Geraldton Port Authority v The Ship “Kim Heng 1888”

[2011] FCA 1148

FEDERAL COURT OF AUSTRALIA

Geraldton Port Authority v The Ship “Kim Heng 1888” [2011] FCA 1148

Citation:		Geraldton Port Authority v The Ship “Kim Heng 1888” [2011] FCA 1148
Parties:		GERALDTON PORT AUTHORITY v THE SHIP "KIM HENG 1888", THE SHIP "SUPPORT STATION 1" and THE SHIP "ARWANA"
File number:		WAD 291 of 2010
Judge:		MCKERRACHER J
Date of judgment:		7 October 2011
Catchwords:		LIMITATION OF ACTIONS – Limitation Act 1935 (WA) s 47A – whether appropriate to grant leave to file proposed proceeding under s 47A(3) – when cause of action accrues – when damage is sustained – whether delay in bringing the action was occasioned by mistake or by any other reasonable cause – whether there has been sufficient notice of intention to bring the application – whether the plaintiff will suffer material prejudice
Legislation:		Limitation Act 1935 (WA) ss 46, 47A Port Authorities Act 1999 (WA) ss 8(2), 30(1)(d) 113, 114B
Cases cited:		Brambles Construction Pty Ltd v Helmers (1966) 114 CLR 213 Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 John Holland (Constructions) Pty Ltd v Jordin (No 2) (1985) 79 FLR 210 Matheson v Commissioner of Main Roads (2001) 25 WAR 269 Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 2) (2010) 267 ALR 547 Quinn v Llesna Rubber Co Pty Ltd [1989] VR 347 Salido v Nominal Defendant (1993) 32 NSWLR 524 State Government Insurance Commission v Teal (1989) 2 WAR 105 Van Win Pty Ltd v Eleventh Mirontron Pty Ltd [1986] VR 484
Date of hearing:	29 September 2011
Place:	Perth
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	37
Counsel for the Plaintiff:	RF Edwards
Solicitor for the Plaintiff:	DLA Piper
Counsel for the Defendants:	PA Hopwood
Solicitor for the Defendants:	Cocks Macnish

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 291 of 2010

BETWEEN: GERALDTON PORT AUTHORITY
Plaintiff/Cross-Respondent

AND:

THE SHIP "KIM HENG 1888"
First Defendant/Cross-Claimant

THE SHIP "SUPPORT STATION 1"
Second Defendant/Cross-Claimant

THE SHIP "ARWANA"
Third Defendant/Cross-Claimant

JUDGE:	MCKERRACHER J
DATE OF ORDER:	29 SEPTEMBER 2011
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

1.Pursuant to s 47A(3) of the Limitation Act 1935 (WA), the First, Second and Third Cross-Claimants have leave to commence a cross-claim in terms of the Cross-Claim filed on 29 September 2011.

2.        Costs of this application be in the cause.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 291 of 2010

BETWEEN: GERALDTON PORT AUTHORITY
Plaintiff/Cross-Respondent

AND:

THE SHIP "KIM HENG 1888"
First Defendant/Cross-Claimant

THE SHIP "SUPPORT STATION 1"
Second Defendant/Cross-Claimant

THE SHIP "ARWANA"
Third Defendant/Cross-Claimant

JUDGE:	MCKERRACHER J
DATE:	7 OCTOBER 2011
PLACE:	PERTH

REASONS FOR JUDGMENT

INTRODUCTION

1. The defendants seek leave pursuant to s 47A of the Limitation Act 1935 (WA) (the Limitation Act) to commence a cross-claim.  The plaintiff commenced an action in rem on 4 October 2010 against the defendants.  The defendants wish to cross-claim under State law.  Because the cross-claim relates to an act done by the plaintiff in execution of a public duty, notice in writing giving information as to the cause of action was required within one year of the accrual of the cause of action.  Also, the action was to be commenced within one year of its accrual. 

2. The defendants say the limitation provisions are not triggered as the claim they wish to pursue is inchoate in that it arises only if the plaintiff succeeds.  However, out of an abundance of caution, lest the limitation provisions of the State Act do apply, leave to pursue the cross-claim is necessary as it is brought well outside the one year period.  Moreover, the relief was sought urgently as the six year limitation period was to expire the day after hearing the urgent application. 

3. I informed the parties after hearing counsel that I would grant leave as sought in the application.  These are my reasons for doing so. 

   THE NATURE OF THE CROSS-CLAIM AND ITS HISTORY

4. On 30 September 2005, the defendant vessels collided with infrastructure at the Port of Geraldton in Western Australia.  That collision gave rise to demands from the plaintiff against the defendants under the provisions of the Port Authorities Act 1999 (WA) (the PAA).  Those provisions do not presently require close analysis as it is the proposed cross-claim which requires consideration.

5. A few months later, on 24 January 2006, the defendants informed the plaintiff in writing of a prospective cross-claim by the three defendant ships. The substance of the cross-claim there disclosed was that the defendants were contractual entrants into the Port. As such, they were entitled to pursue the plaintiff as occupier for any loss or damage they suffered as a result of the plaintiff’s breach of its non-delegable duty or contractual warranty that the Port was as safe as reasonable care could make it. The prospective cross-claim was a claim against the plaintiff in the same amount and to the same extent that any claim may be brought against the defendants for damage to Port property by virtue of s 113 of the PAA, and a claim against the plaintiff for damage to the vessels. The defendants asserted that the PAA did not prevent a party from claiming against the plaintiff to recover any amount it is required to pay to the plaintiff under s 113 if the loss is attributable to the negligence or breach of contract of the plaintiff. That issue does not need to be considered at present.

6. The defendants also advised the plaintiff of their contention that it was only entitled to rely on the protection afforded by s 114B of the PAA if it had first met its obligations to provide a safe port. Any interpretation of s 114B other than that would mean that s 45(1) and s 47 of the PAA would be rendered meaningless and of no effect. The defendants advised that their enquiries had revealed that there had been ongoing difficulties at the Port, particularly since the channel had been deepened, and that in certain weather conditions, the construction of the Port was such that the prevailing swell entered the harbour causing considerable movement of water through the harbour. As a result, it was contended for the defendants that it was unsafe for vessels to berth in those weather conditions. The letter continued:

   We are instructed that there have been regular occasions upon which mooring ropes of vessels tied up in the harbour have snapped, and several occasions upon which the Harbourmaster has directed vessels moored in the harbour to exit the harbour and anchor at sea to ensure their safety during anticipated weather conditions. 

   The letter also sought voluntary pre-action discovery.

7. Over five years after the incident, on 4 October 2010, the plaintiff commenced these in rem proceedings against the defendant ships. 

8. Shortly after, on 26 November 2010, a statement of claim was filed and on 9 February 2011, the defendants/cross-claimants filed a defence and a cross-claim substantially in the same terms as the cross-claim for which leave to file is now sought. 

9. On 2 August 2011, the plaintiff advised for the first time that in its opinion, the cross-claim against the plaintiff was time barred by reason of s 46 and s 47A of the Limitation Act. In other words, while a valid proposed cross-claim was brought very much at the eleventh hour, so also were the plaintiff’s various steps. The defendants’ reason for delay has been explained. The cause of the plaintiff’s delay is not at all apparent at this stage.

   SECTION 46 AND S 47A OF THE LIMITATION ACT

10. Those sections relevantly provide as follows:

    46.      Limitation to apply to counter-claim and set-off

    The provisions of this Act shall apply to any counter-claim or set-off alleged by the defendant in all cases, and to the like extent, and for the same purpose in, to, or for which they respectively would apply if the defendant had instituted an action against the plaintiff or plaintiffs in respect of the same matter.

    47A     Protection of persons acting in execution of statutory or other public duty

    (1)       Notwithstanding the foregoing provisions of this Act but subject to the provisions of subsection (2) and (3), no action shall be brought against any person (excluding the Crown) for any act done in pursuance or execution or intended execution of any Act, or of any public duty or authority, or in respect of any neglect or default in the execution of the Act, duty or authority, unless — 

    (a)the prospective plaintiff gives to the prospective defendant, as soon as practicable after the cause of action accrues, notice in writing giving reasonable information of the circumstances upon which the proposed action will be based and his name and address and that of his solicitor or agent, if any; and

    (b)the action is commenced before the expiration of one year from the date on which the cause of action accrued,

    and for the purposes of this section, where the act, neglect, or default is a continuing one, no cause of action in respect of the act, neglect, or default accrues until the act, neglect or default ceases but the notice required by paragraph (a) may be given and an action may thereafter be brought while the act, neglect or default continues.

    (2)       A person may consent in writing to the bringing of an action against him at any time before the expiration of 6 years from the date on which the cause of action accrued whether or not the notice as required by subsection (1) has been given.

    (3)

    (a)Notwithstanding the foregoing provisions of this section application may be made to the Court which would but for the provisions of this section have jurisdiction to hear the action, for leave to bring an action at any time before the expiration of 6 years from the date on which the cause of action accrued, whether or not notice as required by subsection (1) has been given to the prospective defendant.

    (b)Where the Court considers that the failure to give the required notice or the delay in bringing the action as the case may be, was occasioned by mistake or by any other reasonable cause or that the prospective defendant is not materially prejudiced in his defence or otherwise by the failure or delay, the Court may if it thinks it is just to do so, grant leave to bring the action, subject to such conditions as it thinks it is just to impose.

    (c)Before an application is made under the provisions of paragraph (a), the party intending to make the application shall give notice in writing of the proposed application and the grounds on which it is to be made to the prospective defendant, at least 14 days before the application is made.

    (4)

    (a)In this section person includes a body corporate, Crown agency or instrumentality of the Crown created by an Act or an official or person nominated under an Act as a defendant on behalf of the Crown.

    (b)This section is to be construed so as not to affect the provisions of the Crown Suits Act 1947.

    …

11. On 24 August 2011, the defendants gave written notice of intention to bring an application under s 47A(3) of the Limitation Act. The plaintiff has opposed leave being granted and also contends that the notice given does not satisfy the legislative requirements.

    IS LEAVE NECESSARY?

12. The defendants do not concede, by bringing this application, that leave under s 47A of the Limitation Act is necessary. Rather, the defendants’ primary position is that the cause of action accrues only when all the events necessary to give rise to the right to sue have occurred. The cross-claim is in tort under the Occupiers Liability Act 1985 (WA).  A cause of action accrues only when the defendant suffers damage.  In its express terms, damage on the cross-claim arises only if and when there is a determination of liability against the defendants on the plaintiff’s claim.  The defendants argue, therefore, that the cross-claim is presently inchoate.   The commencement of the relevant limitation period in relation to a claim by one tortfeasor against another begins at the point at which a tortfeasor is liable:  Brambles Construction Pty Ltd v Helmers (1966) 114 CLR 213 (at 221); Quinn v Llesna Rubber Co Pty Ltd [1989] VR 347; State Government Insurance Commission v Teal (1989) 2 WAR 105 (at 120); Van Win Pty Ltd v Eleventh Mirontron Pty Ltd [1986] VR 484 and John Holland (Constructions) Pty Ltd v Jordin (No 2) (1985) 79 FLR 210. That liability is yet to be established. Damage is yet to be sustained. The plaintiff contends that the cause of action is not inchoate because damage had already been suffered and was actionable almost six years ago. While that may be so, the specific cause of action upon which the cross-claim is based arises only in circumstances where liability is established by the plaintiff. That is an event which has not yet occurred. That damage has not yet been sustained.

13. However, out of an abundance of caution, the defendants have pursued the application for leave pursuant to s 47A of the Limitation Act.

14. As that is the application before me, I have approached the question on whether leave should be granted.

    THE REQUIREMENTS FOR LEAVE

15. As is apparent from the portion of the Limitation Act extracted above, before leave can be granted, it is necessary for the Court to be satisfied that the delay in bringing the action was occasioned by mistake or by any other reasonable cause. Alternatively, the prospective defendant is not materially prejudiced in its defence or otherwise by the delay. Providing one of the legislative conditions is satisfied, the Court should exercise its discretion to grant leave if it is just in the circumstances to do so: Matheson v Commissioner of Main Roads (2001) 25 WAR 269 per Murray J (at 274).

    Notice

16. There is a threshold issue.  It is also necessary that notice be given of the intention to bring the application for leave.  By letter from the defendants’ solicitors dated 24 August 2011, the defendants gave notice to the plaintiff of their intention to bring this application. 

17. The plaintiff argues that the grounds of the application for leave itself were not adequately set out in that communication. 

18. Apart from foreshadowing the nature of the claim and dealing with a detailed contention in preceding correspondence of 2 August 2011 from the plaintiff’s solicitors as to the expiry of the limitation period, the defendants, through their solicitors, said the following:

    Section 47A(3) of the Limitation Act 1935 provides that notwithstanding the time limitation point a court may grant leave to bring an action in certain circumstances.  In our view those circumstances are clearly met in this case.  As is clear, our client’s Cross-Claim (once paragraph 12(i) of the Cross-Claim is deleted) is purely defensive and mirrors exactly the extent and scope of the set-off pleaded in the Defence.  In the absence of your client bringing this action against out client, our client could not have not raised this Cross-Claim given the nature of the loss and damage sought to be recovered.

    Accordingly, our [client] intends to make an application under section 37A(3) (sic‑47A(3)) if (sic-of) the Limitation Act 1935. Would you kindly advise whether your client will consent to such an application, obviously on the understanding that the Cross-Claim would be as set out in the present pleadings with paragraph 12(i) deleted. We make this request for the purposes of conferral and also for the purposes of giving notice under section 47A(3)(c).

19. There is no suggestion that the cause for the delay in bringing the action was occasioned by mistake pursuant to s 47A(3)(b). Rather, the defendants rely upon ‘any other reasonable cause’ as well as relying on the fact that there is no material prejudice to the plaintiff.

20. In the written notice to the plaintiff the defendants explained that the only reason the cross-claim was being pursued was because the plaintiff itself had belatedly pursued its claim, and the defendants needed to adopt the claim originally foreshadowed in 2006 by way of defence and cross-claim.   By spelling that out, the defendants were, in my view, making clear that they were relying upon ‘any other reasonable cause’ albeit that that specific provision was not spelt out.  There has never been any suggestion of mistake.  

21. The possibility must be accepted that the alternative ground, namely lack of prejudice to the plaintiff by non-compliance with the Limitation Act provisions, was not foreshadowed in the communication (at least with crystal clarity). The ‘any other reasonable cause’ ground was made sufficiently clear by reference to the fact that the cross-claim would be ‘purely defensive and mirrors exactly the extent and scope of the set-off pleaded in the defence’. Not only was notice of that ground given, but as will be seen, the granting of leave was pursuant to that ground (as well as the no prejudice ground).

22. In my view, the notice of this urgent application, in all the circumstances, satisfied the requirements of the Limitation Act.

    Reasonable cause

23. As Kenny J noted recently in Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 2) (2010) 267 ALR 547 (at [20]):

    The word “mistake” is in common English usage, meaning “[a] misconception about the meaning of something; a thing incorrectly done or thought; an error of judgment” (OED) or “an error in action, opinion or judgment”; “a misconception or misapprehension” (Macquarie Dictionary). The meaning of “other reasonable cause” is well-established: see Perry v City of Armadale [2004] WASC 167 (‘Perry v City of Armadale’) at [20] per Le Miere J and Hughes v Minister for Health [1999] WASCA 131 (‘Hughes v Minister for Health’) at [42]- [44] per Malcolm CJ (with whom Pidgeon and Steytler JJ agreed), citing Quinlivan v Portland Harbour Trust[1963] VR 25 at 28 per Sholl J, who said that the expression “reasonable cause”:

    ... means to refer to a cause which a reasonable man would regard as sufficient, a cause consistent with a reasonable standard of conduct, the kind of thing which might be expected to delay the giving of notice by a reasonable man.

24. The defendants contend that the cross-claim is ‘purely defensive’ and responsive to the plaintiff’s claim.  The defendants only seek to recover any moneys they may be found liable to pay to the plaintiff in the present proceedings.  Given the way in which the claim has been structured, I accept the defendants’ argument that the cross-claim could not have been brought until after the plaintiff commenced the proceedings. 

25. It is true that the claim might have been pursued in another guise, but it seems to me that the policy of the Limitation Act would not be such as to punish a prospective defendant who has refrained from litigation by cross-claim purely because the plaintiff has not pursued its claim until relatively close to expiry of the limitation period. The defendants filed the cross-claim against the plaintiff on 9 February 2011, serving it on or about that date. The plaintiff did not advise the defendants that in its view the cross-claim was time barred by virtue of s 47A(1)(b) of the Limitation Act until the letter of 2 August 2011, some six months after service of the cross-claim. It is a reasonable inference that if that argument had been raised at an earlier date, the application would have been brought at an earlier time.

26. It appears to me that the delay on the part of the defendants was reasonable in the circumstances having regard to the plaintiff’s apparent inaction and also considering the purely defensive nature of the claim as the defendants describe it.

1. In those circumstances the ‘other reasonable cause’ provision to be proven for the purposes of seeking leave has been established.

   No material prejudice

2. As an alternative, there is the question as to whether or not the plaintiff will suffer no prejudice in any event. 

3. There is always potential prejudice occasioned by delay in circumstances where a claim depends upon the memory of people involved in events occurring some years prior to the pursuit of the claim.  Such delay in itself may be sufficient to amount to prejudice as the witnesses’ memories fade and become less reliable even if assisted by contemporaneous documents – In Salido v Nominal Defendant (1993) 32 NSWLR 524 Gleeson CJ noted (at 532), speaking of similar provisions:

   1.        Section 52(4) confers a discretion which is to be exercised judicially, in a manner that furthers the purposes of the statutory context in which it appears. The immediate purpose, as with any limitation period, is to protect defendants against the injustice of stale claims; the statute is also aimed at promoting forensic diligence.

   2.        Bearing in mind those statutory purposes, the question is whether, in the circumstances of each individual case, the applicant for leave has demonstrated that it is fair and just that leave should be granted.

   3.        The diligence, or lack of diligence, shown by a plaintiff or a plaintiff's representatives, in ascertaining and asserting his or her rights will ordinarily be a material factor, as will the extent of the relevant delay, and the reason for it.

   4.        The nature and extent of any forensic disadvantage to a defendant resulting from a plaintiff's delay will also be material. The effect, if any, of the delay upon the defendant's ability to defend an action is a matter to be taken into account, and may in some cases be of decisive importance.

   5.        Leave under s 52(4) may be refused if it would be plainly futile to grant it, and in that connection an applicant's willingness and ability to give a full and satisfactory explanation of any delays in reporting to police, notifying claims and commencing proceedings will be material.

4. Subsequently in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541, McHugh J commented on the effect of delay on a trial saying (at 552 and 555):

   The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost. Second, it is oppressive, even "cruel", to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed. Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period.
   ...
   Legislatures enact limitation periods because they make a judgment, inter alia, that the chance of an unfair trial occurring after the limitation period has expired is sufficiently great to require the termination of the plaintiff's right of action at the end of that period. When a defendant is able to prove that he or she will not now be able to fairly defend him or herself or that there is a significant chance that this is so, the case is no longer one of presumptive prejudice. The defendant has then proved what the legislature merely presumed would be the case. Even on the hypothesis of presumptive prejudice, the legislature perceives that society is best served by barring the plaintiff's action. When actual prejudice of a significant kind is shown, it is hard to conclude that the legislature intended that the extension provision should trump the limitation period.  (footnotes omitted)

5. In relation to this matter, the plaintiff has been on notice as to the nature of the cross-claim at least since 24 January 2006, about four months after the incident.  In the correspondence of that date, the defendants set out in detail the basis upon which a cross-claim would be pursued if the plaintiff pursued its claim.  Insofar as the nature of the cross-claim is concerned, while some aspects of it may involve actual memory, it appears that a substantial portion of the claim will turn upon documentary records.  The cross-claim is based on an allegation that the harbour basin of the Port of Geraldton is subject to surge conditions in certain weather and sea states and thus, not safe. 

6. In support of the application, a substantial volume of materials approximately contemporaneous or preceding the event in respect of which there was discussion at Board level by the plaintiff in relation to the topic concerned was produced.  The reference to this material is certainly not to prejudge whether there was a problem at all but simply to note that the question of whether or not there was a problem was documented in some detail in the plaintiff’s records.  From the defendants’ perspective, apart from relying upon the events themselves, it would seek to rely upon those records.  It is not clear at this stage what position the plaintiff will take in relation to the issue but I give reasonable weight to the defendants’ argument that insofar as it will be necessary to examine circumstances as they were six years ago (and before), it is more likely than not that considerable weight would be given, at least in the first instance, to the contemporaneous documentary records. 

7. In the end an evaluation at this stage as to the prospects of ultimate prejudice can only be a matter of impression one way or the other.  There is a substantial body of written material on the topic and notice of this claim was given at an early date, enabling the plaintiff to pursue inquiries as to other non–documentary evidence.  There is no positive evidence that it did not do so and no specific evidence as to the unavailability of relevant personnel to explain the records.

8. In those circumstances, I accept the argument for the defendants that it is not obvious that there will be material prejudice to the plaintiff caused by the delay in commencing the cross-claim. 

   UNDERTAKING

9. The plaintiff has quite reasonably taken the point that it is inappropriate for the Court to grant leave in circumstances where a grant of leave will result in two cross-claims in respect of the same subject matter.  This submission is clearly correct, as acknowledged by the defendants who gave an undertaking to discontinue the existing cross-claim to the extent it overlapped with the proposed cross-claim. 

   CONCLUSION

10. I am satisfied that it is in the interests of justice to grant leave as sought.

11. The following orders are made:

    1.Pursuant to s 47A(3) of the Limitation Act 1935 (WA), the First, Second and Third Cross-Claimants have leave to commence a cross-claim in terms of the Cross-Claim filed on 29 September 2011.

    2.Costs of this application be in the cause.

I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Associate: 

Dated:        7 October 2011