Federal Court of Australia|1991-10-28|Before: Gummow J, Adam P, Act J

Re Empire Shipping Company Inc v the Owners of the Ship "Shin Kobe Maru" [1991] FCA 499; (1991) 104 ALR 489 (1991) 32 FCR 78 (28 October 1991)

Constitutional Law - Shipping and Navigation - Practice and Procedure

Constitutional Law - whether proprietary maritime claims as defined in paras. 4 (2) (a), (b) of the Admiralty Act 1988 might found proceedings in rem comprising a matter of Admiralty and maritime jurisdiction within the meaning of the Constitution s. 76 (iii) - interpretation of s. 76 (iii).

Shipping and Navigation - claims in rem - creation of fresh maritime claims without new maritime liens - procedural rights in respect of subsisting causes of action - s. 6 of the Admiralty Act 1988 - when proprietary maritime claim will "relate to" possession or title to or ownership of a ship - claim between "co-owners" - whether in either case equitable interests sufficient - whether claim for delivery of possession to a third party is a proprietary maritime claim.

Practice and Procedure - applications to set aside originating process on a proprietary maritime claim - whether plaintiff has to satisfy the Court of a strong argument that the Court has jurisdiction - whether plaintiff has to satisfy the Court that the Court has jurisdiction, on same balance of probabilities as would apply at a trial.

Admiralty Court Act 1840 (3 and 4 Vict., c. 65) (Imp)

Vice-Admiralty Courts Act 1863 (26 Vict., c. 24) (Imp)

The Vice-Admiralty Courts Amendment Act 1867 (30 and 31 Vict., c. 45) (Imp)

The State of New South Wales v The Commonwealth of Australia [1975] HCA 58; (1975) 135 CLR 337

I Congreso del Partido (1978) QB 500

"The St. Elefterio" (1957) P 179

Antares Shipping Corporation v The Ship "Capricorn" (1979) 111 DLR (3d) 289

Fencott v Muller (1983) 152 CLR 570

Philip Morris Incorporated v Adam P. Brown Male Fashions Proprietary Limited (1981) 148 CLR 457

Voth v Manildra Flour Mills Proprietary Limited [1990] HCA 55; (1990) 171 CLR 538

Contender 1 Ltd v Lep International Pty Ltd [1988] HCA 60; (1988) 63 ALJR 26

Vitkovice Horni a Hutni Tezirstvo v Korner (1951) AC 869

The Queen v The Judges of the Federal Court of Australia;

Ex parte The Western Australian National Football League (Incorporated) [1979] HCA 6; (1979) 143 CLR 190

Richardson v The Forestry Commission [1988] HCA 10; (1988) 164 CLR 261

O'Toole v Charles David Proprietary Limited (1990) 171 CLR 232

The Halcyon Isle (1981) AC 221

The Monica S (1968) P 741

The Owners of the S.S. "Kalibia" v Wilson [1910] HCA 77; (1910) 11 CLR 689

Kirmani v Captain Cook Cruises Proprietary Limited (No. 1) [1985] HCA 8; (1985) 159 CLR 351

The King v Turner; Ex parte The Marine Board of Hobart [1927] HCA 15; (1927) 39 CLR 411

F. Kanematsu and Company Limited v The Ship "Shahzada" [1956] HCA 57; (1956) 96 CLR 477

Rosenfeld Hillas and Company Proprietary Limited v The Ship Fort Laramie [1923] HCA 7; (1923) 32 CLR 25

Huddart Parker Ltd v The Ship "Mill Hill" and her Cargo [1950] HCA 43; (1950) 81 CLR 502

Musgrave v The Commonwealth [1936] HCA 80; (1937) 57 CLR 514

The Yuri Maru (1927) AC 906

McIlwraith McEacharn Limited v The Shell Company of Australia Limited [1945] HCA 11; (1945) 70 CLR 175

China Ocean Shipping Co. v The State of South Australia [1979] HCA 57; (1979) 145 CLR 172

Allonah v The Ship "Amanda N" (1989) 21 FCR 60

Foong Tai and Co. v Buchheister and Co. (1908) AC 458

Shell Oil Company v The Ship "Lastrigoni" [1974] HCA 27; (1974) 131 CLR 1

Kali Boat Building and Repair Pty Ltd v The Motor Fishing Vessel "Bosna" (1977) 19 SASR 112

The Conoco Brittania (1972) 2 QB 543

Beswick v Beswick [1967] UKHL 2; (1968) AC 58

J.C. Williamson Limited v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282

Chang v The Registrar of Titles [1976] HCA 1; (1975-1976) 137 CLR 177

Gatoil International Inc. v Arkwright-Boston Manufacturers Mutual Insurance Co. [1984] UKHL 8; (1985) AC 255

Petrofina SA v AOT Ltd (1991) 3 All ER 161

Richard Bertram v Yacht "Wanda" (1971) AMC 1841

Everett A. Sisson v Burton B. Ruby [1990] USSC 126; 111 L Ed 2d 292 (1990)

United Dominions Corporation Limited v Brian Proprietary Limited [1985] HCA 49; (1985) 157 CLR 1

Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) Pty Limited [1974] HCA 22; (1974) 131 CLR 321

Tasker v Small (1837) 3 My and Cr 63[1834] EngR 924; , 40 ER 848

Hohler v Aston (1920) 2 Ch 420

Crouch v Commissioner for Railways (Queensland) [1985] HCA 69; (1985) 159 CLR 22

The Tojo Maru (1972) AC 242

Polyukhovich v The Commonwealth [1991] HCA 32; (1991) 65 ALJR 521

John Sharp and Sons Ltd v The Ship Katherine Mackall [1924] HCA 37; (1924) 34 CLR 420

The "Victoria" (1859) Swab. 408, 166 ER 1188

The Colorado (1923) P 102

Commissioner of Stamp Duties (Queensland) v Hugh Duncan Livingston [1964] UKPC 2; (1965) AC 694

The Commonwealth of Australia v The State of Queensland [1975] HCA 43; (1975) 134 CLR 298

Australian National Airways Proprietary Limited v The Commonwealth [1945] HCA 41; (1945) 71 CLR 29

Russell v Russell (1976) 134 CLR 495

Attorney-General for the State of Victoria (at the relation of Black) v The Commonwealth of Australia [1981] HCA 2; (1981) 146 CLR 559

Waring v Clarke 45-47 US 456 (1846)

Morewood v Enequist 62-64 US 677 (1859)

The Transportation Company v Fitzhugh 65-67 US 615 (1861)

The Queen v Gray; Ex parte Marsh [1985] HCA 67; (1985) 157 CLR 351

The Queen v The Judge of the City of London Court (1892) 1 QB 273

"The Apollo" (1824) 1 Hagg. 306[1824] EngR 895; , 166 ER 109

Re Tracey; Ex parte Ryan [1989] HCA 12; (1989) 166 CLR 518

The Tasmanian Dam Case [1983] HCA 21; (1983) 158 CLR 1

The Queen v Coldham; Ex parte Australian Social Welfare Union [1983] HCA 19; (1983) 153 CLR 297

The Jumbunna Coal Mine, No Liability v Victorian Coal Miners' Association (1908) 6 CLR 309

Counsel and solicitors Mr A.W. Street and (on 10, 11 October 1991) Mr for the plaintiff: G.J. Nell instructed by Messrs Norton Smith and Co.

Counsel and solicitors Mr C.S.C. Sheller QC and Mr P.E. King

for the defendant: instructed by Messrs Westgarth Middletons.

Counsel and solicitors Mr S.J. Gageler instructed by the Australian

The defendant's motion filed 12 October 1989 be dismissed.

The defendant pay the plaintiff's costs of the motion and of the Case Stated to the Full Court.

NOTE: Settlement and entry of order is dealt with by Order 36 of the Federal Court Rules.

By Notice of Motion filed 12 October 1989, the defendant moves the Court for orders that the originating process in this proceeding be set aside or, in the alternative, that service thereof on the defendant be set aside. The plaintiff invokes the Admiralty jurisdiction of the Court. The defendant denies that this jurisdiction has been attracted.

2. This motion has not been treated by the parties as if it were a motion to strike out a statement of claim in a proceeding which is within jurisdiction but where the pleading is said to fail to disclose a reasonable cause of action. On such an application, in accordance with well known authorities, it is assumed that the allegations of fact made in the statement of claim could be made out at a trial, and the orders sought will not be made unless it appears that the cause of action propounded is manifestly untenable.

3. On the hearing of the present motion there was some dispute as to factual matters. Some of those issues also would be crucial at the trial. The plaintiff contends that whilst it will be necessary in disposing of the defendant's motion to deal with some issues of fact, a lesser standard is appropriate in dealing with a challenge to jurisdiction than the standard which the plaintiff would have to meet at a trial. The defendant disputed that submission.

4. Issues also arise on the motion as to the proper construction and the validity of certain provisions of the Admiralty Act 1988 ("the Act"). To that end the necessary notices were given under the provisions of s. 78B of the Judiciary Act 1903 ("the Judiciary Act"). In response to such a notice, the Attorney-General for the Commonwealth appeared by counsel to support validity.

5. In that regard, I should emphasise at the outset that in this case no issue arises as to the criminal jurisdiction formerly exercised in Admiralty, a subject dealt with in The Queen v Bull [1974] HCA 23; (1974) 131 CLR 203 at 226-235, 247-249, 260-263, 268-269, 276-280; see also The State of New South Wales v The Commonwealth of Australia [1975] HCA 58; (1975) 135 CLR 337 at 490-492. Nor did the intervener seek to support the validity of those provisions of the Act which were attacked, other than by reliance upon s. 76 (iii) of the Constitution.

6. The plaintiff, Empire Shipping Company Inc. ("Empire"), is a company incorporated in Panama. Yamashita Shinnihon Steamship Company Limited ("YSL"), is a company incorporated in Japan. On 1 June 1989, YSL changed its name to Navix Line Limited. The proceedings were commenced as an action in rem by Writ filed 2 May 1989. The particulars of the ship are given as the MV "Shin Kobe Maru", registered in a port in Japan ("the Ship"). YSL is the present registered owner. Pursuant to Rule 15 of the Admiralty Rules, it is specified as the defendant. Empire says (and YSL denies) it has a proprietary maritime claim concerning the Ship and that the present proceeding was rightly instituted as an action in rem. A Statement of Claim, since amended, was filed on 16 March 1990. Efforts to seek resolution, by Case Stated to the Full Court, of the issues raised by the defendant's motion proved abortive.

7. In or about August 1989, the Ship was in the Australian territorial sea, and entered or was about to enter an Australian port, namely Port Hedland in the State of Western Australia. The Writ had been filed, as I have indicated, on 2 May 1989. Empire agreed not to arrest the Ship pending determination by this Court of its claim, upon two conditions. First, YSL's solicitors agreed to accept service of the Writ (as provided in Rule 37 of the Admiralty Rules), such service to stand in place of service on the Ship within Australia and to be deemed to place YSL in the same position as if service of the Writ had been effected on the Ship within Australia, but without prejudice to any rights and/or defences which YSL might have (including but not limited to reliance upon certain arbitration provisions to which I refer later in these reasons). The second condition was that YSL agreed to provide security in an amount acceptable to Empire. The Ship has since continued to trade to Australian ports with some regularity.

8. The Ship is not registered under the provisions of the Shipping Registration Act 1981. It follows that the Ship is a "foreign ship" within the definition of that term in sub-s. 3 (1) of the Act. The Act commenced on 1 January 1989. A proceeding on a proprietary maritime claim may be commenced as an action in rem: s. 16. A reference in the Act to a "maritime claim" is a reference to a "proprietary maritime claim" or a "general maritime claim": sub-s. 4 (1). Sub-section 4 (2) provides that a reference to a "proprietary maritime claim" is a reference, inter alia, to:

"(a) a claim relating to:

(i) possession of a ship;

(ii) title to, or ownership of, a ship or a share in

a ship;

(iii) a mortgage of a ship or of a share in a ship; or

(iv) a mortgage of a ship's freight;

(b) a claim between co-owners of a ship relating to the

possession, ownership, operation or earnings of the ship;

. . ."

The plaintiff, Empire, claims that the present proceedings fall within para. (a) (i) and (ii), and para. (b) and thus within the Admiralty jurisdiction of this Court. That jurisdiction, as regards actions in rem, is conferred by ss. 10 and 13 of the Act.

9. In my view, it is no objection that a claim brought under one head in sub-s. 4 (2) of the Act also falls under another head. That interpretation is confirmed by s. 146 of the Law Reform Commission Report No. 33, "Civil Admiralty Jurisdiction", published in 1986 ("the LRC Report"). Section 4 of the Act follows the terms of the draft Admiralty Bill which was an appendix to the LRC Report. The LRC Report is thus material which may be considered in accordance with sub-s. 15AB (1) of the Acts Interpretation Act 1901 ("the Interpretation Act") in the interpretation of provisions of the Act; see para. 15AB (2) (b).

10. I turn to consider the criteria by which the defendant's motion is to be disposed of.

11. There has been division of opinion in England as to the correct approach to be taken in Admiralty where an application is brought to set aside the writ and other subsequent proceedings on the ground that the court has no jurisdiction in the matter.

12. I Congreso del Partido (1978) QB 500 at 535-537 is authority that in England the question of ownership of the res, if in issue, has to be decided on the motion to set aside the writ in an action in rem, and should not be left to be tried as an issue in the action. The "Aventicum" [1884] LRSC 6; (1978) 1 Ll R 184 is to like effect. In that case, Slynn J. ordered that the writ and all subsequent proceedings be set aside and that the ship in question be released from arrest and custody of the court. His Lordship observed (at 186) that very difficult questions of fact were involved and that they were not easily resolved on affidavit evidence, particularly where the matter arose as a matter of urgency. Nevertheless, after referring to other authorities, his Lordship rejected the submission for the plaintiffs that it was only necessary that they show they had a good arguable case as to the existence of jurisdiction. Slynn J. went on to hold (at 190) that the plaintiffs had not satisfied him by their evidence on the balance of probabilities that the person who was the owner of the ship at the time the cause of action arose was the person who, at the time the proceedings were commenced, beneficially owned all the shares in the vessel. This was the crucial question, for jurisdiction which was sought to be rested upon sub-s. 3 (4) of the Administration of Justice Act 1956 (U.K.) ("the 1956 Act"). It may be noted that that provision in terms speaks of beneficial ownership.

13. On the other hand, Slynn J. does not appear to have been referred to the earlier decision of Willmer J. in "The St. Elefterio" (1957) P 179. The defendants there moved unsuccessfully for an order setting aside the writ of summons and warrant of arrest of their ship on the grounds that the Admiralty Court had no jurisdiction under ss. 1 or 3 of the 1956 Act, and that the plaintiffs were not entitled to institute proceedings in rem against their vessel. Title to the vessel was not in issue. His Lordship accepted the submission of counsel for the plaintiffs that a hearing to decide whether there is a right to proceed in rem must not develop into a trial of the action. It had not been suggested that the proceedings were frivolous or vexatious so as to call for the exercise of the inherent jurisdiction of the court to halt the proceedings in limine. Willmer J. pointed out that:

"(T)he simple remedy for the defendants, if they want their ship

released, is to put in bail. The action will then be tried, and at

the appropriate time - when all the facts have been ascertained -

due consideration will be given to the arguments on law which the

defendants desire to advance."

14. A challenge to jurisdiction was considered, yet again somewhat differently, in Antares Shipping Corporation v The Ship "Capricorn" (1979) 111 DLR (3d) 289. The Supreme Court of Canada proceeded on the footing that where the sole issue related to the Admiralty jurisdiction of the Federal Court of Canada, it should be assumed that the allegations of fact in the plaintiff's pleading were correct. On that basis, the Supreme Court held that the Statement of Claim had wrongly been struck out, and that the Federal Court did have jurisdiction to entertain the claim of the plaintiff. Jurisdiction was conferred by para. 22 (2) (a) of the Federal Court Act 1970 (Can.) to entertain claims with respect to "any claim as to title, possession or ownership of a ship".

15. As regards this Court, s. 13 of the Act reminds us that in conformity with Chapter III of the Constitution, jurisdiction is conferred in respect of "matters". It is of the essence of the exercise of the judicial power of the Commonwealth in respect of "matters" that there is presented for determination a controversy, which may comprise one or more causes of action and claims to relief. And, as was pointed out by Mason, Murphy, Brennan and Deane JJ. in Fencott v Muller (1983) 152 CLR 570 at 610, questions which arise as to the existence of federal jurisdiction should hopefully be amenable to summary disposition. In Fencott v Muller itself, this was done by an analysis of the statement of claim and Gibbs C.J. observed (at 580) that at that stage the concern of the Court was not with the merits of any of the claims as a matter of law, but only with the question of jurisdiction; see also per Mason, Murphy, Brennan and Deane JJ. at 594. Likewise, Philip Morris Incorporated v Adam P. Brown Male Fashions Proprietary Limited (1981) 148 CLR 457, was decided upon the pleadings.

16. Similar, though not identical, questions arise in Australia in courts not exercising federal jurisdiction where applications are made to set aside service effected outside the jurisdiction or for a stay on the ground that the court is an inappropriate forum. In the former case, the issue is whether the court should assume jurisdiction, and in the other it is whether the court should decline it, the result being that the onus of proof differs. But, in Voth v Manildra Flour Mills Proprietary Limited [1990] HCA 55; (1990) 171 CLR 538 at 565, Mason C.J., Deane, Dawson and Gaudron JJ. plainly favoured a procedure whereby both types of application were dealt with in summary fashion.

17. Earlier, in Contender 1 Ltd v Lep International Pty Ltd [1988] HCA 60; (1988) 63 ALJR 26, an appeal concerned with an unsuccessful application to have set aside service outside Australia of proceedings commenced in the Supreme Court of New South Wales, Wilson, Dawson, Toohey and Gaudron JJ. said, supra at 28:

"The issues arising before Clarke J, notwithstanding the

interlocutory character of the proceedings, were issues which were

fundamental to the ultimate determination of the action. It is

clear that at the trial the outcome of a case is likely to be

determined by the decision of the trial judge on the question

whether the appellant was a party to the bill of lading or,

alternatively, on the question whether the master's possession of

the cargo rendered the appellant liable as a bailee for failing to

render up the cargo in good condition. At the trial evidence may be

tendered touching those questions additional to that placed before

Clarke J on the preliminary application. If the ultimate

determination of those questions favours the appellant, then the

action against it will be dismissed and the appellant will be

compensated for the erroneous joinder by an order for costs."

Clarke J. had dismissed the application on the footing that on consideration of all admissible material there remained a strong argument for the opinion that the qualifying conditions for service outside the jurisdiction were indeed satisfied. In so doing his Honour followed what had been said by Lord Radcliffe in Vitkovice Horni a Hutni Tezirstvo v Korner (1951) AC 869 at 883. On the appeal to the High Court, there was no challenge to the use by Clarke J. of a criterion expressed in this way.

18. In the present case, the Amended Statement of Claim upon which Empire relies is still, despite amendments, not without its infelicities. The particulars of the claims made by Empire were supplemented on the hearing of the present motion by affidavit and documentary evidence which, though by no means insubstantial, would still fall short of what might be expected at a trial.

19. Counsel for Empire indicated a readiness to shoulder a burden expressed in terms drawn from the speech of Lord Radcliffe, that is to say a burden of showing that on consideration of the material before the Court on the motion, there was a strong argument for the opinion that the Court had jurisdiction. Counsel by YSL submitted, in effect, that on this motion it was for Empire to satisfy the Court that, on the same balance of probabilities which would apply at a trial, the issues which now arose should be decided in favour of Empire. This submission reflects what was said by Slynn J. in The "Aventicum" supra. Nevertheless, in the light of what has been said in the High Court as to the appropriate method of dealing with motions challenging jurisdiction, both as regards the existence of federal jurisdiction (of which this case, after all, is one) and as to the existence of "long arm" or "exorbitant" jurisdiction, I should accept the submission for Empire. I put to one side, at this stage, any special considerations that may arise from any of the jurisdictional facts also being constitutional facts: see The Queen v The Judges of the Federal Court of Australia; Ex parte The Western Australian National Football League (Incorporated) [1979] HCA 6; (1979) 143 CLR 190 at 214-215 per Gibbs J., 226-231 per Mason J.; Richardson v The Forestry Commission [1988] HCA 10; (1988) 164 CLR 261 at 294, per Mason C.J., Brennan J.; O'Toole v Charles David Proprietary Limited (1990) 171 CLR 232 at 251-252, per Mason C.J.

20. I now come to further provisions of the legislation.

"5. (1) Subject to the succeeding provisions of this section,

this Act applies in relation to:

(a) all ships, irrespective of the places of

residence or domicile of their owners; and

(b) all maritime claims, wherever arising.

(2) This Act does not apply in relation to a proceeding

commenced before the commencement of this Act.

(3) This Act does not apply in relation to a cause of

action that arose:

(a) in respect of an inland waterways vessel; or

(b) in respect of the use or intended use of a ship

on inland waters.

(4) Paragraph (3) (b) does not have effect in relation to

a cause of action if, at the time when the cause of

action arose, the ship concerned was a foreign ship."

The result is that a foreign ship may be subject to Admiralty jurisdiction, even where the cause of action arose in respect of the use or intended use of the ship on inland waters.

22. Section 14 stipulates that 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. Sections 15, 16, 10 and 22 provide for the commencement of an action in rem and thus provide the subject matter with which s. 14 is concerned. It will be necessary later to refer further to s. 15. Section 16 states:

"16. A proceeding on a proprietary maritime claim concerning a ship

or other property may be commenced as an action in rem against

the ship or property."

"10. Jurisdiction is conferred on the Federal Court and on the

Supreme Courts of the Territories, and the Supreme Courts of

the States are invested with federal jurisdiction, in respect

of proceedings that may, under this Act, be commenced as

actions in rem."

Section 22 deals with service and arrest. It provides, so far as is relevant:

"22. (1) Subject to subsection (4):

(a) initiating process in a proceeding commenced as

an action in rem in the Federal Court may be

served on a ship or other property; and

(b) a ship or other property may be arrested in such

a proceeding;

at any place within Australia, including a place

within the limits of the territorial sea of Australia.

. . .

(4) Where the arrest of a foreign ship, or of cargo on

board a foreign ship, would be inconsistent with a

right of innocent passage that is being exercised by

the ship, this Act does not authorise the service of

process on the ship or the arrest of the ship or cargo.

(5) In this section:

'innocent passage' has the meaning it has under the

Convention on the Territorial Sea and the Contiguous

Zone done at Geneva on 29 April 1958, a copy of the

English text of which is set out in Schedule 1 to the

Seas and Submerged Lands Act 1973."

The Seas and Submerged Lands Act 1973, sub-s. 7 (1) provides for the declaration by Proclamation of the limits of the whole or of any part of the territorial sea.

23. Section 33 of the Act is a special provision dealing with co-ownership disputes. It states:

"33. In a proceeding on a maritime claim between co-owners of a

ship relating to the possession, ownership, operation or

earnings of the ship, the orders that the Court may make

include:

(a) orders for the settlement of accounts outstanding and

unsettled; and

(b) an order directing that the ship, or a share in the

ship, be sold."

Section 13 of the Act is of importance. I have already referred to it. This section provides:

"13. This Act does not confer jurisdiction on a court, or invest a

court with jurisdiction, in a matter that is not of a kind

mentioned in paragraph 76 (ii) or (iii) of the Constitution."

Paragraph 77 (i) of the Constitution empowers the Parliament, with respect to any of the matters mentioned in ss. 75 and 76 of the Constitution, to make laws defining the jurisdiction of any federal court other than the High Court. Section 76 is in the following terms:

"76. The Parliament may make laws conferring original

jurisdiction on the High Court in any matter -

(i) Arising under this Constitution, or involving

its interpretation:

(ii) Arising under any laws made by the Parliament:

(iii) Of Admiralty and maritime jurisdiction:

(iv) Relating to the same subject-matter claimed

under the laws of different States."

24. Section 6 is an important provision. It states that the provisions of the Act (other than s. 34 dealing with damages for unjustified arrest, with which the present proceedings are not concerned) do not have effect to create:

"(a) a new maritime lien or other charge; or

(b) a cause of action that would not have existed if this Act had

not been passed."

25. A proceeding on a maritime lien may be commenced as an action in rem. The plaintiff in the present proceeding asserts proprietary maritime claims but not a maritime lien. There was a time when jurisdiction to entertain an action in rem and the maritime lien went hand in hand, so that a lien existed in every case in which the Court of Admiralty had jurisdiction to entertain an action in rem. However, this ceased to be true in English law as legislation, beginning in 1840, extended jurisdiction in rem in respect of maritime claims but without the creation of fresh maritime liens: The Halcyon Isle (1981) AC 221 at 232-233. The Act follows this pattern by dealing extensively with actions in rem, by listing in sub-s. 15 (2) the four significant categories of lien (salvage, damage, wages and master's disbursements), and by making in s. 6 the statement to which I have referred as to new liens. See also the LRC Report sections 14-15, sections 119-123.

26. It has been said that a maritime lien has proprietary characteristics (The Halcyon Isle, supra at 234) and to create new liens would be to change the substantive law. But to extend by statute jurisdiction in rem for maritime claims is to create procedural rights in respect of subsisting causes of action, rather than new substantive rights: The Monica S (1968) P 741 at 768-769, per Brandon J., the LRC Report, s. 126. The extended categories of maritime claims which may found an action in rem under the Act are consistent with the provision in s. 6 that the Act does not operate to create new causes of action.

27. It therefore is apparent from a reading of s. 6 of the Act that, putting to one side the effect of s. 34, the Parliament has respected the view of three members of the High Court in The Owners of the S.S. "Kalibia" v Wilson [1910] HCA 77; (1910) 11 CLR 689 at 699 per Griffith C.J., 703-704 per Barton J., 715 per Isaacs J. This was that s. 76 (iii) of the Constitution does not imply a power in the Parliament to legislate substantively as to admiralty and maritime law generally. However, it may be observed that Barton J. rested his decision on the ground that, unlike the United States, Australia was not then a "separated nation of independent sovereignty in its relation to the United Kingdom" and that Griffith C.J. merely said the contrary argument was "quite untenable". That Barton J.'s reasoning no longer represented the modern constitutional position was made apparent, even before the coming of the Australia Acts 1986, by the decision in Kirmani v Captain Cook Cruises Proprietary Limited (No. 1) [1985] HCA 8; (1985) 159 CLR 351. Further, in The King v Turner; Ex parte The Marine Board of Hobart [1927] HCA 15; (1927) 39 CLR 411 at 447-448, Higgins J. treated as having been expressed obiter the views of Griffith C.J., Barton J. and Isaacs J., that s. 76 (iii) did not authorise the Parliament to make laws over a greater area of waters than it could make by virtue of the commerce power.

28. The substantial body of law applicable to the claims comprising the present matter will be supplied by other applicable federal law (cf. F. Kanematsu and Company Limited v The Ship "Shahzada" [1956] HCA 57; (1956) 96 CLR 477) including State law and common law "picked up" by ss. 79, 80 of the Judiciary [1923] HCA 7; Act (cf. Rosenfeld Hillas and Company Proprietary Limited v The Ship Fort Laramie (1923) 32 CLR 25 at 34; Huddart Parker Ltd v The Ship "Mill Hill" and her Cargo [1950] HCA 43; (1950) 81 CLR 502 at 507-508). The law applicable to the matter by these means includes the rules of private international law: Musgrave v The Commonwealth [1936] HCA 80; (1937) 57 CLR 514.

29. Part VI of the Act deals with repeals and amendments of Imperial legislation. In particular, s. 45 repeals a number of English and Imperial statutes that might apply in Australia including the statutes of 13 Richard II, st. I, c. 5, (1389), and 15 Richard II, c. 3, (1391), which had been designed to restrict the Admiralty jurisdiction in England and which had generated much controversy over the centuries. Further, the effect of s. 44 is to repeal the Colonial Courts of Admiralty Act 1890 (Imp) ("the 1890 Act"), as amended at 1 January 1989, and insofar as it was part of the law of the Commonwealth or of an external Territory on 1 January 1989.

30. In its application to Australia, the 1890 Act had had some serious deficiencies. Upon its creation, the High Court was itself a colonial court of admiralty. The content of the jurisdiction with which the courts of this country were invested was that of the English High Court at the time of the passing of the 1890 Act, not the English High Court jurisdiction as it later was extended from time to time: The Yuri Maru (1927) AC 906. Further, at least until the delayed adoption in Australia of the Statute of Westminster 1931 (Imp) there was an inhibition upon the Parliament of the Commonwealth legislating in a manner repugnant to the Imperial statute: McIlwraith McEacharn Limited v The Shell Company of Australia Limited [1945] HCA 11; (1945) 70 CLR 175 at 210; China Ocean Shipping Co. v The State of South Australia [1979] HCA 57; (1979) 145 CLR 172 at 203-204, 224-231, 241-242. The effect of the repeal of the 1890 Act is that s. 76 (iii) of the Constitution no longer is to be read against the background of concurrently applicable Imperial law. In this sense, the denotation of the terms in which s. 76 (iii) of the Constitution is expressed has changed and they are to be considered in this new light: Lansell v Lansell [1964] HCA 42; (1964) 110 CLR 353 at 362-363, 369, 370; Kirmani v Captain Cook Cruises Proprietary Limited (No. 1), supra at 379.

31. I now return to consider the nature of the dispute between the parties. The relief sought in the writ is put in the alternative as (i) damages estimated at US$13,453,926 together with interest and costs, or (ii) an order for sale of the Ship and for remission to the plaintiff of 50% of the sale proceeds, or (iii) an order that all of the shares in the Ship and the property and ownership in the Ship be transferred to Seven Seas Transport Incorporated ("Seven Seas") (a company incorporated under the laws of Liberia) or to some other company nominated by the plaintiff. It will be apparent that Seven Seas is not a party to this proceeding. The relief sought in the statement of claim is somewhat differently expressed and it will be necessary later to return to this.

32. The particulars of the claim given in the Writ are as follows:

"Damages for breach of a joint venture agreement dated 18th

September, 1975 as subsequently amended on 8th February, 1984 made

between the Plaintiff and (YSL) relating to the ship 'Seven Seas

Conqueror' now named 'Shin Kobe Maru', arising out of YSL's refusal

to transfer the ownership of the ship in accordance with the

provisions of the amended joint venture agreement."

33. On 16 July 1974, by what they called their "Basic Agreement", Empire and YSL agreed that Empire would sell and YSL purchase one half of the issued shares in United Transport Investment Inc. ("UTI"), a Liberian company, "for the purpose of owning vessels jointly". There was a recital that Empire and YSL had "agreed it would be in their interest to enter into and jointly carry on the business of shipping".

34. On 18 September 1975, Empire and YSL entered into a written agreement headed "Joint Venture Agreement" ("the JVA"). The JVA recites that Empire and YSL "have agreed to enter into and to jointly carry on the business of shipping", that they are the shareholders of UTI which itself "established" another Liberian company, Seven Seas. (In fact, Seven Seas had been incorporated on 28 June 1973, and UTI on 5 June 1974.) It is further recited that by agreement with Seven Seas dated 1 April 1974, Manufacturers Hanover Trust Company ("Hanover") undertook to make up to US$23m. available to Seven Seas, and that on 14 August 1973, Seven Seas entered into a ship building agreement with Mitsui Shipbuilding and Engineering Co. Limited ("the Builder") relating to the construction and purchase of one ore carrier of about 116,000 tons. Then it is said that Empire and YSL are willing to execute the JVA "for the purpose of jointly own (sic)" the Ship.

35. Paragraph 3A of the Amended Statement of Claim reads as follows:

"3A. The (Plaintiff) says that the Defendant is estopped from

denying the facts asserted in the recitals to the said JVA and

in particular that the purpose of the Joint Venture Agreement

was for the joint ownership of the 'Shin Kobe Maru' and

further that by reason of the nature of the JVA this

Honourable Court is entitled to lift any corporate veil as

between the (Plaintiff) and the Defendant to recognise the

true joint beneficial ownership of the 'Shin Kobe Maru'."

36. Article 16 of the JVA provides that the "validity, interpretation, construction and performance" of the JVA "shall be governed by the laws of England". On the present motion, there was no evidence of any foreign law. Article 6 of the JVA states that YSL shall time charter the Ship from Seven Seas for 15 years from the time of delivery by the Builder at the port of Tamano. Tamano is on the island of Honshu in Japan.

37. Article 4 deals with sale of the Ship and is of particular importance. For the first 15 years after delivery, neither Empire nor YSL "shall have the privilege to cause" Seven Seas to sell the Ship "at its own discretion". During that period, "each party" (which means Empire and YSL) shall give the other "the priviledge (sic) of first refusal". After the expiry of 15 years, YSL "has the priviledge (sic) to cause" Seven Seas to sell the Ship "at its own discretion" and any amount obtained from this sale "shall be shared equally between both parties". If the Ship is lost or becomes a constructive total loss, "both parties shall cause" Seven Seas to liquidate and pay the outstanding loan amount "equally among both parties" and any surplus fund shall be divided equally between the parties.

38. Article 6 of the JVA obliges YSL to time charter the Ship from Seven Seas for 15 years at a rate comprising bareboat charterage, operation cost and insurance premium. In addition, "merely for banking purposes", as the parties put it, there was a bareboat charter between YSL and Seven Seas under which YSL was obliged to make monthly payments. The time charter was to "be used as actual charter party" between YSL and Seven Seas.

39. On 15 June 1976, a time charter from Seven Seas to YSL was entered into in Tokyo, for a period of 15 years "with three months more or less at YSL's option". Over the years that followed, there were 24 addenda to this document. The last was agreed between YSL and Seven Seas on 26 April 1984. The Ship was registered under the Liberian flag on 30 July 1976, with the name "Seven Seas Conqueror". YSL appointed a Bermudan company, United Shipping Co. (Bermuda) Ltd ("US Bermuda"), to act as general agents for the Ship. This agreement was dated 16 December 1975. US Bermuda appointed United Navigation Company Inc. (incorporated in Liberia) as sub-agent, and it, in turn, appointed as sub-agent for the Ship, Van Shipping Co. Ltd ("Van"). Van conducts its operations from Hong Kong and was the medium for communications between YSL and Empire.

40. Article 17 of the JVA states that any dispute between the parties "shall be finally settled by arbitration in London under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by three Arbitrators appointed in accordance with the Rules". On the present motion no point arises as to the applicability of the provisions of the International Arbitration Act 1974; cf. Allonah v The Ship "Amanda N" (1989) 21 FCR 60.

41. On 8 February 1984, YSL and Van entered into an agreement ("the 1984 Agreement") and Empire alleges (in para. 7 of the Amended Statement of Claim) that Van did so on its behalf and by way of amendment of the JVA. For the purposes only of the present motion, YSL accepts that Van acted as Empire's agent in this respect. On the present motion affidavit evidence as to the events leading up to the 1984 Agreement was received from Mr David Lieu. He lives in Hong Kong and is the Managing Director and majority shareholder of Van, a director and majority shareholder of Empire, President of both Seven Seas and UTI, and majority shareholder of US Bermuda. There was no cross-examination. It is sufficient now to note that in the period before 1984, the Ship had been on a regular service between Japanese and Australian ports, and YSL and the sub-charterers Kobe Steel Corporation had been anxious to change the flag of the Ship because they feared an outbreak of boycotting of the Ship under the Liberian flag and other "flags of convenience", by trade unions in this country. The 1984 Agreement does not contain an express choice of governing law. It was drafted by YSL. Following upon this agreement, the Ship was transferred in 1984 by Seven Seas from the Liberian to the Japanese flag, and registered in the name of YSL. Also, the name of the Ship was changed to "Shin Kobe Maru".

42. These changes were effected by various steps. By agreement on 5 March 1984 between Seven Seas and YSL, the Ship was sold to YSL for US$13.20m. The Bill of Sale is dated 28 March 1984. Delivery took place in Japan on 24 April 1984 and since 7 May 1984 the Ship has been registered on the Tokyo Registry as owned by YSL. A mortgage to Bank of America National Trust and Saving Association ("BOA") was discharged on 24 July 1987. By this time the financing of the Ship by Hanover had been taken over by BOA, pursuant to a loan agreement dated 28 January 1983 between BOA and Seven Seas, guaranteed by Mr David Lieu. Since July 1987, other securities over the Ship have been registered. The securities are in favour of Japanese banks.

43. Articles 2, 3, 4, 5 and 6 of the 1984 Agreement were as follows:

"2. In order to register (the Ship) into Japanese, (sic) YSL

will nominally purchase (the Ship) at the price of the

outstanding loan amount . . . and YSL will hold full

ownership under the Japanese law. However even (sic) the

period of the vessel being registered in Japan and owned by

YSL, eventual ownership of (the Ship) still remains 50/50

basis (sic) between YSL and VAN and that any rights,

obligations and liabilities of both parties under the JV

Agreement also still remains (sic) as if JV Agreement deted

(sic) 18th July 1975 remains as it is (sic). (Emphasis supplied)

3. At the time of transfer of (the Ship), YSL will take over

the existing outstanding loan amount and terms of Loan

Agreement with BOA . . .

4. Around July, 1987 when the original loan amount of about

US$8,800,000 will be fully repaid, (Seven Seas) or other

(joint venture company) jointly and equally owned by YSL and

VAN will buy back (the Ship) at the price of her book value

remained (sic) in YSL at the time of transfer to (the joint

venture company).

5. Immediately after the vessel is bought back by (the joint

venture company) YSL will pay VAN or their nominee monthly

US$124,000 for a period of 30 months.

6. After (the Ship) is transferred to (joint venture company),

VAN or their nominee will fully undertake the repayment of

the outstanding loan amount with BOA . . ."

The sum of US$124,000 stipulated in article 5 represented the monthly bareboat charter rate for the Ship.

44. Mr Lieu says that it was always understood by him that the beneficial ownership of the Ship "would remain on a 50/50 basis between Y.S. Lines and my group (through Empire) and also that the JVA would simply be suspended until 1987 by when it was expected that the balance of the original loan . . . would have been repaid and (the Ship) could then be bought either by (Seven Seas) (the original joint venture vehicle) or another joint venture company if this was the desire of my group and Y.S. Lines". His view is that this is what is meant by article 4 of the 1984 Agreement, and he also says that he understood the phrase in article 2 "eventual ownership" to mean "beneficial ownership". He says that Van would never have executed the 1984 Agreement if he had been told by YSL that "my group no longer had any beneficial interest or ownership in (the Ship)".

45. Paragraphs 8A, 9, 11, 12, 13, 14 and 15 of the Amended Statement of Claim are in the following terms:

"8A. It was a further term of that agreement that the provisions

of the JVA were to remain in force and that the vessel would

be 50% owned by Van Shipping Co Limited for and on behalf of

the (Plaintiff) and 50% owned by the Defendant while the

vessel was flying the Japanese flag.

9. It was a further term of the Amendment Agreement that in or

about July 1987 when the original loan was repaid (Seven

Seas) or another company jointly owned by the Defendant and

Van Shipping Co Limited for and on behalf of the (Plaintiff)

would re-purchase the vessel from YSL at book value.

. . .

11. In breach of the provisions of the JVA and the Amendment

Agreement the Defendant has wrongfully refused to retransfer

the ownership of the 'Shin Kobe Maru' to (Seven Seas) or to

another joint venture company equally owned by Van Shipping

Co Limited for and on behalf of the (Plaintiff) and the

Defendant.

12. Further it was an implied term of the JVA and the

Amendment Agreement that the Defendant would retransfer the

ownership of the 'Shin Kobe Maru' to (Seven Seas) or to

another joint venture company equally owned by Van Shipping

Co Limited for and on behalf of the (Plaintiff) and the

Defendant.

13. In breach of the implied terms referred to above, the

Defendant has failed to retransfer the ownership of the

'Shin Kobe Maru' to (Seven Seas) as to another joint venture

company equally owned by Van Shipping Co Limited for and on

behalf of the (Plaintiff) and the Defendant.

PARTICULARS

(a) It was an implied term of the JVA, as amended by the

Amendment Agreement, that the Defendant would take all

reasonable steps to do all that is necessary to be done to

carry out the terms of the (sic) those agreements and to

retransfer the 'Shin Kobe Maru' to (Seven Seas) or to

another joint venture company equally owned by Van Shipping

Co Limited for and on behalf of the (Plaintiff) and the

Defendant.

(b) In breach of the JVA and the Amendment Agreement the

Defendant has wrongfully refused to retransfer the 'Shin

Kobe Maru' to (Seven Seas) or to another joint venture

company equally owned by Van Shipping Co Limited for and on

behalf of the (Plaintiff) and the Defendant.

14. The Applicant says that the claim made herein is a

proprietary maritime claim by reason of Section 4(2)(a)

and/or (b) of the Admiralty Act 1988 in respect of which

jurisdiction is conferred on this honourable Court by reason

or (sic) Section 10 and Section 16 of the said Act.

PARTICULARS

The proceedings are a claim relating to possession of ship

namely the 'Shin Kobe Maru' and/or title or ownership of a

ship or a share in the ship. Further and in the alternative

the proceedings are between co-owners of a ship relating to

the possession, ownership, operation and earnings of the

ship.

15. By reason of the Defendant's failure to retransfer the

ownership of the 'Shin Kobe Maru' in accordance with the

provisions of the Amendment Agreement, the (Plaintiff) has

suffered loss and damage.

PARTICULARS

1. Loss of bareboat hire at US$124,000.00

per month for 30 months (2/87 - 1/90)

with interest 8 1/2 p.a. to 7/93 US$5,592,604.00

2. Loss of profit on management US$25,000.00

per month for 72 months (7/87 - 7/93)

with interest 8 1/2 p.a. to July 93 US$2,354,087.00

3. Charter hire US$114,583.00 per month

(50% of charter hire of US$400,000.00

per month less monthly management fee

US$170,834.00 for 24 months (7/91 - 7/93)

with interest 8 1/2 p.a. to 7/93 US$3,007,235.00

4. The (Plaintiff)'s 50% share of the

vessel's sale proceeds US$2,500,000.00

US$13,453,926.00

Less

Excess loan at 7/87 US$6,911,623.00

Less SST/UTI (50% YSL) US$ 39,620.00

Empire US$ 31,867.00

New S/B pay US$ 910,385.00

US$5,929,751.00

Add

Interest to

17th year at 8.5% p.a.

7/87 to 7/93 = 6 years) US$3,841,479.00

Excess Loan and interest US$9,771,230.00

Total Loss US$3,682,696.00

=============="

46. Counsel for YSL submitted that, in truth, these particulars could not identify loss suffered by Empire. He makes the point (as to item 2) that Empire was never manager under any management agreement, however complex the chain of sub-contracting. Nor was Empire entitled to charter hire (item 3), it never having been a charterer. The claim to 50% of the proceeds of sale of the Ship (item 4) is dependent upon Empire making out its case as to its entitlement to have such a sale made. That leaves item 1.

47. I have referred to the chartering arrangements provided for in Article 6 of the JVA. Article 7 of the JVA, after the expiry of the 151st month of the time charter from Seven Seas to YSL, obliged YSL to pay moneys "to Empire through (Seven Seas)". And article 5 of the 1984 Agreement obliged YSL to pay Van "or their nominee" sums of US$124,000 per month for the period of 30 months "immediately after the vessel is bought back" as stipulated in article 4 thereof. Empire says this should have happened in July 1987 and claims that the obligation to pay then ran against YSL and in its favour because Van executed the 1984 Agreement as the agent of Empire and the rights created thereunder in the name of Van are to be treated as those of its principal. As I have said, this agency is conceded only for the purposes of the present motion. But on that footing, I would hold there was a proper basis for the claim in item 1. I accept what is put by YSL as to items 2 and 3. Item 4 is absorbed in the larger issue of the entitlement of Empire to an interest in the Ship. But even if items 1 and 4 both be allowed to Empire, the allowances which it then makes in the particulars of US$9,771,230 consumes the whole of the sums claimed under items 1 and 4.

48. The Amended Statement of Claim concludes with claims to relief that do not coincide with the Particulars of Claim given in the Writ. I have set out those particulars earlier in these reasons. The claims set out in the Amended Statement of Claim are as follows:

"1. An order for the sale of the vessel and that 50% of the sale

proceeds be remitted to the (Plaintiff) or as the Court

otherwise directs.

2. An order that all the shares in the vessel be transferred to

(Seven Seas) or to another joint venture company equally

owned by or on behalf of the (Plaintiff) and the Defendant.

3. An order that ownership and possession of the vessel be

transferred to (Seven Seas) or to another joint venture

company equally owned by or on behalf of the (Plaintiff) and

the Defendant.

4. US$3,682,696.00.

5. Alternatively, damages.

6. Interest pursuant to section 51A of the Federal Court Act.

7. Costs.

8. Such further or other order as this Honourable Court thinks fit."

49. As I have pointed out when dealing with the particulars to para. 15, para. 4 of the claims to relief, the claim to US$3,682,696 cannot be sustained as the case now stands. But there remain paras. 1, 2 and 3. These were to be found, somewhat differently expressed, in the Writ. They present the issue of whether Empire does indeed have any proprietary maritime claim.

50. Paragraphs 4 (2) (a), (b) of the Act are relied upon by Empire to found jurisdiction. Sub-paragraphs (a) (i), (ii) define two species of proprietary maritime claim as a claim "relating to", "possession of a ship" (sub-para. (a) (i)) or "title to or ownership of a ship or a share in a ship" (sub-para. (a) (ii)). The registered owner of the Ship is YSL. It may then be asked whether a claim, such as that of Empire, which asserts a beneficial interest in a ship is one relating to possession of the ship, or to the title to the ship or to ownership of the ship. (Emphasis supplied). Likewise, para. 4 (2) (b) speaks of a claim between co-owners relating to, inter alia, possession or ownership of a ship.

51. Counsel for Empire referred to various cases in which courts of Admiralty had entertained questions going beyond those of the purely legal title. But some of those were concerned with a very different subject matter, namely the meaning of "owner" in s. 503 of the Merchant Shipping Act 1894 (Imp.); e.g. McIlwraith McEacharn Limited v The Shell Company of Australia Limited, supra. Others dealt with the vexed question of whether under the 1840 or 1861 Imperial Acts an action in rem might lie for necessaries supplied for a person other than the owner, in particular, for the beneficial owner: Foong Tai and Co. v Buchheister and Co. (1908) AC 458; Shell Oil Company v The Ship "Lastrigoni" [1974] HCA 27; (1974) 131 CLR 1 at 5-6; cf. Kali Boat Building and Repair Pty Ltd v The Motor Fishing Vessel "Bosna" (1977) 19 SASR 112 at 116. I do not derive particular assistance from such decisions, in construing sub-s. 4 (2) of the Act.

52. Reference also was made to The Conoco Britannia (1972) 2 QB 543. Under a contract of towage, the plaintiffs had supplied to the ship of the defendants a tug owned by a third party. The tug was sunk in a collision with that ship. The plaintiffs instituted proceedings in rem against the defendants claiming indemnity under the contract for the loss suffered by the tug owners. They also claimed "specific performance" of an obligation of the defendants to indemnify the owners, and relied in that regard upon Beswick v Beswick [1967] UKHL 2; (1968) AC 58. But it must be doubtful if what was sought was "specific performance" in the proper sense of that term: J.C. Williamson Limited v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282 at 297-300. A strike out application, on the ground that a claim for "specific performance" could not be brought in an action in rem, was dismissed. Brandon J. held that effect had to be given to the statutory obligation of the High Court of Justice to give in the one proceeding all legal and equitable relief available to a plaintiff (cf. Federal Court of Australia Act 1976, s. 22). The decision has been criticised (e.g. Jackson, "Enforcement of Maritime Claims", 1985, p 376) for not giving sufficient effect to the principle that equitable remedies are in personam, and should not be given in respect of property in the forum if the defendant is outside it. But a vesting order may be made against an absent vendor if the remedy of specific performance would have been available (Chang v The Registrar of Titles [1976] HCA 1; (1975-1976) 137 CLR 177) and in a specific performance suit service upon an absent defendant may be ordered under various provisions in rules of court (Halsbury's "Laws of England", 4th Ed., Vol. 44, p 292; see, for example, Order 8, Rule 1 (h) of the Rules of Court).

53. Nevertheless, I gain no great assistance from this decision in construing the Act.

54. The Admiralty jurisdiction of the English High Court of Justice, now provided for by s. 20 of the Supreme Court Act 1981 (U.K.), confers jurisdiction to hear and determine "any claim to the possession or ownership of a ship or to the ownership of any share therein" (para. 20 (2) (a)); there, the wider expression "relating to" (used in sub-s. 4 (2) of the Australian Act) is not used to qualify "claim". On the other hand, para. 20 (2) (h) of the British Act speaks of "any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship" and among the general maritime claims provided for in sub-s. 4 (3) of the Australian legislation is para. (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;"

55. The immediate question is one of identifying the force to be given to the expression "relating to" in paras. 4 (2) (a), (b) of the Australian Act. In that regard, some guidance is to be afforded by decisions construing the expression "relating to the carriage of goods in a ship . . ." in para. 20 (2) (h) of the present British Act.

56. One decision in point is that of the House of Lords in Gatoil International Inc. v Arkwright-Boston Manufacturers Mutual Insurance Co. [1984] UKHL 8; (1985) AC 255. It was followed recently by Phillips J. in Petrofina SA v AOT Ltd (1991) 3 All ER 161. In Gatoil, the House of Lords decided that a contract of insurance was not connected with the carriage of goods in a ship in a sufficiently direct sense to be capable of falling within the paragraph in question. Lord Wilberforce (supra at 262) said:

"Taking the statutory words by themselves, it is obvious enough that

they are, in a legal sense, ambiguous, or as I would prefer to state

it, loose textured. It is not possible to ascribe a precise or

certain meaning to words denoting relationships without an

indication what the criterion of relationship is to be. Must the

agreement be directly 'for' carriage of goods in a ship, or is it

enough that it involves directly or indirectly, or that the parties

contemplated that there would be, such carriage as a consequence of

the agreement? How close, in such a case, must the relationship be

between the agreement and the carriage? Is any connection of a

factual character between the agreement and some carriage in a ship

sufficient? If not, what is the test of relevant connection? . . .

(T)he courts are left with a choice of a broad or a narrow

interpretation."

The proposition for which the decision is authority appears in the following passage from the speech of Lord Keith of Kinkel, supra at 270-271:

"It is necessary to attribute due significance to the circumstance

that the words of the relevant paragraphs speak of an agreement 'in

relation to' not 'for' the carriage of goods in a ship and the use

or hire of a ship. The meaning must be wider than would be conveyed

by the particle 'for'. It would, on the other hand, be unreasonable

to infer from the expression actually used, 'in relation to', that

it is intended to be sufficient that the agreement in issue should

be in some way connected, however remotely, with the carriage of

goods in a ship or with the use or hire of a ship. . . There must,

in my opinion, be some reasonably direct connection with such

activities. An agreement for the cancellation of a contract for the

carriage of goods in a ship or for the use or hire of a ship would,

I think, show a sufficiently direct connection. . . Each case

would require to be decided on its own facts. As regards the

contract of insurance founded on in the instant appeal, I am of

opinion that it is not connected with the carriage of goods in a

ship in a sufficiently direct sense . . ."

57. Earlier, in The Jade (1976) 1 All ER 920, the House of Lords held that an agreement for salvage services fell within this paragraph, as relating to the use or hire of a ship, because the performance of the primary obligation of the salvors required them to use a salvage tug; Lord Diplock said (at 926) that the words "an agreement relating to the use or hire of a ship" should be given "their ordinary wide meaning".

58. Further, there is authority which suggests that even without relying upon any additional reach provided by the words "relating to", there may be a claim to title, possession or ownership of a ship (the distinctions between these concepts are not specifically drawn on the authorities) where equitable interests are asserted against a legal owner. Two such decisions are particularly in point.

59. The first is that of Brandon J. in The "Bineta" (1966) 3 All ER 1007. His Lordship held that on the facts before him, the High Court of Justice had jurisdiction to entertain the action, under a law corresponding to what is now para. 20 (2) (a) of the Supreme Court Act 1981 (U.K.), that is to say, as a claim "to the possession or ownership of a ship . . .". The ship had been sold by the registered owner, Miss Simmonds, to Mr Garthwaite. He became registered as owner. Miss Simmonds remained in possession and, upon Mr Garthwaite's default, exercised her lien as unpaid seller by selling to Mr Dalby. But she was not then the registered owner. Mr Dalby commenced proceedings against all other persons claiming any interest in the ship, and obtained a declaration that he was the owner of it and entitled to be registered in the place of Mr Garthwaite.

60. In Antares Shipping Corporation v The Ship "Capricorn" (1979) 111 DLR (3d) 289, the Supreme Court of Canada held that the Federal Court of Canada had jurisdiction to entertain an action for the enforcement of a concluded contract for the sale of a ship by delivery and by the execution of a bill of sale thereof, on the footing that this was a claim "as to title, possession or ownership of a ship" within the meaning of the relevant legislation. The Supreme Court disagreed with the statement in the Federal Court of Appeal, 88 DLR (3d) 28 at 33-38, that Canadian law should be interpreted so as to deny jurisdiction to enforce equitable interests or to order specific performance. The LRC Report, in dealing with the content of the proposed head of jurisdiction covering claims to "title to, or ownership or possession of, a ship or a share in a ship", referred with apparent approval to the Canadian Supreme Court decision; see s. 49.

61. In construing the Australian legislation, I would not, any more than did the Supreme Court of Canada in The Ship "Capricorn" (at 295-296) in dealing with the Canadian law, limit the concept of claims to possession to those described as "petitory" suits (where, to remove a "cloud" upon it, title is litigated independently of any possession which has previously accompanied that title) and "possessory" suits (where restoration is sought of possession of which the owner has been unjustly deprived).

62. In the United States, it has been held that suits on contracts for the sale of vessels are not suits on "maritime contracts". But the Supreme Court has not had to rule squarely upon the matter and the decisions in question have been criticised as stating a rule that is an aberration; Robertson, "Admiralty and Federalism", 1970, pp 120-121, Gilmore and Black, "The Law of Admiralty", 2nd Ed., 1975, p 27, Richard Bertram v Yacht "Wanda" (1971) AMC 1841. In Everett A. Sisson v Burton B. Ruby [1990] USSC 126; 111 L Ed 2d 292 at 305 (1990) (a maritime tort case), Scalia J. observed of the "maritime contract" cases:

"The impossibility of drawing a principled line with respect to what

in addition to the fact that the contract relates to a vessel (which

is by nature maritime) is needed in order to make the contract

itself 'maritime' has brought ridicule upon the enterprise."

63. In my view, a claim may relate to possession of a ship or to title to or ownership of a ship (within the meaning of para. 4 (2) (a) of the Act) where the source of the entitle-ment upon which the claim rests is found in a beneficial interest in the ship which is asserted by the claimant. For example, a claim that by reason of that interest the defendant in the action should be deprived of possession or a claim that the registered title should be changed by an order for sale or for transfer to a particular transferee (whether the claimant, or, as here, a third party), may be founded upon a beneficial interest asserted by the claimant.

64. Where, as is said to be the case here, the beneficial interest in a ship is divided between two parties, one of whom is also the registered owner, then, in my view, a dispute between them also may give rise to a claim between co-owners within the meaning of para. 4 (2) (b). That is to say, I would not confine the sense in which the concept of ownership is used in this paragraph to have legal or registered title any more than I would in sub-para. 4 (2) (a) (ii). It will then be an issue, in each case, whether the claim sought to be litigated has a sufficiently direct connection with the possession, ownership, operation or earnings of the ship.

65. Against that background as to construction of the Act, I turn to consider whether Empire has shown a strong argument for the existence of the jurisdiction it has invoked in this proceeding.

66. In sum, the position taken by YSL is that whilst there may be an action by Empire for damages for breach of contract, there is no proprietary maritime claim in respect of the Ship.

67. YSL emphasises that whilst the joint venture documents may be between YSL and Empire, and YSL is registered owner of the Ship, in the events that have happened at best YSL is obliged to Empire to sell the Ship back to Seven Seas or another joint venture company jointly and equally owned by YSL and Empire. Thus, it is said, the only claim to possession that may arise is that of Seven Seas. When so sold back, YSL submits, the Ship would be owned on terms that as between YSL and Empire, article 4 of the 1974 agreement would apply; that would mean that YSL alone had the privilege to cause the owner to sell the Ship and that if it were sold the proceeds would be shared equally by Empire and YSL. Therefore, the defendant submits, there is no claim relating to possession of the Ship within the meaning of para. 4 (2) (a) (i).

68. Nor, YSL submits, has Empire any claim relating to title to or ownership of the Ship or a share in the Ship. The Ship is presently owned by YSL, it has never been owned by Empire, and the contractual arrangements between the parties call for no more than the revesting of ownership in Seven Seas or some other joint venture company. The fact that Empire owns shares in a company which owns the shares in Seven Seas, does not give Empire any ownership in or title to the Ship. It follows that the dispute between Empire and YSL is not a claim between co-owners relating to the possession, ownership, operation or earnings of the Ship within the meaning of para. 4 (2) (b). Nor is there a claim relating to title to or ownership of the Ship, or a share in it, within the meaning of para. 4 (2) (a) (ii). That is the way the matter is put for YSL.

69. In order to appreciate the contrary submissions, it is necessary to return to the constituent documents.

70. In the Basic Agreement dated 16 July 1974, YSL and Empire recited an agreement that it would be in their interest "to enter into and jointly carry on the business of shipping". This was followed by the JVA dated 18 September 1975 which again recited an agreement by the parties to enter into and to jointly carry on the business of shipping. The recitals in the JVA stated that Empire and YSL were "willing to execute this Joint Venture Agreement for the purpose of jointly own (sic)" the Ship.

71. Accordingly, it was to be expected that counsel for Empire would describe the relationship between Empire and YSL as governed by an agreement for a joint venture. The difficulty is that the expression "joint venture" has no fixed legal meaning. The position was explained as follows by Mason, Brennan and Deane JJ. in United Dominions Corporation Limited v Brian Proprietary Limited [1985] HCA 49; (1985) 157 CLR 1 at 10-11:

"The term 'joint venture' is not a technical one with a settled

common law meaning. As a matter of ordinary language, it connotes

an association of persons for the purposes of a particular trading,

commercial, mining or other financial undertaking or endeavour with

a view to mutual profit, with each participant usually (but not

necessarily) contributing money, property or skill. Such a joint

venture (or under Scots' law, 'adventure') will often be a

partnership. The term is, however, apposite to refer to a joint

undertaking or activity carried out through a medium other than a

partnership: such as a company, a trust, an agency or joint

ownership. The borderline between what can properly be described as

a 'joint venture' and what should more properly be seen as no more

than a simple contractual relationship may on occasion be blurred.

Thus, where one party contributes only money or other property, it

may sometimes be difficult to determine whether a relationship as a

joint venture in which both parties are entitled to a share of

profits or a simple contract of loan or a lease under which the

interest or rent payable to the party providing the money or

property is determined by reference to the profits made by the

other. One would need a more confined and precise notion of what

constitutes a 'joint venture' than that which the term bears as a

matter of ordinary language before it could be said by way of

general proposition that the relationship between joint venturers is

necessarily a fiduciary one . . . The most that can be said is that

whether or not the relationship between joint venturers is fiduciary

will depend upon the form which the particular joint venture takes

and upon the content of the obligations which the parties to it have

undertaken."

72. As I understand the Amended Statement of Claim and the submissions upon it of counsel for Empire, the joint venture propounded here was not in the nature of a partnership and the present proceeding, despite what was said by counsel for YSL, is not in the nature of a suit to wind up a partnership. Therefore, the case is not to be dealt with as if Empire is a partner asserting in relation to partnership assets the sui generis interest described in Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) Pty Limited [1974] HCA 22; (1974) 131 CLR 321 at 328.

73. What is asserted for Empire is a joint activity carried out through the medium of joint beneficial ownership of an asset, the legal title to which was, pursuant to the JVA, retained in Seven Seas. The shares in that company were held by UTI, a company itself with a share capital divided equally between Empire and YSL. The further contention of Empire is that even though the Ship was transferred to the Japanese flag and YSL became the owner pursuant to the 1984 Agreement, nevertheless the joint beneficial ownership between YSL and Empire continued. The Basic Agreement, the JVA and the 1984 Agreement, even without reliance upon the evidence of Mr Lieu as to the understanding upon which he agreed to the flag transfer to YSL in 1984, provide a strong argument in support of the contentions of Empire. To reach that conclusion is not to deny the efficacy of the corporate structure the parties established in various jurisdictions. Article 4 of the JVA shows that YSL and Empire reserved to themselves the manner of disposition of that Ship by Seven Seas and proceeds of sale were for division by YSL and Empire.

74. The terms on which the parties held the joint beneficial ownership asserted by Empire appear from the arrangements made between it and YSL. Article 8 of the JVA prevented each of YSL and Empire from, without the prior written consent of the other, dealing with its shares in UTI, and both YSL and Empire were obliged not, without the prior written consent of the other, to cause UTI to deal with the shares of UTI in Seven Seas. Articles 5 and 6 dealt with the operation and management of the Ship and with the chartering of the Ship. As I have said, article 4 dealt with restraints upon the sale of the Ship. Neither YSL nor Empire would cause Seven Seas to sell the Ship within the first 15 years from the time of delivery of the Ship (which must have shortly preceded its registration on 30 July 1976); during that period, if either YSL or Empire wished to sell the Ship, it would give the other the right of first refusal. In that regard, article 4 ignores intervening corporate structures and speaks of "the party who wishes to sell (the Ship)", and the expression "party" plainly identifies YSL and Empire. After the expiry of the said 15 year period, YSL has the right to cause Seven Seas to sell the Ship, but any amount obtained from that sale is to be shared equally "between both parties", which again must mean between YSL and Empire. Again, article 4 provides that if the Ship is lost or becomes a constructive total loss "both parties shall cause (Seven Seas) to . . . pay outstanding loan (sic)" in respect of the Ship such that the amount will be borne equally "among both parties" and any surplus shall be divided "equally between both parties".

75. A mortgage over the Ship to BOA was discharged on 24 July 1987. In the submission of Empire, article 4 of the 1984 Agreement then came into operation. The result is said to be that YSL is obliged to have the Ship bought back by Seven Seas or another joint venture company jointly and equally owned by YSL and Empire, at a price representing the book value in the hands of YSL at the time of the transfer. YSL responds that even if this be so, the result would be that Empire would have no right to possession of the Ship or to require it to be sold. As I have indicated, this is said to be because article 4 of the JVA would apply and as between Empire and YSL (the parties to that agreement) it would be YSL alone which would have the right to cause Seven Seas to sell the Ship (subject to the proceeds then being shared equally between YSL and Empire). This may be accepted.

76. YSL then reiterated that the only relevant claim to possession was that of Seven Seas; Empire could not obtain possession for itself even on the claim it propounded. That also may be accepted. But the third claim set out in the Amended Statement of Claim (which reflects some of the relief sought in the Writ) is a claim by Empire against YSL to have Seven Seas (or another joint venture company) put into possession and ownership of the Ship (rights which would be subject to article 4 of the JVA). Upon the construction I have given sub-s. 4 (2), this claim would be a claim "relating to possession of a ship" (sub-para. 4 (2) (a) (i)), a claim relating to title to or ownership of a ship (sub-para. 4 (2) (a) (ii)), and a claim between co-owners (Empire and YSL) "relating to" the possession and ownership of their ship (para. 4 (2) (b)).

77. Seven Seas is not a party to the JVA or to the 1984 Agreement. It would not be a necessary party to an action in personam to enforce the obligations of YSL thereunder. Moreover, the rule in Tasker v Small (1837) 3 My and Cr 63[1834] EngR 924; , 40 ER 848, would suggest that it would not be a proper party within the meaning of Order 6 Rule 9 of the Rules of Court: Thomson v Richardson [1928] NSWStRp 108; (1928) 29 SR (NSW) 221 at 222-223 per Harvey C.J. in Eq.; cf. Hohler v Aston (1920) 2 Ch 420 at 425-426; Beswick v Beswick [1967] UKHL 2; (1968) AC 58 at 82, 89, 99-100. Be that as it may, in the present matter there is a claim relating to possession of the Ship, within the meaning of the Act, notwithstanding that Seven Seas is not a plaintiff together with Empire.

78. I find that, on this basis, Empire has shown a strong argument for the existence of the jurisdiction of the Court in respect of a matter of a kind mentioned in s. 76 (iii) of the Constitution; see s. 13 of the Act. There are various other elements forming the substantial subject matter of the controversy between the parties, and as a question of jurisdiction, whatever the position on the merits, the claims against YSL in respect of those further elements would fall within the accrued or pendent jurisdiction: Crouch v Commissioner for Railways (Queensland) [1985] HCA 69; (1985) 159 CLR 22 at 37-38.

79. This brings me to issues of constitutional validity.

80. We have it on the authority of Lord Diplock that in addition to changes effected by statute, the development of English law relating to what happens on the sea did not stop with the merger of the High Court of Admiralty into the High Court of Justice in 1875; this body of law "has not remained alone immune to the gradual changes in concepts in the general law relating to consensual obligations and to man's duty towards his neighbour which have taken place in the last hundred years": The Tojo Maru (1972) AC 242 at 291. In construing the Australian head of constitutional power, one should be slow so to read it as to inhibit the application of his Lordship's remarks to the law in this country.

Re Empire Shipping Company Inc v the Owners of the Ship "Shin Kobe Maru" [1991] FCA 499;

At a glance

Court

Decision date

Before

Source

Judgment (265 paragraphs)

Re Empire Shipping Company Inc v the Owners of the Ship "Shin Kobe Maru" [1991] FCA 499; (1991) 104 ALR 489 (1991) 32 FCR 78 (28 October 1991)

Parties

Legislation Cited (23)

Cases Cited (40)