Twin Bright Shipping Co Ltd v Tauwhareparae Farms Ltd (No 2)

IN THE HIGH COURT OF NEW ZEALAND
GISBORNE REGISTRY
CIV.2003-416-1

BETWEEN TWIN BRIGHT SHIPPING CO S.A. AND SOKI KISEN CO LTD
Plaintiffs

AND TAUWHAREPARAE FARMS LTD
Defendant

AND ADSTEAM HARBOUR (NZ) LTD
First third party

AND EASTLAND MOORINGS LTD
Second Third Party

AND GISBORNE DISTRICT COUNCIL
Third Third Party

Hearing: 3 May 2006 (1st Third Party application)
10 May 2006 (3rd Third Party application)

Counsel: Ms Nicholson for plaintiff (at both fixtures as observer)
Colin Carruthers QC and Roy van Panhuys for defendant
James A Farmer QC and Michael McCarthy for 1st Third Party (on 3 May 2006)
Michael McCarthy for 1st Third Party (on 10 May 2006 as observer)
Mr McGuiness for 2nd Third Party (at both fixtures as observer)
Les J Taylor for 3rd Third Party (on 10 May 2006)

Judgment: 26 May 2006

RESERVED JUDGMENT OF WILLIAMS J
[on striking-out applications by 1st and 3rd Third Parties]

A. The application by the third third party for the striking-out of the defendant’s claims against it is granted other than to the extent outlined in paragraph [127] herein.

B. The defendant is directed to file and serve an amended claim against the first and third third parties within 21 days of the date of delivery of this judgment.

C. The first third party is to advise within seven days whether it wishes to continue its striking-out application.

D. In those circumstances, it would appear to be appropriate to reserve the question of costs as far as both striking-out applications are concerned.

E. There will be a telephone conference with counsel for all parties on Tuesday, 4 July 2006 at 9:00am.

TABLE OF CONTENTS Paragraph

Issue [1]

Striking-out principles [2]

Brief facts [11]

Claims and Defence [15]

Striking-out application by Adsteam:

1. Port Services Contract [29]
2. Evidence [32]
3. Maritime Transport Act 1994 s 60B [38]

Striking-out application by Gisborne District Council

1. Claim and application [55]
2. Breach of Statutory Duty claim:

[a] Statutory framework [65]
[b] Submissions [67]
[c] Discussion [83]

3. Negligence Claim:

[a] Submissions [96]
[b] Discussion [110]
[c] Causation [128]

Result [131]

Issue

[1] This judgment deals with applications by the first third party, Adsteam Harbour (NZ) Ltd, and the third third party, Gisborne District Council, to strike out the claims brought against them by the defendant, Tauwhareparae Farms Ltd. (Since this claim was commenced the original First Defendant, Port Gisborne Ltd, sold its business to the present defendant, Tauwhareparae Farms Ltd, but it is convenient to call the defendant the “Port Company”).

Striking-out principles

[2] The approach to the jurisdiction to striking out a pleading under R 186(a) or a proceeding under R 477(a) is well-settled. Subject to what later appears, all allegations in the statements of claim are assumed will be admitted or be capable of proof. The pleadings are then considered against the test of deciding whether, on material which can be properly considered, they have been shown to be so clearly untenable in fact and law as to be incapable of success. That test has been set by Courts as being deliberately difficult to attain to preserve citizens’ access to Courts. The discretion is to be exercised sparingly and in clear cases only. Pleadings or proceedings may be struck out even though such applications raise difficult questions of law requiring extensive argument provided the Court can be persuaded that the claim is unsound, the pleading cannot be amended satisfactorily – an aspect of importance in these applications - and such an order will obviate the necessity for trial (Peerless Bakery Ltd v Watts [1955] NZLR 339; McKendrick Glass Manufacturing Co Ltd v Wilkinson [1965] NZLR 717; R Lucas & Son (Nelson Mail) Ltd v O’Brien [1978] 2 NZLR 289; Takaro Properties Ltd v Rowling [1978] 2 NZLR 314; Gartside v Sheffield Young & Ellis [1983] NZLR 37; South Pacific Manufacturing Co Ltd v NZ Security Consultants & Investigations Ltd [1992] 2 NZLR 282).

[3] Three additional comments are warranted.

[4] First, the phrase that a striking-out application must show the claim “to be so clearly untenable in fact and law as to be incapable of success” is now so well-worn as to carry little impact.

[5] Putting it more bluntly, what striking-out applicants must show is that those claiming on them will undoubtedly lose if the case goes to trial. A weak case or one imperfectly pleaded is not enough; they must show the claimant’s loss is inevitable. Putting it so baldly may re-focus the minds of readers of this judgment – not just the parties and counsel in this case – on whether to bring such applications.

[6] In the second place, the position of affidavits in striking-out applications can be contentious. As the Court of Appeal said in Electricity Corporation Ltd v Geotherm Energy Ltd [1992] 2 NZLR 641, 645-646 relying on C E D Distributors (1988) Ltd v Computer Logic Ltd (In Receivership) (1991) 4 PRNZ 35, even in cases pleading abuse of process :

“lengthy and contentious affidavits are not to be encouraged and are more likely to lead to an award of costs against an applicant than to the success of the striking-out application”.

[7] The affidavits filed in relation to Adsteam’s application largely put in evidence uncontroversial documents but also referred to some factual matters which may have been in contention. However, no objection was taken.

[8] Thirdly, through the striking-out jurisdiction has a legitimate place in the range of interlocutory applications – Donoghue v Stevenson [1932] AC 562 is an example of the Scottish equivalent – the frequency of such applications over the two decades since RR 186 and 477 were included in the High Court Rules has, on occasions, been controversial (McGechan on Procedure para HR186.02(3)(4) p1- 987-988).

[9] This is particularly the case because, throughout the history of the strikingout jurisdiction, it has always been accepted that such applications will fail if amending the claim cures the alleged deficiency. Tipping J put it thus in Futures Ltd v Marshall [1992] 1 NZLR 316, 324:

The difference, using by analogy the terminology of motor vehicle insurance, is between a pleading which is a total write off and one which is deficient but is capable of effective repair.

[10] An aspect of that frequently overlooked is that bringing a striking-out application often serves to highlight, precisely, pleading deficiencies or lacunae which might have been fatal to the claim at trial but which, because the opportunity to amend will always be given, enables claimants to rectify procedural oversights and avoid substantive failure. This consequence may still not be fully recognised by those defending claims (McGechan on Procedure para HR186.08 p1-991, Sims Court Practice para HCR 186.5 p105,754).

Brief facts

[11] The “Jody F Millennium”, was at all material times in the registered ownership of the first plaintiff, Twin Bright Shipping Co SA, and the beneficial ownership and management of the second plaintiff, Soki Kisen Co Ltd.

[12] She berthed at Port Gisborne on 3 February 2002 to take on a cargo of logs.

[13] On and in the days leading up to 6 February 2002, Poverty Bay, and the Port of Gisborne in its north-east corner, was subject to a gale from the southerly quarter with accompanying large swells.

[14] For reasons which will be fully canvassed at the substantive hearing of this case, at about 2138 hours on 6 February she left berth and commenced to make her way to sea through the harbour exit channel. She touched bottom in the channel about 2152 hours. The grounding damaged her steering and affected her capacity to make sufficient way on the required heading in the then circumstances. She ran aground off Waikanae Beach, only a few hundred metres from the harbour mouth. Despite being partially unloaded and salvors’ efforts, she remained aground for 18 days. She was eventually refloated on 24 February. She was towed to Port of Tauranga where the balance of her cargo was discharged and temporary repairs effected. She was then towed to Japan where permanent repairs were effected. Presumably she has been back at sea plying her trade ever since, despite the fact that 6 this litigation over her grounding has not yet even reached the stage where the parties to the claim and their pleadings are finalised.

Claims and Defence

[15] In the current claim, the owners accept that the cause of the damage suffered by the ship was her initial grounding in the exit channel. As the Court observed in one of its earlier judgments in this case, that delivered on 15 November 2004, what the plaintiffs need to prove at trial to obtain judgment are what actions or omissions of the Port Company and others may be shown to have had a material influence on the “Jody F Millennium” being where she was, when she was, and thus grounding as and when she did.

[16] More particularly, the claim sets out the background to the vessel’s departure, including such matters as published dredged depths and harbour conditions and hazards. It includes the order for the vessel to leave port being given by a Captain Sands. He is pleaded as having been employed by Adsteam as “marine manager and pilot at the Port” under Adsteam’s contract with the Port Company.

[17] The plaintiffs are suing the Port Company for breach of an oral contract to permit the former to use the port for loading. Implied terms of the contract pleaded include providing adequate facilities for a vessel of the size and type of the “Jody F Millennium”, publications as to the dredged channel depth and draught and the Port Company making available to the vessel shore mooring lines sufficient to keep her alongside in all expected conditions.

[18] The claim alleges breaches of that contract by the Port Company by failing to provide a safe port, failing to dredge adequately, publishing incorrect information as to dredged depth, allowing Captain Sands to direct the master to leave port at a time when such was unsafe, failure to pass on weather and swell warnings, failure to provide adequate shore mooring lines and allowing Captain Sands :

“by virtue of his appointment as pilot and marine services manager for the Port and in the absence of any locally resident harbourmaster or similar officer, to assume the role of de facto harbourmaster.”

Captain Sands is also later pleaded to be the Port Company’s “agent or sub-agent”.

[19] A second cause of action brought under the Contracts (Privity) Act 1982 is of no present moment.

[20] A third cause of action under the Fair Trading Act 1986 pleads essentially identical facts and allegations and claims the Port Company “by its servants or agents or sub-agents” engaged in misleading or deceptive conduct in relation to those matters.

[21] The final cause of action against the Port Company is in negligence, again pleading largely identical factual matters.

[22] The Port Company’s defence largely puts the plaintiffs to proof but, in addition, asserts the weather conditions at the time of departure were “more severe than had ever been seen before” and the decision to sail was that of the master “either after consultation with or on the advice of the pilot”. It asserts that by reason of its contract with the owners’ local agents, the owners should have insured against the casualty. The safe working draught is pleaded to have been a matter for the judgment of the master and the grounding was either caused by or contributed to by the actions of the master or the pilot in pleaded respects.

[23] For reasons which will become apparent, it is important to note that, to date the Port Company has not relied on the Maritime Transport Act 1994 s 60B.

[24] In its claim against Adsteam, the Port Company pleads the first third party was the “provider of marine services” at the port under a contract dated 8 December 1998 (seemingly erroneously pleaded as 18 November 2000). It claims to be entitled to indemnity or contribution from Adsteam because at the time of entering the contract Adsteam represented to the Port Company that it was “competent to provide a full range of marine services and undertook provide such services” [sic.] at the Port of Gisborne. Representations during negotiations are pleaded, as is Adsteam’s acceptance that in taking over marine services at the port through its marine services manager and pilot, Adsteam was to provide maritime expertise.

[25] Implied terms of the contract include that Adsteam would provide competent, trained personnel to perform all its services and undertake such services competently.

[26] It is next pleaded that in providing maritime services to the port Adsteam assumed direct management or responsibility for the conduct of vessels in and out when appropriate and providing mooring arrangements. To do that, the claim asserts Adsteam appointed Captain Sands as its “Marine Services Manager at Gisborne [and] … its principal pilot at the Port”.

[27] The Port Company’s claims against Adsteam are brought in breach of contract and negligence with the latter relying on the matters pleaded in the former, mutatis mutandis.

[28] The Port Company pleads that if it be held liable to the owners for erroneously allowing Captain Sands to assert to the master sufficient water depth for safe departure, directing departure when the depth was not accurately known, failing to provide safety management systems at the port including passing on weather or swell warnings, failing to provide adequate mooring lines, negligently ordering the vessel to sea in unsafe conditions and allowing Captain Sands to be simultaneously pilot, marine services manager and de facto harbourmaster, then such breaches resulted from breaches of the express or implied terms of the contract between the Port Company and Adsteam or were contributed to by Adsteam or its contractor, Eastland Moorings Ltd, the second third party, in its contract with Adsteam or, alternatively, through Captain Sands’ actions as pilot in a number of pleaded ways.

Striking-out Application by Adsteam

1. Port Services Contract

[29] Adsteam applied to strike out the Port Company’s claim against it on the grounds set out in RR 186 and 477. It submitted the contract pleading did not establish a cause of action in terms of the contract which defined its duties and was intended to govern all aspects of their relationship. It also pleaded it had available the statutory defence in s 60B.

[30] In support, Mr Farmer QC, Adsteam’s senior counsel, carefully analysed the terms of the pleadings. He submitted the claim against the first third party fell outside the terms of the Port Services Contract and that it was the contract alone which determined Adsteam’s obligations.

[31] For the Port Company, Mr Carruthers QC, its senior counsel, submitted that the claims and admissible evidence filed to date show there are a number of factual issues which must be canvassed before the parties’ respective responsibilities can be accurately determined, something which must await trial.

2. Evidence

[32] The Port Services Contract was made on 8 December 1998 between Adsteam and Port of Gisborne Ltd and ran for ten years from 1 November that year. The “Background” section describes the historical roles of the parties and their agreement that “Adsteam will provide marine services” at the Port of Gisborne.

[33] The contract itself is a brief document but includes a number of Schedules covering matters such as tariffs, general conditions for use of the port, leases of facilities, “Barecon 89” charters for Adsteam’s tugs and other matters of no present moment. But the “Conditions of Engagement” define Adsteam’s obligations as making its tugs, the services of a pilot and “such linemen as are required to assist in the mooring and unmooring” at the port, all on a number of express conditions.

[34] Were Mr Farmer correct in submitting the Port Services Contract was the only document setting out the relationship between the parties, there might perhaps have been some force in that aspect of the striking-out application. However, such is not the case.

[35] In the first place, the pleading against Adsteam, as mentioned, asserts that in representations and as implied conditions of the contract, Adsteam agreed to provide a “full range of marine services” for the Port including taking over responsibility for arrival and departure of vessels and their mooring whilst in harbour.

[36] Secondly, a Mr Tahata, the general manager of Port Gisborne Ltd on 6 February 2002, said the Port Services Contract was only a “framework agreement” between his then employer and Adsteam and that, as pleaded, in preliminary negotiations leading up to the contract, the representations were as set out in the Port Company’s claim. He said that at the time the contract was signed, Port Gisborne Ltd expected its pilot would be employed by Adsteam as were other Port of Gisborne staff but such did not occur and Adsteam employed Captain Sands as its “pilot and operations manager” for the port and thereafter, through those employees, set ground rules for vessels entering, leaving and staying at the port including berthing, mooring and managing the lines services. He put in evidence a number of documents sent to or by Captain Sands and others involved between 7 April 1999- 30 March 2001 which tended to confirm that to be the case.

[37] Since the assumption in striking-out applications is always that the pleadings are provable, on this aspect of the application, therefore, the conclusion must be that the submission that the Port Services Contract alone wholly defines the terms of the relationship between the Port Company and Adsteam is not correct and the parties agreed and acted on the rather broader and more informal arrangement pleaded by the defendant against the first third party. That aspect of the striking-out application accordingly fails.

3. Maritime Transport Act 1994 s 60B and Duties of a Pilot

[38] In 1999 Parliament amended the Maritime Transport Act 1994 to require masters to take on pilots whenever required by maritime rules (s 60A) and also enacted s 60B which reads :

60B Limitation of liability where pilot engaged

(1) A port company, or other body corporate or person, who provides a pilot is not liable for any neglect or want of skill of the pilot.

(2) The owner or master of a ship navigating under circumstances in which pilotage is required is answerable for any loss or damage caused by the ship or by any fault of the navigation of the ship in the same manner and to the same extent as that person would be if pilotage were not required.

(3) A pilot is not liable for neglect or want of skill while on board a ship and acting as a pilot.

[39] As Mr Farmer correctly submitted, shipowners had been vicariously liable for pilot faults under voluntary pilotage for a long period and the enactment of s 60B was to ensure the final demise of any remaining vestige of owners’ defence of compulsory pilotage.

[40] The reason for the enactment of s 60B was, as the Transport and Environment Select Committee reporting on the Maritime Transport Bill put it in its report to Parliament, (p vi) :

Liability of pilots

Section 60B as inserted by clause 8 reflects the principle that ships under pilotage remain under Master’s orders at all times and clarifies that civil liability for a pilot’s negligence rests with the Master or owner of the ship. In so doing, the section removes an ambiguity under existing legislation that has caused port companies and other employers of maritime pilots to take out liability insurance for pilotage, even though shipowners themselves maintain such insurance. Avoiding double insurance in this way will reduce port costs.

[41] As Mr Farmer also correctly observed, similar provisions have been enacted in most other common law maritime countries. Even s 60B(2) was not novel: it repeated the Harbours Act 1950 s 231A enacted in 1959.

[42] But more importantly, in considering whether s 60B may afford Adsteam a complete defence to the Port Company’s claim against it – at least to the extent that claim is based on Adsteam’s provision of a pilot to the company - a current pleading curiosity needs to be noted.

[43] On its face, s 60B(2) is inapplicable to Adsteam’s defence of the Port Company’s claim since, even if the subsection may mean the owners and their Master are answerable for damage arising from a vessel’s navigation, that does not currently avail Adsteam since, of course, the owners are not claiming directly against it and, to date at least, the Port Company has not pleaded s 60B(2) against the owners’ claims.

[44] The Port Company’s current defence was filed as far back as 23 December 2004 and at this hearing Mr Carruthers made clear its current lack of reliance on s 60B was an oversight which would soon be rectified but nonetheless, as far as Adsteam’s striking-out application is concerned, the present pleading position means that, to the extent this judgment is able to deal with the s 60B issue, it has to be dealt with in a vacuum.

[45] It also means, in view of the fact that a further hearing on this application may be required after the Port Company amends its defence and, possibly, its claim against Adsteam, it would be inappropriate to discuss a number of the cases on which Mr Farmer relied. That needs to be postponed until all parties see the way in which s 60B is actually pleaded. That may bring those cases into focus – either at that stage or at trial – since they define the ambit of the s 60B defence following trial. They do not focus on what would seem to be the pivotal issue for the purpose of Adsteam’s striking-out application, namely what pleaded actions by Captain Sands may come within the scope of his appointment as pilot as opposed to marine service manager or other descriptions and thus, potentially at least, come within the scope of s 60B.

[46] With a person who fulfils more than one role, including that of a pilot, precisely what duties they undertake in their role as pilot may, even now, not be precisely defined. No doubt it depends on circumstances but all definitions seem to involve navigation of a ship as a common requirement. That, in its turn, will require evidence as to the duties actually undertaken at Port Gisborne by Captain Sands in the relevant period so as to determine which may come within his duties as a pilot and thus arguably protected by s 60B and which occurred in discharge of his duties in other roles.

[47] In that regard, it is first to be noted, first, that the Maritime Transport Act 1994 defines “Master” and “Pilot” in the following correlative terms :

“Master” means any person (except a pilot) having command or charge of any ship.

“Pilot”, in relation to any ship, means any person not being the master or a member of the crew of the ship who has the conduct of the ship.

[48] Paul David (Laws NZ Maritime Law: Admiralty para 99 p 90) simply says :

Pilotage is the service provided by a person who, with knowledge of local conditions, has the conduct of the ship in local waters on behalf of a Master and owner.

[49] In The Guy Mannering (1882) 4 Asp. MLC 553, 554-555 the matter was put in the following way by Brett LJ :

The duty of a pilot in England is too well known and too universally applied to require any enactment with regard to it at all. It is to regulate the navigation of the ship, and to conduct it so far as the course of the ship is concerned. He has no other power on board the ship; he has no power over the discipline of the ship; he has no power over the cargo on board; and he has no power with regard to the various matters which are necessary to enable him to perform his duty; he cannot place a man on the look-out, or regulate the place at which the look-out man shall be on board the ship. He has nothing to do but to control the navigation. … All the orders which an English pilot has to give are the orders for regulating the course of the ship upon the waters. He knows the course she has to take, and must take.

… He is put there for a special purpose; therefore, so far as the exercise of those known powers are concerned, if, in the course of the ship upon the waters, damage arises by reason of his regulating the course of the ship, the owners are not liable. But if the ship, in consequence of the want of a lookout man, goes wrong, then, although the pilot has given the orders as to the course, yet, inasmuch as the course goes wrong, because he has not the proper information given him by the master and the crew, it is not the fault of the pilot, it is the fault of the master and crew, and therefore the owner is liable. So, if the pilot gives an order to the man at the wheel to steer a course which would be the right course, and he does not obey it, or obeys it too late, then, though the course of the ship is wrong, it is not solely the fault of the pilot, and therefore the owner is liable.

…

The only phrase in which I can accurately describe the position of the pilot is, that he is a live chart…

[50] It must at once be noted, however, that the report of The Guy Mannering in the official reports differs markedly. There, Brett LJ is recorded as holding (1882) 7 PD 132, 134-135) :

… the statutes as to merchant shipping do not accurately define the duty of a pilot; but it is plain that he is to conduct the navigation. On the one hand he has no power to place the crew at particular posts in the ship or to regulate the discipline: on the other hand he is to regulate the course of the ship through the water; he is taken on board in order to control the management of her for this purpose … The owner of the ship is not liable for the consequences of the wrongful or negligent acts committed by the pilot, whom he is compelled to employ. But if the ship goes wrong in consequence of a failure of duty by the look-out man, it is not the fault of the pilot and the owner is responsible. If the pilot’s orders as to steering the ship are not obeyed, and if mischief in consequence ensues, the owner cannot escape from liability.

… a pilot is to tell a captain of the condition, the formation, and the depth of the canal; he is in fact to be a kind of living chart. But a pilot is not to go beyond this: the captain must direct how the ship is to be steered and the whole duty of managing her devolves upon him.

[51] That the former report of The Guy Mannering is accurate may be taken from the fact that Lord Tenterden in his authoritative work “A Treatise of the Law Relative to Merchant Ships and Seamen” (14th ed 1901 (1984 Reprint) Vol 1 p 300-301) set out part of the passage cited from 4 Asp.MLC (though attributing it to Lord Esher MR as Brett LJ later became) and went on to observe :

Accordingly, it has been held to be the pilot’s duty to decide the proper time for the vessel to get under way (The Argo (1859) Swa.Ad. 462); when under way, what her speed shall be, and to give all orders to the helm; to navigate her on one or the other side of a river; to select the time and place for turning in a river, and to direct the manoeuvres necessary for the purpose; to decide whether to comply with the statutory rule of the road or not; if the safety of the ship require it, to take the assistance of a tug, and he has no right to get under way without such assistance if it is dangerous to do so; to select the time for making fast to a tug, and to direct the navigation of the tug when in tow; to decide when the ship shall be brought up, and the place of anchorage; the mode of anchoring, and the preparations to be made for it; if she drags or drives with her anchor down, to decide whether a second anchor shall be let go … and to regulate the ship’s course and speed by means of check ropes and warps when docking.¹

¹ Though some caution should be exercised as to the authenticity of the 4 Asp MLC judgment as by 1901 the Aspinalls had become the editors of Lord Tenterden’s work.

(See also The Andoni [1918] P 14, 18, Cremean Admiralty Jurisdiction: Law and Practice in Australia and New Zealand 2nd ed 2003 p 61-63).

[52] As this matter is currently pleaded, those dicta apply to some but not all of Captain Sands’ actions and accordingly a s 60B defence may be at least partially available to Adsteam (and the Port Company).

[53] But until the Port Company has had the opportunity to re-plead its claim against Adsteam (and perhaps its statement of defence) in light of this judgment, no firm conclusions can be reached in that respect.

[54] The Port Company is therefore directed to file and serve an amended claim against Adsteam (and, if it wishes, an amended defence) within 21 days of the date of delivery of this judgment with Adsteam then having seven days to consider whether it wishes to continue with its striking-out application. The application will be adjourned part-heard for that purpose.

Striking-out application by Gisborne District Council

1. Claim and application:

[55] At the time of the casualty Gisborne District Council held all the shares in Gisborne Holdings Ltd, that company being the sole shareholder in Port Gisborne Holdings Ltd, with that company in its turn being the sole shareholder in Port Gisborne Ltd.

[56] The Port Company’s claim against the District Council is that it was the “statutory authority generally responsible for the regulation of maintenance of safe navigation at the Port, including provision of services of a Harbourmaster” and that, pursuant to the Local Government Act 1974 and other Acts and regulations, the District Council was under “a statutory duty to regulate the safety of navigation” in and around Gisborne Harbour, including by licensing pilots, appointing a Harbourmaster, passing by-laws and installing and maintaining navigational aids.

[57] The Port Company claims the District Council owed statutory duties to it, port users and the Jody F Millennium in two respects and breached both.

[58] The first was to ensure that it promptly provided information to the Port Company and users “relevant to the proper operation of the port including prompt provision of all weather and swell information obtained by it” and, having received a heavy swell forecast from a dedicated MetService issued about 1305 hours on 6 February 2002, failed to pass it on to Captain Sands or the vessel timeously thus forestalling the ship leaving harbour at about high tide at 1400 hours approximately.

[59] The second set of statutory duties on the part of the District Council was said to be to ensure that the “operation and safety of the Port was under the ultimate direction of a Harbourmaster experienced in sea conditions affecting the Port … who was available to deal with such urgent situations and that such Harbourmaster’s adequately resourced and supported” (sic.). The breach alleged is that the District Council failed to “appoint and resource and support a Harbourmaster for the Port familiar with its conditions and limitations or practically capable of making urgent decisions for safe navigation at the Port”. The pleaded particulars include the Council appointing a new Harbourmaster, Captain Rycroft, only about a fortnight before the casualty. He resided at Napier and was said to have been unable to participate in any decision concerning Captain Sands’ order to leave port. In fact, according to Mr Taylor, counsel for the District Council, it is common ground that Captain Rycroft knew nothing of the events leading to the grounding and was not consulted until after the casualty.

[60] A second allegation under the same statutory duty is that the Council breached its obligation by failing to put in place a system to monitor, maintain or provide the Harbourmaster for publication to the Port Company and users information obtained by the District Council relating to the port’s weather conditions.

[61] Those two breaches are pleaded to have deprived the Port Company, Captain Sands and the ship of weather information known to the District Council and the “benefit of the assistance a competent Harbourmaster would have provided”. That, it is pleaded, led to the ship departing in the circumstances and at the time she did, that being pleaded, in its turn, to have led to the damage to the ship because, had the weather and swell information been provided timeously a decision to sail earlier could have been made or an experienced and informed Harbourmaster properly resourced would not have allowed the ship to leave in the circumstances then prevailing.

[62] There is a second cause of action alleging negligence on the part of the District Council asserting that a duty of care arose in circumstances identical to the statutory duties pleaded, the duty was breached in the same way as in the breach of statutory duty claim, and accordingly, as in the earlier claim, the Port Company is entitled to contribution or indemnity from Council.

[63] The District Council seeks either to set aside the third party notice or strike out the Port Company’s claim under RR 186 and 477 on the grounds :

a) None of the statutory provisions pleaded by the Port Company impose duties on the District Council which are express, mandatory or for the benefit of a limited class of which the Port Company was a member or were of a kind intended by Parliament to confer on the company a private civil action for damages against the Council for breach. It is to be noted that the Council does not argue that breaches of the Local Government Act cannot give rise to claims for breach of statutory duty; it argues that, in this case, breaches of the pleaded duties do not support the claim by the Port Company at law.

b) The negligence claim cannot lie as there is insufficient proximity or relationship between the Port Company and the Council to justify imposing the pleaded duties and that it is not fair, just and reasonable as a matter of policy to impose such duties for a number of reasons discussed later.

c) The Council also asserts that even if it remains a party and the pleaded breaches are established against it, none caused the losses claimed.

[64] The Port Company denies each of those assertions and, additionally, says evidence would be required to determine them. Thus the matters raised should await determination at trial.

2. Breach of Statutory Duty Claim

(a) Statutory framework

[65] The statutory provisions on which the Port Company mainly relies are the Local Government Act 1974 ss 37S in Part 1A, and the provisions of Part 39A (ss 650 ff) dealing with navigation. They relevantly read :

37S Functions of regional councils–

(1) Every regional council shall have –

…

(e) The following functions, duties, and powers in relation to waters within its region or within such area or areas of its region as it may specify for the purpose by bylaws made under this Act, namely, -

(i) The regulation and control of navigation safety:
(ii) The functions, duties, and powers set out in Part 39A.

…

650B Appointment of harbourmasters, enforcement officers, and honorary officers–

(1) A regional council may appoint such harbourmasters and enforcement officers (including honorary enforcement officers) as it thinks necessary for the purposes of this Part.

…

(3) Harbourmasters appointed under subsection (1) must have such qualifications as may be required by maritime rules.

Part 39A also includes a selection of harbourmasters’ ancillary powers in the interests of navigation safety not presently relevant although s 650J (1)(b) gives Councils power to delegate their functions relating to navigation safety to port operators. Delegated powers required to be performed by harbourmasters can be undertaken by Port operators’ employees (s 650J (3)).

[66] For about three years prior to the casualty the District Council also had the power to appoint pilots as employees or license pilots employed by Port companies under the relevant Maritime Rules.

(b) Submissions and authorities

[67] The leading definition of the elements of the cause of action for breach of statutory duty are found in the speech of Lord Browne-Wilkinson in X (Minors) v Bedfordshire County Council [1995] 2 AC 633. His Lordship began the judgment with the following passage (at 730-731) :

The question is whether, if Parliament has imposed a statutory duty on an authority to carry out a particular function, a plaintiff who has suffered damage in consequence of the authority’s performance or non-performance of that function has a right of action in damages against the authority.…

Private law claims for damages can be classified into four different categories, viz: (A) actions for breach of statutory duty simpliciter (i.e. irrespective of carelessness); (B) actions based solely on the careless performance of a statutory duty in the absence of any other common law right of action; (C) actions based on a common law duty of care arising either from the imposition of the statutory duty or from the performance of it; (D) misfeasance in public office, i.e. the failure to exercise, or the exercise of, statutory powers either with the intention to injure the plaintiff or in the knowledge that the conduct is unlawful.

[68] His Lordship went on to describe category (A) as those where the claim alleges the existence of the statutory duty, breach and damage. That description, Mr Taylor submitted, applies to the Port Company’s claim against the District Council. Lord Browne-Wilkinson then said that of his category (A) claims :

The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action. However a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty. There is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators. If the statute provides no other remedy for its breach and the Parliamentary intention to protect a limited class is shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer. If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action. … However, the mere existence of some other statutory remedy is not necessarily decisive. It is still possible to show that on the true construction of the statute the protected class was intended by Parliament to have a private remedy.

[69] As Prof John Burrows QC observes in his chapter on Breach of Statutory Duty in Todd et al The Law of Torts in New Zealand (4th ed 2005 para 8.2.03 pp 341- 346) neither the “class” test nor the “alternative modes of enforcement” test are conclusive. Indeed, he says they are not even reliable predictors and points to the Court of Appeal’s acceptance of that view in Select 2000 Ltd v ENZA [2002] 2 NZLR 367, 374 para [43]. Prof Burrows concludes (para 8.2.05 p 350 op cit) :

This is one of the law’s less certain areas. In any topic that avowedly depends on the construction of legislation, it is unwise to expect firm principles. Accordingly, all the presumptions and tests formulated by the courts are only guides and do not produce certainty. Here matters are even less certain than usual, for sometimes the words of the legislation are completely silent on the question. …

…

At times commentators, and even judges, have suggested that everything in this area is judicial legislation. Dickson J in the Supreme Court of Canada said that the cases are based on “a bare-faced fiction”; and Lord Diplock once said succinctly: “the statutes say noting about civil remedies for breaches of their provisions. The judgments of the courts say all.” Even harsher words have been used by some judges, who have variously described this part of the law as “fatuous” and ‘a guesswork puzzle” Lord Evershed, writing extrajudicially, once said :

A lay mind might not unjustifiably be tempted to think that there was no much rhyme or reason in it all and that the spin of a coin was as good a forecast as any of the result of a case.

Yet in modern times, when courts are careful to use a “scheme and purpose” approach to interpretation, these words of doom are probably too strong. There cannot be the slightest doubt that the courts strive to be as faithful to the statute as they can. They search for hints in its wording, and do attempt to reach a decision that, at the very least, is consistent with its scheme and purpose.

[70] Useful guidance can, with respect, be gained from the remarks of Heath J in Hobson v Attorney-General [2005] 2 NZLR 220, 243 para [101] (upheld on appeal by majority: Hobson v Attorney- General; Couch v Attorney-General CA74/05 and CA238/05, 17 May 2006) that what is needed is to “interpret the statute to ascertain whether Parliament intended to create a private law remedy as well as to confer public duties on particular public officials” and to look at other facts only if “Parliament’s will is not clear from the express words used in the Act when read in light of the purpose of the statute.”

[71] Mr Taylor submitted the District Council’s status as the ultimate parent of the Port Company could not create statutory duties and there is no claimed link between the breaches as pleaded and the powers in ss 37S and 650B. The pleading, he submitted, created no express duty on Council, a requirement of such claims, he submitted (E v K [1995] 2 NZLR 239, 245-246). Further, he submitted, the duty must be mandatory not discretionary, though the first of the authorities on which he relied, X (at 732) does not go quite so far. The relevant passage reads :

The cases where a private right of action for breach of statutory duty have been held to arise are all cases in which the statutory duty has been very limited and specific as opposed to general administrative functions imposed on public bodies and involving the exercise of administrative discretions.

[72] However, Mr Taylor was on firmer ground in relying on Rowan v Attorney- General [1997] 2 NZLR 559, 570 where Smellie J held :

To succeed on such a cause of action the plaintiff must not only establish that the statute imposes a mandatory duty, but also that it is of the kind which is enforceable by a personal damages action. Furthermore, the plaintiff must show that he or she has suffered the kind of loss or “mischief” which the statute was intended to prevent.

A consideration of the authorities shows that a statutory duty will be enforceable by personal action if:

(i) It is for the benefit of a limited class of person; and
(ii) Parliament intended to confer a right of action on members of that class.

[73] Mr Taylor submitted that X makes clear the District Council could not be liable in damages for statutorily-authorised actions. The relevant passage reads (at 736) :

Most statutes which impose a statutory duty on local authorities confer on the authority a discretion as to the extent to which, and the methods by which, such statutory duty is to be performed. It is clear both in principle and from the decided cases that the local authority cannot be liable in damages for doing that which Parliament has authorised. Therefore if the decisions complained of fall within the ambit of such statutory discretion they cannot be actionable in common law. However, if the decision complained of is so unreasonable that it falls outside the ambit of the discretion conferred upon the local authority, there is no a priori reason for excluding all common law liability.

[74] Mr Taylor submitted s 37S did no more than describe the District Council’s functions and powers and did not impose a mandatory duty. Section 650S likewise conferred a discretion on Council to chose to appoint a harbourmaster or harbourmasters, full or part-time. That, too, he submitted, was inconsistent with creation of a mandatory duty. At the time of the casualty, the General Harbour (Nautical and Miscellaneous) Regulations 1968 Reg 49(4) expressly contemplated the appointment of part-time harbourmasters. There was no requirement for residential proximity. The pleaded allegations as to unavailability of Captain Rycroft at the time of the casualty were therefore, he submitted, unsustainable. Similarly, resourcing and support for any harbourmaster appointed was plainly discretionary and was dependent on budgetary, suitability and similar factors.

[75] The District Council’s power to licence a pilot was at the time governed by the General Harbour Regulations, Regs 57-60 and Part 90 of the Maritime Rules. However, since the Port Company’s claim alleges no breach by the District Council of that power or the power to pass bylaws, it is unnecessary to consider them. The failure to make bylaws was not pleaded and whilst s 684B empowered the District Council to make bylaws relating to navigation and safety, s 684C expressly prohibited the making of bylaws which limit or affect a port company’s ability to manage its operations other than as may be required for navigation safety.

[76] Mr Taylor noted the delegation power in s 650J in relation to navigation safety imposed no obligation of ongoing supervision. That, he submitted, was a strong indicator that Parliament intended that the District Council would be free from direct responsibilities if it delegated its statutory functions in that area.

[77] In any event, ultimate corporate parents such as the District Council owe no duty to those dealing with its subsidiaries (Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [1990] 3 NZLR 513, 532, Dairy Containers Ltd v NZI Bank Ltd [1995] 2 NZLR 30, 89-90.

[78] Mr Taylor noted there was no plea that the District Council’s claimed obligation to pass on weather and swell information was rooted in statutory power. To how many, he questioned, would such a duty be owed? When would it arise? How would it be satisfied?

[79] In summary, Mr Taylor submitted the District Council’s pleaded obligations were not mandatory and were not for the benefit of a limited class including the Port Company. They were not intended by Parliament to give a right of private action for breach. Port safety and navigation benefited not only port users but the whole of the commercial and shipping communities and, through them, the public as a whole. Accordingly, he submitted, the claim for breach of statutory duty should fail.

[80] Mr Carruthers said this was a Category (C) case from X, not Category (A). He submitted the District Council failed to appreciate that the applicable statutory framework applying to it included what he submitted were the mandatory functions in s 37S and Part 39A. He relied on s 684B-E – though such are not pleaded – empowering District Councils to make bylaws covering all aspects of navigation and safety. Beneath that statutory régime, he submitted, was the further régime contained in the General Harbour Regulations including, he submitted, the preservation of common law claims. The whole of the statutory and regulatory régime, Mr Carruthers submitted, also needed to be seen against the régime covering port companies and Local Authority Trading Enterprises coupled with the factual background. All that, he submitted, indicated strongly that the breach of statutory duty cause of action could only be properly determined at trial.

[81] In relating to the allegation concerning the failure to pass on weather and swell information, Mr Carruthers submitted the District Council had a dedicated source of information and accordingly a correlative duty to pass on the information it received. That obligation, too, required determination on the facts elicited at trial.

[82] As regards the harbourmaster pleading, Mr Carruthers submitted it was a clear breach of the District Council’s duty in that regard to appoint a person without putting in place adequate systems for consultation and advice. This, again, was a statutory function which required determination at trial in light of the evidence.

(c) Discussion

[83] Seen against the background of the statutory powers and the authorities earlier discussed, s 37S must be seen as a general empowering provision giving regional councils authority to regulate and control navigation safety within their respective areas. That must plainly have been intended by Parliament to be a general empowering provision giving Council authority to regulate the activities of all those using the waters within their region in the multitude of ways in which that occurs. The only limitation relevant to this claim is that Council’s functions must relate to “navigation safety”, an undefined term.

[84] Since a very large proportion of persons in New Zealand use waters within Regional Council’s districts at some stage or other in ways which may be affected by navigation safety, it is very difficult to conclude that s 37S confers on the Port Company a private right of action for breach of a duty imposed for protection of a limited public class of which it is a member. Indeed, such may be thought to run counter to Port Companies’ prime obligation to “operate as a successful business” (Port Companies Act 1988 s 5).

[85] Whilst, therefore, the Port Company’s claim against the District Council is correct in saying the latter is “generally responsible for the regulation and maintenance of safe navigation” in Gisborne, that does not by any means suggest that Parliament intended to confer on the Port Company a private right of action for breach.

[86] Further, s 37S is plainly permissive not mandatory and it is noteworthy that the Port Company nowhere pleads breach of any exercise by the District Council of its power to make bylaws for navigation safety. All it alleges in this regard is that the District Council had weather and swell information on the day of the casualty which it failed to pass on timeously. Even assuming that allegation is factually correct, what the District Council did was within its statutory empowerment and there can be no basis for concluding its pleaded failures amounted to breach of a mandatory statutory duty as opposed to exercise of a general administrative discretion.

[87] The appropriate conclusion is accordingly that the Port Company’s claim against the District Council for breach of statutory duty as far as it relates to s 37S is incapable of success and must be struck out.

[88] Turning to s 650B, the first point to be made is that it plainly confers a discretion on the District Council to appoint one or more harbourmasters either full or part-time as thought necessary for the purposes of Part 39A.

[89] As far as concerns the District Council’s exercise of its discretionary powers by the appointment of Captain Rycroft, the only assertions by the Port Company relate to his experience of the port of Gisborne, his availability and his competence. That seems incapable of amounting to a breach of s 650B at the suit of the Port Company given there is no allegation that Captain Rycroft’s qualification does not accord with the relevant Maritime rules, the only statutory requirement.

[90] Even if – as must be the case –the allegations are assumed provable, the assertions as to Captain Rycroft’s appointment would appear to be intended to protect at least all those having business with the port of Gisborne, including the interests of all those in the region. The appointment assertions in combination with s 650B, cannot be regarded as conferring a private right of action on the Port Company for breach of a mandatory function.

[91] The remaining allegations under this part of the claim assert inadequate resourcing and support for the harbourmaster including lack of a system for providing him with weather information at the port of Gisborne which he could pass to the Port Company and users. A well-resourced harbourmaster, it is asserted, would have prevented the ship’s departure at the time she left.

[92] Those assertions clearly cannot be allegations of breach of s 650B. But, though not particularised, the Port Company’s claim also relies on the Harbours Act 1950 (though largely repealed from 29 April 1999 when Part 39A was enacted by the Local Government Amendment (No.2) Act 1999) and the General Harbour Regulations. Reg 50 of the latter gave harbourmasters power to give directions as to, amongst other things, the time of a vessel’s departure from harbour. Thus it may be arguable that the pleading asserts a breach of that duty but, even so, while such a duty might be owed to the ship and those with an interest in her, it is difficult to conceive of it being owed to the Port Company as a member of a limited class given a private right of action for breach.

[93] In any event, even accepting the current form of the pleading, this was clearly a discretionary decision as to something which could have occurred in the circumstances and it is accordingly not possible to conclude that the pleaded breaches are breaches of a mandatory obligation not within the powers Parliament conferred on the District Council.

[94] The Port Company’s breach of statutory duty claim against the District Council based on allegations concerning the appointment and lack of resourcing of the harbourmaster accordingly also cannot stand and must be struck out.

[95] For completeness, it must be observed that no relevance has been demonstrated in the pleading that the District Council is the ultimate owner of the Port Company, particularly having regard to the observations in Kuwait Asia and Dairy Containers.

3. Negligence claim

(a) Submissions

[96] Mr Taylor was justifiably critical of the brevity of the negligence pleading. It occupies only nine lines of the Port Company’s claim including repetition of a number of the earlier paragraphs.

[97] He submitted, however, that the House of Lords in Gorringe v Calderdale Metropolitan Borough Council [2004] 2 All ER 326 was strong authority for the proposition that a broad statutory public duty does not give rise to a correlative common law duty of care. In that case, Mrs Gorringe sued the Council for failure to erect sufficient road signs to prevent the serious accident in which she was involved. The Council’s statutory obligation was to “maintain the highway” and to improve road safety. Her claim was dismissed.

[98] However, with respect to counsel’s submissions, while there are strong views expressed in Gorringe as to when a duty of care arises, as Heath J pointed out in Hobson (at 230 para [42]), in New Zealand the existence of a duty of care giving rise to a negligence claim remains the now long-standing test as to whether there is a degree of proximity or relationship between claimant and defendant such as to impose a duty of care and, secondly, whether policy considerations tend to negative or restrict a claimed duty (South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282, 294-297 per Cooke P). The ultimate question is whether it is just and reasonable for such a duty to be imposed (Attorney-General v Body Corporate No. 200200 CA30/05 1 December 2005 para [36]).

[99] In considering the question of proximity, the observations of the Court of Appeal in Body Corporate 200200 are of assistance (para [37]) :

[37] Foreseeability is a necessary precondition for the imposition of a duty. But a conclusion that harm was foreseeable does not in itself warrant the conclusion that there is sufficient proximity to justify the imposition of a duty of care. Relevant to this assessment are :

(a) Whether duties of care have been imposed in analogous situations.

(b) The substantiality of the nexus between the defendant’s alleged negligence and the plaintiff’s loss . . .

(c) General considerations of vulnerability on the part of the plaintiff and the potential burden on the defendant (or others similarly placed) of taking precautions against the risk in issue. … This necessarily raises the question whether the plaintiff (and others similarly placed) or the defendant (and others similarly placed) are better placed to take steps to avoid or minimise the relevant risk.

(d) The nature of the relevant risk. The courts are most likely to find proximity where the underlying risk is associated with health, personal injury or death and more likely to do so where there is a risk of property damage than where the loss is purely economic. … Also relevant is the size of the class affected by the risk. The larger that class (and thus the more indeterminate the alleged duty), the less likely it is that a duty will be imposed.

[100] In relation to public bodies, in Body Corporate 200200 the Court of Appeal described as the “primary policy issue” the question whether imposing a duty of care is “consistent with the terms and policies of the statute which governed the functions of the defendant” with a duty of care not being imposed if the effect would be inconsistent with the statutory scheme (at para [39]). The Court of Appeal went on to say that the “more policy-orientated and less operational the power in question is, the less likely duty is to be imposed” and the “further removed the public body is from day to day physical control over the activity which directly caused the loss, the less likely courts are to impose a duty of care” (at para [42]).

[101] Mr Taylor submitted imposition of a duty of care should not follow in this case for factors which included :

a) The relationship between the Port Company and the District Council is one of indirect parent and subsidiary. There were, he submitted, few, if any, cases where a duty of care has been held to be owed by a parent company in such circumstances.

b) There is no substantial nexus between the District Council’s alleged negligence and the Port Company’s loss since what is pleaded is essentially an assertion that imposition of a duty to regulate the