On 15 December 1975, the Ha’amotaha was demise chartered by Reef Shipping Co Ltd (Reef) to Pacific Navigation Co Ltd (Pacific). On 12 January 1976, the Government of Tonga executed a deed of guarantee, guaranteeing payment of all sums payable by Pacific to Reef, and performance of all Pacific’s obligations, under the charter. In January 1978, Reef executed a further demise charter to Pacific Navigation of Tonga Ltd (PNT). During the course of the charters, certain damage was suffered and losses incurred in respect of the Ha’amotaha.

After the damage and losses were suffered, the terms of the Pacific charter were varied (without reference to the Government of Tonga) to require disputes arising from the charter to be resolved by arbitration in New Zealand subject to New Zealand law. The arbitrator delivered an award on 2 August 1979, finding that Pacific was liable to Reef in the sum of NZD 165,114.79. Reef failed to recover from Pacific, and instituted proceedings in Tonga against the Government of Tonga under the guarantee. Those proceedings were unsuccessful both in the Supreme Court of Tonga and on appeal. The major ground for refusing Reef's claim was that its action sought to enforce an award payment of which was not one of the obligations that the Government of Tonga had guaranteed.

In June 1983, Reef succeeded in having the award registered in Tonga as a judgment pursuant to the Reciprocal Enforcement of Judgments Act 1934 (NZ). In April 1986, Reef commenced an action in rem against the Fua Kavenga, a ship owned by the Government of Tonga. The Government of Tonga paid NZD 327,000 into a fund from which damages could be paid if Reef obtained a judgment in its action. The owners applied for leave to enter a conditional appearance and immediately filed a notice of motion for orders setting aside the writ of summons in rem, the statement of claim, and other related matters. The grounds set out in the motion alleged that Reef was not entitled to an action in rem because the sister ship jurisdiction under the Admiralty Act 1973 (NZ) (the Act) was not available to Reef, its claims were statute-barred and/or estopped, and/or the doctrines of res judicata and/or sovereign immunity applied.

Held: Application dismissed.

The evolution of the sister ship jurisdiction throughout the Admiralty Courts in the Common Law world is set out in a number of cases. The best exposition is found in the judgment of Lord Diplock in The Eschersheim [1976] 2 Lloyd’s Rep 1. When reading those comments, it is necessary to keep in mind that the UK is a party to, and has ratified the International Convention Relating to the Arrest of Seagoing Ships 1952 (the Arrest Convention 1952), and the sister ship provisions in the Administration of Justice Act 1956 (UK) were passed against the background of those treaty obligations. New Zealand is not a party to the Arrest Convention 1952 and has not signed or ratified it. Nevertheless, ss 4-5 of the Act have their origin in the UK enactment of the Arrest Convention 1952.

The sister ship jurisdiction introduced into Common Law jurisdictions a right of action in rem which had long been known in a number of Civil Law countries, including Scotland. The provisions provide that in respect of certain classes of maritime claim, the right to arrest, pursuant to an action in rem, is granted either to the particular ship in respect of which the maritime claim arose or any other ship owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship. Lord Diplock in The Eschersheim said at p 7: 'It is clear that to be liable to arrest a ship must not only be the property of the defendant to the action but must also be identifiable as the ship in connection with which the claim made in the action arose (or a sister ship of that ship).'

Counsel for the defendant submitted that the Arrest Convention 1952 should be borne in mind when interpreting the Act, that the Arrest Convention 1952 was designed to provide an exhaustive list of claims contemplated, and therefore the claims in s 4 of the Act should be narrowly construed.

Counsel for the plaintiff argued the contrary, and drew the Court’s attention to Wilmer J’s comments in The St Elefterio [1957] P 179, 183:

In my judgment the words of [an identical UK provision] … are nevertheless wide enough to cover claims whether in contract or in tort arising out of any agreement relating to the carriage of goods in a ship. A charterparty is an agreement relating to the hire of a ship and a claim for breach of a term of a charterparty is one 'arising out of' that charterparty.

Lord Diplock in The Eschersheim said at p 8: 'I see no reason in that context [Pt 1 of the Administration of Justice Act 1956 (UK)] for not giving them [the words 'an agreement relating to the use of hire of a ship'] their ordinary wide meaning.'

In The Sandrina [1985] 1 Lloyd’s Rep 181, 187-188, Lord Keith interpreted the section, and said that it would:

be unreasonable to infer from the expression … 'in relation' to, that it is intended to be sufficient that the agreement in issue should be in some way connected, however remotely, with the carriage of goods in a ship or with the use or hire of a ship. There must … be some reasonably direct connection with such activities.

Bearing in mind these comments, and in consideration of the terms of the guarantee, there is a sufficiently direct connection. Therefore, the plaintiff can bring its claims within ss 4(1)(e) and (h) of the Act. Section 5(2)(b)(ii) provides an action in rem can be invoked against 'any other ship which, at the time when the action is brought, is beneficially owned or on charter by demise as aforesaid'. The words ‘as aforesaid’ refer back to the words in s 5(2)(b)(i) 'that ship if, at the time when the action is brought is beneficially owned as respects all the shares therein by, or is on charter by demise to, that person'. Those words are said to mean 'the owner or charter of, or in possession or in control of, the ship' which are found in s 5(2)(b). A narrow interpretation of s 5(2)(b)(ii) would ignore the words 'as aforesaid', whereas a wide interpretation would not, and would give full weight to the words ‘possession or in control’. A wide interpretation would enable Reef to argue that so long as there was some degree of possession or control by the Government of Tonga, the sister ship jurisdiction would be available.

On the other hand, a restricted interpretation would only recognise the jurisdiction if the Government of Tonga was either the owner or charterer by demise of the Ha’amotoha, which demonstrably it was not. In The Eschersheim [1976] 2 Lloyd’s Rep 1, Lord Diplock provided a detailed discussion of the origin of the sister ship jurisdiction and the extent of its applicability. The interpretation placed upon the UK legislation relied heavily upon the terms of the Arrest Convention 1952. At p 5, Lord Diplock said:

The purpose of that convention was to provide uniform rules as to the right to arrest seagoing ships by judicial process to secure a maritime claim against the owner of the ship. Article 1 defined by reference to their subject matter various classes of maritime claim in respect of which alone a right of arrest to either (a) the particular ship in respect of which a maritime claim falling within one or more of those classes arose or (b) any other ship owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship.

By contrast, a wide interpretation was placed upon a similar provision by the Court of Appeal of Singapore in The Permina 108 [1976] SGCA 12 (CMI395). In that case, it was stated that because the terms of the relevant provision were not reasonably capable of more than one meaning, it was unnecessary and wrong to look at the Arrest Convention 1952 to arrive at the proper construction. Singapore is not a party to the Arrest Convention 1952 and did not accede to it following independence. New Zealand, like Singapore and Hong Kong, should follow the wider interpretation. The consequence is that the fact that the Government of Tonga was neither the owner nor the demise charterer of the Ha’amotaha is not sufficient to prevent Reef from invoking the sister ship jurisdiction.