Beluga Shipping GmbH & Co v Headway Shipping Ltd

BETWEEN: BELUGA SHIPPING GMBH & CO KS "BELUGA FANTASTIC"

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 The Suzlon companies have now filed an amended second cross application and a statement of claim which that supports. The amended second cross application seeks to join three other parties as cross defendants. 2 In Beluga Shipping GmbH & Co & Headway Shipping Ltd (No 2) [2008] FCA 1770, I dealt with the Suzlon companies' earlier application to serve the proceedings outside the jurisdiction on their former employee, Mr Bangad, in India. Subsequently, the Suzlon companies have become aware of the existence and activities of two companies which appear to have close links to Mr Bangad, namely Genus Shipping Services Pvt Limited, a company incorporated in India, and SS Oceanwind Pte Limited, a company incorporated in Singapore. The Suzlon companies seek orders joining the latter companies and permitting service on them out of the jurisdiction. 3 Of course, the matters on which the Suzlon companies rely are currently merely in the form of untested allegations before me, but I must proceed on the basis of them in order to assess whether inferences can be drawn which would establish a prima facie case, as explained in Beluga (No 2) [2008] FCA 1770 at [32]. 4 Genus Shipping was incorporated in January 2006. Mr Bangad is its sole shareholder and with his wife, its only directors. 5 In February 2007, Mr Bangad established SS Oceanwind in Singapore. Mr Bangad is alleged to have told his superior in the Suzlon companies, Mr Sridhar, that there was some association between Suzlon and SS Oceanwind, so that Mr Sridhar agreed to become one of the shareholders of SS Oceanwind on the footing that it was a Suzlon company. Another person, Philip Tolath, also became a director, again allegedly under the belief that he was acting on behalf of the Suzlon companies. Mr Tolath has asserted that Mr Bangad asked him in November 2008 to take steps to close down the operations of SS Oceanwind. 6 The statement of claim alleges that Mr Bangad used his position within the Suzlon companies to cause them to make payments, either directly or indirectly, to benefit SS Oceanwind and Genus Shipping on the basis that those payments were being made, so it is alleged, to independent companies at arm's length. 7 It is not clear from the pleading or the material which I have been taken to, exactly how Mr Sridhar was placed in relation to events in which moneys came to be paid to either of those companies, having regard to his own knowledge of his involvement with SS Oceanwind. I have not been taken to any material to show that he was, in fact, aware of any payment being made to SS Oceanwind or the purpose for which it was made. 8 The Suzlon companies wish to join and serve each of SS Oceanwind and Genus Shipping outside the jurisdiction. They want to claim that Mr Bangad made false representations to them, as a result of which they were defrauded of moneys. In particular, the Suzlon companies have sought to establish a prima facie case, for the purposes of O 8 r 2 of the Federal Court Rules, in respect of two individual transactions, one with each of the companies. 9 There would be no utility in approving service out, unless I were satisfied that it was appropriate to allow the joinder of these parties at this stage.

SS Oceanwind 10 MV Margaretha Green was time chartered by a charter party in the NYPE 1946 form by its owners, Beluga, to Suzlon Infrastructure Limited. The charter party was dated 10 March 2006. The term of the charter was one year and there was an option for the charterer to extend it for a further year. 11 Mr Bangad was the person in charge of the Suzlon companies' ship chartering operations and to some extent, it has been necessary for the Suzlon companies to rely on inferences from documents as to precisely what happened in these various transactions. It may well be that there is an explanation other than the one that appears to be reasonable to infer at the moment. However, for the purposes of assessing the question of joinder and service out of jurisdiction I must act on the material before me. 12 There is some evidence that the charter for the MV Margaretha Green was extended by Suzlon Infrastructure. That company had changed its name at some stage and was also known under its other name as Aspen Infrastructure Limited. On 1 May 2007, Beluga sent an invoice to Suzlon Infrastructure for hire of the MV Margaretha Green for the period 31 May 2007 to 16 June 2007. Also, in a letter dated 25 September 2007 on Aspen Infrastructure letterhead, signed by Mr Bangad, he sought that a bank account be opened with Metro Bank NA by Reliance Bulk Carriers LLC: "… to receive and disburse funds as per our express written or documented instructions for Aspen Infrastructure Ltd and/or Suzlon Infrastructure Ltd for the following vessels under our charter: 1. Margaretha Green 2. Beluga Fusion" (emphasis added) 13 In the meantime, on 11 May 2007, SS Oceanwind issued two separate invoices to Suzlon Energy Limited, another one of the Suzlon companies, for the sums of USD 1,004,829.66 and USD 121,258.80 with respect to ocean freight charges for shipping Suzlon wind turbine generating equipment. On 15 May 2007, Mr Bangad signed and approved payment advice forms, on Suzlon Energy Limited stationery, in favour of SS Oceanwind for the payment of each of those sums. 14 I am satisfied that this material establishes that the Suzlon companies have a prima facie case for the purposes of O 8 r 2. In the absence of an explanation by Mr Bangad or others as to how these to payments could be justified, neither payment appears to be for the benefit of, or have any apparent connection with any business of the Suzlon companies. The presence of Mr Sridhar as a shareholder or director of SS Oceanwind indicates that there is a possible weakness in that inference. However, he swore that he believed SS Oceanwind was a company incorporated for the purposes of the Suzlon companies' businesses. 15 The disconformity between the fact that Suzlon Infrastructure was the charterer and Suzlon Energy was being asked to pay SS Oceanwind for freight charges for shipment does not appear, at the moment, to be explained or, indeed, to be intelligible, as a transaction in the ordinary course of the Suzlon companies' business. I am satisfied that this material demonstrates a sufficient prima facie case to warrant joining SS Oceanwind and authorising service on it out of the jurisdiction. 16 I am conscious in doing so that there are a great many other factual allegations underlying what is ultimately now a claim against Mr Bangad in the order of over USD 87 million. Nonetheless, if SS Oceanwind is, in fact, a company he controls, as the Suzlon companies assert, then it is be appropriate to join it at this stage of the proceedings.

Genus Shipping 17 A number of emails before me dated in late March and early May 2008 emanate from Mr Bangad and another employee of the Suzlon companies at the time, a Mr Raam, seeking to direct a shipping broker, Coli Schiffahrt & Transport GmbH & Co KG of Hamburg, Germany to make remittances of substantial sums of money to Genus Shipping. 18 On 29 March 2008, one of Coli Shipping's officers wrote to Messrs Raam and Bangad concerning a payment for the MV Margaretha Green. They noted that Mr Bangad had requested them to remit USD 320,000 as a down payment of freight in accordance with a credit note they had issued to Genus Shipping. While the time of this transaction appears potentially to have been after the end of the second year of the charter party for the MV Margaretha Green, the nature of the email suggests that the credit note is a reimbursement to the person who had paid the freight, of an overpayment in a down payment they had made earlier. There is no apparent explanation on the face of the material before me as to why two employees of Suzlon companies would be asking for freight overpaid by a Suzlon company for the charter of or in respect of the charter of the MV Margaretha Green to be remitted to Mr Bangad's private company. I am satisfied for the purposes of O 8 r 2 that there is a sufficient basis in the material to infer that there is a prima facie case of misconduct by Mr Bangad in relation to this claim. 19 The second group of emails is for the period between 2 and 8 May 2008. In them, Mr Bangad seeks information from Coli Shipping about the remittance he had requested of USD 250,000 from the MV Beluga Fusion account. It is not clear what account is being referred to in the text of the emails, but it is not necessary in my opinion to trace to a particular account that for the purposes of this judgment. 20 I have had regard to the principles for service out of the jurisdiction which I have set out in Beluga (No 2) [2008] FCA 1770. I am satisfied for the same reasons that I gave in respect of the joinder and service of SS Oceanwind, that on the material before me I should join Genus Shipping as a party to the proceedings and order service on it out of the jurisdiction.

Formal matters under Order 8 21 I am satisfied for the purposes of O 8 r 2, item 18, that SS Oceanwind and Genus Shipping are proper and necessary parties in the scheme of the alleged frauds by Mr Bangad, which are already the subject matter of the proceedings: see Beluga (No 2) [2008] FCA 1770 at [38]. The claims arise out of or relate to an agreement for the carriage of goods by ship or the use or hire of ships within the meaning of s 4(3)(f) of the Admiralty Act 1988 (Cth). I am also satisfied for the reasons that I gave in Beluga (No 2) [2008] FCA 1770 at [12]-[13] that the proceedings against SS Oceanwind and Genus Shipping are concerned with the resolution of controversies relating to marine commerce and navigation and are within the Court's admiralty and maritime jurisdiction either directly, under s 4(3)(f), or in the associated jurisdiction conferred by s 12 of the Act. 22 I am satisfied by the affidavit of Amy Joanne Beaumont sworn 5 December 2008 that Singapore is not a party to any convention treaty or other agreement in force between Australia and it, for the service of documents in civil proceedings and that the position, with respect to India, remains the same as that which I found in Beluga (No 2) [2007] FCA 1770 [6], namely that there is, likewise, no relevant convention or other means under O 8 r 3(3), for the service of the proceedings in India. The proceedings may thus be served in both Singapore and India by private agents, which is what the Suzlon companies seek to do. 23 These proceedings have been set down for hearing, provisionally, commencing on 2 February 2009. I will direct that the Suzlon companies may serve the amended second cross application and second cross claim out of the jurisdiction.

Confirmation of service on Mr Bangad 24 The Suzlon companies have sought an order for confirmation of service on Mr Bangad under O 7 r 10. That provides that: "Where for any reason it is impractical to serve a document in the manner set out in the Rules, but steps have been taken to bring the document to the notice of the person to be served, the Court may order that the document be taken to have been served on that person on a date specified in the order." 25 Following my orders made on 13 November 2008, Michael Blaxell, a solicitor of Blaxell Watson in Rushcutters Bay, close to Sydney, telephoned Ms Beaumont (who is a solicitor acting for the Suzlon companies). He said to her that he was calling in relation to the Headway matter, and that he may have instructions to act on behalf of Mr Bangad. He said that he would like copies of the court documents so that he could be up to speed when he was instructed. Shortly after that, later that day, Ms Beaumont rang Mr Blaxell back and asked whether he could provide something in writing to set out the nature of his instructions and the documents he requested. He responded that he would when he received instructions from his client. 26 On 25 November 2008, the day before the matter was next returnable before me, Mr Blaxell wrote to Ms Beaumont saying, among other things, that: "We have had a request from a third party to make inquiries in relation to this matter from Mr Bangad's perspective, but we do not hold any formal instructions from Mr Bangad." 27 Mr Blaxell referred to looking at the court's on-line database, noting that he had ascertained the orders joining Mr Bangad and that, he said, prompted the call. He said that that was done so that, if his firm were instructed to act for Mr Bangad in the proceedings, they would already have copies of the relevant documentation and an understanding of the issues at play. Mr Blaxell reiterated in the facsimile transmission that his firm had no instructions to accept service of any court documentation on behalf of Mr Bangad and that it was his understanding that no court documentation had been served on or received by Mr Bangad. 28 The context for the latter remark is that pursuant to my orders on 14 November 2008, Swapnil Abhiyankar, an advocate practising in Pune, India, attended at the residence of Mr Bangad, together with another employee of the Suzlon companies, who may have been able to assist in identifying Mr Bangad. After waiting some time, Mr Abhiyankar pasted a letter of service on Mr Bangad's house door. The next day he returned to the same residence, but no one opened the door. He then sent by speed post to three addresses, including the address of the residence, the documents which I had ordered on 13 November 2008 be served on Mr Bangad. 29 Again on 19 November 2008, the same day that Mr Blaxell made his first telephone call to Ms Beaumont, Mr Abhiyankar attended at Mr Bangad's flat to serve the documents in their original, rather than scanned, form, having only before had scanned copies of the documents. On that occasion a woman answered the door and introduced herself as Mr Bangad's wife. When he told her the purpose of the visit, she informed him that Mr Bangad was not available and refused to accept the documents. 30 Subsequently, Mr Abhiyankar received back from the Indian postal authorities the documents he had posted on 15 November 2008 with an endorsement "Not Accepted." Mr Abhiyankar served further documents on 1 December 2008 including my orders of 26 November 2008 and a number of other affidavits and pleadings in their scanned version at Mr Bangad's home. Mr Abhiyankar said that when he reached Mr Bangad's flat on 1 December, he repeatedly rang the doorbell but nobody answered, although he could hear voices inside the flat. After waiting for some time he said that he "kept the packet containing aforesaid Documents outside the Flat and took a photo of the same from the camera in my mobile phone". I think the sense of the word "kept" in that paragraph is that he left the documents there, as is confirmed by what the photograph depicts. I find that he did leave the documents there. Also on 1 December 2008, Mr Abhiyankar sent an email of the scanned version of the documents that he attempted to serve on that occasion, to the email address for Mr Bangad at Yahoo, India. He took that address from an email Mr Bangad had sent on 3 November 2008 in connection with his instructions to a Singaporean agent and Mr Tolath to close up SS Oceanwind. 31 I am satisfied by the evidence that Mr Bangad is aware of these proceedings and of the nature of the claims made against him. I am also satisfied that he has been able to learn of the material I ordered be served on him in my orders of 13 November 2008 from Mr Blaxell. 32 The evidence satisfies me that Mr Bangad has deliberately avoided service with full knowledge of the proceedings and the nature in general of the claims sought to be made against him by the Suzlon companies. In my opinion, he deliberately caused the documents sent to him by speed post to be returned so as to avoid in some way consciously receiving the documents. Moreover, by the time he wrote his letter of 25 November 2008, Mr Blaxell understood that Mr Bangad had not been served with the court documents. Mr Bangad is the only logical source of how Mr Blaxell could have written of that understanding. I am satisfied that by that time however, Mr Bangad was fully aware of the proceedings and chose to avoid service. 33 In my opinion it has been impractical to serve Mr Bangad for the purposes of O 7 r 10 because he will not respond or appoint anyone to accept service, albeit that he is fully able to communicate with a solicitor in Australia for the purposes of enabling him to be in the position, should he so choose, of taking steps in the proceedings. I note that when the Suzlon companies' solicitors sought to deliver to Mr Blaxell earlier this week a set of up-to-date materials, he returned them immediately afterwards, saying that he had not been authorised to accept service. While that is obviously reflective of Mr Blaxell's instructions, I am satisfied that Mr Bangad knows about these proceedings and will act at his own risk in ignoring them. 34 I propose to make the order confirming service as sought. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate: Dated: 23 December 2008 Counsel for the Second Cross-Claimants: Mr AW Street SC

Solicitor for the Second Cross-Claimants: HWL Ebsworth Lawyers