FEDERAL COURT OF AUSTRALIA
Strong Wise Limited v Esso Australia Resources Pty Ltd (No 2)
[2010] FCA 575
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Citation: |
Strong Wise Limited v Esso Australia Resources Pty Ltd (No 2) [2010] FCA 575 |
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Parties: |
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File number: |
VID 1060 of 2008 |
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Judge: |
RARES J |
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Date of judgment: |
8 June 2010 |
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Catchwords: |
PRACTICE AND PROCEDURE – PLEADINGS – relief flowing from pleadings – Convention does not deny shipowner the right to limit because number of distinct occasions is misidentified in pleadings – real controversy to be resolved in proceedings is whether shipowner can invoke limitation of liability under Art 10 of the Convention on one or more distinct occasions – Court able to give effect to findings by ordering the constitution of one limitation fund and making a declaration of shipowner’s entitlement to establish a second fund PRACTICE AND PROCEDURE – PLEADINGS – orders to prevent multiplicity of proceedings under s 22 of the Federal Court of Australia Act 1976 (Cth) from shipowner’s failure to plead more than one distinct occasion – Court able to grant relief appropriate to dispose of the controversy litigated – multiplicity of proceedings inevitable consequence of not making orders giving effect to reasons due to shipowner’s failure to plead more than one distinct occasion –refusal to grant relief not consistent with interests of justice PRACTICE AND PROCEDURE – PLEADINGS – amendment of pleadings – late application to amend after reasons delivered – power of Court to make amendments of its own motion to determine real questions in controversy – no unqualified duty to permit late addition of any new claim – tactical choices significant factor in exercise of discretion to allow amendments COSTS – unfettered discretion to award costs under s 43(2) of the Federal Court of Australia Act 1976 – no special practice as to costs in limitation actions under the Convention – substantial issues won and lost by each of the parties – limitation of liability under Convention a right rather than privilege – no general rule that shipowner liable for all costs in limitation proceedings – shipowner liable for costs of establishing uncontested entitlement to limitation: r 61(1) of Admiralty Rules 1988 Held: jurisdiction of Court not limited by pleading of shipowner – plenary jurisdiction to determine the controversy between the parties – orders made to avoid multiplicity of proceedings – shipowner to pay 50% of defendants’ costs |
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Legislation: |
Acts Interpretation Act 1901 (Cth) s 23(b) Admiralty Act 1988 (Cth) s 4(3)(a), 21, 25 Admiralty Rules 1988 r 59(1)
Convention on Limitation of Liability for Maritime Claims 1976 as affected by the 1996 Protocol to amend Arts 1(1), 2, 4, 6, 7, 9, 10, 11, 12 13 Federal Court of Australia Act 1976 (Cth) s 31A Judiciary Act 1903 (Cth) s 39B(1A)(c) Limitation of Liability for Maritime Claims Act 1989 (Cth) s 9 |
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Cases cited: |
AON Risk Services Australia Limited v Australian National University 239 CLR 175 applied Barameda Enterprises Pty Ltd v O’Connor [1988] 1 Qd R 359 referred to Blair v Curran (1939) 62 CLR 464 applied Bouygues Offshore SA v Capsian Shipping Co (Nos 1, 3, 4 and 5) [1998] 2 Lloyd’s Rep 461 referred to Calderbank v Calderbank [1976] Fam 93 distinguished Dare v Pulham (1982) 148 CLR 658 applied Esso Australia Resources Pty Ltd v Commissioner of Taxation [2010] FCA 215 referred to Hyster Australia Pty Ltd v Anti-Dumping Authority (No 2) (1992) 41 FCR 259 referred to James Patrick & Co Ltd v Union Steamship Co of New Zealand Ltd (1938) 60 CLR 650 applied Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 applied Mummery v Irvings Pty Ltd (1956) 96 CLR 99 applied Newcastle Port Corporation v Pevitt (2003) 58 NSWLR 584 distinguished Owners of “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 applied Probiotec Ltd v University of Melbourne (2008) 166 FCR 30 applied Re Wakim; Ex parte McNally (1999) 198 CLR 511 applied Strong Wise Ltd v Esso Australia Resources Ltd [2010] FCA 240 referred to The Capitan San Luis [1994] QB 465 referred to The Despina GK [1983] QB 214 referred to The Point Breeze [1928] P 135 referred to The Tolten [1946] P 135 applied The Western Regent (Seismic Shipping Inc v Total E&P UK plc) [2005] 2 Lloyd’s Rep 359 referred to Thomson Australian Holdings Ltd v Trade Practices Commission (1981) 148 CLR 150 applied Vale v Sutherland (2009) 237 CLR 638 applied Victrawl Pty Ltd v Telstra Corporation Ltd (1995) 183 CLR 595 applied TEXTS REFERRED TO Marsden on Collisions at Sea (13th ed) R Williams: Practical Problems in the Current Global Limitation Regime published as Chapter 15 in D R Thomas: Liability Regimes Contemporary Maritime Law (2007 Informa) pp 279-299 at [15.49]-[15.54] |
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Date of hearing: |
12 May 2010 |
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Place: |
Sydney (via video link to Melbourne) |
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Division: |
GENERAL DIVISION |
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Category: |
Catchwords |
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Number of paragraphs: |
82 |
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Counsel for the Plaintiff: |
Dr G Griffith QC, Mr S Horgan SC and Mr M Scott |
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Solicitor for the Plaintiff: |
Holman Fenwick Willan |
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Counsel for the First and Second Defendants: |
Mr P Murdoch QC and Dr AP Trichardt |
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Solicitor for the First and Second Defendants: |
Blake Dawson |
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IN THE FEDERAL COURT OF AUSTRALIA |
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IN ADMIRALTY |
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NEW SOUTH WALES DISTRICT REGISTRY |
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GENERAL DIVISION |
VID 1060 of 2008 |
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STRONG WISE LIMITED Plaintiff
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AND: |
ESSO AUSTRALIA RESOURCES PTY LTD (ACN 091 829 819) First Defendant
BHP BILLITON PETROLEUM (BASS STRAIT) PTY LTD (ACN 004 228 004) Second Defendant
PERSONS WHO MAY HAVE A CLAIM WITHIN THE MEANING OF ARTICLE 2 OF CONVENTION ON LIMITATION OF LIABILITY FOR MARITIME CLAIMS 1976 (AS AMENDED BY THE 1996 PROTOCOL TO AMEND CONVENTION OF LIMITATION OF LIABILITY FOR MARITIME CLAIMS 1976) AS GIVEN FORCE OF LAW BY THE LIMITATION OF LIABILITY FOR MARITIME CLAIMS ACT (1989) (AS AMENDED) IN RESPECT OF LOSS SUFFERED OR DAMAGE CAUSED BY AN ANCHOR OR ANCHOR CABLE OF THE VESSEL "APL SYDNEY" IN PORT PHILLIP BAY, VICTORIA ON OR ABOUT 13 DECEMBER 2008 Third Defendant
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JUDGE: |
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DATE OF ORDER: |
8 JUNE 2010 |
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WHERE MADE: |
SYDNEY (via video link to melbournE) |
THE COURT DECLARES THAT:
(a) claims arising on the occasion comprised of the events that led to and immediately followed the anchor of APL Sydney fouling the pipeline at about 15:44 to 15:45 on that day and that preceded the events referred to in (b) below (“the first distinct occasion”);
(b) claims arising on the occasion comprised of the events on that day commencing at about 16:19:51 that led to the rupture of the pipeline and its subsequent bending (“the second distinct occasion”).
2. The liability of the plaintiff for claims arising on each distinct occasion referred to in Order 1 is limited to an amount in respect of each occasion calculated by reference to the most recent SDR conversion rate into Australian dollars published by the International Monetary Fund at www.imf.org as at the date of constitution of the limitation fund multiplied by 13,997,300 Units of Account (calculated by reference to the gross registered tonnage of APL Sydney being 35,991 metric tons), plus interest on that sum, at the rates prescribed by O 35 r 7A of the Federal Court Rules, from 13 December 2008 to the date of constitution of the respective limitation fund (“the limitation amount”).
THE COURT ORDERS THAT:
3. The plaintiff constitute a fund in respect of claims subject to limitation, in accordance with Orders 1 and 2 above, arising on the first distinct occasion (“the fund”) by paying the limitation amount into Court on or before 17 June 2010.
4. The registrar, if requested in writing by the plaintiff or its solicitors, shall use or allocate so much of any money that has been paid into Court by the plaintiff in or by reference to these proceedings, together with any interest thereon, for the purpose of constituting the fund, provided that, if that sum is insufficient fully to constitute the fund, the plaintiff has paid the difference necessary to complete the constitution of the fund into Court at or before the time of the request.
5. On or before 22 June 2010 the plaintiff advertise in accordance with Form 24 of the Admiralty Rules 1988 in The Age and The Australian newspapers and the international newspaper and online editions of Lloyd’s List that the determination limiting the plaintiff’s liability in Orders 1(a), 2, 3 and 4 above was made.
6. The period fixed for the purposes of Rule 62(1)(b) of the Admiralty Rules expires on 24 August 2010.
7. The plaintiff notify the following entities of the terms of the advertisement referred to in Order 5 above by posting a copy of that advertisement on or before 24 June 2010 to:
(a) Qenos Pty Ltd
c/- HWL Ebsworth Lawyers
Level 14, Australia Square
264-278 George Street
Sydney NSW 2000
Attn: DAW:AJB
(b) Huntsman Chemical Co Australia Pty Ltd
c/- Minter Ellison Lawyers
Waterfront Place
1 Eagle Street
Brisbane QLD 4000
Attn: DGT
(c) Port of Melbourne Corporation
c/- Monahan & Rowell Lawyers
Level 31
525 Collins Street
Melbourne VIC 3000
Attn: R Tuck
8. The solicitor for the plaintiff file an affidavit deposing to compliance with Orders 5, 6 and 7 on or before 30 June 2010.
9. Any party have liberty to apply upon giving three days written notice to the others.
10. The Fund be administered by order of the Court.
11. The plaintiff pay 50% of the costs of the first and second defendants of these proceedings as agreed or, in default of agreement, as taxed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
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IN THE FEDERAL COURT OF AUSTRALIA |
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IN ADMIRALTY |
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NEW SOUTH WALES DISTRICT REGISTRY |
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GENERAL DIVISION |
VID 1060 of 2008 |
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BETWEEN: |
STRONG WISE LIMITED Plaintiff
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AND: |
ESSO AUSTRALIA RESOURCES PTY LTD (ACN 091 829 819) First Defendant
BHP BILLITON PETROLEUM (BASS STRAIT) PTY LTD (ACN 004 228 004) Second Defendant
PERSONS WHO MAY HAVE A CLAIM WITHIN THE MEANING OF ARTICLE 2 OF CONVENTION ON LIMITATION OF LIABILITY FOR MARITIME CLAIMS 1976 (AS AMENDED BY THE 1996 PROTOCOL TO AMEND CONVENTION OF LIMITATION OF LIABILITY FOR MARITIME CLAIMS 1976) AS GIVEN FORCE OF LAW BY THE LIMITATION OF LIABILITY FOR MARITIME CLAIMS ACT (1989) (AS AMENDED) IN RESPECT OF LOSS SUFFERED OR DAMAGE CAUSED BY AN ANCHOR OR ANCHOR CABLE OF THE VESSEL "APL SYDNEY" IN PORT PHILLIP BAY, VICTORIA ON OR ABOUT 13 DECEMBER 2008 Third Defendant
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JUDGE: |
RARES J |
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DATE: |
8 JUNE 2010 |
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PLACE: |
SYDNEY (VIA VIDEO LINK TO MELBOURNE) |
REASONS FOR JUDGMENT
1 On 12 May 2010, further evidence was tendered and the parties advanced arguments as to the orders that should be made in consequence of the findings contained in my reasons delivered on 18 March 2010: Strong Wise Ltd v Esso Australia Resources Ltd [2010] FCA 240. I will continue to use the same terms to describe matters in these reasons as I did there.
Issues
2 The parties contended that radically different orders be made in consequence of my findings. The shipowner argued that I should order that it establish a limitation fund in respect of the first occasion and make a declaration that it was entitled to limit its liability in respect of the second. It sought repayment of any surplus funds left after the amount it had paid into Court had been applied to constitute a limitation fund, together with the return of other security that had been provided to obtain the release of APL Sydney from arrest in January 2009. The shipowner also argued that it was entitled to a favourable costs order. And, it sought leave to amend the statement of claim, if necessary, to expand the issues and relief claimed, so as to reflect the findings that two distinct occasions had arisen.
3 Esso and BHP argued that the proceedings should be dismissed because the case that the shipowner had pleaded and pursued was that all the events of 13 December 2008 gave rise to one, and only one, distinct occasion. They said that the Court had no jurisdiction to give the shipowner different relief. They contended that the findings that two distinct occasions had arisen, entailed that the substantive claim failed with the consequence that the proceedings be dismissed with costs. And, Esso and BHP opposed leave being given to the shipowner for any amendment to its pleadings.
The current pleadings
4 The statement of claim as amended on 5 March 2009 relevantly pleaded (with the amendments made then underlined):
“2. [Esso and and BHP] …
(b) have alleged (by letter from their solicitors Blake Dawson dated 15 December 2008) that they have or will suffer loss and damage arising out of or in connection with an incident which occurred on or about 13 December 2008 when the vessel “APL SYDNEY” drifted from its anchorage in Port Phillip Bay, Victoria and its anchor struck and became fouled on a submarine pipeline owned by the first and second defendants and operated by the first defendant (“the incident”).
3. The third defendants are any other person, corporation or entity capable of suing (and presently not identified) who may have a claim within the meaning of Article 2 of the [the Convention] as given force of law by the Limitation of Liability for Maritime Claims Act (1989) (as amended) in respect of loss suffered or damage caused by or in connection with the incident.
4. The plaintiff claims to be entitled to limit its liability arising out of or in connection with the incident on the grounds that the claims of the defendants are claims of the type described in Article 2 of The Convention for which the plaintiff is entitled to limit its liability to the amount of the limitation fund referred to in paragraph 5 below.
5. The plaintiff is by Article 6 of The Convention entitled to limit its liability in respect of all the defendants’ claims arising out of the incident to an amount calculated by reference to the gross tonnage of the vessel “APL Sydney” being 35,991 GRT (“the limitation fund”), the defendants’ claims arising on a distinct occasion for the purposes of Article 6.
6. The plaintiff therefore seeks the following orders:
(1) A declaration that the plaintiff’s liability is limited to the amount of the limitation;
(2) An order for the constitution of the one limitation fund for payment of claims arising out of the incident in respect of which the plaintiff is entitled to limit its liability;
(3) A declaration that upon the plaintiff constituting the limitation fund as required by the Court:
(a) the defendants were or will become barred from exercising any right in respect of their claims against any assets of the plaintiff or otherwise;
(b) the plaintiff is entitled to the release of any security provided to the defendants or otherwise in respect of or in connection with the incident;
(4) An order that the defendants return to the plaintiff any security referred to in paragraph 3(b) above.
(5) All such orders as are just with respect to the administration and distribution of the limitation fund; and
(6) Any other necessary or appropriate orders or directions including orders relating to costs and interest.”
5 Esso and BHP pleaded in response to paragraphs 2(b), 3, 4 and 5 of the amended statement of claim that four distinct occasions, describing them as “events”, had occurred in par 2(d) of their amended defence. That defence continued:
“2 …
(e) Each of the events referred to in subparagraph 2(d) hereof gave rise to a separate claim for loss and damage arising on a distinct occasion within the meaning of Article 6 of [the Convention].
Particulars
Full particulars of loss and damage will be before trial.
(f) In the premises the plaintiff is not entitled to limit its liability in respect of the first and second defendants’ claims to a single limitation fund calculated pursuant to Article 6 of the Convention.
(g) They admit that:
(i) a letter was forwarded by Blake Dawson dated 15 December 2008 to the solicitors for the plaintiff;
(ii) the claims referred to in paragraph 2(e) hereof are claims as contemplated by Article 2 of the Convention;
(iii) the gross tonnage of the vessel is 35,991 GRT;
(iv) at all material times, the first and second defendants were and are the owners of the pipeline.
(h) They otherwise deny the allegations in paragraphs 2(b), 3, 4 and 5 thereof.
3. As to paragraph 6 thereof, they do not plead to it, as paragraph 6 is in the nature of a prayer for relief” (emphasis added)
Further evidence on the issue of relief
6 The parties agreed on the appropriate methodology for calculating the amount of a limitation fund, including interest, should one be ordered.
7 On 19 December 2009 Esso commenced an action in rem in this Court against APL Sydney. Esso also applied for the arrest of the ship. She was arrested by the Marshal later that day in the Port of Brisbane. The writ was founded on a general maritime claim for damage done by the ship under s 4(3)(a) of the Admiralty Act 1988 (Cth). Esso gave these particulars of its claim in the writ:
“The plaintiff is the joint owner and/or operator and/or licensee of a submarine pipeline in Port Phillip Bay, Melbourne Victoria. The plaintiff also uses the submarine pipeline to deliver ethane to petrochemical companies in Altona.
The plaintiff has suffered loss and damage and has been put to expense by reason of damage done to the said pipeline by the defendant’s vessel “APL Sydney” in the circumstances set out below.
On or about 13 December 2008, “APL Sydney” anchored in Port Phillip Bay and thereafter dragged its anchor. The anchor struck and damaged the said pipeline. This resulted in an explosion and escape of ethane that was being transported through the pipeline at the time.
The plaintiff stopped transporting ethane through the pipeline in the afternoon on 13 December 2008 and is now unable to use the pipeline until it is repaired and approved for use. The plaintiff must now flare off ethane produced at the Long Island Point fractionation plant, located near Hastings, until the pipeline becomes operational.”
Caveats against release of the ship were filed soon after by BHP, Qenos, Huntsman and Port of Melbourne Corporation.
8 Over the next month negotiations for the release of the ship occurred between the shipowner, its hull and machinery liability insurer, Gard Marine & Energy Ltd, and Esso and BHP. On 31 December 2007, when those negotiations had reached an impasse, the shipowner filed an application seeking release of the ship from the arrest. Before that application was determined, the parties reached agreement on terms for APL Sydney’s release. They agreed that her market value was USD36 million. This was considerably more than the then maximum value of USD21.5 million, for a single limitation fund that could be constituted under the Convention.
9 Gard, on behalf of the shipowner and itself, paid USD21.5 million into Court. Gard also agreed to provide in favour of Esso and BHP a letter of undertaking dated 20 January 2009 as additional “top up” security. Gard promised to pay them up to a further USD14.5 million plus costs as representing, when taken with the money in Court, the agreed value of the ship. Esso and BHP, in turn, agreed not to rearrest the ship.
10 The letter of undertaking described the “Incident” for which it was given as “Damage to submarine pipeline in Port Phillip Bay, Melbourne, 13 December 2008”. The letter related to all claims by Esso and BHP (which it described as “the Beneficiaries”) in respect of damages and costs “… arising from or in relation to or in any way connected with the Incident”. The letter relevantly recorded the following:
· the parties’ agreement for release of APL Sydney in consideration of the payment into Court of USD21.5 million and the provision of Gard’s promise to pay USD14.5 million as “top up” security. The latter sum would be the maximum additional amount, plus costs, that Gard would ever be liable to pay to Esso and BHP in respect of a final judgment or settlement (cll 1, 4);
· the letter had been given without prejudice to:
(1) Gard and any other participating insurer having the right to apply to limit liability under the Convention in these proceedings (cl 2);
(2) the right of Esso and BHP to contest such an application, including under Art 4 of the Convention (cl 3);
· Gard’s agreement to pay any costs ordered or agreed to be paid to Esso and BHP in these proceedings (cl 5);
· “In the event that the Owners of APL Sydney and/or the Hull and Machinery Insurers obtain an unappealable judgment or orders and it is finally determined in Australian proceedings that Owners are entitled to limit liability in respect of the Incident in accordance with the Convention and establish a limitation fund in Australia in respect of the Incident, Gard…shall be released from the obligation under this letter of undertaking towards BHP … and Esso to make the payment in accordance with paragraph land BHP … and Esso shall forthwith return this letter of undertaking to Gard … for cancellation.” (cl 7) (sic) (emphasis added)
The shipowner’s submissions
11 The shipowner argued that, substantively, it had succeeded in the trial. It pointed to the preliminary views that I expressed (Strong Wise [2010] FCA 240 at [363]) that if it were entitled to establish a limitation fund for the first occasion (when the anchor fouled the pipeline);
· that fund would be available to pay all claims other than those that arose on the second distinct occasion (when the pipeline was ruptured and bent back);
· the claims that arose on the second occasion related to the additional damage done to the pipeline by the ship’s movements ahead (causing it to rupture) and then astern after that event (causing it to be bent back), the extra time for repair of the pipeline (about three or four days of the total repair period of 11 weeks), consequential losses claimed by Qenos, Huntsman and other parties in respect of that extra time and the loss of escaped gas.
12 The shipowner contended that its pleaded claim entitled it to orders providing for:
· the establishment of a limitation fund of about AUD23.2 million plus interest in respect of the first distinct occasion, using the money already paid into Court;
· a declaration of its entitlement to limit its liability in respect of the second distinct occasion;
· a return of any remaining money paid into Court.
13 It also argued that it had made a Calderbank offer on 31 July 2009 of such a nature as justified an order that Esso and BHP pay its costs on an indemnity or party-party basis thereafter.
Esso’s and BHP’s submissions
14 Esso and BHP contended that the shipowner was not entitled to any relief because it had pleaded in the statement of claim that:
· all the events on 13 December 2008 amounted to a single distinct occasion (par 5);
· it was entitled to an “… order for the constitution of one limitation fund arising out of the incident (par 6(1) and (2));
· a declaration that on it constituting the limitation fund, all defendants would become barred from exercising any right in respect of their claims against the ship or its other assets and the shipowner would be entitled to the release of all security it had provided (par 6(3)).
15 They also contended that the terms of Gard’s letter of undertaking reflected Gard’s and the shipowner’s intention to bring about a result that all claims be payable from one single limitation fund in respect of all liability that arose from the “Incident”. Esso and BHP also argued that s 25 of the Admiralty Act did not confer any jurisdiction or power on this Court to permit a shipowner to widen its claim for relief as sought now, beyond what it had pleaded. Alternatively, they contended that, if there were jurisdiction, leave to amend now should be refused. They sought costs of the whole proceedings.
Jurisdiction
16 I reject the argument put by Esso and BHP that in some way the Court lacks jurisdiction to grant relief to the shipowner consistent with my earlier findings that there were two distinct occasions. The argument depended upon an erroneous view of the meaning of s 25 of the Admiralty Act and the nature of an application by a shipowner to limit its liability under it and or the Convention. Section s 25 provided:
“25 Limitation of liability under Liability Conventions
(1) A person who apprehends that a claim for compensation under a law (including a law of a State or a Territory) that gives effect to 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.
(2) Subsection (1) does not affect the jurisdiction of any other court.
(3) On an application under subsection (1), the Federal Court may, in accordance with the law referred to in that subsection:
(a) determine whether the applicant’s liability may be so limited and, if it may be so limited, determine the limit of that liability;
(b) order the constitution of a limitation fund for the payment of claims in respect of which the applicant is entitled to limit his or her liability; and
(c) make such orders as are just with respect to the administration and distribution of that fund.
(4) Where a court has jurisdiction under this Act in respect of a proceeding, that jurisdiction extends to entertaining a defence in the proceeding by way of limitation of liability under a law that gives effect to provisions of a Liability Convention.”
17 As appears in the opening words of s 25(1), the jurisdiction of the Court is enlivened, relevantly, when a person apprehends that a claim for compensation under a law, including the Convention, may be made against him by someone else. The words “a claim” include “claims”: s 23(b) of the Acts Interpretation Act 1901 (Cth). That person is given a right, by s 25(1) to apply to this Court to determine whether the apprehended liability of that person “may be limited under that law”. Thus, the jurisdiction conferred by s 25(1) is to determine whether the person’s liability in respect of the claim or claims may be limited. A narrow construction is not apposite for a conferral of jurisdiction of this kind. Not only is a broad construction warranted by the terms of s 25 itself, but the Convention envisages that claims may arise on more than one occasion and that a shipowner is entitled to limit his liability for each and every occasion.
18 Moreover, Esso and BHP’s argument was fundamentally unsound. In Owners of “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404 at 421 Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ stated the principle of statutory construction that applies here, namely:
“It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words.” (footnote omitted)
19 The jurisdiction conferred in s 25 is plenary. It is to determine whether a person’s liability may be limited under the Convention (or other law) in respect of the claim or claims apprehended. The powers conferred in s 25(3) again, read with words in the singular as including the plural (s 23(b) of the Acts Interpretation Act), are not limited to making one order for one limitation fund. They extend to granting all the relief under the Convention to which the controversy between the parties gives rise.
20 In addition, s 39B(1A)(c) of the Judiciary Act 1903 (Cth) conferred jurisdiction on this Court in any matter arising under the Limitation of Liability for Maritime Claims Act 1989 (Cth), because it is a law made by the Parliament. This created jurisdiction in the Federal Court under s 9 of the latter Act because the shipowner expected a claim to be made against it when it filed its statement of claim. That jurisdiction was to determine the limit the shipowner’s liability “in respect of any liability of that person that may be limited under” the Convention. And s 9(5) provided that s 9 did not exclude or limit the operation of s 25 of the Admiralty Act.
21 The nature of the justiciable controversy of which the Court became seized when the shipowner commenced these proceedings was explained by Gummow and Hayne JJ, with whom Gleeson CJ and Gaudron J agreed in Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585-586 [140]; see too at 546 [25] and [26]:
“What is a single controversy “depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships” (Fencott (1983) 152 CLR 570 at 608 per Mason, Murphy, Brennan and Deane JJ). There is but a single matter if different claims arise out of “common transactions and facts” or “a common substratum of facts” (Philip Morris (1981) 148 CLR 457 at 512 per Mason J), notwithstanding that the facts upon which the claims depend “do not wholly coincide” (Fencott (1983) 152 CLR 570 at 607 per Mason J, Murphy, Brennan and Deane JJ). So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other (Philip Morris (1981) 148 CLR 457 at 512 per Mason J), as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are “completely disparate” (Felton v Mulligan (1971) 124 CLR 367 at 373 per Barwick CJ), “completely separate and distinct” (Philip Morris (1981) 148 CLR 457 at 521 per Murphy J) or “distinct and unrelated” (Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 482 per Stephen, Mason, Aickin and Wilson JJ) are not part of the same matter.”
22 Esso’s writ in rem commenced proceedings against the ship on 19 December 2008 based on what appeared to be a single cause of action for damages. It is hardly surprising that the shipowner, when invoking the jurisdiction to seek to limit its liability under the Convention, initially made no reference to more than one distinct occasion. The suggestion that there were possibly multiple occasions did not appear in Gard’s letter of undertaking. I infer that was because by late January 2009 it had not occurred to Esso and BHP that they could bring claims that had arisen on more than one distinct occasion. Nonetheless, the possibility that there had been more than one distinct occasion on which claims arose against the shipowner and APL Sydney on the afternoon of 13 December 2008 was always part of the controversy between the parties over which the Court had jurisdiction.
23 If the jurisdictional argument of Esso and BHP were correct, a shipowner could never amend its pleading under s 25 of the Admiralty Act to limit its liability if, in response, its opponent asserted that claims had arisen on more than the distinct occasion or occasions asserted by the shipowner. Such an impractical construction of the Acts would require very clear words. It achieves no discernible purpose. Rather, it would frustrate the substantive right of a shipowner to establish one or more limitation funds under the Convention, so as to be able to enjoy thereafter the protection that the right or rights to limit its liability were intended to create. I discussed the history and purpose of the shipowner’s rights to limit, the Convention, and the Parliament’s substantive adoption of it as part of the law of the Commonwealth in Strong Wise [2010] FCA 240 at [22]-[65].
24 Under Art 1(1) of the Convention, shipowners were given a right to limit their liability in accordance with the rules in the Convention for claims under Art 2. Thus, the shipowner here was entitled to limit its liability under Art 2(1)(a). That provided relevantly:
“… the following claims, whatever the basis of liability may be, shall be subject to limitation of liability:
(a) claims in respect of … loss or damage to property occurring … in direct connexion with the operation of the ship … and consequential loss resulting therefrom.” (emphasis added)
25 The words “whatever the basis of liability may be” in the chapeau to Art 2(1) suggest that fine distinctions about the basis on which the right to limit is invoked should be eschewed. The procedural consequences of the shipowner’s invocation of the right to limit are dealt with by the succeeding provisions of the Convention. Those consequences include the identification of the basis of the claims and, where necessary, the segregation of them to more than one distinct occasion. The right to limit under the Convention conferred by s 25 of the Admiralty Act and or s 9 of the Limitation of Liability for Maritime Claims Act is a substantive right of a shipowner: Victrawl Pty Ltd v Telstra Corporation Ltd (1995) 183 CLR 595 at 619 per Deane, Dawson, Toohey and Gaudron JJ.
26 It will not always be apparent to a shipowner or to injured parties whether claims in respect of loss or damage under Art 2(1)(a) occurred only on a single distinct occasion. Here, it took some months before Esso and BHP asserted in their defences to these proceedings that there was more than one distinct occasion on which claims arose during a period of about two hours on 13 December 2008. As it transpired, I found, after nearly four weeks of hearing very complex evidence and reserving judgment, that two of those four occasions were, in fact, part of two others.
27 It is difficult to see any policy reason why the failure of a shipowner to identify correctly the number of distinct occasions that may have occurred leads to the necessary consequence that the limitation proceedings fail for want of jurisdiction, if the shipowner underestimated the number of occasions. Such a result would be absurd, particularly where s 25(1) of the Admiralty Act allows the jurisdiction to be invoked on an apprehension that a claim or claims may be made against the shipowner for which he may be entitled to limit liability under the Convention. Often, a shipowner will seek to limit immediately after a casualty so that his ship can be freed from arrest. If he wrongly, but ignorantly, misconceives that there was only one distinct occasion, there is nothing in the words of the Convention to suggest that he is precluded from seeking, in the same or later proceedings, to limit for any further distinct occasion that may be identified.
28 I am of opinion that once the jurisdiction of a court is invoked to determine whether a shipowner is entitled to limit his liability under a Convention referred to in s 25 of the Admiralty Act or s 9 of the Limitation of Liability for Maritime Claims Act, the jurisdiction of the Court is not limited by the number of distinct occasions initially apprehended by the shipowner.
What relief is open to the shipowner on the pleadings?
29 In essence, Esso and BHP argued that they had fought the case on the pleadings. They argued that they had not assumed a positive burden of proof by pleading that there were four distinct occasions. They contended that the onus of proof of each occasion for which limitation was sought to be invoked fell on the person seeking to limit. Thus, Esso and BHP argued that the shipowner had failed to discharge its onus of proof. They contended that they had sought merely to defeat the shipowner’s only pleaded claim that it was entitled to establish a single limitation fund to answer all claims that may have arisen against it from the events on 13 December 2008. They argued that having succeeded in demonstrating, as I found, that there had been more than one distinct occasion, the shipowner’s case failed entirely.
30 Esso and BHP argued that the right to limit under the Convention applied to the aggregate of all claims that had arisen on a distinct occasion. They contended that Art 6 applied to identify a total sum that may be constituted in one limitation fund. Thus, they argued that the shipowner had assumed the burden of proving in this proceeding that all their claims had arisen on one distinct occasion.
31 I reject these arguments. First, the Convention does not deny a shipowner the right to limit his liability because he misidentifies the number of distinct occasions or the description of the occasion for which he seeks to invoke his right to limit. Only Art 4 excludes the entitlement of a shipowner to limit liability in the very particular circumstance that it stipulates. Indeed, the scheme of the Convention envisages that the shipowner has a right to limit his liability for however many distinct occasions are alleged or occurred.
32 Secondly, the Convention is not a domestic statute. It is an international treaty designed to give effect to the policy and purposes to which I referred in my earlier reasons: Strong Wise [2010] FCA 240 at [43]-[52]. Article 15(1) commences by declaring that:
“This Convention shall apply whenever any person referred to in Article 1 seeks to limit his liability before the Court of a State Party or seeks to procure the release of a ship or other property or the discharge of any security given within the jurisdiction of any such State.”
33 The shipowner did seek to limit his liability, and the Convention, thus, applied to his claim by force of Art 15.
34 Thirdly, the scheme of Arts 6, 7 and 9 is to fix the limitation amount applicable to the aggregate of claims arising on each distinct occasion. Those articles do qualify the substantive right to limit liability that is created in Arts 1(1) and 2. Importantly, Art 2 is concerned with “… claims whatever the basis of liability may be”, not occasions. And, Art 10 shows that the right to invoke limitation of liability is different from the protection of the establishment of a fund under Art 11. The former is declaratory of a right; the latter, together with Arts 12 and 13, gives effect to that right by a process equivalent to its enforcement.
35 The effect of my finding of two distinct occasions is that the shipowner is entitled to limit his liability for each distinct occasion. If the shipowner only creates a limitation fund in respect of the first distinct occasion, he will not have the protection of the provisions of the Convention against claims that arose on the second distinct occasion. But the text of the Convention should not be narrowly construed to deny the shipowner the rights to limit established in proceedings to which the Convention applies. No sensible purpose would be achieved by such an approach.
36 Fourthly, the findings of two distinct occasions would entitle the shipowner to plead, in separate proceedings, defences under the Convention that it could limit liability in respect of each such occasion. If the shipowner subsequently pleaded the effect of my findings of there being two distinct occasions in Esso and BHP’s action for damages it would be entitled to immediate relief there of the kind it now seeks pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). That is because of the issue-estoppels that my findings have created: Blair v Curran (1939) 62 CLR 464 at 531-532 per Dixon J. If, as Esso and BHP argued, the shipowner’s claim here must be dismissed, the legal foundation or justification of that order was that there was not one, but two, and only two, distinct occasions for which the shipowner was entitled to limit. And, I rejected Esso and BHP’s pleaded defences of two other distinct occasions, so that those may not be re-litigated. As Dixon J explained in Blair 62 CLR at 532.
“The distinction between res judicata and issue-estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.
Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue-estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order.” (emphasis added)
37 A shipowner is not precluded from bringing a limitation proceeding under the Convention after he has been sued to judgment on a claim within Art 2(1). He can then make that judgment answerable only against the limitation fund established in the subsequent limitation proceeding: Victrawl 183 CLR at 619.
38 The controversy between the parties that was litigated involved the determination of whether the material facts pleaded by the parties were established. Here, the shipowner has proved that it is entitled to establish, at least, a limitation fund, but failed to establish on its pleaded claim, that that fund extended to meet all claims that might have arisen on 13 December 2008.
39 The statutory conferral of the right to limitation of liability under the Convention in s 25 of the Admiralty Act and s 9 of the Limitation of Liability for Maritime Claims Act is not merely procedural. Rather, it is a substantive right conferred on a shipowner to limit his liability in respect of all relevant maritime claims arising from a particular occurrence: Victrawl 183 CLR at 619. Those Acts give force to the international regime established in the Convention. Each State Party must participate in and observe that regime. It controls and limits substantive rights and liabilities in respect of the claims that are subjected to its provisions: Victrawl 183 CLR at 617.
40 Importantly, in Victrawl 183 CLR at 619 Deane, Dawson, Toohey and Gaudron JJ approved, as apposite to explain the nature of the shipowner’s substantive right to limitation of his liability, the observations of Dixon J in explaining the law maritime and ss 503 and 504 of the Merchant Shipping Act 1894 (Imp) in James Patrick & Co Ltd v Union Steamship Co of New Zealand Ltd (1938) 60 CLR 650 at 673. He said that the shipowner’s right to limit his liability is not a defence; rather it limits the damages he can be called upon to pay. Dixon J explained that the relief that the shipowner obtained in a limitation proceeding was that a fund, representing his maximum liability, was established and administered by the Court. He said (James Patrick 60 CLR at 673):
“The court then administers the fund brought into court by the shipowner. The court ascertains the claims upon it, marshals them and distributes the fund ratably among the claimants. In principle the title to relief of such a nature is a substantive right enforceable by independent proceedings. It is more than one of the conditions affecting the amount of the loss or damage to be awarded in the collision action. A limitation decree operates upon claims that have passed into judgment as well as upon those that rest upon the original cause of action. Failure to assert the right in the collision action ought, therefore, to be no bar to its subsequent enforcement.” (emphasis added)
41 A similar position in respect of the position once a limitation fund is constituted under Art 11, was taken by Clarke LJ with whom Rix LJ and Sir Martin Nourse agreed in The Western Regent (Seismic Shipping Inc v Total E&P UK plc) [2005] 2 Lloyd’s Rep 359 at 363-364; [2005] 2 All ER (Comm) 515 at 523-524 [14]-[16], [20]; see too Bouygues Offshore SA v Capsian Shipping Co (Nos 1, 3, 4 and 5) [1998] 2 Lloyd’s Rep 461 Sir John Knox at 471, 474 with whom Evans LJ at [34] and Mummery LJ at 467 agreed: R Williams: Practical Problems in the Current Global Limitation Regime published as Chapter 15 inDR Thomas: Liability Regimes Contemporary Maritime Law (2007 Informa) pp 279-299 at [15.49]-[15.54].
42 Although, the shipowner did not plead an alternative case, and denied that claims had arisen on more than one distinct occasion, I do not consider that it has failed to establish that it may limit its liability under the Convention. Its pleaded claim was found to be both too wide (because it sought only one fund for all claims) and too narrow (because it did not seek relief, even in the alternative, if there were claims arising on more than one distinct occasion). However, that cannot be decisive, given the nature of this right. The right is one to constitute a fund that will meet all claims of a particular description – namely that they arise on a distinct occasion. The identification of the occasion for which a limitation fund may be established can be controversial, as it was here. But a shipowner’s imprecision, and even error, in the task of identifying a claim or occasion is not a ground under the Convention on which the right to limit is lost. The existence of more than one distinct occasion means that the shipowner’s right to limit is both narrowed and expanded. It is narrowed, because he must establish a distinct fund for each occasion on which he wishes to invoke the right to limit; and the right is expanded to embrace each occasion on which he does establish a limitation fund. The right to limit can be lost under Art 4 only if a claimant can demonstrate that the shipowner is not entitled because the loss resulted from his personal act or omission committed with the intention to cause it, or recklessly with knowledge that such loss would probably result.
43 A shipowner who wants to establish a limitation fund quickly, so as to free his ship from arrest, and the risk of future arrests, should not be at risk of having to begin afresh if he pleads and pursues a case that misidentifies the number of occasions on which claims arose. The purposes of these proceedings were, first, to invoke limitation of liability under Art 10(1) of the Convention, and, secondly, if that were permitted, to constitute a limitation fund under Art 11. Once a fund has been constituted, because it is a substitute for the ship, it has the nature of a fund realised by sale of a ship in an action in rem: cf James Patrick 60 CLR at 675. By force of Art 13(1) all persons who had a claim that was subject to limitation can only proceed against the fund. The ship is freed from all maritime liens that had attached to her in respect of those claims and the fund is the only res answerable for any such lien: see The Tolten [1946] P 135 at 144, 153 per Scott LJ; Strong Wise [2010] FCA 240 at [51]-[52].
44 Of course, the real controversy between the parties has always been whether the shipowner can invoke limitation of liability under Art 10 on one or more than one distinct occasion. That was a controversy litigated at the trial and I am able to decide it: Vale v Sutherland (2009) 237 CLR 638 at 657 [41] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ.
45 Here, no new issue will be raised by allowing the shipowner to rely on the findings of there being two distinct occasions. There is an analogy, albeit not exact, in the preparedness of courts to allow a verdict for the plaintiff to stand even where he or she had been refused or had failed to apply for an amendment, but the evidence disclosed a case fit to be determined by the tribunal of fact: Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 at 446 per Stephen, Mason and Jacobs JJ applying Mummery v Irvings Pty Ltd (1956) 96 CLR 99 at 112; see too Dare v Pulham (1982) 148 CLR 658 at 664 per Murphy, Wilson, Brennan, Deane and Dawson JJ. In Mummery 96 CLR at 112 Dixon CJ, Webb, Fullagar and Taylor JJ said:
“There is, of course, no doubt that the question of extending the issues at the trial was peculiarly within the discretion of the trial judge. But, on the assumption that there was some evidence upon which the jury could have reached a conclusion on this additional issue, there was every reason why it should have been submitted to the jury. If, as the members of the Full Court appear to have thought, the present judgment precludes the appellant from bringing any further action that was an additional reason why that course should have been adopted. We find it unnecessary to express any view upon that question but our doubts on this point do not lessen our belief that, if there was evidence upon this additional issue, a refusal to extend the issues was not, in the circumstances, justifiable.” (emphasis added)
46 As they had observed immediately beforehand:
“But in answer to all of these considerations the appellant was in a position to say that the additional issue had been thrown into the ring by the respondent itself and that, having adopted this course, it was in no position to resist an application to re-open the case and make the question of the foreman's negligence a real issue. Why, it might have been asked, should the jury be invited to conclude that the appellant's injuries were caused by the negligence of the foreman and, thereupon, to find for the respondent when that very circumstance would, if the pleadings were in proper form, constitute a ground for awarding damages to the appellant?” (emphasis added)
47 When the shipowner’s counsel opened its case on the first day of the hearing he stated its alternative position to the pleaded single distinct occasion. He said that the shipowner’s “second position” was that it wanted to be able to indicate its preferred course as to what fund or funds it would seek to constitute after I made any finding of four (or less) occasions. Counsel for Esso and BHP consistently objected to this “second position”, stating in his opening that if more than one distinct occasion were found then they would argue, as they now have, that the proceedings fail.
48 As is clear from my principal reasons, the controversy tendered by the parties involved a determination of whether claims arose on one or more occasions. The evidence in the proceedings was admitted on that basis, in order to either demonstrate or negate the existence of more than one occasion. Esso and BHP argued that there was some possible unfairness to them were I to decide that the shipowner was entitled to limit its liability by establishing a fund for the first occasion and to have a declaration that it was entitled to a limit in respect of the second. They argued that they could have conducted the case differently.
49 However, the opening of counsel for the shipowner on the first day of the trial foreshadowed that it would seek such relief if its wider claim failed, as it has. Esso and BHP had sought to establish in the litigation that there was more than one occasion on which claims arose so as to prevent the shipowner being able to limit their potential claims to be met by a single fund. That fund was likely to be exhausted by claims for sums significantly in excess of the limitation amount made not only by them but also by Huntsman and Qenos. Although they asserted they might have conducted the claim differently had the shipowner pleaded a case in the alternative, they did not identify how that would have occurred in a practical sense. At all times the shipowner intended to promote its primary position that it could constitute one fund to answer all claims. The shipowner never sought to establish, as a primary position, that more than one occasion had arisen. Its interests were to concentrate liability into as few occasions as possible, most preferably into one. If the shipowner failed to counter Esso’s and BHP’s arguments that more than one occasion had arisen it would be in its present position.
50 The pleaded positions of the parties were driven by their economic interests in establishing a smaller or larger number of occasions. Very considerable forensic effort was devoted by Esso and BHP at the trial and in the expert evidence they prepared for it, in seeking to establish the second and fourth of their pleaded distinct occasions (namely the dead slow astern engine movement commencing at 15:46:01, that I found to be part of the first distinct occasion; and the slow astern engine movement commencing at 16:27:59 that I found to be part of the second distinct occasion).
51 I am not persuaded by the unsupported suggestion that Esso and BHP would have conducted their case in any different way had the shipowner pleaded an alternate claim. Esso and BHP wanted to maximise the number of distinct occasions and, hence, possible limitation funds in order to escape the likelihood of a partial recovery of their claims against one, or a lesser number of, limitation funds. The more distinct occasions that they could prove, the greater their potential for a larger recovery.
52 Since the parties fought the proceedings on these issues, I am of opinion that I can give effect to my findings by ordering the constitution of a limitation fund in respect of the first distinct occasion and making a declaration in respect of the second. It is not necessary for the pleadings to be amended to do so: Leotta 9 ALR at 446; Mummery 96 CLR at 112.
Avoidance of multiplicity of proceedings
53 The Court can also grant relief appropriate to its findings, so as to prevent multiplicity of proceedings. There is an obvious convenience to the parties, the public and the Court in making orders disposing of the controversy that was resolved by my findings concerning the shipowner’s entitlement to invoke limitation of liability for two distinct occasions. That will avoid an inevitable multiplicity of proceedings on this controversy for the purposes of s 22 of the Federal Court of Australia Act. That section provides:
“22. The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided.”
54 Esso and BHP argued that the power to grant relief created in s 22 should not be used here to assist the shipowner. They said that the argument for it to have wider relief than it pleaded had been raised after I had delivered reasons and made findings. They emphasised that no explanation had been given for the shipowner’s failure to plead an alternative claim for relief, relying on AON Risk Services Australia Limited v Australian National University 239 CLR 175 at 182 [5], 192 [30], 215 [103]; Hyster Australia Pty Ltd v Anti-Dumping Authority (No 2) (1992) 41 FCR 259 at 263 per Hill J; Esso Australia Resources Pty Ltd v Commissioner of Taxation [2010] FCA 215 at [3] per Sundberg J.
55 I reject that argument. The power conferred by s 22 was stated by Gibbs CJ, Stephen, Mason and Wilson JJ to be (Thomson Australian Holdings Ltd v Trade Practices Commission (1981) 148 CLR 150 at 161):
“… designed to ensure that the Court can grant relief which is appropriate to both legal and equitable claims and to avoid multiplicity of proceedings. Its effect is to enable the Court to dispose of all rights, legal and equitable, in the one action, so far as that is possible.”
56 No purpose, consistent with the interests of justice, would be served by dismissing the proceedings, having regard to the facts that:
· this would not prevent the shipowner in other proceedings, (including those already commenced in this Court by Esso and BHP) pleading and establishing its right to invoke limitation of liability for one or both of the two distinct occasions that I have found;
· the shipowner, Esso and BHP will be bound, in any further attempt by the shipowner to invoke limitation of liability, by the issue estoppels created by those findings;
· the shipowner will be entitled to have that issue decided summarily under s 31A of the Federal Court of Australia Act as soon as it raises it in other proceedings;
· the hearing of these proceedings involved not only the parties being put to great effort and expense but also the public resource of the Court was occupied for a considerable period in the interlocutory stages, during a long trial and in preparing reasons for judgment.
57 There is a clear utility and public interest in the nature and extent of the shipowner’s entitlement to invoke limitation of liability under Art 10 being established in these proceedings, authoritatively and once for all. That affects not only the shipowner, Esso and BHP, but other claimants (being Qenos, Huntsman and Port of Melbourne Authority) who have allowed these proceedings to be conducted without seeking to intervene, but who will be bound by the result by force of Art 13(1).
58 Since the shipowner had pleaded (and Esso and BHP had denied), that all possible claims arose on the one distinct occasion, there is no reason why the findings that they did not cannot be reflected in orders giving effect to my earlier reasons. An order that identifies the claims that arose on the first distinct occasion as being claims for which a fund can be constituted and provides for that fund to be established is within the shipowner’s pleaded case. And a declaration can also be made under s 25(3)(a) of the Admiralty Act reflecting the shipowner’s entitlement to invoke limitation of liability under Art 10 in respect of the second distinct occasion that I found. Even if I am wrong that this is within that case, it was certainly a central part of the controversy that was litigated: Vale 237 CLR at 651 [41]. Making the orders now sought by the shipowner will prevent any multiplicity of proceedings in respect of its invocation of its right to limit liability.
Amdendment
59 It is not necessary finally to decide on the shipowner’s very late application to amend. That amendment was sought in the event that I accepted the argument of Esso and BHP that the statement of claim should be dismissed for failing to plead that claims had arisen on more than one distinct occasion. As I have explained Esso and BHP opposed any amendment. I will briefly deal with the arguments.
60 In AON 239 CLR at 185-186 [14]-[17] French CJ (with the apparent approval of Gummow, Hayne, Crennan, Kiefel and Bell JJ: see at 218 [116]) discussed the distinction between the discretion of the Court to allow a party to amend its pleading, on that party’s motion, and the requirement to make all such amendments as may be necessary to determine the real questions in controversy. He pointed out that the Court could make amendments of its own motion should it see fit: AON 239 CLR at 185 [14]. The Chief Justice went on to say: AON 239 CLR at 186 [16]-[17]:
“The coupling of fact pleading and a liberal approach to amendment of pleadings was noted by Barwick CJ in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd ((1981) 148 CLR 457 at 472-473). In the same case Gibbs J made reference to s 22 of the Federal Court Act which he characterised as giving effect to a ‘fundamental principle of the Judicature Act procedure’, namely ‘the avoidance of a multiplicity of proceedings’ ((1981) 148 CLR 457 at 489). He quoted, with evident approval, the observation of Sir George Jessel MR that the section meant ((1981) 148 CLR 457 at 489, citing In the Goods of Tharp (1878) 3 PD 76 at 81): ‘that whenever a subject of controversy arises in an action which can conveniently be determined between the parties to the action, the court should, if possible, determine it so as to prevent further and needless litigation.’ To that observation, Gibbs J added ((1981) 148 CLR 457 at 489, citing Roberts v Gippsland Agricultural & Earth Moving Contracting Co Pty Ltd [1956] VLR 555 at 564-565 and McLeish v Faure (179) 40 FLR 462 at 471-473): ‘It has been said, and no doubt rightly, that having regard to the nature and purposes of the provision, it should be construed liberally.’
Section 24(7) of the Act of 1873 was originally enacted as part of a reform process designed to avoid a multiplicity of proceedings in different courts. That imperative, imported into its statutory offspring in Australia, also applies to the avoidance of a multiplicity of proceedings in the same court.”
61 However, the requirement to make amendments for the purpose of deciding the real issues in the proceedings does not impose some unqualified duty on the Court to permit the late addition of any new claim: AON 239 CLR at 192 [31]. Deliberate tactical choices made by parties in ascertaining what was necessary to determine the real issues in the proceedings, can be a significant factor in the exercise of the discretion to allow an amendment: AON 239 CLR at 192 [31], 217 [112]. The consequence of the disputed amendment in that case had been the necessity to adjourn the trial on its first day. I am comfortably satisfied that there is no similarity with the position here.
62 As I have already observed, I am not satisfied, and there is no evidentiary basis to suggest, that these proceedings would have been conducted differently had such an amendment been sought and granted at any earlier time. It was always in the interests of Esso and BHP to pursue, as they did, a case that sought to maximise the number of distinct occasions on which claims arose on 13 December 2008. I found that two of their four pleaded distinct occasions were not established. However, Esso and BHP vigorously pursued their case that those occasions ought be found. I am satisfied that Esso and BHP would have acted no differently than they have, even if the shipowner pleaded the alternative case in the proposed amendment earlier. That case was consistent with its “second position” as articulated by its senior counsel in opening the trial, but that “second position” was very much a last resort or “fall back” for the shipowner. Its case and interest were the opposite of those of Esso and BHP. The shipowner wanted the least number of distinct occasions, and fought vigorously, but unsuccessfully, for there to be only one found.
63 Having seen and heard the evidence and observed both the later interlocutory stages and the whole of the conduct of the trial, I am comfortably satisfied that Esso and BHP would not have suffered any prejudice had I considered that it was necessary to grant the proposed amendment. Since I have concluded that I can make the substantive orders that the shipowner seeks on the current pleadings, I need not make any order on the amendment application.
Release of security
64 The shipowner initially sought an order releasing so much of the balance of the money it had paid into Court as exceeded what was necessary to constitute a fund for the first distinct occasion. It also sought return to Gard of its letter of undertaking.
65 I am not persuaded that any such an order is appropriate. The agreement between the parties and Gard for the release of APL Sydney was arrived at to provide a substitute for her then value: cf James Patrick 60 CLR at 675. Since then the nature of the claims and the understanding of the parties as to the number of distinct occasions has changed. The payment into Court and Gard’s letter of undertaking were provided prospectively to meet, first, the shipowner’s and Gard’s maximum liability under the Convention, and, secondly, to supplement it to a sum equivalent to the value of the ship of USD36 million. Unless a second limitation fund is constituted, they will not have provided sufficient security to permit the release of either the balance of the money in Court or the letter of undertaking.
66 Both sides to the agreement for the ship’s release in January 2009 were not fully apprised at that time of the possible, let alone actual, outcome of these proceedings. But they compromised their rights on the terms recorded above. Since I have found that the shipowner and Gard must establish two limitation funds before they can be said to have limited all their liabilities in accordance with the Convention, as contemplated in cl 7 of the letter of undertaking, the security or bail provided for the release of the ship should stand undisturbed: cf The Point Breeze [1928] P 135 at 142-143 per Bateson J; The Despina GK [1983] QB 214 at 218E-219B per Sheen J; see too s 21 of the Admiralty Act and r 59(1) of the Admiralty Rules 1988.
67 However, I am of opinion that it is consistent with the agreement for APL Sydney’s release for the money paid into Court to be used to constitute the fund for the first distinct occasion as the shipowner seeks. And, that will leave more than enough security, on the material before me, to satisfy in full claims arising on the second distinct occasion. There is no evidence that Esso and BHP would suffer any prejudice from such a result.
Submissions as to costs
68 The shipowner argued that it was entitled to an order for costs because it had been found entitled to limit its liability. It also sought that the order be made on an indemnity basis from the time of the expiry of its offer to settle made on 3 July 2009.
69 That offer was conveyed in a letter dated 26 June 2009 by the shipowner’s solicitors on the basis of Calderbank v Calderbank [1976] Fam 93 at 105H-106B per Cairns LJ. The letter contended that there was no credible basis that the first three alleged distinct occasions could be separated. It noted that Esso and BHP had alleged that the loss from the fourth distinct occasion, resulting from the further bending of the pipe after the rupture, was approximately AUD1 million. The letter argued that almost all the alleged losses would have been suffered by reason of the events before the fourth alleged distinct occasion. It proposed a settlement on the basis that:
· Esso and BHP withdraw their defence;
· the money paid into Court would be constituted as a limitation fund for all loss and damage arising from the events on 13 December 2008;
· the shipowner would provide further security of AUD1 million;
· there would be no order as to costs;
· the letter of undertaking would be returned to Gard.
70 I have concluded that the earlier agreement for the provision of security should remain substantially in place. In particular, I have refused to order the return of the letter of undertaking at this time because of the terms of the parties’ and Gard’s earlier agreement. The offer did not reflect the result of the proceedings. It was not unreasonable for Esso and BHP to have rejected the offer, as they did on 1 July 2009. Thus, the shipowner’s argument for an order for costs on an indemnity basis fails.
71 Next, the shipowner contended that it had been put to unnecessary effort and expense in proving its entitlement to limitation of liability. It asserted that Esso and BHP had pursued a defence that involved an unrealistic and unreasonable assessment of the likely outcome (PWSR 30).
72 On the other hand, Esso and BHP argued that the usual practice is that a shipowner should pay the costs in a limitation action unless the other party unreasonably raised an issue. They relied on James Patrick 60 CLR at 677-678, and Newcastle Port Corporation v Pevitt (2003) 58 NSWLR 584 at 560 [49] per Palmer J. In any event, they contended that they had succeeded in substance and were entitled to an order for costs. This was because, they said, the shipowner had failed in its principal claim that one limitation fund should be established to meet all claims.
Costs - consideration
73 The Full Court of the Supreme Court of Queensland considered, in obiter dicta, that no special practice as to costs should apply in limitation actions under the Brussels Convention: Barameda Enterprises Pty Ltd v O’Connor [1988] 1 Qd R 359 at 371 per Kelly SPJ with whom Macrossan J agreed at 378 as did McPherson J in separate reasons at 391-392.
74 In The Capitan San Luis [1994] QB 465 at 472G-473B, Clarke J said that under the Convention ordinarily the shipowner only has to prove that the claim falls within Art 2 in order to establish his right to limit liability. If the other party resists the shipowner’s claim, his Lordship held that costs should follow the event. The learned editors of Marsden on Collisions at Sea (13th ed) at [16-19] expressed the view that the Convention had made a radical change in the principles concerning limitation of liability. They argued that the shift in the burden of proof meant that limitation was now a legal right rather than a privilege. However, they did not discuss who should bear the initial costs of the shipowner establishing an uncontested right to limit.
75 The parties did not refer to any other case that had decided this issue. In Pevitt 58 NSWLR at 560 [49] Palmer J proceeded on the agreement of the parties that in James Patrick 60 CLR at 677-678 Dixon J had stated the law. However, Palmer J was not referred to Barameda [1988] 1 Qd R 359.
76 This Court has a general and unfettered discretion to award costs under s 43(2) of the Federal Court of Australia Act: see Probiotec Ltd v University of Melbourne (2008) 166 FCR 30 at 42-44 [45]-[50] where I discussed the principles under that section, with the agreement of Finn and Besanko JJ at 32 [1], 51 [82].
77 There is considerable commonsense in a rule of practice that, ordinarily, a shipowner seeking to limit his liability ought pay at least the other side’s costs of the issue of establishing a prima facie case to its entitlement and of the constitution of a limitation fund. A shipowner must serve at least one named defendant with his initiating process seeking to invoke his right to limitation of liability by dint of r 61(1) of the Admiralty Rules. Thus, the Rules require the person served at least to consider his, her or its position in relation to the shipowner’s claim. The costs of that process and the prima facie proof of the claim should not be forced on the person that the Rules require be served. After all, the costs of establishing the entitlement and fund enure to the benefit of the shipowner against, not only the particular opponent but, as in effect a fund in rem: cp James Patrick 60 CLR at 675. It may be unfair that the costs of the shipowner to prove its claim to limit liability be made to fall on only one of potentially several persons with claims under Art 2 of the Convention.
78 Here, neither party succeeded entirely. The shipowner failed to establish its preferred, and pleaded, case that it could limit liability by establishing only one fund in respect of all claims that arose on 13 December 2008. However, it failed to resist the finding of a second distinct occasion because the master and pilot put the engine ahead at 16:19:51 without a proper basis. I found that the anchor cable should have been let go from the bitter end and that Capt Xu had been negligent in failing to do so. That issue had never been pleaded although Mr Kelle had referred to the use of the bitter end in his initial report for Esso and BHP. The issue assumed considerable significance later in the oral evidence of the three nautical experts and in the parties’ closing submissions: Strong Wise [2010] FCA 240 at [224]-[259].
79 I accept that Esso and BHP had set out to defeat the shipowner’s pleaded case. But, as I have found, they engaged in a contest raising many issues themselves that had to be resolved. Esso and BHP did not succeed in establishing fully their pleaded case. In particular, a considerable forensic contest also developed over whether the anchor had detached from, or remained engaged with, the Mordialloc end of the pipe after the rupture in order to prove their fourth alleged distinct occasion. I rejected the argument that there was such an occasion, finding that the further damage to the Mordialloc end by its being bent backwards, was part of the same occasion (i.e. the second) as had caused the pipeline to fracture: Strong Wise [2010] FCA 240 at [360].
80 These matters illustrate some instances of the varying ways in which each side had forensic successes and failures on significant issues that involved considerable resources and expense. I do not consider that it would be appropriate to dissect minutely the extent of each side’s successes and failures on issues in the trial. Neither did so in submissions. Nor do I consider that I should approach the issue of the appropriate order as to costs by applying any prescriptive rule.
81 The shipowner failed to prove that only one occasion had occurred. That was a substantive loss on its part on a major issue and justified the decision of Esso and BHP to contest the basis on which the shipowner sought to limit. Likewise, Esso and BHP failed to prove two of the four occasions that they had alleged. The second, involving the engine movement at 15:46:01 was not insignificant, but was not as substantial as the fourth, which they also failed to establish. These matters put the shipowner to unnecessary expense and the latter, in particular, took up a significant time at the trial.
82 I have balanced my overall impressions of the varying degrees of success and failure of each party on issues with the need for Esso and BHP to contest the proceedings. Doing the best I can, I consider that the shipowner should be ordered to pay 50% of the costs of Esso and BHP for the proceedings.
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I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. |
Associate:
Dated: 8 June 2010
