Ships Hako Endeavour and others v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21: Admiralty Act

In Ships “Hako Endeavour”, “Hako Excel”, “Hako Esteem” and “Hako Fortress” v Programmed Total Marine Services Pty Ltd [2013] FCAFC 21(26 February 2013), an appeal from Programmed Total Marine Services Pty Ltd v The Ship Hako Fortress [2012] FCA 805, the full court of the Federal Court has heard an appeal against an interlocutory order to set aside writs issued under the Admiralty Act 1988 (Cth) (Admiralty Act).

Relevant Facts

The case involved appeals against an interlocutory order arising out of a judgment made on 1 August 2012 dismissing interlocutory applications which sought to set aside writs issued on 2 April 2012 under the Admiralty Act. The proceedings in rem against four ships also sought that warrants dated 2 April 2012 for the arrest of each of the ships be set aside and that any security provided to the respondent in the current appeal be returned and the consequential orders be made. 

The four ships the subject of the case were registered in Singapore and were arrested on 3, 6, 11 and 16 April 2012 respectively. The interlocutory applications were made by the ship owners, which entered a conditional appearance for that purpose.

The respondent had a contract made on 7 April 2011 for the provision of services (manning, catering &c) with Hako Offshore Pte Ltd (Hako) and Boskalis Pty Ltd (Boskalis).  Hako Offshore entered into BIMCO Standard Bare Boat Charters on 27 April 2009 for the charter of the Hako Fortress (from Otto Marine Ltd), the Hako Excel (from Aries Offshore Singapore Pte Ltd) and Hako Esteem (from Aries Offshore Singapore Pte Ltd). 

By the time of the proceedings the owners of those vessels had become Dolphin 2 Pte Ltd, Eagle 2 Pte Ltd and Eagle 1 Pte Ltd respectively.  On 14 June 2010, Hako Offshore entered into a BIMCO Standard Bare Boat Charter of Hako Endeavour from Eagle 3 Pte Ltd, which company remained its owner at the time the proceedings were commenced. 

Clause 10(a)(i) of each of the charterparties provided that:

During the Charter Period the Vessel shall 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 contract also provided for the provision of other services which might include:

• cleaning services;

• waste collection services;

• vessel management/procurement;

• maintenance and repair services; and

• permanent recruitment services.

These services were to be invoiced monthly, copies to Boskalis, who again expressly did not assume liability under the invoices. The proceedings commenced against the vessels claimed amounts for the provision of these services.

The claim was stated to be a claim “in relation to the costs of and related to the provision by the respondent of goods” to the vessel and “the provision by the respondent of services in the form of a master and crew” to the vessel for its operation. The claim was argued as being made pursuant to or in accordance with the terms of the contract and was argued to be, by reason of Admiralty Act ss 4(3)(m) and 18:

“. . . a general maritime claim enforceable by an action in rem.  Alternatively, so far as it incorporated payments by the respondent to the master and crew of each ship in respect of their wages, the respondent claimed to be entitled to be subrogated to a maritime lien which the master and crew had in respect of their wages which, by reason of s 15 of the Admiralty Act, may be enforced by an action in rem.”

The grounds upon which the appellants sought to set aside the writs and the arrest warrants, and sought the other relief claimed, were:

• Hako was not the demise charterer of any of the ships because it did not employ the master or crew which worked the ship.

• In any event, in the case of the Hako Fortress, any demise charter had been terminated effectively on 1 March 2012.

• The claim was not a general maritime claim because the services supplied pursuant to the contract between the respondent and Hako were not supplied to any ship but were services supplied to Hako in its own right.

• Any liability asserted against Hako had, under the terms of the contract itself, been assigned absolutely to Boskalis in conformity with the provisions of the Property Law Act 1969 (WA) s 20 so that any claim against Hako was ineffective.

• There was no maritime lien with respect to wages in existence because the masters and crew of each vessel had been paid by the respondent as their legal employer.

The Issues

Challenge to jurisdiction

Whether a challenge to the  jurisdiction must always be determined immediately and whether there is a requirement for a plaintiff to establish jurisdiction on the balance of probabilities by reference to its claim as put forward, irrespective of whether the claim is likely to succeed or not.

Demise charter (BARECON 2001 form) ship arrested under Admiralty Act s 18

Whether the demise charter had been terminated before the writ issued and whether it was necessary for the disponent owner (the person or company having commercial control over the vessel) to retake physical possession of ship to effect the termination of the demise charter? Whether the clause in the charterparty providing that charterer will be a gratuitous bailee of the ship after termination was effective?

Whether a charter is not by demise if the demise charterer does not employ a master and crew of the ship itself but contracts with a labour supplier to provide the master and crew?

Maritime lien for wages of master and crew under Admiralty Act  s 15(2)(c)

Whether the labour supplier of a master and crew to a ship after having paid them as their employer can claim a right of subrogation to their maritime lien under s 15(2)(c) to support arrest of ship?

General maritime claim under Admiralty Act s 4(3)(m)

Whether the supply of a masters and crews under a contract for their supply to four vessels under the demise charterer created a general maritime claim of supplier under s 4(3)(m) in respect of goods or services supplied or to be supplied to the ships for their operation and/or maintenance?

The Result

In brief the result in the case was that:

• provisions of the demise charter were effective to permit the termination by the disponent owner without  the retaking of physical possession of the ship (arrest of Hako Fortress),

• the demise charter was effective if the charterer contracts for a third party to provide the master and crew for the ships

• there was a valid claim made under the Admiralty Act s 4(3)(m) for payment for services for supplying masters and crews to the ships

• there was no entitlement by the appellant  to assert or be subrogated to the maritime lien under Admiralty Act s 15(2)(c) of the masters and crews of the ships whom it had paid as their employer

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