FEDERAL COURT OF AUSTRALIA Broken Bay Slipway Pty Ltd v The Yacht 'Flying Cloud' [2006] FCA 309 BROKEN BAY SLIPWAY PTY LTD v THE YACHT 'FLYING CLOUD' NSD 2497 of 2005 ALLSOP J 27 MARCH 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2497 of 2005 BETWEEN: BROKEN BAY SLIPWAY PTY LTD APPLICANT AND: THE YACHT 'FLYING CLOUD' RESPONDENT JUDGE: ALLSOP J DATE OF ORDER: 27 MARCH 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: (1) Judgment be entered for the plaintiff against the defendant in the sum of $19,464.82, including interest before judgment of $4455.82. (2) The defendant pay the plaintiff's costs assessed on an indemnity basis of $33,000. 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 NSD 2497 of 2005 BETWEEN: BROKEN BAY SLIPWAY PTY LTD APPLICANT AND: THE YACHT 'FLYING CLOUD' RESPONDENT JUDGE: ALLSOP J DATE OF ORDER: 27 MARCH 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: (1) Have the above ship valued in writing. (2) Sell the above ship under the Admiralty Rules. (3) The sale need not be by public auction. (4) The method of sale be determined by the Court. (5) The Marshal engage ship brokers, Church Point Charter & Brokerage to value the ship in writing and advise as to the method of sale. (6) Prior to the close of business on 29 March 2006, the Marshal give notice of the ship broker's recommendations as to the method of selling the ship to the solicitors for the Plaintiff, Defendant and any Caveators and other parties granted leave to appear at the hearing of the Plaintiff's motion for sale. (7) Pending further order, the Marshal and the Marshal's ship broker are not to disclose the valuation referred to in order 5 to the parties or anyone else apart from the Marshal's delegates. (8) Until further order, and in particular as long as no other party, whether as caveator or otherwise, expresses an interest in the proceeding, further conduct of these orders and the sale of the vessel may be undertaken by approaching Allsop J in chambers upon prior notification of the National Admiralty Registrar and the Marshal. 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 NSD 2497 of 2005 BETWEEN: BROKEN BAY SLIPWAY PTY LTD APPLICANT AND: THE YACHT 'FLYING CLOUD' RESPONDENT JUDGE: ALLSOP J DATE: 27 MARCH 2006 PLACE: SYDNEY REASONS FOR JUDGMENT 1 By notice of motion filed in Court on 6 March 2006 the plaintiff, Broken Bay Slipway Pty Limited, seeks judgment against the defendant, the Yacht 'Flying Cloud', and an order that the defendant yacht be appraised and sold. 2 On 14 December 2005, a writ in rem was filed against 'Flying Cloud' in respect of a claimed outstanding debt of $15,009 as part of the costs, materials and services of refitting. On the same day there was filed an application for an arrest warrant. 3 The claim was a general maritime claim falling under s 4(3) paragraphs (m), (n) and (o), or one or more of them. The relevant person named was Colin Peter Champness. 4 The affidavit to support the arrest, sworn by Mr James Neill, the solicitor for the plaintiff, deposed to the following, based on instructions from the principal of the plaintiff, a Mr David Rowell, and from documents available to Mr Neill: (a) The claim related to an unpaid invoice in respect of labour and materials done on 'Flying Cloud' at the request of Mr Champness, who is the registered owner under the New South Wales registration system administered by NSW Maritime. (b) That work done by the plaintiff arose from an agreement between the plaintiff and Mr Champness to undertake work on a cost, labour and materials basis. (c) The work commenced. Mr Champness went to Hong Kong. Requests were made for payment. Promises were made by Mr Champness as to payment. Ultimately, when no money was received, work was stopped, and an invoice was issued for $15,009 for work done and materials supplied. (d) Small claims proceedings were begun in the Local Court of New South Wales, but service could not be effected overseas. The owner, Mr Champness, now resides, apparently, in Hong Kong. (e) Mr Neill spoke to someone at a firm of solicitors that he knows acts for Mr Champness in another matter, asking whether the firm could obtain instructions to accept service. He also warned that firm of the intention to arrest 'Flying Cloud'. Those solicitors have not received instructions from Mr Champness. 5 An arrest warrant was issued by a Registrar of the Court on 14 December 2005. On the same day an Admiralty Marshal of the Court served the writ and executed the warrant on 'Flying Cloud' by fixing both to the main entry door to the hold of the yacht. I am satisfied that service was effected in accordance with the Admiralty Act 1988 (Cth) and Rules. 6 No appearance has been filed by any person on behalf of or interested in 'Flying Cloud'. 7 The motion for judgment and appraisal and sale was supported by three affidavits initially from Mr Rowell, Mr Neill and Mr Hughes. Mr Hughes is an employee of Mr Neill. 8 Mr Rowell's affidavit is in strictly inadmissible form, but supports the existence of an underlying claim described by Mr Neill in his affidavit supporting the arrest. Mr Rowell deposed to the fact that the sum of $15,009 was a true, fair and correct sum for the work conducted and the materials supplied. 9 Mr Neill's affidavit elaborated upon the correspondence he had with Mr Champness' solicitors in another matter. He also gave evidence (as did Mr Hughes in his affidavit) of Mr Douglas Colman ringing his firm on 20 December 2005 about the arrest. Mr Colman said that he was acting as agent for the solicitors with whom Mr Neill had corresponded. (Mr Colman is a practitioner, as is Mr Neill, who from past matters in respect of the Admiralty Act would be expected to understand and to have a familiarity with arrest cases.) Later, however, Mr Colman said that he no longer had instructions to act on behalf of the solicitors in question. Also, those solicitors ceased to act for Mr Champness in the other proceeding. 10 Mr Neill then served a draft notice of motion and supporting affidavits upon the former solicitors for Mr Champness and also sent the documents to Mr Champness at his last known address according to the solicitors' notice of ceasing to act in the other proceedings, being an email address and an address in Hong Kong. He also sent the documents to the address provided by NSW Maritime as the address of Mr Champness as the apparent owner of 'Flying Cloud'. 11 No appearance has been filed in these proceedings. The defendant remains under arrest. 12 After the last hearing, I considered that an affidavit should be filed dealing with the matters in O 20 R 1(a) of the Federal Court Rules. That is the provision which deals with the moving party or someone on behalf of the moving party on a summary judgment application swearing to a belief that there was no defence to the claim. I also suggested through the national Admiralty Registrar that Mr Neill should put on evidence as to what his costs were and what the interest component was, to avoid further expense in due course in terms of taxation and the like. 13 That affidavit was filed in Court today. It has not been served on the addresses and places previous material was served on. I excuse that. Given the history of this matter, it would seem to be an expense both unnecessary and futile. 14 The material filed today indicates that the interest up to today, using Uniform Civil Procedure Rules in New South Wales as a convenient guide to an appropriate interest rate, is a total of $4,455.82 upon the primary claim of $15,009. There has also been an affidavit setting out the full solicitor/client costs of the solicitors which is a sum of, including appearance today, $33,832.74. A significant body of those costs has been incurred by reason of the time taken by the solicitors to deal with the matter which the defendant and those interested in her have shown no interest in attending to, including the costs of the application before me today and on the last occasion. 15 The question of what costs I should award is not a straightforward one. Indemnity costs are generally only awarded in circumstances where there is sufficient reason to take the matter out of the ordinary course. 16 In my view, this is one such case. There appears to be evidence of a simple commercial debt. The plaintiff was asked to do work on a yacht and did so. There is no suggestion in any of the material, because none has been filed in defence, that the work was done in an unsatisfactory way. The person who requested the debt appears to have gone overseas and taken no interest in affairs which he began by the request to undertake the work. 17 I am satisfied that Mr Champness must know of the claim. 18 It is a small claim, and the legal expenses are larger than the claim. Without the slightest disrespect to Mr Neill, that is an unfortunate illustration of the fact that if people are required to go to their lawyers to vindicate simple commercial debts which ought to be paid, they are placed in a position of requiring skilled services of experienced persons such as Mr Neill. 19 In all the circumstances, given the nature of the debt, given the apparent lack of defence to it, given the entire lack of interest placed in the proceedings by those who own 'Flying Cloud', I think that in a case such as this the plaintiff should not have its legitimate commercial debt eaten away by legitimate costs of enforcing it. 20 I also propose to make orders today dealing with the res. I will keep the orders separate on different order sheets so that there is no doubt about the terms of my orders dealing with the judgment against the defendant and the orders for sale. 21 In relation to the application for summary judgment, I order that judgment be entered for the plaintiff against the defendant in the sum of $19,464.82, which sum includes a sum for interest of $4455.82. 22 I order that the defendant pay the plaintiff's costs in the sum of $33,000. 23 As to the res, the Marshal has, through Mr Grant, the National Admiralty Registrar, provided me and Mr Neill with short minutes of order as to the valuation and sale of 'Flying Cloud'. The orders are directed to the Marshal, and I make orders in accordance with the document containing the seven orders initialled by me, dated today and placed with the papers. 24 One matter which I am prepared to take into account in the indemnity costs is the fact that in all likelihood, though not in large sum, and I have not taken into account specifically but simply by way of enforcement, but this plaintiff, in the attempted recovery of a simple commercial debt, was put to the expense of Local Court proceedings and the recognition that service ex juris was required. There would have been costs involved in that. How much they are is not relevant; they are an indication of the fact that the matter is taken out of the usual ruck of claims by the attitude of the defendant to its commercial responsibility. 25 The orders for judgment is both in default of appearance and for summary judgment. 26 I make these orders: (1) Judgment be entered for the plaintiff against the defendant in the sum of $19,464.82, including interest before judgment of $4455.82. (2) The defendant pay the plaintiff's costs assessed on an indemnity basis of $33,000. 27 I also note that the costs do not include the amounts paid for marshal's fees, which will fall within the marshal's costs and expenses of the sale which I have otherwise ordered, and reimbursement will occur in the ordinary course through that process. 28 I also make orders (1) – (7) suggested by the Marshal with the addition of order (8) as follows: Until further order, and in particular as long as no other party, whether as caveator or otherwise, expresses an interest in the proceeding, further conduct of these orders and the sale of the vessel may be undertaken by approaching me in chambers upon prior notification of the National Admiralty Registrar and Marshal. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 29 March 2006 Solicitor for the Plaintiff: James Neill Solicitor No appearance for the Defendant. Date of Hearing: 27 March 2006 Date of Judgment: 27 March 2006