Federal Court of Australia

Gordon v The Vessel “Southern Star” [2024] FCA 674

ORDERS

THE COURT ORDERS THAT:

1.    Until further order, while under arrest the vessel Southern Star (the vessel) be permitted to undertake charters in the possession of the relevant person (the owner) on the following conditions:

(a)    The vessel remain within the safe navigable waters of Port Jackson and the Parramatta River, never exiting through the Heads;

(b)    When not performing any charter or preparing therefor, the vessel be moored at its usual dolphin mooring at Snail Bay at the expense of the owner;

(c)    The owner maintain the vessel’s existing hull and machinery insurance;

(d)    The owner notify the Marshal of each charter of the vessel before the charter commences and of the return of the vessel to its mooring;

(e)    The owner keep its vessel Ambiance at its current swing mooring at Gladesville;

(f)    The owner not dispose of any interest in or encumber the vessel or the Ambiance with any security interest.

2.    The matter be listed for further hearing on 26 June 2024 at 2:15pm.

3.    Costs be reserved.

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

REASONS FOR JUDGMENT

STEWART J:

1    These are my reasons why, earlier today, I made unusual orders permitting the vessel Southern Star to trade whilst under arrest, subject to a number of conditions.

2    The Southern Star is a type of vessel well-known in Sydney, although more heard than seen, commonly known as a party boat. The vessel is a power catamaran, nearly 20m in length, was built in 1986, is equipped to entertain patrons on board and is certified to carry 197 passengers with three crew. The vessel is classed 1E which only allows it to operate in “smooth water operations”. The vessel’s insured value is $1 million.

3    The vessel is owned by AMM Entertainment Pty Ltd which charters it out on short-term charters for floating parties in Sydney harbour under the trading name My Harbour Cruises. AMM owns another vessel, the Ambiance, which is a slightly smaller powered monohull and one year older. It is traded in the same way although it is currently out of survey so remains at its swing mooring at Gladesville.

4    On 7 June 2024, the plaintiff, Anthony Edward Gordon, commenced a proceeding by issuing a writ in rem against the Southern Star. The writ names AMM as the “relevant person”, namely the person in respect of whom the claims in the writ are said to arise as owner of the vessel. At the same time, the plaintiff issued an application for an arrest warrant. In the affidavit supporting that application, the plaintiff identifies a number of claims that arise in relation to the Southern Star and the Ambiance. On their face, each of the claims is apparently a maritime claim, and although no express reliance is made in the writ on s 19 of the Admiralty Act 1988 (Cth), each claim is on its face apparently enforceable against the Southern Star under one or more of ss 15 (maritime lien in respect of Master’s wages or disbursements), 17 (owner’s liabilities) or 19 (surrogate ship).

5    In total, the principal sum of the claims amounts to the paltry total of $9,731.29.

6    On 11 June 2024, a Registrar of the Court issued a warrant for the arrest of the Southern Star.

7    On 14 June 2024, three caveats against release of the vessel from arrest – notwithstanding that there had not yet been any arrest – were issued. The caveats do not record the amounts of each caveator’s claims, although I was told that they are all small amounts. The caveators are conveniently all represented by the same solicitor who represents the plaintiff. They are:

(1)    Turramurra Music Pty Ltd

(2)    Spring Operation Pty Ltd

(3)    Jonathon Bensley.

8    On 17 June 2024, the Southern Star was arrested by an Admiralty Marshal at the Cabarita Point Marina and then moved under the direction of the Marshal to a berth at Cockatoo Island.

9    Late on 19 June 2024, AMM gave notice that it urgently applied for the release of the vessel from arrest. That application was listed before me first thing the next day, ie today.

10    The immediate urgency for the application for the release of the vessel from arrest arises from AMM having a charter for the vessel commencing at 6.00pm today.

11    The evidence shows that the plaintiff’s claims against the vessel are the subject of a current proceeding by the plaintiff against AMM in the NSW Local Court that was commenced in May 2023. AMM says that it has a cross-claim against the plaintiff in that proceeding for an amount of nearly $30,000 that exceeds the plaintiff’s claim. The cross-claim is said to arise from damage caused to the Southern Star by the plaintiff. The cross-claim is disputed.

12    The claim by the caveator Spring Operation Pty Ltd is also the subject of a current NSW Local Court proceeding that was commenced in September 2023. That claim is disputed on the basis that access to the relevant marina was hampered because it was damaged.

13    The claim by the caveator Turramurra Music Pty Ltd relates to the purchase of an amplifier by AMM. That claim is disputed on the basis that the amplifier is said to have been faulty.

14    It was said on behalf of AMM that it would immediately pay the claim of the caveator Mr Bensley.

15    The application for the release of the vessel was identified as being on several bases, including:

(1)    There was a lack of candour, or full and frank disclosure, in the application for the arrest warrant because the existing proceeding by the plaintiff against AMM in the Local Court was not disclosed – although that as a basis to release the vessel from arrest would appear to face some difficulty in the light of Atlasnavios Navegacao LDA v The Ship Xin Tai Hai (No 2) [2012] FCA 1497; 215 FCR 265 at [92] per Rares J.

(2)    An abuse of process on account of the existing proceeding in the Local Court, the small value of the claim and the disproportionate cost in effecting and maintaining the arrest.

(3)    There being no risk of the vessel leaving Sydney harbour on account of its restricted certification and undertakings that AMM and its director are prepared to give.

(4)    AMM offered to pay the whole of the plaintiff’s reasonably arguable best case plus interest and costs into court as security – although a dispute about what that sum is and the threat of subsequent arrests by at least two of the caveators complicates that as an immediate basis for release.

(5)    AMM and its director offered to execute a bail bond for all of the claims.

(6)    AMM offered the Ambiance, which, as mentioned, is currently not trading because it is out of survey, as security for the claims coupled with undertakings from AMM and the director that the Ambiance would not be sold or further encumbered.

(7)    AMM offered undertakings that neither vessel would leave Sydney harbour.

16    During the course of the hearing it emerged that the plaintiff and the caveators would be prepared to accept a letter of undertaking (LOU) from AMM and its director as security for all the claims in return for releasing the Southern Star from the arrest and, in the case of the caveators, not arresting the vessel or the Ambiance for the claims. The posited LOU would be on the basis that the claims are litigated in the Local Court and that the LOU would stand as security for any settlements or judgments that may eventuate. However, it was apparent that there was a likelihood that negotiating and settling the final terms of an LOU would likely take a day or so, and certainly more than the approximately six hours remaining before the next charter was due to commence.

17    In light of that, attention turned to what interim arrangement could or should be made. Given the urgency, no immediate short-term security option was viable which led in turn to consideration of the vessel being permitted to trade while under arrest.

18    The relevant principles with regard to the power and discretion of the court to make orders with regard to a vessel under arrest are identified with reference to prior authority in Viva Energy Australia Pty Ltd v MT “AG Neptune” [2022] FCA 522 at [18]-[32]. As was said there at [32]:

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 the present case, the following considerations cause me to conclude that to permit the vessel to trade whilst under arrest and subject to strict conditions is the best course.

20    First, there appears to be a substantial likelihood that the question of long-term security will be agreed within a few days, if not more quickly. The postulated agreement has the advantage of also including the caveators which will remove the risk and attendant expense of further arrests. The parties should be given the opportunity to reach that agreement.

21    Secondly, the vessel was required for previously arranged employment later on today. Loss of that employment would cause losses to AMM, which would potentially be able to be passed on to the plaintiff in due course under s 34 of the Admiralty Act as damages for the maintenance of an arrest unreasonably and without good cause. Those losses might exceed the plaintiff’s claim and arrest expenses. In any event, the risk of future small claims litigation, whether by the charterer against AMM or AMM against the plaintiff, should be avoided if possible.

22    Thirdly, and relatedly, the plaintiff’s claim is very small and will in a relatively short time be overtaken by the arrest costs, particularly if the Marshal, and through the Marshal, the plaintiff, has to pay for the mooring or berthing of the vessel whilst under arrest. In that regard, the Marshal considered that the safest and most cost-effective place for mooring the vessel whilst under arrest was at Cockatoo Island at about $260 per day although incurred for a minimum of one month in the sum of $7,920. AMM is prepared to bear the berthing/mooring costs at the vessel’s usual dolphin mooring in Snail Bay while the vessel is under arrest if the vessel can be traded. In the meanwhile, the mooring provider at Cockatoo Island may be prevailed upon to waive the minimum charge.

23    Fourthly, because all the claims are small, both vessels offer more than adequate short-term security for the claims. I am satisfied that because there is only one registered security interest over one of the vessels, the Ambiance, which is said to be in an amount considerably less than the apparent value of the vessel (recently offered to be bought for $240,000), the Southern Star has current hull and machinery insurance and AMM committed to not selling or further encumbering the vessels or removing them from Sydney harbour, there is very little risk of the security that the vessels offer being prejudiced or denuded in the short term.

24    Finally, the plaintiff and caveators do not oppose the postulated orders.

25    For those reasons, I adjourned the hearing for the release of the vessel from arrest until the middle of next week and ordered that it be permitted to trade whilst under arrest on the following conditions:

(1)    The vessel remain within the safe navigable waters of Port Jackson and the Parramatta River, never exiting through the Heads;

(2)    When not performing any charter or preparing therefor, the vessel be moored at its usual dolphin mooring at Snail Bay at the expense of the owner;

(3)    The owner maintain the vessel’s existing hull and machinery insurance;

(4)    The owner notify the Marshal of each charter of the vessel before the charter commences and of the return of the vessel to its mooring;

(5)    The owner keep its vessel Ambiance at its current swing mooring at Gladesville;

(6)    The owner not dispose of any interest in or encumber the vessel or the Ambiance with any security interest.

Associate:

Dated:    20 June 2024