Laemthong International Lines Co. Ltd v B.P.S. Shipping Ltd DA6/1996 [1997] HCATrans 196 (23 June 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Darwin No D16 of 1996

B e t w e e n -

LAEMTHONG INTERNATIONAL LINES CO. LTD as the owners of the ship "Laemthong Pride" as the surrogate for the vessel "Nyanza"

Appellant

and

B.P.S. SHIPPING LTD

Respondent

BRENNAN CJ

TOOHEY J

GAUDRON J

GUMMOW J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON MONDAY, 23 JUNE 1997, AT 2.16 PM

Copyright in the High Court of Australia

MR D.A. COWDROY, QC: May it please your Honours, I appear with my learned friend, MR P.E. KING, for the appellant. (instructed by De Silva Hebron)

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friend, MR B.W. LARKIN, for the respondent. (instructed by Ward Keller)

BRENNAN CJ: Mr Cowdroy.

MR COWDROY: Your Honours, this appeal concerns the interpretation of section 19 contained in Part III of the Admiralty Act 1988 . The issue that is raised is a very important one, that is, the right of a claimant which has a maritime claim to proceed against a surrogate ship. The point of contention between the appellant and the respondent centres essentially on the interpretation of section 19 of the Admiralty Act 1988 . On the one hand, your Honours, the appellant claims that the right to proceed against a surrogate ship arises only if there exists a right in rem against the wrongdoing ship or, shall I call it, the primary ship. The respondent, however, contends that a right in rem exists against the surrogate ship even though no right in rem exists against the primary ship. Your Honours, that is the area of difference between us.

KIRBY J: Is the right in rem a right in rem anywhere in the world or are we talking about right in rem within Australia?

MR COWDROY: Your Honour, we are talking about a right in rem as recognised by Australian law and those rights, that is, the right to proceed against a surrogate ship, came into Australian law for the first time with the introduction of the Admiralty Act in 1988.

GUMMOW J: The real reference is to section 5, is it not, Mr Cowdroy, as to the scope of the Act?

MR COWDROY: Yes, your Honour. It might be appropriate if I could take your Honours firstly to the facts of the matter which are set out, I hope succinctly, in the statement of facts contained in the appellant's submissions.

KIRBY J: These are not contested by the respondent?

MR COWDROY: The facts are admitted, your Honour.

KIRBY J: That is all we need, is it?

MR COWDROY: For the facts, yes, your Honour.

KIRBY J: Nothing now turns on the fact that the appellant is a different corporation to the party who originally was the charterer? There was a Singapore charterer, was there not?

MR COWDROY: Your Honour, that is now, as it were, ancient history. The Court need not concern itself with that matter. Your Honours, the facts really fall within a very short compass. They are set out, I think, conveniently on the first page of the document entitled "Appellant's Submissions", paragraph 2. The respondent to this appeal was the disponent owner or charterer of the vessel "Nyanza". There was a charter agreement between the respondent as the disponent owner of the "Nyanza" and the appellant which - - -

KIRBY J: Which is the fee simple owner in using that expression, "of the `Nyanza'"?

MR COWDROY: Your Honour, some other company which will not concern the Court. The authorities I will take Your Honours to will make it clear there is a distinction to be drawn between, on the one hand, the owner in fee simple of the vessel and, on the other hand, a disponent owner; two entirely different people or entities. A disponent owner is one who has the control over the vessel. Your Honours, for convenience, I can quote from the dictionary definition which is incorporated in the material. "Disponent owner" is described as "a person or company who controls the commercial operation of a ship, responsible for deciding the ports of call and the cargoes to be carried". The disponent owner is one who in some cases has been described as the owner pro hac vice of the ship or temporary owner, but how temporary that may be, that is the subject of the agreement, may be months or years.

KIRBY J: Why did this come into maritime law? I mean, why is it not just called a lessor of the vessel? If the vessel is owned by a company with which we are not concerned and then it is, as it were, leased out, the "Nyanza", to the respondent and it becomes a disponent owner, it seems an odd use of language.

MR COWDROY: Your Honour, it is, I think, purely historical. Some of the cases talk about a demise of the ship to a disponent owner where the owner demises a ship to another party for a period fixed by the agreement between them. But what seems to be very clear is that whilst the disponent owner has possession and control of the vessel, it is to all effects and purposes the owner, but nevertheless there is still the distinction drawn between the true owner of the ship and the disponent owner.

GUMMOW J: What does "owner" mean in 19(b)?

MR COWDROY: Your Honour, that would be the owner of the vessel.

KIRBY J: Is that the true owner?

MR COWDROY: That is the true owner, we say.

KIRBY J: So, that is the company we are not concerned with?

MR COWDROY: Correct. Your Honours, the facts set out in paragraph 2 are quite straightforward, I believe; that is, that the "Nyanza" was chartered for a voyage by the appellant.

BRENNAN CJ: Now, where do we find the charter party?

MR COWDROY: Your Honour, that is contained in the material in the folder. It is towards the back. I must say, your Honour, the evidence that was tendered before the court of first instance on this issue appears to have been very meagre indeed and at one early stage - it is at tab 4.4. The evidence is very meagre and it appears to have been compiled or consists mainly of a facsimile.

KIRBY J: This is referred to by Justice Mildren, I think, this fact.

MR COWDROY: Yes, it is referred to in the judgment, your Honour. It is a document which on its face requires some examination.

GUMMOW J: It would normally be replaced by a document in longer form, would it not?

MR COWDROY: Your Honour, I believe that would normally be the case but, on the facts of this case, no document other than this was ever produced or tendered in court. Your Honour, as there is no dispute between the parties concerning the arrangement, the "Nyanza" was - if I can just recapitulate, the disponent owner of the "Nyanza" was the respondent. It then entered into a voyage charter with my client whereby it agreed to carry a cargo of rice from Bangkok to a port in Mauritania called Nouakchott.

It is the contention of the appellant that a mere voyage charter gives no rights whatsoever in the possession or control of the ship. The voyage charter is merely a contract pursuant to which the respondent agreed to, as it were, transport the cargo of rice from one place to another.

BRENNAN CJ: I can understand that might be the term which is usually used to describe an arrangement of this kind, but surely it all depends upon the actual terms of the arrangement between the parties. Is this all we have?

MR COWDROY: Your Honour, that is the extent of the evidence that was put before the court at first instance.

BRENNAN CJ: Is it common ground that the nature of the relationship was such as you have just orally outlined?

MR COWDROY: I believe it is, your Honour.

BRENNAN CJ: Is that so, Mr Jackson?

MR JACKSON: I think, your Honour, yes and no. The "yes" is that that is the nature of the arrangement; the "no" is that the document that is the charter party appears as exhibit B to the affidavit of Justine Winifred Creedon sworn on 19 October 1995 which should be in a folder like this that your Honours have, about halfway through.

BRENNAN CJ: Is there some difference between that and the document at 4.4 there?

MR JACKSON: Yes, your Honour, yes. The document at 4.4 is a recapitulation, as is called in the jargon of the trade, if I can put it that way.

KIRBY J: You only seem to have a manilla colour. We have a very nice bright white one.

MR JACKSON: Your Honour, that seems fair, if I may say so.

BRENNAN CJ: I am not sure that we have the same documents.

MR JACKSON: Your Honour, it should be the one at tab 2. I am sorry, I am told that my learned friends have not given it to your Honours yet.

MR COWDROY: Your Honour, it is background material - I was not aware that it had been distributed. Might I hand up copies to your Honours.

TOOHEY J: What is the status of the material that we are being invited to look at, Mr Cowdroy?

MR COWDROY: Your Honour, this was material which was relied upon by the respondent in its application for the arrest of the vessel - that is the arrest of the "Laemthong Pride".

KIRBY J: This was placed before Justice Kearney, the primary judge?

MR COWDROY: As I understand it, your Honour, yes.

BRENNAN CJ: What do you say about this document?

MR COWDROY: Your Honour, I think it is another form which reflects the terms of the document which is contained at 4.4 in the original folder. I am reminded, your Honour, at the top of the facsimile which I drew your Honours' attention to there are the words "AS PER MV AGATE CP", and I understand this document, which is page 57 of the material just handed up, is that form of document.

BRENNAN CJ: This was the "Nyanza".

MR COWDROY: Yes, the "Nyanza" was, as we contend - well, I think we can term it "the wrongdoing ship", if that is a term that would be meaningful, or the primary ship in this case.

TOOHEY J: When you speak of the proceedings before Justice Kearney, Mr Cowdroy, are you speaking of the original application or the rearrest? In either case to what extent was that material before the Court of Appeal?

MR COWDROY: Your Honour, the affidavit I see was sworn on 19 October 1995 to which this document at page 57 is an annexure, so it would be on the rearrest application. What happened was that there was an arrest of the ship and an application made for release of the ship - this is of the "Laemthong Pride". The vessel was released and then, virtually on the same day, because additional evidence came to light, the respondent made a further application to rearrest the ship and that application was successful. This material was used in support of that second application.

TOOHEY J: Was it before the Court of Appeal?

MR COWDROY: It would have been, yes. I do not wish, your Honours, to, as it were, dwell too much upon matters which are not in dispute between the parties. It is accepted that the vessel was the subject of a voyage charter from Bangkok to Mauritania. That is the voyage in respect of which this cause of action, ultimately, is founded.

When the vessel, that is the "Nyanza", arrived in Mauritania it was found that the cargo of rice was infested with a beetle and it had been a term of the agreement that my client would fumigate the vessel so that apparently this type of infestation would not occur.

KIRBY J: That was so even though you were a mere contracting party?

MR COWDROY: Yes, that is what is alleged, your Honour, and that is the subject of proceedings elsewhere in an arbitration. That is the allegation.

KIRBY J: One would normally expect that would be the duty of the primary owner of the vessel.

MR COWDROY: Yes.

KIRBY J: But that is beside the point really for this case.

MR COWDROY: It is not uncommon, as I am instructed, your Honour, in this type of case for various terms to be applied to a voyage charterer, to require the voyage charterer to undertake certain responsibilities in relation to the cargo.

Your Honours, the vessel, that is the "Nyanza", was apparently detained in Mauritania and in consequence there was a claim for damages made for delay and other charges incurred allegedly by the respondent, the respondent claiming approximately $A1. million arising out of that claim.

GUMMOW J: The first question then is: was there a general maritime claim?

MR COWDROY: Yes.

GUMMOW J: Was it a general maritime claim concerning a ship?

MR COWDROY: That is right.

GUMMOW J: Not just any general maritime claim that section 19 is talking about.

MR COWDROY: No.

GUMMOW J:. It is a subclass of general maritime claim.

MR COWDROY: Yes, your Honour. Your Honour, it appears that the vessel apparently then - we are not concerned hereafter with the "Nyanza" because the respondent had a claim against my client.

GUMMOW J: We are concerned with section 19. Now, what was the general maritime claim concerning a ship that it is agreed - - -

MR COWDROY: It arises under section 4(3)(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 charter party or otherwise.

GUMMOW J: Is that the only one?

MR COWDROY: Your Honour, it could be - - -

GUMMOW J: Was there some suggestion about (d) as well?

MR COWDROY: Yes, there was a suggestion it could be (d) as well but we would contend it is (f) that fits the category essentially.

KIRBY J: Do you concede that (f) applies as a claim, not that the claim is - - -?

MR COWDROY: Yes. Your Honour, subject to the matters requiring proof, we would concede that (f) would be applicable to the facts of this case, That is, if the respondent has a valid claim it would fall within subparagraph (f).

GUMMOW J: And is it also agreed that that being so, that was a general maritime claim concerning a ship within the meaning of section 19?

MR COWDROY: Your Honour, it depends to a degree upon the terminology of the words "concerning a ship".

GUMMOW J: Yes, quite.

MR COWDROY: If there was a claim in rem, that is, a claim concerning a ship, then in that event, if the facts were proved, subparagraph (f) could apply.

TOOHEY J: But given the terms of the grant of special leave, to what extent can this Court become involved in that question? By "that question" I mean the question as to whether there is a general maritime claim.

MR COWDROY: Your Honour, that will be, I think, to a degree enmeshed in the question which is before the Court which requires the interpretation of section 19, because section 19 requires there to be "a proceeding on a general maritime claim". If there is no general maritime claim, section 9 would not be applicable.

TOOHEY J: I understand that, but the terms of the order granting special leave confines the appeal to the question of whether the "Laemthong Pride" was a surrogate ship for the "Nyanza".

MR COWDROY: Yes.

TOOHEY J: Are you suggesting that caught up in that is the broader question of the existence of a general maritime claim?

MR COWDROY: No, your Honour, we would put it the other way round. To decide that question, one must look to find whether there was in fact compliance with the requirements of section 19 because, if section 19 was not complied with, it is the appellant's contention that there was no right of action against the "Laemthong Pride".

KIRBY J: As I understand it, just breaking the section down, you have agreed with Justice Gummow that there is a proceeding on a general maritime claim concerning a ship, are you?

MR COWDROY: Yes, your Honour.

KIRBY J: You concede for the purpose of the proceedings that that part of the requirement was made good? Just a claim, it is not a - - -

MR COWDROY: In relation to the claim, yes, we concede that.

GUMMOW J: I do not understand that, Mr Cowdroy. What do you concede in terms of section 19?

MR COWDROY: We are looking at section 19, Your Honour. We acknowledge that if the respondent has a claim against this ship, it would be one which would fall within the heading of "a general maritime claim".

GUMMOW J: Concerning a ship?

MR COWDROY: It would be concerning a ship, yes.

GUMMOW J: That is what I want to get clear in my mind.

BRENNAN CJ: Putting it perhaps more appropriately, is the claim that has actually been made conceded to be a general maritime claim concerning a ship within the meaning of that phrase in section 19? It does not turn on the facts; it turns on what the allegations are.

MR COWDROY: Yes. Your Honour, the only hesitation I have is the words "concerning a ship". The type of claim that is made is clearly, we would agree, a claim of a type which is a general maritime claim.

GUMMOW J: You did not get general leave to agitate this particular question, did you?

MR COWDROY: No. Your Honour, the leave is confined to the question of the relationship of the ships, whether the "Laemthong Pride" is a surrogate ship for the "Nyanza".

GUMMOW J: On the footing that the phrase "on a general maritime claim concerning a ship" is made out.

MR COWDROY: Yes.

GAUDRON J: Or do you say that the words "concerning a ship" go to the question whether or not there can be a surrogate ship in these circumstances?

MR COWDROY: That is the point, your Honour.

GAUDRON J: You say that it has to be an action that could have been brought in rem against the "Nyanza"?

MR COWDROY: That is correct.

GAUDRON J: To be a general maritime claim concerning a ship?

MR COWDROY: Yes, precisely, your Honour. So, the first portion of it we have no difficulty with, conceding for the purposes of this hearing that the words "concerning a ship" raise the issue of whether it is an action in rem.

TOOHEY J: So it would be wrong then, would it, to think that the appeal turns upon the meaning and operation of section 19(a)?

MR COWDROY: Your Honour, I think it would be wrong to say the case hangs or falls on the interpretation of that portion of the subsection. The whole section is going to have to be considered by the Court in order to determine whether in fact the "Laemthong Pride" was a surrogate ship for the "Nyanza".

BRENNAN CJ: The question is not whether the relationship between the parties was such as to attract the description of "charterer". That is not the point.

MR COWDROY: Your Honour, the problem arises in this case because, on the respondent's interpretation of the word "charterer", that means any charterer. On the appellant's contention, consistent with decisions by English courts and consistent with the Hansard debates, second reading speech, of this very Act, the word "charterer" there would mean demise charterer.

BRENNAN CJ: I understand that those are the two contending viewpoints. What I am endeavouring to discover is what is the issue for our determination. Is that one issue?

MR COWDROY: Yes, your Honour.

BRENNAN CJ: And is there another issue as well?

MR COWDROY: Your Honour, special leave was granted by the Court for the issue of whether the "Laemthong Pride" was the surrogate ship for the "Nyanza".

BRENNAN CJ: You tell us if you would what you conceive that question to involve in terms of the determination of the phrases in section 19.

MR COWDROY: Yes. Your Honour, the words "some other ship", that phrase in the introductory words of the second line of section 19. That will be critical. The interpretation of the word "charterer" is critical.

KIRBY J: You have to put "charterer" in the context of "owner in possession and control".

MR COWDROY: Yes, and, your Honour, might I say that the interpretation of section 19 is inextricably linked to section 3(6) where there is the definition of "surrogate ship".

GUMMOW J: It may or may not be.

MR COWDROY: Yes, I follow what your Honour means.

GUMMOW J: And at some stage we will have to be told in which sections this phrase "surrogate ship" appears apart from section 20 and section 35. It does not appear in section 19.

MR COWDROY: No. Your Honour, we would put that it is probably unfortunate drafting because the term "surrogate ship" appears in other places in the Act, and your Honour has mentioned section 20 and section 35.

GUMMOW J: Is there any other section that you know of?

MR COWDROY: Not in the Act. In the rules there is.

GUMMOW J: There may be, yes.

MR COWDROY: Your Honour, might I say the rules make it quite clear, we would submit, in rule 16(2) that because you must, when seeking to arrest a ship, in your application it makes it clear that the ship or the primary ship must also be identified. Rule 16(2) provides that:

If the proceeding is commenced against a surrogate ship, the ship in relation to which it is a surrogate ship -

that is the primary ship -

shall also be identified in the initiating process.

In other words, the rules are predicated upon the basis that a right in rem exists against the primary ship and must exist against the primary ship before one can ever proceed against the surrogate ship.

KIRBY J: In the special leave, Justice Gaudron drew attention to section 18 and I notice that in that section "owner, charterer, or in possession or control" is repeated. Is this a formula that is throughout the Act?

MR COWDROY: Yes, your Honour. Section 17 also has the same form.

KIRBY J: We will have to consider the purpose of your construction, whether it works in those other sections as well.

MR COWDROY: Yes, your Honour.

GUMMOW J: Particularly in the light of 18(b) which uses the phrase, "demise charterer".

MR COWDROY: Yes, your Honour.

GUMMOW J: In juxtaposition with "charterer" which is in (a).

KIRBY J: That is against you, is it not, that Parliament took the trouble to use the word "demise charterer"?

MR COWDROY: Yes, your Honour. On the face of it, it is unusual that Parliament selected the words "demise charterer" in that phrase but not in either section 17 or section 19.

KIRBY J: Just used ordinary old "charterer" in 18 and 19.

MR COWDROY: Your Honour, as I will come to and as your Honour may have seen in the written submissions, the wording in the Act is founded originally upon the Brussels Convention of 1952 and that was the first time that sistership or surrogate ship arrest was recognised amongst maritime nations. That convention was made into law in England by the 1956 Administration of Justice Act and this particular portion of the Act was superseded by the Supreme Court Act 1981 where the same phrase "owner or charterer of, or in possession or control of" appears, and those foundations go back to the 1956 statute.

KIRBY J: That may be so but our maritime history has taken a different course perhaps because of our country's different interests. We never became part of the 1952 convention.

MR COWDROY: No, your Honour, we did not, but what is clear from the Hansard debates is that when the Admiralty Bill, which became the Admiralty Act, was being considered by Parliament, the desire was expressed that this country should bring its practices in relation to maritime matters into conformity with other countries and, secondly, that no new rights were being created that were not already recognised. If the interpretation which is urged by the respondent is correct, a whole new right would be created which is utterly inconsistent with the rights which are known in the maritime countries of the world. In other words, a right to - - -

GUMMOW J: It is known in Singapore. It is not an insignificant country in these matters.

MR COWDROY: No, but if your Honour is referring to a decision called "Permina" - - -

GUMMOW J: I am just reacting to your suggestion that there is this world out there which speaks of one voice and we must not speak with any other voice and I am saying to you there is at least one significant voice which is the same as your opponents would have it.

MR COWDROY: Your Honour, the authorities on the interpretation of this phrase, "the owner or charterer of, or in possession or control of, the ship" has been the subject of judicial interpretation in the United Kingdom and it has been determined distinctively by the House of Lords that the interpretation is "demise charterer".

KIRBY J: And apparently by a court in Hong Kong along the same lines.

MR COWDROY: Your Honour, I am not aware of the Hong Kong decision. I am sorry, your Honour, yes, there is.

KIRBY J: They took a line different to Singapore apparently.

MR COWDROY: Yes. I know the matter your Honour is referring to. But perhaps I could your Honours to a decision - - -

BRENNAN CJ: I must say it would help me a great deal if you could just tell us what lines of argument you are taking one by one.

MR COWDROY: Yes, your Honour. Your Honours, our principal line of argument is that the word "charterer" in section 19 must be interpreted as demise charterer, consistent with the interpretation of that Act and consistent with the decisions of other countries in support of the interpretation of that phrase.

TOOHEY J: You would have to go further than that, would you not, because of the words "or in possession or control"?

MR COWDROY: Yes. Your Honour, quite simply we say, read ejusdem generis, "charterer" can mean one of many different types of things. There can be a voyage charter, a time charter, a slot charter, a subcharter and there can be a demise charter, and Lord Donaldson has made it quite clear that the demise charter stands apart and distinct from all other types of charter.

GUMMOW J: Yes, we know that, Mr Cowdroy, but if there is a demise charter, for example, would it be accurate in those circumstances to say that the owner is in possession or control when there is a current demise charter?

MR COWDROY: No, your Honour, because the person in possession and control would be the - - -

GUMMOW J: But the owner always has an action under 19(a).

MR COWDROY: It depends on the state of things when the cause of action arose. In other words, if the owner had delegated, in effect, his ownership of that vessel to a demise charterer, that is the person who falls within the provisions of section 19(a).

KIRBY J: Just starting as an ordinary matter of construction where the Parliament has used the word "charter" and not, as it were, given a particular classification or kind, given that there are slots and all the other types of charters, one would infer that it is using the word in the generality of the word that it has chosen. That is the starting point, is it not? You are going uphill because the word itself, on its face, is used in its total generality.

MR COWDROY: In isolation, yes; looked at in the context of the phrase where you have on the one side "the owner" and on the other side "or in possession or control of" we say adds a meaning to the term "charter" or "charterer".

KIRBY J: In the facts of this case, you were not the owner and you were purely on a contract. You would not be in a possession and control?

MR COWDROY: No, we had no possession or control and we are not the owner.

KIRBY J: You have to be pushed into the second category.

MR COWDROY: Yes, but, your Honour, it is our case that the charterer, on the facts of this case, was not my client but the respondent. The respondent was the demise charterer of this vessel.

BRENNAN CJ: That is your first point, that "charterer" means "demise charterer".

MR COWDROY: Yes, your Honour.

BRENNAN CJ: Right. What is your next point?

MR COWDROY: The next point is, your Honour, that the interpretation of section 3(6) is critical to an understanding of the operation of the in rem provisions against a ship other than the wrongdoing ship.

GUMMOW J: It is crucial for the understanding of those sections which use the phrase "surrogate ship" of which section 19 is not one. It is crucial for understanding the rather special provision of section 20(4) where there is a maritime lien involved and it is crucial for understanding section 35 where there is a question of priorities out of proceeds of sale.

MR COWDROY: Yes.

GUMMOW J: Does it serve any other office?

MR COWDROY: We would submit, your Honour, it does.

GUMMOW J: In particular, does it control section 19 rather than assume and build on section 19?

MR COWDROY: Your Honour, we would submit it controls section 19. Your Honours have, I think, in front of you the wording of the Act, section 3(6), where it says:

For the purposes of this Act, where:

(a) a proceeding on a maritime claim may be commenced against a ship -

and just to stop there for one moment, a proceeding in rem can only be commenced against a ship as provided in Part III of the Act which deals with the right to proceed in rem against ships, and sections 14, 15, 16, 17, 18 and 19 all deal with proceedings in rem against ships. Returning to subsection (6) again:

under a provision of this Act (other than section 19) and

(b) under section 19, a proceeding on the claim may be commenced against some other ship;

the other ship is, in relation to the claim, a surrogate ship.

GUMMOW J: Why does it not simply say "the second-mentioned ship within the meaning of section 19 is a surrogate ship"? Why did it go through all these elaborate provisions?

MR COWDROY: Your Honour, section 19, we submit, has been formulated in the way it has to make it clear that you do not get a right to proceed against a surrogate ship unless you could have proceeded against the wrongdoing or the primary ship. In other words, critical - - -

GUMMOW J: In rem?

MR COWDROY: In rem.

KIRBY J: Could I just ask: as to (a), it says:

a proceeding on a maritime claim may be commenced against a ship -

that is the "Nyanza" -

under a provision of this Act.

Now, is that, as it were, in brackets, if only it came into Australian waters and our courts could commence proceedings against it, because it says, "under a provision of this Act", the Australian Act? Is it on an hypothesis that if it came into our waters we could serve a writ?

MR COWDROY: Yes, I think that must be the case, your Honour.

KIRBY J: That a proceeding may be commenced against "under a provision of this Act".

MR COWDROY: Against a ship. Yes, your Honour.

KIRBY J: So it is a hypothetical question. It is not real in this case because the "Nyanza" is somewhere over there in Mauritania or Singapore or somewhere else, in Bangkok?

MR COWDROY: Yes. It must be predicated, your Honour, on the basis that the ship is within the jurisdiction and can be actually arrested.

KIRBY J: But the "Nyanza" has never been here as far as I know. At least on the facts, that is not disclosed. The theory of the Act is not, is it, that there are two ships in our waters, one of which you could commence proceedings against but it is more convenient for you to commence proceedings against the "Laemthong" because it is one in the jurisdiction. It does not mean that they both have to be in our waters, because it seems to be - on an assumption, it is under the provision of this, in brackets, Australian, close brackets, Act?

MR COWDROY: Yes.

KIRBY J: This is a problem I have had with understanding how 3(6) attaches in this case because the "Nyanza" has never been within our jurisdiction.

MR COWDROY: Your Honour, the "Nyanza" has not been in the jurisdiction, on the facts as we know them.

KIRBY J: How is the precondition of the Act made out? If it meant "anywhere in the world" you would not have thought "under a provision of this Act" would be - perhaps that was put in for jurisdiction or for constitutional validity reasons, I do not know.

MR COWDROY: Yes. Your Honour, that may well be the interpretation. It does not specifically say that the proceeding must be one which is capable of enforcement in Australia.

KIRBY J: That seems to be inferred by "under a provision of this Act".

MR COWDROY: Yes, "a proceeding on a maritime claim may be commenced against a ship".

KIRBY J: How could we commence proceedings against the "Nyanza", it never having been within our territorial waters or having anything to do with Australia?

MR COWDROY: Your Honour, it may well be that the proceedings could be commenced, for example, against the owner or the demise charterer of the vessel, that is, the owner being in Australia or the demise charterer being in Australia, and that the judgment, if the plaintiff were successful, be enforced against the ship of the owner or demise charterer if it visited Australia.

KIRBY J: Before you finish, I would be grateful, just myself, if you could clarify this because it seems to me this is something in your interest because if, in fact, (a) is not made out, then our courts did not have jurisdiction if you take a narrow view that it has to be within our jurisdictional orders. I just do not follow how it works but no doubt you will help us.

MR COWDROY: Your Honours, the appellant contends simply that there are two requirements of section 3(6). Firstly, there must be a position that a maritime claim can be commenced against a ship under the Act and, secondly, that the proceeding on the claim may be commenced against some other ship. That second ship then becomes the surrogate ship or, shall I say, the secondary ship. Your Honours, it may well be that for the purpose of understanding the provisions of section 3(6) that a claim may be instituted against a ship - in this case the "Nyanza" - through the owners or the demise charterers - in this case the respondent - even though the ship has not yet visited or come to Australia. In other words, it may be a position that the ship does not actually have to come into the jurisdiction to say that the requirements of subsection (a) are satisfied.

TOOHEY J: I do not quite understand why section 3 is said in some way to control section 19. Section 3, in effect, defines what is a surrogate ship. Section 19 does not use the language of "surrogate ship" and yet it is the language that is being used in argument as if somehow there is an equivalence between the two provisions. Why, from your point of view and, indeed, from the respondent's point of view and the Court's, do we not focus on section 19 unless, of course, some other provision is drawn in, either expressly or impliedly?

MR COWDROY: Your Honour, probably the attention has been focused on section 3(6) to a degree because, even though the heading of section 19 has no effect in the Court, the fact is the statute uses the term, "Right to proceed in rem against a surrogate ship".

TOOHEY J: I know it does but it is not what the section itself says.

MR COWDROY: No, the section does not really deal with that term at all.

TOOHEY J: If you want to know what a general maritime claim is, you go to section 4, do you not?

MR COWDROY: Yes, you do.

GUMMOW J: Then you ask yourself does it concern a ship and then away you go with section 19.

TOOHEY J: I just have difficulty in seeing why section 19 in some way is constrained by section 3.

MR COWDROY: Ultimately, your Honour, we say that section 19 stands by itself. Section 3(6) may give some assistance and understanding of what was intended by the Act.

KIRBY J: Is the phrase "surrogate ship", remind me, used somewhere else in the Act?

MR COWDROY: Yes, in section 20(4)(b) where it speaks of:

the person has commenced a proceeding under section 19 against a surrogate ship.

GUMMOW J: It would just have to say "under section 19" or "against a surrogate ship".

MR COWDROY: It would have been a lot easier if they had not mentioned "surrogate ship".

GUMMOW J: This statute, I think, if I may say so, is very carefully and tightly drafted; it does not waste words. It is a late date but an old style statute and it is not lightly to be attributed to the draftsmen, that they were throwing words in here or there, other than drawing a very, very tight skein.

KIRBY J: It may be, by the use in section 20(4), that that is enough in the substance of the Act to take you beyond the heading to section 19 and to make it clear that section 19 is, in substance, dealing with surrogate ships as its heading suggests it is.

MR COWDROY: Your Honour, it could.

KIRBY J: And that that is sort of shorthand for what 19 is doing, and that takes you back to 3(6).

MR COWDROY: Yes, that is, in a way, the dilemma as to how one approaches section 19. Your Honour, can I return to section 19 because section 19 is the section on which the right of the respondent to arrest the ship really hangs or falls because it was section 19 that was clearly used as the basis for jurisdiction in the Northern Territory to found the arrest of a ship.

Your Honours, this comes back now to the question of interpretation of the word "charterer". What does "charterer" mean? Your Honours, the ingredients, we submit, which must exist for the satisfaction of section 19 is that there must be a person against whom a maritime claim exists and that the action in rem may be taken against some other ship - in this case the "Laemthong Pride" - if, at the relevant time, the:

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.

Now, there is no dispute that my client was the owner of the second- mentioned ship, the "Laemthong Pride". The point of contention is that it was never "the owner"; it was not "the charterer of", nor was it "in possession or control of the first-mentioned ship".

BRENNAN CJ: Well, what is the cause of action and when did that cause of action arise?

MR COWDROY: Your Honour, the respondent allegedly has a claim arising out of the use of the - - -

BRENNAN CJ: No, I am not concerned with what it arose out of. When did it arise?

MR COWDROY: Your Honour, we would submit it arose when the writ issued out of the court in the Northern Territory, and that was in October.

BRENNAN CJ: When the cause of action arose?

MR COWDROY: Your Honour, there are two possibilities. Either it arose when the damage was allegedly sustained, that is, the ship was held up in Mauritania - - -

BRENNAN CJ: Let me ask the next question arising out of that: was there a voyage charter in force at that time?

MR COWDROY: Your Honour, shall I say there was no evidence that there was any voyage charter then in existence. I think I am correct in that. The voyage charter had expired by virtue of the fact that the existence of any arrangement to hire the ship for the purpose of carrying the goods or the cargo of rice had terminated.

BRENNAN CJ: Was the claim, as it were, in negligence so that it did not arise until the damage flowed?

MR COWDROY: It would be the respondent's case, no doubt, that the damage flowed from the time when the loss was incurred.

BRENNAN CJ: What was the loss and when was it incurred?

MR COWDROY: By virtue of the delay caused to the ship whilst it was detained in Mauritania.

BRENNAN CJ: But at that time, you say, there was no voyage charter.

MR COWDROY: Your Honour, as far as we can determine on the evidence, there is nothing to suggest the charter extended beyond the carriage of the goods from one place to another.

BRENNAN CJ: Where do I find the claim?

MR COWDROY: The claim, your Honour, is at page 5 of the appeal book.

BRENNAN CJ: So it is breach of contract.

MR COWDROY: Breach of contract, your Honour, and the allegation is that the defendant, that is the appellant, failed to fumigate the cargo in July 1995.

GUMMOW J: That is when the voyage started off?

MR COWDROY: That is correct, your Honour.

BRENNAN CJ: So, you have a claim for breach of contract, the contract being the contract of voyage charter, is that right?

MR COWDROY: Yes, your Honour.

BRENNAN CJ: Now, is that a maritime claim?

MR COWDROY: Your Honour, for the purposes of this hearing we do not dispute that it is a maritime claim.

BRENNAN CJ: Is it a maritime claim concerning a ship?

MR COWDROY: Under the definition, yes, your Honour. We would submit, again, for the purposes of this hearing that it would be concerning a ship in accordance with subparagraph (f) of the definition of a "general maritime claim".

BRENNAN CJ: Well then, is the only question that we are to determine whether or not "charterer" means demise charterer?

MR COWDROY: Your Honour, I believe it does come back to that. Ultimately it does come back to that question.

BRENNAN CJ: Well then, let us decide it. Let us hear what you have to say about that subject.

MR COWDROY: Your Honour, we have provided to the Court the appellant's submissions which the Court may have seen but perhaps if I could just travel through those. We have set out - - -

KIRBY J: Could you help me just to put this in context. I have understood your verbal explanations of why you have to give "charter" special meaning in this context but is there anything, looking at the statute beyond the words, that one can understand what the purpose of Parliament was and why it would not be achieving the purpose of Parliament to give "charter", which is using its generality, its general meaning. Why is it so offensive to the notion of a surrogate or sistership that it should not pick up this case? Do you say because to pick up a case of the party whose only connection with another ship is a contract would be to expand enormously the throw of the net that will catch lots of ships that no other civilised country on earth does except for Singapore and that we should not so construe our statute?

MR COWDROY: Yes, your Honour, we do. Your Honour, we submit that from the parliamentary debates that exist in relation to the introduction of the Bill in the second reading speech, it is clear that the object of the Act was to bring Australia into conformity with the practice of other maritime nations. Particularly, there is a reference to England and Scotland. There, your Honour, the practice is that the notion of "charterer" is confined to "demise charter". To extend it the way in which the respondent would urge upon the Court would be to create a whole new right which is unheard of amongst the - - -

GUMMOW J: Well, it would be unheard of if it is new. This Act does a lot of new things, Mr Cowdroy.

MR COWDROY: Yes, your Honour, but if it was intended to do those new things, your Honour, there is no reference to that in the Hansard debates and, indeed, Hansard specifically says that no new rights other than the rights created by section 34, which do not involve this case, are intended to be created.

KIRBY J: Well, that is not quite right because the surrogate ship right was a new right for Australia.

MR COWDROY: Yes, I appreciate that, your Honour, but that is, in effect - I should say "no unknown right" might be the way to put it, was intended to be created by virtue of the Admiralty Act. Your Honours, the interpretation of the analogous provisions in other countries of this very same clause, or these very same words I should say, "owner", "charterer", or "possession and control", we submit, have been authoritatively determined as meaning "demise charterer" and that to depart from that interpretation in this country where the same wording is used would be inconsistent with the intention of Parliament and inconsistent with the way in which the Act should be interpreted.

KIRBY J: Are the countries that have given the formula the interpretation you urge all parties to the 1952 convention? Is that the origin of the phrase?

MR COWDROY: Yes, that is the origin of the words, your Honour.

KIRBY J: Are we affected by the fact that Australia still is not a party to that convention?

MR COWDROY: The right which we now have under section 19 is a new right. Surrogate ship arrest did not apparently exist in Australia until the Admiralty Act 1988 . It was not, in our submission, intended to create a right which goes beyond the traditional right. When I say "traditional", I mean the right that has been considered and applied in England since 1956 when England adopted the Brussels Convention. To do otherwise would be to give a whole new right to potential litigants and make Australia and possibly Singapore - - -

GUMMOW J: That is not quite right either, Mr Cowdroy. Is it not South Africa that has.....provisions?

MR COWDROY: Your Honour, it has a slightly different position in South Africa because they have extended the right of arrest not only to sisterships, which this case turns upon, but also to ships which are owned by sister companies. So, to that extent it is slightly different.

GUMMOW J: Yes. I mean, you can drive a horse and cart through this. You just have one-ship companies.

MR COWDROY: Your Honour, yes. This was grappled with, your Honour, by Justice Sheppard in a case recently which we have referred to. But the position is, your Honour, we submit that where the words which have been adopted in the Australian legislation are identical to those which have existed in the law of England, we should give the same interpretation to those words.

KIRBY J: That sounds a little old fashioned, does it not?

MR COWDROY: It is a little old fashioned, your Honour, but for the sake of - - -

KIRBY J: It sound a little imperial really, especially where our Act has gone to the trouble of using the words "demise charter" in just the section before.

MR COWDROY: Yes. But, your Honour, might I say that the Australian Law Reform Commission Report which was the genesis of the 1988 Act specifically refers to the fact that there should not be rights created at random which, in effect, would cause uncertainty or doubt. The intention, as expressed in the Law Reform Commission Report, makes it clear also, we would submit, that in the final analysis it was appropriate that the rights of sistership arrest should be in conformity with those adopted by maritime nations.

KIRBY J: But this Court has said something along those lines where you are dealing with something which is an international convention or an international practice. Do you have ready reference to those principles of construing statutes?

MR COWDROY: Your Honour, regrettably I do not.

KIRBY J: No. It has been said in this Court on several occasions.

MR COWDROY: In our material there is reference to an English decision that says words to that effect but I - - -

KIRBY J: I am stumbling over your constant use of the word "English". I am talking about an international market in maritime services and in such a circumstance I think it is reasonable to say to us that if there is a practice that is recognised by maritime countries that unless there is some point of distinction in our statutes, we should, as it were, be conformable to international practice, but I think that has been said by the Court in other contexts.

MR COWDROY: Your Honour, we will try and find those contexts and give the Court a note about that. Your Honours, we have prepared for, I hope, the benefit of the Court and its assistance our submissions. If I could take your Honours to those so that, without going through them word by word, at least give your Honours the benefit of our beliefs and submissions.

BRENNAN CJ: There is no need to repeat them. It is only a question of whether you wish to elaborate on some point.

MR COWDROY: Your Honour, we have prepared also for the benefit of the Court a document entitled "Introduction to Oral Submissions of Appellant" and in this document we point to some of the absurd results that would follow if the respondent's interpretation of section 19 were correct. The first matter we point to is this: could the respondent have ever arrested the first ship, that is, in this case, the "Nyanza"? It is quite clear on the facts that the "Nyanza" could never have been arrested because the respondent itself was the demise charterer of that vessel.

KIRBY J: Is this a reference back to section 3(6), is it?

MR COWDROY: Your Honour, it could be; yes, it is.

KIRBY J: Well, that still leaves Justice Toohey's question hanging in the air, the relevance of 3(6).

MR COWDROY: Yes. Your Honour, perhaps I might pass on from that. Perhaps we might pass on to page 2 of the outline, paragraph 4, where we deal with statutory construction. The term "charterer" is inserted between the words "owner or" and "or in possession or control of" in section 19.

GUMMOW J: What would examples be if someone who was neither an owner nor a demise charterer but who was in possession or control? Salvage, would that be right?

MR COWDROY: Salvage is one, your Honour. There is a case called the "Utopia" where the vessel had been sunk and the control of that vessel was vested in the harbour board and it was held that the owner of that vessel did not have possession and control of it because the harbour board had taken control of the wreck.

GUMMOW J: Have you a reference to that?

MR COWDROY: I am reminded, your Honour, that other examples on that issue are set out at footnote 85 to paragraph 126 of the report on which this Act is based, the Law Reform Commission Report No 33. It is paragraph 126.

GUMMOW J: Do not let me take you off your course, Mr Cowdroy. What about a mortgagee in possession, would that be right?

MR COWDROY: Yes, your Honour, mortgagee in possession would have possession or control of the ship.

GUMMOW J: To the exclusion of the owner, would that be right?

MR COWDROY: We would submit, yes, your Honour. Your Honours, if the Court is to apply the purposive approach, that is to apply the provisions of section 15AA to this Act, the question is what did Parliament intend by the use of the words "charterer"? The term "charterer" in maritime law, as I have already submitted, can have several interpretations, some of which involve a quality akin to "ownership" such as "demise" or in some cases "time charters" where the charter is of such a nature as to invest possession and control for a certain period in another person other than the owner of the ship.

Your Honours, in the dissenting judgment of Justice Donaldson in The "Span Terza" he has set out there the various definitions of "charterer". The "Span Terza" is included in the material which has been briefed. It is at 3.19 of the bundle.

KIRBY J: Is the Singapore decision in here as well?

MR COWDROY: No, it is not, your Honour. It is referred to, your Honour, in here. We did not incorporate everything but it is referred to.

KIRBY J: Are there any United States cases that you refer to?

MR COWDROY: Your Honour, I confess I simply do not know.

KIRBY J: You just stuck to England?

MR COWDROY: No, your Honour, we looked at New Zealand. We found little or no assistance there. There is a reference to South Africa in the Law Reform Commission Report. There is an overwhelming body of law from England. Your Honour, we thought that was the most appropriate place to look.

KIRBY J: Their interests may be different from ours.

MR COWDROY: Your Honour, if they are, then the use or the adoption of the words identical to that as used in England is unusual. Now, your Honours, in The "Span Terza" could I take your Honours to the dissenting judgment of Lord Justice Donaldson. It is the Lloyd's Law Reports extract that appears in the folder.

KIRBY J: What is the status of this decision now? There was legislation since this decision.

MR COWDROY: Yes, your Honour. The position is - no, not since the decision. The original Act that introduced sistership arrest in England was the 1956 Administration of Justice Act. That introduced in England for the first time the provisions of the Brussels Convention. The Administration of Justice Act was repealed in 1981 and the United Kingdom Supreme Court Act - - -

KIRBY J: They seem to be dealing in the Court of Appeal here with the 1956 Act.

MR COWDROY: They refer back to that.

KIRBY J: Has anything changed in the legislation in the Supreme Court Act that is relevant?

MR COWDROY: No, it has not, your Honour.

KIRBY J: Have there been decisions since then by the Court of Appeal of England that say that this decision is now overruled?

MR COWDROY: Yes.

KIRBY J: Or having heard both sides it is not good law?

MR COWDROY: Your Honour, yes, there is a subsequent decision of The "Evpo Agnic" in 1988 and Lord Donaldson who was in the minority in The "Span Terza" gave a decision in 1988 - that is some two years after the Law Report Commission Report here - where he held quite clearly that the word "charterer" where it appears in this phrase means "demise charterer".

Your Honours, for the benefit of the Court, I should explain that The "Span Terza" upon which the respondent relies was a decision which is unusual and should be treated with caution because, as is noted in the judgment at the outset, it was one where it was given on an ex parte application. The case came on at great urgency and was decided - it came on in court at 10.45 one morning and was decided by 12 o'clock. At the end, in the final judgment, these words appear which is interesting:

Consequently, the authority of the decision of the majority in this case will be of little, if any, more authority than the dissenting opinion of Lord Justice Donaldson.

GUMMOW J: That must have reassured the parties.

MR COWDROY: Yes, indeed.

KIRBY J: Lord Justice Donaldson gave a few hints as to what they could do to get out of it by going back to - - -

MR COWDROY: Something must have occurred but, your Honours, the interesting part for the purpose of this present debates appears at page 230 of the report at the top right-hand corner:

So I come back to the question of the meaning of the word "charterer". It seems to me that there are quite a number of forms of charterer; you can have a voyage charterer; you can have time charterers; you can have consecutive voyage charterers and no doubt there are a large number of other varieties of charterer, all of whom fall into one broad category, namely, that they are contracting for the services of a ship with a crew, being run and managed by the owner of the ship or somebody who is in the position of the owner of a ship. But in addition there is a very special form of charterer, the demise charterer, who has nothing whatsoever in common with any other form of charterer and is, for most practical purposes, the owner of a ship. It seems to me that in the context of the phrase "the owner or charterer of, or in possession or in control of, the ship", the proper construction of the word "charterer" is to confine it to somebody who is an owner-type charterer - in other words, a demise charterer.

GUMMOW J: If that were true, why would not 19(a) have just said "the relevant person was in possession or control"?

MR COWDROY: There are two answers to that, your Honour. Firstly, there may have been the desire by the draftsmen of the Admiralty Act to use as far as possible language which was consistent with those used by other countries and, second - - -

GUMMOW J: That is not right because if you look at page 226 of the report of this interlocutory appeal that sets out subsection (4), you see, in the second column there.

MR COWDROY: Yes.

GUMMOW J: Now, that talks about in one limb - on the second limb it talks about beneficial ownership and our draftsmen would not have a bar of that.

MR COWDROY: No, I agree, they departed on that point but, your Honour, that may go to undermine my submission in relation to consistency of language. But, certainly, the use of language in the phrase "the owner or charterer of, or in possession or control" appears to have been, as it were, taken directly from precedent.

Now, the other decision which is more up to date - your Honour asked me whether there was a more recent decision - 1988, The "Evpo Agnic", again, Lord Donaldson, a decision of the Court of Appeal, at that is tab 3.28 - - -

BRENNAN CJ: This is (1988) 1 WLR 1090.

MR COWDROY: Yes, your Honour, and as we have noted, application for leave to appeal to the House of Lords was applied for and refused in that case. The relevant extract of Lord Donaldson's judgment is at the foot of page 1095 of the report where he talks of the term "the relevant person". In the final paragraph of page 1095, he talks of "the relevant person" against whom a claim might be made:

Such a person has to meet two criteria. First, he must be the (or possibly a) person who would be liable on the claim in personam. Second, he must, at the time when the cause of action arose, have been the owner or charterer of, or in possession or control of, the ship. "Charterer" in this context, which includes the Convention, must I think mean demise charterer and the words "or in possession or in control of, the ship" must refer to a person who is in the position of a demise charterer, albeit not under a demise charter - a salvor might be such.

KIRBY J: He does not refer back to the other case.

MR COWDROY: No, he does not, your Honour. He refers to - no, he does not refer back to - - -

KIRBY J: He took his revenge when he got the chance?

MR COWDROY: Yes. We would respectfully submit that the interpretation of section 19(a) would follow the interpretation adopted by the Court of Appeal in The "Evpo Agnic".

GUMMOW J: He also said "owner" means registered owner.

MR COWDROY: Yes, he did, your Honour. The term "owner" is not defined in the Admiralty Act. Certainly, your Honour, that would give meaning to the fact that there was a distinction to be drawn between the owner and a charterer who was the disponent owner.

GUMMOW J: You mentioned slot charters. Where do we get that from?

MR COWDROY: Your Honour, there is no reference to that in his - I simply use that as an example where you may find a shipper of goods, as it were, rents a space in the ship, a simple slot in that ship. That same person might ultimately own a ship which would be liable to arrest if the contention of the respondent was correct, together with any other number of slot charterers who may rent or hire a slot on a ship for a single voyage. It would be, in our submission, extending the concept of sistership arrest beyond all traditional meanings and interpretations if that extension were permitted.

KIRBY J: Is there a book where we can look at what the purpose behind the Brussels Convention was, given that that seems to be the source? Is that in the materials you have supplied the Court with?

MR COWDROY: Yes, your Honour. I have referred to The "Banko", Lord Justice Denning, and also The "Afala" - I have referred to that in the submissions as well - gives a history of the admiralty rights, the rights in rem, the development and the Brussels Convention. Again, I am referring back to the outline of our oral submissions. The phrase "owner or charterer of, or in possession or control of, the ship" is used not only in section 19 but also in sections 17 and 18. Your Honours, we would submit - - -

GUMMOW J: You have to go over to section 18 now, do you not? How does section 18 operate? I do not understand it at the moment. In all these sections one fixes on two points of time. A cause of action arises; proceeding commenced.

MR COWDROY: Yes. Your Honour, section 18 seems to be confined exclusively to the position of a right to proceed against another ship of a demise charterer. In other words, in maritime law the concept of a demise charterer is so common that it has been felt necessary to incorporate in section 18 a specific provision dealing with the fact that a - - -

GUMMOW J: It is the same ship though throughout here.

MR COWDROY: It is, your Honour; it is not a sistership. It really is a different concept. Section 18 is somewhat unique in the sense that it deals specifically with the rights of a demise charterer, or I should say the right against a demise charterer.

GUMMOW J: But if you are right and that collection of words in paragraph (a) of these sections includes its demise charterer, how does section 18 work?

MR COWDROY: Your Honour, the way this works is that in (a) the person liable is the owner or charterer and (b):

is, when the proceeding is commenced, a demise charterer of the ship -

in other words, if the person liable when the proceeding is commenced holds a demise charter over a ship, this section enables proceedings to be claimed against the ship - that is the ship under demise charter.

TOOHEY J: What if you are the owner when the cause of action arose but not the demise charterer when the proceedings are commenced?

MR COWDROY: In that event the provisions of the section would not be fulfilled.

TOOHEY J: You would look elsewhere, would you?

MR COWDROY: Well, you would not have the remedy in rem. Part III of this Act deals specifically with rights in rem, not just your right to a claim. It, as it were, gives the procedural advantage to a party to ensure that he as far as possible has security for any claim that he might have.

GUMMOW J: But 18 is talking about any maritime claim, not just general maritime claims.

MR COWDROY: Yes, that is correct, your Honour.

KIRBY J: But I have a difficulty with your submission because not only do we have the obstacle that the very phrase "demise charterer" which you are trying to use "charterer" to mean is used, but we have a conception that paragraph (a) is of a different and larger quality and then paragraph (b) comes down to, at a later point of time, a demise charterer. It is difficult to reconcile your conception of the composite phrase "owner or charterer in possession or control" at the earlier point of time with the notion that that is in some way different from the demise charterer which is what the statute seems to be assuming, and yet your contention is that that is exactly what it means where "charter" is used.

MR COWDROY: Your Honour, the words "demise charterer" do not appear obviously in (a) but that does not mean that it cannot operate in that way - that is, on that same basis.

KIRBY J: It would be odd because the assumption of the section is that (a) is of a different ownership quality or connection quality than (b) is and that (b) talks of a later point of time when at the time the proceedings have commenced the person has become, whatever they were before, a demise charterer. It assumes that what they were before was a different relationship to the ship that they have become later, whereas your assumption is that that phrase means they were a demise charterer when "charterer" is used.

MR COWDROY: Your Honour, I think section 18 is directed to an entirely different matter to that in section 19.

KIRBY J: I realise that, but the words are so similar that we have to be careful. The Court has often said this in Hussein and so on that you cannot draw inferences necessarily from the express statement in another section of the Act because these things tend to be slipped in drafting, but it is awkward in the way you are advancing your submissions to overlook this specific reference to "demise charterer" in 18(b) given that our primary duty is to give meaning to an Australian statute.

MR COWDROY: Your Honour, that section would cover the position where, for example, at the time that the cause of action arose there was an owner who was in possession or control of a ship. He may have disposed of that ship but entered into a demise charter of it straight back again. It might also apply to the position of a demise charterer against whom it is alleged there is liability at one point and he is still the demise charterer when the proceeding is commenced. It might also operate in relation to a person who has possession and control of a ship, again when the cause of action arose, but by some arrangement has become the demise charterer of it.

It introduces a flexibility into the management of ships. Section 18 has been drafted in such a way as to encompass a possible range of ownership or types of ownership so that a claimant may still be entitled to bring an action in rem against that ship and not be deprived of that action because of various arrangements which an owner might enter into to try to avoid, for example, the very thing which is provided by section 18, namely an action in rem for security.

TOOHEY J: Particularly if the owner remains the owner, then section 17 operates to ground an action in rem in that situation.

MR COWDROY: Yes, your Honour.

BRENNAN CJ: If you look at 17, 18 and 19, what they are saying is that in two instances actions in rem can be brought essentially against the owner; in one instance against the demise charterer.

MR COWDROY: Yes, your Honour.

BRENNAN CJ: In all instances one goes back to when the cause of action arose and then you have the same terms in each one, have you not?

MR COWDROY: Yes, you do, your Honour; the same phrase appears.

BRENNAN CJ: Is there any justification from the text of the statute which requires the reading down of "charterer" to "demise charterer" in paragraphs (a) of those sections?

MR COWDROY: Your Honour, consistent with the interpretation of that phrase by other courts we say yes.

BRENNAN CJ: That is the cases you have taken us to?

MR COWDROY: Yes, your Honour, and there are other cases we have referred to in our submissions.

GUMMOW J: Where are they in the first instance?

MR COWDROY: But I just want to also in this context, your Honour, just refer back to section 3(6) to see whether that throws any light - it is difficult to know whether that actually, in the context raised by your Honour, assists.

BRENNAN CJ: It is fairly clear, is it not, that the categories in paragraphs (a) are wider than the category in paragraph (b)?

MR COWDROY: Yes, your Honour, it is.

BRENNAN CJ: It may be that "owner" appears in 17 and it appears in 19 as the owner of the ship at the time the proceeding is taken. Then you have - - -

MR COWDROY: At the time the cause of action arose, your Honour.

BRENNAN CJ: No, at the time the proceeding was taken - paragraph (b).

MR COWDROY: I am sorry, I thought your Honour was referring to (a).

BRENNAN CJ: No, paragraph (b).

MR COWDROY: Yes, your Honour.

BRENNAN CJ: Paragraph (b) speaks of "the owner" in 17 and 19 and speaks of the "demise charterer" in 18, so they are the ones who will suffer the consequences of the action in rem.

MR COWDROY: Yes, your Honour.

BRENNAN CJ: Clearly enough that category - that is owner or demise charterer - is narrower than the category in paragraph (a) in each of those sections.

MR COWDROY: Yes.

BRENNAN CJ: If it is narrower in no other sense, it is narrower in the sense that "possession or control" appears in (a) in each of those sections.

MR COWDROY: Yes.

BRENNAN CJ: So we do know that there are persons against whom no proceeding in rem could be taken under paragraph (a) who are persons against whom proceedings in rem can be taken if they happen to come within paragraph (b) by the time proceedings commence. That is, the cause of action could not have been litigated on the moment against some of those in paragraph (a) because they would not answer the description at that time of owner or demise charterer.

MR COWDROY: Yes.

BRENNAN CJ: But yet you can take proceedings against those persons if in the meantime they become owner or demise charterer.

MR COWDROY: Yes.

BRENNAN CJ: Then what is the reason for widening the category in paragraph (a) or, putting it another way, narrowing it in paragraph (b)? The answer to (b) seems to me to be quite obvious. Why then should the cause of action in the proceeding in rem be given against those who are not within paragraph (b)? There must be some reason for it.

MR COWDROY: Is your Honour referring to actions in rem only against the owner and the demise charterer?

BRENNAN CJ: They are the only people against whom proceedings do lie for actions in rem.

MR COWDROY: That is in 17 and 18?

BRENNAN CJ: And 19.

MR COWDROY: Yes, I follow your Honour. It comes down, we would submit, to the question of the class of person who satisfies the requirements of section 19(a).

BRENNAN CJ: That is right.

MR COWDROY: In that - - -

BRENNAN CJ: They are the same class of persons as in 17(a) and 18(a).

MR COWDROY: Yes, your Honour. If it had been intended that the word "charterer" where it appears in each of those sections was meant to include any charterer, we would submit that word would have appeared before the word "charterer" - in other words, "any charterer". So it would mean that the words should be read as "the owner or any charterer of the ship or in possession and control of the first-mentioned ship or the ship".

BRENNAN CJ: What is the distinction between a charterer and a shipper of goods who simply enters into a contract for the carriage of the goods?

MR COWDROY: Your Honour, a shipper of the goods has no possession or control. There is no element of control over the vessel, no rights in the vessel itself, nor does a voyage charterer have any such rights.

BRENNAN CJ: Let me ask you that specific question. What is the difference between a shipper of goods who simply contracts for the carriage of the goods from A to B and a voyage charterer?

MR COWDROY: Well, your Honour, they may well be one and the same.

BRENNAN CJ: May be or may not be? Is there any difference? I rather thought the voyage charterer had some possessory right in respect of portions of the ship.

MR COWDROY: Your Honour, the concept of a voyage charter - to make it clear, there is a definition provided in the material of "voyage charter". If I can ask your Honour to turn to the page above 2.4. If I can take your Honour to the definition - and this is from a dictionary which has been cited in the Federal Court of Australia by his Honour Mr Justice Sheppard, the Marine Encyclopaedic Dictionary, a publication of Lloyds of London Press - "voyage charter" is defined as:

The making of an agreement or contract of hire under which a shipowner puts his vessel or space within at the disposal of a charterer for the carriage of a full or part cargo on a voyage from end to named ports at rates and upon conditions mutually agreed.

BRENNAN CJ: But there you have it, you have "at the disposal of a charterer". It is the space, it is the portion of the ship that is at the disposal, whereas the ordinary shipper of goods provides his goods, he gets the bill of lading and the master puts it where he chooses.

MR COWDROY: Yes.

BRENNAN CJ: So that there is a considerable difference between a voyage charter and a shipper of goods under a contract of carriage. The difference lies in the relationship between the voyage charterer and the ship itself.

MR COWDROY: I follow what your Honour says.

GUMMOW J: The contract is not just covered by a bill of lading.

MR COWDROY: No, it is not; it may be governed by the terms of the charter, the voyage charter itself.

GUMMOW J: Yes.

BRENNAN CJ: That is right.

MR COWDROY: So the bill of lading is not of itself complete. Your Honours, there is another extract. If I can also direct your Honours' attention to the extract of Scrutton on Charterparties and Bills of Lading which is contained in the material under 2.1. If one turns in that material to the third page in, that is page 49 of the text, there is the heading, "Article 26 - Charterparties not by Demise - Categories". There is a dissertation there upon the types of charter which are charters not by demise.

GUMMOW J: So a voyage charterer could be carrying the charterer's goods or other people's goods as well and a bill of lading for those other goods. It is a distinct matter, is it not? It is the whole - - -

MR COWDROY: The critical part of the paragraph, your Honour, is:

A voyage charter differs from a time charter in many respects, but primarily in that it is a contract to carry specified goods on a defined voyage or voyages, the remuneration of the shipowner being a freight calculated according to the quantity of cargo loaded or carried, or sometimes a lump sum freight.

BRENNAN CJ: It is primarily but not exclusively.

MR COWDROY: Yes.

BRENNAN CJ: The difference between primarily and exclusively consists in the charterer's rights in respect of a space on the ship.

MR COWDROY: Yes, but, your Honour, the question is if one adopts that approach and applies that literal interpretation to the term "charterer" as used in the various sections, when one comes to section 19 which deals with sistership arrest, it would provide a remedy to persons having a general maritime claim extending well beyond any known right currently provided to shippers.

BRENNAN CJ: It does in the sense that it provides for a sistership. Where else does it extend it?

MR COWDROY: Well, your Honour, take, for example, a person who happens to, say, rent a small part of a ship, a subcharter. A person rents a small portion of a vessel for a subcharter to carry his goods from Australia to New Zealand. If that same shipper later bought his own ship - - -

GUMMOW J: It has to be a charterer of the ship.

MR COWDROY: Yes, of the ship but, your Honour, a charterer of the ship does not say of the whole ship; it could be of a portion of the ship.

GUMMOW J: That is the question, I suppose. It may be settled some day. It does not have to be settled today because it is a voyage charterer.

MR COWDROY: Yes, that is right. Your Honour, it could be that if that same shipper subsequently purchased or acquired his own ship, that would be liable to arrest because of something arising out of an incidental voyage from Australia to New Zealand that occurred previously if a general maritime claim arose out of that voyage. That would be so even though there was no right of action against the first ship.

BRENNAN CJ: Or even if he bought the first ship or became a demise charterer of the first ship, he would be liable.

MR COWDROY: On the literal interpretation, yes.

BRENNAN CJ: Under 17 or 18.

MR COWDROY: Yes, he would be.

BRENNAN CJ: So what is the novelty if it is under 19 except that he bought another ship instead of the one which first attracted the liability?

MR COWDROY: Your Honour, under section 19 the concept of a right in rem against a second ship or the sistership we say could only arise if there was already a right of action against the first ship, in other words, the wrongdoing ship.

BRENNAN CJ: That makes section 19 have an operation significantly different from 17 and 18 even though the language is the same.

MR COWDROY: Well, your Honour, not completely because section 19 really deals - it is only section 19 that you can have an action against a surrogate ship or a sistership. Sections 17 and 18 do not give that right to proceed against another ship.

Your Honours, if I could return to the outline of the oral submissions which we have made. We have referred to section 3(6) and Lord Justice Donaldson in The "Evpo Agnic". We submit that in effect to give the right of an action in rem against a surrogate ship without a right of action against the primary ship is something which is not contemplated by the terms of the Act.

Your Honours, as I indicated before, and it is only a guide, rule 16(2) seems to be predicated essentially on the basis that there was and there must be a ship which is in effect the one which is primarily liable. That ship must be noted in the proceedings as one which is the, as it were, sistership of the one being arrested. So the rules are also predicated upon the basis there must be a primary ship and the sistership. Your Honours, unless there is anything further that I can assist your Honours with, that is the argument of the appellant.

KIRBY J: Just on that last point, there is a primary ship. It is the "Nyanza". You say your interest in it does not reach the standard required by 19(a)?

MR COWDROY: Well, your Honour, we say that is critical because - - -

KIRBY J: I realise that, but there is a primary ship.

MR COWDROY: There is a primary ship, your Honour, but, because the respondent was the disponent owner of that ship, it was the charterer of that ship. Accordingly, when one looks at 19(a), the "relevant person" is the appellant:

a relevant person in relation to the claim was, when the cause of action arose, the owner -

the appellant was not the owner -

the charterer -

he was not the charterer, we say, because the respondent was the charterer -

or in possession or control of, the first-mentioned ship -

the appellant was never in possession or control of the first- mentioned ship. On that interpretation, my client, the appellant, simply does not fall within any of the categories referred to in (a). That being so, the requirements of section 19 were not satisfied. They were not satisfied, your Honours, because we say at no stage was the "Laemthong Pride" the sistership or the surrogate ship for the "Nyanza". There was no commonality, no common interest between those two ships which is specifically contemplated by section 19 of the Act.

In the absence of that, your Honours, we say that there can be no right of action in rem against the "Laemthong Pride". Section 19, the spirit we say was intended - might I take your Honours to the Hansard debates. We say it was intended that there should be a commonality of interest between the two ships, and that is pivotal to the understanding of section 19. If that commonality is non-existent, then section 19 is not fulfilled.

TOOHEY J: What do you mean by "commonality", Mr Cowdroy?

MR COWDROY: Your Honour, a commonality of interest: there must have been in relation to section 19 - working backwards, the "Laemthong Pride" must have been owned by the person against whom the claim is made - that has been satisfied - but there was no commonality of interest, that is no ownership or no possession or control of the first-mentioned ship, that is, the "Nyanza".

TOOHEY J: I just have some trouble with the word "commonality". You do not mean equivalence obviously because paragraph (b) speaks of "owner" and paragraph (a) speaks in wider terms.

MR COWDROY: Yes. Your Honour, the concept, we submit, behind section 19(a) is that the person against whom the claim is made must have had, when the cause of action arose, interest in the vessel akin to ownership or interest that gave it possession or control of that vessel. Such interest only arose either through ownership, through demise ownership or through possession or control. A mere voyage charter did not give the requisite interest in the first-mentioned ship. Absent that, section 19 has no application because the requirements of section 19(a) are not fulfilled.

Can I just extend that a little bit further. If there was no ownership or disponent ownership or possession and control of the first ship, it means, your Honour, that effectively the relevant degree of control stipulated by section 19(a) is missing. That is essential for the operation of the section, because only when that is fulfilled do you get to 19(b).

BRENNAN CJ: Mr Cowdroy, why does a voyage charterer not have possession of the ship?

MR COWDROY: Your Honour, on the material which we have provided in the folder, it is clear that a voyage charter does not give possession and control to the voyage charterer.

BRENNAN CJ: Not control. Why does it not give possession?

MR COWDROY: Your Honour, that remains with the owner or the disponent owner. Voyage charter or time charter does not pass possession or control of the ship to the charterer. There is a case which we have referred to - it deals with time charters - where his Honour Justice Hill in the Federal Court in a case called BHP Trading Asia Ltd - it is only an extract and it is under 3.22. Pages 7 and 8 of the judgment have been reproduced. It is unreported. His Honour said:

A time charter is not a demise. It does not pass possession in the ship or the direct control of the ship to the voyage charterer.

In the same way, your Honour, a voyage charter does not pass possession or control either. That always remains with the owner.

BRENNAN CJ: Could the owner accept for carriage any goods other than those of the voyage charterer?

MR COWDROY: I am sorry, your Honour?

BRENNAN CJ: Could the owner of the ship accept for carriage on the ship, which is the subject of a voyage charter, any other goods than the voyage charterer's goods for carriage?

MR COWDROY: That would depend upon the arrangement made between them, your Honour. It may be that the voyage charter is of the whole ship or it might be a part of the ship.

BRENNAN CJ: If it is for the whole ship?

MR COWDROY: Your Honour, effectively it would not matter because, even if of the whole ship, under a voyage charter, possession and control of the ship still remains with the owner or the disponent owner. Voyage charter does not give possession or control to the charterer.

Your Honours, we have also incorporated in the folder for the benefit of the Court portions of Hansard, but might I indicate what they are because they already set out in our submissions. I believe they are important for the Court to understand what was said. In the appellant's submissions at page 12 we have set out what Mr Lionel Bowen said in Parliament on 24 March 1988.

BRENNAN CJ: We do not have to have it read to us, Mr Cowdroy.

MR COWDROY: If the Court pleases. Perhaps I can also point out that there is one portion which is contained in the material on the last page in the folder, the second paragraph:

The Bill also provides for admiralty jurisdiction to be exercised in relation to claims in personam - that is, claims directed against a specific person - in relation to maritime claims or claims for damage to a ship. The Bill does not attempt a substantive overhaul of the law. It does not, for instance, create new causes of action or, with the exception of clause 34, create new substantive rights, as distinct from creating new procedures. The Bill, therefore, seeks to clarify what claims are subject to admiralty jurisdiction and which courts can exercise that jurisdiction.

Further down at the foot of the page, the last paragraph:

The scope of the statutory right of action in rem is defined exhaustively and in detail. The circumstances in which claims in rem can be brought on maritime claims are set out in clauses 16 to 19. These clauses outline the nexus between a ship and the relevant person against whom the claim arises which is required before an action in rem can be brought. Provision is made in clause 19 for the first time in Australian law for arrest of surrogate or sisterships. This is a feature of admiralty law in certain other countries, including the United Kingdom and New Zealand.

It is our submission, your Honours, that the relevant nexus which is referred to in that speech is the nexus between the person who is the owner or a demise charterer or in possession and control together with the fact that at the time the proceedings are commenced under section 19, the person against whom the claim is made is the owner of the second-mentioned ship. Is that a convenient time?

BRENNAN CJ: Have you completed your submissions, Mr Cowdroy?

MR COWDROY: Your Honour, I believe I have.

BRENNAN CJ: Well, you have or - - -?

MR COWDROY: Yes, I have, your Honour, I have completed my submissions.

BRENNAN CJ: We will adjourn now until 10.15 tomorrow morning.

AT 4.15 PM THE MATTER WAS ADJOURNED

UNTIL TUESDAY, 24 JUNE 1997