Shell Oil Company v The Ship “Lastrigoni”

[1974] HCA 27

HIGH COURT OF AUSTRALIA

Menzies J.

SHELL OIL COMPANY v. THE SHIP "LASTRIGONI"

(1974) 131 CLR 1

4 July 1974

Shipping and Navigation

Shipping and Navigation—Admiralty—Action in rem against ship for cost of necessaries supplied—Maritime lien—Ship under time charter—Necessaries supplied to charterer—Jurisdiction of Court of Admiralty—Whether action in rem can be maintained where owners not liable—Admiralty Court Act, (3 &4, Vict. c. 65) (U.K.), s. 6—Admiralty Court Act, 1861 (24 &25 Vict. c. 10) (U.K.), s. 5.

Decision

July 4.
Menzies J. delivered the following written judgment:-
An action has been commenced in Admiralty by the Shell Oil Co. against the ship Lastrigoni for $103,230.51 for bunkers supplied in Melbourne, Brisbane, Antwerp and Cristobal. The ship has been arrested in Melbourne. (at p2)

2. The Lastrigoni is owned by the Lithos Shipping Co. and is on time charter to Mardina Lines S.A. These companies have applied to have the proceedings, including the arrest of the ship, set aside on the ground that the plaintiff's claim is not within the Admiralty jurisdiction of the Court. (at p3)

3. The time charter includes the following clauses:

"1.That the Owners shall provide and pay for all provisions, wages and consular shipping and discharging fees, of the Crew; shall pay for the insurance of the vessel, also for all cabin, deck engine-room and other necessary stores, including boiler water and maintain her class and keep the vessel in a thoroughly efficient state in hull, machinery and equipment with all necessary certificates of inspection for and during the service. 2. That the Charterers shall provide and pay for all the fuel except as otherwise agreed. . . ." (at p3)

4. The bunkers were provided by or on behalf of the plaintiff under a bunker fuel oil contract, made between the plaintiff and Maritime Shipping Agencies Inc. as agents for Mardina Lines S.A., covering the supply of fuel to ships of Mardina Lines S.A. It was provided that the buyer should order its requirements from the seller at a contract port as specified giving fourteen days prior notice. (at p3)

5. The owner of the Lastrigoni was not a party to this contract. (at p3)

6. Clause 6.4. was in these terms:

"6.4. Security. Each sale and delivery hereunder will be made on the faith and credit of the vessel to which delivery is made, as well as the faith and credit of Buyer. However, if Buyer's financial responsibility ever becomes, in Shell's opinion, impaired or otherwise unsatisfactory, Buyer shall, on Shell's demand, make advance payments and/or furnish additional security. Shell's assertion of any of its rights or remedies against any one of Buyer or any such vessel or any such additional security, shall not waive any of those rights or remedies against any other of them."

This clause was in a contract which, it seems, would cover ships owned by Mardina Lines S.A. as well as ships on charter to that company. (at p3)

7. The ground of the application is that the owner of the ship is under no liability to the plaintiff for the sum claimed. (at p3)

8. It is not disputed that the owner of the ship was under no contractual liability to pay for the bunkers supplied, but is was sought by two submissions to bring the claim within the Admiralty jurisdiction of the Court. The first was that the supply of fuel itself created a maritime lien to which the ship was subject and which could be enforced by an action in rem in Admiralty. The second was that, in the circumstances, an action in rem lay notwithstanding the absence of any contractual liability on the part of the owners to pay for the bunkers supplied and that this was so by virtue of s. 6 of the Admiralty Court Act 1840 (U.K.), and s. 5 of the Admiralty Court Act 1861 (U.K.), either with or without the aid of cl. 6.4 of the bunker fuel oil contract. (at p4)

9. Mr. Pannam, for the plaintiff, in the course of a far-ranging argument , brought to my attention decisions of Dr. Lushington as authority to support his contention that the supply of necessaries to a ship did create a maritime lien for payment for the supplies. It is true that in The "Ella A. Clark" (1863) Br &L 32 (167 ER 283) (notwithstanding what he had said in The "Alexander" (1841) 1 W Rob 288, at p 294 (166 ER 580, at p 582) ), Dr Lushington did express the opinion that where the British Legislature had given the Court of Admiralty jurisdiction to proceed in rem in certain claims, such claims were to be treated as maritime liens, and so decided in The "West Friesland" (1859) Swab 454 (166 ER 1213) . The learned judge regarded Harmer v. Bell; The "Bold Buccleugh" (1851) 7 Moo PC 267 (13 ER 884) , as authority for this. That Privy Council decision, however, was concerned with a claim for damages arising in a collision, and the existence of a maritime lien for such damage is, of itself, hardly sufficient to establish that there is such a lien for necessaries supplied. In Northcote v. Owners of The "Henrich Bjorn" (1886) 11 AC 270, at p 280 , Lord Watson said that no one had done more to impair the authority of The "West Freisland" (1859) Swab 454 (166 ER 1213) and The "Ella A. Clark" (1863) Br &L 32 (167 ER 283) than Dr. Lushington himself. However, the matter was, I think, put at rest by the decision of the Privy Council in Laws v. Smith; The "Rio Tinto" (1884) 9 App Cas 356 by which it was decided that no maritime lien attaches to a ship in respect of coals or other necessaries supplied to it. (at p4)

10. The action cannot therefore be supported as one to enforce a lien upon the Lastrigoni. (at p4)

11. The second point depends upon the Admiralty Court Acts (U.K.) of 1840 and 1861. The two sections most relevant, s. 6 of the 1840 Act and s. 5 of the 1861 Act, are as follows:

"6. The High Court of Admiralty shall have jurisdiction to decide all claims and demands whatsoever in the nature of salvage for services rendered to or damage received by any ship or sea-going vessel, or in the nature of towage, or for necessaries supplied to any foreign ship or sea-going vessel, and to enforce the payment thereof, whether such ship or vessel may have been within the body of a country, or upon the high seas, at the time when the services were rendered or damage received, or necessaries furnished, in respect of which claim is made. 5. The High Court of Admiralty shall have jurisdiction over any claim for necessaries supplied to any ship elsewhere than in the port to which the ship belongs, unless it is shown to the satisfaction of the Court that at the time of the institution of the cause any owner or part owner of the ship is domiciled in England or Wales: Provided always, that if in any such cause the plaintiff do not recover twenty pounds, he shall not be entitled to any costs, charges, or expenses incurred by him therein, unless the judge shall certify that the cause was a fit one to be tried in the said Court. (at p5)

12. Each section confers jurisdiction in the circumstances stated over claims "for necessaries supplied" to a ship. Counsel for the plaintiff relied upon the earlier as well as the later Act on the footing that the Lastrigoni is a foreign ship. The problem, as I see it, is to decide whether, in the circumstances stated, the bunkers were supplied to the ship within the meaning of these provisions. (at p5)

13. It is, of course, true in a general sense that the bunkers were supplied by the plaintiff to the Lastrigoni, but I have come to the conclusion that the reference in the sections means more than that necessaries were put aboard the ship. In my opinion necessaries are only "supplied to a ship" when they are supplied for the owner. Here the bunkers were supplied to the charterer as the buyer under the bunker fuel oil contract and not to the owner. (at p5)

14. My reasons for the foregoing conclusions are, in summary, as follows:
1. The general rule of Admiralty is that an action in rem cannot be maintained when there is no liability in the owners: Rosenfeld Hillas &Co. Pty. Ltd. v. The "Fort Laramie" (1922) 31 CLR 56, at p 63 and the authorities there cited. The practice that once an appearance has been entered to an action in rem it proceeds as an action in personam as well as an action in rem, is, it seems to me, an acknowledgment that, except in special circumstances, there must be liability in the owners before an action in rem lies against the ship. See too s. 35 of the Admiralty Court Act 1861 (U.K.)
2. The statutory provisions under consideration should be construed in the light of the foregoing general rule.
3. That with respect to analogous claims under s. 10 of the Admiralty Court Act 1861 (U.K.) it has been decided that the owner must be liable in personam before a claim in rem will lie in Admiralty. See the judgment of Lord Herschell in Morgan v. Castelgate Steamship Co.; The "Castlegate" (1893) AC 38 .
4. The limitation in s. 5 of the Admiralty Court Act 1861 (U.K.) introduced by the word "unless" points to the conclusion that the action in rem is provided where there is personal liability in the owner which cannot be enforced at the time and place of the institution of the cause.
5. The words "supplied to any ship" are not appropriate to cover a case such as this where the supply is to and pursuant to a contract made with a person who does not represent the ship.
6. Proceedings in Admiralty are intended to facilitate the enforcement of liabilities, not to allow pressure to be put upon a person who is himself under no liability in respect of the liabilities of others. (at p6)

15. I should, perhaps, refer to one case upon which the plaintiff relied, that is Foong Tai &Co. v. Buchheister &Co. (1908) AC 458 . It was contended that this decision provided authority that the right in rem is not dependent upon a related right in personam being available against the owner of the ship at the time when the action is brought. The case is not an easy one, but it seems to me to have been decided upon very special facts, namely that, although the defendant was not the owner of the ship in question, it was the equitable owner and that the expenditure for necessaries was to its benefit. I have studied the explanation of this case given by Kriewaldt J. in Dalgety and Co. Ltd. v. Aitchison; The "Rose Pearl" (1957) 2 FLR 219 , and I agree with his explanation of it. (at p6)

16. There remains to be considered the plaintiff's reliance upon cl. 6.4 of the bunker fuel oil contract. This clause appears to me to afford no basis for any finding of personal liability on the part of the owner. It is a clause in a contract to which the owner was not a party and it is explicable in the circumstances that the contract would cover the provision of bunkers to ships belonging to the charterer. There is nothing to show that the clause was intended to commit the owner of the Lastrigoni and of itself it affords no sound basis for any inference that the owner was affording the Shell Oil Company the security of its ship for any bunkers supplied to the charterer in respect of the Lastrigoni. (at p6)

17. In my opinion the application should succeed and the proceedings instituted in Admiralty and the arrest of the ship as part of those proceedings should be set aside. (at p6)

18. I do not think that the charterer was a necessary party to these proceedings; indeed, it appears to me that it has no locus standi to have the proceedings as a whole set aside. It is not, I think, entitled to costs. (at p7)

Orders

Writ of summons herein and all proceedings thereunder (including but not limited to the arrest of the defendant ship pursuant to the warrant of arrest issued 18th June 1974) set aside.

Plaintiff to pay costs of Lithos Shipping Co. Ltd., the owner of the defendant ship.

Certify for counsel.