The Sanko Steamship Co Ltd v Australia Gloria Energy Group Pty Ltd

Federal Court of Australia|2012-07-20|Before: Mr J, Rares J

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 This is an application for default judgment. The plaintiff, The Sanko Steamship Company Ltd (Sanko), began these proceedings on 22 June 2012 by an originating application and statement of claim and proceeded on that day to obtain freezing orders pursuant to an interlocutory application to that effect. On 27 June 2012, I granted Sanko leave to amend its statement of claim, and continued the freezing orders to today. 2 Sanko has experienced a change in circumstances by reason of two matters and now no longer seeks to keep the freezing orders on foot. First, only a small amount, of about $4,000, the subject of the freezing orders, has been located in the only place where an asset of the defendant, Australia Gloria Energy Pty Ltd (AGE), has been found in accounts in the Sydney Branch of the Bank of China. Secondly, Sanko itself has had a change of circumstances since applying for the freezing orders. Sanko has ceased to negotiate with its major creditors to arrive at a restructuring of its debt. Instead, it has applied, so I have been informed, in Japan under the equivalent of Chapter 11 of the United States Bankruptcy Code, for relief from its creditors. Although its ships still sail to Australia, Sanko no longer wishes to continue the undertakings to support the freezing orders and expose itself to that liability. Rather, it seeks to be able to enforce an order for judgment against the proceeds currently held in AGE's bank accounts directly and otherwise to pursue its judgment, if and to the extent it is able to locate assets of AGE for that purpose.

The evidence 4 Sanko served on AGE at its registered office the application, freezing orders, statement of claim and evidence in support of the freezing orders filed or relied on in court on 22 June 2012. Subsequently, Sanko served the amended statement of claim and orders made on 27 June 2012 on AGE at its registered office on 29 June 2012. The orders of 27 June 2012 provided that if AGE had not filed an appearance on or before 13 July 2012, Sanko had leave to file and serve on AGE by 16 July 2012 an interlocutory application for default judgment, together with all evidence in support, to be made returnable today. Sanko has done that, save to serve the affidavit of Stefan Burma, sworn 20 July 2012. That affidavit proves service on AGE at its registered office at 16 July 2012 of the interlocutory application, and effectively all the documents, apart from the affidavit of 20 July 2012, that Sanko had previously filed or obtained as orders from the Court. On 2 July 2012, Sanko also served by email four persons who had been identified as associated with AGE, namely, Louis Shearer, said to be the general operation manager at Intra Mining, a coal mining distribution company; Anthony Smythe of Intra Mining; Sally Zou, who was described as the chief executive officer of AGE and based in China and John Li, who was described as pay master and purchasing manager of AGE.

Consideration 5 A party is in default for the purposes of rr 5.22 and 5.23 if it fails to do an act required to be done or to do an act in the time required by the Rules, to comply with an order of the Court or to attend a hearing in the proceeding. AGE did not appear at the hearing of 27 June 2012, following service of the originating application, interlocutory application and freezing orders made on 22 June 2012 that returned the proceedings on that day. It has not appeared after being called outside the Court today, nor has it filed an appearance or, on the evidence, caused any response to be made to Sanko's solicitors in respect of the proceedings or emails that were sent to it. 6 I am satisfied that AGE is in default for the purposes of rr 5.22 and 5.23. That circumstance engages the provisions of r 5.23(2)(c). The principles on which the latter rule operates appear to be analogous to those on which O 35A rr 2 and 3 of the now repealed Federal Court Rules 1979 (Cth) operated: Yeo v Damos Earthmoving Pty Ltd in the matter of Beachwood Developments Pty Ltd (in liq) [2011] FCA 1129 at [9] per Gordon J and Speedo Holdings BV v Dave Evans (No 2) [2011] FCA 1227 at [15]-[26] per Flick J. In essence, as Gordon J stated, r 5.23 does not require proof by evidence of the plaintiff's or applicant's claim but only requires that, on the face of the statement of claim, there is a claim for the relief sought and that that claim falls within the jurisdiction of the Court. 7 The second requirement can be disposed of immediately. The statement of claim seeks damages for breach of a charterparty. It is thus a general maritime claim for the purpose of s 4(3)(f) of the Admiralty Act, being a claim arising out of an agreement that relates to the use or hire of a ship, whether by charterparty or otherwise. The Court has jurisdiction in such a matter by force of s 9 of the Admiralty Act. 8 The statement of claim asserts that Sanko was the disponent owner of the ship "Yuritamou", a coal bulk carrier. It alleges that on or about 2 May 2012, Sanko, as disponent owner, entered into a voyage charter, with AGE as charterer, through the agency of its ship broker, Thurlestone Shipping (S) Pte Limited. The charterparty was on the Americanised Welsh Coal Charter form of charter, approved in 1953 and amended in 1979. It was entered into in writing pursuant to an email dated 2 May 2012. The charterparty provided relevantly that Sanko would charter the vessel to AGE for a voyage from the loading port of Newcastle to the discharging port of Zhoushan in the People's Republic of China. AGE would provide a cargo of 130,000 metric tonnes of coal, 10% more or less at owner's option, and that the ship would carry that cargo in bulk, loaded, stowed, trimmed and discharged, in accordance with nominated provisions from the loading port to the discharging port. The freight rate in the charterparty was USD 12.272 per metric tonne, free in and out stowed and trimmed, on a one on one basis for the route. This approximated to USD 1,534,000 and 90% of the freight was payable within 5 banking days after completion of loading and before breaking bulk. Freight was deemed to be earned when the cargo was being loaded and was discountless and non-returnable, whether the ship and/or the cargo was lost. The laycan (laydays - commencement and cancelling) was from 00:01 hours on 18 May 2012 to 23:59 on 20 May 2012. The ship was to provide a notice of readiness at each end of the voyage at any time, day or night, Sundays and holidays included. The demurrage rate was USD 6,500 per day, pro rata. 9 On 19 May 2012, the ship issued a notice of readiness at 15:00 and was in all ways ready to receive the cargo from 10:00 on 20 May 2012. AGE failed to provide any instructions to the ship despite requests to do so at all times, until the charterparty was terminated by Sanko on 4 June 2012. AGE failed to provide or load the cargo or any other cargo within the contractually agreed timeframe or at all. Each of those failures amounted to a breach of a charter party. Those breaches continued until the time of termination, at which point Sanko acted so as to accept AGE's repudiation by terminating the charterparty. Sanko pleaded that, as a result, it had suffered loss or damage of USD 706,155.44 comprised of: (i) Net loss on freight USD 332,580.00 (ii) Bunkers consumed USD 152,651.80 (iii) Demurrage and delay (per Schedule) USD 203,373.64 (iv) Legal Costs as damages USD 17,500.00

10 The failure of a charterer to give any instructions to or provide a cargo in accordance with the terms of a charterparty is a substantive breach of its obligations under the charter party. Persistence in that course evinces an intention no longer to be bound and entitles the owner or disponent owner to terminate the charter party for breach. Sanko was entitled to act as it did to terminate the charterparty based on AGE's repudiation. Upon such termination AGE's secondary obligation to pay damages for breach remained enforceable.

Conclusion 11 I am satisfied that it is apparent on the face of the amended statement of claim that there is a claim for the relief sought and that that claim falls within the jurisdiction of the Court. For those reasons, I am of opinion I should make the orders sought by Sanko. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Federal Court Rules 1979(Cth)

Admiralty Act 1988(Cth)ss 4(3)(f), 9

Federal Court Rules 2011(Cth)rr 5.22, 5.23(2)(c)

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