Daebo International Shipping Co Ltd v The Ship Go Star

Federal Court of Australia|2012-12-20|Before: Mr JA, McKerracher J

INTRODUCTION 1 The respondent vessel Go Star (the Ship) and its owners Go Star Maritime Co SA (the Owners) apply, in effect, for a stay of certain orders made by the Full Court. The Full Court remitted the question for determination by a single judge. This is that determination. The Owners seek an interim stay on orders requiring them to pay out to the appellant (Daebo) certain funds paid into court. The funds to be paid out represent damages awarded by the Full Court against the Owners in favour of Daebo. 2 On 7 November 2012, the Full Court (Keane CJ, Rares and Besanko JJ) (Daebo Shipping Co Ltd v The Ship Go Star [2012] FCAFC 156 (Daebo No 1)) delivered its substantive judgment allowing an appeal from the judgment given by the primary judge in favour of the Ship (Daebo Shipping Co Ltd v The Ship Go Star (2011) 283 ALR 255). In that judgment the primary judge had dismissed the Daebo's claim. 3 On 3 December 2012, the Full Court entered judgment for Daebo in the principal amount of USD361,923.52 (Daebo International Shipping Co Ltd v The Ship Go Star (No 2) [2012] FCAFC 175 (Daebo No 2)). The Court ordered that the principal amount be paid to Daebo from a controlled bank account. The order was formulated so that the money was payable within seven days, unless a judge of the Court made a further order extending the date when the money became payable. 4 The balance of the controlled bank account including principal interest presently stands at AUD613,809.18. The funds in the account are, in substance (although not in an exact amount), the funds paid in by the Owners in order to secure the release of the Ship on its arrest. The history behind that is set out in affidavits filed support of this stay application by the Ship. 5 It is common ground that Daebo has no assets within Australia. On the other hand, it has very substantial assets in the Republic of Korea (Korea). Those assets would well and truly eclipse the amount presently in the account. 6 On 5 December 2012 the Ship and its Owners promptly filed an application for special leave to appeal to the High Court of Australia from the decision of the Full Court. Also filed was a summary of argument and a draft notice of appeal in support of the application for special leave. 7 The principles concerning the grant of a stay pending an application for special leave to the High Court are well established and are discussed below. I have concluded that this is an exceptional case which does warrant the granting of a stay. Both parties are foreign with no assets in Australia. The Owners were brought into the Australian admiralty jurisdiction by reason only of the Ship berthing at Albany in Western Australia and being arrested. If funds presently on account (which the Owners were required to pay into court to secure the Ship's release) are paid out to Daebo and the Owners were to succeed on the ultimate appeal, they would then have to attempt to pursue recovery of those funds in Korea where Daebo has assets. Those features render the situation rare or exceptional and also weigh heavily in consideration of the balance of convenience. Those factors alone would still not be sufficient to warrant exercise of the rare jurisdiction to stay execution unless there were an argument of some merit which can be seen to have a reasonable prospect of serious consideration on a special leave application. That is quite different from predicting that an appeal, if leave were granted, would be likely to succeed.

BACKGROUND 8 At the commencement of 2009, the Ship had been let from the Owners to Breakbulk Marine Services Ltd (BMS). BMS had let the Ship to Bluefield Shipping Co (Bluefield). Bluefield had let the Ship to Daebo and Daebo let the Ship to Nanyuan Shipping Co Ltd (Nanyuan) (see reasons of the primary judge (at [2], [3] and [9]-[18]). 9 As noted by the Full Court in Daebo No 1 (at [18]), each of the four charterparties in the chain contained a standard clause in the form of cl 18 of the New York Produce Exchange Form for a time charter (the ABSATIME NYPE form) which provided: The Owners shall have a lien upon all cargoes and all sub-freight for any amounts due under this Charter, including general average contributions, and the Charterers shall have a lien on the ship for all moneys paid in advance and not earned, and any overpaid hire or excess deposit to be returned at once. Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents which might have priority over the title and interests to the Owners and the vessel. 10 The Ship was delivered to Daebo on 3 January 2009. Daebo delivered the Ship to Nanyuan on the same day in Shanghai. On delivery it had substantial fuel bunkers aboard, including approximately 880 metric tonnes of fuel oil and 79 metric tonnes of diesel oil with a contractual value of some USD238,786.60 (Daebo No 1 (at [110])). The following day, Daebo invoiced Nanyuan for the hire due under the sub-charterparty and for the value of the bunkers at the time of delivery. Between 3 and 8 January 2009, the Ship sailed from Shanghai to Fangcheng to load cargo under instructions from Nanyuan (Daebo No 1 (at [5])). On both 8 and 13 January 2009, Nanyuan sent correspondence to Daebo by which it purported to cancel or withdraw from the sub-charter with Daebo (according to the findings of the primary judge (at [35]-[36] and [39]) and Daebo No 1 (at [7] and [8])). 11 On 15 January 2009, the Owners withdrew the Ship under the terms of the head charterparty. BMS was credited with the value of the bunkers then aboard the Ship. At the time of the withdrawal, the Ship was still in Fangcheng within the territorial waters of the People's Republic of China (China). At that time, the amount of fuel aboard the Ship was diminished as a result of the voyage from Shanghai to Fangcheng and movements at Fangcheng. The amount of fuel aboard the Ship at that stage was about 775 metric tonnes of fuel oil and approximately 51 metric tonnes of diesel oil. 12 On 17 January 2009, the Ship sailed from Fangcheng to Albany in Western Australia under instructions from a new charterer. On arrival at Albany, Daebo demanded that the Owners deliver to them the amount of bunkers aboard the Ship when it was withdrawn from the head charterparty on 15 January 2009. Daebo commenced proceedings claiming firstly that the Owners were liable in conversion or detinue for the value of the bunkers aboard the Ship at the time it was withdrawn on 15 January 2009. This claim failed at first instance and on appeal. 13 Daebo also claimed that the Owners were liable for the tort of procuring Nanyuan to breach its contractual obligations to Daebo under the sub-charterparty to pay hire and to pay for the value of the bunkers transferred to it. The claim for lost bunkers related to the value of the bunkers at the date of delivery of the Ship in Shanghai rather than the value of the bunkers in Fangcheng when the Ship was withdrawn. 14 At first instance, Daebo's claim failed on the basis that the primary judge held that the alleged tort took place in China. There was, however, no such tort known to the law of China. As a result, the primary judge dismissed the tortious claim advanced by Daebo (at [103] and [104]). That decision was reversed on appeal. The Full Court held that the proper law of the tort of interfering with the contractual relations was the law of Singapore rather than the law of China. As the Owners had not adduced evidence of the law of Singapore, Australian law was applied to determine whether there had been any interference in contractual relations (Daebo No 1 (at [52] and [106])). 15 The Full Court concluded that the Owners had interfered in the contractual relations created by the Nanyuan sub-charter by reason of certain factual matters. Specifically, the Full Court relied upon email communications between Mr Nicholas Pantelias, acting on behalf of the Owners, and Ms Jane Chen or Captain Hu on behalf of Nanyuan. That email correspondence occurred on 2, 3, 7 and 9 January 2009. 16 The Full Court also relied upon two telephone conversations between Mr Pantelias and Captain Hu which occurred immediately before the emails which were sent on 3 and 9 January 2009. The primary judge did not reach a finding that anything relevant to the unlawful interference claim was communicated in those conversations (at [26] and [37]). The Owners contend that there was no cross-examination about what occurred during the first telephone call and Mr Pantelias could not recall the other telephone call. The Owners say, therefore, the telephone calls may be dismissed as being of no particular relevance to the unlawful interference claim. 17 However, the emails of 2 and 7 January 2009 sent to Ms Chen, and of 3 and 9 January sent to Captain Hu, were of greater significance. In the first of these, Mr Pantelias said that the Owners communicated to Ms Chen that the Owners: … hereby exercise their rights under the head charter in respect of lien and kindly request you not to proceed with any payment under your sub-charter and you are being put on notice that should you elect to ignore this notice you may be called upon to pay such sums twice over. 18 On the following day, in the email to Captain Hu, Mr Pantelias urged him to read the earlier email again very carefully. Mr Pantelias urged Captain Hu to take his own legal advice before making any decision. He also warned Captain Hu that if Nanyuan proceeded to withdraw from the sub-charterparty with Daebo, they might be in repudiatory breach of that sub-charterparty. Mr Pantelias said: We have simply asked you to withhold payments under your charter. In other words, our last (sic) must be seen as a notice of lien and no more. 19 In the 7 January 2009 email to Ms Chen, Mr Pantelias said that in the circumstances where the head charterers were in arrears in paying hire '… you are kindly requested not to proceed with any payments of any sums due under your charter as you may be called upon to pay twice over such sums'. 20 In the email of 9 January 2009 to Captain Hu, Mr Pantelias said that the notices given in the previous emails of 2 and 7 January 2009 could not be withdrawn as the head charterers were still in arrears. 21 There was no evidence from Nanyuan at trial but the primary judge inferred that Ms Chen was the person who acted upon the email sent by Mr Pantelias as she described herself as a person in charge. The Full Court, however, disagreed and inferred that Captain Hu was the person who acted on the email sent by Mr Pantelias (see Daebo No 1 (at [84]-[86])). The reason for this was that the Full Court considered that in a telephone conversation between Mr Pantelias and Captain Hu, there had been discussion about contractual matters, such that Captain Hu was the person who represented Nanyuan on the serious issue and was Ms Chen's superior. 22 In addition, the Full Court made other factual findings about the emails from Mr Pantelias, concluding that the emails contained a request of Nanyuan not to pay for the bunkers as well as a request not to pay sub-hire. The emails were not therefore an immediate exercise of the lien under cl 18 but rather an indication that the Owners might choose to exercise the lien at some stage in the future and 'were calculated to, and did, induce Nanyuan to breach its obligations to pay hire and for the value of the bunkers on delivery of the Ship due under a Nanyuan sub-charter' (Daebo No 1 (at [83])).

THE TWO SPECIAL LEAVE POINTS TO BE ADVANCED BY THE OWNERS 23 The first special leave question is said to be: Where a corporation is induced to breach its contractual relations, does the place of the wrong for the purposes of determining the lex loci delicti depend only upon the location of the natural individuals who cause the corporation to breach its contract at the time when that individual is induced to breach the contract, or does it depend upon where the breach, in fact, occurs? (emphasis added) 24 The second special leave question the Owners seek to raise is: Does the standard lien on a sub-freight contract in cl 18 of the ABSATIME NYPE Form for a time charterparty of a vessel include a lien over sub-charter hire or not? 25 In other words, the Owners ask, which of the conflicting decisions precisely on this issue, in Care Shipping Corporation v Latin American Shipping Corporation [1983] 1 QB 1005 (The Cebu (No 1)) per Lloyd J or Care Shipping Corporation v Itex Itagrani Export SA [1993] QB 1 (The Cebu (No 2)) per Steyn J, is correct?

THE OWNERS' ARGUMENT 26 A complication to which Daebo points is that the High Court would not be thought to readily interfere with the factual conclusions of the Full Court. The Owners say, however, that the penetration of the factual issue would be very brief. Moreover, if the Full Court were able to reach a contrary factual conclusion to that of the primary judge on the basis of a very small number of mainly email exchanges, there would be no reason why the High Court would not readily carry out a similar exercise. 27 It is contended for the Owners that there was no evidentiary basis for critical findings made by the Full Court about the emails from Mr Pantelias. It is submitted that the emails evidenced an immediate exercise of a lien not a possible intention to exercise the lien at some future time because the first emails stated the Owners 'hereby exercise their rights under the head charter in respect of lien'. The email made it clear the Owners were claiming to be paid all moneys payable under the lien; and further, under cross-examination, the unchallenged evidence of Mr Pantelias was that he only intended to cause Nanyuan not to pay sub-hire as a result of asserting what he believed to be a superior legal right of lien. 28 For the Owners it is argued that the determination of these disputed factual matters simply requires examination of the four short emails and two brief sections of the transcript concerning the cross-examination of Mr Pantelias. 29 However, if all that were wrong, then only the first special leave question would arise. On that question, if the Owners intended to prevent the bunker payments, the only defence is that no unlawful interference claim is available according to the laws of China. 30 Nanyuan's purported rejection of the Ship on 8 January 2009 occurred while it was within the territorial waters of China. The Owners say that, in substance, that is where the breach of the Nanyuan sub-charterparty with Daebo occurred. 31 The Owners rely on Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 (at [75]-[76]), where it was held that, generally, the substantive law for the determination of rights and liabilities in respect of foreign torts is the lex loci delicti. The primary judge considered that the lex loci delicti was China for three reasons. The primary judge considered that Ms Chen was the person who decided to cause Nanyuan to cancel or withdraw from the sub-charter and she was located in China (at [97]-[98]). Hence, applying Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 (at 568), the primary judge considered that the place where the breach of contract was induced was China. However, his Honour also considered two further factors relevant to determining the lex loci delicti. These were that the Ship was in Chinese territorial waters; and that the failure load the Ship at Fangcheng occurred in China (at [100]-[101]). These factors concerned where the breach of the sub-charterparty occurred. The Owners argue that the primary judge's consideration of the location of the breach in determining the lex loci delicti for the tort of unlawfully interfering in contractual relations is consistent with the English Court of Appeal decision in Metall und Rohstoff AG v Donaldson Lufkin & Jenrette Inc [1990] 1 QB 391 (at 448-449). 32 On the other hand, the Full Court determined the lex loci delciti by reference to the place of the inducement, rather than by reference to the place of the breach. 33 The Owners argue that a test which relies only upon the place of inducement in order to determine the lex loci delicti for the tort of interfering with contractual relations has obvious difficulties. For example, it is liable to produce haphazard results in a modern age of instantaneous communications. Captain Hu could have been located in any country in the world, either on a permanent or itinerant basis. If he had been travelling in Iceland when Mr Pantelias emailed him, why should the lex loci deliciti be the law of Iceland? Or if Captain Hu was on the high seas when Mr Pantelias emailed him, what law would apply then? 34 Further, the Owners argue that the test adopted by the Full Court meant that the Court was required to draw inferences based on slender material regarding whether Ms Chen or Captain Hu decided to terminate the charterparty with Daebo. That material, it is said, provided an insecure basis for determining the lex loci delicti. The same problem will arise, if the Full Court's test is adopted, in any case where the person breaking the contract is not called by either party to give evidence. 35 In short, the Owners contend that the proper test for determining the lex loci delicti for the tort of unlawfully interfering with the contractual relations has not yet been stated by the High Court. It is argued that this is an important issue as the tort is not well accepted in other legal systems. The proper test to be applied will be significant for international commerce involving an Australian interest. In the present case, the only Australian connection was that the Ship ultimately sailed into Albany in Western Australia. 36 On the second special leave question, the argument is put by the Owners this way: Clause 18 of each of the charterparties commenced by providing that: 'The Owners shall have a lien upon all cargoes and all sub-freight for any amounts due under this Charter, including general average contributions ...' The word 'lien' ordinarily refers to a right to retain possession of a chattel until payment of a sum due from its owner. By extension, the word may cover a right to property, such as a debt owed for sub-freight or sub-charter hire, which is assigned by the person to whom the debt is owed as security for an obligation, which he owes to the assignee. The debtor, once he has notice of the lien, may not make payment to his creditor if the obligation to the lienor is unpaid; and the lienor may claim the debt in fulfilment of the creditor's obligation to him. A lien creates an assignment by way of a charge, and therefore the vessel owner in a chain of charterparties may enforce the lien against sub-charterers who have assigned their rights as lienors up the chain of charterparties (see The Cebu (No 1) and Western Bulk Shipowning III A/S v Carbofer Maritime Trading APS (The "Western Moscow") [2012] 2 Lloyd's LR 163 (at [37]-[52]). It was accepted in both The Cebu (No 1) (at 1010-1011) and The Cebu (No 2) (at 12) that the term 'sub-freight' had been used in the past to include sub-charter hire. However, these cases diverged over whether 'sub-freight' as used in cl 18 of the ASBATIME NYPE form should be construed as extending to sub-charter hire. In The Cebu (No 1), Lloyd J held that it did (at 1012), whereas in The Cebu (No 2), Steyn J held that it did not (at 15). Lloyd J's view has been followed in Australia in Mutual Export Corporation v Asia Australian Express Ltd (The "Lakatoi Express") (1990) 19 NSWLR 285 (at 300). The point of divergence was the view of Steyn J in The Cebu (No 2) (at 12) that it was 'crystal clear' that there had been a change in the use of the term 'sub-freight' in modern times to exclude sub-charter hire. However, that view, based upon Steyn J's reference to developing English authority, was not supported by evidence of trade usage or custom at trial. The primary judge held that the competing expert evidence on this issue did not assist him to establish any particular trade usage or well established meaning for sub-freight (at [56]). Further, the Full Court observed that US views (relevant to a standard form drafted in New York) were contrary to Steyn J's decision (at [103]). As well, the view of Lloyd J in The Cebu (No 1) is supported by commercial purpose. Unless the lien in clause 18 applies to sub-hire, in a chain of charterparties sub-freight will only be payable by the last sub-charterer to the penultimate sub-charterer. Hence, the lien will prove useless to any party higher in the chain, even though sub-letting of the vessel is expressly contemplated by the standard form. Compare similar observations in The Cebu (No 1) (at 1018). Neither the primary judge, nor the Full Court, resolved the difference between the two Cebu cases (the primary judge's reasons at [108] and Daebo No 1 at [105]). This was due to their conclusions on other points. However, the question raises an important point of construction in respect of a standard form contract. For the reasons set out above, The Cebu (No 1) should be held to have been correctly decided. As a result, the vessel owners' assertion of a lien here, if limited to sub-hire, was the lawful claim of a superior right, and not an unlawful interference with contractual relations. 37 It is argued that the proper construction of cl 18 of the ABSATIME NYPE form concerns a standard form international maritime contract. There is a difference of opinion between two eminent admiralty judges on the construction. While the standard form was amended in 1993 to make it clear that sub-hire was covered by the lien referred to in the amended form, the evidence at trial of the Ship's expert was that the 1981 form is still in use today because people continue to use the form as a matter of habit. The 1981 form was used by all charterers in this case which concerned charterparties entered in the last five years.

PRINCIPLES 38 It is common ground that granting a stay of a judgment pending the hearing of an application for special leave to appeal involves the exercise of an extraordinary jurisdiction. It is necessary to consider four issues: Whether there is a substantial prospect that special leave to appeal will be granted; Whether the respondent has failed to take whatever steps necessary to seek a stay from the Court in which the matter is pending (this does not presently arise); Whether the grant of a stay will cause loss to the appellant (this can be considered together with the final issue); and Where the balance of convenience lies. 39 These propositions are outlined by Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681 (at 685). Nevertheless, they have been developed over a period of time and adapted to the conditions as they apply from time to time and different matters given different weight. Insofar as a change in conditions are concerned, what might have been 'substantial prospects' for special leave in 1986 could well be different in 2013. What might be relevant to the balance of convenience could vary considerably between a company which has no assets in the jurisdiction on the one hand, and a company which has ample assets in the jurisdiction on the other. If a case is in the exceptional category, these two factors have to be given the weight appropriate to the particular circumstances. In my view, the factors need to be considered and weighed together rather than independently. 40 Nevertheless, dealing with those points in the order in which they are raised, all that is required is a broad evaluation of the prospects of success on the first point. There are two points to be made about this issue. The Court is clearly not evaluating the prospects of success of the appeal. Successful applications for special leave in which the ultimate appeal fails are not unknown by any means. The Chief Justice and two judges from the Court's specialist Admiralty Panel have reached a carefully reasoned decision notwithstanding the submissions made by the Owners on this application and to be made on the application for special leave. Be that as it may, the special leave points do apparently raise issues of principle on which the appeal in question, if it is permitted, may be a suitable vehicle for resolution. As in the recent decision of the New South Wales Court of Appeal (Bathurst CJ, Beazley and McColl JJA) in Rinehart v Welker (2012) 285 ALR 191 (at [48]), it is not in all cases that it is an essential prerequisite for the grant of a stay that the Court finds that there are 'substantial prospects of success' on the special leave application. There may be cases, albeit rare, when the other factors relevant to the grant of a stay may be of such significance that a stay should be granted even if the appeal court is unable to reach the view that the application has substantial prospects of success. Plainly, with great respect, this must be so. The question is whether this is such a case. 41 As to the balance of convenience, Rares J in Birdon Pty Ltd v Houben Marine Pty Ltd [2011] FCA 1217 (at [10]) adopted the statement of Ipp J (as his Honour then was) in Hamersley Iron Pty Ltd v Lovell (No 2) (1998) 20 WAR 79 (at 85) where his Honour said: Generally speaking, the Court will only stay proceedings when it is necessary to preserve the subject matter or integrity of the litigation, or where refusal of a stay could create practical difficulties in the relief available to the High Court, or where there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed. 42 These well known principles have been echoed in many cases, including Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Ltd (1986) 160 CLR 220 (at 221-222) and Eastland Technology Australia Pty Ltd v Whisson (2003) 28 WAR 308 (at [9]).

DAEBO'S GROUNDS OF OPPOSITION TO THE APPLICATION 43 Daebo argues that there are no special circumstances demonstrated to justify making an exceptional order. Citing Esco Corporation v PAC Mining Pty Ltd [2008] FCA 1018 (at [19]), it stresses the prima facie assumption that a judgment is correct and that the Court should not deprive a litigant of the fruits of victory by granting a stay. Daebo argues that it is only when the threshold question of exceptional circumstances is established that the other discretionary factors fall to be considered. As to the prospects of success, Daebo emphasises correctly that the High Court will have regard, in accordance with s 35A of the Judiciary Act 1903 (Cth), to the public importance of any question of law, the need to resolve judicial differences of opinion concerning the state of the law, and the interests of the administration of justice. 44 Daebo, however, contends that the stay application fails at the threshold as Daebo has substantial assets, being a company of substantial means in a developed country with a sophisticated legal system. There are reciprocal arrangements in force between Australia and the Republic of Korea as reflected in Daebo No 1 (at [111]) and the Foreign Judgments Act 1991 (Cth) read with the Schedule to the Foreign Judgments Regulation 1992 (Cth). Accordingly, it submits that even if the appeal was successful and Daebo failed to comply with an order for payment of the money to the Ship, that order could be successfully enforced. This is not challenged by the Owners, but the Owners point to the practical difficulty to which they would be put which is well beyond the norm and which they did not bring about themselves, if an appeal were to succeed. I consider there is force in this submission. 45 Further, it cannot be contended, Daebo says, that there substantial prospects that special leave will be granted. To the contrary, Daebo argues that an application for special leave as presently formulated has no prospects of success. In relation to the first proposed ground of appeal, Daebo relies on the fact that the breach by Nanyuan was its failure to pay money for hire and bunkers (Daebo No 1 (at [93] and [96])). Accordingly, the place of payment had nothing to do with China. The Ship was managed in Greece (the primary judge (at [23])). Payment was to be made to Daebo's nominated bank in Korea. In addition, the place where the inducement occurred was a question of fact decided in its favour. It happened in Singapore rather than in China, according to the reasons of the Full Court (at [21], [52] and [83]) and the reasons of the primary judge (at [102]). On this point, however, the evidence is very narrow; if it were to be determined in favour of the Owners which is the very issue under dispute, then there would still (and may be in any event) the interesting legal question to clarify as to the generally appropriate lex loci delicti for the tort. 46 As to the second proposed ground of appeal, this, according to Daebo, does no more than to argue a ground which was described by the Full Court (at [94]) as 'conceptually flawed'. No assertion of a lien over sub-freight was made. In any event, a claim for bunkers is not a claim for payment of sub-freight under any definition of 'sub-freight'. 47 Daebo submits that neither the first proposed ground of appeal nor the second proposed ground of appeal raises a point of law, let alone a point of law of public importance. It adopts the observation of the Full Court (at [83]) that 'the crucial question here is one of fact'. 48 As to the balance of convenience, Daebo argues that it has been out of its money for almost four years. It has judgment in its favour of USD361,923.52 and continuing interest from 3 December 2012 at the daily rate of USD93.59 as determined by the Full Court. Daebo argues that the balance of funds in the secured account is likely to prove inadequate to satisfy Daebo's current entitlements, let alone costs of an application for special leave to appeal. Although the funds are held in Australia in Australian dollars, the judgment is for American dollars. Daebo is, therefore, also exposed to currency fluctuation risk in the value of its security while funds remain in the account. I discount this factor as it was Daebo's choice to issue proceedings for recovery in American dollars. In any event, it is not the role of a court to speculate as to currency fluctuation. 49 Daebo contends that the Owners will not suffer prejudice if a stay is refused. At best, there is no more than a speculative possibility of inconvenience predicated on an unwarranted assumption that Daebo would not comply with an order to repay money in the event the special leave to appeal were granted and the appeal allowed. 50 Moreover, Daebo complains that the Owners have not offered any undertakings to protect Daebo. 51 Daebo also relies on the fact that, at least as at 8 September 2011, the Owners had no assets in Australia. Having regard to the Schedule to the Foreign Judgment Regulations 1992 (Cth), Marshall Islands where the Ship is registered is not a country with which Australia has reciprocal enforcement arrangements. The security represented in the account is the sole source in the jurisdiction from which Daebo might recover its judgment and costs. The funds in the secured account are likely to prove inadequate, Daebo says, to satisfy Daebo's present entitlement to damages, interest and costs, let alone additional costs in relation to the special leave application and any resulting appeal. Daebo argues, accordingly, that the Ship should provide the usual undertakings in line with those previously given by Daebo and discussed above and should be required as a condition of any stay to pay AUD100,000 into the account by way of additional security for Daebo's existing entitlement and further security for Daebo's costs of the special leave application and any resulting appeal.

CONSIDERATION 52 In my view, this application does raise exceptional circumstances. Both of the companies are foreign to the Australian jurisdiction but the Ship was brought into the Australian jurisdiction by reason only of its arrest at Albany in Western Australia and the requirement that in order to release it, the sum be paid into Court. It is common ground that there are no assets at all within this jurisdiction against which the Owners could levy execution against Daebo should they succeed on an appeal to the High Court and should Daebo decline to meet the consequential orders for costs and repayment of the funds paid into Court in lieu of the Ship's arrest. 53 As to the prospects of success, it is necessary to reinforce, once again, that the question is not whether an appeal is likely to succeed but, rather, whether there are reasonable grounds to conclude that an application for leave would be seriously considered. While Daebo submits that there is no question of general importance, on the other hand, the first special leave question is of general application and the second, involving the usage of the charterparty, is reasonably widespread and is likely to affect Australian companies and those who conduct shipping operations to and within Australia. As to the issues concerning lex loci delicti one can see merit in the point of view expressed by the primary judge and, of course, with respect, in the conclusion reached by the Full Court comprising the Chief Justice and two experienced Admiralty judges but that is not to say that the High Court would not entertain the possibility of a special leave application being granted. There is some prospect of that also on the second issue concerning the lien over sub-charter hire, particularly in light of the different approaches taken to the legal question. It is possible, of course that the second question could fall away with the answer to the first. However it is approached, there can be no reasonable suggestion, in my view, that the special leave application is frivolous. It is well constructed and it may be said that even if the appeal were to fail, that the leave application itself does not have insubstantial prospects of being granted for the reasons discussed. 54 As to the balance of convenience, the special leave application would be determined by May 2013. Should it be dismissed, then the sum held in the account, together with accrued interest, would go a long way towards satisfying properly recoverable party and party costs and the portion of costs which were awarded on an indemnity basis. In the big scheme of things, if there were to be a shortfall, which the Owners say is highly improbable in light of the amount which could properly be expected to be recovered on a taxation of costs, then the shortfall would be small. 55 There seems to be no greater reason for suggesting that the Owners would not meet that shortfall than there would be for concluding that Daebo would not meet any award of payment made if the appeal succeeded. But the fact of the matter is that the sum in issue is now here in Australia and earning a good rate of interest. 56 As to loss of use of the money, Daebo is earning 9% per annum on the sum if it succeeds. It is greater than the rate of interest at which Daebo borrows and greater than the rate of interest payable on most bank deposits. If the Owners fail on their application or on their appeal and Daebo recovers the funds together with interest, I am not satisfied that there is any serious prejudice by loss of use of the money, currency fluctuation or lack of further undertaking by the Owners who are seeking only to preserve the funds they have paid into court as a result of Daebo's initiation of proceedings. I accept there may be a small risk that the costs ultimately recoverable by Daebo should it succeed, could total costs and damages beyond the amount in the account. That can and should be accommodated by the Owners contributing a relatively modest amount to the account as a condition of the special indulgence they seek. 57 Further, should circumstances change either party would be free to approach the court for different orders. 58 I consider that with that modification to the relief sought, the balance of convenience is fairly strongly in favour of the Owners and for those reasons would grant the application as sought.

CONCLUSION 59 Resolution of this seemingly simple matter has not been straightforward. I have found the well presented arguments quite finely balanced. However the parties require a speedy answer. 60 On the one hand, stepping back from the legal niceties, the conclusion reached by the Full Court appears at an instinctive level to accord with the merits, let alone the law. 61 On the other, the test I should apply is not the likely outcome of an appeal but the likelihood of the High Court seeing fit to grant special leave particularly to clarify the law on the interesting lex loci delicti point. The Court may well see fit to do so. The facts are not complex. 62 On the rarity of the situation, the only connection at all with Australia, apart from the Courts, is the berthing of the Ship at Albany. I take that into account. I also note that the non-Australian Owners, if the first instance judgment were restored but the funds released, would be forced to pursue a process (about which there is little practical evidence) of seeking to enforce a judgment in Korea to recover the funds they paid into court to achieve release of the Ship. Of course, as Daebo points out, there is no evidence it would not pay. 63 As against all those factors, I recognise that Daebo should not be deprived of the fruits of its victory. Accordingly, taking into account the relatively minor potential risk of some shortfall in funds to cover Daebo's costs should it enjoy further success, and taking into account that resolution of the special leave application should be within a few months time, I will extend the stay but on condition only that the Owners pay into the existing controlled account or a fund to be agreed by the parties a further AUD45,000 within 10 days. 64 Although the original wording of the interlocutory orders sought was for a stay of the operation of order 5 and order 6 in respect of the decision of the Full Court in Daebo No 2, the written and oral submissions did not address the suspension of the costs orders in Order 5 and I am unable to see any good reason why those orders should be suspended nor was that issue delegated by the Full Court. The Owners also sought no order as to costs but, in my view, notwithstanding that the application was opposed unsuccessfully, I consider that the appropriate disposition of costs is that they be in the appeal or the leave application, if no leave is granted. 65 The following orders will be made: 1. Order 6 of the Orders of the Full Court of the Federal Court of Australia in Daebo International Shipping Co Ltd v The Ship Go Star (No 2) [2012] FCAFC 175 be stayed until determination of the respondent's application for special leave to appeal to the High Court of Australia on condition that the respondent pay a further AUD45,000.00 into the existing controlled bank account or a fund to be agreed by the parties within 10 days. 2. Costs of the application be costs in the appeal, if any, and if leave to appeal is refused, costs of this application be costs in the application for special leave to appeal. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Foreign Judgments Regulation 1992(Cth)

Foreign Judgment Regulations 1992(Cth)

Order 6 of the Orders of the Full Court of the Federal Court of Australia in Daebo International Shipping Co Ltd v The Ship Go Star (No 2) [2012] FCAFC 175 be stayed until determination of the respondent's application for special leave to appeal to the High Court of Australia on condition that the respondent pay a further AUD45,000.00 into the existing controlled bank account or a fund to be agreed by the parties within 10 days.
Costs of the application be costs in the appeal, if any, and if leave to appeal is refused, costs of this application be costs in the application for special leave to appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

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