Scandinavian Bunkering AS v The Bunkers on Board The Ship FV*Taruman* [2006] FCAFC 75 (24 May 2006)

Last Updated: 24 May 2006

FEDERAL COURT OF AUSTRALIA

Scandinavian Bunkering AS v The Bunkers on Board The Ship FV "Taruman" [2006] FCAFC 75

ADMIRALTY AND MARITIME – effect of seizure by the Australian Fisheries Management Authority ("AFMA") of a boat pursuant to s 84(1)(ga) of the Fisheries Management Act 1991 (Cth) ("the FMA") – automatic forfeiture pursuant to s 106A of the FMA of, amongst other things, a foreign boat used in an offence against s 100, s 100A, s 101 or s 101A of the FMA – whether it extends to bunker fuel on board a boat – whether forfeiture of a boat prevails over arrest of bunkers under the Admiralty Act 1988 – whether bunkers come within the meaning of ‘ship’ in s 17 of the Admiralty Act or are ‘other property’ – whether bunkers are susceptible to arrest under the Admiralty Act separately from the ship on which they are to be found.

Acts Interpretation Act 1901 (Cth) s 15AB

Administration of Justice Act 1956 (UK) ss 1(1), 3, 3(2),3(3)

Admiralty Act 1988 (Cth) ss 3(1) 4(2), 4(3), 5(1), 6, 15, 16, 17, 17(a), 17(b), 18, 522(1)

Federal Court of Australia Act (1976) (Cth) s 20(1A)

Fisheries Management Act 1991 (Cth) ss 4(1), 84(1)(ga), 84(1)(k)(1), 100(1), 101(1), 101A(1), 106A, 106C, 106E, 106G(2), 106G(3), 108A, 160A, 180A, 180A(1)
Supreme Court Act 1981 (UK) s 20(2)(m)


Australian Law Reform Commission, Civil Admiralty Jurisdiction, Report No 33 (1986)

The Silia [1981] 2 Lloyd’s Rep 534
Morlines Maritime Agency Limited v The Ship ‘Skulptor Vuchetich’ (1996) 62 FCR 602
The ‘Saint Anna’ [1980] 1 Lloyd’s Rep 180
The ‘Span Terza’ [1984] 1 Lloyd’s Rep 119
Fortis Bank (Nederland) NV v ‘MSC Sumatra’ [2003] FCA 524
The ‘Pan Oak’ [1992] 2 Lloyd’s Rep 36

Den Norske Bank A/S and Irish Intercontinental Bank Ltd v Owners of the Ships ‘Eurosun’ and ‘Eurostar’ [1993] 1 Lloyd’s Law Reports 106
The ‘River Rima’ [1987] 2 Lloyd’s Rep 106
Port of Geelong Authority v The ‘Bass Reefer’ [1992] FCA 378; (1992) 37 FCR 374
Metall und Rohstoff Shipping v The Owners of Bunkers on Board the Ship MV ‘Genco Leader’ [2005] FCAFC 162
Tisand (Pty) Ltd v MV ‘Cape Moreton" (2005 [2005] FCAFC 68; 143 FCR 43

Readhead v Admiralty Marshal (1998) 87 FCR 229

Bergensbanken Asa v The Ship ‘Aliza Glacial’ [1998] FCA 1322

Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355

CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384

Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297

The Alexander (1811) 1 Dods. 282

The Owners of the Shin Kobe Maru v Empire Shipping Co Inc [1994] HCA 54; (1994) 181 CLR 404

Opal Maritime Agencies Pty Ltd v The Proceeds of Sale of the Vessel MV ‘Skulptor Konankov’ [2000] FCA 507; (2000) 98 FCR 519

‘The Eschersheim’ [1976] 1 WLR 430

SCANDINAVIAN BUNKERING AS V BUNKERS ON BOARD THE SHIP FV ‘TARUMAN’ AND AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY AND COMMONWEALTH OF AUSTRALIA

NSD 1709 of 2005





RYAN, TAMBERLIN AND KIEFEL JJ
MELBOURNE
24 MAY 2006

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY IN ADMIRALTY	NSD 1709 OF 2005

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	SCANDINAVIAN BUNKERING AS PLAINTIFF
AND:	BUNKERS ON BOARD THE SHIP FV ‘TARUMAN’ FIRST DEFENDANT AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY SECOND DEFENDANT COMMONWEALTH OF AUSTRALIA THIRD DEFENDANT
JUDGES:	RYAN, TAMBERLIN AND KIEFEL JJ
DATE OF ORDER:	24 MAY 2006
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The question whether the Australian Fisheries Management Authority ("AFMA") or the Commonwealth has any right, title or interest in and to the fuel bunkers on board the ship and if so whether such right, title or interest prevails over the interest in the said bunkers claimed by the plaintiff in this action be answered as follows:

By reason of s 108A of the Fisheries Management Act 1991 (Cth) the powers given to the AFMA to seize and detain the bunkers and any forfeiture of the bunkers to the Commonwealth are effective despite the execution of the purported warrant of arrest upon the bunkers under the Admiralty Act 1988 (Cth). Further, the plaintiff does not have the right to proceed against the bunkers on the basis of a general maritime claim brought under s 4(3)(m) of the Admiralty Act.

2. The plaintiff pay the second and third defendants’ costs of and incidental to obtaining an answer to the question referred to in paragraph 1 of this Order, such costs to be taxed in default of agreement.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY IN ADMIRALTY	NSD 1709 OF 2005

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	SCANDINAVIAN BUNKERING AS PLAINTIFF
AND:	BUNKERS ON BOARD THE SHIP FV ‘TARUMAN’ FIRST DEFENDANT AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY SECOND DEFENDANT COMMONWEALTH OF AUSTRALIA THIRD DEFENDANT

JUDGES:	RYAN, TAMBERLIN AND KIEFEL JJ
DATE:	24 MAY 2006
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

RYAN J:

1 I have had the advantage of reading in draft the reasons for judgment prepared by Kiefel J. Her Honour’s careful treatment has relieved me of the need to rehearse the factual background or to set out the legislative provisions which she has reproduced.

Are bunkers part of a "boat" under the Fisheries Management Act 1991?

2 I agree with Kiefel J’s interpretation of s 106A of the Fisheries Management Act 1991 (Cth) ("the FMA") which entails that "boat" in that section, and, consequently, s 108A, includes the bunkers on a boat subject to forfeiture.

3 "Boat" is defined in s 4(1) of the FMA as meaning "launch, vessel or floating craft of any description." "Foreign boat" is defined in the same sub-section as meaning "a boat other than an Australian boat". That refers in turn to the following definition, also in s 4(1);

‘Australian boat means:
(a) a boat:

(i) the operations of which are based on a place in Australia or an external Territory; and
(ii) that is wholly-owned by a natural person who is a resident of, or by a company incorporated in, Australia or an external Territory; and

(iii) that was built in Australia or an external Territory; or
(b) a boat, not being a boat mentioned in paragraph (a) or a boat owned by a foreign resident that is under a demise charter, that is registered under the Shipping Registration Act 1981; or

(c) a boat the subject of a declaration under subsection (2).’

4 It may be accepted, as Counsel for the plaintiff contended, that "boat" where used in the FMA does not include everything which may be found on board a boat at the time when an offence described in s 106 or s 106A was committed. If that were not so, there would be no need for the specific references in those sections to "a net, trap or equipment" and "fish" which are made subject to forfeiture by s 106(1)(a) and (b) and s 106A(c) and (d) respectively. That separate treatment of a "net, trap or equipment" and "fish" entails, I consider, that "equipment" is to be read eiusdem generis with "net" and "trap" to signify tackle, winches and other equipment used in taking, or endeavouring to take, fish. This construction is borne out by the reference in s 101 to a "boat’s nets, traps or other equipment for fishing" (emphasis added). However, this interpretation of "equipment" leaves open the question of what other, non-fishing, equipment or other things found on board a boat at the time of commission of an offence form part of the boat so as to be amenable to forfeiture under s 106 or s 106A. In my view, that equipment and other things include, at least, navigational and ship-handling equipment and gear such as lines, anchors and the like, and food, fuel, lubricants and similar consumables used, or intended for use, in the operation of the boat. If that were not so, the Australian Fisheries Management Authority ("AFMA") would, arguably, remain liable in conversion to the owners of a boat for stores, fuel and other consumables used in complying, eg, with a requirement under s 87(k)(1) to bring the boat to a place in Australia or during an officer’s retention of possession of the boat pursuant to s 106F(1)(a). That liability would remain even if AFMA’s seizure and the forfeiture of the boat were ultimately undisturbed. A construction which gives rise to such an unintended consequence should only be adopted where the language of the enactment intractably requires it. It should not be favoured where an Act is silent, as the FMA is, as to the matters giving rise to the presumed liability.

Are bunkers part of a "ship" under the Admiralty Act 1988?

5 I also consider that similar reasoning compels the conclusion that a "ship" as defined in s 3(1) of the Admiralty Act 1988 (Cth) includes the fuel bunkers on board a ship.

6 The passage from Report No 33 on Civil Admiralty Jurisdiction by the Australian Law Reform Commission ("the ALRC") quoted by Kiefel J at [70] of her reasons makes clear that the ALRC deliberately chose to recommend a formulation of the proposed Admiralty Act which assumes that bunkers would form part of a "ship" as defined without an express provision to that effect in the legislation. That assumption is consistent with the analysis of Sheen J in The Silia [1981] 2 Lloyd’s Rep 534 to which the ALRC referred in this context. For the reasons explained by Sheppard J in Morlines Maritime Agency Limited v The Ship ‘Skulptor Vuchetich’ (1996) 62 FCR 602 at 604, I regard that legislative history as conclusive in favour of the view that "ship" where used in the Admiralty Act includes a ship’s bunkers.

7 In The ‘Saint Anna’ [1980] 1 Lloyd’s Rep 180, which was decided before The ‘Silia’, Sheen J directed that the sale of the vessel be without prejudice as to the ownership of the bunkers at present on board her and that the proceeds of sale of the bunkers be separately accounted for. The order was made in those terms to protect the interests of intervening charterers who were held, on the proper construction of the charterparty, to be the owners of the bunkers. It is significant, however, that his Lordship did not regard the bunkers as something separate from the ship so as to be immune from the sale in consequence of an arrest instigated by the plaintiff mortgagee in rem. The House of Lords approved The ‘Saint Anna’ in The ‘Span Terza’ [1984] 1 Lloyd’s Rep 119 which again turned on the construction of a charterparty with no suggestion that the subject bunkers did not form part of the ship which had been arrested.

8 A similar view was taken by Lee J in Fortis Bank (Nederland) NV v ‘MSC Sumatra’ [2003] FCA 524 where his Honour was concerned with how the cost of bunker fuel consumed after the arrest should be accounted for in distributing the proceeds of sale. It was not disputed that property in the bunkers at the time of the arrest remained in the intervening time charterer, MSC Mediterranean Shipping Company SA ("MSC"). His Honour concluded that fuel consumed in unloading cargo in the form of containers to further the interests of MSC should not be taken to be a liability to MSC incurred by the Admiralty Marshal. On the other hand, bunkers consumed otherwise "should be treated as an expense incurred by the Marshal being within the category of outgoings the Marshal would be expected to authorize to further the purpose of arrest and sale of the vessel" [at [34]]. Contrary to the submission of Mr S Horgan of Counsel for the plaintiff in the present case, his Honour was not concerned in the "MSC Sumatra" to acknowledge a right to arrest bunkers as "property" other than the ship under s 17 of the Admiralty Act 1988.

9 The ‘Pan Oak’ [1992] 2 Lloyd’s Rep 36 is also instructive in this context because in that case an agreement had been reached between the charterers, whom the charterparty required to pay for all fuel, and the owners of a vessel subject to arrest whereby the charterers passed title in the bunkers to the owners. The plaintiff mortgagees, who had instigated the arrest, contended that their security over "the ship, her boats, guns, ammunitions, small arms and appurtenances" extended to the bunkers. That claim was rejected by Sheen J who, at 39, explained his earlier judgment in The ‘Silia’ as having been a case "in which I held that when a ship is arrested the oil in the bunkers is also arrested and that, accordingly, the proceeds of sale of the bunkers formed part of the "res", that is to say the property against which the action is brought" (emphasis added). Consistently with that analysis, his Lordship held that the proceeds of the sale of the bunkers were available for distribution between judgment creditors of the owners. Again, as in The ‘Saint Anna’, there was no suggestion that the bunkers had not been arrested as part of the ship and sold in consequence of the action in rem. Their treatment turned solely on the construction, not of s 3 of the Administration of Justice Act 1958 (UK), but of the mortgage which was claimed to extend to the bunkers.

10 A similar result was reached, also by Sheen J, in Den Norske Bank A/S and Irish Intercontinental Bank Ltd v Owners of the Ships ‘Eurosun’ and ‘Eurostar’ [1993] 1 Lloyd’s Rep 106. In that case, his Lordship held, at 111, that the bunkers "remained the property of the charterers until they were sold by the Admiralty Marshal" (emphasis added). He went on again to explain his decision in The ‘Silia’, observing, ibid;

‘In that case I explained why fuel oil in a ship must be arrested with the ship and sold by the Admiralty Marshal even if that oil may be the property of charterers, against whom no claim is made. The fuel oil in Silia belonged to the shipowners. The issue on the motion was whether the proceeds of sale of that oil formed part of the res and were, therefore, available for distribution only to creditors with a judgment in rem, or whether the money realized on the sale of the oil was an asset of the shipowners which could be attached by a creditor with a judgment in personam. For the reasons given in my judgment I held that the proceeds of sale of the oil were part of the res and therefore available only to judgment creditors in rem. Mortgagees of the ship were represented by Counsel who did not contend that the fuel oil was part of the security for their loans. Of course, if there are no judgment creditors other than the mortgagees they can recover against the whole of the ship fund and bunker fund. (See Lord Justice Kerr in The Span Terza [1983], 1 Lloyd’s Rep. 444). However, it does not follow from the fact that fuel oil in a ship must of necessity be arrested and sold with the ship that the fuel oil forms part of the security for a loan secured by a mortgage of the ship.’

11 Accordingly, his Lordship proceeded in The ‘Eurostar’ to consider whether the fuel oil was part of the security which the mortgagees claimed over "The Ship above particularly described and in her boats, guns, ammunition, small arms and appurtenances." It was in that context that Sheen J held, also at 111, that;

‘The word "ship" does not in its ordinary meaning include fuel. It is common practice for the fuel to be the property of charterers. The only word which arguably covers fuel is "appurtenances". The ordinary meaning of "appurtenances" is a mechanical accessory or some apparatus or gear which appertains or belongs to the ship. Fuel oil cannot be an appurtenance in this sense. In The Honshu Gloria, [1988] 2 Lloyd’s Rep. 67 I held that the word "appurtenances" did not include the fuel on board the ship. In The Pan Oak, [1992] 2 Lloyd’s Rep 36 I had to consider identical words in a Bahamian mortgage. I gave my reasons for holding that the bunkers were not part of the security provided by the defendants to the plaintiff for the loan facilities. In that case there was evidence of Bahamian law, as to which I said:

There is not a word in that opinion which suggests that the property mortgaged as security for the loan included the bunkers.’

12 His Lordship’s reflections on the ordinary meaning of the word "ship" were not directed to the use of that word in s 3 of the Administration of Justice Act 1956 (UK). Indeed, he concluded, at the end of his reasons in The ‘Eurostar’ that "if it be held by a higher Court that the bunker fund is the property of the defendants [owners] it should be distributed pari passu between all judgment creditors in rem." That conclusion is consistent only with the view that, under both the UK Act and, by parity of reasoning, under the Admiralty Act, bunkers form an indistinguishable part of the res constituted by the ship and are not amenable to separate arrest and sale.

13 I have derived no assistance from either the judgment of Sheen J at first instance, or the observations of the members of the Court of Appeal in The ‘River Rima’ [1987] 2 Lloyd’s Rep 106 to which we were referred by Mr Horgan for the plaintiff. That case concerned containers leased to the owner of a ship and whether a claim in respect of them could be maintained as an action in rem as a "claim in respect of goods or materials supplied to a ship for her operation or maintenance" within the meaning of s 20(2)(m) of the Supreme Court Act 1981 (UK). It is true that, in part of his judgment which was not challenged on appeal, Sheen J held that s 20(2)(n) encompassing "any claim in respect of the construction, repair or equipment of a ship or in respect of dock charges or dues" covered only "items which become part of the ship or are carried permanently." However, his Lordship did not, in terms, distinguish items of that kind from what Mr Horgan called "transient items like containers or bunker fuel". As explained at [4] above, bunkers are supplied to, and taken on board, a ship in the contemplation that they will be consumed in the course of her operation. If it were relevant, it would be indisputable, I consider, that, by contrast with containers, they fall within s 20(2)(m) of the Supreme Court Act 1981 (UK).

Can bunkers be "property" other than the ship under s 17 of the Admiralty Act?

14 I am not persuaded that bunkers are capable of constituting "property" within the meaning of s 17 of the Admiralty Act so as to be the subject, separate from the ship on which they are held, of an action in rem. Some indication of the meaning of "property" is given in par 97 of the ALRC Report on Civil Admiralty Jurisdiction which introduces Ch 7 devoted to "The Subject of the Action In Rem." It is there pointed out that;

‘The key feature of admiralty jurisdiction is the action in rem. This chapter discusses the subject of an action in rem, the res. The res is typically a "ship" and the chapter begins by discussing the definition of ship as a subject of an action in rem (para 98-108). In some situations the res may consist of cargo, freight, or wreck. Some discussion is necessary therefore of proceedings in rem against property other than ships (para 109-110).’

15 In pars 109-110 to which that passage refers, the ALRC noted;

‘Typically actions in rem are brought against ships. The 1952 Arrest Convention addresses only such actions. But English admiralty law has long recognised other types of res. Yet the recent United Kingdom legislation on admiralty jurisdiction makes no reference to what these other things are. References to arrest of ships 'and other property' [Supreme Court Act 1981 (UK) s 21(2), 21(3), 21(6)] make it clear that ships are not the only type of thing which may be arrested, but beyond that the legislation is silent. The Rules of the Supreme Court indicate that in addition to a ship, the res may consist of cargo, freight or the fund in the possession of the court representing the proceeds of the sale of the res [RSC (UK) O 75, r 8(1); O 75, r 11]. The position in New Zealand and Canada is similar. This approach provides one model which Australia might follow. ...
... ... ...
Conclusion. Apart from the rarity with which these issues are likely to arise, there could also be difficulties with property owned by a person who is not the shipowner, but who may be liable in respect of the claim. On balance, it is undesirable to spell out what would be a complex definition, one which will rarely be needed but which would not necessarily resolve the difficult problems that could arise. Accordingly it should be sufficient to refer to a right to proceed in rem against a ship or other property. ...’

16 Those recommendations, on the principle discussed at [5] above, ordain the proper construction of "property" in s 17. That construction is also consistent with par (2)(c) of s 4 of the Admiralty Act which provides that a reference in the Act to a proprietary maritime claim is a reference to:

‘(c) a claim for the satisfaction or enforcement of a judgment given by a court (including a court of a foreign country) against a ship or other property in a proceeding in rem in the nature of a proceeding in Admiralty;’ (emphasis added).

17 Similarly, s 4(3) of the Admiralty Act, while confining a reference in the Act to a general maritime claim almost entirely to a reference to a claim connected with a ship, makes some provision for the types of "other property" adverted to by the ALRC by stipulating that a reference in the Act to a general maritime claim is a reference to:

‘(g) a claim relating to salvage (including life salvage and salvage of cargo or wreck found on land);
(h) a claim in respect of general average;
... ...
(u) a claim for the enforcement of, or a claim arising out of, an arbitral award (including a foreign award within the meaning of the Arbitration (Foreign Awards and Agreements) Act 1974) made in respect of a proprietary maritime claim or a claim referred to in one of the preceding paragraphs;’

18 There can be no suggestion that the claim of the present plaintiff, being for fuel supplied to the ship, is other than one within s 4(3)(m) being "in respect of goods ... supplied ... to a ship for its operation or maintenance; see Port of Geelong Authority v The ‘Bass Reefer’ [1992] FCA 378; (1992) 37 FCR 374 at 387.

19 Those references, in conjunction with the ALRC’s acceptance of The ‘Silia’ as authority that bunkers form part of the ship constituting the res, effectively preclude, I consider, an argument that bunkers are "property" so as to be the subject, separate from the ship, of an action in rem under s 17 and thereby amenable to separate arrest under s 22 of the Admiralty Act. I acknowledge that this conclusion may appear inconsistent with the obiter dicta of Allsop J in Metall und Rohstoff Shipping v The Owners of Bunkers on Board the Ship MV ‘Genco Leader’ [2005] FCAFC 162. His Honour there observed, at [20];

‘It is unnecessary to decide whether "property" includes bunkers. For my part, I see no reason to limit the word "property" to particular types of property that would exclude bunkers. The relevant limitation is, as I have said, found in the words "general maritime claim concerning" in the first part of s 17. (See generally ALRC Report [107]-[110].)’

20 The Full Court in that case does not appear to have had the benefit, which we have received, of detailed analysis of the line of authority to which The ‘Silia’ is central. Nor, apparently, was attention given to the practical implications of treating bunkers as "property", separate and distinct from the ship. In my view, almost as a matter of definition, fuel, once taken on board as bunkers, is an integral part of the ship. To admit of the possibility of its separate arrest as "property" would compel its disgorgement from the ship, upon or before arrest, or the provision by the owners of security in respect of an item of property in which ex hypothesi they have no interest. Accordingly, I consider that the meaning of "property" in s 17 which I favour is consistent with the approach to interpretation of the Admiralty Act outlined by a Full Court of this Court in Tisand (Pty) Ltd v MV ‘Cape Moreton" [2005] FCAFC 68; (2005) 143 FCR 43 at 59-61 [59]- [65].

Conclusion

21 For these reasons, I have been led to conclude that, by virtue of s 108A of the FMA, the arrest of a "boat", including bunkers, under the Admiralty Act does not detract from its seizure, detention or forfeiture whenever occurring. It follows that the question posed for the opinion of the Full Court should be answered in the terms proposed by Kiefel J.

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan

Associate:


Dated: 24 May 2006.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY IN ADMIRALTY	NSD 1709 OF 2005

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	SCANDINAVIAN BUNKERING AS PLAINTIFF
AND:	BUNKERS ON BOARD THE SHIP FV 'TARUMAN' FIRST DEFENDANT AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY SECOND DEFENDANT COMMONWEALTH OF AUSTRALIA THIRD DEFENDANT

JUDGES:	RYAN, TAMBERLIN AND KIEFEL JJ
DATE:	24 MAY 2006
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

TAMBERLIN J:

22 I have considered the reasons for judgment and the orders proposed by Kiefel J together with the observations of Ryan J and am in agreement.

23 The conclusions of her Honour in relation to both questions raised are consistent with the purpose of the statutory provisions as indicated by the extrinsic material and the legislative history of the provisions, and they provide for a practical application of the provisions in question.

24 In relation to the observations of the Full Court of this Court in The Genco Leader [2005] FCAFC 162 concerning the question whether bunkers are within the term "ship" at [20], it should be noted that the issue in that case was whether diesel and fuel oil could be arrested in circumstances where there was no connection with the general maritime claim which involved a charterparty dispute arising out of a time charter of another vessel. The property in question in that case had no connection with the charterparty of that other vessel or the bunkers of that other vessel. As pointed out, the property under arrest comprised bunkers in another ship owned by someone else, which was time chartered after the dispute in relation to the earlier charterparty had arisen. The conclusion of the Court was that to allow such an attachment was beyond the reach of s 17 of the Admiralty Act 1988 (Cth). The question in the present case as to whether bunkers are part of "the ship" was not fully ventilated in that case as it has been in the present case.

25 I also agree with her Honour that the comments of Sheen J in subsequent cases to The Silia [1981] 2 Lloyds Rep 534 turned on the proper construction of particular documents and can be distinguished.

26 The observation of the Australian Law Reform Commission Report on Civil Admiralty Jurisdiction (No 33) (1986) at para 107 adopts the principle expounded by Sheen J in The Silia as being sufficiently clear and making it unnecessary to define the expression "ship" in the then proposed legislation. This is a powerful consideration in support of a conclusion that the bunkers are within the term "ship", especially having regard to the fact that the recommendations and of the Law Reform Commission were fully implemented in the 1988 Act. Although, the reasons of Sheen J in The Silia were grounded in history and practice, as opposed to a strict analysis of language, the fact that they were adopted by the Law Reform Commission as a basis for the drafting of the Australian Act is a compelling circumstance to be taken into consideration.

I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate:



Dated: 24 May 2006

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIAN DISTRICT REGISTRY IN ADMIRALTY	NSD 2709 OF 2005

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	SCANDINAVIAN BUNKERING AS PLAINTIFF
AND:	BUNKERS ON BOARD THE SHIP FV ‘TARUMAN’ FIRST DEFENDANT AUSTRALIAN FISHERIES MANAGEMENT AUTHORITY SECOND DEFENDANT COMMONWEALTH OF AUSTRALIA THIRD DEFENDANT

JUDGES:	RYAN, TAMBERLIN, KIEFEL JJ
DATE:	24 MAY 2006
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

KIEFEL J:

27 This matter concerns the competing claims of the plaintiff and the Commonwealth to the fuel bunkers on board the Ship FV ‘Taruman’, a foreign fishing vessel. It will variously be referred to as a ‘ship’, a ‘boat’ and a ‘vessel’ in these reasons. The Commonwealth claims that the fuel bunkers are part of the boat which is automatically forfeited to it under the Fisheries Management Act 1991 (Cth) (‘the FMA’) by reason of the commission of offences against the Act. The plaintiff maintains a maritime claim arising out of its supply of fuel to the ship and has brought in rem proceedings against the bunkers under to the Admiralty Act 1988 (Cth) to enforce that claim.

BACKGROUND

28 In about June 2005 officers of the Australian Fisheries Management Authority (the ‘AFMA’) formed the belief that the Taruman was fishing in the Macquarie Island Fishing Zone off the Australian Fisheries Zone (‘the AFZ’) in contravention of ss 100, 100A, 101 and 101A of the FMA. A notice was provided to the Master of the vessel requiring him to bring the Taruman to Hobart. It arrived on 12 September 2005. Notices of seizure under ss 84(1A) and 106C of the FMA were given to the Master that day. The latter notice identified the following as the subject of the seizure:

‘1. The boat Taruman (XUGW9) including all nets, traps and equipment and catch).

2. Nets traps or equipment in use or on board the boat described above at the time of the offence against section 100, 100A, 101 and 101A for [sic] the Fisheries Management Act 1991; and

3. All fish (catch and bait) on board the boat described above.’

29 On 15 September 2005 the plaintiff commenced proceedings in the nature of an action in rem against ‘the bunkers on board the ship FV Taruman’. The claim was particularised as one in respect of bunkers supplied to the vessel in July 1995 and for damages for breach of contract. Judgment was sought in the sum of US$311 100 together with other relief, including the arrest of the bunkers. A warrant of arrest was issued by the Court and executed upon the bunkers by an Admiralty Marshal of this Court on the same day. Some 220,000 litres of fuel remain on board.

30 On 22 September 2005 the second and third defendants filed a motion seeking orders that they be joined to the plaintiff’s proceedings, a declaration that the seizure under the FMA included seizure of the bunkers and an order that the arrest warrant be discharged. Alternatively a declaration was sought that the arrest does not prohibit those defendants from dealing with the bunkers. On 23 September 2005 Ryan J ordered that they be added as defendants and that there be a separate determination of the question:

‘whether AFMA or the Commonwealth has any right, title or interest in and to the fuel bunkers on board the ship and if so whether such right, title or interest prevails over the interest in the said bunkers claimed by the plaintiff in this action.’

The Chief Justice has made a direction under s 20(1A) of the Federal Court of Australia Act (1976) (Cth) that the original jurisdiction in this matter be exercised by a Full Court.

STATUTORY PROVISIONS

THE FISHERIES MANAGEMENT ACT

31 Sections 100(1), 100A(1), 101(1) and 101A(1) of the FMA are concerned with and prohibit the use of a foreign boat for commercial fishing in the AFZ or one which is equipped for that use, except in certain circumstances there specified.

32 Section 100(1) provides that:

‘(1) A person must not, at a place in the AFZ, use a foreign boat for commercial fishing ...’

33 Section 100A(1) provides that:

‘(1) A person is guilty of an offence if:

(a) the person intentionally has in his or her possession or charge a boat; and
(b) the boat is a foreign boat and the person is reckless as to that fact; and
(c) the boat is equipped with nets, traps or other equipment for fishing and the person is reckless as to that fact; and
(d) the boat is at a place in the AFZ and the person is reckless as to that fact.’

34 Section 101(1) provides:

‘(1) A person must not, at a place in the AFZ, have in his or her possession or in his or her charge a foreign boat equipped with nets, traps or other equipment for fishing ...’.

35 Section 101A(1) provides

‘(1) A person is guilty of an offence if:

(a) the person intentionally has in his or her possession or charge a boat; and
(b) the boat is a foreign boat and the person is reckless as to that fact; and
(c) the boat is equipped with nets, traps or other equipment for fishing and the person is reckless as to that fact; and
(d) the boat is at a place in the AFZ and the person is reckless as to that fact.’

36 A ‘boat’ is defined to mean a ‘launch, vessel or floating craft of any description’ (s 4). In each case an offence is constituted by a contravention of the section which is punishable on conviction by fine. Sections 100(1) and 101A(1) which are each described as a ‘strict liability offence’ are also indictable offences.

37 Section 84(1)(k)(l) and (m) provide that an officer of the AFMA may require a boat to be brought to a specified place in Australia or a Territory if the officer has reasonable grounds to believe that the boat has been used, is being used, or is intended for use in contravention of the Act.

38 Section 84(1)(ga) gives power to an officer of the AFMA to seize a thing forfeited under s 106A or which an officer of the AFMA has reasonable grounds to believe is forfeited.

39 Prior to the coming into effect of the Fisheries Legislation Amendment Bill (No 1) 1999, the forfeiture provisions of the FMA were contained in s 106 of Subdivision A of Division 6 of Part 6 ‘Surveillance Enforcement’. It provided, and continues to provide, that a court could order forfeiture of a boat, equipment or fish when a person was convicted of certain offences against the Act. The 1999 amendments included provision for automatic forfeiture to the Commonwealth of certain things where they had been used in the commission of an offence. Section 106A of Subdivision B of Division 6, Part 6 provides, in relevant part:

‘106A Forfeiture of things used in certain offences:

The following things are forfeited to the Commonwealth:

(a) a foreign boat used in an offence against:
...

(iii) Section 100; or

(iv) Section 100A;
(v) Section 101; or
(vi) Section 101A;

...

(b) a boat used in an offence against section 101B as a support boat (as defined in that section);

(c) a net or trap, or equipment, that:

(i) was on a boat described in paragraph (a) or (b) at the time of the offence mentioned in that paragraph; or
(ii) was used in the commission of an offence against ... section 100, 100A, 101, 101A ...

(d) fish:

(i) on a boat described in paragraph (a) or (b) at the time of the offence mentioned in that paragraph; or
(ii) involved in the commission against ... section 100, 100A, 101, 101A ...’.

40 Section 106C, which is entitled ‘Dealing with things seized as automatically forfeited’, requires notice of seizure to be given. The notice must identify the thing seized and state that it will be condemned as forfeited unless the owner or the person who had possession, custody or control of it immediately before its seizure gives written notice for it within 30 days. If it is not claimed within time it is condemned as forfeited to the Commonwealth: s 106E. It if is claimed, an officer of the AFMA may retain possession of the thing without having to commence proceedings for its condemnation and the Managing Director of the AFMA may give a notice to the claimant stating that the thing will be condemned if the claimant does not initiate proceedings against the Commonwealth within two months to either recover it or seek a declaration that it is not forfeited: s 106F. The thing is condemned if proceedings are not instituted: s 106G(2) and is condemned as forfeited to the Commonwealth if the orders sought are not obtained or other orders, requiring the value of the thing or the proceedings of its sale, are not made: s 106G(3). This Court was informed, subsequent to the hearing of this appeal, that proceedings were commenced by the owner of the vessel, against the second and third defendants pursuant to s 106G(2) of the FMA, seeking a declaration that the vessel, fish, nets and equipment are not forfeited to the Commonwealth.

41 Subdivision F of Division 6 of Pt 6 of the FMA is entitled ‘Enforcement action prevails over admiralty action’. Section 108A in that subdivision provides:

‘108A Seizure or forfeiture has effect despite admiralty proceedings

(1) The seizure, detention or forfeiture of a boat under this Act has effect despite any or all of the following events:

(a) the arrest of the boat under the Admiralty Act 1988;
(b) the making of an order for the sale of the boat by a court in proceedings brought under the Admiralty Act 1988;
(c) the sale of the boat under an order made by a court in proceedings brought under the Admiralty Act 1988.

(2) Subsection (1) has effect regardless of whether the seizure, detention or forfeiture, occurred before or after the arrest, making of the order or sale (as appropriate).’

THE ADMIRALTY ACT

42 The Admiralty Act applies to all ships and all maritime claims: s 5(1). A maritime claim is either a proprietary maritime claim, which has regard to ownership, possession or title to a ship or satisfaction or enforcement of a judgment against the ship or other property in a proceeding in rem (s 4(2)); or a general maritime claim (s 4(3)). Section 4(3), which is here relevant, provides:

‘Maritime claims

...

(3) A reference in this Act to a general maritime claim is a reference to:

(a) a claim for damage done by a ship (whether by collision or otherwise);
(b) a claim in respect of the liability of the owner of a ship arising under Part II or IV of the Protection of the Sea (Civil Liability) Act 1981 or under a law of a State or Territory that makes provision as mentioned in subsection 7(1) of that Act;
(c) a claim for loss of life, or for personal injury, sustained in consequence of a defect in a ship or in the apparel or equipment of a ship;
(d) a claim (including a claim for loss of life or personal injury) arising out of an act or omission of:

(i) the owner or charterer of a ship;
(ii) a person in possession or control of a ship; or
(iii) a person for whose wrongful acts or omissions the owner, charterer or person in possession or control of a ship is liable;

being an act or omission in the navigation or management of the ship, including an act or omission in connection with:

(iv) the loading of goods on to, or the unloading of goods from, the ship;
(v) the embarkation of persons on to, or the disembarkation of persons from, the ship; and
(vi) the carriage of goods or persons on the ship;

(e) a claim for loss of, or damage to, goods carried by a ship;
(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;
(g) a claim relating to salvage (including life salvage and salvage of cargo or wreck found on land);
(h) a claim in respect of general average;
(j) a claim in respect of towage of a ship;
(k) a claim in respect of pilotage of a ship;
(m) a claim in respect of goods, materials or services (including stevedoring and lighterage services) supplied or to be supplied to a ship for its operation or maintenance;
(n) a claim in respect of the construction of a ship (including such a claim relating to a vessel before it was launched);
(o) a claim in respect of the alteration, repair or equipping of a ship;
(p) a claim in respect of a liability for port, harbour, canal or light tolls, charges or dues, or tolls, charges or dues of a similar kind, in relation to a ship;
(q) a claim in respect of a levy in relation to a ship, including a shipping levy imposed by the Protection of the Sea (Shipping Levy) Act 1981, being a levy in relation to which a power to detain the ship is conferred by a law in force in Australia or in a part of Australia;
(r) a claim by a master, shipper, charterer or agent in respect of disbursements on account of a ship;
(s) a claim for an insurance premium, or for a mutual insurance call, in relation to a ship;
(t) a claim by a master, or a member of the crew, of a ship for:

(i) wages; or
(ii) an amount that a person, as employer, is under an obligation to pay to a person as employee, whether the obligation arose out of the contract of employment or by operation of law, including the operation of the law of a foreign country;

(u) a claim for the enforcement of, or a claim arising out of, an arbitral award (including a foreign award within the meaning of the Arbitration (Foreign Awards and Agreements) Act 1974) made in respect of a proprietary maritime claim or a claim referred to in one of the preceding paragraphs;
(w) a claim for interest in respect of a claim referred to in one of the preceding paragraphs.’

The highlighted paragraphs are those upon which the plaintiff’s proceedings are based.

43 In matters of Admiralty or maritime jurisdiction, a proceeding cannot be commenced as an action in rem against ‘a ship or other property’ except as provided by the Act. A ‘ship’ is defined by s 3 as a vessel used or constructed for use in navigation by water. Examples are given. No attempt is made in the Act to define what is ‘other property’.

44 Section 15 confers the right to proceed in rem ‘on a maritime lien or other charge in respect of a ship or other property subject to the lien or charge’ ‘against the ship or property’. Section 16 confers the right to proceed in rem on a proprietary maritime claim ‘concerning a ship or other property’ against the ship or other property. Sections 17 and 18 confer the right to proceed in rem on a general maritime claim ‘concerning a ship or other property’. Section 17 is in the following terms:

‘Right to proceed in rem on owner’s liabilities

17. Where, in relation to a general maritime claim concerning a ship or other property, a relevant person:
(a) was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and
(b) is, when the proceeding is commenced, the owner of the ship or property;

a proceeding on the claim may be commenced as an action in rem against the ship or property.’

45 Section 6 of the Act provides that, save in one respect, the Act does not create a new maritime lien or charge or a new cause of action.

46 Section 22(1) provides that an 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 that ship or other property may be arrested in such a proceeding. The procedures relating to arrest are dealt with in the Admiralty Rules.

THE CONTENTIONS

47 The plaintiff’s case concerning the FMA is that s 108A does not apply to the bunkers of the Taruman for the reason that the reference to seizure and forfeiture of a ‘boat’ does not extend to its fuel bunkers. The second and third defendants submit that if the FMA does not apply to the bunkers nevertheless the plaintiff does not have a right to proceed in rem against them under the Admiralty Act. They come within the definition of a ship for the purposes of such a proceeding. They cannot therefore be regarded as property distinct from the ship within the meaning of s 17.

SEIZURE AND FORFEITURE UNDER THE FMA

48 The second and third defendants sought to rely upon the Explanatory Memorandum to the 1999 Amendment Bill and the second reading speech with respect to the Bill (Hansard, 1 September 1999, page 9565). The problem identified in the Memorandum was unregulated high seas fishing and the preferred option of dealing with it was said to be by government regulation. Under the attached ‘Notes on Individual Clauses’ it is said that ‘Item 23: After section 106’ refers to the subdivision enabling the operation of a new regime of automatic forfeiture to the Commonwealth of ‘foreign boats, support boats, net/trap/equipment, or catch involved in, or resulting from, illegal foreign fishing.’ Section 108A appears at Item 26 of the Bill. Under the heading ‘Part 6 – Precedence over Admiralty Act 1988’ it is said in the Memorandum:

‘Item 26 provides explicitly for the automatic forfeiture provisions of the Fisheries Management Act 1991 to prevail over the Admiralty Act. This should ensure that Australian investigations and judicial action are not frustrated by third parties such as foreign mortgagees. Australia’s unsuccessful efforts in the seizure of the Aliza Glacial (a Norwegian fishing vessel caught operating illegally in Australia’s sub-Antarctic waters) have prompted this approach. Item 27 confirms the timing of the application of this item. These items are new.’

49 The reference to the Aliza Glacial is a reference to the ship the subject of the decision in Readhead v Admiralty Marshal (1998) 87 FCR 229. The ship, its fishing equipment, bait and the catch on board were the subject of seizure under s 84(1)(g)(i) and (ii) of the FMA. Subsequently an arrest warrant was executed on the ship. A preliminary question raised in the proceedings brought under the Admiralty Act was whether a purchaser could obtain an unencumbered title to the ship or must take it subject to the power of control and detention and to any order for forfeiture which might be made by a Court under s 106 of the FMA. Ryan J held (at 246) that when the FMA was enacted in 1991 the legislature may be taken to have been aware of the wide-ranging powers, including a power of sale, possessed by the Courts of Admiralty and confirmed recently by the Admiralty Act. It was significant, in his Honour’s view, that it did not provide for the power of sale to be suspended whilst a vessel was detained pursuant to s 84. Equally, the legislature had not provided that the general power of sale exercisable by an Admiralty Marshal should override the right of detention under the Act and the inchoate right of the Crown to the forfeiture of the vessel. In these circumstances, his Honour concluded (at 246-247):

‘... I consider that the legislature intended to leave to the Court of Admiralty, in the exercise of its discretion, the adjustment of the competing rights of the authorised officer under the Act on the one hand, and of the plaintiff in an action in rem and other persons interested in the resolution of that action on the other ...’.

50 In proceedings which followed (Bergensbanken Asa v The Ship ‘Aliza Glacial’, [1998] FCA 1322) it appeared that an application for forfeiture of the ship under s 106 was not likely to be made because the Master and the other defendants were not within the jurisdiction and the prosecution of the offences they were alleged to have committed could not proceed. His Honour ordered the sale of the ship.

51 In the second reading speech the Minister said that the government was determined to take ‘stern measures’ to deter illegal foreign fishing in the Australian fishing zone and that amendments would provide ‘for a more effective catch, gear and boat forfeiture scheme to deter illegal fishing in the Australian fishing zone’ and that ‘officers will be able to seize foreign boats, fishing gear or catch which have been automatically forfeited to the Commonwealth as a result of illegal fishing in the Australian fishing zone.’

52 The plaintiff submits that the extrinsic materials should not be utilised so as to alter the plain meaning of the FMA. It seems to me that the submission mistakes what the Explanatory Memorandum conveys and the area of potential ambiguity in the amendments. The Memorandum identifies the mischief sought to be addressed as the conflict between provisions for seizure and forfeiture in the FMA and the pursuit of proceedings against the boat by third parties. One might also infer that the provisions for automatic forfeiture were intended to render the process more effective and to overcome the problems with the requirement that a person be convicted of an offence before there could be forfeiture, as occurred in Readhead. The object of these amendments and the method by which they are to be achieved are however clear from the terms of the amending provisions. What might be thought to be unclear, at least on the plaintiff’s case, is what the word ‘boat’ was intended to encompass as property. The extrinsic materials are not directed to this question.

53 The plaintiff’s submissions focus upon s 106A and the reference to a foreign ‘boat’ together with nets, traps and other equipment used in the commission of an offence under the Act as forfeited. It is submitted that there is no express inclusion of bunkers. If it had been intended to include them they could have been added to the list of other property, the nets, traps and other equipment. The legislature should be taken to have been aware of the historical claim of some time charterers, who have paid for the fuel, to ownership of the bunkers. It should be inferred from a failure to mention bunkers, that it was not intended that they also be forfeited. The reference in s 108A to a ‘boat’ should be read in this light, it is submitted.

54 The plaintiff’s submissions contain no reference to the purpose of ss 106A and 108A and do not explain how the construction for which it contends are consistent with those purposes. Moreover they do not place the reference to a ‘boat’ in its statutory context. Purpose, policy and context are necessary guides to the meaning of statutory provisions: Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at 381. The context should be examined in the first instance and not merely when some ambiguity might be thought to arise: CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384 at 408.

55 The offences which found the exercise of the powers of seizure, detention and forfeiture are concerned with the use, or the likelihood of use, of a foreign fishing vessel in the AFZ for commercial fishing. It is what has been used or may be used in that activity which is the subject of the powers of seizure, detention or forfeiture, together with the catch. When the requisite belief is held by an AFMA officer, concerning the commission of an offence, they may require a Master to bring the vessel to a specified place. There are other points at which the movement of the vessel may be required. It may be necessary during the period of detention. It may be required in connexion with a decision made by the Commonwealth about what is to occur to the boat consequent upon forfeiture.

56 The forfeiture provided for in the FMA takes effect regardless of the interests of any third parties in the property the subject of forfeiture, even if they are innocent of any offence under the Act. There is no provision for compensation or the adjustment of rights. Forfeiture does not necessarily entail a sale of the forfeited property and there may be no occasion for an accounting of the proceeds of sale and the vessel and its bunkers.

57 A power of forfeiture, which may be exercised regardless of any property rights is a severe measure. Its purpose is to achieve an object of the FMA, namely to deter illegal commercial fishing in the AFZ. Under the 1999 provisions forfeiture is automatic. The prospect that forfeiture might not occur because of difficulties in securing a conviction is overcome and the process is rendered more efficacious. Section 108A is also intended to ensure the FMA’s seizure, detention and forfeiture provisions have full effect and that there will be no question of those powers being limited or adjusted by the exercise of rights to proceedings concerning the boat. There is to be no competition between the Commonwealth’s powers and the rights thereby acquired and the rights of third parties in connexion with the boat. The provision underscores the denial of the interest of others in the property as relevant in the context of forfeiture.

58 Nothing in the operation of s 106A or the purpose to which it is directed suggests that any distinction is to be drawn between a fishing vessel and its fuel so far as forfeiture is concerned. It is the vessel as a whole which is involved in the offence and no fine distinction could have been intended with respect to fuel remaining unused after it has been committed. The FMA has no regard for the interests of others in the property forfeited. In these circumstances it would not seem sensible to suggest that an owner may lose the fishing vessel but retain the fuel, as the second and third defendants point out. The position of a time charterer with respect to the fuel is irrelevant in the context of the forfeiture provisions.

59 The references in s 106A to the items of nets, traps or other equipment used in fishing are items integral to a fishing vessel and which have been or may be, utilised in an illegal activity. The section is not concerned with identifying particular items of property as subject to seizure and forfeiture. It is not drawn with property or property interests in mind. It identifies what has been used in the commission of an offence under the Act.

60 There are other, practical, considerations which suggest that a ‘boat’ was intended to include its fuel bunkers. The powers to be exercised prior to seizure or during detention and steps which may be taken consequent upon forfeiture assume the vessel may be moved. It is not likely to have been intended that these processes be subject to another’s requirement that the fuel be removed, even if that outcome be unlikely. It is quite unlikely that it was envisaged that the AFMA pay an innocent third party for its fuel. The inconvenience and improbability which might follow upon the adoption of one construction of a statutory provision may lead to a preference for another which is reasonably open and more closely conforms to the legislative intent: Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 at 320-321; CIC Insurance at 635.

61 The second and third defendants also submitted that the reference to a ‘boat’ in s 180A is equated with a ‘ship’ within the meaning of the Admiralty Act provisions dealing with in rem proceedings. The parties however dispute the meaning which is to be given to the word ‘ship’ in s 17 of the Admiralty Act. That issue is dealt with later in these reasons, where I conclude that it includes the bunkers. There is no express incorporation in the FMA of the term ‘ship’ or its definition in the Admiralty Act. In any event the meaning contended for does not appear in the definition of that word in the Admiralty Act, but is drawn from a long-standing understanding and practice of the Admiralty Court. It is no doubt correct that s 108A of the FMA proceeds upon the assumption that the boat which is forfeited is also the ship subject to or liable to arrest and sale. It happens that that assumption is correct. That is so because the meaning of the word ‘boat’, drawn from the purpose and effect of the FMA provisions, necessarily includes bunkers. The term ‘ship’ in the Admiralty Act is to like effect, but for different reasons. It is not necessary to resort to the latter act to inform the FMA.

62 The plaintiff’s contention that bunkers are to be taken as excluded from a ‘boat’ forfeited under the FMA cannot be supported by the purpose, operation and effect of the provisions of the FMA. Moreover the purpose of s 108A was intended to avoid situations such as this arising.

THE PLAINTIFF’S MARITIME CLAIM

63 The conclusion I have reached as to the provisions of FMA is sufficient to permit an answer to the question before the Court. A further question has however been raised and it concerns an opinion expressed by a Full Court of this Court (in Metall und Rohstoff Shipping v The Owner of the Bunkers on Board the Ship MV ‘Genco Leader’ [2005] FCAFC 162) that bunkers might come within the description of ‘property’ in s 17 of the Admiralty Act. Sheen J held in The Silia [1981] 2 Lloyd’s Law Rep 534 that the term ‘ship’ under legislation there in question (s 3 of the Administration of Justice Act 1956 (UK)) included all property on board the ship other than that which was owned by a third party. Accordingly the proceeds of sale of the oil were part of the res and as such available to judgment creditors in the action in rem. That decision can be seen to inform the meaning of ‘ship’ in s 17 of the Australian Admiralty Act, for the reason that the ALRC relied upon it in connexion with whether the term required further definition. It concluded that it had the meaning attributed to it in The Silia. If bunkers come within the definition of ‘ship’ as property, it may be said that they cannot come within ‘other property’, particularly when regard is had to the use of disjunctives in ‘ship or other property’ and ‘ship or property’ in s 17. The plaintiff submits that it can come under either. The issues raised are of some importance to the operation of the Admiralty Act and they have been the subject of argument. It is necessary therefore to consider them.

64 The Admiralty Act of 1988 follows the draft bill scheduled to the ALRC’s Report No 33 (‘Civil Admiralty Jurisdiction’) in 1986. An object of the ALRC’s draft legislation was to ‘strike a balance between following the English legislation and seeking to clarify and simplify the law’ (ALRC, 33, par 95 and see The Owners of the Shin Kobe Maru v Empire Shipping Co Inc [1994] HCA 54; (1994) 181 CLR 404, 422). The ALRC considered the Supreme Court Act 1981 (UK) which repealed the 1956 Act which had given effect to the International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going ships, Brussels, 1952 (‘The Arrest Convention’).

65 Prior to the ALRC Report discussion upon the subject of actions in rem was focused upon ships. As the ALRC observed, the 1952 Arrest Convention, upon which the 1956 UK Act was based, addressed only actions brought against ships. The question in The Silia was what was included as property by the word ‘ship’ in s 3 of the Administration of Justice Act 1956 (UK), in the context of an action in rem. Section 3(2) of that Act provided that the Admiralty jurisdiction of the High Court may be invoked by an action in rem ‘against the ship or property in question’ in cases provided for in certain paragraphs of s 1(1). Section 1(1) provides a list of proprietary and general maritime claims. That subsection concerned proprietary maritime claims. Section 3(3) dealt with maritime liens or charges ‘on any ship, aircraft or other property for the amount claimed’ and allowed an action in rem ‘against that ship, aircraft or property’.

66 In The Silia the vessel was sold with everything on board belonging to her, including unused bunker fuel and lubricants (together referred to as ‘the oil’). The oil was sold separately, and paid into Court together with the proceeds of sale of the ship and her stores. The sale of The Silia followed the issue of a writ in rem by a company which had supplied the stores. The plaintiffs, charterers of the vessel, sought to charge the funds representing the sale of the oil in order to satisfy their judgment which they had obtained following upon an arbitration. They argued that the proceeds of the sale of the oil were not part of the ship and therefore not part of the fund available to a plaintiff who had obtained a judgment in rem. The oil was the property of the shipowners and was available to judgment creditors of the owners. The contrary contention, put by mortgagees of the vessel, was that the proceeds of sale of the oil were part of the res of the action and had to be distributed between all creditors pari passu.

67 Sheen J (at 535) referred to the practice of the Admiralty Marshal in selling a ship. The oil in a ship’s tank was sold with the ship for practical reasons. They included prohibitions upon removal, associated hazards, problems with pumps not being operational when required and no personnel available and the cost of removing it. His Lordship explained that it was the practice of the Admiralty Marshal to account separately for the proceeds of the sale of the oil because the brokers are entitled to commission on the price of the ship but not on the price of the oil.

68 His Lordship expressed no doubt that, in the context of an action in rem, ‘the word ‘ship’ includes all property aboard the ship other than that which is owned by someone other than the owner of the ship. It appears elsewhere in his Lordship’s reasons that he was conscious that time charterers were considered to be the owners of the fuel they had purchased and that this issue sometimes arose in connexion with the proceeds of sale. His Lordship explained the reasons for his conclusion, from which it followed that bunkers formed part of a ship in proceedings in rem (at 537):

‘If one goes back to the days before ships were driven by power derived from coal or oil a warrant served on a ship covered everything that belonged to it as part of its equipment, even to sails and rigging which are detached from it. (See The Alexander, (1811) 1 Dods. 282.) The personal property of the captain and crew were exempt. For many years before the 1956 Act was enacted it was the practice of the Admiralty Court to treat bunkers as part of the ship, unless they were shown to be the property of charterers. If Parliament intended that an action in rem should be brought against the hull and machinery, and not against oil in the tanks, Parliament would have used language which made that clear. The language of the 1956 Act suggests that for this purpose no definition of "ship" was needed and that the practice prevailing immediately before the 1956 Act should continue. The advantage of an Admiralty action in rem is that it enables the plaintiff to detain property of the shipowner which has come within the territorial jurisdiction of the Court in order to secure a maritime claim. That advantage would be reduced if part of the property of the shipowner were exempt from attachment.’

69 His Lordship then enquired why the property of the shipowner which is on board should be exempt from arrest and not made available to pay creditors. It would be absurd, he reasoned, that oil in drums could be sold as part of the ship’s stores and part of the res but oil in the tanks could not. His Lordship concluded (at 538) that the proceeds of sale of the oil are part of the res and, as such, are available to judgment creditors in rem.

70 The decision in The Silia was considered by the ALRC in its Report. At para 107 ‘Equipment, Furniture, Stores, Bunkers’ it said:

‘The definition of "ship" for the purposes of arrest in rem traditionally extends to include the ship’s tackle, apparel and furniture. In The Silia [supra], Justice Sheen was faced with the argument that the ship’s bunkers were not part of the ship. He said:

"What I have to decide is whether the word "ship" in s 3 has a limited meaning, and means no more than the hull, machinery and spare parts, or whether ‘ship’ has a wider meaning and means the hull, machinery and everything on board which is the property of her owners ... I have no doubt that in the context of an action in rem the word ‘ship’ includes all property aboard the ship other than that which is owned by someone other than the owner of the ship."

He went on to ask rhetorically why "any property of the shipowner which is on board for the prosecution of the maritime adventure should be exempt from arrest and not made available to pay the creditors". The decision does not address the issue whether property aboard the ship is included when it is owned by someone other than the ship’s owner, but that other person would have been liable had the action been brought in personam. Although difficult questions may arise, particularly between owners and charterers, as to who owns a particular item of stores or bunkers, the principle as expounded by Justice Sheen is sufficiently clear. Accordingly it is unnecessary to define this aspect of "ship" in the proposed legislation.’

71 In Morlines Maritime Agency Limited v The Ship ‘Skulptor Vuchetich’ (1996) 62 FCR 602 Sheppard J was concerned with whether certain equipment, including forklift trucks and hoists, was part of the ship for the purpose of its arrest and sale. The equipment was not attached to the vessel but it was used in the operations of loading and unloading. His Honour observed that the definition of ‘ship’ in s 3 of the Admiralty Act was a conventional definition (at 604). His Honour held (at 605) that the definition is ambiguous or obscure within the meaning of those expressions in s 15AB of the Acts Interpretation Act 1901 (Cth). His Honour then went on:

‘In those circumstances I should take into account what the Law Reform Commission has said in relation to the matter of equipment and stores and bunkers and I propose to do so. Once I do that the position in Australia is beyond question. It is not simply a case of asking oneself whether one should follow the decision of the court of another country which, however persuasive it may be, is not binding on this Court. It is a case of our own Law Reform Commission, which was responsible for the formulation of the Bill which became the Act, having adopted the dictum of Sheen J as the law which applies in this country.’

72 His Honour went on:

‘I should say that even in the absence of the Law Reform Commission’s report I would have been disposed to take a similar view and I would have been strengthened in that conclusion by the fact that Sheen J’s decision in The Silia has been applied in the Pan Oak [1992] 2 Lloyds Rep. 36. The Silia is also referred to in texts.

In all the circumstances I think that Sheen J’s statements should be adopted and applied. The equipment in question was equipment which was used by the vessel in the course of its operations’. ...

73 His Honour concluded that the equipment in question was part of the ship for the purposes of arrest and sale (at 606).

74 The plaintiff submitted that later decisions of Sheen J suggested that his Lordship resiled, to an extent, from the position taken in The Silia. It is not clear that any alteration of position, on the part of his Lordship, would alter the meaning to be given to the word ‘ship’ in s 17 of the Admiralty Act if it is to be derived from the ALRC Report. In any event neither of the two cases relied upon by the plaintiff however are directed to the meaning of ‘ship’ and as to whether an in rem claim against a ship extends to its bunkers.

75 The ‘Pan Oak’ [1992] 2 Lloyd’s Law Rep 36 concerned the question whether bunkers were part of property to which mortgages attached in the context of an agreement made between the charterers who paid for the oil and the shipowners, in settlement of an action, that title to the bunkers pass to the owners. His Lordship construed the description of the property mortgaged and held that the words used did not in their ordinary and natural meaning include bunker oil (at 38). In The ‘Eurostar’ (Den Norske Bank A/S and Irish Intercontinental Bank Ltd v Owners of the Ships ‘Eurosun’ and ‘Eurostar’) [1993] 1 Lloyd’s Law Reports 106 his Lordship held that bunkers, which had been paid for by charterers, remained the property of the charterers and did not vest in the owners on the termination of the charter. This conclusion was reached by reference to the construction of the charterparty, in particular a clause concerning bunkers, and whether the owners’ actions enabled them to rely upon it. His Lordship went on to deal with an alternative approach, as to whether the fuel oil formed part of the property secured by the mortgage. His Lordship considered it necessary to refer to his decision in The Silia where, however, the mortgagees had not contended that the oil formed part of the security. His Lordship said (at 111):

‘.... However it does not follow from the fact that fuel oil in a ship must of necessity be arrested and sold with the ship that the fuel oil forms part of the security for a loan secured by a mortgage of the ship.’

This statement says nothing about the correctness of the decision in The Silia.

76 The plaintiff relies upon a statement appearing in the reasons of his Lordship which followed (at 111). After identifying the question at that point as: ‘was the fuel oil part of the security’ and identifying the property mortgaged as shares in a ship together with certain other property on board and ‘appurtenances’ his Lordship said:

‘The word "ship" does not in its ordinary meaning include fuel. It is common practice for the fuel to be the property of charterers.’

77 The plaintiff says that this is inconsistent with the notion that bunkers form part of a ship, if that is what The Silia holds. The plaintiff’s argument overlooks the fact that in the ‘Eurostar’ Sheen J was concerned with the ordinary meaning of the word ‘ship’. His Lordship did not suggest that that was the meaning he gave to the term in the 1956 UK Act in The Silia. That meaning was derived from the long-standing practice of the Admiralty Court with respect to proceedings in rem against a ship.

78 In my view the cases relied upon by the plaintiff are irrelevant to the question before the Court.

79 The plaintiff was not able to identify any error in the approach taken by Sheppard J in Morlines Maritime Agency. Clearly regard could be had to the ALRC Report to ascertain the meaning of the word ‘ship’ and the property which is to be taken as forming part of it, for the purposes of in rem proceedings under the Admiralty Act: see CIC Insurance at 408. His Honour considered that Sheen J’s statements should be applied, not only because the ALRC had adopted them but also because his Honour would have taken a similar view.

80 The decision in The Silia and the adoption of it in Morlines Maritime Agency were referred to by a Full Court in Opal Maritime Agencies Pty Ltd v The Proceeds of Sale of the Vessel MV ‘Skulptor Konankov’ [2000] FCA 507; (2000) 98 FCR 519 at 556 [135]. Their Honours did not expressly approve the decision. The Court was there concerned with the identification of the ratio of the decision, and held it to be ‘that property on board a vessel, other than that which is owned by someone other than the shipowner and which is used by the vessel in the course of its operations, is part of the ship for the purpose of arrest and sale under the Act ...’. The Court did not however cast any doubt upon that statement.

81 If regard is had to s 17 it seems to me that there is no answer to the proposition that the bunkers cannot be regarded as ‘property’ if they are to be taken as part of the property which is the ‘ship’. The ‘property’ referred to in the section is that which is not the ‘ship’, whatever else it may mean. The plaintiff offered no basis for the submission that the bunkers could be both part of the ship or property, given the reference to ‘or’ in a ship or other ‘property’ and the ‘ship or property’. The reference to ‘other property’ in the opening part of s 17 in particular conveys that what is part of a ship cannot also be property.

82 The plaintiff’s contention is that the meaning to be attributed to the word ‘ship’, by reference to these sources, does not answer the question whether its maritime claim is one concerning property. That is not a question considered by the cases. The answer to that question is provided by construing the connexion between the plaintiff’s maritime claim and the property in the bunkers. Such an approach is mandated by the decision in the Full Court in Metall und Rohstoff Shipping, the plaintiff submits.

83 The plaintiff’s argument does not have regard to the discussion by the ALRC of what was intended to be the property the subject of a maritime claim. A reference to the list of claims in s 4(3) of the Admiralty Act does not readily suggest that they are likely to be connected to property other than a ship, which is the usual subject matter of proceedings in rem.

84 In further considering what could be the subject of an action in rem the ALRC turned its attention to cargo, freight ‘and other types of res’ and addressed the question whether there was a need to specify cargo and freight. It observed that English Admiralty law has long recognised res other than ships and that, in theory, what constitutes a res should be determined by reference to the statute which confers the right to proceed in rem. The difficulty was that UK legislation was generally silent on the point. It concluded (at par 110):

‘110. ... On balance, it is undesirable to spell out what would be a complex definition, one which will rarely be needed but which would not necessarily resolve the difficult problems that could arise. Accordingly it should be sufficient to refer to a right to proceed in rem against a ship or other property.’

85 Whilst the Report left the question of the meaning to be given to ‘property’ open, nothing in it supports the plaintiff’s contention.

86 Reference to the connexion required by s 17 was made by the Full Court in Opal Maritime Agencies at 535 [40]. The Court observed that the Act incorporated the policy recommendation of the ALRC that ‘the nexus between the ship in respect of which the claim arose, and the ship which may be proceeded against in rem, remain’ (referring to ALRC 33 at pars 124-5, 136)). The ALRC had followed the approach taken by the House of Lords in ‘The Eschersheim’ [1976] 1 WLR 430. Their Honours concluded (at [51]:

‘The reasoning in "The Eschersheim" as to the need for the relationship between claims and particular ships is applicable to all heads of claim under s 4(3) of the Act’.

87 In Opal Maritime the Court was concerned with a claim against the proceeds of sale of a ship when the goods and materials, said to found the maritime claim, had been provided to a number of ships owned by the shipowner. Such an issue may not readily arise in connexion with in rem proceedings against property. Nevertheless their Honour’s statement has equal application to all claims under s 4(3) which are said to have the necessary connexion to property for the purposes of s 17.

88 The question of the connexion required by s 17 arose again in ‘The Genco Leader’ with respect to the bunkers on board the vessel which was chartered by Maywah Limited. The bunkers were arrested by the plaintiff in order to provide security for an arbitration between the plaintiff and that company concerning the time charter of another vessel. The property arrested had no connexion with the charterparty which was the basis for the general maritime claim. The plaintiff argued that the provisions of s 17(a) and (b) were wide enough to extend to the relevant person’s property. The property concerned need not be connected with the general maritime claim.

89 Allsop J (with whom the other members of the Court agreed) rejected the plaintiff’s contention which was based, in part, upon a view of ‘property’ as limited only by the notions of the jurisdictional limits of Admiralty contained in s 76(iii) of the Constitution and any other limits contained in s 76(iii), as referred to in s 13 of the Admiralty Act. His Honour considered that to construe s 17 in this way would permit a form of Admiralty attachment of property (at [16]). The term ‘the ship or property’ in s 17(a) and (b) was clearly a reference to ‘the ship’ and ‘the property’. As appears from the reasons of his Honour which followed, the property is that referred to in the introductory words of s 17, property which is the subject of a general maritime claim.

90 His Honour said (at [17]):

‘...The connecting tissue, if I may use that expression, between property and Admiralty and maritime jurisdiction is the relationship between the property and the general maritime claim brought about by the words in the opening part of s 17.’

And further (at [19] and [20]):

‘19. In my view, the structure of Part 3 of the Admiralty Act is not to bring about this wide notion of attachment of property. The property referred to in (a) and (b), in my view, is the property which has a connection with a general maritime claim as introduced by the first part of s 17.’

20. It is unnecessary to decide whether "property" includes bunkers. For my part, I see no reason to limit the word "property" to particular types of property that would exclude bunkers. The relevant limitation is, as I have said, found in the words "general maritime claim concerning" in the first part of s 17. (See generally ALRC Report [107]-[110].’

91 As a matter of construction, his Honour held, there was no statutory authority to arrest the bunkers.

92 The ratio of ‘The Genco Leader’ concerns the connexion between the property and the general maritime claim referred to in s 17. The reference in par 20 of that decision, as to whether bunkers might come within the description of ‘property’ in s 17, does not form part of its ratio. I understand his Honour to have left that question open and to allow for the possibility that this might be so in a particular case. His Honour’s comments are consistent with no narrow approach being taken to words of wide meaning. There is nothing in his Honour’s reasons which suggests that the questions in this case concerning bunkers were raised in argument before that Court.

93 The word ‘claim’ in s 4(3) refers to the assertion of a right or interest recognised by law and carrying an entitlement to relief: Shin Kobe Maru, at 422. The Admiralty Act, in providing for the enforcement of those rights by a proceeding in rem, does not alter the cause of action nor create a lien over the ship or property referred to in s 17. As the Court explained in that case (at 419-420):

‘A construction which allows a plaintiff to enforce its contractual rights by an action in rem, even though those rights involve or result in another's ownership, neither effects a new maritime lien or other charge nor creates a new cause of action contrary to s.6. It has long been accepted that the mere conferral by statute of a right to proceed in rem on an existing cause of action does not effect a new maritime lien or charge. And where, as here, proceedings are brought on a contract, the cause of action arises under the contract, not under the Act. The position can be illustrated by reference to the rights conferred by ss.17 and 18 of the Act. Where the requirements of those sections are satisfied, a "general maritime claim" of the kind referred to in s.4(3) of the Act is neither elevated to the status of a maritime lien nor transformed into a new cause of action by reason of the right to proceed in rem: the claim and the cause of action remain the same; the Act enables proceedings to be brought in rem but it does not alter the nature or incidents of the claim or of the cause of action.’

94 The Honours went on (at 420) to refer to s 4(2)(a) and (b) as forming part of a ‘jurisdictional definition, in the sense that the definition of ‘proprietary maritime claim’ seems to identify an area of jurisdiction conferred on or vested in the Courts ...’. Section 4(3) should be read in the same light, in my view. The claims listed in the subsection give rise to jurisdiction because they concern ships and matters associated with shipping.

95 In the present case the claim is one based in contract. The contract was one for supply of goods or materials to a ship for its operation or maintenance and comes within the claim defined in s 4(3)(m). The provision extends the former jurisdiction with respect to necessaries: Port of Geelong Authority v The Ship ‘Bass Reefer’ [1992] FCA 378; (1992) 37 FCR 374 at 386, Foster J. His Honour considered fuel and water as more obvious examples of what was comprehended by ‘goods’ and ‘materials’ (and see Berlingieri ‘Arrest of Ships’, 3^rd edn, p 2).

96 Section 17 should be read with s 4(3) in determining whether a general maritime claim concerns a ship or other property. Neither the description of the claim nor the nature of the connexion support the plaintiff’s contention that resort may be had to the bunkers as property. The claim referred to in s 4(3)(m) is not simply one of the supply of fuel, it is of the supply of fuel to a ship in order that it could operate. It is that feature which makes it a maritime claim. It is also that feature which provides the connexion to which s 17 refers. On the plaintiff’s approach the connexion to the fuel is established simply because it is the material which is supplied. Such an approach would deny the obvious connexion to the ship provided by s 4(3)(m), the very matter which provides jurisdiction. Moreover the plaintiff’s claim to the fuel itself gives rise to something approaching a lien over the fuel and this is not permissible.

97 I appreciate that, on the view I have taken, there may be a limited use for the word "property" in s 17, when regard is had to the nature of the maritime claims. Section 4(3) may be one such application and it is an example of the kind of matter to which the ALRC Report was addressed when discussing the provision of "other property". The ALRC Report does not suggest a much wider application was intended.

CONCLUSION

98 The question raised for determination is answered in the first place by reference to the meaning to be given to the word ‘boat’ in ss 160A and 180A of the FMA. In context it includes the fuel bunkers on the vessel and s 180A(1) applies. The result is that the Commonwealth is entitled to seize and detain the bunkers. If they are condemned as forfeited to the Commonwealth (a question not the subject of these proceedings) the forfeiture takes effect despite the arrest of the bunkers. No further orders have been made concerning their sale. If they had they would not be effective against the powers conferred by the FMA and any interests which thereby are given to the Commonwealth.

99 The conclusion I have reached concerning the FMA is sufficient to answer the questions posed, since it does not depend upon whether the plaintiff has a valid claim to the bunkers. The question might however be thought to assume an entitlement to bring in rem proceedings against the bunkers and should therefore be further answered. Two approaches have been considered in this case. Regardless of which is taken, I conclude that the plaintiff does not have a right to proceed against the bunkers. There is authority which holds that the term ‘ship’ in the Admiralty Act includes the bunkers. No basis has been shown for not following the decision in Opal Maritime Agencies. It follows, as a matter of the construction of s 17 of that Act, that whatever is included as the property which is the ‘ship’ is not ‘other property’. The plaintiff’s approach which considers only whether there is a connexion between its maritime claim under s 4(3)(m) and the ‘property’ in s 17 ignores this. In any event the connexion here is provided by the reference in the claim to the operation of the ship. Consistent with the Act not elevating maritime claims to security interests, it should not be concluded that a claim with respect to the supply of fuel can be enforced by in rem proceedings against the fuel bunkers themselves.

100 In my view the question should be answered:

‘By reason of s 108A of the Fisheries Management Act 1991 (Cth) the powers given to the AFMA to seize and detain the bunkers and any forfeiture of the bunkers to the Commonwealth are effective despite the execution of the purported warrant of arrest upon the bunkers under the Admiralty Act 1988 (Cth). Further the plaintiff does not have the right to proceed against the bunkers on the basis of a general maritime claim brought under s 4(3)(m).’

101 The plaintiff should pay the second and third defendants’ costs.

I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel.

Associate:



Dated: 24 May 2006.

Counsel for the Plaintiff:	Mr S Horgan
Solicitor for the Plaintiff:	Middletons Lawyers
Counsel for the Second and Third Respondents:	Mr H C Burmester QC
Solicitor for the Second and Third Respondents:	Australian Government Solicitor
Date of Hearing:	24 November 2005
Date of Judgment:	24 May 2006