Federal Court of Australia
TWW Yachts Sarl v The Yacht “Loretta” (No 3)  FCA 498
NSD 1345 of 2020
Date of Judgment:
PRACTICE AND PROCEDURE – application for joinder of non-party whose cooperation might be required to enforce judgment pursuant to r 9.05(1)(b)(i) Federal Court Rules 2011 – where non-party beneficial owner and in control of seller of yacht located in Hong Kong the subject of orders for specific performance of sale and final judgment entered in favour of buyer
Federal Court of Australia Act 1976 (Cth) s 59(2)(j)
Federal Court Rules 1979
Federal Court Rules 2011 rr 9.05(1)(a), 9.05(1)(b)(i), 10.42, 10.43(3)(c)(iii), 41.06
Supreme Court Rules 1970 (NSW) Pt 42 r 12
Uniform Civil Procedure Rules (NSW) Pt 6 Div 5
Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at The Hague on 15 November 1965
Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529
Costa Vraca Pty Ltd v Bell Regal Pty Ltd  FCAFC 305
State Bank of New South Wales Limited v N.A. MacDonald (unreported, NSWSC, 17 January 1992) BC9202104
Suzlon Energy Ltd v Bangad (2011) 196 FCR 259
TWW Yachts Sarl v The Yacht "Loretta" (No 2)  FCA 241
TWW Yachts Sarl v The Yacht “Loretta” (No 1)  FCA 240
New South Wales
National Practice Area:
Admiralty and Maritime
Number of paragraphs:
Counsel for the Plaintiff:
Mr M. G. McHugh SC with Ms C. Ernst
Solicitor for the Plaintiff:
Colin Biggers & Paisley
Mr M. Tavener of Thynne & Macartney
WING CHEUNG TONY FUNG
DATE OF ORDER:
5 MAY 2021
THE COURT ORDERS THAT:
1. Wing Cheung Tony Fung be joined as second defendant to the proceeding.
2. Leave be granted to the plaintiff to serve the writ, amended statement of claim, amended defence and reply, together with the orders made on 5 March 2021, 22 April 2021 and these orders on the second defendant Wing Cheung Tony Fung:
(a) in Hong Kong pursuant to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965,
(b) by email to the solicitors for the relevant person and defendant on or before 5 May 2021,
(c) at Aquis Australia Pty Ltd at Level 10, 12 Creek St, Brisbane City QLD 4000.
3. On or before 6 May 2021, the plaintiff may serve the relevant person with a further copy of the orders made on 22 April 2021 endorsed in accordance with r 41.06 of the Federal Court Rules 2011 stating that or to the effect that the relevant person will be liable to sequestration of property or punishment for contempt if it neglects or refuses to do any act or thing within the time specified in those orders.
4. The defendant and the relevant person pay the plaintiff’s costs of the relisting of the proceeding today including the hearing of the interlocutory application.
(REVISED FROM THE TRANSCRIPT)
1 On 22 March 2021, I delivered my reasons for the orders made on 5 March 2021 (the 5 March orders) for specific performance of the contract between the plaintiff, as buyer, and the relevant person, Sea Shine (Isle of Man) Limited, as seller, of the yacht Lorretta: TWW Yachts Sarl v The Yacht "Loretta" (No 2)  FCA 241. I will use the same expressions in these reasons that I used in those.
2 It now appears that the seller is not prepared to cooperate with the buyer or to comply with the 5 March orders. That caused the buyer to make an interlocutory application yesterday, 4 May 2021, for orders to join Wing Cheung Tony Fung as a party to the proceeding, pursuant to r 9.05(1)(b)(i) of the Federal Court Rules 2011. The parties agreed in the conduct of the trial that Mr Fung, or “the boss”, was effectively the beneficial owner of the yacht and is based in the Special Administrative Region of Hong Kong: TWW Yachts Sarl v The Yacht “Loretta” (No 1)  FCA 240 at –. The buyer also seeks orders to serve Mr Fung in Hong Kong with the statement of claim, defence, reply, the 5 March orders, the orders made on 22 April 2021 (the 22 April orders) and the orders made today.
3 Relevantly, r 9.05(1)(b)(i) provides that a party may apply to the Court for an order that a person be joined as a party to the proceeding if the person is a person “whose cooperation might be required to enforce a judgment”.
4 The basis of the interlocutory application is set out in two affidavits made by the solicitor for the buyer, Stuart Hetherington, on 4 May 2021, and an affidavit of Chan Roy Carson (Roy Chan) sworn on 3 May 2021. Roy Chan is a director of Legalmap Limited, a consulting company in Hong Kong which the buyer appointed as consultant to manage the purchase and acceptance of physical delivery of Loretta.
5 Murray Tavener, one of the solicitors acting for the seller in the proceeding, appeared today and informed me that his firm had received no instructions from their client, despite seeking them, and was intending to file a notice of ceasing to act. Mr Hetherington had earlier experienced difficulties in receiving responses when communicating with the legal representatives of the seller.
6 On 28 April 2021, Dr Nicholas Valenzia emailed Mr Bender, as the seller’s representative, with the contact details of Enzo Hung, who was named in order 1(b) of the 22 April orders as the buyer’s representative to inspect the yacht, and asked when Mr Hung would be able to attend on board Loretta at The Hong Kong Shipyard Limited to establish her condition in accordance with cl 21 of the agreement. Mr Bender responded later that day saying that he had resigned as a director of the seller with effect from 15 March 2021 and so was not able to assist further. Mr Bender is also a director, together with Mr Fung, of a company called Aquis Australia Pty Ltd, emails from which Mr Bender frequently used in correspondence in evidence in the proceeding.
7 From the evidence of Mr Hetherington, Aquis Australia appears to be one of many Australian companies using the name “Aquis” which Mr Fung controls. The Aquis Australia website states that the group is a highly diversified development and investment business controlled by the Hong Kong-based Fung family and includes a statement that: “Aquis Chairman Tony Fung has more than 40 years experience in global financial services and investment, including more than 15 years as an active investor in Australia”. Searches with the Australian Securities and Investments Commission reveal that Mr Fung is currently a director of many Australian companies, a large number of which include the word “Aquis” in their corporate names.
8 Mr Hetherington annexed to his first, longer affidavit an email dated 29 April 2021 from Dr Valenzia to Mr Fung and Mr Bender addressed to a number of email addresses, including email addresses of @aquis.com.hk and @fung.com, which addresses appear to relate to Mr Fung. The emails sought to ensure that the inspection could take place at the Shipyard and asked for cooperation in making arrangements for completion of the sale and compliance with the 22 April orders, which Dr Valenzia attached together with other material.
9 On 30 April 2021, David Westwood, one of the directors of the buyer, emailed the general manager of the Shipyard, also named Mr Chan, informing him that Roy Chan and Mr Hung would attend as the buyer’s representatives the next day to inspect the vessel. He enclosed copies of the 22 April orders and a repair quotation dated 3 February 2021 by the Shipyard for about HKD2.6 million that he had obtained. The quotation was addressed to Aquis Holdings Limited at a Hong Kong address and directed to Mr Fung’s attention and was for repairs necessary to be made for the vessel pursuant to Mr Fung’s instructions given on 20 January 2021.
10 Roy Chan said that, on 1 May 2021, he attended at the Shipyard with Mr Hung who was the surveyor and authorised representative of the buyer. He said that he was able to perceive, by reason of the distinguishing design and features, that a vessel he saw in the distance at the Shipyard was, in fact, Loretta, berthed alongside the Shipyard. At about 8:52am, Roy Chan and Mr Hung arrived at the front gate of the Shipyard in their respective cars, and a security guard directed them to go to the check in location for the Shipyard. Roy Chan said that while they were waiting at the security station, two men arrived at the front gate by foot and identified themselves as existing crew members of Loretta. They said that they had been asked by their employer to enter and work on board the vessel. Roy Chan said that the security officials granted entry to both those persons, one of whom was called Tony and spoke Cantonese, and another, Lee Vaz, and spoke English.
11 Roy Chan said that, at about 8:55am, Mr Pui, a senior officer of the Shipyard, asked Mr Hung and him about the purpose of their visit. Roy Chan informed Mr Pui that they were representatives of the buyer which had made an appointment the previous day, 30 April 2021, with Mr Chan as the general manager of the Shipyard. Roy Chan asked Mr Pui to verify this, and to allow Mr Hung and him to enter so that they could board the vessel and conduct an inspection. Mr Pui informed them that no one was allowed to access the vessel on that day. Roy Chan asked why, and then saw Mr Pui making a telephone call from the security station. He said that from what he could overhear of the conversation on the telephone, Mr Pui appeared to be receiving an instruction from the person to whom he was speaking that no one was allowed to enter the Shipyard for any reason if it related to the vessel. Roy Chan said that Mr Pui then returned and told Mr Hung and him that they could not enter without permission from the owner of the vessel, and that there was an (undisclosed) issue with their identity.
12 When Roy Chan protested that Mr Hung and he were representatives of the buyer and had come to inspect the vessel, Mr Pui asked if they were accompanying Tony and Lee Vaz, to which Roy Chan replied, “No.” Tony responded to Mr Pui and said that he and Lee Vaz were crew members. Mr Pui told them they, too, were not allowed access to the yacht for that day, and that no one was allowed because of an instruction from the management office.
13 Roy Chan and Mr Hung then spoke with Tony and asked if he knew what was happening. Tony told them that he had been asked by his employer to arrive at 9:00am to work on board the vessel, adding that she was supposed to leave Hong Kong next Monday, 10 May 2021, but that her departure would be delayed because the air conditioner on board was still out of order. Mr Hung asked Tony about the condition on board the vessel, and Tony responded that the echo sounder had been fixed but there were still many cracked marble tiles in the bathroom and other areas on her, and that he had worked on the vessel for about a month.
14 Shortly afterwards, Roy Chan telephoned his namesake, the general manager of the Shipyard, on a mobile telephone, and after both identified themselves, Mr Chan told Roy Chan that he was not allowed to speak to him and immediately hung up.
15 On 3 May 2021, Dr Valenzia sent an email to Mr Fung at the email addresses to which I referred above and to Mr Bender, noting that the buyer’s representatives had been barred from having access to Loretta on 1 May 2021, and that the seller had failed to comply with order 1(c) of the 22 April orders to provide the necessary documents to enable completion to be effected. Dr Valenzia sought an explanation for the denial of access and clarity as to whether the seller intended to provide documents necessary to complete the transaction in accordance with the Court’s orders. As with Mr Tavener’s experience with his client, these entreaties were met with silence from the seller.
16 Mr Hetherington’s second affidavit of 4 May 2021 explained that, if Mr Fung is joined as a defendant, the buyer wishes to serve him in Hong Kong under the provisions of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at The Hague on 15 November 1965 (the Convention), with the statement of claim, defence, reply and the 5 March and 22 April orders and the orders made today. He said that the law of Hong Kong permits service under the Convention. Mr Hetherington also sought orders to serve Mr Fung by email to various addresses, including those in  above, and by service on the current solicitors of the seller on the record.
17 The buyer explained that it was concerned that it may not be able to rearrest Loretta in Hong Kong to give effect to the orders of the Court but it has not yet determined, in the particular circumstances that have arisen, whether to seek to arrest her there in order to ensure compliance with the order for specific performance. That is a matter I need not deal with now.
18 At the moment, there is no evidence that service by email in Hong Kong is a method permitted under the law of Hong Kong to serve Mr Fung. However, there is no impediment to him being served by email here. Even though Mr Tavener opposes an order for substituted service on his firm, in my opinion, such an order will, effectively, be able to bring the proceeding and his joinder to it to Mr Fung’s attention. Whether or not Mr Fung wishes to respond to the orders made today, such service may or may not be sufficient to warrant the grant of other relief.
19 Counsel for the buyer and I have not been able to find an equivalent of r 9.05(1)(b)(i) in other rules of court. The previous Federal Court Rules 1979 did not contain such a rule, and nor do the Uniform Civil Procedure Rules (NSW), especially in Pt 6 Div 5 entitled “Joinder of causes of action and joinder of parties”, including r 6.24, or rules of the Supreme Court of Victoria.
20 The rule-making power in s 59(2)(j) of the Federal Court of Australia Act 1976 (Cth) provides that, in particular, the rules made by the Court may make provision “for or in relation to … the enforcement and execution of judgments of the Court.”
21 In my opinion, the purpose of r 9.05(1)(b)(i) was to overcome a particular problem that might occur if a non-party in control of property or of a corporation the subject of a final order or judgment made by the Court was able, effectively, to frustrate enforcement of that order or judgment at a time when the proceeding was otherwise complete. The rule permits the Court to order that a person described in r 9.05(1)(b)(i) be made a party even though no identifiable course of action might exist against the person.
22 Cole J identified this problem in State Bank of New South Wales Limited v N.A. MacDonald (unreported, NSWSC, 17 January 1992) BC9202104. There, his Honour held that after a judgment had been entered that affected all existing parties to an action, the court had no statutory or inherent power to add an additional party even though the terms of the previous Pt 42 r 12 of the Supreme Court Rules 1970 (NSW) were sufficiently wide to encompass an order for joinder of the further party. His Honour said that:
the better view is that [Pt 42 r 12] is to be construed as relating to the judgment entered, not to matters additional to that judgment.
23 In Suzlon Energy Ltd v Bangad (2011) 196 FCR 259 at 264–265 , I dealt with an application to amend a party’s name because of a misnomer or misjoinder and considered, relevantly, r 9.05(1)(a), in both the 1979 rules and current rules of this Court. Of course, that rule is differently expressed to r 9.05(1)(b)(i). However, in my opinion what I said there concerning r 9.05(1)(a) is equally applicable to r 9.05(1)(b)(i), namely that it:
is a remedial provision and should be given a beneficial interpretation. That interpretation should be the widest that the language of each rule will permit: Bridge Shipping [Pty Ltd v Grand Shipping SA (1991) 173 CLR 231] at 260-261 per McHugh J with whom Brennan and Deane JJ agreed; s 37M of the Federal Court of Australia Act.
24 It is clear that, as expressed, r 9.05(1)(b)(i) can operate after a final judgment has been entered in order to enforce it. The rule allows the Court to join as a party a person whose cooperation might be required to enforce that judgment even though such a person is not one against whom the applicant or plaintiff may have a cause of action. Rather, the purpose of r 9.05(1)(b)(i) is to ensure that the orders of the Court will not be rendered nugatory by third parties, against whom the applicant or plaintiff has no cause of action, who, unless joined as a party, would be free to take steps, in effect, to frustrate enforcement of the Court’s orders.
25 Here, I am satisfied, for the reasons in Loretta (No 1)  FCA 240 and Loretta (No 2)  FCA 241, that Mr Fung controls the seller, and is a person whose cooperation is required to enforce the orders for specific performance that I made on 5 March 2021 and 22 April 2021. Accordingly, Mr Fung should be joined as a defendant to the proceeding notwithstanding that it was commenced in rem. That is because the seller, as relevant person, appeared and defended the proceeding. As a result, the seller is liable in personam and the proceeding against it is not in rem, but in personam. In Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 at 538–539, Gibbs J held that:
it appears that where an action has been commenced in rem a defendant may be added against whom the plaintiff has only a right in personam, and that an action may be commenced by means of a single writ against a number of defendants, against some of whom the plaintiff has an action in rem and against others an action in personam only.
(emphasis added, citation omitted)
26 I am satisfied that the claim against Mr Fung is one that can be brought under items 2, 3 and 20 of the table in r 10.42, in particular, because r 9.05(1)(b)(i) permits Mr Fung to be joined as a party for the purposes of enforcement of the orders for specific performance. He has been properly joined as a party to the proceeding brought in rem against Loretta, which was served in Australia when she was arrested within the meaning of item 20: BY Winddown Inc v Vautin (2016) 249 FCR 262 at 272–274 – per Besanko, Middleton and Griffiths JJ and see too at 266–267  applying Costa Vraca Pty Ltd v Bell Regal Pty Ltd  FCAFC 305 at – per Ryan, Kiefel and Gyles JJ.
27 The law of Hong Kong permits service on Mr Fung, and under Australian law he can be served here, at least, by email. I am not in a position now to make an order allowing him to be served by email in Hong Kong, but will allow the buyer the opportunity to obtain evidence as to whether such a method is permissible there within the meaning of r 10.43(3)(c)(iii).
28 Accordingly, I will grant leave to the buyer to join Mr Fung as second defendant, and to serve him in Hong Kong under the Convention and here by substituted service on the solicitors for the seller. If the law of Hong Kong permits, I will also allow Mr Fung to be served there by email.