FEDERAL COURT OF AUSTRALIA
Yacht Club Sopot SP. Z.O.O. v The Yacht “Monster Project” [2019] FCA 1083
ORDERS
Plaintiff | ||
AND: | Defendant | |
DATE OF ORDER: |
THE COURT ORDERS THAT:
1. The Admiralty Marshal accept the tender of the highest bidder (AUD 165,000 inclusive of GST, being the purchase price) for the sale of the ship “Monster Project” (the Ship) on the terms of the Admiralty Marshal’s conditions of sale (Annexure A).
2. Within three banking days of the date of these orders, the highest bidder pay 10% of the purchase price (inclusive of GST) of the Ship.
3. No later than seven banking days after the date of these orders, the highest bidder pay the balance of the purchase price of the Ship in accordance with the Admiralty Marshal’s conditions of sale.
4. No later than seven banking days after the date of these orders, the highest bidder deliver to the Admiralty Marshal duly executed Admiralty Marshal’s conditions of sale in the form annexed to these orders.
5. On or before 19 July 2019, the plaintiff in VID283/2019 and defendant file and serve any further evidence upon which they propose to rely in support of the orders sought in the interlocutory application filed on 5 July 2019.
6. On or before 26 July 2019, the Admiralty Marshal file and serve any affidavits upon which she proposes to rely.
7. On or before 2 August 2019, the plaintiff in VID283/2019 and defendant file and serve written submissions in support of any interlocutory application limited to 5 pages.
8. On or before 7 August 2019, the Admiralty Marshal file and serve written submissions in reply limited to 5 pages.
9. Evidence in each of VID283/2019 and NSD2390/2018 be evidence in the other.
10. On or before 2 August 2019, the plaintiff in NSD2390/2018 and defendant exchange any outlines of lay evidence together with expert reports and all documents upon which each proposes to rely.
11. Fix the interlocutory application for hearing on 9 August 2019.
12. Stand the proceeding over for case management on 9 August 2019.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
VID 283 of 2019 | ||
| ||
BETWEEN: | SCOTT SAVAGE Plaintiff | |
AND: | THE SHIP "MONSTER PROJECT" Defendant | |
JUDGE: | RARES ACJ |
DATE OF ORDER: | 5 JULY 2019 |
THE COURT ORDERS THAT:
1. The Admiralty Marshal accept the tender of the highest bidder (AUD 165,000 inclusive of GST, being the purchase price) for the sale of the ship “Monster Project” (the Ship) on the terms of the Admiralty Marshal’s conditions of sale (Annexure A).
2. Within three banking days of the date of these orders, the highest bidder pay 10% of the purchase price (inclusive of GST) of the Ship.
3. No later than seven banking days after the date of these orders, the highest bidder pay the balance of the purchase price of the Ship in accordance with the Admiralty Marshal’s conditions of sale.
4. No later than seven banking days after the date of these orders, the highest bidder deliver to the Admiralty Marshal duly executed Admiralty Marshal’s conditions of sale in the form annexed to these orders.
5. On or before 19 July 2019, the plaintiff and defendant file and serve any further evidence upon which they propose to rely in support of the orders sought in the interlocutory application filed on 5 July 2019.
6. On or before 26 July 2019, the Admiralty Marshal file and serve any affidavits upon which she proposes to rely.
7. On or before 2 August 2019, the plaintiff and defendant file and serve written submissions in support of any interlocutory application limited to 5 pages.
8. On or before 7 August 2019, the Admiralty Marshal file and serve written submissions in reply limited to 5 pages.
9. Evidence in each of VID283/2019 and NSD2390/2018 be evidence in the other.
10. On or before 2 August 2019, the plaintiff and defendant exchange any outlines of lay evidence together with expert reports and all documents upon which each proposes to rely.
11. Fix the interlocutory application for hearing on 9 August 2019.
12. Stand the proceeding over for case management on 9 August 2019.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from the transcript)
RARES ACJ:
1 On 9 May 2019, I made orders providing for the Marshal to sell Monster Project by a closed-bid tender. On Wednesday, 3 July 2019, the Marshal notified the parties that the advertisements of sale had resulted in 12 bids from 10 parties, the highest one of which was for $165,000 on the terms the subject of the order for sale made on 9 May 2019. The Marshal then also informed the parties that she would be applying today for an order that she be authorised to accept that bid and to effect the sale.
2 Previously, on about 10 April 2019, the ship, while under arrest, had taken on water and partially sunk at the wharf of the marina where she is being held in the custody of the Marshal. At that time, the Registrar and Admiralty Marshal informed the solicitor for the owners, Thomas Pilsneniks, that an eroded hose clamp had led to the vessel taking on water, causing significant damage. On 22 May 2019, a marine surveyor, Dennis Walker, acting on behalf of the owners, boarded and inspected the ship under the supervision of the Marshal and reported to the owners that he had observed damage to the vessel following the ingress of water.
3 This morning, the owners applied, in an interlocutory application that they sought to file in Court, for a stay of the orders for sale. They have not paid, or even offered to pay, any security into the Court at any time since the ship was arrested in late December 2018. The owners also sought, in the interlocutory application, documents from the Marshal as to any insurance policy taken out by or on behalf of the Marshal or the Court in relation to the arrest of the ship, any insurance declaration or condition report, including expert reports, in respect to the ship that the Marshal had made or had prepared on her behalf around the time of the arrest and any documentation relating to the incident that occurred on about 10 April 2019 in which the ship took on water.
4 The owners, together with Scott Savage, who claims to be a mortgagee registered in the British Virgin Islands, wished to investigate whether they may have claims against the Marshal in respect of the ship taking on water.
Consideration
5 I am unable to see any basis upon which the stay should be granted. First, the owners have delayed, including since 10 April 2019, in pursuing any active steps to put up any security for the claims made by both the plaintiff, Yacht Club Sopot SP. Z.O.O., in the proceedings under which the arrest occurred, and Mr Savage, as mortgagee. Yacht Club Sopot’s writ seeks damages on a general maritime claim, referred to in the affidavit of its solicitor, for breach of a contract to enable parties, who had chartered Monster Project for €100,000 to race in the Sydney Hobart Race, to compete in that race by reason of alleged misrepresentations as to the existing insurance for the yacht.
6 Ordinarily, a person seeking to interfere with a secured creditor’s rights ought put up security for the claim before property is released to them or a sale under a power of sale is enjoined or postponed: Inglis v Commonwealth Trading Bank of Australia (1972) 126 CLR 161 at 169 per Barwick CJ with whom Menzies J and Gibbs J agreed, affirming what Walsh J had held at 164-166.
7 Similarly, owners of ships that are arrested put up security in order to have the ship released from arrest. It is now more than six months since the arrest. The owners have put up no security at all, but today seek to stay the sale by the Marshal that the Court ordered nearly two months ago. The basis of the owners’ application is that they may wish to take proceedings against the Marshal, in the future, if they are able to find evidence to suggest any negligence on her part.
8 In those circumstances, having regard to principle identified in Inglis 126 CLR at 169, there is no proper basis on which the interests of all of the creditors who have claims against the ship would be protected if I interfered with the sale process that I ordered on 9 May 2019 by staying the sale, or failing to allow the Marshal to give effect to a bid that she regards as bona fide, that should realise the highest price offered by the 10 persons who were interested to bid on the ship.
Conclusion
9 For these reasons, I refuse to stay the sale of the ship.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Acting Chief Justice Rares. |
Associate:
