FEDERAL COURT OF AUSTRALIA

Yacht Club Sopot SP. Z O.O. v The Ship “Monster Project” (No 3) [2020] FCA 847

ORDERS

THE COURT ORDERS THAT:

1.    The plaintiff file a draft order identifying the amount or amounts to be given in a partial judgment in accordance with the reasons for judgment given on 29 May 2020.

2.    The defendant and relevant person pay the plaintiff’s costs of the proceeding to date.

3.    The proceeding be listed for case management on 30 October 2020 unless the plaintiff causes it to be relisted earlier for the purpose of informing the Court of its election referred to in paragraph 21 of the reasons.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

Rares J:

1    The plaintiff is a Polish yacht club. It organises social yachting adventures by offering opportunities to third parties to participate in yacht races both in Poland and other parts of the world. This proceeding involves an adventure which the club organised for 13 people to participate in the Sydney-Hobart Yacht Race commencing on 26 December 2018 on a 21.48 metre long Volvo 70 carbon fibre racing sailboat built in 2008 called Monster Project. The owner of Monster Project, EcoNautics Racing International Ltd, is incorporated in the British Virgin Islands. EcoNautics chartered the yacht to the club for the purpose of it participating in the race.

Background

2    The adventure failed to occur because, in the lead up to the race, the Cruising Yacht Club of Australia (CYC), the race organiser, found that Monster Project’s documentation was inadequate to satisfy its requirements and it cancelled her entry on 21 December 2018.

3    Each of the 13 participants had to pay a fee, in most cases €14,500, to the club to participate in what they hoped would be the race together with some preparatory trial work. Most of them came from Poland, one from Norway, and another from the United States of America. Obviously, each of them incurred the expense of travelling to Australia, accommodation, and his or her sustenance while here, particularly during the period when their participation in the race did not occur and they had to make arrangements to return whence they came.

4    On 22 December 2018 the club issued a writ in rem and caused Monster Project to be arrested on its general maritime claim for damages for breach of the charterparty.

5    EcoNautics appeared and originally defended the claim by filing a defence to the statement of claim. However, on 30 August 2019 it filed a submitting appearance including in respect of any costs orders. The defence admitted that:

    the charter required EcoNautics to enable Monster Project to be used in the race and to be partially crewed by EcoNautics together with the participants and others from the club;

    EcoNautics was to provide its crew of five, being the master, bowman, pitman, navigator, and one guest;

    the club could have up to 17 guests, inclusive of its own personnel;

    Monster Project was to arrive in Sydney not later than seven days before the race; and

    she and the crew were to be subject to the CYC’s rules and regulations for the race including that the vessel would have to qualify for the race; and

    the charter party had implied terms that:

(a)    EcoNautics would cause Monster Project to be validly entered into the race;

(b)    she would be capable of being entered in the race, including that she was insured for personal injury and property damage; and

(c)    EcoNautics would provide to the CYC all the documents that it required in order to allow the yacht to enter the race and that those documents would be truthful and accurate.

6    During the course of 2018, the club paid EcoNautics the whole of the charter fee of €100,000. On 7 September 2018, EcoNautics entered Monster Project in the race.

7    EcoNautics provided the CYC with, relevantly, what it required in respect of insurance, including a certificate which, on 21 December 2018, the CYC rejected as not genuine, as explained in the extensive affidavit that the club’s president, Rafal Sawicki, made on 10 September 2019 in which he set out the facts to support its claims for damages.

8    EcoNautics admitted that it was liable to repay the charter fee of €100,000 and, on 13 September 2019, I entered partial summary judgment in that sum. However, EcoNautics denied all other liability in its defence before it filed its submitting appearance.

9    Mr Sawicki set out in his affidavit the history of the arrangements for the charter of Monster Project and the involvement of the participants who ultimately came to Australia expecting to compete in the race.

10    Mr Sawicki said that on 21 December 2018 he attended a meeting with representatives of the race committee of the CYC, including Dave Jordan, whom he understood was the committee’s chairman. Mr Jordan told him that the meeting was unusual because Mr Sawicki was not the owner of Monster Project, but, in the circumstances, he was sympathetic to the plight in which the club and the participants found themselves. Mr Jordan said that the reason for the committee’s rejection of Monster Project’s entry was that there were irregularities relating to the insurance documents provided by a Roman Guerra, whom Mr Sawicki understood to be the person in control of EcoNautics.

11    Subsequently, on 21 December 2018, Mr Sawicki met with Mr Guerra and some of the participants. Mr Guerra presented a document that appeared to be an insurance certificate issued by Pantaenius. Mr Guerra told them that he had also sought to persuade the CYC to reverse its decision not to enter the yacht but was unsuccessful. One of the participants present, Charles Schroeder, told Mr Guerra that the insurance certificate was fraudulent. Mr Sawicki said that Mr Guerra agreed, in effect, with Mr Schroeder that the document was a fraud.

12    Later on 21 December 2018, Mr Sawicki organised another meeting with Mr Jordan, seeking to persuade him to reverse the disqualification decision if the club could provide an insurance certificate but Mr Jordan said that the CYC would not allow that to happen. He suggested that the only option for the participants who had travelled to Australia under their contracts with the club might be to arrange to sail on other yachts that were already entered in the race. Mr Sawicki said he was not aware that any of the participants was able to obtain a position on any other yacht.

13    Mr Sawicki said that each of the participants had notified him that they intended to claim against the club for damages because it failed to perform its obligation to allow them to participate in the race. The club is now the subject of proceedings in the Polish courts for breaches of those contracts.

14    Mr Sawicki annexed a large amount of documentation to his affidavit, much of which sought to establish the claims for damages against the club in Poland in respect of outlays each of the participants (and in some cases persons who accompanied them to Australia) wished to be compensated for following the failure of their adventure. The club’s lawyers prepared a detailed schedule that sought to reconcile that material to various claims, but in the course of doing so it became apparent that a substantial number of the participants had no documentary receipts in the material in evidence to substantiate the total outlays which each claimed, in most cases in the order of between AUD30,000 to AUD40,000, some of which were inclusive of the €14,500 entry fee. These sums included claims for items of clothing, such as oilskin tops and pants which, at least at first blush, appear to be items which any sailor wishing to participate in ocean racing or travel may find useful in any event and may not qualify as an expense that he or she would not have otherwise incurred or would not benefit from owning. However, the absence of any supporting evidence for the claims in this proceeding, no doubt caused by the fact that the club is being sued by the participants for these very types of claims, makes it difficult, at the moment, to establish their basis.

15    The club relied on the expert report of Isabella Turnesca Busan of 28 May 2020. She pithily explained that under the Polish Civil Code a debtor was liable to pay damages arising from any non-performance or improper performance of an obligation unless, which is not relevant here, that was not due to circumstances for which it was not liable. The Code also provided that a person obliged to pay compensation was liable only for the normal consequences of actions or omissions from which the damage arose.

16    The expert said in her statement that she had set out the maximum liability of the club to the participants in the race and the basis for its calculation. She opined that under Polish law the club was liable to each of the participants relating to the failure of their contract to participate in the race for the following:

(1)    their entry fees, which the club received in zloty, totalling 661,658.48 zloty (which depending on the exchange rate, at the present time is worth about AUD250,000); and

(2)    the refund of their costs in respect of flights, accommodation, insurance, specialist clothing, training, and other expenses which each of the guests had incurred.

17    The expert relied on what Mr Sawicki had said in his affidavit of 10 September 2019. She provided a translation of the club’s contract with each of the participants. In it, the club promised to ensure that each participated in the race on Monster Project and, if required, qualifying races organised by the CYC. Under cl 3 of the contract the club reserved the right to cancel participation in the races at any time for any reason including bad weather or inaccessibility of the yacht. It promised to make every effort to ensure that a potential cancellation of the race did not occur within less than 60 days before the start of the Sydney-Hobart yacht race, excluding force majeure and extraordinary or unfixable circumstances over which it had no control. However, the club promised that if participation in the race was cancelled by it the participants would be entitled to a full reimbursement of their costs except if the change or cancellation was caused by force majeure.

Consideration

18    I am satisfied by the expert’s report, the admissions in the defence and the evidence of Mr Sawicki that the club, in principle, has liabilities to each of the participants in respect of their flights to, and within, Australia to participate in the race, their accommodation while they were here, including in respect of the difficult circumstances in which they were placed by the cancellation of Monster Project’s entry in the race and having to make other arrangements, together with some reasonable sums for their ordinary living expenses while they were in Australia for sustenance, insurance and any fees they had to pay to third parties or the club for training. However, on the material before me, in the form in which it is, I am not satisfied that I can make a reasonable calculation of what those sums are. That is partly because a number of the individuals simply provided the club with a bald assertion that they had incurred the particular expenses without providing receipts or other substantiating documents. In addition, as I have explained, at the moment, it is difficult to be satisfied that costs for specialist clothing or equipment would amount to loss of damage, as opposed to an expenditure as an ordinary part of an ocean sailor’s clothing and equipment.

19    The club also incurred, as Mr Sawicki said, costs itself in addition to the €100,000 charter hire costs, namely, it had to pay its own crew members of the proposed crew, and for their accommodation, flights, sustenance and insurance, as well as the entry fee for the race, catering for the crew, transport, bespoke clothing to provide to the crew and the participants, training for survival at sea, and marketing costs. Mr Sawicki said that these totalled in the order of about AUD230,000 at an exchange rate of AUD1 to 2.78 zloty. The club incurred most of those expenses in foreign currency, that the plaintiff’s solicitor summarised in the following table:

20    In light of the need to have further evidence about the justification and quantification of the claims by the participants for flights, accommodation, living expenses, and other expenditure to which I have referred, which form a substantial total amount, I am only in the position now to award a partial judgment for what I have found to have been substantiated, namely the sums in the table above. Having regard to the fact that 13 participants were inconvenienced by what happened, I am of opinion that such partial judgment will allow the club to pay some moneys now to them and to defray some of its loss. The net proceeds of the sale of Monster Project, that, on 28 November 2019, the Court ordered that the Marshal release to the club, amounted to only AUD59,341.41. That sum will need to be deducted from any amount for which I will enter partial judgment once the plaintiff has provided calculations of the amount.

21    The club should have two options about how to establish the quantification of the claims that I have not been able to resolve today, namely, at the club’s election, it may either establish its liability based on a judgment against it in the Polish proceedings in favour of the participants, or, alternatively, apply, with proper evidence, to the Registrar, whom I will appoint as referee, to assess and determine the quantification of those costs.

22    I will also order that EcoNautics pay the club’s costs of the proceedings to date.

Associate:

Dated:    17 June 2020