Australia: Trade And Transport Bulletin - The Value Of A Lien

Last Updated: 6 October 2008
Article by Cheri Chestnut

A recent dispute dealt with by the Supreme Court of New South Wales involving an analysis of some interesting points of maritime law, provides a good illustration of the value which can be obtained by the exercise of a lien. The decision of Justice Rein in Rail Equipment Leasing Pty Ltd v CV Scheepvaartonderneming Emmagracht can be found at [2008] NSWSC 850.


Rail Equipment Leasing Pty Ltd (REL) purchased six second hand locomotives from a vendor in Sweden and arranged for them to be shipped to Newcastle, New South Wales. A house bill of lading was issued by Baltship AS (Baltship), and an ocean bill was issued to Baltship by CV Scheepvaartonderneming Emmagracht (the carrier).

During the voyage, two locomotives shifted, allegedly because the cradles provided by Baltship on which the locomotives were placed were defective. The locomotives sustained damage themselves, and also caused significant damage to the ship. The ship called at Savannah in the United States, where the locomotives were discharged, repairs to the ship undertaken, and new cradles for the carriage of the locomotives constructed.

The ship arrived in Newcastle on 21 July 2008, but the carrier notified REL and Baltship that it was exercising a lien over the locomotives pending settlement of its claim for US$1,098,877.67 for the cost of repairs to the ship and associated expenses.

For reasons which were not clear to Justice Rein, neither REL nor Baltship was prepared to provide security in respect of the carrier's claim, even though the carrier offered to provide a cross security. In the end therefore, when the matter came before Justice Rein on 5 August 2008, he had before him a claim by REL, a claim by Baltship, and a claim by the carrier in rem against the six locomotives which it was holding. As well as these three sets of proceedings, it seems that the carrier, together with some associated parties, had already commenced proceedings against REL and Baltship in Holland, and that Baltship had commenced proceedings against the carrier in the United States.


The carrier argued that the Court had no jurisdiction to hear the claims of REL or Baltship, as the carrier's bill required that 'disputes arising out of or in connection with this bill of lading shall be exclusively determined by the courts and in accordance with the law of the place where the carrier has his principal place of business, as stated on page 1...'.

Justice Rein, however, found it relatively easy to decide that this clause was of no effect because of the provisions of section 11(2)(c) of the Australian Carriage of Goods by Sea Act 1991. Section 11(2)(c) provides that an agreement which precludes or limits the jurisdiction of an Australian Court in respect of a sea carriage document for the carriage of goods from any place outside Australia to any place in Australia, is of no effect. He went on to point out that even if this was not so, the carrier's bill of lading did not on page one provide an address of the principal place of business! As such, the carrier's challenge to jurisdiction was easily dealt with by the Court.

The carrier's claim against the locomotives

This claim had been made mainly for the purpose of obtaining security in relation to the proceedings which had commenced in Holland. However, given that Justice Rein had concluded that the New South Wales Supreme Court had jurisdiction, there was no basis for an order for security in relation to the Dutch proceedings.

The liens

The substantial question which arose for determination was whether the carrier had either a contractual lien arising out of provisions in the bill of lading or a maritime lien within the meaning of the Admiralty Act 1988 (Cth), or perhaps both.

Justice Rein was doubtful that a maritime lien existed in the circumstances of the case, but he was satisfied that there was an arguable case that the carrier had a contractual lien. This lien arose due to the provisions of clause 11 in the ocean bill providing the carrier with a lien 'on all cargo for any amount due under this contract' and because clause 10(b) of the bill rendered the merchant liable 'for all costs and expenses of .... repairing damage to and replacing packing due to excepted causes, and any extra handling of the cargo ...'. Although not entirely convinced, his Honour also considered it arguable that Article IV Rule 6 of the Hague Visby Rules (which deals with goods of a dangerous nature) applied in favour of the carrier.

The debate about the existence of a maritime lien was more complex, and proceeded on the basis of the carrier's argument that Baltship had committed a tort on the high seas by providing defective cradles to the carrier. However, Justice Rein was doubtful that a maritime lien over cargo for a tort on the high seas was known or recognised by Australian law, and went on to point out that even if such a lien was recognised, it would be necessary to identify the wrongdoer and establish that the goods claimed to be the subject of the lien were owned by the wrongdoer. In the circumstances of this case, Baltship was the party alleged to have been the wrongdoer, but the locomotives were owned by REL.

The outcome

The carrier was unsuccessful in its challenge to jurisdiction, and was also unsuccessful in its assertion that it was entitled to a maritime lien. However, failure on those points meant nothing in the end, as Justice Rein concluded that the carrier was entitled to a contractual lien, entitling it to retain possession of the locomotives pending either the provision of security or the resolution of its claim. The old saying that possession is nine-tenths of the law, while not truly the legal position, is perhaps another way of illustrating the value which can be obtained from a lien. The case illustrates the importance of including a well-worded lien clause in contracts of carriage.

Phillips Fox has changed its name to DLA Phillips Fox because the firm entered into an exclusive alliance with DLA Piper, one of the largest legal services organisations in the world. We will retain our offices in every major commercial centre in Australia and New Zealand, with no operational change to your relationship with the firm. DLA Phillips Fox can now take your business one step further − by connecting you to a global network of legal experience, talent and knowledge.

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.