This decision is an appeal from Euroceanica (UK) Ltd v The Ship 'Gem of Safaga' [2009] FCA 1467 (see CMI604). In that case the primary Judge dismissed the plaintiff's notice of motion, which was the subject of this appeal. The basic facts of that case are as follows.

On 3 November 2009, the plaintiff Euroceanica (UK) Ltd (Euroceanica) issued a writ in rem for the arrest of the Gem of Safaga as a surrogate for the ships JBU Onyx and JBU Opal, pursuant to s 19 of the Admiralty Act 1988 (Cth) (the Act). The owner common to all these ships was West Asia Maritime Ltd (West Asia). On 9 November 2009, West Asia issued a notice of motion to have the writ set aside for want of jurisdiction, and sought to have the arrest order against the Gem of Safaga set aside or for the Gem of Safaga to be released.

In this appeal, West Asia alleged that it was not the owner of that ship when proceedings commenced; therefore, the elements of s 19(b) were not satisfied. Originally, the primary Judge settled this issue by holding that West Asia held nine shares in the Gem of Safaga at the time of its arrest and that another company, Four M Maritime Pte Limited (Four M), had legal ownership of the remaining share but nonetheless held it on resulting trust for West Asia. This would make West Asia the beneficial owner of all ten shares.

Held: Appeal upheld. The relief sought by West Asia in its notice of motion should be granted, including the release of the Gem of Safaga.

Four M did hold the beneficial and legal interest in a single share in the Gem of Safaga. The question of whether Four M held the tenth share in the Gem of Safaga on resulting trust for West Asia turned on the acts and declarations of the parties around the time the ship was purchased, subsequent dealings and surrounding circumstances.

In February 2007, West Asia and Four M signed a co-ownership agreement stating that West Asia would 'absolutely own' nine shares and Four M would 'absolutely own' the tenth share in the Gem of Safaga. Each owner would bear its share of liability and was entitled to its share in the profits. On 20 April 2007, the shares that each party held in Gem of Safaga were recorded under the Indian Merchant Shipping Act 1958 by the Registrar of Indian Shipping. Four M had thus received a part of the equitable interest in the ship because West Asia had disposed of or assigned a part of its beneficial interest. Four M had given consideration to West Asia for its incorporation into the original contract between West Asia as purchaser and Tedross Navigation SA (Tedross) as seller. Four M and West Asia had jointly undertaken buyers' obligations and had therefore given consideration. From 16 February 2007, at the point when addendum no 1 was settled (which incorporated Four M into the sale agreement), both parties had an equal right to argue for specific performance of the contract of sale and purchase of the Gem of Safaga from Tedross. A resulting trust in West Asia's interest would still arise, however, over Four M's one share if West Asia had paid the full purchase price. This was not the case, however, as the two parties had jointly borrowed money from ICICI Bank Ltd under a facility agreement and were therefore jointly and severally liable for repaying that loan.

The next issue was whether an 'owner' of a surrogate ship under s 19(b) of the Act included part-owners. That section states the following:

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

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

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

The Court emphasised the definite article in the phrase 'the owner' in s 19(b). Report No 33 of the Australian Law Reform Commission Civil Admiralty Jurisdiction was also referred to in order to interpret and derive meaning from the Act. Paragraph 206 of that Report, in relation to bringing actions against surrogate ships which are only partly owned, referred to art 3.2 of the 1952 Arrest Convention. That article prohibits actions in rem being brought against surrogate ships only partly owned by a relevant person. Also, in para 206 the Commission concluded that Australian legislation should require the relevant person be the sole owner of the surrogate ship being seized. All co-owners of the surrogate ship must be relevant persons, or rather, should jointly constitute the relevant person. The Act, importantly, defines a 'relevant person' as 'a person who would be liable on the [maritime] claim in a proceeding commenced as an action in personam'. This Report, and the draft Admiralty Bill attached to it, led the Court to the conclusion that s 19(b) of the Act required all owners of a ship to be relevant persons, and part-ownership did not fulfill the requirements under s 19.