Patrick Stevedoring No 2 Pty Ltd v The Ship "Turakina" Waitemata Stevedoring Services Ltd v The Ship MV "Rangitata" and Anor

[1998] FCA 244

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES  DISTRICT REGISTRY

IN ADMIRALTY

NG 114 of 1998

BETWEEN:	PATRICK STEVEDORING NO 2 PTY LIMITED PLAINTIFF
AND:	THE SHIP "TURAKINA" DEFENDANT

NG 115 OF 1998

BETWEEN:	WAITEMATA STEVEDORING SERVICES LIMITED PLAINTIFF
AND:	THE SHIP MV "RANGITATA” & ANOR DEFENDANT

JUDGE:	TAMBERLIN J
DATE:	13 MARCH 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT
(Ex-tempore Judgment)

There are before me two applications brought under r 48(1) of the Admiralty Rules 1988 (Cth) (“the Rules”) seeking directions with respect to vessels under arrest.

The applications are brought in matter numbers NG115 and NG114 of 1998.  They are brought before me as a matter of urgency.

The applications are brought because the Marshal seeks to obtain funds to replace two engineers on each of two of the arrested vessels, MV “Turakina” and MV “Rangitata”.  On the available evidence the engineers propose to leave the vessels.  In the case of the “Rangitata” that event will take place tomorrow and in the case of the “Turakina”, early next week.  This will leave the vessels under the custody of the Court without the benefit of the services of these officers.

The specific order sought by the Marshal in each case are as follows:

Here I quote the directions as sought in the applications.

“1.       As costs and expenses of arrest, the Marshal engage Intercontinental Ship Management Pty Ltd (“ISM”):

(a)       to advise the Marshal and

(b)to engage such engineers, Master, officers and other crew whom the Marshal, in his discretion, requires to maintain the safe custody of the vessel under arrest and any cargo on board.

2.The Plaintiff’s solicitor put the Marshal in funds in advance forthwith as requested by the Marshal to pay ISM’s reasonably anticipated charges and expenses.”

The orders sought are supported in general terms by Mr Levingston, who appeared in each of the proceedings on behalf of the master and crew of each of the vessels.

The plaintiffs appear by counsel in both applications to resist the orders sought.

The applications are based on the undertakings proffered by the solicitors for each of the plaintiffs in the proceedings, see specifically the Admiralty Rules 41, 75, 78 and Form 12.

In the case of the “Rangitata”, which is under arrest in Melbourne, the Captain informed a Deputy Marshal of the Court that the chief engineer and second engineer were leaving the vessels for New Zealand tomorrow.

In relation to the  “Turakina” the evidence is that the master expects the two engineers will give notice on 16 March 1998 that they will leave the vessel within 48 hours.  The urgency is obvious.

The Marshal has heard evidence from Mr Sorensen, a qualified chief engineer first class, and the managing director of Intercontinental Ship Management Pty Limited who was previously the general manager of Harvard Smith Shipping.

When Mr Sorensen was cross-examined no contradictory evidence was filed by either of the plaintiffs.

Mr Sorensen's evidence was that it would be imprudent to have only a chief engineer on board without any other engineer.  Relying on what, in his opinion, was safe and proper standards of manning practice and accepted International Convention Guidelines he considered that two engineers were required on board each vessel until the vessels’ generators were shut down and the vessels layed up without power.  The two vessels in question are not layed up or without power.  He considered that a single engineer would not suffice even if available on call 24 hours per day.

Mr Sorensen was cross-examined to suggest that a lesser staffing level or intensity of manning might be possible, but I am satisfied that his better judgement was that two engineers were necessary for vessels which were not totally inactive (“dead”) in the sense of being fully layed up.

The plaintiffs submitted that the requirement of two engineers could not reasonably be justified.  I do not accept this proposition.

Under the Rules the Marshal must take all appropriate and necessary steps to retain safe custody and to preserve the ship: see r 47(1) and (2).

The Marshal's case is that in order to ensure safe custody and preserve the ship it is necessary for engineers to be retained to replace the engineers, whose departure is currently foreshadowed.

In the case of the “Rangitata” there is cargo on board which also calls for custody and preservation.  In the case of the “Turakina” the cargo is presently being off-loaded pursuant to an order made by me yesterday.

The role of the Marshal in these proceedings is that, subject to the supervision of the judges, he acts as an officer of the Court and not as a party to the proceedings and it is therefore appropriate that he should be fully indemnified for the cost incurred in discharging his duty.  See Bayside Airconditioning Pty Limited v the Owners of the Ship "Cape Don", (Unreported, Cooper J, 15 May 1997) at 4.  In that case the Marshal brought a notice of motion to enforce payment of his costs and expenses in maintaining the vessel under arrest.  The plaintiff in that case had paid approximately $40,000 to the Marshal on account of costs and expenses associated with the arrest of the vessel, its upkeep and maintenance.  Also, in that case, the Marshal had demanded payment presumably under r 78 and there had been default.  In a later decision in the same matter on 15 August 1997 his Honour pointed out that the Marshal is entitled under r 78 to make one or more demands for interim payment and that the solicitor’s undertaking is enforceable by committal pursuant to r 75.  The judgment refers to the firm of solicitors which gave the undertaking and noted that while the firm did not seek to resile from its obligations under the undertaking it sought to stop the open-ended nature of its undertaking in circumstances where the client exposed the solicitors to liability on the undertaking and took no steps to pay the Marshal's costs and expenses or to advance the proceedings.  Notwithstanding the arguments, his Honour held the solicitors to their undertaking.  He considered the Marshal should forthwith identify the costs and expenses attributable to the valuation and sale of the ship to the plaintiff, including the costs and expenses incurred as a consequence of the plaintiff's default on the sale and make demand under the undertaking contained in its application for valuation and sale pending trial.

In the case of the “Rangitata” there is evidence from the Deputy Marshal that the Captain informed him that the vessel required the continuous presence of an engineer on board to ensure the safety of the vessel and the refrigerated cargo containers on board.  He rejected a suggestion that engineering services might be met by periodic visits to the ship by an engineer.  This is contained in the evidence of Mr Seccombe.  The continuous presence of an engineer on board is a reference to an engineer being on duty to ensure the safety of the vessel.  A single engineer cannot, of course, be expected to be available for 24 hours a day and this supports the view that two engineers are necessary to ensure the  safety and preservation of the vessel and property on the vessel.

In addition, there is the added circumstance that there are crew members presently on each of the vessels and their welfare is of considerable concern to the Court.

The arrest of a trading vessel is an act which will normally entail serious and far reaching consequences to numerous persons and entities extending well beyond the parties in immediate dispute as to a specific claim or debt.  For this reason r 41 is expressed in wide language.  If the solicitor is not prepared to give the undertaking there may be no arrest.  See McGuffie in British Shipping Laws, Vol 1, Admiralty Practice (1964) at par 262 which touches on the present issues although it does not discuss them in depth.  He also there states that a deposit of cash would be called for if the solicitor is not prepared to give an undertaking.  In the following paragraphs McGuffie goes on to discuss the undertaking.  He points out in par 264 that the practical reason for requiring an undertaking from the solicitor, as an officer of the Court and not as an agent or in any other capacity, is that the solicitor is in a better position to assess the financial reliability of his client, who is often not resident in the jurisdiction, than anyone else and that the solicitor should satisfy himself on this point before giving the undertaking.

He also goes on to discuss the question as to the expenses which the Marshal might recover.  In par 262 he says:

“Various precautions involving expense may be taken by direction of the marshal to keep the vessel within the jurisdiction eg, placing a ship keeper on board, immobilisation of the main engines in a small vessel, provision of a skeleton crew if she is unmanned and port regulations call for a minimum number of men to be aboard, etc. These and similar steps in addition to stopping customs clearance and warning harbour authorities, are taken in the course of a normal arrest and if it should be reported that a defect on the vessel was causing or likely to cause serious deterioration is the value of the res then steps would be taken to investigate and possibly remedy the defect; when an arrest lasts more than a week or two it is usual for the marshal to take the necessary minimum steps...”

The plaintiffs in each case in resisting the application submit that the Marshal should have made a demand for interim payment on account of the likely fees or expenses under r 78.  In default of compliance a solicitor may be liable for committal under r 75.

In substance it seems to me that Direction 2 sought in the Application amounts to a demand for payment.  Given the urgency of this matter, the wide language of r 48, coupled with the absence of any proffered response from either plaintiff, there is no necessity in the present case for the Marshal to formally follow the procedure prescribed in r 78 as being in any way a prerequisite of giving directions under r 48.  It should be noted that the Court itself has a broad discretionary power under r 50 to make appropriate orders with respect to the management of a ship under arrest.

Several objections, however, are taken as to the form of the orders sought.

The first is that objection is taken to the expression "as costs and expenses of arrest" in the preamble to Direction 1. This submission is that such language might preclude any later dispute as to whether in fact the engagement could properly be described as a cost and expense in relation to the arrest within the meaning of the undertaking in s 41(b) of the Rules. In my view, the expenses of the Marshal in taking steps to preserve the vessel clearly extend to ensuring that staffing is maintained at a prudent level. This is the case on the evidence and I can see no reason to delete these words. However, I think the words of the Regulation are more appropriate and therefore the preliminary wording in Direction 1 should be as "As costs and expenses in relation to the arrest".

In relation to Direction 1(b) as sought it is suggested that the words "in lieu of the existing crew" should be inserted.  I see no necessity for this.  Nor do I see any necessity to delete the words referring to the discretion of the Marshal.

In relation to Direction 2 the suggestion is that this order should not be made at all.

The practical reality is that the Marshal does not have funds available to obtain advice and engage the necessary engineers to preserve and keep the vessel in safe custody. The funds must come from somewhere. The Marshal has to enter into commitments to ensure that his duty is performed. The plaintiff's solicitor has given an undertaking to this Court as required by the Rules. That undertaking must be adhered to. The Marshal needs to be put in funds to meet the commitment into which he is presently about to engage to carry out his statutory duties. In those circumstances monies must be paid in advance to cover those commitments. Accordingly, I see no reason to vary the wording of proposed Order 2, except to add at the end the phrase “in relation to the arrest”.

As to the amount of such funds, the evidence proferred is the advice of Intercontinental Ship Management of which Mr Sorensen is the managing director.  He provided advice in a letter, which was not challenged in cross-examination, that the required engineers might be provided at a total daily cost of $1200, including a management fee.  In addition,travel to and from the ship together with meals and accommodation in respect of the engineers would also need to be allowed.  The Marshal has claimed an interim sum of $20,000 in respect of each ship for a period of two weeks to be provided in advance.  In my view that is a reasonable requirement.  It is important to bear in mind in the present case that the undertaking is cast in broad terms in order to protect the Marshal, who is required to assume custody and preserve the vessel and the property.  No doubt parties giving such a broad undertaking to pay on demand must be taken to be aware of its importance particularly in the case of an undertaking by a solicitor.  The Marshal is given direct and immediate recourse by the undertaking to the obligations assumed by the solicitor in order to meet the costs incurred or likely to be incurred in maintaining the arrest procured at the behest of the plaintiffs.

For the above reasons, in relation to each matter and in exercise of the Court's power under rr 48 and 50, I direct as follows:

1. As costs and expenses in relation to the arrest, the Marshal engage Intercontinental Ship Management Pty Ltd (“ISM”)

(a)to advise the Marshal, and

(b)to engage such engineers, masters, officers, and other crew whom the Marshal, in his discretion, requires to maintain the safe custody of the vessel under arrest and any cargo on board.

1. The plaintiff's solicitor forthwith put the Marshal in funds in the sum of $20,000 in relation to the arrest to cover the engagement of engineers arising in relation to the arrest. 

Those are the orders of the Court.

I will reserve the question of costs for parties other than the Marshal.

I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin

Associate:

Dated:             13 March 1998

Counsel for the Plaintiff, Patrick Stevedoring No 2	Mr G J Nell
Counsel for the Plaintiff, Waitemata Stevedoring Services Ltd	Ms L Muston
Solicitor for the Plaintiff, Patrick Stevedoring No 2	Allen, Allen & Hemsley
Solicitor for the Plaintiff Waitemata Stevedoring Services Ltd	Conway Leather Shaw
Solicitor for the Admiralty Marshal:	Mr D Coleman
Solicitor for the Master and Crew	Mr J Levingston
Date of Hearing:	13 March 1998
Date of Judgment:	13 March 1998