Best v The Owner of the Ship 'Glenelg' (No. 1) [1982] VULawRp 3; [1980-1994] Van LR 27 (3 June 1982)

[1980-1994] Van LR 27

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU

Civil Case No. 27/80, 28/80, 29/80

BETWEEN:

ADRIAN BEST, JAMES BEST, ERNEST SYDNEY BEST
Plaintiffs

AND:

THE OWNER OF THE SHIP GLENELG
Defendant

[No. 1]

Coram: Mr. J.R. Coakley, Acting Judge.

Counsel: Mr. D. Hudson for Applicants.
Mr. G. Vasaris for Respondent.
Miss J. Walsh, Chief Registrar.

Held in Chambers.

JUDGMENT

[INJUNCTION - Interlocutory Relief - ADMIRALTY - PLEADING - Application to strike out]

There are two applications before me. The first is brought by Mr. Hudson on behalf of the three plaintiffs whose actions have been consolidated. He seeks an interlocutory injunction whereby the defendant be restrained from dealing with or disposing of any of its assets without the consent of the plaintiffs, or this Court, until any judgment given against the defendant has been fully satisfied. When the application first came before the Court on the 21st of May 1982, an order was made on an interim basis to allow the defendant to file an affidavit in reply and until such time as counsel could be heard and the matters determined. The other application is made by Mr. Vasaris, for the defendant; and he seeks an order striking out the writs on the ground that they do not disclose any reasonable cause of action.

Each action was commenced on the 14th of August 1980 by the issue of a writ of summons in an action in rem under O.75 r.3 of the Rules of the Supreme Court in England, which are applied to Admiralty matters by virtue of O.31 of the Western Pacific High Court (Civil Procedure) Rules 1964. At the time of issue, a request for the arrest of the ship "Glenelg" was filed and a warrant of arrest was executed by the Admiralty Marshal. The particulars of claim are similar in each case, being for wages whilst the plaintiff was a member of the crew of the ship and the only variation relates to the heads and amounts of claim and the period of engagement.

An appearance was entered by the defendant on the 10th of September 1980 and in due course a defence was filed which is, in essence, a denial of any contract of employment and pleading that other named parties were the proper defendants.

The next step taken was a summons for directions which was heard on the 12th of February 1982, but in the interim two events had intervened. The ship had not been released from arrest but as the warrant had not been renewed, it automatically expired on the 14th of August 1981, under O.75 r.10. Then or about the 19th of December 1981, the ship was unlawfully removed from its anchorage in Port Vila harbour and it is common ground that it was subsequently wrecked on a reef in New Caledonia. Attempts to salvage the vessel were not successful and on the 1st of April 1982 it was sold for the nominal sum of $A10.00.

So much for the background to the applications. I must now deal with the law which counsel concede is not without difficulty.

The plaintiffs seek what is commonly known as a Mareva injunction and it is of interest to find that this type of injunction was first granted in an earlier case than Mareva Naviera S.A. v International Bulkcarriers S.A. (1975) 2 Lloyd's Rep. 509. The case I am referring to is Nipon Yusen v Karageorgis (1975) 3 All E.R. 282, in which Lord Denning, MR said in giving the judgment of the Court at p. 283,

"We are told that an injunction of this kind has never been done before. It has never been the practice of the English Courts to seize assets of a defendant in advance of judgment, or to restrain the disposal of them."

That was a charter party hire case and it is to be noted that the application was made ex parte and attempts to trace the two defendants to whom the three ships had been let on charter were not successful. Geoffrey Lane, L.J. (as he then was), in concurring, said,

"In the circumstances which exist in this case there is no reason why the Court should not assist a litigant who is in danger of losing money to which he is admittedly entitled."

The next case which is relevant is Rasu Maritama v Pertambangan (1977) 3 All E.R. 324, which was an appeal from an order of Kerr, J. discharging an interlocutory injunction which had been granted to the plaintiffs ex parte at an earlier hearing. In the course of his judgment Kerr, J said, (and it is quoted by Lord Denning MR at p. 333):

"A plaintiff has what appears to be an indisputable claim against a defendant resident outside the jurisdiction, but with assets within the jurisdiction which he could easily remove and which the Court is satisfied are liable to be removed unless an injunction is granted. The plaintiff is then in the following difficulty. First, he needs leave to serve the defendant outside the jurisdiction and the defendant is then given time to enter an appearance from the date when he is served, all of which usually takes several weeks or even months. Secondly, it is only then that the plaintiff can apply for summary judgment under RSC. Ord. 14 with a view to levying execution on the defendant's assets here. Thirdly, however, on being appraised of the proceedings, the defendant is liable to remove his assets, thereby precluding the plaintiff in advance from enjoying the fruits of a judgment which appears irresistible on the evidence before the Court. The defendant can then largely ignore the plaintiff's claim in the Courts of this country and snap his fingers at any judgment which may be given against him. It has always been my understanding that the purpose and scope of the exercise of this jurisdiction is to deal with cases of this nature. To exercise it on an ex parte basis in such cases presents little danger or inconvenience to the defendant. He is at liberty to apply to have the injunction discharged at any time on short notice."

Lord Denning MR commenting on these observations in the penultimate paragraph of his judgment at p. 336 said,

"In all the circumstances, I think this is not a case in which an injunction should be granted to restrain the defendants in the use or disposal of the goods at Liverpool. I agree with the Judge in the result and with much of what he said in his judgment. But I would not limit the jurisdictionin the way he did. I think the Courts have a discretion, in advance of judgment, to issue an injunction to restrain the removal of assets, whether the defendant is within the jurisdiction or outside it. This discretion should not be fettered by rigid rules."

The criteria and the circumstances in which the discretion of the Court should be exercised were spelt out by Lord Denning, MR. in Third Chandris Shipping v Unimarine (1979) 2 All E.R. 972. Mustill, J. who had granted ex parte injunctions at first instance and later had dismissed an application to discharge them, said at p. 976,

"Applications to discharge the injunctions are very rare, whether because the order is not regarded as producing substantial injustice or because it is cheap and less trouble to lift the injunction by providing bank guarantees rather than by proceedings in Court, is impossible to say. A very simple procedure has now been evolved. The plaintiff's affidavit for an application usually sets out the nature of the claim and states that the defendant is abroad and asserts that, if the plaintiff is successful in the action, the judgment will be unsatisfied if the injunction is refused."

When the case went on appeal, Lord Denning, MR. said at p. 984 that the test to be applied in the exercise of a Court's discretion in granting or refusing an injunction was whether or not a plaintiff can show that he has "a good arguable case." He then proceeded to lay down guidelines, one of which was that the plaintiff should give some grounds for believing that there was a risk of the assets being removed before judgment.

Finally, Mr. Hudson relies on Iraqi Ministry of Defence v Arcepey [1980] 1 All ER 480 as authority for saying that a Mareva injunction can be granted in an action in personam. This is undoubtedly so, and I would venture to add that Chartered Bank v Daklonche [1980] 1 All ER 204 is a much stronger case on the point because there one of the defendants, who was within the jurisdiction, applied to have the ex parte injunction discharged. She was successful in the Commercial Court, but the injunction was restored when the case was taken on appeal.

I shall revert to the plaintiffs' application for an injunction later, but it will be convenient at this stage to deal with the application by the defendant to strike out the writs. The point is, relatively speaking, a short one and the question is this: When a plaintiff proceeds in an action in rem, can he at the same time maintain an action in personam?

Mr. Hudson relies on a case of some antiquity, namely The Dupleix (1912) p. 8, the headnote to which reads,

"The plaintiffs, owners of a British ship, commenced an action in rem and caused a vessel within the jurisdiction to be arrested in respect of a collision on the high seas. The owners of the vessel arrested were foreigners domiciled abroad. They appeared and obtained the release of their vessel by giving bail to the value of ship and freight. They then defended the action, denying their liability and counterclaiming for the damage they had sustained by reason of the collision. The foreign vessel was found alone to blame and judgment was pronounced in the usual form condemning the defendants and their bail in the amount of the damage sustained by the plaintiffs, together with the costs of the claim and counter-claim.

The defendants moved to vary the decree by limiting it to the value of their vessel, freight and costs:

Held by the President (Sir Samuel Evans), following the principles laid down in the course of the judgment in The Dictator (1892) p. 304, approved by the Court of Appeal in The Gemma (1899) p. 285 that (apart from any application for a statutory limitation of liability) the appearance of the defendants being voluntary and their proceedings in the action amounting to a submission to the jurisdiction of the Court, they were personally liable to the full extent of the plaintiff's proved claim."

But there are two passages in the President's judgment which support Mr. Vasaris' contention that once bail is given and the vessel released, the nature of the res is entirely altered. First, at p. 14 in which he said,

"Moreover upon general principles applicable to the effect of entering appearance. I think that where the defendants appear, as in this case, not only to obtain the release of the ship which happens to have been arrested, upon giving sufficient bail, but also to contest their liability and to endeavour to exonerate themselves from any claim for damages and further to put forward, by counter-claim and try to establish a claim for damages against the plaintiffs, they submit themselves to the jurisdiction of the Court, and thereby become liable personally for the full damages."

The second passage appears at the top of p. 15 of the report, "In my opinion, an appearance not merely for the purpose of obtaining a release of property arrested, but also for the purpose of attempting to obtain a judgment freeing defendants from all liability for a collision and for the further purpose of trying to recover a judgment upon a counter-claim - which is equivalent to a cross-action - is not an appearance "only to save property in the hands of a foreign tribunal" nor an "appearance under duress". In these proceedings the plaintiffs' vessel was not arrested to answer the counter-claim. If the plaintiffs had failed in their action and their vessel had been found solely to blame, the defendants' would have been entitled to recover the whole of their damages against the plaintiffs personally. It would be a strange inequality, in the event of the defendants' failing, if the plaintiffs could only recover such part of their loss as the res might be sufficient to meet". It will be apparent from these extracts that the facts in The Dupleix are entirely different to the facts in the present proceedings.

Mr. Hudson's second submission was a reference to para 310 of Halsbury's Laws of England, 4th Edn. in Volume 1, the relevant part of which reads, "An action in rem is an action against the ship itself, but the view that if the owners of the vessel do not enter an appearance to the suit in order to defend their property no personal liability can be established against them has recently been questioned. It has been stated that, if the defendant enters an appearance, an action in rem becomes, or continues also as, an action in personam; but the Admiralty jurisdiction of the High Court may now in all cases be invoked by an action in personam, although this is subject to certain restrictions in the case of collision and similar cases, except where the defendant submits or agrees to submit to the jurisdiction of the Court."

There are four footnotes to these two sentences but the only one which is in any way material is the following:

"The Gemma (1899) p. 285 at 292 C.A. per A.L. Smith, L.J.

CF. The Broadmayne (1916) p. 64 at 77 C.A. where Bankes L.J. said that the true view is that the action proceeds only as if it were an action in personam whilst still retaining the characteristics of an action in rem.

See also The Banco (1971) p. 137 at 151, [1971] 1 All ER 524, (1971) 1 Lloyd's Rep 49 at 51 C.A.

It has not yet been decided whether or not, in an action in rem where the defendant has not appeared, the plaintiff claiming equitable relief may enforce an order for specific performance or granting an injunction : See The Conoco Britainia (1972) 2 All E.R. 238 at 244, 245."

The reference to The Banco is once again the observations of Lord Denning MR at p. 531, in which he said,

"I ought to pause here to add a word so as to avoid confusion. If the defendant enters an appearance, the action in rem proceeds just as an action in personam. If judgment is entered against the defendant, it can be executed against any of his property within the jurisdiction, be it his other ships or any other goods. A writ of fieri facias or other writ of execution, can be issued against his property but only after judgment has been obtained : See The Dictator, The Gemmaand The Dupleix.

If no appearance is entered, however, the action remains as it began, an action in rem only, operating against only the ship arrested. If judgment is entered in default of appearance, it can be enforced by sale of the ship, but not against the defendant personally."

Brandon J. used similar phraseology in The Conoco Britainia at p. 5:

"It has been held in cases where the claim has been for money, that where the value of the res is insufficient to satisfy a money judgment given in an action in rem, the plaintiff may execute against the defendant who has opposed in the ordinary way, for instance, by writ of fieri facias, in order to recover the balance. The basis on which it has been so held appears to be that, when a defendant enters an appearance to an action in rem, the action continues then on as an action in personam. The decisions on the point are The Dictator and The Gemma, and the authority of those decisions was recently recognised by the Court of Appeal in The Banco."

On first impression, the authorities cited above, on which the passage in Halsbury is obviously based, would appear to support Mr. Hudson's submission. But they do not accord with the Supreme Court practice as will be apparent from the following commentary under O.75 r.1 (Reg. 75/1/5).

"The rules make no express provision for combining on one writ an action in rem and an action in personam and doing so is, it seems, not in strict accordance with O.6 r.1 and O.75 r.3. Nevertheless the issue of such writs, often referred to as hybrid writs, has in practice been allowed in the Registry for some years. This practice has not been challenged but nor has it been judicially approved. It has nothing to recommend it except for the saving of costs achieved by issuing one writ instead of two. For the form of such a writ see British Shipping Laws, Vol 6 and Atkin's Encyclopaedia of Court Forms in Civil Proceedings. Suffice it is to add that the use of hybrid writs in Admiralty Proceedings is no longer acceptable. A Practice Direction, which appears in (1979) 2 All E.R. 155, which came into effect on the 2nd of April 1979 requires that if a plaintiff brings an action both in rem and in personam, separate writs must issue in the prescribed form."

It follows that the only proceedings before the Court are the actions in rem because an action in personam must be specifically pleaded. Mr. Vasaris contends that this Court is without jurisdiction as there is no res; the ship has literally ceased to exist and all that remains in the defendant's hands is a sum of $A10.00 representing the proceeds of sale; there has been no application that this nominal amount should be attached.

In fact it is clear from the affidavit in support of the plaintiffs' application that security is sought on the proceeds which may be payable under an insurance claim amounting to $A250,000.00, but there appears to be no authority to show that such monies replace the res and consequently attachment would only be applicable in an action in personam.

Mr. Vasaris further contended that the writs are defective as they do not comply with section 3 (4) of the Administration of Justice Act, 1956 on the grounds set out in paragraph 17 of the defendant's affidavit which it is unnecessary to restate here. Mr. Hudson maintained that the claim was not founded on the right conferred by statute but on the maritime lien which attaches to a ship for seamen's wages. I think that Mr. Hudson is right when he says that there are alternative forms of procedure in admiralty proceedings; Halsbury at paragraph 338 states that there is a maritime lien in respect of seamen's wages.

The substantial question I have to decide and it is the main point taken by Mr. Vasaris is this:

Once the res is outside the jurisdiction, can an action in rem be maintained? The answer is to be found in Halsbury at paragraph 305, which goes into the origin of actions in rem and from which I quote the following extract,

"... the Admiralty Court succeeded in establishing a right to arrest property which was the subject matter of a dispute and to enforce it's judgments against the property so arrested, on the theory that a maritime lien to the extent of the claim attached to the property from the moment of the creations of such claim. Such an action became known as an action in rem. The right to enforce a maritime lien by an action was confined to the property by which the damage was caused or in relation to which the claim arose and was enforceable against the property in the hands of an innocent purchaser."

In other words, any relief resulting from the action was restricted to the res, which was the subject matter of the proceedings.

This finding effectively disposes of the actions; the defendant's application succeeds and the writs must go. The plaintiffs' application does not arise in these circumstances but nevertheless I propose to deal with it briefly on the merits.

In paragraph 7 of the plaintiffs' affidavit it is stated,

"Glenelg Limited is an exempted company and I am not aware whether it has any other assets available with which it could satisfy any judgment given against it in this action."

There is nothing in the affidavit to show that the defendant, which is incorporated here but prohibited from carrying on business in this country, might remove it's assets outside the jurisdiction of the Court. I appreciate, of course, that the assets of the defendant, save for the insurance monies, are not known to the plaintiffs because it has the protection of an exempted company but on a perusal of all the papers which are before me, the impression is that the bringing of the actions in this jurisdiction was somewhat speculative. There is the crew roll, put in by Mr. Hudson, which names fourteen persons as at the 8th of November 1975; there is the Contract of Sale of the ship dated the 16th of April 1982, clause 7A of which indemnifies the purchaser "against all suits pending or proceedings pending in the Supreme Court of Queensland and the Supreme Court of the Republic of Vanuatu."

It would be reasonable to infer that other crew members have brought their actions in Australia. But it is at least understandable why the plaintiffs were advised to bring proceedings here because of the frustration which must have been encountered elsewhere. There was a tangible asset which could be arrested and the possibility that once the vessel was immobilised, the claims might have been settled in order to secure the release of the ship. That, of course, did not happen, and these proceedings have resulted in failure. But if the actions were still alive and on the question whether the interim injunction should be continued, I am emphatically of the view that this is not a case where in the exercise of my discretion such an order should have been made.

Before I close I must add this. It is with some regret that I have reached this decision because of the consequences which flow from it to the plaintiffs. However, the award of costs to the defendant may turn out to be illusionary, as the cases which have been cited show the difficulties in enforcing a judgment or order outside the jurisdiction. There is also the consolation, as Mr. Vasaris pointed out, that they can still proceed against the defendant in an action in personam, if there is merit in their claims. Nevertheless, the whole sorry story indicates some unscrupulous dealing, but in making that remark I totally exonerate the defendant; there is not a scintilla of mala fides against it. But it does seem a grave injustice that ordinary seamen are denied the fruits of their labour; I am assuming that the claims are genuine and someone is responsible for paying their wages. The facts disclosed in these proceedings border on the verge of criminality but that is a matter for the proper authorities in Australia.

In the result, there will be an order striking out the three writs and the interim injunction granted on the 21st of May 1982, is discharged. Costs of the whole proceedings in each action to the defendant.

3 June 1982

MR M.J.R COAKLEY
ACTING JUDGE