On 8 June 2004 the three plaintiffs, Tisand (Pty) Ltd, Richards Bay Iron & Titanium (Pty) Ltd, and China National Complete Plant & Export Guangzhou Ltd, brought a claim against the MV Cape Moreton for damage to a cargo of zircon sand while aboard the vessel. The Cape Moreton was subsequently arrested. The carrier, Freya Navigation Shipholding Ltd (Freya), was the 'relevant person' that was liable for the claim.

A notice of motion was brought by Alico Marine Ltd (Alico) on 10 June 2004, claiming that it, rather than Freya, was the owner of the ship in a substantive or beneficial sense and seeking an order to have the ship freed from arrest. The ship was released the following day. Arguments about the notice of motion were later heard in September and November.

The primary question, that was raised in the initial judgment on 10 September 2004 (see Tisand Pty Ltd v The Owners of the Ship MV 'Cape Moreton' (Ex 'Freya') (CMI660)), was whether the word 'owner' in s 17 of the Admiralty Act 1988 (Cth) (the Act) meant 'registered owner' only or whether it also included the 'real' or beneficial owner. This matter was crucial to the inquiry whether the Court had jurisdiction to arrest the Cape Moreton. The question regarding the meaning of 'owner' arose from the fact that Freya, the relevant person, had sold the Cape Moreton to Alico since the plaintiffs' claim arose, and Freya was now the owner only as recorded on the Liberian ship register. The ship was also still flying a Liberian flag at the time these proceedings commenced. Alico, who now controlled the ship, was not the 'relevant person' for the purpose of the proceedings.

Held: There had been no authority to proceed in rem against the Cape Moreton in June 2004. The writ in rem for the Cape Moreton's arrest must be set aside.

Section 17 of the Act allows an action based on a general maritime claim to be brought against a ship. A general maritime claim must relate to a ship and be brought against the 'relevant person' who owned the ship when the claim arose, and against whom a claim in personam would otherwise be brought. To satisfy s 17, the 'relevant person' must have both owned the ship when the claim arose and still be the owner of the ship when proceedings are commenced.

The Court referred to prior authorities in determining that the approach to be taken was that of interpreting the Act, and s 17, in its legal and historical context. The Act was informed by, for instance, European law, English law and international law. Significant influences included the ALRC Report No 33 on Civil Admiralty Jurisdiction and the Arrest Convention 1952, which drew on and unified European and English maritime laws.

In reviewing the parties' submissions, the Court reached the conclusion that Alico, not Freya, was the beneficial owner of the Cape Moreton when these proceedings commenced, and that 'the owner' in ss 17-19 of the Act went beyond bare registered owners. Considerations relevant to deciding if 'owner' meant a person entered on a national ship register were: a) the breadth of the phrase 'the owner' in ss 17-19 of the Act; b) the legal consequences of the relevant registration; and c) the surrounding factual circumstances.

The decision was made by the drafters of the ALRC Report No 33 to provide for arrest of the relevant ship, sister ships, and demise chartered ships. The common thread between them is the proprietary link between the liable person and the vessel. That link is required before a ship is subject to in rem jurisdiction. The Arrest Convention 1952 echoed the need for that proprietary link in arts 3, 4, and 9 regarding the circumstances in which a ship can be arrested and when a right of action accrues. The Court concluded that under art 3 of the Arrest Convention a ship can only be arrested if the owner of the ship when a general maritime claim attached to it was the same owner when the ship was arrested. The Court also thought that art 3.1 is not restricted to registered owners, but takes the concept beyond that. This overall proprietary link was evident in cases over the last century, including cases decided in Australia. This formed part of the context that shaped the creation of the Act and, together with the ordinary meaning of ss 17-19 of the Act, it could be concluded that what was meant by 'owner' was the person who was the real or beneficial owner of the ship.

The Court referred to the general significance of ship registration, its importance in the context of international shipping, and even its use as a means of determining the nationality of ships. Registration protects an owner's title and assists in determining the priority of security interests in a ship. Assuming that the Shipping Registration Act 1981 (Cth) was applicable, under s 77 of that Act, registration provides prima facie evidence of title only. When the Cape Moreton was sold to Alico, Alico paid for it unconditionally, taking delivery, possession, and control. That meant that Alico took full property in the Cape Moreton. Because of that, Freya's right to absolutely dispose of the ship was undermined, and it could not exercise its power without Alico's consent. The ship, and the rights in it, had already been transferred. To say that Freya was nonetheless still the owner would be illogical - it lacked dominion, enjoyment or control over the Cape Moreton

Since Freya was not the owner of the ship at the time of its arrest, the arrest was unlawful and the Court ordered the writ in rem to be set aside.