Kalymnian Shipping P/L and Skonis Industries P/L and Australian Maritime Safety Authority

[2000] AATA 804

DECISION AND REASONS FOR DECISION [2000] AATA 804

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No. D2000/7

GENERAL   ADMINISTRATIVE   DIVISION  )          
           Re      Kalymnian Shipping Pte Ltd and Skonis Industries Pty Ltd       
  Applicants
           And    Australian Maritime Safety Authority
  Respondent

DECISION

Tribunal       Deputy President B.M. Forrest     

Date11 September 2000

PlaceMelbourne (heard in Darwin)

Decision      The decision not to allow the modification of the requirement of clause 11.3.3(a) of Marine Orders Part 43 Issue 4 in relation to the Kalymnian Express is affirmed.   
   ........(Sgd. B.M. Forrest).............
  Deputy President
CATCHWORDS
PRACTICE AND PROCEDURE – JURISDICTION – reviewable decision – Marine Orders Part 43 – decision to refuse to exercise the discretion to modify the application of a provision of the Marine Orders Part 43 – decision maker not having delegation – whether decision made without authority is reviewable – Tribunal has jurisdiction to review the decision.
NAVIGATION – applicants in the business of shipping livestock from Australia to South East Asia – Marine Orders Part 43 require a ship to have an Australian Certificate for the Carriage of Livestock ("ACCL") issued by the Chief Marine Surveyor – requirement for issue of ACCL that a ship be classed by a full member of the International Association of Classification Societies ("IACS") – applicants' ship not classed by an IACS society – discretion of Chief Marine Surveyor to modify the application of the Marine Orders – extent of modification permissible – modification to be "without danger to persons or detriment to the proper carriage of livestock" – whether discretion should be exercised to grant ACCL – decision affirmed.
Navigation Act 1912 (Cth) sub-s. 425(1AA),
Judiciary Act 1903 (Cth) s. 39B
Marine Orders Part 43 Issue 1 and Issue 2
Marine Orders Part 43 Issue 3, clause 45.2; clause 47
Marine Orders Part 43 Issue 4, clause 1.1, clause 3.1, clause 6.1(b) and (l), clause 11.3, clause 11.5, clause 12, clause 13
Kalymnian Shipping Pte Ltd v Rose [2000] FCA 614
Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (New South Wales) (1976-1978) 1 ALD 167; (1979) 24 ALR 307, on appeal

REASONS FOR DECISION

11 September 2000           Deputy President B.M. Forrest     

1. The applicants, Kalymnian Shipping Pte Ltd and Skonis Industries Pty Ltd, have been in the business of carrying live cattle from Australia to South East Asia for cattle exporters since 1983.  One of two ships used by the applicants in the business, the "Kalymnian Express", the subject of these proceedings, has been operating as a livestock carrier for approximately 10 years.  Previously the Kalymnian Express was used as the lighthouse vessel "Cape Pillar".  The Kalymnian Express is registered in Panama.

2. The survey and inspection of ships carrying livestock from Australian ports is governed by the Marine Orders Part 43 Cargo & Cargo Handling – Livestock ("MO43") made pursuant to sub-s. 425(1AA) of the Navigation Act 1912 (Cth). A ship may not carry livestock from Australia unless there is in force in respect of the ship a valid Australian Certificate for the Carriage of Livestock ("ACCL") issued by the Chief Marine Surveyor of the respondent Australian Maritime Safety Authority ("AMSA") (MO43, Issue 4, clause 11).

3. MO43 first came into operation on 1 July 1983.  Under MO43 Issues 1 and 2 a ship was required to hold a Livestock Capacity Plan ("LCP") before the ship was able to carry livestock.  Under MO43 Issue 3, the LCP was replaced by an ACCL.  All LCP's expired on 31 December 1999 after which a ship required an ACCL to carry livestock.  An ACCL has a maximum validity of 5 years and requires annual endorsement.

4. Issue 4 of MO43 came into force on 1 January 2000 replacing Issue 3.  From that date to be eligible for the issue of an ACCL, a ship was required to be classed by a classification society (MO43 Issue 4, clause 11.3.3(a)).  The term "classification society" is defined in MO43 Issue 4, clause 1.1 as "a corporation that is a full member of the International Association of Classification Societies ("IACS")".  The general supervision of the maintenance of standards for compliance with commercial ships' obligations under the International Convention for the Safety of Life at Sea 1974 ("SOLAS Convention"), to which Australia is a signatory, is generally managed by a classification society.  A ship is described as being "classed" by a particular society.  In exercising flag state responsibilities on behalf of the Commonwealth, AMSA relies on certain classification societies to act as its agent.  Six classification societies are approved for this purpose and each one is a member of IACS.

5. The first ACCL issued for the Kalymnian Express was dated 20 September 1999.  Before then the Kalymnian Express held an LCP which first issued in 1990 and again in 1995.  Its then current Cargo Ship Safety Construction ("SAFCON") Certificate issued by Lloyds Register of Shipping ("Lloyds") was valid until 28 February 2000 and subject to annual revalidation.

6. At the heart of the present dispute is the requirement of clause 11.3.3(a) that a ship be classed by a classification society that is a full member of IACS before an ACCL is issued or endorsed ("the classification requirement").  The relevant provisions in MO43 Issue 4 in relation to the issue of an ACCL are as follows:

   "11.3    Issue of certificate
   11.3.1  If satisfied that:

   (a)the livestock fittings, livestock equipment and carrying arrangements of a ship comply with this Part or are of a standard that is at least equivalent to the provisions of this Part; and

   (b)issue of a certificate is not prohibited by 11.3.3 or 11.3.4,

   the Chief Marine Surveyor may issue in respect of the ship an Australian Certificate for the Carriage of Livestock.
   11.3.2  If satisfied that:

   (a)the livestock fittings, livestock equipment and carrying arrangements of a ship built before 1 July 1983 are of a standard substantially in compliance with the provisions of this Part; and

   (b)        issue of a certificate is not prohibited by 11.3.3 or 11.3.4,

   the Chief Marine Surveyor may issue in respect of the ship an Australian Certificate for the Carriage of Livestock.
   11.3.3  An Australian Certificate for the Carriage of Livestock is not to be issued or endorsed in respect of a ship unless:

   (a)the ship is classed by a classification society;

   (b)the Chief Marine Surveyor is satisfied that the design, construction, maintenance and repair of all structures and structural arrangements, including modifications to the ship's structure, necessary for the carriage of animals, is at least equivalent to a standard that would be acceptable to the ship's classification society;

   (c)there is in force in respect of the ship certification under the International Safety Management Code or there is evidence satisfactory to the Chief Marine Surveyor that the ship substantially complies with the International Safety Management Code; and

   (d)one of the following apply:

   (i)the ship meets the requirements of the Safety Convention applicable to ships constructed on or after 1 September 1984; or

   (ii)if an Australian Certificate for the Carriage of Livestock is to be issued on or before 30 April 2000, a Livestock Capacity Plan was approved for the ship prior to 9 April 1997 under a previous Issue of this Part; or

   (iii)an Australian Certificate for the Carriage of Livestock is in force in respect of the ship."

7. A further relevant provision of MO43 Issue 4 is clause 3.1:

   "3.1     Modification of provisions
   If the Chief Marine Surveyor considers that the application of any of the provisions of this Part may be modified in respect of a ship or class of ships without danger to persons or detriment to the proper carriage of livestock, the Chief Marine Surveyor may allow the modification of the application of those provisions to such extent and subject to such conditions as, in that officer's opinion, the circumstances of the case warrant."

8. In substance the applicants are seeking in this review an exercise of the discretion in clause 3.1 to allow a modification of clause 11.3.3 so as to permit the issue of an ACCL without the Kalymnian Express being required to comply with clause 11.3.3(a), to be classed by a full member of IACS, for a period of 2 years.  The rationale for the applicants seeking a duration of 2 years for the modification to apply is to allow time for the applicants to obtain IACS classification for the ship or, failing that, to acquire new tonnage, or as a last resort to leave the industry in an orderly fashion.

9. It was submitted on behalf of AMSA that the discretion of the Chief Marine Surveyor contained in clause 3.1 is confined to modification of the specific standards set out in specific clauses for example, stability clause 12, ventilation clause 13, where to do so does not increase danger to persons or detriment to the proper carriage of livestock.

10. I am unable to accept this submission.  The word "may" is one of permission giving the Chief Marine Surveyor authority to do something he or she could not otherwise lawfully do.  The language of clause 3.1 does not confine the exercise of the discretion to particular provisions within MO43 because it refers to "…any of the provisions of this Part may be modified…" (my emphasis).  Clause 3.1 specifies that in deciding whether or not the application of any of the provisions may be modified, the criteria to be applied are in essence safety considerations of "without danger to persons or detriment to the proper carriage of livestock".  Where the context confers a discretion which in its terms is fettered by express criteria the factors that are to be taken into account in the exercise of the discretion are similarly fettered.  The exercise of the discretion is confined to the extent that it must adhere to the safety principle embodied in the words "without danger to persons or detriment to the proper carriage of livestock".

11. To understand how the issue for determination arose it is necessary to recite in some detail the background history.

12. From 1990, when the applicants purchased the Kalymnian Express, until November 1998, the ship was classed by Lloyds.  Lloyds is a full member of IACS.  Following a dispute with the applicants concerning fees said by Lloyds to be owing in relation to another ship operated by the applicants, Lloyds suspended the Kalymnian Express from class on 3 November 1998. 

13. On 25 November 1998, Mr Mike Balsdon, the Area Manager of Ship and Personal Safety Service (WA) AMSA sent a facsimile to Mr Christos Skonis, a director of both applicant companies and the person in effective control of the applicants, indicating that AMSA was concerned about the survey status of the Kalymnian Express, in particular whether it was being maintained in compliance with required safety standards.

14. Further correspondence followed between Mr Skonis and AMSA officers.  In early 1999 Mr Skonis was informed to consider carefully a move from classification by a full member of IACS to a non IACS member society describing the move as "possibly a high risk decision" as it was considered unlikely that Panama Maritime Surveyors Bureau ("PMS") would objectively meet the recognised standards achieved by an IACS member.

15. In March 1999 Mr Roger Timms, acting General Manager, Maritime Safety and Environmental Strategy in AMSA informed Mr Skonis by letter of the proposed amendment to MO43 to require all livestock ships trading from Australia to be classed with a full member of IACS and that as soon as the amending legislation is in force AMSA will withdraw its acceptance of all those livestock ships that are surveyed and classed by other than full IACS members.  Mr Skonis was "strongly urged" to anticipate the change. 

16. From June 1998 to June 1999 the Kalymnian Express was in dry dock undergoing an overhaul costing approximately $1.7 million.  The work included repainting the whole ship inside and outside, overhaul of the engine room generators and main engine repair and replacement of sea water valves and pipes, installing a new radio, repairing rusting areas on cattle pens and installing a new life rescue boat. 

17. Mr Skonis maintained that following the overhaul the Kalymnian Express was in better condition than a newly built ship for two reasons.  Firstly, the strength and thickness of the hull plates was more than double that of ships built today and secondly, all the machinery and the main engine were in better condition than the new high speed engines being used in modern ships.

18. The Kalymnian Express was classed by PMS on about 6 July 1999 following a survey inspection conducted on 3 July 1999.  A fresh SAFCON Certificate was also issued by PMS after Lloyds suspended the ship from class.  PMS is not an IACS member.

19. In early July 1999, the applicants lodged a notice of intention to load livestock on the Kalymnian Express for a voyage from Darwin to commence on 12 July 1999.  This was to be the first voyage after the upgrade.  On 9 July 1999 Mr Rob Gehling, Principal Adviser-Technical of AMSA informed Mr Skonis by facsimile that as the SAFCON Certificate issued by Lloyds ceased to be valid on 29 May 1999 (the expiry date for completion of its annual survey), then under clause 47 of MO43 Issue 3, the Kalymnian Express was no longer deemed to be certificated as complying with MO43.  Clause 47 was a transitional provision.  It provided that a ship for which an approved LCP is in force on 1 September 1997 is deemed to have an ACCL until 28 February 1998 or whichever date first occurs of the expiry of the Cargo Ship Safety Construction Certificate (on or after 1 March 1998) or 31 December 1999.

20. Mr Gehling's facsimile also said that the certificate provided by PMS is not acceptable as a satisfactory basis for the issue of an ACCL and went on to mention that the amendment to MO43 requiring classification with a full member of IACS as a pre-requisite for a ship to be certified was expected to be promulgated within a few weeks.

21. Mr Skonis replied on 10 July 1999, in essence complaining about AMSA's performance in relation to its regulatory role, claiming he was being unfairly treated in relation to the Kalymnian Express in comparison with other operators.  He requested that the PMS certification be accepted, and that AMSA had no right to stop the Kalymnian Express loading.  Further correspondence followed which included an explanation from Mr Skonis that the Kalymnian Express was suspended from class by Lloyds for reasons other than seaworthiness.

22. On 26 July 1999 Mr Gehling sent a further facsimile to Mr Skonis informing him that the requirement for the Kalymnian Express to be classed with an IACS member society will only enter force with Issue 4 of MO43.

23. In August 1999 the AMSA Senior Marine Surveyor in Darwin, Mr Doug Robinson, conducted a survey of the Kalymnian Express for the purpose of the issue of an ACCL and an audit for substantial compliance with the International Safety Management ("ISM") Code.

24. On 20 August 1999 Mr Robinson reported that the Kalymnian Express had completed the majority of requirements for the issue of an ACCL and recommended the issue of a full term ACCL, subject to the remaining deficiencies for substantial compliance with the ISM Code being rectified by commencement of the next voyage or three weeks from the date of survey.  A permit to load pending the issue of the necessary certificate was issued.  On 17 September 1999 Mr Robinson further reported that the Kalymnian Express had complied with most of the deficiencies and recommended that an ACCL be issued when outstanding issues relating to ventilation and substantial compliance with the ISM Code had been completed. 

25. Mr Skonis said he was informed by Mr Robinson that a short term ACCL would be issued until a deficiency in the ventilation was dealt with.  The Kalymnian Express loaded and sailed on or about 20 September 1999.  At that time Mr Skonis had not received a copy of an ACCL.  In October 1999 the Chief Marine Surveyor signed the ACCL, backdated to 20 September 1999 with an expiry date of 1 January 2000 with a modification of provisions allowing for the reduced height of ventilators and with the endorsement, "a short term certificate is issued pending correction of the deficiency".

26. The ACCL was forwarded to Mr Skonis by AMSA on 22 October 1999 under cover of a letter stating:

    "A short term certificate has been issued with an expiry date of 1 January 1999. (sic)
    The short term certificate is issued pending remediation action in respect of the height of the ventilator coamings on the superstructure deck which are less than 2.30 metres."

27. Issue 4 of MO43 was signed by the Chief Executive Officer of AMSA on 1 November 1999 and has effect from 1 January 2000.  Mr Skonis received a copy of Issue 4 from AMSA Darwin office on 12 November 1999.  Mr Skonis made further representations to AMSA that he had been given insufficient time to reclass his ships with a full member of IACS.  He addressed a meeting of AMSA's Livestock Advisory Committee on 30 November 1999 at which he pointed out the difficulty he had in trying to have the Kalymnian Express reclassed with a full member of IACS because of its age.  Mr Timms has been Chairman of the Livestock Advisory Committee since 1995.  In an affidavit sworn 14 July 2000, Mr Timms stated that this committee is the primary instrument for communication with industry and other bodies with a legitimate interest in the carriage of livestock by sea, and has a major input to AMSA's policy considerations.  It provided guidance to AMSA on the industry's views in relation to amendment to MO43.  When the introduction of the requirement that livestock export vessels be classed by an IACS member society was first raised with the industry at the committee there was general support for the proposal.  At that time, all of the vessels engaged in the livestock export trade, including the applicants' vessels, were classed by a member of IACS.  When Mr Skonis attended the meeting of the committee in November 1999, his vessels were no longer classed by an IACS society and the decision to amend MO43 in relation to IACS had already been made, in consultation with the industry.

28. In December 1999 Mr Patrick Quirk, General Manager, Maritime Safety and Environmental Strategy, AMSA wrote to all IACS full members (with the consent of Mr Skonis) asking them to consider accepting the Kalymnian Express and another of the applicants' ships into classification.  The responses received indicated that while the age of a ship is a factor it was not a disqualifying factor from entry into an IACS society should the ship be found to be acceptable on inspection.

29. On 9 December 1999 Mr Gehling on behalf of Mr Timms, sent a facsimile to Mr Skonis:

    "In relation to your specific requests, AMSA would be prepared to issue Kalymnian Express with a short term ACCL valid until the anniversary date of its Cargo Ship Safety Construction Certificate on 3 July 2000.  If survey by AMSA at that time shows that the ship complies with all of the requirements of Part 43 for issue or endorsement of an ACCL, including classification by an IACS member society, you may anticipate that an ACCL will be issued for the remainder of the term of the SafCon Certificate (ie. 3 July 2004)."

30. Mr Skonis said that on receipt of this facsimile he assumed that AMSA would issue the ACCL to allow the Kalymnian Express to continue operating until 3 July 2000 and would send the certificate in due course.

31. On 12 December 1999 and over the next few days, in the course of a voyage carrying livestock from Australia to Indonesia, the Kalymnian Express suffered a significant loss of cattle, 220 of the 927 cattle loaded from Geraldton perished.  The mortality rate of 23.73% exceeded the 3% threshold beyond which AMSA is required to conduct an investigation into the cause of death – see clause 45.2 of MO43 Issue 3.  A further 82 cattle died or were destroyed in the quarantine yards at Cilicap after the ship was diverted there as it was the nearest port. 

1. AMSA informed Mr Skonis by facsimile dated 20 December 1999 that the ACCL for the Kalymnian Express "is cancelled forthwith pending the results of the investigation" and the vessel may not load livestock until advised by the Chief Marine Surveyor.

2. Mr Skonis replied that the excessive mortality resulted from a main engine failure while the ship was in the path of a cyclone.  After the Kalymnian Express arrived back in Darwin on 8 January 2000, an investigation was conducted by three AMSA marine surveyors. 

3. Mr Alexander Schultz-Altmann, Senior Marine Surveyor in the Ship Inspection Group of AMSA prepared an investigation report into the excessive livestock mortality on the Kalymnian Express voyage 6 December 1999 to 17 December 1999.  In his report dated 28 January 2000, Mr Schultz-Altmann made a number of recommendations.  In summary, the investigation report found:

   "The investigation found that the primary cause of excessive mortality was the failure of the main engine and the excessive rolling caused by the presence of Cyclone Ilsa.  It was noted that the Master's Report of the Carriage of Livestock indicated that 4 animals died on the 11th and 3 on the 12th of December 1999 which would have indicated these death[s] occurred prior to the breakdown.  The stockman reported and stated that all animals were travelling well prior to the breakdown and no deaths occurred until after the main engine failure had occurred.  In considering this apparent inconsistency it was concluded that some animals may have died in any case due to the weather conditions but the high level of mortality was a result of the failure of the main engine scavenge air pump."

4. On 14 January 2000, prior to the issue of the investigation report, Mr Trevor Rose, Manager-Ship Inspection Group AMSA informed Mr Skonis of the action required prior to the reissue of the ACCL, as a result of a preliminary assessment of the investigation into the excessive mortality suffered on the voyage.  These requirements were:

   "1.That the operator of the Kalymnian Express be required to provide evidence that the vessel has in place a working ISM system as required by section 11.3.3(c) of Marine Orders part 43 (issue 4)…

   2.That the operator of the Kalymnian Express be required to provide evidence that the repairs carried out on the vessels main engine have been accepted by the ships classification society…

   3.That the operator rectifies the deficiencies noted in the SV-CC dated the 10th of January 2000 to the satisfaction of an AMSA surveyor.

   4.That the Kalymnian Express is seaworthy."

5. In response to these requirements which, as Mr Skonis noted, did not include a requirement that the Kalymnian Express be classed by an IACS classification society, he said he took the following steps:

   "a.I already had an ISM system in place in both ship and shore and I requested an external audit of that system from DNV – an IACS member.  As a result of that audit, DNV issued the ISM Certificates…

   b.I arranged for the necessary repairs to be carried out and for the repairs to be inspected and certified by the ship's classification society, PMS on behalf of the flag state administration.  On 12 February 2000, PMS issued a certificate certifying that the vessel is seaworthy. …"

6. Mr Skonis was asked to comment on the draft investigation report but declined, in the belief, he said, that the criticism of himself and the Master contained in the draft report was unfair.  He disagreed with the findings in the investigation report that impinged upon maintenance or the seaworthy condition of the Kalymnian Express but otherwise he was in general agreement with the report findings.  The investigation report made six recommendations relating to the Kalymnian Express.  The first four were as described in paragraph 35 of these reasons.  The remaining two were:

   "Recommendation 5.
   That the Australian Certificate for the Carriage of Livestock not be released to the Kalymnian Express until the vessel fully complies with the provisions of Marine Orders Part 43.
   Recommendation 6.
   That the livestock vessels operated by Skonis Industries be excluded from participation in the 60 day inspection systems allowed under provision 7.2.3 of Marine Orders Part 43 (issue 4) [issue 4 is the current issue of the order and has been in force since 01 January 2000] until such stage that it is demonstrated that they are being operated in a satisfactory manner."

7. In early February 2000 Mr Skonis provided the ISM certification from Det Norkse Veritas ("DNV").  It was Mr Skonis' understanding that an ACCL valid until 3 July 2000 had been issued for the Kalymnian Express and would be released when he had satisfied the four requirements advised to him on 14 January 2000.

8. On 9 February 2000 Mr David Baird, General Manager, Maritime Operations AMSA sent to Mr Skonis "further clarification" of what is required in order for a ACCL to be reissued to the Kalymnian Express.  The facsimile noted that the issue of ISM certification had been satisfied but no evidence had been received that the remaining issues had been addressed.

9. The key area of controversy in these proceedings was the issue of compliance with MO43 Issue 4, specifically the classification requirement.  It was expressed in Mr Baird's facsimile as follows:

   "Recommendation 5:  That the Australian Certificate for the Carriage of Livestock not be released to the Kalymnian Express until the vessel fully complies with the provisions of Marine Orders Part 43

   In order to comply with this requirement the ship must meet the requirements of provision 11.3.3.  While previously it was agreed that additional time would be granted to reclass the vessel this was based on the understanding that the vessel was in a satisfactory condition.  As a result of the outcome of the investigation the condition of the ship has been called into question.
   In order to ensure the safety of the crew and the safe carriage of livestock under provision 47 of issue 4 the order, it is required that the vessel be classed with an IACS Classification Society before an ACCL will be reissued."

10. In his affidavit, Mr Skonis said this was the first notification he received that AMSA would not issue an ACCL for the Kalymnian Express until 3 July 2000 unless the ship was reclassed by an IACS society.  On 12 February 2000 Mr Skonis provided to Mr Robinson copies of the PMS certificate of seaworthiness, the ISM certificates from DNV, and some calculations that had been requested in relation to changes in the ventilation system.

11. In his facsimile of 12 February 2000 Mr Skonis stated that all recommendations from AMSA had been completed and he requested that the Kalymnian Express be inspected.  As to the requirement that the ship would have to comply with MO43 Issue 4, Mr Skonis restated his belief that an ACCL valid to 3 July 2000 had been issued.

12. Mr Schultz-Altmann replied to Mr Skonis on 14 February 2000 that an ACCL could not be reissued until the recommendations of the investigation had been dealt with reiterating, inter alia, that in view of the results of the investigation, an ACCL will not be reissued until the ship is classed with an IACS member classification society.  Mr Schultz-Altmann wrote:

    "…to comply with recommendation 5 the ship must meet the requirements of provision 11.3.3.  Previously it was agreed that additional time would be granted to reclass the vessel this was based on the understanding that the vessel was in a satisfactory condition.  In view of the results of the investigation it is required that the vessel be classed with an IACS Classification Society before an ACCL will be reissued."

13. It was Mr Skonis' evidence that he had by 14 February 2000 complied with the four requirements (set out in paragraph 35) following the accident investigation, subject to satisfactory inspection by AMSA, and that he had requested a time for the inspection but AMSA had refused.  The requirement that the ship be reclassed by an IACS society before the ACCL be reissued was, he said, contrary to the advice he received from AMSA on 9 December 1999 (see paragraph 29 of these reasons) in relation to the issue of an ACCL to 3 July 2000. 

14. Correspondence to AMSA by the applicants' solicitors elicited the response that the valid ACCL expired on 20 January 2000 and cannot be reinstated.  The applicants then applied to the Tribunal for a review of the decision not to issue an ACCL to the Kalymnian Express until it is reclassed by an IACS member classification society. 

15. Prior to the matter coming on for hearing in the Tribunal the applicants instituted proceedings in the Federal Court seeking relief under s. 39B of the Judiciary Act 1903 (Cth). Specifically, the applicants challenged the power of AMSA to issue a short term ACCL limited in duration until 1 January 2000, in other words claiming that AMSA did not have power under clause 3.1 to modify the application of clause 11.5 to issue an ACCL for less than 5 years specified in clause 11.5 or to cancel the then existing ACCL on 20 December 2000. The Court (Finn J.) in an unreported judgment [Kalymnian Shipping Pte Ltd v Rose [2000] FCA 614] rejected the application, finding that the power of modification in clause 3.1 extended to varying the duration of an ACCL.

16. When the matter came on for hearing before me in Darwin on 17 July 2000, AMSA submitted that the Tribunal had no jurisdiction in the matter as no decision capable of review by the Tribunal had been made.  At the conclusion of submissions on this issue, I ruled that the requirement by AMSA, as notified to the applicants on 9 February 2000, that the Kalymnian Express be classed by an IACS member society before an ACCL would be issued was a reviewable decision, in that implicit in the terms of that requirement was a decision to refuse to exercise the discretion to modify the application of a provision of MO43.  Jurisdiction to review that decision is conferred on the Tribunal by MO43 Issue 4, clause 6.1(b).  The Tribunal also has jurisdiction under clause 6.1(l) to review decisions under clauses 11.3.1 and 11.3.2.  The issue for consideration arising from the reviewable decision is whether the discretion given to the Chief Marine Surveyor in clause 3.1 should be exercised to modify 11.3.3(a) as it applies to the Kalymnian Express so that an ACCL may be issued to the Kalymnian Express without it being classed by a full member of IACS.  In response to the submission of AMSA that the decision was not made by the Chief Marine Surveyor, the short answer is that the Tribunal is not precluded from reviewing a decision made in the absence of delegated power.  On the authority of Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (New South Wales) (1976-1978) 1 ALD 167 and on appeal (1979) 24 ALR 307, the Tribunal has jurisdiction to review a decision made in purported exercise of a relevant statutory provision even if the decision is legally ineffective or void.

17. The applicants submitted that the factors relevant to the exercise of discretion in the present circumstances are:

• The Kalymnian Express has been successfully carrying livestock from Darwin for 10 years and is now in better condition than it was during the 10 years it has been trading.

• The $1.7 million overhaul in 1999 rendering the ship at present unfit for any other purpose.

• The incident resulting in excessive livestock loss in December 1999 was caused by a breakdown of the ship in extreme weather.  To the extent that the incident was contributed to by any deficiencies in the ship, on Mr Skonis' evidence these deficiencies have been rectified and may be verified by inspection prior to actual issue of an ACCL.

• The safety systems in place, including an ISM Code system audited by DNV (although acknowledged that non conformities identified in the audit report need to be addressed).

• The commercial dispute with Lloyds resulting in the Kalymnian Express being suspended from classification with Lloyds, rather than any reasons pertaining to the standard of the ship.

• The absence of any evidence that PMS surveyors are any less thorough than any others.

• The annual port state inspection and pre and post loading inspections ensure continuing compliance with MO43 Issue 4 which is sufficient to enable satisfaction that continued classification by PMS for 2 years would pose no danger to persons or detriment to the carriage of livestock.

• The deletion from draft MO43 Issue 4 "at the eleventh hour" of the discretion to allow classification by classification societies who are not full members of IACS, if considered to be of an equivalent standard by the Chief Marine Surveyor.

1. Turning to the substantive issue in these proceedings, Mr Skonis in evidence said that his efforts to obtain IACS classification for the Kalymnian Express have been unsuccessful because of its age.  According to Mr Skonis the Kalymnian Express is seaworthy and complies with all the requirements of MO43 Issue 4 except firstly, the requirement to have the ship reclassed by an IACS society and secondly, certain ventilation requirements specified by AMSA which inspection would reveal have been completed.

2. Mr Skonis stated that DNV and the China Classification Society ("CCS"), both full members of IACS, refused classification solely on the ground that the Kalymnian Express is 36 years old and not because of any defect in the ship.  He said that DNV had inspected both the Kalymnian Express and the KK Express (for which he had also applied for acceptance into class) at a cost of $20,000 for the inspection and the ISM audit.  DNV advised Mr Skonis on 22 February 2000 that it will not accept the Kalymnian Express into class "mainly due to the vessels age, the fact that it is currently not classed by any IACS society and the risks associated with cattle transport".

3. CCS which also rejected the application for classification observed in correspondence to Mr Skonis, that a 36 year old ship (Kalymnian Express),  is seldom considered for class entry although preliminary inspection found that the hull and machinery were in basic sound condition.

4. As I understood the applicants' submissions, some of the factors said by the applicants to be relevant to the exercise of discretion relate to the requirements of MO43 Issue 4, clause 11.3.3 other than classification by an IACS full member.  For instance, the livestock carrying history of the Kalymnian Express, the cost of the overhaul and the fact that the livestock structures have been built and maintained to a satisfactory standard were not in issue and in any event relate to the requirement contained in clause 11.3.3(b) rather than any question of dispensation from the classification requirement.

5. Similarly, factors which relate to the identified deficiencies in the ship which the applicants' submit have been rectified are matters determined by inspection and are not factors directly relevant to the exercise of discretion on the classification issue but concern other separate requirements under clause 11.3.3 before an ACCL can be issued or endorsed.  In fairness to the applicants they acknowledge as much.

6. The applicants' contention that the age of the Kalymnian Express is a bar to IACS classification does not stand close scrutiny.  Obviously the age of the ship is a significant factor but on the evidence before the Tribunal there is not a blanket age disqualifying factor.  While it is reasonably clear that both DNV and CCS would not classify the Kalymnian Express because of its age, age was not a determining factor for Lloyds which suspended the Kalymnian Express from class because of a dispute over monies which Lloyds claim to be owing by the applicants, not because of the ship's age.  Presumably, but for the dispute, the Kalymnian Express would still be classed by Lloyds.  There was no evidence before me to suggest otherwise.  Correspondence from Lloyds (Ex. 16) indicated that if the debt it claims to be owing is paid, then it may be prepared to class the Kalymnian Express again.  Mr Skonis agreed that the debt claim was the reason Lloyds will not class the Kalymnian Express.

7. The evidence in totality on the topic, including an examination of the correspondence in Ex. 16 leads, I think, to the conclusion that there is not an age barrier to classification with an IACS member society.  While an older ship will attract closer scrutiny because of its age, subject to satisfaction as to its condition and compliance with international conventions, a ship of the age of the Kalymnian Express could reasonably expect classification by an IACS society.

8. Additionally, the evidence indicates that Mr Skonis did not actively pursue other IACS members, for example, the apparent lack of response to the expression of interest by Bureau Veritas, before proceeding with PMS (Ex. 16).  Furthermore, in March 1999, well before July 1999 when the Kalymnian Express was classed by PMS, Mr Skonis was warned by AMSA to carefully consider a move to a non IACS member society as it was considered unlikely that PMS would objectively meet IACS member standards.  This warning was repeated in May 1999 but at the time appears to have fallen on deaf ears.  Given this background and the introduction of the classification requirement, a noticeable feature was the absence of probative evidence on behalf of the applicants of the merits of classification by PMS such as would warrant the exercise of discretion.  Some support for the applicants' position is to be found in the evidence of Mr Robinson concerning the general state of the Kalymnian Express in late 1999 which he described as being in "excellent condition" compared to when it was classed by Lloyds.  A close reading of his evidence, on its most favourable view to the applicants, does not lend much weight to their case for a favourable exercise of discretion given the Marine Surveyor's Report of Deficiencies and the Report of Inspection – Form B detailing SOLAS deficiencies issued by Mr Robinson on 10 January 2000 requiring confirmation that the Kalymnian Express be in a satisfactory condition before AMSA will undertake a detailed inspection of the ship.  In short Mr Robinson was not, in his experience, overly impressed by either IACS membership or by PMS.

9. The claim that there is no evidence that PMS surveyors are any less thorough than IACS member surveyors is not a firm foundation for a favourable exercise of discretion.  This submission had more of an appearance of a fall back position in the absence of evidence by the applicants of the survey standards of PMS.

10. In his affidavit Mr Timms stated that throughout his work in various capacities relating to marine survey he has a close involvement with the work of classification societies.  To his knowledge there are approximately forty-five organisations worldwide that claim to be able to provide classification society survey and certification.  Of these, ten are full members of IACS.  Members of IACS are bound by criteria including a code of ethics; an obligation to consistently implement agreed unified requirements for ships' hull structure, machinery and electrical systems between member societies; and a common approach to port state control deficiency follow up procedures, competency based standards for surveyor training, and the maintenance of professional competence by regular audit.  The extent to which non IACS members satisfy any of these criteria is unclear, with the consequence that the standards employed in determining whether a ship is or continues to be fit for purpose are inconsistent and often not in keeping with essential safety and pollution prevention requirements of the relevant international maritime convention as promulgated by the International Maritime Organisation ("IMO").  Mr Timms concluded from examining IMO documents that IACS member classification societies have been internationally accepted by a majority of countries whereas the non member societies have been accepted predominantly by two countries, Belize and Honduras, or their home countries.

1. In submissions the applicants were critical of Mr Timms' conclusion saying they lacked explanation or foundation.  However his evidence was left unchallenged at the hearing, as he was not required to attend for cross examination and as I observed earlier, there was, quite apart from any rebuttal of his evidence, a dearth of evidence as to the merits of PMS.

2. In cross examination Mr Schultz-Altmann agreed that Panama, as a signatory to the SOLAS Convention, has an obligation to give effect to the standards imposed by the Convention on a flag state.  However in evidence he ventured the opinion (which was not seriously challenged) that IACS membership ensures a higher standard than PMS:

   "MR PURNELL:  Mr Schulz Altmann, which in your opinion is the better system IACS or PMSB?---IACS.
   And why do you say that?---Safety is the primary reason, there are three reasons for that, IACS guarantee to implement all international conventions and codes relating to safety and protection of the environment,  2.  They have a self-auditing system which ensures that their members implement these codes and requirements along with common law rules and are bound by a code of ethics,  3.  If we have concerns about a vessel we can be guaranteed of an answer from an IACS Society when we express our concerns to them.
   Do IACS audit there (sic) own members?---They do, they have an internal audit system – ensure compliance with the requirements.
   Does PMSB audit their own members?---We have no knowledge of what PMSB do, they haven't intimated to us in any way, shape or form."

3. The request for a dispensation from clause 11.3.3(a) for two years on the basis of the safeguards provided by port state inspections seems little more than a request for more time rather than a factor of any weight in favour of the exercise of the discretion of modification.  That this is so is apparent from the advance warnings of the introduction of the classification requirement and the associated risk of PMS classification.

4. The other factors relied upon by the applicants may be described in general terms as hardship considerations.  It was Mr Skonis' evidence that the effect of being unable to obtain IACS classification will have a devastating effect.  Income from the carriage of export livestock is the applicants' main source of income.  Without an ACCL, the business will have to close with consequential substantial losses.  The question of whether the Kalymnian Express is able to obtain IACS classification has already been discussed.  Obviously obtaining IACS classification will come at a financial cost but whether that cost will impact critically on the applicants' business I am unable to say on the material before me. 

5. At the end of the day the determining factors are safety considerations not cost or hardship factors, however harsh that may seem to the applicants.  For a discretion of this nature to be exercised on the basis of financial considerations would, having regard to the policy and purpose of the legislation, be for an impermissible purpose if, in the result there was a compromise of maritime safety.  By insisting on compliance with the legislative requirement that the ship be classed by a classification society and, by implication deciding to refuse a modification, it cannot be said (nor was it contended by the applicants) that that decision is contrary to the subject matter, scope and purpose of the legislation.  The classification requirement was inserted into MO43 after industry consultation, reasonable notice to the applicants, and it applies to all industry participants.  It was not imposed capriciously or unreasonably upon the applicants.

6. It seems to me that the Tribunal, standing in the shoes of the decision maker, should not as a general rule exercise its own discretion unless it thinks the matter is perfectly clear.  It should not exercise its discretion on a minimal balance of probabilities.

7. That leads me to the December 1999 voyage.  If, as Mr Skonis believed, there was no reason why he should not have anticipated a favourable exercise of discretion at least while he endeavoured to obtain classification by an IACS society, the report of the investigation into the December 1999 livestock loss dispelled that expectation in that it became quite plain that an ACCL would not be reissued unless there was compliance with the terms of clause 11.3.3.

8. The investigation report which called into question the condition of the Kalymnian Express recorded that the repairs to the scavenge air pump, the identified cause of engine failure, in turn the primary cause of the excessive livestock mortality, were being carried out without supervision by PMS and in a manner of some concern to investigating surveyors:  see 7.2.3.1 and 7.2.3.2 of the investigation report.

9. A considerable body of evidence was directed to the efficacy of the Safety Management Certificate (Ex. C) and Document of Compliance (Ex. D) issued by DNV.  The questions raised in relation to these documents essentially concern the non-conformities which realistically will be determined eventually by the results of the relevant inspections.  They are not matters which determine the classification issue.

10. For these reasons the decision not to allow the modification of the requirement of clause 11.3.3(a) of MO43 Issue 4 in relation to the Kalymnian Express is affirmed.

    I certify that the 68 preceding paragraphs are a true copy of the reasons for the decision herein of
    Deputy President B.M. Forrest

    Signed:         .....................................................................................
      Associate

    Date/s of Hearing  17, 18 and 19 July 2000
    Date of Decision  11 September 2000
    Counsel for the Applicant        Ms J. Kelly and Mr B. O'Loughlin
    Solicitor for Applicant               Mr T. Crane
    Counsel for the Respondent    Mr J. Purnell SC and Mr S. Lloyd

    Solicitor for the Respondent    Ms B. Pearson, AMSA