Patrick Stevedoring No 2 Pty Ltd v The Ship "Turakina" Waitemata Stevedoring Services Ltd v The Ship MV "Rangitata" and Anor

[1998] FCA 1013

FEDERAL COURT OF AUSTRALIA

ADMIRALTY – application for declaration of title to personal property items on vessel at time of arrest – evidence not sufficient – application dismissed – application for declaration of title to bunkers and lubricants – ownership –whether evidence as to payment – whether “ship” includes all property aboard the ship other than property not owned by shipowner – onus of proving ownership.

The “Pan Oak “ [1992] 2 Lloyd’s Rep 36, cited
Morlines Maritime Agency Ltd v The Ship “Skulptor Vuchetich” (1996) 62 FCR, cited
The “Silia” [1981] 2 Lloyd’s Rep 534, applied
The “Eurostar” [1993] 1 Lloyd’s Rep 106, followed
The “Saint Anna” [1980] 1 Lloyd’s Rep 180, cited
The “Span Terza” [1984] 1 Lloyd’s Rep 119,cited
The “Saetta” [1993] 2 Lloyd’s Rep 268, cited

Civil Admiralty Jurisdiction, Report No 33 (1986), par 107
Benjamin’s Sale of Goods, 4^th edn

PATRICK STEVEDORES NO 2 PTY LIMITED v

THE SHIP “TURAKINA”
NG 114 OF 1998

AND

WAITEMATA STEVEDORING SERVICES LIMITED v
THE SHIP “RANGITATA”
NG 115 OF 1998

TAMBERLIN J

SYDNEY
17 AUGUST 1998

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

IN ADMIRALTY

NG 114 OF 1998

BETWEEN:

PATRICK STEVEDORES NO 2 PTY LIMITED
PLAINTIFF

AND:

BETWEEN:

AND

THE SHIP "TURAKINA"
DEFENDANT

  NG 115 OF 1998

WAITEMATA STEVEDORING SERVICES LIMITED
PLAINTIFF

THE SHIP “RANGITATA”
DEFENDANT

JUDGE:

TAMBERLIN J

DATE OF ORDER:

17 AUGUST 1998

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

The applications be dismissed with costs.

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

IN ADMIRALTY

 NG 114 OF 1998

BETWEEN:

PATRICK STEVEDORING NO 2 PTY LIMITED
PLAINTIFF

AND:

BETWEEN:

AND:

THE SHIP "TURAKINA"
DEFENDANT

   NG 115 OF 1998

WAITEMATA STEVEDORING SERVICES LIMITED
PLAINTIFF

THE SHIP “RANGITATA”
DEFENDANT

JUDGE:	TAMBERLIN J
DATE:	17 AUGUST 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

On Application by Liquidators

On 24 June 1998, the Court made an order for the sale of the MV “Turakina” (“the ship”), which was arrested by the Admiralty Marshal on 19 February 1998, on the application of the solicitor for the plaintiff.

At the time of arrest the demise charterer of the ship was South Pacific Shipping Limited (“SPS”).  A few hours before the arrest, SPS had resolved to go into voluntary liquidation and two liquidators were appointed.

The Notice of Motion presently before me has been filed by the liquidators. The application seeks declarations that the liquidators have title to a number of listed items of personal property located on the vessel at the time of arrest.  These include items such as video recorders, television sets, clothing and a photocopier.  The liquidators also seek an order that an amount of AUD27,750 be paid to them.

A further declaration is sought that SPS has title to bunkers and lubricants (“the bunkers”) as listed in the Notice of Motion and an order that the Marshal pay to the liquidators the value of those bunkers and lubricants.

At the commencement of the hearing an application was made by the liquidators seeking further orders including a declaration and damages on the basis that the Marshal was liable in conversion in respect of the property items and bunkers referred to above.

Having heard objections from all other parties and in view of the lateness of the application to amend, I refused the amendment and the consequential adjournment application made on behalf of the liquidators.  In my view, it would have been unfair to allow such an important amendment to have been made at the very last moment without reasonable notification to the other parties and the Marshal in particular.

When the affidavits were sought to be read, substantial objections were raised by all other parties to each of the affidavits filed in support of the application.  Except for a small number of photocopy documents, including the charterparty and several documents relating to the supply of the bunkers, the bulk of the affidavit evidence was disallowed.  This was because it was clearly not in admissible form in a proceeding where final relief is claimed by way of declarations and orders for payment.

In an affidavit sworn on 5 August 1998, Mr Fisk, a chartered accountant of New Zealand in the same practice as the liquidators, stated his belief that it would be impossible for individual invoices to be located to identify the purchase of particular items for a particular vessel.  This explains, to some extent, the reason the evidence advanced in this case was so manifestly inadequate to support the declarations and orders sought in the matters of the Motion. However, it does not remedy the absence of essential evidence.

As a consequence of the evidentiary ruling, the liquidators conceded that they could not continue with the application in relation to the items of personal property listed in the Notice of Motion.

Entitlement to the bunkers

The liquidators pressed on, however, with their application for declarations as to entitlement to the bunkers.  They relied on the terms of the charterparty and on several invoices, bunker orders and delivery receipts, payment advice forms and related documents.

The demise charterparty, in the present case, was entered into at Christchurch on 19 December 1995, between Deil Shipowners BV of the Netherlands and South Pacific Shipping Limited. 

Reference was made to cll 8 and 9(b), which read:

“8.       Inventories and consumable oil and stores

… The Charterers and the Owners, respectively, shall at the time of delivery and redelivery, take over and pay for all bunkers, lubricating oil … oils … and other consumable stores in the said Vessel at the then current market prices at the ports of delivery and redelivery, respectively.

9.        …

(b)      The charterers shall at their own expense and by their own procurement man … operate, supply, fuel and repair the Vessel whenever required during the charter period and they shall pay all charges and expenses of every kind … incidental to their use and operation of the Vessel under this Charter…”

These provisions, of course, govern the rights as between the demise charterer and the owner.  They do not affect any claims which the supplier of the bunkers may have to the fuel as against the charterer.

The significance of the question as to ownership of the bunkers was adverted to by Sheen J in The “Pan Oak “ [1992] 2 Lloyd’s Rep 36 at 39, where his Lordship said:

“… the bunkers in a ship may belong to charterers, as frequently they do.  Nevertheless in an action against the shipowners (in which there is no suggestion of any liability upon charterers) oil which is acknowledged to be the property of the charterers is sold by the Court. It is always accounted for separately.  If it is agreed or proved that charterers were the owners of the oil when it was sold, the proceeds of the sale will be paid out to the charterers. If the oil is the property of the shipowners the proceeds of sale are available for distribution to creditors who establish a claim against the shipowners.”

I accept that the bunkers were delivered by Mobil, the supplier, to the ship.  According to Mobil’s invoices and delivery receipts, it appears that the bunkers were ordered by SPS and duly delivered.  The orders were signed by or on behalf of the Chief Engineer of the ship.  The delivery dates are recorded as 15 January 1998 and 12 February 1998.

There is no evidence that payment for the bunkers was ever made by SPS.

The dates on which payments were due were specified in the invoice payment advices.  They were 20 February 1998 and 20 March 1998 in the case of the “Turakina”.  Both of these dates were after the time of the arrest.  The liquidators endeavoured to tender evidence of a claim by Mobil in the winding-up.  This was not admitted because it was a generalised claim.  Moreover, the copy invoices admitted into evidence still had the payment advice slips attached to them.

Apart from the above documents, there is no evidence as to the terms and conditions which governed the purchase and delivery of fuel.  In particular, there is a lack of any evidence that title to the bunkers has ever passed to the charterers.  The invoices refer to an account number and it seems likely that there is, in existence, a continuing supply agreement which contains the conditions covering the terms applicable to particular orders for bunker fuel.  However, the state of the evidence is insufficient to enable me to make any finding as to the existence or terms of any such agreement.

A number of decisions were referred to in the course of argument, including the recent decision of Sheppard J in Morlines Maritime Agency Ltd v The Ship “Skulptor Vuchetich” (1996) 62 FCR 602. In that case, his Honour decided that forklift trucks, fork hoists and associated equipment valued at $500,000, located on the ship at the time of its sale by the Marshal, were properly characterised as part of the “ship” for the purposes of arrest and sale.

In reaching this conclusion his Honour adopted and applied the reasoning of Sheen J in The “Silia” [1981] 2 Lloyd’s Rep 534, which concerned the claims to the ownership of bunkers. In The “Silia” (at 537) his Lordship said:

“I have no doubt that in the context of an action in rem the word ‘ship’ includes all property aboard the ship other than that which is owned by someone other than the owner of the ship.” (Emphasis added)

Later at 538 he continued:

“… in my judgment the proceeds of sale of the oil are part of the res and, as such, available to judgment creditors in rem.”

The definition of “ship” in s 3 of the Act is not helpful on the present point.  That section defines “ship” to mean:

“… a vessel of any kind used on constructed for use in navigation by water, however it is propelled or moved, …”

The definition then enumerates various types of vessels.

The Australian Law Reform Commission in its report concluded that there was no necessity for any more detailed definition of ship: see Civil Admiralty Jurisdiction, Report No 33 (1986), par 107.  The Commission there accepted the principle, as expounded by Sheen J, as being sufficiently clear on this aspect.

Of course, the general principle that “ship” includes all property aboard the ship as formulated by Sheen J is subject to an exception in instances where it could be shown that the property was owned by someone other than the owner of the ship.  In the present case, the onus rests on the liquidators to establish their ownership in right of SPS to the bunkers.  In my view, on the evidence presented, they have failed to do so.

The importance of proving that “payment” has been made when considering the ownership of bunkers is adverted to in The “Eurostar” [1993] 1 Lloyd’s Rep 106 by Sheen J at 110, where he emphasised that :

“The bunkers in Eurostar throughout the period of hire had all been paid for by the charterers and was their property.… The question before the Court is whether at the date of their sale they were the property of the shipowners or the charterers.  If they remain the property of the charterers after the expiration of the charter the charterers are entitled to payment out of Court of the bunker fund.  The defendant shipowners have not paid the charterers for the bunkers.  But if the property in the bunkers was transferred to the shipowners at the termination of the charter, the charterers have a claim against the shipowners for the price of the bunkers.” (Emphasis added)

Other authorities concerning the ownership of bunkers, as between buyer and seller, attach importance to the fact of payment: see The “Saint Anna” [1980] 1 Lloyd’s Rep 180 at 182; and The “Span Terza” [1984] 1 Lloyd’s Rep 119 at 120 per Lord Diplock.

In the present case, the lack of evidence as to the terms of the agreement with Mobil, in relation to ownership of the bunkers, makes it impossible to determine whether property in the bunkers passed to SPS or whether it was retained by Mobil.

It is not unknown for contracts for sale of bunker fuel to include clauses which provide for retention of title by the seller in the event that the buyer does not pay for the bunkers.  Such a provision is effective as between buyer and seller to prevent the transfer of property in the goods: see Benjamin’s Sale of Goods, 4^th edn at par 5-116 ff.  An example can be found in the case of The “Saetta” [1993] 2 Lloyd’s Rep 268, where the bunker supply agreement had a retention of title clause. It was common ground, in that case, that property in the bunkers did not pass until payment was made by the buyer to the seller.

Accordingly, in the light of the present circumstances, I am not satisfied that the liquidators have made out a case for any declaration that they are entitled to the bunkers on the ship and I, therefore, dismiss the application with costs.  I order South Pacific Shipping Limited (in liquidation) to pay the costs of all other parties of this application.

A similar Notice of Motion was filed by the liquidators in relation to the ship “Rangitata”.  The evidence in relation to that ship was substantially similar in nature and form (except for payment dates) to that filed in the “Turakina” application.  It was not submitted that the outcome in relation to the “Rangitata” should differ from that in the “Turakina”.

Accordingly, for the same reasons, I dismiss the liquidator’s application in relation to the “Rangitata” with costs.

I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin

Associate:

Dated:             17 August 1998

Counsel for the Owner:	Mr B W Larkin
Solicitor for the Owner:	Michell Sillar
Solicitor for the Master and  crew:	Levingstons
Solicitor for the Admiralty Marshal:	Mr Douglas Coleman
Counsel for the Plaintiff:	Mr G J Nell
Solicitor for the Plaintiff:	Allen Allen & Hemsley
Counsel for Intervening Liquidator SPS:	Mr B J Shields
Solicitor for Intervening Liquidator SPS:	Ebsworth & Ebsworth
Counsel for Intervening Bank:	Mr A W Street SC
Solicitor for Intervening Bank:	Norton Smith & Co
Date of Hearing:	7 August 1998
Date of Judgment:	17 August 1998