Compliance with s 17
33 For present purposes the relevant question is whether, for the purposes of s 17 of the Admiralty Act, the Amir was owner of the Ship as at 9 or 11 June 2008 or alternatively, whether he was then in possession or control of it. There is no suggestion that he was a charterer. I infer that whatever Amiri Yachts did on and after 17 May 2008 in connection with the Ship was done for the purpose of acquiring it on behalf of the Amir. That was the date on which Mr Royet was instructed to travel to New Zealand for the purpose of taking possession of the Ship on his Highness's behalf. I infer that Mr Donaldson's conduct in arranging the charterparty with the plaintiff was also done on behalf of the Amir. However that does not lead to the conclusion that his Highness necessarily owned, possessed or controlled the Ship as at 9 June 2008, even assuming that Amiri Yachts then held the benefit of the agreement on his behalf. Pursuant to the agreement, property was to pass upon acceptance, provided that all moneys had been paid. There is no evidence of any such acceptance prior to 21 July 2008. Mr Royet's evidence suggests that the Ship was not completed until on or about that date. In his affidavit Mr Lloyd was somewhat opaque concerning delivery of the Ship to the Amir on 21 July 2008. In para 5 he swore:
On 21 July 2008 Sovereign Yachts was satisfied that all monies due under the Amir of Qatar contract had been paid. On that basis the Acceptance and Delivery Receipt was signed.
34 Sovereign's satisfaction as to payment was not a condition precedent to the passing of title pursuant to either agreement. The question is whether the Ship had been accepted and all moneys paid on or before 9 or 11 June 2008. Mr Lloyd's affidavit simply did not address that question. However, in para 7, he swore that possession of the vessel was not given to any person by Sovereign prior to 21 July 2008. Given the fact that neither Mr Royet nor Mr Lloyd was cross-examined, and the absence of any apparent improbability in their evidence, I am compelled to accept, on the balance of probabilities, that the conditions prescribed in the agreement for the passing of title did not occur prior to 21 July 2008. As to whether or not the Amir was, prior to that date in possession or control of the vessel, it seems to me that, for the same reasons, I must conclude that he was not.
35 The plaintiff sought to establish that property had, nonetheless, passed to the Amir prior to 9 or 11 June 2008. There were at least three different bases for that submission, namely:
· that registration in Qatar was prima facie, and sufficient, proof of ownership;
· that the Amir had acquired some form of equitable interest which satisfied the requirements of s 17(a) of the Admiralty Act; and
· that I should infer that Sovereign and Amiri Yachts or the Amir had varied the agreement so that property passed at some time prior to 9 or 11 June 2008.
36 In order to deal with these submissions I must consider the meaning of the term "the owner" in s 17 of the Admiralty Act. The meaning of the term "owner" was considered, for the purposes of s 19, by the Full Court in Kent v SS Maria Luisa (No 2) (2003) 130 FCR 12 and, for the purposes of s 17, in Tisand v MV Cape Moreton (2005) 143 FCR 43. Concerning that question, the majority (Tamberlin and Hely JJ) said in the Maria Luisa at [61]-[66]:
61 The word "owner" cannot be given any general description. But ordinarily the incidents of ownership of a chattel include the right to make physical use of the chattel, the right to the income from it, the power of management, and the right of alienation: … . In the "Iron Shortland" … Sheppard J quoted from the decision of the Singapore Court of Appeal … that the term "owner" means any person who is vested with such ownership as to have the right to sell, dispose of or alienate the ship, and that a beneficial owner of the ship comes within that term … .
62 The notion of "ownership" carries a connotation of dominance, ultimate control and of ultimate title against the whole world … .
…
65 A helpful description of "ownership" is formulated by Jordan CJ in Gatwood v Alley … where his Honour said in relation to a question as to ownership of a car:
"A good title to property, in the sense of such ownership as the law allows, consists in having the legal right to exercise with respect to it all such rights, as against all such persons, as by law are capable of being exercised with respect to property of the class in question. A person who has possession of property but not ownership has, as a general rule, the same legal rights as the owner, save to the extent to which those rights are qualified as against the owner … ."
66 Ownership, whether legal or equitable, therefore involves something greater than beneficial interest. Equitable ownership of property is commensurate with the right to relief in a Court of Equity … . If a person has contractual rights in relation to a ship which, if performed will result in the person becoming the owner of the ship, then the person will be regarded as the equitable owner of the ship provided that specific performance of the contract would be decreed … .
37 At [74], their Honours continued:
74 The circumstance that AFE may be said in general terms to enjoy "a bundle of rights" which may enable it by a series of discrete actions to obtain ultimate possession of the ship, control its activities, and entitle it to alienate the ship, does not equate to present ownership at a particular point in time. Rather, it indicates the potential to become the owner. The bundling of a series of discrete entitlements which if exercised could lead to ownership does not satisfy the requirement of s 19.
38 The decision in the Cape Moreton was more complex, concerning questions of private international law. The Court comprised Ryan and Allsop JJ, the third member, Cooper J, having fallen ill and died following oral argument and prior to decision. A number of propositions emerge from the reasons. At [92] their Honours observed:
In our view, the meaning of the phrase "the owner" in ss 17, 18 and 19 of the Act does not necessarily encompass the party entered on any international register of ships. The question is one as to whether the relevant person answers the description of "the owner" in the proprietary sense, in all the circumstances. …
39 Their Honours then referred to the decision in the Maria Luisa and, at [97], continued:
The Full Court decided The Maria Luisa in the context of the earlier decision of Sheppard J in The Iron Shortland that the word "owner" was not restricted to registered owner, but extended to include the "true" or "real" or "beneficial" owner. It was not necessary for the Full Court to decide the question before us, that is whether the phrase "the owner" necessarily included the registered owner.
40 After referring to various authorities their Honours observed at [119]-[120]:
119 As is clear … notions of "property" and "ownership" are not amenable to crisp, comprehensive definition in the abstract. The context, here is the possession and enjoyment of, dominion over and power or right to dispose of, a chattel of a kind that is usually engaged in commercial enterprise. In that context, the word "ownership" or "owner" connotes the right or power to have and dispose of dominion, possession and enjoyment of the ship, subject of course to intervening interests … .
120 This kind of dominion, exemplified or epitomised by the lawful power or right to dispose of the ship, may arise from the legal effect of dealing between the parties with a ship, under general law or statute.
41 The Court considered the legal consequences of registration, discussing the purposes thereof which include the protection of the title of the registered owner and the protection and preservation of priorities between security interests in the ship. The Court then turned to the question of choice of law. At [140] the Court concluded that the proper law, for the purpose of determining questions of jurisdiction, was the law of the forum (Australia), including its rules of private international law. Their Honours considered that in connection with questions concerning transfer of title to a chattel, those rules would normally lead to application of the lex situs of the chattel. However the Court identified difficulties in determining the situs of a merchant ship. At [146]-[147], their Honours said:
146 There seem to us to be powerful reasons for giving effect to the law of the country of register as the lex situs in relation to questions of title, property and assignment (subject, of course, to local statute and public policy). The chance location of a working merchant ship in a port within its range of sailing or on the high seas appears to introduce an element of arbitrariness to the legal analysis. This is especially so if, as is likely, the national register and registration laws of the port in question are directed to ships of that country. If a law of a country other than the country of registration is chosen to deal with the assignment of property in a ship, it is likely that there will be no statute dealing with registration that is made relevant.
147 The relevant choices appear to be the law of the forum, the law of the country of registry as the lex situs (and not merely when the ship is on the high seas), the law of the place of the ship within another country's territorial waters, (and on one reading of [certain decisions]) the law of the domicile of the registered owner or operator.
42 In any event, in the absence of any evidence as to foreign law, their Honours concluded that the question of choice of law was "academic". The Court acted upon the presumption that the relevant foreign law was the same as the law of the forum, Australia. Without necessarily conceding the correctness of the approach their Honours accepted that the lex situs (ie the law of the registration state) should be presumed to contain a statute in a form, mutatis mutandis, the same as the Shipping Registration Act 1981 (Cth). Section 45 of that Act provided:
The owner of the ship or of a share in a ship has power, subject to this Act and to any rights and powers appearing in the Register to be vested in any other person, absolutely to dispose of the ship or share and to give effectual receipts in respect of the disposal.
43 At [161] the Honours continued:
A power of that kind may well, in many circumstances, suffice to support the conclusion that the holder of such power was "the owner". It is a power which is the equivalent of the epitome of ownership. A party who has power absolutely to dispose of a chattel has the equivalent of the ultimate incident of ownership. The power derives from statute; it is not a "right" arising from a consensual transaction; but it is a power having equivalent effect.
44 At [163] their Honours observed:
It is necessary, however, to assess the importance of this power … by reference to the surrounding factual circumstances.
45 Relevantly, the registered owner had, in fact, sold the ship and received the sale price. The Court continued at [165]-[168]:
165 Under Australian law, and we would venture to suggest, the law of any other country, subject to any statute affecting the position, [the buyer] took full property in the ship.
166 On the assumption that the [Shipping Registration Act] applies, [the owner] had a power, given by statute, absolutely to dispose of the ship. In the circumstances that obtained, however, [the owner] could not, on any view, exercise that power lawfully or honestly without the consent of [the buyer]. It had transferred the ship, relinquished its rights in her and been paid in full for her. No circumstance could be shown for the honest or lawful exercise of the statutory power, without the consent of [the buyer].
167 In these circumstances, the holding of the statutory power of absolute disposition was empty of real and practical meaning or significance. So to conclude is not to change the content of the power, but to direct attention to the relevant question to be answered. Was a party who had entered and completed this transaction and who held a statutory power (the primary purpose of which was the protection of the next registered owner, conformably with honest dealing, who had taken the property according to the transaction just completed) in circumstances where there could be no occasion for the honest and lawful use of a power, "the owner" of the ship?
168 In our view, the answer to that question is "no". [The owner] had no rights of dominion, enjoyment or control over the ship arising from its dealing with [the buyer] or from its relationship with the ship. It had, by the law of the flag (on the hypothesis of the relevance of the [Shipping Registration Act] by the presumption) a power to dispose of the ship, but that power was incapable of lawful or honest exercise, without the consent of [the buyer]. So understood, the power does not amount to a right of ownership.
46 The plaintiff submits that I should accept registration of the Ship in Qatar as proof of ownership. Exhibited to the affidavit of Mr Hockaday, filed on 17 September 2008, are Resolution No 18 of 1980G and Law No 19 of 1980G, both apparently promulgated by the Amir. The first concerns registration of ships and safety conditions in Qatar. The second concerns registration and safety pertaining to small ships in that country. I understand it to be accepted that these documents contain the relevant aspects of the Law of Qatar concerning the registration of ships. Resolution No 18 provides that a ship, the total tonnage of which is 200 ton or more, may not sail under the flag of Qatar unless it is registered according to that Resolution. Vessels under 200 ton may be registered under Resolution No 18, but such registration is not mandatory. Law No 19 provides for an alternative system of registration for vessels under 200 ton. It is not immediately clear whether the Ship was registered under Resolution No 18 or Law No 19. However the application for registration indicates that its "GRT" (presumably gross registered tonnage) is 200 ton, whilst its net registered tonnage is 60 ton. It is not clear whether it is the gross or net tonnage which applies for the purposes of Regulation No 18. Nor is it clear whether the various references to tonnage in the evidence, in Resolution No 18 and in Law No 19 are to metric tonnes or imperial tons. Law No 19 establishes a register called "The Small Ships Register". There is no indication on the certificate of registration, or on the application for registration, that the Ship was, or was to be, on any such register. It seems more probable than not that it was registered under Resolution No 18. Article 7 of that resolution provides for registration of ownership details. Article 8 requires that the ship owner, supplier or captain notify the registration office of any amendment made to the registered details. Article 13 provides:
Every legal act or incident or a judgment resulting in transferring, or amending or forfeiting an in-kind right on a registered ship shall not be in force between the concerned people or for the third party unless its registration is made in the ships register. The concerned parties have right to apply for registration. If any one of them refrains, the matter may be presented to the court for ordering it.
47 Article 14 provides:
The registration order shall be as per the date of entry in the journal. If many applications are presented related to one ship in one day, the priority among them shall be as per the time of depositing the registration application, and if many applications are presented together in one hour, all of them shall be deemed in one order.
48 If ownership is to be determined by reference to the law of Qatar, it would seem that Sovereign could not enforce any right to the Ship against the Amir in the absence of registration of such right. There would still be a question as to whether surrounding circumstances (which significantly affected the outcome in the Cape Moreton) should lead me to conclude that the Amir was not the owner for the purposes of s 17(a) of the Admiralty Act, notwithstanding the operation of Qatari law. However it seems curious that Sovereign should have been deprived of title to the Ship by the unilateral act of the Amir in applying for registration in Qatar, although it may be, as the plaintiff suggests, that Sovereign was a party to the registration. Nonetheless, I am inclined to think that the decision in the Cape Moreton may not necessarily lead to the conclusion that the law of Qatar should be applied in determining ownership for present purposes. This case differs from the Cape Moreton in that the very fact of registration is said to have effected a change of ownership. It seems likely that, according to Australian private international law, the relevant law concerning transfer of title would have been that of New Zealand where the Ship, then unregistered, was located. It may follow that for present purposes, title could only pass in accordance with the law of New Zealand (or, perhaps, the law of England, the law applicable to the contract). Either law would presumably have given effect to the provisions in the agreement relating to the passing of property. If so, registration in Qatar would not have affected ownership of the Ship. The Ship Registration Act 1992 (NZ) may also have been relevant to the question.
49 The plaintiff also submits that the Amir's entitlements under the agreement, coupled with the substantial part-payments, were sufficient to create an equitable interest equivalent to ownership for the purposes of s 17. However such equitable and/or contractual rights were obviously subject to the limitation imposed by cl 16 of the agreement. It cannot be said that at the relevant time, the Amir had either the right to possession of the Ship or the right to dispose of it, other than subject to the rights of Sovereign. It was not simply a question of paying the outstanding balance of the purchase price. Mr Royet's evidence demonstrates that prior to 21 July 2008, the Ship had not been completed to the satisfaction of the Amir or his agent. Until such time as the Amir elected to accept the vessel in substantial satisfaction of Sovereign's obligations under the agreement, he could not have insisted upon physical delivery. This is relevant to the point made by Tamberlin and Hely JJ in the Maria Luisa at [74]. Prior to 21 July 2008 the Amir had not exercised his right to accept the vessel pursuant to the contract. He was in a position which might well have led to ownership but did not satisfy the requirements of, in this case, s 17.
50 Finally, the plaintiff submits that the agreement was amended so that property passed at some earlier time and prior to 9 or 11 June 2008. The evidence of this amendment is said to be Sovereign's provision of the builder's certificate, the apparent delay in completion and Amiri Yachts' entitlement under the agreement to take possession of the Ship in the event of default by Sovereign (cl 13) and to insure (cl 15). Against this is Mr Lloyd's assertion that prior to 21 July 2008 Sovereign remained in possession and full control of the Ship. It is true that in para 7 of his affidavit, he did not refer to title. He had done so in cl 6, but the relevant passage was objected to and excluded, largely because it went to the proper construction of the agreement. The evidence of both Mr Lloyd and Mr Royet suggests that the parties were, until 21 July 2008, conducting themselves upon the basis that the Ship was still under Sovereign's legal and physical control. In those circumstances, I decline to infer that there had been any variation to the provisions of the agreement concerning the passing of property.
51 Although counsel addressed the question of compliance with s 17 in some detail and demonstrated considerable industry in so doing, I am concerned that the question of the passing of title has not been fully ventilated, particularly in so far as concerns the choice of law question. To the extent that the plaintiff relied upon the Cape Moreton as establishing the relevance of Qatar law, it did not address the fact that in that case the vessel was, at all material times, registered in Liberia. In the present case the question is whether the act of registration in Qatar, itself, effected a change in ownership of the Ship in New Zealand. In those circumstances I am reluctant to decide that question. I am inclined to the view that the law of New Zealand (as the lex situs immediately before registration) should be applied to determine whether or not property passed to the Amir as the result of registration. I suspect that the probable answer is that according to New Zealand law, it did not, but that question has not been argued. In any event, as I have formed a view that the Amir is relevantly entitled to head of state immunity, it is not necessary that I finally dispose of that question.