Kitano v The Commonwealth

High Court of Australia|1974-07-01|Before: Mason J, Stephen JJ

High Court of Australia Mason J. McTiernan, Menzies, Gibbs and Stephen JJ. Kitano v The Commonwealth [1974] HCA 31

ORDER Appeal dismissed with costs including costs of the interlocutory application.

In this action the plaintiff, who is a Japanese national, sues the defendant, the Commonwealth of Australia, for damages for breach of statutory duty, negligence, conversion and by way of action on the case. The causes of action all relate to the yacht "Akitsushima", thirty-six feet in length, which was registered in the shipping register of the Prefecture of Hyogo, Japan. The plaintiff claims that he was at all material times the owner of approximately a nine-tenths interest in the yacht, the remaining undivided interest being owned by one Norio Matsushita.

The yacht commenced a round-the-world voyage in 1970. It was, so the plaintiff claims, under his command, with a crew of three of whom Matsushita was the sailing master (as distinct from master), Nagahama and Fujikawa being the remaining members of the crew. In the course of its voyage, on 27th May 1971 the yacht entered the port of Brisbane from which it departed on 26th June 1971 and proceeded to Darwin, calling on the way at the ports of Gladstone, Bowen, Townsville and Thursday Island. The plaintiff claims that the yacht was imported into Australia, entered for home consumption and became subject to the control of the Department of Customs and Excise.

At Darwin a serious dispute arose between the plaintiff and the other members of the crew. They made it clear to the plaintiff that they desired to return home to Japan and that they did not wish to continue with him on the round-the-world voyage. According to the plaintiff, on 21st August 1971 the crew mutinied and he was forced to leave the yacht and reside ashore. The plaintiff then claims to have dismissed Matsushita from his position of sailing master of the vessel and made arrangements for his repatriation to Japan, notifying the Darwin Customs authorities of these events. The plaintiff had earlier on 20th August 1971 sought a certificate of clearance under the Customs Act so as to enable the yacht to depart from Darwin.

On 26th August 1971 the plaintiff became aware that Matsushita and the two crew members intended to depart from Darwin in the yacht and that Matsushita had applied to the Customs authorities at Darwin for a certificate of clearance. The plaintiff claims that he instructed solicitors to commence proceedings in the Supreme Court of the Northern Territory to obtain interim injunctions restraining the crew from taking the yacht to sea and restraining the Customs authorities from issuing a certificate of clearance to any person other than himself. He asserts that later that day he was informed by Mr. Radcliffe, a Customs officer at Darwin, that the issue of a certificate of clearance was suspended for twenty-four hours, that there was no need to obtain an injunction and that a certificate of clearance would not issue to anybody else. He then refrained from seeking injunctions. Nevertheless, at about 4.30 p.m. that afternoon a certificate of clearance issued in respect of the yacht and was delivered to Matsushita, notwithstanding that he had not obtained an export licence under the Banking (Foreign Exchange) Regulations and notwithstanding that Customs knew that the plaintiff was owner and master of the vessel. Approximately two hours later Matsushita and the remaining two crew members sailed the yacht away from Darwin harbour.

The plaintiff's case is that the issue of the certificate of clearance to Matsushita contravened the prohibition contained in s. 122 of the Customs Act that no certificate of clearance should be issued unless "all the other requirements in regard to the ship have been duly complied with"; that it constituted negligence on the part of the defendant, knowing, as it did, of the plaintiff's rights in the yacht, and of Matsushita's dismissal as sailing master, the plaintiff having been informed that the issue of a certificate of clearance had been suspended for twenty-four hours, that in the meantime a certificate would not issue to anyone else and that accordingly there was no occasion for him to seek an injunction. The effect of the issue of the certificate was to enable the crew to sail the plaintiff's yacht away. The same circumstances are said to give rise to a breach of duty under s. 34 of the Customs Act which relieves the Department of Customs and Excise from liability for any loss or damage occasioned to goods subject to the control of the Customs "except by the neglect or wilful act of some officer". Then it is said that the issue of a certificate of clearance deprived the plaintiff of his possession and enjoyment of the yacht and constituted a conversion of it by the defendant. Finally, it is said that the defendant is liable in damages because it issued a certificate of clearance to Matsushita contrary to the prohibition contained in s. 122 of the Customs Act and that this was done intentionally and with the inevitable consequence that it caused damage to the plaintiff (see Beaudesert Shire Council v. Smith [1] ).

The plaintiff had obtained a Bachelor of Science degree in Industrial Management at the University of Southern California. Later he became an employee of Fuji Iron and Steel (subsequently forming part of Nippon Steel Corporation) and was in 1966 working at its Hirohata Steel Works to the west of Tokyo. He held a position as management trainee. It was there that he met Matsushita, who was also an employee of Fuji Iron and Steel and worked in the melting shop associated with the electric furnace. Plans for the construction of a ferro-cement yacht were obtained from Samson Marine Design Enterprises of Vancouver, British Columbia, and it was agreed by the plaintiff and Matsushita that they would construct a yacht in accordance with the design and sail it around the world. The plaintiff did not have any previous experience in yacht construction or, for that matter, boatbuilding. Nor did he have any experience in ocean navigation. Matsushita had previously built a fifteen-foot yacht in which he had sailed in the Japanese national championships. He evidently had some reputation as a yachtsman and was an instructor in the Himeji Yacht Club where he gave sailing instruction to the plaintiff, but he had no experience in ocean navigation.

In 1967 the construction of the yacht began at Hirohata. The construction was undertaken by the plaintiff, Matsushita, Matsushita's brother, Nagahama, Fujikawa and others. Materials necessary for the construction of the boat were purchased or donated. In addition, it was necessary to pay outside contractors for some materials and supplies, in particular when the fitting-out stage was reached. Apart from money provided by the plaintiff, Matsushita, Nagahama and Fujikawa, money was provided by an appeal organized with the consent of the Fuji corporation among its employees. In a circular and in a petition to the general manager for support, signed by senior officers of the works, Matsushita is referred to as the person who built and completed the yacht. He is the only member of the crew mentioned by name; the others are referred to as "the three others" and "the other three".

The yacht was finally launched in July 1969. After fitting out was completed, trial cruises were undertaken. The vessel was registered on 24th March 1970 in the records of the Hyogo Prefecture, Kobe, Japan. It was registered in the names of Matsushita and the plaintiff as owners. The plaintiff arranged for the issue of a policy of insurance covering the yacht in his name. The policy described the plaintiff and Matsushita as the "beneficiary" under the policy. It did not state their respective interests in the yacht.

It seems that the plaintiff, Nagahama and Fujikawa sat for examinations required to be taken by persons seeking to obtain a master's certificate or small boat operating licence. They were successful, the plaintiff obtaining a master's certificate. Matsushita was urged to take the examination but he did not do so. He did not hold a master's certificate or a licence, although he was a competent navigator and had greater sailing experience than the other members of the crew. However, it was arranged that he should obtain actual navigating experience in a Japan Line vessel on a voyage from Japan to Seattle, which was the first leg of the proposed round-the-world voyage. This he did.

Prior to its departure formal documents relating to the yacht were issued by the Japanese authorities. According to the crew manifest, the plaintiff was described as "Sencho", which has been translated as master or captain. Indeed, the translation "Ship's Master" is given by the Japanese official form. The others were described as members of the crew. The manifest bears the personal seal of the plaintiff but is not sealed or signed by the other crew members. The "Declaration Outward" of the yacht names the plaintiff and Matsushita as owners and describes them also as operators of the yacht. The declaration bears the seal of the plaintiff and his name is given on the form over the word "master". Likewise, the list of ship's stores bears the seal of the plaintiff and his name is written in above the words "Ship's Master".

The vessel proceeded to Seattle, thence to Vancouver and San Francisco. The second leg of the voyage was from San Francisco to Brisbane, with stops at Hawaii, Fiji and Noumea on the way. During the course of the voyage the relationship between the members of the crew deteriorated and ill-will developed between the plaintiff and the other members of the crew. At Hawaii a dispute occurred between the plaintiff and Fujikawa in which Fujikawa struck the plaintiff several times. According to Matsushita, after that dispute he required the other members of the crew to sign a pledge in December 1970 by which they each promised to devote "myself to my duties, assisting other members of the crew and to obey the command of the " teicho " ". " Teicho " is another Japanese word meaning "captain". The plaintiff says that he was forcibly compelled to sign the pledge by Fujikawa's assault upon him.

The plaintiff was the only member of the crew who spoke fluent English. Consequently he conducted discussions with harbour and customs authorities at ports at which the yacht called. He also attended to financial and currency matters, keeping in his care the contributions of $U.S.1,000 made by each member of the crew to expenses of the voyage. Likewise, he attended to matters of publicity, including statements made to newspapers. The other members of the crew lacked the plaintiff's education and were unable to speak English. Matsushita had a poor command of English, although he attended an English-speaking course at Hawaii for three months on a part-time basis. In discussions with Australian officials he used the services of interpreters.

After the "Akitsushima" reached Australia the plaintiff and Matsushita filled in or signed a number of Customs and official documents in Brisbane and other Australian ports. In these documents Matsushita is shown as the master of the yacht. A number of the documents in which Matsushita is so described are signed by the plaintiff. The plaintiff signed these documents in the character of "Owner" of the yacht, striking out the words "Master or Agent" in the collocation "Master, Owner or Agent" where it appeared in the forms.

The plaintiff sought to explain the references to Matsushita as master in these documents by stating that they were prepared in accordance with the directions of Customs officers or were otherwise in error. In particular, he gave evidence of conversations with Mr. Rowe and another Customs officer in Brisbane (whom he first identified as "Mr. Smith" and later as Mr. Wright), in which he asserted that he was the captain of the yacht. His version of the conversations is denied by Rowe and by Wright, who gave evidence of having conversations with the plaintiff at Brisbane. At the conclusion of the evidence, Mr. Handley did not ask me to accept the plaintiff's account of these conversations; nor did he submit that I should find other than that Matsushita was the de facto captain or master of the yacht at the time of its arrival in Brisbane and until shortly before its departure from Darwin; it was conceded for the plaintiff that Matsushita had been held out as the de facto captain or master in that time.

Again, different versions have been given of the discussions at Darwin which the plaintiff had with Sergeant Forrester (of the Commonwealth Police), Detective Sergeant Goedegebuure and Constable Swift (of the Northern Territory Police), Mr. Raby (the Crown Prosecutor for the Northern Territory), Messrs. Liveris and Ibell (of the Immigration Department) and Mr. Radcliffe (of the Customs Department). In each case the plaintiff's version of the discussions is denied. And the plaintiff is in conflict with the three Japanese witnesses who were members of the crew of the yacht as to its construction, as to its ownership, as to the identity of the captain, as to incidents which occurred on the voyage and as to events which took place in Darwin. The plaintiff's story is also at variance with documentary material in which Matsushita is shown as co-owner and master of the "Akitsushima".

I formed an unfavourable impression of the plaintiff's veracity. This impression is based partly on the plaintiff's demeanour as a witness, partly on my preference for the evidence of other witnesses where their evidence conflicts with that of the plaintiff, and partly on the support which the documentary evidence and the admitted facts give to some aspects of the defendant's case. The plaintiff gave his evidence in English, not Japanese. I do not think that he placed himself at a disadvantage by adopting this course as he expressed himself fluently and appeared to have a fine command of English. His ability in English is not a recent development as he impressed Mr. Raby as having a very good command of English in August 1971. Unfortunately, in my judgment his veracity as a witness is much inferior to his ability to understand and make himself understood in English. I am not disposed to accept what he says unless it is corroborated by other evidence for I am convinced that his account of his conversations with Australian officials was quite unreliable and in some instances, in particular the conversations with Customs officers in Brisbane, was contrived.

Matsushita impressed me as a more reliable witness than the plaintiff. Where their evidence conflicts, in general I prefer the evidence of Matsushita. He gave his evidence through an interpreter. Substantially his evidence was confirmed by that of Nagahama and Fujikawa, although there were some variations in their accounts.

The ownership of the yacht is a complex question. The plaintiff's claim that he was the owner of a nine-tenths interest was abandoned at the conclusion of the evidence. His revised claim is that he and Matsushita were owners of a one-half interest, whereas the defendant, relying on the evidence of the other members of the crew, urges that each member of the crew held a one-quarter interest.

The plaintiff's evidence was that the total cost of the yacht was the equivalent of $U.S.10,000, of which he contributed $U.S.7,000 and Matsushita $U.S.3,000. Matsushita, on the other hand, claimed to have provided $U.S.4,000-5,000, Nagahama $U.S.1,950 and Fujikawa $U.S.3,000. In my view the contribution claimed by the plaintiff is greatly exaggerated, for a significant part of the cost of the construction and fitting out of the yacht was defrayed by funds donated as a result of the appeal and otherwise. The receipts record payments amounting to $10,000. But they do not support the plaintiff's claim to have contributed more than Matsushita. They are of little probative value as they do not disclose the source of the funds from which the payments were made. Some slight indication that the level of Matsushita's contribution was not less, and may have been greater, than the plaintiff's is provided by a document prepared by the plaintiff in the early stages of construction when he was transferred by the company from Hirohata to Tokyo. Despite the plaintiff's denial, I am satisfied that the document recorded actual expenditure. It attributed 70,740 of the first 117,000 yen spent to Matsushita.

I find it impossible to determine precisely the contribution made by each member of the crew, but, disposed, as I am, to give greater weight to the evidence to Matsushita, I conclude that the amount of his financial contribution (although somewhat less than he claimed) was not less, and may have been greater, than that of the plaintiff. Matsushita certainly contributed more time and skill to the construction of the yacht than did the plaintiff. I think that Fujikawa and Nagahama, as well as the plaintiff, have overstated their contributions, perhaps because they have counted in their favour donations made by others which they solicited or procured, or because they have had difficulty in distinguishing between contributions to construction of the yacht and contributions to the expenses of the voyage. Their individual financial contributions may have been less than that of the plaintiff, but their contributions in labour were certainly greater.

It can be accepted that before 1970 the plaintiff and Matsushita were co-owners of the yacht in equal shares. The plaintiff denied that he at any time agreed to the remaining two crew members each receiving a one-quarter share, although in chief he said that in March 1970, in two separate discussions with Matsushita at his home in Himeji, he (the plaintiff) stated that if the journey was completed, Matsushita and the crew could have the whole boat when they returned. In his evidence-in-reply the plaintiff said that one or two days before their departure, after Matsushita said to the crew that the plaintiff had offered to make them all equal owners when they returned, he had said, "No, when we succeed and complete the journey I am willing to give the whole boat to you all".

Matsushita, Nagahama and Fujikawa said that on the yacht two days before departure from Japan it was agreed by all members of the crew that they would each have a one-quarter interest in the yacht. In evidence Matsushita agreed that the plaintiff had stated that the rest of the crew could have his share in the yacht on completion of the world voyage but stated that there was a present agreement for the division of the ownership into quarter shares.

The plaintiff's evidence makes it clear that there was a discussion about ownership very shortly before the yacht's departure. What the terms of that discussion were is not so clear. However, in the light of the evidence given by Matsushita I think it probable that two matters were mentioned: the plaintiff's willingness to sacrifice his interest to the others at the end of the voyage and the division of the ownership into four equal shares. The agreement was, I think, the outcome of earlier discussion between the plaintiff and Matsushita, at which one of the others may have been present. It seems to me that the notion had evolved gradually that the voyage of circumnavigation was a joint venture on the part of the four individuals. It was a natural development of this idea that each of them should contribute to the construction of the yacht and share in its ownership. The contributions made by Fujikawa and Nagahama are difficult to explain except on the hypothesis that they were to acquire some interest in the yacht, presently or in the future. This is reinforced by the circumstance that they were not to receive any payment of wages on the voyage and did in fact contribute an equal amount of $U.S.1,000 each towards expenses of the voyage.

In concluding that there was an agreement for equal one-quarter ownership by the four men I am strongly influenced by the contents of applications for admission into Australia by each member of the crew, which the plaintiff prepared and caused to be typed. In fact the plaintiff signed not only his own application but those of Nagahama and Fujikawa, writing their names where provision was made for the signature of the applicant. In each case, including his own application, the application stated against the heading "Assets and interests being retained in home country" that the applicant was the owner of a one-quarter interest in the sail-boat "Akitsushima" ($30,000). The applications were dated 12th June 1970 (five days before the departure date), and therefore antedated the agreement said to have taken place two days before departure. It is possible that the parties are mistaken as to the date of the agreement or that the applications were prepared in the light of the earlier discussion in anticipation that such an agreement would be reached. Be that as it may, the applications are close in time to the agreement. Their significance is enhanced by the circumstance that the plaintiff when cross-examined did not offer an alternative reason for the making of the statement in the applications. He did not suggest that he intended to deceive the Australian authorities by representing that two of the applicants had retained valuable assets in Japan; indeed, there would be little point in making such a representation as the "Akitsushima" was proceeding to Australia. And the statements are inconsistent with his claim that the only agreement was one by which he promised to make over his interest in the yacht to the others on the completion of the voyage.

Pointing in the same direction is a publication relating to the yacht and its voyage, issued by Samson Marine Design Enterprises of Vancouver. It was based, although it differs in some respects, on a similar publication in the Japanese language, supplied by the plaintiff. Unlike the Japanese publication, it refers to the members of the crew as partners and says of Nagahama and Fujikawa, "They both joined the world cruise adventure as full partners". The evidence does not establish that the plaintiff so described the two crew members to the publishers. However, he admitted discussing the publication with the publishers while it was in course of preparation and he was the English-speaking member of the crew who had corresponded with Samson Marine Design Enterprises. That firm would naturally look to him for information. When cross-examined on the publication he was evasive and sought to dismiss parts of it as a public relations exercise. Moreover, there is evidence that after copies of the publication were taken aboard at San Francisco he distributed copies at ports of call, in particular, Darwin.

In the circumstances I infer that the statement made concerning Nagahama and Fujikawa was made with his approval. I therefore regard the publication as confirming the view that the crew members each owned a one-quarter interest in the yacht, although I should say that, independently of the publication, I should have come to the same conclusion.

Reliance was placed on Nagahama's cross-examination and on an entry in Matsushita's diary to support a contrary view. In my view, when this evidence is seen in its context, and I refer particularly to the oral evidence given by Matsushita with respect to his diary entry, it is not sufficiently persuasive to lead me to a different conclusion.

No evidence was led by the parties as to the relevant Japanese law touching the ownership of the yacht or the effect of the agreement providing for equal ownership of it. The case was conducted on the basis that local law was to be applied. Nor was it suggested that the agreement for equal ownership by the four individuals, if made, was other than a valid and enforceable agreement (see Lampleigh v. Brathwait [1] ; In re Casey's Patents [2] ), the effect of which was to give each of the members of the crew a proprietary interest in the yacht.

(1615) Hob. 105 [ 80 E.R. 255]. 2. [1892] 1 Ch. 104.

The issue relating to the mastership of the "Akitsushima" must also be resolved adversely to the plaintiff. The issue is bedevilled by an alleged difference in meaning between the Japanese words " sencho ", meaning "Captain, master, Skipper" and " teicho ", which may mean "Captain, master" but may also mean "Coxswain" and, according to the plaintiff, is appropriate to describe a person who is a "sailing master, subject to the overriding command of another". I prefer the evidence that " teicho " is usually used to describe the captain of a small vessel such as a yacht, whereas " sencho " is used to describe the captain of a large ship. There seems to be some degree of overlapping use, as might be expected in the circumstances. Even conceding that " teicho " may have in some contexts the meaning for which the plaintiff contends, I am nevertheless satisfied that, with the agreement of the plaintiff, Matsushita became captain or master of the "Akitsushima" in the unqualified sense in which those words are understood in English. Matsushita says that the plaintiff agreed to his becoming captain or "top man", as he put it, before construction of the yacht was commenced.

The strongest evidence supporting the plaintiff's claim is the Japanese crew manifest (which describes the plaintiff as "Captain"), the "Declaration Outward" and the list of ship's stores which are all sealed by the plaintiff in the character of "Ship's Master". There was a strong motive for not naming Matsushita as captain or master in the official Japanese documents. Matsushita did not have a master's certificate or an operator's licence and there was some question whether his appointment as master involved a breach of Japanese law. His appointment was disguised by naming the plaintiff as captain in the crew manifest and procuring the plaintiff's signature and seal to the official documents. According to Mr. Raby (whose evidence I accept), the plaintiff informed him in Darwin that this was the reason why the plaintiff had been named as captain in the Japanese documents.

There is an abundance of evidence which points to Matsushita as the captain in the full sense of the term. There are nine letters written by the plaintiff to Matsushita in 1968 and 1969 which commence "Captain Matsushita", the word "Captain" being written in English. It is common ground that a uniform bearing the word " captain " on the breast pocket was provided for Matsushita and was worn by him, the plaintiff having the uniform of an ordinary crew member, bearing no such mark of rank.

Then there are numerous Australian Customs documents in which Matsushita is described as the master or which he signed as master. Some documents in which Matsushita is stated to be the master are signed by the plaintiff; others are documents which, although not signed by the plaintiff, either were typed by him or of which he was otherwise aware. I entirely reject the plaintiff's account of discussions with Rowe and Wright by which he seeks to explain these documents and in which he claims to have protested that they erroneously described Matsushita as master. Likewise, I reject the plaintiff's evidence that he signed the pledge at Hawaii, acknowledging Matsushita as the master, under duress.

The next issue relates to the events which occurred at Darwin after the arrival of the yacht on 15th August 1971 and before its departure on 26th August. The plaintiff's account of the events which then took place was in many respects denied by witnesses called for the defendant, including the other members of the crew of the yacht. I do not propose to summarize the evidence in detail. It will be sufficient if I state shortly my view of the facts and refer to the principal conflict of evidence.

Within a day or so of the yacht's arrival in Darwin, at a discussion between the members of the crew, Matsushita said that although the pledges had been given in Hawaii the relationship between members of the crew was unsatisfactory and for that reason he proposed to change course for Japan. His proposal was supported by Nagahama and Fujikawa but opposed by the plaintiff who wished to continue the voyage of circumnavigation. At a second discussion which took place shortly thereafter on the yacht the same views were expressed, although on this occasion Matsushita said that if on the journey north the relationship between the crew improved it would be possible to change course and sail through the Indian Ocean, resuming the world voyage. This was not acceptable to the plaintiff. The plaintiff suggested that the reason for Matsushita's change of plan was not the unhappy relationship between members of the crew, but their desire to return home because they were homesick. I do not accept that this was so. It is evident that the relationship between members of the crew, in particular the plaintiff and Fujikawa, was most unsatisfactory.

On 20th August the plaintiff saw Radcliffe at the Customs House, obtained from him the appropriate forms for an export entry and and export licence for the yacht and completed them in Radcliffe's presence. He did not leave them with Radcliffe as the consent or recommendation of the Reserve Bank to the export licence was required.

On and after 19th August the plaintiff, knowing that the other members of the crew proposed to sail the yacht back to Japan, sought advice from police and Immigration officers and from Mr. Raby as to what could be done to enable him to obtain possession or command of the "Akitsushima". By 23rd August he consulted Mr. Rudder, a Darwin solicitor. On that day he removed equipment from the yacht in the belief that without the equipment the crew would not depart, and he made arrangements to have Matsushita repatriated by air to Japan on the footing that he had been dismissed from his position as master of the yacht. These arrangements were made with the assistance of the authorities, on the apparent basis either that the plaintiff, not Matsushita, was master of the vessel, or that the plaintiff as owner had removed Matsushita from command. Matsushita's passport was endorsed "Permitted to land for transhipment until 25.8.71".

The plaintiff did inform Matsushita that he was dismissed as master of the yacht. When he first said this to Matsushita is not clear, but he certainly told Matsushita on 25th August when Matsushita was informed that arrangements had been made for his repatriation to Japan. The arrangements fell through because Matsushita declined to go and was not on the yacht when the Customs officers came to ensure that he was ready to go.

There is a conflict of evidence as to what occurred on the afternoon of 26th August. In this conflict I prefer the evidence of Radcliffe and Hall to that of the plaintiff. My account of what transpired therefore involves a rejection of the plaintiff's evidence. It also proceeds upon an acceptance of the evidence of Dixon, who was the senior officer in the Customs House at Darwin on the day.

Shortly after 2.15 p.m. Radcliffe was informed that the Immigration Department recognized Matsushita as master of the yacht and that he would be applying for a certificate of clearance that afternoon. Radcliffe then passed this information on to Mr. Rudder. At 2.30 p.m., or shortly thereafter, Matsushita, through an interpreter, requested Radcliffe to issue a clearance. Radcliffe provided them with the forms for an export licence and told them to call on the Reserve Bank and return to the Customs House. At the Reserve Bank they were told that the licence application could not be stamped, the plaintiff's licence application having been stamped the previous day. When they returned to the Customs House shortly before 3 p.m. they informed Radcliffe of this circumstance and he consulted Dixon. Having consulted Dixon, he told Matsushita that Dixon was ringing the Department in Canberra and that they should return at 3.30 p.m. when a decision would be made. Almost immediately thereafter the plaintiff, accompanied by Mr. Honeycutt, a flight engineer employed by Freeport Indonesia, arrived. He requested a clearance, Radcliffe advised him that a clearance could be withheld for twenty-four hours but that Dixon was ringing Canberra for a decision and that if the plaintiff returned at 3.30 p.m. he would be advised of the decision.

Subsequently Matsushita and the interpreter returned. Radcliffe was instructed by Dixon to prepare the documentation for a clearance, which he did. The export entry was stamped by Mr. Tilbrook, another Customs officer, other necessary documents were completed and a certificate of clearance issued and handed to Matsushita. However, no export licence was issued. Dixon decided that it was unnecessary after he had been told by Mr. Gallagher of the Reserve Bank that the Reserve Bank had no interest in the yacht, having already stamped the plaintiff's application. Dixon had received advice from a senior officer in Canberra that he should issue a clearance to Matsushita as he was named as master in the Australian Customs documents. He decided that this is what he should do unless the plaintiff returned at 3.30 p.m. and demanded a clearance. As the plaintiff did not return that day, he thought it correct to issue a clearance to Matsushita on the footing that there was no dispute as to who was the master; he took the view that no dispute as to ownership had arisen.

The plaintiff's account was very different. He said that he had two conversations with Radcliffe that afternoon. The first took place at 3 p.m. when he protested against the issue of a clearance to Matsushita and said "this boat is mine" and that an injunction was being prepared. He asked that his export entries be handed back to him as he was not then ready to clear the yacht, and said, "I do not want you to issue a clearance to anybody right now, I will see you later". In cross-examination he added that when the export entry was handed to him he said, "Well, I am safe now I have got this, you know nobody can sign but me".

He then went to the Reserve Bank where he found that the bank would not stamp Matsushita's application for an export licence and returned to the Customs House where Radcliffe told him "The clearance is suspended for twenty-four hours and nobody gets clearance", to which he replied, "If you don't give me clearance now I am afraid I must get injunction to the Customs not to issue a clearance".

Radcliffe's account of the conversation at 3 p.m. was supported by Hall, the cashier in the Customs House, who was standing with Honeycutt during the course of the discussion. Hall impressed me as a truthful witness and I accept his evidence. It has been urged that it is unlikely that the plaintiff would have failed to return to the Customs House that afternoon after the conversation at 3 p.m. even if Radcliffe's version of it be accepted. The force of this argument is diminished by the circumstance that the plaintiff believed that a clearance could not issue to Matsushita because the plaintiff had the export entry form and the bank had declined to stamp Matsushita's application for an export licence.

Moreover, Honeycutt was not called to give evidence. The plaintiff's lack of finance has been urged as a sufficient reason for not calling him. However, it seems that no attempt was made to apprise the defendant of the evidence he could give or to examine the possibility of giving his evidence by affidavit.

I turn now to the questions of law. First, there is the question whether the yacht was "subject to the control of the Customs" when the certificate of clearance was granted on 26th August. In relation to goods brought to Australia by ship it has been said that they are imported "whenever they are brought into port for the purpose of being discharged there" (Wilson v. Chambers & Co. Pty. Ltd. [1] ). But it is quite another matter to say that a ship is imported into this country merely because it calls at Australian ports as part of a continuous voyage which will take it to an over-seas destination. I am unable to perceive any provision in the Customs Act which compels this conclusion. Nevertheless, inappropriate as it may seem in this case, steps were taken which are consistent only with importation of the yacht: it was made the subject of a sight entry at Bowen which was passed by Customs and it was entered for home consumption. Imported goods so entered are subject to the control of the Customs until delivery for home consumption or until exportation, whichever shall first happen. Delivery for home consumption means "lawful delivery by the customs" and normally it occurs when the entry is passed, at which time the goods pass out of Customs' control (Carmody v. F. C. Lovelock Pty. Ltd., per Gibbs J. [1] ). Whether this result ensued in the present case it is not necessary to decide, as I am prepared to assume that the yacht subsequently became subject to the control of the Customs when it berthed at Stokes Hill Wharf, Darwin, a prescribed place for export within the meaning of s. 30 (d). The exportation of the yacht was prohibited by reg. 16 of the Banking (Foreign Exchange) Regulations unless a licence to export the goods was in force. In that sense the exportation of the yacht was subject to compliance with a "condition" under a "regulation" in terms of s. 30 (d).

(1926) 38 C.L.R. 131, at p. 136. 2. (1970) 123 C.L.R. 1, at p. 22.

Goods subject to the control of Customs are not as such in the possession of the Customs (see s. 35A). The provisions of the Act which spell out what is involved in the control of the Customs include those "giving the customs a right of examination (ss. 32, 49 (3)), forbidding any movement, alteration or interference except by authority of a Customs officer (s. 33), requiring "for the purpose of securing the due importation of goods" that they be entered and unshipped (s. 49 (3)), and making elaborate provisions for ensuring that the unshipping is subject to adequate safeguards for the revenue (ss. 36-41, 68-77)" (Collector of Customs for the State of Victoria v. Wilh Wilhelmsen Agency Pty. Ltd., per Kitto J. [2] ).

Quite apart from the control of the yacht which Pt III of the Act conferred on Customs, the yacht was under Customs' control in another sense because s. 118 prohibited the master from departing with his yacht without receiving from the Collector a certificate of clearance. It is the issue of the clearance that is the gravamen of the plaintiff's cause of action.

The plaintiff submits that the certificate was wrongly issued on two grounds. The first ground is that Matsushita was not the master. Under s. 119 (2) it seems that the master or pilot is entitled to delivery of the certificate. "Master" is defined by s. 4 to mean, except where otherwise clearly intended, "the person in charge or command of any ship except a pilot or Government officer". In my view, the statutory definition refers to the person who is in actual charge or command of a ship; there is no ground for implying a limitation which would confine the definition to a person who is lawfully in charge or command with the authority of the owners. Under the Act the effectiveness of Customs administration and control hinges largely on the duties and obligations imposed on the masters of ships and the pilots of aircraft. This context supports the view that the duties and obligations which the Act imposes are imposed on those who are actually in charge or command of ships and aircraft.

The plaintiff submitted that in s. 119 "master" bears a meaning different from its defined meaning and signifies one who is lawfully in command with the authority of the owners. I am unable to perceive anything in s. 119 or in the context in which it is found that requires that a meaning other than the statutory meaning should be given to the word.

It is beyond question that Matsushita was on 26th August in charge or command of the "Akitsushima". The plaintiff had left the yacht and was resident on shore. His visits to the yacht on 25th August was of a temporary character and he was, at his own request, accompanied by Constable Swift. Accordingly, in my view, Matsushita was the master of the "Akitsushima" on 26th August in the sense in which that word is used in s. 119.

Whether the continuing consent of the plaintiff was essential to Matsushita's continuation in lawful command of the yacht it is not necessary for me to decide. Were it necessary to decide the question, I should be disposed to think that Matsushita remained in lawful command, despite the plaintiff's attempted dismissal of him. On any view of the matter Nagahama and Fujikawa were not ordinary crew members who agreed to serve for the voyage for a remuneration. Even if the plaintiff and Matsushita were co-owners of the yacht, the voyage of circumnavigation is in my view properly to be regarded as a joint venture undertaken by the four individuals as co-adventurers. They had possession of the "Akitsushima" for the duration of the voyage until she returned to her home port. Matsushita was appointed captain for the voyage by the four co-adventurers and in my opinion he did not cease to be captain because one of them attempted to dismiss him. If it be a relevant consideration, no ground for his removal has been established, his decision to discontinue the voyage of circumnavigation and return to Japan being based on a correct assessment of the problem which had arisen among the crew.

The second ground for criticizing the issue of the clearance has more to it. Section 122 provides that "Except as prescribed, no Certificate of Clearance shall be granted for any ship unless all the other requirements of the law in regard to such ship have been complied with". It was suggested that the expression "all the other requirements of the law in regard to such ship" should be read down; perhaps it should be read down, but there is, in my view, no reason for so confining it that it excludes the requirement which arises under reg. 16 of the Banking (Foreign Exchange) Regulations for an export licence. Although the defendant submits otherwise, no export licence under the regulations issued in respect of the "Akitsushima". It seems that both Dixon and Gallagher laboured under the misapprehension that under the regulations it was for the bank to issue the licence. However, Pt III of the regulations, in particular regs. 22 and 30 and the definition of export licensing officer in reg. 15, makes it clear that the issue of a licence is a function not of the bank, but of the Minister or an export licensing officer (a Customs officer). No doubt an export licensing officer will in the ordinary course of events consult the bank before he issues a licence, but that is another matter. In the circumstances, no export licence had been granted in respect of the yacht at the time when the certificate of clearance issued. For this reason there was a contravention of s. 122.

It is against this background that the causes of action must be examined. It is convenient, in the first instance, to consider the claim in conversion. Conversion may be brought at the instance of a co-owner of a chattel; in particular it will lie at the suit of a co-owner of a ship. In Barnardiston v. Chapman and Smith [1] , a ship was possessed by one tenant in common and sent to sea without the consent of his co-tenant. It was held that trover would lie, the ship having been lost (see also Jacobs v. Seward, per Lord Hatherley L.C. [2] ). In Barnardiston v. Chapman and Smith [1] the defendant dealt with the ship in a manner inconsistent with the rights of the plaintiff as co-owner by excluding him from possession and preventing him from exercising his rights. That was very different from the action of Customs in the present case. All that Customs did was to issue the certificate of clearance (albeit in breach of s. 122). The certificate under the hand of the collector certified, in accordance with the form prescribed (Customs reg. 103; form 41) that the master "hath here entered and cleared his ship according to law". It thereby declared that the law of the port had been complied with and evidenced that the yacht was entitled to depart from the port (Merchant Service Guild of Australasia v. Commonwealth Steamship Owners' Association, per Isaacs J. [3] ).

(1715) 4 East 121 n. [102 E.R. 776 n.]. 2. (1872) L.R. 5 H.L. 464, at p. 474. 3. (1715) 4 East 121 n. [102 E.R. 776 n.]. 4. (1913) 16 C.L.R. 664, at p. 696.

In my view, by issuing the certificate the Customs did not deal with the "Akitsushima" in a manner inconsistent with the rights of the plaintiff as a co-owner; nor can it be said that what it did was done with the intention of denying those rights. The issue of the certificate enabled Matsushita to sail the yacht away without breaching s. 118 but it did not give him possession of the yacht. Although the yacht was subject to the control of Customs it was not in the possession of Customs. The issue of the clearance did not operate as a delivery of possession of the yacht from Customs to Matsushita. He and his companions already had possession. The plaintiff was subsequently excluded from possession but that was by act of Matsushita and his companions, not by act of the Customs.

The plaintiff relies on the decision in Hiort v. Bott [1] , where the plaintiffs by mistake sent barley to the defendant with an invoice and delivery order. The defendant indorsed the delivery order to G., intending that the goods be returned to the plaintiffs. But G. collected the barley from the railway company and made away with it. The defendant was held liable in conversion because he had transferred title to possession of the goods so as to cause them to be lost to the true owner.

Here, however, so it seems to me, the issue of the certificate of clearance did not amount to a transfer of title to possession. It did not disturb the existing possession or the rights of the plaintiff and Matsushita to possession. Even if the issue of the certificate were to be regarded as a transfer by the Customs to Matsushita of a right or title to possession, it was, unlike the transfer to the malefactor in Hiort v. Bott [1] , a transfer to a person who as co-owner and co-adventurer was entitled to possession. The deprivation sustained by the plaintiff was his exclusion from possession which was effected, not by issue of the certificate, but by the action of his companions in sailing the boat away.

The plaintiff's reliance on the special action on the case is based on Beaudesert Shire Council v. Smith [2] , and the statement contained in the judgment of the Court [3] :

independently of trespass, negligence or nuisance but by an action for damages upon the case, a person who suffers harm or loss as the inevitable consequence of the unlawful, intentional and positive acts of another is entitled to recover damages from that other. The case has been much discussed in the light of recent decisions of the House of Lords in which it has been held, after a consideration of some of the cases on which the High Court judgment was based, that a person who suffers economic loss as the result of an unlawful act intended to cause harm can recover damages against the wrongdoer (see Rookes v. Barnard [1] ; J. T. Stratford & Son Ltd. v. Lindley [2] ). There is no point in my discussing this development in the law. The Beaudesert Case [3] is binding on me and the question is whether the present facts fall within the principle which it enunciated. 1. (1966) 120 C.L.R. 145. 2. (1966) 120 C.L.R., at p. 156. 3. [1964] A.C. 1129. 4. [1965] A.C. 269. 5. (1966) 120 C.L.R. 145.

Neither the decision nor the principle as it was expressed turns on the existence of an intention on the part of the defendant to cause harm to the plaintiff. It is enough to found liability, provided that the other elements are present, that the act is intentional and its inevitable consequence is to cause loss to the plaintiff. This is made clear by the Court's reference to the remarks of Bowen L.J. in Mogul Steamship Co. Ltd. v. McGregor, Gow & Co. [4] :

intentionally to do that which is calculated in the ordinary course of events to damage, and which does, in fact, damage another in that other person's property or trade, is actionable if done without just cause or excuse. 1. (1889) 23 Q.B.D. 598, at p. 613.

Even so, in my view the facts as I have found them do not come within the scope of the principle. Granted that the issue of the certificate of clearance was an intentional, unlawful (because it contravened s. 122) and positive act, nevertheless the plaintiff did not suffer loss as an inevitable consequence of its issue. It may be that the plaintiff's loss (deprivation of possession of the yacht) was a consequence of the issue of the certificate to Matsushita but it was not a consequence which was "inevitable". Nor was the issue of the certificate of itself an act which was "calculated in the ordinary course of events to damage" and which did in fact. In the Beaudesert Case [3] it was the plaintiff's intentional act in removing gravel which destroyed the plaintiff's waterhole thereby preventing the exercise of his rights under his licence. Here it cannot be said that the defendant intended that which brought about the plaintiff's loss, namely, his exclusion by his companions from possession of the yacht. Certainly the defendant intended that the certificate should issue, but that act did not deprive the plaintiff of possession.

The Beaudesert Case [3] acknowledges that account must be taken of the limitations which have been placed on the action for damages for breach of statutory duty. It was conceded by Mr. Handley for the plaintiff that no civil cause of action lies on the statute for breach of s. 122. It seems to me that for the plaintiff to succeed in his special action on the case he must show something more than a mere breach of the statute and consequential damage; he must show something over and above what would ground liability for breach of statutory duty if the action were available. As I see the case, he has not succeeded in showing that the act was tortious (and not merely a contravention of the statute), that its inevitable consequence was to cause damage to the plaintiff, or that there was an intention to cause harm to the plaintiff.

The findings of fact are fatal to the cause of action in negligence which the plaintiff set out to make, and to the case which he formulated at the conclusion of the evidence. The case then formulated was predicated on an acceptance of the plaintiff's evidence as to the events alleged to have occurred on the afternoon of 26th August. It was then urged that in view of the conflicting claims made by the plaintiff and Matsushita and the difficulty of determining who was master and who was owner of the yacht, the Customs should have declined to issue a certificate of clearance at all and left the parties to resolve the dispute in legal proceedings in the Supreme Court of the Northern Territory. The argument overlooks the circumstance that the collector has a duty to issue a certificate once application is duly made, the requirements of ss. 119 and 122 have been satisfied and he believes them to have been satisfied (Zachariassen v. The Commonwealth, per Barton, Issacs and Rich JJ. [1] ). Indeed, the certificate is to issue promptly, within twenty-four hours (see s. 119 (2)). Although an export licence had not been granted, the collector had it within his power to grant the licence as an export licensing officer and there was no reason why it should not have been granted. Matsushita had presented the necessary documents; it was then for Customs to issue the export licence and the clearance.

It is implicit in the plaintiff's case that had he instituted proceedings in the Supreme Court against Matsushita and the other crew members he would have obtained an interlocutory injunction restraining them from sailing the yacht away. His failure to take proceedings was a self-inflicted wound, as he had known for some days that the others might leave without him. That apart, I think it unlikely that the plaintiff would have succeeded. The yacht was a foreign vessel, entirely foreign owned; it was on a voyage of circumnavigation having as its destination the home port in Japan. The voyage was undertaken as a joint venture by the four members of the crew (who were also co-owners), it having been agreed that Matsushita would be commander for the voyage. In deciding to return to Japan, Matsushita had the support of the majority of the crew, and in my view his judgment that the voyage of circumnavigation should be terminated was soundly based. In these circumstances it is improbable that a court would have restrained the yacht from returning to Japan or restrained Matsushita from acting as its master.

I need not refer to the statutory cause of action based on s. 34 of the Act as it was acknowledged on behalf of the plaintiff that if he is unsuccessful on the other causes of action he cannot succeed in an action based on the words of s. 34.

It is unnecessary to consider the issue of damages which I had directed to be heard as a separate issue.

In the result there will be judgment for the defendant in the action.

1974, Aug. 22 McTiernan, Menzies, Gibbs and Stephen JJ.

Because the appellant has appeared in person all members of the Court have read the reasons of the learned trial judge several times and have ourselves considered them more critically than we might do in a case where argument is presented by counsel on both sides.

We are of opinion that his Honour's judgment is right and we would not desire to add anything to his Honour's reasons. His Honour's judgment deals fully with all the circumstances in a way satisfactory to the Court.

For these reasons we would dismiss this appeal with costs and the costs will include the costs of the interlocutory matter.

At a glance

Court

Decision date

Before

Source

Judgment (76 paragraphs)

Parties