Federal Court of Australia

Burrows v The Ship ‘Merlion’ (No 2) [2024] FCA 429

ORDERS

THE COURT ORDERS THAT:

1.    The first defendant file a defence in the proceedings by 4.00pm on 3 May 2024.

2.   If Order 1 is not complied with, judgment be entered for the plaintiff in the terms of the declaration sought at paragraph 90(ii) of the Amended Statement of Claim, filed on 6 December 2023, pursuant to rule 5.23(2)(e) of the Federal Court Rules 2011 (Cth).

3.    A copy of these Orders be served on the first defendant forthwith.

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

REASONS FOR JUDGMENT

SARAH C DERRINGTON J

1    Pursuant to an interlocutory application filed on 22 March 2024, the plaintiff, Mr Terence Roy Burrows, seeks an order pursuant to r 5.23(2)(d) of the Federal Court Rules 2011 (Cth) for judgment in default of appearance in relation to the prayer for relief in paragraph 90(ii) of his Amended Statement of Claim (ASOC) filed on 6 December 2023. Paragraph 90(ii) seeks a declaration that Mr Burrows has been the sole legal and beneficial owner of the ship, The Merlion, since December 2022. Alternatively, Mr Burrows seeks an order pursuant to r 5.23(2)(e) of the Rules that judgment for Mr Burrows in the terms of paragraph 90(ii) is to take effect if the first defendant, Mr Glenn Thurlow, does not file an appearance in accordance with Form 9 of the Admiralty Rules 1988 (Cth) within 7 days.

2    Mr Burrows’ application is supported by an affidavit of his solicitor, Mr Benjamin Noel Sewell, filed 22 March 2024 (Sewell Affidavit).

3    By writ filed 13 October 2023, Mr Burrows purported to commence proceedings in rem against The Merlion. The writ named Mr Thurlow as a “relevant person” within the meaning of s 3 of the Admiralty Act 1988 (Cth). On 23 October 2023, The Merlion was arrested by the Admiralty Marshal of the Federal Court of Australia, pursuant to an arrest warrant taken out by Mr Burrows on 13 October 2023, in support of his claims for the following relief:

(a)    a declaration that he is the sole beneficial owner of The Merlion;

(b)    an injunction requiring Mr Thurlow to give possession of, or alternatively transfer title to, The Merlion pursuant to s 232 of the Australian Consumer Law (ACL) (schedule 2 to the Competition and Consumer Act 2010 (Cth)) or the Federal Court of Australia Act 1976 (Cth) (FCA Act); and

(c)    damages for conversion, in detinue, and under the ACL.

4    Mr Thurlow filed a conditional appearance on 3 November 2023. By interlocutory application filed on 28 November 2023, he sought, inter alia, to contest the in rem nature of the claims brought against The Merlion, thereby challenging the Admiralty jurisdiction of this Court in relation to the causes of action said to ground the prayer for relief. Five substantive causes of action were pleaded in the ASOC:

1.    that The Merlion was held on trust for Mr Burrows by Mr Brett Thurley, the sole director of Pacific Motor Yachts Pty Ltd (PMY), or by PMY, and that – accordingly – the transfer of The Merlion to Mr Thurlow was done in knowing breach of trust, pursuant to Barnes v Addy (1874) LR 9 Ch App 244;

2.    that certain transfer documents executed in July 2023 were a sham, such that Mr Burrows was entitled to a declaration that he is, and was at all times, the legal and beneficial owner of The Merlion;

3.    that any transfer of ownership to Mr Thurley, and then from Mr Thurley to Mr Thurlow, if effective, should be set aside under s 228 of the Property Law Act 1974 (Qld);

4.    that PMY and Mr Thurley made a number of misleading or deceptive representations in breach of s 18 of the ACL, and that Mr Thurlow was a knowing participant in those breaches; and

5.    that Mr Burrows has a right to immediate possession of The Merlion from Mr Thurlow in conversion or detinue.

5    In addition to his challenge to jurisdiction, Mr Thurlow sought an order for summary dismissal of the proceedings, pursuant to s 31A(2) of the FCA Act, in the event that any of the claims were within jurisdiction.

6    On 13 March 2024, I delivered judgment on the interlocutory application: Burrows v The Ship ‘Merlion’ [2024] FCA 220. I held that the alleged cause of action for breach of s 18 of the ACL was not a proprietary maritime claim actionable within the meaning of s 4(2)(a) of the Admiralty Act and, as a result, had been impermissibly commenced in the same proceedings as the in rem claims, contrary to r 18 of the Admiralty Rules. It was, therefore, struck out.

7    Each of the other causes of action were held to bear the legal character of a proprietary maritime claim, described in s 4(2)(a) of the Admiralty Act and accordingly, were within jurisdiction. In other words, Mr Thurlow’s challenge to jurisdiction largely failed.

8    Mr Burrows’ present application is premised on the basis that Mr Thurlow has not filed an appearance. By email dated 18 March 2024 sent to Mr Thurlow’s solicitor, Mr Stephen D’Emilio, Mr Sewell requested confirmation that Mr D’Emilio had instructions “to file a notice of appearance immediately” (Sewell Affidavit, p 394). Mr D’Emilio responded seven minutes later, saying “[n]oted Ben. I will seek instructions on the Appearance issue and come back to you” (Sewell Affidavit, p 396). The following day, Mr Sewell informed Mr D’Emilio that he had received instruction to apply for default judgment, but did not “propose to move on those instructions before tomorrow afternoon at 4pm”. He also confirmed that “no further notice of the default judgment application [would] be given to [his] client” (Sewell Affidavit, p 396). Mr Sewell deposed that he has neither received an appearance on behalf of Mr Thurlow, nor any further communication from Mr Thurlow’s lawyers to advise that he would be filing an appearance (Sewell Affidavit, [12]).

9    Mr Burrows’ application for judgment in default of appearance is, however, misconceived. The effect of a failed challenge to jurisdiction in circumstances such as these, where an appearance is required by the Admiralty Rules, and conditional appearances to contest jurisdiction remain within the usual practice of Admiralty, is to render the appearance unconditional. This was the effect of the precursor to the current Rules, being the Federal Court Rules 1979 (Cth) O 9 rr 6 (1), (2), (6), (7): Thasos Shipping Agency Co Ltd v The Owners of the Ship “Balakleya” [1998] FCA 520 per Tamberlin J.

10    As I have already observed, however, Mr Thurlow did more than simply challenge the jurisdiction. He applied for summary judgment and succeeded in relation to the claim said to arise out of the alleged sham. The character of this application was not merely defensive, as might be, for example, an application for security for costs: Interwest Ltd v Tricontinental Corporation Ltd (1991) 5 ACSR 621; Gensco Laboratories LLC v Care A2 Plus Pty Ltd (receiver appointed) (No 2) [2024] FCA 23. Having invoked the jurisdiction of this Court pursuant to s 31A(2) of the FCA Act, Mr Thurlow cannot now disavow his appearance. Indeed, he has waived the condition said to have been the basis for his appearance. Therefore, his purported withdrawal of his appearance does not provide a basis for the plaintiff to seek judgment in default of appearance. Rather, Mr Thurlow is to be taken as having filed an unconditional appearance.

11    Nevertheless, it is apparent from communications received by the Registry on 3 April 2024 and exchanged between the parties, whereby Mr Thurlow purports to withdraw his conditional appearance and states he “will take no further part in the proceeding”, that Mr Thurlow does not wish to continue the proceedings.

12    Despite the unorthodox approach taken by Mr Thurlow, the proceedings cannot be permitted to linger in circumstances where The Merlion remains under arrest. It is appropriate that orders be made to bring the proceedings to an end. I will therefore order, pursuant to r 5.23(2)(e) of the Rules, that there will be judgment for Mr Burrows in terms of paragraph 90(ii) of the ASOC, to take effect in 7 days, if Mr Thurlow does not file a defence in the proceedings within those 7 days.

Associate:    

Dated:        26 April 2024