Banwell v The Ship "The Sydney Sunset"

Federal Court of Australia|2001-03-09|Before: Tamberlin J

REASONS FOR JUDGMENT 1 This application filed by John Wolf (also known as John Veinalds) seeks release of the "The Sydney Sunset" ("the vessel") which was arrested on 2 February 2001 on the application of the plaintiff. The plaintiff in his affidavit in support of the arrest says that his claim against the vessel is in respect of moneys advanced for the purchase of goods, materials, or services supplied to the vessel for its operation and maintenance together with a claim in respect of the alteration, repair or equipping of the vessel. A writ filed by the plaintiff on 2 February 2001 claims "damages" in the sum of $182,529.67. That writ also states that the "relevant person" for the purpose of the Admiralty Act 1988 ("the Act") is Mr Wolf. 2 The application for release and damages for wrongful arrest was filed on 14 February and it raises two grounds. The first is that the claims made by the plaintiff are not within the description of a "general maritime claim". Secondly, it is said that the "relevant person" named in the writ, Mr Wolf, is not and never was the owner of the vessel. 3 On 8 February 2001 Mr Wolf entered an appearance in which his relationship to the vessel is stated to be that of "ex-purchaser and agent of the vessel". An appearance was also filed by Brian Doran in which he is described as the "owner of the vessel." In the course of the hearing it was common ground that Mr Doran was the owner of the vessel at the time the writ was taken out and at the time of the hearing. 4 The application for release is made pursuant to r 52 of the Admiralty Rules ("the Rules") which relevantly provides: "Release from arrest by the Court 52 (1) A party to a proceeding may apply to the court in accordance with Form 19 for the release of a ship or other property that is under arrest in the proceeding. …

General maritime claim 12 At the outset it should be noted that the words "in respect of" and "in relation to" where used in s 4(3) of the Act are words of extension concerning the expression "a claim" and therefore it is not appropriate that the definitions be read in any unduly narrow or restricted sense. They should be given their ordinary and plain meaning without any preconceived reservations as to limitations on their interpretation. 13 In Port of Geelong Authority v The "Bass Reefer" (1992) 37 FCR 374 Foster J considered the phrase "relates to" in s 4(3)(f) and pointed out that it is one of wide import, but that it was not apt to embrace relationships of a remote or tenuous kind. His Honour referred (at 384) to the fact that historically in in rem actions it was a requirement that there should be claims for necessaries supplied to a particular ship, the identity of which had been specified in the contract of supply or notified to the supplier when the necessaries came to be delivered. 14 His Honour said (at 386-387): "I can see no warrant for restricting the term 'services' to benefits provided by way of work and labour as opposed to the provision of goods and materials. I reject this narrow view of the meaning of the word. Of course, whatever meaning is attributed to the word 'services', it remains the position that they must be provided 'to' the ship 'for its operation'. … In my view, it may be regarded as plain that the use of the term 'services' is indicative of an intention by the legislature to cover a wider field of activity than that previously covered by the concept of the supply of 'necessaries', although, clearly enough, claims previously held as being for necessaries such as dock dues, canal dues, custom house and immigration service fees, telegrams and disbursements for quay rent would fall within the concept…. I approach the matter, then, in the context that there is an obvious legislative intent to provide a more expansive area of claim than that comprehended in the supply of goods and materials or 'necessaries' …. In my view, it embraces the supply of facilities to a ship not comprehended in the supply of 'goods' and 'materials' and the other services expressly provided for in the other subsections. The provision of fuel and water may well be obvious examples, unless they can be regarded as goods or materials. Painting and anti-fouling may well qualify. …" 15 That decision was cited by the Full Federal Court in Opal Maritime Agencies Pty Ltd v The Proceed of Sale of the Vessel M V "Skulptor Konenkov" (2000) 98 FCR 519 where the Court considered the requirements of s 4(3) (m), (o) and (r) of the Act. In that case the Court pointed out that the question whether the services have been supplied to a ship is to be determined at the time the services are supplied and that it is a question of fact. The Court said in relation to advances of monies (at 554): "Under the previous law, claims for advances of money made to enable necessaries to be purchased were covered by the term "necessaries": see Williams & Bruce, Admiralty Jurisdiction and Practice 3rd ed 1902 at 194 and the cases cited at footnote (e); The Fairport (No 5) at 163; The Kommunar at 7; The Edinburgh Castle at 363. Accordingly, claims to be indemnified for monies advanced to enable goods, materials or services to be supplied to a ship, or money paid to third parties for the supply of goods, materials or services to a ship, come within s 4(3)(m) of the Act. Where the payments are made to third parties, the claims for indemnity for the payments also come within the disbursements section, s 4(3)(r), of the Act. Further, there is some authority that, under the previous law, services came within the description of 'necessaries' provided the provision of the services satisfied the legal definition of what constituted 'a necessary': see for example a claim for stevedoring services or for trimming coal in William Fleming v 'Equator' (1921) 9 Ll L Rep 1 at 3; the provision of funds to pay crew wages in The Fairport No 5 and the provision of officers and crew of suitable calibre for the operation and manning of the vessel in The Edinburgh Castle at 363. However, the ALRC regarded the position as being unclear: ALRC Report, par 171, note 149. The test of what was constituted 'necessaries' was stated by Abbott CJ in Webster v Seekamp (1821) 4 Barn & Ald 352 (at 354) : '... I am of opinion, that whatever is fit and proper for the service on which a vessel is engaged, whatever the owner of that vessel, as a prudent man, would have ordered, if present at the time, comes within the meaning of the term 'necessary', as applied to those repairs done or things provided for the ship by order of the master, for which the owners are liable.' This definition has been consistently applied: The Riga (1872) LR 3 A & E 516 at 522; Foong Tai & Co v Buchheister & Co [1908] AC 458 at 466 (PC); Christie v Ship 'Karu' (1927) 27 SR (NSW) 443 at 445 and Lewmarine Pty Ltd v Ship 'Kaptayanni' [1974] VR 465 at 472. No distinction was to be drawn between necessaries for the ship or necessaries for the voyage and all things which were reasonably requisite for the particular venture on which the ship was engaged were comprised in this category of claim: The Riga at 522; The Kaptayanni at 472 - 473. Brokerage fees claimed for obtaining future charterparties for a vessel, however, were rejected as coming within the concept of 'necessaries' on two grounds in The Marianne [1891] P 180 at 183 - 184. The first was that expenditure not expended for the voyage in progress or about to be immediately undertaken does not come within the meaning of 'necessaries'. Secondly, a claim for brokerage for the obtaining of work for the vessel was itself outside the meaning of 'necessaries'." 16 In the present case, with the exception of the amount of $4,000, said to be for the "purchase" of the vessel, I consider the components of the itemised claim referred to above are within the provisions of s 4(3) of the Act in that they can be said to be claims "in respect of" goods, materials or services supplied to a ship for its maintenance or operations par (n) or, claims in respect of the alteration, repair or equipping of a ship par (o). The claim in respect of the insurance premium in my view falls within par (s) as being a claim for insurance paid in relation to the ship. However, the $4,000 claim for part of the purchase price paid to Mr Doran, the owner, is not in my view a payment for or in respect of the ship or its operation. Nor does it come within any other relevant category. 17 For the above reasons I consider that the plaintiff has a general maritime claim within the meaning of the Act to the extent of approximately $31,402. It is not possible to be completely accurate as to the extent of the amount on the material presently before me. As to the residue of the claim the evidence before me is too general and unsubstantiated and does not establish the existence of a general maritime claim in relation to the balance above that sum.

Demise charter 18 The next question for determination is whether the requirements of s 18 of the Act as to the existence of a demise charter have been made out. 19 It is not in dispute on this application that at the time the alleged indebtedness arose Mr Wolf was in possession or control of the vessel so that the requirements of s 18(a) are satisfied. The issue between the parties is whether at the time the proceeding was commenced in early February 2001 Mr Wolf could be described as a "demise charterer" of the vessel. If Mr Wolf was not a demise charterer at that time then the plaintiff had no right to arrest the vessel. 20 Charterparties can broadly be classified as time charters, voyage charters, and demise charters. In Scrutton On Charterparties 20th ed 1996, Art 28, it is said, in relation to demise charters, that: "A charter by demise operates as a lease of the ship itself, to which the services of the master and crew may or may not be superadded. The charterer becomes for the time the owner of the vessel; the master and crew become to all intents his servants, and through them the possession of the ship is in him." 21 Whether a demise charter exists always turns on the particular terms of the charter. As Lord Esher said in Baumvoll Manufactur von Scheibler v Gilchrest & Co [1892] 1 QB 253 at 259: "… the question depends, where other things are not in the way, upon this: whether the owner has by the charter … parted with the whole possession and control of the ship, and to this extent, that he has given to the charterer a power and right independent of him and without reference to him to do what he pleases with regard to the captain, the crew, and the management and employment of the ship. This has been called a letting or demise of the ship. The right expression is that it is a parting with the whole possession and control of the ship." 22 Scrutton then adds: "Time charters almost always contain expressions such as 'letting', 'hiring', 'hire', 'delivery', and 'redelivery', which are really apt only in charters by demise. These expressions serve to distinguish such charters from voyage charters, but they do not in themselves characterise such charters as charters by demise.' 23 The distinction between a demise charter and other types of charter is not academic. They are of considerable importance. In Art 29 of Scrutton there is an itemised list of the legal and practical consequences that flow from such a classification. Essentially the distinction turns on the question as to who has the control and possession of the vessel. 24 In the present case the evidence is that the vessel was built in 1980. It was brought by Mr Doran in 1988. On 27 September 1997 Mr Doran agreed to sell it to Mr Wolf for $85,000. This agreement is written and relevantly provides: "AGREEMENT FOR SALE THIS AGREEMENT made the Twenty-Seventh (27) day of SEPTEMBER, 1997 BETWEEN BRIAN DORAN of 11 The Rampart, Hornsby, NSW (to be known as "the Vendor") AND JOHN VEINALDS of 3 Neerim road, Castle Cove NSW (to be known here as "the Purchaser")

The Vendor agrees to sell to the Purchaser the Ketch known as "Capricorn Queen", being the vessel described in Waterways Authority of NSW Boat Registration Certificate NA310N, inclusive of its engine, all fittings and equipment listed in a schedule to be agreed between the parties (to be known as "the Ketch").
The agreed sale price is Eighty-Five Thousand Dollars ($85,000), payable to the Vendor in the following manner: a) On the date of this agreement, Twenty Thousand Dollars ($20,000) is to be paid to the Vendor; and b) One month after the date of this agreement, monthly instalments of One Thousand Dollars ($1,000) to be paid to the Vendor for a period of two years; and c) One month after the final monthly instalment, a final payment of Forty-One Thousand Dollars ($41,000) is to be paid to the Vendor. … 5. The Purchaser shall have possession of the Ketch from the date of this agreement and may retain possession so long as he does not breach any term of this agreement. In the event that the Purchaser breaches any term of this agreement, and fails to rectify the breach within 28 days of such breach, the Vendor shall be entitled to repossess the Ketch and the Purchaser shall not attempt to hinder the Vendor from so doing. 6. The Purchaser shall maintain the Ketch at his own expense in a good and seaworthy condition having regard to its condition at the date of sale. 7. The Purchaser shall, at the date of this agreement, bear all insurance premiums and berthing fees and fees payable to the Waterways Authority of NSW, which may be payable in respect of the Ketch, and if appropriate such fees shall be apportioned on a pro rata basis. The Ketch shall be insured for full value 8 The Vendor shall retain ownership of the said Ketch until the Purchaser has paid to the Vendor the final payment. Upon receipt of the first payment under this agreement, the Vendor shall assist the Purchaser to be recorded as the registered owner of the Ketch in the records of the Waterways Authority of NSW. …" 25 Mr Wolf did not pay the purchase price and on 24 November 2000 Mr Doran notified him in writing that he terminated the purchase agreement as from that date and intended to repossess the vessel. In doing this he relied on the Purchase Agreement dated 27 November 1997. 26 On 30 November 2000 Messrs Doran and Wolf entered into an agreement headed "Agreement to Operate" which reads as follows: 'This agreement is between Brian Doran and John V Wolf. To act as my agent. And to sell The vessel known as THE LUBS registration Number 21573 as soon as reasonable and operate it in the interim till the vessel is sold. A 25% commission will be paid to me as rental for any charters during this period. John V Wolf will keep the vessel in good order and keep the vessel registered in his name and be responsible While the vessel is in his care. Brian Doran JP (signature) Dated 30.11.2000 John V Wolf (signature) Dated 30.11.2000" 27 Mr Wolf gave evidence, which was not attacked in cross-examination, to the effect that on or about 30 November 2000 he and Mr Doran had a discussion in which Mr Doran said that he took the repossession action because he needed the money and he suggested that Mr Wolf could act as his agent in selling the vessel. Mr Wolf said the charter season was coming up to a peak period and that he might be able to organise some "bookings" for Mr Doran so that they could make some money while he was trying to sell the vessel for Mr Doran. He said that Mr Doran could get at least $285 per hour for four hour charters. Mr Doran agreed, saying there was no point in keeping the yacht idle. Mr Doran said to Mr Wolf that the charters could be booked for Mr Doran but that he (Doran) wanted 25% straight off the top. He said that Mr Wolf could take out expenses and any balance remaining would be for Mr Wolf. If this balance was less than $200 Mr Doran would make up the difference from his 25% commission. Mr Wolf agreed to this proposition. 28 Although there was lengthy cross-examination of both Mr Wolf and Mr Banwell in the course of the hearing it is not necessary, for the purposes of this application, to make any rulings on credibility as it is possible to resolve the dispute by reference to documents and evidence which is not in dispute. 29 In considering the Agreement to Operate it is important to bear in mind that Mr Doran had formally notified his intention to repossess the vessel only six days earlier as a consequence of non-payment on the part of Mr Wolf. Against this background it is unlikely that Mr Doran intended to enter into a demise charter conferring possession and relinquishing all control of the vessel in favour of Mr Wolf. It may have been possible before the repossession by Mr Doran, and in the absence of the Agreement to Operate and the proposed sale, to have formed a conclusion that there was some form of demise charter, although clearly Mr Wolf considered himself to be the owner of the vessel in that period. However, the subsequent notification of an intention to repossess and the requirement by Mr Doran that the vessel be sold as soon as reasonably possible supports the conclusion that there was no intention on the part of Mr Doran to relinquish control of the vessel entirely or to confer possession, by way of demise charter, on Mr Wolf. Mr Wolf was really acting as a caretaker pending sale with a right to earn some joint income with Mr Doran. Further support for this conclusion can be derived from the Agreement to Operate which refers to Mr Wolf as acting as "agent" for Mr Doran which would mean that the actions and status of Mr Wolf would effectively be of his principal, Mr Doran. The purpose of the arrangement was to earn income rather than leave the vessel idle in the period during which Mr Wolf was to arrange sale. Reference to the word "commission" in relation to Mr Doran is consistent with an agency agreement. The requirements as to keeping the vessel in good order and registered, and of Mr Wolf being responsible while the vessel was in his care, tends to support the view that the arrangement was one of a custodial or care-taking nature rather than a charter in favour of Mr Wolf. Under the Agreement to Operate, as I read it, the charters were to be made for Mr Doran.

Conclusion 30 While part of the overall claims made by the plaintiff in this proceeding could be described as general maritime claims within s 4(3) of the Act to an amount in the order of $31,402, I do not consider that when the proceedings were commenced the requirements of s 18 of the Act were satisfied Mr Wolf had any interest in the vessel either as owner or demise charterer. Accordingly, subject to payment of the marshal's costs and expenses the vessel should be released from arrest.

I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin J.

Solicitor for the Plaintiff: Neville R Banwell & Associates

Date of Hearing: 8, 16 & 21 February 2001

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