Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd
[1997] FCA 231
•10 Apr 1997
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG863 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:SWITZERLAND INSURANCE
AUSTRALIA LIMITED
Appellant
ANDMOWIE FISHERIES PTY LIMITED
Respondent
CORAM:BEAUMONT, HILL & SACKVILLE JJ.
PLACE:SYDNEY
DATE:10 APRIL 1997
CORRIGENDA
Order 2 of the Minutes of Order should read:
"2.The appellant pay the respondent’s costs of the appeal."
CATCHWORDS
INSURANCE - marine insurance - appeal on whether appellant liable to indemnify respondent for loss of fishing vessel which sank off Victorian coast during voyage from Eden in New South Wales to Portland in Victoria - whether respondent breached express warranties in policy relating to survey and manning requirements - whether respondent in breach of the implied warranty in s 47 of the Marine Insurance Act 1909 (Cth) that the adventure on which it embarked should be carried out in a lawful manner.
STATUTORY CONSTRUCTION - construction of Victorian Marine Regulations - whether reg 402 was intended to refer to the Uniform Shipping Law Code as enacted, or as amended from time to time.
SUBORDINATE LEGISLATION - validity of reg 402 of the Victorian Marine Regulations - statutory requirements met where a subordinate instrument incorporates matter contained in another document.
STATUTORY CONSTRUCTION - whether the Marine Act (Tas) applied to the fishing vessel - whether the vessel was plying to seaward from a "port" in Tasmania.
Interpretation of Legislation Act 1984 (Vic) ss 3, 22, 23, 31(a), 32(1),(2) and (3)
Marine Act 1988 (Vic)
Marine Act 1976 (Tas), ss 4(1), (2), 118, 119, 142, 143(1), 148(1), 149
Marine Insurance Act 1909 (Cth), ss 3(1), 39(1) and (3), 47, 105, 106, 417
Marine (Limits of Operational Areas) Regulation 1985 (Tas), regs 3, 5
Marine (Safety Manning) Regulations 1992 (Tas) regs 16, 20, Schedule 3, Table 2
Marine (Vessels) Regulations 1988 (Vic), regs 103(4), 402
Uniform Shipping Laws Code
Bank of New South Wales v Commonwealth (1948) 76 CLR 1
Norwest Refrigeration Services Pty Ltd v Bain Dawes (WA) Pty Limited (1984) 157 CLR 149
R v Burgess; Ex parte Henny (1936) 55 CLR 608
Sloane v McDonald Industries (Sales) Pty Ltd (1989) 17 NSWLR 86
SWITZERLAND INSURANCE AUSTRALIA LIMITED v MOWIE FISHERIES PTY LIMITED
NG 863 of 1996
Beaumont, Hill, Sackville JJ
Sydney
10 April 1997
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 863 of 1996
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
SWITZERLAND INSURANCE AUSTRALIA LIMITED
Appellant
AND:
MOWIE FISHERIES PTY LIMITED
Respondent
CORAM: BEAUMONT, HILL, SACKVILLE JJ
PLACE: SYDNEY
DATE: 10 April, 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The appeal be dismissed.
The respondent pay the appellant's costs of the appeal.
Order 2 be stayed for a period of 14 days.
Should either party file written submissions on costs within 14 days:
(a)the other party should file written submission in reply within a further 14 days from the filing of the first submissions; and
(b)Order 2 is stayed until further order.
NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG863 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:SWITZERLAND INSURANCE
AUSTRALIA LIMITED
Appellant
ANDMOWIE FISHERIES PTY LIMITED
Respondent
CORAM:BEAUMONT, HILL & SACKVILLE JJ.
PLACE:SYDNEY
DATE:10 APRIL 1997
INDEX TO REASONS FOR JUDGMENT
BEAUMONT J:
INTRODUCTION........ ........ ........ ........ ........ ........ .. 1
BACKGROUND........ ........ ........ ........ ........ ........ .... 2
THE TERMS OF THE INSURANCE........ ........ ........ ........ .... 3
THE CERTIFICATE OF SURVEY........ ........ ........ ........ ..... 4
SIA’S DEFENCES TO THE INSURANCE CLAIM........ ........ ........ . 5
(1) The alleged breaches of the express warranties........ ... 5
(2) The alleged breaches of the implied warranty........ ..... 7
MOWIE’S PLEA IN REPLY........ ........ ........ ........ ........ . 9
THE REASONING AT FIRST INSTANCE........ ........ ........ ....... 9
(a)Did the 1988 or the 1991 version of the USL Code apply?.. 9
(b)Was there a breach of the first (“in survey”) warranty? 11
(c)Was there a breach of the second (“lawful manning”) warranty? 12
(d)Was there a breach of the implied warranty that the venture be conducted lawfully?........ ........ ........ ........ ..... 13
THE GROUNDS OF APPEAL........ ........ ........ ........ ........ 15
CONCLUSIONS ON THE APPEAL........ ........ ........ ........ .... 15
(a) The Victorian legislative scheme........ ........ ........ 15
(b) The proper construction of reg. 402........ ........ ..... 24
(c)The construction of Section 3 of the 1991 version of the Code 33
(d) The Tasmanian legislative scheme........ ........ ........ 43
(e)Was there a breach of the first (“in survey”) warranty? 47
(f) The consequences of the breach........ ........ ........ .. 59
(g)Was there a breach of the second (“lawful manning”) warranty and of the implied (“lawful venture”) warranty?........ ...... 59
(h)Did SIA waive any of the breaches of warranty?........ .. 63
ORDERS PROPOSED........ ........ ........ ........ ........ ...... 72
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG863 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:SWITZERLAND INSURANCE
AUSTRALIA LIMITED
Appellant
ANDMOWIE FISHERIES PTY LIMITED
Respondent
CORAM:BEAUMONT, HILL & SACKVILLE JJ.
PLACE:SYDNEY
DATE:10 APRIL 1997
REASONS FOR JUDGMENT
BEAUMONT J:
INTRODUCTION
The appellant, Switzerland Insurance Australia Limited (“SIA”), agreed to insure the respondent, Mowie Fisheries Pty Limited (“Mowie”), against the loss of the fishing vessel “Pacific Queen” at the agreed value of $640,000. On 18 March 1994, the vessel was lost in circumstances now accepted to amount to an insured peril.
Mowie instituted proceedings in this Court seeking a declaration that it was entitled to indemnity by SIA. SIA denied liability on the ground that Mowie was in breach of several warranties in the policy and that these breaches discharged SIA from liability. Mowie disputed any breach of its warranties. Mowie also said that if there had been any breach, SIA had waived it. Mowie also pleaded waiver and lack of good faith.
A Judge of the Court (Tamberlin J.) rejected SIA’s defences and held that Mowie was entitled to declaratory relief and made consequential orders (see (1996) 140 ALR 57). SIA now appeals from these orders.
BACKGROUND
The “Pacific Queen” was a steel fishing trawler with a measured length of 19.28 metres.
The voyage during which the vessel was lost was to be from Eden in New South Wales to Portland in Victoria. At the commencement of the voyage on 14 March 1994, the vessel was the subject of a conditional survey certificate, expressed to be in force until 23 March 1994, issued by the Marine Board of Victoria, the State in which the vessel was registered.
The vessel departed Eden on 14 March, rounding Wilsons Promontory on 16 March. The crew then became alarmed at the amount of fuel being consumed. A serious fuel leak was suspected, but it was thought impractical to dip the tanks in the open sea. In order to avoid polluting Victorian ports, and to get away from a lee shore and worsening weather conditions, the “Pacific Queen” headed for King Island, where she dropped anchor at a position in the vicinity of Boulder Point at about 6.30 p.m. on 16 March. The fuel level was then verified. The gauge was found to be faulty, but no fuel leak was detected. At about 9.15 p.m. on 16 March, the “Pacific Queen” resumed her voyage. On 17 March, the crew made several fishing shots to test the fishing equipment. These activities occupied most of the day, so that no significant progress towards Portland was achieved.
At around 1.00 p.m. on 18 March, one of the crew noticed that the lights in the galley had gone out. In checking the generator and the motor, the crew discovered heavy flooding in the engine room. Attempts to shut down the seawater valve were unsuccessful. Assistance from another vessel was requested. A rescue boat took the “Pacific Queen” in tow at about 3.30 p.m. However, at about 4.50 p.m., the tow ceased and she sank at a point 45 nautical miles from Portland.
THE TERMS OF THE INSURANCE
The renewal certificate of insurance stated, inter alia, that the vessel’s navigation limits were New South Wales, Victorian and Tasmanian waters. The certificate specified the following warranties:
"(1)That the vessel is in survey and will remain in survey with the appropriate governmental authority of the State of registration at all times during the currency of the policy.
(2)That the vessel will be skippered, manned, crewed, operated and licensed in accordance with the regulations and by-laws and all other applicable laws of the appropriate governmental authorities of the State of registration at all times during the currency of the policy."
THE CERTIFICATE OF SURVEY
The material survey certificate, issued by the Victorian Marine Board and dated 16 April 1993, was in these terms:
“CERTIFICATE OF SURVEY
No 93s 3867
Name of Vessel...... : PACIFIC QUEEN
U.S.L. Class........ : 3B
Identifying Number or Mark : LFB10670
Measured Length (metre) : 19.28
Number of Crew...... : 4
Number of Passengers : 0
Owner........ ....... : MOWIE FISHERIES (NSW) P/L
Address........ ..... : 235 IMLAY STREET
EDEN 2551Whereas the provisions of the Marine Act 1988 with respect to the survey of the above-named vessel and the transmission of declarations in respect thereof have been complied with, the Marine Board of Victoria hereby grants this Certificate which unless previously cancelled or revoked and subject to compliance with the conditions listed below shall be in force until 23/03/94 and shall entitle the above-named vessel to operate within:
VICTORIA INTRA STATE TO ONE HUNDRED (100) MILES OFFSHORE
CONDITIONS
Vessel to carry a minimum safety manning as follows:
TWO/THREE CREW:
3 CREW MASTER 5(F)+MED2+1GP OR 2 CREW IF MASTER 5 ALSO HOLDS MED2 CERTIFICATE" (Emphasis added)
(The reference to MED2 is to a Marine Engine Driver Grade 2).
SIA’S DEFENCES TO THE INSURANCE CLAIM
SIA claimed that Mowie was in breach of the two express warranties set out above. SIA further claimed that Mowie was also in breach of the warranty implied by s.47 of the Marine Insurance Act 1909, which is to the effect that, so far as the insured can control the matter, the adventure shall be carried out in a lawful manner. SIA claimed that, in consequence of all or any of these breaches, it was discharged from liability.
In order to understand the complex issues that arose in the litigation, it will now be necessary to refer to the details of the breaches alleged by SIA.
(1) The alleged breaches of the express warranties
By its amended defence, SIA pleaded that:
"3.In breach of the aforesaid warranties the vessel was not, during the currency of the policy and prior to her loss:
(a)skippered, manned, crewed, operated and licensed in accordance with the regulations, any by-laws and all other applicable laws of the appropriate governmental authorities of the State of registration;
(b)in survey with the appropriate governmental authority of the State of registration."
SIA then gave these particulars:
"Particulars
(i)Victoria was the State of registration and the Marine Board of Victoria was the appropriate governmental authority.
(ii)Regulation 402 of the Marine (Vessels) Regulation 1988 made pursuant to the Marine Act 1988 required that a fishing vessel of less than 35 metres in length must be crewed and crew members must hold the appropriate certificates (if any) in accordance with Schedules I-IV of s.3 of the Uniform Shipping Laws Code (‘the USL Code’).
(iii)Pursuant to the said schedules of s.3 of the USL Code as in force at the time of the Marine (Vessels) Regulation 1988, the ‘Pacific Queen’ being less than 20 metres in length was required to have a Marine Engine Driver Grade 2 for operations beyond 15 miles from the coast.
(iv)In breach of the said Regulation, the “Pacific Queen” did not on 16, 17 and 18 March 1994 have the services of a Marine Engine Driver Grade 2 for operations beyond 15 miles from the coastline.
(v)Furthermore, the Survey Certificate for the ‘Pacific Queen’ issued by the Marine Board was subject to a condition as follows:
‘Vessel to carry a minimum safety manning as follows:
TWO/THREE CREW:
3 MASTER 5(F) + MED 2 + 1GP OR 2 CREW IF MASTER 5 ALSO HOLDS MED 2 CERTIFICATE.’
(vi)In contravention of such condition neither the master nor any other person on board the ‘Pacific Queen’ on 16, 17 and 18 March 1994 had a Marine Engine Driver Grade 2 Certificate.
(vii)The Survey Certificate expressly provided that it remained in force unless previously cancelled or revoked and subject to compliance with the aforesaid condition.
(viii)Further and in the alternative if as the Applicant contends the applicable manning provisions were those of s.3 of the [USL] Code (as amended to 1 January 1991), paragraph 24 of the Code required that a vessel with ‘propulsion power’ of 250 kW and over but less than 500 kW have a Marine Engine Driver Grade 2 for operations beyond 15 nautical miles from the coast and up to 200 nautical miles.
(ix)The total maximum continuous rated power in Kilowatts of all the machinery provided for the propulsion of the ‘Pacific Queen’ and thereby its ‘propulsion power’ was more than 250 kW.
(x)In breach of the said paragraph 24 on 16, 17 and 18 March 1994 the ‘Pacific Queen’ operated beyond 15 nautical miles from the coast without a Marine Engine Driver Grade 2 on board."
(2) The alleged breaches of the implied warranty
By its amended defence, SIA pleaded that:
"5.In further answer to the Statement of Claim generally the said Marine Hull policy was subject to the Marine Insurance Act (1909). By s.47 of the said Act, the said policy was subject to an implied warranty, inter alia, that so far as the assured can control the matter, the adventure shall be carried out in a lawful manner.
6.On 16, 17 and 18 March 1994 with the knowledge and consent of the Applicant as assured the ‘Pacific Queen’ was engaged in operations more than 15 nautical miles from the coasts of Victoria and Tasmania without the services of a Marine Engine Driver Grade 2 whereby the adventure was not carried out in a lawful manner."
SIA then gave these particulars:
"Particulars
(i)The Respondent repeats the particulars to paragraph 3.
(ii)The vessel put in at Boulder Point, along the coastline of King Island on 16 or 17 March 1994.
(iii)Boulder Point at all material time was a place of resort for shipping and otherwise a port within the jurisdiction of the Authority within the meaning of the Marine Act 1976 of Tasmania.
(iv)The ‘Pacific Queen’ was at all material times a vessel to which s.119 of the Marine Act 1976 of Tasmania applied, and s.119(1)(a) of the said Act provided that a vessel to which this Division applies when plying to seaward from any port within the jurisdiction of the Authority shall be provided with a duly certificated master and the prescribed complement of officers and crew.
(v)It was provided by s.119 (2) of the said Act that the prescribed complement of officers and crew referred to officers and crew holding such certificates, if any, as may be prescribed in the Regulations.
(vi)By Regulations made under the said Act known as the Marine (Safety Manning) Regulations it was required that the ‘Pacific Queen’ had a person certified as a Marine Engine Driver Class 2 on board to other than onshore operations.
(vii)On or about 16 March 1994 the ‘Pacific Queen’ [plied] seaward from Boulder Point without any person on board holding a Marine Engine Driver Grade 2 in breach of s.119 of the Marine Act 1976.
(viii)Further and in the alternative s.142(3) of the Act provides that a person who employs a vessel in respect of which a subsisting certificate of survey has been issued in contravention of any condition or limitation specified in the certificate or while employing the vessel fails to observe any condition or limitation so specified, is liable to the same penalty as if no subsisting certificate of survey had been issued in respect of that vessel.
(ix)Section 155 of the Act provides that an owner or master of a vessel specified in s.149 shall not use in navigation or permit the use of the vessel within any waters as defined pursuant to s.143 unless there is in force in relation to the vessel a certificate of survey that is appropriate to its classification and such use is in accordance with the conditions and limitations specified in the certificate. Penalty $1,000.
(x)Section 4 of the Act defines ‘certificate of survey’ to include a valid and unexpired certificate issued by (inter alia) a competent Authority of any Australian State including the Marine Board of Victoria.
(xi)On or about 16 March 1994 the ‘Pacific Queen’ [plied] seaward from Boulder Point without any person on board holding a Marine Engine Driver Grade 2 contrary to the condition imposed in her certificate of survey and thereby in contravention of s.142 of the Marine Act 1976."
MOWIE’S PLEA IN REPLY
By its further amended reply, Mowie joined issue on the defences pleaded by SIA, and also relied upon the following:
"6.The Applicant, in further answer to the Defence, denies that the failure to have an MED Grade 2 on Board (which is denied) contributed to the loss of the vessel."
Mowie further, as has been noted, pleaded waiver, estoppel and lack of good faith. It will be convenient to consider them later.
THE REASONING AT FIRST INSTANCE
(a) Did the 1988 or the 1991 version of the USL Code apply?
His Honour noted that under reg.402 of the Marine (Vessels) Regulations 1988 (Vic.) made pursuant to the Marine Act 1988 (Vic.) crewing requirements were stipulated in the case of a fishing vessel of less than 35 metres in length. In particular, crew members “must hold the appropriate certificates (if any) in accordance with Schedules I-IV of Section 3 of the [USL] Code."
Part 1 of Schedule II of Section 3 dealt with “Total safety manning for offshore operational areas out to 100 miles.” Tamberlin J. noted that in the case of a vessel of measured length of 15 metres and over but less than 20 metres (as was the case here) a Marine Engine Driver Grade 2 was stipulated if a vessel were to operate in those areas. However, in 1991, the relevant requirements of the USL Code were amended by the introduction of criteria which depended upon the vessel’s “propulsion power”, rather than upon its length.
His Honour first addressed the question, for the purposes of reg.402, whether the USL Code as at 1988 applied (being the time when the regulation came into force); or whether the Code in its form as amended from time to time (that is, for present purposes, its later, i.e. relevantly the 1991 version) applied.
In this connection, Tamberlin J. referred to reg.103(4) which is as follows:
"‘(4)A reference in these Regulations to the Uniform Shipping Laws Code is a reference to the Code as at the date these Regulations come into operation.” (Emphasis added).
His Honour said (at 63):
"[Mowie] points to s3 of the Marine Act 1988 (Vic) (‘the Marine Act’) pursuant to which the Regulations were made. That defines the USL Code as follows:
‘‘Uniform Shipping Laws Code’ means the Uniform Shipping Laws Code that is adopted by the body of the Commonwealth,... as that Code is amended from time to time.’ (Emphasis added).
[Mowie] relies on s105 of the Marine Act which empowers the Governor in Council to make regulations. Under para(3)(c)(ii) regulations may be made so as to incorporate any code ‘as formulated at the time the regulations are made.....’. By subs105(5) however, the above paragraph does not apply to the USL Code. This affords some indication that it is the USL Code as amended from time to time which is to apply.
Evidence was led by [Mowie] from Mr Shaw of the Marine Board that as at 1993-1994 the Board adopted an ambulatory approach to the application of the regulations. It applied the USL Code as amended from time to time and not in its frozen form as at 1988. Furthermore, the regulations were amended in 1994 to make it clear that the USL Code as amended from time to time was to apply.
Accordingly, in my view, the USL Code as amended is the relevant form of that code to be applied in the present case. The significance of this is that the criteria for determining whether the vessel complied with the USL Code falls to be determined by reference to the ‘propulsion power’ of the vessel and not simply by reference to its length."
(b) Was there a breach of the first (“in survey”) warranty?
His Honour held that the vessel was “in survey” when it sank, for these reasons (at 64):
"(a)the second warranty specifically refers to the vessel being manned, operated and licensed in accordance with the regulations and by-laws. This supports the view that the first warranty is concerned with the condition of the vessel, whereas it is the second warranty which is directed to manning and operation.
(b)the emphasis in Section 14 of the USL Code, which governs ship surveys is on the physical condition of the vessel and it does not deal with crewing requirements.
(c)paragraph 34 of Section 14 provides for suspension of a certificate where the authority is satisfied that a vessel under its survey fails to comply with the survey requirements. This is some indication that the survey is to remain in force until suspended.
A survey is an act of examination of the condition of an object to determine the measures, if any, necessary to upgrade its standards according to classification needed by the authorities. See E Sullivan, The Marine Encyclopaedic Dictionary (1995), 4th edition, at 417 and also The Macquarie Dictionary, (1995) 2nd edition, at 1760."
Accordingly, his Honour held that the absence of a crew member having a MED2 qualification, was not a breach of the first warranty.
(c)Was there a breach of the second (“lawful manning”) warranty?
Tamberlin J. regarded this question as depending on whether the vessel should be treated as having a “propulsion power” of less than 250 kilowatts for this reason: Part 4 of Section 3 of the USL Code, as amended to 1 January 1991, deals relevantly with minimum safety manning of fishing vessels. By para. 24, a vessel having a “propulsion power” of 250 kW and over, but less than 500 kW, operating from 15 up to 200 nautical miles offshore is required to be manned by a Chief Engineer of MED2 Grade. However, if the “propulsion power” is less than 250 kW, a Chief Engineer of Grade MED3 is required in an operational area from 15 up to 100 nautical miles offshore. The interpretation of “propulsion power” is relevantly dealt with by para. 21(g)(ii) by providing that in Part 4, unless expressly provided otherwise, “propulsion power” means “the total maximum continuous rated power in kilowatts of all the machinery provided for propulsion of the vessel.” It was common ground that the vessel’s operational area was between 15 and 100 nautical miles offshore.
Tamberlin J. said (at 70-1):
"Apart from the expert evidence, having regard to the language, I consider that on the proper construction of Section 3, clause 21(g) of the USL Code, the reference is to total maximum continuous rated power. I am satisfied that this is a reference to maximum continuous rating. In addition, the definition refers to ‘all the machinery provided for propulsion of the vessel’. In my view, the words, ‘provided for propulsion’ are critical. The words ‘provided for’ mean ‘available for’ propulsion. Logically, this requires the deduction of any off-takes of power provided by ‘all the machinery’ which are not transmitted or used for the propulsion of the vessel. In ordinary parlance, it is not appropriate to speak of power provided for a certain purpose, if in fact, some of the power has been siphoned off or provided for other purposes. The concept of propulsion power in the present case is concerned with the actual power used to propel the vessel. Accordingly, while the starting point may be the figure provided by the manufacturer, nevertheless in any individual case to determine the propulsion power referred to in Section 3 para 24, of the USL Code, it is necessary to estimate the power which is to be used for the propulsion of the vessel."
Applying this construction to the evidence, including some expert evidence to be mentioned later, his Honour concluded that the vessel’s propulsion power was less than 250 kW, so that the presence of a MED3 (rather than MED2) engineer did not breach the second warranty.
(d)Was there a breach of the implied warranty that the venture be conducted lawfully?
Tamberlin J. held that, because of his conclusion that the vessel was lawfully manned and “in survey” for the purposes of the Victorian legislation, there was no breach of the implied statutory warranty in this respect.
His Honour also rejected SIA’s contention that there had been a contravention of the manning requirements of s.119(1)(a) of the Marine Act 1976 (Tas.) and of Division 2 of the Marine (Safety Manning) Regulations (Tas.), which are to the same effect, for present purposes, as the 1991 version of the USL Code.
By s.119(1)(a) it is provided, inter alia, that a vessel “when plying to seaward from any port within the jurisdiction of the [Navigation and Survey] Authority [of Tasmania]” shall be provided with a duly certificated master and the prescribed complements of officers and crew.
A question arose as to the meaning of “port” in this context. Section 4(1) of the Marine Act provides that, unless the contrary intention appears, “port” includes any harbour, haven, roadstead, or place of resort for shipping, and any navigable river.
Tamberlin J. referred to the following statement in the “Australia Pilot” (6th ed. (1982) para. 2.17):
"During W gales coasting vessels often anchor in depths of about 16m... on the bank near Boulder Point formed by sand heaped up at the junction of tidal streams. In a settled W gale this anchorage is as safe as that in Sea Elephant Bay... about 15 miles S and handier for proceeding W when the weather moderates."
His Honour said (at 72):
"...I am not satisfied that the place of anchorage at Boulder Point was a ‘harbour, haven or place of resort for shipping’. On the evidence, only one trawler goes there and some cray-fishing boats from Apollo Bay have been seen to use the spot as an anchorage in a sudden 24 hour front, but Mr Wick’s [the master of the ‘Pacific Queen’] evidence was that if there is a ‘bad front they go back home to unload’.
Further, I do not consider that, at the time of the loss, it can be said that the vessel was plying seaward from a ‘harbour, haven or place of resort for shipping’ within the meaning of s4 of the Tasmanian Act. Accordingly, the provisions of Tasmanian law are not attracted."
Tamberlin J. accordingly held that no breach of the implied warranty had been established.
THE GROUNDS OF APPEAL
By its notice of appeal SIA contends that a breach of each of the three warranties pleaded should have been found, with the consequence, SIA contends, that it was discharged from liability under the policy.
CONCLUSIONS ON THE APPEAL
Before going to the specific questions raised by the grounds of appeal, it will be convenient to consider the general position under Victorian law first and then to turn to the general Tasmanian position.
(a) The Victorian legislative scheme
The relevant provisions of the Marine Act are as follows:
The purposes of the Act include making provision “for the efficient and safe operation of vessels on State waters” (s.1(c)).
Part 2 of the Act (ss.7-14) deals with registration of vessels. A person must not operate a vessel on State waters unless that vessel is registered or exempted from registration (s.8(1)). A person must not operate a vessel in breach of any condition of its registration (s.8(2)).
Part 9 of the Act (ss.85A-110) deals with “General” matters. The owner of a vessel must not operate the vessel on State waters “if there is no certificate of survey for the vessel in force in accordance with the regulations” (s.97(1)).
Section 105(1) of the Act provides that the Governor in Council may make regulations for or with respect to any matter or thing required or permitted by the Act to be prescribed or necessary to be prescribed to give effect to the Act including, but not limited to, the matters and things specified in Schedule 5. One of the subject matters specified in Schedule 5 is the “survey of vessels by surveyors or inspectors appointed by the Board”.
Part 3 of the Marine (Vessels) Regulations 1988 (Vic.) deals with the survey of vessels. Under the sub-heading “Adoption of the Code”, it provides that “Section 14 of the USL Code extends and applies to trading and fishing vessels” (reg.300).
The Preface to the USL Code explains its origins and status as follows:
"This Code has been adopted by the Australian Transport Council as a basis for uniform legislation of the Commonwealth, States and Northern Territory relating to the survey, manning and operation of commercial vessels in Australia.
The Australian Transport Council which has absorbed all the functions of the former Marine and Ports Council of Australia, comprises Commonwealth, State and Northern Territory Ministers responsible for ports and marine affairs and other transport matters.
It should be noted that provisions of the Code do not have the force of law except to the extent that they are adopted in Commonwealth, State or Territory legislation. This is being done progressively as circumstances permit.
The Council acknowledges the work done by the Association of Australian Port and Marine Authorities in drawing up the initial requirements for the Code."
As has been said, the Code was amended from time to time. For our purposes, it will be necessary to refer to its provisions at only two points of time: first, as at 1988, when the Regulations came into force; and secondly, as at the time of loss of the vessel, effectively the 1991 version of the Code.
Section 14 of the Code, in its form in 1984, and as in force as at 1988, was relevantly as follows:
“Survey” was defined as “a thorough examination performed by, or in the presence of a surveyor or an authorised person or society” (Section 14(3.5)).
The Authority (i.e. the Board) shall require all new vessels constructed under its jurisdiction and all existing vessels being brought under survey for the first time, to undergo an Initial Survey. The purpose of this survey shall be to satisfy the Authority that the vessel complies with its laws and regulations (Section 14(4)).
Subsequent to completion of the initial survey, the Authority shall require all vessels under its survey to undergo periodic surveys and inspections to satisfy itself that such vessels continue to comply with its laws and regulations. However, the Authority may accept such part of the survey as is performed by an authorised Society (Section 14(8)).
Surveyors, or authorised persons, in the execution of their duties, may board any vessel at all reasonable times to make an occasional or random inspection (Section 14(20)).
Upon receipt of a satisfactory Report and declaration from each surveyor performing the initial Survey of a vessel, the Authority shall prepare a Certificate of Survey, as prescribed by the Authority and a Record of Survey describing the hull, machinery and equipment of the vessel (Section 14(23)).
Section 14(24) is in these terms:
"24. The Certificate of Survey shall contain the following items:
Name of Vessel;
Identifying number of Vessel;
Official Number (if registered vessel);
Number of Passengers;
Number of Crew;
Class of Vessel;
Limits of Operation(s);
Measured Length and/or Gross Tonnage;
Title of Issuing Authority;
Signature of authorised officer(s);
Period of validity from....to....;
Statement that vessel complies with the survey requirements of the Authority."
Provision was made for revalidation or renewal of a Certificate of Survey (Section 14(28)).
Provision was made for the suspension or cancellation of a Certificate of Survey by Section 14(34) and (35) as follows:
"34.Where the Authority is satisfied, by reason of a report that a vessel under its survey fails to comply, for any reason, with the appropriate survey requirements, that Authority may suspend the certificate of survey and the owner shall be advised accordingly. The owner when so advised, shall not operate the vessel without the approval of the Authority.
35.Where the certificate of survey has been suspended or cancelled the Authority may require it and the evidence of survey to be delivered up as directed."
As has been said, Section 14 of the Code, in its 1991 version, was in the same terms as it stood in 1988.
Schedule 5 of the Marine Act provided that another subject matter for the Regulations was the “Crewing of Vessels” in these terms:
“26.The crewing of vessels generally or any class of vessel, and the certificates of competency and service that are required to be held by the crew of any vessel or any class of vessel”.
Part 4 of the Regulations dealt with the “Crewing of Vessels”. It will be recalled that reg.402 was as follows:
"402.A fishing vessel of less than 35 metres in length must be crewed and crew members must hold the appropriate certificates (if any) in accordance with Schedules I-IV of Section 3 of the [USL] Code." (Emphasis added)
In its 1984 (i.e. for our purposes its 1988) version, Section 3 of the Code, which dealt with Safety Manning, provided that fishing vessels of less than 35 metres in length shall have their safety manning prescribed by regulation; and that these regulations “shall be based on the appropriate provisions of Schedules I-IV to this Section”.
The appropriate Schedule (II) provided, as has been noted, that in the case of a vessel of length of 15 metres and over but less than 20 metres, a MED2 officer was required.
It will be recalled that the 1991 version of Section 3 of the Code, dealing with “Qualifications and Manning, Fishing Vessels” differed from the 1984 (and 1988) version. The provisions of para.21(g)(ii), speaking of “propulsion power”, have already been mentioned. Para.21(g)(ii) is part of an interpretation provision.
The requirements for the minimum safety manning of fishing vessels were stated in para.22 as follows:
22. Requirements
The Authority having jurisdiction over a vessel shall determine the minimum safety manning of a vessel and in so doing:(a)Shall require that it be under the command of a master, being the holder of a certificate of an appropriate grade;
(b)May require that it be manned by additional personnel, both certificated and uncertificated, having regard to the type and size of the vessel and the intended area of operation. In so requiring, the Authority shall have regard to 24 below when determining the minimum safety manning and the certificated personnel required.
23.Dispensation
An Authority may provide for the issue of a dispensation from its prescribed manning permitting an adequately qualified and experienced person to serve in a specified vessel for a specific period. For service in vessels engaged in seagoing operations a dispensation for a master or chief engineer shall be for the shortest possible period and only for circumstances of force majeure, and for any other person shall not exceed six months."
Para.24 dealt with manning in terms of the Master, Chief Mate and otherwise by reference to vessel size measured by different specified lengths. It dealt with manning, as has been noted, in terms of the Chief Engineer and other engineers by reference to different propulsion powers, rather than, as the earlier version of the Code had done, by reference to length.
Turning then to the question, one of construction, whether the 1984 (1988) version or the 1991 version of Section 3 applied, reference should first be made to the other provisions of s.105 of the Marine Act.
Section 105(1), as we have seen, empowered the Governor in Council to make regulations as there specified. By s.105(3)(c), it is provided that -
"(3) Regulations made under this Act may be made -
....
(c)so as to apply, adopt or incorporate any matter contained in any document, code, standard, rule, specification or method formulated, issued, prescribed or published by any authority or body whether -
(i)wholly or partially or as amended by the regulations; or
(ii)as formulated, issued, prescribed or published at the time the regulations are made or at any time before then; or (Emphasis added)
(iii)as formulated, issued, prescribed or published from time to time; " (Emphasis added)
By s.105(4) and (5), it is provided that -
"(4)If under sub-section (3)(c)(iii) a regulation has applied, adopted or incorporated any matter contained in any document, code, standard, rule, specification or method as formulated, issued, prescribed or published from time to time and that document, code, standard, rule, specification or method is at any time amended, until the Board causes notice to be published in the Government Gazette of that amendment the document, code, standard, rule, specification or method is to be taken to have not been so amended.
(5)Sub-sections (3)(c)(ii) and (4) do not apply to the Uniform Shipping Laws Code." (Emphasis added)
Section 106 is as follows:
"106. Uniform Shipping Laws Code
A provision of the Uniform Shipping Laws Code that is applied, adopted or incorporated by the regulations has effect with any modifications that are necessary to give it effect, and in particular -
(a)a reference to the Authority must be read as a reference to the Board; and
(b)a reference to a surveyor must be read as a reference to a surveyor or an inspector.” (Emphasis added)
Mention should also be made of the definition of the Code given in s.3(1) of the Act as follows:
"‘Uniform Shipping Laws Code’ means the Uniform Shipping Laws Code that is adopted by the body of Commonwealth, State and Territory Ministers known as the Australian Transport Advisory Council as that Code is amended from time to time."
Reference should be made to s.17(1)(a) of the Interpretation of Legislation Act 1984 (Vic.) dealing with the construction of references in Acts to other enactments or subordinate instruments relevantly as follows:
"17(1)A reference in an Act to... any subordinate instrument or provision of a subordinate instrument shall, unless the contrary intention appears, be construed -
(a)if the... subordinate instrument or provision in question has been amended, as a reference to the... subordinate instrument or provision as amended and in force for the time being." (Emphasis added)
Section 31(1)(a) of the Interpretation of Legislation Act provides for a similar construction of references in subordinate instruments to the provisions of any other subordinate instrument.
Section 3 of the Interpretation of Legislation Act defines “subordinate instrument” to mean an instrument made or to be made under or pursuant to the provisions of an Act, being an instrument that is a statutory rule; or is not a statutory rule but contains regulations, rules, by-law, proclamations, Orders in Council, orders or schemes; or is of a legislative character.
It appears, then, that although the Marine Act Regulations are a “subordinate instrument”, the USL Code, being advisory only, is not.
(b)The proper construction of reg.402
The real question here is whether the Court should, in the present context, prefer an ambulatory construction to a literal meaning. In this connection, it is open to the court to consider whether the application of the literal meaning would give an inconvenient or improbable result. As Brennan CJ., Dawson, Toohey and Gummow JJ. said recently in CIC Insurance Limited v. Bankstown Football Club Limited (1997) 141 ALR 618 (at 635):
"...inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which... is reasonably open and more closely conforms to the legislative intent."
In this regard, their Honours cited Cooper Brookes (Wollongong) Pty Limited v. Federal Commissioner of Taxation (1981) 147 CLR 297 per Mason and Wilson JJ. at 320-1, where, in preference to a literal meaning having an unlikely and arbitrary consequence, an implication was read into a statutory scheme so as to give effect to what the Parliament appeared to have intended. Mason and Wilson JJ. said (at 322):
"This construction is justified on the footing that it is a necessary implication to be deduced from the legislative scheme considered as a whole. It may also be justified as an application of the mischief rule."
In this respect, reference should also be made to the provisions of s.35(a) of the Interpretation of Legislation Act, above, to the effect that in the interpretation of a provision of an Act or subordinate instrument, a construction that would promote the purpose or object underlying the Act or subordinate instrument (whether or not expressly stated) shall be preferred to a construction that would not promote that purpose or object.
We are concerned here with the referential adoption of a set of rules. At common law, the courts were, in some circumstances, reluctant to construe the referential adoption of another law “as itself conveying what may be called an ambulatory intention to incorporate the provisions in whatever shape they may be thrown by amendment” (Commissioner for Government Transport v. Deacon (1957) 97 CLR 535 at 546; Re Universal Distributing Co. Limited (In Liq.) (1933) 48 CLR 171 at 173). But this presumption has now been reversed by legislation in all jurisdictions, including Victoria (see e.g. s.17(1) of the Interpretation of Legislation Act; D C Pearce and R S Geddes, Statutory Interpretation in Australia, 4th ed. at 162-3). The statutory presumption may itself be rebutted (see, e.g., Willows v. Lewis (Inspector of Taxes) (1981) 125 Sol. Jo. 792).
Even if, as appears to be the case here, s.17(1) of the Interpretation of Legislation Act is not itself applicable to the USL Code, there is still a presumption at common law that legislation should be given an “updating” construction. It is presumed that Parliament intends the Court to apply to an “ongoing” Act a construction that continuously “updates” its wording to allow for changes since the Act was initially framed. This means that in its application at any date, “the language of the Act, though necessarily embedded in its own time, is nevertheless to be construed in accordance with the need to treat it as current law” (Francis Bennion, Statutory Interpretation, 2nd ed. at 617).
In my opinion, a reference in the Marine Act, or in the regulations, to the USL Code, if that reference had stood alone, would have been construed as a reference to the Code in its form from time to time.
A proper analogy here may be seen, in those cases, where reference is made to “this Act”. In Ocean Road Motel Pty Limited v. Pacific Acceptance Corporation Limited (1963) 109 CLR 270, Taylor J. said (at 280):
"...it is not open to question that where by amendment a new provision is inserted into a principal Act and that provision speaks of ‘this Act’ it speaks of the whole Act of which from the time of amendment it forms part and, of course, of the Act in the form which it may from time to time thereafter assume."
But, as has been seen, the reference to the Code did not stand alone; and it will be necessary to consider the significance of the contextual features of this legislation. both in general terms and in some of their specific aspects.
In my opinion, it is proper to take into account in the present connection, at least at a general level, the true character of the amendments made to Section 3 of the USL Code between 1984, 1988 and 1991, in order to address the question whether they should be characterised as “mere” amendments to Section 3 on the one hand, or as amounting to the substantive repeal of the former Section 3, on the other (see Ex parte Barker; Re Luckett (1946) 46 SR (NSW) 235; Pearce, Delegated Legislation, at 236-7). Different consequences will follow for present purposes, since it is one thing to pick up something which is no more than an amendment to the existing scheme, but it is a different thing to adopt an ambulatory approach where an entirely different scheme is substituted.
In my view, in its relevant aspect, Section 3 in both its 1984 and 1991 versions, is directed to the same subject matter, that is, safety manning requirements for fishing vessels. Although those requirements differed in some significant respects, many of the concepts employed were common to both versions. Each version clearly had the same objective, that is, the protection of crews and others involved, and their vessels, by the imposition of standards at which vessels of specified sizes should be manned. Looking at the matter in accordance with the modern approach to statutory interpretation, which prefers substance over form where practicable, and acknowledging that questions of degree are involved, I consider that the 1991 version of Section 3 should be seen as, in truth, an amendment of the 1984 version rather than a (notional) repeal of it.
I turn now to consider the significance of the specific contextual features of this legislation. They have already been mentioned and are as follows:
By the interpretation provision of the Marine Act, that is s.3(1), the USL Code is defined to mean that Code “as [it] is amended from time to time.”
By s.105(c)(iii) of the Marine Act, the power to make regulations may be exercised so as to apply, adopt or incorporate any matter contained in any code etc. “as formulated [etc.]... from time to time.”
It follows, in my opinion, that it was plainly within the regulation-making power to pick up the USL Code in an ambulatory fashion if the Executive wished to do so.
At the same time, it will be remembered that by virtue of the provisions of s.105(3)(c)(ii) and (5) of the Marine Act, it appears that it was not within the regulation-making power to pick up the USL Code “as formulated, issued, prescribed or published at the time the regulations are made or at any time before then.” (Emphasis added).
Although the power to regulate by picking up the Code in an ambulatory manner existed in the Executive, the question remains whether that power was, in fact, purportedly exercised here. This depends upon the terms of the Regulations, as properly construed.
As has been noted, by the interpretation provision reg.103(4), it is provided that a reference in the Regulations to the USL Code “is a reference to the Code as at the date these Regulations come into operation.” (Emphasis added). In terms of the limits upon regulation-making power effected by s.105(3)(c)(ii) and (5) just discussed, this is not the same as the date when the regulations are made, or any date before then.
A question may be thought to arise as to the validity of reg.103(4) and specifically, whether it was inconsistent with s.105(5). But reg.103(4) is, and purports to be, no more than an interpretation provision. It does not itself “apply, adopt or incorporate” or pick up any matter in the Code. That work is done by the substantive provisions, relevantly for present purposes, by reg.402. It is the terms of reg.402 themselves that must now be construed in their full statutory context, that is, in the light not only of the provisions of the Regulations, including reg.103(4), but also of the provisions of the Marine Act, including s.105(5), and s.106.
It will also be recalled that by s.106 of the Marine Act, it is provided that a provision of the USL Code that is applied, adopted or incorporated by the Regulations “has effect with any modifications that are necessary to give it effect.” In my view, the presence of s.106 which, to some extent at least, reflects the rule under the general law (see Downey v. Pryor (1960) 103 CLR 353 at 362), overcomes the mischief indicated in cases such as Re Purdy and the Queen (1972) 28 DLR (3d) 720. There, by s.27(2) of the Canadian Interpretation Act, it was provided that certain provisions of the Criminal Code in respect of offences against the Code were to be applicable to offences against other Canadian statutes. But it was held that, since the sections were to be adopted as they appeared, and not mutatis mutandis, only those sections which could be applicable without any change in wording, i.e. literally, could come within s.27(2).
As we have seen, reg.402 provides that a fishing vessel of less than 35 metres in length “must be crewed and crew members must hold the appropriate certificates (if any) in accordance with Schedules I-IV of Section 3 of the ...Code.” (Emphasis added).
Two distinct questions need to be addressed here. First, is reg.402 there speaking of the Code in its earlier, or in its later version? Secondly, if the latter, is the reference to Schedules I-IV in reg.402 erroneous and, if so, what follows from the existence of this error?
As to the first issue, in my opinion, the material provisions of the Marine Act, when read as a whole, indicate a clear legislative intention that when the Code is picked up by the Regulations, it is contemplated that it be picked up in an ambulatory fashion. Further, in my view, it should be presumed that the Regulations, as the subordinate legislation, were intended to give effect to that intention. This is consistent with s.23 of the Interpretation of Legislation Act, which provides that an expression used in a subordinate instrument has the same meaning as it has in the Act conferring the power to make the subordinate legislation, unless the contrary intention appears. In any event, if any conflict were to arise between the Act and the regulations, the statute must always prevail. It follows, I think, that reg.402 was intended to incorporate the relevant provisions of Section 3 as amended from time to time.
Turning then to the second point, the difficulty that arises is that the reference in reg.402 literally to Schedules I-IV, although literally consistent with the interpretation provision, reg.103(4), is, in truth, erroneous because, as has been said, those provisions of the 1984 version were amended and superseded by para.24 of Section 3 where no such Schedules appear. But, in my view, nothing substantial should flow from that erroneous description. In this connection, it is important to note that the reference to the Schedules in reg.402 is truly surplusage. It was sufficient to refer to Section 3. This may be seen then as a proper case for the application of the maxim “falsa demonstratio non nocet” (see Wingadee Shire Council v. Willis (1910) 11 CLR 123 at 144, 148), so that, by a process of interpretation, the essential reference, that is to Section 3, remains, but the inessential and erroneous mention of the Schedules is disregarded. This interpretation is consistent with the operation of s.106 of the Marine Act.
An alternative approach would be to treat the error as a mistake in drafting which, unless ignored, would lead to an absurdity, that is, a requirement of compliance with an obsolete code of conduct. In such a situation, the Court “is entitled to attribute to the provision the meaning which it was obviously intended [by the Act] to have” (see Director of Public Prosecutions (Nauru) v. Fowler (1984) 154 CLR 627 at 630; MacAlister v. The Queen (1990) 169 CLR 324 at 330).
In other words, whatever the literal meaning of the words in reg.103(4) and of the words “Schedules I-IV” in reg.402 itself, the legislative intent indicated in the Act should prevail. Reg.402 should be construed as if the words “Schedules I-IV” were omitted and on the footing that the regulation referred to Section 3 “as that [part of the] Code as amended from time to time” (see s.3(1) of the Marine Act).
It is possible, I think, so to read reg.402 consistently with the presumption that, where the facts of the instant case substantially, though not entirely, correspond to a description in the relevant enactment, it is presumed that the enactment is intended to apply in the same way as it would if they did entirely correspond (see Bennion, op. cit., at 882). That is to say, the substantial aspect is the Section 3 safety manning requirements themselves; whether those requirements are, as a matter of form, framed in terms of a particular Schedule, is not a substantial consideration.
It is true that the interpretative provisions of reg.103(4) seem to contemplate that the position should be, as it were, “frozen” as at the date the Regulations came into force. This is a possible construction, but there is another interpretation open. As we have seen, the Code was dated 1984 and the Marine Act was enacted four years later. Perhaps the object of reg.103(4) was to pick up any amendments made to the Code after 1984, especially any amendments made shortly before the Regulations came into force. If so, it would be consistent with this object to give reg.402 the ambulatory operation which the Act itself envisaged, and which I favour.
It follows that I agree with the learned primary Judge’s conclusion that reg.402 should receive an ambulatory interpretation.
(c)The construction of Section 3 of the 1991 version of the Code
As has been seen, a question arises as to the proper construction of the revised version of Section 3; specifically, a question arises at the outset as to the meaning of the definition of “propulsion power” given in para.21(g)(ii). It will be recalled that by para.21(g)(ii) “propulsion power” is defined, in the absence of other express provisions, to mean “the total maximum continuous rated power in kilowatts of all the machinery provided for propulsion of the vessel”. (Emphasis added).
As has been seen, Tamberlin J. interpreted the words “provided for” in this context to mean “available for”. This accords with their ordinary meaning. The Macquarie Dictionary’s primary meaning of “provide” is “to furnish or supply”.
It will further be recalled that his Honour was of the opinion, or assumed, that the words “provided for” qualified the word “power” in para.21(g)(i).
With all respect, I have difficulty accepting this construction. In my opinion, as a matter of syntax at least, there are good reasons for reading the words “provided for” as attached to their neighbour, the word “machinery”. It is more natural to read the words in this way, that is, in the order in which they appear. To attach the earlier word “power” to “provided for” is, I think, a strained and artificial construction and unlikely to have been intended.
A proper analogy may be seen in the syntactical presumption that where two or more subjects are qualified by two or more matters, the qualifications attach to the subjects in the order in which they appear (see Canadian Pacific Tobacco Co. Limited v. Stapleton (1952) 86 CLR 1 at 6; Chelfco Ninety-Four Pty Limited v. Road Traffic Authority [1985] VR 1 at 11; Pearce and Geddes, op. cit. at 111-2; Bennion, op. cit. at 871).
The courts have always recognised that the significance of individual words is affected by other words and the syntax as a whole (see Collector of Customs v. Agfa-Gevaert Limited (1996) 141 ALR 59 per Brennan CJ., Dawson, Toohey, Gaudron and McHugh JJ. at 64).
The extrinsic expert evidence as to the term “propulsion power” discussed by his Honour illustrates, I think, why para.21(g)(ii) should be read as having its ordinary and natural meaning and construed syntactically.
His Honour’s discussion of that evidence will be mentioned below, but it should be noted that, at the outset, the primary Judge said, and with this I do agree, that the question, ultimately, is one of the construction of para.21(g)(ii).
His Honour also said that “it is appropriate to consider these terms (sc. “propulsion power”) with respect to their common usage in the industry, in the light of the expert evidence”. But it does not appear to have been suggested that the composite phrase in which para.21(g)(ii) is expressed is, taken as a whole, a term of art, even if some of the expressions used in this sub-paragraph may have a special meaning in the industry.
In Agfa, above, the Full High Court made the following observations on the approach to be adopted to the construction of a composite legislative phrase without, as here, a trade meaning (at 68):
"No doubt there are cases where a court or tribunal must interpret a composite phrase by reference to the ordinary meaning of the words taken as a whole without recourse to the trade meaning that one or more of its words may have. Much depends on the subject matter and context of the phrase. In the area of statutory interpretation and construction, courts must be wary of propounding rigid rules. Even the use of general rules carries dangers in this area because of the tendency for such rules to be given an inflexible application. Nevertheless, when construing a composite phrase which does not have a trade meaning, it will ordinarily make sense for a court or tribunal to take notice of the trade meaning of a word or words within that expression, provided such an interpretation does not lead to a result which is absurd in the sense that the result may be unworkable or impracticable, inconvenient, anomalous or illogical, futile or pointless, or artificial. Consideration of the trade meaning of individual words in such cases is more likely than not to lead to the interpretation that the makers of the instrument had in mind.
Further, contrary to Agfa’s submission, using the trade meaning of individual words in a composite phrase having no special meaning as a whole does not involve a failure to construe the phrase “as a whole”. It simply does not follow, as a matter of logic or common sense, that the division of a composite expression into parts which are interpreted by reference to their trade meaning, ordinary meaning or a combination thereof necessarily means that a court or tribunal has failed to construe an expression by reference to its meaning as a whole."
It follows, in my view, that it was open to the parties to lead evidence to show that some of the language in para.21(g)(ii) had a special meaning. However, his Honour seems to have approached this question on the footing that the phrase “propulsion power” appeared in that form in the language of the definition in para.21(g)(ii) itself. As has been noted, I would not construe the sub-paragraph in that way. On the contrary, I would not read those two words as linked in the language of the definition; rather, in my view, it is “the machinery provided for propulsion” which needs to be assessed in order to ascertain the “propulsion power”.
Nonetheless, since it may at least throw some light on the actual context of para.21(g)(ii), mention should be made of the expert evidence considered by Tamberlin J. (at 66-7) as follows:
His Honour referred (at 66) to the evidence of Mr Shaw, the director of marine services with the Marine Board of Victoria, called by Mowie, who said that if the owner of a vessel could substantiate, to the Board’s satisfaction, that the propulsion power was less than that indicated in the survey, then the Board would use the lower figure.
Tamberlin J. (at 66-7) referred to the following evidence by Mr Shaw:
"I would not see the propulsion power of the engine as being that power that’s delivered at the propeller; I would have seen the propulsion power as that power that’s developed as close as possible to the engine and the losses after that would not affect my definition of propulsion power. So you’ve got the propulsion power here at the engine, if you’ve got a gearbox, if you’ve got bearings, if you’ve got tail shaft, if you’ve got a loss through friction which would be very small, as it goes through the stern gland, whatever. I would say those are losses, but the propulsion power that I would have been using for the purposes of determining the certificate of competency would have been that propulsion power of the engine... It is the way we would do it and it is the way I believe we do it, but it’s never been an issue to the extent it is at this point.
...
I would look at the word - the total maximum continuous rated power in kilowatts of all the machinery provided for propulsion of the vessel. And I would sort of - in my own mind I would hold that the emphasis is on the machinery so you would work out the power of the machinery, so you have got the power of the machine that is going to provide the power for the propulsion and the losses therein are such are those... that power that’s tucked off from the machine for other matters such as electrical generators, belt driven generators or belt driven bilge pump would reduce the propulsion power and things like bearings, stern gland, gearbox. That would not reduce the propulsion power but it reduces the power available to propel the vessel, in my opinion (emphasis added)."
As has been seen, in terms of the proper construction of para.21(g)(ii), I agree with Mr Shaw’s view, but as a matter of construction, that “the emphasis is on the machinery so you would work out the power of the machinery”.
His Honour added (at 67):
"Mr Shaw went on to say that the owner and the surveyor would probably get their information from the published data for the particular engine from the manufacturer. He later said that what he meant by propulsion power was brake horsepower. Mr Shaw had never heard a marine engineer speak of the rated power of an engine as being the power that is delivered to the propeller.
I do not, however, attach much weight to the evidence given by Mr Shaw as to the meaning of propulsion power. Throughout his evidence he reiterated that shaft horsepower may or may not be considered to be the same as brake horsepower, and he went on to say that in his own mind shaft horsepower is the horsepower provided at the end of the propeller shaft."
Tamberlin J. then (at 67-8) described the evidence of Mr Roberts, an executive of the supplier of the engine, called by Mowie. Mr Roberts was of the opinion that, at 1,800 rpm, in terms of “continuous” (as distinct from “intermittent”) performance, the engine developed 345 “shaft” horsepower (i.e. 258 kW), which is described by his Honour as follows (at 67):
"This is the power available at the output flange of the transmission available to drive the propeller. It allows for deduction of power losses arising from the operation of parts such as the battery charging alternator, a seawater pump which cools the engine through a heat exchanger, and other frictional losses. The resulting power is described by the manufacturer as propeller shaft horsepower. It does not, however, take into account power losses arising from the operation of the steering pump."
Tamberlin J. went on to say (at 67):
"If a reasonable allowance is made for power used by a steering pump from the shaft horsepower, the result will be a power of less than 250 kW. Accordingly, an MED3 crew member would satisfy the requirement of the USL Code for [present] purposes."
His Honour then noted (at 68) that Mr Roberts treated the term “rated power” as the power “available at the fly wheel, which is the back end of the crankshaft and the engine, before deducting anything for the gearbox and other off-takes”.
Tamberlin J. then discussed (at 68-9) the evidence of Mr Riley, a naval architect called by Mowie. In Mr Riley’s opinion, in order “to ascertain the propulsion power of the vessel it was necessary to take the upper rating of 370 hp and make appropriate deductions... [that is,] for the gearbox, a seawater pump, a generator and a steering pump”. On this approach the “net propeller shaft power” was “in the order of 330 hp or less than 250 kW”.
Mr Riley was familiar with the expression “maximum continuous rating” (which his Honour (at 68) took to be synonymous with “maximum continuous rated power”) and understood the expression to mean the power available from the engine measured in (gross) brake horsepower, and to amount to “an indication of the ‘useful power available’ from the engine”. It appears that it is normal practice for manufacturers to publish either “brake” hp or kW (measured at the crankshaft) or shaft hp (measured at the output coupling of the reduction box). Mr Riley agreed that a manufacturer would not publish a rating which would deduct a steering pump. However, he considered that, to determine what power is available at a propeller, “you would have to take into account whatever other machinery is run from the engine...”. In his view, the “continuous” (as distinct from “intermittent”) rating was the relevant measurement in practice because it “contains an allowance for the normal add-ons that one would have for a marine engine... If other equipment was driven by the main engine, e.g. steering pump..., [he] would deduct [it]... [to] determine the shaft horsepower available for propulsion”.
His Honour said (at 70) that he preferred the evidence of Mr Riley to that of Mr Newall, who was called by SIA.
His Honour’s reasoning (at 70-1) with respect to the construction of para.21(g)(ii) has already been set out. It will be remembered that Tamberlin J. held that the concept of “propulsion power” here meant “the actual power used to propel the vessel”, after taking away “power [that] has been siphoned off or provided for other purposes”.
As appears from the foregoing summary of the expert evidence led at first instance, although it was not suggested by the experts that the whole of the definition expressed in para.21(g)(ii) consists of a term of art having a special meaning, it does not seem that there was any serious dispute about the evidence of Mr Newall (referred to by his Honour at 69) that the concept of “maximum continuous rating” (MCR) was well understood in the industry, and meant the statement by the manufacturer of the engine’s power and speed capability under specified load conditions; and that these ratings are based on a test standard and standard ambient conditions.
It appears that the real point of departure between the experts turned on the point of construction of para.21(g)(ii) previously mentioned, that is, did the word “power” qualify the word “machinery” on the one hand, or the words “provided for propulsion” on the other; put differently, did the words “provided for propulsion” qualify the word “machinery”? As has been said, Tamberlin J. preferred the former; whereas I prefer the latter construction, essentially on syntactical grounds. But the expert evidence shows that there are real difficulties, it appears, to the point of unworkability or impracticality, if the latter construction is not adopted. That is to say, unless it is clear beyond argument what deductions should be made from the “rated power”, the former construction would be uncertain in its application, and thus unlikely to have been intended. The expert evidence shows, if it be needed, that the whole area of the deduction, if any, and the amounts to be allowed on that account, is bound to be controversial and contentious. In my opinion, the former construction is impractical and should not be accepted.
Although not, of course, decisive on the construction of para.21(g)(ii), it should be noted that in connection with an application for a survey certificate, the Marine Board of Victoria, provided a printed form dealing with, inter alia, “Machinery Requirements”. Under the heading “Engine details” the following printed item appeared:
"Max. Continuous S.H.P.... at... R.P.M."
This is clearly a reference to the maximum continuous shaft horsepower of the engine.
In the completed application form for this vessel dated 23 March 1993, signed by the surveyor and on behalf of the owner, the figures “345” and “1800” were inserted in the form so that it read:
"Max. Continuous Rated S.H.P....345 ...at... 1800... R.P.M."
This is consistent with the manufacturer’s statement for “work boat [continuous] performance” to the effect (demonstrated in a graph produced by the engine manufacturer and explained in the expert evidence) that the engine developed 345 horsepower at 1800 revolutions per minute. Notes to the graph indicate that a distinction is made between “gross brake horsepower [continuous]” on the one hand and “net horsepower with reverse reduction gear, generator and raw water pump [continuous]”, on the other. As has been noted from the expert evidence, it appears that it is the latter, which is shaft horsepower, that is of present concern. This is consistent with the survey form previously mentioned. As has been seen, 345 hp translates to 258 kW, i.e. a figure in excess of the 250 kW mark prescribed in para.24 of Section 3 of the USL Code.
It follows that I cannot, with all respect, agree with his Honour’s conclusion that the “Pacific Queen” could be lawfully manned by an engineer of MED3 grade. In my view, since the engine rating exceeded 250kW, an engineer of grade MED2 was required. As has been noted, on the voyage with which we are concerned, the engineer on board was grade MED3 only. It will be remembered that para 23 of Section 3 of the USL Code conferred power on the Authority to dispense with manning requirements in certain circumstances, but it appears that no attempt was made to seek the Board’s dispensation with this requirement.
It follows, in my opinion, that Mowie breached the manning requirements of the Code in this respect.
(d) The Tasmanian legislative scheme
Part XIII of the Marine Act 1976 (Tas.) makes “Provisions as to Safety”. Division 3 (ss.118-120) deals with “Manning of Vessels”.
Section 118 provides that Division 3 applies to, and in relation to, all vessels specified in Part XV which are used for navigation within such limits as are defined in accordance with s.143.
The relevant provisions of Part XV (ss.137-166), which deal with “Survey of Vessels: Certificates of Survey for Vessels”, will be considered further below.
By s.143 it is provided that, for the purpose of s.142 (which deals with the effect of a certificate of survey), the Governor, on the recommendation of the Authority, may make regulations “defining the limits of a port or sheltered waters or part of any port or sheltered waters, or the limits applicable to coastal waters”.
By reg.5 of the Marine (Limits of Operational Areas) Regulations 1985 (Tas.), it is provided that, for the purposes of s.143 of the Marine Act, the limits applicable to coastal waters for the purposes of the classification of a vessel are as defined in Schedule 3.
Schedule 3 is as follows:
"SCHEDULE 3 Regulation 5
TASMANIAN COASTAL WATER LIMITS
Part I - INSHOREWithin all Tasmanian Coastal waters but not more than 15 nautical miles to seaward from the coast.
Part II - RESTRICTED OFFSHORE
Within all Tasmanian Coastal waters that extend beyond Inshore waters but not more than 30 nautical miles to seaward from the coast.
Part III - OFFSHORE
Within all Tasmanian Coastal waters that extend beyond Restricted Offshore waters but not more than 200 nautical miles to seaward from the coast.
Part IV -TASMANIAN COASTAL AND MIDDLE WATERS
Within all Tasmanian Coastal waters that extend beyond Offshore waters but not more than 600 nautical miles to seaward from the coast.
Part V - UNLIMITED OPERATIONS
Within all Tasmanian Coastal waters without lateral or offshore restrictions."
Section 119 of the Marine Act is as follows:
"119 - (1) Subject to section 120 [under which the Authority may issue a permit reducing manning requirements], a vessel to which this Division applies -
(a)when plying to seaward from any port within the jurisdiction of the Authority; or
(b)when plying within the limits of any port as defined pursuant to section 143 or on any inland waters in this State,
shall be provided with a duly certificated master and the prescribed complement of officers and crew.
(2) For the purposes of subsection (1), the prescribed complement of officers or crew of a vessel is such number of officers and crew -
(a)as may be prescribed in the regulations; or
(b)as may be determined, in accordance with the regulations, by the Authority or some other prescribed body, either generally or in relation to the particular vessel,
being officers and crew holding such certificates or possessed of such experience and qualifications, if any, as may be prescribed in the regulations.
(3) If default is made in complying with this section in relation to any vessel, the owner of the vessel, and each other person (including the master of the vessel) who knowingly authorizes or permits the default, is guilty of an offence against this Act.
Penalty: $200."
By s.4(1), unless the contrary intention appears, it is provided that “plying” and “port” are to have these meanings -
"‘plying’, used in relation to a vessel, includes proceeding, going, and navigating (whether for trading purposes or not);"
"‘port’ includes any harbour, haven, roadstead, or place of resort for shipping, and any navigable river;"
Part 3 of the Marine (Safety Manning) Regulations 1992 (Tas.) (regs.10-20) deals with “Prescribed Complements for Vessels”. Division 2 of that Part (regs.16-19) deals with “Fishing vessels”.
Regulation 16 is in these terms:
"16 - (1) For the purposes of section 119(2)(a) of the Act, the total number of persons to be provided on a fishing vessel specified in Schedule 4 is the total complement specified in that Schedule in respect of a fishing vessel of that type in the appropriate operational area.
(2)The total number of persons referred to in subregulation (1) is to be made up of persons filling the positions as specified in Schedule 4."
Table 2 of Schedule 4, dealing with “Engine Room Personnel”, prescribes that, in the case of a vessel having “propulsion power” of 250 kW and over, but less than 500 kW, operating in “Offshore” waters, a MED2 is required.
By reg.3, “propulsion power” is to have a similar meaning to the meaning of “propulsion power” as defined in Section 3 (para.21(g))of the USL Code.
Regulation 17 provides that, by a written submission to the Authority, the owner or master of the vessel may appeal against the application of Schedule 4 to the vessel. The Authority is to refer the appeal to the Committee for decision (reg.17(3)). The Committee may decide that Schedule 4 does, or does not, apply to the fishing vessel (reg.18).
As has been noted, Part XV of the Marine Act deals with “Survey of Vessels: Certificates of Survey for Vessels”.
By s.137 it is provided that nothing in Part XV applies to, or in relation to: (a) vessels used for the purposes of pleasure only; or (b) a vessel, or a vessel included in a class of vessels, declared by the Minister, by order made on the recommendation of the Authority, to be a vessel or class of vessels to which the provisions of this Part do not apply.
By s.138(1) it is provided that the owner of a vessel shall cause the hull, equipment, and machinery of the vessel to be surveyed once in every year or more frequently as the Authority may require by a surveyor authorised by the Authority.
Provision is made by s.139(1) for the Authority to issue a certificate of survey if the Authority is satisfied as to the condition of the hull of the vessel and its machinery and equipment. In the survey certificate, the Authority shall specify: (a) the condition of the vessel; and (b) the conditions and limitations whether as to the use of the vessel or to the limits where it may or may not ply and as to the number of passengers (if any) and crew numbers, prescribed or, in the absence of any regulation in that behalf, determined by the Authority subject to which the vessel may or may not be used (s.140).
It is provided by s.148(1) that the possession in relation to a vessel of a valid and unexpired certificate, issued by a competent authority of, inter alia, any Australian State may, in the Authority’s absolute discretion, be recognized by the Authority and such recognition shall excuse such vessel from compliance with Part XV.
(e) Was there a breach of the first (“in survey”) warranty?
It will be recalled that the terms of this warranty were that -
“... the vessel is in survey and will remain in survey with the appropriate governmental authority of the State of registration at all times during the currency of the policy.”
It is common ground that Victoria was the State of registration.
It will further be remembered that the subject Certificate of Survey, issued by the Marine Board of Victoria and dated 16 April 1993, recited that the provisions of the Marine Act with respect to the survey of the vessel and the transmission of declarations in respect thereof had been complied with; and that it was then provided that the Board thereby granted that Certificate -
“which unless previously cancelled or revoked and subject to compliance with the conditions listed below shall be in force until 23/03/94 and shall entitle the above-named vessel to operate within:
VICTORIA INTRA STATE TO ONE HUNDRED (100) MILES OFFSHORE.
CONDITIONS
Vessel to carry a minimum safety manning as follows:
TWO/THREE CREW:
3 CREW MASTER 5F + MED2 + 1GP OR 2 CREW IF MASTER 5 ALSO HOLDS MED2 CERTIFICATE.”
In considering whether there was a breach of this warranty, it will be convenient first to address the meaning of the phrase “in survey” in the present context.
In my opinion, the preposition “in” was used in the subject policy to express a particular situation or condition. The Macquarie Dictionary definitions of “in” include: “3. situation, condition...in service...”. It appears that “in” was intended to have this meaning here.
One of the primary dictionary meanings of the verb “to survey” offered by the Macquarie is:
“2 to view in detail, esp. to inspect or examine formally or officially in order to ascertain condition, value etc.”
The Oxford English Dictionary offers the following as the primary meaning of the noun “survey”:
“1. The act of viewing, examining or inspecting in detail, esp. for some specific purpose; usually spec. A formal or official inspection of the particulars of something, e.g. of an estate, of a ship or its stores, of the administration of an office, etc.”
Another Oxford meaning is:
“A written statement or description embodying the result of such examination.”
It appears that these meanings, with their emphasis on formal or official examination of the condition of the vessel, were intended in the warranty. As has been seen, this is consistent with the scheme of the Victorian legislation, including the USL Code which is picked up by the statute. It will be remembered that s.97(1) of the Victorian Marine Act provided that the owner of a vessel must not operate it on State waters “if there is no certificate of survey for the vessel in force in accordance with the regulations”; that, by Schedule 5 of the Act, it is provided that the Regulations may provide for the survey of vessels by surveyors or inspectors appointed by the Board; and that by reg.300, s.14 of the USL Code is “extended and applied to” trading and fishing vessels.
We have also seen that, in Section 14 (para.3.5) of the USL Code, “survey” is defined as “a thorough examination performed by, or in the presence of a surveyor or an authorised person or society”.
Construction of s.39 of the Marine Insurance Act
The respondent's next submission was that the second warranty did not attract s.39 of the Marine Insurance Act because it fell outside the terms of s.39(1). It will be recalled that s.39(1) defines a "warranty" for the purposes of the section, as a
"warranty by which the assured undertakes that some particular thing shall or shall not be done, or that some conditions shall be fulfilled, or whereby he affirms or negatives the existence of a particular state of facts".
Mr Street's argument was that the second warranty did not require a "particular thing" to be done, because the requirement that the vessel be manned and operated in accordance with regulations and all other applicable laws lacked sufficient specificity.
The short answer to this submission is that a "warranty" for the purposes of s.39(1) is not confined to an undertaking that a particular thing shall or shall not be done. It also extends to an undertaking that some conditions be fulfilled. The word "particular" does not qualify the phrase "some conditions shall be fulfilled". That this is so is confirmed by the use of the word "particular" both earlier in s.39(1) and later in the sub-section. Moreover, as Mr Street acknowledged, the word "conditions" is not used in s.39(1) in its technical, contractual sense. For present purposes, it simply means stipulations that must be complied with. The requirement in the second warranty, that the vessel be manned and operated in accordance with applicable laws, answers that description.
It is therefore not necessary to consider the limitations imposed by word "particular" as used elsewhere in s.39(1) of the Marine Insurance Act.
The Validity of Reg.402
In view of the construction of reg.402 we have adopted, it is clear, assuming the regulation to be valid, that the respondent was in breach of the second warranty. The trial Judge's finding that the Pacific Queen had no MED 2 crew member on board the vessel, as reg.402 required, was not challenged.
The question then arises whether reg.402 was ultra vires the Marine Act (Vic), as the respondent contended. To address this question it is necessary to consider the regulation making power conferred on the Governor in Council by s.105 of the Marine Act (Vic), the terms of which have been set out earlier.
The starting point, however, is s.32(1) of the Interpretation Act (Vic). This provides as follows:
"(1)Where an Act (whether passed before or after the commencement of this Act) authorizes or requires provision to be made for or in relation to a matter by a subordinate instrument, the subordinate instrument, if made on or after the commencement of this Act and unless the contrary intention appears in the Act under or pursuant to which it is made -
(a)may make provision for or in relation to that matter by applying, adopting or incorporating, with or without modification, the provisions of any Act, or of any statutory rule, as in force at a particular time or as in force from time to time; but
(b)shall not make provision for or in relation to that matter by applying, adopting or incorporating any matter contained in any subordinate instrument (not being a statutory rule) or in any other writing (not being an Act)."
Generally speaking, a "subordinate instrument" means an instrument made or to be made under or pursuant to the provisions of any Act: Interpretation Act (Vic), s.3.
Reference should also be made to other provisions of the Interpretation Act (Vic). Section 32(2)(a) provides that, where a subordinate instrument incorporates any matter contained in any other document (other than an Act or statutory rule) a copy of the matter so incorporated must be laid before Parliament at the same time as the subordinate instrument is required to be laid before Parliament. A failure to comply with this requirement renders the subordinate instrument void: s.32(3). There is a further requirement that the copy be available for inspection without charge at the principal office of the responsible administering body: s.32(2)(b). A person is not to be prejudicially affected by the subordinate instrument incorporating the matter if it is proved that the copy was not available for inspection as required by the Act: s.32(4). Section 31(a) provides that, in the absence of a contrary intention, a reference in a subordinate instrument to any other subordinate instrument or Act is to be construed, if the subordinate instrument or Act has been amended, as a reference to the subordinate instrument or Act as amended and in force for the time being.
The Code is not a statutory rule. It follows from s.32(1) of the Interpretation Act (Vic) that, unless the Marine Act (Vic) evinces a contrary intention, a subordinate instrument made under that Act, including the Marine Regulations (Vic), must not make provision for or in relation to a matter authorised by the Act "by applying adopting or incorporating any matter contained in [the Code]". It follows from s.31(a) that, unless a contrary intention appears, any reference in the Marine Regulations (Vic) to the provisions of any other subordinate instrument is to be construed as a reference to the subordinate instrument as amended from time to time.
Section 105(1) of the Marine Act (Vic) confers a power to make regulations on the Governor in Council in broad terms. However, this grant of power, of itself, does not express an intention that regulations made under the Marine Act (Vic) should be able to apply, adopt or incorporate any matter contained in a document other than an Act or statutory rule. Thus, unless expanded in some way, s.105(1) does not confer a power to make regulations which provide for a matter by applying, adopting or incorporating any matter in the Code.
Section 105(3)(c) of the Marine Act (Vic) addresses the extent to which regulations made under the Act may apply, adopt or incorporate any matter contained in other subordinate instruments or documents. Section 105(3)(c), to which reference has already been made, permits regulations under the Act to be made so as to apply, adopt or incorporate any matter contained inter alia, in any document or code published by any authority or body whether
wholly or partially or as amended by the regulations; or
as formulated, issued, prescribed or published at the time the regulations are made or at any time before then; or
as formulated, issued, prescribed or published from time to time."
If matters stood there, s.105(3)(c)(ii) would constitute the expression of a contrary intention for the purposes of s.32(1)(b) of the Interpretation Act (Vic). The sub-paragraph would therefore authorise the making of regulations under the Marine Act (Vic) which, apply, adopt or incorporate matter contained in a published code or standard, as formulated or published at the time the regulations are made. In particular, it would authorise regulations which apply, adopt or incorporate a matter contained in the Code as published when the regulations are made.
Matters do not, however, stand there. Section 105(5) of the Marine Act (Vic) expressly provides that s.105(3)(c)(ii) does not apply to the Code. Subject to what is said later about s.105(3)(b), s.105(3)(c) remains the source of power to make regulations under the Marine Act (Vic) incorporating any matter contained in the Code. But that power does not include the specific power in s.105(3)(c)(ii) to apply, adopt or incorporate any matter contained in the Code as formulated or published at the time the regulations are made.
If s.105(3)(c) were simply to be read in isolation, but with sub-paragraph (ii) omitted, it is perhaps arguable whether it might be construed as allowing the regulations to incorporate matter contained in the Code, as published at the time the regulations are made. If read in isolation, s.105(3)(c) has the appearance of a grant of power rather than a restriction on the scope of the regulation-making power. Viewed as a grant of power, the opening words of s.105(3)(c) could be construed as expressing a contrary intention for the purposes of s.32(1) of the Interpretation Act (Vic). Similarly, the express reference in s.105(3)(c)(iii) to documents or codes as formulated or published from time to time, might not necessarily be read as impliedly prohibiting a regulation which incorporates a matter contained in a document or code as formulated or published at a particular date.
The task is, however, not simply to construe s.105(3)(c) in isolation from other provisions in the Act and, indeed, from the provisions of the Interpretation Act (Vic). Rather, it is to consider the statutory provisions as a whole, taking account of the context. Section 105(3)(c) operates against the background of the Interpretation Act (Vic), which provides that, in the absence of a contrary intention, regulation-making power does not extend to incorporating matter in other documents (except Acts or statutory rules). Section 105(3)(c) expresses a contrary intention, and goes on specifically to state that the power may be exercised by incorporating any matter contained in a document published at a particular time, or as formulated or published from time to time. Section 105(5) removes the specific power to incorporate any matter contained in the Code as formulated or published at the time the regulations are made, or at any time before then.
The clear intent of s.105(5), in stating that s.105(3)(c)(ii) does not apply to the Code is that the regulation making power does not extend to applying or incorporating any matter contained in the Code as published at the date the regulations are made. The intent of the legislation construed as a whole is that, if the regulations are to apply or incorporate any matter contained in the Code, it must be (to use the language of s.105(3)(c)(iii)) matter contained in the Code as formulated or published from time to time. Unless s.105(5) is read in this manner, it is difficult to see what practical effect it could have. Moreover, this construction is consistent with the definition of the Code in s.3(1) of the Marine Act (Vic) as meaning the Code as amended from time to time. The fact that s.105(4) also does not apply to the Code, means that the regulations made under the Marine Act (Vic) may refer to the Code as formulated or published from time to time, without the need for amendments to the Code to be notified in the Government Gazette.
These provisions reflect a coherent statutory scheme. The Governor in Council is empowered to make regulations which incorporate any matter contained in the Code, but only the Code as formulated or published from time to time. The amendments to the Code do not have to be published in the Gazette, presumably because the view was taken that those effected by the regulations would readily be able to obtain a current version of the Code. The view was also presumably taken that the persons effected by the regulations would not necessarily be able to obtain readily an earlier version of the Code, whether published in 1988 or at some earlier date. The concern of the Victorian Parliament, that the regulations should only incorporate matters contained in the Code as amended from time to time, is consistent with the general principle, stated in the Interpretation Act (Vic), that references in subordinate instruments to an Act or to another subordinate instrument should be to that Act or subordinate instrument as amended from time to time. Of course, the Code is not an Act or subordinate instrument, but Parliament's general preference for applying or incorporating documents as amended from time to time is clear enough. It follows that s.105(3)(c) does not, in our view, empower regulations to be made which apply or incorporate matters contained in the Code as published at the date the regulations are made.
Mr Rayment QC, who appeared with Mr Nell for Switzerland, pointed out that the regulations could have expressly set out in full the precise requirements specified in Schedule II to Section 3 of the Code. It was, he said, absurd to hold invalid a regulation which simply achieved the same result by a different means. But the very point of the Interpretation Act (Vic), s.32(1) and (2), and of s.105(3) of the Marine Act (Vic) is to impose procedural requirements to ensure that members of the public can readily ascertain their rights and responsibilities under subordinate legislation. That the failure to comply with formal requirements may lead to invalidity is made clear by s.32(3) of the Interpretation Act (Vic). Thus it is no answer to the argument that reg.402 was invalid to say that the same result could have been achieved by a different means.
Section 105(3)(b) of the Marine Act (Vic) was referred to in argument as a possible source of power to make regulations applying or incorporating matters contained in the Code as published at the date the regulations are made. Section 105(3)(b) authorises regulations to be made so as to require a matter affected by the regulations to be in accordance with a specified standard or a specified requirement. In our view, this provision is not intended to address the specific question of whether the regulations can incorporate any matter contained in the Code as published at a particular time. That question is addressed exhaustively by s.105(3)(c) and s.105(5). Section 105(3)(b) cannot therefore be relied upon as an independent source of power to support reg.402, insofar as it refers to the Code as amended from time to time.
It would seem, although the point was not developed in argument, that reg.402, as affected by reg.103(4) in its pre-1994 form, was invalid only if drafted so as to "apply, adopt or incorporate" any matter contained in the Code as formulated or published at the date the regulations came into effect. The phrase "apply, adopt or incorporate" is, with inconsequential changes, used both by s.32(1)(b) of the Interpretation Act (Vic) and s.105(3)(c) of the Marine Act (Vic).
The meanings of the word "incorporate" include (Macquarie Dictionary):
"To take in or include as a participant, as the body or mass does; to embody; to unite or combine so as to form one body."
The meanings of the word "apply" include (also Macquarie Dictionary):
"to bring to bear, put into practical application, as a principle, law, rule, etc."
Regulation 402, as we have construed it, incorporates or applies the matters contained in Schedule I-IV to the Code as published in 1988. Regulation 402 requires a fishing vessel of a certain length to be crewed and crew members to hold appropriate certificates (if any), in accordance with Schedules I-IV to Section 3 of the Code as published in 1988. Regulation 402 takes in and puts into practical application the terms of Schedules I-IV, by expressly requiring the operators of certain vessels to act in accordance with the terms of those Schedules. An operator can ascertain the requirements specified in the Schedules only by consulting the Code as published in 1988.
We should add that we were provided with the Explanatory Memorandum accompanying the Marine Bill 1980 (Vic) and the Minister's second reading speech. Neither provides assistance on this question.
For the reasons we have given, reg.402, having regard to the terms of reg.103(4) as it stood in 1994, was ultra vires the Marine Act (Vic) at the date the Pacific Queen was lost. It follows that any failure by the respondent to comply with the terms of Schedule II to the Code, as published in 1988, did not constitute a breach of the second warranty. It also follows that it is unnecessary to consider Switzerland's alternative submission, which was founded on the assumption that reg.402 was valid.
We express no view on the effect on reg.402 of the amendment to reg.103(4), which took effect in 1994. That question was not argued before us and does not arise for determination.
Interpretation Act (Vic), s.22
The respondent submitted that if reg.402 were otherwise invalid, this was a case for the application of s.22 of the Interpretation Act (Vic), which provides that every subordinate instrument shall be construed as operating to the full extent of, but not so as to exceed, the power to make the subordinate instrument conferred by the Act under or pursuant to which it is made. Mr Street contended that s.22 applies to reg.402, so that it should be read as referring to the Code as amended from time to time. But s.22 does not authorise the Court to rewrite a subordinate instrument so as to give it a valid operation, regardless of the language used in the instrument: Bank of New South Wales v Commonwealth (1948) 76 CLR 1, at 371-372, per Dixon J. There must be some foundation in the language to justify a different operation being given to the instrument. It is not permissible for a court to redraft a set of regulations so that they conform to the governing legislation: R. v Burgess; Ex parte Henry (1936) 55 CLR 608, at 655, per Latham CJ; Sloane v McDonald Industries (Sales) Pty Ltd (1989) 17 NSWLR 86, at 99-101, per Cole J. Section 22 of the Interpretation Act (Vic) therefore does not assist the respondent to save reg.402 from invalidity.
THE IMPLIED WARRANTY
The Implied Warranty Argument
Switzerland contended that, even if reg.402 of the Victorian Marine Regulations was invalid, the respondent had breached the implied warranty of legality created by s.417 of the Marine Insurance Act. Section 47 provides as follows:
"There is an implied warranty that the adventure insured is a lawful one, and that, so far as the assured can control the matter, the adventure shall be carried out in a lawful manner."
Switzerland submitted that the Pacific Queen was subject to s.119 of the Marine Act 1976 (Tas) (the "Marine Act (Tas)") and had failed to comply with its requirements.
Section 119, which is within Part XIII, Division 3 of the Marine Act (Tas), provides as follows:
"(1)...a vessel to which this Division applies -
(a)when plying to seaward from any port within the jurisdiction of the Authority; or
(b)when plying within the limits of any port as defined pursuant to section 143 or on any inland waters in this State,
shall be provided with a duly certificated master and the prescribed complement of officers and crew.
...
(2)For the purposes of subsection (1), the prescribed complement of officers or crew of a vessel is such number of officers and crew-
(a)as may be prescribed in the regulations; or
(b)...
being officers and crew holding such certificates or possessed of such experience and qualifications, if any, as may be prescribed in the regulations."
The expression "port" is defined in s.4(1) to include, unless the contrary intention appears:
"any harbour, haven, roadstead or place of resort for shipping, and any navigable river".
"Plying", when used in relation to a vessel, is defined to include "proceeding, going, and navigating (whether for trading purposes or not)": s.4(1). Section 4(2)(a) of the Act provides as follows:
"In this Act:
(a)a reference (however expressed) to a vessel going to sea, or proceeding to sea, or being taken to sea, or being sent to sea includes a reference to a vessel -
(i)plying seaward beyond the limits of a port or of sheltered waters (being those limits as defined pursuant to section 143); and
(ii)getting under way or attempting to get under way for the purpose of going to sea."
The relevant regulations, for the purposes of s.119(2)(a) are the Marine (Safety Manning) Regulations 1992 (Tas) (the "Manning Regulations (Tas)"). The regulations at the relevant time provided that vessels of 250 kW propulsion power and over (but les than 500 kW) required an MED 2 when operating in an "offshore" area: regs. 16, 20, Schedule 3, Table 2.
Switzerland contended that the Pacific Queen plied seawards from its anchorage at Boulder Point on King Island, where it anchored for about three hours on 16 March 1996, before resuming its voyage from Eden in New South Wales to Portland in Victoria. It also contended that the anchorage was a "port" within s.119 of the Marine Act (Tas), so that the section applied to the vessel. Since (so it was said) the Pacific Queen had a propulsion power of more than 250 kW, it was required under the Manning Regulations (Tas) to have an MED 2 on board for offshore operations. Because the vessel did not comply with this requirement, the adventure had not been carried out in a lawful manner and the implied warranty created by s.47 was breached.
The Trial Judge's Conclusions on the Implied Warranty
The trial Judge rejected Switzerland's contentions on this point. His Honour concluded that, on the evidence, he was not satisfied that the place of anchorage at Boulder Point was a "harbour, haven or place of resort for shipping". He found that only one trawler went there. In addition, some cray-fishing boats from Apollo Bay in Victoria used the spot as an anchorage if there was a sudden front, since they worked in the area the whole time. However, the cray-fishing boats went back home to unload. His Honour also expressed the view that at the time of the loss the vessel was not plying seaward from a "harbour, haven or place of resort for shipping" within the meaning of s.4(1). His Honour did not, however, explain the basis for this view.
Other Tasmanian Provisions
Before proceeding further on this point, it is convenient to consider why Division 3 of Part XIII of the Marine Act (Tas), including s.119, applied to the Pacific Queen. Section 118 of the Marine Act (Tas) provides that Division 3 of Part XIII applies to and in relation to all vessels specified in Part XV (dealing with survey of vessels) which are used for navigation within such limits as are defined in accordance with s.143 of the Act. Section 149, which is within Part XV, specifies that vessels for which survey certificates are required include "commercial vessels", an expression which clearly included the Pacific Queen (see definition in s.4(1)). An exemption is provided for vessels which the Authority recognises as having a valid and unexpired certificate from another Australian authority: s.148(1). However, the recognition requires an affirmative exercise of discretion by the Authority and no such exercise of discretion occurred in relation to the Pacific Queen.
Section 143 provides that, for the purposes of s.142 (which deals with the extent of authority to navigate conferred by a certificate of survey) regulations may be made defining the limits of "a port in sheltered waters or part of any port or sheltered waters, or the limits applicable to coastal waters". The power conferred by s.143 has been exercised by the making of the Marine (Limits of Operational Areas) Regulations 1985 (Tas) (the "Operational Regulations (Tas)"). Regulation 5 and Schedule 3 define Tasmanian coastal water limits by categories that extend up to 600 nautical miles to seaward of the coast (see definition of "Tasmanian coastal and middle water operations" in s.4(1) of the Marine Act (Tas)). The categories include "offshore" waters, which extend from 30 to 200 nautical miles to seaward of the coast.
Regulation 3 and Schedule 1 of the Operational Regulations (Tas) define the limits of a number of Tasmanian ports, for the purposes of s.143 of the Marine Act (Tas). Three of these ports whose limits are so defined are ports of King Island, namely, Currie, Grassy and Naracoopa. Regulation 3 and Schedule 1 do not refer to the area off Boulder Point where the Pacific Queen anchored for about three hours on 16 March 1994, before resuming its voyage from Eden towards Portland.
Was s.119(1)(a) of the Marine Act (Tas) Infringed?
In our view, Switzerland's contentions on this issue should not be accepted. It was open to his Honour to make the findings of fact he did relating to the use of the anchorage at Boulder Point. Mr Rayment relied on a 1982 edition of the "Australian Pilot", which suggested that during westerly gales coasting vessels often anchor in depths of about 16 metres on the bank near Boulder Point formed by sand heaped up at the junction of tidal streams. However, this document was published 12 years before the relevant events. It was open to the trial Judge to prefer evidence as to the extent of more recent usage by vessels of the area near Boulder Point.
The only part of the definition of "port" on which Mr Rayment placed reliance was the phrase "place of resort". The full phrase employed in the definition is "place of resort for shipping". The word "shipping" is defined by s.4(1) of the Marine Act (Tas) to include "the putting of persons and things aboard a vessel and the transporting of persons and things by vessel". The definition, perhaps, does not advance matters very far. But it tends to reinforce what would follow in any event, namely, that for an area near the coast to be a place of resort for shipping, it must be resorted to frequently or customarily by shipping generally. This does not mean that an area can be a place of resort for shipping only if it is resorted to by every category of vessel that navigates nearby waters. Nonetheless, where the finding is that only one trawler and some cray boats from a particular location use the area, it is difficult to regard the area as a place of resort for shipping, for the purposes of the definition of "port" in s.4(1) of the Act.
The context in which s.119(1)(a) uses the word "port" supports this view. The effect of s.119(1)(a) is that any vessel plying to seaward from a "port" must comply with Tasmanian crewing requirements. It is not enough that the vessel has a valid certificate from the competent authority of another State, unless the Authority specifically accords recognition to that certificate (see s.148(1)). Nor is there any exception available for emergencies, as where a vessel en route from a New South Wales port to a Victorian port is forced to seek shelter on the Tasmanian coast. In such circumstances, the consequences of inadvertent non-compliance with Tasmanian law could be very serious (as the argument in the present case illustrates). It should not be assumed that the Tasmanian Parliament intended s.119(1) to have such a broad sweep that it catches vessels which simply shelter in an area not frequently used for that purpose by shipping generally.
We tend to the view that there is a second answer to Switzerland's contentions. The definition of "port" in s.4(1) of the Marine Act (Tas) applies only in the absence of a contrary intention. Section 119(1) applies to vessels "when plying to seaward from any port within the jurisdiction of the Authority". Plying is defined to include "proceeding" and "going". While this appears to be a very broad definition, s.4(2) provides that a reference, however expressed, to a vessel going to sea or proceeding to sea includes a reference to a vessel plying seaward beyond the limits of a port being those limits as defined pursuant to s.143.
Having regard to the definition of "plying" in s.4(1), s.119(1)(a) of the Act contains a sufficient reference to a vessel going to sea or proceeding to sea to attract s.4(2). It is true that s.4(2) contains an inclusive definition of the expressions "going to sea" and "proceeding to sea". Nonetheless, the explicit reference in that definition to a port, the limits of which are defined pursuant to s.143, suggests that s.119(1)(a) is intended to apply only to ports the limits of which have been so defined. In other words, s.119(1)(a), when read with s.4(2), reveals an intention that the manning requirements specified in the regulations should apply only to vessels plying to seaward from a port the limits of which have been defined pursuant to s.143.
This construction of s.119(1)(a) does not limit the power to define the limits of a port pursuant to s.143; the definition of "port" in s.4(1) applies to the word as used in s.143. However, the construction of s.119(1)(a) recognises that the broad definition of "port" in s.4(1), could lead to surprising consequences that are unlikely to have been intended by the Tasmanian Parliament. In particular, s.119(1)(a) would apply to any vessel leaving a "place of resort for shipping" on the Tasmanian coast, regardless of the duration or purpose of the stay at the place of resort and regardless of whether the place of resort was designated as a port by the Operational Regulations (Tas). As we have said, an emergency stop at a place of resort, even for a short period, could attract the manning requirements of Tasmanian law. This would be so despite the facts that the place of resort had not been defined as a port by the Operational Regulations (Tas) and that the master or owner of the vessel had no means of ascertaining that the area would or might be classified as a "place of resort for shipping".
We appreciate that s.119(1)(a) uses the expression "plying to seaward from any port within the jurisdiction of the authority", while s.119(1)(b) refers to a vessel "plying within the limits of any port as defined pursuant to section 143". The reason that s.119(1)(a) does not refer expressly to s.143 is that, for reasons that have been explained, s.4(2) incorporates the reference to the "limits [of a port] as defined pursuant to section 143". Since s.119(1)(b) does not contain language which refers to a vessel going to sea or proceeding to sea, s.4(2) does not apply to it and thus an express reference is required to the limits of a port as defined pursuant to s.143. Unless the construction we tend to favour is adopted, the result is that a vessel must comply with State manning requirements if it is plying seaward from a port, whether or not the limits of the port are defined pursuant to s.143. The vessel must also comply if it is plying within the limits of a port so defined. But if the vessel is "plying" within a port, not being a port the limits of which are defined pursuant to s.143, the manning requirements do not apply. It is difficult to see why such a result would be intended.
We prefer to limit ourselves to a tentative expression of opinion on the construction of s.119(1)(a), as we have not had the benefit of a detailed analysis of the scope and operation of the Marine Act (Tas). It is enough to rely on the first answer to Switzerland's argument that the respondent was in breach of the implied warranty created by s.47 of the Marine Insurance Act. In our view, there was no such breach.
CONCLUSION
For the reasons we have given, we conclude that Switzerland has not made out a case in defence to Mowie's claim for indemnity. It is not, therefore, necessary for us to express a view as to whether any conduct on the part of Switzerland constituted a waiver of any breach on the part of Mowie.
The appeal should be dismissed. Our present view is that costs should follow the event. However, we shall stay the costs order for a period of 14 days in order to allow either party to file written submissions on costs. Should either party file any such submissions, the other party should respond within 14 days.
I certify that this and the preceding 35 pages are a true copy of the Reasons for Judgment of the Honourable Justices Hill and Sackville.
Associate:
Dated: 10 April, 1997
Heard:24-25 February, 1997
Place: Sydney
Decision:10 April, 1997
Counsel for appellant: Mr B. Rayment QC, Mr G. Nell
Solicitors for appellant: Ebsworth & Ebsworth
Counsel for respondent: Mr A. Street SC
Solicitors for respondent: Allen Allen & Hemsley
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