Sale of goods - Passing of property and risk - Specific goods in a deliverable state - Agreement for the sale of an unregistered ship - Delivery to the purchaser and part payment of the purchase price - Intention - Whether property passed. Sale of Goods Act 1896, ss 22, 23.

Solicitors for applicant: Butler McIntyre and Butler

ZEEMAN J LD Shipping Pty Ltd, which has entered an appearance in this action as the owner of the ship "BP Melbourne", has applied for an order that the writ be set aside and for certain consequential orders.

2. The action is an action in rem commenced by a writ which was issued on 13 July 1993. The particulars of claim annexed to the writ are in the following terms:

"The Plaintiff's claim is for damages for breach of

contract by the Defendant of a contract made between the

plaintiff and the defendant on or about the 29th April 1993

by which the plaintiff agreed to tow the defendant's barge

BP Melbourne from Geelong to Hobart in consideration of the

defendant paying the plaintiff for that towing work, and

associated costs, fees and expenses, the total sum owing by

the defendant to the plaintiff being $32,314.00. In breach

of the aforesaid agreement the defendant has failed to make

payment of the aforesaid sum to the plaintiff and the

plaintiff claims damages.

AND the plaintiff claims the sum of $32,314.00 together

with interest."

3. Two observations ought to be made about the particulars of claim. The first is that it is expressed as being a claim for damages for breach of contract, whereas it is apparent that the nature of the claim is such that it is a claim for a liquidated sum. I do not consider that such misdescription of the cause of action is relevant to the present application. The applicant did not rely on this defect and the particulars of claim make it sufficiently clear that what is claimed is a sum of money payable pursuant to a contract. The second observation is that the identity of the party with whom the plaintiff alleges to have contracted does not appear from the particulars of claim. However, I was told that the plaintiff's case is that it entered into the relevant contract with Weily's Quarries Pty Ltd ("the company"), which changed its name to Aussie Towing and Charter Pty Ltd on 10 January 1994, and that it brought an action in rem on the basis that at all material times the company was the owner of the ship. The parties argued the application on the basis that the writ sufficiently raises such allegations.

4. The nature of the claim is such that it is a general maritime claim within the meaning of the Admiralty Act 1988 (Cth) ("the Act"), s4(3)(j). The plaintiff's right to proceed by way of an action in rem is governed by the Act, s17. That section provides as follows:

"17 Where, in relation to a general maritime claim

concerning a ship or other property, a relevant person:

(a) was, when the cause of action arose, the owner or

charterer of, or in possession or control of, the ship or

property; and

(b) is, when the proceeding is commenced, the owner of the

ship or property;

a proceeding on the claim may be commenced as an action in

rem against the ship or property."

5. The relevant person within the meaning of the Act, s3(1) is the person who would be liable on the claim in an action in personam. As the plaintiff's case is that it contracted with the company, thereby making it liable in personam, the plaintiff has the right to proceed in rem only if the company came within the Act, s17(a) at the time that the cause of action arose and was the owner of the ship at the time that the writ was filed. Section 17(a) may be disregarded because the application solely relies upon the proposition that at the time the writ was issued the company was not the owner of the ship.

6. The application is brought in the inherent jurisdiction of the Court to ensure that no abuse of its process occurs. That there is jurisdiction to entertain an application of this nature appears to be well established (see The Marianne (1891) P 180; The Theta (1894) P 280; Owners of the Ship Shin Kobe Maru v Empire Shipping Company Inc [1992] FCA 476; (1992) 38 FCR 227). What is challenged by the applicant is the very jurisdiction of the Court to entertain the action. I accept that the test which I am to apply is that adopted by Gummow J, at first instance, in Owners of the Ship Shin Kobe Maru v Empire Shipping Company Inc [1991] FCA 499; (1991) 32 FCR 78 at 84, namely that it is for the respondent to show, on a consideration of the material before me, that there is a strong argument that the Court has jurisdiction. In the circumstances of the present case that means that the respondent must show that there is a strong argument that the company was the owner of the ship at the time that the action was commenced. If it fails to show that, the applicant ought to have the relief which it seeks. If it does show that, the application must be dismissed.

7. At the same time as the writ was filed the plaintiff applied for a warrant for the arrest of the ship. The issue of a warrant, the arrest of the ship and the service of the writ all occurred upon the day on which the writ was filed. The ship remains under arrest. No further step was taken in the action until the applicant filed an appearance on 15 April 1994, although I was informed by counsel for the respondent that there had been negotiations between his client and certain unspecified parties.

8. The ship is not, and at no material time has been, registered pursuant to the Shipping Registration Act 1981 (Cth). The ship was owned by a Western Australian company, Torradale Pty Ltd, when, in 1992, it agreed to sell it to the company for $31,500. The only evidence as to the terms of the sale is to be found in a letter from the company's agent communicating the company's offer to purchase the ship. It is a reasonable inference from the evidence that that offer was accepted. The relevant terms of the offer were that the company offered to purchase the ship for $31,500, as to which a deposit of $3,000 would be paid immediately and the balance after 60 days, that during that 60 day period the ship could be used by the company for storage purposes and that the deposit was to be deemed to be not only a deposit but also rent for that 60 day period. It would be reasonable to infer that the use of the ship for storage purposes was not intended to be other than the use of the ship for that purpose whilst it remained at its berth at Geelong. The company paid the deposit. At times which do not appear from the evidence it paid a further sum of $22,500 on account of the purchase price and it was permitted to take possession of the ship for purposes going beyond mere purposes of storage. When the ship was arrested it was in Hobart and in the apparent possession of the company.

9. Torradale Pty Ltd did not ever execute a bill of sale in respect of the ship in favour of the company. Long after the ship was arrested, on 31 March 1994, Torradale Pty Ltd executed a document described as a bill of sale in favour of the applicant in respect of the ship. That document was in the following terms:

"This Bill of Sale is to advise that the barge 'BP

Melbourne' unregistered and out of survey has been sold by

Torradale Pty Ltd of 4 Rous Head Rd, North Fremantle,

Western Australia to purchaser LD Shipping Pty Ltd.

We advise that the vessel is sold by Torradale Pty Ltd free

of any mortgage or other charges, however, we do believe

that the 'BP Melbourne' is currently under an arrest

warrant by others."

10. Although the agreement is not in evidence, the evidence establishes that that form of bill of sale was executed pursuant to an agreement entered into between Torradale Pty Ltd as vendor, the applicant as purchaser and the company as releasor. It appears from the evidence (which I hold to be admissible despite the objections of the applicant) that it was the company which requested Torradale Pty Ltd to sell the ship to the applicant at the price of $6,000, being the precise amount unpaid by the company. This transaction might be viewed with suspicion. However I do not consider that it affects the outcome of the application.

11. The applicant submitted that the material before me establishes that the legal title to the ship had never passed to the company so that it was never its owner within the meaning of the Act, s17. That submission proceeded upon the basis that the word "owner" appearing in the Act, s17 means "legal owner". The conclusions which I have reached make it unnecessary to consider whether that is correct, but I observe that authority appears to be to the contrary (see Foong Tai and Co v Buchheister and Co (1908) AC 458 and Kali Boat Building and Repair Pty Ltd v The Bosna (1977) 19 SASR 112).

12. The primary submissions upon which the applicant relied were the following:

1 That the legal ownership of an unregistered ship is only

capable of passing by means of an executed bill of sale.

2 Alternatively, the evidence does not give rise to a

strong argument that the property in the ship ever passed

to the company.

13. The evidence does not enable me to conclude that the ship was required to be registered pursuant to the Shipping Registration Act. Although it appears that the ship is Australian owned, it may be exempted from registration pursuant to that Act, s13. However counsel for the applicant did not submit that anything turns on the question of whether the ship was required to be registered. There is authority for the proposition that what is required to effectively transfer ownership of an unregistered ship is the same whether or not it is required to be registered (Union Bank of London v Lenanton (1878) 3 CP 243 at 248).

14. There is substantial authority to the effect that a bill of sale is not required to pass title to an unregistered ship (see Union Bank of London v Lenanton (supra), Benyon v Cresswell [1848] EngR 918; (1848) 12 QB 899 at 903-904; [1848] EngR 918; 116 ER 1107 at 1109, Manchester Ship Canal Co v Horlock (1914) 2 Ch 199 at 207, The James W Elwell (1921) P 351 at 368 and 695113 Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274).

15. Despite that authority, counsel for the applicant relied upon The Sisters [1804] EngR 232; (1804) 5 C Rob 155 at 159; [1804] EngR 232; 165 ER 731 at 732-733 for the proposition that in order to pass title to an unregistered ship it is necessary that there be a bill of sale. That was a case where possession of a ship was claimed. The plaintiff had purchased the ship which had been sold to him under the authority of the court subsequent to its arrest. He was provided with a bill of sale. The defendant asserted that the plaintiff had purchased the ship as agent for another, to whom he had delivered possession, that that other person afterwards had sold it to yet another person who in turn had sold it to the defendant. No bills of sale had been provided in relation to any of the subsequent transactions.

16. In giving the judgment of the Court of Admiralty, Sir William Scott said, at 5 C Rob 159-161, ER 732-733:

"According to the ideas which I have always entertained on

this question, a bill of sale is the proper title to which

the Maritime Courts of all countries would look. It is the

universal instrument of transfer of ships in the usage of

all maritime countries; and in no degree a peculiar

title-deed or conveyance known only to the law of England:

It is what the Maritime Law expects, what the Court of

Admiralty would in its ordinary practice always require,

and what the Legislature of this country has now made

absolutely necessary, with regard to British subjects, by

the regulations of the Statute Law. As to the fact of such

an agreement, what is there in this correspondence that can

amount to a precise and particular declaration from

Charnock, that he has transferred. There are expressions

which intimate that he purchased under an intention to

transfer, when the account should be settled; but that

there was any specific declaration of having transferred,

is what the Court has not been able to find in this

correspondence. Then as to the delivery, it is said that

Charnock delivered to a person sent by Kirkpatrick to take

possession for the purpose of proceeding to a second sale.

It may be so, but it was not a delivery of the title of

property he retains the legal title in his own possession,

and gives up the vessel only as the more convenient method

of carrying the general intentions respecting her into

effect. The expressions of Charnock's letters fairly

interpreted, imply that he considered the property to be

still in him, till after her arrival at Liverpool. If

Kirkpatrick had intended to purchase of Charnock, for the

purpose of selling to another, why did he not get a bill of

sale executed from Charnock, which was the first step to be

taken? Nothing of the kind is attempted, but Charnock is

left in possession of the only legal title, without any

assignment. The ship is afterwards turned over in some way

or other to Marsden, and from him to Tubbs, who is

represented to have been the person employed by Kirkpatrick

to receive delivery from Charnock. But whilst Charnock was

left in possession of the bill of sale, such a delivery as

is here said to have taken place could not be a delivery of

the title to the property. It was merely putting the

property into the hands of another, for the purpose of

executing a particular contract, but which contract was, in

fact, never executed. Nothing less than an express

declaration made by Charnock to Tubbs, 'I deliver this to

you for the use of Marsden,' could fairly raise the

argument, how far delivery, coupled with the

correspondence, could be held equivalent to a bill of sale.

Here is nothing of the kind. Bound down as this Court is

to decide on the legal title, without taking notice of

equitable claims, I have no hesitation in decreeing the

necessary monition in this case, to put Charnock into the

possession of this vessel."

17. The principles expressed by that passage were referred to with approval by the Judicial Committee of the Privy Council in Chasteauneuf v Capeyron (1882) 7 App Cas 127 at 134-135 as being "applicable to all cases in which ships are transferred by purchase and sale, by whomsoever the sale is effected", although the facts of that case may require the reference to ships to be read as a reference to registered ships as the case concerned the question as to whether certain entries should have been made in the register. The cases dealing with the transfer of unregistered ships to which I have referred, which were decided subsequently to The Sisters (supra), are to the effect that in such a case a bill of sale is unnecessary to pass title. At most, authority other than The Sisters would require that there be a bill of sale to effectively transfer the title of a ship only if it is both registered and required to be registered (see also Liverpool Borough Bank v Turner (1860) 1 J and H 159[1860] EngR 1047; , 70 ER 703). In at least some respects the view taken in The Sisters may be explained by the statute law then in force and it may be contrasted with The Victoria (1859) Swab 408, 166 ER 1188. It cannot be said other than to be very strongly arguable by the respondent that a bill of sale was not required to effectively transfer the ownership of the ship to the company because the weight of authority is to that effect. I doubt whether The Sisters ought now to be regarded as good law insofar as unregistered ships are concerned.

18. Having reached that conclusion, it is necessary to consider whether the evidence is such as to raise a strong argument that the title to the ship was transferred to the company. That requires a consideration of what it is that is required for there to be a transfer of ownership of an unregistered ship. Counsel for the applicant relied upon the following dictum of Turner LJ in Hooper v Gumm (1867) LR 2 Ch App 282 at 290:

"We come then to the question whether the purchaser of a

foreign ship is entitled to proceed in his purchase upon

the footing of what may appear upon the ship's papers, or

is bound to make further inquiry into the title to the ship

a question certainly of great importance. In the view

which I have ultimately taken of this case it is not

necessary for us to give any opinion upon this point, nor

do I intend to give any final opinion upon it. I say no

more than that, as at present advised, I am of opinion that

the purchaser is bound to make inquiry into the title. A

ship is not like an ordinary personal chattel; it does not

pass by delivery, nor does the possession of it prove the

title to it. There is no market overt for ships; in the

case of American ships the laws of the United States

provide the means of evidencing the title to them. In

ordinary cases of purchases of property not purchased in

market overt the purchasers are bound to inquire into the

title to the property purchased by them. They cannot shut

their eyes and ears and claim the benefit of want of

notice; and if they think proper to buy without inquiring

into the title of the persons from whom they buy, they must

be held to be affected with notice of what would have

appeared if the inquiry had been made."

19. I have some difficulty with that passage and it has been suggested that the proposition that a "ship is not like an ordinary personal chattel; it does not pass by delivery, nor does the possession of it prove the title to it" might well be subject to limitations and restrictions (Naamlooze Vennootschap etc Vredobert v European Shipping Co Ltd (1924) 20 Ll LR 296, per Atkin LJ at 300). In any event Hooper v Gumm was decided before the Sale of Goods Act was enacted in England.

20. Whatever differences there may be between the passing of property in ships and other personal chattels, a ship falls within the definition of "goods" contained in the Sale of Goods Act 1896, s3. Subject to other statutory provisions having particular reference to ships, such as the Shipping Registration Act, the Sale of Goods Act applies to ships. So much was held in Bank of New South Wales v Palmer (1970) 91 WN (NSW) 580 at 583 and has been assumed in other cases (McRae v Commonwealth Disposals Commission [1951] HCA 79; (1950-1951) 84 CLR 377; Reid v McBeth (1904) AC 223; McDougall v Aero Marine of Emsworth Ltd (1958) 1 WLR 1126; Lloyd Del Pacifico v Board of Trade (1929) 35 Ll LR 217). Although it may be arguable that the proper law of the contract was not the law of Tasmania, but rather the law of Western Australia, or even the law of Victoria, I will consider this case by reference to the relevant provisions of the Tasmanian Act because they find their equivalent in the Sale of Goods Act 1895 (WA) and the Goods Act 1958 (Vic).

21. As the ship is and was an unregistered ship the provisions contained in the Shipping Registration Act as to the transfer of ships by bill of sale have no application. Whether the property in the ship passed to the company is to be determined by reference to the Sale of Goods Act. The relevant provisions of that Act provide as follows:

"22 (1) Where there is a contract for the sale of specific

or ascertained goods the property in them is transferred to

the buyer at such time as the parties to the contract

intend it to be transferred.

(2) For the purpose of ascertaining the intention of the

parties regard shall be had to the terms of the contract,

the conduct of the parties, and the circumstances of the

case.

23 Unless a different intention appears, the following are

rules for ascertaining the intention of the parties as to

the time at which the property in the goods is to pass to

the buyer

Rule 1 Where there is an unconditional contract for the

sale of specific goods in a deliverable state the property

in the goods passes to the buyer when the contract is made,

and it is immaterial whether the time of payment or the

time of delivery or both be postponed."

22. Rule 1 constitutes a presumption (see McEntire v Crossley Bros Ltd (1895) AC 457 at 467) which applies in the present case unless the parties can be said to have had a different intention ascertained by having regard to the matters referred to in s22(2). If the presumption applies in the present case, then the company became the owner of the ship upon the acceptance of its offer to purchase it, although the vendor retained the rights conferred by the Sale of Goods Act, Pt IV the nature of which is such that they were not capable of being exercised after the delivery of the ship to the company. If it is strongly arguable that the presumption applies then the application must fail.

23. The question which I must ask myself is whether the respondent has a strong argument that it was not the intention of the parties that the property in the ship pass at any time before the institution of the proceedings. In order to consider that matter I must have regard to the terms upon which the company purchased the ship and to the subsequent conduct of the company and Torradale Pty Ltd. It may be that it can be said that the terms were such as to indicate that it was not intended that property in the ship pass at the time of the acceptance of the offer. That would be sufficient to rebut the presumption contained in Rule 1. Even if the presumption is rebutted it may yet be the case that the subsequent conduct, including the delivery of the ship to the company and the payment by it of most of the purchase moneys, is such as to indicate an intention that the property in the ship pass at some time after the acceptance of the offer but before the commencement of the action. In such event the rebuttal of the statutory presumption would not be of assistance to the applicant.

24. The terms of the agreement were silent as to when property was to pass and that alone may be fatal to the suggestion that the parties had some intention contrary to the presumption contained in Rule 1. On its face, the terms of the offer to purchase made on behalf of the company, set forth in the letter of offer from its agent, could be construed so that upon acceptance there would be an immediate transfer of the property in the ship (see Bodilingo Pty Ltd v Webb Projects Pty Ltd (1990) ASC 59,022). On the other hand the reference to rent in athat letter could be construed as indicating a contrary intention. Whatever may have been the position at the time that the agreement was entered into, the subsequent conduct of the company and Torradale Pty Ltd, including payment of most of the purchase moneys and the delivery of the ship to the company raises at least a very strong argument that by the time that those things were done the parties intended that property pass. This is not a case where there was some deliberate retention by the vendor of some document of title, or a document analogous thereto, as occurred in Lambert v G and C Finance Corporation Ltd (1963) 107 SJ 666 or Cheetham and Co Ltd v Thornham Spinning Co Ltd (1964) 2 Lloyd's Rep 16. All that remained to be done was for the company to pay the small proportion of the purchase price which it had not yet paid.

25. These considerations lead me to the conclusion that there is a sufficiently strong argument that at some time prior to the institution of the action the company had become the owner of the ship to make it inappropriate to dispose of the action in a summary way. That conclusion requires that the application be dismissed.