The Owners of the Ship "Carina" v The Owners or Demise Charterers of the Ship "MSC Samia"
[1997] FCA 1115
•24 OCTOBER 1997
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE - application for leave to appeal - whether decision attended with sufficient doubt - whether substantial injustice would result if leave refused.
COSTS - application for security for costs - dispute as to appropriate quantum of security.
Federal Court of Australia Act 1976 (Cth), s 24(1A)
Admiralty Rules, rr 51, 52
Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397, applied
The Baxias 3 and The Bazias 4 [1993] QB 673, cited
THE OWNERS OF THE SHIP “CARINA” v
THE OWNERS OR DEMISE CHARTERERS OF THE SHIP “MSC SAMIA”
TAMBERLIN J
SYDNEY
24 OCTOBER 1997
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
IN ADMIRALTY
NG 748 of 1997
BETWEEN:
THE OWNERS OF THE SHIP "CARINA"
PLAINTIFFAND:
THE OWNERS OR DEMISE CHARTERERS
OF THE SHIP "MSC SAMIA"
DEFENDANTJUDGE:
TAMBERLIN J
DATE OF ORDER:
24 OCTOBER 1997
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
Leave to appeal is refused.
The defendant pay the plaintiff’s cost of the application for leave.
The plaintiff shall provide security in the sum of $35,000 within seven (7) days with further security to be provided from time to time by agreement or upon application to the Court.
The costs of the application for security to be costs in the main proceeding.
Liberty to apply to the Court is reserved, on forty-eight (48) hours notice, with respect to the implementation of the security for costs order.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
IN ADMIRALTY
NG 748 of 1997
BETWEEN:
THE OWNERS OF THE SHIP "CARINA"
PLAINTIFFAND:
THE OWNERS OR DEMISE CHARTERERS
OF THE SHIP "MSC SAMIA"
DEFENDANT
JUDGE:
TAMBERLIN J
DATE:
24 OCTOBER 1997
PLACE:
SYDNEY
REASONS FOR JUDGMENT
There are two motions before me. The first is an application by the defendant for leave to appeal from my judgment of 18 September 1997 (reasons published 26 September 1997), in which I dismissed two applications for release of the vessel “MSC Samia” (“the judgment”). The second application seeks security for costs.
Leave to appeal
On 18 September 1997, shortly after dismissing the two applications for release, the following statements were made:
“Mr Hetherington: Your Honour in anticipation of what your Honour has now found, it is possible that my clients will want to pay the money into court and I am just not sure how quickly we can have the vessel released if that takes place in the next few minutes. So I do not know whether we need your Honour to be available to do that or whether we can do that in the Registry.”
Then a short time later:
“Mr Hetherington: Your Honour... we are acting under the assumption that we are talking about $US6 million and non-payment of that amount, and our client in paying that reserves its rights to seek to have that exchanged for some other security at some later time, but it is putting the money into Court to have the vessel released today.
Mr Street:Your Honour, we entirely understand that and indeed I think I said yesterday and repeated this morning that this was a course always open.”
The money was then duly paid into Court and the vessel was released.
Because the judgment dismissing the applications is interlocutory in nature leave to appeal is required by s 24(1A) of the Federal Court of Australia Act 1976 (Cth). The principles on which leave is granted are well settled and are conveniently formulated in the Full Federal Court judgment in Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. These principles are twofold. The first is whether, in all the circumstances, the decision is attended with sufficient doubt to warrant it being reconsidered by the Full Court. The second is whether substantial injustice would result if leave were refused, supposing the decision to be wrong. The Court, however, pointed out (at 399), that the above principles were not intended to confine the Court’s discretion in all cases but rather to provide a “litmus test” for the general run of cases.
The Court stated (at 400):
“When the court comes to exercise its discretion on a particular application, an important distinction to be observed is that between the common interlocutory decision on a point of practice - concerning which the High Court has given ... a strong warning that ‘a tight rein’ should be kept on appeals - and an interlocutory decision determining a substantive right - where leave will more readily be granted .... In the present case, the interlocutory decisions in respect of which leave is sought are certainly attended with difficulty, and their correctness is open to dispute. If they are wrong, significant consequences will be suffered by the applicants. We regard this a clear case for the grant of leave.”
In the present case the defendant submits that there is sufficient doubt as to the correctness of the decision, because the English authorities and previous decisions of this Court at first instance should not be followed or can be distinguished in view of the wording of r 52(3) of the Admiralty Rules.
Rule 52(3) empowers this Court to release a vessel from arrest on such terms as are just. Therefore, it is said, the critical question which the Court must address is whether just terms have been proffered or can be applied as a basis for release. Once “just” terms are proffered, or can be provided, the vessel should be released. The defendant points out that the Australian rule is different from the corresponding UK provision, namely Ord 75 r 13(4) of the Rules of the Supreme Court 1965 which empowers the High Court to order release. There is no reference in the English provision as to the provision of just terms or the necessity to consider whether just terms have been proffered or can be imposed. The defendant says that this difference in wording supports the view that there is sufficient doubt as to whether English authorities are applicable in Australia and that therefore leave to appeal should be granted subject, of course, to the substantial injustice being established.
I am not satisfied the judgment is attended with sufficient doubt to warrant the grant of leave. No reference has been made to any authority contrary to the approach taken in the judgment. The difference in the language conferring the discretionary power to release, does not, in my view, take the matter any further. The principles applied in the United Kingdom authorities and formulated in the commentaries, referred to in my previous judgment are, in my view, applicable to an application made under r 52. The Court is not bound to release the vessel if “just” terms can be provided. It has a discretion which is expressed in wide general terms. The English authorities were approved and applied by the Australian decisions referred to in my judgment and the same line of approach was approved in the passage from the Australian Law Reform Commission Report, Report No 33, Civil Admiralty Jurisdiction, quoted in that judgment.
I note that The Supreme Court Practice (UK), Vol 1, at 75/13/1 expresses the view that:
“Bail, or payment into court in lieu of bail, is rare, for in almost all cases the arresting party is satisfied with a guarantee or undertaking given out of court by, e.g. a bank or insurance company, although it seems an arresting party is entitled to insist on bail or payment into court.” (Emphasis added)
In addition, there is the consideration that it is desirable in the interests of certainty in matters of practice concerning international commercial transactions that there should, so far as practicable, be uniformity of approach to important matters such as arrest and release which can obviously have far reaching consequences for numerous interested parties.
A further submission advanced for the defendant is that the question is one of widespread public importance and concern in maritime law and that therefore it is appropriate to grant leave so the principles relating to the way in which the Court should approach r 52 can be ventilated at an appellate level for the guidance of those involved in Admiralty law and practice.
I am not satisfied that the present circumstances, with three alternative proposed forms of security, are representative or constitute an appropriate vehicle for the “clarification” or elaboration of the operation of r 52. Each case must depend on the particular terms of the security proffered in any particular case.
As regards “substantial injustice” I have quoted the statements made after dismissal of the two applications for release. The payment into Court was duly made after I announced the decisions which I had reached on the question of the proposed forms of security. In these circumstances the vessel was released on the basis of payment into Court. This is expressly provided for by r 51(1)(a)(ii) of the Admiralty Rules. Release on such a basis cannot be said of itself to give rise to substantial injustice where a party has decided to avail itself of this provision. As a result of this payment into Court the plaintiff lost the security of the vessel and, on the evidence, obtained the monetary equivalent of its estimated value at the higher end of the scale.
Although, potentially, the payment of such a substantial sum into Court could give rise to practical problems as to liquidity and loss of alternative commercial opportunities for investment, I am not persuaded that, in the present case, any substantial injustice has been established on the evidence. The evidence does not give any detail in relation to any such problem. I am, in effect, invited to assume such consequences. Inferential inconvenience or indeed hardship in making payment into court do not necessarily equate to substantial injustice. In The Bazias 3 and The Bazias 4 [1993] QB 673 at 682, Lloyd LJ (with whom Ralph Gibson and Butler-Sloss LLJ agreed) said:
“... on an application for release under Ord. 75, r.13 the usual practice has always been that the vessel will only be released on the provision of sufficient security to cover the amount of the claim, plus interest and costs, on the basis of the plaintiffs’ reasonably arguable best case. The authority for that is The Moschanthy [1971] 1 Lloyd’s Rep. 37, 44.
None of the matters relied on by the defendants and in particular, of course, their ability to meet any award that may be made against them, takes this out of the usual run of cases, or justifies anything other than the usual order.
Mr Males further argues that it is quite simply impossible for the defendants to find liquid resources in time to enable them to put up security. In that connection he relies on paragraph 16 of an affidavit sworn by Mr Stockwood, and on a further affidavit, which we allowed to be put before us, in which he explains in greater detail the financial position of the defendant company. I regret that the difficulties which the defendants say they have in finding the necessary liquid resources, and the inconvenience to the freighters and their passengers, are not grounds which persuade me to depart in this case from making the usual order...” (Emphasis added)
Accordingly, for the above reasons, leave to appeal in this matter is refused.
Security for Costs
The second issue for determination concerns security for costs. There is no dispute that some security is appropriate. The only issue is quantum. The defendant seeks $50,000. The plaintiff offers $25,000 which is said to be adequate, at this stage, and suggests that the appropriate course is for any further instalments in respect of security to be paid in appropriate tranche as the funds are required, because of uncertainty as to what may transpire in the future conduct of this matter.
The defendant points to the additional cost which will result if the tranche approach is taken, as such an approach requires the parties to come back to Court.
I am satisfied on the evidence of Mr Hetherington that there are likely to be very substantial costs involved in resolution of this matter. In my view, the tranche approach is appropriate because it is not possible to predict the likely costs of these proceedings on the facts presently available. Doing the best I can on the material before me I consider the first tranche should be in the sum of $35,000.
The orders of the Court on the application are:
Leave to appeal is refused.
The defendant pay the plaintiff’s cost of the application for leave.
The plaintiff shall provide security in the sum of $35,000 within seven (7) days with further security to be provided from time to time by agreement or upon application to the Court.
The costs of the application for security to be costs in the main proceeding.
Liberty to apply to the Court is reserved, on forty-eight (48) hours notice, with respect to the implementation of the security for costs order.
I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.
Associate:
Dated: 24 October 1997
Counsel for the Plaintiff: Mr A W Street SC Mr G J Nell
Solicitor for the Plaintiff: Norton Smith & Co Counsel for the Defendant: Mr N Hutley SC Solicitor for the Defendant: Ebsworth & Ebsworth Date of Hearing: 10, 17 October 1997 Date of Judgment: 24 October 1997
0
0
0