FEDERAL COURT OF AUSTRALIA
NSD 934 of 2016
Date of judgment:
Competition and Consumer Act 2010 (Cth) Sch 2
Corporations Act 2001 (Cth) ss 127(1), 129(5)
Federal Court Rules 2011 (Cth) rr 10.42, 10.43
Brinkibon Limited v Stahag Stahl und Stahlwarenhandels GmbH  2 AC 34
Entores Limited v Miles Far East Corporation  2 QB 327
Ho v Akai Australia Pty Limited (In Liq) (2006) 24 ACLC 1526
Jasmin Solar Pty Limited v Trina Solar Australia Pty Limited (2015) 331 ALR 108
Sydbank Soenderjylland A/S v Bannerton Holdings Pty Limited (1996) 68 FCR 539
Voth v Manildra Flour Mills Pty Limited (1990) 171 CLR 538
New South Wales
National Practice Area:
Admiralty and Maritime
Number of paragraphs:
Solicitor for the Plaintiffs:
Aus Ship Lawyers
FENWICK SHIPPING SERVICES LTD
PACIFIC BUILDING SOLUTIONS LIMITED
SAFE PACIFIC SHIPPING (HONG KONG) LTD
DATE OF ORDER:
THE COURT ORDERS THAT:
2. The plaintiffs’ costs of the interlocutory application filed on 7 July 2016 be the plaintiffs’ costs in the cause.
3. The proceeding be stood over to 2 September 2016 for further directions
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
1 Northpoint Shipping Limited and Fenwick Shipping Services Limited, the plaintiffs, seek leave to serve the originating application and statement of claim on the second, third and fourth defendants, Robert Semaan, Michael Fairfax and Pacific Building Solutions Limited (Pacific Fiji), in Fiji. Both Mr Semaan and Mr Fairfax were directors of Pacific Fiji. Northpoint is a Hong Kong company and was the owner of MV Kuanyin. Fenwick is an Australian company, whose secretary is Christopher Rabbidge (also a director). It is the ship manager of Kuanyin under an agreement between Northpoint and Fenwick dated 1 January 2008.
2 The originating application seeks judgment in the sum of AUD300,000 against Messrs Semaan and Fairfax, together with Pacific Fiji, or damages.
3 Northpoint and Fenwick seek to recover against all the defendants in respect of claims for demurrage under a charter party entered into by Northpoint, through the agency of Fenwick, with Safe Pacific Shipping (Hong Kong) Ltd, the fifth defendant. The fixture note for the charter of Kuanyin between Northpoint and Safe Pacific provided for demurrage to be payable at the rate of USD5,500 per day pro rata. A company associated with members of the group of companies controlled by, among others, Mr Semaan and Mr Fairfax, known as the “PBS Group”, arranged for the shipment of a cargo on Kuanyin between Suva, Fiji and Betio, Kiribati.
4 On 17 December 2015, Northpoint, as carrier, issued a bill of lading for the cargo to be carried on Kuanyin under which Pacific Marine & Civil Solutions Limited, the first defendant, a company in the PBS Group also incorporated in Fiji, was the shipper. The bill of lading incorporated on its face a provision that freight was payable as per the charter party dated 22 October 2015, which was the source of a demurrage claim.
5 There were delays at the loading port that resulted in Northpoint making a demurrage claim for about USD192,000 most of which was paid, leaving a small amount owing being about USD2,154.78. When the ship arrived at the discharge port on 11 January 2016, she went on demurrage that lasted until 8 March 2016. The total demurrage incurred for that period of the charter was USD321,319.72. The total of the two amounts for demurrage of USD323,474.50 is the sum period for which Northpoint and Fenwick seek judgment against Pacific Marine and Safe Pacific. This application does not concern that claim.
6 As the time during which the ship was on demurrage in Betio mounted, Mr Rabbidge began negotiating with members of the PBS Group, principally through emails he sent to Carl Probert, who was designated as “Group Asset/Logistics Manager” of the PBS Group at the foot of emails that he sent and copied to Mr Semaan. Under Mr Probert’s signature block appeared “PBS Group” together with a logo, an address, phone and other contact details. Immediately below that material appeared the logos, business and domain names of five entities, including “Pacific Building Solutions” and “Pacific Marine & Civil Solutions”, without any indication as to whether each entity was a corporation, such as by the use of the word “Limited” or “Incorporated”.
7 On 23 January 2015, Mr Probert emailed Mr Rabbidge, under the subject line “Guarantee for Demurrage Payment”, writing that he had copied in:
Rob Semaan PBS Group Chairman and Simon Ahearn, Group Operations. I have forwarded your request for a direct guarantee from us because we were concerned with the Chinese broker.
Sounds like a notarised company guarantee is what you are after, but please advise if you require a different guarantee.
Again, thanks for working with us to keep this discharge progressing.
8 Mr Rabbidge replied on 25 January 2016 “yes, that is the sort of thing” and that Northpoint and Fenwick would not ask for a bank guarantee. Mr Semaan then emailed Mr Rabbidge on 26 January 2016 asking whether “a guarantee like this” would avoid the need for “us needing to pay for demurrage every week or so”.
9 Subsequently on 1 February 2016, Mr Rabbidge attached to an email he sent to Mr Semaan, Mr Probert and Mr Ahearn a draft deed of undertaking of two pages that had the heading at its top “on letterhead of company giving the undertaking”, that Mr Rabbidge said in the email “we ask PBS to provide”. The draft deed named Northpoint and Fenwick as the parties to whom it was addressed. The email also said that the letter “needs to be on company letterhead and originally signed/witnessed by two directors. pls [sic] send us a scanned copy and send original letter by courier to us.” He gave Fenwick’s address in Australia.
10 The significance of the failure to identify the covenantor under the proposed deed is crucial. Following his sending that email on 1 February 2016, Mr Rabbidge communicated by email with Mr Semaan, Mr Probert and Mr Ahearn about the wording of the proposed deed, but at no point did Mr Rabbidge’s correspondence state a proposal that identified a covenantor different to “PBS” as the party to the deed.
11 After more drafting exchanges between the four men, on 9 February 2016, Mr Rabbidge sent a final draft to Messrs Semaan, Probert and Ahearn and followed up by email, on 11 February 2016, seeking provision of the deed asking whether it could be executed as soon as possible. Mr Semaan replied that he was hoping to do so that day between travels.
12 Finally, late on 12 February 2016, Mr Semaan, from the email address “firstname.lastname@example.org” sent an email to Mr Rabbidge stating simply: “Chris, attached”, and sent copies to Mr Probert and Mr Ahearn at the same domain name email address. The email attached a copy of the final version of the deed dated 12 February 2016. It was on the letterhead of Pacific Marine & Civil Solutions Inc (Pacific Inc) a company incorporated, according to its letterhead, in Port Vila, Vanuatu and was executed by Mr Semaan and Mr Fairfax, under each of whose name appeared “Director”. Mr Ahearn witnessed their signatures.
13 The deed provided a guarantee for demurrage that was limited to AUD300,000 “including interest plus legal costs” and, near the conclusion a covenant that:
C. we warrant that the signatories below have the Authority to instruct lawyers and execute this document. (emphasis added)
14 Immediately underneath that covenant, the deed stated that it was governed by Australian law and that “any dispute arising out of or in any way connected with this letter of undertaking should be subject to the exclusive jurisdiction of the Federal Court of Australia in Sydney”.
15 At the foot of the deed, underneath the signatures, in small print and having the appearance of being a footer at the end of the page appeared the name “Pacific Marine & Civil Solutions Inc”. That name could appear to relate to the status of the signatures, as “Director” of Mr Semaan and Mr Fairfax above it, but there was no corporate seal affixed nor statement of the “directors” executing the deed on behalf of a company. That may not have been necessary in any event for the document to operate at common law as a deed given by the company: cf Norton on Deeds (Sweet & Maxwell, 1928, 2nd ed) at 7, and, of course, it is not necessary under ss 127(1) and 129(5) of the Corporations Act 2001 (Cth).
16 However, the problem with the document was that, according to company searches in Vanuatu, Pacific Inc had been struck off the register of corporations on 12 November 2014 and hence did not exist as a corporation at the time at which Mr Semaan provided Mr Rabbidge with the deed that he and Mr Fairfax had executed as its directors.
17 The deed also acknowledged that, first, no demurrage had been paid as at 12 February 2016, secondly, the total demurrage then payable at the discharge port was USD115,069.72 and, thirdly, that the demurrage was continuing to accrue at the rate of USD5,500 per day pro rata.
18 After Mr Rabbidge received the email attaching the executed deed in Australia, Northpoint and Fenwick caused the cargo to be discharged from Kuanyin and refrained from continuing to exercise their lien over the cargo.
19 Northpoint and Fenwick allege, in the statement of claim, that in the circumstances, each of Mr Semaan, Mr Fairfax and Pacific Fiji had warranted that, first, Pacific Inc was an incorporated entity (i.e. had a present existence as a corporation), secondly, Mr Semaan and Mr Fairfax were authorised by that entity to sign the deed and, thirdly, that entity was guaranteeing the demurrage payable to Northpoint and Fenwick in accordance with the terms of the deed (i.e. up to the amount of AUD300,000).
20 In the events that transpired, Northpoint and Fenwick claim the whole of the amount of AUD300,000 the subject of the guarantee as damages against each of Mr Semaan, Mr Fairfax and Pacific Fiji. In the alternative, Northpoint and Fenwick allege that Messrs Semaan and Fairfax and Pacific Fiji engaged in conduct that was misleading or deceptive or likely to mislead or deceive in contravention of ss 18 and or 29(1)(d) of the Australian Consumer Law (Cth) in Sch 2 to the Competition and Consumer Act 2010 (Cth). Relevantly, s 29(1)(d) provides that:
29(1) A person must not, in trade or commerce, in connection with the supply or possible supply of … services …
(d) make a false or misleading representation that a particular person has agreed to acquire … services.
21 The statement of claim appears to allege that each of Mr Semaan, Mr Fairfax and Pacific Inc represented that he or it had agreed to acquire the services of Northpoint and Fenwick arranging for the discharge of the cargo at Betio. Alternatively, the damages claim against each of Mr Semaan, Mr Fairfax and Pacific Fiji is not limited to the amount of the guarantee.
22 The principles upon which leave to serve outside the jurisdiction under r 10.43 of the Federal Court Rules 2011 (Cth) is granted are well settled: Ho v Akai Australia Pty Limited (In Liq) (2006) 24 ACLC 1526 per Finn, Weinberg and Rares JJ; see also Beluga Shipping GmbH & Co KS “Beluga Fantastic” v Headway Shipping Limited (No 2) (2008) 251 ALR 620 at 627-628 - per Rares J and Jasmin Solar Pty Limited v Trina Solar Australia Pty Limited (2015) 331 ALR 108 at 117 - per Edelman J.
23 I am satisfied by the evidence of Drew James, in his affidavit of 6 July 2016 that Northpoint and Fenwick propose to serve Mr Semaan, Mr Fairfax and Pacific Fiji in Fiji by personal service and that that method of service is permitted under the law of Fiji. Mr James has ascertained that Fiji is neither a party to the Hague Convention nor any other convention with Australia permitting service of curial documents. Fijian law permits service in Fiji of documents from a foreign court by personal service.
24 I am satisfied that the court has jurisdiction in the proceeding for the purposes of r 10.43(4), that the proceedings are of a kind mentioned in r 10.42 and that Northpoint and Fenwick have a prima facie case for some of the relief claimed in the proceeding.
25 In reciting facts for the purposes of giving these reasons, I take at face value the currently unanswered material in Mr James’ affidavit. However, that material may well be seen in another light during the course of a contested hearing and necessarily does not present whatever defences or evidence might be called by the defendants. I have not formed any final view about the nature of the proceedings. However, on the material before me, I am satisfied that Northpoint and Fenwick have established a prima facie case sufficient to establish what is necessary to justify the grant of leave to serve out of the jurisdiction within the principles explained at in Ho 24 ACLC at 1529 -, 1535 at -. Those principles are that a prima facie case for relief for the purposes of r 10.43(4) is one that establishes on the material before the Court that inferences are open which, if translated into findings of fact, would support the relief claimed. Moreover, it is only necessary that a prima facie case for relief be shown to exist for any one of the causes of action relied upon for the relief so sought: Ho 224 ACLC at 1535 -.
26 On the material before me, I am satisfied that there is a prima facie case that when Mr Semaan sent his email on 12 February 2016, attaching the deed of undertaking on the letterhead of Pacific Inc, using his email address that appeared to be that of Pacific Fiji, he, Mr Fairfax and Pacific Fiji gave the express warranty of authority to execute the deed that it contained in covenant C. The principles applicable to instantaneous communications of a contractual nature, including in respect of documents in the nature of the deed dated 12 February 2016 give rise to the prima facie inference that the deed was delivered in Australia when Mr Rabbidge received that email: Brinkibon Limited v Stahag Stahl und Stahlwarenhandels GmbH  2 AC 34 at 42E, per Lord Wilberforce, following Entores Limited v Miles Far East Corporation  2 QB 327.
27 In Voth v Manildra Flour Mills Pty Limited (1990) 171 CLR 538 at 568, Mason CJ, Deane, Dawson and Gaudron JJ said (and see too: Sydbank Soenderjylland A/S v Bannerton Holdings Pty Limited (1996) 68 FCR 539 at 547E-G, per Beaumont, Drummond and Sundberg JJ):
If a statement is directed from one place to another place where it is known or even anticipated that it will be received by the plaintiff, there is no difficulty in saying that the statement was, in substance, made at the place to which it was directed, whether or not it is there acted upon.
28 In my opinion, there is a prima facie case that the alleged warranty of authority was made and breached by the transmission to, and receipt by, Mr Rabbidge in Australia of Mr Semaan’s email of 12 February 2016 attaching the deed of undertaking from the non-existent Pacific Marine & Civil Solutions Inc (i.e. Pacific Inc). In those circumstances, I am satisfied that the proceeding is based on a cause of action arising, and a tort committed, in Australia within the meaning of each of items 1 and 4 in the table to r 10.42. In addition, for the same reasons, I am satisfied that a prima facie case exists that the representation, the subject of the allegations of misleading and deceptive conduct amounting to a contravention of s 18 of the Australian Consumer Law, was made in Australia and falls within items 1 and 12 (the latter relating to a proceeding based on a contravention of an Act that is committed in Australia).
29 Mr James’ evidence demonstrated that, through email exchanges between Mr Rabbidge, Mr Probert and Mr Semaan, the ship was still on demurrage as at 4 March 2016. On 6 April 2016, the lawyers acting for Northpoint and Fenwick sent a letter of demand by email to Pacific Fiji, Mr Semaan, Mr Probert and Mr Fairfax invoking the provisions of the deed. The letter attached a demurrage invoice dated 18 March 2016 and a statement of fact time sheet dated 8 March 2016. The letter demanded payment of the sum of USD323,474.50 and that the addressees appoint a lawyer in Sydney to accept service.
30 Mills Oakley, a firm of Australian solicitors, responded to that letter, saying that they had been instructed by Pacific Inc in relation to it but that they did not have instructions to accept service of any proceedings. Subsequently, on 12 May 2016 Mills Oakley wrote to the solicitors acting for Northpoint and Fenwick and stated, on behalf of “our client” that Pacific Inc: “… is a shell company which holds no assets and we have no instructions to accept service in any proceedings commenced against it”.
31 I have not for the purpose of these reasons considered whether the terms of the deed as signed by Mr Semaan and Mr Fairfax themselves constituted a contractual undertaking by each of those individuals to Northpoint and Fenwick.
32 For these reasons, I will order that Northpoint and Fenwick have leave, pursuant to r 10.43 to serve on each of Mr Semaan, Mr Fairfax and Pacific Fiji in Fiji, the originating application, statement of claim and the orders made and that the costs of the interlocutory application be costs of Northpoint and Fenwick in the cause.