The appellant, Kent, suffered long-term injury as a result of diving from the ships Monika and Boston Bay as part of a tuna fishing operation. The Monika was owned by Simone Fisheries Pty Ltd, a company acting as a trustee of the Simone Fisheries Unit Trust. Similarly, the Boston Bay was owned by Blazar Fisheries Pty Ltd, as trustee of the Blazar Unit Trust. Australian Fishing Enterprises Pty Ltd (AFE) was the sole beneficiary of both trusts. Further, AFE was the charterer of both vessels.

Kent alleged that he had a general maritime claim against AFE for negligent acts and omissions committed by it, falling under ss 4(3)(c) and 4(3)(d)(i) of the Admiralty Act 1988 (Cth) (the Act). In 2001, Kent filed a writ in rem and the ship Maria Luisa was arrested as surrogate for Monika and Boston Bay, in accordance with s 19 of the Act.

Everdene Pty Ltd (Everdene), Maria Luisa's registered owner, sought to have the writ set aside and the ship released, arguing that s 19(b) of the Act was not satisfied because the 'relevant person', AFE, was not the owner of the Maria Luisa at the time the case commenced.

Kent's initial case was dismissed for want of jurisdiction. On this appeal, Kent's argument focused on the notion that AFE's interest under the relevant trust deed was such that it owned the Maria Luisa at all times, and therefore the vessel could be arrested as a surrogate in place of the Monika and Boston Bay.

Held: Appeal dismissed.

The Court had regard to the Arrest Convention 1952 and its importance to the scheme of surrogate arrest under the Act. The position in the Arrest Convention on surrogate arrest was a compromise between the Civil and Common Law position on the issue. Article 3.1 of the Arrest Convention empowers claimants to arrest a ship other than the ship to which their general maritime claim attached, provided that, as in s 19, the owner has remained the same. Article 3.2 details that a ship is in the same ownership when its shares are all held by the same person or persons. Article 3.4 permits claimants to target the demise charterers of ships that a general maritime claim attached to, instead of the registered owner, as well as any other ship under demise charter by the same relevant person. In that case, however, the claimant cannot pursue the registered owner of the ship that its general maritime claim relates to, or any other ship that the owner owns.

The Court turned to considering the general characteristics of ownership and whether AFE could be deemed to have had ownership of the Maria Luisa based on that. It was determined that to have ownership of something invokes ideas of control, the right to sell, dispose of, or alienate the property and ultimate control of it against all the world. Equitable ownership is connected with the right to relief in a court of equity.

Everdene was the trustee of the Maria Luisa Unit Trust, and AFE held all units in the trust. Further, AFE always held all 64 shares in Everdene. The trust deed over the Maria Luisa set out in cl 2(c) that no unit-holder was entitled to the transfer of any property comprised in the trust fund prior to the vesting date. This clause of the deed undermined AFE's entitlement under it and, in the Court's view, meant that it could not be regarded as the equitable owner until the vesting date, although it retained an equitable interest. What AFE could have done, however, is cause Everdene to terminate the trust, since it was the only shareholder, and at that time it would have been recognised as the equitable owner of the Maria Luisa. The question then arose as to whether AFE could really be considered the owner of the Maria Luisa under the trust when it never took obvious steps to cement its ownership. Simply having the power to make itself the owner, as the sole shareholder, did not make it the owner, only indicated the potential for it to become so. Everdene, and not AFE, was the owner of the ship at the time of the Maria Luisa's arrest.

Section 19 of the Act was not satisfied, so the Maria Luisa could not be arrested as a surrogate for the Monika and Boston Bay.

Moore J, dissenting: Moore J noted that the Act was intended to fall in line with existing English law as well as the Arrest Convention, including rules on the arrest of surrogate ships. The English legislation was meant to give effect to the Convention and so the Convention's terms should be a point of reference in interpreting the English law, and construing what England's international obligations were. While Australia was not a party to it, the incorporation of the Arrest Convention into English law in particular meant that its rules were relevant, since English law had a large influence over the formation of the Act.

Moore J considered the judgment of Goff J in I Congreso del Partido [1978] QB 500, where it was stated that 'owner', being a person with title, should be given its natural and ordinary meaning in the context of art 3 of the Arrest Convention. This was because art 3.4 created a qualification for demise charterers, separating them from the typical 'owner'. A demise charterer would have beneficial use, not ownership.

Moore J thought it important to consider alternative perspectives on interpreting legislation that gives effect to the Arrest Convention. In Australia, and as ALRC Report No 33 suggests, the rights of arrest should not be read narrowly, but in such a way that is consistent with both the Convention and international practice.

His Honour then drew attention to, and agreed with, the decision of Sheppard J in Malaysia Shipyard and Engineering Sdn Bhd v 'Iron Shortland' as the Surrogate for the Ship 'Newcastle Pride' (1995) 59 FCR 535, on the meaning of 'ownership' in s 19 of the Act. In that case, the concept of 'owner' in s 19(b) was extended to beneficial, true, and also real owners. Sheppard J's argument was based on the fact that there is no express restriction of the term to registered owners, and there was no particular policy reason that militated against the idea of extending it to include beneficial owners. In addition, Sheppard J was against depending too much on registration as a qualifier, and preventing plaintiffs from claiming against real or beneficial owners even when there is a nominee or trustee standing between the ship and its true owner.

Moore J accepted the reasoning of the majority in this case that AFE had an equitable proprietary interest in the Maria Luisa. While it was true that AFE was not entitled to the trust property at any time, but had to wait for the vesting day, AFE as sole shareholder had the ability still to determine when that day would be, and by controlling Everdene had various other avenues by which it could have the trust property transferred to itself. As well as this, AFE was the demise charterer of the Maria Luisa. Due to these factors, Moore J concluded that AFE, as the demise charterer, had possession and control of the vessel as against all the world, and could control or recall the ship as it pleased.

AFE still lacked an immediate right to equitable relief under the trust; however, it possessed the necessary 'bundle of rights' enabling it to have practical possession of the ship. Everdene lacked that same range and extent of rights in connection with the ship. Everdene was restrained by the trust deed and its obligations, so it could not be the owner.

This led Moore J to conclude that the appeal should be allowed.