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Steamships Trading Company Ltd v Birner [1981] PGNC 37; N363(M) (7 August 1981)

N363(M)

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

W.S. 501 OF 1980

BETWEEN:

STEAMSHIPS TRADING COMPANY LIMITED
PLAINTIFF

AND:

MANFRED ALBERT HEINZ BIRNER
FIRST DEFENDANT

AND:

ROSANA BIRNER
SECOND DEFENDANT

AND:

BLACKWOOD HODGE HIRE PTY. LTD.
CLAIMANT

Waigani: Kapi J
22 July 1981; 7 August 1981

INTERPLEADER SUMMONS - circumstances under which ownership personal property attached to another may pass to another by operation of the law discussed - common law principles and their applicability considered.

Cases Referred To
Rendell v. Associated Pty Ltd. [1957] VicRp 88; (1957) V.R. 604
Thomas Brown and Sons v. Fazal Deen and another [1962] HCA 59; (1962) 108 C.L.R. 391
Bowmakers Ltd. v. Barnett Instruments (1944) 2 ALL E.R. 579.

JUDGMENT

KAPI J: In this matter, a writ of summons was issued against Manfred Albert Heinz-Birner (1st deft) and Rosana Birner (2nd deft) for a claim of K57,813.83 being the price of goods sold and delivered by the Steamships Trading Co. to M.A.H. Birner Pty. Ltd., payment of which was guaranteed by the defendants.

On the 10th day of November 1980, judgment in default of pleadings was obtained by the plaintiff. That on the 27th February, 1981 a writ of fieri facias was issued by the plaintiff to be executed against both defendants.

On the 22nd May 1981, the Sheriff seized the motor vessel "Why Worry" which is allegedly owned by the first defendant. Subsequent to this seizure, claimant, Blackwood Hodge made a claim for the engines of the motor vessel "Why Worry". This claim was disputed by the plaintiff and consequently the Sheriff caused the Interpleader Summons to be issued pursuant to Order 59 of the Rules.

On the 14th May 1981, M.A.H. Birney Pty. Ltd. issued a writ against the Sheriff and the Steamships Trading Co. for possession of and damages for wrongful detention of the motor vessel "Why Worry". In relation to this suit, I made an Order on 22nd July 1981, that the suit be consolidated into the Interpleader Summons and that the trial of the issues raised in the suit be proceeded with in which M.A.H. Birney Pty. Ltd. would be the plaintiff and Steamships Trading Co. and the Sheriff be the defendants on the following questions:

(a) Who owns the motor vessel "Why Worry" at the time of the seizure by the Sheriff?

(b) If at the most Mr. Birner owns only 15% of the motor vessel "Why Worry", can the Sheriff sell the boat?

This will be dealt with in a separate hearing.

The question which falls for decision now is the 2nd order which the Sheriff seeks in the Interpleader Summons. The question is "whether at the time of the seizure of the motor vessel "Why Worry" by the Acting Sheriff two marine diesel engines were part of the goods seized?"

With respect, the parties did not properly plead the issue as required by the Interpleader Summons. This led to a number of arguments that were raised before me which should not have been raised.

The question that has been raised by the Interpleader is a question of law. For the purposes of deciding the issue, the two marine engines are said to be owned by Blackwood Hodges Hire Pty. Ltd. The motor vessel "Why Worry" is owned by others which ownership is still to be determined. The engines were leased or hired to M.A.H. Birner Pty. Ltd. not to Mr. and Mrs. Birner. The engines were attached to the motor vessel "Why Worry". There is no dispute that the property or the ownership in the engines remained in Blackwood Hodge Pty. Ltd. in the lease agreement. The question of law is whether by attaching the engines to the boat, the engines lost their separate identity and have become part of the boat. I am not required by the summons to rule on the question of whether the seizure by the Sheriff is lawful and whether the Sheriff can sell the boat. Those are issues which have been set down to be tried. Neither am I required to rule on whether Blackwood Hodge can repossess or claim for value of engines. These are issues which can be raised by Blackwood Hodge in a separate action.

The limited question of law for my decision is whether at the time the boat was seized the engines by operation of law can be said to be part of the boat in the circumstances of this case. In other words can it be said that the engines have merged into the boat that they are part of the boat.

In this regard counsel for Steamships Trading Company made the submission that the engines have become part of the boat on the basis that the boat is real property floating on water and the engines are fixtures to land. He submitted that this is a common law principle and he asks me to accept it and apply it under Schedule 2.2 of the Constitution. He does not put this submission on the basis of declaring a new principle of law under Schedule 2.3 of the Constitution. Counsel puts up no authority whatsoever to support this proposition. Either there is no authority for this proposition or that counsel expect the court to do its own research and dig out the authority. Without assistance I have attempted to find some authority but to no avail. I am not prepared to accept this submission unless counsel have some authority to support it. I am far from convinced that a boat is not personal property as distinct from real property. See Halsbury’s Laws of England Vol. 29 page 710. It follows from this that the argument that the engines are fixtures to land must fail.

I am not prepared to consider a formulation of a new rule based on this submission as it was not put under Schedule 2.3 of the Constitution.

Both counsel were unable to refer me to a similar case, i.e. a case which involves an engine fixed to a boat. The closest factual situation is the case of Rendell v. Associated Pty. Ltd.^[1]. The relevant facts of this case are as follows: - Rendell owned a Chevrolet car engine. He hired the engine to a Mr. R. L. Pell. There was an option to purchase. It was clear in the agreement that the property in the engine remained in Rendell.

Prior to this hiring agreement with Rendell, Mr. Pell took a Chevrolet utility on hire purchase terms with a finance company. It is not necessary to go into the details of this hire purchase agreement. Mr. Pell took Rendell’s engine and attached it to the Chevrolet truck which was the subject of the hire purchase agreement. Mr. Pell fell into arrears and subsequently finance company repossessed the Chevrolet utility with Mr. Rendell’s engine. The question was whether the engine became part of the truck?

The Full Court in referring to the common law said at p.607:

"But fundamentally the transfer of property in chattels in English law depends upon intention and consent. Transfer by operation of law is resorted to only in circumstances of necessity, and whether those circumstances exist must be determined in each case as it arises. And in determining the existence of necessity. The injury caused by severance, is no doubt, a material consideration."

The Full Court also referred to a N.S.W. case which also applied the common law as above.

The Full Court then said at p. 610:

"Prima facie the property in the accessory does not pass to the owner of the vehicle if the owner of the accessory did not intend it to pass. It is for the defendant by proper evidence to show that the necessity of the case requires the application of principles whereby the property is deemed to pass by operation of law. The accessories continue to belong to their original owner unless it is shown that as a matter of practicability they cannot be identified, or, if identified, they have been incorporated to such an extent that they cannot be detached from the vehicle."

In my view this passage clearly sets out the common law of England. It has not been argued that common law in this regard was different as at 1975 (Independence) and that no submissions were made on the inapplicability of this principle under Schedule 2.2 of the Constitution.

In my view these principles are applicable to the facts of this case.

In this case, the owner of the engine was Blackwood Hodge when it was attached to the boat. It was intended to retain the property in the engine throughout the hiring transaction. This intention is evident in the hiring agreement.

All that remains to be considered is whether as a matter of practicability the engines have been so attached to the boat that they cannot be detached from the boat. No evidence has been placed before the court regarding the manner in which the engines were attached to the boat. But I understand from the nature of the hiring agreement that the engines can be easily removed without damage to the boat. In fact counsel for Steamships Trading Company conceded during argument that the engines can be removed easily. He made no contrary submissions. It follows therefore that the ownership of the engines has not changed and they have not become part of the boat by operation of law. That was the state of these chattels on the date of seizure by the Sheriff. That as far as I can see is the only issue raised by the Interpleader.

That however is not the end of the matter. Can Blackwood Hodge claim possession of these engines? As I have pointed out that is not the issue before me. It is up to Blackwood Hodge now to consider appropriate action, if any. If it wishes the possession or value of the goods, it can institute separate action. The issues have to be clearly pleaded. For instance, would a claim by Blackwood Hodge be based on hiring agreement, or some other basis than the hiring agreement. This is where the question of whether the hiring agreement is invalid becomes relevant. If the claim is based solely on the hiring agreement and the agreement is proven to be invalid and unenforceable, Blackwood Hodge may not repossess the engines under the agreement. See Thomas Brown and Sons v. Fazal Deen and another^[2].

If it bases its claim under something other than the hiring agreement, whether or not agreement is valid is irrelevant. See Bowmakers, Ltd. v. Barnet Instruments.^[3].

Solicitor for the Plaintiff: David Houseman
Counsel: David Houseman
Solicitor for First & Second Defendants: Richard Major, Gawi & Associates.
Counsel: John Gawi
Solicitor for Claimant: Gadens
Counsel: I. Clarke

^[1] (1957) V.R. 604
^[2] (1962) 108 CLR 391
^[3] (1944) 2 All E.R. 579