Re Alexander Watt and Co Pty Limited v the Ship "Oceania Trader" and Its Charterers Oceania Shipping Corporation Limited [1992] FCA 6 (9 January 1992)

FEDERAL COURT OF AUSTRALIA

Re: ALEXANDER WATT AND CO PTY LIMITED
And: THE SHIP "OCEANIA TRADER" and its charterers OCEANIA SHIPPING CORPORATION
LIMITED
No. Q G139 of 1990
FED No. 8
Shipping and Navigation

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Drummond J.(1)

CATCHWORDS

Shipping and Navigation - Proceeds of sale of arrested ship - pre-judgment reimbursement of arresting party's costs and expenses of arrest and preservation of ship - proper construction of Admiralty Rules rr.71 and 72.

Admiralty Rules, rr.41, 65, 66, 67, 69, 71, 72, 73 and 80

The "Falcon" (1981) 1 Lloyd's Rep 31

The "Reina" (1963) 2 Lloyd's Rep 513

The "World Star" (1987) 1 Lloyd's Rep 452

HEARING

BRISBANE
9:1:1992

Counsel for the plaintiff: Mr A.J.H. Morris

Solicitors for the plaintiff: Sly and Weigall Cannan and Peterson

Counsel for the defendants: Mr P.G. Cleary

Solicitors for the defendants: Power and Power

Solicitors for the plaintiffs in Mr P.D. Channell of Peter Channell
Action Q G11 of 1991 (respondents and Associates
to Motion):

Solicitors for the Marshal: Mr B. Cosgrove of the Australian
Government Solicitor

ORDER

The sum of $288,728.27 being part of the sum referred to in the Notice of Motion filed 17 December 1991 is part of the Marshal's costs within order (6) of the orders made by Spender J. on 23 October 1991.

The sum of $288,728.27 be paid forthwith out of the fund entitled "Federal Court of Australia, Queensland District Registry, Admiralty Marshal Account No. 1" ("the fund") to the Marshal and paid by him to the plaintiff.

Upon the solicitors for the plaintiff giving an undertaking to the Court to repay to the Marshal any expenses or costs of the Marshal which are not covered by the amount remaining in the fund after payment of all amounts herein ordered to be paid to the plaintiff:

(a) the sum of $111,830.22 being part of the sum referred
to in the Notice of Motion and being part of the
plaintiff's costs of the arrest and preservation of
the ship "Oceania Trader" while it was under arrest by
the Marshal be paid forthwith out of the fund to the plaintiff;
(b) the costs incurred by the plaintiff to its solicitors
in connection with the arrest, preservation and sale
of the ship be taxed on a party and party basis and
the costs when taxed be paid forthwith out of the fund
to the solicitors for the plaintiff.

If the plaintiff wishes to claim payment of any sum by way of its costs and

expenses of arrest, preservation and sale of the ship, additional to those referred to in orders 2, 3 and 5, it shall file an affidavit specifying the amount so claimed and how that amount is ascertained and serve a copy on each party interested in the fund by 3 February 1992;

Upon the plaintiff filing this affidavit, the Registrar shall take an account of what, if anything, is due to the plaintiff in respect of its costs and expenses of the arrest, preservation and sale of the ship "Oceania Trader" additional to the costs and expenses referred to in orders 2, 3 and 5.

The Registrar shall take an account of the actual costs incurred by the plaintiff by way of interest paid on borrowings to enable it to make the payments totalling $288,728.27 and $111,830.22 respectively.

Dispense with compliance by the plaintiff of its obligations under r.66 in relation to the service of the affidavits it is required to file in connection with the taking of this account.

The plaintiff's taxed costs of this Notice of Motion excluding its costs of the hearing on 19 December 1991 be paid out of the fund.

The costs of the Marshal, of the plaintiffs in action Q G11 of 1991 and of the defendants in this action (all being respondents to this notice of motion) be taxed and paid out of the fund.

Compliance by the Marshal with r.71(c) of the Admiralty Rules be dispensed with in relation to the sale of the ship.

If the Marshal wishes to recoup from the fund any fees or expenses of valuation or sale of the ship additional to those included in the sum of $24,057.06 referred to in his affidavit filed herein, he shall file an affidavit deposing to his having given seven days' written notice to all parties interested in the fund of his intention to pay out such further amount and await the determination of the Court upon any objection thereto by any party interested in the fund before making any such payment out of the fund.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

The applicant is the plaintiff in this action in which it claims $204,107.08 as payments made on behalf of the defendant charterers for charter payments and insurance on the ship. The action has not yet come to trial.

2. By its notice of motion, the plaintiff sought an order that the "Marshal pay to the plaintiff within three days the sum of $437,378.73 from the proceeds of sale of the ship".

3. The ship was arrested in this action on 3 November, 1990.

4. On 23 October, 1991 Spender J made an order in this action for the sale of the ship pendente lite to a nominated purchaser. His Honour also made the following orders:

(3) The Plaintiff pay to the Marshal all accounts
outstanding with respect to the ship within fourteen
(14) days of the ship's release.
(4) That upon payment of the sum of USD650,000.00 to the
Marshal by the purchaser the ship be released from
arrest and all caveats, writs and liens over the ship
pass to the proceeds of sale.
(5) That the Marshal pay from the purchase price the
account of Messrs. Anderson Hughes, Ship Brokers and
Chartering Agents.
(6) The Marshal's administrative and legal costs and
outlays associated with the arrest, administration of
and sale of the ship including the cost of this
application and the further costs and outlays
necessarily incurred in disposing of the ship be paid
from the purchase price.
(7) The Marshal be paid his fees at the rate prescribed
for the Marshal of the Supreme Court of Queensland in
the Third Schedule to the Rules of that Honourable Court.
(8) That the proceeds of any sale, after payment of all
expenses associated with such sale, any unsuccessful
sales, including attempts to date, this application
and all other costs necessarily incurred prior to sale
of the vessel, be deposited in a cash management
account termed "Federal Court of Australia, Queensland
District Registry, Admiralty Marshal Account No. 1"
with the Commonwealth Bank of Australia, King George
Square branch.

5. The sale was completed on 18 November, 1991 and a total of AUD836,582.82 was received by the Marshal. In accordance with order (5), the Marshal paid the brokers' account of AUD13,280.09. The balance is held in an account opened by the Marshal in compliance with order (8).

6. There are a number of other actions in rem involving the ship, none of which has yet come to trial.

7. All of the other parties interested in the ship (and now in the proceeds of its sale) were served with notice of the plaintiff's motion.

8. The amount sought by the plaintiff, according to information provided by its managing director, comprises payments that fall into the following three categories:

(a) $288,728.27 is the total paid by the plaintiff in
respect of invoices submitted by suppliers of goods
and services to the Marshal in connection with the
ship while it was under arrest and passed on by the
Marshal to the plaintiff for payment.
The main component in this figure is a series of
payments to a security service for maintaining
security over the vessel from the date of arrest to sale.
The Marshal has confirmed that all these payments were
made by the plaintiff at his request in respect of
administrative costs and outlays incurred by him in
connection with the arrest of the ship.
(b) $124,405.22 is the total of costs incurred by the
plaintiff, at the Marshal's request, for the wages of
a caretaker crew and for various insurances.
While the Marshal does not dispute that such costs
were incurred by the plaintiff at his request, he says
that he "was unaware of the complete details of the
amounts paid by the plaintiff" in respect of these
particular items until he perused the plaintiff's
affidavits filed in support of this application.
(c) $24,235.24 is interest on the amounts referred to in
(a) and (b) above calculated at the rate of twelve
percent (12%) per annum: according to the plaintiff's
managing director, the various sums that make up these
two amounts were paid by the plaintiff using borrowed funds.

9. The matter came before me on 19 December, 1991 and was adjourned for further argument to 23 December, 1991. On 19 December, 1991 Mr Morris for the plaintiff initially submitted that the application was brought in reliance on order (6) of the orders made on 23 October last and raised only a question of its proper construction. He later sought an order for payment on the alternative basis that the plaintiff was entitled to the sums claimed in priority to all other claims on the proceeds of sale after the Marshal's own costs and expenses of the arrest and sale had been paid. All of the parties interested in the sale proceeds have been given, by service of the notice of motion, adequate notice of the plaintiff's claim to allow me to grant relief on either the narrow basis or the wider basis advanced by plaintiff's counsel, if it is appropriate to do so.

10. On 19 December, 1991, Mr Channell, who appeared for the master, officers and crew of the ship, the plaintiffs in action Q G11 of 1991, against the same defendants in this action, opposed the grant of the relief then sought on two grounds: firstly, that the payments made by the plaintiff did not fall within the terms of order (6). He referred to the group certificates issued to the caretaker crew in respect of wages totalling $111,830.22 which showed the plaintiff, rather than the Marshal, as their employer; he submitted that, even though the plaintiff was under an obligation to reimburse the Marshal, payments made by the plaintiff at the Marshal's request or direction were the plaintiff's costs, not the Marshal's costs, and could only be recovered by the plaintiff making a claim in its own right. Secondly, Mr Channell submitted that disbursement of anything from the proceeds of sale in respect of any of the Marshal's costs and expenses was not authorised until the Marshal had filed an account of the sale in compliance with r.71(c) of the Admiralty Rules and the Registrar had taxed the Marshal's fees and expenses under r.72. Ms Stilgoe, who appeared for the defendant ship owners and charterers on 19 December, 1991, supported Mr Channell.

11. The Marshal has not yet filed his account for taxation.

12. When the hearing resumed on 23 December, 1991, the plaintiff read an affidavit of its managing director, Mr Jewell: he said that the sum of $111,830.22 paid as wages to the caretaker crew was paid by the plaintiff because "the Marshal at the outset notified the plaintiff that he required a deck officer and an engineer to man the vessel as caretaker crew throughout the period of the vessel's arrest and requested the plaintiff to pay the wages of a caretaker crew directly to them". Mr Jewell also said that the caretaker crew at all times looked to and received instructions exclusively from the Marshal concerning the performance of their duties and that the plaintiff was shown as their employer in the group certificates issued to them only as a matter of convenience to meet the request of the Marshal who lacked the necessary accounting infrastructure to attend to this himself. None of this is disputed by the Marshal, who was represented before me on both dates.

13. Neither at the hearing on 19 December nor on 23 December did any other party put any material before the Court or seek to query the propriety of the incurring of any of the charges the subject of the application.

14. I reject the submission that nothing can be disbursed from the proceeds of sale in respect of any of the Marshal's costs and expenses of arrest or sale until his account of the sale has been taxed under r.72. The submission overlooks the significance of the orders made on 23 October, 1991; and is also not in accordance with the proper construction of the Admiralty Rules.

15. It is appropriate first, to ascertain the position that would apply if these orders of 23 October, 1991 had not been made.

16. Part X of the Admiralty Rules deals with the sale pursuant to court order of a ship that is under arrest. Rule 69 empowers the court to make an order, either before or after final judgment, for valuation with or without a sale. Rule 70 requires the sale to be conducted by the Marshal. Rule 71 provides:

"The Marshal shall, as soon as practicable after the sale of
the ship or property:
(a) file a return of sale;
(b) pay into court the proceeds of sale; and
(c) file an account of sale and documents in support of
the account for taxation."

Rule 72 provides:

"(1) The Registrar shall tax the fees and expenses of the
Marshal in connection with the valuation and sale of a
ship or other property ordered to be sold.
(2) A person who is an interested person in relation to
the proceeds of the sale may appear before the
Registrar on the taxation."

17. The rules are explicit. They require the Marshal to file only his "account of sale" and they provide for the taxation only of that particular account. No rule imposes any obligation on the Marshal to file an account that covers his fees and expenses in relation to the arrest or to his custody of the vessel between arrest and sale.

18. There is no justification for attempting to read rr.71 and 72 as applying to such fees and expenses. The Marshal's fees and expenses in relation to the arrest and preservation of the ship will often be substantial, in view of the expenditure the Marshal is authorised to incur by r.47 and the additional expenditure the Marshal can be permitted to incur by directions under rr.48 and 50. Yet the ship may never be sold under court order. The ship may be released after bail has been given. Rule 71 may never apply in a particular case even though in that case the Marshal claims a substantial amount in respect of the costs of the arrest and preservation of the ship up to its release.

19. Rule 71(b) should be construed as requiring the Marshal to pay into court all the proceeds of sale before deducting his fees and expenses in connection with the valuation and sale of the ship. That is the natural meaning of the term "the proceeds of sale" in the context of rr.71 and 72.

20. It has long been the practice in Admiralty for the Marshal to be required to pay into court the entire proceeds of sale, to tax his fees and expenses of valuation and sale and to seek an order for payment out of the proceeds of sale of his taxed expenses. See McGuffie, Fugeman and Gray, 1964, British Shipping Laws, Vol. 1 (Admiralty Practice) p 170, paral 88900d cf r.144 of the Vice-Admiralty Courts Rules of 1883 and O.75 r.23(4) of the Rules of the Supreme Court 1965 (Eng.), which require the Marshal to pay into court "the gross proceeds of the sale".

21. It is this practice which is provided for by rr.71 and 72.

22. If, prior to the sale, the Marshal has to meet any of the costs of the sale, for example, costs of advertising when the sale is by public auction, he can rely on the undertaking imposed by r.69(4) on the party who applied for the sale order to ensure he will have access to the necessary funds. Such an amount would, in terms of r.69(4) be payable by that party "on demand" by the Marshal who, by r.78, can make demands for interim payments on account. That the Marshal can ensure he is in funds to meet any necessary costs of valuation and sale prior to sale, does not absolve him from his obligation to file an account of the sale for taxation. Nor is he at liberty to recoup from the proceeds of sale anything in respect of his fees and expenses of valuation and sale unless and until there has been a taxation of his account of sale under r.72.

23. The absence of any obligation in the rules on the Marshal to file an account for taxation of his fees and expenses in relation to the arrest of a ship does not mean his incurring of expenses in relation to the arrest cannot be challenged. The parties interested in his conduct with respect to the ship while it is in his custody are able to challenge the propriety of the Marshal's actions at any stage, if they have grounds for doing so: under r.48, a party can apply to the court for directions with respect to the ship.

24. Moreover, under r.65, the Court, on application by anyone with a sufficient interest or the Court on its own motion, can order the taking of an account by the Registrar of what is properly chargeable by the Marshal in respect of his fees and expenses in relation to the arrest and preservation of the ship. (An account can also be directed with respect to the Marshal's expenses of valuation and sale, although this will generally not be appropriate since those expenses will usually be the subject of a taxation under r.72.) This procedure is available at any stage of a proceeding: a reference may arise out of the hearing of a motion just as readily as it may arise out of a decree of the court after a trial: McGuffie, op cit p 549, para 1261; Meeson 1986 The Practice and Procedure of the Admiralty Court: forms and precedents pp 42-3; Williams and Bruce 1902 A Treatise on the Jurisdiction and Practice of the English Courts in Admiralty Actions and Appeals pp 451-2; and cf The "Rendsberg" [1805] EngR 389; 6 C Rob 142 at 144-5.

25. So far as the Marshal's fees and expenses in relation to the arrest and preservation of the ship up to its release or sale are concerned, the Marshal is always entitled to obtain payment of those fees and expenses by making demand on the party who procured the arrest in reliance on the undertaking given by that party by force of r.41. Once paid to the Marshal, they become that party's own costs of the arrest and preservation of the ship.

26. However, if the Marshal does not rely on that undertaking to get in all his fees and expenses in relation to the arrest, his claim for those fees and expenses has, under the established practice in Admiralty, priority to all other claims against the res. His claim for those of his fees and expenses in connection with the valuation and sale of the ship not called in by the Marshal in reliance on the undertaking given by the party who sought the sale by force of r.69(4) and allowed on taxation has exactly the same priority. Standing only after the Marshal's claims, so far as entitlement to priority of payment is concerned, is the claim of the plaintiff or plaintiffs, who have caused the ship to be arrested and sold, to payment from the sale proceeds of their costs of arrest and sale, up to the time of completion of sale. McGuffie, op cit p 742, para 1574; M.W.D. White (Ed) 1986 Australian Maritime Law p 59 para 2.6; The "Falcon" (1981) 1 Lloyd's Rep 31, 17.

27. Determinations as to the priority of claims against the res are ordinarily made only after all persons who have sued in rem have obtained their judgments. See r.73; McGuffie, op cit, pp 174-175 para 395 and Supreme Court Practice 1991, p 1239 para 75/24/2.

28. But there is jurisdiction to order payment out to a claimant who has obtained judgment, even though there are other claims that have not proceeded to judgment, where the priorities are such that it is clear that the particular claimant will ultimately be entitled to the amount claimed or, where payment out on account is sought, to at least the amount ordered. See McGuffie, op cit, pp 174-175 para 395 and The "Reina" (No. 2) (1963) 2 Lloyd's Rep 513.

29. In The "World Star" (1987) 1 Lloyd's Rep 452, a plaintiff who had procured the arrest and sale of a ship, applied before judgment in its action for payment out of the proceeds of sale of the amount of payments it had made to the Admiralty Marshal at his request in respect of his expenses of the arrest and preservation of the ship and of its sale. The application was opposed by the mortgagees of the ship whose own claim also had not proceeded to judgment, but which was likely to exceed the whole of the amount in court and had priority over the plaintiff's substantive claim in the action.

30. Of the claim for payment out of the amount equal to the payments the plaintiff had made to the Marshal, Sheen J said, at page 454:

"The plaintiffs are entitled to recover that sum in priority
to all other claims against the fund, other than the claim
of the Admiralty Marshal.
It is not suggested that the plaintiffs acted in bad faith
in arresting "World Star". By arresting "World Star" the
plaintiffs have preserved a fund which, subject to priority
of payment, is now available to all those who have a claim
in respect of which they are entitled to proceed in rem
against the owners of that ship. As I have already said,
there is a number of such claimants.
The (mortgagees) have issued a writ in respect of money due
to them from the defendants, which debt is secured by a
mortgage on "World Star". (They) have adopted the arrest
and cannot now contend that the ship should not have been
arrested. There cannot be any injustice to any claimant
upon the fund in court resulting from a payment out to the
plaintiffs of the sum of pounds 47,100 in respect of the out of
pocket expenses of the Admiralty Marshal in connection with
the arrest and preservation of the ship. Whichever claimant
arrested the ship would have had to make those payments.
On the other hand, a grave injustice would be done to the
plaintiffs if they were held out of this money until they
have obtained a judgment in their action. Accordingly, I
order that this sum be paid out to the plaintiffs forthwith."

31. It is consistent with authority and there are good reasons for the practice to be to order, on application being made, payment out of the proceeds of sale of a ship, even in advance of any judgments being obtained, of the amount claimed by the Marshal in respect of his fees and expenses in relation to the arrest and in relation to the valuation and sale (provided, in the latter case, there has been a taxation of his account of sale) and also payment out of the sale proceeds of the costs of arrest and sale of the party or parties who procured each of those actions. The priority of each of these classes of claim is so unassailable as to make it generally appropriate for each such claim to be paid immediately the proceeds of sale of a ship are to hand. The fact that the proceeds will be eroded by the interest to which the parties procuring the arrest and sale are usually entitled on the amounts they have paid in respect of arrest and sale provides further justification for prompt payment out of the proceeds of sale of these two classes of claim.

32. Here, although the defendant ship owners and charterers oppose the plaintiff's application for payment out, they have made no suggestion that the arrest was in bad faith or that the arrest or sale was made in circumstances in which the defendants might have a claim against the applicant or the Marshal which they might be able to set off against any amount recoverable by the plaintiff and the Marshal as their respective costs of arrest and sale. So far as all the parties interested in the proceeds of sale, other than the defendant ship owners and charterers, are concerned, they have a fund as a result of the arrest and sale which was procured by the plaintiff to which they can look for satisfaction of their own claims, subject to prior claims. Neither the defendants nor any of the other parties interested in the proceeds of sale have challenged the propriety of the incurring or the payment of any of the amounts making up the sum claimed by the plaintiff.

33. The plaintiff has paid the two amounts claimed with borrowed moneys: It is entitled to recoup its borrowing costs. Interest is still accruing and will further erode the proceeds of sale (which are likely to be insufficient to meet all the claims) if relief is denied to the plaintiff.

34. Even if the orders of 23 October last had not been made, I would therefore have granted the plaintiff's application, at least in substantial part.

35. But it remains necessary to determine the impact of those orders.

36. Order (5) directed the Marshal to pay from the proceeds of sale the brokers' account. While it is not clear from the material whether the whole of the amount paid by the Marshal to the brokers was in respect of his expenses of arrest and preservation of the ship or his expenses in respect of valuation and sale, it is clear enough that $8,280.71 of the moneys paid to the brokers was for a valuation fee equal to one percent (1%) of the sale price of the ship (excluding the payment received in respect of the bunkers), i.e., that a substantial part of this item was one of the Marshal's expenses of valuation and sale. Order (7) authorises the Marshal to recoup from the proceeds of sale, not only his fees, at the rates prescribed in that order, in respect of executing the arrest warrant and retaining possession of the ship from arrest to sale, but also his fees, at the rate prescribed, on the sale of the ship - see items 58, 60 and 63 in the scale of fees referred to in this order and item 63 in exhibit "JAC5" to the Marshal's affidavit.

37. Orders (5) and (7) thus authorise payment out of the sale proceeds by or to the Marshal of moneys which, in the absence of these orders, could only be properly disbursed from those proceeds after taxation under r.72 of the Marshal's account of sale. If there are any other fees and expenses of the Marshal in connection with the valuation and sale of the ship not covered by these two orders which would ordinarily be included in his account of sale and be able to be paid or recouped by the Marshal from the proceeds of sale only after that account had been taxed, order (6) is authority to the Marshal to pay those other fees and expenses of valuation and sale.

38. In short, it appears that the effect of orders (5), (6) and (7) is to absolve the Marshal from the need to comply with r.71(b) and (c), a course authorised by r.80(2). The consequence is that there is no need for any taxation under r.72. Orders (5), (6) and (7), which have not been challenged by anyone in these proceedings, are the only authority the Marshal needs to pay from the sale proceeds all his expenses of valuation and sale.

39. Order (6) is also the only authority the Marshal needs to disburse from the sale proceeds an amount equal to all his "administrative and legal costs and outlays associated with the arrest (and) administration of ... the ship".

40. Because there will be no taxation under r.72, and since the Marshal may have fees or expenses of valuation or sale that he wishes to recoup from the proceeds of sale additional to those referred to in order (5), and to the $24,057.06 referred to below, I think payment from the proceeds of sale of any of his additional fees or expenses of valuation or sale should be made only after he has given appropriate written notice to every party interested in the proceeds of sale so that they will have an opportunity to challenge the payment out.

41. By r.71, the Marshal is required to file a return of sale and to pay into court the proceeds of sale as well as filing an account of sale for taxation. Mr Cosgrove, who appeared for the Marshal, submitted that the Marshal's affidavit constitutes a return of sale for the purpose of this rule. I think the affidavit contains all the information that it is necessary to include in such a return. I am therefore prepared to dispense with compliance by the Marshal with this part of the rule. He having paid the proceeds of sale into court, it follows that, in view of the orders made on 23 October, 1991, the Marshal has now complied with all of the requirements of r.71 that remain applicable to him and that no taxation of the kind referred to in r.72 is called for.

42. The Marshal has calculated his fees in accordance with the rates prescribed by order (7). Exhibit "JAC5" to the Marshal's affidavit shows that these fees covering execution of the warrant, possession of the ship from 3 November, 1990 to 18 November, 1991 and commission on the sale of the ship total $24,057.06.

43. Order (7) is sufficient authority for payment out of the proceeds of sale in the account of this amount to the Marshal.

44. So far as the component of $288,728.27 of the amount claimed by the plaintiff in the notice of motion is concerned, it forms part of the Marshal's "administrative costs and outlays associated with the arrest (and) administration of ... the ship" for the purposes of order (6). The amounts making up this sum are all costs incurred by the Marshal. That the Marshal procured the discharge of his liability for them by calling on the plaintiff to pay his creditors does not deprive those costs of the character of "the Marshal's costs" within the order.

45. As to the sum of $124,405.22 forming part of the amount claimed by the plaintiff, notwithstanding what Mr Jewell has to say about the circumstances in which the plaintiff came to incur the bulk of that amount by way of wages to the caretaker crew i.e. $111,830.22, I do not think the wages component can be regarded as the Marshal's costs of the arrest and administration of the ship for the purposes of order (6). The Marshal never incurred any liability in respect of these costs.

46. However, on the unchallenged material before me, the payment by the plaintiff in respect of wages forms part of the plaintiff's own costs of the arrest and preservation of the ship. For the reasons already given, I think the plaintiff is entitled to recoup these particular payments now from the proceeds of sale, subject only to the Marshal's priority to his own fees and expenses in respect of both arrest and sale being protected.

47. It is highly probable that, even after the Marshal has recouped his fees pursuant to order (7) from the balance proceeds of sale and after the plaintiff recoups the entirety of its own costs and expenses of both arrest and sale from those proceeds, sufficient will remain to more than cover anything else that the Marshal may be entitled to recoup in respect of his costs and expenses of arrest and sale. Nevertheless, it is not completely certain that will be the position. The plaintiff's solicitor, however, is prepared to give his personal undertaking to the Court to repay to the Marshal any expenses or costs of the Marshal which are not covered by the amount remaining in the fund after payment of all amounts ordered to be paid to the plaintiff on this application.

48. This fully protects the Marshal's position in the circumstances of this case.

49. I am therefore prepared to order, in reliance on this undertaking, that the sum of $111,830.22 be paid to the plaintiff's solicitors out of the balance proceeds of sale.

50. The balance of this component of $124,405.22 of the amount claimed by the plaintiff, namely $12,575.00, is claimed in respect of "payments made direct by the plaintiff at the Marshal's request" for various insurances. The insurance invoices are, however, on their face directed not to the plaintiff, but to Wills Shipping Pty. Ltd., the plaintiff in action Q G137 of 1990 against the same defendants in this action. Moreover, it is not clear on the material before me, whether all of the insurances, even if it is accepted that the plaintiff rather than Wills Shipping Pty. Ltd. paid for them, are costs that properly form part of the plaintiff's costs of arrest or sale. The three invoices are each expressed to be for "amount payable for renewal of various insurances as per schedule attached for the period (a particular period is then nominated)". One invoice is for $4,145.00, the other two are each for $4,215.00. Schedules describing the cover are attached to only one of the invoices. Not all insurance payments by a plaintiff will be recoverable as part of the plaintiff's costs of arrest and sale of the ship: unless insurances taken out by the plaintiff can be said to benefit the other claimants to the fund by protecting the res, the plaintiff's insurance costs would not be recoverable from the fund, as its costs of arrest, in priority to other claiMs See The "World Star" (supra) at pp 454-5.

51. I am not prepared to make any order for the payment to the plaintiff out of the proceeds of sale in respect of this sum of $12,575.00.

52. I would, however, be prepared to exercise my power under r.65 to order that the Registrar take an account of what is due to the plaintiff in respect of its costs both of arrest and preservation of the ship and of the sale of the ship additional to those of the plaintiff's costs of arrest, preservation and sale which I intend to order to be paid out of the proceeds of sale to the plaintiff now.

53. As to the plaintiff's claim for interest, counsel did not advance any argument as to the basis upon which an amount in respect of the interest it has had to meet should be allowed to it on the present application, apart from relying upon the fact that that course was followed in The "World Star" (supra) at p 456.

54. The plaintiff's claim in this regard is not, however, a claim for interest as such, a claim which would raise rather complex questions since it would not be a claim within s.4(2)(d) or (3)(w) of The Admiralty Act 1988.

55. I think it can be regarded, as it appears to have been in The "World Star", as a claim for costs incurred by the plaintiff in respect of the arrest and preservation of the vessel which are made up of payments it had to make to its lender to borrow the funds it needed to pay its other costs of arrest and preservation of the ship. So regarded, the plaintiff's claim in respect of interest is recoverable on the same basis as its claim in respect of payments made for wages of the caretaker crew.

56. At the hearing on 23 December, 1991, the plaintiff tendered a brief schedule, exhibit "AW1", which showed the result of calculating interest at twelve percent (12%) on the two amounts in question of $288,728.27 and $124,405.22 from the date of the various component payments to 23 December, 1991. The plaintiff's material discloses, however, that the borrowings from which these payments were made were, in fact, at interest rates "varying between 14.5% and 10.75%".

57. This claim being one for costs actually incurred, it is quite different from a claim for interest that relies on the exercise of a discretionary power to award interest, either under the sections of The Admiralty Act 1988 that I have referred to or under a provision such as s.72 of The Common Law Practice Act 1867 (Queensland) (if that provision is applicable to proceedings in the Federal Court).

58. It follows that, tedious though the exercise may be, the plaintiff must establish the actual cost to it of the borrowings in question before it can recoup them.

59. The most convenient way of doing this appears to be for me to order under r.65 that the Registrar take an account of the actual costs incurred by the plaintiff by way of interest paid on borrowings to enable it to make the payments of $288,728.27 and $111,830.22. I see no reason, in the circumstances of this case to put the plaintiff to the expense of serving copies of the affidavit on the other parties interested in the fund and I will therefore dispense with compliance by the plaintiff of so much of r.66 as requires it to serve the relevant affidavit. The Registrar's determination will, in view of r.67(4), be sufficient authority for payment out of the proceeds of sale to the plaintiff in the account of the amount so determined.

60. As to the plaintiff's claim for its legal costs of arresting and maintaining the ship while under arrest (which do not, of course, include any of the costs of its substantive claim in the action), those costs stand on the same footing as the wages of the caretaker crew paid by the plaintiff: they form part of its own costs of the arrest and preservation of the ship and it is entitled to payment of those costs once taxed, but only on a party and party basis and not on the more generous basis claimed, out of the proceeds of sale. See The "World Star" (supra) at p 455.