Programmed Total Marine Services Pty Ltd v Ships “Hako Endeavour”, “Hako Excel” and “Hako Esteem”

[2014] FCAFC 134

FEDERAL COURT OF AUSTRALIA

Programmed Total Marine Services Pty Ltd v Ships “Hako Endeavour”, “Hako Excel” and “Hako Esteem” [2014] FCAFC 134

Citation:

Programmed Total Marine Services Pty Ltd v Ships “Hako Endeavour”, “Hako Excel” and “Hako Esteem” [2014] FCAFC 134

Appeal from:

Programmed Total Marine Services Pty Ltd v Ships “Hako Endeavour”, “Hako Excel” and “Hako Esteem” (No 2) [2013] FCA 1261

Parties:

PROGRAMMED TOTAL MARINE SERVICES PTY LTD v THE SHIP “HAKO ENDEAVOUR”

PROGRAMMED TOTAL MARINE SERVICES PTY LTD v THE SHIP “HAKO EXCEL”

PROGRAMMED TOTAL MARINE SERVICES PTY LTD v THE SHIP “HAKO ESTEEM”

File numbers:

NSD 2574 of 2013
NSD 2576 of 2013
NSD 2578 of 2013

Judges:

ALLSOP CJ, RARES AND BESANKO JJ

Date of judgment:

14 October 2014

Catchwords:

ADMIRALTY – practice and procedure – application for leave to amend writs and pleadings to include additional claims – where in rem claims against ships in relation to demise charterer’s liabilities – where application to amend made after termination of demise charter – where additional claims based on the same facts and claiming the same damage as existing claims – whether amendment to include additional claims against the ships in relation to the demise charterer’s liabilities after termination of demise charter statute barred – whether discretion should be exercised to refuse leave to amend – Admiralty Act 1988 (Cth) s 18.

ADMIRALTY – costs – where demise charterer failed to pay for manning services provided by appellant – where ships arrested on application of the appellant – where appellant continued to provide manning services during arrest – whether costs of providing manning services during arrest recoverable as costs of the proceeding – whether appellant engaged by Marshal to provide manning services during arrest – Admiralty Rules 1988 (Cth) r 41.

CONTRACT – construction – construction of tripartite deed – consideration of surrounding circumstances known to both parties and the purpose and object of the transaction embodied in the deed.

CONTRACT – construction – construction of indemnity clause – where demise charterer failed to pay for manning services provided by appellant – where ships arrested on application of the appellant – where appellant continued to provide manning services during arrest – whether costs of providing manning services during arrest “caused in whole or in part by” breach of agreement for payment.

CONTRACT – implied contract – where demise charterer failed to pay for manning services provided by appellant – where ships arrested on application of the appellant – where appellant continued to provide manning services during arrest – whether implied contract for continued provision of manning services.

RESTITUTION – quantum meruit – where demise charterer failed to pay for manning services provided by appellant – where ships arrested on application of the appellant – where appellant continued to provide manning services during arrest – whether implied request for services by demise charterer receiving benefit of manning services during arrest – whether demise charterer knowingly acquiesced in the provision of manning services during arrest knowing that they were not being provided gratuitously.

Held: Appeal allowed. Application for leave to amend writs and pleadings granted to include claim in quantum meruit. Claim in quantum meruit allowed. Cross-appeal dismissed.  

Legislation:

Admiralty Act 1988 (Cth) ss 3, 4, 15, 17, 18
Admiralty Rules 1988 (Cth) rr 6, 17, 19, 36, 41, 53
Federal Court Rules 2011 (Cth) r 8.21

International Instruments:

International Convention Relating to the Arrest of Sea-Going Ships done at Brussels on 10 May 1952

Cases cited:

ABC v Lenah Game Meats Pty Ltd [2001] HCA 63; 208 CLR 199
Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; 217 CLR 424

Brambles Ltd v Wail [2002] VSCA 150; 5 VR 169

Cachia v Hanes and Another [1994] HCA 14; 179 CLR 403
CMC (Australia) v “Socofl Stream” [1999] FCA 1419; 95 FCR 403
Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; 157 FCR 45
Dovuro Pty Limited v Wilkins [2003] HCA 51
EMAS Offshore Pte Ltd v The Ship “APC Aussie 1” [2009] FCA 872; 258 ALR 454

EMAS Offshore Pte Ltd v The Ship “APC Aussie 1” (No 2) [2009] FCA 1583; 194 FCR 484
Energy World Corporation Ltd v Maurice Hayes and Associates [2007] FCAFC 34; 239 ALR 457

FAI General Insurance Co Ltd  v Southern Cross Exploration N L [1988] HCA 13; 165 CLR 268
Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234
Knight v FP Special Assets Ltd [1992] HCA 28; 174 CLR 178
Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; 232 CLR 635
Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; 226 CLR 486
March v (E & M) Stramare Pty Ltd [1991] HCA 12; 171 CLR 506

Modahl v British Athletic Federation Ltd (CA) [2001] EWCA Civ 1447; [2002] 1 WLR 1192
Monks v Poynice Pty Ltd and Another (1987) 8 NSWLR 66

Oshlack v Richmond River Council (S208-1996) [1998] HCA 11; 193 CLR 72
Owners of “Shin Kobe Maru” v Empire Shipping Co Inc [1994] HCA 54; 181 CLR 404

Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451
Patrick Stevedores No 2 Pty Ltd v Ship MV “Turakina” (No 1) (1998) 84 FCR 493

Patton v Buchanan Borehole Collieries Pty Ltd [1993] HCA 23; 178 CLR 14
Pelechowski v The Registrar, Court of Appeal (S62-1998) [1999] HCA 19; 198 CLR 435

Reardon Smith Line Ltd v Hansen‑Tangen [1976] 1 WLR 989

Re Aro Co Ltd [1980] Ch 196; 1 All ER 1067

Saint John Tug Boat Co. Ltd. v Irving Refining Ltd. [1964] RCS 614
Ship Hako Endeavour & Others v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21; 211 FCR 369
The Cella (1888) 13 PD 82

The Indian Grace [1998] 2 AC 878

The London Scottish Benefit Society v Chorley (1884) 13 QBD 872
The Monica S [1968] P 741
The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Company Inc [1994] HCA 54; 181 CLR 404

The Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue [2001] HCA 49; 207 CLR 72
Tisand Pty Ltd v Owners of the Ship MV ‘Cape Moreton’ (Ex ‘Freya’) [2004] FCA 1191; 141 FCR 29; 210 ALR 601
Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (Ex Freya) [2005] FCAFC 68; 143 FCR 43
Weinstock v Beck [2013] HCA 14
Wong v R [2001] HCA 64; 207 CLR 584

Secondary Materials:

Anson on Contracts (21^st ed)
Australian Law Reform Commission, Admiralty Jurisdiction, 33
Benedict on Admiralty: Jurisdiction and Practice (1^st ed)
Berlingieri, F., Arrest of Ships (4^th ed)
Chitty on Contracts, General Principles, Vol 1 (31^st ed, Sweet & Maxwell, 2012)
Roscoe’s Admiralty Practice (4^th ed, 1920)

Dates of hearing:

7, 8 May 2014

Place:

Sydney

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

218

Counsel for the Appellants/
Cross-Respondents:

Mr A M Stewart with Mr J S Emmett

Solicitor for the Appellants/
Cross Respondents:

Corrs Chambers Westgarth

Counsel for the Respondents/
Cross-Appellants:

Mr G J Nell SC with Mr O R Jones

Solicitor for the Respondents/Cross-Appellants:

Cocks Macnish

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2574 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD Appellant Cross‑Respondent
AND:	THE SHIP “HAKO ENDEAVOUR” Respondent Cross‑Appellant

JUDGES:	ALLSOP CJ, RARES AND BESANKO JJ
DATE OF ORDER:	14 OCTOBER 2014
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The appellant and cross‑respondent file draft minutes of order reflecting the conclusions expressed in these reasons.

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

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2576 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD Appellant Cross‑Respondent
AND:	THE SHIP “HAKO EXCEL” Respondent Cross‑Appellant

JUDGES:	ALLSOP CJ, RARES AND BESANKO JJ
DATE OF ORDER:	14 OCTOBER 2014
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The appellant and cross‑respondent file draft minutes of order reflecting the conclusions expressed in these reasons.

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

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2578 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD Appellant Cross‑Respondent
AND:	THE SHIP “HAKO ESTEEM” Respondent Cross‑Appellant

JUDGES:	ALLSOP CJ, RARES AND BESANKO JJ
DATE OF ORDER:	14 OCTOBER 2014
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The appellant and cross‑respondent file draft minutes of order reflecting the conclusions expressed in these reasons.

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

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2574 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD Appellant Cross‑Respondent
AND:	THE SHIP “HAKO ENDEAVOUR” Respondent Cross‑Appellant

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2576 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD Appellant Cross‑Respondent
AND:	THE SHIP “HAKO EXCEL” Respondent Cross‑Appellant

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2578 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD Appellant Cross‑Respondent
AND:	THE SHIP “HAKO ESTEEM” Respondent Cross‑Appellant
JUDGES:	ALLSOP CJ, RARES AND BESANKO JJ
DATE:	14 OCTOBER 2014
PLACE:	SYDNEY

REASONS FOR JUDGMENT

ALLSOP CJ

1. I have had the benefit of reading the reasons to be published of Besanko J.  I agree with the orders proposed by him.  As to one aspect (the operation of the indemnity in cl 16 of the deed), I respectfully disagree with him.  I also wish to add some comments in relation to the reasons with which I agree.  I gratefully adopt the reasons of Besanko J insofar as they set out the facts and background of the matter.  These reasons should be read with a familiarity of the reasons of Besanko J.  To the extent that I have not expressed disagreement or qualification to his reasons, I should be taken as expressing my agreement with them.

   The claim under the deed of 7 April 2011

2. The primary contention of the appellant was the falling in of the claim under the deed entered into and dated 7 April 2011, and specifically by Hako’s responsibility for payment under cll 5 and 10 of the deed.  As the reasons of Besanko J demonstrate, as at the time of entry into the deed by the appellant, Boskalis and Hako, significant contextual changes had occurred since the original manning and services agreement in June 2010 between Hako and the appellant.  Foremost amongst those changes was the emerging history of financial unreliability of Hako that had led to the arrest of the tugs in March 2011.  This practical unreliability of the service of the tugs was an obvious commercial impediment to Boskalis (which had time chartered the tugs) fulfilling timeously and efficiently its contracts on the Gorgon project.  This explains the undertaking of obligations by Boskalis to the appellant in respect of the primary obligations of Hako to the appellant and also gives a cogent commercial consideration for the construction of the deed.

3. The manning and services agreement of 25 June 2010 expressly contemplated mobilisations and demobilisations: cll 1 and 2.  The agreement consisted of the standard terms and conditions and the schedule (cl 1.1.1 and 1.1.2), the proposal which was Annexure A (cl 1.1.3), special conditions in Annexure B (cl 1.1.4) and subsequent variations (cl 1.1.5).  The proposal to which attention must be given was introduced as a variation referred to in Annexure C.  It is the proposal dated 17 June 2010.  Looking at that document as at June 2010, it should be read as an undertaking to provide and an agreement to accept the “Services” as defined by cl 3 set out in the proposal.  The proposal both in its original form (10 February 2009, sic 2010, document GT-Q1059) and in its later form (17 June 2010, document GT-Q1059D) expressly contemplated mobilisation and demobilisation voyages (albeit in the context of the standard form conditions describing “Marine Manning Services” in Australian waters).

4. In the time charter under which Boskalis obtained the services of the tugs from Hako under the Supplytime 89 form, Boskalis was liable to pay mobilisation and demobilisation charges: cll 2(b) and 2(e), box 12 and Annexure D.  The fees were lump sum fees of USD532,000 or USD399,000 per set of one tug and one barge, depending upon whether delivery or redelivery was at Henderson or Dampier (both being locations in Australia).

5. In this context, Boskalis agreed, by the deed, that it became liable for the payments to the appellant for which Hako was also (and primarily) liable.  The tripartite nature of the deed gave the appellant a reliable source of payment (Boskalis) in addition to its existing unreliable commercial counterparty (Hako); and it gave Boskalis assurance of the availability of the tugs notwithstanding the financial instability of their disponent owner (Hako).  Boskalis had, in effect, already paid a significant sum for demobilisation.  After the completion of the work for which it was responsible (and for which the tugs were integral) it had no commercial need to see the appellant made good for any money for crewing Hako’s vessels.

6. In that light, the definition of the “Term” in the deed, in terms of physical activity under cl 3 and the definition of “Marine Rock Transport” in cl 1.1, can be seen to be of some importance.  The “Term” continued “until the transport of rock material loaded on barges from Henderson to Barrow is completed” (unless the deed is terminated earlier).  The “Services” (as defined in cl 4 of the deed) consisted of the relevant services (in cl 4(a), (b) and (c)) provided in relation to the Marine Rock Transport (as defined in cl 1.1).

7. The “Term” could be brought to an end by Boskalis terminating the deed if it (Boskalis) terminated the time charter: cl 22.3(i) of the deed.

8. Whilst the deed did not (subject to cl 20(b)) expressly deal with the ending of the time charter by effluxion of time and redelivery, nothing in the deed supports a broad construction of the phrase “in relation to” in cl 4 so as to extend the term as defined in cl 3 to include demobilisation after the completion of redelivery of the tugs under the time charter and the completion of the work of rock transport.

9. Clause 20(b) provided for 14 days’ notice by Boskalis to the appellant of the expected completion of services under the time charter.  That phraseology is apt and precise to identify 14 days’ notice of the ending of the time charter.  Its purpose is not clear, though it has a likely relationship to the practical ending of the “Term” and the giving to the appellant of an opportunity to attend to arrangements with Hako.

10. Thus, for these additional reasons I agree (subject to my views on the indemnity under cl 16) with the conclusion and reasons of Besanko J that the appellant’s claim was for services provided after the termination of the deed.

11. It is convenient to deal with the question as to whether the sums fall under the indemnity provided by cl 16 of the deed.  Clause 16 was in the following terms:

    “16      Indemity
    Hako agrees to indemnify and hold harmless TMS, its officers, members, employees, and agents, and any related body corporate of TMS, its officers, members, employees, and agents against any loss, damages, costs, claims, causes of action, liabilities, and expenses (including, without limitation, legal expenses on a full indemnity basis), caused in whole or part by:
              …
              (c)       any breach of this document by Hako;
              …
    If an indemnity payment is made by Hako under this clause 16, Hako must also pay TMS an additional amount equal to any tax which is payable by the recipient in respect of that indemnity payment.”

12. Hako breached the deed by failing to pay amounts under the deed for which it was liable prior to 3, 6 and 16 April 2012 when the three tugs were arrested.  The question is whether, if not otherwise falling under the purview of the deed because they were incurred after the ending of the deed on 19 April 2012, the claims for services were “loss, damages, costs, claims, causes of action, liabilities or expenses … caused in whole or in part by … any breach [of the deed] by Hako,” and thus falling within the indemnity in cl 16.

13. Besanko J is of the view that they are not.  I respectfully disagree.  I agree with Besanko J that the appellant is entitled to recover on the basis of a restitutionary claim (put in the amended writ as a quantum merit).  That the bases for that foundation of the claim were satisfied does not prevent the indemnity in cl 16 being engaged.  The question is whether there is a sufficient causal connection between the breaches of the deed which gave the appellant grounds to arrest the tugs in the in rem action under s 18 of the Admiralty Act and the claim for services provided to the tugs while they were under arrest and after the deed had come to an end.

14. That question of causation is informed by the background and context of the deed.  Hako was in obvious severe financial difficulty; there had been arrests already; the deed was a structure to put in place arrangements to finish the towage works in the Marine Rock Transport.  The work was being done on the North West shelf.  If an arrest took place either this crew, or some crew, would be needed for the vessel.  It was entirely foreseeable that services of the kind covered by the deed would be provided by the appellant if the tugs were arrested because of breach of the deed by Hako.  It may be that upon arrest, the Marshal would be forced to arrange for the crewing of the tugs; or, it may be that (as happened here) the crew already retained by Hako would remain on the vessels, if Hako did not dismiss them.

15. The relevance of these considerations is that the causal link, being a partial cause, is informed by the background circumstances.  As a matter of factual causation, there was an unbroken temporal and factual connection between the breaches of the deed, the arrests, and the services.  The deed was breached; the tugs were arrested; the crews remained on board after 19 April.  If the tugs had not been under arrest after 19 April, there is no reason to think that they would have been crewed.  The deed had come to an end; the rock transport work was finished; the time charter had ended; Boskalis had no need for the tugs; there would have been no commercial reason to have them crewed.  They were crewed (by Hako) because they were under arrest.  Hako had possession of the tugs (even if the Marshal had custody).  The need for crewing arose because of the arrest; that Hako did not reduce the level of crewing was a matter for it.  No act of the appellant, Hako or any third party effected a factual break in that sequence of events.  There were discussions with the owners which led to the placement of Go Marine into a position of financial responsibility after the termination of the arrests.  To use the traditional metaphor, nothing “broke the chain” of causation from a purely factual perspective.  Further, to the extent that evaluative considerations might be seen to attend the common sense answer to the question (March v (E & M) Stramare Pty Ltd [1991] HCA 12; 171 CLR 506 at 515-516), the context and background reinforce rather than attenuate the conclusion of a causal relationship.

    Amendment for the restitutionary claim

1. The amendment of the writ to propound the restitutionary claim is thus not the sole basis for success of the appellant.  I agree with the reasons and conclusions of Besanko J about this and would add the following remarks.

2. The nature of the proceeding under s 18 of the Admiralty Act is an in rem claim against a vessel owned by a party who is not the relevant person.  The separateness of the proceeding as an action in rem under Part III of the Admiralty Act from proceeding by way of action in personam was fully discussed in Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; 157 FCR 45 at 74-82 [99] – [132].

3. Here, whilst the owner appeared, it was not the relevant person and was not liable for the claim in personam as an owner would be upon appearance in answer to an action in rem brought under s 17 for owner’s liabilities. The actions here were only ever in rem against the tugs.

4. The tugs remained under arrest until the issuance of First Capital Insurance Limited guarantees to the appellant in respect of the tugs.  Each letter was headed by a detailed description of the claim and the proceeding as follows:

   “CLAIM:      PROVISION OF GOODS TO THE VESSEL AND PROVISION OF SERVICES IN THE FORM OF MASTERS AND CREW TO THE VESSEL, CATERING SERVICES TO THE VESSEL, AND OTHER SERVICES RELATED TO THE PROVISION OF MASTERS AND CREW AND CATERING SERVICES TO THE VESSEL (“CLAIM”)
   PROCEEDING:        FEDERAL COURT OF AUSTRALIA PROCEEDING WAD 87 OF 2012 (‘PROCEEDING”)”

5. The primary undertaking was in cl 1 of the document as follows:

   “1.       to pay to PTMS within 14 days of service of a written demand, any sum or sums which may be found to be due to PTMS, following any final and unappealable Judgment or Order in the Proceeding or as may be agreed to be due provided always that our liability hereunder will not exceed the sum of AUD $3,500,000.00 (Three Million, Five Hundred Thousand Australian Dollars) in respect of the Claim inclusive of interest and costs, agreed by the parties or as awarded in final and appealable Judgment or Order in the Proceeding, with costs to be taxed if not agreed;”

   
   
   

   The terms of that undertaking were general and not restricted to the claim as precisely pleaded at the time.  Thus, the letter of undertaking did not limit itself to the writ as currently framed absent amendment.  Had it done so, a question may have arisen as to its sufficiency to enable the tugs to be released.

6. Thus, there was security given on behalf of the owner of the tugs for any judgment in the proceeding against each tug.

7. Section 18 reflects Australia’s view of the proper scope of demise charter arrest under Art 3(4) of the International Convention Relating to the Arrest of Sea-Going Ships done at Brussels on 10 May 1952. The view (as held by Australia and reflected in s 18) that s 18 permitted arrest of an owner’s ship for demise charterer’s liability in the absence of a maritime lien was not universally held (see F Berlingieri Arrest of Ships (4^th ed) pp 138ff). No issue was raised about that in these proceedings or the jurisdiction proceedings. The consequence of s 18 and the critical importance of the date of commencement of the proceeding in Australia (see s 3(2) of the Admiralty Act and Tisand Pty Ltd v Owners of the Ship MV ‘Cape Moreton’ (Ex ‘Freya’) [2005] FCAFC 68; 143 FCR 43 at [45]; and [2004] FCA 1191; 141 FCR 29 at [45]) is that from the date of filing the proceedings in rem against the owner’s ship for demise charterer’s liabilities, a species of security is created in the ship by reference to the proceeding: Tisand and Re Aro Co Ltd [1980] Ch 196; 1 All ER 1067.

8. Section 18 is a provision concerned with jurisdiction of the court, and as such is not to be confined by implied restrictions, not otherwise demanded by the words of the statute in their context: Owners of “Shin Kobe Maru” v Empire Shipping Co Inc [1994] HCA 54; 181 CLR 404 at 420-1 [29]; FAI General Insurance Co Ltd  v Southern Cross Exploration N L [1988] HCA 13; 165 CLR 268 at 283-4; Knight v FP Special Assets Ltd [1992] HCA 28; 174 CLR 178 at 185, 202-3, 205; Patton v Buchanan Borehole Collieries Pty Ltd [1993] HCA 23; 178 CLR 14 at [13]; Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38; 226 CLR 486 at [10]; Weinstock v Beck [2013] HCA 14 at [55]; Oshlack v Richmond River Council (S208-1996) [1998] HCA 11; 193 CLR 72 at [38]–[41]; Pelechowski v The Registrar, Court of Appeal (S62-1998) [1999] HCA 19; 198 CLR 435 at [134]; Wong v R [2001] HCA 64; 207 CLR 584 at [84]; Dovuro Pty Limited v Wilkins [2003] HCA 51 at [128]; The Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue [2001] HCA 49; 207 CLR 72 at [53]; Andar Transport Pty Ltd v Brambles Ltd [2004] HCA 28; 217 CLR 424 at [61]; ABC v Lenah Game Meats Pty Ltd [2001] HCA 63; 208 CLR 199 at [151].

9. The Admiralty Rules do not restrict the operation of the Rules of Court: Admiralty Rules 1988, r 6.

10. The initiating process for an action in rem is a writ in accordance with form 6: r 19 of the Admiralty Rules. The writ is the “originating application” for the purposes of the Rules of Court: see definition of “originating application” in Schedule 1 to the Rules of Court: “an application starting a proceeding”.

11. Rule 8.21 permits amendment to add a new claim, amongst other things, that arises out of the same facts or substantially the same facts as those already pleaded.

12. No time bar arose or arises to engage: r 8.21(2).

13. To the extent that the appellant had a restitutionary claim (to which I will come), it arose out of the provision of crewing services in the factual matrix before the Court.  It was a separate cause of action from a claim under the deed, albeit arising from essentially the same facts.

14. No restriction on the operation of the Rules of Court as to amendment is discernible from s 18. The cause of action arose when Hako, as the relevant person, was the demise charterer of the tugs; thus para (a) of s 18 was satisfied. The proceeding (that came to be amended) was commenced when Hako was still the demise charterer of the tugs; thus para (b) of s 18 was satisfied. The word “proceeding” in s 18 is not to be equated with the amendment application. Textually the “proceeding” is, as the Admiralty Rules (Rule 3 definition) illustrate, the proceeding in the Court commenced by the process required by the rules. If the relevant “originating application” is amended under r 8.21, the proceeding under s 18 was still commenced in its unamended and amended form at the same time – when filed. In such circumstances, the proceeding is not to be taken as having been commenced at two points of time. There is no warrant in the Admiralty Act, Admiralty Rules or Rules of Court for that conclusion.

15. Rule 36 of the Admiralty Rules requires that the amended process must be served on the ship, unless the court otherwise orders. No submission was put that the release of the ship, on the guarantee undertakings given, denied the ability of the appellant to amend. To the extent necessary, dispensation from service should be ordered.

16. Thus, whether or not the amendment should be allowed is a matter of discretion in the ordinary course of amendment. The primary judge took the view that the amendment, if made, was bound to fail. For the reasons given by Besanko J and below, I respectfully disagree; the amended claim was not only arguable, but incapable of being gainsaid.

17. The conclusions that the Admiralty Act, Admiralty Rules and Rules of Court permit the amendment of the writ does not create any disconformity with historical Admiralty practice. The operation of any rules of court will depend on their terms. An action in rem in England (before its judicial transformation by the House of Lords in The Indian Grace [1998] 2 AC 878) could always be amended after service with the leave of the court to add a cause of action: Roscoe’s Admiralty Practice (4^th ed, 1920) at pp 339-340, and later English rules in like form; and see Benedict on Admiralty: Jurisdiction and Practice (1^st ed) p 267; and see generally: Australian Law Reform Commission, Admiralty Jurisdiction 33 at [215].

18. Apart from the merits of the claim, there would appear to be no discretionary reason to refuse leave to amend for a new cause of action (in restitution) arising from substantially the same facts as the existing claim (under the deed). The guarantee that underpinned the release of the ship was wide enough in terms to accommodate an amended claim. No new facts beyond those litigated needed to be explored. No injustice to the owner of the tugs could be identified, other than the making out of a valid claim. In many circumstances in a claim under s 18, where ownership of the responding property is in a party distinct from the relevant person, who is not present in the litigation, one might envisage significant procedural injustice to the shipowner by allowing a new claim with different facts to be brought into the proceeding. Other potential sources of injustice may be contemplated. None exists here.

19. Hako had requested the appellant to provide crewing services under the deed.  Hako at all times during and after the operation of the deed knew that it was receiving the crewing services.  It remained in possession of the tugs under the demise charter.  That possession required it to crew the vessel in a manner that maintained the safety and seaworthiness of the tugs.  Hako did not seek to amend the crewing requirements.  The provision of the crew (as Hako’s employees for the purposes of the demise charter: cl 10(b)) thus provided a legal benefit to Hako.  Hako’s financial position did not deny that benefit.  Plainly, by its failure to terminate either the crewing arrangements or to take steps to end the demise charter, Hako acquiesced in the continuation of valuable services to it of a character that objectively were to be paid for.  Little novel authority need be found to justify a claim for restitutionary recovery for services supplied initially under request and continued with acquiescence in circumstances of a commercial relationship bespeaking payment for the services, and in circumstances where the services provided a legal benefit to the recipient: Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; 232 CLR 635 at 652 [39] per Gleeson CJ. The facts are a world away from Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234 at 248.

20. For these reasons, in addition to those of Besanko J, the restitutionary (or quantum merit) claim should have been allowed to be made by amendment and should be the subject of a judgment.

21. I otherwise agree with the reasons on the appeal and cross-appeal.  The parties should bring in orders.

I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop.

Associate:

Dated:        14 October 2014

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2574 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD (ACN 009 231 476) Appellant
AND:	THE SHIP "HAKO ENDEAVOUR" Respondent

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2576 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD (ACN 009 231 476) Appellant
AND:	THE SHIP "HAKO ENDEAVOUR" Respondent

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2578 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD (ACN 009 231 476) Appellant
AND:	THE SHIP "HAKO ENDEAVOUR" Respondent

JUDGES:	ALLSOP CJ, RARES AND BESANKO JJ
DATE:	14 OCTOBER 2014
PLACE:	SYDNEY

REASONS FOR JUDGMENT

RARES J

1. I have had the benefit of reading the reasons to be published by Besanko J and agree with them and the orders that he proposes.  I also agree with the Chief Justice’s additional comments on matters other than those on the operation of the indemnity in cl 16.  I add the following observations on that clause.

2. The appellant had been contractually bound by the deed to provide crews for the tugs at the times of their arrests.  That obligation continued until the term of the deed came to an end.  The question is whether a cause of the appellant’s decision to continue to provide the crews and related services after the deed came to an end was Hako’s breach of its obligations under the deed that led to the arrests.  The issue is not easy to resolve and reasonable minds can differ on whether Hako’s breaches of its obligations under the deed were a cause of the appellant’s decision.

3. I do not think that that decision of the appellant was caused by Hako’s earlier breaches.  In my opinion, the position would have been the same if there had been no arrest when the deed came to an end and the tugs were in port, but Hako was then in breach of its obligations under the deed to pay the appellant.  In that scenario, there would have been no continuing obligation, under the now terminated deed, for the appellant to continue providing its services.

4. Independently of an express or implied request by Hako for the appellant to continue providing the crews and associated services once the deed came to an end, I am not persuaded that Hako’s breaches of the deed, being Hako’s non-payments, operated as a cause of the appellant continuing to provide the crews and other services.

5. In the end, in my view, the interposition of either Hako’s earlier breaches or the arrests did not cause the appellant to maintain its crews on the tugs once its obligations under the deed had come to an end.

I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate:

Dated:        14 October 2014

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2574 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD (ACN 009 231 476) Appellant Cross‑Respondent
AND:	THE SHIP “HAKO ENDEAVOUR” Respondent Cross‑Appellant

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2576 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD (ACN 009 231 476) Appellant Cross‑Respondent
AND:	THE SHIP “HAKO EXCEL” Respondent Cross‑Appellant

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2578 of 2013

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	PROGRAMMED TOTAL MARINE SERVICES PTY LTD (ACN 009 231 476) Appellant Cross‑Respondent
AND:	THE SHIP “HAKO ESTEEM” Respondent Cross‑Appellant
JUDGES:	ALLSOP CJ, RARES AND BESANKO JJ
DATE:	14 OCTOBER 2014
PLACE:	SYDNEY

REASONS FOR JUDGMENT

BESANKO J

INTRODUCTION

1. This is an appeal from orders made by a judge of this Court on 13 December 2013.  The judge heard three in rem actions brought by Programmed Total Marine Services Pty Ltd (“the appellant”) against the ships “Hako Endeavour” (WAD 87 of 2012), “Hako Excel” (WAD 88 of 2012), and “Hako Esteem” (WAD 89 of 2012) (“the respondents”).  The appellant had arrested those vessels and it claimed its charges for goods and services which it supplied to each of the vessels for its operation under an agreement with Hako Offshore Pte Ltd (“Hako”).  Hako was the demise charterer of the vessels.  The appellant succeeded in part and it was awarded a sum of money, including interest, in each action.  However, the awards made in the appellant’s favour did not include its charges for the goods and services it supplied to the vessels during the period from 20 April 2012 to 18 May 2012.  For all but one day of that period (i.e., 18 May 2012), the vessels were under arrest.  The last of the three vessels to be arrested, the Hako Endeavour, was arrested on 16 April 2012.  All three vessels were released from arrest on 17 May 2012.  The goods and services provided by the appellant to each vessel included the provision of a crew, catering services, and other services.  The appellant appeals against her Honour’s decision not to make awards in its favour for its charges in relation to the goods and services provided to each vessel during the period from 20 April 2012 to 18 May 2012.

2. Each respondent has filed a notice of contention in which it seeks to uphold one aspect of her Honour’s decision on a ground not relied on by her.

3. Each respondent has also filed a cross‑appeal in which it challenges one aspect of the awards which the primary judge made in favour of the appellant.  The respondents contend that the primary judge should not have awarded a part of what is called a Retention and Continuity Allowance (“RCA”), which was an allowance paid to the master and crew of each vessel.  The relevant part of the allowance which is challenged is that part which related to the performance of services prior to 7 April 2011.  The appellant has filed a notice of contention in each cross‑appeal in which it claims that the respondents’ challenge to the primary judge’s award in relation to the RCA was not pleaded by it, and was not an available contention at trial, and is not an available contention in the cross‑appeal.

   THE FACTS

4. There was very little dispute about the primary facts before the primary judge.  On the appeals, the challenges relate to the inferences and conclusions the primary judge drew from the primary facts.

5. The three vessels, and a fourth vessel, the “Hako Fortress”, were each demise chartered by their owners to Hako using the “BARECON 2001” Standard Bareboat Charter form.  As the bareboat charterer, Hako had an obligation, at its own expense and by its own procurement, to “man, victual, navigate, operate, supply, fuel and whenever required, repair the Vessel during the Charter Period” (clause 10(b)).  The Port of delivery and redelivery under the Bareboat Charter was Port Batamec, Batam, Indonesia.

6. Each vessel was owned by a single ship‑owning company.  Those companies were, in turn, owned by Aries Offshore Singapore Pte Ltd.  Otto Marine Pte Ltd owned a 49% interest in Aries Offshore Singapore Pte Ltd through its wholly-owned subsidiary, Otto Ventures Pte Ltd.  The other 51% of Aries Offshore Singapore Pte Ltd was owned by Hoe Leong Corporation Ltd which was a publicly listed company.  Otto Marine Pte Ltd held a 19.9% interest in Hako through Otto Ventures Pte Ltd.

7. In April 2010, Hako Offshore Australia Pty Ltd (“Hako Australia”) chartered the vessels to Boskalis Australia Pty Ltd (“Boskalis”) using the “SUPPLYTIME 89” form.  This charter was a time charter and, by a subsequent amendment, Hako itself became a party to the Time Charter.

8. Boskalis was a principal contractor providing services to the Gorgon liquefied natural gas project (“Gorgon project”) and, as part of its role in the project, it needed the vessels, which are all tugs, to tow rock from Henderson near Fremantle to Barrow Island off Western Australia.

9. The Time Charter between Hako and Boskalis specified that the Port or place of delivery and redelivery was “Henderson, WA or Dampier, WA to charterer’s discretion”.  However, the Time Charter also required Boskalis to pay a mobilisation fee and a demobilisation fee on delivery and redelivery and the Port or place of mobilisation was identified as the “Singapore/Batam region”.  The Time Charter identified the employment of the vessel as being “Rock transport activities”.

10. On or about 25 June 2010, the appellant and Hako entered into an agreement, referred to as the “Marine Manning and Services Agreement” and pursuant to this agreement the appellant agreed to provide crew for the manning of the vessels and other services at agreed rates.

1. From about the middle of 2010, the appellant provided marine manning, catering, and other services to the vessels pursuant to the Marine Manning and Services Agreement.  However, by early 2011, Hako had fallen substantially in arrears in the payments due to the appellant under the agreement and, in March 2011, the appellant arrested the vessels.  The appellant, Hako and Boskalis then entered into negotiations and, as a result of those negotiations, the three parties entered into a deed of agreement dated 7 April 2011 and entitled “Deed of continuing services and assignment of debt” (“the Deed”).

2. Subject to the appellant being given leave to amend its Writs and Statements of Claim, the Deed is the critical document and it was central to the appellant’s case before the primary judge for the following reason. The appellant commenced its three in rem actions by Writs issued on 2 April 2012. Rule 19 of the Admiralty Rules 1988 (Cth) (“the Admiralty Rules”) provides that an action in rem must be commenced by writ in accordance with Form 6, and that form requires a plaintiff to provide, among other things, particulars of his or her claim. In each of the appellant’s Writs, the particulars of claim were to the effect that the appellant’s claim was for the provision of goods to the ship, and of services in the form of master and crew, for its operation “pursuant to or in accordance with the terms of a deed”, being the Deed dated 7 April 2011 (emphasis added). An alternative basis for the appellant’s claim which appeared in the particulars of claim in each Writ was that the appellant was entitled to be subrogated to the master and crew’s maritime lien as referred to in s 15 of the Admiralty Act 1988 (Cth) (“the Admiralty Act”). In a previous decision of this Court, that basis for the appellant’s claim was held not to be available to it: Ship Hako Endeavour & Others v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21; 211 FCR 369 (“Hako”) at 373, [2] per Siopis J, 399, [109] per Rares J, 411, [172] per Buchanan J.

3. The background to the Deed is contained in recitals A‑I (inclusive), which are in the following terms (the appellant is referred to in the recitals as TMS):

   Background

   AHako was at all material times, and remains the demised charterer of the Hako Vessels.

   BBy the Manning Agreement TMS agreed to provide manning and catering services to Hako in respect of each of the Hako Vessels.

   CTMS in all respects duly observed and performed its obligations under the Manning Agreement.

   DHako breached the Manning Agreement by failing to pay for the Services provided by TMS.

   EOn 24 March 2010 [accepted by the parties as a typographical error, the correct date being 2011]:

   (a)TMS instituted the Arrest Proceedings against the Hako Vessels for debts due and owing by Hako to TMS under the Manning Agreement.

   (b)Pursuant to the Arrest Proceedings, the Hako Excel, Hako Endeavour and Hako Esteem were arrested at Henderson, Western Australia.

   F        At the time of the making of this document:

   (a)The Hako Excel, Hako Endeavour and Hako Esteem remain under arrest.

   (b)The total indebtedness owed by Hako to TMS under the Manning Agreement is $5,960,315.58.

   (c)The cost of the Arrest Proceedings, including the expenses of the Admiralty Marshall, and the legal costs of TMS (inclusive of counsel’s fees) stands at $115,000.

   GIn reliance upon the obligations assumed by Hako and Boskalis under this document and the promises contained herein, TMS has agreed to discontinue the Arrest Proceedings and release the arrested Hako Vessels.

   HHako has agreed for TMS to provide the Services for the duration of the Term.

   IBoskalis has agreed to purchase the Hako Debt from TMS for the Assignment Fees and take assignment of the right, title and interest in the Hako Debt.

   …

4. Clauses 2, 3 and 4 are important because they provide for the term of the Deed and for the services to be provided under it.  They are in the following terms:

   2        Appointment of TMS as exclusive provider of the Services

   Hako appoints TMS as the sole and exclusive provider of the Services for the Term.

   3        Term

   The Term commences on the Commencement Date, and continues until the Marine Rock Transport is completed unless this document is terminated earlier in accordance with the terms of this document.

   4Services

   The Services consist of the provision of the following services to or in respect of the Hako Vessels whilst such Hako Vessel(s) are engaged in relation to the Marine Rock Transport:

   (a)       Marine Manning Services;

   (b)       Catering Services; and

   (c)       Other Services.

5. “Marine Rock Transport” is defined in the Deed in clause 1.1 in the following terms:

   … means the transport of rock material loaded on barges from Henderson to Barrow.

6. The provision by the appellant of marine manning services, catering services, and other services in relation to the vessels is dealt with by clauses 5, 6, and 7 respectively.  In relation to the first of these matters, the Deed provides that Hako is liable to the appellant for the marine manning services at the rates set out in the Proposal (clause 5.12).  The Proposal consists of two letters from the appellant to Hako dated 10 February 2009 and 17 June 2010 respectively, and they are annexed to the Deed as Annexure A.  They were also annexures to the Marine Manning and Services Agreement and they were also referred to as the “Proposal” in that agreement.  With respect to the marine manning services, the appellant was to send an invoice to Hako every fortnight (clause 5.13) and payment was to be made by Hako within 14 days (clause 5.17).  There were similar provisions in relation to the catering services and other services, save that, in the case of those services, the invoices were to be rendered every month (clauses 6.4, 7.4).

7. Clauses 8 and 9 dealt with the involvement of Boskalis in the dealings between the appellant and Hako, and addressed both past dealings and dealings to take place in the future.  Those clauses provided that Hako’s existing debt to the appellant was to be assigned from the appellant to Boskalis, and in return Boskalis agreed to pay the appellant, as an assignment fee, the amount of that existing debt (i.e., $5,960,315.58 plus arrest costs of $115,000).  As to future dealings, Boskalis agreed to take an assignment from the appellant of the debts owed to it by Hako as the appellant issued invoices from time to time. 

8. Clause 8(a)(vii) provides as follows:

   8        Payment of the Assignment Fees

   (a)       Boskalis shall pay the Assignment Fees to TMS as follows:

   ...

   (vii)Subject to clause 8(b), from the Commencement Date until the end of the Term unless this document is terminated in accordance with its terms, Boskalis agrees upon the expiry of fourteen (14) days of receipt by it of a copy of an invoice issued by TMS to Hako for the Services after the Commencement Date, to purchase as debt such amount due under that invoice in accordance with clause 5.16 above.

9. Clause 8(b) is in the following terms:

   (b)If any of the Hako Vessels are not on hire under the Time Charter for any time during the period covered by an invoice preceding the due date of a payment by Boskalis to TMS for purchase of any part of the New Debt, Boskalis may reduce the amount payable by it for the purchase of such debt pursuant to clause 8(a)(vii) in percentage terms (%), according to the following formula:

   (i)Hako Esteem: If on hire whole or any part of the period covered by the invoice = 25%; or if off hire the entire period = 0% x. (Days on hire in the period / Total number of days in the period); plus

   (ii)Hako Excel: If on hire whole or any part of the period covered by the invoice = 25% or if off hire the entire period = 0% x. (Days on hire in the period / Total number of days in the period); plus

   (iii)Hako Endeavour: If on hire whole or any part of the period covered by the invoice = 25% or if off hire the entire month = 0% x. (Days on hire in the period / Total number of days in the period); plus

   (iv)Hako Fortress: If on hire whole or any part of the period covered by the invoice = 25% or if off hire the entire month = 0% x. (Days on hire in the period / Total number of days in the period).

10. Clause 8(e) makes it clear that Boskalis is not liable to the appellant on any invoice issued by the appellant to Hako, but rather it is liable on the assignment of the Hako debt from the appellant to it.

11. Clause 9 provides that Boskalis becomes the legal and beneficial owner of the Hako debt upon payment of the assignment fee to the appellant.

12. Clause 11, which appears under the heading of “Continuing right to arrest”, provides that any of the vessels may be validly and lawfully arrested by the appellant or Boskalis in any jurisdiction to recover any amount due to that party under the Deed.

13. From Boskalis’ point of view, one of the key obligations, if not the key obligation, on the appellant under the Deed was the obligation imposed by clause 12.  That clause is in the following terms:

    12       Release from arrest and discontinuance

    (a)Upon execution of this document TMS shall immediately apply to the Federal Court in the Arrest Proceedings to:

    (i)Release all arrested Hako Vessels; and

    (ii)Discontinue the Arrest Proceedings with no order as to costs.

    (b)This release does not in any way prevent TMS from arresting the Hako Vessels in the event of a breach of this document by Hako and/or Boskalis.  For the avoidance of doubt, this release shall not prevent Boskalis from exercising any of its rights, title and interest in the Hako Debt arising by reason of any Assignment.

14. Clause 16 is important, having regard to one of the grounds the appellant sought to rely on in support of its claim.  It places an obligation on Hako to indemnify the appellant for certain losses and it is in the following terms, relevantly:

    16       Indemnity

    Hako agrees to indemnify and hold harmless TMS, its officers, members, employees, and agents … against any loss, damages, costs, claims, causes of action, liabilities, and expenses (including, without limitation, legal expenses on a full indemnity basis), caused in whole or part by:

    …

    (c)       any breach of this document by Hako;

    …

15. Clause 20 addresses the Time Charter between Boskalis and Hako.  It places obligations on Boskalis to give notice to the appellant of certain events.  First, by clause 20(a), Boskalis was under an obligation to notify the appellant in the event that any of the Hako vessels come off hire under the Time Charter and then when the vessels come back on hire.  Secondly, by clause 20(b), Boskalis was under an obligation to give the appellant 14 days’ written notice of any expected completion of services under the Time Charter.

16. Each of the three parties to the Deed was given the right to terminate it immediately in certain circumstances.  One of the grounds upon which Boskalis could terminate the Deed immediately was if it terminated the Time Charter.

17. As I have said, the three Writs were issued by the appellant on 2 April 2012.  A Writ was also issued against the Hako Fortress.  The owners of the vessels challenged the jurisdiction of the Court.  The challenge was successful in relation to the Hako Fortress, but not in relation to the other vessels:  Hako.

18. The primary judge found that the Hako Esteem and Hako Excel released their final rock-laden barges at Barrow Island on 3 April 2012 and the Hako Endeavour, although arrested by the appellant on 16 April 2012, released its final rock-laden barge at Barrow Island on 19 April 2012.  The primary judge found that the final delivery by barge of rock to Barrow Island occurred on 22 April 2012. 

19. Boskalis gave notices to Hako of the redelivery of each ship under the Time Charter.  It gave a notice dated 10 April 2012 backdated to 6 April 2012 as the redelivery date for the Hako Esteem and the Hako Excel at Dampier, and a notice dated 19 April 2012 backdated to 16 April 2012 as the redelivery date for the Hako Endeavour at Dampier.  The primary judge appears to have proceeded on the basis that these notices were effective.

20. At the time of its arrest, each vessel was manned by a master and crew provided by the appellant under the Deed and each was off Dampier in Western Australia.  The Hako Esteem was arrested on 3 April 2012.  The Hako Excel was arrested on 6 April 2012.  The Hako Fortress was arrested on 11 April 2012.  The Hako Endeavour was arrested on 16 April 2012.  The appellant continued to provide crew and other services to the vessels whilst they were under arrest.  As I have said, the vessels were released from arrest on 17 May 2012 after letters of undertaking were provided to the appellant. 

21. On 17 May 2012, the appellant entered into an agreement with Go Marine Group Pty Ltd (“Go Marine”), the purpose of which was for the appellant to provide goods and services to the vessels for their journey to Benoa in Indonesia.  In the agreement, the following appeared next to the word “Vessel”:

    Redelivery of Hako vessels Esteem, Endeavour, Excel and Fortress to Benoa Indonesia, currently at anchor at Dampier Harbour WA.

    The agreement described Go Marine as the owner or operator of the vessels.  On the facts, it can only have been the operator.  There was evidence before the primary judge that, by written instrument dated 25 May 2012, the owner of each vessel appointed a company associated with Go Marine as the manager of the vessel.

22. The primary judge found that on and from 19 May 2012, and following arrangements between the owners of the vessels and the appellant, the latter’s fees for services provided to the vessels were paid by Go Marine.  The negotiations which led to the agreement between the appellant and Go Marine, which the primary judge found was brokered by the owners, had started by at least 9 April 2012 and she found that those negotiations between the owners of the vessels and the appellant were well underway by 19 April 2012.

23. The primary judge found that, on 27 May 2012, the appellant’s crew were removed from the vessels in Benoa, Indonesia.  On and after that date, Go Marine directly crewed the vessels for their subsequent return to Batamec.  

    THE PRIMARY JUDGE’S REASONS

    The Claim Under the Deed

24. The first issue which her Honour addressed was the point in time at which the Deed came to an end.  If the services rendered by the appellant between 20 April 2012 and 18 May 2012 were not rendered pursuant to, or in accordance with the Deed, then the charges in relation to those services fell outside the terms of the particulars of claim in the Writs issued by the appellant.  Absent an amendment to the Writs and the Statements of Claim to allege an alternative basis or bases for the appellant’s claim, it would fail.

25. The primary judge considered that the meaning of the phrase “until the Marine Rock Transport is completed” in clause 3 of the Deed was ambiguous.  She said that different views could be held about the event or events which determined when the Marine Rock Transport was completed.  She said that it was necessary, therefore, to consider the context revealed by a consideration of the terms of the Deed as a whole, and the objective circumstances in which the Deed was made.

26. The primary judge identified various matters which she considered were relevant to the question of when the Marine Rock Transport was completed.  Those matters were as follows.

27. First, her Honour said that the nature of the agreement between the appellant and Hako, which included the provision of crewing services at times which included times when the vessels were at sea in Australian waters, meant that completion of the Marine Rock Transport must be given a meaning other than the time at which the last barge carrying rock was released from the vessels.  The appellant could not unilaterally cease providing crewing services at that time.

28. Secondly, her Honour said that the completion of the Marine Rock Transport did not have a necessary relationship with the arrest of the vessels or with their release from arrest.  Her Honour said that the Marine Rock Transport may or may not have been completed at the time of the arrests.

29. Thirdly, her Honour said that the term of the Deed could not vary as between vessels because there was one Deed and one term of the Deed.  The end of the Deed was linked to the actions and activities of the last vessel involved with the Marine Rock Transport.

30. Fourthly, her Honour said that, as far as the mobilisation and demobilisation of the vessels was concerned, the vessels had already been mobilised (i.e., brought to Australia from Benoa in Bali) well before the commencement of the Deed on 7 April 2011 and, on that date, the vessels were in Australian waters and crewed, as her Honour put it, by the appellant’s personnel.  Her Honour found that the Deed did not provide for demobilisation of the vessels in the sense of placing an obligation on any party to demobilise the vessels or to pay for such demobilisation.  She found that the two letters from the appellant to Hako which comprised the Proposal referred to in the Deed contained the rates which the appellant would charge for the demobilisation of the vessels, but they did not place an obligation on Hako to engage the appellant to demobilise the vessels, or on the appellant to provide its services in connection with the demobilisation of the vessels.  The primary judge found that at the time the Deed was entered into, Hako did not have the working capital to continue providing services under the Time Charter with Boskalis.  She accepted that Boskalis had no interest in purchasing Hako’s debt after the last load of rock material had been transported to Barrow Island.

31. Fifthly, her Honour said that the term of the Deed was not defined by reference to the term of the Time Charter between Hako and Boskalis.  The two agreements were linked but the concluding date was not made the same in each case.  Her Honour said that the purpose of clause 20(b) which, it will be recalled, required Boskalis to give the appellant 14 days’ written notice of any expected completion of services under the Time Charter, was to give the appellant warning of when the Time Charter (and thus the Marine Rock Transport) was likely to have concluded, “so that suitable arrangements could be made for it to cease providing the Services in a safe and practical manner”.  She found that Boskalis did not give a notice under clause 20(b) to the appellant.

32. Sixthly, her Honour said that clause 3 of the Deed was to be construed in light of clause 4, and that that means the Deed did not come to an end while any of the vessels were “engaged in relation to the Marine Rock Transport”. 

33. Having made these observations, her Honour then set out her conclusions with respect to the construction of the Deed.  She said that the phrase “engaged in relation to the Marine Rock Transport” in clause 4 of the Deed was concerned with the concept of physical engagement.  In other words, the vessels were engaged in Marine Rock Transport when they were involved or used or employed in such transport, and they were engaged in relation to Marine Rock Transport when there was a sufficient connection between them and their involvement, use, or employment in the Marine Rock Transport.  Her Honour said that there must be a certain degree of connection between the engagement of the vessels and the Marine Rock Transport.  She said that whether there was a sufficient degree of connection was a question of fact, and the onus was on the appellant to prove that its case fell within clauses 3 and 4. 

34. The primary judge said that the Marine Rock Transport could not have been completed until, at the earliest, 19 April 2012, because it was not until that date that the last rock-laden barge was released from the Hako Endeavour.  Her Honour said that, at the other end of the time scale, the vessels were no longer engaged in relation to the Marine Rock Transport as at 17 May 2012 when the appellant and Go Marine entered into the agreement  which I have previously described (at [72]).

1. The primary judge said that there was no evidence to suggest that the vessels did anything in connection with the Marine Rock Transport after 19 April 2012.  Her Honour said that, by that date, the Hako Endeavour had released its last rock-laden barge and the other two vessels had been under arrest for two weeks.  Her Honour then referred in some detail to the evidence of the negotiations which were occurring between the owners of the vessels and the appellant. The oral evidence of those negotiations was given by Mr Aw Chin Leng who, at the time of the relevant events, was Deputy President of Otto Marine Pte Ltd and a director of various companies associated with Otto Marine Pte Ltd.  She was unable to make a finding on the evidence about when the negotiations started, but they were underway by 9 April 2012.  On that date, the Chief Executive Officer of the appellant, Mr Glenn Triggs, met with the owners’ representatives in Singapore.  He was told by the owners’ representatives that the owners were stepping in to secure the release of the vessels and that the owners considered that the bareboat charter with Hako was “dead”.  The owners’ representatives also indicated that the owners wanted Go Marine to crew the vessels and, in anticipation of this, they wished to have crew numbers reduced.  This evidence about the negotiations was accepted by her Honour.  She said that it made sense in the context of other events and particularly the fact that, on 17 May 2012, the agreement between the appellant and Go Marine was entered into and the vessels were released from arrest.

2. The primary judge said that the fact that the appellant bore the onus of proof supported the conclusion that the vessels were no longer engaged in relation to the Marine Rock Transport after 19 April 2012.  That was because the appellant adduced no evidence that the vessels were still engaged in relation to Marine Rock Transport after 19 April 2012.  Her Honour found that from 19 April 2012 the vessels were engaged in the separate task of being subject to negotiations between the appellant and the owners to secure the release of the vessels and their subsequent transport back to Benoa.

3. The primary judge concluded that the Marine Rock Transport was completed on 19 April 2012 and that the term of the Deed ended on that date.  Her Honour concluded that services provided to the vessels after 19 April 2012 were not provided under the Deed.  She held that the appellant was not entitled under the Deed to any of its charges for services it provided after 19 April 2012.

4. There is one matter which should be mentioned by way of explanation, although it is not in issue on the appeals.  Her Honour considered that all three vessels were engaged in relation to Marine Rock Transport until 19 April 2012, even though the Hako Esteem was arrested on 3 April 2012 and the Hako Excel was arrested on 6 April 2012.  I do not need to set out her Honour’s reasons for reaching this conclusion because it is not challenged on the cross‑appeal.

   The Application to Amend the Writs, Statements of Claim and Replies

5. On 26 August 2013, the appellant issued an interlocutory application in each action.  These interlocutory applications were amended on 16 September 2013.  In each amended interlocutory application, the appellant sought orders granting it leave to amend its Writ, Statement of Claim, and Reply.  To explain the applications and their fate, it is sufficient to consider the application made in the action involving the appellant and the Hako Endeavour.

6. I have already referred to the contents of the Writ.  In its Statement of Claim against the Hako Endeavour, the appellant sought to recover its charges on the basis that they were the subject of invoices issued under the Deed.  There was a claim in the Statement of Claim made on the basis of the indemnity clause in the Deed (i.e., clause 16), but that was limited to a claim in relation to the costs and charges to the Federal Court Admiralty Marshal in the sum of AU$13,600.02.

7. The Hako Endeavour pleaded in its Amended Defence that it was not liable for any charges after the Deed came to an end, which it alleged was either on 3 April 2012 or, in the alternative, on 16 April 2012.

8. In its Reply, the appellant alleged that, if any of its charges were for services provided to the vessels after the Deed had come to an end, then they were recoverable under an implied contract between it and Hako, or on the basis of a quantum meruit, or on the indemnity clause in the Deed, or as costs of the proceeding.

9. In essence, the appellant, by its amended interlocutory application, sought to amend its Writ to include in it, as alternative bases of its claim, a claim based on an implied contract, a claim based on quantum meruit, a claim under the indemnity clause in the Deed, or a claim for the charges as the costs of the proceeding.  As far as the amendments to the Statement of Claim are concerned, and leaving aside the finer points of its pleadings, the appellant effectively sought to move its pleas as to these matters from the existing Reply into the Statement of Claim.

10. The appellant’s interlocutory applications were dealt with at the trial in late October 2013.  That way of dealing with the applications, rather than before the trial as is usual, did not cause prejudice to either party because both parties had prepared their respective cases in a way which dealt with the amendments if they were allowed.

11. The primary judge allowed certain amendments to the Statement of Claim which were not contentious and which are not relevant on the appeal.  They may be put to one side.  She refused leave to amend the Writ and Statement of Claim so as to raise the claims relating to implied contract, quantum meruit, clause 16 of the Deed, and the costs of the proceeding.  She granted leave to amend the Reply which had the consequence of removing those claims from the Reply. 

12. In deciding that the amendments should not be allowed, the primary judge addressed three issues.

13. First, she considered whether the proposed amendments could support the claims and she decided that if allowed the amendments would not succeed. 

14. With respect to the claim that there was an implied contract between the appellant and Hako, her Honour said that there were a number of reasons why this claim would not succeed.  First, she said that, although Hako knew the appellant was still supplying services to the vessels after their arrest and after 19 April 2012, there was nothing to indicate any agreement with Hako about these matters, and the evidence did not support an inference of the existence of a contract.  Her Honour said that the fact that the appellant was negotiating with the owners from at least 9 April 2012, and that those negotiations concerned or included the provision of services to the vessels for their journey to Benoa, pointed against the existence of an agreement between the appellant and Hako.

15. Her Honour also said that it was relevant to the claim based on implied contract to consider whether Hako had taken the benefit of the provision of services to the vessels during their arrest.  She held that it had not done so.  The Marine Rock Transport project had been completed and Hako could not use the vessels during the period they were under arrest.  The owners had seen fit to step in to secure the release of the vessels with a view (as eventually happened when they were released from arrest) to their demobilisation back to Benoa in Indonesia.  Her Honour found that Hako did not choose for the appellant to continue to provide services after the Deed had come to an end and it (as distinct from the owners) did not take the benefit of the appellant’s work during the relevant period in “any meaningful sense”.  The owners took that benefit.

16. The primary judge said that the appellant’s quantum meruit claim would not succeed for similar reasons.

17. The primary judge said that the appellant’s claim for its charges based on the indemnity clause in the Deed would not succeed.  Her Honour said that, even if it was accepted that there was a causal link between Hako’s failure to pay the amounts due to the appellant and the arrest of the vessels, it had not been shown that there was a sufficient causal link between Hako’s breaches of the Deed and the incurring of the charges.

18. The primary judge said that the appellant’s claim for its charges as the costs of the proceeding would not succeed because, on reviewing the correspondence and discussions that passed between the appellant’s solicitors and the Admiralty Marshal after the arrest of the vessels, the Marshal had not incurred the costs and expenses of the crewing and provisioning of the vessels while under arrest within the meaning of r 41 of the Admiralty Rules.  Her Honour said that there was no indication that the Marshal required the appellant to continue to crew the vessels.

19. Although the primary judge concluded that the proposed amendments would not succeed and should be disallowed on that basis, she went on to discuss whether the Court had the power to allow the amendments, and, if there was power, whether the amendments should be allowed as a matter of discretion.  However, her Honour did not express a concluded view about either of these matters.

20. With respect to the Court’s power to allow the amendments, the respondents submitted that there was no power to allow the amendments because the existence of such a power would be inconsistent with the requirements for an action in rem in s 18 of the Admiralty Act. That section is in the following terms:

    18       Right to proceed in rem on demise charterer’s liabilities

    Where, in relation to a maritime claim concerning a ship, a relevant person:

    (a)was, when the cause of action arose, the owner or charterer, or in possession or control, of the ship; and

    (b)is, when the proceeding is commenced, a demise charterer of the ship;

    a proceeding on the claim may be commenced as an action in rem against the ship.

21. The respondents submitted that a proceeding on a claim based on the alternative causes of action or the grounds in the proposed amendments could not be brought against them as an action in rem because, as at the date of the application to amend, Hako was no longer the demise charterer of each vessel. It followed that the proposed amendments to introduce alternative causes of action or grounds could not be allowed. As to this submission, although her Honour refrained from expressing a final view, she said that the wording of s 18 suggested that “the addition of new claims must also satisfy the requirements of s 18”. As I understand her Honour’s reasoning, it was that the temporal requirement in s 18(b) should be understood as if it read “when the proceeding [on the claim] is commenced”, with the consequence that the addition of new claims must also satisfy the requirements of s 18.

22. With respect to the Court’s discretion to allow or refuse the amendments, the respondents submitted that if s 18 of the Admiralty Act did not mean that the Court lacked the power to allow the amendments, nevertheless, the rationale for s 18 was a powerful discretionary consideration against allowing the amendments. The primary judge referred to the decision of Rares J in EMAS Offshore Pte Ltd v The Ship “APC Aussie 1” [2009] FCA 872; 258 ALR 454 (“EMAS Offshore”) at [33] and concluded that the scope of s 18 and the limitations which it imposed “weigh[ed] against granting leave to amend in the present circumstances”. As I understand her Honour’s reasoning, it was that even if s 18 did not mean the Court did not have the power to allow the amendments, nevertheless, the scope of s 18 and the limitations it imposes on an action in rem pointed against an exercise of the discretion to allow the amendments.

    The RCA

23. In relation to that part of the RCA which is in issue, the primary judge found in favour of the appellant that:

    (1)as long as the invoice was rendered after the commencement of the term of the Deed on 7 April 2011, the RCA was payable under the Deed; and

    (2)invoices issued after the expiration of the term of the Deed were still within the scope of the Deed provided they related to services that were provided to the vessels up to 19 April 2012.

24. Her Honour said that, in the circumstances, it was not necessary for her consider a submission by the appellant that if the respondents were correct in their contention (which she concluded they were not), then it should be given leave to amend it pleadings to seek the recovery of the disputed amount of RCA under the Marine Manning and Services Agreement.

    ISSUES ON THE APPEAL

    The Claim under the Deed

25. As I have said, the primary judge held that clause 3 had to be understood in light of clause 4 and that meant that the term of the Deed did not come to an end for so long as any of the vessels were engaged “in relation to the Marine Rock Transport”.  I do not understand that conclusion to be challenged on the appeals and, in my opinion, it is clearly correct.  It is difficult to think that the parties contemplated a different operation for clauses 3 and 4 so that, for example, one or more of the vessels was engaged in relation to the Marine Rock Transport within clause 4 even though the term of the Deed within clause 3 had come to an end.  No reason for such an approach can be gleaned from the terms of the Deed, the surrounding circumstances, or the commercial context in which the Deed was made.

26. Furthermore, I think her Honour was clearly correct when she said that “engaged in relation to the Marine Rock Transport” was concerned with the physical engagement of the vessels.  That is clear from the definition of “Marine Rock Transport”.

27. The appellant’s primary submission on the appeal was that “Marine Rock Transport” or “engaged in relation to the Marine Rock Transport” included the demobilisation of the vessels.  Whether the port or place of demobilisation is Port Batamec, Batam or Benoa in Bali does not matter for present purposes.  The appellant put its primary submission in an alternative way.  It submitted that, even assuming the primary judge’s test of a sufficient connection between the vessels and their involvement, use, or employment in the Marine Rock Transport is correct, the demobilisation of the vessels satisfied that test. 

28. The primary judge found that the appellant’s crew were removed from the vessels in Benoa on 27 May 2012 and that demobilisation did not occur before that date.  As I have already said, Go Marine became liable to the appellant for the appellant’s charges on 19 May 2012.  Whether the involvement of Go Marine brought the Deed to an end when it would otherwise have ended on demobilisation of the vessels (i.e., on the facts, no earlier than 27 May 2012) is immaterial to the appellant’s argument because it does not claim its charges beyond 18 May 2012.

29. In the alternative to its primary submission, which linked the end of the Deed to the demobilisation of the vessels, the appellant submitted that the Deed did not come to an end until a reasonable period of time of at least 14 days had elapsed after the last vessel had been redelivered under the Time Charter (i.e., 16 April 2012), or after the last barge had been released from the last vessel involved in the Marine Rock Transport (i.e., 19 April 2012).  It submitted that the period of at least 14 days was necessary so that arrangements could be made by the appellant to cease providing the services to the vessels in a practical and safe manner.

30. The process of construing the Deed is informed not only by the text of the document, but also by the surrounding circumstances known to both parties and the purpose and object of the transaction embodied in the document (Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at 461‑462, [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). Lord Wilberforce in a well-known passage in his speech in Reardon Smith Line Ltd v Hansen‑Tangen [1976] 1 WLR 989 said (at 995‑996):

    In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.

31. The appellant arranged its arguments so that they were directed to the text of the Deed, the commercial context in which the Deed was made, and the purpose and object of the Deed.

32. With respect to the text of the Deed, the appellant relied on various clauses in the Deed dealing with the payment of its charges (clauses 5.2, 5.14, 6.2 and 6.5), the continuing right of arrest provided for in clause 11, and the obligation on Boskalis in clause 20(b) to give the appellant 14 days’ notice of the expected completion of the services under the Time Charter.

33. Clause 5.2 of the Deed provides that the appellant will supply the Personnel listed in the Proposal, and clause 5.12 provides that Hako is liable to the appellant for the Marine Manning Services at the rates set out in the Proposal.  Clauses 6.2 and 6.5 are, in material respects, in the same terms in the case of Catering Services.  The letters which comprise the Proposal refer to mobilisation and demobilisation and, in section 2 of the letter dated 10 February 2009, the following appears:

    2        MOBILISATION/DEMOBILISATION

    SINGAPORE

    TMS would undertake to provide crew mobilisation and demobilisation at cost plus 6%.

34. The appellant submitted that these clauses make it clear that demobilisation was part of the services to be provided under the Deed.  However, I do not think that these provisions in the Deed and the letters forming the Proposal give rise to an obligation on Hako to engage the appellant to provide demobilisation services in relation to the vessels.  No doubt it was contemplated by the appellant and Hako at the time the letters comprising the Proposal were prepared that, absent default by one party, the appellant would provide the crew during the demobilisation of the vessels.  However, the Deed does not contain an obligation on Hako to engage the appellant to do so unless the term of the Deed includes demobilisation, and hence one returns to the question of the term of the Deed.

35. Clause 11 preserves the right of the appellant and Boskalis to arrest any of the vessels in order to recover any amount due to that party under the Deed.  The appellant submitted that this clause showed that the vessels can still be engaged in relation to the Marine Rock Transport even when they are under arrest.  That proposition was accepted by the primary judge, but her Honour went on to say that the question of whether the Marine Rock Transport was completed or not did not have any necessary relationship to the arrests.  I agree with the primary judge and I do not think that reference to clause 11 advances the appellant’s submission.

36. The appellant submitted that the purpose of clause 20(b) of the Deed was to give the appellant notice so that it could make practical arrangements for the demobilisation of the vessels and hence supported the proposition that demobilisation was an act within the term of the Deed.  As I have said, the primary judge found that the purpose of clause 20(b) was to ensure that the appellant had warning of when the Time Charter (and thus the Marine Rock Transport) was likely to have concluded so that suitable arrangements could be made for it to cease providing the services in a safe and practical manner.  I do not think that the purpose of clause 20(b) is entirely clear, but, even if its purpose was as the appellant contended, it does not follow that the term of the Deed included the demobilisation of the vessels.

37. As far as the commercial context in which the Deed was made is concerned, the appellant submitted that the Time Charter between Hako and Boskalis is an important part of that context.  The appellant submitted that the Time Charter provided for the demobilisation of the vessels to the Singapore/Batam region by way of the payment of a demobilisation fee.  The appellant submitted that the Deed was “interweaved” with the Time Charter and that this was further shown by an amendment to the Time Charter in December 2011, which had the effect of enabling Boskalis to set‑off the demobilisation charge due by it at redelivery against any amount due to it by Hako “arising under or in relation to this charter, including as amended by the addendum”.  The appellant also submitted that the vessels needed to be taken back to the Singapore/Batam region only because they had been brought to Australian waters for the rock transport activities referred to in the Time Charter.  In addition, the appellant pointed to the fact that the evidence before the primary judge was that it was common practice for demobilisation to be part of a marine manning and services agreement.  The appellant submitted that, having regard to all these matters, the object or purpose of the Deed can be seen to be the maintenance of the Time Charter and, as the Time Charter included the demobilisation of the vessels, the Deed should also be construed so as to include the demobilisation of the vessels.

1. In my opinion, there was power to allow the amendments sought by the appellant.

2. The respondents argued in the alternative that, even if the Court had the power to allow the amendments, the fact that an action in rem could not have been commenced against the vessels at the time the applications to amend were made is a powerful discretionary consideration against allowing the amendments.  I would not accept that proposition as a general proposition.  It seems to me that it will depend on the circumstances.  There may be circumstances where the fact that the relevant person no longer has a link with the vessel is, with other circumstances, highly significant.  As Rares J pointed out in EMAS Offshore (at 462, [33] and [35]), that may be the case where the amendment seeks to introduce a substantially new and substantively different cause of action, or the amendment, if granted, would have the effect of greatly expanding the amount of security that the plaintiff could require for release of the vessel. None of these type of factors which indicate actual prejudice are present in this case. In my opinion, subject to the next matter to be considered, the justice of the case was such that the amendments ought to have been allowed.

3. These conclusions bring me to the basis upon which the primary judge refused the application for leave to amend to add claims based on implied contract and quantum meruit.  Her Honour held that the claims based on implied contract and quantum meruit would not succeed.

4. Turning first to the claim in implied contract, there may be an agreement between parties even where they have not manifested their agreement in a document or by express words.  Their agreement on the essential terms and conditions of a contract may appear from their conduct.  The matter is to be assessed objectively, that is to say, through the eyes of a reasonable person and having regard to what the parties did, not what they said or thought they were doing.  A court may find that parties have entered into an agreement in the absence of a written agreement or express words in a wide variety of circumstances.  Those circumstances include cases which overlap with cases where a claim in quantum meruit has been upheld.  The Court was referred to the decision of the Supreme Court of Canada in Saint John Tug Boat Co. Ltd. v Irving Refining Ltd. [1964] RCS 614 and that case provides a good illustration of a fact situation which might be analysed in terms of implied contract or in accordance with modern notions of quantum meruit.  The passage in Anson on Contracts,  21^st ed, at page 28, cited by the Supreme Court of Canada in that case (at 621) illustrates the point:

   The test of such a contract is an objective and not a subjective one, that is to say, the intention which the law will attribute to a man is always that which his conduct bears when reasonably construed, and not that which was present in his own mind. So if A allows B to work for him under such circumstances that no reasonable man would suppose that B meant to do the work for nothing, A will be liable to pay for it. The doing of the work is the offer; the permission to do it, or the acquiescence in its being done, constitutes the acceptance.

5. In this case, the appellant put forward its implied contract case on a particular basis.  It argued that this case fell within the class of implied contract identified by the authors of Chitty on Contracts, Volume 1, General Principles, 31^st ed, Sweet & Maxwell (2012) at paragraph 1‑096 in the following passage:

   There may also be an implied contact when the parties make an express contract to last for a fixed term, and continue to act as though the contract still bound them after the term has expired.  In such a case the court may infer that the parties have agreed to renew the express contract for another term.  Express and implied contracts are both contracts in the true sense of the term, for they both arise from the agreement of the parties, though in one case the agreement is manifested in words and in the other case by conduct.

6. The Court was referred to a number of recent authorities in which this class of implied contract has been considered:  Brambles Ltd v Wail [2002] VSCA 150; 5 VR 169 at 185‑187, [57]‑[59]; Energy World Corporation Ltd v Maurice Hayes and Associates [2007] FCAFC 34; 239 ALR 457 at 462‑464, [23]‑[28] (see also Modahl v British Athletic Federation Ltd (CA) [2001] EWCA Civ 1447; [2002] 1 WLR 1192 at 1222, [102]).

7. In my opinion, there are difficulties in analysing the facts in this case in terms of this class of implied contract.  It is true that the Deed in this case was for a fixed term, but the term was fixed not by reference to a date, but rather by reference to an activity (i.e., the Marine Rock Transport).  It seems to me more difficult to conclude that the parties intended that a contract of that nature continued to bind them.  There is a further difficulty in that one would need to conclude that two of three parties to the Deed intended that part of the Deed (i.e., that part of the Deed remaining after excluding Boskalis and the assignment of the Hako debt) continued to bind them.  The facts of this case are more appropriately analysed in terms of the appellant’s quantum meruit claim.

8. Turning now to the quantum meruit claim, the appellant submitted its claim fell within one or both of two recognised categories where one party provides work or services for the benefit of another, and the first party is able to recover reasonable remuneration for that work or those services.  The categories were identified in general terms by Gleeson CJ in Lumbers v W Cook Builders Pty Ltd [2008] HCA 27; 232 CLR 635 (“Lumbers v Cook”) at 652, [39], as a party providing services to another party at the request of the other party, or a party providing services to another party with that party’s acquiescence and knowledge that the services were not being rendered gratuitously.  A third category identified by the Chief Justice of a party providing services necessary for the protection of another party’s property is not said to be relevant in this case.

9. On the appeals, the appellant referred to what it submitted was a fourth category of a party providing an incontrovertible benefit to another party in circumstances where it would be unconscionable for the other party to keep the benefit of the service without paying a reasonable sum therefor (see Monks v Poynice Pty Ltd and Another (1987) 8 NSWLR 662). This category (if it be a category) is not pleaded and, in any event, this case can be decided by reference to the two categories identified above.

10. Prior to 19 April 2012, the appellant had been providing services to the vessels under a commercial arrangement with Hako and Boskalis.  It had been rendering invoices to Hako and, self‑evidently, Hako’s dire financial position did not affect its legal liability in relation to those invoices.  The appellant continued to provide services of the same nature to the vessels between 20 April 2012 and 18 May 2012 and to render invoices to Hako in relation to those services.  As I understand it, on receiving these invoices, Hako did not suggest that the appellant should not be providing the services to the vessels or should not be sending the invoices to it.  Throughout this period, Hako remained in possession of the vessels as the demise charterer and was under an obligation to the owners under the demise charter to crew the vessels.  These facts suggest that the appellant’s quantum meruit claim ought to have succeeded.

11. However, the primary judge held that the appellant’s quantum meruit claim would not succeed because Hako did not request the appellant to provide the services and nor did it acquiesce in the provision of the services because it could not be said that it had, or exercised, a choice as to whether or not the services were provided to it.  Her Honour referred to the well-established principle that people could not have liabilities forced upon them behind their backs (Falcke v Scottish Imperial Insurance Company (1886) 34 Ch D 234 at 248 per Bowen LJ; Lumbers v Cook at 663, [80] per Gummow, Hayne, Crennan and Kiefel JJ). As I have said, the primary judge also found that Hako did not receive the benefit of the services “in any meaningful sense” and that the owners took that benefit.

12. Her Honour’s conclusions were based on her view as to the weight and significance to be accorded to the negotiations between the appellant and the owners whilst the vessels were under arrest.  She found that Hako had no substantive role to play in the negotiations between the appellant and the owners about the release from arrest of the vessels and their demobilisation back to Indonesia.

13. Hako was in dire financial trouble in April 2012 and negotiations took place between the appellant and the owners.  The owners were responsible for the interposition of Go Marine and the release from arrest of the vessels and their demobilisation.  On 9 April 2012, the owners considered that, in a practical sense, the Bareboat Charter was dead.  However, none of those matters contradict or have an effect on the legal position between 20 April 2012 and 18 May 2012.  The fact is that Hako remained the demise charterer during that period and in possession of the vessels.  Furthermore, it remained under an obligation to the owners to provide crew to the vessels.  Mr Leng’s evidence suggests that what happened was that the legal position lagged behind the practical position. At various points during his cross‑examination, Mr Leng seemed to draw the distinction between what he called the “actuality” of the demise charter on the one hand, and “Paper‑wise” or “based on the documents” on the other.

14. In my respectful opinion, it was the legal position which was important and the primary judge erred in proceeding by reference to what the owners considered to be the practical position.

15. Hako received services for reward from the appellant for a considerable period of time prior to 19 April 2012.  As I have said, Hako remained in possession of the vessels after 19 April 2012 and under an obligation to crew them.  It knew that the appellant was continuing to provide services of exactly the same nature after 19 April 2012 as it had before and that it was not doing so gratuitously.  It received invoices from the appellant and did not deny responsibility for the charges on those invoices.  Furthermore, I note that it was an agreed fact before the primary judge that, during the relevant period, Hako received daily reports from the masters of the vessels.  It is well‑established that a request for work or services may be implied:  Lumbers v Cook at 666, [89] per Gummow, Hayne, Crennan and Kiefel JJ. In my opinion, a request for the services by Hako should be implied in this case where the appellant continued to provide the services and Hako did not countermand what should, in the circumstances, be viewed as a continuing request for services. Even if a request for services cannot be implied, Hako acquiesced in the provision of services by the appellant knowing that they were not being provided gratuitously. Finally, Hako, in view of the continuance of the demise charter and its obligations thereunder, received the benefit of the services provided by the appellant.

16. In view of these conclusions, it is not strictly necessary to consider the appellant’s claim based on an indemnity under clause 16 of the Deed and the claim for the charges as part of the costs of the proceeding. However, those claims were fully argued and it is appropriate that I address them. The effect of s 18 does not arise in relation to these claims. The particulars of claim in the Writs are wide enough to cover a claim under clause 16 of the Deed and, if the appellant’s charges are part of the costs of the proceeding, there is no need for them to be mentioned in the Writs.

17. With respect to the claim under clause 16 of the Deed, in April 2012, Hako had failed to pay to the appellant amounts it owed it under the Deed and was in breach of the Deed.  This had resulted in the appellant arresting the vessels.  The question is whether the appellant’s charges for services provided to the vessels during the period of the arrests were caused in whole or part by Hako’s failure to pay the amounts it owed to the appellant.

18. The primary judge answered this question in the negative and I think that she was correct to do so.  It is one thing to say that the charges were incurred while the vessels were under arrest and another to conclude that the charges were caused by Hako’s breaches of the Deed.  Even if it be accepted that Hako’s breaches of the Deed caused the arrests, that does not mean that every expense incurred while the vessels were under arrest was caused by Hako’s breaches of the Deed.  Those expenses or charges resulted from the implied request or acquiescence and knowledge to which I have previously referred and not merely from Hako’s breaches of the Deed.  The primary judge referred to the material, real, or substantial cause of the charges, whereas the correct test was a material, real, or substantial cause of the charges.  However, even on that test the appellant’s claim under the indemnity clause in the Deed fails.

19. The appellant submitted that the primary judge erred in not awarding the charges on the basis that they were part of the costs of the actions.  It puts its argument on two grounds.

20. First, it argued that it was entitled to recover its charges as the costs of the arrests because its charges can be properly characterised as the costs and expenses of the Marshal relating to the arrests. If the Marshal had engaged a third party to provide the goods and services which were in this case provided by the appellant, then the Marshal’s liability to the third party would be part of the Marshal’s costs and expenses relating to the arrests. Those costs and expenses would be recoverable from the appellant pursuant to the appellant’s undertaking (see r 41 of the Admiralty Rules). I do not need to consider the extent to which they might also be recoverable from the person who applies for the vessels to be released from arrest (see r 53 of the Admiralty Rules; EMAS Offshore Pte Ltd v The Ship “APC Aussie 1” (No 2) [2009] FCA 1583; 194 FCR 484). If the appellant paid the costs and expenses to the Marshal, then it would be able to recover them in the actions.

21. If the Marshal engaged the appellant to provide the goods and services, then the same result would follow (Patrick Stevedores No 2 Pty Ltd v Ship MV “Turakina” (No 1) (1998) 84 FCR 493 at 502‑503 per Tamberlin J). However, the decision in that case also makes it clear that the costs of the goods and services are not costs and expenses of the Marshal if there is no engagement by the Marshal of the person who is providing the goods and services even if the Marshal knows the goods and services are being provided.

22. The appellant submitted that its case should be treated as if the Marshal had engaged it to provide goods and services to the vessels.  The relevant facts for the purposes of this submission were said to arise out of the communications between the Marshal and the appellant’s solicitors during the period of the arrests.

23. The communications between the Marshal and the appellant’s solicitors during the period of the arrests concerned the provision of potable water to the vessels and a reduction in the manning levels on the vessels.  One of the vessels was permitted to collect potable water and provide it to the other vessels and, in fact, that activity was the subject of an order made by a judge of this Court.  The appellant also sought to reduce manning levels during the arrests in order to save costs and, after certain inquiries were carried out, that was permitted.

24. The high‑water mark of the appellant’s claim on this ground was a conversation between the appellant’s solicitor and the Marshal on 24 April 2012.  The appellant’s solicitor asked the Marshal the following question:

    What would happen if PTMS no longer wished to provide the crew and provisioning to the vessels and said to the Court “PTMS is stepping out of the manning and provisioning for the vessels and it is up to the Court to deal with this and the associated costs?

25. The Marshal replied as follows:

    It is the Court’s preference that PTMS continues the manning and provisioning of the vessels under arrest.  But if PTMS did step out, the Admiralty Marshal would retain another agency and would invoice the costs to PTMS in any event.  Either way, PTMS would have to pay for these costs.

26. In my opinion, the conversation did not amount to an engagement by the Marshal of the appellant to provide a master and crew and provisions to the vessels.  There is no evidence that the Marshal was aware of the terms and conditions under which the appellant had been providing the goods and services to the vessels under its arrangement with Hako, or that the appellant considered that, as a result of the conversation, it now had a contract with the Marshal.  In fact, having regard to the appellant’s primary case before this Court that it provided the goods and services under the Deed, it may be assumed that it did not consider that to be the case.

27. The other ground the appellant advanced in support of its contention that it was entitled to recover its charges as part of the costs of the actions was based on the bold proposition that this Court should recognise an exception to the usual rules about the recovery of arrest costs or legal costs in the same way as the Court recognises an exception to the rule that a litigant in person cannot recover his costs in the case of a litigant in person who is a solicitor (The London Scottish Benefit Society v Chorley (1884) 13 QBD 872 (“Chorley”)).  The appellant submitted that it ought to be able to recover its charges for the services it provided during the arrests because it is in the business of providing such services.  I do not think that it is within the power of this Court to create an exception.  Certainly, I would not do so by analogy with the rule in Chorley having regard to the High Court’s description of this exception in Cachia v Hanes and Another [1994] HCA 14; 179 CLR 403 at 411 per Mason CJ, Brennan, Deane, Dawson and McHugh JJ as “somewhat anomalous” and the justification for the exception as “somewhat dubious”.

28. In conclusion, I think that the primary judge had the power to allow the appellant’s amendments to raise its quantum meruit claim.  In my opinion, there was no discretionary reason not to allow the amendment.  For the reasons I have given, that claim succeeds.

    ISSUES ON THE CROSS‑APPEAL

29. The RCA was an allowance paid to maritime employees on vessels engaged in connection with the Gorgon project.  It was negotiated by Boskalis and different unions which represented the employees.  It was paid in recognition of the unique characteristics and circumstances of Boskalis’ works during the Gorgon project and to provide an incentive for Boskalis’ maritime employees and those of its contractors to continue their employment until completion, and to work in a co-operative and productive manner while required on the Gorgon project.  The allowance was initially $90 per day.  There was provision for that figure to be increased, but for the purposes of the issues on the appeals it is not necessary to notice the provision dealing with increases.

30. Of the sum of $90, a sum of $45 was to be paid per day upfront for each day of completed service.  A second sum of $45 per day was to accrue as an RCA entitlement for each day of completed duty onboard a vessel and it was to be paid on “completion”.  “Completion” meant the cessation of an employee’s engagement on the Gorgon project, or the time at which the vessel upon which an employee was engaged ceased to operate in relation to the Gorgon project, or the time at which Boskalis ceased to provide dredging services for the Gorgon project.  The first payment of $45 per day was paid as part of the employee’s ordinary weekly salary.  The second payment was said to accrue daily until completion, as previously defined.

1. The primary judge was, and this Court is, concerned with the second payment.  The issue arose because the respondents deny that they are liable under the Deed for the second payment insofar as it includes an amount for days of service prior to the commencement of the Deed on 7 April 2011.  It will be recalled that, prior to 7 April 2011, the appellant was providing services to Hako pursuant to the Marine Manning and Services Agreement.  The appellant’s Writs and Statements of Claim made claims under and pursuant to the Deed.  The appellant did not make a claim under and pursuant to the Marine Manning and Services Agreement.

2. In the case of marine manning services, the cause of action under the Deed has as its central element a breach of clause 5.17, which is in the following terms:

   5.17     Invoice Terms

   Subject to clause 5.16, invoices rendered by TMS [i.e., the appellant] to Hako for the Services shall become due and payable in fourteen (14) days.

3. Clause 5.16 sets out a procedure whereby Hako may dispute an invoice.  It is not relevant to the issue on the cross‑appeal.

4. “Services” means the supply of services by the appellant to Hako and includes marine manning services provided to or in respect of the Hako vessels while they are engaged in relation to the Marine Rock Transport.

5. The basis of the respondents’ argument is that its liability to pay is limited to an invoice and the invoice must be for the Services.  The Services are services rendered under the Deed, which has a defined term commencing on 7 April 2011, and which relates to the Marine Rock Transport.  A service rendered prior to 7 April 2011, even if the liability to pay does not fall due until a time within the term of the Deed, is not a proper matter for an invoice under clause 5.17.

6. In order to determine the merits of this argument, it is necessary to consider other provisions in the Deed and the Marine Manning and Services Agreement.

7. By clause 5.5 of the Deed, Hako acknowledges that all of the personnel employed or engaged by the appellant and supplied by it to Hako for or in relation to the performance of the services are and will remain employees or contractors of the appellant.

8. Clause 5.13 provides that the appellant will invoice Hako fortnightly, copied to Boskalis, for the Marine Manning Services provided in the past fortnight.

9. Clauses 5.12 and 5.14 deal with the items which are to appear in the invoices.  First, there are the rates for the marine manning services which are set out in the Proposal annexed to the Deed.  Secondly, there are other items which have been excluded from the rates.  Clause 5.14 provides, relevantly:

   …

   In addition to the Rates TMS will invoice for any items excluded from the rates which have been incurred during the invoice period together with the mark up, if any, applicable to that item specified in the Proposal.

   (Emphasis added.)

10. That part of the Proposal, which is the appellant’s letter to Hako dated 17 June 2010, provides, in part, as follows:

    As discussed the rates that would apply to this project are those in the column headed mobilisation/demobilisation – Non construction projects.  The reason for this being that this project does not meet the definition of a construction project under the Oil and Gas Agreements.  There is however the issue of the $90 allowance that Boskalis has notified us of as applying to the project as per their discussions with the Principles of Chevron for the project.  This would be recharged to Hako at $111 per person per day inclusive of on costs and exclusive of GST.

    (Emphasis in original.)

11. The Marine Manning and Services Agreement, which was part of the commercial context in which the Deed was made, contains, for the most part, similar provisions.

12. Clause 4.5 of the Marine Manning and Services Agreement corresponds with clause 5.5 in the Deed.

13. Clause 5.2 (see clause 5.13 of the Deed) provides that the appellant will invoice Hako fortnightly for the Marine Manning Services provided in that fortnight, “unless the Proposal provides otherwise”.

14. Clause 5.11 (see clause 5.17 of the Deed) provides that the client (i.e., Hako) must pay all invoices within 30 days of receipt.

15. Clause 5.1 corresponds with clause 5.12 of the Deed.  Importantly, clause 5.4 corresponds with that part of clause 5.14 of the Deed set out above.  It also uses the word “incurred”.

16. The question of construction presented by the cross‑appeal is not free from doubt.  That is because there are indications in the Deed that what the parties had in their minds, as to the subject matter of their invoices, were marine manning services rendered after 7 April 2011.  However, there are indications the other way and I think that these should prevail.

17. First, the similarity in the wording of the Marine Manning and Services Agreement and the Deed means that the parties had in mind a similar approach to the payment of this aspect of the RCA under both agreements.

18. Secondly, this would mean, on the respondents’ approach, the appellant should have included in its fortnightly invoice under both agreements an allowance for accrued RCA due and payable for the past fortnight, even though it was not yet due and payable.  The appellant would receive these monies even though they were not due and payable to the various employees.

19. Thirdly, I think the word “incurred” in clause 5.14 of the Deed is significant.  I think that in context it means to come under an immediate obligation (relevantly in this context) to pay a sum of money, rather than the accrual of an entitlement to a sum of money payable at some time in the future.  That means that the appellant could not have included an allowance for RCA in invoices issued under the Marine Manning and Services Agreement unless the allowance was due and payable on completion.

20. In my opinion, the cross‑appeal should be dismissed. 

21. By its notice of contention, the appellant contended that the respondents had not raised this challenge to the invoices in their pleadings and the primary judge ought to have dealt with the challenge by ruling that the respondents were not entitled to raise it.

22. I do not propose to deal with this for reasons I will give.  However, it is necessary to say something about it in order to explain a ruling the Court made during the course of the hearing of the appeals.

23. The appellant’s claim at trial was based on a number of invoices.  The respondents challenged the appellant’s entitlement to various items in those invoices on different grounds.  Those grounds were set out in paragraph 8 of their Amended Defences and they included the contention that certain services were not services pursuant to the Deed.  There was a need for precision as to what items were challenged and on what grounds and, in the pre‑trial period, the primary judge made an order requiring the respondents to indicate in schedules which ground or grounds in paragraph 8 of the Amended Defence was being taken in relation to which item in the invoices.

24. The respondents filed tables with schedules attached and the most up‑to‑date was a “Further Further Amended Defendant’s Schedule of Disputed Costs Claimed by Plaintiff” dated 14 August 2013.  If one looks carefully at the schedules, one can see a challenge to the RCA which accrued prior to 7 April 2011 on the ground that the services were not services pursuant to the Deed.

25. Nevertheless, when the respondents raised this challenge at trial, the appellants claimed that it had not been given fair notice of the challenge and the respondents should not be permitted to raise it.  It did not argue that it could not deal with the challenge in terms of the evidence to be put before the Court.  Rather, it submitted that it had been prejudiced in that it had not brought a claim in the alternative under the Marine Manning and Services Agreement.  Alternatively, it submitted that it should be permitted to amend its Writs and Statements of Claim to make a claim under that agreement.

26. The primary judge did not find it necessary, in view of her decision on the merits, to deal with what she called the pleading point.  She did make the observation, undoubtedly correct in my respectful opinion, that it was difficult to see how the appellant could bring a claim under the Marine Manning and Services Agreement in light of the quantification of the Hako debt in the Deed and purchase of it by Boskalis from the appellant.

27. I do not propose to deal with the notice of contention in the cross‑appeal because it is unnecessary to do so and because this Court would be dealing with it for the first time.

28. During the hearing of the appeal, the appellant’s counsel applied for leave to amend the Writs to make a claim under the Marine Manning and Services Agreement.  This Court refused that application.  It was made very late and had the real potential of disrupting the respondents’ orderly presentation of its oral arguments on the appeals.  As it happens, in view of my decision on the merits, I can add to those reasons the fact that the application to amend is unnecessary.

    CONCLUSIONS

29. The appeal must be allowed.  The appellant’s application to amend to raise the quantum meruit claim should be allowed and that claim succeeds.

30. The cross‑appeal must be dismissed.

31. The appellant and cross‑respondent should file draft minutes of order reflecting these conclusions.

32. There would appear to be no reason why costs should not follow the event.  That would mean that the respondents and cross‑appellants should pay the appellant and cross‑respondent’s costs of the appeal and cross‑appeal.  However, if either party wishes to advance an argument about costs, then a timetable can be fixed for the filing of short written submissions.

I certify that the preceding one hundred and seventy-seven (177) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

Associate:

Dated:        14 October 2014