The three plaintiffs, Tisand Pty Ltd, Richards Bay Iron & Titanium (Pty) Ltd and China National Complete Plant Import & Export Guangzhou Ltd brought a claim against the defendant, the owners of the MV Cape Moreton, for damages to a cargo of zircon sand while it was aboard the ship. The carrier and liable party was Freya Navigation Shipholding Ltd (Freya), but at the time of proceedings, the ship had passed hands to Alico Marine Limited (Alico). On 10 June 2004, Alico applied to have the Cape Moreton released and filed a notice of motion to have the writ in rem set aside.

Alico challenged the legitimacy of the arrest on the grounds that the Cape Moreton could not be rightly arrested under s 17 of the Admiralty Act 1988 (Cth) (the Act). That section requires that general maritime claims be brought against the 'relevant person' against whom a claim in personam could otherwise be brought. That 'relevant person' must have both owned the responsible vessel at the time of the claim arising, and must still be its owner when the claim against it is initiated. Alico argued that the plaintiffs had no cause of action because the relevant person, Freya, was not the owner of the ship when the plaintiffs commenced these proceedings, and s 17 was not satisfied. The only evidence that Freya was still the owner was that it was registered as such on the Liberian ship register. For the plaintiffs to succeed, the word 'owner' in s 17 would also need to include 'registered owners'.

The key point in these deliberations, however, was whether the defendant was entitled to require security from the plaintiffs for the jurisdictional challenge.

Held: The plaintiffs must provide security for the costs of the defendant within fourteen days, in the amount of AUD 7,500. The matter would stand over to 20 September 2004 for directions as to future conduct.

Allsop J stated that for the purposes of this application, the approach to be taken to interpreting the meaning of s 17 was unimportant. Whether the issue should be concluded with respect to international law, Liberian or Hong Kong law, or Australian principles of property law, was unnecessary to debate and would be decided at a later stage.

More important for the time being was the question of whether the defendant could order security for costs from a preliminary jurisdictional challenge. The plaintiffs argued that if this was permitted, notions of counter-security would be discreetly incorporated into Australian law, which was a concept found in art 13 [sic: art 6.1 is the relevant provision] of the Arrest Convention 1999, which has not been adopted by Australia.

Allsop J noted that in rem actions operate in such a way that foreign parties can depend on procedures outlined in the Act, and benefit from them, which should not be impeded. The arrest of ships was an internationally recognised procedure and foreign parties have the right to depend on it to obtain justice, although they should not take advantage of it. His Honour thought that it had been reasonable for the plaintiffs to assume that Freya was the owner of the Cape Moreton both when the plaintiffs' case arose and when proceedings commenced, since the Liberian ship register stated as much. Their belief that they had jurisdiction to proceed was justified, at least until mid-July 2004 when further evidence was produced to show that Alico had received the Cape Moreton in a proper arm's length transaction.

Should the plaintiffs be required to produce security for costs to justify the claim that they retained jurisdiction, even when Alico had produced evidence showing that the transfer of ownership from Freya to itself was legitimate? The plaintiffs had to be able to justify their invocation of the Act.

Allsop J concluded that security in the sum of AUD 7,500 should be ordered, proportionate to the amount of time and preparation that would go into one day's hearing on the issue of the interpretation of s 17. This was to encourage foreign parties to rely on the Act and in rem procedures without stumbling over procedural barriers and to achieve justice between the parties. Further, his Honour was of the view that ordering security from the plaintiffs here would not tamper with the fact that Australia had not adopted the Arrest Convention 1999 or its notions of counter-security.