ASD Marine Proprietary Ltd v Pacific Navigation Ltd [1992] FijiLawRp 23; [1992] 38 FLR 4 (24 January 1992)

[1992] 38 FLR 4

HIGH COURT OF FIJI

Admiralty Jurisdiction

1. ASD MARINE PROPRIETARY LIMITED

2. KELVIN DIESELS LIMITED

v

1. PACIFIC NAVIGATION LIMITED

2. SEA MANAGEMENT CORPORATION (IN RECEIVERSHIP) PROPRIETARY LIMITED

3. SHIP NO. 91

4. ROBERT JOHN DUFF

Byrne J

24 January 1992

Admiralty- action in rem- warrant for arrest of a vessel- claim in respect of its construction- whether gratuitous promisee has cause of action- how affected by prior debenture.

The 2nd Defendant owned the 3rd Defendant which was being constructed on behalf of the 1st defendant pursuant to a contract between the 1st and 2nd Defendants and to a design prepared by the 1st Plaintiff payment wherefor had been guaranteed by the 1st Defendant. Payment for the design not having been made the 1st Plaintiff commenced proceedings in rem and obtained the 3rd Defendant's arrest. On application made by the 4th Defendant debenture holder it was HELD: the 1st Plaintiff had no cause of action against the 3rd defendant and the warrant would therefore be discharged.

Cases cited:

Lee v Lees Air Farming Limited [1960] 3 All ER 420
Salomon v Salomon & Company Limited [1897] AC 22

Application to set aside warrant of arrest of a vessel.

P. McDonnell for the Plaintiffs
J. G. Singh for the Defendants

Byrne J:

The First Plaintiff is a duly incorporated company having its registered office at Southport, Queensland, Australia. The Second Plaintiff is a duly incorporated company having its registered office at Glasgow. Scotland, United Kingdom.

On the 20th of September 1990 the Plaintiffs issued a Writ against the first three Defendants claiming among other things the sum of A$130,000.00 on behalf of the First Plaintiff for design fees incurred by the First Plaintiff in designing the ship referred to as the Third Defendant, namely Ship No. 91 and on behalf of the Second Plaintiff the sum of £42,372.00 for the alleged supply by the Second Plaintiff of two marine diesel engines and ancillary equipment for installation in Ship No. 91 together with interest at the rate equivalent to the current National Westminster Bank rate plus two percent (2%) provided for in an Agreement between the Second Plaintiff and the First Defendant.

The other facts at present appear to be as follows:

By an Agreement dated the 18th day of April 1989, the First Defendant agreed with the Fiji Government Shipyard for the construction of a 38 metre catamaran known as Ship No. 91 for and on behalf of the Second Defendant.

By a letter dated the 19th of April 1989 the Second Defendant purported to guarantee the payment to the First Plaintiff of the design fees incurred by the First Plaintiff in designing Ship No. 91 on behalf of Pacific Navigation Limited the First Defendant in this Action.

Earlier on 22nd of March 1988 the Second Defendant executed in favour of National Australia Bank Limited of 500 Bourke Street, Melbourne, Victoria, ("the Bank") a debenture ("the debenture") mortgaging to the Bank all the Second Defendant's property, present and future, as security for banking accommodation provided to the Second Defendant by the Bank which debenture was on 9th of February 1990 entered as a mortgage in the Register of Shipping maintained by the Australian Registrar of Ships.

There is still alleged to be secured to the bank by the debenture the sum of not less than $2m Australian currency.

On 24th of November 1989 the Bank appointed one Robert John Duff one of the partners in Deloitte Ross Tohmatsu, Chartered Accountants, of Brisbane, Queensland, Receiver of the property of the Second Defendant which included Ship No. 91.

On or about the 28th of February 1990 the First Plaintiff delivered to the First Defendant an invoice for design work undertaken by the First Plaintiff concerning Ship No. 91 in the amount of $130,000.00 which I have previously mentioned. Since that date the First Defendant has not paid any of the money claimed by either the First or Second Plaintiff. However in the proceedings currently before me the Second Plaintiff has taken no part and I was informed by its counsel Mr. McDonnell that he had no instructions for these interlocutory proceedings on behalf of the Second Defendant.

It is not in issue that Ship No. 91 was constructed at the Fiji Government Shipyards. Walu Bay, pursuant to a contract between the First Defendant as Builder and the Second Defendant as Owner. By virtue of such contract the First Defendant sub-contracted construction to the Government Shipyards pursuant to a contract between the First Defendant and the Marine Department of the Government of Fiji.

Under clause 10.4 of the contract between the First and Second Defendants the property in Ship No. 91 was from commencement of construction and at all times, thereafter in the Second Defendant. It is also not disputed that the Second Defendant did not contract with any person other than the First Defendant and in particular did not contract with either of the Plaintiffs.

On or about the 10th of April 1991 Robert John Duff was added as the Fourth Defendant and on that day an affidavit was sworn and filed on Mr. Duffs behalf by Robert Anderson Smith of Suva a Consultant exhibiting a copy of the contract between the First and Second Defendants and the construction contract between the Marine Department of the Government of Fiji and Pacific Navigation Limited the First Defendant.

On the same day a Notice of Motion to set aside the Writ and discharge a Warrant of Arrest issued by this Court was issued and is presently before me. The Notice of Motion seeks an order for dismissal of the Writ as against Ship No. 91 on the grounds that the First Defendant Pacific Navigation is not and never has been the beneficial owner of all the shares in Ship No. 91 and the Second Defendant, Sea Management Corporation (In Receivership) Proprietary Limited is not and never has been the person who would be liable on the claim brought herein in an action in personam and that accordingly an action in rem does not lie. The Motion also seeks an order that the Warrant of Arrest be discharged on the grounds that it never ought to have been issued. The Motion was issued on behalf of the Fourth Defendant.