Ultimate Lady Ltd v The Ship "Northern Challenger" (No 2)
IN THE HIGH COURT OF NEW
ZEALAND
AUCKLAND REGISTRY
IN ADMIRALTY
AD7-SW2000
ADMIRALTY ACTION IN
REM
BETWEEN
ULTIMATE LADY
LIMITED
Plaintiffs
AND
THE SHIP "NORTHERN
CHALLENGER"
Defendant
AND
REFIT NEW ZEALAND
LIMITED
Intervenor
Hearing: 23, 24, 27, 30 April, 1, 2, 3, 4, 21, 22 and 23 May 2001
Judgment: 17 September 2001
Counsel: Iain J Thain with
Neil A Beadle for plaintiff
Alan L Hassall QC with David J Allan for defendant
Stephen T Scott for intervenor (on 23 April)
David L Bates for intervenor (on 23 May)
JUDGMENT OF WILLIAMS J
Solicitors:
Phillips Fox, DX CP24027 Auckland, for plaintiff
Stephen Rodney Anderson, DX CP21013 Auckland, for defendant
Holland Beckett Maltby, DX HP40014 Tauranga, for intervenor
Copy for:
A L Hassall QC, DX GP20025 Hamilton, for defendant
D L Bates, P O Box 11083 Papamoa, Tauranga, for
intervenor
I N D E X Page Para
General 3 1
Pleadings 4 3
The Vessels 7 10
Refit Wharf 8 14
Events up to matters in issue to 4 February 2000 9 17
Events of 4 February 2000 11 26
Wind and Tide 20 59
Events after 4 February 2000 21 64
Investigations 23 76
Scientific Evidence 28
(a) Jennings Analysis 28 95
(b) Miller Analysis 35 110
(c) Particle shape, travel and adherence 36 116
(d) Photomicrographs 38
(i) General: Cenospheres and weld spatter 39 125
(ii) Edmonds analysis,"holes" and Exhibits B C and D 40 132
(e) Powell Analysis 43 140
Law 52
(a) Admiralty Act 1973 s4(1)(d) 52 160
(b) Admiralty Act 1973 ss4(1)(e), 5(2)(b) 58 172
(c) Rule in Rylands v Fletcher 59 176
(d) Nuisance 60 182
(e) Claim in Contract and pursuant to Contracts (Privity) Act 1982 61 185
(f) Positive Defences 64
(i) Form of Notice of Proceeding in rem 64 194
(ii) Volenti non fit injuria and Contributory Negligence 65 198
(iii) Procedure 70 209
(iv) Betterment 72 215
Legal Relationship between Messrs Bracken and Fonua 73 219
Discussion as to Facts 78 235
Where were the vessels berthed? 79
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Ultimate Lady 79 237
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Bizarre 81 245
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Northern Challenger 81 247
Conclusion 83 255
When did the grinding occur? 83 256
Did particles from Northern Challenger’s guardrails land on Ultimate Lady? 88 274
Discussion as to Scientific Evidence 91 287
Conclusions 94 290
Appendix 1: Slipway - Pile Inspection Plan 96
Appendix 2 Scanning Electron Analysis Results (EDAX) 97
General
[1] On Friday 4 February 2000 the luxury launch Ultimate Lady owned by the plaintiff and the defendant ship, Northern Challenger, were berthed respectively on the eastern and western sides of Refit (also called Pelican) Wharf at Tauranga. The pivotal allegation in this claim is that on that day debris created by the cutting and grinding of guard-rails on Northern Challenger was thrown or blew across Refit Wharf onto Ultimate Lady causing such damage to her paintwork that she eventually required almost complete re-painting at a cost of $385,700.07, the sum for which this claim is brought.
[2] The parties agreed that the vessels were berthed at Refit Wharf on 4 February and that cutting and grinding of Northern Challenger’s aft topdeck guard rails and stanchions occurred that day but disagreed on virtually everything else. In particular, they disagreed on
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Exactly where the vessels were berthed
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The nature of the work carried out on Northern Challenger
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The time at which the work was carried out and therefore the wind and tide at the time
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The extent and density of any contamination of Ultimate Lady emanating from Northern Challenger
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The effectiveness of means taken by Ultimate Lady to get rid of any contamination
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The cost of repainting Ultimate Lady. Northern Challenger raised a positive defence of betterment against the quantum claim saying Ultimate Lady had been "substantially improved by the … repaint" but, other than that, there was little serious contest on quantum
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More than anything else, the parties and, more particularly, their experts, diametrically disagreed over the nature of the contamination of Ultimate Lady.
Pleadings
[3] Ultimate Lady arrested Northern Challenger on 29 February 2000, the required (R 769(2)(b)) concise statement of claim asserting that Northern Challenger had been negligent in "spraying the deck and superstructure of the ship Ultimate Lady with metal filings from the grinding and cutting of guard-rails from the defendant on 4 February 2000" and estimating repair costs at $100,000. The claim was issued under the Admiralty Act 1973 ss 4 (1)(d) and 5 (2)(b).
[4] Northern Challenger has remained under arrest since, having been unsuccessful in an application to set aside the writ of arrest determined by this Court in a judgment delivered on 10 August 2000.
[5] In an amended claim filed on 29 March 2000, Ultimate Lady broadened the causes of action beyond negligence to include the Rule in Rylands v Fletcher and increased the estimated cost of repairs to approximately $227,000. She still relied on ss 4 (1)(d) and 5 (2)(b). The principal factual allegation was that on 4 February 2000 at about 1600 hrs Ultimate Lady was berthed "approximately five metres directly downwind of the Northern Challenger and slightly aft" but the damage to Ultimate Lady was said to have occurred when she was "covered with varying degrees of fine grinding particles" over the horizontal surfaces of both demi-hulls, the grey non-skid area on the forward and port-side decks, the entire superstructure including radar and communications tower, the tender, the margin around the cockpit deck, and the coaming tops and landing platforms.
[6] A further amended claim was filed on 21 July 2000, adding a claim for breach of contract based on the Temporary Berth Licence pursuant to which Northern Challenger was on Refit Wharf coupled with Ultimate Lady’s claim to be entitled to the benefit of that licence pursuant to the Contracts (Privity) Act 1982. The factual allegations deleted reference to Ultimate Lady being slightly aft of Northern Challenger, increased the repair estimate to approximately $300,000 and added the Admiralty Act 1973 s 4 (1)(e) to the claimed relief in rem.
[7] The claim on which Ultimate Lady went to trial was filed on 23 March 2001. Ultimate Lady’s bow was pleaded as being "parallel to the stern of the Northern Challenger…". It was alleged that the wind at 1600 hrs at Tauranga Airport, 600 metres south-east of Refit Wharf, was 250°T at 16-21 knots but that the presence of a third ship, Bizarre, on Refit Wharf caused local wind deflections. The contract and Admiralty claims were repeated. The negligence of Mr Bracken, owner of Northern Challenger, or of his servants or agents was said to be in permitting grinding of the Northern Challenger’s metal guard-rails when they knew or ought to have known that "grinding particles and sparks would be thrown from the ship Northern Challenger thereby causing damage to the ship Ultimate Lady …" and failing to take reasonable precautions to avoid that result. There were causes of action in nuisance and breach of the Rule in Rylands v Fletcher which were entirely unparticularised. Mr Thain, leading counsel for Ultimate Lady, submitted in closing that because they depended on the same facts as the negligence claim, they would stand or fall according to the Court’s decision on that cause of action.
[8] Northern Challenger’s defences were a general denial plus:
[a] that there was no Admiralty jurisdiction under s 4 (1)(d) as the cutting and grinding was not done by the ship but by an independent contractor;
[b] that the damage to Ultimate Lady was not damage within s 4 (1)(e);
[c] that there was no Admiralty jurisdiction under s 5 (2)(b) since the grinding and cutting was carried out not by Northern Challenger but by an independent contractor who was the person who would be liable in personam and was not the actual or beneficial owner or charterer of Northern Challenger nor was he in possession or control of her when the cause of action arose;
[d] that because the notice of proceeding in rem only pleaded negligence it was either defective and the claim should be struck out or the Court had jurisdiction only to deal with the negligence claim;
[e] on the factual allegations, Northern Challenger asserted that at about 0900 hrs on 4 February 2000 an independent contractor ground the aft top deck guard-rail and that Ultimate Lady was "approximately 5-8 metres away and slightly aft". Northern Challenger pleaded that it would be impossible for the whole of Ultimate Lady to be covered with fine grinding particles since that would "require such particles to behave in a manner contrary to the laws of physics" and the wind did not have the strength or direction to carry such particles from Northern Challenger to Ultimate Lady;
[f] Northern Challenger raised the defences of volenti non fit injuria and contributory negligence on the basis later discussed;
[g] Northern Challenger raised further positive defences to the effect that any damage to Ultimate Lady did not emanate from Northern Challenger but came as a result of weld spatter from work done on her, from volcanic dust, from other possible sources in the Refit Wharf area, from a substance containing carbon and oxygen but not iron likely to have come from cutting compound used on Ultimate Lady’s deck, or from rusting steel particles from construction on a building near where Ultimate Lady later berthed in the Viaduct Basin in Auckland.
[9] Refit New Zealand Limited obtained leave to intervene in this proceeding. It owns and operates Refit Wharf, other berthage facilities, the adjacent slipway and the surrounding construction zone. Refit operates a system whereby, because it has credit available from local merchants, in addition to charging berthage it purchases boatowners’ requirements, meets the cost and charges them to vessels plus 1% per month service fee and a late payment fee of 2% per month plus collection costs. As at 18 October 2000, $78,375.53 was owing by Northern Challenger on account plus penalty interest of $977.22 as at 26 September 2000 but less berthage fees at that date of $9358.36 which are the responsibility of the Court. They would have rebated approximately 12% of the total claim. It sought judgment against Northern Challenger for those amounts. Northern Challenger did not oppose Refit’s claim.
The vessels
[10] Ultimate Lady is a wave-piercing catamaran constructed of fibreglass laminate over a foam core. She is a New Zealand registered ship and a commercial passenger vessel under the Safe Ship Management Scheme. Launched in August 1998 as a luxury vessel designed for charter work, principally game fishing off the New Zealand East Coast, she was chartered to a bank for hospitality purposes during the America’s Cup. She was bought by her present owner, the plaintiff, on 25 February 1999 for $9.2m and was said still to be worth approximately that amount on 4 February 2000. She was insured for $10m at the time. Plans in evidence, not of Ultimate Lady but of a vessel of her class, showed her to have a length overall of 26.775m and a beam of 9.955m. Her height above sea level to the flying bridge rail was 6.67m, to the canopy over the flying bridge was about 7.8m a.s.l. and the communications tower including navigation and other lights rose 7.465m above the flying bridge with the tops of the radar at about 10m a.s.l. and the communications dome at about 11m a.s.l. The aft portion of her main deck is a hemisphere which projects something over 1m aft of the water line. Capable of speeds in excess of 30 knots, she normally cruises at 20-25 knots.
[11] Northern Challenger is a steel-hulled former long-line fishing vessel of 40.43m length and 8.02m beam. She is registered in Belize and is not licensed in New Zealand. Mr Bracken bought her at a very favourable price, $150,000, on 24 May 1999 against a valuation of $US500,000. She required a deal of work to fit her for her intended operation, crayfishing in Tongan waters and exporting to New Zealand and Australia.. In particular, a refrigeration unit had to be made operational, the anchor base had to be rebuilt, rust in the aft end of the superstructure led to leakage and the guard rails on the deck were said to be rusted to the point of being unsafe and requiring replacement. When he bought her, Northern Challenger was at Refit Wharf but Mr Bracken found the wharfage unaffordable and before work began she was sailed to Raglan where she remained at anchor for about two months.
[12] The third vessel involved in this claim, Bizarre, was berthed stern to stern with Northern Challenger on the western side of Refit Wharf on 4 February 2000. Her dimensions were variously given in evidence at about 36.9m overall length and photographs suggest she was roughly comparable with Northern Challenger in beam. She berthed at Refit Wharf on 1 February and remained there throughout that and following weeks. While there was no evidence as to any work done on her on or before 4 February there was evidence suggesting that an additional deck was constructed on her superstructure afterwards.
[13] There was also a fishing vessel moored bow to bow with Ultimate Lady on the eastern side of Refit Wharf early on 4 February. She departed during the day.
Refit Wharf
[14] Rather than describing Refit Wharf and its surrounds at length, attached as Annex 1 is a Slipway Pile Inspection Plan prepared by the Port of Tauranga. With two exceptions, it was accepted by all parties as accurate. The first is that there was a pile not in Annex 1 which was in the sea-bed between the western side of Refit Wharf and the work berths further west and not much further from Refit Wharf than Bizarre’s beam. The second was that although the plan shows Refit Wharf as two straight wharves with an elbow at pile 6, in fact photographs show that there was a knuckle in the walkway on the eastern side of Refit Wharf between piles 6 and 7 so that it was not in the same line as the inner and outer fingers.
[15] Other evidence showed the Pile Inspection Plan is oriented with the top and bottom margins at 000°T. The main finger of Refit Wharf at which all three vessels in this case were berthed bears 356°T (or its reciprocal 176°T).
[16] Mr Cave, General Manager of Refit, said the 600 tonne slipway is for seagoing vessels to be hauled for repairs and maintenance. Refit also has berthage facilities for up to 35 vessels in its yard, again for repairs and maintenance. It has signs saying the yard including Refit Wharf is a construction zone. Mr Cave said that at any one time there can be up to 60 contractors working on various vessels. The scope of the work varies widely but it includes a deal of metal grinding, welding and painting. There were fifteen vessels berthed in the Refit facility on 4 February 2000 together with a vessel slipped and in order to accommodate that number there would probably have been at least one vessel on each side of Wharves C-F on Annex 1. He said that although luxury vessels such as Ultimate Lady are regularly slipped at Refit’s premises – Ultimate Lady slipped there on about five occasions up to January 2000 – only about five to six such vessels per year use Refit’s premises just for berthage.
Events up to matters in issue on 4 February 2000
[17] Between her launching and 4 February, Ultimate Lady plied her trade under her skipper, Mr Simon Jennings, a qualified coastal master and engineer, and her deckhand, a Mr Francis.
[18] During January she cruised from Great Mercury up to Great Barrier, returning to Tauranga on 8 and 9 January. She then voyaged to Waihau Bay near East Cape and after fishing in the area returned to Tauranga on 15 January for four days, leaving on 18 January for a further fishing trip to Waihau Bay, mooring off Whale or Motuhora Island north-west of Whakatane on 27 January and returning to Tauranga on 30 January. Mr Jennings lived ashore for much of the week up to 4 February. Mr Francis remained living aboard.
[19] Ultimate Lady’s business required her to be in good condition. Messrs Jennings and Francis took pride in her. They said she was washed down daily with fresh water unless prevented by weather. In port, Mr Francis regularly washed her with a solution recommended by her painters to rid her of salt deposits followed by brushing and a rinse with fresh water. Each three stage wash-down took Mr Francis a day and a half, on his own. They both claimed Ultimate Lady’s paint was in excellent condition before 4 February and discounted any possibility of unnoticed contamination.
[20] Northern Challenger returned to Refit Wharf from Raglan and remained there for the whole of January and February 2000 whilst a Mr Fonua rebuilt the anchor base and then worked on the guard rails. It will be necessary to examine the business relationship between Messrs Bracken and Fonua later.
[21] When Bizarre berthed at Refit Wharf on 1 February, Mr Lightband, its deckhand, said he threw a heaving line ashore from her bow to lead a bow spring to the wharf to enable Bizarre to be berthed. He threw it too hard. It hit Ultimate Lady, damaging her superstructure.
[22] Mr Francis, who was standing in the Ultimate Lady’s saloon watching, was firmly of the view that Mr Lightband threw the heaving line from Bizarre’s stern.
[23] Mr Bracken, Mr Lightband and a Mr Fitzgerald were all unavailable to give evidence. The Court delivered a judgment on 22 May 2001 admitting their evidence by affidavit.
[24] In admitting the affidavits, the Court observed that in cases of conflict between witnesses it would be more likely to prefer evidence tested by cross-examination to that untested but in this instance, although not of major importance in the resolution of the issues in this proceeding, the Court prefers Mr Lightband’s evidence. Because of obstructions created by the unmarked pile on Annex 1 and Northern Challenger, the most practical way of berthing Bizarre was, as Mr Lightband said, to set a bow spring and use that to bring the stern alongside. It would have been very difficult in the constricted berth to have thrown a heaving line from Bizzare’s stern and used that to winch her in. That way, Northern Challenger berthed as she was, Bizarre would have risked damage to her starboard side from the pile or to her port side from Northern Challenger. Further, during the course of his evidence, Mr Francis suggested Mr Lightband threw two heaving lines. In the Court’s view, that addition was inaccurate and was raised to avoid Mr Francis having to acknowledge his earlier error.
[25] At all events, the parties agreed that Ultimate Lady complained to Mr Cave about the dent. He arranged for the damage to be repaired by Southern Ocean Marine at Bizarre’s cost. Nobody from that firm gave evidence. The company’s timesheet was produced which showed that between 0600-1330 hrs on 4 February the work was the second job undertaken. Six hours was charged for the first and one hour for the work on Ultimate Lady. Mr Jennings said it was finished about "10:00am or so".
Events of 4 February 2000
[26] Mr Jennings said that after the dent to Ultimate Lady’s superstructure was repaired she crossed Tauranga Harbour to refuel. He put in evidence the mini-tanker work sheet giving the duration of its trip as 1030-1230 hrs. The invoice had the notation "time: 1200" written alongside the delivery before Ultimate Lady’s bunkering but this was not explained. Mr Jennings said Ultimate Lady’s bunkering trip took 2½-3 hrs and she returned to Refit Wharf between 1230-0100 hrs, berthing in the same position as previously.
[27] Between 1330-1400 hrs on 4 February Mr Jennings left on a provedoring trip for the next charter. He produced two checkout slips from Mt Maunganui stores timed at 1437 and 1441 hrs, two invoices for two Tauranga purchases the same day, and a credit card statement suggesting the Tauranga purchases occurred after those in Mt Maunganui.
[28] That narrative came from Mr Jennings’ affidavit in opposition to Northern Challenger’s application to set aside the Writ of Arrest. Challenged on that chronology and in particular that a receipt was discovered showing a purchase against Mr Jennings’ account at a Mt Maunganui service station at 1706 hrs, Mr Jennings’ brief said that his partner was also a signatory on the credit card and it was she who made the purchase.
[29] Mr Jennings said he returned to the wharf, parked and asked Mr Francis to bring a trolley to ferry the provisions to "Ultimate Lady". He said whilst he was talking to Mr Francis he noted:
… at least two men on the stern top deck of the Northern Challenger. There [sic] were grinding and there were sparks and dust flying off the top deck.
I was immediately concerned. My perception was that the wind was up and was blowing in the direction which would be carrying the sparks and dust on to the Ultimate Lady.
I quickly made my way along the wharf to the Northern Challenger and shouted for the men to stop grinding which they did. I said "you will be covering our boat in dust, you will be ruining our paint" or something to that effect. They basically said nothing in response to that but then said "we’re finished anyway". …
I went on board the Ultimate Lady to check for damage. The worst of the contamination seemed to be around the port demi-hull, foredeck and port superstructure. There were a lot of iron filings on the Ultimate Lady including bits in the wet paint where the repair had been carried out earlier in the day. I remember this because I accidentally put my hand on the wet paint. …
… the contamination appeared to be mainly on the port side and on the foredeck of the Ultimate Lady, rather than on the starboard side, ie. the port side was facing the Northern Challenger.
[30] Mr Jennings said that the two workmen were grinding the rails on the top deck at Northern Challenger’s stern slightly to port of centre and that he could seen the "sparks come off the grinder and I could see a lot of dust being generated by the grinding action". In cross-examination he denied that his view of the grinding was obscured by any other boat berthed at Refit Wharf at the time.
[31] He said they immediately washed the areas apparently contaminated with a hose with a maximum pressure of 90 psi, avoiding the newly repainted area. He noted that there was no damage on the non-skid areas.
[32] Mr Francis’ description of the events of 4 February tallied with that of Mr Jennings. He confirmed the repair, the bunkering trip of, he said, 1½ hrs and the return to Refit Wharf. He said they had lunch and Mr Jennings, his partner and daughter left on the provedoring trip. He remained on board hearing and seeing nothing from Northern Challenger as had been largely the case throughout the week. He said that he met Mr Jennings half way along the wharf on his return and "when alerted by Mr Jennings’ cry" looked toward Northern Challenger and "saw a man on the stern of the boat using a grinder". He said the "steel was flying off, I could see sparks". By the time he reached Ultimate Lady with the trolley Mr Jennings was hosing down the superstructure. Mr Francis said he saw Mr Jennings touch the tacky paint covering the repair. He then helped with the hosing. They thought they had rid Ultimate Lady of the contamination by that means.
[33] After Ultimate Lady returned to Auckland on Saturday 12 February, Mr Jennings contacted her insurers. The insurance file, only belatedly discovered, disclosed a fax from insurance agents to brokers of 15 February recording a telephone call from Mr Jennings earlier that day saying that:
Whilst at berth a vessel tied up, next berth, work was being carried out on steel railings, grinding & it appears filings have fallen on to lower deck & twin hulls of Ultimate Lady. Whilst crew did hose vessel down it could be seen after return to Auckland that some filings had become embedded into fibreglass & are now rusting.
[34] Mr Hunter, a Marine Surveyor and Loss Adjuster with G A B Robins, was instructed. He spoke to Mr Jennings on 16 February. His notes, also only discovered at the commencement of trial, are of interest. They say "Northern Challenger inside & transom amidships of U/L". The relevant narrative for 4 February reads:
"Work u(nder)/w(ay) on N(orthern) C(hallenger). Simon [Jennings] left for town side.
Back @ around 3-4.00 shopping.
Tom [Francis] meet SJ to help carry goods back.
Walking down wharf and saw T(hird) P(arty) cutting steel rail on top deck [with what appears to be the word "top" crossed out and "steel" substituted].
Asked to stop & they did.
Cutting at deck (2 rails) 4/5 stanchions (was finished cutting)."
[35] There followed a rough diagram of the position of four vessels with the wind marked "5-15 knots" but with the arrow coming from the north-west.
[36] The following page read:
"Immediately knew of dust. Big Maori guy on board on board all time.
N/C had replaced rails when U/L had returned.
Crew wash boat that day.
Fishing following day, for week.
First noticed on Sat afternoon when anchor.
Then couple of days later noticed more. Advised Simon.
Full extent not noticed until big clean-up back in Auckland."
[37] That conversation was followed by a fax the following day from the brokers to Ultimate Lady’s insurers suggesting arrest but also saying that "there are apparently plenty of witnesses to the incident that saw steel filings being blown into the hull of the Ultimate Lady…". In cross-examination Mr Jennings said that remark referred to Mr Francis, his partner, himself and those aboard Northern Challenger. His partner did not give evidence.
[38] It is also of interest that Ultimate Lady’s log, carefully kept in many respects, made no mention whatever of the claimed contamination on 4 February. The entry for that day included a number of minor maintenance matters thought sufficiently significant and showed the wind as "variable". Over the following days until after her return to Auckland, the maintenance record continued to record matters of slight significance but nowhere is the suggested contamination noted.
[39] The evidence adduced by Northern Challenger on this topic differed markedly from that of Messrs Jennings and Francis.
[40] Mr Fonua and his uncle, Mr Vete, live in Auckland but lived aboard Northern Challenger during the week with Mr McGee, her master at the time. Mr McGee said that those working on Northern Challenger normally finished at between 1600-1700 hrs each day. In particular, on Fridays, Messrs Fonua and Vete finished no later than 1600 hrs to return to Auckland.
[41] Mr Fitzgerald was Northern Challenger’s First Officer. His affidavit said that Mr Fonua and Mr Vete "commenced in the morning to carry out work involved in the removal and replacing of some guard rails at the stern … on the top deck". Mr Fitzgerald paid little attention but could remember thinking there "was no danger from any of the metal particles being discharged on Ultimate Lady…" because she was 4-5 metres away and the wind was blowing away from her.
[42] The work was carried out by Mr Fonua. He is a qualified fitter and welder who renewed Northern Challenger’s anchor bay at a "contract price" of $3000. Once that was completed Mr Bracken asked Mr Fonua to carry out further work which was "defined each week in a contract price" agreed.
[43] On 4 February 2000 Messrs Fonua and Vete breakfasted about 0800 hrs following which because "there was nothing much to do except start work", Mr Fonua commenced work removing the old guard rails at the stern on the top deck. In his affidavit in support of the application to set aside the Writ of Arrest which served as his brief, he said he started work about 0900 hrs using a disc grinder to cut through the top rail which was about two inches in diameter and the lower rails about half that size. He said that he cut the horizontal rails and rods from the vertical stanchions with the grinder moving vertically. He said cutting the top rail took about 30 seconds and the lower rails less. Rather than cutting each individual rail, he cut so that a section of rails and stanchions could be removed together. But, Mr Fonua said:
I can remember considering the possibility that some damage might be done to the "Ultimate Lady" if the grinding particles from my cutting operation ended up on the "Ultimate Lady". But it was obvious to me that this could not happen because the wind was blowing away from the "Ultimate Lady" and not towards the "Ultimate Lady". …
I had already cut one of the uprights at the stern and was about to start on the next one when a tall man wearing short trousers and a white ‘T’ shirt came to me from the "Ultimate Lady" and asked me to stop the cutting operation, because he said the grindings might come over on to the "Ultimate Lady". I knew there was no possibility of this happening, but I did not want any unpleasantness and so I complied with his wishes and stopped working in the vicinity of "Ultimate Lady".
Mr Jennings is tall but was unable to recall his garb on 4 February.
[44] Mr Fonua said that neither he nor Mr Vete received any other approach from Ultimate Lady about any grinding particles contaminating her. Both Messrs Fonua and Vete were adamant that the cutting and grinding work was wholly carried out during the morning of 4 February. They said the work could not have been carried out about 1600 hrs as on Fridays it was their habit to clean up early in order to await Mr Bracken’s arrival to pay them, following which they returned to Auckland. By1600 hrs Mr Fonua said that they had already showered, packed and were awaiting payment before getting in their van to beat the heavy traffic. He said Mr Bracken was late that day and did not arrive until about 1700 hrs.
[45] When giving evidence it appeared that Mr Fonua’s first language may not be English. He had difficulty understanding some questions. For instance, although in the passage from his affidavit earlier cited he spoke of the wind at the time of his grinding blowing away from Ultimate Lady, in evidence he said there was "not very wind, no wind … it’s not windy like you know like strong wind" at the time. He said that he looked at the windex to see the wind direction before starting work and that "we safe". In the Court’s view, the way in which his affidavit was worded needs to be treated with caution.
[46] He denied the suggestion that the man who approached him advised him to be careful because if there were any damage to Ultimate Lady there might be a claim against him. He reiterated that the man said "Could you please stop the grinding, the sparks might come on our boat" to which he replied "OK, no problem". He said "I won’t do any work if wind go to that boat [Ultimate Lady]" but they did not damage her because the "spark go right down, the dust go right up".
[47] His evidence varied as to the number of stanchions cut at the time of the approach. He first settled on four and then said he had cut three at the "front", two at the back, and was cutting the last when the approach was made. During re-examination he said he made three vertical and two horizontal cuts, the vertical ones being the pipe and two of the railings beneath it, the third of which was broken, and then it seems another vertical cut to a rail where they tried to break it. It was still strong though rusted. He said he was cutting it when the man came up and spoke but was a little indefinite when asked to identify exactly which of the stanchions he was in the process of cutting at that time. It seemed reasonably clear that the work in which he was engaged covered the stanchions on Northern Challenger’s starboard aft quarter on the top deck and either two or three forward and two or three amidships and to port of that point.
[48] Mr Vete is a spry octogenarian, a retired seaman and boatbuilder, an acquaintance of Mr Bracken and the holder of the Tongan Crayfish Licence which Mr Bracken wished to use. It was he who put Mr Fonua in touch with Mr Bracken.
[49] Mr Vete said that Mr Fonua commenced the work immediately after breakfast. Mr Vete’s recollection was:
On the day in question when the cutting operation was commenced by Sam [Mr Fonua] it would have been about 9.00 or 9.30 that the operation started. I assisted Sam in whatever way I could. The "Ultimate Lady" was berthed on the other side of the wharf and slightly aft of the stern of the "Northern Challenger". After Sam had made a number of cuts, and I cannot be sure how many, a person I presume to be the owner of the "Ultimate Lady" emerged from the "Ultimate Lady". He rubbed his hand over the exterior surface of the "Ultimate Lady" and then called out to us requesting in a quite pleasant way that we stop the work we were then involved in just in case some debris came on to his boat. He was not making any complaint that any debris had in fact come onto his boat, but was just asking us to stop in case this happened. I can remember being surprised at his request because the "Ultimate Lady" would have been four or five meters [sic.] away at its closest point and the wind, although not very strong, was blowing away from the "Ultimate Lady". However, Sam and I agreed to the request made and we moved to the bow end of the vessel to do work from there. … The section of guard rail which required replacement commenced about eight to ten feet from the stern.
[50] Mr Vete said that they stopped work most days at or before 1600 hrs and especially on Fridays in order to return home. Mr Vete was adamant that the work was done in the morning, that they started about 0900 hrs and that the man approached them after they had been working for 10-25 minutes.
[51] Mr Vete’s recollection was that the stanchions replaced included all those across the aft end of Northern Challenger’s top deck. He said the man who spoke to them was wearing short khaki pants and a sort of singlet, about 5’10" tall. He said by 1030 hrs they were working forward after the man had spoken to them. He did not remember seeing Ultimate Lady leave on the refuelling trip, nor did he remember Messrs Jennings and Francis returning with groceries. He was firm that there was no other grinding done on Northern Challenger on 4 February.
[52] Helpful evidence on this topic came from a Mr Hayter. He is an experienced yacht and boatbuilder who spent a number of years managing fishing and shipyard companies. In those capacities he came to know the Refit premises well. Since 1996 he has been a director of Dunsford Marine Ltd, a well-known firm of ship surveyors.
[53] Dunsford Marine was retained to survey Bizarre. By chance, Mr Hayter decided to do the work on 4 February. He said that he was wearing navy blue slacks and a shirt without a tie. He is not tall. His time-sheet for the job showed that he arrived at Refit Wharf at 0900 hrs and left at 1230 hrs. As part of the survey, Mr Hayter took a number of photographs of Refit Wharf and Bizarre. By an even greater chance, one of those photographs showed Ultimate Lady berthed at Refit Wharf. As will be later discussed, it is possible from that photograph to fix her position at Refit Wharf on the morning of 4 February 2000 with considerable precision.
[54] On arrival, Mr Hayter mistakenly spoke to a man whom he assumed to be Bizarre’s caretaker. It seems likely it was Mr Francis because he said they were "provisioning up and getting ready to sail and that they were going to the Mount intending to fuel up".
[55] Mr Hayter knew Northern Challenger and was surprised to see her on Refit Wharf, believing her still to be at Raglan. He continued:
I could see that some men were working at the stern of the "Northern Challenger" and they informed me that they were carrying out some repairs. The men were on the stern deck on the aft starboard quarter of the "Northern Challenger".
I could see that the men were grinding or cutting with a machine. I observed sparks coming from the point where the machine was being operated, and they were coming out over the wharf. Those sparks were not touching or going anywhere near the "Ultimate Lady" at the time. I did advise the men to be careful because if there was any damage to the "Ultimate Lady" from whatever source they might have a claim made against them.
At the time I spoke to these men, the weather conditions were calm and indeed they remained calm throughout the time I was working on the "Bizarre". I can remember this particularly because in the course of doing my work on the "Bizarre" when I was on the upper deck I placed my papers that I was working with on the top of the cabin and the wind did not disturb the papers at all.
After I had finished talking with the men who had been working at the stern of the "Northern Challenger" I did not see them working again at any time. …
… when I looked at the men who were doing the grinding operation on the "Northern Challenger", and noticed the discharge of sparks, I was quite sure that the "Ultimate Lady" was far enough away to prevent the sparks reaching the "Ultimate Lady", whereas if the "Ultimate Lady" had been berthed 11 meters [sic.] north of the stern of the "Northern Challenger", the sparks would have reached the "Ultimate Lady".
[56] He said he advised the men about the possibility of claim because a month previously he had been involved in a claim in Auckland where a vessel carrying out grinding was alleged to have sprayed debris onto another. Mr Hayter said he spoke to the men on Northern Challenger within 10-15 minutes of his arrival. Whilst Mr Hayter was at Refit Wharf both Ultimate Lady and the trawler departed.
[57] Being familiar with the refitting, maintenance and construction work carried out at Refit yard, Mr Hayter was surprised to see a luxury vessel such as Ultimate Lady berthed there. He said that grinding and welding operations are quite common in the yard, a vessel on the slipway immediately to the south was being worked on, and out of curiosity he visited a vessel on Wharf C on which workmen were "carrying on extensive grinding and gas-cutting to such an extent that there was quite a cloud of dust". In fact Mr Hayter said the dust was such a mess that the three men aboard "appeared to have worked in a coal-mine". His experience from his 15-16 years running a shipyard made him aware that "strong winds can carry metal particles from grinding or cutting operations considerable distances" including filings from grinding and metal rust from sand-blasting, and that there are other mechanisms to transport particles, such as foot traffic, road-traffic and wind blowing foreign matter off wharves. He also said that it is "virtually inevitable that debris from the work operations will to some extent contaminate vessels moored" at Refit Wharf because of the nature of the work carried out there.
[58] Mr Hayter acknowledged that it was difficult to reconcile that usage of the area with also making the berth available for luxury vessels such as Ultimate Lady. He suggested that there should be an obligation to warn luxury vessels but recognised the problem that commercial work could not be stopped simply because a luxury vessel was berthed there.
Wind and Tide
[59] Mr McElhinney, Northern Challenger’s investigator, put in evidence a table for 4 February of the hourly mean wind speed and direction at Tauranga Airport, including maximum hourly gusts. The western end of Tauranga Airport bears 084°T from Refit Wharf and is approximately 1.3 km distant. The parties accepted that wind data from Tauranga Airport was effectively the same as at Refit Wharf, particularly given that Tauranga Airport was downwind on 4 February.
[60] The evidence was that Mr Fonua’s grinding could not have occurred before 0900 hrs or after 1600 hrs on 4 February. The relevant wind speed and direction data is:
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[61] Adjusted for New Zealand Daylight Time pursuant to the Time Act 1974 s 4 the tides for Tauranga Harbour on 4 February were:
0103 hrs .4m
0730 1.7m
1330 .5m
1937 1.6m
[62] Immediately to the east of Refit Wharf on Chart NZ5412 are tidal arrows showing that ebb tide reaches 2 knots and flood tide 1.5 knots at that point. Evidence suggested the tidestream was stronger at Refit Wharf itself.
[63] Mr McElhinney produced a sketch plan, not to scale, showing the wind directions and his calculations as to the three vessels’ positions. However, since the vessels’ positions were a matter of conjecture and an issue for the Court to decide, the Court has transferred the wind directions onto Annex 1 as accurately as possible.
Events after 4 February 2000
[64] After donating surplus beer to those on Northern Challenger and taking their guests aboard, Ultimate Lady left Tauranga on 5 February and, according to the log, "trolled down to Waihau via White Island".
[65] White Island is, of course, an active volcano. It’s ejecta and constant sulphurous ash plume are well recognised by vessels in the Bay of Plenty as a source of possible contamination of paint and fittings. Mr McGee gave evidence of finding grit on awnings and paint which rapidly caused rusting steel on a vessel on which he crewed after one night anchored near White Island. Mr Hayter’s experience with boats operating in the Bay of Plenty was that on occasions ash on vessels operating near White Island was so thick as to require scraping off.
[66] Both Messrs Jennings and Francis said they were aware of the possibility of contamination from White Island ash. As a result they tended to go to weather of it unless it was a calm day and to leave it about 5 nautical miles distant. Ultimate Lady, they said, never anchored near White Island, despite fishing in the Bay of Plenty-East Cape area for about 6-8 weeks annually.
[67] On 5 February Mr Jennings said Ultimate Lady’s course was through fishing grounds to the south and west of White Island sometimes fishing the seamounts in the area. However, Mr Francis thought they travelled north of White Island until it was pointed out that a south-wester was blowing on 5 February.
[68] Whilst anchoring at Waihau Bay on the Saturday evening, Mr Francis noticed a number of rust stains on the rubbing strips, non-skid areas and superstructure. Some he was able to dislodge. He told Mr Jennings..
[69] It was agreed that on occasions, including on 11 February, Ultimate Lady anchored overnight at Whale Island, some 22 nautical miles south-west of White Island. But when it was put to him that Mr Powell found material on Ultimate Lady’s instrument tower on 11 July 2000 which was volcanic ash, Mr Jennings, whilst accepting that, pointed to the scientific evidence that the remainder of the contamination was ferrous in origin.
[70] After about a week’s fishing and then disembarking guests at Tauranga, Ultimate Lady cruised back to Auckland berthing in the Viaduct Basin on 12 February.
[71] During the voyage, Mr Francis hosed the boat down daily in accordance with his normal procedure. On arrival in Auckland they berthed Ultimate Lady at Hobson Wharf, just outside the Maritime Museum, where she remained for some time apart from day trips. While she was in port he carried out a three-stage wash to prepare the boat for chartering during the America’s Cup. He found soapy water was unable to eradicate rusty stains on the forward port deck, forward port superstructure and the port side. The worst rusty streaks were on the port demi-hull but he also found contamination in the cockpit and around the coamings and fairleads.
[72] Mr Jennings said the rust was pointed out to him by Mr Francis in Waihau Bay but no further effort was made to get rid of it at that stage beyond daily washing and it was only on return to Auckland that the full extent of the damage was seen. He said it was discovered shortly after Ultimate Lady’s arrival in Auckland on 12 February and before there would have been time for damage from another source at that berth. He did not explain his omission of those details from his affidavit in opposition the application to set aside the Writ of Arrest bar saying that they originally thought it a minor problem.
[73] Mr Jennings accepted it was an assumption on his part that contamination was caused "all over" exposed surfaces of Ultimate Lady, as he put it in an affidavit sworn on 21 June 2000, by comparison with his telling the broker on 15 February that only the lower deck and hulls were damaged. He said he only realised the extent of the damage when it was pointed out by Mr Hunter and Mr Pennington of Touch Of Gloss, the original painters.
[74] As earlier noted, Ultimate Lady was chartered to a bank during the America’s Cup, following which she resumed her charter fishing cruises, this time up the east coast of Northland, to the Three Kings Islands and thence to Houhora in late March where she was inspected by Messrs Hayter and Powell.
[75] In the meantime, as noted, Ultimate Lady arrested Northern Challenger on 29 February at Refit Wharf where she has remained since.
Investigations
[76] Mr Hunter first inspected Ultimate Lady on 16 February and found "rust-like spots and rusty metal particles covering the vessel to varying degrees" over the foredeck, tender, demi-hulls, superstructure and cockpit, from .5mm-1.5mm in size and ranging in density from many per square inch lower down to the upper superstructure where they were more than 500mm apart. He said that "every part that was open to the elements was affected". He contacted Mr Pennington and they inspected Ultimate Lady together on 18 February.
[77] Mr Pennington’s firm has painted a number of expensive vessels over the years. Witnesses described his firm’s standard of finish as very high.
[78] When he inspected Ultimate Lady on 18 February he said the "visible appearance of the damage was very much like a fine overspray of paint only every particle was of metal substance and had rusted" with the damage varying on different surfaces and in size. He used magnifying inspection glasses which enabled him to "estimate that there were well over 100 particles per square inch over the contaminated parts". He estimated that "95% of the total superstructure and decks were damaged and … the demi-hulls were 100% damaged" and that:
The damage was consistent with the airborne particles that are dispersed while grinding or cutting steel. This type of damage is unfortunately not uncommon. Touch of Gloss was involved in the repair of three boats with similar damage last year.
[79] Mr Pennington said that distribution of the contamination suggested it came from the port/bow direction. He said contamination was consistently heavier on lower portions of the vessel than higher.
[80] Mr Pennington had no experience of volcanic ash or atmospheric fallout though he discounted such contamination in this case because it was up the coaming sides and he thought there was no evidence of strong cross-winds.
[81] Although iron or steel filings landing on boats is not uncommon, Mr Pennington said that most are unaware how difficult they are to dislodge. In similar occurrences, even though particles have been swept, blown with an air-gun, vacuumed or hosed, not all contamination has been removed. He said that particles which are hot from procedures such as grinding tend to etch themselves into paint surface. With larger particles, he said, you can "actually see how they burn into the surface of the paint" and that even finer particles appearing as a "mist" can be hot and etch into the surface.
[82] Mr Pennington’s understanding of the etching process is that:
There are two factors here. I think one is the heat factor that certainly seems to allow the particles to almost melt into it under magnification and I think the second part is the actual water on the metal particle, as soon as it oxidizes or forms that rust that acts as a bit of a bonding, … key as well. … The heavier you grind the product the heavier the particles will be. If you’ve just got the grinder sitting on the substrate, that particle will be like a dust. It is the lighter particles which will etch to the surface when moisture or even water is applied purely because of the rust scenario.
[83] He said that more particles stick to paint than to fibreglass though gel coat contamination is not unknown. Horizontal surfaces hold more contamination, probably because of moisture or dew though vertical surfaces are not immune. Contamination on wetted surfaces such as Ultimate Lady’s demi-hulls is not dislodged even by long sea passages and high speed.
[84] Touch of Gloss carried out remedial work in the second week of March by cutting and polishing most of the boat to overcome what Mr Pennington described as an "eyesore", particularly on the white demi-hulls and other white surfaces. He said that most of the contamination was removed though a number of iron filings were later retrieved, but cutting and polishing shortens marine paint life by removing the top resinous gloss layer, thus reducing ultra-violet protection. He said re-spraying in his experience was insufficient in contamination cases because residual fragments bleed into the new paint. The only way to rectify the problem is to strip the boat down and repaint.
[85] Mr Hunter acknowledged Ultimate Lady was chartered apparently without complaint during the America’s Cup even though she was damaged. He later tendered the repainting work. Touch of Gloss was the successful tenderer. The work cost $385,700.07 made up of painting ($324.252.30), slipping costs ($51,412.50) and survey fees ($10,035.27). As noted, there is little challenge to this aspect of the claim so its components do not require consideration.
[86] Turning to Mr Hunter’s investigations, his photographs showed spotted deposits on the port topside and demi-hulls with noticeable deposits in the tender fuel filler and on the landing platform. He asserted that stains found throughout were largely similar in colour, nature and shape, particularly those found in the cockpit, the scuppers and coamings and around deck margins. He said he found contamination on the canopy over the flying bridge, about 7.8m a.s.l. and the higher second canopy but could not remember if there was contamination on the dome. The grinding on Northern Challenger was 5.49m a.s.l. Relying on his experience of using grinders, Mr Hunter said that a grinder cutting stanchions cuts from the left first, throwing the debris back towards the operator, and then from the right to finish off throwing the debris outwards with debris able to be lifted upwards the vertical difference between the grinding level and that where he said he found contamination by blustery shifting winds.
[87] Mr Hunter accepted as a possibility that contaminants found on 16 February may have come other than from Northern Challenger and in particular from atmospheric fallout of volcanic ash although he had not previously considered volcanic ash as a possible contaminant. He also accepted that his comment about "every part that was open to the elements" was consistent with atmospheric fallout such as ash. He said there were tangible contaminants embedded in the superstructure on 18 February, predominantly on port and leading aft but there was also staining and rust on starboard which he attributed to wind eddies around the vessel and accumulation of contaminants in the scuppers following washing. He did not try wiping stains off the demi-hulls.
[88] In July he inspected Ultimate Lady again, recovering particles from the port topside and demi-hull. The particles on the port demi-hull came from the blue portion in July and the white in February. He thought the demi-hull particles were all similar.
[89] In cross-examination he accepted that small particles of debris lying around the construction zone could be shifted onto other boats at the Refit facility mainly by wind. He accepted that road debris coming from the nearby Tauranga-Mt Maunganui bridge could be a contaminant but pointed out that on 4 February it was downwind.
[90] Northern Challenger’s scientific evidence principally came from Mr Powell, a forensic scientist with academic qualifications in Geology and Geography who has fulfilled the requirements for a Ph.D. He was senior demonstrator in Geology for five years at Otago University. He routinely examines and analyses a wide variety of material including paint, metallurgical slags and industrial contaminants. He first inspected Northern Challenger on 28 March 2000 at Refit Wharf with Mr McElhinney.
[91] Mr Powell and Mr McElhinney had Mr Fonua repeat the technique he used to cut Northern Challenger’s guard-rails and stanchions with the same grinder. The top rail was galvanized mild steel tube of 33mm diameter with a wall thickness of 2.8mm and the stanchions were 16mm diameter. All were extensively corroded. Mr Powell had Mr Fonua cut through a tube of guard-rail .8m above deck. The resultant particles scattered over the afterdeck. Some of the larger particles, up to 1mm across, went outboard but though hot for about 1.5m, lost their incandescence before they hit the water 5.49m below. Four metres or thereabouts was the furthest the particles travelled in still air. Mr McElhinney also said the furthest any of the debris travelled was 12.5 feet and the luminosity dissipated over that distance. He accepted that some particles went overboard though most were discharged inboard. The test was carried out when there was virtually no wind. They did no tests as to the effect of swirling wind.
[92] Mr Powell laid out a sheet of clean white newsprint on deck and arranged for Mr Fonua to grind a stanchion stub about 1.5m from the paper. He caught the discharge during 30 seconds of grinding. The paper was not charred. He retained it in a tamper-proof bag.
[93] Mr Fonua brought a similar grinder to Court to illustrate the sparks’ line of travel. A number of photographs were put in evidence of that simulation. That evidence showed that a 6" grinder disc rotating clockwise seen from above at about 10,000 rpm has a circumferential velocity of more than 60m per second. Cutting vertically from top to bottom with the material being cut at 3 o’clock to the grinder head, the great majority of sparks and debris were discharged downwards and back towards the operator but with a small proportion thrown out at approximately a 2-3 o’clock angle. When the grinder was operated horizontally to cut the foot of a stanchion, a vertical kickplate at deck level kept most of the debris inboard but a small amount of sparks and debris were thrown overboard at 2-3 o’clock. Mr Fonua acknowledged that more sparks and debris would have been thrown overboard if the object being cut was at 12 o’clock from the grinder but said that cutting in that position was not permitted. He said he never used the grinder upside down or cut upwards.
[94] Mr Powell uplifted ferrous alloy particles from several parts of Refit Wharf and the yard. Neither he nor Mr McElhinney found any rusting on "Bizarre"’s stern despite its lengthy proximity to Northern Challenger.
Scientific Evidence
(a) Jennings Analyses:
[95] The principal scientific evidence for Ultimate Lady came from a Mr Clive Jennings. He has lengthy experience as a metallurgist in Britain and India and has worked as a metallurgical consultant along with running his own ISO 9002 certified foundry since coming to New Zealand in 1971. He has presented technical papers at conferences, acts as consultant for a number of foundries and has undertaken research and development in the area.
[96] Mr Jennings analysed the four samples taken from just aft the tender by Mr Hunter on 18 February and seven samples he personally took on 23 May when Ultimate Lady was in Houhora. Of the later samples, 60% were taken the length of the port side from the transom to the forward end of the demi-hull with the remainder from the non-slip foredeck area where Mr Jennings said there were "40-50 rust ‘halo’ sites … although many of these were ‘empty’ ie the metallic asperity causing the rust had either been removed by cleaning or had rusted away". He was unable to find any removable asperities on the white areas of the hull and superstructure although evidence of rust was visible. He disagreed with the suggestion that his assumption that the lack of asperities arose through cutting and polishing – even though part of the vessel was not cut and polished - did not take account of the possibility that there were no asperities there beforehand, basing his view on the particles remaining and the staining.
[97] Mr Jennings first commented that:
In general terms, most steel of the plain carbon type consists of 98.5% to 99% iron, with small percentages of carbon (0.20%) manganese (0.80%) and silicon (0.20%). Sulphur and phosphorous [sic.] are the other main elements present, but usually below 0.03% in each case in modern steelmaking. Nickel, chromium, copper, molybdenum, vanadium etc are at very low levels of 0.02 to 0.03% if the steel is "primary" metal such as BHP steel. …
It would be expected that any steel from the superstructure of Northern Challenger to be of this plain carbon steel type, but the presence of these trace [or tramp] elements of nickel, copper, chromium may be possible if the steel is from a "secondary" source, such as at Pacific Steel in Auckland, where all steel is made from remelted scrap. …
[98] Mr Jennings put in evidence a table of results from the eleven samples (attached as Annex 2). His overall conclusion, after the reasoning process later discussed, was that Northern Challenger’s rails or stanchions would be of "conventional mild or plain carbon steel with levels of silicon and manganese consistent" with the samples he examined and accordingly that there was likely commonality of origin of all samples.
[99] Mr Jennings arranged for the samples to be analysed with a scanning electron microscope (SEM). SEMs cannot detect elements with atomic numbers lower than sodium. Mr Jennings said it is the only device able to analyse such small-scale particles but suffers from the defect that it only analyses elements present at the surface. In particles such as these it could include paint attached to the asperities. Further, the smallness of the particles made it impracticable to wash them without losing evidence. As a result, he accepted that the findings in Annex 2 other than the high iron content, might appear to be a "confused picture". His reconciliation of Annex 2 with his overall conclusion and some of Mr Powell’s comments is that:
[a] The sodium chloride, potassium, calcium and magnesium present were likely to have stemmed from sea water evaporation as they could not have survived the steel’s manufacture. He adhered to his explanation as typical samples from a marine environment, contrary to Mr Powell’s view, based on a leading text by Prof Strahler.
[b] The sulphur and phosphorus levels in the samples by comparison with those in steel were likely to have been surface contamination. He thought the weight percentages of phosphorus and sulphur came from seaborne bacteria and micro-organisms in the form of algae or seaweed which could develop over a 14-day period. He acknowledged phosophorus could have come from more than one source and was often of different orders of magnitude but said that the order of magnitude of sulphur in marine corrosion analyses of galvanised steel tends to be constant.
[c] Similarly, the aluminium and titanium levels exceeded those resulting from alloying mild steel and were again likely to be surface contamination, in this instance wind-blown dust and road grime, of which aluminium is the main constituent, and paint in the form of titanium oxide.
[d] The copper and zinc levels in sample 3 were consistent with a 60/40 or 70/30 brass which may have been contamination from on-board brass. He did not inspect "Northern Challenger" to assess the amount of brass present. He accepted the possibility of the source of copper being Ultimate Lady’s hydraulic system fittings. Mr Powell accepted that the copper and zinc in the sample probably indicated brass.
[e] The silicon levels were much higher than those in conventional steels and were likely to have resulted from fillers in paint, silicon wax in cutting and polishing compound or silicon carbide in angle grinder discs. They were probably contamination and not alloyed with the steel. He accepted that the high silicon in his analyses could not have come from areas of Ultimate Lady not cut and polished and the possibility put in cross-examination that there was silicon in Ultimate Lady’s davit.
[f] The iron content figures were diluted by combining with oxygen as a result of rusting.
[g] Manganese is relatively uncommon in nature and is seldom found on SEM analysis. It was the most significant alloying element in terms of percentages in mild and plain carbon steels. In Annex 2 the two low results were significantly lower than expected in mild steel, coincided with paint contamination and were likely to have been increased by up to 40% if the samples were clean. They would then be consistent with a 0.60-0.80% reading which would be consistent in its turn with expectations for such steels.
[h] The low levels or lack of nickel, chromium, molybdenum, copper, tungsten, vanadium and cobalt ruled out low alloy, stainless tool and high speed steels and many alloys. He said the level of tin of 2.5 times copper was out of proportion with normal phosphor bronze or tin bronze but he did not rule out the possibility that the tin, nickel and molybdenum in the analysis might have come from the davit. Alternatively, the molybdenum in his analysis may have come from molybdenum disulphide grease used in the davit. Whilst he accepted that nickel is a component of stainless steel, a material commonly used in vessels of Ultimate Lady’s quality, he said that if the nickel in the analysis came from that source there would need to be corresponding chromium.
[100] Of the elements in Annex 2, Mr Jennings accepted that mild steel never contains sodium, chlorine, potassium, magnesium, zinc and calcium, and titanium and copper are only found in particular alloys.
[101] Mr Jennings accepted that variations in the samples from normal composition of mild steel – particularly the presence of elements usually absent from such steel – required explanation to sustain his conclusion that the particles he analysed were consistent with those from Northern Challenger. He said the explanation lay in the expected high iron content, the average manganese content being similar to that expected in mild steel and that the "tramp" elements expected at low levels in mild steel did not exist in any of the samples, leading to a "level of probability … that these would be consistent with mild steel from the Northern Challenger…".
[102] Mr Jennings analysed on Mr Hunter’s samples taken in July and rod, tube, handrail and grinding test samples provided by Mr Powell from Northern Challenger from the simulation test. However, the Hunter July samples were so badly contaminated as not to be able to lead to any assessment. Those samples "could have come from the Northern Challenger but this cannot be said with any degree of certainty". The only conclusion open was that they were all iron-based with levels of copper in four of the five far exceeding copper levels in carbon steel alloy. They possibly came from antifouling paint above water line.
[103] When it was suggested that it was improbable that Mr Hunter’s July samples would have been so contaminated as to preclude analysis given that his own samples were taken on 23 May, Mr Jennings’ response was that so many samples had been taken from Ultimate Lady that few remained but he emphasised that the July samples still showed a high iron content. He said that by July the samples had "essentially dissolved into jelly". Also, his May samples had been taken from vertical surfaces not harvested by others, whereas Mr Hunter’s second samples were from demi-hulls.
[104] As to the Powell samples, Mr Jennings’ conclusions were that all showed "remarkable traceability to the chemistry of the handrails" based on the presence of manganese, chromium, nickel and copper, all common in carbon steels and uncommon in sea water, paint, algae or silicon polish, the most likely marine contaminants. The level of manganese particularly confirmed his view of the high level of probability that the particles he tested originally "emanated from grinding debris from the handrail of the Northern Challenger…". His conclusion on the particles provided by Mr Powell was that they "bear the same physical size and shape characteristics" as those originally tested.
[105] The eleven samples on which Mr Jennings commented were analysed on 25 May 2000 by Dr Miller of Industrial Research Ltd using energy dispersive x-ray spectroscopy (EDS) which analyses on a semi-quantitative basis the composition of very small samples containing elements with atomic numbers equivalent to sodium or heavier. Semi-quantitative analysis gives an indicative showing above a detection limit of 0.1% of elements present on the surface of samples.
[106] Commenting on Dr Miller’s analysis for silicon, sulphur, manganese, iron and zinc in the six Powell samples, Mr Jennings said the results showed:
[a] what would be expected in a low carbon steel with iron content in the expected 98-99% range other than for one sample;
[b] silicon levels close to expectations with surface contamination from silicon carbide in the grinding disc;
[c] other than in one sample, manganese being in the expected range;
[d] where the samples were outside expectations he said the differences were explicable by zinc and algae surface contamination "shielding" in-depth analysis;
[e] zinc in three of the samples, by contrast with his earlier analysis was explained by the steel being galvanized and by the use of zinc anodes used by vessels as a corrodent. He said the "zinc has simply been consumed as the corrosion of these particulates proceeds to develop" which is the "reason for the development of circular rust stains around where the particles exist or did exist"; and
[f] the absence of nickel, chromium or copper confirmed his earlier analysis.
[107] The rod, tube and handrail samples were analysed using optical emission spectrographic methods (OES), an accepted method of metals analysis. Mr Jennings analysed samples from the handrail and rods, particularly to determine manganese, chromium, nickel and copper levels, to see if they could be proved to have come from Northern Challenger and also subjected the tube to SEM. The results were:
[a] no significant levels of nickel, chromium or copper in the handrails. This correlated with his earlier analysis, Dr Miller’s analysis done for Mr Powell and the SEM analysis of the tube. Analysis of the rods showed some level of those elements;
[b] as far as manganese was concerned, the earlier analysis averaged .28%, that in Mr Powell’s six samples .38%, and that from the tube and rod analysis .41%. Removing the three contaminated samples from the earlier report and the one from the later exercise, gave averages of .36%, .45% and .41% which was "excellent correlation on the basis of a semi-analytical method at such a low level of content so we can compare these results with the accurate content of .51% showing a high degree of probability that these particles came from the handrail."
[108] He acknowledged that before writing his initial report he had been told of the allegations that hot particles of ferrous metal arising from grinding on Northern Challenger had contaminated Ultimate Lady and he was asked to assist in establishing that such was the case but strenuously denied any predisposition to that end in his conclusions.
[109] In cross-examination Mr Jennings:
[a] acknowledged having no personal experience analysing volcanic ash. Because of the iron content he disagreed with Mr Powell’s finding that some of Ultimate Lady’s contaminants were volcanic ash. Rust contamination, in his experience, never occurred in naturally-occurring minerals but only from "reactive" metal particles;
[b] felt that the delay between 4 February and the three dates when the samples were taken made no difference to the results and disagreed with the suggestion that such contamination would not have occurred in the 14 days between 4 February and Mr Hunter taking his initial samples saying such degradation could occur in a period as short as 24 hrs, principally from seawater;
[c] suggested that the explanation for contamination of the first Hunter samples was seaweed, algae, seawater and fillers.
[d] acknowledged not being an expert in marine corrosion of fibreglass vessels;
[e] accepting that seawater constantly contains 36 parts sodium to 64 parts chlorine and that his analyses showed other proportions, he pointed to an experiment where mild steel corrosion by seawater subsequently washed with fresh water reduced chlorine content by comparison with sodium by reason of the former’s greater solubility. His analyses, he said, showed a reduction in chlorine not an excess in sodium. That should be coupled with the possibility of other sources of contamination.
(b) Miller analysis
[110] Dr Miller’s views do not require detailed consideration since they largely reflected those of Mr Jennings. However, the following points are of assistance.
[111] Dr Miller, expecting guard rails to be made of mild steel usually containing of the order of 98-99% iron, accepted that the iron content of 35.51% in one of Mr Jennings’ samples was low for mild steel. He said it could be explained by the presence of contaminants given that Industrial Research’s system gives only percentages of elements present so that, in combination, they must total 100%. Percentages of contaminating elements present therefore reduce percentages of other elements present.
[112] Dr Miller accepted that in mild steel, made without scrap, apart from iron he would expect silicon and manganese of the order of .5% but not sodium or chloride in a clean sample, and no potassium, magnesium, calcium and, other than in special steels and at low levels, aluminium, phosphorus and copper with zinc only being present in galvanized steel.
[113] The invariable proportions of sodium and chloride in seawater could be distorted in such samples by other sources of those elements such as dust and substrate removed with the particles. It was only if all other sources of sodium and chloride were excluded that the 36% sodium 64% chlorine ratio could be expected. A similar exercise would have to be undertaken for the percentage content of other elements inconsonant with mild steel. When the tube surface sample chlorine at .66% and the much lower weight percentages derived from analysis of the Ultimate Lady particles were drawn to his attention, he accepted that an explanation was required before a match could be found. That explanation, he said, was possibly saltwater residue and wind-blown dust although he accepted that the sodium chloride percentage found should reflect that in seawater.
[114] However, Dr Miller agreed that if there were a large number of extraneous elements in the "Ultimate Lady" particles and in their weight per cent, a reasonable explanation had to be found for those matters before a conclusion of consistency could be reached. Reasonable explanations here arose out of the nature of the particles, their source, elements in the atmosphere, the environment, rainwater and the earlier comments as to Industrial Research’s system, making the point that the analysis was of elements on the surface of the particles, not in them, and that the SEM was unable to detect oxygen and thus unable to detect the level of iron oxide from oxidation.
[115] Finally, Dr Miller’s view, confronted with dissimilarities in chemical composition of the Ultimate Lady particles and the Northern Challenger guard-rails, was to regard the match as not proven rather than conclude that the former could not have emanated from the latter.
(c) Particle shape, travel and adherence:
[116] There was considerable scientific evidence as to the extent and mechanics of possible particle travel and adherence in addition to that from Messrs Hayter, Hunter, Powell, McElhinney and Pennington earlier discussed.
[117] Mr Jennings commented:
"The distance travelled by these particles is defined by the size and weight, but also by the height of the distribution source. Particles at ground level will typically be restricted to 5 to 15 metres depending on size but smaller particulates from extraction towers under some propulsion can travel 50 to 60 metres. Since many of the particles are platelets .. they travel on the wind in a similar manner to leaves or wind-borne seeds i.e. the surface area to volume is quite high …
The sequence of events after contamination follows a pattern of delay before the contamination is noticed. As the particulate lands initially, it tends to be perfectly dry from the heat generated in grinding, although some particles will retain enough heat to actually adhere to the paint surface. In the case of the "Ultimate Lady", the samples taken from the vertical dark blue paint [the first analysis] could not have arisen as a result of any other method of delivery other than being hot, sticky particles on a vertical surface.
At some point a corrodent appears, either seawater or rain or washdown which wets the surface and begins the oxidation process within hours. The particles are still not very obvious until the oxide begins to hydrolyse and form a halo of rust around the particle, at which time a full bond to the substrate has been achieved. The problem is often irreparable at that stage."
[118] Concerning the shape of iron filings and the contamination alleged, Mr Edmonds, Director of the Post-Graduate Programme in Polymers and Coating Science at the University of Auckland, said:
… there will be a range of shapes, one would expect from needle-shape to flatter particles. These particles leave the grinder at high speed. As they travel through the air they are further oxidized and stay red for the first few metres they travel. When they reach a surface, depending on the shape and orientation of the particle, they may either embed themselves into the surface or they may be simply lying on the surface.
[119] Then, commenting on a photomicrograph of a particle recovered by Mr Powell, Mr Edmonds said:
… the particle appears to have ragged and sharp edges and I would expect that type of particle … would adhere easily to the surface. It appears to be reasonably flat, if there was condensation or water on the surface that would assist it to adhere. There may be other mechanisms by which the particle also adheres to the surface, by static electricity, or even through indirect contact with the surface if it was a very flat particle. Just surface tension causes it too. … people walking on the deck would further press the particles into the surface if they were not dislodged.
[120] He said it is very difficult to remove such particles by hosing even at as much as 90 psi as the jet forces them against the surface and only pressure from beneath dislodges them. He continued, with particular reference to freshly-ground iron filings subjected to fresh and saltwater and the impact of a vessel’s progress:
Particles that remain embedded in the structure have obviously been freshly ground. They would oxidize. Ions formed by that process would penetrate the coating, as well obviously as spreading on the surface around the particle. These ions would subsequently oxidize to form the rust that was observed around the particle. … the oxide layer that forms on particles penetrates the paintwork, locking the particle to the surface, and these are very difficult to remove. They have to be physically removed. … The nearer to the horizontal the less frontal surface area presented to the oncoming flow of seawater, and if the leading edge was closer to the paint surface then the water pressure would be on the upper rather than the lower surface and would likely therefore have the opposite effect [to dislodging it].
[121] He accepted that particle impact was dependent on a number of factors including velocity at impact. That depended on distance from source, wind-speed and direction, shape and many other factors. A definitive investigation as to distance likely to be covered, to his knowledge, had never been undertaken. He said that "all I know from my experience is that … particles do embed themselves some distance away from the source of the grinding".
[122] Mr Edmonds said that the crew’s action in hosing down Ultimate Lady on 4 February was appropriate in view of the lack of widespread understanding at the time that grinding particles become embedded in paintwork.
[123] Mr Powell’s experience of the embedding of particles was that such only occurred when the relative velocities were of the order of hundreds of metres per second as opposed to the grinder’s initial 60m per second. Mr Powell said Stokes’ Law is that the rate at which a particle falls and the velocity of an updraught needed to keep it in suspension is directly proportional to density. Particles here were of steel which is 7.87g/cm3 or about three times as dense as common geological material. The density of pure water is close to 1g/cm3.
[124] That notwithstanding, Mr Powell accepted as correct his conclusion in one report that wind conditions on the afternoon of 4 February were conducive to the transfer of small particles, particularly if the vessels overlapped, as he calculated they might. He accepted that wind direction could be affected by a number of geographical features including temperature, velocity, gusting (up to 50° or less on open water). Since the grinder simulation tests were done in still air, he was unable to say how wind direction and gusting might have affected particle travel from Northern Challenger. Mr Powell accepted that different results could have come from different grinder pressure or angle and atmospheric conditions. At 20 knots (20 x .515m per second) a particle would cover 27 metres in about 2½ seconds.
(d) Photomicrographs
(i) General: cenospheres and weld spatter
[125] Mr Jennings discussed particle photomicrographs taken by Industrial Research Ltd as part of the SEM process. His opinion was that the photomicrographs showed size, shape, curvature, cleanliness and configuration supporting his view that the Ultimate Lady paticles were "consistent" with the Northern Challenger guard-rail particles.
[126] It appeared during the hearing that Mr Powell’s samples on which Mr Jennings commented were, contrary to Mr Jennings’ initial understanding, created by Mr Powell hacksawing a sample of the Northern Challenger guard-rails. They were not particles created by grinding simulation.
[127] Therefore, overnight, Mr Jennings was given the opportunity to test the particles produced in Mr Powell’s grinding simulation. Photographic comparison – the only analysis available in the time – lead him to the view that the simulation particles were consistent with the type of material gathered from Ultimate Lady though some were more fragmented and longer and the photographs showed samples so contaminated with debris and rust that it was difficult even to tell metallics from non-metallics. He said that "we have what appear to be metallic particles of about the right size, shape and configuration with the particles found on Ultimate Lady". Some were also similar to the hacksaw-generated particles.
[128] Some of Mr Powell’s photomicrographs showed objects called cenospheres. Cenospheres are created by particles of grinder disc and melting of the material being ground being thrown out at high velocity. Having a vacuum within, most explode or implode but up to about 10% remain intact. He said cenospheres produced in grinding do not have the "hairy" appearance of Mr Powell’s samples. His may have gathered such material by rolling across the paper onto which they were discharged in his simulation.
[129] Of Mr Jennings’ photographs Mr Powell said that seven particles in one were between 4mm-.7mm which was about twice as long and significantly wider than a large proportion of the cenospheres and particles produced in the grinder simulation. In comparing the size of most of the debris produced in the grinding simulation, .2mm, with photographs taken by Mr Jennings of some of that debris, Mr Powell accepted that many of the cenospheres shown were smaller than .25mm but some were up to .75mm and one exceeded 1 mm.
[130] Mr Powell suggested that, other than ash, all the extraneous elements in his analyses of samples from Ultimate Lady were present in weld-spatter. Mr Jennings acknowledged only limited experience with weld spatter but he suggested that weld beads, not spatter, had chemistry similar to the parent metal. His response was that the cenospheres examined and photographed by him overnight from the grinding simulation were dissimilar from those in weld spatter. Weld spatter, he said, tends to be of similar chemistry to mild steel though manganese and silicon are normally higher in the latter as they are lost during welding. He added that grinding cast iron produces particles of different forms from those in weld spatter.
[131] Mr Powell said that Mr Jennings’ overnight photographs of cenospheres from his simulation were completely unrepresentative of the sample given to him since that was mainly of cenospheres with subordinate volumes of other material including irregular metal particles and rust while the cenospheres in the photographs were much less abundant than in the samples as a whole. The samples given to Mr Jennings contained a much greater proportion of cenospheres than appeared in the photographs. The explanation, he said, was that the spherical particles rolled across the surface of the paper so that their natural distribution became distorted by artificial concentrations.
(ii) Edmonds analysis, "holes" and Exhibits B C and D:
[132] A further investigation of the Ultimate Lady contamination was carried out by Mr Edmonds. He inspected her with Mr Pennington on 7 July 2000 when she was on the hard at West Harbour in Auckland for repainting.
[133] Mr Edmonds’ conclusion, based on two other episodes where he had been asked to inspect vessels similarly contaminated, was that "despite the thorough cut and polish carried out on the affected white areas many contaminant particles remained embedded in the coating and continued to oxidise".
[134] Mr Edmonds found numerous brown stains, generally annular in shape, sparsely but widely distributed on the deck, anti-skid areas and the white deck borders and superstructure even though parts had been cut and polished. Particles remained visible in the centre of some stains only. Where present, they were readily dislodged. Three samples were removed. They were fragile, difficult to remove and one disintegrated before photographing. One of those photographed had a metal sliver embedded in the centre which sprung out when the sample was removed. Two of the samples were photographed on 25 July 2000 by a Ms Jing using an SEM. The two photomicrographs were put in evidence as one page attached to Mr Edmonds’ brief.
[135] There was sharp disagreement as to the source and nature of the two photomicrographs by comparison with defence Exhibits B, C and D. Mr Edmonds said that Exhibit C was the same as the images attached to his brief and emphatically rebuffed any suggestion that the production of Exhibits D and C resulted from modification of the image. Suggested visible differences were merely to improve contrast, he said. Miss Jing said Exhibit B was a copy of the photomicrographs attached to Mr Edmonds’ brief. Her recollection was that Mr Edmonds later asked for a higher resolution print than Exhibit B. She did this and the result, she thought, was Exhibit D which had different contrast from Exhibit B. Exhibit C, she thought, was a photocopy of Exhibit D. Dr James, Technical Director of the Research Centre for Surface and Materials Science at Auckland University largely agreed although she described Exhibit C as a "printout gain" of the same images with the contrast increased significantly. The Court accepts those explanations.
[136] Mr Edmonds described the photomicrographs as being of "holes" or impressions approximately 1000 microns (1mm) and 800 microns long and up to 100-300 microns left after samples without particles had been obtained. There was strong difference as to when the "holes" were made relative to the cutting and polishing and, if made before, whether they were degraded by that process.
[137] The linear features on one photomicrograph and Exhibits D and C Mr Edmonds said were scratch-marks which he regarded as probably the result of cutting and polishing. The straight line at the edge of the lower image in Exhibits D and C was, he accepted, probably the result of cutting and polishing after the hole had been formed, or from contamination resulting in a weak edge to the "hole" which then fell away from cutting and abrasion. He disagreed with Mr Powell that those marks precluded a finding that the image was of a "hole". The lower image on Exhibit D was a shallower impression of a "hole" he thought. Whilst accepting that Exhibits D and C contained evidence of scouring allowing the samples to disintegrate slightly, he took the view that it was not cutting and polishing which caused such damage to the coating, particularly when allied with evidence of staining, but accepted that it was one possibility. However, even if such were the case, he did not accept that the "hole" must have been created after the cutting and polishing partly because there was no evidence as to the depth of the "hole". Mr Edmonds said that he could not tell in the upper image of Exhibits D and C whether it showed scratch-marks leaving indentations, or raised asperities, but he thought it was a depression. He disagreed with Mr Powell’s view that surface staining following cutting and polishing implied that the staining succeeded that exercise, partly because of the embedding process to which he had referred and partly because areas of Ultimate Lady had not been cut and polished.
[138] Mr Powell was critical of Mr Edmonds’ evidence, saying that the photomicrographs appended to his brief were unable to demonstrate paint surface penetration by hot particles if they were not mounted on edge and ground down to reveal that penetration. He said the particles illustrated by Mr Edmonds were larger than those produced in the grinder simulation and, far from being hot enough to embed in paint, the particles produced in the simulation did not even char paper. Further, he said that a wind gusting up to 21 knots would not impart sufficient velocity to such particles to create "holes" on impact. He made the point that the composition of the particles in the photomicrographs had not been analysed for the presence of iron or the components of steel although the equipment used could do compositional analysis. Mr Powell commented adversely on possible image enhancement and differing contrasts which could be such that a "hole" was obscured. He said one of the images of a "hole" with a diagonal scratch across it suggested that the "hole" was later in time than the scratch. The series of scratches was likely to have arisen from cutting and polishing after 4 February, probably on 7 or 13 February. Of the upper photomicrograph, Mr Powell said there was a population of linear features which were also scratches and which passed without interruption across what Mr Edmonds described as a "hole". He said a "hole or a void cannot be scratched". Mr Powell took the view that if there were stains found on parts of Ultimate Lady which had been cut and polished they must have occurred after that exercise. He took the view that the stains were surface features not "holes" whilst any scratching across the "holes" or impressions would not be uniform in depth. Mr Powell’s view was that the lower photomicrograph produced by Mr Edmonds was of a "hole" in paint with a line passing through it which he thought preceded the development of the "hole" and was unmodified by scratching, similar to cutting and polishing. He suggested that the "hole" formed after that process.
[139] The view that the Court takes of all that evidence is that it is unhelpful in resolving any of the issues in the case. In the clearly confused situation it is not possible for the Court to determine whether the subjects of the photomicrographs were "holes" or dents, whether the marks were created before or after cutting and polishing and to what extent they may have been affected by that process. Since their composition was not analysed, the Court regards the whole of this evidence as inconclusive as to whether the subject of the photomicrographs and Exhibits B C and D were of particles which might have come from Northern Challenger.
(e) Powell Analysis
[140] After conducting the analyses discussed below and considering Mr Jennings’ evidence, Mr Powell’s overall conclusions were:
Mr Clive Jennings has specifically invoked the operation of at least five separate mechanisms or processes that have, in his view, caused mild steel particles to somehow become converted to stains having a very different composition. He has suggested that biological or microbially mediated processes involving seaweed, algae or unspecified micro-organisms; contamination by sea-salts; wind-blown dust of rare composition; non-existent brass fittings; and silica fillers, polishing compounds or abrasive discs have all conspired to transmute mild steel grinding particles into stains with compositions wholly unlike mild steel. (emphasis in original)
[141] Applying Bayes Theorem to those five aspects, Mr Powell reached the view that the "conditional probability that the analysed contaminants taken from the Ultimate Lady were caused by disc grinding of rails on the Northern Challenger is zero or very close to zero".
[142] Mr Powell inspected Ultimate Lady at Houhora on 30 March, again with Mr McElhinney. From her tender they saw a stain 1cm x 4mm topside near the port quarter, part of which Mr Powell uplifted and placed in a tamper-proof bag (0350375). He photographed sixteen brown stains on the upper surface of the port demi-hull less than 1mm in diameter. Some had small brown particles at their centres. He was unable to obtain a sample but said the stains easily rubbed off, leaving no damage. Mr McElhinney did likewise. Mr Hayter said on another occasion he wiped such stains off.
[143] From four brown stains on the starboard demi-hull, Mr Powell was able to collect a white paint-flake less than 1mm in diameter (0350376) and a brown particle (0350377).
[144] On the foredeck and adjacent superstructure there were several hundred dark brown stains with a rusty appearance, much larger and more ragged and irregular in shape by contrast with the roughly circular stains on the demi-hulls. Some could "easily be prised off with a fingernail to reveal faint discolouration underneath". These were photographed and the particles secured (no. 0350378). He said the foredeck stains were almost exclusively near the davit, anchor winches and the tender cradle and were concentrated in a swathe from port and the centre-line from the bow area across the non-skid surface around the davit to the forward extremity of the superstructure. He said they were composed of iron oxide or iron hydroxide and that there was "no evidence for pyrolysis, local fusion, or any other type of heat-induced damage to paint beneath the stains on the foredeck". The particles on the foredeck were about 1-1.5mm but stains indicated significantly larger particles. He did not accept that magnification of his photograph of foredeck stains showed many more than in his evidence.
[145] Mr Powell inspected several tiny specks on the roof of the flying bridge, forward of the base of the instrument tower with a magnifying glass. He thought they differed in shape and colour from disc grinder particles and those on the demi-hulls in that there was no staining and they were not adherent. Under magnification, paint on the instrument tower showed no use of abrasive compound or contamination by disc grinder debris or rusty stains. However, brown debris was scattered all over surfaces of the instrument tower protected from seaspray and rain. This debris was clearly visible and was about 9.9m a.s.l. Mr Powell took a sample (no.0350379) and another of fine brown debris near the foot of the spiral staircase (no.0350380).
[146] On 31 March Mr Powell sent the samples for SEM EDS analysis by Dr James. He asked her to provide "elemental characterisation of single particles" in the samples and "elemental characterisation of the materials" in the last two samples collected (no.0350379 and no.0350380). Dr James made the point that the peaks in the spectragraphs which she produced were indicative or representative but the proportions were speculative given that the samples were not taken from a polished surface.
[147] Dr James’ analysis and Mr Powell’s comments showed:
[a] Sample 0350375 from the port topside was predominantly carbon and oxygen with adherent matter, mainly sodium chloride but with particles containing aluminium, silicon, magnesium, calcium, potassium, titanium and iron. In cross-examination, Dr James accepted that she tested three sites on sample 0350375 and produced three spectra from them with the small peak for titanium in one suggesting polymer paint which does not contain titanium. Mr Powell’s analysis was that because of those characteristics and the lack of elements indicating fillers or pigments the stain might have been caused by resin or varnish. He concluded:
The chemical characteristics of the large brown stain, notably the preponderance of carbon and oxygen and the paucity of iron, precluded any possibility that it might in some way have been caused by disc grinder debris generated by cutting steel.
[b] Sample 0350376, the paint flake from the starboard demi-hull, showed the presence of titanium with carbon, oxygen, aluminium, silicon and sodium chloride. Mr Powell accepted that, in agreement with Dr Miller, the titanium dioxide in this sample could have resulted from several microns of paint being uplifted with the sample but he said the onus was on Dr Miller to demonstrate that conclusion as it would otherwise confound the analytical result. He said the silicon in this sample, in combination with aluminium, magnesium, oxygen and hydrogen (the last of which could not be analysed) was, he thought, a mineral talc widely employed in white paint. He said there was no indication it was due to surface contamination. There was less than 1% by weight of silicon in the guard-rail but he accepted that some cut and polish compounds contain silicon and there was also silicon in the volcanic ash sample from the instrument tower. He said that there was aluminium in, rather than on, the sample. Alumino-silicates form a proportion of New Zealand wind-blown dust. The volcanic ash from the instrument tower showed aluminium, attributable to plagioclase feldspar.
[c] Sample 0350377 also from the starboard demi-hull showed sulphur, calcium, sodium, chlorine and silicon and magnesium. His view was that all the elements might have been derived from seawater apart from iron, silicon and oxygen but that titanium from paint was absent. He said:
I cannot exclude the possibility that the small particle taken from the demi-hull could have been generated by disc grinding mild steel.
[d] Sample 0350378, from the foredeck was predominantly iron and oxygen but also showed titanium. Mr Powell added minor amounts of sodium, magnesium, aluminium, silicon, sulphur, chlorine, calcium and manganese. He was unable to account for the presence of the minor elements but initially thought the titanium source was probably paint. He said it was dissimilar to the starboard demi-hull stain (0350377) but similar to Mr Clive Jennings’ list of contaminants in Annex 2. He accepted that the demi-hull and foredeck particles which he obtained were both high in iron oxide and both showed proportions of sodium, chlorine, sulphur and calcium higher in the demi-hull particle than the foredeck particle. His reasoning that the samples were dissimilar was not just because of the titanium peak in the foredeck particle – about which he changed his mind between his initial investigation and the hearing - but also because it was one of a population with that composition as distinct from other materials analysed from Ultimate Lady He accepted that his initial report thought there was consistency in chemical composition between the foredeck and demi-hull particles and Northern Challenger’s guard-rail. He said the iron oxide and hydroxide particles on the forward areas of Ultimate Lady were "consistent with an origin as particles of a ferrous alloy either iron or a low alloy steel" and also concluded that "the chemical composition of the particles recovered from the foredeck and demi-hull of the Ultimate Lady is consistent with the proposition that they represent angle grinder debris" but it is "also consistent with the proposition that they represent ferrous alloys particles generated in another way". Possible sources included "filing, drilling, shot-blasting, milling, turning or gas-cutting iron or a low alloy steel".
[e] Sample 0350379, fine brown debris from the instrument tower, showed uniform distribution of silicon, aluminium, oxygen, calcium, magnesium, sodium, chlorine, sulphur, potassium, titanium and iron. Dr James scanned small areas as the material was too densely packed to scan particles. Sample 0350380, loose mineral matter from near the foot of the staircase, contained similar elemental distribution but analysis of individual particles was possible and Mr Powell’s analysis showed the material was largely silicate and corresponded to plagioclase feldspar with some silicone dioxide corresponding to quartz. That lead him to conclude that it was almost certainly geological in origin and could not be disc grinder debris. He inferred the samples were volcanic ash and concluded that the composition was similar to published material on the composition of White Island volcanic eruption product. Though not then knowing of the crew’s evidence that "Ultimate Lady" always cruised to weather of White Island, he took the view that volcanic ash which he sampled on 30 March may have been deposited on "Ultimate Lady" on 5 February and lain there undisturbed since, particularly because the material was only in areas protected from rain and spray. He said that volcanic ash is distributed widely and could have covered the entire vessel including the instrument tower. He said that a significant portion, up to tens of weight per cent, of dust particles in New Zealand are of volcanic origin. He accepted that the three spectra of sample 0350380 collected on 30 March from the staircase were very different but said the explanation was that Dr James’ analysis was qualitative not quantitative and her inquiry noted what elements were present to within a few, perhaps 5, weight per cent of the amount of material present but a fully quantitative analysis would give an indication to the nearest 1/10th of a weight per cent.
[148] Mr Powell noted that the foredeck particles at about 1mm x 1.5mm were larger than the .2mm particles arising from the disc grinder simulation. His view was that different sizes and shapes, chemical compositions and distributions meant that the small demi-hull stains and the larger foredeck stains were each discrete populations of contaminants and the material from the instrument tower was, because of its different composition and character, a third category of contaminant. He pointed to what he said was a lack of grinder debris or its former presence on the instrument tower notwithstanding that it had not been cut and polished. That, plus its height above sea-level, led him to conclude that the instrument tower had never been contaminated with grinder debris or ferrous alloys.
[149] Mr Powell briefly reinspected Ultimate Lady on 11 July 2000. She was then hauled out at West Harbour. He found small brown stains in the tender’s bilge and elsewhere which he was able to rub off as they did not penetrate the substrate. He thought they were similar to the foredeck stains though dissimilar to the demi-hull stains earlier seen. He said that spotting on the port demi-hull was much more extensive in July than in March. None was analysed.
[150] He inspected a number of small brown stains on a rubbish bin by the starboard bulkhead in the cockpit and identified them as volcanic dust. Mr Powell’s assistant was interested in these as the lead author of two scientific papers in press on North Island Volcanic Ash Falls. Mr Simon Jennings installed the rubbish bin on or after 13 February 2000 so the brown stains Mr Powell found must, he said, have been unrelated to "bleeding" of stains from any ferrous particles embedded on 4 February.
[151] In the report he produced in September 2000 on that inspection he said that Ultimate Lady’s paintwork was "extensively stained and maculated", there were "large stains composed of iron oxide and/or iron hydroxide" mainly on the foredeck and tender, and the distribution of foredeck stains "suggest a contaminant source on or above the foredeck or forward of the vessel". He again asserted that the foredeck stains were caused by larger particles than those generated by the angle grinder and that those stains were superficial and unrelated to embedded particles. He also said that "there were many more small brown stains present on Ultimate Lady at the time of the examination of 11 July 2000 than on the examination of 30 March 2000".
[152] Mr Powell commented at considerable length on Mr Clive Jennings’ evidence and that of Dr Miller. Whilst acknowledging their experience, he disagreed with many of their conclusions. For instance:
[a] he was critical of Mr Jennings’ conclusion that the paucity of rust stains resulted from cutting and polishing, making the point that not all the vessel had been cut and polished and suggesting that Mr Jennings overlooked the possibility that there had been few stains on the vessel beforehand;
[b] he suggested that Mr Jennings’ conclusion about the presence of tramp elements in the guard-rail steel was unsubstantiable "because the only method of analysis applicable to the stains on the foredeck of the Ultimate Lady and elsewhere … are incapable of detecting the minor quantities of elements in these very small samples";
[c] he disagreed with the suggestion that contamination from seaweed or algae was likely from sites above water line and said algae could not be a source of sulphur or phosphorus in the foredeck stains. He discounted Mr Jennings’ conclusions that sulphur and phosphorus from seaweed and algae were normal in seawater corrosion, suggesting that the common source of phosphorus in such situations is steel primer paint;
[d] he said the results for sodium and chlorine were at odds with the 36 parts sodium 64 parts chlorine constant in seawater, thus eliminating seawater as the source of those elements, especially in samples 2, 3, 5 and 7 and Mr Hunter’s samples 1 and 3 where sodium was higher than chlorine. Further, the presence of sodium suggested that the samples analysed could not emanate from the mild steel of the guard-rails which contain no sodium. Further again, Mr Powell said the ratios of potassium, calcium and magnesium in Mr Jennings’ analysis differed from the ratios of those elements in seawater, again suggesting that seawater was not the main source of those elements.
[e] he took issue with Mr Jennings’ suggestion that aluminium was the main constituent of wind-blown dust and that titanium oxide in paint was the likely source of titanium since it is an insoluble whitener and Mr Jennings’ analysis could only analyse the surface of the sample. He suggested the titanium result was "far more likely to reflect the composition of the material that has caused the stains". In reaching that view, Mr Powell changed his earlier conclusion since his analysis showed material detached from its substrate contained titanium;
[f] Mr Powell found the joint presence of copper and zinc in one sample significant. He said there were no brass fittings on Northern Challenger’s top afterdeck rails when he examined them nor were there any brazed joints;
[g] he said grey and malleable cast irons contain silicon, as do arc weld slag and weld spatter. He found silicon in his foredeck samples and he viewed Mr Jennings and Dr Miller’s findings as to silicon suspect for the same reasons as for titanium. Given that the entire vessel had not been cut and polished, Mr Powell discounted silicon polish as a source and he said the loss of silicon carbide from grinding discs is low, despite Mr Jennings’ contrary view. Mild steel having a modest silicon content, Mr Powell suggested that Mr Jennings’ analysis did not support the finding that his samples came from the guard rails;
[h] manganese, Mr Powell said, was about the seventh most abundant element and the low levels found by Mr Jennings could not be accounted for by dilution by elements in paint as that would require a "28-fold contamination by white paint components".
[153] Mr Powell then turned to Mr Jennings’ analysis of Northern Challenger’s guard-rail steel sample and his conclusion of consistency, principally through the manganese results.
[154] Mr Powell said that manganese is present in all mild steel and almost all low-alloy steels included in fishing vessels, cars and other uses, so that manganese would almost certainly be present if the Ultimate Lady contamination came from the Northern Challenger guard-rails. Manganese was equally likely to be present if the contamination came from any other ferrous alloy source. Similarities in manganese content were therefore, in Mr Powell’s view, of little significance.
[155] Turning to other plausible sources of Ultimate Lady’s contamination, Mr Powell said that most of the elements in Mr Jennings’ analyses are present in mild steel welding rod flux and weld spatter, the latter being an admixture of two immiscible components in roughly spherical form. He said there was evidence of welding on Ultimate Lady’s davit and the copper and zinc in Mr Jennings’ analysis could have come from copper-bearing alloys or brasses in the davit hydraulics, the nickel could have come from stainless steel tubing in the hydraulic system, and the molybdenum from molybdenum disulphide grease, common in marine use.
[156] Mr Powell’s conclusion was that "there exist substantial differences in the composition of stains and guard-rail steel and because there is a common industrial contaminant, arc weld spatter, that corresponds closely in composition to the foredeck stains," the latter rather than the former was the likely source of the Ultimate Lady contamination.
[157] Mr Powell said the ratios in some of Mr Jennings’ samples were asymptomatic particularly that between sodium and chlorine. He was extensively cross-examined on his view that seawater always contains 36 parts sodium to 64 parts chlorine. Professor Strahler’s work "The Earth Sciences" ((2nd ed) pp 192-193 and 373-378) was put to him, particularly the passage dealing with the principal constituents of seawater reading "chemical analysis of seawater shows that chlorine makes up 55% of the total weight of all matter dissolved in seawater; sodium is next with 31%" and the table of the major salts in seawater showing sodium at 55% and 30.6% of total salts respectively.
[158] Professor Strahler acknowledged that his table of the earth’s most abundant elements (op cit at 243) was derived from Brian Mason "Principles of Geochemistry" (3rd ed chap 7). That work also deals with the composition of seawater. The major dissolved constituents are listed at 55.05% chlorine and 30.61% sodium. Mr Powell disagreed with the passage in Dr Mason’s book dealing with the composition of seawater and reading "the figure for the major constituents … are referred to a chlorinity of 19‰ [parts per thousand] which is taken as the standard concentration of seawater". He said small amounts of chlorine are lost under laboratory conditions but that the proportions of sodium to chlorine will remain the same following evaporation of seaspray on a vessel’s hull.
Law
[159] While counsel agreed that the Court’s decision on the facts in this case was likely to be determinative, decisions on the legal issues may reduce the scope of factual discussion required.
(a) Admiralty Act 1973 s 4 (1)(d)
[160] The Admiralty Act 1973 s 4(1)(d) gives the Court Admiralty jurisdiction in respect of "any claim for damages done by a ship".
[161] As was observed in this Court’s judgment on Northern Challenger’s application to set aside the Writ of Arrest (paras 26 and 27 pp 10-12), most texts on Admiralty or maritime law include lists of cases deciding whether particular forms of damage were or were not "done by a ship" (Meeson Admiralty Jurisdiction and Practice 2nd ed (2000) paras 2-053 – 2-047 pp37-39, Brice Maritime Law of Salvage 3rd ed (1999) para 2-06 – 2-08 p124, Galt et al Marsden on Collisions at Sea 12th ed (1998) para 2-24 p27, Jackson Enforcement of Maritime Claims 3rd ed (2000) para 2.142 p53 (which omits the extension of the test to management of a ship) Davies & Dickey Shipping Law 2nd ed (1995) pp107-108, White Australian Maritime Law 2nd ed (2000) para 2.4.4 pp38-39, Toh Admiralty Law & Practice (1998) pp46-50, 1(1) Hals Laws 4th ed reissue para 320 p434), Tetley Maritime Liens and Claims 2nd ed (1998) pp 401-403, 731-732).
[162] Initially (The Vera Cruz (No.2) (1884) 9 PD 96) the phrase was limited to instances where the ship was the "noxious instrument" or those in charge of her caused direct physical damage to persons or property. As an example, in Currie v M’Knight [1897] AC 97 a ship was damaged after the crew on another vessel cut its warps and set it adrift. It was held that no lien could attach to a ship for the damage done by her crew to another vessel because (per Lord Halsbury LC at 101) the ship itself had to be the "instrument of mischief" and that in order to establish the liability of the ship "some act of navigation of the ship itself should either mediately or immediately be the cause of the damage". Lord Watson held (at 107) that the damage was caused by the crew of the ship which cut the cable and was "not done in the course of her navigation but for the purpose of removing an obstacle."
[163] However, the phrase was extended over time to the extent that in The "Eschersheim" [1976] 2 Ll.LR 1 it was held that a deliberate beaching by a salvage tug of a ship damaged in a collision with subsequent loss arising from damage to cargo and pollution damage remained damage done by the tug. Lord Diplock held (at 8):
… The figurative phrase "damage done by a ship" is a term of art in maritime law whose meaning is well settled by authority (The Vera Cruz (No. 2) (1884) 9 P.D. 96; Currie v. M’Knight [1897] A.C. 97.) To fall within the phrase not only must the damage be the direct result or natural consequence of something done by those engaged in the navigation of the ship but the ship itself must be the actual instrument by which the damage was done. The commonest case is that of collision, which is specifically mentioned in the Convention: but physical contact between the ship and whatever object sustains the damage is not essential – a ship may negligently cause a wash by which some other vessel or some property on shore is damaged.
In the instant case the act of casting off the Erkowit in such a way as to beach her upon an exposed shore was something done by those engaged in the navigation of the Rotesand, as a result of which the Erkowit and her cargo were left exposed to the risk of being damaged by wind and wave if the weather worsened before she could be removed to a more sheltered position.
I do not understand it to be claimed that the actual beaching caused any physical damage to ship or cargo, but for the purposes of this appeal it must be assumed that the chain of causation is unbroken between the beaching of the Erkowit and her subsequent breaking-up by wind and wave. Had the damage been caused by the beaching, there could in my view have been no question but that the Rotesand could properly be regarded as the actual instrument by which that damage was done. Although for my part I find this a borderline case, I do not think that the intervening failure of the appellants to take steps to avert the risk of damage, which forms the subject of the alternative grounds of negligence, prevents the Rotesand from remaining the actual instrument by which the damage subsequent to the beaching was done.
[164] The phrase has since been further extended to the point where in Berliner Bank AG v C.Czarnikow Sugar Ltd (The "Rama") [1996] Ll.LR 281, 293, 295 Clarke J held:
… the cases show that to be ‘damage done by a ship’ and thus to qualify as giving rise to a maritime lien three criteria must be satisfied: 1. The damage must be caused by something done by those engaged in the navigation or management of the ship in a physical sense; 2. The ship must be the actual or noxious instrument by which the damage is done; and 3. The damage must be sustained by a person or property external to the ship. …
… the physical navigation or management of the vessel must cause the alleged loss or damage and the vessel or part of her must in a physical sense be … the active cause, the noxious instrument or the instrument of mischief.
[165] In Nagrint v The Ship "Regis" formerly The Ship "Rodney" (1939) 61 CLR 688 striking out was refused of a claim for personal injury brought by a passenger following capsize, Dixon J holding, after a careful review of authority, that:
… when the injury arises from some defect in the condition of the ship considered as premises or as a structure upon which the person injured is standing, walking or moving, the ship is treated as no more than a potential danger of a passive kind, a danger to the user, whose use is the active cause of the injury. But where the injury is the result of the management or navigation of the ship as a moving object or of the working of the gear or of some other operation, then the damage is to be regarded as done by the ship as an active agent or as the "noxious instrument".
[166] In extending the phrase "damage done by a ship" to the "working of the gear or of some other operation", Nagrint appears to extend the operation of the phrase (to say nothing of the lack of externality of the damage as per the third requirement in The "Rama") but was not unprecedented. In Union Steamship Co of NZ Ltd v Ferguson (1969) 119 CLR 191, a claim for damages for personal injury by a seaman falling into a hold caused by the negligent operation by a crew member of a winch moving a hatch-cover was held to be "damage done by a ship" (contra, for England: The "Theta" [1894] P 280). And in Fournier v The Ship "Margaret Z" [1999] 3 NZLR 111, Fisher J held that there was no requirement that the damage had to be external to the ship. The relevant portions of the learned Judge’s findings read:
It seems possible to extract from the decisions four core requirements for a damage maritime lien. First, some physical part of the ship or its gear must play an essential part in the chain of events which leads to the damage. The "ship" must be the "instrument" by which the damage is done (… Lord Diplock in The Escherscheim at p 8; see further Currie v M’Knight at pp 101, 108). Damage caused by human activity on a ship unaccompanied by the use of some part of the ship or its gear is therefore insufficient. …
Secondly, the part played by the ship or its gear must be a significant and active one. It is trite to say that accidents in or on ships could not occur but for the existence of the ship. The ship is one of the conditions which makes the accident possible. In that theoretical sense the ship forms an essential part of the chain of causation. However, the mere fact that the injury could not have occurred without the environment provided by the ship is not enough. The part played by the ship or its gear must go beyond the provision of a passive environment which made it possible for the accident to occur. …
Thirdly, human conduct must also play an essential part. It is the human contribution to the accident which gives rise to the liability, not the association of the ship with the damage per se. Ironically, damage caused by the state of the ship alone does not amount to "damage done by a ship" for present purposes.
Fourthly, it seems that the only form of human conduct which qualifies is the crew’s active operation of the ship or its gear. The precise scope of the active operation is open to argument. On the one hand it has been suggested that the lien is limited to damage which is "the direct result or natural consequence of something done by those engaged in the navigation of the ship" (emphasis added) (The Escherscheim at p 926). But the breadth which would have to be given to the word "navigation" in this context seems to rob it of much of its utility. Hoisting equipment by crane (The Minerva), moving hatch covers by winch (Union Steamship Co), and abandoning salvaged vessels (The Minerva) do not amount to "navigation" in any usual sense of that word. No doubt for that reason the activity has more recently been described as "management or navigation" (per Dixon J in The "Regis" at p 700 and Clark J [sic.] in The Rama at p 293). Unfortunately in this context "management" is an even more opaque expression. Evidently it does not extend to negligently leaving the vessel in a dangerous condition which is later encountered by the plaintiff.
[167] Further, highlighting one of the critical issues in this case, in Canada where the phrase "damage by a ship" has been very broadly interpreted (Tetley op.cit. p 412) it was held in Newterm Ltd v. Mys Budyonnogo and Murmanskrybprom (The "Mys Budyonnogo") [1992] 3 FC 255, that a claim for "damage caused by a ship" lay where, whilst the crew of the defendant ship were spray-painting her, paint drifted onto a nearby dockyard damaging 400 cars stored there. Though the Canadian Federal Court Act s 22(1)(d) conferred maritime jurisdiction on the Court in relation to "any claim or damage or for loss of life or for personal injury caused by a ship either in collision or otherwise" by contrast with an earlier statutory provision in identical terms to our s 4(1)(d), Reed J in the Trial Division of the Federal Court held (at 266) that the difference in wording was immaterial and continued (ibid):
… one should adopt a functional or operational test in determining when damage can be said to be "caused by a ship" for maritime law purposes. When the ship is afloat, [if?] the damage is the result of actions of the crew acting under directions of its master and those actions are integrally related to the operation of the ship, then the damage should be classified as "damage caused by a ship".
(In The "Mys Budyonnogo" the learned Judge also referred (at 263) to Outhouse, Delma C v Str.Thorshavn [1935] Ex CR 120 where it appears that damage caused by oil and smoke escaping from a ship amounted to damage caused by the ship. The case might also have been of assistance but as the report is unavailable the Court does no more than note the authority. See also Tetley ibid).
[168] Responsibility for the active operation of the ship being important in this case, it is pertinent to note the following passage from The "Ripon City" [1897] P 226, 245:
… the persons interested in a vessel in placing her in the possession and control of other persons, to be used or employed in the ordinary way, must contemplate that claims may arise against her in respect of rights given by the maritime law, and may be taken to have authorised those persons to subject the vessel to those claims. According to the principle I have stated, claims arising in cases like The Druid (1 Wm Rob 391), The Orient (LR 3 PC 696), and The Ida (Lush 6) cannot be enforced against the vessel, because they arise out of unlawful acts done without any authority and beyond anything which ought to be contemplated in the ordinary use of the vessel. And in cases like The Turgot (11 PD 21) and The Castlegate [1893] AC 38) the persons dealing with the charterers have not been entitled to treat, nor have they treated, the vessel as owned by the charterers, but have dealt with them on their credit, and not upon the faith of having the security of the vessel. They have not, in fact, relied on any presumed authority derived from the owners. But in claims arising in cases like The Ticonderoga (Sw 215), The Ruby Queen (Lush 266), and The Lemington (2 Asp MLC 475) the claims arose from acts occurring in the ordinary employment of the vessel in the manner authorized.
[169] Alternative ways of putting the point can be found in The "Parlement Belge" (1878) 5 PD 197, 218 where the Court of Appeal held that a ship belonging to a foreign sovereign but carrying merchandise and passengers was not liable to be seized in rem following collision. The Court held (218):
Though the ship has been in collision and has caused injury by reason of the negligence or want of skill of those in charge of her, yet she cannot be made the means of compensation if those in charge of her were not the servants of her then owner, as if she was in charge of a compulsory pilot. This is conclusive to shew that the liability to compensate must be fixed not merely on the property but also on the owner through the property.
[170] The House of Lords adopted that passage in Morgan v Castlegate Steamship Co Ltd, The "Castlegate" [1893] AC 38, 52 and in the Owners of SS "Utopia" v The Owners and Master of SS "Primula", The "Utopia" [1893] AC 492. In the latter damage caused by collision with a wreck which the harbour authority had agreed to mark was held not to be damage by the wreck, the House of Lords observing (at 499):
No doubt at the time of action brought, a ship may be made liable in an action in rem, though its then owners are not, because, by reason of the negligence of the owners, or their servants, causing a collision, a maritime lien on their vessel may have been established, and that lien binds the vessel in the hands of subsequent owners. But the foundation of the lien is the negligence of the owners or their servants at the time of the collision, and if that be not proved no lien comes into existence, and the ship is no more liable than any other property which the owners at the time of collision may have possessed.
[171] When those authorities are applied to this case, it appears that, to have a claim in rem under s 4(1)(d), Ultimate Lady must demonstrate that the damage which she suffered was a direct result or natural consequence of actions done as part of the significant or active physical navigation operations or management of Northern Challenger or her gear by her crew or those lawfully in possession or control of her. As put by the learned author of Davies & Dickey (at 107) "if at the time of the damage there was no negligent or wrongful act for which the owner is liable, there can be no lien". The ship’s owner must be liable either directly or vicariously (Davies v Dickey (ibid.)) so if the damage to Ultimate Lady resulted from actions of an independent contractor for whom the owner is not directly or vicariously liable, the damage is not "damage done by a ship".
(b) Admiralty Act 1973 s 4(1)(e), s 5(2)(b)
[172] The Admiralty Act 1973 ss 4(1)(e) and 5(2)(b) gives the Court Admiralty jurisdiction in respect of "damage received by a ship".
[173] In considering whether the contamination of Ultimate Lady was "damage received by a ship" it is first pertinent to note that the phrase is straightforward and includes damage received by a ship through something other than another ship and even extends to such things as a product liability claim against a manufacturer whose defective equipment causes damage to a ship. (Hindustan Steam Shipping Co Ltd v Siemens Bros & Co. [1955] Ll LR 167).
[174] The second matter is to note that the effect of s 5(2)(b) is that no claim in rem can arise against Northern Challenger under this head unless the claim arises
[a] in connection with a ship; and
[b] where the person who would be liable in an action in personam was the owner or charterer "or in possession or in control of the ship" when the cause of action arose.
[175] It follows that in this case no claim in rem arises against Northern Challenger under ss 4(1)(b) and 5 (2)(b) unless Ultimate Lady demonstrates that Mr Fonua, who is obviously the person who would be liable in an action in personam was "in possession or control" of Northern Challenger at the time of the grinding.
(c) Rule in Rylands v Fletcher
[176] Ultimate Lady’s pleading under this cause of action was sparse. After repeating the factual allegations it merely said that she was "entitled to damages pursuant to the Rule in Rylands v Fletcher".
[177] Northern Challenger’s response was a general denial. However, in closing, it was submitted that this cause of action should be dismissed on the ground that the Rule in Rylands v Fletcher applies only to land-based claims.
[178] Northern Challenger’s position is strengthened by the fact that the only mention of the Rule in Rylands v Fletcher in any of the maritime and Admiralty texts (Marsden op.cit. para 10-101 p 371) is in a discussion on Esso Petroleum Co Ltd v Southport Corporation [1956] AC 218 concerning oil pollution
[179] In the view this Court takes of the matter, if no case has thought it appropriate to apply the Rule in Rylands v Fletcher in Admiralty and maritime cases in the 137 years since it was decided, the facts of this case are not such as to warrant any change in the law. More importantly, in Rylands v Fletcher in the Court of Exchequer Chamber ((1866) LR 1 Ex 265, 279-280) Blackburn J stated the rule in the following terms:
… the person who for his own purposes brings on his land and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape.
and that passage was expressly approved in the House of Lords subject to the qualification that the use of the land must be "non-natural" ((1868 LR 3 HL 330, 339). In recent years the continued existence or otherwise of the rule has been the subject of considerable debate in New Zealand (Autex Industries Ltd v Auckland City Council [2000] NZAR 324), Australia (Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520) and in the United Kingdom (Cambridge Water Co Ltd v Eastern Counties Leather PLC [1994] 2 AC 264). In Hamilton v Papakura District Council [2000] 1 NZLR 265, 282-284 The Court of Appeal held that the Rule in Rylands v Fletcher is part of nuisance requiring foreseeability of harm as a prerequisite to recovery. Importantly, there is no suggestion in any of the cases mentioned that it applies to escape of damaging materials such as steel grindings from a ship. Still less, is there any suggestion that grinding rusted rails and stanchions on a ship is a non-natural use.
[180] In any case, a further hurdle facing Ultimate Lady is that the authorities make it clear that a defendant is not liable under the Rule in Rylands v Fletcher if the damage is caused by a deliberate action by a person for whom the defendant is not legally responsible.
[181] The Court accordingly declines to accept that the claim under the Rule in Rylands v Fletcher lies, either generally in Admiralty and maritime law or in the factual circumstances of this case.
(d) Nuisance
[182] Again, Ultimate Lady’s pleading was spare. It simply asserted that the "damage to the Ultimate Lady constitutes a nuisance and it is entitled to damages", Northern Challenger generally denying the claim.
[183] Again, other than in relation to oil pollution or public nuisance through obstruction (Marsden op.cit. para 10-98 p 370, Meeson op.cit. para 8-049 p 256; White op.cit. para 8.30 p 229) no case or text suggests that nuisance is available as a cause of action in Admiralty. The reason is, as the House of Lords emphasised in Hunter v Canary Wharf Ltd [1997] AC 655, 692-693, private nuisance is a tort against land not a personal wrong and the action can only be brought by a person with a sufficient interest in the land affected by the nuisance to bring the claim. It is sufficient to dispose of this cause of action to cite from the headnote where it is recorded (at 656) that "it was established law that an action in private nuisance was brought in respect of acts directed against the plaintiff’s enjoyment of his rights over the land so that generally only a person with an interest in the land could sue" (see also Smillie in Todd et al The Law of Torts in New Zealand 3rd ed (2001) para 9.1 and 9.6 p 491, 508).
[184] Ultimate Lady’s claim in nuisance accordingly cannot succeed.
(e) Claim in Contract and pursuant to Contracts (Privity) Act 1982
[185] Ultimate Lady pleaded that Mr Bracken - not Northern Challenger - breached the terms and conditions of his Temporary Berth Licence and that she was entitled to enforce those obligations against Northern Challenger, not him, pursuant to the Contracts (Privity) Act 1982. In particular, Ultimate Lady pleaded that Mr Bracken failed to keep Northern Challenger in such a state as to prevent her becoming a nuisance or "causing annoyance or damage" and to control her so as not to cause Ultimate Lady loss. There was a further allegation that Mr Bracken was bound to insure Northern Challenger in accordance with the berth licence but that point was not pursued at trial. Northern Challenger generally denied the claim.
[186] Mr Cave put in evidence the Temporary Berth Licence signed by Mr Bracken pursuant to which Northern Challenger was berthed at Refit Wharf. Defining the "marina" as meaning the "wharf berthage and associated accessways" cl 6.1 read:
The Temporary Licensee shall at all times keep the vessel on the berth in such order, condition and state of repair as to prevent her from becoming a nuisance or causing annoyance or damage to any other person or property and will steer, manage and control the vessel and the property thereon so as not to damage or cause to be damaged any part of the marina or any other vessel thereon.
[187] "Benefit" is defined by the Contracts (Privity) Act 1982 s 2 as including any advantage, immunity, limitation or qualification of any contractual obligation to which a non-party may be subject or a right to which they may be entitled. "Beneficiary" is defined as the person on whom a s 4 promise confers a benefit. Section 4 provides:
4. Deeds or contracts for the benefit of third parties –
Where a promise contained in a deed or contract confers, or purports to confer, a benefit on a person, designated by name, description, or reference to a class, who is not a party to the deed or contract (whether or not the person is in existence at the time when the deed or contract is made), the promisor shall be under an obligation, enforceable at the suit of that person, to perform that promise:
Provided that this section shall not apply to a promise which, on the proper construction of the deed or contract, is not intended to create, in respect of the benefit, an obligation enforceable at the suit of that person. …
[188] There have been few cases decided in the 19 years since the statute was enacted, partly because such decisions as there are have restricted its scope. In Field v Fitton [1988] 1 NZLR 482, 493-494, the Court of Appeal held that where one party to a contract was described as "A or nominee" the statute did not permit the nominee to enforce the contract following nomination because that person was not within the designation as required by s 4. The decision was followed in Karangahape Road International Village Ltd v Holloway [1989] 1 NZLR 83 and, if anything, was given additional force in Cross v Aurora Group Ltd (1989) 4 NZCLC 64,909. However, the contract must promise a benefit, that is to say that, expressly or impliedly, it must demonstrate an intention to confer a benefit on the third party (Coxhead v Newman’s Tours Ltd (1993) 6 TCLR 1,10).
[189] In Rattrays Wholesale Ltd v Meredyth-Young & A’Court Ltd[1997] 2 NZLR 363 Tipping J distinguished those cases in what, with respect, this Court regards as a cogent argument observing (at 382-383):
The contract must therefore sufficiently identify the third party on whom the benefit is intended to be conferred. That identification is permitted in one of three ways; by name, by description, and by reference to a class. The purpose is to enable the promisor to know with sufficient certainty who can claim the benefit of the promise. Because that person is not a party to the contract, and may not yet be in existence, he/she must be identifiable from the terms of the contract so that the promisor can say with reasonably certainty whether a person subsequently claiming to be the third party promisee is in fact the person whom the contract intended to benefit.
On that basis the question is whether "X's nominee" or "the lessor's nominee" is a person designated by description. In my judgment a person so "described" is a person designated by description for the purposes of s 4. Conceptually there can be no doubt whether a person claiming to qualify does in fact answer to the description. X or the lessor has the power to nominate only one person to take the benefit of the contract. That person, once nominated, is identifiable with certainty. The fact that until nominated the person could be anyone at all does not, in my view, alter the fact that the nominee is designated as the person intended to benefit from the contract and such designation is by description. The identity of the person is described with precision in the contract.
The criterion which the third party promisee must fulfil is specified exactly in the contract. … The fact that the person may not exist at the date of the contract is not a problem. Nor is the fact that there may never be a nomination. In that event liability will remain with the person holding the power of nomination.
For these reasons I respectfully regard the obiter approach of the Court of Appeal in Field v Fitton as unsound and unduly restrictive.
[190] Although for present purposes it can be assumed that Ultimate Lady is seeking an advantage under the Temporary Berth Licence and accordingly is seeking a "benefit", the difficulty facing this claim is that, to succeed, Ultimate Lady must demonstrate that she is entitled to the benefit of the Temporary Berth Licence because a promise contained in the contract confers or purports to confer a benefit on her "designated by name description or reference to a class". The claim contains no particulars as to how she might qualify.
[191] The Temporary Berth Licence is in conventional contractual form. Its description of the parties does not include any additions such as "or nominee" or "agent" although the definitions of "temporary licensee" and "company" are extended to include successors and agents of the licensee and successors assigns servants or agents of Refit. There was no suggestion that Refit has assigned the benefit of any contractual provision to Ultimate Lady and she was clearly never its successor servant or agent. Mr Bracken, not Northern Challenger, was the other party to the contract. Mr Bracken has not personally filed an appearance in this proceeding so, even accepting the view of the personification theory discussed by Lord Steyn in Republic of India v India Steamship Co Ltd (No.2) [1998] AC 878, 906-910, it is difficult to see Northern Challenger as being Mr Bracken’s successor or agent so therefore, it would appear to follow that no claim can lie against Northern Challenger under this cause of action.
[192] However, even assuming that in some way Northern Challenger could conceptually be liable under Mr Bracken’s contract under the Contracts (Privity) Act 1982, cl 6 of the Temporary Berth Licence obliged Mr Bracken to prevent Northern Challenger becoming a nuisance or causing damage "to any other person or property" and to control her "so as not to damage … any other vessel" in the marina. But without a designation, that is to say some contractual identification of the third party on whom the benefit is conferred, those provisions do not assist Ultimate Lady whether by name, by description or by reference to a class. On the face of the Temporary Berth Licence, there is nothing to identify to Mr Bracken the identity of the other persons by whom the contract might be enforced. In this Court’s view it is insufficient to suggest that the contract was enforceable by "any other person" or "any other vessel" in terms of cl 6.1 unless the contract also designated the beneficiary by name, description or class reference.
[193] Therefore, whether under the line of authority represented by Field, Karangahape Road International Village and Cross, or pursuant to Rattrays Wholesale, in this Court’s view, even setting aside the other difficulties discussed, the Temporary Berth Licence confers no benefit on Ultimate Lady in the sense of her being "designated by name, description or reference to a class". Ultimate Lady’s cause of action under the Temporary Berth Licence and the Contracts (Privity) Act 1982 accordingly also fails.
(f) Positive Defences:
(i) Form of Notice of Proceeding in rem
[194] It remains to deal with the positive defences raised by Northern Challenger and the procedure applying to cases such as this.
[195] Northern Challenger pleaded that because the Notice of Proceeding In Rem only pleaded negligence it was in breach of R 769 or, alternatively, only the negligence claim could be adjudicated on.
[196] In the Court’s view, largely for the reasons appearing in its judgment of 10 August 2000 (paras 21-23 pp 9-10), there is nothing in that pleading. All the Rules require at the commencement of an Admiralty claim in rem leading to an arrest is the filing of a Notice of Proceeding endorsed "with a concise statement" of the claim, the relief sought and any amount claimed (R 769(2)). Indeed, R 769(3) expressly says that the "concise statement" is "not a statement of claim within the meaning of these Rules" and R 774 expressly requires actions to be "heard with pleadings" and obliges plaintiffs to "file in court and serve a full and explicit statement of claim on each defendant" either when the Notice of Proceeding is served on the defendant or at any time after service but within 14 days of the defendant entering an appearance unless leave to the contrary is given. A similar procedure is required by R 774(3) if Preliminary Acts are required.
[197] Here, Ultimate Lady’s Notice of Proceeding In Rem contained a concise statement of the claim which complied with R 769(2). Thereafter, as R 774 sets out, pleadings in Admiralty can be amended as with any other pleading, provided of course that there remains a sufficient pleaded justification for the continuation of the arrest. Although the decision was delivered prior to promulgation of the Admiralty Rules as Part XIV of the High Court Rules, the position of pleadings in in rem cases was discussed by McGechan J in Baltic Shipping Co v Pegasus Lines S A [1996] 3 NZLR 641, 649-650 where the learned Judge observed that "there is no reason why the statement of claim should not be used as the primary basis for jurisdictional decision" in such cases. The Court accordingly declines to accept that defence.
(ii) Volenti non fit injuria and Contributory Negligence
[198] Northern Challenger pleaded that Ultimate Lady had voluntarily assumed the risk of damage arising from negligence and accordingly her claim was barred by the operation of the maxim volenti non fit injuria. Alternatively, Northern Challenger pleaded that Ultimate Lady was contributorily negligent. Factually, the former was pleaded on the basis that Ultimate Lady accepted the risk of damage by berthing at Refit Wharf other than for maintenance purposes when she knew the wharf was in a construction zone where a deal of repairs and maintenance on other vessels was carried out and where there was a risk of contamination by ferrous alloy debris other than from Northern Challenger. The latter was pleaded on a similar basis with the addition of allegations that Ultimate Lady failed to remove any contamination promptly, failed to notify Mr Bracken of the occurrence and give him or anyone on his behalf the opportunity of removing the particles, putting to sea on 5 February despite knowing of the contamination and thus exposing particles to oxidation through contact with seawater and failing to undertake a proper investigation which would have disclosed the remedial work required to restore rather than replace her paintwork.
[199] It must at once be said that factually all the latter allegations cannot succeed. Messrs Jennings and Francis did what they thought was adequate to wash the grinding particles off Ultimate Lady. Until Mr Francis noted some rusting the following day, they thought they had been successful. The evidence shows that what they did was reasonable in the light of their knowledge and the knowledge of most mariners. They did not know such particles can etch themselves into paintwork and the evidence shows that they could not be expected to have known. It is not suggested that Ultimate Lady should have interrupted her charter on 5 February and immediately returned to Auckland for a full investigation since the severity of the problem was not then discernible. Once the contamination was reported to Ultimate Lady’s insurers the matter was properly investigated and remedial steps taken. As Mr Pennington made plain, however surprising it may be to boat-owners, the only effective remedy is to strip a boat down and repaint.
[200] Both these defences therefore come down to whether Ultimate Lady knowingly accepted the risk of contamination by berthing on Refit Wharf or whether she was contributorily negligent in so doing.
[201] The evidence shows that Messrs Jennings and Francis were familiar with the Refit Wharf, the Refit yard and its environs. Ultimate Lady berthed there on a number of occasions and had undertaken maintenance in the yard including being slipped there on some five occasions before 4 February. They must therefore be taken to have known of the type and extent of the repair and maintenance work carried on at Refit Wharf and in the Refit construction zone and the number of vessels likely to be berthed there for such purposes. As a corollary, although Ultimate Lady had used Refit Wharf as a berth on a number of occasions, the evidence establishes that use of Refit Wharf for such purposes by luxury vessels such as Ultimate Lady was uncommon. The crew of Ultimate Lady must have known that.
[202] The evidence shows that cutting and grinding of steel was commonplace at the Refit yard and indeed was being undertaken more directly upwind of Ultimate Lady than Northern Challenger on the morning of 4 February by the workers on Wharf C, so graphically described by Mr Hayter.
[203] Turning to the question of volenti, even assuming the existence of a duty of care in this case and breach, in this Court’s view the plea cannot succeed because any negligence of the kind complained about was in the future. To put that point a little more plainly, in Morrison v Union Steam Ship Co of New Zealand Ltd [1964] NZLR 468 the appellant was working behind a stack of bales while other employees used a forklift to dismantle it. Believing the stack was unstable, the appellant left but returned later when no other work was being done on the stack. The forklift driver returned unexpectedly and resumed work, as a result of which a bale fell on the appellant. Turner J, delivering the leading judgment in the Court of Appeal, discussed the operation of the maxim in cases of express assumption of risk, assumption of risk arising from contract, and implied assumption of risk before first observing (at 476, 477):
But where the parties have made no contract one with the other on which the defendant may claim an express or implied exemption from liability, nor are they in any sort of relationship inter se from which any sort of bargain or agreement on their part can be implied, there is obviously more difficulty in supporting the plea. Even in such cases, however, it has been said that the maxim of volenti non fit injuria may in some circumstances still be applicable – in the cases, for example, "where a dangerous physical condition has been brought about by the negligence of the defendant, and after it has arisen the plaintiff, fully appreciating its dangerous character, elects to assume the risk thereof": Dann v Hamilton [[1939] 1 KB 509] 517.
…
"Where, however, the act of the plaintiff relied on as a consent precedes, and is claimed to license in advance, a possible subsequent act of negligence by the defendant … the case may well be different" (ibid, 516).
Then, after reviewing other authority, the learned Judge held (at 478-479):
I am of the opinion that in the absence of express agreement, or at least of some transaction or intercourse between the parties which may be short of contract, but from which the plaintiff's assent may be clearly inferred, the maxim volenti non fit injuria cannot now be invoked in respect of negligent acts of the defendant which are still in the future at the time when the plaintiff is said by his conduct to have shown himself volens. Not only does it seem to me that this principle is the necessary result of the clear conception of the maxim, but it appears to me also to be the logical consequence of the development of the law of contributory negligence since the passing of the Contributory Negligence Acts. He who decides to take the chance of encountering future negligence on the part of another, while he does not render himself volens by doing this and no more, yet will in the majority of cases disqualify himself either entirely or partially from an award of damages by reason of the contributory negligence which his decision necessarily involves.
(See also Todd et al (op.cit.) para 21.3 p1060-5).
[204] When applied to the facts of this case, this Court reaches the view that up to the morning of 4 February, the crew of Ultimate Lady, by berthing at Refit Wharf, must be taken to have known that they were berthing in a construction zone where vessel repair and maintenance was habitually carried on and was in progress, and that the work might include grinding and cutting steel. But up to that point there had been no contact between the crews and, more importantly, there had been no grinding or cutting aboard Northern Challenger. The crew of Ultimate Lady could not therefore have been aware that grinding and cutting may take place aboard Northern Challenger in wind and other conditions which might spread contaminating particles over Ultimate Lady. The crew of Ultimate Lady could not therefore be taken to have assumed the risk of contamination by wind-blown grinding particles from Northern Challenger when they had no prior inkling such work was to occur. Any negligent acts of Northern Challenger were clearly in the future. Merely berthing at Refit Wharf where such work was undertaken not infrequently by others cannot amount to voluntary assumption of risk of the damage from the negligent act of Northern Challenger of which Ultimate Lady complains.
[205] The plea of volenti non fit injuria accordingly fails.
[206] Turning to contributory negligence, there is nothing in the actions of Ultimate Lady’s crew which could be said to amount to a tort but a plaintiff’s status as tortfeasor is not a prerequisite (Fletcher v National Mutual Life Nominees Ltd [1990] 1 NZLR 97, 107). As the learned author of Todd (op.cit. para 21.1.4(a) pp 1037-1038) puts it:
In determining whether a plaintiff has been contributorily negligent, no question arises as to the existence of any duty owed by the plaintiff to the defendant. All that is necessary to establish the defence is that the plaintiff did not, in his or her own interest, take reasonable care of himself or herself and contributed by this want of care to his or her own injury (Helson v McKenzies (Cuba Street) Ltd [1950] NZLR 878 at 920). This is judged by the familiar test of reasonable foreseeability. "A person is guilty of contributory negligence if he ought reasonably to have foreseen that, if he did not act as a reasonable, prudent man, he might be hurt himself; and in his reckonings he must take into account the possibility of others being careless" (Jones v Livox Quarries [1952] 2 QB 608 at 615).
[207] Applying those comments to the facts of this case, on the one hand Ultimate Lady was both berthed at a work berth in a construction zone where there were a number of other work berths and where work, including the cutting and grinding of steel, was constantly in progress on a large number of other vessels. Her berth was less than 50 metres from the slip where that and other work was habitually carried out. The whole of the construction zone was bordered by the Tauranga-Mt Maunganui road-bridge from which road grime and other debris could be expected to come. She was using, for berthing alone, a berth in a work area not commonly used by vessels of her class for such purposes. She must also have known of the possibility of contamination transfer by wind blowing across and swirling about the construction area. That all suggests that she was negligent in berthing where she did.
[208] On the other hand, the crew of Ultimate Lady was familiar with the berth and the surrounding areas. They had used it both for berthing and for maintenance purposes on a number of occasions previously, always without mishap or damage. They instituted and maintained daily cleaning of the vessel with more intensive cleaning at regular intervals. As with most other mariners, they would then have had no reason to know how difficult it is to remove grinding particles in circumstances such as those they allege. Although they should have known of the grinding being carried on at the work berths on the morning of 4 February, they had no reason to suppose that grinding would occur on Northern Challenger. Any negligence on Ultimate Lady’s part should be reduced by those factors. In the Court’s view, if Ultimate Lady is successful in obtaining judgment against Northern Challenger in negligence, the appropriate reduction for contributory negligence would be 25%.
(iii) Procedure
[209] It remains to add some observations as to the procedure which this case has followed.
[210] On 9 June 2000 Northern Challenger applied to set aside the Writ of Arrest on the grounds discussed by this Court in its judgment of 10 August 2000. That application was determined on the affidavits. No fewer than thirteen were filed. They reflected the evidence given at the substantive hearing though inevitably there were wide differences of view expressed which the Court found it impossible to resolve without oral evidence.
[211] Applications to set aside writs of arrest are based on a number of widely varying circumstances. Most of the common ones and the question of onus are discussed by McGechan J in Baltic Shipping (at 650-6). The issue was revisited by the Court of Appeal in Vostok Shipping Co Ltd v Confederation Ltd [2000] 1 NZLR 37 where, after discussion of authorities, the Court of Appeal held (para 21 p44):
In Baltic Shipping this Court said that ownership must, if in issue, be decided on the motion to set aside and must be decided on evidence and not merely on pleadings. It seems to us that, even allowing for the urgency of the matter, there is no reason why the High Court should not allow an adjournment of the application to set aside the proceeding to give time for the assembling of the necessary evidence and, if necessary, for deponents to be brought to this country for cross-examination so that the important question of ownership, or any other factual issue arising under s 5 as a matter going to jurisdiction, can be determined without undue haste and consequent prejudice to a party which perhaps may not have immediate access to all relevant factual materials. If the application to set aside is heard in this manner it will be little different from a R 418 hearing.
[212] Paul Myburgh, one of New Zealand’s leading Admiralty academics, has doubted the practicality of that approach in all cases commenting [2001] NZ Law Review 105, 108:
It is therefore not enough for the plaintiff merely to raise an arguable case as to jurisdictional issues, leaving the final resolution of these issues to the proceedings; the court must first decide whether it is vested with, and will exercise jurisdiction, before the action should be allowed to proceed. It is difficult to fault the logic of this approach; but it can create practical difficulties, especially in the context of admiralty actions, which are often brought as a matter of urgency and may involve complex factual and legal issues. Indeed, the very nature of the statutory in rem jurisdiction, which is typically defined by reference to a "shopping list" of substantive claims (s 4 of the Admiralty Act 1973) and a substantive ownership or control requirement (s 5(2) of the Admiralty Act), greatly increases the likelihood that preliminary jurisdictional disputes will involve complex substantive issues.
[213] Even given the high – arguably too high: (David Admiralty Practice and Procedure NZLS Seminar November 2000 Section 4(viii) p 18) – standard of proof where an application to set aside a Writ of Arrest is challenged on the basis of its being wrongful or unjustified as being based on crassa negligentia or mala fides, and even setting aside the R 254 requirement for special circumstances to be demonstrated before cross-examination of deponents on interlocutory applications is permitted, if the Court of Appeal intended its observations in Vostock about "ownership or any other factual issue arising under s 5" to be of universal application in relation to jurisdiction this Court respectfully takes the view that this case demonstrates the practical problems that can arise in such circumstances.
[214] The hearing occupied 11 days. There were sharp differences on essential facts. Detailed examination and cross-examination was necessary to elucidate differences and enable the Court to adjudicate on them. The earlier hearing between these parties challenged the Court’s in rem jurisdiction. If the Court had followed the Vostock observations, almost exactly the same procedure would have been required to have determined whether the arrest was wrongful or unjustified. It is difficult to envisage such issues being satisfactorily dealt with at an interlocutory hearing. In such circumstances, determination of the issues between these parties at a substantive hearing would appear to be preferable.
(iv) Betterment
[215] Northern Challenger claims that any damages recovered by Ultimate Lady should be reduced by the fact that against what Ultimate Lady accepted was a fair life expectancy for her paintwork of 9 years after allowing for the fact that she was about 18 months old on 4 February, she now has been completely repainted with an expected coating lifetime of something of the order of 10-15 years. Mr Hayter claimed that her paint life would only have been over the order of 7-10 years.
[216] It is unnecessary to consider this question further since it has long been established that betterment does not lie in marine claims. In The Gazelle (1844) 2 W.Rob 279, 281; 166 ER 759, 760 the argument that there must be a deduction on account of "new for old" was rejected by Dr Lushington who said that if the plaintiff:
"derives incidentally a greater benefit than mere indemnification, it arises only from the impossibility of otherwise effecting such indemnification without exposing him to some loss or burden, which the law will not place on him."
That approach was confirmed in The Pactolus (1856) Swa 137, 174; 166 ER 1079, 1080 and remains good law (McGregor McGregor on Damages 16th ed (1997) para 17 p13) subject only to a qualification that the repair cost must not be disproportionate to the diminution in the vessel’s value – not in point here. The situation is as the learned author of Marsden ((op cit) para 15.49 p 509) puts it:
The owner of a ship wrongfully injured in a collision is entitled to claim the cost of having her fully and completely repaired, and if the necessary consequence of this is that the value of the ship is increased, so that the owner receives more than an indemnity for his loss, he is entitled to that benefit. No deduction is made from the damages recoverable on account of any increased value of the ship, or the substitution of new for old materials.
[217] Northern Challenger’s positive defence to reduce damages payable to Ultimate Lady on account of betterment following her repainting accordingly does not lie.
[218] In the light of that review, it is clear that the fate of the negligence claim, Ultimate Lady’s ability to invoke the in rem jurisdiction and all other legal issues will be largely determined by the Court’s decision on the legal relationship between Messrs Bracken and Fonua. The Court accordingly turns to consider that question.
Legal relationship between Messrs Bracken and Fonua
[219] Ultimate Lady asserts that Mr Bracken was legally responsible for Mr Fonua’s actions. Northern Challenger asserts that he was an independent contractor, the person who, if anybody, was liable in personam to Ultimate Lady and accordingly that Mr Bracken was not liable for Mr Fonua’s actions.
[220] The Court has earlier recounted the evidence of the work Mr Fonua did on Northern Challenger and the fact that Messrs Bracken and Fonua said that the work on the anchor-base was done pursuant to a contract under which Mr Bracken paid Mr Fonua $3000.
[221] As far as the guard-rail work was concerned, Mr Bracken’s affidavit said that he agreed with Mr Fonua to replace the roof of the aft deck and the guard-rail. Each week they discussed the work for the following week and "agreed on a price payable". Mr Bracken travelled to Tauranga on Fridays to inspect the work, pay Messrs Fonua and Vete and decide on the work to be done the following week. The only other evidence from Mr Bracken was a statement in his second affidavit that the grinder used was Mr Fonua’s property. As noted, he was not available to give evidence and elaborate on that spare description. To Mr Thain, Mr Fonua said that Mr Bracken and he had a "contract" to do the work for payment. He said:
I estimate what work be done, and they said everything is there and I start doing the work. He don’t know how to do the work, I only know how to do the work, where to start and where to do it. So I just do the work.
[222] Curiously, given the importance of the question and the fact that the legal nature of the relationship between Messrs Bracken and Fonua was pleaded, all counsel were reluctant to raise the issue with Mr Fonua (or Messrs McGee or Vete) during their evidence. What has just been recounted being the total of the evidence at the end of Mr Fonua’s re-examination, the Court thought it appropriate to ask him to leave the courtroom and enquired from counsel whether there was any reason why the question should not be opened a little further. There was not and, in response to the Court’s questions, Mr Fonua said that he was paid $500.00 per week, not by the hour, that the contract was oral, and that he ordered materials such as new grinder discs from Mr Fitzgerald who supplied them. Mr Fonua did not pay. He said he used some of his tools but the grinder used was new, he thought paid for by Mr Fitzgerald. He did not seek payment for his tools. Accommodation was provided. He regarded as risible the question whether he charged Mr Bracken GST on the $500.00 per week. He confirmed he paid no income tax on the $500.00 per week "because I thought he already taken it out of my contract", an assumption that may not have been soundly based. Given the opportunity, no counsel sought to elaborate on that evidence.
[223] Mr Bracken did not refer to paying Mr Vete. In his evidence, he initially said that he went to Tauranga voluntarily and without payment to help Mr Fonua but, after the Court followed the same procedure as with Mr Fonua and questioned Mr Vete, he said he was paid for his work on the boat about a fortnight later. He said nothing about amount, gave no details and again the point was not investigated by counsel although, given that there were no allegations against Mr Vete, any details he might have given could only have been corroborative or otherwise of Mr Fonua’s evidence.
[224] Mr Fitzgerald in his affidavit and Mr McGee in his evidence said nothing about their business relationship with Mr Bracken.
[225] The circumstances in which a principal can be liable in negligence for the actions of an independent contractor require only brief mention.
[226] The two approaches to the possibility of liability of a principal for an independent contractor are described by the learned authors of Todd (para 22.5 p 1107-1108) in the following terms:
The first approach is to adopt the broad rule that the principal is not vicariously liable for a contractor’s negligence, subject to a number of residual exceptions in which vicarious liability may still arise, as, for example, where the work in question involves a particularly hazardous activity. [Honeywill & Stein Ltd v Larkin Bros Ltd [1934] 1 KB 191]. Where vicarious liability arises under such an exception, the general underlying principle of strict liability suggests that it will do so irrespective of whether the principal has breached a primary duty of care to the plaintiff. Increasingly, however, it has come to be suggested that the so-called "exceptions" are in reality not true exceptions in which vicarious liability is imposed but are instead dependent on a finding that the employer is in breach of some personal duty [D & F Estates Ltd v Church Commissioners for England [1989] AC 177 at 208 per Lord Bridge (HL)]. This leads to the second, and contrasting, approach. Under this approach a principal will never be vicariously liable at common law for the negligence of an independent contractor, but may bear primary liability in some cases of foreseeable damage (including specialised tasks) coupled with the possibility of primary liability in respect of a non-delegable duty.
Tipping J opted for the latter approach in Cashfield House Ltd v David & Heather Sinclair Ltd [1995] 1 NZLR 452, 465-466 where the learned Judge held that under the common law of New Zealand:
1. A principal has no vicarious, ie secondary, liability for the negligence of an independent contractor on the basis that the activity involved is a particularly hazardous one or on any other basis.
2. The principal may nevertheless in some circumstances owe a primary non-delegable duty of care and thus be liable to those to whom the independent contractor is liable if the independent contractor is negligent.
3. The principal may well also owe a primary duty of care to those who could foreseeably be damaged by the acts or omissions of the independent contractor. That duty may include a duty to select, instruct and sometimes to supervise the independent contractor with reasonable care. The greater the expertise of the independent contractor and the more specialised the task the less call there may well be for the involvement of the principal beyond selection and instruction. If the principal has selected and instructed the independent contractor with the skill and care appropriate to the occasion, the principal should generally be entitled to leave the task to the independent contractor without further supervision. If the principal does so there will be no liability unless, of course, the principal owes a non-delegable primary duty to those damaged by the independent contractor’s negligence.
[227] The evidence was plainly left in an unsatisfactory state but the Court, doing the best it can on the little evidence it has, takes the view that Mr Fonua hired his services and some of his equipment to Mr Bracken for a set weekly sum on which, in all probability, he should have been charging GST and paying income tax. Given the nature of the work, it is understandable if the parties only described it in general terms at the outset and refined it on a weekly basis thereafter as problems and money appeared. There certainly does not appear to have been the level of control and direction over the work to be done and the manner in which it was to be carried out which would be expected in a normal employer/employee relationship. Messrs Bracken and Fonua agreed each Friday what would be done the following week. It was up to Mr Fonua to decide how and when he and Mr Vete would to it. Responsibility for those matters was Mr Fonua’s. As he said, he alone knew how to do the work. Mr Bracken played no part. There was no suggestion Mr Fonua ever referred any aspect of the work back to Mr Bracken for directions. There was no suggestion Mr Fonua was not competent to do the work for which he was engaged. It was a commonplace activity at the Refit yard, not especially hazardous. It was not asserted that any duty of care which lay on Mr Bracken was non-delegable. The situation is not unlike many other labour only contracts for repairs and maintenance of defects in, say, a structure or a vehicle where the work to be done is ordered by the owner who pays the eventual account leaving the contractor to do the work. Put another way, were this work to have been done in the way it was not on a ship but on a land-based structure it is unlikely that it would have been alleged that the owner rather than the contractor was liable for any contamination to a neighbouring property.
[228] In those circumstances, the Court finds Mr Fonua was an independent contractor to Mr Bracken not his employee and that Mr Bracken was not vicariously liable in negligence for Mr Fonua’s actions. That is not perhaps an unexpected finding. The Court hinted at the possibility in para [25] p 10 of its judgment of 10 August 2000. However, given the legal analysis which preceded the Court’s consideration of this pivotal issue, that finding makes a marked difference to the Court’s consideration of the major factual issues. Essentially, the finding that Mr Fonua was an independent contractor reduces those questions to whether, within the cases discussed, the Court had in rem jurisdiction over Northern Challenger because Mr Fonua’s actions amounted to "damage done by a ship" or "damage received by a ship".
[229] The requirements of proof of "damage done by a ship" in circumstances such as these appears in para [171]. At least for the purposes of this case, in light of the cases discussed, particularly the Mys Budyonnogo, the Court accepts grinding and cutting guard-rails can amount in law to the operations or management of Northern Challenger. Although there is doubt as to the ownership of the grinder and discs, the Court prefers to accept that they were part of Northern Challenger’s gear and that, if proved, the contamination of Ultimate Lady by grinding particles amounts to a direct result or a natural consequence of Mr Fonua’s actions. Mr Fonua not being part of Northern Challenger’s crew, the critical question is whether he was lawfully in possession or control of her.
[230] He was subject to the overall direction of all of Messrs Bracken, McGee and Fitzgerald, the owner, master and first officer respectively on 4 February 2000. All of them were in various ways directly involved in the management of Northern Challenger. Mr Fonua was not involved in her management in any way and the Court has little difficulty in concluding that he was not in possession or control of the vessel at the time. His only control was over the manner of carrying out the work generally indicated by Mr Bracken. It follows that the contamination alleged by Ultimate Lady did not arise out of actions by Northern Challenger’s crew or those in possession or control of her in carrying out the grinding. Accordingly the action in rem does not lie against Northern Challenger under s 4(1)(e).
[231] Although the circumstances of this matter could amount to "damage received by a ship" or in connection with a ship in terms of the authorities discussed, the findings as to the legal relationship between Messrs Bracken and Fonua make it clear that no claim in rem could arise against Northern Challenger under the Admiralty Act 1973 ss 4(1)(e) and 5(2)(b) because Mr Fonua was not "in possession or in control of the ship" at the relevant time.
[232] It therefore follows that Ultimate Lady was not entitled to invoke the Admiralty Act 1973 s 4(1)(d)(e) and s 5 (2)(d) against Northern Challenger. The consequences of those findings may require to be explored in memoranda from counsel.
[233] Even if Mr Bracken had been held liable for Mr Fonua’s actions, proof of Mr Fonua’s negligence would still have been required. The only basis on which he could have been said to have been negligent would have been in commencing and continuing the grinding operations when, in the wind and other conditions then existing, the relative locations of Northern Challenger and Ultimate Lady made it reasonably foreseeable that contamination damage from the grinding was likely to result. The evidence was that Mr Fonua considered the possibility of contamination by looking at the windex and concluding that "we safe". Once he commenced grinding, there was no suggestion that he saw the debris blowing towards Ultimate Lady and thus should have desisted. In those circumstances and having regard to the factual consideration later in the judgment, whilst no final conclusion is necessary given the findings concerning the legal relationship between Messrs Bracken and Fonua, the Court’s view is that it is unlikely that Ultimate Lady could have demonstrated negligence on Mr Fonua’s part.
[234] The finding as to the legal relationship between Messrs Fonua and Bracken leads to the conclusion that Ultimate Lady’s claim in negligence against Northern Challenger cannot succeed. However, against the possibility that the finding that Mr Fonua was an independent contractor for whom Mr Bracken was not vicariously liable comes to be revisited, the Court turns to consider the factual issues although, in the circumstances, that consideration can be relatively brief.
Discussion as to Facts
[235] The first and major issue is whether Ultimate Lady has proved to the required standard that Northern Challenger caused or permitted its guard-rails to be ground when it knew or ought to have been known that particles or sparks from the grinding would be thrown onto Ultimate Lady and cause damage.
[236] That, in its turn, comes down to four issues, namely –
Precisely where Ultimate Lady and Northern Challenger were berthed
When did the grinding occur?
Whether in the circumstances at the time grinding occurred particles and sparks admittedly caused by the grinding could and did land on affected areas of Ultimate Lady
Whether the contamination found on Ultimate Lady is proved to have come from the grinding of Northern Challenger’s guard-rails.
Where were the vessels berthed?
Ultimate Lady
[237] As far as Ultimate Lady is concerned, although, in the earlier part of the hearing, there was a deal of evidence based on Mr Hayter’s chance photograph showing Ultimate Lady, by the end of the hearing it had become possible to fix Ultimate Lady’s position with considerable precision.
[238] Mr Hayter’s photograph showed Ultimate Lady berthed on the eastern side of Refit Wharf with a power pole shown transecting her superstructure. Various witnesses were asked their view of her position and that of the photographer based on the photograph but, between the completion on 4 May of the time originally allocated for the hearing and the recommencement of the hearing on 21 May, the position was simplified by calculations made by Mr Powell. Working off the whole of the original photograph, by simple triangulation he was able to place Mr Hayter as slightly to the left of pile 1B and C on Annex 1. A transit bearing from that position enabled him to place Ultimate Lady’s bow which projects about 4.5m forward of the demi-hulls. That position varied slightly according to whether she was hard against the wharf, fendered or lying somewhat out from the wharf but, after allowing for half (4.977m) her beam, on the basis that she was lying 1m out from Refit Wharf, the portion of the bow appearing in the photograph was about 6.25m east of pile 12D shown on Annex 1 and at a bearing of 095°T from that pile. Ultimate Lady being 26.775m overall, that placed her stern approximately opposite the mid-point between piles 7D and 6E on Annex 1 if she were 1m from the wharf, slightly further north north-east and approximately due east of pile 7D if she were 2m from the wharf and somewhat more south-south-west and just south of pile 6E if she were hard against the wharf. On that basis her stern would have been south of the knuckle between piles 6E and 7D by about 2.75-5.5m.
[239] That placement of Ultimate Lady was largely confirmed by other evidence. Mr Jennings said that they always secured their stern-line to pile 7D which was alongside the starboard fairlead on the hemisphere. He said pile 7D was just aft of Ultimate Lady. That appears to be incorrect unless the tide was holding her 2m from the wharf. He denied berthing Ultimate Lady with her stern out over the knuckle because he always berthed her stern first, using a stern spring and winching her alongside. The tidal nature of the berth required long lines with the spring doubling as an extra stern-line.
[240] Mr Francis said that the stern warp went to pile 7D, the stern-line to pile 6E, with the aft point of the hemisphere between the two. He said he regularly used pile 7D for access. He estimated that Ultimate Lady’s bow was moored to pile 12D.
[241] Mr Hayter’s recollection was that Ultimate Lady’s stern was "well hanging over the dog-leg in the wharf", something which surprised him in a tidal harbour such as Tauranga, with her bow about 1.5m north of Bizarre’s stern and with about 1.5m between Ultimate Lady and the trawler’s bow. Ultimate Lady’s crew disagreed with Mr Hayter’s placement.
[242] Mr Hayter also commented on Ultimate Lady’s claim, based on the 17 June 2000 sketch by Mr Hunter, that she was berthed on the eastern side of Refit Wharf with her bow 11 metres north of Northern Challenger’s stern. Mr Hayter disagreed because on the morning of 4 February there was the trawler berthed on the eastern side of Refit Wharf bow to bow with Ultimate Lady shown in the photograph, the length of which would have precluded Ultimate Lady being berthed as claimed.
[243] Though he accepted in evidence that the trawler was berthed bow to bow with Ultimate Lady on Refit Wharf on the morning of 4 February, Mr Jennings said that its omission from his affidavit did not affect his view of Ultimate Lady’s position. Mr Jennings said twice in his affidavits that the stern of the Pelican shown in Mr Hunter’s photographs was in approximately the same position as the stern of the Ultimate Lady on 4 February but that seems unlikely to have been the case since Pelican’s stern appeared in the photographs to be between piles 7D and 8D.
[244] It remains to note the evidence that Ultimate Lady always used the same piles when berthing at Refit Wharf. Accordingly, for the purpose of deciding her position, apart from wind and tidal variation, it is immaterial at what time the Court finds the grinding took place.
Bizarre
[245] It is convenient next to place Bizarre as accurately as possible though the evidence was less precise than for Ultimate Lady.
[246] Mr Hayter said that, by contrast with photographs taken on 28 March, when he arrived on 4 February Bizarre was lying hard alongside Refit Wharf or virtually so and approximately abeam Ultimate Lady. In fact, from Mr Powell’s triangulation and Mr Hayter’s photograph it seems probable that Bizarre’s bow was lying about west of pile 2A with her port shoulder approximately opposite pile 6A and her stern almost directly west of pile 10A. From photographs Mr Hayter estimated that Bizarre’s amidships would be about opposite pile 7A. That, too, would place her stern somewhere between piles 10A and 11A.
Northern Challenger
[247] There were various estimates of the distance between the sterns of Bizarre and Northern Challenger but they were all roughly comparable and borne out by photographs: Mr Fonua estimated 2.5-3m, Mr Lightband estimated about 11 feet, Mr Francis’ estimate was 2-3m.
[248] Turning to the pleadings, it is to be noted that Ultimate Lady’s assertions as to the vessels’ relative positions changed several times. In its 29 March 2000 claim, Ultimate Lady pleaded that she was berthed at "approximately 5 metres directly down wind of the Northern Challenger and slightly aft". In the amended claim filed on 21 July 2000 the reference to "slightly aft" was deleted. And in the claim filed on 23 March 2001 her bow was pleaded as being "parallel to the stern of the Northern Challenger" that apparently being intended to be a plea that Ultimate Lady’s bow and Northern Challenger‘s stern were directly opposite each other on Refit Wharf.
[249] Additional formulations included Mr Hunter’s 17 June 2000 sketch which placed Northern Challenger’s stern 11m to the south of a line drawn through Refit Wharf at right angles to Ultimate Lady’s bow (though unlike his sketch made on 16 February 2000 this sketch omits Bizarre and there is inadequate room for her) and the formulation in Mr Hunter’s note of his conversation with Mr Simon Jennings on 16 February which said Northern Challenger’s "transom amidships of U/L".
[250] In evidence, Mr Jennings said by the original description of Ultimate Lady being "immediately aft and directly down wind" of Northern Challenger he meant that Ultimate Lady’s bow overlapped Northern Challenger’s stern. Taxed with the sketch showing the 11m overlap, he said it was "close enough" and was the same as "approximately 5 metres directly down wind". All those placements, he said were "consistent".
[251] Mr Francis said that there was a slight overlap between Northern Challenger and Ultimate Lady and they were "sort of level" though he accepted that his affidavit suggested no overlap. Like Mr Jennings, he placed Northern Challenger’s stern near pile 10A. He agreed with Mr Hunter’s sketch.
[252] Mr Hunter modified his affidavit and sketch estimate of an 11m overlap after reading other evidence but maintained there was at least a 4m overlap. Mr Hunter measured Northern Challenger’s stern as 16m north of pile 7A which would place it approximately 1m north of pile 10A, the piles being 5m apart.
[253] Working from the photographs Mr Cave said Northern Challenger’s stern was probably between piles 9A and 10A.
[254] Finally, but importantly, Mr Powell calculated the position of the three vessels from his and others’ photographs. From those sources he calculated the gap between the sterns of Bizarre and Northern Challenger as 4m ± .9m – rather more than eye witnesses - because of uncertainties about Bizarre’s location. If Ultimate Lady were lying .25m or 1m out from Refit Wharf, his calculations were that her bow was north of Northern Challenger’s stern by 4.5m ± .9m to 6.75m ± 9m respectively. For the pleaded 11m overlap to have been correct, Ultimate Lady must, improbably, have been lying 2.75m out from Refit Wharf. At 1600 hrs when the flood was at its strongest, that overlap may have been reduced, given his view that Northern Challenger’s lateral tidal movement was more than 1m and more than Bizarre.
Conclusion
[255] Having regard to all those matters, subject to the question of wind, the Court accepts Mr Powell’s calculations as to the placement of Northern Challenger and Ultimate Lady as the most accurate. Their positions relative to the wharf would, however, have been affected by wind. Irrespective of the Court’s finding as to the time of grinding, the wind throughout the day came from the south-westerly quarter so, to the extent that it blew Northern Challenger closer to or against Refit Wharf or her fenders, it would have blown Ultimate Lady away from the wharf, and the obstruction of the wharf meant that the distance between the two vessels would be likely to be greater than calculated by Mr Powell who did not appear to take wind into account. The north-south tidal movement of Northern Challenger and Ultimate Lady was likely to have been approximately equal. The Court also accepts that Ultimate Lady probably lay up to 1m from Refit Wharf. Accordingly, the Court finds that that Northern Challenger’s stern was at all times during 4 February when both vessels were on Refit Wharf south of Ultimate Lady’s bow by between 4.5m-6.75m, probably rather more towards the former than the latter. Depending on the Court’s finding as to the time of grinding, the bearing of Ultimate Lady’s bow from Northern Challenger’s stern would have been of the order of 060°T-080°T, the variation being accounted for by imprecision in placement, wind and tide conditions. On that basis, after making allowance for the vessels’ likely distances from the wharf, the wind and the 5m distance between the outside edge of opposite piles, the distance between Ultimate Lady’s bow and the nearest point of Northern Challenger’s stern would have been of the order of 10.5m or a little more, with the tip of her port demi-hull being some 3.6m closer.
When did the grinding occur?
[256] The evidence on this topic was recounted earlier in this judgment. There is a wide disparity between Messrs Jennings and Francis who claimed that it was occurring about 1600 hrs and Messrs Fonua, Vete and Hayter, all of whom claim that it occurred fairly shortly after 0900 hrs.
[257] Having carefully reviewed all the evidence several times and reflected on it at length, the Court has concluded that Ultimate Lady has failed to show that it is more probable that the grinding occurred in the afternoon. In the Court’s view, Messrs Jennings and Francis were mistaken in their recollection as to the time of the grinding. Amongst the reasons for the Court reaching that view are what follows.
[258] In considering all the evidence, it is important to recall that there was only one grinding incident aboard Northern Challenger on 4 February. No witness suggested otherwise. Messrs Fonua, Vete and Fitzgerald all said so. Mr Hayter was only at Refit Wharf during the morning. He did not suggest there was a second incident. He was working aboard Bizarre and no doubt moving about the vessel for the remainder of the morning and would have been likely to have noticed any resumption of the grinding.
[259] While the evidence did not disclose whether Mr Jennings was on Ultimate Lady all morning and he suggested there could have been an earlier grinding incident about 0900 hrs unnoticed by those on Ultimate Lady, to the contrary Mr Francis was aboard all day and was sufficiently attentive to note there was little activity aboard Northern Challenger, as had been the case all week. He did not suggest there was any grinding until his attention was drawn to it on Mr Jennings’ return.
[260] Mr Hayter was, at least on 4 February, a witness wholly independent of the parties. Although he was later retained to assist Northern Challenger’s advisers, the Court found his evidence careful, cogent and moderately expressed. He surveyed Bizarre between about 0900-1230 hrs on 4 February. He said that about 10-15 minutes after his arrival he noticed the grinding and was sufficiently motivated from general experience and recent involvement in contamination claims to speak to Messrs Fonua and Vete. The Court accepts that evidence although the Court takes the view that the conversation may have been a little later than Mr Hayter’s recollection.
[261] On the other hand, if the grinding occurred in the afternoon after Ultimate Lady’s return from the bunkering trip at 1230-1300 hrs, it is likely Mr Francis would have noticed it. It is also clear that it must have occurred only over a brief period as he did not see or hear the grinding when he walked down Refit Wharf towards the shore-line to meet Mr Jennings. That tends to confirm Messrs Fonua’s and Vete’s evidence that after they stopped grinding they spent the rest of the day working forward below decks on port.
[262] Messrs Fonua and Vete said they started work after about 0900 hrs and it was about 10-25 minutes after that when they were approached. It is correct that, although Mr Jennings could not remember his clothing on 4 February, the height of the man described by Messrs Fonua and Vete more suits Mr Jennings than Mr Hayter and Mr Hayter’s description of his apparel and what he said that day does not fit Messrs Fonua and Vete’s recollection. That, of course, assists the plaintiff.
[263] Whilst the Court has doubted whether the wording of their affidavits was theirs, that does not lead to a conclusion that the evidence of Messrs Fonua and Vete was inaccurate. Even though they were first asked to recall events quite some time afterwards, their recall was detailed. They gave their evidence in a straightforward manner despite it possibly being against Mr Fonua’s interest. The Court accepts what they said as accurate.
[264] Further again, though the Court means no disrespect by the comment, having observed them closely, the Court takes the view that it is unlikely that Messrs Fonua and Vete would list workaholism amongst their attributes. They were being paid by the week not the hour and, having breakfasted, it seems unlikely that they began work until something after 0900 hrs. On the other hand, their evidence shows that, naturally enough, they were keen to be paid and start the return journey to Auckland. They habitually left about 1600 hrs although on 4 February it seems Mr Bracken was late and it was closer to 1700 hrs before they were paid and departed. That notwithstanding, their evidence was that they had to clean up their work, tidy away the tools, shower and pack all in time to be ready to depart about 1600 hrs. That suggests that they probably stopped work on 4 February about 1500 hrs or 1530 hrs at the latest. Given that Mr Jennings’ timed purchases showed that he was buying goods in Mt Maunganui at 1441 hrs and his evidence that he made purchases after that and returned to Refit Wharf about 1600 hrs, it seems most improbable that Messrs Fonua and Vete would still have been grinding at that time.
[265] Mr Jennings said that the dent repair was finished about "10a.m. or so". The repairer was not called but his time-sheet shows that he charged from 0600-1330 hrs on 4 February and that the 1-hour charged to Ultimate Lady was the second job after a 6-hour job on another vessel. That suggests the repair was not completed until early afternoon. In that respect, when such intensive investigations were later undertaken, it might have been expected that photographs would have been produced of the dent repair which was said to be heavily contaminated. Mr Hunter said his original photographs did not come out but it seems surprising that further photographs were not produced and samples from that spot analysed if they showed contamination. Though no more than a suggestion, that may indicate that the grinding occurred before the repair.
[266] The contents of Mr Hayter’s conversation shortly after his arrival with what must have been Mr Francis was earlier noted. That suggests the bunkering and provedoring trips were then imminent, not later in the day.
[267] Mr Jennings said the bunkering trip took 2½-3 hrs commencing after the repair and returning between 1230-1300 hrs. Mr Francis said the bunkering trip took about 1½ hrs. The evidence was said to be supported by the mini-tanker work-sheet which may indicate Ultimate Lady’s bunkering occurred after noon.
[268] It is to be remembered that Mr Jennings was not asked to recall the detail of what occurred on 4 February until he spoke with Mr Hunter on 16 February, and Mr Francis was not asked to remember his version until somewhat later. Even allowing for the fact that it was Mr Hunter’s hurried note of his conversation with Mr Jennings, there were inaccuracies in that record. Northern Challenger did not have her "transom amidships of U/L" and if, as the note said, the Northern Challenger had "replaced" the rails when Ultimate Lady returned from the bunkering trip, that suggests the grinding had occurred somewhat earlier and new rails and stanchions had been welded into place by early afternoon. It is also of interest that the rough diagram forming part of Mr Hunter’s note shows four vessels berthed at Refit Wharf at the time. He obtained the details from Mr Jennings and the inclusion of the fourth vessel in the sketch suggests Mr Jennings told Mr Hunter that at the time of the grinding the trawler was still on Refit Wharf. Mr Hayter noticed her leave whilst he was still working on Bizarre so the sketch supports the view that, to Mr Hunter, Mr Jennings described a grinding in the morning.
[269] Of some importance, it is remarkable that the claimed contamination by Northern Challenger was nowhere recorded in Ultimate Lady’s log. As earlier noted, the log recorded quite minor matters on a number of occasions and although, given that the crew thought they had rid Ultimate Lady of all the filings on 4 February, it may perhaps be understandable that no note appears on that date, once Mr Francis pointed out rust to Mr Jennings on 5 February it would be expected that the log would note the incident in the maintenance requirements. Its omission might have been in breach of the Maritime Transport Act 1994 s 182(f) and para (f) of the definition of "accident" in s 2(1). It is also surprising that the incident was not noted once she returned to Auckland and the severity of the problem realised.
[270] Further, at the hearing there seemed little contest to Mr Powell’s assertion that material he took from the instrument tower was volcanic ash. Ultimate Lady had been nowhere near White Island since 12 February. Mr Powell’s samples were taken on 30 March. It follows that volcanic ash had been lying on the vessel for seven weeks without being cleaned off by Mr Francis’ claimed regular maintenance and washdowns. That suggests that the crew’s housekeeping cleanliness of the vessel was not as high as asserted. Mr Hayter certainly took that view and gave examples.
[271] There was significant imprecision in their recollections as to the positions of the various vessels, the detail of which was earlier discussed. Significant differences were regarded as consistent. That imprecision was also reflected in the pleadings, particularly the allegation on 29 March 2000 that Ultimate Lady was "approximately 5 metres directly downwind of the Northern Challenger and slightly aft". That pleading must have been substantially based on Mr Jennings’ recollections.
[272] There are also a number of other infelicities in the evidence which, although of lesser importance, contribute to the Court’s finding that, where there is a conflict, it prefers the evidence for Northern Challenger. Those matters include the suggestion in the broker’s letter – though triple hearsay - that there were "plenty of witnesses" to the mishap, the omission of any reference to the trawler in Mr Jennings’ original affidavit and the curious fact that both Messrs Jennings and Francis initially said that on 5 February they sailed "downwind of White Island" (Mr Jennings) and "we left White Island to starboard" and they passed it "to windward" (Mr Francis) until the wind direction that day was pointed out to them. Mariners do not usually mistake wind direction. Mr Francis acknowledged that between his brief and his evidence he had "added" to the amount of rust which he claimed he saw on 5 and 12 February and Mr Jennings accepted that when he discovered widespread contamination on Ultimate Lady on 12 February it was no more than an assumption on his part that it came from grinding on Northern Challenger’s guard-rails. There was an element of exaggeration in his saying there were rust spots "all over" the boat and Mr Hunter saying that "every part that was open to the elements was affected" by contrast with the insurance agent’s statement that "fine filings have fallen on to lower deck and twin hulls". Then, although the crew thought they had hosed all the contamination off Ultimate Lady it is odd that if they were as fastidious as they claim and if they thought Northern Challenger was the sole cause, there was no evidence of further complaint as to the damage, beyond what was recounted earlier, and no evidence of any search for continuing contamination after the hosing.
[273] Balancing all those matters one against the other, the Court finds that the grinding carried out by Messrs Fonua and Vete on the aft topdeck guard-rails of Northern Challenger on 4 February 2000 took place in the morning, probably at or before about 1000 hrs.
Did particles from Northern Challenger’s guard-rails land on Ultimate Lady?
[274] Accepting that Tauranga Airport’s statistics were means, it follows from the Court’s finding that the wind was from between 210°T-240°T between 0900-1100 hrs, backed to 230°T by noon and veered to 240°T by 1300 hrs at speeds varying between 4 knots-13 knots with gusts between 7 knots-19 knots. On the Court’s finding that the grinding occurred in the region of 1000 hrs, the wind direction was 210°T-220°T at a mean speed of 3 knots gusting 7 knots.
[275] During that period, the tide was ebbing but the tidal range was only 1.7m and, as the Court has already observed, seems likely to have affected Northern Challenger and Ultimate Lady approximately equally.
[276] It follows that subject to the Court’s earlier comments about the effect of wind, Mr Powell’s plotting of the respective positions of those two vessels should be generally be adopted. Accordingly the bow of Ultimate Lady would have continued to bear approximately 60°T-80°T from Northern Challenger or, to adopt the more appropriate reciprocal bearing, Northern Challenger’s stern to Ultimate Lady’s bow would bear between 245°T-265°T throughout the relevant period. The bearing of all parts of Ultimate Lady aft the bow would, of course, have been greater.
[277] It also follows that only at 1100 hrs and 1300 hrs did the wind direction approximate that which might potentially have carried particles from Northern Challenger’s guard-rails to Ultimate Lady’s bow and the tip of the demi-hulls, let alone the rest of the vessel, and that at all other relevant times the wind was further in the south and accordingly less likely to blow particles directly from the grinding site towards Ultimate Lady. At or before 1000 hrs the wind direction at 210°T-220°T contrasts with Ultimate Lady’s bow bearing between 245°T-265°T.
[278] No witness actually tested the direction and distance of particle travel at Refit Wharf –such tests may well have been impossible unless all vessels and weather conditions were able to be duplicated – but Mr Powell calculated what he called "strewnfields" or areas where debris would land in known wind direction. His calculation showed that with the wind at 240°T "debris could potentially have blown … into the water a few metres ahead of the bow" of Ultimate Lady with debris being carried further to the north north-east and further ahead of the bow with a wind from 210°T-230°T.
[279] As the evidence suggested and as is notorious to mariners, headlands boats and other obstructions bend wind. Mr Hunter, for instance, said that on his visit he saw a local weather vane vary as much as 90° in local gusts though that evidence is very considerably at variance with the Tauranga Airport figures. Therefore, because of the effect of gusting, eddying and local deflection, those views might lead to a finding that it was improbable but not entirely impossible for grinding particles of Northern Challenger’s guard-rails to blow towards the foreparts of Ultimate Lady but the difficulty is that no tests were carried out on wind deflection, again probably because they would be impossible to test unless all the circumstances were able to be duplicated. The Court has little difficulty in accepting that the hulls, sterns and superstructures of Bizarre and Northern Challenger would have created updrafts backwinds and eddies disturbing the air-flow, particularly around Bizarre, and that it may perhaps be possible that backwinds or eddies could have distorted the wind but with the wind coming generally from the south-west it would have struck Bizarre’s hull at an oblique angle and is more likely to have been deflected to the north-east and away from Ultimate Lady.
[280] The grinding work on Northern Challenger was said by Mr Jennings to be occurring to port of centre. Messrs Fonua and Vete’s evidence was somewhat imprecise on the topic and it may well be that the work carried out that day crossed most of Northern Challenger’s stern and perhaps slightly up her starboard side. The Court has already held that Northern Challenger’s stern was likely to be over 10m from Ultimate Lady’s bow – though less to the demi-hulls – but, if particles could cover that distance, the overlap of some 4.5m or more reduces the wind deflection which would have been necessary for contamination to occur, at least of the forward parts of Ultimate Lady.
[281] However, and importantly, Ultimate Lady claims to have been almost entirely enveloped in contamination. Contaminant samples were found as far aft as in and around her cockpit, coamings and fittings, less than 4m from her stern. For airborne contaminants from Northern Challenger to have reached that site, they must necessarily have travelled well over 20m – probably nearer 30m - at an angle of the order of 340-350°T or something much more than 100° south-east away from the wind direction.
[282] At the strongest gusts of 7 knots (3.6m per second) evidence suggests hot particles would have cooled very considerably even before they reached Ultimate Lady’s foreparts, let alone towards her stern. It is also noteworthy that paper placed about 1.5m from the test to collect particles was not charred, contrasting with the evidence from Messrs Pennington and Edwards evidence about hot grinding particles etching themselves into paint.
[283] Then there is the question of vertical transport. The area of grinding was 5.49m a.s.l. This was about 2m above Ultimate Lady’s foredeck but about 1.17m below her flying bridge and about a further 3.5m below the communications dome.
[284] From the application of Stokes’ Law Mr Powell concluded that grinder particles were unlikely to be carried upwards in an updraught even of a wind velocity of 20 knots.
[285] Finally, but by no means unimportantly, the results of the grinding simulation test must be kept in mind. Whilst a few particles fell overboard during the test, by far the greatest proportion were discharged inboard. The evidence was that Mr Fonua never used his grinder in a way likely to alter that result.
[286] Having carefully weighed all those matters, the Court reaches the view that having regard to wind speed and direction at and before 1000 hrs it is most improbable that the grinding of Northern Challenger’s guard-rails which the Court has held took place at about that time caused the contamination of which Ultimate Lady’s complains. Whilst it is conceivable that eddies, backwinds or updrafts could possibly have resulted in particles from the grinding of Northern Challenger’s guard-rails reaching Ultimate Lady’s foredeck and demi-hulls to a limited degree, for reasons of time of grinding, wind direction and strength, density of contamination, lateral and vertical distribution of contamination, distance of travel, particle weight and heat and the direction of discharge of almost all grinder particles, the Court’s conclusion is that Ultimate Lady has failed to show that it is more probable than not that the grinding of Northern Challenger’s guard-rails resulted in contamination of Ultimate Lady of the density and extent which she claims.
Discussion as to Scientific Evidence
[287] The Court next briefly summarises its views as to the scientific evidence to see if it would have disturbed those findings. Notwithstanding the complexity and extent of the scientific evidence, having carefully considered it all in the light of that analysis, the Court’s conclusions can be expressed quite succinctly. They are:
[a] the composition of Northern Challenger’s guard-rails and stanchions was of mild or plain carbon steel galvanized, painted and quite heavily rust-corroded. They were therefore likely to comprise in excess of 98% iron with small percentages of carbon, manganese, silicon, sulphur and phosphorous and possibly nickel chromium copper molybdenum and vanadium. Mild steel is common on seagoing vessels.
[b] Significantly, none of the iron levels in the particle analyses in Annex 2 are at the expected level. But that may be explained by the presence of contaminants depressing iron percentages and by the fact that the analytical methods used by Mr Jennings and Dr Miller indicate only elements present on the surface samples;
[c] Mr Jennings’ considerable efforts to reconcile the aberrant results with expectations for mild steel – particularly the presence of elements never found in such material - whilst individually plausible to greater or lesser degree, are of reduced persuasion in combination largely for the reasons advanced by Mr Powell. That notwithstanding, the Court accepts that some of the particles uplifted from the non-slip foredeck area, the forward ends of the demi-hulls and the topsides particularly that on port, and even though contaminated by sea-water, paint and, in some instances, cutting compound and other contaminants, seemed to be consistent with being of ferrous alloy origin but not necessarily from Northern Challenger. Equally, however, the analysis of some of the particles from those areas showed contaminants which did not come from such a source. In addition, there was an unevenness in results not fully explained by the evidence.
[d] The Court found Mr Jennings’ averaging of the manganese results and deletion of contaminated samples in Annex 2 unpersuasive as supporting his conclusion that the samples may have come from the guard-rails. In the Court’s view, individual results would have been more indicative than averaging results across a number of samples.
[e] The Court prefers Dr Miller’s acceptance that reasonable explanations for inconsistency must be found before a conclusion could be reached that the Ultimate Lady particles might have come from Northern Challenger. The numerous additional matters which require to be factored-in to reach a conclusion of consistency means that results should be regarded as not proven.
[f] By contrast, the contamination on the instrument tower and at the foot of the staircase was almost certainly volcanic, or at least geological, in origin. For the reasons earlier discussed, the likelihood is that it emanated from White Island and remained in place through inadequate housekeeping. The Court also recalls Mr Powell’s view that there were three discrete groups of contaminants on Ultimate Lady’s foredeck.
[g] The Court accepts that because of their shape, size, configuration and the other aspects mentioned in evidence, grinding particles can travel quite some distance and attach themselves to paint surfaces, particularly uneven surfaces such as non-skid areas and that, surprising though it may seem, for the reasons discussed, such particles can be extremely difficult to dislodge by brushing or hosing. They then oxidize quickly, particularly if adhering to a surface in a marine environment. The Court also accepts that the adherent quality of grinding particles and the difficulties in removing them are not widely known to mariners.
[h] Against that, the Court notes Mr Powell’s evidence about Stoke’s Law. Particles as dense as those of mild steel are unlikely to travel far other than in a strong wind and the Court has held that at the relevant time wind speed was between 4-13 knots with gusts between 7-19 knots. For grinding over a period, obviously the mean speed is to be preferred.
[i] The Court records that it accepts that a number of the particles analysed were larger than those produced by the grinder simulation.
[288] The Court’s overall conclusion on the scientific evidence is that it demonstrates that some of the particles found on Ultimate Lady, particularly those uplifted from her foredeck, the forward ends of the demi-hulls – especially the port demi-hull – and the forward parts of the topsides – again mainly on port – were of ferrous alloy origin which was consistent with their emanating from mild steel of a composition roughly consistent with the composition of the mild steel in Northern Challenger’s guard-rails. But this was by no means universal. The results were equally compatible with weld-spatter, even though there was no evidence of welding having occurred on or near Ultimate Lady at the relevant time. The evidence also demonstrated the presence of contaminants from other sources, particularly the volcanic ash found on the instrument tower and at the foot of the staircase. It is to be recalled that there were other possible sources of ferrous alloy debris at Refit Wharf on 4 February, not the least the grinding work on Wharf C, more upwind of Ultimate Lady than Northern Challenger’s stern. The highest the matter could be put is that the evidence demonstrates that it is possible but improbable that some of the material contaminating the forward parts of Ultimate Lady might perhaps have come from Northern Challenger.
[289] The Court’s conclusion on the scientific evidence is the same as that for the factual discussion, namely that Ultimate Lady has failed to prove that it is more probable than not that the contamination from which she suffered came from the grinding of Northern Challenger’s guard-rails.
Conclusions
[290] In the light of that, the Court’s formal Orders are:
[a] The claim by the plaintiff fails against the defendant on all causes of action for the reasons set out in this judgment.
[b] The claim by the intervenor against the defendant succeeds, it being unopposed. On the material before it the Court is unable to calculate the amount of the judgment to be entered for the intervenor against the defendant. If counsel are unable to agree, leave is reserved to those parties to apply further on that topic.
[c] The defendant is entitled to costs against the plaintiff and the intervenor is entitled to costs against the defendant. If the parties are unable to agree, memoranda may be filed with the parties indicating if they consider it appropriate so to do that all questions of costs can be resolved by the Court without further hearing. In the event that memoranda are to be filed, those from the defendant and intervenor are to be filed within 35 days of the date of delivery of this judgment and those from the plaintiff and the defendant in reply to be filed and served within 42 days of that date.
[d] If the plaintiff and defendant wish to pursue any consequences arising out of the Court’s findings that the in rem jurisdiction of this Court was not available to the plaintiff, they may file memoranda within the same time limits as in Order [c] above.
ANNEX 1 [unavailable]
Slipway – Pile Inspection Plan
p96
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ANNEX 2 [unavailable]
Scanning Electron Analysis Results (EDAX)
p97