Laemthong International Lines v BPS Shipping Ltd

[1996] HCATrans 264

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Darwin  No D7 of 1995

B e t w e e n -

LAEMTHONG INTERNATIONAL LINES CO LTD

Applicant

and

BPS SHIPPING LTD

Respondent

Application for special leave to appeal

DAWSON J
GAUDRON J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

FROM DARWIN BY VIDEO LINK TO CANBERRA

ON THURSDAY, 5 SEPTEMBER 1996, AT 9.54 AM

Copyright in the High Court of Australia

MR D.A. COWDROY, QC:   May it please the Court, I appear with my learned friend, MR J.E. HEBRON, for the applicant.  (instructed by De Silva Hebron)

MR J.C.A. TIPPETT:   If the Court pleases, I appear for the respondent.  (instructed by Ward Keller)

DAWSON J:   Yes, Mr Cowdroy.

MR COWDROY:   Your Honour, for the assistance of the Court and for the assistance of Mr Tippett, we have prepared a written outline of the oral argument which we propose to raise.  I would seek to hand that up, together with an extract from The Marine Encyclopaedic Dictionary which contains a term which will feature largely, I suspect, in this application.

DAWSON J:   Mr Tippett has copies of those documents?

MR COWDROY:   He does, your Honour.  He does not have a copy, unfortunately, of the dictionary definition but it is short and I will read that out.  The essential points in this case are three.  The first point is ‑ ‑ ‑

DAWSON J:   Do you want us to read these oral submissions?

MR COWDROY:   It may be of assistance, your Honour.

KIRBY J:   That will take up all your time.

MR COWDROY:   Perhaps if I could talk to them, your Honour, as I am going.

DAWSON J:   All right.

MR COWDROY:   The essential point for this application is:  did the two vessels in question possess the requisite common interest sufficient to invoke the surrogate ship arrest provision contained in the Admiralty Act?

GAUDRON J:   Is that first point one that was taken in the Full Court?

MR COWDROY:   Your Honour, I can say that below the point was taken that the court had to be satisfied as to its jurisdiction.  Now, involved in that statement is the fact that the court had to be satisfied that the first ship, the “Nyanza”, was owned, chartered, or in possession and control of my client, the applicant.  Secondly, that there was a claim, a general maritime claim, that existed against that ship or the owner, charterer, or person in possession and control of that ship and, lastly, that my client was the owner of the second ship, the “Laemthong Pride”.

Now, there is no question about the ownership of the second ship.  That is acknowledged to be that of my client.  The central issue concerns the title, ownership or control of the first ship.  That point was not taken in the terms that are now being raised, your Honour, if I can say that, but the general question of jurisdiction - - -

GAUDRON J:   Your other point below was whether the evidence established the charter by your client?

MR COWDROY:   Your Honour, it goes further than that.  The simple point is this:  the evidence clearly established that the respondent was the disponent owner of the critical ship, the “Nyanza”.  The term “disponent owner” is contained conveniently in the definition which has been handed up as:

A person or company who controls the commercial operation of a ship, responsible for deciding the ports of call and the cargoes to be carried.

Now, it is our short point that the disponent owner in this case was undisputedly the respondent.  My client was purely a voyage charterer.  It did not possess any control.

GAUDRON J:   That is in evidence?  The evidence clearly establishes that, does it?

MR COWDROY:   Yes, your Honour, it is not disputed.  Your Honour, we say that is critical to this case and fatal to the success of any application to arrest the surrogate ship.

GAUDRON J:   Does that bring in section 18?

MR COWDROY:   It does not bring it in, I do not believe, your Honour.  Section 19 is the critical one.

GAUDRON J:   Yes, but section 6(3) requires that you be able to proceed against the “Nyanza” or that the respondent should have been able to proceed against the “Nyanza”.

MR COWDROY:   Your Honour, the respondent could never have proceeded against the “Nyanza” because it would be proceeding against itself.  It was the disponent owner of that vessel.

GAUDRON J:   That is why I asked you about section 18.

MR COWDROY:   Thank you, your Honour, yes.

GAUDRON J:   But that point was not taken below either.  Your Honour, it was not taken in the terms that are now being elucidated, no.

DAWSON J:   Just while you are interrupted, Mr Cowdroy, where is the ship now?

MR COWDROY:   It has been released, your Honour.  A very substantial bond has been paid, a guarantee.

DAWSON J:   That is what I wanted to know.

MR COWDROY: Yes but, your Honour, when one comes to the point, which is undisputed, concerning the nature of the control over the vessel it, at all times, is remaining in the disponent owner which was the respondent. That was, in our submission, fatal to any application to arrest the “Laemthong Pride” simply because there is not the relevant common interest which is required by section 19. If I could take your Honours to the oral submissions and run through them briefly, your Honour. Section 14 of the Admiralty Act, which is quite a recent Act, your Honour, really restricts the circumstances in which surrogate ship arrests may be undertaken.  It provides:

In a matter of Admiralty or maritime jurisdiction, a proceeding shall not be commenced as an action in rem against a ship or other property except as provided by this Act.

Now, 15, 16, 17 and 18 are not really relevant for our present purposes but section 19 is the critical one.  It provides:

A proceeding on a general maritime claim concerning a ship -

in this case the “Nyanza” -

may be commenced as an action in the rem against some other ship if:

(a)  a relevant person -

that is a person who is being sued, that is my client -

was, when the cause of action arose, the owner or charterer of, or in possession or control of, the first‑mentioned ship -

the “Nyanza”, and -

(b)  that person is, when the proceeding is commenced, the owner of the second‑mentioned ship.

Subsection (b) is satisfied, no dispute about that.  Subsection (a), we submit, is clearly unsatisfied for the reason that we were not the owner or charterer or in possession and control of that ship. 

Section 19, your Honour, permitted for the first time in Australia law, surrogate ship arrest.  It was based upon the English procedure which is also common in other maritime nations around the world and it arises out of the action in rem where a person who had a claim against a ship and a ship owner could arrest and seize that ship, the action in rem.  On page 2, at the foot of the page, we refer to the principle in The Castlegate:

every proceeding in rem is in substance a proceeding against the owner of the ship, a proper maritime lien must have its root in his person liability.

That principle has been affirmed and I might also say, your Honour, adopted in this Court in one of the cases I will refer to.  It was suggested in The Utopia, that a ship might be held liable even though there was no liability in the owners and the court in that case said:

Such contention appears to their Lordships to be contrary to the principles of maritime law now well recognised.

The important part of the next quote, your Honour, is that:

the foundation of the lien is the negligence of the owners or their servants at the time of the collision, and if that not be proved no lien comes into existence, and the ship is no more liable than any other property to which the owners at the time of collision may be possessed.

Your Honour, in 1956, in the United Kingdom ‑ ‑ ‑

DAWSON J:   There is no question that there is a personal liability so far as your client is concerned on the claim.

MR COWDROY:   The entitlement of a claimant to seize the ship depends upon wrongdoing by the owner of that vessel.

DAWSON J:   Yes, I appreciate that, but there is a claim on the statement of claim - there is a claim against your client.

MR COWDROY:   There is a claim made against my client, your Honour.

DAWSON J:   Yes, and your client is the owner of the ship which was seized.  There is no dispute about that.

MR COWDROY:   Yes, your Honour.

DAWSON J:   The only question is whether your client was the owner of the “Nyanza”.

MR COWDROY:   That is right.

KIRBY J:   Or the charterer or in possession or control.

MR COWDROY:   Or charterer or in possession or control.  That is a critical question.

DAWSON J:   If your client was not, then there is no surrogacy.

MR COWDROY:   Exactly.

DAWSON J:   You say it is not alleged, even on the facts, that your client was the owner of the “Nyanza”.

MR COWDROY:   No, your Honour.  It is, without doubt, acknowledged that the respondent was the desponent owner.  It had entered into some arrangement with the true owner so that it became the charterer of the ship.  It had possession and control of that ship at all times.  It gave to my client - it agreed with my client to carry goods.  It was simply a voyage charter.  A voyage charter gave no possession or control.

DAWSON J:   Is there any difference between a voyage charter and a contract for the carriage of goods?

MR COWDROY:   No, they are essentially the same.  It was simply a contract for the carriage of goods.  It gave no rights to my client to direct that ship, to do anything, or have any possesion or control.  The crew remained in the possession and control of the desponent owner.  On all the authorities ‑ ‑ ‑

DAWSON J:   What was the evidence before the court below?

MR COWDROY:   I have read the transcript, your Honour.  I must say I have great difficulty understanding exactly what went on.  There was a degree of confusion over what was “despondent owner”, and this point seemed to fade into insignificance in the argument that followed.

KIRBY J:   Does that not have perils for you, because that means that this is really at base a fight about evidence.  That would not normally attract special leave.

MR COWDROY:   Your Honour, I do not believe so, because this problem was not grappled with.  I think it is fair to say that.

DAWSON J:   How do we grapple with it without any evidence?

MR COWDROY:   I think it is clear on the judgment that the fact that the respondent was the desponent owner - which is not disputed - and the fact that the charter is in existence, and the charter document clearly shows that it was simply a contract for the carriage of goods.  A charter in that term.

DAWSON J:   Was the charter document that you speak of in evidence?

MR COWDROY:   Not the actual charter document.  A document which, on hearsay evidence, was said to be the charter ‑ ‑ ‑

GAUDRON J:   There was secondary evidence.

MR COWDROY:   There was secondary evidence, and the third point is that it was really insufficient for this type of case.

GAUDRON J:   Yes, but leaving aside your third point, if you fail on that, there is documentary evidence from which we can ascertain the terms of the charter?

MR COWDROY:   Yes, your Honour, there is, and if I could proceed because I think this will unfold as we go along.  Your Honour, in England in 1956, for the first time, this right was given to a sister ship and at the foot of page 3, The St Eleftheriou, there is the quote of Justice Willmer concerning that:

for the first time in England, the right to arrest either the ship in respect of which the cause of action is alleged to have arisen or any other ship in the same ownership.

“In the same ownership”, your Honour, is critical:

That is an entirely new right so far as the law of England is concerned, although it previously existed in other countries, including Scotland -

and the reason is to bring England into line with the international convention.  Your Honour, section 19 ‑ ‑ ‑

KIRBY J:   Was the original ownership the same as your client, except that it did not have the Singapore connection?  I mean, the titles look the same.

MR COWDROY:   Yes, your Honour.  There is no dispute and no difficulty about this.  When the action was first commenced, the respondent sued a company of a similar name alleging that it was the charterer and it was responsible.  When the matter came to court, it was acknowledged that was a mistake and my client was added in as the respondent to those proceedings.  Your Honour, the law has developed since then and the law has clearly developed to show these things.

Firstly, when the statute talks about ownership, it can mean owner pro hac vice, or temporary owner, in the section.  Secondly, that a contract for the carriage of goods merely is a voyage charter and does not give any possession or control of the vessel to the person who is having its goods carried in that vessel.

DAWSON J:   It does mean that the ship carries cargo only for the one consignor, but that is all?

MR COWDROY: Precisely, yes, although, your Honour, there are situations now where they have slot charters where a boat may be divided into compartments and charters given in respect of 100 different sections of the boat for a charter to be issued to carry goods for that consignor. So, your Honour, the critical thing is and the cases show this, and they are referred to on page 5, unless the charterer had possession and control of that vessel - perhaps I will say it in a different way. Essential for the operation of section 19 is that the owner or charterer have possession and control of the vessel to satisfy the requirements of section 19(a). If the charterer, in this case, my client, did not have that degree of possession or control, it was not a person who could be described as a charterer within the terms of section 19(a).

Your Honour, what I have just said is consistent with the law as it has developed in the United Kingdom.  There is no case that we can find where a simple voyage charter has been equated to the temporary owner of the ship.  The temporary owner of the ship in this case was the respondent, that being an undisputed fact, and in those circumstances, your Honour, we say there was simply not in existence the very foundation which would found a sister ship arrest.  It is logical in this sense, your Honour:  an action in rem entitles a claimant to seize the wrongdoer’s ship. 

Ownership, or temporary control of that ship on the basis of some demise, is essential for that action in rem, and the sister ship aspect which was provided by section 19 - that new right - was predicated solely upon the claimant having a right in rem against the owner.         In other words, if there was not that claim against the owner of the ship, there is no occasion when sister ship arrest could ever possibly arise.  Sister ship arrest was predicated upon there being an entitlement to an action in rem against the owner of the first vessel.

GAUDRON J:   Or against the first vessel.

MR COWDROY:   Or against the first vessel, yes, your Honour.  Without that - - -

GAUDRON J:   Well, it had to be against the vessel.

MR COWDROY:   It had to.

GAUDRON J:   Yes, which means it had to come - leaving section 19 aside, did it not - within one or other of 15, 16, 17 or 18.

MR COWDROY:   Precisely.

DAWSON J:   In other words, just because you have a claim against a person, and that person happens to own a ship, you do not have a claim in rem.

MR COWDROY:   Well, you would if the person owned the ship, and you had a claim against that ship.

GAUDRON J:   Exactly, a ship.

DAWSON J:   A ship, not the ship that was involved.

MR COWDROY:   Now, your Honour, in those circumstances what we say is that if the requirement of section 19(a) was not fulfilled, then the arrest of the “Laemthong Pride” was contrary to section 14 of the Act and, in effect, or in reality, the arrest was utterly without jurisdiction. Jurisdiction to invoke the surrogate ship provision depends entirely upon the requirements of section 19 being satisfied. So, in effect, the arrest of this ship was made contrary to section 14 and, therefore, was made without jurisdiction.

Your Honour, the last two points, very quickly, is that there is also a question of whether the law conferred a right to re-arrest a ship in the same proceedings.  We say that you can only re-arrest a ship in the same proceedings where the ship is released conditionally, for example, a bond being provided, and that bond not being fulfilled, so the person can then go back and re-arrest the ship.  Once the ship is arrested unconditionally, you must read the words “ejusdem generis” with the words that precede it; that is, where default has been made in the performance of the guarantee or undertaking.  If that does not exist, if there has been no default because there has been no condition, the words “or for some other sufficient reason” do not give a right to re-arrest a ship at any stage by a claimant.

KIRBY J:   Well, this Court has said quite often that the ejusdem generis rule has to be used with care.  This does not seem to me to be a special leave point; it is a question of statutory construction.

MR COWDROY:   Your Honour, that may be.

KIRBY J:   Different view might be taken but, in principle, it would seem appropriate to give the words wide meaning.

MR COWDROY:   Your Honour, the only thing is it would take it into a realm of maritime law unknown.

GAUDRON J:   That has been said about other provisions of this Act.

MR COWDROY:   Yes.  Your Honour, the last point, and I will just touch on it very briefly ‑ ‑ ‑

KIRBY J:   The last point is just evidence, is it not?

MR COWDROY:   It is, your Honour.  Perhaps I will not come to that at this stage.  Might I indicate, your Honour, there has been a bundle of material supplied.  In the back of the bundle of material is the order for discharge, which shows the ship was discharged unconditionally.  There is an extract of Hansard when the Admiralty Act 1988 was being debated in Parliament, which clearly showed that the action in rem, to refer to my first point, was intended to be, as stated to be, “exhaustive”, the terminology, used in section 19, and also to bring it into line with the other maritime nations.

KIRBY J:   Do you need the last point, that is to say the evidence point, in order to give the foundation for the first point?

MR COWDROY:   I do not believe we do, your Honour.  No, the first point stands separately and by itself.  Your Honour, it is a critical point because it does touch matters both nationally and internationally.  If the Court pleases.

DAWSON J:   Yes, thank you, Mr Cowdroy.  Mr Tippett.

MR TIPPETT:   May it please the Court. Firstly, we submit, your Honours, that the submission that the criteria set out in section 19(a) of the Admiralty Act, that it requires a legal or equitable interest in the wrongdoing ship before an arrest of a surrogate ship can be made, is wrong, for the reason that it essentially relies upon authority predominantly from the United Kingdom, that discusses surrogate ship arrest in the context of the Administration of Justice Act 1956, section 3(4), which in particular required that a person would be liable on a claim, or relevant person, in our Act, to have beneficial ownership, both in the wrongdoing ship and the surrogate ship, at the time when the action is brought.  That requirement was not introduced into the Admiralty Act.

In 1981 in the United Kingdom, the mode of exercise of the Admiralty jurisdiction was expanded by the provisions of section 21 of the Supreme Court Act, United Kingdom. That provision extended the relevant person under a charter by demise of a wrongdoing ship. That provision was not incorporated into the Admiralty Act 1988. Section 19(a) does not contain such a limitation to the word “charterer”. The word carries its ordinary legal meaning, namely, the person who charters or hires a vessel or part of it. The section is an empowering one, we submit. It would be inappropriate to read the provision by making implications or imposing limitation that are not found in the express words.

The Act uses the term “demised charterer” in section 18, and if the legislature intended that the term “demised charterer” in section 19, which I understand is the applicant’s position, to mean “demised charterer” then logically would have done so.  We submit, your Honours, that the purpose of the action in rem against a surrogate ship is to persuade the relevant person to appear and provide security.  That has always been so.  Thus, the appropriate nexus is not with the wrongdoing ship, but with the relevant person.  It is submitted that the proper nexus requirements are, firstly, one, between the claim and wrongdoing ship; two, between the wrongdoing ship and the relevant person; three, between that person, the relevant person and the relevant person’s ships, that is, and the relevant person’s ships.

DAWSON J:   It is the second point that is put against you, the connection between the claim and wrongdoing ship that arises here.  It says that there was not a sufficient connection, or, at least, there was not a wrongdoing ship, really.

MR TIPPETT:   The Act does not require it. The reason can be seen in a number of the authorities, it is submitted, the old English authorities, where difficulties have been experienced in relation to surrogate ship arrest due to matters that have transpired either shortly before a charter is entered into or during a charter that result in the wrongdoer, the person against whom the claim is made, the relevant person being able to escape the provisions of the Act, and, in my submission, what is essentially the applicant’s mistake is to approach this on the basis of the use of the expression “sister ship” which, in my submission, is erroneous and confusing. It is a generic term to describe surrogate ship arrest and that specific provision is contained in section 19 and it moves away from the traditional concept of sister ship arrest. In my submission, your Honours, the term “sister ship arrest” has misled the applicant which, in fact, has searched for a sibling and overlooked the surrogate and it is the surrogate and the relevant person that are the two particularly important entities in relation to the construction and application of section 19(a).

It is submitted that it has always been the case that a general maritime claim arises out of the use of a ship. The purpose is to make the defendant put up bail or provide a fund for securing compliance with any judgment. The law has moved on from the authorities relied upon by the applicant in support of sister ship arrest and that movement can be seen in the terms of section 19(a) and (b). The operation of that section in its broadest terms, it is submitted, is consistent with the objectives of the old action in rem and has the additional function of filling a legal lacuna. Firstly, it prevents escape by a charterer who owns a ship where the undisguised sale of a ship before action arose but after the charter was entered into, where the wrongdoing ship has sunk or in circumstances as described in the case of I Congresso.

The section, it is submitted, your Honours, retains an identity between a ship in respect of which the cause of action arose and the ship proceeded against.  That identity is in the relevant person, the relevant person being the person against whom the cause of action arose and the relevant person who owned that ship.

GAUDRON J:   Mr Tippett, you seem to be proceeding on the basis that there is no necessity for there to have been an ability to proceed against the “Nyanza”, is that right?

MR TIPPETT:   That is so, your Honour.

GAUDRON J:   What about section 3(6)?

MR TIPPETT:   In my submission, your Honour ‑ ‑ ‑

GAUDRON J:   That is irrelevant, is it?

MR TIPPETT:   That is irrelevant, yes, your Honour.  Section 19 sets up a regime that permits arrest in circumstances where the appropriate nexus is between the relevant person, the ship and the relevant person’s ship.  In my submission, if I may with leave simply refer to the Australian Law Reform Commission Report No 33 and in particular paragraphs 204 and 205 of that report.  In doing so, I note that in this Court’s decision of the Shin Kobe Maru the Court had looked at the Law Reform Commission report in order to assess the movement of the law and its ultimate development in the Admiralty Act 1988.

In that report it was concluded, in my submission, that the old position described as “sister ship” arrest did not have a sound foundation in maritime law as it had developed, that it led to problems in circumstances where a party was unable to proceed against a second ship because transactions had taken place in relation to the first ship that defeated arrest as the transactions may have taken place prior to the cause of action arising. Having regard to the many authorities dealing with section 3(4), in my submission, it is clear that section 19(a) of the Admiralty Act 1988 has set about to fill that lacuna and to provide a more extensive opportunity for a person to ensure that the relevant person appears and provides security in relation to a maritime claim.

In that regard, therefore, the section does not require ownership in a wrongdoing ship but, rather, that the relevant person be a charterer, in possession or control of and, of course, a voyage charter is one that in a number of respects controls the ship.  It directs the ship where it goes, within what period of time the ship must get into port and other such requirements, and that has been recognised at law.  It is submitted that the applicant did not argue before the primary court the charter in section 19 should be given a restricted meaning, and the Court of Appeal approached the matter upon the basis that “charterer” has its ordinary legal meaning, and that is a person who charters a ship or part of that ship.

In my submission, section 19 should be read broadly, therefore, and is not at all unclear in its terms.  I do note, if it please the Court, that section 19 also distinguishes between possession and control.  It uses the disjunctive.  It is not a requirement that there be possession and control and that again lends weight, in my submission, to the argument “the charterer” should be given a broad interpretation and one that, in my submission, the Law Reform Commission saw fit to conclude was appropriate having regard to admiralty law as it had developed since the introduction of section 3(4) in the United Kingdom in 1956.

KIRBY J:   So you say this provision goes further than the United Kingdom legislation, but that that is deliberate and it is part of the policy of  the Parliament?

MR TIPPETT:   Indeed, it is, your Honour, and if one follows ‑ ‑ ‑

KIRBY J:   Well, does that not tender to the Court an important question if we are, as it were, out of step with other maritime nations, that that is a matter that should attract the attention of the Court in order that, if that is the position of the Australian law, then that is stated authoritatively by this Court?

MR TIPPETT:   Well, in my submission, your Honour ‑ ‑ ‑

KIRBY J:   I am not challenging the arguability of the point, I am simply looking at it from the point of view of the special leave gateway.

MR TIPPETT:   Yes, I appreciate that, your Honour.  Well, I return simply in response to that to say that the statute in its terms is clear.  I mean, that is a matter of interpretation and the words are to be given their ordinary legal meaning and when the statute says “charterer” a “charterer” has its ordinary legal meaning:  a person who hires a ship or part of a ship for the purposes of maritime commerce and there can be no, in my submission, confusion

about that and consequently it is my submission that special leave should be refused on those terms for that reason.

DAWSON J:   The Court need not trouble you, Mr Cowdroy.  You have finished have you, Mr Tippett?

MR TIPPETT:   I am sorry, your Honour.

DAWSON J:   I am sorry, I thought you had.

MR TIPPETT:  I just wished to know whether your Honours wished me to address the other aspects of Mr Cowdroy’s case in relation to ‑ ‑ ‑

DAWSON J:   We need not hear you on that, Mr Tippett.

MR TIPPETT:   May it please your Honour, thank you.

DAWSON J:   Thank you.  The Court need not trouble you, Mr Cowdroy. 

Special leave to appeal will be granted but on the first point only, that is to say whether the “Laemthong Pride” was a surrogate ship of the “Nyanza”.

AT 10.30 AM THE MATTER WAS CONCLUDED