Thomas, H.c. v the ship "Xiphias Hunter"

[1991] FCA 365

Re: HUGH CHARLES THOMAS As Official Liquidator of North Coast Fishing
Industries Pty Limited (in liquidation)
And: THE SHIP "XIPHIAS HUNTER"; GLOBAL STEEL HOLDINGS NV and ESANDA FINANCE
CORPORATION LIMITED
No. G394 of 1990
FED No. 365
Admiralty - Estoppel - Evidence

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION IN ADMIRALTY
Davies J.(1)

CATCHWORDS

Admiralty - dispute as to the ownership of a fishing vessel - whether a valid Bill of Sale.

Estoppel - whether parties estopped from contradicting representations previously made.

Evidence - whether evidence of ownership adduced was the best evidence available - whether evidence was even a fair representation of the facts which have occurred - whether as a result all persons who may be interested in the claim have been given due notice of the claim as it has been presented to the Court.

HEARING

SYDNEY

#DATE 28:6:1991

Counsel for the applicant and
first cross-respondent: Dr G.A. Flick

Solicitors for the applicant and
first cross-claimant: Dibbs Crowther and Osborne

unsel for the third respondent
and cross-claimant: Mr N.C. Hutley

Solicitors for the third respondent
and cross-claimant: Dickson Fisher and Macansh

ORDER

The Court declares that by Bill of Sale dated 29 July 1988, registered in the Corporate Affairs Commission as No. 13036, North Coast Fishing Industries Pty Limited validly mortgaged the "Xiphias Hunter" to Esanda Finance Corporation Limited.

The Court orders that the application of Hugh Charles Thomas as Official Liquidator of North Coast Fishing Industries Pty Limited (in liquidation) be dismissed without prejudice to any right of the applicant to claim the same relief in fresh proceedings.

The second respondent pay the costs of the third respondent.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

These proceedings concern the ship "Xiphias Hunter". There are currently two claimants. The first is Hugh Charles Thomas ("the Liquidator"), who is the official liquidator of a company, North Coast Fishing Industries Pty Limited ("North Coast"). The Liquidator claims that North Coast is the owner of the fishing vessel, Xiphias Hunter. The second claimant is Esanda Finance Corporation Limited ("Esanda"), which claims that a bill of sale over the Xiphias Hunter dated 29 July 1985 given by it to North Coast is valid, and that any persons who claim to the contrary are estopped from alleging its invalidity. There is no contentious issue as between the Liquidator and Esanda.

1. The directors of North Coast at all material times were Mr Philip Green, his father Mr Neville Green, with whom he carried on practice as solicitors under the style N.G. Green and Co, and Mr Stephen Lacher.

2. The second respondent, Global Steel Holdings N.V. ("Global Steel"), and an associated company, Atlantic Fishing and Charter N.V., were companies incorporated in the Netherlands Antilles and associated with the Green family. Global Steel entered an appearance in these proceedings by their solicitors, Messrs Ebsworth and Ebsworth, and affidavits were filed on behalf of Global Steel with a view to opposing the orders sought by the Liquidator and by Esanda on the ground that Global Steel was the owner of the vessel. However, prior to the hearing, an affidavit was filed stating that, though Messrs Ebsworth and Ebsworth had originally been instructed by Global Steel, and particularly by Mr Philip Green, they had no instructions to attend the hearing on behalf of Global Steel, they were not in funds to do so, they had advised their client accordingly and that they would not appear on its behalf. Mr P.M. Jacobson of counsel appeared to explain that Global Steel would not be represented. Messrs Ebsworth and Ebsworth were subsequently given leave to file a notice of their ceasing to act.

3. In the event, the Court has been left with very little evidence as to ownership, which is the claim made by the Liquidator. There are voluminous affidavits filed on behalf of the Liquidator and on behalf of Global Steel. But counsel for the Liquidator, Dr G. Flick, has chosen to read only a few selected passages from the principal affidavit of the Liquidator, Mr Hugh Charles Thomas. Those passages are sub-paragraphs 8(13), (15), (17) and (20), sub-paragraphs 10(b) and (d), paragraph 33 and the annexures referred to therein. Dr Flick also handed up some short minutes and copies of documents which he said were the annexures referred to. In fact, some of the documents handed up were not those referred to. I have had regard only to the documents referred to in the passages mentioned. Dr Flick also read another short affidavit by Mr Thomas. The affidavits of Global Steel were not read at all. The one person who would have direct knowledge of the facts, Mr Philip Green, was not called to give evidence and no affidavit by him was read. Mr N. Hutley, counsel for Esanda, read a number of affidavits filed on behalf of Esanda.

4. The vessel "Xiphias Hunter" was built by AMF Incorporated ("AMF") of North Carolina in 1981. On 4 February 1981, AMF sent a letter to "Mr Neville Green, Atlantic Fishing and Charter" care of "N.G. Green and Co." at its New York offices, stating inter alia:-
   

"Thank you very much for your order for one AMF Hatteras 60 Convertible with twin G.M. 12V71TI engines. We are processing your order under our Export Order reference number 231006. Please use this number in future references, payments, etc. to this order. Your order is priced at the dealer net level per my proforma invoice made to your firm dated January 14. A 10% deposit is required to start production of your order with the balance due payable at delivery in July at New Bern, North Carolina."

AMF subsequently sent an invoice to "Atlantic Fishing and Charter" dated 24 March 1981 to the same address for the attention of Mr Andrew Green, a son of Mr N. Green. The price of the vessel was $US423,300.

1. In June or July 1981, Mr Philip Green, on behalf of North Coast, approached Esanda for a loan of $250,000 on the security of the vessel "To assist applicant (North Coast) complete the purchase of a Hatteras 60' 9" Game Fishing Boat. Purchase price in excess of $600,000." Mr Green provided a statement of the assets and liabilities of Mr Neville Green and Mrs M.A. Green which included the asset: "Hatteras 60' 9" Convertible Sportsfisherman 1981 ($) 675,000". Mr Philip Green produced to Esanda the letter from AMF to Mr N. Green of 4 February 1981 referred to above and a document dated 11 September 1981 on the letterhead of Atlantic Fishing and Charter (not Atlantic Fishing and Charter NV), showing its address as the New York address of N.G. Green and Co., which stated, inter alia:-
   

"We confirm our advice that the AMF Hatteras 60' convertible described in invoice attached to letter from AMF Marine International dated 4th February, 1981, has been assigned by us to North Coast Fishing Industries Pty Limited, Sydney."

That letter was signed by Mr Philip Green.

1. On 10 September 1981, Mr Philip Green and another director of North Coast, Mr Stephen Lacher, swore a statutory declaration for the purpose of the loan application which included the following:-
   

"9. The AMF Hatteras 60 Convertible known as `Xiphias Hunter', and all machinery, equipment, furniture, fixtures, fittings, goods and chattels therein the subject of the said Bill of Sale are the sole and absolute property of the Company and no money is owing to any person or company in respect of the purchase or upon the security thereof."

1. On 14 September 1981, Esanda lent $250,000 to North Coast on the security of a bill of sale over the vessel. The bill of sale was executed by Mr P. Green on behalf of North Coast. Mr Neville Green and his wife, Mrs M.A. Green, and two companies with which they were associated, gave guarantees. This loan was repaid in January 1983.

2. On 24 January 1983, for the purpose of obtaining a loan from Citicorp Australia Ltd, Mr Philip Green made a statutory declaration which read inter alia:-
   

"2. North Coast Fishing Industries Pty Limited is the owner of one 60 foot glass reinforced polyester Hatteras Cruiser registered number XHIN (hereinafter referred to as 'the vessel').

3. The Vessel has never been registered under the Merchant Shipping Act, 1894 (Imperial) as amended and has not been registered under the Shipping Registration Act (Commonwealth) 1981.

4. The Vessel is not required to be registered under the Shipping Registration Act (Commonwealth) 1981 as it is a pleasure craft as defined in the said Act.

5. There is no charge encumbrance or lien over the Vessel."

1. In mid-1985, North Coast again approached Esanda. Mr Philip Green represented that North Coast remained the owner of the vessel and sought a loan of $625,000 from Esanda. Relying on the information supplied in respect of the earlier loan and on further material, Esanda advanced to North Coast $625,000 on the security of a bill of sale. The loan was to be used for investment purposes and to pay out Citicorp. The moneys were not for use in relation to the Xiphias Hunter. Mr Neville Green and Mr Philip Green provided personal guarantees.

2. The evidence filed on behalf of Esanda is comprehensive insofar as it covers the dealings between North Coast and Esanda. The affidavits set out the documents provided on behalf of North Coast and describe the statements made by Mr Philip Green to officers of Esanda and the steps taken by those officers on the application. This evidence shows that the vessel was represented to Esanda as being owned by North Coast and that Esanda made the 1985 loan of $625,000 on the faith of that representation. But Esanda's evidence does not, however, advance the allegations as to the ownership of the Xiphias Hunter. A financial statement of Mr Neville Green was produced to Esanda and this included the item: "Hatteras 64' motor vessel $1,200,000". A financial statement of Mr Philip Green was also produced to Esanda. But no financial statements of North Coast were produced. North Coast's accounts and taxation returns, if any, were not before Esanda and are not before this Court.

3. As the evidence tendered by Dr Flick was so limited, there is not before the Court any financial record of North Coast disclosing the Xiphias Hunter as an asset of North Coast. There are no Minutes before the Court dealing with the vessel's acquisition and use. There is no statement from the Liquidator as to where the Xiphias Hunter was moored or how it was used. The evidence contains no statement from the Liquidator and no record of North Coast disclosing what use North Coast made of the vessel or that it received any income therefrom or that it paid any person employed thereon or that it paid for the maintenance and repair of the vessel. An internal memorandum prepared by an officer of Esanda setting out the details of the loan required and records the statement that, "Vessel has not generated income from charter work for a number of years and is solely used by the Green family." That statement and the financial accounts of Mr Neville Green which showed the Xiphias Hunter as his asset do not support, indeed detract from, the submission that the Xiphias Hunter was owned and operated by North Coast.

4. There are some other miscellaneous items of evidence.

5. On 10 April 1981, Mr Philip Green wrote on the letterhead of North Coast to the Director of Fisheries New South Wales for the purpose of obtaining a fishing licence. The letter stated, inter alia:-
   

"The vessel is an Australian boat.

We advise as follows -

(a) The owner is North Coast Fishing Industries Pty Limited incorporated in New South Wales.

(b) The boat is presently enroute to Sydney. The boat's port of registry is Sydney."

That letter is evidence that North Coast applied for a fishing licence but it seems to be a minor, insignificant event. If North Coast owned and operated the Xiphias Hunter, one would expect far more evidence to be available to the Liquidator than a copy of an application for a fishing licence.

1. There are in evidence some certificates which show that the Xiphias Hunter was registered with the Maritime Services Board of New South Wales in the name of North Coast. The Water Traffic Regulations (NSW) provide, inter alia:-
   

"2.(3) A reference in these Regulations to a person who has the control of a vessel is a reference to a person who has the right to decide the possession, disposition and use of the vessel."

and:-

"11.(2) A person who controls a registrable vessel may apply to the Board for registration of such vessel."

These certificates are some evidence that North Coast had the control of the Xiphias Hunter. But, as I have already mentioned, if North Coast owned and operated the vessel, one would have expected the company's accounts and minutes to have recorded the ownership of the vessel and the expenditure of moneys on the running expenses, maintenance and upkeep of the vessel. Moreover, the production of certificates of registration under the Maritime Services Act 1935 (NSW) do not carry the matter far when there is not before the Court evidence that the vessel, whether used by North Coast or the Green family, was used within the waters of New South Wales or elsewhere.

1. There are also in evidence two letters on the letterhead of Atlantic Fishing and Charter (not Atlantic Fishing and Charter NV), both signed by Mr Philip Green, which certify to the Commissioner of Taxation that certain goods were for use on a vessel in the fishing industry and, accordingly, were exempt from sales tax under Item 119 of the First Schedule and the Sales Tax (Exemptions and Classifications) Act 1935 (Cth). These letters do not assist as the evidence does not disclose that North Coast was the organisation which operated under the name Atlantic Fishing and Charter. The evidence does not include taxation records of North Coast showing that North Coast claimed depreciation on the vessel or that it earned income from the vessel or that it had deductible expenses from its operation.

2. The remaining pieces of evidence are, firstly, an affidavit which shows that notice of the proceedings was served on Esanda and Messrs Ebsworth and Ebsworth and, in addition, on Global Steel, Atlantic Fishing and Charter NV, Mr Neville Green and Mr Philip Green. Secondly, Mr Hutley, in presenting Esanda's case, relied on the affidavit filed on behalf of Ebsworth and Ebsworth which shows that Ebsworth and Ebsworth received instructions from and had many communications with Mr Philip Green. That affidavit justifies an inference that Mr Philip Green had sufficient authority in relation to Global Steel to bind that company as well as North Coast to the representations as to ownership which he made to Esanda.

3. In September 1989, North Coast was placed in liquidation. The Liquidator of North Coast claims that North Coast is the owner of the vessel. However, the Liquidator has not supported that claim by any documents of title other than the certificate I have mentioned. Nor has it been suggested by the Liquidator that any moneys were paid by North Coast for the vessel or that the Xiphias Hunter was ever brought into the accounts of North Coast as an asset of that company.

4. Dr Flick submitted that there was sufficient evidence that North Coast was the owner of the vessel. Dr Flick relied on the statutory declarations by Mr Philip Green and Mr Stephen Lacher, upon the recitals in the bills of sale and upon acts of possession, such as the application for a fisheries licence, registration with the Maritime Services Board, insurance of the vessel, the applications for finance and the granting of the bills of sale.

5. Acts of ownership or of possession may be evidence of ownership. See Phipson on Evidence, 13th Ed, paras 9.60, 9.61, 9.62. Such acts will indeed be strong evidence in a case where that evidence is the best or only evidence available.

6. In the present case, however, I am troubled by the fact that it has not been shown that the evidence of ownership and of possession is the best evidence available, or even that the limited information before the Court is a fair representation of the facts which have occurred. If North Coast is the owner of the vessel, it must have obtained ownership by some means, as the result of some transaction. If the Xiphias Hunter had been ordered and paid for by North Coast, one would presume that there was evidence of this fact. The evidence suggests that the vessel was not ordered by North Coast; but by the person or organisation which was carrying on operations under the name "Atlantic Shipping and Charter". I take that name to be a business name and not a reference to Atlantic Shipping and Charter N.V. There is no evidence before the Court as to what person or what enterprise was behind that name. Atlantic Fishing and Charter seems to have been a different enterprise from North Coast, for the letter from Atlantic Fishing and Charter to Esanda dated 11 September 1981, signed by Mr Philip Green, affirms to an assignment from Atlantic Fishing and Charter to North Coast.

7. That letter of 11 September 1981 is, itself, some evidence of an assignment but, being addressed to Esanda, it takes the matter no further than the statutory declarations, the oral representations which Mr Philip Green made to Esanda that North Coast was the owner and the entering into of the bills of sale. The letter of 11 September 1981 was not itself an assignment in writing or a declaration of trust. So the question remains: What was the transaction by which North Coast acquired title?

8. A transaction by way of gift seems improbable for, from the name of North Coast and the content of the applications made for finance, North Coast appears to be an entity of commerce. One would assume that, if North Coast acquired title to a vessel which had been built for a price of over $650,000, the Minutes of North Coast would have recorded a purchase at some price and the financial records of North Coast would have recorded a payment of or liability for that price. Even if the Xiphias Hunter had been given to North Coast by way of gift, it was a vessel of such worth that one would expect to have seen the gift recorded in the Minutes of North Coast and that the vessel was accepted on behalf of North Coast. One would expect that, however the vessel was acquired, it would appear as an asset in the books of account of North Coast. The books of account and the Minutes of the company would have been records admissible in evidence under Part IIIA of the Evidence Act 1905 (Cth).

9. No such material is before the Court. Indeed, Dr Flick informed me that he did not propose to read those parts of Mr Thomas' affidavit as annexed Minutes of North Coast. The only reasonable inference is that Mr Philip Green was not called as a witness because it was considered that his evidence would not assist the case made by North Coast and that the Minutes and financial records of North Coast were not put in evidence because they do not show that the Xiphias Hunter was acquired by or is an asset of North Coast.

10. In summary, the evidence of ownership is limited to the use of the vessel as security for loans, the insurance of the vessel and the registration of the vessel under the Maritime Services Act. The evidence as to possession is limited to that registration and to such minor matters as the application for a fishing licence and the obtaining of a survey in support of the security. That evidence is not the best evidence that must be available and there is evidence to the contrary in that the Xiphias Hunter was shown in the financial documents before the Court as an asset, not of North Coast but of Mr Neville Green.

11. I have given the matter anxious consideration; but I cannot feel satisfied on the balance of probabilities that North Coast is or ever was the owner of the Xiphias Hunter. Dr Flick put the submission that I should assume that Mr Philip Green in the declarations and letters I have mentioned and in his transactions with Esanda and Citicorp was acting with the propriety that one would expect of a solicitor. However, so much known to the Liquidator has been withheld from the Court that I am not prepared to make any assumptions about the matter, either that Mr Green acted with due propriety or that, as Mr Hutley could not refrain from saying in the course of his submissions, "obviously there was some fraud going on here somewhere." The material before me is so limited and so much relevant evidence as to ownership and possession has been withheld that I cannot feel satisfied as a matter of probability that North Coast is or ever was the owner of the Xiphias Hunter.

1. I would add that, even had I thought that the evidence adduced proved, on the balance of probabilities, that North Coast was the owner of the Xiphias Hunter, I may have refused a declaration of ownership. Relevant information known to the Liquidator has not been presented to the Court. No doubt, as notice of the Liquidator's claim has been given to Global Steel, Atlantic Fishing and Charter NV and to Mr Neville Green and to Mr Philip Green, this is not a case where the applicant has a duty of uberrimae fidei, as would be the situation if an order were sought ex parte without notice, as to which see e.g. Thomas A. Edison Ltd v. Bullock (1912) 15 CLR 679. However, the proceedings are undefended. In this circumstance, it would have been appropriate for the Liquidator to rely upon the evidence of which notice was given that he intended to rely, namely the affidavit of the Liquidator sworn 16 July 1990. So little of that affidavit has been read that I am not satisfied that all persons who may be interested in the Liquidator's claim have been given due notice of the claim as it has been presented to the Court. A court should not make a declaration as to ownership unless satisfied that such notice has been given.

2. I propose to dismiss the claim made by the Liquidator on the ground that there had not been adequate proof that North Coast is the owner of the vessel. As is authorised by Order 35 Rule 6(1) of the Federal Court Rules, the claim will be dismissed without prejudice to any right of the applicant to claim the same relief in fresh proceedings. In this circumstance, the order will permit the applicant to renew his claim.

3. Esanda is in a different position, for, in the light of the representations made by Mr Philip Green that North Coast was the owner of the vessel, all parties in these proceedings are estopped from alleging the contrary, as would be Mr Neville Green and Mr Philip Green who participated in the security transaction. I shall therefore declare that, by Bill of Sale dated 29 July 1985 registered in the Corporate Affairs Commission as No. 13036, North Coast validly mortgaged the Xiphias Hunter to Esanda.

4. The second respondent should pay the costs of Esanda. I shall make no order as to the costs of the applicant.