Yachting NZ Inc v Birkenfeld (No 2)
IN THE HIGH COURT OF NEW ZEALAND
BETWEEN YACHTING NEW ZEALAND INCORPORATED
AND KIMBERLEY BIRKENFELD
Hearing: 12 July 2005
Appearances: N A Beadle for Plaintiff
Judgment: 22 July 2005
JUDGMENT OF KEANE J
Solicitors: Phillips Fox, Auckland for Plaintiff
 On 8 August 2002 in the Saronikos Gulf, one and a half miles off the coast of Greece, just before an international windsurfing regatta, there was a collision between a rigid inflatable boat owned by Yachting New Zealand, and driven by Bruce Kendall, and a windsurfing board, ridden by Kimberly Birkenfeld, an American athlete about to take part in the regatta, and in training for the Olympics.
 Ms Birkenfeld was severely injured, is now confined to a wheel chair and has been diagnosed as suffering from post traumatic stress disorder. In an action, brought in Wellington in August 2004, she seeks from Mr Kendall, YNZ and the International Sailing Federation Limited, a United Kingdom entity, $15M damages. She intends, I understand, to abandon her claim against the Federation. She maintains her claim against Mr Kendall and YNZ.
 YNZ, in separate but related proceedings, brought in Auckland, applies under the Maritime Transport Act 1994 for a decree limiting its liability to a figure less than $400,000, and there has been a contest as to venue that has only partly been resolved. YNZ’s application to have the Wellington proceedings transferred to Auckland has still to be heard. Ms Birkenfeld’s converse application as to YNZ’s Auckland proceedings was determined against her on 17 June 2005 by Simon France J. YNZ’s application remains in the Auckland Registry, and is for me to resolve.
 Ms Birkenfeld, who lives in Miami, Florida, and now represents herself and is incapable of appearing, opposes the application and seeks to have it adjourned so that she can gather information to enable her to decide whether YNZ has the right to limit its liability.
 I am very conscious, as was Simon France J and Rodney Hansen J, to whom I shall refer in a moment, of the handicaps under which Ms Birkenfeld is conducting this litigation, now unrepresented and at a distance. But I do not consider that the adjournment she seeks can be justified.
 Ms Birkenfeld has had notice of this application, which is limited in scope, since the beginning of the year. It rests securely on facts already a matter of record. She has disavowed in her notice of opposition the only basis on which she can resist YNZ’s decree. I cannot see how, by any wider inquiry she could find the means to resist it. For the reasons that I now give I intend to grant the decree that YNZ seeks.
 On 26 January this year, against the background of Ms Birkenfeld’s statement of claim filed on 24 December 2004, and before YNZ filed its statement of defence, YNZ’s solicitors wrote to Ms Birkenfeld’s then solicitors proposing that Ms Birkenfeld concede YNZ’s right to limit its liability under the Maritime Transport Act 1994.
 In that letter they outlined YNZ’s response to each of Ms Birkenfeld’s allegations in her statement of claim. YNZ, they said, denied that, as Ms Birkenfeld contends, YNZ’s inflatable, driven by Mr Kendall, ran her down while she was off her board in the water. YNZ’s position is, they said, as is I understand Mr Kendall’s, that Ms Birkenfeld, riding her windsurfing board, overtook the inflatable at speed and collided with it. YNZ, its solicitors said, denied any liability for the acts or omissions of Mr Kendall, direct or vicarious. He was, they said, a freelance coach and at most an independent contractor.
 Given those denials, the solicitors said, YNZ was entitled to limit its liability under s 85 of the Maritime Safety Act 1994 and Ms Birkenfeld was incapable of discharging the onus resting on her of breaking that limitation. Mr Kendall claims not to have been negligent, let alone to have been reckless, knowing the consequence, as s 85 requires; and even if he was at fault to that extent his fault was not that of YNZ. It could not be implicated directly or vicariously.
 Ms Birkenfeld was not prepared to concede the limitation that YNZ asserted and on 2 February 2005 YNZ issued this proceeding, and took the same point in its statement of defence filed in the Wellington proceedings.
 Service could not be effected by consent and an order for substituted service was obtained on 28 February. In terms of that order Ms Birkenfeld’s then solicitor, from whom she may have already parted, was effected on 7 March. He ceased to be her solicitor of record on 1 April. The notice of motion, dated 20 April, was served personally on Ms Birkenfeld in Florida on 11 May.
 The application was first set down for hearing on 19 May, but Rodney Hansen J was concerned that the notice given Ms Birkenfeld was too short. She was not then represented, and she had not had, he considered, a proper opportunity to redress that, or to file evidence or prepare for the hearing. He allocated a fixture for 30 June 2005 for half a day. He directed that Ms Birkenfeld file her notice of opposition and any supporting affidavit by 16 June, and that Yachting New Zealand reply within seven days.
 On 6 June Ms Birkenfeld filed her notice of opposition, and said that seven clear days before the hearing she would file medical evidence and film, to show that YNZ was not entitled to its decree. In a fax to the Registrar dated 23 June, she asked what fixture date had been allocated. On 29 June the Registrar confirmed that it had become 12 July.
 On 1 and 7 July YNZ’s solicitors faxed its submissions to Ms Birkenfeld. On 5 July the Registrar reminded Ms Birkenfeld that her submissions would need to be filed by 7 July. On 12 July, as the fixture was about to commence, Ms Birkenfeld applied by fax under R 792(8)(d) for an adjournment and for directions to enable her ‘to obtain information ... to decide whether the plaintiff has a right to limit ... (its) liability’.
 Ms Birkenfeld gave no indication in her memorandum what information she hoped to obtain, or how it would help her, or when she could expect to obtain it. She had not taken the opportunity to file any submissions replying to those she had from YNZ. Also, in her notice of opposition dated 6 June she had, on the face of it deliberately, abandoned the sole basis on which she could resist the decree YNZ seeks.
 I could not see therefore, even allowing for Ms Birkenfeld’s evident difficulties, that an adjournment could be justified. I decided to continue with the hearing.
 Section 85, which lies within Part VII of the 1994 Act, gives effect to the Convention on Limitation of Liability to Maritime Claims 1976, the London Convention, to which New Zealand has acceded, and enables a ship owner to limit liability in respect of a wide variety of claims by reference to the tonnage of the vessel. The first such category of claims is, as Art 1(a) of the Convention says:
Claims in respect of loss of life or personal injury or loss of or damage to property ... , occurring on board or in direct connexion with the operation of the ship ... , and consequential loss resulting therefrom.
 Section 85(1), subject to the qualification in subs (2), identifies by category those entitled to limit their liability, and YNZ contends that it lies within the first category (paragraph (a)), which comprehends:
Owners of ships, and any master, seafarer, or other person for whose act, omission, neglect, or default the owner of the ship is responsible:
 There can be no issue that at the date of the accident, YNZ was the ‘owner’ of the inflatable; see also the first category in the definition of ‘owner’ given in s 84. It is also to the point that Mr Kendall could then be understood to have been an ‘owner’. As the ‘person ... responsible for the navigation and management of the ship’, at the time of the accident, assuming always that notionally YNZ was not, he could well lie in the third category (para (c)) of the s 84 definition. He has not as yet, I understand, sought to rely on the s 85(1) right.
 Secondly, there can be no issue that YNZ’s inflatable was a ‘ship’ as defined in s 84. Even a windsurfing board can be. Both can be thought of as lying within the broad definition given, of ‘every description of vessel ... used or intended to be used in navigation, however propelled’.
 Nor can there be any question, thirdly, as Ms Birkenfeld appears to suggest there may be, that s 85 can be invoked where personal injury, as opposed to loss or damage to cargo, is in issue. Consistent with Art 4 of the Convention, s 86 (1)(a)(i) gathers in ‘claims in respect of — loss of life or personal injury’, before it gathers in, under subs (1)(a)(ii), ‘loss of or damage to property’.
 The critical issue arises not under s 85(1), but under s 85(2). The s 85(1) entitlement is not absolute. It is defeasible. Reflecting Art 4 of the London Convention, s 85(2) says:
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.
 In Schiffahrtsgesellschaft MS 'Merkur Sky’ m.b.H. v Ms Leerort Nth Schiffarhts G.m.b.H (The ‘Leerort’)  2 Lloyd’s Rep 291, CA, at 294, Lord Phillips MR said, at para 11, that a claimant, who wishes to break an owner’s limitation, faces ‘a very heavy burden’. At para 13 he said:
To defeat the right to limit, it is necessary to identify the causative act or omission on the part of such person that caused the loss. Furthermore, it is only conduct committed with intent to cause such loss, or recklessly with knowledge that such a 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.
 In that case the English Court of Appeal upheld the decision of the Judge appealed from to grant a decree limiting liability before trial. On a broad appraisal, the reason why the claimant considered it could break the limitation, Lord Phillips considered, was quite unreal, and further discovery would not have made it any more cogent. The owner limiting liability could not possibly, the Court held, be guilty, personally, of the high degree of fault that the exception, expressed in New Zealand by s 85(2), calls for.
 The issues here are essentially the same. Can it be said, before trial, as YNZ contends, that Ms Birkenfeld is incapable of discharging the s 85(2) burden? Is it conceivable that she could at trial show Mr Kendall to have been at fault for her injury or loss in the high degree required? If she could, could Mr Kendall’s fault be attributed to YNZ, as YNZ’s own, disqualifying it from the right to limit its liability? I shall consider that final issue first.
Relationship YNZ - Kendall
 That YNZ and Mr Kendall can both be understood as ‘owners’ of the inflatable craft on the day of the accident does not mean that their rights to limit liability merge, and stand or fall together. As s 86(3)(a)(i) illustrates, ‘on any distinct occasion’ those against whom claims can be made for any loss, injury or damage can be various. The owner, or the owners, the seafarers, and any others said to be implicated, can each individually face claims, and each is entitled to limit his or her own liability. That YNZ and Mr Kendall happen both to be able to limit their liability as ‘owners’ does not mean that they cease to be independent of each other.
 Rather, as appears from the most helpful tour d’horizon made by Williams J in Tasman Orient Line CV v Alliance Group Limited  1 NZLR 650, the essential issue is whether, at the time of the accident, Mr Kendall and YNZ were so closely and actually aligned, one with the other, that Mr Kendall could then be said to have been YNZ embodied.
 The question would once have been whether Mr Kendall could be thought of as ‘the directing mind and will’ of YNZ. Now it is whether his functions were such that under s 85(2) they ought to be attributed to YNZ as if they were its own: Meridian Global Funds Management Asia Ltd v Securities Commission  2 AC 500;  3 NZLR 7, PC. However the question is expressed, the answer is very much a matter of fact as well as law.
 Tasman Orient itself proved in this respect to be the clearest of cases. There it was plain before trial that there could be no such merger of identities between master and sub-time charterer. They were not in any contractual relations. The master was employed by a third party, with whom the charterer’s contract lay. That contract reserved expressly to the master all detailed issues of navigation. That was as it was when the grounding, to which the action related, happened.
 In this case contract does not define the position completely, as it did there. But the issue is not simply contractual, it is also practical; the realities are not to be ignored: Browner International Ltd v Monarch Shipping Co Ltd (The 'European Enterprise’)  2 Lloyds Rep 185, at 191, Steyn J; see also R G Mayor (t/a Grandville Coaches) v P & O Ferries Ltd (the ‘Lion’)  2 Lloyd’s Rep 144, 149, Hobhouse J. And when the practicalities are examined here, I consider, three stand out.
 First, YNZ is an incorporated society that exists to promote and to administer a wide range of yachting and boating sports, nationally and internationally, of which windsurfing is one only. It is an umbrella organisation managed nationally by a board, guided by a council representing regions, and by members in general meeting. Whatever administrative and managerial staff it may have, in individual sports, at the highest levels, it engages as independent contractors coaches, who are answerable to a manager. That is the extent of its involvement.
 Secondly, in the period during which the incident happened, initially YNZ did not have any contractual relationship with Mr Kendall. He was to coach the New Zealand team as an employee of or as a contractor to an Auckland trust, the Millennium Institute of Sport and Health, with which YNZ had entered into a services agreement, relating particularly to the sport of wind surfing, for the period 1 November 2001-31 October 2002.
 In the management of those services Millennium remained autonomous. YNZ agreed to co-operate with, but not to interfere with or obstruct Millennium (cl 5.6). Relations on any issue of significance were to be at arm’s length. When Millennium wished YNZ to make a decision it was to ask in writing, and that is how YNZ was to reply (cl 5.5).
 According to cl 4.8(a), Mr Kendall was to ‘be responsible for the provision of board sailing coaching’, and that was his role in essence. He was to be part of a committee supervising services under the contract with Millennium’s board sailing manager and YNZ’s high performance manager (cl 4.14). His principal, if not exclusive role, remained high performance coaching (cl 4.10, 4.11).
 The closest statement of Mr Kendall’s position under the contract appears from cls 5.7:
The Boardsailing Coach will be responsible for undertaking and completing any administration tasks associated with the HP Boardsailing Programme relating to communication with the Squad Members. Any general administration work for the ... (YNZ’s) overall High Performance Coaching Programme will be the responsibility of ... (YNZ).
 As to YNZ’s inflatable, cl 5.8 says, tellingly I consider:
... (YNZ) will make available to the Boardsailing Coach, ... (YNZ’s) support boat, whenever it is reasonably required by the Boardsailing Coach to provide the Services under this agreement. Any costs associated with the use of the support boat shall be the responsibility of ... (YNZ). ... (YNZ) shall insure the Coach boat and other equipment. Should ... (YNZ) form the view that the Coach boat and/or other equipment is damaged due to misuse, poor maintenance or negligence, other than fair wear and tear, .. (YNZ) shall inform ... (Millennium) in writing.
 That is telling, I think, because cl 5.8 continues to say that YNZ’s and Millennium’s insurers were to determine how the damage was caused and who was to be responsible for the cost. That suggests that YNZ’s interest in the use of the boat was always retrospective and limited to issues of damage and insurance.
 At the date of the accident, however, the relationship between Millennium and Mr Kendall had apparently just ceased. He was with the New Zealand board sailors at the regatta as an individual. YNZ paid for his services during that month, when he claimed them, but his relationship with YNZ remained undefined. He was not, as he had been for two weeks in 2001, when coach at an international tournament, engaged by YNZ under written contract as an independent contractor. But YNZ contends that it did not employ him either, and that this must again have been his status. Whatever his status was, I consider, he cannot be seen contractually, at the time of the accident, as an emanation of YNZ.
 Thirdly, on the date of the accident, Mr Kendall was engaged in coaching New Zealand’s representatives at the regatta, at a point distant from New Zealand in Greece, and one and a half miles off shore. YNZ’s inflatable was for Mr Kendall’s use and was in his charge. It was his to navigate as he decided, depending on what he needed to achieve as coach, and what he needed to do to take account of conditions as they changed around him. It cannot sensibly be contended, it seems to me, that when he was about that, moment by moment, YNZ could have either instructed him or supervised him.
 Those three practicalities combine, to my mind, in one conclusion. It is that at the time of the accident Mr Kendall was acting in his own right and that his acts or omissions, whatever they may have been, cannot be attributed to YNZ. For that reason alone Ms Birkenfeld cannot, I consider, discharge the onus s 85(2) imposes on her.
Fault essential - alleged
 Whether Mr Kendall was at fault to the high degree required remains factually at the centre, of course, of Ms Birkenfeld’s Wellington proceedings, and YNZ remains implicated in that issue.
 The principal issue of fact will be whether the collision happened, and Ms Birkenfeld was injured, because, as she contends, YNZ’s inflatable, driven by Mr Kendall, ran her down while she was in the water or whether, as he contends, she overtook the inflatable on her board and collided with it. But her principal cause of action, for present purposes, is no less important.
 In her original statement of claim, mindful no doubt of s 85, Ms Birkenfeld alleged that Mr Kendall acted recklessly and with knowledge of the result. She alleged that Yachting New Zealand as Mr Kendall’s employer, or principal, was vicariously liable for his acts or omissions, or was itself, because Mr Kendall was acting on its behalf or with its delegated authority, in breach of a duty of care. When she assumed responsibility for the conduct of her own case, Ms Birkenfeld filed an amended statement of claim, dated 10 May, in which she maintained that pleading.
 That, so far as I am aware, may still be Ms Birkenfeld’s pleaded position, but in this proceeding, in her notice dated 6 June, opposing YNZ’s decree, she disavows any intent to rely on s 85(2). She says that in the Wellington proceeding she will ground her claim principally in negligence. She continues to say:
Section 85(2) of the Maritime Transport Act 1994 has been omitted in the amended statement of claim in CIV-2004-485-1657. ... The plaintiff ... would not charge that the defendant intended to cause such loss or injury or damage, or recklessly and with the knowledge that such loss or injury or damage would probably result.
 On the face of this proceeding, therefore, if not yet in the Wellington proceedings, Ms Birkenfeld has taken a position that is self-contradictory. She opposes YNZ limiting its liability, but she elects not to advance the only basis on which she can resist YNZ doing so. Nor can that be seen as a simple error. Her decision, in the context she describes in her notice, was considered. Her concession is in the language of s 85(2) itself. Effectively she then abandoned her opposition to YNZ’s decree.
 It may be that Ms Birkenfeld does not understand what she has done and, if this were the only basis on which I doubted the cogency of her opposition to YNZ’s decree, I would allow her the opportunity to reconsider. As I have said, however, I do not think that YNZ and Mr Kendall are in such a relationship that, for the purposes of s 85(2), any fault on his part can be attributed to YNZ. It is on that basis that I intend to grant the decree.
 There will be a decree that YNZ is entitled to limit its liability, if any, in the manner set out in its application. On the face of it YNZ is entitled to costs, as I should have thought at scale 2B, and disbursements, both to be fixed by the Registrar. There will be such an order unless within 10 days of the issue of this decision I receive a memorandum to the contrary from Ms Birkenfeld.