Emily Krstina (Aust) P/L v State of SA No. Scgrg-96-2407 Judgment No. S251

[1999] SASC 251

EMILY KRSTINA (AUST) PTY LTD v

STATE OF SOUTH AUSTRALIA
[1999] SASC 251

1 PRIOR J         The plaintiff is involved in the fishing industry at Port Lincoln.  In December 1993, it added to its fleet a vessel first launched in New South Wales and approved in 1980 as a vessel to catch fish using the purse-seine method of fishing.  Its use changed over the years.  When purchased by the plaintiff, the vessel was subject to an approval from the Department of Marine & Harbors of this State for use as a long-line vessel.  There is a third relevant method of catching fish professionally in this State.  That is known as poling.
2 Mr Santic, the man who is said to drive the plaintiff company, contacted Mr Pike, a Marine Surveyor employed by the defendant, shortly before 3 December 1993, to ask if he would look at the vessel the plaintiff was interested in purchasing.  An inspection of the vessel occurred at Port Lincoln on 3 December 1993.  Three days later, Mr Pike issued a certificate saying that the vessel was "satisfactory for its intended service".  The plaintiff claims that Mr Pike was asked by Mr Santic to inspect the vessel knowing that the plaintiff’s intention was to use it as a purse-seine vessel.  Pike denies this and said that he, as a Marine engineer and surveyor, is no expert on stability of vessels, has no authority to give opinions on behalf of the defendant with respect to that and was only asked by Mr Santic to look at the hull of the vessel that Santic was contemplating purchasing.
3 Pike’s  evidence was that about a week before 3 December 1993, he received a telephone call from Mr Santic, asking when he was next in Port Lincoln.  Pike said he told him he was going to be there on 3 December and that Santic then told him that he was thinking of buying the Leonard Star from Hagen Stehr’s company.  That was a reference to Australian Tuna Fisheries Pty Ltd, a company that had gone into receivership in September 1992.  Pike said that he recalled asking whether Santic wished him to survey the vessel and that Santic said that he did not as the vessel still had six months to run.  Pike said Santic said that if he bought the boat he would get it surveyed when the certificate expired.
4 Pike said that when he arrived at Port Lincoln on 3 December 1993, he first went to Mr Santic’s office, before conducting a survey of the Dangerous Reef Platform.  After this, he returned to look at the Leonard Star with Mr Santic.  Pike said that when he arrived there Mr Chillingworth was present.  Chillingworth was an employee of the owner of the vessel.  Pike spoke of two men from  Arthur Andersen and Co being present as well.  Whilst Santic’s recollection was no different from Pike’s about this, other evidence before the court is that there was but one representative from the receiver present,  a Mr Sayers.  Pike’s evidence that Santic went with him to the Dangerous Reef Platform is disputed.  Pike may well be wrong about both these matters but, overall, I found his evidence on the substantial issues in dispute to be convincing, compelling and consistent with what he did in response to Santic’s request..
5 As for the Leonard Star, Pike said that he inspected the hull and called Mr Santic’s attention to pitting which, Pike said, was over a fair area of plating but was not serious.  He said he told Mr Santic that and that if the hull was painted regularly the hull would last some ten to fifteen years.  Pike said he also drew Mr Santic’s attention to rope wrapped around the propeller shaft.  He had Mr Chillingworth remove the rope so that he could inspect the propeller shaft.  Pike noticed a groove in the shaft and said he told the persons then present that the grooving may have affected the life of the shaft.  Pike said he also told those then present that he would check and measure the shaft, borrowing a pair of callipers from a nearby workshop.  In cross-examination, Pike admitted to being on the deck of the vessel, looking at the wheelhouse, life raft, life rings and navigation lights, noticing that they all appeared good and so informing Santic.  I find that at that time he remarked to Mr Santic that the vessel looked okay, implying that the vessel looked in reasonable condition.  Finding that, I reject any suggestion that, by that remark, Pike was undertaking any responsibility with respect to the vessel’s stability, suitability for immediate use as a purse-seine vessel or that the plaintiff was entitled to think that he was. 
6 Pike said that at Mr Santic’s suggestion, they went to lunch before Pike sought a copy of the Uniform Shipping Laws Code to assist in his calculations as to whether the shaft would need to be replaced before the vessel could go to sea.  Pike made a note in the Leonard Star’s survey book that he had checked the condition of the hull.
7 Pike said he had lunch with Mr Santic and the plaintiff’s insurance agent, Mr Wilkinson.  Pike said that he was then concerned about the lack of lights on the Dangerous Reef Platform and that the conversation he was involved in revolved mostly around that.  He said there may have been reference to pitting of the hull on the Leonard Star but that he could not recall hearing any conversation at all about converting the vessel to a purse-seiner.  It was also his evidence that there was no reference to any intention of Mr Santic to use the vessel for purse seining when Santic telephoned him about a week before 3 December.  I accept Pike’s evidence about that, particularly his assertion that Santic then asked him to inspect the hull of the vessel.  I find that in that telephone conversation, Santic did not ask nor say that he wanted Pike to report on whether the vessel would remain in survey after he had converted it back to a purse-seiner.  I also find that, in that conversation, Santic did not say that he wanted Pike to report on whether, after alterations to the vessel, the vessel would be capable of immediate use as a purse-seine vessel for fishing. 
8 Pike’s demeanour in the witness box was convincing.  I accept, as Pike insisted, that if Santic had asked him about the capability of immediate use of the vessel as a purse-seiner after alterations, he was asking the wrong person.  I find that no such request was made of Pike either on the telephone or on 3 December 1993.  I also find that, in this telephone conversation, Santic did not ask Pike to report to him on what departmental requirements, if any, Santic would have to fulfil in order to be able to alter the vessel to a purse-seine vessel and, thereafter, commence fishing.  The allegations made in the pleadings with respect to the telephone conversation, as disputed by the defendant, are not proved.  I accept Pike’s version of that exchange as true and consistent with other circumstances notwithstanding the plaintiff’s submissions, particularly that Pike was the plaintiff’s point of contact with the department.   In my view, Pike was the most frequent but not the only point of contact.  It must not be overlooked that well before this Santic had retained a naval architect with respect to modifications to the Santa Rosa and that Santic well knew that stability matters were for naval architects not surveyors.  Likewise he knew that if a vessel underwent a major change a new stability book was required.  Moreover, in my view, a major change was involved in returning the vessel to purse-seine fishing.
9 There is evidence from Sayers and Wilkinson as well as Pike and Santic with respect to events on 3 December.  Pike is mistaken about the number of persons from Arthur Andersen and Co if Sayers’ evidence be accepted as to that.  I do accept Sayers’ evidence as to that but I do not accept that anything said by Sayers in his evidence, or in any note he made of his attendance, positively establishes that there was any reference to the use of the vessel as a purse-seine vessel at times when Pike was present.
10 Wilkinson is now employed as the General Manager for the plaintiff’s fishing operations.  His evidence was that he had never met Pike before 3 December 1993.  He also said that, at lunch, there was discussion about the conversion work Mr Santic was looking to do on the vessel should he purchase it.  He also said there was discussion about the intended use of the vessel for purse-seine fishing.  Wilkinson’s evidence was that Mr Pike was not at all negative when they were discussing the change of the boom and the power block.
11 I find that the condition of the hull was discussed at lunch.  The evidence of Wilkinson and Pike with respect to talk of use as a purse-seiner is hard to reconcile.  I am not prepared to disbelieve Pike in his assertion that he was not a party to any discussion about the intended use of the vessel at that lunch.  The discussion of which Wilkinson speaks could have occurred in Pike’s absence before the lunch or at lunch, or after Pike left to pursue his assessment about the state of the shaft.  Even if there were some discussion about possible conversion or the change of the boom and the power block, nothing then said could establish reliance upon Pike with respect to the vessel’s immediate suitability for use as a purse-seine vessel.  A matter against Wilkinson’s assertion that that was discussed can be found in his own correspondence to the insurers the following day, where he still continues to refer to advice yet to be received from Mr Santic as to what work was to be carried out, this depending on whether he used the vessel for purse seining or towing cages and long lining.  I prefer the substance of Pike’s evidence to any particular assertion of Wilkinson or Santic.
12 After the lunch, Pike said he went to get a copy of the Uniform Shipping Laws Code to do his calculations about the shaft.  The calculations being made, he returned to Mr Santic’s office to tell him that the shaft did not have to be changed.  Pike said Santic said that that was good news given that he had bought the boat and got $5000 off it for the shaft.
13 As for Pike’s certificate of 6 December 1993, I accept the submission that, properly understood, it was confined to the request made to look at the hull and that the assertion that the vessel was satisfactory for its intended service could not properly be understood as a reference to service as a purse-seine fishing vessel.  It is not without significance that Pike, the surveyor, used the language of s73(3)I of the Marine Act 1936.  That provisions speaks of intended service with respect to the sufficiency of a vessel’s hull.  Invoking the language of the statute in the document is consistent with Pike’s version of events and inconsistent with the plaintiff’s case against the defendant.  I find that Pike responded to Santic’s request for something in writing for insurance purposes and that the document he issued did not stray from the areas of his normal activities and responsibilities.
14 I also accept the submission put that, properly understood, Pike’s certificate was confined to the request made of him to look at the hull and that the assertion that the vessel was satisfactory for its intended service could not properly be understood as a reference to service as a purse-seine fishing vessel as opposed to a fishing vessel.
15 The evidence satisfies me that before he contacted Pike, Santic had himself conducted an inspection of the Leonard Star and informed his accountant, Mr Jay, of that before Jay pursued enquiries of the receiver about purchase of the vessel.  As a qualified master, Santic was aware of the obligation to have a stability book on board a fishing vessel.  He had experience with having one of his vessels assessed for stability after it was converted from poling to trawling.  On that occasion he retained a naval architect, Mr Kretschmer, the man who had subjected the Leonard Star to a stability test in 1992, with his stability book for that vessel being approved by the department just six months before the vessel was purchased by the plaintiff at the end of 1993. 
16 I also find that, despite the assertion by Mr Santic that Mr Pike was his contact with the department, Santic well knew, when he was in touch with Pike, that Pike was no expert on stability.  I also find that Santic knew that changes of the kind which were necessary to reconvert the vessel, as he clearly intended, back to purse-seine fishing, required notice to the department, even if he assumed that the vessel known to him to have been used for purse-seine fishing before being certified as a long line vessel in 1993 had earlier been approved for purse-seine fishing and was therefore not likely to encounter any difficulties from the department as a result of the work he put in train soon after Pike’s inspection on 3 December. 
17 I further find that it was open to Santic and the plaintiff to make enquiries of the representatives of the former owners of the Leonard Star about previous stability books and the history of the vessel.  Santic was also aware of the plaintiff’s obligations as an owner to ensure that the provisions of the Marine Act and the Uniform Shipping Laws Code were complied with.  He was aware of his responsibility as a master and the plaintiff’s obligations as owner to take care for the safety of crews.  He admitted to not asking for and checking stability books prior to purchase of the Leonard Star.  As a willing but not anxious purchaser the plaintiff could have done so.  Neither the plaintiff nor Santic could reasonably expect others to inform or give them chapter and verse about the vessel’s history absent a proven obligation or willingness to do so.
18 The evidence establishes that Wilkinson sought insurance cover for the vessel on the very day of Pike’s inspection.  As already noticed, he contacted Sunderland Marine Mutual the following day.
19 On 23 December 1993, the insurers contacted Mr Kretschmer by letter to advise him that the vessel was currently undergoing a refit.  The insurer requested Kretschmer to carry out a survey on the vessel on completion of the refit, with a view to reporting to the insurer on the vessel’s general condition and the state of housekeeping and maintenance.  The insurer asked for particular comments on any defects which might affect the seaworthiness or safe operation of the vessel and any unsafe aspects which could affect the safety of the crew.  Mr Kretschmer was asked to contact Mr Santic to make necessary arrangements.  The letter concluded with an invitation to bear in mind that the report might be released to the owner, so that if any remarks were to remain confidential they should be put in a separate letter or addendum.
20 On 7 January 1994, Mr Kretschmer contacted the office of the plaintiff, spoke to the then general manager, Mr Cameron, with respect to the survey and then advised the insurer that the vessel was being re-equipped as a purse-seiner from the current long line, with completion expected within about two weeks.  In his advice to the insurer Mr Kretschmer said that he mentioned that the new owners should inform the Department of Marine and Harbors about the changes, "particularly stability factors".  I find the plaintiff was so informed by Kretschmer on that occasion.
21 Mr Kretschmer’s evidence was impressive.  It satisfied me that Kretschmer made every effort to ensure that the plaintiff inform the defendant of its proposals to modify the vessel by reverting it to a purse-seine fishing vessel.  In contrast, Santic’s evidence about his exchanges with Kretschmer was far from convincing.  It smacked of a person anxious to make the best of what he believed was a good case of others failing to do the right thing by him when the truth was that he believed he had no particular obligations to the department or others with respect to his plans and that purchase and reconversion of the Leonard Star did not require the attention of naval architects or the involvement of the department.
22 I accept the evidence of Mr Grigg, Manager, Ship Surveys, in the Marine Safety Division of the department, that he was contacted by Mr Kretschmer on 7 January, to be told of changes then in train to the Leonard Star.  I think that Kretschmer made but a passing disclosure to Grigg when Kretschmer rang him about another vessel and difficulties that were then being experienced with that. Grigg apparently misunderstood Kretschmer to be speaking of plans to change when, in fact, changes were already occurring.  Conscious of his obligations to the insurer, Kretschmer saw it as important that the department intervene and ensure, against some sorry history about the Leonard Star that both Kretschmer and Grigg were familiar with, there be a fresh assessment of the vessel after any alterations to the vessel had been completed.
23 I find that on the following Monday, 10 January, Grigg sent and the plaintiff received a facsimile for the attention of Mr Santic.  The facsimile said:
"The stability data for this vessel was reassessed in 1993 to cover its operations at that time.
You are advised that if the vessel configuration alters by addition of weights, removal of ballast etc the vessel must be reinclined and new stability data presented.
You are further advised to discuss these matters with Naval Architect Mr Bob Kretschmer of K Tech Marine, Port Lincoln, especially regarding the placing of Draft Marks on the vessel which may save you considerable problems in the future."
24 Santic admitted that he did know that to go back to purse seining involved the addition of weights and the removal of ballast, matters specifically referred to in Grigg’s facsimile of 10 January 1994 and coupled with the advice that the vessel had to be reinclined and new stability data presented to the department. Santic said that he did not read the facsimile as calling for any stability check at all.  I do not accept what he said.  Rather, I think he was shutting his eyes to an obvious warning.
25 I find that Grigg’s facsimile was not the subject of any proper response by the plaintiff.  It should have been.  A proper response was called for,  not just to the department but, consistent with what the plaintiff then knew about stability, doing as Grigg suggested and discussing stability matters with Kretschmer.  There were ample opportunities.  They were not taken up.  The plaintiff cannot now complain about things resulting from its own omissions. It had responsibilities as an owner and employer that could not be ignored or discharged by a belief that had not been the subject of expert advice.  It was not unreasonable to expect the plaintiff to seek it against what it then knew, or ought to have known.
26 On 31 January, Kretschmer spoke to Mr Santic about the work that was still in progress on the Leonard Star.  He made a note on his advice to Sunderland Marine of 7 January.  It states:
"`DMH does not require stability examined’ !!
P/S before."
27 In his evidence, Kretschmer found it difficult to depose to exactly what was said but, in effect, he made plain that, on two occasions in January 1994, he was told by the plaintiff that there was no need to inform the department about the changes being made to the vessel and that the department did not require stability to be examined in contrast to what Kretschmer had been asked to do by the insurers.
28 I find that Santic chose to ignore Grigg’s advice because, as he put it, with respect to another occasion, he believed in the vessel and in being allowed to revert to use as a purse-seine vessel without any further stability test.  That belief was not founded on anything he was told by the defendant.
29 In cross-examination, Santic said that he told Kretschmer that he had informed the department of the changes.  He denied that he told him anything about stability not being a problem.  In his evidence-in-chief, Santic said that, when he was talking to Kretschmer, Kretschmer "sort of asked me about the stability" and that Santic said that the department had said it was okay.  The observation which Santic made when giving this evidence was that he could see from Kretschmer’s face that Kretschmer "wasn’t too happy".  Santic also spoke of telling Kretschmer that the department had told him that he could go fishing.  This was an allusion, no doubt, to a facsimile he had received from Pike on 15 March 1994.  That advice was subsequent to these exchanges with Kretschmer.  This serves to shake the credibility of Santic’s version of events. 

30 Besides the enquiries Kretschmer made of the plaintiff in January 1994, before Pike’s advice of 15 March 1994, Kretschmer advised the insurers, by facsimile of 17 February, of a further conversation with Santic that day.  I find that Kretschmer did speak to Santic on 17 February 1994 and that there was, then, reference to a request made by Santic of the department to carry out a full ultrasonic hull thickness test before he signed the purchase contract.  Finding that that was said on that occasion does not establish that Santic made such a request at any time.  There is no other evidence to support Mr Santic’s assertion.  Finding that it was made again serves to demonstrate that, at this time, Mr Santic was not wanting to know what others were wanting to tell him about stability data and the need for tests. Overall, Santic has been less than accurate as to what happened and what he had asked of others.  I am unable to accept him as a reliable witness.
31 I accept what Kretschmer said about his conversation with Santic on 17 February.  I find that Kretschmer raised the question of stability and conveyed his "general level of concern", with Mr Santic not wanting to engage in a conversation about the topic at all.  I find that Kretschmer then made plain to Santic that what he was doing to the vessel "had significant stability implications and should be reassessed."  I also find that, on this occasion, Mr Santic raised, on his own volition, one particular issue of stability.  This was a reference to the net block.  Santic pointed out that what he was doing was better from a stability point of view than the previous system.  I find Kretschmer agreed with that but, equally, made plain to Santic that, notwithstanding that fact, Kretschmer’s view was still that stability was an issue.
32 After this exchange with Santic, Kretschmer was asked by Sunderland Marine whether he thought it would be prudent to investigate stability further, notwithstanding the assertion Santic made to Kretschmer on 17 February that the Department of Marine and Harbors did not require the vessel’s stability to be re-examined because he was simply replacing the equipment previously removed when it operated as a purse-seiner.  Whilst accepting that Santic said things like that to Kretschmer, I do not accept that Santic was told anything like that by the department at any relevant time.  For Santic to have said this to Kretschmer was to reflect Santic’s beliefs, inspiring a loose statement as against the department, plainly inconsistent with what the plaintiff and Santic had been told by Grigg’s facsimile of 10 January. 
33 I reject any suggestion that Kretschmer’s credibility should be questioned because of his particular interests at the time.  Nor do I think there is anything inaccurate in his advice of 17 February, when he said that he had not spoken to the department about the matter.  I accept that he was informing the insurer that he had not spoken to the department about the whole project of the conversion and what was involved.  I have found it most probable that his remarks to Grigg were in the context of a conversation focussed upon what Kretschmer described as "a big problem with" another vessel, the Charlene, in January 1994.
34 Three other events should be referred to.  They are Pike’s facsimile to Santic of 15 March 1994, Kretschmer’s requisition to the plaintiff of 18 March 1994 and Wilkinson’s disclosures to Santic of 14 April 1994. 
35 As to Pike’s advice, I accept his version and explanation for that communication and reject any suggestion or submission that, in that communication, Pike was giving any advice to the plaintiff about stability matters.  The occasion was one where Santic himself was in contact with another member of the department’s staff, not just Pike.
36 As for Kretschmer’s request for further particulars following upon an inspection of the vessel in March 1994, I find that, again, the plaintiff was asked whether the department had been officially notified of the modifications that had occurred to the vessel by that time and that the plaintiff failed to answer that particular question though there were answers given to most of the 15 items listed in that requisition.
37 The vessel put to sea in March 1994.  I find that the plaintiff was then on notice, if not before, with respect to stability problems and that it could and should have proceeded to arrange stability tests soon after that date.  I find also that any necessary repairs to the vessel could have been undertaken then without the loss of any fishing time.  But that is not all.  With Wilkinson’s letter of 14 April was a copy of Kretschmer’s report of 25 March 1994.  All causes for concern were then more than adequately spelt out and disclosed to the plaintiff.
38 I have found against the plaintiff’s particular allegations in par10 and par12 of the statement of claim.  The plaintiff has failed to establish that it made plain to Pike that it wanted to know of him whether the Leonard Star would be satisfactory for the intended use as a purse-seine vessel.  There was no misstatement by Pike.  The words he used and the statements he made did not engender in the plaintiff any reasonable reliance about matters other than the hull.  The opinions expressed about the propeller shaft were not relied upon by the plaintiff.  
39 The plaintiff maintained that, even if the allegations involving Pike were not made out, the defendant was liable to the plaintiff for its failure to discharge its obligations with respect to surveys of the vessel before 1992.  In particular, within par18 of the statement of claim, it was said that the defendant was under a duty to inform the plaintiff that the method of calculating stability for the Leonard Star had changed since its stability as a purse-seine vessel was last calculated in 1986/1987 and that it could not be presumed that by converting the vessel back to its earlier use it would pass a fresh stability test simply because historically it had done so.  It was also said that the defendant was under a duty to inform the plaintiff that the Leonard Star would have failed its stability test in 1986/1987 if the calculations imposed by the Uniform Shipping Laws Code had been used.  A further allegation was that the defendant was under a duty to ensure that stability tests occurred more frequently than they did during the period October 1981 to July 1992.  Another duty to inform was said to have arisen because of variations in the lightship displacement during that period.  The defendant was said to be under a duty to ensure that a representative of the defendant was present during the conduct of the stability test carried out by Kretschmer in July 1992. 
40 The defendant was said to have had obligations under the Marine Act to manage, control and administer the safe navigation of vessels in South Australian waters and to conduct inspection and surveys on vessels in accordance with that Act.  Acts and omissions with respect to this particular vessel, at times when the plaintiff was not its owner, were said to have given rise to breaches of a duty of care owed to it. 
41 The plaintiff alleged that the defendant was obliged to inform it that the Leonard Star may not remain in survey and may not be legally capable of immediate use by simply converting the vessel back to its original "as built" use and that problems existed with the stability of the vessel if it was to be converted back to a purse-seine vessel.
42 In final submissions, counsel for the plaintiff submitted that the defendant had to tell a new purchaser "at the very least that there had been stability problems with this vessel when configured as a purse-seiner prior to conversion as a long liner."  It was put that the defendant owed duties, not just to the owner or master of a vessel but obligations to look after the safety of people on the vessel.  It was said that it was not just a matter of informing the owner of a vessel of the fact that the vessel had had stability problems in the past.  It was also said that a more specific warning than that given by Grigg’s facsimile of 10 January may have discharged the defendant’s obligation to the plaintiff but if something had happened to the vessel and lives were lost the defendant would have been in breach of its duty to those who lost their lives.  A power to suspend or cancel survey certificates was referred to and relied upon as an example of what obligations were imposed upon the defendant.  These submissions do not properly distinguish between different issues which arise depending upon the identity of the particular plaintiff and the kind of harm claimed to have been suffered in consequence of a breach of a particular duty of care owed to a particular plaintiff.
43 A number of statutory provisions must be considered.  Some impose obligations upon the defendant, some upon the plaintiff.  Others are less than specific in their terms.
44 Section 13 of Marine Act 1936 empowers the minister to whom the administration of the Act is committed to cause unseaworthy ships to be detained and ships to be inspected.   The minister may issue and revoke certificates that ships have complied with the law with respect to surveys.   Both those powers are to be contrasted with a duty in par(c) of that section.  That paragraph says that the minister "shall in manner hereinafter provided cause the requirements of this Act for the preservation of life and property and the prevention of accidents at sea to be fulfilled;". 
45 Section 14 of the Act permits the making of regulations for particular purposes including providing for "matters affecting the stability of ships" and "regulating the issue of certificates to ships" .  The Survey, Equipment and Load Line Regulations 1990 imported the provisions of the Uniform Shipping Laws Code with respect to stability by reference to the Australian Transport Advisory Council Uniform Shipping Laws Code.   Regulation 25 requires certain vessels, including the vessel the subject of these proceedings, to comply with s8 of the Code.  That section applies to every vessel subject to a survey of an authority.  By parA.2.1, it is provided that where alterations are made to an existing vessel,
"such as materially to affect the stability of the vessel, the Authority may require the vessel to be reinclined and a reassessment made as to the ability of the vessel to meet the applicable criteria."
46 There is also a specific provision with respect to inclining experiments and lightship measurements being witnessed by a surveyor:  par1.6 in Appendix A to Section 8, Sub-section A.  In my view, that provision was satisfied in July 1993 by Kretschmer being present.  The provision does not incorporate a demand that a surveyor then present should be an approved surveyor or one appointed by the minister.   Section 8 also calls for reference to s7 of the Code.  Within that section are two clauses, 4 and 25.  Clause 25.1 requires that there:
"be supplied on board a vessel sufficient information, in an approved form, to enable the master of the vessel to arrange for the loading and ballasting of the vessel in such a way to avoid the creation of any acceptable stresses in the vessel structure."
By cl4.2, it is provided that there shall be carried at all times on a vessel to which the section applies:
"information with respect to the stability of the vessel, being information approved as information that satisfies the requirement of this section and shall include particulars appropriate to the vessel in respect of all matters specified in clA4 of the ‘stability section’."
This provision refers to s8 of the Code.
47 Further specific provisions relevant include those within Part IV of the Marine Act itself with respect to safety and survey of ships, reg38 of the Survey, Equipment and Load Line Regulation 1990; s19 and s23 of the Occupational Health, Safety and Welfare Act 1986. In my view, these two Acts "stand together".
48 Regulation 38 applies to the owner of this vessel and requires advice of "any proposed structural alteration to the vessel or to its manner or area of operation".  That provision has to be read in conjunction with s73 and s78a of the Act.  Of particular significance, again, is that s73 imposes a primary liability upon the owners of ships.  Section 85a may not be irrelevant either, although counsel for the defendant was unable to produce evidence of a specific ministerial direction if a proper construction of (4) exempts the master or owner of any fishing vessel from the penal provisions of that section.  Whatever be the proper construction of that section, there can be no doubt that the plaintiff and others involved in or supervising fishing activities in Port Lincoln and elsewhere in this State, have accepted that no fishing vessel like the Leonard Star should take to sea without an approved stability book on board.
49 In the case of the Leonard Star, it was bought by the plaintiff and taken to sea when the only stability book approved by the defendant specifically referred to the obligation to notify the department of any material alteration to the vessel, its tanks or fishing gear.  Those obligations are enforceable whether by prosecution under s78a or otherwise.  Other means of enforcement exist.  As for loading conditions, the approved stability book available to the plaintiff and required to be on board referred to the approved loading conditions being typical "for the intended service of the vessel as a long liner".  It also said that if the application of the boat changed, or different loading conditions were contemplated, separate calculations would be necessary to ensure compliance with stated criteria, the equivalent of what is in the Code.
50 The provisions of the Occupational Health, Safety and Welfare Act are expressed to apply to work places. The definition of "work place" in s4 refers to any place where an employee works, including any ship. Thus, by s23, the plaintiff, as an occupier of the vessel, was required to "ensure so far as is reasonably practicable" that the ship was maintained in a safe condition. Other duties in other provisions of that Act attach to the plaintiff and are part of the background to a proper consideration of the plaintiff’s submissions.
51 In support of this part of the plaintiff’s case, counsel relied upon the decision of the High Court in Pyrenees Shire Council v Day.   There the majority of the High Court rejected the concept of general reliance.  They saw it as unsound.  Accepting that, some of the submissions of the plaintiff have nowhere to go.
52 In Pyrenees, a fire broke out in an old shop and residence.  The premises were destroyed.  Adjoining premises were severely damaged.  The cause of the fire was a defect in the chimney, which had been identified and notified to the council some years before.  The council gave a direction to the then tenant not to use the fireplace unless certain repairs were carried out.  The tenant failed to pass on the council’s advice to the owner.  The owner failed in its claim against the council at first instance and on appeal.  The adjoining owners succeeded.  The council’s statutory powers included the power to direct the owner or occupier of premises to alter a fireplace or chimney so that it would make it safe for use.  The council was also empowered to execute the work itself if the alterations were not carried out.  The council gave notice, requiring remedial work.  It did not follow up that notice by checking whether the work had been done or by enforcing compliance with directions given.  The evidence disclosed that the risk of a serious fire was very grave.  The High Court unanimously dismissed the council’s appeal against the judgment in favour of the owners of the adjoining premises.  A majority allowed the owner’s appeal and found the council owed a duty of care to the owner of the premises.  It was accepted before the High Court that if such a duty were found, the council was negligent and liable for breach of such a duty.

1. In the Supreme Court of Victoria, the adjoining owners succeeded on a view that rate payers generally rely on councils to exercise statutory powers to rid neighbouring properties of dangers and detriments.  The view of the court was that such an expectation could be judicially noticed.  However, whilst the adjoining owners could exercise no control over what precautions were taken on the premises, the owner was in a position to do something about a fire hazard on the owner’s property.  On the approach in the lower court, any reliance by the owners on the council would not be reasonable.  In the High Court, the majority rejected the proposition that the doctrine of general reliance forms part of Australian law, but found in favour of both the adjoining owner and the owner of premises applying other reasoning.  The minority adopted and applied the doctrine of general reliance and agreed with the decision of the courts below in favour of the adjoining owner and against the owner of the premises.

2. Brennan CJ was of the view that an individual has an action against a public authority for failure to exercise statutory powers where, in the circumstances, it would have been irrational not to have exercised the power so that there was in effect a public law duty to act and the purpose for which the power was conferred was protection of the person or property of the class of individuals of which the plaintiff was a member.   However, the other two justices constituting the majority disagreed with the Chief Justice’s test for the existence of a duty of care in negligence being the same as the administrative law test for mandamus.

3. Gummow J said that the circumstances of the case did not involve a case of "pure non-feasance" by the public authority but rather an omission in the course of positive conduct sufficient to found liability.   His Honour’s view was that a public authority which enters upon the exercise of statutory powers with respect to a particular subject matter may place itself in a relationship to others which imports a common law duty to take care which is to be discharged by the continuation or additional exercise of those powers.  For this proposition His Honour relied upon Heyman’s case.   Gummow J observed that an absence of further exercise of interconnected statutory power may be difficult to separate from the exercise which has already occurred and that exercise may then be said to have been performed negligently.

4. Kirby J also agreed that the idea of general reliance is entirely artificial and a fiction.  His Honour’s view was that considerations that have been thought to establish the general reliance concept should properly be viewed as "proximity factors", "or a spectrum of considerations or arguments as to why a duty of care existed which, in the particular circumstances, obliged the public authority to exercise its powers". .  His Honour adopted, as the approach to be taken in Australia, a three stage test expressed by the House of Lords in Caparo.   In His Honour’s view:
   "To decide whether a legal duty of care exists the decision-maker must ask three questions:-
   ‘1.     Was it reasonably foreseeable to the alleged wrong-doer that particular conduct or an omission on its part would be likely to cause harm to the person who has suffered damage or a person in the same position?

5. Does there exist between the alleged wrong-doer and such person a relationship characterised by the law as one of "proximity" or "neighbourhood"?

6. If so, is it fair, just and reasonable that the law should impose a duty of a given scope upon the alleged wrong-doer for the benefit of such person?’
   The answer to the first question may often be a relatively easy one.  This is because the law usually affords its answer with the wisdom of hindsight, knowing that harm has occurred, the risk of which could have been avoided by the exercise of reasonable care.  The answer to the second question will depend upon an analysis of the spectrum of ‘proximity factors’ advanced to define the relationship between the parties out of which a duty is said to arise.  Sometimes, but not always, an element of reliance will give content to that relationship.  The answer to the third question, which will be necessary only if the first two have been decided in the affirmative, will require the decision-maker to weigh any competing considerations of legal policy in order to determine whether, notwithstanding the proof of foreseeability and proximity, the law should not impose a duty at all or a duty of a scope which the injured party needs in order to succeed.  In conformity with the incremental approach accepted by this Court, each of the three questions will be answered with the guidance of the responses given, in analogous circumstances in earlier cases, where a duty of care has been asserted and either found to exist or rejected."

1. Toohey J denied a duty of care owed to the occupier but found in favour of the adjoining owner.  The latter was particularly vulnerable.  The authority existed and was empowered to protect them from the very loss that occurred.  
   58 McHugh J adhered to the notion of general reliance as an aid to the determination of liability.  He emphasised that there were certain limitations to the doctrine that had to be properly understood.  In particular, the doctrine applied in limited situations of such magnitude or complexity that individuals cannot, or may not, take adequate steps for their own protection.   His Honour’s view was that the doctrine applied "only in those situations where individuals are vulnerable to harm from immense dangers which they cannot control or understand and often enough recognise."  His Honour’s view was that in the situation referred to by Mason J in Heyman’s case, and also in similar situations, it was not a fiction to conclude that members of the community rely on the relevant public authority, "often endowed with extensive powers, to protect them from harm."  His Honour continued:
   "I do not think such reliance is a fiction when an authority provides a service in that area, particularly where the authority ‘has supplanted private responsibility, as in the case of air traffic controllers’ and in cases such as fire control.  In the case of aircraft inspections, for example, individuals who travel on planes are aware that their safety is dependent on the aircraft being maintained in accordance with standards laid down by governmental regulatory bodies.  They rely on those bodies to regularly examine aircraft to ensure that they comply with those standards."

1. The second limitation that His Honour spoke of was that the public authority must know or ought to know that the plaintiff will suffer damages unless care is taken.  A public authority incurs no liability under the general reliance doctrine unless it has knowledge or imputed knowledge of danger.  In many cases where the doctrine applies the public authority will already have a public duty, enforceable by mandamus, to consider whether it should exercise its power or perform its function.  In some cases, its knowledge may be such that, though the power or function may be discretionary, it nevertheless has a public duty to act.   The third limitation was identified as:
   "the fact that the authority owes a common law duty of care because it is invested with a function or power does not mean that the total or partial failure to exercise that function or power constitutes a breach of that duty.  Whether it does will depend upon all the circumstances of the case including the terms of the function or power and the competing demands on the authority’s resources."

1. His Honour’s view was that the mere failure to exercise a discretionary statutory power was not negligent.  The council had to be shown to have already owed an anterior duty to take affirmative action in favour of the owner if the owner was able to succeed.  McHugh’s J view was that the council’s entry on to the premises and the sending of the letter to the tenant imposed no obligation on it to take any further steps in the matter.  Unless the inspection or the sending of the letter increased the risk of harm or induced the owner or occupier to act to their detriment, the council was entitled to desist from further action.
   61 Pyrenees is not a case founded upon a failure to inform or warn.  It is not a case where the plaintiff, seeking to establish such a duty of care, had statutory obligations linked to statutory powers or obligations of the defendant.  It is a very different case from this case.  Nevertheless, against the arguments advanced, I refer to some of the reasoning and apply it, hopefully consistent with other authority of the High Court.  In this case, "there are no exceptional grounds for holding that the policy of the statute requires compensation to be paid to (a plaintiff) who suffer(s) loss because (a) power was not exercised."   The defendant’s powers were conferred to supervise the discharge by others of a duty to protect a plaintiff from risks of damage to person or property.   There was no failure to "take steps in the further exercise of (the defendant’s) powers which were required by the circumstances."   There was no relevant omission in the course of positive conduct sufficient to found liability.   There was no sufficiently proximate relationship between the parties, certainly with respect to events occurring before the plaintiff became owner.
   62  It could not be fairly said that the defendant owed an anterior duty to take affirmative action in favour of a new owner of a vessel which, itself, had specific duties cast upon it by the very legislation it sought to invoke against the authority to establish a duty of care that involved a positive duty to inform about a previous situation and warn against assumptions made by an owner not complying with its own statutory obligations.  Any duty of the defendant did not supplant the plaintiff’s responsibilities.

2. I think in this case it can be said that it was not reasonable for the plaintiff to rely on the defendant to protect it from its own failures including a proper enquiry as to the history of the vessel before purchase, the failure to heed the advice contained in the current stability book, act upon the warning given by Kretschmer, or respond to Grigg’s letter and that which followed in the communications to it by Wilkinson.
   64 The plaintiff maintained that the defendant was negligent in failing to discharge a statutory duty as well as failing to exercise a statutory power.  In particular, s13(c) of the Marine Act is said to have imposed upon the minister in favour of the defendant an obligation to preserve life and property by taking action in the plaintiff’s favour.  I reject any submission that that provision imposes a duty upon the defendant to inform in the manner suggested or intervene to prevent financial loss and damage to property of the plaintiff against what the plaintiff claimed the defendant knew or ought to have known from what was happening on the vessel in January 1994.  I find that nothing which occurred when the vessel was being reconverted was properly notified to the defendant to begin to attract any such principle.
   65 In my view, a duty of care involving disclosure or explicit warning was not owed by the defendant to the recent purchaser of a vessel known to the State to have had stability problems in the past.  If I am wrong on that, I would hold that any such duty of care owed by the State has not been shown to have been breached given the warnings actually given to the plaintiff.   The stability book discharged any duty of the kind alleged.  The plaintiff itself had duties imposed upon it by law to the point that, even if other persons were potentially able to complain of breaches of duty to them, that was not so in the case of this plaintiff against its responsibilities as an employer and owner of a vessel, whatever the history of that vessel may have been in earlier times. 
   66 I reject the plaintiff’s allegation that the defendant was obliged to inform it that the Leonard Star may not remain in survey and may not be legally capable of immediate use by simply converting the vessel back to its original "as built" use and that problems existed with the stability of the vessel if it was to be converted back to a purse-seine vessel.  If there was any such obligation, both the current stability book and Grigg’s facsimile of 10 January 1994 discharged any duty of that kind.  I reject the submission that there was a duty to inform the plaintiff as a prospective or present owner about the change in calculation methods and the effect that that may have had on previous stability tests of the vessel.  Any obligation to require stability tests more frequently during times when the plaintiff was not the owner of a vessel would not give rise to any duty in a potential or prospective purchaser of that vessel. 
   67 I also reject the arguments about a failure to inform the plaintiff about lightship displacement matters without going to the evidence about that.  As for the suggestion that the Uniform Shipping Laws Code required a representative of the defendant to be present before any duty owed to a particular person was discharged, I have construed the relevant legislation as not requiring a representative of the defendant to be present as much as that the stability test is conducted in the presence of a particular person with particular qualifications.  Mr Kretschmer conducted the stability test in July 1992.  He was a person who satisfied the demands of cl1.6 in Appendix A to s8 of the Uniform Shipping Laws Code.  However, even if the provision were to be construed as the plaintiff insists, I reject the suggestion that that would give rise to an actionable claim at the suit of anyone.
   68 For these reasons the plaintiff’s claim is dismissed.  That being said, I should indicate that if, contrary to my view, any breach of duty is made out in this case, the damages claimed by the defendant for the loss of fishing opportunities would fail for reasons already expressed.  As for the cost of repairs to the vessel, I would find that whilst that would constitute damage resulting from any breach of a duty owed by the defendant to the plaintiff, the fault of the plaintiff being so great I would reduce the damages recoverable for the cost of repairs to the vessel by at least 75 per cent.