US Shipping Limited v Leisure Freight & Import Pty Ltd

REASONS FOR JUDGMENT 1 In this proceeding the applicant, US Shipping Limited ("US Shipping"), seeks a declaration that it is entitled to exercise a lien over a vessel described as 1989 Sea Ray 400 Flybridge (WILFRE-19) (HIN:SERF1312K889) (the "Sea Ray 400") either as a matter of contract or at common law. The applicant also seeks a declaration that it is entitled to appropriate from the proceeds of any sale of the Sea Ray 400 an amount which satisfies outstanding charges owed to the applicant by the first respondent to the proceeding, Leisure Freight & Import Pty Ltd (In Liquidation) ("Leisure") for the carriage of the Sea Ray 400 by sea from the United States to Australia. The charges are said to include amounts in respect of outstanding freight; cranage; GST and Customs fees; storage fees; transfer (skipper fees); loadmaster (Christy & Griffin); towage; Port of Brisbane charges; AAT charges; demurrage; the costs of any sale; and the costs of this proceeding. 2 The applicant also seeks an order for leave to commence the proceeding against the first respondent pursuant to s 471B of the Corporations Act 2001 (Cth). The Court's jurisdiction in the proceeding arises under s 9(1)(a) of the Admiralty Act 1988 (Cth) as a maritime claim for the purposes of s 4(3)(f) of that Act. Section 4(3)(f) contemplates that a general maritime claim includes a reference to a claim arising out of an agreement that relates to the carriage of goods by a ship. This proceeding is concerned with whether a lien arises in favour of the applicant arising out of an agreement made between the applicant and the first respondent for the carriage of goods by sea from the United States to Australia. 3 The background facts are these. 4 The second respondent to the proceeding is Mr Scott Murphy who is a miner living in Western Australia. He is the owner of the Sea Ray 400. Mr Murphy has sworn an affidavit in the proceeding dated 18 September 2014. By para 8 of that affidavit, Mr Murphy says that on 27 October 2012 he made an offer to purchase the Sea Ray 400 from Neptune Yacht Sales for $59,000. On 27 October 2012, Mr Murphy's offer was accepted. Mr Murphy was asked to pay a 10% deposit to be held in escrow to secure the purchase of the vessel. Mr Murphy says at para 11 that on 29 October 2012, Ms Dianne Lyons on behalf of Leisure, sent an email to Mr Murphy advising him that it would cost $43,468.86 plus GST for Leisure to freight the Sea Ray 400 from the United States to Australia. Ms Lyons provided Mr Murphy with a list of the costs involved in the purchase and freight of the Sea Ray 400 to Australia so that Mr Murphy would be in a position to arrange finance to meet those costs. The costs would be approximately $107,571.91: see Annexure SM1 to the affidavit of Mr Murphy sworn 18 September 2014. 5 Mr Murphy says at para 13 that on 2 November 2012 Mr Bruce Jacob of "Get Approved finance brokers" advised him that a loan for $108,000 had been approved. It was to be secured against the Sea Ray 400. 6 At para 15, Mr Murphy says that on 3 November 2012 he paid a deposit of 10% of the purchase price to Leisure who was to pay it to the owner of the Sea Ray 400. Mr Murphy says that he paid the deposit to Leisure because he did not understand the escrow arrangement. He says that he asked Ms Lyons about it and was told by her that she had established an escrow account in which she could receive the money and would then pay it to the vendor, Neptune Yacht Sales. Mr Murphy at para 16 says that on 28 November 2012 after having paid the deposit in this way, he received an email from Mr Jacob to the effect that the bank would not advance the loan monies to him for the purchase of the Sea Ray 400 unless the vessel was registered in Australia "as part of the actual loan document requirements". At para 17, Mr Murphy says that as a result of the email from Mr Jacob, he realised that he could not access the loan monies to pay for the vessel to be imported into Australia as the Sea Ray 400 would not be registered in Australia until it was delivered in Australia. Mr Murphy says that, therefore, he applied to the Commonwealth Bank for a personal loan of $50,000 which would not be secured against the Sea Ray 400. The Commonwealth Bank approved the loan on 28 November 2014 and deposited the loan monies to Mr Murphy's account. At para 18, Mr Murphy says that by 1 December 2012 he had electronically transferred $50,000 to Leisure to be held in escrow for payment to Neptune Yacht Sales. 7 At para 19, Mr Murphy says that consequent upon the payments to Leisure, he received a Bill of Sale from Neptune Yacht Sales dated 14 December 2012. The Bill of Sale recites the payment of USD59,000 to Ms Andrea Stern in respect of the sale and transfer of a 100% interest in the Sea Ray 400 to Mr Murphy. At para 21, Mr Murphy says that he made enquiries at the Department of Transport in Western Australia about the process for securing registration of the vessel in his name. He says that he was told things about that process and believed that he would not be able to secure registration in Australia of the Sea Ray 400 in his name unless and until the vessel arrived in Australia. 8 Mr Murphy says in para 22 that consequent upon his discovery that he could not register the vessel in Australia until the vessel was transported to Australia, he contacted Ms Lyons of Leisure concerning the delay in the shipping of the vessel to Western Australia. Mr Murphy says that he complained to Ms Lyons about the delay. He says he was angry that the Sea Ray 400 could not be registered in Australia until transported to Australia. At para 23, Mr Murphy says that Ms Lyons told him that she would do what she could to secure registration of the Sea Ray 400 in Australia as quickly as possible and that Leisure would compensate him for "rental" he had to pay in the meantime. These exchanges occurred on 15 and 16 February 2013. 9 Mr Michael Davis Holden swore an affidavit on behalf of the applicant on 21 March 2014. In that affidavit, Mr Holden says that he is a director of US Shipping and has 32 years' experience in the shipping freight industry. At para 2 of his affidavit he says that on 30 May 2013 he sent an email to Ms Lyons submitting an offer to Leisure for space aboard the MV Alderney for the transport of cargo loading in Wilmington, North Carolina, and also West Palm Beach, Florida, discharging in Brisbane and Newcastle. At para 3, Mr Holden says that on 1 June 2013 he provided Leisure with a "Conline Booking Note" and "Terms and Conditions" for shipping space described as "600 SQUARE METRES DECK SPACE FOR YACHTS/BOATS". On the Booking Note, the freight rate is described in these terms: USD 340,000 lpsm fios 1/s/d bss 2 load/2 discharge port. -Deposit payable 30% in advance + freight payable latest 5 banking days after completion of loading prior s+r bsl marked 'frt payment as per b/n' 10 Item 13 of the Booking Note sets out a Special Term concerning carnage in these terms: "… if agreed CRANAGE USD 30,000 TOTAL FOR 2 PORT LOAD/2 PORT DISCHARGE". Item 13 also sets out "Rider clauses". A number of matters are addressed by those Rider clauses including these matters: goods "shipped on/under deck at shipper's risk with Bill of Lading claused accordingly"; "freight deemed earned cargo loaded/not loaded"; cargo lien to apply if freight not paid; all taxes/wharfages/dues on cargo to charterer's account; all taxes/wharfages/dues on vessel to owner's account; and, "otherwise as per carriers standard booking terms and conditions based on conline 2000". The Booking Note also says this: It is hereby agreed that the Contract shall be performed subject to the terms contained on Page 1 hereof [that is, page 1 of the Booking Note] which shall prevail over any previous arrangements and which shall in term be superseded (except as to deadfreight and demurrage) by terms of the Bill of Lading, the terms of which (in full or in extract) are found on the reverse side hereof. [emphasis added] 11 Beneath that provision, space is provided for the signature of the Booking Note by US Shipping and by Leisure. Mr Holden says at para 3 that Annexure MDH-2 is a copy of the Booking Note and the Terms and Conditions of the Bill of Lading referred to in the quoted provision at [10] of these reasons. In those Terms and Conditions, cl 12 is in these terms: 12. LIEN The Carrier shall have a lien on the Goods and any documents relating thereto for all sums payable to the carrier under this contract and for general average contributions to whomsoever due and for the cost of recovering the same and for that purpose shall have the right to sell the Goods by public auction or private treaty without notice to the Merchant. 12 In that clause, "Carrier" means the Carrier on whose behalf the Bill of Lading has been signed. The term "Merchant" includes the Shipper, Holder, Consignee, Receiver of the Goods, any person owning or entitled to possession of the Goods or of the Bill of Lading and anyone acting on behalf of any such person. The term "Goods", relevantly, means the cargo accepted from the Shipper which in this case includes the Sea Ray 400. 13 On 1 June 2013, Leisure sent an email to Mr Holden which attached a copy of the Booking Note executed on behalf of Leisure and dated 1 June 2013. At Annexure MDH-3, Mr Holden annexes a copy of that email of 1 June 2013 and a copy of the Booking Note signed on behalf of Leisure dated 1 June 2013. Apart from the signature by Leisure, the executed Booking Note at MDH-3 is slightly different to the Booking Note at MDH-2. At MDH-3, the Booking Note is described as "BOOKING NOTE 20-6-1". Secondly, the Rider clauses at Item 13 are introduced with the heading "Liner Terms". The Rider clauses recited at Item 13 of MDH-3 are in the same terms as the Rider clauses recited at MDH-2. The provision recited at [10] of these reasons is recited on the Booking Note at MDH-3. In Mr Holden's email of 1 June 2013 sending Ms Lyons of Leisure the Conline Booking Note and the Terms and Conditions document, Mr Holden requested Leisure to "please sign and email back to us for counter signature by the owners". Ms Lyons on behalf of Leisure signed the Booking Note at MDH-3 and sent it by email to Mr Holden on 1 June 2013 but did not send to Mr Holden the Terms and Conditions document signed or otherwise initialled. In the Booking Note attached to Mr Holden's email to Ms Lyons of 1 June 2013, he described the ship's name as Alberney. In Ms Lyons's responsive email of 1 June 2013 attaching the executed Booking Note, Ms Lyons changed the name of the vessel to its correct name of Alderney. In Ms Lyons's email attaching the executed Booking Note she said this: Hi Mike It is the Alderney not the Alberney - changed this as well. Di Kind regards Di Lyons LEISURE … 14 No mention is made by Ms Lyons of the Terms and Conditions (document) attached to Mr Holden's email of 1 June 2013 which, by the provision recited on the Booking Note at MDH-3 immediately above Leisure's signature, was to be the "terms of the Bill of Lading". Presumably, Ms Lyons had nothing relevant to say about the Terms and Conditions of the Bill of Lading as sent to her and, in particular, expressed no objection to the content of the Terms and Conditions. At para 5, Mr Holden says that the reference to "Liner Terms" in Booking Note 20-6-1 at MDH-3 may have been intended by Leisure to be a reference to the Baltic and International Marine (BIMCO) standard terms and conditions for a carrier's Bill of Lading. Mr Holden says that in his experience it is common within the shipping freight industry for the description "Liner Terms" to be used when referring to the BIMCO standard terms. Mr Holden says that Leisure did not explain what it meant by the reference to "Liner Terms" and nor did it provide US Shipping with a copy of the Liner Terms with the executed Booking Note or at any other time. Nevertheless, Mr Holden annexes at MDH-4 a copy of the BIMCO terms applicable at June 2013. Those terms provide at cl 11 for a lien in favour of the carrier "on all cargo for any amount due under this contract and the costs of recovering the same". The clause also provides that "[the carrier] shall be entitled to sell the cargo privately or by auction to satisfy any such claims". 15 At para 6, Mr Holden says that on 4 June 2013 he sent a further email to Leisure attaching a copy of the Booking Note duly signed by Leisure on 1 June 2013 and also now signed by US Shipping (by EBI Corporation NZ Limited as agents for the carrier, US Shipping) on 4 June 2013. The email also attached a document described as "t&c" and an invoice for the deposit due under what might be described, put simply, as the arrangements. These documents are annexed to Mr Holden's affidavit at MDH-5. The invoice was Invoice No. 001 issued by US Shipping to Leisure which listed a total price under the Booking Note of USD370,000 (comprising an amount of USD340,000 for 600 square metres of deck space plus USD30,000 for cranage according to the Special Term). It recites a deposit due of USD111,000 being 30% of the total price. The document described as "t&c" is a document which bears the heading "FULL TERMS OF THE CARRIER'S BILL OF LADING FORM*". The asterisk directs attention to the following matter at the foot of the document: *) LINER BILL OF LADING (Liner approved by The Baltic and International Maritime Conference) Code Name: "CONLINERBILL" Amended January 1st, 1950, August 1st, 4952 [1952], January 1st, 1973, July 1st 1974, August 1st 1976, January 1st 1978 16 The Terms and Conditions annexed at MDH-5 are in a different form to the Terms and Conditions of the Bill of Lading at MDH-2 sent to Leisure on 1 June 2013. Clause 12 of the Terms and Conditions at MDH-5 is in these terms: 12. Lien. The Carrier shall have a lien for any amount due under this contract and costs of recovering same and shall be entitled to sell the goods privately or by auction to cover any claims. 17 Mr Holden says at para 6 that he "cannot explain" why the Terms and Conditions sent to Leisure on 4 June 2013 with Booking Note 26-6-1 counter-signed on behalf of US Shipping and attaching Invoice 001, are different from the "Conditions" sent to Leisure on 1 June 2013. Since Mr Holden who has 32 years' experience in the shipping freight industry and who had the carriage of the exchanges with Leisure cannot explain that matter, I infer that the Terms and Conditions document attached to the email of 4 June 2013 was sent in error to Leisure. 18 At para 7, Mr Holden says that on 3 July 2013 Ms Lyons sent an email to him in which she makes a number of comments about the stow plan. Ms Lyons says that she has prepared the stow plan to scale by square meterage reflected in an attached spreadsheet. Ms Lyons also makes a number of comments about the configurations adopted for the boats and trailers. The spreadsheet identifies the final "load list" including the Sea Ray 400. 19 At para 9, Mr Holden says that on 11 July 2013, further cargo of Leisure was loaded onto the MV Alderney in West Palm Beach bringing the total occupied square metres of deck space on behalf of Leisure to 556.35 square metres. On final loading in West Palm Beach, US Shipping issued a Bill of Lading a copy of which is annexed at MDH-7. The Bill of Lading is "USAUST0150" dated 11 July 2013. The quantity and description of goods recited in the Bill of Lading is in these terms: FOR 795.34 SQUARE METRES (M2) OF UNOBSTRUCTED DECK SPACE FOR A CARGO OF YACHTS/BOATS AS PER ATTACHED MANIFEST PER BOOKING NOTE DULY SIGNED 1ST JUNE 2013 BOOKING NOTE 20-6-1 SHIPPERS LOAD, STOW AND COUNT SHIPPED ON/UNDER DECK AT SHIPPERS RISK FREIGHT PAYABLE AS PER BOOKING NOTE TERMS BY CONSIGNEE SHIPPED ON BOARD 11TH JULY 2013 [emphasis added] 20 The copy of the Bill of Lading at MDH-7 is not in fact a true copy of the Bill of Lading USAUS0150 as, importantly, the copy does not attach the terms said to be on the reverse or back of the Bill of Lading. That problem was cured by Mr Holden's further affidavit of 3 October 2013 and MDH-26 (see [22] of these reasons). 21 At para 10, Mr Holden says that on 14 July 2013 he re-issued Invoice No. 001 to Leisure in an amount of USD410,631.33 being the amount payable by Leisure for deck space occupied by it on the MV Alderney together with additional costs for wharfage, cradles and a separate vessel, less the deposit paid of USD111,000.00. That invoice is made up of an amount due in respect of deck space occupied by Leisure of 556.35 square metres (as described at para 9 of Mr Holden's affidavit) amounting to USD343,078.79 plus an amount of USD52,173.54 in respect of "1 x 40' [foot] TIARA WPBSIN10" plus USD879.00 for wharfage, and USD14,500.00 for cradles (on behalf of Miami Cradle) constituting a total amount of USD410,631.33. The invoice also recites an amount in respect of additional deck space occupied by Leisure of 238.99 square metres amounting to USD147,375.68 less the deposit paid of USD111,000.00 resulting in a balance due in respect of that space of USD36,375.68. The two areas of deck space occupied by Leisure represent total occupied deck space of 795.34 square metres as described in the Bill of Lading dated 11 July 2013 (see [19] of these reasons). A copy of Invoice No. 001 as re-issued together with the covering email is annexed at MDH-8 of Mr Holden's affidavit. 22 Mr Holden swore a further affidavit dated 3 October 2014 in the proceeding. Annexure MDH-26 is a copy of the original Bill of Lading dated 11 July 2013 together with the "Conditions" document forming part of the Bill of Lading. The Conditions document at MDH-26 is in the same terms as the Bill of Lading terms referred to in the Booking Note at MDH-2. Those terms are also annexed at MDH-2 (being the document sent to Leisure on 1 June 2013). 23 On 15 July 2013, Mr Holden sent an email to Leisure (addressed to Ms Lyons and another) enclosing the invoice for ocean freight of the cargo of boats and a copy of the Bill of Lading of 11 July 2013. On 29 July 2013, Mr Holden sent a letter of demand to Leisure for "payment of full freight due under the terms/conditions of the booking note duly signed on 1/6/13 between [US Shipping] and [Leisure]". The amount demanded was USD386,936.59 being the amount of Invoice 001 (concerning the deck space of 556.35 square metres plus charges) less a payment "received from Glenn Kilpatrick" of USD23,694.74. Mr Holden says at para 12 that by this emailed letter of demand he "re-issued Invoice 001" which is cross-referenced to Booking Note Number 20-6-1 which in turn refers to the terms of the Bill of Lading. The re-issued invoice continues to incorporate an amount of USD147,375.68 in respect of the 238.99 square metres of deck space. It also records the payment of the deposit of USD111,000.00 (consistent with the reserved deck space recited in the original Bill of Lading of 795.34 square metres). 24 Under the Booking Note 20-6-1 the total amount of freight fell due for payment at the latest, "5 banking days after completion of loading". Leisure's cargo of "yachts/boats" were loaded between 5 July and 11 July 2013. 25 On 16 August 2013, the solicitors for US Shipping wrote to Leisure (addressed to Ms Lyons) observing that the freight of USD386,936.59 had not been paid and that should that amount not be paid to the carrier prior to discharge of the cargo, the carrier would exercise a lien over the cargo under cl 12 of the conditions incorporated by the Booking Note. The solicitors asserted the exercise of a lien by the carrier in letters or emails to Leisure dated 11 September 2013, 13 September 2013 and 17 September 2013. In the letter dated 17 September 2013, the solicitors for the carrier advised Leisure that the ship had been directed to Brisbane and all relevant cargo would be discharged at Brisbane pursuant to the carrier's lien "until all freight and charges are settled". At para 14, Mr Holden says that the cargo was discharged from the ship into the possession of US Shipping on 19 to 21 September 2013 at the Port of Brisbane. 26 On 1 October 2013, the Supreme Court of New South Wales made orders that Leisure be wound up in insolvency pursuant to the Corporations Act 2001 (Cth). Mr Paul Weston and Mr Anthony Elkerton of Pitcher Partners were appointed as joint and several liquidators of Leisure. Mr Elkerton resigned as liquidator of Leisure on 2 October 2013 upon his ceasing to be a Partner of Pitcher Partners. Mr Weston continues to be the liquidator of Leisure. Although served with the present application, the company in liquidation chose not to appear as a respondent to the application. 27 On 16 August 2013, the carrier's solicitors wrote to Mr Murphy. In that letter Mr Murphy was told that Leisure had not paid "all the freight payable by [Leisure] pursuant to the booking" and thus the carrier was exercising a lien over the Sea Ray 400 until payment of the freight due "under the booking note". The letter told Mr Murphy that the lien arose under cl 12 of the "booking note" and by reason of the carrier's "common law lien". The letter says that the carrier would relinquish its lien over the Sea Ray 400 and release the craft to Mr Murphy upon receipt of USD27,092.11. 28 On 23 September 2013, the carrier's solicitors wrote to Mr Murphy again advising that the Sea Ray 400 had been discharged at the Port of Brisbane and that a lien was being exercised over the craft. However, as a result of the discharge of the cargo, additional costs and charges (lifting service and hardstand fees, transfer, towage, wharfage and AQIS fees, GST and Customs fees) had been incurred amounting to $16,904.62. Outstanding freight and cranage of USD33,531.76 was also due. The letter tells Mr Murphy that upon payment of these amounts by 30 September 2013, the Sea Ray 400 would be released into Mr Murphy's possession. Similar letters varied as to reflect continuing costs were written to Mr Murphy by the carrier's solicitors on 25 September 2013 and 4 October 2013. 29 At para 24 of his affidavit, Mr Murphy says that on or about 8 September 2013, he sought to obtain loan funds through "Get Approved" finance brokers (by contacting Mr Jacob and Ms Magill) to pay Leisure the freight costs of causing the Sea Ray 400 to be brought to Australia. The following steps then seem to have occurred. On 10 October 2013, Ms Magill sent an email to Mr Murphy confirming that a hull inspection had been completed and that transfer of ownership of the craft could now occur. The email attached a Settlement Schedule. Esanda was the lender. The settlement sum was $108,471.55. That settlement was paid to Leisure (Ms Christine Henry) on either 10 October or 11 October 2013. Mr Murphy says that he understood that the amount (of $50,000.00) previously paid to Leisure (Ms Lyons to her escrow account) would be refunded (together with a rental component) to enable Mr Murphy to pay out the previously obtained Commonwealth Bank loan. An amount of $54,295.40 was paid to Mr Murphy on 11 October 2013 by Ms Henry. It seems likely that the Esanda funded settlement occurred on 11 October 2013. On 14 October 2013, Mr Murphy signed a document described as a Recreational Ship Registration Transfer Application from the Queensland Department of Transport. The name of the Disposer recorded in the application is Ms Christine Henry who Mr Murphy understood to be a "new director" of Leisure according to things Ms Lyons had told him. 30 At paras 21 to 35 of his affidavit, Mr Holden sets out the expenses incurred by the applicant the subject of the lien. At those paragraphs, Mr Holden describes the source of the expense and he annexes at MDH-16 to MDH-23 documents relevant to those expenses. It is not necessary to examine in these reasons all of those matters. The expenses, however, are these: Outstanding freight (minus 30% deposit) USD$22,236.94 Cranage USD$1,764.71 GST and customs fees and duties $10,874.45 Rivergate Storage fees (accruing at $1,390/month) $5,300.35 (as at 28 February 2014) Transfer (Skipryan) $1,957.37 Loadmaster (Christy & Griffin) $399.23 Towage (PB Towage) $118.80 AAT and Port of Brisbane port charges $1,963.71 Demurrage $112,000.00