ADMIRALTY - application for release of vessel from arrest - whether at commencement of arrest proceeding Federal Court had jurisdiction to arrest vessel - whether plaintiff was demise charterer - whether demise sub-charter was effectively terminated by a letter prior to the time when proceedings for arrest were instituted - effect of withdrawal of vessel from service under a demise charter - meaning of “re-delivery” in the demise charter agreement - whether there was a maritime claim - whether an unsatisfied condition precedent prevented valid arrest - whether resolution to enter into voluntary liquidation operates to terminate demise charter or employment contracts of Master and crew.

The Admiralty Act 1988 (Cth), s 18

The Admiralty Rules r 52

Sandeman v Scurr [1866] LR2 QB 86, followed

Baumvoll Manufactur von Scheibler v Gilchrist [1892] 1 QB 253, followed

Australasian United Steam Navigation Co Ltd v The Shipping Control Board (1945) 71 CLR 508, followed

The Agios Georgis [1976] 2 Lloyd’s Rep 192, followed

The Aegnoussiotis [1977] 1 Lloyd’s Rep 268, followed

Italian State Railways v Mavrogordatos [1919] 2 KB 305, followed

Tankexpress A/S v Compagnie Financiere Belge des Petroles S A (1948) 82 Ll L Rep 43, applied

Sea & Land Securities Ltd v William Dickinson & Co Ltd (1942) 2 KB 65, applied

Mutual Export Corporation v Asia Australian Express Ltd (1990) 103 FLR 32, cited

Tropwood AG of Zug v Jade Enterprises; “The Tropwind” (1981) 1 Lloyd’s Rep 45, cited

“The Munster” (1983) 1 Ll. LR 20, on appeal, 1983 1 Ll LR 370, cited

“The Gregos” (1995) 1 Lloyd’s Rep 1, cited

“The River Rima” (1988) 1 WLR 758

‘The Bass Reefer” (1992) 37 FCR 374, cited

Patrick Stevedores No 2 Pty Ltd v Proceeds of sale of the vessel MV “Skulptor Konenkov” (1997) 144 ALR 394, cited

Scrutton on Charterparties, (20th edn) 1996

Australian Law Reform Commission Report No 33 Civil Admiralty Jurisdiction 1986

Chartering Documents, Harvey Williams (1996) 3rd edn




NG 114 OF 1998




11 MAY 1998





NG 114 of 1998




(ACN 003 893 141)











11 MAY 1998







1.         The application be dismissed with costs.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.





 NG 114 of 1998




(ACN 003 893 141)












11 MAY 1998




This is an application by Partenreederei MS “Turakina”, the owner of the ship MS “Turakina” (“the ship”) for release of the ship from arrest.  The application is made pursuant to r 52 of the Admiralty Rules (“the Rules”) which provides:

Release from arrest by the Court


52.       (1)  A party to a proceeding may apply to the court in accordance with Form 19 for the release of a ship or other property that is under arrest in the proceeding.


            (2) Where a caveat against release of the ship or property is in force, a copy of the application shall be served on the caveator.


            (3)  On the application under subrule (1), the court may order the release from arrest of the ship or property on such terms as are just.”



The ship was arrested on 19 February 1998 at Sydney on the application of the plaintiff, Patrick Stevedores No 2 Pty Limited (“Patricks”), pursuant to a claim by Patricks for stevedoring and other services rendered to the ship in Australian ports under a stevedoring agreement between South Pacific Shipping Limited (“SPS”) and the plaintiff, executed on 25 June 1997.  The governing law is expressed to be the law of New South Wales.

Immediately prior to arrest, the ship was sub-demised to Deil Shipowners B.V (“Deil”), a Dutch corporation, which in turn, on 19 December 1995, entered into a further sub-demise charter to SPS.

The Admiralty Marshal and the Master and crew of the ship have intervened in the proceeding to secure their respective interests in the event that the vessel is released.

The principal issue in the case is whether the sub-charter, by way of demise, entered into between Deil and SPS was effectively terminated so that at the time when proceedings for arrest were instituted on the afternoon of 19 February, SPS could no longer said to be a demise charterer within the meaning of s 18 of the Admiralty Act 1988 (Cth) (“the Act”).

That section provides as follows:

“Right to proceed in rem on demise charterer’s liabilities


18.       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.”  (Emphasis added)



The precise temporal sequence of events is important in this matter.  The times to which I refer are given as Australian Eastern Standard times.  It is common ground that on 18 February 1998, at 1.42 pm Australian time, Deil sent a letter by fax to SPS in New Zealand purporting to terminate the sub-demise charter with SPS for non-payment of hire.  That letter is of central importance and reads as follows:

“M/V “Turakina” - Charterparty dated 19 December 1995

Pursuant to clause 10 of the above charterparty, charter hire is payable by you every 14 days in the amounts referred to in rider clause 35.  We note that hire monies have now remained unpaid for more than 60 days.

In the circumstances, we have no alternative but to terminate the charterparty and take possession of the ship.  Termination is immediate effect.

Without prejudice to the timing and effect of this notice, we as disponent owners also direct that the ship be redelivered to the possession and control of the beneficial owners, whose representative will make contact with the master to attend to necessary aspects of redelivery.

In the mean time, and in terms of the other provisions of the charterparty, all of the beneficial owners’ and disponent owners’ rights and remedies are hereby expressly reserved.

Yours faithfully,

Deil Shipowners b.v.”

I pause to note the language of this letter does not, in terms, refer to withdrawal of the vessel from the service of the charterers.  It requires redelivery of possession to be made. That requirement cannot itself amount to redelivery of possession.  The case was argued on the basis that the letter acted as a notice of withdrawal under cl 10(e).  It was not argued in this case that the charter had been repudiated and the repudiation accepted.

The following day, 19 February 1998, at 10.21 am a resolution was passed in New Zealand for the voluntary winding up of SPS.

At 11.15 am, a copy of the above letter of 18 February 1998 was served on the Master of the ship.  Several hours later, at 2.30 pm, the plaintiff’s writ was filed for arrest of the vessel.

As a consequence of these events the applicant submits that at the time the writ was filed, the Court had no jurisdiction to issue the writ because the plaintiff was not, at the time when the proceeding was commenced, a demise charterer of the ship.

In addition, the applicant also makes several further submissions.  First, that at the time of arrest there was no maritime claim.  Second, that a condition precedent to the bringing of the action had not been satisfied.  In particular, reliance is placed on the terms of the arbitration clause in the agreement between SPS and Patricks for supply of stevedoring services.  The third submission is that the resolution of SPS to enter into voluntary liquidation automatically terminated both the employment of the Master and crew and the demise charter without the necessity for any notification or publication.

In answer to the principal submission as to the termination of the charter, Patrick submits that at the time of arrest the vessel remained under demise charter to SPS and that it was not terminated by the letter of 18 February 1998.  The contention is first that the letter did not terminate the demise charter because the charter provided in cl 10 for hire to continue until the date and hour when the vessel is redelivered by the charters to her owners.  The continuance of this right under the charter meant, it is said, that SPS continued as the demise charterer.  It is then said that the charterparty remained on foot after receipt of notice of withdrawal of the vessel from the service of the charterer because redelivery had not taken place and that this was required before the charter was terminated.  The argument is that, as there had been no redelivery prior to the time when the in rem proceedings were commenced, the demise charter had not been terminated as contended for by the owner applicant.  It is further said that the resolution for voluntary winding up did not affect the operation of the demise charter.  It is submitted that the claim for stevedoring services is a maritime claim and that on the correct construction of the agreement between SPS and Patricks there was no unsatisfied condition precedent to the commencement of the arrest proceeding on 19 February 1998.

The Master and crew and the Marshal were given leave to appear on the application in order to support their position, which was that if any order for release were to be made then adequate security must be provided as a condition of release to meet their proper claims against the ship.  In the case of the Marshal, r 53 confers a discretion on the Marshal to refuse to release a ship from arrest unless arrangements satisfactory to the Marshal have been made for the payment of fees and expenses incurred by the Marshal in connection with the custody of the ship whilst under arrest.  In relation to the Master and crew, the claim for security is based on r 52(3) of the Rules set out earlier, which empowers the Court to impose such terms as are just on release of a ship from arrest.

The charterparty

In order to adequately appreciate the argument in this matter it is necessary to refer to the terms of the charter. The demise charter of 19 December 1995 was in the standard bareboat charter format known as “Barecon 89”.  There is no dispute that the charter is a bareboat charter or demise charter and not a time charter or a voyage charter: see definition cl 1 of the Charter.

Clause 2 of the charter provides that the vessel shall be delivered and taken over by the charterer at any port in New Zealand or within the Australian range in such ready berth as the charterers may direct.  The owners must before and at the time of delivery exercise due diligence to make the vessel seaworthy and ready for service under the charter.  The vessel must be properly documented at the time of delivery.  The delivery to the charterers of the vessel and the taking over of the vessel by the charterers shall constitute a full performance by the owners, of all the owners’ obligation under cl 2.  Considerable significance is attributed in the charter to the physical delivery and taking over of the vessel.  Clauses 3 and 4 are concerned with the time of delivery and cancellation if not delivered in time.  In my view, the above three clauses make it apparent that it is delivery, involving the handing over of the vessel at a port, that is contemplated

Clause 9 provides as follows:


“9.       Maintenance and Operation


(a)       The Vessel shall during the Charter period be in the full possession and at the absolute disposal for all purposes of the Charterers and under their complete control in every respect.  The Charterers shall maintain the Vessel ....

            The Charters to take immediate steps to have the necessary repairs done within a reasonable time failing which the Owner shall have the right to withdraw the Vessel from the service of the Charterers without noting any protest and without prejudice to any claim the Owners may otherwise have against the Charterers under the Charter.

(b)       The Charterers shall at their own expense and by their own procurement man, victual, navigate, operate, supply, fuel and repair the Vessel whenever required during the Charter period and they shall pay all charges and expenses of every kind and nature whatsoever incidental to their use and operation of the Vessel under this Charter...

            The Master, officers and crew, of the Vessel shall be servants of the Charterers for all purposes whatsoever, even if for any reason appointed by the Owners.


(e)        The Charterers shall have the use of all outfit, equipment and appliances on board the Vessel at the time of delivery, provided the same or their substantial equivalent shall be returned to the Owners on redelivery in the same good order and condition as when received....”  (Emphasis added)

Clause 10 provides for the payment of hire.  It relevantly reads:

10.     Hire

(a)       The Charterer shall pay to the Owners for the hire of the Vessel at the lump sum per 14 days as indicated in Box 21, commencing on and from the date and hour of her delivery to the Charterers...  Hire to continue until the date and hour when the Vessel is redelivered by the Charterers to her Owners.



(e)        Time

            Time shall be of the essence in relation to payment of Hire hereunder. In default of payment beyond a period of seven running days, the Owners shall have the right to withdraw the Vessel from the service of the Charterers without noting any protest and without interference by any court or any other formality whatsoever, and shall, without prejudice to any other claim the Owners may otherwise have against the Charterers under the Charter, be entitled to damages in respect of all costs and losses incurred as a result of the Charterers’ default and the ensuing withdrawal of the Vessel.”  (Emphasis added)

It should be noted that the entitlement to hire under the Charter is up to the time of redelivery.  The right is not quasi contractual but is an express and specific entitlement under the demise.  Any claim for such hire is a claim under the charter.

Clause 14 relates to redelivery and provides:

“14.     The Charterers shall at the expiration of the Charter period redeliver the Vessel at a safe and ice free port or place as indicated in Box 16...

            Should the Vessel be ordered on a voyage by which the Charter period may be exceeded the Charterers to have the use of the Vessel to enable them to complete the voyage, provided it could be reasonably calculated that the voyage would allow redelivery about the time fixed for the termination of the Charter.”

Clause 23 relates to Acquisition and to termination.  Relevantly it provides:



(b)       In the event of the Owners being deprived of their ownership of the Vessel ... then irrespective of the date during the Charter period when ‘Compulsory Acquisition’ may occur, this Charter shall be deemed terminated as of the date of such ‘Compulsory Acquisition’.  In such event Charter Hire to be considered as earned and to be paid up to the date and time of such ‘Compulsory Acquisition’.”  (Emphasis added)

Since there is no substantial dispute between the parties as to the meaning of the expression “demise charter” or “time charter” nor as to the present charter being a demise charter then the issue is whether SPS was a demise charterer at the commencement of arrest proceedings.

A charter by demise is one by which the owner parts the whole possession and control of the ship and gives the charterer a power and right independent of him and without reference to him to do what he pleases with the regard to the appointment and employment of crew: Sandeman v Scurr [1866] LR2 QB 86 at 96; Baumvoll Manufactur von Scheibler v Gilchrist [1892] 1 QB 253 at 259; Australasian United Steam Navigation Co Ltd v The Shipping Control Board (1945) 71 CLR 508 at 521-522, 525, 526-527, 528.  See also Scrutton on Charterparties, 20th edn at 59-60.  As Scrutton points out, a charter by demise operates as a lease of the ship itself to which the services of the Master and crew may or may not be super-added.

A time charter, which is not by demise, in contrast, is an agreement between shipowner and charterer to render services by the shipowner’s Master and crew to carry the goods, which are put on board a ship by or on behalf of the charterer.  In these charters, the ownership and also the possession of the ship remain with the original owner through the Master and crew, who continue to be his servants.  See Scrutton (supra) at 59.

Withdrawal of the vessel - the authorities

The applicant submits that the letter of “termination”, dated 18 February 1998, effected a withdrawal of the vessel from the service of the charterers under cl 10(c) quoted above.  It is said that in accordance with the authorities, the affect of the withdrawal was to cancel the charter: see The Agios Georgis [1976] 2 Lloyd’s Rep. 192; The Aegnoussiotis [1977] 1 Lloyd’s Rep 268 and Scrutton on Charterparties (20th edn) 1996 at 355-356.  It is submitted that the characteristics of a demise charter were no longer present after receipt of this notice.  Deil’s rights, it is said, were not limited to a bare right to receive the stipulated hire and take the vessel back into possession after the charter came to an end.  Rather, upon notice of withdrawal, Deil had a right to immediate possession, which meant that after termination it could no longer be correctly said that the whole possession and control of the vessel remained in SPS.  SPS thereafter, it is submitted, was subject to a direction that the ship must be redelivered to the possession and control of Deil.  It is further submitted that, after cancellation, if a party remains in possession, any previous contractual right to possession under the demise charter is replaced by a common law bailment relationship whereupon the contractual demise relationship ceases, with the consequence that the former demise charterer becomes an involuntary bailee.

Both the decision in The Agios Giorgis and The Aegnoussiotis, it is pointed out, concern the cancellation of time charters and not demise charters.  In The Agios Giorgis, Mocatta J considered the meaning of the expression “withdrawal” as used in the time charterparty.  At 202 his Lordship said:

“The courts seem to have treated the word ‘withdrawal’ as equivalent to ‘cancellation’, an interpretation which, if I may say so with respect, seems to me the natural one.”

His Lordship, having then referred to the decision of the Court of Appeal in Italian State Railways v Mavrogordatos [1919] 2 K.B. 305 and Tankexpress A/S v Compagnie Financiere Belge des Petroles S A (1948) 82 Ll. L. Rep. 43, went on to say:

“This view of the meaning of withdrawal is expressed in the 12th edition of Carver (1971) par 392, where it is said ‘the effect of the withdrawal is to determine the contract’.”

The above statement of Carver was made in the context of a non-demise charter.

In The Aegnoussiotis, Donaldson J considered a cancellation clause in a charterparty, which provided that upon the charterer failing to make punctual and regular payment of hire:

“... the Owners shall be at liberty to withdraw the vessel from the service of the Charterers, without prejudice to any claim (the Owners) may otherwise have on the Charterers.”

At 276 his Lordship said:

“The concept of the right to withdraw a vessel for non-payment of hire is very well known.  It involves, and has always involved, a final withdrawal and the termination of the charterparty.  If, thereafter, the service is resumed it is because the parties have agreed that this should occur.  In other words, their rights are governed by a new contract”

Again, his observations concerned a time charter and not a demise charter.

Despite extensive research, Counsel were unable to refer me to any direct authorities where the same principles had been taken to apply to a demise charter as opposed to a time or voyage charter.

Counsel for the plaintiff submits that an important distinction must be drawn between demise charter and a non-demise charter when considering the effect of an exercise of the right to withdraw the vessel from service of the charterer.  He points out that the expression “demise charterer” is not defined in the Act and further submits that the practical effect of a “demise charter” is to effect a lease of the vessel and to transfer possession of the vessel to the charterer.

In the Australian Law Reform Commission Report No 33 on Civil Admiralty Jurisdiction 1986, (“the ALRC Report”) a demise charterer is referred to as a person to whom the whole operation and management of the ship has been delegated and the person who appoints the Master and employs the crew.  It is submitted that under the present demise charter, the vessel was delivered into the possession of SPS and was at its absolute disposal and under its complete control until redelivery of that possession.  Reference is made to the provisions of clause 10(a), which requires the charterer to pay hire for the vessel until the date and hour when it is redelivered.  It is, therefore, said that this supports the conclusion that until redelivery, SPS remained the demise charterer of the ship.

It is noteworthy that in the ALRC Report, the Commission emphasised the importance of the distinction for the purposes of an in rem claim between a time charter and a charter by demise. After considering several options the Commission concluded in par 136:

“... a statutory right of action in rem with respect to any claim, other than a claim directly involving the possession of or a proprietary interest in the ship, should only be able to be brought where, when the action is commenced, the owner or a demise charterer of the ship is a relevant person in respect of the claim.”

In par 137, the Commission discussed the alternative view that a right of action in rem should be provided:

“ ... with respect to the liabilities of any person who is the operator of the ship (including a time charterer who is the operator)...”

Earlier in the Report, the Commission noted that there was general agreement that a right of action in rem should exist where the relevant person, when the action is commenced, is either the co-owner or the demise charterer of the ship in question.  However, there was no consensus beyond that among the members.

In furtherance of its submissions, the plaintiff indicates that the charter attaches considerable importance to the concepts of redelivery and delivery.  The submission then proceeds to point out that, in relation to time or voyage charters, upon which the English authorities focus, the expression “redelivery” is inappropriate because the time charters under consideration in those decision were in a form which used language taken from demise charterparty form without appropriate modification.

The point is succinctly made by Lord Porter in The Tankexpress case (supra) at 90 speaking of a non-demise charter:

“My Lords, it is commonplace that the phraseology still adopted in the case of the charter of a ship where her services are put at the disposal of the charterer but she is not demised, is deceptive.  The ship is not leased or withdrawn: her services and those of her crew are put at the disposal of the charterers when the charter begins, and when the withdrawal of the ship is spoken of it merely means that those services are no longer supplied.”

This matter was also referred to by Lord MacKinnon in Sea & Land  Securities Ltd v William Dickinson & Co Ltd (1942) 2 KB 65 at 69:

“The rights and obligations of the parties to a time charterparty must depend on its written terms, for there is no special law applicable to this form of contract as such.  A time charterparty is, in fact, a misleading document, because the real nature of what is undertaken by the shipowner is disguised by the use of language dating from a century or more ago, which was appropriate to a contract of a different character then in use.  At that time a time charterparty (now known as a demise charterparty) was an agreement under which possession of the ship was handed by the shipowner to the charterer for the latter to put his servants and crew in her and sail her for his own benefit.  A demise charterparty has long been obsolete.  The modern form of time charterparty is, in essence, one by which the shipowner agrees with the time charterer that during a certain named period he will render services by his servants and crew to carry the goods which are put on board his ship by the time charterer.  But certain phrases which survive in the printed form now used are only pertinent to the older form of demise charterparty.  Such phrases, in the charterparty now before the court, are: ‘the owners agree to let,’ and ‘the charterers agree to hire’ the steamer.  There was no ‘letting’ or ‘hiring’ of this steamer.  Then it is in terms provided that at the end of the period the vessel shall be ‘redelivered’ by the time charterers to the shipowners.  ‘Redelivery’ is only a pertinent expression if there has been any delivery or handing over of the ship by the shipowner to the charterer.  There never has been any such delivery here.  The ship at all times was in the possession of the shipowners and they simply undertook to do services with their crew in carrying the goods of the charterers.  As I ventured to suggest quite early in the argument, between the old and modern form of contract there is all the difference between the contract which a man makes when he hires a boat in which to row himself about and the contract he makes with a boatman that he shall take him for a row.”

The question of withdrawal of the ship from a time charter and redelivery was considered in the Italian State Railways case (supra).  In that case, the time charterparty placed the use of a ship and the Master and crew at the disposal of the charterers for 12 months.  The charterers agreed to pay hire monthly in advance, commencing on the date of the vessel’s “delivery as aforesaid” and to continue until “her redelivery” at a port in West Italy or the United Kingdom at the charterers’ option.  Failing punctual and regular payment of the hire, the owner had liberty to withdraw the vessel from the services of the charterers without prejudice to any claim he might otherwise have against them.  After a month’s hire having fallen due and not having been paid, the owner wrote to the charterers withdrawing her from their service.  An action was brought by the charterers against the owners for a declaration that the charterparty was still subsisting after the letter of withdrawal.

The Court of Appeal held that because the charterparty was not a demise charterpartybut was only a contract for the provision of services, the word “redelivery” could not be construed literally.  Accordingly, the ship was “redelivered” when the owner was able to resume control of her and the services were withdrawn.  The case differed from the present since the owner admitted that he could only recover hire for that part of the month during which the ship was at the service of the charterers and therefore the Court held that he could not recover for hire for the use of the ship after the letter of withdrawal of the services.

All three members of the Court drew a distinction between the effect of a letter of withdrawal in the case of a time charterparty and its effect in relation to a charter by way of demise.

Bankes LJ in that case (at 311-312) said on this question:

“But it is said that the charterparty provided that the hire should continue until the ship’s redelivery, and that she cannot be said to be redelivered while on the high seas continuing the voyage commenced under the charterers’ orders which have never been cancelled.  One must consider the language of the charterparty in order to give that argument its true weight.  It is founded on the word ‘redelivery’.

As pointed out by Mr MacKinnnon that is not an apt word to express the obligation of either party to the other under such a contract as this.  It might be an appropriate word if the ship had been demised, but under a charter like the present by which the owner places the ship with her captain, officers, seamen, engineers .... and crew at the disposal of the charterer for a certain period on certain terms, the only redelivery possible is to make such arrangements as will enable the owner to resume control on the expiration of the charter and, it may be, if necessary, to inform the Master that the is no longer under the charterer’s orders but must consider himself under the orders of the owner.


The material point of time [in the case of a time charterparty] is that moment when as a matter of law the power of giving orders to the master passes from the charterers to the owner. And that is the moment when the owner chooses to exercise the option of withdrawing the ship from the services of the charterers.”  (Emphasis added)

Duke LJ agreed with the judgment of Bankes LJ and said at 113:

“There had never been a demise of the ship; she remained from first to last in the possession of the owner.  ‘Delivery’ and ‘redelivery’ in this clause relate to the same thing, the power of disposition of the ship. When the power of disposition is restored to the owner there is a redelivery within the meaning of the clause.”

A T Lawrence J agreed with the argument advanced by Counsel, Mr  MacKinnon.  He said at 314 that:

“... it is impossible to construe the word ‘redelivery’ in a literal sense.  This is not a contract of demise. It is an ordinary contract whereby the possession of the ship remains in the shipowner.”

The last sentence in the above judgment is significant in the case of a demise charter whereby the charterer is given an interest in and the possession of the vessel.  Arguably then, there is more required to effect ‘redelivery’ than simply surrendering services to the owner.  It is necessary that possession of the vessel be redelivered to the owner.

In Mutual Export Corporation v Asia Australian Express Ltd (1990) 103 FLR 32, Carruthers J had to consider the effect of an accepted repudiation in relation to a charter. His Honour held that the case before him involved a clear repudiation by the sub-charterer of its obligations under the sub-charter and also that acceptance by the owners of such repudiation terminated the charter.  His Honour considered that it was “ a far cry” from the situation where there had merely been late payment or short payment of hire with a consequential attempt by the owner to withdraw the vessel in order to obtain an increased rate of hire.  He referred with approval to the remarks of Bankes LJ quoted above in Italian State Railways.  He also accepted the following passage from the judgment of Goff J in Tropwood AG of Zug v Jade Enterprises; “The Tropwind” (1981) 1 Lloyd’s Rep 45 at 52 where his Lordship said:

“It is important ... to remember that under an ordinary time charter the possession of the vessel remains throughout in the shipowner, by whom the master and crew are employed.  The terms ‘delivery’ and ‘redelivery’, still used in time charters, are misnomers, hangovers from demise charters signifying no more than the beginning and end of the services provided by the shipowners under what is simply a contract of services.”


In the text Chartering Documents, Harvey Williams (1996), 3rd edn at 93, in discussing rights of withdrawal under cl 10(e) of the standard “Barecon 89” demise charter, the author says:

“Withdrawing a time-chartered ship is achieved simply enough by a series of notices (to bank, charterer and master).  In a bareboat charter withdrawal possession must be physically retaken.”

It seems to me that this is an overstatement of the true position.  For example, there may be a surrender of the vessel by the charter or a symbolic redelivery.  However, the general view expressed does indicate that something more than mere notification of withdrawal is necessary to terminate the charter and redeliver possession of the vessel to the owner.




Although the above authorities do not expressly decide that redelivery of possession is necessary in order to terminate a charter by demise, they proceed on the basis that there is a significant distinction between a time or voyage charter and a demise charter.  This distinction resides in the fact that in a non-demise charter there is no requirement for delivery or transfer of possession to the charterer at the commencement of the charter.  Accordingly, redelivery cannot require a transfer back of possession. In such a case, the services provided to the charterer are terminated upon notice of withdrawal.  However, in the case of a demise charter the vessel itself is let and possession is taken by the charterer.  Therefore, once the vessel is withdrawn from the service of the charterer, an obligation to redeliver possession arises because possession has been delivered at the commencement of the charter.  Redelivery, in its natural and ordinary meaning, denotes a delivery back of that which was originally delivered.  Upon withdrawal, if the charterer refuses to redeliver possession, there will be a repudiation by the charterer, which could then be accepted by SPS.  It is clear that if an owner is entitled to treat the breach as a repudiation or on behalf accepts the repudiation the charter is thereafter at an end: “The Munster” (1983) 1 Ll. LR 20, on appeal, 1983 1 Ll LR 370, “The Gregos” (1995) 1 Lloyd’s Rep 1 at 9.

The appellant submits that once notice of withdrawal of the ship from service of the charterer is given, the charterer has lost that complete possession and control which is the distinguishing hallmark of a demise charter. The charterer is then under an obligation to give back possession of the vessel at the direction of the owner and its status as a demise charterer is, from the time when withdrawal is notified, reduced to that of an involuntary bailee.

One answer to this submission, in my view, is that clause 10(a) of the charter contemplates the continued payment of hire under the charter until the day and hour of redelivery of the possession of the vessel.  That redelivery had not taken place before the arrest proceedings were commenced.  The letter of 18 February 1998,  itself contemplates “redelivery” to the possession of the beneficial owner and to the taking of possession after termination.  The language used indicates that possession is to be taken by subsequent redelivery to Deil.  In the case of a true demise charter, such as the present, there is no difficulty in construing the requirement of “redelivery” in its ordinary and natural sense; meaning the giving back that which was originally given.

The language of the charter, in the present, case supports this conclusion.  It provides in detail for delivery of possession of the ship to the charterer and also for redelivery of that possession by the charterer: see cl 1, 2, 3, 4, 5, 8, 10 and 13, and also Boxes (b) 13, 14, 16 and 30.  The ship is, during the charter period, in the possession and absolute control of the charterer: see cl 9.  The wording of cl 10 does not refer in terms to “termination” of the charterparty.  In this respect it is noteworthy that cl 23, which relates to Compulsory Acquisition, makes particular reference to the charter being “terminated” and to hire being paid only up to the date and time of the Compulsory Acquisition: cl 23(b).  This contrasts with the provision of the present demise charter to the effect that hire continues to be payable under it until redelivery, which indicates that the charterparty obligations continued to operate after notice of withdrawal.

As at the time of commencement of the arrest proceedings there had been no redelivery of the vessel of possession.  There has been no act of actual or symbolic delivery of possession.  Nor was there any attornment or statement of intent by the charterer to the effect that possession was surrendered or redelivered.  The evidence does not indicate that any or that any steps had been taken by or on behalf of SPS to redeliver possession of the vessel to Deil prior to commencement of the arrest proceeding.  As mentioned earlier in these reasons a mere notification by the owner that redelivery is required does not itself amount to redelivery.  Having regard both to the language of the demise charter, and the indications in the authorities as to the different character of a demise charter which confers an interest in the vessel and possession, my conclusion is that the notice of withdrawal in the present case did not operate to terminate the charter at the time arrest proceedings were instituted.

Constructive redelivery

The applicant submitted that upon withdrawal of the ship there was a constructive redelivery and that SPS thereafter became an involuntary bailee.

This submission cannot be accepted, if due regard is paid to the language of the charter, which contemplated redelivery of possession at a port or place indicated in the charter.  Notice is required to be given at the port or place of redelivery and there are obligations as to the condition of the vessel upon redelivery: see cl 14.

The submission is also inconsistent with Deil’s letter of 18 February 1998 which said:

“Without prejudice to the timing and effect of this notice, we as disponent owners also direct that the ship be redelivered to the possession and control of the beneficial owners, whose representative will make contact with the master to attend to the necessary aspects of redelivery.”

This paragraph calls for a subsequent delivery of the vessel into the possession and control of the beneficial owners and requires that arrangements be made in order “to attend to the necessary aspects of redelivery.”  These latter words clearly refer to the mechanical steps necessary to effect delivery of actual possession.  They contemplate that there will be no redelivery until the vessel is restored to the possession of the beneficial owner.  The notion of redelivery of possession of the vessel suggests some step or acknowledgment by the charterer to give effect to the redelivery and not merely a notice by or on behalf of the owner that redelivery is required.  No such step was taken nor was any acknowledgment made in the few hours between withdrawal and commencement of proceedings.  In the light of these considerations there is no substance in the suggestion that constructive delivery was made simply by issuing and serving the notice of withdrawal of the vessel.

Voluntary liquidation of SPS


The applicant further submits that the non-communicated and unpublished resolution to voluntarily wind up SPS, which was passed on 19 February 1998, had the effect of dismissing the Master and crew as from that time so that although physically present on the ship at the time the writ was filed, they could not be said to be the agents or employees of SPS and to have possession on its behalf.

In fact the Master and crew were not informed of their dismissal until the day after the writ was filed, that is to say, on 20 February 1998, so that if notice or publication of the resolution were required, there was no effect until that time at the earliest.

In view of the conclusion which I have reached earlier as to the requirements for termination of the demise charter having not been satisfied at the relevant time, this argument is strictly irrelevant.  The above conclusion does not necessarily depend upon the continued employment of the crew by SPS at the time when the writ was filed, but, rather upon whether there had been a redelivery of the vessel as required by the terms of the charter at or prior to that time.

Some evidence, of an expert nature, was led for the applicant from Mr Stubbs, a New Zealand solicitor practising in the area of corporate insolvency and liquidation, as to the effect of a resolution to enter into voluntary liquidation.  His conclusion was that:

“13.     The position in New Zealand under the Act is not clear .... Thus, although the matter is not clear or certain, in my opinion the better view is that the voluntary liquidation of an insolvent company operates as a notice of discharge of the contracts of employment with its employees, just as a court ordered winding up so operates.”

There is a difficulty inherent in the expression of the conclusion reached by Mr Stubbs.  The question must be answered as to the point of time when the voluntary liquidation operates as a notice of discharge.  The use of the word “notice” indicates that some further step must be taken to draw the resolution to the attention of those affected by it.  The Master and crew were not notified until 20 February 1998 and there was no publication of the resolution until 2 March 1998, when notice of the liquidation was filed in the Business & Registries Branch in Christchurch.

It would be a curious result if an uncommunicated or unpublished resolution to voluntarily wind up a body corporate could operate immediately and automatically to discharge employees without any notification to them or public access to the terms of that resolution either by way of publication or by way of filing in a public registry.  There is a considerable body of authority in support of the proposition that publication of the fact that a resolution to wind up has been passed is effective notice of dismissal from employment: see Chapman’s case (1866) 35 Beav 208; MacDowell’s case (1886) 32 Ch D 366, Re Associated Dominions Assurance Society Pty Ltd and the Life Insurance Act (1962) 109 CLR 516 at 518; McPherson, The Law of Company Liquidation, 3rd edn at 174-175;  The Effect of Liquidation on Contracts of Service (1952) 15 MLR 48 at 52, and The Laws of New Zealand (Vol 6) Companies to Compulsory Acquisition, par 398.  In light of this line of authority, in my view, the earliest date on which a resolution to voluntarily wind up could operate as a notice of discharge from employment was when the Master and crew were informed of the passing of the resolution and its terms.  This occurred on the day after the writ was filed and cannot therefore assist the applicant’s case in relation to the time of termination of the demise charter.

Maritime claim


The applicant’s further submission is that there is no maritime claim within s 4(3) of the Act because the claim is for services applied to SPS, the charterer, and not to any specific ship.

Section 4(3) of the Act is in these terms:

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

(a) .....


(m)      a claim in respect of ..... services (including stevedoring ... services) supplied ... to a ship for its operation or maintenance.”

The applicant refers to The “River Rima” (1988) 1 WLR 758; “The “Bass Reefer” (1992) 37 FCR 374 and Patrick Stevedores No 2 Pty Ltd v Proceeds of sale of the vessel MV “Skulptor Konenkov” (1997) 144 ALR 394.

Those decisions draw attention to the distinction between services rendered to a shipowner or to a charterer of a ship and services rendered or supplied to the ship itself. Where it can be said that the services are purely for the benefit of the shipowner or charterer then they do not give rise to a maritime claim because they are cannot accurately be described as claims against the ship as distinct from the shipowner.

In the present case, the evidence is quite clear that the plaintiff’s claims were for stevedoring and other services provided to the MV “Turakina” herself in accordance with the Agreement for Stevedoring Services made on 25 June 1997 between Patricks and SPS.  The invoices, which form the basis of the claim, are all said to be in relation to the vessel.  In order to establish the necessary relationship between the services and the ship, it is sufficient, as Foster J points out in Port of Geelong Authority v The “Bass Reefer” (supra) at 385, that the matter is looked at as at the time when the services are provided and not necessarily when the contract is entered into.  In the present case, it is clear that the vessel was sufficiently specified when the services were provided to it and therefore it is of no relevant consequence if the agreement related to services said to be provided to other vessels in addition to the particular vessel.

Condition precedent


The applicant also contends that no cause of action had arisen in favour of the plaintiff as at the time when the arrest proceedings were instituted.  Accordingly, it is said that the Court had no jurisdiction to arrest the vessel.  This consequence is said to result from the terms of the arbitration clause in the agreement between Patricks and SPS of 25 June 1997, which reads as follows:


Each of the following steps must be taken as a condition precedent to any party commencing or maintaining a cause of action on any court, tribunal or other forum with respect to these Conditions (the “dispute”).

(a)       One party shall identify the nature of the dispute by written notice to the other (the “notice”).

(b)       If, within 14 days of service of the notice, the parties fail to agree on the appropriate tribunal or method of resolving the dispute, the dispute shall be referred to the President of the Law Society of New South Wales.  The President or his nominee (the “referee”) shall decide which of the following tribunals or procedures shall be used to resolve the dispute.

            (i)         A court of competent jurisdiction.

            (ii)        Arbitration by a legally qualified arbitrator.

            (iii)       Arbitration by a lay arbitrator.

            (iv)       Arbitration by a legal arbitrator and a lay arbitrator.

                        (v)        The final ad binding decision by an expert not acing as an arbitrator.

(c)        Failing agreement between the parties on the choice of an arbitrator or an expert, the referee shall nominate an arbitrator or expert.

(d)       The parties may make written submissions to the referee (in relation to all issues to be determined by him) within 28 days of service of the notice.

(e)        The referee’s decision shall be implemented.”

There are several answers, in my view, to this submission.  First, the Act operates in relation to a claim in respect of services supplied to the ship: see ss 4(3)(m) and 18 of the Act.  The Act is not concerned with the question whether a defence might be raised against such claims. Such a defence may result in a stay of proceedings but it does not extinguish the claim or the cause of action or prevent it coming into existence.  Second, cl 12 assumes that there is a cause of action in existence and does not prevent a claim arising or a cause of action being constituted prior to its operation.  Third, cl 12 is concerned with proceedings as between the contracting parties, namely Patricks and SPS.  It binds those parties but it does not purport to cover an in rem proceeding between the plaintiff and the ship itself as a distinct legal entity.

For those reasons I do not accept this submission.



Submissions were made on behalf of the Master and crew and by the Marshal as to the amount of security which should be provided if the vessel were to be released from arrest. However, in view of the conclusions which I have reached, it is not necessary for me to determine the question as to the appropriate amount of security which ought be provided.




As at the date when the current proceedings were commenced, SPS was the demise charterer of the ship.  The Court had jurisdiction to arrest the ship.

Accordingly, the appropriate order is that the application should be dismissed with costs.

I certify that this and the preceding twenty-one (21) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin


Dated:              11 May 1998

Counsel for the Plaintiff:

Mr A J Meagher SC

Mr G J Nell

Solicitor for the Plaintiff:

Allen, Allen & Hemsley

Counsel for the Applicant:

Dr A S Bell

Solicitor for the Applicant:

Michell Sillar

Solicitor for the Admiralty Marshal:

Mr Douglas Coleman

Solicitor for the Master and crew


Date of Hearing:

16 April 98 and 23 April 1998

Date of Last Submissions

5 May 1998

Date of Judgment:

11 May 1998