17 Years in the Judicial Sea: A voyage through my experiences as an admiralty and maritime judge
I begin this afternoon by acknowledging the Gadigal people of the Eora nation, the traditional custodians of the land on which we meet in Sydney today, and pay my respects to their elders past, present and emerging.
I would also like to thank Melanie Faithfull, one of the Court’s most experienced marshals, for her introduction. I have always had a fantastic experience working with the Court’s registrars and marshals.
I was asked to address you this afternoon about my reflections on my experiences as a judge in the Federal Court’s Admiralty and maritime jurisdiction, which is possibly an invitation for self indulgence. I understand that the motivation for this was the fact that I am imminently to sail into the constitutional scrapyard.
Can I say at the outset how honoured I am by your kind invitation, even if it is to hear the last of me. Over the past 17 years, I have had the benefit of the cooperation and assistance of the many skilled MLAANZ practitioners in conduct of first instance and appellate Admiralty matters in the Court. MLAANZ and its active New South Wales branch have played a leading role in maintaining a high level of continuing legal education for not only practitioners but also judges on topics of currency and interest for the profession. The Court, as much as the legal profession, has been a beneficiary of these seminars, conferences and user groups. The Admiralty judges, registrars and marshals of the Court enjoy the close and cooperative relationships that occasions of this kind have fostered in assisting and providing consultative feedback to all of us involved in this important area of law that underpins much of Australia’s international trade.
The Comandate
Any tour of my experiences in the exercise of Admiralty and maritime jurisdiction must begin with the first substantive matter I heard in this practice area, concerning the vessel MVComandate.[2]
On 22 June 2006, a few months after my appointment, I extended an ex parte anti-anti-suit injunction restraining Comandate Marine, the owners of the vessel, from commencing proceedings in any English court seeking to stay or otherwise restrain the Australian proceeding.
In August 2006, the owners of Comandate applied to stay the Australian proceeding on the basis of an exclusive dispute resolution clause in the charter party which provided for arbitration in London. By that time, the owners had also brought other proceedings in the Federal Court and arrested another vessel chartered by the plaintiff, Boomerang I (although that arrest was subsequently set aside on the basis that s 19 of the Admiralty Act 1988 (Cth) does not allow for surrogate ship arrest where the relevant person is the demise charterer[3]).
The main issue I had to decide was whether Comandate Marine’s choice to bring parallel proceedings meant that it had abandoned its right to insist on arbitration in London. I thought I was on fairly solid ground when I found that it had. I applied the 1998 decision of the House of Lords in TheIndian Grace,[4] which was English authority for the proposition that the action in rem filed by Comandate Marine against Boomerang I was the equivalent of an action in personam between the plaintiff and the relevant person, namely by Comandate Marine against Pan Australia Shipping Pty Ltd. I also determined a number of other issues. I found that there was no agreement in writing to arbitrate for the purposes of the International Arbitration Act 1974 (Cth), because the arbitration clause did not extend so as to permit the arbitral tribunal to deal with the plaintiff’s pre-contractual claims under s 52 of the Trade Practices Act 1974 (Cth) based on obiter dicta in the decision of the Full Court in Kiukiang Career,[5] and extended the anti-anti-suit injunction.
However, as it turned out, my initial substantive judicial foray in the Admiralty and maritime jurisdiction was also the first time that I was overturned by the Full Court. Indeed, Finn, Finkelstein and Allsop JJ overturned me on almost every finding.[6] In my own lamentable defence, one might have thought it difficult to foresee that the Full Court would say that not only was the House of Lords wrong but so too was the earlier Full Court’s obiter dicta interpretation of the arbitration clause.
On the key issue of whether the owners had abandoned their right to insist on arbitration in London, the Full Court (led by a judgment of the-then Allsop J, with whom Finkelstein J agreed in whole and Finn J in part) declined to follow the House of Lords in The Indian Grace and found that the owner’s action to arrest Boomerang I did not amount to the commencement of proceedings in personam against the demise charterers. Ultimately, the Full Court stayed the Australian proceeding, giving a wide, but now orthodox, construction to the arbitration clause that allowed the London arbitration to proceed. In a manner reminiscent of a recent matter I presided over, Carmichael Rail Network Pty Ltd v BBC Chartering Carriers GmBH & Co KG,[7] the Court accepted an undertaking from Comandate Marine that would allow the London arbitration to determine all issues between the parties arising under the Trade Practices Act.
Cargo damage claims
Reflecting back, I realised that, although I have heard many Admiralty and maritime matters, only a few were pure cargo damage claims. Notably, in a Full Court there was The Ankegracht[8] that concerned unseaworthiness for a north south journey of a ship loaded with steel coils and, as a trial judge, Hilditch Pty Ltd v Dorval Kaiun KK (No 2).[9]
In Hilditch, Golden Lucy I carried refined oil products from South Korea for delivery to the plaintiff at Port Botany. The carriage was covered by a clean tanker bill of lading to which the Australian Rules applied (that is – the Hague-Visby rules as amended in Schedule 1A of the Carriage of Goods by Sea Act 1991 (Cth)) (COGSA). As is well-known, a quirk of Australian shipping law is Australia’s adoption of its own bespoke version of the Australian Rules. That version looks like it could be the work of Dr Frankenstein. The Australian Rules have the force of law in Australia (s 8) subject to s 10 of COGSA. These rules accommodate the complementary State and Territory laws, such as the Sea-Carriage Documents Act 1997 (NSW).
Returning to Golden Lucy I, on arrival at Port Botany, it became apparent, as the oil cargo was discharging, that it was not clear but contaminated. One issue was whether the plaintiff, as holder of a negotiable bill of lading, endorsed in blank, had title to sue when it presented the bill at Port Botany for delivery of the cargo. As is often the case, the bill had been endorsed by prior holders, including banks holding it as security. I had to track the law merchant from the jury’s finding in Lickbarrow v Mason,[10] that it was the custom of merchants to allow a bill of lading to be endorsed by a person to whom it had been delivered. That case established that a bill of lading was a document of title, as Lord Blackburn affirmed a century later in Glyn Mills Currie & Co v The East and West India Dock Co.[11] I rejected the owner’s canard that all three original bills had to be presented and be properly endorsed to enable the holder to collect the cargo at the port of discharge, based on Lord Blackburn’s finding:[12]
And the very object of making the bill of lading in parts would be baffled unless the delivery of one part of the bill of lading, duly assigned, had the same effect as the delivery of all the parts would have had.
Lord Blackburn observed that he had never been able to learn why merchants and shipowners continued the practice of making out a bill of lading in parts. That remains the case today. But, he said that so long as the practice continued it was of vast importance not to unsettle the principles which had already been settled.[13]
Another issue was whether the carrier breached its obligation under Art 3(2) of the Rules to “properly and carefully load, handle, stow, carry, keep, care for and discharge” the oil. The carrier sought to rely on the exemption in Art 4(2)(l) that the damage resulted from the act or omission of the shipper, whose representative at discharge did not stop the discharge operation soon enough after noticing that the oil had been contaminated. The cause of the contamination was that caustic soda intakes on the ship had mixed with the oil while it passed through the lines or pumps. However, the carrier had a compound obligation under Art 3(2) both to exercise reasonable care in the discharge of goods and have a sound system for their discharge.[14] I found that:[15]
At the end of the day, the question of whether a carrier can rely upon an immunity under Art IV r 2 must be answered by reference to all the circumstances of a particular case … Where the facts disclose that a loss was caused by the concurrent effects of an excepted and non-excepted circumstance, the carrier remains liable. The carrier will only escape liability if it proves that the loss or damage was caused by an excepted circumstance alone.
The question of the scope and application of the exceptions in Art 4(2) remains a live issue in maritime courts around the world. In 2021, the UK Supreme Court, in Alize 1954[16] held that the Art 4(2) exceptions could not be relied upon to excuse a breach of the seaworthiness due diligence obligation in Art 3(1), a position which accords with previous obiter dicta of McHugh J in Bunga Seroja.[17] It remains to be seen if there is any ‘wind in the sails’ of this issue under Australian law today.
Pipelines, pilots and the bitter end
In 2009, I heard a limitation action under the Limitation of Liability for Maritime Claims Act 1989 (Cth) brought by the owners of APL Sydney, a two-year-old Panamax fully loaded container ship, against Esso Australia, BHP and others with claims arising from her rupturing the high pressure gas pipeline extending from Mordialloc to Altona under Port Phillip Bay. The pipeline was 10 inches in diameter and buried three metres below the seabed. Esso and BHP pleaded that the owners were not entitled to limit their liability under the Convention on Limitation of Liability for Maritime Claims 1976 as amended and given force of law here, to the value of the ship (about $24.5 million) calculated in accordance with the Convention limitation formula. Rather, they contended that there were four distinct occasions, each of which gave rise to a separate Convention claim under Arts 6(1) and 7.
I formulated and applied the following the test:[18]
whether one occasion is distinct from another will depend upon whether the causes of the claims that arise from each act, neglect or default are sufficiently discrete that, as a matter of commonsense, they can be said to be distinct from one another.
The case had a number of memorable moments. The events occurred on a Saturday afternoon in December 2008. Pilotage is compulsory in Port Phillip Bay. As often occurs in such cases, the pilot turned out to be more of a problem than a solution. A force 8 or 9 gale was raging. There were waves of between 2 and 2.5 metres in the growing storm conditions. The pilot had brought the ship into the anchorage and directed the experienced Chinese master to drop the anchor and stop the engine, but he left on the pilot boat before the ship came up to the anchor. She was then about 0.6 nautical miles south west of the pipeline and the wind was blowing the ship in its direction. That was the pilot’s first mistake. Soon after his departure, the master noticed, as the normal anchoring process was occurring, that something was wrong and the anchor was dragging. He knew of the location of the pipeline and where the ship would be carried by the wind if it continued to drag. After about 15 minutes, at about 3pm, he radioed harbour control and sought permission to heave the anchor and re-anchor further away from the pipeline because of the danger. Harbour control could see on its radar what was happening but refused the master’s request, told him he could not move the ship without a pilot and to stand by until one arrived. By then, the pilot was 40 to 45 minutes away.
Within a few minutes, the pilot radioed harbour control to confirm what the master had been saying, namely that the ship’s stern appeared to be over the pipeline and dragging the anchor closer to it. At about this time, the penny dropped and harbour control realised that this was a “drama”. But it waited a total of 25 minutes after the master’s request to heave anchor, and the obvious evidence on its AIS screen that the ship was moving directly towards the pipeline, before giving him permission to use the engine and move her about a mile forward. The pilot was then at least 30 minutes away and the weather was worsening. When the master ordered the anchor to be heaved, there were about 5 shackles in the water. During the next 15 minutes, as the weather continued to worsen, the master had considerable difficulty, having to constantly reposition the ship to assist in the retrieval of the anchor. During this time, only about 3 of 5 shackles had been winched onboard.
At about 3:45pm, the anchor struck the pipeline with a powerful force, causing it to ovalise. One of the experts pointed out, when we all were standing in the well of the Court, the point on the piece of exhibited pipe where the impact occurred. The ship pulled the pipeline out of the seabed and bent it toward north east. This arrested the ship’s movement, although, because of the foul weather conditions, this was not apparent on the bridge or AIS. If things had stopped there, only about 102 metres of pipeline would have needed replacement. But there’s more.
I found that the first distinct occasion occurred when the anchor fouled the pipeline.
At 3:48pm, the pilot, who was still en route, directed the master to leave what, he thought, was the remaining shackle of the cable (or anchor chain) out of the water because the boson at the foc’sle had told him that the cable was drawn across the bow to port at about 10 o’clock. However, at this point, the windlass (or winch used to heave the anchor) stopped working. The cable began playing out fast and the bosun instinctively applied the brake to stop this continuing. The windlass was broken and the bosun then noticed an oil spill on the foc’sle deck. At the same time, the master concluded that the anchor either had fouled the pipeline or was holding on the seabed. The chief officer ordered the crew to clean up the oil to make the deck safe and prevent pollution.
By about 4.05pm, the pilot arrived back on the ship and had returned to the bridge. Earlier, as he approached on the pilot boat, he had seen oil on the foc’sle deck. The pilot told the master that he should cut the cable either using a kenter shackle or with a gas axe (i.e., an oxyacetylene torch). Although one of the nautical experts disagreed, the latter was not a good idea given that there was flammable oil on the deck. No one on the bridge suggested letting the anchor cable go from the bitter end. That, I learnt from the three expert mariners, is the nautical term for the mechanism to quickly release the anchor cable from its attachment to the ship to avert danger from the vessel being held by the anchor to its position.
While the master sought instructions from the owners about jettisoning the anchor, the pilot did a miscalculation of the ship’s and anchor’s positions. He told the master that she could move safely ahead because he had plotted the anchor as being on the seabed north of the pipeline. At 4:20pm, the pilot advised the master that the engine be ordered to go dead slow ahead. The master, hesitantly, thought that the pilot had seen the direction of the cable as he approached on the pilot boat and, given his local knowledge, knew what he was doing. The pilot, however, simply assumed that because he had seen the cable leading "pretty much ahead”, the anchor was clear and ahead of the pipeline and not fouled onto it. So the engine was put ahead and the ship travelled to the south south west for about 1.5 minutes until the master saw gas bubbling to the surface off the starboard bow. That is when the next penny dropped. The master immediately ordered the crew to put out all cigarettes and sources of flame.
The ahead engine movement had caused the pipeline to rupture. I found this was the second distinct occasion because, prior to the ship going ahead in accordance with the pilot’s second misguided piece of advice to the master, the pipeline had remained intact.
However, the drama did not end there. About six minutes after the rupture, the pilot advised the master to go slow astern to get the ship away from the danger posed by the escaping gas. Both the master and the pilot were aware of the possibility that going astern might cause the anchor to re-engage with the pipeline. In the event, their fears were realised and the anchor somehow engaged with the Mordialloc side of the fractured pipeline and pulled up between 10% and 20% more pipe that needed replacement. In total, 156.58m of pipeline was replaced at a cost of over $70 million. I found that this was not a distinct occasion but was inseparably connected to and part of the circumstances of the rupture and its consequences.
The master graphically exclaimed at one point in his cross-examination, when chided about his evidence that he did not remember why he ordered every engine movement over about 1.5 hours from when the anchor dropped: “I want to forget it all, although I couldn’t. But I don’t want to remember”. I believed him.
An amusing cross-examination of the two nautical experts called by BHP and Esso occurred about their disagreement as to what the master should have after the fouling, one saying he should have manoeuvred the ship using the engine and the other said the contrary, culminating in this exchange, which was a cross-examiner’s dream:
Now, Captains, I will put this to you, Captain Cole, first. The difference of opinion that you two have, based on the same assumptions of fact, and after all these years of experience that you’ve got reflects, does it not, the fact that in an emergency situation two people applying seamanlike principles can reach different conclusions about the appropriate course of action?
CAPT COLE: Mr Scott, yes.
MR SCOTT: And Captain Dwyer, you also - - -
CAPT DWYER: I agree.”
What suffices to arrest and release a ship
Sailing away to other cases, the ship arrest of the Huang Shan Hai led to a person known as ‘the Rares whisperer’ (being the sobriquet that I learnt applied to the now Stewart J at his swearing in ceremony) opposing a shipowner’s proposal of having only a single surety for a bail bond rather than two as prescribed in r 54(2) of the Admiralty Rules 1989. The allegedly insufficient surety was the Bank of China. Cosco, the owners of the arrested vessel, sought dispensation from the requirement of r 54(2) for a bail bond to have two sureties. I was not persuaded that the Bank, whose audited balance sheet showed a net equity in 2010 of over USD100 billion, would default.[19]
In another case involving the intricacies of an arrest of Xin Tai Hai,[20] I found that a plaintiff’s affidavit in support of the issue of an arrest warrant had only to disclose the matters expressly stipulated in the Admiralty Rules. I found that, even though an application for the issue of an arrest warrant is made ex parte, unlike an ex parte application in equity or an application under the then current English Rules for arrest, the plaintiff does not have to make full and frank disclosure of all material facts. The question arose in that case because the plaintiff had not disclosed that it had begun or was about to being proceedings in respect of the same collision in China.
Seafarers’ liens
The redoubtable Timothy Visscher pursued his former employer Teekay Shipping (Australia) Pty Ltd, in various fora, including the High Court and the Federal Court, for what he claimed was due as a result of his constructive dismissal by it demoting him from chief officer to second mate. In his Federal Court proceeding, he claimed that, under ss 75 and 78 of the Navigation Act 1912 (Cth), Teekay owed him double wages until it paid him in full all that he was owed after his discharge on his final voyage. He brought two separate appeals, the first to reinstate his proceeding after it had been summarily dismissed[21] and the second, after a final hearing, in which he received a lot less than he sought.[22]
Seafarers’ wages and liens formed a recurring theme. In between Mr Visscher’s appeals came the first of another two appeals. In the first, Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd,[23] Siopis, Buchanan JJ and I had to determine, first, the nature of a demise charter of a ship and, secondly, whether a person who had paid the crew’s wages could be subrogated to their maritime lien under s 15(2)(c) of the Admiralty Act. We held that once the crew’s claim was paid, the maritime lien ceased to exist. The second of the two appeals decided that the supplier of the crew could not claim against the demise charterers for their wages after the termination of the deed under which it provided their services.[24]
The ‘Damp Biscuit’ case
I have had several brushes with the COGSA and the Australian Rules. The term “sea carriage document” is unlikely to be immediately familiar to a maritime lawyer from any jurisdiction other than Australia. “Sea carriage document” is defined in Art 1(1) of the Australian Rules to mean a bill of lading, a negotiable document of title that is similar to a bill of lading and that contains or evidences a contract of carriage of goods by sea, a non-negotiable bill of lading, or a non-negotiable document such as a sea waybill.
In what has come to be known as the ‘Damp Biscuit’ case,[25] due to the frustratingly Dutch character of the appellant’s name, Mansfield, Buchanan JJ and I had to consider the meaning of “sea carriage document” as used in s 11 of COGSA. At the time of the decision, s 11(1)(a) of COGSA provided that “all parties to a sea carriage document” for outbound carriage from Australia were “taken to have intended to contract according to the laws in force at the place of shipment”, being Australia., and s 11(2) provided:
(2) An agreement (whether made in Australia or elsewhere) has no effect so far as it purports to:
…
(b) preclude or limit the jurisdiction of a court of the Commonwealth or of a State or Territory in respect of a bill of lading or a document mentioned in subsection (1)
Next, s 11(3) clarified that the s 11 did not invalidate an agreement to arbitrate so long as the arbitration was in Australia, as opposed to any other jurisdiction. Of course, the cumulative effect of these provisions made it compulsory for there to be either arbitration or proceedings in an Australian court in respect of transactions governed by sea carriage documents for outbound carriage from Australia.
The issue in the Damp Biscuit case was whether the voyage charter between the parties, for the carriage of coal from Australia to China, amounted to a sea carriage document, rendering the foreign arbitration clause in the charter party invalid by force of s 11 of COGSA.
It is immediately obvious that, if the provisions of COGSA were found to apply to charterparties that governed outbound voyages from Australia, the effect would not be friendly to international trade. As I said in that case:[26]
Over 10% of the world’s trade by volume comes into or leaves Australia by sea. Much of that trade is carried by ships under charters that, as an ordinary incident of the shipping industry, will contain international arbitration clauses that were freely negotiated by sophisticated, professional parties. Those parties could bargain at arms length for the terms of their charterparties, including for resolution of disputes arising under them. They would not have anticipated that their agreement for international arbitration had been eliminated “by a sidewind” involving the combination of the ship carrying cargo from Australia overseas and s 11 of COGSA.
Mansfield J and I allowed the appeal. I noted that the object of s 11 of COGSA was to protect “the interests of Australian shippers and consignees from being forced contractually to litigate or arbitrate outside Australia”. I found that purpose did “not extend to protection of charterers or shipowners from the consequences of enforcement of their freely negotiated charterparties subjecting them to the well recognised and usual mechanism of international arbitration in their chosen venue”.
Section 11 of COGSA continues to be a source of judicial, academic, and legislative controversy. In 2022, the pithily named Commonwealth Department of Infrastructure, Transport, Regional Development, Communications and the Arts instigated a review into s 11 and invited submissions from the public about potential amendments to it.[27] One of the concerns raised in the discussion paper[28] was the definition of “sea carriage document”. The paper stated:
Some stakeholders have raised concerns about the lack of an explicit definition for the term ‘sea carriage document’ in the text of the Act itself. They argue the court decisions have only increased confusion over what a ‘sea carriage document’ may encompass, with judges interpreting the definition of the term in the amended Hague Rules differently. They maintain it is desirable for industry to have confidence and certainty as to what documents are considered by section 11 of COGSA.
It is undoubtedly desirable for industry to have confidence and certainty about what documents are captured by the Act. Hopefully, the results of the Department’s review and any subsequent amendments to COGSA create greater confidence and certainty than now exists, although a more cynical maritime practitioner might merely see the potential for more interesting litigation like the Damp Biscuits case. Indeed, last week the Full Court reserved its decision in the Dijksgracht appeal that again traversed those troubled waters.[29]
The Sam Hawk
Obviously, a standout decision in my judicial career was that of the Full Court in Sam Hawk v Reiter Petroleum.[30] That grappled with the issue of what foreign maritime liens are recognised and enforceable under Australian law.
Sam Hawk had been time chartered to Egyptian Bulk Carriers, under terms which obliged the time charterer to bunker the vessel and to pay for all bunkers. The charterer contracted with Reiter Petroleum to supply bunkers upon the vessel’s arrival in Istanbul. The bunker supply contract gave Reiter a right to assert a maritime lien wherever it found the vessel and that the law of the United States would apply to determine the existence of such a lien, regardless of where proceedings were instituted. As is well known, United States’ maritime law gives a necessaries supplier a maritime lien over a ship regardless of whether the supply was made to her owners or demise charterers or persons who had no title to, or possession of, the ship such as time or voyage charterers.
After charterer failed to pay for the bunkers, Reiter demanded payment from the owners of Sam Hawk. In 2014, Reiter arrested the vessel in Australia based on two separate claims, namely, first, a general maritime claim pursuant to s 17 of the Admiralty Act, for which the owner was the relevant person, and secondly, a maritime lien pursuant to s 15.
The primary judge found that the Court had jurisdiction under s 15 in respect of Reiter’s claims because, first, a maritime lien for necessaries was recognised in United States’ law and, secondly, the existence of a maritime lien created a substantive right that was independent from the lex fori. Accordingly, his Honour declined the owners’ request for summary dismissal.
The main issue in the appeal to the Full Court was whether Australian law recognises a foreign maritime lien as enforceable despite it not being one of those categories provided in s 15 of the Admiralty Act. Sam Hawk alleged that liens other than those in s 15 were not enforceable here, and therefore that an Australian court did not have jurisdiction to hear Reiter’s claims.
Much of the argument in the Full Court, as before the primary judge, turned on the correctness or otherwise of the majority judgment of the Privy Council in The Halcyon Isle.[31] There, Lords Diplock, Elwyn-Jones and Lane classified the right to a maritime lien created by United States’ law for a ship repaired there as procedural, not substantive. They held that this meant that, even if a maritime lien were conferred by the lex causae (also known as the lex loci) it would only be enforceable in an English court (because the law of Singapore as the place of arrest was the same as that of England) if it could be characterised as having the same legal effect under English law (being the lex fori) including treating the priority of such a claim as a right of the same nature under the lex fori. The minority, Lords Salmon and Scarman, preferred to treat the right to proceed in rem on a maritime lien as a substantive right, with the result that they held that the English courts would recognise the right in the character created by the lex causae. That would give the foreign lien the same priority and consequences as if it were a right of the same nature that had arisen in the lex fori.
About three years before the Full Court heard the Sam Hawk appeal, I gave the Dethridge Address to the 2013 MLAANZ annual conference entitled The Far from Halcyon Isle: Maritime liens, renvoi and conflicts of law. It is not without a small amount of irony that I recall telling the conference (which I am sure some of those here today attended) that:
One day a court here will have to make the intellectually challenging choice as to whether Australian law will accord recognition to a foreign maritime lien that is outside the nature of those liens referred to in s 15(2) of the Admiralty Act. That is an area between the majority and minority opinions in The Halcyon Isle that the Australian Law Reform Commission deliberately left open. And this issue will no doubt arise again when a cross-border insolvency is recognised here under the Cross-Border Insolvency Act 2008 (Cth) and it affects the arrest of a ship on a maritime lien.
In the end, that intellectually challenging choice was settled, at least at the intermediate appellate level in obiter dicta, over my obiter The other four judges, Allsop CJ and Edelman J for whom the reasoning was part of their ratio, and Kenny and Besanko JJ agreeing in obiter, followed Lord Diplock’s conclusions on similar (although not identical, but much, as Professor Martin Davies correctly describes, “better reasoned”) bases.
However, the unanimous ratio of the Full Court was that Reiter could not rely on its contractual or maritime lien claims because the lex causae was Turkish, where the bunkers had been supplied. As a result, no US based claim could arise under Turkish law. That was because, first, the owners were not a relevant person under Australian law for such a claim since the time charterer had contracted with Reiter in Turkey for the supply of the bunkers at Istanbul and, secondly, (in the absence of evidence) Turkish law was presumed to be the same as Australian law, so that those circumstances could not create a general maritime claim enforceable in rem against Sam Hawk. On the more interesting issue of whether foreign maritime liens could be recognised under Australian law, Allsop CJ and Edelman J said that a foreign right will be recognised as a maritime lien under s 15 of the Admiralty Act if: (1) the lex causae, as identified, recognises such a right; and (2) that right is characterised as, or is closely analogous to, a maritime lien that the lexi fori (which for a claim under s 15 of the Admiralty Act will be Australian law) recognised. Kenny and Besanko JJ said, obiter, that they preferred this reasoning but did not need to decide whether it should be applied because it did not arise on the facts.[32]
In my obiter view, based on the history of the maritime lien, together with commercial and international policy considerations, I concluded that “a claim on a maritime lien that is properly so characterised under the law of the place where it attached, ordinarily, will be maintainable under s 15(1) of the Admiralty Act even though no such maritime lien would attach if the same events had occurred in Australia”.[33]
Ship arrests and cross-border insolvency
One important remedy for a maritime creditor is the maritime lien – as I explained in Sam Hawk:[34]
The principles of Australian maritime law, as well as those of the laws of most maritime nations recognise that the injured party can assert that a maritime lien or privilege or claim also attaches to the ship at the moment of the damage and that this lien, privilege or claim can be asserted in proceedings regardless of any subsequent change of ownership.
The lien travels around the world with the vessel, like a barnacle on its hull, and can only be ‘cleaned’ convincingly by a judicial sale. Hopefully, the issue of how judicial sales will be effected and recognised will soon attain a greater degree of international harmony following the adoption by the General Assembly of the United Nations Convention on the International Effects of the Judicial Sales of Ships.
Following Buchanan J’s decision in Yu v STX Pan Ocean Company,[35] the Court issued a practice note on cross-border insolvency.[36] This requires an application under the Cross-Border Insolvency Act which “relates to an owner of a ship or ships engaged in any commercial trade”, to be brought the Court’s attention before or at the time the application is filed, together with a copy of Buchanan J’s reasons in Yu. In accordance with the Court’s usual processes, the application will then be referred to an appropriate Admiralty and maritime judge who will have a proper appreciation of the issues at stake in both Admiralty and commercial law contexts.
Of course, recognition of one’s claim in the forum is a substantive hurdle facing a creditor in the context of cross-border insolvencies involving shipowners. In both Kim v Daebo International Shipping Co Ltd[37] and Hur v Samsum Logix Corporation,[38] I considered the interaction between actions in rem and Art 20 of the Model Law on Cross-Border Insolvency which, is given force of law by the Cross-Border Insolvency Act 2008 (Cth). The model law provides for a stay of the commencement or continuation of individual actions concerning the debtor’s assets or liabilities where there is already an insolvency proceeding in a foreign jurisdiction.[39]
In Kim, I noted that:[40]
It may be thought unlikely that the Model Law was understood or intended by either its creators or by the Parliament when giving it the force of law in Australia under s 6 of the Cross-Border Insolvency Act, to supervene or impliedly repeal the domestic statutory remedies provided in States Parties, including those in Australia’s Admiralty Act, in respect of maritime creditors’ rights to proceed in rem on a secured or proprietary claim that pre-existed any interim or final orders recognising a foreign proceeding under Arts 19 or 20 of the Model Law.
I provided the following example in Hur:[41]
It will be of little comfort to an unpaid ship’s crew to be told that they can prove against their defaulting employer in a foreign country in foreign main proceedings if they wish, but, by the operation of the stay in Art 20(2), they have been denied the right to exercise their security interest consisting of their maritime lien, recognised almost universally in the maritime law of nations as protecting their right to be paid their wages: see s 15(2)(c) of the Admiralty Act. The fact that they are unpaid and are on a ship from which, if penniless, they cannot escape is a very good reason to ensure that however else the automatic stay in Art 20(2) of the Model Law operates, claims to such maritime liens are protected and immediately enforceable without any requirement for prior leave to be sought. If the stay in Art 20(2) were construed to preclude members of a ship’s unpaid crew from exercising their maritime lien by arresting or attaching the ship when she reached port, the consequence might be the de facto forced labour or enslavement of the crew until the ship finally reached the crew’s or ship’s home port.
The Thor Commander
Another interesting case concerned Thor Commander.[42] The plaintiff, Mount Isa Mines, had entered into a voyage charter for Thor Commander from the Chilean port of Angamos to Townsville with cargo of 3,044 bundles of copper anodes that it owned. In January 2015 the vessel suffered a main engine breakdown in the Coral Sea, following which she began drifting towards the Great Barrier Reef. Her owners arranged for a tug to depart from Townsville to assist her, but both the vessel's master and the Australian Maritime Safety Authority (AMSA) were uncertain whether the tug would arrive in time to prevent Thor Commander from drifting onto the Reef.
Due to this concern, AMSA issued a pan-pan notification requesting that all vessels within 10 hours of Thor Commander be available to provide immediate assistance. Xinfa Hai responded and by the afternoon she had deviated 61.5 nautical miles from her voyage to provide assistance to Thor Commander. At this point, AMSA issued a direction pursuant to s 11 of the Protection of the Sea (Powers of Intervention) Act 1981 (Cth) that required Xinfa Hai to tow and Thor Commander to accept such a tow. Xinfa Hai successfully towed Thor Commander away from the danger of her ongoing drift towards the Reef. Following this, the cargo owner of the copper anodes, Mount Isa Mines, through its insurers paid Xinfa Hai USD1 million in settlement of its salvage liability. Thor Commander claimed general average in respect of this and for certain transhipment costs.
This rescue gave rise to a number of legal issues which I had to resolve, including, among others: the cause of Thor Commander’s main engine breakdown, whether she was in need of salvage and whether the salvage settlement reached with the insurer was reasonable.
One of the witnesses was Vladimir Smirnov. His evidence was particularly memorable. He was the technical superintendent for MarShip who managed the ship and was responsible for her maintenance. Mr Smirnov gave his evidence via videolink from Germany, due to his difficulty obtaining a visa, which persisted despite my making an order that he attend in person. Mr Smirnov had a number of fiery exchanges with Mount Isa Mine’s counsel, Greg Nell SC, about the quality of the Rolls Royce fuel injection valves, the lack of maintenance for which was at the centre of the issue as to the cause of the engine breakdown. In one exchange, Mr Smirnov asserted that the quality of [“the] derivative nozzle element is absolutely shit” (T501).
I found that what Mr Smirnov said “could not be taken at face value”, and that he had been “party to the fabrication of maintenance records for Thor Commander’s oil filters”. This contributed to my ultimate finding that Thor Commander was unseaworthy due to a faulty fuel injector nozzle, and that MarShip had failed to exercise due diligence before and at the commencement of the voyage.
As to the salvage issues, I found that at the time Thor Commander accepted the tow, 'no reasonable person in charge of [her] … would have refused that assistance if it were offered to that person upon condition of paying a salvage award'. She was clearly in danger, “drifting at the mercy of the elements in a direction towards reefs”. This scenario, where AMSA had compelled the Xinfa Hai to render salvage services, fell squarely within the line of authority beginning with The Beaverford,[43] which holds that compliance with a statutory duty to render assistance does not change the voluntary character of the salvage services rendered.[44] Cases where the salvor is under a statutory obligation to render assistance can be differentiated from cases where the salvor is under another pre-existing duty, such as a contractual obligation, because the former 'is not enforceable against the salvor by the ship in danger, but by a governmental authority'.[45]
Despite the voluntariness of Xinfa Hai’s actions not being contentious, I remarked in the judgment, in obiter dicta, that:[46]
[T]he definition of salvage operations in s 14(1) of the Navigation Act does not create a precondition that the salvor be a volunteer
[N]either the definition of salvage operations in the Navigation Act nor the articles of the 1989 Convention to which reg 17 of the Navigation Regulation gives force of law in Australia qualify the character of “salvage operations” as being only voluntary … The motivating reason for an act or activity, whether voluntary or done under statutory or official compulsion, does not change its character.
These comments seem to have caused some minor controversy; for example, Dr Michael White OAM and Justice SC Derrington informed me in the 4th edition of Australian Maritime Law that my comments had ‘thrown into doubt’ the traditional principle that voluntariness was a requirement of salvage, and Damien Cremean also criticised the comments in an article in the Australian Law Journal.[47]
Not content with having lost the case, senior counsel for the vessel interests in the proceeding, now Stewart J, gave a speech to MLAANZ in July 2019 principally centred around my obiter dicta on the salvage issue. His Honour disagreed with me that voluntariness may not be a requirement of salvage at Australian law, commenting, rather ominously, that my statement in Thor Commander with regard to voluntariness “should not be taken as the last word on the subject in Australia”.
As I approach the end of my time on the bench, navigating the judicial sea, there may come a time for his Honour or another Admiralty and maritime judge to take up this challenge.
Conclusion
Thank you again for the support you have given the Court and me over my time as a judge.
[1] A judge of the Federal Court of Australia, an additional judge of the Supreme Court of the Australian Capital Territory, and a judge of the Supreme Court of Norfolk Island. The author acknowledges the assistance of his associate, Laura Heit, in the preparation of this speech. The errors are the author’s alone. This speech was delivered in a similar form as the keynote address to the MLAANZ NSW Branch 2023 Mini Conference on 28 February 2023.
[2] Pan Australia Shipping Pty Ltd v The Ship ‘Comandate’ (No 2) [2006] FCA 1112; 234 ALR 483.
[3] See Comandate Marine Corp v The Ship ‘Boomerang I’ (2006) 151 FCR 403.
[4] Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878.
[5] Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1.
[6] Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45.
[7] [2022] FCAFC 171; 295 FCR 81.
[8] C V Sheepvaartonderneming Ankergracht v Stemcor (A/sia) Pty Ltd (2007) 160 FCR 342.
[9] (2007) 245 ALR 125.
[10] (1794) 5 TR 673 at 686.
[11] (1882) 7 App Cas 591 at 604.
[12] Glyn Mills 7 App Cas at 604.
[13] Glyn Mills 7 App Cas at 605.
[14] Hilditch 245 ALR at [78].
[15] Hilditch 245 ALR at [93].
[16] Alize 1954 and CMA CGM SA v Allianz Elementary Versicherungs AG & Ors [2021] UKSC 51; 2 Lloyd’s Rep 613.
[17] Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad ('MV Bunga Seroja') (1998) 196 CLR 161 at 193 [85].
[18] Strong Wise Limited v Esso Australia Resources Pty Ltd [2010] FCA 240; 185 FCR 149 at 172 [80].
[19] Navios International Inc v The Ship “Huang Shan Hai” (2011) 194 FCR 468.
[20] Atlasnavios Navegacao LDA v The Ship “Xin Tai Hai” (No 2) (2012) 215 FCR 265.
[21] Visscher v Teekay Shipping (Australia) Pty Ltd [2011] FCAFC 137; 198 FCR 575.
[22] Visscher v Teekay Shipping (Australia) Pty Ltd [2014] FCAFC 5; 219 FCR 168
[23] [2013] FCAFC 21; 211 FCR 369
[24] Programmed Total Marine Services Pty Ltd v Ships “Hako Endeavour”, “Hako Excel” and “Hako Esteem” [2014] FCAFC 134; 229 FCR 563.
[25] Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd [2013] FCAFC 107; 216 FCR 469.
[26] Dampskibsselskabet 216 FCR at 489 [66].
[27] See https://www.infrastructure.gov.au/have-your-say/review-section-11-carriage-goods-sea-act-1991.
[28] Available at https://www.infrastructure.gov.au/department/media/publications/carriage-goods-sea-act-1991-potential-amendments-section-11.
[29] See now Poralu Marine Australia Pty Ltd v MV Dijksgracht [2023] FCAFC 147.
[30] The Ship “Sam Hawk” v Reiter Petroleum Inc [2016] FCAFC 26; 246 FCR 337.
[31] [1981] AC 221.
[32] Sam Hawk 246 FCR at 405 [283].
[33] Sam Hawk 246 FCR at 438 [430].
[34] Sam Hawk 246 FCR at 427 [378].
[35] [2013] FCA 680; 223 FCR 189.
[36] Cross-Border Insolvency Practice Note: Cooperation with Foreign Courts or Foreign Representatives (GPN-XBDR).
[37] [2015] FCA 684; 232 FCR 275.
[38] [2015] FCA 1154.
[39] For those who are interested, I have previously addressed the issues arising from cross-border insolvencies in a shipping context more fulsomely in a paper presented at the BIT’s 2017 Annual World Congress of Ocean in Shenzhen, China: Ship Arrests, Maritime Liens and Cross-Border Insolvency.
[40] Kim 232 FCR 275 at [14].
[41] Hur [2015] FCA 1154 at [33].
[42] Mount Isa Mines v Ship ‘Thor Commander’ (2018) 263 FCR 1814.
[43] [1938] AC 136.
[44] Thor Commander [346].
[45] Ibid [249].
[46] Ibid [274] and [348].
[47] Damien Cremean, ‘Salvage and Voluntariness’ (2020) 94 Australian Law Journal 665.
