IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 730 of 1995 BETWEEN: MORLINES MARITIME AGENCY LIMITED plaintiff AND: SKULPTOR VUCHETICH defendant JUDGE: TAMBERLIN J DATE OF ORDER: 5 SEPTEMBER 1997 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. There be judgment for Transworld Marine Agency Limited in the sum of US$2,271,544.29 2. The defendant pay the costs of the proceedings of Transworld Marine Agency Co NV in the sum of AUD$35,000. 3. The Marshal pay to the Transworld Marine Agency Company NV from the Fund representing the proceeds of sale of the ship "Skulptor Vuchetich" in partial satisfaction of the judgment entered herein and the accrued interest (other than in respect of costs) the sum of US$1,028,964.40, together with interest for each day after 29 August 1997 at the rate of US$338.29 per day. 4. The Marshal pay to Transworld Marine Agency Company NV from the Fund in satisfaction of the Order entered herein for costs, the sum of AUD$35,000 out of the fund retained for costs pursuant to Order 13 made 22 May 1997. 5. Baltic Shipping Company pay the costs of Transworld Marine Agency Company NV in respect of the further hearing of this matter on 29 July 1997. 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 730 of 1995 BETWEEN: MORLINES MARITIME AGENCY LIMITED PLAINTIFF AND: SKULPTOR VUCHETICH DEFENDANT JUDGE: TAMBERLIN J DATE: 5 SEPTEMBER 1997 PLACE: SYDNEY EX-TEMPORE REASONS FOR JUDGMENT In this matter I delivered reasons for decision on 29 August 1997. I refrained from making any orders in relation to the claim made by Transworld Marine Agency Company NV ("Transworld"), an additional plaintiff, until such time as the parties brought in Short Minutes setting out the final amount of the claim and other specific orders sought. These reasons relate to some questions raised in relation to the Short Minutes, in submissions on behalf of the Admiralty Marshal and counsel for the Baltic Shipping Company ("Baltic"). As to the quantum of the claim, I have been provided by Transworld with a Schedule of Calculations which shows the make-up of the final amount claimed. Admiralty Marshal's submissions Mr Coleman, for the Admiralty Marshal, raised several matters for consideration relating to the draft Short Minutes prepared on behalf of Transworld, having regard to my reasons for decision. The first question raised is whether any pre-judgment interest should be awarded in respect of the claim and, if so, at what rate. The claimants, apart from the Admiralty Marshal, have agreed that pre-judgment interest should be paid in relation to the Transworld claim on a simple interest basis as opposed to a compound interest basis. The Admiralty Act 1988 (Cth) specifically contemplates in s 4(3)(w) that a claim for interest in respect of a maritime claim set out in subsection 4(3) can be made. The present claim of Transworld is such a claim. Therefore interest, in my view, ought to be paid. Paragraph (w) is, however, silent as to whether any relevant payment should be on a simple or compound basis. So far as I can determine, there is no admiralty decision which has awarded compound interest on a general maritime claim. The Australian Law Reform Commission in Civil Admiralty Jurisdiction, Report No 33, 1986, at par 267 concluded that: "The better view is therefore that pre-judgment simple interest can be awarded in all matters heard in admiralty." (Emphasis added) In Hungerfords v Walker (1990) 171 CLR 125 at 148 Mason CJ and Wilson J observed : "Equity has adopted a broad approach to the award of interest. It has long been accepted that the equitable right to interest exists independently of statute: Wallersteiner v Moir [No 2]. Equity courts have regularly awarded interest, including not only simple interest but also compound interest, when justice so demanded, eg, money obtained and retained by fraud and money withheld or misapplied by a trustee or fiduciary: La Pintada. In admiralty, simple interest has been awarded in a variety of cases standing outside the authority conferred by statute. As Sir Robert Phillimore said in The Northumbria: 'The principle adopted by the Admiralty Court has been that of the civil law, that interest was always due to the obligee when payment was not made, ex mora of the obligor; and that, whether the obligation arose ex contractu or ex delicto.'" The present is not a case of fraud, breach of trust or breach of fiduciary duty. The extract indicates that the practice of the Admiralty Court is to award simple interest. The award of interest is, of course, discretionary. In the present case I consider that it is appropriate to award simple interest to the date of judgment. A second matter raised is whether interest should be awarded on the amount of BF18,578,166, which is for moneys owing to Transworld and for which Transworld is liable to suppliers, but which it has not yet paid to suppliers. In my earlier reasons for judgment of 29 August 1997 I determined that Transworld was entitled to be paid that amount notwithstanding that it had not yet paid out those monies to the suppliers. In accordance with this determination and principle there is no reason why interest should not be awarded to Transworld in respect of the unpaid amount of BF18,578,166. A third matter raised concerned the conversion exchange rate used in formulating the Transworld claim. The Admiralty Marshal submitted that by using different exchange rates Transworld has received a windfall. I am not persuaded that any adjustment should be made to the amount claimed on the basis of the differential in exchange rates arising from conversion of amounts from US dollars to Belgian francs and Belgian francs to Australian dollars and then to US dollars. The calculations have applied the relevant exchange rates at the date of the conversion and in my view this approach is appropriate. Baltic's submissions Counsel for Baltic has pointed out that some adjustment needs to be made in relation to the claim for US$813,030.80 which was paid out as an interim distribution pursuant to orders made on 1 July 1997. The Schedule of Calculation includes interest on this amount for the period after it had been paid to Transworld. This contention has substance and the parties inform me that an appropriate adjustment has been made. The Short Minutes seek an order that Baltic pay the costs of Transworld in respect of the further hearing of this matter on 29 July 1997. This is opposed by Baltic. However, as indicated in my earlier reasons I consider that Baltic should pay the costs of Transworld as Transworld has been substantially successful in relation to the challenges made by Baltic. Baltic further submits that interest rates applicable are too high because they are based on prevailing interest rates in Australia whereas they should be based on the prevailing interest rates in the Unites States because that is the currency of account and in respect of which the judgment is obtained. In support of this submission Baltic refers to the decision of Rogers J in Maschinenfabrik Augsburg-Nurenburg AG v Altikar Pty Ltd [1984] 3 NSWLR 152. In the present case the relevant contractual currency is Belgian francs. However, the claims were made, the matter was heard, and judgment was delivered, in Australia. In the case of all other resolved claims in this proceeding judgment has been given and orders made on the basis that the applicable interest rate was in accordance with prevailing Australian rates. This present argument as to the relevant interest rate regime was not argued before Sheppard J but the calculations on the basis of which his judgment was handed down, were made on the basis of Australian interest rates. It was indicated in the course of argument before me that prevailing United States interest rates at relevant times were probably lower than prevailing Australian rates and I assume for present purposes that this is the case. The case before me is readily distinguishable from the Altikar. In that case the award was made in Deutsche Marks ("DM"). The award no doubt was made in DM because the plaintiff creditor was a German corporation and the debt was payable in DM. In the present case the contractual currency was Belgian francs. The connection with US dollars is accidental. This arises from the fact that the vessel was sold on the international shipping market where the basic currency is US dollars. It is therefore only a matter of convenience, that the judgment was given on the basis of payment in US dollars. The position is quite different from that to which his Honour adverted in Altikar of a Swiss creditor, kept out of money to which he was entitled to be paid in Swiss francs. Such a creditor could reasonably be assumed to have borrowed in Switzerland in Swiss francs pending judgment. So the creditor should only be entitled to interest at the lower rate prevailing in Switzerland. This is the appropriate basis of calculation in that situation because the Swiss creditor would have to pay interest rates at prevailing Swiss rates to borrow such funds: see Milangos v George Frank (Textiles) Ltd (No 2) [1977] QB 489. This would have nothing to do with any foreign bank rate or basic lending rate. The principle in such a case was expressed in Altikar at 154, citing Milangos, as being that: "if you opt for a judgment in a foreign currency, for better or for worse, you commit yourself to whatever rate of interest obtains in the context of that currency." An examination of the reasons for judgment of Sheppard J delivered on 15 May 1997 in this matter indicates that claims before his Honour involved debts owing in various currencies including Canadian dollars, Belgian francs, Netherlands guilders, Australian dollars and US dollars. His Honour expressly provided at the close of his judgment that the amounts of the claims of those who succeeded were to be converted into US dollars. The position in this case is again different because the judgment in foreign currency (US dollars) was not "opted for" by any party but was imposed by the Court as a convenient basis of accounting given that the sale price was in US dollars and was paid to the Court in that currency. Accordingly, in the interest of even handedness and consistency as regards other claimants, and having regard to the "accidental" role of US currency in the present claims I do not consider it is appropriate to calculate interest on prevailing American rates in respect of the Transworld claim. In my view, the calculations of interest at Australian rates are properly founded. Accordingly, I do not accept the submission that interest in the Transworld calculation should have been calculated in accordance with US rather than Australian rates. The orders I make in this matter are as follows: 1. There be judgment for Transworld Marine Agency Limited in the sum of US$2,271,544.29 2. The defendant pay the costs of the proceedings of Transworld Marine Agency Co NV in the sum of AUD$35,000. 3. The Marshal pay to Transworld Marine Agency Company NV from the Fund representing the proceeds of sale of the ship "Skulptor Vuchetich" in partial satisfaction of the judgment entered herein and the accrued interest (other than in respect of costs) the sum of US$1,028,964.40, together with interest for each day after 29 August 1997 at the rate of US$338.29 per day. 4. The Marshal pay to Transworld Marine Agency Company NV from the Fund in satisfaction of the Order entered herein for costs, the sum of AUD$35,000 out of the fund retained for costs pursuant to Order 13 made 22 May 1997. 5. Baltic Shipping Company pay the costs of Transworld Marine Agency Company NV in respect of the further hearing of this matter on 29 July 1997. 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: 5 September 1997 Counsel for the Plaintiff: Mr J S Wheelhouse Solicitor for the Plaintiff: Holmes & Bevan Counsel for the Baltic Shipping Company: Mr B W Larkin Solicitor for the Baltic Shipping Company Norton Smith & Co Solicitor for the Admiralty Marshal Douglas Coleman Date of Hearing: 4,5 September 1997 Date of Judgment: 5 September 1997