United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC

Federal Court of Australia|2006-02-08|Before: Tamberlin J

REASONS FOR JUDGMENT 1 These reasons concern a Motion to set aside some paragraphs of a Notice to Produce issued by the plaintiffs. The plaintiffs claim salvage reward in respect of salvage services provided on 27 and 28 March 2002 to the vessel "La Pampa". The plaintiffs say there may be a dispute as to the beneficial ownership of the vessel. The plaintiffs seek the documents on the basis that if successful they are entitled to an order for reward as against any owner, registered owner, demise charterer or the beneficial owner of the vessel. The determination of beneficial ownership they contend is a complex question, which requires production of all relevant documents that can bear on that issue. They submit that the fourth defendant, Oltramare Shipping Co SA, appears to be a possible co-owner, and point to another issue they argue arises as to whether that entity as demise charterer falls within the meaning of "owner". 2 The defendants have not objected to a number of paragraphs in the Notice to Produce. 3 The plaintiffs contend that the security currently held is inadequate and therefore that the entity against which they are entitled to obtain judgment is of particular significance in this case, given the likely need for enforcement. The nature of the documents sought by way of Notice to Produce is that they are said to evidence control, possession, management, insurance, hire, income and expenditure, and would assist in identifying the beneficial owner of the vessel. They contend they are also entitled to see documents covering destruction or possible destruction of documents. They say that notwithstanding an admission on the pleadings that Oltramare was the registered owner, the Memorandum for Agreement for Sale dated 12 March 2003 identifies the owners as being Oltramare for a one percent interest and the second defendant (Louis Dreyfus Armateurs SAS) for ninety-nine percent. They say that a search of the relevant Lloyds Register identifies the first defendant (SNC) as the Manager and the third defendant (Louis Dreyfus et Compagnie) as beneficial owner. They also point out that the appearance for the fourth defendant of 15 March 2004 describes it as the registered owner and demise charterer. They point to invoices which they say evidence a sale of ninety-nine percent and one percent interest in the vessel, and refer to a power of attorney on the letterhead of Louis Dreyfus Armateurs SAS citing that it is the ultimate owner of all 10,000 shares of Oltramare Shipping. They also point to a number of other documents, the substance of which when taken together with the foregoing records, indicate that there may be considerable room for dispute as to beneficial ownership of the vessel. 4 On 9 December 2005, Mr Hockaday, solicitor for the defendants, filed an affidavit annexing a copy of Minutes of a meeting of the executive committee of SAS held on 11 April 2003. This records approval of the sale of the one percent share of the vessel "La Pampa" to Oltramare Shipping, leaving the SAS with a ninety-nine percent share of the vessel to Maystar Shipping Company Limited of Cypress or its nominee. The total net price was USD23.32 million for delivery of the vessel between April 16 and 30, 2003. 5 The foregoing indicates that there may be an issue to be ventilated as to beneficial ownership. 6 I now turn to the specific paragraphs under challenge. 7 In considering the Notice to Produce, it is necessary to bear in mind that it differs from a subpoena in that it is addressed to a party who will generally have a greater awareness of the issues, details and history of the matter than a stranger to the proceedings: see Trade Practices Commission v Australian Feather Mills Pty Ltd (1990) 26 FCR 555 at 557-8. By O 33 r 12 of the Federal Court Rules ("FCR"), a Notice to Produce has the same coercive effect as a subpoena issued under O 27 of the FCR: see Potts v Dennis James & Co Pty Ltd (1995) 17 ACSR 770 at 779. Under O 27 r 3(4)(a), a subpoena must identify the document to be produced. The Notice to Produce also has the effect that in the event of non-production, secondary evidence can be given of the contents.

Paragraph 3 8 This request is for all documents and other records concerning the management, ownership and possession of the ship "La Pampa" from 27 March 2001 to 1 May 2003. The defendants submit that this is far too wide, having regard to the word "concerning" as used in relation to broad concepts such as the management, ownership or possession of the vessel over a 26 month period. The defendants point out that the date 1 May 2003 specified in the paragraph is 14 months after the event giving rise to the salvage claim, the subject of the plaintiff's claim in this proceeding. They submit that in substance the request is broad enough to call for production of every piece of paper in the possession of each of the defendants that relates to the operation of the vessel over the 26 month period. They say that the claimants' request is a fishing expedition in that it is in the nature of general discovery in relation to ownership rather than a Notice to Produce. They say that the request is inconsistent with the terms and content of Practice Note 14, which provides the Court will not order general discovery as a matter of course even when a consent direction is submitted. They also point to the requirement that where there are a large number of documents, consideration should be given to the question whether staged discovery is appropriate. 9 In my opinion there is force in the submission by the defendants that the request is cast too broadly and that the request must be made more specific as to the particular types of documents which are to be produced. I do not, however, accept the submission by the defendants that it has not been demonstrated that all documents or records sought are, or are likely to be, relevant to the issues raised by the plaintiffs' claim or the establishment of the alleged beneficial ownership of the vessel. I think this casts the obligation too broadly. The problem is that the request in its present form is too broad, and there needs to be greater specificity as to the nature and character of the documents sought. I do not think that the time period is excessive. I therefore set aside this request as too broad.

Paragraph 4 10 This paragraph seeks all documents and other records concerning the hire of the ship "La Pampa", payments of hire, receipt of payments of hire or transfer of hire to or from any of the defendants from 27 March 2001 to 1 April 2003. 11 The same objection is taken by the defendants in respect to this request on the basis that it too wide, is oppressive, and is tantamount to a fishing expedition. They say it encompasses not only documents concerning the hire of the ship from one defendant to another but production of all documents concerning the hire of the ship by any of the defendants to third parties, and includes any type of charter party that may have been entered into during the 26 months specified. In addition, the defendants refer to the fact that all documents and other records concerning hire are sought, and that this would cover a large number of incidental records in relation to payment of hire, bank records, receipts and documents concerning disputes which may have arisen between the defendants themselves and also with third parties. Again, I consider that the documents should be specified with greater precision and substantially narrowed for the reasons given alone in discussion of paragraph 4.

paragraph 5 12 This seeks documents or other records concerning the distribution of income relating to the ship "La Pampa" to or from any of the defendants from 27 April 2001 to 1 May 2003. Again, it is much too wide. The problem here lies in the use of the word "concerning the distribution of income relating to the ship". That description should be cut down to specify documents recording evidence of payments, receipts or transfers in the distribution of income.

Paragraph 6 13 This refers to all books of account, profit and loss statements, balance sheets, freight records, crew wage records, expense records, hire documents, freight documents or other financial records of the defendants concerning the ship "La Pampa" for the period 27 March 2001 to 1 May 2003. Again, expressions such as "other financial records" are too broad, and references to "concerning the ship" are indeterminate and should be narrowed substantially. The reference to "freight records" is general and would encompass a great number of irrelevant documents. I also consider that the specified period is excessive. I accept the observation that the reference to "all crew wage records" could include crew lists, documents reporting payment of wages to crew, leave payments, payments of expenses and other documents recording repatriation, and changeover of the crew with associated expenses and many more documents which on their face do not appear to be relevant and should be narrowed. I consider that at this stage the end period of the request should be cut down to the period of within three months from the date the services were rendered.

Paragraph 9 14 This seeks all documents concerning payments received in relation to the sale of the ship "La Pampa" including documents of records evidencing payment pursuant to the contract, records of payment or other records concerning the distribution of the proceeds of sale. Although the word "concerning" is broad, I do not think this expression on its own is a fatal objection. As noted in the submission for the defendants, no objection could be taken to a request for production of documents recording or evidencing the payment or receipt of the proceeds of the vessel, including any distribution of proceeds. This request needs to be reformulated and should be struck out in its present form.

Paragraph 11 15 This seeks all contracts or other records concerning the management, ownership and possession of the ship "La Pampa" between the period 27 March 2001 and 1 May 2003. This is manifestly too general and should be struck out for reasons given above.

Paragraph 12 16 This refers to all documents evidencing communications from the defendants concerning the instruction of lawyers, provision of security and conduct of proceedings concerning the ship "La Pampa". Apart from questions of privilege, I am not persuaded that these documents are relevant in the present dispute. It may be after seeing other documents a case might be made out in respect of this request, but at present I think it should be struck out. 17 Accordingly, for the reasons given above, I consider that the paragraphs in respect of which the application is made should be set aside. The plaintiffs, if they wish to file a further Notice, should formulate a more specific Notice to Produce which sets out with more precision the documents they seek. 18 Accordingly, the application to set aside the specified paragraphs is granted. The plaintiff should pay the defendants' costs of the application. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

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