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Reiter Petroleum Inc v The Ship “Sam Hawk” [2015] FCA 1005 (11 September 2015)

Last Updated: 11 September 2015

FEDERAL COURT OF AUSTRALIA

Reiter Petroleum Inc v The Ship “Sam Hawk” [2015] FCA 1005

Citation:
Reiter Petroleum Inc v The Ship “Sam Hawk” [2015] FCA 1005


Parties:
REITER PETROLEUM INC v THE SHIP “SAM HAWK”


File number:
NSD 1136 of 2014


Judge:
MCKERRACHER J


Date of judgment:
11 September 2015


Catchwords:
ADMIRALTY – jurisdiction – whether the plaintiff’s writ ought to be set aside for want of jurisdiction and the action dismissed on the basis that the plaintiff’s claims do not satisfy the requirements of s 15 or  s 17  of the  Admiralty Act 1988  (Cth) (Act) – whether the Court has jurisdiction in respect of the asserted maritime lien, in rem, under  s 15  of the Act – whether the plaintiff’s claim is a proceeding on a maritime lien which is of a character recognised by Australian law, including Australian rules of private international law – whether a foreign maritime lien, such as that alleged to have arisen pursuant to the alleged bunker supply contract and the law of Canada or the United States, is a maritime lien for the purposes of  s 15  of the Act even though the supply of necessaries to a ship, including bunkers, does not give rise to a maritime lien under Australian law – whether the Privy Council decision of Halcyon Isle, which is authority for the proposition that questions as to the existence of an asserted maritime lien are procedural or remedial in nature and are therefore to be determined in accordance with the law of the forum, should be followed in Australia – whether the decision of the High Court of Australia in John Pfeiffer dictates that a claim based on a maritime lien is a substantive claim as to the existence, extent or enforceability of the rights or duties of the parties, not merely a procedural claim directed to governing or regulating the mode or conduct of court proceedings

ADMIRALTY – jurisdiction – whether the Court has jurisdiction in respect of a general maritime claim under s 17 of the Act – whether the owner is ‘a relevant person’ within the meaning of  s 3  of the Act with respect to the claim under  s 17  of the Act – whether the jurisdiction claim under  s 17  goes to the merits of the dispute or jurisdiction

ADMIRALTY – application for summary judgment pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) and/or rule 26.01(1)(a) of the Federal Court Rules 2011 (Cth) – whether the plaintiff has a reasonable prospect of successfully prosecuting the proceeding under s 15 – choice of law – whether the law of Canada, United States, Hong Kong or Turkey is the proper law of the alleged bunker supply contract – whether in the circumstances United States law would recognise a maritime lien

ADMIRALTY – application for summary judgment – whether the plaintiff has a reasonable prospect of successfully prosecuting the proceeding under s 17 – whether the plaintiff has a reasonable prospect of establishing the existence of an enforceable bunker supply contract which establishes that the owner, a relevant person, is indebted to the plaintiff for the cost of bunkers, which are goods and materials supplied to the vessel for its operation or maintenance pursuant to s 4(3)(m) – whether summary judgment would be premature in the circumstances of the case


Legislation:
 Admiralty Act 1988  (Cth)  ss 4(3)(m) ,  5 (1)(b), 6,  10 ,  14 ,  15 ,  17 
Federal Court of Australia Act 1976 (Cth) s 31A(2)
Federal Court Rules 2011 (Cth) r 26.01(1)(a)


Cases cited:
Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50
Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559
Bankers Trust International Ltd v Todd Shipyards Corporation (The Halcyon Isle) [1981] AC 221
Belcher Oil Company v M/V Gardenia[1985] USCA11 1135; , 766 F.2d 1508
Cole v Cunningham (1983) 81 FLR 158
Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45
Elbe Shipping SA v The Ship “Global Peace” [2006] FCA 954; (2006) 154 FCR 439
Gulf Oil Trading Company v M/V Caribe Mar[1985] USCA5 519; , 757 F.2d 743
Hampton Bermuda Ltd v M/V Star Siranger (S.D. Tex. April 18 2008)
Hassanein v The Ship Hellenic Island [1904] HCA 17; [1989] 1 CLR 406
Imperial Oil Limited v Petromar Inc 2001 FCA 391
Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60; (2008) 167 FCR 372
John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503
Lauritzen v Larsen[1953] USSC 62; , 345 U.S. 571
Marlex Petroleum Inc v The Ship Har Rai (1984) 4 D.L.R. (4th) 739
Marlex Petroleum Inc v The Ship Har Rai [1987] 1 SCR 57
Morlines Maritime Agency Ltd & Ors v Ship "Skulptor Vuchetich" [1997] FCA 432
Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146
Norwegian Bunkers AS v Boone Star Owners Inc 2014 FC 1200
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Phillips v Eyre (1870) LR 6 QB1
Phoenix Assurance Co Ltd v Berechree [1906] HCA 6; (1906) 3 CLR 946
R v Federal Court of Australia; Ex p WA National Football League (Inc) [1979] HCA 6; (1979) 143 CLR 190
Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491
Republic of India v India Steamship Co (The Indian Grace) (No 2) [1997] UKHL 40; [1998] AC 878
Shell Oil Company v The Ship "Lastrigoni" [1974] HCA 27; (1974) 131 CLR 1
Stevens v Head [1993] HCA 19; (1992) 176 CLR 433
The Bold Buccleugh [1851] EngR 985; (1851) Moo PC 267, 13 ER 884
The Colorado [1923] P 102
The Father Thomas [1979] 2 Lloyd’s Rep 364
The Goulandris [1927] PD 182
The Milford (1858) Swab 362
The Owners of the Motor Vessel “Iran Amanat” v KMP Coastal Oil Pte Limited [1999] HCA 11; (1999) 196 CLR 130
The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Company Inc (1994) 181 CLR 404
The Ripon City [1897] P 226
The Royal Arch (1857) 166 ER 1131
The Ship “Hako Endeavour” v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21; (2013) 296 ALR 265
The Ship Betty Ott v General Bills Ltd [1992] 1 NZLR 655
The Tolten [1946] P 135
Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (ex Freya) [2005] FCAFC 68; (2005) 143 FCR 43
Todd Shipyards Corporation v The Ship "Ioannis Daskalelis" [1974] 1 Lloyd's Rep 174
Tramp Oil and Marine, Ltd v M/V Mermaid I, [1986] USCA1 497; 805 F.2d 42
Transol Bunker BV v MV Andrico Unity (1989) (4) SA 325
Trans-Tec Asia v M/V Harmony Container, 518 F.3d 1120
Trinidad Foundry and Fabricating, Ltd. v M/V K.AS. Camilla, [1992] USCA11 1129; 966 F.2d 613
Triton Marine Fuels Ltd v M/V Pacific Chukotka, 575 F.3d 409
Union Shipping of New Zealand Ltd v Morgan [2002] NSWCA 124; (2002) 54 NSWLR 690
World Fuel Services Corporation v The Ship “Nordems”, 2010, FC 332
World Fuel Services Trading v M/V Hebei Shijiazhvang, 12 F Supp 3d 792


Articles and Texts:
Australian Law Reform Commission, The Civil Admiralty Jurisdiction, Report No 33 (1986)
Davies M, Bell AS and Brereton P, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis, Butterworths, 2014)
Davies M and Lewin K, “Foreign maritime liens: should they be recognised in Australian Courts?” (2002) 76 ALJ 775
Derrington S and Turner J QC in The Law and Practice of Admiralty Matters (Oxford University Press, 2007)
Dicey, Morris and Collins, The Conflict of Laws (15th ed, Sweet & Maxwell Ltd, 2012, vol 1)
Fawcett J and Curruthers J Cheshire, North and Fawcett: Private International Law (14th ed, Oxford University Press, 2008)
Jackson D Enforcement of Maritime Claims (4th ed, Informa, 2005)
Mukherjee PK ‘The law of maritime liens and conflict of laws and customs’ (2003) 9(6) JIML 545
Rares S, “Maritime liens, renvoi and conflicts of law: the far from Halcyon Isle” [2014] Lloyd's Maritime and Commercial Law Quarterly 183
Schoenbaum TJ, Admiralty and Maritime Law (5th ed. 2011) (at 710-711)
Tetley W, “Maritime Liens in the Conflict of Laws” in Nafziger JAR and Symeonides SC (eds), Law and Justice in a Multistate World: Essays in Honor of Arthur T. von Mehren (Transnational Publishers Inc, 2002
Thomas DR, Maritime Liens (Stevens & Sons Ltd, 1980)


Date of hearing:
1 May 2015


Date of last submissions:
15 May 2015


Place:
Perth


Division:
GENERAL DIVISION


Category:
Catchwords


Number of paragraphs:
147


Counsel for the Plaintiff:
Mr E Cox


Solicitor for the Plaintiff:
HWL Ebsworth Lawyers


Counsel for the Defendant:
Mr P Hopwood with Mr A Nair


Solicitor for the Defendant:
Cocks Macnish

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
NSD 1136 of 2014

BETWEEN:
REITER PETROLEUM INC
Plaintiff
AND:
THE SHIP “SAM HAWK”
Defendant

JUDGE:
MCKERRACHER J
DATE OF ORDER:
11 SEPTEMBER 2015
WHERE MADE:
PERTH


THE COURT ORDERS THAT:

  1. The application be dismissed.
  2. Costs of the application be reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
NSD 1136 of 2014

BETWEEN:
REITER PETROLEUM INC
Plaintiff
AND:
THE SHIP "SAM HAWK"
Defendant

JUDGE:
MCKERRACHER J
DATE:
11 SEPTEMBER 2015
PLACE:
PERTH

REASONS FOR JUDGMENT

  1. The Vessel, “Sam Hawk” was arrested in Albany, Western Australia, at the instance of Reiter Petroleum Inc, a Canadian company. Reiter Petroleum claims it has not been paid for bunkers supplied to the Vessel. It contends that the Vessel’s owner, SPV Sam Hawk Inc, is liable to pay for them. It commenced these in rem proceedings on the basis of a maritime lien claimed pursuant to s 15 of the  Admiralty Act  1988 (Cth) or, alternatively, on a general maritime claim in respect of goods and materials supplied to the Vessel for its operation or maintenance pursuant to  s 4(3)(m)  and  s 17  of the  Admiralty Act .
  2. These reasons address an application for orders that:
(a) the writ be set aside for want of jurisdiction and the action dismissed because Reiter Petroleum’s claim as advanced does not satisfy the requirements of either  s 15  or  s 17  of the  Admiralty Act . As a consequence, pursuant to s 14 of the  Admiralty Act , Reiter Petroleum is not entitled to commence the action as by  s 10  of the  Admiralty Act , the Court has no jurisdiction in respect of the proceedings; or
(b) if the Court does have jurisdiction, there be summary judgment in favour of the Vessel pursuant to s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (FCA) and/or r 26.01(1)(a) of the Federal Court Rules 2011 (Cth) (FCR) on the basis that Reiter Petroleum has no reasonable prospect of successfully prosecuting the proceeding.
  1. The application raises an important question as to whether the Privy Council decision of Bankers Trust International Ltd v Todd Shipyards Corporation (The Halcyon Isle) [1981] AC 221 is still to be followed in Australia.
  2. For reasons that follow, I consider that Halcyon Isle does not represent the state of the law in this country. It follows that the Court has jurisdiction to consider the claim for a maritime lien for the supply of bunkers.
  3. Although the claim under  s 17  of the  Admiralty Act  for a general maritime claim pursuant to  s 4(3)(m)  is also very much in dispute on the basis that the Owner contends that no contract which could bind the Vessel’s owner, SPV Sam Hawk Inc, has been or can be proven, the complaints about this claim, properly viewed, in my view, go to the merits, not to jurisdiction. It is easy to understand why such complaints have been made, but the pleaded claim is sufficient to establish jurisdiction. This is especially so given that the Court has already been conferred jurisdiction under the  s 15  claim.
  4. For other reasons, it cannot be said at this early stage that either claim should be summarily dismissed. As the application nevertheless was quite appropriately made, I consider that costs should be reserved.

BACKGROUND

  1. The background is taken from affidavits filed by both parties and the statement of claim.
  2. The Vessel was registered in Hong Kong, is owned by SPV Sam Hawk Inc, a company incorporated in Hong Kong, is operated by Shipping Asset Management SA (SAM Shipping), which is based in Geneva, and managed by Venturi Fleet, a company operating from Greece. Unless it is necessary to be specific, the term ‘owner’ will be used to apply to these entities collectively.
  3. By a time charterparty dated 31 October 2013, Egyptian Bulk Carriers (EBC) time chartered the Vessel from the Owner. Clause 13 of the recap to the charterparty required EBC to bunker the Vessel during the charterparty. It was EBC, not the Owner, who was responsible for arranging and paying for the bunkers. The charterparty did not authorise EBC to contract for necessaries on behalf of the Owner or to bind the Vessel with a maritime lien for necessaries.
  4. On about 15 November 2013, EBC communicated with Reiter Petroleum to seek a quote for bunkers for the Vessel at Istanbul. It was anticipated the Vessel would dock on around 25 November 2013. Reiter Petroleum canvassed a quote by telephone from a Turkish company, KPI Bridge Oil Denizcilik ve Tecaret Ltd Sti, and passed on the quote to EBC. While there is no evidence of whether or not EBC accepted Reiter Petroleum’s quote, EBC informed the Vessel that it had arranged for bunkers at Istanbul on 16 November 2013.
  5. EBC sought confirmation on 20 November 2013 from Reiter Petroleum of the name of the supplier at Istanbul. After making those enquiries with KPI, Reiter Petroleum informed EBC that the supplier was ‘Socar Marine’. EBC then passed on this information to the Vessel.
  6. On the following day, the master of the Vessel issued a ‘no liability’ notice addressed to Socar and sent it to the shipping agent at Istanbul, Nakkas Shipping. The notice advised that the Vessel and Owner accepted no liability to pay for bunkers, and that such payment was the responsibility of the time charterer, EBC. By email dated 2 December 2013, the agent at Istanbul advised the master of the Vessel that Socar had received the ‘no liability’ notice, but had refused to sign the document. As the Owner points out, therefore, it is clear that by no later than 2 December 2013, the physical supplier, Socar, had received and was aware of the ‘no liability’ or ‘no lien’ notice issued by the master of the Vessel.
  7. Between 25 November 2013 and 2 December 2013, EBC and Reiter Petroleum renegotiated the price of the bunkers because the Vessel was to be delayed on its arrival to Istanbul, with the new expected arrival date being on or around 6 December 2013. On 28 November 2013, Socar cancelled the stem originally scheduled for 25 November 2013.
  8. On the present state of the evidence, there is no indication of any activity as between Reiter Petroleum and KPI between 28 November 2013 and 2 December 2013. On the latter date, however, three things happened. First, EBC confirmed the Vessel’s estimated time of arrival at Istanbul on 6 December 2013 and the quantity of bunkers sought (185 mt). Secondly, Reiter Petroleum sent EBC a revised quote of USD$655 per metric tonne for the bunkers. Thirdly, EBC accepted the increased price and Reiter Petroleum sent EBC an amended confirmation of the price and quantity. The document which contained the amended price was entitled ‘Amended Confirmation re ETA and PRICE’.
  9. It was a term of the contract now relied upon by Reiter Petroleum that payment for the bunkers was to be made within 45 days from the date of supply, failing which, interest would accrue at 24% per annum thereafter on the amount outstanding until payment. Those terms for payment were expressly set out, Reiter Petroleum says, in the Amended Confirmation. Payment was therefore due on, or not later than, 21 January 2014, it contends.
  10. The Amended Confirmation was not sent to the Owner.
  11. The terms of the Amended Confirmation provided that it was to be subject to Reiter Petroleum’s general terms and conditions. By cl 15(a) of the Terms and Conditions, any contract is to be construed according to the law of Canada. Clause 15, however, is subject to cl 7, which provides significantly for this application, amongst other things, that the seller shall be entitled to assert a lien wherever it finds the Vessel, and that the law of the United States of America shall apply to determine the existence of any maritime lien, regardless of the court in which proceedings are instituted.
  12. Reiter Petroleum considers that the Amended Confirmation constituted a contract between Reiter Petroleum and EBC. Reiter Petroleum also contends that EBC entered into the contract, which was ‘evidenced by’ the Amended Confirmation, as agent of the Owner. There is some uncertainty as between the statement of claim and the evidence as to whether the contention is that the Amended Confirmation constitutes evidence of a contract, or whether it is the actual contract itself by which it is alleged that the Vessel or the Owner is either a party, or said to be bound. For convenience however, (and as this will not be dispositive in this application), I will refer to the Amended Confirmation as the Bunker Supply Contract, assuming for present purposes that there is a binding contract.
  13. It is common ground that the Owner was not involved in any of the negotiations surrounding the supply and delivery of bunkers at Istanbul in December 2013, and that the Owner was unaware of the existence of Reiter Petroleum in the supply chain relating to the delivery of bunkers at Istanbul around this time. Indeed, on 6 December 2013, at the Port of Istanbul, the Vessel’s master sent a further ‘no liability’ letter to the master of a barge named ‘Force 1’ (being the barge which supplied the bunkers). This letter advised that the bunkers, which were to be stemmed the following day from that barge, were ordered by time charterers EBC and would only be accepted on the condition that neither the Owner nor the Vessel would be held responsible for payment. This letter was acknowledged by the master of Force 1.
  14. On the following day, 7 December 2013, the Vessel took bunkers from Force 1. Following the stem, the master of Force 1 and the chief engineer of the Vessel each stamped and signed a bunker delivery receipt. That document was on a Socar letterhead. The stamp on the bunker delivery receipt provided that the bunkers were received for the account of EBC, and not for the account of the Owner.
  15. On completion of the stem, no invoice was received by the Owner from any party for the bunkers. Neither did the Owner expect to receive such an invoice in light of the terms of the time charter, which required that EBC was to be responsible for the cost of bunkers during the time charter.
  16. Some five months after the Vessel took the bunkers at Istanbul, on 17 May 2014, Reiter Petroleum wrote to SAM Shipping, the operators of the Vessel to:
(a) inform the operators that Reiter Petroleum had supplied the bunkers to the Vessel at Istanbul;
(b) acknowledge that the Vessel was under time charter at that time;
(c) reveal that it had issued an invoice for USD$122,675 to EBC for payment of the bunkers;
(d) state that EBC had not paid the invoice;
(e) seek the operators’ assistance to recover the unpaid sum from EBC; and
(f) provide them with a copy of the invoice and its Terms and Conditions.
  1. No demand was made on the Owner or the Vessel at this time. This was the first time that the Owner, through the operators, had been made aware of the involvement of Reiter Petroleum in the sale of bunkers at Istanbul. The Owner was unable to persuade EBC to pay the invoice to Reiter Petroleum and, subsequently, Reiter Petroleum made a demand for payment on the Owner, which the Owner declined to meet.
  2. On 5 November 2014, Reiter Petroleum filed the in rem writ in this proceeding in respect of the unpaid invoice. It procured the arrest of the Vessel in Albany, Western Australia. The writ named the Owner as the ‘relevant person’.
  3. Two days later, the Owner entered a conditional appearance and, upon the provision of security in the form of a P & I Club letter of undertaking, secured the release of the Vessel. The P & I Club letter of undertaking expressly reserved the Owner’s right to challenge the Court’s jurisdiction in this action.
  4. The Owner and Reiter Petroleum engaged in subsequent negotiations for some time relating to provision of security for the Owner’s legal costs, including its costs for challenging jurisdiction. On the resolution of those negotiations, this interlocutory application was filed challenging the Court’s jurisdiction and, alternatively, seeking summary judgment in its favour.

THE CLAIM

  1. In addition to these facts, Reiter Petroleum pleads that:
    1. The proper law of the Contract was the law of Canada, and/or the law of the [United States] and the State of Florida was the proper law governing the existence and enforcement of a maritime lien.
Particulars

Clauses 17 and 7(e) of [Reiter Petroleum’s] Terms and Conditions of Sale with [EBC].
  1. It was an express term of the Contract that [Reiter Petroleum] has a Maritime Lien attaching to the [Vessel] which can be enforced in any country where the [Vessel] is present, which lien is to be in accordance with the laws of the [United States] and the State of Florida.
Particulars
Clause 7(e) of [Reiter Petroleum’s] Terms and Conditions of Sale with [EBC].
  1. Under the laws of the [United States] and the State of Florida [Reiter Petroleum] has a Maritime Lien against the [Vessel] for necessaries, which includes bunkers, supplied to a vessel in a port outside the United States.
Particulars
 Section 46 , USC § 31301, 31397, 31341 and 31342 of the United States Commercial Instruments and Maritime Lien Act (US) and/or Federal Maritime Lien Act 1910 (US).
  1. Under the laws of the [United States] and the State of Florida [Reiter Petroleum] says that the maritime lien for necessaries has the following effects and consequences:
  1. There is a rebuttable presumption that the bunkers were supplied to the credit of the [Vessel], and that the necessaries supplier has no duty to enquire as to the authority of the person requesting the supply of bunkers.
  1. The supplier has a maritime lien over the vessel which may be enforced by an action in rem against the vessel and it is not necessary to prove that credit was given to the vessel.
  1. The maritime lien arises and attaches to the [Vessel] at the time the bunkers are supplied and is indelible.
  1. Under the laws of Canada it is permissible to contractually incorporate a maritime lien of the United States.
  1. Further and in the alternative, under the laws of Canada [Reiter Petroleum], being a person carrying on business in Canada in respect of goods, materials or services for the operation or maintenance of a foreign vessel, has a maritime lien against the [Vessel] for the Bunkers supplied.
Particulars

Section 139(2) of the Maritime Liability Act 2010 (Canada).
  1. Under the laws of Canada [Reiter Petroleum] says that the maritime lien for necessaries may be enforced as an action in rem against the [Vessel].

19. In the premises, [Reiter Petroleum] says that:
  1. the amount owing to it for the supply of bunkers to the [Vessel] under the contract is secured by a maritime lien over the [Vessel], within the meaning of and for the purposes of  s.15  of the  Admiralty Act 1988  (Cth); and
  1. [Reiter Petroleum] is entitled to pursue its claim for repayment of that amount as a proceeding in rem against the [Vessel] pursuant to  s.15  of the  Admiralty Act 1988  (Cth).

Claim under s.17 of the  Admiralty Act 1988  (Cth)
  1. Further and in the alternative, in entering into the contract with [Reiter Petroleum] ... [EBC] did so for and on behalf of the owner of the [Vessel] and as its agent.
Particulars
It was an express term of [Reiter Petroleum’s] Amended Confirmation dated 2 December 2013 that "All sales are on the credit of the vessel. Buyer is presumed to have authority to bind the vessel with a maritime lien".
  1. It was an express term of the Contract that the buyer had the consent of the owner of the [Vessel] when it ordered the Bunkers and entered into the contract.
Particulars
Clause 7(d) of [Reiter Petroleum’s] Terms and Conditions of Sale with [EBC].
  1. In the premises, SPV Sam Hawk Inc is indebted to [Reiter Petroleum] under the Contract for the cost of the Bunkers supplied to the [Vessel].
  1. Contrary to and in breach of the contract, SPV Sam Hawk Inc has failed to pay to [Reiter Petroleum] the amount owing for the cost of the bunkers supplied to the [Vessel].
  1. [Reiter Petroleum’s] claim for the cost of the supply of the bunkers to the [Vessel] is a general maritime claim within the meaning of  s.4(3)(m)  of the  Admiralty Act 1988  (Cth).
  1. SPV Sam Hawk Inc is now and was both at the time [Reiter Petroleum’s] cause of action arose and when this proceeding was commenced the owner of the [Vessel], within the meaning of  s.17  of the  Admiralty Act 1988  (Cth).
  1. In the premises, [Reiter Petroleum] says that it is entitled to pursue its claim for repayment of the aforesaid amount owing to it under the Contract as a proceeding in rem against [the Vessel] pursuant to  s.17  of the  Admiralty Act 1988  (Cth).

LEGISLATIVE PROVISIONS

  1. The case raises for consideration a number of areas of the  Admiralty Act , including the following sections:
14 Admiralty actions in rem to be commenced under this Act
In a matter of Admiralty or maritime jurisdiction, a proceeding shall not be commenced as an action in rem against a ship or other property except as provided by this Act.

15 Right to proceed in rem on maritime liens etc.

(1) A proceeding on a maritime lien or other charge in respect of a ship or other property subject to the lien or charge may be commenced as an action in rem against the ship or property.

(2) A reference in subsection (1) to a maritime lien includes a reference to a lien for:
(a) salvage;
(b) damage done by a ship;
(c) wages of the master, or of a member of the crew, of a ship; or
(d) master’s disbursements.
(emphasis added)

17 Right to proceed in rem on owner’s liabilities
Where, in relation to a general maritime claim concerning a ship or other property, a relevant person:
(a) was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and
(b) is, when the proceeding is commenced, the owner of the ship or property;
a proceeding on the claim may be commenced as an action in rem against the ship or property.

4 Maritime claims
...
(3) A reference in this Act to a general maritime claim is a reference to:
...
(m) a claim in respect of goods, materials or services (including stevedoring and lighterage services) supplied or to be supplied to a ship for its operation or maintenance; ...
  1. Further, s 31A(2) FCA provides:
31A Summary judgment
...
(2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(emphasis added)
  1. Rule 26.01(1)(a) of the FCR provides:
26.01 Summary judgment

(1) A party may apply to the Court for an order that judgment be given against another party because:
(a) the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or
(emphasis added)
  1. USC §31341 and §31342 of the United States Commercial Instruments and Maritime Lien Act (US) provide relevantly and respectively:
§31341. Persons presumed to have authority to procure necessaries
(a) The following persons are presumed to have authority to procure necessaries for a vessel:
(1) the owner;
(2) the master;
(3) a person entrusted with the management of the vessel at the port of supply; or
(4) an officer or agent appointed by-
(A) the owner;
(B) a charterer;
(C) an owner pro hac vice; or
(D) an agreed buyer in possession of the vessel.
T
(b) A person tortiously or unlawfully in possession or charge of a vessel has no authority to procure necessaries for the vessel.
...
Historical and Revision Notes
Revised section
Source section (U.S. Code)
31341(a)
46:972 (1st sentence), 973
31341(b)
46:972 (2d sentence)

Section 31341(a) lists those persons who are presumed to have authority to procure necessaries for a vessel. These include the owner, master, or a manager at the port of supply; and an officer or agent appointed by the owner, charterer, owner pro hac vice, or buyer in possession of the vessel. This subsection makes no substantive change to law.

Section 31341(b) provides that any person that is tortiously or unlawfully in possession of or in charge of a vessel has no authority to procure necessaries. This subsection makes no substantive change to law.
...
§31342. Establishing maritime liens

(a) Except as provided in subsection (b) of this section, a person providing necessaries to a vessel on the order of the owner or a person authorized by the owner—
(1) has a maritime lien on the vessel;
(2) may bring a civil action in rem to enforce the lien; and
(3) is not required to allege or prove in the action that credit was given to the vessel.
(b) This section does not apply to a public vessel.
Historical and Revision Notes
Revised section
Source section (U.S. Code)
31342
46:971

Section 31342 provides that any authorized person providing necessaries for a vessel has a maritime lien on the vessel, may bring a civil action in rem in admiralty to enforce the lien, and is not required to allege or prove that credit was given to the vessel. “Providing” has been substituted for “furnishing” for consistency with other laws. This section makes no substantive change to law. This section does not supersede the prohibition under the Public Vessels Act, the Foreign Sovereign Immunities Act, or the Suits in  Admiralty Act , on bringing an in rem action against a public vessel.
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EXPERT EVIDENCE

  1. With limited exceptions, the key facts are, at least for present purposes, agreed. The legal effect of those facts is very much in dispute. Which, if any, foreign law applies and what the consequence of that law will be are issues at the heart of the dispute. Mixed questions of fact and law arise. Even the effect of foreign law is a question of fact. A deal of evidence has been adduced on this issue.
  2. Mr Timothy Cox is an experienced Perth admiralty and maritime solicitor, who has been practising in that field for more than 40 years. His firm represents the Owner and the Vessel. He does not purport to be an independent expert, but does set the scene for the expert evidence which has been given. He explains that the time charter hire payable by the charterers to the Owner does not include a component for bunkers because, in most cases, it is for the time charterer to direct the deployment of the vessel. The time charterer accordingly assumes responsibility for the cost of bunkers consumed in the course of the vessel’s deployment. Both Mr Cox and Ms Angela Hunt, operations manager at SAM Shipping, give evidence that SAM Shipping, the operator, generally requires masters of vessels under its operation and under time charter to issue a ‘no lien’ notice to bunker suppliers at the port at which bunkers are intended to be stemmed. They are also instructed to stamp the bunker delivery notes with a ‘no lien’ stamp, which clearly states the name of the charterer who is responsible for the payment of the relevant bunkers. The apparent purpose of this practice is to clarify to the bunker suppliers at the port before the bunkers are stemmed, that neither the owner, nor the vessel, would be liable for the cost of the bunkers. Rather, the cost would be borne by the time charterer. There is documentary evidence supporting that standard practice. As a matter of fact, in the present case, that is what occurred.
  3. Affidavit evidence was given by Mr Marc de Man, a lawyer practicing in Quebec, as to the effect of Canadian law on the maritime law issues arising in this dispute. As an independent expert, he expresses the view that Reiter Petroleum’s claim would give rise to a maritime lien under the prevailing body of Canadian law. In reaching this conclusion, he took into account the fact that Reiter Petroleum was not aware of the contents of the charterparty agreement between the Owner and EBC and was ‘accordingly unaware of whether a “no lien clause” existed in the subject charterparty’. According to Mr de Man, until 2009 in Canada a Canadian supply of necessaries’ claim for unpaid services rendered to a vessel did not give rise to a maritime lien. Rather, only a statutory right in rem existed in the necessaries man’s favour. This meant that the supplier of necessaries were at a significant disadvantage, he says, compared to the American counterparts in the United States, where a claim for unpaid necessaries was attributed the status of a maritime lien. A change in Canadian maritime law occurred in 2009 with the passing of amendments to the Marine Liability Act, S.C. 2001, C.6 (MLA), including s 139, which provides for a maritime lien in favour of the Canadian supplier of necessaries services to a foreign vessel. Mr de Man notes that at the time of writing, there was no case law testing whether a Canadian necessaries man would benefit from a maritime lien if the necessaries at issue were ordered by the charterer and not the owner. In Norwegian Bunkers AS v Boone Star Owners Inc 2014 FC 1200, the Federal Court of Canada said (at [80]):
Whether a Canadian maritime lien would flow from the purchase of bunkers by a charterer rather than by the owner is a question that remains to be decided (The Nordems, FC, at paras 27-28; Cameco Corporation v MCP Altona (The Ship), 2013 FC 23 (CanLII), at paras 49-54).
  1. Mr de Man also opines that under the laws of the United States, personal liability of the shipowner is not required in order for an American supplier of necessaries to benefit from a maritime lien: World Fuel Services Corporation v The Ship “Nordems”, 2010, FC 332 (confirmed on appeal in 2011 FC 73). The effect of s 139 MLA, he says, is that there is no longer a requirement under Canadian law that there be a contractual nexus between the Canadian supplier of necessaries and the shipowner in order for a maritime lien to flow from the supply. According to Mr de Man, in the case at hand, Reiter Petroleum is clearly a ‘person, carrying on business in Canada’ who supplied ‘goods, materials or services [...] to the foreign vessel for its operation or maintenance’, for which they have never been paid.
  2. In his opinion, the fact that the bunkers were supplied to the Vessel in Turkey was irrelevant given the wording of s 139 (2)(a) MLA, which states that a maritime lien exists in favour of a Canadian supplier of necessaries, ‘wherever’ the said services were supplied.
  3. Mr Frank Dahan, a senior trader at Reiter Petroleum in Quebec, also gives evidence that Reiter Petroleum has a maritime lien against the Vessel, both under the laws of the United States and the laws of Canada. Alternatively, he says that EBC entered into the contract with Reiter Petroleum for and on behalf of the Owner and as its agent.
  4. While Mr Dahan’s evidence is helpful in establishing the history of the communications, it is not independent expert evidence on the state of, and effect of, the law in the United States or Canada.
  5. Ms Mary Lou Rodon is an experienced attorney licensed to practise law in Florida, United States before the Florida State Courts, the Southern District Court, the Federal Court of Appeals and the United States Supreme Court. On the basis of the facts that she outlines, which accord with those outlined above (for interlocutory purposes) in these reasons, she notes that in the case of a maritime lien, the vessel itself is viewed as the obligor, regardless of whether the vessel’s owner is also obligated (‘the maritime lien arises by operation of law and exists as a claim upon the property, secret and invisible’: Triton Marine Fuels Ltd v M/V Pacific Chukotka, 575 F.3d 409). She notes that in Triton, the court considered a ‘no lien’ clause in the charter party contract. The court reiterated the underlying reason why charterers have presumed authority to bind the vessel for ordering necessaries, which is so that charterers can be self-sufficient during the course of the charter. Triton, she says, is also authority for the principle that the charterer’s presumptive authority is not diminished by the existence of the ‘no lien’ clause in the charter.
  6. In her opinion the Owner’s attempt to create a ‘no lien’ by issuing the bunker letter at the time of taking the bunkers, did not rebut the presumption that the charterer binds the vessel. Under the current federal statute governing maritime liens ‘even if a supplier is aware that the vessel with which he is dealing is under charter, he should not be charged with knowledge of the existence of any “no lien” clause absent affirmative evidence that he received express notice from the owner or other reliable source that the vessel was not to be bound’ (emphasis added): World Fuel Services Trading v M/V Hebei Shijiazhvang, 12 F Supp 3d 792. In that case, the court found that because actual knowledge of a prohibition of lien clause is merely one way of obtaining actual knowledge of one’s lack of authority to bind a vessel:
... a vessel owner may rebut the presumption of a charterer’s authority to bind the vessel by establishing “that the supplier of necessaries either had actual knowledge that the person ordering the supplies lacked the authority to bind the vessel or had knowledge of a prohibition of lien clause in the charter.”
  1. She cites several authorities for the proposition that actual knowledge will defeat a maritime lien. Ms Rodon relies upon the decision of Trans-Tec Asia v M/V Harmony Container, 518 F.3d 1120 in the Ninth Circuit Court of Appeals in which it was ruled that a maritime lien for necessaries applied to provision of fuel bunkers by a foreign supplier to a foreign vessel and in a foreign port because the Statute, 46U.S.C.S §31342, expressly extended to any supplier of necessaries to any vessel regardless of the port.
  2. Accordingly, in her view, Reiter Petroleum, by providing bunkers to the Vessel at Istanbul on purchase order of the charterer, subject to a contract and terms and conditions governed by the United States law, had an enforceable maritime lien in rem against the Vessel for the cost of suppling the bunkers plus interest.
  3. Mr Patrick Bolger is a barrister and solicitor of the Montreal, Quebec and Canadian Bar Associations. He is also an experienced maritime lawyer. As will be discussed below, he confirms that the foundation of Canadian maritime law is the maritime law of England, being defined by the Supreme Court of Canada as being:
that body of law which was administered in England by the High Court on its admiralty side in 1934 as such law may, from time to time, have been amended by the federal Parliament and as it has developed through judicial precedent to date.
  1. Thus the notion of maritime liens in Canada was derived from the English common law and includes classic maritime liens such as those relating to seamen’s wages, salvage and collisions, as well as those created by statute, for example, those in favour of port authorities and suppliers of goods, materials and services.
  2. His view is, on the facts which he cites and which accord with those set out in these reasons, that there was an absence of any express or apparent or ostensible authority on the part of the Owner to permit EBC, as the time charterer of the Vessel, to bind the Owner contractually to Reiter Petroleum. There was an absence, in his opinion, of privity of contract such that the Owner did not have any contractual relationship with Reiter Petroleum.
  3. He gives evidence similar to that of Mr de Man in relation to the introduction in 2009 of the amendments passed in Canada in respect of the MLA, in particular s 139, which was designed to place Canadian suppliers on a level playing field with their American counterparts or competitors.
  4. Notwithstanding the introduction of that law, in his opinion, absent a contract in Canadian law between Reiter Petroleum and the Owner, the proper law governing the relationship between Reiter Petroleum and the Owner should be determined by application of Canadian conflict of law rules, which is that with which the bunker purchase transaction has the closest connection. Mr Bolger relied upon the Canadian Federal Court of Appeal decision in The Ship Nordems and Imperial Oil Limited v Petromar Inc 2001 FCA 391 (at [28]-[29]) in reaching this conclusion. Based on The Ship Nordems and Petromar, in his view, a number of factors must be considered to identify the jurisdiction with which the transaction had the closest connection and, thus, the proper law governing the relationship between the Vessel and the Owner, on the one hand, and Reiter Petroleum, on the other. According to Mr Bolger, those factors would be:
(1) the Vessel was registered in Hong Kong;
(2) the Owner was based in Hong Kong;
(3) the Vessel operator was based in Geneva, Switzerland;
(4) the fleet managers (a distinct corporate entity) were based in Hong Kong;
(5) the time charterer was based in Cairo, Egypt;
(6) Reiter Petroleum has its place of business in Montreal, Canada; and
(7) the place of delivery of the bunkers was Istanbul, Turkey.
  1. He considers that, taking into account all those factors, a Court in Canada would conclude that the proper law of the relationship between the parties was that of Turkey, being the location where the bunkers were supplied. In The Ship Nordems, Justice Harrington said (at [67]):
Absent a contract, we must tote up the points of contact. In a fact situation which has contact with several jurisdictions, pride of place must be given to the place where the necessaries were provided.
  1. Accordingly, his view was that Reiter Petroleum could not claim a benefit of a maritime lien either:
(1) by virtue of the incorporation by reference of American law and its standard contractual terms and conditions which were agreed solely by EBC (in circumstances where there was no relationship with the Owner); or
(2) by virtue of s 139 MLA because Canadian law, statutory or otherwise, is not the proper law governing the legal effect of the supply of fuel to the Vessel. Rather, Turkish law would be the proper law and, as such, the MLA would be wholly inapplicable.
  1. His opinion is that as Terms and Conditions provide for the application of Canadian law, Canadian law in turn provides, as indicated by Justice Harrington in The Ship Nordems (at [38]): ‘[t]he conflict of law rules which determine the proper law of the relationship between World Fuel Services and the ship Nordems and her owners are those of the forum’.
  2. The Owner also relies upon an affidavit of an experienced United States attorney and maritime lawyer, Dr Rob Maass. He explains the United States legal system in concepts which, relevantly, are reasonably familiar to Australian lawyers.
  3. Given that, in the present instance, the choice of law clause specifies the law of the State of Florida, it would be expected that a court interpreting that clause could apply the law of the Eleventh Circuit, that is, the body of federal law that a Federal Court sitting in Florida would apply. He explains that maritime law in the United States aspires to national uniformity, and accordingly, State law plays a limited role in maritime cases. In relation to maritime liens under the law of the United States, the maritime lien is a property right in a vessel or other maritime property that arises by law to secure a debt owed by the vessel or other property. Maritime liens rest on the doctrine of personification. This doctrine treats vessels themselves as responsible agents under the law, and such liens may be enforced by an action against the vessel in rem. Dr Maas cites the English decision The Bold Buccleugh [1851] EngR 985; (1851) Moo PC 267, 13 ER 884 as being very influential in this United States jurisprudence concerning maritime liens. Parties cannot create a maritime lien by agreement under United States law. It arises only by operation of law, regardless of any agreement between the parties. He says that American courts have recognised the important principle that maritime liens should be interpreted narrowly to avoid prejudicing the rights of third parties who may not have notice that such liens exist.
  4. Dr Maass discussed maritime liens for necessaries in the United States, which is governed by the Commercial Instruments and Maritime Liens Act, 46 U.S.C §31341-31343 (2012) (CIMLA). The CIMLA expressly ‘supersedes’ any lien statute enacted by a state government to the extent that the statute establishes a claim to be enforced by a civil action in rem against the vessel for necessaries. As a result of that, in the present case, he says that although the Terms and Conditions provide for the application of the law of the State of Florida, Florida law does not apply to a maritime lien for necessaries. He expresses the view that under the facts referred to in these reasons, it appears that Reiter Petroleum engaged KPI, which in turn engaged Socar. If Reiter Petroleum cannot show that it caused Socar to provide the bunkers to EBC, Reiter Petroleum cannot assert a maritime lien for necessaries under the CIMLA. Even if it could show that link, it would have to satisfy an additional requirement that the necessaries were provided on the order of the Owner or a person authorised by the Owner. Dr Maass explains that the CIMLA establishes a presumption that certain persons have such authority, but this, of course, is a rebuttable presumption. It is rebuttable by the supplier having ‘actual knowledge that the person ordering the supplies lacked the authority to bind the vessel or had knowledge of a prohibition of lien clause in the charter’: Belcher Oil Company v M/V Gardenia, [1985] USCA11 1135; 766 F.2d 1508.
  5. Dr Maass devotes a deal of attention to the knowledge of the supplier. He summarises a leading treatise, Schoenbaum TJ, Admiralty and Maritime Law (5th ed. 2011) (at 710-711), as saying:
[t]he courts have uniformly construed no lien clauses in charters as without effect to bar a lien in favor of a supplier, unless it is proved that, at the time the contract was entered into, the supplier had actual knowledge of the prohibition of lien clause.
  1. The question, he says, in the present case is whether the master’s ‘no lien’ notice to Socar was effective as against Reiter Petroleum to preclude a lien.
  2. He also refers to Tramp Oil and Marine, Ltd v M/V Mermaid I, [1986] USCA1 497; 805 F.2d 42 where the First Circuit denied a maritime lien for necessaries to a broker in part because the broker was unknown to the vessel and it would be commercially unreasonable to require the vessel’s owner to sort through the chain of brokers and suppliers. He analyses a number of other authorities including Gulf Oil Trading Company v M/V Caribe Mar, [1985] USCA5 519; 757 F.2d 743 where a second supply of bunkers did not attract a lien on the basis that the broker had, by that time, received notice of the ‘prohibition-of-lien’ clause. He also refers to Hampton Bermuda Ltd v M/V Star Siranger (S.D. Tex. April 18 2008). After discussion of those cases, he expresses the view that the master’s notice to Socar should be sufficient to rebut the statutory presumption that EBC, as charterer, had the authority to incur a lien. That is because, in his opinion, the evidence shows that Reiter Petroleum issued the confirmation to EBC on 2 December and Socar, the only party known to the Owner, received the notice no later than that date.
  3. Dr Maass notes that there is also a question as to whether the United States choice of law clause would be enforceable in the present circumstances. He points to conflicting authority concerning whether a United States choice of law clause in a maritime contract should be enforced to recognise a maritime lien that would not otherwise exist. He says that the Second Circuit, in his opinion with good reason, held that such clauses are not enforceable. If United States law would otherwise govern the contract, there appears to be an approach similar to that adopted by the Supreme Court in Canada to examine and value the various points of contact between the transactions in the states or governments whose competing laws are involved. Once again, on a summary judgment application, while there are some views expressed on this topic, neither party, probably for good reason, appears to advance a concrete position.
  4. On the applicability of the CIMLA to foreign transactions, the point of greatest concern on the present state of the evidence, Dr Maass says, is that even if the United States choice of law clause is enforceable, the decisions of the Eleventh Circuit, which bind courts in Florida, have established that the CIMLA does not apply to wholly foreign transactions. Other circuits have reached a different conclusion, which has created a split of authority. However, in the view of Dr Maass, those cases are factually distinguishable from the instant case.
  5. Dr Maass refers to Trinidad Foundry and Fabricating, Ltd. v M/V K.AS. Camilla, [1992] USCA11 1129; 966 F.2d 613 where a supplier based in Trinidad sought to enforce a maritime lien on a foreign vessel for repairs and other necessaries. The supplier argued that it had a maritime lien under English law, but also argued in the alternative that it had a lien under the CIMLA. The Eleventh Circuit rejected the supplier’s argument that it had a lien under English law and held that even if United States law applied, there was no lien because the CIMLA ‘does not provide for a maritime lien for goods and services supplied by a foreign plaintiff to foreign flag vessels in foreign ports’ (at 617). In doing so, the Eleventh Circuit relied in part on the First Circuit’s decision in Tramp Oil where it was explained (at 46) that the purpose of the CIMLA was ‘the protection of American suppliers of goods and services’. Pursuant to this decision, foreign suppliers, (that is, foreign to the United States, which includes Reiter Petroleum which is Canadian), that supply of goods and services to foreign flag vessels in foreign ports would not be entitled to a maritime lien.
  6. This jurisprudence has been rejected elsewhere. The Ninth and Fourth Circuit Courts in Trans-Tec and Triton, respectively, have criticised the decision. The Ninth Circuit described the decision as being ‘a house of cards that quickly tumbles with even the gentlest examination’, and in both of those cases the Court allowed a maritime lien under the CIMLA to a foreign supplier for necessaries provided to a foreign flag vessel in a foreign port.
  7. While Ms Rodon describes the decisions in Triton and Trans-Tec as being ‘controlling’, Dr Maass suggests that in fact those decisions are only binding precedent for courts within the Fourth and Ninth Circuits. Rather, a court in the Eleventh Circuit would not be bound by either decision. Although the Eleventh Circuit’s statement in Triton was arguably non-binding dicta, in the view of Dr Maass, it is strongly suggestive that a court applying the law of the Eleventh Circuit Court would follow Triton and not enforce a maritime lien for necessaries absent some connection with the United States. He then goes on to discuss the factual distinctions between the cases, and concludes that if United States law applies, the master’s ‘no lien’ notice to Socar should be sufficient to rebut the statutory presumption under the CIMLA that EBC, as charterer, had authority to incur a lien for necessaries, and in any case, Dr Maass argues that the CIMLA would not recognise a lien for necessaries in the instance case as the CIMLA does not wholly apply to foreign transactions.
  8. Mr de Man responds to the evidence of Mr Bolger and disagrees that two of the cases he relies upon, The Ship Nordems and Petromar, can assist in the present circumstances as they were determined prior to the amendments to the MLA discussed above. Mr de Man concludes that if conflict of law rules are necessary to determine the outcome of this matter, it would be those of the laws of Australia that would apply, namely, those in the forum in which the matter is being adjudicated, and there is accordingly no reason to consider Canadian conflict rules in this instance. As such, it remains his contention, notwithstanding the considerations set out in Mr Bolger’s affidavit, that Reiter Petroleum does benefit from a maritime lien for the bunkers supplied to the Vessel.
  9. There is also a further response from Ms Rodon in relation to the evidence of Dr Maass, which reemphasises that Gulf Oil Trading has been cited in 70 cases since its ruling 1985 and while it may be the opinion of Dr Maass that the case ‘imposes an unreasonable burden on the ship owner’, it is nonetheless the law of the United States as no Circuit has reversed the ruling. In her view, in Belcher Oil Company, the Eleventh Circuit Court in fact followed the ruling in the same year and said ‘suppliers of necessaries are afforded the protection of a lien when they have no knowledge that the person ordering the supplies has no authority to do so’. She takes issue with the other authorities on which Dr Maass relies and explains her reasons for doing so.
  10. While it is tempting to view these issues through the eyes of an Australian lawyer, there are several points of conflict between the international legal experts and there has been no opportunity for conferral and testing of the evidence in a more conventional manner which might produce much clearer outcomes.

RELATIONSHIP BETWEEN REITER PETROLEUM AND THE OWNER

  1. From the perspective of the Owner, the application, on either basis, focusses on the lack of any relationship between Reiter Petroleum and the Owner. The Owner accepts that by reason of cl 15(a) of the Terms and Conditions, the Bunker Supply Contract (assuming it be one) between Reiter Petroleum and EBC is to be construed according to the law of Canada. It would follow, the Owner says, that questions as to the formation of the alleged contract, including the parties to it, are to be determined according to Canadian law: Amin Rasheed Shipping Corp v Kuwait Insurance Co [1984] AC 50 (at 65).
  2. I will discuss the substance of the Owner’s submissions on the contractual relationship point at this stage and address the consequence of these submissions in more detail below.
  3. The Owner makes the point that there is only limited evidence as to the substance of Canadian law on the contractual point. There is expert evidence from Mr Bolger for the Owner. He expresses the view that the Owner is not a party to the Bunker Supply Contract under Canadian law because of the lack of actual authority and apparent/ostensible authority on the part EBC to bind the Owner. This opinion is framed in terms familiar to Australian law. Therefore, either on the basis of Canadian law, or on the basis that Australian law applies by default in the absence of evidence on Canadian law in this respect: Davies M, Bell AS and Brereton P, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis, Butterworths, 2014) (at [17.37]); Dicey, Morris and Collins, The Conflict of Laws (15th ed, Sweet & Maxwell Ltd, 2012, vol 1) (at [98-026]); the Court must proceed on the basis that the question as to whether the Owner is a party to the Bunker Supply Contract by reason of the Amended Confirmation is to be determined according to familiar Australian legal principles.
  4. Under Australian law, broadly speaking, a principal can only be bound if the agent contracting on the principal’s behalf acts pursuant to and within the agent’s actual or ostensible authority: Northside Developments Pty Ltd v Registrar-General [1990] HCA 32; (1990) 170 CLR 146 (at 172). If an agent contracts on the principal’s behalf outside its actual or ostensible authority, then absent ratification of the contract by the principal, the principal is not bound by it: Phoenix Assurance Co Ltd v Berechree [1906] HCA 6; (1906) 3 CLR 946 (at 962).
  5. In relation to that question of agency, the Owner’s position is that:
(a) there is uncontroverted evidence that EBC did not have actual authority to act for and on behalf of the Owner, nor did it have actual authority to act as the Owner’s agent for the purposes of the alleged Bunker Supply Contract;
(b) there is no evidence that would tend to establish that EBC had apparent or ostensible authority to act as the Owner’s agent in entering the Bunker Supply Contract; in particular, there is no evidence that the Owner held EBC out as its agent or as having authority to contract on its behalf, nor did the Owner permit or allow EBC to hold itself out this way; indeed, as the Owner points out, it had no knowledge at all of the terms of the Amended Confirmation until 17 May 2014;
(c) it would appear from the evidence that the reference in the Amended Confirmation to EBC contracting ‘for and on behalf of’ the Owner was drafted and inserted by Reiter Petroleum without notice to and without the authority of the Owner; as such, it cannot constitute a representation by the Owner necessary to create apparent or ostensible authority by estoppel: Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451; and
(d) the Owner has not ratified the acts of EBC as being the acts of its agent.
  1. The Owner further argues that the evidence of the parties’ conduct supports the conclusion that there was no relevant contractual relationship between Reiter Petroleum and the Owner on the following basis:
  2. The Owner relies also on the explanation of Mr Bolger that under Canadian law there was an absence of expressed or apparent/ostensible authority on the part of the Owner to permit EBC to bind the Owner contractually to Reiter Petroleum. The Owner contends that this conclusion is uncontested and supports the Owner’s submission that there was no contractual relationship between Reiter Petroleum and the Owner.

THE JURISDICTION ISSUE

Does the Court have jurisdiction to entertain the in rem action?

  1. The jurisdictional question requires determination of the question of whether a foreign maritime lien is enforceable, even though it is common ground that the provision of bunkers would not give rise to a maritime lien under Australian substantive law. For Reiter Petroleum to succeed on this question, it needs to persuade the Court that the Privy Council decision of Halcyon Isle should no longer be followed in this country. Before coming to that interesting submission, there are a number of foundational concepts to address.
  2. Jurisdiction has been described as the Court’s authority to adjudicate the plaintiff’s cause of action: Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 per Gleeson CJ, Gaudron and Gummow JJ (at [2]). The Court’s authority in this case is derived from s 10 and s 14, and to an extent from s 15 and s 17 of the  Admiralty Act . In circumstances where a defendant challenges jurisdiction, it is necessary for the Court to determine as a preliminary issue whether it has jurisdiction: The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Company Inc (1994) 181 CLR 404 per the High Court (at 426). It was established in R v Federal Court of Australia; Ex p WA National Football League (Inc) [1979] HCA 6; (1979) 143 CLR 190 per Gibbs J (at 215-216) that the Court, as a superior court of record pursuant to  s 5(2)  FCA, has an inherent power to the decide whether it has jurisdiction in a proceeding by determining if the requisite matters upon which its jurisdiction depends do exist. It is clear that, on a jurisdictional challenge, it is necessary for the plaintiff to establish that the Court has jurisdiction in respect of its claim as advanced, and where jurisdiction depends on particular facts, the plaintiff must establish those facts on the balance of probabilities on the evidence advanced in the proceedings: Shin Kobe Maru (at 426); The Owners of the Motor Vessel “Iran Amanat” v KMP Coastal Oil Pte Limited [1999] HCA 11; (1999) 196 CLR 130 per the High Court (at [18]-[20]); The Ship “Hako Endeavour” v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21; (2013) 296 ALR 265 per Rares J (at [37]-[38]). It is also clear from the Full Court decision in Hako Endeavour, that the question of whether the relevant jurisdictional facts have been established is distinct from that of whether the plaintiff’s action ought to be summarily dismissed. Each question is to be answered by applying different tests: Hako Endeavour per Rares J (at [42]); per Buchanan J (at [135]-[136]); Iran Amanat per the High Court (at [19])).

Challenge to jurisdiction –  s 15  of the  Admiralty Act 

  1. To be entitled to proceed in rem pursuant to  s 15  of the  Admiralty Act , Reiter Petroleum must establish that its claim is ‘a proceeding on a maritime lien or other charge in respect of a ship or other property subject to the lien or charge ...’. The question of jurisdiction is therefore one of statutory interpretation, namely, whether a lien, as alleged to have arisen pursuant to the law of either Canada or the United States by reason of the contractual ‘proper law clause’ in the Bunker Supply Contract, is a maritime lien for the purposes of  aa1988115 /s15.html" class="autolink_findacts">s 15 of the  Admiralty Act . As noted by Allsop J (as the Chief Justice then was) in Elbe Shipping SA v The Ship “Global Peace” [2006] FCA 954; (2006) 154 FCR 439 (at [133]):
The text of  s 15  is important, indeed, controlling. It refers to “A proceeding on a maritime lien”. That is to be distinguished from  ss 16  to  19  which refer to maritime claims which are defined, through s 4, as various types of claims.  Section 15  does not say “a claim to or for a maritime lien”. It says “a proceeding on a maritime lien”. True it is that there must be room at this level of decision-making, as to whether the court has authority to entertain the in rem action, for the court to work on the legitimate assertion of the plaintiff. As I earlier said, one does not undertake the task at the jurisdictional level of deciding whether the lien exists. That degree of permissible assertion comes from the use of the word “proceeding”, which contemplates justiciable contested assertions. The importance of the phrase “on a maritime lien” is that it requires the proceeding to be on a maritime lien of a character recognised by Australian law, including Australian rules of private international law. That question, whether what is asserted in the proceeding is recognised in Australian law as a maritime lien, is a part of deciding whether there is “a proceeding on a maritime lien”, and so is part of deciding whether there is authority to commence an in rem action under s 15.
(emphasis added)
  1. Reiter Petroleum needs, therefore, to establish that the proceeding comes within the definition of a ‘proceeding ... on a maritime lien of a character recognised by Australian law, including Australian rules of private international law’.
  2. As noted above, it is common ground that under Australian law a maritime lien does not arise from the supply of necessaries to a ship, including bunkers: see Shell Oil Company v The Ship "Lastrigoni" [1974] HCA 27; (1974) 131 CLR 1. In that case Menzies J also stressed that (at [6]):
[p]roceedings in Admiralty are intended to facilitate the enforcement of liabilities, not to allow pressure to be put upon a person who is himself under no liability in respect of the liabilities of others.
  1. It follows that the only question for consideration is whether Australian rules of private international law would recognise a maritime lien in the circumstances of this case.
  2. When considering that topic, it is necessary to examine the effect of the decision of the Privy Council in Halcyon Isle in Australia. A majority of the Privy Council in Halcyon Isle advised that because the nature of a maritime lien under Singapore/English law was procedural or remedial, it was therefore governed by the law of the jurisdiction in which the proceeding is brought, the lex fori. On that basis, the majority of the Privy Council declined to recognise a maritime lien asserted by a ship repairer under a contract governed by the law of the United States, even though such a lien would have been recognised under United States law. Halcyon Isle, therefore, stands for the proposition that questions of the existence of an asserted maritime lien are to be determined in accordance with the law of the forum. This has been accepted by this Court as being the state of Australian law: Morlines Maritime Agency Ltd & Ors v Ship "Skulptor Vuchetich" [1997] FCA 432 per Sheppard J.
  3. The Owner argues that the choice of law rule laid down in Halcyon Isle, and applied in Australia, is sufficient to determine the question of whether Reiter Petroleum has the right to proceed in rem on a maritime lien. As the law of the forum is to apply, there is no recognisable maritime lien under Australian law and this Court has no jurisdiction under  s 15. 
  4. The Owner acknowledges that the decision of the majority in Halcyon Isle, and its adoption in Australia, has been the subject of significant criticism, and notes the unusual circumstance of a strong dissenting judgment by the minority. The criticism of the majority decision has escalated since the reformulation of the distinction between procedural and substantive matters by the High Court in John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503: see Davies M and Lewin K, “Foreign maritime liens: should they be recognised in Australian Courts?” (2002) 76 ALJ 775; Tetley W, “Maritime Liens in the Conflict of Laws” in Nafziger JAR and Symeonides SC (eds), Law and Justice in a Multistate World: Essays in Honor of Arthur T. von Mehren (Transnational Publishers Inc, 2002) at pp 439-457; Rares S, “Maritime liens, renvoi and conflicts of law: the far from Halcyon Isle” [2014] Lloyd's Maritime and Commercial Law Quarterly 183. It is implicit in the Owner’s submissions that an Australian court may not be bound by the majority decision in Halcyon Isle, nor bound by Skulptor Vuchetich. Nonetheless, the Owner contends that there is no compelling reason in this case for a departure from Halcyon Isle, and that the Court should be wary of departing from the approach taken by the majority of the Privy Council and by Sheppard J in Skulptor Vuchetich.
  5. The Owner goes further to contend that on a proper application of established choice of law rules, Reiter Petroleum has not established on the balance of probabilities that a maritime lien, within the meaning of that term in  s 15  of the  Admiralty Act , arises in the circumstances of this case.
  6. The Owner suggests that an Australian court, faced with circumstances in which there is no applicable choice of law rule, should apply an existing choice rule which is appropriate in the circumstances of the particular case: Union Shipping of New Zealand Ltd v Morgan [2002] NSWCA 124; (2002) 54 NSWLR 690; Davies (ed) et el Nygh’s Conflict of Laws in Australia (2014) (at [14.21]) where the authors say (footnotes omitted):
If one follows the analytical approach one must distinguish between two types of situation. The first situation occurs where there is no choice-of-law rule clearly applicable, as happened in Re Korvine’s Trust. In that case the court must find the nearest choice-of-law rule and try to fit the relevant dispositive rule into the one rather than the other. An example of this is the decision of the New South Wales Court of Appeal in Union Shipping of New Zealand Ltd v Morgan where the issue was whether, with regard to a tort occurring wholly on board a New Zealand flagged vessel in Port Kembla harbour, the owner’s liability was to be determined by the law of the flag (which would be the applicable law had the incident occurred on the high seas) or the law of New South Wales as the law of the ‘territory’ or ‘territorial water’ in which the vessel was situated when the injury occurred. The latter solution was preferred.
  1. A difficulty recognised by Davies M et el “Foreign maritime liens: should they be recognised in Australian Courts?” (at 780) is that maritime liens can arise in a variety of contexts. For example, a maritime lien arising from damage done by a ship may well be tortious in nature, whereas a maritime lien arising in respect of a crewman’s wages is likely to be contractual. Accordingly, the Owner argues that it is therefore logical not to specify a choice of law rule that would apply to every maritime lien, but rather, to consider each on a case by case basis depending on the nature of the lien asserted. This, the Owner argues, is consistent with the approach advanced by the minority in Halcyon Isle (Lord Salmon and Lord Scarman). It was not disputed in Halcyon Isle that the shipowner was contractually obliged to pay the ship repairer as it had entered into a contract with the ship repairer and delivered the ship to the repairer’s yard in Brookland, New York. The question was expressed as being whether English law would or should recognise a maritime lien created by the lex loci contractus: Halcyon Isle (at 242 and 246). Their Lordships answered that question in the affirmative. Even if it is not made explicit, it is clear that their Lordships applied an orthodox choice of law procedure in the course of their reasoning. They classified the nature of the ship’s repairer’s claim, which in that case arose from a contract with the shipowner, and then applied the appropriate choice of law rule, namely that the lex loci contractus would determine the question of the relationship between the ship repairer and shipowner.
  2. The Owner argues that if the same choice of law procedure is followed in the present case, the Court could not conclude that either United States nor Canadian law would govern the question of the relationship between Reiter Petroleum and the Owner, as the factors that led the minority, Lord Salmon and Lord Scarman, to apply the lex loci contractus in Halcyon Isle do not presently apply.
  3. As already noted, the basis on which Reiter Petroleum contends that either United States or Canadian law is applicable is to be found in the proper law clause in the Bunker Supply Contract between Reiter Petroleum and EBC. As the Owner was not a party to that Bunker Supply Contract, the Owner argues that it would not be bound by the contract to pay for the bunkers and did not at any stage agree by contract or otherwise that either United States or Canadian law would govern its relationship with Reiter Petroleum. To the contrary, the Owner argues that the evidence establishes that on two occasions the Owner informed the only party that, to its knowledge, was to supply the bunkers that the responsibility to pay for the bunkers remained with EBC. In other words, the only evidence of the conduct of the Owner in relation to the supplier of the bunkers is that it expressly disavowed any contractual liability for the bunkers prior to supply.
  4. There are, perhaps, three other approaches to the question of the governing law which the Court might take. First, one might consider applying the lex situs of the ship to determine the status of the relationship between a bunker supplier and a non-contracting vessel. In this case, the bunkers were supplied to the Vessel at Istanbul. It might sensibly be argued that Turkish law should apply as the Owner (on EBC’s instructions) navigated the Vessel to Turkey and took on bunkers there. The Owner either knew, or ought to have known that the Vessel would be likely to be subject to Turkish law while in Turkish territory. It would not be surprising in those circumstances if Turkish law governed the relationship between the Owner and a supplier of bunkers.
  5. Another approach would be to regard a maritime lien as being more specifically a proprietary right in relation to a vessel. This would be consistent with the approach in Tisand Pty Ltd v The Owners of the Ship MV Cape Moreton (ex Freya) [2005] FCAFC 68; (2005) 143 FCR 43, which suggests that questions of title, property and assignments of ship should be determined according to the law of the ship’s registration, which in this case would be the law of Hong Kong.
  6. A further possibility may be to consider the issue in the context of the supply of goods in circumstances where there is no contractual claim, but rather, the claim is effectively in the nature of restitution. The choice of law rule for a restitution claim in those circumstances would suggest that the law of Turkey, being the country in which the unjust enrichment took place, would be the appropriate law by which to determine the existence or otherwise of a maritime lien.
  7. The above are simply possibilities, and in the end it is unnecessary to make a determinative finding on this point to resolve the jurisdictional application because Reiter Petroleum bears the onus of establishing jurisdiction. Its argument is that jurisdiction arises because this Court should apply either United States or Canadian law to the question of the existence of a maritime lien ‘as such law governs the Bunker Supply Contract’. In doing so, it contends, that Halcyon Isle should not be followed.

Consideration of the challenge to jurisdiction –  s 15  of the  Admiralty Act 

  1. In his paper ‘The law of maritime liens and conflict of laws and customs’ (2003) 9(6) JIML 545, Dr PK Mukherjee notes (at 547) that first and foremost, the maritime lien is a species of maritime claims enjoying priority ranking as against other claims which are not recognised as maritime liens. The author goes on to discuss the other characteristics of the maritime lien in the following terms (at 547-548) (footnotes omitted):
The second characteristic of the maritime lien is that it is a charge or encumbrance against maritime property and in that sense it is a proprietary interest similar to a maritime mortgage or hypothèque which is also a charge against the res. Maritime property has been jurisprudentially defined as basically comprising ship, cargo and freight. Generally speaking, only the particular res, can be encumbranced, and the property represents a security for the claim.

The third characteristic of the maritime lien is that it accrues from the moment the event which triggered the claim actually occurred. A maritime lien could arise in respect of a service rendered to, or damage done by, the maritime property in question. Thus, maritime liens can be said to be ex contractu (for example, the wages lien), or ex delicto (for example, the collision lien), or quasi ex contractu (for example, the salvage lien).

Perhaps the most unique attribute of the maritime lien is that having accrued, it travels with the res secretively and unconditionally. In other words, it is attached to the res and is not affected by change of possession or ownership. It does not require any form of notice or registration to subsist. Since the maritime lien is a secret encumbrance which travels with the res unconditionally, it has often been described as ‘indelible’. In practice this is not entirely correct. There are usually time limitations imposed by statute or Convention within which the ship must be arrested or seized for the claim to subsist. In common law jurisdictions, a maritime lien can be extinguished by the application of the equitable doctrine of laches which requires a lien holder to exercise reasonable diligence in the execution of his lien, especially where third-party rights are involved. It is also an inchoate right, at least in terms of English law; that is to say, it is incomplete or, to be more precise, dormant, until it is crystallised by the commencement of an action in rem.

The inverse-order ranking of priorities between certain classes of maritime liens is another unique trait. The underlying rationale is that it is to the exertion of the claimant later in time that the res is preserved for the benefit of one whose claim accrued earlier. Therefore, the last in time is first in right. This is often referred to as the ‘beneficial service’ theory and is typical of salvage liens, whether inter se or vis-à-vis other classes of maritime liens. The principle of inverse order ranking is also sometimes rationalised by the so-called ‘proprietary interest’ theory which deems a prior lienholder to be, in a sense, a part-owner, with the attendant responsibility of protecting his interest against the risk of accrual of subsequent liens by exercising his right in a timely manner.

Despite the fact that by and large, all of the abovementioned characteristics are universally recognised, substantial differences continue to remain in the way maritime claims are treated under various legal systems.
  1. Dealing with contractual claims, Dr Mukherjee says (at 550) (footnotes omitted):
Where there is a conflict or choice of law situation with regard to a claim in contract, there are basically four options that come into play. In the first instance it is the express choice of the parties to the contract. In commercial maritime contracts such as charterparties, bills of lading, mortgages and ship sale contracts, usually the law to be applied in the case of a dispute and the place of arbitration or litigation is expressly provided for in the contract itself in a typical ‘choice of law’ clause. Secondly, in the absence of an express stipulation as to choice of law, the intention of the parties may be implied from the contract. The third option is application of the law of the flag state if nothing is stated in the contract. In The Johann Friedrich it was held in connection with the merits of a claim for crew wages that the law of the flag state applied. The fourth option is the application of the lex loci contractus, that is, the law of the place where the contract was entered into. In The Milford it was held by Dr. Lushington that the employment contract of a Master was to be construed according to the lex loci contractus. It was coincidental that the place where the contract was executed was the flag state. The application of lex loci contractus seems to be the general rule where there is no express provision regarding choice of law in the contract. However, this approach has its inherent flaws. It does not, for example, take into account the place of performance of the contract, the place of payment, or the national or residential status of the parties. It is possible that the place where the contract was entered into was perchance and not at all so intended.

There is indeed a fifth approach in relation to claims in contract characterised by the ‘closest and most real connection’ doctrine, that is, application of the law of the jurisdiction with which the dispute is most closely connected. It is notable that in the context of claims in tort, there is a similar principle expressed by the phrase ‘most significant relationship’ which was used by Lord Denning MR in the Court of Appeal decision in Boys v Chaplin.
  1. From pages 550 to 554, the author joins the chorus of critics of the majority reasoning in Halcyon Isle and suggests that it is quite inconsistent with English precedent including: The Bold Buccleugh; The Milford (1858) Swab 362; The Colorado [1923] P 102; Todd Shipyards Corporation v The Ship "Ioannis Daskalelis" [1974] 1 Lloyd's Rep 174; Marlex Petroleum Inc v The Ship Har Rai [1987] 1 SCR 57. It is unnecessary at present to examine closely the basis of the author’s criticism of the decision as that approach is reflected in further analysis of a number of other sources below. I propose now to look more closely at the decision itself.
  2. Argument in Halcyon Isle was heard over four days in February 1980, with judgment being delivered in June of 1980. Lord Diplock delivered the judgment of the majority, which was constituted by Lord Diplock, Lord Elwyn-Jones and Lord Lane. The appellant mortgagees were an English bank holding a mortgage on the ship Halcyon Isle, which was registered in London. The mortgage was dated 1973 and registered in 1974. Todd Shipyards (‘the necessaries men’) were ship repairers carrying on business in New York. They executed repairs to the Halcyon Isle at their Brookland yard in March 1974. Under United States law, a ship repairer was entitled to a maritime lien for the price of repairs done to a ship. The Halcyon Isle was arrested in Singapore on 5 September 1974 in an action in rem brought in the High Court of Singapore by the mortgagees. On 6 March 1975, the Halcyon Isle was sold by order of the court for a sum insufficient to satisfy in full the claims of all the creditors of ship’s owners. The question of law raised by the appeal was whether in the distribution of the proceeds of sale the claim of the mortgagee should have taken priority over the claim of the necessaries men or vice versa.
  3. Lord Diplock noted (at 229) that although the admiralty jurisdiction of the High Court of Singapore was statutory, the order of priorities and the distribution of the proceeds of sale of a ship in an action in rem or in a limitation action was not. Lord Diplock said that: ‘[i]t is a matter of practice and of procedure of that court in the exercise of its admiralty jurisdiction’ (emphasis added). Lord Diplock noted (at 235):
Although in the English cases involving claims to maritime liens, which extend over a period of a century and a half, there is no apparent recognition in the judgments that any hidden problems of conflict of laws might be involved, the English Courts of Admiralty have consistently applied English rules as to what classes of events give rise to maritime liens wherever those events may have occurred. Not one single case has been drawn to their Lordships’ attention in which it has been treated as relevant that a transaction or event did or did not give rise to a maritime lien under the law of the country where the transaction or event took place; even though the judges of the Court of Admiralty were fully aware that under the law of many European countries claims falling outside the six classes recognised by English law were treated by those countries as giving rise to maritime liens. Claims for the supply of necessaries provided the most widespread example of foreign recognition of the maritime lien; but, under French law in particular, a wide variety of other maritime claims were treated as giving rise to privileges, i.e. maritime liens.
  1. His Lordship continued (at 236-237):
In coming to the conclusion in the instant case that, because it would have given rise to a maritime lien under its lex causae (United States law) to which effect would be given by an American court applying United States law as the lex fori, the necessaries men’s claim was therefore entitled to the same priority over mortgages as maritime liens as a class enjoy over mortgages under the law of Singapore as the lex fori, the Court of Appeal were greatly influenced by the decision of the Supreme Court of Canada in The Ioannis Daskalelis [1974] 1 Lloyd’s Rep. 174 that under Canadian law, which in admiralty matters is derived from English law, American necessaries men took priority over mortgagees of a Greek ship. There had been a previous decision of the Supreme Court of Canada in 1926, The Strandhill v Walter W. Hodder Co. Inc. [1926] 4 D.L.R. 801, in which it had been held that American necessaries men could proceed to enforce their claim by an action in rem against the ship notwithstanding a subsequent change in ownership; but this earlier decision expressly left open the question whether priorities between competing claims would be determined by Canadian law. A subsequent decision of the Canadian Court of Exchequer had determined that priorities were to be determined by Canadian law: Marquis v. The Astoria [1931] Ex.C.R. 195. In overruling The Astoria the Supreme Court of Canada in The Ioannis Daskalelis [1974] 1 Lloyd’s Rep. 174 relied strongly on the judgment of the English Court of Appeal in The Colorado [1923] P. 102, a case that was not concerned with a claim to a maritime lien at all. The only question in The Colorado was whether a hypothèque executed and registered in France over a French ship created a proprietary right in the ship which the court would recognise as similar enough in legal character to an English mortgage to justify according it the priority over the claim of necessaries men to which a mortgagee would be entitled in English law. This is not a problem that would have troubled the Court of Admiralty when it was manned by civil lawyers; they would have known all about the legal concept of hypothèque. An examination of the expert evidence of French law, which can be found in the report of the case in 16 Asp.M.L.C. 145-147, discloses that, contrary to what Scrutton L.J. [1923] P. 102, 109 said, a hypothèque does constitute a jus in rem or right of property in the ship that is created consensually to secure a debt; although, unlike an English mortgage, it gives no right to take possession of the res. There is nothing inchoate about it; it requires registration and is enforceable by judicial sale. It has different characteristics from a privilège in French law and, what is significant for present purposes, according to the French law of priorities, it ranks behind and not before the claims of necessaries men.
  1. His Lordship concluded (at 238) that the reasoning of the judgments he analysed was consistent only with the characterisation of a maritime lien in English law as involving rights that are procedural or remedial only. Accordingly, the question whether a particular class of claim gave rise to a maritime lien or not was one to be determined by English law as the lex fori.
  2. After expressing the view that the Supreme Court of Canada in Ioannis Daskalelis had misunderstood the judgments in The Colorado, Lord Diplock noted (at 238) that the Court of Appeal in Singapore had also relied on statements on the legal nature of a maritime lien in English law in the judgment of Scott LJ in The Tolten [1946] P 135. This gave rise to the conclusion (at 238-239) that, on close examination, the English authorities supported the principle that in the application of English rules of conflicts of laws, maritime claims were classified as giving rise to maritime liens which were enforceable as actions in rem in English courts where, and only where, the events on which the claim was founded would have given rise to a maritime lien in English law if those events had occurred within the territorial jurisdiction of the English court.
  3. As a consequence, the question of whether or not the necessaries men were entitled to priority over the mortgagees in the proceeds of sale of the Halcyon Isle depended on whether or not, if the repairs to the ship had been done in Singapore, the repairers would have been entitled under the law of Singapore to a maritime lien on the Halcyon Isle for the price of the repairs. The majority concluded (at 241) that the answer to that question was that they were not. The mortgagees were therefore not entitled to priority.
  4. In the strong dissenting judgment of Lord Salmon and Lord Scarman (at 242 et seq), their Lordships also noted the description by Scott LJ in The Tolten of the maritime lien being ‘one of the first principles of the law of the sea, and very far reaching in its effects’. Their Lordships continued, commenting on the majority judgment:
But, if the mortgagees are right, a maritime lien is in the modern law no more than a procedural remedy. So far from being far-reaching, its validity and effect will be subject to the domestic law of the forum in which it is sought to be enforced. If this be the law, we have travelled a great distance from the concept of a universal law of the sea. We have returned to the legal climate which in England prior to 1840 nourished the common law courts by excluding the Admiralty jurisdiction from “the body of the county,” i.e., the internal waters, ports and dockyards of the country. In the climate of a dominating domestic law the concepts and principles of the law of the sea wilt and die.
  1. Their Lordships, dissenting, agreed with the judgment of the Court of Appeal in Singapore, delivered by Wee Chong Jin CJ who had said:
Apart from authority, we are of the opinion that in principle the courts of this country ought to recognise the substantive right acquired under foreign law as a valid right and to give effect to that recognition when determining the question of priorities between the ship repairers and the mortgagees of the res.
  1. Their Lordships in dissent agreed that the appeal should be approached on the basis of that principle and attached great weight to the view of the Republic’s Court of Appeal as to what the law of Singapore ought to be in principle. After dealing with several cases, including The Ripon City [1897] P 226 and The Bold Buccleugh, their Lordships said (at 246-247):
The classic cases, from which these quotations have been taken, do not touch the question that arises in this appeal. The repairs were carried out by the ship-repairers in the [United States] under a contract with the then owners of the ship; this contract was governed by the lex loci contractus, as both parties to the contract must have known. This indubitably conferred a maritime lien on the ship-repairers in respect of their repairs to this ship: otherwise the ship-repairers would never have allowed the ship to leave their yard without payment. It is obvious also that these repairs must have added to the value of the ship and therefore to the value of the security of the appellant mortgagees. The law relating to the repair of ships in England under contracts governed by English law differs, however, from that in the United States of America. The repairers of a ship in England do not acquire any maritime lien over a ship which they have repaired; and accordingly they rarely allow a ship to leave their yard until they are paid, or have arranged other security for the repairs.

In England, the lex fori decides the priority of the rights which exist against a ship, e.g. the rights conferred by a maritime lien taking precedence over the rights of a mortgagee. The question is-does English law, in circumstances such as these, recognise the maritime lien created by the law of the [United States], i.e. the lex loci contractus where no such lien exists by its own internal law? In our view the balance of authorities, the comity of nations, private international law and natural justice all answer this question in the affirmative. If this be correct then English law (the lex fori) gives the maritime lien created by the lex loci contractus precedence over the mortgagees’ mortgage. If it were otherwise, injustice would prevail. The ship-repairers would be deprived of their maritime lien, valid as it appeared to be throughout the world, and without which they would obviously never have allowed the ship to sail away without paying a dollar for the important repairs upon which the ship-repairers had spent a great deal of time and money and from which the mortgagees obtained substantial advantages.

It is suggested in the majority judgment that the ship-repairers were well aware that the lex loci contractus, conferring upon them their maritime lien, was likely to be disregarded by overseas lex fori in its determination of priorities. We entirely disagree. The importance which the ship-repairers attached to their maritime lien is clearly shown by the ship repair contract which included the term: “Nothing herein shall be deemed to constitute a waiver of our maritime lien.” Moreover, in many countries the lex loci gives priority to maritime liens over mortgages. In our opinion, the ship-repairers clearly relied upon the fact that overseas the lex loci and the maritime lien which it created would both be respected, and the lien would be given the priority which it rightly received from the Court of Appeal in Singapore according to the law of Singapore and of England. Finally, on this aspect of the matter, it must be remembered that the nations have failed to introduce a uniform code governing maritime liens. The two international conventions relating to maritime liens, upon which the majority places great weight, cannot affect, in our view, the result of this appeal. Neither of them has been signed by Singapore; and neither of them ratified by the United Kingdom.
  1. The minority concluded as follows (at 250):
In our opinion the English Court of Appeal in The Colorado adopted the approach which is correct in principle. A maritime lien is a right of property given by way of security for a maritime claim. If the Admiralty court has, as in the present case, jurisdiction to entertain the claim, it will not disregard the lien. A maritime lien validly conferred by the lex loci is as much of the claim as is a mortgage similarly valid by the lex loci. Each is a limited right of property securing the claim. The lien travels with the claim, as does the mortgage: and the claim travels with the ship. It would be a denial of history and principle, in the present chaos of the law of the sea governing the recognition and priority of maritime liens and mortgages, to refuse the aid of private international law.
  1. Against the background of that difference of view, it is to be noted that the language of  s 15  of the  Admiralty Act  is broad. The list of items in  s 15(2)  is non-exclusive by use of the word ‘includes’. The  Admiralty Act  contemplates a range of liens being enforced which arise outside of the jurisdiction:  s 5(1)(b).   Section 6  of the Admiralty Act, which provides that the  Admiralty Act  does not have the effect of creating a new maritime lien, does not pose an impediment to the recognition of foreign maritime liens. The question presently remains open. This is also apparent from the report of the Australian Law Reform Commission, The Civil Admiralty Jurisdiction, Report No 33 (1986), where the Commission reported (at [123]) (footnotes omitted):
A separate issue that remains uncertain in Australia concerns maritime liens arising outside the forum. Where an act or event that gives rise to a maritime lien under the relevant foreign law would not have given rise to a maritime lien under Australian law, should an Australian court nonetheless treat it as a maritime lien and thereby acquire jurisdiction over the matter? This question, so far as it concerns the law of Singapore, was answered in the negative by the Privy Council in The Halcyon Isle. But the decision was by a bare majority and the position in other common law countries is different. In particular, the Canadian courts have answered the question in the opposite way, as have the courts of South Africa. As the majority and dissenting judgments in The Halcyon Isle reveal, the arguments supporting the alternative positions are fairly evenly balanced. On the one hand, the minority view is more consistent with general conflicts of law principles, assuming that maritime liens are properly classified as substantive rather than procedural rights for this purpose. On the other hand, the consequences of recognising a foreign maritime lien (for example for goods supplied to a ship) where the equivalent local claim does not give rise to a lien is to give the foreign claimant priority over the local one, even where the foreign law’s classification of the claim as a lien is out of line with any international consensus on the scope of liens. Indeed, a foreign lien might attach to a claim which was not a maritime claim as defined in the Brussels Arrest Convention of 1952, in which case to allow arrest on the lien would appear to contravene art 2 of that Convention. Although the dominant view expressed to the Commission favoured the Canadian and South African approach rather than that of the majority in The Halcyon Isle, the matter is best left to be resolved through further attempts at international unification (either through amendments to the Arrest Convention or through a further and more satisfactory Convention on Maritime Liens and Mortgages). In the absence of formal international agreement (and consistently with the recommendation in para 122 relating to liens generally) the question is best left to the courts to resolve, taking into account developments in other jurisdictions.
  1. In the discussion in Global Peace, Allsop J, (as the Chief Justice then was), also referred to the broad definition of liens in  s 15(2).  His Honour did not need to decide the question of whether foreign liens are enforceable, leaving that question for another day: see the discussion (at [130]-[133]).
  2. Halcyon Isle is not binding on this Court, although as a decision of the Privy Council it is accorded great respect and weight: Cole v Cunningham (1983) 81 FLR 158; 49 ALR 123 per Bowen CJ, Sheppard and Morling JJ (at 166). The court there noted that while a decision of the Privy Council is not binding on the Federal Court of Australia, it should be accorded substantial weight where there is no decision of the High Court or the Federal Court which runs counter to it. In the decision of Skulptor Vuchetich it appears that Sheppard J accepted a submission that the majority in Halcyon Isle had been followed by the Supreme Court of Canada in Marlex Petroleum Inc v The Ship Har Rai (1984) 4 D.L.R. (4th) 739, when in fact it appears that the court had followed the earlier Supreme Court of Canada decision in Ioannis Daskalelis. But most significantly, Skulptor Vuchetich was decided three years before the important distinction was made by the High Court in John Pfeiffer between procedural and substantive issues, and expressed a view which would not accord with the underlying reasoning of the majority in Halcyon Isle that a maritime lien was simply a procedural remedy.
  3. The process of reasoning in Halcyon Isle turns on the distinction made between substantive and procedural issues and remedies. In John Pfeiffer, the High Court (Gleeson CJ, Gaudron, McHugh, Gummow, and Hayne JJ) said (at [99]):
Two guiding principles should be seen as lying behind the need to distinguish between substantive and procedural issues. First, litigants who resort to a court to obtain relief must take the court as they find it. A plaintiff cannot ask that a tribunal which does not exist in the forum (but does in the place where a wrong was committed) should be established to deal, in the forum, with the claim that the plaintiff makes. Similarly, the plaintiff cannot ask that the courts of the forum adopt procedures or give remedies of a kind which their constituting statutes do not contemplate any more than the plaintiff can ask that the court apply any adjectival law other than the laws of the forum. Secondly, matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance, not with issues of procedure. Or to adopt the formulation put forward by Mason CJ in McKain [1991] HCA 56; (1991) 174 CLR 1 at 26-27, "rules which are directed to governing or regulating the mode or conduct of court proceedings" are procedural and all other provisions or rules are to be classified as substantive.
(emphasis added)
  1. The High Court then later said in Regie Nationale des Usines Renault SA v Zhang [2002] HCA 10; (2002) 210 CLR 491 (at [75]):
The submission by the Renault companies is that the reasoning and conclusion in Pfeiffer that the substantive law for the determination of rights and liabilities in respect of intra-Australian torts is the lex loci delicti should be extended to foreign torts, despite the absence of the significant factor of federal considerations, and that this should be without the addition of any "flexible exception". That submission should be accepted.
  1. Most commentary on the issue is to the effect that Halcyon Isle does not or should not apply in Australia. In the seminal article by Davies et el “Foreign maritime liens: should they be recognised in Australian Courts?”, the matter is put most succinctly. As the authors observed, a maritime lien is an unusually powerful form of security providing, as it does, the basis for an action in rem against a ship, even in circumstances where the ship has been sold to a bona fide purchase of value without notice of the lien. It takes priority over all other claims against the ship, including registered mortgages, whether prior or later in time. It arises automatically by operation of law and attaches to the ship from the moment the claim in question arises. According to the authors, Anglo-Australian admiralty law only recognises three types of maritime lien. Of course, as this case starkly illustrates, the law of the United States in contrast provides that almost all claims that fall within the federal admiralty jurisdiction are secured by a maritime lien. The authors argue for the position which is pressed on the Court in this matter by Reiter Petroleum, namely, that although Australian courts have followed Halcyon Isle (albeit that there have only been a few instances), the decision of the High Court in John Pfeiffer, dictates the opposite result, namely, that an Australian court should recognise and enforce a maritime lien arising under the foreign law governing the claim.
  2. After discussing the views of the majority and minority in Halcyon Isle, in Davies M et el “Foreign maritime liens: should they be recognised in Australian Courts?”, the authors note the ‘sea change in the High Court’s view of the procedure/substance distinction’ which came about as a result of the Court’s decision in John Pfeiffer. As the Owner has emphasised in the instant case, the facts in John Pfeiffer were very different. The dispute in John Pfeiffer concerned a conflict of laws between New South Wales, where the plaintiff was injured, and the Australian Capital Territory, where he had been employed, lived and commenced proceedings. The majority in the High Court (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ, with Kirby J and Callinan JJ delivering separate judgments, Kirby J agreeing with the majority and Callinan J dissenting, but concurring with upholding the appeal), held that the plaintiff’s claim, including the assessment of damages, should be governed by New South Wales law. In doing so, they abandoned the Phillips v Eyre (1870) LR 6 QB1 double actionability rule for choice of law in interstate tort cases, and replaced it with the rule that the law of the place of the wrong (lex loci dilicti) should be applied to torts committed in Australia where there is in existence an interstate element. That rule applies, however, only to matters of substance, rather than procedure. In order to address the question raised on the appeal, the Court confirmed that quantification of damages in all matters concerning assessment of damages should be regarded as substantive not procedural. This involved a departure from an earlier High Court decision, Stevens v Head [1993] HCA 19; (1992) 176 CLR 433, which had held that the actual quantification of damages was a procedural matter and, therefore, governed by the law of the Court’s jurisdiction, the lex fori. In reaching its conclusion the majority examined the underlying principle which has relevance to the present question, which was, as indicated above but is worthy of repetition, that:
... matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face appear to be concerned with issues of substance, not with issues of procedure. Or to adopt the formulation put forward by Mason CJ in McKain [1991] HCA 56; (1991) 174 CLR 1 at 26-27, “rules which are directed to governing or regulating the mode or conduct of court proceedings” are procedural and all other provisions or rules are to be classified as substantive.
  1. The same rationale was extended in the Zhang decision, to which I have referred above. In that case the majority (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) noted (at [75]) that:
the reasoning and conclusion in Pfeiffer that the substantive law for the determination of rights and liabilities in respect of intra-Australian torts is the lex loci dilicti should be extended to foreign torts.
  1. However, the majority did note (at [76]) that this was to be subject to a caveat that ‘special considerations apply to maritime torts ...’ (my emphasis), which should be reserved for further consideration as the occasion arises. Another caveat observed (at [76]) was whether the John Pfeiffer decision that all questions about the kinds of damage should be treated as substantive should be applied in cases of foreign tort.
  2. These qualifications do not, in my view, colour the question presently arising, namely, whether a claim based on a maritime lien is a procedural or substantive claim. Taking John Pfeiffer literally, and even if it be the case that the caveats expressed in Zhang do not apply at least to the present case, it would have the result that the minority in Halcyon Isle were correct in concluding that a claim pursuant to a maritime lien recognised under foreign law is a substantive claim, not a procedural claim. That is because, in the words of the High Court in John Pfeiffer (at [99]), it is a claim as to the existence, extent or enforceability of the rights or duties of the parties, not merely directed to governing or regulating the mode or conduct of court proceedings.
  3. The inherently international nature of maritime activity supports the desirability, where possible, to have rules and laws which are reasonably harmonious. But as Professor William Tetley QC observes in his essay ‘Maritime Liens in the Conflict of Laws’ (cited above), Halcyon Isle has had a far reaching effect on judicial thinking outside the United Kingdom, particularly in some of the countries of the Commonwealth and in some former British colonies where English admiralty law still prevails. Professor Tetley refers to the decision of Transol Bunker BV v MV Andrico Unity (1989) (4) SA 325 in South Africa and the Cyprus Supreme Court in Hassanein v The Ship Hellenic Island [1904] HCA 17; [1989] 1 CLR 406. The latter was a claim for bunkers supplied to a vessel in Egypt, which claim enjoyed maritime lien status there under national law. It was held, however, that it could not be recognised in preference to the claim of the Singapore registered first preferred mortgage against the Singapore ship. That was because Cyprus imported English admiralty law under the Cypriot Courts of Justice Act 1960. Similarly, the New Zealand Court of Appeal followed Halcyon Isle in The Ship Betty Ott v General Bills Ltd [1992] 1 NZLR 655, but this was at a time when New Zealand was bound to follow the Privy Council. As has already been noted, Tetley points to the authority in Australia, Skulptor Vuchetich. Professor Tolken also cites Singapore and Malaysian judgments which have referred with apparent approval to Halcyon Isle decision. Of some significance also is the fact that the People’s Republic of China in its Maritime Code 1993, Art 272, follows the lex fori principle enunciated in Halcyon Isle.
  4. In his extra curial Dethridge Memorial Address at the 40th Annual MLAANZ conference in 2013, Justice Rares also queried whether Halcyon Isle should be reconsidered in Australia. His Honour cited Professor David Jackson in Enforcement of Maritime Claims (4th ed, Informa, 2005), J Fawcett and J Curruthers in Cheshire, North and Fawcett: Private International Law (14th ed, Oxford University Press, 2008), Professor Sarah Derrington and Mr James Turner QC in The Law and Practice of Admiralty Matters (Oxford University Press, 2007), the latest editors of Dicey, Morris and Collins in The Conflict of Laws and, of course, the essay of Professor William Tetley QC, to whom I have referred. His Honour also referred to the consideration by the authors in Nygh’s Conflict of Laws in Australia (at [16.43]), and as his Honour notes, it is difficult to find any leading text which supports the majority ratio decidendi in Halcyon Isle.
  5. Justice Rares also referred to the analysis by Sheppard J in Skulptor Vuchetich. Along with the submissions made by Reiter Petroleum in this case, Rares J considered that his Honour may have inadvertently omitted the word ‘not’ before ‘followed’ when referring to the more recent Canadian case of Har Rai because that court had followed the earlier Supreme Court decision as it was bound to do. Sheppard J was mindful of, and noted the criticisms of the majority reasoning in Halcyon Isle, but preferred it. Of course the decision in John Pfeiffer post-dates Skulptor Vuchetich, which is the only Australian authority to closely look at this question.
  6. Even viewing the topic historically, it seems clear that a maritime lien is more than a procedural or remedial right: see The Goulandris [1927] PD 182 per Bateson J and The Tolten. In The Tolten Scott LJ described the security of the maritime lien as something that was a ‘vested right of property’ (at 145) and as conferring ‘a true charge on the ship and freight of a proprietary kind’ (at 150). Scott LJ expressly described the maritime lien as consisting ‘in the substantive right of putting into operation the admiralty court’s executive function of arresting and selling [a] ship ...’ (at 145).
  7. Notwithstanding the majority view of the Privy Council in Halcyon Isle, there is much to be said for Reiter Petroleum’s contention that the nature of a maritime lien is necessarily substantive. It is an inchoate right which attaches to the vessel and travels with the vessel independent of changes in ownership: The Bold Buccleugh (at 890-891); The Tolten (at 150); The Royal Arch (1857) 166 ER 1131; The Father Thomas [1979] 2 Lloyd’s Rep 364; Thomas DR, Maritime Liens (Stevens & Sons Ltd, 1980) at p 40. The substantive character of a maritime lien is consistent with the rejection by the Full Court of this Court of the approach taken in the Republic of India v India Steamship Co (The Indian Grace) (No 2) [1997] UKHL 40; [1998] AC 878. That discussion appears in Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45 per Allsop J (as the Chief Justice then was), (Finn and Finkelstein JJ agreeing) (at [99]-[129]).
  8. The discussion in Comandate Marine Corp by Allsop J, (as the Chief Justice then was), also leads to the conclusion that the characteristic of the features of a maritime lien are substantive. His Honour there said (in [112] and [117]):
    1. Actions in rem under Pt III can be based on maritime liens, proprietary maritime claims and general maritime claims. The phrases “proprietary maritime claim”, “general maritime claim” and “maritime claim” are defined in s 4 of the  Admiralty Act . There is no definition of a maritime lien in the  Admiralty Act . It is a creature of maritime law and is generally described by reference to cases such as The Bold Buccleugh 13 ER at 890-91, as a non-possessory claim or privilege upon a ship carried into effect by legal process by in rem action. It is inchoate from the time of the events giving rise to it, attaching to the ship, travelling with the ship into anyone’s possession (even a bona fide purchaser for value without notice, except a purchaser at an Admiralty Court sale) and perfected by legal process relating back to first attachment. See also Johnson v Black (The Two Ellens) (1872) LR 4 PC 161 at 169; The Ripon City [1897] P 226 at 242; The Tolten [1946] P 135 at 150; and The Tervaete [1922] P 259 at 273; and Thomas DR, Maritime Liens (Stevens, 1980) at [10]-[13]. Under Bankers Trust International v Todd Shipyards Corp (The Halcyon Isle) [1981] AC 221 maritime liens are characterised as procedural. Some legal systems view the matter differently.
...
  1. Lord Steyn simply set maritime liens to one side. He did not deal with The Monica S [1968] P 741 and the statutory action in rem continuing against the ship after a sale to a new owner. He denied, however, the legitimacy of treating judgments in rem and in personam as separate. So to find was contrary to established authority for over a century. Lord Steyn, wrongly, as Young J pointed out in The Irina Zharkikh [2001] 2 NZLR 801, said that all the cases about non-merger of in personam and in rem judgments were lien cases. They were not. The Cella (1888) 13 PD 82 and The Rena K [1979] QB at 405-406 involved a statutory right of action in rem. With respect, the character of the statutory action cannot be assessed by putting the maritime lien to one side. The action in rem is the essential procedural perfection of the lien which attaches from the time of the very acts which give rise to it, in circumstances where the person liable on any claim, eg salvage or bottomry, might not be the current owner.
  2. In my view, the minority view in Halcyon Isle should or indeed must be preferred in Australia as it accords with the substantive nature of a maritime lien as identified by the High Court of Australia in John Pfeiffer. The consequence is that a lien will operate independently of the fortuitous choice of venue at which a ship is arrested.
  3. For this conclusion it follows that I am satisfied on the pleaded case under  s 15  of the  Admiralty Act  that this is a proceeding on a maritime lien, and therefore jurisdiction has been conferred on this Court by that provision.

Jurisdiction –  s 17 

  1. In relation to the jurisdictional challenge under  s 17  (on which there was substantially less focus), in essence, as I understand it, the Owner raised similar points to those arising under the summary judgment application. The Owner contends that Reiter Petroleum cannot satisfy the Court that the Owner is a ‘relevant person’, as defined in s 3 of the  Admiralty Act , as there is no evidence on which it can be argued that the Owner is putatively liable on the alleged contract. It could not be liable in personam.
  2. I would accept Reiter Petroleum’s submission that the pleaded claim, in particular [20] of the statement of claim, asserts a general maritime claim within the meaning of  s 4(3)(m)  of the  Admiralty Act  against the relevant person and owner. In considering jurisdiction, one considers the facts pleaded on the assumption that the relevant person ‘would be liable’: see Iran Amanat (at [18]) and Ship MV Cape Moreton (at [55]). The issues which arise on jurisdiction are not relevantly distinguishable from those considered by the High Court in Iran Amanat where Gleeson CJ, McHugh, Gummow, Kirby and Hayne JJ said (at [21]) (footnotes omitted):
Counsel for the appellants sought to distinguish The “St Elefterio”. He argued that, in considering whether the appellants were relevant persons for the purpose of  s 19 , the question whether the owners of the vessels to which fuel was supplied were liable to pay for the fuel stood in a different category from any other issue of fact or law going to the merits of the respondent's claim. The circumstance that, in the present case, unlike The “St Elefterio”, there were no such other issues was accidental. That was how the jurisdictional issue came to be identical with the ultimate issue in the case, but, even so, it was argued, that issue had to be determined once a challenge to jurisdiction was made. The problem with such an argument is to identify a logical basis, consistent with the meaning of the definition of relevant person, for treating one aspect of a dispute as to potential liability in a proceeding commenced as an action in personam differently from another. In The “St Elefterio”, for example, an attempt was made, unsuccessfully, to distinguish between issues of fact and issues of law. In the present case, the appellants dispute the allegation, made in the writ, that the bunker fuel was supplied at their request. The issue thus presented, as examined by Tamberlin J, raised questions of fact and law. On any view, however, it was an aspect of the nature of the respondent's claim that the fuel was ordered by or on behalf of the appellants, their servants or agents, and that the appellants are persons who would be liable on the claim in a proceeding commenced as an action in personam. It is not apparent why a dispute as to whether the appellants were parties to the contracts for the supply of fuel, involving questions of actual or apparent authority, and evidence as to the conduct of those who arranged the supplies, is in a different category from a dispute, (if there were a dispute), as to whether any fuel was in fact supplied, or any other dispute concerning the alleged liability of the appellants to pay for the fuel.
  1. As I noted at the outset, the submissions of the Owner are directed to the merits rather than jurisdiction and are, in my assessment, substantially similar to the summary judgment submissions on this point.

THE SUMMARY JUDGMENT CLAIMS

Summary judgment on the claim under  s 15  of the  Admiralty Act 

  1. In relation to the  s 15  claim, this argument for summary judgment is advanced by the Owner as an alternative to the jurisdictional argument.
  2. The claim for Reiter Petroleum is that it is entitled to a maritime lien under United States law, and in particular under § 31342 of the CIMLA, because cl 7(e) of the Terms and Conditions, which is said to be incorporated into the alleged Bunker Supply Contract evidenced by the Amended Confirmation, provides for a maritime lien under the laws of the United States and the State of Florida.
  3. It is common ground, for the purposes of the current argument, that under Canadian law (which is identified as being the proper law of the alleged Bunker Supply Contract), the United States choice of law clause at cl 7(e) of the Terms and Conditions is enforceable. Thus, it is argued by the Owner that there is no scope for the operation of substantive Canadian maritime law to determine the existence of a maritime lien.
  4. As to United States law, however, the Owner relies upon affidavit evidence of Dr Maass, sworn on 30 March 2015, which evidence, it says, is largely uncontested. Reiter Petroleum relies upon affidavits of Ms Rodon, sworn on 16 March 2015 (Roden No 1) and 10 April 2015 (Roden No 2).
  5. The evidence of Dr Maass is to the effect that United States law to be applied to the question of the existence of the maritime lien is the federal law of the United States that a federal court sitting in the Eleventh Circuit would apply. Dr Maass describes the United States federal court organisation and hierarchy. The Owner submits that on the available evidence as to United States law, there is no reasonable prospect that a court could find that a maritime lien arises in the circumstances of this case as:
(a) the CIMLA does not apply to circumstances which have no connection whatsoever with the United States; and alternatively,
(b) if the CIMLA does apply, the notice given by Reiter Petroleum to the supplier of the bunkers in this case is sufficient to rebut the presumption that arises under United States law that bunkers supplied to a ship are to the credit of the vessel.
  1. The Owner relies upon the decision of the Eleventh Circuit in Trinidad Foundry, which is said to be binding on a court in Florida exercising maritime jurisdiction, and which is to the effect that the CIMLA ‘does not provide for a maritime lien for goods and services supplied by a foreign plaintiff to foreign flag vessels in foreign ports’ (emphasis added): Dr Maass affidavit (at [49]).
  2. It is also argued in support of the Owner’s application that the decisions in Trans-Tec and Triton on which Reiter Petroleum relies are not binding on a court in the Eleventh Circuit. Furthermore, it is argued that in each of those cases, there was some connection to the United States and, accordingly, neither of those cases accords with the facts in the present case or in those in Trinidad Foundry.
  3. The Owner also argues that the approach of the Eleventh Circuit to the interpretation of the CIMLA accords with the approach of the United States Supreme Court as to the interpretation of The Jones Act 26 U.S.C. § 30104 (2010) in Lauritzen v Larsen, [1953] USSC 62; 345 U.S. 571.
  4. The Owner contends that there was no connection with the United States at all in the case at issue. The Vessel was flagged in Hong Kong, Reiter Petroleum is incorporated and operates from Canada, the Owner is incorporated in Hong Kong, the alleged contract was negotiated between Reiter Petroleum and EBC which is an Egyptian company, the bunkers were supplied by a Turkish supplier to the Vessel in Turkey, and the Vessel was arrested in Australia. This is a typically cosmopolitan blend. On the approach set out in Trinidad Foundry, the Owner contends that these are not circumstances in which a court in the Eleventh Circuit would apply the provisions of the CIMLA to determine whether a maritime lien existed.
  5. Alternatively, it is argued that even if United States law governs the existence of a maritime lien, the evidence displaces the statutory presumption arising under the CIMLA that a charterer has the owner’s authority to bind the vessel with a maritime lien and, therefore, the plaintiff is not entitled to a maritime lien under the CIMLA. This is because § 31341 of the CIMLA gives a supplier of necessaries the benefit of a rebuttable statutory presumption that a charterer ordering necessaries has the authority to bind the vessel with a maritime lien if payment is not made for those necessaries. As described above, that presumption is rebuttable on evidence that the supplier of necessaries actually knew that the charterer lacked authority.
  6. In the case of bunkers, the Owner says that it is common practice for a charterer to engage a broker to supply bunkers and, in turn, for the broker to engage a physical supplier to supply the bunkers to the vessel. The evidence of Dr Maass, which the Owner says is unchallenged, is that the effect of United States law is that when notice is given to the physical supplier of bunkers, the only party in the supply chain the shipowner is aware of, knowledge ought to be imputed to the broker who agreed to supply the bunkers under the original supply contract with the charterers because the legislation was not designed to penalise shipowners for the failure of the physical supplier to relay the notice to the broker: Hampton Bermuda Ltd. Such a situation may be contrasted with one where the owner or the vessel’s crew knew the identity of the broker prior to the stem, but failed to give notice to that party before the bunkers were delivered to the vessel: Gulf Oil Trading.
  7. The Owner says the affidavit evidence, which it says is not contested, clearly establishes that the Owner, through the master of the Vessel, made Socar aware of EBC’s lack of authority on two occasions prior to the delivery of the bunkers: first, at some point between 21 November 2013; and 2 December 2013 and, second, on 6 December 2013. It was also undisputed that Socar was the only party of whom the Owner was aware in the supply chain.
  8. In circumstances where the Owner did not know the identity of Reiter Petroleum and gave ample prior notice to the physical supplier of the bunkers engaged on behalf of Reiter Petroleum, the notices given by the master of the Vessel are sufficient to rebut the statutory presumption of authority, according to Dr Maass. Accordingly, even if United States law applied, Reiter Petroleum would not be entitled to a maritime lien under United States law. The Owner contends that it follows that the evidence excludes the possibility that the fact essential to the success of Reiter Petroleum’s claim, namely, that Reiter Petroleum has a maritime lien under United States law, will be able to be established. Accordingly, the Owner argues that Reiter Petroleum has no prospect of succeeding on this aspect of its claim and judgment should be entered for the Vessel.
  9. Reiter Petroleum, however, argues that United States law under the Ninth Circuit Court of Appeal’s decision in Trans-Tec strongly supports the existence of the maritime lien for which it contends. It submits that the disagreement between the experts giving evidence as to United States law in relation to which Circuit’s decision reflects Unites States law is a matter for final hearing. Reiter Petroleum says that there should not be a ‘mini hearing’ on these issues without the experts consulting to produce a joint report and, if necessary, giving oral evidence. Similarly, it argues, that the factual dispute on whether the ‘no lien’ letter was in fact provided cannot be determined on this application. The Owner’s evidence, Reiter Petroleum argues, as to who received the letter is hearsay. Reiter Petroleum says that it never received notice that EBC was not authorised to bind the Owner of the Vessel.
  10. Further, Reiter Petroleum argues that there remains the alternative possibility that Canadian law may apply, and that the resolution of that issue should be left to the final hearing.
  11. Additionally, there is the further possibility that either the laws of Hong Kong or Turkey might apply. The issue has not yet been fully pleaded and neither party has had an opportunity to call any evidence on the existence of a maritime lien for necessaries in those countries. On each of those possibilities, Reiter Petroleum submits that the resolution of the applicable choice of law rule is a matter for final hearing, and should not be explored or resolved on a summary judgment application.
  12. I accept these submissions for Reiter Petroleum.

Summary judgment on the claim under  s 17  of the  Admiralty Act 

  1. In relation to the summary judgment application on the contractual claim under  s 17  of the  Admiralty Act , again, Reiter Petroleum argues that the application is premature in the circumstances of this case as no defence or reply has been filed, the issues of agency and ostensible authority are undeveloped, and no discovery has been given in respect of communications between the Owner and EBC regarding the bunker supply arrangements. The evidence on agency on this application is no more than an assertion by one of the Owner’s witnesses.
  2. Reiter Petroleum submits that it has an arguable claim based on the contractual documents, including cl 7(d) of the Terms and Conditions. The Owner has not demonstrated that the agency recorded in the 2 December 2013 confirmation that ‘all sales are on the credit of the vessel. Buyer is presumed to have authority to bind the vessel with the maritime lien’ does not create an enforceable contract against the Owner. Reiter Petroleum argues that these are triable issues for a final hearing on the separate contract claim, which has reasonable prospects of succeeding. On this point there may be a debate as to the onus, but it is fair to say that discovery on close of pleadings is yet to reveal, perhaps, potential claims of inquiry.
  3. The Owner argues that the submissions for Reiter Petroleum fail to take into account the principle that where on an application for summary judgment the moving party establishes a prima face case, the opposing party must respond by pointing to factual or evidentiary disputes that make a trial necessary: Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd [2008] FCAFC 60; (2008) 167 FCR 372 per Gordon J (at [127]) and Finkelstein J (at [22]).
  4. It is true that Reiter Petroleum has had the opportunity to put on responsive evidence by way of affidavits in response to the Owner’s application. It has not suggested otherwise. Nor has it pointed to particular evidence it would like to advance. But there has already been a substantial body of evidence accumulated. I would not expect such an application to become, in effect, a mini-trial.

Conclusion on summary judgment

  1. The parties have both made their arguments very clearly and effectively. I have endeavoured to reflect them in these reasons in order to acknowledge that they have been carefully considered, but it would be imprudent and indeed contrary to authority given my intended disposition of the application, to venture comments on the respective prospects of the parties at this stage. I am persuaded that there is still a refining of prospective arguments and evidence and martialling of additional evidence which, depending on its content, could affect the outcome of the proceeding. Reiter Petroleum has alluded to some such material.
  2. There is a deal of complexity surrounding the competing considerations and competing points of view expressed by the experts about the impact of United States and Canadian law, let alone the possibility of expert evidence regarding the law of Turkey or Hong Kong. At present there is no evidence on either of those possibilities. Given that pleadings have not been finalised and discovery not yet given, notwithstanding that the bar has been lowered in relation to a summary judgment applications pursuant to s 31A of the FCA, it does seem to me to be premature to shut out Reiter Petroleum and its claim. For those reasons, I do not consider it is appropriate to allow the Owner’s application for summary judgment in respect of either claim.

CONCLUSION

  1. Accordingly, the application must be dismissed. In the circumstances of this case, considering that it was entirely appropriate to bring the application, I think it is appropriate that costs be reserved.
I certify that the preceding one hundred forty-seven (147) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.


Associate:
Dated: 11 September 2015


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