Smith's Dock Co Ltd, ship repairers, initiated an action in rem against the St Merriel, owned by the South American Saint Line. The plaintiffs claimed GBP 11,200 to cover the cost of labour, materials, and services incurred while carrying out repairs on the St Merriel. At the time in question, the vessel was on demise charter to British Car Carriers Ltd.

The St Merriel was arrested on 4 December 1962, and on 7 December the defendants entered a conditional appearance. On 9 December, the plaintiffs applied for the release of the vessel, a request to which the defendants consented, provided that the plaintiffs agreed to cover their costs and the expenses related to the action, not exceeding GBP 25. Despite the ongoing legal action, the vessel was released.

Subsequently, the defendants applied to the Court to set aside the writ of summons based on the following grounds:

(i) The St Merriel was, at all relevant times, chartered by demise to British Car Carriers Ltd;
(ii) The defendants were not the party who would be liable in an action in personam; and
(iii) The demise charterers were never, and had never been, beneficial owners of all the shares in the vessel.

Held: The writ is set aside.

The Court considered arguments relating to s 3(4) of the Administration of Justice Act 1956 (UK) (the Act). This provision was intended to give domestic implementation to art 3.1 of the Arrest Convention 1952, which states that 'a claimant may arrest either the particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship'.

The Judge took note of the case of The St Elefterio [1957] P 179, which addressed the interpretation of the phrase in s 3(4) of the Act: 'who would be liable on the claim in an action in personam'. He held that s 3(4) expanded the admiralty jurisdiction of the Court, granting the right to arrest either the ship related to the alleged cause of action, or any other ship under the same ownership. The purpose of the wording in s 3(4) is to identify the person(s) whose ship(s) may be arrested in respect of the right to arrest a sister ship.

The Judge acknowledged that under s 3(4) the liable party would either be the owner, charterer, or person in possession of the ship at the time when the cause of action arose. He found that the evidence indicated no liability on the part of the owners, the South American Saint Line.

Additionally, 'beneficially owned' is not defined in the Act. However, there are circumstances where a ship is owned by one person - that is, true ownership - who is the only one with the right to sell it, even though the same ship is beneficially possessed, as in the case of a ship under a demise charter. Nevertheless, the wording of the Act specifies 'as respects all the shares therein', intending to identify the true owner, namely the only person with the right to sell all the shares in the ship. Consequently, the Judge found that the South American Saint Line were the individuals who beneficially owned the ship with respect to all its shares.