Bremer Landesbank Kreditanstalt Oldenburg v "Turakina"
[1999] FCA 261
•19 MARCH 1999
FEDERAL COURT OF AUSTRALIA
Bremer Landesbank Kreditanstalt Oldenburg v "Turakina" [1999] FCA 261
ADMIRALTY - appeal against costs order made by primary judge - costs order made in proceedings where the Master and crew of two arrested ships sought payment of wages since arrest and costs of repatriation as part of the Marshal's costs of arrest - proceedings were successful in part only - whether primary judge erred in holding that the Master and crew were entitled to recover the whole of the costs of their application payable from the fund created by the sale of the ships - whether decision to depart from the ordinary rule that costs follow the event was open to the primary judge - whether primary judge entitled to view the "reasonableness" of the Master and crew's application as a relevant consideration in awarding costs - principles governing payment of legal costs from a fund - whether leave should be given for the Marshal to intervene in the appeal - role of the Marshal in proceedings in the Court.
Latoudis v Casey (1990) 170 CLR 534
Re Buckton [1907] 2 Ch 406
Star v Silvia & Pantzer (No 2) (unreported, Young J, Supreme Court of New South Wales, 14 September 1994)
Meeson, Nigel, Admiralty Jurisdiction and Practice (Lloyd's of London, 1993)BREMER LANDESBANK KREDITANSTALT OLDENBURG & ANOR v THE SHIP "TURAKINA" & ORS
NG 997 OF 1998BREMER LANDESBANK KREDITANSTALT OLDENBURG & ANOR v THE SHIP "RANGITATA" & ORS
NG 998 OF 1998BEAUMONT, MOORE and MERKEL JJ
19 MARCH 1999
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 997 OF 1998
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
BREMER LANDESBANK KREDITANSTALT OLDENBURG
First ApplicantDEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT
Second ApplicantAND:
THE SHIP "TURAKINA"
First RespondentPATRICK STEVEDORES NO 2 PTY LIMITED
Second RespondentTHE MASTER AND CREW LATELY EMPLOYED UPON THE SHIP "TURAKINA"
Third Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 998 OF 1998
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
BREMER LANDESBANK KREDITANSTALT OLDENBURG-GIROZENTRALE
First ApplicantDEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT
Second ApplicantAND:
THE SHIP "RANGITATA"
First RespondentECOMAR-SCHIFFARHTS Gmbh & CO KG
Second RespondentWAITEMATA STEVEDORING SERVICES LIMITED
Third RespondentNEW ZEALAND STEVEDORING COMPANY LIMITED
Fourth RespondentTHE MASTER AND CREW LATELY EMPLOYED UPON THE SHIP "RANGITATA"
Fifth Respondent
JUDGES:
BEAUMONT, MOORE AND MERKEL JJ
DATE:
19 MARCH 1999
PLACE:
SYDNEY
THE COURT ORDERS THAT:
1. The appeal is dismissed.
2. The appellant to pay the costs of the respondents as agreed or taxed.
3. The appellant to pay the costs of the Marshal on an indemnity basis.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 997 OF 1998
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
BREMER LANDESBANK KREDITANSTALT OLDENBURG
First ApplicantDEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT
Second ApplicantAND:
THE SHIP "TURAKINA"
First RespondentPATRICK STEVEDORES NO 2 PTY LIMITED
Second RespondentTHE MASTER AND CREW LATELY EMPLOYED UPON THE SHIP "TURAKINA"
Third Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 998 OF 1998
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
BREMER LANDESBANK KREDITANSTALT OLDENBURG-GIROZENTRALE
First ApplicantDEUTSCHE SCHIFFSBANK AKTIENGESELLSCHAFT
Second ApplicantAND:
THE SHIP "RANGITATA"
First RespondentECOMAR-SCHIFFARHTS Gmbh & CO KG
Second RespondentWAITEMATA STEVEDORING SERVICES LIMITED
Third RespondentNEW ZEALAND STEVEDORING COMPANY LIMITED
Fourth RespondentTHE MASTER AND CREW LATELY EMPLOYED UPON THE SHIP "RANGITATA"
Fifth Respondent
JUDGES:
BEAUMONT, MOORE AND MERKEL JJ
DATE:
19 MARCH 1999
PLACE:
SYDNEY
REASONS FOR JUDGMENT
THE COURT
Introduction
These are appeals by Bremer Landesbank Kreditanstalt Oldenburg and Deutsche Schiffsbank Aktiengesellschaft (“the appellants”) against costs orders made by Tamberlin J on 17 August 1998 in two related applications. The applications arose from the arrest of two ships, the “Turakina” and the “Rangitata” on 19 February 1998 following proceedings commenced in this Court by Waitemata Stevedoring Services Limited (“Waitemata Stevedoring”) and Patrick Stevedores No 2 Pty Ltd (“Patrick Stevedores”) seeking payment for stevedoring and related services each had provided to one of the vessels.
General Background
In order to understand the issues arising in these appeals it is necessary to describe events following the arrest of each ship. However what occurred in relation to each was, for present purposes, essentially the same and occurred at the same time. Accordingly it is only necessary to refer to events following the arrest of the Turakina to illustrate the circumstances in which Tamberlin J came to make the costs orders which are the subject of these appeals. On 10 March 1998, after the arrest of the Turakina, an application was filed on behalf of the Master and crew seeking orders which included:
3.The wages claimed by the Master and Crew for carrying out their duties in the preservation of the Turakina since the time of arrest on 19 February 1998 are to be paid as the Marshal’s costs of arrest and are to be paid fortnightly or at such other times as may be agreed with the Marshal or ordered by the Court;
4.The Master and Crew are to be repatriated to their homes once they are discharged from the Turakina;
5.The cost of the repatriation of the Master and Crew are to be paid as the Marshal’s costs of arrest;
6.In the alternative to Orders 3 and 5, the wages are to be paid by the Owners of the Turakina.
That application was heard on 23 March 1998 though written submissions were later filed and the last filed on 8 April 1998. Judgment was given by Tamberlin J on 5 May 1998. On 23 April 1998 proceedings were commenced in this Court by the appellants as secured creditors by way of an amended writ seeking judgment in a sum exceeding DM4,000,000 and an order that the Turakina be sold. On 17 August 1998, Tamberlin J gave judgment on costs in the application by the Master and crew.
Tamberlin J’s judgment of 5 May 1998 concerning the application by the Master and crew
On 5 May 1998 Tamberlin J published reasons for judgment dealing with the application of the Master and crew. His Honour concluded that the claim of the Master and crew against the Marshal for wages since arrest should fail but that an order for repatriation ought to be made. His Honour made no formal orders but directed that the parties bring in short minutes to give effect to his reasons. After some introductory observations in his reasons, Tamberlin J described the position of the Master and crew in the following passage:
The Master and crew on each vessel are understandably anxious to protect their entitlements in respect of the work undertaken by them in relation to the ships. As at the date of hearing they do not wish to compromise the strength of their position by leaving the ship. They, therefore, seek to ensure that satisfactory arrangements are made for their wages and other entitlements and also for their repatriation to New Zealand in due course. As at the date of hearing, no offer satisfactory to them for payment of wages and repatriation had been forthcoming.
His Honour then referred to the orders they sought and summarized events since the arrest of the ship. His Honour noted that the Marshal had appointed the Master as “ship’s keeper” and that the owner of the vessel had not paid the wages of the Master and crew since 19 February 1998. His Honour identified the issues for determination in the following way:
·whether, in the circumstances of this case, the wages claim by the Master and crew, in respect of work on the vessel since arrest on 19 February 1998, are expenses of the Marshal in relation to the arrest;
·whether the Court should direct that the plaintiff in each proceeding pay the wages of Master and crew since the arrest;
·whether the Master and crew should be repatriated to their home port once they are discharged from the vessel; and
·whether the repatriation expenses are an expense of the Marshal in relation to the arrest.
His Honour summarized the evidence from the Master given in the proceedings including evidence about work that had been undertaken by the crew since the arrest. His Honour then dealt with the position of the Admiralty Marshal and undertook an historical survey of that office by reference to Pritchards’ Digest of Admiralty and Maritime Law, 3rd ed., 1887 and F L Wiswall Jr’s The Development of Admiralty Jurisdiction Practice Since 1880 as well as the judgment of Lord Stowell in “The Hoop” [1801] 4 C Rob 145 and the judgment of Cooper J in Bayside Air Conditioning Pty Ltd v The Owners of the Ship “Cape Don” (unreported, 15 May 1997).
Tamberlin J went on to discuss the nature of a maritime lien in the context of a claim for wages of a Master or crew member and explained how it is now well settled that such a claim confers on the claimants a maritime lien. His Honour then discussed whether the wages of Master and crew can properly be described as fees or expenses of the Marshal in relation to the arrest as that expression appears in rule 41 of the Admiralty Rules. He noted that an application for an arrest warrant constitutes an undertaking to pay those fees and expenses and exposes a solicitor who gives that undertaking to committal if it is not complied with. He also noted that the Marshal may make interim demands for fees and expenses: see rule 78, and that upon arrest the ship is in the custody of the Marshal who must take steps to retain safe custody of and to preserve the ship: see rule 47.
His Honour then dealt with the post arrest wages of the Master and crew who had not been engaged by the Marshal and whether they were comprehended by the expression “fees and expenses of the Marshal in relation to the arrest”. He referred to four English authorities and one Australian authority which touched on the issue of post arrest wages of the Master and crew but which did not determine what the Marshal’s position was in relation to their payment.
Tamberlin J turned to the submissions made on behalf of the Master and crew in support of their contention that post arrest wages should be treated as fees and expenses of the Marshal. It had been submitted that the Master had been appointed the ship’s keeper and that it could be fairly contemplated there would be an active and continuing program of maintenance and preservation carried out on the arrested ship under the supervision of the Master and that such work was necessary and appropriate to preserve and maintain the ship while in the custody of the Marshal. It followed, it was submitted, that as this work had been carried out with the knowledge of the Marshal and was directed to the performance of his duties, the cost of paying their wages is one which could be properly incurred by the Marshal and characterized as an expense in relation to arrest.
His Honour then identified and discussed what he viewed as difficulties in the approach advanced on behalf of the Master and crew. In the course of that discussion he noted that the crew had not been engaged by the Marshal and concluded:
Whilst it is true that work has been done on the vessel by the Master and crew, such work cannot in a realistic sense be said to have been carried out for the benefit of the Marshal, who is the Executive officer of the Court charged with the custody of the vessel pending determination of the proceedings or sale. In the absence of any engagement between the Marshal, the Master and crew, it cannot be said that the wages of the crew members are fees or expenses of the Marshal in relation to the arrest.
Tamberlin J then dealt with the question of repatriation. He summarized and rejected a submission that had been made on behalf of Patrick Stevedores that the costs of repatriation should be treated as a cost of the Marshal of complying with an anticipated order for sale and should not be treated as a cost of the Marshal of the arrest. His Honour concluded:
The need for repatriation of the crew arises as a consequence of the arrest of a vessel with a foreign crew on board, on the application of a plaintiff. There is an evident and real connection between the arrest and the need to pay repatriation expenses. Something must be done with respect to the crew. They should not be permitted or required to remain indefinitely on the vessel regardless of the necessity or appropriateness of their remaining. Repatriation expenses, in my view, in the present circumstances, are an appropriate expense of the Marshal in relation to the arrest because it is in the interest of all parties concerned to minimise the payment of daily expenses pending the determination of the dispute and where appropriate the sale of the vessels. In order to minimise costs it is clearly desirable that vessels, the subject of this proceeding, should be de-manned and laid up as soon as practicable. …
Where the crew are willing to return to their home port and accept repatriation, it is within the discretion and power of the Marshal to arrange for repatriation and make demand on the undertaking given on arrest by the applicant’s solicitor to pay the expenses of the Marshal in advance if necessary.
His Honour then summarized the conclusions he had earlier reached which included an observation:
However, I do not consider that it necessarily follows that in all circumstances that claims for post arrest wages by the Master and crew can never be described as an expense of the Marshal in relation to the arrest. This will depend, for example, on any specific agreements or arrangements entered into between the Marshal and the Master and crew.
His Honour directed that short minutes be brought in to give effect to the reasons and also that the parties address the question of costs.
Decision of Tamberlin J of 17 August 1998 concerning costs
It is convenient to first set out the orders made on 17 August 1998, as entered, before considering Tamberlin J’s reasons for making them. His Honour ordered:
In respect of costs in relation to the claim for wages and repatriation expenses by the Master and crew see in respect of each ship.
1.The Marshal arrange to repatriate such of the Master and crew of the MV “Turakina” and the MV “Rangitata” as are willing to be repatriated.
2.The Marshal’s costs of such repatriation are to be the fees and expenses of the Marshal in relation to the arrest.
3.The Marshal’s costs, with respect to the application of the Master and crew, the subject of the reasons for judgment of 5 May 1998, should be the fees and expenses of the Marshal in relation to the arrest on a solicitor-client basis.
4.75% of the Plaintiff’s legal costs of the application of the Master and crew, the subject of the reasons for judgment of 5 May 1998, be part of the Plaintiff’s costs and expenses of arrest and be payable from the fund representing the proceeds of the sale of the “Turakina” and the “Rangitata”.
5.All of the Master and crews’ legal costs of the application, the subject of the reasons for judgment of 5 May 1998, be payable from the fund representing the proceeds of the sale of the “Turakina” and the “Rangitata”.
The reference to the “Plaintiff’s” in order 4 is to one or both of the stevedores, Waitemata Stevedoring and Patrick Stevedores.
In his reasons for judgment of 17 August 1998 Tamberlin J noted that the Master and crew had been successful in relation to their claim concerning repatriation but had failed in relation to the claim for wages and related entitlements. His Honour noted that counsel for parties other than the Master and crew had submitted that in the event that there was a shortfall in the proceeds of sale of the vessel, after meeting all substantiated claims, the Master and crew should repay to the fund, from moneys received by them, the costs attributable to their unsuccessful claim for wages. This would maximize the funds to meet the other claims. His Honour then said:
I do not think this approach is appropriate in the present circumstances for two reasons. The first is the benevolent approach which the Admiralty Court adopts when confronted with the procedures of seafarers whose ship is arrested in a foreign port. Historically there has developed out of the solicitude of the Admiralty Court the recognition of a claim in the nature of a maritime lien for the seamen discharged in a foreign port: see Thomas, Maritime Liens, (1980) par 303; United States Trust Company of New York v Master and Crew of the Ship “Ionian Mariner” (1997) 149 ALR 200 at 223. The second reason is the absence of directly relevant guidelines as to whether the wages should be directed to be paid by the Marshal. In these circumstances, it could not be said that the application was unreasonable since it was made in an attempt to alleviate the immediate needs of the Master and crew and there was no authority on the question raised.
…
Notwithstanding that the Master and crew have only been partially successful on their application, having regard to the predicament in which they were placed through no fault of their own, I consider that they should recover all of their costs on this application from the fund which will arise when the ships have been sold. The plaintiff [Patrick Stevedores] has been successful on the claim concerning wages and related expenses and, therefore, having regard to the submissions made, in my view, the plaintiff should have 75% of its costs, to be paid from the fund.
The apportionment of costs of 75% and 25% reflected the costs attributable to defending the claim for wages on the one hand and the claim for repatriation on the other. His Honour refused to apportion costs on a different basis in the proceedings concerning the “Rangitata” where it had been submitted that Waitemata Stevedoring had made several submissions that had failed and lacked substance.
Issues in the appeal
In their notices of appeal filed on 23 September 1998 the appellants challenged both order 4 and order 5 made by Tamberlin J on 17 August 1998. The challenge to order 4 was abandoned immediately before the hearing of the appeals. Thus the only order in issue is order 5 concerning the costs of the Master and crew. Senior counsel for the appellants accepted that the impugned order was an interlocutory one and made in the exercise of a discretionary power. It was therefore accepted that the basis upon which an appellate court might intervene was a limited one: see House v R (1936) 55 CLR 499 at 504 – 505 and Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1987) 17 FCR 211 at 222. Thus the appellants accepted they must demonstrate that the primary judge acted upon wrong principle, or allowed extraneous and irrelevant material to guide and affect his judgment. The appellants identified two matters which were said to demonstrate error of the requisite type. The first was that his Honour had taken into account whether the application by the Master and crew had been a reasonable one. This, they submitted, was an irrelevant consideration and reference was made to Latoudis v Casey (1990) 170 CLR 534 at 543, 563 – 564 and 566 – 567 and 570. The other was that ordinarily costs followed the event. The Master and crew had been unsuccessful and the solicitude referred to by Tamberlin J did not provide a sufficient reason to depart from the ordinary rule. Senior counsel for the appellants also pointed to the fact that their interests would be adversely affected by the order. Funds to satisfy the costs order in favour of the Master and crew would have priority over any claims the appellants had as a secured creditor at a point when the funds from the sale of the ship were distributed.
Counsel for the Master and crew submitted that as it was an appeal against the exercise of a discretionary power the appellants must demonstrate that Tamberlin J acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect his judgement, was mistaken as to the facts or failed to take into account material considerations: see House v R (supra); Queensland Wire Industries Pty Ltd v BHP Co Ltd (supra); Cummings v Lewis (1993) 41 FCR 559; George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803, Antonovic v Volker [1986] 7 NSWLR 151 and Beneficial Corporation v Karavas [1991] 23 NSWLR 256. It was also submitted that as the judgment concerned a matter of practice and procedure the appellants must demonstrate that the decision appealed from must work a substantial injustice to one of the parties: see Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 and National Mutual Pty Ltd v Sentry Corp (1988) 19 FCR 155 at 160 – 161. Counsel for the Master and crew put in issue that it was irrelevant to take into account the peculiar position of the Master and crew in an Admiralty Court nor was there any error manifest in Tamberlin J’s consideration of the partial success of the Master and crew in the substantive proceedings.
Resolution of the appeal
It may be accepted that in civil proceedings the general rule is that costs follow the event and the costs of the successful party are met by the unsuccessful party. However the rule so stated, like many general rules, is subject to qualifications and exceptions. Two are relevant in the present case.
The submission made on behalf of the appellants that costs should have followed the event in the applications of the Master and crew proceeded on a premise which is false, namely that the Master and crew failed entirely in their application. As earlier discussed the Master and crew succeeded in relation to one of the issues identified by Tamberlin J, that is, whether an order should be made concerning their repatriation and the manner in which the costs of that repatriation should be met. The Master and crew neither failed entirely nor succeeded entirely in their application. They succeeded on one issue and failed on another. In those circumstances the principles guiding the exercise of the discretion to award costs are not as simple as postulated by the appellants.
What is often now treated as a convenient starting point in considering this question is the judgment of Toohey J in Hughes v Western Australian Cricket Association (Inc) & Ors [1986] ATPR 40-748 at 48,136. His Honour noted that ordinarily costs follow the event but where a litigant had succeeded only on a portion of their claim, the circumstances may make it reasonable that they bear the expense of litigating that portion upon which they failed. Also a successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered to pay the other party’s costs of them. Toohey J noted that in this sense, “issue” does not mean a precise issue in the technical pleading sense but a disputed question of fact or law.
It would have been open to Tamberlin J to have adopted an approach involving apportionment in relation to the costs of the Master and crew. However it appears the approach his Honour took of not apportioning costs, indeed not awarding costs against the Master and crew at all and ordering their payment from a fund, was influenced by two factors. The first was the special position of seamen in an Admiralty Court and the second was his Honour’s view about the reasonableness of the claim for wages. The existence, but not the relevance, of the first factor was not put in issue by the appellants and indeed it had been expressly adverted to by senior counsel for the appellants in argument before Tamberlin J as to what costs orders should be made. It is based on an approach adopted by the High Court of Admiralty discussed in Meeson’s Admiralty Jurisdiction and Practice 1993 at 42:
The court has always adopted a benevolent and protective attitude towards seamen to avoid overreaching by shipowners. In The “Minerva” Lord Stowell described the disparity of bargaining power in the negotiation of special contracts in following memorable words:
“On the one side are gentlemen possessed of wealth, and intent, I mean not unfairly, upon augmenting it, conversant in business, and possessing the means of calling in the aid of practical and professional knowledge. On the other side, is a set of men, generally ignorant and illiterate, notoriously and proverbially reckless and improvident, ill provided with the means of obtaining useful information, and almost ready to sign any instrument that may be proposed to them; and on all accounts requiring protection, even against themselves.”
The particularly high regard which the Admiralty Court has for the intellect of seamen is also illustrated by the words of Lord Stowell in another case, The “Juliana”, where he said: “… the common mariner is easy and careless, illiterate and unthinking; he has no resources, in his own intelligence and experience in habits of business …”
Whilst we would not accept the above description as necessarily having accuracy today the underlying premise of disparity of bargaining power as a basis for the benevolent approach remains valid.
The second factor relied on by Tamberlin J is not, in the circumstances, an irrelevant one. It is clear that his Honour exercised the discretion to make the order he did in relation to the costs of the Master and crew because, amongst other reasons, he viewed the application they had made as not “an unreasonable” one. The foundation of the appellant’s contention that reasonableness is not a relevant consideration is the judgment of the High Court in Latoudis v Casey (supra). Those proceedings concerned the exercise of a statutory discretion to award costs in criminal proceedings that had been terminated in favour of the defendant. The magistrate had refused the defendant’s application for costs on the ground that the informant had acted reasonably in instituting the proceedings. The clearest rejection of the notion that reasonableness was a relevant consideration is found in the judgment of Toohey J at 563 – 564. First his Honour noted that:
… the reasonableness of the informant’s action seems to underlie the practice in Victoria of not awarding costs against the police …
And later that:
Furthermore, while existing practice should not be ignored, if it is based on a misapprehension of legal principle it cannot dictate what the law should be. According to an affidavit filed in support of the application for an order to review the magistrate’s decision, the magistrate refused to make an award of costs in favour of the appellant, because:
“(i) It was reasonable for the Informant to have sworn the information, given that she had a reasonable suspicion that the Defendant was in possession of stolen goods – some of which were in fact now conceded to have been stolen albeit not by the Defendant.
(ii)…
The first of these considerations is, in the light of the authorities, irrelevant.
This reference to the authorities is to a number of authorities discussed in detail by Dawson J who reviewed the approach adopted in the various states of Australia and elsewhere in determining whether to award costs against an informant in unsuccessful criminal proceedings heard summarily. Cases reviewed by Dawson J included Anstee v Jennings (1935) VLR 144. In relation to that authority Dawson J said at 559:
It was as long ago as 1935 that Mann J observed in Anstee v Jennings that “the order for costs in a Court of Petty Sessions … should have nothing to do with the reasonableness of the informant’s action. It is a matter of giving proper indemnity to a successful defendant for costs to which he has been put without lawful justification.” Nevertheless, the cases referred to by Carter J in Lewis v Utting and, indeed, the decision of the magistrate in this case would suggest that Mann J’s observation and similar remarks in other jurisdictions have not significantly weakened the long established practice on the part of magistrates in Victoria not to award costs against police informants who have acted reasonably.
Plainly the remarks of Toohey J and similar observations of other members of the Court have to be seen in the context in which they were being made. The specific issue addressed by the Court was the proper principles to be applied in awarding costs against a background where a practice had developed where reasonableness was seen as a relevant consideration and a basis for refusing a successful defendant costs in criminal proceedings of this type. As pointed out above the present case is not one in which a successful party has been denied costs. The Master and crew were successful on one issue and failed on another. In determining whether the Master and crew should pay costs of the issue upon which they failed his Honour was entitled to have regard to all the circumstances of the case including the reasonableness of bringing the claim on which they failed in the same proceeding as the claim on which they succeeded. Thus, the present case is clearly distinguishable from the situation considered in Latoudis v Casey.
There was an additional circumstance in the present case which made the “reasonableness” issue relevant. The gravamen of the complaint of the appellants is that the costs of the Master and crew will be paid from the fund generated by the sale of the ship in priority to their claim. The payment of legal costs out of a fund arises in other areas of the law. It commonly arises in proceedings concerning the construction of a will. In Re Buckton [1907] 2 Ch 406 Kekewich J identified three situations where an issue might arise about the payment of legal costs out of the testator’s estate. The first involved applications by the trustee seeking guidance from the Court in order to ascertain the interests of the beneficiaries. His Lordship said that in cases of this character he regarded the costs of all parties as necessarily incurred for the benefit of the estate and would direct them to be taxed as between solicitor and client and paid out of the estate: see p 404. The qualification concerned applications by trustees which were, in substance, unreasonable because the “question of construction or of administration [was] too clear for argument”.
The second and third categories were described by his Lordship in the following passage at 414 – 415:
There is a second class of cases differing in form, but not in substance, from the first. In these cases it is admitted on all hands, or it is apparent from the proceedings, that although the application is made, not by the trustees (who are respondents), but by some of the beneficiaries, yet it is made by reason of some difficulty of construction, or administration, which would have justified an application by the trustees, it is not made by them only because, for some reason or other, a different course has been deemed more convenient. To cases of this class I extend the operation of the same rule as is observed in cases of the first class. The application is necessary for the administration of the trust, and the costs of all parties are necessarily incurred for the benefit of the estate regardless as a whole.
There is yet a third class of cases differing in form and substance from the first, and in substance, though not in form, from the second. In this class the application is made by a beneficiary who makes a claim adverse to other beneficiaries, and really takes advantage of the convenient procedure by originating summons to get a question determined which, but for this procedure, would be the subject of an action commenced by writ, and would strictly fall within the description of litigation. It is often difficult to discriminate between cases of the second and third classes, but when once convinced that I am determining rights between adverse litigants I apply the rule which ought, I think, to be rigidly enforced in adverse litigation, and order the unsuccessful party to pay the costs. Whether he ought to be ordered to pay the costs of the trustees, who are, of course, respondents, or not, is sometimes open to question, but with this possible exception the unsuccessful party bears the cost of all whom he has brought before the Court.
(emphasis added)
The highlighted passage indicates that the earlier qualification concerning applications by the trustee which had been brought unreasonably is a relevant matter in considering whether to order the costs of the applicants in the second class be paid out of the estate.
Young J recently applied these principles in Star v Silvia & Pantzer (No 2), unreported, 14 September 1994, Supreme Court of New South Wales. His Honour had to determine what costs order should be made in proceedings which had, in substance, been an dispute between the liquidators of two inter-connected companies over the operation of deeds entered into between the two liquidators. Young J said:
The English Court of Chancery last century had a very easy way of dealing with this sort of problem. It would award costs out of the fund whenever it had the remotest possibility that such a order could be productive. However from about 1875 the Court of Chancery realized that that sort of order was not always just and looked with far more care as to when an order should be made for costs out of a fund. Kekewich J, a judge who was an acknowledged expert in the field of costs and procedure, considered the matter in Re Buckton [1907] 2 Ch 406. His Lordship at pp 414-415 analyzed three separate classes into which litigation could fall and in respect of trustees set out what should be the prima facie position. The Buckton principles have been followed in NSW, see e.g. O’Brien v Ritchie (1931) 48 WN(NSW) 85, and see also Re Preston’s Estate [1951] Ch 878 (which deals with a situation where after proceedings are commenced a trustee should have appreciated that they were hopeless).
His Honour went on to say that generally speaking the problem was one of classification. He indicated one could look to issues such as the vehemence with which the proceedings were conducted, the amount of cross examination and the true financial interests of the parties. His Honour said:
However, generally speaking, one must take a global view of the proceedings. This is probably why in most of the discussions on the subject one finds that ultimately there is a discretionary assessment of how the costs burden should fall without overmuch reasoning, see e.g. Burns Philp Trustee Co Ltd v Telford Property (Fund) Ltd, Hodgson J, 23 February 1989, unreported.
Other recent authorities dealing with questions of the same general character are McDonald v Horn [1995] 1 All ER 961 where the Court of Appeal upheld a pre-emptive costs order in anticipation of an application by a member of a pension fund to compel the trustees to account for the fund where the costs would be paid out of the fund: Wallace-Smith and Mansell (Liquidators of Australasian Investment Corp Ltd) v Boland [1996] FCA 692 concerning costs in an application by liquidators for directions in relation to the winding up of a company and Adsett v Berlouis (1992) 37 FCR 201 concerning the payment of the legal costs of a bankrupt’s trustee out of the bankrupt’s estate.
It is apparent from the propositions formulated by Kekewich J in Re Buckton (supra) that not only is the character of the litigation relevant in determining whether costs should be paid out of a fund but the reasonableness of the conduct of the moving party is also relevant. In the present case Tamberlin J appears, at least impliedly, to have approached the matter on the basis that the application by the Master and crew was broadly analogous to the second class of litigation considered by Kekewich J. That is, it was not adversarial litigation but an application made by the Master and crew to a court which has a clear role in determining the rights of Master and crew following the arrest of a ship by order of the Court in circumstances beyond the control of the Master and crew. This is an approach his Honour was plainly entitled to take in considering the costs orders that were appropriate in the particular circumstances of the present case. If the application was to be characterized in this way it then became relevant to consider the reasonableness of the application of the Master and crew. If it had been obviously unmeritorious it might not have been appropriate to order the payment of the costs of the Master and crew from the fund. Whether the conduct of the Master and crew was not unreasonable was plainly a relevant matter for his Honour to consider. Moreover the conclusion that the conduct was not unreasonable was open to his Honour in the circumstances.
In our opinion it has not been demonstrated that Tamberlin J erred in the exercise of his discretion to award costs in the way he did.
The role of the Marshal
Before concluding it is necessary to refer to one other matter which arose during the hearing of the appeal. The Marshal had made submissions to Tamberlin J on the question of costs and appears to have been treated as a party for that purpose. However the Marshal was not joined as a party to these appeals though the Marshal was represented at the callover and no point was taken by the appellants about his appearance. However at the hearing the appellants put in issue whether the Marshal should be heard in the appeals. When this matter was raised, counsel for the Marshal elected to apply to intervene in the appeal rather than to apply to be joined as a party. We reserved on the question of whether intervention should be granted.
In our opinion the Marshal should be given leave to intervene in the appeal. However the interests of the Marshal are limited. In written submissions filed on behalf of the Marshal two arguments are evident. The first was not developed at length and involved a submission that the appeals against the costs orders of Tamberlin J, as they related to the Master and crew costs, should not succeed because Tamberlin J, in exercising the discretionary power to order costs in the way he did, properly had regard to the interests of seafarers. The manner in which this submission was presented, in our opinion, involved the Marshal entering upon the merits on an issue which had no direct or indirect bearing on his role as an officer of the Court and which was able to be, and was, fully addressed by the affected parties.
The second argument concerned the form of the orders proposed by the appellants in the event of the appeals succeeding. The Marshal had an interest in that question and it was appropriately the subject of submissions by the Marshal. The orders proposed by the appellants were firstly that order 5 made by Tamberlin J be set aside and:
2.Order in lieu:
(a)that the Master and crew pay the costs of the First Plaintiff and of the Marshal arising from and incidental to their application heard by His Honour on 23 March 1998;
(b)in the alternative, Order that the Master and crew pay the costs of the Marshal arising from and incidental to their application heard by His Honour on 23 March 1998; and
(c)in the alternative, that there be no order in respect of the costs incurred by the Master and crew arising from and incidental to their application heard by His Honour on 23 March 1998.
It is possible that proposed orders 2(a) or 2(b) would materially alter the regime created by Tamberlin J in the orders made on 17 August 1998 in a way that would, or at least might, affect the Marshal. Potentially there would have been, at the least, an internal inconsistency in the orders proposed by the appellants if order 5 had been set aside and the Master and crew had been ordered to pay the costs of the Marshal. That is because order 3, which was not sought to be impugned in the appeal, remained and provided that the Marshal’s costs in relation to the application of the Master and crew should be the fees and expenses of the Marshal in relation to the arrest. These difficulties need not be considered further as the appellants have not established a basis on which this Full Court should set aside the orders made by Tamberlin J. Having regard to the range of orders sought by the appellants, including those not ultimately pursued at the hearing, we consider that it was appropriate for the Marshal to appear and apply to intervene in relation to matters that might affect his administration and duties in respect of the proceeds of sale.
Conclusion
For the preceding reasons the appeals should be dismissed with costs. The appellants should pay the costs of all other parties appearing in the appeals and the costs of the Marshal on an indemnity basis.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court. Associate:
Dated: 19 March 1999
Appearances NG 997/98 - The Ship "Turakina"
Counsel for the Appellants: A W Street SC with M Condon
Solicitors for the Appellants: Norton Smith & Co
Counsel for the Second Respondents
(Patrick Stevedores No 2): G NellSolicitors for the Second Respondents
(Patrick Stevedores No 2) Allen Allen & HemsleyCounsel for the Third Respondents
(Master and crew): J B WhittleSolicitors for the Third Respondents
(Master and crew): LevingstonsAppearances NG 998/98 - The Ship "Rangitata"
Counsel for the Appellants: A W Street SC with M Condon
Solicitors for the Appellants: Norton Smith & Co
Counsel for the Third and Fourth
Respondents (Waitemata Stevedoring
and New Zealand Stevedoring): L MustonSolicitors for the Third and Fourth
Respondents (Waitemata Stevedoring
and New Zealand Stevedoring): Conway Leather ShawCounsel for the Fifth Respondents
(Master and crew): J B WhittleSolicitors for the Fifth Respondents
(Master and crew): LevingstonsCounsel for the Marshal: P E King
Solicitor for the Marshal: Mr Douglas Coleman
Date of Hearing: 19 February 1999
Date of Judgment: 19 March 1999
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