Australasian United Steam Navigation Company Limited v Shipping Control Board [1945] HCA 45

Australasian United Steam Navigation Company Limited v Shipping Control Board [1945] HCA 45 - HCA 1945 case summary — Zoe

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. action upon which it at present relies. It cannot rely on the right to fair compensation under reg. 11 (2) without accepting the manner provided for the determination of the compensation. It is sub- mitted, however, that no question of just terms arises, because there has been no acquisition of property within the meaning of s. 51 (xxxi.) of the Constitution ; there was no demise of the ship and no interest in it passed to the defendants. To determine whether there has been a demise it is pertinent to inquire: Who has the management and control of the ship ; in whose possession is it ; who in fact has the personal responsibility for the ship as such ? Cases which relate to this question are Sea and Land Securities Ltd. v. William Dickinson and Oo. Ltd. (1); Elliott Steam Tug Co. v. Admiralty Commissioners (2). The terms of the standard time charter party show that there was no demise of the ship and no other right of property acquired. On the modern authorities the words "let" and "hire " are, of course, not conclusive that there is a demise. On the other hand clause 13 of the charter party is conclusive that there was no demise and no taking of possession and control of the ship ; the Master was bound to do what the charterer directed as regards the employment of the ship and kindred matters, but, for the management, navigation and handling of the ship, the Master was responsible on behalf of the owners. That is to say, the owners, through the Master, remain in control of the ship, though the use to which it is to be put is for the charterer to determine. The other clauses of the charter party, except, perhaps, clause 27, are consistent with this view. Clause 16 merely means that the Master must have the proper certificate ; if the owners have not appointed such a Master, the charterer may do so; but the owners may put an end to this by appointing a Master who has the appropriate certificate. All that clause 31 effects is that the charterer may allow others to use the ship, as, for instance, when the charterer has not a full cargo for a particular trip and someone else has. As to clause 27, insurance is normally a matter for the owner, not the charterer, and under this clause the Commonwealth

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itself becomes the insurer so far as war risks are concerned. War risks, however, are an exceptional matter. To have those risks covered by insurance negotiated in the ordinary business way would involve a very high premium, and that would have to be reflected in the charter rates. It is, therefore, more a matter of finance than anything else ; the Commonwealth by undertaking the liability for these exceptional war risks economises in the matter of charter rates. This does not affect the ownership or possession of the ship. It is to be noticed that it is only as to war risks that liability is undertaken. It is left to the owner to insure against marine risks. The Lord Strathcona Steamship Co.'s Case (1) is inconsistent with the opinions expressed in many other cases (See, e.g., Greenhalgh v. Mallard (2) ); but, even if it is accepted, it has no bearing on the facts of the present case. If the requisition did involve the acquisition of property, it is important to see what property was acquired. It clearly was not the ship itseli - the complete ownership. At the most it was possession ; or, it may be, some proprietary right to the use and hire of the ship. Whichever it may be, the Requisition Regulations and the charter party provide just terms of compensation. The only liability which could normally and fairly be imposed on the charterer would be to provide the proper amount of hire. The ship on the sea is always exposed to risk, and it is the owner's concern to insure. As to the assumption of liability by the Commonwealth for war risks under clause 27 of the charter party, it is important to notice that at the material time the National Security (Marine War Risks Insurance) Regulations were in force; they placed restrictions on insurance against war risks, and, by comparison, there is no reason to think that clause 27 operated to the prejudice of the shipowner. Clause 27 constitutes a logical and fairly considered scheme, and the Court should not set it aside as not providing just terms merely because the Court thinks there may be some circumstances in which it will not provide as full and ample cover as a shipowner might devise. As to charter rates, if the Requisition Regulations have to provide just terms and do not do so, there is still clause 7 of the charter party, which provides that the rate shall be determined under the Control Regula- tions (that is, reg. 11 (2) ) " or in some other lawful manner." The standard time charter party was in existence before the Requisition Regulations, and when it was scheduled to them apparently the fact that clause 7 referred to the earlier regulations was overlooked. Even if both sets of regulations are invalid so far as they provide for charter rates, the plaintiff is not precluded from having them deter- mined in "other lawful manner." As to the objections that the

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Ricu J. This is a demurrer to a statement of claim which seeks compensation or damages in respect of a ship owned by the plaintiff and lost by enemy action on 6th August 1943. By an order of the Minister for Commerce dated 14th July 1941 she had been " requi- sitioned " under reg. 11 of the National Security (Shipping Control) Regulations. Under reg. 4 (2) of the National Security (Shipping Requisition) Regulations the ship so requisitioned came to be governed by the provisions of the standard time charter party of the Shipping Control Board. Regulation 45 of the National Security (Shipping Co-ordination) Regulations continued the operation upon the ship of the standard time charter. The substance of the plaintiff's case is that the requisition, coupled with the subsequent loss of the vessel, entitles the plaintiff to just terms - that is of compensation - for the acquisition of property. The standard time charter party provides in par. 27 for the assumption by the Commonwealth of the war risk, i.e., loss of the vessel by enemy action. The plaintiff is entitled to the value of the ship as fixed by that paragraph, but is not satisfied apparently either with the valuation or with the division of the established value into two parts and the retention by the author- ities of what is called the increased value. The plaintiff therefore falls back on s. 51 (xxxi:) of the Constitution and says that the Commonwealth has acquired property in the ship and could only do so on just terms. Whether the case can be brought within that section depends upon the correctness of the contention that property in the ship was acquired. This in turn rests upon the provisions of the standard time charter party. That is a studied document bearing all the marks of the adaptation of the traditional terms of time charter parties and the terms of the requisition used in the last war, e.g., 199. I think that it is perfectly plain that the document is a charter in respect of the use or services of ships, and not a demise charter. It performs the ordinary function ot a charter of affreightment, leaving the possession of the ship in the master as the servant of the owner. The owner has full control of the ship through the master and crew under a time charter of indefinite duration giving the Commonwealth a power of direction as to the voyages to be made and,

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that the terms and conditions of this charter party did not constitute a demise of a ship. There is an even closer correspondence between the standard time charter party and the charter party contained in the form T99a used by the Admiralty during the recent world war. We were supplied at the hearing with a copy of this charter party. It provides, inter alia, clause 1, that the owners agree to let and the charterer agrees to hire the ship, she being then ready to receive cargo and tight, strong, and in every way fitted for ordinary cargo service, and with a master and full complement of officers and crew, and for the delivery, redelivery and right to sublet the ship. Clause 2, that the owners shall provide for and pay for all the wages, provisions, and all other expenses in connection with the master, officers, and crew, and for all services in connection with the navigation of the ship and for the maintenance of the ship in a thoroughly efficient state in hull machinery and equipment for and during the service. Clause 9, that the master shall prosecute his voyage with the utmost despatch and shall render all possible assistance with ships, officers and crew and boats, cranes, derricks, and winches on board, and although appointed by the owners he shall be under the orders and direction of the charterer as regards employment, agency, and other arrangements. Clause 10, that if the charterer shall have reason to be dissatisfied with the conduct of the master, officers, or crew, the owners shall, on receiving particulars of the complaint, investigate the matter and, if necessary, make a change in the appointments. Referring to this charter party, Lord Wright said, in Larrinaga Steamship Co. Ltd. v. The King (1), that it was not a demise of the ship. The standard time charter party like T99 and T99a is a charter party which provides for the owner placing the ship complete with officers and crew at the disposal of the charterer, he retaining posses- sion of the ship through the officers and crew who are his servants. He is responsible for their wages and the hire is calculated on what is termed in Elliott?s Case (2) "a gross basis of hire." As in clause 9 of T99a, clause 13 of the standard time charter party provides that the master shall be solely under and obey the orders and directions of the charterer as regards employment of the ship, agency, or other arrangements ; but clause 13 also provides that the master shall be solely responsible (on behalf of the owners) for the management, navigation and handling of the ship. These additional words make it even clearer than it is in the case of T99 and T99a that the terms and conditions of the standard time charter party are not a demise of the ship. There was, therefore, no acquisition of property in the

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Judgment (147 paragraphs)

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