D H & L S Chilcott Pty Ltd v the Owners of the Ship "Lady of the Loch"
[1990] TASSC 124
•16 August 1990
Serial No B47/1990
List "B"
COURT: SUPREME COURT OF TASMANIA
CITATION: D H & L S Chilcott Pty Ltd v The Owners Of The Ship "Lady of the Loch" [1990] TASSC 124; B47/1990
PARTIES: D H & L S CHILCOTT PTY LTD
v
THE OWNERS OF THE SHIP "LADY OF THE LOCH"
FILE NO/S: 430/1989
DELIVERED ON: 16 August 1990
JUDGMENT OF: Wright J
Judgment Number: B47/1990
Number of paragraphs: 21
Serial No B47/1990
List "B"
File No 430/1989
D H & L S CHILCOTT PTY LTD
v THE OWNERS OF THE SHIP "LADY OF THE LOCH"
REASONS FOR JUDGMENT WRIGHT J
16 August 1990
By an action in rem in the Admiralty jurisdiction commenced on 16 November 1989, the plaintiff, an electrical contracting company carrying on business in Launceston, sued the defendants for an amount of $59,878.41 for electrical works carried out during the course of construction upon the ship "Lady of the Loch" between 17 March 1989 and 7 September 1989.
In paragraph 3 of the Statement of Claim it was alleged that the owner of the ship at the relevant time was Sea Management Corporation (Qld) Pty Ltd and that the plaintiff's services were engaged by an agent of that company, namely Marine Systems and Supply (Aust) Pty Ltd as purchasing agents.
The Writ and Statement of Claim were duly served and on 7 December 1989, the plaintiff filed an application in the following terms:
"1That judgment be entered for the plaintiffs in the sum of $59,878.41 and costs to be taxed.
2That the ship 'Lady of the Loch' be appraised and sold by the Marshall and that the abovementioned sum $59,878.41 and the plaintiff's costs, when taxed, be paid out of the proceeds of the sale of the ship 'Lady of the Loch'.
3Further or other orders."
On 14 December 1989, Mr Wayne Charles Chilcott, a director of the plaintiff company, swore an affidavit verifying the facts alleged in the Statement of Claim. The plaintiff's application came before me in Launceston on 7 February 1990 and I then said:
"I am satisfied that the orders sought should be made. There will be firstly an order for judgment to be entered for the plaintiffs in the sum of $59,878.41 together with costs to be taxed. I note your undertaking to file an application in the terms of Form 26 of the Admiralty Rules No. 269 of 1988 of the Commonwealth and on the basis of that undertaking, I will make a second order as requested for the valuation and sale of the subject vessel under the Admiralty Act 1988. I certify for counsel."
This order was taken out and signed by the District Registrar in the form of a document titled a "Decree for an Ascertained Sum". This decree followed Form 1 of Section VI of the Admiralty Rules (Tasmania) p561, but neither the Tasmanian Rules nor the new Commonwealth Rules make provision for the utilisation of that form of order in Admiralty proceedings. Why that form was used in the present case has not been clearly explained.
The defendants now seek to defend these proceedings, and have filed an application in the following terms:
"1That the Decree for an Ascertained Sum entered herein and dated the 7th February 1990 be set aside.
2Such further or other order as the Court considers appropriate."
The defendants argue that I am not functus officio in respect of the plaintiff's application as the order which I made has not been perfected in appropriate form. The "Decree for an Ascertained Sum", as drawn up and signed by the District Registrar is in the following terms:
"Dated the 7th day of February 1990 before the Honourable Mr Justice Wright.
The Honourable Mr Justice Wright having heard Mr Zeeman of counsel for the plaintiffs, there being no appearance by or for the defendant, pronounced the sum of fifty nine thousand, eight hundred and seventy eight dollars and forty one cents ($59,878.41) to be due to the plaintiffs in respect of its claim together with costs to be taxed and certified that the application for judgment was one fit for the attendance of counsel.
By the Court
J Bendall, District Registrar"
Rule 6 of the Admiralty Rules (Statutory Rule 2691988 (Commonwealth)) hereinafter referred to as "the new Rules", makes it clear that those Rules are not intended to exclude or limit the operation of previous or supplementary Rules of Court made by any court exercising jurisdiction under the Admiralty Act so long as such Rules are not inconsistent with the new Rules. It therefore seems clear that insofar as the new Rules are silent, the Rules of the Supreme Court, Part IV are to continue to have operation. Rule 1 of those Rules provides as follows:
"1 (i) Subject to the Rules contained in this Part the Orders and Rules contained in Part I including r32 of O21 shall so far as the same are applicable to Admiralty actions apply to and regulate the procedure and practice of the Court in the exercise of its jurisdiction in Admiralty.
(ii) The Rules contained in this Part shall be read and construed subject to the provisions of subs.(5) of s9 of the Act."
The submission of the defendants based upon these considerations is that, in accordance with the order made by me on 7 February 1990, a judgment should have been entered up in the usual form appropriate to a judgment entered upon motion after default of appearance in an ordinary action in personam in the Supreme Court. That is, as there is no provision either in the new Rules or the Admiralty Rules contained in Part IV of the Rules of the Supreme Court, for the entry of a judgment in the form of a "Decree for an Ascertained Sum", the document drawn up and signed by the District Registrar bearing that title, is of no force or effect whatsoever and is a nullity. No authority was cited to me to suggest that the formal document purporting to express the order I pronounced was nugatory and for my part I have some doubt about this. On the whole I think it may well be a sufficient order pursuant to which the plaintiff may levy execution but there is no need to reach a final view upon this question.
The defendants contend that in any event, this is a proper case where I should exercise a discretion under the provisions of O30, r15 of the Rules of the Supreme Court which provides:
"Any judgment by default, whether under this Order or any other of these Rules, may be set aside by the Court or a Judge upon such terms as to costs or otherwise as such Court or Judge may think fit, and, when an action has been set down on motion for judgment under r11 of this Order, such setting down may be dealt with by the Court or a Judge in the same manner as if judgment by default had been signed when the case was set down."
It was conceded by counsel for the defendants that any application under the provisions of O14, r10 of the Rules of Court could not succeed.
At first, counsel for the defendants accepted that for his application to be successful on either ground, it was necessary for his clients to show, a) that it had an arguable defence to the plaintiff's claim, b) that there was a satisfactory explanation for the delay which had occurred between the date of the application for default judgment and the date of the application to vacate or set aside the order made by me on 7 February, and c) that the plaintiff would sustain no prejudice as a consequence of an order being made in favour of the defendants upon the application. However, in the course of his argument counsel for the defendants tended to resile from this position and to contend that, insofar as the application was based upon my capacity to recall and reconsider the order which I made originally, it was sufficient for him to demonstrate, that based upon the material now before me it is "in the interests of justice" for me to revoke that order. For my part I have great difficulty in perceiving any real distinction between the manner of approach which should be adopted to either of the grounds advanced in argument and I see nothing in the judgment of Underwood J. in The Electrolytic Zinc Company of Australasia Ltd v Arthur Fisher (31/1989) to support a contrary view. Indeed, it seems to me that his Honour in that case at pp4 and 5 was merely restating the principle which was so clearly identified by Lord Aiken in Evans v Bartlam [1937] AC 473 at p480:
"The discretion is in terms unconditional. The Courts, however, have laid down for themselves rules to guide them in the normal exercise of their discretion. One is that where the judgment was obtained regularly there must be an affidavit of merits, meaning that the applicant must produce to the Court evidence that he has a prima facie defence. It was suggested in argument that there is another rule that the applicant must satisfy the Court that there is a reasonable explanation why judgment was allowed to go by default, such as mistake, accident, fraud or the like. I do not think that any such rule exists, though obviously the reason, if any, for allowing judgment and thereafter applying to set it aside is one of the matters to which the Court will have regard in exercising its discretion. If there were a rigid rule that no one could have a default judgment set aside who knew at the time and intended that there should be a judgment signed, the two rules would be deprived of most of their efficacy. The principle obviously is that unless and until the Court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procedure."
It is plain from the affidavit evidence placed before me, and the oral cross–examination of the deponents upon their affidavits, that there is a genuine dispute and thus a triable issue upon the question as to whether or not the plaintiff has an action in rem under the provisions of s17 of the Admiralty Act 1988. That section provides as follows:
"17 Where, in relation to a general maritime claim concerning a ship or other property, a relevant person:
(a) was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and
(b) is when the proceeding is commenced, the owner of the ship or property;
a proceeding on the claim may be commenced as an action in rem against the ship or property."
It was submitted that upon the evidence there is some confusion as to whether or not the company with which the plaintiff contracted to perform the electrical work upon the "Lady of the Loch" was the owner of the ship at either or both of the relevant times mentioned in s17. It was submitted that the contracting parties were the plaintiff, D H & L S Chilcott and Son Pty Ltd and either Sea Management Corporation (Tas) Pty Ltd trading as Tamar Steel Boats, or alternatively, Marine Systems and Supply (Aust) Pty Ltd The first of these companies at the relevant time, was wholly owned by Sea Management Corporation Pty Ltd but is of course a separate corporate entity. Marine Systems and Supply (Aust) Pty Ltd was fifty percent owned by Sea Management Corporation Pty Ltd There is also evidence that at relevant times the owner of the "Lady of the Loch" was another company associated with Sea Management Corporation Pty Ltd, namely Maid of the Loch Limited.
It was also contended, and indeed scarcely disputed, that there was no such company as Sea Management Corporation (Qld) Pty Ltd as alleged in the Statement of Claim and that the plaintiff company was erroneously named as D H & L S Chilcott Pty Ltd in the Writ and Statement of Claim, rather than D H & L S Chilcott & Son Pty Ltd which is its correct name. These errors are of little consequence however, because it is common ground that they have not resulted in any real misconception of the true identity of the parties referred to.
Nonetheless, I am in little doubt that there has been a good deal of confusion on the part of those involved in the relevant transactions as to the identity of the party contracting with the plaintiff for the electrical work to be carried out and the confusion that has resulted should serve as a salutary lesson to those who negotiate or deal with companies which trade under similar names or who share the same directors. Be that as it may, there is no basis at all for suggesting that there has been any deliberate misrepresentation on the part of any of the participants in the negotiations involved. Nor does there appear to have been any attempt to conceal relevant facts. Suffice it to say for present purposes, as I have already mentioned, that there is sound reason for concluding that there is an arguable defence in this case, based upon the proposition that the contract upon which the plaintiff sues was not with Sea Management Corporation Pty Ltd (which was and is the correct name of the company referred to in the Statement of Claim) but was with either Marine Systems and Supply (Aust) Pty Ltd or Sea Management Corporation (Tas) Pty Ltd trading as Tamar Steel Boats.
The significance of this is that in either of these events, the plaintiff could not maintain an action in rem and therefore could not justify the arrest, detention or sale of the "Lady of the Loch". The action would simply be an action in personam against one of the two last mentioned companies and the plaintiff would rank in priority as an unsecured creditor in proceedings to satisfy any judgment it obtained against either of them. It is also possible that the plaintiff's cause of action should lie against Maid of the Loch Limited, in which case there will be added complications and difficulties in obtaining the sum due as Maid of the Loch Limited is now also in receivership.
In the circumstances of this case, although the quantum of the plaintiff's claim is not in dispute, it is obviously of fundamental importance to its prospects of recovering the amount owing to it, to establish that Sea Management Corporation Ltd, rather than Marine Systems and Supply (Aust) Pty Ltd, Sea Management Corporation (Tas) Pty Ltd or Maid of the Loch Limited is the debtor. The plaintiff's only real prospect of obtaining satisfaction of its claim may lie in its establishing an entitlement to priority over other creditors of Sea Management Corporation Ltd I now turn to the second matter for consideration, namely whether or not there has been an acceptable explanation proffered for the delay in this case.
This question has been taken up in the affidavits of Mr Duff sworn the 18 May 1990 and 8 June 1990. Mr Duff was not cross–examined upon his affidavits. The delay involved was one of several months. He did not claim to have misunderstood the nature of the proceedings instituted against Sea Management Corporation Ltd of which he is the receiver. He does claim however, to have misunderstood the significance of the proceedings that were taken and the priority which the plaintiff, as a matter of law, may have succeeded in achieving over other unsecured creditors, and indeed, over secured creditors by obtaining a judgment in an action in rem in Admiralty. It is thus understandable even if not excusable, that Mr Duff failed to take immediate action to upset the default judgment obtained by the plaintiff. There was plainly no reason for him to dispute the quantum of the claim and in failing to appreciate that entitlement to priority as between creditors may vary depending upon whether the plaintiff succeeded in rem or merely in personam, his omission to obtain legal advice swiftly was scarcely remarkable. The explanation, though not excusing the delay, seems to me to be reasonable in all the circumstances.
It was also argued that the plaintiff would not be prejudiced in the present proceedings if orders of the kind sought were pronounced. I suggested to counsel for the defendants that the plaintiff would certainly lose the advantage which it currently enjoys over other creditors by reason of having in court a sum of money representing the quantum of its claim against the defendants but, as Mr Thompson, I think correctly pointed out, the plaintiff is really only entitled to that advantage if it is successful in establishing that it has a legitimate action in rem in the circumstances that obtained. If it has that action in rem its current position cannot be prejudiced, whereas if the action is properly one in personam against some company other than Sea Management Corporation Pty Ltd, it will be in no worse position now than if it had sued that company in the first place. In short, it was submitted correctly that prejudice, if any, must be found in circumstances outside and beyond the merits of the action itself. For example, it is frequently found to exist where a witness has died or become unavailable or where the plaintiff who seeks to retain the fruits of his judgment has, on the faith of his success, entered into commitments or undertaken some enterprise upon which he would not have otherwise embarked.
In this connection it should be noted that on 5 April 1990, the defendants, for the purposes of obtaining the release of the ship and preventing its sale by the Marshall, paid into court the sum of $60,885.31 whereupon the plaintiff authorized the vessel's release. There was considerable debate between counsel as to whether payment into court in this way was sanctioned by the Rules of Court. Plainly some of the conditions which the defendants' solicitors sought to attach to the payment cannot be justified but it is less clear that this procedure, though unfamiliar, is inappropriate or illegitimate, (see "The Lorena" [1973] 1 NZLR 507 at p516 per Mahon J.) It is however unnecessary to finally resolve this question because counsel for the defendants concedes that this money should not be paid out of court pending the final resolution of this matter without an order of the Court. Plainly, if the defendants are permitted to defend, it is unlikely that such an order would be made. However, this aspect of the matter should not be left to chance and the possibility, however remote, that the funds may be withdrawn by the defendants should be effectively circumvented. Accordingly, being persuaded as I am that in other respects it would be just in the circumstances to permit the defendants to contest the action on its merits, I propose to do so only if the defendants by their solicitors are prepared to undertake that they will not, pending the determination of these proceedings, take any steps to withdraw from the custody or control of the Registrar the monies paid into court on or about 5 April 1990.
Provided that undertaking is given, I propose to order:
(a)That the judgment and orders pronounced by me on 7 February 1990 be vacated and set aside.
(b)That the name of the plaintiff in these proceedings be amended from "D H & L S Chilcott Pty Ltd" to "D H & L S Chilcott & Son Pty Ltd"
(c)That all references to "Sea Management Corporation (Qld) Pty Ltd" in the Particulars of Claim endorsed on the Writ and in paragraphs 3, 4 and 6 of the Statement of Claim be amended to read "Sea Management Corporation Pty Ltd"
(d)That the defendants be at liberty to deliver a Defence, limited to the issues canvassed during the course of the hearing of the applications before me on 8 and 9 August 1990, within seven days.
(e)That the defendants pay the plaintiff's costs thrown away and the plaintiff's costs of the application to set aside the decree for an ascertained sum.
(f)That the costs of the plaintiff's application for payment out of the funds in Court be reserved to the trial judge.
(g)That the plaintiff's costs referred to in paragraph (e) be taxed and be actually paid in full to the plaintiff's solicitors within 14 days of service of the certificate of taxation and if not so paid the plaintiff to be at liberty to apply to have the defence struck out and judgment entered in its favour.
(h)I certify for counsel.
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