KMP Coastal Oil Pte Ltd v The Owners of Motor Vessel "Iran Amanat" & the 84 other vessels set out in the Application
[1997] FCA 665
•18 July 1997
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE - Stay of order of the Full Court of the Federal Court pending application for special leave to appeal to High Court - Preservation of subject matter of litigation - Factors relevant to exercise of discretion to stay.
Federal Court of Australia Act 1976 (Cth) s 25(2)(d)
Jennings Construction Ltd v Burgundy RoyaleInvestments Pty Ltd (1986) 161 CLR 681
KMP COASTAL OIL PTE LIMITED v. THE OWNERS OF MOTOR VESSEL “IRAN AMANAT” and the 84 other vessels set out in the Application
NG 130 of 1997
EMMETT J
SYDNEY
18 JULY 1997
IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) NG 130 of 1997 GENERAL DIVISION )
BETWEEN: KMP COASTAL OIL PTE LIMITED
AppellantAND: THE OWNERS OF MOTOR VESSEL “IRAN AMANAT” and the 84 other vessels set out in the Application
Respondent
JUDGE(S): EMMETT J PLACE: SYDNEY DATED: 18 JULY 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
Upon the conditions noted in paragraph 2 herein, Order that Order 2 of the Orders of the Full Court of the Federal Court of Australia made 5 June 1997 be stayed pending the determination of the Application for Special Leave to Appeal to the High Court of Australia filed 24 June 1997 and in the event that the Application is successful determination of the Appeal to the High Court.
On or before 8 August 1997 the Respondent will file in the Registries of the Federal Court of Australia and the High Court of Australia to be placed with each file copies of a letter addressed to the Appellant comprising;
(1)An undertaking by the Respondent to the Appellant to prosecute the Application for Special Leave to Appeal and if Special Leave be granted the Appeal with all due diligence;
(2) A statement that if it has provided additional security in the sum of US$150,000.00 in a form which has been agreed between the parties and failing which to the satisfaction of the Registrar in Admiralty of the Federal Court of Australia in respect of the Appellant’s claim including interests and costs (including the Appellant’s costs of the Application for Special Leave to Appeal and any Appeal if Leave is granted).
Grant liberty to apply to either party on 7 days notice in writing with respect to these orders and the imposition of any further conditions as to the Court seems appropriate.
Order that the costs of the Respondent’s motion follow the event of the Application for Special Leave to Appeal and, if granted the Appeal.
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 130 of 1997 ) GENERAL DIVISION )
BETWEEN: KMP COASTAL OIL PTE LIMITED
AppellantAND: THE OWNERS OF MOTOR VESSEL “IRAN AMANAT” and the 84 other vessels set out in the Application
Respondent
JUDGE(S): EMMETT J PLACE: SYDNEY DATED: 18 JULY 1997
EX TEMPORE REASONS FOR JUDGMENT
In this matter the Full Court on 5 June 1997, upheld an appeal from a decision of a judge of this Court releasing the vessel “Iran Amanat” from arrest on the ground of want of jurisdiction. The Full Court concluded that the Court does have jurisdiction to entertain the plaintiff's claim.
The Full Court's orders were that the appeal be allowed with costs, that the proceedings be remitted to Tamberlin J, as admiralty judge, for directions concerning the determination of the appellant's claim, that the respondent pay the appellant's costs of the respondent's motion for release of the ship from arrest and that the parties have liberty to apply. The defendant has applied to the High Court for special leave to appeal from the decision of the Full Court and has made an application for a stay of the second order, that the proceedings be remitted for directions concerning the determination of the plaintiff’s claim.
The basis for the application is that if the matter is remitted, the defendant may be placed in a position where it will be required to comply with directions given by the Court or possibly, in the conduct of the proceedings, may be advised to make an application itself, thereby invoking the court's jurisdiction. It is said that these possibilities gives rise to a concern that, either in complying with directions or in making an application to the Court, the defendant would be taken to have submitted to the jurisdiction of the court in circumstances where it is maintaining the stance that the court does not have jurisdiction and that there has hitherto been no submission to the Court’s jurisdiction.
If that were the consequences of the remitter then the subject matter of the appeal to the High Court would in effect be put in jeopardy because of the subsequent conduct of the proceedings. That is to say, it would be pointless for the High Court to determine whether the Full Court was right if in the meantime the subsequent conduct of the proceedings had made the issue moot. Neither counsel has been able to refer me to any authority on the question of whether in circumstances where there has been no determination of liability and the mere participation under protest, so to speak, in the proceedings by the defendant could amount to a submission to the jurisdiction. I must say that, as presently advised, I would be surprised if that were so. However there is good reason for that question not being allowed to arise if it can be avoided.
My initial view would be that the appropriate course would be to refuse the application for a stay on the basis that it would be a matter for Tamberlin J to decide whether or not, in the circumstances, any directions should be given and whether or not the defendant should be placed in a position where, in the conduct of its defence of the proceedings, it might itself have to move the court for orders. My present inclination is that, if I were in that position, I would grant some de facto stay, subject to appropriate conditions, pending the outcome of the proceedings before the High Court.
However, I am mindful of the fact that costs have been incurred in the argument before me both today and on earlier occasions. Having heard the argument it seems to me that it would be preferable for me to deal with the question at this stage.
It is clear that if a stay is to be granted, it must be on terms. Before I come to the question of terms though I will make some observations about the appropriateness of a stay in the circumstances. I have been referred to the observations of Brennan J in Jennings Construction Ltd v Burgundy RoyaleInvestments Pty Ltd (1986) 161 CLR 681 concerning the terms upon which a stay might be granted by the High Court.
The jurisdiction to grant a stay depends on whether a stay is necessary to preserve the subject matter of the litigation. The stay is an extraordinary jurisdiction and exceptional circumstances must be shown. For the reasons which I have indicated, I consider that there is at least an argument, although I do not know that it is a strong one, that there may be a destruction of the subject matter of the litigation by reason of the defendant either complying with directions or itself being advised to move the Court. I am satisfied that exceptional circumstances exist because of the risk for the defendant of losing the subject matter of the proposed appeal to the High Court, namely the possibility of a determination that there is no jurisdiction of this Court.
Brennan J said, in Jennings Construction Ltd v Burgundy RoyaleInvestments Pty Ltd at 685, that a number of factors are material to the exercise of the Court's discretion, referring, of course, to the discretion of the High Court. It is fair to say that much the same considerations would apply on an application to this Court.
First there must be a substantial prospect that special leave to appeal will be granted. Having been a participant in the Full Court which upheld the appeal my view is clearly that the appeal ought to fail. Nevertheless it cannot be said that the arguments advanced by the appellant are futile and whether or not there is a substantial prospect that the appeal will succeed there is, I think, a sufficient prospect that special leave will be granted. Secondly, Brennan J said that where the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending, that would count against an application of the High Court. That does not arise in present circumstances.
Third, and fourth, it is necessary to decide whether the grant of a stay will cause loss to the respondent and where the balance of convenience lies. Those two are clearly related. The circumstances of the present case are that while the vessel was released from arrest, that release was on terms that the defendant furnish security in respect of the claim made by the plaintiff. There is in evidence before me of an undertaking given by North of England P & I Association Limited relevantly in the following terms. It is addressed to the plaintiff:
“In consideration of your releasing mv “IRAN AMANAT” from arrest and your refraining from taking any action resulting in the arrest or detaining of MV “IRAN AMANAT” or any other vessel or property in the same ownership, associated ownership, management or control or any vessel owned by Islamic Republic of Iran Shipping Lines for the purpose of founding jurisdiction or obtaining security in respect of or arising out of the claim by KMP Coastal Oil Pte Ltd in respect of non-payment for bunkers...,we, North of England P & I Association Limited, hereby guarantee to pay to you or your solicitors on your behalf such sums as may be adjudged to be due to you from Islamic Republic of Iran Shipping Lines by the Supreme Court of New South Wales or the Federal Court of Australia or other competent Court or Tribunal or on final appeal therefrom, or as may be agreed by us in writing to be recoverable from you in respect of the said claim, interest and cost, provided that the total of our liability hereunder shall not exceed the sum of $200,000.00.”
The present claim is for $US132,751.08 which was said to be equivalent to $A178,815.70. The plaintiff contends that the terms of any stay should include an increase in the amount for which security is provided and a condition to the effect that the consequences of any delay should not prejudice the running of time for commencement of proceedings in other jurisdictions.
In the affidavit of David James Stone sworn 16 July,1997 the prospective claim, which the plaintiff has, is summarised at a total figure of $A470,464 which equates to $US349,268. That figure of $A470,464 is made up as follows:
· Basic claim - $178,815
· Contractual interest to date - $37,991
· Costs before Tamberlin J to date - $45,750
· Costs of the appeal to the Full Court - $45,300
· Costs of solicitors in Singapore to date - $35,200
· Additional interest on the claim pending determination in the High Court allowing 18 months
- $53,624
· Estimated additional costs in the High Court - $26,000
· Estimated additional interest pending determination of the claim at first instance, allowing 12 months
- $35,763
· Estimated cost of the further hearing of the matter at first instance - $12,000.
The defendant concedes that a term should be imposed but that the term should be limited to interest which would accrue by reason of any delay consequent upon an unsuccessful application to the High Court or unsuccessful appeal to the High Court, namely, the sum of $53,644. If I refuse the application for a stay, the plaintiff would be in a position where the only security which it has is that which is provided under the letter of guarantee of 18 October 1996 which I have extracted above. There is something to be said for the proposition that the only prejudice which would be occasioned to the plaintiff would be the erosion of the security by reason of the additional interest consequent upon the delay by the proceedings in the High Court. In one sense, the application for a stay might result in a windfall to the plaintiff.
On the other hand, it appears, on the evidence before me, that, for whatever reason, the security which was furnished for the release of the ship from arrest may turn out to be inadequate in that it does not apparently adequately provide for all of the costs of the proceedings. In circumstances where the appellant seeks the indulgence of the Court, it seems to me that the discretion which is open to me is in effect wide open. The applicant for the stay is not compelled to pursue the stay and could indeed make the same application to Tamberlin J. As I have indicated, that seems to me to be the appropriate course. In the circumstances, I would be disposed to grant the stay if it is pressed before me, but only on terms that the defendant provide security to the satisfaction of the Registrar for an additional sum of $US150,000.
So far as the second condition sought by the plaintiff is concerned, I am not satisfied at the moment that there is sufficient prejudice likely to flow from the delay in question. The condition sought in effect would involve time not running in any part of the world in respect of any claim which might be made in rem. It seems to me that the appropriate course in relation to that matter is to reserve liberty to the plaintiff to apply for a variation of the terms of the stay, or indeed, for dissolution of the stay if a genuine concern arises as to time running for commencement of some other proceeding. There is nothing before me to indicate that there is any time limit imminently coming to an end. I would therefore decline to impose as a condition a term that time not run but would grant liberty to the plaintiff to make any application on 7 days notice for a variation of the terms of the stay.
I will grant the stay pending the hearing of the application for special leave and, if that is successful, pending the determination of the appeal to the High Court, on condition that the defendant undertakes to prosecute the application for leave and any appeal with all due expedition, and on the further condition that the defendant provide, within 21 days, security to the satisfaction of the Registrar in a sum equivalent to $US150,000, reserving to either party, liberty to apply on 7 days notice to vary the terms of the stay.
I am inclined to think that it may well be appropriate that the cost be costs of the appeal. My view is that the costs of the application for a stay should follow the event of the outcome of the application for special leave and any appeal if leave is granted.
I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett
Associate:
Dated: 18 July 1997
Counsel for the Appellant (Respondent on the notice of motion): P.E. King Solicitor for the Appellant (Respondent on the notice of motion): Phillips Fox Counsel for the Respondent (Applicant on the notice of motion): G. Nell Solicitor for the Respondent (Applicant on the notice of motion): Norton Smith Date of Hearing: 18 July 1997 Date of Judgment: 18 July 1997
0
0
0