ADMIRALTY AND MARITIME JURISDICTION – jurisdiction in rem – application to strike out pleaded claims on the basis of which ship was arrested – whether claims arising under a trust, Barnes v Addy, a “sham”, misleading or deceptive conduct, conversion, and detinue have legal character of proprietary maritime claims as defined by s 4(2)(a) of the Admiralty Act 1988 (Cth) – whether claims in rem and in personam impermissibly combined contrary to s 18 of the Admiralty Act
ADMIRALTY AND MARITIME JURISDICTION – practice and procedure – conditional appearance – where claims asserted to be proprietary maritime claims within the meaning of s 4(2)(a) of the Admiralty Act 1988 (Cth) – application to strike out pleaded claims on the basis of which ship was arrested – where defendants entered conditional appearance to challenge jurisdiction – where defendants also brought application for summary judgment – effect of conditional appearance under r 23 of the Admiralty Rules 1988 (Cth)
PRACTICE AND PROCEDURE – summary judgment on actions commenced in rem – claim that ship held on trust pursuant to terms of a “higgledy-piggledy” purchase and sale agreement – where deposit to be held on trust – where ship “traded-in” with value assigned to deposit, engine installation, and ex-factory payments – whether reasonable prospects of establishing the ship was a “deposit” – whether if trust established, there are reasonable prospects of establishing the first limb of Barnes v Addy, and claims in conversion and detinue – where alleged “sham” – nature of a “sham” – whether reasonable prospects of establishing elements of a “sham”
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Burrows v The Ship ‘Merlion’ [2024] FCA 220
Case
[2024] FCA 220
Decision Date
CaseChat Overview and Summary
The matter before the Federal Court of Australia involved an application by Mr Thurlow to strike out certain pleaded claims and dismiss the proceedings brought by Mr Burrows against The Ship ‘Merlion’. Mr Burrows claimed that The Merlion was held on trust for him and was wrongfully arrested by PMY. He sought various remedies, including a declaration of trust, conversion, and detinue. The central legal issues were whether Mr Burrows’ claims had the necessary proprietary maritime character to justify the Court’s jurisdiction under the Admiralty Act 1988 (Cth), and whether his claims improperly combined in rem and in personam actions. The Court held that the claims in question had the requisite proprietary maritime character, as they involved rights in or over the vessel, thereby falling within the Admiralty jurisdiction. Additionally, the Court found that the in rem and in personam claims were not impermissibly combined, as they related to distinct causes of action against different defendants. Consequently, the Court dismissed the application to strike out the claims and denied the application for summary judgment.
The Court's reasoning focused on the statutory language of the Admiralty Act and relevant case law, particularly Spencer v Commonwealth, which highlighted the requirement for a “no reasonable prospect” of success to grant summary judgment. The Court examined whether Mr Burrows' claims were fanciful or merely arguable, and concluded that there were genuine issues of fact and law that required resolution at a full hearing. The Court also noted the discretion available under s 31A of the Federal Court of Australia Act 1976 (Cth) and r 26.01 of the Federal Court Rules 2011, emphasizing that summary judgment should not be granted lightly and is reserved for cases where the outcome is clear. The Court's decision underscored the importance of evaluating each claim's merits on its own facts, particularly where mixed questions of fact and law are involved. Ultimately, the Court found that Mr Burrows had a reasonable prospect of success on his claims, and therefore, the application to dismiss the proceedings was denied.
Orders
Orders of the court
1. Paragraph [90](i) of the Amended Statement of Claim filed on 6 December 2023 be struck out.
2. The action in personam against the named defendant, Glenn Leslie Thurlow, as pleaded in paragraphs [73] – [89] and [90] (v) and (viii) of the Amended Statement of Claim filed on 6 December 2023 be struck out.
3. The action in rem pleaded in paragraphs [63] and [64](iii)C, (iii)D, and (iii)E be summarily dismissed.
4. The interlocutory application filed on 28 November 2023 be otherwise dismissed.
5. The parties have liberty to apply within 7 days of the date of these Orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
By his interlocutory application filed on 28 November 2023, Mr Thurlow seeks orders which can be separated into two categories. First, Mr Thurlow challenges the nature of Mr Burrows’ claims and contends that, not being proprietary maritime claims, they do not fall within the Admiralty jurisdiction of this Court, and so should be struck out. Even if those claims are within jurisdiction, Mr Thurlow seeks an order for summary dismissal of the proceedings pursuant to s 31A(2) of the FCA Act, and that the arrest of The Merlion be set aside. Second, Mr Thurlow seeks an order that Mr Burrows’ pleading be struck out, on the basis that it impermissibly merges an in rem and an in personam action, contrary to r 18 of the Admiralty Rules. Ordinarily, the filing of an application for summary judgment, in addition to objecting to jurisdiction, goes beyond a mere objection and would be taken to amount to a waiver of any objection to jurisdiction. In the circumstances of this case, however, where the Admiralty Act under s 14 provides that “a proceeding shall not be commenced as an action in rem against a ship …except as provided by this Act”, the Court must resolve the question of jurisdiction notwithstanding.BACKGROUND Purchase of The Merlion PMY is a corporation whose business is the sale of motor yachts and arranging for their construction. On or about 30 March 2022, Mr Burrows (as buyer) entered into a contract with PMY (as seller) for the construction of The Merlion, a 2023 Clipper Hudson Bay 540 Sedan. The Merlion was constructed in accordance with the terms of that contract, and Mr Burrows took delivery of her on or about 14 or 15 December 2022. The Merlion was registered in Western Australia under Mr Burrows’ name. A Boat Registration Certificate was issued by the Department of Transport in Western Australia (DOTWA), which registered The Merlion under registration number ‘GX 369’.Construction and sale of a new vessel Between March and May 2023, Mr Burrows entered into negotiations with representatives of PMY for the construction of a new vessel, a 2024 Clipper Hudson Bay 540-S01 (the New Vessel). On 4 May 2023, Mr Burrows participated in a video conference with Mr Thurley and Mr Peter Foster, an employee of an associated entity of PMY, to discuss the terms of a contract for the construction of the New Vessel. A contract document dated 2 June 2023 was prepared by PMY that set out the terms of the construction and sale of the New Vessel, titled ‘Offer to Purchase and Sales Agreement’, which is exhibited to the Affidavit of Glenn Leslie Thurlow filed 14 December 2023 (Thurlow Affidavit). It was signed by Mr Burrows on 9 June 2023, who then provided a copy of the executed Agreement to Mr Thurley. The Agreement was signed on behalf of PMY, apparently by Mr Thurley, on 10 June 2023. The Agreement comprised a set of standard form sale and purchase conditions. The bespoke details of the transaction were entered onto a reference schedule (Reference Schedule).
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Section 31A is supplemented by r 26.01 of the Rules, by which a party may apply for summary judgment. That rule provides, relevantly: 26.01 Summary judgment(1)A party may apply to the Court for an order that judgment be given against another party because: …(e) the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding. …If an order is made under subrule (1) dismissing part of the proceeding, (b) the proceeding may be continued for that part of the proceeding not disposed of by the order. Section 31A must be applied in accordance with the statutory language, whereby summary judgment is only granted if the Court is satisfied that the party against whom the claim is brought has “no reasonable prospect” of success: Spencer v Commonwealth (2010) 241 CLR 118 at [56]-[60]). The onus is on the defendant to establish that the plaintiff’s claim has no reasonable prospect of success: ASIC v Cassimatis [2013] FCA 641 at [46]-[47]. The power to dismiss an action summarily is not to be exercised lightly: Spencer at [24] and [60]. However, merely because complexity exists in the underlying issues, courts should not shy away from granting summary judgment where, after considering the facts and law, the outcome of the disputation is apparent: ThoughtWare Australia Pty Limited v IonMy Pty Ltd [2023] FCA 906 at [53]. If it is clear that the outcome will not be altered by the holding of a trial, it is apposite to the proper administration of justice to require the parties to be put to the effort and expense of conducting a full hearing: ThoughtWare at [53]; Theseus Exploration NL v Foyster (1972) 126 CLR 507; FCA Act ss 37M and 37N. As the assessment of the prospects of success under s 31A necessitates the making of a value judgment in the absence of a “full and complete matrix of fact and argument thereon”, the judge hearing the summary judgment application has discretion: Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401; [2009] FCAFC 117 at [28]. Therefore, when determining whether there is a reasonable prospect of success, much will depend on the case at hand, and “no hard and fast rule can be laid down as to when summary judgment is available”: Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4) (2011) 203 FCR 293 at [17]. In Prior v South West Aboriginal Land and Sea Council Aboriginal Corporation [2020] FCA 808, McKerracher J set out a number of further principles relevant to the application of s 31A at [29]:(a)a reasonable prospect of success is one which is real, not fanciful or merely arguable: Rogers v Assets Loan Co PtyLtd (2008) 250 ALR 82 per Logan J (at [41]), cited in Buurabalayji Thalanyji Aboriginal Corporation v OnslowSalt Pty Ltd (No 2) [2018] FCA 978 per McKerracher J (at [3]), though this must now be read with Spencer (at [58]-[60]);(b)there will be no prospect of success in circumstances where there is a defect in the pleadings which cannot be cured: “Sam Hawk” v Reiter Petroleum Inc (2016) 246 FCR 337 per Kenny and Besanko JJ (at [269]), cited in Buurabalayji (at [3]);(c)an application for summary dismissal is likely to succeed where the applicant’s success in the principal proceedings relies upon a question of fact that can truly be described as fanciful, trifling, implausible, improbable, tenuous or one that is contradicted by all the available documents or other materials. Conversely, as a general principle, an application for summary dismissal is unlikely to succeed where, on a critical examination of all the available materials, the Court is satisfied that there appears to be a real question of fact to be determined between the parties: Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256 per Reeves J (at [47]);(d)similarly, as a general principle, the moving party on an application for summary dismissal is likely to succeed if it is able to demonstrate to the Court that the applicant’s success in the principal proceedings relies upon a question of law that is straightforward and confined, or is trite in the sense that it is well settled on authority, such that the question can be resolved summarily without the necessity for a full trial. On the other hand, the moving party would be unlikely to succeed if the Court is satisfied that the applicant’s success in the proceedings relies upon a question of law that is serious or important, or is difficult and therefore likely to require lengthy argument for its resolution, or involves conflicting authority: Cassimatis (at [48]); see also: Luck v University of Southern Queensland [2008] FCA 1582 per Logan J (at [14]-[15]): s 31A is amenable to resolving straightforward questions of law; SK Foods LP v SK Foods Australia (in liq) (No 3) (2013) 214 FCR 543 per Flick J (at [115]): summary judgment may still be appropriate if a question raised is of some complexity; McAleer v University of Western Australia (No 3) (2008) 171 FCR 499 per Siopis J (at [39] and the cases therein cited): s 31A permits dismissal of a proceeding where an inquiry into the merits of the issues of law demonstrates the arguments are insufficiently strong to warrant the matter going to trial;(e)a Court should be particularly cautious about ordering summary determination where proceedings involve questions of fact and law, or mixed questions of fact and law, as these combinations usually give rise to some complexity that would require a full hearing. In such circumstances the moving party, as a general principle, would need to show a substantial absence of merit on either of the question of fact or law concerned, or on the mixed question: Cassimatis (at [49]); and(f)if a prima facie case in support of summary judgment is established, the onus shifts to the opposing party to point to some factual or evidentiary issues making a trial necessary: Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 per Gordon J (at [127]), cited in Buurabalayji (at [3]). See also Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 per Gilmour J (at [6]).The claims within jurisdiction