Consideration
51 A nation's register of ships affects a ship and those with interests in her in both public and private international law respects. First, the registration of a ship by a sovereign State ordinarily entails the consequence that the ship has the status of being governed by the law of that State and must fly its flag or ensign. As Jackson J put it, giving the opinion of the Court in Lauritzen v Larsen 345 US 571 at 584 (1953):
Perhaps the most venerable and universal rule of maritime law relevant to our problem is that which gives cardinal importance to the law of the flag. Each state under international law may determine for itself the conditions on which it will grant its nationality to a merchant ship, thereby accepting responsibility for it and acquiring authority over it. Nationality is evidenced to the world by the ship's papers and its flag.
52 Secondly, however, different countries can attach different consequences to registration of a ship, in respect of property or legal rights and interests in her, as matters of domestic, or private international, law, as Ryan and Allsop JJ explained in Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (Ex Freya) (2005) 143 FCR 43 at 75 [127]. There, they said that, in the Australian context, under the Act:
… the title of the registered owner is protected by giving to the registered mortgagee or owner power (subject to interests on the register) absolutely to dispose of the ship or a share therein and to give effectual receipts in respect thereof: ss 41 and 45 of the S[hipping] R[egistration] Act. The preservation of priorities is dealt with by giving priority to the date of registration: s 39 of the SR Act. Other national registration systems may deal with such issues differently….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)
53 Their Honours discussed, in illuminating detail, some of the legal consequences of a person's registration as owner of a ship in both public and private international law (143 FCR at 74-84 [123]-[163]). They concluded (143 FCR at 81 [152]), and we agree, that it was clear that the Act:
does not provide title by registration. The register is evidence of title only: s 77. Ownership precedes, and, indeed, is a requirement for, registration.
54 In our opinion, it follows that Mr Mentink's characterisation of the effect of registration of ownership under the Act was incorrect. Registration under the Act is not equivalent to what Barwick CJ described as the role of the land title register in the Torrens system which operates not as "a system of registration of title, but as a system of title by registration": Breskvar v Wall (1971) 126 CLR 376 at 385.
55 The analysis of Ryan and Allsop JJ of the function of Register in Cape Moreton 143 FCR 43 is compelling. In addition, we would add, s 20(1) identified that the registration certificate of a ship had only one use, namely for the purpose of lawful navigation of the ship and not as evidence of title to, or an interest in, the ship. Rather, s 36 provided a means for a registered owner to transfer the legal title to a ship, under the Act, pursuant to that person's power to do so under s 45. However, s 47 recognised that beneficial interests could be enforced against the owner of a ship in the same manner as in respect of any personal chattel, as Ryan and Allsop JJ held in Cape Moreton 143 FCR at 81-83 [152]-[161].
56 While Mr Mentink alleged that Mr Thackray had acted fraudulently to obtain closure of the registration of Larus II, the primary judge correctly confined his finding to the failure of the Registrar to follow the statutory requirement in s 66(1) of acting only on a notice in writing given by the registered owner. The declaration that the primary judge made reflected the fact that Mr Mentink had not given such a notice and that the Registrar had erred in acting on the sole basis of Mr Thackray's communications with the Registrar and Australian officials in Timor Leste.
57 For the same reason, McPherson J correctly held in General Credits (Finance) Pty Ltd v Registrar of Ships (1982) 44 ALR 571 at 574 that the Registrar's power in s 60 to correct a clerical or obvious mistake did not confer authority to expunge an erroneous registration that had been made after his Honour had granted an ex parte injunction restraining the Registrar from registering an application for a transfer of ownership, but before the Registrar had been given notice of that order. The newly registered owner and its mortgagee were not made parties to those proceedings and McPherson J refused to make an order expunging their registration without affording those persons the right to be heard in opposition, whether or not as parties. He said, correctly in our opinion (44 ALR at 575-576):
Section 59(4) requires that notice of an application for registration shall be served on the Registrar, who may appear and be heard. His presence may often be necessary if the register is to be altered. It is certainly not sufficient, except perhaps in rare cases, that he alone should be represented in response to an application for rectification.
What I have said should not be taken as deciding that the plaintiff's title is inferior to those of [the newly registered owner or its mortgagee], or that registration now precludes the plaintiff from vindicating that title. As I have said, registration does not carry indefeasibility and the register is by s 59 open to rectification. But in a case such as this, it should not be rectified in the absence of the party or parties who will be most directly affected by it. The application for rectification is therefore refused. (emphasis added)
58 Rares J made a similar point in his decision to order Mr Mentink to pay security for costs, when he was not residing in Australia, in his earlier proceedings seeking rectification: Mentink [2009] FCA 871 at [22]-[23]. He said there that unless Mr Arrand, who then appeared to be the owner and in possession of Larus II, were joined to those proceedings, Mr Mentink would have almost no prospects of succeeding in his claim for revising the entry closing the registration of the ship.
59 The evidence before the primary judge demonstrated that Mr Thackray had acted on the basis of the closure of the registration of Larus II and that, apparently, Mr Arrand had acquired her subsequently. The further evidence of Mr Arrand's registration of the yacht by the United States Coast Guard and his later sale of her to another person in Indonesia confirmed that rights of third parties in respect of the ship or dealings in her have arisen in the years since the closure of the registration in August 2004. The Coast Guard's registration appears to have had the effect of conferring the nationality of the United States of America on Larus II, until Mr Arrand sold her to an Indonesian national. There is no evidence as to the yacht's current registration, if any.
60 It is one thing to make a declaration, as the primary judge did, that the Registrar had not been authorised by s 66 to make the entry closing the registration, and another to rectify the Register. Rectification would affect the rights of third parties who have dealt with the ship in the years following the closure of her registration here. Mr Mentink chose not to join and serve all persons who appeared to have acquired interests in the yacht, including Mr Thackray and Mr Arrand, whose interests may have been affected were the Register rectified to cancel the closure of her registration on 11 August 2004.
61 Ordinarily, it would be necessary for all third parties who may have acquired rights or interests in a ship after an erroneous entry, including a closure, has been made on the Register, to have an opportunity to be heard before a court would make any order under s 59(1) rectifying the error. Such an order may prejudice the rights or interests of any such third party. This is a fundamental application of the principles of procedural fairness, that is also called natural justice, which, in the absence of express words of plain intendment, necessarily apply to proceedings of a court exercising judicial power: Annetts v McCann (1990) 170 CLR 596 at 598 per Mason CJ, Deane and McHugh JJ; Eastman v Director of Public Prosecutions (No 1) (2014) 9 ACTLR 163 at 174 [40] per Rares, Wigney JJ and Cowdroy AJ. Indeed, in Commissioner of Police v Tanos (1958) 98 CLR 383 at 395 Dixon CJ and Webb J said:
… it is a deep-rooted principle of the law that before anyone can be punished or prejudiced in his person or property by any judicial or quasi-judicial proceeding he must be afforded an adequate opportunity of being heard.
62 Nor did the Act impose an obligation on the Registrar to apply to a court under s 59(1) to rectify the Register merely because Mr Mentink asserted in September 2004 that his yacht had been stolen. The Registrar could not have known or proved that serious allegation. Moreover, Mr Mentink himself took no such proceedings at that time.
63 As we have noted, the Register serves both public and private law functions. Once a ship's registration on a national register of ships, such as the Register, has been entered or closed, the ship's nationality, or status, ordinarily, will change with that event. Countries into whose waters she sails will look to her registration certificate in respect of the lawfulness of her right to navigate as, for example, s 20 of the Act contemplated. In addition, persons who might wish to acquire rights or interests in the ship will be concerned to observe the existing and, where apposite, future flag State's laws for the transfer or creation of those rights and interests: cf Richard Coles & Edward Watt: Ship Registration: Law and Practice (2nd ed) informa, London 2009 at [1.22]-[1.25], [2.1]-[2.4]; Z. Oya Özçayir: Port State Control (2nd ed) LLP, London 2004 at [1.6]-[1.7], [1.31]-[1.32].
64 The primary judge correctly refused to order rectification in the absence of the persons who had, or may have, acquired rights or interests in the yacht based on a title derived through Mr Thackray.
65 We reject Mr Mentink's argument that, in the circumstances, the Registrar had an obligation to serve a notice on him pursuant to s 58(1) of the Act. The argument did not give any effect to the terms of the section that depended on the Registrar forming a state of mind that he had "reason to suspect" that, among others, certain particulars entered in the Register were incorrect and that if he did form that state of mind he "may, by notice in writing served on the registered agent or any owner of the ship, require him or her to furnish" information or documents specified in the notice. The word "may" in s 58(1) created a discretion, not an obligation, that the Register could decide to exercise. The section did not prescribe any content or requirements for a notice that the Registrar might have decided to serve. The Registrar could choose what to include in any notice that he might have decided to serve.
66 Importantly, s 58(1) did not require the Registrar to serve the registered owner, because the definition of "owner" in s 3(1) did not apply to s 58. The Registrar could choose the person on whom the notice would be served from between the registered agent or "any owner". And that person's response or failure to respond could be used as the basis of setting in train the steps under s 58(2), (2A) and (3) that could result in closure of the relevant ship's registration.
67 The only substantive action that could occur under s 58 was the deemed closure of the relevant ship's registration. If the registered agent or any owner responded to a notice with information or documents that revealed an error that could not result in such a closure, that error could only be corrected by a court order under s 59, or by the Registrar under s 60 if it were a clerical error or obvious mistake.
68 However, s 58(1) did not create any obligation on the Registrar to act by serving a notice. It did not provide for a person to make any form of application to the Registrar to act. That is hardly surprising, since any person aggrieved by any of the matters specified in s 59(1) had the right to apply to the Federal Court or a Supreme Court for an order for rectification of the Register.
69 The existence of the specific right to apply to a Court, that the Registrar may also exercise, under s 59(1) and the absence of any corresponding right or duty in s 58(1) suggests that the power conferred on the Registrar by s 58(1) was discretionary and that the Registrar was not obliged to exercise it. Indeed, the Registrar's right to apply to the Court under s 59(1) covered matters that could also have been the subject of the power under s 58(1), yet neither section excluded or confined the operation of the other or the circumstances in which the Registrar could exercise his power to proceed under one or other of those sections.
70 In our opinion, these factors suggest that s 58(1) conferred a discretion on the Registrar to choose whether to serve a notice at all, on whom to serve it and what information or documents he would seek in the event he had reason to suspect any of the three matters referred to in s 58(1)(b). Such a discretion was unconfined, except if the Registrar chose to exercise it, by the subject matter, scope and purpose of s 58 itself: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-40 per Mason J, with whom Gibbs CJ and Dawson J agreed.
71 It follows that the primary judge was correct to hold that s 58 created a discretionary power, and not a duty, in the Registrar to serve a notice in writing on the registered agent or any owner (registered or not) requiring that person to provide specified information or documents relating to a ship. Accordingly, Mr Mentink has not made good his claim to a declaration in terms of paragraph 4 of his application in the Court below.
72 None of the declarations that Mr Mentink sought in paragraphs 1, 3 or 5 of his application before the primary judge was necessary or expedient to be made in connection with his application to rectify the Register. First, the declaration that his Honour made gave Mr Mentink all the relief that was necessary and appropriate to resolve the controversy: Plaintiff M61/2010E v Commonwealth (2010) 243 CLR 319 at 359 [103] per French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; see too s 59(3).
73 Secondly, as his Honour found, Mr Mentink acknowledged that further facts had to be found before the three further declarations he sought could be made: Mentink [2014] 1 Qd R at 411 [41]. Thirdly, Mr Mentink did not identify any foreseeable consequences for the parties if declarations in the form of paragraphs 1, 3 and 5 were made and so, it was not appropriate for his Honour, in the exercise of his discretion, to make them: M61 243 CLR at 359[103]; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582 per Mason CJ, Dawson, Toohey and Gaudron JJ.
74 Mr Mentink has not established that he was entitled to any further relief than that granted by the primary judge. Moreover, we are satisfied that his Honour correctly found that there was no utility in granting declarations in terms of paragraphs 1, 3 or 5 of Mr Mentink's application, given the terms of the declaration that his Honour did make.
75 We reject Mr Mentink's argument that the Registrar's unauthorised action in closing the registration of Larus II was no decision at all, in the sense of a decision affected by jurisdictional error as explained by Gaudron, McHugh, Gummow, Kirby and Hayne JJ in Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476 at 506 [76]. If that were so, detailed provisions such as ss 58 and 59, that empower the Registrar and the Court to rectify or make an entry in the Register in circumstances including where the affected entry was wrongly made, would not need to be in the form that the Parliament enacted. McHugh, Gummow, Kirby and Hayne JJ held in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 392 [97] that:
Courts have always accepted that it is unlikely that it was a purpose of the legislation that an act done in breach of a statutory provision should be invalid if public inconvenience would be a result of the invalidity of the act [Montreal Street Railway Co v Normandin [1917] AC 170 at 175; Clayton v Heffron (1960) 105 CLR 214 at 247; TVW Enterprises Ltd v Duffy [No 3] (1985) 8 FCR 93 at 104-105].
76 Their Honours made those observations in the context of an act done by a Commonwealth authority in contravention of a statutory provision that required it to act in a manner consistent with any agreement between Australia and a foreign country. They held that properly construed, the legislation in that case entailed that an act of the Authority done in contravention of the section was not invalid, but was "a breach of the Act and therefore unlawful", and that a person with a sufficient interest was entitled to sue for, and obtain, a declaration to that effect, and, because it was appropriate on the facts of that case, an injunction restraining the authority from taking any further action based on its unlawful action (see 194 CLR at 393 [100]). They had said that "the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have" (194 CLR at 384 [78]). And , as Gaudron, McHugh, Gummow, Kirby and Hayne JJ said in Plaintiff S157 211 CLR at 510 [90]:
Seldom will a construction that gives a provision no useful work to do achieve that end.
77 It is not necessary to decide whether the bill of sale was invalid and not capable of affecting entries in the Register, as Mr Mentink argued, because even if it were, that would not affect the operation of the closure of the registration of Larus II.
78 Here, s 58 of the Act allowed the Registrar to initiate a process with a view to changing certain obsolete or incorrect entries, other than particulars relating to a mortgage (see s 58(1)(b)(i)). And s 60 allowed the Registrar to correct "any clerical error or obvious mistake in the Register".
79 More importantly, s 59(1)(c) gave a person aggrieved or, significantly, the Registrar, the right to apply for rectification of the Register to the Supreme Court of a State or Territory if "an entry wrongly exists in the Register" and for that Court to "make such order as it thinks fit directing the rectification of the Register". Of course, the person aggrieved or the Registrar can also apply to the Federal Court for that relief by force of the jurisdiction conferred by s 39B(1A)(c) of the Judiciary Act 1903 (Cth), as Allsop J held in Adsteam Harbour Pty Ltd v The Registrar of the Australian Register of Ships [2005] FCA 1324 at [5]-[7].
80 If an erroneous or wrong entry in the Register were no decision, or of no effect, at all, the Registrar could have ignored it. Yet, s 59(1)(c) created a specific right for a person in Mr Mentink's position, as well as the Registrar, to apply to a court for an order for rectification and the section created a discretion for, and not an obligation of, the Court to make an order for rectification.
81 In our opinion, the words of s 59(1) evinced an intention of the Parliament that a court could make an order for rectification where, among other circumstances, an entry wrongly existed in the Register, only if the Court considered that such an order were appropriate in the exercise of its judicial discretion.
82 The Act entailed that until the Court made an order for rectification under s 59(1), the entry would be valid and operate according to its terms, including to confer or withdraw Australian nationality on a ship. The public inconvenience of any other result is self evident. The fact of registration or its closure on the Register has the public international law consequence of determining whether Australia is the ship's flag State. The Parliament intended that until the Court made an order rectifying the Register under s 59(1), any entry would mean what it said and operate as effectual.
83 Nonetheless, private international law rights and interests, such as beneficial interests, could still co-exist and be enforceable by or against a registered owner or mortgagee of a ship or a share in a ship, as s 47 of the Act expressly recognised. But, those equitable interests were personal rights that, if established, could be used to support the making of an entry to reflect them on the Register, including, where appropriate, pursuant to a court order for rectification under s 59(1).
84 For these reasons, the closure of the registration of Larus II made on 11 August 2004 was not invalid even though it was unlawful: Project Blue Sky 194 CLR at 392 [97], 393 [100]. It was and will remain operative, unless and until an order is made to rectify the Register under s 59(1).