Fortuna Seafoods Pty Ltd v The Ship “Eternal Wind” - [2005] QCA 405

SUPREME COURT OF QUEENSLAND

CITATION:

Fortuna Seafoods P/L as trustee for The Rowley Family Trust v The Ship “Eternal Wind” [2005] QCA 405

PARTIES:

FORTUNA SEAFOODS PTY LTD as trustee for THE ROWLEY FAMILY TRUST
(plaintiff/respondent)
v
THE SHIP “ETERNAL WIND”
(defendant/appellant)

FILE NO/S:

Appeal No 1125 of 2005
Appeal No 2068 of 2005
SC No 1485 of 2000

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

4 November 2005

DELIVERED AT:

Brisbane

HEARING DATE:

3 August 2005

JUDGES:

McMurdo P, Jerrard JA and Dutney J
Separate reasons for judgment of each member of the Court, McMurdo P and Dutney J concurring as to the order made, Jerrard JA dissenting

ORDER:

Both appeals dismissed with costs to be assessed

CATCHWORDS:

TORTS – NEGLIGENCE – ESSENTIALS OF ACTION FOR NEGLIGENCE – DUTY OF CARE – RELATIONSHIP OF PROXIMITY – appellant negligently caused a ship owned by a fishing company closely linked to the respondent to sink – fishing company and respondent were part of a vertically integrated commercial operation which included common directors and shareholders – respondent brought claim against appellant for pure economic loss – evidence given that respondent processed and sold fishing company’s fish as its agent and that all transactions were performed at normal market rates – respondent gave uncontested evidence that such vertically integrated commercial operations were common in the Australian fishing industry at the relevant time – appellant led no contrary evidence at trial – whether appellant owed respondent a duty of care – whether judge erred in concluding that the appellant had the means of knowledge that the respondent was part of an ascertainable determinate class of persons likely to suffer economic loss as a consequence of appellant’s negligence – whether judge entitled to more readily draw an inference regarding the means of knowledge where no contradictory evidence was led by the appellant

PROCEDURE – COSTS – SCALES OF COSTS – SCALE APPLICABLE – judgment sum awarded to plaintiff in the Supreme Court was within the District Court’s jurisdiction – action was originally one of three factually related actions ordered to be heard together – the other two claims settled prior to trial – plaintiff’s original claim was for a sum within the Supreme Court jurisdiction but a lower amount was settled upon just prior to trial – whether the judge erred in awarding costs on the Supreme Court scale

Bow Valley Husky (Bermuda) Ltd v St John Shipbuilding Ltd [1997] 3 SCR 1210; 153 DLR (4^th) 385, considered
Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529, applied
Canadian National Railway Co v Norsk Pacific Steamship Co [1992] 1 SCR 1021; 91 DLR (4^th) 289, considered
Christopher & Ors v The Motor Vessel “Fiji Gas” [1993] QCA 22; (1993) Aust Torts Reports 81-202, not followed
Jones v Dunkel (1959) 101 CLR 298, cited
Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd [1985] QB 350, distinguished
Perre v Apand (1999) 198 CLR 180, applied
Valleyfield Pty Ltd v Primac Ltd [2003] QCA 339; Appeal No 3605 of 2002, 8 August 2003, cited

COUNSEL:

A W Duffy for the appellant
A J Greinke for the respondent

SOLICITORS:

Ebsworth & Ebsworth for the appellant
Thomson Rich O’Connor (Sydney) for the respondent

McMURDO P: On 5 April 1998 about 48 nautical miles off Noosa Heads the motor bulk carrier Eternal Wind collided with the commercial fishing vessel Melina T. Melina T suffered extensive damage and sank. Eternal Wind was owned by Ganta Shipping SA ("Ganta") and was registered in Panama. Melina T was owned by and part of the fleet of Fortuna Fishing Pty Ltd ("Fortuna Fishing"). The respondent plaintiff, Fortuna Seafoods Pty Ltd ("Fortuna Seafoods"), as agent for Fortuna Fishing processed and sold fish caught by Fortuna Fishing. Fortuna Seafoods brought an action against the appellant defendant, Eternal Wind, for damages for the loss resulting from its inability to process and market Fortuna Fishing's catch. Eternal Wind's liability for the collision was agreed and the quantum of Fortuna Seafoods' economic loss after apportionment was also agreed at $163,256. The learned trial judge found Eternal Wind was liable for Fortuna Seafoods' claimed economic loss. Eternal Wind appeals from the learned primary judge's decision in favour of Fortuna Seafoods and from a subsequent costs order in Fortuna Seafoods' favour.

The issue

The issue to be determined in this appeal is whether Eternal Wind, because of its careless conduct which resulted in property loss to Fortuna Fishing and pure economic loss to Fortuna Seafoods, owed Fortuna Seafoods a duty of care so as to sustain an action for damages for negligence.

The applicable legal principles

The answer to this question lies in a developing area of the common law and one in which the path taken by the High Court of Australia (cf Perre v Apand Pty Ltd[1]) has diverged from that taken by English (cf Caparo Industries Plc v Dickman[2] and Candlewood Navigation Corporation Ltd v Mitsui OSK Lines Ltd[3]), Canadian (cf Canadian National Railway Co v Norsk Pacific Steamship Co[4]) and New Zealand courts (cf South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd[5]).
[1](1999) 198 CLR 180.
[2][1990] 2 AC 605.
[3][1986] AC 1.
[4][1992] 1 SCR 1021.
[5][1992] 2 NZLR 282.

It is not the law that one person owes to another an absolute duty to take care not to cause reasonably foreseeable financial harm:[6] the law recognises there must be some intelligible limits to keep the law of negligence within the bounds of common sense and practicality.[7] The courts have, understandably, been reluctant to extend a negligent, as opposed to an intentional, tortfeasor's liability to those who have suffered only economic loss. As Gleeson CJ acknowledged in Perre, however, there is no longer a bright line rule absolutely preventing the recognition of a duty of care in every case where negligent conduct of one person causes financial loss to another, not associated with injury to the other's person or property.[8]
[6]See Cattle v Stockton Waterworks Co (1875) LR 10 QB 453.
[7]Perre, above, Gleeson CJ at 192.
[8]Perre, above, Gleeson CJ at 193.

In Australia, the first major break in the bright line rule came with Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad".[9] The High Court there held that whilst damages are not as a general rule recoverable for a claimant's foreseeable economic loss which is not consequential on injury to the claimant's person or property, damages may be recoverable for breach of a duty of care where the defendant had knowledge, or the means of knowledge, that a particular claimant, not merely as a member of an unascertained class, would be likely to suffer economic loss as a consequence of the defendant's negligence.[10] Jacobs J considered that the duty of care was that owed to a claimant whose property was in such physical propinquity to the place where the negligent acts or omissions had their physical effect so that a physical effect on the property of the claimant was foreseeable as a result of the defendant's negligent acts or omissions.[11] Proximity, a central issue to the reasoning in Caltex, is no longer so pivotal in determining the existence of a duty of care in negligence, but the discussion of principles in Caltex remains a useful starting point for courts in cases where it is claimed negligence has resulted in pure economic loss.
[9](1976) 136 CLR 529.
[10]Caltex, above, Gibbs J at 555, Stephen J at 576 - 577, Mason J at 593.
[11]Caltex, above, Jacobs J at 604.

This developing area of Australian law has moved incrementally and cautiously.[12] Examples of its development can be seen in Bryan v Maloney,[13] Hill v Van Erp[14] and, arguably, Cattanach v Melchior.[15] The fact situations in those cases, however, bear no real resemblance to, and offer no particular assistance in addressing, the issue for determination here. Caltex and Perre suggest that the determination of whether a defendant owes a claimant a duty of care not to cause mere economic loss will depend on a combination of factors including the reasonable foresight of the likelihood of harm; the defendant's knowledge or means of knowledge of an ascertainable, determinate class of persons who are at risk of foreseeable harm;[16] the claimant's vulnerability or whether they are unable to protect themselves from the foreseeable harm;[17] whether the implication of a duty would impair the defendant's legitimate pursuit of autonomous commercial interests[18] including the existence of any contracts between the claimant and defendant; whether the damage flowed from the occurrence of activities within the defendant's control;[19] the closeness of the relationship between the parties[20] and the existence of any other special circumstances justifying compensation.[21]
[12]Caltex, above, Stephen J at 576; Perre, above, McHugh J at 217 - 218, Gummow J (Gleeson CJ agreeing) at 253 - 254, Kirby J at 289 - 291, Hayne J at 302, Callinan J at 325.
[13](1995) 182 CLR 609.
[14](1997) 188 CLR 159.
[15](2003) 215 CLR 1, Gleeson CJ at 18 - 19, Callinan J at 108 - 109.
[16]Caltex, above; Perre, above, McHugh J at 222 - 223, 230, Hayne J at 303 - 305.
[17]Perre, above, McHugh J at 220, 225; Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 530.
[18]Perre, above, Gaudron J at 200, Gummow J (Gleeson CJ agreeing) at 258, Hayne J at 303.
[19]Perre, above, Callinan J at 326.
[20]Perre, above, Gummow J (Gleeson CJ agreeing) at 242.
[21] Perre, above, Callinan J at 326.

There is, however, no simple formula to be applied in determining whether the application of these principles to the facts of this case has the result that Eternal Wind is responsible for Fortuna Seafoods' claimed economic loss. The answer to that question requires some more detailed attention to the pertinent facts of this case.

The evidence

Fortuna Fishing and Fortuna Seafoods were closely related companies. At the relevant time, the sole shareholders of Fortuna Fishing were Ms Frances Rowley and her son Mr Jonathan Rowley. The shareholders in Fortuna Seafoods were Ms Rowley and her husband and Jonathan's father, Mr Michael Rowley.[22] It seems that at the relevant times the directors of both companies were Ms Rowley and Mr Michael Rowley. Mr Jonathan Rowley was the fleet master of the Fortuna Fishing fleet. Fortuna Seafoods was the trustee of a discretionary trust for a wide range of beneficiaries associated with the Rowley family. Fortuna Fishing owned and operated the fishing vessels and supplied all its catch to Fortuna Seafoods for processing for a fee calculated at the prevailing industry rates.
[22]On one view of the evidence the shareholders may have been Ms Frances Rowley and Mr Jonathan Rowley but nothing turns on this.

Mr Michael Rowley gave the following uncontested oral and affidavit evidence. He and his private companies have been operating in the fishing industry since about 1979. Up until 1995 his operations were based in New South Wales. He was developing a long line tuna and swordfish business on the east coast of Australia with a view to exporting. He received advice that all seafoods had to be delivered through the New South Wales Fish Marketing Authority so that a fishing company wishing to process and export fish was not well placed to bypass the Fish Marketing Authority. For this reason he established the entity, Fortuna Seafoods, to conduct and expand the processing and marketing arm of his business. When his family commenced a swordfishing venture based in Mooloolaba in 1997, he used a vertically integrated family company structure with Fortuna Fishing catching and supplying the fish to Fortuna Seafoods, which processed and marketed the fish. This vertically integrated structure became a common model in the fishing industry at this time. When the collision occurred, Fortuna Fishing was a tied supplier of all its product to Fortuna Seafoods so that any drop in supply from Fortuna Fishing was a continuous loss for Fortuna Seafoods. The two companies were conducted as an integrated operation and were treated by the Rowleys for most purposes as one company but with two bank accounts. Although proper accounting procedures were adopted, money in the accounts of one company would be transferred into the account of the other, depending on the commercial needs of the business as a whole. When the Mooloolaba processing factory was completed in late 1996 or early 1997, the enterprise's printed business card recorded the business title as "Fortuna Australia" and in much smaller print referred to "Fortuna Fishing" and "Fortuna Seafoods". The business card recorded one landline telephone and fax number and one mobile telephone number with Mike Rowley as managing director. Fortuna Seafoods also processed some products from suppliers other than Fortuna Fishing.

The learned primary judge found that the two companies were treated by their directors and shareholders as one company although with two bank accounts and with separate books of account so that in some respects the transactions between them were at arm's length.

Eternal Wind did not call evidence in its case.

The arguments in the appeal

Counsel for Eternal Wind in the appeal contends that the learned trial judge erred in concluding that Eternal Wind owed a duty of care to Fortuna Seafoods because his Honour wrongly concluded that Eternal Wind had the means of knowledge that Fortuna Seafoods was part of an ascertainable determinate class of persons. He contends there was no evidence to support his Honour's finding. He further contends that the learned primary judge erred in more readily drawing that inference because of the absence of evidence from Eternal Wind or Ganta as to the appellant's knowledge of this issue.

Counsel on behalf of Fortuna Seafoods in this appeal argues that his Honour was entitled on the evidence to reach the disputed conclusion. He contends that in any case knowledge or means of knowledge is but one of a number of relevant factors to be considered in determining the ultimate issue of whether Eternal Wind owed Fortuna Seafoods a duty of care not to cause economic loss when it negligently damaged Fortuna Fishing's Melina T and that in all the circumstances his Honour was right to find that it did.

Does Eternal Wind owe Fortuna Seafoods a duty of care?

In Caltex, the defendant's knowledge or means of knowledge of the foreseeable risk of economic loss to Caltex was clearly established as was the defendant's knowledge or means of knowledge in Perre. McHugh J recognised in Perre, that knowledge, or what his Honour and Stephen J in Caltex[23] referred to as "constructive knowledge", is a minimum requirement in finding the existence of a duty of care[24] at least where the case does not fall into a category of previously recognised liability.[25] McHugh J considered it to be unwise and perhaps impossible to exhaustively set out when it would be permissible to rely on "constructive knowledge" but suggested:

"… it may be necessary to draw a distinction between using constructive knowledge to identify those within a class who are primarily affected by the defendant's negligence (the first line victims) and using constructive knowledge to identify those who have suffered economic loss purely as the result of economic loss to the first line victims. That is, as a general rule, no duty will be owed to those who suffer loss as part of a ripple effect. Ordinarily, it will be an artificial exercise to conclude that, before acting or failing to act, the defendant should have contemplated the interests of those persons who suffer loss because of the ripple effect of economic loss on the first line victims. While the defendant might reasonably foresee that the first line victims might have contractual and similar relationships with others, it would usually be stretching the concept of determinacy to hold that the defendant could have realistically calculated its liability to second line victims."[26]

[23]Caltex, above, Stephen J at 577 - 578.

[24]Perre, above, McHugh J at 222.

[25]Perre, above, McHugh J at 217 - 218.

[26]Perre, above, McHugh J at 223.

In the light of those observations and mindful of the cautious incremental approach to be taken by courts in determining issues of this kind, I would not find the existence of a duty of care here unless satisfied that Eternal Wind's master or its owner, Ganta, through Ganta's officers, had the means of knowledge that Fortuna Seafoods was a member of a determinate ascertainable class of persons or entities who were at risk of foreseeable economic harm if Eternal Wind acted negligently in colliding with and sinking Melina T.

The learned trial judge was conscious that there was no direct evidence of Ganta's knowledge of the commercial arrangements entered into by the Fortuna group of companies or of the arrangements likely to apply to the ownership and operation of fishing vessels in Australia. Whilst Eternal Wind was a Panamanian registered ship, his Honour inferred from Mr Rowley's evidence and the tendered exhibits relating to the Fortuna companies that its master or owner had the means of knowing that commercial fishing ventures in Australia may consist of a number of companies in an integrated company group with related shareholders with different functions undertaken by the individual companies in the group, such as the Fortuna group. In the absence of evidence from Eternal Wind, his Honour felt more able to readily draw the inference that its master or owner could have discovered that Fortuna Fishing as owner of the Melina T may have been part of a related group of companies with another related company marketing its catch (Fortuna Seafoods) and that it should have had the interests of such a processing company in contemplation when navigating Eternal Wind.[27]
[27]Fortuna Seafoods Pty Ltd (as trustee for the Rowley Family Trust) v The Ship "Eternal Wind" [2005] QSC 4; SC No 1485 of 2000, 14 January 2005 at [25].

The uncontradicted evidence at trial was that vertically integrated commercial operations, like those of Fortuna Australia incorporating Fortuna Fishing as the entity catching the fish and Fortuna Seafoods as the closely related entity processing and marketing the fish, were by 1997 common within the Australian fishing industry. It could reasonably be inferred from this evidence that such information was within the means of knowledge of the master or owner of Eternal Wind. Fortuna Fishing and Fortuna Seafoods are separate legal entities, but they were closely related private companies in that they had a common shareholder and their shareholders and directors were the closest of relatives, working together in a vertically integrated, family-operated commercial enterprise. The closeness of the relationship between Fortuna Fishing and Fortuna Seafoods greatly limits the size of the class to which Fortuna Fishing and Fortuna Seafoods belong so that floodgate issues and policy questions do not suggest that it is unwise to find that Eternal Wind owed a duty of care to Fortuna Seafoods. The exact details of the arrangements between Fortuna Fishing and Fortuna Seafoods may not have been expected to be within the means of knowledge of the master or owner of Eternal Wind but it was within their means of knowledge that if Eternal Wind acted negligently towards and collided with Melina T, a commercial fishing vessel, it was likely that Melina T would be unable to operate as a commercial fishing vessel, with resulting loss of profit not only to the entity owning Melina T, here Fortuna Fishing, but also to the closely associated (in terms of directors, shareholders and in their integrated commercial operation) marketer and processor of the commercial fishing catch, here Fortuna Seafoods.

His Honour's statement, that he felt more able to readily draw that inference in the absence of any contradictory evidence from the appellant, was not an infringement of the much cited rule in Jones v Dunkel.[28] The drawing of inferences of fact can be assisted by the failure of the party against whom the inference might be drawn to contradict that inference.[29] His Honour was not using the absence of evidence from the appellant to fill gaps in Fortuna Seafoods' case. The uncontradicted evidence from Mr Rowley was sufficient to allow his Honour to draw the inference in the absence of any competing evidence.
[28](1959) 101 CLR 298.
[29]Butterworths, Cross on Evidence, vol 1 (at service 90) [3280].

Whilst that deals with the essential arguments raised on the appeal, I would not dismiss it before determining whether the application of the concepts gleaned from Caltex and Perre to which I referred earlier in these reasons[30] when applied to the facts here warrant the conclusion that Eternal Wind owed a duty of care to Fortuna Seafoods.
[30]See these reasons [6].

Eternal Wind does not contend that the likelihood of economic harm to Fortuna Seafoods was not reasonably foreseeable by it. That concession is plainly right. Whilst foreseeability of harm from negligent acts or omissions is an essential prerequisite in establishing that Eternal Wind owed Fortuna Seafoods a duty of care, it is, on its own, not an especially persuasive factor.

For the reasons I have given, the appellant had the means of knowledge that Fortuna Seafoods was part of an ascertainable determinate group who were at risk if Eternal Wind acted negligently towards Melina T.

The imposition of a duty of care on Eternal Wind not to negligently cause economic loss to Fortuna Seafoods by colliding with and sinking the Melina T does not impair the appellant's pursuit of its autonomous commercial interests. The group to which Fortuna Seafoods belongs is a relatively small and determinate class of fish processors and marketers closely affiliated through integrated company structures with owners of fishing vessels. There was no contractual relationship between the appellant and Fortuna Seafoods. Those maritime cases, such as Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd,[31] where courts have been especially reluctant to impose a duty of care to avoid pure economic loss for fear of interfering with long‑established international rules, have no application to the facts of this case.
[31][1985] QB 350, especially at 387.

It was clear from Mr Michael Rowley's uncontested evidence that Fortuna Seafoods was vulnerable if Melina T was negligently damaged by Eternal Wind. Fortuna Seafoods suffered resulting economic loss from its inability to process Melina T's catch. As a company processing seafood it could do little to realistically protect itself against Eternal Wind's negligent actions. Insurance is always one possible option to limit vulnerability. There was no evidence as to whether insurance was available and at what cost. But, as McHugh J recognised in Perre, insurance is generally not relevant to the issue of vulnerability.[32]
[32]Perre, above, McHugh J at 230.

Fortuna Seafoods' loss flowed directly from activities within the control of the master of Eternal Wind: the negligent operation of Eternal Wind resulting in the sinking of Melina T meant that Fortuna Seafoods could not process its sister company's catch and suffered economic loss. Fortuna Seafoods was within the class of those whom McHugh J in Perre called first line victims.

In Perre, McHugh J included in the special categories of liability where negligence causing mere economic loss has already been recognised by the courts that of "relational economic loss". This is the loss suffered when a defendant damages property owned by a third party and the claimant suffers resultant economic loss because of the relationship that exists between the claimant and the third party. The Canadian courts have given recognition to this principle: Bow Valley Husky (Bermuda) Ltd v St John Shipbuilding Ltd[33] and Canadian National Railway Co v Norsk Pacific Steamship Co.[34] Because of the different jurisprudential path taken by the Canadian courts on economic loss, I am reluctant to place much weight on a close analysis of those cases. Callinan J in Perre also recognised that there may be special circumstances apposite in a particular case that would justify compensation for pure economic loss.[35] Kirby J in Perre observed that the closely integrated relationship of several Perre interests made it highly artificial to divide one member of a commercially integrated operation from another.[36] The close relationship in the makeup of the directors and shareholders of both Fortuna Fishing and Fortuna Seafoods and their integrated commercial relationship is a special circumstance in this case justifying the imposition of a duty of care on Eternal Wind for Fortuna Seafoods' economic loss.
[33][1997] 3 SCR 1210 at 1242.
[34][1992] 1 SCR 1021.
[35]Perre, above, Callinan J at 326.
[36]Perre, above, Kirby J at 291 - 292.

Fortuna Seafoods also comes within the "physical propinquity" test which Jacobs J considered was necessary in Caltex before finding a defendant liable to a claimant for negligence for pure economic loss.[37] Eternal Wind's negligence caused Melina T to sink so that Fortuna Seafoods suffered economic loss in its inability to process its sister company's catch. There was physical propinquity between the place where Eternal Wind negligently caused the sinking of Melina T and the inevitable and foreseeable physical effect on Fortuna Seafoods' ability to process and market Fortuna Fishing's catch resulting in economic loss.
[37]Caltex, above, Jacobs J at 604.

The appellant placed some emphasis on this Court's 1993 decision in Christopher & Ors v The Motor Vessel "Fiji Gas"[38] where this Court refused to find the existence of a duty of care for pure economic loss. Whilst the facts of that case had many similarities to those here, there were significant self-evident differences. It was decided before Perre and without the benefit of the High Court's guidance in that case so that Fiji Gas is no longer of real assistance.
[38][1993] Aust Torts Reports ¶81-202.

It follows that after applying the principles extracted from Caltex and Perre to the facts of this case I am satisfied that the learned primary judge was right in concluding that Eternal Wind, because of its careless conduct which resulted in property loss to Fortuna Fishing and pure economic loss to Fortuna Seafoods, owed Fortuna Seafoods a duty of care so as to sustain an action for damages for negligence. The close relationship, both in the nature of the work undertaken by, and in the structure of, Fortuna Fishing and Fortuna Seafoods, which together formed an integrated family company group, combined with the other factors I have discussed, justify the imposition of the duty. That close relationship also adequately answers policy concerns such as indeterminacy, commercial viability and floodgates. The appeal on liability should be dismissed.

The appeal as to costs

I turn now to the appeal from his Honour's costs order. The appellant contends that because the judgment was for a sum within the District Court jurisdiction, costs should have been awarded on the District Court scale rather than the Supreme Court scale.

This action was one of three related proceedings arising out of the collision of the vessels. The two other proceedings, one for personal injury by the crew of Melina T and the other by Fortuna Fishing for the loss of its vessel, were both for claims within the jurisdiction of the Supreme Court. Fortuna Seafoods' claim arose out of the same factual matrix as the other proceedings and all three proceedings were ordered to be heard together. The Fortuna Fishing action was settled only shortly before the commencement of the trial the subject of this appeal and after a Supreme Court judge was available and allocated to hear all three matters. Fortuna Seafoods' claim was originally for $297,210, an amount in excess of the jurisdiction of the District Court. It was reduced to the sum awarded ($163,256), an amount within the District Court jurisdiction, only when the question of apportionment between the parties settled shortly before trial.

His Honour's costs order is unexceptional in these circumstances. The appellant has failed to demonstrate that the order as to costs of the action on the Supreme Court scale was outside a sound exercise of discretion. The appeal as to the costs order should be dismissed.

Orders

Both appeals should be dismissed with costs to be assessed.

JERRARD JA: This appeal is about a claim for economic loss in proceedings in this Court arising out of a collision between the fishing vessel Melina T and the motor bulk carrier Eternal Wind on 5 April 1998, 48 nautical miles east of Noosa Heads. The Melina T was owned by a company Fortuna Fishing Pty Ltd (“Fishing”), and the claim in this proceeding was brought by its related company, Fortuna Seafoods Pty Ltd (“Seafoods”); Seafoods claimed as damages from Ganta Shipping SA (“Ganta Shipping”), the owners of the Eternal Wind, the profit Seafoods would have earned from processing and selling seafood that it (would have) obtained from Fishing, had the Melina T not been sunk in the collision. The appellant argues that it owed no duty to Seafoods and accordingly has no liability for that loss. The learned trial judge, after a careful analysis of recent authorities on economic loss, on what constitutes a joint venture, of time charter cases, and of the defendant’s capacity to discover the commercial relationship between Fishing and Seafoods, held otherwise, and ordered that the defendant pay Seafoods an amount of damages agreed at $163,256. The defendant has appealed.

The judgment under appeal

The learned trial judge observed that information in ASIC company extracts exhibited at the trial recorded that the shareholders in Fishing were Frances Rowley and Jonathan Rowley, a mother and son, and the shareholders in Seafoods were Frances Rowley and her husband Michael Rowley. However, the judge noted that Michael Rowley's affidavit evidence was that his wife and son were the only shareholders of either company. Michael Rowley was a director of both companies at all relevant times, and the learned trial judge found that (probably) Frances Rowley was the only other director of both at the time of the collision.

The learned judge found that Fishing owned and operated fishing vessels, and Jonathan Rowley was the fleet master for the vessels Fishing owned, at the time of the collision. The judge described the affidavit evidence as being that, before the collision, Fishing supplied its catch to Seafoods which processed and sold it as Fishing’s agent, for a fee. It accounted to Fishing for the proceeds of sale. Seafoods also bought fish from other suppliers; Michael Rowley’s unchallenged affidavit evidence was that any drop in supply from Fishing was a continuous loss for Seafoods. The judge also recorded that Michael Rowley's oral evidence was that Seafoods did not buy the catch from Fishing, although at least one of his affidavits said it did. The learned trial judge found the financial records of each company were kept separately, and the costs associated with shipping, such as unloading vessels and packaging the catch, were calculated at prevailing industry rates. However, the proceeds of sale of processed fish were fed into the Fishing bank account via the Seafoods account, and sometimes money would be transferred between the two companies and both accounts would be used to meet expenditures. Michael Rowley said in evidence that the two companies were treated as one company with two bank accounts.

The trial judge recorded that Seafoods was also the trustee of a discretionary trust of which the potential beneficiaries included Fishing; those potential beneficiaries formed a very wide class. There had been significant distributions to Fishing from the trust in most of the years between 1993 and 2000, and the company’s accountants said that part of the overall planning of the group was to allocate profits from Seafoods, as trustee, to Fishing, and to pay tax at the appropriate company tax rate.

The judge described Seafoods’ pleaded case, which was that it was owed a duty of care because it was in a relationship of proximity with Ganta Shipping. That was alleged to be so because Seafoods was part of a special and ascertainable class vulnerable to economic loss from the collision between the Eternal Wind and the Melina T; the pleading then described Fishing’s position as a beneficiary of the discretionary trust of which Seafoods was a trustee, their status as related companies allegedly controlled and managed as a single economic entity, and the use by both companies of the Melina T to conduct the fishing operation as a common enterprise, such that the loss of the Melina T had a direct impact on the processing operations of Seafoods.

Relationship between Fishing and Seafoods

The affidavit evidence at the trial, both from Michael Rowley and from loss assessors engaged by Seafoods, was that under an arrangement between them, Fishing sold its catch to Seafoods, which in turn packaged and on-sold those fish.[39] Michael Rowley's affidavit evidence included the statement that the purchase price of the product landed by Fishing was always the higher of the local or export market price. Further, Seafoods paid to each vessel operated by Fishing the same price it paid to any vessel operated by any other supplier. The purchase price paid to Fishing for the product processed and sold in the domestic market was based on the daily current market price for the size of fish of that species, and Michael Rowley deposed to testing that market by telephoning the Brisbane Fish Market, the Sydney Fish Market, the Melbourne Fish Market, and receiving prices on a daily basis from the Sydney Auction Market and the Tokyo Market. When fish was sold for export, Seafoods acted as packer for Fishing and remitted the whole of the sale to Fishing.
[39]Michael Rowley swore that in an affidavit dated 29 July 2004, at AR 62

Consistently with that description, the loss assessor described Fishing as a highly specialised company which primarily fished for high grade tuna and swordfish, and Seafoods as a company which had carved a niche market in restaurants in the USA and in Japan for the high grade catch from Fishing.[40] The report advised that Seafoods charged a fee of $1.50 for packing the seafood, which charge "reduces the price paid by . . . Seafoods".[41] That evidence described Seafoods as a company which made profitable use of Fishing's catch supplied to Seafoods, but it also made clear Seafoods had other suppliers. Profit and Loss statements for both companies for the years 1994-2000 showed variations in income for each, which income was reported as derived only from "sales". For example, in 1996 Seafoods’ gross income from sales was $848,034, whereas Fishing’s was $1,347,810; in 1998 Seafood’s gross income from sales was $6,996,027, whereas Fishing’s gross income was $1,825,083. Seafoods' 1999 income was in excess of $5,000,000, whereas Fishing's was in excess of $1,700,000.
[40]The respondent did not make anything in its argument of the fact of this niche market supplied by Fishing’s catch
[41]At AR 74

Contrary to that affidavit evidence, Michael Rowley swore in evidence-in-chief that in fact, while the purchase price paid to Fishing was the selling price in the best available market, Seafoods did not buy the fish from Fishing, but sold it on Fishing's behalf, charging it a packing fee: “That is how Seafoods earnt its keep, so to speak".[42] His oral evidence was quite clear that Seafoods did not actually buy any fish from Fishing.
[42]At AR 6

That oral evidence contained the perhaps contradictory claims that Seafoods charged only a packing fee and sold fish on Fishing's behalf, and also that "The purchase price was actually the selling price and it would always be sold into the best market".[43] The conflicting evidence as to Seafood’s role was not resolved by an express finding, or the contradiction explained, although the learned trial judge clearly acted on the view that Seafoods sold the catch for a fee as Fishing’s agent. On Michael Rowley's oral evidence Seafoods was only a processor, and it would be Fishing which exploited a niche market in Japan and elsewhere. On that evidence Seafoods’ loss was only the packaging fees it would have charged Fishing, whereas on the affidavit evidence it was exposed to loss as an on-seller of seafood no longer available to it from Fishing.
[43]Also at AR 6

The position was not clarified in any way by the limited evidence given about the Rowley family trust. That evidence did not identify the source of the money distributed, but did inform that the income of Fishing consisted of fishing income and trust distributions. Those trust distributions were intended to ensure that the rate of tax payable in the year the income was derived by the Rowley family trust was limited to 30 per cent, rather than the higher tax rates which would have been the case if the income was distributed to individual family members.[44] The implication from the assessor’s report was that the trust income came in part at least from the sale of fish, but that information did not show that the existence of the trust made Seafoods more vulnerable in any way to loss because of damage to Fishing’s boat. The existence of the trustee/beneficiary relationship between Seafoods and Fishing appears irrelevant to any loss Seafoods suffered because of the collision.
[44]This information is at AR 94 and 95

The trial judge’s conclusions

The learned judge’s analysis of recent decisions of the High Court[45] on liability for pure economic loss led the judge to the conclusion that to succeed the plaintiff needed to show:
[45]The learned judge also analysed recent articles and decisions in courts other than the High Court

· reasonable foresight of the likelihood of harm;

· that the defendant knew (or knowledge should be imputed to it) that the Melina T was likely, when damaged, to be productive of consequential economic loss to those who relied directly upon its use;

· that it was not a case of indeterminate liability;

· that the defendant knew or had means of knowing that the plaintiff was a member of an ascertainable class of vulnerable persons who were unable to protect themselves from harm;

· that the implication of a duty would not impair the legitimate pursuit by the defendant of its own commercial interests; and

· that the damage flowed from the occurrence of activities within the defendant’s control.[46]

[46]The appellant’s counsel did not challenge the learned judge’s analysis on the appeal; the respondent’s counsel suggested that it was unnecessary to prove all those matters for it to succeed

The learned judge then held that the foresight of the likelihood of harm posed no problems, because if a fishing vessel was sunk it required little imagination to expect that those who might make a profit from processing and arranging the sale of its catch might suffer loss, especially if those persons had limited numbers of suppliers. Nor did the judge have any difficulty in inferring that the defendants knew that the Melina T was likely, if damaged or sunk, to be productive of consequential economic loss to those who relied directly upon its use as a fishing vessel, including those who processed and arranged the sale of its catch. The judge also held that Seafoods was a “first line victim”[47] whose loss was ascertainable, not indeterminate; nor, in the judge’s view would the implication of a duty on the defendant impair its legitimate pursuit of its own commercial interest, since it already had a duty to take care to avoid a collision with the Melina T. Further the damage flowed from activities with the owner’s control, namely the navigation of its vessel. The learned judge held that accordingly the remaining issue was whether the defendant knew or had means of knowing that Seafoods was part of an ascertainable class of vulnerable persons unable to protect themselves from harm; in fact it was the only alleged member of the class.
[47]Quoting from the judgment of McHugh J in Perre v Apand (1999) 198 CLR 180 at [112]

As to that, the learned judge considered that the claimed damages fell into a category that might be described as “contractual relational economic loss”, a term used by Professor Feldthusen in an article cited by the learned judge,[48] which category included cases where the claimant and the owner of the damaged property were parties to a joint or common venture. However, on the learned judge’s analysis, relevant or salient features of a typical joint venture were not present in the relationship between Fishing and Seafoods. There was no precise agreement documented between them, they had no property held as tenants in common, no right to take product in kind, and no division in management between them. Instead, each company appeared to have earned its own income, owned its own property, and to have been managed as part of the one group that were commonly owned. The judge noted that Seafoods’ counsel did not place his case on the argument that the arrangement between the two companies was necessarily typical of a joint venture.
[48]“Liability for Pure Economic Loss: Yes, But Why?” University of Western Australia Law Review, vol 28 (1999) 84, 98; referred to by McHugh J in Perre v Apand at [96]-[97]; and [101]

Rather, the learned judge held that the relationship between Fishing and Seafoods was akin to that described by McLachlin J in the Canadian Supreme Court, in Canadian National Railway Co v Norsk Pacific Steamship Co,[49] by the phrase “common or joint venturer (or a concept akin thereto) with the property owner”. McLachlin J used that phrase to illustrate a situation where to deny recovery “would be to deny it to a person who for practical purposes is in the same position as if he or she owned the property physically damaged”.[50] The learned trial judge in this matter held that there was a fair description[51] of the position with Fishing and Seafoods, because of the close relationship between the owners of the shares in the two companies, the common control of those companies, and the interlinked operation of their businesses. The judge also considered it significant that Seafoods was the trustee of the trust of which Fishing was a beneficiary receiving distribution from Seafoods’ income. The judge later remarked that “One is tempted to ask rhetorically . . . in a case such as this, why a wrongdoer should escape paying for part of the loss for which [the wrongdoer] is responsible, merely because the loss is divided between two victims?”.[52]
[49](1992) 91 DLR (4^th) 289
[50]CNR v Norsk Pacific Steamship at 376
[51]At AR 160, paragraph [19] of the reasons for judgment
[52]At AR 170, in paragraph [23]

The reasoning described helped the judge to the conclusion that the defendant knew or had the means of knowing that Seafoods was part of an ascertainable class of vulnerable persons unable to protect themselves from harm by the defendant’s negligence. The judge considered that the existing contract by which both companies profited from the Melina T catch was an interest capable of attracting the law’s protection, leading to a result analogous to the decision in Main v Leask [1910] SC 772.[53] In that case the claimants were crew members of a fishing vessel sunk by the negligence of the defendants. The claimants were working at sea under an agreement by which profits of the voyage were divisible in specified proportions among the owners of the vessel, the fishing net owners, and the crew. The claimants’ loss was suffered at the time when they were serving as crew members on the vessel in accordance with that arrangement, for which they were engaged to the end of the season. Those claimants recovered their economic loss. I observe that they were independently the victims of a breach of duty of care by the defendants, when their negligence carelessly sank the vessel on which the claimants were travelling; and that the reasons for judgment describe the boat owners, the net owners (who were also crew members), and the crew, as all engaged in "what . . . may be fairly viewed as a joint adventure",[54] in which the crew each suffered a direct loss of profit on the sinking of the boat.
[53]That decision is discussed in the reasons for judgement of McPherson JA in Christopher & Ors v The Motor Vessel “Fiji Gas” [1993] Aust Torts Reports 81-202 at 61,967
[54]Main v Leask at [1910] SC 772 at 779

The learned judge held that while there was no direct evidence that Ganta Shipping knew of the commercial arrangements likely to apply to the ownership and operations of fishing vessels in Australia, its owner or master had the means of knowing that commercial fishing ventures in Australia might consist of a number of companies in a group, with related shareholders and different functions for the individual companies. The judge held the defendant could have discovered such information, namely that a company like Fishing which owned a vessel, might form part of a related group of companies, with another company marketing its catch, and should have the interests of another such company in mind when navigating the Eternal Wind. The learned judge concluded that because of Seafoods’ close association with the company whose vessel was damaged, by reason of the family connection of the shareholders, their common directors, the relationship between the two companies as trustee and beneficiary, and the integrated operation of separate aspects of what was essentially one business, Seafoods was a member of an ascertainable class.[55] The judge also held that it was vulnerable to the loss claimed, because there was an absence of evidence that it could have protected itself by other means, such as by seeking and obtaining an indemnity from Fishing. The judge remarked that the conclusion was equally open that Seafoods could have indemnified itself by an insurance policy, whereas there was actually an absence of any evidence that such a policy was obtainable on reasonably commercial terms. The judge accordingly held the defendants liable.
[55]At AR 172 in para [30]

The appellant’s arguments

Its counsel, Mr Duffy, submitted that the learned judge erred in holding that the owner or master of Eternal Wind had the means of knowing that commercial fishing ventures in Australia “may consist of a number of companies in a group with related shareholders and different functions for the individual companies, as existed here”. There was relatively limited evidence on that topic. Michael Rowley adopted in his oral evidence the description given to him by his counsel, that Seafoods and Fishing were “vertically integrated”, and Michael Rowley described that as “somewhat unique” when first set up as a marketing arrangement, but as “now” a “quite common practice”.[56] Michael Rowley was nevertheless unsure how the owners of other vessels arranged their marketing, but thought that what he described as “imitators” were a “common practice” since 1997.[57] Michael Rowley’s evidence did not describe clearly what the relationship between Seafoods and Fishing was. The learned judge was accordingly correct in referring only to a general proposition, describing a number of companies in a group with related shareholders and different functions for the individual companies, without describing those functions, other than that Seafoods (in some fashion) marketed the catch.
[56]At AR 10
[57]At AR 11

It would have been difficult for either the owner or master of the Eternal Wind to learn the Seafoods/Fishing structure; the ASIC returns for each company did not reveal the existence of the other, or their relationship, and there was no public register recording the existence of the trust. The appellant’s counsel conceded in argument that it was foreseeable that the owner of a commercially operated vessel like the Melina T was a corporate entity, but was reluctant to concede that it was also a relatively common experience that separate legal entities conducted different aspects of a business enterprise. I consider a finding in the latter terms was certainly open to the learned judge to make, and that the owner or master of the Eternal Wind had the means of learning that information. The problem for the respondent is the absence of clear evidence as to its relationship with Fishing, other than that it was enmeshed in the process of selling Fishing’s catch, and derived income from it. That relationship with Fishing does not per se establish that it was a member of an ascertainable class of vulnerable persons, such that the owner or master of Eternal Wind could or should have foreseen the likelihood of harm to it.

The appellants’ counsel made the point that in Perre v Apand (1999) 198 CLR 180, considered further below, it was an essential feature of the judgments for the plaintiffs that Apand had actual foresight of the likelihood of harm to, and knowledge of, an ascertainable class of vulnerable persons[58] (by reason of its knowledge of the potato market, the growing area, and the West Australian regulations). That is a level of knowledge and foresight considerably higher than the finding by the learned trial judge that the owner or master could know that commercial fishing ventures in Australia “may” consist of a number of companies with related shareholders and different functions; and that Fishing “might” form part of such a related group, with another company marketing its catch. The respondent’s counsel could not take this Court to other recent decisions in which liability for economic loss was imposed on a tortfeasor with the means of acquiring knowledge only that a class of potential victims, whose property was undamaged, might exist. Almost by definition, such a class is both not ascertainable and also indeterminate. Imposing liability in the circumstances of this case by imputed foresight of the existence of a class of victims who might exist, as marketers of fish caught by a company owning and operating the Melina T, imposes liability simply because that class of victim, if existing, was a related entity with intermingled corporate owners and controllers, when a liability would not be imposed to recompense an independent and unrelated corporate entity (or natural person), which (or who) regularly – or always – bought and on-sold Fishing's catch; or also processed and marketed the catch for a fee.
[58]Perre v Apand per Gleeson CJ at [13]; McHugh J at [104] and [131]-[132]; Gummow J at [206] and Hayne J at [341]

As to whether such an independent person could claim any economic loss suffered while catches from Fishing were unavailable for purchase while the Melina T was damaged and under repair, the appellant pointed to the lack of evidence that loss by a purchaser or selling agent was foreseen or foreseeable, the absence of evidence of any assumption of responsibility on the appellant’s part to Seafoods or any independent purchaser or processor and agent, the absence of evidence of known reliance by Seafoods or such purchaser or agent, and the fact that liability imposed to compensate an independent purchaser, or independent processor and selling agent, would be indeterminate. Mr Duffy summarised the appellant’s argument as that the closeness of the relationship between Seafoods and Fishing said nothing about any relationship between the appellant and Seafoods; and that there simply was none recognised by law as justifying an indemnity for Seafoods’ economic loss. Mr Duffy contended that Canadian authorities did not assist Seafoods anymore than the judgment in Perre v Apand, or Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515, did.

Queensland authority

Mr Duffy also argued that imposing liability on it in this case would be inconsistent with the result in Christopher & Ors v The Motor Vessel “Fiji Gas”,[59] a case in which the appellant plaintiffs were the crew of a fishing vessel, the Antonia, which vessel was damaged when at anchor by another vessel which was being berthed. The crew (who were not then engaged in fishing) sued the owners of that other vessel; those plaintiff crew members were paid a percentage of the revenue earned from each fishing voyage undertaken by the Antonia, and their claim was for recovery for the loss of their earnings while the Antonia was out of action. The evidence admitted or established that the owner defendant knew that its vessel navigated in waters where there were likely to be fishing vessels, knew that the crew of those vessels earned their living by fishing from them, and knew that if that owner's vessel damaged a fishing vessel then a loss of income was likely to be suffered by its crew. The crew members of the Antonia were not known as individuals to the defendant.
[59][1993] Aust Torts Reports 81-202

This Court held on an appeal from the dismissal of the plaintiff crew members’ claim, that its claim must fail. The joint judgment of Pincus JA and Thomas J held:[60]

“The important point is that whether they were employees or not, the appellants’ return from their activities was a share of the amounts received, or estimated to be likely to be received, for the catch. The appellants had no proprietary or possessory interest in the fishing vessel and were far removed from any proprietorial role. They had no interest in the vessel or the business, and the best description of the arrangement is that they were crewmen who were paid under an incentive system.”

[60]At 61,962

Their Honours also held that success for the appellants depended on accepting the view that a small group of people who had suffered loss, but whose identity was unknown to the tortfeasor at the time when the tort was committed, should succeed in their claim, so long as such a loss by such a group was foreseeable by the tortfeasor; and that did not represent the law of Australia.[61] That latter proposition is of limited assistance to the appellant; the reasoning for it depended on proximity as the determinant of liability, and was before Perre v Apand. McPherson JA wrote in a separate judgment that there was nothing in that case to show that the crew member plaintiffs were contractually or otherwise engaged in any form of joint venture or undertaking with the owners at the time the Antonia was damaged, and nothing to show there was any form of contractual relationship obliging the owners of the Antonia to take those plaintiffs on as crew members when the vessel next went to sea. Accordingly those plaintiffs possessed an interest one step removed even from that of the claimants in Cattle v Stockton Waterworks Co (1875) LR 10 QB 453 and in other cases cited by McPherson JA, in all of which the plaintiff had, from the very least, a contract with the party whose property was damaged by defendant’s negligent act.[62]
[61]At 61,965
[62]At 61,967

Michael Rowley swore that Seafoods did have what he described as a management agreement with Fishing,[63] and he also described Fishing as a tied supplier of product to Seafoods,[64] so that Seafoods did have a contractual relationship with Fishing, improving its position when compared to the plaintiffs in Christopher & Ors v The Motor Vessel “Fiji Gas”. But that alone is not sufficient to make Seafoods a member of an ascertainable class of potential victims to whom the appellant owed a duty.
[63]At AR 55
[64]At AR 89

The respondent’s arguments

These relied on the passages in CNR v Norsk Pacific Steamship[65] cited by the learned trial judge. In that case the defendants had negligently damaged a railway bridge owned by Public Works Canada and used by the plaintiff railway company, which company incurred economic loss in re-routing its traffic whilst the bridge was being repaired. The plaintiff railway company was the principal user of the bridge, accounting for 85 per cent or 86 per cent of the traffic on it, and the plaintiff owned the track leading to each end of the bridge. It was widely known, and the defendants knew, that the plaintiff was the primary user of the bridge. The plaintiff, by agreement with Public Works Canada, provided certain maintenance services for that bridge; the trial judge held the defendants liable for the loss claimed, and the Supreme Court of Canada, by 4-3 majority, upheld that decision. L'Heureux-Dubé and Cory JJ agreed with McLachlin J; Sopinka and Iacobucci JJ agreed with La Forest J, who wrote a lengthy dissenting judgment; and Stevenson J wrote a judgment concurring in the result with that of McLachlin J but for different reasons.
[65](1992) 91 DLR (4th) 289

The concepts central to the judgment of McLachlin J were quoted and relied upon by the learned trial judge in this matter. McLachlin J analysed English, American, Australian, and Canadian civil and common law authorities, to arrive at the conclusion[66] that the common law authorities suggested that pure economic loss was prima facie recoverable where, in addition to negligence and foreseeable loss, there was sufficient proximity between the negligent act and the loss; proximity was the controlling concept which avoided the spectre of unlimited liability.[67] As Gleeson CJ said in Woolcock v CDG, in Australia proximity is no longer seen as the conceptual determinant permitting and requiring the existence of a duty to take reasonable care to avoid a reasonably foreseeable risk of injury to another.[68] McLachlin J, when considering proximity further, looked at the close assimilation between the position of the plaintiff railway company and Public Works Canada (a successful plaintiff), and endorsed the trial judge’s view that those two plaintiffs were so closely assimilated that the railway company was very much within the reasonable ambit of risk of the defendants at the time of the accident; and that was sufficient proximity.
[66]Expressed at 369
[67]The learned trial judge in this matter did not rely on proximity as a basis for liability
[68]In Woolcock v CDG at [18], citing Hill v Van Erp (1997) 188 CLR 159; Pyrenees Shire Council v Day (1998) 192 CLR 330; Perre v Apand; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1; Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254; Brodie v Singleton Shire Council (2001) 206 CLR 512; Sullivan v Moody (2001) 207 CLR 562; Tame v New South Wales (2002) 211 CLR 317; and Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540

Her Honour went on,[69] in a passage quoted by the learned trial judge:

“The reasoning, as I apprehend it, is that where the plaintiff’s operations are so closely allied to the operations of the party suffering physical damage and to its property (which – as damaged – causes the plaintiff's loss) that it can be considered a joint venturer with the owner of the property, the plaintiff can recover its economic loss even though the plaintiff has suffered no physical damage to its own property. To deny recovery in such circumstances would be to deny it to a person who for practical purposes is in the same position as if he or she owned the property physically damaged.”

Her Honour added:
“Recovery serves the purpose of permitting a plaintiff whose position for practical purposes, vis-à-vis the tortfeasor, is indistinguishable from that of the owner of the damaged property, to recover what the actual owner could have recovered. This is fair and avoids an anomalous result.”

[69]At 376

In another passage quoted by the learned trial judge in this case, McLachlin J wrote:[70]

“If the evidence establishes that having regard to the entire relationship between the owner of the damaged property and the plaintiff, the plaintiff must be regarded as standing in the relation of joint or common venturer (or a concept akin thereto) with the property owner with the result that in justice his rights against third parties should be the same as the owner’s, then I would not interfere” (Her Honour meant with the judgment under appeal).

[70]At 377

Those passages in the judgment of McLachlin J explain why the learned trial judge in this matter focused on the close relationship between the controlling minds and ownership of each of Fishing and Seafoods, but that close relationship does not mean that to deny recovery to Seafoods denies it to a person who for practical purposes is in the same position as if Seafoods owned the boat that was sunk. Seafoods was either a purchaser, or a processor and agent for sale. Fishing could sell its catch for market rates to any other purchaser, or pay some other processor or agent to do that. Seafoods’ position was not indistinguishable from Fishing’s.

In CNR v Norsk Pacific Steamship the independent judgment of the majority, that of Stevenson J, approved what that judge described as the “known plaintiff” approach which that judge attributed to Gibbs and Mason JJ in Caltex Oil (Australia) PtyLtd v The Dredge “Willemstad” (1976) 136 CLR 529,[71] and remarked that that rule at least precluded the threat of indeterminate liability. Stevenson J held the defendants liable in CNR v Norsk Pacific Steamship because:

“The loss was identifiable, the victim identifiable, the damage almost inevitable. The defendants ought to have known that the plaintiff would suffer economic loss as a result of their negligence. In fact, they even had actual knowledge that such a loss would occur. They even knew of the precise manner in which this plaintiff would be harmed. Would we deny recovery in such a case? Liability would in no way be out of proportion with the neglect. There is no danger of indeterminate liability.”[72]

The learned judge went on (at 391) to hold that:
“Economic loss to the plaintiff was foreseeable, in no way indeterminate or uncertain. Its nature and extent were almost predictable. The specific plaintiff was actually foreseen by the defendants. I see no policy rationale for excluding liability on the facts of this case.”

[71]At 388

[72]At 390

The different position of La Forest J, writing the minority judgment, considered what that learned judge described as the convenient if somewhat barbarous phrase “contractual relational economic loss”.[73] That judge described as a “bright line rule” the principle that persons cannot sue a tortfeasor for suffering losses to their contractual rights with the owner of property by reason of damages caused to that property by the tortfeasor.[74] That learned judge was strongly of the view that none of the traditional indicia of a joint venture were present in that case, either through contract or extra-contractually. There was no legal entity in the nature of a partnership, no joint undertaking of any commercial enterprise, no duty to share both profits and losses, and that judge held a finding of the existence of joint venture was excluded.[75]
[73]That description is at 291
[74]At 292
[75]At 334-335

I respectfully consider that each of those observations is applicable here, and indeed the learned trial judge in this case also had that view. La Forest J went on to conclude,[76] after examining many authorities, that the outcome in cases of that nature depended upon the terms of the contract which operated in two ways: the contract might create a possessory interest or a joint venture, or it might provide for an indemnity from the property owner. The learned judge considered that there were well established cases in which the law provided for recovery by the contracting party where in fact it had a proprietary or possessory interest, but the plaintiff railway company’s interest was merely contractual.[77] Again, I observe that those remarks apply here; Seafoods’ interest, whatever it may have been, was merely contractual, it having no proprietary or possessory interest in whatever Fishing caught, and not being in a joint venture relationship or one akin to it. Interlocking directors and shareholders, and intermingled finances, did not transform what was not a joint venture into a joint venture or something akin to one.
[76]At 353
[77]Also at 353-4

In Bow Valley Husky (Bermuda) Ltd v St John Shipbuilding Ltd[78] McLachlin and La Forest JJ concurred in the leading judgment, which endeavoured to reconcile the differences between them in CNR v Norsk Pacific Steamship, described in Bow Valley Husky at [46]. That concurring judgment held that the difference in result in CNR v Norsk Pacific Steamship, taken at its narrowest, was a difference in the definition of what constituted a “joint venture” for the purposes of determining whether recovery for contractual relational economic loss should be allowed; and that the judgments in CNR v Norsk Pacific Steamship had agreed on the important propositions that:
[78](1997) 153 DLR (4th) 385

(i) relational economic loss is recoverable only in special circumstances where the appropriate conditions are met;

(ii) those circumstances can be defined by reference to categories, which will make the law generally predictable;

(iii) the categories are not closed.

The concurring judgment in Bow Valley Husky then recorded that in CNR v Norsk Pacific Steamship, La Forest J had identified the categories of recovery of relational economic loss, defined to date (of that judgment) as:

(i) cases where the claimant has a possessory or proprietary interest in the damaged property;

(ii) general average cases; and

(iii) cases where the relationship between the claimant and property owner constitutes a joint venture.[79]

[79]At [48]

The concurring judgment went on to note that in Hercules Managements Ltd v Ernst & Young (1997) 146 DLR (4th) 577 La Forest J had delivered a unanimous judgment of the Supreme Court, describing the methodology the courts should follow when determining whether a tort action lay for relational economic loss. This was to determine whether a prima facie duty of care was owed; and then whether that duty, if it existed, was negated or limited by policy considerations. The existence of a relationship of “neighbourhood” or “proximity” distinguished those circumstances in which a defendant owed a prima facie duty of care to the plaintiff from those where no such duty existed.

That approach continues to apply a proximity test to answer the first of the questions posed by La Forest J, and accordingly diverges from the path followed by the High Court in more recent years. Even on the “proximity” test approved in Bow Valley Husky, applying Hercules Managements v Ernst & Young, while there is considerable proximity between Seafoods and Fishing, there is very little between Seafoods and the appellant.

Integrated business activities

The respondent’s counsel appeared to make an argument, in passing, based on some concluding remarks by Kirby J on the integrated nature of the operations of the successful appellants in Perre v Apand.[80] In that case the respondent Apand controlled 60 per cent of the potato crisping industry in Australia, and had contracted with potato growers in the eastern states and in South Australia for the supply to it of potatoes for processing as potato crisps. It invited five of its contract potato growers in different localities in South Australia, including a Mr and Mrs Sparnon and their son, to grow experimental winter crops of Saturna potatoes. Apand supplied Saturna seed potatoes to the Sparnons which were infected with bacterial wilt, which wilt then appeared in the Sparnons’ crop. One consequence of that disease in their crop was that regulations made under the Plant Diseases Act 1914 (WA) then prohibited the export from South Australia to Western Australia of potatoes which had been “harvested, cleaned, washed, graded or packed with equipment or in premises with or in which potatoes, grown within 20 km of a known outbreak of the disease Bacterial Wilt detected within the last five years, have been handled.” [81]
[80]At [304]
[81]Perre v Apand at [142]

The Sparnons succeeded in a claim in negligence and for breach of contract against Apand,[82] but the appeal in the High Court concerned the claims against Apand by some potato growers within a 20 km limit of the Sparnons’ property, some processors of those potatoes, and some owners of land within that 20 km limit and on which potatoes were grown; those claimants alleged economic loss resulting from loss of the possibility of sale of potatoes for five years into the Western Australian market. One corporate appellant Warruga Farms Pty Ltd (“Warruga Farms”) grew potatoes on land three km distant from the Sparnons’ property, and it also acquired potatoes grown by a partnership known as the Rangara joint venture; Warruga Farms washed and packed both the potatoes it grew and those it acquired from the Rangara joint venture in a purpose built packing shed on land leased by a second corporate appellant, Perre's Vineyards Pty Ltd (“Perre’s Vineyards”). The Rangara joint venture was a partnership between two individual appellants, Pasquale and Grace Perre, and another company Rangara Pty Ltd (“Rangara”), in which the shares were held by two other appellants, Francesco and Maria Perre. The Rangara joint venture used equipment owned by both Rangara as well as some owned by Francesco and Maria Perre. That joint venture grew potatoes on two blocks of land owned respectively by Pasquale and Grace Perre, and by Francesco and Maria Perre. The Rangara joint venture owned the potatoes it grew until those were sold to Warruga Farms.[83]
[82]Perre v Apand at [163]
[83]The facts stated in this fashion are taken from those described in the judgment of Gaudron J in Perre v Apand at [19]-[23], although expressed more positively than as described therein, for the sake of simplicity

Warruga Farms conducted three activities:
(i)          growing potatoes on land owned by some of the Perres;
(ii)          processing potatoes grown on that land and potatoes purchased from the Rangara joint venture;
(iii)          exporting processed potatoes to Western Australia.
Warruga’s shareholders were the natural persons who owned the land on which it operated, although Frank and Katerina Perre held their share through Perre’s Vineyards. The Rangara joint venture grew potatoes on land leased by Rangara. Perre’s Vineyards owned the processing facility and it leased the land on which that was situated, and let the facility to Warruga Farms, for a fee. The Perres – the natural persons – were the owners of Warruga Farms, Rangara, and Perre’s Vineyards.

Warruga Farm’s pleadings alleged that it had suffered damage because it lost the opportunity to pursue the Western Australian export market; the Rangara joint venturers pleaded they had suffered loss by losing sales to Warruga Farms; Perre’s Vineyards pleaded it suffered loss by losing the benefit of its tenancy with Warruga Farms and the opportunity to relet the land for five years, and the Perres pleaded they had suffered loss because the Warruga land had diminished in value, and they had lost money on the sale of the Rangara land.[84] No bacterial wilt was discovered on any of the land owned by the Perres and on which Warruga Farms, the Rangara joint venture, and Perre’s Vineyards conducted operations; but potatoes grown on that land could not be sold into the Western Australia market simply because of the proximity of that land to the Sparnons’ land.
[84]This description of the relationship between the parties and the pleadings comes from the judgment of McHugh J in Perre v Apand at [52]-[57]

The claims for economic loss were made as growers, as processors, as exporters to Western Australia, (Warruga Farms); as potato growers selling to potato exporters (Rangara joint venture); as owners and lessors of land and a potato processing facility (Perre’s Vineyards), and as land owners whose land had diminished in value (the Perres). A majority of the High Court held that, subject to proof of actual damage on a further hearing before a single judge, each of those claims for economic loss could be maintained.[85] McHugh J would have excluded claims by the processors, holding that they were not members of an ascertainable class, principally because some processors might be outside the 20 km sphere of risk but process potatoes grown within the area;[86] Hayne J would have included among the ascertainable class both growers of potatoes and processors of potatoes from within the 20 km sphere of risk, but would have excluded land owners who did not themselves grow potatoes (the individual Perres), and growers who did not sell potatoes for export to Western Australia, but only to those exporters (such as the Rangara joint venture).[87] However, with respect to the argument made by counsel for the respondent, only Callinan J specifically upheld the claim by the processors because of the latter’s close connection with the affected lands and producers.
[85]Gleeson CJ at [12] and [16]; Gaudron J at [44]-[46]; Gummow J at [195], [220]-[221]; Kirby J at [303]-[306]; and Callinan J at [435]-[437]
[86]His Honour's reasoning is at [144]-[145]
[87]His Honour's reasoning is at [337] and [352]-[353]

In my respectful opinion, a majority of judges of the High Court based Apand's potential liability to the various classes of claimant upon the variety of foreseeable economic loss suffered by those claimants, not dependant in any way upon the inter-relationship or integrated business activity of any claimant in one class, or claimant alleging one variety of economic loss, with any other claimants who pleaded economic loss. Economic loss from bacterial wilt found on the Sparnon’s potatoes was foreseeable to growers within the 20 km limit of that farm who supplied the Western Australian export market, to processors in that area who processed potatoes for that market, to exporters from that area into that market, and to land holders whose land diminished in value when the wilt was identified in potatoes grown on land nearby. This was because the evidence referred to in the appeal described how Apand knew of the local export market to Western Australia, knew of the regulations prohibiting the import into Western Australia of potatoes grown within 20 km of an outbreak of disease, knew the Sparnons were located in a potato growing area, knew that bacterial wilt was a potentially serious and pernicious disease that could cause heavy losses to growers with infected paddocks taking up to four to five years to clear, and that growers with infected farms were unable to sell them.[88] I respectfully observe that majority of the High Court would have upheld the appeals by each of those claimants had the claimants been entirely independent from each other. That majority position does not help Seafoods in its argument based on it being a related company to Fishing and with an intermingled business.
[88]See, for example, the remarks of McHugh J at [69]

The basis for liability

I repeat my remarks in Valleyfield v Primac [2003] QCA 339 that the principles upon which a duty of care is imposed or not imposed in differing circumstances in which one party to a non-contractual relationship has suffered either damage to property, injury to the person, psychological injury, or pure economic loss, as a result of the conduct of another party, have been discussed and analysed in a number of quite recent decisions in the High Court; and also in academic writings and the commissioned Further Report on the Review of the Law of Negligence September 2002, chaired by the Honourable Justice David Ipp.

Those High Court decisions include Bryan v Maloney,[89] Perre v Apand,[90] Modbury Triangle Shopping Centre Pty Ltd v Anzil & Anor,[91] Sullivan v Moody,[92] Tame v New South Wales,[93] Graham Barclay Oysters Pty Ltd v Ryan,[94] and Woolcock v CDG.[95] The judgments in those describe as important criteria identifying the existence or non-existence of a duty of care:
[89](1995) 182 CLR 609
[90](1999) 198 CLR 180
[91](2000) 205 CLR 254
[92](2001) 207 CLR 562
[93](2002) 211 CLR 317
[94](2002) 211 CLR 540
[95](2004) 216 CLR 515

· actual foresight of the likelihood or possibility of harm of the kind suffered;[96]
[96]Perre v Apand at [10] per Gleeson CJ

· or, absent actual foresight, reasonable foreseeability of that harm to the extent of recognition of it being an unreasonable risk created for others;[97]
[97]Tame v New South Wales at [102] per McHugh J

· who are either known to the person causing damage, or members of an ascertainable group or class reasonably foreseen as subject to that risk;[98]
[98]Perre v Apand at [13] per Gleeson CJ, [42] per Gaudron J, [50] per McHugh J, [341] per Hayne J, [406] per Callinan J; Woolcock v CDG at [23] per Gleeson CJ, and [80] per McHugh J

· in respect of whom there is known or reasonably foreseen vulnerability of those others suffering damage to harm of that type (often arising from those others relying on the person causing harm to take care) and against which harm the person injured could not otherwise take steps adequately to protect themselves;[99]
[99]Perre v Apand at [10] per Gleeson CJ, [42] per Gaudron J, [50] per McHugh J, [216] per Gummow J, [416] per Callinan J

· in the absence of preventative action by reasonable care taken to avoid causing that damage;[100]

· because of the degree of control exercised by the person causing the damage in or over the activity which causes it;[101]

· and often relevant is the physical, geographic, or commercial propinquity of the parties, in the activities of each in which one suffered and the other caused the harm.[102]

[100]Tame v New South Wales at [102] per McHugh J

[101]Perre v Apand at [15] per Gleeson CJ, [38] per Gaudron J, [215] per Gummow J, [406] per Callinan J

[102]Ibid at [15] per Gleeson CJ, and [411] per Callinan J

These matters have been described as salient factors in determining if a duty of care exists.[103] More general considerations also identified in recent authoritative judgments include a concern to avoid the imposition of liability in an indeterminate amount for an indeterminate time to an indeterminate class,[104] expressed by the quotation cited in Perre v Apand by Gummow J (at [170]) that “a single overturned lantern may burn Chicago”. There is likewise recognition of the necessity to ensure that the imposition of a duty to take care does not unreasonably interfere with the commercial freedom of the person upon whom it is imposed, or, as observed in the joint judgment in Sullivan v Moody (at [53]), cut across other legal principles. That consideration, and the necessity to avoid imposing an indeterminate liability, are examples of matters of policy, which matters are increasingly articulated as something sufficient in themselves for denying the existence of a duty of care.[105] Kirby J in Graham Barclay v Ryan described policy considerations as having returned to the fundamental test, that a duty of care will be imposed when it is reasonable in all the circumstances to do so.[106]
[103]See the comments of Kirby J in Graham Barclay v Ryan at [236]; and the listing of some of those features by Callinan J at [321] in that judgment. See too Gummow J in Perre v Apand at [198] and [201]
[104]Perre v Apand at [32] per Gaudron J
[105]Graham Barclay v Ryan at [84] per McHugh J, Perre v Apand at [297] per Kirby J
[106]At [244]

In Perre v Apand McHugh J listed[107] five principles he thought relevant in all cases whether a duty and liability existed for pure economic loss. Those are:
[107]At [105]; McHugh J repeated that proposition in Woolcock v CDG at [74]-[87]; and Kirby J in Woolcock remarked at [164] that the other judge in Perre did not adopt a significantly different approach

· reasonable foreseeability of loss;

· indeterminacy of liability;

· autonomy of the individual;

· vulnerability to risk; and

· knowledge of the risk and its magnitude.

It is clear from His Honour’s reasoning at [133]-[145] in Perre v Apand that the issue of indeterminacy of liability was whether the class of victims was ascertainable or effectively indeterminate.

In Tame v New South Wales, a number of the judgments dealt with both the general principles in which a duty of care would be imposed, as well as those applicable to cases in which the claimant had suffered “nervous shock”. Gleeson CJ, when writing of the wider issue and Lord Atkin’s descriptions in Donoghue v Stevenson[108] of to whom a duty is owed, described the need to ask whether it was reasonable to require a defendant to have certain persons and certain interests in contemplation, and likewise in contemplation the risk of injury that had eventuated.[109] The recent judgments in the High Court identify vulnerability to the injury caused as one way of supplying an answer to that question, and the judgments in Tame and Graham Barclay v Ryan stress that a significant measure of control of the relevant activity causing risk is important to the answer.[110] The joint judgment of Gummow and Hayne JJ in Graham Barclay v Ryan also requires a court to consider the totality of the relationship between the claimant and the defendant and not simply the knowledge of a risk of harm and a power to avert or minimise that harm.[111]
[108][1932] AC 562 at 580
[109]Tame v New South Wales at [9] and [12]
[110]Tame at [185] (joint judgment of Gummow and Kirby JJ); and Graham Barclay at [20] per Gleeson CJ, [90] per McHugh J, [150] per Gummow and Hayne JJ, [321] per Callinan J
[111]Barclay at [145]

Conclusions

While I generally agree with the learned judge’s analysis of the principles and basis upon which liability is imposed for economic loss, I respectfully disagree that that basis existed on these facts. The learned judge’s reasons included that Seafoods may have been able to use a different supplier to replace the catch from the lost vessel, as well as the finding that it did buy fish from other suppliers. If the defendants owed Seafoods a duty of care breached by their negligence in damaging the Melina T, then I do not see why the like duty of care would not be owed to any other purchaser who either always, routinely, or intermittently bought all or some part of Fishing’s catch before its fishing boat was negligently damaged or sunk. That is entirely separate from Fishing’s foreseeable economic loss resulting from it being unable to catch and sell as much fish after the defendant sunk one of its boats; Fishing settled its action against the defendant. If Seafoods could recover because its main, or a, supplier, whose fish it either bought, or sold as agent for a fee, had its boat damaged, then it or any other seafood processor (and wholesaler) could recover if another one of its two, or any one of its six, main or other suppliers were damaged or sunk. If Seafoods could recover, then so could each wholesaler or selling agent to whom the owner of an out-of-action fishing vessel might provide its catch, now no longer available for sale. But each on-seller, who would have otherwise purchased what the owners of the Melina T might have sold, could buy fish from another vessel, as could Seafoods. Seafoods might not be able to find another supplier for whom it could sell fish as the supplier’s agent, rather than buy the fish and resell it, but it could still get fish to sell.

Vulnerability

Seafoods’ loss resulting from its special relationship with Fishing resulting in the agreed right to sell the latter’s fish as agent (or buy it itself) may have made it vulnerable to the negligence of the defendants and unable to protect itself by other means. That is because it derived income from Fishing’s catch, by reason of an arrangement presumably made because of its connected shareholdings and directorships, (but not because of the trustee/beneficiary relationship), and because there was no evidence it could protect that special position by an indemnity or by insurance, or by any other means. But I do not see how the existence, or the membership, of such a class of vulnerable victims of a collision could be ascertained without a careful analysis of the documents or facts establishing that relationship. I observe that in this case, even after a trial, there was uncertainty as to the shareholders and directors of each company, and whether or not Fishing sold its catch to Seafoods, or merely provided it to the latter as its agent to sell for a fee. That means that individual membership of this class would be particularly difficult to ascertain with any accuracy, and it is no more than speculation whether such a class would exist or not in respect of any privately owned fishing vessel. Even if such an ascertainable class existed, Seafoods failed to prove it was a member; or else the class has to be wide enough to include both potential purchasers of the catch and potential processors of it who sold it for a fee, since it was never settled whether Seafoods was one or the other. Accordingly, I respectfully disagree that Seafoods was a member of an ascertainable class of foreseeable victims. Fishing was; it owned the vessel that was damaged.

An ascertainable class

There would be an available argument that Seafoods might be a member of an ascertainable class of injured processors and retailers of the catch if, for example, the Melina T was damaged or sunk when proceeding to, operating in, or returning from, an area generally known in the seafood and shipping industries as the only area, or one of a limited number of areas, in which a particular variety of sought after fish could be caught; and if Seafoods was equally commonly known to be either the only or a substantial seller of that variety of fish generally unavailable elsewhere; and if the Melina T was known to be one of its principal suppliers of those fish; such that damaging the Melina T meant Seafoods was deprived of what was commonly known to be a significant business opportunity it exploited, causing it economic loss. Holding that Seafoods falls within an ascertainable class on the facts in this case because it, either as a retailer of Fishing's catch or its selling agent, (whichever it might be), had common directors and shareholders, related to each other, and intermingled finances which resulted from fishing, fish processing, and fish marketing being treated as the one intermingled business, makes the Eternal Wind liable because of a combination of circumstances of which none satisfactorily explains liability.

It is not enough that Seafoods sold Fishing’s catch for a fee, because then liability would necessarily extend to any selling agent. It is not enough that Fishing sold only to Seafoods, because there was no evidence that it did so cheaper than Seafoods could buy that fish from other suppliers, and evidence instead that it paid full market value to Fishing. Liability could not be based on the variously described links and connections between the shareholding and directorships of each company, because the existence of an associated business with interlinking directors and shareholders common to Fishing was only a speculative possibility of a class of victim. Liability could not be based on Seafoods being a trustee of a trust which distributed income to Fisheries. The combination of circumstances, none sufficient in themselves, does not make the case for liability stronger. Had Fishing been the trustee and Seafoods the discretionary beneficiary, with the trust funds sourced from Fishing’s catches, all potential beneficiaries could claim. Had there been a third company – say, in Vanuatu – which for taxation limitation reasons bought the catch and licensed Seafoods to sell it, that company would be a successful claimant too; such a variety of business structure would be equally as foreseeable as the one(s) described in evidence.

Unless liability is recognised to a class of wholesalers who suffer loss because a fishing vessel is damaged and unable to continue supplying a particular wholesaler who has a contract for any catch, then the particular and close relationship between Fishing and Seafoods is insufficient to create an ascertainable class of wholesaler or selling agent to which the Eternal Wind is liable. The liability imposed would be to an indeterminate class and too wide. It would be impossible to deny a claim from any processor or manufacturer whose supplier had a reduced capacity because of a tortfeasor’s negligence. On the approach taken by the High Court, as analysed by the learned trial judge and by myself, the plaintiff should fail. It would also fail on the approach taken in the Canadian Supreme Court.

I would allow the appeal, set aside the judgment in the respondent's favour, and order that the respondent pay the costs of the trial below assessed on the Supreme Court[112] scale on the standard basis and of this appeal, also assessed on the standard basis.
[112]The trial judge ordered that costs be assessed on the Supreme Court scale; the respondent defended that ruling

DUTNEY J: I have had the advantage of reading the judgments of the President and of Jerrard JA in which their Honours set out the relevant facts in detail and analyse the relevant law.

In light of the different conclusions reached by the President and Jerrard JA, I should record my separate opinion on what I perceive to be the critical points of difference.

The principal case advanced on behalf of the appellant in this appeal and below was that the respondent had not established “that the appellant had actual foresight of the likelihood of harm and knowledge of an ascertainable class of vulnerable people”.[113]
[113] This formulation paraphrases the fourth issue identified by the trial judge at paragraph [9] as critical to establishing the appellant’s liability.

This submission identified the two controversial matters the respondent was required to prove in this case to bring it within the ambit of the present authorities on claims for pure economic loss. A more complete summary of the requirements a plaintiff must establish in a case such as the present is set out by McHugh J in Perre v Apand Pty Ltd[114] at 231 [133].[115]
[114] (1999) 198 CLR 180.
[115] The listed matters flow from the discussion at 222-223, 225, 226, 227-228 and 230-231; see also Gaudron J at 200-201; Kirby J at 286-291 and Callinan J at 331.

I do not intend to say anything about the issues of foreseeability of harm or whether the imposition of liability imposes an unreasonable burden upon the autonomy of the appellant. I will address the issue of vulnerability only in passing. None of these issues seemed to be significant sources of controversy. I propose only to address the issues of whether the respondent was a member of an ascertainable class such that the appellant’s liability was not indeterminate and whether the appellant had the means of knowledge of that class.[116]
[116] Items 2 and 5 in McHugh J’s list of matters required to be established by a plaintiff.

The first step in the process is to identify the primary judge’s findings of fact on the basis of which he was satisfied that the respondent’s case fell within the established principles. In light of the other judgments, I propose to set out no more of the facts than is necessary to make my conclusions intelligible.

Fortuna Fishing Pty Ltd (“Fishing”), the owner of the damaged boat, Melina T, and Fortuna Seafoods Pty Ltd (“Seafoods”), the respondent, were related companies. The relevant players were Mr Michael Rowley, his wife, Ms Frances Rowley and their son, Mr Jonathan Rowley.

While the evidence concerning the shareholdings in Fishing and Seafoods was inconsistent the shareholders were, on any view, some combination of the three Rowleys. It was not controversial that Mrs Rowley was a shareholder in both companies. Mr Jonathan Rowley was a shareholder in Fishing. Either Mr Michael Rowley or Mr Jonathan Rowley was the other shareholder in Seafoods. Mr Michael Rowley was a director of both companies. At the time of the collision, the trial judge found that Ms Rowley was the only other director of each company although she had ceased to be a director of either company by trial. By trial her son and daughter-in-law were directors of Seafoods and Mr Michael Rowley was the only director of Fishing.

At paragraph [24] the trial judge concluded that the business of Fishing and Seafoods was “an integrated fishing business… a business which, in other circumstances, would most likely have been operated through one company rather than two”.

The “other circumstance” to which his Honour made reference was the regime for fish marketing in New South Wales prevailing at the time of incorporation of Seafoods under which Fishing was unable to become the operator of an export approved processing plant in that State. Seafoods was incorporated to by-pass those restrictions.

The primary judge also found that it was common in the fishing industry for related companies to operate different parts of what was essentially one integrated business. While the evidence for this finding was slight,[117] there was no contrary evidence from the appellant and in that circumstance the trial judge was entitled to make his finding on the little evidence available.
[117] The only reference in the evidence is at page 10, lines 25 – 35.

The relationship between the two businesses was that Fishing would catch the fish and Seafoods would package and sell it as agent for Fishing, charging a fee of $1.50 per case for its services. Although the evidence on this was also inconsistent (the affidavit of Mr Rowley suggested that Seafoods actually bought the fish from Fishing), that inconsistency was cleared up in cross-examination.[118] Ultimately, the trial judge accepted the oral evidence of Mr Rowley that Seafoods was merely an agent. Having made this finding based on hearing the oral evidence I am not prepared to go behind it.
[118] See transcript page 8, lines 25 – 31.

In addition to acting as agent for Fishing, Seafoods also purchased some fish from unrelated operators.

There was evidence that Fishing was a beneficiary of a discretionary trust of which Seafoods was trustee but, in my view, little turns on that relationship which is just a further illustration of the close relationship between the two companies.

The trial judge’s conclusion from this evidence was that the respondent was a member of an ascertainable class of which it was the only member. The class was described as “closely related ‘common venturers’”. I do not consider that the expression “common venturers” has any particular legal significance and is simply a useful tag for a close economic relationship which is neither a partnership nor a joint venture. In this instance the phrase really means two companies with common or associated ownership in fact carrying on one integrated business. Indeed, the trial judge described Seafoods as “... a person who for practical purposes is in the same position as if he or she owned the property physically damaged”, a phrase he borrowed from the decision of the Canadian Supreme Court in Canadian National Railway Co v Norsk Pacific Steamship Co.[119]
[119] (1992) 91 DLR (4^th) 289 at 376 per McLachlin J.

While the two companies kept separate accounts, as no doubt they were required to do to comply with obligations to other agencies, there was intermingling of funds in the sense that the debts of both companies were met from whichever bank account contained funds at the relevant time and funds were transferred between company accounts. In this respect the companies were treated as a single business.

That the relationship of “common venturers” might give rise to an ascertainable class is consistent with the statement by Kirby J in Perre at 292 that “[i]n negligence law, lines must be drawn. But it would be highly artificial to divide some of the members of this integrated commercial operation from others.”

In Perre at 260, Gummow J (with whom Gleeson CJ agreed on this point) concluded that the close relationship between all of the parties was such as to extend the duty of care owed by Apand Pty Ltd to all of them. In that case, however, the facts admitted of the finding that the parties were joint venturers in various combinations. On the evidence here the trial judge was not prepared to make such a finding although he conceded the point was arguable. McHugh J would not have found a duty of care owed to the potato processor despite the degree of economic integration. On the way in which Gaudron and Callinan JJ decided the case it was unnecessary for either of them to consider this point.

Bearing in mind the developing nature of the law in this area, I am not prepared to regard the imposition of the title of “joint venture” on the relationship between Fishing and Seafoods as determinative of whether a class as found by the trial judge existed. This is particularly so having regard to the imprecision in the law as to when a commercial relationship will amount to a joint venture.[120] Rather, I consider the question as to whether or not the degree of commercial integration is sufficient to constitute Seafoods a member of an ascertained class is something to be decided in the light of the trial judge’s findings. On the basis of the findings of fact the trial judge made, I agree with him that Seafoods is a member of a determinate and ascertainable class of related companies conducting what is in effect a single integrated business of catching and marketing fish which, for historical reasons, based on a desire to circumvent marketing restrictions, was conducted by two related entities rather than a single entity.
[120] See United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 10 (per Mason, Brennan and Deane JJ).

In reaching the above conclusion, I was concerned that it might be thought to leave open the possibility of spreading the ambit of claims for pure economic loss much wider than has ever been contemplated. For example, if Seafoods can claim because of its relationship with Fishing, why should a subsidiary of a multinational company not be able to claim pure economic loss suffered by its steel making business in South Australia because a defendant negligently causes damage to a coking facility owned by another subsidiary with consequent loss of production? Leaving aside the issue of whether these companies are vulnerable in the relevant sense, and the issue of whether in the example given the steel making subsidiary is a first line victim, one answer is that the subsidiaries of the multinational company are not integrated businesses in the sense in which I use that term in relation to Fishing and Seafoods.

The feature which distinguishes this case is that the catching and selling of the fish are necessarily related activities for a commercial fishing operation. Without both there is no commercial activity. I would be more hesitant in my ultimate conclusion if Fishing sold the fish to Seafoods since then Fishing’s interest in the activity would be complete upon sale to Seafoods. It would have caught its fish and sold it. What profit or loss Seafoods made on the resale would be of no direct interest to Fishing. In this case, however, the fish are not sold and Fishing has a direct interest in what Seafoods does as its agent. The catching and sale of the fish has been separated by using two related companies for the particular purpose of avoiding the marketing restrictions which prevented Fishing selling its specialist product into export markets. This combination of features sets Seafoods apart from the example I gave of the multinational company and from the position of the third party processor to which Jerrard JA refers in his judgment, even one selling merely as agent. It creates a separate ascertainable category of finite membership. It is these features, found by the trial judge, which enable me to accept that in reality there is only one business albeit one operated by two companies. It is this combination which makes Seafoods the only member of an ascertainable class of related entities carrying on separate aspects of the same business.

The activities of the multinational company’s subsidiaries in the example to which I referred are not integrated businesses in this sense. If a fish processor was carrying on its own business of marketing Fishing’s fish for its own independent purposes it would not be part of an integrated business in this sense. When Seafoods buys fish from other sources it does not conduct an integrated business with that other operator. Rather, each operates its own business in the same industry.

It is then necessary to turn to the question of whether the appellant had the relevant means of knowledge of the existence of Seafoods.

At the outset it should be noted that it is not necessary that the appellant knew or even had the means of knowledge of the existence of Seafoods itself. It is sufficient if it knew of or had the means of knowledge of the class to which Seafoods belonged. This much is clear from the judgments in Perre.[121]
[121] See Gaudron J at 202, McHugh J at 222, Gummow J at 259, Hayne J at 303

Here the trial judge relied on the fact that the business structure under which Fishing and Seafoods operated was a common one within the commercial fishing industry. The trial judge recognised that this provided a scant basis to support the finding of fact which was said to flow from it but he was fortified by the absence of any evidence from the appellant which might, even by inference, cast doubt on its accuracy. It would have to be considered in the context of the companies having similar names, common directors and common or overlapping shareholders.

In this case, there was some further evidence before him but to which the trial judge did not make express reference. This concerned the circularisation of business cards for the business, “Fortuna Australia”. This card showed, in addition to the name Fortuna Australia, but in smaller print, the names of both Fishing and Seafoods. It clearly identified them as the operating companies behind the business name. A single address, telephone and facsimile number was provided for Fortuna Australia. The managing director of Fortuna Australia was given as Mike Rowley and his mobile phone number was shown. The card was supplied to prospective purchasers, not only in Australia, but in the United States and Japan and was circulated from late 1996 or early 1997. While this only advances the case a little, it does appear that at least within the markets in which Seafoods operated, which markets were not limited to Australia, the integrated nature of the business and the interrelationship of the two companies was in fact publicly known.

In the absence of any other evidence it was open to the trial judge to conclude that it was within the means of knowledge of the appellant that Fishing was part of an integrated group of related companies which were likely to rely directly on Fishing, and, more particularly, on the Melina T, for their incomes.

In relation to the other elements required to establish a duty of care on the part of the appellant to the respondent and in relation to the appeal against the costs order I am content to rely on what has been said by the President with whose reasons I generally agree subject only to the matters I have separately addressed.

In my view the appeals should be dismissed with costs.

CITATION:	Fortuna Seafoods P/L as trustee for The Rowley Family Trust v The Ship “Eternal Wind” [2005] QCA 405
PARTIES:	FORTUNA SEAFOODS PTY LTD as trustee for THE ROWLEY FAMILY TRUST (plaintiff/respondent) v THE SHIP “ETERNAL WIND” (defendant/appellant)
FILE NO/S:	Appeal No 1125 of 2005 Appeal No 2068 of 2005 SC No 1485 of 2000
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	Supreme Court at Brisbane
DELIVERED ON:	4 November 2005
DELIVERED AT:	Brisbane
HEARING DATE:	3 August 2005
JUDGES:	McMurdo P, Jerrard JA and Dutney J Separate reasons for judgment of each member of the Court, McMurdo P and Dutney J concurring as to the order made, Jerrard JA dissenting
ORDER:	Both appeals dismissed with costs to be assessed
CATCHWORDS:	TORTS – NEGLIGENCE – ESSENTIALS OF ACTION FOR NEGLIGENCE – DUTY OF CARE – RELATIONSHIP OF PROXIMITY – appellant negligently caused a ship owned by a fishing company closely linked to the respondent to sink – fishing company and respondent were part of a vertically integrated commercial operation which included common directors and shareholders – respondent brought claim against appellant for pure economic loss – evidence given that respondent processed and sold fishing company’s fish as its agent and that all transactions were performed at normal market rates – respondent gave uncontested evidence that such vertically integrated commercial operations were common in the Australian fishing industry at the relevant time – appellant led no contrary evidence at trial – whether appellant owed respondent a duty of care – whether judge erred in concluding that the appellant had the means of knowledge that the respondent was part of an ascertainable determinate class of persons likely to suffer economic loss as a consequence of appellant’s negligence – whether judge entitled to more readily draw an inference regarding the means of knowledge where no contradictory evidence was led by the appellant PROCEDURE – COSTS – SCALES OF COSTS – SCALE APPLICABLE – judgment sum awarded to plaintiff in the Supreme Court was within the District Court’s jurisdiction – action was originally one of three factually related actions ordered to be heard together – the other two claims settled prior to trial – plaintiff’s original claim was for a sum within the Supreme Court jurisdiction but a lower amount was settled upon just prior to trial – whether the judge erred in awarding costs on the Supreme Court scale Bow Valley Husky (Bermuda) Ltd v St John Shipbuilding Ltd [1997] 3 SCR 1210; 153 DLR (4^th) 385, considered Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529, applied Canadian National Railway Co v Norsk Pacific Steamship Co [1992] 1 SCR 1021; 91 DLR (4^th) 289, considered Christopher & Ors v The Motor Vessel “Fiji Gas” [1993] QCA 22; (1993) Aust Torts Reports 81-202, not followed Jones v Dunkel (1959) 101 CLR 298, cited Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd [1985] QB 350, distinguished Perre v Apand (1999) 198 CLR 180, applied Valleyfield Pty Ltd v Primac Ltd [2003] QCA 339; Appeal No 3605 of 2002, 8 August 2003, cited
COUNSEL:	A W Duffy for the appellant A J Greinke for the respondent
SOLICITORS:	Ebsworth & Ebsworth for the appellant Thomson Rich O’Connor (Sydney) for the respondent