Baltic Shipping Company v Dillon

[1991] HCATrans 259

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl13 of 1991

B e t w e e n -

BALTIC SHIPPING COMPANY

Respondent Appellant

and

JOAN NORMA DILLON

Applicant Respondent

Application for security for

costs

GAUDRON J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON WEDNESDAY, 12 SEPTEMBER 1991, AT 10.25 PM

Copyright in the High Court of Australia

Baltic(2) 1 12/9/91

MR A.W. STREET:  May it please the Court, I appear with my

learned friend, MR G.J. NELL, for the appellant,

respondent to the application. (instructed by

Norton Smith & Co)

MR P.E. KING:  May it please the Court, I appear for the

applicant, Mrs Dillon. (instructed by Dunhill

Madden Butler)

HER HONOUR: It is your application, Mr King.

MR KING:  Yes, it is, Your Honour. Does Your Honour have a

copy of our summons which was filed on 5 September?

HER HONOUR:  The 6th, perhaps.

MR KING:  Yes, Your Honour. In support of that is an

affidavit of Rodney Edward Withnell, sworn

5 September 1991.

HER HONOUR:	Yes, I also have that.
MR KING:	Your Honour, we have prepared an outline of

written submissions in support of our application

for security - - -

MR STREET:  I have a number of objections to that affidavit,

Your Honour, which I wish to take when my learned

friend seeks to read it.

HER HONOUR:  Yes.

MR KING:  - - - to assist the Court. I will hand those up.

I will supply a copy to my friend.

HER HONOUR:	Do you wish me to read that at this stage?
MR KING:	It may be convenient as an outline of our case,

Your Honour.

HER HONOUR:	Have you been provided with a copy?
MR STREET:	I have, Your Honour.	The only thing I would say

is that it may be more convenient simply to have,

first of all, the evidence put before the Court

before one embarks on submissions in that I think

there is both evidence that will - - -

HER HONOUR:  There are a number of legal issues. I mean,

they may be capable of simple resolution, but - - -

MR STREET: Having said that, Your Honour, I certainly do

not object - - -

HER HONOUR:  No, I was just wondering. It might perhaps be

better if I read the outline and indicate the

problems that I already feel about this matter.

Baltic(2)	12/9/91
MR KING:	I am happy to have the evidence examined first.

We prepared this outline of submissions to

indicate, Your Honour, the general thrust of the

way in which we put our case.

HER HONOUR:  There is some irony in the application itself,

is there not, being based on the notion that the collapse of the Soviet Socialist Republic brings

certain economic consequences for the western world

in its train that must be resolved here and now in

this action.

MR KING:  Mrs Dillon, all she can see is that the guarantee

of a judgment is collapsing in a very dramatic

fashion.

MR STREET:  Your Honour, I should object to the extent that

my learned's submissions trespass outside notice of

argument to the extent that they purport to be

matters of fact.

HER HONOUR:  Yes, I have noted that, Mr Street. I have read

the outline, Mr King.

MR KING:  My friend has indicated just now, apparently, that

he has some objections to the affidavit of

Mr Withnell. I am surprised that he has not

informed me about that before now, but however

perhaps if my friend can inform me now what they

are, we can go straight to those.

HER HONOUR:  Mr Street, that would seem to be convenient.

MR STREET: First of all, Your Honour, paragraph 6, the

second sentence starting "The other plaintiffs are

the subject of a stay", that is the subject of

objection. In its form, it is not admissible as

such. There is evidence that we will seek to put

on to say that is not the case. But in essence,

the form in which it is put there is objectionable

and we object to - - -

HER HONOUR:  What is wrong with the form?

MR STREET: If there is a stay, it is the order that is the

record that would prove whether or not there is a

stay. It is a conclusion as such. One would

produce what is either a transcript - - -

HER HONOUR:  Nothing much is going to turn on that, is it?

MR STREET: Only this, that it is not correct, Your Honour, and that is one of the very reasons why it should be in proper form.

HER HONOUR:	Thank you.	Is that the only objection?
Baltic(2)	3	12/9/91

MR STREET: That is the first objection. The next objection

that I take is to paragraph 8, the delay, starting

from the words "In respect of damages" down to the second-last sentence saying "not including costs", and again, Your Honour, in that regard the form of the material that has been put on is objected to.

It is by way of conclusions. It may have been

admissible to put on or annex copies of judgments

to identify what was the nature of the claims

raised in those proceedings and it may have been

admissible then to annex claims identifying the

nature of what would be each co-plaintiff's alleged

damages and their personal injuries, but to simply

seek by way of conclusion to draw something from a

judgment that is not admixed in that way, in my

respectful submission, is objectionable in form.

And the last sentence of paragraph (a), in so

far as it is a calculation I do not object, but in

so far as it is said to be evidence of what those

damages are, I object to it. Your Honour, can I

just interpose there. This is not a case where one

can assume that every co-plaintiff has suffered the

same injuries in any way that has been suffered by
either Mrs Muter, Mrs Simpson or Mrs Dillon and

Your Honour just cannot have presented in this

fashion, we respectfully submit, an attempted

assessment of quantum in this way, irrespective of

problems relating to the nature of it.

MR KING:  Your Honour, can I just interrupt my friend

because, with respect, we had asked him to identify

what the objections were. If my friend is going to

go through and dissect our affidavit before I have

had an opportunity to present it to you, then I

would rather, if I may, take the usual course and

read the affidavit and let him object as I go, but

if he is going to indicate as a matter of

convenience now which paragraphs he object to, that

may be a simpler way of dealing with it. But I do

not wish the course of our evidence presented to

you to be - - -

HER HONOUR:  Gentlemen, can you not work this out yourself?

I have another case in this list to hear. I would

have thought, really, there are more fundamental

aspects to this application than ..... First of all,

I would like to know where my power is in the

matter, I do not wish you to go to it at the
moment, and the extent of it and if you tell me

that this is under the Admiralty Rules, I wish to

know how they are made applicable in this

jurisdiction.

MR KING:  You are sitting, as it were, as a Court of

Delegates. That is an ultimate court of appeal in

Admiralty.

Baltic(2)	12/9/91
HER HONOUR:	I need to be satisfied of that.

MR STREET:  Your Honour, I will accelerate the event. I can

indicate I object to the balance of paragraph 8 in

whole. I object to the whole of paragraph 9, I

object to the whole of paragraph 10, I object to

the whole of paragraph 11, 12, 13, 14, 15, 16, 17

and 18.

HER HONOUR:  If there is a paragraph after 18 I think you

are safe, Mr King.

MR KING:	I did not catch that - - -
HER HONOUR:	Do you wish to object to 19?
MR STREET:	I do, in so far as it goes beyond mere

contention, if it is said to be evidence of the

fact.

MR KING:  So 9 is objected to, is it?

HER HONOUR: Yes, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and

19 so far as it involves evidence.

MR STREET:	Your Honour, I was specifically seeking to indicate that we do not take these objections of
form lightly; we take them in this case by reason of the nature of what is sought to be done in the
affidavit in this form.
MR KING:	At least my friend is being consistent with the

way he has run his case from day one in this

matter, Your Honour. What I would seek to do is

now read this affidavit and deal with the

objections.

HER HONOUR:	I am just wondering about that.
MR STREET:	I have no objection to Your Honour ruling on the objections after having heard argument if that was
convenient. If Your Honour proposed that course, then can I indicate there is evidence I wish to -
if that is my learned friend's case in-chief,
subject to a ruling on those - - -
HER HONOUR:	I think before we go to that, I would be

assisted if I could be told exactly what my power

is in this matter and where it comes from and if I

could hear argument as to any special
considerations that derive from the special nature

of an appeal to this Court by special leave. I

would have thought there were considerations in

this Court that were different from the ordinary

appellate court and I think - - -

MR KING: Yes, that is right.

Baltic(2)	12/9/91
MR STREET:	Your Honour, my only concern is this, that there are some affidavits that we do rely upon and I just
would like Your Honour to have the benefit of those
in my - - -
HER HONOUR:	I have seen all the - is there one or - - -

MR STREET: No, there are three. There is an affidavit of

Mr James of 10 September that Your Honour has

because that has been filed. There are two further affidavits that we seek to rely upon, both of which

have been served, one by Mr James of

11 September 1991 and I seek to file that in Court

and seek to read it, and second, an affidavit of

Louise Mary Gillespie of 11 September and again I

would seek leave to file it in Court and read that,

as well as the affidavit of Mr James of

10 September.

HER HONOUR:	They have been served?
MR STREET:	They have, Your Honour.
HER HONOUR:	Is there any objection to this course, Mr King?
MR KING:	We got by fax this morning the third affidavit,

and I think the second. There is no objection to

the first affidavit of Mr James except for three

words to which I will make reference now, if that

is appropriate. At paragraph 4(ii) it is

asserted - what is done is it is an information on

information on belief. A Mr Vote who is stated in the affidavit as the Line Manager of Opal Maritime Agencies, which apparently is the ship's agent in
Australia, makes an assertion about the ownership

of six vessels and the three words in

paragraph 4(ii) "by the Appellant" we object to,

but we have no other objection to the whole of that

affidavit. We do not object to anything as to form

in either of the other two affidavits except in

relation to Mrs Gillespie's affidavit, she is the

cost consultant, we object to the whole of that on	relevance, but we would accept that you would read
that, Your Honour, and determine for yourself
whether it is relevant or not.

HER HONOUR:  Yes, thank you.

MR STREET: Your Honour, there are then two other matters

that we ·seek to adduce in evidence: both are

probably matters of the record, but for more

abundant caution, we seek to tender them.	One is a
copy of the judgment of His Honour

Mr Justice Mahoney in a stay application before the

Court of Appeal dated 21 February 1991, and the

second is a notice of discontinuance in proceedings

Baltic(2) 6 12/9/91

that were commenced, being these proceedings,

against the Union of Soviet Socialist Republics.

HER HONOUR:  I receive the judgment and I will accept the -

is it a copy of the notice of discontinuance?

MR STREET: It is a copy of the notice.

HER HONOUR: Is there any objection to the copy - - -

MR KING:  No, Your Honour.

HER HONOUR: It can become exhibit Sl.

EXHIBIT:  Exhibit Sl .... Judgment and copy of notice of

discontinuance

MR STREET: That is the evidence for the defendant.

HER HONOUR:  Thank you.

MR KING:  I perhaps should indicate this, Your Honour. When

Mr Withnell, my solicitor, was informed originally

that there would be some evidence on from Baltic
Shipping Company that they still trade to

Australia, we did indicate that we wished to cross-

examine in relation to this evidence but it now

appears we are - I will not say thwarted, but

prevented from doing that because what we have got

is an affidavit on information and belief from the

solicitor. We do not seek to cross-examine him

about what his client would or would not be

doing - - -

MR STREET:  I object

MR KING: Just a moment, let me finish, please.

MR STREET:  I object to my learned friend asserting things

from the Bar table of fact.

MR KING:  You will get your chance. We do not wish to be

taken that we accept everything on information and

belief that is contained in paragraph 4 of the

affidavit of the defendant's solicitor.

HER HONOUR:	Yes.
MR STREET:	Your Honour, the solicitor is available for cross-examination, if that can be noted.

HER HONOUR: There are other solutions to this problem, are

there? Do you wish further evidence called? Do

you wish evidence to be made -

MR KING:  No, we do not. The defendant has taken a certain

course as to how it proposes to inform the Court of

Baltic(2) 7 12/9/91

its ability to meet the judgment and the costs but

the point I am making is that we would have thought
that it would have been preferable to have had an

affidavit on from the company, rather than all from

its company's representative, rather from its

solicitor, which cannot be effectively tested.

HER HONOUR: That may simply mean adjournment, for a long

time.

MR KING:  We do not seek an adjournment.

HER HONOUR:  I see, thank you. I shall read the affidavits

that have been handed up today. Yes. I do not

think there is any point in ruling on the evidence

at this stage.

MR KING:  We just take the view, Your Honour, that all the

evidence should be received and read subject to

questions of relevance to be dealt with by

Your Honour as the matter proceeds.

HER HONOUR: 

You have no other evidence you wish to call?

MR KING: 

No, Your Honour.

HER HONOUR: 

And you have none, Mr Street?

MR STREET: 

No, Your Honour.

HER HONOUR: 

Can we proceed to the substance of the matter.

for costs of the appeal and also for an early
hearing date pursuant to - - -

MR KING: 

Your Honour is hearing an application for security

HER HONOUR:  We can put aside the early hearing date. I

have no power with respect to that other than to

say that I can recommend that matters be dealt with

with all expedition, but in this Court the

expedition of the time at which matters are held is

largely within the hands of the parties.

MR KING: Yes. It is pursuant to leave granted by the Court

under order - - -

HER HONOUR:  I do not know that the early hearing date was

mentioned.

MR KING:  And in that regard we have been given an

opportunity to make this application. The final

portion of the order in which the leave was granted

to appeal to the Baltic Shipping Company was that

the Court doth further order that:

Baltic(2) 8 12/9/91

the respondent will have leave, if leave be
necessary, to make an application for security

generally -

and that is the application we are now making.	And
also to make representations to obtain an early
listing.

HER HONOUR:  Yes. I do not think there is any dispute about

a listing date. If the papers are ready, it will

be heard as soon as it can, conformably with the

other business of the Court.

MR KING: Thank you, Your Honour. Order 70 rule 7(1) of the

High Court Rules make provision for Your Honour to

grant an order for security for costs in the

following terms:

The Court or a Justice may, at any time on the

application of a respondent to an appeal,

order that the appellant give security, within

a time to be limited by the order and in such

amount as the Court or a Justice may fix, for

the prosecution of the appeal without delay

and for the payment of such costs as may be

awarded by the Court to the respondent.

(2) Security may be given by payment into

Court or in such manner as the Registrar may approve.

Your Honour, there is a decision - perhaps if

I can take Your Honour to my outline of

submissions. We also rely upon the power of the

appellate court in Admiralty appeals to order

security of the type being sought in this case and

I will take you to the authorities which are set

out in our submissions in due course.

HER HONOUR:  Yes.

MR KING:  But I would stress in Order 70 rule 7(1) the

words:

for the prosecution of the appeal without

delay -

and -

for the payment of such costs as may be

awarded.

So there is two strings - two aspects - to the

power. And, Your Honour, consistently with the

very wide words - - -

Baltic(2) 9 12/9/91

HER HONOUR: That is a limited power, is it not? The costs

of this appeal in the Court.

MR KING: Prosecution of the appeal without delay - and for the payment of such costs as may be awarded by the

Court to the respondent.

HER HONOUR: Well, there is no delay involved here, is

there?

MR KING:  There is no difficulty about delay. We are

seeking security for costs of the final appeal.

HER HONOUR:	Yes.
MR KING:	And what we say is that the Court has the power to award us security for costs in the circumstances of
this case.  An order for security is not given
merely as a means of forcing an appellant to
expedite the hearing.  We do not say it is anything
to do with that.  We say it has to do with the fact
that basically the appellant is a foreign company, or a foreign entity, which has no assets in
Australia and there is evidence to suggest it is in
severe financial difficulty.

Your Honour, the Court's power is an absolute

discretion which is extremely wide in cases of this

type. I would remind Your Honour that His Honour

Mr Justice Brennan gave leave for us to seek security generally, not just in respect of costs,

but generally.

HER HONOUR:  Yes. The Court gave you leave, not

MR KING:	I am sorry, the Court.
HER HONOUR:	- - - and indeed, if it be necessary, but there

is a further question - - -

MR KING: Whether we are entitled to it.
HER HONOUR:	Yes.

MR KING:  Oh yes. That is the application we are now

making. Your Honour, just to emphasize the point

that the Court has a very wide discretion and power

in relation to these matters, can I hand up to

Your Honour a copy of the decision of His Honour

Mr Justice Brennan in Lucas v Yorke, (1983)

50 ALR 228?

HER HONOUR:  Yes, thank you.

MR KING: This was a case in which there was:

Baltic(2) 10 12/9/91

an application for an order that the

appellants give security for the costs of

their appeal ..... against a judgment of the

Full Court of the Federal Court which affirmed

part of the judgment of Fisher J.

Your Honour will recall that in due course this case went on to be reported on the substantive question as well, in relation to damages for fraud and under section 52 of the Trade Practices Act.

At the bottom of page 228 the questions of

principle arise, about line 44:

Mr Lucas seeks an order for security for the

costs of the appeal on the grounds that the

appellants will be unable to meet the costs of

the appeal if their appeal should fail. The

inability of an appellant to meet the costs of an unsuccessful appeal is a relevant factor in exercising the discretion conferred by O 70,

r 10 ..... but is no more than a factor to be

weighed in all the circumstances (DJE

Constructions Pty Ltd v Maddocks (1981) 38 ALR

185)      The discretion is not fettered by a

rule, such as the rule adopted by the Court of

Appeal in Hall v Snowdon, Hubbard & Co, that

security for costs is ordinarily ordered when

a respondent shows that the appellant, is

unsuccessful, will be unable through poverty

to pay the costs of the appeal.

And that is the principle, Your Honour - the
well-known principle, that if an order for security
would stifle the appeal, all other things being

equal, then the Court will take that into account

and not require security. I would immediately

point out here that there is no evidence,

whatsoever, that an order for security would stifle

the appeal by the appellant.	And then His Honour
goes on to say that:

The discretion under O 70 r 10 -

and Your Honour Order 70, rule 10 is now contained

in Order 70, rule 7

is absolute -

and I would stress that word "absolute" -

like the discretion under the High Court

Procedure Act 1903 considered by Rich Jin

King v Commercial Bank of Australia Ltd.	I
would respectfully adopt what Rich J said

mutatis mutandis, to the discretion now to be

exercised:  "The Legislature, however, has

left absolute discretion to the court, and has

Baltic(2) 11 12/9/91

done so without prescribing any rules for its

exercise. In these circumstances no rules can

be formulated in advance by any judge as to

how the discretion shall be exercised. It

depends entirely on the circumstances of each

particular case. The discretion must, of

course, be exercised judicially, which means

that in each case the judge has to inquire

how, on the whole, justice will be best

served, whether by altering the amount and, if
so, to what extent, or by letting it stand
unaltered."

A factor which ought not be left out of account is the course of the litigation,

particularly if the appellant has failed at

first instance and again on appeal to an

intermediate appellate court. A second appeal

upon substantially the same grounds is

this case.

indulging in a luxury, as Rich J said; in appellants in

And so here. The appellant has failed before

His Honour Mr Justice Carruthers. There was a very

lengthy hearing before His Honour, and then it

failed again before the Court of Appeal.

HER HONOUR:  Had special leave to appeal been granted in

Lucas v Yorke?

MR KING: Yes. Special leave was granted in Lucas v

Yorke - - -

HER HONOUR:  Or was it an appeal as of right?

MR KING:  I withdraw that. I think that was before the new

procedures were adopted. It was certainly

reported, as I have indicated, in the Commonwealth

Law Reports, on the question of damages under

section 52 and the Trade Practices Act generally

and fraud. So, the point that I seek to draw from

this judgment, Your Honour, in the first instance -

and it has been repeated on a number of occasions

after the leave to appeal procedure has been

adopted by this Court - is that the question is one

in the absolute discretion of the Court, and it is

unfettered and the Court is entitled to take in all

the circumstances of the case.

HER HONOUR:  Yes, but I am wondering whether the materiality

of having lost twice below is altered by special

leave, and special leave provisions.

MR KING: Well, Your Honour, it can be said, as was said by

Mr Justice Mason in a case I am shortly going to

take Your Honour, that the fact that special leave

Baltic(2) 12 12/9/91

was granted is some indication of public importance of the issue, but the question of public importance

is where there is no other - that only became

relevant where there was evidence that the appeal

would be stifled by an order for security. His

Honour the learned judge said:

If there is evidence that the appeal would be

stifled by an order for security for costs,

then I take into account that leave to appeal

has been granted, and therefore it is a matter

of public importance and therefore I

discount -

will not make the order in those circumstances.

But in terms of the general principle that if the appellant has failed in the courts below, that

ought to be a factor weighing in favour of a grant

of security, that seems to be unaltered by

His Honour's judgment which has been cited with

approval in later cases, if Your Honour please.

It is also cited, Your Honour, although I have not

referred to it in my written submissions, in the

current High Court Practice of the CCH, that
general principle.

Your Honour, that is a. of our submissions. b. is the question of time and delay. Unlike the

case of Devenish v Jewel Food Stores, here our

application for security has been brought almost

immediately the notice for leave to appeal has been

filed. Can I take Your Honour to the case of

Devenish v Jewel Food Stores, 94 ALR 664, and can I

hand Your Honour a copy of the judgment in that

case? This is a decision of the Chief Justice,

Your Honour. In this case, which is the most

recent case on this issue before this Court:

The respondent to an appeal sought an

order against the second appellant for

security for costs to be incurred by the

respondent in preparing the appeal on its side

of the record.

And in that case the Chief Justice held that one of

the reasons for refusing an order for security was

delay in the history of the proceedings on the part

of the applicant for security. The other reason

that he refused security was that there was no

sufficient evidence that the appellant would be

unable to meet any adverse order for costs in the

appeal, the books of account in that case being

before him. The difficulty in this case,

Your Honour, of course, is that on the evidence

there appears to be no books of account for the

respondent available, and if there are they have

not be produced upon challenge.

Baltic(2) 13 12/9/91

Now, Your Honour, taking you to line 43 at the second page of the judgment, page 665, His Honour -

perhaps line 40 -

In any event, even if that matter had been established -

that is the matter that His Honour was:

not prepared to infer that the second

appellant will be unable to meet an adverse

order for costs.

I would not, in the exercise of my discretion,

make the order sought. There are two

significant factors telling against the

exercise of a discretion .....

The first is delay arising from the

history of the proceedings.

And His Honour then goes on to deal with the date of the filing of the notice of appeal and of the

application, and the events that have occurred

since that time. Now, Your Honour, in this case,

and it is not just in Devenish v Jewel Foods, Your

Honour, but in other cases as well, that this issue of delay has come up, but in this case there is no

aspect of that whatsoever. As was recommended in

His Honour's judgment in Devenish, we made the

application for security on the very day that the

application for leave to appeal was made, and

Your Honour may recall that in the affidavit of

Mr Withnell, which was filed to oppose the grant of leave - we did seek an order for security at that

time and as a result of which the Court comprising

Your Honour, and Mr Justice Brennan and

Mr Justice Deane, I think, gave us that leave to

seek security which we do today.

There has been no delay and, of course,

Your Honour will recall that it would have been

impossible for us to have sought security for costs

prior to the grant of leave to appeal, because in

the decision of Bahr v Nicolay, (1987) 72 ALR 361,

at 362, a copy of which I hand up to Your Honour,

it was held by His Honour Mr Justice Toohey that

there was no jurisdiction in this Court to make an

order for security prior to the grant of leave to

appeal. Your Honour, in that case the learned

judge held at pages 362 to 363 that an application

for security for costs in the High Court could not be made, in effect, pursuant to the new procedural

rules until after the notice to appeal had been
filed - that is, after leave had been granted, and

can I refer Your Honour to page 362, about line 15,

where His Honour Justice Toohey quoted with

Baltic(2) 14 12/9/91

approval the decision in Lucas v Yorke - does

Your Honour see that, and that affirms that both

before and after the leave to appeal procedures

were put in place under the Judiciary Act this

Court has that same type of absolute discretion in

all the circumstances of the case, if Your Honour

pleases.

So that case, we would respectfully submit

indicates that there has been no delay whatsoever

in the prosecution of our application for security

and, indeed, Your Honour may like to note that when

Justice Mahoney, who dissented in the Court of

Appeal, was approached to obtain a stay of proceedings by the appellant, pending the appeal to this Court Justice Mahoney required, as a condition

of that stay, that the appellant expedite this
appeal, because of the great difficulties with all

the passengers, many of them are very elderly, some

indeed have died, and - to come back to what

His Honour Justice Mahoney said - - -

HER HONOUR:  We have got what Mr Justice Mahoney said, have

we not? It was handed up.

MR KING:  It is in the judgment that was handed up, and

His Honour determined that any stay would be on the

basis that:

an application for leave to appeal would be

pressed with all due diligence -

those are the words he uses at the top of page 3.

Now the point that I was going to make was

that it is odd that if the notice of appeal, which

had been drafted prior to the leave application was prepared, it took 20 days for the appellant to file

its actual notice. One wonders why it took them 20

days. True it is they had 21 days, but if they

were pursuing this case with all due expedition,

one would have hoped they would have filed it the
next day, the matter then being ready.	However,
that was not to happen.

Your Honour, turning to point c. in our

outline of submissions, with respect, I have

already made the point that, in this case, the appellant has been unsuccessful in both courts

below. Jt might be said against us, in the Court

of Appeal you only had two judges in your favour

and Justice Mahoney was against you, but it was the

President of the Court of Appeal and the Chief

Justice in favour of the respondents, and it was a

decision adverse to the appellant and nobody has

ever said, with respect, Your Honour, that that

principle of leaning in favour of granting security

Baltic(2) 15 12/9/91

should be in some way diluted because there was a

dissenting judge in the court below.

Your Honour, the real basis of our claim for

security in this case is point d. of our

submissions. There is absolutely no doubt that the

appellant is a foreign entity: what type of entity

is totally unclear and it has no assets in

Australia. It is in those circumstances - -

HER HONOUR:	Does it carry on business in Australia?
MR KING:	No, it does not. there is no evidence of that

whatsoever. What it does do is it has a ships'

agent in Australia, called Opal Maritime Agencies,

but, if Your Honour pleases, in - I thought that
there might be a query as to the nature of the work

of Opal Maritime Agencies - in Freight Forwarders

by D.J. Hill, which is a well regarded book on the

whole question of agents working with ships and

international trade, there is a description of the

work of a ships' agent, and that appears at

paragraphs 49 and 50 and, if I can just hand up to

Your Honour an extract from Hill, which I should

identify, it illustrates that a ships' agent is

nothing more than a service company which provides

various services such as supplying a ship with
fuel, with bunkering fuel, the crew with its
foodstuffs and servicing the ship in various ports
around - in this case in some ports in Australia.

In every place around the world, Your Honour,

shipping companies need port agents in order to

victual and otherwise supply the ship for its
operations but, of course, such agents have no
knowledge or understanding of the nature of the
shipping companies, the many shipping companies who
are there principals, and those points are brought

out in those passages from Hill, Freight

Forwarders.

Of course, one only needs to go to the

affidavit of Mr James, paragraph 4, and I invite

Your Honour to go there now.

HER HONOUR: That is the one handed up today, or

MR KING: Yes, Your Honour, 10 September. It is the first

one - the first of the three handed up today by my

learned friend - Mr James, 10 September.	Does
Your Honour have that one?

HER HONOUR:  Yes, I have 10 September, it was filed in Court

yesterday.

MR KING:  Your Honour will see at paragraph 4, at page 4,

the evidence upon - this is the only evidence of

solvency and ability to meet the judgment that is

Baltic(2) 16 12/9/91

filed by the defendants in answer to all the

material that has been put before Your Honour by my

clients. Mr Vote appears to by the line manager

for the appellant of Opal Maritime Agencies Pty

Limited, the Australian agents for the appellant.

Now that means he is no more than a manager in a

ships' agent operating in Australia. That company

is quite discrete and separate from the appellant.

Nowhere in that statement in paragraph 4 does

Mr Vote say anywhere that the appellant has any

assets in Australia. Nowhere does he give the

undertaking on behalf of the appellant to meet any

adverse judgment against the appellant. Nowhere

does he say that the appellant is solvent. Nowhere does he say that the appellant is in a position to

meet the costs of the appeal. What he does say is

that he has been employed by the agent for 16
years, that the:

Liner service consist of 6 vessels owned - Now we objected to the words by the appellant,

Your Honour, because there is just no evidence -

for a ships' agent to assert on information and

belief that vessels are owned, then we would submit

that is just objectionable, it is also

contradictory to the other evidence that is brought

before Your Honour in our affidavits, because what

has happened is this, Your Honour, that until

January of this year, indeed, until July of this year, the Baltic Shipping Company was, in effect,

an arm of the Soviet Government, and it owned - the

Soviet Government owned and it owned, in an

enterprise that is a bit unclear, the ships, and

there are 170 of them. Now, what happened in July

of this year, Your Honour, is that the Baltic

Shipping Company went independent like the

Republics of Lithuania, Estonia and Latvia, and there is evidence to that effect in the press

releases from Lloyds and from the Soviet Union, which are quoted - quoting direction from the heads	of the company, and the arrangement that was put in	place, as from July this year, in respect of Baltic
Shipping Company, is as follows: that the Soviet
Union, the Government - or the Russian Government,
to be more precise, because Leningrad is in the
Russian Republic, is to lease -

HER HONOUR: Well, we do not know - - -

MR KING:	- - - these ships to the Baltic Shipping Company. So that no longer does the appellant own any ships
at all.  The is the effect of it. What it does is
it leases the ships from the Russian Government,
and the aim is to privatize the company and over a
10-year period the company will be privatized by
paying instalments to the Russian Government and

Baltic(2) 17 12/9/91

buying back the ships from the Government. So, on

the evidence the appellant owns no ships at all.

What it does is it leases ships. It also has a

huge debt owed to it by the Russian Government to

the extent of some 240-odd million roubles, which

have not been paid for goods carried for the

Government. How it is ever going to get that is

another question.

So, that is why we object to the three words by the appellant in line 2 of paragraph 4(ii),

Your Honour. If they are to be proved, they are to

be proved in proper form, we would submit, and the

proper way to do that is by tendering the Lloyds

extracts, which is the usual way in every maritime

case ownership of the vessel is proved. It is not

done here. You do not prove ownership of a vessel by calling a port agent in a country, which has no

connection other than being port agent for the

company.

Then, Your Honour, we see that all that the appellant is doing, well, firstly it has no assets

in Australia, that is not asserted, all it is doing

is providing a three-weekly service to Australia

called a liner service and calling at a number of

Australian ports and it appears that they may be increasing the regularity of that service from three weeks to two weeks. Well, we say, so what.

That is of no help to Mrs Dillon. Those assets cannot be touched by her because she has got no

right of arrest in relation to those ships. This

is an action under the old Admiralty Act prior to the 1988 statute corning into force, see section 5 of that statute, and I will take Your Honour to

that shortly. So, unless Mrs Dillon can get the

sort of security that we are seeking here,

Your Honour, she will be left completely unsecured,

unlike the normal claimant in admiralty; unsecured

because of the dramatic changes that have occurred

in the appellant company in the last six months.

HER HONOUR: 

Your submissions are somewhat double-edged, are

they not? If the Russian Government owes the
shipping company all that much money then, on one

view, your prospects of recovery might be better
off under the present arrangements than they would

have been before.

MR KING: Well, no, Your Honour, because the evidence is,

from the press releases which quote directly from

the Russian Government representatives, that there

is no present intention of paying those monies over

and that the company is in terrible financial

trouble. That is the state of the evidence. Now,

if the respondent wants to come clean and offer us

some security, which all it requires is a bank bond

Baltic(2) 18 12/9/91

- they do not have to put up any money now - all we

want is a bank bond to recover our judgment if we

are successful in the appeal. It will not stifle

the appeal. It will cost them about $3 to get a

bond from a bank. What they have got to do is say

to the bank, "We've got the backing to pay'', and we

are asking the Court to require them to do that,

because of those changed circumstances.

Now, Your Honour, can I come back to

paragraph d. of my written submissions to make the
point that the appellant is a foreign entity, there

is no doubt about that, and has no assets in

Australia; of that there is no doubt. And in those

circumstances alone, Your Honour, I would

respectfully submit my client is entitled to an

order for security.

HER HONOUR:	You keep talking about an order for security in general terms.	An order for security under
order - - -

MR KING:  Under order 70 rule 7, Your Honour.

HER HONOUR:	Yes.	Which is for the costs of the appeal?
MR KING:	Yes.	Your Honour, the question as to the amount

of the security is dealt with in paragraph 2.	At
this stage - - -

HER HONOUR:  Well, let us be clear about this. You apply

only under order 70 rule 7?

MR KING:  No. The first point I am making, Your Honour, is

that an order for security should be made. There

are two questions. The second question is:	in
what amount?

HER HONOUR: Well, pursuant to what authority is one

question also, because to some very considerable

extent, if the authority of the Court is

exclusively to be found in order 70 rule 7, it puts

a very low ceiling on the amount.

MR KING: Yes, we would have something to say about that,

Your Honour, but that deals with the question of the amount. If I may, at this stage, I am really

trying to convince Your Honour that Your Honour

should exercise a discretion in giving us security,

that an order ought to be made in our favour. And

we say that the basis for that is that this is a

foreign appellant with no assets in Australia.

Your Honour, I should indicate, as I think I

did earlier in my opening, that in terms of the

amount we rely not only upon order 70 rule 7 but

also on the Admiralty Rules, rule 126, in relation

Baltic(2) 19 12/9/91

to costs, and on the general principle of Admiralty
that where a party invokes the jurisdiction of the

Court, by intervention or by appeal, the Court is

in a position to make any order that it thinks

appropriate for security, including an order

securing the claim. That is our submission.

Perhaps I should hand up to Your Honour a copy

of the old Admiralty Rules, the 1952 Rules which

apply in this case. I will come to those, if I

may, shortly, Your Honour.

HER HONOUR:	Yes.
MR KING:	Your Honour, in support of the contention that I

have just put at point d., can I take you to the

judgment of Mr Justice Fullagar in Brundza v
Robbie, (1953) 88 CLR 171. Your Honour, in that

case Justice Fullagar considered the very question in issue in the present application. I hand up to

Your Honour a copy.

HER HONOUR:	Thank you.
MR KING:	What happened in that case, Your Honour, was that
in the Supreme Court of Victoria the plaintiff had
failed in proceedings and he then sought to appeal
to the High Court in relation to that matter and
deposited a sum of 50 pounds, as required under the
old rules, as security for costs. There was an
automatic requirement in those days, Your Honour.
And in addition he provided security in respect of
the judgment for costs adverse to him at first instance.

Now, Your Honour, the appellant, Mr Brundza,

then decided he wanted to go to Ethiopia and,

shortly after leaving, there was an application by

the respondent, Robbie, for an increase in the

security that had already been provided pursuant to

the rules.	Can I then take Your Honour to page 175
of the judgment of Justice Fullagar, at about the

second paragraph, where His Honour says this:

The fact that the appellant is out of the

jurisdiction {there being no suggestion that
he has assets within the jurisdiction)

affords, of course, a clear prima facie ground

for ordering that further security for the

costs of the appeal be given.

And it is those words, Your Honour, that we rely

upon to ground, without more, our application for

security in this case.

Now, Your Honour, it might be said against us

that in - - -

Baltic{2) 20 12/9/91

HER HONOUR:	Why did His Honour come to the contrary conclusion in that case?
MR KING:	Because what had happened in that case was delay,

the very same reason that His Honour Justice Mason

in - that is why I stress to Your Honour there has

been no delay in our application here, because in

both Brundza's case and in Devenish's case the

delay in making the application was critical in

refusal of the order. That appears at page 176,

Your Honour.

Your Honour, if it might be said against us

that in Brundza's case the appellant was also the

plaintiff in the hearing below, it might be

different if the appellant was the defendant in the

hearing below, we would submit, Your Honour, that

that point cannot be taken in view of a decision of the Court of Appeal in the United Kingdom in a case

called Grant v Banque Franco-Egyptienne, (1877)

LR 2 CPD 430. Can I hand up to Your Honour a copy

of that decision?

Your Honour, this was a case before the Court

of Appeal comprising what might be described as

three experienced commercial judges at the end of the last century in the UK, where the Court held,

and I refer to the headnote:

The fact that an appellant is a foreigner

domiciled abroad with no assets in this

country, is a "special circumstance'' -

under the particular rules and, for present

purpose, Your Honour, the terms of those rules are

irrelevant -

and entitles the respondent to security for

costs of appeal from an interlocutory order.

And that is this very case.	And, Your Honour,
Chief Justice Cockburn says, at the second
sentence:	·

The position of the bank, being that of

foreigners -

and this, of course, was a bank - the fact that it

was a bank made no difference -

resident abroad, is a special circumstance

within the meaning of the rule; and especially
as here the parties are not in pari periculo,
for if the defendants are successful in their
appeal they will recover their costs upon the

higher scale of taxation -

Baltic(2) 21 12/9/91

and so on.	And Lord Justice Brett was of the same
opinion.	Now, in that case, Your Honour, the

appellant was the defendant, and Your Honour will

see that in line 2 under the headnote.

So, Your Honour, the principle that we have

set out at point d. of paragraph 1 of our

submissions applies, whether or not the appellant

was plaintiff or defendant below. All that needs

to be shown is that the appellant is a foreign

entity, no matter how big or small, with no assets

in Australia.

Your Honour, can I at this stage take

Your Honour to the affidavit of Mr Withnell to illustrate to the Court that whether or not Baltic

Shipping Company was ever an arm of the Soviet

Government, it certainly is not now. In fact, I will seek an admission from my friend to that effect. That may expedite the matter, Your Honour.

Are you prepared to admit that?

MR STREET:	No.
MR KING:	Your Honour, I find that refusal to make that

simple admission, with respect, surprising, because

when this case first started, Your Honour will note

from the notice of discontinuance which my friend
has had specially handed up to Your Honour and

marked as an exhibit, that the USSR was the third

defendant in this action, and the basis upon which

the action was discontinued against the third

defendant was that the USSR was a separate entity

from the second defendant, the Baltic Shipping

Company. And now it is said something different

has happened. We find that surprising indeed. I

have got the correspondence to that effect,

Your Honour.

MR STREET:  I object to that, Your Honour. My learned

friend - - -

HER HONOUR:  I understand the objection. I will treat it as

a comment from the bar table.

MR KING: It is intended as a comment only, Your Honour, but

it is correct.

HER HONOUR:  I can only act on what is before me.

MR KING:  Yes. Your Honour, going to the affidavit of

Mr Withnell, it is most convenient to refer to

annexure F, which sets out a number of press
releases issued by Lloyds, which is the highly
reputable international agency dealing with

shipping on a daily basis and which itself is

Baltic(2) 22 12/9/91

quoting directly from the Russian sources as to

what the position of the appellant company is.

Your Honour will see firstly, under annexure F, that there was a statement on

4 September that:

LENINGRAD'S BALTIC SHIPPING COMPANY TO OPERATE

INDEPENDENTLY.

Your Honour will see that that is the commencement

of this approach by the appellant, in this case, to
operate independently - presumably independently

from the Soviet Government - and, as is pointed out

in line 2:

from the Soviet Ministry of Merchant Marine

(Morflot).

And then it goes on to say:

The Soviet Council of Ministers has given the

go ahead to the company's plan to hire/lease

its assets from the state and operate outside

ministry dictates.

So, what do we have? We now have the

appellant, who no longer is under the umbrella or
protection of the Soviet Government, it is
operating independently of the Government. It

falls or succeeds whether or not the Government

gives it assistance, on the same basis that any

company falls or succeeds in Australia. And it

leases - that is the effect of line 4 - its assets

from the State. So it owns no assets itself.	It
leases or hires those assets.

Then, Your Honour, it goes on to say that the

Baltic Shipping Company is an independent-minded

management and they want to be different from the

Black Sea fleet and the White Sea fleet.	Then,
Your Honour, the next press release relates to the

effect upon that, and:

INDEPENDENCE COULD SPELL DISASTER FOR BALTIC

SHIPPING COMPANY.

Your Honour, it goes on to state that:

The Baltic SHIPPING Company has won its battle

for independence from the Soviet Ministry of

Merchant Marine (Morflot).

It then states that:

Business Editor Christopher Brown-Humes argues

that it could prove to be a hollow victory.

Baltic(2) 23 12/9/91

Soviet SHIPPING Industry has seen nothing to

rival it in more than 70 years.

One of the three largest SHIPPING companies

Baltic SHIPPING Company, after a long and

bitter campaign for independence, has been

given the go-ahead to operate its 2 million

tonnes deadweight fleet outside state control.

So it is only operating them; it is leasing them

from the State and operating them itself under

charter parties - it is not made clear whether

those charter parties are demise or time charters,
but that is the normal arrangement for hiring and

leasing - and it is described as a "remarkable

development". It then goes on to say it:

is fraught with risk.

Now, Your Honour, the next document is of

11 September:

INDEPENDENCE COULD SPELL DISASTER FOR BALTIC

SHIPPING COMPANY -

and this, again, comes from Lloyds. I would stress

to Your Honour the third paragraph there:

Although BSC is largely a liner operator -

with a substantial presence in international

cross-trades - it still relies heavily on

Soviet import and export cargoes for its business.

That is the third subparagraph.	Then two
subparagraphs further down:

But it now faces the prospect of having this

lifeline cut off without having the means to

support its own newbuilding programme. Soviet

law still does not allow it the option of

mortgaging its existing fleet and, unlike the

organisation Sovcomflot, it cannot yet get

access to foreign banks.

And over the page, Your Honour, under page 2, the

paragraph commencing with the letters "BSC", at

about point 2 down the page:

BSC, by contrast, maintains that some of the

other Soviet SHIPPING companies are simply

less efficient and says it is sick of

subsidising them. Significantly, BSC has

received no support for its independence plan

from any other of the other 16 Soviet SHIPPING

companies.

Baltic(2) 24 12/9/91

That has a lot to do with the manner in which

the Leningrad group has sought its

independence - through hiring its assets from

the state.

And then there are some machinery discussions about

how that was all going to happen. Then, over the

page, Your Honour, the next press release is dated

17 September, and this is an important document

because it states that:

The USSR Council of Ministers has granted the

Baltic SHIPPING Company the right of a leaseholder.

And then it appears that they have made a virtue

out of necessity because the Deputy Chairman of the

USSR Council of Ministers is stated as saying:

"The initiative of the Baltic company will set

an example for the whole country," ..... "The

new approach by the USSR Council of Ministers

to the transition of the Baltic SHIPPING line

to leasing relations reflects the general

principles underlying a new managerial

structure for sea transport during the

country's transition to a market economy". Then, Your Honour, I do not think it is necessary

for me to take Your Honour further than that.

What I want to draw from these documents,

Your Honour, is simply this: firstly, that the

company is independent and sees itself as being

independent of the Russian Government. It does not

have the backing - well, is it the Russian

Government, is it the Soviet Government? It is not

clear from anybody whether that is the case.

HER HONOUR: Leningrad, I think, was always the Soviet.

MR KING: It is always in Russia.
HER HONOUR:	No, I think Leningrad was the seat of the Soviet Government. It is like Canberra.

MR KING: That is right, Your Honour, yes, with respect.

HER HONOUR:	And Moscow is Russia.
MR KING:	I hear muttering from over here that Leningrad was

St Petersburg.

HER HONOUR:  Yes, and it is now, it has reverted. But as

Leningrad, it was the capital of the Soviet - the seat of government of the Union of Soviets, I think.

Baltic(2) 12/9/91

MR KING: So, whether it is Soviet or whether it is Russian,

Your Honour, it probably does not matter much,

although I am advised that the flag, interestingly

enough, the colours on the funnels have just been

changed only a few weeks ago. They used to be red

and white funnels with the hammer and sickle, and

now they have got the Russian tricolour, which is

very interesting. I think maybe they see

themselves as Russians, not Soviets, I do not know.

Whatever the position, Your Honour, on the

clear evidence before this Court they are independent of any government and have no

government backing, and all they are doing is

leasing assets from the government in very much the

same way as the Australian National Line tends to

operate - not always, but quite frequently. The

government finances the purchase of the vessels and

the company is on its own.

Your Honour, then can I come back to our

written submissions to make the point that, in all
those circumstances, there is an added emphasis for

the need for the Court to exercise a discretion in

favour of the grant of security.

Your Honour, in point e. we make the point

that the fact that no security was sought or

obtained below, particularly in view of the changed
circumstances of the appellant, would not

disqualify the respondents from obtaining security

in the appeal. There is an old Admiralty case,

Your Honour, called Sheffield v Ball, in which

Sir George Lee said:

by the practice -

in Admiralty -

fresh security and a new proxy are always

given upon an appeal -

and a proxy, of course, Your Honour, is the

guarantor for the - may I hand up to Your Honour a

copy of Sheffield v Ball, which is from the English

Reports. It is only a short judgment, Your Honour,

but it is cited in Williams and Bruce's Admiralty

Practice with approval.

HER HONOUR:	Yes.
MR KING:	Your Honour, in point f. we make the submission

that, if one looks at the affidavit of Mr James, it

is, with respect, wholly inadequate to suggest that

the appellant is able and is willing and will meet

any judgment against it. No material of any

substance has been put forward before the court to

Baltic(2) 26 12/9/91

outweigh the prima facie position in favour of an

order. It is not stated the appellant is solvent,

or that it can meet an adverse judgment.

Your Honour, these two considerations alone, we

would respectfully submit, would weigh heavily in

favour of an order, and the usual - - -

HER HONOUR:	When was your application filed?
MR KING:	Your Honour, on 5 September, almost a week after

the filing of the notice of appeal.

HER HONOUR:	Thank you.
MR KING:	Your Honour, it might be said by my friend that -

it is not said, and no further time is sought from

the respondents to put on any further material;
they are happy to rely upon the material they put
before the Court, and we take their application and
the material they put at face value - nowhere, in

any of that material, is it stated the appellant is

solvent or that it could meet a judgment.	Nowhere
are there any books of account.

Interestingly enough, in the information from Lloyds of London, it appears that it is only

recently that Baltic Shipping Company has decided

to adopt Western style accounts and reports. If

that is the case, one would have thought that the

appellants might have sought an opportunity to file

such accounts, and to illustrate to Your Honour

that it could meet a judgment. That, of course, is
the usual way of going about it, where an appellant

is challenged in this way.

Your Honour, the Court is asked to infer from

the paragraph 4 to which I have taken Your Honour,
of Mr James's affidavit, that because the appellant

provides a liner service to Australia in ships for

over 16 years, no order should be made. But,

Your Honour, we would make the simple point that

there are many types of companies providing liner

services and the mere fact that a company provides

a liner service does not mean it owns the vessel

or, indeed, that the ownership is in any way

solvent, and rarely do Australian shippers know

what the solvency of overseas ship owners is. It

is notorious that, in the ports of Port Kembla and

Newcastle, indeed, just recently, that the

authorities are requiring bonds from overseas ship

owners in order to meet clean-up costs for

pollution and also to instal safety features on

vessels as a condition of using those ports. And

bonds of that type are being sought frequently.
Indeed, only last week there were discussions in

the local press about the need for that in relation

to pollution.

Baltic(2) 27 12/9/91

Your Honour, at point g., on the available

evidence the whole structure of the appellant has

monumentally changed within the last few months.

Therefore, what happened for the last 16 years, as
put in Mr James's affidavit, is not to the point.

The appellant, on the clear available material, no

longer has government backing. The government

backing itself is questionable, in view of the
break-up of that government and its admitted

indebtedness. Can I take Your Honour to statements

made by the highest Soviet officials on this very

point.

HER HONOUR:	Yes, but I am just wondering what is the relevance of whether the government backing, if it
exists, would be questionable.  Your application is
premised, I take it, on the basis that it has no
government backing.
MR KING:	Yes.
HER HONOUR:	And that it has not had any for over 12 months.
MR KING:	Yes, that is right, but if it is argued against us

- and my friend is not prepared to concede the

point - if it is argued against us, "Well, we're

backed up by the Soviet Government", we say, "Well,

so what?", because the head of the Supreme Soviet's

Budget Committee, Mr Viktor Khucherenko said, as

late as September of this year, "Our finances are

absolutely out of control". The country was on the

verge of financial collapse. That is the Supreme

Soviet, head of the government.

HER HONOUR: Well, it has got the Russian tricolour now, you

tell me.

MR KING:  The warning that the Union is close to economic

collapse. Your Honour, nobody - particularly

passengers on the Mikhail Lermentov, who have got

no security - could feel comfortable that any

judgment favourable to them will ever be secured.

Of course, we have sought, by letter, security, and

perhaps, Your Honour, I should hand up to

Your Honour the letter in which we did seek the

security.

MR STREET:  I would object to it. I thought my friend had

indicated that the evidence was closed. I have not

seen thi~ affidavit before. It has not been served

and, in my respectful submission, it is just not

appropriate, Your Honour, having asked whether

further evidence was to be adduced, for my learned
friend to seek at this stage now to produce an

affidavit that was not even served.

Baltic(2) 28 12/9/91

MR KING:  Your Honour, all it is is two letters, since leave

to appeal was granted, in which we seek security

and they have refused it. It is nothing more than

that, and I would respectfully seek leave to file

it.

HER HONOUR:  Mr Street, are you prejudiced by it? That

surely must be the question.

MR STREET: Could I just have another look at it?

HER HONOUR:	Yes.
MR STREET:	In light of what Your Honour said I withdraw the objection.

HER HONOUR:  Thank you. I think the copy there on the bar

table is for you, Mr Street.

MR STREET:	Thank you, Your Honour.
HER HONOUR:	Yes.

MR KING: So, Your Honour, we have given very adequate

notice of this application and all we have been met

with is a bland refusal; no assertion that the

appellant is solvent and could or would meet any

judgment which, as a matter of good faith, one

would hoped, perhaps expected, to obtain from an

appellant when challenged.

We than make the pointing., in the third

sentence, that the appellant does not have the

backing of a P & I Club. Your Honour, can I take

you to the affidavit of Mr Withnell and, in

particular, to paragraphs 10 and 11 where

Mr Withnell states:

Shortly after the sinking I made enquiries of

Messrs. Ebsworth & Ebsworth, Solicitors of

Sydney, who customarily act for shipowners

Protection and Indemnity Mutual Associations

(P. & I. Clubs) based in the United Kingdom

and Western Europe, and was informed and

verily believe that the Baltic Shipping

Company is not entered in any United Kingdom

or Western European P. & I. Club.

Now, Your Honour, of course the P & I Clubs are the

funds which shipowners usually use, if they are

entered in them, to pay out verdicts against them.

In this case, there is no evidence whatsoever that

the Baltic Shipping Company is entered in any club.

It must meet any judgment out of its own funds and

that is a further matter which concerns the

respondent.

Baltic(2) 29 12/9/91

Then Your Honour, the appellant produces no

accounts when challenged as to credit worthiness. There are no assets in the jurisdiction, does not

own the ships in it trades. It does not directly say it is able to meet any judgment. Given these

circumstances and the circumstances of the

respondents, who are minnows in the world of

international trade, we respectfully submit that

justice would be met by an exercise of the Court's

discretion in favour of the respondent and an order

for security.

Your Honour, if it could be said against us

that in some way we have to prove positively that

no order could be satisfied or would be satisfied,

that is just not the law.	Can I take Your Honour
to two decisions in the Federal Court.	The first

is a decision of the Full Court comprising

Justices Sheppard, Merling and Neaves - I will hand

up to Your Honour a copy of the judgment - in this

case there was a $2 company involved, which is a

trustee company, and an order for security for

costs was made and pursuant to the Federal Court of

Australia Act, in particular sections 59 and 56,

perhaps it is sufficient for present purposes to
quote from (iv) of the headnote:

A court is not justified in declining to order security on the ground that to do so

would frustrate the litigation unless a
company in the position of the appellant in

the instant case -

that is the person opposing the application for

security -

establishes that those who stand behind it and

who would benefit from the litigation if it is

successful (whether they be shareholders or

creditors or, as in the instant case,

beneficiaries under a trust) are also without

means. It is not for the party seeking

security to raise the matter; it is an
essential part of the case of a company
seeking to resist an order for security on the

ground that the granting of security would

frustrate the litigation to raise the issue of

the impecuniosity of those whom the litigation

would benefit and to prove the necessary

facts.

Now, Your Honour, I have already, with

respect, made the point that in this case it is not

suggested that any order would stifle the

Chester and Fein

litigation but in the case of judgment of Mr Justice Jenkinson in the Federal

Baltic(2) 30 12/9/91

Court following Bell Wholesale, His Honour points

out that the applicants for security did not have

to prove that the applicant could not satisfy an

order for costs.	Can I hand that up to
Your Honour.

HER HONOUR:	Yes, thank you.
MR KING:	It might be said against us by my learned friend,

Your Honour, oh well, in a vague sort of way, there must be some Soviet backing there somewhere or some Russian backing there somewhere and surely the

Soviet Government or the Russian Government would not let the passengers suffer, if they were

successful surely that would not happen. Well,

Your Honour, the judgment of Mr Justice Jenkinson

illustrates that that sort of submission must fail

because, when challenged, once it is shown that

there is a prima facie right to security, you do

not have to go on to show that the applicant could

not satisfy an order for costs, for example, by

producing all of the books of the respondent and

going through them in detail and showing that they

have 170 ships on hire but they earn 200 million

roubles a month and therefore they could pay out a

verdict. But, of course, there is no such evidence

of that type before the Court.

The point that His Honour makes, and it is really taken from the headnote, point (ii):

In the circumstances of this case, to

justify the making of an order for costs
against the applicant under s 56 of the

Federal Court Act the respondents did not have

to prove that the applicant could not satisfy

an order for costs or that the applicant's

right to an indemnity out of trust assets was unlikely to produce sufficient funds for that

purpose, notwithstanding the requirements of

s 553 of the Companies Code or O 28, r 3, of

the Federal Court Rules.

That case also deals not only with the provision in

the Federal Court of Australia Act which is similar
to that in the High Court Rules, it also refers to

section 533 of the Companies Code, at page 731,

line 25 where the provision is set out that

security may be ordered where:

by credible testimony that there is reason to

believe that the corporation will be unable to

pay the costs of the defendant if successful

in his defence -

Your Honour, could I then go to point i. in

our submissions. The respondents, on the evidence,

Baltic(2) 31 12/9/91

have no alternative available source of security,

affidavit of Mr James are not owned by the appellant, on the available evidence and there is

an important consideration in obtaining security in

real doubt as to whether the vessels could be

arrested.

Can I just take Your Honour to the case in the

High Court of The Lastrigoni, a decision of

Mr Justice Menzies, to illustrate that point. This

was where the Judge was sitting at first instance

and what happened in that case, Your Honour - and

it is often cited - is that there was a supply of

bunkering fuel and other necessaries to the ship

when she docked in Melbourne and it appeared, upon
the ship filing an application to set aside the
warrant of arrest by Shell because there had been
no payment for the supply, that in fact the owner

of the vessel had not ordered the fuel but the

charterer or the lessee of the vessel had, and

therefore there was no right of arrest of the
vessel because the owner of the ship and the person

ordering the supplies had to be one and the same

person.

We, by analogy, make that point here. If the

Russians have, on the material available to us, leased all its assets to this new independent

entity, Baltic Shipping, my clients, even if they

had a right of arrest, could not arrest the ships

because, on the authority of The Lastrigoni, the

owner, which is the Russian Government or the

State, has not incurred the liability, the lessee

has, Baltic Shipping Company. So there is no

security available to my clients.

HER HONOUR: There never was in this case, was there?

MR KING: There never was.

HER HONOUR:  What is the relevance of this?

MR KING: There would have been, had the ship not sunk.

HER HONOUR:  Yes. Once the ship sank, which was before you

commenced your action in the supreme court, there

was no security available.	So that nothing now
turns on this issue, does it?

MR KING: Well it does, for this reason, Your Honour, that

normally - under the new Admiralty Act which came

into force in 1989 my clients would have been

entitled to arrest sister ships. We would have

been entitled to arrest all these other ships that

are referred to in Mr James' affidavit, assuming

they were owned by the appellant, because under

Baltic(2) 32 12/9/91

section 19 of the Admiralty Act there is a right of

arrest of sister ships.

HER HONOUR:	Yes, but you never had that right either.
MR KING:	No, so the difficulty that we face is that we have

been, in a sense, precluded by circumstance from

being able to enforce the judgment in rem. So the

point is, Your Honour - and there is another aspect

of this as well - there is a decision called The

Alletta which is referred to at point i. - it is a

judgment of Mr Justice Mocatta and I will hand it

up to Your Honour - where it was held that where a

plaintiff had obtained a judgment in personam it is

unlikely - well, in that case there was no right to

arrest the ship anyway.

HER HONOUR:  But where does this take us in this case,

Mr King?

MR KING: It is a further consideration, Your Honour; it is

a further matter of justice or discretion that we

put before Your Honour, that unlike the usual

Admiralty case, my clients would have had an

opportunity to arrest and obtain security for a

calamitous incident but that has not been available

to them. And that is a matter of discretion which

ought to be taken in their favour, if an

opportunity arises, for the Court to actually give

them the security which the current Admiralty Act

says they can have. There is a very interesting

discussion, Your Honour, in the Law Reform

Commission Report No 33 by Professor Crawford, a

report which has won acclamation not only in this

country but elsewhere for its conciseness and
precision, which discusses these questions. It is

at paragraph 190 and I did give that to the

Registrar. I do not know if Your Honour has it.

The point, however, can be made simply that if

the Court, as it now does, has an opportunity to

award security, not just for costs but for the

whole claim -

HER HONOUR:  Now that, you see, is I think a very large question, is it not?

MR KING: That is the point that I am really making,

Your Honour.

HER HONOUR:  Where do I get the authority to award security

who are not actually parties to the appeal in this

for the claim, first of all the claim of

Court?

Baltic(2) 33 12/9/91

MR KING:  Your Honour, the first point is that the

application is brought by all the plaintiffs who

are joined in the suit.

HER HONOUR:  You say that, Mr King, but this application -

let us assume for the moment that you lose this

application and I award costs of this application
to the Mikhail Lermontov, can it collect costs from

all the plaintiffs in this suit?

MR KING:  One would have thought so, because they bring the

application.

HER HONOUR:  I would not have thought - Mr King, you say

that, but I thought the application was made by

Mrs Dillon. I mean, there is no application to

join the various persons as respondent to the

appeal. If there were, other problems might arise.

MR KING:  But they are already parties to the litigation

because they are already on the record.

HER HONOUR:	They are not in this Court.
MR KING:	Can I deal with it another way, Your Honour, and

again it comes back to the discretion of the Court.

We would submit that - - -

HER HONOUR:  I am not too sure that it does come back to the

discretion of the Court. It seems to me this is

very fundamentally a matter of jurisdiction and

authority and what is the source of my jurisdiction

in this matter.

MR KING:  Can I take Your Honour to - the first point to be

made, Your Honour -

HER HONOUR:  I am exercising an appellate jurisdiction, am I

not?

MR KING:  No, Your Honour is now exercising power pursuant

to -

HER HONOUR:  The Court's jurisdiction in the first instance

in this matter is an appellate jurisdiction.

MR KING: Yes, the notice of appeal has now been filed.

HER HONOUR: There is no suggestion that it is exercising

original .Admiralty jurisdiction, is there?

MR KING:	Not original, but appellate Admiralty
jurisdiction.

HER HONOUR: All right. That perhaps does not matter. The

only parties to the appeal are the shipping company

and Mrs Dillon, to the appeal, is that not correct?

Baltic{2)	12/9/91
MR KING:	The appeal is, Your Honour, in matter No 917 of

1987 in which there are a large number of

plaintiffs joined in the one action and it is those

proceedings that are before the Court.

HER HONOUR:  I do not think that is right, Mr King. What is

before the Court is an appeal, special leave having
been granted, by Baltic Shipping Company, against

an order awarding damages to Mrs Dillon.

MR KING:  Yes.

But in that very same action - it is rather like a class action, Your Honour. It is a highly

unusual set of circumstances because what has

happened is that the same passengers - they are

literally all in the same boat - - -

HER HONOUR:  Do you want to make application that the other

120 people be joined as respondents to the appeal?

MR KING:  Yes, Your Honour, I think Your Honour, with

respect, is correct.	Can I take Your Honour to the
summons.	I think we did -

HER HONOUR: Which summons? Yes, I have that.

MR KING:  In the preamble to the summons we seek an order:

on the part of JOAN NORMA DILLON for herself,
and for the co-plaintiffs in each of the
actions commenced in the New South Wales

Supreme Court Admiralty Division as number 917 of 1987 and 900951 of 1988 - - -

HER HONOUR:  You can write that in your document but I do

not know that it takes you any distance at all.

Let me go back to the question I asked you before.

Assume for the moment that this application is lost

and the Mikhail Lermontov wants its costs of this

application. Can it have recourse to anyone other

than Mrs Dillon?

MR KING: Yes, Your Honour, because those persons are

applicants in this application.

HER HONOUR:	But this is an application in the appeal.
MR KING:	Your Honour, let me put it another way around.

For example, it could not be said that no person can intervene in an appeal - - -

HER HONOUR:	But they have not.
MR KING:	That is the effect of what they are doing,

Your Honour.

HER HONOUR:  You say that. I have nothing before me to

suggest that the other - how many is it - - -

Baltic(2) 35 12/9/91

MR KING:	Your Honour, 146 people.
HER HONOUR:	- - -146 people know about this application.
MR KING:	Your Honour, with respect, that is not right.
HER HONOUR:	But it is right - - -

MR KING:  Because each of them instruct Mr Withnell. Each

of them are making the application.

HER HONOUR: That does not take the matter any further, and

let us go back one step: if Mr Street had sought

special leave to appeal, had joined as parties to

his application for special leave to appeal the other 120 people, they would have said, what is there to appeal against me, would they not?

MR KING:  They are not - Your Honour, that is the problem

aspect of the litigation because, as is evidenced

from the affidavit of Mr Withnell and in the

judgments that are annexed of Mr Justice Yeldham

and Mr Justice Carruthers, what happened was that

all of the actions were consolidated and there was

a test action under the special Admiralty rules.

Can I take Your Honour to the rules. Under

rule 61, Your Honour should have the rules there in

front of you.

HER HONOUR:  Of the Admiralty Rules?

MR KING:  Yes, Your Honour. In that rule it says:

The judge may order several actions to be

tried at the same time, and on the same

evidence, or the evidence in one action to be

used as evidence in another, or may order one
of several actions to be tried as a test

action, and the other actions to be advised to

abide the result.

That is a highly unusual rule and it has been

discussed in academic texts as a result of this
decision in that first instance as a way through to

class actions being taken in this country and,

indeed, that is effectively what happened here.

Mrs Dillon brought a class action of behalf of all the passengers who were injured in the sinking of

the vessel in New Zealand. What happened then was

that His· Honour Mr Justice Carruthers for some

17 days dealt with the issue of liability in

respect of each and every passenger and then,

subsequently, on the question of quantum,

Mrs Dillon's case alone was dealt with, but the

case has proceeded to date as if all of the

passengers are affected by the ruling that the

Court shall make.

Baltic(2) 36 12/9/91

Now, it is quite true that there would not be an estoppel res judicata as against, say, the

second-named plaintiff if Mrs Dillon's appeal

succeeded, but the parties have been ad idem that

any pronouncement of this Court and of the courts

below as to the liability of one or the other will

affect the prosecution of the case.

HER HONOUR:	May I be corrected if I am wrong. Absent the application for leave to appeal and its granting,
none of the other - I will say 100 - plaintiffs
could have obtained any security for the verdicts
that they might ultimately receive, is that
correct?
MR KING:	Your Honour, that, with respect, is not correct.
HER HONOUR:	How could they do that?
MR KING:	They could do that either by - if the vessel was

salvaged and then it started to trade to Australia,

they arrested it and obtained their security that

way.

HER HONOUR:	Yes, well leave that - - -
MR KING:	Which illustrates that that is possible for them

to get the security - or by an order of this Court

upon the appellant invoking the jurisdiction of the

Court, either the appellate - - -

HER HONOUR:  I am saying they could not get security in the

supreme court, could they?

MR KING:  In the Court of Appeal, they could have, yes. Or,

indeed, even before the trial judge, they could

have if he made it a condition of some order that

they were seeking or some jurisdiction they were

seeking to have exercised, because that is a power

that he has.

HER HONOUR:

Let me ask you this question: to the extent

that they might obtain security in the supreme

court, there is nothing about the filing of this

appeal or the grant of special leave that prevents

them getting such security, is that right?

MR KING: That would be right, Your Honour, yes.

HER HONOUR:  Then why would you come to this Court seeking

security on their behalf in respect of matters

about which this Court knows nothing?

MR KING: Perhaps I should have qualified that last answer.

There is no reason why they could not have obtained

security in the supreme court in appropriate

circumstances. They could not do so now, and they

Baltic(2) 37 12/9/91

can only do so in this Court because it is in this jurisdiction. Therefore what we say is - the way

we put it, Your Honour, is that as a price, really,

of invoking the Court's jurisdiction, in its

discretion the Court can demand security.

HER HONOUR:  Now you say that, but is that my inherent

jurisdiction?

MR KING:	Yes, Your Honour, by reason of the Admiralty
jurisdiction.
HER HONOUR:	What do you mean "by reason of the Admiralty

jurisdiction"? What in the Admiralty Rules or the

Admiralty Act governing this action says, the ship

not having been salvaged and brought to Australia,

that any of these plaintiffs can have security for

their damages? Forget costs for the moment, for

their damages.

MR KING:  Can I take Your Honour to the decision of

Mr Justice Hill in the case of The Lord Strathcona

(No 2). Ultimately this matter went to appeal, The

Lord Strathcona v Dominion Coal Company, a case which has been widely reported and referred to.

This was the decision at first instance in relation

to the question of security generally. What

happened, Your Honour, is that it was a mortgagee action. The plaintiffs were mortgagees who had a

mortgage or hypothecation in respect of the ship.

They arrested the vessel; there was no appearance

by the vessel; and they obtained a default

judgment. After that, the interveners, the

Dominion Coal Company, turned up and claimed that

they had a charter party with the owners of the

vessel and they claimed that the mortgagee, who had

arrested it, was bound by that charter party and

that furthermore, they were entitled to damages

from the mortgagee. There was an interesting

question about notice and whether a person who had

got notice of a contract with another could be

bound by it, the sort of question which was

discussed recently in the High Court, but that, in

a sense, is by the by.

The critical question was, that having sought

to intervene in the action as the charterers did,
to obtain damages, and then having lost that aspect
of the action with a judgment against them by the
judge, they then sought, for the first time, to
invoke the jurisdiction of the court by contesting

the right of the court to make the order and

disputing the court's order by appealing. At that

stage His Honour said that he had the right to

require any person in Admiralty who seeks to invoke

Baltic(2) 38 12/9/91

the jurisdiction of the court to order security for

the full amount of the claims made.

In that case, Your Honour, the intervention by

the charterer had the effect of postponing the

sale - - -

HER HONOUR: Well, why do you not go - leave aside

Mrs Dillon - to the supreme court and ask it to

make such an order in respect of the plaintiffs who

are not actually noted on the record of this Court?

MR KING: Because, Your Honour, we are not invoking the

jurisdiction - sorry, the appellant is not invoking

the jurisdiction of the supreme court.

HER HONOUR:  But you have invoked the jurisdiction of - I

see, you say it is only if they invoke the

jurisdiction that - - -

MR KING: Yes, they are invoking the jurisdiction of the

High Court by appealing to it.	They are seeking
orders from this Court.	We are saying, in the

discretion of the Court, that we are asking - - -

HER HONOUR:  There is a further question. You say that

notwithstanding the express terms of order 70
rule 7, there is inherent jurisdiction to order

security for the claim in an appeal from a decision

given in the exercise of Admiralty jurisdiction.

MR KING: Yes, we do, Your Honour.

HER HONOUR:  You do. Do you wish to argue that?

MR KING: That is the point, Your Honour, of The Lord

Strathcona - - -

HER HONOUR:  But do you wish to argue that this Court,

notwithstanding the express terms of order 70

rule 7, with respect to security for costs in an

appeal, has power by reason that it is exercising

appellate jurisdiction from a decision given in

Admiralty?

MR KING: Yes.

HER HONOUR:  You wish to argue that?

MR KING: Yes, I do, Your Honour.

HER HONOUR:  That argument I would like to hear. Then I

would wish to hear that it has power to order

security for claims of persons still pending in

another court and not the subject of any appeal to

this Court.

Baltic(2)	39	12/9/91
MR KING:	Yes.	Your Honour, we would submit that the two

questions are bound up with each other.

HER HONOUR:  Yes, well, I am sure they are, to this extent,

that if you do not get the first question answered

in your favour there is no way the second one will

be. The first, as a matter of logic, is the question that has to be first answered.

MR KING:  Yes. Your Honour, we would submit as a matter of

purpose and the underlying policy of the approach

taken by the courts, particularly in Admiralty, in

these matters, that - - -

HER HONOUR:  I am aware of that, except that I am sitting in

a matter which is brought on appeal.

MR KING: Yes. Your Honour, can I just summarize the

argument and then turn to the authorities we rely

upon.

HER HONOUR:  Yes. And is there any case you can point to

where this Court, sitting on an appeal from a

decision given in Admiralty, has asserted power to

do as you suggest?

MR KING:  No, Your Honour, I cannot point to such a case.

There have been very few Admiralty appeals over the

years, I am afraid.

HER HONOUR:  I suppose the other question really is: is

there something special about the nature of

appellate jurisdiction, as distinct from original

jurisdiction? In The Lord Strathcona (No 2), the

order was made in the exercise of original

jurisdiction?

MR KING:  Yes, it was. Upon the party seeking to invoke the

assistance of the court. And we say that that is

exactly applicable here. The appellant has always been defendant in this case, Your Honour, until it became appellant, and because of the changed

circumstances - well, we did not seek security in

the Court of Appeal because we did not think it was

necessary until the catastrophic events of recent

months.

HER HONOUR: It is an interesting description.

MR KING: Well, one might say

HER HONOUR:  The catastrophic events occurred some

considerable time ago and gave rise to the cause of

action, I would have thought.

MR KING:  I am talking about the events that have led to the

need to seek security. When I say "catastrophic",

Baltic(2) 40 12/9/91

perhaps one should say enlightening events that

have occurred in the Soviet Union. But certainly

from the point of view of securing judgments and

undertaking to meet obligations, honouring

obligations, there certainly is a very severe

questioning of the ability of the appellant to do

it.

HER HONOUR:  Can you indicate any case at all where an

appellate court has, for the first time, made an

order for the security for the claim?

MR KING:  Yes, Your Honour. I have handed up to Your Honour

a case called Sheffield v Ball, which is an old

decision of the old Admiralty Court of Delegates;

that was the old Court of Appeal in Admiralty.	It
is a single page judgment in the English Reports.

HER HONOUR:	Yes.
MR KING:	Your Honour, in that case Mr Sheffield was a

mariner, and he sued for his wages in the

Admiralty, and the judge pronounced for his wages

and did not grant him costs. He appealed from the

order that refused him costs, and the question

before the appellate court was whether the mariner

should give fresh security to prosecute his appeal

and whether his proctor, that is his solicitor,

should exhibit a new proxy, that is a security, or

whether the security - that is the guarantor for

the security - and whether the security and proxy

given in the Admiralty was sufficient. The judge

held, in the appeal, that:

We were all clear -

that is all the judges

that the proxy in the Admiralty was expired,

and that if the cause should be retained in

the Delegates, that the security given in the

Admiralty cannot be made use of; and that by

the practice fresh security and a new proxy

are always given upon an appeal, and so is

Clark's Prax. Adm.

HER HONOUR: That was security for costs, was it not?

MR KING: Well, it is

HER HONOUR:  I am interested in this notion that you can get

security for the damages or for the claim.

MR KING:  Can I just take it one step at a time.

Your Honour's first question to me was: is there a case in which the court for the first time has

ordered security - - -

Baltic(2) 41 12/9/91

HER HONOUR:  Yes, not for costs; security for the claim.

MR KING: Well, Your Honour, that was a case of security for

the claim because there the claim in the court was

for costs. Now, it is true - - -

HER HONOUR: Well, for a claim other than a claim for costs

in relation to the claim.

MR KING: Well, no distinction for that purpose can be made

because he was seeking a sum in respect of his

costs below and the security order was not made in
respect of - the security order, apparently, was

made in respect not only of the costs of the appeal

but also of the claim. But, Your Honour, can I

just take you to the general - in The Lord

Strathcona, Mr Justice Hill who, with respect, was

a very experienced Admiralty judge, at page 23,

said that:

the plaintiffs -

that is the mortgagees in that case -

ask for further security. The amount of the

security is for the registrar.

That is, the registrar in Admiralty.

The question for me is whether any further

security can or should be ordered.

Now, Your Honour, the security that was sought to

be obtained in that case was security for the whole claim, and not just for costs - it included costs - the sort of security the court makes when it

arrests a vessel.

At the end of July, upon the materials then
before me, I reversed an order which had been

made for further security for loss of interest

and marshal's expenses.

That is the arresting official.

I may have given good or bad reasons for so

doing, but it was done upon the interveners' -

that is the charterers' -

representation that judgment had gone against

them and they were not going to appeal -

and they were not going to appeal - Your Honour

sees that point -

Baltic(2) 12/9/91

and were therefore no longer interested in the

case; and as they were foreigners it seemed

idle to order security to be given by persons

who had no interest to obey the order. Now,

however, the interveners are taking a very

active interest in the case, and attend by

counsel to contest the present summons and

show that they will vigorously dispute the

plaintiffs' claims against them.	I think the
matter is now open.

And we would submit that is the same position here.

Here are defendants with an adverse judgment

against them. We could not have ever obtained

security against them in the court below, but as

soon as they invoked the jurisdiction of the

Court - - -

HER HONOUR: But, you see, that seems to me extraordinary.

As soon as they invoke an appellate jurisdiction, a

jurisdiction conferred by the Constitution, they

are put in a position of jeopardy that they would

not otherwise be in. That seems to me

extraordinary. This is a case where they are

participating in original jurisdiction.

MR KING:  What we say, Your Honour, to use the words of Mr

Justice Hill, the matter is now open. It would not

happen in any other jurisdiction except Admiralty,

but in no other jurisdiction except Admiralty can

one get security of this type.	It is common to be
granted in Admiralty.

HER HONOUR:  You say it is common to be granted in

Admiralty, but that is not necessarily correct. the supreme court because you invoked the

jurisdiction, not the ship owner.

MR KING:  No, not for that reason, Your Honour. We could

not get security in the supreme court because the

ship had sunk in New Zealand and had not been

salvaged and there were no assets in the

jurisdiction against which we could attach. Now we

are in a position to do something about it because

the appellant has said - - -

HER HONOUR: That is the whole question: are you in a

position to do something about it?

MR KING: That depends on Your Honour's discretion, we say.

HER HONOUR:  No, I am asking you a different question. I am

there is still this question whether I have

asking you: is there power in this Court? Assume moment,

power to award security for Mrs Dillon's claim and

Baltic(2) 43 12/9/91

then the further question whether I have power to

award security for the claims of the other

plaintiffs.

MR KING:  Could I come back to the order made by the Court

granting leave to appeal.	In that case, the order
was that we have leave to	obtain security
generally.

HER HONOUR:  To apply.

MR KING:  To apply to seek security generally. Now,

Your Honour, it was not just security for costs,

but that is the first indicator, we would submit,

that the matter is more than just a question of

costs. Then if one looks to the terms of rule 7 of

Order 70 one sees that, I would respectfully

submit, it is wider than just costs itself,

leaving aside any question of special rules in

Admiralty, because if I can take Your Honour to

Order 70 rule 7(1):

The Court or a Justice may, at any time on the

application of a respondent to an appeal,
order that the appellant give security, within

a time to be limited by the order and in such

amount as the Court or a Justice may fix -

so it is a matter for Your Honour as to the amount

of the security. It goes on to say:

for the prosecution of the appeal without

delay and -

it is two-edged, Your Honour, there are two aspects

to it -

and for the payment of such costs as may be

awarded by the Court.

Now, Your Honour, we not only seek security

for costs in that sense, but we also seek an amount

that is referred to in the affidavit ttfor the

prosecution of the appeal without delay".

HER HONOUR:	You do not seek security for the prosecution of the appeal, Mr King; you seek security for the
claims, in truth and in substance.  And indeed,
even in form.

MR KING:  Yes, Your Honour. We do not deny that we are

seeking - that is the very nature of our

application, that we seek that security. But what

we say is - and, indeed, if one goes to the

judgment of His Honour Mr Justice Carruthers, and

indeed judges at first instance do make these

orders quite frequently - the appellant sought to

Baltic(2) 44 12/9/91

appeal in one of the other cases of passengers who

recovered, I think, some $50,000-odd as well and,

in that case, His Honour directed the appellant to

pay over, as a condition of any appeal, $40,000.

Now, we would submit that the Court has very

ample powers in the control of its business,

particularly in the context of an Admiralty appeal

where the appellant is a foreigner and has no

assets in the country, to require as a condition of

prosecuting the appeal that it pay the full

amount - - -

HER HONOUR:  Has there been a stay on the judgment?

MR KING:  - - - full amount of the anticipated claims. No,

Your Honour, apparently the stay, as my friend pointed out, ceased upon the granting of leave to

appeal.	I think that is right.	I should check
that.

MR STREET: There has been a stay, Your Honour.

MR KING:  What Justice Mahoney said, Your Honour, was:

I think in the circumstances of this case it

is appropriate that a stay be given. The stay

will be given only upon the basis that the

claimant desires to and will press an
application for leave to appeal with all due

diligence.

His Honour then made an order in terms of

paragraph 1 of the motion. I am not precisely

aware of what order 1 of the motion was. But, Your Honour has power, under the rules of this

Court, to vary - let us assume that that stay continues to today - we would submit you have ample

power to vary that order and, indeed, we would

press you to do so.

HER HONOUR: That is in the exercise of inherent

jurisdiction, is it?

MR KING: In the exercise of interlocutory inherent

jurisdiction in the High Court.

HER HONOUR:  But that is limited by what is necessary in the

interests of justice.

MR KING:  Yes, Your Honour. We would submit in the very

unusual circumstances of this case - - -

HER HONOUR:  We need not stay on that because there has been

no application made on that. In any event, the

application is for security.

Baltic(2) 45 12/9/91

MR KING:  Your Honour was asking whether or not there was

any authority that an appellate court in Admiralty

could make orders for security in respect of claims

other than for costs. I have referred Your Honour

to Sheffield v Ball, which is a very old case on

appeal, in which the judge said:

that by practice fresh security and a new

proxy are always given upon an appeal -

and in particular, the general principles arising

from the Lord Strathcona (No 2) where, at page 23,

Justice Hill held that where a party who is

formerly a defendant seeks to invoke the

jurisdiction of a court or seeks assistance from a

court, as a price of obtaining that assistance, the

Admiralty Court has the power to require it to put

up a bond for the full amount of the claim. In

that case the damages were the loss to the

plaintiff by reason of the postponement of the sale

which occurred as a result of the intervention of

the charterer. We would respectfully submit,

Your Honour, that so here, that where we can show -

and Your Honour is prepared to assume for the

purposes of this argument and we would continue

that assumption - that prima facie an order for
security ought to be made, that on general

principle the Court may require that the security

should not be merely for costs but in respect of

the claims as well because of the peculiar powers of Admiralty courts in relation to these matters.

Your Honour, can I take you to page 3 of our submissions, point j. There is no suggestion that

an order for security would stifle the appeal. Nor

is it suggested that there would be any detriment to the appellant if it were required to furnish a bank bond in the usual way in Admiralty to secure the amount it may become liable to pay. There is evidence in the affidavit of Mr Withnell of a

legitimate and real concern that unless an order

for security is made, any final judgment may be

nugatory.

Paragraph 2 is to the amount of the security.

The applicants on the motion seek an order for

security generally, that is to cover costs and the

anticipated quantum of claims. The point is then

made that the matter is unusual. It is in the

nature of a class action and the relevant orders of

Justices Yeldham and Carruthers are annexed. The

applicants in the litigation are, and at the time
of the sinking were, literally all in the same
boat. The class is specific and limited. The

likely quantum and number of claims is likewise

specific and limited.

Baltic(2) 46 12/9/91

Security is commonly given in Admiralty

actions, unlike other actions, for the amount of

the claim, interest and anticipated costs. Again,

we would refer Your Honour to the Law Reform

Commission Report, what Professor Crawford had to

say at paragraph 89, and British Shipping Laws

Admiralty Practice, chapter 9. Can I hand to

Your Honour a copy of a relevant extract from the

Admiralty Practice. Paragraph 9 deals with the

whole question of arrest and illustrates the vital

distinction between Admiralty and other matters,

that security for claims - anticipated claims,

whether they are good or not is another matter - as

well as interest and costs may be obtained in discussion as to the effect of an undertaking,

which is the same as a bond, to be obtained when a

vessel is released.

as the res will probably not remain within the

jurisdiction it is essential that the

solicitor for the releasing party is satisfied

with the financial arrangements made on behalf

of his clients. It is often not possible for

a reliable estimate of the expenses of an

arrest to be given, particularly when outside

firms have been employed by the marshal as his
agents to carry out the various operations

mentioned above and they in turn are dependent

upon others to render accounts before they can

render their own. Therefore any estimate of

expenses would be made on the very high side

and if a vessel was released by someone acting

in person a deposit of sufficient size to

allow a considerable margin in respect of the

expenses would be called for.

In other words, there is a very speculative aspect

to the obtaining and furnishing of security in

Admiralty.

Going back to page 4, in this case had the ship been salvaged and continued to trade to

Australia the respondents could have arrested or, in accordance with the usual practice, threatened to arrest the vessel and obtained the security in

the sums presently sought. It is inappropriate

that the appellant should be better off because its

ship has sunk and was not salvaged. Security

provided in the form of a bond, is always on the

high side, that is to cover all anticipated claims

and costs.

Although it is normal in Admiralty for

security to be provided as a consequence of arrest or a threatened arrest, it is not limited to these

situations. We would submit that security

Baltic(2) 47 12/9/91

generally may be required in Admiralty against any party who invokes the jurisdiction of the Court or the assistance of the Court, as a condition of the exercise of jurisdiction or provision of that

assistance, and I have referred Your Honour to The

Lord Strathcona (No 2). In short at least in

Admiralty once the appellant invokes the

jurisdiction of this Court by the lodgment of its

notice of appeal after a grant of leave, the Court

has a complete discretion as to the amount of the

security and is not limited to the anticipated

costs of the appeal. The underlying policy of

courts in Admiralty in granting security generally

has long been recognised in the context of actions

by and against foreign parties

In the present case the amount sought for

damages is reasonable. It may be observed from

three judgments so far handed down, and referred to

in the affidavit of Mr Withnell, in each case the

injured passenger, with a varying extent of

injuries, recovered in excess of $50,000. There is

no reason to think that any other passenger will

recover less.	So far as costs are concerned, the
case has been run modestly to date.	The estimates
of costs are reasonable.	What I mean by that,
Your Honour - - -

HER HONOUR:	What you meant was that so far as costs are ever reasonable, did you?
MR KING:	The true facts are that we have not had senior

counsel, we have tried to keep the costs to an

absolute minimum, if we can, and we would submit

that the case has been run modestly and that

therefore the estimates of costs are reasonable.

It is reasonable that the claims of all 146

co-plaintiff passengers are covered by the order

for security for all these passengers have a right

to claim and have claimed.

Your Honour, coming back to the basis for the order, or the jurisdiction to make the order, we

would rely, firstly, upon Order 70 rule 7(1) and

the words:

in such amount as the Court or Justice may

fix, for the prosecution of the appeal without

delay -

and we would submit that those words are ample
enough to make an order of the type sought. But in

any event, if Your Honour is against us on that, we

submit those words are not limiting because this

Court is, indeed, an appellate Court in Admiralty

and there are many cases in which Mr Justice Dixon,

sitting both at first instance and on appeal in

Baltic(2) 48 12/9/91

this Court in Admiralty, has examined the full

extent of the Admiralty jurisdiction of this Court,

both as an appellate and as a court of first

instance, and in that regard we would refer Your

Honour to rule 126 of the Admiralty Rules, in this

case the 1952 New South Wales Rules, which I have handed up to Your Honour, and that rule provides:

In general, costs shall follow the result

but the judge may in any case make such order

as to the costs as to him shall seem fit.

In this case, indeed, in the Court of Appeal,

Mr Justice Kirby, the President, illustrated on the question of indemnity costs which he thought should

be awarded to my clients, on a question of

liability to all the plaintiffs, not just one but

all the plaintiffs, His Honour pointed out the

unusual but ample nature of Admiralty Rules because

of the dramatic way in which cases in Admiralty can

arise. Often foreign shipowners have no presence

in Australia. Regrettably that has been the case
since the earliest days in our country. Australia

is not a large ship owning nation. Often the ship

owners or one ship company is registered in flag of

convenience nations like Liberia or Panama. That

is the reason that the courts amply construe these

rules to ensure that full recovery, not just to

judgment but to execution, may be obtained. We

would submit that that rule ought to be amply

construed to provide for an order of the type here

sought.

Then finally we rely upon the jurisdiction in

Admiralty of this Court which is inherent in

respect of appeals; that this Court is an Admiralty

court and that although it is exercising appellate

jurisdiction it is still sitting as an Admiralty

Court and has the general supervision of the case,

and we would respectfully submit that where a party

invokes the jurisdiction by appealing, as it has

done in this case, filing its notice of appeal,

seeking orders in the High Court, then this Court

has ample jurisdiction and absolute discretion to

make orders which it thinks appropriate.

We would respectfully submit, Your Honour,

that the Court ought to make an order as follows: in terms of paragraph 1 of the summons, but with

this variation that in line 3, the word

"irrevocable" appear before the word "Bank", That

was the form of the order, Your Honour, sought in

Devenish's case referred to by the Chief Justice,

"irrevocable Bank bonds", and we would seek,

firstly, an order in the full amount, $7.3 million,

in respect of all the 146 co-plaintiffs claims,

Baltic(2) 49 12/9/91

plus the costs in all those actions, plus the costs

in the Dillon claim.

If Your Honour is against us in respect of the

full amount of that claim, then we would seek an

order for costs in the claim in Mrs Dillon's case;

alternatively costs in respect of her appeal, in

that order, if I could - - -

HER HONOUR:  Could you just say those last two matters again; the costs of her appeal.

MR KING: Firstly we would seek (a), (b) and (c) in order l;

that approximately is $8,880,000; that a bond in

that amount should be posted, as security for the

appeal. Alternatively, it should be the costs
only, which is point (c) - that is of all the
claims. Alternatively, it should be the costs only
of Mrs Dillon's claim which I think is stated in

Mr Withnell's affidavit, estimated at $25,000.

HER HONOUR: That is of the appeal to this Court, I think.

MR KING: Forty all told, Your Honour.

HER HONOUR: That is the costs of the appeal?

MR KING:  Yes, Your Honour. There does not appear to be

any dispute about that. That is at paragraph 7.

HER HONOUR:  I think it is disputed by an affidavit that was

filed today.

MR KING: Paragraph 7(iii) and (iv) sets out the costs of the appeal. Those are the matters that we would put.

HER HONOUR: There is an intermediate position between (11)

and (iii), which you put to me, which is

Mrs Dillons' costs of the action to date.

MR KING: Yes.
HER HONOUR:	And there is also another intermediate position

of Mrs Dillons' security - well the security for

her claim plus her costs today.

MR KING: Yes, well we would certainly pursue that,

Your Honour.

HER HONOUR:  Yes. I understand that. Now that completes

your submissions, does it?

MR KING:  Yes, it does.

Baltic(2) 50 12/9/91

HER HONOUR: Well, Mr Street, perhaps I could just get an

estimate from you - if you would like to hand that

in now - - -

MR STREET:  Your Honour, I would like to have up, if I could

a copy of our outline of submissions. Your Honour,

I would be - approximately 5 minutes, would be all
I would be in answer, taking into account that

Your Honour would read what is in the written

submission. So that, Your Honour, it is simply a

matter of when it is convenient to hear me.

HER HONOUR: Well, what would best suit your convenience.

MR STREET:  Your Honour, I would wish to do that most

convenient for the Court.	My submissions are very
short.

HER HONOUR: Well, perhaps we will hear them now.

MR STREET: If Your Honour pleases. Outside the written

submissions - Your Honour, the only matters outside

our written submissions that I wish to deal with

are these. Firstly, in relation to the question

which Your Honour raised with my learned friend as

to whether the respondent carries on business in

New South Wales, that is a question that I think,

on the evidence, is left unresolved, and it is one

which was discussed by His Honour,

Mr Justice Holland in a decision of National

Commercial Bank v Wimborne, (1979) 11 NSWLR 156, if

I could hand up a copy of the case from the

library, the passage appears at pages 165 to 166.

It is not that I suggest that it has been proved

one way or the other, but in answer to

Your Honour's question, it is not - - -

HER HONOUR:  Yes, there was some discussion of carrying on

business in ocean shipping.

MR STREET: Yes, Your Honour, and it was because I did not

want to have it suggested to the extent that it is	the plaintiff's application, we would say that the
respondent has not proved that the appellant does
not carry on business, but I accept that there is
no evidence that takes the matter any further. I
do not wish to -

Your Honour, the next matter that I wished to

answer that Your Honour raised was the question of

the distinction between appellate and original

jurisdiction, and again, we would respectfully

submit that there is a very clear distinction

between appellate and original jurisdiction, as

recognized in the Constitution in section 73 and

section 76. The distinction there is that,

Your Honour, in our respectful submission, the

Baltic(2) 51 12/9/91

application is just misconceived, in so far as my

learned friend relies on some notion of Admiralty

jurisdiction attaching to this Court.

Your Honour, the decision which my learned friend referred to in Brundza v Robbie, 88 CLR was

one which was under what were the old High Court

rules, in which, being out of the jurisdiction was

one of the express criteria for the making of a

security order but, none the less, what was said in

Brundza v Robbie was the absence there of any

assets within the jurisdiction. The evidence in

this Court is that there are vessels that call in

Australia regularly, and the evidence is that those vessels are owned by the appellant, and my learned friend had the opportunity to challenge such

evidence and no such challenge was made.

Your Honour would not reject the evidence in that

regard, and there being assets within the

jurisdiction, it falls outside that category of

case where there is both a foreigner and no assets.

Your Honour, the submissions made about The

Lastrigoni and writs in rem at the commencement of

proceedings is wholly irrelevant for the purpose of

execution of judgments and, in my respectful

submission, misconceives the nature of that

decision.

Your Honour, the next matter I would simply wish to identify is this: there have been a number

of references to material annexed to Mr Withnell's

affidavit that is just wholly irrelevant and

inadmissible, by way of newspaper articles and the

like, not attributed to an officer of the defendant

and, Your Honour, we would go so far as to say this

in relation to the application, other than what we put in our written submissions, the pursuit, as it

has been continued right up until the end of this

application, of the prayers for relief that extend

to the subject-matter and in relation to persons

not before this Court, is just vexatious, and the

affidavit, in the form in which has been presented, inclusion of the material that has been put in this is likewise vexatious. We would respectfully ask

that Your Honour, in light of the nature of the

application being pursued in that way and that

material being presented in that way, make a

solicitor/client order for costs in dismissing the

application, if the Court pleases.

HER HONOUR:  Thank you. Anything in reply, Mr King?

MR KING:  Your Honour, yes. I do not know - it appears my

friend is not relying on his written submissions,

because he has not referred to them, so that I will

deal with the oral submissions of my friend.

Baltic(2) 52 12/9/91

HER HONOUR:  How much time do you wish?

MR KING: Well, I would certainly wish an opportunity to

respond, Your Honour.

HER HONOUR:	Yes. Well, you can assume that, in accordance with the normal practice of this Court, I am taking
the written submissions as having been relied on.
MR KING:	Thank you, Your Honour.
HER HONOUR:	We will adjourn until 2pm.

AT 1.01 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.02 PM:

HER HONOUR:	Yes, Mr King.
MR KING:	Can I deal with the written submissions of my

friend? The point that emerges from paragraph 1,

particularly paragraphs 3 and 7 perhaps, is that
there is no basis for suggesting, or no proper basis for suggesting that the appellant has no assets in the jurisdiction but, Your Honour, the

affidavit of Mr Withnell specifically asserts that and specifically draws attention to the fact. The

affidavit, in response, of Mr James, puts nothing
on the record to suggest that what Mr Withnell has
asserted is incorrect or wrong. There is clear

evidence there are no assets within the

jurisdiction, and if one takes the decision of

Mr Justice Holland, referred to by my friend, in

National Commercial Bank and Wimborne, (1979)

11 NSWLR 156, a decision recently approved in

18 NSWLR 223, the point made by my client is made

stronger, because in that case at pages 165 to 166,

and in particular at point Eat page 165, the judge

said - he was looking at this issue for the

purposes of determining from a point of view of
private international law whether a company was

carrying on business in New South Wales, or

Australia. The judge said:

First, it must be carrying on its

business here and this it can do only by an

agent and will not be doing unless the agent

has authority on behalf of the corporation to

make contracts with persons in New South Wales

binding on the corporation -

Baltic(2) 53 12/9/91

He then goes on to say that in order for the point

to be made good there is need for a presence so

that a writ in personam may be served upon the

entity. Now, Your Honour, it would be impossible

for my client to serve a writ in personam upon the
defendants in this case - or the appellant, because
the very nature of a writ in rem is that a ship can
be served by service of the writ in rem, tacking it
to the mast - the old procedure, which they now do

by sticky tape - the marshal does with sticky tape

- we cannot do that with a writ in personam, it is

not possible. So the point is made good.

HER HONOUR:  Mr King, I do not follow that.

MR KING: Perhaps I should start again. The general

consideration is this: it is our contention that
the evidence is that there are no assets of the

appellant within the jurisdiction.

HER HONOUR:  Yes, I follow that. The reference says that a

writ in personam might be served on the entity

refers to a situation in which you do not need to

have leave to serve outside the jurisdiction.

MR KING: That is right, yes.

HER HONOUR:  You have got an Admiralty jurisdiction here,

and	I am not too sure what the rules for service
are,	but it does not deal - it is not a question
with	the means of effecting service, is it?

MR KING:  No. Your Honour, the case is all about whether

the company had any presence within the

jurisdiction in New South Wales in that case, and

it is my simply submission that even if you adopt

the tests Mr Justice Holland in that case, there is

no evidence in this case that the appellant has

presence within the jurisdiction, and the best way
of testing that is to say, "Would it be possible

for Mrs Dillon to have served a writ in personam

upon the defendants?" and the answer is, no, it

would not be possible. The only way it could be

done, according to the evidence, is by serving a

writ on the vessel, but that is not possible

either, because there is no vessel. It is at the

bottom of the sea. That is our point.

HER HONOUR:	Yes, thank you.
MR KING:	Your Honour, to talk about paragraph 7 of point A,

that:

it would not accord with international comity

to found the making of any order upon

democratic development in the appellant's

country of origin -

Baltic(2) 54 12/9/91

with respect, is specious in the extreme. There is

no question of international comity here, it is a

question of whether our judgment will be honoured. That is the issue. Will our judgment be honoured?

Will our costs and expenses be met? And we would

submit that we have raised that issue in a proper

fashion.	The evidence that has been put forward by
the respondents is equivocal, at best.	No positive

material indicating assets in the jurisdiction has

been put before the Court. In any event it is that

lack of presence within the jurisdiction which is

critical, and further to that point, my friend

suggested that the decision of Brundza v Robbie of

Mr Justice Fullagar in some way should be qualified

but, Your Honour, at page 175, His Honour makes no

qualification of the type referred to by my friend,

indeed, further on down the page the learned judge

said, in dealing with the question of delay:

There has been substantial delay in

applying for further security. The

application could have been made at any time

after 21st July. It is a well settled rule

that applications for security for costs must

be made promptly -

and there is a citation -

I would agree that delay, as such, may often

be of less importance when the ground of the
application is that the appellant is out of

the jurisdiction than where the application is

based on some other ground.

HER HONOUR: Well, that does remind me of something. It

perhaps does not strictly arise in reply - I should

have thought a bit earlier - Baltic Shipping

Company was the appellant in the Court of Appeal?

MR KING: Yes.

HER HONOUR:

And there was no application for security of

the sort now sought at that stage?

MR KING:	No, that is right.
HER HONOUR:	But the shipping company became independent of the Government of the Soviet Union at least 18
months ago?

MR KING: Well, no, Your Honour, those events have occurred

since the Court of Appeal heard this matter.

HER HONOUR: Well, the initial reports of independence go

back to April of 1990 - let us call it

privatization - that is a word we seem to

understand, at least, in this society.

Baltic(2) 55 12/9/91

MR KING:  The earliest one, Your Honour, is September 1990,

but that was an indication then that that is what

they were seeking to do.

HER HONOUR:  I see. Thank you.

MR KING:  And then it was not until July of this year that

it became conclusive that that is what, in fact,

has been achieved - July of this year, but of

course, the leave process was then under way and we

could not apply until the appeal was actually on

foot, in accordance with Bahr v Nicolay,

Your Honour.

HER HONOUR:	Yes, that does answer it, thank you.
MR KING:	Your Honour, another point made was that in some

way the Commonwealth Constitution prevented us from

seeking the order we seek. Can I ask Your Honour -

I would merely refer Your Honour to section

76(iii), which provides:

The Parliament may make laws conferring

original jurisdiction on the High Court Admiralty jurisdiction any more.

HER HONOUR:  Yes, but it has not. We have not got original

MR KING: Well, with respect, Your Honour, in relation to

appeals -

HER HONOUR:	Under 75(iii), have we?
MR KING:	Your Honour, in 1912 the Privy Council put in

place an ordinance which conferred Admiralty

jurisdiction on the High Court as a colonial Court

of Admiralty - pursuant to the Colonial Courts of

Admiralty Act and it is that jurisdiction which has been maintained up until the corning into operation

of the Admiralty Act 1988 and this litigation is

under the old dispensation. Your Honour, I would

also refer the Court to section Sl(i), relating to

the power to make provision for laws for:

Trade and commerce with other countries, and

among the States -

which has been extended in relation to navigation
matters, specifically. Your Honour, I will find

the section of the Constitution which does that.

HER HONOUR:	Yes, but nothing turns on that, does it?
MR KING:	No, all I -
HER HONOUR:	It is a question, - if the Court has any

Admiralty jurisdiction different from its appellate

Baltic(2) 56 12/9/91

jurisdiction, it is by reason that the Court

continues at this time to be a colonial Court of Admiralty, at least with respect to matters that were instituted under the old Act.

MR KING:	Yes, Your Honour.
HER HONOUR:	Yes.
MR KING:	And we say that it has similar power to the

predecessors of all Admiralty appellate courts,

such as the Court of Delegates in which

Sir George Lee sat, to which I have referred, and where it has a very broad discretion as to the sort

of orders that can be made.

Your Honour, the only other matter to which I

would respectfully refer is paragraph 9 of my

learned friend's submissions. We say that that

point really is not made good for the reasons
outlined a short while ago, namely that this matter
was not available for us to be - we did not agitate
this in the Court of Appeal because at that stage

it did not appear as if the Baltic Shipping Company

was in any trouble.	We thought that our claims
would be honoured without any contest.	We did not

raise or agitate the issue, and it is only since

then that the issue has arisen, because of the

dramatic events that have occurred and received

such wide publicity in this country. There seems

to be no contest as to - - -

HER HONOUR:	But that really is beside the point, is it not?
MR KING:	The fact that there has been publicity, yes,

Your Honour.

HER HONOUR:  No, no. which was July, became privatized, the events in Once the Baltic Shipping Company,

the Union of Soviet Socialist Republics became, at

best, marginal, did they not, to your case, your

application?

MR KING: Yes, that is so. Except to this extent,

Your Honour, I am reminded: the Russian Government

is a major creditor of the appellant and - - -

HER HONOUR:	Or the USSR?
MR KING:	USSR, Your Honour, for something like 247 billion

roubles.

HER HONOUR:  Presumably that did not happen just since the

coup.

MR KING:  Oh no. It has been outstanding for a long time

and has not been paid, which is another indication

Baltic(2) 57 12/9/91

of the credit problems that are faced by the

appellant, which is part of the evidence that we

rely upon to illustrate the severe financial strain

that it is under, which is the admission, indeed,

of the president of the company, as referred to in

the material. There is nothing further,

Your Honour.

HER HONOUR:  I shall reserve my decision in this matter.

Thank you, gentlemen.

AT 2.18 PM THE MATTER WAS ADJOURNED SINE DIE

Baltic(2) 58 12/9/91