FEDERAL COURT OF AUSTRALIA

Commonwealth of Australia v Shenzhen Energy Transport Co Ltd [2015] FCA 757

THE COURT ORDERS THAT:

1.    The amended interlocutory application filed on 23 July 2015 be dismissed.

2.    The costs of the respondent of and incidental to the amended interlocutory application filed 23 July 2015 be paid by the applicant, such costs to be taxed if not otherwise agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    In the amended interlocutory application filed on 23 July 2015, the applicant, the Commonwealth of Australia, seeks an order pursuant to r 20.15 of the Federal Court Rules 2011 (Cth) (Federal Court Rules) that the respondent provide discovery in accordance with the criteria in r 20.14(1)(b) and (c) and r 20.14(2) of a large number of documents. These documents are as follows:

1.1    Documents for the vessel (including documents of a similar nature) for the period from 12.00 am on 3 April 2010 to 12 April 2010:

1.1.1    The bridge log book

1.1.2    The original deck log book including the glossary, index or other information about the numeric or other codes used in the log book

1.1.3    The voyage data recorder (S-VDR), including the recorder itself

1.1.4    The radio log book

1.1.5    The official engine log book

1.1.6    The Chief Engineer’s log

1.1.7    The “rough” bridge log book or “rough log”, or “scrap log,” or any preliminary draft log of the vessel’s course, speed, location, and any other data which was created preliminary to the bridge log book

1.1.8    The bridge bell book

1.1.9    The bridge GPS log book

1.1.10    The rough engine bell log book or any draft log in which all orders concerning the main engines of the vessel were recorded

1.1.11    The print-out from the bridge data telegraph recorder

1.1.12    The course recorder trace

1.1.13    The echo sounder trace

1.1.14    Sounding records including vessel and tank soundings

1.1.15    Records of the draught of the vessel

1.1.16    The compass deviation card

1.1.17    The passage plan and course card for the voyage

1.1.18    The vessel’s crew list

1.1.19    Certificates of Competency of all officers and crew for the vessel

1.1.20    The Safety Management system (SMS) incident report prepared by either the respondent or Tosco Keymax International Ltd

1.1.21    Any report into the grounding on 3 April 2010 prepared by either the respondent or Tosco Keymax International Ltd

1.1.22    The Master’s Standing Orders Book

1.1.23    The chart correction log

1.1.24    The ship’s working copy or annotated copy of Marine Charts area - Aus 819 and Aus 820

1.1.25    Captain’s personal diary

1.2    Documents for the vessel (including documents of a similar nature) for the period 1st March to 12th April 2010, inclusive:

1.2.1    The vessel’s Compass Error Book

1.2.2    Data print out from the engine room alarm monitoring system

1.2.3    Completed SMS checklist for the grounding incident

1.2.4    Any statements or records of interview or reports from members of the ship’s officers or crew

1.2.5    The pages from the section of the ship’s SMS covering actions in the event of an emergency

1.2.6    The index page(s) from the ship’s SMS

1.2.7    The vessel’s General Arrangement Plan

1.2.8    The wheelhouse antenna plan

1.2.9    Any documents recording details of the vessel’s departure condition

1.2.10    The stability booklet

1.2.11    Cargo stowage plan

1.2.12    Cargo manifest on departure from Gladstone

1.2.13    Any draught survey report prior to departure from Gladstone

1.2.14    Lines plans of the vessel

1.2.15    The vessel’s Global Maritime Distress Safety System (GMDSS) log book

1.3    Documents recording any communications between the Master or the crew of the vessel and Tosco Keymax International Ship Management Co Ltd from 3 April 2010 up to an [sic] including 12 April 2010.

1.4    Documents relating to the salvage of the vessel:

1.4.1    Any reports prepared by or for the salvage contractor not already discovered by the respondent

1.4.2    Any agreement or terms of engagement between the salvage contractor and the Respondent

1.4.3    Daily situation reports of the salvage operations.

1.5    Documents relating to repair of the vessel:

1.5.1    The repair specification for the vessel

1.5.2    The work done list

1.5.3    Record of accounts/invoices for the repairs

1.5.4    Hull & Machinery (H&M) underwriter’s report

1.5.5    Any report prepared on General Average Interests

1.5.6    Any surveys undertaken during dry docking or repairs.

2    The applicant also seeks an order that discovery of these documents be given in electronic format and in accordance with terms previously agreed by the parties.

3    The substantive matter in respect of which further discovery is sought pursuant to this amended interlocutory application concerns damage to the Douglas Shoal in the Great Barrier Reef in April 2010, occasioned by the ship “Shen Neng 1”. Damages in the amount of $194,000,000 are sought by the Commonwealth, representing the estimated cost of remediation of Douglas Shoal, or alternatively an order requiring that the respondent undertake the remediation of Douglas Shoal.

Background

4    The pleadings in this case are short. It is useful to set them out in their entirety, as the argument before me this morning focussed in detail on the nature of the pleadings and whether they were such that the discovery sought was relevant to them.

5    In the statement of claim filed on 3 May 2013 the applicant claimed as follows:

1.    The respondent was at all material times the registered owner of the “Shen Neng 1” (now called the “Jia Yong”), a 225m long, Chinese-flagged, Panamax bulk carrier.

PARTICULARS

a.    The applicant refers to pages 1 and 51 of the report of the Australian Transport Safety Bureau titled “Independent Investigation into the Grounding of the Chinese registered bulk carrier Shen Neng 1 on Douglas Shoal, Queensland, 3 April 2010”.

2.    On 3 April 2010, at about 17.10 hours, the Shen Neng 1 ran aground on the Douglas Shoal in the Great Barrier Reef within Australia’s territorial sea.

3.    The said grounding was caused solely by the negligent navigation of the Shen Neng 1 by the servants or agents of the respondent.

PARTICULARS

a.    The applicant refers to the report of the Australian Transport Safety Bureau titled “Independent Investigation into the Grounding of the Chinese registered bulk carrier Shen Neng 1 on Douglas Shoal, Queensland, 3 April 2010”.

b.    On 3 April 2010 at about 1600, the chief officer, Xuegang Wang, took over as officer of the watch.

c.    The chief officer failed to alter the ship’s course at the designated course alteration position in accordance with the planned course (as amended).

d.    The chief officer failed to fix and monitor the ship’s position.

e.    The chief officer failed to check that the ship’s course was properly entered into the GPS route plan.

4.    The said grounding caused extensive damage to the Douglas Shoal.

PARTICULARS

a.    The damage caused included physical injury and contamination from anti-fouling paint particles. “Severe” physical injury has occurred in areas where 50% or more of the seabed has been crushed, scraped, smothered or otherwise physically injured. A feature of areas with “severe” injury in the absence of living benthic cover (ie algae, corals and other sessile fauna) and the preponderance of dead coral, rubble and bare pavement substrate.

b.    The minimum area of “severe injury” (which includes physical injury and contamination) to the reef is 80,000 m2. It is estimated that the most plausible area of “severe injury” to the reef is 400,000 m2.

c.    The nature and extent of damage caused to Douglas Shoal will be the subject of expert evidence at trial.

5.    By reason of these matters, the Commonwealth has suffered loss and damage.

PARTICULARS

a.    The Commonwealth has sovereignty in, and is responsible for the care and management of, the Douglas Shoal.

b.    The cost to remediate Douglas Shoal will be the subject of expert evidence.

6    In the amended defence filed on 23 June 2014 the respondent pleads as follows:

1.    The Respondent admits paragraph 1

2.    The Respondent admits paragraph 2

3.    In answer to paragraph 3, the Respondent:

a.    Admits that the grounding was caused solely by the negligent navigation of the Chief Officer of the vessel;

b.    Otherwise denies the paragraph.

4.    The Respondent does not know and cannot admit paragraph 4.

5.    The Respondent does not know and cannot admit paragraph 5.

Limitation of liability under the Limitation of Liability for Maritime Claims Act 1989

6.    The Respondent was at all material times the owner of the Shen Neng 1.

7.    The Shen Neng 1 is a seagoing ship.

8.    The claim made in the Statement of Claim is:

a.    A claim in respect of loss of or damage to property occurring in direct connection with the operation of the Shen Neng 1 and/or consequential loss resulting therefrom; and/or

b.    A claim in respect of loss resulting from infringement of rights (other than contractual rights) occurring in direct connection with the operation of the Shen Neng 1; and/or

c.    A claim in respect of measures taken in order to avert or minimise loss of the type referred to in sub-paragraph (a) and/or sub-paragraph (b) above and/or further loss caused by such measures.

9.    By reason of the matters pleaded in paragraphs 6 to 8 above, the Respondent is entitled to avail itself of the limitation of liability provided for in the Convention on Limitation of Liability for Maritime Claims, 1976, as applied by s. 6 of the Limitation of Liability for Maritime Claims Act 1989 (Cth).

10.    The tonnage of the Shen Neng 1 is 36,575 tons.

11.    By reason of the matters pleaded in paragraphs 9 and 10 above, any liability of the Respondent is limited to the value of 14,172,500 Special Drawing Rights as defined by the International Monetary Fund.

7    In its reply filed 9 July 2014, the applicant pleads as follows:

1.    The Applicant admits paragraph 7.

2.    The Applicants admits paragraph 10.

Submissions of the applicant in support of the amended interlocutory application

8    In relation to its amended interlocutory application, Mr Young for the Commonwealth submitted, in summary:

    There was a live issue about the respondent’s right to limit and the amount of any limitation. It was necessarily implicit in paragraph 11 of the Defence that there was only one “distinct occasion” for the purposes of the Limitation Convention and in light of the decision in Strong Wise Ltd v Esso Australia Resources (2010) 185 FCR 149.

    These are matters in respect of which the Commonwealth is entitled to discovery.

    The affidavit of Ms Jane Lye, solicitor for the Commonwealth in these proceedings, filed 17 July 2015 at [7] deposes that a report by the AMS Casualty Co-ordinator came to light during the discovery process. That report raised issues about how the grounding was handled by the crew, including issues about anchoring and about decisions taken to attempt to reload the vessel.

    The Commonwealth has engaged a master mariner to review the documents and he has identified the documents the subject of the discovery application as documents he requires.

    The respondent has already acknowledged the propriety of the Commonwealth’s amended application, and has provided additional documents including the deck log book, the rough log book, the general arrangement plan and dive surveys or condition reports from the salvor.

    The respondent says in correspondence that a number of the documents sought do not exist.

Consideration

9    The relevant orders sought by the applicant are pursuant to r 20.15 of the Federal Court Rules, which makes provision for non-standard and more extensive discovery. Rule 20.15(1)(a) provides that the party seeking the order must identify any criteria mentioned in r 20.14(1) and (2) that should not apply.

10    Rule 20.14 makes provision for standard discovery in accordance with the Federal Court rules. Sub-rules 20.14(1)(b) and (c) and r 20.14(2), to which the applicant refers in the application before me, provide:

(1)    If the Court orders a party to give standard discovery, the party must give discovery of documents:

(a)    …

(b)    of which, after a reasonable search, the party is aware; and

(c)    that are, or have been, in the party's control.

(2)    For paragraph (1)(a), the documents must meet at least one of the following criteria:

(a)    the documents are those on which the party intends to rely;

(b)    the documents adversely affect the party's own case;

(c)    the documents support another party's case;

(d)    the documents adversely affect another party's case.

11    Guidance to litigants in respect of discovery of documents in the Federal Court is provided by Practice Note CM 5 issued 1 August 2011, which materially provides:

    the Court will not order discovery as a matter of course, even where the parties consent, unless discovery is necessary for the determination of issues in the proceeding (paragraph 2(a));

    the Court will fashion any order for discovery to suit the issues in a particular case (paragraph 2(b));

    the Court will want to know whether discovery is necessary to facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible (paragraph 2(c)(i));

    the Court will have regard to the issues in the case and the order in which they are likely to be resolved, the resources and circumstances of the parties, the likely benefit of discovery and the likely cost of discovery and whether that cost is proportionate to the nature and complexity of the proceeding (paragraph 3); and

    to prevent orders for discovery requiring production of more documents than are necessary for the fair conduct of the case, orders for discovery will ordinarily be limited to the documents required to be disclosed by r 20.14 of the Federal Court Rules (paragraph 4).

12    In the circumstances of the case before me, I am satisfied that the amended interlocutory application filed by the applicant on 23 July 2015 should be dismissed. My reasons for so finding are as follows.

13    First, it was common ground before the parties that documents in respect of which parties may legitimately seek discovery must be within the scope of the pleadings in the case. This position is consistent with Practice Note CM 5 (and cf discussion of this point in Reading Entertainment Australia Pty Ltd v Birch Carroll & Coyle Ltd [2002] FCAFC 109 per Beaumont J at [65] and the commentary in Cairns B, Australian Civil Procedure (10th ed, Lawbook Co, 2014) at [10.110]). It is necessary in considering the interlocutory application before the Court that the Court give foremost consideration to the terms of the pleadings and the manner in which the documents in respect of which discovery is sought satisfy the criteria specified by the Federal Court Rules relative to those pleadings.

14    Second, as was explained by Rares J in Strong Wise Limited v Esso Australia Resources Pty Ltd (2010) 185 FCR 149 at [78]-[79] the Convention on Limitation of Liability for Maritime Claims 1976, enacted by the Limitation of Liability for Maritime Claims Act 1989 (Cth) clearly limits the liability for claims to “distinct occasions”. As his Honour observed:

78.    I am of opinion that a claim arises on a distinct occasion within the meaning of the Convention in the following way. Where a single act, neglect or default of a shipowner places him in such a relationship that, as a matter of commonsense, it is a cause of loss or damage suffered by a third party, that third party will have a claim under Art 2 of the Convention. And, such a claim will be caused by an occurrence and, so, will arise on that distinct occasion for the purposes of Arts 6, 7, 9 and 11.

79.    But where a subsequent act, neglect or default of the same shipowner separately operates to cause different or separately identifiable loss or damage to the same third party, or to others, then a new claim or claims will arise on that later distinct occasion. The latter occasion is distinct because, first there is a new event (the separate act, neglect or default), secondly, there is new loss or damage and thirdly, the new cause is, as a matter of commonsense, not a necessary or inseparable consequence of the earlier act, neglect or default.

80.    Thus, whether one occasion is distinct from another will depend upon whether the causes of the claims that arise from each act, neglect or default are sufficiently discrete that, as a matter of commonsense, they can be said to be distinct from one another.

15    In this case the applicant clearly pleads in the statement of claim only one “distinct occasion” giving rise to loss and damage - namely that the damage to the Douglas Shoal was caused by the grounding of the Shen Neng 1 on the shoal at about 1710 hours on 3 April 2010. This is clear from paragraph 2 of the statement of claim, but in particular paragraphs 3 and 4 which refer to “the said grounding”. If the applicant seeks to refer to other acts of negligence of the respondent or its servants or agents, I accept, as Mr Lawrance for the respondent submitted, that the applicant will require leave to amend the statement of claim to so plead.

16    Third, Mr Young submitted that the meaning of “grounding” of the vessel extended beyond the actual event occurring at or about 1710 hours on 3 April 2010. In support of this submission he referred me to paragraph 4 of the statement of claim which detailed the damage to the reef, which clearly extended beyond the initial impact on the reef, at that time and date. I do not accept this submission. As Mr Lawrance submitted, and I accept, claimable damage following a negligent act can clearly extend beyond the initial stages of the event. Normal and consequential loss following an act of negligence is the subject of an extensive body of law, in respect of which principles are well-known (cf for example McGregor H, McGregor on Damages (19th ed, Sweet & Maxwell, 2014) Ch 3). As is clear from its terms, paragraph 4 of the statement of claim is referable only to the damage resulting from the “said grounding”, not identification of the event which caused the damage and loss. I do not accept that paragraph 4 constitutes a separate “distinct occasion” within the meaning of the Act, or that it broadens the meaning of “grounding” in earlier paragraphs of the statement of claim, as submitted by the applicant.

17    Fourth, the respondent has admitted that the Chief Officer of the Shen Neng 1, Mr Xuegang Wang, was negligent, and that it was his negligence that caused the grounding of the ship. It is clear on the pleadings that, although paragraph 3 of the statement of claim refers to negligent navigation of the ship by “servants or agents of the respondent”, the applicant only pleads negligence of Mr Xuegang Wang. This is abundantly plain from the particulars to paragraph 3, where the Chief Officer is the only person mentioned as having any role in the grounding of the ship.

18    Mr Lawrance submitted this morning that the negligence of Mr Xuegang Wang is not an issue in the proceedings, because the respondent has admitted it. This is plainly so. To that extent it is not apparent why the documents sought by the applicant in its amended interlocutory application fall within any of the sub-paragraphs of rule 20.14(2). Mr Young for the applicant submitted that the Court should have regard to the broader terms of paragraph 3 which referred to the negligent navigation of the ship by “servants or agents” of the respondent, and place less weight on the contents of the particulars to paragraph 3. I am not minded to follow this course. It is well-settled that a key purpose of particulars in pleadings is to define and limit the issues in the proceeding (Mummery v Irvings Pty Ltd (1956) 96 CLR 99 at [10]), and to inform an opponent of the nature of the case it has to meet and prevent it from being taken by surprise at the hearing (Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712; Conway v Mercedes-Benz Australia Pacific Pty Ltd [2010] FCA 72 at [7] and cases listed in Practice & Procedure High Court and Federal Court of Australia (LexisNexis, subscription service) r 16.41.10). In my view it is not sustainable for the applicant to claim that the particulars it has supplied in the statement of claim do not shape the substantive claim in paragraph 3.

19    It appeared from submissions this morning that the applicants may seek to rely upon the negligence of servants or agents of the respondent other than Mr Xuegang Wang. As I have already noted, if that is the case it would need to seek leave to amend the statement of claim to so plead.

20    Fifth, I do not accept the submission of the applicant concerning the utility of the Court ordering additional discovery to inform it in relation to any proposed amendment to its reply, based upon comments of Rares J in Strong Wise Ltd v Esso Australia Resource Pty Ltd (No 2) (2010) 185 FCR 237 at [5]. The juridical basis for his Honour’s observations in that case is very different from that in the substantive case in these proceedings.

21    Sixth, I am not satisfied that categories of documents relating to salvage and repair of the ship meet any of the criteria in Rule 20.14 (2) on the current state of the pleadings.

Conclusion

22    The amended interlocutory application should be dismissed. Further, there is no reason in my view why the applicant should not pay the costs of the respondent of and incidental to this application. Such costs should be paid by the applicant, to be taxed if not otherwise agreed.

Associate:

Dated:    23 July 2015