Opal Maritime Agencies Pty Ltd v Skulptor Konenkov - [2000] FCA 507

FEDERAL COURT OF AUSTRALIA
Opal Maritime Agencies Pty Ltd v “Skulptor Konenkov” [2000] FCA 507
ADMIRALTY - General maritime claim - consideration of the requirements to claim on the proceeds of sale fund - whether claims against the proceeds of sale must be “in rem” claims - whether in the circumstances of this case, agency commission or agency fees came within a general maritime claim - specifically consideration of agency commission or agency fees as disbursements or in respect of goods and materials or services - discussion of disbursements made on behalf of a ship or on behalf of a ship’s owner - consideration of the nature of shipping containers - what property constitutes the “ship” - discussion of “equipping” a ship.
TRADE AND COMMERCE - running account - set-off accounts - consideration of the nature of the disbursement and freight account arrangements - the effect, if any, of the appointment of a provisional liquidator.
Admiralty Act 1988 (Cth) ss 4(3), 17, 19, 24
International Convention Relating to the Arrest of Seagoing Ships signed at Brussels on 10 May 1952
Administration of Justice Act 1956 (UK)
Report No 33 Civil Admiralty Jurisdiction (AGPS) Canberra (1986)
Supreme Court of Judicature (Consolidation) Act 1925 (UK)
Supreme Court Act 1981 (UK)
The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 Cited
Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181 Cited
Ocean Industries Pty Ltd (receivers and managers appointed) v Owners of the Ship MV “Steven C” [1994] 1 QdR 69 Cited
The Eschersheim [1976] 1 WLR 430 Appl
Gatoil International Inc v Arkwright-Boston Manufacturers Mutual Insurance Co [1985] 1 AC 255 Foll
Bain Clarkson Ltd v The Owners of the Ship “Sea Friends” [1991] 2 Lloyd’s Rep. 322 Cited
The River Rima [1988] 1 WLR 758 Foll
The Deichland [1989] 2 Lloyd’s Rep. 113 Appl
The Westport (No 3) [1966] 1 Lloyd’s Rep. 342 Appl
The Owners of the Motor Vessel “Iran Amanat” v KMP Coastal Oil Pte Ltd (1999) 196 CLR 130 Foll
The Feronia (1868) LR 2 A & E 65 Appl
The Orienta [1895] P 49 Appl
John Carlbom & Co Ltd v Zafiro (Owners). The Zafiro [1960] P 1 Cited
Centro Latino Americano De Commercio Exterior S.A. v Owners of the Ship “Kommunar” [1997] 1 Lloyd’s Rep. 1 Cited
The “Edinburgh Castle” [1999] 2 Lloyd’s Rep. 362 Cited
Morlines Maritime Agency Ltd v The Proceeds of Sale of the Ship “Skulptor Vuchetich” [1997] FCA 432 Appl
Patrick Stevedores No 2 Pty Ltd v The Proceeds of Sale of the Vessel MV Skulptor Konenkov (1997) 144 ALR 394 Appl
Port of Geelong Authority v The “Bass Reefer” (1992) 37 FCR 374 Cited
The Fairport (No 5) [1967] 2 Lloyd’s Rep. 162 Cited
William Fleming v “Equator” (1921) 9 Ll. L. Rep. 1 Cited
Webster v Seekamp (1821) 4 Barn & Ald 352 Appl
The Riga (1872) LR 3 A & E 516 Cited
Foong Tai & Co v Buchheister & Company [1908] AC 458 Cited
Christie v The Ship “Karu” (1927) 27 SR (NSW) 443 Cited
Lewmarine Pty Ltd v The Ship “Kaptayanni” [1974] VR 465 Cited
The Heinrich Bjorn (1883) LR 8 PD 151 Cited
Morlines Maritime Agency Ltd v The Ship “Skulptor Vuchetich” and Her Owners (1996) 136 ALR 206 Appl
The Silia [1981] 2 Lloyd’s Rep. 534 Appl
Secony Bunker Oil Co Ld v Owners of the Steamship D’Vora. The D’Vora [1953] 1 WLR 34 Appl
In re Harmony and Montague Tin and Copper Mining Company (Spargo’s Case) (1873) LR 8 App Cas 407 Cited
The Commissioner of Stamp Duties (NSW) v Perpetual Trustee Co Ltd (1929) 43 CLR 247 Cited
Federal Commissioner of Taxation v Steeves Agnew & Co (Vic) Pty Ltd (1951) 82 CLR 408 Cited
Commissioner of Taxation v P Iori & Sons Pty Ltd (1987) 15 FCR 363 Cited
P & C Connell Pty Ltd (provisional liquidator appointed) v The Electricity Trust of South Australia (1990) 8 ACLC 975 Foll
Re Carapark Industries Pty Ltd (In liquidation) [1967] 1 NSWR 337 Cited
Re Codisco Pty Ltd (1974) CLC 40-126 Cited
Airservices Australia v Ferrier (1996) 185 CLR 483 Foll
Re Laycock v Pickles (1863) 4 B&S 497; 122 ER 546 Cited
Siqueira v Noronha [1934] AC 332 Cited
Van Hasselt v Sack, Bremmer & Co; The Twentje (1859) 13 Moore PC 185; 15 ER 70 Appl
Borneo Company v Mogileff [1921] 6 Ll.L. Rep 528 Cited
Clausen v The Ship O M Alqora [1985] 38 SASR 481 Cited
OPAL MARITIME AGENCIES PTY LIMITED v THE PROCEEDS OF SALE OF THE VESSEL MV “SKULPTOR KONENKOV”
NG 197 OF 1998
BLACK CJ, COOPER AND FINKELSTEIN JJ
MELBOURNE (HEARD IN SYDNEY)
19 APRIL 2000

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 197 OF 1998

BETWEEN:

OPAL MARITIME AGENCIES PTY LIMITED
APPLICANT

AND:

THE PROCEEDS OF SALE OF THE VESSEL MV “SKULPTOR KONENKOV”
RESPONDENT

JUDGES:

BLACK CJ, COOPER AND FINKELSTEIN JJ

DATE OF ORDER:

19 APRIL 2000

WHERE MADE:

MELBOURNE (HEARD IN SYDNEY)

THE COURT ORDERS THAT:
1.The appeal be allowed in part.
2.The order of Tamberlin J that the claim of Opal Maritime Agencies Pty Limited be dismissed, be set aside and in lieu thereof :
DECLARE that the claim of Opal Maritime Agencies Pty Limited for the Suez Canal fee in the sum of $303,473.28 is a general maritime claim within the meaning of s 4(3) of the Admiralty Act 1988 (Cth).

3. The appeal be otherwise dismissed.
4.The proceedings be remitted to Tamberlin J for the purpose of hearing and determining any application by Opal Maritime Agencies Pty Limited in respect of the proceeds in Court, having regard to the terms of the orders previously made by Tamberlin J in the proceedings.
5.Pending the hearing and determination of any application by Opal Maritime Agencies Pty Limited to recover payment of the Suez Canal fee of $303,473.28 from the proceeds of the sale of the ship “Skulptor Konenkov” presently held in Court, or further order of Tamberlin J, the said proceeds not be paid out of Court except to pay any outstanding costs and expenses of the Marshal, including the Marshal’s costs of this appeal.
6.Any application by Opal Maritime Agencies Pty Limited for payment out of the proceeds in Court be brought by motion on notice given within twenty-eight days, in default of which the Marshal forthwith apply to Tamberlin J or another judge of the Court for such orders and directions as may be appropriate for the final disposition of the proceeds in Court.
7.Any directions concerning the giving of notice by advertisement or otherwise and the service of parties who may claim an interest in the proceeds in Court be given by Tamberlin J or such other judge of the Court who hears the application of Opal Maritime Agencies Pty Limited.
8.The Marshal’s costs of the appeal be taxed on an indemnity basis and be paid out of the fund in Court representing the proceeds of sale.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NG 197 OF 1998

BETWEEN:

OPAL MARITIME AGENCIES PTY LIMITED
APPLICANT

AND:

THE PROCEEDS OF SALE OF THE VESSEL MV “SKULPTOR KONENKOV”
RESPONDENT

JUDGES:

BLACK CJ, COOPER AND FINKELSTEIN JJ

DATE:

19 APRIL 2000

PLACE:

MELBOURNE (HEARD IN SYDNEY)

REASONS FOR JUDGMENT
THE COURT
Background

In 1995, the ship “Skulptor Konenkov”, along with another ship owned by the Baltic Shipping Company (“Baltic”), was arrested and sold by order of this Court. The proceeds of the sale of the ship (“the fund”) was paid into Court. On 20 December 1995, Sheppard J ordered that the priorities of all claims against the proceeds of the “Skulptor Konenkov” be determined. In response to a notice in Form 28 of the Admiralty Rules, Opal Maritime Agencies Pty Limited (“Opal”) on 29 January 1996 filed a caveat against the release of the proceeds of sale and a notice of intention to claim on the fund. The claim was for “Goods, materials and services provided to the owners of the ship ‘Skulptor Konenkov’”. At the time of filing the caveat and the notice, a provisional liquidator was in control of Opal.
On 23 April 1996, Opal filed a statement of claim in its proceeding against the fund. Opal pleaded that it had provided goods, materials and services to Baltic’s ships under a written Agency Agreement for the operation and maintenance of the ships, and that it had incurred disbursements on account of Baltic’s ships.
By paragraph 5 of the statement of claim, Opal pleaded :
“5.The Plaintiff operated a running ‘Offset’ account with the Baltic Shipping Co. The offset account operated whereby freight payments received from Baltic Shipping Co’s customers were credited to such account and payments (disbursements) made by the Plaintiff pursuant to the Agency Agreement for a service/material provided to the Baltic vessels were debited to the account. From time to time that offset account showed that the Plaintiff owed money to the Baltic Shipping Co. and from time to time the balance of account was such that the Baltic Shipping Co, owed money to the Plaintiff. The deficit position, whereby Baltic owed money to the Plaintiff was funded by the retained earnings of the Plaintiff. The position of the freight deficit to disbursements paid on one particular vessel was rectified by Baltic from the freight received from a subsequent vessel.”
Opal pleaded that as at 10 July 1995, the balance in the offset account was $2,551,019.13 in its favour. After giving Baltic the benefit of the sum of $1,912,246.28, being the amount of the proof of debt of Baltic admitted by the provisional liquidator, Opal claimed the balance of $638,772.85.
In support of its claim Opal filed an affidavit of Brian Silva, the provisional liquidator of Opal. Included in the exhibits to Mr Silva’s affidavit was a summary of the balance struck on the offset account. The sum of $2,551,019.13 was shown as :
“Disbursement A/cs Conceded by Baltic not Incl in Proof of Debt
- Equipment Operation A/c  1,059,448.93
- Equipment Operation A/c   29,238.79
- General  1,287,621.77
- Container Handling Fees     174,709.64(2,551,019.13) dr”
Opal’s claim was heard by Sheppard J on 17 and 18 June 1996. Mr Silva gave evidence of further debits and credits as between Opal and Baltic which reduced the claim to $538,856.21.
In the final submissions made to Sheppard J, it was agreed by Opal that the Container Handling Fees amount of $174,709.64 were fees and not disbursements, and that Opal’s claim should be reduced to $364,146.57. That left the remaining items as the two Equipment Operation Accounts and the General Account.
Sheppard J was of the opinion that Opal had failed to prove its case and that the evidence was not sufficient to satisfy him that the remaining heads of claim were general maritime claims under the Admiralty Act 1988 (Cth) (“the Act”). His Honour published his reasons on 14 May 1997 to allow the parties and their legal advisers to further consider the matter before he made final orders.
On 20 May 1997 Opal, by notice of motion, sought leave to file and serve affidavit material in support of its claim. Sheppard J made the following orders and directions on 21 May 1997 :
“1.That Opal Maritime Agencies Pty Limited have leave to reopen its case by leading such evidence as it may be advised in relation to the items constituting the two equipment operation accounts and the general account referred to in the document marked annexure D, annexed to the reasons for judgment published on 14 May 1997 and in relation to the appropriation of amounts credited to that account.
2.Such evidence is to be by way of affidavit evidence which is to be filed on or before 18 June.
3.Any evidence in reply is to be filed on or before 2 July.
4.The matter is to be listed for directions before Tamberlin J on 18 July 1997 at 9:30 am or on such other day as may be notified to the parties by Tamberlin J.
5.Leave to reopen the case is granted on the following conditions,
(a)Opal Maritime Agencies Pty Limited recover a judgment in rem in the sum of no more than $364,146.57 together with interest and costs;
(b)it recover no costs in rem additional to those which it would have recovered if its claim had been fully presented for hearings on 17 and 18 June 1996.
6.The costs of the further hearing of the matter are to be in the discretion of the judge who hears it.”
On 29 August 1997, Opal sought and obtained from Tamberlin J leave to file and serve an amended statement of claim. Such leave was granted :
“... on the basis and condition that no party is thereafter precluded from submitting that the claim by Opal Maritime Agencies Pty Ltd in excess of the sum of $364,146.57 together with interest and costs is not able to be raised as not being within the leave granted by Sheppard J and/or that the Court should not in it’s discretion make the declaration.”
The amended statement of claim, so far as presently relevant, pleaded :
“4.Pursuant to the terms of the Agency Agreement the Plaintiff:
(a)supplied goods, materials and services to ships owned or chartered by the Baltic Shipping Co for their operation or maintenance;
(b)equipped ships owned or chartered by the Baltic Shipping Co;
(c)incurred expenses in respect of general average [sic] and the towage and pilotage of ships owned or chartered by the Baltic Shipping Co;
(d)incurred expenses in respect of port, harbour, canal or light tolls, charges or dues in relation to ships owned or chartered by the Baltic Shipping Co;
(e)entered into agreements for and arranged on behalf of the Baltic Shipping Co the carriage of goods by ships owned or chartered by the Baltic Shipping Co;
(f)entered into agreements for and arranged on behalf of the Baltic Shipping Co the use or hire of ships by way of slot charterparty;
(g)made or incurred disbursements on account of ships owned or chartered by the Baltic Shipping Co.
PARTICULARS
Particulars are set out in the affidavit of James Rolfe sworn on 13 August 1997 and in the annexures to that affidavit in the affidavit of Craig James sworn on 22 August 1997.
5.[Paragraph 5 remained unchanged save for particularising the operation of the account by reference to an affidavit of Craig James sworn on 22 August 1997].
5A.The Agency Agreement was terminated by the Plaintiff serving upon Baltic Shipping Co a written notice of termination dated 15 May 1995.
PARTICULARS
The termination is deposed to in the affidavit of Craig James sworn on 22 August 1997.
5B.As a consequence of the matters referred to at paragraph[s] 5 and 5A above, the offset account came to an end.
6.The balance of the Offset account as at 10 July 1995 was, according to the provisional liquidator, $2,551, 019.13 in the Plaintiff’s favour.
PARTICULARS
Particulars are set out in the provisional liquidator’s affidavit and in particular annexure ‘D’.
7.On 6 February 1996 the Baltic Shipping Co submitted a proof of debt to the provisional liquidator. The sum of $1,912,246.28 was allowed by the provisional liquidator on or about 13 March 1996 and the provisional liquidator rejected the balance of the proof of debt.
PARTICULARS
The partial rejection of the proof of debt is set out as annexure ‘C’ to the provisional liquidator’s affidavit.
7A.In proceeding No 3808 of 1995 in the Supreme Court of New South Wales the Baltic Shipping Co appealed the partial rejection of the proof of debt by the provisional liquidator.
7B.In March 1996 the proceeding referred to at paragraph 7A above was dismissed.
8.The Plaintiff had claimed the amount of A$638,772.85 calculated as follows:
(i)Balance of Offset account
as at 10 July 1995 $2,551,019.13
(ii)Less Baltic’s claim against
Opal allowed by the provisional
liquidator$1,912.246.28
$ 638,772.85
PARTICULARS
Particulars are set out in the provisional liquidator’s affidavit and in particular annexure ‘D’ to that affidavit.
9.On 17 and 18 June 1996 Justice Sheppard heard evidence on the claim of the Plaintiff.
10.On 14 May 1997 Justice Sheppard gave reasons for judgment in the proceeding and found that the Plaintiff had not proved its claim.
11.On 21 May 1997 Justice Sheppard:
(a)gave leave to the Plaintiff to reopen its case by leading such evidence as it may be advised in relation to the equipment operation accounts and the general account referred to in annexure ‘D’ to the provisional liquidator’s affidavit and in relation to the appropriation of amounts credited to those accounts;
(b)ordered that the leave referred to at (a) be subject to the following conditions;
(i)that the Plaintiff recover a judgment in rem in the sum of no more than $364,146.57 together with interest and costs;
(ii)the Plaintiff recover no costs in rem additional to those which it would have recovered if its claim had been fully presented for hearing on 17 and 18 June 1996.
12.At the time the Plaintiff did the matters referred to at paragraph 4 above, the Baltic Shipping Co was the owner of the ship MV Skulptor Konenkov and of the ships set out below in respect of or on account of which the Plaintiff did the matters referred to at paragraph 4 above.
PARTICULARS
Komsomolosk
Magnitogorsk
Skulptor Vuchetich
Georgiy Pyasetskiy
Akademik Gorbunov
Anatoliy Vasiljev
Skulptor Konenkov
Further particulars are set out in the affidavit of James Rolfe sworn on 13 August 1997 and in the annexures to that affidavit.
13.As a consequence of the matters referred to at paragraphs 5, 5A and 5B above, the true and adjusted balances of the offset accounts are :
(a)as at 30 April 1995, $525,543 in favour of the Plaintiff;
(b)as at the conclusion or termination of the agency agreement, and offset account $1,244,823 in favour of the Plaintiff.
PARTICULARS
Particulars as set out in the affidavit of James Rolfe sworn on 13 August 1997 and in annexure JR1 to that affidavit.
14.In respect of the matters referred to at paragraph[s] 4, 5, 5A, 5B and 13 above, of the amount referred to at paragraph 13(b) above the Plaintiff claims an amount of $1,049,776.00 as a general maritime claim.
PARTICULARS
Particulars of the amount claimed are set out in the affidavit of James Rolfe sworn on 13 August 1997 and in the annexures to that affidavit and in the supplementary of James Rolfe sworn on 26 August 1997.
15.The claim made by the Plaintiff is a general maritime claim within the meaning of section 4(3)(f), (h), (j), (k), (m), (o), (p), (q), (r) and (t) of the Admiralty Act 1988.
16.The claim made by the Plaintiff is made pursuant to sections 4, 19 and 24 of the Admiralty Act 1988 against the proceeds of the sale of the ship formerly owned by the Baltic Shipping Co, the MV Skulptor Konenkov.”
Opal claimed the following relief :
“A.A declaration that the claim made by the Plaintiff in this proceeding is a general maritime claim within the meaning of section 4(3) of the Admiralty Act 1988.
B.A declaration that the general maritime claim referred to at A is in an amount of $1,049,776.00 or in such other amount as the Court determines.
C.In accordance with the orders made by Justice Sheppard on 21 May 1997:
(i)Judgment against the Defendant in the sum of $364,146.57 together with interest;
(ii)An order that the Defendant pay the costs of the proceedings of the Plaintiff up to and including 18 June 1996.
D.Interest on the amount referred to at C(i) pursuant to section 4(3)(w) of the Admiralty Act 1988 and in accordance with section 51A of the Federal Court of Australia Act 1976.
E.Such further or other relief as the Court thinks just and necessary.”
The matter proceeded to a hearing before Tamberlin J on 24 October 1997 on the basis of the orders made by Sheppard J and Tamberlin J and the case pleaded in the amended statement of claim.
At the hearing, Opal handed to the Court a statement which was marked “MFI 2”. The statement reads as follows :
“Personal liability of Baltic Shipping Company
on running account  $1,244,823       (JRI)
Possible in personam debits pre 30 April 1995
Lease container repairs on Equipment Operation
Account  $174,847.12 (JR2)
  $10,575.61 (JR4)
  $197,079.00 (JR5)
Agency Commission on Equipment Operation
Account  $113,710.68 (JR2)
Agency Commission on General Account  $58,483.33 (JR8)
Agency Commission on General Account  $34,730.39 (JR9 and
  JR11)
Container Fees  $151,817.73 (JR10
  para 32)
Slot Charters  $99,180.00 (JR11
  para 33)
Possible in personam debits post 30 April 1995
Lease container repairs on Equipment Operation
Account  $56,997.00 (JR12)
Agency Commission on Equipment Operation
Account  $19,572.95 (JR12)
Agency Commission on General Account  $162,518.71 (JR 13 and
  JR14)
Container Fees  $22,891.91 (JR 10
  para 32)
Slot Charters  $156,513.00 (JR11
  para 33)”

The meaning of the statement and its significance was addressed by his Honour in his reasons for judgment given on 12 December 1997. He said :
“The sum of $1,244,823 which appears at the head of the Statement is the balance at July 1995, said to be due to Opal on a running account over the period from March 1994 to July 1995. This running account was terminated on and from 15 May 1995. The consequence of termination is said to be that as from that date the intention of the parties to deal on the basis of a running account ended. The closest convenient accounting date to 15 May was 30 April 1995. There is no substantial dispute that this is a convenient and appropriate date for determining the present dispute.
As can be seen on its face the document is to be read in two parts. The first part consists of the items under the heading ‘Possible in personam debits pre 30 April 1995.’ The second comprises the items under the heading ‘Possible in personam debits post 30 April 1995’.
The expression ‘possible’ is used in the statement to indicate that there may be some disagreement as to whether the amounts referred to are recoverable against the in rem fund because it may be argued that they are of an in personam character. The question of characterisation will be considered later.
Under the running account, Opal has offset payments in respect of both in personam and in rem claims against the total debt, both in rem and in personam, owing by Baltic to Opal.
Opal submits that the starting point in deciding whether the claims are in rem, and therefore recoverable against the fund, should be taken as 30 April 1995. In other words, the submission is that the Court should not go behind the balance struck as at that date on the running account because that represents the agreed sum owing at that date as between Baltic and Opal. After 30 April 1995 it is conceded that it may be appropriate to disallow some items claimed on the ground that they are not of an in rem character.
Certain consequences follow from an acceptance of 30 April 1995 as a cut-off date. If all the claims in the Statement both pre and post-April 1995, which are referred to as ‘possible’ in personam debts are disallowed, then Opal will recover $468,835. If, however, the pre 30 April 1995 in personam claims are not excluded, but all the post 30 April claims are excluded, the resultant debt is $1,049,776 in favour of Opal. These amounts may, in turn, be further reduced if certain claims relating to the service and handling of containers are disallowed as in rem claims. This will also be considered later.
The Running Account
Opal submits that the Court should accept the running account balance struck as at 30 April 1995 between Opal and the shipowner and that the Court should not go behind that balance amount to investigate, accept or reject claims on the basis that they are not in rem in nature. While the running account existed, up to 30 April 1995, credits should be applied against debits of any character whether in personam or in rem. Thereafter, in personam debts might be excluded so that only in rem debts could be recovered.
The consequence of accepting this submission, is that the pre 30 April claims which are in personam would be recovered from the in rem fund arising from sale of the vessel. This result is contrary to well-settled Admiralty principles that claims against the proceeds of sale, which stand in place of the vessel itself, must be in rem in character. This is not a case where the nature of the pre 30 April 1995 items is unknown. The general description of the claims are specified. It seems to me therefore that the Court should consider each claim in the Statement and determine so far as possible its proper characterisation. If a claim is in personam then it should be disallowed against the fund.
The Statement of Account is between the shipowner, Baltic, and the agent, Opal. It is not an account between Opal and the ship itself, which is a party in its own right, or between Opal and someone on behalf of the ship. This being so, I cannot see how the ship, as a distinct legal entity, can be bound by a set-off of in personam entries in a set of accounts kept as between Baltic and Opal, which, as Sheppard J pointed out is comprised of ‘all matters of debit and credit which are involved in that account’: The ‘Skulptor Konenkov’ at 420.
Accordingly, I consider it is neither necessary nor appropriate to approach the claims on the basis that a cut-off point should be drawn as at 30 April 1995 and that the Court should accept that balance as recoverable and not decide whether particular items arising before that date are recoverable against the in rem fund. The Court is not, in my view, limited to a consideration of the post 30 April 1995 figures in the running account.”
The operation of the Equipment Operation Account and the General Account referred to in the Statement “MFI 2” was described by Mr James Rolfe, the sole director of Opal in paragraphs 45 and 46 of his affidavit :
“45.The components or categories of the general account are port charges, loading expenses, discharging expenses, agency expenses, vessel expenses and miscellaneous expenses. Port charges include pilotage, towage and mooring costs. Loading and discharge expenses include stevedoring, wharfage and cartage costs. Agency expenses comprises agency commission and fees payable to Opal by Baltic under the agency agreement. Vessel expenses include the provision of medical care and food to the crews of Baltic ships. Miscellaneous expenses will include items such as postage and the provision of funds to the master of the Baltic ship.
46.The components or categories of the equipment operation account are repairs to containers owned by Baltic; repairs to containers leased by Baltic; rental for the storage of containers at container depots; the lifting on and off of containers from trucks at container depots; the loading and discharging of containers from ships; container survey fees; the transportation of containers at the port; miscellaneous items; and agency commission payable to Opal by Baltic under the agency agreement. The item for repairs to containers leased by Baltic relates to slot charters. The miscellaneous items relate to the missing equipment operation accounts for which it is not possible to provide a breakdown and for which the total amounts payable are taken from the letters comprising annexures ‘JR-3’ and ‘JR-11’.”
This evidence was accepted by Tamberlin J. His Honour, after setting out paragraphs 45 and 46, stated :
“It is common ground that the claims relating to ‘Lease container repairs’ in respect of both periods are not recoverable against the fund. These claims relate to containers leased by Baltic which were used on ‘slot’ charters rather than on ships owned by Baltic. A ‘slot’ charter is a charter of a ship by a fleet operator such as Baltic for a specific voyage when none of the vessels in the fleet is available. These accounts cannot be claimed against the fund.
The items described in the Statement as ‘container fees’ are conceded not to be in rem claims. The amounts separately referred to in items ‘slot charters’ are not recoverable against the fund because these claims do not relate to Baltic vessels.”
His Honour concluded that the claims for agency commission on both the Equipment Operation Account and the General Account both before and after 30 April 1995 were not general maritime claims within s 4(3) of the Act, and were not recoverable by action in rem against the fund constituted by the proceeds of sale of the ship.
His Honour accepted the evidence of Mr Craig James concerning disbursements made by Opal in respect of containers and recorded in the Equipment Operation Accounts. Mr James deposed :
“21.The equipment operation accounts recorded disbursements incurred by Opal on account of services supplied to containers owned or leased by Baltic that were used by Baltic ships. The services included the storage of containers, the transport of containers, the carrying out of repairs to containers, the lifting of containers on and off trucks that would collect the containers either from Baltic ships at port or from transport centres (sometimes referred to as container parks), the inspecting and certifying of containers for seaworthiness, survey fees for the purpose of insurance claims and the packing and repacking of containers. The suppliers of these services would render invoices to Opal for payment by Opal. In turn, Opal would render to Baltic equipment operation accounts on a periodic basis for reimbursement of the costs incurred by Opal in respect of the servicing and handling of the containers.
22.Opal maintained equipment operation account files that were open and closed on a periodic basis. Each equipment operation account file was given a file number. Contained within each equipment operation account file were invoices rendered to Opal by the supplier of goods and services, a computer print out generated from computer accounting records maintained by Opal and a carbon copy of an invoice or account rendered by Opal to Baltic recording the total amount of disbursements incurred by Opal in respect of the servicing and handling of containers within the period covered by the equipment operation account file.
23.The computer print outs referred to in the preceding paragraph were generated from the computer accounting systems maintained by Opal in respect of the equipment operation account. Staff of Opal would key in to the computer information taken from invoices provided to Opal by suppliers of services in respect of the servicing and handling of the containers. The information keyed in would include a description of the service provided and the amount invoiced by the supplier of the service.
24.At any given time it was possible for Opal to identify and track the whereabouts of a container owned or leased by Baltic by reference to the relevant container number through computer records maintained by Opal. In this respect, on an inward journey it was possible to identify the Baltic ship upon which a container arrived at an Australian port, the date of its unloading at the relevant port and the container park to which the container had been transported for collection and unpacking. From that time it was then possible to identify the dates upon which the container had been repacked and transported to an Australian port for loading onto a Baltic ship for an outward journey. The computer records of Opal also supplemented computer records maintained by Transglobe Container Services Singapore which provided to Baltic a computer tracking system of containers owned or leased by Baltic that were used on Baltic ships throughout the world.
25.If an exporter in Australia wanted to use a container owned or leased by Baltic the exporter would obtain from Opal an authorisation number issued in the name of Baltic. The authorisation number would identify the container and would be issued to the exporter with the bill of lading. At the time the authorisation number was issued the Baltic ship upon which the container was to be placed for the outward journey would be identified in the cargo manifest used in preparing the bill of lading.
26.At the time Opal performed its responsibilities under the agency agreement in respect of the servicing and handling of containers owned or leased by Baltic for an outward journey, the identity of the Baltic ship that was to carry the relevant container out of Australia was known to Opal. Likewise, at the time Opal performed its responsibilities under the agency agreement in respect of the servicing and handling of containers owned or leased by Baltic for an inward journey, the identity of the Baltic ship which carried the relevant container into Australia was known to Opal.
27.Because Opal acted exclusively as maritime agent in respect of Baltic ships, it was not possible for containers owned or leased by Baltic to be used by ships other than Baltic ships which, as noted above, included ships both owned and chartered by Baltic. The containers the subject of the equipment operation accounts for which Opal incurred charges from service providers were therefore used only on ships owned or chartered by Baltic.
28.From time to time Baltic chartered spaces on ships owned by other fleet operators for specific voyages to and from ports within Australia. These are known as slot charters. The slot charters were used so as to fulfil obligations assumed by Baltic for the shipment of cargo. Containers owned and leased by Baltic which were the subject of the equipment operation accounts were not used on slot charters. Instead, containers for slot charters would be provided by or on behalf of the ship chartered by Baltic for the slot charter.”
His Honour concluded that none of the disbursements claimed in respect of containers was a general maritime claim within s 4(3) of the Act, and that they were not recoverable by action in rem against the fund.
As to the other items in the disbursement accounts, his Honour concluded that in light of the further evidence of Mr James, those items gave rise to general maritime claims and should be accepted for that purpose.
His Honour’s conclusion in respect of the claim was :
“The view which I have reached is none of the items set out in the Statement, MFI 2, in relation to pre and post 30 April 1995, should be accepted as maritime claims. The agency commission claimed is not an in rem claim. I am not satisfied that the claims asserted in respect of the Equipment Operation Account in relation to the servicing and handling of containers and other matters referred to therein should be accepted as maritime claims. I direct the parties to bring in Short Minutes to give effect to these reasons.”
On 18 December 1997 the matter again came before Tamberlin J for the settlement of orders to give effect to his Honour’s reasons of 12 December 1997. There was an issue between the parties as to how “credits” in favour of Baltic should be taken into account when determining any net amount recoverable by it against the proceeds of sale.
The position taken by Opal is set out in his Honour’s reasons for judgment given on 20 February 1998 :
“At the October hearing Opal argued its case on the basis that if certain items were disallowed and certain assumptions were not justified in relation to the equipment operation and the general account then there would be a nil recovery against the proceeds. The result was that Opal failed to satisfy me that the disputed claims were of an in rem character or that the assumptions were not justified. Accordingly, my view was that Opal had not made good its claims against the proceeds.
Opal now contends, however, that in order to arrive at the net amount recoverable by it against the proceeds, it is entitled to appropriate all credits in the accounts in favour of Baltic in such a way as to maximise its in rem claim. This could be achieved by applying all credits to the in personam items and thereby reducing such claims. Opal suggests there are four possible, alternative approaches which could be adopted in the calculation of the net amount due as an in rem claim. These are:
(1)Opal is entitled to appropriate all credits to any debits on the offset account. In particular, it may apply all credits first in satisfaction of in personam debits. The result is that the balance of the offset account constitutes an in rem debt recoverable in admiralty; or
(2)Conversely, Opal is not so entitled to elect to appropriate credits against particular debits but is obliged to do the opposite. It must appropriate credits first in payment of in rem debits with the result that the balance of the offset account constitutes an in personam debt and is not recoverable in admiralty; or
(3)The contractual arrangements and the course of dealings between the parties, the nature of the transactions conducted on the offset account and the nature of the admiralty jurisdiction requires that credits be applied to corresponding debits. The Court should be concerned with ascertaining the extent of the in rem debit by reference only to credits that correlate to in rem debits recoverable in admiralty; or
(4)The contractual arrangements and the course of dealings between parties are such that credits, or at least freight credits, are to be applied proportionately or rateably to all debits both in personam and in rem. They are to be applied to satisfy the oldest debits, regardless of the character of the debits or credits.”
His Honour rejected the positions contended for by Opal and made the following findings as to the operation of the account between Opal and Baltic as a running account :
“... The evidence does not indicate that, at any time prior to commencement of this proceeding, any appropriation was made in respect of any credits or debits with the result that Opal now contends for. The indication is that Opal simply offset each credit and debit against each other regardless of characterisation of the item in rem or in personam. The evidence does not establish that there has been any election made as to the treatment of in rem and non in rem claims. This is not a case where, for example, in rem claims and credits have been separated out and are applied against each other. In my view, it is too late to do so at this stage, having regard to the way in which the claim has been presented. Accordingly, I reject the submission that Opal is entitled to appropriate all credits, whether in rem or in personam, to any debits on the offset account and apply them firstly in satisfaction of in personam debts so as to maximise its in rem claim.
.....
The third alternative proposed by Opal is that the extent of the in rem debt is to be determined by reference only to credits that correspond to the ‘in rem’ debits recoverable in Admiralty.
There are two difficulties with this approach. The first difficulty is that Opal has chosen to base its claim on references to the balance of a running account. The way the case has been conducted renders it inappropriate to adopt such an approach in this case.
In addition, there is a long standing line of authority to the effect that an ‘in rem’ claim cannot be brought for a general balance of a mercantile account. ...
.....
The final suggestion for Opal was that any credits, or at least any freight credits, should be applied rateably towards satisfaction of all debits regardless of their nature. There is no indication in the evidence that this was ever intended or that it was done. For the reasons given above as to the way the claim was pleaded and the case was conducted, I do not think this approach should be followed.
Accordingly, my conclusion is that Opal cannot now elect to appropriate all credits, both in rem and in personam to maximise its in rem claim. I do not consider that the balance of the running account, conducted between the parties, which forms the basis of the present claim, gives rise to a general maritime claim against the proceeds of sale in circumstances where the balance is arrived at after the parties have indiscriminately offset both in rem and in personam claims and there has been an intermixture of such debits and credits. None of the alternatives advanced by Opal are available in the present case. For these reasons I am not satisfied on the evidence that there is any amount presently recoverable by Opal against the proceeds of sale.
Accordingly, I dismiss the claim brought by Opal. ...”
On 12 March 1998, Opal filed a notice of appeal against the judgment of Tamberlin J constituted by the whole of the reasons given on 20 February 1998 and part of the reasons given on 12 December 1997.
The issues raised on appeal
The requirements of the Act to obtain a judgment in rem against the fund

Opal submitted that ss 4(3), 17, 19 and 24 of the Act confer on claimants statutory rights of action in rem and that those rights are procedural in nature. A general maritime claim, it was submitted, may be commenced as an action in rem against a wrongdoing ship, a surrogate ship, or the proceeds of sale of the wrongdoing ship or a surrogate ship, where a claim could not otherwise be commenced in rem under s 15, s 16 or s 18 of the Act. So much followed, it was submitted, from the construction of the provisions and the decisions of The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 at 420; Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181 at 188 - 189, 194, 202 - 203; and Ocean Industries Pty Ltd (receivers and managers appointed) v Owners of the Ship MV “Steven C” [1994] 1 QdR 69 at 74 - 75.
Opal submitted that the principal error of the trial judge was to require that a general maritime claim be characterised as a claim which in itself is in rem in character in order to satisfy the requirements of s 4(3)(m), (o) or (r) of the Act. Such an approach, it was submitted, introduced a limitation not found in the express words of the provision and one which was contrary to the objects of the Act. One of those objects was to widen the admiralty jurisdiction. That Tamberlin J adopted such a construction is said to be evident from the statements from the reasons for judgment of 12 December 1997 concerning the running account set out earlier in these reasons, and his reason for refusing the claim for commission because it was “not an in rem claim and accordingly cannot be recovered from the proceeds of sale.”
In our view, the use of the phrase “in rem claim” by his Honour in that context, meant no more than that the maritime claim must be one which could be enforced in rem against the proceeds of sale before the claim could be recovered from those proceeds. In this, his Honour is echoing the observation of Sheppard J in the earlier judgments, that no claim can lead to a payment out of the proceeds of sale unless the claimant has recovered a judgment in rem against the vessel which has been served and arrested, or the fund which stands in its place: (1996) 64 FCR 223 at 237; (1997) 144 ALR 394 at 396, 399.
Any right of Opal to recover a judgment against the fund represented by the proceeds of sale of the ship “Skulptor Konenkov” arises from s 24 of the Act. Unless Opal could bring itself within the terms of s 24, it was not entitled to the orders which it sought. Section 24 provides :
“24. Where, but for the sale of a ship or other property under this Act, a proceeding could have been commenced as an action in rem against the ship or property, the proceeding may be commenced as an action in rem against the proceeds of the sale that have been paid into a court under this Act.”
For the purposes of the present proceedings, the relevant ship was the “Skulptor Konenkov”. Opal was required to prove that, but for the sale of the ship, it could have commenced proceedings as an action in rem against the “Skulptor Konenkov”.
By virtue of s 14 of the Act, Opal’s right to commence an action in rem against the “Skulptor Konenkov” was limited to the statutory rights given by the Act. The right to commence a proceeding in rem is provided for in ss 15, 16, 17, 18 and 19 of the Act.
Opal pleaded, by its amended statement of claim, that its right to proceed to commence proceedings in rem lay in ss 4(3) and 19 of the Act. On the appeal, and before Tamberlin J, Opal also argued that it had a right to proceed in rem against the “Skulptor Konenkov” under s 17 of the Act.
Section 19 of the Act provides :
“19. A proceeding on a general maritime claim concerning a ship may be commenced as an action in rem against some other ship if:
(a)a relevant person in relation to the claim was, when the cause of action arose, the owner or charterer of, or in possession or control of, the first-mentioned ship; and
(b)that person is, when the proceeding is commenced, the owner of the second-mentioned ship.”
For the purpose of s 19, the “Skulptor Konenkov” is the “other” and “second mentioned” ship.
To succeed in its claim, Opal was required to show that it had a general maritime claim concerning a ship which it is sought to enforce by an action in rem against the “Skulptor Konenkov” and that the conditions in paragraphs (a) and (b) of s 19 were made out. It is not a requirement of s 19 that there be in existence a general maritime claim on which proceedings could have been commenced in rem against the first named ship as a precondition to proceeding against the “Skulptor Konenkov”: Laemthong International at 188 - 189, 194, 202 - 203. However, Opal must prove that it had “a general maritime claim concerning a ship” and that the “relevant person in relation to the claim” was, when the cause of action arose, the owner or charterer of, or in possession or control of, the first mentioned vessel, and that that person, when the proceeding is commenced, was the owner of the second mentioned ship.
The term “relevant person” is a defined term in s 3 of the Act :
“ ‘relevant person’, in relation to a maritime claim, means a person who would be liable on the claim in a proceeding commenced as an action in personam;”
In the context of the present proceedings, Opal was required firstly to prove that it had a general maritime claim concerning a ship other than the “Skulptor Konenkov” in respect of which Baltic, at the time the cause of action arose, was either owner, charterer of, or the person in possession or control of that ship and would be liable on that claim in a proceeding commenced as an in personam action against Baltic. Opal was then required to prove that at the time the proceeding in rem was commenced against the “Skulptor Konenkov” under s 19 of the Act, Baltic was then the owner of the “Skulptor Konenkov”.
Section 19 of the Act does not give a right to commence an action in rem against the “Skulptor Konenkov” on a general maritime claim concerning the “Skulptor Konenkov”. The right to commence such a proceeding must be made out under s 17 of the Act.
Section 17 of the Act, on which Opal relied to satisfy the requirement that it could have brought an action in rem against the “Skulptor Konenkov” but for its sale, provides :
“17. Where, in relation to a general maritime claim concerning a ship or other property, a relevant person:
(a)was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and
(b)is, when the proceeding is commenced, the owner of the ship or property;
a proceeding on the claim may be commenced as an action in rem against the ship or property.”
Section 17 is not concerned with the enforcement of a general maritime claim concerning one ship against another ship in the same ownership; that is the function of s 19 of the Act. Section 17 is concerned with giving a right to proceed by an action in rem against a particular ship on a general maritime claim concerning that ship, where there is a person who would be liable on that claim in a proceeding commenced as an action in personam against that person and the conditions in paragraphs 17(a) and (b) are satisfied. The cause of action referred to in s 17(a) is the cause of action in respect of the claim on which the relevant person would be liable in any in personam proceedings.
For an action in rem to be commenced against a ship, it is not sufficient that the ship is the property of a person who would be liable on an action in personam on a general maritime claim concerning a ship. The ship against which it is sought to commence in rem proceedings must also be the ship in respect of which the general maritime claim is made. The policy recommendation of the Australian Law Reform Commission (“the ALRC”) in its Report on Civil Admiralty Jurisdiction and draft Admiralty Bill accompanying the report, which included clause 17 in the form of the present s 17 of the Act, was that the nexus between the ship in respect of which the claim arose, and the ship which may be proceeded against in rem, remain: see Report No 33 Civil Admiralty Jurisdiction (AGPS) Canberra (1986) paras 124 - 125, 136.
In coming to the view which it did, the ALRC accepted the approach taken by the House of Lords in The Eschersheim [1976] 1 WLR 430. The leading opinion of the House was given by Lord Diplock with whom the other Law Lords who heard the appeal agreed. At issue was the proper construction of s 1(1) of the Administration of Justice Act 1956 (UK) (“the 1956 UK Act”) which Act implemented as part of the domestic law the treaty obligations of the United Kingdom under the International Convention Relating to the Arrest of Seagoing Ships signed at Brussels on 10 May 1952 (“the Arrest Convention”).
The 1956 UK Act replaced s 22 of the Supreme Court of Judicature (Consolidation) Act 1925 (UK) (“the 1925 UK Act”) and redefined the admiralty jurisdiction of the High Court in the light of, and to give effect to, the United Kingdom’s treaty obligation under the Arrest Convention; Gatoil International Inc v Arkwright-Boston Manufacturers Mutual Insurance Co [1985] AC 255 (HL) at 263 - 264, 266; Bain Clarkson Ltd v The Owners of the Ship “Sea Friends” [1991] 2 Lloyd’s Rep. 322 (CA) at 323; “Shin Kobe Maru” v Empire Shipping Co Inc at 417.
The Arrest Convention itself contained in Article 1 a closed list of maritime claims. The list in the Arrest Convention was based on the list of types of claims then assigned under English law to the admiralty jurisdiction of the High Court by s 22 of the 1925 UK Act: Gatoil Inc at 264; The River Rima [1988] 1 WLR 758 at 764.
The Arrest Convention was a compromise between the existing English law and the law of many other European countries as to the circumstances in which a ship might be arrested: Berlingieri Arrest of Ships 2nd ed 1996 at 7 - 8, 39 - 40; The Deichland [1989] 2 Lloyd’s Rep. 113 (CA) at 117. The effect of the compromise on the operation of the Arrest Convention was summarised by Neil LJ in The Deichland at 117 :
“... English law had hitherto restricted the right to arrest a ship to cases where a ‘maritime’ claim was made. Moreover the power of arrest did not extend to other ships in the same ownership as the ship concerned with the claim: see The Beldis, (1935) 53 Ll L Rep 255; [1936] P 51.
In some Continental countries, however, the power of arrest could be exercised in respect of any claim whether maritime or non-maritime and against any ship in the same ownership.
The 1952 Convention reached a solution which restricted the power to arrest to ‘maritime claims’ as defined in the Convention. In substance the Convention adopted the approach of English law.”
Lord Diplock outlined the purpose and effect of the Arrest Convention in The Eschersheim. He said (at 434 - 435) :
“The purpose of that Convention was to provide uniform rules as to the right to arrest seagoing ships by judicial process to secure a maritime claim against the owner of the ship. Article 1 defined by reference to their subject matter various classes of maritime claim in respect of which alone a right of arrest was to be exercisable; while articles 2 and 3 granted and confined the right of arrest to either (a) the particular ship in respect of which a maritime claim falling within one or more of those classes arose or (b) any other ship owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship.
The provisions of article 3 represented a compromise between the wide powers of arrest available in some of the civil law countries (including for this purpose Scotland) in which jurisdiction to entertain claims against a defendant could be based on the presence within the territorial jurisdiction of any property belonging to him, and the limited powers of arrest available in England and other common law jurisdictions, where the power to arrest was exercisable only in respect of claims falling within the Admiralty jurisdiction of the court and based upon a supposed maritime lien over the particular ship in respect of which the claim arose.”
As to its implementation by the 1956 UK Act, his Lordship said (at 435) :
“The way in which the draftsman of Part I of the Administration of Justice Act 1956 set about his task of bringing the right of arrest of a ship in an action in rem in English courts into conformity with article 3 of the Convention was (a) by section 1 of the Act, to substitute a fresh list of claims falling within the Admiralty jurisdiction of the High Court, and (b) by section 3, to regulate the right to bring an action in rem against a ship by reference to the claims so listed. Sections 22 and 33 of the Supreme Court of Judicature (Consolidation) Act was repealed.
Apart from the addition of claims in respect of salvage, towage and pilotage of aircraft (which in any event are not subject to the Convention) there is again no significant difference between what is contained in the new list and what was contained in the 1925 list, except that the language is rather more succinct and a little closer to the language of article 1 of the Convention. ...”
As to the operation of s 1(1) and s 3(4) of the 1956 UK Act, his Lordship said (at 436 - 437) :
“It is clear that to be liable to arrest a ship must not only be the property of the defendant to the action but must also be identifiable as the ship in connection with which the claim made in the action arose (or a sister ship of that ship). The nature of the ‘connection’ between the ship and the claim must have been intended to be the same as is expressed in the corresponding phrase in the Convention ‘the particular ship in respect of which the maritime claim arose’. One must therefore look at the description of each of the maritime claims included in the list in order to identify the particular ship in respect of which a claim of that description could arise.”
Professor Berlingieri in his commentary on the Arrest Convention, expressed the view that the decision of the House of Lords in The Eschersheim reiterated the fundamental rule for the arrest of a ship under the provisions of the Arrest Convention. That was that the right to arrest existed only if the claim arose in respect of a “particular ship” and the owner was liable in respect of a maritime claim relating to that ship: at p 59.
It was the requirement that there must exist a relationship between the claim and a particular ship which led Professor Berlingieri to conclude :
“Claims against a shipowner that relate to the maintenance and operation of his ships, but which are not related to a particular ship, cannot be secured by means of the arrest of one of the ships owned by him. If, for example, the owner purchases stores or spare parts for his fleet and uses them for one or more of his ships when the need arises, the claim of the supplier for the payment of such spare parts or stores has not arisen in respect of a particular ship. The same situation would exist in the case of a contract for the lease by a shipowner of a number of containers to be used on board the container ships he operates and of a contract of affreightment, when the ships to be employed by the owner for the carriage of the agreed tonnage of cargo are not specified and the owner does not perform the contract. ...”
Arrest of Ships (2nd Ed) at 59.
The reasoning in The Eschersheim as to the need for the relationship between claims and particular ships is applicable to all heads of claim under s 4(3) of the Act.
The requirement and its application across all classes of maritime claims was accepted by the ALRC: see ALRC Report para 151 fn 27, 28; Chapter 8 paras 125 - 126.
The consequence of the approach adopted by the ALRC in its report and draft legislation and the enactment of that draft as the Act by the Australian Parliament, is that the nature of the connection between the claim and the ship which it is sought to arrest as described in The Eschersheim must exist for the purposes of s 4(3), s 17 and s 19 of the Act. Section 4(3) neither stands outside of what Professor Berlingieri described as the fundamental rule nor operates independently of s 17 and s 19 to the extent that they give effect to that rule.
Sections 17 and 19 respectively prescribe the conditions to be satisfied before a proceeding on the claim concerning a ship may be commenced as an action in rem against the ship or against another ship. In respect of each section the claim is limited to a claim concerning the ship identified by the section as being the relevant ship which is the subject of the claim. The type of claim which falls within the description of a general maritime claim is determined by the operation of s 4(3) of the Act. Section 4(3) defines in paragraphs (a) to (w) inclusive the claims which satisfy the requirement of being, for the purposes of ss 17 and 19, a general maritime claim.
The issues before Tamberlin J arising from the amended statement of claim, the way the proceedings were conducted before his Honour, and the requirements of ss 24, 19 and 17 of the Act, were :
(a)Whether Opal had established the existence of any general maritime claim concerning the “Skulptor Konenkov” which gave it the right to proceed to enforce the claim by commencing an action in rem against that ship under s 17 of the Act, on the assumption that the other requirements of the section were satisfied.
(b)Whether Opal had established the existence of any general maritime claim concerning another ship which gave it the right to enforce that claim by commencing an action in rem against the “Skulptor Konenkov” under s 19 of the Act on the assumption that the other requirements of the section were satisfied.
(c)Whether the preconditions necessary to commence an action in rem against the proceeds in Court from the sale of the “Skulptor Konenkov” under s 24 of the Act were made out.
These were the issues which Tamberlin J addressed. In our view there is no demonstrable error in the judgment of his Honour as to the proper construction of ss 17, 19 or 24 of the Act and what Opal was required to prove to obtain a judgment in rem against the fund.
The real issue is whether, on the facts as found, the claims advanced by Opal were claims which fell within any of the claims specified in s 4(3) of the Act.
Agency Commissions
Opal, before Tamberlin J and on the appeal, submitted that agency commission payable under the written Agency Agreement dated 24 January 1992 on the Equipment Operation and General Accounts, as identified in the document marked “MFI 2” and described in the evidence of Mr Rolfe, was a general maritime claim.
It was submitted that the claim for commission fell within the category of claims specified in paragraphs (m), (r) and/or (o) of s 4(3). These provisions relevantly state :
“4(3)(m)a claim in respect of goods, materials or services (including stevedoring and lighterage services) supplied or to be supplied to a ship for its operation or maintenance;
.....
(o)a claim in respect of the alteration, repair or equipping of a ship;
.....
(r)a claim by a master, shipper, charterer or agent in respect of disbursements on account of a ship;”
Opal submitted that the object of the Act was to expand the circumstances in which claims could be enforced by proceedings in rem, and that a liberal construction of each of the paragraphs ought to be adopted. Further, Opal submitted that the words “in respect of” are words of wide import which, in the context of the Act, only require that there be a connection between the subject of the claim and the subject matter described in the respective paragraphs.
That such an approach was warranted, Opal submitted, was demonstrable from the ALRC Report para 164 and the decision in The Westport (No 3) [1966] 1 Lloyd’s Rep. 342.

One of the objects of the ALRC in its report and draft bill, was to strike a balance between following the English legislation and seeking to clarify and simplify the law: ALRC Report para 95. In respect of disbursements, the Commission said (para 164) :
“164. Disbursements. The rather fragmented statutory underpinning in Australia for the maritime lien for master’s disbursements has already been discussed, as has the proposed provision for its enforcement as a maritime lien (See para 119, 122). This head of jurisdiction will give a parallel statutory right of action in rem to the master. The question is whether a similar statutory right should be allowed in respect of claims for disbursements by a person other than the master. All the overseas Acts allow claims in admiralty jurisdiction for disbursements by shippers, charterers or agents. The 1952 Arrest Convention art 1(1)(n) and the Admiralty Jurisdiction Regulation Act (SAf) s 1(1)(ii)(o) refer to disbursements on account of a ship or its owner. The remaining Acts refer more narrowly only to disbursements on account of a ship (Administration of Justice Act 1956 (UK) s 1(1)(p); Supreme Court Act 1981 (UK) s 20(2)(p); Admiralty Act 1973 (NZ) s 4(1)(p); Federal Court Act 1970 (Can) s 22(2)(p)). The issue is whether any extension beyond disbursements by a master is required or desirable in Australia, and whether disbursements not made on account of a ship should be included. With respect to the master’s lien for disbursements :
[g]iven the facility of modern communication, the wide international spread of shipping companies and world proliferation of specialist agents, the circumstances when a master will be required to assume a personal responsibility for the demands and contingencies of a voyage are probably diminishing.
(Thomas (1980) para 341. This presumably explains the virtual absence of modern reported decisions on master’s disbursements).
To the extent that agents are now making disbursements rather than masters it seems reasonable to allow agents to recover in admiralty. The argument for widening the class of people whose disbursements claims are within admiralty is simply to improve their chances of recovery against foreign shipowners. The argument against extension similarly parallels the more general argument for not extending admiralty jurisdiction; unlike the master, most agents, shippers and charterers are well able to protect themselves by ordinary commercial means (such as letters of credit or bank guarantees) against elusive shipowners. It follows from the position taken on the more general argument that the recommendation should be for wider jurisdiction. The categories used in the overseas texts should be followed in the interest of uniformity. The reference to charterers and shippers is perhaps redundant since any disbursements made by these categories of people would normally be pursuant to a charterparty or contract for the carriage of goods by sea. As such it could be recovered under other heads of jurisdiction. But their inclusion will do no harm. The term ‘agent’ would appear sufficiently elastic to cover not only those trading as ship’s agents but others making payments on behalf of the ship. To the extent that these payments are for necessaries or other goods and materials supplied on the request of the owner or master to a ship they could be claimed under the head of jurisdiction covering goods or materials supplied to a ship (See eg The Zafiro [1960] P1, 14). But the overlap may not be complete (eg The Westport (No 3) [1966] 1 Lloyd’s Rep 342) and again the redundancy seems harmless. It is less clear that disbursements should extend beyond the current definition of payments made ‘on account of the ship’ (Navigation Act 1912 (Cth) s 94(2) referring to master’s disbursements). As mentioned above, only the 1952 Arrest Convention and the South African legislation allows extension to disbursements on behalf of the ship’s owner. Such an extension apparently covers disbursements made on behalf of someone who happens to own a ship. This seems overbroad. The provision should cover only claims which are made on behalf of a ship.”
The decision in The Westport (No 3) is footnoted as an example where the overlays between a claim “for goods or services supplied to a ship” and a claim for disbursements being payments made on account of the ships may be incomplete.
In The Westport (No 3) the ship’s agent moved for judgment in default of appearance against the proceeds of sale of the ship Westport which had been sold by order of the Court. The claim was for £503 10s 10d of which £423 1s 00d was for disbursements paid on account of the ship, with the balance of £80 9s 10d being for agency fees. Hewson J identified the issue for decision as “whether the agency fees are properly included in this claim for disbursements”. The claim was brought under s 1(1)(p) of the 1956 UK Act, which provided :
“1(1) The Admiralty jurisdiction of the High Court shall be as follows, that is to say, jurisdiction to hear and determine any of the following questions or claims -
.....
(p)any claim by a master, shipper, charterer or agent in respect of disbursements made on account of a ship.”
Hewson J resolved the issue in the following manner (at 342 - 343) :
“Under Sect 1(1)(p) of the Administration of Justice Act, 1956, this Court has jurisdiction (inter alia) in respect of ‘any claim by’ an ‘agent in respect of disbursements made on account of a ship’. Obviously an agent does not work for nothing in making disbursements and the usual arrangements that an agent is expected to make. In my view he is entitled to include in his claim a reasonable figure for his services, and I am satisfied that the £80 9s. 10d. is a reasonable figure in the circumstances.”
The issue which the ALRC regarded as not being covered by a claim for goods and services supplied to a ship was thus the right to remuneration for making the necessary arrangements for the ship which gave rise to the necessity to pay and making the disbursements by payment on account of the ship. Whether this view was correct is a matter which will be discussed below. What is important is, that in the context of its report, the ALRC affirmed the policy position that the claims covered be limited to payments in the nature of disbursements and that they be made on account of a particular ship. To this end it adopted the wording of s 20(2)(p) of the Supreme Court Act 1981 (UK) (“the 1981 UK Act”) which repeats the language of s 1(1)(p) of the 1956 UK Act.
The High Court in The Owners of the Motor Vessel “Iran Amanat” v KMP Coastal Oil Pte Ltd (1999) 196 CLR 130, said in a judgment of the Court in the context of the meaning of s 17 and s 19 of the Act (at 136) :
“The legislative provisions set out above originated in a draft Bill attached to a 1986 Report of the Australian Law Reform Commission on Civil Admiralty Jurisdiction (Australian Law Reform Commission, Civil Admiralty Jurisdiction, Report No 33 (1986)). The language of the draft Bill originated in that of the Administration of Justice Act 1956 (UK) (Subsequently contained in Supreme Court Act 1981 (UK), s 21(4)). There is no doubt that the Parliament followed the language of the English statute, which, by 1988, had been construed and applied in a number of cases. ...”
and (at 138) :
“The Australian legislation having been enacted against the background of English legislation and authority set out above, the definition of ‘relevant person’ should be understood as having the same meaning as the courts had given to the corresponding words in the English statute. When the Parliament has enacted legislation, affecting the subject of international shipping, and followed a statutory precedent from overseas which has by then received a settled construction, there is every reason to construe the statutory language in the same way in this country unless such construction is unreasonable or inapplicable to Australian circumstances. ...”
The approach taken by the High Court to s 17 and s 19 of the Act is in principle to be adopted with respect to the content of the maritime claims specified in s 20(2) of the 1981 UK Act where the provisions of that section have been adopted and applied by the Australian legislature in the form and content of the classes of general maritime claims specified in s 4(3) of the Act.
In our view the recommendation of the ALRC in the terms expressed and the history of the UK legislation indicates that s 4(3)(o) of the Act was not intended by the Australian legislature to have an operation wider than that given to s 20(2) of the 1981 UK Act.
In the United Kingdom masters’ disbursements had, by 1952, acquired a particular meaning which in part was grounded on s 10 of the Admiralty Court Act 1861 (UK), which gave jurisdiction to the Admiralty Court over any claim by a master “... for disbursements made by him on account of the ship.” Those words were construed by Sir Robert Phillimore in The Feronia (1868) LR 2 A & E 65 at 75 :
“The next question of importance relates to the true construction of the words in the statute, ‘disbursements made by him.’ It certainly appears to me that the legislature intended to include under these words all proper expenditure made by the master upon the ship, whether the particular articles, the subject of this expenditure, were obtained by immediate or by promised payment; and that in each case two questions would arise: 1. Had the particular articles actually been applied to the use of the ship? 2. Whether these articles were such as the necessities of the ship justified and required? ...”
In The Orienta [1895] P 49, Lord Esher MR, in a judgment agreed in by the other members of the English Court of Appeal, said (at 55) :
“The real meaning of the word ‘disbursements’ in Admiralty practice is disbursements by the master, which he makes himself liable for in respect of necessary things for the ship, for the purposes of navigation, which he, as master of the ship, is there to carry out - necessary in the sense that they must be had immediately - and when the owner is not there, able to give the order, and he is not so near to the master that the master can ask for his authority, and the master is therefore obliged, necessarily, to render himself liable in order to carry out his duty as master.”
In Bain Clarkson Ltd v The Owners of the Ship “Sea Friends” in a judgment agreed in by the other members of the Court, Lloyd LJ defined a disbursement within s 20(2)(p) of the 1981 Act as a liability undertaken to acquire something that was “needed to keep the ship going”. His Lordship gave bunkers as an example. If the subject matter of the disbursement was not necessary to keep the ship going, it was not a disbursement on account of a ship. His Lordship also held that s 20(2)(p) required that the disbursement be in the nature of a master’s disbursement even if made by an agent and that the wording of Article 1(n) of the Arrest Convention did not lead to a different result; rather Article 1(n) contained the same requirement: at p 324.
Article 1(n) of the Arrest Convention provides :
“Master’s disbursements, including disbursements made by shippers, charterers or agents on behalf of a ship or her owner.”
Professor Berlingieri in his commentary on the Arrest Convention expresses the opinion that the reference to Owner in the article was to differentiate between disbursements which relate to the ship itself and disbursements made for the operation of the ship. Disbursements falling within the second category are only disbursements under the Article and thus a maritime claim if they were made on behalf of the shipowner in respect of the particular ship: Arrest of Ships (2nd Ed) at 54 - 55.
The introduction of ss 1(m) and 1(p) of the 1956 UK Act was seen as extending the right given by the legislature to bring in rem proceedings on claims in respect of the supply of necessaries to a ship, and in respect of disbursements made on behalf of a ship: John Carlbom & Co Ltd v Zafiro (Owners). The Zafiro [1960] P 1 at 14 per Hewson J.
The extension of the right to proceed in rem in respect of disbursements lies in the additional persons, including an agent having the right. The second aspect lay in the use of the words “any claim ... in respect of disbursements. ...” Those words, in the context of s 20(2)(p) of the 1981 UK Act and in s 4(3)(r) of the Act, have a wider operation than the word “for”, which is used in the formulation of claims under other paragraphs. The words should not be given an unduly restrictive operation: Centro Latino Americano De Commercio Exterior S.A. v Owners of the Ship “Kommunar” [1997] 1 Lloyd’s Rep. 1 at 5; The “Edinburgh Castle” [1999] 2 Lloyd’s Rep. 362 at 363.
That said, the words nevertheless require a relationship between the claim and the “disbursements made on account of a ship”. The question then arises, how close must the circumstances giving rise to the claim be to the disbursements made on account of the ship before there is a sufficient connection to permit the claim to be by an action in rem under s 4(3)(r) of the Act?
As we have set out earlier in these reasons, the report of the ALRC makes clear that disbursements on behalf of the ship’s owner are not intended to be covered by para 4(3)(r) of the Act.
The decision in The Westport (No 3) does not stand as authority for the proposition that agency fees and commissions are within s 4(3)(r) of the Act as disbursements irrespective of the subject matter giving rise to a claim for agency fees and commissions. Nor does the decision stand as authority for the proposition that agency fees may be recovered in respect of disbursements for ships other than the ship for which the disbursement was made or recovered otherwise than as part of a claim for disbursements in respect of the ship on whose behalf the disbursements were made.
Tamberlin J rejected the claim to agency commission on two bases. The first was that, on a proper analysis of the Agency Agreement, the services supplied to Baltic by Opal were supplied to it as a shipowner and that the claims could not be properly characterised as disbursements made on behalf of the ship. The second basis was that the provision of agency services for which a fee or commission was claimed was not a claim for a disbursement.
In our view, his Honour was entitled to find that the Agency Agreement was made with the owner Baltic to supply agency services in respect of unnamed ships which Baltic may choose to engage in trade to and from Australia where those vessels fell within the general descriptions in clause 1 of the agreement. The agreement provided “that [Baltic] appoints [Opal] as their General Agent at the ports of the [sic] AUSTRALIA for Owner’s vessels indicated in clause 1 and respective Addenda to this Agreement.”
Clause 1 of the agreement provided :
“1.1This agreement covers tramp and passenger vessels owned, managed, operated, or chartered by Owner, whenever relevant contract affreightment allows Owner to nominate their own agent.
1.2This Agreement covers also liner vessels of Owner regular cargo services for which appropriate Addenda are in force. These Addenda are to be considered an intergal [sic] part of this Agreement.
1.3The Agreement covers also Owners vessels under repair in the shipyard in the ports covered by this Agreement subject to special instructions of Owner.”
The agreement provided for agent’s obligations in clause 2. The obligations were divided into two categories :
(a) “Generals”;
(b) “Agency services to Owners vessels”.
The twenty obligations in part (a) relate to the conduct of and advancement of Baltic’s business interests in providing shipping services to and from Australian ports. The nature of the relationship is apparent from the nature of the obligations, of which the following is a representative sample :
“2.1Protecting and promoting Owners interests in all respects. Representing Owner before official harbour and other authorities, institutions, and commercial enterprises concerned, and maintaining due contact with them. Providing Owner with full information on all matters relevant to subject of this Agreement and on special request of Owner and their Representatives.
.....
2.4Reporting to Owner regularly about Owners vessels arrived, their position and prospects, as well as about any important or special occurrences connected with the vessels, their cargo, passengers and crew.
2.5Promoting, co-ordinating and controlling all cargo operations on Owners vessels, including arranging for stuffing, unstuffing and transhipment of containers, always endeavouring to minimise time and cost of the operations.
Undertaking any arrangements in this respect, always taking into account the provisions of the respective Charter-Party and Owners instructions.
Overtime operations involving - extra expenses for Owners account, if the operations are not compulsory under local regulations, are to be arranged only with previous approval of Owner or the Master of the particular vessels.
2.6Attending to freight and chartering contracts and conference matter always securing Owners interests in this respect.
2.7Announcing Liner schedules and advising customers of Owners vessels position.
Canvassing for and booking cargo.
Reporting to Owner regularly about cargo booked and about customers offers on the matter, booking and space allotments regarding each particular vessel.
2.8Announcing Owners freight rates and amendments thereto, and giving information on same as required. Quoting rates of freight according to liner tariffs in force and Owners instructions.
Pricing of through rates. Quoting sea-borne and inland transport freight for containers.
2.9Calling forward outward cargo and receiving same for shipment, delivering inward cargo. Attending to transhipment cargo. All these functions are effected on behalf of and for Owners account in case it applies to the vessels of Owners regular services in accordance with relevant Addenda to this Agreement, or in the cases when and where it is provided for by the particular Charter-Party or other particular document confirmed by Owner or under particular Owners instruction.
.....
2.13Assisting Owner and Masters of Owners vessels in solving any disputes regarding the quantity and quality of the cargo loaded on or discharged from Owners vessels. Organising receiving the cargo by consignees or their agents alongside Owners vessels. Arranging for tallying and checking the cargo loaded or discharged in accordance with local practice and Masters requests. Taking all necessary steps to prevent Owners losses during further movement of inward cargo to receivers if under local rules cargo is received and cargo documents signed after vessels sailing. Furnishing Owner and his Representative with necessary documents to prevent the losses.
.....
2.19Not accepting without the consent of Owner the agency of any other competitive cargo lines of other owner. Not divulging to any third parties any knowledge, information or experience in respect of business matters and practices of Owner, acquired in result of activity as Agent under this Agreement.
2.20At Owners request, providing Owners Representative free of charge with proper office accomodation [sic] and facilities and introducing them into all matter of Agents activity covered by this Agreement. All other expenses of the Representative and their wages are to be borne by the Owner.
Promoting in getting visas for Owners Representatives.
2.21Keeping all records, accounts and other documents concerning Owners vessels and their cargo handled under this Agreement as well as any important or special occurrences connected with the vessels, their cargo, crew and passengers, for at least three years and producing copies of the documents at any time during this period on reasonable request and notice of Owner.”

The appointment of the provisional liquidator under the Corporations Law (“the Law”) suspended the powers of and functions of the officers of Opal: s 471A(2) of the Law. It also had the effect of staying proceedings and suspending enforcement of process against Opal: s 471B of the Law. It did not affect the existence or character of Opal: P & C Connell Pty Ltd (provisional liquidator appointed) v The Electricity Trust of South Australia (1990) 8 ACLC 975 (FC) at 979; McPherson Law of Company Liquidation 4th Ed (1999) LBC at 207.
The powers of the provisional liquidator were those conferred on him by the Law, by the rules of the Court that appointed him, and by the terms of the order appointing him: s 472(3) of the Law. Those powers included a power to carry the business of the company in order to preserve the assets of the company and the status quo pending the making of a winding up order: s 472(4)(a) of the Law.
The primary function of a provisional liquidator is to take control of the company and to preserve the status quo, including the getting in and protection of its assets with the least harm possible to all concerned so as to enable the Court to decide after a proper and final hearing whether or not the company should be wound up: Re Carapark Industries Pty Ltd (In liquidation) [1967] 1 NSWR 337 at 341; Re Codisco Pty Ltd (1974) CLC 40-126 at 27,906; P & C Connell Pty Ltd (provisional liquidator appointed) v The Electricity Trust of South Australia at 979.
The appointment of the provisional liquidator did not prevent him from continuing to conduct the agency business of Opal under the Agency Agreement until its termination in consequence of the giving of the notice on 15 May 1995. Nor did the appointment prevent the provisional liquidator from attempting to obtain payment for agency services rendered both before and after his appointment by preparing and sending to Baltic full disbursement accounts and setting those accounts off against freight collections standing to Baltic’s credit in the owner’s account maintained by Opal. The evidence shows that this was in fact the course followed by the provisional liquidator.
On 25 August 1995, Opal wrote to Baltic a letter which began :
“Dear Sirs,
DISBURSEMENT ACCOUNTS
We enclose original disbursement accounts totalling A$2,099,744.07.
The related disbursements have been offset against freight collections for the week ending 25th August, 19095 [sic].
Disbursement accounts included as follows :

KOMSOMOLSK 97 BRIS 08/06/95 13,390.49

KOMSOMOLSK 97 BRIS 08/06/95 452.28

KOMSOMOLSK 97 ADEL 24/06/95 55,858.95

KOMSOMOLSK 97 MELB 11/06/95 352,773.11

KOMSOMOLSK 97 SYD 08/06/95 225,851.89

KOMSOMOLSK 97 FREM 02/06/95 80,503.21

OP9502 FEB95 ALL PORTS 7,505.25

OP9501 JAN95 ALL PORTS 4,870.82

DISCOVERY BAY 412 FREM 25/06/95 1,684.13

DISCOVERY BAY 405 FREM 29/03/95 411.00

NELSON BAY 409 ADEL 18/05/95 1,713.00

BRANDENBURG 406 FREM 05/04/95 2,129.00

NELSON BAY 409 SYD 27/05/95 7,675.15

NELSON BAY 409 FREM 18/05/95 1,318.00

NELSON BAY 409 MELB 27/05/95 4,190.00

CONTSHIP JORK 020 ADEL 28/06/95 119.43

PALLISER BAY 007 FREM 03/07/95 260.00

CONTSHIP FRANCE 018 SYDNEY 07/06/95 102.00

CONTSHIP SYDNEY 022 SYDNEY 04/07/95 1,500.00

CONTSHIP JORK 020 SYDNEY 27/06/95 8,485.53

CONTSHIP SYDNEY 022 SYDNEY 05/07/95 1,532.57

MORETON BAY 414 SYDNEY 17/07/95 3,501.21

SKULPTOR VUCHETICH 94 MELB 06/03/95 4,678.96

DISCOVERY BAY 412 SYDNEY 25/06/95 8,054.23

SKULPTOR KONENKOV 93 ADEL 09/03/95 108.00
... [There followed seventy-eight similar entries] ...
TOTAL $2,099,744.07
Yours faithfully
OPAL MARITIME AGENCIES PTY LIMITED
A Stimpson
PP Craig James
Company Secretary
Encl”

The disbursement accounts related to arrivals or departures between 5 March 1994 and 20 July 1995 inclusive. Opal had not paid in fact all of the disbursements on the accounts and after taking into account non-payments, the adjusted amount was $1,287,621.77.
The letter was exhibit “JR11” to the affidavit of Mr Rolfe sworn 13 August 1997, relied on by Opal.
On 15 September 1995 Opal sent a further letter enclosing original disbursement accounts totalling A$1,282,912.48. The letter also stated that “The related disbursements have been offset against freight collections for the week ending 15 September, 1995.” This letter was Exhibit “JR3” to the affidavit of Mr Rolfe.
In February 1996 Baltic lodged a proof of debt which included, amongst others, the following claims :
Amount of disbursements and supplementary accounts
debited by Opal through statements 21.04.95 - 14.7.95  $335,297.44
but not paid
Agency commission erroneously debited in
disbursements Account for M/V Magnitogorsk  $69,586.36
Trans-shipment charges:
Baltic Intermodal Centre  $67,659.00
Remitted by Kirby Engineering Co for purchase
of 105 x 20 containers: 20.5.95  $62,179.17
On 1 May 1996 the provisional liquidator admitted the first claim to the extent of $328,579.01 and all the other claims. The provisional liquidator also admitted Baltic’s outstanding freight claim as at 10 July 1995 to the extent of $376,543.00. By exhibit “D” to his affidavit of 16 May 1996, Mr Silva admits that as at 10 July 1995 Baltic was entitled to have credits raised in favour of Baltic in the sum of $904,546.74. As at 10 July 1995 the total credit available to Baltic in the period 30 April 1995 to 10 July 1995 was $1,912,246.28.
In his notice of rejection, dated 21 March 1996 of part of Baltic’s proof of debt, the provisional liquidator made the following statements :
“11.As to the amount of $1,912,246.28, the Company says that Baltic is indebted to it in the sum of $2,551,019.13 and that accordingly the amount of $1,912,246.28 is eliminated by virtue of the offset of $2,551,019.13 and that Baltic is in effect a debtor of the Company in the sum of $638,772.85 subject always to that figure being revised as additional amounts become known (‘the debt’).
12.The Company maintains its claim in respect of the debt. However, for the purpose of dealing with this Proof of debt only seeks to offset the amount as aforesaid sufficiently to discharge the balance of the claim admitted as owed by the Company to Baltic, save always that in the event that it be found that any other amount be owed by the Company to Baltic in respect of amounts presently rejected and subject to any adjustment to be made to the amount of the debt, the Company maintains its right to offset such part of the debt (as varied) as may be required to satisfy and discharge any further claim that Baltic may be entitled to make as against the Company.
13.The Company maintains that any right to offset may be exercised against any funds in the hands of the Provisional Liquidator received after the commencement of the winding up.
14.This Partial Rejection of Proof of Debt is intended to deal with all claims made by Baltic up to the date hereof.”
The provisional liquidator between 10 July 1995 and 30 April 1996 collected $408,238.39 in freight due to Baltic. He charged against that freight what he called the costs of generating such freight income which he claimed was $328,321.75. The balance of $79,916.64 he credited against the balance outstanding in the set-off account. The net effect of the set-offs made by the provisional liquidator between 10 July 1995 and 30 April 1996 was that he claimed a debit balance was due in favour of Opal in the sum of $558,856.21. The accounting involved in arriving at the debit balance is contained in exhibit “D” to Mr Silva’s affidavit.
Opal came out of provisional liquidation in August 1996. Mr Rolfe deposes that the provisional liquidation ended with the payment of Opal’s creditors. So far as Baltic was concerned, the admitted debts owed to it by Opal were paid by setting off the debt for collected freight against the debts arising under the Agency Agreement as set out above.
In July and August 1997, Mr Rolfe reviewed the files and financial records of Opal relating to the provision of agency services to Baltic under the Agency Agreement. As a consequence of that examination, Opal pleaded in its amended statement of claim that “the true and adjusted balances of the offset accounts” were $525,543 in Opal’s favour as at 30 April 1995 and $1,244,823 as at the conclusion or termination of the Agency Agreement: paragraph 13. Of that sum, Opal claimed $1,049,776 as a general maritime claim: paragraph 14.
As appears from paragraphs 5, 5A, 5B, 13 and 14 of the amended statement of claim, the claim pleaded and particularised by reference to the annexures to the affidavits of Mr Rolfe was that Opal operated a running offset account with Baltic in respect of the totality of their dealings under the Agency Agreement for so long as it remained operative. Further, that on the taking of an account of the entire dealings between them and by offsetting debits and credits to the account, there was at the conclusion or termination of the agency account a debit balance in the offset account in the sum of $1,244,823 in favour of Opal which it contended $1,049,776 was a general maritime claim and claimed as such. It was no part of the pleaded or particularised case that the running off-set account pleaded came to an end on 30 April 1995 or 15 May 1995. The balance pleaded as owing at the termination or conclusion of the agency and the offset account of $1,244,823 includes all of the services provided under the Agency Agreement in the months of May, June and July and shown in exhibit “JR1” as dealings on the account between 30 April 1995 and 31 July 1995. The document exhibit “JR1” was described by Mr Rolfe as a summary of dealings on the running account in respect of transactions that took place before and after 30 April 1995.
Tamberlin J found that the account operated by Opal and Baltic was a “running account” within the meaning of that term as described by Dawson, Gaudron and McHugh JJ in Airservices Australia v Ferrier (1996) 185 CLR 483 at 504 - 505. Their Honours said (at 504 - 505) :
“... the significance of a running account lies in the inferences that can be drawn from the facts that answer the description of a ‘running account’ rather than the label itself. A running account between traders is merely another name for an active account running from day to day, as opposed to an account where further debits are not contemplated (The term ‘running account’ seems to come from the world of banking where it is synonymous with a current account ‘on which cheques are drawn and to which credits are paid, as opposed to a deposit account on which normally cheques are not drawn’: Hanson, Dictionary of Banking and Finance (1985), p183 and see the definition of ‘current account’ in Woelfel, The Fitzroy Dearborn Encyclopedia of Banking & Finance, 10th ed (1994), p278, as an ‘open, continuing, and running account’.) The essential feature of a running account is that it predicates a continuing relationship of debtor and creditor with an expectation that further debits and credits will be recorded. Ordinarily, a payment, although often matching an earlier debit, is credited against the balance owing in the account. Thus, a running account is contrasted with an account where the expectation is that the next entry will be a credit entry that will close the account by recording the payment of the debt or by transferring the debt to the Bad or Doubtful Debt A/c.”
After delivery of his Honour’s reasons for judgment in December 1997, Opal sought to appropriate particular payments received by way of set-off over the period that the set-off account operated against items which formed part of the general agency account and the equipment operating accounts which were of a character that could not be enforced as a general maritime claim by action in rem. His Honour rejected the entitlement of Opal to do so, in terms set out earlier in these reasons, at para 25.
The submissions of Opal before his Honour and on appeal were based on the contention that :
(a)it remained open to Opal to now appropriate all payments because there has been no appropriation by it or Baltic of the credit balance for collected freight to any particular debt due to Opal;
(b)the services provided after 15 May 1995 were not provided on a running set-off account having the characteristics identified in Airservices Australia, but were provided on the basis that each gave rise to a separate and identifiable debt in respect of which it was free to appropriate to a payment by way of set-off.
Although we agree with his Honour that the settlement of accounts between Opal and Baltic was done without differentiation as to whether the items in the account were in the nature of claims enforceable by action in rem or in personam alone, we do not agree that the account which Opal maintained was, or was operated as, a running account against the balance of which credits for collected freight account were set-off. By the terms of the Agency Agreement and from the evidence which Tamberlin J accepted, the credit balance in the owner’s account for collected freight was set-off against specific disbursement accounts which were delivered to Baltic. Each disbursement account was paid by way of set-off with the intention that the debt represented by the disbursement account would be fully satisfied and discharged by the set-off. The balance, if any, standing to the credit of Baltic in the owner’s account, remained to be disposed of or dealt with in accordance with the instructions of Baltic. Where the entire disbursement account was paid by set-off, the set-off operated as an appropriation. The debt having been paid, it no longer exists.
In the context of the present case, when Baltic and Opal agreed the balance in favour of Baltic at $1,007,699.74, they agreed the state of accounts between them as at 30 April 1995. Each of the disbursement accounts which had been set-off against the previous agreed balance in the owner’s account for collected freight as at 30 April 1995 was at the time of the set-off thereby paid. The mutual set-offs which produced the agreed balance discharged the disbursements accounts on the one side and collected freight credit on the other and operated as an appropriation: Re Laycock v Pickles (1863) 4 B&S 497 at 506; 122 ER 546 at 549; Siqueira v Noronha [1934] AC 332 at 337 - 338; see generally Prof R M Goode Payment Obligations in Commercial and Financial Transactions (1983) Sweet & Maxwell. All of the previous disbursement accounts and credits for collected freight which had been set-off in accordance with the provisions of the Agency Agreement from the time of its inception up to 30 April 1995 had been paid by mutual set-off and the debts used to bring about payment by set-off had been appropriated and discharged.
It is not open to Opal to re-open a settled account which has been discharged by payment. Nor can it seek to treat the conduct of the parties as constituting a running account where an alleged debt is brought to account at the time the service is performed even though the debt was not then due for payment in terms of the Agency Agreement. Opal cannot now seek to bring into the account as at 30 April 1995 other items which it says were debts which could or should have been taken into account in agreeing a balance at that date so as to take out of the account claims which, if enforceable, would separately be maritime claims within s 4(3) of the Act enforceable by action in rem. The course which Opal now seeks to take was attempted and rejected as incompetent by the Privy Council in Van Hasselt v Sack, Bremer & Co; The Twentje (1859) 13 Moore PC 185 at 193 - 194; 15 ER 70 at 73 - 74.
Disbursement accounts which had not been the subject set-off against collected freight credits under the procedure agreed in the Agency Agreement were not discharged as at 30 April 1995. Those accounts fell into two categories. The first were disbursement accounts which were raised after 30 April 1995 for services rendered pursuant to the Agency Agreement prior to 30 April 1995. The second category were disbursements made prior to 30 April 1995 which were for whatever reason not included in disbursement accounts.
The disbursement accounts falling into the first category are those contained in the summary of account of the provisional liquidator, being exhibit “D” to his affidavit. They are described as :
“Disbursement A/cs Conceded by Baltic not Incl in Proof of Debt
- Equipment Operation A/c  1,059,448.93
- Equipment Operation A/c  29,238.79
- General  1,287,621.77
- Container Handline Fees  174,709.64(2,551,019.13) dr”
The provisional liquidator set-off the general disbursement account in the sum of $1,287,621.77 (after making allowance for claims not in fact paid by Opal) in the letter of 25 August 1995 (exhibit “JR11”) against the balance outstanding for collected freight due to Baltic. It is at this point that the problems of proof found by Sheppard J and by Tamberlin J to prevent the identification of the items of mutual set-off become clear. If at 25 August 1995 the proper balance in the collected freight account amounted to $1,336,278.75, then the set-off, which was in accordance with Addendum N3 of the Agency Agreement, operated to discharge Baltic from the disbursement claims particularised in the letter insofar as those claims had in fact been paid by Opal and left a credit balance in favour of Baltic in the sum of $45,657.98. This credit balance would then have been available to be set-off in accordance with the purported set-off by letter of 15 September 1995 from Opal to Baltic.
The problem is that the evidence is silent as to whether the credit in favour of Baltic as at 30 April 1995 remained available for set-off in August and September 1995 or whether it had earlier been set-off against the other or some of the other accounts identified thereby discharging those accounts by payment and leaving the general disbursement account either wholly or partly unpaid.
To the extent that there is any evidence as to the setting off of the credit for collected freight against the accounts other than the general disbursement account, it is equivocal. It lies in the rejection by the provisional liquidator of a claim for the balance of the collected freight credit made up of the agreed credit of $1,007,699.74 and the credit of $328,579.01 for payment previously made by set-off where Opal had not in fact paid the claim. The provisional liquidator contended that the balance had been set-off against all four accounts leaving a debit balance in favour of Opal. The order and identity of the debts mutually set-off is not revealed.
In the state of the evidence before Tamberlin J, it was impossible to determine which of the disbursement accounts rendered after 30 April 1995 remained unpaid. However, that does not entitle the purported set-offs by the letters of 25 August and 15 September 1995 to be ignored as if they did not occur.
The disbursement accounts which fall within the second category have never been the subject of set-off. However, on the findings of fact made by his Honour, some were services provided under the Agency Agreement to Baltic in its own capacity and not on the credit of any ship. The claims in terms of the Agency Agreement were to become due and payable, and to be paid, in accordance with the provisions of the Agency Agreement. In the first instance, they were to be paid out of collected freight and if that was insufficient by payment from Baltic to Opal in accordance with Addendum N3 to the Agency Agreement.
The items falling within the second category are :
(a)Equipment operating disbursement accounts;
(b)Vessel disbursements pre-30 April 1995 not included in balance of $1,007,699.74 struck in Baltic’s favour;
(c)Vessel disbursements pre-April 1995 not included in provisional liquidators statement of accounts;
(d)Container fees and slot charters pre-April 1995;
(e)Suez Canal fee.

The items in (a) and (d) above were not items which were enforceable by an action in rem. They therefore do not give rise to a claim against the fund.
The claim in (b) above is particularised as being sourced in the documents “JR17” to Mr Rolfe’s affidavit. Those documents on casual observation include substantial claims for agency commission and container related charges and expenses. Some items would prima facie appear by their nature to be services rendered to the ship.
The claim in (c) above is particularised as being sourced in the documents “JR18” to Mr Rolfe’s affidavit. A perusal of these documents likewise reveals that a not insubstantial part of the items fall within categories of claim which were not recoverable against the fund, notwithstanding that others prima facie appear to be claims relating to goods and services provided to a ship.
The difficulty facing Opal in respect of these claims is that although it may be said that they can be characterised as being goods and services supplied to a particular ship by third parties and therefore claims prima facie within s 4(3)(m) and s 4(3)(o) if Opal has paid the third party account, that prima facie entitlement may by agreement or a course of conduct be contracted away: Borneo Company v “Mogileff” [1921] 6 Ll.L. Rep 528 at 533; Clausen v The Ship OM Alqora [1985] 38 SASR 481 at 485 ff; The Kommunar at 7. Tamberlin J has found that the effect of the Agency Agreement was that all agency services under the Agency Agreement were supplied to Baltic as the owner or operator of the ship it used in its business and that the services were supplied to Baltic in that capacity without the intention that Opal would look to the ships individually for the satisfaction of claims in addition to the personal liability of Baltic secured by the right to access the freight collections it held. For reasons outlined earlier, we see no reason to disturb that finding.
There is also substance in the observation of Tamberlin J that the case was never conducted on the basis that these items were to be regarded as themselves giving right to a judgment in rem against the fund. They were at all times brought into account to produce a balance of account and it was the balance of account due, it was said, under the Agency Agreement for which judgment in rem was sought.
The claim in respect of the Suez Canal fee stands in a different category. In our view it was not provided under the Agency Agreement. The documents disclose that Baltic, on 21 March 1995 by telex, requested Opal to forward to Asswan Shipping Agency in Egypt US$220,000 to pay the Suez Canal fee in respect of the “MV Anatoliy Vasiljev” which was then at the Canal. The money was drawn from Opal’s account with the ANZ Bank and paid as per the telex request. The amount debited to Opal was $303,473.28.
The Suez Canal fee has not been paid and was not brought to account in any set off. The claim for the fee has the character of a general maritime claim under s 4(3). However, Opal is not entitled to judgment for this sum as part of the sum of $364,146.57 because of the conditions imposed by Shepherd J when he granted leave to re-open the case. One of those conditions was that Opal could not recover more than $364,146.57 in respect of the two equipment operation accounts and the general account referred to in the document marked D annexed to his reasons. This item was never included in those accounts. Tamberlin J anticipated that, when he granted Opal leave to file and serve its amended statement of claim, it was possible that an amount in excess of this sum might be found to be owing. Accordingly, his Honour said that his grant of leave would not deprive any party from contending that judgment should not be entered for a sum in excess of $364,146.57 or that the Court should not grant a declaration that any further sum was due.
In these circumstances it would be wrong to make an order on this appeal to allow Opal to enter judgment for $303,473.28. We would regard it as proper, however, to declare that Opal has a general maritime claim for this amount but the question whether it should be entitled to enforce that claim against the money in Court cannot be determined until those who might wish to oppose enforcement have been heard. In these circumstances we consider that it is appropriate to make the following declaration and orders :
1.The appeal be allowed in part.
2.The order of Tamberlin J that the claim of Opal Maritime Agencies Pty Limited be dismissed, be set aside and in lieu thereof :
DECLARE that the claim of Opal Maritime Agencies Pty Limited for the Suez Canal fee in the sum of $303,473.28 is a general maritime claim within the meaning of s 4(3) of the Admiralty Act 1988 (Cth).
3. The appeal be otherwise dismissed.
4.The proceedings be remitted to Tamberlin J for the purpose of hearing and determining any application by Opal Maritime Agencies Pty Limited in respect of the proceeds in Court, having regard to the terms of the orders previously made by Tamberlin J in the proceedings.
5.Pending the hearing and determination of any application by Opal Maritime Agencies Pty Limited to recover payment of the Suez Canal fee of $303,473.28 from the proceeds of the sale of the ship “Skulptor Konenkov” presently held in Court, or further order of Tamberlin J, the said proceeds not be paid out of Court except to pay any outstanding costs and expenses of the Marshal, including the Marshal’s costs of this appeal.
6.Any application by Opal Maritime Agencies Pty Limited for payment out of the proceeds in Court be brought by motion on notice given within twenty-eight days, in default of which the Marshal forthwith apply to Tamberlin J or another judge of the Court for such orders and directions as may be appropriate for the final disposition of the proceeds in Court.
7.Any directions concerning the giving of notice by advertisement or otherwise and the service of parties who may claim an interest in the proceeds in Court be given by Tamberlin J or such other judge of the Court who hears the application of Opal Maritime Agencies Pty Limited.
8.The Marshal’s costs of the appeal be taxed on an indemnity basis and be paid out of the fund in Court representing the proceeds of sale.
The Suez Canal fee claim was not advanced before Sheppard J at all. It was raised as an item in an account the balance of which was claimed before Tamberlin J. The first time that the claim was advanced as a separate and discrete claim in its own right was before this Court on appeal. Opal failed before Sheppard J and before Tamberlin J. It has substantially failed on the grounds argued on the appeal. Having regard to the way the Suez Canal fee claim was raised and Opal’s lack of success otherwise, it should bear its own costs of the appeal and below.
The Marshall’s appearance on the appeal was in defence of the fund and to assist the Court in the proper determination of the issues arising below and on the appeal. The Marshal’s costs on the appeal shall be taxed on an indemnity basis and paid out of the funds in Court.
To the extent indicated above, the appeal is allowed and the judgment of Tamberlin J set aside and in lieu thereof there is to be a declaration in the terms indicated above. Otherwise the appeal is dismissed.

I certify that the preceding two hundred and three (203) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black and Justices Cooper and Finkelstein
Associate:
Dated: 19 April 2000

Counsel for the Appellant: Dr G Griffith QC with Mr S Glacken

Solicitor for the Appellant: Goldsmiths

Counsel for the Admiralty Marshal: Mr P King

Solicitor for the Admiralty Marshal: Law Office of Douglas Coleman

Counsel for the Receivers and Managers: Mr G Nell

Solicitors for the Receivers and Managers: Zaparas & Dandanis Lawyers & Consultants

Date of Hearing: 5 November 1998

Date of Judgment: 19 April 2000

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 197 OF 1998

BETWEEN:	OPAL MARITIME AGENCIES PTY LIMITED APPLICANT
AND:	THE PROCEEDS OF SALE OF THE VESSEL MV “SKULPTOR KONENKOV” RESPONDENT
JUDGES:	BLACK CJ, COOPER AND FINKELSTEIN JJ
DATE OF ORDER:	19 APRIL 2000
WHERE MADE:	MELBOURNE (HEARD IN SYDNEY)

JUDGES:	BLACK CJ, COOPER AND FINKELSTEIN JJ
DATE:	19 APRIL 2000
PLACE:	MELBOURNE (HEARD IN SYDNEY)

KOMSOMOLSK	97	BRIS	08/06/95	13,390.49
KOMSOMOLSK	97	BRIS	08/06/95	452.28
KOMSOMOLSK	97	ADEL	24/06/95	55,858.95
KOMSOMOLSK	97	MELB	11/06/95	352,773.11
KOMSOMOLSK	97	SYD	08/06/95	225,851.89
KOMSOMOLSK	97	FREM	02/06/95	80,503.21
OP9502	FEB95	ALL PORTS	7,505.25
OP9501	JAN95	ALL PORTS	4,870.82
DISCOVERY BAY	412	FREM	25/06/95	1,684.13
DISCOVERY BAY	405	FREM	29/03/95	411.00
NELSON BAY	409	ADEL	18/05/95	1,713.00
BRANDENBURG	406	FREM	05/04/95	2,129.00
NELSON BAY	409	SYD	27/05/95	7,675.15
NELSON BAY	409	FREM	18/05/95	1,318.00
NELSON BAY	409	MELB	27/05/95	4,190.00
CONTSHIP JORK	020	ADEL	28/06/95	119.43
PALLISER BAY	007	FREM	03/07/95	260.00
CONTSHIP FRANCE	018	SYDNEY	07/06/95	102.00
CONTSHIP SYDNEY	022	SYDNEY	04/07/95	1,500.00
CONTSHIP JORK	020	SYDNEY	27/06/95	8,485.53
CONTSHIP SYDNEY	022	SYDNEY	05/07/95	1,532.57
MORETON BAY	414	SYDNEY	17/07/95	3,501.21
SKULPTOR VUCHETICH	94	MELB	06/03/95	4,678.96
DISCOVERY BAY	412	SYDNEY	25/06/95	8,054.23
SKULPTOR KONENKOV	93	ADEL	09/03/95	108.00

Counsel for the Appellant:	Dr G Griffith QC with Mr S Glacken
Solicitor for the Appellant:	Goldsmiths
Counsel for the Admiralty Marshal:	Mr P King
Solicitor for the Admiralty Marshal:	Law Office of Douglas Coleman
Counsel for the Receivers and Managers:	Mr G Nell
Solicitors for the Receivers and Managers:	Zaparas & Dandanis Lawyers & Consultants
Date of Hearing:	5 November 1998
Date of Judgment:	19 April 2000