The latest from the Federal Court: October 2018

Practice and procedure

Res judicata – whether final judgment must be decided ‘on the merits’

Zetta Jet Pte Ltd v The Ship “Dragon Pearl” (No 2) [2018] FCAFC 132 (16 August 2018) concerned a claim from Zetta Jet Pte Ltd and Mr King (a trustee appointed to Zetta Jet under the insolvency law of the United States) that Zetta Jet was the owner in equity of a vessel, Dragon Pearl, which was in the custody of the Admiralty Marshal pending the outcome of the proceedings. When the matter was to be heard, Zetta Jet failed in a late application to adjourn the proceedings. Counsel for Zetta Jet was then invited to open and lead evidence and, after he indicated that he was not in a position to do so, the proceedings were dismissed. An appeal against the decision to dismiss the proceedings was unsuccessful.

Half an hour after the appeal was dismissed, the vessel was sold by the registered owner. After the second proceedings were dismissed, Zetta Jet and Mr King then commenced third proceedings including an application for an interlocutory injunction to restrain the new owner from removing the vessel from Australian waters. Claims to proprietary relief of the same kind as those that had been advanced against the previous owner of the vessel in the first proceedings were advanced in support of the application for an injunction. There was also a new proprietary claim based upon an alleged alienation to defraud creditors of Zetta Jet and, in addition, a proposed claim for relief for an uncommercial transaction under s 588FF of the Corporations Act 2001 (Cth).

The primary judge refused the interlocutory injunction on the basis that a res judicata arose in respect of claims in rem by Zetta Jet or Mr King against the vessel by reason of the dismissal of the original proceedings. Zetta Jet and Mr King sought leave to appeal from that refusal and the orders for the summary dismissal of a second in rem claim against the vessel.