FEDERAL COURT OF AUSTRALIA PRACTICE AND PROCEDURE - application for cross claim to be dismissed as against the second and third cross defendants - whether cross claim against third cross defendant should be struck out as having no basis in law - whether third cross defendant under duty as bailee - where third cross defendant time charterer of the vessel - whether Court has jurisdiction to entertain cross claim - where cross claim filed without leave of the Court and principal proceedings have been discontinued - whether Court has power to grant an extension of time for filing cross claim. Federal Court Rules, O 3 r 3; O 5 rr 4, 5, 7, 9; O 11 r 20 Dorrough v Bank of Melbourne Ltd (unreported, 1 August 1996, Federal Court of Australia), applied CARLTON INTERNATIONAL PLC and BRADMANS STORES PTY LIMITED - v - CRAYFORD FREIGHT SERVICES LIMITED & ORS NG 166 OF 1997 TAMBERLIN J SYDNEY 8 SEPTEMBER 1997 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 166 of 1997 IN ADMIRALTY BETWEEN: CARLTON INTERNATIONAL PLC First plaintiff BRADMANS STORES PTY LIMITED Second plaintiff AND: CRAYFORD FREIGHT SERVICES LIMITED First defendant/cross claimant CORAL SEATEL NAVIGATION CO Second defendant/first cross defendant LLOYD TRIESTINO DI NAVIGAZIONE SPA Third defendant/second cross defendant CONTSHIP CONTAINERLINES LIMITED Fourth defendant/third cross defendant JUDGE: TAMBERLIN J DATE OF ORDER: 8 SEPTEMBER 1997 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application for leave to file a cross claim or for an extension of time within which to file a cross claim against the second and third cross defendants be refused. 2. The applicant for leave pay the costs of the second and third cross defendants. 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 NG 166 of 1997 IN ADMIRALTY BETWEEN: CARLTON INTERNATIONAL PLC First PLAINTIFF BRADMANS STORES PTY LIMITED Second PLAINTIFF AND: CRAYFORD FREIGHT SERVICES LIMITED First DEFENDANT/CROSS CLAIMANT CORAL SEATEL NAVIGATION CO Second DEFENDANT/FIRST CROSS DEFENDANT LLOYD TRIESTINO DI NAVIGAZIONE SPA Third DEFENDANT/SECOND CROSS DEFENDANT CONTSHIP CONTAINERLINES LIMITED Fourth DEFENDANT/THIRD CROSS DEFENDANT JUDGE: TAMBERLIN J DATE: 8 SEPTEMBER 1997 PLACE: SYDNEY REASONS FOR JUDGMENT By Notice of Motion filed 19 August 1997 the second and third cross defendants seek orders that: "1. The Court has no jurisdiction to entertain the purported Cross Claim filed 22 July 1997. 2. In the alternative, if the proceedings are competent, an order striking out the Cross Claim against the Third Defendant. 3 The Cross Claimant pay the Cross Defendant's costs of and incidental to the proceedings." This application raises two short points. The first is whether the cross claim against the third cross defendant ("Contship") should be struck out. Contship submits that the cross claim against it is bad on its face because the allegation is that it was under a duty as bailee of the consignment to take reasonable care of it and to deliver it at Melbourne in good order and condition as shipped. Contship submits that it was never under a duty as bailee. Bailment The cross claim alleges that the first cross defendant ("Coral Seatel") is the owner of the vessel; that the second cross defendant ("Lloyd Triestino") contracted to carry the goods, and that Contship was the time charterer of the vessel. Clause 12 of the cross claim alleges that the cross defendants failed to ensure the vessel was seaworthy and properly manned; did not properly and carefully load, handle, stow and carry the consignment, and did not properly handle, keep or care for the consignment. The particulars of this allegation are said to be given at preceding paragraphs 9 and 11. Paragraph 11 only alleges breaches against Lloyd Triestino. Paragraph 9 alleges breaches against Contship. These breaches are said to be in respect of duties of care pleaded in paragraph 8. In turn, paragraph 8 alleges that Contship was under a duty as bailee of the consignment to take reasonable care of it. It is well settled that to constitute a bailment there must be a transfer of possession of the goods from one person to another without any intention on the part of the bailor to transfer the ownership of the goods to the bailee. The bailee receives the goods for the purpose of fulfilling the instructions of the bailor, which may be to keep the goods in safe custody or to carry the goods from one place to another or to do something to the goods and then return them. In contrast to a demise charter, a time charter, like a voyage charter, is a contract for the rendering of services by the owner and not for the hiring out or parting with possession of the ship: see N E Palmer, Bailment, 1991 (2nd edn) at 193; Port Line Ltd v Ben Line Steamers Ltd [1958] 1 Lloyd's Rep 290; M Wilford, T Coghlin and J D Kimball, Time Charters, 1995 (4th edn) at 529-530. It does not give rise to a bailment relationship. The only breach alleged against Contship is breach of a duty as bailee. Accordingly, the claim against Contship should be struck out as having no basis in law. Counsel for the cross claimant ("Crayford") submitted that paragraph 12 of the Statement of Claim gave rise to separate and independent allegations. However, the particulars furnished in relation to that paragraph refer back to pars 11 and 9 which in turn are framed in bailment. Jurisdiction to entertain cross claim after discontinuance The second point raised relates to the jurisdiction of the Court to entertain the cross claim filed on 22 July 1997. Essentially, the contention on behalf of Contship and Lloyd Triestino is that on 13 August 1997 the proceedings were discontinued. As at the time when the cross claim was filed on 22 July 1997 leave or an extension of time was required and this had not been given. Accordingly, as at the date of discontinuance, twenty-two days after filing, there was no effective cross claim because there had been no leave and accordingly the cross claim should be struck out. This question involves consideration of the Federal Court Rules particularly O 3 r 3; O 5 rr 4, 5, 7 and 9, and O 11 r 20. Order 5 r 9 requires that a respondent desiring to cross claim, after a directions hearing, must obtain all necessary directions at the directions hearing in relation to the cross claim, including the time within which the cross claim is to be filed. Where a respondent does not obtain directions, pursuant to that requirement, then the leave of the court is required in order to file a cross claim. In the present case there have been directions hearings, but no direction has been sought or made in relation to the filing of a cross claim. Order 5 r 7 provides that r 9 only applies where a proceeding is commenced by application supported by affidavit. In the present case the proceedings were commenced by application supported by a statement of claim. Accordingly, O 5 r 9 is not applicable in the present circumstances. Under O 5 r 4, r 5 applies where a proceeding is commencement with an application supported by a statement of claim. By r 5(1) a respondent may file a pleading by way of cross claim within the time fixed for filing the defence or any extension thereof. In the present case no time has been fixed for filing a defence, but O 11 r 20(1) provides that where an application is accompanied by a statement of claim the defence shall be filed within seven days after the directions hearing. In the present case no formal directions have been made as to filing a defence or cross claim. There have been several directions hearings. On one of these leave was given to the applicants in the substantive proceeding to serve outside the jurisdiction. In short, the position is that on 22 July 1997, the cross claim was filed with the Court without leave but prior to discontinuance of the proceeding by the applicants. Order 5 r 5(1) contemplates an extension of the time fixed for filing a defence or cross claim. Order 3 r 3 enables the Court to extend any time fixed by the Rules either before or after the time expires and whether or not an application for the extension is made before the time expires. The question which arises is whether the Court has power to retrospectively grant an extension of time for filing of the cross claim when the proceedings were discontinued on and from 13 August 1997. Contship and Lloyd Triestino contend that there is no power to extend time because at present there are no proceedings on foot in which to ground an application for an extension of time to file the cross claim on 22 July 1997. Reference was made to the judgment of Cooper J in Dorrough v Bank of Melbourne Ltd (unreported, 1 August 1996, Federal Court of Australia). In that case his Honour expressed the view, with which I agree, that the rules contemplate there must be in existence, a proceeding at the time the cross claim is brought or leave is granted to bring the cross claim. Where this is the case then a later settlement of the original claim will not prevent the existing cross claim being litigated to a conclusion. He referred to The Salybia [1910] P 25 at 27. The power conferred by O 3 r 3 confers a wide discretion to be exercised so as to avoid injustice to the parties. In addition, apart from the rule, there is a broad necessary incidental power in the court to extend time. In the present case, however, the position is that there is presently no proceeding on foot in respect of which an extension of time can be granted. The purported cross claim filed with the Court on 22 July 1997 was filed without leave and therefore had no legal effect. Subsequent discontinuance of the proceedings on 13 August 1997 meant that thereafter there were no proceedings on foot in respect of which a cross claim could be filed. Therefore, there is nothing in respect of which an application for an extension of time to 22 July 1997 can be anchored or grounded in the present circumstances. The effect of this is that any application, at this time, for an extension of time to file the cross claim must be dismissed. The Court has no jurisdiction to entertain the cross claim which has been filed. Independently of the above conclusion I am not satisfied as a matter of discretion that any sufficient case has been made out to warrant an extension of time in the present case. No adequate explanation is proffered as to why an extension was not sought before the proceedings were discontinued. For the reasons given above, my conclusion is that an extension of time or leave cannot be granted where there are presently no proceedings currently on foot. As a matter of discretion, even if such power existed, I would not be disposed to grant an extension on the material before me. Finally, I consider that the claim against the fourth defendant Contship should, in any event, be dismissed on the ground that it does not disclose any cause of action. The orders of the Court are that: 1. The application for leave to file a cross claim or for an extension of time within which to file a cross claim against the second and third cross defendants be refused. 2. The applicant for leave pay the costs of the second and third cross defendants. 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: 8 September 1997 Counsel for the Cross Claimant: Ms L Muston Solicitor for the Cross Claimant: Conway O'Reilly Counsel for the Second and Third Dr A S Bell Cross Defendants: Solicitor for the Second and Third Ebsworth & Ebsworth Cross Defendants: Date of Hearing: 19 August 1997 Date of Judgment: 8 September 1997