Turks Shipyard Ltd v The Owners of the Vessel November

Where a contract names a company as principal, that description is evidence of the intended contractual relationship and places a substantial burden on the party asserting an undisclosed agency. The court must assess all the circumstances objectively, including the parties’ conduct and their commercial interests.

Where the named company has no proprietary or possessory interest in the vessel, no contractual right to use it, and no obligation to repair it, while the alleged principals own the vessel and have the relevant interest in the work, those circumstances may establish that the company contracted only as their agent.

Section 21(4) of the Senior Courts Act 1981 permits an action in rem only where the person liable in personam was the owner, charterer, or person in possession or control when the cause of action arose.

Turks Shipyard Limited carried out conversion and painting work on the vessel November. The written booking form identified Clean Marine Limited as the client. Clean Marine was controlled by the vessel’s owners, but the intended transfer of ownership to Clean Marine never occurred.

The Admiralty Registrar found that Clean Marine had contracted with the shipyard as agent for the owners, who were therefore liable as undisclosed principals. He held that the claim could be brought in rem against the vessel under section 21(4) of the Senior Courts Act 1981.

One owner appealed, arguing that Clean Marine alone was liable because it was the party named in the contract. The central issue was whether the owners had consented, expressly or by implication from their words or conduct, to an agency relationship concerning the repair contract.

1. Appeal dismissed. The Registrar was correct to find that Clean Marine Limited contracted with Turks Shipyard Limited as agent for the vessel’s owners. The shipyard was therefore entitled to enforce its claim in rem under section 21(4) of the Senior Courts Act 1981.
2. The description of Clean Marine as the client in the booking form was evidence that it was intended to be the principal. The shipyard accordingly bore a heavy burden in showing that Clean Marine acted for undisclosed principals. The court assessed the issue objectively by reference to the parties’ words, conduct and the surrounding circumstances.
3. The circumstances provided the necessary proof. Clean Marine had no proprietary or possessory interest in the vessel, no contract for its use and no obligation to repair or convert it. The owners, by contrast, owned the vessel and had every interest in the work being done so that it could be certified. The intended transfer of ownership to Clean Marine had not occurred. In those circumstances, Clean Marine’s entry into the repair contract was only consistent with it acting as agent for the owners.
4. The owners’ later understanding of the agency relationship and evidence from the company that prepared the work specification could confirm the conclusion, but could not found it. The conclusion rested on the objective circumstances.
5. The Registrar had overstated the effect of section 21(4). It does not always protect builders and repairers by permitting an action against the vessel. The statutory condition is that the person liable in personam was the owner, charterer, or person in possession or control when the cause of action arose. The error did not invalidate the Registrar’s conclusion.
6. Alternative issues concerning quantum meruit, the arrest jurisdiction, an implied term, beneficial ownership and a possessory lien were left undecided because they were unnecessary to the result.

1. High Court (Admiralty Division) — appeal dismissed. The court upheld the Admiralty Registrar’s conclusion that Clean Marine Limited contracted as agent for the vessel’s owners.
2. Admiralty Registrar — decision dated 16 October 2019. The Registrar found the owners liable as undisclosed principals and held that the claim could proceed in rem under section 21(4) of the Senior Courts Act 1981.