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Comandate Marine Corp v Pan Australia Shipping Pty Ltd [ 2006] HCATrans 421  (14 August 2006)

Comandate Marine Corp v Pan Australia Shipping Pty Ltd [ 2006] HCATrans 421  (14 August 2006)

Last Updated: 23 August 2006

 [2006] HCATrans 421 

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S213 of 2006

B e t w e e n -

COMANDATE MARINE CORP

Applicant

and

PAN AUSTRALIA SHIPPING PTY LTD

Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 4 AUGUST 2006 AT 10.59 AM

Copyright in the High Court of Australia

MR A.W. STREET, SC: May it please the Court, I appear with my learned friend, MR D.A. McLURE, and my learned friend, MR J.P. LO SCHIAVO, for the applicant. (instructed by Norton White)

MR A.S. BELL: If it please the Court, I appear for the respondent. (instructed by Ebsworth & Ebsworth)

GUMMOW J: Yes, Mr Street.

MR STREET: If the Court pleases. Your Honours, in this case there are in essence seven points that we seek to make in relation to the error of law made by the court below in the construction of this grant of jurisdictional power in respect of surrogate arrest under section 19. The first point in summary that we would seek to develop is the failure to follow a longstanding authority of this Court as to the meaning of “owner” in the maritime context. That is the McIlwraith McEachern decision.

GUMMOW J: But this Act, as it were, was very carefully framed by a group of people presided over by Professor Crawford and we have to look at the Act.

MR STREET: Your Honour, our answers to that are threefold. The Law Reform Commission did not deal with McIlwraith McEachern in relation to a decision of this Court in legislation where, like the Admiralty Act, there was no definition of the term “owner”. The significance of the Merchant Shipping Act in that regard is that it is on all fours. It is surprising in the extreme that a provision which limits liability would be given a more liberal and broad construction than a provision such as section 19 of the Admiralty Act conferring a grant of jurisdictional power. That issue was not touched on in the Australian Law Reform Commission Report, nor was it touched on in the Law Reform Commission Report the significance of the absence of a definition of “owner” in the context of section 19. Further, the third point in relation to the Australian Law Reform Commission Report is it did not deal with the principles of Shin Kobe Maru in the application of section 19 and its construction in the absence of a definition.

Your Honours, can I go on to identify the second point that I would seek to make and that is that the court below adopted a construction that defeats the legislative purpose underlying surrogate ship arrest. The third point we would seek to develop is that the court below erroneously took into account one grant of jurisdictional power to read down the grant of another.

GUMMOW J: It was reading Part III as a whole.

MR STREET: No, your Honour, in our respectful submission, the approach that was adopted - - -

GUMMOW J: Should it not do that?

MR STREET: Your Honour, certain it is that the whole of the Act must be taken into account.

GUMMOW J: No, the whole of Part III, “Rights to proceed”.

MR STREET: It is appropriate to read the whole of the Act, but when the whole of the Act is read, your Honour, and one takes into account section 6, which itself distinguishes section 19 and this type of power – I am sorry, section 4(6). I am sorry, your Honours, I have actually jumped ahead too fast. It is section 3(6), in its own terms, if I can refer your Honours to it, distinguishes the grant of this jurisdictional power in respect of surrogate arrest from the other sections. So, your Honours, we say that it is erroneous, as the court below has clearly done, to read down the grant of jurisdictional power in respect of surrogate arrest by reference to another grant of jurisdictional power.

The fourth point that we seek to develop is this, that the court below has applied an erroneous canon of construction as to there being a distinct and exclusive meaning of the terms as to the jurisdictional nexus when it is patent that there is significant overlap of those terms, as is the fact that there is overlap of the provisions themselves within Part III that your Honour referred to.

The fifth point that we seek to develop, your Honours, is that the court below erroneously took into account a line of country based on materially different legislation in respect of jurisdictional criteria. That is the English line of country which your Honours are familiar with. The sixth ground is the failure to apply the principles in Shin Kobe Maru to the construction of section 19 and - - -

GUMMOW J: What are these principles?

MR STREET: As to not reading in a limitation that is not found in the provision itself. Here the effect of this construction is to read in a limitation as to the meaning of “owner” which creates a narrow and, in essence, confined construction of the undefined term. Your Honour, the seventh point was the point that I have already touched on in respect of the Australian Law Reform Commission.

Can I deal with now the first point in more detail? Your Honours, the McIlwraith McEachern decision is not to be so easily dismissed as in essence being a different problem under different legislation. This Admiralty Act itself in section 46 repealed that very legislation that addressed the same statute. It is, in our respectful submission, a decision of this Court giving, in the context of a statute that did not have a definition of “owner”, a broad and liberal meaning. In our respectful submission, it flies contrary to principle - - -

GUMMOW J: Do you say section 46 repealed the 1894 Act, did it?

MR STREET: Section 46, if I can refer your Honour - - -

GUMMOW J: We have not been given the text, you see.

MR STREET: It is reported to repeal, your Honour, I think sections 449 and 472 of the Imperial Act known as the Merchant Shipping Act, but the significance of it is this, that it is not an entirely unrelated and different piece of legislation. It is a piece of legislation that this Act itself addressed by repealing. So that is the first point.

The second point in relation to that aspect under this first heading is that in fact it is on all fours with the statute here in question because it contained no statutory definition of “owner” and it was a piece of legislation working a limitation of certain rights. It would be odd in the extreme that a more liberal construction would be given to a limitation statute than a statute granting jurisdictional power.

Your Honours, can I turn to the second point, and that is the underlying legislative purpose of section 19 of the Admiralty Act being defeated by the construction advanced by the court below which is tantamount to a narrow and confined legislative definition of the word “owner”. Your Honours, the legislative purpose of section 19 - - -

GUMMOW J: What do you say about paragraph 24 on page 41 of Mr Bell’s submissions, that reasoning which he adopts, I guess?

MR STREET: Page 41 is in essence my submissions. In essence what we are seeking to there raise, your Honour, was that there has been a trilogy of decisions in the Full Federal Court which in essence have confined the admiralty jurisdiction.

GUMMOW J: It is these words “belongs to”. What do you want to say about that? It does not say “belongs to”; it says “owner”, you see.

MR STREET: No, your Honour, but the concept of “belongs to” is found in section 8. If one goes to section 8, it is speaking of a demise charter. One has a definition of “government ship” which refers to “demised or sub-demised [ship], to a government” and uses that term.

Your Honours, in relation to that trilogy of decisions if I could just indicate, having referred to that paragraph, that “Cape Moreton” was a decision which in essence the Full Federal Court has confined the meaning back to a meaning which does not embrace of itself the registered owner. “Maria Luisa” was the decision in respect of which the Full Federal Court has confined the scope of penetrating the beneficial owner - - -

GUMMOW J: We refused leave in “Maria Luisa”, I think.

MR STREET: I understand that, your Honour, but this decision is a further constraint which in essence we say sterilises the grant of jurisdictional power in respect of surrogate ship arrest. Your Honour, can I expand upon the legislative purpose that I was seeking to develop. In that regard we respectfully submit that the legislative purpose of section 19, different to the earlier sections, was to facilitate enforcement of general maritime claims against a maritime enterprise that is operating more than one vessel and consistent with still meeting the necessary jurisdictional nexus to satisfy the procedural theory underlying the right to arrest.

That legislative purpose was intended to facilitate the enforcement through the exercise of the jurisdictional power to arrest in rem against assets of that business enterprise operating more than one ship. That legislative purpose reinforces a broad construction to be given to the jurisdictional provision and it is patently advanced by embracing within the undefined term “owner” a person who is for all other purposes in international maritime law regarded as the owner, namely, the demise charterer.

The demise charterer in that regard, your Honours, has an actual proprietary interest as identified in the decision of this Court. It is an interest which we say is akin to ownership for the purpose of the Admiralty Act. It is an interest which gives rise to all the incidents of ownership: the right to make physical use of the ship, the right to income derived from the use of the ship, the power of management of the ship and most materially in the present case, as your Honours will have seen, also a power impeding the ability to alienate the ship, and clause 22 of the bareboat charter which I hope your Honours can read appears on page 51 in that regard.

The Full Court’s decision fails to give effect to that legislative purpose. In the doing the work intended to be done by section 19, arrange for the enforcement of maritime claims, a maritime enterprise can defeat that legislative purpose on this construction simply by operating a maritime enterprise in respect of which all vessels are demise chartered. That would prevent enforcement against the other assets of that maritime enterprise.

An alternative means by which that purpose is now defeated is that the maritime enterprise can simply create a series of separately registered owned companies – because of “Maria Louisa” we cannot penetrate the shareholding – and by having a series of single companies owning separately vessels that enterprise can then, through a different vehicle, demise charter each of those separately owned vessels and utilise it in its maritime enterprise and the purpose of section 19 is defeated. In our respectful submission, that is a powerful reason why the demise charterer should be included within the meaning of “owner” in the context of section 19.

Your Honour, the third point that we seek to develop is that the term “owner” in section 19 is not to be read down by the grant of jurisdictional power in respect of section 18. That is, in our respectful submission, what effectively the court has done. It was a separate grant of power and should not have been utilised to read down the grant of power in respect of surrogate ship arrest which the Act itself in section 16 recognised as having a difference.

The next ground I seek to develop if I may – and if I could hand up to your Honours a copy of this – is the error in the court below of the assumption of no overlap in the language itself used within section 19. There is clearly, in our respectful submission, significant overlap to be found within the relationship terms that are used to satisfy a jurisdictional nexus. In our respectful submission, it cannot be the case that the criteria which the applicant here advances of being a demise charterer at the time the proceedings are commenced is an inadequate jurisdictional nexus. One can go back to section 18(b) to see clearly it can be sufficient.

To that extent what we say is it is not appropriate to approach the construction as one where there is no overlap of meaning between owner, charterer, possession and control in the context of section 19. Your Honours, more than that, it is also one where there is patently significant overlap between the provisions themselves within Part III. Could I hand up to your Honours a separate document? There is overlap between the provisions in Part III of a kind that I have here identified between the various provisions. The one section that is distinguished from 15 to 18 through section 4(6) is section 19, this grant of jurisdictional power which was intended to be useful in respect of surrogate ship arrest.

Your Honour, the fifth point we seek to make is this, that in essence what the court below has done is to adopt a line of country in respect of English legislation which is materially different. Your Honours, the English section that has been the subject of further enactment but is sufficiently identified on page 14 of the application book plainly uses different language in terms of the concept of beneficially owned shares not found in our statute. More than that, the Law Reform Commission expressly identified that this was language used in both the Arrest Convention and the English statute and eschewed utilising such language.

It would be odd in the extreme that one would find read in now words of limitation so as to confine the meaning of “owner” when clearly the intention one can glean from the Law Reform Commission was that it was intended to have a broad and liberal meaning for want of definition.

KIRBY J: In your reply you refer to the International Convention on Civil Liability for Oil Pollution, are there any other international conventions that throw light on the Australian legislation given that that is the primary focus of our attention? Is there any interpretation that you call in aid that would otherwise create a problem for our compliance with international treaties?

MR STREET: Your Honour, I think I have sought to identify the enforcement of a number of areas of international treaties permits enforcement in the context of “owner” being included, including “demise charterer” in other contexts, so I think I have made a reference to that in respect of the Navigation Act. The other context that is of inconsistency in this regard is the Shipping Registration Act which itself gives effect to an international convention and a “demise charterer” can be there registered as the owner.

Your Honours, the last point in terms of the six points which we sought to develop was that in essence it is not appropriate to read in words of limitation to adopt a narrow construction. This gives rise to a construction in respect of which the undefined term in essence is apparently a term which will have meaning only of a kind where there is a right, even if it is conditional, to alienate property. That, in our respectful submission, is contrary to the principles identified in Shin Kobe Maru.

Your Honour, the seventh point was the one I identified at the outset. In our respectful submission, the consequence of the Full Court’s decision is in essence to sterilise the significant grant of jurisdictional power in section 19. If the Court pleases.

GUMMOW J: Now, wait a minute, do not sit down. You have a summons, have you not?

MR STREET: We have, your Honours. In relation to the summons, that is a procedural matter. There is an amendment we seek in respect of the name of the respondent. I do make that application.

GUMMOW J: Is that opposed?

MR BELL: It is not opposed, your Honour.

GUMMOW J: The Court makes order 1 in the summons filed 31 July 2006 which has the effect of changing the identity of the respondent. We will take a short adjournment.

AT 11.17 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.22 AM:

GUMMOW J: We do not need to call on you, Mr Bell.

The issue in this application for special leave to appeal is whether the reasons and orders of the Full Court of the Federal Court of Australia in these proceedings are attended by sufficient doubt as to their correctness or otherwise to warrant the grant of special leave to appeal to this Court.

The central question concerns the meaning of the term “owner” in section 19(b) of the Admiralty Act 1988 (Cth) and whether it extends to a demise or bareboat charter of the vessel, Boomerang 1, involved in these proceedings. Judicial observations on that or related questions whether in this Court or in courts of higher authority overseas are only relevant insofar as they assist in the construction of the provisions of the Australian federal legislation. That legislation was enacted following a major inquiry by the Australian Law Reform Commission. It introduced some new concepts. It must be construed according to the language it uses and so as to achieve the objective as derived from that language.

Although the applicant has raised what appear to be a number of arguable points, we are not convinced that it has shown error in the interpretation referred by the Full Court of the Federal Court, specifically in the reasons of Justice Allsop with whom Justice Siopis agreed.

We are not convinced that an appeal, were special leave to be granted, would enjoy sufficient prospects of success to merit a grant of special leave. Accordingly special leave is refused with costs.

AT 11.24 AM THE MATTER WAS CONCLUDED