Tasman Orient Line CV v Alliance Group Ltd

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
AD31-SD02

BETWEEN TASMAN ORIENT LINE CV
Plaintiff

AND ALLIANCE GROUP LIMITED
First Defendant

AND COMALCO NEW ZEALAND LIMITED
Second Defendant

AND ALL OTHER PERSONS CLAIMING OR BEING ENTITLED TO CLAIM DAMAGES BY REASON OF OR ARISING OUT OF THE GROUNDING OF THE VESSEL "TASMAN PIONEER" OFF THE COAST OF JAPAN ON OR AROUND 3RD MAY 2001
Third Defendants

Hearing: 11 June 2003

Appearances: N A Beadle with M-A Lowe for plaintiff
P R Rzepecky with E J Grove for First Defendant

Judgment: 21 August 2003

RESERVED JUDGMENT OF WILLIAMS J.

Solicitors:
Phillips Fox, Auckland, for plaintiff
McElroys, Auckland, for first defendant

ISSUES

[1] At about 0255 hours on 3 May 2001 (local time) the ship "Tasman Pioneer" grounded in the Inland Sea of Japan. Salvors pulled her free and beached her. The cargo was unloaded, but much was damaged and as a result, claims totalling over $NZ21m have been commenced. This judgment deals with two issues arising out of the casualty.

[2] First, the plaintiff, Tasman Orient Line, seeks a decree pursuant to the Maritime Transport Act 1994 Part VII¹ limiting its liability to the claimants and fixing the amount. If successful, the decree will limit Tasman Orient's liability to approximately $NZ7m. While both Alliance Group and Comalco, the first and second defendants, took a neutral stance in relation to the application, in the best traditions of the Bar counsel for each provided full written submissions on the issue (although Mr Stewart, counsel for Comalco, sought and was granted leave not to appear in person).

[3] Secondly, if Tasman Orient were successful in its application for the decree of limitation, Alliance Group, supported by Comalco, sought an order requiring Tasman Orient to establish a limitation fund by paying the Registrar the amount determined under Part VII. Tasman Orient opposed, partly on the ground the Court had no power to order security, partly on the ground that such was not ordered in advance of the constitution of the fund in comparable jurisdictions, and partly on other grounds later discussed.

[4] Apart from a comment, almost certainly obiter, in one case, both issues are without precedent in New Zealand.

APPLICATION FOR DECREE OF LIMITATION

Facts

[5] It was a dark and stormy night. According to the judgment of the Japan Maritime Safety Authority acting through the Kobe Local Marine Accidents Inquiry Agency (MAIA) delivered on 1 November 2001, "Tasman Pioneer" was steaming through the Kanmon Strait via Bungo Channel. The freely translated judgment then said:

At 20:10 hours on the same day, a strong wind and high seas advisory was announced for all region of Kochi Prefecture. Under stormy weather in the early morning of May 2, the ship's sailing schedule was gradually delaying at each marked spot. Being afraid of delay in the pilot's boarding time at the east entrance of Kanmon port, the Master thought of sailing through the waters between the southwest coast of Shikoku Island and Okinoshima in order to shorten the sailing distance.

At that time, out of 2 radars, both similar records of use, the radar No.2 was turned off due to instability caused by increased vibration of hull, etc., and only the radar No.1 was in operation. This radar was also unstable, requiring fine adjustment depending upon conditions of weather and sea.

In regard to the aforementioned waters, there is Biroushima Island near the center which separates the waters to its east and west side. On the east side waters, there is a passable route of 0.8 nautical mile width between the island and Murobae, a rock above water of 4.3m high. Taking his route from south of Murobae directly to northwest may provide saving of the distance by 10 nautical miles, while on the other hand there is no navigational aid at night such as light beacon, etc., to show circumstances of the route.

The Master had sailed through the east side route many times with cargo ships of gross tonnage of 4,000 tons, and even with the Tasman he had used the route when heading towards south. He therefore, was aware of the conditions of the route.

On May 3, at 02:25 hours at a position of 085º (true, unless otherwise specified) and 10.0 nautical miles from Tosa Okinoshima Lighthouse (hereinafter called "Okinoshima Lighthouse"), the Master went to the bridge to take over the control of the ship by himself ... And in order to pass through the east side route, he set the course on 278º and proceeded the ship with the engine full ahead to 14.8 knots (groundspeed, unless otherwise specified).

At 02:30 hours when the ship was getting to a position of 083º and 8.7 nautical miles from Okinoshima Lighthouse, there came a shower that reduced the visibility down to 1 nautical mile. The Master, however, thought that he would be able to manage the sailing by checking the condition of the east side route using the radar No.1. So, he did not take the originally planned course of the broad waters at the south side of Okinoshima, but continued sailing towards the east side route with the radar No.1 setting at 3 nautical mile range.

At 02:46 hours at a position of 071º and 5.0 nautical miles from Okinoshima Lighthouse, the Master then turned the course of ship toward 308º and proceeded to sail trying to hold her position parallel to Biroushima Island in a distance of about 0.4 nautical miles on her portside, during which time the radar No.1 lost the echo of Biroushima affected by the shower, or some other reason....

At 02:53 hours at a position of 053º and 4.4 miles from Okinoshima Lighthouse, without recognizing the ship approaching closer to Biroushima Island on her port bow, he ordered the helmsman hard port aiming at the aforementioned broad waters, and went out to the portside wing to watch direction of the Tasman's turning stern, at 02:54 he found the black shadow of the summit of the island very close to Tasman's port side and so immediately ordered hard starboard. But it was too late and the Tasman, with a speed of 12.0 knots heading towards 270º at a position of 047º and 4.0 nautical miles from Okinoshima Lighthouse at 02:55 hours, ran aground by her forward bottom in the shallows very close to the north of Biroushima Island and went over the shallows. ...

As a result of the grounding, the forward bottom of the ship was cracked by 14 m long, and many dents and holes were made on the bottom plating from the bow to amid portside.

After the grounding the Master drove the ship to a position of 15 nautical miles northwest from the position of grounding and temporarily anchored her off the southeast coast of Yuramisaki. He then prepared procedures required on accidents such as inspection of damages, etc.

[6] MAIA's judgment on the cause of the casualty was:

The grounding in this case was caused by inappropriate selection of the sailing course when sailing towards east of Okinoshima under the stormy weather at night. The ship was sailing westward off the south coast of Shikoku. The radar No.2 was turned off because of failure and the radar No.1 in operation despite unstable condition. With the intention to save the sailing distance, the ship was heading towards the east end of the narrow water route, where no navigational aid such as a light beacon was available, in between Biroushima Island and Murobae in the north of Okinoshima. The occasional shower reduced the visibility. Instead of taking the originally planned course in broad waters on the south side of Okinoshima, the ship turned to the narrow water route and proceeded toward northwest, during which time the echo of Biroushima Island on the radar screen was lost by the influence of shower, or some other reason. Without knowing the relative position of the ship against Biroushima Island, the ship swung hard port toward south of Okinoshima, then made hard starboard, headed to the shallows very close to the north of Biroushima Island and ran aground.

[7] Tasman Orient is a corporate partnership organised under Nertherlands law which has run liner trades between New Zealand and the Asia-Pacific region since its formation in 1999 with about 8-11 vessels under time charters of typically 1-3 years in duration. Tasman Orient at the time sub-chartered "Tasman Pioneer" from Tasman Orient Line (Cyprus) Ltd under an NYPE form dated 23 November 2000 and was the contractual carrier under various bills of lading for cargo. Tasman Orient Cyprus charters multi-purpose vessels in the international market and chartered "Tasman Pioneer" (under her former name "Pioneer Ark") from her registered owner Rimba Shipping Co Ltd of Cyprus. The vessel was managed by Technomar Shipping Inc. Capt. Rao, Tasman Orient's general manager operations in Auckland, said Technomar is well known in international shipping, manages a large number of vessels and offers compliance with the International Safety Management Code ("ISM").

[8] "Tasman Pioneer" was a multi-purpose container vessel built in 1979, 166m in length and of 27m beam. She had four cargo holds and could carry 860 TEU containers. A mechanical inspection prior to chartering noted a recent major engine overhaul. There were few concerns.

[9] The charter was initially for two trial round voyages between the Far East and New Zealand, part of the reason for the trial being to confirm the vessel's suitability for Tasman Orient's purposes.

[10] Tasman Orient came on sub-charter on 9 March 2001 following a further report on condition carried out at Busan, Korea. That showed all necessary certificates current as having been issued within three months of survey and her ISM Document of Compliance was valid through to the time of the casualty. The vessel was certified and surveyed in class with no notations only three days prior to delivery. There were no structural faults of concern. As she had been recently modified for Tasman Orient's requirements, its Far East operations manager also inspected her on delivery and supervised initial loading. Neither surveyor, it seems inspected the radars, no difficulty being indicated though repairs had been effected in February-March 2001. She had a classification certificate issued by Germanischer Lloyd, a classification society of repute, with notations of +100AS and +NC so her condition and operation complied with best international standards.

[11] At Busan, the Filipino Master was given a copy of Tasman Orient's comprehensive standing instructions which outlined the company's policies. They said that "no instruction is intended to prevent you ... acting for the best interests of cargo, ship, owners and charterers where this is required by the special circumstances of the case or the practice of diligent seamanship". The section "Reporting Procedures" required noon reports every second day as to such matters as position, distance steamed at average speed, wind and sea state, eta next port and "where there is any reason to divert from the normal track (weather/emergency) please inform Tasman Orient VBR at/prior to making the diversion with an estimate of impact on ETA and Fuel ROB."

[12] Capt. Rao made the point that cl 26 of the charterparty required owners to remain responsible for the navigation of the vessel and cl 47 stated "it is clearly understood that the Master is the only party to decide upon vessel's course". The section headed "Inland Sea Pilotage" said the preferred route from Busan to Osaka was through the Bungo Straits and although the casualty did not occur in a compulsory pilotage area, the standing instructions said "Self Pilotage is ALWAYS at the complete discretion of the Master".

[13] On "Tasman Pioneer"'s first voyage from Busan to Auckland she passed through the Kanmon and Bungo Straits south of Shikoku, this being the usual route from Korea to Osaka. The Master declined the offer of a pilot in the non-compulsory pilotage area of Bungo Straits.

[14] Surveyors for Tasman Orient inspected her and her cargo's condition on her arrival in Auckland on 29 March 2001. Although the radars were not mentioned, the report said that "on board systems appear to be in good working order".

[15] On 29 March 2001 the Master was given instructions for the next voyage loading about 150 containers and a quantity of break bulk cargo at New Zealand ports for carriage to and discharge at seven ports in Japan and Korea expected to occur between 30 April and 10 May. The instructions said:

At all times, we rely upon you to exercise your judgment in carrying out your responsibility as Master and these instructions in no way relieve you of that responsibility.

[16] The voyage proceeded uneventfully although, as "Tasman Pioneer" was three days late arriving Yokohama, Tasman Orient deleted Inchon, Korea, from the schedule to ensure timely arrival at Busan.

[17] "Tasman Pioneer" sailed from Yokohama on 1 May 2001 at 1850 hours and the Master's noon report of 2 May 2001 (actually transmitted at 1719 hours because of time difference) indicated an eta Busan of 3 May 2001 at 1800 hours. Tasman Orient's instruction to the Master on leaving Yokohama was for the course "Yokohama to Busan is via Bungo and Kanmon Straight [sic]". The noon report gave no indication of any course change, weather or other emergency. By the time the next report was due the vessel had grounded and was off-hire from that moment.

[18] Capt. Rao was advised of the grounding at about 0800 hours New Zealand time on 3 May. Owners appointed a salvage tug on Lloyd's Open Form terms. By 1920 hours New Zealand time, Capt. Rao was aware the forecastle of the vessel was under water, "crew have evacuated to a coastguard cutter and the prospects to save the vessel appear bleak". Two vessels in the area were sought to offload cargo. Tasman Orient's P & I Club was informed, as were others interested in the vessel. Rimba, Technomar and the salvage company, Nippon Salvage, took over the operation. Tasman Orient had no part to play beyond obtaining and relaying information to safeguard cargo interests and advising customers. Tasman Orient was not permitted to interview crew.

[19] The grounding tore a 14m hole in the shell plating and two holds flooded. After the second grounding further flooding occurred. Reefer containers suffered power outages. The salvors were able to stabilise the vessel by discharging a number of containers, pressurising one tank and adjusting ballast. They then deliberately beached her on 10 May for temporary repairs. On 18 May she was re-floated and towed by salvors to Kukura, Japan, the nearest port of refuge, the rest of the salvageable cargo being discharged by Rimba at Kukura in the three weeks from 19 May. Tasman Orient arranged for that cargo to be transhipped to its destination with unsalvageable cargo being destroyed by Rimba. "Tasman Pioneer" was towed to a shipyard and later sold for scrap. Tasman Orient was not involved in any decisions in those respects.

[20] As is common, neither Tasman Orient nor Tasman Orient Cyprus were parties to the MAIA inquiry and only obtained a copy of the report through representatives of cargo interests.

Claims

[21] As a result of the casualty, Tasman Orient received a number of claims. They include many from owners or lessors of the 155 containers on board, many of which were lost or damaged, from those with interests in the contents of the containers and in break bulk cargo. Cargo claims issued to date exceed $US11m but further claims have been notified by other cargo interests, container owners or lessors. Some are being arbitrated in London but Capt. Rao estimated the total claims likely to be brought against Tasman Orient to be in the region of $US15m. All claims issued in, or transferred to, the Auckland Registry are being case-managed together.

[22] Based on a gross tonnage of 16,748 tonnes measured in accordance with the International Convention on Tonnage Measurement of Ships 1969 and ss86-88, Tasman Orient's calculation of the principal amount of any limitation fund for claims other than for loss of life or personal injury amounts to 2,880,416 units of account, ie Special Drawing Rights of the IMF, plus interest up to distribution. It asserts its entitlement to a decree limiting its liability to the New Zealand currency equivalent of 2,880,416 SDRs on the basis that all claims against it come within s86 and that the effect of that section and s85(1) automatically entitle a charterer or sub-charterer to limit liability against such claims unless the entitlement to limitation is defeated by s85(2).

Law and Submissions

[23] The power of a New Zealand court to make a limitation decree is not in doubt. Section 85(1) provides:

85 Persons entitled to limitation of liability under this Part

(1) Subject to subsection (2) of this section, the following persons are entitled to limit their liability in accordance with this Part of this Act:

(a) Owners of ships, and any master, seafarer, or other person for whose act, omission, neglect, or default the owner of the ship is responsible:

(b) Salvors, and any employee of a salvor or other person for whose act, omission, neglect, or default the salvor is responsible:

(c) Insurers of liability for claims subject to limitation of liability, to the extent that the person assured is entitled to such limitation.

but entitlement is limited by s85(2) which reads:

 

(2) No person shall be entitled to limitation of liability in respect of claims for loss or injury or damage resulting from that person's personal act or omission where the act or omission was committed, or omitted, with intent to cause such loss or injury or damage, or recklessly and with knowledge that such loss or injury or damage would probably result.

[24] R792 requires Admiralty actions in personam seeking relief under Part VII to be proved by affidavit setting out the plaintiff's case and naming generally all persons with claims against the casualty other than those named expressly. Once procedural requirements are complied with, R792(8)(c) provides:

(c) if at the hearing of the application it appears to the Court that it is not disputed that the plaintiff has a right to limit the plaintiff's liability, the Court must make a decree limiting the plaintiffs liability and fix the amount to which the liability is to be limited:

[25] Mr Beadle, leading counsel for Tasman Orient, submitted that since neither named defendant disputed Tasman Orient's right to limit its liability, the Court was required to make the limitation decree under R792(8)(c).

[26] Limitation of liability in maritime claims has a lengthy history, though a history not without controversy. Meeson Admiralty Jurisdiction and Practice (2nd ed 2000 para 8-001 p241) says that the "rationale for such a concept is the public policy in encouraging shipping and trade which overrides the competing public policy in compensating the victims of wrongdoing" while Toh Admiralty Law and Practice (1998 p407) puts it in the following terms:

The limitation of liability of carriers and shipowners is a necessary facet of maritime commerce. The commonly cited, though not the only, justification is that by capping liability at a certain sum, the spectre of unlimited exposure is removed for carriers and shipowners, as well as their insurers, which in turn translates into lower freight rates for cargo interests, for whom insurance is the answer for any loss or damage in excess of the limits of liability.

(An interesting review of the historical basis for limitation of liability appears in Lord Mustill "Ships Are Different - Or Are They?" [1993] LMCLQ 490 and the response by David Steel QC (as he then was) in "Ships Are Different: The Case For Limitation Of Liability" [1995] LMCLQ 77. See also Meeson op cit para 8-002-8-005 pp241-242, for Australia White Australian Maritime Law 2nd ed 2000 ch10.2 p296ff and for New Zealand, Broadmore in Griggs & Williams Limitation of Liability for Maritime Claims 3rd ed 1998 chap 23, pp252-256 and Myburgh Transport Law in New Zealand in International Encyclopaedia of Laws, Kluwer Law International 2002 chap 5 p137). Steel J (as he now is) further reviewed the history of this topic in his recent decision in CMA CGM SA v Classica Shipping Co Ltd [2003] 2 Lloyd's Rep 50, 52-54, paras 14-27.

Tasman Orient as "owner"

[27] Of those listed in s85 as entitled to apply for tonnage limitation the only category into which Tasman Orient may fall is that of "owner" which is defined in s84 as:

Owner, in relation to a ship,-

(a) Means every person who owns the ship or has any interest in the ownership of the ship:

(b) In any case where the ship has been chartered, means the charterer:

(c) In any case where the owner or charterer is not responsible for the navigation and management of the ship, includes every person who is responsible for the navigation and management of the ship:

[28] Mr Beadle submitted that para (b) of the definition should be construed as extending to time charterers and sub-time charterers relying on the Interpretation Act 1999 s33 to the effect that singulars include plurals and the history of New Zealand legislation and International Conventions on the topic.

[29] Briefly, for New Zealand the earliest provisions on the topic would appear to have been the Shipping and Seamen Act 1903 s295 and the Shipping and Seamen Act 1908 s295 both of which restricted entitlement to limitation to owners. That reflected the Merchant Shipping Act 1894 s503 (UK). Entitlement was extended by the Shipping and Seamen Amendment Act 1909 s43 to include within the term "owner" charterers to whom the ship was demised. That reflected the Merchant Shipping Act 1906 s71 (UK) although, as Steel J noted in CMA CGM (para 17) the House of Lords extended the ambit of "owner" to include a demise charter in Sir John Jackson Ltd v Owners of the Steamship "Blanche" (The "Hopper No.66") [1908] AC 126, 130, 136. The Convention for the Unification of Certain Rules Relating to the Limitation of Liability of Owners of Sea-Going Vessels 1924 extended the availability of limitation to persons who "operate the vessel without owning it or the principal charterer". That, and the Merchant Shipping Act 1921 s1 (UK) led to the Shipping and Seamen Act 1952 s458(2) which extended the definition of "owner" to "charterer or other person for the time being" responsible for the vessel if the owner was not so responsible. Then the International Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships 1957 Article 6(2) entitled charterers to limitation. In New Zealand that was followed by the Shipping and Seamen Amendment Act 1987 s2 which extended the definition of "owner" of ships under 'charter or demise' to the charterer if the owner was not responsible for navigation. The Convention on Limitation of Liability for Maritime Claims 1976 defined those entitled to limit as "ship-owners" which was extended by Article 1 to mean "owner, charterer, manager or operator". That, in its turn, led to s85.

[30] All of that tends to support Mr Broadmore's comment (op cit p251) that Parliament in this country adopted a "peculiar and unsatisfactory technique" of paraphrasing the London Convention rather than merely enacting it. Be that as it may, the conclusion must be that tonnage limitation has been available to charterers for nearly a century in England, in New Zealand and under the International Convention and there seems no warrant now to read down the definition of "owner" for s85 purposes by excluding time charterers and sub-time charterers.

[31] To an extent, that view was confirmed in CMA CGM but the point there in issue was whether charterers were entitled to limit against claims by shipowners. As part of the discussion leading to his decision against the charterer, Steel J held (p54 paras 31-35):

31. ... The inference I am minded to draw is that the term "shipowner" only includes those who, if they have no beneficial or possessory interest in a vessel, are nonetheless in a real sense directly concerned in the operation of the vessel and have incurred liability as such.

32. The position of a demise charterer would be axiomatic: he is the temporary or "pro hac vice" owner. By contrast a voyage charterer, who merely pays freight to the shipowner for the carriage of his own or others' goods on a defined voyage, in no sense operates or manages the vessel. In short, he has no more role or responsibility as the "shipowner" than a shipper.

33. The time charterer pays hire to a shipowner to the end that the owner's vessel should render services for a defined period by way of carriage of the time charterers' or others' goods. Albeit the vessel is under the legitimate orders of the time charterers as regards the vessel's employment (and accordingly commonly described as within their "disponent" ownership), again almost all aspects of management and operation remain the responsibility of the shipowners.

34. I have not forgotten that, from time to time, time charterers may engage in a role akin to that of an owner - for instance by the issuance of time charterers' bills of lading which attract liability in respect of cargo claims. In these circumstances it was conceded by the respondents that the charterers could, if necessary, invoke limitation under the convention against a claim brought by cargo-owners.

35. This may well be right but the point does not arise directly for consideration in the present case. ...

[32] The learned Judge also adopted (p55 para 43) the observations in Aegean Sea Traders Corporation v Repsol Petroleo SA (The "Aegean Sea") [1998] 2 Lloyds Rep 39, 48 that:

... the charterer is to be treated as a shipowner and entitled to limit for the claims brought against him when he acts in the capacity of a shipowner.

[33] Tasman Orient was carrier under bills of lading issued in respect of "Tasman Pioneer".

[34] It accordingly follows that Tasman Orient is entitled to be regarded as the "owner" in relation to "Tasman Pioneer" under s84 and thus entitled to a decree of limitation under s85, other, perhaps, than in respect of any claim which might be brought by Rimba.

Was the casualty caused by negligent navigation? Does s85(2) apply to Tasman Orient?

[35] A consideration whether Tasman Orient is disqualified from a limitation decree by the provisions of s85(2) is assisted by authorities under Article 4 of the London Convention which is similarly worded and reads :

ARTICLE 4 Conduct barring limitation

A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.

[36] Under the 1957 Limitation Convention, a shipowner lost the right to limit if guilty of "actual fault or privity". That is no longer the case under either the 1976 Limitation Convention or s85. The position is now that it is for the claimant seeking to break the limitation to show the intention for which the section provides. As put by Dr Jackson Enforcement of Maritime Claims (3rd ed 2000 para 24.51 p590):

Formerly it was for the shipowner to show lack of actual fault or privity. Now it is for the liability claimant to show at least the knowledge by the person claiming limitation that loss would result. The difficulty of establishing that there is no limit is increased when the defendant is a company. It must then be shown that acts of the person responsible for the damage are the acts of the company - this depending on where the person is in the company hierarchy. It seems accepted that the limits will normally be unbreakable - a trade off for the higher limits established in the 1976 Convention.

(See also White op cit p317).

[37] Inevitably, decisions on applications to break the limit depend on examination of the relevant Convention provisions as applied to the facts.

[38] For example, under the Hague-Visby Rules, in Browner International Ltd v Monarch Shipping Co Ltd (The "European Enterprise") [1989] 2 Lloyds Rep 185, Steyn J (as he then was) held the comparable provisions of those Rules referred only (at 192) to the "misconduct or recklessness of the carrier himself or his alter ego" because (at 191):

Firstly, and looking at the matter as between the parties to a contract of carriage, one must bear in mind that once an ocean voyage has commenced the carrier has rather limited control over the acts and omissions of his servants and agents. Taking a broad view of the matter, this factor alone would have provided a rational justification for a narrow view of what constitutes a "carrier" under a provision allowing the limitation to be broken. Secondly, there is another reason why a narrower view of "carrier" would have appealed to those who drafted the 1968 Protocol. That is the consideration that, although limitation provisions are often viewed with scepticism by lawyers, the undoubted advantage of limitation provisions such as those contained in Art.IV r.5(e), is that makes it easier and less expensive to obtain the insurance vital to the conduct of the shipping trade. A fairly narrow breaking of limitation provision, predicated on the misconduct or recklessness of the carrier himself, therefore serves a rational commercial purpose.

[39] Then, under the similar provisions of the International Convention on the Carriage of Passengers and Their Luggage (the Athens Convention), in R G Mayor (T/A Granville Coaches) v P & O Ferries Ltd (The "Lion") [1990] 2 Lloyds Rep 144, 149-150) Hobhouse J first held that "carrier" in the Convention did not include the carrier's servants or agents and then, after referring to The European Enterprise as holding

In The European Enterprise Mr. Justice Steyn was invited to hold that "the Carrier" should mean the carrier or his servants or agents. He approached the construction of that Convention and those rules in a similar way to that in which I have approached the Athens Convention and came to the conclusion that clearly on the drafting of the Convention the word "carrier" meant what it said, and therefore the right to limit could only be displaced if there was the appropriate act or omission of the carrier himself as opposed to the carrier or his servants or agents.

went on to express the view that:

... it is clearly important and correct that there should be a consistent approach to the construction of similar Maritime Conventions using similar terms and expressing similar ideas. ... The defendants are entitled to limit their liability under art. 8 of the Athens Convention, and that is not affected by any question of whether any servant or agent of theirs who was not an alter ego of the defendants was guilty of any act or omission of the kind referred to in art. 13.

[40] Though dealing with the law as it was prior to the 1976 Limitation Convention coming into force and on a concession that the actions of a director of a managing company were, as a matter of law, the actions of the shipowners, it is nonetheless instructive to note the comments by Lord Brandon of Oakbrook delivering the leading judgment of the House of Lords in Grand Champion Tankers Ltd v Norpipe A/S [1984] 1 AC 563, 572-573 where the following appears:

There was a time when courts dealing with contested limitation actions considered that shipowners or ship managers sufficiently discharged their responsibilities if they appointed a competent master and thereafter left all questions of safe navigation, including the obtaining at their expense of all necessary charts and other nautical publications, entirely to him. That former approach of such courts has now been out of date for more than 20 years, as appears from the decision of the Court of Appeal in Rederij Erven H. Groen v The England (Owners) (The England) [1973] 1 Lloyd's Rep. 373. ...

If it was held by the Court of Appeal, reversing the Admiralty judge, that Mr Groen [the owner] had been guilty of actual fault in this respect, and that it had not been proved that such fault did not contribute to the collision.

In relation to that issue, Sir Gordon Willmer, who was the acknowledged master of Admiralty law in his time, said at p 383:

It may be that 20 years ago what Mr Groen did and did not do might have passed muster; but the decision of the House of Lords in the case of The Norman [1960] 1 Lloyd's Rep. 1, seems to me to have thrown quite a fresh light on the extent of the managerial duties of owners and managers, especially in relation to the supply of navigational information and publications to their vessels. It seems to me that it is no longer permissible for owners or managers to wash their hands so completely of all questions of navigation, or to leave everything to the unassisted discretion of their masters. This relatively new approach, as I think it is, was well illustrated by the decision of this court in The Lady Gwendolen [1965] P 294. ... I venture to quote two sentences from the judgment which I myself delivered in that case. . . . On p 345 of the . . . report I am reported as saying: '. . . It seems to me that any company which embarks on the business of shipowning must accept the obligation to ensure efficient management of its ships if it is to enjoy the very considerable benefits conferred by the statutory right to limitation.'

Then, after referring to another case called The Radiant [1958] 2 Lloyd's Rep 596 ... I proceeded to quote a sentence ... which again I think is appropriate to this case: '. . . The fundamental fault in respect of which I am disposed to blame Mr B [- that is the manager -] is that he never had any proper comprehension of what his duty as managing director of a fleet of this sort was. . . .' It appears to me that Mr Hendrikus Groen was very much in the same position as the managing owner in that case.

My Lords, I am of the opinion that what Sir Gordon Willmer there described as "this relatively new approach", begun by your Lordships' House in Northern Fishing Co (Hull) v Eddom (The Norman) [1960] 1 Lloyd's Rep 1 and continued by the two subsequent decisions of the Court of Appeal in The Lady Gwendolen [1965] P. 294 and The England [1973] 1 Lloyd's Rep 373 should now be regarded as the correct approach in law to the problem of actual fault of shipowners or ship managers in contested limitation actions. It follows that I regard it as right to apply that approach to the facts of the present case.

[41] As a result, the learned authors of Gaskell Asariotis & Baatz Bills of Lading: Law and Contracts (2000 para 16.53 pp520-521) conclude:

There are subtle differences, as well as similarities, between the tests in the various Conventions and care has to be taken in comparing them. First, the wording of the Article would clearly indicate that the burden of proof under the Hague-Visby Rules will be on the cargo owner to show that the carrier was guilty of the necessary misconduct. Secondly, the test will be fairly hard to satisfy because of the subjective requirement arising through the link between recklessness and knowledge of consequences. Whatever the exact meaning of recklessness, it is its combination with a certain state of knowledge on the part of the carrier that will cause problems for the cargo owner. Moreover, the carrier has to have knowledge that "damage" would probably, and not possibly, result. ...

In deciding whose acts can deprive the shipowning company of the right to limit, attention has often been focused on the question of whether it is possible to identify a "directing mind and will" of the company. Although that may often be the most appropriate description of the person designated by the special rule of attribution set out in the maritime rule, it is now clear that this may not be an exclusive formula. In Meridian Global Funds Management (Asia) Ltd v Securities Commission [[1995] 2 AC 500], Lord Hoffmann indicated that it may be necessary to look for the person whose functions in the company, in relation to the cause of the loss, were the same as those to be expected of the individual shipowner to whom the language of a statute ... primarily applied. After this (non-shipping) case, it may be necessary to look at anyone in the company hierarchy who had functions corresponding to those to be expected of an individual owner. That search might end up much lower in the corporate hierarchy than previously had been thought to follow from cases such as The Marion [[1984] AC 563].

[42] There is one authority which indicates the contrary, but since it is the only New Zealand decision touching the topic, it requires to be addressed. It is Nelson Pine Industries Ltd v Seatrans New Zealand Ltd (The "Pembroke") [1995] 2 Lloyd's Rep 290. The case was primarily concerned with whether Seatrans could rely on the limitation provisions of the Hague-Visby Rules where cargo initially stowed below deck was later stowed on deck. The liner booking note provided for the cargo to be loaded under deck but the bill of lading said nothing about place of storage. The learned Judge first described the factual background in the following passage (at 291, 292):

The plaintiff, Nelson Pine, claims from Seatrans its losses resulting from corrosion to roller chain carried by sea from Bremerhaven in Germany to the port of Nelson on Pembroke in 1990. Seatrans is the New Zealand agent and legal representative of the master and the owner or charterer of Pembroke for the purposes of receiving and paying such a claim for damaged cargo under s11 of the Sea Carriage of Goods Act 1940.

In October 1989 Nelson Pine decided to purchase a new press for its MDF fibreboard plant in Richmond. The total cost was in the order of $60m.and Eduard Kusters G.m.b.H. of Hanover was the supplier of the main componentry to a value of nearly $12m. ... the managing director of Nelson Pine appointed agents in the port of Bremen to arrange and co-ordinate the shipping of the press to New Zealand. That agent appointed another agent Lassen G.m.b.H. and that company concluded a contract with Svendborg Maritime APS, a Danish firm, to carry the componentry by sea from Bremerhaven to the port of Nelson. ...

The plaintiff claims that Svendborg is the agent of the carrier. The defendant submits that this has not been proved. The case was presented on the basis of an agreed bundle of documents which are to be taken to establish what they purport to establish unless the parties claim otherwise. On that basis I conclude from a time charter dated Aug. 24, 1990 that Earl Shipping Ltd owns the ... Pembroke, which is under the Panamanian flag; that the owner chartered her to Paramount Enterprises International Inc. and Conmer Ltd jointly and severally and that Svendborg is the commission agent of the vessel on hire earned and paid under the charter. The fact that Svendborg entered into the liner booking note as carrier and the correspondence showing that the ship was to be one "under Svendborg Maritime Denmark Flag" ... indicates that Svendborg was the agent for the charterers of Pembroke. There is no evidence to the contrary and I conclude that Svendborg was the agent for the vessel. ...

Mr MacKenzie agreed that if I concluded that Svendborg was the vessel's agent, then the express terms of the liner booking note obliged the carrier to carry the goods below deck. I consider this concession to be properly made.

[43] But then, having held that Seatrans could not rely on the limitation provisions in the Hague or Hague-Visby Rules, the Judge went on to consider whether the packet or weight limitation in the Hague-Visby Rules applied. After concluding the master must have known when re-stowing the machinery that damage would probably occur, the learned Judge held (at 297):

It is plain that the master and the charterers took a calculated risk with full appreciation of the dangers and probable consequences for the same of extra freight from the cargo shipped in Brazil and which displaced the plaintiff's open top containers. The evidence shows that Conmer and the master of Pembroke were in touch by fax while the cargo was being loaded. I conclude that the carrier, and in particular the master, its agent, knew that damage to some of the machinery was probable and recklessly proceeded to stow the open top containers, open top container 494 in particular, on deck.

Mr Mackenzie submitted that the recklessness and knowledge must be on the part of the carrier's management. I reject that. The recklessness and knowledge on the part of the master is what is in issue. However as I have said, Conmer in London were it seems kept fully informed and must have approved. I reach these conclusions on the evidence and in the absence of any evidence to the contrary. On this finding the defendant cannot rely on the limitation in the Hague-Visby Rules in any event.

[44] There are a number of reasons why, with respect, this Court finds itself unable to conclude that the latter passage from The "Pembroke" correctly identifies masters as carriers' agents or, at least, not in a way which reflects on Tasman Orient's position in this case.

[45] First, the passage is clearly obiter. Secondly, the passage makes clear - as is common in such cases - that the result in any case stems from examination of the precise facts of the case. Thirdly, it is clear from the report that authorities such as The "Lion" and The "European Enterprise" were not cited. Fourthly, for the most part The "Pembroke" has been ignored in both cases and texts since it was decided or, where cited, is mentioned - usually as an exception e.g. Boyd et al Scrutton on Chartparties (20th ed 1996 p452) - more on the stowage than on the limitation point. And, fifthly, where it has been examined in detail on the limitation question, the conclusion is usually that the decision is in error or contrary to authority (Gaskell et al, op.cit. paras 16.49-53, pp518-523). An additional point was made by Rolfe J in the Supreme Court of New South Wales Equity Division in Sellers Fabrics Pty Ltd v Hapag-Lloyd AG (The "Encounter Bay") (29/10/98 P12/1996 p66) in which the learned Judge said of the decision in The "Pembroke" that he was "not satisfied that His Honour was not applying the basic proposition that the 'carrier' must be guilty of the conduct".

[46] This Court accordingly declines to follow The "Pembroke" on the point.

[47] When those decisions are applied to s85(2) and the facts of this case, it is clear that, as the facts currently appear, it could not be asserted, first, that the casualty arose from Tasman Orient's personal act or omission or, secondly, that it occurred when Tasman Orient intended to cause the loss or, thirdly, that Tasman Orient acted recklessly in the knowledge that the loss or damage would probably result.

[48] The MAIA judgment indicates the grounding of "Tasman Pioneer" was caused by the master's errors in sailing east of Biroushima in stormy conditions, where few lights were available, with no or only erratic radar coverage and where the master gave an inappropriate command to turn the ship to port. Working from the information available to him, Captain Rao, an experienced master, concluded the master was responsible and chose the course he did without reference to Tasman Orient. Are, then, the master's actions to be attributed to Tasman Orient so as to disqualify the company under s85(2) from entitlement to limitation?

[49] On the evidence to date, the answer must be 'No'. The master (and crew) were employed by Rimba or Technomar, not Tasman Orient. They were responsible to those companies not to Tasman Orient which was not even the charterer but only a sub-time charterer. Though Tasman Orient had and did direct the master as to such matters as ports of call and, broadly, the route to be followed, the manner of implementing those orders, including detailed navigation and management of the ship, was left to the master. The charterparty provided for Rimba to remain responsible for navigation (cl 22) and gave the master sole responsibility for deciding the course (cl 47). The master thought it unnecessary to seek instruction on those topics from Tasman Orient to the point where he would appear not to have regarded it as his obligation to tell Tasman Orient of his intention to sail east of Biroushima or Okinoshima or seek its approval. The only regular contact between Tasman Orient and "Tasman Pioneer" were the noon reports which conveyed information about such things as time, distance and weather conditions but sought no instructions. All the present evidence conduces to the conclusion that, up until being indirectly advised of the casualty after it had occurred, this was a voyage under which Tasman Orient had no reason to suspect that the ship and cargo were not and would not proceed uneventfully to their destination under the control of those employed by the owner, or the managers who were, pursuant to the charterparty with Tasman Orient Cyprus, contracted to provide the crew and run the ship. Tasman Orient was not even advised of the casualty until after salvors had been appointed.

[50] Section 85(2) requires those opposing limitation decrees to prove either of the disjunctive requirements of intentional injury or damage or injury or damage caused recklessly and with knowledge of the probable result. This, as Steel J held in MSC Mediterranean Shipping Co SA v Delumar BVBA (The "MSC Rosa M") [2000] 2 Lloyd's Rep 399, 401 para 13, is an "onerous" task with the learned Judge going on to say that "there are no examples in English law of the defence being successfully run in the maritime context". The result, the Judge held, was (at 401 para 14, 403 para 23):

14. The authorities make it plain that, absent, as in the present case, any allegation of intent, the person challenging the right to limit must establish both reckless conduct and knowledge that the relevant loss would probably result.

...

23. It follows, in summary, that the cargo claimants must plead and prove:

(i) That the capsize was caused by the personal act or omission of the demise charterers;

(ii) That the personal acts or omissions were committed recklessly; and

(iii) That at the time of those acts or omissions, the alter ego of the demise charterers actually knew that a capsize would probably result.

[51] Further, as put by Lord Phillips of Worth Matravers MR in Schiffahrtsgesellschaft MS "Merkur Sky" m.b.H & Co. K.G. v MS Leerort Nth Schiffahrts G.m.b.H & Co. K.G. (The "Leerort") [2001] 2 Lloyd's Rep 291. 294-295 para 13:

13. The limitation provisions in relation to merchant shipping provide even greater protection than those in relation to carriage by air. It is only the personal act or omission of a shipowner which defeats the right to limit. A shipowner is defined in art.1 as the owner, charterer, manager or operator of a seagoing ship. Thus, to defeat the right to limit, it is necessary to identify the causative act or omission on the part of such a person that caused the loss. Furthermore, it is only conduct committed with intent to cause such loss, or recklessly with knowledge that such loss would probably result, that defeats the right to limit. It seems to me that this requires foresight of the very loss that actually occurs, not merely of the type of loss that occurs.

(See also Nugent and Killick v Michael Goss Aviation Ltd [2000] 2 Lloyd's Rep 222, 229 and Margolle v Delta Maritime Co Ltd (The "Saint Jacques II" and "Gudermes") [2003] 1 Lloyds Rep 203, 207-209 para 16 which summarizes the law on limitation under the Convention).

[52] In the result, having regard to all the matters discussed, the Court concludes, on the information so far available, the casualty may have been caused by the negligent navigation of the master but in circumstances where it has not been shown that his actions were attributable to Tasman Orient. Accordingly s85(2) does not operate to defeat Tasman Orient's claim to be entitled to a decree limiting its liability. It should be added that that finding is not one that the casualty was intentional on the part of the master or that he acted recklessly with knowledge that damage or injury would probably result. It is simply a finding that, on the evidence currently available, even if the casualty arose intentionally or recklessly with knowledge of probable resultant damage, the action of the master has not been shown to be attributable to Tasman Orient.

Result

[53] There will therefore be an order pursuant to the Maritime Transport Act 1984 Part VII that Tasman Orient Line CV has the right to limit its liability for claims against it as sub-time charterer of the vessel "Tasman Pioneer" arising out of loss or damage to cargo containers and other property on board the vessel on 3 May 2001 to 2,880,416 units of account, the Court being satisfied, on the evidence adduced to date, that such loss or damage did not arise from the personal act or omission of Tasman Orient Line CV as "owner" pursuant to ss85(1)(a) and 84(b) or that any act or omission of Tasman Orient Line CV was not committed or omitted with intent to cause such loss or damage or recklessly and with knowledge that such loss or damage would probably result.

Procedure henceforth

[54] That being a general decree and a number of those holding bills of lading not being represented by Mr Rzepecky or Mr Stewart, pursuant to R792(9)(b) the decree limiting Tasman Orient's liability is required to be advertised. That aspect of the matter is adjourned for counsel to confer as to the form of advertisement, the publications in which it is to appear and the time within which persons may without leave file claims against Tasman Orient. In the event the parties are unable to agree (or, in view of the stance of Alliance Group and Comalco, if counsel for those parties object to the form of the advertisement and the arrangements proposed), those aspects of the application are to be dealt with at a conference before Williams J on 18 September 2003 at 9:00am.

 

APPLICATION TO ESTABLISH LIMITATION FUND FOR SECURITY

[55] In the event the Court made a decree of limitation on Tasman Orient's application, Alliance Group, supported by Comalco, applied for an order requiring Tasman Orient to establish a limitation fund by paying the limitation amount to the Registrar of the Court, it being thereafter held in an interest-bearing account.

[56] Alliance Group and Comalco claimed that R792 (11) gave the Court power to order such security and that it was the practice in England to order the constitution of a limitation fund on granting any limitation decree.

[57] Tasman Orient challenged the Court's power to order the establishment of a limitation fund to provide security under s89 relying on the terms of s86. Secondly, it disputed the suggested English practice. Thirdly, it submitted it would unjust to order a limitation fund be established and paid into Court rather than relying on a P & I Club letter of undertaking. In that last respect, at the hearing Mr Beadle filed an affidavit by Mr Adams, a director of Steamship Insurance Management Services Ltd the London representative of Tasman Orient's P & I Club, saying that in the usual course of events proper security would be provided by a Club letter and offering such a letter in draft. As to the Court understood it, both Messrs Rzepecky and Stewart accepted the reputation of Steamship Insurance and accepted the terms of the draft were appropriate though neither had instructions to agree that the same was a suitable undertaking in the circumstances of this matter. That view renders unnecessary any consideration of the suggested English practice, although it must be noted that Tasman Orient contests liability in the other claims against it and that, had it been necessary to decide whether a limitation fund was required to be established, the Court may have been inclined to adopt the historical survey and conclusion of Rix J in Caspian Basin Specialised Emergency Salvage Administration v. Bouygues Offshore SA (No.4) [1997] 2 Lloyds Rep 507, 517-8, 519, 520, 521, (confirmed on appeal: Bouygues Offshore SA v Caspian Shipping Co (Nos. 1, 3, 4 and 5) [1998] 2 Lloyds Rep 461, 471 per Sir John Knox, 467 per Evans LJ) to the effect that a decree of limitation may be granted prior to any admission or finding of liability.

[58] If jurisdiction is held to exist, the Court's view is that it would be appropriate for a P & I Club letter in the draft form annexed to Mr Adams' affidavit to provide security without the necessity for Tasman Orient or its indemnifiers constituting the limitation fund in money and paying the same into Court.

Is there jurisdiction to order the establishment of a limitation fund?

[59] For Alliance Group, Mr Rzepecky submitted that jurisdiction to order the constitution of a limitation fund in New Zealand stems from R792 (11) and s89. The former merely provides that orders limiting liability may make "any provision authorised by s89". Section 89 provides:

89 Court may consolidate claims

(1) Where 2 or more claims are made or expected against any person who is alleged to have incurred liability in respect of any claim of a kind referred to in section 86(2) of this Act, that person may apply to the High Court to have the claims consolidated.

(2) On any such application, the Court may-

(a) Determine the amount of the applicant's liability, and distribute that amount rateably among the several claimants; and

(b) Stay any other proceedings pending in the same or any other Court in relation to the same matter; and

(c) Proceed in such manner and give such directions relating to the joining or excluding of interested persons as parties, the giving of security, the payments of costs, or otherwise, as the Court thinks just.

and s86(1) and (2) provide:

86 Claims subject to limitation of liability

(1) No person who is entitled to limitation of liability shall be liable for an amount greater than the relevant limit calculated in accordance with section 87 of this Act in respect of claims for loss or injury or damage arising on any distinct occasion, being, in relation to any ship,-

(a) Claims in respect of-

(i) Loss of life or personal injury; or

(ii) Loss of or damage to property (including damage to harbour works, basins and waterways, and aids to navigation),-

where the loss or injury or damage occurs on board the ship or is directly connected with the operation of the ship or with salvage operations, or is consequential upon any such loss or injury or damage; or

(b) Claims in respect of loss or damage resulting from delay in the carriage by sea of cargo, passengers, or luggage; or

(c) Claims in respect of loss or damage resulting from infringement of rights other than contractual rights, where the loss or damage is directly connected with the operation of the ship or salvage operations; or

(d) Claims in respect of the raising, removal, destruction, or rendering harmless of a ship which is sunk, wrecked, stranded, or abandoned, or of anything that is or has been on board such a ship; or

(e) Claims in respect of the removal, destruction, or rendering harmless of the cargo of a ship; or

(f) Claims of a person (other than the person liable) in respect of measures taken in order to avert or minimise any loss or injury or damage for which the person liable is entitled to limitation of liability, including claims for further loss or injury or damage caused by the taking of such measures.

(2) Notwithstanding anything in subsection (1) of this section,-

(a) The following claims shall not be subject to limitation of liability:

(i) Claims for salvage or contribution in general average:

(ii) Claims for pollution damage that are subject to Part XXV of this Act:

(iii) Claims in respect of nuclear damage; and

(b) Claims in respect of the matters specified in paragraphs (d), (e), and (f) of that subsection shall not be subject to limitation of liability to the extent that they relate to remuneration under a contract with the person liable.

[60] As will be noted, s86(2) lists claims which cannot be the subject of any decree of limitation. The nub of this aspect of the matter is, therefore, whether s89(1) is in error in referring to s86(2) and should have referred to s86 generally or whether the limitation to s86(2) is correct.

[61] Accepting that s86(2) deals only with claims which cannot be subject to decrees of limitation, Mr Rzepecky submitted that R792(11) must have been intended to refer not to s89 generally but to s89(2) setting out the Court's powers following an application for consolidation, those being the types of orders appropriate to proceedings under the Rule. He acknowledged there was no authority on the topic.

[62] For Tasman Orient, Mr Beadle submitted that R792(11) was in error and s89(1) was correct and the Court accordingly had no power to order the constitution of a limitation fund by way of security in claims such as this one which fall under s86(1). He supported that submission by reference to the statutory antecedents of s89 although direct comparison is skewed by New Zealand's abolition of claims for damages for personal injury by the Accident Compensation Act 1972.

[63] The earliest provision which appears to have dealt with the topic was the Shipping and Seamen Act 1903 s296 which was in Part XI and provided a tonnage limitation for owners. Section 297 gave the Court power to consolidate claims, determine owners' liability and distribute, stay proceedings and require security from owners (s297).

[64] Part XI was repeated in the Shipping and Seamen Act 1908 which was, in its turn, repealed by the Shipping and Seamen Act 1952 Part XIII, s460 of which gave owners the right to seek a tonnage limitation for claims for loss of life or personal injury or damage to cargo. Again, where "several claims" were made, the Court had power to determine the amount of liability, distribute the same rateably, stay proceedings and require security from the owner (s461). That was complemented by the Admiralty Rules 1975 R31 which largely paralleled the present R792 in dealing with actions for liability limitation, sub-rule (11) of which gave the Court power on making a limitation order to make any provision authorised by s461 of the 1952 Act.

[65] Part XIII of the 1952 Act was repealed by the Shipping and Seamen Amendment Act 1987 which enacted a new Part XIII in effect in terms identical to the present Part VII. In particular, the new ss460, 461 and 464 were effectively repeated in the present ss85, 86 and 89. Section 464(1) expressly referred to "any claim of a kind referred to in s461(2) of this Act", that subsection identifying claims for which limitation was not available. In combination, ss461 and 464 of the 1987 Amendment therefore, for the first time, limited the Court's power to order security to claims outside the liability limitation regime.

[66] Counsel suggested that the change in the scope of s464 and, now, s89 may have arisen through legislative error but a perusal of Hansard refutes that suggestion. It appears from most of the debates that Parliament's concern was to ensure New Zealand's liability provisions were updated, particularly as to amount (471 NZPD 2202-3, 479 NZPD 7894-5, 480 NZPD 8739, 482 NZPD 10530). However, it is equally clear from the amendment as reported back by the Communications and Road Safety Committee that it was the Committee which, in s464(1), the equivalent of s89(1), deleted the phrase "occurrence of a kind referred to in s461" and substituted the phrase "claim of a kind referred to in s461(2)". Inquiries of the Clerk of the House of Representatives show the change was made by the Committee as a result of a submission made to it by the Ministry of Transport commenting on all other submissions on the Bill which said, in its solitary reference to the matter:

The committee should note that when a Supplementary Order Paper is prepared to incorporate any amendments agreed to by the committee it will be necessary also to make some minor amendments of a technical nature and consequential amendments to other legislation. These will be of a "machinery" type and non controversial.

The change was included in the Supplementary Order Paper proposed to the Committee on behalf of the Minister of Transport and was adopted but if there were reasons given they have not been able to be ascertained.

[67] Section 86(2) roughly reflects the list of claims excepted from limitation in Article 3 of the 1976 Limitation Convention but, if the Ministry's intention was to incorporate the effect of Article 3 into New Zealand law, that means of doing so does perhaps merit Mr Broadmore's criticism (para 30 supra) more particularly when there appears never to have been a discussion in Parliament as to whether the 1976 Limitation Convention division between claims subject to limitation and those excepted was appropriate in the New Zealand context. That may have been pertinent, given such matters as the abandonment of personal injury damages claims, the fact that there has been a separate statutory regime in force in this country in relation to maritime pollution since at least the Oil in Territorial Waters Act 1926 through the Marine Pollution Act 1974 and, now, the extensive provisions in the Maritime Transport Act 1994 Parts XVIII-XXVII and the New Zealand Nuclear-Free Zone, Disarmament, and Arms Control Act 1987.

[68] Although courts have power to correct obvious drafting areas in statutes, they proceed with great caution so as not to cross the line between interpreting Parliament's intention and engaging in judicial legislation. The tests to be applied were set out by Lord Nicholls of Birkenhead speaking for the House of Lords in Inco Europe Ltd v First Choice Distribution (a firm) [2000] 2 All ER 109, 115 where the following appears:

A statute is expressed in language approved and enacted by the legislature. So the courts exercise considerable caution before adding or omitting or substituting words. Before interpreting a statute in this way the court must be abundantly sure of three matters: (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed. The third of these conditions is of crucial importance. Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation.

(See also Evans: Statutory Interpretation 1988 p233 and Burrows Statute Law in New Zealand 3rd ed 2003 208-216).

[69] Applying those tests to the reference to s86(2) in s89(1) (and the reference in the former s464(1) to s461(2)) the conclusion must be that there is no ground to conclude that the reference to s86(2) was an obvious drafting error for s86. Inquiries have failed to demonstrate any document evidencing Parliament's purpose for the change from s461 to s461(2) in the Shipping and Seamen Amendment Act 1987. It may have been officials' intention to implement Article 3 of the 1976 Limitation Convention but that cannot have been the legislative intention if nothing was ever presented to Parliament in that respect. It accordingly could not be said that the reference to s461(2) arose through inadvertence and although the way in which the error, if error it were, would be corrected is obvious, because no material on the topic was presented to Parliament and there is no express reason for the change, there is no power for the Court to read the reference to s461(2) as a reference to s461, particularly when Parliament has effectively repeated the provision in its enactment of s89(1).

[70] It follows that having regard to the express terms of s89(1), the Court has no power to order Tasman Orient to constitute a limitation fund by way of security in this case, the claims against Tasman Orient not being claims defined in s86(2).

[71] That conclusion does not cut across the terms of R792(11). That rule permits the making of "any provision authorised by s89" when an order limiting liability is made. In its terms, that must limit power to consolidate claims and to make the orders listed in s89(2) to claims of the types listed in s86(2). That is a considerable but by no means illogical restriction which Parliament has deliberately enacted twice.

[72] Further, there is no suggestion in either of the New Zealand commentators on the topic that the reference to s86(2) in s89(1) was a legislative error (Broadmore op.cit. pp252, 253, 254; Myburgh op.cit. paras 157, 158, 160, 161 pp138-141).

[73] A less compelling reason for reaching the same conclusion is that the Court's powers under s89 only arise on an application for consolidation. At least since the High Court Rules came into force in 1986, consolidation has had the technical meaning ascribed to it by R382. Prior to that, the same result could be achieved by exercise of inherent jurisdiction (Clark v Sutton [1960] NZLR 829. No counsel suggested resort to inherent jurisdiction in this case.

[74] Although the claims arising out of the "Tasman Pioneer" casualty are being case-managed together, there is no application for consolidation under R382 - particularly in AD31-02 - and on this ground as well, the conclusion must be that the Court has no jurisdiction to order the constitution of a limitation fund for the giving of security by Tasman Orient. Accordingly, the applications by Alliance Group and Comalco in that regard must be dismissed.

COSTS

[75] In the event the Court granted the decree of limitation, Tasman Orient sought costs against Alliance Group and Comalco on the grounds that Tasman Orient has been successful.

[76] However, the Court's view is that it would be inappropriate to order costs against either defendant. Not only did they adopt a neutral position as far as the decree was concerned, as earlier noted they provided comprehensive and helpful submissions to assist the Court in its conclusion on an issue without direct authority in this country. In those circumstances, it would not be right to penalise them in costs.

RESULT

[77] The Court's formal orders are accordingly

a) There will be a decree of limitation in the form appearing in para [53] of this judgment.

b) The applications by Alliance Group and Comalco for the establishment of a limitation fund by way of security are dismissed, there being no jurisdiction so to order. Even if the Court had jurisdiction, it would have taken the view that, in lieu of the constitution of a limitation fund by the payment of money, it would have accepted a P & I Club letter in the draft form annexed to Mr Adams' affidavit as discussed in paras [57] and [58] of this judgment.

c) There will be no order for costs.

d) Any further proceedings on this file are adjourned to the conference before Williams J on 18 September 2003 at 9:00am.

_________________________________________________________
1 All section references in this judgment are to the Maritime Transport Act 1994 unless otherwise expressed.