The authorities
78 In an early case not long after the commencement of the Act, in General Credits (Finance) Pty Ltd v Registrar of Ships (1982) 44 ALR 571 ("General Credits"), a receiver appointed by the security holder sold a ship to B which was financed by an old system mortgage consisting of an assignment of ownership of the ship to GCF with an equity of redemption in B. GCF, as owner by assignment, then applied to register the ship under the Act. Due to procedural irregularities there was some delay in doing so. In the meantime, F applied, as owner, to register the ship with L as mortgagee. F became registered as owner under the Act by reason of an oversight on the part of the Registrar notwithstanding that an interim injunction had been granted restraining F's registration as owner. GCF applied for rectification of the Register by removing F and registering GCF.
79 In the ordinary course, there would have been a contest of priorities between an owner, a person otherwise asserting ownership, contended rights of a bona fide purchaser for value asserting no notice of any contended irregularity and other persons asserting equitable interests.
80 In the context of these facts, McPherson J made a number of observations of importance.
81 Having regard to McPherson J's international standing as a legal scholar, some of his Honour's observations should be noted.
82 McPherson J accepted at p 574 that the following notion drawn from McLachlan on Merchant Shipping (Pilcher GSC and Bateson OL, McLachlan, A Treatise on the Law of Merchant Shipping (7th ed, Sweet & Maxwell, 1932) at p 62) concerning the "integrity of the register" applied to the Australian Register of Ships established under s 56 of the Act. The applicable notion is this:
This integrity of the register being of the utmost importance to society, it is of equal moment that the keeper of it should use caution, and refuse to make an entry, save upon such evidence only, as, being within the requirements of the Act, would satisfy a court of justice. Nor should he, after acting on the evidence of documents which prim facie satisfy the Act, endeavour to undo it on the face of the register, although convinced that the title is not in the person registered, but in some other; that kind of rectification of a public document of title is the function of a court of justice.
[citations omitted]
83 In comparing the Australian Act with the system of registration established by the Merchant Shipping Act 1894 (Imp) 57 & 58 Vict, c 60 (the "Imperial Act"), McPherson J said this at p 574:
The register and the process of registration under the Imperial Act is commonly believed to have been one of the examples which prompted the adoption of the Torrens system of registration of title in Australia. Although, unlike the latter, it contains no provisions for "paramountcy" or for indefeasibility of title, the Imperial Act does contain certain provisions regulating the priority of instruments both inter se and in relation to unregistered and unregistrable equitable interests in ships.
84 Noteworthy, in McPherson J's view, was the provision (now s 45) conferring on a registered owner a power absolutely to dispose of a ship in respect of which he is the registered owner and a similar power as it then existed under the Act in a mortgagee. Having examined a number of the provisions of the Imperial Act and the corresponding provisions of the Australian Act, McPherson J made these two further observations.
85 First, at pp 574 and 575, his Honour said this:
A series of decisions, both in England and elsewhere, has established that the foregoing provisions [the comparison his Honour undertook] give to a registered owner or mortgagee of a ship a priority or power which in a number of respects displaces the rules of common law and equity which would otherwise regulate their rights.
His Honour then set out particular authorities.
86 Second, having examined a number of provisions including the power of disposal, the prohibition against entering notice of trusts and the enforceability of personal equities, his Honour said this:
The conclusion that follows is that, in establishing an Australian Register of Ships and a process of registration therein, the legislative intention was to impute to them a purpose, function and effect similar to those of the Imperial legislation. The register and registration are likewise intended in particular respects to displace rules of the general law by which questions of legal and equitable ownership of ships and interest therein are to be determined. It is in this context that the statutory power of rectification under s 59 of the Act is to be viewed. It is inherently improbable that the power to rectify the register was or is intended to be exercised in derogation of what McLachlan describes as the "integrity of the register". The occasions for invoking that power which are specified in s 59(1) themselves suggest that this is so. Priorities and other rights attained under the Act are not to be overridden lightly, if at all, in the exercise of the power which the section confers; otherwise, much of the utility of a public register of the kind in question would be removed.
[emphasis added]
87 These things seem to flow from this decision. First, as to the Australian Register, the integrity of the Register is of utmost importance and the keeper of the Register should use caution and should only act on evidence falling within the requirements of the Act. Second, although the Act does not provide for paramountcy of title or indefeasibility of title (in the Torrens system sense) the Act does give the registered owner a priority or power which displaces the rules of common law and equity otherwise regulating rights. Third, it is inherently improbable that the power of rectification was (or is) intended to be exercised in derogation of the integrity of the Register. Fourth, rights attained under the Act are not to be overridden lightly or at all in the exercise of the s 59 power otherwise much of the utility of an important public Register for Australian-owned ships would be removed.
88 Although McPherson J's observations are made in the context of examining the scope of the rectification power (and whether F which had become registered should be removed in favour of GCF), his Honour's observations about the nature of the Register, the integrity of the Register, and the Registrar not lightly overriding if at all rights attained by registration strongly emphasise the importance of the rights obtained on and by registration.
89 In Mr Mentink's case, his rights obtained on registration were simply expunged. The Register was closed to the Larus II and Mr Mentink's registered ownership of it. No person, such as F, was admitted to registration which then attained rights by registration which were not to be lightly overridden if at all. The Register was simply closed with no other interest recorded in it as to the Larus II.
90 Mr Mentink says that he does not seek to overcome another person's registration who is not before the Court. He says that he simply seeks to secure reinstatement of his position to the Register as it was prior to unlawful closure of the Register.
91 It is in this respect that Mr Mentink seeks to differentiate the ultimate position adopted by McPherson J in General Credits as to parties not being heard. In General Credits, McPherson J concluded that the interests of F as owner and possibly the interests of L as mortgagee, once registered, would be affected perhaps fatally by expunging the entry in the Register with respect to ownership of the ship and his Honour concluded at p 575 that he "certainly would not do so without affording to those companies an opportunity, whether or not as parties to the proceedings, to be heard in opposition to the [expungement] order sought". Mr Mentink says that had the Registrar made an entry in the Register by which a third party attained rights under the Act concerning the ship, no order for rectification of that entry could be made, properly, without such a person being heard. Mr Mentink says, however, that his case is not such a case.
92 Counsel for the Registrar contends that General Credits is not able to be differentiated in this way and that it stands as authority for the proposition that the rectification power ought not to be exercised in circumstances where third party interests might well be affected and thus Mr Mentink has very poor prospects of success in challenging the primary Judge's refusal to rectify the Register and the refusal to make declarations to that end.
93 Moreover, the Registrar relies upon the following observations of Rares J in Mentink v Registrar of Ships [2009] FCA 871 at [23] in support of that proposition (as did the primary Judge):
Looking at the matter as it presently stands I must conclude that there are almost no prospects that Mr Mentink would be able to succeed in having the register amended with the consequence that Mr Arrand might be denied or deprived of whatever rights he has without having had the opportunity to have his own entitlements tested or to have notice that they were in fact being challenged with the object of removing them from him.
94 Those observations were made in proceedings in this Court commenced against the Registrar, the Minister for Foreign Affairs and the Commissioner for the Australian Federal Police in circumstances where the respondent parties sought and obtained an order for security for costs against Mr Mentink.
95 In the Supreme Court proceedings, of course, Mr Mentink has obtained a declaration favourable to him that the Registrar made an entry in the Register expunging registration of the ship beyond power and without authority.
96 In 695113 Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274, Bollen J at p 281 described s 45 of the Act as a "protection section" and observed that the provisions of the Act contemplate a passing of the legal estate in the ship by the execution or signing of a bill of sale prior to registration of ownership and further observed that "s 45 takes up its work after registration and it does that because the Act contemplates that registration will give notice and protection to those who wish to deal with interests in or to be created in a vessel" [emphasis added]. Bollen J described the Register as "a record".
97 In The Advertising Department Pty Ltd v Ship MV Port Phillip (2004) 141 FCR 251, Finkelstein J considered extensively the origin and history of the registration of ships from 1660 and particularly the role of the Imperial Merchant Shipping Acts. Having examined a number of the authorities, and the provisions of the Act, his Honour made these observations at [25] and [27]:
[25] The effect of these decisions is clear. The register of ships is evidence of title. If a person in good faith acquires an interest in a ship from the registered owner he will obtain an indefeasible title that will defeat any prior unregistered right or interest, regardless of whether the prior right or interest is legal or equitable. It makes no difference that the owner obtained his registration by fraud, provided the person who acquired the interest was not party to, or did not know of, the fraud.
[27] … The authorities to which I have referred, being authorities which conform to the policy of the Merchant Shipping Acts, show that the Australian register is the record of title to a ship. The register serves only one other purpose, which is to indicate that the ship is entitled to fly the Australian flag.
[emphasis added]
98 These observations of Bollen J and Finkelstein J at [96] and [97] respectively highlight the "utmost importance to society" of maintaining the "integrity of the register" as McPherson J accepted, so that members of the public can search the Register and deal, with protection, with the registered owner and acquire a title that will defeat any prior unregistered right.
99 In Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (Ex Freya) (2005) 143 FCR 43, the Full Court at [127] observed that under the Act the title of the registered owner is protected by giving the registered owner power (subject to interests on the Register) absolutely to dispose of the ship and give an effectual receipt for such disposal. The preservation of priorities is achieved by giving priority to the date of registration.
100 The Full Court also said this at [127]:
Other national registration systems may deal with such issues differently. For instance, in any given national law the register may play a role as an element in the title to, or ownership of, the ship, as opposed to its being only a record or evidence of the title to, or ownership of, the ship. Before the amendments contained in the [Merchant Shipping Act] 1862, entry on the British Register was determinative of title. No legal or equitable interest of an unregistered party was recognised or enforced. … This role of title by, or by reference to, registration is to be contrasted with other systems, such as those of the United Kingdom and Australia in which the register substantially operates as a record of title, subject to the effect of provisions such as ss 39, 41 and 45 dealing with the order of registration, priorities and power of disposition.
[emphasis added]
101 The Full Court also observed at [151] that the Act creates a local regulatory environment concerned with Australian-owned ships. The Full Court also said this at [152]:
… it is clear that the [Act], in its own terms, and framed as it clearly was (see McPherson J in [General Credits] at 334) by reference to the MSA [Merchant Shipping Act] 1894, does not provide title by registration. The register is evidence of title only: s 77. Ownership precedes, and, indeed, is a requirement for, registration. See also The Spirit of the Ocean (1865) 34 LJP 74 at 76 as to the Imperial legislation preceding and consolidating MSA 1894.
[emphasis added]
102 And at [153]:
Nevertheless, various provisions dealing with statutory methods of transfer (ss 36 and 42), transmission (ss 37 and 43), priorities (s 39), power of disposition (ss 41 and 45), the recognition, but not entry, of trusts and equities (ss 46 and 47) and rectification and correction of the register (ss 59 and 60) in a number of respects displace or modify the legal rules that would otherwise regulate parties' rights: [General Credits] at 334 and the cases there cited.
103 At [159], the Full Court also said this:
We accept that the significant purpose of s 45 (and of s 41, in respect of mortgages) is to protect the registered owner who takes from a prior registered owner (or mortgagee). In that sense, it is "protective": see Bollen J in [Ontario] at 281. Nevertheless, the statute, in plain terms, confers the power of absolute disposition on the party who is named on the register as "owner". It is unnecessary, we think, to characterise that as "legal title". It is a statutorily conferred power. Section 36 deals with transfer; though the reading together of ss 36, 45 and 47 and the use of language in s 47 of "beneficial interests" (having its origin in s 3 of the MSA 1862, and later in s 57 in the MSA 1894) may give support to the characterisation, for a relevant purpose, of the seller as holding a "legal title"...
[emphasis added]
104 In Adsteam Harbour Pty Ltd v The Registrar of the Australian Register of Ships [2005] FCA 1324, Allsop J (as the Chief Justice then was) at [13] observed: "The Register is, of course, a record of ownership; entry on the Register does not give title or ownership: see s 77 of the Act and generally, [Tisand] at [152]".
105 In the observations quoted at [101] of these reasons, the Full Court makes reference to the role played by s 77 of the Act (see also the reference at [104]). That section provides that a document declared by the Act to be admissible in evidence is, on mere production, admissible in any proceedings as prima facie evidence of any matter stated in the document, in pursuance of the Act, or in pursuance of any duty under the Act, and of the fact that it was signed by the person by whom it purports to be signed: s 77(1). The Registrar may supply copies of, or extracts from, any entry in either Register or any document forming part of or associated with either Register: s 77(2). The relevant copy is to be supplied to any person applying for such a copy or extract: s 77(3). A document purporting to be a copy or extract supplied under s 77(2) or (3) is declared, by s 77(4), to be admissible in evidence.
106 Thus, any "matter" stated in the copy or extract from either Register supplied by the Registrar is prima facie evidence of that matter. The Full Court, however, does not seem to suggest that this section operates in derogation of the power of the registered owner, conferred by s 45 of the Act, absolutely to dispose of the ship subject to any rights and powers appearing in the Register to be vested in some other person.