Five Star Cruises P/L v York Bros (Trading) P/L

[1992] FCA 768

JuDGMENT No. ..,% .X...J ...a 2

IN TIIE FEDERAL COURT OF AUSTRALIA )

1 No. NG 142 of 1992

GENERAL DIVISION i

BETWEEN :	FIVE STAR CRUISES PTY LIMITED
Applicant
AND :	YORK BROS (TRADING)
PTY LIMITED
First Respondent and WILLIAH HARPER YORK Second Respondent

CORM:	WILCOX J
PLACE :	SYDNEY
DATE:	28 SEPTEMBER 1992

EXTEMPORE m O N S FOR JUDGMENT

WILCOX J: This is a notice of motion which was filed on 11 September 1992 whereby the respondents seek an order that the whole, or so much of the application and statement of claim as the Court thinks fit, be stayed or dismissed generally pursuant to order 20 rule 2.

vexatious or that the proceeding is an abuse of the process of	cause of action, that the proceedings are frivolous or
the Court, to order that the proceeding be stayed or dismissed, either generally or in relation to any claim for relief in the proceeding.
Ordinarily there would be no question of exercising the power given by order 20, rule 2. However, there are special circumstances here. It appears from the evidence filed by the respondents that there have been arbitration proceedings between the parties. Indeed, that fact has been referred to more than once during directions hearing.
On 22 July 1992, before the award of the arbitrator was delivered, orders were made by me by consent. It was stated in order 2 that the Court notes a certain agreement between the parties. The agreement had a number of limbs. One of the limbs, which it is convenient to refer to immediately, is that the applicant shall discontinue the subject proceedings insofar as they relate to the fourth cause of action. This identified in the statement of claim as post- contract negligence.
One of the other terms of the agreement was that the parties should be bound in this proceeding by those findings of fact made by the arbitrator which are essential to the making of his award. On 3 July 1992 the arbitrator published what he called an "interim award". It was so entitled because, by agreement between the parties, the decision of the arbitrator was not at that stage to deal with matters of damages, but rather to concentrate on questions of liability.

Order 20 rule 2, empowers the Court, where it
appears in relation to a proceeding, or in relation to any
claim for relief in a proceeding, that there is no reasonable

The award is a lengthy document containing some

eight pages of findings. It is supported by reasons which

run to another 126 pages. I note than an application was made to the Supreme Court of New South Wales for leave to appeal against the award pursuant to 8.38 of the Commercial prbitration Act 1984. This application came before Cole J.

It was dismissed on 25 August 1992. Accordingly, the interim

award is final and binding. I understand that, since that time, the arbitrator has heard evidence on damages but has not yet handed down his final award dealing with that issue.

In the meantime the respondents say that the proceeding in this Court is doomed to failure because of the agreement of the parties to bind themselves to the findings of the arbitrator. To the extent that this contention is made good, order 20 rule 2 applies. None of the conditions set out in that rule would have applied to the proceeding when it was instituted. But, if it is correct that consistently with

bind themselves to the arbitrator's findings, the case, or	the arbitrator's award and the agreement of the parties to
aspects of it, are now hopeless, it is proper to say that its continuation is frivolous or vexatious. The question, then, is whether it is correct to say that the arbitrator's award, and his reasons, determine the matter. In order to address that question, one has to go to the statement of claim.
The first cause of action identified therein is misleading and deceptive conduct, reliance being placed on 6.52 of the Trade Practices Act 1974.
There are, essentially, two sets of allegations in regard to alleged misconduct. The first of these allegations concerns the speed of the vessel, it being said that the first respondent, through the second respondent, represented to the applicant that any drawings and specifications which the first respondent might produce for the applicant pursuant to any agreement to be entered into between them, for the construction by the first respondent of a vessel for the applicant, would be for a vessel which would have a capacity to cruise at about 24 knots, provided the seas would permit; and, secondly, that any vessel which the first respondent might build for the applicant would have that same capacity.
The arbitrator dealt with the matter of speed of the vessel. There was something of a problem in this regard because the vessel has not been completed. The arbitrator
respondent, the builder, because of a breach of contract by found that the agreement was rescinded by the first
the applicant, the owner. However, in dealing with the matter of speed, the arbitrator found, in para.20 of his award:

" I am not s a t i s f i e d t h a t i t has been c l e a r l y

e s t a b l i s h e d t h a t the vessel on complet ion would no t have been capable o f ach iev ing the maximum speed provided under t h e agreement which was

approximately 25 kno t s p l u s . "

Although this finding is expressed in the negative, it seems to me that the finding is inconsistent with the proposition that there was a representation that the vessel would have a capacity to cruise at about 24 knots which representation was not fulfilled. The allegation of non- fulfilment is set out in para.6 of the statement of claim.

On this aspect of the case the present applicant must fail.

The second matter arising under s.52 is dealt with by paras. 5 and 7 of the statement of claim. It is there alleged that there was a representation made on behalf of the first respondent by the second respondent to one Richard Grant Page on behalf of the applicant in relation to the necessity for the applicant to appoint an inspecting officer to administer the building works and as to the steps which the respondents would take to protect the interests of the applicant if no inspecting officer was appointed. This also was an issue contested before the arbitrator.

The arbitrator found that there was no such conversation. Consistently with that factual finding para.5 cannot be made out. It follows that, insofar as the action relies on s.52 of the Trade Practices Act, it cannot stand with the findings of the arbitrator.

The second cause of action is described as collateral contract. It relies upon an alleged oral agreement between the parties prior to the making of the written contract. The first aspect of the matter, set out in para. l5 of the statement of claim, is that it was a requirement of the applicant, made known to the first respondent, that the vessels machinery and equipment should be classed with Lloyds Registrar of Shipping Maltese Cross LMC and, secondly, that the vessel should be classed 1B under the uniform shipping laws as adopted by the Gommercial Vessels Act 1979.

The arbitrator dealt with both of those matters. He concluded that, had the vessel been completed, it would have complied with both of these requirements. Consequently, it seems apparent that a breach of the alleged term of para.15 cannot be established.

Paragraph 17 contains two further alleged terms.

The first of these is that the vessel must be able to travel

from Sydney to Hamilton Island without being refuelled. Mr

Maston, on behalf of the respondents, says that there was no evidence about this issue at the arbitration. Consequently,

particular matter may be treated as having been determined, or	it seems to me that there is no basis upon which this
the statement of claim struck out in regard to paragraph
17 (a).
Paragraph 17(b) again repeats a requirement that the vessel be able to cruise around 24 knots if the seas will allow. That I think is in the same category as the similar

I .

matter raised under s.52.

The third cause of action alleges pre-contract negligence. Particulars are set out in para.23 of the statement of claim. Items 1 and 2 deal with speed, again the allegation being that the vessel would do 24 knots in normal seas. These matters are in the same category as the earlier references to speed.

Sub-paragraph 3 refers to an allegation that the respondents failed to design a vessel which was stable and which would not roll over. As perhaps might be expected, this is a matter which is relevant in considering certification of the vessel by the Maritime Services Board, and it is apparent from the award and the reasons that stability was a matter determined favourably to the respondents. Consequently, this particular allegation of negligence cannot succeed.

The remaining two paragraphs deal with matters that

were not litigated before the arbitrator, namely, the adequacy

electric power to be generated for the vessel. I do not see	of ventilation of the engine room and the sufficiency of the	any basis upon which these paragraphs ought to be struck out.
The fourth cause of action, post contract negligence, is the subject of the agreement between the parties and ought to be struck out consistently with that agreement.
In the result it seems to me that all of the matters which are sought to be raised in this proceeding by the applicant are fore-doomed to failure, having regard to the agreement to which I have already referred and the Court's orders consequential upon that agreement, with the exception of the allegations contained in paragraphs 17(a) and 23(4) and
( 5 )

The orders that I make are as follows: I strike

out the whole of the statement of claim insofar as it relates to the causes of action and allegations other than those contained in paragraph 17(a) and paragraph 23(4) and (5) of the statement of claim. I order that the applicant in the principal proceeding pay the respondent's costs of the notice of motion.

I order that the trial of the remaining issues proceed on the basis of affidavit evidence and that all affidavits upon which the applicant will rely in relation to the remaining causes of action be filed and served by Friday,

in respect of those matters are to be filed and served by	16 October. All affidavits on which the respondents will rely
Friday, 30 October.
In the event that no affidavits in respect of those issues are filed and served by the applicant by 16 October, the respondents may file and serve a notice of motion, returnable before me on 27 October, 1992 at 9.30am, for dismissal of the balance of the statement of claim for want of prosecution.
I direct that a copy of this order be served at the registered office of the applicant not later than Friday next.
I certify that this and the preceding eight (8) pages
are a true copy of the Reasons for Judgment of the Honourable Justice Wilcox.
Associate:
Dated:  28 September 1992

APPEARANCES

Counsel for the Applicant:	No appearance
Solicitors for the Applicant:	Holman Webb
Counsel for the Respondent:	J B Maston
Solicitors for the Respondent:	Stone & Partners
Date(s) of hearing:	28 September 1992