Mol Bulk Carriers Pte Ltd v Sin-Tang Development Pte Ltd

Link copied
Case Copied 31 min read

FEDERAL COURT OF AUSTRALIA

MOL Bulk Carriers Pte Ltd v Sin-Tang Development Pte Ltd [2016] FCA 619

File number: WAD 517 of 2015
Judge: MCKERRACHER J
Date of judgment: 31 May 2016
Catchwords:

ADMIRALTY - Practice and Procedure – application to set aside order for service out of the jurisdiction to Singapore – whether order for service out of the jurisdiction tainted by material non-disclosure or misrepresentation of key facts – whether there is a prima facie case – strength of case at service stage – dealings leading to contracts of affreightment – FOB, CFR and CIF contracts – consequences of such contracts

ARBITRATION – International Arbitration Act 1974 (Cth), s 7 - whether proceedings should be stayed on the basis of an arbitration clause in the relevant agreement – whether party that contends it is not a party to the agreement is entitled to rely on the arbitration clause in the agreement – whether proceedings should be stayed in the absence of a formal application for a stay under r 28.43 of the Federal Court Rules 2011 (Cth)

Legislation:

Admiralty Act 1988 (Cth) ss 4(1), 4(3)(f) , 9(1)

Federal Court Rules 2011 (Cth) rr 10.43, 28.43

International Arbitration Act 1974 (Cth) s 7

Cases cited:

CMA CGM SA v Ship 'Chou Shan' (2014) 224 FCR 384

Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45

Jasmin Solar Pty Ltd v Trina Solar Australia Pty Ltd  [2015] FCA 1453

Lightsource Technologies Australia Pty Ltd v Pointsec Mobile Technologies AB (2011) 250 FLR 63

Perdaman Chemicals & Fertilisers v ICICI Bank Ltd [2013] FCA 175

Date of hearing: 1 March 2016
Registry: Western Australia
Division: General Division
National Practice Area: Admiralty and Maritime
Category: Catchwords
Number of paragraphs: 70
Counsel for the Applicant: Mr M Jones SC with Ms H Mann
Solicitor for the Applicant: Jarman McKenna
Counsel for the First Respondent: Mr Young SC with Mr Oldfield
Solicitor for the First Respondent: K & L Gates
Counsel for the Second  Respondent: Ms A Richmond-Scott
Solicitor for the Second Respondent: Minter Ellison Lawyers

ORDERS

WAD 517 of 2015
BETWEEN:

MOL BULK CARRIERS PTE LTD

Applicant
AND:

SIN-TANG DEVELOPMENT PTE LTD

First Respondent

KIMBERLEY METALS GROUP PTY LTD (ACN 114 123 572)

Second Respondent

JUDGE:

MCKERRACHER J

DATE OF ORDER:

31 MAY 2016

THE COURT ORDERS THAT:

1.The first respondent’s interlocutory application filed 20 October 2015 be dismissed. 

2.The first respondent pay the costs of the applicant, to be assessed if not agreed. 

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

MCKERRACHER J:

SIN-TANG’S APPLICATION TO SET ASIDE OR STAY PROCEEDINGS

  1. Sin-Tang Development Pte Ltd applies for service of an originating application upon it in Singapore to be set aside, the order granting leave for service to be discharged and the proceeding against it stayed.   Sin-Tang contends that the relevant orders granted in favour of MOL Bulk Carriers Pte Ltd for service out of the jurisdiction…

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Mol Bulk Carriers Pte Ltd v Sin-Tang Development Pte Ltd and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2016] FCA 619
Decision Date

CaseChat Overview and Summary

Mol Bulk Carriers Pte Ltd initiated legal proceedings against Sin-Tang Development Pte Ltd and Kimberley Metals Group Pty Ltd (KMG) in the Federal Court of Australia. Mol sought to serve its originating application and statement of claim on Sin-Tang in Singapore, which was granted on an ex parte basis. Mol is a bulk carrier operator based in Singapore, while Sin-Tang is a Singaporean corporation and KMG is an Australian company involved in iron ore projects. The dispute revolves around contracts of affreightment for the shipment of iron ore between the parties.

The legal issues before the court included whether the order for service out of jurisdiction to Singapore was tainted by material non-disclosure or misrepresentation, whether there was a prima facie case, and whether the proceedings should be stayed based on an arbitration clause in the agreement. Mol argued that Sin-Tang's attempt to challenge its liability under the contract while simultaneously relying on the arbitration clause was inconsistent, and that Sin-Tang had not filed a formal application for a stay under the Federal Court Rules.

The court held that Mol had established a prima facie case, and therefore the service orders would not be set aside. The court also found that without a formal application, the proceedings would not be stayed at that stage. Consequently, Sin-Tang's application was dismissed with costs to be paid by Sin-Tang to Mol.

In summary, the court denied Sin-Tang's application to set aside the service orders and to stay the proceedings. Mol's claims would proceed in the Federal Court, and Sin-Tang was ordered to pay Mol's costs.

Orders

Orders of the court

1. The first respondent’s interlocutory application filed 20 October 2015 be dismissed.

2. The first respondent pay the costs of the applicant, to be assessed if not agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

MOL issued an originating application on 9 September 2015 against both Sin-Tang and Kimberley Metals Group Pty Ltd (ACN 114 123 572) (KMG), an Australian company. By interlocutory application filed two days later, MOL sought leave ex parte pursuant to r 10.43 of the Federal Court Rules 2011 (Cth) (FCR) to serve the originating application and statement of claim, both filed on 9 September 2015, on Sin-Tang in Singapore by engaging a solicitor admitted to practice in Singapore or that solicitor’s clerk to leave the documents at the registered address of Sin-Tang. Leave was granted on 22 September 2015.BACKGROUND MOL is an operator of bulk carriers and is headquartered in Singapore. MOL’s Australian representative, Mr Tony Pegum, operates from Perth. Sin-Tang is a corporation registered in Singapore. KMG is a developer and operator of iron ore projects. KMG is an Australian company, with a registered office in Western Australia. On 28 June 2013, MOL as owner and KMG as charterer/shipper entered into a contract of affreightment for the shipment of iron ore (First Contract of Affreightment). As described more fully below, Addendum No 1 dated 5 November 2013 between MOL as owners and KMG as charterers amended the arbitration and choice of law clauses in the First Contract of Affreightment. Importantly for present purposes, the 2013 Novation Contract of Affreightment between Sin-Tang, KMG and MOL had the effect of creating the ‘Novated COA’ between MOL as owner and Sin-Tang-as charterer/shipper in place of KMG on the same terms and conditions as the First Contract of Affreightment and Addendum No 1. (Although I note that the copy of the Novation Contract of Affreightment annexed to the affidavit of Mr Jonathan Wyatt dated 10 December 2015 is undated and only executed by Sin-Tang and KMG.) The statement of claim pleads that on or about 18 December 2013, MOL as owner and Sin-Tang as charterer/shipper entered into a contract of affreightment for the shipment of a minimum of four and a maximum of six iron ore cargos (Second Contract of Affreightment). The Second Contract of Affreightment included a term to the effect that KMG was to coordinate on behalf of Sin-Tang, as its agent, the various obligations and activities of Sin-Tang under or in connection with the contract of affreightment. Braemar Seascope Pty Ltd was a shipbroker with its business located in Western Australia. Mr Chris Hall was employed by Braemar. Braemar acted for and on behalf of Sin-Tang in arranging contracts of affreightment with shipowners. Further, Mr David Gallagher was the chief financial officer of KMG, located in Perth, Western Australia. On or about 3 March 2014, MOL claims that it, as owner and Sin-Tang as charterer/shipper, entered into a further contract of affreightment for the shipment of a minimum of 18 and a maximum of 21 iron ore cargos in the period 1 May 2014 to 30 April 2015 (Third Contract of Affreightment). MOL now sues on this Third Contract of Affreightment.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Sin-Tang’s application and brief written submissions did not rely on an argument as to forum non conveniens except to the extent that the possibility of a stay application might be so described. For the factual reasons above in relation to a stay of the proceedings or the absence of abuse of process and the analysis in Jasmin (at [74] et seq), had the argument been raised, I would have concluded that the proper law is the law of the forum. CONCLUSION As MOL has established a prima facie case, I would not set aside the service orders. Further, in the absence of a formal application, I will not stay the proceedings at this stage. The application will be dismissed with costs.

Ratio Decidendi

Legal Principle Established

MOL contends that Sin-Tang, in doing so, is maintaining a ‘schizophrenic approach’ to the case. In other words, Sin-Tang cannot argue on the one hand that it is not a party to the Third Contract of Affreightment, and on the other hand say that, if it is, it is entitled to rely upon the arbitration clause. More specifically, on this topic, MOL’s argument is that the application for a stay is made under r 28.43 FCR which provides as follows:28.43 Application for stay of arbitration(1)A party to an arbitration agreement who wants an order under section 7 of the International Arbitration Act to stay the whole or part of a proceeding must file an originating application, in accordance with Form 51.(2)The originating application must be accompanied by:(a)a copy of the arbitration agreement; and(b)an affidavit stating the material facts on which the claim for relief is based. That Rule requires any person seeking an order under s 7 of the International Arbitration Act 1974 (Cth) to stay proceedings to file an originating application in accordance with Form 51. That application must be accompanied by the arbitration agreement and an affidavit stating the material facts on which the claim is based. There is no such application before the Court. MOL argues that without filing an application, any party seeking the exercise of the Court’s power to stay must accept that it is a party to the arbitration agreement before it can enforce its terms by seeking the stay. This is said to be entirely consistent with recognition that the relevant onus to establish the existence of the arbitration agreement rests on the party seeking the stay. Sin-Tang cannot, MOL argues, take advantage of the so-called doctrine of separability (the arbitration agreement is to be treated as a ‘distinct agreement’ from the balance of the contract) because the basis of its challenge to its liability under the balance of the Third Contract of Affreightment (that the agent who purported to buy as principal has no authority to conclude any agreement on its behalf), necessarily also applies to the arbitration agreement. MOL says that these are two quite inconsistent positions. I am not yet persuaded this is necessarily so. Sin-Tang also appear to rely upon an ‘inherent power; in the Court to stay the proceeding. It says ‘having regard to all the material before the Court as a whole’ the proceeding ought to be stayed, relying upon Lightsource Technologies Australia Pty Ltd v Pointsec Mobile Technologies AB (2011) 250 FLR 63 (at [197]). However, this is an authority directed towards stay of proceedings to prevent an abuse of process. It is difficult to see that if the Court is satisfied that there is a prima facie case against Sin-Tang, that there could be an abuse of process given the following matters:(a)the proceedings are plainly pursued for a monetary remedy, a regular outcome sought in the institution of proceedings;(b)the proceedings bear a relevant relationship with the forum, the contract having been, arguably, made and breached in Perth;(c)Sin-Tang does not (at least at this stage) seek to engage the statutory jurisdiction to enforce and thereby embrace the arbitration clause in the contract;(d)there are no other proceedings on foot in which the issues before the Court are being litigated;(e)the state of the record is that there are two parties that have potential liability under the Second Contract of Affreightment;(f)Sin-Tang and KMG have had a sequential series of dealing with MOL up to and including, in the case of KMG, the Second Contract of Affreightment and potentially in the case of Sin-Tang, the Second Contract of Affreightment. It is certainly difficult to see that neither party could have any relationship with the contract;(g)it would be preferable for matters to be litigated between the parties in the one proceeding to avoid the risk of inconsistent findings on similar subject matters;(h)the forum is plainly appropriate for KMG, a Western Australian company; and (i)Sin-Tang has not put forward any factual case to support a finding that this Court is a ‘clearly inappropriate’ forum (see CMA CGM SA v Ship 'Chou Shan' (2014) 224 FCR 384).