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[1996] FCA 794
procedural. The vessel was released from arrest. The arrest warrant was set aside. CTC Package Holidays Pty Limited was to undertake to use its best endeavours to ensure the vessel returned to Australia in...
The Court released the Kareliya because the evidence did not prove that BLASCO owned it, including beneficially, or had it on a demise charter when MTC began its proceeding. The documents supported the position that Maddock Trading Inc owned the vessel, Globus held a bareboat charter, and CTC held a time charter. BLASCO’s operational involvement and links to related businesses did not, without stronger evidence, establish ownership or the whole possession and control required for a demise charter.
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2,276 words · generated 02/10/2026
Marine Trade Consulting GmbH (MTC) brought an admiralty proceeding concerning the passenger vessel Kareliya. Its claim was for unpaid management fees and disbursements said to be due under a management agreement dated 25 March 1994. The claim totalled DM 6,077,148.58. MTC alleged that BLASCO, the Black Sea Shipping Company of Odessa, was the owner of the Kareliya and the other vessels covered by the agreement.
No linked legislation citations have been extracted yet.
The proceeding was commenced on 15 August 1996. The Kareliya was arrested when it returned to Sydney on 30 August 1996. Globus, described in the evidence as a Ukrainian private enterprise and the vessel’s bareboat charterer, applied under r 52 of the Admiralty Rules for release. The immediate practical context was significant: the large passenger liner was due to depart Sydney that evening on a cruise with more than 300 passengers aboard. Tamberlin J ordered release on 30 August, and gave reasons on 5 September 1996.
The ownership evidence showed a sequence of relationships. The management agreement described BLASCO as owner in 1994. A bill of sale, expressed to be dated 10 July 1995, transferred the vessel from BLASCO to Maddock Trading Inc for USD 12 million. A certificate issued by the Liberian Bureau of Maritime Affairs listed Maddock Trading Inc as owner. Maddock Trading then granted Globus a bareboat charter dated 12 January 1996. Globus entered a time charter with CTC, which was to operate the vessel.
There was also evidence that BLASCO remained involved in aspects of operations. It communicated with suppliers, sought spare-parts quotations, and was identified in correspondence as arranging technical management. An agreement of 12 March 1996 between Globus and BLASCO provided for BLASCO to perform technical management. MTC relied on this continuing activity, the company relationships involving CTC, BLASCO’s earlier ownership, and the non-appearance of Maddock Trading to argue that BLASCO remained beneficial owner or was a demise charterer.
The Court was not deciding whether MTC’s underlying contractual debt was owed, nor finally determining the merits of the claim. The question for the release application was whether the evidence established the statutory basis for proceeding in rem against the vessel. The judgment did not include numbered paragraphs in the supplied text, so pinpoint references below use the judgment’s identified sections and statutory provisions rather than invented paragraph numbers.
The primary statutory question was s 17(b) of the Admiralty Act 1988 (Cth): whether BLASCO was the owner of the vessel when the proceeding commenced. Tamberlin J said the question was whether ownership had been established as at 15 August 1996. He treated that as a jurisdictional fact. Drawing on the High Court’s joint judgment in Owners of the ship Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404, the Court said a challenge to jurisdiction can be resisted only by establishing the facts on which jurisdiction depends, on the balance of probabilities.
The Court accepted the proposition in Malaysia Shipyard v Iron Shortland (1995) 131 ALR 738 that “owner” need not mean only registered owner and can include beneficial owner. That did not, however, lower the evidentiary threshold. The question remained whether the evidence proved BLASCO had a beneficial interest in the vessel itself, rather than merely interests in companies involved in operating or managing it.
The documentary evidence was important. The bill of sale recorded a transfer from BLASCO to Maddock Trading in July 1995. The Liberian ownership certificate and other records supported Maddock Trading’s position as registered owner. The January 1996 bareboat charter was also consistent with Maddock Trading owning the vessel and Globus chartering it. Tamberlin J considered these documents important evidence that should not be disregarded lightly, citing The Evpo Agnic [1988] 1 WLR 1090.
MTC relied on evidence that BLASCO had previously owned the vessel, was still involved in ordering parts, and had operational connections with CTC. Some Lloyds directory entries linked the Kareliya with BLASCO. The Court regarded those entries as ambiguous, of marginal and indicative value, and without formal status as evidence of ownership. The Court also considered that evidence of corporate relationships did not establish a proprietary interest in the ship. The judgment expressly rejected treating the dispute as an occasion to lift the corporate veil to impose liability on connected entities.
The Court separately considered s 18. That provision requires the relevant person to be a demise charterer when proceedings commence. Citing the test in Scrutton on Charterparties and Bills of Lading and the authorities Baumvoll Manufactur Von Scheibler v Gilchrest & Co [1892] 1 QB 253 and Anderson's (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd (1980) 2 NSWLR 870, Tamberlin J said the issue is whether the owner has parted with the whole possession and control of the ship and given the charterer independent power over matters such as the master, crew, management, and employment of the vessel.
The evidence did not establish that level of control in BLASCO. Dr Markov agreed that BLASCO employed the master and crew, but his evidence was that Globus recruited them, paid their wages, and could engage, dismiss, or repatriate them. The crewing agreement was in Russian, and the evidence about its effect was limited. The Court found employment and technical management insufficient, in the circumstances, to establish that BLASCO had whole possession and control.
The central reasoning was therefore evidentiary and statutory. The history of involvement by BLASCO did not establish current ownership or demise-charterer status at the critical date. The Court ordered release under r 52, made provision for undertakings concerning the vessel’s return and the Marshal’s expenses, and set aside the arrest warrant.
The judgment applied, rather than announced a wholesale change to, the meaning of ownership in the Admiralty Act. Before this decision, Sheppard J in Iron Shortland had considered whether statutory “owner” could include a beneficial owner. Tamberlin J adopted that reasoning for s 17 and treated beneficial ownership as potentially within the section, while emphasising that the claimant still had to prove it on the evidence.
The judgment also relied on Shin Kobe Maru for the jurisdictional-fact principle. Where statutory jurisdiction turns on particular facts, those facts must be established on the balance of probabilities. In this case, that requirement focused attention on the time proceedings were commenced, rather than merely on the earlier history of the ship or the parties’ commercial arrangements.
For demise charter, the judgment applied the established possession-and-control approach described in Scrutton and supported by Baumvoll and Anderson's (Pacific) Trading. It did not treat the label attached to an arrangement, or the existence of technical management, as determinative. The substance of the relationship and the actual allocation of control mattered.
The Court also addressed corporate relationships. It referred to the Australian Law Reform Commission’s report opposing a special corporate-veil provision in admiralty legislation. The report’s stated position was that corporate-group liability should be addressed through company or insolvency law rather than a special admiralty rule. In this case, that discussion reinforced the distinction between ownership of shares in companies involved with the vessel and beneficial ownership of the vessel itself.
The judgment’s practical contribution is its illustration of the evidentiary burden. Past ownership, operational involvement, supplier communications, and corporate connections may be relevant, but this case shows that they did not outweigh documentary evidence of a sale and later charter arrangements. The decision does not state that such documents are invariably conclusive. Its conclusion rests on the combined evidence before the Court.
The supplied judgment text contains no numbered paragraphs. The following passages are therefore identified by topic and source rather than by paragraph number.
“The question of ownership by the relevant person at the commencement of the proceeding is a jurisdictional fact.”
In plain English, the claimant had to prove the required ownership status at the date the case began, not simply show that BLASCO had once owned or operated the vessel.
“They must be established on the balance of probabilities in the light of all the evidence advanced in the proceedings held to determine whether there is jurisdiction.”
This states the proof standard the Court applied to the facts that supported jurisdiction. The evidence had to make the necessary ownership fact more likely than not.
“There is thus nothing which runs counter to ordinary concepts of admiralty law or jurisdiction which should lead me to reject the plaintiff’s submission.”
In the passage adopting Iron Shortland, the Court accepted that statutory ownership could include beneficial ownership. It did not find that BLASCO was beneficial owner on these facts.
“There has to be a parting with the whole possession and control of the ship.”
For a demise charter, the question is not simply who performs some management tasks. The charterer must have the whole possession and control described by the test applied in the judgment.
“I do not consider that the evidence discloses that as at 15 August 1996 BLASCO had any ownership interest in the vessel beneficial or otherwise.”
This is the Court’s factual conclusion on s 17. It refers specifically to the date the proceeding commenced.
“The correct conclusion is that the owner of the vessel is Maddock Trading Co Limited with a bareboat charter to Globus, which in turn has entered into a Time Charter Contract with CTC.”
The Court’s reading of the documents was a chain of ownership and chartering, rather than continued ownership by BLASCO.
The decision is most relevant where a claimant seeks to arrest a vessel for a general maritime claim and the in rem right depends on proving that the relevant person owned the vessel when proceedings commenced. It is especially relevant where registered ownership is in one entity, but the claimant alleges that another entity retained beneficial ownership.
The case also concerns evidence of continued operational involvement after a documented sale. A former owner’s communications with suppliers, involvement in technical management, historical responsibility for the vessel, or links to operating companies may prompt an ownership inquiry. The judgment indicates that these circumstances must be assessed alongside formal ownership and transaction documents. On the evidence in this case, the operational links did not prove a retained beneficial interest.
A second fact pattern concerns alleged demise chartering. Where a claimant argues that a relevant person was a demise charterer, evidence about who recruits and pays the crew, who can dismiss or repatriate them, and who exercises overall control may matter. The judgment treats technical management and some involvement in crewing or supplies as insufficient, without evidence of the whole possession and control required by the test.
The case may also be relevant where the alleged owner is part of a corporate group or connected with companies that operate the vessel. Tamberlin J distinguished ownership of shares in related companies from ownership of shares in the vessel. Corporate links alone did not establish the vessel’s beneficial ownership, and the Court did not use admiralty jurisdiction to pierce the corporate veil.
The decision’s scope is limited by its facts and procedural posture. It concerns release of an arrested vessel where the Court considered the evidence then before it. It does not determine the underlying debt claim or declare that a bill of sale will always defeat a beneficial-ownership allegation.
The supplied judgment does not include any later decisions discussing Marine Trade Consulting GmbH v owners of ship Kareliya, and no later treatment can be reliably extracted from the material provided. It would therefore be unsafe to state whether later courts have followed, distinguished, or limited it.
The judgment itself identifies its treatment of earlier authorities. It applied the reasoning in Malaysia Shipyard v Iron Shortland on beneficial ownership; considered Shin Kobe Maru on proof of jurisdictional facts; cited The Evpo Agnic in relation to the significance of documents; and relied on Baumvoll and Anderson's (Pacific) Trading for the demise-charter control test. These are relationships stated within the judgment, not claims about later treatment of Kareliya.
The judgment leaves open how the beneficial-ownership question would be resolved on a different evidentiary record. It accepts that statutory “owner” may include beneficial owner, but the decision does not set out a comprehensive test for beneficial ownership beyond distinguishing ownership of the vessel from ownership of shares in companies involved in its operation.
The decision also does not determine what evidence, in another case, would be sufficient to overcome formal ownership documents. It found the evidence before it insufficient, but did not say that a bill of sale, registration record, or charter document is conclusive in every case. The significance of those records will depend on the evidence and the issue being tried.
For demise charter, the judgment states the whole-possession-and-control test but does not comprehensively analyse every feature of the Globus-BLASCO arrangements. The crewing agreement was in Russian, and the evidence as to its effect was limited. The judgment’s conclusion on BLASCO’s status therefore reflects the evidence available in this application.
Finally, the Court did not decide whether the requirements of ss 17(a) or 18(a) had been met, because it concluded that the relevant ownership or demise-charterer requirement had not been established. Nor did it determine the underlying contractual liability, the ultimate merits of MTC’s claim, or the final allocation of costs. Those matters were outside the conclusion necessary to decide the release application.
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The application is made under r52 of the rules ("the Admiralty rules") made pursuant to the Admiralty Act 1988 (Cth) ("the Act") to release the vessel from an arrest effected by the Court on the morning of 30 August 1996.
Later on that day after considering evidence and hearing submissions from the parties, I made an order to release the vessel. I now give my reasons.
The vessel is a large passenger liner capable of accommodating up to 644 passengers. It was due to depart Sydney on Friday evening, 30 August 1996, on a cruise with over 300 passengers on board. It has now departed. It is scheduled to return to Sydney with passengers on the cruise in the next few weeks.
The vessel first came to Australia in November 1994 and has cruised in Australian waters since that time with the exception of a four and half month period in 1995, when it was sub-chartered to Japanese interests and it travelled around the world. The vessel returned to Australia in about November 1995 and has been continuously cruising from Australian ports since that time. It is scheduled to continue cruising from Australian ports until July 1997, apart from one voyage to Singapore.
An affidavit was filed in Court on 30 August 1996 by Dr Markov. He is the General Director of CTC Package Holidays Pty Limited ("CTC Holidays"). Dr Markov is also a Director of Charter Travel Company Limited ("CTC"). Prior to June 1996 he had been Managing Director of CTC in London for about twelve months.
He says that from enquiries and from his own knowledge he understands that when the vessel arrived in Australia 1994 and up to July 1995, it was operated by CTC pursuant to a time charter from Black Sea Shipping Company of Odessa ("BLASCO"). This is a Joint Stock Shipping Concern created pursuant to a decree of the Ukrainian President on 13 August 1993.
From July 1995 until January 1996 when the vessel was bareboat chartered to Globus, which is also based in Odessa, the vessel was operated by CTC pursuant to a time charter from the registered owner, Maddock Trading Inc. That is a Liberian registered company. Since 12 January 1996 the vessel has been operating pursuant to a time charter from Globus to CTC.
The present dispute raises the question as to whether BLASCO, which is "the relevant person", was at the time the proceeding was commenced on 15 August 1996 the owner under s17(b) of the Act or a demise charterer under s18 of the Act. In view of the conclusion I have reached on this question it is not necessary for me to consider whether the requirements of ss17(a) or 18(a) of the Act have been satisfied.
The vessel was arrested two weeks ago pursuant to an application by the present applicant made on 15 August 1996. As I understand it, after some preliminary discussion before Sheppard J, his Honour made orders as follows:
"(1) The vessel be released from arrest upon the Undertaking to the Court of CTC Package Holidays Pty Ltd to use its best endeavours to ensure that the vessel returns to Sydney on or about 30 August 1996.
(2) The Plaintiff has liberty to apply to rearrest the vessel.
(3) The Marshall be at liberty to permit passengers to board the vessel forthwith.
(4) The Defendant's Notice of Motion dated today be stood over with liberty to apply on 2 days notice.
(5) The Plaintiff to file an Application to Registrar for release of ship pursuant to Form 19 forthwith.
On the vessel's return to Sydney from a cruise during the latter half of August, on the morning of Friday 30th August 1996, the vessel was re-arrested
In the course of the application before Sheppard J for arrest, doubts were raised as to the ownership of the vessel as at the relevant date. The particulars of claim in the writ read as follows:
BY THIS WRIT the Plaintiff commences action against the ship specified above.
PARTICULARS OF SHIP: "KARELIYA"; Port of Registry - Odessa, Ukraine
(c) security for the claim in the sum of $A6,625,514.58;
The Plaintiff, pursuant to an Agreement dated 25 March 1994 (hereinafter referred to as the "Management Agreement") between themselves and the owners (BLASCO, of 1 Lastochkina Street, Odessa, 270026, Ukraine, hereinafter referred to as "Owners") of the ships "Kareliya", "Azerbaydzhan", "Lev Tolstoi" and "Odessa" (hereinafter referred to as "the Ships"), performed various management services in relation to the Ships during the period 1 April 1994 to 30 June 1996, and in addition incurred disbursements in relation to the supply of various goods, materials, and services to the Ships. The Management Agreement provided that the fees for the said management services and disbursements would be paid by the Owners to the Plaintiff. The said fees and disbursements were to be paid in an amount determined by reference to an Agreement dated 24 May 1994 between the Plaintiff and Lloyd Werft Bremerhaven GmbH. In breach of the Management Agreement the Owners have failed to pay the Plaintiff the said fees and disbursements, which remain outstanding as calculated below:
1 April 1994 to 31 March 1996 DM 3,000,000.00
1 April 1996 until 30 June 1996 DM 250,000.00
in relation to the ship "Azerbaydzhan" DM 960,695.91
The writ was taken out in respect of the ship "Kareliya" for debts owing in relation to it and also as surrogate for three other ships referred to in the title to the proceeding.
The relevant provisions of the Act are as follows:
"17. Where, in relation to a general maritime claim concerning a ship or other property, a relevant person:
(a) was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and
(b) is, when the proceeding is commenced, the owner of the ship or property;
a proceeding on the claim may be commenced as an action in rem against the ship or property.
"relevant person, in relation to a maritime claim, means a person who would be liable on the claim in a proceeding commenced as an action in personam;"
"52(1) A party to a proceeding may apply to the court in accordance with Form 19 for the release of a ship or other property that is under arrest in the proceeding.
(3) On an application under subrule (1), the court may order the release from arrest of the ship or property on such terms as are just.
(4) The court must not hear an application for the release from arrest of a ship or any property under this rule unless:
(a) the applicant for the release has given to the plaintiff notice, being notice that the court is satisfied is reasonable in the circumstances, of the hearing of the application for the release; or
(b) the court is satisfied that there are exceptional circumstances that justify hearing the application without giving notice to the plaintiff."
Rule 53 empowers the Marshal to refuse to release a ship from arrest in accordance with an order of the court unless arrangements satisfactory to the Marshal have been made for payment of the fees and expenses of the Marshal in connection with the custody of the ship or property whilst it was under arrest.
As can be seen from the particulars, the relevant person is BLASCO. The period in respect of which the claims are made is from 1 April 1994 to 30 June 1996.
The primary question I will address is whether it has been established on the evidence that BLASCO was, in August 1996 when the proceedings commenced, the owner of the vessel.
The most recent and relevant authority is the case Malaysia Shipyard v "Iron Shortland" as surrogate for the ship "Newcastle Pride" (1995) 131 ALR 738. In that matter Sheppard J held that for the purposes of s19 of the Act "owner" includes a beneficial owner as well as a registered owner.
"I think there are difficulties in taking the simple view that "owner" in the section means only "registered owner". After all, the section does not use those words. Obviously the registered owner will, in the absence of other evidence, be taken to be the beneficial owner. But there seems to me to be no reason of policy why the section should not be construed to mean or to include a beneficial owner. Because the judges who decided Shin Kobe Maru were dealing with a case directly concerned with the ownership of a vessel and thus with a proprietary, rather than a general, maritime claim, there is a danger in taking too much from the dicta about the meaning of ownership in s4(2) and applying them to cases under s4(3), particularly bearing in mind the terms of both ss 17 and 19. But at least the judgments show that the concept of "owner" and "ownership" in the Act may have a meaning which involves or includes beneficial ownership. There is thus nothing which runs counter to ordinary concepts of admiralty law or jurisdiction which should lead me to reject the plaintiff's submission."
In that case, neither the parent company nor its subsidiary which was the registered owner of the "Iron Shortland", had entered an appearance in the proceedings. His Honour stated that in such circumstances, he would have found the parent to be the beneficial owner of the vessel if there had been any real evidence of beneficial ownership. However, notwithstanding this he considered that the evidence did not establish or tend to establish that the parent beneficially owned the vessel.
The question of ownership by the relevant person at the commencement of the proceeding is a jurisdictional fact and as the High Court said in its joint judgment in Owners of the ship "Shin Kobe Maru" v Empire Shipping Co Inc [1994] HCA 54; (1994) 181 CLR 404 at 426- 427:
"Where jurisdiction depends on particular facts or a particular state of affairs, a challenge to jurisdiction can only be resisted by establishing the facts on which it depends. And, of course, they must be established on the balance of probabilities in the light of all the evidence advanced in the proceedings held to determine whether there is jurisdiction."
In the present case, there has been no appearance by BLASCO or Maddock Trading Inc. It is the latter company which is said to be the owner.
This is not a case where it is open to the Court to lift the corporate veil so as to make entities, which may be holding companies, liable for the obligations and debts of subsidiaries. In this regard it is helpful to bear in mind the conclusions expressed in the Australian Law Reform Commission Report, (No 33, Civil Admiralty Jurisdiction) at 108-9, where the Commission said:
"Again, differing views were expressed to the Commission about the desirability of a corporate veil provision, either confined to the identification of surrogate ships, or applying more generally. The predominate view was that a special provision in the legislation was undesirable. It was suggested that the right to proceed in rem with respect to owners' and demise charterers' liabilities, combined with the existing law of maritime liens, covered most situations. But the fundamental consideration, in the Commission's view, is the undesirability of making special provision with respect to the corporate veil in legislation dealing with admiralty jurisdiction. If questions of the liability or indebtedness of corporate groups are to be addressed this is properly done through company or insolvency law rather than in specific legislative contexts such as admiralty jurisdiction. Accordingly, there should be no special provision dealing with the corporate veil, or defining "related" or "associated" companies, in the proposed legislation."
The evidence adduced by the plaintiff is that on 25 March 1994 a Management Agreement was entered into between MTC Marine Trade Consultants GmbH of Hamburg (MTC") as Manager. The recitals refer to BLASCO as the owner of Ukrainian registered passenger vessels, MV "Odessa", MV "Lev Tolstoi", MV "Azerbaydzhan" and MV "Kareliya".
BLASCO appointed MTC to manage and maintain the vessels and perform the services set out in the agreements. There were two addenda. They are not of present significance.
A memorandum from Lloyds Maritime Information Services dated 8 July 1996 states that according to Lloyds records, the current registered ownership of the vessel is listed as being:
Lloyds listed the vessel as "ex-Ukraine flag". There is also a Certificate of Ownership and Encumbrance issued by the Bureau of Maritime Affairs of the Republic of Liberia, dated 21 August 1996, showing the owner as Maddock Trading Inc, a company which is stated to have its residence in Liberia and to have Liberian citizenship.
According to a company search from Companies House, Cardiff,(UK), dated 27 August 1996, the shareholders of CTC are Anglo-Soviet Shipping Co Ltd and BLASCO.
A letter to MTC from Globus of Odessa dated 23 August 1996, states that the vessel works under bareboat charter with Globus and "doesn't concern BLASCO". A fax from BLASCO, on a letterhead entitled "Ministry of Transport of Ukraine", to MTC, dated 27 August 1996, asserts that the vessel was sold by BLASCO to "Messers Maddock", who are the rightful owners of the vessel. BLASCO denies having any proprietary rights or ownership in the vessel.
There is also in evidence a Bill of Sale of the vessel expressed to be executed on 10 July 1995, transferring all the shares in the ship from BLASCO to Maddock Trading Inc. of Monrovia in consideration of the sum of USD 12 million. There is also a bareboat charter executed by Maddock Trading Inc as owner and Globus as charterer dated 12 January 1996 in relation to the vessel. In addition, there is a signed Contract of Time Charter between Globus as Shipowners and CTC London, as charterers, for the period 12 January 1996 until September 1996.
A Ship's Certificate dated 5 March 1996, issued by the Port Office of Odessa shows the owner of the ship as being Globus. However, later in the certificate, it is said:
"According to the Merchant Shipping Code of the Ukraine, this certificate is to be considered as final and complete evidence of the right of property of Maddock Trading Inc, Monrovia, Liberia on the ship Kareliya."
A Classification Certificate issued and dated 2 April 1996 describes "Clobus" (sic) as the shipowner in relation to the "Kareliya". This classification certificate is expressed to be valid until 12 December 1997.
The plaintiff tendered a footnote to the financial statements for the year ended 31 December 1994 for the Charter Travel Company Limited and subsidiaries which reads:
At 31 December 1994 the Company was a 70% subsidiary of BLASCO, an undertaking incorporated in the Ukraine. On 26 February 1996 BLASCO entered into an agreement to purchase the minority stake in the Group held by Anglo-Soviet Shipping Company Limited."
This is some evidence that CTC may have been, in February 1996, a wholly owned subsidiary of BLASCO. There is also in evidence a letter, dated 8 August 1996, from East Wind Schiffsausrustung GmbH of Hamburg ("East Wind") to MTC which states:
"We herewith confirm that we have been supplying M/V "Kareliya" with technical ships supplies since May 1994. Orders were received from Shipowners Black Sea Shipping Company in Odessa and payment was guaranteed from Managers MTC - Marine Trade Consulting GmbH in Hamburg.
Since 1996 we have been receiving several delivery orders for M/V "Kareliya" from Black Sea Shipping Company with payment from charterers CTC in London.
The above statements are supported by an affidavit of Norbert Dennstedt, dated 28 August 1996. He is employed by East Wind. He annexes to that affidavit communications passing between East Wind and BLASCO in the course of which BLASCO seeks quotes for spare parts from East Wind and seeks confirmation of delivery to Australia for "MV Kareliya". The annexures contain statements that payment will be effected by CTC London or CTC Sydney for such parts.
There is also a direction from BLASCO to CTC Lines London, requesting them to effect payment to East Wind in the sum of DM 120,806.25.
An agreement dated 12 March 1996 between "Globus" and SSC BLASCO provides that the owner, Globus, will entrust the operator BLASCO with the technical management of the vessel. The "technical management" is defined to include:
2.1 Technical survey of a/m vessel during navigation;
2.3 Appointments of ship engineers on the vessel, examination of their qualifications and working experience;
2.4 Organising of any kind of ship's repair, including classification repair;
2.5 Order of necessary spare parts and materials for the vessel;
2.6 Carrying out of regular inspections of the vessel by superintendents to maintain the vessel in good order.
It is pointed out in an affidavit sworn by Mr Luxford of Messrs Phillips Fox, filed for the plaintiffs, that the telex number of BLASCO in a telefax from BLASCO to East Wind of 31 July 1996 is the same telex number for BLASCO as appears in the entry under the heading "BLASCO" in an extract from Lloyds Maritime Directory 1993. This does not seem to me to carry the matter much further.
Entries in the Lloyds Register of Ships for 1992 through 1995 to 1996, indicate that an entry with the name "Kareliya", is coupled with a reference to BLASCO. In the 1995-1996 entry, however, the name "Kareliya" is associated with a reference to Maddock Trading Co Inc. In relation to the list of shipowners for 1996-1997, the directory shows Maddock Trading Inc. as owner of the vessel. Three other entries concerning Maddock Trading relate to different entities namely, Maddock Trading 2 Inc, Maddock Trading 6 Inc, and Maddock Trading 8 Inc. These entries also refer to BLASCO. However, the principal entry relating to Maddock Trading Inc has no such reference.
Firstly, it seems to me that these entries in the Lloyds Directory are ambiguous and unclear as to what they purport to show. Secondly, they can only provide some guidance of a marginal and indicative nature. Thirdly, they do not appear to have any formal status as to the ownership of vessels. The history and basis of the statements are not known.
The plaintiff provided several ASC searches in relation to CTC Package. These indicate that CTC Package, with its registered office at Clarence Street, Sydney, is ultimately held by CTC. From an extract of Business Names records, it appears that the business of CTC Cruise Line (a trading name) is passenger shipping and travel. The name is registered until 2 June 1998. The principal place of business is Clarence Street, Sydney. CTC began operation on 1 June 1992. It is used by "CTC Package Holidays Pty Limited" of the same address in Clarence Street, Sydney.
In address the plaintiff relied on the following circumstances to make out a case that BLASCO was the beneficial owner of the vessel:
* The unchallenged ownership of BLASCO up to the early half of 1995.
* The non-appearance of Maddock Trading Inc. in the proceeding.
* The employment by BLASCO of the master and crew and its continuing control.
* The continued involvement of BLASCO in ordering parts for the vessel and the procuring of payments by the CTC Group.
* The absence of any evidence as to shareholding or directors of Maddock Trading Inc.
* The registration of Maddock Trading Inc. in Liberia, which is a "flag of convenience" country.
Whilst there is some force in the above considerations, I am not persuaded that, when considered in the light of the documentary evidence placed before me and the oral evidence of Dr Markov, they are of sufficient weight to establish that BLASCO was the beneficial owner of the vessel at the commencement of the proceeding for arrest on the balance of probabilities.
The evidence shows that the vessel was sold to Maddock Trading Inc. and that Maddock Trading Inc. is the registered owner. The circumstances relied on by the plaintiff are not sufficient to give rise to an inference that, notwithstanding the documented sale, BLASCO has continued to be the beneficial owner of the vessel, in the sense of owning the vessel or having shares in the vessel, as opposed to ownership of shares in companies which are involved with the operation of the vessel. For example, the existence of the Technical Management Agreement between Globus as owner and BLASCO as operator, does not raise an inference that BLASCO is in fact the owner of the vessel even when considered in the light of all the evidence proffered.
The evidence in relation to the ownership of Globus is limited but there is some evidence that the founder-owner of Globus is a Mrs E Kulybachenko. There is no evidence to indicate that, in any way, she is a nominee, trustee, or agent for BLASCO.
From the evidence it appears to me that the correct conclusion is that the owner of the vessel is Maddock Trading Inc. The Bill of Sale indicates that the transfer was made from BLASCO on 10 July 1995. This is consistent with the assertions of BLASCO. It is reinforced by reference to the bareboat charter of 12 January 1996 from Maddock Trading Co Inc to Globus. The expenditure of funds by BLASCO in 1996 appears to be based on the Technical Management Agreement with Globus of 12 March 1996. These documents provide important evidence and should not be disregarded lightly. See the remarks of Lord Donaldson in The Evpo Agnic [1988] 1 WLR 1090 at 1096.
While there is evidence of a general and circumstantial nature to indicate that there may be links between the vessel and BLASCO, I do not consider that the evidence discloses that as at 15 August 1996 BLASCO had any ownership interest in the vessel beneficial or otherwise.
The evidence leads me to the conclusion that the owner is Maddock Trading Co Limited with a bareboat charter to Globus, which in turn has entered into a Time Charter Contract with CTC.
Section 18 of the Act provides:
"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 of the claim may be commenced as an action in rem against the ship."
The plaintiff submits that all requirements of s18 have been met in the present case. In particular, it is submitted that when the proceeding was commenced (on the assumption that BLASCO was not the owner) BLASCO was the demise charterer of the ship.
This is said to flow from a number of considerations, including the fact that Dr Markov is said to have testified that the master and crew were employed by BLASCO. The submission was that such employment together with the control evident in the communications from East Wind in terms of the instructions given in relation to the vessel, and the control through CTC, which BLASCO exercised, led to the conclusion that BLASCO was a demise charterer for the purpose of jurisdiction under s18.
However, Dr Markov in cross-examination did not agree that the master and crew on the vessel were paid by BLASCO or were under the control and direction of BLASCO. He agreed that they were employed by BLASCO, but said that according to the agreement they were recruited by Globus and that Globus paid their salary and their wages.
When asked whether in relation to the master and crew on the vessel, he understood they were able to be repatriated or engaged or dismissed by BLASCO, Dr Markov replied that Globus on his understanding was the entity able to repatriate, engage or dismiss them.
The crewing agreement between Globus and BLASCO, dated 15 January 1996, which was Exhibit B, is in the Russian language and the only evidence as to its effect is that of Dr Markov.
In these circumstances, the evidentiary basis for the submission that BLASCO has been shown to be a demise charterer has not been made out.
As Scrutton on Charter Parties, 19th Edition, 1984 points out at 48, the question depends on whether the owner has parted with the whole possession and control of the ship and whether he has given the charterer a power and right independent of the owner and without reference to the owners; to do whatever is considered appropriate with respect to the captain, the master, the crew and the management and employment of the ship. There has to be a parting with the whole possession and control of the ship. In each case it is necessary to consider the particular terms of the Charter: Baumvoll Manufactur Von Scheibler v Gilchrest & Co [1892] 1 QB 253 at 259 applied by Hunt J in Anderson's (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd (1980) 2 NSWLR 870 at 872. In every case it is necessary to look at the substance and not merely the form of the relationship.
Although in general the employment of the master and the crew affords an indication of the existence of a demise charterer, I do not think that the fact of employment and the provision of technical management are sufficient in the present case to establish degree of possession and control. In the present case, in my view, greater weight must be given the documentary evidence and that provides substantial support for the conclusion that BLASCO was not, when the proceedings were commenced, a demise charterer of the vessel.
My conclusion was that the vessel should be allowed to depart.
In the circumstances, however, I thought it appropriate to make an order that there be an undertaking from CTC Holidays to use its best endeavours to ensure that the vessel returns to Australia in accordance with its existing schedule of departures which according to Dr Markov is applicable until July 1997. I have also made orders as to the provision of an undertaking in respect of the expenses of the Marshal. I considered that the arrest warrant of 30 August 1996 should be set aside.
I have also ordered that the time limitation for lodgment of a notice of appeal will run from the date on which these reasons for judgment are delivered.
In principle, the costs of the application to release the vessel should be borne by the plaintiff. However, I will hear any submissions which the parties may wish to make on this question.
Marine Trade Consulting GmbH
owners of ship Kareliya [1996] FCA 794
Owners of the ship "Shin Kobe Maru" v Empire Shipping Co Inc. [1994] HCA 54; (1994) 181 CLR 404, considered
(1994) 181 CLR 404
(1995) 131 ALR 738
(1980) 2 NSWLR 870
(1955) 131 ALR 738
The vessel was released from arrest. The arrest warrant was set aside. CTC Package Holidays Pty Limited was to undertake to use its best endeavours to ensure the vessel returned to Australia in accordance with its existing schedule, and an undertaking was also required in respect of the Marshal’s expenses. The time for lodging a notice of appeal was to run from delivery of the reasons. Costs were not finally determined.