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[1998] HCRev 14
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Case Note: The Owners of the Motor Vessel "IRAN AMANAT" and
Others v KMP Coastal Oil PTE Limited
by
Sarah C Derrington[1]
| 1. | On 13 February 1998 the High Court of
Australia granted special leave to appeal from the decision of the Full Federal
Court of Australia in The Owners of the Motor Vessel "Iran Amanat" and the 84
other vessels as set out in the schedule attached hereto v KMP Coastal Oil Pte
Limited[2] delivered on 5 June 1997. |
| 2. | The essential question for determination
by the High Court is the correct interpretation of the term "relevant person" as
defined in s 3 of the Admiralty Act (Cth) 1988 ("the Act") and as applied in s
19 of the Act for the purposes of establishing jurisdiction in
rem. |
| 3. | Section 19 of the Act
provides: |
A proceeding on a general maritime claim concerning a ship may be commenced as
an action in rem against some other ship if:
(a) a relevant person in relation to the claim was, when the cause of action
arose, the owner or charterer of, or in possession or control of, the
first-mentioned ship; and
(b) that person is, when the proceeding is commenced, the owner of the
second-mentioned ship.
| 4. | The phrase "relevant person" is defined
in s 3 of the Act to mean: |
A person who would be liable on the claim in a proceeding commenced as an action
in personam.
| 5. | The purpose of s 19 of the Act is to
enable the arrest of a ship other than the actual "wrong doing" ship. The
enactment of s 19 was a deliberate enlargement of Admiralty jurisdiction.[3] In
Australia, this is known as the arrest of a surrogate ship. In other
jurisdictions it is known as sister ship[4] or associated ship arrest[5] and
is a response to the International Convention for the Unification of Certain
Rules Relating to the Arrest of Sea-Going Ships 1952 ("the Arrest
Convention").[6] |
| 6. | Section 19 of the Act and the defined
phrase "a relevant person" accord with s 21(4) of the Supreme Court Act 1981
(UK) which confers similar jurisdiction in the United Kingdom. That section
provides: |
(4) In the case of any claim as is mentioned in s 20(2)(e) to (r), where-
the claim arises in connection with a ship; and
the person who would be liable on the claim in an action in personam (the
relevant person) was, when the cause of action arose, the owner or charterer of,
or in possession or in control of, the ship, an action in rem may (whether or
not the claim gives rise to a maritime lien on that ship) be brought in the High
Court against-
that ship, if at the time when the action is brought the relevant person is
either the beneficial owner of that ship as respects all the shares in it or the
charterer of it under a charter by demise; or
(a) any other ship of which, at the time when the action is brought, the
relevant person is the beneficial owner as respects all the shares in it.
| 7. | The South African provision namely s 3(4)
of the Admiralty Jurisdiction Regulation Act of 1983 (Act 105 of 1983) is also
in similar terms providing that a maritime claim may be enforced by an action in
rem: |
(a) if the claimant has a maritime lien over the property to be arrested;
or
|
(b) if the owner of the property to be arrested would be liable to
the claimant in an action in personam in respect of the cause of action
concerned.
|
| 8. | There has been relatively little judicial
discussion in any of the three jurisdictions as to the precise meaning of the
definition of a relevant person. At first instance, the defendant/owner argued
that it was not liable for the bunker fuel supplied to its vessels by the
plaintiff. Rather the defendant argued that the time charterer was the person
liable to pay for the bunker fuel and therefore the defendant could not be a
"relevant person". Justice Tamberlin accepted this submission and released the
vessel from arrest on the ground of want of jurisdiction. |
| 9. | His Honour agreed that the plaintiff must
make out its case for jurisdiction on the balance of probabilities. The standard
of proof for the establishment of jurisdiction was discussed by the High Court
in the case of The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Co[7]
albeit in relation to a proprietary rather than a general maritime claim. There
the Court said: |
"Where jurisdiction depends on particular facts or a particular state of
affairs, a challenge to jurisdiction can only be resisted by establishing the
facts on which it depends. And, of course, they must be established on the
balance of probabilities in the light of all the evidence advanced in the
proceedings held to determine whether there is jurisdiction."
[8]
| 10. | However, in The Shin Kobe Maru, the
Court did not find it necessary to consider the balance of probabilities in
relation to the claims arising in that case. In any event, were it necessary for
the Court to have come to a conclusion on the balance of probabilities, the
matter it would have been asked to consider was whether as a matter of fact,
facts had been established which gave rise to a relationship which is recognised
in law as co-ownership. This is not the same question that the Court will be
asked to consider in the present case. |
| 11. | The English approach to the definition
of the "relevant person" is apparent from the judgment of Willmer J in The St
Elefterio: |
"In my judgment the purpose of the words... 'the person who would be liable on
the claim in an action in personam', is to identify the person or persons whose
ship or ships may be arrested in relation to this new right (if I may so express
it) of arresting a sister ship. The words used, it will be observed, are 'the
person who would be liable' not 'the person who is liable', and it seems to me,
bearing in mind the purpose of the Act, that the natural construction of those
quite simple words is that they mean the person who would be liable on the
assumption that the action succeeds. This action might or might not succeed if
it were brought in personam; that would depend upon the view which the court
ultimately took of the various contentions raised by Mr Roskill. But clearly, if
the action did succeed, the person or persons who would be liable would be the
owner or owners of the steamship St Elefterio. In such circumstances, in the
absence of any suggestion that the action is a frivolous or vexatious action, I
am satisfied that the Plaintiffs are entitled to bring it and to have it tried,
and that, whether or not their claim turns out to be a good one, they are
entitled to assert that claim by proceeding in rem."[9]
| 12. | This view found favour with Goff J (as
he then was) in The I Congresso Del Partido[10] where his Honour expressed the
view[11] that the wording indicated an intention to refer to the person who
would be liable, on the assumption that the action succeeded. It did not
indicate an intention to refer to a person who is liable - that is, presently
shown to be liable - in personam. |
| 13. | The observations made by Willmer J in
the St Elefterio[12] were referred to with approval in The St Merriel[13]
although, with respect, it appears that Hewson J went on to embark upon an
impermissible investigation of the evidence in much the same way as Justice
Tamberlin approached the matter at first instance in the present
case. |
| 14. | The Full Court of the Supreme Court of
Queensland has followed the approach of the English Courts in Ocean Industries
Pty Ltd v The Owners of the Ship MV "Steven C",[14] where McPherson ACJ
said: |
"The decisions thus show that the function of the expression 'person who would
be liable' in a context like this is to identify someone having a sufficient
connection with the ship as to render him or her personally, and consequently
the ship herself, responsible for goods, materials or supplies for its operation
or maintenance. It is concerned not with the question whether in the particular
case the defendant in an action in personam (which is assumed by the definition
in s 3(1) as its hypothesis) is liable in fact and in law; but whether it can be
predicated that the necessary relation exists between the defendant in rem as
owner or otherwise and the ship in question." [15]
| 15. | The precise wording of the definition
has been recently considered by the South African Court in The Tau Men v
Degueldre.[16] In that case the plaintiff brought an action in rem against a
vessel claiming the return of the vessel which had been sold and delivered to
another on the grounds that the agreement was null and void ab initio. On the
application for release of the vessel, after referring to s 3(4) of Act 105 of
1983, Foxcroft J said: |
"In my view, Jones' unnamed principal, who states that he is presently the owner
of the Tau Men, would certainly be liable to the claimant in an action in
personam in respect of the cause of action before me if the allegations of
fraudulent misrepresentation are ultimately proved."[17]
| 16. | This approach accords with that which
has been expressed by the English and Australian Courts. His Honour went on to
discuss the burden of proof: |
"Mr Hodes submitted that in order to sustain the arrest the respondent need do
no more than establish a prima facie case and this was not an issue. The
respondent's claim is based on the allegation of fraudulent misrepresentation. I
was referred to certain authorities in regard to the standard of proof.
Instructive are the remarks of Steyn J in Bradbury Gretorex Co (Colonial)
Limited v Standard Trading Co (Pty) Limited 1953 (3) SA 529 at 533 C-E as
follows:-
'The authorities and considerations to which I have referred seem to justify the
conclusion that the requirement of a prima facie cause of action, in relation to
an attachment to find jurisdiction, be satisfied where there is evidence which,
if accepted, will show a cause of action. The mere fact that such evidence is
contradicted would not disentitle the applicant to a remedy. Even where the
probabilities are against him, the requirement would still be satisfied. It is
only where it is quite clear that he has no action, or cannot succeed, that an
attachment should be refused or discharged on the ground here in
question'."[18]
| 17. | This approach was also adopted in the
case of The Cargo Laden and Lately on Board the MV Thalassini Avgi v MV Dimitris
1989 (3) SA 820 at 832B. |
| 18. | The differences between the English and
South African approaches appears to be little more than semantic but they do
suggest that the standard of proof adopted in both jurisdictions on this issue
is somewhat lower than that which the obiter dicta of the High Court in Shin
Kobe Maru would indicate was appropriate in Australia. However, it is suggested
that it is inconsistent with the purpose of the provision allowing for
sister-ship arrest that, in order to establish jurisdiction, the plaintiff must
establish on the balance of probabilities that it has a successful claim in
personam against the defendant. |
| 19. | An interlocutory hearing for the release
of a vessel from arrest is not the appropriate stage at which to examine all the
evidence said to support the cause of action. Indeed the Full Federal Court
said: |
"It would be curious if the question whether the owner is liable to KMP for the
price of the bunker fuel had to be considered on an interlocutory and urgent
basis, in circumstances where there was no opportunity for the parties to avail
themselves of procedures such as discovery and interrogatories which might
assist in determining the facts. That issue will not need to be determined until
the final hearing, undertaken after completion of the usual preparation. It is
not necessary to determine it in order to establish
jurisdiction."[19]
| 20. | The approach to the definition of a
"relevant person" in a provision allowing the arrest of a sister ship, in all
jurisdictions which have specifically considered the point, has been essentially
the same. Such a provision was enacted as an enlargement of admiralty
jurisdiction and therefore should not be given an unduly narrow
construction. |
| 21. | The appropriate question to ask is not
whether the defendant is liable for the bunker fuel but rather, if the action
succeeds, is the defendant the person who would be liable in personam. The
plaintiff may well be able to establish after discovery and interrogatories
sufficient evidence entitling it to succeed against the defendant in personam.
Given that there is no dispute that the defendant was the owner of the vessels
to which the bunker fuel was supplied, it is suggested that a court would be
satisfied, on the balance of probabilities, that were the plaintiff to succeed
in its claim against the defendant for the supply of the bunker fuel, the
defendant would be liable in personam and thus there is jurisdiction in
rem. |
[1]. BA/LLB(Hons), LLM; Barrister-at-Law; Lecturer in Maritime Law at the
University of Queensland.
[2]. No S74 of 1997.
[3]. Australian Law Reform Commission Report on Civil Admiralty Jurisdiction
No 33.
[4]. eg the United Kingdom.
[5]. eg South Africa.
[6]. Australia is not a party to the Arrest Convention but has nevertheless
enacted s 19 of the Act to accord with the principles of sister-ship arrest.
Canada has neither ratified the Arrest Convention nor enacted similar
legislation.
[7]. [1994] HCA 54; (1994) 181 CLR 404.
[8]. Ibid at 426.
[9]. [1957] P 179 at 186.
[10]. [1978] QB 500.
[11]. Ibid at 536.
[12]. [1957] P 179.
[13]. [1963] P 247 at 257-258.
[14]. [1994] 1 Qd R 69.
[15]. Ibid at 74.
[16]. 1996 (1) SA 559. In a case rather more directly on point, Transol Bunker
BV v. MV Andrico Unity: Grecian Mar SRL v MV Andrico Unity 1987 (3) SA 794, the
issue of whether Transol's claim for bunkers supplied to the vessel was
enforceable in rem in terms of s 4(3)(b) was abandoned at the hearing.
[17]. 1996 (1) SA 559 at 565B.
[18]. Ibid at 566E.
[19]. No. NG130 of 1997, Reasons for Judgment, p.14.
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