Federal Court of Australia

GeelongPort Pty Limited v The Ship “Voyager P” [2023] FCA 918

ORDERS

THE COURT ORDERS THAT:

1.    The Marshal sell the ship Voyager P under the Admiralty Rules 1988 (Cth).

2.    The method of sale be determined by the Court.

3.    The Marshal engage a shipbroker to value the ship in writing and advise as to the method of sale most appropriate to realising the best advantage to the body of creditors.

4.    The Marshal retain a solicitor experienced in the judicial sale of ships to act on the sale of the ship.

5.    Pending further order, the Marshal and the shipbroker not disclose the valuation referred to in order 4 to the parties or anyone else apart from the Marshal's delegates.

6.    The costs of the sale be recoverable from the fund constituted by the proceeds of the sale.

7.    The ship Voyager P presently under arrest at the Port of Geelong, Point Henry Pier berth, be repositioned as soon as practical to the northern side of the Bulk Grain Berth (or at such other location as the Marshal may determine) and remain there until further order of the Court.

8.    Costs of the plaintiff's application dated 1 August 2023 be reserved.

9.    These orders be entered forthwith.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J

1    At a hearing on 4 August 2023, I made the orders set out above.

2    These are my reasons.

3    By application dated 1 August 2023 the plaintiff sought orders substantially in the form of the orders I made.

4    The plaintiff operates the Port of Geelong subject to the Port Management Act 1995 (Vic).

5    On 13 July 2023, the plaintiff commenced proceedings in rem against the ship Voyager P (the ship) for outstanding berthing fees by filing a writ, a warrant for her arrest, and an affidavit in support, sworn by Geoffrey Eric Farnsworth (the plaintiff’s solicitor) on 13 July 2023.

6    That affidavit deposed that R J Fishing Pty Ltd (R J Fishing) is the registered owner of the ship.

7    On 14 July 2023, the ship was arrested at the Point Henry Pier berth in the Port of Geelong.

8    On 17 July 2023, the Marshal filed an affidavit in the proceeding verifying the arrest.

9    For the purposes of this application, the plaintiff relied Mr Farnsworth’s 13 July affidavit and a second affidavit sworn 1 August 2023, and the Marshal’s affidavit.

10    The principles applicable to sale pendente lite are well-established. As Stewart J said in Dan-Bunkering (Singapore) Pte Ltd v The Ship Yangtze Fortune [2022] FCA 1556 at [22]-[27]:

Rule 69 of the Admiralty Rules 1988 (Cth) provides for orders for valuation and sale of property under arrest. Although r 69(1)-(2) provide for the application by a party to a proceeding for an order that a ship that is under arrest be sold, r 69(5) provides that if the ship is deteriorating in value, the court may, at any stage of the proceeding, either with or without application, order that it be sold. That is to say, the court can on its own motion order the sale of a ship, or it can do so on the application of a party.

Rule 70 provides that the sale of a ship ordered to be sold under r 69 must be conducted by the Marshal. The court may direct that the sale be by auction on a public tender or any other method.

It was explained by Brandon J in The Myrto [1977] 2 Lloyd’s Rep 243 at 260 that the question whether an order for the appraisement and sale of a ship under arrest in an action in rem should be made pendente lite arises normally only in a case where there is a default of appearance or defence. In such a case, it has been a common practice for the court to make such an order on the application of the plaintiff on the ground that, unless the order is made, the security for their claim will be diminished by the continuing costs of maintaining the arrest to the disadvantage of all those interested in the ship, including, if they have any residual interest, the owners.

The principles expounded by Brandon J have been adopted in this Court on many occasions … [case names and citations omitted].

The deterioration of the ship whilst under arrest and the erosion of the security that it offers to creditors by the mounting costs of maintaining it while under arrest are also pressing considerations: Hilane Ltd v MV Silver Star [2013] ZAECPEHC 61; 2014 (2) SA 392 (ECP) at [16]-[17] per Eksteen J.

The authors Sarah C Derrington and James M Turner QC in The Law and Practice of Admiralty Matters (2nd ed, Oxford University Press, 2016) at [7.61] identify a number of matters as being among those on which evidence may relevantly be adduced in support of an application for sale pendente lite. The list amounts to a ready reference of potentially relevant considerations. It is as follows:

(1)    the overall value of the claim;

(2)    the number of cautions against release and other claims against the ship and their likely value;

(3)    the value of the ship and its likely diminution in value during the course of the arrest;

(4)    the costs of maintaining the vessel’s arrest, including such costs as port and berth charges, ship’s keeper, crew wages and emoluments, supply of domestic fuel to the vessel, and so on, and the consequent diminution in the claimant’s security;

(5)    any (prospect of) deterioration in the condition of the vessel;

(6)    any necessary work to be done on the ship either to keep it afloat or to enable it to be moved;

(7)    the unwillingness of the shipowner to contribute to the costs of the arrest;

(8)    the financial position of the shipowner and its unwillingness or inability to provide security for the ship’s release;

(9)    the likely intervention of claimants with higher priority;

(10)    humanitarian considerations in relation to the crew; and

(11)    whether, if the claimant obtains judgment in its favour, the judgment can be satisfied by the defendant without the need to sell the ship in any event.

11    In this case, all the facts point to the ship having been abandoned. Her initial call to the Point Henry Pier was essentially one of two days, from 17 June 2023. She has not moved since, and all the plaintiff’s efforts prior to and since the arrest to make contact with the owner have been to no avail.

12    In that regard, I refer to paragraphs [5]-[6] and [12]-[13] of Mr Farnsworth’s 13 July 2023 affidavit and paragraphs [12]-[17] of his 1 August 2023 affidavit, where he deposed:

The claim in respect of which the arrest is sought concerns the berthing of the Ship at the Point Henry Pier, Port of Geelong, a facility controlled, operated and managed by the Plaintiff, pursuant to an Application to Berth (Application) submitted by the Owner of the Ship, to the Plaintiff on 16 June 2023. Specifically, the Application was for the Ship to Berth at Point Henry Pier from 17 June 2023 to 18 June 2023 at 4pm. Exhibited at “GF-1” is a copy of the Application submitted by Monson Shipping Agency on behalf of the Owner, and GeelongPort new customer application form and Insurance Policy Schedule submitted by the Owner.

The Ship was not removed on 18 June 2023, and as of today continues to be berthed at the Point Henry Pier. Despite repeated attempts, the Plaintiff has been unable to make contact with any representative of the Owner.

…

On 27 June 2023, the Plaintiff sent a letter of demand to the Owners of the Ship. Exhibited hereto and marked “GF-5” is a copy of this letter.

On 4 July 2023, I sent a final letter of demand to the Owners of the Ship. Exhibited hereto and marked “GF-6” is a copy of this letter. No acknowledgement of or response to the letter has been received.

…

On 20 July 2023, our office posted copies of the writ, warrant and my First Affidavit to the registered offices for R J Fishing and Voyager Seafoods. Copies of these letters are exhibited to the affidavit at pages 34 to 73 (R J Fishing) and pages 74 to 113 (Voyager Seafoods) of “GF-7”.

Further, without waiving privilege, I am informed by Elias Anastasiou, ‘General Manager - Commercial’ at GeelongPort and verily believe that:

(a)    On 21 July 2023 at about 5:07pm he had a telephone call with Antonio Muollo of Voyager Seafood (who appears as a director on the company search at “GF-7”);

(b)    Mr Anastasio told Mr Muollo that the Ship had been abandoned at Geelong Port; and

(c)    Mr Muollo told Mr Anastasio that he had sold the Ship and has no interest in the Ship.

Further, on 24 July 2023, I directed Melanie Long, a solicitor at Holding Redlich working under my supervision, to telephone R J Fishing’s registered office. R J Fishing’s registered office is listed as Stone Accounting and Business Advisory in Portland, Victoria. A copy of Ms Long’s file note of this conversation is exhibited to this affidavit at page 114 of the “GF-7”.

Following this telephone conversation, I was copied into correspondence between Ms Long and Paul Wright (paul@stoneaccounting.com.au). A copy of this correspondence is exhibited to this affidavit at pages 115 to 117 of “GF-7” which states in part:

... the express post envelope was received by our office this morning, and I contacted the client [Sole Director of R J Fishing] who came and collected it this morning in person.

On 24 July 2023, our office sent an email attaching our letter of 20 July 2023 to tonywicks10@icloud.com, being the email used by R J Fishing on its Application (as defined in my First Affidavit and exhibited at “GF-1”). A copy of this email is exhibited to this affidavit as page 118 of “GF-7”.

R J Fishing has not contacted anyone at Holding Redlich in response to the communications above or the proceedings generally. Similarly, and without waiving privilege, I am informed by Mr Anastasiou and verily believe that GeelongPort has not received any communication from R J Fishing in response to any of the above correspondence or the proceedings generally.

13    I also accepted the plaintiff’s submission that the costs of maintaining the ship under arrest may become disproportionate to her value as a reasonable prospect. The berthing fees continue to accrue in the amount of $2,117.68 plus GST per day.

14    As I said, I heard the application on 4 August 2023. That was the day the defendant was due to file an appearance. Rather than adjourning the hearing for a day or two, the hearing proceeded on the basis that counsel for the plaintiff gave an undertaking that if, against all odds, the defendant by next Tuesday (8 August 2023) made an application to set aside the sale orders, “we wouldn’t take a point, in the context of such an application, on the basis that the relevant person failed to appear in accordance with the rules”. (As it happened, no appearance was filed).

15    As to the issue of repositioning of the ship, r 47(1) of the Admiralty Rules 1988 (Cth) provides that a Marshal who arrests a ship has the custody of the ship. Rule 47(2) provides that the Marshal must, unless the court otherwise orders, take all appropriate steps to retain safe custody of, and to preserve, the ship. Such steps expressly include moving a ship that is under arrest: r 47(2)(d).

16    Rule 50 of the Rules provides that the court may, at any stage of a proceeding, make appropriate orders with respect to the preservation, management or control of a ship that is under arrest in the proceeding. That is the power relied on here.

17    There are a number of cases in which the court has granted permission for a ship to move from one port to another whilst under arrest. They are conveniently summarised by Stewart J in Viva Energy Australia Pty Ltd v MT “AG Neptune” [2022] FCA 522 at [22]-[31].

18    At [32] of his Honour’s reasons, he said:

It is apparent that the power under r 50 is broad. There are an infinite variety of factual circumstances in which it might come to be exercised, which makes it difficult and inapposite to attempt to identify a definitive list of relevant considerations; just what will be relevant to consider will depend on the facts and circumstances of the particular case in light of what is sought to be achieved. Nevertheless, considerations of convenience, or practicality, and cost will likely always be relevant, but they may have to give way to paramount considerations of the safety of the vessel, the public and the public interest. The at times competing interests of the various interested parties will also have to be considered, including any risk to the plaintiff’s security in the arrested vessel, and the Marshal’s responsibility to retain safe custody of, and to preserve, the ship.

19    In this case, it seemed to me that “considerations of convenience, or practicality, and cost” pointed mostly to the good sense of moving the ship to the northern side of the Bulk Grain Berth, as the plaintiff suggested.

20    As Mr Farnsworth deposed, the Port Henry Pier berth, as a result of the ship’s presence there, is unavailable to larger vessels which could otherwise be accommodated there; and is unable to accommodate as many small vessels as it would otherwise be able to.

21    He further deposed that there were two readily viable options with respect to the repositioning of the ship – shifting her ahead about 30 metres, or shifting her to the northern side of Bulk Grain Beth which is located west of the Port Henry berth, within the Port of Geelong. Both options would involve the use or assistance of a tug.

22    He deposed, however, that the plaintiff’s preferred option was to reposition the ship to the Bulk Grain Berth because it has better protection, better access (especially in the context of a sale), and enables greater overall efficiency in the use of Port facilities. There is no difference in the ongoing berthing fees.

23    I was told from the Bar table that the distance from the Port Henry Pier to the Bulk Grain Berth is about six nautical miles, and that the tug costs associated with the removal would be something in the vicinity of $30,000.

24    I raised with counsel the possibility (perhaps remote) that the ship, on closer inspection by the Marshal or the tug operators, might not be able safely to make the trip across the bay, so he sensibly suggested the addition of the parenthetical words in order 7.

Associate:    

Dated:    7 August 2023