Owners of the Ship MV Steven C v Ocean Industries Pty Ltd (Receivers and Managers Appointed) trading as Markwell Chandelry

[1991] HCATrans 374

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' 'I

-.~JA

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B36 of 1991

B e t w e e n -

THE OWNERS OF THE SHIP MV

"STEVEN C"

Applicants

and

OCEAN INDUSTRIES PTY LTD

(Receivers and Managers

Appointed) trading as MARKWELL

CHANDLERY

Respondent

Application for special leave

to appeal

BRENNAN J

"Steven C" 1 13/12/91

DAWSON J

MCHUGH J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 13 DECEMBER 1991, AT 12.52 PM

Copyright in the High Court of Australia

MR P.J. WHITE:  May it please the Court, I appear for the

applicant. (instructed by Williams Graham &

Carman)

MR H.G. FRYBERG, QC:  May it please the Court, I appear with

my learned friend, MR D.M. LOGAN, for the

respondent. (instructed by MacDonnells)

BRENNAN J: Yes, Mr White.

MR WHITE:  Your Honour, this appeal turns upon the

construction of parts of the Admiralty Act of 1988.

I have had forwarded to the Court a brief synopsis

of the material facts which are not in dispute.

BRENNAN J: Yes, we have those, Mr White.

MR WHITE:  Thank you, Your Honour. The critical fact, so

far as the applicants' case is concerned, is that

on 20 August 1990 the respondent obtained judgment
in an action in personam against the Cavanaghs, the

owners of the applicant ship, as it were, on their

claim. That judgment not having been completely

satisfied, they then commenced an action in rem in

the Admiralty jurisdiction of the Supreme Court at

Cairns on 13 December 1990.

Your Honours, the argument before

Mr Justice de Jersey centred upon the construction

of the relevant parts of the Admiralty Act. The

nature of the claim was such that it was a general

maritime claim pursuant to section 4(3)(m) of the

Act.

Section 14 of the Act limits a proceeding

commenced as an action in rem to the manner

provided for under the Act and section 17 deals

with the way in which an action in rem, on a

general maritime claim, may be commenced.	And
could I take the Court to section 17.

Perhaps I could make this clear, that the

matters required by subparagraph (b) of that

section are the matters of concern in this

application. It is submitted that in order for a

proceeding on the claim, that is the claim in

respect of a general maritime claim:

may be commenced as an action in rem -

It must be shown that -

a relevant person ..... is, when the proceeding

is commenced, the owner of the ship or

property -

"Steven C" 2 13/12/91

"Relevant person" is defined in section 3(1):

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 -

May I emphasize the word "who would be liable".

BRENNAN J:  Does your argument come to this, that

proceedings can be brought in rem, followed by

proceedings in personam, but not vice versa?

MR WHITE: That is so, Your Honour.

BRENNAN J: And what possible reason would there be for

that, as a matter of statutory purpose?

MR WHITE:  Your Honour, as a matter of statutory purpose, if

a plaintiff has a judgment in rem against the

owners of a ship, the owner may, by a warrant of

attachment, become a secured creditor in respect of

that ship. There is no need to proceed in rem to

enforce what is a claim which has already merged in

a judgment - in personam - - -

BRENNAN J:  Why not? I can see every reason why you should

not be allowed to proceed in personam once you have

got hold of the ship, but I cannot see any reason

why you should not be able to grab the ship if you
have not got satisfaction in your judgment in

personam.

MR WHITE:  Yes. Your Honour, if you do not have

satisfaction in your judgment in personam, you may

certainly, by a warrant of attachment, enforce your

judgment in personam, and if your judgment in

personam is against the owners of a ship, then you

may enforce your judgment by warrant of attachment

against that ship. But in this case where an

action in rem is commenced, the ship is arrested

and lies in limbo, as it were, unless and until the

owner is able to pay bail on it, or lodge bail to

obtain its relief, as in this case the ship lies in

limbo until the action in rem, commenced by the

person who already has the judgment in personam,
brings it to court and until it is tried and, as

happened in this case, this ship lay under arrest

until April when the action in rem was brought on before Mr Justice de Jersey. There was no reason

for an action in rem to be commenced at all. The

judgment in personam could have been enforced in
the normal way in which a judgment in personam may

be enforced against the ship.

DAWSON J:  But in other cases there may be very good reasons for wanting to proceed in rem because it is

"Steven C" 3 13/12/91

impossible to satisfy the judgment in personam,

which is the reason why, in this jurisdiction,

there is that procedure.

MR WHITE:  Your Honour, in my submission that is not so. If

it is impossible to satisfy the judgment in

personam by a warrant of attachment against the

ship, then there is really no possibility of enforcing the action in rem against the ship

because it would not be able to be arrested.	The
practical ability to enforce a warrant of
attachment against the ship is the same as

arresting the ship under a warrant issued by the

Court pursuant to the commencement of an action in

rem.	An officer of the court must go to the ship
and take possession of it and arrest it.	If that

cannot be done in the course of enforcing a

judgment in personam then it could not be done in

the course of enforcing a judgment in rem.

The other thing, of course, with a judgment in

personam not only is a ship owned by the judgment

debtors available for the enforcement of the

judgment in personam, any other property which the

judgment debtor may own is available for

attachment.

McHUGH J: But the definition in section 3 is speaking of a

hypothetical situation, not an actual situation, is

it not?

MR WHITE:	I agree, Your Honour, and that is precisely the point of the appeal. What existed in this case was
an actual situation.

DAWSON J: What the section is talking about is a person who

would be liable in personam if the claim were made

in personam.

MR WHITE:  Yes. And if this action in rem, if this claim

had been made in personam, the respondent would

have failed.

DAWSON J: Yes, but hypothetically, not in this situation;

just if the claim were made in personam.

McHUGH J: Take the case where an action in personam has

been commenced, but not brought to conclusion; you

would concede, would you not, that in that

situation section 17 would apply.

MR WHITE:  I would Your Honour, yes. I would submit that if

an - - -

McHUGH J: But in that particular case the action has

already been commenced, so you are not talking

"Steven C" 4 13/12/91

about that action; you are talking about a

hypothetical action.

MR WHITE:  No, because the hypothetical - Your Honour, it is

not the action which is hypothetical; it is the

liability which is hypothetical, in my submission,

and the liability is still hypothetical if an

action in personam is commenced. For instance, if

a material man, as such suppliers, as the

respondent in this case are commonly called, were

to have an unpaid claim, he may commence an action

in personam against the persons, presumably the

owners of the ship who have ordered the goods and,

if he subsequently proves his case, he then has

available all of the assets of those owners to

enforce his judgment in personam. He may, at the

same time, commence an action in rem and

eventually, if he succeeds in that, he has not only
the ability to enforce his judgment in rem against
the ship; his judgment in rem operates as a

security dating back to the commencement of the

action in rem. So he has that additional advantage

that if, for instance, the vessel is sold after the

action in rem is commenced, his right prevails over

the new owner; if there is a bankruptcy or a later

mortgage on the ship, his right prevails over that

later mortgagee. But if he commences the action in

personam first and proceeds to judgment in that

action in personam then, on the plain and ordinary

meaning of those words "would be liable", there is

no hypothetical liability.

McHUGH J:  No, but it is really directed to the state of

facts; the state of facts which give rise to the

maritime claim must be sufficient to have founded a

claim commenced in an action in personam.

MR WHITE:  Yes, and in my submission, what is required is a

subsisting cause of action in personam at the time

the action in rem is commenced. Chamberlain v The

Deputy Commissioner of Taxation, 164 CLR 502,

explained the absolute nature of the res judicata

rule.

DAWSON J: That does not apply here, obviously, because if

you take the converse situation and there is a

judgment in rem, you have conceded that it does not

preclude a claim in personam.

MR WHITE:  Yes. A judgment in rem, though, is of a

different character to a judgment in personam.

DAWSON J: Well, if so, then your argument fails too.

MR WHITE:  Your Honour, until the action in rem is

commenced, until the actual filing of the writ in a

claim for necessaries, the claimant has nothing but

"StevenC" 13/12/91

an action in personam. There is no cause of action

in rem arising until the actual commencement of the

action, the filing of the writ.

BRENNAN J:  Your proposition is that the cause of action

that was litigated in the in personam proceedings

is extinguished by or merged in the judgment and that at the time when the in rem proceedings are

brought there is no person who would, if then sued

in personam, have been liable?

MR WHITE: That is exactly my proposition, Your Honour.

McHUGH J:  You have got to go further. You have got to say

that since the 1988 Act a cause of action in rem

does merge in a judgment in personam, in certain

circumstances, do you not?

MR WHITE:  No, I do not, Your Honour, because, in my

submission, there was no cause of action in rem.

In a claim by a material man, no cause of action in rem arises until the filing of the writ. There was
no cause of action in rem at the time the judgment

in personam was obtained.

Could I refer Your Honour to some authorities

for that proposition, if that should be necessary.

I have arranged for a copy of the judgment of

Mr Justice Brandon in The Monica S, 1968 P 741, to

be forwarded to Your Honours.

BRENNAN J: Just a moment until we find these cases. Yes,

Mr White.

MR WHITE:  His Lordship in that case was considering whether

or not the cause of action in rem based on a
statutory right in rem arose at the time of issue
of proceedings or the time of arrest of the ship
and,in the course of doing so, reviewed the cases

quite considerably. Rather than take Your Honours

through all of those could I perhaps refer to what

are, in my submission, the most significant. At

page 751, Mr Justice Brandon refers to a judgment

of Dr Lushington in the Pacific, and he said:

"The material man, therefore, by the mere fact

of his supplying necessaries, in no case

obtains the ship as a security until he

institutes his suit in this court ... This,

I think, shows that the material man has not a

maritime lien; for a maritime lien accrues

from the instant of the circumstances creating
it, and not from the date of intervention of

the court.

A little later, at page 755, His Honour refers to

some passages in the judgment of Lord Justice Fry

"Steven C" 6 13/12/91

in the Court of Appeal in The Heinrich Bjorn and, just at the bottom of the page, the first passage reads:

"But if the material man may thus arrest the

property to enforce his claim, how does his

claim differ from a maritime lien? The answer

is, that a maritime lien arises the moment the

event occurs which creates it; the proceeding

in rem which perfects the inchoate right relates back to the period when it first

attached: 'the maritime lien travels with the

thing into whosesoever possession it may

come': The Bold Buccleugh and the arrest can

extend only to the ship subject to the lien.

But, on the contrary, the arrest of a vessel

under the statute is only one of several

possible alternative proceedings ad fundandam
jurisdictionem; no right in the ship or
against the ship is created at any time before

the arrest.

That was the alternative view as between arrest and

issue of proceedings -

it has no relation back to any earlier period.

However, in the further passage from the judgment

of Lord Justice Fry, the position is clarified

perhaps:

"In our opinion the two statutes of 1840 and

1861 ought (notwithstanding the observations

of Mellish LJ in The Two Ellens to be

construed as in pari materia, and we think

that the decision of the Privy Council in that

case lends confirmation to the conclusion at

which we arrive, namely, that whilst the

statute of 1840 has enabled the material man

to enforce his claim in the Admiralty Court,

and as one means has given him the right to

arrest the ship, it has given him no maritime

lien, and consequently no right against the

ship till action brought."

That decision was confirmed and at page 757 -

BRENNAN J: These principles are not in doubt, are they?

MR WHITE:  They are not in doubt at all, Your Honour, but as

I apprehend it, the proposition you put to me about

the non-merger as between causes of action in

personam and causes of action in rem arises out of

the passage referred to by the Full Court. The

principle stated by Mr Justice Brandon, the same

judge in The Rena K. I have to confess that in the

"Steven C" 7 13/12/91

Full Court, I considered that I had some difficulty

with that case.

DAWSON J: All this means is, if you are right in what you

are putting, that the claim in rem may be

unsuccessful, but the claim in rem may be made if

the conditions of section 17 are satisfied, and

they are satisfied having regard to the definition.

The claim that is being made is a maritime claim.

You may say that none exists because it is merged

in the judgment, but that does not prevent the

action in rem being commenced.

MR WHITE:  That is so, Your Honour. The action in rem may

be commenced, and in this case it was, and it came

to conclusion in a summary trial before

Mr Justice de Jersey, who found in fact that -

based on that incontrovertible fact that there was

the prior judgment in personam, he found that the

owners of the vessel were not relevant persons at

the time the action was commenced, and therefore

gave judgment for the ship.

Your Honour, could I just take a little time

with that statement of principle in The Rena Kand
may I repeat that I do not dispute the correctness

of that statement at all.	It is at page 9 of the
record, line 6:

"a cause of action in rem, being of a

different character from a cause of action in

personam does not merge in a judgment in
personam, but remains available to the person

who has it so long as, and to the extent that,

such a judgment remains unsatisfied".

Now the initial requirement of that statement of

principle is that there be a cause of action in

rem. Now, in the case of a maritime lien of course the cause of action in rem arises at the moment the

event which gives rise to the lien take place.	So
that if, for instance, there is a collision or

salvage of a vessel, then from that moment there is

a cause of action in rem and so, if at some time

after that, the claimant obtains a judgment in

personam, then that cause of action in rem is not

merged. It is of a different character. It is a
charge giving him a security against that vessel
from the moment of salvage. For instance from the

moment of collision and it survives for his benefit

against any subsequent owners, any subsequent

mortgagees and so on.

However, in this case there was no cause of

action in rem at the time the judgment in personam

was obtained because the cause of action in rem, to

give rise to this statement of principle, did not

"Steven C" 13/12/91

apply - or could not have arisen until the

commencement of the action in rem which occurred at
a later time.

Your Honours, could I take you to the part of the judgment in The Rena K where this matter is

dealt with, and that has been provided to

Your Honours. His Honour was there dealing with a

case in which some cargo owners commenced action

against shipowners, an action in rem and an action

in personam, as I apprehend the facts, and the

shipowners applied to the court to have the action

in rem dismissed.

The basis - so far as this question arises in

this application - was that the contract of

carriage provided for any dispute to be sorted out

by arbitration and the ship owners wanted a

reference to arbitration, insisted on it and argued

that the action in rem should be dismissed and the

ship released unconditionally from arrest on the

basis that, even if the claimant was successful in

obtaining an arbitration award, that the cause of action in rem would merge in that award. For the

purposes of the argument, as may be observed at

line F, His Lordship assumed that that would be so.

DAWSON J: This is on page?

MR WHITE:  At page 405, I am sorry, and he assumed for the

purpose of the argument that just as a cause of

action in personam merged in a judgment, so also a

cause of action in rem merged. And then at the

bottom of the page he set out the - - -

BRENNAN J:  No, he did not say that, he said, a cause of

action in personam will merge in a judgment and he

assumes that it will merge in an arbitral award.

MR WHITE:  Yes, I am sorry. He then went on to set out the

principle referred to by the Full Court in this

case: 

It has, however, been held that a cause of action in rem -

et cetera.

BRENNAN J: Well, it does not really take us very far at all

in this case, because if you have got a cause of

action in rem which, in this case, there is none,

the proposition which is advanced here is that it

does not merge in a judgment in personam.

MR WHITE:  Yes, Your Honour, and that is precisely - in my

submission the circumstances in The Rena K do not

apply, because there was no prior award of

"Steven C" 9 13/12/91

arbitration or prior judgment in personam, before

the action in rem was commenced.

DAWSON J: But, His Honour at the bottom of page 405 seems

to be stating the converse of what you are

asserting:

It has, however, been held that a cause of action in rem, being of a different character

from a cause of action in personam, does not merge in a judgment in personam, but remains

available to the person who has it so long as,

and to the extent that, such judgment remains

unsatisfied.

MR WHITE:  Your Honour, I do not dispute that; the point I

am making is that it requires - for that principle
to apply, there must be a cause of action in rem.

If there is no cause of action in rem, then the question or the principle that the cause of action

in rem does not merge in a judgment in personam

does not arise.

BRENNAN J: It does not seem to me that this has got

anything to do with your present case; the part

that has to do with your case is at 405F, namely

that a cause of action in personam merges in a

judgment.

MR WHITE:  Yes, and that is my submission.

BRENNAN J: Well, your proposition is that here there was no

cause of action in personam, because it had merged

in a judgment in personam.

MR WHITE:  That is so; there was no cause of action still

subsisting at the time the action in rem was

commenced.

BRENNAN J:	So we are then driven back to, as a matter of construction, the definition of "relevant person"
in section 3?
MR WHITE:	Yes.

BRENNAN J: And we have to determine whether, on its true

construction, "relevant person" when used in

reference to section 17(b) means, a person who, at the time when the in rem proceedings are commenced

had a cause of action which had not merged. That

is your proposition.

MR WHITE:  Yes. If the plaintiff in the action in rem,

whether or not he had a subsisting cause of action

in personam, and, in my submission, the - - -

DAWSON J:  No, it does not say that.

"Steven C" 10 13/12/91

MR WHITE:	No, it does not say that.
DAWSON J:	The right to proceed in rem is created by

sections 16 and 17. That, as His Honour says,

throws you back to the definition.

MR WHITE:  It does, I agree, yes, Your Honour. And, in my

submission, that definition is such that the plain

and ordinary meaning of it is such that it requires

a subsisting cause of action in personam. Could I

refer you to a reported decision which was relied

upon by the Full Court, which, in my submission,

tends to support the construction for which I
contend. At page 12 of the record, the

Acting Chief Justice set out a passage from the

judgment of Mr Justice Willmer in the St Elefterio,

(1957) P 179, and I have provided Your Honours with

a full report of that decision.

You will note at the top of page 12, the

Acting Chief Justice recognized that the

proposition being advanced before His Lordship was

the converse of what was considered here. What was

being advanced is that it was essential that the

plaintiff in an action in rem already had a

judgment in personam before commencing the action

in rem.

In the passage at page 12 of the record, you

will see His Lordship set out a sentence, talking

about the purpose of the words:

the person who would be liable on the claim in

an action in personam -

It is the same words and Your Honours would be able to see from the Administration of Justice Act 1956

that there is an adaptation of that to the

Australian Act.

His Lordship had, in that case, under

consideration, a case of the arrest of a sister

ship and, to that extent, the sentence in which he

describes the purpose of the words is quite

correct. However, it is clear from the Australian

Act that the purpose of the words is to describe the person whose ship may be arrested, the

qualifications of that person.

However, at line 10 on page 12 of the record,

His Lordship went on to have something to say about the meaning of the words as opposed to its purpose, and he said:

The words used, it will be observed, are 'the

person who would be liable' not 'the person

who is liable', and it seems to me, bearing in

"Steven C" 11 13/12/91

mind the purpose of the Act, that the natural

construction of those quite simple words is

that they mean the person who would be liable

on the assumption that the action succeeds.

This action might or might not succeed if it

were brought in personam; that would depend

upon the view which the court ultimately took

of the various contentions raised by

Mr Roskill.

Mr Roskill was counsel for the shipowners and he

raised various potential defences.

So, Your Honours, I would simply adopt as part

of my submissions that approach to the

construction. If you look at this action -

DAWSON J: But that is against you, is it not, Mr White?

What His Lordship is saying there is that it is an entirely hypothetical action in personam. You look

at the person concerned and say, "Well, would he be

able to pursue an action in personam if he had

chosen to do that, or if he chooses to do that?"

MR WHITE:  Your Honour, he says:

This action might or might not succeed if it

were brought in personam.

He was dealing with an action in rem.	In this
case - - -

DAWSON J: In this case, the action might not succeed if an action in personam had commenced because the cause of action had merged in the judgment, but as a

hypothetical action it was available to this

person.

MR WHITE:  Your Honour, in my submission, exactly that. this action in rem had been brought as an action in If

personam it would have failed.

DAWSON J: Yes, but that is what His Lordship is

contemplating. You might have an action in

personam which would fail, but that is not the

point. You are dealing with a suppositious case, a

hypothetical case.

MR WHITE:  Your Honour, that is so, and the definition of

relevant person is dealing with a hypothetical
case. In my submission, there is no hypothetical
case any more, there is only a judgment and that

the words "would be liable", to adopt the words of

Mr Justice Willmer and similar words by

Mr Justice de Jersey in the court below, the words are "the person who would be liable" not "the

person who is liable".

"Steven C" 12 13/12/91

BRENNAN J:  Mr White, we have been through these words a few

times. You have made the point, I think, that the

cause of action in personam had merged in the

judgment and you therefore no longer have a

hypothetical liability but only an actual

liability, and your submission is that that takes

it out of the definition of "relevant person".

MR WHITE:	Yes.
BRENNAN J:	Is there anything that you can add to that?

MR WHITE: There is just one further point, if I could

briefly do so. The Full Court justified the

departure from what, in my submission, is the plain

and ordinary meaning of those words by elevating

the claim in this case to the status of a maritime

lien. At page 14, line 14, the court said:

In the present case the Cavanaghs were

the owners of the Steven C both when the cause

of action in rem arose as it did between

4 January and 4 December 1989; and also when

the proceeding was commenced by issue of the

writ of summons out of the circuit court

registry on 13 December 1990.

Your Honour, in my submission that statement is

wrong. That elevates the cause of action in rem to

that of a maritime lien. Of course, as I have

already pointed out to Your Honours, I hope that

supply of necessaries gives no maritime lien. It

was this line of reasoning which the Full Court

relied upon to depart from the plain and ordinary

meaning of the words "would be liable". I do not

think I can take my submissions further.

BRENNAN J: Yes, Mr White. Yes, Mr Fryberg?

MR FRYBERG:  May it please the Court, there are four reasons

why special leave should not be granted. First,	the decision of the Full Court was clearly correct.	Second, the decision of the Full Court accords with
decisions in England and New Zealand on cognate
provisions, and in this area international cornmity is important. Third, the practical importance of the point is low. While the point is of general
application it is not of major importance simply
because of the improbability of its recurrence.
Finally, the case is not a suitable vehicle for the resolution of the point for a couple of
reasons. Some of the grounds sought to be advanced
by our learned friend were not argued below, and
Your Honours do not have the benefit of the
judgments at first instance and in the Full Court.
I refer in particular to the argument that the

"Steven C" 13 13/12/91

cause of action does not arise on a statutory cause

of action in rem until the issue of the writ, and the distinction our learned friend sought to draw

between cases of maritime lien and other cases.

The other reason that the matter is not a

suitable case for the argument of the point is that in the ultimate hearing of the appeal, difficulties may arise because of the fact that one of the

applicants has been made a bankrupt and the trustee

in bankruptcy has yet to elect what attitude he

will take.

BRENNAN J:  You tell us why you think the judgment was

right.

MR FRYBERG:  Yes, Your Honours. The essence of the judgment

is set out in the passage commencing at page 11 of

the record, and that is page 6 of the judgment on

the typescript. The question is there stated.

Your Honours have, I take it, read the judgment and

from the remarks that have already fallen from

Your Honours in argument, the point is already

clear, I think, that the judgment that is being

considered is a hypothetical judgment. It is one

which is to be resolved on the hypothesis that the

action would succeed, and that is the point that is

brought out in the St Elefterio. It is a point

which was also - - -

BRENNAN J: Yes, well that is so, but the question is

whether, if when the writ was issued commencing the

in rem proceedings, in a hypothetical action the

owners would have been held liable.

MR FRYBERG:  Yes, Your Honour, and the reason for that

provision, the statutory purpose of the provision,

is to indicate a nexus between the vessel and the

cause of action. It is old law - certainly before

the Act - that, except in the case of a maritime

lien, one could not arrest a vessel simply because

of Mr Justice Menzies in the "Lastrigoni", for	necessaries had been supplied to it. The decision
example, demonstrates that. There had to be a
nexus between the cause of action and the
particular vessel. That was the purpose of the
definition of "relevant person", and that point is
made in the judgment of the Full Court in the
record at pages 12 and 13, where it is said:

The decisions thus show that the function

of the expression ..... is to identify someone

having a sufficient connection with the ship

as to render him or her personally -

liable. That is also the point that was made by

Lord Diplock in The Eschersheim, (1976) 1 WLR 430.

"Steven C" 14 13/12/91

The passage is at pages 436 to 437 in the judgment

of Lord Diplock:

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 -

and he quotes it -

One must therefore look at the description of each of the maritime claims included in the

list.

The relevant statutory provision is not the same as

ours, but the expression is a cognate one and it is

set out at letter G on page 436.

BRENNAN J: Is there a convention which led His Lordship to

make that observation?

MR FRYBERG:  The convention is a convention to which

Australia is not a party, it is the Arrest of Ships

Convention of 1952, but the convention was sought

to be used to overcome the traditional English view

that there must be a nexus. Your Honours may

recall that when the 1840 and 1861 Admiralty Acts

were introduced and passed in the English

Parliament, there was for some 40 years a view that the new causes of action or, more accurately, the

new jurisdiction conferred by those two Acts had

the effect of elevating the new claims to the

status of maritime liens. It was ultimately held

that they were not and the mechanism by which the

distinction was drawn was the requirement of nexus.

The argument which the appellant seeks to put - - -

BRENNAN J:  Mr Fryberg, you said that there were some cases

which support the view which you are advancing,

from other jurisdictions.

MR FRYBERG:  Yes, Your Honour.

BRENNAN J: What are those cases and what do they say?

MR FRYBERG:  We have given Your Honour the Eschersheim.

Your Honours also already had reference to The Rena

Kand to St Elefterio. The other two cases we

would seek to give to Your Honours are the case of

Reef Shipping Co Ltd v Fua Kavenga, (1987)

"Steven C" 15 13/12/91

1 NZLR 550, and the relevant passages in that case

are at 560-561 and 568; and also the - - -

BRENNAN J: What do they say?

MR FRYBERG:  That the purpose of the creation of the concept

of the hypothetical liability is to establish the

nexus between the ship and the action.

They do not suggest that that hypothetical

liability is designed to deprive the court of

jurisdiction, and that is what really the argument

here seeks to do.

The second case to which I should refer

Your Honour in answer to Your Honour's question, is the one referred to at 561 in the "Fua Kavenga ",

that is the decision of Mr Justice Hewson in The St

Merriel, (1963) P 247, and the relevant passage is

quoted at page 561 of the New Zealand case.

The point, Your Honour, is that we are here concerned with jurisdiction.	We are not concerned
with whether there is ultimately a defence.	What

happened in the present case was that the ground

taken in the defence was res judicata, and that

appears in the record in the affidavit - I think

the evidence before the trial judge is not before

the Court.

BRENNAN J:  We need not trouble you any further, Mr Fryberg.

MR FRYBERG: If Your Honour pleases.

BRENNAN J: Have you anything to say in reply, Mr White?

MR WHITE:  Could I just say briefly this, Your Honours. The

cases of The St Merriel and the. "Fua Kavenga ", are

similar cases to The St Elefteria in that they

acknowledge, in my submission, if a proceeding in

then any defence which might have been pleaded in rem were commenced as a proceeding in personam,	the proceeding in personam is avaiJable to the
owners in the proceeding in rem. In my submission,
if this action in rem had been commenced as an
action in personam, the Cavanaghs would have been
entitled to plead the earlier judgment in personam
in the magistrates court and that would have been a
bar to obtaining judgment in that hypothetical
action in personam as has been determined by this
Court in Chamberalain's case.

BRENNAN J: Yes, thank you, Mr White. There is not

sufficient reason to doubt the decision of the Full

Court in this case to justify the grant of special

leave. Accordingly, the application for a grant of

special leave is refused.

"Steven C" 16 13/12/91

MR FRYBERG: 

May it please the Court, we ask for costs and

an order in the form that the applicants pay the
respondent's costs to be taxed, and that the
respondent recover those costs against the vessel

"Steven C".  The latter would be the ordinary

result, we would think, of a less wordy order, but

for the avoidance of doubt, we would ask that it be

spelt out since, as Your Honours may have seen,

there has been an intervening bankruptcy by one of

the applicants.

BRENNAN J: 

The effect of the order would be to make you a

secured creditor in respect of the costs.

MR FRYBERG:  We submit that is the position we are in, but

by commencing the action against the vessel in rem,

the vessel becomes security for our claim and for

the costs. That is the ordinary position.

BRENNAN J: That would be a matter which would be of

considerable interest, one imagines, to the trustee

in bankruptcy, who is not present.

MR FRYBERG: With respect, Your Honour, he does not have any

interest in the vessel, we would submit, except

subject to the security.

BRENNAN J: Exactly.

McHUGH J: But he has got an interest in the quantum of the

security.

MR FRYBERG:  Yes.

BRENNAN J: And if you get security in respect of your

costs, you will rank in advance to the other

creditors.

MR FRYBERG:  Your Honour, we have given him notice and

invited him to be here today. His solicitor has

indicated he is on stand-by and willing to attend,

if necessary, but he was not going to come

otherwise. We cannot make him come.

BRENNAN J:  We do not make orders which give you a secured

position, Mr Fryberg. If you wish to seek some

security in some fashion, then you must do so on

notice.

MR FRYBERG:  Your Honour, with respect, the ordinary

position is that orders for costs follow the event

and those orders for costs are caught up in the

security. That is accepted law. I should also

tell Your Honours, I might say - - -

BRENNAN J: What is your authority?

"Steven C" 17 13/12/91

MR FRYBERG: It is not a matter I came prepared with

authority for, Your Honour, with respect, because,

it is, in our respectful submission, very well

settled, but there is one other factor I ought to

tell Your Honours of, and that is this: that the

applicants claim to have sold the vessel to another

party before the trustee's interest arose, and,

again, it is settled law that any charge we have

follows the vessel, in our submission. Again, we

would submit that the trustee, for that reason,

cannot have an interest if what the applicants have

alleged is correct.

BRENNAN J:  Mr Fryberg, if the law is as clearly settled as

you say it is in respect of a secured order for

costs, it is regrettable that you do not have the

authority with you because you are seeking an order

which will give you priority over other parties who

are not parties to these proceedings and who are

not presently represented, so that if you seek an

order for costs, that is one thing; if you seek a secured order, that is another. I would not make

an order.

MR FRYBERG:  Would Your Honours then adjourn that question?

BRENNAN J: Adjourn the question?

MR FRYBERG:  Of costs, in order to enable us to give notice

to the solicitors for the trustee.

BRENNAN J:	I do not think so.
MR FRYBERG:	I say, stand it down rather than adjourn,

Your Honour, because they could be here, I think,

in half an hour-.

BRENNAN J: No, Mr Fryberg. If your matter is not ready for

determination, then we do not propose to stand it

over for that purpose.

MR FRYBERG:  We ask for the ordinary order for costs in that

case, Your Honour.

BRENNAN J:  Yes • Let us see what Mr White has to say about

that. Mr White?

MR WHITE:  I could not oppose the ordinary order for costs,

Your Honour, in light of your decision.

BRENNAN J: The application for special leave will be

refused, with costs.

AT 1.43 PM THE MATTER WAS ADJOURNED SINE DIE

"Steven C" 18 13/12/91