The Owners of the Ship Shin Kobe Maru v Empire Shipping Company Inc

[1993] HCATrans 137

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl29 of 1992

B e t w e e n -

THE OWNERS OF THE SHIP

"SHIN KOBE MARU"

Applicant

and

EMPIRE SHIPPING COMPANY INC

Respondent

Application for special leave

to appeal

DAWSON J

GAUDRON J

McHUGH J

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TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 21 MAY 1993, AT 10.27 AM

Copyright in the High Court of Australia

MR F.H. CALLAWAY, OC:  May it please the Court, I appear

with my learned friend, MR P.E. KING, for the applicant. (instructed by Middletons Moore &

Bevins)

MR A.W. STREET:  May it please the Court, I appear with my

learned friend, MR M.J. FITZSIMONS. (instructed by

Norton Smith & Co)

DAWSON J:	Mr Callaway.
MR CALLAWAY:	If the Court pleases. Your Honours, on

Wednesday we endeavoured to file in the Registry an

affidavit concerning the 78B notices. The Registry

took the view that we should have done so the day

before. If that be right, we apologize. In any

event, I ask for leave to file them by handing them

to the Court.

DAWSON J:	You have no objection, Mr Street?
MR STREET:	No, Your Honour.

DAWSON J: Thank·you, Mr Callaway.

MR CALLAWAY: If the Court pleases.

DAWSON J:  We do not require to read those, do we?

MR CALLAWAY:  No, Your Honour. I think, as a matter of

candour, I should perhaps say to the Court that the

constitutional issue is identified in the

78B notices but only just and in the event that the

Court granted special leave, we would propose to

give fuller and better notices so that no Attorney

could possibly be under a misapprehension as to the

point sought to be raised on the actual hearing.

Your Honours, we also have four copies of the

Admiralty Act for the use of the Court. We

photocopied material, only a little of which we
propose to refer to, and put that in an indexed
paginated book. If I might hand that up to

Your Honours.

If the Court pleases, this case raises three

issues, each of which, in our submission, is of

general importance and each of which is attended by

sufficient doubt as to what was decided below. I

propose to take the Court through the three issues:

first, on the matter of general importance and then

to look at the reason to doubt correctness.

The first issue is the constitutional issue,

which is the meaning and scope of section 76(iii)

of the Constitution, "Of Admiralty and maritime

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jurisdiction". It is clearly raised by the

proceedings because the Admiralty Act is founded on

that provision of the Constitution. The long title

says that it is, "An Act relating to Admiralty and

maritime jurisdiction", and section 14 says:

In a matter of Admiralty or maritime

jurisdiction, a proceeding shall not be

commenced as an action in rem ..... except as

provided by this Act.

And there are similar limitations in terms of section 76(iii) in sections 12 and 13.

There has been no definitive statement of the

meaning and scope of section 76(iii) in this Court

since the Kalibia case in 1910 and even that is far

from being a definitive statement. Three members

of the Court, Chief Justice Griffith,

Justices Barton and Isaacs, said words to the effect that you could not use section 76(iii) to legislate substatively, the phrase one finds in Justice Barton's judgment; that one could not use

section 76(iii) to alter admiralty and maritime law
as they are found to exist, which is the phrase

used in Justice Isaacs' judgment.

That is the nearest that this Court has ever

come to a definitive statement. There are other

cases which refer to the issue of what 76(iii)

means. There is no case, including the Kalibia

which assays a definition of admiralty and maritime

jurisdiction which all the judges in the courts

below in this case assayed.

DAWSON J:  You are not suggesting it is frozen as at 1901,

are you?

MR CALLAWAY:  No, Your Honour, no. The reasoning in the

judgments in the Kalibia was explicitly based on

the concept that Australia was not then a separate

nation of independent sovereignty in relation to

the United Kingdom, a phrase one finds in

Justice Barton's judgment, and Justice Isaacs also

referred to the imperial nature of the

subject-matter. Your Honours, much water has

flowed under the bridge since then and in the words

of a non-admiralty American case I read last year,

the surrounding landscape is entirely changed as

well. In our submission, the passage of the

Australia Act and the other constitutional

developments that have occurred since 1910 make it

timely for this Court to revisit the meaning of

section 76(iii). The passage of the Admiralty Act

makes it timely too because, for the first time, we

have Australian admiralty legislation of a

comprehensive kind.

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I would not take up the Court's time by going

to the definitions that were assayed in the courts

below. They appear at page 74 in the judgment of

the learned primary judge; at page 98 in the

judgment of Mr Justice Davies, and at page 126 in

the judgment of Mr Justice Lockhart, with whom

Mr Justice French concurred. If it is expedient,

Your Honours, to define "Admiralty and maritime

jurisdiction" then, in our respectful submission,

it should be done by this Court.

If, on the other hand, it is expedient to

develop the understanding of the section on a

case-by-case basis, it is better that the issue

raised by this proceeding be decided by this Court.

DAWSON J:  You are going to say what is wrong with, well, in

particular, the definition on pages 125 and 126, I

take it?

MR CALLAWAY:	It is too wide, Your Honour, if it reaches the conclusion that Their Honours did. This is a claim
in contract which Their Honours had held as a
proprietary - the important word is "proprietary" -
maritime claim. It is essentially an attempt to
obtain specific performance in favour of a third party.

We have looked and we have not been able to

find any case in Australia, New Zealand, the United

Kingdom, Canada or the United States where an

admiralty court has made an order for the transfer

of title to a third party.

DAWSON J: But that is to ignore the words "maritime

jurisdiction". They must be words of the widest

import, must they not?

MR CALLAWAY: Certainly, wider than if we - - -

DAWSON J: Admiralty.

MR CALLAWAY:  - - - persevered in the 1910-type submission,

Your Honour. But the American courts which take a

notoriously wide view of the same words in the

United States Constitution, because clearly the

framers had article III, section 2 in mind - the

American courts take a very wide view but the

American courts do not regard a claim for specific performance of a contract for the sale of a vessel

even in favour of the plaintiff as a maritime

contract. That was so in 1900 in a case in the

Supreme Court called the Eclipse. So, if one looks

at the contemporaneous American understanding, it

was so then, as we understand it, it is still the

prevailing view in the United States. So that a

wide view, even a very wide view of admiralty and

Ship 4 21/5/93

maritime jurisdiction does not necessarily mandate a claim even in favour of the plaintiff, let alone

a claim for a third party.

GAUDRON J:  Is that treated as an express limitation on the

constitutional grant of power, in America, or is it

simply because ~here is no legislation of the kind

involved in the Admiralty Act which we now have?

MR CALLAWAY:  As we understand it, Your Honour, it is

understood as a limitation on the scope of the

words of the Constitution, as "Admiralty and

maritime jurisdiction" does not extend that far.
The reasoning, as we understand it, is that the

American courts say that all maritime contracts are

covered by the words in the Constitution, but that

is not a maritime contract. It is simply the

enforcement of a commercial contract.

DAWSON J:	What is a maritime contract?
MR CALLAWAY:	We would not wish to assay a definition on the

special leave day, Your Honour, and I doubt that we

would on the hearing. It is something that is best

built up case by case. It is fair to say, in the

United States, difficulty has been found in formulating a definition too, with all the

experience the courts of those - - -

DAWSON J: 

Can I ask you what the word "maritime" means?

MR CALLAWAY: 

In itself, Your Honour, it means pertaining to

the navigation and commerce of the seas. It means
pertaining to the sea in its purely literal form.

"Mara maritimus": pertaining to the sea, but it ~s

unlikely that the words have that wide a meaning and if they do it is petter that this Court says

so. So that even if we went down on that aspect of the case, we would be hopeful of persuading the

Court, on other aspects, it would still be an

appropriate case for the grant of special leave.

and (b) is also an important issue in addition to So that the meaning of section 4(2)(a)(i)(ii)

the constitutional issue. It is important that the

true meaning of "proprietary maritime claim" be

established early on in the administration of the

Admiralty Act. It is important for a particular reason, Your Honours. Admiralty jurisdiction is peculiar; it is one of the rare cases where a court

can exercise jurisdiction that is internationally

recognized in respect of a matter that has no
connection with the country except that the vessel

sailed into our waters and we were able to arrest

the vessel.

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It is important that the Admiralty Act, in

this country, have international acceptance. That

was a matter present to the minds of the Law Reform

Commission and referred to in its report. If, as

we would submit, the jurisdiction claimed in this

case is internationally exorbitant, then it will

not achieve international acceptability. That, in

itself, we submit, is a special leave point. It is

vital that the Admiralty Act have international

acceptance. It may not, if the courts of this

country go beyond even the United States' courts

and even the Canadian courts.

There is a Canadian case Your Honours will

have seen reference to, Antares, where the

Supreme Court of Canada, disagreeing with the

American courts, said that Canadian admiralty

courts, the Federal Court of Canada, could

entertain an action for specific performance in

favour of the plaintiff. Not even the Canadian
courts have gone the next step and said in favour

of a third party. So, the international

acceptability of the Admiralty Act is genuinely in

issue.

The third issue is the procedural issue. We

submit that where there is a challenge to

jurisdiction of this kind, the plaintiff must

establish at the outset, on the balance of

probabilities, that the Court has jurisdiction.

When I come to the reasons to doubt I will say more about that, but in terms of the - - -

GAUDRON J:  What does that really mean in this case? I must

say, when I read it all, I was greatly confused.

Does it mean more than that it is a proprietary

action as defined?	C~n it mean more in the context
of this Act?	I suppose to that extent we assume

against you on the first issue.

MR CALLAWAY:  Yes. Your Honour, if the Court granted

special leave, and if we failed on the

constitutional issue and failed on the construction

issue, if the Court were with us on the procedural

point - - -

GAUDRON J: But if you fail on those two points, is there

anything in the procedural point other than a

determination that you fall within the definition?

MR CALLAWAY:  Yes, Your Honour, because it is a mixture of

looking at the writ and looking at the facts, and

you do have to look at the facts because otherwise

somebody could establish exorbitant jurisdiction by

just issuing a writ which claimed something,

whereas, a defendant was in a position to prove

straight away that it just was not so.

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GAUDRON J:	The facts have been looked at.
MR CALLAWAY:	Yes, Your Honour, the facts have been looked

but that is the very matter that we complain of.

We have not ended up with a decision on either the law or the facts.

GAUDRON J:	But in the circumstances of this case, could you, other than by way of final determination?
MR CALLAWAY:	In our respectful submission, yes,

Your Honour. All we have so far, certainly with

Mr Justice Gummow, and it seems clear in the

Full Court too, is it has been established that there is a strong argument for the opinion that the

court has jurisdiction. Well now, that is not good

enough internationally, in our respectful

submission. There should be a decision now on the

balance of probabilities as to whether, on the

material that is put before the court deciding it,

there is jurisdiction.

GAUDRON J:  What do you mean by "there is jurisdiction"?

Assuming against yourself the constitutional point

and the construction point, what is involved in the

proposition that the Court has jurisdiction?

MR CALLAWAY:  The problem, Your Honour, is this, that the

view taken by the courts below - certainly by

Mr Justice Gummow - we think, with respect, by the

Full Court, the view taken was that Seven Seas held

the vessel on trust for the parties to this action.
Now, if all one has to ask is, "Is there an

argument to that effect; is there a strong argument

to that effect?", we cannot possibly say that there

is not. Four learned judges have found that there
is a strong argument to that effect. But if a

court correctly directs itself and says, "No, we

have to go further than that. We have to decide

whether, or the balance of probabilities, there was

a trust for Seven Seas.", we would be optimistic

that we could persuade a court properly directed

that there was not; that there was either no - I

keep saying "a trust for Seven Seas". The finding

below was a trust for the principals, for Empire

and Navix.

If a court properly directed itself, we would

submit that it would come to the conclusion either

that there was no trust or, if there were a trust,

it was for Seven Seas. If the trust was for Seven

Seas, as opposed to the plaintiff and defendant,

then, really, it is not a proprietary maritime

claim of a kind that can be asserted by this

plaintiff even, as we understand it, on the

reasoning of the courts below. So that if we did

fail on the first two points, to answer

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Your Honour's question, we could still succeed, and

we submit we would succeed, if a court were

properly directed on the burden of proof issue.

The other reason, Your Honours, why it is

submitted that this issue is of general importance

is that it has now been established by the

Full Court of the Federal Court that on such an

objection to jurisdiction, the right test is strong

argument for the opinion that, and in practice,

that binds all Australian courts other than this

Court because the practice is to follow another

intermediate appellate court on Commonwealth

legislation. So that unless this Court intervenes,

that is going to be the test forever. That is its

width.

We submit the issues are important. Of

course, that is not good enough if what was decided

below is plainly right.	On the constitutional
issue - - -

DAWSON J:  Mr Callaway, perhaps it might be better if we

heard from Mr Street at this juncture.

MR CALLAWAY: If the Court pleases.

MR STREET: If Your Honours please. Can I deal, first of

all, with the constitutional issue that is said to

arise? First of all, Your Honours, that issue is

not one, in light of the concession that was made

by my learned friend, that has been pursued. If the argument that His Honour Mr Justice Gummow had

to entertain was an issue as to whether or not it

was frozen as at 1900. That appears between

lines 1 to 10.

That same argument is what was run at page 97

in the Full Court. Again, what is clear, at the

top of page 97 of the application book, is that it

is frozen as at 1900. That was the argument

advanced to the Full Court. The same thing appears

in the judgment of His Honour Mr Justice Lockhart

at page 123 at about point 10.

So, the concession made by my learned friend

is that the grounds that were advanced in respect

of some constitutional issue are ones that he
cannot sustain, because that was the argument that

was put forward. To the extent that my learned

friend says to this Court that it is an appropriate

issue to be raised because there is some

constitutional challenge, we respectfully submit

that there is no constitutional challenge as such

that arises because of section 13. Section 13

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makes it clear that the provisions in the present

case and their validity is not -

GAUDRON J: But there is authority that a provision such as

that raises a question under the Constitution, is

there not?

MR STREET:  I understand that, Your Honour, but what I was

seeking to put to Your Honour is this, though, that

the legislation itself is confined by section 13. One then comes to the proposition that my learned friend developed, that a definitive statement on

this area of the law was necessary. At the same
time, when asked what a maritime contract was, my

learned friend responded that that was a matter

that would have to be dealt with case by case. No

definitive statement on the meaning of "Admiralty

and maritime jurisdiction" is to be -

DAWSON J: But he does make his point why this is not a

maritime contract.

MR STREET: But his point, Your Honour, in my respectful

submission, reduces to a proposition that the

question of a beneficial owner is one which he says

is novel. It is one which we accept the judgment

at first instance and in the Full Court has

analysed the equitable jurisdiction of the

Admiralty Court and held that, to the extent that
the section in the present case is concerned, the

meanings of "co-owners'' and the like, in section 4,

cannot or should not be read narrowly. The whole

thrust of the submission that is being advanced to

give rise to a constitutional issue is that a

narrow construction of section 4 is to be adopted.

Your Honours, can I just briefly hand up, in

that regard, two pages from the Law Report

Commission Report that dealt with this very

question, and it was touched upon in the judgment

of His Honour Mr Justice Gummow. But in the Law

Reform Commission Report at page 111 at the bottom

of the passage, the wide interpretation to be given

to the language found in respect of "jurisdiction"

is to be found, and at page 112, dealing with the

very question of the dispute between co-owners and
in respect of title, the question was touched in
footnote 14 as to the jurisdiction and the width of

the jurisdiction that would be picked up by the

language used.

Your Honours, in our respectful submission,

the present case, so far as the constitutional

issue is concerned, is not one that is an

appropriate vehicle for any definitive statement

upon what is admiralty and maritime jurisdiction.

More importantly, it is one which, in our

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respectful submission, does turn on the unique

facts of the case that the court was dealing with

and it does not, in our respectful submission, in

any event, fall within a category of being attended

by sufficient doubt to warrant a grant of special

leave in respect of that constitutional issue.

Your Honours, can I very briefly take

Your Honours to one other passage in the judgment at page 121 of the application book where, in essence, His Honour Mr Justice Lockhart sums up

what is the substance of our answer to the next

issue that my learned friend raised, in lines 1 to

line 9, namely, that this, at the end of the day,

was a discretionary area of practice and procedure,

which His Honour Mr Justice Gummow was looking at,

in an attempt by the appellant to stifle the

respondent's action at the start where, as His

Honour had said at the outset in his judgment at page 5:

Some of those issues also would be crucial at

the trial.

The very point that Your Honour Justice Gaudron was

raising in respect of the nature of the issues with

which His Honour was faced.

In our respectful submission, in those

circumstances where the issues that were raised

were ones that would be crucial at the trial, as a

matter of discretion, the onus that His Honour

applied, in my respectful submission, is not one

that this Court would interfere with so far as the

strong argument applied - or test - in that regard,

that His Honour adopted and that the Full Court

likewise accepted was an appropriate test. It also

is consistent with what this Court did in relation

to Lep v Contender I where, again, questions arose

in respect of jurisdiction that were crucial or

ultimate questions for the trial.

So, Your Honours, in our respectful

submission, so far as concerns the question of

onus, that falls within a category of practice and

procedure and as a matter of discretion that this Court would not lightly interfere with. So that,

in our respectful submission, no question of

general public importance whatsoever arises. It
turns on the facts of the particular case.

Your Honours, so far as the construction question is concerned, we again respectfully submit

that the construction issue thrown up by section 4

is one which, again, is a facts exercise so far as concerns the application of the different limbs of

section 4 to the findings that were made. In that

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regard, Your Honours, all judges below made

findings consistent with there being facts to
support the strong argument and, in my respectful

submission, in essence, what the applicant is

seeking to raise, so far as concerns

construction, is to reagitate the findings of fact.

Your Honours, can I deal with one other aspect

that was touched upon in support of the challenge

and that was the proposition that there was, here,
an unusual nature to the application because the

relief sought concerned a third party. The vessel

is registered, and for the purpose of the suit, I

think, still is, in the applicant. It is the

applicant that is a party to the joint venture. It

is the applicant against whom relief is sought.

His Honour Mr Justice Gurnmow, at first instance,

said that a third party was not necessary, and

there was no pursuit of any appeal from that

finding. That appears at page 48 in His Honour's

judgment. He dealt specifically with the question

of whether there was, in fact, any need - about

line 5:

Seven Seas is not a party to the JVA or

to the 1984 Agreement. It would not be a

necessary party to an action in personam to

enforce the obligations of YSL thereunder.

Can I just pause there, Your Honours? The relief

that we are seeking in the present case is relief

against the other joint venturer. In my respectful

submission, there is no force in the submission

that was developed that the novelty in the present

case is in someway enhanced by reason of the fact that the joint venture agreement, if enforced, is

one that gives rise tq a transfer to a joint

venture vehicle, and whether it is Seven Seas or

some other company, because that is not a necessary

party and no pursuit of that appeal was pressed,

albeit that it was found in paragraph 15 of the

notice of appeal to the Full Court and not pursued.

Your Honours, next can I put this submission

in relation to that question of the relief that is

sought. What section 4 deals with is alleged

causes of action, not relief. That flows from the

word "claim". The claim is clearly not concerned

just with, as my learned friend has sought to
confine the case, the relief that one finds sought.

It is concerned with the matter embodied within

that claim and, as such, the characterization and

satisfaction of the requirements of section 4
cannot be confined in the way in which my learned

friend suggested by looking merely to the relief.

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If that needed greater clarification, if one

goes to section 33 of the Act, one finds the Court
there dealing specifically with the concept of what
orders might be made in contradistinction to what

we would say is the cause of action as opposed to

remedy. So section 33 provides a non-inclusive category of remedies in relation to proprietary

maritime claims but, at the end of the day, it is

the nature of the cause of action.

GAUDRON J:  Your case, however, does not depend on

co-ownership, does it?

MR STREET:	No, Your Honour.
GAUDRON J:	Your case could conveniently come under the

definition 4(2)(a)(ii)?

MR STREET: Yes, Your Honour, and, indeed, that was accepted

by His Honour Mr Justice Gummow and, indeed, the

Full Court, that the question of possession as well

as co-ownership were both matters which arose in

the present case because it was the possession of

the owner, and if one looks at section 4(2)·(a)(i),

it is:

a claim relating to:

(i) possession of a ship -

and those words, "relating to possession of a ship"

are of wide import and Their Honours have analysed

the reasons why, in the present case, that was
sustained. But, likewise, one has "relating to

title or ownership of a ship" and, again, in my

respectful submission, in the facts of the present

case, Their Honours found that that was made out.

Their Honours also - and I should just note

this because it is not apparent from the way in

which the affidavit in support of the application
was drawn - went to the statement of claim or the

amended statement of claim in identifying what was the cause of action because it embodied more fully	the nature of the cause of action thrown up in the
short particulars and the writ.

So, Your Honours, in our respect submission,

what is sought to be raised as a potential

constitutional question ultimately comes down to a

question of facts of the particular case in which

the Court, dealing with the matter of practice and

procedure - - -

DAWSON J: That is very often the case, is it not?

MR STREET:  I accept that, Your Honour, but what I am

seeking to put though is that the significance, in

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terms of general public importance, is one without substance, that this case does not carry with it a

significance so far as the maritime industry at
large is concerned, given that the nature of the
issue in the present case in respect of the joint

venture agreement is obviously of a fairly limited

type of issue that may arise.

To the extent that Their Honours have dealt

with the meaning of section 4(2), in our respectful

submission, no proper ground has been advanced as

to why one should assume that it has, in fact, been

attended by any sufficient doubt as would warrant

the grant of special leave in respect of either the

constitutional issue or the construction issue.

GAUDRON J: They are really much the same point, are they

not?

MR STREET:  Your Honour, the only reason why I would suggest

they may not be is because when one goes to the

notice of appeal, one finds in the notice of appeal

a list of categories which we would say clearly

throws up that what is really being embarked upon

is a factual exercise as one starts to analyse it.

Paragraphs 1, 2 - 3, I think, is one which refers to an observation made by His Honour

Mr Justice Davies only - 4, S, 6, 7, 9 and 11 are

all concerned with this section 4 argument, but

when one looks at what is sought to be done, it is

the claim in the present case. What the applicant

is seeking to agitate is the application of the

facts in the present case to those sections, not

simply the question which might otherwise have been
advanced: whether or not those sections extend to

beneficial ownership or whether or not one can say

that possession should be read down in a way in

which the words "relating to" does not embrace the

type of claim in the present instance.

But, in my respectful submission, what emerges from the way in which the notice of appeal is set

out is that these are, in substance, a reagitation
of the factual findings made at first instance and,

again, before the Full Court in matters which, in

my respectful submission, are ones of practice and

procedure, and on which, in essence, against the

applicant there have been concurrent findings so

far as concern those matters of practice and

procedure. If the Court pleases.

DAWSON J:  We need not trouble you further, Mr Callaway.

MR CALLAWAY: If the Court pleases.

DAWSON J:  Mr Callaway, the Court is disposed to grant

special leave and not to limit the grounds of the

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grant but we would indicate at this stage,

something that might be obvious to you, that the

Court would probably be reluctant to embark upon

matters of fact or matters of practice and

procedure, and that may govern the course of the

appeal in due course.

MR CALLAWAY:  We are indebted to the Court for that

guidance.

DAWSON J: Very well then, special leave will be granted.

AT 11.00 AM THE MATTER WAS ADJOURNED SINE DIE

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