With reference to the German ship Setos, which before the war left Pugit Sound, under a time charter to a British firm, with a cargo of timber consigned to W. Balchin Ltd, Sydney (see my opinion of 8 September 1914⁽¹⁾) the Comptroller-General of Customs forwards for advice the following letter from W. Balchin Ltd to the Collector, Sydney:

Adverting to your letter of the 15th September in regard to the s.s. Setos, we have received the following cable from our San Francisco correspondents:

Setos is there any possibility your arranging Government permission transfer American flag bona fide purchase if so we may be able reasonable freight forward prospects rather remote but worth trying if you give reasonable price, and shall be glad to know in reply if there will be any objections to the Setos coming to Sydney, provided she is sold to a United States firm and duly transferred and registered under the flag of that country.

Please let us know this information at your earliest convenience.

In my opinion, the question of the validity of a sale to a neutral in the circumstances of the Setos will present difficulties of law over and above the necessity of establishing the bona fides of the transaction. No undertaking can be given that would preclude an investigation of the facts by a prize court on the question of bona fides (as to which a very strict standard of proof is applied) or would prevent the Crown from challenging the validity of the transfer in point of law.

[Vol.13, p. 137]

(1) Opinion No.556.