Federal Court of Australia

Iveco S.P.A v The Ship Höegh London [2024] FCA 901

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 52 of the Admiralty Rules 1988 (Cth), the defendant vessel be released from arrest.

2.    The requirement for notice of the release to be provided to the Marshal under Form 19A be dispensed with, noting that the Marshal is present and aware of these orders.

3.    The plaintiffs pay the costs of the interlocutory application for the release of the vessel from arrest.

4.    Within 7 days, the plaintiffs provide to the defendant the form of a proposed amended writ.

5.    Within 7 days thereafter, the defendant indicate its consent or otherwise to the amendment and failing that consent the plaintiff file an application for leave to amend its writ within a further 7 days or if such consent was given file the amended writ within that period.

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

REASONS FOR JUDGMENT

STEWART J:

1    Today I ordered that the motor vessel Höegh London be released from arrest and that the plaintiffs pay the costs of the interlocutory application for the release. These are my reasons for making those orders.

2    The vessel is a vehicle carrier with a gross tonnage of 68,871 tons. The evidence indicates that its registered owner is Höegh Autoliners Shipping AS.

3    Yesterday, an admiralty proceeding in rem was commenced by four named plaintiffs. Although the vessel is cited in the writ, the writ names the first defendant as Höegh Autoliners AS and the second defendant as Höegh Autoliners Shipping AS. It also names those two entities as the “relevant person”, ie as required by Form 6 with reference to r 15 of the Admiralty Rules 1988 (Cth) being the “relevant person” referred to in ss 17 or 18 of the Admiralty Act 1988 (Cth).

4    It is immediately to be observed that the writ impermissibly cites corporations rather than “a ship or other property” (see Admiralty Act, s 14) as a defendant, and it apparently seeks to make claims both in personam and in rem in the same proceeding – which is prohibited by r 18 of the Admiralty Rules. For those reasons, the writ will have to be amended.

5    By the writ, the plaintiffs allege that Höegh Autoliners Shipping AS is the owner of the vessel. It is alleged that in about May 2024, the plaintiffs engaged Höegh Autoliners AS “to ship cargo (trucks and trailers) onboard the Vessel, to various ports in Australia and to Durban, South Africa” – presumably it is intended to allege that the relevant corporation was engaged to “carry” the cargo rather than to “ship” it. It is alleged that the vessel encountered heavy weather while on her way to Port Elizabeth, South Africa which caused structural damage to the vessel and severe damage to the cargo. It is said that the plaintiffs’ cargo of vehicles and vehicle parts was damaged during the transportation.

6    Pursuant to a warrant of arrest issued on the plaintiffs’ application, the vessel was arrested at the Port of Brisbane at 13:38 AEST yesterday by Australian Border Force officers appointed as Admiralty Marshals. The vessel was at that time discharging cargo, which operations were allowed to continue while the vessel remained under arrest. The plaintiffs knew that the vessel was scheduled to depart from Brisbane at about 20:00 AEST.

7    Yesterday at 19:24 AEST, Mr James, as Australian solicitor for the owners of the vessel, sent an email to Mr Newey, the plaintiffs’ Australian solicitor. The email attached a letter of undertaking (LOU) issued by Gard (UK) Ltd as agent for Gard P&I (Bermuda) Ltd, the vessel’s protection and indemnity club (the Club). The LOU is in the usual form including as to an amount asserted in the email as being sufficient to meet the plaintiffs’ “best arguable case plus interest and costs” (ZAR64,869,630 plus A$7,441,876). The LOU states that the Club warrants that it has been informed by the shipowners that the vessel was not on demise charter at any material time. Mr James requested Mr Newey to confirm by return that the plaintiffs would take immediate steps to release the vessel from arrest or to consent to its release.

8    The evidence reveals that there has been ongoing correspondence between the parties through South African attorneys, Cox Yeats for the plaintiffs and Bowmans for the vessel owners and/or Club, for several weeks. An affidavit of Andrew Craig Clark, a partner of Cox Yeats, in a proceeding brought in the KwaZulu-Natal Local Division, Durban, of the High Court of South Africa (exercising its admiralty jurisdiction) for access to the vessel for inspection and preservation of evidence, states that the cargo of motor vehicles and parts was loaded in Antwerp, Belgium and Santander, Spain for carriage to the ports of Durban, Fremantle, Melbourne, Port Kembla and Brisbane. Bills of lading are relied on in respect of which Höegh Autoliners AS appears to be the carrier.

9    The point for present purposes is that although Mr James’s email presenting the LOU was only during the evening yesterday in Australia, that was in the morning in South Africa. At 11:09 South African Standard Time (SAST), Bowmans sent the LOU to Cox Yeats saying that they had been advised that it “constitutes sufficient security as a matter of Australian law” and urging the plaintiffs to “immediately uplift the arrest.”

10    Cox Yeats replied at 16:30 SAST raising “reservations” as to whether the LOU constitutes sufficient and proper security, including:

We note that for the first time, your clients have indicated that the vessel was not on demise charter at the time that the cargo was damaged. In the circumstances, we understand that at the time that the cargo was damaged, the vessel was on time charter to Hoegh Autoliners AS, the named carrier under the bills of lading – for both the SA cargo and Aus cargo. This issue is important to the wording of the applicable LOU as it must be given on behalf of the party against which claims will be brought, i.e.: the named carrier under the bills of lading which as far as we can tell is not the registered owner of the vessel, being Hoegh Autoliners Shipping AS.

… The signed LOU that has been presented is issued only on behalf of Hoegh Autoliners AS. In our view, subject to the input of our Australian counterpart, this discrepancy is fundamental to the assertion that the LOU constitutes sufficient and proper security.

11    Bowmans replied almost immediately asserting that the plaintiffs were not entitled to security other than against the shipowner. Bowmans later advised that cargo operations were complete and that the vessel was being delayed by the continued arrest.

12    Returning to Australia, at 07:26 AEST today, Mr James again wrote to Mr Newey. He addressed various issues raised by Cox Yeats on behalf of the plaintiffs in South Africa overnight, including asserting that:

It is trite that the vessel can only be arrested and security obtained for claims against the owners and not other parties. To refuse to release the vessel from arrest on this basis is plainly wrongful.

13    Mr Newey replied at 10:40 AEST, stating the following (as written):

An action in rem has been commenced against the owner and carrier. It is directed against the ship itself.

The ship was not on demised charter.

The action in rem is available against:

(i)     the owner or charterer of a ship;

(ii)     a person in possession or control of a ship; or

(iii)     a person for whose wrongful acts or omissions the owner, charterer or person in possession or control of a ship is liable

Adequate security must be provided by both the owner and carrier.

We reject your contention that it is only the owner that must provide adequate security.

We invite your client to provide a replacement LOU which incorporates provision of security by the owner and carrier. If that cannot be obtained in the short term we invite you to procure an undertaking from your client to do so and confirm the terms of the undertaking.

…

We would recommend to our clients that they consent to a release from arrest provided:

(i)     a replacement LOU is provided to our clients which includes the provision of security by both the owner and carrier; or an undertaking is provided to provide that replacement LOU within 48 hours; …

14    At about the same time, my chambers received notice of an urgent application by the owner of the vessel for its release from arrest on the basis that adequate security had been provided. I listed that application for 11:45 AEST. When it was called, Mr O’Dowd, who appeared for the plaintiffs, explained that although he had not had the opportunity to consider the matter he was instructed that the plaintiffs maintained their position that they were entitled to security that would answer to any liability of the contractual carrier. I then stood the matter down to 12:30 AEST to enable the plaintiffs’ lawyers further time to consider their position and take instructions.

15    When the matter was recalled at 12:30 AEST, Mr O’Dowd said that he could not advance any submission against an order for the release of the vessel but that because of time differences between here and where his solicitors had to take instructions from he was not in a position to consent on behalf of the plaintiffs to the release of the vessel.

16    Save in one respect which is not presently relevant (and which is no doubt why he left it out), Mr James is absolutely correct in having stated that it is trite that the vessel can only be arrested and security obtained for claims against the owners and not other parties. The exception is, of course, demise charterers. The Admiralty Act is very clear in that regard. Under s 17 a plaintiff can proceed in rem on the basis of the shipowner’s liabilities, and under s 18 on the basis of the demise charterer’s liabilities. There is, however, no basis to pursue an action in rem in respect of the in personam liability of a party having some other relationship with the ship, such as being the time charterer.

17    The result is that the assertion that was maintained on behalf of the plaintiffs right up until the matter was recalled at 12:30 AEST was always unsustainable. Also, the assertion by Cox Yeats that there was late advice from the vessel’s owner that the vessel was not on demise charter is not to the point. A plaintiff’s interest in knowing whether or not there was a demise charter at the time their claim arose or at the time that the proceeding against the vessel is commenced is to ensure that they have a justifiable claim against the ship, ie that they have not sued in respect of the wrong person’s liability. For example, a claim in tort based on the negligence of the Master and crew of a demise-chartered vessel will typically properly be a claim against the demise charterer rather than the owner. However, in circumstance where the proceeding has already been commenced and the vessel arrested, the plaintiff is in no position to insist on being advised whether or not there was a demise charter in place at any material time. Moreover where, as here, the writ does not assert any claim in respect of a demise charterer’s liability, the existence of a demise charter is simply irrelevant to the question of whether security is adequate. For that reason, Bowmans was quite correct in asserting that in this proceeding the plaintiffs are not entitled to security other than against the shipowner.

18    The short point is this. It is a serious matter to arrest a ship, particularly a ship that is trading on a schedule and is imminently due to depart, as was the case here. A plaintiff must therefore be prepared to defend the basis upon which they have arrested a ship, and to be able to do so at very short notice. On an obvious and un-contestable point such as the one canvassed above with regard to obtaining security against the contractual carrier who is neither the owner nor the demise charterer, the need or desire to obtain instructions is no proper basis to delay the inevitable release of the vessel.

19    In view of the attitude taken on behalf of the plaintiffs not to consent to the release of the vessel against the provision of the LOU on the basis that it did not answer to a claim against the contractual carrier, the owners had no alternative but to bring their application for the release of the vessel from arrest. They were successful in that application. They are thus entitled to their costs.

20    I observe that it is understandable why, if they had not been advised that a time charter’s liability is not an available basis to arrest in Australia, Cox Yeats sought an LOU that answered to a claim against a time charterer. That is because although an action in rem in South Africa can also be brought only on the basis of the owners’ or demise charterer’s liability (leaving maritime liens to one side), there is the possibility of attaching the bunkers of the vessel as the time charterer’s property to found or confirm jurisdiction for a proceeding against the time charterer. I refer to ss 1(3), 3(4) and 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (RSA). An attachment of that nature is not available in Australia.

Associate:

Dated:    9 August 2024

SCHEDULE OF PARTIES