Stirling Marine Services Pty Ltd v Austral Piling and Constructions Pty Ltd
[1999] WASCA 6
•6 MAY 1999
STIRLING MARINE SERVICES PTY LTD -v- AUSTRAL PILING AND CONSTRUCTIONS PTY LTD & ANOR [1999] WASCA 6
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [1999] WASCA 6 | |
| THE FULL COURT (WA) | |||
| Case No: | FUL:101/1998 | 19 APRIL 1999 | |
| Coram: | IPP J WALLWORK J STEYTLER J | 6/05/99 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Appeal succeeds | ||
| PDF Version |
| Parties: | STIRLING MARINE SERVICES PTY LTD AUSTRAL PILING AND CONSTRUCTIONS PTY LTD SEDGWICK LTD |
Catchwords: | Shipping and Navigation Collisions Charter-party Time charter-party Supplytime 89 Damage caused to navigational beacon by dumb barge towed by a tug owned by appellant and time chartered by first respondent Whether owner or charterer liable for damage Interpretation of indemnity clause in Supplytime 89 Held allowing the appeal the charterer was under Supplytime 89 required to indemnify the owner of the vessel |
Legislation: | Nil |
Case References: | Nil Allied Westralian Finance Ltd v Wenpac, unreported; FCt SCt of WA; Library No 950597; 8 November 1995 Darlington Futures Ltd v Delco Australian Pty Ltd (1986) 161 CLR 500 Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500 Duncombe v Porter (1953) 90 CLR 295 Federal Commerce and Navigation Co Ltd v Tradax Export SA (1978) AC1 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp. Bhd (1998) 72 ALJR 1592 Johnson v American Home Assurance Co (1998) 192 CLR 266 State Government Insurance Commission v Sinfein Pty Ltd (1996) 15 WAR State Government Insurance Commission v Stevens Bros Pty Ltd (1984) 154 CLR 552 Thiel v Commissioner of Taxation (1990) 171 CLR 338 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : STIRLING MARINE SERVICES PTY LTD -v- AUSTRAL PILING AND CONSTRUCTIONS PTY LTD & ANOR [1999] WASCA 6 CORAM : IPP J
- WALLWORK J
STEYTLER J
- Appellant (Plaintiff)
AND
AUSTRAL PILING AND CONSTRUCTIONS PTY LTD
First Respondent (Defendant)
SEDGWICK LTD
Second Respondent (Third Party)
Catchwords:
Shipping and Navigation - Collisions - Charter-party - Time charter-party - Supplytime 89 - Damage caused to navigational beacon by dumb barge towed by a tug owned by appellant and time chartered by first respondent - Whether owner or charterer liable for damage - Interpretation of indemnity clause in Supplytime 89
(Page 2)
Held allowing the appeal the charterer was under Supplytime 89 required to indemnify the owner of the vessel
Legislation:
Nil
- Result: Appeal succeeds
Counsel:
Appellant (Plaintiff) : Mr C L Zelestis QC
First Respondent (Defendant) : Mr P B O'Neal
Second Respondent (Third Party) : Mr E M Corboy
Appellant (Plaintiff) : Cocks Macnish
First Respondent (Defendant) : Deacons Graham & James
Second Respondent (Third Party) : Pynt McKay
Nil
Case(s) also cited:
Allied Westralian Finance Ltd v Wenpac, unreported; FCt SCt of WA; Library No 950597; 8 November 1995
Darlington Futures Ltd v Delco Australian Pty Ltd (1986) 161 CLR 500
Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500
Duncombe v Porter (1953) 90 CLR 295
Federal Commerce and Navigation Co Ltd v Tradax Export SA (1978) AC1
Great China Metal Industries Co Ltd v Malaysian International Shipping Corp. Bhd (1998) 72 ALJR 1592
Johnson v American Home Assurance Co (1998) 192 CLR 266
(Page 3)
State Government Insurance Commission v Sinfein Pty Ltd (1996) 15 WAR
State Government Insurance Commission v Stevens Bros Pty Ltd (1984) 154 CLR 552
Thiel v Commissioner of Taxation (1990) 171 CLR 338
(Page 4)
1. IPP J: This appeal turns on the construction of an indemnity clause under "Supplytime 89", which is a uniform time charter-party issued by the Baltic and International Maritime Council for offshore service vessels.
2. The indemnity clause (which is cl 12(b) of Supplytime 89) is crucial to litigation that has arisen in consequence of a collision between a dumb barge (which at the time was being towed by a tug known as Blue Bulla) and a navigational beacon owned by the Port Hedland Port Authority ("the Port Authority"). The barge damaged the beacon beyond repair and it had to be replaced at a cost of approximately $525,000. The appellant ("Stirling Marine") was the owner of the tug and the barge. The first respondent ("Austral") had time chartered the tug from Stirling Marine under Supplytime 89.
3. The correct construction of the indemnity clause will determine which of Stirling Marine and Austral is potentially liable for the damage so sustained by the Port Authority. Stirling Marine contends that by the indemnity clause Austral is obliged to indemnify it against the Port Authority's claim. Austral and the second respondent ("Sedgwick") dispute this.
4. The dispute as to the meaning of the indemnity clause was crystallised in questions that, by agreement, were determined as preliminary issues. The questions were:
"(a) Whether upon the facts pleaded in paragraphs 1 to 5, 7 and 8 of the statement of claim would the terms of the charter party known as Supplytime 89 on their true construction require that [Austral] indemnify [Stirling Marine] in the circumstances pleaded in paragraphs 9, 10 and 11 of the statement of claim?
(b) Would the answer to the question in paragraph (a) be answered differently if it was established that the cause of the collision pleaded in paragraph 8 of the statement of claim was as a result of the negligent navigation of the [tug] and the [barge] by employees of [Stirling Marine]".
- The learned trial Judge answered both these questions in the negative. These answers have given rise to this appeal.
5. The indemnity clause (cl 12(b)) is best seen in context with cl 12(a). These clauses provide:
"12. Liabilities and Indemnities
(Page 5)
- (a) Owners, - Notwithstanding anything else contained in this Charter Party excepting clauses ..., the Charterers shall not be responsible for loss of or damage to the property of the Owners or their contractors and sub-contractors, including the Vessel or for personal injury or death of the employees of the Owners or of their contractors and sub-contractors, arising out of or in any way connected with the performance of this charter party, even if such loss, damage, injury or death is caused wholly or partially by the act, neglect, or default of the Charterers, their employees, contractors or sub-contractors, and even if such loss, damage injury or death is caused wholly or partially by unseaworthiness of any vessel; and the Owners shall indemnify, protect, defend and hold harmless the Charterers from any and against all claims, costs, expenses, actions, proceedings, suits, demands and liabilities whatsoever arising out of or in connection with such loss, damage, personal injury or death.
(b) Charterers, - Notwithstanding anything else contained in this Charter Party excepting clause ..., the Owners shall not be responsible for loss of, damage to, or any liability arising out of anything towed by the Vessel, any cargo laden upon or carried by the Vessel or her tow, the property of the Charterers or of their contractors and sub-contractors, including their offshore units, or for personal injury or death of the employees of the Charterers or of their contractors and sub-contractors (other than the Owners other than the owners and their contractors and sub-contractors) or of anyone on board anything towed by the Vessel, arising out of or in any way connected with the performance of this Charter Party, even if such loss, damage, liability, injury or death is caused wholly or partially by the act, neglect or default of the Owners, their employees, contractors or sub-contractors, and even if such loss, damage, liability, injury or death is caused wholly or partially by the unseaworthiness of any vessel; and the charterers shall indemnify, protect, defend and hold harmless the Owners from any and against all claims, costs, expenses, actions, proceedings, suits, demands, and liabilities whatsoever
(Page 6)
- arising out of or in connection with such loss, damage, liability, personal injury or death."
- It is to be noticed that cl 12(b) (like cl 12(a)) contains both provisions for exemption from liability and indemnity against liability. Broadly speaking, the indemnity is in respect of those matters in respect of which exemption from liability is afforded. Thus, in determining the extent of the indemnity, it is necessary to determine those matters which, by cl 12(b), are subject to exemption from liability.
6. Stirling Marine argues that, by cl 12(b), it is exempted from liability for "loss of, damage to, or any liability arising out of anything towed by the [tug]". The damage to the Port Authority's beacon was caused by the towing of the barge. Thus, it is said, the damage arose out of "anything towed by the tug" within the meaning of this phrase in the clause. Hence, Austral, as charterer, is required to indemnify Stirling Marine against such liability. The argument of Austral and Sedgwick, on the other hand, is that the phrase in cl 12(b), "the property of the Charterers or of their contractors and sub-contractors, including their offshore units" (to which I shall refer as the "charterers' property provision"), qualifies the heads of liability that precede it, namely liability arising out of "anything towed by the [tug]" and "any cargo laden upon or carried by the [tug] or her tow". The submission, accordingly, is that, as neither the beacon nor the barge was the property of Austral, Stirling Marine is not exempted from liability for damage to the beacon, and is not entitled to an indemnity in respect of damage to it.
7. In upholding the argument of Austral and Sedgwick, the learned trial Judge attached considerable weight to cl 6(d) of Supplytime 89. This contains provisions different to the traditional time charter-party, namely:
"The entire operation, navigation, and management of the Vessel shall be in the exclusive control and command of the Owners, their Master, Officers and Crew. The Vessel will be operated and the services hereunder will be rendered as requested by the Charterers, subject always to the exclusive right of the Owners or the Master of the Vessel to determine whether operation of the Vessel may be safely undertaken. In the performance of the Charter Party, the Owners are deemed to be an independent contractor, the Charterers being concerned only with the results of the services performed."
- The learned trial Judge considered that the provision that the entire operation of the tug was under the exclusive control of the owners was
(Page 7)
- inconsistent with an obligation on the part of the charterers to indemnify the owners against liability in respect of property not owned by the charterers. In my view, however, and with respect to the learned Judge, there are at least four factors which are contrary to such a conclusion.
8. Firstly, by cl 6(a)(i):
"The Master shall carry out his duties promptly and the Vessel shall render all reasonable services within her capabilities by day and at such times and on such schedules as the Charterers may reasonably require. The Charterers shall furnish the Master with all instructions and sailing directions ..."
- Thus, subject to the rights of the owners under cl 6(d) (and, particularly, the right to determine whether particular operations can be undertaken safely), the charterers can direct the master to sail to a particular destination at a particular time, to receive on board particular cargo and to tow any particular object. Despite the control vested in the owners by cl 6(d), the exercise by the charterers of their powers under cl 6(a)(i) is capable of having a material affect on the risks attendant on the work of the vessel chartered.
9. Secondly, by the very nature of the industry, when the vessel under charter is carrying cargo, the owners of the chartered vessel will seldom know who owns the cargo, and will often not be able to identify its nature. Take a vessel that is chartered to carry personnel and cargo to and from an offshore rig. When mixed cargo (often enclosed in a crate or container) is being transferred from the shore to the vessel, (usually by crane) and from the rig to the vessel (again, usually by crane) the opportunity for the crew of the vessel to ascertain the true owner of each item and the contents of each package within a crate or container would be extremely limited. The only notice that Supplytime 89 requires the charterers to give concerning the cargo carried on board is in regard to "explosives and dangerous cargo" and "hazardous and noxious substances". Thus, both from the point of view of knowing when they should take particular precautions to insure against liability because cargo is not owned by the charterers, and to take precautions against cargo that is capable of causing additional risk to the safety of the vessel (which may occur even when the cargo cannot be classified as explosives, or "dangerous " or "hazardous and noxious substances"), the owners are at a material disadvantage. This makes the provision of an indemnity in the terms contended for by Stirling Marine commercially comprehensible.
(Page 8)
10. Thirdly, by cl 12(b), the charterers are required to indemnify the owners against liability for the personal injury or death of anyone on board anything towed by the vessel. Thus, the clause does not reflect a general intent to confine the charterers' indemnity to liability in respect of harm to the charterers, their employees, contractors and sub-contractors, alone.
11. Fourthly, the clause provides that the charterers indemnify the owners against loss, damage, liability, injury or death (to the extent set out therein), even if such loss, damage, liability, injury or death is caused by the act, neglect or default of the owners. Thus, the clause does not reflect a general intent that there will be no indemnity where liability arises because of fault on the part of the owners; indeed, the contrary is the case.
12. Austral sought to obtain some support from the insurance provisions of Supplytime 89, namely, cl 14(a)(i). By this clause the owners are obliged to procure and maintain, for the duration of the charter-party, third party liability insurance. It was said that this reveals an intention that, generally, the owners are to be liable for third party claims. In terms of cl 14(a)(ii), however, "the charterers shall upon request be named as co-insured". Further, by the clause, "the owners shall upon request cause insurers to waive subrogation rights against the charterers". Accordingly, by these provisions, the owners are obliged to obtain appropriate insurance for themselves, including third party liability insurance. But, at the request of the charterers, the owners are required to obtain extended insurance or protection to cover charterers as well. While the owners will be required to pay the premium for the insurance, including insurance in respect of which the charterers are co-insureds, that premium may in turn affect the charter rates. In these circumstances I do not think that anything material turns on the insurance provisions.
13. It was also submitted that cl 12(b) is intended to mirror cl 12(a), to the extent that the indemnity provided by the charterers to the owners should be substantially the same as that provided by the owners to the charterers. As the owners, by cl 12(a), are only required to indemnify the charterers in respect of liability arising out of the property of the owners, it was said that the intention of cl 12(b) is to provide that the charterers indemnify the owners only in respect of liability arising out of the property of the charterers. But if the submission of Austral as to the effect of the charterers' property provision were to be correct, cl 12(b) would provide for an indemnity by the charterers only in respect of the property of the charterers when that property is being towed or carried as cargo. To that extent, therefore, cl 12(b) would not mirror cl 12(a). Furthermore, cl 12(a) provides that the owners indemnify the charterers against liability
(Page 9)
- in respect of personal injury or death to the owners' employees, contractors and sub-contractors. Clause 12(b), on the other hand, provides not only that the charterers indemnify the owners against liability for personal injury or death of the charterers' employees, contractors and sub-contractors, but additionally against liability in respect of personal injury or death of anyone on board anything towed by the vessel. In my view, therefore, cl 12(b) provides for an indemnity by the charterers different in extent and character to any indemnity provided to the owners by cl 12(a).
14. I now turn to that part of cl 12(b) which is the kernel of the dispute. That is the provision that:
"The Owners shall not be responsible for loss of, damage to, or any liability arising out of anything towed by the vessel, any cargo laden upon or carried by the Vessel or her tow, the property of the Charterers or of their contractors and sub-contractors, including their offshore units, or for personal injury or death of the employees of the Charterers …"
15. If this part of cl 12(b) is to be construed in accordance with the argument of Austral and Sedgwick, it would follow that the owners would, thereby, be exempted from and indemnified against two heads of liability. The first would be liability arising out of anything towed by the vessel, provided the tow was the property of the charterers, their contractors and sub-contractors. The second would be any cargo laden upon or carried by the vessel or her tow, provided again that it was the property of the charterers, their contractors and sub-contractors.
16. Stirling Marine, on the other hand, contend that, by cl 12(b), the heads of liability include, firstly, liability arising out of anything towed by the vessel, secondly, liability arising out of any cargo laden upon or carried by the vessel or her tow, and thirdly, liability arising out of the property of the charterers, their contractors and sub-contractors. On this construction, the purpose of the charterers' property provision is to widen the owners' exemption from liability arising out of "anything towed by the vessel" and "any cargo laden upon or carried by the vessel or her tow" so that it applies also to liability arising out of property of the charterers, their contractors and sub-contractors in circumstances where such property is not towed by the vessel and not cargo laden upon or carried by the vessel or her tow.
(Page 10)
17. In my opinion, the natural meaning of the words used in cl 12(b) support Stirling Marine's argument. There are a number of points to be made.
18. Firstly, the natural meaning of the words of the charterers' property provision is not to qualify that which preceded it. For a qualifying effect to be obtained, it is necessary to import words at the beginning of the provision such as "being" or "that is".
19. Next, the use of the word "anything" in the phrase, "[t]he Owners shall not be responsible for … anything towed by the vessel" appears to be used deliberately to convey a broad concept. Its use in this context is not easily reconciled with an intention to qualify its ambit by limiting its application to property of the charterers. Had that indeed been the intention, one would have expected the phrase to read, "[t]he Owners shall not be responsible for … any property of the Charterers towed by the vessel".
20. The term "offshore units" is defined by Supplytime 89 as "any vessel, offshore installation, structure and/or mobile unit used in offshore exploration, construction, pipe laying or repair exploitation or production". Therefore the term includes both fixed structures and units that can be towed. To the extent that the term includes fixed structures, a provision that the owners would not be liable for damage to such structures while towing them, would be inappropriate. Further, on the argument of Austral and Sedgwick, the charterers' property provision must also qualify the phrase "any cargo laden upon or carried by the vessel or her tow". That is to say, on the argument of Austral and Sedgwick, "offshore units" must be capable of being cargo; but offshore units as defined would not readily fit such a description.
21. Without having regard to the charterers' property provision, cl 12(b) contains four categories of exemption against liability and indemnity, namely: (a) arising out of anything towed by the vessel, (b) arising out of any cargo laden upon or carried by the vessel, (c) for personal injury or death of the charterers' employees, contractors and sub-contractors, (d) for personal injury or death of anyone on board anything towed by the vessel. So read, the clause is merely a list of categories of exemption and indemnity. The charterers' property provision is inserted in the middle of these categories. This positioning is consistent with an intent that the provision constitute a separate category of exemption and indemnity (and not a phrase of qualification). This is reinforced by the word, "or", in the phrase that follows the charterers' property provision, namely, "or for personal injury or death of the employees of the Charterers or of their contractors and sub-contractors". The word "or" in this context indicates
(Page 11)
- that the charterers' property provision is a category of exemption, as are the phrases that precede and follow it.
22. Supplytime 89 is intended for use in the offshore industry as a whole. It may be used even when no towing takes place and no cargo is carried. In such circumstances, the charterers' property provision is capable of being particularly significant. On the construction advanced by Stirling Marine, the owners would be indemnified if the vessel struck and damaged a fixed offshore unit owned by the charterers. In a case where a vessel is chartered for the purpose only of carrying personnel to and from an offshore unit, the major risk of damage (and attendant liability) would be from collisions with the unit. It would be surprising (where the offshore unit is owned by the charterers) if Supplytime 89 was not intended to provide for an exemption of liability on the part of the owners for such damage (and an indemnity against claims arising therefrom). This, indeed, appears to be the point of the specific reference to offshore units in the charterers' property provision.
23. The learned trial Judge enunciated two reasons which led her to conclude that the construction advanced by Stirling Marine was unlikely to have been intended. These were set out by the learned Judge as follows:
"First, it is difficult to think of any situation in which the owner would be likely to become liable for damage to the property of the charterers other than property towed by or carried upon the vessel. Second, the definite article in that expression 'the property' is in contrast to the preceding 'any cargo'. These considerations suggest that the phrase 'the property ...' is not an independent subject of exclusion, but is intended to qualify one or more of the expressions preceding it."
24. It seems to me, however, that the owners could readily become liable for damage to the charterers' property in many instances which do not involve property towed or carried. As mentioned, cl 12(b) specifically refers to the charterers' offshore units, and a collision between the vessel and the offshore unit would plainly have the potential for considerable damage. Further, damage may well occur to the charterers' property in the course of stevedoring operations prior to cargo actually being placed on board the vessel or her tow.
25. As regards the use of the definite article in the phrase "the property of the charterers ... including their offshore units", the word "the" is entirely appropriate if one assumes that the exemption and indemnity apply to
(Page 12)
- "anything" towed by the vessel, "any" cargo upon the vessel and, thirdly, "the" property of the charterers, that is, "the" property that is neither towed nor cargo.
26. In all the circumstances, I consider that the charterers' property provision does not qualify the exemptions that precede it; rather, it constitutes a separate and independent category of exemption and indemnity in accordance with its ordinary meaning.
27. Counsel for Austral submitted, in the alternative, that the words, in cl 12(b), "arising out of anything towed by the vessel, any cargo laden upon or carried by the vessel or her tow, the property of the charterers or of their contractors or sub-contractors" meant arising out of "the character of the thing towed or freighted" only. If this were to be correct, the exemptions and indemnity would only operate where loss or injury was caused by the character of the thing towed or carried as cargo, and not merely where the towing or carriage was a causative element of the loss or injury.
28. This argument, however, loses sight of what may be described as the second and third "arising out of" provisions. The second "arising out of" provision is contained in that part of the clause (immediately following the last of the categories of exemption) which reads, "arising out of or in any way connected with the performance of this Charter Party, even if such loss, damage, liability, injury or death is caused wholly or partially by the act, neglect or default of the Owners …" The third "arising out of" provision is contained in the indemnity provision at the end of cl 12(b) which reads: "the charterers shall indemnify ... the owners ... against all claims ... and liabilities whatsoever arising out of or in connection with such loss, damage, liability, personal injury or death." The latter phrase relates to each category of loss, etc, as is manifest from the words "such loss, damage, liability, personal injury or death". The words "loss, damage, liability" refer back to "anything towed by the vessel", "any cargo laden upon or carried by the vessel or her tow" and "the property of the charterers ... including their offshore units". The words "personal injury or death" refer back to the "personal injury or death of the employees of the charterers ..." and "anyone on board anything towed by the vessel". Accordingly, cl 12(b) is relevantly to be read as follows:
"The Owners shall not be responsible for loss of, damage to, or any liability arising out of anything towed by the Vessel ... arising out of or anyway connected with the performance of this charter party ...; and the Charterers shall indemnify ... the Owners
(Page 13)
- from any and against all claims ... and liabilities whatsoever arising out of or in connection with such loss, damage, liability ..."
29. In my opinion the clause, when read in this light, is extremely broad in scope. The words used do not limit "arising out of" to the nature of the thing towed or carried or which is the property of the charterers. In my view, as a whole, the clause - according to its natural meaning - provides for an exemption from liability on the part of the owners, and an indemnity by the charterers, where the owners are responsible for loss or injury caused in any way by "anything towed by the vessel", or by "any cargo laden upon or carried by the vessel or her tow" or by "the property of the charterers …".
30. In the circumstances I would uphold the appeal, and set aside the answer given by the learned Judge to the first question posed by way of the preliminary issue. I would answer the first question in the affirmative.
31. Counsel for Austral and Sedgwick did not submit that the second question should be answered in the affirmative on the ground that the indemnity does not apply to liability on the part of Stirling Marine caused by its negligent navigation of the tug and the barge. That is perfectly comprehensible in the light of the express provisions of cl 12(b) (to which I have already adverted) that stipulate for an indemnity even if loss, damage, liability, injury or death "is caused wholly or partially by the act, neglect or default of the Owners, their employees, contractors or sub-contractors". The parties appeared to assume that if the first question was answered in the affirmative, it should follow that the answer to the second question should remain in the negative. I would confirm the negative answer to the second question.
32. WALLWORK J: I agree with the reasons for judgment of Ipp J. There is nothing I wish to add.
33. STEYTLER J: I have had the advantage of reading the reasons for decision proposed to be delivered by Ipp J. I agree with them and with his Honour's conclusions. I have nothing to add.
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