Sirius Shipping Corporation v The Ship Sunrise

• Author: John Patrick Tarrant
• Position: Lecturer, Law School, University of Western Australia
• Pages: 58-60

Case Note:

Sirius Shipping Corporation v The Ship Sunrise

[2006] NSWSC 398

John Ta rra nt∗

Background

Sirius Shipping Corporation (Sirius Corp) commenced in rem proceedings against the ship Sunrise

claiming ownership of the Sunrise. Sirius Corp is controlled by Mr Peter Sirius. Sirius Corp had sold

the Sunrise to Mr Richard Evans (Evans). A finance company, Capital Finance Australia Ltd (Capital

Finance) provided part of the purchase price on the understanding that it was to be the purchaser of the

Sunrise from Sirius Corp and that it was granting possession of the Sunrise to Evans pursuant to a hire

purchase agreement. Unfortunately for Capital Finance a contract to document the sale and purchase

was never finalised or entered into. At the time of the proceedings the Sunrise was in the possession of

Capital Finance after it had repossessed it from Evans. Both Sirius Corp and Capital Finance claimed

that they had the best title to the Sunrise.

The fac ts

On 21 December 2000 Sirius Corp agreed to sell the Sunrise to Evans. This agreement was replaced by

a revised sale agreement made on 21 February 2001. The consideration for the sale in this second

agreement was $600,000 and the transfer of shares to the value of $400,000 from Evans to Sirius Corp.

The shares forming part of the consideration were to be in a company or companies associated with

Evans not relevant for current purposes.

Evans was unsuccessful in raising finance from the National Australia Bank and decided to seek

assistance from a finance broker, Hunt Pacific Finance Pty Ltd (Hunt Pacific). Hunt Pacific introduced

Evans to Capital Finance who agreed to provide the $600,000 required for the purchase of the Sunrise.

In Sirius Shipping Corporation v The Ship Sunrise1 (Sirius Shipping) Young CJ noted that it appeared

that Capital Finance paid the $600,000 in respect of the transaction ‘in the belief that there was to be a

sale from Sirius Corp to Capital Finance and then a hire purchase agreement between itself and Mr

Evans’.2 However, he noted that ‘the documentation of such a transaction is incomplete’.3 The

$600,000 was duly paid to Sirius Corp prior to the end of February 2001 but after settlement the ship

was delivered not to Capital Finance but to Evans. Young CJ noted that the $400,000 of shares were

not transferred to Sirius Corp at settlement.4 Evans entered into a hire purchase agreement with Capital

Finance with a commencement date of 16 February 2001. The agreement provided for Evans to hire the

Sunrise from Capital Finance.

On 11 March 2003 Sirius Corp executed a deed with Evans which contained a retention of title clause.

The clause provided that notwithstanding delivery of the Sunrise to Evans, the legal title to the Sunrise

was to remain with Sirius Corp until Evans’ debt with Sirius Corp was paid in full. Evans still owed

Sirius Corp $400,000 of the purchase price. On 17 June 2003 Sirius Corp issued a notice of default on

Evans for failure to pay the balance of the purchase price and gave notice that it would recover the

Sunrise.

During the time between when the deed was signed in April 2003 and Sirius Corp issued its notice in

June 2003, Capital Finance had issued its own notice on 17 April 2003, as a result of default by Evans

under the hire purchase agreement, advising that it had taken possession of the Sunrise on 16 April

2003. On 18 July 2003 Sirius Corp gave Capital Finance notice of its alleged proprietary interest in the

ship. Sirius Corp claimed that it had the best title to the Sunrise and argued that pursuant to its contract

∗ Lecturer, Law School, University of Western Australia

1 [2006] NSWSC 398 (unreported, Young CJ, 10 May 2006)

2 Ibid, [26]

3 Ibid

4 Ibid, [33]

(2006) 20 A&NZ Mar LJ

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