Allsop, Justice James --- "Admiralty Jurisdiction and Marine Insurance" (FCA) [2003] FedJSchol 17

Admiralty Jurisdiction & Marine Insurance Lecture to the NSW Bar Association 24 September 2003 Justice James Allsop

A INTRODUCTION

1. This lecture is intended as an introduction to an area which is somewhat specialised.
   
2. Many shy away from practising in the area for lack of appreciation of its fundamentals and structure. This paper attempts to provide that. It is not a paper which deals with the relevant procedural rules. You can understand those by reading the rules and a basic practice text such as Cremean (2nd). Rather, this paper attempts to provide an outline of the fundamentals of the jurisdiction . The rules of practice should follow easily.
   
3. The paper also seeks to point out some important aspects of marine insurance.
   
4. All this cannot be done in one hour and a half. However, it is hoped that later lectures will build on the foundations contained in today’s lecture.
   
5. Attached is a bibliography of references in the text of the lecture.
   

B. ADMIRALTY JURISDICTION

What is Admiralty?

6. The introductory paragraph to the summary of the ALRC Rep is a helpful encapsulation to place the subject in context.

Admiralty jurisdiction has a long history, dating back to 14th century England. In its modern form it is a distinctive jurisdiction with respect to a wide range of shipping and maritime disputes. The key feature of admiralty is the action in rem, which allows civil jurisdiction to be asserted over disputes, wherever arising, involving a ship. This jurisdiction is predicated mainly upon service of process on the ship, and can be backed up by arrest of the ship by the court, with the subsequent sale of the ship providing a fund from which claims can be met. As a result of developments in England from the 17th to the 19th century, two classes of in rem action came to be recognised: those based on a limited number of maritime liens (eg salvage, wages, collision damage) and those based on a much wider category of claims in contract or tort involving the operation of ships (eg goods supplied to a ship, cargo claims). The expansion of admiralty jurisdiction over the latter class of claims was brought about by legislation in the 19th and 20th century, and this process has been expanded through international developments (especially the 1952 Brussels Convention on the Arrest of Sea-Going Ships, a Convention that is itself now undergoing revision) and through further legislative expansion and development in countries such as the United Kingdom (1956, 1981), Canada (1970), New Zealand (1973) and South Africa (1983) [and Australia in 1988].

Constitutional Basis

7. Any introduction to Admiralty jurisdiction in Australia must begin with the Constitution.
   
8. Of course (subject to any Imperial legislation in 1901 and the position before the Statute of Westminster), ss 75 and 76 of the Constitution contain the universe of legislative authority for the Commonwealth Parliament to confer express jurisdiction on the High Court, on any federal court and on State courts: ss 75, 76 and 77 of the Constitution. Subsections 76(ii) and (iii), relevantly, are in the following terms:

The Parliament may make laws conferring original jurisdiction on the High Court in any matter:

...

(ii) arising under any laws made by the Parliament;

(iii) of Admiralty and maritime jurisdiction;

...

9. Subsection 77(i) empowers the Parliament to confer jurisdiction on a federal court by reference to the enumerated jurisdictions in ss 75 and 76. Subsection 77(iii) empowers the Parliament to vest jurisdiction in State courts by reference to the same provisions.
   
10. Section 122 of the Constitution provides a wide foundation for the investiture of jurisdiction in Territory courts, which includes the matters in ss 75 and 76.
    
11. The Admiralty and maritime jurisdiction is not found in the Constitutional conferral of original jurisdiction on the High Court by s 75; it is part of s 76 – enabling the Parliament to confer that jurisdiction on the High Court, and, so, by subs 77(i) on a federal court, and by subs 77 (iii) on a State court by statute.
    
12. As to the Constitutional basis, see Cremean (2nd) pp 8-11, White (2nd) pp 1-25 and see the historical outline below.
    

Essential Provisions of the Admiralty Act

13. By the Admiralty Act original jurisdiction has been conferred on the Federal Court and State and Territory courts. Sections 9, 10, 11, 12 and 13 of the Admiralty Act are in the following terms:

s 9 Admiralty jurisdiction in personam

(1) Jurisdiction is conferred on the Federal Court and on the courts of the Territories, and the courts of the States are invested with federal jurisdiction, in respect of proceedings commenced as actions in personam:

(a) on a maritime claim; or

(b) on a claim for damage done to a ship.

(2) Subsection (1) does not confer on a court other than the Federal Court or a Supreme Court of a Territory, or invest a court of a State other than the Supreme Court of a State with, jurisdiction in respect of limitation proceedings.

s 10 Jurisdiction of superior courts in respect of Admiralty actions in rem

Jurisdiction is conferred on the Federal Court and on the Supreme Courts of the Territories, and the Supreme Courts of the States are invested with federal jurisdiction, in respect of proceedings that may, under this Act, be commenced as actions in rem.

s 11 Jurisdiction of other courts in respect of Admiralty actions in rem

(1) The Governor-General may by Proclamation declare a court of a State or of a Territory to be a court to which this section applies.

(2) Subject to any condition or limitation (whether as to locality, subject-matter or otherwise) specified in the Proclamation, a court of a State to which this section applies is invested with federal jurisdiction, and jurisdiction is conferred on a court of a Territory to which this section applies, in respect of proceedings that may, under this Act, be commenced as actions in rem.

(3) Where a Proclamation has been varied or rescinded, the variation or rescission does not deprive a court of jurisdiction to hear and determine a proceeding that was pending in the court at the time of the variation or rescission.

s 12 Jurisdiction in associated matters

The jurisdiction that a court has under this Act extends to jurisdiction in respect of a matter of Admiralty and maritime jurisdiction not otherwise within its jurisdiction that is associated with a matter in which the jurisdiction of the court under this Act is invoked.

s 13 Restriction to Admiralty and maritime jurisdiction

This Act does not confer jurisdiction on a court, or invest a court with jurisdiction, in a matter that is not of a kind mentioned in paragraph 76(ii) or (iii) of the Constitution.

14. Sections 9, 10, 11, 12 and 13 of the Admiralty Act at once raise concepts fundamental to the operation of the Admiralty Act. It should be noted that by s 9 State courts are given jurisdiction within the limits of their own investiture. So, by s 9, the District Court or even Court of Petty Sessions, can deal with an in personam maritime claim. Section 10 confines the in rem jurisdiction to superior courts.
    
15. Jurisdiction is both in personam (s 9) and in rem (ss 10 and 11). An action in rem is against the ship itself or other property on or related to the ship in question. The most obvious and common example of the action in rem is the proceeding against the ship itself. A fascinating and instructive history of the action in rem is found in Wiswall. The important distinction between in personam and in rem, the nature of the maritime lien and the difference between English and American law and practice is discussed below at.
    
16. The notion of “maritime claim” is introduced by subs 9(1). Subsection 4(1) defines this phrase as a “proprietary maritime claim” and a “general maritime claim”. The definitions of the phrases “proprietary maritime claim” and “general maritime claim” are found in subs 4(2) and (3) respectively. The two concepts are central to the operation of the Act. The definitions are as follows:

subs 4 (2): proprietary maritime claim

(2) A reference in this Act to a proprietary maritime claim is a reference to:

(a) a claim relating to:

(i) possession of a ship;

(ii) title to, or ownership of, a ship or a share in a ship;

(iii) a mortgage of a ship or of a share in a ship; or

(iv) a mortgage of a ship's freight;

(b) a claim between co-owners of a ship relating to the possession, ownership, operation or earnings of the ship;

(c) a claim for the satisfaction or enforcement of a judgment given by a court (including a court of a foreign country) against a ship or other property in a proceeding in rem in the nature of a proceeding in Admiralty; or

(d) a claim for interest in respect of a claim referred to in paragraph (a), (b) or (c).

(3) A reference in this Act to a general maritime claim is a reference to:

(a) a claim for damage done by a ship (whether by collision or otherwise);

(b) a claim in respect of the liability of the owner of a ship arising under Part II or IV of the Protection of the Sea (Civil Liability) Act 1981 or under a law of a State or Territory that makes provision as mentioned in subsection 7(1) of that Act;

(c) a claim for loss of life, or for personal injury, sustained in consequence of a defect in a ship or in the apparel or equipment of a ship;

(d) a claim (including a claim for loss of life or personal injury) arising out of an act or omission of:

(i) the owner or charterer of a ship;

(ii) a person in possession or control of a ship; or

(iii) a person for whose wrongful acts or omissions the owner, charterer or person in possession or control of a ship is liable;

being an act or omission in the navigation or management of the ship, including an act or omission in connection with:

(iv) the loading of goods on to, or the unloading of goods from, the ship;

(v) the embarkation of persons on to, or the disembarkation of persons from, the ship; and

(vi) the carriage of goods or persons on the ship;

(e) a claim for loss of, or damage to, goods carried by a ship;

(f) a claim arising out of an agreement that relates to the carriage of goods or persons by a ship or to the use or hire of a ship, whether by charterparty or otherwise;

(g) a claim relating to salvage (including life salvage and salvage of cargo or wreck found on land);

(h) a claim in respect of general average;

(j) a claim in respect of towage of a ship;

(k) a claim in respect of pilotage of a ship;

(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;

(n) a claim in respect of the construction of a ship (including such a claim relating to a vessel before it was launched);

(o) a claim in respect of the alteration, repair or equipping of a ship;

(p) a claim in respect of a liability for port, harbour, canal or light tolls, charges or dues, or tolls, charges or dues of a similar kind, in relation to a ship;

(q) a claim in respect of a levy in relation to a ship, including a shipping levy imposed by the Protection of the Sea (Shipping Levy) Act 1981, being a levy in relation to which a power to detain the ship is conferred by a law in force in Australia or in a part of Australia;

(r) a claim by a master, shipper, charterer or agent in respect of disbursements on account of a ship;

(s) a claim for an insurance premium, or for a mutual insurance call, in relation to a ship;

(t) a claim by a master, or a member of the crew, of a ship for:

(i) wages; or

(ii) an amount that a person, as employer, is under an obligation to pay to a person as employee, whether the obligation arose out of the contract of employment or by operation of law, including the operation of the law of a foreign country;

(u) a claim for the enforcement of, or a claim arising out of, an arbitral award (including a foreign award within the meaning of the Arbitration (Foreign Awards and Agreements) Act 1974) made in respect of a proprietary maritime claim or a claim referred to in one of the preceding paragraphs;

(w) a claim for interest in respect of a claim referred to in one of the preceding paragraphs.

As to “proprietary maritime claims”, see Cremean (2nd) pp 30-39; as to “general maritime claims”, see Cremean (2nd), pp 39-77.

17. Thus, in an in personam action the claim must, in whole or in part, fall within the list of claims in subs 4(2) or (3) or par 9(1)(b) of the Admiralty Act (damage done to a ship). If so, there will be a “matter” which will include all accrued jurisdiction and allow for any associated jurisdiction under s 32 of the Federal Court Act.
    
18. The possible application of s 32 of the Federal Court Act is supplemented (for all courts) by s 12 of the Admiralty Act which appears to cater for the possibility that the reach of subs 76(iii) (and subs 76(ii), vide s 13) is wider than the enumeration of claims under the Admiralty Act. Given the approach of the High Court in The Shin Kobe Maru (see below) and the possible reach of s 98 and ss 51(i), (x) and (xxix) of the Constitution, this possibility is real. As to ss 12 and 13, see Cremean (2nd) 84-86.
    
19. For in personam claims, apart from the formal procedural matters contained in the Admiralty Act and Admiralty Rules, one goes to the substantive law for the resolution of the rights of the parties.
    
20. The jurisdiction concerning actions in rem is in respect of proceedings that may, “under this Act”, be commenced as actions in rem. One must therefore proceed to Part III of the Act (“Rights to Proceed in Admiralty”) which deals with proceedings in Admiralty in rem.
    
21. Fundamental to understanding actions in rem under the Act, is the meaning of “ship”. It is defined in subs 3(1) as follows:

ship means a vessel of any kind used or constructed for use in navigation by water, however it is propelled or moved, and includes:

(a) a barge, lighter or other floating vessel;

(b) a hovercraft;

(c) an off-shore industry mobile unit within the meaning of the Navigation Act 1912; and
(d) a vessel that has sunk or is stranded and the remains of such a vessel;

but does not include:

(e) a seaplane;

(f) an inland waterways vessel; or

(g) a vessel under construction that has not been launched.

22. The right to proceed in rem against a ship or other property in not to be commenced “except as provided by the Admiralty Act”: s 14 of the Admiralty Act.
    
23. The action in rem is one of the distinguishing features of Admiralty jurisdiction. It is a proceeding against the res that has its origins in the Admiralty Courts’ civilian heritage.
    
24. Commencement of proceedings in rem enables a warrant to issue for the arrest of the res. So, to understand when an arrest warrant may issue for a ship or property, one needs to understand whether an action in rem is able to be commenced. Sections 15 to 19 deal with the circumstances in which an action in rem can be commenced. These sections deal with the right to proceed on a maritime lien (s 15), on a proprietary maritime claim (s 16), on an owner’s liabilities (s 17), on a demise charterer’s liabilities (s 18) and against a surrogate ship (s 19).
    

Section 15: on a maritime lien

25. Section 15 provides for actions in rem against ship or property arising from a maritime lien or other charge. Section 15 is in the following terms.

(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.

26. One is left to the substantive law to understand the circumstances in which a maritime lien or other charge will arise. See generally, by way of introduction, Cremean (2nd) pp 107-112. The subject of maritime liens is not without its complexity. The maritime lien is far wider under American law than Anglo-Australian law. It is sufficient to say, by way of introduction, that the maritime lien has been the foundation of the proceedings in rem. It arises at the moment the relevant claim or privilege attaches. By its simultaneous creation, along with the underlying cause of action, it confers a true charge of a proprietary kind, undefeated by bona fide purchasers of the res for value without notice, and irrespective of possession. For a description see The Bold Buccleugh [1851] EngR 985; (1851) 7 Moo PC 267 at 284-85; [1851] EngR 985; 13 ER 884 at 890-91; and The Tolten [1946] P 135, 150. There are rival theories as to the origins of maritime liens. This debate may still resonate deeply in the foundations of the law.
    

Section 16: on a proprietary maritime claim

27. Section 16 provides for all proceedings on a proprietary maritime claim (see subs 4(2)) to be able to be commenced as an action in rem. As to s 16, see generally Cremean (2nd), p 112.
    

Section 17: on an owner’s liabilities

28. Section 17 provides for an action in rem in relation to a general maritime claim as follows:

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.
As to s 17, see generally Cremean (2nd) 112-115.

Section 18: on a demise charterer’s liabilities

29. A “demise charterer” is not defined in the Admiralty Act. It means a charterer which takes under a “bareboat” charter, taking full possession of the vessel and being responsible for crewing it, and not merely being in charge of its commercial operation as in a time charter: see Scrutton (20th) Art 28; The Sydney Sunset [2001] FCA 210 at [20] ff; Cremean (2nd) 115-116 and White (2nd) pp 121-122 and 156-60.
    
30. Section 18 provides for an action in rem in relation to both proprietary and general maritime claims in respect of liabilities of a demise charterer. Section 18 provides as follows:

Where, in relation to a maritime claim concerning a ship, a relevant person:

(a) was, when the cause of action arose, the owner or charterer, or in possession or control, of the ship; and

(b) is, when the proceeding is commenced, a demise charterer of the ship;

a proceeding on the claim may be commenced as an action in rem against the ship.

As to s 18, see generally Cremean(2nd) pp 115-116.

Section 19: surrogate arrest

31. Section 19 provides for which is termed “surrogate ship” arrest or sometimes “sister ship arrest”. It provides as follows:

A proceeding on a general maritime claim concerning a ship may be commenced as an action in rem against some other ship if:

(a) a relevant person in relation to the claim was, when the cause of action arose, the owner or charterer of, or in possession or control of, the first-mentioned ship; and

(b) that person is, when the proceeding is commenced, the owner of the second-mentioned ship.

As to s 19, see generally Cremean, (2nd) pp 116-119.

32. Stopping at this point, an action in rem (so enabling, if sought, the issue of a warrant for the arrest of a ship or other res) may be commenced in the following circumstances:
    • (a) on a maritime lien or other charge: s 15,
    • (b) on any proprietary maritime claim as set out in subs 4(2): s 16,
    • (c) on general maritime claims when s 17 or 19 is satisfied, and
    • (d) in respect of liabilities of a demise charterer in relation to both proprietary and general maritime claims when s 18 is satisfied.
      
33. Because the ability to commence an action in rem is the gateway to the issue of a warrant for the arrest of a ship or other property, the satisfaction of the conditions of the Act for the commencement of an action in rem are also pre-conditions for the entitlement to arrest a vessel. These arrest provisions are dealt with in more detail below.
    
34. As to the meaning of “owner”, for introductory purposes it is sufficient to say that “owner” is not restricted to registered owner, but extends to encompass the notions of “beneficial”, “true” or “real” owner: The Maria Luisa [2003] FCAFC 93; The Iron Shortland (1995) 59 FCR 535, or the party with the right to sell, dispose of or alienate the ship: The Ohm Mariana [1993] 2 SLR 698 and The Permina 3001 [1979] 1 Lloyd’s Rep 327, 329.
    
35. Thus, one can see that the notion of Admiralty and maritime jurisdiction covers not only the peculiar kind of suit – against a thing, but also encompasses peculiarly maritime claims and obligations, such as liens arising from salvage or collision, as well as ordinary claims in contract and tort having a maritime connection or context. The subject matters are broad and diverse. However, central to the understanding of the jurisdiction is the recognition of the place of the singular suit and remedy – the in rem suit and the arrest of the res.
    

Historical Outline

36. Prior to the Admiralty Act, Admiralty and maritime jurisdiction in Australia was governed by the Colonial Courts of Admiralty Act 1890 (UK) and, for a time, provisions of the Judiciary Act 1903 (Cth) (the Judiciary Act).
    
37. Admiralty courts in England had their origins in the civilian tradition. Until the nineteenth century, they were not common law courts. Centuries of competition, from the fourteenth century, called an “incessant war of jurisdiction” (The Beldis [1936] P 51, 85 per Scott LJ) saw the English jurisdiction diminished from its former claims by the time of the fashioning of the Constitution of the United States of America. Whilst there were reform measures in the nineteenth century (the Admiralty Court Act 1840 (UK) and the Admiralty Court Act 1861 (UK)), eventually the Supreme Court of Judicature Act 1873 (UK) swept Admiralty jurisdiction into the common law courts therein created, and the Admiralty Court was abolished. More detailed references to the history of the Admiralty courts can be found in Cremean (2nd) pp 1-3 and the ALRC Rep 9-14. As to what follows on the growth of Admiralty jurisdiction in Australia, see in particular ALRC Rep pp 14 ff.
    
38. Admiralty jurisdiction was initially derived in Australia from Royal Letters Patent of 12 April 1787 which authorised the Lords Commissioners of the Admiralty to constitute and appoint a Vice-Admiral and a Judge and other officers for a Court of Vice Admiralty within New South Wales. Shortly thereafter, on 30 April 1787, by further Letters Patent under the seal of the High Court of Admiralty, Governor Phillip was appointed Vice-Admiral and Robert Ross as Judge in Vice-Admiralty in New South Wales. The Court of Vice-Admiralty was, and remained after the creation of civil and criminal courts in New South Wales in 1814, 1823 and 1828, an Imperial Court, its Judge holding office by virtue of an appointment from the British Admiralty.
    
39. By 1863, Vice-Admiralty Courts had been established in all Australian colonies, but their jurisdiction had not kept up with the reach of jurisdiction in the High Court of Admiralty in England which been expanded, somewhat, by the reforms contained in the Admiralty Court Acts of 1840 and 1861. The Vice-Admiralty Courts Act 1863 (UK) brought the colonial courts into line in this respect with the High Court of Admiralty.
    
40. The next major change which occurred was to remove the separateness of the existence of an Imperial Court from the local colonial courts. The Colonial Courts of Admiralty Act 1890 (UK) replaced the system of Vice-Admiralty Courts with non-Imperial Colonial Courts of Admiralty. The Act came into force in 1891 in colonies other than New South Wales and Victoria, where it came into force on 1 July 1911. (The delay apparently being due to certain local fears: ALRC No 33 p 15 [21].)
    
41. The jurisdiction conferred by the Colonial Courts of Admiralty Act 1890 was the jurisdiction of the High Court of Admiralty immediately before the Judicature Act – that is the narrowly confined jurisdiction as at 1840, somewhat expanded by the Admiralty Acts of 1840 and 1861: The Camosun [1909] UKLawRpAC 40; [1909] AC 597 (PC). Also, it was held by the Privy Council that the jurisdiction conferred by the Colonial Courts of Admiralty Act 1890 was fixed as at 1890: The Yuri Maru; the Woron [1927] AC 906; and F Kanematsu and Co Ltd v Ship ‘Shahzada’ [1956] HCA 57; (1956) 96 CLR 477, 482-483.
    
42. After 1890 came Federation and the Constitution. Section 71 of the Constitution created a new court: the High Court. However, subs 76(iii) did not create any original jurisdiction in the High Court, as s 75 did. For a discussion of some of the complexities of the inter-relationship between the Colonial Courts of Admiralty Act 1890, the Constitution and the Judiciary Act 1903 (Cth) prior to the introduction of the Admiralty Act, see ALRC Rep pp 17-26, and Zines (3rd) pp 71-77.
    
43. Sections 98, 51(i), 51(x) and 51(xxix) of the Constitution also need to be borne in mind. Section 51(i) of course deals with interstate and overseas trade and commerce. Section 98 is directly related to s 51(i), though is expressed in otherwise quite wide terms, as follows:

The power of the Parliament to make laws with respect to trade and commerce extends to navigation and shipping, and to railways the property of any State.

Section 51(x) deals with fisheries and s 51(xxix) with external affairs. As to these heads of power within the Constitution see Davies and Dickey (2nd) pp 15-24. The external affairs power is potentially hugely important with the large number of treaties, conventions and other international instruments dealing with maritime law.

44. The Federal, Supreme and Territory Courts’ Admiralty jurisdictions prior to 1989 rested on the Colonial Courts of Admiralty Act 1890 (and in relation to the Federal Court any application of accrued and associated jurisdiction, the former under notions of “matter” before it, the latter under s 32 of the Federal Court of Australia Act 1976 (Cth)). This jurisdiction came about because of the open-ended wording of s 2 of the Colonial Courts of Admiralty Act 1890 allowing newly created courts to fulfil the criterion in s 2 of courts of “original unlimited jurisdiction.”
    
45. An issue which was unresolved at the time of the repeal of the Colonial Courts of Admiralty Act 1890 by the Admiralty Act, was the possible co-existence of jurisdiction after 1903 conferred by the Colonial Courts of Admiralty Act with jurisdiction in State courts under subs 76(iii) of the Constitution conferred on those courts by subs 39(2) of the Judiciary Act 1903 (Cth). See generally ALRC Rep pp 23-25, McIlwraith McEacharn Ltd v Shell Company of Australia Ltd [1945] HCA 11; (1945) 70 CLR 175 (esp per Dixon J at 210) and China Ocean Shipping Co v South Australia [1979] HCA 57; (1979) 145 CLR 172.
    
46. The words of subs 76(iii) were taken directly from Art III, s 2 of the United States Constitution. In the late eighteenth century, there was a much wider conception of Admiralty and maritime jurisdiction in the American colonies, than existed under English law as narrowed by the common law supremacy over the English civilians. This was confirmed by the United States Supreme Court. See generally Zines (3rd) p 72. For an interesting discussion about the extent of Admiralty jurisdiction in North America at the time of the Revolution, see Robertson pp 28-103, and for a short, but lucid, description of the development of Admiralty jurisdiction in the United States from the time of the Revolution, see Mangone Ch 2 pp 37-72.
    
47. Quick and Garran saw subs 76(iii) as freeing the Commonwealth Parliament from the historical limitations: Quick and Garran p 800.
    
48. Isaacs J, however, in John Sharp and Sons Ltd v Ship Katherine Mackall [1924] HCA 37; (1924) 34 CLR 420, said that the framers of the Constitution could not have intended the wide scope of the jurisdiction in the United States on a matter of such common Imperial concern, though he drew back from fossilising subs 76(iii) jurisdiction. He left the matter open.
    
49. Importantly, the High Court has, in The Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404, rejected the proposition that the content of subs 76(iii) was limited to Admiralty jurisdiction in 1901. It applied the United States’ precedents as to the content of subs 76(iii). Thus, subs 76(iii) covers matters of the kind generally accepted by maritime nations as falling within Admiralty and maritime jurisdiction concerned with the resolution of controversies relating to maritime commerce and navigation: see The Shin Kobe Maru at 424 and at first instance [1991] FCA 641; (1991) 32 FCR 78 at 93 to 111 where Gummow J gave a history of the breadth of the North American jurisdiction, and gave an insight into the potential width of s 76(iii).
    
50. For further reading on the history of Admiralty courts and the constitutional foundations and framework in Australia, see White (2nd) Ch. 1, Cremean (2nd) pp 1-11, Wiswall, Gilmore and Black (2nd) pp 1-53, Mears , Marsden pp xi-xxx, Story, Mathiasen, Laing, Bausman, Waring v Clarke [1847] USSC 24; 46 U.S. 441, 12 L.Ed 226 (1847), De Lovio v Boit 7 Fed Cas 418 (1815) and see the further historical authorities in Robertson pp 35 ftnt 32.
    
51. For a short, but illuminating, historical sketch from Athenian law up to the United States Judiciary Act 1789, see Mangone Ch 1 pp 2-36.
    

Further Aspects of In Rem Actions - ss 17, 18 and 19 of the Admiralty Act

52. There are a number of common elements within ss 17, 18 and 19. First, each employs the phrase ‘relevant person’ as defined in s 3: ‘in relation to a maritime claim means a person would be liable on the claim in a proceeding commenced as an action in personam.’ The purpose of this definition is to identify the person or persons whose ship may be arrested. Even if a challenge is brought on jurisdictional grounds, it is not necessary to prove the claim against this person in the arrest proceedings. It is enough that the claim as made can be seen as one which leads to the liability of the relevant person on the hypothesis of its success: The Owners of MV Iran Amanat v KMP Coastal Oil Pty Ltd (1999) 196 CLR 130, applying the The St. Elefterio [1957] P 179, 185-6 and The Moschanthy [1971] 1 Lloyd’s Rep 37, 42; and see generally ALRC Rep [118] and [124].
    
53. Secondly, where one has a general maritime claim concerning a ship and a relevant person (in the sense discussed above) who would be liable on the claim if it were to be made out, one can arrest either the ship in question (that is concerning which the claim is made) under s 17 or s 18, another ship (the surrogate ship) under s 19. As to the word ‘concerning’ see Lord Diplock in the The Escherscheim [1976] 1 WLR 430 dealing with the phrase ‘in connection’. One must be careful using the phrase ‘surrogate ship’ in respect of s 19. It appears in the heading above the section, but the phrase is not used in s 19, although s 19 is referred to in the definition of the phrase ‘surrogate ship’ in subs 3(6). See Laemthong International Lines v BPS Shipping [1997] HCA 55; (1997) 190 CLR 181, where the importance of the conclusion that the definition of the phrase ‘surrogate ship’ in s 3(6) does not control the operations of s 19 is explained: that, for s 19 to apply, there need not be a first ship against which there could be an in rem claim; that is there need not be a “wrongdoing” first ship. In Laemthong International the claim for the purposes of s 19(a) was by the disponent owner against a voyage charterer of the (first) vessel. So there was, and could be, no ‘first ship’ to arrest.
    
54. In the operation of each of ss 17, 18 and 19 there is a two step process under paragraphs (a) and (b). The first step is assessed at the time the cause of action arose. In this respect, recourse may need to be had to the law on cognate areas such as service ex juris and other private international law fields. The identification of when any cause of action arose governs the relevance of evidence about the next matter: whether, at that time, the relevant person was the owner, charterer, or in possession or in control of the ship or property (for ss 17 and 18) or the first mentioned ship (for s 19).
    
55. “Charterer” means not only demise charterer, but it includes time charterers: The Span Terza [1982] 1 Lloyd’s Rep 225 and voyage charterers: Laemthong International Lines v BPS Shipping. It has also been held to include slot charters (that is charters of space on a ship): The Tychy [1999] 2 Lloyd’s Rep 11 See the note at 116 LQR 36 and on appeal see [2001] 2 Lloyd’s Rep 403.
    
56. “Owner” is not just registered owner; it includes real or true or beneficial owner. But, it refers to title not economic control: The Maria Luisa [2003] FCAFC 93.
    
57. The second step for the application of ss 17, 18 and 19 is assessed at a time entirely within the control of the plaintiff – the commencement of the proceedings, that is the commencement of the in rem action, not the issue of the warrant for arrest. At this time, the relevant person proven for paragraph (a) must be the owner of the ship or property (for s 17) or the demise charterer of the ship (for s 18) or the owner of the second ship (for s 19).
    
58. To summarise ss 17, 18 and 19, the following elements exist.
    

s 17	s 19	s 18
That there is a claim which is a general maritime claim.	The same.	That there is a claim which is a maritime claim (general or proprietary).
That the claim is concerning a ship or other property.	That claim is concerning the first ship.	That the claim is concerning a ship.

That a particular person would be liable on the claim on the assumption that the claim is successful: the relevant person.	The same.	The same.
When the cause(s) of action arose the relevant person was: owner charter in possession in control of the ship or property	The same in respect of the first ship.	The same in respect of a ship.
When the proceedings were commenced the relevant person was the owner of the ship or property.	The same in respect of the second ship.	When the proceedings were commenced the relevant person was the demise charterer of the ship.

59. As to (1) to (3) above, there is no need to prove the liability of the relevant person. What is required, at least initially, is that the claim be sufficiently precise to satisfy these matters: ie that the claim exists which will lead to the liability of the relevant person, if successful. However, should there be a challenge to the claim based on its weakness, whether by strikeout or for release of the vessel, sufficient evidence should be available underpinning it to establish, on a prima facie basis, the nature of the claim, that it is a general maritime claim for the purposes of the Admiralty Act and that the person who will liable upon it, if it is successful, is the person identified. See the Full Court in The Iran Amanat [1997] FCA 483; (1997) 75 FCR 78.
    
60. Both (4) and (5) are facts which must be proved, on the balance of probabilities: the jurisdictional facts referred to in The Shin Kobe Maru. It was held by the Full Court of the Federal Court in Australia in The Ship Zoya Kosmodemyanskaya [1997] FCA 1162; (1997) 79 FCR 71 that the matter before the Court, being a notice of motion to set aside the writ of arrest on the grounds of lack of jurisdiction, was final in character. This being so, it was held that the evidence to be adduced must be in accordance with strict rules of evidence, without the leeway given by the rules in an interlocutory hearing.
    

What is an “Owner”?

61. The United Kingdom and New Zealand provisions (s 21(4) of the UK Act and s 5(2)(b) of the NZ Act ) draw a distinction between ‘owner’ of the first ship for the first limb of the test, at the time when the cause of action arose, and the ‘beneficial owner’ of the ship at the time the action was brought.
    
62. In England, the word ‘owner’ where it first appears has been construed by the Court of Appeal to mean only registered owner: The Evpo Agnic [1988] 1 WLR 1090 (leave to appeal to the House of Lords being dismissed [1989] 1 WLR 127).
    
63. The phrase ‘beneficial owner’, where it appears in the second limb of the English Act and like Acts, has been examined in a like number of cases. Before the introduction in 1981 in the English Act of demise charterer arrest in s 21(4)(i), there was a difference of authority as to whether the phrase ‘beneficial owner’ in s 3(4) of the Administration of Justice Act 1956, or perhaps more accurately, the phrase ‘beneficially owned as respects all the shares therein’, included demise charterer. Hewson J in The St Merriel [1963] p 247, Goff J in I Congreso Del Partido [1978] QB 500, Sheen J in The Father Thames [1979] 2 Lloyd’s Rep 364 and the Singapore Court of Appeal in The Permina 3001 [1979] 1 Lloyd’s Rep 327 were of the view that it did not. Brandon J in The Andrea Ursula [1973] QB 265 was of the view that it did. In the present context of the structure of all the Acts which include demise charterer arrest: s 21(4)(i) of the English Act, s 18 of the Admiralty Act, and s 5(2)(b)(i) and (ii) of the NZ Act (the NZ Act extending to arrest of a surrogate ship which is on charter by demise; cf article 3(4) of the 1952 Convention), it appears clear that ‘owner’; or ‘beneficial owner’ is not intended to encompass demise charterer: The Union Darwin [1983] HKLR 248; The Loon Chong [1982] 1 MLJ 212; Colombo Drydocks v The Ship Om Al-Quora [1990] 1 NZLR 608, Beaumont J in Kent v The Maria Luisa [2002] FCA 1207; and the Full Court [2003] FCAFC 93.
    
64. Beneficial ownership was said by Goff J in I Congreso Del Partido to refer to cases of equitable ownership. It was not a phrase which entitled a court to lift the corporate veil in circumstances where the law would not otherwise allow that: The Aventicum [1978] 1 Lloyd’s Rep 184; The Maritime Trader [1981] 2 Lloyd’s Rep 153; and The Saudi Prince [1982] Lloyd’s Rep 255. I will return to this question of “lifting” or “piercing” the “corporate veil”.
    
65. The Admiralty Act does not use the phrase ‘beneficial owner’ in the second limb. It repeats the word ‘owner’. For an examination of its meaning see The Iron Shortland and the Full Court in the appeal in The Maria Luisa.
    
66. In The Iron Shortland Sheppard J held that ‘owner’ where it appears in s 19 means or includes beneficial or real or true owner of the ship who or which may or may not be the registered owner. (The case has been followed: Nautilus Australia v The Ship Rossel Current, [1999] QSC 39, Ambrose J, Queensland Supreme Court 9/3/99 in a s 17 arrest; Marine Trade Consulting v The Owners of the Ship Kareliya Federal Court 5/9/96 in a s 17 arrest; The Ship Zoya [1997] FCA 1162; 79 FCR 71 in a s 19 arrest; and see also Swards v The Owners of the Ship Pyungwha Tas S Ct 22/10/96, Slicer J.)
    
67. In the Maria Luisa at first instance before Beaumont J ([2002] FCA 1207) and on appeal ([2003] FCAFC 93) in the judgment of the majority (Tamberlin and Hely J) a strict proprietary analysis was taken to the question of ownership. One must look to common law and equitable notions to assess ownership, not questions of economic dominion or control.
    

The Maritime Lien, the Action In Rem and Their Relationship

68. The place of the action in rem, at least from an historical perspective, is importantly different in the United States and England. At least at present, Australia having an English legal tradition generally falls to be analysed by English law.
    
69. A brief examination of the position in the United States is useful also to throw into greater perspective and context aspects of English law.
    
70. Part of the underlying debate about the nature of Admiralty jurisdiction, of the action in rem and of the maritime lien is reflected by the distinction made between the “personification” theory (the ship as a responsible legal thing) and the procedural theory. The former had much greater influence in the United States than in England, where the procedural theory has dominated since the late nineteenth century.
    

Maritime Liens

71. An understanding of the in rem jurisdiction is assisted by an examination of the maritime lien.
    
72. One description of a maritime lien is a claim or privilege attaching upon the ship itself, travelling with the ship wherever it goes and arising, independently and irrespectively of ownership or incumbrance, from circumstances concerned with the ship: see Mayers “Maritime Liens” (1928) 6 Can Bar Rev 516, 516. That, is a very broad description, encompassing many potential claims, but it exemplifies elements of the personification of the vessel:
    • (a) The lien may attach irrespective of personal fault of the owner.
    • (b) The limit of liability is the value of the ship.
    • (c) The lien remains indelible notwithstanding sale of the ship.
      
73. Four essential characteristics of the maritime lien can be identified as follows:
    • (a) It is a charge on property enforceable only by proceedings against the property.
    • (b) It attaches to property automatically by operation of law, upon the occurrence of the relevant events, irrespective of grant with the exception of bottomry and respondentia
    • (c) It adheres notwithstanding a change of ownership.
    • (d) It is generally paramount in priority.
      
74. The maritime lien has been described as the distinctive feature of the maritime law in the field of substantive rights: Marsden “Two Points in Admiralty Law” (1886) 2 LQR 357. It has nothing to do with possession (with the exception of the lien for freight) and little to do with agreement.
    
75. Lord Tenterden defined the lien as “a claim or privilege upon a maritime res to be carried into effect by legal process”: Abbott Law of Merchant Ships and Seamen (14th 1901) p 1012. See also Sir John Jervis in The Bold Buccleugh [1851] EngR 985; (1851) 7 Moo PC 267, 284; Scott LJ in The Tolten [1946] P 135, 150; and Thomas [10].
    
76. The origin of the lien is obscure. See Thomas [8]-[9]. To a significant degree, its analysis in the United States has been affected by the personification of the vessel and the identification of claims in rem with the attachment of a lien. Field J in The Rock Island Bridge [1867] USSC 60; 73 U.S. 213, 215, (1867) said:

The lien and the proceeding in rem are, therefore, correlative – where one exists, the other can be taken and not otherwise.

77. Thus, U.S. law grew up on the proposition that a ship may be arrested (libelled) in rem only in aid of a lien claim. These liens were in respect of a significant number of claims, in fact virtually all maritime claims, including seamen’s claims for wages, salvage, tort, general average, supplies and repairs, towage, wharfage, pilotage, stevedoring, cargo claims from improper loading, stowage and custody, ship’s claims against cargo for freight, charterparty disputes, bottomry and respondentia bonds.
    
78. In England, probably due to the effects of jurisdictional wars prior to the mid-nineteenth century (which did not affect the Vice-Admiralty courts in the American colonies), the maritime lien was restricted to bottomry, damage done by a ship, salvage, seamen’s and masters’ wages and masters’ disbursements.
    
79. For a discussion of which claims support a maritime lien and which do not see Davies and Dickey (2nd) pp 106-118 and see Cremean (2nd) pp 107-112.
    
80. Thomas describes (at [12] to [13]) the fundamental legal characteristics of the lien as follows:
    • (a) a privileged claim or charge,
    • (b) upon maritime property,
    • (c) for service rendered to it or damage done by it,
    • (d) accruing from the moment of the events out of which the cause of action arises,
    • (e) travelling with the property secretively and unconditionally, and
    • (f) enforced by an action in rem.
      
81. Some maritime liens arise from the general law – bottomry, salvage, seamen’s wages and damage; some are creatures of statute; see Thomas [19] to [25].
    
82. Whilst the above characteristics are accepted, the nature of the right is of some debate. It is sometimes described not as a right “in” but “against” property – as a form of hypothecatory right. On other occasions, especially after crystallisation of the right by arrest, it is described as giving an ownership interest. See generally Thomas [27].
    
83. This distinction is reflected in the question whether a maritime lien is a matter of substantive right or procedural remedy. In England it is generally seen as a question of remedy to be governed by the lex fori: The Halcyon Isle [1981] AC 221. Hence, the non-recognition in English law of foreign liens outside the domestic conception. (In this respect see the discussion by Davies and Lewins of foreign maritime lies in Australia after the recent High Court conflicts cases (Pfeiffer and Zhang) and the alteration of substance and procedure: (2002) 76 ALJ 775; and see Davies and Dickey (2nd) pp 126-27 and the learning there cited at p 127 ftnt 244. This more flexible approach to maritime liens as substantive and governed by the proper law of the lien can be seen in other countries: Thomas Ch 12.
    
84. The lien can attach to the ship, its cargo or freight: this is so-called “maritime property”.
    
85. The lien, whilst it may attach to a ship of any nationality, does not attach to ships owned by a person with immunity from process – especially sovereign immunity.
    
86. For a discussion of priorities of maritime liens, see Davies and Dicky (2nd) pp 118 to 121.
    

The Relationship Between the Lien and the Action In Rem

87. In the mid nineteenth century in England it seemed that the lien and the action in rem may run together as in the United States. Sir John Jervis said in The Bold Buccleugh [1851] EngR 985; (1851) 7 Moo PC 267, 284:

A maritime lien is the foundation of the proceeding in rem... and whilst it must be admitted that where such a lien exists, a proceeding in rem may be had, it will be found to be equally true that in all cases where a proceeding in rem is the proper course, there a maritime lien exists...

This reflected what Field J said sixteen years later in The Rock Island Bridge, supra.

88. The Bold Buccleugh was not accepted in England contemporaneously: see Lord Fitzgerald in The Heinrich Bjorn [1886] UKLawRpAC 19; (1886) 11 App Cas 270, 286 who said that the High Court of Admiralty had an inherent in rem jurisdiction independently of the existence of the maritime lien.
    
89. More importantly, with the nineteenth century statutory extension of Admiralty, there emerged the statutory right of action in rem which was seen as independent of the maritime lien.
    
90. A matter of fundamental importance in relation to the lien is the priority it may give in a context of competing claims.
    

The Statutory Action in Rem

91. The action in rem grew up as the legal process peculiar to the Admiralty court. It was not the only way of proceeding in Admiralty. One could also proceed in personam.
    
92. The action is a proceedings against the res – against the ship or other property. The owner may never appear. In The Mecca [1879] UKLawRpPro 42; (1881) 5 P.D. 106, 112 Sir George Jessel MR said:

You may in England and in most countries proceed against the ship. The writ may be issued against the owner of such a ship, and the owner may never appear, and you get your judgment against the ship without a single person being named from beginning to end. That is an action in rem, and it is perfectly well understood that the judgment is against the ship.

93. In the cases in the U.S., which reflect the personification theory, the ship, as the offending object, was liable, irrespective of the liability of the owners: eg The Young Mechanic 30 Fed Cas 873 (1855); The Little Charles 26 Fed Cas 979 (1819); The Palmiyra [1827] USSC 4; 25 U.S. 1 (1827); The Brig Malek Adhel [1844] USSC 26; 43 U.S. 210 (1844); The Nestor 18 Fed Cas 9 (1831).
    
94. In most cases (claims such as salvage aside) the action in rem is rooted in the personal liability of the owner. The action in personam and the action in rem here always been seen as related, though distinct. The action is against the res; it is dependant on the res being within the jurisdiction; the presence or service or amenability to service of the owner are irrelevant.
    
95. Thus, the in rem action is a means of obtaining jurisdiction over and proceeding against the res, and a means of persuading or coercing the owner to appear personally to defend its interest, thereby enabling the in personam claim to be pursued within the jurisdiction or leading to security being put up for the in personam claim, wherever it may be pursued.
    
96. In the above sense, the action in rem can be seen as a procedural device to coerce the res owner into entering an appearance and providing security. This procedural analysis has prevailed in England since the decision of Sir Francis Jeune in The Dictator [1892] UKLawRpPro 41; [1892] P 304 which departed from the personification theory reflected in The Bold Buccleugh.
    
97. The importance of the distinction between personification and procedure was, first, whether the appearing owners could have judgment entered for more than the value of the vessel. The procedural theory, seeing the in rem action as a mechanism for procuring presence and security answered yes, if the owner appeared.
    
98. Another point of importance is the relationship of the theories to the law of re judicata. Notwithstanding the strength of the procedural theory in England, a distinction was recognised between the two actions. It had been clearly held that an in rem action does not merge on an adjudication on a cause of action in personam: Thomas [63] p 39. Now, however, the sweeping away of past authority by the House of Lords in The Indian Grace (No 2) [1997] UKHL 40; [1998] AC 878 where the procedural theory appears triumphant to its logical conclusion makes it necessary to re-evaluate earlier accepted propositions as to the continued distinction of the two actions. As to The Indian Grace (No 2) [1998] LM&CLQ 27 and 33.
    
99. The procedural theory, however, does not fully answer the undoubted fact that the right to arrest in rem can arise from the existence of a lien attaching irrespective of the fault of the owner eg salvage, and the right can run against bona fide purchasers without notice if based on a lien.
    
100. The difference between the two actions leads to the procedural rule that the claimant cannot conjoin the in rem and in personam claims in the one writ. Separate writs are required. This separateness is most apparent when someone who is not the “relevant person” appears to defend on behalf of the ship, eg a mortgagee. There may be no in personam claims against that person. Thus, though someone may appear to defend the in rem action, it remains that – an in rem claim.
     
101. If the owner does not appear, and no other party appears to defend the res the court will without more make an order for sale.
     
102. If the owner does appear, the proceedings in question continue as a proceedings in rem and also as if proceedings in personam: The Dictator [1892] UKLawRpPro 41; [1892] P 304; The Gemma [1899] 285, 291-92; The Beldis [1936] P 51,75-6; and see the cases at pp 102-3 ftnt 12 of Davies and Dickey (2nd).
     
103. For a good introduction as to the now less than clear relationship between the in rem and the in personam claims, see Cremean (2nd) pp 13-17.
     

The Nature of Arrest and the Duty of Disclosure

104. What is an arrest? Is it a true exercise of judicial power, involving a discretion, such as might be wielded ex parte by a court of equity against a party within the jurisdiction? Or is it an entitlement to administrative action, at least in the first instance? Before coming to the nature of arrest, I will briefly examine the nature of the duty of disclosure at an ex parte hearing.
     
105. In Garrard v Email Furniture Pty Ltd (1993) 32 NSWLR 662 Mahoney AP, with whom Clarke JA agreed, applying the views of Isaacs J in Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679, 681-82, expressed the duty of disclosure very strongly. His Honour limited his views to the exercise of “judicial and, I think, quasi-judicial” power. There is a high standard of responsibility: to disclose, uberrima fides, everything that is known and that is relevant to the making of the order. Isaacs J in Thomas A Edison Ltd v Bullock expressed it as follows:

Uberrima fides is required, and the party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumable have brought forward in his defence to that application. Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained must almost invariably fall.

106. The relevant decision in Gerrard was made by a non-judicial officer, who issued a certificate of taxation, while there was, to the knowledge of the solicitor applying for the certificate, an application filed and pending for an extension of time for filing a notice of objection to the bill of costs that had been filed by him. There was a discretion of the non-judicial officer involved.
     
107. Under the 1952 and 1999 Arrest Conventions the “arrest” of a ship or other property is viewed as “detention by judicial process”. The word is defined in the 1952 and 1999 Conventions as follows:

1952

“Arrest” means the detention of a ship by judicial process to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgment.

1999

“Arrest” means any detention or restriction on removal of a ship by order of a Court to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgment or other enforceable instrument.

108. Yet the difference between arrest and, for instance, the Mareva injunction is recognised to be in the latter being an exercise of judicial discretion, not lightly undertaken. See the ALRC Report’s discussion at [245] to [247].
     
109. Whether a matter is judicial or administrative in character can depend, in some circumstances, upon the identity and nature of the person in whom the matter is vested, as well as the character of the subject matter. Some tasks can be given both to an administrator and to a judge. Dealt with by the former they will involve the exercise of administrative power, dealt with by the latter they will involve the exercise of judicial power. This may well be because of the importance of the manner of dealing with it that informs the characterisation of the power. See generally R v Spicer; Ex Parte Australian Builders’ Labourers’ Federation [1957] HCA 81; (1957) 100 CLR 277, 305; R v Hegarty; Ex parte City of Salisbury [1981] HCA 51; (1981) 147 CLR 617; Hanks Constitutional Law in Australia (2nd Ed) Ch 13; and Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245.
     
110. Arrest is a remedy which has not been viewed as the exercise of a discretionary judicial power in the same way as an ex parte injunction in equity. The ALRC Report stated at [245] p 196:

Arrest is a legal remedy available as of right; the Mareva injunction is equitable and discretionary.

111. Under the Australian Rules, the Registrar issues the arrest warrant: Rule 40. The words “may issue” are used.
     
112. There have been different views expressed by different judges as to the place, if any, of the duty of disclosure in the procedure to arrest a vessel. In The Owners of the SS Kalibia v Wilson [1910] HCA 77; (1910) 11 CLR 689 the High Court was dealing with s 13 of the Seamen’s Compensation Act 1909 (Cth) which provided that, if it was alleged that the owner of a ship was liable to pay compensation under the Act and the ship was in territorial waters a judge might issue an order directed to an officer of the Department of Trade and Customs to detain the ship until such time as the compensation was paid or secured. The order, however, could issue only:

...upon its being shown to [the Judge] by any person applying that the owner is probably liable

Whilst not dealt with in that case, the discretionary power, being predicated on an assessment of the strength of the claim would have called for the duty of disclosure.

113. In Sea Containers Ltd v Owners of Vessel Seacat 031, 7 June 1993, Lockhart J dealt with a motion to set aside an arrest warrant which had been issued on the order of another judge. The judge who issued the warrant had not been told of offers made by the defendant which would have undermined the impression given by the evidence put forward on the ex parte application that there was a clear breach of contract in not offering the vessel to the plaintiff pursuant to an option agreement. Lockhart J said:

In my view that information should have been placed before the Court, as it had a material bearing on the establishment of the cause of action. It was not so placed and the result, in my opinion, is that that alone should, so far as clause 4 is concerned, lead to the discharge of the arrest warrant.

The principles in this area of the law are clearly established and I need only refer to the judgment of Sheen J in The “Stephan J” [1985] 2 Lloyds Law Reports, 344 at 346. There his Lordship was speaking of the duty of a solicitor who swears affidavits in support of [ex parte] applications, to make full disclosure, but the principle is of wider ambit than that. I should say in this case that there is no material upon which I would be prepared to rely to find that the solicitor or solicitors who act for the plaintiff failed in their requisite duty to the Court. But when ex parte applications are made, even in this area of the law, the party who seeks it must put to the court all relevant material that could bear upon a right to ex parte relief.

The principles expressed by Isaacs J, although in a different context, in Thomas A Edison Limited v Bullock [1912] HCA 72; (1913) 15 CLR 679 are applicable: in general terms they are not as high a degree of duty as his Honour referred to there, because he was speaking in a different context. Had the material relating to clause 4 that is presently before the Court had been before the Court on 1 June, I would strongly suspect that the arrest warrant would not have issued, at least in relation to this aspect of the matter (clause 4). It remains to see what effect the other two clauses of the agreement and the arguments with respect to them would have in relation to the issue of the arrest warrant.

114. A view similar to that expressed by Sheen J in The Stephan J (referred to by Lockhart J above) was expressed by the Court of Appeal in the Vasso [1984] 1 QB 477 at 491-28. The Court said (at 492), having referred to the duty of disclosure in the context of injunctions, service ex juris and Mareva injunctions:

In our judgment, exactly the same applies in the case of an ex parte application for the arrest of a ship where, as here, there has not been full disclosure of the material facts to the court.

115. The Vasso was applied in The Nordglimt [1988] 1 QB 183, The Mediterranean Carrier 8, Admiralty Court, London, 18 July 1990, The Kherson [1992] 2 Lloyd’s Rep 261, and Sin Hua Enterprise Co Ltd v The Owners of the Motor Ship Harima [1987] HKLR 770.
     
116. Sheen J in The Kherson [1992] 2 Lloyd’s Rep 261, 268-9, put the matter as the follows:

...The importance of full and frank disclosure being made on an ex parte application was emphasised by Lord Justice Robert Goff in The Vasso, [1984] 1 Lloyd’s Rep. 235 at p 243. I adapt and adopt a sentence from that judgment.

Accordingly, the Court having in the present case issued the warrant of arrest on the basis of an affidavit which failed to disclose material facts, the appropriate course is to make an unconditional order for the release of the ship from arrest.

117. Then came the decision of the Court of Appeal in The Varna [1993] 2 Lloyd’s Rep 253. At the time of The Vasso the relevant rule (O 75 r 5(1)) was in the following terms:

After a writ has been issued in an action in rem a warrant ... for the arrest of the property against which the action .. is brought may, subject to the provisions of this Rule, be issued at the instance of the plaintiff ...

[emphasis added]

118. However, as was pointed out in The Varna [1993] 2 Lloyd’s Rep 253, Order 75 was in fact changed in important respects in 1986 with effect from 12 January 1987. Rule 5(1) (above) was replaced by the following:

In action in rem the plaintiff ... may after the issue of the writ in the action and subject to the provisions of this rule issue a warrant ... for the arrest of the property against which the action is brought...

[emphasis added]

At the same time, other changes were made, as described by Scott LJ in The Varna at 257:

In addition, a new par (6) was introduced. The new par (6) is in these terms:

A warrant of arrest may not be issued as of right in the case of property whose beneficial ownership has, since the issue of the writ, changed as a result of the sale or disposal by any court exercising Admiralty jurisdiction.

[emphasis added]

In addition, references in the previous r 5 to a party applying for the issue of a warrant were altered to references to a party intending to issue the warrant. And, a new par (8) was added in these terms:

Issue of a warrant of arrest takes place upon its being sealed by an officer of the registry or district registry.

The present r 5 remains in the form in which it was left by the 1986 amendments.

119. In The Varna these changes were held to transform the issue of a warrant of arrest from a discretionary remedy into a remedy to which the plaintiff had a right if the requirements of O 75 were otherwise met. Scott LJ said at 257:

...Be that as it may, the requirement of “full and frank disclosure”, a phrase well understood in the context of applications to the Court for discretionary orders of the sort that Lord Justice Robert Goff referred to by way of analogy in The Vasso, has, in my opinion, no real substance except in the context of an application for a discretionary remedy in circumstances in which there is an obligation of disclosure cast upon the applicant.

120. The Varna, in this respect, was approved and applied by the English Court of Appeal in Haji-Ioannou v Frangos [1999] 2 Lloyd’s Rep 337, 353. For a helpful discussion of The Varna and previous English practice see the note in [1993] LM&CLQ 458.
     
121. It may be that this approach is inconsistent with the 1952 and 1999 Conventions if these Conventions require a conscious and specific judicial act. See Dockray 110 LQR 382, 384-85. Nevertheless, it is fair to say that, to a significant extent, arrest in modern times has become regarded as a pre-emptive security device, available virtually on demand to someone with an arguable claim against a relevant person if the other requirements are said to be present and if the other requirements can be substantiated, if challenged. As Staughton J said in The Vanessa Ann [1985] 1 Lloyd’s Rep 549, 551:

No doubt the ordinary way if the plaintiff has a valid claim within the Admiralty jurisdiction of the High Court, the ship is arrested and, unless security is provided, she is not released. Counsel and the staff of the Admiralty Registrar could not recall a case which had departed from the ordinary practice. But the discretion is still there.

122. In 1999, in England, the Admiralty Practice Direction 49F par 6(1) was introduced which spoke of the claimant as “entitled to arrest”.
     
123. Since 2002 the new Civil Procedure Rules regulate the position in England. The new wording is not entirely clear as to whether there is an entitlement or a discretion. Rule 61.5, relevantly, is in the following terms:
     • (1) In a claim in rem –
       • (a) a claimant; and
       • (b) a judgment creditor

may apply to have the property proceeded against arrested.

...

(3) A party making an application for arrest must –

• (e) request a search to be made in the Register before the warrant is issued to determine whether there is a caution against arrest in force with respect to that property; and
• (f) file a declaration in the form set out in the practice direction.

(4) A warrant of arrest may not be issued as of right in the case of property in respect of which the beneficial ownership, as a result of a sale or disposal by any court in any jurisdiction exercising admiralty jurisdiction in rem, has changed since the claim form was issued.

[emphasis added]

124. The word “entitled” has been changed to “may apply”, but rule 61.5(4) is the same as O 75 r 5(6) which was relied on by the Court of Appeal in The Varna as supporting its conclusion that arrest was a matter of entitlement, not discretion. The intent is perhaps expressed by PD 61.5(2) which states:

...when it receives an application for an arrest that complies with the rules and the practice direction the court will issue an arrest warrant.

[emphasis added]

125. Thus, ex parte disclosure is probably not required in England.
     
126. At first instance in The Zoya K [1997] FCA 379 Tamberlin J found no failure to disclose on any basis and did not need to decide whether the Australian position was still reflected by The Vasso. The Full Court did not need to deal with the matter. In Sun Lucky Co Ltd v Mu Gung Wha [1999] FCA 220, the allegation of breach of the duty was made at an early stage, but not pressed.
     
127. The wording of rule 40 in the Australian rules used the phrase “may issue”. However, Cremean (2nd) says at 146-47:

...there is no ground for refusing to issue a warrant if the requirements of the Act and Rules have been met.

128. The relevant form (From 13) provides for an affidavit which only sets out short particulars of the claim.
     
129. It may be that the rule 40 “may” is a “Julius v The Bishop of Oxford must”. See Julius v Bishop of Oxford (1880) 5 App Cas 214 at 222-23 (where ‘may’ can mean ‘must’):

They are words merely making that legal and possible which there would otherwise be no right or authority to do. They confer a faculty or power and they do not of themselves do more than confer a faculty or a power. But there may be something in the nature of the thing empowered to be done, something in the object for which it is to be done, something in the conditions under which it is to be done, something in the title of the person or persons for whose benefit the power is to be exercised, which may couple the power with a duty, and make it the duty of the person in whom the power is reposed, to exercise that power when called upon to do so.

See generally Pearce and Geddes Statutory Interpretation in Australia in (5th Ed) pp 275 ff.

130. In New Zealand Rule 776 (7) provides:

(7) Subject to compliance with the preceding provisions of this rule, the Registrar must complete the certificate on the application for a warrant of arrest and must issue a warrant of arrest in form 74.

Thus the New Zealand position appears to be one of entitlement, not discretion.

131. In 1987 the Hong Kong Court of Appeal in The Harima [1987] HKLR 770 applied The Vasso. It was recognised, however, that the relevant question was what had to be disclosed, bearing in mind the nature of the proceeding in rem. There the plaintiff cargo interest sued the shipowner, carrier. The plaintiff knew that the bill of lading was back-dated. It was held that these were not facts relating to the arrest because they did not affect the owner’s liability. Whereas in another case, The Cynthia G, in 1984, the material not disclosed, which it was held should have been, was that the vessel had been previously arrested and upon that earlier application the plaintiff had led evidence that the vessel was beneficially owned by a person other than named as owner in the second proceedings: see generally for a discussion of The Cynthia G, the reasons of Sir Alan Huggins V-P in The Harima [1987] HKLR 770, 774.
     
132. The nature of the in rem claim should not be lost sight of at this point. Scott LJ in The Tolten [1946] P 135 145-6:

...In most actions in rem for damage the ship is released on bail, but cases may occur where the liens or rights in rem against the ship are so heavy as to exceed the ship’s value to her owners, who, in such case, will probably not enter an appearance and obtain the ship’s release on bail. The lien consists in the substantive right of putting into operation the admiralty court’s executive function of arresting and selling the ship, so as to give a clear title to the purchaser, and thereby enforcing distribution of the proceeds amongst the lien creditors in accordance with their several priorities, and subject thereto rateably. I call that function of the court “executive” because, once the lien is admitted, or is established by evidence of the right to compensation for damage suffered through the defendant ship’s negligence, there is then no further judicial function for the court to perform, save that in the registry where priorities, quantum and distribution are dealt with. When the court has thus discharged the whole of the secured claims, the balance (if any) of the proceeds will, if there be no limitation of liability to prevent it, go to the unsecured creditors and the final surplus (if any) to the owners. ...

[emphasis added]

133. The proceeding is against the property, and a weighing of the balance of convenience, as occurs in an exercise of discretionary equitable jurisdiction ex parte or an interim application, does not take place. If the claim is known to be hopeless, or if it is known that the relevant person is not the owner, the arrest would amount to an abuse of process. Apart from such extreme cases, the weighing of the relative merits of the parties’ cases and the competing balance of convenience play little part in any decision as to the issue of the arrest warrant. That is perhaps why Lockhart J said in The Seacat 031 that:

...in general terms they are not as high a degree of duty as [Isaacs J referred to in Thomas A Edison]

C. MARINE INSURANCE

134. The ALRC has recently published Rep 91 being a review of the Marine Insurance Act 1909.
     
135. Marine insurance is governed by the Marine Insurance Act 1906 (Cth) (the MIA). It is not covered by the Insurance Contracts Act 1984 (Cth) (the ICA).
     
136. This paper is only a brief introduction to the topic. Recourse should be had to basic and fundamental texts: ALRC Rep 91, Bennett The Law of Marine Insurance, Templeman on Marine Insurance, Arnould Law of Marine Insurance and Average, Parks The Law and Practice of a Marine Insurance and Average, Chalmers’ Marine Insurance Act 1906 (annotated).
     
137. The MIA came into effect on 1 July 1910 and, with minor differences, was a replica of the United Kingdom parent legislation drafted famously by Chalmers.
     
138. The MIA has been amended only twice since then, one such amendment was to reflect the introduction of decimal currency. The MIA was said to have codified the law of marine insurance when enacted. However s 4 specifically preserves the rules of the common law “including the law merchant”.
     
139. In many places the MIA preserves the parties’ ability to agree on terms other than those set out in the legislation.
     
140. Schedule 2 to the MIA contains the Lloyds SG Policy which by the terms of s 36 effectively becomes a body of rules for the construction of marine insurance policies.
     
141. Sections 7 to 9 identify the limits of marine insurance. Section 7 defines a contract of marine insurance as a contract:

Whereby the insurer undertakes to indemnify the assured in manner and to the extent thereby agreed, against marine losses, that is to say the losses incident to marine adventure.

142. A “marine adventure” is defined in subs 9(2).
     
143. The High Court in Gibbs v Mercantile Mutual Insurance (Australia) Ltd [2003] HCA 39 recently dealt with the definition of marine insurance. I deal with this case below.
     
144. The “marine adventure” as dealt with by s 9 refers to the exposure to risk of insured property, of money which may be earned from that property, of money which may be earned from that property or the adventure and to liability that may arise to a third party if that property is lost or damaged. An essential element is the notion of “maritime perils” which are defined as to be perils:

Consequent on, or incidental to, the navigation of the sea, that is to say, that perils of the sea, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints, and detainments of princes and peoples, jettisons, barratry, and any other perils either of the like kind, or which may be designated by the policy.

145. Thus, a contract of marine insurance may deal with some land risks and may be extended under s 8 to protect the assured against losses on inland waters or on any land risk “which may be incidental to any sea voyage”:
     
146. Sections to 10 to 21 of the MIA deal with the central issue of insurable interest. Section 16 of the ICA abolished the requirement of an insurable interest. However, a contract of marine insurance is deemed to be a gaming or wagering contract, and so void, unless the assured party has an insured interest. Sections 11 and 12 of the MIA deal with the nature of insurable interest. Following sections then go on to specify certain examples of insurance of insurable interest, including defeasible or contingent interest s, partial interests, re-insurance interests, bottomry, master’s and seamen’s wages and advance freight.
     
147. Sections 23 to 27 deal with questions of the utmost good faith, disclosure and misrepresentation. These matters were reformed substantially under the ICA for general insurance. This reform, which did away with the ability of an insurer to rely upon the notion of the prudent insurer as the test by reference to which it could avoid the policy does not extend to marine insurance.
     
148. In marine insurance contracts the law on good faith, subject to the possible issue as to the divergence of the law between the United Kingdom and Australia recently, is as it was unreconstructed prior to the ICA.
     
149. Section 24 to 26 of the MIA deal with the insureds obligations of precontractual of non-disclosure and misrepresentation. Sections 24 and 26 are in the following terms:

SECT 24
Disclosure by assured
(1) Subject to the provisions of this section, the assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him. If the assured fails to make such disclosure, the insurer may avoid the contract.

(2) Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.

(3) In the absence of inquiry the following circumstances need not be disclosed, namely:

(a) Any circumstance which diminishes the risk;

(b) Any circumstance which is known or presumed to be known to the insurer. The insurer is presumed to know matters of common notoriety or knowledge, and matters which an insurer in the ordinary course of his business, as such, ought to know;

(c) Any circumstance as to which information is waived by the insurer;

(d) Any circumstance which it is superfluous to disclose by reason of any express or implied warranty.

(4) Whether any particular circumstance, which is not disclosed, be material or not is, in each case, a question of fact.

(5) The term circumstance includes any communication made to, or information received by, the assured.

SECT 26
Representations pending negotiation of contract

(1) Every material representation made by the assured or his agent to the insurer during the negotiations for the contract, and before the contract is concluded, must be true. If it be untrue the insurer may avoid the contract.

(2) A representation is material which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will take the risk.

(3) A representation may be either as to a matter of fact, or as to a matter of expectation or belief.

(4) A representation as to a matter of fact is true, if it be substantially correct, that is to say, if the difference between what is represented and what is actually correct would not be considered material by a prudent insurer.

(5) A representation as to a matter of expectation or belief is true if it be made in good faith.

(6) A representation may be withdrawn or corrected before the contract is concluded.

(7) Whether a particular representation be material or not is, in each case, a question of fact.

150. In Pan Atlantic Insurance Co Ltd v Pinetop Insurance Co Ltd [1995] 1 AC 501 the House of Lords dealt with the question of non-disclosure. The House of Lords rejected the proposition that the only matters that need to be disclosed are those that if disclosed to the hypothetical prudent underwriter would have caused him to decline the risk or charge an increased premium. Rather it was held, what had to be disclosed was material which would have an effect on the mind of the prudent insurer (being a hypothetical person) in estimating the risk and it was not necessary that it should have a decisive effect on his acceptance of the risk or the amount of premium demanded. Also, the House of Lords engrafted on to the section a further requirement “implied in the Act” that a material misrepresentation will not entitle the underwriter to avoid the policy unless the misrepresentation (or non-disclosure) induced the making of the contract (using the word “induced” in the sense in which it is used in the general law in contract). Whether or not the views of the House of Lords are entirely conformable with existing Australian authority is a matter yet to be finally determined. In Akedian Co Ltd v Royal Insurance Australia (1997) 148 ALR 480 Byrne J considered that since Pan Atlantic the question of materiality should be addressed in these two stages.
     
151. In Australia prior to the Insurance Contracts Act non-disclosure cases in general and marine insurance were run on the basis of the question of the prudent insurer and not by reference to the insurer in question: see generally Mayne Nickless v Pegler [1974] 1 NSWLR 228 and Barclay Holdings (Australia) Pty Ltd v British National Insurance Co Ltd (1987) 8 NSWLR 514.
     
152. It is also necessary to bear in mind the objective terms of s 24. The ignorance of the insured as to what the usual course of business would throw up as material would be of no assistance. Also, the terms of s 25 of the MIA should be recognised:

SECT 25
Disclosure by agent effecting insurance

Subject to the provisions of the preceding section as to circumstances which need not be disclosed, where an insurance is effected for the assured by an agent, the agent must disclose to the insurer:

(a) every material circumstance which is known to himself, and an agent to insure is deemed to know every circumstance which in the ordinary course of business ought to be known by, or to have been communicated to, him; and

(b) every material circumstance which the assured is bound to disclose, unless it come to his knowledge too late to communicate it to the agent.

153. In the usual instance when a broker is involved the broker’s knowledge will become important.
     
154. Sections 28 to 37 deal with the policy. Section 29 sets out what the marine policy must specify:

(a) the name of the assured, or of some person who effects the insurance on his behalf:

(b) the subject-matter insured and the risk insured against:

(c) the voyage, or period of time, or both, as the case may be, covered by the insurance:

(d) the sum or sums insured:

(e) the name or names of the insurers.

155. Section 31 distinguishes between voyage and time policies. The distinction which is self explanatory, has three purposes: the differentiation of the warranty of sea-worthiness found in s 45, the definition of the implied condition as to the commencement of the risk in s 48 and the prohibition of time policies exceeding twelve months in subs 31(2). I will come in a moment to warranties and other provisions dealing with the voyage.
     
156. A policy may be valued or unvalued: ss 33 and 34.
     
157. Section 35 deals with “floating policies”, which are policies which describe the insurance in general terms and leave the name of the ship or ships or other particulars to be defined by subsequent declaration.
     
158. Warranties and other contractual obligations are both important and likely to lead to dispute. I will deal with warranties first.
     
159. Section 39 provides that a warranty is promissory warranty and may be express or implied. Importantly, subs 39(3) state the following:

39(3) A warranty, as above defined, is a condition which must be exactly complied with, whether it be material to the risk or not. If it be not so complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date.

160. The importance of warranties is revealed when one understands s 40 which is in the following terms:

SECT 40
When breach of warranty excused

(1) Non-compliance with a warranty is excused when, by reason of a change of circumstances, the warranty ceases to be applicable to the circumstances of the contract, or when compliance with the warranty is rendered unlawful by any subsequent law.

(2) Where a warranty is broken, the assured cannot avail himself of the defence that the breach has been remedied, and the warranty complied with, before loss.

(3) A breach of warranty may be waived by the insurer.

161. Thus a warranty must be exactly complied with. If there is a breach, the insurer is automatically discharged from liability from the date of the breach (unless the policy ameliorates this), although without prejudice to any liability, that may have been incurred by the insurer before the date. The insurer is not required to elect to be discharged from liability but it may waive the breach. There need be no causative link between the breach and any loss or claim under the policy. The breach cannot be remedied with the result or purpose of putting the policy back on foot before any loss occurs. It matters not that the breach is trivial. The consequences are the same.
     
162. The MIA itself identifies certain important implied warranties. Most important of these is the warranty of seaworthiness in s 45:

SECT 45
Warranty of seaworthiness of ship

(1) In a voyage policy there is an implied warranty that at the commencement of the voyage the ship shall be seaworthy for the purpose of the particular adventure insured.

(2) Where the policy attaches while the ship is in port, there is also an implied warranty that she shall, at the commencement of the risk, be reasonably fit to encounter the ordinary perils of the port.

(3) Where the policy relates to a voyage which is performed in different stages, during which the ship requires different kinds of or further preparation or equipment, there is an implied warranty that at the commencement of each stage the ship is seaworthy in respect of such preparation or equipment for the purposes of that stage.

(4) A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured.

(5) In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness.

163. Note the difference between a voyage policy and a time policy in subss 45(1) and (5).
     
164. Section 46 deals with the lack of an implied warranty that goods are seaworthy; and s 47 deals with an implied warranty that the adventure insured is lawful.
     
165. In relation to a voyage policy there is an implied condition in s 48 that the adventure will be commenced within a reasonable time of the insurance being put in place.
     
166. Section 52 deals with deviation likewise in strict terms to warranties:

SECT 52
Deviation

(1) Where a ship, without lawful excuse, deviates from the voyage contemplated by the policy, the insurer is discharged from liability as from the time of deviation, and it is immaterial that the ship may have regained her route before any loss occurs.

(2) There is a deviation from the voyage contemplated by the policy:

(a) where the course of the voyage is specifically designated by the policy, and that course is departed from; or

(b) where the course of the voyage is not specifically designated by the policy, but the usual and customary course is departed from.

(3) The intention to deviate is immaterial; there must be a deviation in fact to discharge the insurer from his liability under the contract.

167. Section 54 deals with delay in the following terms:

SECT 54
Delay in voyage

In the case of a voyage policy, the adventure insured must be prosecuted throughout its course with reasonable despatch, and, if without lawful excuse it is not so prosecuted, the insurer is discharged from liability as from the time when the delay became unreasonable.

168. Section 55 deals with certain excuses for deviation and delay as follows:

SECT 55
Excuses for deviation or delay

1. Deviation or delay in prosecuting the voyage contemplated by the policy is excused:

(a) where authorized by any special term in the policy; or

(b) where caused by circumstances beyond the control of the master and his employer; or

(c) where reasonably necessary in order to comply with an express or implied warranty; or

(d) where reasonably necessary for the safety of the ship or subject-matter insured; or

(e) for the purpose of saving human life, or aiding a ship in distress where human life may be in danger; or

(f) where reasonably necessary for the purpose of obtaining medical or surgical aid for any person on board the ship; or

(g) where caused by the barratrous conduct of the master or crew, if barratry be one of the perils insured against.

(2) When the cause excusing the deviation or delay ceases to operate, the ship must resume her course, and prosecute her voyage, with reasonable despatch.

169. Later parts of the Act deal with assignment of policy, the premium, loss and abandonment, the measure of indemnity, the return of premium, mutual insurance and other supplementary matters.
     

Gibbs v Mercantile Mutual

170. The importance of understanding when a policy is covered by the ICA and when by the MIA is reflected by the High Court decision in Gibbs. After the events of the litigation in Gibbs the ICA was amended (Insurance Laws Amendment Act 1998 (Cth) s 77) to provide in effect that the MIA does not apply to a contract of marine insurance made in respect of a pleasure craft defined as a ship which is used or intended to be used wholly for recreational activities, sporting activities for both and otherwise for reward and legally and beneficially owned by one or more individuals and not declared by the regulations to be exempt from the relevant subsection. It is likely that this amendment would not have applied to the facts in Gibbs.
     
171. Mr Gibbs and his company (the appellants) conducted a business offering paraflying or parasailing to the public. The corporate entity operated a 17 foot runabout ski boat powered by a 160 horse power sterndrive motor. When paraflying, the boat towed a person wearing a parachute who could ascend to the length of the tow rope while the boat made sufficient speed to generate enough lift under the canopy of the parachute. Mrs Morrell went paraflying with the appellants in Perth on the Swan River near “the Narrows Bridge”. She was injured hitting trees on an adjacent island after the party had gone downstream. Mrs Morell sued the appellants. The insurer denied liability to them. The appellants sued the insurer. The appellant had arranged insurance for the vessel, its hull, motor and trailer together with equipment and third party legal liability cover. At the time of the injury the only aspect of the policy still on foot was the third party liability cover extended to include commercial paraflying.
     
172. The insurer contended that the insured had not disclosed matters that they were bound to and that they had made certain material misrepresentations. If the MIA applied the regime to which I have referred above under the MIA applied, not the ICA regime.
     
173. By majority the High Court found that the policy was covered by the MIA. Gleeson CJ said that subject to the argument about whether the policy was one where liability to a third person by someone interested in or responsible for insurable property by reason of maritime perils, that is perils consequent on or incidental to, the navigation of the sea, the policy was plainly a marine policy. With the dropping of the hull and equipment cover the scope of the cover purchased was reduced, but the character of the policy was not transformed. The losses remained primarily losses arising out of events occurring in the course of the navigation of the vessel in question. The appellants argued that neither the original policy nor the renewed policy was a contract of marine insurance because of the locality in which in the contemplation of the parties the vessel was to operate. The vessel was only to operate pursuant to the navigation warranties in it in “protected WA waters as per permit”. The word “permit” was a reference to the certificate of survey for the vessel required under the Western Australian Marine Act 1982 which recorded that the geographical limits of operation of a vessel was “smooth water only”. In fact, as was intended, the vessel’s commercial paraflying activities were conducted in the Swan River area near the Narrows Bridge. Gleeson CJ described the area of the Swan River in which the appellant operated their vessel as part of a broad expanse of water properly described as an estuary near the conjunction of the Swan River and the Indian Ocean. As one of the judges in the Full Court, had said an estuary is the interface between the ocean and a river in which salinity changes are found. The waters of the Swan River around South Perth where the activity was intended to take place were affected by tidal movements and were properly described as estuarine. An estuary of this kind where the tide ebbs and flows was found by the Full Court, and Gleeson CJ agreed, to be part of the sea, being estuarine and to be waters within the ebb and flow of the tide and falling within at least the definition of “sea” in s 3 of the Admiralty Act 1988 and s 6 of the Navigation Act 1912 (Cth). Gleeson CJ said the word “sea” is not limited to the open ocean.
     
174. Hayne and Callinan JJ formed the balance of the majority. They were of the view that the careless operation of the craft causing injury to the person being towed was a peril of a kind properly described as a peril “consequent on, or incidental to, the navigation of the sea”. It was not determinative that this did not occur at sea. What was determinative was the nature of the risk, not where the event happened. Under the contract of insurance the insurers undertook to indemnify the appellants against marine losses that is losses incident to marine adventure.
     
175. McHugh J and Kirby J dissented.
     

24 September 2003

Attached Bibliography

ALRC Rep Australian Law Reform Commission Report No. 33 Civil Admiralty Jurisdiction (1986)

Bausman Bausman “Admiralty and Maritime Jurisdiction” (1902) 36 Amer L Rev 182

Cremean (2nd) Cremean, Admiralty Jurisdiction: Law and Practice (2nd Ed) (Federation Press, 2003)

Davies and Dickey (2nd) Davies and Dickey Shipping Law (LBC 2nd Ed)

Gilmore and Black (2nd) Gilmore and Black The Law of Admiralty (2nd Ed 1975)

Laing Laing “Historic Origins of Admiralty Jurisdiction in England” (1946) 45 Mich L Rev 163

Mangone Gerard J Mangone United States Admiralty Law (Kluwer International, 1997)

Marsden Marsden Select Pleas in the Court of Admiralty (Selden Society) 1897 (1953 reprint) vol 2

Mathiasen Mathiasen “Some Problems of Admiralty Jurisdiction in the Seventeenth Century” (1958) 2 American J Legal History 215

Mears Mears “The History of the Admiralty Jurisdiction” 2 Select Essays in Anglo-American Legal History 312

Quick and Garran Quick and Garran The Annotated Constitution of the Australian Commonwealth

Robertson Robertson Admiralty and Federalism: History and Analysis of Federal State Relations in the Maritime Law of the United States (1970)

Story Story Commentaries on the Constitution of the United States

Thomas Thomas Maritime Liens

White (2nd) White Australian Maritime Law (Federation Press, 2nd Ed)

Wiswall Wiswall The Development of Admiralty Jurisdiction and Practice Since 1800 (Cambridge, 1970)

Zines (3rd) Zines Cowen and Zines’s Federal Jurisdiction in Australia (Federation Press, 3rd Ed)