Victrawl Pty Ltd v OTC Ltd

[1992] FCA 322

JUDGMENT ~QO.~;ZZ:/..%~

IN THE FEDERAL COURT OF AUSTRALIA	)
NEW SOUTH WALES DISTRICT REGISTRY	j NO. ~ 6 7 3 of 1991
1
GENERAL DIVISION	)

BETWEEN:

VICTRAWL PTY. LIMITED

Applicant

OTC LIMITED AND OTHER CO-OWNERS

OF THE ANZCAN CABLE

Respondent

AND:

OTC LIMITED AND OTHER CO-OWNERS

OF THE ANZCAN CABLE

Cr~sS-Ap~li~antS

AND :

VICTRAWL PTY. LIMITED

Cross-Respondent

CORAM: SHEPPARD J.

HIS HONOUR: By its Notice of Motion in this matter the applicant seeks an order pursuant to Order 29, rule 2 for the separate determination of a question concerning the	of Liabilitv for Maritime Claims Act 1989 ("the Act"). The	application to the circumstances of the case of the Limitation
Act was assented to on 30 November 1989 and it not having been proclaimed earlier, came into force on 1 May 1991 by operation of subsec.2(2) of the Act.
It is common ground that the applicant was at all material times the owner of the fishing vessel "Lorna Dorn" .
OTC Limited and the other respondents are the CO-owners of the
Anzcan Cable. The other CO-owners are listed in the schedule

U: 11 MARCH 1992

REASONS FOR JUDGMENT

i

to the Notice of Appearance and comprise a n	er of companies
and corporations most of which are establis ed in countries	4
outside Australia. On or about 13 April 1991,	the Act came into force, the Lorna Dorn was fouled on the 7 that is before
Anzcan Cable in the position of latitude S34 02.22 and longitude E151 46.50.

,

On 30 April 1991 the respondent wrote to the applicant saying that the CO-owners of the Anzcan Cable expected the applicant to reimburse it for all damages, costs, losses and expenditure incurred by the CO-owners of the Cable as a result of the damage caused by the Lorna Dorn. On 31 October 1991 the applicant, in expectation that the respondent would make a

commenced proceedings for limitation of liability pursuant to	claim against the applicant for the damage to the cable,
the Act. The respondent has filed a defence to the applicant's statement of claim in which it denies that the applicant is entitled to limit its liability pursuant to the Act.

Paragraph 4 of the defence is as follows:-
"Further, in answer to the whole of the Statement of
Claim, the Respondent says as a matter of law that
the 1976 Convention on Limitation of Liability for
Maritime Claims as introduced by the Limitation of
Liability for Maritime Claims Act 1989 does not
apply, the event giving rise to this claim occurring
on or about 13 April 1991 and by reason of that the
Statement of Claim is liable to be struck out for
failing to disclose any cause of action."

The respondent has also filed a cross-claim. 1t was replaced by an amended cross-claim on 12 December 1991. The cause of action relied upon in the cross-claim is negligence. An amount of $1,359,852.59 is claimed by way of damages.

In its statement of claim the applicant relies not only upon the Act but also upon the provisions of n.25 of the Admiraltv Act 1988. That section provides that a person who apprehends that a claim for compensation under a law that gives effect to the provisions of a Liability Convention may be made against the person by some other person may apply to the Federal Court to determine the question whether the liability of the first-mentioned person in respect of the claim may be limited under that law. On such an application

the Federal Court may determine whether the applicant's	liability may be so limited and determine the limit of that
liability. The expression "Liability Convention" is defined in s.3 of the Admiraltv Act to include "the Limitation Convention", which was defined until recently to mean the International Convention relating to the limitation of the liability of owners of sea-going ships done at Brussels on 10 October 1957, a copy of the English text of which is set out in Schedule 6 to the Naviaation Act 1912 and the Protocol amending that Convention done at Brussels on 21 December 1979, a copy of the English text of which is set out in Schedule 6A to the Naviaation Act. The Act effected amendments to the Admiraltv Act. These are set out in Schedule 2. The definition of "Limitation Convention" now means the Convention on Limitation of Liability for Maritime Claims 1976 being the Convention, a copy of the English text of which is set out in Schedule 1 to the Act. The central provision of the Act is s.6 which provides that, subject to the Act, the provisions of the Convention, other than paras. l(d) and (e) of Article 2, have the force of law in Australia.
One of the principal matters in question between the parties is whether the 1957 Convention applies or whether the case is governed by the 1976 Convention. The matter is of importance because of the different wording of the relevant parts of the two Conventions. It should be said that the applicant has not as yet made any claim to limit its liability pursuant to the 1957 Convention but it was said during the
argument that, if it were unable to rely upon the 1976
Convention, it is probable that it would seek to rely upon the 1957 Convention.
The 1957 Convention was in force in Australia until the passing of the Act by virtue of the provisions of Division 1 of Part VIII of the Navisation Act 1912. That Division has now been repealed by the Act; see Schedule 3. Section 333 of the Naviaation Act formerly provided that the provisions of the 1957 Convention had the force of law as part of the law of the Commonwealth. There are other provisions of Division 1 dealing with limitation actions but it is unnecessary to refer to the detail of these.
As mentioned the 1957 Convention was set out in Schedule 6 to the Naviaation Act. Clause (l) (b) of Article 1 provided that the owner of a sea-going ship might limit his liability in accordance with Article 3 of the Convention in respect of claims arising, inter alia, from loss of or damage "to any other property". The presence of the word "other" is accounted for by the fact that clause (l)(a) of Article 1 refers to loss of or damage to property on board the ship which has caused the damage. Article 1 provides that the right to limit liability will be lost if the occurrence giving rise to the claim resulted from "the actual fault or privity of the owner" of the vessel. The expression "actual fault or privity" has, of course, a well understood meaning.
These provisions of the 1957 Convention need to be contrasted with those of the 1976 Convention. Paragraphs (a) and (c) of clause 1 of Article 2 are as follows:-

"1. Subject to Articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability:

(a) claims in respect of loss of life or personal
injury or loss of or damage to property
(including damage to harbour works, basins and
waterways and aids to navigation), occurring on
board or in direct connexion with the operation
of the ship or with salvage operations, and
consequential loss resulting therefrom;

........ ........ ........ ........ ........ ........ .....

(C) claims in respect of other loss resulting from

infringement of rights other than contractual
rights, occurring in direct connexion with the
operation of the ship or salvage operations;"

Article 3 deals with claims which are excepted from limitation. None of the exceptions is relevant to the circumstances of the present case. Article 4 is as follows:-

"A person liable shall not be entitled to limit his

liability if it is proved that the loss resulted
from his personal act or omission, committed with
the intent to cause such loss, or recklessly and
with knowledge that such loss would probably result."

It is to be observed that there is no provision now which bars the right to limit where the damage has resulted from the actual fault or privity of the owner. The comparable provision is Article 4 which, although I have not considered the matter fully, would seem to bring about a situation in which it will be less difficult for owners of vessels to limit their liability.

The application for the determination of a separate question is opposed by the respondent. In support of his submissions that the order should be made counsel for the applicant said that, if the question were answered adversely to the applicant, the applicant would be unable to proceed on its statement of claim with the consequence that there would be a final determination of the applicant's claim based as it

is only upon the Act and the 1976 Convention. That this is

the situation is underlined in his submission by para. 4 of

the defence which I have earlier set out. Other submissions

made by counsel for the applicant were that a considerable

saving in costs and court time would result from the

/

identification of the limitation regime which was applicable and that there would be avoided a dilemma which would otherwise arise at the trial in that the trial judge would be saved the necessity of deciding on the evidence adduced at the trial which of two separate limitation r6gimes was applicable.

/

Reference was made to the fact that the two regimes have different disentitling conduct. I do not myself take anything from the second of these submissions. There is, however, force in the first of them.

A further factor relied upon by counsel for the applicant was that, if matters are left as they are, the parties will be required to conduct different interlocutory steps in relation to the different limitation rLgimes and will need to lead

/

different evidence in relation to the competing regimes of

matter and result in increased costs. I reject this	liability all of which will protract the determination of the
submission. It seems to me that whatever is done, the facts will have to be ascertained. When they are ascertained and findings are made, the Court can apply to them the regime /
which it finds is the correct one.
In her submissions the solicitor for the respondent said that the determination of which of the limitation provisions
applies would not be decisive of the litigation although it
might be determinative of the initiating proceeding as it now
stands. In her submission a separate determination of the

1

applicable liability regime will still leave open the respondent's entitlement to rely upon a defence that the occurrence giving rise to the action did not arise in circumstances in which the applicant is entitled to limit its liability.

The principles which guide me in an application of this kind have been referred to in a number of authorities. The most recent statement, so far as I am aware, is that to be found in the jugment of French J. in Blurton v. Minister for Aboriainal Affairs (1991) 29 FCR 442. There his Honour, after setting out the provisions of the rule, said (p.449):-

"The principles governing the exercise of the power under 0 29 were referred to by Toohey J. in m Enter~rises v. Duffv (unreported, Toohey J., 28 March 1985):

'Order 29, r.2 provides a useful procedure

in certain cases though its usefulness
depends upon the obtaining of answers which
are likely to make a substantive hearing
unnecessary, at least if the questions are
answered in a particular way. The decision
ultimately is one for the court though
naturally it will have regard to the attitude
of the parties.'

And in Car1 Zeiss Stiftunq v. Herbert Smith & Co. [l9691 1 Ch. 93 at 98, Lord Denning (Diplock and Sachs LJJ agreeing) said:

'I know that it has been said on one or two
occasions that a preliminary issue should be
ordered only when, whichever way it is

decided, it is conclusive of the whole
matter. That was said by Lord Evershed MR
in Windsor Refriaerator Co. Ltd. v. Branch

pominees Ltd. [(No. 1) [l9611 Ch. 88; (No. 2)

[l9611 Ch. 375 at 3961; and Haman LJ in

Yeoman Credit Ltd. v. Latter [[l9611 1 WLR

828 at 835; [l9611 2 All ER 294 at 2991. I

do not think that is correct. The true rule

was stated by Romer LJ in Everett v. Ribbands

[l9521 1 KB 112:

'where you have a point of law which, if decided in one way, is going to be decisive of litigation, then advantage

ought to be taken of the facilities
afforded by the Rules of Court to have
it disposed of at the close of pleadings,
or very shortly after the close of

pleadings.'

I have always understood such to be the practice.
I quite agree that in many cases the facts and law
are so mixed up that it is very undesirable to have
a preliminary issue. I always like to know the
facts before deciding the law.'

The preliminary issue in this case does not depend upon any question which would require evidence to be adduced. It is simply a matter of the proper construction of the Act. In my opinion, and in accordance with the principles already outlined, it is appropriate that that issue be decided now."

As mentioned the applicant has not as yet formally
committed itself to taking action under the 1957 Convention if

it should be held that the 1976 Convention does not apply to

moment, a determination that the 1976 Convention did not apply	the circumstances of this case. As matters stand at the
would bring to an end the applicant's claim. That would not be the position if it were to sue alternatively upon the basis of the 1957 Convention in the event that it were held that the
1976 Convention had no application. If the statement of claim
remains as it is, then I think that there is clearly utility in determining whether the 1976 Convention is applicable as a

preliminary question. If the 1957 Convention is to be relied upon in the alternative, then I think the position is different. The position must be one under which either the 1976 Convention applies or the 1957 Convention applies. It is not a case where there is no applicable limitation Convention. If the two Conventions are to be relied upon in the alternative, then I do not think there is utility in a preliminary question being determined. As I have said, the facts will have to be found. I do not think that the trial judge will find it inconvenient firstly to find the facts and then form a view as to which is the appropriate Convention. Having done so he can then reach a conclusion on whether there is disentitling conduct under the applicable Convention. It may be that, in order to short circuit matters, it will be found appropriate once findings of fact have been made then to refer a question as to the applicable Convention to a full court. On the other hand it is possible that the facts will- be such as to lead to the conclusion that the applicant is not entitled to limit no matter which of the two Conventions applies or, alternatively, that the applicant is entitled to	limit irrespective of which Convention applies because there	is no disentitling conduct established under either.
It follows from what I have said that, if the applicant is prepared to tie itself irrevocably to the masthead of the 1976 Convention, I will accede to the application. If it is not prepared to do this, then the statement of claim should be amended and, at least for the time being, I would in that

event decline to state a separate question.

The matter will stand over for a few days to enable the parties and their legal advisers to consider what I have said. When it is next in the list I shall make appropriate directions for its on-going prosecution.

I certify that this and the /O preceding

pages are a true copy of the reasons for

ludgment herein of The Honourable

Mr Justice Sheppard.