Laemthong International Lines Co Ltd v BPS Shipping Ltd

High Court of Australia|1997-12-09|Before: Brennan CJ, Kirby JJ, Kearney J

High Court of Australia Brennan CJ Toohey, Gaudron, Gummow and Kirby JJ Laemthong International Lines Co Ltd v BPS Shipping Ltd [1997] HCA 55

By a voyage charterparty of 12 May 1995 entered into by the appellant (Laemthong) as charterer and the respondent (BPS) as disponent owner, Laemthong chartered the vessel Nyanza to carry a cargo of bagged rice from Bangkok in Thailand to Nouakchott in Mauritania. BPS alleges that Laemthong, in breach of its contractual obligation, failed to fumigate the cargo and, in consequence, the cargo was infested with beetles. This resulted in the arrest of the Nyanza in Nouakchott whereby BPS alleges that it suffered a loss of $1,833,285.

Subsequently, the Laemthong Pride, a vessel owned by Laemthong, arrived in Darwin. To enforce its claim in relation to Laemthong's charter of the Nyanza, BPS commenced proceedings in rem against the Laemthong Pride in the Supreme Court of the Northern Territory, invoking the jurisdiction of that Court under the Admiralty Act 1988 Cth (the Act). Kearney J ordered the arrest (or, rather, the re-arrest) [1] of the Laemthong Pride on 24 October 1995. An appeal to the Court of Appeal of the Northern Territory was dismissed.

The Laemthong Pride had been released after an earlier arrest and its re-arrest was ordered pursuant to s 21 of the Act.

The jurisdiction that is invoked to support proceedings in rem against the Laemthong Pride is to be found in s 19 of the Act which, with its headnote, reads as follows:

A proceeding on a general maritime claim concerning a ship may be commenced as an action in rem against some other ship if:

(a) a relevant person in relation to the claim was, when the cause of action arose, the owner or charterer of, or in possession or control of, the first-mentioned ship; and

(b) that person is, when the proceeding is commenced, the owner of the second-mentioned ship.

The grant of special leave to appeal to this Court was limited to the question whether the Laemthong Pride was a surrogate ship for the Nyanza within the meaning of the Act. It will be noted that the term "surrogate ship" does not appear in the text of s 19, only in the heading.

On the appeal, the substantive question that was argued was the meaning of the term "charterer" in par (a) of s 19. The appellant contended that, as a mere voyage charterer rather than an "owner-type" charterer of the Nyanza, it was not a "charterer" within the meaning of par (a) of s 19. I am in general agreement with the reasons for judgment of Gaudron, Gummow and Kirby JJ for rejecting this argument, but I would state my own reasons for rejecting an argument based on the statutory definition of the term "surrogate ship" in s 3(6) of the Act.

(a) a proceeding on a maritime claim may be commenced against a ship under a provision of this Act (other than section 19); and

(b) under section 19, a proceeding on the claim may be commenced against some other ship;

the other ship is, in relation to the claim, a surrogate ship. Laemthong submitted that, unless the Laemthong Pride satisfied the definition of surrogate ship in s 3(6), s 19 had no application. There are two answers to that submission. The first is that the term "surrogate ship" does not appear in s 19 and none of the terms in the text of that section takes its meaning from s 3(6). Indeed, to treat the term "some other ship" in s 19 as defined by s 3(6) is to treat an element in the definition as the thing to be defined. It is only by reference to s 19 that par (b) of s 3(6) can be understood. The second answer is that the definition in s 3(6) has a significant role to play in the meaning and operation of other sections of the Act in which the term "surrogate ship" appears, namely, ss 20(4) and 35.

Paragraph (a) of s 3(6) contains two elements: a maritime claim and a proceeding on such a claim otherwise than under s 19. Maritime claims made otherwise than under s 19 can be made under s 15, 16, 17 or 18. Each of these sections provides for a proceeding on a claim to be commenced against a ship, being the ship "in respect of" which (s 15) or "concerning" which (ss 16, 17, 18) the claim is made. I refer to that ship as "the first ship". Then s 19 provides for the commencing of proceedings on certain claims against what may be termed "the second ship". That is the provision to which par (b) of s 3(6) relates. By that paragraph, an element of the definition of "surrogate ship" is that "the claim" to which par (a) refers may be commenced against the second ship under s 19. The only kind of claim which can be commenced against a second ship under s 19 is a "general maritime claim". That is a discrete sub-class of "maritime claim", different from the other sub-class of "proprietary maritime claim": s 4. Thus a surrogate ship is a ship against which a proceeding can be commenced under s 19 on a general maritime claim which can be commenced against a first ship under s 15, 17 or 18, but not under s 16 (which is confined to proprietary maritime claims).

Section 20(3), however, prohibits the arrest of more than one ship in a proceeding under the last-mentioned sections. Section 20(3) provides:

Where a ship has been arrested in a proceeding commenced as mentioned in section 15, 17, 18 or 19, no other ship shall be arrested in the proceeding unless the first-mentioned ship:

(a) was invalidly arrested and has been released from arrest; or

(b) was unlawfully removed from the custody of the Marshal and the Marshal has not regained custody of the ship.

A qualification or, arguably, a clarification of the operation of sub-s (3) of s 20 is contained in sub-s (4): Where:

(i) a claim on a maritime lien or other charge; and

(b) the person has commenced a proceeding under section 19 against a surrogate ship;

subsection (3) does not prevent the arrest of the first-mentioned ship in a proceeding on the maritime lien or other charge if the amount recovered by the person in the proceeding commenced under section 19 is less than the amount of the claim on the maritime lien or other charge. The definition of surrogate ship in s 3(6) facilitates the drafting of a provision that protects the security given to the maritime lienee or chargee who first obtains the arrest of a second ship under s 19 but who, failing to recover the amount secured, seeks to recover the shortfall by arresting the first ship under s 15.

Section 35(1) deals with the situation where proceedings on general maritime claims have been commenced either under s 19 or under s 15, 17 or 18 and a surrogate ship is arrested and sold. Section 35(1) reads:

(a) a proceeding in respect of a general maritime claim concerning a ship has been commenced under this Act against a surrogate ship; or

(b) in relation to a proceeding commenced under this Act concerning a ship, a surrogate ship has been arrested;

the order in which general maritime claims against both the ships shall be paid out of the proceeds of the sale of the surrogate ship shall be determined as if all the claims were general maritime claims against the surrogate ship. Section 35(1) provides for the priority to be observed in the payment of general maritime claims against the first and surrogate ships out of the proceeds of sale of the surrogate ship. The definition of surrogate ship in s 3(6) avoids the need to incorporate the provisions of s 19 in the drafting of s 35(1).

The definition of surrogate ship in s 3(6) is thus reserved for use in cases where a general maritime claim can be enforced against one ship under s 15, 17 or 18 or against a second ship under s 19. But it is not a condition of the operation of s 19 that the claim on which proceedings under that section are commenced is a claim in rem on which proceedings could be commenced under s 15, 17 or 18. Section 19 is enacted to give a remedy in rem against the "relevant person" who is defined (s 3) to be a person who would be liable on a maritime claim in an action in personam. So construed, s 19 accords with the policy embraced by the Australian Law Reform Commission as stated in its report Civil Admiralty Jurisdiction [2] on which the Act was based:

The appropriate rule is one which, as an alternative to allowing an action in rem to be commenced against the wrongdoing ship, allows such an action against a ship owned by the relevant person even though this person is not the owner of the wrongdoing ship. This will occasionally allow an action against a surrogate ship even where there could be no action against the wrongdoing ship. The most obvious examples are where the wrongdoing ship has sunk or been sold (where there is no droit de suite). But another case would be where the claim is by an owner against someone using the owner's ship on a time or voyage charter. In such a case the owner has already got possession of his own ship, but he could, under the recommended provision, proceed against any other ship owned by the defendant. (Emphasis added.) 1. ALRC 33 (AGPS, Canberra, 1986), p 156.

That is the present case. I would dismiss the appeal.

This is an appeal from the Court of Appeal of the Northern Territory which granted the appellant leave to appeal from a decision of Kearney J but dismissed the appeal [3] .

Laemthong International Lines Co Ltd v BPS Shipping Ltd (1995) 5 NTLR 59

The order granting special leave to appeal to this Court was limited to

that part of the judgment and order of the Court of Appeal of the Northern Territory dealing with the question of whether the Laemthong Pride was a surrogate ship for the Nyanza within the meaning of the Admiralty Act 1988 (Commonwealth).

The term "surrogate ship" appears in s 3(1) of the Admiralty Act 1988 Cth (the Act), the interpretation provision. It is declared by that sub-section to have "the meaning given by subsection (6)". That sub-section reads:

(a) a proceeding on a maritime claim may be commenced against a ship under a provision of this Act (other than section 19); and

(b) under section 19, a proceeding on the claim may be commenced against some other ship;

the other ship is, in relation to the claim, a surrogate ship.

Section 19 carries the heading: "Right to proceed in rem against surrogate ship." The heading is not part of the Act [4] ; it can however be used as extrinsic material if capable of assisting in the ascertainment of the meaning of the section in limited circumstances [5] . The section reads:

A proceeding on a general maritime claim concerning a ship may be commenced as an action in rem against some other ship if:

(a) a relevant person in relation to the claim was, when the cause of action arose, the owner or charterer of, or in possession or control of, the first-mentioned ship; and

(b) that person is, when the proceeding is commenced, the owner of the second-mentioned ship.

Acts Interpretation Act 1901 Cth, s 13(3). 2. Acts Interpretation Act 1901 Cth, s 15AB.

In Owners of Shin Kobe Maru v Empire Shipping Co Inc [6] the Court noted that the Act reproduces the substance of draft legislation prepared by the Australian Law Reform Commission as part of its 1986 report, Civil Admiralty Jurisdiction (the Report) and that one object of the draft legislation was "to strike a balance between following the English legislation and seeking to clarify and simplify the law". This is a reference to the Supreme Court Act 1981 UK which relevantly gave effect to the Brussels Convention 1952 [7] . Australia, however, is not a party to the Convention.

(1994) 181 CLR 404 at 416-417. 2. International Convention Relating to the Arrest of Seagoing Ships (Brussels) 1952.

Against that background and before considering the legislation in further detail, something needs to be said of the circumstances giving rise to the appeal. It is common ground that the respondent was the disponent owner of the vessel Nyanza [8] . On 12 May 1995 the parties entered into an agreement for the appellant to charter the Nyanza to carry bagged rice from Bangkok to Mauritania. On 13 August 1995 the appellant acquired the Laemthong Pride [9] . On arrival in Mauritania the Nyanza was arrested when its cargo was found to have become infected with a species of beetle. The respondent claimed against the appellant the sum of $1,833,285 plus interest and costs, later adding a claim for demurrage and deadfreight charges [10] . The basis of the claim was breach of an implied term of the charterparty that the cargo would be properly fumigated.

The term "disponent owner" is defined in Sullivan, The Marine Encyclopaedic Dictionary, 4th ed (1995), p 135 as "A person or company who controls the commercial operation of a ship, responsible for deciding the ports of call and the cargoes to be carried". 2. The precise circumstances surrounding the ownership of the Laemthong Pride prior to 13 August 1995 are somewhat obscure but it is common ground that the appellant was its owner when proceedings were commenced by the respondent against the appellant in the Supreme Court of the Northern Territory. 3. Deadfreight is described in Davies and Dickey, Shipping Law (1990), p 172 as damages for breach of the charterer's obligation to load a full and complete cargo.

On 16 October 1995 the respondent commenced proceedings in rem against the appellant in the Supreme Court of the Northern Territory and obtained the arrest of the Laemthong Pride pursuant to s 19 of the Act. On 19 October Kearney J ordered the discharge of the warrant of arrest and the release of the Laemthong Pride. On 24 October Kearney J ordered the re-arrest of the ship pursuant to s 21 of the Act which permits such a course for sufficient reason. The appellant's challenge to the order of Kearney J was dismissed by the Court of Appeal.

Because of the limits placed by the Court on the grant of special leave to appeal, it is unnecessary to consider any aspect of the rearrest other than the status of the Laemthong Pride as a surrogate ship. In particular, the appellant did not challenge the exercise of discretion implied in making an order for rearrest. The question for this Court is whether or not s 19 applied in the circumstances so as to justify the order for re-arrest.

In the circumstances in which the matter came before this Court, there is a question whether the appellant was, when the cause of action arose, "the owner or charterer of, or in possession or control of" the Nyanza, the language of s 19(a). Section 4(3) of the Act identifies a number of claims which answer the description of a general maritime claim, an essential element of s 19. It is unnecessary to set out the considerable list in the sub-section. The appellant accepted that the respondent had a "general maritime claim" within s 4(3) of the Act and that, in terms of s 19, this was a claim "concerning a ship". And the appellant did not really challenge that it was, in terms of s 19(a), "a relevant person" [11] . The appellant's argument was that, at the relevant time, it was not the owner, charterer of or in possession or control of the Nyanza. Given that there was a voyage charter under which the appellant was to use the Nyanza for carriage of bagged rice, it might be thought that the appellant was indeed the charterer of the ship.

"Relevant person" is defined by s 3(1) to mean, in relation to a maritime claim, "a person who would be liable on the claim in a proceeding commenced as an action in personam".

The appellant's answer was that the word "charterer" should be read in the context which is set by the words immediately preceding and following it in s 19. According to the argument, the charterer must be a disponent owner, possessing power to control the commercial operation of a ship and responsible for deciding the ports of call and the cargoes to be carried. Relevantly, this amounts to saying that there must be a demise charter and that a voyage charter does not satisfy the requirements of s 19. In the appellant's submission, it was the respondent which had possession or control of the Nyanza.

The submission must be rejected. Whether this approach is based, as the appellant claims, upon the maxim ejusdem generis or perhaps more appropriately upon the maxim noscitur a sociis, the approach involves construing particular words by reference to some common feature [12] . Any such approach must be applied with care [13] . The appellant would give to the word "charterer" in s 19(a) a narrower meaning than it properly bears in the provision. This conclusion rests on several foundations. To begin with, "possession or control" cannot be a common feature in the paragraph because an owner may well be out of possession. More importantly, s 18 of the Act, which deals with the right to proceed in rem against a ship, makes express reference to "a demise charterer" in par (b) while par (a) speaks more generally of "charterer" [14] . Indeed, s 18(a) uses the language of s 19(a). Why then should "charterer" be given the same meaning when it does and when it does not use the qualification?

Pearce and Geddes, Statutory Interpretation in Australia, 4th ed (1996), pp 98-104. 2. Houssein v Under Secretary of Industrial Relations and Technology (NSW) (1982) 148 CLR 88 at 94 3. Section 17, which deals with the right to proceed in rem in respect of a ship or property, uses in par (a) the same language as in s 18(a) but in par (b) refers to "the owner of the ship or property".

A demise charterparty is one in which the charterer has possession and control of the ship.

"Most commonly charterparties are made for the purpose of securing to the charterer the use merely of the ship on a particular voyage or series of voyages. He does not desire to interfere with the manner in which she is to be navigated, nor is the shipowner willing to part with his control over her Contracts in which the possession of the ship is handed over to the charterer are very much less frequent. But they are at times made. A recent dictum that "a demise charterparty has long been obsolete" is not true. Occasionally charterparties are made in such doubtful shapes that it is difficult to tell whether, in fact, the possession does or does not pass to the charterer." [15] (footnote omitted) 1. Carver's Carriage by Sea, 13th ed (1982), vol 1, pp 410-411.

The respondent accepted the proposition that it was under a voyage charter that the appellant obtained the use of the Nyanza. It is therefore unnecessary to refer to the terms of the charter in any detail.

The term charter has a number of possible connotations such as voyage charter, time charter, slot charter or subcharter. Nevertheless the usual distinction made is between a voyage charter and a demise charter. Since the legislation has chosen to refer expressly to the latter in s 18(b) but to speak generally of charterer in s 18(a) and s 19, the conclusion is inevitable that no limitation was intended in the latter provisions.

At this point it is useful to refer to the Report where it is said (par 128):

It is clear that a statutory right of action should be able to be brought where the owner of the wrongdoing ship is the relevant person. The question is should it be possible to commence proceedings in rem against a wrongdoing ship where its owner is not the relevant person.

In canvassing the possibility of whether the "long-standing status quo" (par 129) right to proceed in rem against an owner liable in personam [16] should be extended to a "demise charterer" the Report observed (par 131):

One difficulty is explaining why the extension should apply only to demise charterers The fact that some overseas legislation continues to draw a distinction between demise and other charterers for the purposes of arrest might be thought not to be a sufficient reason for Australia to do likewise, especially when such a distinction is not made in the 1952 Arrest Convention. In examining the different possibilities of extending the right in rem, the Report had regard to numerous arguments and submissions which it is not necessary to refer to here. It is sufficient to mention the reference to the fact that the "provisions of the Supreme Court Act 1981 UK which provide for an action in rem with respect to demise charterers' liabilities have been said to be working well and resolving most difficulties" (par 136). The Report continued: For these reasons a statutory right of action in rem with respect to any claim should only be able to be brought where, when the action is commenced, the owner or a demise charterer of the ship is a relevant person in respect of the claim. 1. See, eg, Shell Oil Co v The Ship Lastrigoni (1974) 131 CLR 1 at 6, per Menzies J.

The Act differentiates between the cases of "owner" and "demise charterer" in ss 17 and 18. As has been mentioned, however, s 18 refers in par (a) to "charterer". Although neither the Report nor Explanatory Memorandum accompanying the Bill which became the Act makes reference to the reason for par (a) in ss 17 and 18, its purpose can be surmised. By providing that the "relevant person" need not be the "owner" or "demise charterer" for the purposes of those sections, until the "proceeding is commenced" [17] , the Act contemplates the possibility of a cause of action arising in personam against a person who may be a charterer (in the sense of voyage charterer) or in possession or control (but not an owner or demise charterer). Although at that time the cause of action could not be taken as an action in rem against the ship concerned, if at the time proceedings are instituted the voyage charterer has become either an owner or demise charterer, such an action may be commenced.

This is defined in s 3(2) as "a reference to the time when the initiating process in relation to the proceeding is filed in, or issued by, a court".

The Act is not free from difficulty. Section 3(6) does not so much define "a surrogate ship" as identify the circumstances in which a ship answers that description. But it is not a legitimate exercise of statutory interpretation to apply the description to the heading to s 19 and then somehow construe s 19 by reference to s 3(6). Section 19 prescribes the conditions in which an action in rem may be commenced against a ship, other than the ship against which a general maritime claim exists. The term "surrogate ship" appears in s 20(4) but in a context where s 19 is acknowledged. It appears also on four occasions in s 35 which deals with priorities in relation to the proceeds of the sale of such a ship, but not in any way that affects the requirements of s 19. The term does not appear elsewhere in the Act. The use of the term cannot obscure the operation of s 19 which is the source of power to proceed against some other ship.

The appellant had a second string to its bow though it was by no means clear whether it was in amplification of the argument that charterer in s 19 is a reference to a demise charterer only or whether it was an independent argument. In any event, the argument looked to s 3(6) and contended that if s 19 is dealing with a surrogate ship, s 3(6) requires that there be a proceeding on a maritime claim against one ship and a proceeding under s 19 on that claim against some other ship. In the present case there was no proceeding except against "some other ship". The short answer to this argument has already been foreshadowed. It is that s 3(6) cannot control the plain language of s 19 and that in the present case the conditions of s 19 were met.

In this regard, confirmation may be found in the Report, par 205 which refers to a rule which will "occasionally allow an action against a surrogate ship even where there could be no action against the wrongdoing ship". An illustration offered is "where the claim is by an owner against someone using the owner's ship on a time or voyage charter. In such a case the owner has already got possession of his own ship, but he could, under the recommended provision, proceed against any other ship owned by the defendant".

The appellant made an appeal to authority, in particular to the dissenting judgment of Donaldson LJ in The "Span Terza" [18] as it was applied by his Lordship in The Evpo Agnic [19] . However the weight of contrary authority which does not confine the word charterer to demise charterer where the qualification is not used is formidable [20] .

[1982] 1 Lloyd's Rep 225. 2. [1988] 1 WLR 1090; [1988] 3 All ER 810. 3. See The "Span Terza" [1982] 1 Lloyd's Rep 225 at 227, per Sir David Cairns; at 231, per Stephenson LJ; The "Sextum" [1982] 2 Lloyd's Rep 532 at 534, per Penlington J; Reef Shipping v The Ship Fua Kavenga [1987] 1 NZLR 550 at 567, per Smellie J; The "Permina 108" [1978] 1 Lloyd's Rep 311 at 314, per Jin CJ.

This appeal is brought from the Court of Appeal of the Northern Territory [21] . Special leave was granted to determine an issue with respect to the construction of s 19 of the Admiralty Act 1988 Cth (the Act). Section 19 permits, in certain circumstances, the commencement of a proceeding on a general maritime claim concerning a ship as an action in rem against another ship. Before turning to the text of s 19, the following general observations concerning the nature and operation of the Act, with reference to this litigation, should be made.

Laemthong International Lines Co Ltd v BPS Shipping Ltd (1995) 5 NTLR 59

The Act reproduces the substance of draft legislation prepared by the Australian Law Reform Commission (the Commission) for its 1986 report, Civil Admiralty Jurisdiction [22] (the Report). The Commission recognised that there was broad recognition of the need for reform and that Australian interests were best served by a widening of admiralty jurisdiction [23] .

Report No 33. 2. See Owners of Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404 at 416-417

The previous history of the Court of Admiralty in England was detailed by Lord Denning MR in The Banco [24] . His Lordship said:

Long years ago, in the seventeenth and eighteenth centuries, the ordinary mode of commencing a suit in Admiralty was by arrest, either of the person of the defendant or of his goods. Not only could the offending ship be arrested, but the other ships of the defendant could be arrested also, and any other goods that belonged to him, so long as they were within the jurisdiction. The object was so as to make the defendant put up bail or provide a fund for securing compliance with the judgment, if and when it was obtained against him: see Clerke's Praxis Curiae Admiralitatis [25] quoted in The Dictator [26] ; and the Selden Society's Select Pleas in the Court of Admiralty [27] . In this respect the Court of Admiralty in those days exercised a jurisdiction which obtained in foreign countries too, and still prevails in many of them today.

The courts of common law were, however, jealous of the jurisdiction of the old Court of Admiralty and issued prohibitions against it. They succeeded in cutting down its jurisdiction a great deal. So much so that its jurisdiction in rem to arrest goods became limited to a jurisdiction to arrest the offending ship itself.

The Master of the Rolls went on to deal with the operation of the Administration of Justice Act 1956 Eng, stating that it was passed to give effect to the International Convention Relating to the Arrest of Seagoing Ships 1952 (the Brussels Convention) [28] . Speaking of the Brussels Convention, his Lordship said [29] : It was held because of the different rules of law of different countries about the arrest of seagoing ships. Some countries, like England, did not permit the arrest of any ship except the offending ship herself: whereas many continental countries permitted the arrest, not only of the offending ship, but also of any other ship belonging to the same owner. In the result a middle way was found. It was agreed that one ship might be arrested, but only one. It might either be the offending ship herself or any other ship belonging to the same owner: but not more. This was an advantage to plaintiffs in England because it often happened previously that, after a collision, the offending ship sank or did not come to these shores. So there was nothing to arrest. Under the [Brussels] Convention the plaintiff could arrest any other ship belonging to the same owner whenever it happened to come to England. Unlike the United Kingdom, Australia is not a party to the Brussels Convention. 1. [1971] P 137 at 150. 2. Simpson (1743). 3. [1892] P 304 at 311. 4. (1894), vol 1, p lxxi. 5. 439 UNTS 193. 6. The Banco [1971] P 137 at 151.

With exceptions not presently material, s 5(1) of the Act states that the Act applies in relation to all ships, irrespective of the places of residence or domicile of their owners and to all maritime claims wherever arising. The term "maritime claim" is a reference either to a proprietary maritime claim or a general maritime claim (s 4(1)). These expressions are given further meaning respectively in s 4(2) and s 4(3) of the Act.

A reference in the Act to a proprietary maritime claim is a reference to any of the matters listed in pars (a)-(d) of s 4(2). They include claims relating to possession of a ship, title to or ownership of a ship or a share in a ship, and a claim between co-owners relating to possession, ownership, operation or earnings of a ship. A reference in the Act to a general maritime claim is a reference to any of the claims listed in pars (a)-(w) of s 4(3). Paragraphs (d), (e) and (f) provide as follows:

(d) a claim (including a claim for loss of life or personal injury) arising out of an act or omission of:

(ii) a person in possession or control of a ship; or

(iii) a person for whose wrongful acts or omissions the owner, charterer or person in possession or control of a ship is liable;

being an act or omission in the navigation or management of the ship, including an act or omission in connection with:

(iv) the loading of goods on to, or the unloading of goods from, the ship;

(v) the embarkation of persons on to, or the disembarkation of persons from, the ship; and

(e) a claim for loss of, or damage to, goods carried by a ship;

(f) a claim arising out of an agreement that relates to the carriage of goods or persons by a ship or to the use or hire of a ship, whether by charterparty or otherwise.

Jurisdiction is conferred on the Supreme Court of the Northern Territory, and upon other courts, in respect of proceedings commenced both as actions in personam (s 9) and as actions in rem (s 10). In the case of the Supreme Court of the Northern Territory, initiating process in a proceeding commenced as an action in rem may be served on a ship at any place within the Northern Territory, including a place within the limits of the territorial sea of Australia that is adjacent to that Territory (s 22(2)(b)) [30] . In such a proceeding in rem, a ship may be arrested at any place within Australia, including a place within the limits of the territorial sea of Australia (s 22(3)).

Where the arrest of a "foreign ship" (defined by s 3(1) of the Act to mean a ship that is not registered, and is not permitted to be registered, under the Shipping Registration Act 1981 Cth) would be inconsistent with a right of innocent passage that is being exercised by the ship, the Act does not authorise the service of process on that ship (s 22(4)). No such question arises in the present case.

There was before the Court of Appeal an application pursuant to s 53 of the Supreme Court Act 1979 NT for leave to appeal from an order made on 24 October 1995 by a judge of the Supreme Court (Kearney J) for the rearrest of the ship Laemthong Pride. By reason of circumstances which it is unnecessary to narrate, the order was made by Kearney J under s 21 of the Act. This provides for rearrest in a proceeding on a maritime claim whether because default has been made in the performance of a guarantee or undertaking given to procure the release of the ship from the earlier arrest or, as is the case here, "for some other sufficient reason". The Court of Appeal granted leave but dismissed the appeal. At the hearing of the application for special leave, this Court was informed that on the provision of security the Laemthong Pride was released. However, the issue remains whether the order for rearrest was properly made.

For the determination of the issue in this Court, certain facts are to be taken as not in dispute. At all material times, BPS Shipping Ltd (the respondent) was the disponent owner [31] , and accordingly either demise or time charterer, of the vessel Nyanza. On 12 May 1995 the respondent in turn entered into a charterparty agreement with Laemthong International Lines Co Ltd (the appellant) for the carriage of a full and complete cargo of bagged rice from Bangkok in Thailand to the port of Nouakchott in Mauritania. The appellant was shown as having its place of business in Bangkok and the respondent's place of business was given as London. The agreement answered the description of a voyage charter under which, as voyage charterer, the appellant obtained the use of the Nyanza to carry a full cargo on a single voyage during which it did not man or navigate the ship [32] . The form used for the voyage charter was that which was recommended by the Baltic and International Maritime Conference, as revised in 1922 and 1976, and which has the codename "Gencon" [33] . The respondent claimed that it was an implied term of the charterparty that the appellant as voyage charterer of the Nyanza would undertake proper fumigation of the cargo. The breach alleged was the failure on 8 July 1995 at Bangkok to ensure proper fumigation, an omission which led to the infestation of the cargo by a species of beetle. The result of the infestation was that the Nyanza was arrested at Nouakchott, thereby causing loss and damage to the respondent, including costs associated with obtaining the release of the ship. The respondent subsequently applied for a warrant for the arrest of the Laemthong Pride as surrogate for the vessel Nyanza. The warrant was initially issued on 16 October 1995 but was discharged on 19 October 1995. This litigation arises from the application by the respondent for a warrant for the re-arrest of the Laemthong Pride.

"Disponent owner" is defined in Brodie, Dictionary of Shipping Terms, 2nd ed (1994), p 60, as a "[p]erson or company who controls the commercial operation of a ship, responsible for deciding the ports of call and the cargoes to be carried. Very often, the disponent owner is a shipping line which time charters a ship and issues its own liner bills of lading". 2. Gilmore and Black, The Law of Admiralty, 2nd ed (1975), par 4.1; Colinvaux, Carver's Carriage by Sea, 13th ed (1982), vol 1, pars 410-411, 416-417. 3. See Schoenbaum, Admiralty and Maritime Law, 2nd ed (1994), vol 2, par 11.4, where this is described as the most widely used voyage charterparty.

A proceeding on a general maritime claim concerning a ship may be commenced as an action in rem against some other ship if:

(a) a relevant person in relation to the claim was, when the cause of action arose, the owner or charterer of, or in possession or control of, the first-mentioned ship; and

(b) that person is, when the proceeding is commenced, the owner of the second-mentioned ship.

The term "relevant person" is defined in s 3(1) as meaning, in relation to a maritime claim, "a person who would be liable on the claim in a proceeding commenced as an action in personam". A reference in the Act to the time when a proceeding is commenced is a reference to the time when the initiating process is filed in, or issued by, a court (s 3(2)). This case turns upon the construction of s 19 but that process of construction involves the consideration of ss 17 and 18, among other provisions.

It is accepted, for the purposes of this appeal, that the respondent had "a general maritime claim" within the meaning of s 4(3) of the Act and that, within the meaning of s 19, this was a general maritime claim "concerning a ship" [34] , namely the Nyanza. At the time when the proceeding was commenced in the Supreme Court, the appellant was the owner, within the meaning of s 19(b) of the Act, of the vessel Laemthong Pride. It was against this ship that the respondent commenced the proceeding in the Supreme Court as an action in rem. It was common ground that, in respect of the respondent's maritime claim, no action in rem could have been properly commenced against the Nyanza.

cf The Eschersheim [1976] 1 WLR 430 at 436-438; [1976] 1 All ER 920 at 925-926.

In a matter of Admiralty or maritime jurisdiction, a proceeding shall not be commenced as an action in rem against a ship except as provided by the Act (s 14). An action in rem may be commenced on a proprietary maritime claim concerning a ship (s 16). Rights to proceed in this way are also conferred in respect of maritime liens or other charges in respect of the ship (s 15). In certain circumstances a proceeding on other general maritime claims may be commenced as an action in rem. These circumstances are specified in ss 17, 18 and 19. In all of them, a "relevant person", meaning a person who would be liable on the claim in a proceeding commenced as an action in personam, must bear, when the proceeding is commenced (par (b)), a specified relationship to the ship against which the in rem action lies. In the case of ss 17 and 19, when the proceeding is commenced the relevant person must be the owner of the ship and, for s 18 to apply, the relevant person then must be a demise charterer of the ship. The text of ss 17 and 18 is as follows:

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.

Where, in relation to a maritime claim concerning a ship, a relevant person:

(a) was, when the cause of action arose, the owner or charterer, or in possession or control, of the ship; and

(b) is, when the proceeding is commenced, a demise charterer of the ship;

a proceeding on the claim may be commenced as an action in rem against the ship.

Sections 17 and 18 involve but the one ship, that with which the claim is concerned and that of which the relevant person is owner or demise charterer when the action in rem is commenced. Section 19 involves two ships, that with which the claim is concerned and that against which the action in rem may be commenced.

On 8 July 1995, when the cause of action of the respondent against the appellant arose on the respondent's general maritime claim concerning the Nyanza, the appellant was voyage charterer of the Nyanza. When the proceeding was commenced in the Supreme Court, the appellant was the owner of the Laemthong Pride. The conclusion which found favour in the Supreme Court and the Court of Appeal was that, within the meaning of s 19, the Nyanza was the first-mentioned ship and the Laemthong Pride was the second-mentioned ship against which the proceeding was properly commenced as an action in rem.

The appellant submits that par (a) of s 19 was not satisfied because, when the cause of action arose, it was not the "charterer of the first-mentioned ship". On the face of the statute, the voyage charter, whereby the appellant obtained the use of the Nyanza for carriage of a full cargo of bagged rice from Bangkok to Nouakchott, made it accurate to identify the appellant as charterer of the Nyanza. However, the appellant contends that, in order to answer the description in s 19(a), the charterer must be a disponent owner, responsible for deciding the ports of call and the cargoes to be carried and that, for that purpose, a voyage charter will not suffice. In substance, the submission is that the phrase in par (a) of s 19 "the owner or charterer of, or in possession or control of, the first-mentioned ship" creates a genus the indicium of which is possession or control of the ship in question. The appellant submits that at all relevant times it was the respondent, not the appellant, which had possession or control of the ship.

There are several difficulties in the path of that submission. In part these are presented by the presence of the phrase "the owner or charterer [of], or in possession or control" in par (a) of ss 17 and 18 as well as in par (a) of s 19.

In argument the appellant accepted that a salvor or mortgagee in possession, for the purposes of these provisions, might be "in possession or control" to the exclusion of "the owner" or "charterer". It follows that "possession or control" cannot be the common element in a genus comprising "the owner", "charterer" and "in possession or control".

Rather, the submission has to be that in each of ss 17, 18 and 19, par (a) directs attention to the time when the cause of action arose and requires identification of which of the owner or the charterer or some other person was in possession or control of the ship, there being only one person which can answer the description at any time. However, even with that modification, the submission should not be accepted. The point is illustrated by the decision of the Privy Council in The "Utopia" [35] . There, the owners had not given up their rights to possession of the wreck, but a port authority had assumed control of the wreck. Thus there may be control without possession. Within the meaning of s 19(a), at the same time one party may have possession and another control.

A further difficulty with the construction urged by the appellant is that s 18 uses both the terms "charterer" and "demise charterer" in respect of the one ship but at different points of time. On a fair reading of s 18, "demise charterer" is used as a narrower term than "charterer". It is sufficient for s 18 that, at the time when the cause of action arose, the relevant person was merely a charterer provided that, when the proceeding is commenced, the relevant person is a demise charterer. In those circumstances, a proceeding on a maritime claim concerning the ship may be commenced as an action in rem [36] .

It will be noted that s 18 speaks of "a maritime claim" rather than, as do ss 17 and 19, "a general maritime claim". It was not submitted that anything turned upon this distinction for present purposes.

The heading to s 19 reads "Right to proceed in rem against surrogate ship". However, the term "surrogate ship" does not appear in the text of s 19, the expression used being "the second-mentioned ship". The heading is not part of the Act [37] . However, it is extrinsic material to which regard may be had in certain circumstances [38] . Nevertheless, as will appear, the heading to s 19 is of limited assistance in the construction of that section.

Acts Interpretation Act 1901 Cth, s 13(3). 2. Interpretation Act, s 15AB(1), (2)(a).

The appellant relied upon the use of the term "surrogate ship" in s 3(6) of the Act. This states:

(a) a proceeding on a maritime claim may be commenced against a ship under a provision of this Act (other than section 19); and

(b) under section 19, a proceeding on the claim may be commenced against some other ship;

the other ship is, in relation to the claim, a surrogate ship. It will be observed that par (a) of s 3(6) uses the expression "maritime claim" whereas s 19 uses the narrower term "general maritime claim".

The appellant submitted that the terminology of s 3(6) was critical to the interpretation of s 19. The contention was that the operation of s 3(6) was not to take s 19 and to build upon it for the purposes of provisions of the Act other than s 19 in which a reference is made to a surrogate ship. To the contrary, the submission was that s 3(6) dictated the construction of s 19 itself. The result was said to be that the claim referred to in par (a) of s 19 must answer the criterion in par (a) of s 3(6) of "a maritime claim [which] may be commenced against a ship under a provision of this Act (other than section 19)". The appellant submitted that this requirement was not satisfied because no action could ever have been commenced against the Nyanza by the respondent.

Upon the appellant's construction, a proprietary maritime claim which might be commenced as an action in rem under s 16 would suffice for s 19, but a general maritime claim which might not be pursued by an action in rem against the first ship would not support an action in rem against the second ship. However, that would be to use s 3(6) to contradict the plain terms of s 19. They speak of "a general maritime claim concerning a ship", not a proprietary maritime claim or an action in rem against that first ship.

The expression in s 3(6) "maritime claim" includes a general maritime claim and, if s 17 or s 18 applies, an action upon such a general maritime claim may be commenced as an action in rem against what in s 19 is the first-mentioned ship. However, any construction which stipulated the availability of an in rem claim under s 17 or s 18 as a precondition to the operation of s 19 would unduly restrict the operation of s 19. That provision is not so framed as to contemplate only general maritime claims which might, under another provision, be commenced as an action in rem against the first-mentioned ship and as then to enable that claim also to be brought as a claim in rem against the second-mentioned ship. Section 19 may operate where a general maritime claim concerning a ship may be commenced as an action in rem against the first-mentioned ship, but that is not a requirement of s 19.

The heading to s 19 is of little assistance in construing s 19. It does not render s 3(6) a provision which controls s 19. Rather, s 3(6) directs attention to those provisions of the Act which employ the term "a surrogate ship". Those provisions are found in s 20(4) and s 35. We turn first to consider s 35.

(a) a proceeding in respect of a general maritime claim concerning a ship has been commenced under this Act against a surrogate ship; or

(b) in relation to a proceeding commenced under this Act concerning a ship, a surrogate ship has been arrested;

(2) Subsection (1) applies notwithstanding any other law, including a law of a State or Territory.

Section 35 is concerned with a situation where there are general maritime claims against the two ships. In that sense it proceeds upon the footing indicated in par (a) of s 3(6), namely that in respect of the first ship a proceeding on a maritime claim may be commenced against it. Section 35 then prescribes a system of priorities as to disposition of the proceeds of sale of the surrogate ship. None of this necessarily controls or limits the operation of s 19.

Nor does s 20(4). This operates by way of qualification to s 20(3) which applies where a ship has been arrested in a proceeding commenced on a maritime lien or other charge under s 15 or in a proceeding commenced as mentioned in s 17, 18 or 19. Section 20(3) forbids the arrest of any further ship to that arrested under those sections unless the arrest of the first ship was invalid and there has been a release from the arrest or the ship was unlawfully removed from the custody of the Marshal and the Marshal has not regained custody of the ship. To that prohibition upon arrest of any other ship, s 20(4) supplies a stipulation. This operates where (i) in respect of the first ship a person has the one claim that is both a claim on a maritime lien or other charge and a general maritime claim, and (ii) the person has commenced a proceeding under s 19 against a surrogate ship and the amount recovered in that proceeding is less than the amount of the claim on the maritime lien or other charge. In those particular circumstances, s 20(3) does not prevent the arrest of the first ship. The claim under a maritime lien would found an action against the first ship (s 15). The species of maritime liens listed in s 15(2) are general maritime claims [39] . It follows that par (a) of s 3(6) would be attracted and the second ship would be a surrogate ship if s 19 applied to it.

The species of maritime lien specified in s 15(2) and corresponding or related provisions in the list of general maritime claims in s 4(3) are (a) salvage (s 4(3)(g)); (b) damage done by a ship (s 4(3)(a)); (c) wages of the master, or of a member of the crew, of a ship (s 4(3)(t)(i)); and (d) master's disbursements (s 4(3)(r)).

The appellant's submissions that the operation of s 19 is controlled by s 3(6) should be rejected. Section 19 operates without any necessary engagement of s 3(6). The term "surrogate ship" is involved only where provisions (s 20, s 35) in addition to s 19 are enlivened. Section 20(4) uses the phrase "a proceeding under section 19 against a surrogate ship". It does not speak merely of "a proceeding under s 19", nor of "a proceeding against a surrogate ship". The sub-section is concerned with a particular species of proceeding under s 19, namely that in which both paragraphs of s 3(6) have been satisfied, so that the ship against which the s 19 proceeding is commenced is a "surrogate ship". Likewise, s 35 applies not to any proceeding under s 19 but to a proceeding against a surrogate ship within the meaning of s 3(6).

The appellant submitted that an interpretation of the Act which did not accord with its construction of s 3(6) and s 19 would "result in the concept of the phrase "surrogate ship" or "sistership" being reduced to a meaningless fiction". In dealing with this submission, regard may be had to the Report [40] . The Report makes it clear that the Commission had in mind the situation which has arisen in this case as one to which its recommended legislation would extend. Chapter 10 of the Report (pars 201-216) is headed "Surrogate Ships and Multiple Arrest". In par 205, the following appears:

This consideration of matters extrinsic to the text of the Act further supports the conclusions reached earlier in these reasons as to the proper construction of s 19.

The final support upon which the appellant relied was derived from decisions upon legislation from other jurisdictions. In particular, reference was made to the dissenting judgment of Donaldson LJ in The "Span Terza" [41] and his Lordship's later judgment, as Master of the Rolls, in The Evpo Agnic [42] . The first decision concerned s 3(4) of the Administration of Justice Act 1956 Eng which stated:

In the case of any such claim as is mentioned in paragraphs (d) to (r) of subsection (1) of section One of this Act, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, the Admiralty jurisdiction of the High Court may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against -

(a) that ship, if at the time when the action is brought it is beneficially owned as respects all the shares therein by that person; or

(b) any other ship which, at the time when the action is brought, is beneficially owned as aforesaid. (Emphasis added.)

In The "Span Terza" [43] , Sir David Cairns referred to the provisions of the Brussels Convention but said that he did not find them of assistance, preferring to act upon his interpretation of the words in the domestic law. His Lordship concluded [44] : If only a demise charterer were meant, one would of course have expected the word "demise" to have been inserted before the word "charterer". Alternatively the word "charterer" could have been omitted altogether, because a demise charterer would be included in the words "the person in possession or control". Stephenson LJ said [45] that he had not found any sufficient reason to limit the word "charterer" in s 3(4) to a charterer by demise. Donaldson LJ dissented and in The Evpo Agnic repeated his views, with the support of the other members of the Court of Appeal. The later case concerned s 21(4)(b) of the Supreme Court Act 1981 UK. This also used the phrase "when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship". In the course of dealing with the issue with which the appeal principally was concerned, the meaning of "owner", his Lordship said [46] : "Charterer" in this context, which includes the [Brussels] Convention, must I think mean demise charterer and the words "or in possession or in control of, the ship" must refer to a person who is in the position of a demise charterer, albeit not under a demise charter - a salvor might be such. On the other hand, in the interim, the judgment of Sir David Cairns in The "Span Terza" had been applied by the Supreme Court of Hong Kong [47] and the New Zealand High Court [48] , and the same view earlier had been taken by the Singapore Court of Appeal in The "Permina 108" [49] . 1. [1982] 1 Lloyd's Rep 225. 2. [1988] 1 WLR 1090; [1988] 3 All ER 810. 3. [1982] 1 Lloyd's Rep 225 at 227. 4. The "Span Terza" [1982] 1 Lloyd's Rep 225 at 227. 5. The "Span Terza" [1982] 1 Lloyd's Rep 225 at 231. 6. The Evpo Agnic [1988] 1 WLR 1090 at 1095-1096; [1988] 3 All ER 810 at 814. 7. The "Sextum" [1982] 2 Lloyd's Rep 532 at 534. 8. Reef Shipping v The Ship Fua Kavenga [1987] 1 NZLR 550 at 565-567 9. [1978] 1 Lloyd's Rep 311.

The result is that the balance of authority dealing with comparable legislation in other jurisdictions favours the respondent rather than the appellant. Further, The "Span Terza" and the Singapore decision predated consideration of the matter in Australia by the Commission and were taken into account in the Report.

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