Case: Kent v SS Maria Luisa (No 2) [2003] FCAFC 93 ; (2003) 130 FCR 12
Outcome: discussed
In order to deal with these submissions I must consider the meaning of the term "the owner" in s 17 of the Admiralty Act . The meaning of the term "owner" was considered, for the purposes of s 19 , by the Full Court in Kent v SS Maria Luisa (No 2) [2003] FCAFC 93 ; (2003) 130 FCR 12 and, for the purposes of s 17 , in Tisand v MV Cape Moreton [2005] FCAFC 68 ; (2005) 143 FCR 43. Concerning that question, the majority (Tamberlin and Hely JJ) said in the Maria Luisa at [61]-[66]: 61 The word "owner" cannot be given any general description. But ordinarily the incidents of ownership of a chattel include the right to make physical use of the chattel, the right to the income from it, the power of management, and the right of alienation: ... . In the "Iron Shortland" ... Sheppard J quoted from the decision of the Singapore Court of Appeal ... that the term "owner" means any person who is vested with such ownership as to have the right to sell, dispose of or alienate the ship, and that a beneficial owner of the ship comes within that term ... . 62 The notion of "ownership" carries a connotation of dominance, ultimate control and of ultimate title against the whole world ... . ... 65 A helpful description of "ownership" is formulated by Jordan CJ in Gatwood v Alley ... where his Honour said in relation to a question as to ownership of a car: "A good title to property, in the sense of such ownership as the law allows, consists in having the legal right to exercise with respect to it all such rights, as against all such persons, as by law are capable of being exercised with respect to property of the class in question. A person who has possession of property but not ownership has, as a general rule, the same legal rights as the owner, save to the extent to which those rights are qualified as against the owner ... ." 66 Ownership, whether legal or equitable, therefore involves something greater than beneficial interest. Equitable ownership of property is commensurate with the right to relief in a Court of Equity ... . If a person has contractual rights in relation to a ship which, if performed will result in the person becoming the owner of the ship, then the person will be regarded as the equitable owner of the ship provided that specific performance of the contract would be decreed ... . 39 Their Honours then referred to the decision in the Maria Luisa and, at [97], continued: The Full Court decided The Maria Luisa in the context of the earlier decision of Sheppard J in The Iron Shortland that the word "owner" was not restricted to registered owner, but extended to include the "true" or "real" or "beneficial" owner. It was not necessary for the Full Court to decide the question before us, that is whether the phrase "the owner" necessarily included the registered owner. 40 After referring to various authorities their Honours observed at [119]-[120]: 119 As is clear ... notions of "property" and "ownership" are not amenable to crisp, comprehensive definition in the abstract. The context, here is the possession and enjoyment of, dominion over and power or right to dispose of, a chattel of a kind that is usually engaged in commercial enterprise. In that context, the word "ownership" or "owner" connotes the right or power to have and dispose of dominion, possession and enjoyment of the ship, subject of course to intervening interests ... . 120 This kind of dominion, exemplified or epitomised by the lawful power or right to dispose of the ship, may arise from the legal effect of dealing between the parties with a ship, under general law or statute. 41 The Court considered the legal consequences of registration, discussing the purposes thereof which include the protection of the title of the registered owner and the protection and preservation of priorities between security interests in the ship. The Court then turned to the question of choice of law. At [140] the Court concluded that the proper law, for the purpose of determining questions of jurisdiction, was the law of the forum (Australia), including its rules of private international law. Their Honours considered that in connection with questions concerning transfer of title to a chattel, those rules would normally lead to application of the lex situs of the chattel. However the Court identified difficulties in determining the situs of a merchant ship. At [146]-[147], their Honours said: 146 There seem to us to be powerful reasons for giving effect to the law of the country of register as the lex situs in relation to questions of title, property and assignment (subject, of course, to local statute and public policy). The chance location of a working merchant ship in a port within its range of sailing or on the high seas appears to introduce an element of arbitrariness to the legal analysis. This is especially so if, as is likely, the national register and registration laws of the port in question are directed to ships of that country. If a law of a country other than the country of registration is chosen to deal with the assignment of property in a ship, it is likely that there will be no statute dealing with registration that is made relevant. 147 The relevant choices appear to be the law of the forum, the law of the country of registry as the lex situs (and not merely when the ship is on the high seas), the law of the place of the ship within another country's territorial waters, (and on one reading of [certain decisions]) the law of the domicile of the registered owner or operator. 42 In any event, in the absence of any evidence as to foreign law, their Honours concluded that the question of choice of law was "academic". The Court acted upon the presumption that the relevant foreign law was the same as the law of the forum, Australia. Without necessarily conceding the correctness of the approach their Honours accepted that the lex situs (ie the law of the registration state) should be presumed to contain a statute in a form, mutatis mutandis, the same as the Shipping Registration Act 1981 (Cth). Section 45 of that Act provided: The owner of the ship or of a share in a ship has power, subject to this Act and to any rights and powers appearing in the Register to be vested in any other person, absolutely to dispose of the ship or share and to give effectual receipts in respect of the disposal. 43 At [161] the Honours continued: A power of that kind may well, in many circumstances, suffice to support the conclusion that the holder of such power was "the owner". It is a power which is the equivalent of the epitome of ownership. A party who has power absolutely to dispose of a chattel has the equivalent of the ultimate incident of ownership. The power derives from statute; it is not a "right" arising from a consensual transaction; but it is a power having equivalent effect. 44 At [163] their Honours observed: It is necessary, however, to assess the importance of this power ... by reference to the surrounding factual circumstances. 45 Relevantly, the registered owner had, in fact, sold the ship and received the sale price. The Court continued at [165]-[168]: 165 Under Australian law, and we would venture to suggest, the law of any other country, subject to any statute affecting the position, [the buyer] took full property in the ship. 166 On the assumption that the [Shipping Registration Act] applies, [the owner] had a power, given by statute, absolutely to dispose of the ship. In the circumstances that obtained, however, [the owner] could not, on any view, exercise that power lawfully or honestly without the consent of [the buyer]. It had transferred the ship, relinquished its rights in her and been paid in full for her. No circumstance could be shown for the honest or lawful exercise of the statutory power, without the consent of [the buyer]. 167 In these circumstances, the holding of the statutory power of absolute disposition was empty of real and practical meaning or significance. So to conclude is not to change the content of the power, but to direct attention to the relevant question to be answered. Was a party who had entered and completed this transaction and who held a statutory power (the primary purpose of which was the protection of the next registered owner, conformably with honest dealing, who had taken the property according to the transaction just completed) in circumstances where there could be no occasion for the honest and lawful use of a power, "the owner" of the ship? 168 In our view, the answer to that question is "no". [The owner] had no rights of dominion, enjoyment or control over the ship arising from its dealing with [the buyer] or from its relationship with the ship. It had, by the law of the flag (on the hypothesis of the relevance of the [Shipping Registration Act] by the presumption) a power to dispose of the ship, but that power was incapable of lawful or honest exercise, without the consent of [the buyer]. So understood, the power does not amount to a right of ownership. 46 The plaintiff submits that I should accept registration of the Ship in Qatar as proof of ownership. Exhibited to the affidavit of Mr Hockaday, filed on 17 September 2008, are Resolution No 18 of 1980G and Law No 19 of 1980G, both apparently promulgated by the Amir. The first concerns registration of ships and safety conditions in Qatar. The second concerns registration and safety pertaining to small ships in that country. I understand it to be accepted that these documents contain the relevant aspects of the Law of Qatar concerning the registration of ships. Resolution No 18 provides that a ship, the total tonnage of which is 200 ton or more, may not sail under the flag of Qatar unless it is registered according to that Resolution. Vessels under 200 ton may be registered under Resolution No 18, but such registration is not mandatory. Law No 19 provides for an alternative system of registration for vessels under 200 ton. It is not immediately clear whether the Ship was registered under Resolution No 18 or Law No 19. However the application for registration indicates that its "GRT" (presumably gross registered tonnage) is 200 ton, whilst its net registered tonnage is 60 ton. It is not clear whether it is the gross or net tonnage which applies for the purposes of Regulation No 18. Nor is it clear whether the various references to tonnage in the evidence, in Resolution No 18 and in Law No 19 are to metric tonnes or imperial tons. Law No 19 establishes a register called "The Small Ships Register". There is no indication on the certificate of registration, or on the application for registration, that the Ship was, or was to be, on any such register. It seems more probable than not that it was registered under Resolution No 18. Article 7 of that resolution provides for registration of ownership details. Article 8 requires that the ship owner, supplier or captain notify the registration office of any amendment made to the registered details. Article 13 provides: Every legal act or incident or a judgment resulting in transferring, or amending or forfeiting an in-kind right on a registered ship shall not be in force between the concerned people or for the third party unless its registration is made in the ships register. The concerned parties have right to apply for registration. If any one of them refrains, the matter may be presented to the court for ordering it. 47 Article 14 provides: The registration order shall be as per the date of entry in the journal. If many applications are presented related to one ship in one day, the priority among them shall be as per the time of depositing the registration application, and if many applications are presented together in one hour, all of them shall be deemed in one order. 49 The plaintiff also submits that the Amir's entitlements under the agreement, coupled with the substantial part-payments, were sufficient to create an equitable interest equivalent to ownership for the purposes of s 17. However such equitable and/or contractual rights were obviously subject to the limitation imposed by cl 16 of the agreement. It cannot be said that at the relevant time, the Amir had either the right to possession of the Ship or the right to dispose of it, other than subject to the rights of Sovereign. It was not simply a question of paying the outstanding balance of the purchase price. Mr Royet's evidence demonstrates that prior to 21 July 2008, the Ship had not been completed to the satisfaction of the Amir or his agent. Until such time as the Amir elected to accept the vessel in substantial satisfaction of Sovereign's obligations under the agreement, he could not have insisted upon physical delivery. This is relevant to the point made by Tamberlin and Hely JJ in the Maria Luisa at [74]. Prior to 21 July 2008 the Amir had not exercised his right to accept the vessel pursuant to the contract. He was in a position which might well have led to ownership but did not satisfy the requirements of, in this case, s 17. 50 Finally, the plaintiff submits that the agreement was amended so that property passed at some earlier time and prior to 9 or 11 June 2008. The evidence of this amendment is said to be Sovereign's provision of the builder's certificate, the apparent delay in completion and Amiri Yachts' entitlement under the agreement to take possession of the Ship in the event of default by Sovereign (cl 13) and to insure (cl 15). Against this is Mr Lloyd's assertion that prior to 21 July 2008 Sovereign remained in possession and full control of the Ship. It is true that in para 7 of his affidavit, he did not refer to title. He had done so in cl 6, but the relevant passage was objected to and excluded, largely because it went to the proper construction of the agreement. The evidence of both Mr Lloyd and Mr Royet suggests that the parties were, until 21 July 2008, conducting themselves upon the basis that the Ship was still under Sovereign's legal and physical control. In those circumstances, I decline to infer that there had been any variation to the provisions of the agreement concerning the passing of property.