Ahrenkiel Pacific Services Inc v Fuel & Diesel Oil on board the vessel "Nand Nidhi"

[1996] FCA 14

NOT FOR GENERAL DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )        No  NG 23 of 1996
IN ADMIRALTY  )

BETWEEN:

AHRENKIEL PACIFIC SERVICES INC
  Plaintiff

AND:

FUEL AND DIESEL OIL ON BOARD THE VESSEL "NAND NIDHI"
  Defendant

CORAM:Lindgren J

PLACE:Sydney

DATE:12 January 1996

REASONS FOR JUDGMENT

In this matter at about 10 am yesterday morning, I made an order for the issue of a warrant for the arrest of the fuel and diesel oil on board the vessel "Nand Nidhi"; stood over further consideration of the motion of the plaintiff, to which I will refer as "Ahrenkiel", to 4.15 pm yesterday afternoon; and gave directions for service.  At 4.15 pm a solicitor appeared for Atlantic & Orient Shipping Co Ltd ("Atlantic") and indicated that his client would apply for appropriate relief this morning. 

It is not necessary for me in this judgment, which relates only to the question of costs, to give a detailed account of the background.  By the writ, issued on 10 January, 1996,
Ahrenkiel claims payment from the disponent owner of the vessel, Atlantic, of amounts totalling US$112,616.80.   The claim is a general maritime claim within para 4(3)(f) of the Admiralty Act 1988 (Cth). The claim arises out of the fact that fuel and diesel oil is said to have been on board the vessel when it was re-delivered by Ahrenkiel as sub-charterer to Atlantic on 5 January, 1996, in Port Moresby, and also out of the fact that there was allegedly an overpayment of hire, being hire in respect of a period after the time of re-delivery.

This morning counsel has appeared for Atlantic and also for a new sub-charterer from it, Universal Bulk Transport (Bahamas) Limited ("UBT").  Atlantic and UBT have filed in Court a notice of motion seeking various heads of relief.  One of these is that the bunkers on board the vessel be released from arrest.  I should say that the arrest was effected at Gove at apparently approximately 3.02 pm local time (4.32 pm Sydney time).  Unfortunately confirmation that the arrest had taken place at that time could not be communicated to the Marshal of the Court until quite some time later, a little after 4.00 pm Gove time (5.30 pm Sydney time), due to a difficulty in communications.

Part of the case made by Atlantic and UBT this morning is that on 9 January 1996 the vessel was delivered pursuant to a sub-charterparty between them.  The case made is that at the time when Atlantic delivered to UBT, namely 4.03 pm Gove time (5.33 pm Sydney time) on 9 January 1996, the property in the fuel and diesel oil passed to UBT.  The point made is that by the time of the issue of the warrant the property in the oil was no longer that of Atlantic.

This morning the hearing continued until 11.00 am when the solicitor for Ahrenkiel asked for a short adjournment so that discussions might take place.  After about half an hour, the parties had resolved the issues for urgent determination by way of consent orders.  One of those orders was that the bunkers be released from arrest. 

The vessel was to depart from Gove at 12 noon today, Gove time (1.30 pm, Sydney time) and the order was made prior to that time.  The bunkers were released from arrest at 11.43 am Gove time (1.13 pm Sydney time).  So that, so far as I am aware, the vessel has been able to depart on time.

The issue outstanding is that of the costs of the motion brought by Atlantic and UBT.  Atlantic and UBT say that there should be an order that Ahrenkiel pay their costs on an indemnity basis.  Ahrenkiel submits that there should be no order for costs, or that if there is to be one, it should be on the usual party and party basis.

The case for indemnity costs arises out of a communication which occurred by facsimile at about 2.11 pm (Sydney time) yesterday afternoon from the solicitors for Atlantic and UBT to the solicitors for Ahrenkiel.  Shortly, that facsimile made the assertion that the property in the oil had already passed from Atlantic to UBT on 9 January.  It said this:

"We refer to our telephone conversation earlier today and confirm that we act on behalf of Atlantic and Orient Shipping Co Ltd in relation to Ahrenkel [sic] Pacific Services Inc's proposed arrest of the vessel's bunkers.  As discussed, we have been instructed by our client that the vessel was delivered by them under a sub-timecharter to Universal Bulk transport (Bahamas) ('UBT') on 9 January 1996 and that property in the bunkers passed to UBT upon delivery.

We attach copies of the following documents for your consideration:-

1. Fixture re-cap dated 08.01.1996;

1. Telex from Freight Brokers Australia to Pacific Rim dated 08.01.1996;

1. Telex from the Master to UBT dated 09.01.1996;

1. Fax from Freight Brokers Australia to Pacific Rim dated 10.01.1996.

We have been instructed that the charterparty between our client and UBT has yet to be drawn up.  You will note from the fixture re-cap, however, that UBT took over the bunkers on delivery.  It is apparent from the Master's telex that the vessel was delivered 'AT PILOT STATION AT GOVE AT 1803 LT 9TH JAN 96'.  Freight Brokers Australia's fax confirms that UBT attended to the payment for hire and bunkers in accordance with the Master's telex as regards delivery.  Kindly note that we have obliterated any reference to the amount of hire which has been paid to our client.  Furthermore, the documents have been provided to you solely for the purposes of this dispute and are to remain strictly confidential between the parties.

We trust the attached documents satisfy your client that property in the bunkers passed to UBT on 09.01.1996.  Accordingly, we should be grateful if you would kindly let us know by return whether your client will be withdrawing its application to arrest the bunkers.

Finally, we confirm that we have been instructed to place your client on notice that our client reserves its rights to claim damages for wrongful arrest in the event that the bunkers are arrested."

The telex dated 8 January 1996 from "Freight Brokers Australia" to "Pacrim Melbourne", called a "recap" in the industry, contained a statement that UBT was to pay for and take over the bunkers on delivery together with payment of the first amount of hire, that is, the hire as between Atlantic and UBT.  What is said for Atlantic and UBT is that Ahrenkiel and its solicitors should have appreciated shortly after receipt of that facsimile that there was no case for an arrest to take place and that steps should have been taken to ensure that the arrest did not take place.

On any reckoning the solicitors for Ahrenkiel would have needed a little time to study the letter and attached telex and to obtain instructions on what was being put.  Nonetheless, there would have been time by the time when the matter came back before me yesterday afternoon at 4.15 pm for Ahrenkiel to have resolved its attitude.  In any event, it should have done so last night and avoided the necessity of any hearing this morning.

All that is put for Ahrenkiel in answer is that a particular sentence in the telex made it impossible for Ahrenkiel to be sure that the property in the fuel had passed.  This sentence reads:

"Otherwise as per 'Nand Rati' C/P DD 1.11.94, logically amended strictly in accordance with main terms plus the flwg alterations:..."

It is put for Ahrenkiel that because the charterparty dated 1 November 1994 was not seen by its solicitors until the hearing before me this morning, it could not be aware that the property in the oil had indeed passed.  However, I think that ultimately it is conceded, and in any event it is my view, that the words "chtrs to pay for and take over bunkers on delvy together with first hire" which occur earlier in the telex specifically deal with the matter and that the sentence relied upon by Ahrenkiel relates only to other matters. 

In substance this is the only argument put against the proposition that Ahrenkiel should have appreciated that the property in the oil had passed.  It is not an argument that I accept.  It should be noted that the solicitors for Atlantic and UBT made the position plain in their letter (quoted above) and no clarification was sought by Ahrenkiel or its solicitors.

An arrest is a serious step to take in the face of an assertion, supported by evidence, that the property to be arrested belongs to another company.  It is fortunate that the vessel was able to depart on time.  So far as I know, neither Atlantic nor UBT has suffered any loss from the arrest other than the legal costs incurred by them.
Although the solicitor for Ahrenkiel has put all that could be said against an order for indemnity costs, I think that all things considered it should have been clearly appreciated by or on behalf of Ahrenkiel, at least by the end of yesterday, that the case for arrest was non-existent.  In these circumstances I think that this is one of those exceptional cases where there should be an order for indemnity costs.  That order will, of course, be limited to the hearing this morning in so far as it relates to the obtaining of the order for the release of the property from arrest. 

Accordingly, the order of the Court is that the plaintiff pay the costs of Atlantic and Orient Shipping Co Limited and Universal Bulk Transport (Bahamas) Limited of those parties' motion heard this morning in so far as it seeks a release of the bunkers, those costs to be on an indemnity basis.

I certify that this and the preceding 6 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

Associate:

Dated:19 January 1996

Heard:       12 January 1996

Place:       Sydney

Decision:     12 January 1996

Appearances:  Mr I P Davis, solicitor, of Ebsworth & Ebsworth appeared for the plaintiff (respondent to the motion).

Mr P J King of counsel instructed by Middletons Moore & Bevins appeared for Atlantic and Orient Shipping Co Limited and Universal Bulk Transport (Bahamas) Limited (applicants on the motion).