FEDERAL COURT OF AUSTRALIA News Maritime Co Ltd v "Hyundai Cosmos" [2002] FCA 1164 ADMIRALTY – ship arrested by Marshal at Port Gladstone – vessel loaded with cargo at the port of Newcastle – further cargo of coal to be loaded at Port Gladstone – application to move arrested vessel to enable loading of coal cargo at Port Gladstone – application to move and load vessel opposed – consideration of whether appropriate to move vessel to berth and permit loading – whether Court should permit movement and loading of vessel under arrest Admiralty Act 1988 (Cth) ss 4, 19 Admiralty Rules rr 47, 48, 49 and 50 Den Norske Bank (Luxembourg) SA v The Ship "Martha II" (unreported, Federal Court of Australia, Sheppard J, 6 March 1966) discussed The Bazias 3 [1993] QB 673 referred to NEWS MARITIME CO LTD v "HYUNDAI COSMOS" or "HYUNDAI OLYMPIA" or "HYUNDAI ISLAND" or "HYUNDAI OCEANIA" as surrogate ships N 891 of 2002 TAMBERLIN J SYDNEY 19 SEPTEMBER 2002 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 891 OF 2002 IN ADMIRALTY BETWEEN: NEWS MARITIME CO LTD PLAINTIFF AND: "HYUNDAI COSMOS" or "HYUNDAI OLYMPIA" or "HYUNDAI ISLAND" or "HYUNDAI OCEANIA" as surrogate ships DEFENDANT JUDGE: TAMBERLIN J DATE: 19 SEPTEMBER 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On Friday 13 September 2002, I declined to grant an application by the defendant which has entered a conditional appearance, to move the arrested vessel, "Hyundai Cosmos" ("the vessel") to its intended berth to enable it to load a cargo of coal and then to permit the vessel to proceed to anchorage within the limits of Port Gladstone in Queensland. I now set out my reasons. 2 When the matter came before me again on Monday, 16 September, 2002, no further evidence was advanced nor were any further submissions made and I made a formal order dismissing the application. 3 When a vessel is arrested it comes into the "custody" of the Marshal and in general, any important decisions affecting the custody of the vessel are subject to the consent of the Court. The Court does not of course have "possession" of the vessel. 4 The vessel was arrested in Port Gladstone, by order of the Court on 9 September 2002 under ss 4(3)(f) and 19 of the Admiralty Act 1988 (Cth). The basis for the arrest was that the plaintiff, pursuant to a Novation Agreement said to have been made on 28 February 2001, claimed damages in a sum of JPY 2,306,750,000 (more than AUD 34,000,000) in respect of repairs, salvage, hire of tugs, detention, clean up costs and a cargo claim together with interest and costs arising from alleged breaches of a charterparty. The claim arose out of a grounding incident in respect of the ship "Jody F Millennium" at the port of Gisborne, New Zealand on 6 February 2002. The dispute is subject to a London arbitration clause under the charterparty. The vessels referred to as the defendant are surrogate ships. Hyundai Maritime Marine Co Ltd is the registered owner of the defendant ships and at the time of the incident was the hirer of the vessel, "Jody F Millennium" from the plaintiff. One of the primary issues between the parties is whether the port of Gisborne was a safe port within the meaning of the charterparty. The defendant has filed an affidavit by its solicitor Mr Luxford, dated 13 September 2002, based on information and belief. This indicates that at the time of the arrest of the vessel at Port Gladstone it was in the process of loading a cargo comprising approximately 73,000 tonnes of coal. At the time of arrest, the vessel already had on board a cargo of approximately 87,880 tonnes of coal which had been loaded at the port of Newcastle. However, from other information provided to the Court on the hearing it appears that as at the actual time of arrest, the vessel was not loading cargo. 5 Mr Luxford states that he is informed that the intended cargo of coal at Gladstone could be loaded within twenty-four hours once the vessel has re-berthed for loading. This indicates that the vessel was not in the course of loading at Gladstone at the time of arrest. The cargo is presently stockpiled at the berth in Gladstone and there is no impediment, it is claimed, to the coal being loaded onto the vessel immediately upon re-berthing. The vessel has already tendered its Notice of Readiness at the port of Gladstone in preparation for loading. Upon completion of loading it is said the vessel can proceed to a waiting anchorage approximately ten nautical from the loading berth but still within the port of Gladstone. It is said that the vessel has been chartered pursuant to a contract of affreightment and that the vessel was placed off hire on 12 September 2002 at approximately 3.48 pm and will remain off hire until it re-berths. The daily rate of hire lost is said to be USD 11,000. The owner of the vessel believes that so long as the vessel remains off hire it may be exposed to a claim for damages by the shippers of the cargo of coal at Gladstone. The Court is requested to vary the terms of arrest of the vessel so as to enable the vessel to load at the Gladstone berth and to move to the waiting anchorage whereupon it is said the arrest will continue. 6 The application is opposed by the plaintiff and the Marshal does not support the application. 7 The application is brought pursuant to the provisions of rules 47 to 50 of the Admiralty Rules, which relevantly read as follows: "47. (1) Subject to these Rules, a Marshal who arrests a ship or other property has the custody of the ship or property. (2) The Marshal shall, unless the court otherwise orders, take all appropriate steps to retain safe custody of, and to preserve, the ship or property, including: (a) removing from the ship, or storing, cargo that is under arrest; (b) removing cargo from a ship that is under arrest and storing it; (c) removing, storing or disposing of perishable goods that are under arrest or are in a ship that is under arrest; and (d) moving the ship that is under arrest. … 48. (1) Where a Marshal has custody of a ship or other property, the Marshal or a party may at any time apply to the court for directions with respect to the ship or property. … 49. (1) Where: (a) cargo on board a ship is under arrest but the ship is not; or (b) a ship is under arrest but its cargo is not; a person who is entitled to immediate possession of the ship or the cargo, respectively, may apply, in accordance with Form 17, to the Marshal to discharge the cargo from the ship. (2) Where: (a) the Marshal is satisfied that the applicant is entitled to immediate possession of the ship or cargo; (b) the applicant gives an undertaking in writing that is satisfactory to the Marshal to pay on demand to the Marshal the fees and expenses of the Marshal in connection with the discharge; and (c) if the Marshal so requires, the applicant indemnifies the Marshal, in a form satisfactory to the Marshal, in respect of any claim against the Marshal arising from the discharge; the Marshal may comply with the application. (3) Where: (a) … (b) a ship is under arrest but its cargo is not; the court may, on application and subject to such terms and conditions as are just, order the cargo to be discharged from the ship. 50. The court may, at any stage of a proceeding, make appropriate orders with respect to the preservation, management or control of a ship or other property that is under arrest in the proceeding." (Emphasis added) 8 In this case the solicitor has undertaken to pay the Marshal's fees and expenses as required by Form 17. 9 There is no rule which specifically deals with the loading of cargo aboard a ship under arrest. When the matter came on for hearing urgently late in the afternoon on Friday 13 September 2002, I was informed that negotiations were taking place overseas between the parties and it was submitted for the plaintiff that it would be appropriate to wait and see what ensued from those negotiations before proceeding with the application. This was a consideration which I took into account when I decided not to grant the orders sought on Friday afternoon and I therefore stood the matter over until Monday 16 September. When the matter came on before me on that date no further evidence was placed before me and I dismissed the application. I made no order as to costs. 10 The evidence in this case as to the desirability or necessity of moving the vessel is slender and generalised. In my view, it is not sufficient to warrant the grant of the orders sought. In the absence of substantial evidence to justify loading of the additional cargo it is, in my view, appropriate to preserve the status quo as at the time of the arrest. Both movement of the vessel and loading could present practical problems and complicate the management by the Court of its function as custodian of the vessel. 11 While there is no doubt that the Court has power in an appropriate case to make an order permitting movement of the vessel and the loading of cargo onto an arrested vessel, the matter is one of discretion for the Court, having regard to all relevant circumstances. 12 I was not referred to any authority directly in point involving permission to load. However, the exercise of the Court's powers under Rule 49 of the Admiralty Rules to permit discharge of cargo was considered by Sheppard J in Den Norske Bank (Luxembourg) SA v The Ship "Martha II" (unreported, Federal Court of Australia, Sheppard J, 6 March 1996). That case concerned an application to move a vessel under arrest from Port Jackson to Port Botany, to discharge cargo, and then to sail to Port Jackson and to proceed to anchorage. 13 In that case there was extensive evidence over a period of five days in relation to the difficulties that could be involved in relation to the application. In particular there was reference to the possibility of risk to the integrity of the cargo, if unloaded, otherwise than in Newcastle. Witnesses were called concerning the question of unloading the vessel, including evidence of a marine surveyor. The Court suggested that an independent report from a surveyor or other appropriate person not associated with the parties should be obtained by the Marshal and this was obtained and made available to the Court. In the course of his judgment his Honour relied on evidence provided by Captain Bozier, who gave expert evidence on the matter. His Honour was also concerned about whether the vessel should leave the Court's jurisdiction and referred to the decision in The Bazias 3 [1993] QB 673. In that case the Court of Appeal took the view that the vessels under arrest should remain under arrest within jurisdiction and not be allowed to move in and out of the jurisdiction. In the present case it is, of course, not proposed that the vessel should depart from the jurisdiction. I note that in relation to the Martha II, Sheppard J vacated an order previously made by Olney J in Victoria which permitted cargo to be loaded but his Honour did not state his reasons for vacating the order to permit the loading of cargo. 14 To permit movement of the vessel to enable the loading of a large cargo of coal at Gladstone, in this case, could, in my view, unnecessarily complicate the administration of the custody of the vessel. If the loading of cargo were permitted in this case problems could arise should it become necessary to offload the cargo in order to carry out a possible sale of the vessel. There could also be complications in relation to liability for any incidents occurring during the on-loading of cargo and also in relation to contracts entered into in connection with the remaining cargo. There is simply not sufficient material available to me at the present time in order to properly resolve these important questions which bear on the exercise of the Court's discretion to permit the movement and loading of the vessel. No doubt this was largely due to the pressing urgency with which the application came before the Court. 15 In the absence of persuasive evidence in support of the application, I am not disposed to permit movement of the vessel or the loading of additional cargo onto it at this point in time and on the limited material presently available to me. It is of course possible for a further application to be made at a later stage supported by more extensive evidence seeking similar orders. Because of the early stage at which the question has arisen I do not think it is appropriate to make any order as to costs. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 19 September 2002 Solicitor-Advocate for the Plaintiff: S Hetherington Solicitor for the Plaintiff: Withnell Hetherington Counsel for the Defendant: A W Street SC Solicitor for the Defendant: Phillips Fox Dates of Hearing: 13 and 16 September 2002 Date of Orders Made: 16 September 2002 Date of Publication of Reasons: 19 September 2002