Federal Court of Australia

Delta Corp Ship Management DMCCO v The Ship “Caledonian Sky” [2023] FCA 1058

ORDERS

THE COURT ORDERS THAT:

1.    The vessel be released from the arrest of the plaintiff, Delta Corp Ship Management DMCCO.

2.    The Registrar give notice of the release to the Marshal in accordance with Form 19A.

3.    Costs reserved.

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

REASONS FOR JUDGMENT

(Revised from the transcript)

STEWART J:

Background

1    The small passenger vessel Caledonian Sky was arrested in Roebuck Bay, Broome in Western Australia on 25 August 2023. The vessel had docked there at the end of the winter touring season of the Kimberley coast before the onset of the wet.

2    The plaintiff is Delta Corp Ship Management DMCCO, a corporation registered in Dubai. It asserts that it was appointed by the bareboat charterer of the vessel, Delos Cruise Ventures II, under a BIMCO SHIPMAN 2009 Standard Ship Management Agreement as the vessel’s technical and crew manager. It says that Delos owes it a substantial sum of money under that agreement. It claims damages, interest and costs.

3    In the short while that the vessel has been under arrest, a number of logistical challenges have been presented to the Admiralty Marshal in the maintenance of the custody of the vessel. It is not necessary to go into those, save to observe that it is well-established that for various reasons Broome is an expensive and challenging place to arrest a vessel and to maintain it under arrest.

4    On 28 August 2023, Delos issued a caveat against release from arrest of the vessel under r 10 of the Admiralty Rules 1988 (Cth). Delos describes its relationship with the vessel as demise charterer. It does not otherwise identify the basis of any claim that it asserts in rem.

5    On 31 August 2023, Nordic Hamburg Shipmanagement GmbH & Co KG (Nordic Germany) and Nordic Hamburg Shipmanagement (HK) Ltd (Nordic Hong Kong) both issued caveats against the release of the vessel from arrest. Both of those companies have also commenced proceedings by issuing writs in rem, proceedings WAD213/2023 and WAD214/2023 respectively.

6    Nordic Hong Kong alleges that pursuant to a crew management agreement dated 22 August 2023, Delos appointed it to supply crew for the vessel. It claims that Delos has failed to pay the agreed crew management fee and expenses. Nordic Germany alleges that on 25 August 2023 it was appointed by Delos to manage the vessel under a BIMCO SHIPMAN 2009 Standard Ship Management Agreement. It claims that Delos has failed to pay the agreed crew management fee and expenses.

7    At approximately 5.00pm AWST on Sunday 3 September 2023, Delta furnished by email to the relevant Admiralty Registrar an application for the release of the vessel from arrest on Form 18A. That was said to be under r 51(3) of the Admiralty Rules. The form disclosed the three caveats against release.

8    The form contains the requisite undertaking that the lawyer for the plaintiff will pay the costs and expenses of the Marshal in relation to the custody of the ship while under arrest, including the costs and expenses associated with the release of the ship.

9    As the application for release had not been served on the three caveators, shortly before 7.00pm AWST the same evening, the Admiralty Registrar forwarded it to them. The Admiralty Registrar noted that pursuant to r 51(5) an order for release of the ship must not be made by the Registrar in circumstances where a caveat against release from arrest of the ship is in force unless the court so orders. At the same time, the Registrar referred Delta’s application for release of the vessel from arrest to my Chambers as Admiralty list judge.

10    The application for release came before me in a prearranged case management hearing at 11.00am the next day, ie, Monday 4 September 2023, in Sydney. Advocates for both the Nordic companies and Delos said that they had not yet had sufficient time to take instructions on what attitude their clients took to the release application, and, more particularly, whether they intended to arrest the vessel and how quickly they could do so – made more challenging by their clients being overseas in different time zones. Since they had only had notice of the release application late on Sunday evening, and because I was not satisfied that any particular prejudice would result, I did not deal with the application immediately, but listed it for 3.00pm. That is now the application before me.

The applicable principles

11    Rule 10 of the Admiralty Rules provides that if a ship is under arrest in a proceeding, a person may file in the court by which the arrest warrant was issued a caveat in accordance with Form 4 against the release from arrest of the ship. That is what the Nordic companies and Delos did.

12    Rule 51(3) provides that the Registrar may order the release of a ship that has been arrested if, in a proceeding, the party who made the application for the ship to be arrested has, relevantly, made an application to the Registrar in accordance with Form 18A. However, r 51(5) provides that if a caveat against the release from arrest of the ship is in force, an order must not be made under subrule (3) in relation to the ship “unless the court so orders”.

13    Rule 51(7) provides that if the Registrar orders under subrule (3) that a ship be released from arrest, the Registrar must give notice of the release to the Marshal in accordance with Form 19A.

14    Rule 52(1) provides that a party to a proceeding may apply to the court in accordance with Form 19 for the release of a ship that is under arrest in the proceeding. Subrule (2) then provides that if a caveat against release of the ship is in force, a copy of the application must be served on the caveator.

15    There may be some debate about whether an application that is brought under r 51(3) for the release of a vessel in respect of which there is a caveat against release, and which therefore cannot be granted by the registrar without an order of the court, is then determined by the court under r 51 or r 52.

16    In my view, the court’s power to order the release of the vessel in those circumstances arises from the provisions of r 51(5), rather than r 52. That is because the application remains an application under r 51(3), but it cannot be granted by the Registrar unless the court so orders. It is r 51(5) that imposes that limitation, and it is under that rule that the court then decides whether or not to so order. That is therefore the provision under which I will consider Delta’s application, although it may ultimately make little difference. If in the circumstances of there being a caveat against release and r 51(5) thus applying to an application under r 51(3) it was required that there be an application to the court under r 52(1) on Form 19, I would in the present circumstances dispense with that requirement under r 80(2). That is because the requirement would serve no purpose.

17    The question arises as to the relationship between the plaintiff’s interest in having the vessel released from arrest, including to bring its liability for the Marshal’s costs and expenses to an end, and any caveator’s interest in maintaining the arrest until such time as it can itself effect the arrest of the vessel.

18    In my view, the overriding consideration is the interests of the plaintiff and, obviously, the owner or other party responsible for the operation of the vessel who is prejudiced or otherwise inconvenienced by the continuing arrest. The caveat procedure is designed for the benefit of the caveator to enable it to ensure that it gets notice of any impending release so that it can then arrest the vessel if it chooses to do so; the idea is that it is wasteful and unnecessary for a plaintiff in a different action to arrest a vessel if the first arrest is still in place. However, once the first arrest might come to an end because a release application has been filed, the prospective second arresting plaintiff must move quickly – as quickly as it would have had to move had there been no first arrest.

19    It is an entirely unfair burden on the plaintiff to delay the release of the vessel for which the plaintiff has otherwise qualified, including by giving the necessary undertaking, merely to give a caveator further opportunity to get itself organised. When a caveator files a caveat against release, it should be and remain in a position to immediately seek a warrant for the arrest of the vessel in the event that an application is made for the release of the vessel from arrest – there is no obvious reason why such an application should be delayed for the convenience of a caveator. The caveator’s right is to have notice of an application for release so that it can arrest the vessel, not so that it can delay the release in order to give itself more time to act.

The present case

20    In the present case, Delos has now lodged for filing a withdrawal of caveat on Form 5. Delos, having taken the opportunity that I gave it earlier in the day to consider its position, has thus decided not to oppose Delta’s application for release of the vessel. Its position need not be considered further.

21    The position of the Nordic companies is different. Nordic Germany has indicated that it is ready to apply for an arrest warrant right now, but it has opposed the immediate release of the vessel as a precaution. In that regard, it wants to be sure that the vessel has not sailed from the jurisdiction before its application for an arrest warrant can be dealt with and any arrest thereby authorised can be effected.

22    As explained, that is not a proper basis to delay the release of the vessel from arrest. In any event, in the present factual circumstances of the vessel – which I need not go into – there is, in my assessment, barely any risk of it departing jurisdictional waters before Nordic Germany’s arrest can be dealt with. There is therefore no justification for delaying the release of the vessel from the arrest by Delta.

23    As mentioned, Delta’s solicitor has given the necessary undertaking. Sufficient notice has been given in the circumstances to the caveators and Delta is entitled to the release of the vessel. For those reasons, I order:

(1)    The release of the vessel from the arrest at the instance of Delta as plaintiff, in proceeding NSD902/2023.

(2)    The Registrar give notice of the release to the Marshal in accordance with Form 19A.

Associate:

Dated:    4 September 2023