Australian Coastal Shipping Commission v Pv "Wyuna"

[1964] HCA 76

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Kitto, Menzies and Owen JJ.

AUSTRALIAN COASTAL SHIPPING COMMISSION v. P.V. "WYUNA"

(1964) 111 CLR 303

4 December 1964

Shipping and Navigation

Shipping and Navigation—Towage—Hire of tug to tow vessel—Damage to the tug necessitating salvage—Whether damage "whilst towing"—Right of tug owners to recover indemnity against consequences of damage—United Kingdom Standard Towage Conditions, cll. 1, 3.*

Decisions

December 4.
The following written judgments were delivered:-
BARWICK C.J. In my opinion the tug "Walumba" fouled her propeller "whilst towing" the "Wangara", within the meaning of cl. 1 of the United Kingdom Standard Towage Conditions. I am also of opinion that the subsequent jeopardy of the tug and its salvage therefrom were consequences of the damage done to its propulsion gear "whilst towing". It follows, in my opinion, that the amount payable by the owners of the tug to the master and crew of the pilot vessel P.V. "Wyuna" was within the indemnity given to the tug owner by the Australian Coastal Shipping Commission (the hirer) by cl. 3 of those conditions. (at p306)

2. I have had the advantage of reading the judgments of my brothers Menzies and Owen and I agree with what each has written. As I do not wish to qualify any of their reasons or conclusions, it is sufficient for me to adopt them. (at p306)

3. The appeal should be dismissed. (at p306)

McTIERNAN J. I am of the opinion that this appeal should be dismissed. I agree with the reasons of Owen J. (at p306)

KITTO J. The S.S. "Wangara" being grounded on a reef, the tug "Walumba" was engaged by the appellant, her owner, on terms which included certain towage conditions, to endeavour to get her off. A tow-line was passed from the "Wangara" to the tug and the tug put strain on the line ; but wind and tide swung the tug sideways, and before she could recover her position the tow-line carried away. The tug was being swept towards a reef and her master chose the lesser of two evils by going ahead, away from the reef, notwithstanding the danger of fouling the broken tow-line. Unfortunately the propeller caught the tow-line and such damage was done that the tug was without motive power. In this situation the pilot vessel "Wyuna" came to her rescue and saved her from the reef. For the services thus rendered the owners, master and crew of the "Wyuna" were awarded 10,000 pounds salvage against the owners of the tug. The latter then claimed to be indemnified by the appellant against their salvage liability, and Adam J., who decided the case in the Supreme Court of Victoria, gave judgment in their favour. The appeal before us is from that judgment. (at p306)

2. The case depends upon the meaning and application to be given to a clause (cl. 3) in the towage conditions. The clause is badly expressed. Its apparent object is to relieve the tug-owner against certain losses and liabilities, and to place the hirer under certain obligations to the tug-owner in respect of certain happenings "whilst towing". The tug-owners here rely upon the clause on the footing that the mishap which caused the tug to be in the peril from which it was saved by the "Wyuna" happened to it "whilst towing". The expression is defined in cl. 1 of the towage conditions to cover a period therein described. The period commences when the tug is in a position to receive orders direct from the hirer's vessel to pick up ropes or lines, or when the tow-rope has been passed to or by the tug, whichever is the sooner. It ends when the final orders from the hirer's vessel to cast off ropes or lines have been carried out, or the tow-rope has been finally slipped and the tug is safely clear of the vessel, whichever is the later. In the present case the mishap to the tug which placed her in the jeopardy from which the "Wyuna" extricated her happened after the tow-rope had been passed to the tug, and at a time when no final orders from the "Wangara" to cast off ropes or lines had been given and the tow-rope had not been finally slipped - for "finally slipped" obviously refers to a deliberate act of letting go the tow-line with the intention of thereby concluding the whole operation. The damage to the tug happened, therefore, "whilst towing", unless cl. 1 is to be read as subject to some implied limitation which fits the facts of this case. (at p307)

3. For the appellant it is contended that the limitation to be implied is one which restricts the definition to "the ordinary case" or, alternatively, makes it applicable only "when appropriate". If any implication is to be made which will render the definition inapplicable to the facts of the present case it must be one which satisfies the familiar tests for implying terms in contracts. It cannot be an implication restricting the period to that in which there is a line between the two vessels, for the express terms of cl. 1 extend that period at both ends, so to speak. The appellant must go so far as to say that if the parties when making the towage contract had had in view such a situation as had developed in the present case up to the time the broken tow-line fouled the tug's propeller, and had made express provision as to their rights and liabilities in such a situation, they would presumably have agreed, as fair and reasonable men, that the situation should not be covered by the expression "whilst towing" : see Dahl v. Nelson, Donkin &Co. (1881) 6 App Cas 38, at p 59 . (at p307)

4. I do not see how this proposition or anything like it could be maintained. I could accept without difficulty an implication that in a case where the tow-line has parted and the tug has turned away from the tow with the intention of abandoning the contract, finally or for the time being, or, perhaps, has become incapacitiated for further performance of the contract, the period covered by "whilst towing" which was running when the tow-line parted is ended ; but it is clear on the evidence that nothing of either kind had happened in the present case up to the moment when, the tug's propeller having become fouled, the damage was caused which deprived her of motive power. That, of course, is the point of time to consider. The learned trial judge, who merely described the fouling of the propeller as having occurred in the course of further manoeuvring by the tug in the emergency that arose when the tow-line had carried away, evidently was satisfied that the fouling of the propeller and the resulting immobilization of the tug took place before the master of the tug had applied his mind to the question of possibly having to abandon the towage contract. With respect, that seems to me the proper conclusion on the evidence. It is true that in the interval between the parting of the tow-line and the fouling of the propeller the tug-master's whole attention was concentrated upon extricating his vessel from her own predicament ; but that means only that he was too preoccupied with the problems of the moment to give thought to what he would do if and when the peril to his tug should be overcome. It had become very plain, of course, that there was considerable ground for doubt as to whether the "Wangara" could be pulled off the reef in the prevailing conditions of wind and tide ; but there is nothing in the evidence to justify a conclusion that before the propeller became fouled the tug-master had actually come to a decision that he would give up his endeavours. Indeed it was never put to him in the witness-box that he had made such a decision. In the circumstances it seems to me that the correct finding of fact was that he had made no decision to abandon the task, and consequently that the tug suffered its damage "whilst towing". (at p308)

5. It is on this footing that the question must be decided whether the tug-owners are entitled under cl. 3 of the towage conditions to be indemnified by the appellant against their liability for salvage. The clause begins by providing, negatively, that the tug-owner shall not, whilst towing, bear or be liable for damage done by or to the tug, or by or to the hirer's vessel, or for loss of or damage to anything on board the hirer's vessel, or for loss of the tug or the hirer's vessel, or for any personal injury or loss of life, arising from any cause. As applied to the present case, this means only that the tug-owners shall not have to bear the damage that was done to the tug by the fouling of the propeller in the period covered by "whilst towing". The clause then adds to the negative provision two positive provisions : the hirer shall pay for "all loss or damage and personal injury or loss of life", and shall also indemnify the tug-owner "against all consequences thereof". These provisions are obviously intended as correlative to the negative provision, so that "all loss" etc. should be read as meaning "all such loss" etc. Accordingly the appellant is bound to pay for the damage done to the tug by the fouling of the propeller. So much is conceded ; but when it is put by the tug-owners as an equally clear result of the clause that the appellant is liable to indemnify the tug-owners against all consequences of the damage done to the tug by the fouling of the propeller, including the consequence of liability for salvage for the rescue of the tug from its resulting position of peril, the appellant objects that the expression "all consequences" does not extend so far. The submission starts with the word "indemnify", emphasizing by reference to The Carlton (1931) P 186, at p 195 the aptness of that word to refer to third party claims. The "consequences" to which the clause refers, so the appellant contends, must consist of third party claims which arise directly out of loss, damage, personal injury or loss of life falling within the earlier provisions of the clause. As applied to the present case, the contention is that as nothing that occurred was within the earlier provisions except the damage to the tug, and as no third party claim against the tug-owner flowed or could flow directly from that damage, there were no "consequences thereof" which could be within the appellant's obligation to indemnify the tug-owners. In particular, it is said, the liability of the tug-owner for salvage is not within the clause, because it was a consequence not of the damage to the tug, but of the subsequent action of the "Wyuna" in saving the tug from the peril into which she drifted some time after the damage had occurred. (at p309)

6. The contention attributes to "all consequences thereof" a meaning which in my opinion is much too narrow. The document is a business document, directed to a practical topic, and exhibiting a general intention to give the tug-owner a wide protection. The appellant, as one way of putting its submission, relies upon the legal concept of remoteness of damage as supplying or suggesting an appropriate limit to place upon the expression "all consequences thereof". It may be accepted that the tug-owners' salvage liability was not caused immediately by the fouling of the propeller : it arose immediately by reason of the action of the "Wyuna" in effecting the rescue and of the making of the Court's award. But the common law concept is not immediacy of causation ; it is reasonable foreseeability of "consequences" : Overseas Tankship (U.K.) Ltd. v. Morts Dock &Engineering Co. Ltd. (The Wagon Mound) (1). The question therefore is whether a salvage liability incurred in such circumstances as those of the present case should be considered to have been outside the reasonable contemplation of the parties as consequences of damage to the tug ; and that depends on the view a business or seafaring man would take "without too microscopic analysis but on a broad view" : per Lord Wright in Yorkshire Dale S.S. Co. v. Minister of War Transport (2). The fouling of the tug's propeller immediately caused a situation to arise of such a kind as to necessitate the payment of salvage if the tug were not to be lost altogether ; and, that being so, if a business man or a seafaring man were asked whether the damage to the tug caused the salvage liability I should think he would answer at once that it did. The analogy from the law of damages tells against the appellant, for where a ship not at fault sustains damage by collision and is rescued by a third ship from a resulting peril the established rule is that the salvage payable to the third ship is recoverable as part of the damages caused by the collision. In The Williamina (3), Sir Robert Phillimore applied the rule in terms appropriate to the present case. He said : "the salvage claim, arising as it did out of the collision, if not paid (scil. by the defendants), would have been recoverable from the defendants as consequential damages in the collision action". (The italics are mine.) See also The Legatus (4). Accordingly, even without deriving any special assistance from the universality of the word "all" as qualifying "consequences", I am of opinion that the salvage liability in the present case was covered by cl. 3 of the towage conditions as being a third party claim which was a consequence of the damage sustained by the tug. (at p310)

7. For the foregoing reasons I agree that the appeal fails and should be dismissed. (at p310)

MENZIES J. By this appeal the Commission challenges the decision of Adam J. that by reason of the operation of the Standard Towage Conditions, it is liable to indemnify the tug "Walumba" against liability to the owners, master and crew of the P. V. "Wyuna" for 10,000 pounds salvage. (at p311)

2. "Walumba" got into difficulties while attempting to carry out its engagement to tow the appellant's ship "Wangara" off a reef at Point Lonsdale. The tow-rope parted, leaving the tug in danger of grounding upon another reef; the master thereupon went ahead and that part of the broken tow-rope that was attached to the tug fouled its propellor and stopped its engines. It was rescued from a position of jeopardy by the "Wyuna" and 10,000 pounds salvage was awarded as reward. The respondents' successful claim for indemnity was made under the Standard Towage Conditions, which admittedly formed part of the contract between the appellant and the tug-owner. (at p311)

3. Clause 3 of the Towage Conditions applies "whilst towing" and exempts the tug-owner, inter alia, from liability for damage of any description done to the tug or for loss of the tug. Furthermore, it obliges the hirer of the tug to "pay for all loss or damage" and to "indemnify the Tugowner against all consequences thereof". This means, I think, that whereas the tug-owner is not liable for damage to the tug whilst towing, the hirer is, and the hirer indemnifies the tug-owner against all consequences of such damage. Adam J. decided that the liability for salvage incurred by the tug was a consequence of the damage to the tug when its propeller became fouled, and I agree with this decision and with the learned judge's reasons therefor. Dr. Coppel's argument conceded that, if it occurred "whilst towing", the damage to the "Walumba" when its propeller fouled was the responsibility of the appellant, but he contended that the appellant was not responsible for remoter consequences of that damage which occurred after towing ceased and, in particular, that its indemnity against "all consequences thereof" did not cover its liability for salvage even if the jeopardy from which it was rescued was due to the damage that it suffered. That indemnity, he contended, was an indemnity against liability to third parties incurred whilst towing. I agree with Adam J. that it is not so restricted. It appears to me that the words "all consequences thereof" naturally include consequences of damage to the tug and that some support for this meaning is to be gathered from the circumstance that, later in the condition, indemnity against some third-party claims against the tug-owner is conferred in express language. I consider, therefore, that the appellant was liable to indemnify the tug-owner against liability for salvage incurred by reason of the fouling of the tug's propeller if that damage to the tug occurred "whilst towing". (at p312)

4. By cl. 1 of the Towage Conditions the phrase "whilst towing" is "deemed to cover the period commencing when the tug is in a position to receive orders direct from the Hirer's vessel to pick up ropes or lines, or when the tow-rope has been passed to or by the tug, whichever is the sooner, and ending when the final orders from the Hirer's vessel to cast off ropes or lines have been carried out, or the tow-rope has been finally slipped and the tug is safely clear of the vessel, whichever is the later". It is clear that the "Walumba" had commenced to tow the "Wangara", and a strict application of the words of the condition would lead to the conclusion that towing had not ended when the tow-rope fouled the tug's propeller. It was argued, however, that towing could come to an end in a way not covered by this condition - for example, if the tug commenced to tow but, upon the parting of the tow-rope, simply gave up the tow and steamed away. I am ready enough to accept the proposition that towage, having begun, might be brought to an end by some unilateral action of the tug not specified in condition 1 - for example, if, having been in a position to receive orders from the ship to pick up lines, it refused to do so and went away - but, like Adam J., I find nothing here that did bring the towing to an end before the propeller of the tug was fouled. The evidence of the tug-master makes the position quite clear: - "Well perhaps if you tell me - after the line was broken you find yourself drifting down towards the reef? - Yes, after the line was broken. (at p312)

5. Yes, after it is broken you are drifting towards the reef. You know there are lines somewhere underneath you and on the bottom? - Yes. (at p312)

6. I suppose you would be conscious in those circumstances that there would be some danger of the wire getting caught around the screw? - Yes, I was. (at p312)

7. But you were also conscious that there was a danger of going on Lonsdale Reef, so you had no option but to start your screw and run the risk? - That is correct. (at p312)

8. His Honour: You would not have done it if there had been no emergency? - No, sir. (at p312)

9. Mr. Hulme: Well now, Captain, am I right that at that time, as far as you were concerned, your whole immediate concern was with 'Walumba'? - Definitely. (at p312)

10. You were not interested any more in trying to get 'Wangara' off the rock into the water with you ? You were interested in saving 'Walumba'? - That is correct. 'Wangara' was doing very well. (at p312)

11. It was safe and not coming to any harm? - Yes. (at p312)

12. And you were in danger? - Yes. (at p312)

13. And the - you started the screw and pretty shortly afterwards, I gather you had the trouble with your engines which was later found to be the wire around the screw? - That is correct. (at p313)

14. Mr. Hulme: Once that screw was fouled, I take it that the expedition with 'Wangara' was well and truly over the day, as far as you were concerned? You had a disabled tug and you were still in some danger of going aground somewhere if you did not get help? - Yes". (at p313)

15. From this it is apparent that it was not until the screw was fouled that it could be said that the towing was over, notwithstanding that at an earlier point of time the tug-master's immediate concern was wholly with the safety of his tug. Whether, upon the screw becoming fouled, the towing was then over is a matter unnecessary to consider. (at p313)

16. I agree, therefore, with the decision of Adam J. and, because I also agree with his reasons for that decision, I have been able to express my concurrence without doing more than state shortly why, in my opinion, the argument that Dr. Coppel presented to this Court should not prevail. (at p313)

OWEN J. This is an appeal by the Australian Coastal Shipping Commission (the third party) against a decision of Adam J. in the Supreme Court of Victoria the effect of which was to require the third party to pay to the owners of the tug "Walumba" (the defendants) the sum of 10,000 pounds together with certain costs incurred by the defendants in connexion with proceedings brought against them by the owners, master and crew of the Pilot Vessel "Wyuna" (the plaintiffs). (at p313)

2. The facts are that the "Wangara", a ship owned by the third party, grounded on a reef near Point Lonsdale and the tug "Walumba", owned by the defendants, was employed by the third party to tow her off. When the tug arrived on the scene a tow-line was with difficulty passed to it from the "Wangara" but a combination of tide, high wind and heavy seas caused the line to break when the strain came on it with the result that the tug was in danger of grounding on another reef. To avoid disaster, the tug-master put the engine ahead to get away from the reef and within a very short period thereafter the broken tow-line fouled the tug's propeller and put it out of action with the result that the tug again began to drift down onto the reef. Before it struck, however, it was saved by the exertions of those on board the plaintiffs' pilot vessel "Wyuna" and towed to safety. The plaintiffs took proceedings to obtain salvage reward from the defendants and the latter in turn joined the third party claiming that under the contract of towage they were entitled to be indemnified against their liability to the plaintiffs. The proceedings were heard by Adam J. who awarded the plaintiffs a reward of 10,000 pounds and costs. His Honour proceeded then to consider the defendants' claim against the third party based upon the provisions of the United Kingdom Standard Towage Conditions which, as was conceded on the appeal, governed the contractual relationship between them. (at p314)

3. Clause 1 of those Conditions provides that: - "For the purpose of these Conditions, the phrase 'whilst towing' shall be deemed to cover the period commencing when the tug is in a position to receive orders direct from the Hirer's vessel to pick up ropes or lines, or when the tow-rope has been passed to or by the tug, whichever is the sooner, and ending when the final orders from the Hirer's vessel to cast off ropes or lines have been carried out, or the tow-rope has been finally slipped and the tug is safely clear of the vessel, whichever is the later. Towing is any operation in connection with holding, pushing, pulling or moving the ship." (at p314)

4. And by cl. 3 "The Tugowner shall not, whilst towing, bear or be liable for damage of any description done by or to the tug . . . or for any personal injury or loss of life, arising from any cause .. . . and the Hirer shall pay for all loss or damage and personal injury or loss of life and shall also indemnify the Tugowner against all consequences thereof . . ." (at p314)

5. The case for the defendants was that the tug was damaged when the broken tow-rope fouled the propeller and immobilized it. The damage occurred "whilst towing" with the result that the tug was exposed to the very real danger of striking the reef from which it was saved by the pilot vessel in circumstances entitling the owners, master and crew of that vessel to salvage reward. This was a consequence of the damage to the tug against which the third party was bound to indemnify the defendants. For the third party it was submitted that the towing operation had ended when the tow-line parted because, so it was said, the evidence showed that when that happened the tug-master abandoned the venture and cl. 3 of the Towage Conditions had no further application. Alternatively it was argued that, if towing ended when the propeller was fouled by the tow-rope and further performance of the contract of towage became impossible, the liability of the defendants to pay salvage reward to the plaintiffs was not a "consequence" of that damage within the meaning of cl. 3. (at p314)

6. The first question is whether the fouling of the tug's propeller occurred "whilst towing" and this involves two considerations, one of fact and one of law. The question of fact is whether on certain evidence given by the tug-master in cross-examination, the proper conclusion is that the towing operation was abandoned when the tow-rope parted and before it fouled the propeller. If this was the fact I would agree that the defendants' claim could not be sustained, but the finding of the learned trial judge was that "up to the moment when her propeller was fouled, there was no question of 'Walumba' abandoning the towing operation" and I have no doubt that his Honour was right. The evidence relied upon by the third party was as follows: - "Well perhaps if you tell me - after the line was broken you find yourself drifting down towards the reef? - Yes, after the line was broken. (at p315)

7. Yes, after it is broken you are drifting towards the reef. You know there are lines somewhere underneath you and on the bottom? - Yes. (at p315)

8. I suppose you would be conscious in those circumstances that there would be some danger of the wire getting caught around the screw ? - Yes, I was. (at p315)

9. But you were also conscious that there was a danger of going on Lonsdale Reef, so you had no option but to start your screw and run the risk? - That is correct. (at p315)

10. His Honour: You would not have done it if there had been no emergency? - No, sir. (at p315)

11. Mr. Hulme: Well now, Captain, am I right that at that time, as far as you were concerned, your whole immediate concern was with 'Walumba'? - Definitely. (at p315)

12. You were not interested any more in trying to get 'Wangara' off the rock into the water with you? You were interested in saving 'Walumba'? - That is correct. 'Wangara' was doing very well. (at p315)

13. It was safe and not coming to any harm? - Yes. (at p315)

14. And you were in danger? - Yes. (at p315)

15. And the - you started the screw and pretty shortly afterwards, I gather you had the trouble with your engines which was later found to be the wire around the screw? - That is correct." (at p315)

16. It is clear from this that when the tow-rope broke and the tug was being driven towards the reef, the tug-master's immediate and natural concern was with the safety of his own vessel. The "Wangara" was in no immediate danger, the tug was. But to infer from those facts that the tug-master thereupon abandoned the towing operation would not be justified. His intention no doubt was to save the tug from going aground and then to pick up another tow-line from the "Wangara". It was only when the propeller became fouled and would no longer do its work so that the performance of the towage contract became impossible that the venture was abandoned. (at p316)

17. It is necessary then to consider whether the damage to the tug occurred "whilst towing" within the definition of the phrase contained in cl. 1. The period so defined had unquestionably begun before the damage occurred and, as it seems to me, it had not ended. Performance of the towage contract had then not become impossible; there had been no abandonment of the venture; there had been no order from the "Wangara" to cast off ropes; the tow-line had not been slipped, finally or at all; and an operation in connexion with holding, pushing, pulling or moving the ship was still in progress. (at p316)

18. There remains the question whether the liability of the defendants to pay salvage reward to the plaintiffs was a "consequence" of the damage to the tug within the meaning of cl. 3. The submission made on behalf of the third party was, as I understood it, that the promise to indemnify the tug-owner "against all consequences thereof" applies only to consequences which themselves occur "whilst towing" and that what the clause contemplates is that loss or damage or personal injury or loss of life has occurred "whilst towing" in circumstances which have immediately given rise to a liability owed by the tug-owner to a third party. The clause would, I agree, cover such a case. Federal Steam Navigation Co. Ltd. v. J. Fenwick &Co. Pty. Ltd. (1943) 68 CLR 553 is an example. There the damage to the tug "whilst towing" caused the death of one member of the crew and personal injury to another in circumstances which imposed upon the tug-owner an obligation to pay compensation, in the one case to the dependants of the dead man, in the other to the injured employee. But I am unable to agree that it is only in such cases that the obligation to indemnify operates. The clause requires, first of all, that the hirer will, as between himself and the tug-owner, pay for all loss or damage and personal injury or loss of life occurring "whilst towing", and goes on to impose upon the Hirer the further obligation that he will also indemnify (which I take to mean "save harmless") the tugowner against all consequences of that loss or damage and personal injury or loss of life. The words "whilst towing" apply to the first of these obligations but they do not limit the promise to indemnify to those consequences which occur "whilst towing". In my opinion the indemnity extends to all consequences directly following from damage occasioned to the tug "whilst towing" whether those consequences occur during the period of towing or after it has come to an end. (at p317)

19. For these reasons, which are in substance those given by Adam J., I would dismiss the appeal. (at p317)

Orders

Appeal dismissed with costs.