FEDERAL COURT OF AUSTRALIA
Virtu Fast Ferries Ltd v The Ship “Cape Leveque” [2015] FCAFC 58
Citation: Virtu Fast Ferries Ltd v The Ship “Cape Leveque” [2015] FCAFC 58 Appeal from: Virtu Fast Ferries Ltd v The Ship “Cape Leveque” [2015] FCA 324 Parties: VIRTU FAST FERRIES LTD v THE SHIP “CAPE LEVEQUE” (IMO 9684603) AS SURROGATE FOR THE SHIP “JEAN DE LA VALLETTE” (IMO 9559743) (FORMALLY AUSTAL YARD NO. 248), AUSTAL SHIPS PTY LTD and COMMONWEALTH OF AUSTRALIA File number: NSD 302 of 2015 Judges: ALLSOP CJ, MANSFIELD AND MCKERRACHER JJ Date of judgment: 30 April 2015 Catchwords: ADMIRALTY – arrest of surrogate ship – general maritime claim by purchaser of vessel alleged to be defective against shipbuilder under s 4(3)(n) of Admiralty Act 1988 (Admiralty Act) – whether purchaser could arrest nearly completed vessel in shipyard of shipbuilder – whether s 19(a) of Admiralty Act satisfied – surrogate vessel under construction not a “ship” for purposes of s 19(a) – ship on delivery not owned by “relevant person” – cause of action said to arise between launch and delivery of ship based on terms implied into construction contract for first vessel not reasonably arguable – upon striking out of that claim, no cause of action by purchaser against shipbuilder when shipbuilder owner of ship Legislation: Admiralty Act 1988 (Cth)
Federal Court of Australia Act 1976 (Cth)Cases cited: Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181
Shagang Shipping Co Ltd v Ship “Bulk Peace” (as surrogate for the Ship “Dong-A Astrea”) (2014) 314 ALR 230
Spencer v Commonwealth of Australia (2010) 241 CLR 118
Owners of “Shin Kobe Maru” v Empire Shipping Inc (1994) 181 CLR 404
Ship Hako Endeavour v Programmed Total Marine Service Pty Ltd (2013) 211 FCR 369
KMP Coastal Oil Pty Ltd v The Owners of the Motor Vessel Iran Amanat (1997) 75 FCR 78
CMC (Australia) Pty Ltd v Ship Socofl Stream (1999) 95 FCR 403
Brisbane Slipways Operations Pty Ltd v Pantaloni (2010) 270 ALR 13
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] 1 QB 433
New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd [1975] 1 AC 154
European Roma Rights Centre) vImmigration Officer: Prague Airport [2005] 2 AC 1Date of hearing: 24 April 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 58 Counsel for the Appellant: Mr GJ Nell SC and Mr JS Emmett Solicitor for the Appellant: James Neill Solicitor Counsel for Austal Ships Pty Limited: Mr AM Stewart SC and Ms CO Gleeson Solicitor for Austal Ships Pty Limited: Norton Rose Fulbright Australia Counsel for the Commonwealth: Mr JA Hogan-Doran and Mr Q Rares Solicitor for the Commonwealth: HWL Ebsworth Lawyers Table of Corrections 2 June 2015 The first sentence in para 26 has been replaced with “The word ‘ship’ is defined in s 3 specifically not to include a vessel under construction and before it has been launched.”
[emphasis added]
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Details
- Case
- [2015] FCAFC 58
- Decision Date
CaseChat Overview and Summary
In this appeal, Virtu Fast Ferries Ltd sought to arrest the Cape Leveque, a ship under construction by Austal Ships Pty Ltd, as a surrogate for the Jean de la Vallette, a ferry built by Austal for Virtu. The primary judge dismissed Virtu's claim and the Federal Court of Australia now considers the appeal. The central issue before the Court was whether Virtu could arrest Cape Leveque as a surrogate ship to secure a maritime claim against Austal under section 4(3)(n) of the Admiralty Act 1988. This required an examination of whether Cape Leveque satisfied the conditions of section 19(a) of the Admiralty Act, particularly whether it was a ship owned by a relevant person at the time the cause of action arose.
The Court held that Cape Leveque was not a "ship" within the meaning of section 19(a) of the Admiralty Act at the time the cause of action arose, as it was not yet launched and was still under construction in Austal's shipyard. Additionally, at the time of the writ, Austal was not the owner of Cape Leveque as its ownership was vested solely in the Commonwealth. The Court also rejected Virtu's argument that a cause of action arose between the launch and delivery of Jean de la Vallette based on an implied term that the ship should not be delivered if latent defects were known or suspected. This claim was not reasonably arguable given the express warranty terms in the contract. Therefore, the Court concluded that Virtu's claim did not meet the requirements of section 19(a) of the Admiralty Act.
In light of these findings, the Court dismissed the appeal and ordered that Virtu Fast Ferries Ltd pay Austal Ships Pty Ltd's costs of the appeal. The Court further directed that any application for costs by the Commonwealth must be filed and served within seven days, with any opposing submissions and evidence to be filed within a further seven days. This decision ensures that the appeal is resolved with finality and that the appropriate parties are reimbursed for their legal costs.
The Court held that Cape Leveque was not a "ship" within the meaning of section 19(a) of the Admiralty Act at the time the cause of action arose, as it was not yet launched and was still under construction in Austal's shipyard. Additionally, at the time of the writ, Austal was not the owner of Cape Leveque as its ownership was vested solely in the Commonwealth. The Court also rejected Virtu's argument that a cause of action arose between the launch and delivery of Jean de la Vallette based on an implied term that the ship should not be delivered if latent defects were known or suspected. This claim was not reasonably arguable given the express warranty terms in the contract. Therefore, the Court concluded that Virtu's claim did not meet the requirements of section 19(a) of the Admiralty Act.
In light of these findings, the Court dismissed the appeal and ordered that Virtu Fast Ferries Ltd pay Austal Ships Pty Ltd's costs of the appeal. The Court further directed that any application for costs by the Commonwealth must be filed and served within seven days, with any opposing submissions and evidence to be filed within a further seven days. This decision ensures that the appeal is resolved with finality and that the appropriate parties are reimbursed for their legal costs.
Orders
Orders of the court
1. The appeal be dismissed.
2. The appellant pay the second respondent’s costs of the appeal.
3. Absent a consent minute of order, any application for costs by the Commonwealth be filed and served within seven days, together with all supporting evidence and submissions, and if opposed, any submissions and evidence of the appellant be filed and served within a further seven days, such application to be determined on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
This appeal was heard on 24 April 2015. As the decision of the Court was required before 1 May 2015, for reasons which appear below, the Court has principally addressed one only of several issues raised on the appeal. The conclusion reached on that point is sufficient to dispose of the appeal, which, in our view, should be dismissed with costs.BACKGROUND On 18 February 2015, the appellant, Virtu Fast Ferries Ltd (Virtu) filed a writ in rem, relevantly against the ship Cape Leveque, then under construction at the shipyard of the second respondent, Austal Ships Pty Ltd (Austal) in Western Australia. Cape Leveque, the first respondent, was said to be a surrogate for the ship Jean de la Vallette. Jean de la Vallette, a double hulled ferry, was built for Virtu by Austal. She was launched on about 25 April 2010 and delivered to Virtu on 16 August 2010. In 2013, Virtu commenced arbitration in London under the ship building contract for Jean de la Vallette, dated 12 March 2009 (the Virtu contract). The arbitration has proceeded to the point of Virtu on 28 June 2013 having delivered its points of claim. Cape Leveque is one of eight cape class patrol boats constructed, or being constructed, by Austal under a ship building contract with the Commonwealth dated 12 August 2011, for use by the Australian Customs and Border Protection Service (the patrol boat contract). At the date of the original writ, Austal had completed and delivered four patrol boats, and a fifth was delivered shortly afterwards. Cape Leveque will be the sixth patrol boat to be delivered under the patrol boat contract. She was very substantially completed (over 90% of construction and fit out) by 18 February 2015, and the Commonwealth had paid about two thirds of the total sum payable under that contract. She is to be delivered to the Commonwealth, subject to the resolution of this appeal, on 1 May 2015: hence, the urgency in both the claim at first instance and on this appeal. The issues before the primary judge, and on this appeal, concern whether in the circumstances Cape Leveque is properly sued as a surrogate ship. The primary claim of Virtu is a general maritime claim under s 4(3)(n) of the Admiralty Act 1988 (Cth) (the Act) as a claim in respect of the construction of a ship (including such a claim relating to a vessel before it was launched), namely Jean de la Vallette. The points of claim indicate that Virtu asserts that she was not properly constructed, and is now showing significant cracking. It is apparent that the proposed arrest of Cape Leveque as a surrogate ship is not made, therefore, in the typical circumstances where a sea-going vessel is said to have caused loss and the surrogate vessel is arrested to better provide security for recovery of the loss, generally where the first vessel is not within the jurisdiction: see the observations of the plurality (Gaudron, Gummow and Kirby J) in Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181 at 195-198. The general maritime claim concerning Jean de la Vallette is by her owner against her constructor. The surrogate, Cape Leveque is still in the shipyard of the constructor being built for another, entirely unrelated owner or putative owner.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
The matter came before the primary judge on an interlocutory application of Austal on the following grounds:1.the writ, as amended, was invalid or ought to be set aside and the proceedings dismissed on the ground that Austal was not the owner or charterer or in possession or control of Jean de la Valette when the causes of action in respect of that ship arose for the purposes of s 19(a) of the Admiralty Act 1988(Cth) because, first, the causes of action asserted in the London arbitration proceedings arose either before Jean de la Valette was launched or after she had been delivered to Virtu and, secondly, because there was no credible or evidential basis supporting the assertion of any breach of the Virtu contract in the period between the launch of Jean de la Valette and her delivery to Virtu;2.for the purposes of s 19(b) of the Act, Austal was not the owner of Cape Leveque on the date of the issue of the writ, 18 February 2015; and3.Cape Leveque was a government ship within the meaning of s 8(4) of the Act, and accordingly, the Court had no jurisdiction in respect of her.THE DECISION OF THE PRIMARY JUDGE The primary judge concluded that, at the time of the writ, Austal was not the owner of Cape Leveque. The factors referred to above meant that, at that time, the Commonwealth alone had the right of dominion and true ownership of her: applying Shagang Shipping Co Ltd v Ship “Bulk Peace” (as surrogate for the Ship “Dong-A Astrea”) (2014) 314 ALR 230. Consequently, s 19(b) was not satisfied. His Honour rejected an alternative contention by Virtu that the ownership was, in a strict legal sense, in Austal and the beneficial ownership in the Commonwealth, both as to the factual premise and because in any event s 19(b) would require both the legal and beneficial owners as “cognate relevant persons” to be the owner and the Commonwealth in that circumstance could not be a relevant person for the purposes of s 19(a) at the time the cause of action arose. Based on the same conclusion as to ownership, the primary judge also said that s 8(2) of the Act would preclude Virtu from proceeding in rem against Cape Leveque because it is a government ship, as it belonged to the Commonwealth at the material time. His Honour did not need to, and did not determine the third issue that, in any event, s 19(a) was not engaged by Virtu because its cause of action against Austal for breach of contract, in particular a breach of cl 2.1 and cl 3.1 of the Virtu contract arose either before Jean de la Vallette was a ship as defined in s 3, or after Jean de la Vallette was transferred to Virtu itself. His Honour described as “more exotic” the alternative claim that the relevant cause of action was the breach of an implied term that Jean de la Vallette would not be delivered if Austal knew or believed she might be suffering from widespread or significant latent defects not reasonably discoverable on reasonable pre-delivery inspection, and so a cause of action for breach of contract arose immediately before, and at, delivery when Austal was the owner of that ship. He said he would not have found that term was capable of being implied into the Virtu contract, having regard to the express warranty for defects which appeared in the vessel after delivery.
Ratio Decidendi
Legal Principle Established
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