Shipping law [Fourth edition.] 9780455238739, 0455238731

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Shipping Law

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Shipping Law

MARTIN DAVIES MA (Oxon), BCL (Oxon), LLM (Harvard)

Admiralty Law Institute Professor of Maritime Law, Tulane University Director, Tulane Maritime Law Center Professorial Fellow of The University of Melbourne

ANTHONY DICKEY, QC

FOURTH EDITION

LAWBOOK CO. 2016

Published in Sydney by Thomson Reuters (Professional) Australia Limited ABN 64 058 914 668 19 Harris Street, Pyrmont, NSW National Library of Australia Cataloguing-in-Publication entry Davies, Martin, 1957– author. Shipping law / Martin Davies and Anthony Dickey. 4th edition. ISBN: 9780455226767 (paperback) Includes index. Maritime law—Australia. Dickey, Anthony, 1943– author. 343.94096 © 2016 Thomson Reuters (Professional) Australia Limited This publication is copyright. Other than for the purposes of and subject to the conditions prescribed under the Copyright Act, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Inquiries should be addressed to the publishers. Editor: Corina Brooks Product Developer: Paul Gye Publisher: Anne Murphy Printed by Ligare Pty Ltd, Riverwood, NSW This book has been printed on paper certified by the Programme for the Endorsement of Forest Certification (PEFC). PEFC is committed to sustainable forest management through third party forest certification of responsibly managed forests. For more info: http://www.pefc.org

Preface When we wrote the Preface to the third edition of this book, we ruefully noted that nine years had passed between publication of the second and third editions, and we expressed the wish that it would not take nine years to produce the next edition. Well, as it turned out, it didn’t. It took twelve years, half a generation. In that same Preface, we quoted the Bellman’s words from Lewis Carroll’s poem “The Hunting of the Snark” — “What I tell you three times is true”. Sadly, but predictably, many of the things we told you in the third edition (they were all true, yes they were) are no longer true a dozen years later. It would be tedious to list every one of the significant changes to the law that have occurred since the last edition, and we strive never to be tedious (although that is sometimes difficult). It would, however, be remiss of us not to mention at least some of the major recent (or recent-ish) developments that are referred to in this edition, if only to highlight how much this book has been transformed from its humble beginnings in the first edition in (can this really be right?) 1990. This edition deals with (among many other things): the Personal Property Securities Act 2009 (Cth) and its effect on ship registration and mortgages; the comprehensive revision of matters affecting navigation (and collisions) in the Navigation Act 2012 (Cth) and the Navigation Regulation 2013 (Cth); Australia’s implementation of the 1996 Protocol to the Limitation of Liability for Maritime Claims 1976, its denunciation of the original Convention, and the “tacit amendment” increases to the limits in 2015; the epochal changes to marine insurance made by the Insurance Act 2015 (UK) and the possibility that Australia may follow suit in amending the pro-insurer law of marine insurance; Australia’s adoption of the Bunker Convention 2001 and its implementation of Annex VI of MARPOL, dealing with air pollution (which led to the renaming of the pollution chapter); and the adoption of the York-Antwerp Rules 2016 relating to general average. Rather to our surprise, one thing that did remain constant between the third edition and this one was the involvement of our editor, Corina Brooks. The American poet John Godfrey Saxe said (in a quotation often attributed to the first German Chancellor, Otto von Bismarck) that laws are like sausages, in that our respect for them diminishes the more we know about the process of making them. The task of getting a book from final manuscript to eventual publication is, if anything, even more ghastly than sausage-making or the legislative process. Like a sausage-eater, you, the reader, are better off not knowing what editors like Corina Brooks must do to guide their unenthusiastic authors through the processes necessary to get to the final product. Rest assured that her work has always been literally exemplary, a model for other editors to emulate, and we thank her for it. In addition to our joint expression of thanks to Corina Brooks, Anthony would like to thank the Hon Justice Rein, the Admiralty Judge of the Supreme Court of

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New South Wales, Ms Lucinda McIntyre, the Registrar of Ships, and Mr Prasanthen Athipar, Manager, Marine Environment Salvage and Intervention, Australian Maritime Safety Authority, for their assistance in preparing the chapters that he wrote. Martin would like, once again, to thank his friend, mentor and Tulane colleague Bob Force both for knowing everything about maritime law and for his generosity in sharing that knowledge and so many other things. Martin would also like to thank Ernie van Buuren and the other members of Ernie’s team at Norton Rose Fulbright (and, before that, Blake Dawson Waldron), for a never-ending stream of fascinating questions from real cases that enhanced his understanding of how maritime law works in practice. Lastly, Martin would like to express his love and admiration for his wife Erinn and his four daughters (four! another big change since the last edition!) Lydia, Gloria, Julia, and Eleanor. As in previous editions, we would also like sincerely to thank ourselves, for each writing those chapters of the book that the other did not want to write. Anthony wrote Chapters 1–10, 20 and 21. Martin wrote Chapters 11–19. The law is stated as it appeared to us in January 2016, with the exception of references to the York-Antwerp Rules 2016, which were inserted into the text at a very late stage of production, after their adoption in New York on 8 May 2016.

MARTIN DAVIES ANTHONY DICKEY New Orleans and Perth May 2016

Table of Contents Preface ................................................................................................................... v Table of Cases ...................................................................................................... ix Table of Statutes ................................................................................................ lxxi 1 Characteristics of a Ship ............................................................................ 1 2 Division of Shipping Law Powers in Australia ...................................... 19 3 Registration of Ships ................................................................................. 51 4 Consequences of Registration .................................................................. 77 5 Property, Ownership and Title ................................................................ 93 6 Acquisition of Property in Ships ........................................................... 113 7 Introduction to Charges over Ships ...................................................... 127 8 Maritime Liens ........................................................................................ 133 9 Possessory Liens and Bottomry ............................................................. 169 10 Mortgage of Ships ................................................................................... 175 11 Introduction to Carriage of Goods by Sea ........................................... 191 12 Bills of Lading, Sea Waybills and Other Sea-Carriage Documents . 203 13 Voyage Charterparties ............................................................................ 367 14 Time Charterparties ................................................................................ 465 15 Collisions and Liability for Damage ..................................................... 577 16 Limitation of Liability ............................................................................ 625 17 Marine Insurance .................................................................................... 679 18 General Average ....................................................................................... 761 19 Pollution from Ships ............................................................................... 781 20 Salvage ...................................................................................................... 861 21 Wrecks ...................................................................................................... 907 Appendix 1: Conlinebill 2016 ........................................................................ 921 Appendix 2: Combiconbill 2016 .................................................................... 927 Appendix 3: Linewaybill 2016 ....................................................................... 933 Appendix 4: Combiconwaybill 2016 ............................................................. 939

viii Table of Contents

Appendix 5: Congenbill 2016 ......................................................................... 945 Appendix 6: Gencon 94 .................................................................................. 951 Appendix 7: NYPE 2015 ................................................................................ 961 Appendix 8: Institute Cargo Clauses (A) 2009 .......................................... 1027 Appendix 9: York-Antwerp Rules 2016 ...................................................... 1031 Index ................................................................................................................ 1043

Table of Cases A A Gagniere & Co v Eastern Co of Warehouses (1921) 7 Ll L Rep 188 ................................... 12.840 A Gagniere & Co v Eastern Co of Warehouses (1921) 8 Ll L Rep 365 ................................... 12.840 A Meredith Jones & Co Ltd v Vangemar Shipping Co Ltd (The Apostolis) [1997] 2 Lloyd’s Rep 241 ........................................................................................................................................... 12.400 A Meredith Jones & Co Ltd v Vangemar Shipping Co Ltd (The Apostolis) (No 2) [2000] 2 Lloyd’s Rep 337 ................................................................................................................................... 13.560 A Raptis & Son v South Australia (1977) 138 CLR 346 ....................................... 2.110, 2.220, 2.260 A/B Nordiska Lloyd v J Brownlie & Co (Hull) Ltd (1925) Com Cas 307 ............................... 13.210 A/S Awilco v Fulvia SpA di Navigazione (The Chikuma) [1981] 1 Lloyd’s Rep 371 ............ 14.310, 14.440 A/S Gunnstein & Co K/S v Jensen, Krebs and Nielsen (The Alfa Nord) [1977] 2 Lloyd’s Rep 434 ................................................................................................................................... 13.660 A/S Hansen-Tangens Rederi III v Total Transport Corp (The Sagona) [1984] 1 Lloyd’s Rep 194 ......................................................................................................... 14.360, 14.380, 14.390 A/S Iverans Rederi v KG MS Holstencruiser Seeschiffahrtsgesellschaft mbH & Co (The Holstencruiser) [1992] 2 Lloyd’s Rep 378 ............................................................................ 14.410 AB Marintrans v Comet Shipping Co Ltd (The Shinjitsu Maru No 5) [1985] 1 Lloyd’s Rep 568 ...................................................................................................................... 13.560, 14.400 ABC Shipbrokers v The Ship Offi Gloria [1993] 3 NZLR 576 ................................................... 8.590 AET Inc Ltd v Arcadia Petroleum Ltd (The Eagle Valencia) [2010] 2 Lloyd’s Rep 257 ........ 13.200, 13.490 AIC Ltd v Marine Pilot Ltd (The Archimidis) [2008] 1 Lloyd’s Rep 597 .................................. 13.50 ANZ Banking Group Ltd v Cawood [1987] 1 Qd R 131 ........................................................... 13.440 APC Marine Pty Ltd v Ship APC Aussie 1 [2009] FCA 690 ..................................................... 14.450 ASM Shipping Ltd of India v TTMI Ltd of England (The Amer Energy) [2009] 1 Lloyd’s Rep 293 ................................................................................................................................... 14.240 Abrahams v Herbert Reiach Ltd [1922] 1 KB 477 ........................................................ 13.520, 13.540 Abt Rasha, The [2000] 2 Lloyd’s Rep 575 ................................................................................... 18.60 Abu Dhabi National Tanker Co v Product Star Shipping Ltd (The Product Star) (No 2) [1993] 1 Lloyd’s Rep 397 ........................................................................................... 14.290, 14.300, 14.370 Ace Imports Pty Ltd v Companhia de Navegacao Lloyd Brasileiro (1987) 10 NSWLR 32 ... 12.160, 12.210 Achille Lauro Fu Gioacchino & C v Total Societa Italiana per Azioni [1968] 2 Lloyd’s Rep 247 ...................................................................................................................... 12.330, 13.620 Acraman v Johnston (1871) 5 SALR 65 ...................................................................................... 12.420 Acrux, The [1962] 1 Lloyd’s Rep 405 ................................................................ 8.470, 10.320, 10.370 Acrux, The [1965] P 391 ................................................................................................................ 8.230 Action Navigation Inc v Bottigliere di Navigazione SpA (The Kitsa) [2005] 1 Lloyd’s Rep 432 ...................................................................................................................... 14.270, 14.330 Action SA v Britannic Shipping Corporation Ltd (The Aegis Britannic) [1985] 2 Lloyd’s Rep 481 ................................................................................................................................... 13.570 Action SA v Britannic Shipping Corporation Ltd (The Aegis Britannic) [1987] 1 Lloyd’s Rep 119 .................................................................................................................................... 13.570 Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm) [1982] 1 WLR 119; [1982] 1 Lloyd’s Rep 7 .................................................................................. 12.300, 13.600, 14.110, 14.330, 20.150 Acwoo International Steel Corp v Toko [sic] Kaiun Kaisha Ltd 840 F 2d 1284 (6th Cir 1988) ............................................................................................................ 12.170, 12.560 Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133 ......... 13.600, 14.150 Adler v Dickson [1955] 1 QB 158 ...................................................................... 12.740, 12.840, 15.20

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Admiralty Commissioners v Owners of SS Chekiang [1926] AC 637 ...................................... 15.170 Admiralty Commissioners v Owners of SS Susquehanna [1926] AC 655 ................................. 15.170 Admiralty Commissioners v Page [1918] 2 KB 447 ................................................................... 20.220 Admiralty Commissioners v SS Volute [1922] 1 AC 129 ........................................................... 15.150 Admiralty Commissioners v Valverda (Owners) [1938] AC 173 ............. 8.20, 8.190, 20.660, 20.670 Advertising Department Pty Ltd v Ship MV Port Phillip (2004) 141 FCR 251 ......................... 5.190 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39 ............................................................ 13.60, 14.380, 16.50, 16.90, 16.100, 16.120, 19.240 Aegnoussiotis Shipping Corporation of Monrovia v A/S Kristian Jebsens Rederi of Bergen (The Aegnoussiotis) [1977] 1 Lloyd’s Rep 268 ................................................................ 14.440, 14.550 Aetna Insurance Co v M/V Lash Italia 858 F 2d 190 (4th Cir 1988) .......................... 12.340, 12.560 Afovos Shipping Co SA v R Pagnan and F Lli (The Afovos) [1983] 1 Lloyd’s Rep 335 ....... 14.450 Africano, The [1894] P 141 ............................................................................................................ 8.620 Agapatos v Agnew (The Aegeon) [2003] QB 556 ......................................................... 17.620, 17.630 Agapitos v Agnew (The Aegeon) (No 2) [2003] Lloyds Rep IR 54 .......................................... 17.620 Agar v Hyde (2000) 201 CLR 552 .............................................................................................. 12.270 Aglaia, The (1888) 13 PD 160 ..................................................................................................... 20.140 Agnew v Commissioner of Inland Revenue [2001] 2 AC 710 ................................................... 14.560 Agrimpex Hungarian Trading Company for Agricultural Products v Sociedad Financiera De Bienes Raices SA (The Aello) [1958] 2 Lloyd’s Rep 65 .................................................................. 13.170 Agrosin Pte Ltd v Highway Shipping Co Ltd (The Mata K) [1998] 2 Lloyd’s Rep 614 ........ 12.130, 12.210 Ahmad v Mitsui OSK Lines Ltd (2005) 222 ALR 338 .................................... 12.340, 12.670, 12.780 Aichhorn & Co KG and Switzerland General Insurance Co Ltd v The Ship MV Talbot (1974) 132 CLR 449 ........................................................................................................................... 8.40, 8.100 Aitchison v Lohre (1879) 4 App Cas 755 .................................................................................... 20.440 Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418 ................................... 12.90, 12.590 Akai Pty Ltd v People’s Insurance Co Ltd [1998] 1 Lloyd’s Rep 90 .......................................... 12.90 Akedian Co Ltd v Royal Insurance Australia Ltd [1999] 1 VR 80 .............................. 17.100, 17.110 Akerblom v Price, Potter, Walker & Co (1881) 7 QBD 129 ......................................... 20.130, 20.360 Aktieselskabet Olivebank v Dansk Svovlsyre Fabrik [1919] 2 KB 162 ...................................... 13.60 Aktieselskabet Reidar v Arcos Ltd [1927] 1 KB 352 ................................................................. 13.540 Aktieselskabet de Danske Sukkerfabrikker v Bajamar Compania Naviera SA (The Torenia) [1983] 2 Lloyd’s Rep 210 ........................................................................................................ 12.280, 12.370 Al Battani, The [1993] 2 Lloyd’s Rep 219 ......................................................... 12.90, 12.700, 12.710 Alamo Chemical Transport Co v M/V Overseas Valdes 469 F Supp 203 (ED La 1979) ......... 15.140 Albacora SRL v Westcott & Laurance Line Ltd [1966] 2 Lloyd’s Rep 53 ............................... 12.310 Albacruz (Cargo Owners) v Albazero (Owners): The Albazero [1977] AC 774 ....................... 12.840 Albazero, The [1977] AC 774 ...................................................................................................... 12.680 Albion, The (1861) Lush 282; 167 ER 121 ................................................................................. 20.460 Albion, The (1872) 3 VR (A) 1 .......................................................................................... 8.300, 8.570 Albionic, The [1942] P 81 ............................................................................................................ 20.290 Aldebaran Compania Maritima SA Panama v Aussenhandel AG Zurich [1977] AC 157 ........ 13.180, 13.280 Alexander, The (1812) 1 Dods 278; 165 ER 1310 .......................................................................... 8.70 Alexandros Shipping Co of Piraeus v MSC Mediterranean Shipping Co SA of Geneva (The Alexandros P) [1986] 1 Lloyd’s Rep 421 ................................................................ 13.560, 14.400 Alfen, The (1857) Swab 189; 166 ER 1088 ................................................................... 20.210, 20.220 Alfred C Toepfer Schiffahrtsgesellschaft GmbH v Tossa Marine Co Ltd (The Derby) [1985] 2 Lloyd’s Rep 325 ......................................................................................................... 14.110, 14.120 Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 123 ................................................................................................................................... 19.230 Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 327 ...................................................................................................................... 19.230, 19.330 Alhambra, The (1881) 6 PD 68 ...................................................................................................... 13.90 Alimport v Soubert Shipping Co Ltd [2000] 2 Lloyd’s Rep 447 ............................................... 12.200 Aline, The (1839) 1 W Rob 111; 166 ER 514 .............................................................................. 8.390

Table of Cases xi All Commodities Supplies Co Ltd v M/V Acritas 702 F 2d 1260 (5th Cir 1983) .................... 12.490 Allanah Pty Ltd v The Ship Amanda N (1989) 21 FCR 60 ......................................................... 8.620 Alletta, The [1974] 1 Lloyd’s Rep 40 ................................................................................ 8.450, 8.490 Allgemeine Versicherungs-Gesellschaft Helvetia v Administrator of German Property [1931] 1 KB 672 ........................................................................................................................................... 17.440 Allied Chemical Corp v Hess Tankship Co 661 F 2d 1044 (5th Cir 1981) ............................... 15.140 Allied Chemical International Corp v Companhia de Navegacao Lloyd Brasileiro 775 F 2d 476; 1986 AMC 826 (2d Cir 1985) ................................................................................................ 12.770 Allison Pty Ltd v Lumley General Insurance Ltd (2006) 200 FLR 394; 14 ANZ Insurance Cases 61-708; [2006] WASC 104 ..................................................................................................... 17.220 Allseas Maritime SA v M/V Mimosa 574 F Supp 844 (SD Tex 1983) ..................................... 15.140 Alma Shipping Corporation of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep 115 ............................................................................................ 14.210, 14.220, 14.230, 14.240 Alstom Ltd v Liberty Mutual Insurance Co (No 2) [2013] FCA 116 ............ 17.270, 17.280, 17.290, 17.310 Alstom Ltd v Sirakas [2012] NSWSC 1064 ................................................................................ 13.440 Alternative Glass Supplies v M/V Nomzi 1999 AMC 1080 (SDNY 1999) ................. 12.340, 12.560 Aluminios Pozuelo Ltd v S/S Navigator 407 F 2d 152; 1968 AMC 2532 (2d Cir 1968) ........ 12.560 Alvion Steamship Corporation Panama v Galban Lobo Trading Co SA of Havana (The Rubystone) [1955] 1 QB 430 ..................................................................................................................... 13.270 Amarantos Shipping Co Ltd v South Australia (2004) 89 SASR 438 ............................ 16.20, 16.100 Ambatielos, The; The Cephalonia [1923] P 68 ............................................................................. 8.320 American Farmer, The (1947) 80 Ll L Rep 672 ......................................................................... 20.200 American Home Assurance Co v MV Zim Jamaica 296 F Supp 2d 494 (SDNY 2003) .......... 12.160 American Home Assurance Inc v Internaves Shipping Corp 985 F Supp 1154; 1998 AMC 2266 (SD Fla 1997) .......................................................................................................................... 12.620 American Marine Corp v Barge American Gulf III 100 F Supp 2d 393 (ED La 2000) ........... 12.300 American Overseas Marine Corp v Golar Commodities Ltd (The LNG Gemini) [2014] 2 Lloyd’s Rep 113 .................................................................................................................................... 14.400 Amstelslot, The (see Union of India v NV Reederij Amsterdam [1962] 1 Lloyd’s Rep 539) .. 12.300 Anapolis, The; The Golden Light; The HM Hayes (1861) Lush 355; 167 ER 150 .................. 20.410 Andalusian, The (1878) 3 PD 182 ...................................................................................... 1.240, 1.250 Anders Utkilens Rederi A/S v Compagnie Tunisienne de Navigation of Tunis (The Golfstraum) [1976] 2 Lloyd’s Rep 97 ........................................................................................................ 14.190 Anders Utkilens Rederi A/S v O/Y Lovisa Stevedoring Co A/B (The Golfstraum) [1976] 1 Lloyd’s Rep 547 ................................................................................................................................... 14.300 Anderson v Attorney General of New Zealand (The Danica Brown) [1995] 2 Lloyd’s Rep 264 ................................................................................................................................... 12.300 Anderson v Hillies (1852) 12 CB 499; 138 ER 1002 ................................................................. 12.640 Anderson v Morice (1874) LR 10 CP 58 .................................................................................... 17.300 Anderson v United Insurance Co (1876) 2 VLR (L) 129 ........................................................... 17.150 Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870 ...................................................................................... 11.70, 12.810, 12.820, 15.190 Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139 ................................................................................................................................... 14.330 Andre Toulemonde Wool Co Pty Ltd v Knutsen Offshore (Panama) SA (unreported, WA SC, Anderson J, 26 June 1998) .......................................................................................... 12.300, 18.70 Andrea Merzario Ltd v Internationale Spedition Leitner Gesellschaft GmbH [2001] 1 Lloyd’s Rep 490 ........................................................................................................................................... 13.660 Aneroid, The (1877) 2 PD 189 ....................................................................................................... 8.630 Angel Bell, The [1979] 2 Lloyd’s Rep 491 ......................................................................... 4.90, 10.40 Anglo-Danubian Transport Co Ltd v Ministry of Food (1950) 83 Ll L Rep 137 ........... 13.50, 13.70, 13.410 Anglo-Indian, The (1868) 8 SCR 102 ................................................................................ 8.440, 8.450 Anglo-Saxon Petroleum Co v Adamastos Shipping Co [1957] 2 QB 233 ................................. 12.370 Anglo-Saxon Petroleum Co Ltd v Adamastos Shipping Co Ltd [1957] 2 QB 255 ................... 14.130 Anglo-Saxon Petroleum Co Ltd v Adamastos Shipping Co Ltd [1959] AC 133 ...................... 14.130

xii Table of Cases Anglo Irish Beef Processors International v Federated Stevedores Geelong [1997] 2 VR 676 .......................................................................................................... 12.370, 12.580, 12.590 Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 ............. 13.130 Ann Stathatos, The (see Royal Greek Government v Minister of Transport (1950) 83 Ll L Rep 228) ........................................................................................................ 14.380 Annangel Glory Compania Naviera SA v M Golodetz Ltd (The Annangel Glory) [1988] 1 Lloyd’s Rep 45 ..................................................................................................................................... 14.560 Annefield, The [1971] P 178 ........................................................................................................ 12.720 Antaios (No 2), The [1984] 2 Lloyd’s Rep 235 .......................................................................... 14.460 Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 .................................... 14.460 Antares II and Victory, The [1996] 2 Lloyd’s Rep 482 .............................................................. 15.105 Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1991] 2 Lloyd’s Rep 485 ...................................................................................................................... 13.200, 13.660 Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558 ......................................................................................................... 13.200, 13.220, 13.660 Anthanasopoulos v Moseley (2001) 52 NSWLR 262 ................................................................. 15.170 Antigoni, The [1991] 1 Lloyd’s Rep 209 .......................................................... 12.300, 12.370, 12.480 Antiparos ENE v SK Shipping Co Ltd (The Antiparos) [2008] 2 Lloyd’s Rep 237 ................... 13.50 Antonow v Leane (1989) 53 SASR 60 ........................................................................................ 15.110 Anvil Knitwear Inc v Crowley American Transport Inc 2001 AMC 2382 (SDNY 2001) ....... 12.430, 12.490 Aqualon (UK) Ltd v Vallana Shipping Corp [1994] 1 Lloyd’s Rep 669 ................................... 12.840 Aquila, The (1798) 1 C Rob 37; 165 ER 87 .................................................................... 20.630, 21.70 Arab Maritime Petroleum Transport Co v Luxor Trading Corp (The Al Bida) [1987] 1 Lloyd’s Rep 124 ................................................................................................................................ 14.80, 14.100 Aramis, The [1989] 1 Lloyd’s Rep 213 ....................................................................................... 12.680 Argonaut Navigation Co Ltd v Ministry of Food (The SS Argobec) [1949] 1 KB 572 ........... 13.560 Aries Tanker Corporation v Total Transport Ltd (The Aries) [1977] 1 Lloyd’s Rep 334 ........ 12.580, 13.660 Arkle v Henzell (1858) 8 El & Bl 828; 120 ER 309 .................................................................... 3.410 Armadillo, The (1841) 1 W Rob 215; 166 ER 566 ......................................................................... 9.50 Armement Adolf Deppe v John Robinson & Co Ltd [1917] 2 KB 204 .................................... 13.200 Armour & Co v Walford [1921] 3 KB 473 ................................................................................. 12.270 Aro Co Ltd, Re [1980] Ch 196 ............................................................................. 8.620, 8.630, 16.250 Arosa Kulm (No 2), The [1960] 1 Lloyd’s Rep 97 ...................................................................... 8.230 Arosa Star, The [1959] 2 Lloyd’s Rep 396 ................................................................................... 8.330 Arrow Shipping Co Ltd v Tyne Improvement Commissioners: The Crystal [1894] AC 508 ..... 21.70 Asfar & Co v Blundell [1896] 1 QB 123 .................................................................................... 13.660 Asia Star, The [2010] 2 Lloyd’s Rep 121 ...................................................................................... 14.30 Asiatic Steam Navigation Co Ltd v Commonwealth (1956) 96 CLR 397 ............ 2.290, 2.310, 16.20 Associated Metals & Minerals Corp v M/V Arktis Sky 1991 AMC 1499 (SDNY 1991) ........ 12.720 Associated Metals & Minerals Corp v M/V Arktis Sky 978 F 2d 47; 1993 AMC 509 (2d Cir 1992) .............................................................................................................. 12.310, 12.450 Associated Packaging Pty Ltd v Sankyo Kaiun Kabushiki Kaisha [1983] 3 NSWLR 293 ...... 12.150 Astro Amo Compania Naviera SA v Elf Union SA (The Zographia M) [1976] 2 Lloyd’s Rep 382 ................................................................................................................................... 14.310 Asturias, The 40 F Supp 168 (SDNY 1941) ................................................................................ 12.410 Athamas (Owner) v Dig Vijay Cement Co Ltd (The Athamas) [1963] 1 Lloyd’s Rep 287 ...... 13.90, 13.640 Athanasia Comninos, The (1979) [1990] 1 Lloyd’s Rep 277 ....................................... 13.520, 14.380 Athenian Tankers Management SA v Pyrena Shipping Inc (The Arianna) [1987] 2 Lloyd’s Rep 376 ...................................................................................................................... 14.110, 14.120 Athens Maritime Enterprises Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Andreas Lemos) [1983] QB 647; [1982] 2 Lloyd’s Rep 483 .................................... 17.10, 17.220 Atkins v Fibre Disintegrating Co 2 Ben 381; 2 F Cas 78 (EDNY 1868) (No 601) ...... 13.70, 14.300 Atkins v Fibre Disintegrating Co 85 US (18 Wall) 272 (1873) ...................................... 13.70, 14.300

Table of Cases xiii Atkins International HA v Islamic Republic of Iran Shipping Lines (The APJ Priti) [1987] 2 Lloyd’s Rep 37 .......................................................................................................................... 13.50 Atkinson v Maling (1788) 2 TR 462; 100 ER 249 ....................................................................... 6.190 Atkinson, Assignees of Sleddon v Bell (1828) 8 B & C 277; 108 ER 1046 ................................. 6.40 Atlantic & Great Lakes Steamship Corp v Steelmet Inc 565 F 2d 848 (2nd Cir 1977) ............. 13.30 Atlantic Lines & Navigation Co Inc v Hallam Ltd (The Lucy) [1983] 1 Lloyd’s Rep 188 .... 14.280, 14.290 Atlantic Lines and Navigation Co Inc v Didymi Corp (The Didymi) [1988] 1 Lloyd’s Rep 97 ....................................................................................................................................... 14.80 Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1991] 1 Lloyd’s Rep 246 .......................................................................................................................... 14.30, 14.80 Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1992] 2 Lloyd’s Rep 103 ............................................................................................................. 14.30, 14.80, 14.100 Atlantic Maritime Co Inc v Gibbon [1954] 1 QB 88 .................................................................. 17.310 Atlantic Mutual Insurance Co v Poseidon Schiffahrt GmbH 313 F 2d 872 (7th Cir 1963) ..... 12.340, 12.560 Atlantic Mutual Insurance Co Inc v CSX Lines LLC 432 F 3d 428; 2006 AMC 1 (2d Cir 2005) ........................................................................................................................... 12.510 Atlantic Oil Carriers Ltd v British Petroleum Co (The Atlantic Duchess) [1957] 2 Lloyd’s Rep 55 ..................................................................................................................................... 13.520 Atlas, The (1827) 2 Hagg Adm 48; 166 ER 162 ................................................................... 9.50, 9.70 Atlas, The (1862) Lush 518; 167 ER 235 ......................................................... 20.240, 20.250, 20.550 Atlas, The 93 US (3 Otto) 302; 23 L Ed 863 (1876) .................................................................. 15.140 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (2012) 291 ALR 795 ..................................... 16.260 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 ............ 16.250, 16.260 Attica Sea Carriers Corp v Ferrostaal Poseidon Bulk Reederei GmbH [1976] 1 Lloyd’s Rep 250 ...................................................................................................................... 14.250, 14.510 Attorney-General v Australian Agricultural Co (1934) 34 SR (NSW) 571 .................................. 2.210 Attorney-General v Glen Line Ltd (1930) 37 Ll L Rep 55 ........................................................ 17.440 August 8, The [1983] 2 AC 450 ....................................................................................................... 8.40 Augusta, The (1813) 1 Dods 283; 165 ER 1312 ............................................................................. 9.50 Auguste Legembre, The [1902] P 123 ......................................................................................... 20.410 Aurora Borealis Compania Armadora SA v Marine Midland Bank NA (The Maistros) [1984] 1 Lloyd’s Rep 646 ...................................................................................................................... 14.520 Austin Friars, The (1894) 10 TLR 633 ........................................................................................ 13.200 Australasian Steam Navigation Co v Smith (1886) 7 LR (NSW) 207 ....................................... 15.100 Australasian United Steam Navigation Co Ltd v Shipping Control Board (1945) 71 CLR 508 .................................................................................................................................... 11.70 Australia, The [1927] AC 145 ...................................................................................................... 15.105 Australia Star, The (1940) 67 Ll L Rep 110 ................................................................................ 12.300 Australian Coastal Shipping Commission v Green [1971] 1 QB 456 .......................................... 18.40 Australian Coastal Shipping Commission v O’Reilly (1962) 107 CLR 46 .......................... 2.40, 2.70 Australian Fisheries Management Authority v Su (2009) 176 FCR 95 .......................... 19.70, 19.130 Australian General Electric Pty Ltd v AUSN Co Ltd [1946] SASR 278 ..................... 12.150, 12.470 Australian National Airways Pty Ltd v Commonwealth (1945) 71 CLR 29 ................................. 2.60 Australian Oil Refining Pty Ltd v Cooper (1987) 11 NSWLR 277 ............................................. 19.40 Australian Robinson v Western Museum (1977) 138 CLR 283 ................................................. 20.400 Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 ....... 12.610 Australian Shipping Commission v Kooragang Cement Pty Ltd [1988] VR 29 .......... 12.580, 12.590 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 ........ 2.30, 2.40, 2.60, 2.70, 2.190, 2.210, 2.220 Australian Tallow & Agri-Commodities Pty Ltd v Malaysia International Shipping Corp (2001) 50 NSWLR 576 ............................................................................................................................ 12.640 Australian United Steam Navigation Co Ltd v Ship William E Burnham (1921) 21 SR (NSW) 225 .............................................................................................................................. 20.140 Australian Wheat Board v Reardon Smith Line Ltd (1954) 91 CLR 233 ................................... 13.50 Automatic Totalisators Ltd v Oceanic Steamship Co [1965] NSWLR 702 ............................... 12.100

xiv Table of Cases Automatic Tube Co Pty Ltd v Adelaide Steamship (Operations) Ltd [1966] WAR 103 .......... 12.590, 12.600 Aviles v S/S San Juan 1991 AMC 2681 (SDNY 1991) .............................................................. 12.560

B BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 ............. 12.10, 12.20, 12.300, 12.640, 12.680, 12.720, 12.760, 12.810, 13.600 BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 4) (2009) 263 ALR 63 ....... 13.440 BNP Paribas v Pacific Carriers Ltd (2004) 218 CLR 451 .......................................................... 12.770 BP North American Petroleum v Solar S/T 250 F 3d 307; 2001 AMC 1844 (5th Cir 2001) ... 15.170 BP Oil International Ltd v Target Shipping Ltd (The Target) [2012] 2 Lloyd’s Rep 245 .......... 13.30 BP Oil International Ltd v Target Shipping Ltd (The Target) [2013] 1 Lloyd’s Rep 561 ........ 13.660 BS & N Ltd (BVI) v Micado Shipping Ltd (Malta) (The Seaflower) [2001] 1 Lloyd’s Rep 341 ........................................................................................................................ 14.70, 14.140 Babatsikos v Car Owners’ Mutual Insurance Co Ltd [1970] VR 297 ....................................... 17.100 Baggermaatschappij Boz & Kalis BV v Australian Shipping Commission (1980) 54 ALJR 382 ................................................................................................................................. 15.110 Baker v Adam (1910) 15 Com Cas 227 ........................................................................................ 17.80 Ballantyne & Co v Paton & Hendry 1912 SC 246 ..................................................................... 13.650 Ballast Trailing NV v Decca Survey Australia Ltd (unreported, NSW Sup Ct, 1980) .............. 16.170 Ballast Trailing NV v Decca Survey Australia Ltd (unreported, NSW Sup Ct CA, 1981) ....... 16.170 Balli Trading Ltd v Afalona Shipping Co Ltd (The Coral) [1993] 1 Lloyd’s Rep 1 ... 12.310, 12.450 Bally Inc v M/V Zim America 22 F 3d 65; 1994 AMC 2762 (2d Cir 1994) ............................ 12.210 Balnaves v Smith [2011] 2 Qd R 17 ............................................................................................ 15.130 Bamburi, The [1982] 1 Lloyd’s Rep 312 ..................................................................................... 17.400 Bamfield v Goole and Sheffield Transport Co Ltd [1910] 2 KB 94 .......................................... 12.630 Banana Services Inc v M/V Fleetwave 911 F 2d 519; 1991 AMC 439 (11th Cir 1990) .......... 12.280 Banana Services Inc v M/V Tasman Star 68 F 3d 418; 1996 AMC 260 (11th Cir 1995) ........ 12.400 Bank Line Ltd v Arthur Capel & Co [1919] AC 435 ................................................................. 14.480 Bank of America National Trust and Savings Association v Chrismas (The Kyriaki) [1993] 1 Lloyd’s Rep 137 ...................................................................................................................... 17.370 Bank of New South Wales v Commonwealth (1948) 76 CLR 1 .................................................... 2.60 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1990] 1 QB 818 .... 17.90 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1992] 1 AC 233 ... 17.90, 17.570 Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 ....... 8.80, 8.330, 8.380, 8.450, 8.590, 9.50, 9.70, 10.20 Banner v Berridge (1881) LR 18 Ch D 254 ................................................................................ 10.310 Banque Financiere de la Cite SA v Westgate Insurance Co Ltd [1991] 2 AC 249 ................... 17.630 Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd [1990] 1 QB 665 ......... 17.90, 17.100 Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd [1991] 2 AC 249 ......... 17.90, 17.100 Barber v Meyerstein (1870) LR 4 HL 317 .................................................................................. 12.770 Barclay v Penberthy (2012) 246 CLR 258 ............................................ 15.50, 15.180, 16.100, 19.230 Barclay & Co Ltd v Poole [1907] 2 Ch 284 ............................................................................... 10.370 Barclay Holdings (Australia) Pty Ltd v British National Insurance Co Ltd (1987) 8 NSWLR 514 ............................................................................................................................ 17.100 Barclays Bank Ltd v Commissioners of Customs and Excise [1963] 1 Lloyd’s Rep 81 .......... 12.770 Barde AS v ABB Power Systems (The Barde Team) (1995) 69 FCR 277 ...... 16.40, 16.160, 16.220, 19.260, 19.280 Barefoot, The (1850) 14 Jur 841 .................................................................................................. 20.410 Barker v M’Andrew (1865) 18 CB (NS) 759; 144 ER 643 .......................................... 13.130, 13.140 Barker v Moore & McCormack Inc 40 F 2d 410 (2nd Cir 1930) .............................................. 14.330 Barker v Stickney [1919] 1 KB 121 ............................................................................................ 10.230 Barker v Windle (1856) 6 El & Bl 675; 119 ER 1015 .................................................. 13.530, 14.100 Barns v Barns (2003) 196 ALR 65 .............................................................................................. 15.190 Barque Strathearn C Ltd v McIlwraith McEacharn & Co Ltd (1895) 16 LR (NSW) 94 ......... 15.170

Table of Cases xv Barras v Aberdeen Steam Trawling & Fishing Co Ltd [1933] AC 402 ....................................... 3.510 Barron v Stewart: The Panama (1870) LR 3 PC 199 ..................................................................... 9.50 Batis Maritime Corp v Petroleos de Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345 .................................................................................................. 13.50, 13.60, 13.70, 13.410 Batthyany v Bouch (1881) 50 LJQB 421 .................................................................. 5.170, 6.90, 6.100 Baumwoll Manufactur von Carl Scheibler v Furness [1893] AC 8 ................................ 12.810, 15.20 Beal v Horlock [1915] 3 KB 627 ................................................................................................... 3.510 Beaverford (Owners), The v The Kafiristan (Owners) [1938] AC 136 ......................... 20.320, 20.530 Bedeburn, The [1914] P 146 ......................................................................................................... 20.360 Bedouin, The [1894] P 1 ............................................................................................................... 17.110 Behn v Burness (1863) 3 B & S 751; 122 ER 281 ......................................................... 13.110, 14.60 Behnke v Bede Shipping Co Ltd [1927] 1 KB 649 ............................................................... 5.10, 6.20 Belcore Maritime Corp v F Lli Moretti Cereali SpA (The Mastro Giorgis) [1983] 2 Lloyd’s Rep 66 ..................................................................................................................................... 14.330 Beldis, The [1936] P 51 ............................................................................................... 8.40, 8.90, 8.100 Bell v Mansfield (1893) 19 VLR 165 ................................................................................... 4.50, 4.180 Bell, Assignee of Batley v Bank of London (1858) 28 LJ Ex 116 .............................................. 3.230 Beltana, The [1967] 1 Lloyd’s Rep 531 ......................................................................... 12.590, 12.600 Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791 ...... 11.20, 12.20, 12.40, 12.140, 12.200, 12.640 Belyando Shire Council v Rivers (1908) 2 QJPR 47 .................................................................. 19.240 Ben Line Steamers Ltd v Pacific Steam Navigation Co (The Benlawers) [1989] 2 Lloyd’s Rep 51 ..................................................................................................................................... 14.410 Ben Shipping Co (Pte) Ltd v An-Board Bainne (The C Joyce) [1986] 2 Lloyd’s Rep 285 ..... 14.420 Benjamin v M/V Balder Eems 639 F Supp 1497; 1987 AMC 52 (SDNY 1986) ...................... 12.440 Benwell Tower, The (1895) 8 Asp MLC 13 ........................................ 10.170, 10.280, 10.290, 10.310 Benyon v Cresswell (1848) 12 QB 899; 116 ER 1107 ...................................................... 6.100, 6.190 Benyon & Co v Godden & Son; HR Evans (Third Party) (1878) 3 Ex D 263 ......................... 10.280 Berger and Light Diffusers Pty Ltd v Pollock [1973] 2 Lloyd’s Rep 442 ................... 17.100, 17.350 Berkshire, The [1974] 1 Lloyd’s Rep 185 ................................................................................... 12.820 Berliner Bank AG v C Czarnikow Sugar Ltd; The Rama [1996] 2 Lloyd’s Rep 281 ..... 8.150, 8.160 Biddulph v Bingham (1874) 2 Asp MLC 225 ............................................................................. 12.100 Bineta, The [1967] 1 WLR 121 ...................................................................................................... 5.210 Bingle v Ship Queen of England (1862) 1 SCR (NSW) Eq 47 .................................... 20.410, 20.520 Binladen BSB Landscaping v M/V Nedlloyd Rotterdam 759 F 2d 1006; 1985 AMC 2113 (2d Cir 1985) ........................................................................................................................................ 12.560 Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 ................................. 13.520, 13.540 Bird v Appleton (1800) 8 TR 562; 101 ER 1547 ........................................................................ 17.610 Birmingham Southeast LLC v M/V Merchant Patriot 2003 AMC 1559 (SD Ga 2000) ............. 18.70 Bistricic v Rokov (1976) 135 CLR 552 ....................................................... 2.290, 2.310, 8.130, 16.20 Bizley & Co Pty Ltd v Transcontinental Services Ltd (The Protea Trader) (1992) (unreported, NSW Sup Ct, Carruthers J, 10 April 1992) ..................................................................................... 12.830 Black King Shipping Co Ltd v Massie (The Litsion Pride) [1985] 1 Lloyd’s Rep 437 ........... 17.100 Blackburn v Haslam (1888) 21 QBD 144 ................................................................................... 17.100 Blackgold Trading Co Ltd of Monrovia v Almare SpA di Navigazione of Genoa (The Almare Seconda and Almare Quinta) [1981] 2 Lloyd’s Rep 433 ........................................ 13.140, 14.180 Blane Steamships Ltd v Minister of Transport [1951] 2 KB 965 ................................. 14.480, 17.440 Blenden Hall, The (1814) 1 Dods 414; 165 ER 1361 ................................................................. 20.420 Blitz, The [1992] 2 Lloyd’s Rep 441 ................................................................................ 7.110, 10.370 Blue Anchor Line Ltd v Alfred C Toepfer International GmbH (The Union Amsterdam) [1982] 2 Lloyd’s Rep 432 ...................................................................................................................... 13.470 Blue Nile Shipping Co Ltd v Iguana Shipping and Finance Inc (The Darfur) [2004] 2 Lloyd’s Rep 469 ........................................................................................................................................... 16.100 Bluecorp Pty Ltd (In liq) v ANZ Executors & Trustee Co Ltd (1995) 127 FLR 120 ................ 6.190 Blunden v Commonwealth (2003) 218 CLR 330; 78 ALJR 236 ............. 4.100, 4.130, 15.10, 16.250 Blyth Shipbuilding & Dry Docks Co Ltd, Re; Forster v Blyth Shipbuilding & Dry Docks Co Ltd [1926] Ch 494 ............................................................................................................................. 6.30

xvi Table of Cases Board of Trade v Hain Steamship Co [1929] AC 534 ................................................................ 17.310 Boiler ex Elephant (1891) 64 LT 543 .......................................................................................... 20.480 Bonser v La Macchia (1969) 122 CLR 177 ...... 1.320, 2.90, 2.100, 2.110, 2.220, 2.250, 2.260, 4.90, 20.190 Boon and Cheah Steel Pipes Sdn Bhd v Asia Insurance Co Ltd [1975] 1 Lloyd’s Rep 452 ... 17.340 Borealis AB v Stargas Ltd: The Berge Sisar [2002] 2 AC 205 .......... 12.100, 12.670, 12.680, 12.760 Borgship Tankers Inc v Product Transport Corp Ltd (The Casco) [2005] 1 Lloyd’s Rep 565 ................................................................................................................................... 14.160 Boston Corp v France, Fenwick & Co Ltd (1923) 15 Ll L Rep 85 ........................................... 17.440 Bostonian, The v The Gregersö: The Gregersö [1971] 1 Lloyd’s Rep 220 ............................... 20.330 Bouillon et Cie v Lupton (1863) 15 CB (NS) 113; 143 ER 726 ............................................... 12.300 Boukadoura Maritime Corp v SA Marocaine de l’Industrie et du Raffinage (The Boukadoura) [1989] 1 Lloyd’s Rep 393 ............................................................................ 12.100, 12.110, 14.420 Bouygues Offshore SA v Caspian Shipping Co (Nos 1, 3, 4 and 5) [1998] 2 Lloyd’s Rep 461 ................................................................................................................................... 16.100 Bowbelle, The [1990] 1 Lloyd’s Rep 532 ....... 12.530, 16.10, 16.70, 16.160, 16.220, 16.240, 19.280 Bradley v H Newsom Sons & Co [1919] AC 16 ............................................................. 20.630, 21.70 Brady-Hamilton Stevedore Co v MV Kalantiao 1987 (4) SA 250 ............................................... 8.590 Bramley Moore, The [1964] P 200 ................................................................................... 16.10, 16.170 Brandt v Liverpool, Brazil and River Plate Steam Navigation Co Ltd [1924] 1 KB 575 ....... 12.150, 12.680 Branston, The (1826) 2 Hagg Adm 3n; 166 ER 146 .................................................................. 20.300 Brass v Maitland (1856) 6 El & Bl 470; 119 ER 940 ................................................... 12.630, 12.650 Bray v Macdonald (1867) 1 SALR 20 ........................................................................................... 5.190 Breckwoldt v Colonial Guano Co Ltd (1890) 16 VLR 166 ........................................................ 13.110 Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401 ........................................................................................... 12.100, 12.110, 12.170 Breydon Merchant, The [1992] 1 Lloyd’s Rep 373 .... 16.90, 16.100, 16.110, 16.140, 16.150, 16.160 Breynton (Owners) v Theodoridi & Co (1924) 19 Ll L Rep 409 .............................................. 13.470 Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231 ......................... 12.590, 12.830 Brig Byron, The (1879) 2 NSWR (Adm) 1 ................................................................................... 15.40 Brimnes: Tenax Steamship Co Ltd, The v The Brimnes (Owners) [1975] QB 929 ..... 14.310, 14.440 British Inventor, The (1933) 46 Ll L R 137 ................................................................................ 20.160 British Steamship Owners’ Association v Chapman & Son (1935) 52 Ll L Rep 169 ..... 1.280, 3.510 British Trade, The [1924] P 104 ......................................................................................... 8.230, 8.260 British Transport Docks Board v Owners of the Proceeds of Sale of the Charger and Other Vessels: The Charger and Other Vessels [1966] 1 Lloyd’s Rep 670 ...................................................... 7.90 British West Indies Produce Inc v S/S Atlantic Clipper 353 F Supp 548; 1973 AMC 163 (SDNY 1973) ........................................................................................................................................ 12.810 British and Mexican Shipping Co Ltd v Lockett Brothers Co Ltd [1911] 1 KB 264 ............... 13.270 Broadmayne, The [1916] P 64 .......................................................................................................... 8.80 Brodie v Howard (1855) 17 CB 109; 139 ER 1010 ..................................................................... 5.130 Broken Hill Co Pty Ltd v Hapag-Lloyd Aktiengesellschaft [1980] 2 NSWLR 572 .................. 12.820 Brond v Broomhall [1906] 1 KB 571 ............................................................................................ 3.370 Broomfield v Southern Insurance Co Ltd (1870) LR 5 Ex 196 ................................................... 3.510 Bropho v Western Australia (1990) 171 CLR 1 ............................................................................ 16.50 Brostrom & Son v Louis Dreyfus & Co (1932) 44 Ll L Rep 136 ............................................. 14.300 Brown v Mallett (1848) 5 CB 599; 136 ER 1013 ......................................................................... 21.70 Brown v Owner of Lighter No 6 (1910) 10 SR (NSW) 905 ........................................... 15.40, 15.110 Brown v Ship Darnholme (1922) 23 SR (NSW) 195 .................................................... 20.130, 20.140 Brown v Ship Honolulu Maru (1924) 24 WN (NSW) 309 ......................................................... 20.450 Brown v Stapylton (1827) 4 Bing 119; 130 ER 713 ................................................................... 20.100 Brown v Tanner (1868) LR 3 Ch App 597 ............... 10.170, 10.180, 10.190, 10.210, 10.220, 10.290 Brown v The Ship Honolulu Maru (1924) 24 WN (NSW) 309 ................................................. 20.460 Brown, Jenkinson & Co Ltd v Percy Dalton (London) Ltd [1957] 2 QB 621 .......................... 12.110 Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448; [1989] 1 Lloyd’s Rep 518 ...................................................................................................................... 12.550, 13.440

Table of Cases xvii Browner International Ltd v Monarch Shipping Co Ltd (The European Enterprise) [1989] 2 Lloyd’s Rep 185 ..................................................................... 12.530, 12.710, 13.20, 16.10, 16.160, 19.280 Brownsville Holdings Ltd v Adamjee Insurance Co Ltd (The Milasan) [2000] 2 Lloyd’s Rep 458 ...................................................................................................................... 17.300, 17.620 Bryan v Maloney (1995) 182 CLR 609 ............................................... 15.180, 15.190, 16.100, 19.230 Bua International Ltd v Hai Hing Shipping Co Ltd (The Hai Hing) [2000] 1 Lloyd’s Rep 300 ................................................................................................................................... 12.590 Building Construction Employees and Builders’ Labourers’ Federation of New South Wales v Minister for Industrial Relations (1986) 7 NSWLR 372 ......................................................... 2.220 Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd (The Pamphilos) [2002] 2 Lloyd’s Rep 681 ........................................................................................................................ 14.80, 14.510 Bulk Chartering and Consultants Australia Pty Ltd v T & T Metal Trading Pty Ltd: The Krasnogrosk (1993) 31 NSWLR 18 ......................................................................................... 12.90 Bulk Ship Union SA v Clipper Bulk Shipping Ltd (The Pearl C) [2012] 2 Lloyd’s Rep 533 .. 14.80, 14.90 Bulk Shipping AG v Ipco Trading SA (The Jasmine B) [1992] 1 Lloyd’s Rep 39 ........ 13.50, 13.60, 13.70, 13.410 Bulk Transport Group Shipping Co Ltd v Seacrystal Shipping Ltd (The Kyzikos) [1989] AC 1264 ..................................................................................................................... 13.170, 13.180 Bulmer, The (1823) 1 Hagg Adm 163; 166 ER 59 ....................................................................... 8.240 Bunge Corp v M/V Furness Bridge 558 F 2d 790 (5th Cir 1977) ............................................... 13.50 Bunge Edible Oil Corp v M/V Torm Rask 756 F Supp 261 (ED La 1991) ................. 12.340, 12.620 Bunge Edible Oil Corp v M/V Torm Rask 949 F 2d 786 (5th Cir 1992) .................... 12.340, 12.620 Bunge SA v ADM Do Brasil Ltda (The Darya Radhe) [2009] 2 Lloyd’s Rep 175 .................. 12.650 Bunge SA v Kyla Shipping Co Ltd (The Kyla) [2013] 1 Lloyd’s Rep 565 .............................. 14.480 Burgis v Constantine [1908] 2 KB 484 ................. 5.130, 5.180, 5.190, 5.200, 10.30, 10.240, 10.370 Burley v The Ship Texaco Southampton [1981] 2 NSWLR 238 ................................................ 20.480 Burnard v Aaron (1862) 31 LJCP 334 ........................................................................................... 11.70 Burns Philp & Co Ltd v Nelson and Robertson Pty Ltd (1958) 98 CLR 495 .......................... 15.230 Bus v Sydney County Council (1989) 167 CLR 78 .................................................................... 15.110 Butterfield v Forrester (1809) 11 East 60; 103 ER 926 .............................................................. 15.130 Byrne v Schiller (1871) LR 5 Ex 319 .......................................................................................... 13.660 Bywell Castle, The (1879) 4 PD 219 ........................................................................................... 15.110

C C-ART Ltd v Hong Kong Islands Line America SA 940 F 2d 530; 1991 AMC 2888 (9th Cir 1991) .......................................................................................................................... 12.770 C & CJ Northcote v Owners of the Henrich Bjorn: The Henrich Bjorn (1886) 11 App Cas 270 .................................................................... 8.50, 8.200, 8.320, 8.330, 8.410, 8.450, 8.620 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 .................................................. 12.280, 12.300, 12.310, 12.360, 12.370, 12.470, 12.490 CA Stewart & Co v Phs van Ommeren (London) Ltd [1918] 2 KB 560 .................................. 14.320 CA Venezolana de Navegacion v Bank Line Ltd (The Roachbank) [1988] 2 Lloyd’s Rep 337 ................................................................................................................................... 14.330 CCR Fishing Ltd v Tomenson Inc (The La Pointe) [1991] 1 Lloyd’s Rep 89 ............. 17.220, 17.290 CMA CGM SA v Classica Shipping Co Ltd [2003] 2 Lloyd’s Rep 50 ....................................... 16.50 CMA CGM SA v Classica Shipping Co Ltd [2004] 1 Lloyd’s Rep 460 ........... 14.380, 16.50, 16.90, 16.100, 19.50 CMA CGM SA v Ship Chou Shan (2014) 224 FCR 384 ................................................ 15.10, 16.250 CMA CGM SA v Ship Chou Shan (2014) 311 ALR 234 ........................................................... 16.250 CPC Consolidated Pool Carriers GmbH v CTM Cia Transmediterranea SA (The CPC Gallia) [1994] 1 Lloyd’s Rep 68 .......................................................................................................... 13.30 CS Butler, The (1874) LR 4 A & E 238 ........................................................ 1.10, 1.180, 16.20, 16.80 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 .................................. 16.250, 16.260 CV Scheepvaartonderneming Flintermar v Sea Malta Co Ltd (The Flintermar) [2005] 1 Lloyd’s Rep 409 ................................................................................................................................... 14.400

xviii Table of Cases Cactus Pipe & Supply Co v M/V Montmartre 756 F 2d 1103; 1985 AMC 2150 (5th Cir 1985) .......................................................................................................................... 12.810 Caemint Food Inc v Lloyd Brasileiro Cia de Navegaçao 647 F 2d 347; 1981 AMC 1801 (2d Cir 1981) ........................................................................................................................... 12.120, 12.150 Cairnbahn, The [1914] P 25 ......................................................................................................... 15.160 Caltex Oil (Australia) Pty Ltd v Howard Smith Industries Pty Ltd [1973] 2 NSWLR 89 ....... 13.390 Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 ........... 8.40, 15.50, 15.180, 15.190, 16.100, 16.170 Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649 .................................. 15.50, 19.230 Caltex Refining Co Pty Ltd v BHP Transport Ltd (The Iron Gippsland) [1994] 1 Lloyd’s Rep 335 ...................................................................................................................... 12.310, 12.390 Caltex Singapore Pte Ltd v BP Shipping Ltd [1996] 1 Lloyd’s Rep 286 .................................. 16.240 Calypso, The (1828) 2 Hagg Adm 209; 166 ER 221 .................................................................. 20.170 Calyx, The (1910) 27 TLR 166 .................................................................................................... 20.130 Camelia, The (1883) 9 PD 27 ...................................................................................................... 20.250 Campbell Mostyn (Provisions) Ltd v Barnett Trading Co [1954] 1 Lloyd’s Rep 65 ................ 15.170 Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55 ........... 12.410, 12.420, 17.300 Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamship Ltd [1947] AC 46 ................................................................................................................................ 12.100, 12.150 Canadian Imperial Bank of Commerce v The Orion Expeditor (1991) 43 FTR 284 ....... 8.650, 10.20 Canadian National Railway v Norsk Pacific Steamship Co [1992] 1 SCR 1021 ...................... 15.180 Canadian National Steamship Co v Watson [1939] 1 DLR 273 ................................................... 4.130 Canadian Pacific (Bermuda) Ltd v Canadian Transport Co Ltd [1974] 1 Lloyd’s Rep 311 ..... 14.330 Canadian Transport Co v Court Line [1940] AC 934 .................................................... 13.560, 14.400 Candlewood Navigation Corporation v Mitsui Osk Lines (The Mineral Transporter and The Ibaraki Maru) [1986] AC 1 ......................................................................... 13.440, 15.170, 15.190, 19.240 Cantiere Navale Triestina v Handelsvertretung der Russe Soviet Republik Naphtha Export [1925] 2 KB 172 ....................................................................................................................... 13.410, 13.470 Cape Packet, The (1848) 3 W Rob 122; 166 ER 909 ................................................................. 20.550 Capital Coastal Shipping Corp v Hartford Fire Insurance Co 378 F Supp 163; 1974 AMC 2039 (ED Va 1974) .......................................................................................................................... 17.580 Capitan San Luis, The [1993] 2 Lloyd’s Rep 573 ...................................................................... 16.160 Captain Gregos, The [1989] 2 Lloyd’s Rep 63 ........................................................................... 12.610 Carboex SA v Louis Dreyfus Commodities Suisse SA [2012] 2 Lloyd’s Rep 379 .................. 13.380 Care Shipping Corp v Itex Itagrani Export SA [1993] 1 QB 1 ....................... 14.200, 14.550, 14.560 Care Shipping Corp v Latin American Shipping Corp [1983] QB 1005 ......... 14.260, 14.550, 14.560 Caresse Navigation Ltd v Zurich Assurances Maroc (The Channel Ranger) [2015] 1 Lloyd’s Rep 256 ........................................................................................................................................... 12.720 Carga del Sur Compania Naviera SA v Ross T Smyth & Co Ltd (The Seafort) [1962] 2 Lloyd’s Rep 147 ................................................................................................................................... 13.180 Cargill BV v S/S Ocean Traveller 726 F Supp 56; 1989 AMC 953 (SDNY 1989) .................. 12.590 Cargill Ferrous International v M/V Sea Phoenix 325 F 3d 695 (5th Cir 2003) ....................... 12.720 Cargill Inc v M/V Golden Chariot 31 F 3d 316; 1995 AMC 1077 (5th Cir 1994) ................... 12.720 Cargill Inc v Rionda de Pass Ltd (The Giannis Xilas) [1982] 2 Lloyd’s Rep 511 ................... 13.350 Cargill International SA v CPN Tankers Ltd (Bermuda) (The OT Sonja) [1993] 2 Lloyd’s Rep 435 ...................................................................................................................... 13.530, 12.580 Cargo Ships El-Yam Ltd v Invoer-En Transport Onderneming Invotra NV [1958] 1 Lloyd’s Rep 39 ..................................................................................................................................... 14.100 Cargo ex Capella (1867) LR 1 A & E 356 .................................................................................. 20.530 Cargo ex Galam (1863) Br & Lush 167 .......................................................................................... 9.30 Cargo ex Port Victor [1901] P 243 .............................................................................................. 20.570 Cargo ex Schiller (1877) 2 PD 145 ..................................... 8.190, 8.210, 20.10, 20.30, 20.630, 21.70 Cargo ex Sultan (1859) Swab 504; 166 ER 1235 ........................................................................... 9.60 Caroline, The (1861) Lush 334; 167 ER 149 .............................................................................. 20.230 Carrie, The [1917] P 224 .............................................................................................................. 20.310

Table of Cases xix Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd (The Cape Comorin) (1991) 24 NSWLR 745 ................................................................................................... 12.530, 12.570, 12.740, 12.840 Carron Park, The (1890) 15 PD 203 .............................................................................................. 18.70 Carruthers v Sheddon (1815) 6 Taunt 14; 128 ER 937 ................................................................. 17.40 Carso, The 53 F 2d 374 (2d Cir 1931) ........................................................................................ 12.150 Case v Davidson (1816) M & S 79; 105 ER 980 ....................................................................... 17.440 Case v Davidson (1820) 2 Brod & B 379; 129 ER 1013 ........................................................... 17.440 Cash Logistics Pty Ltd v Nelson [2015] SASC 117 ................................................................... 12.840 Caspian Basin Specialised Emergency Salvage Administration v Bouygues Offshore SA (No 4) [1997] 2 Lloyd’s Rep 507 ........................................................................................... 16.40, 16.100 Castel Electronics Pty Ltd v TCL Airconditioner (Zhongshan) Co Ltd [2013] VSC 92 ........... 12.270 Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd [1984] AC 226 ........... 18.30, 18.50 Caterpillar Overseas SA v Marine Transportation Inc 900 F 2d 714 (4th Cir 1990) ................ 12.560 Catherine, The (1847) 3 W Rob 1 ........................................................................................ 8.450, 9.70 Catherine, formerly the Croxdale, The (1851) 15 Jur 231 ........................ 8.470, 9.50, 10.320, 10.370 Cattle v Stockton Waterworks Co Ltd (1875) LR 10 QB 453 ...................................... 15.190, 19.230 Cavcar Co v M/V Suzdal 723 F 2d 1096; 1984 AMC 609 (3d Cir 1983) ................................ 12.810 Cayo Bonito, The [1904] P 310 ................................................................................................... 20.200 Cebu, The [1983] 1 Lloyd’s Rep 302 ............................................................... 14.260, 14.550, 14.560 Cebu, The (see Care Shipping Corp v Latin American Shipping Corp [1983] QB 1005) ........ 14.560 Cebu (No 2), The [1990] 1 Lloyd’s Rep 316 ................................................... 14.200, 14.550, 14.560 Cebu (No 2), The (see Care Shipping Corp v Itex Itagrani Export SA627 [1993] 1 QB 1) .... 14.560 Cella, The (1888) 13 PD 82 ....................................................................................... 8.50, 8.410, 8.620 Celthene Pty Ltd v WJK Hauliers Ltd [1981] 1 NSWLR 606 ................................................... 12.740 Celtic King, The [1894] P 175 ........................................................................................ 10.190, 10.210 Central Argentine Railway Ltd v Marwood [1915] AC 981 ....................................................... 13.380 Central National-Gottesman Inc v M/V Gertrude Oldendorff 204 F Supp 2d 675; 2002 AMC 1477 (SDNY 2002) ........................................................................................................................... 12.810 Century Textiles and Industry Ltd v Tomoe Shipping (Singapore) Pte Ltd (The Aditya Vaibhav) [1991] 1 Lloyd’s Rep 573 ...................................................................................................... 14.320 Century Textiles and Industry Ltd v Tomoe Shipping (Singapore) Pte Ltd (The Aditya Vaibhav) [1993] 1 Lloyd’s Rep 63 ........................................................................................................ 14.320 Cepheus Shipping Corp v Guardian Royal Exchange Assurance Plc (The Capricorn) [1995] 1 Lloyd’s Rep 622 ............................................................................................................ 17.30, 17.60 Cero Navigation Corp v Jean Lion & Cie (The Solon) [2000] 1 Lloyd’s Rep 292 .... 13.380, 13.390, 13.460 Cerro Colorado, The [1993] 1 Lloyd’s Rep 58 ................................................... 8.470, 10.320, 10.370 Cerro Sales Corp v Atlantic Marine Enterprises Inc 403 F Supp 562; 1976 AMC 375 (SDNY 1975) ........................................................................................................................... 12.600 Champion, The [1934] P 1 ............................................................................................................. 1.180 Chandler v Blogg [1898] 1 QB 32 ................................................................................................. 1.280 Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178 . 12.90, 12.370, 12.550, 12.560, 12.740, 12.820 Chappel v Comfort (1861) 10 CB (NS) 802; 142 ER 669 ......................................................... 12.710 Chappell v Bray (1860) 6 H & N 145; 158 ER 60 ....................................................................... 5.130 Charles Goodfellow Lumber Sales Ltd v Verreault [1971] 1 Lloyd’s Rep 185 ......................... 12.410 Charles Nelson Co v Ship Keishin Maru (1921) 22 SR (NSW) 102 ......................................... 15.110 Charlotte, The (1848) 3 W Rob 68; 166 ER 888 ................................ 20.130, 20.140, 20.200, 20.210 Charlotte Wylie, The (1846) 2 W Rob 495; 166 ER 842 ........................................................... 20.140 Chartered Mercantile Bank of India, London & China v Netherlands India Steam Navigation Co Ltd (1883) 10 QBD 521 ......................................................................................... 4.50, 4.90, 4.110 Chartered Trust and Executor Co v London Scottish Assurance Corp Ltd (1923) 39 TLR 608 .................................................................................................................................... 17.40 Chasteauneuf v Capeyron (1882) 7 App Cas 127 ................................................................ 6.10, 8.470 Chattahoochee, The 173 US 540; 19 S Ct 491; 43 L Ed 801 (1899) ........................................ 15.140 Cheerful, The (1885) 11 PD 3 ........................................................................................... 8.190, 20.250

xx Table of Cases Cheikh Boutros Selim El-Khoury v Ceylon Shipping Lines Ltd (The Madeleine) [1967] 2 Lloyd’s Rep 224 ............................................................................................ 13.600, 14.110, 14.170, 14.180 Chellew Navigation Co Ltd v AR Appelquist Kolimport AG (1933) 38 Com Cas 218 ........... 14.510 Chembulk Trading LLC v Chemex Ltd 393 F 3d 550 (5th Cir 2004) ......................... 14.550, 14.560 Chenoweth v Summers [1941] ALR (CN) 364 ........................................................................... 19.240 Chief Collector of Taxes Papua New Guinea v TA Field Pty Ltd (1975) 49 ALJR 351 .......... 13.440 Chieftain, The (1863) Br & Lush 212; 167 ER 340 .......................................................... 8.380, 10.20 Chilean Nitrate Sales Corp v Marine Transportation Co Ltd (The Hermosa) [1980] 1 Lloyd’s Rep 638 ........................................................................................................................................... 14.150 Chilean Nitrate Sales Corp v Marine Transportation Co Ltd (The Hermosa) [1982] 1 Lloyd’s Rep 570 ........................................................................................................................................... 14.150 China, The 74 US 53; 2002 AMC 1504 (1868) ............................................................................ 15.30 China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 ........................................................................................................................................... 12.300 China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA (The Mihalios Xilas) [1979] 2 Lloyd’s Rep 303 ............................................................................ 14.320, 14.440, 14.470 China Ocean Shipping Co v South Australia (1979) 145 CLR 172 .......... 2.150, 2.290, 2.310, 16.10, 16.20, 16.30, 16.100, 19.250 China Ocean Shipping Co v The Owners of the Vessel Andros (The Xingcheng) [1987] 2 Lloyd’s Rep 210 ................................................................................................................................... 12.620 China Offshore Oil (Singapore) International Pte Ltd v Giant Shipping Ltd (The Posidon) [2001] 1 Lloyd’s Rep 697 ...................................................................................................................... 13.530 Ching Sheng Fishery Co Ltd v United States 124 F 3d 152 (2d Cir 1997) .............................. 15.110 Chiswell Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115 ............................................................... 14.210, 14.220, 14.230, 14.240 Christianborg, The (1885) 10 PD 141 ............................................................................................ 8.540 Christie & Vesey Ltd v Maatschappij Tot Exploitatie van Schepen en Andere Zaken, Helvetia NV (The Helvetia-S) [1960] 1 Lloyd’s Rep 540 ............................................................ 13.140, 14.180 Chubu Asahi Cotton Spinning Co Ltd v The Ship Tenos (1968) 12 FLR 291 .......................... 12.390 Chung Chi Cheung v The Queen [1939] AC 160 ........................................................................... 4.90 Cia Sud Americana Vapores v MS ER Schiffahrtsgesellshaft mbH & Co KG [2006] 2 Lloyd’s Rep 66 ............................................................................................................................................. 14.400 Cia Sud Americana de Vapores SA v Sinochem Tianjin Import and Export Corp (The Aconcagua) [2010] 1 Lloyd’s Rep 1 .......................................................................................................... 12.650 Ciampa v British India Steam Navigation Co Ltd [1915] 2 KB 774 .............. 12.440, 13.600, 14.110 Citadel Insurance Co v Atlantic Union Insurance Co SA [1982] 2 Lloyd’s Rep 543 ............... 17.160 Citibank NA v Hobbs Savill & Co Ltd (The Panglobal Friendship) [1978] 1 Lloyd’s Rep 368 ................................................................................................................................... 14.570 Cities Service Transportation Co v Gulf Refining Co 79 F 2d 521; 1935 AMC 1513 (2d Cir 1935) ............................................................................................................................. 13.90 City Centre Cold Store Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 739 ............................................................................................................................ 17.310 City of Brisbane, The (1884) 5 LR (NSW) (P & D) 21 ............................................................. 20.150 City of Chester, The (1884) 9 PD 182 ......... 20.210, 20.240, 20.260, 20.450, 20.470, 20.480, 20.490 Clara Killam, The (1870) LR 3 A & E 161 ....................................................................... 8.130, 8.160 Clarke v Spence (1836) 4 Ad & E 448; 111 ER 855 ............................................................ 6.30, 6.40 Clarke v Union Steamship Co of New Zealand Ltd (1914) 18 CLR 142 .................................... 2.190 Classic Maritime Inc v Lion Diversified Holdings Bhd [2010] 1 Lloyd’s Rep 59 .................... 14.240 Claude R Ogden & Co Pty Ltd v Reliance Fire Sprinkler Co Pty Ltd [1973] 2 NSWLR ....... 17.100 Clay v Snelgrave (1700) 1 Ld Raym 576; 91 ER 1285 ................................................................ 8.270 Clea Shipping Corp v Bulk Oil International Ltd (The Alaskan Trader) (No 2) [1983] 2 Lloyd’s Rep 645 ...................................................................................................................... 14.250, 14.480 Cleobulus Shipping Co Ltd v Intertanker Ltd (The Cleon) [1983] 1 Lloyd’s Rep 586 ............ 13.660 Cleopatra, The (1878) 3 PD 145 ....................................................................................... 20.80, 20.490 Clerco Compania Naviera SA v The Food Corporation of India (The Savvas) [1982] 1 Lloyd’s Rep 22 ............................................................................................................................................. 13.330 Clifton, The (1834) 3 Hagg Adm 117; 166 ER 349 ......................................... 20.140, 20.460, 20.490

Table of Cases xxi Clot v Compagnie Commerciale du Nord (1921) 8 Ll L Rep 380 ............................................. 12.840 Clothing Management Technology Ltd v Beazley Solutions Ltd [2012] 1 Lloyd’s Rep 571 .. 17.140, 17.380, 17.390, 17.440 Coates v Charles Porter & Sons Pty Ltd (unreported, WA Sup Ct, 1990) ................................. 19.240 Cobban v Downe (1803) 5 Esp 41; 170 ER 731 ........................................................................ 12.100 Cobelfret (UK) Ltd v Austen & Butta (Sales) Pty Ltd (unreported, NSWCA, Kirby P, Preistely and Meagher, JJP, 1 January 1991) ............................................................................................... 13.550 Cobelfret Bulk Carriers NV v Swissmarine Services SA (The Lowlands Orchid) [2010] 1 Lloyd’s Rep 317 ................................................................................................................................... 13.310 Cobelfret NV v Cyclades Shipping Co Ltd (The Linardos) [1994] 1 Lloyd’s Rep 28 ............. 13.200 Coca Cola Co v SS Norholt 333 F Supp 946; 1972 AMC 388 (SDNY 1971) ......................... 14.150 Cochran v Retberg (1800) 3 Esp 121; 170 ER 560 .................................................................... 13.250 Cockburn v Alexander (1848) 6 CB 791; 136 ER 1459 ............................................................. 14.500 Collaroy, The; Harris v Robertson (1887) 3 WN (NSW) 97 ............................................. 8.240, 8.300 Collier, The (1866) LR 1 A & E 83 ............................................................................................. 20.570 Collins v Lamport (1865) 34 LJ Ch 196 ........................................................... 10.180, 10.190, 10.210 Collins v Simpson Steamship Co (1907) 24 TLR 178 .................................................................. 3.510 Colonial Bank (now Bank of Boston Connecticut) v European Grain & Shipping Ltd (The Dominique) [1989] 1 Lloyd’s Rep 431 .................................................................................. 13.660 Colonial Insurance Co of New Zealand v Adelaide Marine Insurance Co (1886) 12 App Cas 128 .................................................................................................................................... 17.190 Colonial Sugar Refining Co Ltd v British India Steam Navigation Co Ltd (1931) 32 SR (NSW) 245 ............................................................................ 12.460, 12.580, 12.620 Colorado, The (1922) 13 Ll L Rep 474 .............................................................................. 8.650, 10.20 Colorado, The [1923] P 102 ........................................................................................................... 8.330 Coltman v Chamberlain (1890) 25 QBD 328 .................................................................... 1.40, 10.140 Colvin v Newberry and Benson (1832) 1 Cl & Fin 283; 6 ER 923 ................................... 5.50, 5.100 Comalco Aluminium Ltd v Mogal Freight Services Pty Ltd (1993) 113 ALR 677 .................. 12.840 Comandate Marine Corporation v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 .............. 8.40 Comandate Marine Corporation v Ship Boomerang I (2006) 151 FCR 403 ...................... 5.50, 5.100 Commercial Steamship Co v Boulton (1875) LR 10 QB 346 ....................................... 13.250, 13.440 Commonwealth v Baume (1905) 2 CLR 405 .............................................................................. 12.280 Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 ....... 12.280, 12.300, 12.370, 12.390, 12.400, 13.600 Commonwealth v WMC Resources Ltd (1998) 194 CLR 1 ......................................................... 2.370 Compagnie Algerienne de Meunerie v Katana Societa di Navigazione Marittima SpA (The Nizeti) [1960] 1 Lloyd’s Rep 132 ......................................................................................... 13.120, 13.600 Compagnie Generale Maritime v Diakan Spirit SA (The Ymnos) [1982] 2 Lloyd’s Rep 574 .. 14.20, 14.100 Compagnie Général Transatlantique v Owners of the FT Barry; Compagnie Général Transatlantique v Owners of the Spray: The Amérique (1874) LR 6 PC 468 ............................................... 20.480 Compagnie Primera de Navagaziona Panama v Compania Arrendataria de Monopolio de Petroleos SA [1940] 1 KB 362 ............................................................................................................... 13.620 Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577 .......................... 12.90, 12.270 Compania Argentina De Navigacion de Ultramar v Tradax Export SA (The Puerto Rocca) [1978] 1 Lloyd’s Rep 252 ...................................................................................................................... 13.200 Compania Colombiana de Seguros v Pacific Steam Navigation Co Ltd [1965] 1 QB 101 ..... 12.590, 12.670 Compania Continental del Peru SA v Evelpis Shipping Corp (The Agia Skepi) [1992] 2 Lloyd’s Rep 467 ................................................................................................................................... 12.680 Compania Importada de Arroces Collette y Kamp SA v Peninsular and Orient Steam Navigation Co (1927) 28 L1 L Rep 63 ........................................................................................................... 12.250 Compania Maritima San Basilios SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1977] QB 49 ............................................................................................................. 17.270, 19.240 Compania Naviera Aeolus SA v Union of India [1964] AC 868 ............................................... 13.460 Compania Naviera Azuero SA v British Oil & Cake Mills Ltd [1957] 2 QB 293 .................... 13.280 Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] 1 Lloyd’s Rep 373 .... 13.660

xxii Table of Cases Compania Naviera Maropan S/A v Bowaters Lloyd Pulp & Paper Mills Ltd [1955] 2 QB 68 ........................................................................................................................................ 13.70 Compania Naviera Nedelka SA v Tradax International SA (The Tres Flores) [1974] QB 264 .................................................................................................................................... 13.200 Compania Naviera Vascongada v SS Christina [1938] AC 485 ..................................................... 8.40 Compania Naviera Vasconzada v Churchill and Sim [1906] 1 KB 237 ..................................... 12.150 Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) [1990] 1 Lloyd’s Rep 311 ........................................................................................... 12.370, 12.580, 12.610 Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) (No 2) [1990] 2 Lloyd’s Rep 395 ..................................................................................................... 12.580, 12.680 Compania Sud Americana de Vapores v Shipmair BV (The Teno) [1977] 2 Lloyd’s Rep 289 ................................................................................................................................... 14.320 Compania de Navigacion Zita SA v Louis Dreyfus & Cie [1953] 2 Lloyd’s Rep 472 ........... 13.330, 13.350 Complaint of Murmansk Shipping Co, In re 2002 AMC 2495 (ED La 2002) .......................... 15.140 Complaint of Tecomar SA (The Tuxpan), Re 765 F Supp 1150 (SDNY 1991) ........................ 12.410 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Pty Ltd (1986) 160 CLR 226 ................................................................................................................ 17.10, 17.640 Conet, The [1965] 1 Lloyd’s Rep 195 ............................................................................................. 9.50 Conoco Britannia, The [1972] 2 QB 543 ......................................................................................... 8.40 Consolidated Investment & Contracting Co v Saponaria Shipping Co Ltd (The Virgo) [1978] 1 WLR 986 ................................................................................................................................. 12.580 Container Transport International Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 ......................................................................................... 17.100, 17.110 Contender 1 Ltd v LEP International Pty Ltd (1988) 63 ALJR 26 ............................................ 12.810 Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Capt Panagos DP) [1986] 2 Lloyd’s Rep 470 ................................................................................ 17.290 Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Captain Panagos DP) [1989] 1 Lloyd’s Rep 33 ............................................ 17.10, 17.220, 17.290 Continental Illinois National Bank & Trust Co of Chicago v Bathurst (The Capt Panagos DP) [1985] 1 Lloyd’s Rep 625 ............................................................................................. 17.1017.140 Continental Pacific Shipping Ltd v Deemand Shipping Co Ltd (The Lendoudis Evangelos II) [1997] 1 Lloyd’s Rep 404 ....................................................................................................... 14.80, 14.260 Contship Containerlines Ltd v PPG Industries Inc 442 F 3d 72 (2d Cir 2006) ........................ 12.650 Cook v Dredging & Construction Co Ltd [1958] 1 Lloyd’s Rep 334 .............................. 1.210, 1.260 Corbett v Pearce [1904] 2 KB 422 ................................................................................................ 1.240 Corfu Island, The (see Compania de Navigacion Zita SA v Louis Dreyfus & Cie [1953] 2 Lloyd’s Rep 472) .................................................................................................................................. 13.350 Cornish Shipping Ltd v International Nederlanden Bank NV 53 F 3d 499 (2d Cir 1995) ....... 14.560 Corporacion Argentina de Productores de Carnes v Royal Mail Lines Ltd (1939) 64 Ll L Rep 188 ................................................................................................................................... 12.480 Corps v Owners of the Paddle Steamer Queen of the South: The Queen of the South [1968] P 449 ................................................................................................... 8.470, 10.320, 10.370 Cory Brothers & Co v Stewart (1885) 2 TLR 508 ..................................................................... 10.190 Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd (The Saldanha) [2011] 1 Lloyd’s Rep 187 ................................................................................................................................... 14.330 Cosmar Compania Naviera SA v Total Transport Corp (The Isabelle) [1984] 1 Lloyd’s Rep 366 ................................................................................................................................... 13.180 Cosmar Compania Naviera SA v Total Transport Corporation (The Isabelle) [1982] 2 Lloyd’s Rep 81 ............................................................................................................................................. 13.410 Cosmar Compania Naviera SA v Total Transport Corporation (The Isabelle) [1984] 1 Lloyd’s Rep 366 ........................................................................................................................................... 13.410 Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corp (The Apollonius) [1978] 1 Lloyd’s Rep 53 .................................................................... 14.70, 14.80, 14.100, 14.330 Cossman v West; Cossman v British America Assurance Co (1887) 13 App Cas 160 .............. 3.510, 20.410, 20.420, 20.630, 21.70 Courier, The (1862) Lush 541; 167 ER 244 .................................................................................. 8.170

Table of Cases xxiii Court Line Ltd v Dant & Russell Inc (1939) 64 Ll L Rep 212 ................................................. 14.330 Court Line Ltd v The King (1945) 78 Ll L Rep 390 .................................................... 17.380, 17.390 Couthino Caro & Co v M/V Sava 849 F 2d 166; 1988 AMC 2941 (5th Cir 1988) ................. 12.560 Cowas-Jee v Thompson (1845) 5 Moo PC 165; 13 ER 454 ...................................................... 12.100 Cox, Patterson & Co v Bruce & Co (1886) 18 QBD 147 .......................................................... 12.260 Craddock International Inc v WKP Wilson & Son Inc 116 F 3d 1095; 1998 AMC 1107 (5th Cir 1997) ........................................................................................................................................ 12.560 Craig v Associated National Insurance Co Ltd [1984] 1 Qd R 209 ... 17.220, 17.270, 17.290, 17.340 Craighall, The [1910] P 207 ................................................................................................ 1.210, 1.260 Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 ...................................... 17.620 Craven v Ryder (1816) 6 Taunt 433; 128 ER 1103 .................................................................... 12.100 Cremer v General Carriers SA (The Dona Mari) [1973] 2 Lloyd’s Rep 366 ............................ 12.150 Crew, Widgery & Co v Great Western Steamship Co [1887] WN 161 ..................................... 12.440 Cristie, The [1975] 2 Lloyd’s Rep 100 ........................................................................................ 17.580 Croft v Dunphy [1933] AC 156 ........................................................ 2.200, 2.210, 2.220, 2.240, 2.250 Crooks v Allan (1879) 5 QBD 38 ......................................................................... 12.30, 12.270, 18.80 Crossfield & Co v Kyle Shipping Co Ltd [1916] 2 KB 885 ...................................................... 12.220 Crowe v Commonwealth (1935) 54 CLR 69 ................................................................................. 2.200 Cuba, The (1860) Lush 14; 167 ER 8 ......................................................................................... 20.450 Culling v Culling and Nicholson [1896] P 116 ............................................................................. 4.140 Cumbrian, The (1887) 6 Asp MLC 151 ........................................................................... 8.190, 20.570 Cummins Sales & Service Inc v London & Overseas Insurance Co 476 F 2d 498 (5th Cir 1973) .......................................................................................................................... 12.150 Cunard Carrier, Eleranta and Martha, The [1977] 2 Lloyd’s Rep 261 ....................................... 13.570 Currie v M’Knight [1897] AC 97 .......................................... 8.120, 8.160, 8.380, 8.390, 8.420, 10.20 Curtis & Sons v Mathews [1919] 1 KB 425 ............................................................................... 12.430

D D/S A/S Idaho v Peninsular and Orient Steam Navigation Co (The Strathnewton) [1982] 2 Lloyd’s Rep 296 ................................................................................................................................... 14.150 D/S A/S Idaho v Peninsular and Oriental Steam Navigation Co (The Strathnewton) [1983] 1 Lloyd’s Rep 219 ........................................................................................................ 14.400, 14.410 DGM Commodities Corp v Sea Metropolitan SA (The Andra) [2012] 2 Lloyd’s Rep 587 ..... 13.450 Daebo Shipping Co Ltd v Ship Go Star (2011) 283 ALR 255 ................................................... 14.200 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 .............. 11.90, 14.10, 14.170, 14.200, 14.560, 19.50 Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s Rep 1 ............................................................................................... 12.340, 12.530, 12.570 Dagmar, The (1929) 141 LT 271 .................................................................................................... 1.300 Dahl v Nelson, Donkin & Co (1881) 6 App Cas 38 ....................................................... 13.90, 13.640 Dairy Containers Ltd v The Ship Tasman Discoverer [2005] 1 NZLR 433 .............................. 12.550 Daisy Philippine Underwear Co v United States Steel Products Co 11 F Supp 175 (SDNY 1935) ........................................................................................................................... 12.390 Dalgety & Co Ltd v Aitchison: The Rose Pearl (1957) 2 FLR 219 . 8.50, 8.330, 8.410, 8.450, 8.620 Dalwood Marine Co v Nordana Line A/S (The Elbrus) [2010] 2 Lloyd’s Rep 315 ................. 14.180 Dampskibsselskabet Danmark (Owners of SS Helge) v Christian Poulsen & Co 1913 SC 1043 .......................................................................................................................... 13.380 Dampskibsselskabet Norden A/S v Andre & Cie [2003] 1 Lloyd’s Rep 287 ............................ 14.250 Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd (2013) 216 FCR 469 ......................................................................................................................... 12.90, 13.20 Dampskibsselskabet Torm A/S v Australian Wheat Board [1981] VR 145 ............................... 13.380 Danae Shipping Corp v TPAO (The Daffodil B) [1983] 1 Lloyd’s Rep 498 ............................ 12.330 Dantzic Packet, The (1837) 3 Hagg Adm 383; 166 ER 447 ......................................... 20.420, 20.630 Darlington Futures Ltd v Delco (Australia) Pty Ltd (1986) 161 CLR 500 ..... 12.340, 12.780, 13.620 Darrah, The [1976] 2 Lloyd’s Rep 359 .......................................................................... 13.180, 13.280 Dataforce Pty Ltd v Brambles Holdings Ltd [1988] VR 771 ..................................................... 14.440

xxiv Table of Cases Datas Industries Ltd v OEC Freight (HK) Ltd 2000 WL 1497843 (SDNY 2000) ...................... 12.20 Daval Aciers D’Usinor et de Sacilor v Armare SRL (The Nerano) [1994] 2 Lloyd’s Rep 50 . 12.720 Daval Steel Products v MV Acadia Forest 683 F Supp 444; 1988 AMC 1669 (SDNY 1988) . 12.530 David Agmashenebeli, The [2003] 1 Lloyd’s Rep 92 ................................................... 12.100, 14.420 Davies v Mann (1842) 10 M & W 546; 152 ER 588 ................................................................. 15.150 Davies v National Fire and Marine Insurance Co of New Zealand [1891] AC 485 ................. 17.150 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 ................................ 14.480 Dawson Line Ltd v Aktiengesellschaft Adler Fuer Chemische Industrie [1932] 1 KB 433 ..... 14.420 De Clermont v General Steam Navigation (1891) 7 TLR 187 ................................................... 12.100 De Mattos v Gibson (1858) 4 De G & J 276; 45 ER 108 ............................... 10.220, 10.230, 10.350 De Vaux v Salvador (1836) 4 Ad & El 420; 111 ER 845 .......................................................... 17.220 Delantera Amadora SA v Bristol Channel Ship-repairers Ltd and Swansea Dry Dock Co: The Tatingaki [1976] 2 Lloyd’s Rep 372 .......................................................................................... 9.10 Delos, The [2001] 1 Lloyd’s Rep 703 ......................................................................................... 12.720 Deltamax Freight System v M/V Aristotelis 1999 AMC 1789 (CD Cal 1998) ......................... 12.340 Demand Shipping Co Ltd v Ministry of Food Government of the People’s Republic of Bangladesh (The Lendoudis Evangelos II) [2001] 2 Lloyd’s Rep 304 ........................................... 18.70, 18.80 Demsey & Associates Inc v S/S Sea Star 461 F 2d 1009; 1972 AMC 1440 (2d Cir 1972) .... 12.310, 12.810 Den Norske Afrika Og Australie Linie v Port Said Salt Association Ltd (1924) 20 Ll L Rep 184 ................................................................................................................................... 13.140 Dependable Marine Co Ltd v Customs & Excise Commissioners [1965] 1 Lloyd’s Rep 550 .... 1.20, 1.210, 1.220 Deutsche Ost-Afrika-Linie GmbH v Legent Maritime Co Ltd [1998] 2 Lloyd’s Rep 71 ......... 14.380 Deutsche Shell Tanker Gesellschaft mbH v Placid Refining Co 993 F 2d 466; 1993 AMC 2141 (5th Cir 1993) ........................................................................................................................ 18.20, 18.70 Devine Shipping Pty Ltd v BP Melbourne (1994) 3 Tas R 456 ..................... 5.10, 6.20, 6.190, 8.620 Diamond, The [1906] P 282 ......................................................................................................... 12.400 Diana, The (1862) Lush 539; 167 ER 243 .................................................................................... 8.170 Diana Co Maritime SA of Panama v Subfreights of SS Admiralty Flyer 280 F Supp 607 (SDNY 1968) ........................................................................................................................................ 14.470 Dias, The [1972] 2 Lloyd’s Rep 60 ............................................................................................. 17.290 Dias Compania Naviera SA v Louis Dreyfus Corporation (The Dias) [1978] 1 Lloyd’s Rep 325 ......................................................................................................... 13.430, 13.450, 13.460 Dickenson v Lano (1860) 2 F & F 188; 175 ER 1017 ............................................................... 12.630 Dickinson v Kitchen (1858) 8 El & Bl 789; 120 ER 293 ............................................. 10.170, 10.290 Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500 ............................................. 16.100 Dictator, The [1892] P 304 .................................................................................................... 8.40, 8.540 Didymi Corp v Atlantic Lines and Navigation Co Inc (The Didymi) [1988] 2 Lloyd’s Rep 108 ..................................................................................................................................... 14.80 Director General of the India Supply Mission for and on behalf of the President of the Union of India v S/S Maru 459 F 2d 1370; 1972 AMC 1694 (2d Cir 1972) ...................................... 12.390 Doak v Weekes (1986) 82 FLR 334 .................................................... 17.270, 17.580, 17.600, 17.610 Dolphin Hellas Shipping SA v Itemslot SA (The Aegean Dolphin) [1992] 2 Lloyd’s Rep 178 ........................................................................................................................ 14.80, 14.100 Dolphin Tanker SrL v Westport Petroleum Inc (The Savina Caylyn) [2011] 1 Lloyd’s Rep 550 ................................................................................................................................... 14.140 Domett v Beckford (1833) 5 B & Ad 521; 110 ER 883 ............................................... 12.630, 12.640 Domingo de Larrinaga, The (see Willcox, Peck & Hughes v Alphonse Weil & Bros 24 F 2d 587; 1928 AMC 64 (SDNY 1927)) .................................................................................................. 18.60 Dora, The (1925) 21 Ll L Rep 204 ................................................................................. 13.410, 13.470 Dorsid Trading Co v SS Rose 343 F Supp 617 (SD Tex 1972) ................................................. 12.170 Dow Chemical (Nederland) BV v BP Tanker Co Ltd (The Vorras) [1983] 1 Lloyd’s Rep 579 ................................................................................................................................... 13.300 Dow Europe SA v Novoklav Inc [1998] 1 Lloyd’s Rep 306 ..................................................... 14.300 Dowthorpe, The (1843) 2 W Rob 73; 166 ER 682 ..................................... 8.380, 8.390, 8.450, 10.20 Druid, The (1842) 1 W Rob 391; 166 ER 619 .................................................................. 8.150, 15.20

Table of Cases xxv Dry Bulk Handy Holding Inc v Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s Rep 38 .......................................................................................................... 12.810, 14.560 Du Moulin v Druitt (1860) 13 Ir CLR 212 ................................................................................... 4.140 Du Pont de Nemours International SA v S/S Mormacvega 493 F 2d 97; 1974 AMC 67 (2d Cir 1974) ........................................................................................................................................ 12.340 Duc d’Aumale (No 2), The [1904] P 60 ...................................................................................... 20.530 Dudgeon v Pembroke (1877) 2 App Cas 284 .............................................................................. 17.310 Duferco International Steel Trading v T Klaveness Shipping A/S 333 F 3d 383 (2d Cir 2003) . 13.50 Duferco Steel Inc v M/V Kalisti 121 F 3d 321; 1998 AMC 171 (7th Cir 1997) ...................... 12.720 Duke of Bedford, The (1829) 2 Hagg Adm 294; 166 ER 251 ......................... 9.50, 9.80, 9.90, 10.20 Dundee, The (1823) 1 Hagg Adm 109; 166 ER 39 ........................................................................ 8.70 Dunlop v Lambert (1839) 6 Cl & F 600; 7 ER 825 ................................................................... 12.840 Dunne v Australasian Steam Navigation Co (1876) 14 SCR (NSW) (L) 131 ........................... 13.620 Durra v Bank of NSW [1940] VLR 170 ..................................................................................... 19.240

E ED & F Man Sugar Ltd v Unicargo Transportgesellschaft mbH (The Ladytramp) [2012] 2 Lloyd’s Rep 660 ................................................................................................ 12.440, 13.50, 13.70, 13.410 ED & F Man Sugar Ltd v Unicargo Transportgesellschaft mbH (The Ladytramp) [2014] 1 Lloyd’s Rep 412 ................................................................................................................................... 13.390 ED Sassoon & Co v Western Assurance Co [1912] AC 561 ...................................................... 12.410 EL Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479 .. 13.10, 13.170, 13.200, 13.590 EMI (New Zealand) Ltd v William Holyman & Sons Pty Ltd [1976] NZLR 566 ................... 12.840 ERG Raffinerie Mediterranee SpA v Chevron USA Inc (The Luxmar) [2007] 2 Lloyd’s Rep 542 ................................................................................................................................... 14.180 Eagle Terminal Tankers Inc v Insurance Co of USSR Ltd 637 F 2d 890; 1981 AMC 137 (2d Cir 1981) .......................................................................................................................................... 18.20 Earthworks and Quarries Ltd v FT Eastment & Sons Pty Ltd [1966] VR 24 ........................... 19.240 East West Corp v Dkbs 1912 [2003] 1 Lloyd’s Rep 239 .............................................. 12.770, 12.780 Eastern Mediterranean Maritime (Liechtenstein) Ltd v Unimarine SA (The Marika M) [1981] 2 Lloyd’s Rep 622 ...................................................................................................................... 14.330 Ebsworth v Alliance Marine Insurance Co (1873) LR 8 CP 596 ...................................... 17.40, 17.50 Edelweiss (USA) Inc v Vengroff Williams & Associates Inc 2007 AMC 1080 (Sup Ct NY 2007) ...................................................................................................................... 12.20, 12.100 Eden, The (1846) 2 W Rob 442; 166 ER 822 ............................................................................... 15.30 Edmond Weil Inc v American West African Line Inc 147 F 2d 363; 1945 AMC 191 (2d Cir 1945) .............................................................................................................. 12.280, 12.410 Edso Exporting LP v Atlantic Container Line AB 471 Fed Appx 8; 2012 AMC 1811 (2d Cir 2012) ........................................................................................................................... 12.560 Edwards v Quickenden and Forester [1939] P 261 ................................................ 1.180, 1.200, 1.310 Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) [2007] 2 Lloyd’s Rep 517 ...................................................................................................... 14.480 Effort Shipping Co Ltd v Linden Management SA: The Giannis NK [1998] AC 605 ............. 12.650 Efploia Shipping Corp Ltd v Canadian Transport Co Ltd (The Pantanassa) [1958] 2 Lloyd’s Rep 449 ........................................................................................................................................... 14.200 Egon Oldendorff v Libera Corp [1996] 1 Lloyd’s Rep 380 ......................................................... 13.30 Eitzen Bulk AS v TTMI SARL (The Bonnie Smithwick) [2012] 1 Lloyd’s Rep 407 .............. 14.520 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA [2003] FCA 588 ....... 12.640, 12.680 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296 .............. 12.40, 12.510, 12.520, 12.640, 12.680 Elbe Maru, The [1978] 1 Lloyd’s Rep 206 ................................................................................. 12.820 Elbe Shipping SA v Giant Marine Shipping SA [2008] FCA 1135 ............................................. 15.40 Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439; 232 ALR 694 ..... 1.240, 1.250, 2.150, 7.30, 7.40, 8.10, 8.160, 8.340, 8.360, 8.640, 9.70, 19.210, 20.10, 20.350 Elder, Dempster & Co v Paterson, Zochonis & Co [1924] AC 522 .......................................... 13.600

xxvi Table of Cases Elena D’Amico, The [1980] 1 Lloyd’s Rep 75 ........................................................................... 13.550 Elena Shipping v Aidenfeld Ltd (The Elena) [1986] 1 Lloyd’s Rep 425 .................................. 13.660 Elin, The (1882) 8 PD 39 ............................................................................................................... 8.420 Elin, The (1883) 8 PD 129 ............................................................................................................. 8.420 Eliza, The (1862) Lush 536; 167 ER 242 .................................................................................... 20.200 Ellerman Lines Ltd v Lancaster Maritime Co Ltd (The Lancaster) [1980] 2 Lloyd’s Rep 497 ......................................................................................................... 14.540, 14.560, 14.570 Elliott Steam Tug Co Ltd v Admiralty Commissioners; Page v Admiralty Commissioners [1921] 1 AC 137 .................................................................................................................................... 20.570 Ellis Shipping Corp v Voest Alpine Intertrading (The Lefthero) [1991] 2 Lloyd’s Rep 599 .... 13.660 Ellis Shipping Corp v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109 ..... 13.90, 13.220, 13.460, 13.470, 13.660 Elmville (No 2), The [1904] P 422 ................................................................................................ 8.230 Emeraldian Ltd Partnership v Wellmix Shipping Ltd (The Vine) [2011] 1 Lloyd’s Rep 301 .. 13.170 Emile Galline, The [1903] P 106 ................................................................................................. 20.410 Emilie Millon, The [1905] 2 KB 817 ................................................................................... 7.90, 10.20 Emma, The (1844) 2 W Rob 315; 166 ER 774 ........................................................................... 20.620 Emmco Insurance Co v Wallenius Caribbean Line SA 492 F 2d 508 (5th Cir 1974) .............. 12.510 Emperor Goldmining Co Ltd v Switzerland General Insurance Co Ltd [1964] NSWR 1243 .. 17.220 Empire Shipping Co Ltd v Owners of the Ship Shin Kobe Maru (1991) 32 FCR 78 ..... 2.130, 2.150 Empresa Central Mercantil de Representaçoes Ltda v Republic of the United States of Brazil 257 F 2d 747 (2d Cir 1958) .............................................................................................................. 12.510 Empresa Cubana Importada de Alimentos “Alimport” v Iasmos Shipping Co SA (The Good Friend) [1984] 2 Lloyd’s Rep 586 ......................................................................................... 12.300, 12.370 Empresa Cubana de Fletes v Kissavos Shipping Co SA (The Agathon) (No 2) [1984] 1 Lloyd’s Rep 183 ................................................................................................................................... 14.290 Empresa Cubana de Fletes v Lagonisi Shipping Co Ltd [1971] 1 QB 488 ............................... 14.440 Empress Assurance Corp v Bowring & Co Ltd (1906) 11 Com Cas 107 ................................. 17.160 Encyclopaedia Britannica Inc v S/S Hong Kong Producer 422 F 2d 7 (2d Cir 1969); [1969] 2 Lloyd’s Rep 536 ...................................................................................................................... 12.340 Ene Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] 2 AC 164 .... 14.310, 14.380, 14.440, 14.470 English Electric Valve Co Ltd v M/V Hoegh Mallard 814 F 2d 84; 1987 AMC 1351 (2d Cir 1987) ........................................................................................................................... 12.340 Enichem Anic SpA v Ampelos Shipping Co Ltd (The Delfini) [1990] 1 Lloyd’s Rep 252 ...... 12.760 Environment Protection Authority v Australian Iron & Steel Pty Ltd (1992) 28 NSWLR 502 .. 19.40 Erichsen v Barkworth (1858) 3 H & N 894; 157 ER 730 .......................................................... 12.770 Eridania SpA v Rudolf A Oetker, Flensburger Ubersee-Schiffahrtsgesellschaft mbH & Co KG (The Fjord Wind) [2000] 2 Lloyd’s Rep 191 ...................................................... 14.150, 12.300, 12.720 Eschersheim, The [1976] 1 WLR 430 ............................................................................................ 8.160 Esso Belgium (see United States v Atlantic Mutual Insurance Co 343 US 236; 72 S Ct 666; 96 L Ed 907 (1952)) ........................................................................................................................ 15.140 Esso Bernicia, The [1989] 1 Lloyd’s Rep 8 .................................................................................. 15.30 Esso Petroleum Co Ltd v Hall Russell & Co Ltd (The Esso Bernicia) [1989] AC 643 ............. 15.30 Esso Petroleum Co Ltd v Southport Corp [1956] AC 218 ......................................................... 19.210 Etablissement Biret Et Cie SA v Yukiteru Kaiun KK and Nissui Shipping Corporation (The Sun Happiness) [1984] 1 Lloyd’s Rep 381 ...................................................................... 13.480, 13.650 Etablissements Georges Et Paul Levy v Adderley Navigation Co Panama SA (The Olympic Pride) [1980] 2 Lloyd’s Rep 67 ......................................................................................................... 13.110 Eurico SpA v Philipp Bros (The Epaphus) [1987] 2 Lloyd’s Rep 215 ...................................... 13.200 Europa, The [1908] P 84 ............................................................................................................... 12.300 European & Australian Royal Mail Co v Peninsular & Oriental Steam Navigation Co (1866) 14 LT 704 .................................................................................................................................. 1.280, 6.100 European Bank Ltd v Evans (2010) 240 CLR 432; 264 ALR 1 ................................................ 13.440 Eurysthenes, The (see Compania Maritima San Basilios SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1977] QB 49) .............................................................. 19.240, 17.270 Eva, The [1921] P 454 ......................................................................................................... 8.410, 8.650 Evans & Associates v European Bank Ltd (2009) 255 ALR 171 .............................................. 14.240

Table of Cases xxvii Ever Success, The [1999] 1 Lloyd’s Rep 824 ........................................................ 8.190, 8.240, 8.250 Evera SA Commercial v North Shipping Co Ltd [1956] 2 Lloyd’s Rep 367 .............. 13.100, 13.130 Evpo Agnic, The [1988] 1 WLR 1090 ............................................................................................. 4.90 Exercise Shipping Co Ltd v Bay Maritime Lines Ltd (The Fantasy) [1992] 1 Lloyd’s Rep 235 ...................................................................................................................... 13.560, 14.400 Exmar BV v National Iranian Tanker Co (The Trade Fortitude) [1992] 1 Lloyd’s Rep 169 .... 13.660 Exmar NV v BP Shipping Ltd (The Gas Enterprise) [1993] 2 Lloyd’s Rep 352 .......... 14.80, 14.100 Explorer, The (1870) LR 3 A & E 289 .......................................................................................... 8.140

F F Kanematsu & Co Ltd v The Ship Shahzada (1956) 96 CLR 477 ................ 12.330, 12.340, 13.620 FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 469 .................................. 14.300 FD Lambert, The [1917] P 232n .................................................................................................... 21.70 FMC Corp v S/S Marjorie Lykes 851 F 2d 78; 1988 AMC 2113 (2d Cir 1988) ...................... 12.560 Fair Work Ombudsman v Pocomwell Ltd (No 2) (2013) 218 FCR 94 ............... 8.240, 2.110, 21.120 Fairbridge v Pace (1844) 1 Car & K 317; 174 ER 828 ................................................ 13.160, 13.210 Fairport (No 3), The [1966] 2 Lloyd’s Rep 253 ........................................................................... 8.230 Fairport (No 5), The [1967] 2 Lloyd’s Rep 162 ........................................................................... 8.330 Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 .................................................. 20.440 Falconbridge Nickel Mines Ltd v Chimo Shipping Ltd [1974] SCR 933; [1973] 2 Lloyd’s Rep 469 ................................................................................................................................... 12.740 Falstria, The [1988] 1 Lloyd’s Rep 495 ........................................................................... 16.30, 19.250 Fanchon, The (1880) 7 PD 173 ....................................................................................... 10.190, 10.200 Fanti, The [1990] 2 Lloyd’s Rep 191 ............................................................................................ 17.10 Farenco Shipping Co Ltd v Daebo Shipping Co Ltd (The Bremen Max) [2009] 1 Lloyd’s Rep 81 ........................................................................................................... 12.770, 14.360, 14.380 Father Thames, The [1979] 2 Lloyd’s Rep 364 .............................................................................. 5.50 Federal Airports Corp v Makucha Developments Pty Ltd (1993) 115 ALR 679 ...................... 14.440 Federal Bulk Carriers Inc v C Itoh & Co Ltd (The Federal Bulker) [1989] 1 Lloyd’s Rep 103 ................................................................................................................................... 12.720 Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1979] AC 757 .......... 14.320, 14.560 Federal Commerce and Navigation Co Ltd v Tradax Export SA [1978] AC 1 ............. 11.50, 13.170, 13.180 Federal Commerce and Navigation Ltd v Molena Alpha Inc (The Nanfri, Benfri and Lorfri) [1978] QB 927; [1978] 2 Lloyd’s Rep 132 .......................................................................... 14.320, 14.460 Federal Insurance Co v Union Pacific Railroad Co 651 F 3d 1175 (9th Cir 2011) ..... 12.740, 12.820 Fenix, The (1855) Swab 13; 166 ER 992 ......................................................................... 20.630, 21.70 Fenton v Queensland Insurance Co Ltd (1915) 11 Tas LR 125 .................................... 17.220, 17.330 Fenwick v The Glencaim (1899) 15 WN (NSW) 166 ................................................................ 20.130 Ferguson and Hutchinson, Ex parte (1871) LR 6 QB 280 ......................................... 1.10, 1.20, 1.180 Feronia, The (1868) LR 2 A & E 65 ............................................................................................. 8.280 Ferrier-Watson v McElrath (2000) 26 Fam LR 169 .................................................................... 16.250 Ferrostaal Inc v MV Sea Phoenix 447 F 3d 212; 2006 AMC 1217 (3d Cir 2006) ................... 12.560 Fetim v Oceanspeed Shipping BV (The Flecha) [1999] 1 Lloyd’s Rep 612 ............................. 12.820 Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 ....... 13.660, 14.480 Fieldhouse v Commissioner of Taxation (1989) 25 FCR 187 .................................................... 15.190 Filikos Shipping Corp of Monrovia v Shipmair BV (The Filikos) [1983] 1 Lloyd’s Rep 9 .... 14.400 Finix, The [1978] 1 Lloyd’s Rep 16 ............................................................................................ 13.180 Finlay v Liverpool and Great Western Steamship Co Ltd (1870) 23 LT 251 ............................ 12.440 Finnish Government v H Ford and Co Ltd (1921) 6 LI L Rep 188 .......................................... 13.130 Finora Co Inc v Amitie Shipping Ltd 54 F 3d 209 (4th Cir 1995) ............................................ 14.550 Fire Brigades Board v Elderslie Steamship Co (1899) 15 WN (NSW) 320 .............................. 20.330 Fireman’s Fund Insurance Co v Tropical Shipping & Construction Co 254 F 3d 987 (11th Cir 2001) ........................................................................................................................................ 12.560 Firma C-Trade SA v Newcastle Protection & Indemnity Association [1991] 2 AC 1 ................ 17.10

xxviii

Table of Cases

First National Bank of Chicago v West of England Mutual Protection and Indemnity Association (Luxembourg) (The Evelpidis Era) [1981] 1 Lloyd’s Rep 54 ................................................ 17.80 Fisher v Fisher (1929) 165 NE 460 ............................................................................................... 4.140 Fisher v The Oceanic Grandeur (1972) 127 CLR 312 .......... 20.130, 20.170, 20.240, 20.270, 20.310, 20.350, 20.410, 20.460, 20.490 Fisher, Renwick & Co v Calder & Co (1896) 1 Com Cas 456 .................................................. 12.220 Fishman & Tobin Inc v Tropical Shipping & Construction Co Ltd 240 F 3d 956; 2001 AMC 1663 (11th Cir 2001) ........................................................................................................................ 12.560 Five Steel Barges (1890) 15 PD 142 .............................................................................. 20.380, 20.570 Fleece, The (1850) 3 Wm Rob 278; 166 ER 966 ....................................................................... 20.420 Fletcher and Campbell v City Marine Finance Ltd [1968] 2 Lloyd’s Rep 520 ............. 10.30, 10.330 Flint v Christall: The Irrawaddy 171 US 187; 18 S Ct 831; 43 L Ed 130 (1898) ...................... 18.70 Florence, The (1852) 16 Jur 572 ......................................................................... 20.290, 20.450, 21.70 Food Corp of India v Carras Shipping Co Ltd (The Delian Leto) [1983] 2 Lloyd’s Rep 496 ...................................................................................................................... 13.200, 13.220 Forbes v Cochrane (1824) 2 B & C 448; 107 ER 450 .............................................. 4.90, 4.100, 5.10 Foreman & Ellams Ltd v Federal Steam Navigation Co Ltd [1928] 2 KB 424 ........................ 12.390 Forestal Land, Timber and Railways Co Ltd v Richards [1941] 1 KB 225 .............................. 17.120 Fort Sterling Ltd v South Atlantic Cargo Shipping NV (The Finnrose) [1994] 1 Lloyd’s Rep 559 ................................................................................................................................... 12.590 Fortuna Seafoods Pty Ltd v Ship Eternal Wind [2008] 1 Qd R 429 .......................................... 15.180 Foster v Colby (1858) 3 H & N 705; 157 ER 651 ..................................................................... 12.710 Foti v Banque Nationale de Paris (No 1) (1989) 54 SASR 354 ................................................ 13.440 Fournier v The Ship Margaret Z [1999] 3 NZLR 111 .................................................................. 8.590 Fowles v Eastern and Australian Steamship Co Ltd [1916] 2 AC 556 ........................................ 15.30 Fox v Nott (1861) 6 H & N 630; 158 ER 261 .............................................................. 12.630, 12.640 Fox and Assocs Inc v M/V Hanjin Yokohama 977 F Supp 1022; 1998 AMC 1090 (CD Cal 1997) ................................................................................................................................. 12.160 Francis v Boulton (1895) 65 LJQB 153 ...................................................................................... 17.350 Francis and Eliza, The (1816) 2 Dods 115; 165 ER 1433 .......................................................... 20.170 Franconia, The (1877) 2 PD 163 .................................................................................................... 8.140 Francosteel Corp v M/V Pal Marinos 885 F Supp 86; 1995 AMC 2327 (SDNY 1995) .......... 12.530 Francosteel Corp v MV Deppe Europe 1990 AMC 2962 (SDNY 1990) ................................... 12.530 Franke v CIC General Insurance Ltd (The Coral) (1994) 33 NSWLR 373 ............................... 17.140 Fraser Shipping Ltd v Colton [1997] 1 Lloyd’s Rep 586 .............................................. 17.360, 17.540 Frazer v Marsh (1811) 13 East 238; 104 ER 362 ................................................................ 5.50, 5.100 Frazer & Co v Cuthbertson (1880) 6 QBD 93 .............................................................................. 5.130 Freedman v The Concordia Star 250 F 2d 867 (2d Cir 1958) ................................................... 12.150 Freeman & Lockyer Ltd v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 ............. 13.30 French v Newgass (1878) 3 CPD 163 ........................................................................................... 14.70 French Marine v Compagnie Napolitaine d’Eclairage et de Chauffage par le Gaz [1921] 2 AC 494 .......................................................................................................... 14.320, 14.480, 14.570 Fri, The 154 F 333 (2d Cir 1907) ................................................................................................ 12.710 Friedlander v Texas & Pacific Railway Co 130 US 416 (1889) ................................................. 12.200 Friend v Metcalfe (1873) 12 SCR (NSW) 169 ............................................................................ 17.150 Frisia, The [1960] 1 Lloyd’s Rep 90 ........................................................................................... 20.510 Frontier International Shipping Corp v Swissmarine Corp Inc (The Cape Equinox) [2005] 1 Lloyd’s Rep 390 ................................................................................................................................... 13.380 Frost v Knight (1872) LR 7 Ex 111 ............................................................................................. 13.520 Fulton Shipping Inc of Panama v Globalia Business Travel SAU of Spain (The New Flamenco) [2014] 2 Lloyd’s Rep 230 ...................................................................................................... 14.250 Furness Withy (Aust) Pty Ltd v Metal Distributors (UK) Ltd (The Amazonia) [1990] 1 Lloyd’s Rep 236 ................................................................................................................................ 12.90, 13.630 Furness Withy (Australia) Pty Ltd v Black Sea Shipping Co (The Roman Karmen) [1994] 1 Lloyd’s Rep 644 ...................................................................................................................... 14.100 Fury Shipping Co Ltd v State Trading Corporation of India Ltd (The Atlantic Sun ) [1972] 1 Lloyd’s Rep 509 ...................................................................................................................... 13.320

Table of Cases xxix Fusilier, The (1865) Br & Lush 341; 167 ER 391 ......................................................... Future Express, The [1992] 2 Lloyd’s Rep 79 ............................................................... Future Express, The [1993] 2 Lloyd’s Rep 542 ............................................... 12.100, Fyffes Group Ltd v Reefer Express Lines Pty Ltd (The Kriti Rex) [1996] 2 Lloyd’s Rep 171 ......................................................................................................... 12.300,

20.120, 20.790 12.100, 12.770 12.760, 12.770 13.120, 13.610

G G & N Angelakis Shipping Co SA v Compagnie National Algerienne de Navigation (The Attika Hope) [1988] 1 Lloyd’s Rep 439 ........................................................................................... 14.560 GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 .......... 13.70 GF Co v Pan Ocean Shipping Co Ltd 23 F 3d 1498 (9th Cir 1994) ......................................... 12.170 GH Renton & Co Ltd v Palmyra Trading Corporation of Panama [1957] AC 149 ..... 12.310, 12.370 GW Grace & Co Ltd v General Steam Navigation Co Ltd (1950) 83 Ll L Rep 297 ............... 14.280 Gabarron v Kreeft (1875) LR 10 Ex 274 .................................................................................... 12.770 Gaetano and Maria, The (1882) 7 PD 137 ........................................................................... 7.30, 20.10 Gaggin v Moss [1984] 2 Qd R 513 ..................................................................... 16.30, 16.160, 19.250 Galatia, The (1858) Swab 349; 166 ER 1162 ................................................................ 20.360, 20.380 Galaxy Special Maritime Enterprise v Prima Ceylon Ltd (The Olympic Galaxy) [2006] 2 Lloyd’s Rep 27 ....................................................................................................................................... 18.80 Gamma-10 Plastics v American President Lines 32 F 3d 1244 (8th Cir 1994) ......................... 12.560 Gapp v Bond (1887) 19 QBD 200 ............................................................................ 1.10, 1.200, 1.210 Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2014] 1 Lloyd’s Rep 59 ........................................................................................................................ 14.300 Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2015] 1 Lloyd’s Rep 381 .......................................................................................................... 13.70, 14.300 Garden City, The [1982] 2 Lloyd’s Rep 382 .................................................................. 16.160, 19.280 Gardner v Cazenove (1856) 1 H & N 423; 156 ER 1267 ............................................................ 10.60 Gardner & Sons v Trechmann (1884) 15 QBD 154 ...................................................... 12.710, 12.720 Gardner Smith Pty Ltd v The Ship Tomoe 8 (1990) 19 NSWLR 588 .............. 12.10, 12.700, 13.630 Garnat Trading & Shipping (Singapore) Pte Ltd v Baominh Insurance Co [2011] 2 Lloyd’s Rep 492 ................................................................................................................................... 17.150 Gas Float Whitton No 2, The [1896] P 42 ...................... 1.210, 1.220, 20.80, 20.100, 20.120, 20.520 Gas Natural Aprovisionamientos SDG SA v Methane Services Ltd (The Khannur) [2010] 1 Lloyd’s Rep 610 ...................................................................................................................... 14.180, 14.190 Gatoil Anstalt v Omenial Ltd (The Balder London) (No 2) [1983] 1 Lloyd’s Rep 492 ........... 14.440 Gatoil Anstalt v Omennial Ltd (The Balder London) [1980] 2 Lloyd’s Rep 489 ..................... 14.440 Gatoil International Inc v Tradax Petroleum Ltd (The Rio Sun) [1985] 1 Lloyd’s Rep 350 ...... 13.80 Gator Shipping Corporation v Trans-Asiatic Oil Ltd SA (The Odenfeld) [1978] 2 Lloyd’s Rep 357 ................................................................................................................................... 14.250 Gaudet v Brown: Cargo Ex Argos (1873) LR 5 PC 134 ............................................................ 13.660 Gazelle, The 128 US 474; 2006 AMC 1202 (1888) ................................................................... 14.300 Gebr Broere BV v Saras Chimica SpA [1982] 2 Lloyd’s Rep 436 ........................................... 13.300 Gee-Whiz, The [1951] Lloyd’s Rep 145 ....................................................................................... 8.230 Geestland, The [1980] 1 Lloyd’s Rep 628 ..................................................................... 20.570, 20.620 Gemma, The [1899] P 285 ............................................................................................................... 8.40 General Accident Fire and Life Assurance Corp v Tanter (The Zephyr) [1984] 1 Lloyd’s Rep 58 ....................................................................................................................................... 17.90 General Accident Fire and Life Assurance Corp v Tanter (The Zephyr) [1985] 2 Lloyd’s Rep 529 ..................................................................................................................................... 17.90 General Credits (Finance) Pty Ltd v Registrar of Ships (1982) 61 FLR 329 ........ 3.30, 3.370, 4.220, 5.190 General Electric Co v Steamship Nancy Lykes 536 F Supp 687; 1982 AMC 1726 (SDNY 1982) ........................................................................................................................... 12.330 General Electric Co v Steamship Nancy Lykes 706 F 2d 80; 1983 AMC 1947 (2d Cir 1983) ........................................................................................................................................ 12.330

xxx Table of Cases General Feeds Inc v Burnham Shipping Corp (The Amphion) [1991] 2 Lloyd’s Rep 101 ..... 13.520, 13.630 General Iron Screw Collier Co v Schurmanns (1860) 29 LJ Ch 877 .................... 1.320, 4.90, 20.190 Genessee, The (1848) 12 Jur 401 ................................................................................................... 21.70 Geogas SA v Trammo Gas Ltd (The Baleares) [1990] 2 Lloyd’s Rep 130 ............................... 13.130 Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215 ... 13.100, 13.120, 13.130, 13.140 George Kallis (Manufacturers) Ltd v Success Insurance Ltd [1985] 2 Lloyd’s Rep 8 ............. 17.190 George Veflings Rederi A/S v The President of India (The Bellami, The Pearl Merchant and the Doric Chariot) [1979] 1 Lloyd’s Rep 123 ............................................................................. 13.440 Georgian Maritime Corp v Sealand Industries (Bermuda) Ltd (The North Sea) [1997] 2 Lloyd’s Rep 324 ................................................................................................................................... 14.180 Georgian Maritime Corp Plc v Sealand Industries Ltd (The North Sea) [1999] 1 Lloyd’s Rep 21 ........................................................................................................................ 14.180, 14.190 Gerani Compania Naviera SA v Alfred C Toepfer (The Demosthenes V) (No 2) [1982] 1 Lloyd’s Rep 282 ...................................................................................................................... 13.480, 13.560 Germanic, The 196 US 589 (1904) .............................................................................................. 12.390 Gertrude, The (1861) 30 LJPM & A 130 ......................................................................... 20.630, 21.70 Gesellschaft Burgerlichen Rechts v Stockholms Rederiaktiebolag Svea (The Brabant) [1965] 2 Lloyd’s Rep 546 ...................................................................................................................... 14.180 Gibbs v Grey (1857) 2 H & N 22; 157 ER 10 ........................................................................... 14.100 Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604; 77 ALJR 1396 ... 1.320, 4.90, 17.10, 20.190 Gibbs International Inc v Federal Insurance Co 1997 AMC 2954 (DSC 1997) ........................ 12.370 Gibson v Ingo (1847) 6 Hare 112; 67 ER 1103 ............................................................................ 3.400 Gibson v Sturge (1855) 10 Ex 622; 156 ER 588 ........................................................................ 13.660 Giertsen v Turnbull 1908 SC 1101 ................................................................................. 14.120, 14.130 Gilchrist Watt and Sanderson Pty Ltd v York Products Pty Ltd [1970] 1 WLR 1262 .............. 12.840 Gilgandra Marketing Co-Operative Ltd v Australian Merchandise Pty Ltd (In liq) (No 3) [2011] NSWSC 69 .............................................................................................................................. 12.640 Gilkison v Middleton (1857) 2 CB (NS) 134; 140 ER 363 ........................................................ 12.710 Gill & Duffus SA v Rionda Futures Ltd [1994] 2 Lloyd’s Rep 67 ............................................ 13.650 Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd; Rennie Hogg Ltd (Third Party) [1973] 1 QB 400 .................................................................................................................................... 12.840 Giovanni Dapueto v James Wyllie & Co: The Pieve Superiore (1874) LR 5 PC 482 .... 8.330, 8.630 Gipsy Queen, The [1895] P 176 ................................................................................................... 20.590 Giuseppe di Vittorio, The [1998] 1 Lloyd’s Rep 136 .......................................................... 5.50, 5.100 Glasgow Assurance Corp Ltd v William Symondson & Co (1911) 104 LT 254 ....................... 17.100 Glaucus, The (1948) 81 Ll L Rep 262 ........................................................................... 20.140, 20.170 Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (The Antwerpen) (1993) 40 NSWLR 206; [1994] 1 Lloyd’s Rep 213 .................................................... 12.370, 12.740, 12.780 Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2001] 1 Lloyd’s Rep 754 ...... 13.210 Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] 2 Lloyd’s Rep 487 ....... 13.70, 13.160, 13.180, 13.210, 13.650 Glencore Grain Ltd v Goldbeam Shipping Inc (The Mass Glory) [2002] 2 Lloyd’s Rep 244 ................................................................................................................................... 13.210 Glencore International v Alpina Insurance Co Ltd (No 2) [2004] 1 Lloyd’s Rep 567 ............. 17.160 Glencore International AG v MSC Mediterranean Shipping Co SA [2015] 2 Lloyd’s Rep 508 ...................................................................................................................... 12.670, 12.770 Glencore International AG v Ryan (The Beursgracht) [2002] 1 Lloyd’s Rep 574 .................... 17.160 Glendarroch, The [1894] P 226 .................................................................................................... 12.280 Glenfruin, The (1885) 10 PD 103 ................................................................................... 20.230, 20.310 Glengaber, The (1872) LR 3 A & E 534 ..................................................................................... 20.530 Glicksman v Lancashire and General Assurance Co Ltd [1927] AC 139 .................................. 17.110 Global Mariner and Atlantic Crusader, The [2005] 1 Lloyd’s Rep 699 ..................................... 15.105 Global Process Systems Inc v Syarikat Takaful Malaysia Bhd (The Cendor MOPU) [2011] 1 Lloyd’s Rep 560 ........................................................................................... 17.270, 17.290, 17.310

Table of Cases xxxi Glory Wealth Shipping Pte Ltd v Korea Line Corp (The Wren) [2011] 2 Lloyd’s Rep 370 .... 14.250 Glyn, Mills Currie & Co v East and West India Dock Co (1881) 7 App Cas 591 ................... 12.770 Glynn v Margetson & Co [1893] AC 351 ...................................................................... 12.330, 13.620 Godina v Patrick Operations Pty Ltd [1984] 1 Lloyd’s Rep 333 ............................................... 12.740 Goldean Falcon, The [1990] 2 Lloyd’s Rep 366 ......................................................................... 20.590 Golden Fleece Maritime Inc v ST Shipping and Transport Inc (The Elli and the Frixos) [2008] 2 Lloyd’s Rep 119 ...................................................................................................................... 14.100 Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 AC 353 .................................................................................................................................... 14.250 Golodetz & Co Inc v Czarnikow-Rionda Co (The Galatia) [1980] 1 Lloyd’s Rep 453 .......... 12.160, 12.210 Good Luck, The [1989] 2 Lloyd’s Rep 238 .................................................................................. 17.90 Good Luck, The [1991] 2 Lloyd’s Rep 191 ..................................................................... 17.90, 17.570 Gordon v Powis (1892) 8 TLR 397 ............................................................................................. 13.210 Goring, The [1987] QB 687 ............................................................................... 20.190, 20.440, 20.480 Goring, The [1988] AC 831 ......................................................................................................... 20.190 Gosper v Sawyer (1985) 160 CLR 548 ....................................................................................... 19.240 Goulandris, The [1927] P 182 ...................................................................................................... 20.660 Goulandris Bros Ltd v B Goldman & Sons Ltd [1958] 1 QB 74 ..................................... 18.30, 18.70 Gould v South Eastern and Chatham Railway Co [1920] 2 KB 186 ......................................... 12.470 Government of Indonesia v The General San Martin 114 F Supp 289 (SDNY 1953) .............. 12.590 Government of Sierra Leone v Marmaro Shipping Co Ltd (The Amazona and Yayamaria) [1989] 2 Lloyd’s Rep 130 ........................................................................................................ 12.580, 12.590 Gradmann & Holler GmbH v Continental Lines SA 504 F Supp 785 (DPR 1980) ................. 12.170 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 ...................................... 15.50, 19.230 Grand Champion Tankers Ltd v Norpipe A/S: The Marion [1984] AC 563 .............................. 16.160 Granit SA v Benship International Inc [1994] 1 Lloyd’s Rep 526 ............................................... 13.30 Grant v Norway (1851) 10 CB 665; 138 ER 263 .......................................................... 12.190, 12.200 Grant Smith & Co v Seattle Construction and Dry Dock Co [1920] AC 162 ........................... 12.410 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 .......... 12.280, 12.300, 12.310, 12.360, 12.370, 12.390, 12.400, 12.410, 12.470, 13.600 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (The Bunga Seroja) [1994] 1 Lloyd’s Rep 455 ............................................................... 12.280, 12.390, 12.470 Great Circle Lines Ltd v Matheson & Co Ltd 681 F 2d 121 (2d Cir 1982) .................... 13.30, 14.30 Great Eastern, The (1867) LR 1 A & E 384 ................................................................................. 8.230 Great Eastern Shipping Co Ltd v Far East Chartering Ltd (The Jag Ravi) [2012] 1 Lloyd’s Rep 637 ................................................................................................................................... 12.600 Great Eastern Steamship Co, Re; Claim of Williams (1885) 5 Asp MLC 511 ............................ 8.240 Great Eastern Steamship Co, Re; Claim of Williams (1886) 6 Asp MLC 511 ............................ 8.260 Great Elephant Corp v Trafigura Beheer BV (The Crudesky) [2014] 1 Lloyd’s Rep 1 ............ 13.200 Green v Briggs (1848) 6 Hare 395; 67 ER 1219 .......................................................................... 5.130 Grey v Pearson (1857) 6 HLC 61; 10 ER 1216 .......................................................................... 15.240 Grey & Co v Christie & Co (1889) 5 TLR 577 ............................................................ 14.210, 14.230 Grimaldi Compagnia di Navigazione SpA v Sekihyo Lines Ltd (The Seki Rolette) [1998] 2 Lloyd’s Rep 638 ................................................................................................................................... 14.160 Gronlund v Hansen (1969) 4 DLR (3d) 435 ...................................................................... 4.100, 4.130 Gross, Assignee of Williams, a Bankrupt v Quinton (1842) 3 Man & G 825; 133 ER 1372 ...... 6.40 Grossner Jens v Raffles Holdings Ltd [2004] 1 SLR (R) 202 ...................................................... 13.30 Groupe Chegaray/V De Chalus v P & O Containers 251 F 3d 1359; 2001 AMC 1858 (11th Cir 2001) ........................................................................................................................................ 12.560 Groves Maclean & Co v Volkart Brothers (1884) 1 TLR 92 ..................................................... 13.200 Groves Maclean & Co v Volkart Brothers (1885) 1 TLR 454 ................................................... 13.200 Guardian Industries Pty Ltd v Transport & General Insurance Co Ltd [1965] NSWR 1430 ... 17.270 Guildfaxe, The (1868) LR 2 A & E 325 ........................................................................................ 8.140 Guinomar of Conakry v Samsung Fire & Marine Insurance Co Ltd (The Kamsar Voyager) [2002] 2 Lloyd’s Rep 57 .......................................................................................................................... 18.70

xxxii

Table of Cases

Gulf & Fraser Fishermen’s Union v Calm C Fish Ltd, Phillipson, Doving O’Brien and O’Brien: The Calm C [1975] 1 Lloyd’s Rep 188 .................................................................... 10.300, 10.310 Gulf Shipping Lines Ltd v Compania Naviera Alanje SA (The Aspa Maria) [1976] 2 Lloyd’s Rep 643 ........................................................................................................................................... 14.220 Gustaf, The (1862) Lush 506; 167 ER 230 ............................................................... 8.190, 8.400, 9.30

H H, In re [1996] AC 563 ................................................................................................................ 17.290 HIH Casualty & General Insurance Ltd v Waterwell (1998) 43 NSWLR 601 ............ 17.290, 17.310 HMS London [1914] P 72 ............................................................................................................ 15.170 HMS Thetis (1833) 3 Hagg Adm 14; 166 ER 312 ............................................................ 8.190, 20.10 HMS Thetis (1835) 3 Hagg Adm 228; 166 ER 390 ........................................................ 20.630, 21.70 Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145 ............................ 12.680, 13.140, 13.550, 14.240 Hain Steamship Co Ltd v Minister of Food (1949) 82 Ll L Rep 386 ....................................... 13.330 Hain Steamship Co Ltd v Tate and Lyle Ltd (1936) 55 Ll L Rep 159; 41 Com Cas 350 ....... 12.710, 13.620 Hair and Skin Trading Co Ltd v Norman Airfreight Carriers Ltd [1974] 1 Lloyd’s Rep 443 .. 12.840 Halcyon Skies, The [1977] QB 14 ...................................................................................... 8.230, 8.260 Halcyon Steamship Co Ltd v Continental Grain Co (1943) 75 Ll L Rep 80 ............... 14.280, 14.320 Hall v Hyman [1912] 2 KB 5 ...................................................................................................... 17.420 Hallett v Bousfield (1811) 18 Ves 187; 34 ER 288 ....................................................................... 18.80 Hamburg Star, The [1994] 1 Lloyd’s Rep 399 ............................................................................ 12.800 Hamilton v Baker: The Sara (1889) 14 App Cas 209 ................................................................... 8.260 Hamilton, Fraser & Co v Pandorf & Co (1887) 12 App Cas 518 .............................................. 12.410 Hamilton and St John, The [1999] 1 Lloyd’s Rep 883 ............................................................... 20.160 Hams v CGU Insurance Ltd [2002] NSWSC 273 ....................................................................... 17.310 Hanjin Shipping Co Ltd v Zenith Chartering Corp (The Mercedes Envoy) [1995] 2 Lloyd’s Rep 559 ............................................................................................................................................. 14.30 Hannibal, The; The Queen (1867) LR 2 A & E 53 ..................................................................... 20.320 Hansen Development Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1999] NSWCA 186 .............................................................................................................................. 17.10 Harlow, The [1922] P 175 ................................................................................................... 1.10, 16.170 Harman v Clarke (1815) 4 Camp 159; 171 ER 51 ..................................................................... 13.650 Harman v Mant (1815) 4 Camp 161; 171 ER 52 ........................................................................ 13.650 Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884 ......... 8.10, 8.20, 8.30, 8.50, 8.170, 8.450 Harmony Shipping Co SA v Saudi-Europe Line Ltd (The Good Helmsman) [1981] 1 Lloyd’s Rep 377 ................................................................................................................. 14.200, 14.330, 14.520 Harpers Trading (Singapore) Pte Ltd v RFL International Ltd (The Planeta) (unreported, NSW Sup Ct, Carruthers J, 12 December 1994) ..................................................................................... 12.300 Harris v Best, Ryley & Co (1892) 68 LT 76 .................................................................. 13.470, 13.560 Harris and Dixon v Marcus Jacobs & Co (1885) 15 QBD 247 ................................................. 14.190 Harrison v Garthorne (1872) 26 LT (NS) 508 ................................................................ 13.130, 13.140 Harriton v Stephens (2006) 226 CLR 52 .......................................................................... 15.50, 19.230 Hartmann v Konig (1933) 50 TLR 114 ....................................................................................... 12.670 Hasbro Industries Inc v M/S St Constantine 705 F 2d 339; 1983 AMC 1841 (9th Cir 1983) .......................................................................................................................... 12.400 Hathesing v Laing (1873) LR 17 Eq 92 ...................................................................................... 12.100 Havhelt, The [1993] 1 Lloyd’s Rep 523 ...................................................................................... 12.590 Hawaiian and Guamanian Cabotage Antitrust Litigation, In re 647 F Supp 2d 1250 (WD Wash 2009) .......................................................................................................................................... 14.60 Hawkspere Shipping Co Ltd v Intamex SA 330 F 3d 225 (4th Cir 2003) ................................ 12.720 Hayes-Leger Associates v M/V Oriental Knight 765 F 2d 1076; 1986 AMC 1724 (11th Cir 1985) ........................................................................................................................................ 12.560 He Kaw Teh v The Queen (1985) 157 CLR 523 .......................................................................... 19.40 Heather Bell, The [1901] P 143 ................................. 10.180, 10.190, 10.210, 10.220, 10.250, 10.350

Table of Cases xxxiii Heather Bell, The [1901] P 272 ......................................................................... 10.180, 10.190, 10.340 Heavy Industries Ltd v Klipriver Shipping Ltd (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s Rep 1 ............................................................................................................................................... 12.530 Hedges & Son v The London & St Katherine Docks Co (1885) 16 QBD 597 ........................... 1.200 Heilbrunn v Lightwood PLC (2007) 164 FCR 1 ......................................................................... 12.840 Heilbutt v Hickson (1872) LR 7 CP 438 ......................................................................................... 6.40 Heinrich, The (1872) LR 3 A & E 505 ............................................................................................ 7.70 Heinrich Bjorn, The (1885) 10 PD 44 ........................................................................................... 8.630 Heinrich Hanno & Co BV v Fairlight Shipping Co Ltd (The Kostas K) [1985] 1 Lloyd’s Rep 231 ................................................................................................................................... 13.640 Heinz Horn, The [1970] 1 Lloyd’s Rep 191 ............................................................................... 13.600 Helicopter Resources Pty Ltd v Sun Alliance Australia Ltd (The Icebird) (unreported, Vic Sup Ct, 1991) ............................................................................................................................. 17.90, 17.100 Helios, The 115 F 705 (2d Cir 1902) ............................................................................................. 13.50 Hellenic Dolphin, The [1978] 2 Lloyd’s Rep 336 ......................................................... 12.280, 12.300 Helme v Smith (1831) 7 Bing 709; 131 ER 274 .......................................................................... 5.130 Henderson & Co v Comptoir d’Escompte de Paris (1873) LR 5 PC 253 ................................. 12.760 Henderson Bros v Shankland & Co [1896] 1 QB 525 ................................................................ 17.420 Henriksens Rederi A/S v THZ Rolimpex (The Brede) [1974] QB 233 ..................................... 13.660 Henry v Henry (1996) 185 CLR 571 ........................................................................................... 16.250 Hepburn v A Tomlinson (Hauliers) Ltd [1966] AC 451 .................................................... 17.40, 17.50 Herceg Novi and Ming Galaxy, The [1998] 2 Lloyd’s Rep 454 ................................... 16.160, 16.240 Hercules Inc v Stevens Shipping Co Inc 698 F 2d 726; 1983 AMC 1786 (5th Cir 1983) ....... 12.620 Hersey, The (1837) 3 Hagg Adm 404; 166 ER 455 ................................................... 9.50, 9.80, 10.20 Hestia, The [1895] P 193 .............................................................................................................. 20.660 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263 ........ 12.10, 12.270, 12.700, 12.710, 12.720, 14.420 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1 ................ 12.90, 12.720 Hibbs v Ross (1866) LR 1 QB 534 ............................................................................................... 5.220 Hightime Investments Pty Ltd v Adamus Resources [2012] WASC 295 ................................... 13.440 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 ...... 11.20, 12.40, 12.100, 12.280, 12.310, 12.370, 12.450, 12.620, 12.670, 12.710, 12.760 Hill Harmony, The [2001] 1 Lloyd’s Rep 147 ...................................... 13.620, 14.10, 14.280, 14.360 Hines Exports Pty Ltd v Mediterranean Shipping Co SA (2000) 209 LSJS 127; [2000] SADC 71 .................................................................................................................... 12.270, 12.610 Hines Exports Pty Ltd v Mediterranean Shipping Co SA (2001) 80 SASR 268 ......... 12.270, 12.610 Hispanica de Petroleos SA v Vencedora Oceania Navigacion SA (The Kapetan Markos NL) [1986] 2 Lloyd’s Rep 211 ................................................................................................................... 12.590 Hochster v De la Tour (1853) 2 El & Bl 678; 118 ER 922 ....................................................... 13.520 Hodgkin, Ex parte; Re Softley (1875) LR 20 Eq 746 ....................................................... 1.250, 10.70 Hodgson and Wife v Stawell (1856) 1 VLT 51 ............................................................................. 4.140 Hodson v Owners of the Ship Super Sport (1990) 26 FCR 157 ..................... 20.220, 20.480, 20.520 Hofflinghouse & Co Ltd v C-Trade SA (The Intra Transporter) [1985] 2 Lloyd’s Rep 158 ..... 11.70, 13.30 Hogarth v Miller, Brother & Co [1891] AC 48 ........................................................................... 14.330 Holderness v Lamport (1861) 29 Beav 129; 54 ER 576 .............................................................. 5.190 Hollandia, The [1983] 1 AC 565 .................................................................................................... 12.40 Holmes v Norton (1870) 1 AJR 93 ....................................................................................... 8.280, 9.50 Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715 ...... 12.370, 12.810, 12.820, 12.830, 12.840 Hong Kong Kapok Vacuum Flask Enterprises Pty Ltd v Megavest International Pty Ltd [2003] VSC 330 .................................................................................................................................. 13.440 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 ....... 13.130, 13.600, 14.20, 14.100, 14.110, 14.120, 14.130 Hooper v Gumm; McLellan v Gumm (1867) 2 Ch App 282 .......................................... 6.190, 10.370 Hooshmand and Ghasmezadegan, In the Marriage of [2000] FLC 93-044 ................................. 4.140 Hope, The (1873) 1 Asp MLC 563 .................................................................................................. 9.70

xxxiv

Table of Cases

Horlock v Beal [1916] AC 486 ...................................................................................................... 3.510 Horlock, The (1877) 2 PD 243 .............................................................................. 5.180, 5.190, 10.240 Horn v Cia de Navegacion Fruco SA 404 F 2d 422 (5th Cir 1968) ............................ 13.600, 14.150 Hornbeck Offshore Services LLC v Fairfield Industries Inc No 09-2905; 2010 WL 2008971 (ED La 17 May 2010) ............................................................................................................................ 14.30 Hourani v T & J Harrison (1927) 28 L1 L Rep 120 ................................................................... 12.490 Household Financial Services Ltd v Island and River Trading Pty Ltd [1994] ACL Rep 295 NSW 10 ........................................................................................................................... 5.190, 5.200, 6.60 Houston & Co v Sansinena & Co (1893) 7 Asp MLC 311 ........................................................ 12.700 Houston City, The (see Reardon Smith Line Ltd v Australian Wheat Board (1956) 93 CLR 577) ................................................................................................................................... 13.70 Howard Smith Industries Ltd v Melbourne Harbor Trust Commissioners [1970] VR 406 ....... 15.100 Howden Brothers Ltd v Ulster Bank Ltd and Hugh Boyd and the Olderfleet Shipbuilding and Engineering Co Ltd [1924] 1 Ir R 117 ............................................................................. 6.30, 6.40 Howden and Ainslie, Ex parte; Re Litherland (1842) 2 Mont D & De G 574 ......................... 10.280 Howmet Corp v Tokyo Shipping Co 318 F Supp 658; 1971 AMC 1993 (D Del 1970) ........... 12.590 Howmet Corp v Tokyo Shipping Co 320 F Supp 975; 1971 AMC 1987 (D Del 1971) ........... 12.590 Hua Tyan Development Ltd v Zurich Insurance Co Ltd (The Ho Feng 7) [2014] 2 Lloyd’s Rep 637 ...................................................................................................................... 17.570, 17.600 Hubble & Co v Thomas (1890) 24 SALR 102 .................................................................. 15.30, 15.40 Huddart Parker Ltd v Ship Mill Hill and her Cargo (1950) 81 CLR 502 .................... 20.640, 20.670 Hudson v Bilton (1856) 6 El & Bl 565; 119 ER 975 ................................................................. 13.590 Hughes v Lord Advocate [1963] AC 837 .................................................................................... 14.300 Hume v Palmer (1926) 38 CLR 441 .................................................................................. 2.270, 16.20 Hunter v Fry (1819) 2 B & Ald 421; 106 ER 420 ...................................................................... 13.530 Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507 ........ 12.10, 12.110, 12.150, 12.450, 12.700, 12.810 Huppert v Stock Options of Australia Pty Ltd (1965) 112 CLR 414 ........................................... 14.70 Hur v Samsun Logix Corp (2015) 109 ACSR 137 ....................................................................... 16.70 Hurst v Usborne (1856) 18 CB 144; 139 ER 1321 ....................................................................... 14.70 Hussain v Great Eastern Shipping Co Ltd ILR (1960) Ker 1028 .............................................. 12.550 Hutchinson, Ex parte (1871) LR 6 QB 280 ....................................................................... 16.20, 16.80 Hyundai Merchant Marine Co Ltd v Americas Bulk Transport Ltd (The Pacific Champ) [2013] 2 Lloyd’s Rep 320 .......................................................................................................... 14.30, 14.190 Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd (2006) 236 ALR 115 .. 13.520, 13.550 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 ............................................................. 14.10, 14.170, 14.210, 14.220, 14.230, 14.240, 14.360 Hyundai Merchant Marine Co Ltd v Karander Maritime Inc (The Niizuru) [1996] 2 Lloyd’s Rep 66 ..................................................................................................................................... 14.180 Hyundai Merchant Marine Co Ltd v Trafigura Beheer BV (The Gaz Energy) [2012] 1 Lloyd’s Rep 211 ............................................................................................................................................. 14.80

I I Congreso del Partido [1978] QB 500 ............................................................................................ 5.50 I/S Rederiet Erik B Kromann v Ocean Bridge Shipping Pty Ltd (The Hermann C Boye) (unreported, WA Sup Ct, 1991) ..................................................................................... 13.30, 14.30 IC Potter, The (1870) LR 3 A & E 292 ....................................................................................... 20.380 ICL Shipping Ltd v Chin Tai Steel Enterprise Co Ltd (The ICL Vikraman) [2004] 1 Lloyd’s Rep 21 ..................................................................................................................................... 16.230 ITT Rayonier Inc v Southeastern Maritime Co 620 F 2d 512; 1981 AMC 854 (5th Cir 1980) ........................................................................................................................................ 12.620 Ida, The (1860) Lush 6; 167 ER 3 ................................................................................................. 8.150 Ilyssia Compania Naviera SA v Bamaodah (The Elli 2) [1985] 1 Lloyd’s Rep 107 ................ 12.680 Immacolata Concezione, The (1883) 9 PD 37 ..................................................................... 7.70, 8.230

Table of Cases xxxv Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 ...................................................................................................................................... 13.70 Imperial Oil Ltd v The Expo Spirit (1987) 80 NR 259 ....................................................... 1.220, 8.70 Inca Cia Naviera SA v Mofinol Inc (The President Brand) [1967] 2 Lloyd’s Rep 338 ............ 13.190 Independent Petroleum Group Ltd v Seacarriers Count Pte Ltd (The Count) [2008] 1 Lloyd’s Rep 72 ............................................................................................................................................... 13.70 India, President of v Davenport Marine Panama SA (The Albion) [1987] 2 Lloyd’s Rep 365 ...................................................................................................................... 13.200, 13.220 India, President of v Diamantis Pateras (Hellas) Marine Enterprises Ltd (The Nestor) [1987] 2 Lloyd’s Rep 649 ........................................................................................................ 13.200, 13.220 India, President of v Hariana Overseas Corp (The Takafa) [1990] 1 Lloyd’s Rep 536 ............ 13.610 India, President of v Jebsens (UK) Ltd (The General Capinpin, Proteus and Free Wave) [1991] 1 Lloyd’s Rep 1 .......................................................................................................................... 13.350 India, President of v Lips Maritime Corp [1988] AC 395 ............................................. 13.440, 13.660 India, President of v Metcalfe Shipping Co Ltd [1970] 1 QB 289 ............................... 12.700, 13.630 India, President of v Moor Line Ltd (1958) 99 CLR 185 .......................................................... 13.560 India, President of v NG Livanos Maritime Co (The John Michalos) [1987] 2 Lloyd’s Rep 188 ................................................................................................................................... 13.460 India, Republic of v India Steamship Co Ltd (No 2) [1998] AC 878 ............................................ 8.40 India, The (1842) 1 W Rob 406; 166 ER 625 ............................................................................... 8.190 India, Union of v EB Aaby’s Rederi [1975] AC 797 .................................................................... 18.30 India, Union of v NV Reederij Amsterdam [1962] 1 Lloyd’s Rep 539 ..................................... 12.300 India, Union of v NV Reederij Amsterdam [1963] 2 Lloyd’s Rep 223 ..................................... 12.300 Indonesia, Government of v The General San Martin 114 F Supp 289 (SDNY 1953) ............. 12.590 Industrie Chimiche Italia Centrale and Cerealfin SA v Alexander G Tsavliris & Sons Maritime Co, Panchristo Shipping Co SA and Bula Shipping Corporation: The Choko Star [1990] 1 Lloyd’s Rep 516 ................................................................................................................................... 20.430 Ingersoll Milling Machine Co v Granger 833 F 2d 680 (7th Cir 1987) .................................... 16.260 Inna, The [1938] P 148 .......................................................................................... 8.190, 8.420, 20.660 Innisfallen, The (1866) LR 1 A & E 72 ............................................................................. 5.170, 10.60 Insurance Company of North America v MV Atlantic Corona 704 F Supp 528; 1989 AMC 875 (SDNY 1989) ........................................................................................................................... 12.530 Insurance Company of North America v S/S American Argosy 732 F 2d 299; 1984 AMC 1547 (2d Cir 1984) .................................................................................................................................. 12.810 Interbulk Ltd v Ponte Dei Sospiri Shipping Co (The Standard Ardour) [1988] 2 Lloyd’s Rep 159 ................................................................................................................................... 14.160 Intercargo Insurance Co v Container Innovations Inc 100 F Supp 2d 198; 2000 AMC 2395 (SDNY 2000) ........................................................................................................................................ 12.560 Interim Advance Corp Pty Ltd v Fazio [2008] WASCA 140 ....................................................... 19.40 International Bulk Carriers (Beirut) SARL v Evlogia Shipping Co SA (The Mihalios Xilas) [1978] 2 Lloyd’s Rep 186 ..................................................................................................... 14.440, 14.530 International Factors (Singapore) Pty Ltd v Speedy Tyres Pty Ltd [1991] Tas R (NC) N9 ..... 13.440 International Fina Services AG v Katrina Shipping Ltd (The Fina Samco) [1994] 2 Lloyd’s Rep 344 ........................................................................................................................................... 14.130 International Packers London Ltd v Ocean Steam Ship Co Ltd [1955] 2 Lloyd’s Rep 218 .... 12.310 International Sea Tankers Inc v Hemisphere Shipping Co Ltd (The Wenjiang) (No 2) [1983] 1 Lloyd’s Rep 400 ...................................................................................................................... 14.480 Interocean Shipping Co v National Shipping and Trading Corp 523 F 2d 527 (2nd Cir 1975) ........................................................................................................................... 13.30 Inverkip Steamship Co Ltd v Bunge & Co [1917] 2 KB 198 .................................................... 13.450 Inverkip Steamship Co Ltd v Bunge & Co (1917) 22 Com Cas 200 ........................................ 13.150 Ioannis Daskalelis (see Todd Shipyards Corp, The v Altema Compania Maritima SA) (1973) 32 DLR (3d) 572 ............................................................................................................................ 8.590 Ionides v Universal Marine Insurance Co (1863) 14 CB (NS) 259; 143 ER 445 ..................... 17.290 Irving v Richardson (1831) 2 B & Ad 193; 109 ER 1115 ............................................................ 17.40 Isabella, The (1838) 3 Hagg Adm 428; 166 ER 463 .................................................................. 20.350

xxxvi

Table of Cases

Isabella Shipowner SA v Shagang Shipping Co Ltd (The Aquafaith) [2012] 2 Lloyd’s Rep 61 ..................................................................................................................................... 14.250 Isabelle, The [1982] 2 Lloyd’s Rep 81 ........................................................................................ 13.180 Islamic Investment Co 1 SA v Transorient Shipping Ltd (The Nour) [1999] 1 Lloyd’s Rep 1 ....................................................................................................................................... 13.520 Islamic Republic of Iran Shipping Lines v Ierax Shipping Co of Panama (The Forum Craftsman) [1991] 1 Lloyd’s Rep 81 ........................................................................................... 13.430, 13.460 Islamic Republic of Iran Shipping Lines v Royal Bank of Scotland plc (The Anna Ch) [1987] 1 Lloyd’s Rep 266 ........................................................................................... 13.220, 13.430, 13.470 Island Tug & Barge Ltd v SS Makedonia (Owners); The Makedonia [1958] 1 QB 365 ......... 20.510 Islander Shipping Enterprises SA v Empresa Maritima del Estado SA (The Khian Sea) [1979] 1 Lloyd’s Rep 545 ...................................................................................................................... 14.300 Issaias v Marine Insurance Co Ltd (The Elias Issaias) (1923) 15 Ll L Rep 186 ...................... 17.290 Italmare Shipping Co Ltd v Ocean Tanker Co Inc (The Rio Sun) [1981] 2 Lloyd’s Rep 489 ................................................................................................................................... 14.450 Italmare Shipping Co Ltd v Ocean Tanker Co Inc (The Rio Sun) [1982] 1 Lloyd’s Rep 404 ................................................................................................................................... 14.450 Itobar Pty Ltd v MacKinnon (1984) 3 ANZ Insurance Cases 60-543 ........................................ 17.100 Itochu International Inc v M/V Western Avenir 1998 AMC 555 (ED La 1998) .......... 12.310, 12.450 Iverson v Rowlands (1886) 12 VLR 57 ........................................................................................... 1.10

J J Gadsden Pty Ltd v Australian Coastal Shipping Commission [1977] 1 NSWLR 575 .......... 12.370, 12.580, 12.820 J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57 ........... 12.830, 14.470 J Gerber & Co v S/S Sabine Howaldt 437 F 2d 580 (2d Cir 1971) .......................................... 12.410 J Kaufman Ltd v Cunard Steam-Ship Co Ltd [1965] 2 Lloyd’s Rep 564 ................................. 12.130 J Vermaas’ Scheepvaartbedrijf NV v Association Technique de L’Importation Charbonniere (The Laga) [1966] 1 Lloyd’s Rep 582 ............................................................................................ 13.380 JCB Sales Ltd v Wallenius Lines 124 F 3d 132; 1997 AMC 2705 (2d Cir 1997) ........ 12.80, 12.530 JI MacWilliam Co Inc v Mediterranean Shipping Co SA: The Rafaela S [2003] 2 Lloyd’s Rep 113 ...................................................................................................................................... 12.10 JI MacWilliam Co Inc v Mediterranean Shipping Co SA: The Rafaela S [2005] 2 AC 423 .... 11.20, 12.20, 12.140 JJ Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyd’s Rep 32 ..................................................................................................................................... 17.310 Jackson v Vernon (1789) 1 HBl 115; 126 ER 69 .......................................................................... 10.60 Jadranska Slobodna Plovidba v Gulf Shipping Line Ltd (The Matija Gubec) [1983] 1 Lloyd’s Rep 24 ................................................................................................................................ 14.220, 14.230 Jaensch v Coffey (1984) 155 CLR 549 ........................................................................................ 16.100 Jaggar v QBE Insurance International Ltd [2007] 2 NZLR 336 ................................................ 17.100 James v Commonwealth (1936) 55 CLR 1 ...................................................................................... 2.60 James Morrison & Co Ltd v Shaw, Savill and Albion Co Ltd [1916] 2 KB 783 ..................... 13.620 James N Kirby Pty Ltd v International Cargo Control Pty Ltd [2000] NSWSC 289 ............... 16.250 James Patrick & Co Ltd v Union Steamship Co of New Zealand Ltd (1938) 60 CLR 650 ..... 16.30, 16.40, 16.160 James Seddon, The (1866) LR 1 A & E 62 ................................................................................... 8.280 James W Elwell, The [1921] P 351 .................................................... 6.190, 8.450, 8.470, 8.530, 9.50 Jan Laurenz, The [1973] 1 Lloyd’s Rep 329 ............................................................................... 15.150 Jane, The (1870) 23 LT 791 ................................................................................................ 5.170, 5.190 Jane and Matilda, The (1823) 1 Hagg Adm 187; 166 ER 67 ....................................................... 8.240 Janet Court, The [1897] P 59 ....................................................................................................... 20.450 Japp v Campbell (1887) 57 LJQB 79 ............................................................................... 5.140, 10.260 Jason, The 225 US 32; 32 S Ct 560; 56 L Ed 969 (1912) ........................................................... 18.70 Jebsen v A Cargo of Hemp 228 F 143 (D Mass 1915) ............................................................... 14.560 Jeffery v Associated National Insurance Co Ltd [1984] 1 Qd R 238 ......................................... 17.270

Table of Cases xxxvii Jenny Lind, The (1872) LR 3 A & E 529 .......................................................................... 8.410, 8.650 Jessel v Bath (1867) LR 2 Ex 267 ............................................................................................... 12.200 Jetopay Pty Ltd v Ocean Marine Mutual Insurance Association (Europe) OV (1999) 95 FCR 570 .................................................................................................................................. 17.640 Jindal Iron and Steel Co Ltd v Islamic Solidarity Co Jordan Inc (The MV Jordan II) [2003] 2 Lloyd’s Rep 87 ........................................................................................................................ 12.310 Jindal Iron and Steel Co Ltd v Islamic Solidarity Co Jordan Inc (The MV Jordan II) [2005] 1 Lloyd’s Rep 57 .......................................................................................................... 12.310, 12.450 Jockel v Jockel [1963] SR (NSW) 230 ........................................................................................ 15.110 Johanna Oldendorff, The [1973] 2 Lloyd’s Rep 285 ................................................................... 13.170 Johanna Oldendorff, The (see EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479) ................................................................................................................................... 13.590 John Bullock, The (1870) 9 SCR (NSW) 300 ............................................................................. 20.350 John Carlbom & Co Ltd v Zafiro (Owners): The Zafiro [1960] P 1 ....................... 8.50, 8.410, 8.620 John Cory & Sons v Burr (1883) 8 App Cas 393 ....................................................................... 17.310 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 .................................................. 8.590, 16.250 John Sharp & Sons Ltd v Ship Katherine Mackall (1924) 34 CLR 420 ............... 2.130, 2.150, 2.270 John and Jane, The (1802) 4 C Rob 216; 165 ER 590 ................................................................. 21.70 Johnson v Black: The Two Ellens (1872) LR 4 PC 161 ................................. 8.20, 8.50, 8.330, 8.450 Johnson v Royal Mail Steam Packet Co (1867) LR 3 CP 38 ..................................................... 10.180 Johnson Matthey & Co v Constantine Terminals Ltd [1976] 2 Lloyd’s Rep 214 ..................... 12.840 Johnson Tiles Pty Ltd v Esso Australia Ltd (No 2) (2000) 104 FCR 564 ................................. 15.200 Johnson Tiles Pty Ltd v Esso Australia Ltd (No 2) (2000) 97 FCR 175 ................................... 15.200 Johnstone & Wilmot Pty Ltd v Kaine (1928) 23 Tas LR 43 ........................................................ 21.70 Jolly v Young (1794) 1 Esp 186; 170 ER 323 ............................................................................ 14.310 Jones v European & General Express (1920) 25 Com Cas 296 ................................................. 12.840 Jones v Queensland [1998] 2 Qd R 385 ........................................................................................ 2.370 Jonge Andries, The (1857) Swa 226; 166 ER 1108 .................................................................... 20.150 Joo Seng Hong Kong Co Ltd v S/S Unibulkfir 483 F Supp 43 (SDNY 1979) ......................... 12.810 Julindur, The (1853) 1 Spinks Ecc & Ad 71; 164 ER 42 ............................................................. 8.220

K K/S Arnt J Moerland v Kuwait Petroleum Corp (The Fjordaas) [1988] 1 Lloyd’s Rep 336 ... 13.190, 13.200 K/S Merc-Scandia XXXXII v Certain Lloyd’s Underwriters Subscribing to Lloyd’s Policy No 25T 105847 [2001] 2 Lloyd’s Rep 563 ......................................................................................... 17.630 K/S Merc-Scandia XXXXII v Lloyd’s Underwriters Subscribing to Lloyd’s Policy No 25T 105487 (The Mercandian Continent) [2000] 2 Lloyd’s Rep 357 ......................................................... 17.10 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 ................................................................................................................................ 13.70, 14.300 KMP Coastal Oil Pty Ltd v Owner of MV Iran Amanat (1997) 75 FCR 78 .............................. 8.620 Kairos Shipping Ltd v Enka & Co LLC (The Atlantik Confidence) [2014] 1 Lloyd’s Rep 586 ........................................................................................................................ 16.40, 19.260 Kalamazoo, The (1851) 15 Jur 885 ................................................................................................ 8.540 Kaleej International Pty Ltd v Gulf Shipping Lines Ltd (1986) 6 NSWLR 569 ......... 12.810, 12.820 Kali Boat Building & Repair Pty Ltd v Motor Fishing Vessel Bosna (1977) 19 SASR 112 ..... 5.190, 5.200 Kamilla Hans-Peter Eckhoff KG v AC Oersleff’s EFTF A/B (The Kamilla) [2006] 2 Lloyd’s Rep 238 ........................................................................................................................................... 14.410 Kammerman v Baster (1981) 28 SASR 571 ................................................................................ 15.150 Kanchenjunga, The [1990] 1 Lloyd’s Rep 391 ............................................................................. 13.70 Kanematsu-Gosho Ltd v M/T Messiniaki Aigli 814 F 2d 115 (2d Cir 1987) ............................ 12.510 Kangaroo, The [1918] P 327 ........................................................................................................ 20.410 Kapitan Shvetsov, The [1998] 1 Lloyd’s Rep 199 ...................................................................... 16.240 Karnak, The (1868) LR 2 A & E 289 .............................................................................................. 9.50

xxxviii

Table of Cases

Kassiopi Maritime Co Ltd v Fal Shipping Co Ltd (The Adventure) [2015] 1 Lloyd’s Rep 473 ................................................................................................................................... 13.490 Kastor Navigation Co Ltd v AGF MAT [2003] 1 Lloyd’s Rep 296 ................ 17.350, 17.370, 17.440 Kawasaki Kisen Kabushiki Kaisha v Bantham Steamship Co Ltd [1938] 1 KB 805 ............... 14.190 Kawasaki Kisen Kabushiki Kaisha of Kobe v Bantham Steamship Co Ltd [1939] 2 KB 544 .................................................................................................................................... 12.430 Kawasaki Kisen Kabushiki Kaisya v Belships Co Ltd (The Belpareil) (1939) 63 Ll L R 175 ....................................................................................................................................... 12.430 Kay v Wheeler (1867) LR 2 CP 302 ........................................................................................... 12.410 Keane v Australian Steamships Pty Ltd (1929) 41 CLR 484 ..................................................... 12.600 Keith v Burrows (1876) 1 CPD 722 .................................................................... 10.60, 10.270, 10.310 Keith and Wyllie v Burrows and Perks (1877) 2 App Cas 636 ............. 5.60, 10.160, 10.170, 10.180, 10.290 Kent v SS Maria Luisa (No 1) (2002) 130 FCR 1; [2002] FCA 1207 ............................... 5.50, 5.100 Kent v Vessel Maria Luisa (2003) 130 FCR 12 ............................................................................ 17.40 Kenya Railways v Antares Co Pte Ltd (The Antares) (Nos 1 and 2) [1987] 1 Lloyd’s Rep 424 ...................................................................................................................... 12.340, 12.620 Kim v Daebo International Shipping Co Ltd (2015) 232 FCR 275 ............................................. 16.70 Kim Meller Imports Pty Ltd v Eurolevant SpA (1986) 7 NSWLR 269 ......................... 12.90, 12.580 King Line Ltd v Moxey, Savon & Co Ltd (1939) 62 Ll L Rep 252 ................... 13.50, 13.70, 13.410 Kingalock, The (1854) 1 Sp Ecc & Ad 263; 164 ER 153 .......................................................... 20.350 Kiriacoulis Lines SA v Compagnie D’Assurances Maritime Aeriennes et Terrestres (The Demetra K) [2002] 2 Lloyd’s Rep 581 .................................................................................... 17.220, 17.310 Kirknes, The [1957] P 51 ............................................................................................................... 16.90 Kirmani v Captain Cook Cruises Pty Ltd (No 1) (1985) 159 CLR 351 ..... 1.10, 2.120, 2.320, 16.20, 16.80 Kish v Taylor & Co [1912] AC 604 ............................................................................................ 13.620 Kleinwort, Cohen & Co v Cassa Marittima of Genoa (1877) 2 App Cas 156 .............................. 9.50 Koch Marine Inc v D’Amica Societa di Navigazione Arl (The Elena D’Amico) [1980] 1 Lloyd’s Rep 75 .......................................................................................................................... 14.70, 14.250 Kodros Shipping Corp v Empresa Cubana de Fletes (The Evia) (No 2) [1982] 1 Lloyd’s Rep 334 ................................................................................................................................... 14.300 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] 1 AC 736 ................................................................................................................... 13.70, 14.300, 14.480 Kokusai Kisen Kabushiki Kaisha v Johnson (1921) 8 Ll L Rep 434 ........................................ 13.520 Kong Magnus, The [1891] P 223 ........................................................................................ 8.450, 8.490 Konica Business Machines Inc v Vessel Sea-Land Consumer 153 F 3d 1076; 1998 AMC 2705 (9th Cir 1998) .................................................................................................................................. 12.340 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 .......... 13.130, 14.20, 14.100 Kopitoff v Wilson (1876) 1 QBD 377 ............................................................................ 12.300, 13.600 Kos, The [2012] 2 Lloyd’s Rep 292 .................................................... 14.310, 14.380, 14.440, 14.470 Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350 ...................................... 13.550, 14.240 Kristiansands Tankrederi A/S v Standard Tankers (Bahamas) Ltd (The Polyglory) [1977] 2 Lloyd’s Rep 353 ..................................................................................................................................... 13.70 Kristy Mae, The v The Santa Rita [1984] WAR 95 ........................................... 20.80, 20.490, 20.520 Kruger & Co Ltd v Moel Tryvan Ship Co [1907] AC 272 ........................................................ 14.420 Kuenigl v Donnersmarck [1955] 1 QB 515 ..................................................................................... 3.80 Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 ........................... 15.50, 19.230 Kukje Hwajae Insurance Co v M/V Hyundai Liberty 408 F 3d 1250 (9th Cir 2005) .............. 12.560 Kukje Hwajae Insurance Co Ltd v M/V Hyundai Liberty 294 F 3d 826; 2002 AMC 1598 (9th Cir 2002) ........................................................................................................................................ 12.560 Kuklycz v Kuklycz (1971) 18 FLR 9 ............................................................................................ 4.140 Kum v Wah Tat Bank [1971] Lloyd’s Rep 439 .......................................................................... 12.760 Kuo International Oil Ltd v Daisy Shipping Co Ltd (The Yamatogawa) [1990] 2 Lloyd’s Rep 39 ........................................................................................................................ 12.300, 12.480

Table of Cases xxxix Kurt A Becher GmbH & Co KG v Tradax Ocean Transportation SA (The World Navigator) [1991] 2 Lloyd’s Rep 23 .................................................................................................................... 13.150 Kusel v Atkin (The Catariba) [1997] 2 Lloyd’s Rep 749 ........................................................... 17.450 Kuwait Maritime Transport Co v Rickmers Linie KG (The Danah) [1993] 1 Lloyd’s Rep 351 ........................................................................................................... 14.10, 14.360, 14.400 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1993] 1 Lloyd’s Rep 333 ... 14.330, 14.360 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541 ..... 13.80, 14.330, 14.360 Kuwait Rocks Co v AMN Bulkcarriers Inc (The Astra) [2013] 2 Lloyd’s Rep 69 .... 14.310, 14.460, 14.470 Kyzikos, The [1989] 1 Lloyd’s Rep 1 ............................................................................ 13.170, 13.180 Kyzuna Investments Ltd v Ocean Marine Mutual Insurance Assoc (Europe) [2000] 1 Lloyd’s Rep 505 ................................................................................................................................ 17.90, 17.140

L L & M Electrics Pty Ltd v SGIO (Qld) [1985] 2 Qd R 370 ........................................................ 17.60 LD Seals NV v Mitsui OSK Lines Ltd (The Darya Tara) [1997] 1 Lloyd’s Rep 42 .. 14.190, 14.400 LEP International Pty Ltd v Atlanttrafic Express Service Inc (1987) 10 NSWLR 614 ............. 12.810 La Compania Martiartu v Royal Exchange Assurance Corp [1923] 1 KB 650 ......................... 17.290 La Pintada Compania Naviera SA v President of India (The La Pintada) [1983] 1 Lloyd’s Rep 37 ..................................................................................................................................... 13.660 Lacon v Liffen (1862) 4 Giff 75; 66 ER 626 ................................................................................ 10.70 Laconia, The [1977] 1 Lloyd’s Rep 315 ........................................................................ 14.310, 14.440 Laconia, The (see Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia [1977] AC 850) .......................................................................................................................................... 14.440 Lady Durham, The (1835) 3 Hagg Adm 196; 166 ER 378 .......................... 8.90, 8.220, 8.480, 8.580 Lady Franklin, Re The (1874) 5 AJR 185 ....................................................................................... 9.50 Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181 .......... 5.50, 5.100, 16.50, 19.50 Lakeport Navigation Co Panama SA v Anonima Petroli Italiana SpA (The Olympic Brilliance) [1982] 2 Lloyd’s Rep 205 ...................................................................................................... 13.660 Lambs Head Shipping Co Ltd v Jennings (The Marel) [1992] 1 Lloyd’s Rep 402 ..... 17.300, 17.310 Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624 .... 17.220, 17.290, 17.300, 17.310 Landcatch Ltd v International Oil Pollution Compensation Fund [1998] 2 Lloyd’s Rep 552 .. 19.230 Landcatch Ltd v International Oil Pollution Compensation Fund [1999] 2 Lloyd’s Rep 316 ...................................................................................................................... 19.230, 19.330 Lane v Dive Two Pty Ltd (2012) 17 ANZ Insurance Cases 61-294; [2012] NSWSC 104 ........ 17.90, 17.100 Langley, Beldon & Gaunt Ltd v Morley [1965] 1 Lloyd’s Rep 297 ......................................... 12.840 Langton v Horton (1842) 5 Beav 9; 49 ER 479 ............................................................................ 10.60 Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 ....... 14.240 Laoulach v El Khoury [2010] NSWSC 1009 ..................................................................... 16.20, 16.80 Larrinaga Steamship Co Ltd v R [1945] AC 246 .......................................................... 14.360, 14.380 Lauritzen Reefers v Ocean Reef Transport SA (The Bukhta Russkaya) [1997] 2 Lloyd’s Rep 744 ................................................................................................................................... 14.400 Laveroni v Drury (1852) 8 Ex 166; 155 ER 1304 ...................................................................... 12.410 Law Guarantee & Trust Society v Russian Bank for Foreign Trade [1905] 1 KB 815 ........... 10.180, 10.190 Laws v Smith: The Rio Tinto (1883) 9 App Cas 356 ................................................................... 8.330 Lawson v Dumlin (1850) 9 CB 54; 137 ER 811 .......................................................................... 15.20 Le Jonet, The (1872) LR 3 A & E 556 ........................................................................................ 20.290 Leaders Shoes (Aust) Pty Ltd v Liverpool & London & Globe Insurance Co Ltd [1968] 1 NSWR 279 ........................................................................................................................................... 17.200 Leary v Lloyd (1860) 3 El & El 198; 121 ER 409 ....................................................................... 4.180

xl

Table of Cases

Leduc & Co v Ward (1888) 20 QBD 475 ......................................................... 12.270, 12.700, 12.710 Lee Cooper Ltd v CH Jeakins & Sons Ltd [1964] 1 Lloyd’s Rep 300 ..................................... 12.840 Lee Cooper Ltd v CH Jeakins & Sons Ltd [1967] 2 QB 1 ........................................................ 12.840 Leeds Shipping Co v Societe Francaise Bunge (The Eastern City) [1958] 2 Lloyd’s Rep 127 ........................................................................................................................ 13.70, 14.300 Leesh River Tea Co Ltd v British India Steam Navigation Co Ltd (The Chyebassa) [1966] 1 Lloyd’s Rep 450 ...................................................................................................................... 12.300 Leesh River Tea Co Ltd v British India Steam Navigation Co Ltd (The Chyebassa) [1967] 2 QB 250 ........................................................................................................................................... 12.300 Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785 ............................................................................................ 12.830, 12.840, 15.200, 19.230 Lekas & Drivas Inc v Goulandris 306 F 2d 426 (2d Cir 1962) ................................................. 12.440 Lemington, The (1874) 2 Asp MLC 475 ....................................................................................... 8.150 Lempriere v Miller (1871) 2 VR (L) 26 ...................................................................................... 17.340 Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 ..................... 16.160, 19.280 Leoborg (No 2), The [1964] 1 Lloyd’s Rep 380 ........................................................................... 8.450 Leon Blum, The [1914] P 90 ........................................................................................................ 20.380 Leon Corp v Atlantic Lines and Navigation Co Inc (The Leon) [1985] 2 Lloyd’s Rep 470 .... 14.320 Leonis Steamship Co Ltd v Rank Ltd [1908] 1 KB 499 ............................................................ 13.200 Lepanto, The [1892] P 122 ............................................................................................................. 21.70 Leslie, Ex parte; Re Drury and Hudson (1833) 3 LJ Bcy 4 ......................................................... 5.130 Leslie Shipping Co v Welstead (The Raithwaite) [1921] 3 KB 420 .......................................... 14.470 Lesotho Highlands Development Authority v Impreglio SpA [2006] 1 AC 221 ....................... 13.440 Levy v Costerton (1816) 4 Camp 389; 171 ER 124 ...................................................... 13.600, 14.110 Lewis v Rucker (1761) 2 Burr 1167; 97 ER 769 ........................................................................ 17.530 Ley v Delaissé; The Yolaine [1995] 2 Lloyd’s Rep 7 ................................................... 20.480, 20.520 Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350 ........ 17.290, 17.310 Li Chia Hsing v Rankin (1978) 141 CLR 182 .............................................................................. 2.110 Lickbarrow v Mason (1794) 5 TR 683; 101 ER 380 .................................................................. 12.760 Liesbosch, Dredger v SS Edison (Owners) [1933] AC 449 ........................................................ 15.170 Life Savers (Aust) Pty Ltd v Frigmobile Ltd [1983] 1 NSWLR 431 ........................................ 12.740 Limerick SS Co Ltd v Stott & Co Ltd [1921] 2 KB 613 ........................................................... 14.510 Lind v Mitchell (1928) 32 Ll L Rep 70 ....................................................................................... 17.380 Linda Flor, The (1857) Swab 309; 166 ER 1150 .......................................................................... 8.420 Lindsay v Janson (1859) 4 H & N 699; 157 ER 1016 ............................................................... 17.200 Lindsay v Klein: The Tatjana [1911] AC 194 ............................................................................. 12.300 Linelevel Ltd v Powszechny Zaklad Ubezpieczen SA (The Nore Challenger) [2005] 2 Lloyd’s Rep 534 ............................................................................................................................................. 17.40 Linsley v Petrie [1998] 1 VR 427 ................................................................................................ 17.650 Lips, The [1987] 2 Lloyd’s Rep 311 .............................................................................. 13.440, 13.660 Lishman v Christie (1887) 19 QBD 333 ...................................................................................... 12.220 Little Joe, The (1860) Lush 88; 167 ER 46 ................................................................................. 20.200 Liverpool, The [1893] P 154 ........................................................................................................ 20.380 Liverpool Borough Bank v Turner (1860) 29 LJ Ch 827 ............................................................... 5.10 Liverpool Marine Credit Co v Wilson (1872) LR 7 Ch App 507 ...... 10.150, 10.170, 10.270, 10.290 Lloyd v Fleming (1872) LR 7 QB 299 .............................................................................. 17.50, 17.80 Lloyd Royal Belge SA v Stathatos (1917) 34 TLR 70 ............................................................... 14.480 Lloyd del Pacifico v Board of Trade (1930) 35 Ll L Rep 217 ............................................. 5.10, 6.20 Loch Tulla, The (1950) 84 Ll L Rep 62 ...................................................................................... 20.410 Lodza Compania de Navigacione SA v Government of Ceylon (The Theraios) [1971] 1 Lloyd’s Rep 209 ...................................................................................................................... 13.150, 13.340 Logs & Timber Products (Singapore) Pte Ltd v Keeley Granite (Pty) Ltd (The Freijo) [1978] 2 Lloyd’s Rep 1 .......................................................................................................................... 13.200 Lomonosoff, The [1921] P 97 ......................................................................................... 20.170, 20.400 London County Council v Allen [1914] 3 KB 642 ..................................................................... 10.230 London Explorer, The [1971] 1 Lloyd’s Rep 523 .......................................................... 14.220, 14.240

Table of Cases xli London Explorer, The (see Timber Shipping Co SA v London & Overseas Freighters Ltd [1972] AC 1) ....................................................................................................................................... 14.220 London Merchant, The (1837) 3 Hagg Adm 394; 166 ER 451 .................................................. 20.200 Longford, The (1881) 6 PD 60 ..................................................................................................... 20.620 Lord Citrine (Owners) v Hebridean Coast (Owners): The Hebridean Coast [1961] AC 545 ... 15.170 Lord Strathcona, The [1925] P 143 ................................................................................. 10.220, 10.350 Lord Strathcona Steamship Co v Dominion Coal Co [1926] AC 108 ....................................... 10.230 Lorentzen v White Shipping Co Ltd (1942) 74 Ll L Rep 161 .......................................... 14.70, 14.80 Loretta, The v Bubb [1971] WAR 91 .................................................. 20.240, 20.270, 20.450, 20.490 Losinjska Plovidba Brodarstovo DD v Valfracht Maritime Co Ltd (The Lipa) [2001] 2 Lloyd’s Rep 17 ............................................................................................................................................... 14.80 Loucas G Matsas Salvage & Towage Maritime Co v Fund on Sale of the Ionian Mariner (1997) 79 FCR 351 .................................................................................................................................... 8.540 Louis Dreyfus & Cie v Parnaso Cia Naviera SA [1960] 2 QB 49 ............................................ 14.100 Louis Dreyfus & Co v Lauro (1938) 60 LI L Rep 94 ................................................... 13.100, 13.130 Louis Dreyfus & Co v Tempus Shipping Co [1931] AC 726 ..................................................... 12.400 Louis Dreyfus Corp v 27,946 Long Tons of Corn 830 F 2d 1321 (5th Cir 1987) ...................... 18.70 Louise Roth, The [1905] SALR 107 ....................................................................... 8.230, 8.290, 8.450 Louisiana, The 70 US 164; 18 L Ed 85 (1866) ........................................................................... 15.110 Love and Stewart Ltd v Rowtor Steamship Co Ltd [1916] 2 AC 527 ....................................... 12.700 Luckenbach v Pierson 229 F 130 (2nd Cir 1915) ....................................................................... 14.470 Lufty Ltd v Canadian Pacific Railway Co (The Alex) [1974] 1 Lloyd’s Rep 106 .................... 12.160 Lukoil-Kalingradmorneft Plc v Tata Ltd (No 2) [1999] 1 Lloyd’s Rep 365 ............................. 12.840 Lukoil-Kalingradmorneft Plc v Tata Ltd (No 2) [1999] 2 Lloyd’s Rep 129 ............................. 12.840 Lyderhorn Sailing Ship Co Ltd v Duncan Fox Co [1909] 2 KB 929 ........................................ 13.200 Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117 ........ 12.330, 13.600, 13.620, 14.150, 14.260 Lyrma (No 1), The [1978] 2 Lloyd’s Rep 27 .............................................................................. 20.520 Lyrma (No 2), The [1978] 2 Lloyd’s Rep 30 ........................................ 8.420, 20.470, 20.520, 20.660

M M Almojil Establishment v Malayan Motor and General Underwriters Pty Ltd (The Al-Jubail IV) [1982] 2 Lloyd’s Rep 637 ......................................................................................... 17.150, 17.600 M Vatan, The [1990] 1 Lloyd’s Rep 336 .......................................................... 20.520, 20.570, 20.620 MFM Restaurants Pte Ltd v Fish & Co Restaurants Pte Ltd [2011] 1 SLR 150 ...................... 14.240 MH Progress Lines SA v Orient Shipping Rotterdam BV (The Genius Star 1) [2012] 1 Lloyd’s Rep 222 .............................................................................................................................. 14.260, 14.410 M’Iver v Humble, Holland & Williams (1812) 16 East 169; 104 ER 1053 ................................ 5.190 MSC Mediterranean Shipping Co v Delumar BVBA (The MSC Rosa M) [2000] 2 Lloyd’s Rep 399 ................................................................................................................................... 16.160 MSC Mediterranean Shipping Co SA v Alianca Bay Shipping Co Ltd (The Argonaut) [1985] 2 Lloyd’s Rep 216 ........................................................................................................ 13.560, 14.400 MV DG Harmony, In re 533 F 3d 83; 2008 AMC 1848 (2d Cir 2008) .................................... 12.650 Mac, The (1882) 7 PD 126 ............................................. 1.10, 1.20, 1.180, 1.200, 1.210, 1.240, 1.250 Mac, The (1882) 7 PD 38 ............................................................................................................... 1.200 MacKinnon McErlane Booker Pty Ltd v P & O Australia Ltd [1988] VR 534 ........................ 17.510 Macgregor, The: Heselton’s Claim (1876) 14 SCR 107 .................................................... 8.200, 8.320 Macieo Shipping Ltd v Clipper Shipping Lines Ltd (The Clipper Sao Luis) [2000] 1 Lloyd’s Rep 645 .............................................................................................................................. 14.400, 14.410 Mackay v Dick (1881) 6 App Cas 251 ........................................................................................ 14.180 Mackill v Wright Brothers & Co (1888) 14 App Cas 106 .......................................................... 14.100 Mackinnon v Iberia Shipping Co Ltd 1955 SLT 49 ...................................................................... 15.10 Macleod v Attorney-General (NSW) [1891] AC 455 .................................................................... 2.170 Macmillan Inc v Bishopsgate Investment Trust PLC (No 3) [1996] 1 WLR 585 ..................... 12.670 Madonna D’Idra, The (1811) 1 Dods 37; 165 ER 1224 ............................................................... 8.230 Maersk Line Ltd v United States 513 F 3d 418; 2008 AMC 278 (4th Cir 2008) ..................... 12.560

xlii Table of Cases Magnolia Shipping Co Ltd of Limassol v Joint Venture of the International Trading and Shipping Enterprises and Kinship Management Co Ltd of Brussels (The Camelia and Magnolia) [1978] 2 Lloyd’s Rep 182 ........................................................................................................ 13.180, 13.300 Mahkutai, The [1996] AC 650 ..................................................................................................... 12.740 Maintop Shipping Co Ltd v Bulkindo Lines Pte Ltd (The Marinicki) [2003] 2 Lloyd’s Rep 655 ................................................................................................................................... 14.300 Makis, The (see Vlassopoulos v British and Foreign Marine Insurance Co [1929] 1 KB 187) ..................................................................................................................................... 18.20 Malaysia Shipyard and Engineering Sdn Bhd v Iron Shortland (1995) 59 FCR 535 .................. 8.620 Malaysian International Shipping Corp v Empresa Cubana de Fletes (The Bunga Kenanga) [1981] 2 Lloyd’s Rep 518 ...................................................................................................................... 14.500 Malcolmson v Meeson: The Malvina (1863) 1 Moo PCC (NS) 357; 15 ER 736 ....................... 8.170 Mamiye Bros v Barber SS Lines Inc 241 F Supp 99 (SDNY 1965) ......................................... 12.420 Mamiye Bros v Barber Steamship Lines, Inc 360 F 2d 774 (2d Cir 1966) ............................... 12.420 Mammoth Bulk Carriers Ltd v Holland Bulk Transport BV (The Captain Diamantis) [1978] 1 Lloyd’s Rep 346 ...................................................................................................................... 14.520 Man Ferrostaal, Inc v MV Akili 704 F 3d 77 (2d Cir 2013) ...................................................... 12.810 Man Ferrostaal, Inc v MV Akili 763 F Supp 2d 599 (SDNY 2011) .......................................... 12.810 Manbre Saccharine Co Ltd v Corn Products Co Ltd [1919] 1 KB 198 ..................................... 15.200 Manchester Ship Canal Co v Horlock [1914] 2 Ch 199 .................. 3.490, 3.510, 3.570, 6.100, 6.190 Manchester Trust v Furness [1895] 2 QB 539 ............................................................................ 12.710 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 .............................................................................................. 17.90, 17.270, 17.440, 17.630 Manor, The [1907] P 339 .............................................................................................................. 10.250 Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2008] 2 Lloyd’s Rep 384 ..... 13.50, 13.80, 13.140 Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2009] 2 Lloyd’s Rep 371 ..... 13.50, 13.80, 13.140, 14.180, 14.190 Maratha Envoy, The [1977] 2 Lloyd’s Rep 301 .......................................................................... 13.170 Marben Pty Ltd v Alexander (1985) 39 SASR 150 .................................................................... 15.110 Marbienes Compania Naviera SA v Ferrostaal AG (The Democritos) [1976] 2 Lloyd’s Rep 149 ............................................................................................ 14.180, 14.210, 14.230, 14.240 Marbig Rexel Pty Ltd v ABC Container Line NV (The TNT Express) [1992] 2 Lloyd’s Rep 636 ............................................................................................ 12.120, 12.150, 12.160, 12.210 Marc Rich & Co Ltd v Tourloti Compania Naviera SA (The Kalliopi A) [1988] 2 Lloyd’s Rep 101 ................................................................................................................................... 13.460 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 ........................................................ 15.150 March Cabaret Club & Casino Ltd v The London Assurance [1975] 1 Lloyd’s Rep 139 ........ 17.110 Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia (The Laconia) [1976] 1 Lloyd’s Rep 395 ...................................................................................................................... 14.460 Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia (The Laconia) [1977] AC 850 .............................................................................................................................. 14.310, 14.440 Mare Schiffahrtskontor GmbH v M/V Oceanhaven 763 F 2d 633 (4th Cir 1985) .................... 12.440 Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164 ................................................................................................................. 13.130, 13.520, 13.540 Marene Knitting Mills Pty Ltd v Greater Pacific General Insurance Ltd [1976] 2 Lloyd’s Rep 631 ................................................................................................................................... 17.100 Mareva Navigation Co Ltd v Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd’s Rep 368 ...................................................................................................................... 14.220, 14.330 Margaret, The (1829) 2 Hag Adm 275; 166 ER 244 ....................................................... 5.140, 10.260 Margarine Union GmbH v Cambay Prince Steamship Co Ltd [1969] 1 QB 219 ..................... 15.200 Margaronis Navigation Agency Ltd v Henry W Peabody & Co of London Ltd [1965] 1 QB 300 ....................................................................................................................... 13.150, 13.520 Margem Chartering Co v Cosena SrL [1997] 2 FC 1001 ............................................................. 14.30 Margem Chartering Co v The BOCSA [1997] 2 FC 1001 ........................................................... 13.30 Margery, The [1902] P 157 ............................................................................................. 20.640, 20.660

Table of Cases xliii Margolle v Delta Maritime Co Ltd (The Saint Jacques II and Gudermes) [2003] 1 Lloyd’s Rep 203 ......................................................................................... 16.160, 19.280 Marguerite Molinos, The [1903] P 160 ........................................................................................ 20.200 Maria, The 91 F 2d 810 (4th Cir 1937) ....................................................................................... 12.390 Marie Jane, The (1850) 14 Jur 857 .............................................................................................. 20.230 Marimpex v Compagnie de Gestion et d’Exploitation Ltd (The Ambor and the Once) [2001] 1 All ER (Comm) 182 ...................................................................................................................... 14.240 Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2007] 1 Lloyd’s Rep 66 ........................................................................................................................ 17.150, 17.600 Marine & Civil Construction Co Pty Ltd v SGS Australia Pty Ltd [2012] FCA 907 ............... 12.740 Marine Craft Constructors Ltd v Erland Blomqvist (Engineers) Ltd [1953] 1 Lloyd’s Rep 514 .................................................................................................... 1.200, 1.210, 1.240, 1.250 Marine Sulphur Queen, In re 460 F 2d 89 (2d Cir 1972) ........................................................... 12.710 Maritime Transport Overseas GmbH v Unitramp (The Antaios) [1981] 2 Lloyd’s Rep 284 .... 14.290 Maritime Union of Australia, Re; Ex parte CSL Pacific Shipping Inc (2003) 214 CLR 397; 77 ALJR 1497 ................................................................................................................ 2.30, 2.40, 2.60 Mark Lane, The (1890) 15 PD 135 .............................................................................................. 20.660 Markappa Inc v NW Spratt & Son Ltd (The Arta) [1985] 1 Lloyd’s Rep 534 ................ 11.70, 13.30 Marlex Petroleum Inc v The Ship Har Rai (1984) 4 DLR (4th) 739 ........................................... 8.590 Marriott v Anchor Reversionary Co Ltd (1860) 2 Giff 457; 66 ER 191 ................................... 10.300 Marriott v Anchor Reversionary Co Ltd (1861) 3 De G F & J 177; 45 ER 846 ...................... 10.300 Marsden v Reid (1803) 3 East 572-579; 102 ER 716 ................................................................. 17.120 Marshall v Murgatroyd (1870) LR 6 QB 31 ........................................................................ 4.90, 4.100 Marston Excelsior Ltd v Arbuckle, Smith & Co Ltd [1971] 2 Lloyd’s Rep 306 ...................... 12.840 Marstrand Fishing Co Ltd v Beer (The Girl Pat) (1936) 56 Ll L Rep 163 ............................... 17.400 Martin v Leavers (1882) 46 JP 807 ............................................................................................... 1.200 Martin Luther, The (1857) Swab 287; 166 ER 1141 .................................................................. 20.210 Mary Ann, The (1865) LR 1 A & E 8 ........................................................................ 8.20, 8.50, 8.280 Mary Pleasant, The (1857) Swa 224; 166 ER 1107 .................................................................... 20.620 Maréchal Suchet, The [1911] P 1 ................................................................................................. 20.380 Maschinenfabrik Augsburg-Nuremburg AG v Altikar Pty Ltd [1984] 3 NSWLR 152 ............. 13.440 Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua) [2011] 1 Lloyd’s Rep 630 ......................................................................................................... 17.220, 17.330, 17.360 Matthew Short & Associates Pty Ltd v Riviera Marine (International) Pty Ltd [2001] NSWCA 281 ............................................................................................................................ 12.840 Maugham v Sharpe (1864) 17 CB (NS) 443; 144 ER 179 ........................................................... 10.50 Mauritius Oil Refineries Ltd v Stolt-Nielsen Nederlands BV (The Stolt Sydness) [1997] 1 Lloyd’s Rep 273 ................................................................................................................................... 14.160 Mawson Steamship Co Ltd v Beyer [1914] 1 KB 304 ............................................................... 13.500 Maxine Footwear Co Ltd v Canadian Government Merchant Marine [1959] AC 589 ............ 12.300, 12.370, 12.400 Mayne Nickless Ltd v Pegler [1974] 1 NSWLR 228 ................................................................. 17.100 Mayor, &c, of Southport v Morriss [1893] 1 QB 359 .................................................................. 1.240 Mayor (t/as Granville Coaches) v P & O Ferries Ltd (The Lion) [1990] 2 Lloyd’s Rep 144 ......................................................................................................... 12.530, 16.160, 19.280 Mbashi, The [2002] 2 Lloyd’s Rep 602 ....................................................................................... 20.240 McDougall v Aeromarine of Emsworth Ltd [1958] 1 WLR 1126 ............................... 5.10, 6.20, 6.30 McIlwraith McEacharn Ltd v Shell Co of Australia Ltd (1945) 70 CLR 175 ..... 2.130, 2.150, 2.310, 5.50, 5.100, 16.20 McLean v Fleming (1871) LR 2 Sc & Div 128 .......................................................................... 12.200 McLean v Liverpool Association (1883) 9 VLR (L) 93 ............................................................... 18.80 McLean v Tedman (1984) 155 CLR 306 ..................................................................................... 15.110 McMullin v ICI Australia Operations Pty Ltd (1997) 72 FCR 1 ..................... 15.180, 15.190, 19.230 Meandros, The [1925] P 61 ............................................................................ 5.70, 8.80, 8.460, 20.570 Medina, The (1876) 1 PD 272 ..................................................................................................... 20.660 Medina, The (1876) 2 PD 5 ......................................................................................................... 20.660 Mediolanum Shipping Co v Japan Lines Ltd (The Mediolanum) [1984] 1 Lloyd’s Rep 136 .. 14.300

xliv Table of Cases Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1993] 1 Lloyd’s Rep 257 .............................................................................................................................. 12.370, 12.650 Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1994] 2 Lloyd’s Rep 506 .............................................................................................................................. 12.580, 12.650 Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc (The Reborn) [2009] 2 Lloyd’s Rep 639 ............................................................................................................ 13.50, 13.60 Medway Drydock & Engineering Co Ltd v MV Andrea Ursula; The Andrea Ursula [1973] QB 265 ........................................................................................ 5.50, 5.100, 8.150, 15.190 Melbourne Corp v Commonwealth (1947) 74 CLR 31 ................................................... 17.10, 17.660 Melhuish v Miller (1865) 3 WW & A’B (E) 61 .......................... 5.50, 5.100, 20.210, 20.240, 20.460 Mencke v A Cargo of Java Sugar 187 US 248 (1902) ................................................................. 13.90 Mendala III Transport v Total Transport Corp (The Wilomi Tenana) [1993] 2 Lloyd’s Rep 41 ..................................................................................................................................... 12.100 Mentink v Registrar of the Australian Registrar of Ships (2012) 277 FLR 248 .............. 3.520, 6.190 Merak, The [1965] P 223 .............................................................................................................. 12.720 Mercantile Mutual Insurance (Australia) Ltd v Gibbs (2001) 24 WAR 453 ................................ 17.10 Merchant Prince, The [1892] P 179 ............................................................................................. 15.110 Merchant Service Guild of Australasia v Archibald Currie & Co Pty Ltd (1908) 5 CLR 737 ... 2.190 Merchant Service Guild of Australasia v Commonwealth Steamship Owners Association (1913) 16 CLR 664 ........................................................................................................................... 2.190, 4.50 Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association (1926) 25 Ll L Rep 446 ..................................................................................... 1.210, 1.250, 1.260 Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association (1926) 26 Ll L Rep 201 ................................................................................................ 1.220, 1.250 Merit Shipping Co Inc v TK Boesen A/S (The Goodpal) [2000] 1 Lloyd’s Rep 638 .............. 14.400 Merrimac, The (1868) 18 LT 92 ................................................................................................... 20.300 Mersey Docks & Harbour Board v Hay: SS The Countess [1923] AC 345 .................................. 7.90 Mersey Docks and Harbour Board v Owners of SS Marpessa: The Marpessa [1907] AC 241 .................................................................................................................................... 15.170 Mersey Mutual Underwriting Association Ltd v Poland (1910) 15 Com Cas 205 .................... 13.590 Mesocap Industries Ltd v Torm Lines 194 F 3d 1342 (11th Cir 1999) ........................ 12.340, 12.620 Messageries Imperiales Co, The v Baines (1863) 7 LT 763 ....................................................... 10.230 Metall Market OOO v Vitorio Shipping Co Ltd (The Lehmann Timber) [2013] 2 Lloyd’s Rep 541 ........................................................................................................................ 13.460, 18.80 Metaxas v Ship The Galaxias [1989] 1 FC 386 ............................................................................ 8.590 Metvale Ltd v Monsanto International SARL (The MSC Napoli) [2009] 1 Lloyd’s Rep 246 .. 16.50, 19.50 Meyer v Dresser (1864) 16 CB (NS) 646; 143 ER 1280 ........................................................... 12.700 Michalos v Food Corp of India (The Apollon) [1983] 1 Lloyd’s Rep 409 .................. 13.200, 13.220 Midwest Shipping Co Ltd Inc v DI Henry (Jute) Ltd [1971] 1 Lloyd’s Rep 375 .................... 14.360 Milburn & Co v Jamaica Fruit Importing and Trading Co of London [1900] 2 QB 540 ........... 18.70 Milford, The (1858) Swab 362; 166 ER 1167 ............................................................................... 8.290 Miliangos v George Frank (Textiles) Ltd [1976] AC 443 ........................................................... 13.440 Minerals and Metals Trading Corp of India v Encounter Bay Shipping Co Ltd (The Samos Glory) [1986] 2 Lloyd’s Rep 601 ...................................................................................................... 13.660 Minerva, The (1825) 1 Hagg Adm 347; 166 ER 123 ................................................................... 8.260 Minerva, The [1933] P 224 ............................................................................................................. 8.160 Minerva Navigation Inc v Oceana Shipping AG (The Athena) [2013] 2 Lloyd’s Rep 673 ...... 14.330 Mining Technologies Australia Pty Ltd, In Re [1999] 1 Qd R 60 ............................................. 17.220 Minister Administering the Environmental Planning and Assessment Act 1979 v San Sebastian Pty Ltd [1983] 2 NSWLR 268 ...................................................................................................... 15.190 Minister of Materials v Wold Steamship Co Ltd [1952] 1 Lloyd’s Rep 485 ............................ 14.130 Minnehaha, The (1861) Lush 335 ..................................................................... 20.350, 20.380, 20.530 Minnesota Mining & Manufacturing (Australia) Pty Ltd v The Ship Novoaltaisk [1972] 2 NSWLR 476 ........................................................................................................................................... 12.390 Miramar Maritime Corporation v Holborn Oil Trading Ltd [1984] AC 676 ................ 12.720, 13.480 Mitchell v Scaife (1815) 4 Camp 298; 171 ER 95 ..................................................................... 12.710

Table of Cases xlv Mitchell v Steel [1916] 2 KB 610 ................................................................................................ 12.650 Mitchell, Cotts & Co v Steel Bros Ltd [1916] 2 KB 610 ........................................................... 12.630 Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1991] 1 Lloyd’s Rep 456 ... 12.370 Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyd’s Rep 311 .. 12.370, 12.680 Mitsui OSK Lines (Thailand) Co Ltd v Jack Fair Pty Ltd [2015] 1 Lloyd’s Rep Plus 55; [2015] FCCA 558 ................................................................................................................................ 12.770 Mitsui OSK Lines Ltd v Garnac Grain Co Inc (The Myrtos) [1984] 2 Lloyd’s Rep 449 ....... 13.100, 13.120, 13.130 Mitsui OSK Lines Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564 ......... 13.440, 15.170, 15.190, 19.240 Mobil Shipping & Transportation Co v Wonsild Liquid Carriers Ltd 190 F 3d 64; 1999 AMC 2705 ...................................................................................................................... 14.150 Modern Fruit and Vegetable Supermarket Pty Ltd v New Zealand Insurance Australia Ltd (unreported, NSW SC, 1991) .................................................................................................. 17.270 Moel Tryvan Ship Co Ltd v Andrew Weir & Co [1910] 2 KB 844 .......................................... 13.140 Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196 ......................... 13.610 Monica S, The [1968] P 741 .................................................................................... 8.450, 8.620, 8.630 Monica Textile Corp v S/S Tana 952 F 2d 636; 1992 AMC 609 (2d Cir 1991) ....................... 12.560 Monroe Bros Ltd v Ryan [1935] 2 KB 28 ..................................................................... 13.130, 13.140 Mons, The [1932] P 109 .......................................................................................... 8.420, 8.440, 8.620 Monte Ulia (Owners) v Banco (Owners): The Banco [1971] P 137 .............................................. 8.40 Montedison SpA v Icroma SpA (The Caspian Sea) [1980] 1 Lloyd’s Rep 91 .......................... 13.660 Mooney v MS Magdalene Schiffahrtsgesellschaft mBH [2014] NSWSC 1277 ........................ 19.390 Moore v Metcalf Motor Coasters Ltd [1958] 2 Lloyd’s Rep 179 .............................................. 16.100 Moore v Metcalf Motor Coasters Ltd [1959] 1 Lloyd’s Rep 264 .............................................. 16.100 Morgan v Castlegate Steamship Co Ltd: The Castlegate [1893] AC 38 ................. 8.90, 8.150, 8.280 Morgan v Commonwealth (1947) 74 CLR 421 ..................................................................... 2.30, 2.40 Morlines Maritime Agency Ltd v Proceeds of Sale of Ship Skulptor Vuchetich [1997] ACL Rep 270 FC 7 .................................................................................................................................... 8.590 Morlines Maritime Agency Ltd v Ship Skulptor Vuchetich (1996) 62 FCR 602 .......................... 1.40 Morris v Levison (1876) 1 CPD 155 ........................................................................................... 13.130 Morris v Lyonesse Salvage Co Ltd [1970] 2 Lloyd’s Rep 59 ......................... 20.400, 20.630, 20.820 Morrison v Peacock (2000) 50 NSWLR 178 ................................................................................ 19.70 Morrison v Peacock (2002) 210 CLR 274 ....................................................................... 19.70, 19.100 Morrissey v S/S A & J Faith 252 F Supp 54 (ND Oh 1965) ..................................................... 12.440 Mortgages of the Ships Albion, Myrtle and George, Re (1864) 3 SCR 138 ............................... 5.200 Mortimer v Wisker [1914] 3 KB 699 ............................................................................................ 3.490 Moscow V/O Exportkhleb v Helmville Ltd (The Jocelyne) [1977] 1 Lloyd’s Rep 121 ........... 12.700 Moss v Smith (1850) 9 CB (NS) 94; 137 ER 827 ...................................................................... 17.410 Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab [1999] 1 Lloyd’s Rep 837 .. 12.770 Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab [2000] 1 Lloyd’s Rep 211 .. 12.770, 12.780, 13.620 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1987] 2 Lloyd’s Rep 509 ........................................................................................................................ 13.70 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 .......................................................................................................... 13.70, 14.300 Mount Isa Mines Ltd v Pusey (1971) 125 CLR 383 .................................................................. 15.170 Mowie Fisheries Pty Ltd v Switzerland Insurance Australia Ltd (1996) 140 ALR 57 .............. 17.620 Mucklow, Assignee of Royland v Mangles (1808) 1 Taunt 318; 127 ER 856 .............................. 6.40 Mudlark, The [1911] P 116 ................................................................................................. 1.240, 1.250 Muncaster Castle, The [1961] 1 Lloyd’s Rep 57 ........................................................................ 12.300 Munday v Australian Capital Territory (1998) 99 LGERA 312 ................................................... 21.70 Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express) (1990) 19 NSWLR 285 .................................................................................... 12.810, 14.440, 14.550, 14.560 Mutual Life Insurance Co of New York v Ontario Products Co Ltd [1925] AC 344 ............... 17.100 Myrto, The [1977] 2 Lloyd’s Rep 243 ................................... 10.180, 10.190, 10.210, 10.220, 10.350

xlvi Table of Cases

N NPL (Australia) Pty Ltd v Kamil Export (Aust) Pty Ltd [1996] 1 VR 538 ................. 12.610, 12.780 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699 ......... 17.30, 17.40, 17.50, 17.190 NV Bureau Wijsmuller v Owners of the MV Tojo Maru: The Tojo Maru [1970] P 21 ........... 20.240, 20.550 NV Reederij Amsterdam v President of India (The Amstelmolen) [1961] 2 Lloyd’s Rep 1 .... 13.180 Nagle v Rottnest Island Authority (1993) 177 CLR 423 ............................................................ 15.110 Nagrint v Ship Regis, formerly the Ship Rodney (1939) 61 CLR 688 ................. 8.130, 8.140, 8.160 Naim Molvan, Owner of Motor Vessel Asya v Attorney-General for Palestine [1948] AC 351 ...................................................................................................................................... 4.210 Nam Kwong Medicines & Health Products Co Ltd v China Insurance Co Ltd [2002] 2 Lloyd’s Rep 591 .............................................................................................................................. 17.190, 17.200 Namchow Chemical v Botany Bay Shipping Co (Aust) Pty Ltd [1982] 2 NSWLR 523 ........ 12.720, 12.810 Nanfri, Benfri and Lorfri, The [1978] 2 Lloyd’s Rep 581 (CA); [1979] 1 Lloyd’s Rep 201 ... 14.320 Nanfri, Benfri and Lorfri, The (see Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1978] QB 927) ....................................................................................................................... 14.320 Napier v Hunter [1993] 1 AC 713 ............................................................................................... 17.650 Narada, The [1977] 1 Lloyd’s Rep 256 ........................................................................................... 9.20 Narnian Sea, The [1991] AMC 274 ............................................................................................. 14.240 Nasmyth, The (1885) 10 PD 41 ................................................................................................... 20.640 National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) [1995] 1 Lloyd’s Rep 455 .................................................................................................................. 17.290 National Oil Co of Zimbabwe (Pte) Ltd v Sturge [1991] 2 Lloyd’s Rep 281 ........................... 17.280 National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd’s Rep 582 .............................. 17.40 National Shipping Co of Saudi Arabia v BP Oil Supply Co (The Abqaiq) [2012] 1 Lloyd’s Rep 18 ..................................................................................................................................... 13.490 National Steamships Co v Watson [1939] 1 DLR 273 ................................................................. 4.100 Navarro v Larrinaga Steamship Co Ltd: The Niceto de Larrinaga [1966] P 80 ........................ 15.230 Navico AG v Vrontados Naftiki Etairia PE [1968] 1 Lloyd’s Rep 379 ..................................... 13.500 Naviera Mogor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1 Lloyd’s Rep 412 ......................................................................................................... 12.100, 14.380, 14.420 Naviera de Canarias SA v Nacional Hispanica Aseguradora SA (The Playa de las Nieves) [1977] 1 Lloyd’s Rep 457 ...................................................................................................................... 17.270 Navigazione Alta Italia SpA v Svenska Petroleum AB (The Nai Matteini) [1988] 1 Lloyd’s Rep 452 ........................................................................................................................................... 12.720 Navios Enterprise and Puritan, The [1998] 2 Lloyd’s Rep 16 ...................................................... 15.80 Navrom v Callitsis Ship Management SA (The Radauti) [1987] 2 Lloyd’s Rep 276 ............... 13.180 Navrom v Callitsis Ship Management SA (The Radauti) [1988] 2 Lloyd’s Rep 416 ............... 13.180 Nea Agrex SA v Baltic Shipping Co Ltd [1976] 1 QB 933 ....................................................... 12.590 Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazaros) [1976] 2 Lloyd’s Rep 47 ........ 14.150 Nelson v Dahl (1879) 12 Ch D 568 ............................................................................................... 13.90 Nelson, The (1823) 1 Hagg Adm 169; 166 ER 61 ......................................................................... 9.50 Nelson & Sons v The Dundee East Coast Shipping Co Ltd (1907) 44 SLR 661 ..................... 14.180 Nelson Pine Industries Ltd v Seatrans New Zealand Ltd (The Pembroke) [1995] 2 Lloyd’s Rep 290 ...................................................................................................................... 12.340, 12.530 Nemeth v General Steamship Corp 694 F 2d 609 (9th Cir 1982) ................................ 12.340, 12.560 Neptune, The (1824) 1 Hagg Adm 227; 166 ER 81 ............ 8.90, 8.480, 8.580, 20.10, 20.30, 20.270, 20.290 Neptune, The (1824) 3 Hagg Adm 129; 166 ER 354 ........................................................ 5.60, 10.160 Neptune, The (1842) 1 W Rob 297; 166 ER 583 ....................................................................... 20.550 Nereide SpA di Navigazione v Bulk Oil International Ltd (The Laura Prima) [1982] 1 Lloyd’s Rep 1 ............................................................................................................................................... 13.190 Nesterczuk v Mortimore (1965) 115 CLR 140 ............................................................................ 15.130 Netherlands, State of the v Youell [1998] 1 Lloyd’s Rep 236 .................................................... 17.220

Table of Cases xlvii Neuchatel Swiss General Insurance Co v Vlasons Shipping Inc [2001] VSCA 25 ................... 17.280 New A Line v Erechthion Shipping Co SA (The Erechthion) [1987] 2 Lloyd’s Rep 180 ........ 14.380 New Chinese Antimony Co v Ocean Steamship Co [1917] 2 KB 664 ...................................... 12.210 New Holland Australia Pty Ltd v TTA Australia Pty Ltd (The Resolution Bay) (unreported, NSW Sup Ct, Carruthers J, 6 December 1994) ............................................................................... 12.740 New Rotterdam Insurance Co v S/S Loppersum 215 F Supp 563 (SDNY 1963) ..................... 12.410 New South Wales v Commonwealth (Seas and Submerged Lands Case) (1975) 135 CLR 337 ............ 2.30, 2.40, 2.90, 2.110, 2.120, 2.220, 2.240, 2.350, 2.260, 2.370, 15.70, 17.660 New York, The 175 US 187; 20 S Ct 67; 44 L Ed 126 (1899) .................................................. 15.140 New Zealand Insurance Co v South Australian Insurance Co (1878) 1 SCR (NSW) 214 ........ 17.150 New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd (The Eurymedon) [1975] AC 154 .................................................................................................................................... 12.740 Newcastle & Hunter River Steamship Co Ltd v Attorney-General (Cth) (1921) 29 CLR 357 ... 2.30, 2.40 Newcastle Port Corporation v Pevitt (2003) 58 NSWLR 548 ....................................... 16.100, 16.200 Newman v Walters (1804) 3 Bos & P 612; 127 ER 330 ............................................................ 20.300 Ngo Chew Hong Edible Oil Pte Ltd v Scindia Steam Navigation Co Ltd (The Jalamohan) [1988] 1 Lloyd’s Rep 443 ........................................................................................................ 12.820, 14.470 Niarchos (London) Ltd v Shell Tankers Ltd [1961] 2 Lloyd’s Rep 496 ...................................... 14.50 Nichimen Co Inc v M/V Farland 462 F 2d 319; 1972 AMC 1573 (2d Cir 1972) .................... 12.310 Nicholson v Chapman (1793) 2 H Bl 254; 126 ER 536 ................................................. 20.80, 20.440 Nicol v Whiteoak (No 2) [2011] NSWSC 1486 ............................................................................ 16.20 Nielsen & Co v Wait, James & Co (1885) 16 QBD 67 .............................................................. 13.260 Nightingale, The (1885) 6 LR (NSW) (P & D) 18 ........................................................ 20.290, 20.400 Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371 ..... 12.310, 12.450, 12.580, 12.590, 12.740, 12.830 Nima SARL v The Deves Insurance Public Co Ltd (The Prestrioka) [2003] 2 Lloyd’s Rep 327 ...................................................................................................................... 17.190, 17.200 Niobe, The (1888) 13 PD 55 .......................................................................................................... 15.40 Nippon Fire & Marine Insurance 167 F 3d 99 (2d Cir 1999) .................................................... 12.560 Nippon Yusen Kaisha v Acme Shipping Corporation (The Charalambos N Pateras) [1971] 2 Lloyd’s Rep 42 ..................................................................................................................................... 14.320 Nippon Yusen Kaisha v Ramjiban Serowgee [1938] AC 429 ..................................................... 12.760 Nippon Yusen Kaisha v SA Marocaine de L’Industrie Du Raffinage (The Tsukuba Maru) [1979] 1 Lloyd’s Rep 459 ...................................................................................................................... 13.460 Nippon Yusen Kaisha Ltd v Scindia Steam Navigation Co Ltd (The Jalagouri) [1999] 1 Lloyd’s Rep 903 ................................................................................................................................... 14.330 Nippon Yusen Kaisha Ltd v Scindia Steam Navigation Co Ltd (The Jalagouri) [2000] 1 Lloyd’s Rep 515 ................................................................................................................................... 14.330 Nipponkoa Insurance Co Ltd v Norfolk Southern Railway Co 794 F Supp 2d 838 (ED Oh 2012) ........................................................................................................................................ 12.740 Nissan Fire & Marine Insurance Co Ltd v M/V Hyundai Explorer 93 F 3d 641; 1996 AMC 2409 (9th Cir 1996) ............................................................................................................ 12.300, 12.400 Nissho Iwai (Australia) Ltd v Malaysian International Shipping Corp Berhad (1989) 167 CLR 219 .......................................................... 12.340, 12.600, 12.740, 12.780, 13.620 Nitram Inc v MV Cretan Life 599 F 2d 1359 (5th Cir 1979) ....................................... 12.200, 12.280 Nitrate Corporation of Chile Ltd v Pansuiza Compania de Navegacion (The Hermosa) [1980] 1 Lloyd’s Rep 638 ...................................................................................................................... 14.330 Noble Resources Ltd v Cavalier Shipping Corp (The Atlas) [1996] 1 Lloyd’s Rep 642 .......... 12.210 Noemijulia Steamship Co Ltd v Minister of Food [1951] 1 KB 223 ........................................ 13.200 Noferi v Smithers [2002] NSWSC 508 ............................................................... 16.10, 16.100, 16.160 Nominal Defendant v Haslbauer (1967) 117 CLR 448 ............................................................... 15.110 Nominal Defendant v MVIT (1982) 45 ALR 697 ....................................................................... 19.240 Noranda Inc v Barton (Time Charter) Ltd (The Marinor) [1996] 1 Lloyd’s Rep 301 ...................................................................................................................... 12.580, 14.160 Nord Sea and Freccia del Nord: The Freccia del Nord, The [1989] 1 Lloyd’s Rep 388 ............ 8.100 Nordglimt, The [1987] 2 Lloyd’s Rep 470 ...................................................................................... 8.40

xlviii

Table of Cases

Nordglimt, The [1988] 1 QB 183 ................................................................................... 12.580, 12.590 Norfolk Southern Railway Co v James N Kirby Pty Ltd 543 US 14 (2004) ............................ 12.740 Noritake Co Inc v M/V Hellenic Champion 627 F 2d 724 (5th Cir 1980) ............................... 12.420 North British Fishing Boat Insurance Co Ltd v Starr (1922) 13 Ll L Rep 206 ........................ 17.100 North Coast Steam Navigation Co v Ship Eugene (1909) 9 SR (NSW) 246 .................................................................................................... 20.140, 20.480, 20.490 North Range Shipping Ltd v Seatrans Shipping Corp (The Western Triumph) [2002] 2 Lloyd’s Rep 1 ............................................................................................................................................... 14.450 North Star, The (1860) Lush 45; 167 ER 24 ................................................................................. 18.80 North Star Shipping Ltd v Sphere Drake Insurance PLC [2006] 2 Lloyd’s Rep 182 ............... 17.100 North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] 461 ......................................... 17.610 North of England Protecting & Indemnity Association v Merchants’ Marine Insurance Co Ltd (1926) 26 Ll L Rep 201 ................................................................................................ 1.210, 1.260 Northern Shipping Co v Deutsche Seereederei GmbH (The Kapitan Sakharov) [2000] 2 Lloyd’s Rep 255 ......................................................................................................... 12.300, 12.370, 12.650 Northfield Steamship Co v Compagnie L’Union des Gaz [1912] 1 KB 434 ............................. 13.180 Northumbrian Shipping Co Ltd v E Timm & Son Ltd [1939] AC 397 ..................................... 13.600 Norway and Asia Lines v Adamjee Jute Mills Ltd (1981) 1 BLD 152 ..................................... 12.550 Norwich Union Fire Insurance Society Ltd v WH Price Ltd [1934] AC 455 .............. 17.360, 17.440 Noseda v Hoverlloyd Ltd [1974] 1 Lloyd’s Rep 448 .......................................................... 1.220, 8.70 Novologistics SARL v Five Ocean Corp (The Merida) [2010] 1 Lloyd’s Rep 274 ...... 13.30, 13.170 Novorossisk Shipping Co v Neopetro Co Ltd (The Ulyanovsk) [1990] 1 Lloyd’s Rep 425 ... 13.150, 13.190, 13.430, 13.450 Nowy Sacz, The [1977] 2 Lloyd’s Rep 91 .................................................................................. 15.100 Nugent v Goss Aviation [2000] 2 Lloyd’s Rep 222 .................................................................... 19.280 Nugent v Smith (1876) 1 CPD 423 .............................................................................................. 12.420 Nymph, The (1856) Sw 86; 166 ER 1033 ....................................................................................... 9.50

O O’Kane v Jones (The Martin P) [2004] 1 Lloyd’s Rep 389 ......................................................... 17.40 Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and the Sibotre) [1976] 1 Lloyd’s Rep 293 ........................................................................................................................ 11.50 Ocean Cargo Lines Ltd v North Atlantic Marine Co 227 F Supp 872 (SDNY 1964) .............. 14.470 Ocean Crown, The [2010] 1 Lloyd’s Rep 468 ............................................................... 20.450, 20.480 Ocean Glory Compania Naviera SA v A/S PV Christensen (The Ioanna) [1985] 2 Lloyd’s Rep 164 ................................................................................................ 14.40, 14.80, 14.320, 14.330 Ocean Harvester Holdings Pty Ltd v MMI General Insurance Ltd (2003) 12 ANZ Insurance Cases 61-577; [2003] QSC 262 ........................................................................................................ 17.300 Ocean Harvester Holdings Pty Ltd v MMI General Insurance Ltd (2004) 12 ANZ Insurance Cases 61-592; [2004] QCA 41 ............................................................................................. 17.290, 17.300 Ocean Industries Pty Ltd v Owners of the Ship MV Steven C [1994] 1 Qd R 69 ............ 8.40, 8.620 Ocean Industries Pty Ltd (receivers and managers appointed t/as Markwell Chandlery) v Owners of the Ship MV Steven C (1991) 104 ALR 353 .......................................................................... 8.620 Ocean Marine Mutual Insurance Association (Europe) OV v Jetopay Pty Ltd (2000) 120 FCR 146 .................................................................................................................................. 17.640 Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic) [2003] 2 Lloyd’s Rep 693 ...................................................................................................................... 14.250, 14.330 Ocean Pride Maritime Ltd Partnership v Qingdao Ocean Shipping Co (The Northgate) [2008] 1 Lloyd’s Rep 511 ......................................................................................................... 13.170, 13.210 Ocean Star Tankers SA v Total Transport Corp (The Taygetos) [1982] 2 Lloyd’s Rep 272 .... 14.290 Ocean Trawling Co Pty Ltd v Fire and All Risks Insurance Co Ltd [1965] WAR 65 .............. 17.620 Oceanfocus Shipping Ltd v Hyundai Merchant Marine Co Ltd (The Hawk) [1999] 1 Lloyd’s Rep 176 ........................................................................................................................................... 14.410 Oceangas (Gibraltar) Ltd v Port of London Authority (The Cavendish) [1993] 2 Lloyd’s Rep 292 ..................................................................................................................................... 15.30 Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 .............. 15.30

Table of Cases xlix Oceanic Steam Navigation Co v Mellor (The Titanic) 233 US 718 (1914) ................................ 16.10 Oceanic Steam Navigation Co Ltd v Evans (1934) 50 Ll L Rep 1 ........................................... 17.440 Oceanografia SA de CV v DSND Subsea AS (The Botnica) [2007] 1 Lloyd’s Rep 37 .. 13.30, 14.30 Office of Supply, Government of Republic of Korea v New York Navigation Co 469 F 2d 377 (2d Cir 1972) .................................................................................................................................. 12.590 Okmasich v Evans (1980) 25 SASR 481 ....................................................................................... 2.110 Oleo Pty Ltd v Vanguard Insurance Co Ltd (unreported, WA SC, 1991) ..................... 17.270, 17.600 Ollive v Booker (1847) 1 Ex 416; 154 ER 177 ............................................................................ 14.70 Omak Maritime Ltd v Mamola Challenger Shipping Co (The Mamola Challenger) [2011] 1 Lloyd’s Rep 47 ..................................................................................................................................... 14.250 Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] 2 Lloyd’s Rep 221 .............................................................................................................................. 14.150, 14.260 Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274 .................. 5.180, 5.190, 6.60, 10.240 Opal Maritime Agencies Pty Ltd v Baltic Shipping Co (1998) 158 ALR 416 .......................... 13.660 Opal Maritime Agencies Pty Ltd v Proceeds of Sale of MV Skulptor Konenkov (2000) 98 FCR 519 ........................................................................................................ 1.40, 13.660 Optima, The (1905) 10 Asp MLC 147 ........................................................................................... 8.450 Orduna SA v Zen-Noh Grain Corp 913 F 2d 1149 (5th Cir 1990) .............................................. 13.70 Ore Carriers of Liberia Inc v Navigen Co 435 F 2d 549 (2nd Cir 1970) .................................... 13.70 Oregon, The 158 US 186; 15 S Ct 804 (1895) ........................................................................... 15.110 Orica Australia Pty Ltd v Limit (No 2) Ltd (2011) ANZ Ins Cases 61-877; [2011] VSC 65 .. 13.440 Orient Mid-East Lines Inc v Shipment of Rice on Board SS Orient Transporter 496 F 2d 1032; 1974 AMC 2593 (5th Cir 1974) .................................................................................... 18.20, 18.30 Orient Overseas Container Line (UK) Ltd v Sea-Land Service Inc 122 F Supp 2d 481; 2001 AMC 1005 (SDNY 2000) ................................................................................................................. 12.560 Orienta, The [1895] P 49 ....................................................................................................... 8.280, 9.50 Oriental Maritime Pte Ltd v Ministry of Food, Government of People’s Republic of Bangladesh (The Silva Plana, Bahamastars and Magic Sky) [1989] 2 Lloyd’s Rep 371 ....................... 12.700 Orion Insurance Co PLC v M/V Humacao 851 F Supp 575 (SDNY 1994) .............................. 12.370 Orpheus, The (1871) LR 3 A & E 308 .......................................................................................... 8.180 Orr v Dickinson (1859) Johns 5; 70 ER 315 ................................................................................. 5.190 Osmium Shipping Corp v Cargill International SA (The Captain Stefanos) [2012] 2 Lloyd’s Rep 46 ..................................................................................................................................... 14.330 Oswald v Australian Steamships Ltd [1914] VLR 329 ............................................................... 15.190 Otal Investments Ltd v MV Clary 494 F 3d 40; 2007 AMC 1817 (2d Cir 2007) .................... 15.110 Oteri v The Queen (1976) 51 ALJR 122 ................................................ 3.10, 4.50, 4.90, 4.100, 4.110 Ouro Fino, The [1988] 2 Lloyd’s Rep 325 .................................................................................. 15.150 Out of the Box Pte Ltd v Wanin Industries Pte Ltd [2013] 2 SLR 363 .................................... 14.240 Overseas Commodities Ltd v Style [1958] 1 Lloyd’s Rep 546 .................................................. 17.570 Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound (No 1)) [1961] AC 388 ......................................................................................................................... 15.170 Overseas Transportation Co v Mineralimportexport (The Sinoe) [1971] 1 Lloyd’s Rep 514 ... 13.570 Overseas Transportation Co v Mineralimportexport (The Sinoe) [1972] 1 Lloyd’s Rep 201 ... 13.570 Ovington Court, The (see Canadian Transport Co v Court Line [1940] AC 934) ....... 13.560, 14.400 Owens v Ship Alexia (1914) 14 SR (NSW) 389 ......................................................................... 20.360 Owneast Shipping Ltd v Qatar Navigation QSC (The Qatar Star) [2011] 1 Lloyd’s Rep 350 ................................................................................................................................... 14.180 Owner, Master and Crew of the Tug Maridive VIII v Owners and Demise Charterers of the Oil Rig Key Singapore [2005] 1 Lloyd’s Rep 91 ............................................................................... 20.540 Owners, Charter, Master and Crew of the Ship Margaret Philippa v The Ship MV Santo Rocco Di Bagnara (1991) 101 ALR 491 ...................................................................... 20.230, 20.270, 20.310 Owners, Master and Crew of SS Cartela v Ship Inverness-shire (1916) 21 CLR 387 ............. 20.350 Owners, Master and Crew of SS Nestor v Owners of SS Mungana, Cargo and Freight: The Mungana [1936] 3 All ER 670 ............................................................................................... 20.590 Owners of Cargo Lately Laden on Board the Ship or Vessel Makedonia v Makedonia (Owners): The Makedonia [1962] P 190 ................................................................................................. 12.300 Owners of Cargo on Ship Maori King v Hughes [1895] 2 QB 550 .......................................... 13.600

l

Table of Cases

Owners of Cargo on board The Merak v The Merak (Owners): The Merak [1965] P 223 ...... 12.590 Owners of MV Iran Amanat v KMP Coastal Oil Pte Ltd (1999) 196 CLR 130 ................ 3.30, 5.100 Owners of No 7 Steam Sand Pump Dredger v Owners of SS Greta Holme: The Greta Holme [1897] AC 596 ......................................................................................................................... 15.170 Owners of SS Mediana v Owners, Master and Crew of Lightship Comet: The Mediana [1900] AC 113 ........................................................................................................................................... 15.170 Owners of SS Melanie v Owners of SS San Onofre [1925] AC 246 .............. 20.240, 20.250, 20.320 Owners of SS Utopia v Owners of SS Primula: The Utopia [1893] AC 492 .............................. 8.150 Owners of Ship Carina v Owners or Demise Charterers of Ship MSC Samia (1997) 78 FCR 404 .................................................................................................................................... 8.540 Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 ......................................... 16.60, 20.180, 20.240, 20.250, 20.410, 20.550, 20.630, 20.660 Owners of the SS Devonshire v Owners of the Barge Leslie [1912] AC 634 ............................. 15.40 Owners of the SS Kalibia v Wilson (1910) 11 CLR 689 ........................................... 2.30, 2.40, 2.130 Owners of the SS Sappho v Denton: The Sappho (1871) LR 3 PC 690 ......... 20.230, 20.290, 20.310 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404 ............ 2.150 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Ltd (1992) 38 FCR 227 .............. 2.150 Owners of the Steamship Gracie v Owners of the Steamship Argentino: The Argentino (1889) 14 App Cas 519 ............................................................................................................................ 15.170 Owners of the Tug Sea Tractor v Owners of the Ship Tramp [2007] 2 Lloyd’s Rep 363 ....... 20.140, 20.160

P P v A [2008] 2 Lloyd’s Rep 415 ........................................................................... 13.50, 13.70, 13.410 P & O Scottish Ferries Ltd v Braer Corp [1999] 2 Lloyd’s Rep 535 ........................................ 19.230 P Samuel & Co Ltd v Dumas [1924] AC 431 ....................................... 17.10, 17.220, 17.290, 17.310 PEP Shipping (Scandinavia) ApS v Normaco Shipping Corp 1997 AMC 2933 (ED La 1997) ............................................................................................................................ 13.30 PNSL Bhd v Dalrymple Marine Services Pty Ltd (The Koumala) [2008] 1 Qd R 511 .............. 15.40 PS Chellaram & Co Ltd v China Ocean Shipping Co [1989] 1 Lloyd’s Rep 413 .................... 12.560 PS Chellaram & Co Ltd v China Ocean Shipping Co (The Zhi Jiang Kou) [1991] 1 Lloyd’s Rep 493 .............................................................................................................................. 12.560, 12.610 PS Chellaram & Co Ltd v China Ocean Shipping Co (The Zhi Jiang Kou) (unreported, High Court of Aust, 1993) ............................................................................................... 12.560, 12.610, 12.740 Pacific, The (1864) Br & Lush 243; 167 ER 356 ....................................................... 8.20, 8.50, 8.330 Pacific Asia Express Pty Ltd v Renegade Gas Pty Ltd [2010] NSWSC 1188 ........................... 12.640 Pacific Basin IHX Ltd v Bulkhandling Handymax AS (The Triton Lark) [2012] 1 Lloyd’s Rep 151 ................................................................................................................................... 14.370 Pacific Basin IHX Ltd v Bulkhandling Handymax AS (The Triton Lark) [2012] 1 Lloyd’s Rep 457 ................................................................................................................................... 14.370 Pacific Composites Pty Ltd v Transpac Container System Ltd (unreported, FCA, Tamberlin J, 11 May 1998) ............................................................................................................................... 12.800 Pacific Molasses Co v Entre Rios Compania Naviera SA (The San Nicholas) [1976] 1 Lloyd’s Rep 8 ............................................................................................................................................... 12.720 Pacific Sun, The [1983] AMC 830 ............................................................................................... 14.240 Pacol Ltd v Trade Lines Ltd (The Henrik Sij) [1982] 1 Lloyd’s Rep 456 ................................ 12.820 Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltd [1972] 2 QB 625 ......... 17.290 Palm Shipping Inc v Kuwait Petroleum Corp (The Sea Queen) [1988] 1 Lloyd’s Rep 500 ... 13.190, 13.200 Palmco Shipping Inc v Continental Ore Corp [1970] 2 Lloyd’s Rep 21 ................................... 13.620 Palmer v Rouse (1858) 3 H & N 505; 157 ER 569 .................................. 20.80, 20.630, 21.50, 21.80 Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501 .......... 17.100, 17.110 Pan Cargo Shipping Corp v United States 234 F Supp 623 (SDNY 1964) ................................. 13.50 Pan Cargo Shipping Corp v United States 373 F 2d 525 (2d Cir 1967) ..................................... 13.50 Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1993] 1 Lloyd’s Rep 443 ......................................................................................................... 14.320, 14.340, 14.470

Table of Cases li Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 Lloyd’s Rep 365 ......................................................................................................... 14.320, 14.340, 14.470 Panamanian Oriental Steamship Corp v Wright [1970] 2 Lloyd’s Rep 365 ................. 17.360, 17.400 Panamanian Oriental Steamship Corp v Wright [1971] 1 Lloyd’s Rep 487 ................. 17.360, 17.400 Panther and the Ericbank, The [1957] P 143 ................................................................................. 15.40 Pantland Hick v Raymond & Reid [1893] AC 22 ....................................................................... 13.360 Papadimitriou v Henderson [1939] 3 All ER 908 ....................................................................... 17.360 Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] 1 Lloyd’s Rep 719 ........................................................................................................ 12.300, 12.390 Paragon Oil Co v Republic Tankers SA 310 F 2d 169 (2d Cir 1962) ............................ 13.70, 14.300 Parke, Lacey, Hardie Ltd v The Ship Clan MacFadyen (1930) 30 SR (NSW) 438 .................. 12.390 Parker v Commonwealth (1965) 112 CLR 295 ............................................................................. 8.140 Parlement Belge, The (1880) 5 PD 197 ............................................................................. 8.150, 8.460 Parlux SpA v M & U Imports Pty Ltd (2008) 21 VR 170 ............................................ 12.100, 12.740 Parsons v New Zealand Shipping Co [1901] 1 KB 548 ............................................................. 12.250 Parsons Corp v CV Scheepvaartonderneming “Happy Ranger” (The Happy Ranger) [2002] 2 Lloyd’s Rep 357 ........................................................................................................ 12.370, 12.530 Partenreederei M/S Heidberg v Grosvenor Grain and Feed Co Ltd [1994] 2 Lloyd’s Rep 287 ................................................................................................................................... 13.570 Paterson (NM) & Sons Ltd v The Birchglen (1990) 36 FTR 92 ................................................. 8.540 Patrick Stevedores No 2 Pty Ltd v Proceeds of Sale of the Vessel MV Skulptor Konenkov (1997) 75 FCR 47 ...................................................................................................................... 8.350, 8.370 Patrick Stevedores No 2 Pty Ltd v Ship MV Turakina (No 1) (1998) 84 FCR 493 ................... 8.420 Patrick Stevedores No 2 Pty Ltd v The Turakina (1998) 154 ALR 666 ............................. 5.50, 5.100 Paul v Birch (1743) 2 Atk 621; 26 ER 771 ................................................................................. 14.550 Payabi v Armstel Shipping Corp (The Jay Bola) [1992] 2 Lloyd’s Rep 62 ................. 12.580, 12.590 Pearce v Florenca (1976) 135 CLR 507 ........................................... 2.220, 2.230, 2.240, 2.250, 2.350 Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508 ........ 14.300 Pearl and Jahre Venture, The [2003] 2 Lloyd’s Rep 188 ............................................................ 15.110 Pelopidas and TRSL Concord, The [1999] 2 Lloyd’s Rep 675 .................................................. 15.105 Pelton Steamship Co Ltd v North of England Protecting & Indemnity Association (1925) 22 Ll L Rep 510 ..................................................................................................................................... 1.280 Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 ................................................................ 14.200 Pennsylvania, The 86 US (19 Wall) 125; 22 L Ed 148 (1873) ................................................... 15.110 Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; [2014] 2 Lloyd’s Rep 315 ......................................................................................................... 12.530, 16.160, 19.280 Perdaman Chemicals and Fertilisers Pty Ltd v ICICI Bank [2013] FCA 175 ........................... 19.240 Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (In liq) (2003) 214 CLR 514 .................................................................................................................................. 17.100 Perre v Apand Pty Ltd (1999) 198 CLR 180 .................................................... 15.180, 16.100, 19.230 Pesquerias y Secaderos de Bacalao de Espana SA v Beer (1946) 79 Ll L Rep 417 ................. 17.440 Pesquerias y Secaderos de Bacalao de Espana SA v Beer [1949] 1 All ER 845; 82 Ll L Rep 501 ...................................................................................................................... 12.430, 17.440 Peter der Grosse, The (1875) 1 PD 414 ......................................................................... 12.120, 12.150 Peters Slip Pty Ltd v Commonwealth [1979] Qd R 123 ............................................................ 15.105 Petersen v Union des Assurances de Paris IARD (1995) 8 ANZ Insurance Cases 61-244 ....... 17.310 Petersen v Union des Assurances de Paris IARD (1997) 9 ANZ Insurance Cases 61-366 ....... 17.310 Petition of Frescati Shipping Co Ltd, In re 718 F 3d 184; 2013 AMC 1521 (3d Cir 2013) ..... 13.50, 13.70, 14.300 Petone, The [1917] P 198 ............................................................................................................... 8.450 Petroleo Brasileiro SA v Kriti Akti Shipping Co SA (The Kriti Akti) [2004] 1 Lloyd’s Rep 712 ...................................................................................................................... 14.220, 14.240 Petroleo Brasiliero S/A v Elounda Shipping Co (The Evanthia M) [1985] 2 Lloyd’s Rep 154 . 14.80 Phantom, The (1866) LR 1 A & E 58 ............................................................................ 20.130, 20.660 Phillips Petroleum Co v Cabaneli Naviera SA (The Theodegmon) [1990] 1 Lloyd’s Rep 52 ........................................................................................................................ 12.280, 12.300 Phoenix Life Assurance Co v Raddin 120 US 183 (1886) ......................................................... 17.100

lii

Table of Cases

Phoenix Shipping Co v Apex Shipping Corp (The Apex) [1982] 2 Lloyd’s Rep 407 .............. 14.290 Pickaninny, The; George Hammond & Co (Interveners) [1960] 1 Lloyd’s Rep 533 ...... 8.330, 8.350, 8.620 Pickwick, The (1852) 16 Jur 669 ................................................................................................. 20.630 Pierce v Bemis: The Lusitania [1986] QB 384 ................................................... 20.630, 21.70, 21.180 Piermay Shipping Co SA v Chester (The Michael) [1979] 1 Lloyd’s Rep 55 .......................... 17.220 Pindos Shipping Corp v Raven (The Mata Hari) [1983] 2 Lloyd’s Rep 449 .............................. 17.90 Pioneer Container, The [1994] 2 AC 324 ....................................................................... 12.830, 12.840 Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) [1981] 2 Lloyd’s Rep 239 ................... 14.100 Piper Aircraft Co v Reyno 454 US 235; 102 S Ct 252 (1981) .................................................. 16.240 Pitman v Universal Marine Insurance Co (1882) 9 QBD 192 .................................................... 17.510 Plainar Ltd v Waters Trading Co Ltd (1945) 72 CLR 304 ......................................................... 15.200 Plakoura Maritime Corp v Shell International Petroleum Co Ltd (The Plakoura) [1987] 2 Lloyd’s Rep 258 ................................................................................................................................... 13.160 Plastique Tags Inc v Asia Trans Line Inc 83 F 3d 1367; 1996 AMC 2304 (11th Cir 1996) .... 12.160 Plywood Panels Inc v M/V Sun Valley 804 F Supp 804 (ED Va 1992) .................................... 12.170 Podmore v Aquatours Pty Ltd [1984] 1 NSWLR 111 ........................................ 15.60, 15.100, 15.110 Point Breeze, The (1928) 30 Ll L Rep 229 ................................................................................... 8.540 Point of Pay Pty Ltd, Re [2012] VSC 380 .................................................................................. 16.250 Polish Steamship Co v AJ Williams Fuels (Overseas Sales) Ltd (The Suwalki) [1989] 1 Lloyd’s Rep 511 ...................................................................................................................................... 13.30 Polish Steamship Co v Atlantic Maritime Co [1985] QB 41 ............................. 16.30, 16.200, 19.250 Poll v Dambe [1901] 2 KB 579 ..................................................................................................... 8.290 Pollard, Ashby & Co (France) Ltd v Franco-British Marine Insurance Co Ltd (1920) 5 Ll L Rep 286 ........................................................................................................................................... 17.640 Pollux Marine Agencies Inc v Louis Dreyfus Corp 455 F Supp 211 (SDNY 1978) ................... 13.30 Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161 ............................................................................................. 1.20, 1.80, 1.210, 1.250, 1.260 Polurrian Steamship Co Ltd v Young [1915] 1 KB 922 ............................................................. 17.400 Polyukhovich v Commonwealth (1991) 172 CLR 501 ................................................................. 2.130 Polzeath, The [1916] P 117 .............................................................................................................. 3.80 Pongola, The (1895) 8 Asp MLC 89 ............................................................................................. 5.130 Ponting v Huddart, Parker & Co Ltd (1897) 22 VLR 644 .................................................... 4.50, 4.60 Porky Products Inc v Nippon Express USA (Illinois) Inc 1 F Supp 2d 227 (SDNY 1997) ...... 11.20, 12.20 Port Caledonia and The Anna, The [1903] P 184 ............................................. 20.200, 20.410, 20.660 Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (The New York Star) (1980) 144 CLR 300 ............................................................................................................... 12.740 Port Line Ltd v Ben Line Steamers Ltd [1958] 2 QB 146 ......................................................... 10.230 Port MacDonnell Professional Fishermen’s Association Inc v South Australia (1989) 168 CLR 340 .................................................................................................. 2.230, 2.250, 2.370, 15.70 Port of Geelong Authority v The Bass Reefer (1992) 37 FCR 374 ............................................. 8.330 Portland Fish Co v States Steamship Co 510 F 2d 628 (9th Cir 1974) ........................ 12.130, 12.160 Portolana Compania Naviera Ltd v Vitol SA Inc (The Afrapearl) [2004] 2 Lloyd’s Rep 305 ............................................................................................ 13.390, 13.400, 13.410, 13.460 Poseidon Schiffahrt GmbH v Nomadic Navigation Co Ltd (The Trade Nomad) [1999] 1 Lloyd’s Rep 723 ................................................................................................................................... 14.130 Postlethwaite v Freeland (1880) 5 App Cas 599 ......................................................................... 13.360 Potoi Chau, The [1983] 2 Lloyd’s Rep 376 .................................................................................. 18.30 Potter & Co v New Zealand Shipping Co Ltd (1895) 64 LJQB 689 ......................................... 13.520 Prekookeanska Plovidba v Felstar Shipping Corp (The Carnival) [1992] 1 Lloyd’s Rep 449 ... 13.70 Prekookeanska Plovidba v Felstar Shipping Corp (The Carnival) [1994] 2 Lloyd’s Rep 14 ..... 13.70 Premier Group Pty Ltd, The v Followmont Transport Pty Ltd [2000] 2 Qd R 338 .................. 12.840 Prentis Donegan & Partners Ltd v Leeds & Leeds Co Inc [1998] 2 Lloyd’s Rep 326 ............ 17.640 President of India v Davenport Marine Panama SA (The Albion) [1987] 2 Lloyd’s Rep 365 ...................................................................................................................... 13.200, 13.220

Table of Cases liii President of India v Diamantis Pateras (Hellas) Marine Enterprises Ltd (The Nestor) [1987] 2 Lloyd’s Rep 649 ........................................................................................................ 13.200, 13.220 President of India v Hariana Overseas Corp (The Takafa) [1990] 1 Lloyd’s Rep 536 ............. 13.610 President of India v Jebsens (UK) Ltd (The General Capinpin, Proteus and Free Wave) [1991] 1 Lloyd’s Rep 1 .......................................................................................................................... 13.350 President of India v Lips Maritime Corp [1988] AC 395 .............................................. 13.440, 13.660 President of India v Metcalfe Shipping Co Ltd [1970] 1 QB 289 ................................ 12.700, 13.630 President of India v Moor Line Ltd (1958) 99 CLR 185 ........................................................... 13.560 President of India v NG Livanos Maritime Co (The John Michalos) [1987] 2 Lloyd’s Rep 188 ................................................................................................................................... 13.460 Preti v Sahara Tours Pty Ltd (2008) 22 NTLR 215 .................................................................... 13.440 Preti v Sahara Tours Pty Ltd [2008] NTCA 2 ............................................................................. 13.440 Price v Livingstone (1882) 9 QBD 679 ....................................................................................... 13.590 Pride Shipping Corp v Chung Hwa Pulp Corp (The Oinoussian Pride) [1991] 1 Lloyd’s Rep 126 ................................................................................................................................... 12.720 Prince George, The (1837) 3 Hagg Adm 376; 166 ER 445 .......................................................... 8.240 Prince Heinrich, The (1888) 13 PD 31 ............................................................................. 8.190, 20.570 Princess Alice, The (1849) 3 W Rob 138; 166 ER 914 .............................................................. 20.350 Princess Helena, The (1861) Lush 190; 167 ER 91 .................................................................... 20.210 Product Transport Corp Ltd and Blystad Shipping & Trading Inc (The Harold K Hudner), In re SMA No 3619 (Arb in NY 2000) .......................................................................................... 14.140 Project Asia Line Inc v Shone (The Pride of Donegal) [2002] 1 Lloyd’s Rep 659 ..... 13.600, 14.110 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 ..................... 12.280 Puccini Festival Australia Pty Ltd v Nippon Express (Australia) Pty Ltd (2007) 17 VR 36 .... 12.270 Puerto Buitrago, The (see Attica Sea Carriers Corp v Ferrostaal Poseidon Bulk Reederei GmbH [1976] 1 Lloyd’s Rep 250) ..................................................................................................... 14.510 Pust v Dowie (1865) 5 B & S 33; 122 ER 745 .......................................................................... 14.100 Puttick v Tenon Ltd (2008) 238 CLR 265 ................................................................................... 16.250 Putwain v English, Scottish & Australian Bank: The Gothenburg (1875) 4 QSCR 133 ........... 20.630 Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402 ........ 12.270, 12.310, 12.740, 13.560, 14.400 Pyrennee, The (1863) Br & Lush 189; 167 ER 330 ..................................................................... 8.190

Q QT Trading LP v MV Saga Morus 641 F 3d 105; 2012 AMC 1778 (5th Cir 2011) ................ 12.810 Qenos Pty Ltd v The Ship APL Sydney (2009) 187 FCR 282 ..................................... 16.100, 16.120 Quadro Shipping NV v Bizley & Co Pty Ltd (The Protea Trader) (1992) 113 FLR 280 ........ 12.680, 12.830, 14.470 Quaker Oats Co v M/V Torvanger 734 F 2d 238 (5th Cir 1984) ............................................... 12.490 Queen of the South, The [1968] P 449 .......................................................................................... 8.330 Queensland v Northaus Trading Co Ltd [1999] QCA 313 .......................................................... 13.440 Quick v Quick orse O’Connell [1953] VLR 224 .......................................................................... 4.140 Quickstep, The (1890) 15 PD 196 ................................................................................................. 15.40

R R R R R R R R R R

v Allen (1837) 1 Moo CC 494; 168 ER 1357 ............................................................................. 4.90 v Anderson (1868) LR 1 CCR 161 ..................................................... 1.330, 4.80, 4.90, 4.100, 5.10 v Arnaud (1846) 9 QB 808; 115 ER 1485 ................................................................................... 3.80 v Berchet (1688) 1 Show KB 106; 89 ER 480 ....................................................................... 12.280 v Bjornsen (1865) 10 Cox CC 74 ....................................................................................... 4.60, 4.90 v Bull (1974) 131 CLR 203 .......................................................... 1.320, 2.210, 2.220, 4.90, 20.190 v Byrne (1867) 6 SCR (NSW) 302 ............................................................................................ 4.140 v Carr and Wilson (1882) 10 QBD 76 ............................................................................. 1.330, 4.90 v Carrick District Council; Ex parte Prankerd [1999] QB 1119; [1999] 2 WLR 489 ........................................................................................................................ 1.240, 1.250

liv Table of Cases R R R R R

v v v v v

Clark; Ex parte Doyle (1879) 5 VLR (L) 440 ....................................................................... 4.180 Collector of Customs at Liverpool (1813) 2 M & S 224; 105 ER 366 ................................ 5.130 Commissioner for Transport; Ex parte Cobb & Co Ltd [1983] Qd R 547 ........................... 2.270 Forty-Nine Casks of Brandy (1836) 3 Hagg Adm 257; 166 ER 401 ...................... 20.630, 21.50 Foster; Ex parte Eastern & Australian Steamship Co Ltd (1959) 103 CLR 256 ..... 2.190, 2.200, 2.210 R v Gordon-Finlayson; Ex parte an Officer [1941] 1 KB 171 ............................................ 4.90, 4.100 R v Harvey (1869) 8 SCR (NSW) 340 .......................................................................................... 4.180 R v Judge of the City of London Court and the Owners of the SS Michigan (1890) 25 QBD 339 .................................................................................................................................... 8.240 R v Keyn (1876) 2 Ex D 63 ................................................................................................. 1.320, 4.90 R v Lesley (1860) Bell CC 220; 169 ER 1236 ............................................................................... 4.90 R v Liverpool Justices; Ex parte Molyneux [1972] 2 QB 384 ..................................................... 1.320 R v Lopez (1858) Dears & B 525; 169 ER 1105 ........................................................................... 4.90 R v Olney [1996] 1 Qd R 187 ....................................................................................................... 4.110 R v Owners of the SS Argyllshire [1922] QSR 186 ................................................................... 15.170 R v Property Derelict (1825) 1 Hagg Adm 383; 166 ER 136 ...................................................... 21.70 R v Roach (1879) 13 SALR 96 ...................................................................................... 12.700, 12.710 R v Ross (1854) 2 Legge 857 ............................................................................................... 4.90, 4.180 R v Shea (1978) 18 SASR 591 ...................................................................................................... 4.110 R v Stewart [1899] 1 QB 964 ........................................................................................................ 8.290 R v Sven Seberg (1870) LR l CCR 264 ........................................................................................ 4.180 R v Turner; Ex parte the Marine Board of Hobart (1927) 39 CLR 411 ..................... 2.30, 2.40, 2.70 R v Two Casks of Tallow (1837) 3 Hagg Adm 294; 166 ER 414 .................................. 20.630, 21.50 R Pagnan & Fratelli v Finagrain Compagnie Commerciale Agricole et Financiere SA (The Adolf Leonhardt) [1986] 2 Lloyd’s Rep 395 ...................................................................... 13.170, 13.210 RT Jones Lumber Co v Roen SS Co 270 F 2d 456 (2d Cir 1959) ............................................ 12.510 Raft of Timber (1844) 2 W Rob 251; 166 ER 749 .................................................. 1.20, 1.210, 20.80 Raiffeisen Zentralbank Osterreich AG v Five Star General Trading (The Mount I) [2001] 1 Lloyd’s Rep 597 ..................................................................................................................................... 17.80 Rail Equipment Leasing Pty Ltd v CV Scheepvaartonderneming Emmagracht [2008] NSWSC 850 ............................................................................................................... 12.470, 12.840 Rainbow Spring, The [2003] 3 SLR (R) 362 ................................................................................ 13.30 Rama, The (1921) 8 Ll L Rep 369 ..................................................................................... 8.650, 10.20 Randal v Cockran (1748) 1 Ves Sen 98; 27 ER 916 .................................................................. 17.650 Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253 .... 17.90, 17.100, 17.110, 17.140, 17.500, 17.600 Ranicar v Frigmobile Pty Ltd [1983] Tas R 113 ......................................................................... 17.470 Rashtriya Chemicals and Fertilizers Ltd v Huddart Parker Industries Ltd (The Boral Gas) [1988] 1 Lloyd’s Rep 342 ........................................................................................................ 13.430, 13.650 Raveh v Official Receiver of the State of Israel [2002] WASCA 27 ......................................... 16.250 Ravenna Tankers Pte SRL v Omni Ships Pte Ltd 2014 AMC 1190 (ED La 2013) .................. 14.560 Ray v M’Mackin (1875) 1 VLR (L) 274 ....................................................................................... 2.170 Rayner v Preston (1881) 18 Ch D 1 ............................................................................................ 14.570 Raynes v Ballantyne (1898) 14 TLR 399 .................................................................................... 14.360 Readhead v Admiralty Marshal, Western Australia District Registry (1998) 87 FCR 229 ........ 7.100, 8.470, 10.320 Reardon Smith Line Ltd v Australian Wheat Board (1956) 93 CLR 577 ........... 13.50, 13.70, 14.300 Reardon Smith Line Ltd v Black Sea and Baltic General Insurance Co Ltd [1939] AC 562 .......................................................................................................... 12.330, 13.600, 13.620 Reardon Smith Line Ltd v Hansen-Tangen (The Diana Prosperity) [1976] 2 Lloyd’s Rep 621 ..................................................................................................................................... 14.50 Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1962] 2 QB 42 .......... 13.60 Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food (Vancouver Strikes cases) [1963] AC 691 .............................................................................................. 13.250, 13.270, 13.280 Reardon Smith Line Ltd v Sanko Steamship Co Ltd (The Sanko Honour) [1985] 1 Lloyd’s Rep 418 ........................................................................................................................................... 14.500

Table of Cases lv Rebecca, The (1804) 5 C Rob 102; 165 ER 712 ................................................................. 8.450, 9.70 Red Arrow Freight Lines Inc v Roy G Howe 480 SW 2d 281 (Ct App Tx 1972) ................... 12.160 Rederi Sverre Hansen A/S v Phs van Ommeren (1921) 6 Ll L Rep 193 .................................. 14.280 Rederiaktiebolaget Urania v Zachariades (1931) 41 Ll L Rep 145 ............................................ 13.530 Reeves v Capper (1838) 5 Bing (NC) 136; 132 ER 1057 ............................................................ 10.60 Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 .................................... 16.250 Reid v Macbeth & Gray [1904] AC 223 ......................................................................................... 6.30 Reid and Stewart v Fairbanks, Allison and Allison (1853) 13 CB 692; 138 ER 1371 ............... 5.190 Reiter Petroleum Inc v The Ship Sam Hawk [2015] FCA 1005 .................................................. 8.590 Rejfek v McElroy (1965) 112 CLR 517 ...................................................................................... 17.290 Reliance, The (1843) 2 W Rob 119; 166 ER 700 .................................................... 8.90, 8.480, 8.580 Rena K, The [1978] 1 Lloyd’s Rep 545 ...................................................................................... 12.720 Renpor, The (1883) 8 PD 115 ......................................................................................... 20.260, 20.790 Renton & Co v Palmyra Trading Corp of Panama [1957] AC 149 .............................. 12.310, 14.400 Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878 ............................................. 8.40 Rey Banano del Pacifico CA v Transportes Navieros Ecuatorianos (The Isla Fernandina) [2000] 2 Lloyd’s Rep 15 ........................................................................................................................ 12.390 Reynolds v Katoomba RSL All Services Club Ltd (2001) 53 NSWLR 43 ............................... 19.230 Rhadamanthe, The (1813) 1 Dods 201; 165 ER 1283 ........................................................... 9.50, 9.90 Rheinoel GmbH v Huron Liberian Co (The Concordia C) [1985] 2 Lloyd’s Rep 55 .............. 13.550 Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 2 Lloyd’s Rep 1 .. 17.220, 17.290, 17.300, 17.360 Rhone and Peter AB Widener, The [1993] 1 Lloyd’s Rep 600 .................................................. 16.170 Riby Grove, The (1843) 2 W Rob 52; 166 ER 675 ............................................................. 8.90, 8.220 Ricargo Trading SA v Spliethoff’s Bevrachtingskantor BV (The Tassos N) [1983] 1 Lloyd’s Rep 648 ........................................................................................................................................... 13.640 Rickards v Forestal Land, Timber and Railways Co [1942] AC 50 ........................................... 17.370 Ridge v Taylor & Larner Construction Pty Ltd (1974) 9 SASR 428 ......................................... 12.580 Ridgeway Maritime Inc v Beulah Wings Ltd (The Leon) [1991] 2 Lloyd’s Rep 611 ................ 14.30 Ripon City, The [1897] P 226 ...................... 8.30, 8.150, 8.280, 8.380, 8.450, 9.30, 9.50, 9.70, 10.20 River Gurara (Owners of Cargo Lately Laden On Board) v Nigerian National Shipping Line Ltd [1998] QB 610 ........................................................................................................................ 12.520 River Rima, The [1988] 1 WLR 758 ............................................................................................. 8.330 Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd (The Muncaster Castle) [1961] AC 807 ......................................................................................................................... 12.300 Riyad Bank v Ahli United Bank (UK) plc [2005] 2 Lloyd’s Rep 409 ...................................... 17.620 Robertson v Petros M Nomikos Ltd [1939] AC 371 .......................... 17.370, 17.380, 17.390, 17.420 Robey v Vladinier (1935) 53 Ll L Rep 121 .................................................................................... 4.90 Robins Dry Dock and Repair Co v Flint 275 US 303 (1927) .................................................... 15.190 Robinson v Western Australian Museum (1977) 138 CLR 283 ....... 2.90, 2.110, 2.120, 2.200, 2.220, 2.230, 2.250, 2.260, 2.290, 2.300, 2.350, 8.190, 20.180, 20.200, 20.630, 20.820, 21.40, 21.50, 21.60, 21.70, 21.180, 21.210 Rockwell Graphic Systems Ltd v Fremantle Terminals Ltd (1991) 65 ALJR 514 .................... 12.740 Rodocanachi v Milburn (1886) 18 QBD 67 .......................................... 12.10, 12.700, 12.710, 15.170 Roe, The (1856) Swa 84; 166 ER 1032 ....................................................................................... 20.140 Roelandts v Harrison (1854) 9 Ex 444; 156 ER 189 .................................................................. 13.590 Ropner Shipping Co Ltd and Cleeves Western Valleys Anthracite Collieries Ltd, Re [1927] 1 KB 879 ........................................................................................................................................... 13.470 Rosa S, The [1988] 2 Lloyd’s Rep 574 ....................................................................................... 12.550 Rosenbruch v American Export Isbrandtsen Lines Inc 543 F 2d 967; 1976 AMC 487 (2d Cir 1976) ........................................................................................................................... 12.560 Rosenfeld Hillas & Co Pty Ltd v Ship Fort Laramie (1922) 31 CLR 56 .................................... 8.150 Rosenfeld Hillas & Co Pty Ltd v The Ship Fort Laramie (1923) 32 CLR 25 ............. 12.200, 12.210 Ross v Adelaide Marine Assurance Co (1870) 1 VR (L) 232 ......................................... 17.40, 17.140 Routh v MacMillan (1863) 2 H & C 749; 159 ER 310 ................................................................ 14.70 Roux v Salvador (1836) 3 Bing (NC) 266; 132 ER 413 .............................................................. 3.510

lvi Table of Cases Rowland & Marwood’s Steamship Co Ltd v Wilson, Sons & Co Ltd (1897) 2 Com Cas 198 ....................................................................................................................... 13.320, 13.500 Royal & Sun Alliance Insurance PLC v MK Digital Fze (Cyprus) Ltd [2005] 2 Lloyd’s Rep 679 ................................................................................................................................... 12.840 Royal Boskalis Westminster NV v Mountain [1999] QB 674 ....................................... 17.120, 17.220 Royal Commission on the Sugar Supply v Hartlepools Seatonia Steamship Co Ltd [1927] 2 KB 419 ........................................................................................................................................... 12.700 Royal Greek Government v Minister of Transport (1948) 82 Ll L Rep 196 ............................. 14.330 Royal Greek Government v Minister of Transport (1950) 83 Ll L Rep 228 ............................. 14.380 Royal Insurance Co of America v Cineraria Shipping Co 894 F Supp 1557; 1996 AMC 2051 (MD Fla 1995) .................................................................................................................................... 18.20 Royal Victorian Aero Club v Commonwealth (1954) 92 CLR 236 ........................................... 19.240 Royal Wells, The [1985] QB 86 ......................................................................................... 8.260, 8.440 Ruby Queen, The (1861) Lush 266; 167 ER 119 .......................................................................... 8.150 Rudhra Minerals Pte Ltd v MRI Trading Pte Ltd [2013] 4 SLR 1023 ........................................ 13.30 Rusden v Pope (1868) LR 3 Ex 269 ............................................................................................ 10.280 Russell v Niemann (1864) 17 CB (NS) 163 ................................................................................ 12.430 Russland, The [1924] P 55 ......................................................................................... 8.400, 8.440, 9.30 Ruta, The [2000] 1 Lloyd’s Rep 359 .................................................................................. 8.350, 8.420

S SA Maritime et Commerciale v Anglo-Iranian Oil Co Ltd [1954] 1 Lloyd’s Rep l ................... 14.50 SA Sucre Export v Northern River Shipping Ltd (The Sormovskiy 3068) [1994] 2 Lloyd’s Rep 266 ...................................................................................................................... 12.100, 12.770 SA de Remorquage & Helice v Bennetts [1911] 1 KB 243 ....................................................... 15.190 SC White Pty Ltd v Ship Mediterranean [1966] Qd R 211 .......................................................... 2.300 SCA (Freight) Ltd v Gibson [1974] 2 Lloyd’s Rep 533 ............................................................. 17.200 SG White Pty Ltd v Ship Mediterranean [1966] Qd R 211 .......................................................... 2.310 SIB International SRL v Metallgesellschaft Corp (The Noel Bay) [1989] 1 Lloyd’s Rep 361 .............................................................................................. 13.40, 13.520, 13.540, 13.550 SL Sethia Liners Ltd v Naviagro Maritime Corp (The Kostas Melas) [1981] 1 Lloyd’s Rep 159 ................................................................................................................................... 14.320 SNC SLB v M/V Newark Bay 111 F 3d 243; 1997 AMC 1952 (2d Cir 1997) ........... 12.340, 12.560 SPM Corp v M/V Ming Moon 965 F 2d 1297; 1992 AMC 2409 (3d Cir 1992) ........ 12.340, 12.560 SS Albion, Re the: Dunn v Hoyt (1873) 4 AJR 3 ......................................................................... 8.300 SS Ardennes (Cargo Owners) v SS Ardennes (Owners) [1951] 1 KB 55 .................... 12.270, 12.370 SS Arild (Owner) v SA de Navigation Hovrani [1923] 2 KB 141 ............................................. 14.330 SS Blairmore Co v Macredie [1893] AC 593 .............................................................................. 17.440 SS Boveric Co Ltd v Howard Smith & Sons Pty Ltd (1901) 27 VLR 347 ................................. 13.70 SS Garston Co v Hickie & Co (1885) 15 QBD 580 ................................................................... 13.590 SS Pharmaceutical Pty Ltd v Qantas Airways Ltd [1991] 1 Lloyd’s Rep 288 ........... 12.530, 16.160, 19.280 STX Pan Ocean Ltd v Ugland Bulk Transport AS (The Livanita) [2008] 1 Lloyd’s Rep 86 .... 13.50 Sabah Shipyard Sdn Bhd v M/V Harbel Tapper 178 F 3d 400 (5th Cir 1999) ......................... 12.560 Safadi v Western Assurance Co (1933) 46 Ll L Rep 140 ............................................................. 17.80 St George, The [1926] P 217 ............................................................................................................ 9.50 Saint John Marine Co v US 92 F 3d 39 (2d Cir 1996) .............................................................. 14.560 St John Pilot Commissioners and the Attorney-General for the Dominion of Canada v Cumberland Railway & Coal Co [1910] AC 208 .................................................................. 1.200, 1.240, 1.250 St Joseph, The [1933] P 119 ......................................................................................................... 12.680 St Lawrence, The (1880) 5 PD 250 ............................................................................................... 8.320 St Louis, The [1984] 2 Lloyd’s Rep 174 ..................................................................................... 15.120 St Machar, The (1939) 64 Ll L Rep 27 .............................................................................. 1.240, 1.250 St Machar, The (1939) 65 Ll L Rep 119 ............................................................................ 1.240, 1.250 St Paul Travelers Insurance Co Ltd v Wallenius Wilhelmsen Logistics A/S 433 Fed Appx 19; 2011 AMC 2701 (2d Cir 2011) ....................................................................................................... 12.560

Table of Cases lvii St Vincent Shipping Co Ltd v Bock, Godeffroy & Co (The Helen Miller) [1980] 2 Lloyd’s Rep 95 ..................................................................................................................................... 14.280 Salacia, The (1829) 2 Hagg Adm 262; 166 ER 240 ................................................................... 20.450 Salacia, The (1862) Lush 545; 167 ER 246 .................................................................................. 8.440 Salamis Shipping (Panama) SA v Edm van Meerbeeck & Co SA (The Onisilos) [1971] 2 QB 500 .................................................................................................................................... 13.380 Sale Corp of Monrovia v Turkish Cargo Lines General Manager (The Amiral Fahri Engin) [1993] 1 Lloyd’s Rep 75 ............................................................................................. 13.190, 13.200, 13.220 Salmon and Woods, Re; Ex parte Gould (1885) 2 Morr BR 137 ..................................... 1.40, 10.140 Salsi v Jetspeed Air Services Ltd [1977] 2 Lloyd’s Rep 57 ....................................................... 12.840 Salt Union Ltd v Wood [1893] 1 QB 370 ................................................................. 1.10, 16.20, 16.80 Sameiet Stavos (OH Meling Rederi) v The Berostar (Owners) [1970] 2 Lloyd’s Rep 403 ....... 8.450 Sametiet M/T Johs Stove v Istanbul Petrol Rafinerisi A/S (The Johs Stove) [1984] 1 Lloyd’s Rep 38 ................................................................................................................... 13.190, 13.390, 13.460 Samuel v Jones (1863) 7 LT 760 ................................................................................................. 10.300 Samuel, The (1851) 15 Jur 407 .................................................................................................... 20.420 Samuel, The (1851) 17 LT (OS) 204 ................................................................... 20.410, 20.630, 21.70 Samuel, Samuel & Co v West Hartlepool Steam Navigation Co (1906) 11 Com Cas 115 ...... 12.810 Samuel Sanday v Keighley Maxted & Co (1922) 27 Com Cas 296 .......................................... 13.130 San Demetrio, The (1941) 69 Ll L Rep 5 ...................................................................... 20.290, 20.450 San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 ...................................................................................................... 15.190 Sandeman v Scurr (1866) LR 2 QB 86 ................................................................... 5.50, 5.100, 12.810 Sanders Bros v Maclean & Co (1883) 11 QBD 327 ................................................................... 12.760 Sandgate, The [1930] P 30 ........................................................................................................... 13.350 Sanko Steamship Co Ltd v Fearnly and Eger A/S (The Manhattan Prince) [1985] 1 Lloyd’s Rep 140 ........................................................................................................................................... 14.330 Sanko Steamship Co Ltd v Kano Trading Ltd [1978] 1 Lloyd’s Rep 156 .................................. 14.50 Sanko Steamship Co Ltd v Sumitomo Australia Ltd (No 2) (1995) 63 FCR 227 ....... 12.300, 12.390 Santa Martha Baay Scheepvaart and Handelsmaatschappij NV v Scanbulk A/S (The Rijn) [1981] 2 Lloyd’s Rep 267 ........................................................................................................ 14.330, 14.500 Santiago v Sea-Land Service Inc 366 F Supp 1309 (DPR 1973) ............................................... 12.510 Santiago, The (1900) 9 Asp MLC 147 ......................................................................................... 20.360 Santiren Shipping Ltd v Unimarine SA (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep 159 ......................................................................................................... 14.320, 14.520, 14.550 Sanwa and Choyang Star, The [1998] 1 Lloyd’s Rep 283 ........................................................... 15.80 Sappho, The (1870) LR 3 A & E 142 ............................................................................ 20.230, 20.310 Saratoga, The (1861) Lush 318; 167 ER 140 ................................................................. 20.350, 20.360 Sarma Navigation SA v Sidermar SpA (The Sea Pioneer) [1982] 1 Lloyd’s Rep 13 ............... 13.210 Sarpen, The [1916] P 306 ............................................................................................................. 20.310 Satya Padam, The [1985] 1 Lloyd’s Rep 338 ............................................................................. 15.100 Sava Star, The [1995] 2 Lloyd’s Rep 134 ........................................... 20.230, 20.290, 20.300, 20.400 Scandinavian Bunkering AS v Bunkers on Ship FV Taruman (2006) 151 FCR 126 .................... 1.40 Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 Lloyd’s Rep 253 ........................................................................................................ 14.440, 14.450 Scapa Forming Fabrics v Blue Anchor Line 243 Fed Appx 846; 2007 AMC 2108 (5th Cir 2007) .......................................................................................................................... 12.560 Scaramanga v Stamp (1880) 5 CPD 295 ..................................................................................... 13.620 Schelde Delta Shipping BV v Astarte Shipping Ltd (The Pamela) [1995] 2 Lloyd’s Rep 249 ................................................................................................................................... 14.450 Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121 .................................................. 15.110 Schiffahrt & Kohlen GmbH v Chelsea Maritime Ltd [1982] QB 481 ....................................... 15.200 Schiffahrtsagentur Hamburg Middle East Line GmbH v Virtue Shipping Corp (The Oinoussian Virtue) (No 2) [1981] 2 Lloyd’s Rep 300 .............................................................................. 14.290 Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291 ....................................... 12.530, 16.160, 19.280

lviii Table of Cases Schiffshypothekenbank Zu Luebeck AG v Compton (The Alexion Hope) [1988] 1 Lloyd’s Rep 311 .................................................................................................................................... 17.220 Schirmer Stevedoring Co Ltd v Seaboard Stevedoring Corp 306 F 2d 188 (9th Cir 1962) ..... 14.470 Schlederer v The Ship Red Fin [1979] 1 NSWLR 258 ................................................................ 16.10 Schoolman v Hall [1951] 1 Lloyd’s Rep 139 .............................................................................. 17.110 Schuster v McKellar (1857) 7 El & Bl 704; 119 ER 1407 ................................ 11.70, 12.100, 15.190 Schwan, The; The Albano [1892] P 419 ...................................................................................... 16.170 Scio, The (1867) LR 1 A & E 353 .............................................................................. 9.20, 9.30, 10.20 Scott v Pilkington (1862) 2 B & S 11; 121 ER 978 ................................................................... 12.670 Scruttons Ltd v Midland Silicones Ltd [1962] AC 446 .............................................................. 12.740 Sea Glory Maritime Co v Al Sagr National Insurance Co (The MV Nancy) [2014] 1 Lloyd’s Rep 14 .................................................................................................................................. 14.70, 17.100 Sea Spray, The [1970] P 133 .......................................................................................................... 8.420 Sea Success Maritime Inc v African Maritime Carriers Ltd [2005] 2 Lloyd’s Rep 692 ........... 14.420 Sea and Land Securities Ltd v William Dickinson & Co Ltd [1942] 2 KB 65; (1942) 72 Ll L Rep 159 ................................................................................................................................ 14.10, 14.320 Seacrystal Shipping Ltd v Bulk Transport Group Shipping Co Ltd (The Kyzikos) [1987] 2 Lloyd’s Rep 122 ................................................................................................................................... 13.180 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149 ........ 11.70, 12.50, 12.160, 12.280, 12.300, 12.310, 12.370, 12.480, 12.740, 12.800 Seagate Shipping Ltd v Glencore International AG (The Silver Constellation) [2008] 2 Lloyd’s Rep 440 ........................................................................................................................................... 14.140 Seamen’s Union of Australia v Australian Dredging & General Works Pty Ltd (1968) 129 CAR 29 .......................................................................................................................... 1.200, 1.220 Searoad Shipping Co v EI du Pont de Nemours 361 F 2d 833 (5th Cir 1966) ........... 12.340, 12.560 Seas Sapfor Forests Pty Ltd v Electricity Trust of South Australia (1996) 187 LSJS 369 ...... 15.180, 15.190, 19.230 Seath & Co Ltd v Moore (1886) 11 App Cas 350 .......................................................................... 6.30 Seatrade Groningen BV v Geest Industries Ltd (The Frost Express) [1996] 2 Lloyd’s Rep 375 ..................................................................................................................................... 14.30 Seavision Investment SA v Evennett (The Tiburon) [1990] 2 Lloyd’s Rep 418 .......... 17.160, 17.580 Sedco Inc v S/S Strathewe 800 F 2d 27; 1986 AMC 2801 (2d Cir 1986) ...... 12.340, 12.440, 12.560 Sedgwick Tomenson Inc v PT Reasuransi Umum Indonesia [1990] 2 Lloyd’s Rep 334 .......... 17.160 Segovia Compagnia Naviera SA v R Pagnan & Fratelli (The Aragon) [1977] 1 Lloyd’s Rep 343 ................................................................................................................................... 14.190 Seguros Illimani SA v M/V Popi P 929 F 2d 89; 1991 AMC 1521 (2d Cir 1991) .................. 12.560 Seismic Shipping Inc v Total E&P UK Plc (The Western Regent) [2005] 2 Lloyd’s Rep 359 ......................................................................................................... 16.230, 16.240, 16.260 Seismic Shipping Inc v Total E&P UK Plc (The Western Regent) [2005] 2 Lloyd’s Rep 54 ..................................................................................................................................... 16.260 Sellers Fabrics Pty Ltd v Hapag-Lloyd AG [1998] NSWSC 644 .................... 12.300, 12.530, 12.820 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1995] 2 Lloyd’s Rep 44 ............................................................................................. 20.700, 20.730, 20.740 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1996] 1 Lloyd’s Rep 449 ...................................................................................................................... 20.730 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1997] AC 455; [1997] 1 Lloyd’s Rep 323 ............................. 18.90, 20.700, 20.730, 20.750, 20.760, 20.770 Senator Linie GmbH & Co KG v Sunway Line Inc 291 F 3d 145; 2002 AMC 1217 (2d Cir 2002) ........................................................................................................................... 12.650 Servicios-Expoarma CA v Industrial Maritime Carriers Inc 135 F 3d 984; 1998 AMC 1453 (5th Cir 1998) ........................................................................................................................................ 12.600 Servicios-Expoarma CA v Industrial Maritime Carriers Inc 135 F 3d 988; 1998 AMC 1457 (5th Cir 1998) ........................................................................................................................................ 12.600 Seven Seas Transportation Ltd v Atlantic Shipping Co SA [1975] 2 Lloyd’s Rep 188 ............ 14.320 Seven Seas Transportation Ltd v Pacifico Union Marina Corp (The Satya Kailash and Oceanic Amity) [1984] 1 Lloyd’s Rep 588 .......................................................................................... 12.390 Seward v Owner of the Vera Cruz: The Vera Cruz (1884) 10 App Cas 59 ................................. 8.140

Table of Cases lix Sewell v Burdick (1884) 10 App Cas 74 .......................................................... 12.270, 12.630, 12.760 Shagang Shipping Co Ltd v Ship “Bulk Peace” (2014) 314 ALR 230 ............................ 16.50, 19.50 Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501 .......... 17.20, 17.30, 17.40, 17.90, 17.100 Shelford v Mosey [1917] 1 KB 154 .............................................................................................. 8.230 Shell International Petroleum Co Ltd v Gibbs (The Salem) [1983] 1 Lloyd’s Rep 342 ........... 17.220 Shell International Petroleum Ltd v Seabridge Shipping Ltd (The Metula) [1978] 2 Lloyd’s Rep 5 ....................................................................................................................................... 13.660 Shell Oil Co v The Ship Lastrigoni (1974) 131 CLR 1 ................................................................ 8.330 Shell UK Ltd v CLM Engineering Ltd [2000] 1 Lloyd’s Rep 612 .............................. 17.270, 17.290 Sherbro, The (1883) 5 Asp MLC 88 ..................................................................................... 9.30, 10.20 Ship Betty Ott, The v General Bills Ltd: The Betty Ott [1992] 1 NZLR 655 ............................ 8.590 Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369 ....... 5.50, 5.100, 7.30, 8.280, 8.450, 9.70, 14.440, 14.470 Ship Korowa v Ship Kooraka [1949] SASR 45 ............................................... 20.460, 20.480, 20.490 Ship MV Santo Rocco Di Bagnara, The (1991) 101 ALR 491 .................................................. 20.390 Ship Marlborough Hill, The v Cowan & Sons Ltd [1921] 1 AC 444 ........................................ 12.100 Ship Socofl Stream, The v CMC (Australia) Pty Ltd [2001] FCA 961 .......... 12.320, 12.700, 12.710, 12.810, 14.420 Ship Texaco Southampton v Burley [1982] 2 NSWLR 336 .. 20.240, 20.350, 20.380, 20.660, 20.670 Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 ................................................................ 12.150, 12.280, 12.310, 12.370, 12.400, 12.410 Shipping Corp of India Ltd v NSB Niederelbe Schiffahrtsgesellschaft mbH & Co (The Black Falcon) [1991] 1 Lloyd’s Rep 77 ........................................................................................... 14.240 Shipping Corporation of India Ltd v Naviera Letasa SA [1976] 1 Lloyd’s Rep 132 ............... 14.180 Shipping Developments Corp v V/O Sojuzneftexport: The Delian Spirit [1972] 1 QB 103 ... 13.190, 13.200 Shizelle, The [1992] 2 Lloyd’s Rep 444 ............................................................................ 10.50, 10.60 Showa Oil Tanker Co Ltd of Japan v Maravan SA of Caracas (The Larissa) [1983] 2 Lloyd’s Rep 325 ............................................................................................................................................. 14.80 Sibley v Kais (1967) 118 CLR 424 .............................................................................................. 15.110 Sidermar SpA v Apollo Corporation (The Apollo) [1978] 1 Lloyd’s Rep 200 .......................... 14.330 Sidney Cooke Ltd v Hapag-Lloyd Aktiengesellschaft [1980] 2 NSWLR 587 ............. 12.370, 12.820 Sierra Leone, Government of v Marmaro Shipping Co Ltd (The Amazona and Yayamaria) [1989] 2 Lloyd’s Rep 130 ........................................................................................................ 12.580, 12.590 Sig Bergesen DY A/S v Mobil Shipping and Transportation Co (The Berge Sund) [1992] 1 Lloyd’s Rep 460 ................................................................................................................................... 14.330 Sig Bergesen DY A/S v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453 ......................................................................................................... 12.650, 14.330, 14.380 Silia, The [1981] 2 Lloyd’s Rep 534 ............................................................................................... 1.40 Silver v Ocean Steamship Co Ltd [1930] 1 KB 416 ..................................................... 12.150, 12.470 Simon v Taylor [1975] 2 Lloyd’s Rep 338 ...................................................................... 20.400, 21.70 Simpson v Thomson (1877) 3 App Cas 279 .................................................................................. 15.20 Singer Co (UK) Ltd v Tees and Hartlepool Port Authority [1988] 2 Lloyd’s Rep 164 ............ 12.840 Sir Henry Constable’s Case (1601) 5 Co Rep 106a; 77 ER 218 ......................... 20.630, 21.50, 21.80 Sir James Laing & Sons Ltd v Barclay, Curle & Co Ltd [1908] AC 35 ....................................... 6.30 Sir John Jackson Ltd v Owners of the Steamship Blanche [1908] AC 126 ....................... 5.50, 5.100 Sisters, The (1804) 5 C Rob 155; 165 ER 731 ............................................................................. 6.190 Sivewright v Allen [1906] 2 KB 81 ............................................................................................... 3.510 Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 ............ 12.410, 17.200, 17.220, 17.290, 17.300, 17.600 Skandia Insurance Co Ltd v Star Shipping A/S 173 F Supp 2d 1228; 2001 AMC 1527 (SD Ala 2001) ........................................................................................................................................ 12.420 Skarp, The [1935] P 134 ................................................................................................. 12.120, 12.150 Skibsaktieselskapet Snefonn, Skibsaktieselskapet Bergehus & Sig Bergesen DY & Co v Kawasaki Kisen Kaisha Ltd (The Berge Tasta) [1975] 1 Lloyd’s Rep 422 ............................ 14.170, 14.240 Skips A/S Nordheim v Syrian Petroleum Co Ltd (The Varenna) [1983] 2 Lloyd’s Rep 592 ... 12.720

lx

Table of Cases

Slade v JJ Sullivan Ltd (1920) 21 SR (NSW) 90 ....................................................................... 15.200 Slattery v Mance [1962] 1 QB 676 .............................................................................................. 17.110 Smaragd, The (1927) 28 Ll L Rep 302 ........................................................................................ 20.160 Smith v Beaver (1876) 2 VLR (L) 110 ........................................................................................ 13.540 Smith v Blair (1884) 5 ALT 177 ........................................................................................... 8.280, 9.50 Smith v Brown (1871) 6 QB 729 ................................................................................................... 8.140 Smith v Chadwick (1884) 9 App Cas 187 ................................................................................... 17.110 Smith v Dart & Son (1884) 14 QBD 105 ......................................................... 13.140, 13.200, 14.180 Smith v Perese [2006] NSWSC 288 ................................................................................... 16.20, 16.80 Smith v Plummer (1818) 1 B & Ald 575; 106 ER 212 ....................................................... 8.90, 8.270 Smith, Hogg & Co v Black Sea and Baltic General Insurance Co [1940] AC 997 .................. 12.370 Smithers v Lokys (2001) 108 FCR 303 ............................................................................ 16.30, 16.160 Smith’s Dock Co Ltd v The St Merriel (Owners): The St Merriel [1963] P 247 ....................... 8.620 Snia Societa di Navigazione Industria e Commercio v Suzuki & Co (1924) 17 Ll L Rep 78 ..................................................................................................................................... 14.130 Snia Societa di Navigazione Industria e Commercio v Suzuki & Co (1924) 18 Ll L Rep 333 ...................................................................................................................... 14.120, 14.130 Sociedad Carga Oceania SA v Idolinoele Vertriebs GmbH (The Angelos Lusis) [1964] 2 Lloyd’s Rep 28 ..................................................................................................................................... 13.190 Sociedad Financiera de Bienes Raices SA v Agrimpex Hungarian Trading Company for Agricultural Products (The Aello) [1961] AC 135 ..................................................................................... 13.200 Societe Anonyme Marocaine de L’Industrie du Raffinage v Notos Maritime Corporation (The Notos) [1987] 1 Lloyd’s Rep 503 ............................................................................. 13.260, 13.460 Societe Belge des Batons SA v London & Lancashire Insurance Co Ltd (1938) 60 Ll L Rep 225 ................................................................................................................................... 17.400 Societe Navale de L’Ouest v RWJ Sutherland & Co (1920) 4 Ll L Rep 58 ............................... 14.50 Société Maritime Caledonienne v The Cythera [1965] NSWR 146 ... 20.170, 20.200, 20.490, 20.520 Société Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] 1 AC 871 ............................ 16.260 Solway v Lumley General Insurance Co Ltd (2003) 12 ANZ Insurance Cases 61-567; [2003] QCA 136 ........................................................................................................................................... 17.610 Solway Prince, The [1896] P 120 ................................................................................... 20.410, 20.660 Somelas Corporation v A/S Gerrards Rederi (The Pantelis A Lemos) [1980] 2 Lloyd’s Rep 102 ................................................................................................................................... 14.510 Sompo Japan Insurance Co of America v Norfolk Southern Railway Co 762 F 3d 165 (2d Cir 2014) ........................................................................................................................................ 12.740 Son Shipping Co Inc v De Fosse & Tanghe 199 F 2d 687 (2nd Cir 1952) .............................. 12.590 Soproma SpA v Marine & Animal By-Products Corp [1966] 1 Lloyd’s Rep 367 .................... 12.760 Sorrell v Paget [1950] 1 KB 252 ................................................................................................. 20.440 South Australian Voluntary Wheat Pool v Owners of the Riol (1926) 24 Ll L Rep 363 .......... 13.440 Southern Centre of Theosophy Inc v South Australia (1979) 145 CLR 246 ............................... 2.290 Southport Corp v Esso Petroleum Co Ltd [1953] 2 All ER 1204 .............................................. 19.210 Southport Corp v Esso Petroleum Co Ltd [1954] 2 QB 182 ...................................................... 19.210 Soya GmbH Mainz Kommanditgesellschaft v White [1982] 1 Lloyd’s Rep 136 ...................... 17.270 Soya GmbH Mainz Kommanditgesellschaft v White [1983] 1 Lloyd’s Rep 122 ...................... 17.270 Spalmatori, The [1962] 2 Lloyd’s Rep 175 ................................................................................. 13.460 Spalmatori, The (see Compania Naviera Aeolus SA v Union of India [1964] AC 868) ........... 13.460 Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2015] 2 Lloyd’s Rep 407 ...................................................................................................................... 14.250, 14.310 Spartus Corp v S/S Yafo 590 F 2d 1310; 1979 AMC 2294 (5th Cir 1979) ................. 12.340, 12.560 Spermina, The (1923) 17 Ll L Rep 17 ............................................................................................. 7.90 Spermina, The (1923) 17 Ll L Rep 52 ............................................................................................. 7.90 Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 ............................................................ 16.250 Spirit of the Ocean, The (1865) 12 LT 239 ................................................. 5.130, 5.190, 5.200, 5.210 Splosna Plovba of Piran v Agrelab Steamship Corp (The Bela Krajina) [1975] 1 Lloyd’s Rep 139 ................................................................................................................................... 14.330 Stag Line Ltd v Ellerman & Papayanni Lines Ltd (1949) 82 Ll L Rep 826 ............................. 14.380 Stag Line Ltd v Foscolo Mango & Co Ltd [1932] AC 328 .......................................... 12.330, 12.340

Table of Cases lxi Stainbank v Fenning (1851) 11 CB 51; 138 ER 389 ............................................................. 9.50, 9.70 Stainbank v Shepard (1853) 13 CB 418; 138 ER 1262 ............................................. 8.280, 9.50, 9.70 Stamp Duties (NSW), Commissioner of v Millar (1932) 48 CLR 618 ........................................ 2.210 Stamps (Qld), Commissioner of v Counsell (1937) 57 CLR 248 ................................................. 2.210 Standard Chartered Bank v Dorchester LNG (2) Ltd (The Erin Schulte) [2013] 2 Lloyd’s Rep 338 ................................................................................................................................... 12.770 Standard Chartered Bank v Dorchester LNG (2) Ltd (The Erin Schulte) [2015] 1 Lloyd’s Rep 97 ........................................................................................................... 12.100, 12.670, 12.770 Standard Chartered Bank v Pakistan National Shipping Corp (No 4) [2001] QB 167 ............. 12.110 Stanton v Austin (1872) LR 7 CP 651 ........................................................................... 13.160, 13.210 Stapleton v Haymen (1864) 2 H & C 918; 159 ER 380 ........................................ 5.170, 5.190, 5.200 Star Sea, The [2001] 1 Lloyd’s Rep 389 ............................................... 17.90, 17.270, 17.440, 17.630 Star Steamship Society v Beogradska Plovidba (The Junior K) [1988] 2 Lloyd’s Rep 583 ...... 11.70, 13.30, 14.30 Stargas SpA v Petredec Ltd (The Sargasso) [1994] 1 Lloyd’s Rep 412 ....................... 14.150, 14.400 State Bank of New South Wales Ltd v Swiss Bank Corp (1995) 39 NSWLR 350 .................. 13.440 State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412 ........................... 16.100 State Trading Corp of India v Doyle Carriers Inc (The Jute Express) [1991] 2 Lloyd’s Rep 55 ....................................................................................................................................... 18.80 State of the Netherlands v Youell [1998] 1 Lloyd’s Rep 236 ..................................................... 17.220 Steamship Isis Co Ltd, The v Bahr [1900] AC 340 .................................................................... 13.530 Steedman v Scofield [1992] 2 Lloyd’s Rep 163 ............................................ 1.20, 1.200, 1.210, 1.240 Steel v The State Line Steamship Co (1877) 3 App Cas 72 ...................................................... 13.600 Steel, Young & Co v Grand Canary Coaling Co (1902) 7 Com Cas 213 .................................. 13.430 Steel Coils Inc v M/V Lake Marion 331 F 3d 422 (5th Cir 2003) ............................................ 12.300 Steel Warehouse Co Inc v Abalone Shipping Ltd of Nicosai 141 F 3d 234; 1998 AMC 2054 (5th Cir 1998) .................................................................................................................................. 12.720 Steelwood Carriers Inc of Monrovia, Liberia v Evimeria Compania Naviera SA of Panama (The Agios Giorgis) [1976] 2 Lloyd’s Rep 192 .................................................. 14.320, 14.440, 14.550 Stella Antares, The [1978] 1 Lloyd’s Rep 41 ................................................................................ 15.80 Stephens v Broomfield: The Great Pacific (1869) LR 2 PC 516 ........................................ 9.50, 20.80 Stern v McArthur (1988) 165 CLR 489 ...................................................................................... 14.440 Stettin, The (1889) 14 PD 142 ..................................................................................................... 12.770 Steven v Bromley & Son [1919] 2 KB 722 ................................................................................ 13.520 Stewart v Aberdein (1838) 4 M & W 211; 150 ER 1406 ........................................................... 17.640 Stindt v Roberts (1848) 17 LJQB 166 ......................................................................................... 12.680 Stocznia Gdanzska SA v Latvian Shipping Co [1995] 2 Lloyd’s Rep 592 ............................... 14.250 Stocznia Gdanzska SA v Latvian Shipping Co [1996] 2 Lloyd’s Rep 132 ............................... 14.250 Stolt Tank Containers Inc v Evergreen Marine Corp 962 F 2d 276; 1992 AMC 2015 (2d Cir 1992) .............................................................................................................. 12.370, 12.560 Stolt Tankers Inc v Landmark Chemicals SA (The Stolt Spur) [2002] 1 Lloyd’s Rep 786 ..... 13.420, 13.470 Stonedale No 1, The [1955] 2 Lloyd’s Rep 9 ............................................................................... 16.90 Stork, The [1955] 1 Lloyd’s Rep 349 ............................................................................................ 13.70 Strang, Steel & Co v A Scott & Co (1889) 14 App Cas 601 ....................................................... 18.80 Strathlorne Steamship Co Ltd v Andrew Weir & Co (1934) 49 Ll L Rep 306 ......................... 14.390 Strathnaver, The (1875) 1 App Cas 58 ......................................................................................... 20.350 Stream Fisher, The [1927] P 73 .......................................................... 8.350, 8.390, 8.440, 8.620, 9.90 Strive Shipping Corp v Hellenic Mutual War Risks Assoc (The Grecia Express) [2002] 2 Lloyd’s Rep 88 ........................................................................................................................ 17.220, 17.290 Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555 ............................ 16.10, 16.30, 16.40, 16.160, 16.170, 19.270, 19.280 Suek AG v Glencore International AG (The Hang Ta) [2011] 2 Lloyd’s Rep 278 ................... 13.180 Suez Fortune Investments Ltd v Talbot Underwriting Ltd (The Brillante Virtuoso) [2015] 1 Lloyd’s Rep 651 ................................................................................................................................... 17.420 Sumitomo Corp v CV Scheepvaartonderneming Emmagracht (2009) 260 ALR 264 ................ 12.740 Sumitomo Corp of America v M/V Saint Venture 683 F Supp 1361 (MD Fla 1988) .............. 12.170

lxii Table of Cases Sunshine Fisheries v Lambert-Bain Pty Ltd (1991) 6 ANZ Insurance Cases 61-069 ............... 17.440 Superfos Chartering A/S v NBR (London) Ltd (The Saturnia) [1987] 2 Lloyd’s Rep 43 ........ 13.460 Surrey Shipping Co Ltd v Compagnie Continentale (France) SA (The Shackleford) [1978] 2 Lloyd’s Rep 154 ...................................................................................................................... 13.210 Sutherland v Pratt (1843) 11 M & W 296; 152 ER 815 ............................................................... 17.30 Sutherland v Pratt (1843) 12 M & W 16; 152 ER 1092 ............................................................... 17.50 Sutherland Shire Council Council v Heyman (1985) 157 CLR 424 ............................................ 15.50 Svenska Traktor Akt v Maritime Agencies (Southampton) Ltd [1953] 2 QB 295 .................... 12.340 Swan, Hunter & Wigham Richardson Ltd (Titan) v Benwood (1923) 14 Ll L Rep 484 ............ 1.210 Sweeting v Pearce (1861) 9 CB (NS) 534; 142 ER 210 ............................................................ 17.640 Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd (1997) 74 FCR 205 ............. 17.580, 17.610, 17.620 Sydney Cove, The (1815) 2 Dods 11; 165 ER 1399 ..................................... 8.90, 8.390, 8.480, 8.580 Sylph, The (1867) LR 2 A & E 24 ................................................................................................ 8.160 Sylvan Arrow, The [1923] P 220 .................................................................................................... 8.150 Symington v Union Insurance Society of Canton (No 2) (1928) 34 Com Cas 233 .................... 17.90 Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] AC 576 ............................................ 12.770

T TA Shipping Ltd v Comet Shipping Ltd (The Agamemnon) [1998] 1 Lloyd’s Rep 675 .......... 13.210 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 ........ 13.520, 13.540 TJ Stevenson & Co Inc v 81,193 Bags of Flour 629 F 2d 338 (5th Cir 1980) ......................... 12.110 TM Noten BV v Harding [1989] 2 Lloyd’s Rep 527 ................................................................. 17.270 TM Noten BV v Harding [1990] 2 Lloyd’s Rep 283 ................................................................. 17.270 TS Lines Ltd v Delphis NV (The TS Singapore) [2009] 2 Lloyd’s Rep 54 ............................. 14.330 TW Thomas & Co Ltd v Portsea Steamship Co Ltd: The Portsmouth [1912] AC 1 ................ 12.720 Ta Chi Navigation (Panama) Corp SA, In re 513 F Supp 148; 1981 AMC 2350 (ED La 1981) ............................................................................................................. 12.300, 12.390 Ta Chi Navigation Corp SA, In re 677 F 2d 225; 1982 AMC 1710 (2d Cir 1982) .................. 12.400 Tacko v Talacko [2009] VSC 579 ................................................................................................ 13.440 Tacoma City, The [1991] 1 Lloyd’s Rep 330 ..................................................................... 8.380, 10.20 Tagart, Beaton & Co v James Fisher & Sons [1903] 1 KB 391 ................................................ 14.560 Tagus, The [1903] P 44 ....................................................................................................... 8.290, 8.450 Talbot Underwriting Ltd v Nausch, Hogan & Murray Inc (The Jascon 5) [2006] 2 Lloyd’s Rep 195 ..................................................................................................................................... 17.40 Tame v New South Wales; Annetts v Australian Stations Pty Ltd (2002) 211 CLR 317 ......... 16.100 Tamini v Salen Dry Cargo AB 866 F 2d 741; 1989 AMC 892 (5th Cir 1989) ......................... 12.560 Tamvaco v Simpson (1866) LR 1 CP 363 ................................................................................... 12.710 Tankexpress A/S v Compagnie Financiere Belge des Petroles SA (The Petrofina) [1949] AC 76 ......................................................................................................................... 14.170, 14.440 Tantalus (Master and Crew) v Telemachus, her Cargo and Freight (Owners): The Telemachus [1957] P 47 .............................................................................................................................. 20.510 Taokas Navigation SA v Komrowski Bulk Shipping KG (The Paiwan Wisdom) [2012] 2 Lloyd’s Rep 416 ................................................................................................................................... 14.370 Tapco Nigeria Ltd v M/V Westwind 702 F 2d 1252 (5th Cir 1983) .......................................... 12.490 Tarbert, The [1921] P 372 ............................................................................................................. 20.250 Tarcoma City, The [1990] 1 Lloyd’s Rep 408 ................................................................... 8.220, 8.230 Tarcoma City, The [1991] 1 Lloyd’s Rep 330 ................................................................... 8.220, 8.230 Tasman Express Line Ltd v JI Case (Australia) Pty Ltd (The Canterbury Express) (1992) 111 FLR 108 .............................................................................................................................. 12.340, 13.620 Tasman Orient Line CV v Alliance Group Ltd (unreported, NZ High Ct, Williams J, 21 August 2003) ........................................................................................................................................ 16.160 Tasman Orient Line CV v New Zealand China Clays Ltd (The Tasman Pioneer) [2010] 3 NZLR 1 .................................................................................................................... 12.390 Tata Ltd & Global Marine Transportation Inc [1999] 2 Lloyd’s Rep 129 ................................. 12.840 Taylor v Caldwell (1863) 3 B & S 826; 122 ER 309 ................................................................. 14.480

Table of Cases lxiii Telfair Shipping Corporation v Athos Shipping Co SA (The Athos) [1981] 2 Lloyd’s Rep 74 ..................................................................................................................................... 14.290 Telfair Shipping Corporation v Athos Shipping Co SA (The Athos) [1983] 1 Lloyd’s Rep 127 ...................................................................................................................... 14.290, 14.460 Temperley Steam Shipping Co v Smyth & Co [1905] 2 KB 791 .............................................. 12.700 Temple Steamship Co Ltd v V/O Sovfracht (1945) 79 Ll L Rep 1 ........................................... 14.280 Tempus Shipping Co v Louis Dreyfus & Co [1930] 1 KB 699 ................................................. 12.400 Tergeste, The [1903] P 26 ............................................................ 8.230, 8.400, 8.470, 9.20, 9.30, 9.40 Terman Foods Inc v Omega Lines 707 F 2d 1225 (11th Cir 1983) ........................................... 12.510 Tervaete, The [1922] P 259 ................................................................................ 8.30, 8.50, 8.80, 8.460 Tessler Bros (BC) v Italpacific Line 494 F 2d 438; 1974 AMC 937 (9th Cir 1974) ................ 12.560 Teys Bros (Beenleigh) Pty Ltd v ANL Cargo Operations Pty Ltd [1990] 2 Qd R 288 ............ 12.610 Thames and Mersey Marine Insurance Co Ltd v Hamilton, Fraser & Co (1887) 12 App Case 484 ..................................................................................................................... 17.220, 17.290 Tharsis Sulphur & Copper Co v Loftus (1872) LR 8 CP 1 .......................................................... 18.50 Themistocles (Owners) v Compagnie Intercontinentale de L’Hyperphosphate of Tangier (The Themistocles) (1949) 82 LI L Rep 232 ................................................................................. 13.500 Theta, The [1894] P 280 ...................................................................................................... 8.130, 8.160 Thiess Brothers (Qld) Pty Ltd v Australian Steamships Pty Ltd [1955] 1 Lloyd’s Rep 459 ... 12.330, 12.340 Thomas v Tyne and Weir Steam Ship Freight Insurance Assoc [1917] 1 KB 938 ...... 17.270, 17.600 Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353 .................................................................................................................................. 13.620 Thomas Wilson, Sons & Co v Owners of the Cargo per the Xantho: The Xantho (1887) 12 App Cas 503 .................................................................................................................................... 12.410 Thomasson Shipping Co Ltd v Peabody & Co Ltd [1959] 2 Lloyd’s Rep 297 ........................ 13.500 Thompson v Gillespy (1855) 5 El & Bl 209; 119 ER 459 ......................................................... 13.590 Thompson v H & W Nelson Ltd [1913] 2 KB 523 ........................................................... 8.230, 8.240 Thompson v Masterson [2004] 1 Lloyd’s Rep 304 ..................................................................... 16.100 Thompson v Smith (1815) 1 Madd 395; 56 ER 145 .................................................................... 10.30 Thomson v Louis Dreyfus & Co (1936) 56 Ll L Rep 44 ........................................................... 14.420 Thomson & Co and Brocklebank Ltd, Re [1918] 1 KB 655 ...................................................... 14.100 Thor Navigation Inc v Ingosstrakh Insurance [2005] 1 Lloyd’s Rep 547 .................................. 17.140 Thoresen & Co (Bangkok) Ltd v Fathom Marine Co Ltd [2004] 1 Lloyd’s Rep 62 .................. 13.30 Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243 ........................... 12.590, 13.30 Thyssen Steel Co v M/V Kavo Yerakas 50 F 3d 1349; 1995 AMC 2317 (5th Cir 1995) ....... 12.810, 12.820 Tibermede v Graham (1921) 7 Ll L Rep 250 .............................................................................. 14.100 Tiburnia (No 1), The (1887) 8 LR (NSW) (A) 1 .......................................................................... 8.440 Ticonderoga, The (1857) Swa 215; 166 ER 1103 ......................................................................... 8.150 Tidebrook Maritime Corp v Vitol SA (The Front Commander) [2006] 2 Lloyd’s Rep 251 .... 13.140, 13.210 Tigress, The (1863) Br & L 38; 167 ER 286 .............................................................................. 12.770 Tillmanns & Co v S/S Knutsford Ltd [1908] 1 KB 185 ............................................................. 12.810 Tillmanns & Co v S/S Knutsford Ltd [1908] 2 KB 385 ............................................................. 12.820 Tillmanns & Co v S/S Knutsford Ltd [1908] AC 406 ................................................... 12.810, 12.820 Timber Shipping Co SA v London & Overseas Freighters Ltd [1972] AC 1 .............. 14.220, 14.240 Tisand Pty Ltd v Owners of Ship MV Cape Moreton (Ex parte Freya) (2005) 143 FCR 43 ..... 5.10, 5.100, 6.190 Tobago, The (1804) 5 C Rob 218; 165 ER 754 .............................................................................. 9.70 Todd v Adams and Chope (t/a Trelawney Fishing Co) (The Maragetha Maria) [2002] 2 Lloyd’s Rep 293 ........................................................................................................................................... 16.150 Todd Shipyards Corp v Altema Compania Maritima SA (1973) 32 DLR (3d) 572 .................... 8.590 Tokio Marine & Fire Insurance Co v M/V Saffron Trader 257 F Supp 2d 651 (SDNY 2003) ........................................................................................................................... 12.590 Tokio Marine & Fire Insurance Co v Retla Steamship Co 426 F 2d 1372 (9th Cir 1970) ....... 12.170 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 ........................................... 12.740

lxiv Table of Cases Tolten, The [1946] P 135 ... 1.320, 1.330, 8.20, 8.50, 8.120, 8.130, 8.170, 8.380, 8.450, 8.470, 10.20 Tonnelier v Smith (1897) 2 Com Cas 258 ................................................................................... 14.320 Topaloglu v P & O Nedlloyd Ltd [2006] QSC 17 ...................................................................... 12.610 Tor Line AB v Alltrans Group of Canada Ltd (The TFL Prosperity) [1982] 1 Lloyd’s Rep 617 ................................................................................................................................... 14.100 Tor Line AB v Alltrans Group of Canada Ltd (The TFL Prosperity) [1984] 1 Lloyd’s Rep 123 ................................................................................................................................... 14.100 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1992] 2 Lloyd’s Rep 40 .......... 14.210, 14.240 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 .......... 14.10, 14.170, 14.210, 14.220, 14.230, 14.240, 14.360 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 .......................................................... 14.10, 14.170, 14.210, 14.220, 14.230, 14.240, 14.360 Toshiba Corp v Mitsui OSK Lines Ltd (The Nichigoh Maru) (unreported, NSW Sup Ct, 1991) ........................................................................................................................... 12.530, 12.570 Total Transport Corporation v Amoco Trading Co (The Altus) [1985] 1 Lloyd’s Rep 423 ..... 13.470, 13.540 Tower Bridge, The [1936] P 30 ...................................................................................... 20.140, 20.200 Townsville Harbour Board v Scottish Shire Line Ltd (1914) 18 CLR 306 ................................. 15.30 Tradax Export SA v Dorada Compania Naviera SA (The Lutetian) [1982] 2 Lloyd’s Rep 140 ................................................................................................................................... 14.340 Trade, Board of v Hain Steamship Co [1929] AC 534 ............................................................... 17.310 Trade Star Line Corp v Mitsui & Co Ltd (The Arctic Trader) [1996] 2 Lloyd’s Rep 449 ...... 12.100, 14.420 Tradigrain SA v King Diamond Shipping SA (The Spiros C) [2000] 2 Lloyd’s Rep 319 ...... 14.470, 14.560 Tradigrain SA v SIAt SPA [2002] 2 Lloyd’s Rep 553 ................................................................ 17.160 Trafigura Beheer BV v Golden Stavreatos Maritime Inc (The Sonia) [2003] 2 Lloyd’s Rep 201 ................................................................................................................................... 12.600 Trafigura Beheer BV v Ravennavi SpA (The Port Russel) [2013] 2 Lloyd’s Rep 57 ............... 13.210 Tramp Shipping Corp v Greenwich Marine Inc (The New Horizon) [1975] 2 Lloyd’s Rep 314 ................................................................................................................................... 13.380 Tramp Shipping Corporation v Greenwich Marine Inc (The New Horizon) [1975] 2 Lloyd’s Rep 314 ........................................................................................................................................... 13.380 Transamerican Steamship Corp v Tradax Export SA (The Oriental Envoy) [1982] 2 Lloyd’s Rep 266 ........................................................................................................................................... 13.210 Transatlantic Marine Claims Agency Inc v M/V OOCL Inspiration 137 F 3d 94; 1998 AMC 1327 (2d Cir 1998) ........................................................................................................................... 12.160 Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2007] 1 Lloyd’s Rep 19; [2007] 2 Lloyd’s Rep 555 .................................................................................................................. 14.240 Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] 1 AC 61 .................. 14.240 Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) [1990] 1 Lloyd’s Rep 507 ................................................................................................................. 13.160, 13.210, 13.650 Transocean Liners Reederei GmbH v Euxine Shipping Co Ltd (The Imvros) [1999] 1 Lloyd’s Rep 848 ........................................................................................................................................... 14.400 Transoceanic Petroleum Carriers v Cook Industries Inc (The Mary Lou) [1981] 2 Lloyd’s Rep 272 ................................................................................................................................... 14.300 Transol Bunker BV v MV Andrico Unity 1989 (4) SA 325 ......................................................... 8.590 Transpacific Discovery SA v Cargill International SA (The Elpa) [2001] 2 Lloyd’s Rep 596 ................................................................................................................................... 14.410 Transpetrol Ltd v Ekali Shipping Ltd (The Aghia Marina) [1989] 1 Lloyd’s Rep 62 ........................................................................................................................ 12.580, 12.590 Transpetrol Maritime Services Ltd v SJB (Marine Energy) BV (The Rowan) [2012] 1 Lloyd’s Rep 564 ..................................................................................................................... 14.70, 14.80, 14.140 Transport Commission (Tas) v Neale Edwards Pty Ltd (1954) 92 CLR 214 ............................ 19.240 Transworld Oil (USA) Inc v Minos Compania Naviera SA (The Leni) [1992] 2 Lloyd’s Rep 48 ..................................................................................................................................... 12.590

Table of Cases lxv Travel Compensation Fund v Blair [2003] NSWSC 720 ............................................................ 17.650 Travelers Indemnity Co v Vessel Sam Houston 26 F 3d 895; 1994 AMC 2162 (9th Cir 1994) .......................................................................................................................... 12.560 Travers v Cooper [1915] 1 KB 73 ............................................................................................... 14.400 Trelawney, The (1802) 4 C Rob 223; 165 ER 592 ..................................................................... 20.170 Tres, The (1936) 55 Ll L Rep 16 ................................................................................................. 20.140 Triad Shipping Co v Stellar Chartering & Brokerage Inc (The Island Archon) [1994] 2 Lloyd’s Rep 227 ........................................................................................................................................... 14.380 Triton Navigation Ltd v Vitol SA (The Nikmary) [2004] 1 Lloyd’s Rep 55 .............................................................................................. 13.140, 13.200, 13.470, 13.520 Troilus, The [1950] P 92 ....................................................................... 20.130, 20.140, 20.150, 20.350 Troilus (Cargo Owners) v Glenogle (Owners, Master, Crew) [1951] AC 820 ............ 20.130, 20.150, 20.180 Tromp, The [1921] P 337 ............................................................................................................. 12.120 Tropwood AG v Jade Enterprises Ltd (The Tropwind) [1977] 1 Lloyd’s Rep 397 ................... 14.460 Tropwood AG of Zug v Jade Enterprises Ltd (The Tropwind) [1981] 1 Lloyd’s Rep 45 ........ 14.440 Tropwood AG of Zug v Jade Enterprises Ltd (The Tropwind) [1982] 1 Lloyd’s Rep 232 ..... 14.440, 14.460, 14.520 Trucks & Spares Ltd v Maritime Agencies (Southampton) Ltd [1951] 2 Lloyd’s Rep 345 ..... 12.770 True Blue, The (1843) 2 W Rob 176; 166 ER 721 ..................................................................... 20.660 Truran Earthmovers Pty Ltd v Norwich Union Fire Insurance Society Ltd (1976) 17 SASR 1 ...................................................................................................................................... 17.50 Trustees Executors & Agency Co Ltd v Federal Commissioner of Taxation (1933) 49 CLR 220 .................................................................................................................................... 2.200 Tubacex Inc v M/V Risan 45 F 3d 951; 1995 AMC 1305 (5th Cir 1995) ................... 12.310, 12.450 Tubantia, The [1924] P 78 ............................................................................................... 20.400, 20.630 Tube Products of India v S/S Rio Grande 334 F Supp 1039; 1971 AMC 1629 (SDNY 1971) ........................................................................................................................... 12.810 Tudor Marine Ltd v Tradax Export SA (The Virgo) [1976] 2 Lloyd’s Rep 135 .......... 13.480, 13.650 Tully v Howling (1877) 2 QBD 182 .............................................................................. 14.120, 14.130 Tully Falls, The; United Geophysical Corp v Ship Tully Falls [1975] Qd R 85 ....................... 20.590 Turnbull v Owners of the Ship Strathnaver: The Strathnaver (1875) 1 App Cas 58 ... 20.130, 20.200 Turnbull v The Ship The Esk [1991] ACL Rep 270 Vic 1 ......................................................... 20.480 Turner v Haji Goolam Mahomed Azam [1904] AC 826 .................................. 12.700, 14.420, 14.550 Two Ellens, The (1871) LR 3 A & E 345 ..................................................................................... 5.190 Two Friends, The (1799) 1 C Rob 271; 165 ER 174 .................................................................... 8.190 Two Friends, The (1844) 2 Wm Rob 349; 166 ER 786 ............................................................. 20.450 Tychy, The [1999] 2 Lloyd’s Rep 11 ............................................................................................. 19.50 Tynedale Steam Shipping Co Ltd v Anglo-Soviet Shipping Co Ltd (1936) 54 Ll L Rep 341 ......................................................................................................... 14.130, 14.330, 14.390

U UBC Chartering Ltd v Liepaya Shipping Co Ltd (The Liepaya) [1999] 1 Lloyd’s Rep 649 ... 14.130 UN/FAO World Food Programme v M/V Tay 138 F 3d 197; 1998 AMC 2729 (5th Cir 1998) ........................................................................................................................... 12.430, 12.490 US v Ocean Bulk Ships Inc 248 F 3d 331; 2001 AMC 1487 (5th Cir 2001) .............. 12.280, 12.490 US Shipping Ltd v Leisure Freight & Import Pty Ltd (No 2) [2015] FCA 347 ....................... 12.270 US Steel Products Co v AM Foreign Ins 82 F 2d 752 (2d Cir 1936) ....................................... 12.390 US Titan Inc v Guangzhou Zhen Hua Shipping 241 F 3d 135; 2001 AMC 2080 (2nd Cir 2001) ........................................................................................................................... 13.30 Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (2011) 277 ALR 441 ................................... 13.440 Ugland Trailer, The [1985] 2 Lloyd’s Rep 372 ........................................................................... 14.560 Ugland Trailer, The (see Welsh Irish Ferries Ltd, Re [1986] Ch 471) ....................................... 14.560 Uhla, The (1867) LR 2 A & E 29n ................................................................................................ 8.130 Ullises Shipping Corp v Fal Shipping Co Ltd (The Greek Fighter) [2006] 2 Lloyd’s Rep Plus 99 ..................................................................................................................................... 14.300

lxvi Table of Cases Ulrich Ammann Building Equipment Ltd v M/V Monsun 609 F Supp 87; 1985 AMC 1965 (SDNY 1985) ........................................................................................................................................ 12.560 Undaunted, The (1860) Lush 90; 167 ER 47 .............................................................................. 20.200 Uni-Ocean Lines Pte Ltd v C-Trade SA (The Lucille) [1983] 1 Lloyd’s Rep 387 ................... 14.480 Uni-Ocean Lines Pty Ltd v C-Trade SA (The Lucille) [1984] 1 Lloyd’s Rep 244 ................... 14.300 Unifert International SAL v Panous Shipping Co Inc (The Virginia M) [1989] 1 Lloyd’s Rep 603 ................................................................................................................................... 13.200 Unimac Co Inc v CF Ocean Service Inc 43 F 3d 1434; 1995 AMC 1484 (11th Cir 1995) .... 12.340, 12.560 Union, The (1860) Lush 128; 167 ER 60 ...................................................................................... 8.390 Union Bank of London v Lenanton (1878) 3 CPD 243 ................................ 4.50, 5.180, 6.100, 6.190 Union Insurance Society of Canton v George Wills & Co [1916] 1 AC 281 ............................ 17.150 Union Shipping (NZ) Ltd v Morgan (2002) 54 NSWLR 690 ...................................................... 15.10 Union Steamship Co v The Owners of the Aracan (1874) LR 6 PC 127 .................................... 15.40 Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 ....... 2.210, 2.220, 2.230, 4.130 Union Steamship Co of New Zealand Ltd v Commonwealth (1925) 36 CLR 130 .......... 1.10, 2.270, 2.290, 2.310, 16.20, 16.80 Union Steamship Co of New Zealand Ltd v Ferguson (1969) 119 CLR 191 ...... 8.120, 8.130, 8.160, 8.170 Union Steamship Co of New Zealand Ltd v The Ship Caradale (1937) 60 CLR 633 .............. 15.100 Union of India v EB Aaby’s Rederi [1975] AC 797 ..................................................................... 18.30 Union of India v NV Reederij Amsterdam [1962] 1 Lloyd’s Rep 539 ...................................... 12.300 Union of India v NV Reederij Amsterdam [1963] 2 Lloyd’s Rep 223 ...................................... 12.300 Unique Mariner, The [1978] 1 Lloyd’s Rep 438 ........................................................... 20.410, 20.660 Unique Mariner (No 2), The [1979] 1 Lloyd’s Rep 37 ................................................. 20.410, 20.660 United Nations Children’s Fund v S/S Nordstern 251 F Supp 833 (SDNY 1966) ................... 12.810 United Nations Food and Agriculture Organisation-World Food Programme v Caspian Navigation Inc (The Jay Ganesh) [1994] 2 Lloyd’s Rep 358 .................................................................. 13.200 United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151 ........ 20.450, 20.460, 20.480, 20.490, 20.500 United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 183 ...................... 20.570 United States v Atlantic Mutual Insurance Co 343 US 236; 72 S Ct 666; 96 L Ed 907 (1952) .......................................................................................................................... 15.140 United States Gypsum Transport Co v Dampskibs Aktieselskabet Karmoy 48 F 2d 376 (EDNY 1930) ........................................................................................................................................ 14.180 United States Gypsum Transport Co v Dampskibs Aktieselskabet Karmoy 54 F 2d 1086 (2d Cir 1931) ........................................................................................................................................ 14.180 United States Shipping Co v Empress Assurance Corp [1907] 1 KB 259 ................................... 17.60 United States Shipping Co v Empress Assurance Corp [1908] 1 KB 115 ................................... 17.60 United States Trust Co of New York v Master and Crew of the Ship Ionian Mariner (1997) 77 FCR 563 ............................................................................................................................................. 8.220 Unitramp v Garnac Grain Co Inc (The Hermine) [1979] 1 Lloyd’s Rep 212 ............................. 13.70 Universal Cargo Carriers Corp v Citati [1957] 2 QB 401 .................. 13.520, 13.610, 14.120, 14.130 Universal Leaf Tobacco Co Inc v Companhia De Navegacao Maritime Netumar 993 F 2d 414; 1993 AMC 2439 (4th Cir 1993) ............................................................................................. 12.560 Universal Ruma Co v Mediterranean Shipping Co SA 2001 AMC 110 (SDNY 2000) ............ 12.600 Upcerne, The [1912] P 160 ............................................................................................................. 1.210 Usinas Siderurgicas de Minas Geras, SA-Usiminias v Scindia Steam Navigation Co Ltd 118 F 3d 328; 1997 AMC 2762 (5th Cir 1997) ......................................................................... 12.390, 18.70

V Vagres Compania Maritima SA v Nissho-Iwai American Corp (The Karin Vatis) [1988] 2 Lloyd’s Rep 330 ................................................................................................................................... 13.660 Vallescura, The 293 US 296 (1934) ............................................................................................. 12.280 Van Leer Australia Pty Ltd v Palace Shipping KK (1981) 180 CLR 337 ................................. 12.590

Table of Cases lxvii Vancouver Strikes cases (see Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] AC 691) .......................................................................................................... 13.270, 13.280 Vandyke, The (1882) 5 Asp MLC 17 ........................................................................................... 20.410 Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials LLC (The Alev) [1989] 1 Lloyd’s Rep 138 ........................................................................................................ 12.830, 14.470 Vardinoyannis v Egyptian General Petroleum Corp (The Evaggelos Th) [1971] 2 Lloyd’s Rep 200 ..................................................................................................................................... 13.60 Vaughn v USA 2015 AMC 1482 (CD Cal 2011) ........................................................................ 12.300 Venetico Marine SA v International General Insurance Co Ltd (The Irene EM) [2014] 1 Lloyd’s Rep 349 ................................................................................................................................... 17.290 Venezuela, The [1980] 1 Lloyd’s Rep 393 .................................................................................. 12.810 Venizelos ANE of Athens v Societe Commerciale de Cereales et Financieres SA of Zurich (The Prometheus) [1974] 1 Lloyd’s Rep 350 .......................................................... 13.50, 13.70, 13.410 Venore Transportation Co v M/V Struma 583 F 2d 708; 1978 AMC 2146 (4th Cir 1978) ...... 15.190 Venore Transportation Co v Oswego Shipping Corp 498 F 2d 469 (2nd Cir 1974) ................... 13.70 Ventouris v Mountain (The Italia Express (No 2)) [1992] 2 Lloyd’s Rep 281 .............. 17.10, 17.500 Venture, The [1908] P 218 .............................................................................................................. 5.150 Vera Cruz (No 2), The (1884) 9 PD 96 ......................................................................................... 8.160 Veritas, The [1901] P 304 ...................................................... 8.120, 8.130, 8.170, 8.190, 8.420, 8.440 Verna Trading (Aust) Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 ........ 17.200, 17.580 Versloot Dredging BV v HDI-Gerling Industrie Versicherung BV (The DC Merwestone) [2013] 2 Lloyd’s Rep 131 ........................................................................................................ 17.220, 17.290 Victor, The (1860) Lush 72; 167 ER 38 .......................................................................................... 8.90 Victoria v Commonwealth (1937) 58 CLR 618 .......................................................................... 21.170 Victoria v Hansen [1960] VR 582 ................................................................................................ 19.240 Victoria, The (1867) 37 LJ Adm 12 ............................................................................................... 8.450 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 .......................... 13.550 Victrawl Pty Ltd v Telstra Corp Ltd; Sanko Steamship Co Ltd v Sumitomo Australia Ltd (1995) 183 CLR 595; 117 ALR 347 .................................................................. 16.10, 16.20, 16.30, 16.40 Vinava Shipping Co Ltd v Finelvet AG (The Chrysalis) [1983] 1 Lloyd’s Rep 503 ................ 14.480 Vine, The (1825) 2 Hagg Adm 1; 166 ER 145 .............................................................. 20.200, 20.210 Viro v The Queen (1978) 141 CLR 88 ........................................................................................ 15.190 Vision Air Flight Service Inc v M/V National Pride 155 F 3d 1165; 1999 AMC 1168 (9th Cir 1998) .......................................................................................................................... 12.560 Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 561 ... 17.90, 17.100 Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 575 ................ 17.90 Visscherij v Scottish Metropolitan Assurance Co Ltd (1921) 27 Com Cas 198 ........................ 17.100 Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd (2003) 12 ANZ Insurance Cases 61-572; [2002] VSC 549 ........................................................................................................ 17.280 Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd (No 2) [1998] VSC 135 .................................................................................................................................. 13.440 Vlassopoulos v British and Foreign Marine Insurance Co [1929] 1 KB 187 .............................. 18.20 Vogemann v Zanzibar Steamship Co Ltd (1901) 6 Com Cas 253; (1902) 7 Com Cas 254 ..... 14.330 Volcafe Ltd v Cia Sud Americana de Vapores SA (t/as CSAV) [2015] 1 Lloyd’s Rep 639 ...... 12.50, 12.280, 12.460, 12.480, 12.740 Von Freeden v Hull, Blyth & Co; GP Turner & Co, Third Parties (1906) 10 Asp MLC 247 .... 5.210 Vortigern, The [1899] P 140 ............................................................................................ 12.300, 13.600 Voss v APL Co Pte Ltd [2002] 2 Lloyd’s Rep 707 ........................................................... 11.20, 12.20 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 .......................................... 16.250, 16.260 Vrede, The (1861) Lush 322; 167 ER 143 ..................................................................... 20.290, 20.300

W W & A McArthur Ltd v Queensland (1920) 28 CLR 530 .............................................................. 2.60 W & R Fletcher (New Zealand) Ltd v Sigurd Haavik Aksjeselskap (The Vikfrost) [1980] 1 Lloyd’s Rep 560 ................................................................................................................................... 12.820

lxviii

Table of Cases

W Angliss & Co (Australia) Pty Ltd v Peninsular and Orient Steam Naviation Co [1927] 2 KB 456 ..................................................................................................................... 12.300 W Langley & Sons Ltd v Australian Provincial Assurance Assoc Ltd (1924) 24 SR (NSW) 280 .............................................................................................................................. 17.300 W Millar & Co Ltd v Owners of SA Freden [1918] 1 KB 611 ................................................. 14.100 WD Fairway, The [2009] 2 Lloyd’s Rep 191 ................................................................ 17.370, 17.440 WH (No 1) and The Knight Errant, The [1911] AC 30 ................................................................ 15.40 WMC Engineering Services Pty Ltd v Brambles Holdings Ltd (unreported, WA Sup Ct, Wheeler J, 31 October 1997) .................................................................................................................... 12.840 WMC Engineering Services Pty Ltd v Brambles Holdings Ltd (unreported, WA Sup Ct CA, Kennedy, Wallwork and Anderson JJ, 4 March 1999) .......................................................... 12.840 Wallace v Fielden: The Oriental (1851) 7 Moo PC 398; 13 ER 934 ................................. 8.280, 9.50 Wallace v Kam (2013) 250 CLR 375 .......................................................................................... 15.120 Wallems Rederij A/S v Wm H Muller & Co, Batavia [1927] 2 KB 99 .................................... 13.540 Waller v James (2006) 226 CLR 136 ............................................................................... 15.50, 19.230 Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 ........................ 12.740 Waltraud, The [1991] 1 Lloyd’s Rep 389 ....................................................................... 12.300, 12.370 Walumba, The [1964] 2 Lloyd’s Rep 382 ......................................................... 20.450, 20.460, 20.490 Ward v Beck (1863) 13 CB (NS) 668; 143 ER 265 ..................................................................... 10.60 Warkworth, The (1884) 9 PD 145 .................................................................................................. 1.240 Warrior, The (1862) Lush 476; 167 ER 214 ................................................................................ 20.290 Waterloo, The (1820) 2 Dods 433; 165 ER 1537 ............................................. 20.230, 20.270, 20.320 Watson v RCA Victor Co Inc (1934) 50 Ll L Rep 77 .................................. 1.80, 1.210, 1.220, 1.250 Watson Steamship Co v Merryweather & Co (1913) 18 Com Cas 294 ....................... 14.210, 14.230 Waverley, The (1871) LR 3 A & E 369 ......................................................................... 20.380, 20.660 Wayne Tank and Pump Co Ltd v Employers’ Liability Assurance Corp Ltd [1974] 1 QB 57 ......................................................................................................................... 17.290, 17.310 Weeding v Gaven [1970] QWN 11 .............................................................................................. 15.100 Weeks v Ross [1913] 2 KB 229 ..................................................................................................... 1.240 Wehner v Dene Steam Shipping Co [1905] 2 KB 92 .................................................... 12.810, 14.470 Weiner v Wilsons and Furness-Leyland Lines Ltd (1910) 102 LT 716 ....................................... 1.200 Weir v Union Steamship Co Ltd [1900] AC 525 ........................................................................ 14.380 Wells v Owners of the Gas Float Whitton No 2 [1897] AC 337 ..... 1.20, 1.210, 1.250, 1.260, 20.80, 20.100, 20.520, 20.630 Welsh Irish Ferries Ltd, Re [1986] Ch 471 ................................................................................. 14.560 Wessels v The Asturias 126 F 2d 999 (2d Cir 1942) .................................................................. 12.410 Westbourne, The (1889) 14 PD 132 ............................................................................... 20.350, 20.380 Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389 .. 14.310, 14.320, 14.340, 14.440, 14.450 Western Gear Corp v State Marine Lines Inc 362 F 2d 328 (9th Cir 1966) ............................. 12.600 Western Sealanes Corp v Unimarine SA (The Pythia) [1982] 2 Lloyd’s Rep 160 .................... 14.330 Westfal-Larsen & Co A/S v Colonial Sugar Refining Co Ltd (1960) 77 WN(NSW) 550; [1960] 2 Lloyd’s Rep 206 ...................................................................................................................... 14.180 Westinghouse Electric Corp v M/V Leslie Lykes 734 F 2d 199; 1985 AMC 247 (5th Cir 1984) .......................................................................................................................... 12.400 Westminster, The (1841) 1 W Rob 229; 166 ER 558 ...................................................... 8.190, 20.120 Weston v Huddart Parker Ltd (1922) 23 SR (NSW) 261 ........................................................... 15.170 Westpac Banking Corp v MV Stone Gemini (1999) 110 FCR 47; [1999] 2 Lloyd’s Rep 255 ......................................................................................................... 12.760, 12.770, 13.440 Westpac Banking Corp v MV Stone Gemini [1999] FCA 917 ................................................... 13.440 Westpac Banking Corp v South Carolina National Bank (1986) 60 ALJR 358 ........................ 12.100 Westport (No 4), The [1968] 2 Lloyd’s Rep 559 .......................................................................... 8.230 Westport Coal Co v McPhail [1898] 2 QB 130 .......................................................................... 17.310 Westrac Equipment Pty Ltd v The Ship Assets Venture (2002) 192 ALR 277 .......................... 12.840 Westralian Wheat Farmers Ltd v Westfal-Larsen & Co (1935) 38 WALR 54 ........................... 13.530 Westrup v Great Yarmouth Steam Carrying Co (1889) 43 Ch D 241 .............................. 8.200, 8.320 Westway Coffee Corp v M/V Netuno 675 F 2d 30 (2d Cir 1982) ............................................. 12.210

Table of Cases lxix Whistler International Ltd v Kawasaki Kisen Kaisha Ltd (The Hill Harmony) [2001] 1 AC 638 .............................................................................................. 13.620, 14.10, 14.280, 14.360 White v Crisp (1854) 10 Exch 312; 156 ER 463 .......................................................................... 21.70 White Star, The (1866) LR 1 A & E 68 ...................................................................................... 20.380 White and Carter (Councils) Ltd v McGregor [1962] AC 413 ................................................... 14.250 Whitfield v Parfitt (1851) 4 De G & Sm 240; 64 ER 814 ............................................................ 10.60 Wibau Maschinenfabric Hartman SA v Mackinnon Mackenzie & Co (The Chanda) [1989] 2 Lloyd’s Rep 494 ........................................................................................... 12.340, 12.530, 12.570 Wiggins Teape Australia Pty Ltd v Baltica Insurance Co Ltd (1970) 2 NSWR 77 ................... 17.200 Wild Ranger, The (1863) Br & Lush 84; 167 ER 310 .................................................................. 8.540 Wildman v Blakes (The Petersfield and the Judith Randolph) (1789) Burrell 332; 167 ER 596 ..................................................................................................................................... 15.130 Wiley v Crawford (1861) 30 LJQB 319 ........................................................................................ 3.400 Wilhelm, The (1866) 14 LT 636 ................................................................................................... 13.610 Wilhelm Tell, The [1892] P 337 ................................................................................................... 20.600 Wilkes v Saunion (1877) 7 Ch D 188 ......................................................................................... 10.250 Wilkins, Assignee of Brooke v Carmichael (1779) 1 Doug 101; 99 ER 70 ................................ 8.270 Willcox, Peck & Hughes v Alphonse Weil & Bros 24 F 2d 587; 1928 AMC 64 (SDNY 1927) ............................................................................................................................. 18.60 Willem III, The (1871) LR 3 A & E 487 ....................................................................... 20.100, 20.790 William Beckford, The (1801) 2 C Rob 355; 165 ER 492 ......................................................... 20.460 William Holyman & Sons Pty Ltd v Eyles [1947] Tas SR 11 ..................................................... 4.110 William Holyman & Sons Pty Ltd v Foy & Gibson Pty Ltd (1945) 73 CLR 622 ................... 12.550 William Holyman & Sons Pty Ltd v Marine Board of Launceston (1929) 24 Tas LR 64 ........ 1.200, 1.220, 1.240, 1.250, 15.170, 16.170 William Money, The (1827) 2 Hagg Adm 136; 166 ER 193 ....................................................... 8.570 William Pickersgill & Sons Ltd v London and Provincial Marine and General Insurance Co Ltd [1912] 3 KB 614 ....................................................................................................................... 17.80 William Thomas & Sons v Harrowing Steamship Co [1915] AC 58 ......................................... 13.660 Williams v Allsup (1861) 10 CB (NS) 417; 142 ER 514 .................................................... 9.30, 10.20 Williams v Atlantic Assurance Co Ltd [1933] 1 KB 81 ............................................................... 17.80 Williams Bros v Ed T Agius Ltd [1914] AC 510 ........................................................................ 15.170 Wilson v Boag (1957) 57 SR (NSW) 384 ................................................................................... 17.150 Wilson v Compagnie des Messageries Maritimes (1954) 54 SR (NSW) 258 ........................... 12.270 Wilson v Darling Island Stevedoring and Lighterage Co Ltd (1955) 95 CLR 43 ..................... 12.840 Wilson v Marryat (1798) 8 TR 31; 101 ER 1250 ....................................................................... 17.610 Wilson v Marryat (1799) 1 Bos & Pul 430; 126 ER 993 ........................................................... 17.610 Wilson v Nelson (1864) 5 B & S 354; 122 ER 863 ................................................................... 17.140 Wilson v Ship Tasman (1915) SR (NSW) 128 ............................................................................ 20.360 Wilson v Watts (1891) 12 NSWR (L) 104 .................................................................................. 12.770 Wilson Electric Transformer Co Pty Ltd v Electricity Commission of NSW [1968] VR 330 .. 19.240 Wilsons and Furness-Leyland Lines Ltd v Weiner (1910) 103 LT 168 ....................................... 1.200 Wilston Steamship Co Ltd v Andrew Weir & Co (1925) 22 Ll L Rep 521 .............................. 12.810 Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290 ........ 17.90, 17.610, 17.620, 17.630 Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 .. 17.270, 17.310, 17.440, 17.600 Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297 ..................................................................... 17.270, 17.290, 17.310, 17.440, 17.600, 19.240 Wood v Bell, Rhodes and Moser (1856) 6 El & Bl 355; 119 ER .................................................. 6.30 Woods v Duncan [1946] AC 401 ................................................................................................. 12.300 Woods, Assignee of Alexander Paton, a Bankrupt v Russell (1822) 5 B & Ald 942; 106 ER 1436 .............................................................................................................................. 6.30, 6.40 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 ... 15.50, 15.180, 19.230 World Harmony, The [1967] P 341 .............................................................................................. 15.190 Wotonga, The (1881) 2 LR (NSW) (Adm) 5 .................................................... 20.130, 20.150, 20.170 Wright v Campbell (1767) 4 Burr 2046; 98 ER 66 .................................................................... 12.760 Wulfsberg & Co v SS Weardale (Owners) (1916) 85 LJKB 1717 ................................ 14.440, 14.470

lxx Table of Cases Wunsche Handelsgesellschaft International mbH v Tai Ping Insurance Co Ltd [1998] 2 Lloyd’s Rep 8 ........................................................................................................................... 17.30, 17.50, 17.80 Wye Shipping Co Ltd v Compagnie du Chemin de Fer Paris-Orleans [1922] 1 KB 617 ........ 14.510

Y Yakushiji v Kaisha [2015] FCA 1170 ............................................................................................ 16.70 Yasin, The [1979] 2 Lloyd’s Rep 45 .............................................................................................. 17.50 Yates v Whyte (1838) 4 Bing (NC) 272; 132 ER 793 ................................................................ 17.650 Yemgaz FZCo v Superior Pescadores SA Panama (The Superior Pescadores) [2014] 1 Lloyd’s Rep 660 ................................................................................................................... 12.80, 12.530, 12.550 Yeo v Tatem and Dwerry House Braginton; The Orient (1871) LR 3 PC 696 ............................. 8.40 Yorkshire Dale Steamship Co v Minister of War Transport [1942] AC 691 ............................. 17.290 Yorkshire Insurance Co Ltd v Campbell (1916) 22 CLR 315 .................................................... 17.570 Yorkshire Insurance Co Ltd v Nisbet Shipping Co Ltd [1961] 1 Lloyd’s Rep 479 .................. 17.650 Youell v Bland Welch & Co Ltd [1992] 2 Lloyd’s Rep 127 ...................................................... 17.280 Young v Brander and Dunbar (1806) 8 East 10; 103 ER 248 .......................................... 5.190, 5.210 Young v The Steamboat Key City 20 US 896 (1872) .................................................................. 8.490 Young, Ex parte (1813) 2 V & B 242; 35 ER 311 ....................................................................... 5.130 Young, Master of SS Furnesia v SS Scotia [1903] AC 501 ........................................................... 8.80 Yu v STX Pan Ocean Co Ltd (South Korea) (2013) 223 FCR 189 ............................................. 16.70 Yukong Lines Ltd of Korea v Rendsburg Investments Corp [1998] 1 Lloyd’s Rep 322 ............ 14.30 Yulianto v The Ship Glory Cape (1995) 134 ALR 92 ................................................................ 12.390 Yuzhny Zavod Metall Profil LLC v Eems Beheerder BV (The MV Eems Solar) [2013] 2 Lloyd’s Rep 487 ...................................................................................................................... 12.310, 12.450

Z Z Steamship Co Ltd v Amtorg, New York (1938) 61 Ll L Rep 97 .............................. 13.320, 13.500 Zaglebie Dabrowskie (No 2), The [1978] 1 Lloyd’s Rep 573 .................................................... 15.110 Zephyrus, The (1842) 1 W Rob 329; 166 ER 596 ........................................... 20.240, 20.260, 20.790 Zeta, The (1875) LR 4 A & E 460 ................................................................................... 20.630, 21.70 Zeus Tradition Marine Ltd v Bell (The Zeus V) [2000] 2 Lloyd’s Rep 587 ............................. 17.280 Zigurds, The [1932] P 113 .............................................................................................................. 8.330 Zim Israel Navigation Co Ltd v 3-D Imports Inc 29 F Supp 2d 186; 1999 AMC 1145 (SDNY 1998) .......................................................................................................................................... 18.80 Zim Israel Navigation Co Ltd v Effy Shipping Corp (The Effy) [1972] 1 Lloyd’s Rep 18 ..... 14.310 Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1970] 2 Lloyd’s Rep 409 ... 13.80, 13.210, 13.430, 13.640 Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1971] 2 Lloyd’s Rep 91 ..... 13.80, 13.430, 13.640 Zodiac Maritime Agencies Ltd v Fortescue Metals Group Ltd (The Kildare) [2011] 2 Lloyd’s Rep 360 ........................................................................................................................................... 14.250

Table of Statutes Commonwealth ANL Act 1956: 6.200 Acts Interpretation Act 1901 s 15B(1)(b): 21.180 s 15B(4)(a): 21.180 s 36(2): 12.590

Admiralty Act 1988: 1.40, 1.50, 1.60, 1.70, 1.90, 1.230, 1.290, 5.50, 8.110, 8.120, 8.140, 8.170, 8.260, 8.280, 8.330, 8.340, 8.410, 8.490, 8.510, 8.650, 15.105, 16.30, 19.50, 19.390 s 3(1): 1.60, 1.70, 1.80, 1.290, 5.100, 8.70, 8.170, 8.240, 8.300, 8.620, 16.30,

19.250 s 3(1)(c): 1.70 s 3(2): 8.40, 8.620 s 4(1): 19.220, 19.240 s 4(2)(a)(iii): 10.320 s 4(3): 8.620 s 4(3)(a): 8.120 s 4(3)(b): 19.210, 19.220, 19.240, 19.250 s 4(3)(d): 8.140 s 4(3)(g): 20.190, 20.570 s 4(3)(h): 18.80 s 4(3)(j): 8.200, 8.320 s 4(3)(k): 8.320 s 4(3)(m): 8.330 s 4(3)(t): 8.260 s 4(3)(ba): 19.390 s 5(3): 8.120 s 5(3)(b): 8.170 s 5(4): 8.120, 8.170 s 6(1): 1.70 s 6(1)(c): 1.70 s 6(a): 8.340 s 8: 8.80 s 9: 8.120, 16.30, 19.240 s 9(1): 16.30, 20.570 s 9(1)(a): 19.220, 19.240, 19.250 s 9(2): 16.30, 16.220 ss 9 to 12: 19.390 s 10: 8.120, 16.30, 19.240 s 15: 8.70, 8.120, 8.240, 15.20, 20.570 s 15(1): 8.30, 8.50 s 15(2): 8.10, 8.340, 9.70 s 15(2)(c): 8.280 s 15(2)(d): 8.280

s 16: 10.320 ss 16 to 18: 8.50 s 17: 5.50, 5.100, 8.120, 8.200, 8.320, 8.330, 8.620, 12.830, 15.270, 18.80, 19.50,

19.210 18: 5.50, 5.100, 12.830, 19.50 19: 5.50, 5.100, 8.110, 8.620, 19.50 19(a): 16.50, 19.50 22: 8.100 25(1): 16.30, 19.250 25(2): 16.30 25(4): 16.30, 19.250 27(1): 16.30 29: 12.590 32: 3.370, 3.490 36(1): 7.100 36(2): 7.100 36(3): 7.100 36(4): 7.100 36(5): 7.100, 8.470 37(1): 15.210, 15.240 37(1)(a): 8.510, 15.240 37(1)(b): 8.490, 8.510, 15.210, 15.240, 15.270, 15.280 s 37(2): 8.490, 8.510, 15.210, 15.240 s 37(3): 15.240 s 37(5): 8.450, 8.490 s 48(1): 2.270 s 55(1): 8.140 Pt II: 8.260

s s s s s s s s s s s s s s s s s s

Admiralty Rules 1988 r 7: 16.220 r 7, Form 2: 5.310 r 10, Form 4: 5.320 r 12(1): 5.330 r 13: 5.330 r 19: 8.40 r 21: 16.30 r 21(1): 16.30 r 21(3): 16.30 r 21(4): 16.30 r 21(5): 16.30 r 47(1): 17.40 r 62: 16.30 r 62, Form 24: 16.30 r 62(1)(b)(ii): 16.30 r 64: 16.30 r 65: 15.105 Pt VIII: 16.40

lxxii Table of Statutes Admiralty Rules 1988 — cont Pt VI, Div 1: 8.40

Australia Act 1986: 2.210, 2.270, 2.340 s s s s

2: 2.210 2(1): 2.210 3: 2.270 4: 2.270, 2.340

Australia Acts (Request) Act 1985 s 11: 15.190

Australian Coastal Shipping Commission Act 1956: 6.200 Australian Consumer Law: 12.40, 12.740, 15.40 s 18: 12.110, 12.770 s 60: 12.40, 15.40 s 63: 12.740 s 63(a): 12.40 s 64: 15.40

Australian Maritime Safety Authority Act 1990 s 6(1)(a): 19.400 s 10(1): 19.400

Carriage of Goods by Sea Act 1991: 12.20, 12.40, 12.90, 12.100, 12.250, 12.340, 12.520, 12.540, 12.600, 12.610, 12.640, 12.710, 12.790, 18.10 s (c)(ii): 13.20 s 2: 12.40 s 8: 12.90, 12.340, 12.530, 12.620, 12.710 s 9: 13.20 s 10(1)(b)(i): 12.90, 12.710 s 10(1)(b)(ii): 12.90 s 10(1)(b)(iii): 14.150 s 10(1A): 12.40 s 10(2): 14.150 s 10(b)(i): 12.40 s 11: 12.90, 12.560, 13.20 s 11(1)(a): 12.90, 13.20 s 11(2): 12.90, 12.720, 13.20 s 11(2)(a): 12.90 s 11(2)(b): 12.90, 13.20 s 11(2)(c)(i): 12.90, 13.20 s 11(2)(c)(ii): 13.20 s 11(3): 12.90 s 17: 12.300 s 18: 12.740 s 19(a): 12.650 s 19(b): 16.100 s 20(1): 12.40 Pt 2: 12.40 Pt 3: 12.40

Sch 1 (Hague-Visby Rules) Sch 1: 12.10, 12.30, 12.40, 12.50, 12.60, 12.70, 12.80, 12.100, 12.110, 12.130, 12.140, 12.160, 12.170, 12.180, 12.190, 12.200, 12.210, 12.240, 12.250, 12.270, 12.280, 12.290, 12.300, 12.310, 12.320, 12.330, 12.340, 12.350, 12.370, 12.410, 12.480, 12.530, 12.550, 12.560, 12.580, 12.600, 12.610, 12.620, 12.630, 12.650, 12.660, 12.690, 12.710, 12.730, 12.740, 12.800, 12.810, 12.820, 12.830, 12.840, 13.20, 13.560, 13.600, 13.610, 13.630, 14.130, 14.150, 14.160, 14.400, 14.410, 15.140, 15.170, 15.200, 15.240, 16.100, 18.10, 18.30, 18.70, 19.280 Sch 1, Art 1(a): 12.60, 12.370, 12.810 Sch 1, Art 1(b): 12.40 Sch 1, Art 1(c): 12.70, 12.340 Sch 1, Art 1(e): 12.50, 12.310, 12.740 Sch 1, Art 1, r 1(b): 12.710 Sch 1, Art 1, r 3: 12.750 Sch 1, Art 2, r 4(n): 12.470 Sch 1, Art 3: 12.280, 12.410 Sch 1, Art 3, r 1: 12.280, 12.300, 12.310, 12.360, 12.370, 12.400, 12.410, 12.580, 12.650 Sch 1, Art 3, r 1(a): 12.300, 12.360, 12.440,

14.150 Sch 1, Art 3, r 1(b): 12.290, 12.360 Sch 1, Art 3, r 1(c): 12.290, 12.360 Sch 1, Art 3, r 2: 12.280, 12.290, 12.300, 12.310, 12.370, 12.390, 12.400, 12.410, 12.460, 12.480, 12.490, 12.650, 13.630, 14.400 Sch 1, Art 3, r 3: 12.100, 12.210, 12.310 Sch 1, Art 3, r 3(a): 12.240 Sch 1, Art 3, r 3(a) to (c): 12.100 Sch 1, Art 3, r 3(b): 12.190, 12.210 Sch 1, Art 3, r 3(c): 12.100, 12.130, 12.160,

12.170 Sch 1, Art 3, r 4: 12.110, 12.130, 12.140, 12.190, 12.200, 12.240, 12.250,

12.280 Sch 1, Art 3, r 5: 12.110, 12.200, 12.630,

12.660 Sch 1, Art 3, r 6: 12.340, 12.580, 12.590, 12.600, 12.610, 12.620, 12.740, 12.830, 14.160, 14.400, 18.30 Sch 1, Art 3, r 6 bis: 12.620 Sch 1, Art 3, r 7: 12.100 Sch 1, Art 3, r 8: 12.80, 12.330, 12.370, 12.520, 12.580, 12.590, 12.820,

12.830 Sch 1, Art 4: 12.370

Table of Statutes lxxiii Carriage of Goods by Sea Act 1991 — cont Sch 1, Art 4 bis: 12.580 Sch 1, Art 4 bis, r 1: 12.370, 12.580 Sch 1, Art 4 bis, r 2: 12.530 Sch 1, Art 4, r 1: 12.280, 12.300, 12.370, 12.380, 12.480, 12.580, 15.200 Sch 1, Art 4, r 2: 12.280, 12.370, 12.380, 12.400, 12.410, 12.460, 12.480, 12.490, 12.500 Sch 1, Art 4, r 2(a): 12.330, 12.390, 12.650, 15.140, 18.70 Sch 1, Art 4, r 2(b): 12.370, 12.400 Sch 1, Art 4, r 2(c): 12.410, 12.420 Sch 1, Art 4, r 2(d): 12.420 Sch 1, Art 4, r 2(e): 12.430 Sch 1, Art 4, r 2(g): 12.440 Sch 1, Art 4, r 2(h): 12.500 Sch 1, Art 4, r 2(i): 12.310, 12.370, 12.450 Sch 1, Art 4, r 2(j): 12.500 Sch 1, Art 4, r 2(k): 12.500 Sch 1, Art 4, r 2(l): 12.500 Sch 1, Art 4, r 2(m): 12.280, 12.370, 12.460 Sch 1, Art 4, r 2(n): 12.450, 12.470 Sch 1, Art 4, r 2(o): 12.240, 12.500 Sch 1, Art 4, r 2(p): 12.280, 12.300, 12.400,

12.480 Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch

4, r 2(q): 12.280, 12.430, 12.490 4, r 3: 12.650 4, r 4: 12.330, 12.340 4, r 5: 12.370, 12.520, 12.530, 16.10, 16.100 1, Art 4, r 5(a): 12.520, 12.530 1, Art 4, r 5(b): 12.510 1, Art 4, r 5(c): 12.520 1, Art 4, r 5(d): 12.30, 12.520 1, Art 4, r 5(e): 12.530, 12.620, 19.280 1, Art 4, r 5(e): 16.160 1, Art 4, r 5(f): 12.530 1, Art 4, r 5(g): 12.530 1, Art 4, r 6: 12.580, 12.650 1, Art 5: 12.80, 12.370, 12.530, 12.690, 1, Art 1, Art 1, Art 1, Art

14.150 Sch 1, Art 7: 12.740, 12.750 Sch 1, Art 10: 12.40 Sch 1, Art 10, r 7: 12.730 Sch 1A (Modified Hague-Visby Rules) Sch 1A: 12.40, 12.50, 12.70, 12.80, 12.90, 12.100, 12.110, 12.130, 12.140, 12.160, 12.180, 12.190, 12.210, 12.240, 12.270, 12.300, 12.310, 12.320, 12.330, 12.340, 12.350, 12.370, 12.530, 12.550, 12.610, 12.630, 12.650, 12.660, 12.690, 12.710, 12.730, 12.740, 12.750, 12.800, 12.810, 12.820, 12.830, 12.840, 13.20, 13.630, 15.200,

15.240

1, r 1(a): 12.370, 12.810 1, r 1(aa): 12.40 1, r 1(b): 12.40, 12.710 1, r 1(c): 12.70 1, r 1(e): 12.50, 12.750 1, r 1(f): 12.40, 12.140 1, r 1(g): 12.40, 12.640, 13.20 1, r 1(g)(i) to (iv): 12.40 1, r 3: 12.50, 12.310, 12.750 1, r 4: 12.50, 12.750 1, r 4(b): 12.600, 12.610 1, r 6: 12.50, 12.750 1A, r 1: 12.20, 12.40, 12.790 2, r 1: 12.350 2, r 2: 12.350 2, r 3: 12.350 2, r 4: 12.350 2, r 4(n): 12.470 3: 12.410 3, r 1: 12.300, 12.310, 12.360, 12.370, 12.400, 12.410, 12.580,

Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch

1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art 1A, Art

Sch Sch Sch Sch

r 1(a): 12.300, 12.360, 12.440 r 1(b): 12.290, 12.360 r 1(c): 12.290, 12.360 r 2: 12.290, 12.300, 12.310, 12.370, 12.390, 12.400, 12.410, 12.460, 12.480, 12.490, 12.650 1A, Art 3, r 3: 12.100, 12.210, 12.310 1A, Art 3, r 3(a): 12.240 1A, Art 3, r 3(a) to (c): 12.100 1A, Art 3, r 3(b): 12.190, 12.210 1A, Art 3, r 3(c): 12.130, 12.160 1A, Art 3, r 4: 12.130, 12.140, 12.190, 12.240, 12.280 1A, Art 3, r 5: 12.110, 12.200, 12.630,

12.650

Sch Sch Sch Sch Sch Sch Sch

1A, Art 1A, Art 1A, Art 1A, Art

3, 3, 3, 3,

12.660 Sch 1A, Art 3, r 6: 12.580, 12.590, 12.600, 12.610, 12.620, 12.740, 12.830,

14.160 Sch 1A, Art 3, r 6 bis: 12.620 Sch 1A, Art 3, r 7: 12.100 Sch 1A, Art 3, r 8: 12.80, 12.310, 12.320, 12.330, 12.370, 12.580, 12.820 Sch 1A, Art 4: 12.370 Sch 1A, Art 4, r 1: 12.300, 12.370, 12.380, 12.480, 15.200 Sch 1A, Art 4, r 2: 12.370, 12.380, 12.400, 12.410, 12.460, 12.480, 12.490,

12.500 Sch 1A, Art 4, r 2(a): 12.330, 12.390, 12.650,

18.70 Sch Sch Sch Sch Sch

1A, Art 1A, Art 1A, Art 1A, Art 1A, Art

4, 4, 4, 4, 4,

r r r r r

2(b): 12.370, 12.400 2(c): 12.410, 12.420 2(d): 12.420 2(e): 12.430 2(g): 12.440

lxxiv

Table of Statutes

Carriage of Goods by Sea Act 1991 — cont Sch 1A, Art 4, r 2(h): 12.500 Sch 1A, Art 4, r 2(i): 12.310, 12.450 Sch 1A, Art 4, r 2(j): 12.500 Sch 1A, Art 4, r 2(k): 12.500 Sch 1A, Art 4, r 2(l): 12.500 Sch 1A, Art 4, r 2(m): 12.460 Sch 1A, Art 4, r 2(n): 12.450, 12.470 Sch 1A, Art 4, r 2(o): 12.500 Sch 1A, Art 4, r 2(p): 12.300, 12.400, 12.480 Sch 1A, Art 4, r 2(q): 12.430, 12.490 Sch 1A, Art 4, r 3: 12.650 Sch 1A, Art 4, r 4: 12.330 Sch 1A, Art 4, r 5: 12.370, 12.520, 12.530,

16.100 Sch 1A, Art 4, r 5(a): 12.520, 12.530 Sch 1A, Art 4, r 5(b): 12.510 Sch 1A, Art 4, r 5(c): 12.520 Sch 1A, Art 4, r 5(d): 12.30, 12.520 Sch 1A, Art 4, r 5(e): 12.530, 12.620, 19.280 Sch 1A, Art 4, r 5(f): 12.530 Sch 1A, Art 4, r 5(g): 12.530 Sch 1A, Art 4, r 6: 12.580, 12.650 Sch 1A, Art 4A: 12.320, 12.540 Sch 1A, Art 4A, r 1: 12.320

Carriage of Goods by Sea Regulations (No 2) 1998: 13.20 Civil Aviation (Carriers’ Liability) Act 1959: 19.280 Coastal Trading (Revitalising Australian Shipping) Act 2012: 14.60 Coastal Waters (Northern Territory Powers) Act 1980: 2.370, 19.40 s 4(2): 15.70

Coastal Waters (Northern Territory Title) Act 1980: 2.370 Coastal Waters (State Powers) Act 1980: 2.240, 2.370, 19.40 s s s s s s s

4(2): 2.370, 15.70 5: 2.240, 2.260, 2.370, 15.70, 21.210 5(b): 15.70 7(a): 2.370 7(b): 2.370 7(c): 2.370 8(a): 2.370

Sch 1A, Art 4A, r 3: 12.320 Sch 1A, Art 4A, r 6: 12.540 Sch 1A, Art 4 bis, r 1: 12.370, 12.580 Sch 1A, Art 4 bis, r 2: 12.530 Sch 1A, Art 5: 12.40, 12.80, 12.370, 12.530, 12.690, 14.150 Sch 1A, Art 6A, r 1: 12.350 Sch 1A, Art 6A, r 2(a): 12.350 Sch 1A, Art 6A, r 2(b): 12.350 Sch 1A, Art 6A, r 3: 12.350 Sch 1A, Art 7: 12.750 Sch 1A, Art 10: 12.40 Sch 1A, Art 10, r 1: 12.40 Sch 1A, Art 10, r 2: 12.40, 12.340 Sch 1A, Art 10, r 3: 12.40, 12.710 Sch 1A, Art 10, r 3(a): 12.40 Sch 1A, Art 10, r 3(b): 12.40 Sch 1A, Art 10, r 3(c): 12.40 Sch 1A, Art 10, r 4: 12.40, 12.90 Sch 1A, Art 10, r 5: 12.40 Sch 1A, Art 10, rr 5, 6: 14.150 Sch 1A, Art 10, r 6: 12.40, 12.690

Coastal Waters (State Title) Act 1980: 2.370 s 4(1): 2.370

Commonwealth of Australia Constitution: 2.10, 2.40, 2.220, 19.10 s 51: 2.20 s 51(i): 2.20, 2.30, 2.40, 2.60, 2.70 s 51(vi): 2.20 s 51(vii): 2.20 s 51(x): 2.20, 2.80, 2.90, 2.100, 2.110, 2.180,

2.260 s 51(xiii): 17.10 s 51(xiv): 2.20, 17.10 s 51(xx): 2.20 s 51(xxix): 2.20, 2.120, 2.220, 2.260, 15.70,

16.20 s 51(xxxi): 2.370 s 51(xxxvii): 2.10, 10.80 s 51(xxxviii): 2.370

Sch 1A, Art 10, r 7: 12.40, 12.710

s 52(ii): 2.20 s 55: 19.30, 19.310

Sch 2: 12.40

s 69: 2.20

Sch 2, Art 10: 12.810

s 76(iii): 2.20, 2.130, 2.140, 2.150 s 77: 2.20

Carriage of Goods by Sea Amendment Act 1997: 12.40 Carriage of Goods by Sea Regulations 1998: 12.40, 13.20

s 77(iii): 2.130 s 92: 2.60 s 98: 2.20, 2.30, 2.40, 2.50, 2.60, 2.70 s 99: 2.60 s 100: 2.60

Table of Statutes lxxv Commonwealth of Australia Constitution — cont s 109: 2.260, 2.370, 16.20, 19.40, 19.180,

21.170 s 122: 2.30

Competition and Consumer Act 2010: 12.800 s 4B(1)(b): 15.40 s 4B(2)(a): 15.40 Pt 10: 12.800 Sch 2 (Australian Consumer Law): 15.40

Corporations Act 2001: 19.310 Crimes Act 1914 s 4B(3): 15.90, 19.40, 19.50, 19.60, 19.80 s 4AA(1): 15.90, 19.40, 19.50, 19.60, 19.80, 19.90, 19.130, 19.170, 19.190 s 4AA(3): 15.90, 19.40, 19.50, 19.60, 19.80, 19.90, 19.130, 19.170, 19.190

Crimes at Sea Act 1979: 4.110 s 6(2): 4.110

Crimes at Sea Act 2000: 4.120 s 4: 4.120 s 6(1): 4.120 s 6(2): 4.120 s 6(3): 4.120 Sch 1, cl 1: 4.120 Sch 1, cl 2(1): 4.120 Sch 1, cl 2(2): 4.120 Sch 1, cl 14: 4.120

Criminal Code: 19.130 s s s s s

6.1: 19.40, 19.130, 19.310 6.1(1): 19.50 6.1(1)(b): 19.70 9.2: 19.40, 19.50, 19.130 9.2(1): 19.70, 19.130

Criminal Code Act 1995: 19.130

s 4B: 19.190 s 5: 19.190 s 7(1): 19.190 s 7(2): 19.190 s 9: 19.200 s 9(1): 19.30 s 10A(1)(a): 19.190 s 10A(1)(b): 19.190 s 10A(1)(c): 19.190 s 10A(1)(d): 19.190 s 10A(2): 19.190 s 10B(1): 19.190 s 10B(2): 19.190 s 10C(1): 19.190 s 10C(2): 19.190 s 10D(1): 19.190 s 10D(2): 19.190 s 15(1): 19.190 s 15(2): 19.190 s 15(3)(a): 19.190 s 15(3)(b): 19.190 s 15(3)(c): 19.190 s 15(3)(d): 19.190 s 16: 19.400 s 17(1): 19.400 s 17(3): 19.400 s 18: 19.190 s 19: 19.190 s 19(5): 19.190 s 19(5)(b): 19.190 s 19(6): 19.190 s 19(7): 19.190 Sch 1: 19.190 Sch 1, Art 23: 19.20, 19.30, 19.190

Environment Protection (Sea Dumping) Amendment Act 1993: 19.190 Environment Sport and Territories Legislation Amendment Act 1997: 19.190

s 4.1(2): 19.130

Cross-Border Insolvency Act 2008: 16.70 s 6: 16.70 Sch 1, Art 2(b): 16.70

Customs Act 1901

Environment and Heritage Legislation Amendment Act 2000: 19.190 Environmental Protection (Sea Dumping) Act 1981 s 17(3): 7.80

s 15: 12.50, 12.750

Federal Court Rules 2011: 16.40 Environment Protection (Sea Dumping) Act 1981: 19.30, 19.190, 19.400 s s s s s

4: 19.190 4(1): 19.190 4(1)(d): 19.190 4(4): 19.190 4A: 19.190

r 10.42, Item 12: 19.240

Federal Court of Australia Act 1976 Pt VA: 15.105

Flags Act 1953 s 4: 4.150

lxxvi

Table of Statutes

Historic Shipwrecks Act 1976: 20.820, 21.10, 21.160, 21.200, 21.220, 21.230 s s s s s s s s s s s s s s s s s s

2(1): 21.200, 21.210 3(1): 2.100, 21.200, 21.230 3(5): 21.200 5(1): 21.200 7: 21.240 9: 21.260 10: 21.260 11: 21.260 12(1): 21.270 12(2): 21.270 12(3): 21.270 13: 21.240 14(1): 21.240 15: 21.240 17(1): 21.250 18(1)(a): 21.250 19: 21.240, 21.260 20: 21.250, 21.260

Historic Shipwrecks Regulations 1978 reg 4: 21.240

Insurance (Agents and Brokers) Act 1984: 17.90

Insurance Contracts Act 1984: 17.10 s s s s s s s s

8(2): 12.90 9(1)(d): 17.10, 17.20 9A(2): 17.10 9A(3): 17.10 16: 17.30 16(1): 17.20 18: 17.30 54: 17.10

International Maritime Conventions Legislation Amendment Act 2001: 19.400 s 3: 16.10, 16.20 Sch 1: 16.10, 16.20

Judiciary Act 1903 s 79: 15.105, 15.160, 15.210

Jurisdiction of Courts (Cross-Vesting) Act 1987: 16.160 s 5(4): 16.30

Life Insurance (Consequential Repeals and Amendments) Act 1995: 17.30 Limitation of Liability for Maritime Claims Act 1976: 15.130 Limitation of Liability for Maritime

Claims Act 1989: 16.10, 16.20, 16.40, 16.50, 16.80, 16.100, 18.10 s 3(1): 16.20 s 5: 16.20 s 6: 16.10, 16.20, 16.130, 16.250 s 7: 16.50, 16.80 s 8: 16.100, 16.210 s 9(1): 16.220 s 9(1)(a): 16.30 s 9(1)(b): 16.30 s 9(3): 16.30 s 11: 16.40 Sch 1: 16.40, 16.80, 16.230 Sch 1, Art 13(2)(a) to (c): 16.220 Sch 1, Art 1.2: 16.20, 16.50, 16.80 Sch 1, Art 1.3: 16.60 Sch 1, Art 1.4: 16.50, 16.60 Sch 1, Art 1.5: 16.50 Sch 1, Art 1.6: 16.50 Sch 1, Art 1.7: 16.40 Sch 1, Art 2: 16.90, 16.100, 16.160 Sch 1, Art 2.1: 16.90 Sch 1, Art 2.1(a): 16.100, 16.110, 16.120, 16.140, 16.150, 16.200 Sch 1, Art 2.1(b): 16.110, 16.120, 16.140 Sch 1, Art 2.1(c): 16.100, 16.120 Sch 1, Art 2.1(d): 16.130, 16.140 Sch 1, Art 2.1(e): 16.130, 16.140 Sch 1, Art 2.1(f): 16.90, 16.140 Sch 1, Art 2.2: 16.90, 16.140 Sch 1, Art 3: 16.50, 16.90 Sch 1, Art 3(a): 16.150 Sch 1, Art 3(b): 16.150 Sch 1, Art 3(c): 16.150 Sch 1, Art 3(d): 16.150 Sch 1, Art 3(e): 16.150 Sch 1, Art 4: 16.90, 16.160, 16.220, 19.280 Sch 1, Art 5: 16.210 Sch 1, Art 6: 16.60, 16.170, 16.180, 16.190,

16.200 Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch Sch

1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art 1, Art

6.1(a): 16.170, 16.180, 16.210 6.1(b): 16.170, 16.210 6.1(b)(i): 16.50 6.2: 16.210 6.3: 16.210 6.4: 16.60, 16.190 6.5: 16.170 7: 16.180, 16.200 7.2: 16.180 8: 16.10 8.1: 16.40, 16.170 9(1): 16.10 9(2): 16.10 9.1(a): 16.50 9.1(b): 16.50, 16.60 9.1(c): 16.50 9.2: 16.50

Table of Statutes lxxvii Limitation of Liability for Maritime Claims Act 1989 — cont Sch 1, Art 10(1): 16.230 Sch 1, Art 10.1: 16.40 Sch 1, Art 11: 16.220 Sch 1, Art 11(1): 16.230 Sch 1, Art 11.1: 16.200, 16.210, 16.220 Sch 1, Art 11.2: 16.40, 19.260 Sch 1, Art 12: 16.40 Sch 1, Art 12.1: 16.210 Sch 1, Art 12.4: 16.40 Sch 1, Art 13: 16.40, 16.70, 16.220, 16.240,

16.250 Sch 1, Art 13(1): 16.40, 16.220, 16.240 Sch 1, Art 13(2): 16.70, 16.220, 16.240,

16.250 Sch Sch Sch Sch Sch Sch Sch Sch

1, Art 15.2(a): 16.20 1, Art 15.5(a): 16.80 1, Art 15.5(b): 16.80 1, Art 18.1: 16.130 1A: 16.40 1A, Art 8: 16.10 1A, Art 9.1: 16.10 1A, Art 9(2): 16.220

Limitation of Liability for Maritime Claims Act 1991 Sch 1A, Art 3: 16.30

Limitation of Liability for Maritime Claims Amendment Act 2015: 16.10 Marine Insurance Act 1909: 17.10, 17.20, 17.30, 17.90, 17.100, 17.160, 17.200, 17.220, 17.260, 17.310, 17.320, 17.570, 17.590, 17.630, 17.660 s s s s s s s s s s s s s s s s s s s s s s

4: 17.10, 17.190 6: 17.660 6(1): 17.10 7: 17.10, 17.20, 17.560 8(1): 17.10 8(2): 17.10 9: 17.200 9(1): 17.10 9(2): 17.10, 17.20, 17.210 9(2)(a): 17.10, 17.30, 17.40, 17.50, 17.130 9(2)(b): 17.10, 17.30, 17.60 9(2)(c): 17.10, 17.50 10(1): 17.20 10(2)(a): 17.20 11(1): 17.30 11(2): 17.30, 17.40, 17.50, 17.60, 17.80 12(1): 17.30, 17.80 13(1): 17.30 14: 17.30 15: 17.130 15(1): 17.70 16: 17.70

s 17: 17.70 s 18: 17.60 s 19: 17.70 s 20(1): 17.40 s 20(2): 17.40, 17.50 s 20(3): 17.40 s 21: 17.80 s 22: 17.140, 17.500 s 22(b): 17.500 s 23: 17.90, 17.110, 17.630 s 24: 17.100 s 24(1): 17.100 s 24(2): 17.100, 17.110 s 24(3)(a): 17.100 s 24(3)(b): 17.100 s 24(3)(c): 17.100 s 24(3)(d): 17.100 s 24(4): 17.100 s 24(5): 17.100 ss 24 to 26: 17.10 ss 24 to 27: 17.630 s 25(a): 17.100 s 25(b): 17.100 s 26(1): 17.110 s 26(2): 17.110 s 26(4): 17.110 s 26(5): 17.110 s 26(6): 17.110 s 26(7): 17.110 s 27: 17.90 s 28: 17.90, 17.160 s 29: 17.90, 17.120, 17.160 s 29(a): 17.90, 17.160 s 29(b): 17.90, 17.160 s 29(c): 17.90, 17.160 s 29(d): 17.90, 17.140, 17.160 s 29(e): 17.90, 17.160 s 30: 17.90, 17.120, 17.160 s 30(1): 17.90, 17.160 s 30(2): 17.90 s 31(1): 17.150, 17.180 s 31(2): 17.150 s 32(1): 17.130 s 32(4): 17.130 s 33(1): 17.140 s 33(2): 17.140 s 33(3): 17.140 s 33(4): 17.420 s 34: 17.140 s 35(1): 17.150 s 35(2): 17.150 s 35(3): 17.150 s 35(4): 17.150 s 36: 17.120 s 36(1): 17.120 s 37(1): 17.640 s 37(2): 17.640

lxxviii

Table of Statutes

Marine Insurance Act 1909 — cont s 38: 17.560 s 38(1): 17.560 s 38(2)(d): 17.560 s 39(1): 17.270, 17.570 s 39(2): 17.570 s 39(3): 17.150, 17.570, 17.620 s 40(1): 17.570 s 40(2): 17.570 s 40(3): 17.570, 17.610, 17.620 s 41(1): 17.580 s 41(2): 17.580 s 41(3): 17.580 s 43: 17.590 s 45: 17.150, 17.200 s 45(1): 17.270, 17.600 s 45(3): 17.600 s 45(4): 17.600, 20.150 s 45(5): 17.270, 17.600 s 46(1): 17.600 s 46(2): 17.600 s 47: 17.610 s 48: 17.200 s 48(1): 17.190 s 48(2): 17.190 s 49: 17.190, 17.200 s 50: 17.190, 17.200 s 51: 17.200 s 51(2): 17.200 ss 51 to 55: 17.200 s 52: 17.200 s 52(1): 17.200 s 52(2)(a): 17.200 s 52(2)(b): 17.200 s 54: 17.200 s 55: 17.200 s 56(1): 17.80 s 56(2): 17.80 s 56(3): 17.80 s 57: 17.80 s 58: 17.640 s 59(1): 17.640 s 59(2): 17.640 s 61(1): 17.290 s 61(2): 17.270 s 61(2)(a): 17.270, 17.290, 17.310 s 61(2)(b): 17.270 s 61(2)(c): 17.270 s 62(1): 17.450 s 62(2): 17.320 s 63(1): 17.330, 17.350, 17.360 s 63(2): 17.370 s 64: 17.360 s 66: 17.370 s 66(1): 17.370 s 66(2): 17.370 s 66(2)(b): 17.420 s 67: 17.370, 17.380, 17.420, 17.440

s 68: 17.370, 17.380 s 68(1): 17.370, 17.440 s 68(2): 17.440 s 68(3): 17.440 s 68(4): 17.370, 17.440 s 68(5): 17.440 s 68(6): 17.440 s 68(7): 17.440 s 68(8): 17.440 s 68(9): 17.440 s 69(1): 17.440, 17.650 s 69(2): 17.440 s 70: 17.320 s 70(1): 17.470 s 70(2): 17.480 s 72: 17.320 s 72(1): 17.460 s 72(2): 17.460, 18.20 s 72(3): 17.460 s 72(4): 17.460 s 72(5): 17.460 s 72(6): 17.460 s 73(1): 17.490 s 73(2): 17.490 s 74(a): 17.500 s 74(b): 17.500 s 75(a): 17.510 s 75(b): 17.510 s 75(c): 17.510 s 76: 17.520 s 77: 17.530 s 77(a): 17.530 s 77(b): 17.530 s 77(c): 17.530 s 77(d): 17.530 s 80: 17.480 s 82(1): 17.540 s 82(2): 17.480, 17.540 s 82(4): 17.540 s 84: 17.480 s 84(4): 17.220 s 85: 17.40, 17.650 s 85(1): 17.440, 17.650 s 85(2): 17.650 s 86(1): 17.560 s 86(2): 17.560 s 87: 17.140, 17.490 s 88: 17.640 s 89: 17.640 s 90(1): 17.640 s 90(2): 17.640 s 90(3): 17.640 s 90(3)(a): 17.100, 17.110 s 93(1): 17.640 s 94: 17.190, 17.360 s 95: 17.90 Sch 1, r 2: 17.190

Table of Statutes lxxix Marine Insurance Act 1909 — cont Sch 2: 17.10, 17.120, 17.130, 17.230 Sch 2, r 3: 17.190 Sch 2, r 7: 17.220 Sch 2, r 11: 17.220, 17.290 Sch 2, r 15: 17.130 Sch 2, r 16: 17.130 Sch 2, r 17: 17.130

Marine Order 30 (Prevention of Collisions) 2009: 15.70 Marine Order 4 (Transitional Modifications) 2013: 15.70 Marine Order 41 (Carriage of Dangerous Cargoes) 2009: 12.650 s 9.1.1: 12.650

s s s s s s s s s s s s s s s s s s

8A(5): 16.20 9A: 8.280, 8.430 10: 8.280, 8.430 48(2): 2.270 83(2): 8.430 85(1)(a): 8.230 85(1)(b): 8.230 94: 8.280, 8.290 94(1): 8.280 94(2): 8.280 258(5): 15.105 259: 15.130 262: 8.140 315: 8.190, 8.210, 20.50, 20.640 329: 21.170 332(2): 16.50 333: 2.390, 16.20 396(1): 15.210, 15.220, 15.230, 15.240,

15.260

Marine Safety (Domestic Commercial Vessel) National Law: 1.50, 1.170, 1.230, 1.290, 1.350, 2.10, 2.390, 15.70 s 7(1): 1.180 s 8: 1.100, 1.180 s 8(1): 1.290, 1.350

Marine Safety (Domestic Commercial Vessel) National Law Act 2012: 1.50, 2.10, 2.390 Sch 1: see Marine Safety (Domestic Commercial Vessel) National Law

Maritime Legislation Amendment Act 2003: 19.370 Sch 1, para 1: 19.250

Maritime Legislation Amendment Act 2011: 19.50 Maritime Legislation Amendment Act 2012 s 66: 19.40

Marriage Act 1961: 4.140 s 23A(1)(a): 4.140 s 40(1): 4.140 s 55: 4.140

Navigation Act 1912: 2.270, 2.350, 2.390, 8.280, 15.70, 15.105, 15.130, 15.210, 16.20, 20.50 s s s s s s

2(1): 2.390, 8.280, 8.430 2A: 16.50 3: 16.50 6(1): 8.230, 8.280 6(4): 5.50, 5.100 7: 2.390

s 396(2): 15.250 s 410B: 15.30 s 410B(2): 15.30 Pt VIII: 16.20 Pt VIII, Div 1: 16.50 Sch 6: 16.20 Sch 6A: 16.20 Sch 9: 20.50 Sch 9, Art 6.2: 20.640 Sch 9, Art 13.2: 8.190

Navigation Act 1958 s 161: 16.20 s 195: 15.30

Navigation Act 2012: 1.50, 1.130, 1.190, 1.230, 1.290, 1.350, 2.270, 2.390, 3.540, 8.280, 14.100, 15.70, 15.90, 15.105, 15.130, 15.210, 16.20, 18.10, 19.50, 20.50, 20.90, 20.110, 20.190, 20.200, 21.20, 21.40, 21.60, 21.90 s s s s s s s s s s s s s s s s

10: 21.20 10(3): 19.60 10(4): 19.60 12: 15.70, 15.130 14: 1.100, 1.190, 1.290, 1.350 14(1): 5.110, 8.300, 20.90, 20.110, 20.130, 20.190, 21.20, 21.60, 21.160 15: 15.70, 19.90 15(1): 21.20 15(1)(b): 21.20 15(1)(c)(ii): 21.20 15(2): 21.20 16: 21.20 17: 21.20 25: 21.20 57(2)(e): 15.70 57(2)(g): 15.70

lxxx Table of Statutes Navigation Act 2012 — cont s 93: 16.150 s 112(6): 12.650 s 112(7): 12.650 s 115: 12.650 s 119: 12.650 s 119(2): 12.650 s 129: 19.90 s 130: 19.70 s 130(2): 19.90 s 135(1): 19.90 s 135(2): 19.90 s 135(3): 19.90 s 136(1): 19.90 s 136(2): 19.90 s 136(3): 19.90 s 140: 19.50 s 140(2): 19.50 s 140(3): 19.50 s 140(4)(a): 19.50 s 140(4)(b): 19.50 s 141: 19.50 s 141(2): 19.50 s 141(3): 19.50 s 141(4)(a): 19.50 s 141(4)(b): 19.50 s 142: 19.50 s 142(2): 19.50 s 142(4)(a): 19.50 s 142(4)(b): 19.50 s 143: 19.50 s 143(2): 19.50 s 143(4)(a): 19.50 s 143(4)(b): 19.50 s 144(1): 19.50 s 144(2): 19.50 s 144(3): 19.50 s 175: 15.70, 15.130 s 175(1)(a) to (c): 15.70 s 175(2)(f): 15.70 s 176: 15.130 s 176(3): 15.130 s 177(1): 15.90 s 177(2): 15.90 s 177(3): 15.90 s 178(1): 15.90 s 178(2): 15.90 s 178(3): 15.90 s 179: 15.100, 15.110, 15.120 s 181: 20.800 s 227: 21.20 s 228: 21.180 s 229(1)(a): 21.150 s 229(1)(b): 21.150 s 229(1)(c): 21.150 s 229(1)(d): 21.150 s 229(2)(a): 21.150 s 229(2)(b): 21.150

s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s

229(3)(a): 21.150 229(3)(b): 21.150 231: 21.140 231(1): 21.140 231(2): 21.140 231(3): 21.140 231(4): 21.140 232(1): 21.30, 21.100 232(1)(e): 21.60 232(2): 21.20, 21.100 232(3): 21.100 232(4): 21.100 233(1): 21.30, 21.110 233(2): 21.110 233(3): 21.110 234: 21.100, 21.110 234(2): 21.30 235(1): 21.120 235(1)(b): 21.20 235(2): 21.120 235(3): 21.120 236(1): 21.120 236(2): 21.120 236(3): 21.120 238: 21.160 238(1)(b): 21.160 240(1): 20.90 240(2): 20.90 240(3): 20.190, 20.820 240(3)(a): 20.130 240(3)(b): 20.130 240(3)(c): 20.60 242: 20.810 243: 8.190, 20.810 291(1): 15.90, 19.50, 19.90 291(3): 15.90, 19.50, 19.90 292(1): 15.90, 19.50, 19.90 292(2): 15.90, 19.50, 19.90

s 296: 15.90, 19.50 ss 296 to 300: 19.90 s 297: 15.90, 19.50 s 298: 15.90, 19.50 s 299: 15.90, 19.50 s 300: 15.90, 19.50 s 326: 15.30 s 326(3): 15.30 s 326(4): 15.30 s 340(1)(b): 15.70 s 342(1): 12.650, 15.70 s 343(2): 15.70 Ch 3, Pt 4: 12.650 Ch 3, Pt 4, Div 4, Subdiv B: 12.650 Ch 4: 19.90 Ch 6, Pt 3: 15.70, 15.130 Ch 7, Pt 2: 21.10, 21.30 Ch 7, Pt 3: 20.820

Table of Statutes lxxxi

Navigation Amendment Act 1979: 16.20 s 104(3): 2.320

Protection of the Sea (1992 Fund) Regulations 1994 reg 22 to 24: 19.310

Navigation (Consequential Amendments) Act 2012: 8.280 s 3: 8.280 Sch 1: 8.280

Navigation Regulation 2013: 15.130, 15.160, 15.210 reg 14: 15.160 reg 14(1): 8.140, 15.130 reg 14(2): 15.130 reg 15: 15.160 reg 15(1): 15.130, 15.140, 15.160 reg 15(2): 15.130 reg 15(3): 15.150 reg 15(4): 15.140 reg 16(1): 15.160 reg 17: 8.190, 20.50 reg 17(b): 20.710 Sch 1: 20.710

Occupational Health and Safety (Maritime Industry) Act 1993: 3.540 Offshore Petroleum and Greenhouse Gas Storage Act 2006 Sch 1: 4.120

Personal Property Securities Act 2009: 2.10, 4.10, 7.40, 7.60, 8.360, 8.380, 8.390, 8.640, 10.20, 10.60, 10.80, 10.90, 10.100, 10.120, 10.130, 14.560 s 6(1): 10.100 s 8(1)(b): 7.40, 10.110 s 8(1)(c): 7.40, 8.360, 8.640, 10.110 s 10: 7.40, 8.360, 10.110, 10.120 s 12: 7.40, 8.640 s 12(1): 9.80, 10.100, 10.110, 10.120 s 12(2): 10.100 s 19: 10.70 s 19(2): 10.130 s 20(1): 10.130 s 21: 10.130 s 55: 9.80, 9.90 s 55(2): 10.130 s 55(3): 10.130 s 55(4): 10.130 s 55(5): 10.130 s 73(1): 7.40, 8.380, 8.390 s 73(1)(a): 10.110 s 235(1): 10.100 Ch 9: 10.110

Petroleum (Submerged Lands) Act 1967 Sch 2: 21.200

Protection of the Sea (Civil Liability) Act 1981: 19.20, 19.30, 19.210, 19.240, 19.250, 19.310, 19.370 s 3(1): 19.20, 19.250 s 5: 19.220 s 8: 19.210 s 8(1): 19.220 s 9: 19.220, 19.240 s 9(2): 19.250 s 10: 19.250 s 10(1): 19.250 s 20(1): 19.400 s 20(2): 19.400 s 20(3): 19.400 s 21: 19.400 s 22(1): 19.400 s 22(1A): 19.400 s 22(2): 19.400 s 22(3): 19.400 s 22A: 19.400 Sch 1: 19.220 Sch 1, Arts I to VI: 19.210 Sch 1, Art VIII: 19.210 Sch 1, Art VII.1: 19.210 Sch 1, Art VII.8: 19.210 Sch 1, Art VII.9: 19.210 Sch 1, Art IX.1: 19.210 Sch 1, Art IX.3: 19.210 Sch 1, Art XI.1: 19.210 Sch 1, Art XII bis: 19.210 Sch 2: 19.220 Sch 2, Art 1.2: 19.320 Sch 2, Art 1.3: 19.240 Sch 2, Art 1.6: 19.220, 19.230, 19.400 Sch 2, Art 1.7: 19.220, 19.400 Sch 2, Art 1.8: 19.220, 19.270 Sch 2, Art 2: 19.220 Sch 2, Art 3.1: 19.220, 19.240, 19.400 Sch 2, Art 3.2: 19.290, 19.400 Sch 2, Art 3.2(a): 19.290, 19.340, 19.370 Sch 2, Art 3.2(c): 19.290 Sch 2, Art 3.2(b): 19.290, 19.340 Sch 2, Art 3(2)(b): 19.290 Sch 2, Art 3.2(c): 19.340 Sch 2, Art 3.3: 19.290, 19.340 Sch 2, Art 3.4: 19.220, 19.240 Sch 2, Art 3.4(c): 19.240 Sch 2, Art 3.5: 19.240 Sch 2, Art 5.1: 19.250 Sch 2, Art 5.2: 19.280 Sch 2, Art 5.3: 19.260 Sch 2, Art 5.4: 19.230, 19.270 Sch 2, Art 5.5: 19.270

lxxxii

Table of Statutes

Protection of the Sea (Civil Liability) Act 1981 — cont Sch 2, Art 5.8: 19.230 Sch 2, Art 5.9(a): 19.250 Sch 2, Art 5.10: 19.250 Sch 2, Art 6.1(a): 19.270 Sch 2, Art 6.2: 19.270 Sch 2, Art 7: 19.320, 19.350 Sch 2, Art 7.1: 19.240 Sch 2, Art 7.8: 19.240, 19.250, 19.290, 19.350, 19.370 Sch 2, Art 9: 19.20 Sch 2, Art 9.1: 19.220, 19.240 Sch 2, Art 11: 19.20 Sch 2, Art 11.1: 19.290, 19.340 Sch 2, Art 15: 19.20 Sch 3: 19.20, 19.250

Protection of the Sea (Civil Liability) Regulations 1983 reg 4(b): 19.260

Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008: 19.30, 19.390 s 3: 19.390 s 8: 19.390 s 11: 19.390 Pt 3: 19.390

Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – Customs) Act 1993: 19.30, 19.210, 19.310 Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – Excise) Act 1993: 19.30, 19.210, 19.310 Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – General) Act 1993: 19.30, 19.210, 19.310 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993: 19.30, 19.210, 19.310 s 3: 19.310 s 26: 19.30 ss 27 to 46: 19.30 s 29: 19.310 s 31: 19.310 s 31(1): 19.320 s 32(2): 19.310 s 32(3): 19.310 s 32(4): 19.310

s 32(5): 19.310 s 33: 19.310 s 35(1): 19.310 s 35(2): 19.310 s 35(4): 19.310 s 40(1): 19.310 s 40(2): 19.310 s 41: 19.310 s 41(3): 19.310 s 43: 19.310 s 44: 19.310 s 45(1): 19.310 s 45(2): 19.310 s 46: 19.310 s 46C: 19.310 s 46E: 19.310 s 46E(c): 19.320 s 46F(2): 19.310 s 46F(3): 19.310 s 46F(4): 19.310 s 46F(5): 19.310 s 46G: 19.310 s 46J: 19.310 s 46J(1): 19.310 s 46J(2): 19.310 s 46J(4): 19.310 s 46N(1): 19.310 s 46N(2): 19.310 s 46P: 19.310 s 46P(3): 19.310 s 46R: 19.310 s 46S: 19.310 s 46T(1): 19.310 s 46T(2): 19.310 s 46U: 19.310 Ch 2: 19.30 Ch 3: 19.30, 19.310 Ch 3A: 19.210, 19.310 Pt 3A.4: 19.20 Sch 1, Art 11: 19.310 Sch 1, Art 15: 19.310 Sch 1, Art 33: 19.20 Sch 3, Art 26: 19.20 Sch 3, Art 27: 19.20 Sch 4: 19.20, 19.310, 19.370

Protection of the Sea (Powers of Intervention) Act 1981: 19.30, 19.400 s s s s s s s s s

8: 19.400 8(1): 19.400 8(2A): 19.400 8(4): 19.400 8(6): 19.400 9: 19.400 9(1): 19.400 9(2A): 19.400 9(4): 19.400

Table of Statutes lxxxiii Protection of the Sea (Powers of Intervention) Act 1981 — cont s 9(6): 19.400 s 10(1)(b): 19.400 s 10(1)(c): 19.400 s 10(2): 19.400 s 10(3A): 19.400 s 10(4): 19.400 s 10(8): 19.400 Sch 1, Art II.4: 19.400 Sch 1, Art III: 19.400 Sch 1, Art V: 19.400 Sch 3: 19.400 Sch 4: 19.400

Protection of the Sea (Prevention of Pollution from Ships) Act 1983: 3.540, 19.30, 19.40, 19.50, 19.100, 19.120, 19.140, 19.150, 19.180 s 3(1): 19.40, 19.130, 19.140 s 3(1A): 19.40 s 3(1B): 19.40 s 3(1C): 19.40 s 3(1D): 19.40, 19.80 s 3(2): 19.70, 19.80, 19.130 s 3(3): 19.30 s 6: 19.40 s 8: 19.30 s 9: 19.50, 19.60 s 9(1)(c)(i): 19.140 s 9(1B): 19.40, 19.50, 19.70, 19.100 s 9(1B)(b)(i): 19.40, 19.50, 19.140 s 9(1B)(b)(ii): 19.50 s 9(1B)(b)(iii): 19.40, 19.50 s 9(1C): 19.50, 19.70 s 9(2): 19.70, 19.100 s 9(2)(c): 19.70 s 9(2)(d): 19.70 s 9(2)(e): 19.70 s 9(3): 19.70 s 9(3A): 19.70 s 9(4): 19.70, 19.80 s 9(4)(f): 19.70 ss 9 to 14A: 19.40 s 10: 19.60, 19.100 s 10(1): 19.60 s 10(2): 19.60 s 11: 19.100 s 11(1): 19.80 s 11(1)(a): 19.80 s 11(1)(b): 19.80 s 11(2): 19.80 s 11(3): 19.80 s 11(3)(a): 19.80 s 11(3)(b): 19.80 s 11(3A): 19.80 s 11(4): 19.80 s 11(8): 19.80

s 11(9): 19.80 s 11(9A): 19.80 s 11(10): 19.80 s 15: 19.30 ss 15 to 26AA: 19.40 s 16: 19.130 s 21(1): 19.130 s 21(1)(c)(i): 19.40, 19.140 s 21(1B): 19.130 s 21(1C): 19.130 s 21(2)(c): 19.130 s 21(2)(d): 19.130 s 21(2)(e): 19.130 s 21(3): 19.130 s 21(3A): 19.130 s 22: 19.130 s 26A: 19.30 ss 26A to 26B: 19.40 s 26AB(1): 19.130 s 26AB(1)(c)(i): 19.40, 19.140 s 26AB(3): 19.130 s 26AB(4): 19.130 s 26AB(5): 19.130 s 26AB(6): 19.130 s 26B: 19.130 ss 26BA to 26DAA: 19.40 s 26C: 19.30 s 26D(5A): 19.130 s 26D(1): 19.130 s 26D(1)(c)(i): 19.40, 19.140 s 26D(3): 19.130 s 26D(4): 19.130 s 26D(5)(a): 19.130 s 26D(5)(b): 19.130 s 26D(6) to (9): 19.130 s 26E: 19.30 ss 26E to 26FE: 19.40 s 26F(5A): 19.130 s 26F(5B): 19.130 s 26F(9A): 19.130 s 26F(1): 19.130 s 26F(1)(c)(i): 19.40, 19.140 s 26F(3): 19.130 s 26F(4): 19.130 s 26F(5): 19.130 s 26F(6) to (9): 19.130 s 26FA: 19.130 s 26FB: 19.130 s 26FC: 19.130 s 26FD: 19.130 s 26FEF: 19.30 ss 26FEF to 26FEW: 19.40 s 26FEG(1): 19.170 s 26FEG(1)(d)(i): 19.40 s 26FEG(1)(d)(iii): 19.170 s 26FEG(2): 19.170 s 26FEG(2)(b)(iii): 19.170

lxxxiv

Table of Statutes

Protection of the Sea (Prevention of Pollution from Ships) Act 1983 — cont s 26FEG(3): 19.170 s 26FEG(4): 19.170 s 26FEG(5): 19.170 s 26FEG(6): 19.170 s 26FEH: 19.170 s 26FEH(1): 19.170 s 26FEH(2): 19.170 s 26FEH(6): 19.170 s 26FEH(7): 19.170 s 26FEH(8): 19.170 s 26FEH(9): 19.170 s 26FEL: 19.170 s 26FEM: 19.170 s 26FEO: 19.170 s 29F(9): 19.130 Pt II: 19.130 Pt III: 19.120, 19.130 Pts III to IIIC: 19.130 Pt IIIA: 19.120 Pt IIIB: 19.120 Pt IIIC: 19.120 Pt IIID: 19.120, 19.150, 19.170 Pt IIID, Div 3: 19.170

Protection of the Sea (Supplementary Fund) Regulations 2009 reg 25 to 27: 19.310

Quarantine Act 1908 s 65: 7.80

Sea-Carriage of Goods Act 1904: 12.30, 12.40

Sea-Carriage of Goods Act 1924: 12.40, 12.90, 12.340 s s s s s

3: 12.40 4: 12.40, 12.340 7: 12.100 9(1): 12.90 9(2): 12.90

Seamen’s Compensation Act 1911: 2.40 Seas and Submerged Lands Act 1973: 2.350, 2.370, 19.40 s 6: 2.220, 2.350, 19.400 s 7: 2.110, 15.70 s 10A: 19.400 s 11: 2.220 s 12: 19.190 s 14: 15.70 Sch, Art 76.5: 19.190

Service and Execution of Process Act 1901

Pt IV: 13.440

Shipping Registration Act 1981: 1.40, 1.50, 1.60, 1.70, 1.90, 1.290, 1.320, 3.10, 3.30, 3.60, 3.100, 3.140, 3.150, 3.340, 3.400, 3.500, 3.540, 3.580, 3.600, 3.610, 4.20, 4.60, 4.110, 4.150, 4.160, 4.230, 4.240, 4.250, 5.20, 5.30, 5.40, 5.50, 5.60, 5.90, 5.100, 5.180, 5.200, 5.300, 6.10, 6.60, 6.100, 10.80, 10.130, 21.20 s 3(1): 1.60, 1.70, 1.80, 1.230, 1.290, 1.320, 3.80, 3.100, 3.110, 3.120, 3.130, 3.140, 3.240, 3.280, 3.310, 3.320, 3.330, 3.350, 3.380, 3.430, 3.440, 3.550, 4.50, 4.150, 4.230, 5.20, 5.50, 5.90, 5.150, 5.210, 6.50, 6.100 s 3(1)(b): 1.70 s 3(2): 3.90, 5.90 s 3(3): 3.130 s 3(4): 4.230 s 3(8): 1.40 s 3A: 3.490, 3.550 s 4: 2.320 s 7: 3.100, 3.130 s 8(1): 3.80, 5.30 s 8(2): 3.80 s 9: 3.130 s 10(1): 3.130 s 10(2): 3.130 s 10(3): 3.60, 3.100, 3.160, 3.320 s 11: 5.30 s 11(1)(a): 5.20 s 11(1)(b): 5.20, 5.150 s 11(1)(c): 5.20, 5.30 s 11(1)(d): 6.50 s 11(1)(e): 5.20 s 11(1)(f): 5.20 s 11(2): 5.20, 5.140 s 11A: 3.350 s 12(1): 3.70, 5.40 s 12(2): 3.100, 5.40, 5.50 s 12(3): 3.90 s 12(3A): 3.90 s 12(3B): 3.90 s 12(3C): 3.90 s 12(3D): 3.90 s 12(4): 3.90 s 13: 3.100, 4.20 s 14: 5.40 s 14(a): 3.130, 3.310, 5.50 s 14(b): 3.130, 3.310 s 14(c): 3.130, 3.310 s 14(d): 3.130, 5.50 s 15: 3.250 s 15(a): 3.150 s 15A: 3.20 s 15B: 3.320

Table of Statutes lxxxv Shipping Registration Act 1981 — cont s 15C: 3.250 s 15C(a): 3.150 s 15E: 3.340, 3.350, 5.180 s 15F: 3.340 s 15F(1): 3.350 s 15F(2): 3.350 s 15F(3): 3.350 s 16(1): 3.160 s 16(2): 3.160 s 17(1): 3.90, 3.130, 3.140, 3.300 s 19: 3.390 s 20(1): 3.400, 10.70 s 20(2): 3.410 s 20(2B): 3.410 s 20(4): 3.400, 3.410 s 21(2): 3.440 s 21(3): 3.450 s 21(5): 3.450 s 21(6): 3.450 s 21(7)(a): 3.450 s 21(7)(b): 3.450 s 22(1): 3.430, 4.230 s 22(2): 3.450 s 22(4): 3.450 s 22(5): 3.450 s 22(6): 3.450 s 22A(1): 3.430 s 22A(2): 3.430, 4.230 s 22A(3): 3.450, 4.230 s 22A(4): 3.450 s 22A(5): 3.450 s 22A(6): 3.450 s 22A(7): 4.230 s 22B: 3.430 s 23(1): 3.460 s 23(3): 3.470 s 25: 3.480 s 26(1): 3.170 s 26(2): 3.170 s 26(2A): 3.170 s 26(3): 3.170 s 26(3A): 3.170 s 26(4): 3.170 s 27(1): 3.230 s 27(2): 3.210 s 27(3): 3.180 s 28: 3.180 s 29(1): 4.40, 4.50, 4.60 s 29(1)(a): 4.20 s 29(1)(b): 4.20 s 29(2): 5.10 s 29(3): 4.20 s 30(1): 4.150 s 30(1)(a): 4.150 s 30(1)(b): 4.150 s 30(2): 4.190 s 30(2)(a): 4.190

s s s s s s s s s s s s s s s s s s s s s s s s

30(3): 4.190 30(4): 4.160 30(4)(c): 4.160 30(5)(b)(i): 4.160 30(5)(b)(ii): 4.160 30(6): 4.150, 4.160 30(7): 4.160 30(8): 4.150 30(9): 4.150 30(10): 4.170 30(12): 4.160 32(1): 4.30 32(2): 4.30 32(3): 4.30 33(1): 4.30 33(2): 4.30 33(3): 4.30 33A: 3.330 33B(1)(a): 3.540 33B(1)(b): 3.540 33B(1)(c): 3.540 33B(1)(d): 3.540 33B(1)(e): 3.540 34: 1.90, 5.180, 5.240, 6.50, 6.60, 6.100,

s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s s

36: 5.210 36(1): 5.180, 5.190, 6.60, 6.100 36(2): 5.180, 5.190, 6.120, 6.180 36(2A): 5.180, 6.160 36(3): 6.130 36(3)(a)(i): 6.130 36(3)(a)(ii): 6.130 36(3)(b)(i): 6.130 36(3)(b)(ii): 6.130 36(3)(b)(iii): 6.130 36(4): 6.130 36(5): 5.180, 6.160 37: 5.20, 5.210 37(1): 5.180, 5.190, 6.210, 6.270 37(1A): 5.180, 6.210 37(2): 6.220 37A: 6.120, 6.180, 6.210, 6.260, 6.270 37A(1A): 6.180, 6.270 37A(2A): 6.180, 6.270 37A(1): 3.410, 6.170 37A(2): 6.170 37A(3): 6.170 40: 10.180 45: 5.180, 5.190, 6.50, 10.240 46: 5.30, 5.160, 5.170 47: 5.10, 5.170, 10.60, 10.70 47A: 5.260 47A(1): 5.230, 5.240, 5.260 47A(6): 5.290 47A(7): 5.270, 5.290 47B(1): 5.260 47B(2): 5.260, 5.290

6.210

lxxxvi

Table of Statutes

Shipping Registration Act 1981 — cont s 47B(3): 5.260, 5.290 s 47C: 5.290 s 47D(1): 5.230, 5.270 s 47D(2): 5.270 s 47D(3): 5.270 s 47E: 5.250 s 48(1)(a): 6.200 s 48(5): 6.200 s 48(6): 6.200 s 49(1)(b): 3.600 s 54: 3.360 s 56(1): 3.20 s 56(2): 3.20 s 57(1): 3.360 s 57(2): 3.360 s 57(4): 3.360 s 57(5): 3.360 s 58: 3.500 s 58(1): 3.520 s 58(2): 3.520 s 58(2A): 3.520 s 58(3): 3.520, 3.530 s 59(1): 3.370, 3.490 s 60: 3.370 s 61AB(1): 3.320 s 62: 3.520, 5.90 s 63(1): 4.20 s 63(1)(a): 4.50, 4.150 s 63(1)(b): 4.250 s 63(2): 4.20 s 64: 3.270 s 64(1): 3.270 s 65(1): 3.440 s 65(1)(a): 3.380, 3.440 s 65(1)(b): 3.380, 3.440 s 65(1)(c): 3.380 s 65(1)(d): 3.380, 3.440 s 65(1)(e): 3.380 s 65(2): 3.450 s 65(3): 3.380 s 65(4): 3.450 s 65(5): 3.380, 3.450 s 65(6): 3.380, 3.450 s 65(8): 3.380 s 66: 3.500 s 66(1): 3.520 s 66(1)(b): 6.100 s 66(1A): 3.520 s 66(2): 3.500, 6.100 s 66(3): 3.500, 3.530 s 66(3)(b): 6.100 s 66(10): 3.550 s 67(1): 3.520 s 67(2): 3.520 s 68: 4.230 s 68(1): 4.190, 4.230 s 68(2): 4.230

s 68(2A): 4.230 s 68(4): 4.230 s 69: 4.230 s 69(1): 4.230 s 69(2): 4.230 s 69(2A): 4.230 s 70(4): 3.90 s 71(1): 3.90 s 74(1): 3.170, 3.400, 3.410, 6.180, 6.270 s 74(1A): 6.180, 6.270 s 74(2): 3.380 s 74(4): 3.90 s 74(4A): 3.480, 4.30 s 74(4C): 3.230 s 77(1): 4.220, 5.180, 5.220 s 77(2): 3.560, 3.590 s 79: 3.610 s 80(c): 4.130 s 114(d): 3.310 Pt III: 1.90 Pt VI: 5.90

Shipping Registration Regulations 1981: 3.150, 3.280, 3.340, 3.540, 6.70 reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg reg

2(1): 3.340, 4.130 2(2): 3.280 2A: 3.540 5: 3.250 6A: 3.60, 3.100, 3.160, 3.320 7(2): 3.250 7A: 3.250 7A(1)(b): 3.250 7A(2): 3.250 7A(3): 3.290 7B: 3.250 7C: 3.250 7C(4): 3.280 7C(5): 3.280 8: 3.250 8(1)(c): 3.280 9: 3.250 10: 3.160 11: 3.340 11(1): 3.340, 5.160 13(1): 3.410 13(2): 3.410 14(2): 3.420 15(1): 3.420 20(1): 3.170 20(3): 3.170 21(1): 3.210 21(2): 3.180 22(1)(a): 4.190 22(1)(b): 4.190 22(2): 4.190 22(3)(a): 4.200 22(3)(b): 4.200

Table of Statutes lxxxvii Shipping Registration Regulations 1981 — cont reg 22B: 3.540 reg 22C(2)(a): 3.550 reg 22C(2)(b): 3.490 reg 23(1)(a): 6.70 reg 23(1)(b): 6.70 reg 23(2)(a): 6.130 reg 23(2)(b): 6.130 reg 23(2)(c): 6.130 reg 23(2)(d): 6.130 reg 23(3): 6.140 reg 24(1): 5.30 reg 24(1)(a): 6.230 reg 24(1)(b): 6.230 reg 24(1)(c): 6.230 reg 24(2)(a): 6.220 reg 24(2)(b): 6.220 reg 24(2)(c): 6.220 reg 28A(1): 5.230 reg 31(1): 3.380 reg 31(4): 3.380 reg 31(5): 3.420 reg 31(6): 3.380 reg 31(7): 3.380 reg 31(8): 3.380 reg 32: 3.550 reg 33: 3.500 reg 33A: 4.230 reg 34: 4.220, 5.180, 5.220 reg 35: 4.130 reg 40: 6.240 reg 41: 3.340 Sch 1: 3.340 Sch 2, Form 5: 5.230, 5.260

Australian Capital Territory Law Reform (Miscellaneous Provisions) Act 1955 s 32: 16.100

Legislation Act 2001 s 86: 2.330

Statute Law Amendment Act (No 2) 2002 s 6(1): 2.330, 8.290 Sch 4, Pt 4.9: 2.330, 8.290

New South Wales Civil Liability Act 2002 s 5D: 15.110 s 5D(1)(a): 15.120 s 5D(1)(b): 15.120, 15.170 s 5D(4): 15.170 s 5E: 15.110 ss 34 to 39: 15.130 s 36: 15.160 s 36(b): 15.160

Commercial Arbitration Act 2010 s 5: 12.580

Compensation to Relatives Act 1897 s 3(1): 16.100

Crimes (Offences at Sea) Act 1980: 4.110 Crimes (Sentencing Procedure) Act 1999

Statute Stocktake Act 1999

s 17: 15.90

s 4(1): 2.280

Crimes at Sea Act 1998: 4.120 Statute of Westminster Adoption Act 1942: 2.200, 2.270, 2.290, 16.20 s 3: 2.200, 2.270, 16.20

Frustrated Contracts Act 1978 s 4(1)(b): 14.480 s 4(2)(b): 14.480

Trade Practices Act 1974 s 68(1): 15.40 s 74(1): 15.40

s 6(1)(b): 14.480 s 11(2)(a): 14.480 s 12: 14.480

Transport Legislation Amendment Act 1995: 20.50

Heritage Act 1977

Transport and Communications Amendment Act 1994: 19.40

Imperial Acts Application Act 1969

Transport and Communications Legislation Amendment Act (No 2) 1992: 19.400

Law Reform (Marital Consortium) Act 1984

Pt 3C: 20.820, 21.210

ss 24 to 28: 17.660

s 3(1): 16.100

Uniform Shipping Laws Code s 16: 15.70

Limitation Act 1969

lxxxviii Table of Statutes Limitation Act 1969 — cont s 14(1)(a): 18.30 s 14(1)(b): 15.240 s 18A: 15.240 s 22(1): 8.500, 15.240 s 22(2): 8.500, 15.220, 15.240 s 22(3): 8.500 s 22(4): 15.220 s 26(1): 15.250 s 60A: 15.240 s 60C: 15.240

Marine Pollution Act 1987 s 8(2)(b): 19.70

Marine Pollution Act 2012: 19.30, 19.100 s 3: 19.40 s 4: 19.30 s 13(1): 19.40 s 15(1): 19.40, 19.100 s 16(1): 19.100 s 16(2): 19.100 s 17: 19.100 s 18: 19.70, 19.100 s 18(1): 19.140 s 18(1)(a): 19.100 s 19: 19.100 s 20: 19.100 s 21: 19.100 ss 22 to 23: 19.100 s 25: 19.100 s 26: 19.100 s 30: 19.140 s 31: 19.140 s 45(1): 19.140 s 46: 19.140 s 47: 19.140 s 53(1): 19.140 s 54: 19.140 s 55: 19.140 s 60(1): 19.140 s 61: 19.140 s 62: 19.140 s 86: 19.100 s 87: 19.100 s 87(1): 19.100 s 90(1): 19.100 Pts 4 to 7: 19.140

Marine Safety Act 1998: 1.110, 1.120, 1.290, 3.610 s s s s s s s

5(1): 1.120 5(2): 1.120 5(3): 1.120 7: 5.120 8(1)(a): 15.70 8(1)(c): 15.70 10(3): 15.90

s 79: 15.30 s 80: 15.30

Maritime Services Act 1935 s 13YA(2): 16.100, 16.210

Navigation and Other Acts (Validation) Act 1983: 2.270 Protection of the Environment Operations Act 1997 s 4: 19.180 s 7(3): 19.180 s 120: 19.180

Sea-Carriage Documents Act 1997: 12.200, 12.320, 12.640, 12.670, 12.680, 12.710, 12.730, 12.770, 12.840 s s s s s s s s s s s s s s s s s s

5: 12.200, 12.640, 12.680, 12.710, 12.770 5(a): 12.640, 12.680 5(b): 12.670 6: 12.20, 12.680, 12.790 6(1): 12.770 8: 12.710 8(1)(a): 12.640, 12.670, 15.200 8(1)(b): 12.670 8(1)(c): 12.670 8(2): 12.670 9: 12.670 10: 12.710 10(1): 12.640 10(2): 12.640 10(3): 12.640 11: 12.640 12(2): 12.190, 12.200, 12.250 12(3): 12.190, 12.200, 12.250

Sea-Carriage of Goods (State) Act 1921: 12.40

Uniform Civil Procedure Rules 2005 Sch 6, para (a): 19.240

Northern Territory Commercial Arbitration (National Uniform Legislation) Act: 12.580 Compensation (Fatal Injuries) Act s 7: 16.100

Crimes at Sea Act: 4.120 Criminal Law (Offences at Sea) Act: 4.110 Darwin Port Corporation Act s 42: 16.100, 16.210

Table of Statutes lxxxix

Environmental Offences and Penalties Act s s s s

4: 5: 6: 7:

19.110 19.110 19.110 19.110

s 92: 15.30

Proportionate Liability Act s 15: 15.160 s 15(2): 15.160 Pt 2: 15.130

Heritage Act: 20.820, 21.210 Law of Property Act s 58: 16.40

Sea-Carriage Documents Act: 12.200, 12.320, 12.640, 12.670, 12.680, 12.710, 12.730, 12.770, 12.840 s 5: 12.200, 12.640, 12.670, 12.680, 12.710,

12.770

Limitation Act s s s s s s s s s

12(1)(a): 18.30 12(1)(b): 15.240 20: 8.500 20(2): 8.500, 15.240 20(3): 8.500, 15.220, 15.240 20(4): 8.500 20(5): 15.220 24: 15.250 44: 15.240

Marine Act: 1.110, 1.180, 1.290, 3.610, 5.120, 8.430 s s s s s

7(1): 1.180 49(1): 8.430 49(3): 8.290 108: 15.70 110: 15.70, 15.90

s s s s s s s s s s s s s s s

6: 12.20, 12.680, 12.790 6(1): 12.770 8: 12.710 8(1)(a): 12.640, 12.670, 15.200 8(1)(b): 12.670 8(1)(c): 12.670 8(2): 12.670 9: 12.670 10: 12.710 10(1): 12.640 10(2): 12.640 10(3): 12.640 11: 12.640 12(2): 12.190, 12.200, 12.250 12(3): 12.190, 12.200, 12.250

Supreme Court Rules r 7.01(1)(g): 19.240

Marine Pollution Act: 19.30, 19.100, 19.110 s 6: 19.110 s 6(1): 19.40 s 9: 19.40 s 14(1): 19.110 s 14(2): 19.100, 19.110 s 14(3): 19.110 s 14(4): 19.100, 19.110 s 14(5): 19.100 s 14(6): 19.110 s 15(1)(a): 19.100 s 15(1)(b): 19.100 s 15(1)(c): 19.100 s 15(2)(a): 19.100 s 15(3): 19.100 s 16: 19.100 s 21: 19.140 s 27: 19.140 s 31 (uncommenced): 19.140 s 38: 19.140 s 50: 19.110 Pts 3 to 6: 19.140

Queensland Acts Interpretation Act 1954 s 20: 2.330, 8.290

Civil Liability Act 2003 s 11: 15.110 s 11(1)(a): 15.120 s 11(1)(b): 15.120, 15.170 s 11(4): 15.170 s 12: 15.110 ss 28 to 33: 15.130 s 32A: 15.160 s 32A(b): 15.160

Commercial Arbitration Act 2013 s 5: 12.580

Crimes at Sea Act 2001: 4.120 Criminal Code s 14A: 4.110

Penalty Units Act: 15.90, 19.110 Environmental Protection Act 1994 Ports Management Act s 91: 15.30

s 8: 19.180 s 23(2): 19.180

xc Table of Statutes Environmental Protection Act 1994 — cont Pt 3C: 19.180

Imperial Acts Application Act 1984 ss 9 to 11: 17.660

Law Reform (Husband and Wife) Act 1968 s 3(1): 16.100

s 9: 12.640 s 10(2): 12.190, 12.200, 12.250 s 10(3): 12.190, 12.200, 12.250

Statute Law Revision Act 1995 s 5(1): 19.200 Sch 7: 19.200

Supreme Court Act 1995 ss 17 to 18: 16.100

Limitation of Actions Act 1974 s s s s s s

10: 15.270 10(1)(a): 15.270, 18.30 10(6)(a): 15.270, 15.280 11(1): 15.280 31: 15.280 40(1): 15.290

Navigation (Manning of Fishing Vessels) Regulations 1974 reg 8(b)(ii): 17.610

Penalties and Sentences Act 1991 s 5: 15.90, 19.40, 19.100 s 5A: 15.90, 19.40, 19.100

Property Law Act 1974 s 56: 16.40

Queensland Heritage Act 1992 Pt 9: 20.820, 21.210

Queensland Marine Act 1958 s 77(1): 8.290 s 77(2): 8.290 s 255: 2.330, 8.290

Queensland Marine (Sea Dumping) Act 1985: 19.200 Sea-Carriage Documents Act 1996: 12.200, 12.320, 12.640, 12.670, 12.680, 12.710, 12.730, 12.770, 12.840 s 3: 12.200, 12.640, 12.670, 12.680, 12.710,

12.770 s s s s s s s

4: 12.20, 12.680, 12.790 4(1): 12.770 6: 12.710 6(1)(a): 12.640, 12.670, 15.200 6(1)(b): 12.670 6(1)(c): 12.670 6(2): 12.670

s 7: 12.670 s 8: 12.710 s 8(1): 12.640 s 8(2): 12.640 s 8(3): 12.640

Transport Infrastructure Act 1994 s 281E: 16.100, 16.210

Transport Operations (Marine Pollution) Act 1995: 19.30, 19.100 s 4(1): 19.40 s 5: 19.30 s 9: 19.40 s 26(1): 19.40, 19.100 s 26(2): 19.40, 19.100 s 27: 19.100 s 28(1)(a): 19.100 s 28(1)(b): 19.100 s 28(1)(c): 19.100 s 28(1)(d): 19.100 s 28(2): 19.100 s 29(1): 19.100 s 29(2): 19.100 s 35(1): 19.140 s 42(1): 19.140 s 47: 19.140 s 48: 19.140 s 55: 19.140 s 67: 19.100 s 67(2): 19.100 s 67(3): 19.100 Pts 5 to 8: 19.140 Schedule: 19.40

Transport Operations (Marine Safety) Act 1994: 1.110, 1.140, 1.290, 3.610, 17.610 s s s s s s s s s s s s s s s

6: 15.70 9: 5.120 10(1): 1.140 10(2): 1.140 10(3): 1.140 10(4): 1.140 10(5): 1.140 10(7): 1.140 11(1)(a): 15.70 11(1)(c): 15.70 11(1)(d): 15.70 11(1)(e): 15.70 101(1): 15.30 102(3): 15.30 211(2): 15.90

Table of Statutes xci

Transport Operations (Marine Safety) Regulations 1995 reg 38: 17.610

Transport Operations (Oil Pollution) Act 1995 s 27: 19.100

Uniform Civil Procedure Rules 1999 r 124(1)(a): 19.240 r 500: 15.105

South Australia Acts Interpretation Act 1915 s 16: 2.330 s 17: 8.290

Civil Liability Act 1936 ss 19 to 23C: 16.100 s 34: 15.110 s 34(1)(a): 15.120 s 34(1)(b): 15.120, 15.170 s 34(4): 15.170 s 35: 15.110

s s s s s s s

6: 15.70 6(2): 15.70 21: 16.100, 16.210 31C: 7.80 36(1): 15.30 36(2): 15.30 36(3): 15.30

Harbors and Navigation Regulations 2009 reg 165(2): 15.90

Historic Shipwrecks Act 1981: 20.820, 21.210

Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 s 6(4): 15.290 s 9: 15.160 Pt 3: 15.130

Limitation of Actions Act 1936 s s s s s

35(a): 18.30 35(c): 15.270 35(g): 8.500 36(1): 15.280 48: 15.270, 15.280

Commercial Arbitration Act 2011 s 5: 12.580

Marine Act 1936 s 131: 2.330, 8.290

Crimes (Offences at Sea) Act 1980: 4.110 Crimes at Sea Act 1998: 4.120 Environment Protection Act 1993 s s s s s s

7(1): 19.180 9(1): 19.180 25: 19.180 79: 19.180 80: 19.180 82: 19.180

Environment Protection (Sea Dumping) Act 1984: 19.200 Frustrated Contracts Act 1988 s 3(1): 14.480 s 3(2): 14.480 s 7(1): 14.480 s 7(2): 14.480

Harbors and Navigation Act 1993: 1.110, 1.150, 1.290, 3.610 s 4: 15.70 s 4(1): 5.120 s 4(1)(a): 1.150 s 4(1)(b) to (d): 1.150

Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987: 19.30, 19.100 s 3(1): 19.40 s 3(3): 19.30 s 3(6): 19.40 s 7: 19.30 s 8(1): 19.100 s 8(2)(a): 19.100 s 8(2)(c): 19.100 s 8(3): 19.100 s 8(3)(a) to (c): 19.100 s 8(4)(a) to (i): 19.100 s 8(4)(j): 19.100 s 9: 19.100 s 14: 19.30 s 18(1): 19.140 s 24AA: 19.30 s 24AAB(1): 19.140 s 24AAC: 19.30 s 24AAD(1): 19.140 s 25A: 19.100 s 25A(1): 19.100 s 25A(3): 19.100 Pt 3: 19.140 Pt 3AA: 19.140

xcii Table of Statutes Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 — cont Pt 3AB: 19.140

Sea-Carriage Documents Act 1998: 12.200, 12.320, 12.640, 12.670, 12.680, 12.710, 12.730, 12.770, 12.840 s 4: 12.200, 12.640, 12.670, 12.680, 12.710,

12.770 s s s s s s s s s s s s s s s

5: 12.20, 12.680, 12.790 5(1): 12.770 7: 12.710 7(1)(a): 12.640, 12.670, 15.200 7(1)(b): 12.670 7(1)(c): 12.670 7(2): 12.670 8: 12.670 9: 12.710 9(1): 12.640 9(2): 12.640 9(3): 12.640 10: 12.640 11(2): 12.190, 12.200, 12.250 11(3): 12.190, 12.200, 12.250

South Australian Ports Corporation Act 1994

s 3: 16.100

Crimes (Offences at Sea) Act 1979: 4.110 Crimes at Sea Act 1999: 4.120 Environment Protection (Sea Dumping) Act 1987: 19.200 Environmental Management and Pollution Control Act 1994 s s s s s s

3(2): 19.180 5(2): 19.180 9(2): 19.180 50: 19.180 51: 19.180 53: 19.180

Fatal Accidents Act 1934 s 4: 16.100

Historic Cultural Heritage Act 1995 Pt 9: 20.820, 21.210

Legislation Repeal Act 2000 Sch 1: 19.200

s 24: 16.100, 16.210

Limitation Act 1974 Supreme Court Act 1935 s 71: 15.105

Supreme Court Civil Rules 2006 r 40(1)(k): 19.240

Wrongs Act 1936 s 33(1): 16.100

s s s s s s s s s

4(1)(a): 15.240, 18.30 4(2): 18.30 5(3): 15.240 5A(3): 15.240 7(1): 15.250 8(1): 8.500, 15.240 8(2): 8.500, 15.220, 15.240 8(3): 8.500 8(4): 15.220

Tasmania Marine Act 1976 Acts Interpretation Act 1931

s 2(2): 2.330

s 14: 2.330

Marine Act (No 2) 1966 Civil Liability Act 2002 s 13: 15.110 s 13(1)(a): 15.120 s 13(1)(b): 15.120, 15.170 s 13(4): 15.170 s 14: 15.110 s 43C: 15.160 s 43C(2): 15.160 Pt 9A: 15.130

s 5: 2.330

Marine and Safety Authority Act 1997: 1.110, 1.170, 1.290, 3.610, 15.70 s 3: 1.170, 5.120 s 35: 15.30

Marine and Safety (Collision) Regulations 2007 reg 5: 15.90

Commercial Arbitration Act 2011 s 5: 12.580

Common Law (Miscellaneous Actions) Act 1986

Marine and Safety Regulations 2007: 15.70 Mercantile Law Act 1935 s 6: 16.40

Table of Statutes xciii

Penalty Units and Other Penalties Act 1987 s 4: 15.90, 19.100 s 4A: 15.90, 19.100

Supreme Court Rules 2000 r 147A(1)(b): 19.240 r 560(1): 15.105

Wrongs Act 1954 Pollution of Waters by Oil and Noxious Substances Act 1987: 19.30, 19.100 s 3(1): 19.40 s 3(3): 19.30 s 3A: 19.40 s 4(a): 19.100 s 4(b): 19.100 s 7: 19.30 s 8(1): 19.100 s 8(2)(a): 19.100 s 8(3)(b): 19.100 s 8(3)(c): 19.100 s 8(5): 19.100 s 8(6)(a) to (e)(vi): 19.100 s 8(6)(e)(vii): 19.100 s 9: 19.100 s 16: 19.30 s 20(1): 19.140 s 25A: 19.30 s 25C(1): 19.140 s 25CA: 19.30 s 25CB(1): 19.140 s 25D: 19.30 s 25F(1): 19.140 s 25I: 19.100 s 25I(1): 19.100 s 25I(3): 19.100 Pt II, Div 2: 19.140 Pt II, Div 2A: 19.140 Pt II, Div 2AB: 19.140 Pt II, Div 2B: 19.140

Sea-Carriage Documents Act 1997: 12.200, 12.320, 12.640, 12.670, 12.680, 12.710, 12.730, 12.770, 12.840 s 4: 12.200, 12.640, 12.670, 12.680, 12.710,

12.770 s s s s s s s s s s s s s s s

5: 12.20, 12.680, 12.790 5(1): 12.770 7: 12.710 7(1)(a): 12.640, 12.670, 15.200 7(1)(b): 12.670 7(1)(c): 12.670 7(2): 12.670 8: 12.670 9: 12.710 9(1): 12.640 9(2): 12.640 9(3): 12.640 10: 12.640 11(2): 12.190, 12.200, 12.250 11(3): 12.190, 12.200, 12.250

s 3(5): 15.250

Victoria Australian Consumer Law and Fair Trading Act 2012 s s s s

35(3)(a): 14.480 36: 14.480 37: 14.480 42: 14.480

Commercial Arbitration Act 1984: 12.580 s 48: 12.580

Commercial Arbitration Act 2011 s 5: 12.580

Crimes (Offences at Sea) Act 1978: 4.110 Crimes at Sea Act 1999: 4.120 Environment Protection Act 1970 s 3(1): 19.180 s 3(2): 19.180 s 39: 19.180

Goods Act 1958: 12.200, 12.320, 12.640, 12.670, 12.680, 12.710, 12.730, 12.770, 12.840 s 89: 12.200, 12.640, 12.670, 12.680, 12.710, 12.770 s 90: 12.20, 12.680, 12.790 s 90(1): 12.770 s 92: 12.710 s 92(1)(a): 12.670, 15.200 s 92(1)(b): 12.670 s 92(1)(c): 12.670 s 92(2): 12.670 s 93: 12.670 s 94: 12.710 s 94(1): 12.640 s 94(2): 12.640 s 94(3): 12.640 s 95: 12.640 s 96(2): 12.190, 12.200, 12.250 s 96(3): 12.190, 12.200, 12.250

Heritage Act 1995 Pt 3: 20.820, 21.210

Instruments Act 1958 ss 15 to 18: 17.660

xciv Table of Statutes Instruments Act 1958 — cont s 126: 16.40

Interpretation of Legislation Act 1986 s 38: 15.90, 19.40, 19.100

Limitation of Actions Act 1958 s 5(1)(a): 15.270, 18.30 s 5(1AA): 15.280 s 23A: 15.280

Marine Act 1928 s 13: 21.170

Marine Act 1988: 17.580 s 58(5): 15.105

Marine Safety Act 2010: 1.110, 1.130, 1.290, 3.610 s s s s s s

3(1): 1.130, 5.120 96(1): 15.70 96(2): 15.90 257(1): 15.30 257(2): 15.30 257(3): 15.30

Marine (Vessels) Regulations 1988: 17.580 Monetary Units Act 2004 s 5(3): 15.90, 19.40, 19.100

Pollution of Waters by Oil and Noxious Substances Act 1986: 19.30, 19.100 s 3(1): 19.40 s 3(3): 19.30 s 3(6): 19.40 s 7: 19.30 s 8(1): 19.40, 19.100 s 8(2)(a): 19.100 s 8(2)(b): 19.100 s 8(2)(c): 19.100 s 8(3): 19.100 s 8(4)(a) to (i): 19.100 s 8(4)(j): 19.100 s 9: 19.100 s 10: 19.100 s 10(1): 19.100 s 10(3)(c): 19.100 s 10(3)(d): 19.100 s 14: 19.30 s 18(1): 19.140 s 23A: 19.30 s 23B(1): 19.140 s 23C: 19.30 s 23E(1): 19.140 s 23F: 19.30 s 23G(1): 19.140 Pt 2, Div 2: 19.140

Pt 2, Div 2A: 19.140 Pt 2, Div 2B: 19.140 Pt 2, Div 2C: 19.140

Port Management Act 1995 s 23: 16.100, 16.210

Sentencing Act 1991 s 110: 15.90, 19.40, 19.100

Supreme Court Act 1986 s 77: 15.105

Supreme Court (General Civil Procedure) Rules 2005 r 7.01(1)(g): 12.270

Supreme Court (General Civil Procedure) Rules 2015 r 7.01(1)(g): 19.240 r 21.03(1.2): 13.440

Wrongs Act 1958 ss 15 to 22: 16.100 s 24(4): 15.290 s 24AJ: 15.160 s 24AJ(b): 15.160 s 51: 15.110 s 51(1)(a): 15.120 s 51(1)(b): 15.120, 15.170 s 51(4): 15.170 s 52: 15.110 Pt IVAA: 15.130

Western Australia Civil Liability Act 2002 s 5AL: 15.160 s 5AL(2): 15.160 s 5C: 15.110 s 5C(1)(a): 15.120 s 5C(1)(b): 15.120, 15.170 s 5C(4): 15.170 s 5D: 15.110 Pt 1F: 15.130

Commercial Arbitration Act 2011 s 5: 12.580

Crimes (Offences at Sea) Act 1979: 4.110 Crimes at Sea Act 2000: 4.120 District Court of Western Australia Act 1969 s 50(2): 16.30

Table of Statutes xcv

Environmental Protection Act 1986 s s s s s

3(1): 19.180 5: 19.180 49(1): 19.180 50A: 19.180 50B: 19.180

Fatal Accidents Act 1959 s 4: 16.100

Law Reform (Miscellaneous Provisions) Act 1941 s 3: 16.100

s 8(5): 19.100 s 8(6)(a) to (i): 19.100 s 8(6)(j): 19.100 s 10: 19.100 s 11: 19.100 s 11(1): 19.100 s 11(3)(aa): 19.100 s 11(3)(bb): 19.100 Pt III: 19.140

Port Authorities Act 1999 s 99: 15.30 s 100(2): 15.30 s 113: 16.100, 16.210

Law Reform (Statute of Frauds) Act 1962: 16.40

Limitation Act 2005 s s s s s

13: 18.30 13(1): 15.270 14(1): 15.280 17: 15.290 39(1): 15.280

Limitation Legislation Amendment and Repeal Act 2005 s 18(1): 15.260

Marine Archaeology Act 1973: 21.210 Marine (Certificates of Competency and Safety Manning) Regulations 1985 reg 4: 16.20 Sch 1: 16.20

Maritime Archaeology Act 1973: 20.820, 21.210

Motor Vehicle (Third Party) Insurance Act 1987 s 7: 16.100

Pollution of Waters by Oil and Noxious Substances Act 1986: 19.30 s s s s

3(3): 19.30 7: 19.30 16: 19.30 20(1): 19.140

Pollution of Waters by Oil and Noxious Substances Act 1987: 19.100 s s s s s s

3(1): 19.40 3(5): 19.40 8(1): 19.40, 19.100 8(4)(a): 19.100 8(4)(b): 19.100 8(4)(c): 19.100

Rules of the Supreme Court 1971 O O O O

10: 10, 20, 35,

19.240 r 1A(3): 19.240 r 1(f): 19.240 r 1: 15.105

Sea-Carriage Documents Act 1997: 12.200, 12.320, 12.640, 12.670, 12.680, 12.710, 12.730, 12.770, 12.840 s 5: 12.200, 12.640, 12.670, 12.680, 12.710,

12.770 s s s s s s s s s s s s s s s

6: 12.20, 12.680, 12.790 6(1): 12.770 8: 12.710 8(1)(a): 12.670, 15.200 8(1)(b): 12.670 8(1)(c): 12.670 8(2): 12.670 9: 12.670 10: 12.710 10(1): 12.640 10(2): 12.640 10(3): 12.640 11: 12.640 12(2): 12.190, 12.200, 12.250 12(3): 12.190, 12.200, 12.250

Sea-Carriage of Goods Act 1909: 12.40 Supreme Court Act 1934 s 29: 15.260

Western Australian Marine Act 1982: 1.110, 1.160, 1.290, 3.610, 16.20 s s s s s s s s

3(1): 1.160, 5.120 6(1): 16.20 76: 16.20 79(1)(a): 15.70 79(2): 15.90 84: 16.20 84(1)(e): 16.20 85: 16.20

xcvi Table of Statutes Western Australian Marine Act 1982 — cont s 135(2): 2.330

Western Australian Marine (Sea Dumping) Act 1981: 19.200 s 2(1): 19.200

United Kingdom/Imperial Admiralty Offences (Colonial) Act 1849 s 1: 4.110

Arbitration Act 1996: 14.100

Canada Water-Carriage of Goods Act 1910: 12.30

s 48(4): 13.440 s 69: 14.240

Army and Air Force (Annual) Act 1940 s 3(1): 2.170

Canada – Ontario Australia Act 1986: 2.210 Statutes of Ontario 1924

s 4: 2.270

cl 32: 15.130

Bills of Lading Act 1855: 12.670, 12.680

China Maritime Code: 12.40 Art 207: 16.250 Art 210: 16.230, 16.250 Ch IV: 12.40 Ch XI: 16.250

England Admiralty Court Act 1861: 8.260 s 10: 8.260

British Nationality Act 1948 s 1: 4.110

British Nationality Act 1981: 4.110 Carriage of Goods by Sea Act 1971: 12.40 s 1(6)(b): 13.20

Carriage of Goods by Sea Act 1992: 12.670, 12.770 s 1(5): 12.770 s 5(2)(b): 12.670

Bills of Sale Act 1878: 1.200 Registration of Vessels Act 1823 (4 Geo IV, c 41): 5.20 s 30: 5.20

Shipping and Navigations Act 1660: 3.40 Union with Scotland Act 1706: 4.90

Indonesia Indonesian Commercial Code Arts 466 to 520: 12.160

New Zealand Admiralty Act 1973 s 2: 9.70

Maritime Transport Act 1994 s 83: 16.220

Civil Procedure Rules 1998 (CPR): 16.40, 19.260 r 61.7: 16.220 r 61.11: 16.40

Colonial Courts of Admiralty Act 1890 s 2: 8.260

Colonial Laws Validity Act 1865: 16.20 s 2: 2.270

Commonwealth of Australia Constitution Act 1900: 2.190 s 5: 2.190

Communications Act 2003: 12.770 Courts (Colonial) Jurisdiction Act 1874: 4.110

Federal Council of Australasia Act 1885 s 15(c): 2.80

Pt 7: 16.220

Finance Act 1959 Shipping and Seamen Act 1903: 12.30

Sch 8, Pt II: 17.150

Table of Statutes xcvii

Insurance Act 2015: 17.10, 17.90, 17.100, 17.570 s 3(3)(b): 17.100 s 3(3)(c): 17.100 s 3(4)(b): 17.100 s 3(5): 17.100 s 8(1): 17.100 s 8(4)(5): 17.100 s 8(4)(a): 17.100 s 10(1): 17.570 s 10(2): 17.570 s 10(3): 17.570 s 10(4): 17.570 s 11(3): 17.570 s 14(1): 17.630 s 21(2): 17.10, 17.100 Sch 1, para 3: 17.100 Sch 1, para 4: 17.100 Sch 1, para 5: 17.100

Insurance Contracts Act 2015: 17.10 Law Reform (Contributory Negligence) Act 1945: 15.130

ss 221 to 224: 2.320 s 260: 8.290 s 261: 2.300 s 372: 2.300 s 509: 2.300 ss 511 to 522: 21.40 ss 511 to 537: 2.300 s 523: 2.300 ss 524 to 537: 21.40 s 686: 1.320 s 712: 2.300 s 735: 2.270, 2.340, 16.20 ss 735 to 736: 16.20 s 736: 2.270, 2.340 s 742: 1.180, 1.230 Pt I: 2.300, 2.320, 3.10, 3.30 Pt II: 2.300, 2.330, 8.290 Pt IV: 2.300 Pt V: 2.330 Pt VII: 15.130 Pt VIII: 2.300, 2.320, 2.330 Pt IX: 2.300, 21.40 Pt XIII: 2.300

Merchant Shipping Act 1906: 2.310 Life Assurance Act 1774: 17.30 Merchant Shipping Act 1911: 2.310 Marine Insurance Act 1906: 17.10, 17.30, 17.150 s 17: 17.630 s 18: 17.100 ss 18 to 20: 17.10 s 29: 17.90, 17.160 s 30: 17.90, 17.160 s 66(2): 18.20 s 78(4): 17.220 s 91(2): 17.10

Merchant Shipping Act 1974 s 4: 19.230

Merchant Shipping Act 1995: 19.230 s 185(4): 16.150 Sch 7, Art 10: 16.230

Merchant Shipping (Liability of Shipowners and Others) Act 1900: 16.20

Maritime Conventions Act 1911: 2.310, 15.130 s 1(b): 15.150 s 9(1): 2.310

Merchant Shipping Act 1786 s 17: 6.190

Merchant Shipping Act 1862: 15.60

Merchant Shipping (Liability of Shipowners and Others) Act 1958: 2.310, 16.20 Merchant Shipping (Oil Pollution) Act 1971: 19.230 Pilotage Act 1913 s 15(1): 15.30

Merchant Shipping Act 1894: 1.250, 2.10, 2.70, 2.270, 2.280, 2.290, 2.300, 2.310, 2.320, 2.330, 3.10, 3.30, 4.110, 5.30, 10.330, 16.10, 16.20, 16.90, 16.100, 16.170 s s s s s

1: 4.110 91: 2.300 106: 2.320 158: 3.510 167: 8.290

Responsibility of Shipowners Act 1734: 16.10

Sale of Goods Act 1894: 5.210 Statute of Frauds 1677: 16.40 Statute of Westminster 1931: 2.200, 4.110

xcviii

Table of Statutes

Statute of Westminster 1931 — cont s 1: 2.200, 2.210 s 2(1): 2.270 s 3: 2.200, 2.210 s 4: 16.20 s 5: 2.270

Treaties and Conventions Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974: 16.160 Art 13: 12.530, 16.160, 19.280

s 10: 2.200

Theft Act 1968: 4.110

United States 46 App USC § 30701, Statutory Note § 1301(a): 12.810

46 USC § 12102: 14.60 § 12103: 14.60 § 12111: 14.60 § 12112: 14.60 §§ 30501 to 30512: 16.230 § 30505: 16.260 § 30701, Statutory Note: see Carriage of Goods by Sea Act 1936 (US)

Carriage of Goods by Sea Act 1936 (46 USC § 30701, Statutory Note): 12.30, 12.40, 12.370, 12.510, 12.530, 12.560, 12.590, 12.710, 12.810, 15.140, 18.70 § 3(4): 12.150 § 3(6): 12.590

Australia-Indonesia Delimitation Treaty: 19.190

Brussels Convention: see International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 Bunker Convention: see International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 CLC 69: see International Convention on Civil Liability for Oil Pollution Damage 1969 CLC 92: see International Convention on Civil Liability for Oil Pollution Damage 1992 Convention on Limitation of Liability for Maritime Claims 1976: 14.380, 16.10, 16.20, 16.160, 16.220, 16.230, 16.240, 16.250, 16.260, 18.10, 19.50 Art 2.1(d): 16.20

§ 3(8): 12.820

Art 2.1(e): 16.20

§ 4(2)(a): 15.140

Art 4: 16.30

§ 4(2)(b): 12.400

Art 13(2): 16.240

§ 4(5): 12.530, 12.550, 12.560 § 4(5)(g): 12.560 § 5: 12.560

Constitution s 8: 6.10

Convention on Limitation of Liability for Maritime Claims 1976 as amended by the 1996 Protocol: 16.20, 16.30, 16.40, 16.50, 16.60, 16.80, 16.90, 16.100, 16.160, 16.170, 16.230, 18.10

Art III, s 2(1): 2.130

Harter Act: 12.30, 12.40, 18.70 46 USC §§ 30702 to 30707: 12.30 46 USC § 30704: 12.30

Convention on Limitation of Liability for Maritime Claims of 1976 (1996 Protocol to amend): 16.10, 16.20, 16.30, 16.70, 16.100, 16.170, 16.220, 16.230, 16.240, 16.250, 18.10

Merchant Marine Act 1920 (Jones Act): 14.60

Oil Pollution Act 1990: 19.20

Convention on the International Regulations for Preventing Collisions at Sea 1972 (Prevention of Collisions Convention): 15.70, 15.130, 18.10

Pomerene Act: 12.20, 12.200 49 USC § 80110: 12.20 49 USC § 80113(a): 12.200

Convention on the Prevention of Marine Pollution by Dumping of Wastes and

Table of Statutes xcix Dumping Convention — cont

Other Matter 1972 (Dumping Convention): 19.20, 19.30, 19.190, 19.200 Australian enactment: see Environment Protection (Sea Dumping) Act 1981 (Cth), Sch 1 Annex 1: 19.190 Annex 1, para 1: 19.190 Annex 2: 19.190 Art 1: 19.190 Art 1.8: 19.190 Art 8: 19.190

Declaration of Paris 1856: 4.50, 6.10 Fund Convention 1971: see International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971 Dumping Convention: see Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter 1972 Hague Rules under the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924: 12.10, 12.30, 12.40, 12.50, 12.60, 12.70, 12.80, 12.100, 12.110, 12.130, 12.140, 12.150, 12.160, 12.170, 12.180, 12.200, 12.210, 12.240, 12.250, 12.270, 12.280, 12.290, 12.300, 12.310, 12.320, 12.330, 12.340, 12.370, 12.410, 12.480, 12.510, 12.520, 12.530, 12.550, 12.560, 12.570, 12.580, 12.600, 12.610, 12.620, 12.630, 12.650, 12.660, 12.690, 12.710, 12.730, 12.740, 12.780, 12.800, 12.810, 12.820, 12.830, 12.840, 13.20, 13.600, 13.610, 13.630, 14.130, 14.150, 14.160, 14.400, 14.410, 15.140, 15.170, 15.200, 15.240, 16.100, 18.10, 18.30 Art 1(a): 12.60 Art 1(c): 12.70 Art 1(e): 12.50

Art 3, r 6: 12.340, 12.580, 12.590, 12.600, 12.610, 12.620, 12.830, 14.400,

18.30 Art 3, r 8: 12.310, 12.330, 12.370, 12.710, 12.820, 12.830 Art 4: 12.370 Art 4, r 1: 12.280, 12.300, 12.370 Art 4, r 2: 12.280, 12.370, 12.490, 12.580 Art 4, r 2(a): 12.330, 15.140 Art 4, r 2(b): 12.370 Art 4, r 2(f): 12.490 Art 4, r 2(g): 12.490 Art 4, r 2(i): 12.310, 12.370 Art 4, r 2(k): 12.490 Art 4, r 2(m): 12.280, 12.370 Art 4, r 2(p): 12.280 Art 4, r 2(q): 12.280, 12.490 Art 4, r 3: 12.650 Art 4, r 4: 12.330, 12.340 Art 4, r 5: 12.340, 12.370, 12.530, 12.550, 12.560, 12.570, 12.780, 16.100 Art 4, r 6: 12.650 Art 9: 12.550

Hague Service Convention: 19.240 Hague-Visby Rules Australian enactment: see Carriage of Goods by Sea Act 1991 (Cth), Sch 1 (Hague-Visby Rules) Australian modification: see Carriage of Goods by Sea Act 1991 (Cth), Sch 1A (modified Hague-Visby Rules) Hamburg Rules under the United Nations Convention on the Carriage of Goods by Sea 1978: 12.10, 12.30, 12.40, 12.50, 12.60, 12.110, 12.270, 12.320, 12.390, 12.710, 12.810, 14.410 Art Art Art Art Art

4: 12.50 5(1): 12.320 5(2): 12.320 5.1: 12.390 10: 12.60

Art 3: 12.280 Art 3, r 1: 12.280, 12.310, 12.360, 12.370 Art 3, r 1(a): 12.360 Art 3, r 1(b): 12.360 Art 3, r 1(c): 12.360 Art 3, r 2: 12.280, 12.300, 12.310, 12.370, 13.630, 14.400 Art 3, r 3(a): 12.240 Art 3, r 3(c): 12.100, 12.130, 12.170 Art 3, r 4: 12.130, 12.150, 12.240 Art 3, r 5: 12.200

International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924: see Hague Rules International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties 1969 (Intervention Convention): 19.20, 19.30, 19.400

c

Table of Statutes

International Convention Relating to Limitation of Liability of Owners of Sea-Going Ships (Limitation Convention 1976): 12.530, 19.240, 19.250, 19.260, 19.270, 19.280, 19.390 Australian enactment: see Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1 Art Art Art Art

1.2: 19.390 3(b): 19.270 4: 19.280 13(1): 19.270

International Convention Relating to Limitation of the Liability of Owners of Sea-Going Ships 1957 (Limitation Convention): 16.10, 16.20, 16.50, 16.90, 16.100, 16.160, 16.170, 16.230, 16.240, 19.250, 19.280

Annex II, reg 5: 19.140 Annex II, reg 6: 19.40, 19.140 Annex II, reg 13: 19.40, 19.140 Annex III: 19.40, 19.120, 19.130, 19.140 Annexes III to V: 19.140 Annexes III to VI: 19.40 Annex III, reg 7: 19.40, 19.140 Annex IV: 19.40, 19.120, 19.130, 19.140 Annex IV, reg 3: 19.40, 19.140 Annex IV, reg 11: 19.40 Annex IV, reg 11, para 1: 19.140 Annex V: 19.40, 19.120, 19.130, 19.140 Annex V, reg 3: 19.40, 19.140 Annex V, reg 4: 19.40, 19.140 Annex V, reg 7: 19.40, 19.140 Annex VI: 19.40, 19.120, 19.150, 19.160,

19.170 Annex VI, reg 14: 19.160 Annex VI, reg 14, para 1: 19.40 Annex VI, reg 18: 19.170

Art 1(1)(c): 16.20

International Convention Relating to the Arrest of Sea Going Ships 1952: 19.50 International Convention for the Prevention of Pollution by Oil 1954 (OILPOL 54): 19.20 International Convention for the Prevention of Pollution by Ships 1973, as amended by Protocol in 1978 (MARPOL 73/78): 14.100, 19.20, 19.30, 19.40, 19.60, 19.70, 19.90, 19.100, 19.120, 19.130, 19.140, 19.180, 19.210 Australian enactment: see Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) Annex I: 19.40 Annexes I to V: 19.40 Annexes I to III: 19.40 Annex I, reg 4: 19.40

International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 (Brussels Convention): 12.30, 12.40, 12.530, 12.560 International Convention for the Unification of Certain Rules of Law relating to Maritime Liens and Mortgages 1926: 8.600 International Convention for the Unification of Certain Rules of Law relating to Maritime Liens and Mortgages 1967: 8.600 International Convention for the Unification of Certain Rules of Law with Respect to Collisions 1910 (Brussels Collisions Convention 1910): 15.110, 15.130

Annex I, reg 9: 19.140 Annex I, reg 11(b)(ii): 19.70 Annex I, reg 12: 19.60 Annex I, reg 15: 19.40, 19.140 Annex I, reg 34: 19.40, 19.140 Annex I, reg 114: 19.140 Annex II: 19.40, 19.70, 19.120, 19.130,

19.140 Annexes II to V: 19.120, 19.130, 19.140,

19.170 Annex II, reg 1(2): 19.70 Annex II, reg 1(3): 19.70 Annex II, reg 3: 19.40, 19.140 Annex II, reg 4: 19.140

International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (Bunker Convention): 19.20, 19.30, 19.210, 19.390 Australian enactment: see Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth) Art Art Art Art Art

1: 19.390 3: 19.390 3.2: 19.390 4: 19.390 4.1: 19.390

Table of Statutes ci Bunker Convention — cont Art 5: 19.390 Art 6: 19.390 Art 7.10: 19.390 Art 8: 19.390

International Convention on Civil Liability for Oil Pollution Damage 1969 (CLC 69): 19.20, 19.30, 16.150, 19.220, 19.230, 19.240, 19.250, 19.280, 19.300, 19.330, 19.380 Art 1.6: 19.230 Art 1.8: 19.220 Art 5: 19.380 Art 9: 19.20 Art 11: 19.20 Arts 12 to 18: 19.20 Art 12 ter: 19.20

International Convention on Civil Liability for Oil Pollution Damage 1992 (CLC 92): 19.20, 19.30, 19.210, 19.220, 19.230, 19.240, 19.250, 19.260, 19.270, 19.280, 19.290, 19.300, 19.320, 19.330, 19.340, 19.350, 19.360, 19.370, 19.380, 19.390, 19.400

Australian enactment: see Protection of the Sea (Civil Liability) Act 1981 (Cth), Sch 1 Art 1.2: 19.210 Art 1.5: 19.210 Art 9: 19.20 Art 11: 19.20 Arts 12 to 18: 19.20

International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 as amended by protocol in 2010 (HNS Convention 2010): 19.210 International Convention on Maritime Liens and Mortgages 1993: 8.600 International Convention on Oil Pollution Preparedness Response and Co-Operation 1990 (OPRC Convention): 19.20 International Convention on Salvage 1989: 8.190, 18.90, 20.50, 20.110, 20.190, 20.200, 20.370, 20.480, 20.690, 20.710 Art 1: 20.490, 20.720 Art 1(a): 20.190 Art 1(c): 20.110

1(e): 20.370 6.1: 20.680 6.2: 20.680 6.3: 20.680 7: 20.680 12: 20.240 12.3: 20.230 13: 20.460, 20.590, 20.700, 20.710 13(1): 20.500 13(1)(b): 18.90 13.1: 20.460, 20.750 13.1(b): 18.90 13.1(h): 20.730, 20.770 13.1(i): 20.730, 20.770 13.1(j): 20.730, 20.770 13.2: 20.620 13.3: 20.480 14: 17.220, 17.250, 18.90, 20.690, 20.700, 20.710, 20.760, 20.780 Art 14.1: 20.700, 20.730 Art 14.2: 20.750 Art 14.3: 20.730 Art 14.4: 20.700 Art 14.5: 20.780 Art 15.1: 20.590 Art 15.2: 20.610 Art 16.1: 20.790 Art 16.2: 20.790 Art 17: 20.370 Art 18: 20.540, 20.560 Art 19: 20.410 Ch III: 20.230

Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art

International Convention on Tonnage Measurement of Ships 1969: 3.160 Annex 1: 16.170 Sch 8, Art 2(8): 3.160 Sch 8, Art 3(1): 3.160 Sch 8, Art 4(1)(b): 3.160

International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971 (Fund Convention 1971): 19.20, 19.30, 19.210, 19.230, 19.300, 19.310, 19.370, 19.380 Art 1.6: 19.310 Art 1.7: 19.310 Art 26: 19.20 Art 27: 19.20 Arts 28 to 39: 19.20 Art 36 quinquies: 19.20

International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992 (Fund Convention

cii Table of Statutes Fund Convention 1992 — cont

1992): 19.20, 19.30, 19.210, 19.230, 19.300, 19.310, 19.320, 19.330, 19.340, 19.360, 19.370, 19.380, 19.390 Australian enactment: see Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth) Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art Art

1.2: 19.210, 19.370 1.6: 19.210 1.8: 19.320 3(5): 19.390 3.2(b): 19.340 3.2(c): 19.340 4: 19.370 4(2)(a): 19.370 4.1: 19.320, 19.340, 19.360 4.1(a): 19.320, 19.340 4.1(b): 19.320, 19.350 4.1(c): 19.320 4.2: 19.340 4.2(a): 19.340 4.3: 19.340, 19.370 4.4(a): 19.370 4.4(b): 19.370 4.5: 19.370 7.10: 19.390 10: 19.310 11: 19.310 13: 19.310 15(1): 19.310 20: 19.310

International Convention on the Removal of Wrecks: 21.190

r 9(e)(i): 15.80 r 10: 15.80 r 11: 15.80, 15.100 r 12: 15.80, 15.110 r 13: 15.80, 15.100, 15.110 r 14: 15.80, 15.110 r 15: 15.80, 15.100, 15.110 r 16: 15.80 r 17: 15.80 r 18: 15.80 r 18(a): 15.80 r 19: 15.80 r 19(b): 15.80 rr 20 to 31: 15.80 r 22: 15.80 r 32: 15.80 r 33: 15.80 r 34: 15.80, 15.100 r 34(c)(i): 15.80 r 35: 15.80 r 36: 15.80 r 37: 15.80 r 38: 15.80 r 38(a): 15.80 r 38(c): 15.80 Pt A: 15.80 Pt B: 15.80 Pt B, Section I: 15.80 Pt B, Section II: 15.80, 15.100 Pt B, Section III: 15.80 Pt C: 15.80 Pt D: 15.80 Pt E: 15.80

International Regulations for Preventing Collisions at Sea 1960: 15.80

Limitation Convention 1976: see International Convention Relating to Limitation of Liability of Owners of Sea-Going Ships

International Regulations for Preventing Collisions at Sea 1972 (Collision Regulations): 15.10, 15.60, 15.70, 15.80, 15.90, 15.100, 15.105, 15.110, 15.120, 15.130, 16.250, 18.10

MARPOL: see International Convention for the Prevention of Pollution by Ships 1973, as amended by Protocol in 1978

r r r r r r r r r r r r r

1: 15.80 1(a): 15.80 1(b): 15.80 2: 15.60, 15.80, 15.100 2(b): 15.100, 15.110 3: 15.80 4: 15.80 5: 15.80 6: 15.80, 15.105 7: 15.80 8: 15.80 9: 15.80, 15.100 9(a): 15.110

Montreal Convention 1999: 19.280 Rotterdam Rules under the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2008 (Rotterdam Convention): 12.30, 12.40, 12.50, 12.60, 12.270, 12.320, 12.390, 12.810 Art Art Art Art

1(5): 12.810 1(6): 12.810 1(7): 12.810 12: 12.50

Table of Statutes ciii Rotterdam Rules — cont Art 17(1): 12.320 Art 17(3): 12.390 Art 18: 12.60 Art 19: 12.60 Art 21: 12.320 Art 26: 12.30, 12.50

Torres Strait Treaty Art 4.3: 19.190

UNCITRAL Model Law on Cross-Border Insolvency: 16.70 Art 20(1): 16.70

United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2008 (Rotterdam Convention): see Rotterdam Rules United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2008: 12.30 United Nations Convention on the Carriage of Goods by Sea 1978: see Hamburg Rules United Nations Convention on the Law of the Sea 1982 (UNCLOS 1982): 3.50, 19.40, 19.400 Art Art Art Art

91.2: 3.410 92.1: 3.140 94.2(a): 3.50 98: 20.800

Warsaw Convention as amended at the Hague 1955: 12.530 Art 25: 12.530, 16.160, 19.280

York Rules of 1864: 18.10 York-Antwerp Rules: 18.10, 18.20, 18.30, 18.60 Rule Paramount: 18.20 Rule of Interpretation: 18.20 Rule A: 18.20, 18.40, 18.90 Rules A to G: 18.20 Rule B: 18.20 Rule B(2): 18.20 Rule C: 18.40 Rule C(1): 18.40 Rule C(2): 18.40, 18.90 Rule C(3): 18.40 Rule D: 18.70

Rule E(1): 18.30 Rule E(2): 18.30 Rule E(3): 18.30 Rule F: 18.60 Rule G: 18.60, 18.90 Rule G(1): 18.50 Rule G(2): 18.50 Rule G(3): 18.60 Rule G(4): 18.60 Rule I: 18.20 Rules I to XXIII: 18.20 Rule III: 18.20 Rule VI: 18.90 Rule VI(a): 18.90 Rule VI(b): 18.90 Rule X(b): 18.20 Rule XI(b): 18.20 Rule XI(d): 18.40 Rule XIV: 18.50, 18.70 Rule XVI: 18.50 Rule XXII: 18.80 Rule XIII: 18.50 Rule XVII: 18.50, 18.60 Rule XVII(c): 18.60 Rule XVIII: 18.50 Rule XXIII(a): 18.30 Rule XXIII: 18.20, 18.30

York-Antwerp Rules 1950: 18.10, 18.20 Rule of Interpretation: 18.20

York-Antwerp Rules 1974 as modified in 1990: 18.10 York-Antwerp Rules 1994: 18.10, 18.40, 18.60, 18.90 Rule G(3): 18.60 Rule G(4): 18.60

York-Antwerp Rules 2004: 18.10, 18.20, 18.30, 18.90 Rule VI: 18.90 Rule XXIII: 18.30

York-Antwerp Rules 2016: 18.10, 18.30, 18.60 Rule B(1): 18.20 Rule E(2): 18.30 Rule E(3): 18.30 Rule G(4): 18.60 Rule VI: 18.90 Rule VI(c): 18.90 Rule VI(d): 18.90 Rule XXII: 18.80 Rule XXIII: 18.20

1

Characteristics of a Ship [1.10] INTRODUCTION TO TWO BASIC TERMS: “SHIP” AND “BOAT” ......... 1 [1.50] “SHIP” AND “VESSEL” IN AUSTRALIAN STATUTES ............................... 3

[1.50] “Ship” and “vessel” in Commonwealth statutes ............................. 3 [1.110] “Ship” and “vessel” in State and Territorial statutes .................... 5 [1.190] Terms and elements of the statutory definitions of a ship and a vessel ...................................................................................................... 7

INTRODUCTION TO TWO BASIC TERMS: “SHIP” AND “BOAT” [1.10]

In a maritime context, and thus for the ordinary purposes of maritime law, the word “ship” is a general term used to describe any seagoing vessel.1 By “seagoing vessel” here is meant any vessel that in fact goes to sea.2 It is irrelevant for present purposes that a vessel is capable of going to sea if it does not in fact do so.3 In maritime history the term “ship” has also been used to signify a particular type of vessel, namely one with a bowsprit and three masts, each with a lower, top and topgallant mast, and square-rigged on all three masts.4 This particular meaning of the term “ship” is obsolete for the purposes of current maritime law.

[1.20]

“Boat”

A boat is ordinarily a small open craft without any decking.5 A boat is always concave shaped,6 and is thereby distinguished from a raft.7 A boat 1 Ex parte Ferguson and Hutchinson (1871) LR 6 QB 280 at 291; The CS Butler (1874) LR 4 A & E 238. See generally P Kemp (ed), Oxford Companion to Ships and the Sea (OUP, London, 1976), p 780. Compare the wider definition of a ship in The Mac (1882) 7 PD 126 at 129, 130, 131 (a hopper barge comes within the ordinary meaning of a ship), followed in The Harlow [1922] P 175 at 181. See, however, Iverson v Rowlands (1886) 12 VLR 57 at 61. 2 Salt Union Ltd v Wood [1893] 1 QB 370 at 374; Union Steamship Co of New Zealand Ltd v Commonwealth (1925) 36 CLR 130 at 145; Kirmani v Captain Cook Cruises Pty Ltd (No 1) (1985) 159 CLR 351 at 457. 3 Salt Union Ltd v Wood [1893] 1 QB 370 at 374. 4 Gapp v Bond (1887) 19 QBD 200 at 202. See also P Kemp (ed), Oxford Companion to Ships and the Sea (OUP, London, 1976), p 780. 5 The Mac (1882) 7 PD 126 at 131. 6 Steedman v Scofield [1992] 2 Lloyd’s Rep 163 at 165.

2

Shipping Law

[1.30]

has as its function the carriage of persons or goods on water.8 It does not therefore ordinarily include such motorised personal water craft as a jet ski9 or a ski craft.10 A fishing vessel is commonly called a boat, though it may strictly be a ship.11 A submarine is also commonly referred to as a boat, though this results from an accident of history rather than from the technical characteristics of this type of vessel.12

[1.30]

Statutory definitions

Australian shipping law, like its English counterpart, is not confined to ships in any strict or conventional sense. Australian shipping statutes have extended the scope of the term “ship” to include many other types of vessels and even certain floating structures which are not ships or vessels in any recognisable sense of the word. In order to use the most expansive term, there has for some time been a perceptible movement in shipping legislation to use the wider term “vessel” in place of “ship”. Most shipping statutes now contain a definition of a ship or vessel which is designed to meet its own particular needs. Most of these definitions have common elements which warrant further consideration.

[1.40]

Position of property on board ship

It is sometimes said that a ship means more than just its hull, and that it includes all property on board a ship. That is true, but only for particular purposes. In proceedings in rem (now covered by the Admiralty Act 1988 (Cth)), a ship includes all property on board the ship that is used in the course of its operation, other than property owned by someone apart from the ship’s owner.13 This is so whether or not the property on board ship is 7 See also Raft of Timber (1844) 2 W Rob 251; 166 ER 749 at 255; 751; The Mac (1882) 7 PD 126 at 131; Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161 at 167; Steedman v Scofield [1992] 2 Lloyd’s Rep 163. Compare Wells v Owners of Gas Float Whitton No 2 [1897] AC 337 at 345. Quaere, is a platform or raft on flotation chambers ordinarily classifiable as a ship or vessel? See M Summerskill, Oil Rigs: Law and Insurance (Sweet & Maxwell, London, 1979), p 14. 8 Steedman v Scofield [1992] 2 Lloyd’s Rep 163 at 165; Dependable Marine Co Ltd v Customs & Excise Commissioners [1965] 1 Lloyd’s Rep 550 at 555. 9 Steedman v Scofield [1992] 2 Lloyd’s Rep 163 at 165. 10 Dependable Marine Co Ltd v Customs & Excise Commissioners [1965] 1 Lloyd’s Rep 550 at 555. 11 Ex parte Ferguson and Hutchinson (1871) LR 6 QB 280 at 291-292. 12 See P Kemp (ed), Oxford Companion to Ships and the Sea (OUP, London, 1976), p 92. 13 The Silia [1981] 2 Lloyd’s Rep 534 at 537; Morlines Maritime Agency Ltd v Ship Skulptor Vuchetich (1996) 62 FCR 602 at 604-606; Opal Maritime Agencies Pty Ltd v Proceeds of Sale of MV Skulptor Konenkov (2000) 98 FCR 519 at 556-557; Scandinavian Bunkering AS v Bunkers on Ship FV Taruman (2006) 151 FCR 126 at 129, 131, 134.

[1.60]

1 Characteristics of a Ship

3

essential, as opposed to simply useful, for the ship’s operation.14 All such property is accordingly liable to arrest and sale in proceedings in rem. Unless the terms of a ship mortgage provide otherwise, the mortgage of a ship covers not only the fabric of the ship but also everything on board which is necessary for the ship to undertake a voyage, and anything which may be substituted for any such item.15 Under the Shipping Registration Act 1981 (Cth), a reference in the Act to a ship includes a reference to every thing or article which either belongs to, or is to be used in connection with, or is necessary for the operation and safety of, the ship.16

“SHIP” AND “VESSEL” IN AUSTRALIAN STATUTES “Ship” and “vessel” in Commonwealth statutes Introduction

[1.50]

The four principal Commonwealth statutes relating to ships are the Shipping Registration Act 1981, the Admiralty Act 1988, the Navigation Act 2012 and the Marine Safety (Domestic Commercial Vessel) National Law Act 2012. The last created the Marine Safety (Domestic Commercial Vessel) National Law. Specific terms used in the statutory definitions of these Acts are considered in detail at [1.230]–[1.350].

The term “ship” in Commonwealth statutes

[1.60]

By s 3(1) of the Shipping Registration Act, a ship is defined broadly as any kind of vessel that is capable of navigating the high seas. By s 3(1) of the Admiralty Act, a ship is defined broadly as any kind of vessel used or constructed for use in navigation by water, however it is propelled or moved. Both of these subsections then go on to include within the scope of the broad definition particular types of vessels. Both include a barge, lighter or other floating vessel. The Shipping Registration Act also includes an air-cushion vehicle or other similar craft that is used either wholly or primarily in navigation by water. It thus covers a hovercraft. The Admiralty Act definition specifically includes a hovercraft, which is further defined in s 3(1) to mean an air-cushion vehicle or similar vehicle that is used wholly or principally in navigation by water. See also M Harvey, “Arresting a “Ship”: Boats, Bunkers and Barometers” (2012) 86 ALJ 189.

14 Morlines Maritime Agency Ltd v Ship Skulptor Vuchetich (1996) 62 FCR 602 at 605-606. 15 Coltman v Chamberlain (1890) 25 QBD 328. See also Re Salmon and Woods; Ex parte Gould (1885) 2 Morr BR 137 at 141. 16 Section 3(8).

4

Shipping Law

[1.70]

[1.70]

Inclusion of drilling and other rigs

The Shipping Registration Act includes within its definition of a ship any structure that is able to float or be floated and is able to move or be moved as an entity from one place to another.17 It thus includes virtually all forms of rigs. The Admiralty Act is more specific. It includes within the definition of a ship an “off-shore industry mobile unit”.18 This construction (known colloquially as an “OSIMU”) is further defined in s 3(1) to cover virtually all drilling rigs and mobile offshore exploration, production and accommodation structures that are for use in Australian waters.

[1.80]

Exclusions from the statutory definitions

The general definition of a ship in s 3(1) of the Shipping Registration Act excludes any vessel, structure, vehicle or craft which is declared by the regulations not to be a ship for the purposes of the definition. The regulations have so far not made any declaration under this provision. The definition of a ship in s 3(1) of the Admiralty Act excludes a seaplane (which is not ordinarily regarded as a ship in any event19), an inland waterways vessel, and a vessel under construction that has not been launched.

[1.90]

Statutory definitions not invariable

The general definitions of a ship in the Shipping Registration Act and Admiralty Act are expressed to apply unless the contrary intention appears. In the Shipping Registration Act, s 34 defines a “ship” as a registered ship for the purposes of Pt III (“Transfers, Transmissions, Security Interests and Other Dealings”) of the Act. The term “vessel” in Commonwealth statutes

[1.100] Section 14 of the Navigation Act 2012 presents a definition of a vessel instead of a ship. It defines a vessel as any kind of vessel that is used in navigation by water, however propelled or moved. The definition includes a barge, lighter or other floating craft, and an air-cushion vehicle or other similar craft that is used wholly or primarily in navigation by water, thus including a hovercraft. Similarly, s 8 of the Marine Safety (Domestic Commercial Vessel) National Law presents a definition of a vessel instead of a ship. It defines a vessel as a craft that is for use, or that is capable of being used, in navigation by water, however propelled or moved, and it includes an air-cushion 17 Section 3(1) (definition of “ship” (b)). 18 Navigation Act, s 6(1) (definition of “ship” (c)); Admiralty Act, s 3(1) (definition of “ship” (c)). 19 See Watson v RCA Victor Co Inc (1934) 50 Ll L Rep 77 at 78-79, 82; Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161 at 167.

[1.140]

1 Characteristics of a Ship

5

vehicle, a barge, a lighter, a submersible, a ferry in chains and a wing-in-ground effect craft. The definition excludes an aircraft. Regulations may provide that a specified thing, or a thing that is included in a specified class, either is, or is not, a vessel.

“Ship” and “vessel” in State and Territorial statutes [1.110]

The Marine Acts or related legislation of Queensland, Western Australia and the Northern Territory all contain a statutory definition of a ship. The New South Wales, Victorian, South Australian and Tasmanian Acts contain a definition of the related term “vessel” instead. The Northern Territory Act contains a definition of a vessel as well as a ship. The Western Australian Act contains a definition that covers both a ship and a vessel. These various definitions are as follows. Specific terms used in the statutory definitions of these Acts are considered in detail at [1.240]–[1.350].

[1.120]

New South Wales

The Marine Safety Act 1998 (NSW) defines a vessel non-exhaustively to include a water craft of any description that is used or capable of being used as a means of transportation on water.20 It thus includes any vessel in the ordinary sense of the term. The statutory definition expressly includes any non-displacement craft and a seaplane whilst it is on water, and also anything that is declared by the regulations to be a vessel.21 It excludes anything that is declared by the regulations not to be a vessel.22

[1.130]

Victoria

The Marine Safety Act 2010 (Vic) defines a vessel as any kind of vessel that is used, or is capable of being used, in navigation by water, however propelled or moved.23 It expressly includes a barge, lighter, floating restaurant or other floating vessel, an air-cushion vehicle or other similar craft that is used in navigation by water, and any waterborne aeroplane, lifeboat, thing being towed by a vessel and an off-shore industry mobile unit as defined in the Commonwealth Navigation Act 2012.24

[1.140]

Queensland

In Queensland, the Transport Operations (Marine Safety) Act 1994 defines a ship as any kind of boat or other vessel that is used — or in respect of a boat or other vessel that is being built, is intended to be used — in navigation by water or for any other purpose on water, whatever its size 20 Section 5(1). 21 Section 5(2), (3). 22 Section 5(3). 23 Section 3(1). 24 Section 3(1).

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[1.150]

and however propelled or moved and whether it is on land or in water.25 It expressly includes as an example of a ship a barge, lighter or other floating vessel, and a hovercraft or other surface effect craft.26 It also includes the ship’s equipment.27 The definition does not ordinarily include an aircraft, though a regulation may provide that a ship does include an aircraft when it is on water or when it is taking off from, or landing on, water.28 A ship does not include a vessel that is declared by regulation not to be a ship.29

[1.150]

South Australia

The Harbors and Navigation Act 1993 (SA) defines a vessel as a craft that is capable of being used in navigation by water, however propelled or moved, including an air-cushion vehicle, a barge, a lighter, a submersible, a ferry in chains and a wing-in-ground effect craft.30 It is also defined to include a surf board, a wind surf board, a personal watercraft, water skis or other similar device on which a person rides through water, a structure that is designed to float in water and is used for commercial, industrial or scientific purpose, and any thing that is declared by regulations to come within the definition.31 It does not include any craft or other thing that is excluded by regulation from the ambit of this definition.

[1.160]

Western Australia

The Western Australian Marine Act 1982 (WA) combines the definition of both a ship and a vessel. Both terms mean any kind of vessel used or capable of being used in navigation by water, however propelled or moved, including a barge, lighter, floating restaurant, or other vessel, and an air-cushion vehicle or other similar craft that is used wholly or primarily in navigation by water.32 The definition goes on to exclude a pontoon or floating jetty that is used only for the purpose of a walkway or storage, and also any other similar platform that is situated adjacent to a river bank or shore and which is not being either towed or moored away from the shore.33

25 Section 10(1), (2). 26 Section 10(3). 27 Section 10(7). 28 Section 10(4), (5). 29 Section 10(4). 30 Section 4(1)(a). 31 Section 4(1)(b) – (d). 32 Section 3(1). 33 Section 3(1).

[1.190]

[1.170]

1 Characteristics of a Ship

7

Tasmania

The Marine and Safety Authority Act 1997 (Tas) gives the term “vessel” the same meaning that it has under the Marine Safety (Domestic Commercial Vessel) National Law (Cth), and it adds any prescribed craft, and any craft of a prescribed class, that is used for recreational purposes.34

[1.180]

Northern Territory

The Marine Act (NT) reproduces the definition of a ship that was first contained in s 742 of the Merchant Shipping Act 1894 (IMP). This Act defines a ship as including every description of vessel used in navigation not propelled by oars.35 English cases have held that because this definition is non-exhaustive, a vessel comes within the scope of this Act if it is a ship in the ordinary sense of the term regardless of whether it also comes within the scope of the extended definition.36 This is so even if it is propelled by oars.37 Classical Greek triremes and quinqueremes would accordingly be, without more, ships for the purpose of the Northern Territory Acts. English cases have also held that a vessel is one “used in navigation not propelled by oars” if its normal means of navigation does not involve the use of oars, notwithstanding that it might occasionally use oars, for example to get out of a harbour in order to go to sea.38 Conversely, a vessel which is ordinarily propelled by oars is not a “vessel used in navigation not propelled by oars” simply because it is being towed on an isolated occasion.39 The relative simplicity of the Northern Territory’s definition of a ship is, however, deceptive, for the Marine Act also contains a definition of the term “vessel”. This definition incorporates the meaning of a vessel in s 8 of the Marine Safety (Domestic Commercial Vessel) National Law (Cth).40

Terms and elements of the statutory definitions of a ship and a vessel Ordinary meaning of “vessel”

[1.190]

A problem with the statutory term “vessel” is that it is either not defined in the legislation or that it is essentially circular, being defined in terms of itself. The Commonwealth’s Navigation Act 2012, for example,

34 Section 3. 35 Section 7(1). 36 Ex parte Ferguson and Hutchinson (1871) LR 6 QB 280 at 291, 292; The Mac (1882) 7 PD 126 at 128, 130, 130-131. 37 Ex parte Ferguson and Hutchinson (1871) LR 6 QB 280 at 291; The CS Butler (1874) LR 4 A & E 238. Compare Edwards v Quickenden and Forester [1939] P 261 at 268. 38 Ex parte Ferguson and Hutchinson (1871) LR 6 QB 280 at 290-291. 39 The Champion [1934] P 1 at 8-10. 40 Section 7(1).

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[1.200]

commences the definition of “vessel” to mean “any kind of vessel”.41 Even where it is defined, however, it is usually not defined precisely or exhaustively, with the result that the scope of this term is to a large extent dependent upon the ordinary meaning of this word.

[1.200]

Popular and judicial meanings of “vessel”

The word “vessel” is not a technical term. In common parlance it appears to have both a narrow and a broad meaning. This is illustrated by statements made in two English cases of the 1880s. In Hedges & Son v The London & St Katherine Docks Co,42 Wills J regarded a vessel as commonly understood, and in the context of the technology of the day, to be a large craft propelled by means of sails or by steam-power, and having masts, rigging and equipment, as opposed to lighters and other small craft which have no such rigging or equipment.43 In Gapp v Bond,44 on the other hand, Lord Esher MR adopted a broader interpretation of a vessel to include any craft larger than a boat, and whether or not capable of self-propulsion. He said with reference to a statutory provision excepting “any ship or vessel” from the operation of the Bills of Sale Act 1878 (ENG) that “The word ‘vessel’ … goes further than ship, and brings into the exception anything that in popular language is called a vessel”.45 He then went on, “Nobody would call a raft or a Thames wherry46 a vessel, but anything beyond a mere boat is, to my mind, ordinarily called a vessel, and is brought within the exception”.47 The Court of Appeal held in this case that a dumb barge (that is, a barge without any means of self-propulsion) was a vessel, though not a ship.48

41 Section 14. 42 Hedges & Son v The London & St Katherine Docks Co (1885) 16 QBD 597. 43 Hedges & Son v The London & St Katherine Docks Co (1885) 16 QBD 597 at 604. See also Martin v Leavers (1882) 46 JP 807 (“vessel means, prima facie, something larger than boat, keel, or lighter”). 44 Gapp v Bond (1887) 19 QBD 200. 45 Gapp v Bond (1887) 19 QBD 200 at 202. 46 An open boat propelled by oars and used for the carriage of passengers on the River Thames. 47 Gapp v Bond (1887) 19 QBD 200 at 202. 48 See also The Mac (1882) 7 PD 38 at 41 (a hopper barge is a vessel), reversed on appeal on other grounds, The Mac (1882) 7 PD 126; Weiner v Wilsons and Furness-Leyland Lines Ltd (1910) 102 LT 716 (as a matter of construction of a bill of lading, a “vessel” held to include a barge), affirmed Wilsons and Furness-Leyland Lines Ltd v Weiner (1910) 103 LT 168; William Holyman & Sons Pty Ltd v Marine Board of Launceston (1929) 24 Tas LR 64 at 65, 67 (a lighter is a vessel); Seamen’s Union of Australia v Australian Dredging & General Works Pty Ltd (1968) 129 CAR 29 at 34 (dredges are vessels). See also St John Pilot Commissioners and the Attorney-General for the Dominion of Canada v Cumberland Railway & Coal Co [1910] AC 208 at 217-218; Marine Craft Constructors Ltd v Erland Blomqvist (Engineers) Ltd [1953] 1 Lloyd’s Rep 514 at 518.

[1.220]

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In the later case of Edwards v Quickenden and Forester,49 Henn Collins J appeared prepared to go further and treat all boats as vessels, for he seemed to regard both a rowing eight and a sculling boat as being vessels.50 In the more modern case of Steedman v Scofield,51 however, Sheen J said that in popular parlance a vessel refers to a craft larger than a rowing boat.52

[1.210]

Floating bodies that are not vessels

The statement by Lord Esher in Gapp v Bond53 that a raft cannot be classified as a vessel is supported by statements in many other cases that a vessel is in any event a hollow structure.54 This accords with the popular notion of a vessel. Other floating bodies which have been held not to be vessels include a seaplane55 and a flying boat56 (both forms of aeroplane designed to take off from, and land on, water), a floating gas-beacon on a boat-shaped raft,57 a floating landing-stage,58 a pontoon fitted with a crane to form a floating crane,59 and a jet ski60 and a ski craft61 (both forms of motorised personal water craft).

[1.220]

Ultimately, whether a craft is a vessel is a matter of impression

One clear conclusion from many of the cases is that whether any structure is classifiable as a vessel in the ordinary sense of the term is ultimately a 49 Edwards v Quickenden and Forester [1939] P 261. 50 Edwards v Quickenden and Forester [1939] P 261 at 265. 51 Steedman v Scofield [1992] 2 Lloyd’s Rep 163. 52 Steedman v Scofield [1992] 2 Lloyd’s Rep 163 at 166. 53 Gapp v Bond (1887) 19 QBD 200 at 202. 54 Raft of Timber (1844) 2 W Rob 251; 166 ER 749 at 255; 751; The Mac (1882) 7 PD 126 at 131; Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161 at 167; Steedman v Scofield [1992] 2 Lloyd’s Rep 163. Compare Wells v Owners of Gas Float Whitton No 2 [1897] AC 337 at 345. Quaere, is a platform or raft on flotation chambers ordinarily classifiable as a ship or vessel? See M Summerskill, Oil Rigs: Law and Insurance (Sweet & Maxwell, London, 1979), p 14. 55 Watson v RCA Victor Co Inc (1934) 50 Ll L Rep 77 at 78-79, 82. 56 Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161 at 167. 57 The Gas Float Whitton No 2 [1896] P 42 at 58, 64, upheld sub nom Wells v The Owners of the Gas Float Whitton No 2 [1897] AC 337 at 343, 349. See also The Upcerne [1912] P 160. 58 The Craighall [1910] P 207 esp at 212, 213. 59 Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association (1926) 25 Ll L Rep 446 at 447, upheld on appeal North of England Protecting & Indemnity Association v Merchants’ Marine Insurance Co Ltd (1926) 26 Ll L Rep 201. See also Swan, Hunter & Wigham Richardson Ltd (Titan) v Benwood (1923) 14 Ll L Rep 484. Compare Marine Craft Constructors Ltd v Erland Blomqvist (Engineers) Ltd [1953] 1 Lloyd’s Rep 514 esp at 518; Cook v Dredging & Construction Co Ltd [1958] 1 Lloyd’s Rep 334 at 338. 60 Steedman v Scofield [1992] 2 Lloyd’s Rep 163 at 165. 61 Dependable Marine Co Ltd v Customs & Excise Commissioners [1965] 1 Lloyd’s Rep 550 at 555-556.

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[1.230]

matter of impression, depending on whether it has a sufficient number of the characteristics of a typical vessel to be reasonably so described.62 This naturally causes problems where a structure has some of the features of a vessel but not others. There is, for example, still no clear opinion whether a hovercraft or an offshore drilling rig is a ship or vessel in the ordinary sense of these terms, for although each possesses some of the characteristics of a ship or vessel, neither possesses them all.63 For this reason, statutory definitions usually refer to them specifically if it is intended that they be included. Navigational element

[1.230]

Many State and Commonwealth statutes, not least the Admiralty Act 1988 (Cth), the Navigation Act 2012 (Cth) and the Marine Safety (Domestic Commercial Vessel) National Law (Cth), define a ship or a vessel to mean any kind of vessel “used in navigation by water” or a closely related expression. This terminology follows that contained in the definitions of both a ship and a vessel in s 742 of the Merchant Shipping Act 1894 (IMP). Section 3(1) of the Shipping Registration Act 1981 (Cth) defines a ship to mean any kind of vessel “capable of navigating the high seas”.

[1.240]

Meaning of “navigation”

The term “navigation” (from the Latin “navis”, a ship, and “agere”, to drive) has been judicially defined as the “nautical art or science of conducting a ship from one place to another”.64 More particularly, it signifies the art of conducting a ship by way of planned, ordered movement from one place to another.65 It does not concern movement which is controlled to a significant extent by natural forces, like waves.66 It thus does not concern mere haphazard movement on water. Navigation does not, however, necessarily imply independent navigation. Provided 62 See The Gas Float Whitton No 2 [1896] P 42 at 58; Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association (1926) 26 Ll L Rep 201 at 203; Watson v RCA Victor Co Inc (1934) 50 Ll L Rep 77 at 79; Dependable Marine Co Ltd v Customs & Excise Commissioners [1965] 1 Lloyd’s Rep 550 at 556. See also William Holyman & Sons Pty Ltd v Marine Board of Launceston (1929) 24 Tas LR 64 at 67; Seamen’s Union of Australia v Australian Dredging & General Works Pty Ltd (1968) 129 CAR 29 at 33. 63 In respect of hovercraft, see the implication of Richards J in Noseda v Hoverlloyd Ltd [1974] 1 Lloyd’s Rep 448 at 451, and of the Canadian Federal Court of Appeal in Imperial Oil Ltd v The Expo Spirit (1987) 80 NR 259, that a hovercraft is a ship. In respect of oil rigs, see M Summerskill, Oil Rigs: Law and Insurance (Sweet & Maxwell, London, 1979), Ch 1. 64 Steedman v Scofield [1992] 2 Lloyd’s Rep 163 at 166. See also The Warkworth (1884) 9 PD 145 at 148. 65 Steedman v Scofield [1992] 2 Lloyd’s Rep 163 at 166. See also The Warkworth (1884) 9 PD 145 at 148. 66 Steedman v Scofield [1992] 2 Lloyd’s Rep 163 at 166. See also The Warkworth (1884) 9 PD 145 at 148.

[1.250]

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there is controlled movement, a ship or other craft can be navigated by some external force, for example with the assistance of tugs or by being towed.67 In Mayor, &c, of Southport v Morriss,68 it was held that the term “navigation” implies more than simply sailing a launch round an artificial pleasure lake just half-a-mile long and 180 yards wide.69 The reason for this conclusion is not easy to appreciate. It might depend more on the legal consequence involved in the case (namely, being liable to a penalty for not displaying a Board of Trade certificate on board) than on the nautical activities of the vessel. In the subsequent case of Weeks v Ross,70 however, a motor boat was held to navigate an inland river and canal even though it travelled for a distance of only one-and-a-half miles from a bridge on the river to a lock on the canal. The length of the boat’s journey and the confined nature of the water were not found to be material. Bray J observed in that case, “A river is a place for navigation and a canal is a place for navigation, and they are none the less places for navigation because it happens this vessel only used a portion of them”.71

[1.250]

“Used in navigation”

Strangely, the expression “used in navigation” has no precise meaning. English cases indicate that whether any vessel is one “used in navigation” may depend not simply on whether it is, or can be, or will be, navigated, but also on whether it was primarily intended to be used for such a purpose.72 For example, in Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd,73 a flying boat was found to navigate short distances for the purpose of taking off from, and landing on, water. Atkinson J, however, held that this was not a “ship or vessel” under an insurance contract as it was not intended to be used in navigation. The judge 67 St John Pilot Commissioners and the Attorney-General for the Dominion of Canada v Cumberland Railway & Coal Co [1910] AC 208 at 218; Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 466. See also The Andalusian (1878) 3 PD 182; The Mac (1882) 7 PD 126 esp at 130; The Mudlark [1911] P 116; William Holyman & Sons Pty Ltd v Marine Board of Launceston (1929) 24 Tas LR 64 at 67; The St Machar (1939) 64 Ll L Rep 27 at 31, and on appeal The St Machar (1939) 65 Ll L Rep 119 at 125; Marine Craft Constructors Ltd v Erland Blomqvist (Engineers) Ltd [1953] 1 Lloyd’s Rep 514; R v Carrick District Council; Ex parte Prankerd [1999] QB 1119 at 1126. 68 Mayor, &c, of Southport v Morriss [1893] 1 QB 359. 69 Mayor, &c, of Southport v Morriss [1893] 1 QB 359 at 361-362. 70 Weeks v Ross [1913] 2 KB 229. 71 Weeks v Ross [1913] 2 KB 229 at 234. See also Corbett v Pearce [1904] 2 KB 422 at 428. 72 Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161 at 164, 165. See also Wells v The Owners of the Gas Float Whitton No 2 [1897] AC 337 at 343; Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association (1926) 25 Ll L Rep 446 at 447; Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association (1926) 26 Ll L Rep 201 at 202, 203. 73 Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161.

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[1.250]

considered the cases on what constitutes a ship or vessel for the purposes of the British Merchant Shipping Act and said that if he had to define “ship or vessel” he would say that it was “any hollow structure intended to be used in navigation, that is, intended to do its real work on the seas or other waters, and capable of free and ordered movement thereon from one place to another”.74 He found that a flying boat did not fall within this description. “A flying boat’s real work”, he said, “is to fly”.75 In the earlier case of The Andalusian,76 Sir Robert Phillimore held that a ship which had just been launched but which was as yet unfinished was nonetheless a “vessel used in navigation”.77 The reason for this would appear to be that although the ship was not yet capable of self-navigation, it had been constructed for the purpose of navigation.78 The intended purpose for which a floating structure has been constructed is not, however, an invariable determinant of whether it is a vessel “used in navigation”. A floating structure may be classified as a vessel used in navigation if it is in fact being used for this purpose. In Marine Craft Constructors Ltd v Erland Blomqvist (Engineers) Ltd,79 for example, a pontoon which had formerly been used as the base of a floating crane was employed on a single occasion as a means of transporting a dismantled part of the crane by water from one location to another. This was held to be a vessel used in navigation. Lynsky J said: “At the moment, the pontoon was being used to be towed for the carriage of goods through the water and to be navigated for that purpose. She was fitted with bollards for towing, and, although she may not have been a vessel when she had a crane on her, it seems to me that, at the time when this arrangement was made, she was to be used as a vessel and was treated as a vessel, at any rate, for the purpose of this towing.”80 The meaning of the expression “used in navigation” was more recently considered in R v Carrick District Council; Ex parte Prankerd.81 There Lightman J noted that the expression in question here is “used in navigation”, and not “used for navigation”. The latter, he said, connotes that the actual current use of the ship is for navigational purposes whereas, “The phrase ‘used in navigation’ connotes that (irrespective of 74 Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161 at 167. 75 Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161 at 167. See also Watson v RCA Victor Co Inc (1934) 50 Ll L Rep 77 (seaplane not a ship for similar reasons). 76 The Andalusian (1878) 3 PD 182. 77 The Andalusian (1878) 3 PD 182 at 189. See also Ex parte Hodgkin; Re Softley (1875) LR 20 Ex 746 at 756. 78 See also the Scottish case of The St Machar (1939) 64 Ll L Rep 27 at 31, and on appeal The St Machar (1939) 65 Ll L Rep 119 at 125. 79 Marine Craft Constructors Ltd v Erland Blomqvist (Engineers) Ltd [1953] 1 Lloyd’s Rep 514. 80 Marine Craft Constructors Ltd v Erland Blomqvist (Engineers) Ltd [1953] 1 Lloyd’s Rep 514 at 518. 81 R v Carrick District Council; Ex parte Prankerd [1999] QB 1119.

[1.260]

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the actual current use) the ship is actually or potentially capable of being used for navigation.”82 The judge observed that a ship can accordingly be used in navigation even though it is presently incapable of navigation so long as there is a reasonable expectation that it will regain its capacity to navigate.83 In case there be any doubt on the matter, it is clear that a vessel can be “used in navigation” even though it is incapable of self-propulsion.84

[1.260]

Possible intrinsic requirement of a navigational element in respect of all vessels

The relevance of the navigational element which has just been considered might extend beyond any express reference to navigation in a statutory definition of a ship or vessel. It might go to the very nature of a ship or vessel in the ordinary sense of these terms. Roche J said on this point in Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association,85 “Whatever other qualities are attached to a ship or vessel, the adaptability for navigation, and its user for that purpose, is in my judgment one of the most essential elements”.86 In that case a pontoon on which a crane was erected, and which was designed to float and be manned, was held not to be a ship or vessel as it was not designed to be navigated, even though it was capable of movement and was in fact moved from time to time in order to operate elsewhere. The judge found that movement was the exception in its career as a pontoon, and not the rule. To be compared with the Merchants’ Maritime Insurance case, however, is Cook v Dredging & Construction Co Ltd.87 There a dredger-like structure which served as a floating pump to transfer sludge from barges to the land, and which was fixed to a pipeline on shore during operation but 82 R v Carrick District Council; Ex parte Prankerd [1999] QB 1119 at 1126. 83 R v Carrick District Council; Ex parte Prankerd [1999] QB 1119 at 1126. 84 The Andalusian (1878) 3 PD 182; The Mac (1882) 7 PD 126 esp at 130; The Mudlark [1911] P 116; William Holyman & Sons Pty Ltd v Marine Board of Launceston (1929) 24 Tas LR 64 at 67; The St Machar (1939) 64 Ll L Rep 27 at 31, and on appeal The St Machar (1939) 65 Ll L Rep 119 at 125; Marine Craft Constructors Ltd v Erland Blomqvist (Engineers) Ltd [1953] 1 Lloyd’s Rep 514; R v Carrick District Council; Ex parte Prankerd [1999] QB 1119 at 1126. See also St John Pilot Commissioners and the Attorney-General for the Dominion of Canada v Cumberland Railway & Coal Co [1910] AC 208 at 218; Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 466. 85 Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association (1926) 25 Ll L Rep 446. 86 Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association (1926) 25 Ll L Rep 446 at 447. See also the similar observations by members of the Court of Appeal dismissing the appeal in this case, North of England Protecting & Indemnity Association v Merchants’ Marine Insurance Co Ltd (1926) 26 Ll L Rep 201 at 202, 203; Wells v The Owners of the Gas Float Whitton No 2 [1897] AC 337 at 343; The Craighall [1910] P 207 at 212; Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161 at 167. 87 Cook v Dredging & Construction Co Ltd [1958] 1 Lloyd’s Rep 334.

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[1.270]

could be moved to new moorings as the place of work changed, was held to be a vessel used in navigation notwithstanding its stationary character and the fact that it had no rudder or means of self-propulsion. Jones J said in this case: “This structure in some respects is like the gas float and in other respects it is like the floating crane. I think that it should be held that it was used in navigation, as it had been moved often on the sea from place to place as occasion required.”88

[1.270]

Problem with the navigational element

The cases just referred to present an obvious problem, for they give no clear indication of when the ability to navigate and the purpose of construction are each determinants of whether a vessel is one “used in navigation” for the purpose of the statutory definitions. Nor do they indicate when these same characteristics are necessary conditions of a ship or vessel in other contexts. The root of the problem, which the statutory expression “vessel used in navigation” does nothing to resolve, is whether regard should be had to a floating structure’s actual, potential or prospective function. That is, whether regard should be had to the fact that any floating structure is actually used in navigation, can be used in navigation, or is intended to be used in navigation. This problem admits of no simple answer. It is, indeed, just one aspect of the fact that whether any floating structure is classifiable as a vessel is often ultimately a matter of impression. Ships and other obvious examples of vessels are both intended to be used, and are in fact used, in navigation. When a floating structure does not possess both of these characteristics, the question whether it is nonetheless to be regarded as a ship depends upon its other characteristics, and also doubtless to a certain extent on the purpose for which the court’s decision is to be made. Considered in this light, Merchants’ Marine Insurance Co Ltd v North of England Protecting & Indemnity Association and Cook v Dredging & Construction Co Ltd are best regarded not as conflicting decisions but rather as cases where judges simply formed different opinions on the classification of the distinctive structures involved.

[1.280]

When does a vessel cease to be a vessel?

As one would expect, a vessel does not cease to be so describable simply because it is temporarily unable to be navigated, for example because it is lying on the beach, has lost its rudder, or even has sunk and is waiting to be raised and refloated.89 As Greer J observed in Pelton Steamship Co Ltd v North of England Protecting & Indemnity Association, with reference to a sunken ship:90 “A ship like any other thing remains entitled to its description until facts are established which show it has become 88 Cook v Dredging & Construction Co Ltd [1958] 1 Lloyd’s Rep 334 at 338. 89 Chandler v Blogg [1898] 1 QB 32 at 36; Pelton Steamship Co Ltd v North of England Protecting & Indemnity Association (1925) 22 Ll L Rep 510 at 512. 90 Pelton Steamship Co Ltd v North of England Protecting & Indemnity Association (1925) 22 Ll L Rep 510.

[1.310]

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disentitled to its ordinary name or description. Just as a man may be moribund without ceasing to be a man if the doctors are hopeful that they will be able to secure his recovery by treatment, so I think a ship may remain a ship or vessel even though she be damaged and incapable of being navigated, if she is in such a position as would induce a reasonably minded owner to continue operations of salvage; and if so she would in the ordinary use of the English language be still described as a ship or vessel although described as one which was in serious danger of ceasing to be a ship or vessel.”91 In sum, just as whether a floating structure is a vessel is ultimately a matter of fact and degree, so whether it has ceased to be a vessel is also a matter of fact and degree.92 “Barge, lighter or other floating vessel”

[1.290] The Shipping Registration Act 1981 (Cth), the Navigation Act 2012 (Cth), the Admiralty Act 1988 (Cth), and the Marine Safety (Domestic Commercial Vessel) National Law all include “a barge, lighter or other floating vessel” within the definition of a ship or vessel.93 The State Marine Acts or related legislation have either the same or similar provisions. [1.300]

“Barge”, “lighter”

A barge is a large, flat-bottomed vessel with a leeboard in place of a keel so that it can operate in shallow water and remain upright when grounded. A barge may be capable of self-propulsion. A lighter (otherwise known as a dumb barge) is strictly a barge-like vessel which does not have its own means of propulsion but is towed, commonly now by a tug though in the 19th century often by horses.94

[1.310]

Scope of “barge, lighter or other floating vessel”

It is evident that the expression “barge, lighter or other floating vessel” is designed to extend the statutory definition of a ship or vessel to include a craft which would not ordinarily be classified as a ship, and which might not even be classified as a vessel if this term is to be given a narrow meaning. Unfortunately, the scope of this expression, and especially the 91 Pelton Steamship Co Ltd v North of England Protecting & Indemnity Association (1925) 22 Ll L Rep 510 at 512. 92 See European & Australian Royal Mail Co Ltd v Peninsular & Oriental Steam Navigation Co (1866) 14 LT 704 (a former sailing vessel no longer capable of, or intended ever again to be used in, navigation but kept at permanent anchor and used as a coal store held not to be a ship); British Steamship Owners’ Association v Chapman & Son (1935) 52 Ll L Rep 169 at 171 (a ship may remain severed in two for a time and yet retain its existence as a ship). 93 Shipping Registration Act, s 3(1); Admiralty Act, s 3(1); Navigation Act, s 14. See also the Marine Safety (Domestic Commercial Vessel) National Law (Cth), s 8(1). 94 See P Kemp (ed), Oxford Companion to Ships and the Sea (OUP, London, 1976), pp 60, 482. A dumb hopper is a lighter: The Dagmar (1929) 141 LT 271.

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[1.320]

words “or other floating vessel”, is presently uncertain. In particular it is not clear whether this expression includes a boat. As has already been observed, it is generally accepted that the term “vessel” does not ordinarily include a boat, though at least one case may point to the opposite conclusion.95 “The high seas”

[1.320] The Shipping Registration Act 1981 (Cth) defines a ship as “any kind of vessel capable of navigating the high seas”.96 Although there is no reported Australian case on point, there is no doubt that the expression “high seas” here bears its Admiralty meaning97 of the entire sea including all tidal waters below low-water mark, even where these go inland.98 This expression thus does not here bear its public international law meaning of that part of the sea which lies outside a country’s territorial sea.99 [1.330]

Obsolete Admiralty definitions of “high seas”

Although under Admiralty law, the “high seas” ordinarily means the entire sea including all tidal waters below low-water mark, even where these waters go inland, some 19th century cases might appear to present different meanings for this term. These differences are, however, more apparent than real. Thus, for example, cases can be found which define the high seas as those waters “where great ships do go”.100 It is now accepted that this is simply an alternative way of referring to the relevant waters.101 Cases can also be found which limit that part of the high seas which go inland to the tidal reaches of rivers “up to the first bridge”.102 It is now clear that this was simply a practical boundary, which has no continuing relevance at law.103 “Craft”

[1.340]

Some shipping Acts now use the term “craft”, especially in definitions, as an alternative for “vessel”. In the 15th century, and indeed until the 17th century, this term meant just a piece of equipment used for

95 Edwards v Quickenden and Forester [1939] P 261 at 265. 96 Section 3(1). 97 See R v Liverpool Justices; Ex parte Molyneux [1972] 2 QB 384 (“high seas” in s 686 of the Merchant Shipping Act 1894 (IMP) means the high seas as understood in Admiralty law). 98 General Iron Screw Collier Co v Schurmanns (1860) 29 LJ Ch 877 at 879; Bonser v La Macchia (1969) 122 CLR 177 at 184, 233; R v Bull (1974) 131 CLR 203 at 226; Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 77 ALJR 1396 at 1400, 1432. 99 The Tolten [1946] P 135 at 156. For a detailed consideration of the meaning of “high seas” in the context of both Admiralty law and public international law, see R v Keyn (1876) 2 Ex D 63. 100 See R v Carr and Wilson (1882) 10 QBD 76 at 86. 101 The Tolten [1946] P 135 at 156. 102 See R v Anderson (1868) LR 1 CCR 161 at 169. 103 The Tolten [1946] P 135 at 156.

[1.350]

1 Characteristics of a Ship

17

fishing; for example, a net, a line or a hook. The term craft subsequently came to be applied to a small fishing boat, and later still to any small vessel. “Wing-in-ground effect craft”

[1.350] Both the Navigation Act 2012 (Cth) and the Marine Safety (Domestic Commercial Vessel) National Law (Cth), include within the definition of a vessel a wing-in-ground effect craft.104 This is a new form of transport that resembles a cross between an aeroplane and a hovercraft, though it works on different aerodynamic principles from both. It is a vehicle that attains level flight near to an external surface, like water. It achieves lift by the aerodynamic interaction between the wings and the surface.

104 Navigation Act, s 14; Marine Safety (Domestic Commercial Vessel) National Law (Cth), s 8(1).

2

Division of Shipping Law Powers in Australia [2.10] INTRODUCTION ............................................................................................... 19 [2.20] LEGISLATIVE POWERS UNDER THE CONSTITUTION .......................... 20

[2.20] Constitutional heads of power .......................................................... 20 [2.30] The trade and commerce power of section 51(i) ........................... 21 [2.80] The fisheries power of section 51(x) ................................................. 24 [2.120] External affairs power of section 51(xxix) ..................................... 27 [2.130] Section 76(iii) and substantive legislative powers ....................... 28 [2.160] POWER OF THE COMMONWEALTH AND THE STATES TO LEGISLATE EXTRA-TERRITORIALLY ........................................................ 31

[2.160] Introduction ........................................................................................ 31 [2.180] Power of the Commonwealth to legislate extra-territorially ..... 31 [2.210] Power of the States to legislate extra-territorially ....................... 33 [2.220] Legislative competence over Australia’s territorial sea .............. 34 [2.270] THE POSITION IN AUSTRALIA OF THE MERCHANT SHIPPING ACT 1894 (IMP) ............................................................................ 40

[2.270] Introduction ........................................................................................ 40 [2.280] Extent to which the Merchant Shipping Act continues to apply to Australia .............................................................................. 41 [2.350] THE OFFSHORE CONSTITUTIONAL SETTLEMENT ............................. 44

[2.350] The need for a re-arrangement of powers .................................... 44 [2.360] Terms of the Offshore Constitutional Settlement ......................... 46

INTRODUCTION [2.10]

The Constitution gives the Commonwealth Parliament only limited powers to legislate on the subject of shipping. Outside the scope of these powers, the States have exclusive legislative competence. Both the Commonwealth and the States have exercised their respective powers in respect of shipping, with the result that shipping law in Australia is controlled partly by Commonwealth law and partly by State law. This has caused problems, not only concerning the limits of the Commonwealth’s

20

Shipping Law

[2.20]

competency to legislate on maritime matters, but also in securing uniform legislation on aspects of shipping law that will cover the whole of Australia irrespective of the legislative limits of the Commonwealth and the States. In order to avoid such problems, States often now either adopt Commonwealth legislation which might otherwise exceed constitutional limits1 or refer their State legislative powers to the Commonwealth pursuant to s 51(xxxvii) of the Constitution.2 Shipping law in Australia is nonetheless still very much affected by problems of constitutional law. Australian shipping law is, however, a little more complex than has just been indicated, for it is still partly controlled in the States and the Northern Territory by provisions of the Merchant Shipping Act 1894 (IMP). The starting point for any consideration of legislative power in respect of shipping law is nonetheless the Constitution, for legislation that is justified by this source of law is paramount.

LEGISLATIVE POWERS UNDER THE CONSTITUTION Constitutional heads of power [2.20]

Many heads of legislative power under s 51 of the Constitution can concern shipping. Not least among these are the defence power of s 51(vi), the insurance power of s 51(xiv), and the corporations power of s 51(xx). The scope of these various powers is considered in detail in the established texts on constitutional law, and their application to shipping law is for the most part unexceptional. Three heads of legislative power, however, require more detailed consideration. The first is the trade and commerce power of s 51(i), which is specifically extended to navigation and shipping by s 98. The second is the fisheries power of s 51(x). And the third is the external affairs power of s 51(xxix). Consideration must also be given to s 76(iii) and s 77, which empower the Parliament to confer Admiralty and maritime jurisdiction upon courts. These various heads of power are examined in the following sections of this chapter. Finally, s 51(vii) should also be mentioned. This gives the Parliament the power to make laws with respect to “Lighthouses, lightships, beacons and buoys”. This paragraph is clearly concerned with shipping, though as a head of legislative power it requires nothing more than a note of its existence.3

1 As they did in the Marine Safety (Domestic Commercial Vessel) National Law, contained in the Marine Safety (Domestic Commercial Vessel) National Law Act 2012 (Cth), which concerns the safety of domestic commercial vessels and their crews in Australian waters. 2 As they did in the the Personal Property Securities Act 2009 (Cth), which now covers all ship mortgages, whether registered or unregistered. 3 Note also in this connection s 69 (“Transfer of certain departments”), and with it s 52(ii).

[2.40]

2 Division of Shipping Law Powers in Australia

21

The trade and commerce power of section 51(i) [2.30]

Section 51(i) of the Constitution gives the Commonwealth Parliament the power to make laws with respect to “Trade and commerce with other countries, and among the States”. Associated with this head of power is s 98. This states: “The power of the Parliament to make laws with respect to trade and commerce extends to navigation and shipping, and to railways the property of any State.”

There is no doubt that s 51(i) and s 98 give the Parliament a very wide power to legislate in respect of shipping. This power is not, however, a general power in respect of this subject.4 There are clear limits which are imposed not least by the concluding words of s 51(i), namely “among the States”5 (though s 122 might well fill any lacuna in respect of trade with the Territories6). It is also clear from the concluding words of s 51(i) that the Parliament cannot, without more, legislate in respect of the coastal trade of a single State.7 There is early High Court authority for the proposition that by virtue of the limits of the power conferred by s 51(i), the Parliament cannot legislate in respect of the navigation of ships not engaged in interstate or overseas trade even though they sail in or near waters that are used by ships that are engaged in such trade.8 This nexus with para (i), the High Court said, is too remote.9 In more recent times, however, it has been argued that this High Court decision should no longer be read so restrictively.10

[2.40]

Effect of section 98

Section 98 of the Constitution states: “The power of the Parliament to make laws with respect to trade and commerce extends to navigation and shipping, and to railways the property of any State.” Although the first limb of this section might initially appear to give the Parliament the power to legislate in respect of navigation and shipping generally, the High Court has made it clear that it does not go that far.11 4 Owners of the SS Kalibia v Wilson (1910) 11 CLR 689 esp at 707; Newcastle & Hunter River Steamship Co Ltd v Attorney-General (Cth) (1921) 29 CLR 357 at 368; New South Wales v Commonwealth (1975) 135 CLR 337 at 409. 5 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 at 307. 6 See Re Maritime Union of Australia; Ex parte CSL Pacific Shipping Inc (2003) 77 ALJR 1497 at 1503. 7 Owners of SS Kalibia v Wilson (1910) 11 CLR 689 at 697, 701; Newcastle & Hunter River Steamship Co Ltd v Attorney-General (Cth) (1921) 29 CLR 357 at 368-369. See also Morgan v Commonwealth (1947) 74 CLR 421 at 452. 8 R v Turner; Ex parte the Marine Board of Hobart (1927) 39 CLR 411. 9 R v Turner; Ex parte the Marine Board of Hobart (1927) 39 CLR 411 at 424-425. 10 Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), p 49, para 75, n 46 and text. 11 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 at 339; Morgan v Commonwealth (1947) 74 CLR 421 at 455.

22

Shipping Law

[2.40]

The narrow view of the effect of s 98 is that it is simply declaratory of the fact that the trade and commerce power of s 51(i) covers trade and commerce conducted by means of navigation and shipping. Griffiths CJ adopted this view in Australian Steamships Ltd v Malcolm12 when he said, “The effect of s 98 is only to say that the power conferred by s 51(i) extends within its ambit to trade and commerce whether carried on by land or sea”.13 Under this view, s 98 is included in the Constitution simply out of an abundance of caution. This was the interpretation adopted by Quick and Garran.14 The more generally accepted view, however, is that s 98 goes further than this and confers upon the Parliament the power to legislate directly in respect of shipping and navigation provided this is ancillary to trade and commerce within the scope of s 51(i). The classic statement in this regard is that by Gavan Duffy and Rich JJ in Australian Steamships Ltd v Malcolm. There they said:15 It was argued that [s 98] should be read as merely enabling the legislature to deal with trade and commerce when conducted by means of ships. But such a power is already necessarily implied in the language of s 51(i), and in any case the language of s 98 is inappropriate to express it. In our opinion s 98 has a quite different operation. … It says in effect that the power to make laws with respect to trade and commerce shall include a power to make laws with respect to navigation and shipping as ancillary to such trade and commerce. It authorizes Parliament to make laws with respect to shipping and the conduct and management of ships as instrumentalities of trade and commerce, and to regulate the relations and reciprocal rights and obligations of those conducting the navigation of ships in the course of such commerce both among themselves and in relation to their employers on whose behalf the navigation is conducted.

In the Australian Steamships case, the majority of the High Court upheld the validity of the Seamen’s Compensation Act 1911 (Cth), which imposes a duty on the owners of ships engaged in interstate or overseas trade to pay compensation to any of their crew who are injured during the course of their employment. It did so on the ground that by virtue of s 51(i) and s 98, the Commonwealth can regulate the employment obligations of those who carry on interstate or overseas trade by means of ships.16 12 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298. 13 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 at 307. See also Owners of the SS Kalibia v Wilson (1910) 11 CLR 689 esp at 697, 707. 14 J Quick and R R Garran, Annotated Constitution of the Australian Commonwealth (Angus & Robertson, Sydney, 1901), pp 872-873. 15 J Quick and R R Garran, Annotated Constitution of the Australian Commonwealth (Angus & Robertson, Sydney, 1901), p 335. See also pp 314, 327, 332, 339; Newcastle & Hunter River Steamship Co Ltd v Attorney-General (Cth) (1921) 29 CLR 357 at 368; R v Turner; Ex parte Marine Board of Hobart (1927) 39 CLR 411 at 435; Morgan v Commonwealth (1947) 74 CLR 421 at 455; Australian Coastal Shipping Commission v O’Reilly (1962) 107 CLR 46 at 54; New South Wales v Commonwealth (1975) 135 CLR 337 at 409. 16 See also Re Maritime Union of Australia; Ex parte CSL Pacific Shipping Inc (2003) 77 ALJR 1497.

[2.60]

[2.50]

2 Division of Shipping Law Powers in Australia

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Genesis of section 98

The limited scope of the Parliament’s power to legislate in respect of navigation and shipping is a historical accident. Under the draft Constitution of 1891, the Commonwealth was assigned plenary powers in respect of navigation and shipping. However, this power was deleted by the Constitutional Convention of 1897-1898 as it was feared that the inclusion of navigation and shipping as a distinct head of legislative power might unwittingly derogate from the scope of the trade and commerce power. The power of the Parliament to legislate in respect of navigation and shipping was then made part of the power of the Parliament to make laws with respect to trade and commerce by the addition of the present s 98. This device, however, clearly limited the scope of the Parliament’s power to legislate with respect to navigation and shipping. Whether or not this consequence was intended, it has had important consequences upon the distribution of legislative powers over shipping in Australia.

[2.60]

“Trade and commerce”

The kernel of s 51(i), and thus of s 98, is trade and commerce. The words “trade” and “commerce” are not confined to s 51(i) and s 98. They also appear in ss 92, 99 and 100, and it is in the context of s 92 that these two terms have most often arisen for judicial consideration. The meaning of these terms is the same regardless of context.17 From the cases on s 92 it is clear that the expression “trade and commerce” is not a term of art but bears the ordinary meaning signified by the respective words involved. The expression “trade and commerce” certainly includes the act of transportation, though its scope is much wider than this. As three members of the High Court said in W & A McArthur Ltd v Queensland:18 “All the commercial arrangements of which transportation is the direct and necessary result form part of ‘trade and commerce’. The mutual communings, the negotiations, verbal and by correspondence, the bargain, the transport and the delivery are all, but not exclusively, parts of that class of relations between mankind which the world calls ‘trade and commerce’.”19 More recently, the High Court has said of the scope of trade and commerce, with particular reference to s 51(i) and shipping:20 It is … well settled that, in the exercise of the trade and commerce power, the Parliament can validly regulate the conduct of persons employed in those 17 James v Commonwealth (1936) 55 CLR 1 at 60. 18 W & A McArthur Ltd v Queensland (1920) 28 CLR 530. 19 W & A McArthur Ltd v Queensland (1920) 28 CLR 530 at 547; and see generally at 546-549. See also Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 at 305-306, 315-321, 331-332; Australian National Airways Pty Ltd v Commonwealth (1945) 71 CLR 29 at 56-57, 71, 76, 82-83, 106-107; Bank of New South Wales v Commonwealth (1948) 76 CLR 1 at 381-383. 20 Re Maritime Union of Australia; Ex parte CSL Pacific Shipping Inc (2003) 214 CLR 397 at 413.

24

Shipping Law

[2.70]

activities which form part of trade and commerce with other countries and among the States. A ship journeying for reward is in commerce; those who co-operate in the journeying of the ship are in commerce and the wages of those persons and the conditions of their employment relate to that commerce.

[2.70]

“Navigation and shipping”

Like the expression “trade and commerce” in s 51(i), the expression “navigation and shipping” in s 98 is not a term of art with a precise meaning. There seems little doubt that this expression covers at least those matters which fell within the general field of shipping law in 1901. Isaacs J, for example, said in Australian Steamships Ltd v Malcolm,21 “The test of the contents of the words ‘navigation’ and ‘shipping’ is what they ordinarily meant in the systems of law in Australia at the time of federation”.22 In all probability, however, the current meaning of these words is broader than that and concerns the ordinary meaning of “navigation” and “shipping” as these terms are understood within the field of contemporary shipping law. There is some authority for the proposition that “navigation and shipping” includes at least all the topics covered by the Merchant Shipping Act 1894 (IMP).23 Whether or not this is so, there is no doubt that the power conferred by s 51(i) and s 98 is very wide. Dixon CJ said in Australian Coastal Shipping Commission v O’Reilly,24 “There can … be no doubt that the combination of s 51(i) with s 98 gives the widest power to deal with the whole subject matter of navigation and shipping in relation to trade and commerce with other countries and among the States”.25

The fisheries power of section 51(x) [2.80]

Section 51(x) of the Constitution gives the Parliament the power to make laws with respect to “Fisheries in Australian waters beyond territorial limits”.26 This provision had its origin in s 15(c) of the Federal Council of Australasia Act 1885 (IMP), which gave the Federal Council of Australasia the power to legislate in respect of “Fisheries in Australasian waters beyond territorial limits”. The present head of power involves three questions of interpretation, namely what is meant by the term “fisheries”, what is meant by “Australian waters”, and what is meant by “territorial limits”. 21 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298. 22 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 at 328. See also at 338-340. 23 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 at 328-329; see also at 340; R v Turner; Ex parte the Marine Board of Hobart (1927) 39 CLR 411 at 435. 24 Australian Coastal Shipping Commission v O’Reilly (1962) 107 CLR 46. 25 Australian Coastal Shipping Commission v O’Reilly (1962) 107 CLR 46 at 54. 26 For a detailed study of this provision, see J Waugh, Australian Fisheries Law (Law School, University of Melbourne, 1988), pp 11-29.

[2.100]

[2.90]

2 Division of Shipping Law Powers in Australia

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“Fisheries”

The problem with the word “fisheries” is whether it signifies an activity or a place. The Shorter Oxford English Dictionary, for example, gives as the first meaning of the singular term “fishery”, “the business of catching fish”, and as the second meaning, “a fishing ground”. In the leading case on s 51(x), Bonser v La Macchia,27 both interpretations were adopted by different members of the High Court. Kitto and Windeyer JJ were of the opinion that “fisheries” as a head of legislative power means the activity of taking fish and other marine products from the sea.28 Menzies J, on the other hand, thought that the term meant simply the waters where fish are to be found.29 The weight of authority would appear to support the view that “fisheries” signifies the activity of fishing.30 However, this question has yet to be conclusively determined by the High Court.

[2.100]

“Australian waters”

The meaning of the expression “Australian waters” in s 51(x) was considered by the High Court in Bonser v La Macchia.31 It is clear from this case that this expression does not mean simply Australia’s territorial sea.32 Instead it means those waters around Australia which are of importance to Australia as a nation. It is also clear from Bonser v La Macchia that the limits of Australian waters can change as Australia’s national interests change, and that these waters can even overlap with the waters of other nations.33 There are two main uncertainties concerning the expression “Australian waters”. The first is whether the meaning of this expression in s 51(x) should be limited by the word “fisheries”. In other words, does “Australian waters” in s 51(x) mean only those waters around Australia that are of importance to Australia as a fishing nation (which may or may not be coterminous with the limits of the waters which are important to Australia for other purposes), or does it mean those waters around Australia which are of importance to Australia for general purposes, of which only one is fishing? In Bonser v La Macchia, Barwick CJ expressed the firm opinion that “Australian waters” meant Australian waters for 27 Bonser v La Macchia (1969) 122 CLR 177. 28 Bonser v La Macchia (1969) 122 CLR 177 at 201 (Kitto J), 212 (Windeyer J). 29 Bonser v La Macchia (1969) 122 CLR 177 at 210. 30 Bonser v La Macchia (1969) 122 CLR 177 at 201, 212; New South Wales v Commonwealth (1975) 135 CLR 337 at 448; Robinson v Western Australian Museum (1977) 138 CLR 283 at 294. 31 Bonser v La Macchia (1969) 122 CLR 177. 32 Compare Historic Shipwrecks Act 1976 (Cth), s 3(1), where “Australian waters” is restricted to the territorial sea for the purposes of this Act. 33 See generally Bonser v La Macchia (1969) 122 CLR 177 at 195-196 (Barwick CJ), 198-199 (McTiernan J), 210 (Menzies J), 235-236 (Owen J).

26

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[2.110]

general purposes.34 Kitto J, on the other hand, seemed to imply that “Australian waters” in s 51(x) meant only those waters which are relevant to Australia’s fishing interests.35 The second uncertainty concerning the expression “Australian waters” is where they commence for the purposes of s 51(x). This involves the interpretation of the expression “beyond territorial limits”.

[2.110]

“Beyond territorial limits”

By s 51(x), the Parliament has power to make laws with respect to fisheries in Australian waters, but only “beyond territorial limits”. The expression “territorial limits” can have various possible meanings. It has been suggested by one member of the High Court, for example, that it means Imperial territorial limits.36 This interpretation, however, has not found general favour.37 The two main meanings that have been given to this expression are low-water mark, and the limits of the territorial sea. The latter had traditionally been set at three nautical miles (one marine league, 5,556 metres) from low-water mark, though pursuant to a declaration made by the Governor-General in 1990 under s 7 of the Seas and Submerged Lands Act 1973 (Cth), Australia’s territorial sea is now 12 nautical miles (22,224 metres) measured from low-water mark or from any proclaimed baseline.38 The view of the majority of members of the High Court in Bonser v La Macchia was that “beyond territorial limits” means beyond the territorial sea.39 This accords with the view of Quick and Garran who said that by virtue of s 51(x), “The federal Parliament was assigned jurisdiction over fisheries in Australian waters beyond the three-mile limit”.40 Only Windeyer J regarded territorial limits as commencing at low-water mark.41 Under either interpretation there is no doubt that s 51(x) excludes from the scope of the Parliament’s legislative power fisheries in inland

34 Bonser v La Macchia (1969) 122 CLR 177 at 194. See also at 198 (McTiernan J). 35 Bonser v La Macchia (1969) 122 CLR 177 at 206. See also at 215 (Windeyer J). 36 See Bonser v La Macchia (1969) 122 CLR 177 at 190 (Barwick CJ). 37 See New South Wales v Commonwealth (1975) 135 CLR 337 at 408-409. 38 Commonwealth of Australia Gazette No S 297 (13 November 1990). See also Fair Work Ombudsman v Pocomwell Ltd (No 2) (2013) 218 FCR 94 at 100. 39 Bonser v La Macchia (1969) 122 CLR 177 at 190-191, 193, 196 (Barwick CJ), 203 (Kitto J), 209-210 (Menzies J), 235 (Owen J). 40 J Quick and R R Garran, Annotated Constitution of the Australian Commonwealth (Angus & Robertson, Sydney, 1901), p 569. 41 See Bonser v La Macchia (1969) 122 CLR 177 at 230-231, 233.

[2.120]

2 Division of Shipping Law Powers in Australia

27

waters, for example in rivers, lakes and enclosed bays.42 Dicta in subsequent High Court cases have generally supported the majority view in Bonser v La Macchia.43 It would appear to follow from Bonser v La Macchia that the States alone are able to legislate in respect of fisheries within territorial limits.44

External affairs power of section 51(xxix) [2.120]

Section 51(xxix) gives the Commonwealth Parliament the power to make laws with respect to “External affairs”. The scope of this power has been the subject of substantial High Court attention, much of which does not especially concern the subject of shipping. Two particular points should, however, be made concerning relevance of this power to shipping law. The first is that it gives the Parliament a plenary power to legislate in respect of Australia’s territorial sea.45 The second is that it also gives the Parliament a power to repeal any Imperial law that still applies to Australia. The extent of the external affairs power to repeal any Imperial law is, however, the subject of some uncertainty. It undoubtedly enables the Parliament to repeal any Imperial law that would apply to the Commonwealth, but it is uncertain whether it also enables the Parliament to repeal any Imperial law so far as it applies to the States. In the modern case of Kirmani v Captain Cook Cruises Pty Ltd (No 1),46 three members of the High Court were of the opinion that a Commonwealth law which excludes the operation of an Imperial Act to Australia is a law with respect to Australia’s external affairs even though it affects law which is otherwise part of the law of the States.47 Three other members of the court, however, disagreed with this view.48

42 See Bonser v La Macchia (1969) 122 CLR 177 at 196 (Barwick CJ), 233 (Windeyer J). 43 New South Wales v Commonwealth (1975) 135 CLR 337 at 403, 408-409, 457; Robinson v Western Australian Museum (1977) 138 CLR 283 at 294; A Raptis & Son v South Australia (1977) 138 CLR 346 at 357, 374, 379 (but compare at 396-397). 44 See also A Raptis & Son v South Australia (1977) 138 CLR 346 at 357, 379 (but compare at 396-397); Li Chia Hsing v Rankin (1978) 141 CLR 182 at 191; Okmasich v Evans (1980) 25 SASR 481 at 485. Note, however, the observations of GJ Lindell in (1978) 52 ALJ 397. 45 New South Wales v Commonwealth (1975) 135 CLR 337 at 360, 373, 470, 497; Robinson v Western Australian Museum (1977) 138 CLR 283 at 294, 337. 46 Kirmani v Captain Cook Cruises Pty Ltd (No 1) (1985) 159 CLR 351. 47 Kirmani v Captain Cook Cruises Pty Ltd (No 1) (1985) 159 CLR 351 at 379-382 (Mason J), 384-385 (Murphy J), 434-441 (Deane J). 48 Kirmani v Captain Cook Cruises Pty Ltd (No 1) (1985) 159 CLR 351 at 370-372 (Gibbs CJ), 395-396 (Wilson J), 455-460 (Dawson J).

28

Shipping Law

[2.130]

Section 76(iii) and substantive legislative powers [2.130]

Section 76(iii) of the Constitution empowers the Parliament to make laws conferring original jurisdiction on the High Court “in any matter … of Admiralty and maritime jurisdiction”.49 Section 77(iii) then extends this power to enable the Parliament to invest federal jurisdiction on the same matters in any State court. The head of power in s 76(iii) is largely founded upon Art III, s 2(1) of the United States Constitution. This states, “The judicial power [of the United States] shall extend … to all cases of admiralty and maritime jurisdiction”. Although it would initially appear that this United States provision simply confers judicial power, it is now well established that it also confers a power upon the Congress to legislate in respect of maritime law generally.50 The question has accordingly arisen of whether s 76(iii) of the Australian Constitution confers a similar power on the Commonwealth Parliament. Until recent years, the accepted view was that s 76(iii) does not give the Parliament a general power to legislate in respect of maritime law. There is no High Court statement in favour of such a broad interpretation of this head of power, and indeed several High Court statements to the contrary. Isaacs J, for example, said in Owners of SS Kalibia v Wilson:51 Section 76 relates solely to original judicial jurisdiction and enables Parliament to confer it on the High Court. Whatever is incidental to that it likewise has power to enact (s 51(xxxix)). But beyond that it cannot go. The interpretation and enforcement of admiralty and maritime law, as it is found to exist, is one thing; the alteration of that law is quite another.52

On this understanding of the law, s 76(iii) gives the Parliament the power to confer Admiralty and maritime jurisdiction on a court, but not otherwise to affect the substantive rules of maritime law. It has, however, been suggested in a modern Federal Court case that this view of the ambit of s 76(iii) should now be reconsidered in light of more recent constitutional developments in Australia and the current understanding of the legislative competence of the Commonwealth Parliament.53 Even if the hitherto accepted view of the scope of s 76(iii) be correct, the limitation of this head of power to jurisdictional matters is blurred by the 49 On the meaning of the terms “jurisdiction” and “matter” in this general context, see Polyukhovich v Commonwealth (1991) 172 CLR 501 at 614-615. 50 See (note), (1954) 67 Harv L Rev 1214 at 1230-1237; Empire Shipping Co Ltd v Owners of the Ship Shin Kobe Maru (1991) 32 FCR 78 at 107-109. 51 Owners of SS Kalibia v Wilson (1910) 11 CLR 689. 52 Owners of SS Kalibia v Wilson (1910) 11 CLR 689 at 715. See also at 699 (Griffith CJ), 703-704 (Barton J); John Sharp & Sons Ltd v Ship Katherine Mackall (1924) 34 CLR 420 at 428; McIlwraith McEacharn Ltd v Shell Co of Australia Ltd (1945) 70 CLR 175 at 208-209. Note, however, the observations of H Zelling, “Of Admiralty and Maritime Jurisdiction” (1982) 56 ALJ 101 at 105-106. 53 Empire Shipping Co Ltd v Owners of the Ship Shin Kobe Maru (1991) 32 FCR 78 at 86-87.

[2.150]

2 Division of Shipping Law Powers in Australia

29

fact that some rules of substantive maritime law are to a large extent the creature of Admiralty procedure. The most obvious example is the rules relating to maritime liens.54 Another may be the rules relating to statutory liens, though these are generally considered to concern remedies rather than substantive rights and thus substantive law.55 Both forms of liens are considered in detail in Chapter 8. It is sufficient here to observe that the existence of both maritime liens and statutory liens are dependent upon the ability of claimants in Admiralty actions to commence proceedings directly against a ship or other maritime property. Without this ability the rights themselves would not exist. To the extent that any substantive right is fundamentally the product of Admiralty procedure, there would appear to be no reason why a legislative power in respect of the latter cannot also cover the former.56

[2.140]

“Make laws conferring … jurisdiction”

It is generally accepted that the power of the Parliament under s 76(iii) to “make laws conferring … jurisdiction” in Admiralty and maritime matters enables the Parliament to devise its own rules of law on these subjects. In other words, the Parliament is not restricted to making laws in respect of established rules of Admiralty or maritime jurisdiction. The scope of the power under s 76(iii) is consequently limited only by the extent to which rules may be said to be rules “of Admiralty and maritime jurisdiction”.

[2.150]

“Admiralty and maritime jurisdiction”

Statements by members of the High Court have made it clear that the expression “Admiralty … jurisdiction” is not restricted to the limits of Admiralty jurisdiction in England in 1900.57 This view has been expressed emphatically in modern decisions of the Federal Court.58 The High Court has also made it clear that the addition of the word “maritime” in s 76(iii) implies that the Parliament has the ability to confer a broader jurisdiction

54 Empire Shipping Co Ltd v Owners of the Ship Shin Kobe Maru (1991) 32 FCR 78 at 86. 55 Empire Shipping Co Ltd v Owners of the Ship Shin Kobe Maru (1991) 32 FCR 78 at 86. 56 Note, however, the more cautious opinion of the Australian Law Reform Commission in its report, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), pp 53-54, paras 80-81. 57 See John Sharp & Sons Ltd v Ship Katherine Mackall (1924) 34 CLR 420 at 428; China Ocean Shipping Co v South Australia (1979) 145 CLR 172 at 204. See also McIlwraith McEacharn Ltd v Shell Co of Australia Ltd (1945) 70 CLR 175 at 208-209. 58 Empire Shipping Co Ltd v Owners of the Ship Shin Kobe Maru (1991) 32 FCR 78 at 104-107, 110-111; Owners of the Ship Shin Kobe Maru v Empire Shipping Co Ltd (1992) 38 FCR 227 at 234-235, 245-247.

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[2.150]

than that normally associated with Admiralty,59 and that this word signifies the jurisdiction of maritime nations generally.60 The entire phrase “Admiralty and maritime jurisdiction” is thus wide in scope, though its precise limits have yet to be determined.61 In Owners of the Ship Shin Kobe Maru v Empire Shipping Co Inc,62 the High Court said that s 76(iii) “extends to matters of the kind generally accepted by maritime nations as falling within a special jurisdiction, sometimes called Admiralty and sometimes called maritime jurisdiction, concerned with the resolution of controversies relating to maritime commerce and navigation”.63 In the Full Court of the Federal Court in the Shin Kobe Maru64 — which resulted in the appeal to the High Court — Davies J said, “The power granted by s 76(iii) of the Constitution is a grant of plenary legislative power to be construed ‘with all the generality which the words used will admit’ and as ‘wide enough to be capable of flexible application to changing circumstances’”.65 Lockhart J (with whom French J agreed) concurred with this view. He said, “Section 76(iii) of the Constitution must be construed broadly and liberally and as ensuring that the grant of power which it confers upon the Parliament is capable of adjustment to the constantly changing forces and conditions in Australia”.66 Lockhart J particularly observed in this regard that “The addition of the words ‘and maritime’ was designed to ensure that the power was not confined to the jurisdiction of the Courts of Admiralty and was intended to confer jurisdiction with respect to all matters that may be said to reasonably relate to admiralty or maritime law”.67 In his reasons for judgment at first instance in the Shin Kobe Maru,68 Gummow J held that s 76(iii) certainly empowers the Parliament to make laws conferring jurisdiction with respect to matters concerning the commerce or navigation of the sea, including the means by which, or with 59 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404 at 423-424 (and see also at 425-426). See also Empire Shipping Co Ltd v Owners of the Ship Shin Kobe Maru (1991) 32 FCR 78 at 106; Owners of the Ship Shin Kobe Maru v Empire Shipping Co Ltd (1992) 38 FCR 227 at 246-247. 60 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404 at 425-426. 61 See generally on this matter, H Zelling, “Of Admiralty and Maritime Jurisdiction” (1982) 56 ALJ 101 esp at 103-104; H Zelling, “Constitutional Problems of Admiralty Jurisdiction” (1984) 58 ALJ 8 at 11-13; Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), Ch 5, esp pp 45-46, para 70. 62 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404. 63 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404 at 424, and see also at 425-426; Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 449-451. 64 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Ltd (1992) 38 FCR 227. 65 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Ltd (1992) 38 FCR 227 at 235. 66 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Ltd (1992) 38 FCR 227 at 245. 67 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Ltd (1992) 38 FCR 227 at 246. 68 Empire Shipping Co Ltd v Owners of the Ship Shin Kobe Maru (1991) 32 FCR 78.

[2.190]

2 Division of Shipping Law Powers in Australia

31

the assistance of which, these activities are or may be conducted.69 With this the majority of the Full Court of the Federal Court agreed.70

POWER OF THE COMMONWEALTH AND THE STATES TO LEGISLATE EXTRA-TERRITORIALLY Introduction [2.160]

The power of both the Commonwealth and the States to legislate extra-territorially is of special importance in respect of shipping law, as this body of law operates principally upon the high seas. Although the old limits of legislative competence which once fettered the Commonwealth and the States qua British colonies have been abolished, this does not mean that the Commonwealth and State Parliaments now have an unrestricted ability to legislate extra-territorially.

[2.170]

Old doctrine of extra-territorial legislative incompetence

It was once accepted that a British colony could not enact valid legislation that operated extra-territorially, that is outside the territorial limits of the colony.71 The British Parliament (the Imperial Parliament), on the other hand, was not so limited. It could legislate extra-territorially, and it could also legislate in respect of its colonies.72 Accordingly, under the old doctrine if a colonial legislature wanted to legislate extra-territorially, it could do so only with the legislative assistance of the Imperial Parliament.73

Power of the Commonwealth to legislate extra-territorially [2.180]

With the creation of the Commonwealth of Australia in 1901, a new British colony came into existence, albeit one with wide legislative competence. This competence did not, however, immediately include the ability to legislate extra-territorially, for no British colony then enjoyed this power except to the extent that a particular conferral of legislative power clearly provided for this (as the fisheries power of s 51(x) of the Constitution of the Commonwealth of Australia obviously did).

[2.190]

Covering section 5

One section of the Commonwealth of Australia Constitution Act 1900 (IMP) requires special mention in the context of the ability of Commonwealth legislation to have extra-territorial effect. This is s 5 of the Act itself, popularly known as “covering section (or clause) 5”. This provides, inter 69 Empire Shipping Co Ltd v Owners of the Ship Shin Kobe Maru (1991) 32 FCR 78 at 111. 70 Owners of the Ship Shin Kobe Maru v Empire Shipping Co Ltd (1992) 38 FCR 227 at 247. 71 Ray v M’Mackin (1875) 1 VLR (L) 274 at 280-281; Macleod v Attorney-General (NSW) [1891] AC 455. 72 See Ray v M’Mackin (1875) 1 VLR (L) 274 at 280. 73 For a late example of this in respect of Commonwealth legislation, see Army and Air Force (Annual) Act 1940 (IMP), s 3(1).

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Shipping Law

[2.200]

alia, that “The laws of the Commonwealth shall be in force on all British ships, the Queen’s ships of war excepted, whose first port of clearance and whose port of destination are in the Commonwealth”. This section does not, however, give the Commonwealth Parliament any extraterritorial competence in the ordinary sense of this expression, for it does not enable the Parliament to legislate extra-territorially.74 Instead, it simply provides that the entire corpus of Commonwealth law shall be in force on British ships75 in the specified circumstances.76

[2.200]

Recognition of extra-territorially

the

Commonwealth’s

power

to

legislate

The demise of the doctrine of extra-territorial legislative incompetence occurred in Australia with the decision of the Privy Council in Croft v Dunphy77 in 1932. There the Privy Council recognised the competency of the Canadian Parliament, and thus by extension the Parliament of the Commonwealth of Australia, to legislate extra-territorially, provided the legislation otherwise fell within the legislature’s field of competence. The Judicial Committee of the Privy Council said on this matter:78 Once it is found that a particular topic of legislation is among those upon which the Dominion Parliament may competently legislate as being for the peace, order and good government of Canada … their Lordships see no reason to restrict the permitted scope of such legislation by any other consideration than is applicable to the legislation of a fully sovereign state.

The Privy Council in this case recognised Canadian customs legislation as validly operating some 12 miles from the Canadian coast. In the previous year, s 3 of the Statute of Westminster 1931 (IMP), had declared that the Parliament of a Dominion — which by s 1 includes the Commonwealth of Australia — has full power to make laws having extra-territorial operation. However, s 10 provides that the substantive parts of this statute, including s 3, should not apply to any Dominion Parliament until it has been adopted there. The Statute of Westminster was not adopted by the Commonwealth Parliament until 1942.79 (The adopting Act then deemed this Statute to have been adopted from 3 September 1939,80 the date upon which Britain and Australia had declared war on Germany.) 74 See Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 at 299, 304, 324. 75 On what constitutes a “British ship” for present purposes, see Merchant Service Guild of Australasia v Commonwealth Steamship Owners Association (1913) 16 CLR 664 at 693. 76 See R v Foster; Ex parte Eastern & Australian Steamship Co Ltd (1959) 103 CLR 256 at 309. On the circumstances in which Commonwealth law applies by virtue of s 5, see Merchant Service Guild of Australasia v Archibald Currie & Co Pty Ltd (1908) 5 CLR 737; Merchant Service Guild of Australasia v Commonwealth Steamship Owners Association (1913) 16 CLR 664; Clarke v Union Steamship Co of New Zealand Ltd (1914) 18 CLR 142. 77 Croft v Dunphy [1933] AC 156. 78 Croft v Dunphy [1933] AC 156 at 163. 79 Statute of Westminster Adoption Act 1942 (Cth). 80 Statute of Westminster Adoption Act 1942 (Cth), s 3.

[2.210]

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There seems little doubt that the adoption by the Commonwealth of s 3 of the Statute of Westminster simply formalised the ability of the Commonwealth Parliament to legislate extra-territorially, as had been earlier recognised by the Privy Council in Croft v Dunphy. But whatever may have been the position before 1942 (and in fact Australian courts consistently followed Croft v Dunphy81), there is no doubt that at least since 1942, the Commonwealth Parliament has had full ability to legislate extra-territorially on any matter that is otherwise within its field of legislative competence.82

Power of the States to legislate extra-territorially [2.210]

The doctrine of extra-territorial legislative incompetence applied to the States after federation in the same way as it had previously applied to them as colonies.83 It continued to apply until the decision of the Privy Council in Croft v Dunphy.84 Although Croft v Dunphy prima facie concerned only “Dominion” legislatures, and not the constituent parts of a Dominion, this decision nonetheless became accepted as applying equally to the States as to the Commonwealth.85 This was fortunate, for the States could not avail themselves of the declaration in s 3 of the Statute of Westminster 1931 (IMP), as the provisions of this Act do not apply to them.86 The result, then, was that after Croft v Dunphy, the States, like the Commonwealth, were able to legislate extra-territorially in respect of all matters which were within their field of legislative competence.87 It has been suggested that s 2 of the Australia Acts88 has extended the ability of States to legislate extra-territorially.89 Subsection (1) of this section states, “It is hereby declared and enacted that the legislative 81 See Trustees Executors & Agency Co Ltd v Federal Commissioner of Taxation (1933) 49 CLR 220 at 230-241; Crowe v Commonwealth (1935) 54 CLR 69 at 85; R v Foster; Ex parte Eastern & Australian Steamship Co Ltd (1959) 103 CLR 256 at 307. 82 R v Foster; Ex parte Eastern & Australasian Steamship Co Ltd (1959) 103 CLR 256 at 267, 279, 284-285, 300-301, 306-308; Robinson v Western Australian Museum (1977) 138 CLR 283 at 294. See also A Twomey, “Geographical Externality and Extraterritoriality” (2006) 17 PLR 256. 83 See Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 at 324. See also Commissioner of Stamp Duties (NSW) v Millar (1932) 48 CLR 618 at 628, 632, 636; FA Trindade, “The Australian States and the Doctrine of Extra-territorial Legislative Incompetence” (1971) 45 ALJ 233. 84 Croft v Dunphy [1933] AC 156. 85 Commissioner of Stamps (Qld) v Counsell (1937) 57 CLR 248 at 255; Attorney-General v Australian Agricultural Co (1934) 34 SR (NSW) 571 at 576-577; R v Bull (1974) 131 CLR 203 at 263, 270-271, 280-281. See also R v Foster; Ex parte Eastern & Australian Steamship Co Ltd (1959) 103 CLR 256 at 307. 86 See Statute of Westminster 1931 (IMP), s 1. 87 Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 12. 88 Being the Australia Act 1986 (Cth) and Australia Act 1986 (IMP). 89 See M Moshinsky, “State Extraterritorial Legislation and the Australia Acts 1986” (1987) 61 ALJ 779; M Moshinsky, “State Extraterritorial Legislation – Further Developments” (1990) 64 ALJ 42.

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Shipping Law

[2.220]

powers of the Parliament of each State include full power to make laws for the peace, order and good government of that State that have extra-territorial operation”. It is probable, however, that like s 3 of the Statute of Westminster 1931 (IMP), s 2 of the Australia Acts simply formalises the existing legislative competence of States to legislate extra-territorially, following the decision of the Privy Council in Croft v Dunphy, and that it does not otherwise widen it.90

Legislative competence over Australia’s territorial sea General legislative competence of the Commonwealth and the States over the territorial sea

[2.220]

The question of who has legislative competence over Australia’s territorial sea involves the question of whether this forms part of the territory of the littoral States, and if it does not, whether the States or the Commonwealth nonetheless have sovereignty over this part of the sea. If this part of the sea is part of the territory of the littoral States, the States have the same ability to legislate over their territorial sea as they have over their land. On the other hand, if sovereignty is vested in the Commonwealth, the States’ ability to legislate in respect of their territorial sea is substantially reduced.

There has never been any doubt since the creation of the Commonwealth that the States do have some ability to legislate in respect of their territorial sea, though whether this derived from the fact that the territorial sea formed part of their domestic territory, or from their sovereignty over these waters, or simply from a minimal ability to legislate extra-territorially, was for a long time uncertain. Statements like that by Barton J in Australian Steamships Ltd v Malcolm91 could be read to support any of these views. Barton J there observed: “The police power of the States extends only to the territorial waters, commonly called ‘the three mile limit’. Beyond that limit legislation is in the hands of the sovereign Imperial Parliament only.”92 The status of the territorial sea, and the issue of legislative competence over this part of the sea, was resolved in a series of High Court cases decided between 1969 and 1977. The more important of these were (in chronological order) Bonser v La Macchia,93 New South Wales v Commonwealth94 (the “Seas and Submerged Lands case”), Pearce v Florenca,95 90 See Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 13-14. See also CD Gilbert, “Extraterritorial State Laws and the Australia Acts” (1987) 17 Fed LR 25; HP Lee, “The Australia Act 1986 – Some Legal Conundrums” (1988) 14 Mon LR 298 at 306-309. 91 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298. 92 Australian Steamships Ltd v Malcolm (1914) 19 CLR 298 at 324. 93 Bonser v La Macchia (1969) 122 CLR 177. 94 New South Wales v Commonwealth (1975) 135 CLR 337. 95 Pearce v Florenca (1976) 135 CLR 507.

[2.220]

2 Division of Shipping Law Powers in Australia

35

and Robinson v Western Australian Museum.96 The result of these cases may be summarised as follows. First, the territory of the States ends at low-water mark. The territorial sea and its subsoil thus do not form part of a State’s territory.97 Secondly, the States are competent to legislate for the peace, order and good government of their territory only.98 However — and thirdly — the States are also competent to legislate on matters concerning their territorial sea, and indeed concerning any extraterritorial location, provided they are thereby legislating for the peace, order and good government of their State territory.99 This last point is, indeed, no less than what was decided by the Privy Council in Croft v Dunphy.100 Opinion was also expressed in at least two of these cases that sovereignty over Australia’s territorial sea, and also over its subsoil, is vested in the Commonwealth under the ordinary rules of common law, quite apart from statute.101 However, be that as it may, it was held in New South Wales v Commonwealth that s 6 of the Seas and Submerged Lands Act 1973 (Cth) validly vests sovereignty over Australia’s territorial sea in the Commonwealth by virtue of the external affairs power of s 51(xxix) of the Constitution. This does not mean that these parts of the sea are part of the territory of the Commonwealth any more than they are part of the

96 Robinson v Western Australian Museum (1977) 138 CLR 283. 97 Bonser v La Macchia (1969) 122 CLR 177 esp at 189, 221-222, 233; R v Bull (1974) 131 CLR 203 at 234; New South Wales v Commonwealth (1975) 135 CLR 337 esp at 370-372, 378, 467-468, 470, 484, 493, 495; Pearce v Florenca (1976) 135 CLR 507 at 514, 522; Robinson v Western Australian Museum (1977) 138 CLR 283 at 293-294. 98 Bonser v La Macchia (1969) 122 CLR 177 at 185-186, 189, 224-225; Robinson v Western Australian Museum (1977) 138 CLR 283 at 293-294. 99 Bonser v La Macchia (1969) 122 CLR 177 at 189, 224-226; R v Bull (1974) 131 CLR 203 at 231, 270-271; New South Wales v Commonwealth (1975) 135 CLR 337 at 361-362, 475, 495; Pearce v Florenca (1976) 135 CLR 507 at 512, 517-518, 526; Robinson v Western Australian Museum (1977) 138 CLR 283 at 294-295, 303-304, 331; A Raptis & Son v South Australia (1977) 138 CLR 346 at 355; Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 13-14. On the meaning and scope of the expression “peace, order and good government” in the context of State legislative powers, see Union Steamship Co of Australia Pty Ltd v King at 8-10, 12-13. See also Building Construction Employees and Builders’ Labourers’ Federation of New South Wales v Minister for Industrial Relations (1986) 7 NSWLR 372 at 383-385. 100 Croft v Dunphy [1933] AC 156. 101 Bonser v La Macchia (1969) 122 CLR 177 at 192, 197, 223-224; New South Wales v Commonwealth (1975) 135 CLR 337 at 373, 469-470 (and see also at 500-501). It would appear that sovereignty of Australia’s continental shelf is, by virtue of general legal principles, also vested in the Commonwealth: Bonser v La Macchia (1969) 122 CLR 177 at 187; R v Bull (1974) 131 CLR 203 at 219. Note also New South Wales v Commonwealth (1975) 135 CLR 337 at 374-375. See now, however, the Seas and Submerged Lands Act 1973 (Cth), s 11.

36

Shipping Law

[2.230]

territory of the States.102 It simply means that the Commonwealth has ultimate authority over the seas and seabed adjacent to Australia in respect of matters of concern to Australia as a nation.103 The legislative competence of the Commonwealth in respect of the territorial sea is in theory limited by the heads of power conferred by the Constitution, though it is now recognised that it in fact has plenary power in this regard by virtue of the external affairs powers of s 51(xxix).104 Competence of the States to legislate in respect of the territorial sea and high seas

[2.230]

To say that the States have power to legislate in respect of the territorial sea and high seas to the extent that they are thereby legislating for the peace, order and good government of their State territory raises many consequential questions. In particular, it raises the question of the nexus that is required between an extra-territorial law and the territory of a State in order for the law to be valid. As is so often the case in respect of the constitutional validity of legislation, the required nexus is ultimately a question of degree. And as is also so often the case, the test for determining whether the required nexus exists is the subject of conflicting High Court views.

According to one view, an extra-territorial State law will be regarded as valid provided it has some apparent connection with the State, even though this is not close or substantial. As Gibbs J put it in Pearce v Florenca,105 “It has become settled that a law is valid if it is connected, not too remotely, with the State which enacted it, or, in other words, if it operates on some circumstance which really appertains to the State.”106 He subsequently went on to observe that “It is obviously in the public interest that the test should be liberally applied, and that legislation should be held valid if there is any real connection — even a remote or general connection — between the subject matter of the legislation and the State”.107 Another view, however, is stricter. This looks for a more substantial connection between an extra-territorial law and the peace, order and good government of the relevant State. In the words of Barwick CJ in Robinson 102 New South Wales v Commonwealth (1975) 135 CLR 337 at 360, 375, 475. See also Bonser v La Macchia (1969) 122 CLR 177 at 184; R v Bull (1974) 131 CLR 203 at 219-220; Robinson v Western Australian Museum (1977) 138 CLR 283 at 337. Compare, however, Pearce v Florenca (1976) 135 CLR 507 at 519. 103 New South Wales v Commonwealth (1975) 135 CLR 337 at 362. See also Robinson v Western Australian Museum (1977) 138 CLR 283 at 294. 104 New South Wales v Commonwealth (1975) 135 CLR 337 at 360, 373, 470, 497; Robinson v Western Australian Museum (1977) 138 CLR 283 at 294, 337. 105 Pearce v Florenca (1976) 135 CLR 507. 106 Pearce v Florenca (1976) 135 CLR 507 at 517. 107 Pearce v Florenca (1976) 135 CLR 507 at 518.

[2.230]

2 Division of Shipping Law Powers in Australia

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v Western Australian Museum:108 “The validity of a law of the State will be determined by resolving the question whether it can properly be said to be a law for the peace, order and good government of that territory. … [The] laws must first be seen to be laws which are for the peace, order and good government of the State and thereafter when they answer that criterion they may operate extra-territorially so long as the extraterritorial operation is still something which can be said to be for the peace, order and good government of the State.”109 In short, the former test appears to assume that an extra-territorial law of a State is valid provided it has some connection with the State, whereas the latter involves no such assumption at all. The test currently preferred by the High Court is the more liberal test stated by Gibbs J in Pearce v Florenca.110 This was made clear by the High Court in the two modern cases of Union Steamship Co of Australia Pty Ltd v King111 and Port MacDonnell Professional Fishermen’s Association Inc v South Australia.112 Neither test, however, is particularly easy to apply. The case of Robinson v Western Australian Museum113 provides a good example of the problems that are involved in determining the validity of State extra-territorial legislation. There an attack was made on the validity of a Western Australian Act which vested property in historic shipwrecks lying off the Western Australian coast in the Western Australian Museum. Although three of the five members of the Court found the Act to be invalid, only two (Barwick CJ and Murphy J) did so on the ground that there was an insufficient connection between this legislation and the peace, order and good government of Western Australia. Two other members of the court (Gibbs and Mason JJ) regarded the legislation as valid. The fifth member (Stephen J) regarded the Act as invalid simply by virtue of inconsistency with a Commonwealth Act. In the course of the various considerations by members of the High Court concerning the competence of States to legislate extra-territorially, two particular matters have arisen which require further mention. The first (which in light of subsequent Commonwealth legislation is now of academic interest only) is whether there is a presumption that State legislation on matters concerning the State’s territorial sea is valid. The second is whether State fishing legislation is to be regarded any differently from legislation on other matters.

108 Robinson v Western Australian Museum (1977) 138 CLR 283. 109 Robinson v Western Australian Museum (1977) 138 CLR 283 at 294-295. 110 Pearce v Florenca (1976) 135 CLR 507. 111 Union Steamship Co of Australia Pty Ltd v King (1988) 166 CLR 1 at 14. 112 Port MacDonnell Professional Fishermen’s Association Inc v South Australia (1989) 168 CLR 340 at 372. 113 Robinson v Western Australian Museum (1977) 138 CLR 283.

38

Shipping Law

[2.240]

[2.240]

Position of State legislation concerning the territorial sea

There is some High Court authority for the proposition that State legislation on matters concerning the State’s territorial sea are valid simply by virtue of this fact. For example, in Pearce v Florenca,114 Gibbs J said, “The very fact that the waters are the offshore waters of the State provides the nexus necessary to render valid a law operating within those waters”.115 Jacobs J expressed a similar view in the same case.116 The view which in theory is more consistent with the basic principle in Croft v Dunphy, however, is that a State law must have some connection with the peace, order and good government of the State in order to be valid.117 As Barwick CJ said in New South Wales v Commonwealth:118 “The test of validity of a law having an extra-territorial operation is its relationship to the peace, order and good government of the territory for the government of which the legislature has been constituted. If such a law did not so touch and concern that territory it would not be valid simply because it operated in the marginal seas.”119 The law relating to the ability of States to legislate in respect of their territorial sea is now governed by the Coastal Waters (State Powers) Act 1980 (Cth). By s 5 of this Act, States have the power to legislate in respect of their territorial sea as if these were within the limits of their territory. This Act is considered in more detail at [2.370].

[2.250]

Position of fishing legislation

Judicial attitudes on the validity of State laws in respect of fishing are similar to those just referred to concerning the territorial sea. On the one hand, some members of the High Court appear to regard State fishing legislation as prima facie valid, especially when it operates within the territorial sea, whereas others would apply the principle in Croft v Dunphy120 to all State legislation, irrespective of its subject matter. Jacobs J adopted the former view in Pearce v Florenca,121 when he said: “Fishing in waters near the coast of a community is, and has always been regarded as, a matter of special concern to that community. … That special concern would provide the nexus for legislative control of such fishing and for laws designed to give effect to that control.”122 As a matter of principle, however, there would seem to be no reason to depart from the rule that 114 Pearce v Florenca (1976) 135 CLR 507. 115 Pearce v Florenca (1976) 135 CLR 507 at 519. See at 519-520 generally. 116 Pearce v Florenca (1976) 135 CLR 507 at 527. 117 Croft v Dunphy [1933] AC 156 at 163. 118 New South Wales v Commonwealth (1975) 135 CLR 337. 119 New South Wales v Commonwealth (1975) 135 CLR 337 at 361. See at 361-362 generally. 120 Croft v Dunphy [1933] AC 156. 121 Pearce v Florenca (1976) 135 CLR 507. 122 Pearce v Florenca (1976) 135 CLR 507 at 526. See also at 520, 526-527; Bonser v La Macchia (1969) 122 CLR 177 at 226, 233; Robinson v Western Australian Museum (1977) 138 CLR 283 at 331.

[2.260]

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extra-territorial State legislation is valid only if it relates to the peace, order and good government of the State. This is not to deny that State fishing legislation may usually be expected to have this nexus, though it does deny the existence of any presumptions, or assumptions, that legislation has such a nexus simply by virtue of its subject matter. As the High Court unanimously observed in the modern case of Port MacDonnell Professional Fishermen’s Association Inc v South Australia,123 “What is essential to the extra-territorial operation of a State law is a connection between the enacting State and the extra-territorial persons, things and events on which a law operates”.124

[2.260]

Laws in respect of fishing, and section 51(x) of the Constitution

The effect of the fisheries power of s 51(x) of the Constitution upon the legislative competence of States to legislate upon fishing within their territorial sea deserves special mention notwithstanding the effect of s 5 of the Coastal Waters (State Powers) Act 1980 (Cth). Section 51(x) gives the Commonwealth Parliament the power to make laws with respect to fisheries in Australian waters, but only beyond territorial limits. This has been held to mean that the Parliament can legislate in respect of fisheries under s 51(x) only outside the territorial sea.125 There are some judicial statements which may at first glance seem to indicate that as a result of s 51(x), the States have an unfettered power to legislate in respect of fishing within their territorial sea. An example of this is the statement by Windeyer J in Bonser v La Macchia,126 that “The Australian States have plenary power to make laws for fisheries within their territorial limits”.127 It is, however, quite clear that the States do not, without more, have such an unfettered power. All that statements such as this imply is that as the Commonwealth has no power to legislate in respect of fisheries within territorial limits, State laws on this matter cannot become inoperative by virtue of inconsistency with any Commonwealth law based on s 51(x).128 There is no reason, however, why a State law on fishing within territorial limits cannot be inconsistent with a Commonwealth law based on some other head of power (for example, the external affairs power of s 51(xxix)). 123 Port MacDonnell Professional Fishermen’s Association Inc v South Australia (1989) 168 CLR 340. 124 Port MacDonnell Professional Fishermen’s Association Inc v South Australia (1989) 168 CLR 340 at 372. 125 Bonser v La Macchia (1969) 122 CLR 177 at 190-191, 193, 196, 203, 209-210, 235 (but compare at 230-231, 233); New South Wales v Commonwealth (1975) 135 CLR 337 at 403, 408-409, 457; Robinson v Western Australian Museum (1977) 138 CLR 283 at 294; A Raptis & Son v South Australia (1977) 138 CLR 346 at 357, 374, 379 (but compare at 396-397). 126 Bonser v La Macchia (1969) 122 CLR 177. 127 Bonser v La Macchia (1969) 122 CLR 177 at 233. 128 Bonser v La Macchia (1969) 122 CLR 177 at 226, 233. See also Robinson v Western Australian Museum (1977) 138 CLR 283 at 294; A Raptis & Son v South Australia (1977) 138 CLR 346 at 379.

40

Shipping Law

[2.270]

In case there should be any doubt on the matter, it is quite clear that States have the power to legislate in respect of fishing outside their territorial sea.129 The fisheries power of s 51(x) does not divest them of this ability. State fisheries legislation which operates outside the territorial sea will, however, be inoperative by virtue of s 109 of the Constitution if it is inconsistent with Commonwealth legislation.130

THE POSITION IN AUSTRALIA OF THE MERCHANT SHIPPING ACT 1894 (IMP) Introduction [2.270]

In 1894, the British Government enacted the Merchant Shipping Act as a legislative code to govern merchant shipping throughout the then British Empire. So far as the Australian colonies (and indeed, British colonies generally) were concerned, the effect of this Act was twofold. First, its provisions extended to the colonies by virtue of being Imperial legislation enacted with that object, and secondly, any conflicting colonial legislation was invalid by virtue of the repugnancy provisions of s 2 of the Colonial Laws Validity Act 1865 (IMP).131

Section 2 of the Colonial Laws Validity Act ceased to bind the Commonwealth when Australia adopted s 2(1) of the Statute of Westminster 1931 (IMP) in 1942, with retrospective effect from 3 September 1939.132 It ceased to apply to the States only upon the commencement of the Australia Acts133 on 3 March 1986. Before those dates, the Parliaments of the Commonwealth and the States could enact laws departing from provisions of the Merchant Shipping Act only in accordance with the terms of this Act. Of special importance in this regard was s 735 (“Power of colonial legislature to alter provisions of Act”). This said that the legislature of a British possession — which included the Commonwealth134 — could repeal any provisions of the Act other than those relating to emigrant ships provided the repealing legislation was first confirmed by the Queen in Council and the Royal approval proclaimed.135 The confirmation and approval requirements of s 735, and the similar 129 Bonser v La Macchia (1969) 122 CLR 177. 130 A Raptis & Son v South Australia (1977) 138 CLR 346 at 379. 131 For a case in which provisions of the Navigation Act 1912 (Cth) were held repugnant to the 1894 Act, see Union Steamship Co of New Zealand Ltd v Commonwealth (1925) 36 CLR 130. 132 Statute of Westminster Adoption Act 1942 (Cth), s 3. 133 Section 3. 134 John Sharp & Sons Ltd v Katherine Mackall (1924) 34 CLR 420; Hume v Palmer (1926) 38 CLR 441 at 449, 452, 462. 135 For a case concerning failure by the Queensland Parliament to comply with the manner and form requirements in s 736 (“Regulation of coasting trade by Colonial Legislature”) of the 1894 Act, see R v Commissioner for Transport; Ex parte Cobb & Co Ltd [1983] Qd R 547.

[2.290]

2 Division of Shipping Law Powers in Australia

41

requirements of s 736 (“Regulation of coasting trade by Colonial Legislature”), were abolished for the Commonwealth Parliament upon the adoption of the Statute of Westminster,136 and for the Australian States by the Australia Acts.137 Concern that some provisions of the Navigation Act 1912 (Cth) which had been enacted before the commencement of the Statute of Westminster Adoption Act 1942 (Cth) might still be invalid for repugnancy with Imperial legislation was allayed by s 48(1) of the Admiralty Act 1988 (Cth). That stated that no provision of the Navigation Act was invalid, or taken to have been at any time invalid, because of its inconsistency with any Imperial Act. That section bound the Crown in all its capacities.138 The 1912 Act has now been repealed by the Navigation Act 2012 (Cth).

Extent to which the Merchant Shipping Act continues to apply to Australia Merchant Shipping Act and the Commonwealth

[2.280]

The Merchant Shipping Act 1894 (IMP) was repealed for the Commonwealth and its external territories by s 4(1) of the Statute Stocktake Act 1999 (Cth).

Merchant Shipping Act and the States and Territories

[2.290]

The Merchant Shipping Act 1894 (IMP) continues in force as part of the law of the Australian States and Territories today except to the extent that it has been amended or repealed by Commonwealth, State or territorial legislation (a matter which is considered in more detail at [2.320]–[2.340]).139 The proposition that this Imperial statute ceased to have force within Australia either upon the creation of the Commonwealth in 1901, or upon the enactment of the Statute of Westminster Adoption Act 1942 (Cth),140 has been firmly rejected by the High Court.141 136 Statute of Westminster 1931 (IMP), s 5. 137 Australia Act 1986 (Cth), s 4; Australia Act 1986 (IMP), s 4. 138 Navigation Act 1912 (Cth), s 48(2). Note also in this connection the Navigation and Other Acts (Validation) Act 1983 (NSW). 139 Union Steamship Co of New Zealand Ltd v Commonwealth (1925) 36 CLR 130; Asiatic Steam Navigation Co Ltd v Commonwealth (1956) 96 CLR 397 esp at 403, 414; Bistricic v Rokov (1976) 135 CLR 552 esp at 555; Robinson v Western Australian Museum (1977) 138 CLR 283; China Ocean Shipping Co v South Australia (1979) 145 at 181-183, 194-195, 207, 214, 240. 140 See the view of Murphy J in: Bistricic v Rokov (1976) 135 CLR 552; Robinson v Western Australian Museum (1977) 138 CLR 283; China Ocean Shipping Co v South Australia (1979) 145 CLR 172. 141 China Ocean Shipping Co v South Australia (1979) 145 CLR 172 at 181-183, 194-195, 207, 211-212, 214, 240. See also Bistricic v Rokov (1976) 135 CLR 552; Southern Centre of Theosophy Inc v South Australia (1979) 145 CLR 246 esp at 252, 256-257, 265.

42

Shipping Law

[2.300]

[2.300]

Ambit of the Act’s provisions to the States and Territories

There are, however, still some problems concerning the application of the Merchant Shipping Act 1894 to Australia. One of these is the extent to which the provisions of this Act apply. There are two possible solutions here. The first is to treat as applicable to Australia — specifically now just to Australian States — only those provisions of the Act which are expressly stated to apply to the British dominions (which the States were in 1894). This would prima facie include Pts I (“Registry”),142 II (“Masters and Seamen”),143 VIII (“Liability of Shipowners”),144 and XIII (“Legal Proceedings”).145 The second possible solution is to treat the entire Act as applicable to Australia and the States unless it is clear that any particular provision is not intended to apply outside the United Kingdom. Most of Pt IV (“Fishing Boats”), for example, clearly does not apply to Australia because s 372 provides that this Part is not, without more, to apply to any British possession. Australian courts have adopted the latter course. This means that all the provisions of the Merchant Shipping Act apply in the States unless they are expressly excluded by the Act, unless they are clearly inapplicable outside the United Kingdom and thus impliedly excluded by the Act, or unless they have been amended or repealed by Commonwealth or State legislation. The course adopted by Australian courts is often difficult to apply, for there is often no easy way to decide whether a particular provision of the Act is inapplicable outside the United Kingdom.146 This is well illustrated by the division of opinion by members of the High Court in Robinson v Western Australian Museum147 on whether s 523 (“Right of Crown to unclaimed wreck”) of the 1894 Act was applicable to a wreck located in the Australian territorial sea. Stephen J thought that this section might vest an unclaimed wreck in the Crown.148 Gibbs J was of the opinion that this section vests such a wreck in the Crown in right of the States.149 But three members held that this section was inapplicable outside the United Kingdom, inter alia because the “Crown” referred to is the Crown in right

142 Merchant Shipping Act 1894 (IMP), s 91. 143 Merchant Shipping Act 1894 (IMP), s 261. 144 Merchant Shipping Act 1894 (IMP), s 509. 145 Merchant Shipping Act 1894 (IMP), s 712. 146 For attempts to identify which parts of the 1894 Act still apply to Australia, see: D A Butler and W D Duncan, Maritime Law in Australia (Legal Books, Redfern, 1992), pp 23-27; G B Carter, “The Imperial Merchant Shipping Act Story” (1992) 66 ALJ 359 at 368-371. 147 Robinson v Western Australian Museum (1977) 138 CLR 283. 148 Robinson v Western Australian Museum (1977) 138 CLR 283 at 325. 149 Robinson v Western Australian Museum (1977) 138 CLR 283 at 309.

[2.320]

2 Division of Shipping Law Powers in Australia

43

of the United Kingdom.150 As a result of this case it would indeed appear that all the provisions in the Merchant Shipping Act concerning a wreck (that is, ss 511 – 537) are inapplicable to a wreck in Australia’s territorial sea.151

[2.310]

Some Imperial amendment Acts applicable to Australia

The Merchant Shipping Act 1894 (IMP) has been amended in the United Kingdom on many occasions. There is, however, some uncertainty concerning which of the various amendment Acts apply in Australia. There is no doubt that all amendment Acts up to and including the Merchant Shipping Act 1906 apply in Australia unless they have since been amended or repealed by Commonwealth or State legislation.152 It is generally assumed that neither the Merchant Shipping Act 1911 nor any subsequent Act amending the 1894 Act was intended by the British Parliament to apply to Australia. In Bistricic v Rokov,153 the High Court unanimously held that the Merchant Shipping (Liability of Shipowners and Others) Act 1958 (UK) does not apply to Australia. In the earlier case of SG White Pty Ltd v Ship Mediterranean,154 the Supreme Court of Queensland held that the Maritime Conventions Act 1911 (UK), which is expressed not to apply to the Commonwealth of Australia,155 also does not apply to the States.156

[2.320]

Repeal of provisions of Commonwealth legislation

the

Merchant

Shipping

Act

by

The Commonwealth Parliament has repealed for the whole of Australia, including the States, the following parts of the Merchant Shipping Act 1894 (IMP): • Part I (“Registry”);157 • Sections 221 – 224, concerning agreements with crew;158 and • Part VIII (“Liability of Shipowners”).159 150 Robinson v Western Australian Museum (1977) 138 CLR 283 at 332 (Mason J), 341 (Jacobs J), 343-344 (Murphy J). 151 See Robinson v Western Australian Museum (1977) 138 CLR 283 at 308, 332, 341, 343. See also SC White Pty Ltd v Ship Mediterranean [1966] Qd R 211 at 216-217 (none of Pt IX (“Wreck and Salvage”) applies to the States). 152 See Union Steamship Co of New Zealand Ltd v Commonwealth (1925) 36 CLR 130 at 142-143; Asiatic Steam Navigation Co Ltd v Commonwealth (1956) 96 CLR 397. See also McIlwraith McEacharn Ltd v Shell Co of Australia Ltd (1945) 70 CLR 175; China Ocean Shipping Co v South Australia (1979) 145 CLR 172. 153 Bistricic v Rokov (1976) 135 CLR 552. 154 SG White Pty Ltd v Ship Mediterranean [1966] Qd R 211. 155 Maritime Conventions Act 1911 (UK), s 9(1). 156 SG White Pty Ltd v Ship Mediterranean [1966] Qd R 211 at 215-216. 157 Shipping Registration Act 1981 (Cth), s 4. 158 Navigation Amendment Act 1979 (Cth), s 104(3). 159 Merchant Shipping Act 1894 (IMP), s 106.

44

Shipping Law

[2.330]

The constitutional validity of the repeal of Pt VIII of the Act was upheld by the High Court in Kirmani v Captain Cook Cruises Pty Ltd (No 1).160

[2.330]

Repeal of provisions of the Merchant Shipping Act by State and Territorial legislation

Queensland has repealed Pts II (“Masters and Seamen”) and V (“Safety”) of the Merchant Shipping Act 1894 so far as regards coasters and harbour and river ships either in Queensland waters or in any port in Queensland, and the owners, masters and crews of such ships where they are within the jurisdiction.161 South Australia has repealed Pts II (“Masters and Seamen”) and V (“Safety”) of the Merchant Shipping Act 1894.162 Western Australia has repealed Pt VIII (“Liability of Shipowners”) of the Merchant Shipping Act.163 Tasmania has repealed Pt V (“Safety”) of the Merchant Shipping Act.164 The Australian Capital Territory has repealed the whole of the Merchant Shipping Act,165 principally because this Territory is landlocked with the result that the Act is of no relevance to it. Although the statutes repealing provisions of the Imperial Act have themselves been repealed (with the exception of that of Western Australia), the relevant jurisdictions have provisions in their Acts Interpretation Acts which preserve the operation of previously repealed provisions.166

[2.340]

Abolition of sections 735 and 736 for the whole of Australia

The confirmation and approval requirements of s 735 of the Merchant Shipping Act 1894 (IMP), and the similar requirements of s 736, were abolished for the Australian States by the Australia Acts.167

THE OFFSHORE CONSTITUTIONAL SETTLEMENT The need for a re-arrangement of powers [2.350]

The constitutional division of shipping law powers between the Commonwealth and the States is weighted overwhelmingly in favour of the Commonwealth. This became particularly apparent with the decision of the High Court in New South Wales v Commonwealth (the “Seas and

160 Kirmani v Captain Cook Cruises Pty Ltd (No 1) (1985) 159 CLR 351. 161 Queensland Marine Act 1958 (Qld), s 255. Although this Act has been repealed, note Acts Interpretation Act 1954 (Qld), s 20 (“Saving of operation of repealed Act etc”). 162 Marine Act 1936 (SA), s 131. 163 Western Australian Marine Act 1982 (WA), s 135(2). 164 Marine Act (No 2) 1966 (Tas), s 5, with Marine Act 1976 (Tas), s 2(2). 165 Statute Law Amendment Act (No 2) 2002 (ACT), s 6(1); Sch 4, Pt 4.9. 166 Acts Interpretation Act 1954 (Qld), s 20; Acts Interpretation Act 1915 (SA), s 16; Acts Interpretation Act 1931 (Tas), s 14; Legislation Act 2001 (ACT), s 86. 167 Section 4.

[2.350]

2 Division of Shipping Law Powers in Australia

45

Submerged Lands case”)168 of 1975. There the High Court upheld the constitutional validity of the Seas and Submerged Lands Act 1973 (Cth), which declared that sovereignty over Australia’s territorial sea, including the subjacent subsoil and superjacent airspace, is vested in the Crown in right of the Commonwealth.169 That decision did not deprive the States of their ability to legislate in respect of the territorial sea. It did, however, mean that they could not legislate over this part of the sea as if it were part of their State territory. It also meant that the Commonwealth could legislate in respect of this area of the sea by virtue of its external affairs power. Many problems resulted from the decision in New South Wales v Commonwealth. For example, there was uncertainty concerning the extent to which existing State laws continued to apply — and to which future State laws could apply — to the territorial sea now that it was clear this did not form part of the States’ territory. This problem was well illustrated by the subsequent decisions of the High Court in Pearce v Florenca170 and Robinson v Western Australian Museum.171 In Pearce v Florenca, a fisherman had successfully challenged in a magistrate’s court the validity of a Western Australian Act which made it an offence to possess undersize rock lobsters in the territorial sea. The High Court, however, held that this Act was valid, as it concerned the peace, order and good government of Western Australia and it was not inconsistent with Commonwealth legislation. In Robinson v Western Australian Museum, on the other hand, an attack on the validity of a Western Australian Act operating in the territorial sea was upheld. There an underwater explorer, who had discovered the wreck of a Dutch vessel that had sunk in Western Australia’s territorial sea in 1656, challenged the validity of an Act which vested rights in all historic shipwrecks lying off the Western Australian coast in the Western Australian Museum. The majority of the High Court declared this Act to be invalid. Two members of the court held that it did not have a sufficient connection with the peace, order and good government of Western Australia to be a valid State law applying extra-territorially, whilst one of these two, and a third member, found that the State Act was inconsistent with provisions of the Navigation Act 1912 (Cth) concerning wrecks. The High Court decisions of the mid-1970s, though undoubtedly favourable to the Commonwealth in constitutional terms, nonetheless presented the Commonwealth with practical difficulties, for the Commonwealth did not have any immediate desire to exercise full responsibility over Australia’s territorial sea. The obvious solution to the problems arising from the High Court decisions lay in an agreement 168 New South Wales v Commonwealth (Seas and Submerged Lands Case) (1975) 135 CLR 337. 169 Section 6. 170 Pearce v Florenca (1976) 135 CLR 507. 171 Robinson v Western Australian Museum (1977) 138 CLR 283.

46

Shipping Law

[2.360]

between the Commonwealth and the States on a more practical division of powers between the parties. This was achieved in outline at the Premiers’ Conference of 1977. The final division of powers was approved at the Premiers’ Conference of 1979. This became known as the “Offshore Constitutional Settlement”.172

Terms of the Offshore Constitutional Settlement General

[2.360]

The Offshore Constitutional Settlement dealt with a wide variety of matters.173 These included offshore petroleum exploration and production, offshore mineral exploration and mining, offshore fisheries, marine parks, historic shipwrecks, and crimes at sea. The two principal topics from the point of view of shipping law, however, were the legislative competence of the States in respect of the territorial sea, and the distribution of powers in respect of navigation and shipping. These last two matters are now considered in more detail.

Legislative powers of States over the territorial sea

[2.370]

One of the most important parts of the Offshore Constitutional Settlement was the agreement to give the States a general legislative power in respect of their territorial sea, and thus place them in a legislative position similar to that which they had assumed they were in before the decision in New South Wales v Commonwealth.174 The terms of this agreement were put into effect by the Coastal Waters (State Powers) Act 1980 (Cth). This was passed by the Commonwealth at the request of the States pursuant to the States’ requests power of s 51(xxxviii) of the Constitution. The constitutional validity of this Act was upheld by the High Court in Port MacDonnell Professional Fishermen’s Association Inc v South Australia.175 Section 5 of the 1980 Act gives the States power to legislate in respect of their territorial sea (limited to three nautical miles176 — 5,556 metres), including its seabed, subsoil and airspace, as if this part of the sea were within the States’ territorial limits. Section 5 also gives the States power to legislate further out to sea with respect to subterranean mining from land within the States, ports, harbours and other shipping facilities, and 172 For a more detailed account of this settlement, see R Cullen, Australian Federalism Offshore (2nd ed, Law School, University of Melbourne, 1988), Ch 5. 173 For a summary of the terms of this settlement, see Attorney-General’s Department, Offshore Constitutional Settlement: A Milestone in Co-operative Federalism (AGPS, Canberra, 1980), pp 6-16; R Cullen, Australian Federalism Offshore (2nd ed, Law School, University of Melbourne, 1988), pp 83-84. 174 New South Wales v Commonwealth (1975) 135 CLR 337. See Jones v Queensland [1998] 2 Qd R 385 at 394. 175 Port MacDonnell Professional Fishermen’s Association Inc v South Australia (1989) 168 CLR 340. 176 Coastal Waters (State Powers) Act 1980 (Cth), s 4(2).

[2.370]

2 Division of Shipping Law Powers in Australia

47

fisheries in Australian waters where the Commonwealth agrees that these are to be governed by State law. A separate Act confers similar legislative powers upon the Northern Territory.177 One important effect of s 5 is to remove the requirement that State legislation in respect of matters concerning the territorial sea be for the peace, order and good government of the State territory.178 The territorial sea of a State is now treated for the purposes of State legislative power as if it be within the State’s territorial limits. The Act does not, however, extend the limits of the States as a matter of law.179 Nor does it affect either the power of States otherwise to enact legislation having extraterritorial effect180 or the ability of the Commonwealth to legislate in respect of the territorial sea and beyond,181 as recognised by the High Court in New South Wales v Commonwealth. The Commonwealth Parliament can thus continue to enact legislation in respect of the territorial sea, and this will override inconsistent State legislation by virtue of s 109 of the Constitution. In conjunction with the Coastal Waters (State Powers) Act, the Commonwealth enacted the Coastal Waters (State Title) Act 1980. This vests in each State title to the seabed of its territorial sea. A similar Act was also passed for the Northern Territory.182 The object of this grant of title was to support the associated grant of legislative competence in respect of the territorial sea and provide the States with some assurance that the Commonwealth will treat the extension of State powers over the territorial sea as permanent.183 If the Commonwealth were now to repeal this title-conferring legislation, or to appropriate any part of the bed of a State’s territorial sea, it might be liable to pay compensation pursuant to the acquisition on just terms provision of s 51(xxxi) of the Constitution.184 The key provision in the title-conferring Act is contained in s 4(1). This vests in each State the same right and title to the property in the seabed beneath its territorial sea, and the same rights in respect of the superjacent sea and airspace, as it would have if this seabed were within the limits of the State. The Act, however, expressly provides that it does not extend the States’ territorial limits.185 The rights and title vested in the States are 177 Coastal Waters (Northern Territory Powers) Act 1980 (Cth). 178 See Jones v Queensland [1998] 2 Qd R 385 at 392. 179 Coastal Waters (State Powers) Act 1980 (Cth), s 7(a). See Jones v Queensland [1998] 2 Qd R 385 at 393-394. 180 Coastal Waters (State Powers) Act 1980 (Cth), s 7(b). 181 Coastal Waters (State Powers) Act 1980 (Cth), s 7(c). 182 Coastal Waters (Northern Territory Title) Act 1980 (Cth). 183 Jones v Queensland [1998] 2 Qd R 385 at 394. 184 See generally Jones v Queensland [1998] 2 Qd R 385 at 394; Commonwealth v WMC Resources Ltd (1998) 194 CLR 1. 185 Coastal Waters (State Powers) Act 1980 (Cth), s 8(a). See Jones v Queensland [1998] 2 Qd R 385 at 393-394.

48

Shipping Law

[2.380]

subject to the continuing right of the Commonwealth to use the seabed for such national purposes as communications, safety of navigation, quarantine, and defence.186 The consequences of the State Powers and State Titles Acts are not easy to explain in a broad and coherent way, for they involve complex constitutional considerations. In Jones v Queensland,187 Ambrose J summarised his understanding of the basic effect of these Acts as follows:188 While they remain in force those Acts in my view have the effect that the Commonwealth of Australia, subject to express reservations, has ceded to the States all the rights, powers and jurisdiction over the seas and submerged lands which the States would have enjoyed had those seas and lands been within the limits or boundaries of the States.

As a consequence, Ambrose J held that any statute passed by a State has force not merely within the State’s limits but also in respect of the territorial sea and seabeds covered by the State Powers and State Title Acts.189 The Seas and Submerged Lands Act 1973 (Cth) has not been repealed. The Commonwealth’s sovereignty over Australia’s territorial sea thus remains intact. An amendment was, however, made to this Act in 1980 to protect the validity of State and Territorial legislation enacted pursuant to the powers conferred by the Coastal Waters (State Powers) Act 1980 (Cth) and Coastal Waters (Northern Territory Powers) Act 1980 (Cth). Distribution of powers on shipping and navigation

[2.380]

The agreement between the Commonwealth and the States concerning shipping and navigation was designed to rationalise the allocation of legislative powers on these matters by distributing them principally on the basis of the type of voyage a ship is undertaking at any time, rather than on the then-existing basis of whether a ship was engaged in interstate trade or commerce, or its location (inside or outside the territorial sea) at any time. The new division of responsibility agreed upon was that the Commonwealth should have legislative responsibility for all trading vessels on overseas and interstate voyages, for all fishing vessels on overseas voyages (other than a voyage by a Queensland-based fishing vessel involving simply incidental visits to Papua New Guinea), and for all offshore drilling rigs and similar structures. It was agreed that the States, on the other hand, should have legislative responsibility for

186 Coastal Waters (State Powers) Act 1980 (Cth), s 4(2). 187 Jones v Queensland [1998] 2 Qd R 385. 188 Jones v Queensland [1998] 2 Qd R 385 at 392. 189 Jones v Queensland [1998] 2 Qd R 385 at 395.

[2.390]

2 Division of Shipping Law Powers in Australia

49

trading vessels on intrastate voyages, for all vessels whose operations are confined to rivers, lakes and other internal waterways, and for all private pleasure craft. This, however, was just the broad division of responsibility. Practical considerations required certain departures from this scheme. In particular, it was agreed that offshore industry vessels — that is, vessels attending offshore rigs and other offshore industry mobile units — may be covered by Commonwealth legislation rather than by State legislation if they are intended to operate from more than one State or Territory over a period of three years. (The three-year condition was dispensed with in 1988.) On one matter it was agreed that the division of shipping law powers should remain on a territory basis. This concerned collision regulations. It was agreed that these regulations should remain a State or Commonwealth responsibility depending on whether any collision occurs inside or outside the territorial sea.

[2.390]

Subsequent developments: The Intergovernmental Agreement on Commercial Safety Reform

Pursuant to the Offshore Constitutional Settlement, the Navigation Act 1912 (Cth) was amended so that it was limited to trading vessels that were on an overseas voyage or on an interstate voyage, and fishing vessels on an overseas voyage.190 This left all other vessels to be covered by State and territorial laws. With the passage of time, this division of responsibility was found to be wanting, especially in respect of ship standards and safety, where legislation differed from State to State. In order to remedy this deficiency, in 2011 the Commonwealth, the States and the Territories concluded an Intergovernmental Agreement on Commercial Safety Reform. Pursuant to this, the States and Territories agreed that there be a national law for standards and safety applicable to all commercial vessels operating in Australian waters. The result of this was the enactment by the Commonwealth of the Marine Safety (Domestic Commercial Vessel) National Law Act 2012 (Cth). This contains a code on marine safety — the Marine Safety (Domestic Commercial Vessel) National Law — to apply to all Australian commercial vessels191 that operate in Australian waters. In order to ensure that its provisions apply irrespective of the Commonwealth’s constitutional limits, the States and Territories agreed to adopt the National Law as their own law, thus ensuring Australia-wide validity. As part of the reform of shipping law in 2012, the Navigation Act 1912 (Cth) was repealed and replaced by the Navigation Act 2012 (Cth). The principal purpose of this Act is to regulate the safety of commercial Australian vessels engaged in international shipping and those employed on them. It thus complements the Marine Safety (Domestic Commercial 190 Navigation Act 1912 (Cth), s 2(1). 191 A commercial vessel for the purposes of the Law includes governmental and research vessels: see Navigation Act 1912 (Cth), s 7.

50

Shipping Law

[2.390]

Vessel) National Law. The validity of this Navigation Act 2012 depends solely upon the constitutional limits of the Parliament.192

192 See Navigation Act 1912 (Cth), s 333.

3

Registration of Ships [3.10] INTRODUCTION ............................................................................................... 52 [3.60] SHIPS REQUIRED AND SHIPS PERMITTED TO BE REGISTERED ....... 53

[3.60] The registration regime of the Act .................................................... 53 [3.70] The general rule ................................................................................... 54 [3.100] Ships exempt from registration ....................................................... 54 [3.130] Registration of exempt and other ships ........................................ 56 [3.150] REQUIREMENTS AND FORMALITIES FOR REGISTRATION .............. 57

[3.150] Statutory requirements for registration ......................................... 57 [3.250] Formalities for registration ............................................................... 60 [3.290] The practical steps for registration ................................................. 61 [3.300] REGISTRATION IN THE GENERAL REGISTER AND THE INTERNATIONAL REGISTER ....................................................................... 62

[3.300] Exclusivity of the General Register or the International Register ................................................................................................ 62 [3.310] The General Register ......................................................................... 62 [3.320] The International Register ................................................................ 62 [3.340] REGISTRATION AND CERTIFICATES ........................................................ 63

[3.340] Entry in the relevant register ........................................................... 63 [3.390] Certificates and passes ...................................................................... 66 [3.490] CLOSURE AND CANCELLATION OF REGISTRATION ........................ 70

[3.490] Introduction ........................................................................................ 70 [3.500] Closure of registration ...................................................................... 70 [3.540] Cancellation of registration in the International Shipping Register ................................................................................................ 73 [3.550] Consequences of closure or cancellation ....................................... 73 [3.600] Revocation of registration certificate .............................................. 75 [3.610] REGISTRATION UNDER STATE AND TERRITORIAL LAWS ............... 75

52

Shipping Law

[3.10]

INTRODUCTION [3.10]

The law relating to the registration of ships is governed by the Shipping Registration Act 1981 (Cth), which came into operation in 1982. Before then, the registration of Australian ships was governed by Pt I of the Merchant Shipping Act 1894 (IMP). By the early 1980s, however, the provisions of Pt I were considered inappropriate for Australia for two main reasons. The first, and most obvious, was that the 1894 Act is a British Act, and it was felt incongruous that the registration of Australian ships be governed by the law of another country. The second was that all ships registered under the Merchant Shipping Act were deemed to be British ships and to have British nationality1 regardless of the particular nationality of their owners. This was considered to be a wholly inappropriate consequence for the ships of Australia as an independent country in the modern world. The purpose of the enactment of the Shipping Registration Act was thus to provide Australia with its own code for the registration of Australian-owned ships.

[3.20]

The General Register and the International Register

Until 2012, there was just one register, the Australian Register of Ships. In that year the Register was divided into two registers: the Australian General Shipping Register and the Australian International Shipping Register.2 Registration in the General Register is open to all Australianowned ships. Registration in the International Register is restricted to Australian-owned commercial ships that are engaged in international trade. The purpose of the International Register is to promote the long-term growth of the Australian shipping industry.3 The registration of a ship in the International Register affords the owners of Australian international trading ships valuable tax advantages and the ability to operate with crews of mixed nationalities and with different employment conditions from those which operate in coastal and interstate trading.

[3.30]

Relevance of case law decided under the former British Act

As originally drafted, the Shipping Registration Act 1981 (Cth) followed parts of Pt I of the British Act of 1894 reasonably closely. English decisions concerning the provisions of the Merchant Shipping Act can accordingly assist in the interpretation of corresponding provisions of the Australian Act. Indeed, in General Credits (Finance) Pty Ltd v Registrar of Ships,4 McPherson J said with respect to the Imperial Act and the Shipping Registration Act as originally enacted, “It is not, in my opinion, possible to compare the provisions of the two enactments without concluding that the draftsman of the [Australian] Act deliberately adopted the form of 1 Oteri v The Queen (1976) 51 ALJR 122 at 124. 2 Shipping Registration Act 1981 (Cth), s 56(1), (2). 3 See Shipping Registration Act 1981 (Cth), s 15A. 4 General Credits (Finance) Pty Ltd v Registrar of Ships (1982) 61 FLR 329.

[3.60]

3 Registration of Ships

53

many of the provisions of the earlier statute with the intention that they should be construed in the light of existing decisions on similar provisions of the Imperial Act.”5 The High Court made a more general statement to the same effect in Owners of MV Iran Amanat,6 when it said, “When Parliament has enacted legislation, affecting the subject of international shipping, and followed a statutory precedent from overseas which has by then received a settled construction, there is every reason to construe the statutory language in the same way in this country unless such construction is unreasonable or inapplicable to Australian circumstances.”7

[3.40]

Origin of the requirement of registration

The modern requirement for the registration of ships and the provision of a certificate of registration have their origin in the Shipping and Navigations Act 1660 (ENG). The purpose of this Act was not, however, simply to identify the owners of English ships. Its ulterior purpose was thereby to exclude foreign ships from British markets overseas and monopolise foreign trade for English ships and their owners.

[3.50]

Register requirement under current international law

The United Nations Convention on the Law of the Sea, which was signed in 1982 and came into force in Australia in 1994, requires every State to maintain a register of ships containing the name and particulars of all ships flying its flag, except those ships which are excluded from generally accepted international regulations on account of their small size.8

SHIPS REQUIRED AND SHIPS PERMITTED TO BE REGISTERED The registration regime of the Act [3.60]

The object of the registration provisions of the Shipping Registration Act 1981 (Cth) is to compel the registration in Australia of certain Australian-owned ships — namely Australian-owned commercial vessels of at least 24 metres in tonnage length9 — and to permit the registration of most other ships associated with Australia if their owners so wish. This object is achieved by the Act first setting out a general rule requiring registration of all Australian-owned ships, then providing for wide-ranging exemptions from it, and finally providing for the optional registration of exempt ships and certain other ships. 5 General Credits (Finance) Pty Ltd v Registrar of Ships (1982) 61 FLR 329 at 334. 6 Owners of MV Iran Amanat (1999) 196 CLR 130. 7 Owners of MV Iran Amanat (1999) 196 CLR 130 at 138. 8 United Nations Convention on the Law of the Sea 1982, Art 94.2(a). 9 Tonnage length is a calculation of the physical dimensions of a ship. For the method of determining the tonnage length of a ship, see Shipping Registration Act 1981 (Cth), s 10(3); Shipping Registration Regulations 1981 (Cth), reg 6A.

54

Shipping Law

[3.70]

The general rule [3.70]

The general rule of registration, which is set out in s 12(1) of the Shipping Registration Act, is that every Australian-owned ship must be registered in Australia. This rule is then subject to certain exceptions.

[3.80]

Australian-owned ships

An Australian-owned ship is, in short, one which is more than half owned by Australian nationals. More precisely it is a ship which either is entirely owned by one or more Australian nationals, is owned by three or more persons as joint owners where the majority are Australian nationals, or is owned by two or more persons as owners in common where more than half of the shares in the ship are owned by Australian nationals.10 An “Australian national” is defined in the Act to mean either an Australian citizen, an Australian company or corporation, or the Commonwealth, a State or a Territory.11 There is no requirement that to come within the definition of an Australian national an Australian company have Australian citizens as shareholders12 or have its principal place of business in Australia.

[3.90]

Penalty for non-registration of non-exempt ships

The owner of a ship which is required to be registered under the Act, but which is not registered, is guilty of an offence.13 The offence is one of strict liability.14 It is no defence that the ship is registered under the law of a foreign country15 and thus cannot be registered in Australia.16 This furthers an aim of the Act of compelling all non-exempt Australianowned ships to become registered solely in Australia, an aim considered further at [3.140]. Regardless of whether criminal proceedings are instituted for nonregistration of a ship, an unregistered ship which is required to be registered may be detained until registration is effected.17

Ships exempt from registration [3.100]

Certain Australian-owned ships are exempt from registration under the Shipping Registration Act. These are:

10 Shipping Registration Act 1981 (Cth), s 8(1). For the method of determining the nationality of the owners of jointly owned shares in the last situation, see s 8(2). 11 See s 3(1). 12 See R v Arnaud (1846) 9 QB 808; 115 ER 1485 at 817-818; 1489; Kuenigl v Donnersmarck [1955] 1 QB 515 at 536. Compare The Polzeath [1916] P 117 at 122-123. 13 Sections 12(3), 74(4). The term “owner” includes all owners if there are more than one: see s 3(2). 14 Section 12(3A). Note also s 12(3B), (3C), (3D). 15 Section 12(4). 16 See s 17(1). 17 Section 12(3). See in this connection s 71(1), with s 70(4).

[3.120]

• • • • •

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55

ships of less than 24 metres in tonnage length;18 Government ships;19 fishing vessels;20 pleasure craft;21 and any Australian-owned ship which is being operated by a foreign resident under a demise charter and which is exempted from registration by the Australian Maritime Safety Authority for the term of the charter.22

Australian defence force ships are also exempt from registration by virtue of their exclusion from the scope of the Act as a whole.23

[3.110]

“Pleasure craft”

A pleasure craft is defined in s 3(1) as “a ship that is used, or is intended to be used, wholly for recreational or sporting activities, whether or not let, or intended to be let, for hire or reward or consideration of any kind”. The application of this definition sometimes presents problems. Take, for example, a craft which is hired out to groups of individuals solely for recreational or sporting activities. There is little doubt that this falls within the definition of a pleasure craft, for the craft is used by its passengers only for recreational or sporting activities, and the fact that it is hired out for commercial gain is irrelevant in light of the concluding part of the definition. But then consider the example of a craft which is used to take aboard, not groups of people, but individual fee-paying passengers for recreational or sporting activities. The owner might claim that this vessel also falls within the definition for precisely the same reason. However, it is arguable that this vessel does not come within the scope of the definition as the ship is now being used for a commercial purpose which is not sanctioned by the terms of the definition. In particular it is no longer simply “let … for hire or reward”, but takes individual fee-paying passengers aboard, which is quite a different commercial activity. The better view is that a craft which is used to take individual fee-paying passengers aboard, albeit for recreational or sporting purposes, is not a pleasure craft as defined in s 3(1), and is accordingly not exempt from registration under the Act.

[3.120]

“Demise charter”

A demise charter for the purposes of the Act is, in short, any arrangement under which a charterer has the whole possession and control of the ship, 18 Section 13. For the method of determining the tonnage length of a ship, see s 10(3); Shipping Registration Regulations, reg 6A. 19 Section 13. “Government ship” is defined in s 3(1). 20 Section 13. “Fishing vessel” is defined in s 3(1). 21 Section 13. “Pleasure craft” is defined in s 3(1). 22 Section 12(2). “Foreign resident” is defined in s 3(1). 23 Section 7.

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[3.130]

including the right to appoint the master and crew.24 A demise charter is effectively a lease of a ship. It is often used as a method of financing the purchase of a vessel. An Australian-owned ship which is under a demise charter to a foreign resident (and which may accordingly be exempt from registration) is often shortly described as “demise chartered-out”. Conversely, a foreign ship which is under a demise charter to an Australian based operator (and which is accordingly permitted to be registered in Australia) is often shortly described as “demise chartered-in”.

Registration of exempt and other ships With the exception of defence force ships25 and ships which are registered under the law of a foreign country,26 any Australian-owned ship which is exempt from registration is nonetheless entitled to be registered if an application for registration is made.27

[3.130]

Certain other ships which have a clear connection with Australia may also be registered. These are: • small craft (that is, ships less than 12 metres in overall length28) which are wholly owned or entirely operated by either residents of Australia,29 Australian nationals, or both;30 and • ships on demise charter to Australian-based operators.31

[3.140]

Exclusivity of registration and nationality

A ship which is registered under the law of a foreign country32 cannot be registered under the Shipping Registration Act.33 This is so even if the ship is otherwise required to be registered under the Act. The effect of this requirement is to compel non-exempt Australian-owned ships to become registered in, and solely in, Australia, and to ensure that all ships registered in Australia have Australian nationality exclusively. The principle of exclusive Australian nationality for ships is considered to be in the national interest on the ground it avoids the possibility of an Australian ship being subject to conflicting national laws and conflicting supervisory jurisdictions. It also accords with the rule of public 24 Section 3(1). 25 See s 7. 26 Section 17(1). “Foreign country” is defined in s 3(1). 27 Section 14(a). 28 Section 3(1). For the method of determining the overall length of a ship, see s 10(1), (2). 29 A resident of Australia is defined in s 3(3). 30 Section 14(a), (b), (c). 31 Section 14(d). On what constitutes a demise charter to an Australian-based operator, see s 9. 32 A foreign country is any country other than Australia: s 3(1). 33 Section 17(1).

[3.170]

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57

international law that a ship may sail on the high seas only under the flag and registration of one state.34 A corollary of this rule is that a ship which is ostensibly entitled to sail under the flags of two different countries is in the same position as a vessel which is not entitled to sail under the flag of any country: it is not entitled to sail on the high seas at all.35

REQUIREMENTS AND FORMALITIES FOR REGISTRATION Statutory requirements for registration Certificate of tonnage measurement and markings on ship

[3.150]

Most of the requirements for the registration of a ship are contained in the Shipping Registration Regulations 1981 (Cth).36 The Shipping Registration Act itself, however, specifies two particular requirements which must be complied with before a ship may be registered, whether in the General Register or the International Register.

[3.160]

Certificate of tonnage measurement

The first requirement of the Act is that a certificate of the tonnage measurement of the ship be lodged with the Registrar of Ships.37 The tonnage of a ship serves as the basis for such matters as the shipowner’s liability for damage caused by the ship, port and harbour dues, and the application of certain maritime regulations. The certificate is arranged by a surveyor from the Australian Maritime Safety Authority. A certificate of tonnage measurement is not presently required of ships that are outside the scope of the International Convention on Tonnage Measurement of Ships 1969.38 The result of this is, in short, that a certificate is not required of ships which are not engaged on international voyages or which are less than 24 metres in tonnage length.39

[3.170]

Markings in accordance with the Regulations

The second registration requirement required by the Act is that the ship be marked in accordance with the Regulations with the marks directed by the Registrar of Ships.40 The Regulations require that a ship ordinarily be 34 United Nations Convention on the Law of the Sea 1982, Art 92.1; R Jennings and A Watts (eds), Oppenheim’s International Law (9th ed, Longman, Harlow, 1992), Vol 1, Pt 2, p 731, para 287. 35 See R Jennings and A Watts (eds), Oppenheim’s International Law (9th ed, Longman, Harlow, 1992), Vol 1, Pt 2, p 731, para 287. 36 See ss 15(a), 15C(a). 37 Section 16(1). 38 Section 16(2); reg 10. 39 International Convention on Tonnage Measurement of Ships 1969, Sch 8, Arts 3(1), 4(1)(b) (with Art 2(8)). For the method of determining the tonnage length of a ship, see s 10(3); Shipping Registration Regulations, reg 6A. 40 Section 26(1).

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[3.180]

marked with its name on each bow, its name and home port on its stern, and its official number, together with either its net tonnage, registered tonnage or length (whichever is applicable to the particular ship) on its main beam.41 Once a ship has been registered, its markings must be maintained.42 It is an offence for anyone to do anything that results in the concealment, removal, alteration, defacing or obliteration of any marking required on a registered ship, other than for the purpose of escaping capture by an enemy.43 The offence is one of strict liability.44 Name of a ship

[3.180]

Generally speaking, any name may be chosen for a ship. However, the Registrar of Ships must disallow any proposed name if it is included in a prescribed class of names,45 and the Minister for Transport and Communications may disallow any proposed name if he or she is of the opinion that the name is likely to prejudice the international relations of the Commonwealth.46

The prescribed classes of names for ships are:47 • names of existing registered ships; • names approved by the Registrar in respect of ships that are in the course of registration; • names that are likely to be confused with, or mistaken for, the name of an existing registered ship or a name approved for a ship in the course of registration; • names that are blasphemous or likely to be offensive to members of the public; • names of, or suggesting connection with, members of the Royal family or suggesting Royal patronage; • names falsely suggesting connection with: 1. the Crown; 2. the Commonwealth of Nations; 3. the Government of the Commonwealth, of a State, of a Territory, of any other country or of any legal subdivision of another country; 4. the United Nations; 5. the Defence Force or an arm of the Defence Force; 6. a Government department, authority or instrumentality of the Commonwealth, a State or a Territory; or 41 Regulation 20(1), (3). 42 Section 26(2). 43 Sections 26(3), (4), 74(1). 44 Section 26(2A), (3A). 45 Section 27(3). 46 Section 28. 47 Regulation 21(2).

[3.230]

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59

7. a municipal or other local government authority; • names that include a prefix comprising any letter or letters capable of indicating a type of ship (for example, “MV” for merchant vessel, and “FV” for fishing vessel).

[3.190]

Departmental prohibition on definite and indefinite articles

Besides the statutory prohibition on names which include prefix letters indicating a type of ship, as a matter of internal policy the Shipping Registration Office normally disallows the use of the definite and indefinite articles in the English language unless special circumstances can be established. Both prohibitions are designed to facilitate the easy identification of ships, especially by computer where an abundance of common prefixes, letters or words might otherwise lead to delay.

[3.200]

Suffix numerals allowed

The use of suffix numerals to distinguish ships which would otherwise bear the same name is allowed. Examples of this well-known in Australian yachting history were the Australian entrants for the 1987 America’s Cup yacht race off Fremantle, namely “Australia III” and “Australia IV”, and “Kookaburra II” and “Kookaburra III”.

[3.210]

Change of name

The name of a registered ship is not indelible. It can be changed in accordance with the procedure set out in the Act and Regulations.48

[3.220]

No property in names

Entry of the name of a ship in the relevant Shipping Register does not confer on the ship’s owners any property in the name. Accordingly, once the registration of a ship is closed, the ship’s name can be claimed by the owner of another ship, and the other ship may then be registered in this name.

[3.230]

Prohibition against misdescription of a ship

Section 27(1) of the Shipping Registration Act prohibits any person from describing a registered ship by any name other than that by which the ship is currently registered.49 This curious prohibition, which follows the former Imperial law, is almost certainly limited to the description of a registered ship for official purposes only. Old English authority can be found to support the proposition that this prohibition should not be construed with undue strictness.50

48 Section 27(2); reg 21(1). 49 Contravention of s 27(1) is also an offence: s 74(4C). 50 Bell, Assignee of Batley v Bank of London (1858) 28 LJ Ex 116.

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[3.240]

The validity of any transaction concerning a ship (for example, security over the ship) is not normally affected by a misdescription of the ship.51 It is unlikely that the current statutory prohibition against misdescription affects this ordinary rule. No minimum size of ship for registration

[3.240]

There is no minimum size of ship for the purpose of registration. Provided a floating object falls within the definition of a “ship” in s 3(1), it is entitled to be registered if an application is made. This means that even a very small craft such as a kayak or a rowing boat is entitled to be registered if it is classifiable as a “vessel capable of navigating the high seas”.

Formalities for registration [3.250]

An application for the registration of a ship is made by the owner lodging52 with the Registrar of Ships a written application containing the required information, together with the required documents.53 The latter include a document setting out the prescribed characteristics of the ship, documentary evidence of ownership of the ship traced back to the builder, a declaration of ownership and of the owner’s (or owners’) nationality, and notice of the ship’s registered agent.54 The written application and supporting documents are all retained by the Registrar. At the time the application is made, any licence or other document authorising the use of a call sign in relation to the ship must also be produced to the Registrar for noting.55 After the Registrar has specified the markings that are required on the ship, documentary evidence must be provided to the Registrar that the ship has been so marked.56

[3.260]

Form produced by the Australian Shipping Registration Office

There is no prescribed application form which must be used for the registration of a ship. The Australian Shipping Registration Office has, however, produced its own forms for an application for registration, declaration of ownership and nationality, builder’s certificate, and notice

51 Bell, Assignee of Batley v Bank of London (1858) 28 LJ Ex 116. 52 On what constitutes lodging, see Shipping Registration Regulations, reg 5. 53 Sections 15, 15C. The required information is in reg 7(2). 54 See regs 7A, 7B, 7C, 8, 9. 55 Regulation 7A(2). 56 Regulation 7A(1)(b).

[3.290]

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61

of appointment of a registered agent. These forms are available on the Australian Maritime Safety Authority’s website.57

[3.270]

Ship’s registered agent

For a ship to be registered, it must have a registered agent.58 The registered agent must be either the operator of the ship, the charterer, the ship’s agent, the person who manages the ship, or the managing owner (or any one such person if there is more than one) depending on the type of ship involved.59

[3.280]

Only a “completed” ship can be registered

One consequence of the formal requirements for registration60 is that a ship cannot be registered until its construction is completed for the purpose of the Shipping Registration Regulations. By reg 2(2), the construction of a ship is completed only when it becomes capable of navigating the high seas, whether under its own power or otherwise. This complements the statutory definition of a ship in s 3(1) of the Shipping Registration Act as a “vessel capable of navigating the high seas”. A ship under construction can thus be registered at the point where it is capable of navigating the high seas under tow, but not before then.

The practical steps for registration [3.290]

The practical steps for the registration of a ship are as follows. First, an application for registration must be made to the Registrar of Ships. This application must be accompanied by the required supporting documents and the required fee. If the application and supporting documents are in order, the Registrar will send the applicant a Marking Note which specifies the details that must be marked on the ship and the way in which they must be marked. After the ship has been properly marked, the applicant must return the Marking Note, duly signed and witnessed, to the Registrar. The Registrar will then send the applicant the ship’s Registration Certificate. The formalities for registration must be completed within six months from the time that the application for registration is lodged with the Registrar.61 The Registrar may extend this time period.

57 See http://www.amsa.gov.au/forms-and-publications/international/forms. 58 Section 64. For the powers and obligations of a ship’s registered agent, see the Australian Maritime Safety Authority’s website: http://www.amsa.gov.au/vessels/shippingregistration. 59 Section 64(1). 60 See especially reg 7C(4), with reg 7C(5) and reg 8(1)(c). 61 Regulation 7A(3).

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[3.300]

REGISTRATION IN THE GENERAL REGISTER AND THE INTERNATIONAL REGISTER Exclusivity of the General Register or the International Register [3.300]

A ship may be registered in either the General Register or the International Register. It cannot be registered in both.62 A ship can, however, move from one register to the other provided that the necessary conditions for the other register are met.

The General Register [3.310]

Any Australian-owned ship may be registered in the Australian General Shipping Register.63 So too may any small craft that is wholly owned by an Australian resident or by an Australian resident and an Australian national, and any small craft that is operated solely by an Australian resident, an Australian national or both.64 A small craft is a ship that is less than 12 metres in overall length.65

A ship on demise charter to an Australian-based operator may also be registered in the General Register.66

The International Register [3.320]

For a ship to be registered in the Australian International Shipping Register, it must be a trading ship that is at least 24 metres in tonnage length.67 A trading ship is a ship that is engaged in commercial activity, other than a Government ship, a fishing vessel or a pleasure craft.68 The typical trading ship is a cargo ship or a passenger ship.69 In addition to being a trading ship, the ship must also either be:70 • Australian-owned; • wholly owned by an Australian resident or by an Australian resident and an Australian national; • operated solely by an Australian resident, an Australian national or both, or • on demise charter to Australian-based operators. 62 Section 17(1). 63 Section 14(a). 64 Section 14(b), (c). 65 Section 3(1). 66 Section 114(d). 67 Section 15B. For the method of determining the tonnage length of a ship, see s 10(3); Shipping Registration Regulations, reg 6A. 68 Section 3(1). “Government ship”, “fishing vessel” and “pleasure craft” are further defined in s 3(1). 69 See in this regard s 61AB(1). 70 Section 15B.

[3.350]

[3.330]

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63

Conditions for remaining on the International Register

In order to remain on the International Register, the owner or operator of the ship must ensure that either the master or the chief mate, and either the chief engineer or the first engineer are Australian nationals or Australian residents. In this regard, the owner or operator must first seek to ensure that the master and chief engineer are Australian nationals or Australian residents, if this is reasonably possible.71

REGISTRATION AND CERTIFICATES Entry in the relevant register [3.340]

When the requirements of the Shipping Registration Act and Regulations have been complied with, the Registrar of Ships registers the ship by entering the prescribed particulars in either the General Register or the International Register.72 These particulars comprise the ship’s official number, its name, home port, call sign, year of registration, place of construction, year of completion, tonnage, registered agent and prescribed physical characteristics, as well as the name, address and nationality of every person to whom the ship belongs and the extent of his or her interest in the ship.73 The Registrar must also enter the date and time of the entry.74

[3.350]

Registrar’s discretion on entry in the International Register

The Registrar of Ships does not have a discretion whether to enter a ship in the General Register if this is sought in the application for registration and the requirements for registration have been met.75 On the other hand, the Registrar does have a discretion on whether to register a ship in the International Register, even though all the conditions concerning the ownership, physical requirements and work of the ship are satisfied.76 In deciding whether to register a ship in the International Register, the Registrar of Ships must have regard to such factors as the age of the ship and any inspection records and inspection reports on its condition or classification.77 The Registrar must refuse to register the ship in the International Register if it will not be predominantly used to engage in international trading or if a collective agreement has not been made between the ship’s owner and the seafarers’ bargaining unit.78 A ship is 71 Section 33A. “Australian resident” is defined in s 3(1). 72 Sections 15E, 15F and reg 11. 73 Regulation 11(1), with reg 2(1) (definition of “prescribed characteristics”), Sch 1. 74 Regulation 41. 75 Section 15E. 76 Section 15F(1). 77 Section 15F(2). 78 Section 15F(3). On the seafarers’ bargaining unit, see s 11A.

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[3.360]

predominantly engaged in international trading if it spends more time in international trading than in coastal or interstate trading in a calendar year.79

[3.360]

Location and inspection of the Registers

The Registers are located at the Australian Shipping Registration Office, at Canberra.80 Partial copies of the Registers were once kept in branch offices located in Brisbane, Sydney, Newcastle, Melbourne, Port Adelaide, Hobart, Fremantle and Darwin. They contained the entries for all the ships registered in the State or Territory concerned. That practice has now been discontinued. The Registers are now in electronic form81 with the result that they can now be inspected online anywhere upon payment of the prescribed fee.82 The Registers are open for public inspection.83 Anyone may obtain a copy of an entry in a Register upon payment of the prescribed fee.84

[3.370]

Correction of entries in the Registers

The entry of information in the ship Registers is an act of considerable responsibility, as this information might have very important consequences. For example, entry of a person’s name in a Register as the owner of a particular ship or share in a ship confers title to this property if this person is a bona fide purchaser for value from the registered owner of the ship or share.85 The integrity of the Registers is consequently regarded as a matter of the utmost importance.86 Because the integrity of the Registers is so important, the ability of the Registrar of Ships to correct entries in a Register is limited. He or she may correct only clerical errors or obvious mistakes in a Register.87 Any other errors or mistakes, for example such as may result from faults or errors in the documents presented to the Registrar, may be corrected by the Registrar only by order of the Supreme Court of a State or Territory,88 or by order of the Federal Court in a proceeding on a proprietary maritime claim.89 79 Section 3(1). 80 See s 54. 81 Section 57(2). 82 Section 57(5). 83 Section 57(1). 84 Section 57(4), (5). 85 See Chapter 5. 86 General Credits (Finance) Pty Ltd v Registrar of Ships (1982) 61 FLR 329 at 333. 87 Section 60. 88 Section 59(1). See General Credits (Finance) Pty Ltd v Registrar of Ships (1982) 61 FLR 329 esp at 332-334. Note also Brond v Broomhall [1906] 1 KB 571 (court of general jurisdiction also has power by virtue of its inherent jurisdiction to order rectification of the Register). 89 Admiralty Act 1988 (Cth), s 32.

[3.380]

[3.380]

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65

Entry in a Register of alteration to a registered ship

The physical characteristics of a ship might be altered after registration — for example, to improve the ship or to change its function. In this case the physical characteristics of the ship might no longer correspond with the particulars of the ship’s tonnage or description in a Register. If this occurs, the ship’s registered agent must give the required notice to the appropriate official. If relevant characteristics of a registered ship are altered whilst the ship is in Australia, the ship’s registered agent must give the required notice of this fact to the Registrar of Ships within 14 days.90 The Registrar must then enter the alteration in the appropriate Register and grant a new registration certificate in respect of the ship.91 If relevant characteristics of a registered ship are altered when the ship is abroad, the registered agent must give notice of this to the appropriate Australian diplomatic or consular official at the port where the alteration occurs, or if there is no such person there or the alteration is made at sea, at the first port that it arrives at which has an official of this kind.92 If the ship arrives first at a port in Australia, the registered agent must give notice to the Registrar of Ships.93 If notice is given to a diplomatic or consular official, he or she must grant a provisional registration certificate in respect of the ship and forward to the Registrar of Ships both the notice of alteration to the ship and a copy of the certificate.94 Any person who has possession of a provisional registration certificate granted in accordance with these provisions is required to lodge it with the Registrar within 10 days of the ship arriving in Australia.95 Upon lodgment of the provisional registration certificate, the Registrar must enter the alteration in the Register.96 If the requirements concerning notice of alteration to a ship are not complied with, the owner of the ship commits an offence.97

90 Shipping Registration Act, s 65(1)(c); reg 31(1), (4). The Australian Shipping Registration Office has produced its own form for this purpose. This is available on the Australian Maritime Safety Authority’s website: see http://www.amsa.gov.au/forms-andpublications/International. 91 Section 65(1)(e). Note, however, reg 31(8). 92 Section 65(1)(a), (b), with s 3(1) (definition of “proper officer”); reg 31(1). 93 Section 65(1)(c). 94 Section 65(1)(d), (3); reg 31(6), (7). 95 Section 65(5). 96 Section 65(6). Note, however, reg 31(8). 97 Sections 65(8), 74(2).

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[3.390]

Certificates and passes Registration certificates

[3.390]

Upon the registration of a ship in the General Register or in the International Register, the Registrar of Ships is required to grant the appropriate registration certificate in respect of the ship.98

[3.400]

Purpose for which a registration certificate may be used

The purpose for which a registration certificate may be used is strictly limited by the Shipping Registration Act. Section 20(1) states that a registration certificate cannot be used except for the purpose of the lawful navigation of the ship, and that it cannot be detained by virtue of a claim by an owner, mortgagee, charterer, operator or any other person to any title to, lien or charge on, or interest in, the ship concerned. A registration certificate accordingly cannot be detained by the ship’s master as security for any salary or money owing to him by the ship’s owner.99 Nor can it be used as security for a loan or as security for compliance with a promise or undertaking.100 If a registration certificate is used as security, the pledge is void and the certificate may be claimed at any time by any person having a right to its possession.101 The restrictions on the use of a registration certificate apply equally to a provisional registration certificate.102 Any person who improperly uses a registration or provisional registration certificate commits an offence.103

[3.410]

Proper custodian of registration certificate

There is no provision which requires a particular person to have the custody of a ship’s registration certificate, or for this document to be kept in any particular place. As a matter of practice, the master of a ship retains custody of the ship’s registration certificate. It is, indeed, necessary for the master to have custody of a ship’s registration certificate if the ship is to undertake an overseas voyage, for a ship is not normally allowed to berth at a foreign port without its registration certificate being produced to the port authorities. There is also a rule of public international law that a ship sailing on the high seas must carry proper identification papers, which is taken to include a registration or similar certificate.104 Both 98 Section 19. 99 Gibson v Ingo (1847) 6 Hare 112; 67 ER 1103 at 118; 1106. 100 Wiley v Crawford (1861) 30 LJQB 319. 101 See Wiley v Crawford (1861) 30 LJQB 319. 102 Section 20(4). 103 Section 74(1). 104 See the United Nations Convention on the Law of the Sea 1982, Art 91.2; R Jennings and A Watts (eds), Oppenheim’s International Law (9th ed, Longman, Harlow, 1992), Vol 1, Pt 2, p 734, para 290.

[3.430]

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s 37A(1) of the Shipping Registration Act and reg 13(1), (2) of the Shipping Registration Regulations impliedly recognise that the registration certificate is normally located aboard any ship that is not at an Australian port. There is old English authority for the proposition that when a ship is not at sea, the ship’s master remains the proper person to have custody of the registration certificate, and not its owner unless he or she intends to replace the master.105 Any person who has possession or control of a registration certificate, including here a provisional registration certificate,106 must deliver it on demand to the person who is entitled to its custody for the purposes of the lawful navigation of the ship, or to the Registrar or other person who is entitled by law to require its delivery.107 Otherwise he or she commits an offence of strict liability.108 Provisional registration certificates

[3.420]

There are provisions in the Act for the granting of a form of interim or temporary registration certificate called a provisional registration certificate. This may be granted either to a ship which is unregistered but requires prompt interim registration, or to a ship that is registered but requires a new registration certificate promptly when it is outside Australia. A ship may be granted provisional registration under either the General Register or the International Register.109

[3.430]

Provisional registration certificate for unregistered ships

An unregistered ship might require prompt registration in two circumstances. The first is where the ship is outside Australia and requires registration in Australia to continue its journey. This might occur, for example, where ownership of the ship changes whilst it is abroad and it thereby becomes an Australian-owned ship as defined by the Act. As is observed in [4.230], a ship which is entitled to be registered in Australia normally requires Australian registration in order to continue an overseas voyage, even if it is otherwise an exempt ship, because unless it is so registered it is not permitted to depart from a foreign port at which there is an Australian diplomatic or consular official. Registration, however, can be a reasonably lengthy process. There is accordingly a need for a form of prompt interim registration until the requirements for proper registration are completed. 105 Arkle v Henzell (1858) 8 El & Bl 828; 120 ER 309 at 834-835, 835, 836; 312. 106 Section 20(4). 107 Section 20(2). 108 Sections 20(2B), 74(1). 109 Regulations 14(2), 15(1), 31(5).

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Shipping Law

[3.440]

There is a similar need for prompt interim registration where an unregistered ship in Australia is due to travel overseas and the registration formalities cannot be completed before the time that the journey is to commence. This situation is sometimes faced by the owner of a private pleasure craft who plans an overseas voyage but is unaware until just before the time of departure of the need for registration before the boat is permitted to travel overseas.110 The Act covers both of the situations just described. It provides that a provisional registration certificate may be granted where a ship becomes entitled to be registered111 whilst it is at sea or in a foreign port, or where a ship is entitled to be registered and is in an Australian port but is about to depart from Australia.112 If a ship becomes registrable out of Australia, a provisional registration certificate may be granted either by an Australian diplomatic or consular official at a foreign port113 or by the Registrar of Ships.114 If the ship is in Australia, a provisional registration certificate may be granted only by the Registrar of Ships.115 In either case, a provisional certificate may be granted only if an application has been lodged for the full registration of the ship and this application has not yet been determined.116

[3.440]

Provisional registration certificate for registered ships

A provisional registration certificate may be granted for a registered ship which is outside Australia in two circumstances. The first is where the registration certificate has been mislaid, lost or destroyed during the course of the voyage.117 The second is where the ship has been altered in such a way that it no longer corresponds with the particulars of its tonnage or description contained in the relevant Shipping Register.118 In both cases a provisional certificate may be granted by an Australian diplomatic or consular official at a foreign port.119 In the former case it may also be granted by the Registrar of Ships.120

110 See 135 H Rep Deb 222 (29 February 1984). 111 This statutory expression covers both a ship required to be registered and a ship permitted to be registered under the Act: s 3(1). 112 Sections 22(1), 22A(1), (2). 113 Section 22(1), with s 3(1) (definition of “proper officer”). 114 Section 22A(1). 115 Section 22A(2). 116 Section 22B. 117 Section 21(2). 118 Section 65(1). 119 Sections 21(2), 65(1)(a), (b), (d), with s 3(1) (definition of “proper officer”). 120 Section 21(2).

[3.460]

[3.450]

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69

Effect and duration of provisional registration certificate

A provisional registration certificate has the same general effect as a registration certificate proper. In particular, the ship in respect of which it is issued is deemed to be registered.121 A provisional certificate initially has effect only for six months or until the ship arrives at an Australian port, whichever happens first,122 though the Registrar of Ships may subsequently extend the six-month time limit.123 A provisional certificate must be surrendered to — technically lodged with — the Registrar of Ships within 10 days of the ship arriving at an Australian port.124 The Registrar may then grant a further provisional registration certificate in respect of the ship.125 If the ship is already registered, the Registrar may grant a full registration certificate instead.126 Temporary passes

[3.460]

Convenient though a provisional registration certificate might be as a form of temporary registration certificate, it has the drawback that it may be granted to an unregistered ship only if there is an application pending for the registration of the ship. It would, however, be inconvenient for the owners of many ships to have to seek full registration in order to make simply an isolated voyage overseas. There is accordingly provision in the Act for the grant of a further kind of interim registration certificate called a temporary pass. This is especially useful to enable yacht owners to take part in overseas races and to enable shipbuilders to deliver an unregistered ship to a buyer overseas.

A temporary pass authorises an unregistered ship to travel on a particular voyage either from an Australian port to a foreign port, from a foreign port to an Australian port, or between two different foreign ports.127 The journey permitted by a temporary pass is thus very limited. In particular, a pass does not allow more than one trip, or even a return trip. If a return trip is necessary, two passes must be obtained. A temporary pass is granted by the Registrar of Ships at the direction of the Australian Safety Maritime Authority.128 The Authority is empowered to direct the grant of a temporary pass only if it is satisfied that there are special circumstances for so doing.129 121 Sections 21(3), 22(2), 22A(3), 65(2). 122 Sections 21(3), 22(2), 22A(3), 65(2). 123 Sections 21(5), 22(4), 22A(4), 65(4). 124 Sections 21(6), 22(5), 22A(5), 65(5). 125 Sections 21(7)(a), 22(6), 22A(6). 126 Sections 21(7)(b), 65(6). 127 Section 23(1). 128 Section 23(1). 129 Section 23(1).

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[3.470]

[3.470]

Effect of a temporary pass

A temporary pass has the same general effect as a registration certificate.130 For the purposes of the voyage to which a temporary pass applies, the ship is deemed to be registered.131 It seems clear from this that a temporary pass deems a ship to be registered only for the purpose of making the particular voyage concerned, and not for any other purpose — for example, conferring title. Improper use of a certificate or pass

[3.480]

It is an offence for anyone to use a registration certificate, a provisional registration certificate or a temporary pass in relation to any ship other than that to which the certificate or pass relates.132

CLOSURE AND CANCELLATION OF REGISTRATION Introduction [3.490]

From a narrow point of view, once a ship has properly been registered it never ceases to be registered as its entry is never removed from the General Register or International Register. This is so even if the registration of a ship in the International Register is cancelled.133 Only if a ship has improperly been registered can its entry be expunged, and then only upon an order for the rectification of the Register by either the Supreme Court of a State or Territory,134 or the Federal Court in a proceeding on a proprietary maritime claim.135 A registered ship nonetheless ceases in law to be registered136 and loses all the benefits of being a registered ship, and is commonly spoken of as being “unregistered”,137 when its registration is closed or deemed to be closed. A ship registered in the International Register also in law ceases to be registered if its registration is cancelled.138

Closure of registration [3.500]

Under the Shipping Registration Act, the registration of a ship can be either closed or simply deemed to be closed. Put shortly, registration of a ship is “closed” if this results from a voluntary act by the

130 Section 23(3). 131 Section 23(3). 132 Sections 25, 74(4A). 133 Regulation 22C(2)(b). 134 Section 59(1). 135 Admiralty Act 1988 (Cth), s 32. 136 See s 3A. 137 See Mortimer v Wisker [1914] 3 KB 699 at 704. See also Manchester Ship Canal Co v Horlock [1914] 2 Ch 199 at 207 (a ship whose registration is closed has “ceased to be a registered ship”). 138 Section 3A.

[3.510]

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owner seeking closure of the ship’s registration.139 The registration of a ship is “deemed to be closed” if this results from action taken by the Australian Maritime Safety Authority or the Registrar of Ships because the ship is not entitled to be registered.140 Be that as it may, the distinction between “closed” and “deemed closed” has no practical consequences so far as the ship is concerned. The effects are the same. The registration of a ship is closed, or in appropriate cases deemed to be closed, when the Registrar of Ships makes an entry in the Register noting any of the following facts: • that he or she has received an application for closure from the sole owner of a ship or by a representative of the owners of at least 33 of the 64 shares in a ship, provided that the ship is not required to be registered under the Act;141 • that the ship has been lost (whether actually or constructively), taken by an enemy, burnt or broken up;142 or • that the ship has ceased to be entitled to be registered (for example, because it has ceased to be an Australian-owned ship, or has ceased to be capable of navigating the high seas).143

[3.510]

“Lost (whether actually or constructively)”

Although there is no judicial authority directly on point, it seems clear that a ship is actually lost at least if it is wrecked beyond repair or has sunk irretrievably to the bottom of the sea.144 In the context of s 158 of the Merchant Shipping Act 1894 (IMP), concerning the termination of a seaman’s services by reason of “wreck or loss of the ship”, the unqualified term “loss” has been held to mean loss or destruction of the ship as a physical entity, but not loss to the owner simply by capture, detention or deprivation.145 A ship is constructively lost only if it is deemed to be totally lost for the purposes of marine insurance.146 In the context of marine insurance, the 139 See reg 33. 140 See ss 58, 66. 141 Regulation 33. 142 Section 66(2), (3). 143 Section 66(2), (3). 144 See Roux v Salvador (1836) 3 Bing (NC) 266; 132 ER 413 at 288; 421; Broomfield v Southern Insurance Co Ltd (1870) LR 5 Ex 196. 145 Sivewright v Allen [1906] 2 KB 81 at 86, 87; Collins v Simpson Steamship Co (1907) 24 TLR 178 at 180; Beal v Horlock [1915] 3 KB 627 at 635, 647; Horlock v Beal [1916] AC 486 at 493, 499, 517, 524. See also Barras v Aberdeen Steam Trawling & Fishing Co Ltd [1933] AC 402 at 426-428; British Steamship Owners’ Association v Chapman & Son (1935) 52 Ll L Rep 169 at 171. 146 Manchester Ship Canal Co v Horlock [1914] 2 Ch 199 at 208-209 (a ship which had sunk and been raised by salvors, and was lying in safety on a pontoon, held to be constructively lost as it was deemed to be a constructive total loss for the purposes of a marine insurance policy). See also Cossman v West; Cossman v British America Assurance Co (1887) 13 App Cas 160 at 169.

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[3.520]

expression “total loss” includes loss to an owner by sale to a third party following an adverse judgment in rem.147

[3.520]

Notice by owner and inquiries by Registrar or Maritime Safety Authority

If a registered ship is lost (whether actually or constructively), taken by an enemy, burnt or broken up, or ceases to be entitled to be registered, and the registered owner148 knows of this, he or she is required to give notice in writing to the Registrar of Ships unless such notice has already been provided to the Registrar.149 The owner might, however, neglect to do so, or be unable to do so (for example, because he or she is lost with the ship at sea), or there might be some other reason why the registration of a ship remains open when it should be deemed closed (for example, because the whereabouts of the owner and even the whereabouts of the ship are now unknown). The Act accordingly empowers either the Registrar or the Australian Maritime Safety Authority to take the initiative and inquire whether any event has occurred which justifies closure of a ship’s registration. The Registrar of Ships may require information from a registered owner or registered agent of a ship if he or she suspects either that particulars entered in a Register in relation to the ship are incorrect, or that a required notice has not been given in respect of an entry in the Register, or that a ship has been lost, taken by an enemy, burnt or broken up.150 If the required information is not forthcoming, or if the Registrar considers that the information received might justify closure of the ship’s registration, the Registrar must inform the Australian Maritime Safety Authority of this.151 The Authority may then give the Registrar such written notice as it thinks fit with respect to either the closure of the ship’s registration or an entry, or amendment of an entry, to be made in the relevant Register.152 This notice then has the same effect under the Act as notice from the owner of the ship on the matter in question.153 If the Australian Maritime Safety Authority suspects that a registered ship is not entitled to be registered, it can require the ship’s registered agent to furnish it with evidence of the ship’s ownership.154 If the registered agent fails to satisfy the Authority that the ship is entitled to be registered, it 147 Cossman v West; Cossman v British America Assurance Co (1887) 13 App Cas 160 at 169-170. 148 See s 62. 149 Section 66(1), (1A). See Mentink v Registrar of the Australian Registrar of Ships (2012) 277 FLR 248 at 257-258. 150 Section 58(1). 151 Section 58(2). 152 Section 58(2A). 153 See s 58(3). 154 Section 67(1).

[3.550]

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may give the Registrar notice in writing to close the registration of the ship.155 This notice again has the same effect under the Act as notice from the owner of the ship that the ship has ceased to be entitled to be registered.156

[3.530]

Time from which deemed closure is effective

Where the registration of a ship is deemed to be closed, the deemed closure takes effect immediately upon the Registrar making the required entry in the relevant Register.157

Cancellation of registration in the International Shipping Register [3.540]

The Registrar of Ships may cancel the registration of a ship registered in the International Shipping Register if he or she is satisfied that: • the ship has not, or will not be, predominantly used or engaged in international trading;158 • an agreement with the seafarers’ bargaining unit is not in force when the ship is engaged in international trading;159 • the ship has contravened the Shipping Registration Act, the Navigation Act 2012 (Cth), the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), or the Occupational Health and Safety (Maritime Industry) Act 1993 (Cth);160 • the ship is substandard or not seaworthy;161 • the ship’s owner has failed to meet the requirements of the Shipping Registration Regulations 1981 (Cth) in relation to the registration of the ship.162

Consequences of closure or cancellation [3.550]

Upon the registration of a ship being closed or deemed closed, or upon the registration being cancelled, the ship is regarded in law as unregistered.163 A ship which is otherwise required to be registered will thus lose its Australian nationality and cease to enjoy the rights and privileges of an Australian ship if its registration is closed or cancelled. When the registration of a ship is closed or deemed to be closed, the person having possession of the registration certificate must return it

155 Section 67(2). 156 Section 67(2). 157 Sections 58(3), 66(3). 158 Section 33B(1)(c). 159 Section 33B(1)(d). 160 Section 33B(1)(a); reg 2A. 161 Section 33B(1)(b). 162 Section 33B(1)(e); reg 22B. 163 Section 3A.

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[3.560]

either to the Registrar of Ships or to an Australian diplomatic or consular official if this has not already been done.164 When the registration of a ship is cancelled, the ship’s owner must surrender the registration certificate to the Registrar as soon as possible.165

[3.560]

Informal “deletion certificate” may be granted

When a ship’s registration is closed or deemed to be closed, or when a ship’s registration is cancelled, the Registrar of Ships may upon request and upon payment of a fee grant a “deletion certificate”. This certificate has three parts, namely a statement that the ship is no longer registered in Australia and the circumstances by which registration is closed, a statement of the registered owners at the time of the closure, and a statement of the registered description of the ship at the time of the closure. A deletion certificate is formally an extract of the relevant Register. It is made pursuant to s 77(2) of the Shipping Registration Act.

[3.570]

Re-registration of a ship

Once the registration of a ship is closed or deemed to be closed, the registration cannot be revived. Instead, the ship must be re-registered if the owner wishes the ship once again to enjoy the benefits of registration.166

[3.580]

Suspension of registration not possible

There is no provision in the Shipping Registration Act which enables the registration of a ship to be suspended for a period, rather than closed. Suspension of registration might be thought desirable, for example, when an Australian-owned ship is demise chartered for a short term to a foreign resident who plans to register the ship in a foreign country for the duration of the charter. In a situation such as that, the registration of the ship must be closed for the period of the demise charter and the ship then re-registered upon reverting to the control of its Australian owners.

[3.590]

Informal “suspension certificate” may be granted

If a ship’s registration is closed because it is on a demise charter to a foreign resident but it is envisaged that the ship will be registered again at the end of the charter, the Registrar of Ships may grant a “suspension certificate” to the charterer in order to satisfy overseas registration requirements. Like a deletion certificate, a suspension certificate is formally an extract of the relevant Register. It is made pursuant to s 77(2) of the Shipping Registration Act. 164 See s 66(10), with s 3(1) (definition of “proper officer”); reg 32. 165 Regulation 22C(2)(a). 166 Manchester Ship Canal Co v Horlock [1914] 2 Ch 199 at 207.

[3.610]

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Revocation of registration certificate [3.600]

The Registrar of Ships has power to revoke a registration certificate, or indeed any other document required under the Shipping Registration Act.167 The grounds for revocation are not, however, stated either in the Act or in the regulations made under it. It is assumed that the Registrar would revoke a registration certificate only if information has been wrongly recorded on the certificate or if registration in the International Shipping Register has been cancelled.

REGISTRATION UNDER STATE AND TERRITORIAL LAWS [3.610]

The Shipping Registration Act preserves the right of the States and Territories to enact legislation for the recording or registration of ships provided the purpose of this is not to establish or transfer title, or grant nationality to a ship.168

The Marine Acts or related legislation of all States and the Northern Territory make provision, either expressly or through regulations, for the registration or licensing of ships and boats, particularly small vessels like recreational craft and fishing vessels. The general purpose of these Acts is either to identify a person as being the person who claims to be the owner of a vessel (for example, for contact purposes in the event of an accident), to license a vessel for a particular purpose (for example, to carry passengers or to be let out for hire), or to certify that a vessel has met safety requirements for its use on water.

167 Section 49(1)(b). 168 Section 79.

4

Consequences of Registration [4.10] INTRODUCTION ............................................................................................... 77 [4.20] NATIONALITY ................................................................................................... 78

[4.20] Registration and nationality ............................................................... 78 [4.40] The nationality provision ................................................................... 79 [4.70] CONSEQUENCES OF AUSTRALIAN NATIONALITY .............................. 81

[4.70] Introduction .......................................................................................... 81 [4.80] Importation of Australian law aboard ship .................................... 81 [4.150] Right to fly the national colours ..................................................... 87 [4.220] CONFERMENT OF TITLE IN CERTAIN CIRCUMSTANCES ................ 90 [4.230] LIBERTY TO TRAVEL OVERSEAS ............................................................... 90 [4.240] LIMITATION ON METHOD OF TRANSFER ............................................. 91 [4.250] A SPURIOUS CONSEQUENCE OF REGISTRATION: THE “RIGHT” TO NAVAL PROTECTION ............................................................................. 91

INTRODUCTION [4.10]

There are four main legal consequences of registration of a ship. The first three are benefits of registration; the fourth is a limitation. The four consequences are: • the conferment of Australian nationality on the ship; • liberty for the ship to travel overseas; • the conferment of title to the ship in certain circumstances; and • limitation on the method of transfer of the ship. The first two of these consequences of registration are considered in this chapter. The other two are considered in detail in the course of [5.180]–[5.200], [6.60] and [6.90]. Until December 2009, there was a further legal consequence of registration of a ship: a registered ship could be made the subject of a registered mortgage in the Register of Ships. Security interests on ships are now registrable in the Personal Property Securities Register under the Personal Property Securities Act 2009 (Cth). Registered mortgages in the Register of

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[4.20]

Ships were transferred (“migrated” to use the statutory term) to the Personal Property Securities Register upon the commencement of the operative provisions of the Personal Property Securities Act on 30 January 2012.

NATIONALITY Registration and nationality [4.20]

Registration confers upon a ship the two-fold status of being an Australian ship and of having Australian nationality.1 This status is not, however, confined to registered ships. The Shipping Registration Act 1981 (Cth) provides that certain unregistered2 ships which are not required to be registered are also Australian ships and have Australian nationality. These are:3 • exempt Australian-owned ships (namely ships less than 24 metres in tonnage length, Government ships and exempt fishing vessels and pleasure craft4); • ships wholly owned by Australian residents or by Australian residents and Australian nationals; and • ships operated solely by Australian residents, by Australian nationals, or by both. If a ship is required to be registered in Australia but is not registered, the Act states that it cannot be recognised as an Australian ship and is not entitled to any of the benefits, privileges, advantages or protection that are usually enjoyed by a registered ship.5 Such a ship is nonetheless subject to the same fees, charges and penalties as a registered ship.6

[4.30]

Offences

It is an offence for the master or owner of an Australian ship to do anything, or to permit anything to be done, which conceals the fact that it is an Australian ship, except for the purpose of escaping capture by an enemy.7 It is also an offence for the master or owner of a non-Australian ship to do anything, or to permit anything to be done, that results in the ship appearing to be an Australian ship, again except for the purpose of

1 Shipping Registration Act 1981 (Cth), s 29(1)(a). 2 “Unregistered” here means unregistered under either the Shipping Registration Act 1981 (Cth) or the law of a foreign country: s 29(3). 3 Section 29(1)(b). 4 See s 13. 5 Section 63(1). 6 See s 63(2). 7 Section 33(1), (2). For the penalties, see s 74(4A).

[4.50]

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escaping capture by an enemy.8 These are offences of strict liability.9 Where such an offence is committed, the ship itself is also subject to forfeiture.10

The nationality provision [4.40]

The provision concerning the nationality of ships is contained in s 29(1) of the Shipping Registration Act 1981. This commences: “The following ships shall, for all purposes, be taken to be Australian ships and to have Australian nationality”. It then specifies all registered ships and certain unregistered ships.

[4.50]

“Australian ship”, “having Australian nationality”

Although the terms of s 29(1) might appear to indicate that being an Australian ship and having Australian nationality are two distinct notions, the accepted view is that these are simply two aspects of a single status, the one notion implying the other. This view is partially supported by the definition of an “Australian ship” in s 3(1) as “a ship having Australian nationality by virtue of section 29”. It is also supported by the tenor of the Act as a whole, which makes no differentiation of substance between an Australian ship and a ship having Australian nationality. (It may be observed in this regard that in the United Kingdom there is no difference between a British ship and a ship having British nationality.11) The presently accepted construction of s 29(1), by which an Australian ship and a ship having Australian nationality are equivalent notions, removes the possibility that an unregistered Australian-owned ship which is required to be registered may still have Australian nationality at common law, even though by s 63(1)(a) such a ship must not be recognised as an Australian ship. At common law, the nationality of a ship was determined by the nationality of its owner unless it was employed under letters of marque,12 in which case its nationality was that of the government which granted those letters.13 If the presently accepted construction of s 29(1) is correct, a ship cannot have Australian nationality at common law: it can only have Australian nationality pursuant to the provisions of s 29(1). 8 Section 32(1), (2). For the penalties, see s 74(4A). 9 Sections 32(3), 33(3). 10 Sections 32(1), 33(1). 11 Oteri v The Queen (1976) 51 ALJR 122 at 124. See also Bell v Mansfield (1893) 19 VLR 165 at 177. 12 Letters of marque were letters from a sovereign permitting a subject to capture merchant ships of a hostile state. They were abolished by the Declaration of Paris 1856. 13 See Chartered Mercantile Bank of India, London & China v Netherlands India Steam Navigation Co Ltd (1883) 10 QBD 521 at 535-536. Under the common law rule, differing nationalities of joint owners is not envisaged. See also Ponting v Huddart, Parker & Co Ltd (1897) 22 VLR 644 at 659; Merchant Service Guild of Australasia v Commonwealth Steamship Owners Association (1913) 16 CLR 664 at 693; Oteri v The Queen (1976) 51 ALJR 122 at 124.

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[4.60]

There is, however, a problem which might militate against the construction of equivalence which has just been presented. This is that there is no clear indication in the Act that the ships referred to in s 29(1) are the only ones which can have Australian nationality. This problem is perhaps heightened by the fact that s 63(1)(a) clearly implies that the ships listed in s 29(1) are the only ones which can be recognised as “Australian ships” (with no reference to Australian nationality). Be that as it may, for the reasons which have just been outlined, the better view is that the only ships which have Australian nationality are those which come within the scope of s 29(1). Section 29(1) may accordingly be regarded as a complete code on the nationality of ships even though there is no clear statement in the Act that this is so. There is some authority for the proposition that an unregistered Australian-owned ship which is required to be registered is still “in a certain sense”, or “in the larger sense of the term”, an Australian ship, even though s 63(1)(a) states that it must not be recognised as such.14 The argument here is that an unregistered Australian-owned ship which is required to be registered always retains its general character as an Australian ship, and can accordingly be regarded as an Australian ship for some purposes, despite the fact that it is not an Australian ship in the strict sense.15 This distinction in truth says little more than that an Australian-owned ship may be regarded as an Australian ship in a loose, general sense whether or not it is registered, and that this may be relevant for some legal purposes (for example, where it is clear that an Australian ship in such a broader sense is contemplated by statute), even though by s 63(1)(a) it would not otherwise be recognised as an Australian ship until it is registered. This distinction is thus obvious and of little consequence for present purposes.

[4.60]

“For all purposes”

Section 29(1) states that the ships specified in this subsection are to be taken to be Australian ships and to have Australian nationality “for all purposes”. This means that the operation of this subsection is not confined to the Shipping Registration Act but extends to all aspects of Australian law. The expression “for all purposes” does not mean that all registered ships are Australian ships and have Australian nationality regardless of whether their registration is proper. It thus does not imply that the Australian status of a ship which is improperly registered is protected. It is presently uncertain whether proof that a registered ship is improperly registered without more affects its ostensible status as an Australian ship 14 See Union Bank of London v Lenanton (1878) 3 CPD 243 at 247. See also Merchant Service Guild of Australasia v Commonwealth Steamship Owners Association (1913) 16 CLR 664 at 693. 15 See Ponting v Huddart, Parker & Co Ltd (1897) 22 VLR 644 at 658-659.

[4.90]

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81

and as a ship having Australian nationality,16 or whether this simply justifies rectification of the Register or closure of registration.

CONSEQUENCES OF AUSTRALIAN NATIONALITY Introduction [4.70]

Two main consequences follow from the fact that a ship has Australian nationality. First, the ship imports Australian law aboard it, though the extent to which it does so is subject to some uncertainty. Secondly, the ship is entitled to fly the national colours, and in some circumstances it must do so. Both of these matters require detailed consideration.

Importation of Australian law aboard ship Law aboard ships generally

[4.80]

It is commonly said that a ship of a particular nationality carries with it the law of the country of its nationality. So, for example, Blackburn J said in R v Anderson,17 “When a ship is sailing on the high seas, and bearing the flag of a particular nation, the ship forms part of that nation’s country, and all persons on board of her may be considered as within the jurisdiction of that nation whose flag is flying on the ship, in the same manner as if they were within the territory of that nation.”

[4.90]

Four initial observations on R v Anderson

Four initial observations should be made concerning the statement by Blackburn J in R v Anderson.18 The first is that the expression “high seas” here bears its wide Admiralty meaning. It thus means all tidal waters below low-water mark, even if these waters go inland.19 A ship in a foreign port or on a foreign river may thus still be on the high seas and subject to the law of its national country even though it is also within the domestic jurisdiction of another country.20 The second is that the law of 16 See R v Bjornsen (1865) 10 Cox CC 74 (proof that a ship was improperly registered held sufficient to deprive it of its ostensible status as a British ship). See also Ponting v Huddart, Parker & Co Ltd (1897) 22 VLR 644. 17 R v Anderson (1868) LR 1 CCR 161 at 169. 18 R v Anderson (1868) LR 1 CCR 161. 19 General Iron Screw Collier Co v Schurmanns (1860) 29 LJ Ch 877 at 879; Bonser v La Macchia (1969) 122 CLR 177 at 184, 233; R v Bull (1974) 131 CLR 203 at 226; Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 77 ALJR 1396 at 1400, 1432. 20 See R v Allen (1837) 1 Moo CC 494; 168 ER 1357 (sailor on board British ship on the Wampu River in China 20-30 miles from the sea held subject to English law); R v Anderson (1868) LR 1 CCR 161 (sailor on board a British ship 45 miles up the Garonne River in France held subject to English law); R v Carr and Wilson (1882) 10 QBD 76 (British ship moored at Rotterdam in Holland 18 miles from the sea held subject to English law). See also R v Ross (1854) 2 Legge 857; R v Keyn (1876) 2 Ex D 63 at 94, 161; R v Lesley (1860) Bell CC 220; 169 ER 1236 at 233; 1242.

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[4.100]

the national country applies to everyone on board the ship, regardless of his or her personal nationality or reason for being aboard that ship.21 The third observation is that the references to the flag of a particular nation are strictly references to the ship’s nationality. It is a ship’s nationality that imports on board the laws of a particular country, not the mere fact that it is flying that country’s flag.22 Finally, the statement that a ship forms part of the nation’s country is purely metaphorical.23 Like the related statement that a ship is a floating island,24 this statement is not to be taken literally. It means simply that the domestic courts of a country will take cognisance of acts done on board its ships as if they had taken place in that country.25

[4.100]

Extent to which a ship carries the law of its country of nationality

Although it is common to find judicial statements to the effect that a ship of a particular nationality carries with it the law of the country of its nationality, there seems little doubt that broad statements such as this do not accurately state the law. There is certainly no ratio decidendi to support the proposition that the nationality of a ship imports on board the entire body of law of the country of that nationality. The main cases which appear to support such a proposition, like R v Anderson,26 are cases which concern only criminal law. It is indeed impossible to support even as a general theory the proposition that the nationality of a ship imports on board the entire law of the country of nationality, as many countries encompass more than one system of law. This is obviously true of all federal countries like Australia, Canada and the United States, and it is also true of some non-federal countries like the United Kingdom. The situation in respect of ships of the United Kingdom — that is, British ships, with British nationality — is particularly instructive in this regard, In some of these cases judges improperly refer to “English ships” when they should strictly have said British ships. English ships ceased to exist with the Union with Scotland Act 1706: see Oteri v The Queen (1976) 51 ALJR 122 at 124. These judges might perhaps here mean British ships with an English port of registry, though this seems unlikely. 21 R v Lopez (1858) Dears & B 525; 169 ER 1105 at 545; 1113; R v Lesley (1860) Bell CC 220; 169 ER 1236 at 234; 1242; R v Anderson (1868) LR 1 CCR 161; R v Keyn (1876) 2 Ex D 63 at 161; R v Carr and Wilson (1882) 10 QBD 76 at 85, 86; Robey v Vladinier (1935) 53 Ll L Rep 121 at 122. 22 R v Keyn (1876) 2 Ex D 63 at 161. 23 See also R v Bjornsen (1865) 10 Cox CC 74 at 81; Marshall v Murgatroyd (1870) LR 6 QB 31 at 33-34; R v Keyn (1876) 2 Ex D 63 at 94, 101, 113, 118, 161. 24 See Forbes v Cochrane (1824) 2 B & C 448; 107 ER 450 at 464; 456; R v Anderson (1868) LR 1 CCR 161 at 168; The Angel Bell [1979] 2 Lloyd’s Rep 491 at 495; The Evpo Agnic [1988] 1 WLR 1090. 25 R v Keyn (1876) 2 Ex D 63 at 94; Oteri v The Queen (1976) 51 ALJR 122 at 124. See also Chartered Mercantile Bank of India, London & China v Netherlands India Steam Navigation Co Ltd (1883) 10 QBD 521 at 544; Chung Chi Cheung v The Queen [1939] AC 160 at 174-175; R v Gordon-Finlayson; Ex parte an Officer [1941] 1 KB 171. 26 R v Anderson (1868) LR 1 CCR 161.

[4.110]

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83

not least because cases concerning British ships are primarily responsible for the broad proposition that the law on board ship is the law of the ship’s nationality. The truth is, however, that ships with British nationality cannot be subject to British law, for there is no such thing. What the cases concerning British ships strictly mean is very limited. It is simply that for the purposes of the exercise of English Admiralty jurisdiction, the law applicable in respect of any crime committed on board a British ship on the high seas is English law.27 This leaves open the question of what law applies on board a British ship for other purposes.28 There is Canadian authority for the proposition that where a nation embraces more than one system of law, the civil law which operates on board a ship of that nation on the high seas is the law applicable at the ship’s port of registry. This is the case in Canadian National Steamships Co v Watson.29 There the court expressed the view that the law governing an alleged tort committed on the high seas on board a British ship registered at Vancouver and owned by a Canadian company was the law of British Columbia. No justification was given for this view of the law, though it has the obvious advantage of attaching to a ship a system of law with which it has a clear connection.30 Criminal law aboard Australian ships prior to the present cooperative scheme

[4.110]

Until 1982, when the Shipping Registration Act 1981 (Cth) commenced operation, Australian law relating to the status of ships was the same as that of England. According to English law, a ship had British nationality if, in short, it was owned solely by British subjects.31 This was so whether or not the ship was registered under the Merchant Shipping Act 1894 (IMP).32 Moreover, according to English law, Australian citizens were 27 Oteri v The Queen (1976) 51 ALJR 122 at 125. 28 For two rare English non-criminal cases concerning the law on board ship, see Forbes v Cochrane (1824) 2 B & C 448; 107 ER 450 (slaves on board a British ship become free men); Marshall v Murgatroyd (1870) LR 6 QB 31 (illegitimate child born on board a British ship deemed born in England for affiliation purposes). The soundness of the latter case must, however, be doubted in light of R v Gordon-Finlayson; Ex parte an Officer [1941] 1 KB 171. 29 National Steamships Co v Watson[1939] 1 DLR 273. See also Gronlund v Hansen (1969) 4 DLR (3d) 435. Compare Blunden v Commonwealth (2003) 78 ALJR 236 (concerning tort committed aboard a ship of the Royal Australian Navy, which does not have a port of registry). 30 For choice of law rules for torts committed on board a ship, see N Rein, “Raising the Flag: Revisiting Choice of Law Rules for Shipboard Torts” (2014) 88 ALJ 247. 31 Chartered Mercantile Bank of India, London & China v Netherlands India Steam Navigation Co Ltd (1883) 10 QBD 521 at 535-536; Oteri v The Queen (1976) 51 ALJR 122 at 124; Merchant Shipping Act 1894 (IMP), s 1. 32 Chartered Mercantile Bank of India, London & China v Netherlands India Steam Navigation Co Ltd (1883) 10 QBD 521 at 535-536; Oteri v The Queen (1976) 51 ALJR 122 at 124.

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[4.110]

deemed to be British subjects.33 This meant, following the principles which have already been considered, that for the purposes of English Admiralty jurisdiction, the criminal law that was applicable on board all Australian-owned ships on the high seas was English law. Until 1979, the powers possessed by Australian courts to punish offences committed on board ships on the high seas were, by virtue of Imperial legislation,34 the same as those of English courts exercising Admiralty jurisdiction. Accordingly, for the purpose of Australian law, the general criminal law applicable on board all Australian-owned ships on the high seas was English law.35 It is true that the Commonwealth Parliament had made certain extra-territorial acts Commonwealth offences and to this extent Australian law applied aboard Australian-owned ships. However, as a broad principle, the criminal law on board an Australian-owned ship on the high seas was English law. The anomalous situation which resulted from that state of the law was well demonstrated by the decision in Oteri v The Queen36 of 1976. There the Privy Council agreed with the Supreme Court of Western Australia that a theft committed some 22 miles off the Western Australian coast on board a fishing vessel owned by Australians resident in Fremantle was governed by the English Theft Act 1968, and not by Western Australian criminal law. Lord Diplock observed in this case that it was surprising that despite the passing of the Statute of Westminster 1931 (IMP) and the creation of separate Australian citizenship, “Parliament in the United Kingdom when it passes a statute which creates a new criminal offence in English law is also legislating for those Australian passengers who cross the Bass Strait by ship from Melbourne to Launceston”.37 The decision in Oteri v The Queen encouraged the Commonwealth, the States and the Northern Territory to agree to enact complementary legislation to extend the operation of State and Territorial criminal law to Australian ships. This was done as part of the Offshore Constitutional Settlement of 1979. The Commonwealth enacted the Crimes at Sea Act 1979, and the States and the Northern Territory enacted related legislation.38 The problem with these Acts was, however, that they were complex and not easy to apply. They provided, in short, that the criminal law of a particular State or the Northern Territory applied on board an 33 British Nationality Act 1948 (UK), s 1. This section was repealed by the British Nationality Act 1981, which came into operation on 1 January 1983. 34 Admiralty Offences (Colonial) Act 1849 (IMP), s 1. Note also Courts (Colonial) Jurisdiction Act 1874 (IMP). 35 See William Holyman & Sons Pty Ltd v Eyles [1947] Tas SR 11 at 12-13; Oteri v The Queen (1976) 51 ALJR 122 at 124-125; R v Shea (1978) 18 SASR 591. 36 Oteri v The Queen (1976) 51 ALJR 122. 37 Oteri v The Queen (1976) 51 ALJR 122 at 124. See also R v Shea (1978) 18 SASR 591 at 592. 38 Crimes (Offences at Sea) Act 1978 (Vic), Crimes (Offences at Sea) Act 1979 (Tas), Crimes (Offences at Sea) Act 1979 (WA), Crimes (Offences at Sea) Act 1980 (NSW), Crimes (Offences at Sea) Act 1980 (SA); Criminal Law (Offences at Sea) Act (NT).

[4.120]

4 Consequences of Registration

85

Australian ship which was either on an intrastate voyage, on an interstate or foreign voyage where the last place of call was that State or Territory, and the ship had a sufficient connection with this jurisdiction (for example, through registration or base of operations),39 or at a place in a foreign country provided it again had a sufficient connection with this jurisdiction. Queensland did not enact legislation complementing the Acts on crimes at sea of the other jurisdictions. Instead it simply legislated to make all provisions of the statutory criminal law of Queensland operate on the high seas up to 200 miles from Queensland.40 The complexity of the original crimes at sea legislation led a Special Committee of Solicitors General to devise a simpler scheme which was subsequently approved by the Standing Committee of Attorneys General. This is known as the cooperative scheme for dealing with crimes at sea and is the subject of uniform Crimes at Sea Acts that were enacted by the Commonwealth in 2000 and by the States and the Northern Territory between 1998 and 2001. These Acts repealed the earlier legislation on the subject. Criminal law aboard Australian ships under the present cooperative scheme

[4.120]

Under the uniform Crimes at Sea Acts enacted by the Commonwealth, the States and the Northern Territory,41 the substantive criminal law of each State and of the Northern Territory applies, in short, to its outer limits of the continental shelf as delimited in Sch 1 to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth).42 This law applies for 12 nautical miles from its baseline by force of the law of the State or Territory concerned, and beyond that by force of the law of the Commonwealth.43

Outside this area, the criminal law of the Jervis Bay Territory applies on board an Australian ship by force of the law of the Commonwealth.44 This law also applies to any Australian citizen on a foreign ship other than as a member of the ship’s crew, and to anyone on board a foreign ship if the first country at which the ship calls after the commission of a criminal offence is Australia or one of its external Territories.45 39 On what constitutes a sufficient connection, see s 6(2) of the Crimes at Sea Act 1979 (Cth). 40 Criminal Code (Qld), s 14A. On the effect of this section, see R v Olney [1996] 1 Qd R 187. 41 Crimes at Sea Act 2000 (Cth); Crimes at Sea Act 1998 (NSW); Crimes at Sea Act 1999 (Vic); Crimes at Sea Act 2001 (Qld); Crimes at Sea Act 1998 (SA); Crimes at Sea Act 2000 (WA); Crimes at Sea Act 1999 (Tas); Crimes at Sea Act (NT). 42 See Crimes at Sea Act 2000 (Cth), Sch 1, cl 14. 43 Crimes at Sea Act 2000 (Cth), Sch 1, cl 2(1), (2), with cl 1 (definitions of “baseline”, “inner adjacent area” and “outer adjacent area”). 44 Crimes at Sea Act 2000 (Cth), s 6(1). 45 Crimes at Sea Act 2000 (Cth), s 6(2), (3).

86

Shipping Law

[4.130]

An Australian ship for present purposes is a ship that is registered in Australia, a ship that operates or is controlled from a base in Australia and is not registered in another country, and a Defence Force ship.46 A ship means a vessel or boat of any description and includes a floating structure and a hovercraft and other similar craft.47 Civil law aboard Australian ships

[4.130]

If the civil law of the Commonwealth is designed to have extra-territorial effect, it will operate on board Australian ships on the high seas unless its terms indicate otherwise. Problems arise, however, in respect of the civil law of the States and Territories. It may be assumed (though there is no authority directly on point) that the common law of the States and Territories applies on Australian ships on the high seas to the extent that this law is identical in all Australian jurisdictions. It may accordingly be assumed that an ordinary contract entered into on board an Australian ship between passengers or members of the crew is governed by Australian common law, at least to the extent that the principles of contract law are the same throughout Australia.

Difficulties, however, arise in respect of those areas of civil law which differ from jurisdiction to jurisdiction within Australia, for example the law of defamation. The solution indicated in the Canadian case of Canadian National Steamship Co v Watson48 is that in such circumstances the law applicable on board an Australian ship on the high seas is that of its home port. (That case in fact said port of registry, but these no longer exist in Australia. The home port is the corresponding alternative.49) This conclusion might be implied in statements by the High Court in Union Steamship Co of Australia Ltd v King.50

[4.140]

Law relating to the formalities of marriage

The law relating to the formalities of marriage on board an Australian ship presents a special problem. The Australian law of marriage is ordinarily governed by the Marriage Act 1961 (Cth). This Act, however, makes provision only for marriages solemnised in Australia or by a diplomatic officer in an overseas country.51 It says nothing about marriages performed on the high seas on board a ship (or, for that matter, 46 Crimes at Sea Act 2000 (Cth), s 4 (definition of “Australian ship”). 47 Crimes at Sea Act 2000 (Cth), s 4 (definition of “ship”). 48 Canadian National Steamship Co v Watson [1939] 1 DLR 273. See also Gronlund v Hansen (1969) 4 DLR (3d) 435. 49 See Shipping Registration Act 1981 (Cth), s 80(c). For the meaning of “home port”, see Shipping Registration Regulations 1981 (Cth), regs 2(1), 35. For a list of home ports in 1992, see Marine Notice no 7/1992. 50 Union Steamship Co of Australia Ltd v King (1988) 166 CLR 1 at 14. See also Blunden v Commonwealth (2003) 78 ALJR 236. 51 See Marriage Act 1961 (Cth), ss 23A(1)(a), 40(1), 55.

[4.150]

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over the high seas on board an aircraft). The popular notion that a ship’s captain has power to solemnise marriage is unknown both to Australian and to English law. It seems reasonable to assume that in the absence of any legislative provision on the matter, the common law rules of marriage apply on board an Australian ship on the high seas.52 Persons on board such a ship may accordingly marry simply by an exchange of promises to marry in the present tense, at least if this takes place in the presence of an episcopally-ordained minister.53 Writers on the position under English law (which has the same problem on the applicable law of marriage) concur with the opinion that on board a ship on the high seas the common law rules of marriage apply.54

Right to fly the national colours Entitlement of ships to fly the national colours

[4.150]

All Australian ships are entitled to fly, and in particular circumstances are required to fly, the national colours. Some Australian ships are permitted to fly alternative flags in place of the national colours when they are within Australian waters. The expression “national colours” here signifies the official flag, or official flags, which distinguish a ship as having a particular nationality. Ships which are registered either because they are required to be registered under the Shipping Registration Act or by virtue of being on demise charter to Australian-based operators — these are generally larger Australian commercial vessels — have as their national colours just the Australian red ensign.55 The red ensign is the same as the Australian national flag but has a red instead of a blue background.56

All other Australian ships, whether registered or exempt, have as their national colours both the Australian national flag and the Australian red ensign.57 They may fly either, but they may not fly both together.58 52 See Du Moulin v Druitt (1860) 13 Ir CLR 212; Culling v Culling and Nicholson [1896] P 116; Fisher v Fisher (1929) 165 NE 460. 53 See Hodgson and Wife v Stawell (1856) 1 VLT 51 at 52; R v Byrne (1867) 6 SCR (NSW) 302; Quick v Quick orse O’Connell [1953] VLR 224 at 226-228, 237, 238D, 240-251 (but compare at 237); Kuklycz v Kuklycz (1971) 18 FLR 9 at 12-14. Note, however, In the Marriage of Hooshmand and Ghasmezadegan [2000] FLC 93-044 at 87,684. 54 See P M North and J J Fawcett (eds), Cheshire and North’s Private International Law (11th ed, Butterworths, London, 1987), pp 572-574; J H C Morris (ed), Dicey and Morris on the Conflict of Laws (10th ed, Stevens, London, 1980), p 271. See also J D White, “Marriages at Sea” (1901) 17 LQR 283. 55 Shipping Registration Act, s 30(1)(a), with s 3(1) (definition of “red ensign”). 56 Flags Act 1953 (Cth), s 4, Sch 1. 57 Shipping Registration Act, s 30(1)(b), with s 3(1) (definition of “national flag” and “red ensign”). 58 See s 30(6).

88

Shipping Law

[4.160]

An unregistered ship which is not exempt from registration has no national colours.59 It is, indeed, an offence for a person to use or to permit anyone to use either the national flag or the red ensign in connection with an unregistered ship which is required to be registered.60

[4.160]

Right to fly alternative flags

Certain Australian ships are permitted to fly other flags in place of the national flag or the red ensign when they are within Australian waters. By “Australian waters” here is meant the territorial sea of Australia and any marine or tidal waters that are on the landward side of any part of that sea.61 The ships concerned are those which are entitled to fly either a particular flag under a warrant granted by the Governor-General,62 the flag of a State or Territory,63 or the British blue ensign (either with or without defacement) by virtue of a British Admiralty warrant or a Royal Warrant.64 The British blue ensign is a flag similar to the Australian national flag, but without the stars. Before the commencement of the Shipping Registration Act in 1982, approximately 400 yacht owners of some 16 Australian yacht clubs had been granted a warrant to fly the blue ensign. The Act preserves the right of the existing holders of these warrants to fly the blue ensign instead of the national flag or the red ensign, but only within Australian waters. A ship which is entitled to fly a particular flag in place of the national colours may fly it only as an alternative to, and not together with, the national flag or red ensign.65 A ship may not fly any such alternative flag outside Australian waters.66

[4.170]

Certificate of entitlement to fly the national colours

The owner or operator of an unregistered ship that is not required to be registered and that is entitled to fly either the national flag or the red ensign may apply to the Registrar of Ships for a certificate stating that the ship is entitled to fly either of these flags.67 The entitlement to fly either of these flags is not, however, dependent upon the possession of such a certificate.

59 Sections 30(1), 63(1)(a). 60 Section 30(8), (9). 61 Section 30(12). 62 Section 30(5)(b)(i). 63 Section 30(5)(b)(ii). 64 Section 30(4). The right to fly the blue ensign continues only for so long as British law so allows: s 30(4)(c). 65 See s 30(6). 66 See s 30(7). 67 Section 30(10).

[4.210]

[4.180]

4 Consequences of Registration

89

Flag as evidence of nationality

The flag of a ship is regarded by both Australian and English courts as prima facie evidence of the ship’s nationality.68 Obligation to fly national colours at particular times

[4.190]

Ships which have as their national colours only the Australian red ensign (generally larger Australian commercial vessels) are required to fly this flag in two situations. The first is when they are entering, leaving, or under way in any port, whether in Australia or overseas, during daylight.69 The second is when they are berthed or at anchor in any port, again whether in Australia or overseas, between 8 am and sunset.70 All other registered ships are required to fly their national colours — that is, either the national flag or the red ensign — only when entering, leaving, or under way in any foreign port during daylight.71 Unregistered ships are not required to fly their national colours in Australian waters at any time. (An unregistered ship must not be outside Australian waters as registration is required for a ship to travel to a place outside Australia.72) Apart from the times when Australian ships are required to fly national colours, they may fly their colours whenever they wish.73 Position at which national colours to be flown

[4.200]

The national colours must be flown at the stern of the ship, or as near as practicable to the stern.74 If a ship has no stern, the national colours must be flown in the position approved by the Registrar of Ships.75

National colours and international law

[4.210]

Under public international law, the right of a ship to sail on the open seas is dependent upon its right to fly the national colours of a recognised country. As the Judicial Committee of the Privy Council observed in Naim Molvan, Owner of Motor Vessel Asya v Attorney-General for

68 R v Ross (1854) 2 Legge 857 at 863; R v Harvey (1869) 8 SCR (NSW) 340; R v Sven Seberg (1870) LR l CCR 264; R v Clark; Ex parte Doyle (1879) 5 VLR (L) 440. See also Bell v Mansfield (1893) 19 VLR 165 at 177-178. Compare Leary v Lloyd (1860) 3 El & El 198; 121 ER 409. 69 Regulation 22(1)(a), with s 30(2)(a), (3). 70 Regulation 22(1)(b), with s 30(2)(a), (3). 71 Regulation 22(2), with s 30(2). 72 Section 68(1). 73 See in respect of ships outside Australian waters, s 30(2). 74 Regulation 22(3)(a). 75 Regulation 22(3)(b).

90

Shipping Law

[4.220]

Palestine,76 “The freedom of the open sea, whatever those words may connote, is a freedom of ships which fly, and are entitled to fly, the flag of a State which is within the comity of nations”. There is, however, no obligation on a ship to fly its national colours whilst sailing on the open seas, though almost all do so. In order to maintain the safety of the open seas against piracy, armed navy ships of any nation are entitled under international law to require any suspicious-looking merchant vessel to show its colours. The vessel may also be boarded and its papers inspected to confirm its right to fly those colours. An armed navy ship may arrest any merchant vessel which is sailing under the flag of any country without authority.77

CONFERMENT OF TITLE IN CERTAIN CIRCUMSTANCES [4.220]

Registration does not normally confer title to a ship; registration normally involves simply the recording of existing title. The entry of a person’s name in the relevant Shipping Register as the owner of a ship or share in a ship does, however, confer title where this person is a bona fide purchaser for value from the registered owner of the ship or share. This matter is considered in detail in Chapter 5.

Except in the case of a bona fide purchaser for value without notice from a registered owner, the registration of ships is thus unlike the registration of land in Australia under the Torrens system in that it concerns simply the registration of title, and not title by registration.78 The fact that a ship is registered in the name of a particular person may, however, serve as evidence that he or she is the owner (or a part owner) of the ship. The Act and Regulations indeed provide that a registration certificate, provisional registration certificate and a temporary pass are prima facie evidence of any matter stated in these documents.79

LIBERTY TO TRAVEL OVERSEAS [4.230]

Registration is required in order for any ship which is entitled to be registered80 to travel overseas. This is so even if the ship is otherwise exempt from registration. The requirement of registration for travel overseas follows from two provisions in the Shipping Registration Act. The first is in s 68(1). This prohibits an unregistered ship that is entitled to be registered81 from

76 Naim Molvan, Owner of Motor Vessel Asya v Attorney-General for Palestine [1948] AC 351 at 369. 77 See H Lauterpacht (ed), Oppenheim’s International Law (8th ed, Longman, London, 1955), pp 604-606. 78 See General Credits (Finance) Pty Ltd v Registrar of Ships (1982) 61 FLR 329 at 333, 335. 79 Section 77(1); reg 34. 80 That is, which is either required to be registered or permitted to be registered: s 3(4). 81 See s 3(1) (definition of “unregistered ship”).

[4.250]

4 Consequences of Registration

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departing from an Australian port to a place outside Australia. The second is in s 69(1). This prohibits an unregistered ship which is entitled to be registered82 from departing from a foreign port at which there is an Australian diplomatic or consular official83 until a registration certificate or a provisional registration certificate has been granted. The latter provision principally concerns ships which become registrable only whilst they are overseas (for example, through change of ownership). An Australian diplomatic or consular official at a foreign port is empowered to grant a provisional registration certificate to ships located at that port.84 There is no express reference in s 68(1) (as there is in s 69(1)) to a ship being entitled to travel overseas with only a provisional registration certificate. It is nonetheless clear from amendments made to the Act in 1984 that a ship may properly leave Australia with a provisional certificate, not least because such a ship is deemed to be registered.85 Section 68 does not apply to small craft operated by Torres Strait Islanders, to ships propelled only by means of oars or to ships on demise charter to an Australian-based operator.86 It is an offence for the master or owner of a ship to contravene s 68 or s 69.87 These are offences of strict liability.88

LIMITATION ON METHOD OF TRANSFER [4.240]

A registered ship, or a share in a registered ship, can be transferred only by a bill of sale made in accordance with the regulations under the Shipping Registration Act. This matter is considered in detail in Chapter 6.

A SPURIOUS CONSEQUENCE OF REGISTRATION: THE “RIGHT” TO NAVAL PROTECTION [4.250]

In 1987, during the course of the military conflict between Iran and Iraq known as the Gulf War, some Kuwaiti ships gave up their existing registration in favour of registration in the United States for the purpose of obtaining protection from the United States Navy in the Persian Gulf. This gave the general impression that ships registered in a particular country have a right under public international law to protection from the navy of that country. No such right is known to international law. Under international law, the navy of any country has the right to protect any ship, whether or not

82 See s 3(1) (definition of “unregistered ship”). 83 See s 3(1) (definition of “proper officer”). 84 See s 22(1). 85 See s 22A(2), (3), (7). 86 Section 68(4); reg 33A. 87 Sections 68(2), 69(2). 88 Sections 68(2A), 69(2A).

92

Shipping Law

[4.250]

registered in that country. It also has the right not to afford such protection to any ship, including a domestically registered ship, if the navy’s government so decides. That said, as a matter of practice a country’s navy usually affords protection to its registered ships. The Shipping Registration Act appears to indicate this in s 63(1)(b), which states that if a ship is required to be registered but is not registered, it is “not entitled to any … protection usually enjoyed by a registered ship”.

5

Property, Ownership and Title [5.10] PROPERTY IN SHIPS ........................................................................................ 94

[5.10] Ship as personal property .................................................................. 94 [5.20] Shares in a registered ship ................................................................. 94 [5.40] OWNERSHIP OF SHIPS ................................................................................... 96

[5.40] Ordinary rules concerning ownership of ships .............................. 96 [5.80] Statutory provisions on owner of ships .......................................... 98 [5.130] Relationship between co-owners of a ship ................................... 99 [5.140] Management of a ship by co-owners ........................................... 100 [5.150] EQUITABLE INTERESTS IN REGISTERED SHIPS ................................. 101

[5.150] Recognition of equitable interests ................................................. 101 [5.160] Equitable interests and registration .............................................. 101 [5.180] REGISTRATION OF OWNERSHIP AND TITLE TO PROPERTY IN SHIPS ................................................................................................................ 102

[5.180] Statutory provisions on registration and title ............................. 102 [5.190] Relationship between registration and title ................................ 103 [5.200] Consideration of the law on registration and title .................... 105 [5.220] Registration of ownership as evidence of title ........................... 108 [5.230] CAVEATS ......................................................................................................... 108

[5.230] Caveats and caveatable interests ................................................... 108 [5.260] Procedure ........................................................................................... 109 [5.270] Effect of a caveat .............................................................................. 109 [5.290] Cessation of caveat .......................................................................... 110 [5.300] Postscript: caveat against arrest or release of ships .................. 110

94

Shipping Law

[5.10]

PROPERTY IN SHIPS Ship as personal property [5.10]

Notwithstanding some judicial references to a ship as a “floating island”,1 a ship is always an article of personal property.2 Subject to the rules that are considered in this chapter and at [6.60], a ship is treated in law no differently from any other item of personal property. Unless statute provides otherwise, a ship is accordingly subject to the provisions of sale of goods and related legislation.3

Shares in a registered ship [5.20]

For the purpose of the registration of a ship under the Shipping Registration Act 1981 (Cth), the property in a ship is divided into 64 shares.4 The Act here follows the British scheme that was first established by statute by the Registration of Vessels Act 1823 (ENG),5 though this simply formalised the existing practice.6 No person can be registered as owning a fractional part of a share in a ship.7 Accordingly, the maximum number of persons that can be registered as the sole owners of the shares in a ship at any one time is 64.8 More than one person can, however, be a joint owner of shares in a ship. The Shipping Registration Act permits up to five persons to be registered as the joint owners of either the entire ship itself or of any one or more shares in the ship.9 Where individual shares in a ship are jointly owned, the joint owners are treated as constituting one person for the purposes of the registration of the ship.10 Where, however, the entire ship itself is

1 Forbes v Cochrane (1824) 2 B & C 448; 107 ER 450 at 464; 456; R v Anderson (1868) LR 1 CCR 161 at 168. 2 Shipping Registration Act 1981 (Cth), ss 29(2), 47; Liverpool Borough Bank v Turner (1860) 29 LJ Ch 827 at 829; Behnke v Bede Shipping Co Ltd [1927] 1 KB 649 at 659; Tisand Pty Ltd v Ship MV Cape Moreton (Ex parte Freya) (2005) 143 FCR 43 at 76. 3 Behnke v Bede Shipping Co Ltd [1927] 1 KB 649; Lloyd del Pacifico v Board of Trade (1930) 35 Ll L Rep 217; McDougall v Aeromarine of Emsworth Ltd [1958] 1 WLR 1126 at 1129; Devine Shipping Pty Ltd v BP Melbourne (1994) 3 Tas R 456 at 465-466. 4 Section 11(1)(a). 5 4 Geo IV, c 41, s 30. 6 On the history of this feature of ships, see H Alexander, “The Ownership of Ships in 64 Shares” in M White and A Rahemtula (eds), Table Talk of the Selden Society in Queensland (Queensland Supreme Court Library, Brisbane, 2004). 7 Section 11(1)(e). 8 See s 11(1)(b). There is a proviso in this paragraph which allows for the possibility of more than 64 persons being registered as sole owners of shares as a result of transmission under s 37. It is difficult to see how this could ever occur. 9 Section 11(1)(c). 10 Section 11(2).

[5.30]

5 Property, Ownership and Title

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jointly owned (in other words, where all 64 shares in a ship are jointly owned), the joint owners are treated as separate persons for the purposes of registration.11 Although the maximum number of persons that can be registered as the sole owners of the shares in a ship is 64 and the maximum number of persons that can be registered as the joint owners of a ship or of any share in a ship is five, any number of persons can have a beneficial interest in a ship by virtue of a claim under or through a registered owner or joint owner.12 A company or corporation can own a share in a ship in the same way as a natural person. Such an entity is registered as owner by its corporate name.13

[5.30]

Types of joint ownership of shares for the purpose of registration

Section 11(1)(c) of the Shipping Registration Act provides that for the purpose of registration, up to five shares in a ship may be jointly owned. Particularly, para 11(1)(c) states: “Any number of persons not exceeding 5 may be registered as joint owners of the ship or of a share or shares in the ship”. Joint ownership strictly implies that all co-owners have an equal interest in the property concerned, as opposed to ownership in common where the co-owners may have unequal interests. Under the British Merchant Shipping Act 1894 (from which the Australian provision derives), joint ownership of shares in a registered ship could involve either joint ownership in the strict sense, or ownership in common.14 It would thus seem reasonable to conclude that joint ownership of shares registered under the Shipping Registration Act can also be of either kind. This conclusion is supported by reg 24(1) of the Shipping Registration Regulations 1981 (Cth), which distinguishes between a joint owner and an owner in common of a registered ship or a share in a registered ship for the purposes of the evidence that must be lodged with the Registrar of Ships upon the transmission of such property upon the owner’s death. There is, however, a ground for rejecting the conclusion that for the purposes of registration “joint ownership” of shares can include ownership in common. This concerns s 8(1) of the Act. This subsection draws a clear distinction between joint ownership of a ship as a whole (as opposed simply to shares in a ship), and ownership of a ship in common. The implication from this might be that the references in s 11 of the Act to joint ownership of shares in a ship means joint ownership in the strict sense. 11 Note that s 11(2) does not concern joint ownership of the ship itself. 12 Section 11(1)(b). For the definition of “beneficial interest”, see s 3(1). 13 Section 11(1)(f). 14 See M Thomas and D Steel, Temperley: The Merchant Shipping Acts (7th ed, Stevens & Sons Ltd, London, 1976), p 8.

96

Shipping Law

[5.40]

This would not, of course, preclude equitable ownership in common of shares in a ship, for the registration provisions are not concerned with equitable interests in ships.15

OWNERSHIP OF SHIPS Ordinary rules concerning ownership of ships [5.40]

As a general rule, ownership of any ship or share in a ship is determined by the law relating to the acquisition, transfer and transmission of ships and shares in ships. These topics are considered in detail in Chapter 6. It is sufficient here simply to observe that the ownership of a ship or share in a ship does not depend upon registration under the Shipping Registration Act, even if the ship is able to be registered or is required to be registered. Indeed, in one respect the contrary is true, for the obligation and entitlement to register a ship under this Act depends upon the ownership of the ship anterior to registration.16 This matter is considered further at [5.180]–[5.190]. Separate from the meaning of “ownership” is the term “owner”. The latter depends for its meaning on the context in which it is used. The term “owner” might signify the legal owner of property, it might mean the beneficial owner, or it might mean the person who enjoys both.

[5.50]

“Owner” of a ship under demise charter

There is substantial judicial authority for the proposition that a ship under a demise charter — that is, which is leased with full possession and control to a third party17 — is ordinarily regarded as owned for the time being by the charterer and not by those in whom the property in the ship is otherwise vested.18 It is immaterial for the purposes of this rule whether the subject of the demise charterparty is simply the ship itself (a “bareboat charter”), or the ship along with its master and crew.19 What is required is that the charterer has possession and control of the ship. In 15 See s 46. 16 See ss 12(1), (2), 14. 17 Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181 at 192; Patrick Stevedores No 2 Pty Ltd v The Turakina (1998) 154 ALR 666 at 671. See also s 3(1) (definition of “demise charter”). 18 Frazer v Marsh (1811) 13 East 238; 104 ER 362 at 239-240 (East); Colvin v Newberry and Benson (1832) 1 Cl & Fin 283; 6 ER 923 at 297; 929; Melhuish v Miller (1865) 3 WW & A’B (E) 61 at 71; Sandeman v Scurr (1866) LR 2 QB 86 at 96; Sir John Jackson Ltd v Owners of the Steamship Blanche [1908] AC 126 esp at 132-133; Medway Drydock & Engineering Co Ltd v MV Andrea Ursula; The Andrea Ursula [1973] QB 265 at 269-270; The Giuseppe di Vittorio [1998] 1 Lloyd’s Rep 136 at 159. See also McIlwraith McEacharn Ltd v Shell Co of Australia Ltd (1945) 70 CLR 175 at 194, 199, 212-216, 217-218; Navigation Act 1912 (Cth), s 6(4). For consideration of the relevance of some of these authorities, see Comandate Marine Corporation v Ship Boomerang I (2006) 151 FCR 403 at 405. 19 Colvin v Newberry and Benson (1832) 1 Cl & Fin 283; 6 ER 923 at 297; 929; Sandeman v Scurr (1866) LR 2 QB 86 at 96.

[5.70]

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Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd,20 the Full Court of the Federal Court approved the following definition of a demise charter:21 The essence of a demise charter is that the owners confer on the charterer, for a term, sufficient of their rights to give the charterer possession and control of the ship, including the right to employ and direct the master and crew, so as to place the charterer in the same position, for the duration of the term, as the owners would have had to possess and control the ship, her master and crew.

This rule does not apply where legislation or the context indicates otherwise. Thus, it does not apply for the purposes of registration, for the Shipping Registration Act makes a clear distinction between the owners of a ship in the sense of those in whom title is vested, and demise charterers.22 Nor does it apply for the purposes of the Admiralty Act 1988 (Cth), which distinguishes between the “owner”, “charterer” and “demise charterer” of a ship.23 The meaning of the term “owner” in these contexts is considered at [5.90]–[5.100]. A demise charterer is also not regarded as the owner of a ship where the term “owner” in context signifies the beneficial owner of a ship.24

[5.60]

“Owner” of a registered ship in the possession of mortgagee

Prior to 2012, when a mortgage of a registered ship could be registered under the Shipping Registration Act — and still today in jurisdictions that follow the model of registered mortgages established under English shipping legislation — the “owner” of a ship that was subject to a registered mortgage was either the mortgagor or the mortgagee, depending on who was in possession of the ship. Upon the mortgagee under a registered mortgage taking possession of the property, the mortgagor lost all incidents of ownership of the ship or share. The mortgagee was then treated as the owner of the ship or share.25

[5.70]

“Owner” of a requisitioned vessel

The “owner” of a requisitioned vessel is its true owner, and not the requisitioning State.26 20 Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369. 21 Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369 at 386, following The Giuseppe di Vittorio [1998] 1 Lloyd’s Rep 136 at 156-157. See generally at 386-390. 22 See the implication of ss 12(2), 14(a), (d). 23 See Admiralty Act 1988 (Cth), ss 17, 18, 19; Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181. 24 See I Congreso del Partido [1978] QB 500 at 539; The Father Thames [1979] 2 Lloyd’s Rep 364 at 366-367; Kent v SS Maria Luisa [2002] FCA 1207 at [32]. 25 Keith and Wyllie v Burrows and Perks (1877) 2 App Cas 636 at 645-646. Compare The Neptune (1824) 3 Hagg Adm 129; 166 ER 354 at 133; 355. 26 The Meandros [1925] P 61 at 68.

98

Shipping Law

[5.80]

Statutory provisions on owner of ships [5.80]

Some shipping law statutes contain a statutory definition of an owner of a ship. Although some of these definitions say very little, others include persons who would not ordinarily be regarded as the owner of a ship.

[5.90]

“Owner” of a ship under the Shipping Registration Act

There are three provisions in the Shipping Registration Act concerning the meaning of the term “owner”. The first is in s 3(1). This provides that except in certain specified sections, “owner” means a person registered as owner in accordance with the regulations. The second is in s 3(2). This provides (doubtless out of an abundance of caution) that unless the contrary intention appears, if there is more than one owner of a ship, a reference in the Act to a ship’s owner is to be read as a reference to each of the owners. The third provision is in s 62. This provides, in short, that in Pt VI (“Miscellaneous”) of the Act, the “owner” of a registered ship on demise charter to an Australian-based operator is the ship’s registered agent.

[5.100]

“Owner” of a ship under the Admiralty Act 1988

The term “owner” has most often arisen for consideration in the context of ss 17 and 19 of the Admiralty Act 1988 (Cth). These set out conditions under which proceedings in rem may be instituted under this Act. These sections require that two conditions be satisfied. First, the person liable on the claim27 must have been the owner, charterer or person in possession or control of a ship or property when the cause of action arose, and secondly, this person must also be owner of the ship or property at the time the proceedings are commenced. The question that has particularly arisen here is whether a demise charterer — that is, a charterer with full control of the ship28 — may properly be considered to be the owner of a ship for the purpose of the second requirement (as older judicial authorities would suggest29). 27 See Owners of MV Iran Amanat v KMP Coastal Oil Pte Ltd (1999) 196 CLR 130. 28 See Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181 at 192; Patrick Stevedores No 2 Pty Ltd v The Turakina (1998) 154 ALR 666 at 671; Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369. See also s 3(1) (definition of “demise charter”). 29 See Frazer v Marsh (1811) 13 East 238; 104 ER 362 at 239-240 (East); Colvin v Newberry and Benson (1832) 1 Cl & Fin 283; 6 ER 923 at 297; 929; Melhuish v Miller (1865) 3 WW & A’B (E) 61 at 71; Sandeman v Scurr (1866) LR 2 QB 86 at 96; Sir John Jackson Ltd v Owners of the Steamship Blanche [1908] AC 126 esp at 132-133; Medway Drydock & Engineering Co Ltd v MV Andrea Ursula; The Andrea Ursula [1973] QB 265 at 269-270; The Giuseppe di Vittorio [1998] 1 Lloyd’s Rep 136 at 159. See also McIlwraith McEacharn Ltd v Shell Co of Australia Ltd (1945) 70 CLR 175 at 194, 199, 212-216, 217-218; Navigation Act 1912 (Cth), s 6(4). For consideration of the relevance of some of these authorities, see Comandate Marine Corporation v Ship Boomerang I (2006) 151 FCR 403 at 405.

[5.130]

5 Property, Ownership and Title

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It is now settled that the term “owner” in ss 17 and 19 (and also s 18) does not include a demise charterer.30 In the absence of evidence to the contrary, the person whose name is entered as the owner of a ship that is registered under the Shipping Registration Act is to be regarded as the owner of the ship.31 However, the owner of a ship that is registered in a foreign register is not necessarily the registered owner. The owner there is the person who has a proprietary interest in the ship; that is, the person who has the right to possession of the ship and the right to dispose of it.32

[5.110]

“Owner” of a ship under the Navigation Act 2012

Section 14(1) of the Navigation Act 2012 (Cth) provides that the owner of a vessel is either a person who has a legal or beneficial interest in the vessel other than as a mortgagee, a person who has overall general control and management of the vessel other than as the master or pilot of the vessel, a person who has assumed responsibility for the vessel from one of the foregoing persons, or any of them.

[5.120]

Owner of a vessel under State legislation

The Marine Act or related legislation of all States contains a definition of “owner”. The definition varies from jurisdiction to jurisdiction.33 It generally includes a charterer and any person who exercises the functions of the owner of a vessel. The Northern Territory’s Marine Act has no definition of an owner.

Relationship between co-owners of a ship [5.130]

As between themselves, and in the absence of any statutory provision on point, the co-owners of a ship are ordinarily tenants in common, and not joint tenants.34 The co-owners of a ship may nonetheless hold their interest as joint tenants if they so choose.35 In this case, each co-owner has an equal interest in the ship, and the right of

30 Kent v SS Maria Luisa (No 1) (2002) 130 FCR 1 at 9; Comandate Marine Corporation v Ship Boomerang I (2006) 151 FCR 403 at 405, 411. 31 Kent v SS Maria Luisa (No 1) (2002) 130 FCR 1 at 9. 32 Tisand Pty Ltd v Owners of Ship MV Cape Moreton (Ex parte Freya) (2005) 143 FCR 43 at 65-73. 33 Marine Safety Act 1998 (NSW), s 7; Marine Safety Act 2010 (Vic), s 3(1); Transport Operations (Marine Safety) Act 1994 (Qld), s 9; Harbors and Navigation Act 1993 (SA), s 4(1); Western Australian Marine Act 1982 (WA), s 3(1); Marine and Safety Authority Act 1997 (Tas), s 3. 34 R v Collector of Customs at Liverpool (1813) 2 M & S 224; 105 ER 366; Ex parte Young (1813) 2 V & B 242; 35 ER 311; Ex parte Leslie; Re Drury and Hudson (1833) 3 LJ Bcy 4 at 5; Green v Briggs (1848) 6 Hare 395; 67 ER 1219 esp at 408; 1225. 35 Ex parte Leslie; Re Drury and Hudson (1833) 3 LJ Bcy 4 at 5.

100

Shipping Law

[5.140]

survivorship applies upon the death of one of the co-owners in the same way as it does in respect of joint tenants of real property.36 Co-owners of a ship are not, by virtue of this fact alone, partners.37 They are partners only if they have agreed to carry on a business together.38 This now well-established fact is unexceptional, for the fact that two or more persons together own a ship does not necessarily mean that they intend to run a business enterprise together with this property. One natural consequence of the ordinary relationship between co-owners of a ship is that one co-owner has no authority to bind any other co-owner without his or her authority.39 This is so even in respect of repairs to a ship or any other necessary expenses.40 It may also be observed in this connection that the registered owner of a ship or share in a ship is not without more the agent of any beneficial owner of this ship or share.41

Management of a ship by co-owners [5.140]

Unless there is an agreement to the contrary between the owners of shares in a ship, the control and management of a ship lies with the will of the majority of shareholders.42 In this regard, the law is different from that concerning the control and management of chattels generally.43 In voting upon the management of a ship, co-owners of individual shares in a ship have together just one vote.44

Where shares in a ship are owned by a number of separate persons, the day-to-day management of the ship is usually consigned to a managing agent. The old term for a ship’s managing agent was the ship’s managing owner if he or she was also a part owner of the ship, and the ship’s husband if he or she was not. Both of those appellations are now obsolete. 36 See C Butler (ed), Coke upon Littleton (19th ed, J & W T Clarke, London, 1832), pp 181a-182a. 37 Helme v Smith (1831) 7 Bing 709; 131 ER 274 at 713; 276; Brodie v Howard (1855) 17 CB 109; 139 ER 1010 esp at 117-118, 120, 122 (CB); 1013, 1014-1015 (ER); The Spirit of the Ocean (1865) 12 LT 239; Frazer & Co v Cuthbertson (1880) 6 QBD 93 at 97. 38 On the relationship between co-owners of a ship and partners, see The Pongola (1895) 8 Asp MLC 89. 39 Brodie v Howard (1855) 17 CB 109; 139 ER 1010 at 118; 1013; Frazer & Co v Cuthbertson (1880) 6 QBD 93 at 98. 40 Chappell v Bray (1860) 6 H & N 145; 158 ER 60 at 149; 62; Frazer & Co v Cuthbertson (1880) 6 QBD 93 at 97. 41 Burgis v Constantine [1908] 2 KB 484 at 500, 501. 42 The Margaret (1829) 2 Hag Adm 275; 166 ER 244 at 276; 245; Japp v Campbell (1887) 57 LJQB 79 at 81. On the respective rights and powers of majority and minority shareholders, see Halsbury’s Laws of England (4th ed, Butterworths, London, 1984), Vol 43, pp 93-94, paras 127-128. 43 See J P Aspinall, B Aspinall, H S Moore (eds), Abbott’s Law of Merchant Ships and Seamen (14th ed, Shaw & Sons, London, 1901), Vol 1, p 117. 44 Note the related provision in the Shipping Registration Act 1981 (Cth), s 11(2).

[5.160]

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Many ships today are owned by a single company, with investors having shares in the company rather than in the ship itself. The control and management of the ship then lies with the directors of the company in accordance with the company’s constitution.

EQUITABLE INTERESTS IN REGISTERED SHIPS Recognition of equitable interests [5.150]

Equitable interests can exist in a registered ship as in any other chattel. In this regard, a registered ship is no different from any other item of personal property. A trust can accordingly arise in respect of a registered ship in precisely the same way as it can arise in respect of other property. Similarly, presumptions of the existence of a trust can arise in respect of a registered ship in the same way as with other property.45

There are no statutory restrictions on equitable interests in registered ships. This is confirmed by the provisions of s 11(1)(b) of the Shipping Registration Act. This limits the number of persons who can be registered as the sole owners of a ship at any time to 64, but adds that “nothing in this paragraph affects the beneficial interests of any number of persons or of a body corporate represented by or claiming under or through a registered owner (including a registered joint owner)”. By s 3(1), beneficial interests include interests arising under contract and other equitable interests. Accordingly, it is clear that any number of people may have an equitable interest in a registered ship notwithstanding the statutory limit on the number of persons who can be registered as the owners of a ship.

Equitable interests and registration [5.160]

Although there are no statutory restrictions on the equitable interests that can exist in a registered ship, there are restrictions on the entry of information concerning these interests in the relevant Shipping Register. There is an implied general restriction on the entry of such information by virtue of the fact that there is no provision for details of any equitable interest to be entered in the relevant Register.46 More importantly, there is a specific restriction in s 46 of the Shipping Registration Act. This states that no notice of any trust, whether express, implied or constructive, may be entered in the relevant Register or may be received by the Registrar. This means that the Register cannot indicate whether any person named as the owner of a ship or a share enjoys the sole beneficial interest in this property, or whether he or she holds this property in trust for someone else.

45 See eg The Venture [1908] P 218 at 229-230 (presumption of a resulting trust arises where one person advances money to another for the purchase of a ship). 46 See Shipping Registration Regulations, reg 11(1).

102

Shipping Law

[5.170]

[5.170]

Limits of section 46

The object of s 46 of the Shipping Registration Act is simply to prohibit notice of any trust from appearing in either of the Shipping Registers. This section does not prohibit the recognition of equitable interests in registered ships. This is made quite clear by s 47, which states that beneficial interests in ships may be enforced by or against the owner or mortgagee of a ship or of a share in a ship in the same manner as in respect of any other personal property. A court may thus always look behind a Register and give effect to any equitable interests that a person might have in a registered ship.47

REGISTRATION OF OWNERSHIP AND TITLE TO PROPERTY IN SHIPS Statutory provisions on registration and title [5.180]

The Shipping Registration Act does not specify any legal consequence as flowing from the entry in either Shipping Register of a person’s name as that of the owner of a ship or of a share in a ship.48 The Act is thus not specifically concerned with the relationship between the entry of a person’s name as that of the owner of a ship or share, and his or her title to this property. The Act does, however, contain four provisions which indicate a relationship, either positive or negative, between the entry of a person’s name as that of the owner of a ship or of a share in a ship (what may loosely be termed “registration of ownership”49) and title to this property, at least upon the transfer or transmission of the ship or share. The first is in s 36(1). This requires a registered ship or a share in a registered ship to be transferred by a bill of sale made in accordance with the regulations. The second and third are in ss 36(2) and 37(1). These require a person who becomes an owner of a registered ship or a share in a registered ship, whether by transfer or transmission, to take steps to have his or her name entered as owner in the relevant Shipping Register. The clear implication of these three provisions is that property passes prior to, and without need for, registration of ownership. The fourth provision is in s 36(5). This requires that bills of sale for the transfer of any registered ship or share in a registered ship be registered 47 Stapleton v Haymen (1864) 2 H & C 918; 159 ER 380 at 924-925; 383; The Innisfallen (1866) LR 1 A & E 72 at 76; The Jane (1870) 23 LT 791; Batthyany v Bouch (1881) 50 LJQB 421 at 424. 48 Note, however, s 77(1), with reg 34, which creates a rebuttable presumption inter alia that the person named as the owner of a ship or share in a registration certificate, provisional registration certificate or temporary pass is in fact the owner. 49 Strictly, only a ship and a bill of sale transferring property in a ship are registered: see ss 15E, 36(2A). The name of an owner of property in a ship (including the name of a new owner upon a transfer or transmission) is technically only entered in the relevant Shipping Register: see ss 36(2A), 37(1A).

[5.190]

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in order of lodgment with the Registrar. The implication of this is that registration affects priorities in respect of persons claiming competing interests in registered ships. The provisions which have just been noted derive from British provisions of a similar kind. The British provisions were briefly considered by the Court of Appeal in Union Bank of London v Lenanton.50 There Bramwell LJ said, concerning the effect of non-registration of a bill of sale for the transfer of a ship: “I incline to think that the consequence of not producing the transfer [for registration] is that a subsequent transferor or incumbrancer takes precedence — whoever gets first on the register takes precedence”.51 There was no suggestion by any member of the Court of Appeal that non-registration of a bill of sale otherwise affects the transferee’s title. There is, however, one further statutory provision that should be observed in this connection. This is in s 45. This states that “The owner of a [registered52] ship or of a share in a [registered] ship has power … absolutely to dispose of the ship or share and to give effectual receipts in respect of the disposal”. According to a 19th century case on the corresponding English provision, the purpose of this section is “to give evidence of title by the name of the owner appearing upon the Register”.53 From this it would appear that s 45 is concerned with evidence of title upon registration, and not — or not merely — with powers of ownership. In the modern Australian case of Ontario Ltd v Commissioner of Stamps,54 however, Bollen J adopted a somewhat different interpretation of s 45 and intimated that this section is not concerned with evidence of title. He said: “It takes the situation of title having passed and registration having been achieved. From that situation it says that he who has registered may dispose.”55

Relationship between registration and title [5.190]

The present law concerning the relationship between the entry of the name of a person in the relevant Shipping Register as being that of the owner of a ship or share in a ship, and this person’s title to this property, may be summarised in three rules. The first is that entry of a person’s name in the relevant Shipping Register as being the owner of a

50 Union Bank of London v Lenanton (1878) 3 CPD 243. 51 Union Bank of London v Lenanton (1878) 3 CPD 243 at 248. 52 See s 34. 53 The Horlock (1877) 2 PD 243 at 249-250. See also Burgis v Constantine [1908] 2 KB 484 at 496, 498, 501-503. 54 Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274. 55 Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274 at 281.

104

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[5.190]

ship or share at the time of the ship’s registration neither confers nor confirms title.56 There is no exception to this rule. The second rule is that title to a registered ship ordinarily passes upon the execution of a bill of sale or upon transmission, and not upon the entry of the name of the new owner in the relevant Register.57 As has already been observed, this is clearly implied by ss 36(1), (2) and 37(1) of the Shipping Registration Act.58 The name stated in a Register as being that of the owner of a ship or share ship might thus be wrong, for the bill of sale might be invalid,59 or title might since have passed to someone else. A person may accordingly make a mistake if he or she treats the individual named in the Register as the owner of a ship or share as the true owner of this property.60 A further consequence of the second rule is that the entry of a person’s name in the relevant Register as being that of the owner of a ship or share does not, without more, guarantee title. Entry of ownership in the relevant Register ordinarily involves just the registration of existing title, and not title by registration. As Dr Lushington said in The Spirit of the Ocean,61 “Registration is but the record of a fact done — a record of the sale, not the sale itself”.62 The registration of ownership of ships is to this extent quite different from the registration of ownership of land under the Torrens system.63 The second rule is, however, subject to the third. This is that the entry of a person’s name in the relevant Register as that of the owner of a ship or share in a ship will always give this person good title if he or she is a bona fide purchaser for value from the person last named in the Register as the owner of the property.64 It is immaterial in such circumstances that the person last named in the Register as the owner does not have good 56 Bray v Macdonald (1867) 1 SALR 20. See also Household Financial Services Ltd v Island and River Trading Pty Ltd [1994] ACL Rep 295 NSW 10. 57 Stapleton v Haymen (1864) 2 H & C 918; 159 ER 380 at 925; 383; The Spirit of the Ocean (1865) 12 LT 239 at 240; The Two Ellens (1871) LR 3 A & E 345 at 355; Kali Boat Building & Repairs Pty Ltd v Motor Fishing Vessel Bosna (1977) 19 SASR 112 at 115. See also Reid and Stewart v Fairbanks, Allison and Allison (1853) 13 CB 692; 138 ER 1371 at 731; 1388; The Jane (1870) 23 LT 791 at 792; Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274 at 281. 58 See Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274 at 281. 59 See Orr v Dickinson (1859) Johns 5; 70 ER 315 at 12-13; 319-320. 60 See Young v Brander and Dunbar (1806) 8 East 10; 103 ER 248 at 11-12; 249; M’Iver v Humble, Holland & Williams (1812) 16 East 169; 104 ER 1053 at 176; 1055. 61 The Spirit of the Ocean (1865) 12 LT 239. 62 The Spirit of the Ocean (1865) 12 LT 239 at 240. See also Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274 at 281; Advertising Department Pty Ltd v Ship MV Port Phillip (2004) 141 FCR 251 at 260. 63 General Credits (Finance) Pty Ltd v Registrar of Ships (1982) 61 FLR 329 at 333, 335. 64 Stapleton v Haymen (1864) 2 H & C 918; 159 ER 380 at 925; 383; The Horlock (1877) 2 PD 243 at 249-250; Burgis v Constantine [1908] 2 KB 484 at 496, 498, 501-503. See also Household Financial Services Ltd v Island and River Trading Pty Ltd [1994] ACL Rep 295 NSW 10.

[5.200]

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105

title to give. This consequence, which originates from the superseded Imperial legislation, is assumed to follow in Australia today from the provisions of s 45 of the Shipping Registration Act. It follows from what has just been said that if a registered owner of a ship or share disposes of this property to one purchaser, and then purports to dispose of this same property to another purchaser, the second purchaser will acquire good title if he or she makes the purchase in good faith and for valuable consideration, and then obtains entry of his or her name in the relevant Register as owner of this property before the first purchaser. Although in the absence of registration of ownership any such purported second disposition of the same property in a registered ship is a nullity — for the ordinary rule is that no one can dispose of what he or she has ceased to own — this fundamental deficiency is cured in the case of a bona fide purchaser for value by the entry of his or her name as owner in the relevant Register before that of a prior purchaser.65 As Finkelstein J said in the recent case of Advertising Department Pty Ltd v Ship MV Port Phillip:66 If a person in good faith acquires an interest in a ship from the registered owner he will obtain an indefeasible title that will defeat any prior unregistered right or interest, regardless of whether the prior right or interest is legal or equitable. It makes no difference that the owner obtained his registration by fraud, provided the person who acquired the interest was not a party to, or did not know of, the fraud.

This third rule concerns only a purchaser from a person who is named in the relevant Register as the owner of a ship or share in a ship. It does not concern a purchaser from any other person. Accordingly, the title of a purchaser from a purported owner of a registered ship or share is not protected by entry of the former’s name in the relevant Register if the latter is not the person named as the registered owner.67 And a fortiori the title of a purchaser from a purported owner of an unregistered ship or share is not protected by entry of the former’s name in the relevant Register upon the ship’s initial registration.68

Consideration of the law on registration and title [5.200]

The established law concerning registration of ownership and title does not sit easily with the ordinary rules of law and equity. It nonetheless clearly derives from them. The present rules concerning registration of ownership and title appear to result from divergent judicial attitudes to the significance of registration of ownership of ships. According to one view, registration of ownership is no more than a

65 Stapleton v Haymen (1864) 2 H & C 918; 159 ER 380 at 925; 383. See also The Horlock (1877) 2 PD 243 at 249-250. 66 Advertising Department Pty Ltd v Ship MV Port Phillip (2004) 141 FCR 251 at 260. 67 Holderness v Lamport (1861) 29 Beav 129; 54 ER 576 at 133; 577. 68 Bray v Macdonald (1867) 1 SALR 20. See also Household Financial Services Ltd v Island and River Trading Pty Ltd [1994] ACL Rep 295 NSW 10.

106

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[5.210]

formality, which does not affect title. Under this view, title can pass regardless of registration of ownership.69 This view has led to the first two rules set out at [5.190]. It is also reflected in the provisions of the Shipping Registration Act. According to the other view, however, registration of ownership is the sole means of acquiring good legal (as opposed to equitable) title to a registered ship. According to this view, a transfer of title by a registered owner confers simply an equitable interest in the transferee until he or she becomes registered as the new owner. Until registration, the transferor retains the legal title but holds the property in trust for the transferee.70 It is for this reason that a registered owner can give good legal title free of any prior equitable interests to a bona fide purchaser for value provided the name of this purchaser is entered in the relevant Register in place of the name of the registered owner. A registered owner can give good title in such circumstances because a trustee can always give good legal title to trust property, free of any equitable interest, to a bona fide purchaser for value without notice of such interest. There is a paucity of modern cases on the relationship between registration of ownership and title to a registered ship, and none at all which attempts to clarify or reconsider the two distinct approaches which emerge from the old English decisions on this subject. In light of the support that is given to the first and second rules by the Shipping Registration Act, it is tempting to surmise that Australian courts may be disposed to abolish, or at least dilute, the law supporting the third rule concerning the conferment of title on a bona fide purchaser. This, however, appears unlikely, not least because the Australian Act for the most part follows the English legislation, on which the third rule is firmly based. The third rule appears anyway to be accepted as part of Australian shipping law.71

[5.210]

Practical approach to the divergent lines of judicial reasoning

For the time being, perhaps the most satisfactory approach to the established law concerning registration of ownership and title is to distinguish between ownership for the purpose of transfer, and ownership

69 Stapleton v Haymen (1864) 2 H & C 918; 159 ER 380 at 925; 383; The Spirit of the Ocean (1865) 12 LT 239 at 240; Kali Boat Building & Repair Pty Ltd v Motor Fishing Vessel Bosna (1977) 19 SASR 112 at 115. 70 Stapleton v Haymen (1864) 2 H & C 918; 159 ER 380 at 924-925; 383. See also Re Mortgages of the Ships Albion, Myrtle and George (1864) 3 SCR 138 at 145; Burgis v Constantine [1908] 2 KB 484 at 496, 497-498. 71 See Household Financial Services Ltd v Island and River Trading Pty Ltd [1994] ACL Rep 295 NSW 10.

[5.210]

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107

for all other purposes. For the purpose of the transfer of property in a registered ship or share — in other words, as between transferor and transferee — the better approach would appear to be to regard the registered owner of a ship or share as its legal owner.72 On this basis, any transferee of a registered ship or share can have only an equitable interest in this property until he or she is registered as the new owner. However, for all other purposes where the ownership of a ship or share is in issue, the better approach would appear to be to regard the owner of a ship or share as ordinarily the person to whom the ship has been transferred by bill of sale or transmitted by operation of law, regardless of whether the name of this person has been entered in the relevant Shipping Register. There is sound authority for this proposition, for it now appears to be well established that if the law imposes a liability on the owner of a ship or share, then unless statute indicates otherwise,73 this liability ordinarily falls upon the person who has title by bill of sale or transmission, regardless of whether this person’s name appears as the owner in the relevant Register.74 It is possible to unify these two approaches by saying that for all purposes the legal owner of a ship is the person in whose name a ship or share is registered, that any other person can at most have only an equitable interest in such property, and that except for the purpose of transferring property in a ship or share (in other words, except as between transferor and transferee), the person who is to be regarded as the “owner” of the property is ordinarily its equitable, or beneficial, owner. This certainly achieves a consistency in the cases and is supported by some authorities.75 However, consistency is achieved in this way only at the price of distorting what the judges in many leading cases have either said or clearly implied. It also distorts the apparent implication of ss 36 and 37 of the Shipping Registration Act, that legal ownership (as opposed to registered ownership) of a ship is not dependent upon registration. This alternative, purposive approach has at least the advantage of preserving the intentions of both the judges and the Parliament whilst at the same time providing some coherence to otherwise divergent lines of cases.

72 Note, however, the situation in The Bineta [1967] 1 WLR 121, which turns on its own special facts (an original transferor held able to transfer title to a second transferee pursuant to a right to re-sell under the Sale of Goods Act, notwithstanding that the name of the defaulting first transferee has been registered as owner pursuant to the first transfer). 73 As it does eg in s 3(1) of the Shipping Registration Act 1981 (“owner” generally means registered owner). 74 See Young v Brander and Dunbar (1806) 8 East 10; 103 ER 248 at 12-13; 249; The Spirit of the Ocean (1865) 12 LT 239 at 240. 75 Von Freeden v Hull, Blyth & Co; GP Turner & Co, Third Parties (1906) 10 Asp MLC 247 at 249-250; Halsbury’s Laws of England (4th ed, Butterworths, London, 1974), Vol 43, p 89, para 119.

108

Shipping Law

[5.220]

Registration of ownership as evidence of title [5.220]

The fact that a person’s name is entered in one of the Shipping Registers as the owner of a ship or share may naturally be evidence of the fact that he or she is the owner.76 However, this fact does not, without more, raise any legal presumption of ownership. Such a presumption does arise indirectly from registration. By s 77(1) of the Shipping Registration Act, with reg 34 of the Shipping Registration Regulations, a registration certificate is admissible in evidence as prima facie evidence of any matter stated in it pursuant to this Act. This means that there is a rebuttable presumption that the person who is named in a registration certificate as being the owner of the ship or of shares in the ship is in fact the owner of the ship or shares.

CAVEATS Caveats and caveatable interests [5.230]

Any person who claims an unregistered interest in a registered ship or in a share in a registered ship may protect this interest by lodging a caveat with the Registrar of Ships.77 A caveat is a formal notice in which a person claiming an interest in a registered ship or share forbids the Registrar from entering in the Register any instrument relating to any dealing with this property.78

[5.240]

Caveatable interests

By s 47A(1) of the Shipping Registration Act, a caveat can be used to protect “an interest in a [registered79] ship or in a share in a [registered] ship under any unregistered instrument, or by operation of law or otherwise”. In practice caveats are commonly used to protect the following interests: • the interest of a prospective purchaser of a ship during negotiations for the sale of the ship, to ensure that it is not sold to a third party; • the interest of a mortgagee pending the registration of the mortgage, to ensure that no other mortgage is registered in the meantime; • the interest of an owner in common of a share in a ship, to ensure that another owner in common of the same share does not dispose of his or her interest without the knowledge of the caveator; • the interest of a person claiming payment of wages for services on, or in respect of, a ship; • the interest of a person claiming payment for the supply of provisions, ship repairs, or the like; and • the interest of a charterer under a charterparty. 76 Hibbs v Ross (1866) LR 1 QB 534 at 543. 77 Section 47A(1). 78 Sections 47A(1), 47D(1); Shipping Registration Regulations, reg 28A(1), Sch 2, Form 5. 79 See s 34.

[5.270]

5 Property, Ownership and Title

109

The propriety of these uses of caveats has not yet been considered by the courts.

[5.250]

Liability of caveator compensation

without

reasonable

cause

to

pay

Any person who lodges a caveat with the Registrar without reasonable cause is liable to pay compensation to anyone who suffers damage as a consequence.80

Procedure [5.260]

A person wishing to protect an interest in a ship or share by means of a caveat must lodge a caveat in the prescribed form with the Registrar of Ships.81 Once a caveat has been lodged with the Registrar, the Registrar must enter the caveat in the relevant Shipping Register.82 He or she does this by entering the name and address of the caveator, and the date of the caveat. The Registrar must then give particulars of the caveat to every person named in the Register as an owner or part-owner of the ship or share in which the caveator is claiming an interest.83 Any person who has, or should have, received notice of a caveat may then summon the caveator to the Supreme Court of a State or Territory to show cause why the caveat should not be removed.84 Upon the hearing of the summons, the Supreme Court may make such order as it thinks fit either in favour of or against the caveator.85

Effect of a caveat [5.270]

As a general rule, for so long as a caveat remains in force in respect of a ship or share in a ship, the Registrar may not enter particulars of any dealing with this property in the relevant Shipping Register without the consent in writing of a person entitled to withdraw this caveat.86 The Registrar may, however, enter a dealing in the Register if this has already been lodged with him or her prior to the lodgment of the caveat,87 or if he or she is satisfied that this will vest in the caveator the interest which the latter is claiming in the caveat.88

80 Section 47E. 81 Section 47A(1). The prescribed form is Form 5 in Sch 2 to the Shipping Registration Regulations. 82 This duty is not expressed in the Act; it is nonetheless understood to be implied by s 47A. 83 Section 47B(1). 84 Section 47B(2). 85 Section 47B(3). 86 Section 47D(1). 87 Section 47D(2). 88 Section 47A(7).

110

Shipping Law

[5.280]

Unless a caveat specifies to the contrary, it does not prevent the Registrar from entering in the relevant Shipping Register the transmission of a registered ship or share by operation of law.89

[5.280]

Caveat cannot prevent a transfer of title

As title to a ship or share in a ship does not ordinarily depend upon registration, a caveat cannot ordinarily prevent the transfer of title to a registered ship or share in a ship. A caveat simply prevents the registration of a transfer of title.

Cessation of caveat [5.290]

A caveat continues in operation until:

• it is withdrawn by the caveator or by his or her agent or representative;90 • it is removed by order of the Supreme Court of a State or Territory pursuant to a summons against the caveator to show cause why this should not be done;91 or • it has lapsed or is deemed to have lapsed. A caveat lapses when the Registrar enters a dealing in the relevant Shipping Register which vests in the caveator the interest which he or she is claiming in the caveat.92 A caveat is also normally deemed to have lapsed 14 days after notice has been given to the caveator by the registered owner or other person interested that an application had been made for the registration of a dealing with the property in which the caveator is claiming an interest.93 The Supreme Court of a State or Territory is, however, empowered to make an order that a caveat not lapse after the expiration of the 14 days’ notice.94 It is likely to do so, for example, where the caveator has instituted proceedings or has taken other steps within the 14-day period to protect his or her interest in the property.

Postscript: caveat against arrest or release of ships [5.300]

A caveat forbidding the registration of certain instruments in the relevant Shipping Register must be distinguished from a caveat against the arrest or release of a ship or other maritime property in proceedings in rem. The former is a creature of the Shipping Registration Act; the latter is a creature of Admiralty rules of court.

89 Section 47D(3). 90 See s 47A(6). The Australian Shipping Registration Office has produced its own form for this purpose. It is available on the Australian Maritime Safety Authority’s website. 91 See s 47B(2), (3). 92 Section 47A(7). 93 Section 47C. 94 Section 47C.

[5.330]

[5.310]

5 Property, Ownership and Title

111

Caveat against the arrest of a ship

A caveat against the arrest of a ship or other maritime property is a formal notice, effected by filing an appropriate form in any Federal Court registry, that a person wishes to prevent the arrest of particular property and to this end has undertaken both to enter an appearance in any action that may be commenced against the property, and to give bail or pay money into court up to a particular sum, within three days of service of the process.95 The entry of a caveat does not prevent the arrest of the property in question. However, if the property is subsequently arrested without good and sufficient reason, the caveator may apply to the court not only for its release but also for an award of costs and damages against the person responsible for the arrest.

[5.320]

Caveat against the release of a ship

A caveat against the release of a ship or other property arrested in proceedings in rem is a formal notice, effected by filing an appropriate form in the court by which the arrest warrant was issued, that a person wishes to prevent the release of arrested property.96 This caveat has the effect of preventing the release of the property until notice has been given to the caveator. If the caveat results in a delay in the release of the property or proceeds of sale, the caveator is liable to pay damages in respect of any loss suffered by reason of the delay unless the court is satisfied that the caveator had a good and sufficient reason for entering the caveat.

[5.330]

Duration of a caveat

A caveat against arrest or release normally lasts for 12 months, or for such shorter period as is specified in the caveat, unless it is withdrawn by the caveator before then.97

95 Admiralty Rules 1988 (Cth), r 7, Form 2. 96 Admiralty Rules 1988 (Cth), r 10, Form 4. 97 Admiralty Rules 1988 (Cth), rr 12(1), 13.

6

Acquisition of Property in Ships [6.10] METHODS OF ACQUIRING PROPERTY IN SHIPS ................................. 113 [6.20] CONSTRUCTION OF SHIPS ......................................................................... 114 [6.50] TRANSFER OF PROPERTY IN SHIPS ......................................................... 116

[6.50] Transfer of property in registered ships ........................................ 116 [6.190] Transfer of property in unregistered ships ................................. 121 [6.200] No restrictions on persons to whom ships may be transferred ......................................................................................... 122 [6.210] TRANSMISSION OF PROPERTY IN SHIPS ............................................. 122

[6.210] Transmission of property in registered ships ............................. 122 [6.280] Transmission of property in unregistered ships ........................ 125

METHODS OF ACQUIRING PROPERTY IN SHIPS [6.10]

A person can acquire a ship in one of three ways: by construction, by transfer or by transmission. Construction here includes not only personal construction, but also having a ship built by a shipbuilder pursuant to a shipbuilding contract. Transfer means a deliberate conveyance of property in an existing ship.1 This can result from a sale, an exchange or a gift. Transmission means the conveyance of property in a ship solely by operation of law, for example as a result of the death or bankruptcy of the owner of a ship or by an order of a court.2 The transfer and transmission of property in registered ships are the subject of special provisions of the Shipping Registration Act 1981 (Cth). Until the middle of the 19th century, a person might also acquire a ship by capture pursuant to letters of marque, followed by condemnation of the ship by a court of competent jurisdiction. Letters of marque were letters under the hand of a sovereign which permitted a subject to fit out an armed vessel and use it to capture merchant shipping belonging to the 1 Chasteauneuf v Capeyron and Delange (1881) 7 App Cas 127 at 133-134. 2 Chasteauneuf v Capeyron and Delange (1881) 7 App Cas 127 at 133-134.

114

Shipping Law

[6.20]

subjects of a hostile state. They thus legalised acts which would otherwise constitute piracy. Letters of marque were abolished by the Declaration of Paris 1856.3 The Crown can still acquire an enemy ship by capture in times of war, followed by condemnation by a Prize Court. This is the subject of the law of prize, which is not considered further in this work.

CONSTRUCTION OF SHIPS [6.20]

There are no statutory provisions which specifically concern the acquisition of property in a ship by construction. Accordingly, the ordinary law of personal property applies. Where construction is undertaken by a third party for payment, the ordinary law concerning the sale of goods is also applicable.4

[6.30]

Property-passing provision in a shipbuilding contract

Under a typical shipbuilding contract, the purchaser of a ship under construction undertakes to pay the purchase price by instalments, the first upon the signing of the contract and the others at various stages of the ship’s construction. The shipbuilder for his or her part usually agrees that upon payment of the first instalment, property in the ship under construction vests in the purchaser subject to the shipbuilder’s lien for any unpaid instalments.5 This means that during construction the ship cannot be taken by the shipbuilder’s creditors.6 There is authority for the proposition that by virtue of the usual terms of a shipbuilding contract, an agreement to pay an initial instalment of the purchase price of a ship under construction, either forthwith or at a particular stage of its construction, is prima facie evidence of an intention by the parties that property in the ship will pass upon payment of this instalment.7 This is subject to any clear intention to the contrary, for example by an agreement that the ship is not to be accepted and property pass until after successful trials have been carried out.8 3 Under s 8 of the Constitution of the United States, Congress still has power to grant letters of marque. 4 Behnke v Bede Shipping Co Ltd [1927] 1 KB 649; Lloyd del Pacifico v Board of Trade (1930) 35 Ll L Rep 217; McDougall v Aeromarine of Emsworth Ltd [1958] 1 WLR 1126 at 1129; Devine Shipping Pty Ltd v BP Melbourne (1994) 3 Tas R 456 at 465-466. 5 Howden Brothers Ltd v Ulster Bank Ltd and Hugh Boyd and the Olderfleet Shipbuilding and Engineering Co Ltd [1924] 1 Ir R 117 at 125-126. 6 Re Blyth Shipbuilding & Dry Docks Co Ltd; Forster v Blyth Shipbuilding & Dry Docks Co Ltd [1926] Ch 494. 7 Woods, Assignee of Alexander Paton, a Bankrupt v Russell (1822) 5 B & Ald 942; 106 ER 1436 at 946; 1438; Clarke v Spence (1836) 4 Ad & E 448; 111 ER 855 at 470-472; 864; Seath & Co Ltd v Moore (1886) 11 App Cas 350 at 380; D Maclachlan, G St Clair Pilcher and O Bateson, A Treatise on the Law of Merchant Shipping (7th ed, Sweet & Maxwell, London, 1932), p 5. 8 See Sir James Laing & Sons Ltd v Barclay, Curle & Co Ltd [1908] AC 35.

[6.40]

6 Acquisition of Property in Ships

115

If it is agreed by the parties that property in a ship under construction is to pass at a particular stage in its construction, once that stage is reached, property in the partly completed ship and in all subsequent additions and improvements to it vest in the purchaser.9 Any problems arising under a shipbuilding contract involving a propertypassing provision (for example, if at the time that a relevant instalment is paid there is nothing yet physically in existence, and whether property also passes in materials — and in particular worked materials and distinct chattels — that are set aside for incorporation but not yet incorporated in the ship) rely for their solution on the terms of the contract and the ordinary law concerning the sale of goods.10 A property-passing provision in a shipbuilding contract does not without more deprive the purchaser of the right to reject the ship when it is completed if it is found to be defective.11

[6.40]

Passing of property in other circumstances

If a shipbuilding contract does not contain a property-passing provision and there is no agreement between the parties to the contrary, property in the ship passes to the purchaser upon either its completion and delivery12 or its completion and approval by the purchaser,13 whichever is the earlier. In the meantime, property remains with the builder. This is so even if the purchaser agrees to pay the purchase price in simple instalments14 (as opposed to payment by instalments at certain stages of a particular ship’s construction), and indeed even if he or she pays the entire purchase price in advance.15 Where the property in a ship under construction is to pass to a purchaser upon completion, the shipbuilder may always expressly or impliedly consent to passing property in the ship to the purchaser before then, for

9 Clarke v Spence (1836) 4 Ad & E 448; 111 ER 855 at 470-471; 380. 10 Wood v Bell, Rhodes and Moser (1856) 6 El & Bl 355; 119 ER 897 at 361-362; 900; Seath & Co v Moore (1886) 11 App Cas 350; Reid v Macbeth & Gray [1904] AC 223; Re Blyth Shipbuilding & Dry Docks Co Ltd; Forster v Blyth Shipbuilding & Dry Docks Co Ltd [1926] Ch 494; McDougall v Aeromarine of Emsworth Ltd [1958] 1 WLR 1126. 11 McDougall v Aeromarine of Emsworth Ltd [1958] 1 WLR 1126 at 1130. 12 Mucklow, Assignees of Royland v Mangles (1808) 1 Taunt 318; 127 ER 856; Atkinson, Assignees of Sleddon v Bell (1828) 8 B & C 277; 108 ER 1046 at 282; 1048; Howden Brothers Ltd v Ulster Bank Ltd and Hugh Boyd and the Olderfleet Shipbuilding and Engineering Co Ltd [1924] 1 Ir R 117 at 123. 13 Clarke v Spence (1836) 4 Ad & E 448; 111 ER 855 at 467-469; 863; Heilbutt v Hickson (1872) LR 7 CP 438 at 449. 14 Clarke v Spence (1836) 4 Ad & E 448; 111 ER 855 at 466; 862. 15 Mucklow, Assignee of Royland v Mangles (1808) 1 Taunt 318; 127 ER 856.

116

Shipping Law

[6.50]

example by signing the builder’s certificate before completion to enable the advance registration of the ship in the name of the purchaser.16

TRANSFER OF PROPERTY IN SHIPS Transfer of property in registered ships Owner’s right to transfer interest in a registered ship

[6.50]

By s 45 of the Shipping Registration Act 1981 (Cth), the sole registered owner17 of a registered ship18 or of a share in a registered ship may ordinarily dispose of this property whenever he or she pleases, without regard to any other person. The sole owner of a share in a registered ship may thus ordinarily dispose of this property without the concurrence of the owners of the other shares. By virtue of s 11(1)(d), however, a joint owner of a registered ship or of a share in a registered ship, cannot dispose of his or her interest alone. All joint owners must join together in disposing of a jointly-owned interest in a registered ship or share in such a ship. Although the sole owner of a registered ship or of a share in a registered ship may ordinarily dispose of this property whenever he or she pleases without regard to any other person, there may of course be constraints outside the Act on an owner’s ability to dispose of a ship or share, for example a provision in a mortgage which restrains sale.

Requirement of transfer by bill of sale

[6.60]

A registered ship, or share in a registered ship, can be transferred only by a bill of sale made in accordance with the regulations under the Shipping Registration Act.19 A bill of sale in this context is simply an instrument of assignment;20 it is not a bill of sale in any more restricted sense, for example in the sense of an instrument transferring title to goods where possession is to be retained by the transferor.21

[6.70]

Statutory requirements of a bill of sale for transfer of a registered ship

Under the Shipping Registration Regulations 1981 (Cth), a bill of sale transferring a registered ship or share in a registered ship must specify the name and official number of the ship, the number of shares in the ship 16 See Woods, Assignee of Alexander Paton, a Bankrupt v Russell (1822) 5 B & Ald 942; 106 ER 1436 at 946-947; 1438-1439; Gross, Assignee of Williams, a Bankrupt v Quinton (1842) 3 Man & G 825; 133 ER 1372. 17 See s 3(1) (definition of “owner”). 18 Section 34. 19 Section 36(1), with s 34; Household Financial Services Ltd v Island and River Trading Pty Ltd [1994] ACL Rep 295 NSW 10. 20 Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274 at 277. 21 Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274 at 277.

[6.100]

6 Acquisition of Property in Ships

117

to which the bill of sale relates, and the name and address of each transferor and transferee.22 It must also be signed by each transferor.23

[6.80]

Form produced by the Australian Shipping Registration Office

There is no prescribed form which must be used for a bill of sale for the transfer of a registered ship or share. The Australian Shipping Registration Office has produced its own form, “Bill of Sale”, which covers all the requirements for an effective transfer of a registered ship or share. This is available on the Australian Maritime Safety Authority’s website.24

[6.90]

Effect of non-compliance with statutory requirements

A purported transfer of a registered ship or a share in a registered ship other than by a bill of sale containing the required information is void.25 Limits of the requirement of transfer of a registered ship by a bill of sale

[6.100]

The requirement in the Shipping Registration Act that a registered ship, or a share in a registered ship, be transferred by a bill of sale made in accordance with the regulations applies only to a deliberate assignment by the owner of such property. This is clear from the use of the term “transferred” in s 36(1). This requirement thus does not apply to the transmission of a ship or share. Separate provisions apply to that situation, which are considered separately at [6.210]–[6.240]. Other limits of the statutory requirement are also evident from the terms of the relevant statutory provisions. Thus, the requirement applies only to a registered ship.26 The transfer of an unregistered ship or of a share in an unregistered ship is consequently not covered by this requirement, even if the ship is one which is required to be registered under the Act.27

There is old English authority for the proposition that the transfer of even a registered ship is not covered by the statutory requirement if the ship is otherwise exempt from registration.28 It is highly doubtful, however, whether this is good law in Australia today, for the terms of s 36(1), with s 34, seem clearly to indicate that all registered ships without exception must be transferred by a bill of sale made in accordance with the regulations.

22 Regulation 23(1)(a). 23 Regulation 23(1)(b). 24 See: http://www.amsa.gov.au/forms-and-publications/AMSA159.pdf. 25 Batthyany v Bouch (1881) 50 LJQB 421 at 424. 26 See s 34. 27 See Union Bank of London v Lenanton (1878) 3 CPD 243 at 248. 28 Benyon v Cresswell (1848) 12 QB 899; 116 ER 1107 at 903-904; 1109.

118

Shipping Law

[6.110]

The statutory requirement does not apply if a ship’s registration is closed or deemed to be closed.29 This follows from the fact that closure of registration places a ship in the same position as an unregistered ship. The statutory requirement of s 36(1) applies only to the transfer of a ship or share in a ship. It accordingly does not apply to a mere agreement to transfer such property.30 There is English authority for the proposition that if a registered ship ceases to be a ship for any reason (for example, because it has since become a floating store and is no longer able, and is not intended ever again, to be used in navigation31), its transfer is not subject to the statutory requirements, even though its registration may still technically be open.32 This, however, is probably no longer good law in Australia in light of the broad terms of s 36(1), with s 34.

[6.110]

Caveat to the foregoing

The preceding discussion of the limits of the statutory requirement concerning the transfer of a ship or share implies that in all situations outside these limits, a ship can be transferred not only without a bill of sale made in accordance with the regulations, but without a bill of sale of any kind. Whilst there is authority for the proposition that a ship not covered by the statutory requirement can be transferred without a bill of sale, in the same way as any other ordinary chattel, there is also authority for the proposition that all ships must be transferred by a bill of sale, whether or not they are registered. This matter is considered further at [6.190]. Required formalities upon the transfer of registered ship

[6.120]

Upon the transfer of a registered ship or share in a registered ship, the bill of sale and a declaration of transfer must be lodged by the transferee with the Registrar of Ships.33 This must normally be done within 14 days of the execution of the bill of sale, though the Registrar

29 Manchester Ship Canal Co v Horlock [1914] 2 Ch 199 at 207. 30 Batthyany v Bouch (1881) 50 LJQB 421. 31 European & Australian Royal Mail Co v Peninsular & Oriental Steam Navigation Co (1866) 14 LT 704. 32 European & Australian Royal Mail Co v Peninsular & Oriental Steam Navigation Co (1866) 14 LT 704. Note, however, that if a registered ship ceases to be a “ship” as defined in s 3(1), the owner is required by s 66(1)(b) to give notice of this fact to the Registrar of Ships, as a result of which the ship’s registration will be deemed to be closed: see s 66(2), (3)(b). 33 Section 36(2).

[6.140]

6 Acquisition of Property in Ships

119

may extend this period in special circumstances.34 The ship’s registration certificate must also be delivered to the Registrar for endorsement with particulars of the change of ownership.35

[6.130]

Declaration of transfer

The object of the declaration of transfer is to indicate to the Registrar of Ships that the ship is still entitled to be registered in the relevant Shipping Register. The declaration must be in writing and it must specify the name and official number of the ship, the date of the bill of sale, the nationality of each transferee, the grounds upon which he or she claims such nationality, and the extent of each transferee’s interest in the ship.36 If a transferee is a company or a corporation, the declaration must specify instead of nationality the country in which it is incorporated.37 No statement of nationality is required if the transferee is the Commonwealth, a State or a Territory.38 The declaration of transfer must also contain a statement that to the best of the knowledge and belief of the person making the declaration the ship will not cease to be an Australian-owned ship, or in the case of a ship on demise charter will not cease to be on demise charter to an Australianbased operator, as a result of the transfer.39 If the ship is a “small craft” as defined in the Act, the declaration must also specify the transferee’s normal place of residence (or in the case of a company or corporation, its principal place of business) and a statement that to the best of the knowledge and belief of the person making the declaration, the ship will not cease as a result of the transfer to come within the class of small craft that are entitled to be registered under the Act.40 No statement concerning the continuing status of the ship is required if the transferee is the Commonwealth, a State or a Territory.41 A declaration of transfer must be signed by each transferee.42

[6.140]

Change of registered agent

If the transfer of a registered ship or share leads to a change in the ship’s registered agent, a notice of this change must be lodged with the Registrar of Ships along with the bill of sale.43 34 Section 36(2). 35 Section 37A. 36 Section 36(3); reg 23(2)(a), (b), (c). 37 Section 36(3)(a)(i), (b)(i). 38 Section 36(3). 39 Section 36(3)(a)(ii), (b)(iii), (4). 40 Section 36(3)(b)(ii), (iii). 41 Section 36(3). 42 Section 36(3); reg 23(2)(d). 43 Regulation 23(3).

120

Shipping Law

[6.150]

[6.150]

Forms produced by the Australian Shipping Registration Office

The Australian Shipping Registration Office has produced its own internal forms entitled “Declaration of Transfer” and “Notice of Appointment of Registered Agent (Ship’s Manager)”. These are available on the Australian Maritime Safety Authority’s website.44

[6.160]

Registration of bill of sale by Registrar of Ships

As soon as practicable after both the bill of sale and the declaration of transfer have been lodged with the Registrar of Ships, the Registrar is required to register the bill of sale in the relevant Shipping Register.45 Registration is effected by the Registrar entering in the relevant Register the name of the transferee as the owner of the ship or of a particular number of shares in the ship.46 The register entry in relation to a transfer in fact goes further than this. It sets out the transferor’s name, the number of shares transferred, the date and time of registration, the date of the bill of sale, and the name, address and nationality of the transferee. The Registrar must also endorse on the bill of sale a note of the fact that entry has been made in the relevant Register, and the date and time of the entry.47 Bills of sale must be registered in the order of their lodgment with the Registrar of Ships.48

[6.170]

Delivery and endorsement of registration certificate

When a registered ship or a share in a registered ship is transferred by a bill of sale, the person who has possession or control of the registration certificate must deliver it to the transferee at the time of the transfer, or if the ship is not then at an Australian port, as soon as practicable afterwards.49 Once the transferee has received the registration certificate, he or she must immediately deliver it to the Registrar of Ships.50 The Registrar must then endorse the registration certificate with the particulars of the change of ownership and return it either to the ship’s registered agent or to such other person as the registered agent directs.51

44 See: http://www.amsa.gov.au/forms-and-publications. 45 Section 36(2A). 46 Section 36(2A). 47 Section 36(2A). 48 Section 36(5). 49 Section 37A(1). 50 Section 37A(2). 51 Section 37A(3).

[6.190]

[6.180]

6 Acquisition of Property in Ships

121

Offences

It is an offence for a transferee of a registered ship or share not to lodge the bill of sale and a declaration of transfer with the Registrar of Ships within the time specified by the Act.52 It is also an offence for the person required to deliver the ship’s registration certificate to the transferee not to do so, and for the transferee then not to deliver the registration certificate to the Registrar for endorsement with the particulars of change of ownership.53 These latter are offences of strict liability.54

Transfer of property in unregistered ships [6.190]

There are no legislative provisions, whether Commonwealth, State or territorial, which specifically concern the transfer of property in an unregistered ship. Modern Australian authority supports the proposition that the ordinary rules on the transfer of property in chattels therefore apply,55 with the result that an unregistered ship can be transferred by delivery without writing. There is, indeed, good English authority for the latter point.56 However, there is also authority for the proposition that there are special common law rules concerning the transfer of property in ships,57 and that for such a transfer a bill of sale is nonetheless required.58 Whether or not a bill of sale is strictly necessary for the transfer of an unregistered ship — and modern Australian authority supports the view that it is not required59 — it is certainly the usual means by which such a transfer is effected. This practice has long historical antecedents60 and derives from the fact that delivery of a ship might be impractical and at

52 Section 36(2), with s 74(1). 53 Section 37A, with s 74(1A). 54 Section 37A(1A), (2A). 55 Bluecorp Pty Ltd (In liq) v ANZ Executors & Trustee Co Ltd (1995) 127 FLR 120 at 131-132; Mentink v Registrar of the Australian Register of Ships (2012) 277 FLR 248 at 259. See also Union Bank of London v Lenanton (1878) 3 CPD 243 at 250. 56 Benyon v Cresswell (1848) 12 QB 899; 116 ER 1107 at 903-904; 1109; Manchester Ship Canal Co v Horlock [1914] 2 Ch 199, esp at 207; The James W Elwell [1921] P 351 at 368. 57 See, eg, Hooper v Gumm; McLellan v Gumm (1867) 2 Ch App 282 at 290: “A ship is not like an ordinary personal chattel; it does not pass by delivery, nor does the possession of it prove the title to it.” For a consideration of this statement, see Devine Shipping Pty Ltd v BP Melbourne (1994) 3 Tas R 456 at 465. 58 The Sisters (1804) 5 C Rob 155; 165 ER 731 at 159; 732-733. For a consideration of this decision, see Devine Shipping Pty Ltd v BP Melbourne (1994) 3 Tas R 456 at 462-464. 59 Devine Shipping Pty Ltd v BP Melbourne (1994) 3 Tas R 456 at 464. See also Tisand Pty Ltd v Owners of Ship MV Cape Moreton (Ex parte Freya) (2005) 143 FCR 43 at 76. 60 Bill of sale for the transfer of a ship was recognised in statute as early as 1786: see Merchant Shipping Act 1786, s 17.

122

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[6.200]

times impossible (for example, when the ship is away at sea),61 with the result that transfer must then be effected in some other way, and a bill or sale was perhaps the most obvious in a maritime context.

No restrictions on persons to whom ships may be transferred [6.200]

There are no restrictions on those to whom a ship, or a share in ships, may be transferred. This freedom of transfer has not always been part of Australian law. From the commencement of the Australian Coastal Shipping Commission Act 1956 (Cth) (now entitled the ANL Act 1956 (Cth)) until 1984, there was a prohibition on the transfer of certain ships, or of shares in such ships, to any person who was not resident in Australia, or to any company or corporation whose principal place of business was not in Australia, without the consent of the Minister for Transport.62 This prohibition applied to all ships that were registered in Australia, or were owned, managed or controlled by an Australian resident or by a company or corporation which had its principal place of business in Australia, and which had a gross tonnage of 200 tons and were not more than 25 years old.63 The Minister was empowered to consent to the transfer of such ships to persons outside Australia only if this would help to provide adequate commercial shipping services within Australia.64

The purpose of the former restrictions was twofold. First, it was to help prevent a run down of Australia’s commercial shipping services, and secondly, to ensure that any ship built in an Australian shipyard with the assistance of a government subsidy would serve Australia for the bulk of its useful life.65

TRANSMISSION OF PROPERTY IN SHIPS Transmission of property in registered ships [6.210]

There is no special law relating to the process of transmission of property in registered ships. The law on this matter is the same as that relating to the transmission of chattels generally. There are, however, statutory requirements which must be complied with by a person who acquires property in a registered ship as a result of transmission. When a person becomes the owner of a registered ship or a share in a registered ship by transmission, he or she is required to lodge with the Registrar of Ships a declaration of transmission and any prescribed evidence of transmission within 14 days.66 This period may be extended

61 Atkinson v Maling (1788) 2 TR 462; 100 ER 249. 62 Section 48(1)(a). 63 Section 48(1)(a), (6). 64 See s 48(5). 65 See 11 H Rep Deb 3022 (8 June 1956). 66 Section 37(1), with s 34.

[6.230]

6 Acquisition of Property in Ships

123

by the Registrar in special circumstances.67 The ship’s registration certificate must also be delivered to the Registrar for endorsement with particulars of the change of ownership.68 Upon receipt of a declaration of transmission and any prescribed evidence of transmission, the Registrar is required to enter the name of the new owner in the relevant Shipping Register as soon as practicable.69

[6.220]

Declaration of transmission

A declaration of transmission is very similar to a declaration of transfer. It must be in writing and it must specify the name and official number of the ship, the name and address of the person who has ceased to be the owner, or one of the owners, of the ship or share in the ship by virtue of the transmission, and the name, address and nationality of the person to whom the ship or share is transmitted.70 Except where the person entitled under the transmission is the Commonwealth, a State or a Territory, a declaration of transmission must also contain the same information concerning the nationality of the new owner and the continuing status of the ship as is required in a declaration of transfer.71 A declaration of transmission must be signed by the person to whom the ship or share is transmitted.72

[6.230]

Prescribed evidence of transmission upon death and by court order

Evidence is presently prescribed for the transmission of a registered ship, or of a share in a registered ship, in just two circumstances, namely upon the death of an owner and by a court order. In the case of transmission upon the death of the sole owner or an owner in common of a ship or share in a ship, the prescribed evidence is the instrument (or an office copy of the instrument) constituting a person as the deceased’s legal personal representative and an instrument identifying the person who is to become the owner of the ship or share as a result of the transmission.73 In the case of transmission upon the death of a joint owner of a ship, or a joint owner of a share in a ship, the prescribed evidence of transmission is either the deceased owner’s death or burial certificate, or the probate or letters of administration of the deceased’s estate (or an office copy of any such document), and a statutory declaration by a person well acquainted 67 Section 37(1), with s 34. 68 Section 37A. 69 Section 37(1A). 70 Section 37(2); reg 24(2)(a), (b). 71 Section 37(2). 72 Section 37(2); reg 24(2)(c). 73 Shipping Registration Regulations, reg 24(1)(b).

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[6.240]

with the facts of the case that the deceased is the same person as the joint owner named in the relevant Shipping Register.74 If transmission occurs as a result of a court order, the prescribed evidence is an office copy of the order.75

[6.240]

Evidence of transmission upon bankruptcy

There is no prescribed evidence for the transmission of a ship, or share in a ship, upon bankruptcy. However, as a matter of practice the Registrar of Ships requires evidence of the appointment of a trustee, or such other evidence of the bankruptcy as he or she considers appropriate. This is done by virtue of the powers conferred upon the Registrar by reg 40 (“Verification of information etc”) of the Shipping Registration Regulations.

[6.250]

Forms produced by the Australian Shipping Registration Office

There is no prescribed form which must be used to satisfy the formal requirements for the acquisition of a registered ship or share by transmission. The Australian Shipping Registration Office has, however, produced its own form for this purpose entitled “Declaration of Transmission of Ownership by Operation of Law”. This is available on the Australian Maritime Safety Authority’s website.76

[6.260]

Delivery and endorsement of registration certificate

Upon transmission of a registered ship or share, the person who has possession or control of the ship’s registration certificate must give it to the transmittee, who is then required to deliver it to the Registrar of Ships for endorsement with particulars of the change of ownership.77 The requirements here are the same as those applying upon the transfer of a ship or share in a ship.

[6.270]

Offences

It is an offence for a person to whom a registered ship or share in a registered ship is transmitted not to lodge a declaration of transmission and the prescribed evidence of transmission to the Registrar of Ships within the time specified by the Act.78 It is also an offence for the person required to deliver the ship’s registration certificate to the transmittee not to do so, and for the

74 Regulation 24(1)(a). 75 Regulation 24(1)(c). 76 See: http://www.amsa.gov.au/forms-and-publications. 77 Section 37A. 78 Section 37(1), with s 74(1).

[6.280]

6 Acquisition of Property in Ships

125

transmittee then not to deliver the registration certificate to the Registrar for endorsement with the particulars of change of ownership.79 These latter are offences of strict liability.80

Transmission of property in unregistered ships [6.280]

There are no special requirements which must be complied with by a person who acquires property in an unregistered ship as a result of transmission.

79 Section 37A, with s 74(1A). 80 Section 37A(1A), (2A).

7

Introduction to Charges over Ships [7.10] CLASSIFICATION OF CHARGES OVER SHIPS ....................................... 127 [7.40] POSITION OF CHARGES OVER SHIPS UNDER THE PERSONAL PROPERTY SECURITIES ACT ....................................................................... 128 [7.50] PRIORITY OF CHARGES OVER A SHIP .................................................... 129 [7.80] PARAMOUNT STATUTORY CHARGES ..................................................... 130

CLASSIFICATION OF CHARGES OVER SHIPS [7.10]

A charge, or encumbrance, can arise over a ship either intentionally or by operation of law. In theory, two kinds of charge can be created over a ship intentionally. These are a mortgage and bottomry, though bottomry is now obsolete. Three kinds of charge can arise over a ship by operation of law. These are a maritime lien, a possessory (or common law) lien, and a statutory charge.

[7.20]

Mortgage and bottomry

The principal charge that can be created over a ship intentionally is a mortgage. A mortgage of a ship, like a mortgage of any other property, can be created only by the owner or his or her authorised agent. Ships are, however, different from other forms of property in that they can, in theory at least, be made the subject of something akin to a mortgage without the knowledge or express authority of the owner. A ship’s master can in theory always charge his ship when in foreign parts in order to obtain necessary repairs or supplies for the voyage to continue. This charge is called bottomry. It is created by a bond called a bottomry bond. A ship’s master can also charge the ship’s cargo on a similar basis. The charge is then known as respondentia. Bottomry and respondentia are now obsolete. A mortgage, on the other hand, remains a very popular form of charge on a ship. It is indeed the principal means by which a ship is used as security for a loan.

[7.30]

Possessory liens, maritime liens and statutory charges

Two kinds of lien can attach to a ship, namely a possessory lien and a maritime lien. Both arise solely by operation of law. They thus arise independently of the will of the ship’s owner, and also independently of the will of the ship’s master. A possessory lien is the ordinary common

128

Shipping Law

[7.40]

law charge which entitles a person to retain possession of property until a debt incurred in relation to it has been paid. In shipping law, a possessory lien commonly arises in favour of a shipbuilder or ship repairer in possession of a ship to secure the purchase price of the ship or the cost of repairs. A maritime lien is altogether different. This is a charge that arises by operation of law over a ship or certain other property, irrespective of possession, in order to secure particular types of claims. One such claim is for damage caused by the ship; another is for salvage reward; and a third is for crew wages. The maritime lien that secures these three claims is a creature of general maritime law — the “common law” of courts exercising Admiralty jurisdiction1 which is now part of the common law of Australia.2 Statute has since created certain statutory maritime liens. Statute has also created other forms of statutory charges over ships, including paramount statutory charges and so-called “statutory liens” which are different from statutory maritime liens. Despite their disparity, all liens have this in common: they operate as security for an outstanding claim of money. If such a claim is not available for any reason, the foundation for the claim does not exist.3

POSITION OF CHARGES OVER SHIPS UNDER THE PERSONAL PROPERTY SECURITIES ACT [7.40]

Both maritime liens and possessory (common law) liens fall outside the scope of the Personal Property Securities Act 2009 (Cth). This is because the Act excludes from its operation “a lien, charge, or any other interest in personal property, that is created, arises or is provided for by operation of the general law”.4 “General law” here means the principles and rules of the common law and equity.5 A statutory lien also does not come within the scope of the Personal Property Securities Act 2009 (Cth) because it too arises by operation of the general law — more particularly here by virtue of general maritime law, which is now part of the common law.6 A statutory lien arises as a consequence of a claimant instituting proceedings in rem. In any event, a statutory lien is anyway not a “security interest” with which the Act is concerned because it does not result from “a transaction that … secures payment or performance of an obligation”.7 1 See The Gaetano and Maria (1882) 7 PD 137 at 143. 2 Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 471. 3 Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369 at 411. 4 Personal Property Securities Act 2009 (Cth), s 8(1)(c). Note the limited provisions on priority of interests that arise by law and other security interests in s 73(1). 5 Personal Property Securities Act 2009 (Cth), s 10. 6 Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 471. 7 Personal Property Securities Act 2009 (Cth), s 12.

[7.60]

7 Introduction to Charges over Ships

129

A paramount statutory charge also does not come within the scope of the Personal Property Securities Act 2009 because the Act excludes “a lien, charge, or any other interest in personal property, that is created, arises or is provided for under a law of the Commonwealth … a State or a Territory”.8 Both a ship mortgage and bottomry, on the other hand, do come within the scope of the Act because both are charges that are deliberately created in order to secure payment of a financial liability.

PRIORITY OF CHARGES OVER A SHIP [7.50]

It is possible for a ship to be subject not only to different kinds of charges, but also to different charges of the same kind. For example, a ship might be encumbered by a mortgage. This ship might then collide with a vessel at sea and thus be subject to a maritime lien to secure a claims for ship damage. The ship might subsequently founder. Salvors might then salvage the vessel and take it to a shipyard where it receives extensive repairs. As a result of the salvage exercise, the salvors will enjoy a maritime lien to secure their claim for salvage reward, and for so long as the ship is in the possession of the ship repairer, he or she will enjoy a possessory lien to secure the cost of the repairs. The owner of the ship might then become insolvent. In a case like this it becomes essential to determine the order of priority of the various charges to which the ship is now subject, for this will regulate the order in which the chargees will be satisfied from the proceeds of sale of the ship. The subject of priorities among maritime charges is complex. However, under general maritime law the basic order of priorities between different kinds of maritime charges is as follows: • paramount statutory charges; • maritime liens (including statutory maritime liens); • possessory liens; • bottomry and respondentia; • mortgages; and • statutory liens. With the exception of statutory liens, these charges are considered in turn in this chapter and in Chapters 8–10 according to the order of priorities just presented. Statutory liens are considered in the context of maritime liens, with which they have clear similarity. The order of priorities among charges of the same kind is considered in the course of the examination of each type of charge.

[7.60]

Effect of the Personal Property Securities Act

As is discussed in Chapters 8 and 9, maritime liens, possessory liens, paramount statutory charges and statutory liens, do not come within the 8 Personal Property Securities Act 2009 (Cth), s 8(1)(b). Note the limited provisions on priority of interests that arise by law and other security interests in s 73(1).

130

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[7.70]

scope of the Personal Property Securities Act 2009 (Cth). As a consequence of this they retain their order of priority under general maritime law. It would appear that these charges also take priority to any charge that comes within the scope of the Act. Ship mortgages and bottomry, however, are subject to the rules of priority prescribed by the Act. These rules are considered in Chapter 10.

[7.70]

Legal costs

Under general maritime law, legal costs ordinarily rank with the claim involved.9

PARAMOUNT STATUTORY CHARGES [7.80]

Statute can always impose a charge upon a ship to secure a particular payment and give this charge priority over all other charges. It is not usual for a statute to do this expressly. It is, however, reasonably common for a statute to do so impliedly by giving a person or body the power to detain a ship for non-payment of certain fees or charges. This power sometimes has associated with it a further power to sell the ship and take the amount owing from the proceeds of sale if payment is not made within a particular period. A provision of either the narrower or the broader kind was once a common feature of harbour legislation to secure the payment of harbour dues,10 though it is now more often found in other legislation involving shipping.11

[7.90]

Paramountcy of statutory charge

A statutory power to detain a ship for non-payment of fees or other financial liability clearly creates a form of statutory possessory lien.12 It does not, however, usually confer any express right of priority over any other charge. English cases, however, make it clear that such a power creates a paramount charge, for they hold that the right to payment which is secured by a statutory possessory lien takes priority over all other charges.13 This is so whether or not there is also a power of sale.14 Consistently with the rules relating to common law possessory liens, the right of priority afforded by a statutory possessory lien is lost if the ship is 9 The Heinrich (1872) LR 3 A & E 505; The Immacolata Concezione (1883) 9 PD 37. 10 For a current instance, see Harbors and Navigation Act 1993 (SA), s 31C. 11 See Quarantine Act 1908 (Cth), s 65; Environmental Protection (Sea Dumping) Act 1981 (Cth), s 17(3). 12 Mersey Docks & Harbour Board v Hay: SS The Countess [1923] AC 345, esp at 354, 366-367. 13 The Emilie Millon [1905] 2 KB 817; R v Carrick District Council; Ex parte Prankerd [1999] 2 WLR 489 at 491-492. 14 The Emilie Millon [1905] 2 KB 817; The Spermina (1923) 17 Ll L Rep 17 at 18; Mersey Docks & Harbour Board v Hay: SS The Countess [1923] AC 345 at 374; The Spermina (1923) 17 Ll L Rep 52 at 53; British Transport Docks Board v Owners of the Proceeds of Sale of the Charger and Other Vessels: The Charger and Other Vessels [1966] 1 Lloyd’s Rep 670 at 671-672.

[7.110]

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131

not detained or if it is prematurely freed from detention. In that event, any fees or liabilities due have no priority over any other charge.15

[7.100]

Paramount statutory charges and Admiralty proceedings in rem

A ship which has been detained pursuant to a statutory power of detention in relation to a civil claim is nonetheless susceptible to arrest in Admiralty proceedings in rem.16 If it is arrested, then for so long as it remains under arrest, the detention of the ship is suspended.17 If the ship is subsequently sold in proceedings in rem, the priority originally secured by the detention under the statutory power is transferred to the proceeds of sale of the ship.18 A ship which has been detained with a view to forfeiture by way of a penalty can also be arrested in proceedings in rem, though the court then has a discretion on how to adjust the rights of the competing claimants.19 A ship which is under arrest in proceedings in rem cannot be detained pursuant to a statutory power of detention if this power relates to a civil claim.20

[7.110]

Effect on mortgage upon a sale pursuant to a statutory right of sale

If a ship is sold pursuant to a statutory right of sale, the ship is sold free of any mortgage, at least if the purchaser was unaware of this encumbrance at the time of the sale.21

15 The Emilie Millon [1905] 2 KB 817; British Transport Docks Board v Owners of the Proceeds of Sale of the Charger and Other Vessels: The Charger and Other Vessels [1966] 1 Lloyd’s Rep 670 at 672. 16 Admiralty Act 1988 (Cth), s 36(1), (3). 17 Admiralty Act 1988 (Cth), s 36(4). 18 Admiralty Act 1988 (Cth), s 36(5). 19 Readhead v Admiralty Marshal, Western Australia District Registry (1998) 87 FCR 229 at 246-247. 20 Admiralty Act 1988 (Cth), s 36(1), (2). 21 The Blitz [1992] 2 Lloyd’s Rep 441 at 443.

8

Maritime Liens [8.10] NATURE OF A MARITIME LIEN ................................................................. 134

[8.10] Introduction to maritime liens ........................................................ 134 [8.30] Maritime liens and proceedings in rem ......................................... 135 [8.60] PROPERTY TO WHICH A MARITIME LIEN ATTACHES ...................... 137

[8.60] Property capable of attracting a maritime lien ............................ 137 [8.90] The particular property to which a maritime lien attaches ....... 138 [8.100] Surrogate ships not available for enforcement of a maritime lien ...................................................................................................... 139 [8.120] CLAIMS SUPPORTING A MARITIME LIEN ........................................... 140

[8.120] Maritime lien for ship damage ...................................................... 140 [8.190] Maritime lien for salvage reward ................................................. 144 [8.220] Maritime lien for wages ................................................................. 145 [8.310] CLAIMS NOT SUPPORTING A MARITIME LIEN ................................. 152 [8.350] PRIORITIES OF MARITIME LIENS ........................................................... 154

[8.350] Introduction to priorities of maritime liens ................................ 154 [8.370] Priority between maritime liens and other charges .................. 155 [8.420] Priority between different kinds of maritime liens ................... 156 [8.440] Priority between maritime liens of the same kind .................... 157 [8.450] EFFECT OF PARTICULAR CIRCUMSTANCES UPON MARITIME LIENS ................................................................................................................ 158

[8.450] Effect of change of ownership of ship ......................................... 158 [8.470] Effect of judicial sale following arrest .......................................... 160 [8.480] Effect of shipwreck .......................................................................... 161 [8.490] PERIOD OF LIMITATIONS .......................................................................... 161 [8.520] EXTINGUISHMENT OF MARITIME LIENS ............................................ 162 [8.590] MARITIME LIENS AND PRIVATE INTERNATIONAL LAW ............... 164 [8.600] PROPOSALS FOR REFORM OF THE LAW OF MARITIME LIENS ... 165 [8.620] STATUTORY RIGHTS OF ACTION IN REM AND STATUTORY LIENS ................................................................................................................ 166

134

Shipping Law

[8.10]

NATURE OF A MARITIME LIEN Introduction to maritime liens [8.10]

A maritime lien is a species of charge that attaches to particular property — most commonly a ship — to secure certain types of claims. Under general maritime law, a maritime lien secures a claim for damage caused by a ship, salvage reward, and crew’s wages. The last category has, however, been extended by statute to include claims for masters’ wages and masters’ disbursements.1 (The position of bottomry and respondentia are considered separately in Chapter 9 on account of their distinctive nature.) Although maritime liens have been recognised as a distinct form of charge on property for over 160 years,2 certain aspects of their nature remain a source of controversy and debate. For example, it is still not entirely clear whether a maritime lien confers on the lienee an interest in property or only a right against property. Nor is it clear whether, or to what extent, a maritime lien is transferable. One English authority on maritime liens said some 70 years ago, “No branch of English law would seem to involve more difficulty and inconsistency than that portion of Admiralty jurisdiction relating to the concept of the maritime lien”.3 This is certainly an overstatement, but the point is well taken: the law relating to maritime liens is not as well developed, either in England or in Australia, as many other branches of law.

[8.20]

Four characteristics of a maritime lien

Four characteristics of a maritime lien are clear. The first is that a maritime lien is a charge over property which is enforceable by proceedings instituted directly against the property itself.4 These proceedings are known as proceedings “in rem”, that is, against a “thing” (in Latin “res”). A maritime lien is, indeed, enforceable only by proceedings in rem. The claim which gives rise to a maritime lien may also be enforceable by proceedings “in personam” (against a person), but the lien itself is not. The relationship between a maritime lien and proceedings in rem is considered in more detail at [8.50]. The second characteristic of a maritime lien is that it attaches to property automatically, by operation of law, upon the occurrence of certain acts or 1 See Admiralty Act 1988 (Cth), s 15(2). This list is not exclusive: Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 470-471. 2 The case which is regarded as marking the emergence of the modern maritime lien is Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884. For the history of maritime liens, see P M Herbert, “The Origin and Nature of Maritime Liens” (1930) 4 Tulane Law Review 381; D R Thomas, Maritime Liens (Stevens & Sons Ltd, London, 1980), pp 6-9. 3 G Price, “Maritime Liens” (1941) 57 LQR 409. 4 See Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884 at 282-283; 889-890.

[8.40]

8 Maritime Liens

135

events.5 A maritime lien cannot be granted or otherwise specifically created.6 There may appear to be an exception to this rule, for bottomry and respondentia are traditionally classified as maritime liens, and they were always deliberately created by the owner or master of a ship. These two charges, however, are so distinctive, not only in this but in other respects, that they are treated in this work as sui generis and not as a species of maritime lien. The third characteristic of a maritime lien is that it continues to adhere to property notwithstanding any change in ownership. This is so even though the new owner might be a bona fide purchaser for value. The fourth characteristic is that a maritime lien enjoys priority over most other charges, the principal exception being a paramount statutory charge. All of these characteristics are considered in detail in this chapter.

Maritime liens and proceedings in rem [8.30]

Notwithstanding the common meaning of the word “lien”, a maritime lien does not require possession, as does a possessory lien.7 Nor does it give any right to possession.8 A maritime lien gives only a right to enforce a claim by the institution of proceedings in rem in a court exercising Admiralty jurisdiction.9

[8.40]

Proceedings in rem

Proceedings in rem are commenced by the issue of a writ directed against the subject property itself,10 not against the owner of the ship. Upon the issue of the writ, a party — usually the plaintiff — may apply to the Registrar of the court to have the property arrested by the Admiralty Marshal.11 The arrest of the property might well induce the owner to enter a formal appearance in the proceedings, for unless the owner does so, he or she cannot defend the action. If the action is not defended, the court will without more make an order for the sale of the arrested property and for the proceeds to be applied to satisfy the plaintiff’s claim. If the owner does enter an appearance, the proceedings then continue, not simply as proceedings in rem, but also as proceedings in personam — 5 The Pacific (1864) Br & Lush 243; 167 ER 356 at 246; 358; The Mary Ann (1865) LR 1 A & E 8 at 11; Johnson v Black: The Two Ellens (1872) LR 4 PC 161 at 169; The Tolten [1946] P 135 at 150. 6 See Admiralty Commissioners v Valverda (Owners) [1938] AC 173 at 186. 7 Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884 at 284; 890. 8 The Tervaete [1922] P 259 at 274. 9 Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884 at 284; 890; The Ripon City [1897] P 226 at 242; The Tervaete [1922] P 259 at 274. Note also Admiralty Act 1988 (Cth), s 15(1). 10 Admiralty Act 1988 (Cth), s 3(2); Admiralty Rules 1988 (Cth), r 19. 11 See Admiralty Rules 1988 (Cth), Pt VI, Div 1.

136

Shipping Law

[8.50]

that is, against the owner personally.12 In this event, all the owner’s assets — and not just the arrested property — are available to satisfy the plaintiff’s claim.13 Proceedings in rem have the advantage of enabling a plaintiff to obtain security for his or her claim by the arrest of the subject property. They often have the disadvantage, however, of effectively limiting the plaintiff’s claim to the value of this property, for unless the owner enters an appearance this is all that the plaintiff can recover in the proceedings. But that is not necessarily the end of the matter. If the owner does not enter an appearance and the plaintiff does not obtain full satisfaction from proceedings in rem, he or she may then institute separate proceedings in personam against the owner or other person liable in order to obtain full satisfaction.14 Similarly, if the plaintiff first institutes proceedings in personam and does not obtain full satisfaction, he or she may then institute proceedings in rem for the difference.15 This assumes, of course, that the owner or the property is within the jurisdiction of the court, which might not be the case. The nature of proceedings in rem has given rise to differences of opinion on whether an action in rem is in reality an action against the owner of the ship (the personification theory) or whether it is first and foremost an action against property (the procedural theory). Australia presently espouses the latter,16 whilst England supports the former.17

[8.50]

Relationship between maritime liens and proceedings in rem

All maritime liens confer a right on the lienee to institute proceedings in rem, for this is essential to the nature of a maritime lien.18 Not every right to institute proceedings in rem, however, involves a maritime lien, for statute also confers this right upon the holder of other types of claim.19 12 The Dictator [1892] P 304 at 319-321; The Gemma [1899] P 285 at 291-292; The Beldis [1936] P 51 at 75-76; Compania Naviera Vascongada v SS Christina [1938] AC 485 at 492; Monte Ulia (Owners) v Banco (Owners): The Banco [1971] P 137 at 151; The Conoco Britannia [1972] 2 QB 543 at 555; Aichhorn & Co KG and Switzerland General Insurance Co Ltd v The Ship MV Talbot (1974) 132 CLR 449 at 456; Caltex Oil (Aust) Pty Ltd v Dredge Willemstad (1976) 136 CLR 529 at 538-539; The August 8 [1983] 2 AC 450 at 456; Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878 at 908. 13 The Beldis [1936] P 51 at 76; Compania Naviera Vascongada v SS Christina [1938] AC 485 at 492; Monte Ulia (Owners) v Banco (Owners): The Banco [1971] P 137 at 151; Caltex Oil (Aust) Pty Ltd v Dredge Willemstad (1976) 136 CLR 529 at 538-539. 14 Yeo v Tatem and Dwerry House Braginton; The Orient (1871) LR 3 PC 696 at 702; The Nordglimt [1987] 2 Lloyd’s Rep 470 at 483. Quaere, is this rule limited to cases involving maritime liens? See Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878 at 911-912. 15 Ocean Industries Pty Ltd v Owners of the Ship MV Steven C [1994] 1 Qd R 69 at 72. 16 See Comandate Marine Corporation v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45. 17 Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878. 18 Admiralty Act 1988 (Cth), s 15(1). 19 See Admiralty Act 1988 (Cth), ss 16 – 18.

[8.60]

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137

The difference between a claim secured by a maritime lien and a claim giving rise to a statutory right of action in rem is considered in more detail at [8.620]–[8.650]. One fundamental difference, however, concerns priority. A claim secured by, and enforced as, a maritime lien has a higher priority than a claim giving rise simply to a statutory right of action in rem. This results from the fact that the priority of a maritime lien dates from the moment the claim arises, for this is when the lien attaches to the property.20 From this moment the claimant — the lienee — becomes a secured creditor. The priority of a statutory right of action in rem, however, dates only from the time proceedings in rem are commenced, for only then does a charge attach to the property to secure the claim.21 The right to institute proceedings in rem, and the right of priority in the distribution of the proceeds of sale, are not just incidental aspects of a maritime lien: they are fundamental to the notion, and thus to the definition, of this species of charge. This has been well recognised by the courts, with particular reference to ships. In The Tolten,22 for example, Scott LJ described a maritime lien as, “The substantive right of putting into operation the admiralty court’s executive23 function of arresting and selling the ship … thereby enforcing distribution of the proceeds among the lien creditors in accordance with their several priorities”.24 In The Tervaete,25 Scrutton LJ defined a maritime lien more shortly as essentially a “priority in claim over the proceeds of sale of the ship in preference to other claimants”.26

PROPERTY TO WHICH A MARITIME LIEN ATTACHES Property capable of attracting a maritime lien [8.60]

A maritime lien can attach to three species of property, namely a ship, cargo, and freight (ship’s earnings). These three species of property constitute the class of “maritime property”.

20 See The Pacific (1864) Br & Lush 243; 167 ER 356 at 246; 358; The Mary Ann (1865) LR 1 A & E 8 at 11; Johnson v Black: The Two Ellens (1872) LR 4 PC 161 at 169; The Tolten [1946] P 135 at 150. See also Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884 at 285; 890-891. 21 C & CJ Northcote v The Owners of the Henrich Bjorn: The Henrich Bjorn (1886) 11 App Cas 270 at 277; The Cella (1888) 13 PD 82; Dalgety & Co Ltd v Aitchison: The Rose Pearl (1957) 2 FLR 219 at 227; John Carlbom & Co Ltd v Zafiro (Owners): The Zafiro [1960] P 1 at 13; Dalgety & Co Ltd v Aitchison: The Rose Pearl (1957) 2 FLR 219 at 227. 22 The Tolten [1946] P 135. 23 The judge subsequently explained (The Tolten [1946] P 135 at 146): “I call that function of the court ‘executive’ because, once the lien is admitted, or is established by evidence of the right to compensation … there is then no further judicial function for the court to perform, save that in the registry where priorities, quantum and distribution are dealt with.” 24 The Tolten [1946] P 135 at 145-146. 25 The Tervaete [1922] P 259. 26 The Tervaete [1922] P 259 at 270; see also at 274.

138

[8.70]

Shipping Law

[8.70]

“Ship”

For the purpose of the law of maritime liens, a “ship” includes not only the hull of a ship but also its tackle and equipment, for example its sails, rigging, and fishing gear.27 A maritime lien cannot attach to a structure which, though it may have certain features of a ship, is not in fact a ship.28 A maritime lien accordingly cannot attach to a hovercraft if this is not technically classifiable as a ship (a question which is still unresolved29). The extended definition of a ship to include a hovercraft in s 3(1) of the Admiralty Act 1988 (Cth) probably does not resolve this point as this Act does not purport to affect the substantive law of maritime liens.30

[8.80]

Relevance of nationality and sovereign immunity

A maritime lien can attach to property regardless of its nationality or the nationality of its owner.31 A lien cannot, however, attach to property owned by a person who enjoys immunity from process.32 This is because a maritime lien can be enforced only by proceedings in rem against the subject property. Accordingly, if the right to institute these proceedings is denied by immunity from process, the lien itself cannot exist.33 A maritime lien can, however, attach to property which is simply requisitioned by a person enjoying immunity from process, though it cannot be enforced for so long as it remains requisitioned.34 Because the Crown ordinarily enjoys immunity from process, a maritime lien cannot normally attach to any property which is owned by the Crown.35

The particular property to which a maritime lien attaches [8.90]

It is commonly said that a maritime lien attaches only to the particular property in respect of which the claim founding the lien arises; in other words, only to the property which gives rise to the relevant claim. Although this is broadly true, it is not entirely accurate, for although the particular property in respect of which a maritime lien may

27 The Alexander (1812) 1 Dods 278; 165 ER 1310 at 282; 1312. See also The Dundee (1823) 1 Hagg Adm 109; 166 ER 39 at 124; 45. 28 On the characteristics of a ship, see Chapter 1. 29 For judicial indications that a hovercraft might be classifiable as a ship, see Noseda v Hoverlloyd Ltd [1974] 1 Lloyd’s Rep 448 at 451; Imperial Oil Ltd v The Expo Spirit (1987) 80 NR 259. 30 See the broad scope of Admiralty Act 1988 (Cth), s 15. 31 See Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 235-236. 32 The Tervaete [1922] P 259. 33 The Tervaete [1922] P 259 at 274. 34 The Broadmayne [1916] P 64. See also The Meandros [1925] P 61. 35 Young, Master of SS Furnesia v SS Scotia [1903] AC 501 at 504-505. On the immunity of the Crown in right of both the Commonwealth and the States from proceedings in rem, see Admiralty Act 1988 (Cth), s 8.

[8.110]

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arise is either a ship or cargo, a maritime lien extends from such property to any related freight (ship’s earnings).36 It should be observed that it is only in this indirect way that a maritime lien can attach to freight: a maritime lien cannot attach to freight alone.37 The basic rule may perhaps be put better negatively, that a maritime lien cannot attach to maritime property which is unconnected with the circumstances giving rise to the lien.38 A maritime lien which attaches to a ship does not extend to its cargo.39 A lien can attach to a ship’s cargo only by salvage of the cargo.40 Once a maritime lien attaches to a ship or other property, it continues to adhere to any remaining part of it in the event of wreckage.41

Surrogate ships not available for enforcement of a maritime lien [8.100]

Proceedings in rem for the enforcement of a maritime lien may be instituted against only the particular property to which the lien attaches.42 This rule can result in an injustice, not least by virtue of the procedural rule that a writ in rem can be served on property only if it is within the jurisdiction.43 The owner of property to which a maritime lien attaches can thus avoid proceedings in rem simply by keeping the property out of the jurisdiction. So, for example, the owner of a ship that has caused damage in a collision, and to which a maritime lien for damage consequently attaches, can avoid proceedings in rem against the ship in Australia simply by keeping it outside Australian waters. Under general maritime law, one ship cannot be substituted for another in proceedings in rem, even if they are both owned by the same person.

[8.110]

Admiralty Act provisions not available

The Admiralty Act 1988 (Cth) has amended to a limited extent the old rule prohibiting the substitution of one ship for another in proceedings in rem: 36 Smith v Plummer (1818) 1 B & Ald 575; 106 ER 212 at 582; 214; The Lady Durham (1835) 3 Hagg Adm 196; 166 ER 378 at 200, 201; 380; Morgan v Castlegate Steamship Co Ltd: The Castlegate [1893] AC 38 at 48-49, 54-55, 55-56. 37 Smith v Plummer (1818) 1 B & Ald 575; 106 ER 212 at 582; 214; Morgan v Castlegate Steamship Co Ltd: The Castlegate [1893] AC 38 at 48-49, 54-55, 55-56. 38 The Beldis [1936] P 51, esp at 70-73, 86. 39 The Victor (1860) Lush 72; 167 ER 38 at 76; 40. 40 See The Lady Durham (1835) 3 Hagg Adm 196; 166 ER 378 at 200; 380; The Riby Grove (1843) 2 W Rob 52; 166 ER 675 at 59-60; 677. 41 The Sydney Cove (1815) 2 Dodds 11; 165 ER 1399 at 13; 1400; The Neptune (1824) 1 Hagg Adm 227; 166 ER 81 at 238; 85; The Reliance (1843) 2 W Rob 119; 166 ER 700; The Lady Durham (1835) 3 Hagg Adm 196; 166 ER 378 at 201; 380. 42 The Beldis [1936] P 51. 43 Admiralty Act 1988 (Cth), s 22. See also Aichhorn & Co KG and Switzerland General Insurance Co Ltd v The Ship MV Talbot (1975) 132 CLR 449; The Nord Sea and Freccia del Nord: The Freccia del Nord [1989] 1 Lloyd’s Rep 388 at 392.

140

Shipping Law

[8.120]

s 19 now enables a person who is entitled to commence certain proceedings in rem against one ship to commence these proceedings against another ship owned by the same person in its place.44 This right to proceed in rem against “surrogate ships” (sometimes also called “sister ships”45) does not, however, extend to the enforcement of maritime liens. The 1988 Act thereby follows the recommendation of the Australian Law Reform Commission in its report on civil Admiralty jurisdiction in Australia.46 The Commission argued that as maritime liens are a form of inchoate security interest in particular property, proceeding against other property would not be appropriate.47 It expressed the opinion that this restriction would rarely cause an injustice in practice as a claimant in respect of a maritime lien would usually be able to proceed against a surrogate ship pursuant to a statutory right of action in rem covering the same cause of action.48

CLAIMS SUPPORTING A MARITIME LIEN Maritime lien for ship damage [8.120]

If a ship causes damage by reason of a negligent or otherwise wrongful act or manoeuvre for which the owner is responsible, a maritime lien immediately arises against it for the amount of the damage sustained.49 The limits of any damages claim which is supportable by this lien are simply the limits of Admiralty jurisdiction in respect of actions for damage caused by a ship.50 The Admiralty Act 1988 (Cth) expressly states that courts exercising Admiralty jurisdiction have jurisdiction in respect of any claim for damage done by a ship, whether by collision or otherwise.51

44 See D Cremean, “Surrogate Ship Arrest” (2014) 88 ALJ 96. 45 The term “sister ship” is often used to mean simply a ship of the same design as another. For this reason the term “surrogate ship” is more appropriate in the present context. 46 Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), pp 153-161, paras 202-209. 47 Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), pp 159-160, para 208. 48 Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), pp 159-160, para 208. 49 Currie v M’Knight [1897] AC 97; The Tolten [1946] P 135 at 152. 50 The Veritas [1901] P 304 at 311; Union Steamship Co of New Zealand Ltd v Ferguson (1969) 119 CLR 191 at 202. 51 See Admiralty Act 1988 (Cth), s 4(3)(a), with ss 9, 10, 15, 17. Note, however, s 5(3), (4).

[8.140]

[8.130]

8 Maritime Liens

141

Meaning of “damage”

The term “damage” in the present context has a broad meaning. It covers both direct and consequential damage, and it covers personal injury52 as well as damage to property. The property which may be damaged can be property of any kind, movable or immovable, afloat or on shore.53 A maritime lien for damage by a ship is thus not restricted simply to damage to another vessel, though this is a common instance. It can include, for example, damage to a submarine cable,54 a wharf,55 a landing stage,56 or a breakwater.57

[8.140]

“Damage” does not now include loss of life

By virtue of the limits of Admiralty jurisdiction, the notion of damage does not include loss of life.58 Before the commencement of the Admiralty Act, s 262 of the Navigation Act 1912 (Cth) provided that any enactment which conferred Admiralty jurisdiction in respect of damage had effect as though reference to damage included loss of life.59 This section was repealed by the Admiralty Act,60 but no similar provision was substituted. The provision in the Admiralty Act which specifically concerns claims for loss of life61 does not affect the meaning of the term “damage”. It would accordingly appear that in Australia today a maritime lien cannot arise in respect of damage by a ship in so far as it causes loss of life. This is so notwithstanding reg 14(1) of the Navigation Regulation 2013 (Cth), which provides that “if a person on board a vessel suffers personal injury or dies because of the fault of the vessel and of another vessel, the liability of the owners of the vessels is joint and several”. This sub-regulation does not affect the meaning of the term “damage”.

52 The Theta [1894] P 280; The Tolten [1946] P 135 at 147; Nagrint v Ship Regis, formerly the Ship Rodney (1939) 61 CLR 688 at 693-696; Union Steamship Co of New Zealand Ltd v Ferguson (1969) 119 CLR 191, esp at 202; Bistricic v Rokov (1976) 135 CLR 552 at 560. 53 The Tolten [1946] P 135 at 147, 152. 54 The Clara Killam (1870) LR 3 A & E 161. 55 The Tolten [1946] P 135. 56 The Veritas [1901] P 304. 57 The Uhla (1867) LR 2 A & E 29n. 58 Smith v Brown (1871) 6 QB 729; Seward v Owner of the Vera Cruz: The Vera Cruz (1884) 10 App Cas 59; Nagrint v Ship Regis, formerly the Ship Rodney (1939) 61 CLR 688 at 693-695. Compare The Guildfaxe (1868) LR 2 A & E 325; The Explorer (1870) LR 3 A & E 289; The Franconia (1877) 2 PD 163. 59 There were, however, doubts on the constitutionality of this section: see Nagrint v Ship Regis, formerly the Ship Rodney (1939) 61 CLR 688 at 695-696; Parker v Commonwealth (1965) 112 CLR 295 at 298. 60 Section 55(1). 61 See s 4(3)(d).

142

Shipping Law

[8.150]

[8.150]

Shipowner must be liable for the damage

The basis of a maritime lien for ship damage is a negligent or otherwise wrongful act or manoeuvre for which the ship’s owner62 is liable, either directly or vicariously.63 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.64 A maritime lien thus does not arise if a ship causes damage when it is simply lying as a wreck,65 or drifting out of control, where no related liability can be established in the owner. A maritime lien similarly does not arise from an act or manoeuvre which is performed without the authority of the ship’s owner.66 Nor does a lien arise if a ship causes damage when it is under the control of an independent contractor,67 and a fortiori when it is under the wrongful control of another.

[8.160]

Ship must be the cause of the damage

For a maritime lien to arise for damage by a ship, the ship must itself be the cause of the damage.68 This is often expressed in terms that the ship must be the “instrument” of the damage.69 The term “ship” in the present context refers not only to the hull of a ship but also to the machinery and equipment on board the ship.70 It also includes members of the crew fulfilling their duties aboard the ship.71 62 A shipowner for present purposes includes a demise charterer: The Ticonderoga (1857) Swa 215; 166 ER 1103 at 217; 1104; The Lemington (1874) 2 Asp MLC 475 at 478; Medway Drydock & Engineering Co Ltd v MV Andrea Ursula: The Andrea Ursula [1973] QB 265 at 270. 63 The Lemington (1874) 2 Asp MLC 475 at 478; Owners of SS Utopia v Owners of SS Primula: The Utopia [1893] AC 492 at 499; Berliner Bank AG v C Czarnikow Sugar Ltd; The Rama [1996] 2 Lloyd’s Rep 281 at 293, 295. 64 The Parlement Belge (1880) 5 PD 197 at 218; Morgan v Castlegate Steamship Co Ltd: The Castlegate [1893] AC 38 at 52; Owners of SS Utopia v Owners of SS Primula: The Utopia [1893] AC 492 at 499; The Sylvan Arrow [1923] P 220. See also Rosenfeld Hillas & Co Pty Ltd v Ship Fort Laramie (1922) 31 CLR 56 at 63. 65 Owners of SS Utopia v Owners of SS Primula: The Utopia [1893] AC 492. 66 The Lemington (1874) 2 Asp MLC 475 at 478; The Ripon City [1897] P 226 at 244-245. See also The Druid (1842) 1 Wm Rob 391; 166 ER 619 at 399-400; 622; The Ida (1860) Lush 6; 167 ER 3 at 9; 5. 67 See The Sylvan Arrow [1923] P 220. Compare, however, The Ruby Queen (1861) Lush 266; 167 ER 119, which can no longer be good law in light of the following cases: The Lemington (1874) 2 Asp MLC 475 at 478; Owners of SS Utopia v Owners of SS Primula: The Utopia [1893] AC 492 at 499; Berliner Bank AG v C Czarnikow Sugar Ltd; The Rama [1996] 2 Lloyd’s Rep 281 at 293, 295. 68 Currie v M’Knight [1897] AC 97. See also The Vera Cruz (No 2) (1884) 9 PD 96 at 99, 101; Nagrint v Ship Regis, formerly the Ship Rodney (1939) 61 CLR 688 at 698-700; The Eschersheim [1976] 1 WLR 430 at 438. 69 See Berliner Bank AG v C Czarnikow Sugar Ltd; The Rama [1996] 2 Lloyd’s Rep 281 at 293, 295. 70 The Minerva [1933] P 224; Nagrint v Ship Regis, formerly the Ship Rodney (1939) 61 CLR 688, esp at 700; Union Steamship Co of New Zealand Ltd v Ferguson (1969) 119 CLR 191. See also The Sylph (1867) LR 2 A & E 24. 71 The Clara Killam (1870) LR 3 A & E 161.

[8.170]

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It follows from what has just been said that it is not sufficient that damage be caused simply by persons who happen to be on board the ship, even if they be members of the crew, provided they are not then fulfilling their duties.72 Nor is it sufficient that damage be caused by persons off the ship though whilst acting for the benefit of the ship.73 In neither case is the ship then the cause of the damage. In Australia, any damage gives rise to a maritime lien provided it is caused by the ship in the sense just indicated. There is thus no requirement in Australia that the damage be external to the ship.74 There is modern English authority, however, for the proposition that damage gives rise to a maritime lien only if it is sustained by a person or property external to the ship.75 In neither Australia nor England is there any requirement that the damage result from a collision.76

[8.170]

Location of accident generally irrelevant

Provided the damage does not occur on Australian inland waters,77 the geographical location of where the damage occurs is immaterial. English and Australian cases have held a maritime lien to attach to a ship that has caused damage, among other places, on a river78 and in a dock.79 The damage can, moreover, be caused anywhere in the world.80 Some early 19th century cases indicate that the damage must be caused “on the high seas outside the body of a county”. This, however, was due to jurisdictional limitations of the old High Court of Admiralty. Under the Admiralty Act, the only related limitation prevents the institution of

72 Nagrint v Ship Regis, formerly the Ship Rodney (1939) 61 CLR 688 at 698. 73 Currie v M’Knight [1897] AC 97, esp at 101, 106-107, 108. 74 Union Steamship Co of New Zealand Ltd v Ferguson (1969) 119 CLR 191, esp at 202-203, 209, 211-212. Compare Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 462. 75 Berliner Bank AG v C Czarnikow Sugar Ltd; The Rama [1996] 2 Lloyd’s Rep 281 at 293, 295. See also The Theta [1894] P 280. 76 Union Steamship Co of New Zealand Ltd v Ferguson (1969) 119 CLR 191; The Eschersheim [1976] 1 WLR 430 at 438. See also The Sylph (1867) LR 2 A & E 24; The Minerva [1933] P 224; Nagrint v Ship Regis, formerly the Ship Rodney (1939) 61 CLR 688. 77 Admiralty Act 1988 (Cth), s 5(3)(b) (but note subs (4)). 78 See Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884 (collision on the River Humber). See also Malcolmson v Meeson: The Malvina (1863) 1 Moo PCC (NS) 357; 15 ER 736 (collision at Blackwall Reach on the River Thames). 79 See The Veritas [1901] P 304 (collision in the Mersey Docks); Union Steamship Co of New Zealand Ltd v Ferguson (1969) 119 CLR 191 (accident at a wharf at Burnie). 80 See The Diana (1862) Lush 539; 167 ER 243 (collision in the Great North Holland Canal); The Courier (1862) Lush 541; 167 ER 244 (collision in the port of Rio Grande); The Tolten [1946] P 135 (damage to a wharf at Lagos).

144

Shipping Law

[8.180]

proceedings for any cause of action arising in respect of an Australian ship on inland waters within Australia.81 By “inland waters” here is meant non-tidal waters.82

[8.180]

Lien against associated freight

When a maritime lien attaches to a ship for damage done by it, a lien also attaches to any freight that is then being earned by the ship.83

Maritime lien for salvage reward [8.190]

A maritime lien attaches to any salvable property which is saved as a result of salvage services.84 Salvable property is of two basic kinds: a ship and its cargo.85 When a maritime lien attaches to such property, it also attaches to any freight that is consequently saved.86 The maritime lien secures the salvor’s reward for the successful salvage of the property. As under general maritime law there is no salvage reward for unsuccessful salvage services, no maritime lien attaches to property for any salvage services that are unsuccessful.87 It would also appear that there is no maritime lien for “special compensation” under the International Convention on Salvage 1989, which is now part of the salvage law of Australia.88 If more than one salvor salvages property, each has a separate lien on the property to secure his or her own reward.89 If more than one item of salvable property is saved, the lien on each item ordinarily secures an amount of the total reward that is proportionate to its value.90 Like all maritime liens, the lien for salvage reward arises by operation of law. It is not, and cannot be, created by contract.91 Any purported creation of a salvage lien in a salvage contract at most simply confirms the 81 Section 5(3)(b) (but note subs (4)). 82 Section 3(1) (definitions of “inland waters”, “sea”). 83 The Orpheus (1871) LR 3 A & E 308 at 312-313. 84 See The Two Friends (1799) 1 C Rob 271; 165 ER 174 at 277; 176; The Gustaf (1862) Lush 506; 167 ER 230 at 508; 231; HMS Thetis (1833) 3 Hagg Adm 14; 166 ER 312 at 48; 324-325; Cargo Ex Schiller (1877) 2 PD 145 at 149; The Veritas [1901] P 304 at 311-312; Robinson v Western Australian Museum (1977) 138 CLR 283 at 320. 85 See Chapter 20. 86 See The Westminster (1841) 1 W Rob 229; 166 ER 558. 87 The India (1842) 1 W Rob 406; 166 ER 625 at 408 (W Rob); The Cheerful (1885) 11 PD 3. 88 See Navigation Regulation 2013 (Cth), reg 17. 89 The Two Friends (1799) 1 C Rob 271; 165 ER 174 at 277; 176. 90 The Westminster (1841) 1 Wm Rob 229; 166 ER 558 at 233; 559-560; The Pyrennee (1863) Br & Lush 189; 167 ER 330. Note in this connection Navigation Act 1912 (Cth), s 315; Sch 9, Art 13.2. 91 Admiralty Commissioners v Valverda (Owners) [1938] AC 173 at 186. See also The Ever Success [1999] 1 Lloyd’s Rep 824 at 828.

[8.220]

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145

existence of the lien. Parties can, however, always settle between themselves the incidents of a salvage lien by contract. For example, they can determine the quantum of the salvage reward,92 the particular person liable to pay the reward,93 and the conditions under which the reward is to be paid. By s 243 of the Navigation Act 2012, the Commonwealth, a State or a Territory is entitled to claim payment for any salvage operation that it undertakes the same as any other salvor. This almost certainly means that such payments are secured by a maritime lien.

[8.200]

No lien for mere towage services

Notwithstanding an old Australian decision to the contrary,94 it is now understood that a maritime lien does not arise simply from towage services where these do not form part of salvage services.95 Towage services do, however, give rise to a statutory right of action in rem enabling the person providing these services to commence proceedings directly against the ship for the costs involved.96

[8.210]

No lien for saving life

Under general maritime law, no maritime lien arises for saving life. The reason for this is that there is no “thing” (“res”) to which a lien can attach.97 There is simply an individual who has been saved, and liens do not attach to a person. Something akin to a statutory maritime lien for saving life formerly arose under s 315 of the Navigation Act 1912. However, that provision was repealed in 1995.

Maritime lien for wages Maritime lien for crew wages

[8.220]

A maritime lien attaches to a ship to secure the wages due to the crew for services performed aboard, or otherwise for the benefit of, the ship.98 The same lien also secures certain other expenses and payments which are regarded by the courts as associated with the crew’s employment. A maritime lien does not attach to a ship to secure wages for services performed aboard another ship owned by the same owner.99

92 The Inna [1938] P 148. 93 See The Cumbrian (1887) 6 Asp MLC 151; The Prince Heinrich (1888) 13 PD 31. 94 The Macgregor: Heselton’s Claim (1876) 14 SCR 107 at 111-113. 95 C & CJ Northcote v Owners of the Henrich Bjorn: The Henrich Bjorn (1886) 11 App Cas 270 at 283; Westrup v Great Yarmouth Steam Carrying Co (1889) 43 Ch D 241. 96 Admiralty Act 1988 (Cth), s 4(3)(j), with s 17. 97 See Cargo ex Schiller (1877) 2 PD 145 at 149-150. 98 The Tarcoma City [1990] 1 Lloyd’s Rep 408 at 411; The Tarcoma City [1991] 1 Lloyd’s Rep 330 at 347. 99 The Julindur (1853) 1 Spinks Ecc & Ad 71; 164 ER 42; The Tarcoma City [1990] 1 Lloyd’s Rep 408 at 411; The Tarcoma City [1991] 1 Lloyd’s Rep 330 at 347.

146

Shipping Law

[8.230]

When a maritime lien for wages attaches to a ship, it also attaches to the ship’s freight.100 The lien does not, however, extend to the ship’s cargo.101 Nor does it attach to the proceeds of sale of a ship following sale by order of a court in proceedings in rem. In the latter case, the right of priority of any lien attaching to the ship at the time of its sale then transfers to the proceeds of sale102 (a matter considered further at [8.470]). One consequence of the fact that a lien does not attach to the proceeds of sale of a ship is that there can be no lien to secure an entitlement to any further wages that become due following the sale of the ship.103

[8.230]

“Wages”

In the context of maritime law, the term “wages” has a broad meaning and includes not only wages in the strict sense but also emoluments.104 An emolument here is any allowance, bonus or other financial benefit that accrues to the advantage of a member of the crew of a ship as contractual recompense for services that have either been rendered, or in normal circumstances would be rendered,105 for the benefit of the ship.106 An emolument need not be paid, or made, directly to the crew member provided that it nonetheless accrues to the crew member’s advantage by virtue of his or her contract of service. Modern cases have held a crew member’s emoluments to include statutory contributions for social welfare benefits which a shipowner had agreed to pay,107 union contributions paid by a shipowner on behalf of the crew,108 and employer contributions to a superannuation fund.109 All of these financial benefits are accordingly covered by a maritime lien for wages.

100 The Lady Durham (1835) 3 Hagg Adm 196; 166 ER 378 at 200; 380; The Riby Grove (1843) 2 W Rob 52; 166 ER 675 at 59; 677. 101 The Lady Durham (1835) 3 Hagg Adm 196; 166 ER 378 at 200; 380; The Riby Grove (1843) 2 W Rob 52; 166 ER 675 at 59; 677. 102 R Williams, G Bruce, C Jennett and G Phillimore, Williams’ and Bruce’s Admiralty Practice (3rd ed, Sweet & Maxwell, London, 1902), p 319. 103 United States Trust Co of New York v Master and Crew of the Ship Ionian Mariner (1997) 77 FCR 563 at 590-591. 104 Note in this regard Navigation Act 1912 (Cth), s 6(1): “Wages includes emoluments”. 105 See The Tarcoma City [1991] 1 Lloyd’s Rep 330 at 346. 106 See The Tergeste [1903] P 26 at 32; Shelford v Mosey [1917] 1 KB 154; The British Trade [1924] P 104 at 108-110; The Westport (No 4) [1968] 2 Lloyd’s Rep 559 at 562; The Halcyon Skies [1977] QB 14 at 22. See also The Elmville (No 2) [1904] P 422 at 428; The Louise Roth [1905] SALR 107 at 111; Thompson v H & W Nelson Ltd [1913] 2 KB 523; The Halcyon Skies [1977] QB 14 at 22, 31. 107 The Gee-Whiz [1951] Lloyd’s Rep 145; The Arosa Kulm (No 2) [1960] 1 Lloyd’s Rep 97. Compare The Acrux [1965] P 391. 108 The Fairport (No 3) [1966] 2 Lloyd’s Rep 253. 109 The Halcyon Skies [1977] QB 14.

[8.240]

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147

It has been held in England that the notion of “wages” in the present context does not include redundancy, or severance, pay.110 The reason for this is that redundancy pay is basically compensation for losing employment, and not part of the emoluments of employment.111 Put another way, it is not a payment for services rendered, but payment because services are no longer required.112 Certain other expenses and payments are also covered by the wages lien. These include the cost of repatriation in the event of the premature termination of a voyage (“viaticum” as it was formerly called),113 a subsistence allowance pending repatriation,114 and compensation for wrongful dismissal.115

[8.240]

“Crew”

The term “crew” is used here as a modern synonym for the wellestablished legal term “seaman”. The latter word is not particularly apt as there has never been any doubt that a woman can be a seaman just as much as a man.116 The ambit of the terms “crew” or “seaman” depends upon context. In a narrow sense these terms cover every member of a ship’s complement, other than the master or a pilot.117 However, in a broader sense, and in particular in the context of maritime liens, “crew” or “seaman” have been held to mean any person “who is connected with the ship as a ship”.118 In this latter sense, the “crew” of a ship has been held to include not only every member of a ship’s complement other than the master,119 but also anyone who is otherwise employed in service aboard a ship,120 and any person who acts as a member of a ship’s crew unless this person knows 110 The Tarcoma City [1990] 1 Lloyd’s Rep 408 at 415; The Tarcoma City [1991] 1 Lloyd’s Rep 330 at 343-345, 346, 348. 111 The Tarcoma City [1990] 1 Lloyd’s Rep 408 at 415; The Tarcoma City [1991] 1 Lloyd’s Rep 330 at 343-344. 112 The Tarcoma City [1990] 1 Lloyd’s Rep 408 at 415; The Tarcoma City [1991] 1 Lloyd’s Rep 330 at 343-344. 113 The Tergeste [1903] P 26 at 32; The Halcyon Skies [1977] QB 14 at 22. See also Navigation Act 1912 (Cth), s 85(1)(a). 114 The Madonna D’Idra (1811) 1 Dods 37; 165 ER 1224 at 40; 1225; The Immacolata Concezione (1883) 9 PD 37 at 42-43. See also Navigation Act 1912 (Cth), s 85(1)(b). 115 The Great Eastern (1867) LR 1 A & E 384; The Halcyon Skies [1977] QB 14 at 22, 31. Compare The British Trade [1924] P 104 at 110. 116 The Jane and Matilda (1823) 1 Hagg Adm 187; 166 ER 67. 117 See Re Great Eastern Steamship Co; Claim of Williams (1885) 5 Asp MLC 511 at 512-513; Fair Work Ombudsman v Pocomwell Ltd (No 1) (2013) 218 FCR 94 at 124. 118 R v Judge of the City of London Court and the Owners of the SS Michigan (1890) 25 QBD 339 at 343. 119 See Re Great Eastern Steamship Co; Claim of Williams (1885) 5 Asp MLC 511 at 512-513. 120 See Thompson v H & W Nelson & Co [1913] 2 KB 523.

148

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[8.250]

that he or she is not entitled to do so.121 The term has been held to include a ship’s cook,122 a ship’s carpenter,123 a ship’s purser124 and a steward in charge of a bar on a ship.125 There is old authority for the proposition that a seaman can include a person who is simply looking after a ship whilst it is laid up in harbour,126 and even a stevedore.127 A member of the crew of a ship is defined in s 3(1) of the Admiralty Act 1988 as meaning a person who is employed or engaged in any capacity on board the ship on the business of the ship other than the ship’s master, a pilot of the ship and any person temporarily employed on the ship in port. It is probable, however, that this definition does not affect the scope of a maritime lien for crew wages as this Act does not purport to affect the substantive law of maritime liens.128

[8.250]

Ambit of the lien for crew wages

A maritime lien for wages covers work undertaken by a member of a ship’s crew not only on a ship but also off the ship provided the services are referable to the ship.129

[8.260]

Lien for wages and special contracts

Under general maritime law, the lien for wages arose only under a seaman’s contract, and not under a special contract.130 A seaman’s, or “mariner’s”, contract was any oral or written contract (but not a contract under seal) by which a seaman agreed with a shipowner, either directly or through his agent (who could be a ship’s captain131), to render service at an agreed rate for a particular voyage.132 Any other form of contract — for example, one which was under seal, or which was for service for a period of time rather than for a particular voyage — was strictly a special contract. The reason why under general maritime law a maritime lien attached only to a seaman’s contract had to do with the limited jurisdiction of the old High Court of Admiralty. Following successful attempts by the 121 The Ever Success [1999] 1 Lloyd’s Rep 824 at 829-830. 122 The Jane and Matilda (1823) 1 Hagg Adm 187; 166 ER 67. 123 The Bulmer (1823) 1 Hagg Adm 163; 166 ER 59. 124 The Prince George (1837) 3 Hagg Adm 376; 166 ER 445. 125 Thompson v H & W Nelson & Co [1913] 2 KB 523. 126 The Jane and Matilda (1823) 1 Hagg Adm 187; 166 ER 67; The Collaroy: Harris v Robertson (1887) 3 WN (NSW) 97. 127 R v Judge of the City of London Court and the Owners of the SS Michigan (1890) 25 QBD 339 at 342. 128 See the broad scope of s 15. 129 The Ever Success [1999] 1 Lloyd’s Rep 824 at 832. 130 The British Trade [1924] P 104 at 111-112. 131 Re Great Eastern Steamship Co; Claim of Williams (1886) 6 Asp MLC 511 at 513. 132 The Minerva (1825) 1 Hagg Adm 347; 166 ER 123 at 352-353; 125-126.

[8.270]

8 Maritime Liens

149

common law courts to restrict the jurisdiction of the High Court of Admiralty, it became settled that the jurisdiction of the latter court in respect of crew contracts of service was restricted to seamen’s contracts. Special contracts therefore fell within the exclusive jurisdiction of the common law courts. This jurisdictional barrier was broken down in 1861 when s 10 of the Admiralty Court Act 1861 (ENG) provided that the High Court of Admiralty could exercise jurisdiction “over any claim by a seaman of any ship for wages earned by him on board the ship, whether the same be due under a special contract or otherwise”. Following the commencement of s 10 of the 1861 Act, it was argued that the effect of this section was to extend not only the jurisdiction of the court but also the scope of the maritime lien for crew wages, with the result that a maritime lien would arise in respect of all crew contracts. For a long time the principal authority on point was against this proposition.133 In the more recent English case of The Halcyon Skies,134 however, Brandon J held at first instance that s 10 did extend the maritime lien for wages to wages due under a special contract.135 This was a welcome decision as seamen’s contracts had long ceased to be used in England, or in Australia. Until the commencement of the Admiralty Act 1988 (Cth), the provisions of the English Admiralty Court Act 1861 applied to Australia by virtue of s 2 of the Colonial Courts of Admiralty Act 1890 (IMP). In Australia today, the jurisdiction previously conferred by s 10 of the 1861 Act is conferred by s 4(3)(t), with Pt II, of the Admiralty Act. This confers jurisdiction on Australian courts with respect to any claim for, inter alia, crew wages. Statutory maritime lien for master’s wages and disbursements

[8.270]

Under general maritime law, a maritime lien secured only the wages of the crew, and not also the wages of the ship’s master.136 The formal reason for this was that a master’s contract of service was a contract solely upon the credit of the owner and not, like a seaman’s contract, equally a contract upon the credit of the ship.137 The real reason was probably one of public policy.138 In any event, this lacuna has been remedied by statute.

133 The British Trade [1924] P 104. 134 The Halcyon Skies [1977] QB 14. 135 The Halcyon Skies [1977] QB 14 at 30-31. See also Hamilton v Baker: The Sara (1889) 14 App Cas 209 at 216; The Royal Wells [1985] QB 86 at 92. 136 Wilkins, Assignee of Brooke v Carmichael (1779) 1 Doug 101; 99 ER 70 at 105; 72; Smith v Plummer (1818) 1 B & Ald 575; 106 ER 212. 137 Clay v Snelgrave (1700) 1 Ld Raym 576; 91 ER 1285 at 578; 1286. 138 Wilkins, Assignee of Brooke v Carmichael (1779) 1 Doug 101; 99 ER 70 at 105; 72.

150

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[8.280]

[8.280]

Current uncertain state of Commonwealth law

Until 2012, s 94(1) of the Navigation Act 1912 (Cth), gave the master of an Australian139 ship140 “the same rights, liens, and remedies for the recovery of his or her wages as a seaman has by law or custom”.141 By s 6(1), the term “wages” included emoluments. Section 94(2) of the Act, however, went further. This gave the master of an Australian ship similar rights, liens and remedies for the recovery of any disbursements that he has properly made, or liabilities which he has properly incurred, on account of the ship.142 Cases on the related English provision indicated that to come within this subsection the master must have made disbursements, or have incurred liabilities, on account of the ship with either the express or the implied authority of the ship’s owner. In the absence of any express authority, this section was restricted to disbursements made and liabilities incurred by a master for necessaries;143 in other words, it was then confined to the ambit of a master’s implied agency of necessity.144 Both from the terms of s 94 and from cases on the English provisions, the effect of this section was to create a statutory maritime lien for a master’s wages, liabilities and disbursements.145 It was irrelevant to the existence of this lien that the master was also a part-owner of the ship.146 The Navigation Act 1912 was repealed by the Navigation (Consequential Amendments) Act 2012 (Cth),147 and no related provisions were included in the Navigation Act 2012 (Cth), which took its place. It is quite clear, however, that Australian law still recognises a maritime lien that secures a master’s wages and a master’s disbursements, as these are specifically referred to in the Admiralty Act 1988 (Cth).148 The ambit of the lien for master’s wages and disbursements in Australia might still be that set out in s 94 of the repealed Act on the basis that the substance of that section has now become part of general maritime law, independent of statute.

139 As defined in s 10. 140 Note, however, the exclusionary provisions of ss 2(1), 9A. 141 See also Admiralty Act 1988 (Cth), s 15(2)(c). 142 See also Admiralty Act 1988 (Cth), s 15(2)(d). 143 Morgan v Castlegate Steamship Co Ltd: The Castlegate [1893] AC 38, esp at 47-48, 53; The Orienta [1895] P 49. See also The James Seddon (1866) LR 1 A & E 62. 144 On the scope of this agency, see Wallace v Fielden: The Oriental (1851) 7 Moo PC 398; 13 ER 934 at 409; 938; Stainbank v Shepard (1853) 13 CB 418; 138 ER 1262 at at 441; 1271; The Orienta [1895] P 49 at 54. See also Holmes v Norton (1870) 1 AJR 93; Smith v Blair (1884) 5 ALT 177. 145 See The Mary Ann (1865) LR 1 A & E 8 at 12; The Ripon City [1897] P 226 at 242. 146 The Feronia (1868) LR 2 A & E 65 at 74-75. 147 Section 3, Sch 1. 148 Section 15(2)(c), (d); Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369 at 396-399.

[8.300]

[8.290]

8 Maritime Liens

151

Related State law

It is arguable that the provisions of s 167 of the Merchant Shipping Act 1894 (IMP), similar to those in s 94 of the repealed Navigation Act, continue to apply under State and Territorial law unless these have been superseded or repealed. The main difference is that s 167 of the Imperial Act applies to the master of any ship whatsoever whereas s 94 of the Commonwealth Act applied only to the master of an Australian ship. Prima facie, the provisions in s 167 of the Merchant Shipping Act should be more restricted in scope than has just been indicated, because s 260 of the 1894 Act ostensibly confines the operation of Pt II of the Act, in which s 167 appears, to ships registered in the United Kingdom. However, this section has been consistently interpreted more broadly by English courts.149 It is true that early last century a South Australian judge expressed the opinion that the operation of s 167 of the Imperial Act should be confined to ships registered in the United Kingdom,150 but he appears to have been unaware of the English authorities on point. South Australia has terminated the operation of Pt II of the Merchant Shipping Act to this State.151 Queensland has also done so to a limited extent.152 The Australian Capital Territory has repealed the application of the whole of the 1894 Act to this Territory.153 Both Queensland and the Northern Territory once had provisions concerning a master’s lien,154 but these have since been repealed.

[8.300]

Who is a ship’s master for the purposes of a master’s lien?

A master is any person who has command or charge of a ship other than a pilot.155 A person may have command or charge of a ship, and accordingly be its master, even though the ship is laid up with the result that the master is for the time being acting simply as a caretaker.156 There is old Victorian authority for the proposition that if the name of a person is endorsed on a ship’s registration certificate as being the master of that ship, a lien for master’s wages and disbursements can arise in 149 The Milford (1858) Swab 362; 166 ER 1167 at 367; 1170; Poll v Dambe [1901] 2 KB 579 at 586-587; The Tagus [1903] P 44. See also R v Stewart [1899] 1 QB 964. 150 The Louise Roth [1905] SALR 107 at 112-113. 151 Marine Act 1936 (SA), s 131. Although this Act has been repealed, note Acts Interpretation Act 1915 (SA), s 17 (“Repeal not to revive previously repealed enactments”). 152 Queensland Marine Act 1958, s 255. Although this Act has been repealed, note Acts Interpretation Act 1954 (Qld), s 20 (“Saving of operation of repealed Act etc”). 153 Statute Law Amendment Act (No 2) 2002, s 6(1); Sch 4, Pt 4.9. 154 Queensland Marine Act 1958 (Qld), s 77(1), (2); Marine Act (NT), s 49(3). 155 See the definitions in Navigation Act 2012, s 14(1); Admiralty Act 1988 (Cth), s 3(1) (does not exclude pilot). 156 The Collaroy; Harris v Robertson (1887) 3 WN (NSW) 97.

152

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[8.310]

favour of this person only, and not in favour of any other person who may have a claim to be the master of the ship.157

CLAIMS NOT SUPPORTING A MARITIME LIEN [8.310]

Except for claims for ship damage, salvage reward and crew wages, and those other claims which statute has provided to be recoverable in like manner, no claim gives rise to a maritime lien, no matter how close a connection a claim may have to ships and shipping. Special mention should nonetheless be made of claims for towage, pilotage and the supply of necessaries.

[8.320]

Towage and pilotage

Notwithstanding an old Australian decision to the contrary,158 it is now understood that a claim for towage services does not give rise to a maritime lien unless these form part of salvage services.159 It is also now accepted that a claim for pilotage services does not give rise to a maritime lien.160 A claim for both towage and pilotage services does, however, give rise to a statutory right of action in rem enabling the person providing these services to commence proceedings directly against the ship for the costs or charges involved.161

[8.330]

Supply of necessaries

In some jurisdictions, including the United States, a maritime lien secures the costs involved in the provision of necessary goods and services for a ship. This gives “necessaries men” (or “material men”), as the providers of such goods and services have sometimes been called, an important security for their costs. A maritime lien for the provision of necessaries is, however, unknown to either Australian162 or English law.163 For this reason, the possessory lien becomes particularly important to such people as ship repairers, who in other parts of the world might have a maritime lien to secure their costs. 157 The Albion (1872) 3 VR (A) 1 at 6. See also Re the SS Albion: Dunn v Hoyt (1873) 4 AJR 3. 158 The Macgregor: Heselton’s Claim (1876) 14 SCR 107 at 111-113. 159 C & CJ Northcote v Owners of the Henrich Bjorn: The Henrich Bjorn (1886) 11 App Cas 270 at 283; Westrup v Great Yarmouth Steam Carrying Co (1889) 43 Ch D 241. 160 See The Ambatielos; The Cephalonia [1923] P 68 at 75; D R Thomas, Maritime Liens (Stevens & Sons Ltd, London, 1980), p 17. Compare The St Lawrence (1880) 5 PD 250 at 253. 161 Admiralty Act 1988 (Cth), s 4(3)(j), (k), with s 17. 162 Shell Oil Co v The Ship Lastrigoni (1974) 131 CLR 1 at 4. Compare Dalgety & Co Ltd v Aitchison: The Rose Pearl (1957) 2 FLR 219 at 226-227. 163 The Pacific (1864) Br & Lush 243; 167 ER 356 at 246; 358-359; Johnson v Black: The Two Ellens (1872) LR 4 PC 161; Laws v Smith: The Rio Tinto (1883) 9 App Cas 356 at 359, 364; C & CJ Northcote v Owners of the Henrich Bjorn: The Henrich Bjorn (1886) 11 App Cas 270, esp at 278-279; Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221.

[8.340]

8 Maritime Liens

153

The position of a provider of any goods and services for a ship is, indeed, particularly poor under Australian and English law, for unless he or she has a possessory lien or some other form of security, the provider’s position is simply that of an unsecured creditor. He or she thus ranks below not only any maritime lienee but also any mortgagee.164 This is so notwithstanding that the provision of services in the form of, for example, ship repairs may increase the value of the ship and thus enhance the security of any existing lienee or subsequent mortgagee.165 A claim for the supply of necessaries does, however, give rise to a statutory right of action in rem as a claim under the Admiralty Act 1988 “in respect of goods, materials or services166 … supplied or to be supplied to a ship for its operation167 or maintenance”.168 This enables the person providing these necessaries to commence proceedings directly against the ship for the costs or charges involved. Upon the commencement of these proceedings, a statutory lien attaches to the ship. Statutory rights of action in rem and the resulting statutory liens are considered at [8.620].

[8.340]

No new maritime liens created by the Admiralty Act

In its report on civil Admiralty jurisdiction in Australia,169 the Australian Law Reform Commission recommended against the creation of any new maritime liens.170 The resulting legislation, the Admiralty Act 1988 (Cth), specifically states in s 6(a) that the provisions of this Act do not create any new maritime lien.171 This does not preclude the possibility of the courts recognising new maritime liens in circumstances require that this,172 though this is considered to be unlikely. 164 Johnson v Black: The Two Ellens (1872) LR 4 PC 161, esp at 170; Giovanni Dapueto v James Wyllie & Co: The Pieve Superiore (1874) LR 5 PC 482 at 491; The Colorado [1923] P 102 at 108, 109; The Zigurds [1932] P 113 at 129; The Pickaninny; George Hammond & Co (Interveners) [1960] 1 Lloyd’s Rep 533. See also The Arosa Star [1959] 2 Lloyd’s Rep 396 at 400. 165 As in The Pickaninny; George Hammond & Co (Interveners) [1960] 1 Lloyd’s Rep 533. 166 On the scope of “services” in this context, see Port of Geelong Authority v The Bass Reefer (1992) 37 FCR 374 at 385-387. 167 On the scope of “operation” in this context, see Port of Geelong Authority v The Bass Reefer (1992) 37 FCR 374 at 387. 168 Section 4(3)(m), with s 17. This clearly includes the supply of necessaries: The River Rima [1988] 1 WLR 758 at 764; Port of Geelong Authority v The Bass Reefer (1992) 37 FCR 374 at 387. See also The Fairport (No 5) [1967] 2 Lloyd’s Rep 162; The Queen of the South [1968] P 449 at 455. 169 Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986). 170 Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), pp 88-89, para 121. 171 Section 6(a). 172 See the non-exclusive terms of s 15(2); Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 471.

154

Shipping Law

[8.350]

PRIORITIES OF MARITIME LIENS Introduction to priorities of maritime liens [8.350]

The rules concerning the priority of maritime liens are notoriously complex. One difficulty in trying to reduce them to a basic scheme is that they are not inflexible. An order of priorities adopted in one case may not be followed in another if the court believes that considerations of justice or public policy warrant a departure from the established rules of ranking. The foregoing has led some commentators to deny the existence of any strict rules of ranking at all. One modern writer, for example, has said:173 “Rules of ranking” are no more than visible manifestations of an underlying equity, policy or other consideration. Upon the underlying equity, policy or other consideration being displaced, either for want of substantiation or from the competitiveness of a greater equity or policy, so also the “rule” becomes inoperative or inapplicable. In the realm of priorities there would appear to be no immutable rules of law, but only a number of guiding principles.

Although there is much truth in such an assertion, it is nonetheless clear that there is a system of rules of priority which is ordinarily followed by the courts and which can be departed from only in cases involving important considerations of equity or public policy.174 The following is an account of these rules as they appear at the present day.175

[8.360]

Maritime liens and the Personal Property Securities Act

All liens, whether maritime liens or possessory (common law) liens, fall outside the scope of the Personal Property Securities Act 2009 (Cth). This is because the Act excludes from its operation “a lien, charge, or any other interest in personal property, that is created, arises or is provided for by operation of the general law”.176 “General law” here means the principles and rules of the common law and equity.177 General maritime law is now part of Australia’s common law.178

173 D R Thomas, Maritime Liens (Stevens & Sons Ltd, London, 1980), pp 234-235. See also The Stream Fisher [1927] P 73 at 82; The Ruta [2000] 1 Lloyd’s Rep 359 at 364. 174 See The Pickaninny; George Hammond & Co (Interveners) [1960] 1 Lloyd’s Rep 533 at 537; Patrick Stevedores No 2 Pty Ltd v Proceeds of Sale of the Vessel MV Skulptor Konenkov (1997) 75 FCR 47 at 50. 175 For a more detailed account of priorities under English Admiralty law in 1980, see D R Thomas, Maritime Liens (Stevens & Sons Ltd, London, 1980), Ch 9. 176 Section 8(1)(c). 177 Section 10. 178 Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 471.

[8.400]

8 Maritime Liens

155

Priority between maritime liens and other charges [8.370]

Broadly speaking, a maritime lien takes priority over all other charges. There are however, exceptions to this rule. The most obvious exception is a paramount statutory charge, though there are others. The particular rules of priority of maritime liens currently appear to be as follows. 179

[8.380]

Maritime lien and mortgage

A maritime lien on a ship takes priority over any mortgage on the ship, whether registered or unregistered, and whether prior or later in time.180 It is probable that this is so notwithstanding any apparent priority that might be afforded to the mortgage under the Personal Property Securities Act 2009 (Cth).181

[8.390]

Maritime lien and bottomry bond

As a general rule, a maritime lien takes priority over any bottomry bond.182 This is always the case where the bond was executed before the lien arose, and it is usually the case where it was executed afterwards.183 It is probable that the priority provisions of the Personal Property Securities Act 2009 (Cth) do not affect this.184

[8.400]

Maritime lien and possessory lien

Priority between a maritime lien and a possessory lien is determined by the order of the time of their attachment to the ship. A shipwright’s possessory lien for ship repairs is accordingly subject to any maritime lien which was attached to the ship prior to its entering the shipyard, but a

179 Patrick Stevedores No 2 Pty Ltd v Proceeds of Sale of the Vessel MV Skulptor Konenkov (1997) 75 FCR 47 at 50. 180 The Dowthorpe (1843) 2 W Rob 73; 166 ER 682 at 79; 684-685; The Chieftain (1863) Br & Lush 212; 167 ER 340; The Ripon City [1897] P 226 at 244; Currie v M’Knight [1897] AC 97 at 105; The Tolten [1946] P 135 at 150; Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 233, 244, 246; The Tacoma City [1991] 1 Lloyd’s Rep 330 at 332, 347. 181 Note the limited provisions on priority of interests that arise by law and other security interests in s 73(1). 182 The Aline (1839) 1 W Rob 111; 166 ER 514 at 118-119; 517; The Dowthorpe (1843) 2 W Rob 73; 166 ER 682 at 79; 684-685; Currie v M’Knight [1897] AC 97 at 105-106. See also The Sydney Cove (1815) 2 Dods 11; 165 ER 1399; The Union (1860) Lush 128; 167 ER 60 at 137; 65-66. 183 See The Aline (1839) 1 W Rob 111; 166 ER 514 at 119-120; 517-518 (maritime lien for damage does not necessarily take precedence over a bottomry bond subsequently granted to enable the ship to be repaired). See also The Stream Fisher [1927] P 73 at 83. 184 Note the limited provisions on priority of interests that arise by law and other security interests in s 73(1).

156

Shipping Law

[8.410]

shipwright’s possessory lien then takes priority over any maritime lien which attaches after the shipowner has become indebted to him or her.185 A possessory lien also takes priority over any further claim under an existing maritime lien for wages. So if members of the crew remain on board after a ship enters a shipyard for repairs, their maritime lien for wages up to that time takes priority over the shipwright’s possessory lien, but the possessory lien then takes priority over any claim by the crew for subsequent wages.186

[8.410]

Maritime lien and statutory lien

Priority between a maritime lien and a statutory lien is also normally determined by the order of the time of their attachment. This means that a maritime lien usually takes priority over a statutory lien because the latter attaches only at the time of the commencement of proceedings in rem and not at the time the claim arose.187 It has, however, been held, simply on grounds of equity, that a statutory lien for the provision of necessaries — and semble now for the supply of goods and services in proceedings in rem under the Admiralty Act 1988 — takes priority over a maritime lien for master’s wages and disbursements if the master is either the owner or a part-owner of the ship.188 If it were otherwise, an owner or part-owner would enjoy priority for the payment of his or her own wages and disbursements over payment for the supply of goods and services, even though he or she might have ordered the goods or services involved.

Priority between different kinds of maritime liens [8.420]

Under general maritime law, a maritime lien for damages ordinarily has priority over a prior lien for salvage or wages.189 However, this order may be departed from in order to do justice.190 One reason given for the main rule is that a claim for reparation of damage should come before the claims of those who have chosen to enter into a relationship with the vessel for their own benefit and with the knowledge of the risks that are involved.191

185 The Gustaf (1862) Lush 506; 167 ER 230 at 507-508; 231; The Tergeste [1903] P 26 at 33-34. See also The Russland [1924] P 55 at 59. 186 The Gustaf (1862) Lush 506; 167 ER 230 at 507-508; 231; The Tergeste [1903] P 26 at 32-33. 187 C & CJ Northcote v The Owners of the Henrich Bjorn: The Henrich Bjorn (1886) 11 App Cas 270 at 277; The Cella (1888) 13 PD 82; Dalgety & Co Ltd v Aitchison: The Rose Pearl (1957) 2 FLR 219 at 227; John Carlbom & Co Ltd v Zafiro (Owners): The Zafiro [1960] P 1 at 13. 188 The Eva [1921] P 454. See also The Jenny Lind (1872) LR 3 A & E 529. 189 The Linda Flor (1857) Swab 309; 166 ER 1150; Currie v M’Knight [1897] AC 97 at 105-106; The Veritas [1901] P 304 at 313, 314-315; The Inna [1938] P 148 at 152-153. See also Patrick Stevedores No 2 Pty Ltd v Ship MV Turakina (No 1) (1998) 84 FCR 493 at 499. 190 See The Ruta [2000] 1 Lloyd’s Rep 359. 191 See The Veritas [1901] P 304 at 313.

[8.440]

8 Maritime Liens

157

Under general maritime law, a lien for damages also takes priority over a subsequent lien for wages,192 but is subject to a subsequent lien for salvage.193 Until recent times, a maritime lien for salvage and for crew wages took priority one against the other in inverse order of the time of their attachment to the ship.194 This rule was based on the principle that as both types of lien concern claims for services rendered, priority should be given to the claims for the later services as they may be regarded as operating for the protection of the claims for earlier services.195 More modern authority, however, is in favour of the proposition that a lien for salvage always takes priority.196

[8.430]

Repealed statutory provision for priority of crew wages

The order of priority between the different liens was altered by s 83(2) of the Navigation Act 1912 (Cth) so far as crew wages are concerned. By that subsection, the lien for the wages of a seaman aboard an Australian197 ship198 had priority over “all other liens”. It is probable that the term “liens” in that context meant simply maritime liens, and not also possessory liens. There was a related provision in the Marine Act of the Northern Territory.199 Both the Navigation Act and the provision in the Northern Territory’s Marine Act have since been repealed. Whether the statutory rule is nonetheless now part of general maritime law must await judicial determination.

Priority between maritime liens of the same kind [8.440]

If there is more than one maritime lien against a ship for damage caused by the ship, all rank pari passu (that is, on an equal footing), regardless of the date of attachment.200

If there is more than one maritime lien against a ship for salvage as a result of different accidents, they rank in the inverse order of the time of their attachment to the ship.201 If there is more than one lien against a ship for salvage relating to the same accident, they rank pari passu.202 192 The Elin (1882) 8 PD 39, and on appeal, The Elin (1883) 8 PD 129. 193 The Inna [1938] P 148 at 153-155; The Lyrma (No 2) [1978] 2 Lloyd’s Rep 30 at 33. See also The Sea Spray [1970] P 133. 194 The Veritas [1901] P 304 at 312-313, 315-316; The Lyrma (No 2) [1978] 2 Lloyd’s Rep 30 at 33-34 (earlier wages lien and later salvage lien). See also The Mons [1932] P 109 at 112. 195 The Veritas [1901] P 304 at 312-313. 196 The Lyrma (No 2) [1978] 2 Lloyd’s Rep 30 at 34-35. 197 As defined in s 10. 198 Note the exclusionary provisions of ss 2(1), 9A. 199 Section 49(1). 200 The Stream Fisher [1927] P 73, esp at 76-77, 86-87. 201 The Veritas [1901] P 304 at 312-313, 315-316; The Stream Fisher [1927] P 73 at 82. 202 The Russland [1924] P 55 at 60.

158

Shipping Law

[8.450]

If there is more than one maritime lien against a ship for crew wages, they also rank pari passu.203 Until modern times, a lien for crew wages took priority over a lien for master’s wages.204 This was deemed to follow from the old rule that seamen could recover their wages from the master.205 Now that a master is no longer personally liable to pay crew wages, it has been held in England that both types of lien rank pari passu.206 A master’s lien for wages, and the same master’s lien for liabilities and disbursements, rank pari passu.207 Liens by different masters for liabilities and disbursements in respect of the same ship also rank pari passu.208

EFFECT OF PARTICULAR CIRCUMSTANCES UPON MARITIME LIENS Effect of change of ownership of ship [8.450]

A maritime lien not only attaches to a ship, it is also said to travel with the ship, for with just one exception it is enforceable against the ship notwithstanding any change in possession or ownership.209 This rule is strict. A maritime lien is thus not lost by the sale of the ship even to a bona fide purchaser for value without notice of the lien.210 Every purchaser of a ship thus normally incurs the risk that there may be one or more maritime liens attaching to the vessel at the time of the sale.211 The only situation where there is no such risk is where a ship is purchased upon a sale ordered by a court in proceedings in rem. This point is considered further at [8.470]. Because a maritime lien is ordinarily enforceable against a ship despite any change in possession or ownership, it is sometimes said that it confers 203 The Stream Fisher [1927] P 73 at 82. Compare, however, The Veritas [1901] P 304 at 312-313. 204 The Salacia (1862) Lush 545; 167 ER 246 at 547-548; 247; The Anglo-Indian (1868) 8 SCR 102; The Mons [1932] P 109 at 110. See also The Tiburnia (No 1) (1887) 8 LR (NSW) (A) 1. 205 The Salacia (1862) Lush 545; 167 ER 246 at 547-548; 247. 206 The Royal Wells [1985] QB 86 at 92. 207 The Mons [1932] P 109 at 110-111. 208 The Mons [1932] P 109 at 111-112. 209 The Dowthorpe (1843) 2 W Rob 73; 166 ER 682 at 79; 684-685; Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884 at 284-285; 890-891; Johnson v Black: The Two Ellens (1872) LR 4 PC 161 at 169; C & CJ Northcote v Owners of the Henrich Bjorn: The Henrich Bjorn (1886) 11 App Cas 270 at 277; The Ripon City [1897] P 226 at 242; The Tolten [1946] P 135 at 150. See also The Optima (1905) 10 Asp MLC 147. 210 Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884; The Tolten [1946] P 135 at 150; Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 234. 211 See The Monica S [1968] P 741 at 769.

[8.450]

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an interest similar to a proprietary interest in a ship.212 There is an element of truth in this statement, for according to one judicial statement a maritime lien detracts from the absolute title of the owner of the ship.213 However, it confers no title to, or right to possession of, the ship. Nor does it confer any immediate rights in the property of the ship. In other words, it does not confer any rights which can be exercised directly against the ship without recourse to the courts. As has already been observed, the rights created by a maritime lien depend for their effect upon proceedings in rem. They are ultimately rights against the bail or the proceeds of a court-enforced sale of the ship, and not rights against the ship itself.214 Although a maritime lien is not normally lost by any change in ownership, under general maritime law it could nonetheless be lost through laches215 by the lienee upon a change in ownership of the ship involved. This resulted from the rule that a maritime lien could be lost where an unreasonable delay resulted in the compromise of the rights of a third party.216 This point was often summarised in the proposition that although a maritime lien travelled with a ship, it was not indelible. Laches has now effectively been abolished in respect of maritime liens by s 37(5) of the Admiralty Act 1988 (Cth). This states that laches does not apply to a claim on (inter alia) a maritime lien that is brought within a time period fixed by this section. It would appear that a maritime lien is not transferable,217 at least without the consent of the court.218 Although there are some judicial statements to the contrary,219 the current law would seem to be that a third party who

212 See Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 234; cf at 250. See also D R Thomas, Maritime Liens (Stevens & Sons Ltd, London, 1980), pp 22-23. 213 The Ripon City [1897] P 226 at 242. 214 Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 234, 237. 215 On what constitutes laches in this context, see The Kong Magnus [1891] P 223 at 228; The Alletta [1974] 1 Lloyd’s Rep 40 at 45. 216 Harmer v Bell: The Bold Buccleugh (1851) 7 Moo PC 267; 13 ER 884 at 285; 891; Johnson v Black: The Two Ellens (1872) LR 4 PC 161 at 169; C & CJ Northcote v Owners of the Henrich Bjorn: The Henrich Bjorn (1886) 11 App Cas 270 at 277; Bankers Trust International Ltd v Todd Shipyards Inc [1981] AC 221 at 234. 217 The Rebecca (1804) 5 C Rob 102; 165 ER 712 at 104; 713; The Catherine (1847) 3 W Rob 1 at 2. See also Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369 at 398. 218 See Sameiet Stavos (OH Meling Rederi) v The Berostar (Owners) [1970] 2 Lloyd’s Rep 403. 219 See The Tagus [1903] P 44 at 54; Dalgety & Co Ltd v Aitchison: The Rose Pearl (1957) 2 FLR 219 at 227. See also The Anglo-Indian (1868) 8 SCR 102 at 103.

160

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[8.460]

voluntarily pays off a debt which attracts a maritime lien cannot then claim the benefit of that lien as of right.220

[8.460]

Transfer to owner with immunity from process

Although there is no case directly on point, it would appear that a maritime lien is not lost if the ship to which it attaches is sold to a person who is able to claim immunity from process, though it cannot then be enforced.221 It would seem that the lien can subsequently be enforced if either the owner ceases to be able to claim immunity or the ship is transferred to a person who does not enjoy this privilege.222

Effect of judicial sale following arrest [8.470]

If a ship which has been arrested in proceedings in rem is subsequently sold pursuant to a judicial order, the purchaser receives a clean title, free of any charge or claim.223 Any charge or claim on the ship prior to the sale then becomes a claim on the proceeds of sale.224 The purchaser thus takes the ship free of any paramount statutory charge,225 maritime lien,226 possessory lien227 or mortgage.228 It is important to observe that a purchaser receives this clean title only pursuant to a sale in proceedings in rem, and not pursuant to a sale in any other proceedings.229 The sale of a ship pursuant to foreign proceedings in rem confers the same clean title as a sale pursuant to domestic proceedings.230

220 The Petone [1917] P 198, esp at 208-209; The Leoborg (No 2) [1964] 1 Lloyd’s Rep 380 at 383. See also The Victoria (1867) 37 LJ Adm 12; The Louise Roth [1905] SALR 107; The James W Elwell [1921] P 351 at 363. 221 See The Parlement Belge (1880) 5 PD 197. 222 See The Tervaete [1922] P 259 at 265. See also The Meandros [1925] P 61. 223 The Catherine, formerly the Croxdale (1851) 15 Jur 231; The Acrux [1962] 1 Lloyd’s Rep 405 at 409; Corps v Owners of the Paddle Steamer Queen of the South: The Queen of the South [1968] P 449 at 461-462; The Cerro Colorado [1993] 1 Lloyd’s Rep 58 at 60-61; Readhead v Admiralty Marshal, Western Australia District Registry (1998) 87 FCR 229 at 242. 224 R Williams, G Bruce, C Jennett and G Phillimore, Williams’ and Bruce’s Admiralty Practice (3rd ed, Sweet & Maxwell, London, 1902), p 319. 225 See Admiralty Act 1988 (Cth), s 36(5). 226 The Catherine, formerly the Croxdale (1851) 15 Jur 231; The Tolten [1946] P 135 at 145-146; The Cerro Colorado [1993] 1 Lloyd’s Rep 58 at 60-61. 227 The Tergeste [1903] P 26 at 32-33; Corps v Owners of the Paddle Steamer Queen of the South: The Queen of the South [1968] P 449 at 461-462. 228 The Catherine, formerly the Croxdale (1851) 15 Jur 231; The Acrux [1962] 1 Lloyd’s Rep 405; Corps v Owners of the Paddle Steamer Queen of the South: The Queen of the South [1968] P 449 at 461-462; The Cerro Colorado [1993] 1 Lloyd’s Rep 58 at 60-61. 229 Chasteauneuf v Capeyron (1882) 7 App Cas 127 at 135. See also The James W Elwell [1921] P 351 at 356-357. 230 The Acrux [1962] 1 Lloyd’s Rep 405; The Cerro Colorado [1993] 1 Lloyd’s Rep 58 at 61.

[8.500]

8 Maritime Liens

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Effect of shipwreck [8.480]

A maritime lien is destroyed if the ship or other maritime property is itself destroyed. A maritime lien is not, however, destroyed if the ship is simply wrecked or partially destroyed. The lien then attaches to the wreck, or to whatever remains of the ship.231

PERIOD OF LIMITATIONS [8.490]

Under general maritime law, there was no fixed period of limitations within which maritime claims, and thus claims involving a maritime lien, had to be commenced. Maritime claims were lost only by laches.232 Since the commencement of the Admiralty Act 1988 (Cth), a claim of laches no longer applies to maritime claims.233 The Admiralty Act provides that, subject to any overriding provisions of Commonwealth law, the period of limitations for maritime claims is governed by the Limitation Acts of the States and the Northern Territory234 or, in default, three years.235

[8.500]

Limitation periods in New South Wales, South Australia, Tasmania and the Northern Territory

New South Wales, South Australia, Tasmania and the Northern Territory all have limitation periods which concern, or which can concern, claims involving a maritime lien. In New South Wales and Tasmania, there is a six-year limitation period for the commencement of actions in rem for the recovery of seamen’s wages,236 and a two-year period for the commencement of proceedings to enforce a lien against a ship for damage caused by collision with another ship or for salvage services.237 In the Northern Territory the limitation periods for the commencement of such actions are three years and two years respectively.238 In South Australia, there is a limitation period of six years for the commencement of actions for seamen’s wages.239 231 The Sydney Cove (1815) 2 Dods 11; 165 ER 1399 at 13; 1400; The Neptune (1824) 1 Hagg 227; 166 ER 81 at 238; 85; The Reliance (1843) 2 W Rob 119; 166 ER 700; The Lady Durham (1835) 3 Hagg Adm 196; 166 ER 378 at 201; 380. 232 Young v The Steamboat Key City 20 US 896 (1872) at 898; adopted in The Alletta [1974] 1 Lloyd’s Rep 40 at 45. On what constitutes laches in this context, see The Kong Magnus [1891] P 223 at 228; The Alletta [1974] 1 Lloyd’s Rep 40 at 45. 233 Section 37(5). 234 Section 37(2). 235 Section 37(1)(b). 236 Limitation Act 1969 (NSW), s 22(1); Limitation Act 1974 (Tas), s 8(1). 237 Limitation Act 1969 (NSW), s 22(2), (3); Limitation Act 1974 (Tas), s 8(2), (3). 238 Limitation Act (NT), s 20(2), (3), (4). Notwithstanding the final words of subs (2), there can be no doubt that s 20 applies to proceedings in rem. 239 Limitation of Actions Act 1936 (SA), s 35(g).

162

Shipping Law

[8.510]

[8.510]

Limitation periods in other jurisdictions

Some jurisdictions have more general time limitation provisions which can apply to proceedings involving a maritime lien.240 If there is no State or Territorial limitation period applicable to a particular maritime claim, the Admiralty Act provides that the period is the same as that which would apply under State or Territorial law to proceedings on the same claim instituted other than under this Act241 — in other words, the period is that applicable to non-Admiralty proceedings on the same claim instituted in personam. The Act then goes on to provide that if proceedings on a claim can be brought only under this Act, the limitation period is three years.242

EXTINGUISHMENT OF MARITIME LIENS [8.520]

There are six ways in which a maritime lien can effectively be extinguished. These are by payment of the sum secured by the lien, by provision of bail or other security for the release of the ship, by sale by order of the court in proceedings in rem, by expiry of the statutory limitation period, by abandonment of the lien, and by the total destruction of the property to which the lien attaches. These are considered in turn.

[8.530]

Payment of the sum secured

A maritime lien is automatically extinguished upon payment of the sum it secures.243 This payment may be made by anybody.244

[8.540]

Provision of bail or other security

A maritime lien attaching to a ship is extinguished by the provision of bail by the ship’s owner following the arrest of the ship in proceedings in rem. Bail is a covenant made to the court to pay a particular sum of money as security for the release of the ship. The sum involved is either agreed between the parties or determined by the court.245 The secured sum is then treated as equivalent to the ship for the purpose of the financial claim by the lienee who instituted the proceedings.246 By virtue of this process of substitution, after the provision of bail the released ship is free 240 See Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), p 202. 241 Section 37(1)(a), (2). 242 Section 37(1)(b). 243 The James W Elwell [1921] P 351 at 363. 244 The James W Elwell [1921] P 351 at 363. 245 On the discretion of the court in this regard, see Owners of Ship Carina v Owners or Demise Charterers of Ship MSC Samia (1997) 78 FCR 404. 246 The Kalamazoo (1851) 15 Jur 885; The Christianborg (1885) 10 PD 141 at 155; The Dictator [1892] P 304 at 322.

[8.570]

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of the subject lien (but not of any other lien).247 This is so notwithstanding that the amount secured by the bail-bond is subsequently found to be insufficient to meet the claim involved in the proceedings, or that the money accepted as bail is less than the value of the ship itself.248 There are certain alternatives to the provision of bail. One is the payment of money into court, and another is the provision by a third party of a guarantee to pay the plaintiff any sum awarded by the court. A ship released by the provision of an alternative to bail is also free of the lien to which the proceedings relate.249 The provision of security for a binding arbitration in respect of a claim secured by a maritime lien similarly frees a ship of the lien concerned.250 A maritime lien once extinguished does not revive, even if the security provided becomes valueless (for example, on account of the subsequent insolvency of the guarantor).251

[8.550]

Sale in proceedings in rem

A maritime lien is extinguished upon sale by order of a court in proceedings in rem. Any claim or charge against the ship is then extinguished. The right of priority which any lien had previously secured against the ship then transfers to the proceeds of sale held by the court.252

[8.560]

Expiry of the limitation periods

A maritime lien cannot be enforced, and is to this extent extinguished, after the statutory limitation period has expired.253

[8.570]

Abandonment of the lien

It would appear that a maritime lien can also be extinguished by abandonment of the lien by the lienee accepting some other form of security in place of it.254 However, the authorities on this matter are not strong, and the conditions for an effective abandonment are uncertain. 247 The Kalamazoo (1851) 15 Jur 885 at 886; The Wild Ranger (1863) Br & Lush 84; 167 ER 310 at 87; 312; The Christianborg (1885) 10 PD 141 at 156. 248 The Kalamazoo (1851) 15 Jur 885 at 886; The Wild Ranger (1863) Br & Lush 84; 167 ER 310 at 87; 312. See also The Point Breeze (1928) 30 Ll L Rep 229. 249 See D R Thomas, Maritime Liens (Stevens & Sons Ltd, London, 1980), pp 290-291. For judicial consideration of this matter in Canada, see Paterson (NM) & Sons Ltd v The Birchglen (1990) 36 FTR 92. 250 Loucas G Matsas Salvage & Towage Maritime Co v Fund on Sale of the Ionian Mariner (1997) 79 FCR 351 at 359-362. 251 Loucas G Matsas Salvage & Towage Maritime Co v Fund on Sale of the Ionian Mariner (1997) 79 FCR 351 at 362-363. 252 R Williams, G Bruce, C Jennett and G Phillimore, Williams’ and Bruce’s Admiralty Practice (3rd ed, Sweet & Maxwell, London, 1902), p 319. See [8.470]. 253 See [8.490]–[8.510]. 254 See The William Money (1827) 2 Hagg Adm 136; 166 ER 193 at 194; The Albion (1872) 3 VR (A) 1 at 6-7.

164

Shipping Law

[8.580]

[8.580]

Destruction of the property to which the lien attaches

A maritime lien is extinguished upon the total destruction of the maritime property to which it attaches. If the property is only partially destroyed, any lien continues to attach to whatever remains.255

MARITIME LIENS AND PRIVATE INTERNATIONAL LAW [8.590]

Maritime liens are known to many legal systems. However, the precise acts and events that give rise to maritime liens, and their priorities, can differ from one jurisdiction to another.

In Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle,256 the Privy Council held that the question of whether any act or event gives rise to a maritime lien (or semble any other maritime claim257), and if it does, the priority to be afforded to it, is determined solely by the law of the jurisdiction determining the matter (the lex fori), and not by the law of the jurisdiction where the cause of action arose (the lex causae).258 Under the rule in The Halcyon Isle, a court will recognise and enforce only those maritime liens which are known to the law of the forum. It follows from this that the court will not recognise a foreign act or event as giving rise to a maritime lien, even though it would be so recognised in the jurisdiction where it occurred, if it is not recognised by the law of the forum. It similarly follows that the court will recognise a maritime lien as existing if the conditions required by the law of the forum are fulfilled, even though no such lien would be recognised under the law of the jurisdiction in which the relevant act or event took place. The decision of the Privy Council in The Halcyon Isle is contentious.259 In Australia, it was followed by the Federal Court of Australia at first instance in Morlines Maritime Agency Ltd v Proceeds of Sale of Ship Skulptor Vuchetich260 but not by the more recent case at first instance of Reiter Petroleum Inc v The Ship Sam Hawk.261 It is probable that the latter case will be followed in Australia in light of the more recent decision of the High 255 The Sydney Cove (1815) 2 Dods 11; 165 ER 1399 at 13; 1400; The Neptune (1824) 1 Hagg 227; 166 ER 81 at 238; 85; The Reliance (1843) 2 W Rob 119; 166 ER 700; The Lady Durham (1835) 3 Hagg Adm 196; 166 ER 378 at 201; 380. 256 Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221. 257 See Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 233. 258 Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 235, 238-239, 241, 242. 259 See C A Ying, “Priorities and the Foreign Maritime Lien” (1982) 8 Adel L Rev 95; M M Cohen, “In Defense of The Halcyon Isle” [1987] LMCLQ 152; W Tetley, “In Defence of the Ioannis Daskalelis” [1989] LMCLQ 11; H Staniland “The Halcyon Isle Revisited: A South African Perspective” [1989] LMCLQ 174. 260 Morlines Maritime Agency Ltd v Proceeds of Sale of Ship Skulptor Vuchetich [1997] ACL Rep 270 FC 7. 261 Reiter Petroleum Inc v The Ship Sam Hawk [2015] FCA 1005 at [119].

[8.600]

8 Maritime Liens

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Court in John Pfeiffer Pty Ltd v Rogerson.262 There the High Court held that any question of substance concerning torts with an interstate element — including questions relating to the existence, extent and enforceability of a tort — is governed by the law of the place where the tort occurred, and not the law of the forum. The decision in The Halcyon Isle has been followed in New Zealand263 and South Africa,264 though not in other jurisdictions, for example Canada.265 In the latter jurisdictions, the question of whether any act or event gives rise to a maritime claim, including a maritime lien, is determined by the lex causae, though the priority to be afforded to the claim is then determined by the lex fori.

PROPOSALS FOR REFORM OF THE LAW OF MARITIME LIENS [8.600]

Three international conventions have sought to unify the law of maritime liens, and also of ship mortgages. The first is the International Convention for the Unification of Certain Rules of Law relating to Maritime Liens and Mortgages 1926. The second is an identically named Convention of 1967.266 The third is the International Convention on Maritime Liens and Mortgages 1993. Australia has not yet ratified any of these Conventions. The 1926 Convention remains in force among the countries that have ratified it. The 1967 Convention has not yet come into force owing to insufficient ratifications, and in light of the subsequent 1993 Convention, it is unlikely ever to do so. The 1993 Convention came into force on 5 September 2004 among those countries that have ratified it. These include China and Indonesia, but not the United States or the United Kingdom. Under the 1993 Convention, a maritime lien is recognised for pilotage dues as well as for ship damage, master and crew wages, loss of life resulting from the operation of a vessel and salvage.267

262 John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. See M Davies and K Lewins, “Foreign Maritime Liens: Should they be Recognised in Australian Courts?” (2002) 76 ALJ 775. 263 See The Ship Betty Ott v General Bills Ltd: The Betty Ott [1992] 1 NZLR 655; ABC Shipbrokers v The Ship Offi Gloria [1993] 3 NZLR 576; Fournier v The Ship Margaret Z [1999] 3 NZLR 111 at 115-116. 264 See Brady-Hamilton Stevedore Co v MV Kalantiao 1987 (4) SA 250; Transol Bunker BV v MV Andrico Unity 1989 (4) SA 325. 265 See Todd Shipyards Corp v Altema Compania Maritima SA (1973) 32 DLR (3d) 572 (more commonly known as The Ioannis Daskalelis); Metaxas v Ship The Galaxias [1989] 1 FC 386. Compare Marlex Petroleum Inc v The Ship Har Rai (1984) 4 DLR (4th) 739. 266 For the text of these Conventions, see N Singh, International Maritime Law Conventions (Stevens & Sons Ltd, London, 1983), Vol 4, pp 3,053-3,054. 267 For accounts of the 1993 Convention, see D C Jackson, “International Convention on Maritime Liens and Mortgages 1993” [1994] LMCLQ 12; F Berlingieri, “The 1993 Convention on Maritime Liens and Mortgages” [1995] LMCLQ 57.

166

Shipping Law

[8.610]

[8.610]

Recommendations of the Australian Law Reform Commission

As part of its reference into the Admiralty jurisdiction of Australia, the Australian Law Reform Commission considered whether any new maritime liens should be created for the purposes of Australian law. In its report, Civil Admiralty Jurisdiction,268 published in 1986, the Commission recommended against the creation of any new maritime liens for two main reasons. The first was that there appeared to be little demand or need for any new maritime liens in Australia.269 The second was to await international agreement on the proper scope of such charges.270

STATUTORY RIGHTS OF ACTION IN REM AND STATUTORY LIENS [8.620]

A statutory right to institute proceedings in rem is said to give a claimant a “statutory right of action in rem”, and the commencement of these proceedings is said to create a “statutory lien” over the subject ship or property. This statutory lien differs from a maritime lien in that it attaches to a ship or property only at the time of the commencement of the proceedings (that is, the time the writ is issued271) and not at the time the claim first arises.272 Because statute provides only for the right to institute proceedings in rem and says nothing about the consequential security, the term “statutory” lien is something of a misnomer. A statutory lien is basically a secured charge which gives priority to a claimant over any unsecured creditor in the distribution of the proceeds of sale of the ship or property.273 If more than one claimant institutes statutory proceedings in rem against the same ship, each is ordinarily entitled to be paid pro rata out of the proceeds of sale of the ship.274 Although statutory proceedings in rem are, like all proceedings in rem, formally instituted against a ship or other property, they ordinarily concern a personal liability. They are indeed for the most part simply an alternative to proceeding in personam to enforce the liability. In light of 268 Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986). 269 Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), p 89, para 121. 270 Australian Law Reform Commission, Civil Admiralty Jurisdiction (ALRC 33, AGPS, 1986), p 89, para 121. 271 Admiralty Act 1988 (Cth), s 17, with s 3(2). See also The Pickaninny; George Hammond & Co (Interveners) [1960] 1 Lloyd’s Rep 533 at 536; The Monica S [1968] P 741, esp at 770-771; Re Aro Co Ltd [1980] Ch 196 at 208-209. 272 C & CJ Northcote v The Owners of the Henrich Bjorn: The Henrich Bjorn (1886) 11 App Cas 270 at 277; The Cella (1888) 13 PD 82; Dalgety & Co Ltd v Aitchison: The Rose Pearl (1957) 2 FLR 219 at 227; John Carlbom & Co Ltd v Zafiro (Owners): The Zafiro [1960] P 1 at 13. 273 The Cella (1888) 13 PD 82; John Carlbom & Co Ltd v Zafiro (Owners): The Zafiro [1960] P 1 at 13. 274 The Africano [1894] P 141 at 149; The Stream Fisher [1927] P 73 at 82. See also The Mons [1932] P 109 at 112.

[8.620]

8 Maritime Liens

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this it would clearly be inappropriate if proceedings in rem could be instituted against a ship or property in circumstances where the current owner is not liable in respect of the claim. Section 17 of the Admiralty Act 1988 (Cth) therefore places restrictions on who can institute such proceedings. Section 17 provides that proceedings in rem can be instituted in respect of a general maritime claim275 only if a person who would be liable276 on the claim in a proceeding commenced in personam277 was either the owner278 or charterer, or in possession or control, of the ship or property at the time the cause of action arose, and if he or she is also the owner of the ship or property at the time the proceedings are commenced.279 (It is interesting to observe that the person referred to in s 17 need not in fact be a defendant to the proceedings in rem,280 though he or she usually will be.) In some circumstances the requirements of s 17 can clearly frustrate a litigant wishing to enforce a claim for the supply of goods or services, or indeed wishing to enforce any general maritime claim, by proceedings in rem. For example, a supplier of goods or services upon the order of a charterer will not normally be able to commence proceedings in rem after the expiration of the charterparty,281 for then the former charterer and the current owner will usually be different people. The supplier of goods and services to an owner who has mortgaged his or her ship may also be in a difficult position by virtue of s 17. Under general maritime law, the “owner” of a mortgaged ship is either the mortgagor or the mortgagee, depending on who is in possession.282 If a mortgagor therefore orders goods or services for his or her ship but fails to pay for them, the supplier has a remedy against the ship only for so long as the mortgagor remains in possession. After the mortgagee enters into possession, the supplier loses his or her ability to institute proceedings directly against the ship. 275 General maritime claims are listed in Admiralty Act 1988 (Cth), s 4(3). 276 “Would be liable” includes “is (or has been found to be) liable”: Ocean Industries Pty Ltd v Owners of the Ship MV Steven C [1994] 1 Qd R 69 at 73-95. On the meaning of “would be liable” where no liability has been established, see KMP Coastal Oil Pty Ltd v Owner of MV Iran Amanat (1997) 75 FCR 78 at 83-85. 277 See Admiralty Act 1988 (Cth), s 3(1) (definition of “relevant person”). On the interpretation of this definition, see Ocean Industries Pty Ltd (receivers and managers appointed t/as Markwell Chandlery) v Owners of the Ship MV Steven C (1991) 104 ALR 353. 278 “Owner” here means beneficial owner, and not registered owner: see Devine Shipping Pty Ltd v BP Melbourne (1994) 3 Tas R 456 at 461; Malaysia Shipyard and Engineering Sdn Bhd v Iron Shortland (1995) 59 FCR 535 at 547-548 (concerning s 19). 279 For a consideration of this provision, see Ocean Industries Pty Ltd v Owners of the Ship MV Steven C [1994] 1 Qd R 69 at 72-73, 75. 280 Allanah Pty Ltd v The Ship Amanda N (1989) 21 FCR 60 at 63. 281 Note in this connection the facts in Smith’s Dock Co Ltd v The St Merriel (Owners): The St Merriel [1963] P 247. 282 See Chapter 10.

168

Shipping Law

[8.630]

[8.630]

Position of purchaser of ship or other maritime property

Once a writ has been issued in proceedings in rem on a statutory right of action, the resulting statutory lien binds any subsequent purchaser of the ship or property.283 Until then, a subsequent purchaser, even with notice of a claim justifying proceedings in rem, takes the ship or property free of any such claim.284

[8.640]

Statutory liens and the Personal Property Securities Act

A statutory lien does not come within the scope of the Personal Property Securities Act 2009 (Cth) because it arises by operation of the general law285 — more particularly here by virtue of general maritime law which the common law now encompasses.286 It is not deliberately created by the action of parties, but arises simply as a consequence of a claimant instituting proceedings in rem. A statutory lien also does not come within the scope of the Act because it is not a “security interest” with which the Act is concerned, as it does not result from “a transaction that … secures payment or performance of an obligation”.287

[8.650]

Priority of a statutory lien

Priority between a statutory lien and any other charge except a paramount statutory charge is ordinarily determined by the order of the time of their attachment or creation: the first in time normally has priority. This is certainly true of priority between a statutory lien and a mortgage,288 and it is generally also true of priority between a statutory lien and a maritime lien. It has, however, been held, simply on grounds of equity, that a statutory lien for the provision of necessaries — and semble now for the supply of goods and services in proceedings in rem under the Admiralty Act 1988 (Cth) — takes priority over a maritime lien for master’s wages and disbursements if the master is either the owner or a part-owner of the ship.289 Otherwise an owner or part-owner would enjoy priority for the payment of his or her own wages and disbursements over payment for the supply of goods and services even though he or she might have ordered the goods or services involved.

283 See The Monica S [1968] P 741, esp at 771; Re Aro Co Ltd [1980] Ch 196 at 208, 209. 284 See The Aneroid (1877) 2 PD 189 at 191; The Heinrich Bjorn (1885) 10 PD 44 at 61. See also Giovanni Dapueto v James Wyllie & Co: The Pieve Superiore (1874) LR 5 PC 482 at 491-492. 285 Section 8(1)(c). 286 Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 471. 287 Section 12. 288 See The Rama (1921) 8 Ll L Rep 369; The Colorado (1922) 13 Ll L Rep 474; Canadian Imperial Bank of Commerce v The Orion Expeditor (1991) 43 FTR 284. 289 The Eva [1921] P 454. See also The Jenny Lind (1872) LR 3 A & E 529.

9

Possessory Liens and Bottomry [9.10] POSSESSORY LIENS ........................................................................................ 169

[9.10] Possessory liens and ships ............................................................... 169 [9.30] Priority of possessory liens .............................................................. 170 [9.50] BOTTOMRY AND RESPONDENTIA ........................................................... 170

[9.50] The nature of bottomry and respondentia .................................... 170 [9.80] Priority of bottomry .......................................................................... 173

POSSESSORY LIENS Possessory liens and ships [9.10]

The common law relating to possessory liens applies equally to a ship as to any other chattel. Accordingly, any person who builds or repairs a ship enjoys a possessory lien over it for the cost of the materials and labour involved for so long as he or she remains in possession.1 Similarly, anyone who sells a ship enjoys a possessory lien for any outstanding purchase money whilst he or she remains in possession. In a shipping law context, possessory liens are sometimes referred to as common law liens to distinguish them from maritime liens.

[9.20]

When does a person have possession of a ship?

A person has possession of a ship for the purpose of claiming a possessory lien when he or she is able to exercise such physical control over the vessel that it cannot be taken out of his or her custody.2 Whether a person has sufficient control over a ship to found a possessory lien is a question of fact and degree in every case.3 A person can have possession of a ship for the purpose of exercising a possessory lien despite the fact that the master and crew remain on board.4 1 See Delantera Amadora SA v Bristol Channel Ship-repairers Ltd and Swansea Dry Dock Co: The Tatingaki [1976] 2 Lloyd’s Rep 372 at 375. 2 The Tergeste [1903] P 26 at 33. See also The Scio (1867) LR 1 A & E 353; The Narada [1977] 1 Lloyd’s Rep 256. 3 The Narada [1977] 1 Lloyd’s Rep 256. 4 The Tergeste [1903] P 26 at 33; The Narada [1977] 1 Lloyd’s Rep 256.

170

Shipping Law

[9.30]

Priority of possessory liens [9.30]

A possessory lien on a ship or other item of maritime property is subject to any prior maritime lien,5 but it takes priority over any subsequent maritime lien.6 A possessory lien also takes priority over any further claim under an existing maritime lien for wages.7 A possessory lien takes priority over bottomry and respondentia.8 It also takes priority over any mortgage, including any prior mortgage.9 Although there is no authority on point, it seems evident as a matter of principle that priority between a possessory lien and a statutory lien is determined by the order of their creation. In other words, the first in time has priority.

[9.40]

Position of possessory lienee after arrest of ship

The advantage of priority enjoyed by a person with a possessory lien is not lost by the arrest of the ship following the institution of proceedings in rem. The court will then recognise the lienee as having due priority over the proceeds of sale of the ship notwithstanding its arrest.10

BOTTOMRY AND RESPONDENTIA The nature of bottomry and respondentia [9.50]

The security known as bottomry was closely allied to a master’s implied agency of necessity. By virtue of his agency of necessity, a master who was unable to make contact with the ship’s owner could pledge the owner’s credit for any necessaries that were required for a voyage to continue.11 A supplier of necessaries might not, however, be content to rely simply upon the ship owner’s credit: he or she might also want security. Bottomry could supply this security. Bottomry may be defined shortly as a charge which is created over the fabric of a ship in order to secure money for necessaries so that a voyage can continue. It is called “bottomry”, from the Dutch “bodemerij”, because the charge is founded on the keel, or “bodem” (“bottom”), of the ship as representing the entire vessel. Bottomry could be expressed to include a charge on the ship’s freight and cargo as well. 5 The Gustaf (1862) Lush 506; 167 ER 230 at 507-508; 231; The Russland [1924] P 55 at 59. 6 The Tergeste [1903] P 26 at 33-34. 7 The Gustaf (1862) Lush 506; 167 ER 230 at 508; 231; The Tergeste [1903] P 26 at 33-34. 8 See Cargo ex Galam (1863) Br & Lush 167 at 181. 9 Williams v Allsup (1861) 10 CB (NS) 417; 142 ER 514; The Scio (1867) LR 1 A & E 353 at 355; The Ripon City [1897] P 226 at 244. See also The Sherbro (1883) 5 Asp MLC 88. 10 The Tergeste [1903] P 26 at 33-34. 11 Wallace v Fielden: The Oriental (1851) 7 Moo PC 398; 13 ER 934 at 409; 938; Stainbank v Shepard (1853) 13 CB 418; 138 ER 1262 at 441; 1271; The Orienta [1895] P 49 at 54. See also Holmes v Norton (1870) 1 AJR 93; Smith v Blair (1884) 5 ALT 177.

[9.50]

9 Possessory Liens and Bottomry

171

The rules relating to bottomry were developed during the course of the 19th century to meet the shipping requirements of that era. It then became settled that bottomry could be created only when a ship was at a foreign port and required money urgently for necessaries in the form of either supplies or repairs so that it could continue its voyage.12 Bottomry could be created by either the ship’s owner or its master.13 In the majority of circumstances where the owner was not also the master, it was the master who created this charge. A master had authority ex officio to create bottomry. He was required, however, first to communicate with the ship’s owner if this was reasonably possible without endangering the ship.14 It was held desirable that the master also give prior notice to any mortgagee.15 It was a fundamental condition of bottomry that the money it secured be repayable only upon the arrival of the ship at its destination at the end of the voyage.16 Bottomry could not impose a liability on the ship’s owner personally.17 If the ship was lost before arrival at its final destination, the money secured by the charge was also lost.18 If the ship was simply wrecked, the charge attached to whatever was left of it.19 The repayment of money raised by way of bottomry was thus always subject to the risk that the ship might be lost before the voyage ended. To cover this risk, a high rate of interest, commonly known as “maritime interest”, could be charged.20 Because of the exceptional nature of bottomry, and in particular because of the economic effect that it has upon the shipowner by virtue of attracting maritime interest, the rule evolved that bottomry had to be a charge of last resort: it could not be created if adequate funds could be 12 The Rhadamanthe (1813) 1 Dods 201; 165 ER 1283 at 204; 1284-1285; The Augusta (1813) 1 Dods 283; 165 ER 1312 at 286-287; 1313-1314; The Hersey (1837) 3 Hagg Adm 404; 166 ER 455 at 407-408; 456; The St George [1926] P 217 at 226-227. See also The Karnak (1868) LR 2 A & E 289, esp at 299-301. 13 The Duke of Bedford (1829) 2 Hagg Adm 294; 166 ER 251 at 302-303; 254. 14 Wallace v Fielden: The Oriental (1851) 7 Moo PC 398; 13 ER 934; Barron v Stewart: The Panama (1870) LR 3 PC 199; Kleinwort, Cohen & Co v Cassa Marittima of Genoa (1877) 2 App Cas 156 at 157-158; The St George [1926] P 217 at 227. See also Re the Lady Franklin (1874) 5 AJR 185. 15 The St George [1926] P 217 at 228. 16 The Armadillo (1841) 1 W Rob 215; 166 ER 566 at 255; 567; Stainbank v Shepard (1853) 13 CB 418; 138 ER 1262 at 442-443, 444; 1272; The James W Elwell [1921] P 351 at 365-366. 17 The Ripon City [1897] P 226 at 245-246. 18 The Atlas (1827) 2 Hagg Adm 48; 166 ER 162 at 52; 164; The James W Elwell [1921] P 351 at 365-366. 19 The Catherine, formerly the Croxdale (1851) 15 Jur 231 at 232; Stephens v Broomfield: The Great Pacific (1869) LR 2 PC 516 at 522-523. 20 See, eg, Stephens v Broomfield: The Great Pacific (1869) LR 2 PC 516 at 521 (interest charged at 45%).

172

Shipping Law

[9.60]

obtained in some other way.21 Bottomry accordingly could not be created if adequate funds could be raised simply upon the personal credit of the owner or master.22 Bottomry was created by the execution of a bond, called a bottomry bond. It then attached to the ship immediately.23 Once bottomry attached to a ship, it remained attached notwithstanding any change of ownership of the ship.24 Bottomry thus travelled with the ship in the same way as a maritime lien. Bottomry was important when global communications were poor, for it then provided a means by which the master of a ship could raise funds urgently so that the voyage could continue. With modern communications facilities now available at all ports — indeed with most ships able to communicate by radio directly with the rest of the world — and with banks now able to transmit funds promptly to almost any port around the globe, bottomry and respondentia have become obsolete.25

[9.60]

Respondentia

Respondentia (Latin for “things responding” or “things paying back”) is a charge solely on a ship’s cargo.26 The rules of respondentia were very similar to those of bottomry.

[9.70]

Enforcement of bottomry

Bottomry was similar to a ship mortgage in that it involved a loan which was secured on the ship itself.27 It is different from a mortgage, however, in that it did not confer any interest in the property of the ship.28 It consequently could not be enforced by any extrajudicial means. Bottomry, like a maritime lien, was enforceable only by judicial proceedings in rem.29 21 The Rhadamanthe (1813) 1 Dods 201; 165 ER 1283 at 204; 1284-1285; The Nelson (1823) 1 Hagg Adm 169; 166 ER 61 at 175-176; 63; The Hersey (1837) 3 Hagg Adm 404; 166 ER 455 at 408; 456; Wallace v Fielden: The Oriental (1851) 7 Moo PC 398; 13 ER 934 at 409; 938. 22 The Augusta (1813) 1 Dods 283; 165 ER 1312 at 286; 1313; The Nelson (1823) 1 Hagg Adm 169; 166 ER 61 at 176; 63; The Hersey (1837) 3 Hagg Adm 404; 166 ER 455 at 408; 456; Wallace v Fielden: The Oriental (1851) 7 Moo PC 398; 13 ER 934 at 409; 938; Stainbank v Fenning (1851) 11 CB 51; 138 ER 389 at 88-89; 403-404. See also Stainbank v Shepard (1853) 13 CB 418; 138 ER 1262 at 443-444; 1272; Re the Lady Franklin (1874) 5 AJR 185. 23 The Nymph (1856) Sw 86; 166 ER 1033. 24 The Catherine, formerly the Croxdale (1851) 15 Jur 231; The Nymph (1856) Sw 166 ER 1033. 25 Bottomry was regarded as obsolescent as long ago as 1926: see The St George [1926] P 217 at 222. A pending claim for bottomry was, however, referred to in The Conet [1965] 1 Lloyd’s Rep 195 at 196. Bottomry was treated as obsolete in 1980: see Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 232. 26 Cargo ex Sultan (1859) Swab 504; 166 ER 1235 at 510; 1238. 27 The Atlas (1827) 2 Hagg Adm 48; 166 ER 162 at 53; 164. 28 The Tobago (1804) 5 C Rob 218; 165 ER 754 at 222; 755. 29 Stainbank v Fenning (1851) 11 CB 51; 138 ER 389 at 88-89; 403; Stainbank v Shepard (1853) 13 CB 418; 138 ER 1262 at 441-442; 1271.

[9.90]

9 Possessory Liens and Bottomry

173

Because bottomry had to be enforced by proceedings in rem, it was traditionally classified as a species of maritime lien.30 It was, however, a distinct form of security. In particular, bottomry was created by a deliberate act, and not by the mere operation of law. Moreover, although bottomry was like a maritime lien in that it travelled with the ship to which it was attached, it was unlike a maritime lien in that it was fully transferable or assignable.31 A bottomry bond has, indeed, been judicially described as a form of negotiable instrument.32

Priority of bottomry [9.80]

Under general maritime law, bottomry took priority over all mortgages without exception.33 However, it usually ceded priority to any maritime lien.34 As bottomry is created by “a transaction that … secures payment or performance of an obligation”, it is a “security interest” for s 12(1) of the Personal Property Securities Act 2009 (Cth). Priority between bottomry and a mortgage would accordingly today be determined by s 55 (“Default priority rules”) of the Act. These rules are considered further in Chapter 10.

[9.90]

Priority inter se

Under general maritime law, if there was more than one charge of bottomry on a ship, the order of priorities was in inverse order to the date of attachment.35 The reason given for this was that any subsequent charge of bottomry was deemed to protect all prior interests of the same kind.36 The rule relating to the priority of bottomry inter se was thus the opposite of that which applied to ship’s mortgages. Priority between more than one charge of bottomry today would also be determined by s 55 of the Personal Property Securities Act 2009 (Cth).

30 See The Hope (1873) 1 Asp MLC 563 at 565; The Ripon City [1897] P 226 at 242; Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 232, 240. Note also Admiralty Act 1973 (NZ), s 2 (definition of “maritime lien”). Compare Admiralty Act 1988 (Cth), s 15(2), where bottomry and respondentia are not listed as maritime liens, though this subsection is not exclusive and they might therefore come within its scope: Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 470-471. 31 The Rebecca (1804) 5 C Rob 102; 165 ER 712 at 104; 713; The Catherine (1847) 3 W Rob 1 at 2. See also Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369 at 398. 32 The Rebecca (1804) 5 C Rob 102; 165 ER 712 at 104; 713. Compare, however, D R Thomas, Maritime Liens (Stevens & Sons Ltd, London, 1980), p 266. 33 The Duke of Bedford (1829) 2 Hagg Adm 294; 166 ER 251 at 304; 255; The Hersey (1837) 3 Hagg Adm 404; 166 ER 455 at 407; 456. 34 See [8.390]. 35 The Rhadamanthe (1813) 1 Dods 201; 165 ER 1283 at 204; 1284; The Duke of Bedford (1829) 2 Hagg Adm 294; 166 ER 251 at 304; 255; The Stream Fisher [1927] P 73 at 82. 36 The Rhadamanthe (1813) 1 Dods 201; 165 ER 1283 at 204; 1284; The Duke of Bedford (1829) 2 Hagg Adm 294; 166 ER 251 at 304; 255; The Stream Fisher [1927] P 73 at 82.

10

Mortgage of Ships [10.10] INTRODUCTION TO MORTGAGE OF SHIPS ........................................ 175

[10.10] Mortgage as form of security over ships .................................... 175 [10.30] Mortgage of ships: the general law .............................................. 176 [10.60] Ways of creating a chattel mortgage of a ship ........................... 177 [10.80] MORTGAGE OF SHIPS AND THE PERSONAL PROPERTY SECURITIES ACT 2009 .................................................................................. 178

[10.80] Introduction ...................................................................................... 178 [10.100] Securities on ships under the Personal Property Securities Act .................................................................................................... 178 [10.130] Rules of priorities .......................................................................... 179 [10.140] GENERAL LAW OF SHIP MORTGAGES ............................................... 180

[10.140] Property secured by a ship mortgage ........................................ 180 [10.160] Effect on ownership of mortgagee taking possession ............. 180 [10.180] Rights, duties and liabilities of ship mortgagors ..................... 180 [10.250] Rights, duties and liabilities of a mortgagee ............................ 184 [10.370] CESSATION OF A SHIP MORTGAGE ..................................................... 190

INTRODUCTION TO MORTGAGE OF SHIPS Mortgage as form of security over ships [10.10]

A mortgage is for all practical purposes the most secure form of charge that an owner can create over a ship. It is true that under general maritime law, bottomry ranks higher than a mortgage in priority, but that form of security can be created only in a foreign port and only to secure necessaries so that a voyage can continue.1 It is in any event now an obsolete form of charge. A mortgage, on the other hand, continues to be an attractive form of charge over a ship for owner and lender alike. It is attractive to an owner as it enables him or her to use the ship as security to raise money for any purpose at any time. It is attractive to a lender because it gives rights over the ship itself which can be exercised without recourse to the courts. 1 See Chapter 9.

176

Shipping Law

[10.20]

[10.20]

Priority of a ship mortgage with other charges under general maritime law

Under general maritime law, a mortgage of a ship always cedes priority to a paramount statutory charge,2 a maritime lien,3 a possessory lien,4 and bottomry.5 This is so regardless of whether the mortgage is (or was) registered or unregistered, legal or equitable, or prior or later in time. Priority between a ship mortgage and a statutory lien usually depends on the time of creation: the first in time ordinarily has priority.6 The provisions on priority under the Personal Property Securities Act 2009 (Cth) are considered separately at [10.130].

Mortgage of ships: the general law [10.30]

Except where statute has intervened, the general law of mortgages is applicable to the mortgage of a ship in the same way as it applies to the mortgage of any other chattel.7

[10.40]

Law governing the mortgage of foreign ships

The law governing the mortgage of foreign ships is ordinarily the law of the ship’s country of nationality.8

[10.50]

Chattel mortgage can be a legal mortgage

If a mortgage of a legal interest in a chattel involves a transfer of this interest, it ordinarily constitutes a legal mortgage.9 Under general law it is accordingly enforceable against a bona fide purchaser for value without notice. In the modern English case of The Shizelle,10 it was confirmed that this rule applies equally in respect of a mortgage of a ship.11 In that case a finance company lent money to a purchaser of a ship and secured this 2 See The Emilie Millon [1905] 2 KB 817. 3 The Dowthorpe (1843) 2 W Rob 73; 166 ER 682 at 79; 684-685; The Chieftain (1863) Br & Lush 212; 167 ER 340; The Ripon City [1897] P 226 at 244; Currie v M’Knight [1897] AC 97 at 105; The Tolten [1946] P 135 at 150; Bankers Trust International Ltd v Todd Shipyards Corp: The Halcyon Isle [1981] AC 221 at 233, 244, 246; The Tacoma City [1991] 1 Lloyd’s Rep 330 at 332, 347. 4 Williams v Allsup (1861) 10 CB (NS) 417; 142 ER 514; The Scio (1867) LR 1 A & E 353 at 355; The Ripon City [1897] P 226 at 244; The Sherbro (1883) 5 Asp MLC 88. 5 The Duke of Bedford (1829) 2 Hagg Adm 294; 166 ER 251 at 304; 255; The Hersey (1837) 3 Hagg Adm 404; 166 ER 455 at 407; 456. 6 See The Rama (1921) 8 Ll L Rep 369; The Colorado (1922) 13 Ll L Rep 474; Canadian Imperial Bank of Commerce v The Orion Expeditor (1991) 43 FTR 284. 7 Thompson v Smith (1815) 1 Madd 395; 56 ER 145 at 405; 149; Fletcher and Campbell v City Marine Finance Ltd [1968] 2 Lloyd’s Rep 520 at 535, 538-539. See also Burgis v Constantine [1908] 2 KB 484. 8 The Angel Bell [1979] 2 Lloyd’s Rep 491 at 495. 9 Maugham v Sharpe (1864) 17 CB (NS) 443; 144 ER 179 at 464; 187. 10 The Shizelle [1992] 2 Lloyd’s Rep 444. 11 The Shizelle [1992] 2 Lloyd’s Rep 444 at 451.

[10.70]

10 Mortgage of Ships

177

loan by a mortgage on the ship. The purchaser subsequently sold the ship to a bona fide purchaser for value without notice of the mortgage. In proceedings instituted by the mortgagee to realise its security it was held that the ship remained subject to the legal mortgage notwithstanding its sale to the innocent purchaser.

Ways of creating a chattel mortgage of a ship [10.60]

There are no necessary formalities that must be observed to create a chattel mortgage of a ship.12 Leaving to one side here the provisions of the Personal Property Securities Act 2009 (Cth), which are considered separately at [10.80]–[10.130], under the general law there must simply be a transfer of an interest in property by way of security.13 The clearest way is by an out-and-out transfer of the property with a right to redeem upon discharge of the financial obligation involved. If a court finds that a transfer of property was effected simply as security, it will enforce the right of redemption even if there is no express term on this point in the transfer instrument itself.14 It does not matter that the transfer has then been registered under the Shipping Registration Act 1981 (Cth) as s 47 of the Act provides for the enforcement of any equitable interest in a ship or share in a ship against the registered owner.

[10.70]

Equitable mortgage by deposit of builder’s certificate or mortgage instrument

A ship, including a ship under construction, can be mortgaged by a deposit of the builder’s certificate.15 This results in an equitable mortgage. A builder’s certificate is a document indicating initial ownership of a ship. A mortgage by deposit of the builder’s certificate is thus akin to a mortgage by deposit of title deeds. A registered ship cannot, however, be mortgaged by a deposit of the registration certificate as this is prohibited by s 20(1) of the Shipping Registration Act 1981 (Cth). An equitable mortgage can also be achieved by the deposit of a mortgage instrument as security,16 and today also by satisfying the requirements of s 19 of the Personal Property Securities Act 2009 (Cth). An equitable interest can be enforced against the mortgagee of a registered ship pursuant to s 47 of the Shipping Registration Act. 12 Reeves v Capper (1838) 5 Bing (NC) 136; 132 ER 1057 at 139-140; 1058; The Shizelle [1992] 2 Lloyd’s Rep 444 at 447. 13 Keith v Burrows (1876) 1 CPD 722 at 731; The Shizelle [1992] 2 Lloyd’s Rep 444 at 447. 14 Jackson v Vernon (1789) 1 HBl 115; 126 ER 69; Langton v Horton (1842) 5 Beav 9; 49 ER 479; Whitfield v Parfitt (1851) 4 De G & Sm 240; 64 ER 814; Gardner v Cazenove (1856) 1 H & N 423; 156 ER 1267; Ward v Beck (1863) 13 CB (NS) 668; 143 ER 265; The Innisfallen (1866) LR 1 A & E 72. 15 Ex parte Hodgkin; Re Softley (1875) LR 20 Eq 746 at 756. 16 Lacon v Liffen (1862) 4 Giff 75; 66 ER 626 at 82; 629.

178

Shipping Law

[10.80]

MORTGAGE OF SHIPS AND THE PERSONAL PROPERTY SECURITIES ACT 2009 Introduction [10.80]

Until the commencement of the operative provisions of Personal Property Securities Act 2009 (Cth) on 30 January 2012, the mortgage of ships was the subject of detailed provisions in the Shipping Registration Act 1981 (Cth). There are no longer any statutory provisions either in this Act or any other Act that deal exclusively with the mortgage of ships. All securities on ships and on other vessels and watercraft now come within the scope of the Personal Property Securities Act in the same way as securities on any other form of personal property. The Personal Property Securities Act is a national code that applies throughout Australia. It supersedes State law by a reference of powers that was made by all States pursuant to s 51(xxxvii) of the Constitution between 2009 and 2011. Ship mortgages registered in the Register of Ships on 30 January 2012 were automatically transferred (“migrated” to use the statutory term) to the Personal Property Securities Register, with transitional provisions to enable registered ship mortgages to become consistent with the requirements of the 2009 Act and thereby retain their existing priority.

[10.90]

Relevance of general maritime law of ship mortgages

The general maritime law on ship mortgages is not without more displaced by the Personal Property Securities Act 2009. They can coexist, though the extent to which they do so must remain uncertain for the time being. The established general law on ship mortgages as a branch of law sui generis is considered further at [10.140]–[10.360].

Securities on ships under the Personal Property Securities Act [10.100]

A security on a ship or other watercraft comes within the scope of the Personal Property Securities Act 2009 only if the property is located17 in Australia or if the grantor of the security is an Australian entity.18 The particular type of security that is secured on the property is irrelevant19 provided that it secures either a payment or the performance of an obligation.20 It can thus be a chattel mortgage, a fixed charge or a lease.21 17 On “located”, see s 235(1). 18 Section 6(1). 19 For examples of relevant securities, see s 12(2). 20 Section 12(1). 21 See s 12(2).

[10.130]

[10.110]

10 Mortgage of Ships

179

The security must result from a transaction

A security on chattels, and thus on a ship, must result from a transaction.22 It cannot arise simply by operation of law.23 The requirement of a transaction is confirmed by provisions that make it clear that a lien, charge or any other interest in personal property does not ordinarily come within the scope of the Act, whether it arises under statute law or by operation of the rules of common law and equity.24

[10.120]

Terminology

In the Personal Property Securities Act, a security that comes within the scope of the Act is more precisely referred to as a “security interest”.25 The property to which a security interest is attached is referred to in the Act as “collateral”.26

Rules of priorities [10.130]

The priority of a security interest under the Personal Property Securities Act depends on whether the security interest is “perfected”. A security interest is perfected when three conditions are met. These are: when the security interest is attached to the collateral,27 when it is enforceable against third parties,28 and when steps have been taken to protect the security interest either by taking possession or control of the collateral or — more commonly — by having the security registered in the Personal Property Securities Register.29

The rules of priority under the Act are complex.30 However, the basic rules in respect of claims against the same collateral are as follows. A perfected security interest always takes priority over an unperfected security interest in the same collateral.31 As between more than one perfected interest in the same collateral, priority is determined by the order of time in which perfection occurred.32 As between more than one unperfected interest in the same collateral, priority is determined by the order of attachment.33 Unlike registration of mortgages in the old Register of Ships under the former provisions of the Shipping Registration Act 1981 22 Section 12(1). 23 See Ch 9 of the Act. 24 Section 8(1)(b), (c), with s 10 (definition of “general law”). Note also s 73(1)(a). 25 Section 12(1). 26 Section 10 (definition of “collateral”). 27 On “attachment”, see s 19(2). 28 See s 20(1). 29 Section 21. 30 For a more detailed consideration of priorities, see J O’Donovan, “Maritime Claim Priorities under the Personal Property Securities Act 2009” (2011) 25 ANZ Mar LJ 118. 31 Section 55(3). 32 Section 55(4), (5). 33 Section 55(2).

180

Shipping Law

[10.140]

(Cth), registration of a security interest in the Personal Property Securities Register is not necessary to afford it the advantages of priority, though it is the common way of doing so.

GENERAL LAW OF SHIP MORTGAGES Property secured by a ship mortgage [10.140]

Unless the terms of a mortgage provide otherwise, the mortgage of a ship covers not only the fabric of the ship but also everything on board which is necessary for the ship to undertake a voyage, and also anything which may be substituted for any such item.34

[10.150]

Position of insurance and freight

The mortgage of a ship does not, without more, involve a charge on either its insurance or its freight (ship’s earnings).35 Freight, including freight not yet earned, can nonetheless be made the subject of a charge. The charge of freight is subject to the ordinary law relating to a charge on a chose in action.36

Effect on ownership of mortgagee taking possession [10.160]

A mortgagor under a registered mortgage loses all incidents of ownership of the ship or share when the mortgagee takes possession of the property. The mortgagee is then treated as the owner of the ship or share.37 This follows from the ordinary law concerning the position of a mortgagee in possession.

[10.170]

Rights and liabilities of mortgagee in possession

A mortgagee in possession of a ship or share is entitled to all the rights, and is subject to all the liabilities, of the owner from the time of taking possession.38 If freight then becomes due to the owner of the ship, this is payable to the mortgagee and not to the mortgagor.39

Rights, duties and liabilities of ship mortgagors Right of mortgagor to deal with the ship and bind the mortgagee

[10.180]

Unless there are provisions to the contrary in the mortgage instrument or in any collateral deed of covenant, the mortgagor of a ship

34 Coltman v Chamberlain (1890) 25 QBD 328. See also Re Salmon and Woods; Ex parte Gould (1885) 2 Morr BR 137 at 141. 35 Liverpool Marine Credit Co v Wilson (1872) LR 7 Ch App 507 at 511. 36 Liverpool Marine Credit Co v Wilson (1872) LR 7 Ch App 507 at 511. 37 Keith and Wyllie v Burrows and Perks (1877) 2 App Cas 636 at 645-646. Compare The Neptune (1824) 3 Hagg Adm 129; 166 ER 354 at 133; 355. 38 Brown v Tanner (1868) LR 3 Ch App 597 at 602. 39 Dickinson v Kitchen (1858) 8 El & Bl 789; 120 ER 293 at 798; 297; Brown v Tanner (1868) LR 3 Ch App 597 at 602; Liverpool Marine Credit Co v Wilson (1872) LR 7 Ch App 507 at 511; Keith and Wyllie v Burrows and Perks (1877) 2 App Cas 636 at 646; The Benwell Tower (1895) 8 Asp MLC 13 at 16.

[10.190]

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181

or share in a ship which is subject to a mortgage has, for so long as he or she remains in possession, the prima facie right to deal with the property as he or she wishes. The reason for this is that the mortgagor remains by statute its normal owner.40 It has been said that a mortgagor in possession of his or her ship has the implied consent of the mortgagee to enter into all engagements for the employment of the ship of the sort usually entered into by a person who has apparent control and ownership of a vessel.41 The accuracy of this statement has, however, been doubted.42 The rule that a mortgagor in possession has the prima facie right to deal with the property as he or she wishes is subject to one main qualification: he or she must not deal with the ship or share in any way which will impair the mortgagee’s security.43 Subject to this limitation, the mortgagor may enter into any contract that he or she wishes in respect of the ship, including charterparties. These dealings then bind the mortgagee if he or she should subsequently enter into possession to enforce his or her security.44 One consequence of a mortgagor’s right to deal with the ship as he or she wishes is that the mortgagor is free to allow the ship to lie idle if he or she is so minded. If the mortgagor does this, the mortgagee cannot, without more, interfere.45

[10.190]

Rule against impairment of the mortgagee’s security

The rule that a mortgagor must not deal with his or her ship or share in a way which impairs the mortgagee’s security is not applied by the courts with uncompromising strictness. In particular, the courts do not apply this rule to a dealing which is merely unfavourable to the mortgagee.46 Many shipping contracts and other commercial dealings — indeed, even sailing the ship on the high seas — might be regarded as in some way unfavourable to the mortgagee of a ship, and for the courts to place restrictions in this regard would fetter the ability of a mortgagor to deal with his or her property in a proper commercial manner. What a mortgagor is restrained from doing is entering into a contract or dealing

40 Shipping Registration Act 1981 (Cth), s 40. See also Brown v Tanner (1868) LR 3 Ch App 597 at 602; The Heather Bell [1901] P 272 at 280; The Myrto [1977] 2 Lloyd’s Rep 243 at 253. 41 Johnson v Royal Mail Steam Packet Co (1867) LR 3 CP 38 at 42. 42 Law Guarantee & Trust Society v Russian Bank for Foreign Trade [1905] 1 KB 815 at 826. 43 Collins v Lamport (1865) 34 LJ Ch 196 at 200-201; Keith and Wyllie v Burrows and Perks (1877) 2 App Cas 636 at 645; The Heather Bell [1901] P 143 at 149, and on appeal The Heather Bell [1901] P 272 at 280; The Myrto [1977] 2 Lloyd’s Rep 243 at 253. 44 Brown v Tanner (1868) LR 3 Ch App 597 at 603; The Heather Bell [1901] P 143 at 149; The Myrto [1977] 2 Lloyd’s Rep 243 at 253. 45 Keith and Wyllie v Burrows and Perks (1877) 2 App Cas 636 at 645; The Heather Bell [1901] P 143 at 149-150. 46 The Heather Bell [1901] P 143 at 151-152.

182

Shipping Law

[10.200]

which will materially impair the mortgagee’s security.47 Whether any contract or dealing will materially impair a mortgagee’s security is a matter of fact and degree, to be decided in light of the circumstances of each case.48 Dealings that have either been held materially to impair a mortgagee’s security, or been deemed likely to have this effect, include the following: • assignment of freight before it becomes due so as to prevent the mortgagee from receiving it should he or she enter into possession;49 • entry into a contract which will bind up a ship for a very long period or otherwise make it difficult for the mortgagee to sell the vessel should this become necessary;50 • entry into a contract which might imperil the safety of the ship (for example, a contract to carry contraband in time of war) or which otherwise involves such risks as to make the ship uninsurable;51 and • entry into a speculative and improvident contract for the employment of the ship, especially where the mortgagor is impecunious and the ship is already charged with substantial debt.52

[10.200]

Meaning of “materially impair a mortgagee’s security”

It is difficult to determine from the cases precisely what is meant by materially impairing a mortgagee’s security. It certainly concerns an actual or possible reduction in the value of the ship or share in the hands of the mortgagee, though not necessarily, it would seem, a reduction in value below that which would be sufficient to pay out the mortgage should the mortgagor default in the repayment of the secured financial obligation. One point is clear, however. This is that the impairment must concern the value of the mortgaged property or the economic benefits (such as freight) that accrue to that property, and not simply the ability of the mortgagee to enforce his or her security. Accordingly, a mortgagee’s security is not impaired by the fact that pursuant to a charterparty the ship will travel out of the jurisdiction of the court, with the result that it may then be difficult for the mortgagee to enforce the mortgage security.53 47 Collins v Lamport (1865) 34 LJ Ch 196 at 200-201; Brown v Tanner (1868) LR 3 Ch App 597 at 603; The Fanchon (1880) 7 PD 173 at 177; The Heather Bell [1901] P 272 at 280. 48 The Myrto [1977] 2 Lloyd’s Rep 243 at 254. 49 Brown v Tanner (1868) LR 3 Ch App 597 at 693. But cf Cory Brothers & Co v Stewart (1885) 2 TLR 508, and the consideration of both cases in The Heather Bell [1901] P 143 at 150-151. 50 The Celtic King [1894] P 175 at 188 (contract which sought to bind ship to a particular line for five years held not binding on mortgagee). Compare The Heather Bell [1901] P 143 at 151-152 (contract which sought to bind ship to specified daily excursion trips for six weeks held binding on mortgagee). 51 Law Guarantee & Trust Society v Russian Bank for Foreign Trade [1905] 1 KB 815, esp at 823, 826, 828. 52 The Myrto [1977] 2 Lloyd’s Rep 243 at 254, 257-258. 53 The Fanchon (1880) 7 PD 173.

[10.230]

[10.210]

10 Mortgage of Ships

183

Limits of the rule against impairment of the mortgagee’s security

The rule that a mortgagor must not deal with his or her ship in a manner which impairs the mortgagee’s security does not mean that any such dealing is void or illegal (though it might be a breach of the mortgage agreement). What it means is that if there is such a dealing and the mortgagee subsequently takes possession of the ship, he or she may ignore the dealing with impunity.54 If therefore a mortgagor enters into a contract with a third party which impairs the security of the mortgagee, the contract is prima facie binding as between the mortgagor and the third party.55 However, the mortgagee may then repudiate the contract should he or she enter into possession of the ship.56 In this case, the contract is unenforceable as against the mortgagee, though the third party may then seek damages against the mortgagor.57

[10.220]

Limits on the extent to which a mortgagee is bound by the mortgagor’s dealings

A corollary of the foregoing is that, provided a mortgagor deals with his or her ship in a way that does not impair the mortgagee’s security, any dealing by the mortgagor binds the mortgagee if he or she should subsequently take possession.58 This rule applies, however, only if at the time of taking possession the mortgagor was in a position to meet his or her obligations in respect of that dealing. A mortgagee is not bound if at the time of taking possession the mortgagor was unable to meet his or her obligations in that regard.59 So, for example, if a mortgagor cannot for financial reasons fulfil obligations under a charterparty, the mortgagee cannot be required to fulfil the terms of the charter should he or she then take possession.60 Put shortly, a mortgagee in possession cannot be required to do more than the mortgagor was able to do when the latter was last in possession of the ship.

[10.230]

Position of a mortgagee with notice of an existing contract

There is strong authority for the proposition that if a person becomes the mortgagee or purchaser of a ship with actual notice of an existing contract in respect of this ship, he or she is bound by the contract to the extent that he or she may be restrained by way of injunction if he or she should 54 The Myrto [1977] 2 Lloyd’s Rep 243 at 254. 55 Collins v Lamport (1865) 34 LJ Ch 196 at 200. 56 Collins v Lamport (1865) 34 LJ Ch 196 at 200; The Heather Bell [1901] P 143 at 151-152. See also Brown v Tanner (1868) LR 3 Ch App 597 at 604. 57 The Celtic King [1894] P 175 at 190. 58 Brown v Tanner (1868) LR 3 Ch App 597 at 603; The Heather Bell [1901] P 143 at 149; The Myrto [1977] 2 Lloyd’s Rep 243 at 253. 59 De Mattos v Gibson (1858) 4 De G & J 276; 45 ER 108 at 300-301; 116-117; The Lord Strathcona [1925] P 143 at 156; The Myrto [1977] 2 Lloyd’s Rep 243 at 254. 60 See The Lord Strathcona [1925] P 143 at 154-156; The Myrto [1977] 2 Lloyd’s Rep 243 at 259.

184

Shipping Law

[10.240]

attempt to act in a way which is inconsistent with it.61 It is irrelevant in such circumstances that the contract might impair the mortgagee’s security. This proposition has, however, been judicially criticised.62 The principal alternative view, which is based on ordinary principles of privity of contract, is that a mortgagee or purchaser of a ship is not bound by an existing contract with a third party in any event.63 An intermediate view, which has so far not been judicially considered, is that a mortgagee or purchaser of a ship is bound by an existing contract in respect of the ship only if the mortgage or purchase is expressed to be subject to the contract, notwithstanding that the mortgagee or purchaser was not a party to it. Ability of mortgagor to dispose of mortgaged property

[10.240]

It might appear from s 45 of the Shipping Registration Act 1981 (Cth) that a mortgagor under a registered ship has an unfettered power to dispose of the mortgaged property without the consent, or even the knowledge, of the mortgagee. This section states that the owner of a registered ship or share “has power, subject to this Act and to any rights and powers appearing in the Register to be vested in any other person, absolutely to dispose of the ship or share and to give effectual receipts in respect of the disposal”. It should be observed in this regard that a mortgagee’s rights and powers are not set out, and thus do not “appear”, in either of the Shipping Registers, and that there is no provision elsewhere in the Act which clearly restrains a mortgagor from selling the mortgaged property. It would be altogether surprising if a mortgagor of a ship did have a statutory power to sell the mortgaged property, and indeed the better view is that this is not the case. Section 45 is probably a section designed to protect the title of a purchaser of a registered ship or share,64 and not (or at least not primarily) a section intended to describe the powers of an owner of such property.

Rights, duties and liabilities of a mortgagee Right of mortgagee to take possession and sell

[10.250]

The most important right possessed by the mortgagee of a ship or share in a ship is to take possession of this property and if

61 De Mattos v Gibson (1858) 4 De G & J 276; 45 ER 108 at 282, 299; 110, 116; The Messageries Imperiales Co v Baines (1863) 7 LT 763 at 764; Lord Strathcona Steamship Co v Dominion Coal Co [1926] AC 108 at 117-120, 125. See also Port Line Ltd v Ben Line Steamers Ltd [1958] 2 QB 146 at 164-169. 62 Port Line Ltd v Ben Line Steamers Ltd [1958] 2 QB 146 at 164-169. 63 London County Council v Allen [1914] 3 KB 642 at 659; Barker v Stickney [1919] 1 KB 121 at 132. 64 The Horlock (1877) 2 PD 243 at 249-250. See also Burgis v Constantine [1908] 2 KB 484 at 496, 498, 501-503; Ontario Ltd v Commissioner of Stamps (1990) 53 SASR 274 at 281.

[10.260]

10 Mortgage of Ships

185

necessary then sell it in order to realise his or her security. This right is commonly the subject of express provisions in either the mortgage instrument itself or the collateral deed of covenant which the parties may execute along with it. Apart from any express provisions on this matter, a mortgagee has a right to take possession of the mortgaged ship or share in two circumstances. The first (following basic principles of the law of mortgages) is where the mortgagor defaults either in the repayment of capital or in the payment of interest.65 The second is where the mortgagor deals with the ship or share in such a way that the mortgagee’s security either is, or will become, materially impaired.66 In respect of the second situation, it should be observed that a mortgagee’s right to take possession does not arise if the mortgagor allows the ship simply to become burdened by a maritime lien, even if this does strictly impair the mortgagee’s security, for this might be entirely reasonable in the circumstances. A ship, for example, may properly accept salvage assistance when in distress even though successful salvage services will ordinarily attract a maritime lien for salvage reward. However, a mortgagee’s right to take possession does arise if the mortgagor by inaction then allows the ship to remain burdened by a maritime lien which impairs the mortgagee’s security.67 (As is observed in Chapter 8, a maritime lien takes priority over a mortgage, and thus detracts from the mortgagee’s security.)

[10.260]

Right of mortgagee of majority of shares to take possession and sell

A mortgagee of a majority of the shares in a ship has the same right to take possession of the ship and sell it as a mortgagee of the whole ship.68 This is a corollary of the rule that the control and management of a ship lies with the will of the majority of shareholders.69 A mortgagee of a minority of shares in a ship has the right to take possession of the mortgaged shares, but not the ship itself.

65 Wilkes v Saunion (1877) 7 Ch D 188 at 191; The Heather Bell [1901] P 143 at 148. 66 The Manor [1907] P 339 at 358-362. 67 The Manor [1907] P 339 at 361-362. 68 Japp v Campbell (1887) 57 LJQB 79. 69 The Margaret (1829) 2 Hag Adm 275; 166 ER 244 at 276; 245; Japp v Campbell (1887) 57 LJQB 79 at 81.

186

Shipping Law

[10.270]

[10.270]

Right of a second or subsequent mortgagee to take possession and sell

The ordinary rules of equity do not recognise any right in a second or subsequent mortgagee to take possession of a ship and sell it. Only a first mortgagee has this right. Equity empowers a second or subsequent mortgagee merely to apply to the court for the appointment of a receiver of the ship.70

[10.280]

Method of taking possession

A mortgagee can take possession of a mortgaged ship by going on board and taking personal possession of the vessel or by putting a representative on board. Either course is known as taking actual possession of the ship. These procedures are not, however, always practicable. For example, the ship may be in foreign parts. In this case a mortgagee can take constructive possession by acting in a way which indicates a clear and obvious intention of assuming the rights of ownership of the ship or share.71 A mortgagee has been held to take constructive possession of a ship in the following ways: • by informing the captain by letter that he or she is now the owner of the ship and by giving the captain a fresh set of instructions which override those of the mortgagor;72 • by informing the captain of the appointment of a new ship’s manager or agent;73 • by giving notice to the mortgagor and charterer of an intention to take possession of the ship.74 It has, however, been held insufficient for a mortgagee simply to have the ship arrested at a foreign port, for this is not an unequivocal assertion of the right to possession of a ship.75

[10.290]

Rights and liabilities of a mortgagee in possession

A mortgagee in possession of a mortgaged ship or share has all the rights, and is subject to all the liabilities, of the owner of the ship or share from

70 Liverpool Marine Credit Co v Wilson (1872) LR 7 Ch App 507 at 511; Keith v Burrows (1876) 1 CPD 722 at 736. 71 The Benwell Tower (1895) 8 Asp MLC 13 at 16. 72 Ex parte Howden and Ainslie; Re Litherland (1842) 2 Mont D & De G 574. 73 Benyon & Co v Godden & Son; HR Evans (Third Party) (1878) 3 Ex D 263. 74 Rusden v Pope (1868) LR 3 Ex 269. 75 The Benwell Tower (1895) 8 Asp MLC 13 at 16-17.

[10.300]

10 Mortgage of Ships

187

the time of taking possession.76 One consequence of this is that a mortgagee is entitled to receive any freight which is earned by the mortgaged ship after he or she has taken possession.77 This freight is then available to satisfy the mortgagee’s secured claim.78 Liberty to use ship pending sale

[10.300]

The only purpose for which a mortgagee of a ship or a share in a ship may enter into possession of this property is to sell it and thereby satisfy the sum secured by the mortgage.79 In some circumstances, however, it might be prudent for a mortgagee in possession to wait a while before selling the property. In this case the mortgagee should delay the sale, for a mortgagee of a ship, as of any other property, is liable for any loss suffered as a result of an imprudent or reckless sale.80 In the meantime the mortgagee might wish to use the property in some commercial venture in order thereby to reduce the amount owing to him or her. This, however, involves a risk, for the ship might suffer damage or loss as a result. Although there is some uncertainty on the matter, it would appear that a mortgagee in possession of a ship may use the vessel for a commercial venture pending sale without incurring any liability, provided he or she acts prudently in this regard.81 So long as the mortgagee acts prudently, it would appear that he or she is not liable for any loss, damage or diminution in value that may result to the ship. If, on the other hand, the mortgagee acts imprudently, he or she is so liable.82 It may be observed in this regard that there is no requirement that a mortgagee in possession employ the ship commercially pending sale, even if a prudent ship owner would do so. If a mortgagee chooses to let a mortgaged ship remain idle in the meantime, he or she is entitled to do so.83 The mortgagee’s sole duty in those circumstances is to take such care of it as any prudent shipowner would do.

76 Brown v Tanner (1868) LR 3 Ch App 597 at 602. 77 Dickinson v Kitchen (1858) 8 El & Bl 789; 120 ER 293 at 798; 297; Brown v Tanner (1868) LR 3 Ch App 597 at 602; Liverpool Marine Credit Co v Wilson (1872) LR 7 Ch App 507 at 511; Keith and Wyllie v Burrows and Perks (1877) 2 App Cas 636 at 646; The Benwell Tower (1895) 8 Asp MLC 13 at 16. 78 The Benwell Tower (1895) 8 Asp MLC 13 at 16. 79 Marriott v Anchor Reversionary Co Ltd (1861) 3 De G F & J 177; 45 ER 846 at 190; 851. 80 Marriott v Anchor Reversionary Co Ltd (1861) 3 De G F & J 177; 45 ER 846 at 190; 851. See also Marriott v Anchor Reversionary Co Ltd (1860) 2 Giff 457; 66 ER 191 at 469; 197. 81 Marriott v Anchor Reversionary Co Ltd (1861) 3 De G F & J 177; 45 ER 846 at 185-186, 191-192; 849, 851. See also Gulf & Fraser Fishermen’s Union v Calm C Fish Ltd, Phillipson, Doving O’Brien and O’Brien: The Calm C [1975] 1 Lloyd’s Rep 188. 82 Marriott v Anchor Reversionary Co Ltd (1860) 2 Giff 457; 66 ER 191, esp at 469, 470-471; 197. 83 Samuel v Jones (1863) 7 LT 760 at 762.

188

Shipping Law

[10.310]

Rights and duties in respect of a mortgagee’s sale and the proceeds of sale

[10.310]

A mortgagee in possession of a ship or a share in a ship must take reasonable care to obtain the best price reasonably possible for the mortgaged ship or share.84

The proceeds of sale of a mortgaged ship or share, and any freight payable to the mortgagee as owner of the ship or share, form a common fund for the satisfaction of the mortgagee’s security.85 If there is more than one mortgage on the ship, the common fund is available to satisfy the security of the mortgagees in accordance with their respective priorities.86 After all mortgagees have been satisfied, the mortgagee responsible for the sale holds any surplus as constructive trustee for the mortgagor.87

[10.320]

Effect of sale on existing rights and charges on the ship

If a ship or share in a ship is sold by a mortgagee, it is sold subject to any existing charges over the property other than those secured by way of a mortgage. All mortgages are extinguished upon sale of the subject property by a mortgagee in possession. Because a ship sold by a mortgagee is sold subject to any existing charges over the property other than those secured by way of a mortgage, it is sold subject to any maritime lien, statutory lien or other charge that may be attaching to it. In order to sell a ship with a completely clear title, a mortgagee must institute proceedings in rem in relation to the mortgage for the purpose of having the ship sold in the proceedings. Upon a sale in proceedings in rem, a ship is sold free of any charge.88 Proceedings in rem for a claim relating to a mortgage of a ship or share are commenced pursuant to s 16, with s 4(2)(a)(iii), of the Admiralty Act 1988 (Cth). Mortgagee’s right to foreclose

[10.330]

There is some uncertainty about whether a mortgagee of a ship or a share in a ship can foreclose, because this is very rarely even attempted. In England the accepted view under the corresponding provisions of the Merchant Shipping Act 1894 was that a mortgagee could

84 Gulf & Fraser Fishermen’s Union v Calm C Fish Ltd, Phillipson, Doving O’Brien and O’Brien: The Calm C [1975] 1 Lloyd’s Rep 188. 85 The Benwell Tower (1895) 8 Asp MLC 13 at 16. 86 The Benwell Tower (1895) 8 Asp MLC 13 at 16. See also Keith v Burrows (1876) 1 CPD 722 at 736. 87 Banner v Berridge (1881) LR 18 Ch D 254 at 269. 88 The Catherine, formerly the Croxdale (1851) 15 Jur 231; The Acrux [1962] 1 Lloyd’s Rep 405 at 409; Corps v Owners of the Paddle Steamer Queen of the South: The Queen of the South [1968] P 449 at 461-462; The Cerro Colorado [1993] 1 Lloyd’s Rep 58 at 60-61; Readhead v Admiralty Marshal, Western Australia District Registry (1998) 87 FCR 229 at 242.

[10.350]

10 Mortgage of Ships

189

foreclose.89 In the reasonably modern English case of Fletcher and Campbell v City Marine Finance Ltd,90 Roskill J referred to the ability of a ship mortgagee to foreclose without expressing any doubt on this matter. Right of mortgagee to require insurance of the ship by the mortgagor

[10.340]

Whilst a mortgaged ship is in the possession of the mortgagor, the mortgagee has the right to require that the vessel be insured against marine perils before going to sea.91

Duty of mortgagee to respect dealings by mortgagor in possession

[10.350]

As a general rule, a mortgagee of a ship or a share in a ship must not interfere with the performance of any contract in respect of the ship made by the mortgagor in possession.92 This is a corollary of the rule that the mortgagor of a registered ship ordinarily has the right to deal with it as he or she wishes for so long as he or she is in possession. Like the latter rule, the former does not apply to contracts which impair the mortgagee’s security or to contracts which contravene the terms of the mortgage.93 By virtue of the general rule just referred to, a mortgagee may not exercise any of his or her rights under the mortgage (for example, to enter into possession, or to arrest the ship in proceedings in rem) if this will interfere with the performance of a permissible contract.94 If a mortgagee enters into possession of a ship, he or she is bound by the terms of any permissible contract if, but only to the extent that, the mortgagor was otherwise then able to meet his or her obligations under it.95 A mortgagee in possession is thus not required to discharge any contractual obligation which the mortgagor was unable to discharge at the time the mortgagee took possession of the ship.96 If a mortgagee wrongly interferes with a contract in respect of a mortgaged ship, the injured party can obtain an injunction or damages against the mortgagee.97

89 See M Thomas and D Steel, Temperley’s Merchant Shipping Acts (7th ed, Stevens & Sons Ltd, London, 1976), p 34. 90 Fletcher and Campbell v City Marine Finance Ltd [1968] 2 Lloyd’s Rep 520 at 535-536. 91 The Heather Bell [1901] P 272 at 281. 92 The Myrto [1977] 2 Lloyd’s Rep 243 at 253-254. 93 The Myrto [1977] 2 Lloyd’s Rep 243 at 253-254. 94 The Myrto [1977] 2 Lloyd’s Rep 243 at 253-254. 95 See De Mattos v Gibson (1858) 4 De G & J 276; 45 ER 108 at 300-301; 116-117; The Lord Strathcona [1925] P 143 at 156; The Myrto [1977] 2 Lloyd’s Rep 243 at 254. 96 See The Lord Strathcona [1925] P 143 at 154-156; The Myrto [1977] 2 Lloyd’s Rep 243 at 259. 97 The Myrto [1977] 2 Lloyd’s Rep 243 at 254. See also The Heather Bell [1901] P 143 at 148.

190

Shipping Law

[10.360]

Extinguishment possession

[10.360]

of

mortgage

by

sale

by

mortgagee

in

As has already been observed, if a registered mortgagee in possession of a ship or share sells the property pursuant to his or her power of sale, all existing mortgages are extinguished, be they registered or unregistered. The ship or share is then transferred to the purchaser free of any mortgage. The transfer may then be registered in the relevant Shipping Register without the need for any evidence of the extinguishment.

CESSATION OF A SHIP MORTGAGE [10.370]

Any mortgage of a ship or share in a ship automatically ceases to have effect in the following circumstances:

• • • • •

upon the discharge of the mortgage obligation; upon the total destruction of the ship; upon the sale of the ship by a mortgagee in possession; upon the sale of the ship in proceedings in rem;98 upon the sale of the ship pursuant to a statutory right of sale, at least if the purchaser is unaware of the mortgage at the time of the sale;99 • in the case of an equitable mortgage, upon the sale of the ship or share to a bona fide purchaser for value without notice or constructive notice of the mortgage.100

98 The Catherine, formerly the Croxdale (1851) 15 Jur 231; The Acrux [1962] 1 Lloyd’s Rep 405; Corps v Owners of the Paddle Steamer Queen of the South: The Queen of the South [1968] P 449 at 461-462; The Cerro Colorado [1993] 1 Lloyd’s Rep 58 at 60-61. 99 The Blitz [1992] 2 Lloyd’s Rep 441 at 443. 100 Hooper v Gumm; McLellan v Gumm (1867) 2 Ch App 282. See also Barclay & Co Ltd v Poole [1907] 2 Ch 284; Burgis v Constantine [1908] 2 KB 484.

11

Introduction to Carriage of Goods by Sea [11.10] GENERAL INTRODUCTION ....................................................................... 191 [11.20] BILLS OF LADING AND SEA WAYBILLS ................................................ 192 [11.30] VOYAGE CHARTERPARTIES ...................................................................... 194 [11.40] CONTRACTS OF AFFREIGHTMENT ........................................................ 195 [11.50] SENSITIVITY OF WORLD FREIGHT MARKET ...................................... 195 [11.60] FREEDOM OF CONTRACT ......................................................................... 196 [11.90] INTERLOCKING CONTRACTS .................................................................. 199

GENERAL INTRODUCTION [11.10] When goods are to be carried by sea from one place to another, their nature and size influence the contractual arrangements that the parties choose to make. If the cargo to be transported is 40,000 tonnes of coal, for example, it would be necessary to use the entire carrying capacity of a large ship to carry the coal to its destination. The contract of carriage for such a cargo would probably be a voyage charterparty,1 by which the ship is chartered for the single voyage from the port of loading to the port of delivery: see Chapter 13. If, however, the cargo is 400,000 tonnes of coal, it would be necessary to use the carrying capacity of many large ships. In such a case, the contract of carriage would be a contract of affreightment for many liftings of cargo on many voyages: see [13.670]. By contrast, if the cargo to be carried is a single refrigerated container containing tulip bulbs, it would obviously be neither necessary nor desirable to charter an entire ship to carry the container to its destination. The contract of carriage for such a cargo would be a bill of lading or a sea waybill: see Chapter 12. The largest modern container ships can carry thousands of shipping containers at one time. This means that such a ship may be carrying goods under thousands of different contracts of carriage (bills of lading or sea waybills) on any one voyage. Obviously, the operator of such a ship 1 The term “charterparty” derives from the medieval Latin “carta partita”, which was an instrument written in duplicate on a single sheet and then divided by indented edges so that each part fitted the other: see C Trowbridge, “The History, Development and Characteristics of the Charter Concept” (1975) 49 Tulane Law Review 743.

192

Shipping Law

[11.20]

cannot promise each one of the thousands of cargo-owners with goods on the ship that the ship will go wherever they want it to go. Instead, ships of this kind follow the same advertised routes around the world over and over again, stopping at the same ports in the same order. A ship that continually follows the same route or line in this way is called a liner. A liner service carries goods between any two of the stopping places on the route or line. Smaller lines or “feeder services” bring goods to and from the ports on the line. For example, the port of Melbourne is on several international shipping lines, but since 2011 the port of Hobart has been on none at all. Containerised goods bound for Hobart from overseas may be carried into Melbourne or Sydney on an international liner service, and then transferred to a smaller ship for carriage from Melbourne or Sydney to Hobart, often under a separate contract of carriage. Conversely, export cargoes from Tasmania must be shipped on a feeder service before embarking on their voyage to other countries. By contrast, the exporter or importer of 40,000 tonnes of coal is likely to find a ship operator who will agree to take the cargo to the particular destination nominated by the exporter or importer. Bulk carriers do not usually follow lines like container ships: they travel the world from cargo to cargo, going wherever they are sent. As a result, the trade that they are involved in is sometimes known as the tramp trade, and they are sometimes called tramp ships. In summary, the different types of contract for carriage of goods by sea are, in ascending order of the size of cargo to be carried: 1. bills of lading and sea waybills; 2. voyage charterparties; and 3. contracts of affreightment.

BILLS OF LADING AND SEA WAYBILLS [11.20] A negotiable bill of lading does not only act as evidence of the contract for carriage between shipper and carrier; it also acts as a receipt for the goods put on board the carrying ship, and as a document entitling the holder to possession of them. When the shipper-exporter puts the goods on board the carrying ship, the carrier (or, more usually, its agent) issues a bill of lading to the shipper, which acts as a receipt for the goods, and as evidence of the contract of carriage between the shipper and the carrier. While the goods are at sea on the way to their destination, the bill of lading performs its third function (if it is a negotiable bill),2 as a document entitling the holder to possession of the goods. Typically, a negotiable bill of lading travels the following route: after receiving the bill of lading from the carrier, the shipper-exporter indorses the bill, usually 2 For the difference between negotiable and non-negotiable bills of lading, see [12.20].

[11.20]

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“in blank”,3 and then hands it to a bank in its own country for transmission to the importer’s bank, which gives the bill to the importer-indorsee in return for the purchase price (or an undertaking to pay it), and the importer-indorsee then presents the original, indorsed bill of lading to the carrier at the port of destination when the ship arrives.4 Possession of the original, indorsed bill of lading entitles the holder to possession of the goods it represents, so the banks can hold the negotiable bill of lading as security for any advances they have made on credit. In many cases, the shipper-exporter and receiver-importer do not require a negotiable document to act as security for payment, in the way that a negotiable bill of lading does. For example, if an exporter and an importer have formed a stable and longstanding trading relationship, the exporter may be prepared to send goods to the importer on credit, trusting that the importer will pay when the exporter sends its account, or the importer may be prepared to pay in advance, trusting that the exporter will send the goods as it has promised. Alternatively, if a national subsidiary of a multinational company sends goods to another subsidiary in a different country, payment can be made by in-house bookkeeping arrangements for transfer of credit from one subsidiary to the other. In each of these examples, the parties have no need for a negotiable bill of lading to secure payment of the purchase price, because the importer-receiver will pay the exporter-shipper without insisting on a negotiable document in return for payment. If a negotiable bill of lading is not needed, the parties may choose to use a sea waybill as the contract of carriage. A sea waybill performs two of the three functions that a bill of lading performs: it is a receipt for the goods shipped, and it is evidence of the contract of carriage between the shipper and the sea-carrier. It does not, however, perform the third function: it does not entitle the holder to possession of the goods. As a result, there is no need for the receiver to present the original sea waybill in order to persuade the carrier that it is entitled to delivery of the goods.5 The sea waybill simply names the importer-receiver as consignee. 3 A bill of lading is indorsed “in blank” if it is simply signed on the back by the shipper-exporter, without identifying the indorsee, so that passing the indorsed bill from hand to hand by mere delivery is sufficient to transfer the right to possession of the goods: see Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 133-134 [31] per Rares J; see also [12.710]. 4 That is what happens when the importer agrees to pay for the goods by providing an unconfirmed letter of credit. An unconfirmed letter of credit is an undertaking by the importer’s bank (known as the issuing bank) to pay the exporter-shipper in return for the indorsed bill of lading (among other documents). If the letter of credit is confirmed, a bank in the exporter’s country adds its undertaking to that of the issuing bank. The purchase price is paid by the importer-indorsee and then relayed from the issuing bank to a bank in the shipper-exporter’s country (called the nominated bank) and by that bank to the shipper-exporter. The purchase price changes hands in return for the negotiable bill of lading. 5 In contrast, a non-negotiable, “straight” bill of lading, which names the consignee, must be presented to the carrier for delivery, at least when it contains the typical “surrender clause” requiring presentation of the original bill in return for delivery of the goods: see

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Unlike a bill of lading, the original sea waybill usually does not change hands at all; it usually plays no part in the arrangements for payment of the purchase price. Because the carrier is entitled to deliver the goods to the receiver without demanding presentation of the original shipping documents, sea waybills are also used in trades involving short sea voyages, where the carrying ship may arrive at its destination before the shipping documents do. Sea waybills are commonly used for sea-carriage of goods between Australia and New Zealand, and in the Australian coasting trade, particularly between Tasmania and the mainland of Australia. It is also a simple matter for the waybill to be given in electronic form. In contrast, although electronic negotiable bills of lading do exist, they remain unusual in practice. Although many aspects of a shipping transaction are now paper-free, negotiable bills of lading are still generally issued and negotiated in paper form.6

VOYAGE CHARTERPARTIES [11.30]

In the case of a large quantity of goods, where the entire carrying capacity of a ship is to be used for the voyage to the port of destination, a voyage charterparty is usually used as the contract of carriage. The ship may be chartered for the voyage by either the shipper-exporter or the receiver-importer, and it may either be chartered directly from the shipowner or sub-chartered from another charterer (the head charterer). Unlike a negotiable bill of lading, a voyage charterparty is not a document entitling the holder to possession of the goods that are carried on the chartered ship. If the exporter and the importer need a negotiable document to perform that function, then the shipowner (or head charterer) or its agent must issue a negotiable bill of lading when the goods are shipped on board the chartered ship. The right to possession of the goods is passed from shipper-exporter to indorsee-importer by indorsement of the bill of lading, but the contract of carriage between the charterer and the shipowner (or head charterer) is contained in the charterparty. If a negotiable bill of lading is not needed, the carrier may issue a non-negotiable sea waybill instead. The contract of carriage between charterer and shipowner (or head charterer) is still the charterparty; the sea waybill acts merely as a receipt so far as the charterer is concerned.

Voss v APL Co Pte Ltd [2002] 2 Lloyd’s Rep 707 (Sing Ct App); JI MacWilliam Co Inc v Mediterranean Shipping Co SA: The Rafaela S [2005] 2 AC 423; Porky Products Inc v Nippon Express USA (Illinois) Inc 1 F Supp 2d 227 (SDNY 1997); Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791. See generally [12.20] for the difference between a sea waybill and a straight bill of lading. 6 For a description of the technical problems preventing easy adoption of electronic bills of lading, see [12.790].

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CONTRACTS OF AFFREIGHTMENT [11.40]

Where the quantity of goods to be carried is even larger still, the contract of carriage used by the parties is often a contract of affreightment. Strictly speaking, any contract for the carriage of goods by sea is a contract of affreightment. In practice, though, the expression is used to describe a contract for the carriage of such large quantities of goods that several voyages are needed. Instead of entering into separate voyage charterparties for each carrying voyage, the parties agree on the basic specifications (such as how much cargo is to be carried, how many voyages will be needed, over how much time and in what kind of ships) that will govern the entire series of voyages (or “liftings”, as they are usually called), leaving nomination of the precise details for each voyage until just before it occurs. From the charterer’s point of view, the advantage of a contract of affreightment over a series of single voyage charterparties is its stability: the shipowner is locked in to an agreed freight rate7 and agreed contractual terms for all the liftings under the contract. If the charterer thinks that market freight rates will rise over the next few years, it may try to enter a single contract of affreightment for many liftings at this year’s rate, rather than enter into separate voyage charterparties at progressively higher rates and, possibly, progressively less favourable terms. The shipowner, too, must fix the freight rate for the contract of affreightment with an eye to the future. If the market freight rate goes down over the term of the contract of affreightment, the shipowner makes a larger profit, because it is guaranteed the higher contract rate for all liftings during that period; if the market rate goes up, the shipowner makes a smaller profit or even a loss, because it is locked in to the lower contract rate and cannot charter its own ships out at the market rate, or must pay the higher market rate to charter ships in to perform its obligations under the contract of affreightment. Indeed, from the shipowner’s point of view, entering a contract of affreightment is almost like playing a futures market in freight rates.

SENSITIVITY OF WORLD FREIGHT MARKET [11.50] For contracts such as voyage charterparties and contracts of affreightment, the world freight market is extremely sensitive, fluctuating from day to day. (By contrast, liner freight rates tend to be more static, as they are usually fixed by cartels of sea-carriers known as shipping conferences.) Freight rates for bulk cargoes are influenced by commodity prices, political developments, weather and many other factors. For example, a fall in the price of oil reduces demand for oil tankers, thereby 7 Freight is the price paid for the carriage of goods: see [13.660] (voyage charterparties) and [12.640] (bills of lading and sea waybills). In the case of a time charterparty, the sum paid by the charterer to the shipowner is called hire: see [14.310]–[14.340].

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lowering freight rates.8 The armed conflict between Iran and Iraq that began in 1980 had a dramatic effect on freight rates for voyages into the Persian Gulf, as did the Gulf Wars of 1991 and 2003. It is not only in this sensitivity to market factors that the world bulk freight market resembles the perfect market models of economic theory. As Lord Diplock observed in Federal Commerce and Navigation Co Ltd v Tradax Export SA:9 The freight market for chartered vessels still remains a classic example of a free market. It is world-wide in coverage, highly competitive and sensitive to fluctuations in supply and demand. It is a market in which the individual charterers and shipowners are matched in bargaining power and are at liberty to enter into charterparties in whatever contractual terms they please.

FREEDOM OF CONTRACT [11.60] In the pure model of freedom of contract, equality of bargaining power does not go hand-in-hand with the use of standard form contracts, which are more usually found in contracts of adhesion, where there is inequality of bargaining power. However, voyage charterparties and contracts of affreightment are almost always made out on standard forms approved by international bodies such as the Baltic and International Maritime Conference (BIMCO). The freedom of contract referred to by Lord Diplock lies not so much in the liberty to construct a contract at will, as in the liberty to choose the particular standard form that best corresponds to one’s requirements, and the liberty to modify it to suit the parties’ needs.

[11.70]

Charterparties

Charterparties are usually drawn up through the mediation of agents and brokers. The shipowner’s broker and the charterer’s broker conduct negotiations on behalf of their principals, usually by exchange of emails and telephone calls.10 Each broker maintains contact with his or her principal, to whom it owes a duty to take care in each stage of negotiation, with the result that the broker is liable in tort if losses arise as a result of his or her negligence.11 8 See, eg, Occidental Worldwide Investment Corp v Skibs A/S Avanti (The Siboen and the Sibotre) [1976] 1 Lloyd’s Rep 293, where it was argued unsuccessfully that the drying up of oil supplies from Libya in 1970-1972 had frustrated a time charterparty because market freight rates had fallen far below the agreed rate of hire. 9 Federal Commerce and Navigation Co Ltd v Tradax Export SA [1978] AC 1 at 7. 10 See, eg, Hofflinghouse & Co Ltd v C-Trade SA (The Intra Transporter) [1985] 2 Lloyd’s Rep 158; Star Steamship Society v Beogradska Plovidba (The Junior K) [1988] 2 Lloyd’s Rep 583. Brokers used to send one another telex messages, but that technology has been largely, but not completely, replaced by email. 11 See, eg, Markappa Inc v NW Spratt & Son Ltd (The Arta) [1985] 1 Lloyd’s Rep 534.

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Unlike bills of lading and sea waybills, charterparties are not only used for the carriage of goods. Voyage charterparties are contracts for the carriage of goods; demise and time charterparties are not. A demise or time charterer is more likely to be the carrier of other people’s goods than it is to be a cargo-owner itself. Demise and time charterparties are contracts for the use of a ship for a period of time. The distinction between demise and time charterparties is the distinction between possession and control. It was expressed as follows by Latham CJ in Australasian United Steam Navigation Co Ltd v Shipping Control Board:12 All charterers of ships, by virtue of the charter party, have some control over the ship. Such control may relate only to a particular voyage; it may operate during a specified period. If the charter party is by way of demise, property in the ship temporarily passes to the charterer – for the duration of the charter. If possession, as well as some degree of control, passes to the charterer, then the property passes to the charterer and he is pro tempore the owner. But no property in the ship passes if possession is not given to the charterer by virtue of the terms of the charter. If the control of the master and crew in the navigation of the ship passes to the charterer he has possession. If, on the other hand, he acquires only a right to the use of the ship – a right to use her carrying capacity … there is no demise, but only a contract for services – locatio operis vehendarum mercium … Thus the general test is “whose servants the master and crew were” … If the owner has the power of appointing and dismissing the master and crew, he remains owner of the ship, while if, under the charter, the charterer obtains that power, possession of the ship passes to him.

A demise charterer is the disponent owner of the ship, rather than merely a hirer of the services of ship and crew. The question of whether or not a charterparty is a demise charterparty is one of substance, not form; it is not determined by the label the parties choose to put on it, but by the fact of possession of the ship.13 Because a demise charterer hires the ship without the services of master and crew, demise charters are also known as bareboat charters. In modern shipping practice, demise charters are usually used as a vehicle for ship financing arrangements that split ownership of the ship as capital asset from entitlement to the stream of income it generates, for the purposes of reducing or avoiding tax. In contrast, under a time charterparty, the shipowner provides the time charterer with the services of the ship and its crew for a stated period of time, to carry the goods which the charterer arranges to be put on board the ship. A time charterparty is, thus, a means of dividing the navigational and commercial operations of the ship. The shipowner runs the ship, along with its master and crew, without having to worry about finding commercial employment for it. The charterer finds commercial employment for the ship without having to worry about the technical and 12 Australasian United Steam Navigation Co Ltd v Shipping Control Board (1945) 71 CLR 508 at 521, citing Schuster v McKellar (1857) 7 El & Bl 704; 119 ER 1407; Burnard v Aaron (1862) 31 LJCP 334. 13 Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870.

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navigational aspects of running it, such as employing the master and crew. The charterer pays for the commercial use of the ship, and in return is entitled to keep the freight paid by the cargo-owners for carriage of their goods on the ship. The shipowner is guaranteed payment for the use of the ship without having to find cargoes in the market; the charterer makes profits in the cargo market (the freights it receives from cargo-owners minus the hire it has to pay the shipowner) without having to run the ship itself. Some time charterparties, known as trip time charterparties, define the duration of the charter period by reference to the time taken to complete a single voyage or round trip, rather than by reference to a specified number of years, months or days. Although these charterparties are time charterparties, they usually specify the particular cargo to be carried on the voyage or voyages. A trip time charterparty is thus rather like a voyage charterparty, a contract for the carriage of goods, but with a different allocation of responsibility for running costs.14 In some cases, the owner or time charterer of a ship may charter out only part of the carrying capacity of the ship, such as a single hold or stack of container cells. Such charterparties are known as slot charterparties, which are also (usually) a form of time charterparty or (sometimes) a form of voyage charterparty. They provide the owner (or, more commonly, a time charterer of the whole ship) with the opportunity of selling the use of the carrying space of the ship in large blocks or slots, rather than in individual parcels. Thus, for example, it may be commercially convenient for the time charterer of a container ship that can carry 6,000 containers to sub-charter six slots of 1,000 container spaces each, rather than entering into 6,000 separate contracts of carriage with individual cargo-owners. The slot charterers then sell the use of the space that they have chartered, by entering into contracts under bills of lading, sea waybills or voyage charterparties for the carriage of goods, or even slot sub-charters.15 In effect, selling space to slot charterers rather than shippers allows a carrier to become a wholesaler of its ship’s carrying capacity, rather than a retailer.

[11.80]

Freight forwarders

Another commonly-found intermediary between cargo owner and shipowner is the freight forwarder (known in North America as an NVOCC, which stands for Non-Vessel Operating Common Carrier). Since the advent of containerised carriage, many freight forwarders offer a

14 See [14.260] for a description of trip time charterparties. 15 See, eg, Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149, where the contracting carrier was a slot charterer.

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“door-to-door” service, picking up goods from an exporter’s warehouse and stuffing them into containers (or arranging for those two functions to be done by others), arranging for road or rail carriage of the containers to the port of loading, then sea carriage to the port of destination, then road or rail carriage from the port of discharge to the importer’s warehouse and then arranging for unstuffing the containers there. Forwarders providing a “door to door” service of this kind are often referred to as multimodal transport operators, or MTOs, because they handle transportation in several modes: sea, land and air. The cargo owner does not deal directly with the sea-carrier or the road or rail carriers that handle the goods during the land stages. Instead, the cargo owner deals with the freight forwarder/NVOCC/MTO. Often, in the case of small consignments of goods, the freight forwarder consolidates cargoes from several different shippers into a single container. Whether or not it has consolidated different cargoes into a single container, the forwarder/ NVOCC/MTO usually issues the shipper of goods with its own document called a “house” bill of lading, or consignment note. It (the forwarder/NVOCC/MTO) then contracts with a sea-carrier under a bill of lading or sea waybill for carriage of the containerised goods to the port nearest their eventual destination.16 The sea carriage document issued by the sea-carrier to the forwarder/NVOCC/MTO is usually a nonnegotiable sea waybill or straight bill of lading, naming the forwarder/ NVOCC/MTO itself or an agent as the consignee. In making the contracts with the actual carriers (sea and land), the forwarder/NVOCC/MTO may be acting merely as agent for the cargo-owner. Alternatively, the forwarder may have contracted with the cargo owner as principal, promising to carry the goods to their final destination, in which case the bill of lading or waybill contract between the forwarder/NVOCC/MTO and the sea-carrier is a sub-contract by the forwarder/NVOCC/MTO acting as principal, rather than as agent for the cargo-owner. Whether it is principal or agent, if the forwarder regularly undertakes the carriage of goods from one port to another, it may charter a slot on a ship performing a liner service that calls at those two ports. The contract of carriage between forwarder and sea-carrier may be evidenced by a single bill of lading or sea waybill listing dozens or even hundreds of different containers.

INTERLOCKING CONTRACTS [11.90] This rather bewildering cast of characters, each with a different function (and each often represented by an agent or manager), means that there may be many interlocking contracts relating to the carriage of a single cargo on a single voyage.

16 The forwarder/NVOCC/MTO also arranges for road or rail carriage for the land stages at either end of the sea voyage.

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Example 11.1 The container ship “Bon Temps” is owned by O, which is incorporated in the Cayman Islands. “Bon Temps” is demise chartered by O to D, a demise charterer, which is a company registered in Panama. D charters the ship to T, a Swiss shipping line, under a time charterparty for ten years. T operates the ship on a liner route from Northern Europe via Singapore to Australian ports, then back again. T charters one stack of the container cells on “Bon Temps” to S-T, a shipping line based in the United Kingdom, under a slot time charterparty for one year. F, a Singaporean freight forwarder/MTO, contracts with E, a Singaporean exporter, for carriage of a container of goods from Singapore to Australia on “Bon Temps”. F issues E a “house” bill of lading or consignment note. When F ships the container on board the vessel in Singapore for carriage to Australia, S-T (or an agent on its behalf) issues F a sea waybill naming F’s Australian agent AF as the consignee. While the ship is en route from Singapore to Australia, the original bill of lading issued by F is indorsed by E to I, an Australian importer, in return for the purchase price of the contents. An electronic copy of the sea waybill issued by S-T to F is emailed by F to AF. On arrival of the ship in Australia, AF takes delivery of the container from “Bon Temps”, having identified itself as the named consignee in the sea waybill. AF then delivers the goods to I in return for presentation of the indorsed original bill of lading, or takes the original bill of lading for a delivery note (or PIN code)17 that entitles I to take delivery directly from the container terminal at the port of discharge.

This example of the carriage of a single container of goods on a single voyage may seem wilfully complicated. Nevertheless, this web of contractual relations is fairly typical. In the examples, there are contracts between O and D, D and T, T and S-T, F and S-T (or F and T, or F and D, or E and S-T, or E and T, or E and D, depending on whether F, S-T and T have contracted for themselves or as agents for someone else),18 F and E, E and I, and, when the original bill of lading has been transferred to I, between I and F, S-T, T or D. Each type of contract, except the demise charterparty between O and D and the contract of sale between E and I, is considered in Chapters 12–14.

17 See [12.770] for the use of PIN codes as substitutes for delivery orders. 18 The question of identifying the carrier is dealt with at [12.800]–[12.840].

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Example 11.2 The bulk carrier “Green Wave” is owned by O2 Ltd of Panama. It is time-chartered by O2 to T2, a Japanese company, for a period of five years. T2 sub-charters the vessel to V, a Taiwanese company, under a voyage charterparty for carriage of a cargo of 30,000 MT of coal from Australia to Indonesia. V has entered into a contract of affreightment with an Australian exporter, S-V, for carriage of 250,000 MT of coal from Australia to Indonesia over a period of two years. V nominates “Green Wave” to perform one of the liftings under the contract of affreightment. When the coal is shipped on board the ship by S-V in Australia, S-V is issued a negotiable bill of lading by agents acting for the master of the vessel. While the ship is en route from Australia to Indonesia, S-V indorses the bill of lading to I2, the Indonesian importer, in return for the purchase price.

In this example, there are contracts between O2 and T2, T2 and V, V and S-V, S-V and I2, and, when the bill of lading is indorsed, I2 and O2. Each type of contract, except the contract of sale between S-V and I2, is considered in Chapters 12–14. Although these two examples are fairly typical of the kinds of arrangements to be found in maritime practice, they do not exhaust all the possibilities by any means. There may be chains of demise charterers, time charterers, voyage charterers and sub-charterers and/or chains of freight forwarders;19 alternatively, there may be no demise charterers, time charterers, voyage charterers, sub-charterers or freight forwarders involved at all. Many permutations are possible, so much so that it often seems as if no two cases are ever alike. In order to unravel the various relationships, bills of lading and sea waybills are considered in Chapter 12, voyage charterparties and contracts of affreightment in Chapter 13, and time charterparties in Chapter 14.

19 See, eg, Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220, where the bulk carrier “Go Star” was time-chartered by its owner (Go Star) to BMS, which sub-chartered to Bluefield, which sub-chartered to Daebo, which sub-chartered to Nanyuan: at 222 [1]–[3].

12

Bills of Lading, Sea Waybills and Other Sea-Carriage Documents [12.10] INTRODUCTION ........................................................................................... 204

[12.10] The functions of a bill of lading ................................................... 204 [12.20] Sea waybills, straight bills of lading and electronic carriage documents ......................................................................................... 206 [12.30] The Hague Rules, the Hague-Visby Rules, the Hamburg Rules and the Rotterdam Rules .................................................... 209 [12.90] Choice of law and choice of forum .............................................. 219 [12.100] THE SEA-CARRIAGE DOCUMENT AS RECEIPT ................................ 222

[12.100] Issue of the sea-carriage document ............................................ 222 [12.120] Receipt as to condition ................................................................. 228 [12.180] Receipt as to quantity or weight ................................................. 236 [12.230] Receipt as to “leading marks” ..................................................... 242 [12.260] Receipt as to quality ...................................................................... 244 [12.270] THE SEA-CARRIAGE DOCUMENT AND THE CONTRACT OF CARRIAGE .................................................................................................... 244

[12.270] The relationship between the sea-carriage document and the contract of carriage ................................................................. 244 [12.280] The order of proof in cargo claims: the relationship between the carrier’s obligations and its immunities ............. 247 [12.290] The carrier’s obligations ............................................................... 252 [12.370] The carrier’s immunities ............................................................... 271 [12.510] Limitation of the carrier’s liability .............................................. 292 [12.580] Limitation of time .......................................................................... 303 [12.630] The shipper’s obligations ............................................................. 316 [12.670] Transfer of rights and liabilities under the contract of carriage: title to sue ....................................................................... 323 [12.690] Contracts of carriage on chartered ships ................................... 329 [12.740] Before loading and after discharge ............................................. 338

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[12.10]

[12.760] THE NEGOTIABLE BILL OF LADING AS DOCUMENT OF TITLE: ENTITLING THE RECEIVER TO TAKE DELIVERY ............................. 342

[12.760] Introduction .................................................................................... 342 [12.770] Delivery of the cargo at the port of discharge ......................... 344 [12.780] Excluding and limiting liability for misdelivery ..................... 348 [12.790] Negotiable electronic bills of lading ........................................... 349 [12.800] WHO IS THE CARRIER? ............................................................................ 350

[12.800] Introduction .................................................................................... 350 [12.810] Sea-carriage documents for carriage on time-chartered ships ................................................................................................. 351 [12.840] Freight forwarders ......................................................................... 360

INTRODUCTION The functions of a bill of lading [12.10]

A bill of lading is a versatile document. It performs several different functions simultaneously, and its nature changes with the circumstances in which it is used. Because of the latter quality, any explanation of the functions of a bill of lading must include an outline of the ways in which bills of lading are used in practice.

A bill of lading is issued when goods are delivered to a ship for carriage. It is issued by the carrier1 (or, more usually, its agent) to the shipper of the goods. In this context, the word “issued” may be somewhat ambiguous, as the bill of lading is often actually prepared by the shipper — in some cases, in modern practice, by completing an online form on the carrier’s website.2 Although the bill of lading is prepared by the shipper, it is not “issued” in the technical sense until it is signed for or on behalf of the carrier. Although the bill of lading appears to be a contractual document,3 it does not always function as the contract of carriage between the shipper of the goods and the carrier. If a shipper has a large quantity of goods to transport, it often charters a ship, or part of one, to carry them to their

1 The carrier may be either the owner of the carrying ship or its charterer, or, in some cases, a freight forwarder. The word “carrier” is used in this chapter unless “shipowner” accurately describes the carrier’s status. The question of who is the carrier under a bill of lading is considered in greater detail at [12.800]–[12.830]. 2 See [12.100] for a more detailed consideration of the “issuing” of the sea-carriage document. 3 See, eg, the Conlinebill 2016 and Combiconbill 2016 forms (Appendices 1 and 2). A bill of lading is not the carriage contract itself, but only evidence of it: see [12.270].

[12.10]

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destination. In these circumstances, the contract of carriage between the shipper-charterer and the carrier is the charterparty by which the carrying ship is chartered,4 but a bill of lading is still usually issued when the goods are delivered to the ship for carriage. However, if a shipper has a smaller quantity of goods to ship, perhaps only a single package or container, it clearly has no interest in chartering an entire ship. This type of shipper makes a contract for carriage of goods aboard a ship engaged in the liner trade, carrying small consignments of cargo, usually in containers, for many different shippers. Here, the bill of lading issued by the carrier to the shipper acts as evidence of the contract of carriage between the parties. Whether the contract for carriage of the goods is contained in a charterparty or evidenced by a bill of lading, the bill of lading issued by the carrier acts as a receipt, acknowledging that the goods have been delivered to the ship for carriage. Further, the bill of lading operates to a limited extent as a document of title to the goods, entitling the holder of the bill to possession of the goods.5 If the bill of lading is made out “To Order”, the carrier undertakes to deliver to the shipper’s order, which order is given by indorsing the original bill of lading to the person to whom delivery should be made. An indorsee can pass on the right to possession by indorsing the bill of lading to a new holder. Possession of the bill of lading is functionally equivalent to possession of the goods because the carrier will deliver the goods to any indorsee holding the original bill of lading. Thus, a bill of lading made out “To Order” is a negotiable6 instrument which can be used to secure payment of the purchase price for the goods if they are sold by the shipper to the receiver while they are at sea.

4 Rodocanachi v Milburn (1886) 18 QBD 67; Gardner Smith Pty Ltd v The Ship Tomoe 8 (1990) 19 NSWLR 588; Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507 at 510 per Sheppard J. Goods are usually shipped under voyage, rather than time, charterparties: see Chapters 13 and 14. If the voyage charterparty is between shipper-charterer and time charterer, but the bill of lading is issued by the shipowner rather than the time charterer, the bill of lading is a contract of carriage in the charterer’s hands: see Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263. These and other issues relating to bills of lading for goods on chartered ships are considered at [12.690]–[12.730]. 5 A bill of lading clearly performs the third function when it is made out “To Order”. It is not clear whether a straight bill of lading (which names the consignee) is negotiable: the conflicting decisions on this issue are considered at [12.760]. 6 Strictly speaking, an “order” bill of lading is transferable, rather than negotiable, because the indorsee cannot get a better title to the goods than the transferor: see JI MacWilliam Co Inc v Mediterranean Shipping Co SA: The Rafaela S [2003] 2 Lloyd’s Rep 113 at 115 [1] per Rix LJ, quoting T Scrutton et al, Scrutton on Charterparties and Bills of Lading (20th ed, Sweet & Maxwell, London, 1996), p 185. The relevant passage now appears in B Eder et al, Scrutton on Charterparties and Bills of Lading (22nd ed, Sweet & Maxwell, London, 2011), pp 201-202 at [10-003]. This use of “negotiable” is idiosyncratic but traditional (see The Rafaela S per Rix LJ) so it will be continued here.

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Thus, to summarise, a bill of lading performs three separate but related functions,7 which are considered separately in this chapter: • as a receipt for the goods shipped; • as evidence of the contract of carriage between shipper and carrier; and • as a document entitling the holder to possession of the goods.8 Where a bill of lading is issued for goods on a voyage-chartered ship, it performs the first and third functions only between the voyage charterer and the shipowner-carrier; it is not evidence of a contract while in the charterer’s hands. In all other cases, the bill of lading performs all three functions simultaneously. Each of the functions is affected by the Hague, Hague-Visby or Hamburg Rules, depending on the countries of loading and/or discharge.

Sea waybills, straight bills of lading and electronic carriage documents [12.20]

In many cases, the shipper and receiver of goods carried by sea do not require a negotiable bill of lading to act as security for payment under the underlying contract for sale of the goods. For example, if a national subsidiary of a multinational company sends goods to another subsidiary in a different country, payment can be made by in-house bookkeeping arrangements for transfer of credit from one subsidiary to the other. To take another example, if an exporter and an importer have formed a stable and longstanding trading relationship, the exporter may be prepared to send goods to the importer on credit, trusting that the importer will pay when the exporter sends its account, or the importer may be prepared to pay in advance, trusting that the exporter will send the goods as it has promised. In each of these examples, the parties have no need for a bill of lading to secure payment of the purchase price, because the importer-receiver will pay the exporter-shipper without insisting on a negotiable bill of lading in return for payment.

If a negotiable document of title is not needed, the parties may (and, indeed, should) choose to use a sea waybill instead of a bill of lading.9 A sea waybill performs two of the three functions that a bill of lading performs: it is a receipt for the goods shipped, and it is evidence of the contract of carriage between the shipper and the sea-carrier. It does not, however, perform the third function: it is not a negotiable document giving the holder the right to possession of the goods. As a result, there is no need for the receiver to present the original sea waybill in order to persuade the carrier that it is entitled to delivery of the goods. The sea 7 For two judicial recitations of this familiar proposition, see BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 222 per Hill J; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263 at 267 [23] per Tamberlin J. 8 At least where the bill of lading is made out “To Order”. The position in relation to straight bills of lading is described at [12.760]. 9 See, eg, the Linewaybill and Combiconwaybill forms (Appendices 3 and 4).

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waybill simply names the receiver in the box marked “Consignee”, and the carrier delivers the goods to the receiver once it identifies itself as the named consignee. Unlike a bill of lading, the original sea waybill usually does not change hands at all. Because the carrier is entitled to deliver the goods to the receiver without demanding presentation of the original shipping document, sea waybills are also used in trades involving short sea voyages, where the carrying ship may arrive at its destination before the shipping documents do. For example, sea waybills are routinely used for sea-carriage of goods between Australia and New Zealand. Because the actual sea waybill document has no legal significance (unlike an original bill of lading), it may easily be replaced by an electronic message. Like its paper counterpart, an electronic sea waybill performs the first and second functions of a bill of lading, but not the third. The Carriage of Goods by Sea Act 1991 (Cth) and the State and Territory Sea-Carriage Documents Acts, which are considered in this chapter at [12.760]–[12.790], apply in the same way to electronic sea waybills as they do to paper ones.10 A straight bill of lading names the consignee, just as a sea waybill does. For that reason, it is non-negotiable, just like a sea waybill.11 (What makes an “order” bill of lading a negotiable instrument is the carrier’s promise to deliver to the shipper’s order rather than to a particular consignee.) It is a mistake, however, to assume that there is no difference between a straight bill of lading and a sea waybill. At the simplest level, different standard forms are used: a sea waybill is a form usually headed “Non-Negotiable Sea Waybill”12 whereas a straight bill of lading is simply a bill of lading form where the Consignee box contains the consignee’s name. More fundamentally, recent decisions suggest there is an important difference in principle between the two types of carriage document. In Voss v APL Co Pte Ltd13 and The Rafaela S,14 the Singapore Court of Appeal and the House of Lords, respectively, held that a straight bill of lading differs from a sea waybill because the named consignee must present the original straight bill of lading to the carrier in order to be entitled to delivery of the goods. This is because a bill of lading contains a clause, known as the “surrender” clause, requiring one of the original bills to be “accomplished”. In Beluga Shipping GmbH v Headway Shipping 10 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1A, r 1; Sea-Carriage Documents Act 1997 (NSW), s 6; Sea-Carriage Documents Act (NT), s 6; Sea-Carriage Documents Act 1996 (Qld), s 4; Sea-Carriage Documents Act 1998 (SA), s 5; Sea-Carriage Documents Act 1997 (Tas), s 5; Goods Act 1958 (Vic), s 90; Sea-Carriage Documents Act 1997 (WA), s 6. 11 BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 222-223 per Hill J; Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791 at [4] per Rares J. 12 See, eg, the Linewaybill and Combiconwaybill forms (Appendices 3 and 4). 13 Voss v APL Co Pte Ltd [2002] 2 Lloyd’s Rep 707. 14 JI MacWilliam Co Inc v Mediterranean Shipping Co SA: The Rafaela S [2005] 2 AC 423.

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Ltd (No 1),15 Rares J of the Federal Court followed Voss and The Rafaela S, holding that a straight bill of lading is a “sea carriage document” for purposes of the Carriage of Goods by Sea Act 1991 (Cth), and that the original straight bill must be presented to the carrier in order to receive the cargo at the port of discharge. The position is similar in the United States where, under the Pomerene Act, the named consignee must have possession of the original straight bill of lading to be entitled to demand possession of the goods from the carrier, but need not produce the bill of lading to the carrier.16 However, in Porky Products Inc v Nippon Express USA (Illinois) Inc,17 the United States District Court for the Southern District of New York held that where a straight bill of lading contains a “surrender clause”, which requires the document to be surrendered in return for the goods, the carrier is liable to the shipper for breach of contract, quite independently of the operation of the Pomerene Act, if it delivers to the named receiver without presentation of the original straight bill of lading. Because most standard form bills of lading contain a surrender clause requiring the original document to be exchanged for the goods,18 it follows that in most cases, the original straight bill of lading document must be presented in return for the goods under United States law. Because Australian, English, Singaporean and United States law all agree that the original straight bill of lading document must be presented to the carrier by the named consignee (at least where the bill contains a surrender clause), it follows that straight bills of lading cannot simply be replaced by electronic messages, as sea waybills can. Straight bills of lading thus share the problems encountered in replacing negotiable paper bills of lading with electronic ones.19 To put the same point another way, if the parties wish to use an electronic sea-carriage document, they should ensure that they use an electronic sea waybill rather than an electronic straight bill of lading. To put the same point yet another way, if the parties wish to use a non-negotiable sea-carriage document, they would be well 15 Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791. 16 49 USC § 80110 provides that “the carrier must deliver goods covered by a bill of lading on demand of the consignee named in a nonnegotiable bill or the holder of a negotiable bill for the goods when the consignee or holder … (2) has possession of the bill and, if a negotiable bill, offers to indorse and give the bill to the carrier”. 17 Porky Products Inc v Nippon Express USA (Illinois) Inc 1 F Supp 2d 227 (SDNY 1997). See also Datas Industries Ltd v OEC Freight (HK) Ltd 2000 WL 1497843 (SDNY 2000); Edelweiss (USA) Inc v Vengroff Williams & Associates Inc 2007 AMC 1080 (Sup Ct NY 2007). 18 See, eg, the Conlinebill 2016 form (Appendix 1), which contains the words: “One original bill of lading must be surrendered duly endorsed in exchange for the cargo or delivery order, whereupon all other Bills of Lading to be void.” Similar words are to be found in the Combiconbill 2016 form (Appendix 2). Traditionally, the surrender clause used the more old-fashioned phrase “any one of [the original bills of lading] being accomplished the others shall be void”. Because “accomplished” in this context means “surrendered for delivery”, the older form of words has the same effect: see Edelweiss (USA) Inc v Vengroff Williams & Associates Inc 2007 AMC 1080 (Sup Ct NY 2007) at 1082. 19 Those problems are described at [12.790].

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advised to use a sea waybill rather than a straight bill of lading, thus saving themselves the trouble of transferring and presenting an original paper document.

The Hague Rules, the Hague-Visby Rules, the Hamburg Rules and the Rotterdam Rules Historical development20

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The shipper of a large quantity of goods, such as a voyage charterer, is in a relatively strong bargaining position with respect to the carrier. A voyage charterer who is not satisfied with the terms of carriage offered by the carrier can bargain to change them, or can take its business elsewhere. In contrast, the shipper of a small quantity of goods is not in such a powerful position, and is usually obliged to accept the terms offered by the carrier. Carriers took advantage of this inequality of bargaining power in the 19th and early 20th centuries to include long lists of exemptions and exclusions in their contracts of carriage “designed to exonerate the shipowners from all liability as carriers, and to reduce them substantially to the condition of irresponsible bailees”.21

In 1893, the United States attempted to redress the balance by passing the Harter Act,22 which contained a statutory scheme regulating the rights and liabilities of cargo-owners and carriers. The Act struck down any bill of lading clauses that sought to relieve the carrier from liability for its own negligence.23 Many of the countries that were then part of the British Empire, including Australia, were in the same position as the United States, in that they were predominantly importers and exporters, rather than shipowners, and they were similarly disadvantaged by the terms found in bills of lading.24 Australia’s Sea-Carriage of Goods Act 1904 (Cth) was modelled on the Harter Act, as were New Zealand’s Shipping and Seamen Act 1903 (NZ) and Canada’s Water-Carriage of Goods Act 1910 (CAN). 20 For a detailed account of the history of the Hague Rules, see M Sturley, “The History of COGSA and the Hague Rules” (1991) 22 JMLC 1, and M Sturley, Legislative History of the Carriage of Goods by Sea Act and the Travaux Preparatoires of the Hague Rules (Fred B Rothman and Co, Littleton, CO, 1990), Vol 1, pp 3-23. See also Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 168-170 [10]-[16] per Gaudron, Gummow and Hayne JJ. 21 Crooks v Allan (1879) 5 QBD 38 at 40 per Lush J. 22 “An Act relating to navigation of vessels, bills of lading and to certain obligations, duties and rights in connection with the carriage of property”, now codified at 46 USC §§ 30702 – 30707. 23 See now 46 USC § 30704. 24 For an account of the background to the passing of the Sea-Carriage of Goods Act 1904 (Cth) and the protests made to Parliament by Australian exporters disadvantaged by the terms offered by UK carriers, see M Davies, “Forum Selection, Choice of Law and Mandatory Rules” [2011] LMCLQ 237.

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Although the Australian Act of 1904 went some way toward redressing the balance of power between shipper and carrier in Australia, neither it nor its Harter-based cousins could solve all of the problems associated with international carriage of goods by sea. Different countries regulated the relationship between shipper and carrier in different ways, and some continued to have no regulation at all. The lack of international uniformity made carriage by sea between countries a matter of considerable legal complexity. In an attempt to produce uniformity within its sphere of influence, the British Government convened an Imperial Conference in 1921, which recommended the adoption of Harter-style legislation throughout the British Empire. In order to pre-empt the passage of Imperial legislation modelled on the Harter Act, British shipowning interests convened a meeting in London of the Maritime Law Committee of the International Law Association, to formulate uniform model rules to govern international carriage of goods under bills of lading. In 1921, the Committee adopted draft model rules, which were subsequently adopted by the International Law Association in plenary session at the Hague in 1921. The draft rules underwent further revision during 1922 and 1923 at a Diplomatic Conference on Maritime Law in Brussels, before being adopted finally at Brussels in the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, on 25 August 1924. Although the rules were first drafted in London, and were finally adopted in Brussels, they are known as the Hague Rules, although the international Convention is referred to as the Brussels Convention of 1924. Many countries in the British Empire passed legislation adopting the Hague Rules almost as soon as the Brussels Convention was signed: Australia was no exception.25 Widespread international uniformity was not achieved until 1936, however, when the United States adopted the Hague Rules in its Carriage of Goods by Sea Act 1936.26 Once the United States had adopted the Rules, many non-Commonwealth countries followed suit, so that by 1938, the overwhelming majority of international sea-carriage under bills of lading was carried on the terms of the Hague Rules. That remained the position until 1968, when the Hague Rules were amended by a Protocol. Like the original Hague Rules, the Protocol was signed at Brussels, but an earlier draft was signed at Visby. The Protocol was designed to modernise the Hague Rules, particularly in relation to limitation of the carrier’s liability.27 The Hague Rules as amended by the 1968 Protocol are known as the Hague-Visby Rules. A further Protocol in 25 For an account of the Australian adoption of the Hague Rules, see [12.40]. 26 Now codified as 46 USC § 30701, Statutory Note. 27 For a consideration of the provisions limiting the carrier’s liability, see [12.510]–[12.570].

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1979, known as the SDR Protocol, translated the Hague-Visby limits of liability into Special Drawing Rights (SDRs).28 Although the Hague and Hague-Visby Rules are the most notable examples of successful international cooperation on legal matters, they were opposed by developing countries on the grounds that both versions of the Rules were overly favourable to sea-carriers. Under the aegis of the United Nations Commission on Trade and Development (UNCTAD), those countries developed an entirely new legal regime for international sea-carriage of goods, which was adopted as the United Nations Convention on the Carriage of Goods by Sea at Hamburg on 31 March 1978. Predictably, the rules contained in that Convention are known as the Hamburg Rules. They are generally thought to be more favourable to cargo interests than either the Hague or the Hague-Visby Rules. The Convention containing the Hamburg Rules came into force on 1st November 1992. It is not only developing countries that are dissatisfied with the Hague-Visby Rules. They are now widely regarded as being hopelessly anachronistic. Several countries, including Australia, have unilaterally amended their domestic enactment of the Hague-Visby Rules in piecemeal fashion, usually by engrafting features of the Hamburg Rules regime. The end result has been an accelerating decline in international uniformity. Some countries (such as the United States) still have the original Hague Rules; some (such as Germany) have the Hague-Visby Rules, but not the SDR Protocol; some (such as the United Kingdom and most other European countries) have the Hague-Visby Rules plus the SDR Protocol, in the form adopted at the international Conventions; some (such as Australia and the Scandinavian countries) have their own unique modification of the Hague-Visby Rules plus the SDR Protocol; some (such as Chile and Egypt) have the Hamburg Rules; some (such as the People’s Republic of China) have national maritime codes that combine features of each one of the international regimes. The obvious solution to this decay in international uniformity is the adoption of a new international convention governing the carriage of goods by sea. On 11 December 2008, the General Assembly of the United Nations adopted a new Convention, the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, which had been prepared by the United Nations Commission on International Trade Law (UNCITRAL). The signing ceremony was in Rotterdam on 23 September 2009, so the new Convention is known as the Rotterdam Rules. At the time of writing, it is unclear when or even whether the Rotterdam Rules will come into force internationally. The Rotterdam Rules are complex — they have 96 Articles, compared to ten in the Hague and Hague-Visby Rules — and, as their formal title suggests, 28 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 5(d) (Hague-Visby Rules); Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 4, r 5(d) (Australian modification).

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they extend beyond carriage of goods by sea to include the land stages of multimodal transportation, but only in a rather confusing way, if there is no other compulsory international instrument applicable to that land carriage.29 These and other features have made countries wary about adopting the Rotterdam Rules.30 In 2016, nine years after signature in Rotterdam, only three countries had adopted the Rotterdam Rules: Spain, Togo, and Congo. At the time of writing,31 there was no indication that Australia would either ratify the Rotterdam Rules or pass legislation giving effect to them. The Hague, Hague-Visby and Hamburg Rules in Australia

[12.40]

Australia adopted the Hague Rules on 17 September 1924, just three weeks after the Brussels Convention was signed.32 The Sea-Carriage of Goods Act 1924 (Cth) repealed the Harter-style Sea-Carriage of Goods Act 1904 (Cth),33 and compulsorily incorporated the Hague Rules into all bills of lading for outward-bound international carriage of goods from Australia, and all bills of lading for interstate carriage of goods.34 The Sea-Carriage of Goods Act 1924 (Cth) was, in turn, repealed by the Carriage of Goods by Sea Act 1991 (Cth),35 which contains the original version of the Hague-Visby Rules in Sch 1. The Act of 1991 also contained the Hamburg Rules in Sch 2 but they were repealed in 2001 by a process described in more detail later in [12.40]. Part 2 of the Act is concerned with the application of the Hague-Visby Rules; it came into force on 31 October 1991, the day the Act received the Royal Assent. Part 3 of the Act was concerned with the application of the Hamburg Rules; it was repealed without ever coming into force. Section 2 of the 1991 Act was an unusual commencement provision, which said that the Hamburg Rules would come into effect three years after the Act was passed (that is, on 31 October 1994) unless Parliament took steps before then to prevent that from occurring. With two weeks left to go, on 17 October 1994, the House of Representatives passed a resolution that commencement of the Hamburg Rules should be deferred for another three years. On 19 October 1994, the Senate passed a similar resolution. That meant that the the Hamburg Rules would come into force on 19 October 1997 unless Parliament again took steps to prevent that 29 Rotterdam Rules, Art 26. 30 See, eg, T Nikaki, “The Carrier’s Duties under the Rotterdam Rules: Better the Devil you Know?” (2010) 35 Tulane Maritime Law Journal 1. 31 31 January 2016. 32 The Act did not come into force until 1 January 1925. Rather oddly, Australia did not ratify the Brussels Convention until 4 July 1955. See N Singh, International Maritime Conventions (Stevens & Sons Ltd, London, 1983), Vol 4, p 3044. 33 Sea-Carriage of Goods Act 1924 (Cth), s 3. 34 Sea-Carriage of Goods Act 1924 (Cth), s 4. 35 Carriage of Goods by Sea Act 1991 (Cth), s 20(1).

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from occurring. The Carriage of Goods by Sea Amendment Act 1997 (Cth) was passed on 15 September 1997 to prevent the Hamburg Rules from coming into force. In 1995, a Marine Cargo Liability Working Group was set up at an industry forum convened by the Department of Transport and Regional Development, with the aim of producing a set of amendments to the existing Hague-Visby Rules that would be acceptable to all those interested in the carriage of goods by sea. The Working Group had representatives from shippers, carriers, cargo insurers, maritime lawyers and the Department of Transport and Regional Development. Its compromise package of reforms was published in October 1995, was endorsed by the relevant industry groups and the then Minister for Transport and Regional Development, and was circulated for public comment in mid-1996. That reform package formed the core of the amendments to the Hague-Visby Rules that Australia made unilaterally in 1998. On 1 July 1998, the Carriage of Goods by Sea Regulations 1998 (Cth) came into force, amending the operation of the Carriage of Goods by Sea Act 1991 (Cth) and the Hague-Visby Rules in a manner provided for in the Carriage of Goods by Sea Amendment Act 1997 (Cth). The Hague-Visby Rules as modified by the Regulations appear in a Schedule of Modifications (Sch 1A to the Act) in “redlined” form showing where changes have been made to the original text. Although the 1998 reforms are substantial, the modified version of the Hague-Visby Rules in the Schedule of Modifications has seldom been applied in Australian courts, and it will seldom be applied in the future. The Australian modification of the Hague-Visby Rules is given the force of Australian law in sea-carriage documents36 for outward-bound carriage from Australia.37 However, actions on outward-bound contracts are usually brought in the country of destination.38 If the country of destination gives the force of law to the original version of the Hague-Visby Rules, its courts may well apply the unmodified version of the rules even if the carriage contract is governed by Australian law. In The Hollandia,39 the House of Lords held that because the Carriage of Goods by Sea Act 1971 (UK) gives the force of law to the Hague-Visby Rules, they apply by force of English law to all of the contracts that are mentioned in 36 “Sea-carriage document” covers bills of lading, straight bills, sea waybills, consignment notes and other non-negotiable documents: Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1 r 1(g). 37 Carriage of Goods by Sea Act 1991 (Cth), s 10(b)(i); Sch 1A, Art 10.1. 38 A notable exception is El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296, where an action was brought in Australia in relation to the carriage of goods from Australia to Greece. A Full Court of the Federal Court applied the Australian version of the Hague-Visby Rules in the Carriage of Goods by Sea Act 1991 (Cth), Sch 1A: at 324-326 [135]-[138], [141] per Allsop J (with whom Black CJ agreed). 39 The Hollandia [1983] 1 AC 565.

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Art 10, regardless of the operative law in the country of shipment. Australia is still a “Contracting State” to the Conventions making up the Hague-Visby Rules, so any bill of lading issued in Australia or for international carriage from a port in Australia will still fall within the operational provisions of Art 10 of the unmodified Hague-Visby Rules.40 Any country taking the approach suggested in The Hollandia should therefore apply the original rules to such bills of lading by force of its own law, without even considering the Australian modifications to the rules. Conversely, the Australian modification of the Hague-Visby Rules only applies to inward-bound international carriage if the contract would not otherwise be governed “by agreement or by law” by the Hague, Hague-Visby or Hamburg Rules “or a modification of [one of those Conventions] by the law of a Contracting State”.41 There are very few maritime countries in that category. The only ones that would seem to qualify are those that are not Contracting States to any of the original Conventions, either because they have never adopted them or because (like Spain, Togo and Congo) they have adopted the Rotterdam Rules. Among Australia’s trading partners, the most significant countries in that category are China, Korea and Indonesia. Although China’s Maritime Code adopts features of the Hague, Hague-Visby and Hamburg Rules,42 the Code does not constitute a modification of the Conventions by a Contracting State, as required by Art 10, r 2 of Sch 1A. The same is true of the national sea-carriage law in Korea and Indonesia, because neither country is party to any of the Conventions. Thus, the Australian version of the Rules should apply to inward-bound carriage from China, Korea, Indonesia and other non-Convention countries, unless the parties to the transport document adopt one of the Conventions by agreement in the sea-carriage document — which they often do.43 Similarly, if other countries adopt the Rotterdam Rules before Australia does, inward-bound carriage to Australia from those countries will be governed by the Schedule of Modifications, unless Art 10, r 3 of Sch 1A is amended to make reference to the Rotterdam Convention. 40 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 10. 41 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 10, r 2. 42 See Li, “The Maritime Code of the People’s Republic of China” [1993] LMCLQ 204. For an English translation of the Chinese Maritime Code, see: http://www.english.mofcom. gov.cn/aarticle/lawsdata/chineselaw/200211/20021100050726.html. The relevant chapter is Ch IV. 43 In Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125, the parties agreed that the version of the Hague-Visby Rules in the Schedule of Modifications would apply to carriage of a cargo of chemicals from Korea to Australia under a bill of lading incorporating the US Carriage of Goods by Sea Act 1936 (referred to in this chapter as “the COGSA”): at 128 [4]. It is not clear why the parties made this agreement, as Sch 1A would not have applied by force of law. Korea is not party to any of the Conventions listed in Sch 1A, Art 10, r 3, but the unamended Hague Rules would have applied by agreement of the parties, given the terms of the Clause Paramount choosing the COGSA. That would have precluded application of Sch 1A by virtue of Art 10, r 2.

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The unmodified Hague and Hague-Visby Rules applied only to “bills of lading or similar documents of title”.44 By contrast, the modified Australian version applies to all “sea-carriage documents”, which means bills of lading, negotiable documents similar to bills of lading, nonnegotiable (or straight) bills of lading,45 and non-negotiable documents such as sea waybills and consignment notes,46 including sea-carriage documents in electronic form.47 The modified Rules do not apply to charterparties,48 but they do apply to a negotiable sea-carriage document (an “order” bill of lading or similar document of title)49 issued under a charterparty while that document regulates the relationship between the holder of it and the carrier.50 Thus, the modified Rules apply to a negotiable charterparty bill of lading while it is held by someone other than the charterer, but not while it is held by the charterer.51 For no obvious reason, the modified Rules do not apply compulsorily to a non-negotiable sea waybill issued under a charterparty. In summary, the overall effect of the operative provisions of the Carriage of Goods by Sea Act 1991 (Cth) is as follows: 1. The Australian version of the Hague-Visby Rules governs sea-carriage documents (that is, order bills of lading, straight bills of lading, sea waybills, electronic waybills, etc) for outward-bound international carriage from Australia.52 Foreign courts in Contracting States may apply the unmodified version of the Hague-Visby Rules for the reasons described above,53 but Australian courts considering actions on such contracts should apply the Australian modification of the Rules. 2. The unmodified version of the Hague-Visby Rules governs bills of lading and similar documents of title for inward-bound international carriage to Australia from Hague-Visby Contracting States (such as New Zealand, the United Kingdom, Japan and most European countries).54

44 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(b). 45 See Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791. 46 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r (1)(g)(i) – (iv). 47 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1A, r 1. 48 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 5, Art 10, rr 5, 6. 49 “Negotiable sea carriage document” is defined in Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 1(f). 50 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 1(b), Art 10, rr 6, 7. 51 See [12.690]–[12.710]. 52 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 10, r 1. 53 See The Hollandia [1983] 1 AC 565; Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 10. 54 Article 10(b) of the unmodified Hague-Visby Rules (see Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 10(b)) as saved by Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 10, rr 2, 3(b).

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3. The unmodified version of the Hague Rules governs bills of lading and similar documents of title for inward-bound international carriage to Australia from Hague Contracting States that have not modified the Rules (such as the United States).55 4. The Hamburg Rules govern any sea-carriage document for inwardbound international carriage to Australia from Contracting States to the Hamburg Rules (such as Chile and Egypt).56 5. The Australian version of the Hague-Visby Rules governs inwardbound international carriage to Australia under non-negotiable seacarriage documents unless the Hague, Hague-Visby or Hamburg Rules (or a modification of them) apply to the carriage by the law of the country of shipment (provided it is a Contracting State) or by agreement of the parties in the sea-carriage document itself.57 6. The Australian version of the Hague-Visby Rules governs inwardbound international carriage to Australia from non-Contracting States (such as China and Indonesia) unless the sea-carriage document incorporates the Hague, Hague-Visby or Hamburg Rules (or a modification of them by the law of a Contracting State) by reference.58 7. The Australian version of the Hague-Visby Rules governs interstate carriage of goods within Australia,59 unless the contract is contained only in, or evidenced only by, a consignment note,60 in which case the consignment note governs and the carrier has no liability.61 However, the Australian version of the Hague-Visby Rules does apply to interstate carriage under a consignment note if there has been or is to be international on-carriage to or from Australia and the goods have been declared to the carrier in writing to be international cargo.62 8. Sea-carriage of goods entirely within an Australian State or Territory is not governed by the Carriage of Goods by Sea Act 1991 (Cth). The provision of the Australian Consumer Law requiring a supplier of 55 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 10, rr 2, 3(a). 56 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 10, rr 2, 3(c). 57 The unmodified Hague and Hague-Visby Rules do not apply to non-negotiable sea-carriage documents (although they may apply to straight bills of lading: see Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791). The Australian version applies to inward-bound international carriage to Australia unless one of the Conventions (or a modification of such a Convention by the law of a Contracting State) applies to the carriage by agreement or by law: Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 10, rr 2, 3. 58 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 10, rr 2, 3. 59 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 10, r 4. 60 For these purposes, a consignment note is a non-negotiable document that contains or evidences a contract of carriage by sea where no bill of lading or similar document of title has been issued, and which clearly states that no liability for loss of, damage to or delay of the goods will be accepted by the carrier, and which is clearly marked as being non-negotiable: Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 1(aa). 61 Carriage of Goods by Sea Act 1991 (Cth), s 10(1A). 62 Carriage of Goods by Sea Act 1991 (Cth), s 10(1A); Sch 1A, Art 10, r 5.

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services in trade or commerce to guarantee that the services will be rendered with due care and skill63 does not apply to the provision of services under contracts for transportation or storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported or stored.64 Hence, there is no Commonwealth statutory regulation of commercial shipping contracts for intrastate carriage. Intrastate carriage of goods by sea in New South Wales and Western Australia is still governed by State legislation modelled on the Harter Act.65 Application of the Rules When and for how long?

[12.50]

The Hague Rules and the unmodified version of the HagueVisby Rules apply only in the period from the time the goods are loaded to the time they are discharged from the ship.66 This period is generally known as the “tackle-to-tackle” period. This restricted period of application is one of the principal ways in which the Rules are out of date. (By contrast, the Hamburg Rules apply to the whole period while the goods are in the carrier’s charge, including at the ports of loading and discharge, and the Rotterdam Rules apply to the whole period from when the goods are received by the carrier to when they are delivered by it, without reference to the ports of loading or discharge.)67 The Hague Rules were drafted at a time when cargo was handed over to, and received from, the carrier on the wharf alongside the ship — the period of operation of the Rules then matched the period when the goods were under the carrier’s control. Since the advent of containerised carriage in the 1960s, liner cargo is usually handed over to the carrier at the container terminal at the port of loading, some time before and some distance away from the beginning of loading onto the ship. Similarly, containerised cargo is usually received from the container terminal at the port of discharge some time after and some distance away from the end of discharge from the ship. Under the Hague Rules and the unmodified version of the Hague-Visby Rules, the rights and liabilities of the carrier and cargo-owner outside the “tackle-to-tackle” period are governed by the terms of the sea-carriage document, and are not compulsorily regulated by the Rules. There is widespread agreement that the scope of 63 Australian Consumer Law, s 60. 64 Australian Consumer Law, s 63(a). 65 Sea-Carriage of Goods (State) Act 1921 (NSW); Sea-Carriage of Goods Act 1909 (WA). Both Acts are expressed to apply to “a bill of lading or document” rather than “bills of lading or similar documents of title”, so it would seem that they apply to non-negotiable sea-carriage documents, too. 66 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(e). Article 1(e) of the unamended Hague Rules is in the same terms. 67 Hamburg Rules, Art 4; Rotterdam Rules, Art 12. The Rotterdam Rules do not apply outside the period of carriage by sea if another compulsorily-applicable instrument applies during the land stages: see Art 26.

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compulsory operation of the Rules should match the period of the carrier’s control under modern cargo practices. Accordingly, Australia’s unilateral modification of the Hague-Visby Rules applies from the moment when the goods are delivered to the carrier (or its servant or agent) within the limits of a port or wharf to the moment when the goods are delivered to or placed at the disposal of the consignee within the limits of a port or wharf that is the intended destination of the goods.68 Although the Australian modification of the carrier’s period of responsibility is eminently sensible and in line with modern carriage practice, it is unfortunately true that it will seldom apply in practice, because the unmodified Hague Rules and Hague-Visby Rules still often apply to inward-bound international carriage of goods to Australia.69 Thus, the anachronistic and restricted “tackle-to-tackle” period remains significant in Australian law. The law governing liability before loading and after discharge is considered in detail at [12.740]–[12.750]. For present purposes, it should be noted that some of the unfortunate effects of the restricted operation of the unmodified Rules have laudably been ameliorated by recent decisions holding that the process of “loading” for purposes of the Rules may begin well before the goods reach the ship’s “tackle” if the carrier is responsible for stuffing containers at the loading port,70 and also that the process of “discharge” is not complete for purposes of the Rules when the goods leave the ship in a carrier-supplied container if their safe discharge requires further attention after that moment (as in the case of refrigerated cargoes).71 To whom?

[12.60]

Under the Hague and Hague-Visby Rules, “carrier” is defined as including the owner or the charterer who enters into a contract of carriage with the shipper.72 Where one person, such as a time charterer or freight forwarder, contracts with the shipper, but another person, such as the shipowner or demise charterer, actually performs the carriage as a subcontractor, the definition provides no assistance in determining which of them is liable as carrier under the Hague or Hague-Visby Rules. In contrast, the Hamburg Rules and the Rotterdam Rules stipulate which obligations are undertaken by the contracting carrier, and which by the 68 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, rr 1(e), 3. For these purposes, the limits of a port or wharf in Australia are defined by reference to the area fixed by the Chief Executive Officer of Customs under the Customs Act 1901 (Cth), s 15 and the limits of a port or wharf outside Australia are the limits fixed by local law: see Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, rr 4, 6. 69 See [12.40]. 70 Volcafe Ltd v Cia Sud Americana de Vapores SA (t/as CSAV) [2015] 1 Lloyd’s Rep 639. 71 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149. 72 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(a). Article 1(a) of the unamended Hague Rules is in the same terms.

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“actual carrier” or “performing party” in such a situation.73 Although several aspects of the Hamburg Rules were grafted onto the Hague-Visby Rules when Australia unilaterally modified the latter in 1998, the vague and unhelpful definition of “carrier” was left untouched. The question of who is the carrier under a sea-carriage document is considered in more detail at [12.800]–[12.840]. To what cargoes?

[12.70]

The Hague Rules and and unmodified version of the HagueVisby Rules do not apply to live animals or deck cargo, unless the parties specifically so agree.74 The Australian modification of the Hague-Visby Rules also does not apply to live animals,75 but the modified Rules govern deck cargo in certain circumstances, which are described at [12.350].

Contracting out

[12.80]

The carrier cannot contract out of its obligations under the Hague or Hague-Visby Rules or the Australian modification of the latter. Any agreement that purports to give the carrier greater protection than is afforded by the Rules is “null and void and of no effect”.76 The carrier may, however, agree to obligations over and above those imposed by the Hague or Hague-Visby Rules or the Australian modification.77 For example, if the sea-carriage document incorporates by reference a version of the Rules that provides for a higher limit of liability than that provided for in the compulsorily-applicable version, the court should apply the higher limit on the basis that the parties have agreed to impose greater liability on the carrier than that provided for by the Rules.78

Choice of law and choice of forum [12.90] Section 11(1)(a) of the Carriage of Goods by Sea Act 1991 (Cth) provides that the parties to a sea-carriage document relating to carriage of goods by sea out of Australia are deemed to have chosen Australian law as the governing law of the contract.79 Any agreement purporting to preclude or limit the effect of that compulsory choice of Australian law 73 Hamburg Rules, Art 10; Rotterdam Rules, Arts 18, 19. 74 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(c). Article 1(c) of the unamended Hague Rules is in the same terms. 75 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 1(c). 76 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 8 (unmodified Hague-Visby Rules); Sch 1A, Art 3, r 8 (Australian modification). 77 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 5 (unmodified Hague-Visby Rules); Sch 1A, Art 5 (Australian modification). 78 JCB Sales Ltd v Wallenius Lines 124 F 3d 132 (2d Cir 1997); Yemgaz FZCo v Superior Pescadores SA Panama (The Superior Pescadores) [2014] 1 Lloyd’s Rep 660 at 669-660 [55] per Males J. 79 Carriage of Goods by Sea Act 1991 (Cth), s 11(1)(a).

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has no effect.80 Where goods are carried by sea into Australia under a sea-carriage document, the governing law of the contract may be a foreign law, usually the law in force at the place of shipment.81 The governing law may not always be the law in force at the place of shipment, though, particularly where that country does not have a provision equivalent to s 11. Section 11 also provides that any agreement (whether made in Australia or elsewhere) has no effect so far as it purports to preclude or limit the jurisdiction of a court of the Commonwealth or of a State or Territory in respect of a sea-carriage document for carriage of goods by sea into or out of Australia.82 Thus, any agreement (whether by choice of forum clause in the sea-carriage document or ex post facto after a dispute arises) that provides for resolution of disputes in another country is void.83 In Kim Meller Imports Pty Ltd v Eurolevant SpA,84 it was held that a bill of lading clause providing for arbitration in London was struck down by the equivalent provision in the Sea-Carriage of Goods Act 1924 (Cth), s 9(2), because it purported to oust or lessen the jurisdiction of Australian courts. In Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5),85 the Full Court of the Federal Court of Australia held that s 11(2) has the same effect as its predecessor did, striking down a bill of lading clause providing for arbitration in London. However, it seems unlikely that an English court would regard a London arbitration clause as invalid by virtue of s 11(2). In Akai Pty Ltd v People’s Insurance Co Ltd,86 a majority of the High Court of Australia held that the Insurance Contracts Act 1984 (Cth), s 8(2) overrode an English choice of law clause in an insurance contract, but in later proceedings in England, the High Court held that the self-same contract was governed by English law because of the choice of law clause, regardless of the operation of s 8(2) and despite what the High Court of

80 Carriage of Goods by Sea Act 1991 (Cth), s 11(2)(a). 81 Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577 at 584-585 per Fullagar J. See, eg, Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178, where Emmett J applied US law in a dispute under a bill of lading for carriage of goods from the US to Australia. 82 Carriage of Goods by Sea Act 1991 (Cth), s 11(2)(b) (outward-bound); s 11(2)(c)(i) (inward-bound). 83 Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577. Although this decision relates to the equivalent provision in the Sea-Carriage of Goods Act 1924 (Cth), s 9(1), there should be the same result under Carriage of Goods by Sea Act 1991 (Cth), s 11. 84 Kim Meller Imports Pty Ltd v Eurolevant SpA (1986) 7 NSWLR 269. See also Furness Withy (Aust) Pty Ltd v Metal Distributors (UK) Ltd (The Amazonia) [1990] 1 Lloyd’s Rep 236, an English decision to the same effect concerning a voyage charterparty which incorporated the whole of the Sea-Carriage of Goods Act 1924 (Cth) by reference. 85 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1. 86 Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418.

[12.90]

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Australia had said.87 It can be expected with some confidence that English courts, at least, would ignore s 11 in the same way.88 Australian arbitration clauses in sea-carriage documents are left untouched by s 11. In Bulk Chartering and Consultants Australia Pty Ltd v T & T Metal Trading Pty Ltd: The Krasnogrosk,89 Handley and Sheller JJA expressed concern at the prospect that s 11 might strike down an Australian arbitration clause,90 and Sheller JA called for s 11 to be amended to save the effect of Australian arbitration clauses in sea-carriage documents.91 That was done in 1997 by the inclusion of s 11(3), which provides that an agreement or contract provision requiring arbitration in Australia is not made ineffective by s 11(2) “despite the fact that it may preclude or limit the jurisdiction of a court”. In Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd,92 a Full Court of the Federal Court of Australia held, by a majority, that s 11 does not apply to voyage charterparties. Although (as pointed out (in vain, it seems) in previous editions of this book),93 the plain meaning of “sea-carriage document” would seem to include a voyage charterparty, which is undoubtedly a document relating to the carriage of goods by sea, and although the restrictive definition of “sea-carriage document” in the Schedule of Modifications to the Carriage of Goods by Sea Act 1991 (Cth) applies only to the Schedule and not to the Act itself, the Norden majority held that a voyage charterparty is not a “sea-carriage document” for purposes of s 11. Thus, foreign forum selection clauses in voyage charterparties are valid for purposes of Australian law. Anomalously, s 11 does not strike down foreign forum selection clauses in contracts for interstate carriage of goods by sea. The Act applies the Australian version of the Hague-Visby Rules to such contracts,94 but the jurisdictional protection afforded by s 11(2) is confined to contracts for international carriage of goods. Thus, if a sea-carriage document for interstate carriage of goods contains a forum selection clause providing for dispute resolution in a foreign country (as it might if it were to 87 Akai Pty Ltd v People’s Insurance Co Ltd [1998] 1 Lloyd’s Rep 90. 88 Compare, however, The Al Battani [1993] 2 Lloyd’s Rep 219 at 224, where Sheen J suggested that an English court might recognise the effect of Egyptian legislation on a contract governed by English law, because of the comity of nations. 89 Bulk Chartering and Consultants Australia Pty Ltd v T & T Metal Trading Pty Ltd: The Krasnogrosk (1993) 31 NSWLR 18. 90 Bulk Chartering and Consultants Australia Pty Ltd v T & T Metal Trading Pty Ltd: The Krasnogrosk (1993) 31 NSWLR 18 at 28-29 per Handley JA, at 42-43 per Sheller JA. 91 Bulk Chartering and Consultants Australia Pty Ltd v T & T Metal Trading Pty Ltd: The Krasnogrosk (1993) 31 NSWLR 18 at 43. 92 Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd (2013) 216 FCR 469. 93 See M Davies and A Dickey, Shipping Law (3rd ed, Lawbook Co., Sydney, 2004), pp 177-179, 280-281. 94 Carriage of Goods by Sea Act 1991 (Cth), ss 8, 10(1)(b)(i), (ii); Sch 1A, Art 10, r 4.

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incorporate the terms of another contract by reference, for example), nothing in the Act would prevent that clause from being valid and enforceable.

THE SEA-CARRIAGE DOCUMENT AS RECEIPT Issue of the sea-carriage document General When a shipper of goods or its freight forwarder95 books space on a carrier’s ship, it provides the carrier or its agent with details of the cargo to be carried. Increasingly, that process now takes place over the internet. Many carriers operating liner services now have websites that allow customers to have access (usually password-protected) to online versions of the carrier’s standard form shipping documents. The shipper or its agent provides the details of the cargo to be shipped by filling in the boxes on the web page. A draft sea-carriage document (bill of lading or sea waybill) is then prepared by the carrier (usually an automatic process done by the carrier’s computer server) and an email notification is sent to the shipper or forwarder, which then views the draft document online. The carrier may then issue the sea-carriage document itself but, in most cases, the shipper or its agent can simply print out the document on its own printer.96 Although the exchange of information is done electronically, the end result is a paper document, at least in the case of negotiable bills of lading. Purely electronic negotiable bills of lading are still not common in practice.97

[12.100]

An older and slower process involves production of a preliminary document known as a mate’s receipt. This process is still used for bulk shipments. When the goods are delivered to the ship, the ship’s master or carrier’s agent issues an informal receipt known as a mate’s receipt or dock receipt, which is an acknowledgment to the shipper that the carrier has taken delivery of the goods.98 The mate’s receipt is then exchanged for the formal sea-carriage document (usually a negotiable bill of lading) once it has been prepared. The mate’s receipt is usually prepared and signed by the master or chief officer of the ship, who is employed by the shipowner, but if the carrying ship is under time charter, the bill of lading may be signed by the time charterer or its agent, which has an obligation 95 The contractual relationship between shipper and freight forwarder is considered at [12.840]. 96 It is usually necessary for the shipper or forwarder to enter into a side agreement with the carrier, setting out the terms and conditions of the authorisation given to the shipper or forwarder to print documents. This is often done as a prerequisite to obtaining the username and password that provide access to the relevant part of the carrier’s website. 97 Electronic negotiable bills of lading are considered at [12.790]. 98 Naviera Mogor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1 Lloyd’s Rep 412 at 420 per Mustill LJ.

[12.100]

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under the time charterparty to sign “in conformity with mate’s receipts”.99 Issue of the mate’s receipt is sufficient to make the carrier responsible for the goods,100 unless the carrier can prove conclusively that they were never delivered to the ship.101 Possession of the mate’s receipt is evidence that the holder is entitled to receive the bill of lading.102 However, the carrier is not bound to insist on production of the mate’s receipt before issuing the formal bill of lading,103 and is entitled to issue the formal bill of lading to someone other than the holder of the mate’s receipt if that person is proved to be the owner of the goods.104 Until the formal bill of lading is issued, the carrier holds the goods on the terms of its usual bill of lading, at least where the shipper is, or ought to be, aware of those terms.105 The sea-carriage document is usually signed by an agent on behalf of the carrier, although it may be signed by the master of the ship.106 It is often the case that the carrying ship is under time charter, and it is the time charterer who is responsible for arranging which cargoes are to be carried on the ship. In such a case, there are three possibilities concerning issue and signature of the sea-carriage document: 1. The time charterer may issue its own sea-carriage document, signed by itself or by its agent. 2. The time charterer (or its agent) may issue and sign the sea-carriage document as agent on behalf of the master or the shipowner. 3. The time charterer (or its agent) may simply prepare the sea-carriage documents and present them to the master or the carrier’s agent for signature. Which of these alternatives occurs depends upon the contractual relationship between the charterer and the shipowner under the time charterparty. It also affects the question of who is the carrier for the purposes of the Hague or Hague-Visby Rules; that question is considered at [12.810]–[12.830]. 99 Trade Star Line Corp v Mitsui & Co Ltd (The Arctic Trader) [1996] 2 Lloyd’s Rep 449 at 456 per Evans LJ. 100 Cobban v Downe (1803) 5 Esp 41; 170 ER 731. 101 Biddulph v Bingham (1874) 2 Asp MLC 225. 102 Craven v Ryder (1816) 6 Taunt 433; 128 ER 1103; Schuster v McKellar (1857) 7 El & Bl 704; 119 ER 1407. 103 Hathesing v Laing (1873) LR 17 Eq 92. 104 Cowas-Jee v Thompson (1845) 5 Moo PC 165; 13 ER 454. 105 However, in De Clermont v General Steam Navigation (1891) 7 TLR 187, a shipper who had shipped goods many times under the carrier’s usual form of bill was held bound to the terms of a new bill of lading adopted by the carrier before the shipment in question. 106 The Hague and Hague-Visby Rules and the Australian modification of the latter all provide that the bill of lading may be signed by the master or an agent: see Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 3 (Hague-Visby Rules); Sch 1A, Art 3, r 3 (Australian modification).

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When negotiable bills of lading are issued, the carrier’s agent usually signs not one, but a set of three original bills of lading. Each original bill records the number of originals signed by the carrier’s agent, “all of this tenor and date, one of which being accomplished, the others to stand void”, or words to that effect.107 A bill of lading is “accomplished” when it is presented to the carrier for delivery at the port of discharge108 — that is, when it ceases to become capable of transferring rights to an indorsee.109 When one indorsed original is presented to the carrier at the port of discharge, the other originals “stand void”, meaning they cease to have any effect.110 The sea-carriage document may acknowledge that the goods have been “shipped on board”,111 or it may merely acknowledge that the goods have been “received for shipment”.112 A “received for shipment” document is issued when the goods have been delivered by the shipper (or its agent) to the carrier but have not yet been loaded aboard the ship. This often occurs when the document is for combined transport, involving land

107 See, eg, the Conlinebill 2016 form (Appendix 1) which contains the words: “One original bill of lading must be surrendered duly endorsed in exchange for the cargo or delivery order, whereupon all other Bills of Lading to be void.” Similar words are to be found in the Combiconbill 2016 form (Appendix 2). The bill of lading is not necessarily “accomplished” when delivery takes place at the port of discharge, as its function as a document of title may not be exhausted at that time: see The Future Express [1992] 2 Lloyd’s Rep 79 at 99-100 per Judge Diamond QC (aff’d on appeal The Future Express [1993] 2 Lloyd’s Rep 542 without consideration of this point); Standard Chartered Bank v Dorchester LNG (2) Ltd (The Erin Schulte) [2015] 1 Lloyd’s Rep 97 at 109 [53] per Moore-Bick LJ (with whom Briggs LJ and Sir Bernard Rix agreed). 108 SA Sucre Export v Northern River Shipping Ltd (The Sormovskiy 3068) [1994] 2 Lloyd’s Rep 266 at 272 per Clarke J; Edelweiss (USA) Inc v Vengroff Williams & Associates Inc 2007 AMC 1080 (Sup Ct NY 2007) at 1082. 109 Borealis AB v Stargas Ltd: The Berge Sisar [2002] 2 AC 205 at 226 [26] per Lord Hobhouse of Woodborough. Note, however, that a bill of lading may still be capable of transferring rights if the goods have been misdelivered to someone not entitled to take possession: see The Future Express [1992] 2 Lloyd’s Rep 79 at 99-100 per Judge Diamond QC (aff’d on appeal The Future Express [1993] 2 Lloyd’s Rep 542 without consideration of this point); Standard Chartered Bank v Dorchester LNG (2) Ltd (The Erin Schulte) [2015] 1 Lloyd’s Rep 97 at 109 [53] per Moore-Bick LJ (with whom Briggs LJ and Sir Bernard Rix agreed). 110 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 133 [27]-[30] per Rares J. 111 See, eg, the Conlinebill 2016 form (Appendix 1). 112 See, eg, the Combiconbill, Linewaybill and Combiconwaybill forms (Appendices 2, 3 and 4). A “received for shipment” bill of lading can serve as a document of title in the same way as a “shipped” bill of lading can: see The Ship Marlborough Hill v Cowan & Sons Ltd [1921] 1 AC 444 (PC). There was specific provision to this effect in the Sea-Carriage of Goods Act 1924 (Cth), s 7, but that section has been repealed, and not replaced, by the Carriage of Goods by Sea Act 1991 (Cth). If the goods are being sold, and if the buyer is paying by letter of credit, the letter of credit usually stipulates presentation of an “on board” (ie, shipped) bill of lading: see Uniform Customs and Practice for Documentary Credits (UCP 600) (ICC, 2007), Art 20(a)(ii).

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stages at one or both ends of the sea carriage.113 The carrier may also issue a “received for shipment” document before the goods have been loaded aboard the ship, when the shipper or its agent has delivered the goods to a container yard at the port of loading. In the case of negotiable bills of lading, the Hague and Hague-Visby Rules and the Australian modification of the latter all provide that when the goods are subsequently loaded aboard the ship, the shipper is entitled to demand a “shipped on board” bill of lading, provided that it surrenders the “received for shipment” bill previously issued.114 In practice, the “received for shipment” bill of lading is usually not actually surrendered, but is converted into a “shipped on board” bill by being endorsed with a stamp to that effect, which records the date when the goods were shipped on board.115 After these fundamental acknowledgments, the receipt in the sea-carriage document may take many different forms. A bill of lading or sea waybill may contain statements of the condition, quantity and identifying marks of the goods on shipment, or some, or none of these acknowledgments. Those statements that do appear in the document are of great evidentiary significance in an action for loss of or damage to the goods, where the onus of proof lies on the plaintiff to establish that the goods were lost or damaged while in the carrier’s hands. Thus, it is in the carrier’s interests to ensure that the sea-carriage document says as little as possible about the goods shipped.116 By acknowledging receipt of the goods without any representations about their condition, quantity, or marks on shipment, the carrier minimises the evidentiary value of the document in subsequent litigation. However, where the Hague or Hague-Visby Rules apply, the shipper is entitled to demand the issue of a bill of lading showing the leading marks necessary 113 The Combiconbill and Combiconwaybill forms (Appendices 2 and 4) are designed for use in combined transport shipments. Use of such a form is not enough in itself to make the sea-carriage document one for combined transport if it is filled out in such a way as to make it a port-to-port bill: see Parlux SpA v M & U Imports Pty Ltd (2008) 21 VR 170. 114 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 7 (Hague-Visby Rules); Sch 1A, Art 3, r 7 (Australian modification). This is one of the few provisions of the Australian modification that applies only to negotiable bills of lading. 115 There is old authority to the effect that a “shipped” bill can properly be issued as soon as the goods are placed beneath the ship’s tackle: see Automatic Totalisators Ltd v Oceanic Steamship Co [1965] NSWLR 702. The better view is that it is not proper for a “shipped” bill to be dated earlier than the date by which the cargo has, in fact, been shipped on board: see Mendala III Transport v Total Transport Corp (The Wilomi Tenana) [1993] 2 Lloyd’s Rep 41 at 45 per Hobhouse J. See Westpac Banking Corp v South Carolina National Bank (1986) 60 ALJR 358 (PC) for an example of the effect of a “received for shipment” bill of lading with a “shipped on board” indorsement when tendered under a letter of credit. 116 See, eg, the Conlinebill 2016 form (Appendix 1), which states “weight, measure, marks, numbers, quality, contents and value unknown”. Similar words are used in the Linewaybill 2016 form (Appendix 3).

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for identification of the goods, the number of packages or pieces, or their quantity or weight as the case may be, and the apparent order or condition of the goods.117 Where the Australian modification of the Hague-Visby Rules applies, the shipper has this right in relation to any type of sea-carriage document.118 If the carrier or its agent knows or has reasonable grounds for believing that the goods are not as described by the shipper, it should record that fact on the sea-carriage document. Similarly, if the goods are not in apparent good order and condition, the carrier or its agent should record that fact on the document. A sea-carriage document with no qualifications added by the carrier is called “clean”; one with qualifications added is called “claused”.119 The carrier is not obliged to state details that it suspects to be inaccurate or which it has no reasonable means of checking.120 Its obligation to the shipper under Art 3, r 3(c) of the Hague or Hague-Visby Rules is to make an accurate statement of fact about the apparent order and condition of the goods, not merely to take reasonable care in doing so.121 However, in many cases, the master or other person issuing the document may not have any knowledge or expertise about the qualities of the cargo loaded, which makes it difficult to judge the apparent order and condition of the cargo. In those circumstances, the master or agent is entitled to form his or her own opinion from personal observation and is not obliged to appoint an expert surveyor to determine whether the cargo is in good condition.122 If the master or agent honestly takes the view, exercising his or her own judgment, that the cargo is not or not all in apparent good order and condition, and if that view could properly be held by a reasonably observant master or agent, then he or she is entitled to clause the sea-carriage document accordingly.123

117 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 3(a) – (c) (Hague-Visby Rules). 118 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 3, r 3(a) – (c). 119 See, eg, Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamship Ltd [1947] AC 46 (PC), where the bill of lading relating to shipment of bags of sugar was claused by the endorsement “many bags stained, torn and re-sewn”. 120 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 3 proviso (Hague-Visby Rules); Sch 1A, Art 3, r 3 proviso (Australian modification). See, eg, Boukadoura Maritime Corp v SA Marocaine de l’Industrie et du Raffinage (The Boukadoura) [1989] 1 Lloyd’s Rep 393. 121 Trade Star Line Corp v Mitsui & Co Ltd (The Arctic Trader) [1996] 2 Lloyd’s Rep 449 at 458 per Evans LJ. 122 The David Agmashenebeli [2003] 1 Lloyd’s Rep 92 at 105 per Colman J; Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401 at 406 [32] per Simon J. 123 The David Agmashenebeli [2003] 1 Lloyd’s Rep 92 at 105 per Colman J; Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401 at 406 [32] per Simon J.

[12.110]

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Guarantee of particulars by the shipper, and indemnities given by the shipper

[12.110]

Standard form bills of lading and sea waybills usually contain a printed notation making it quite clear that all particulars of the goods are provided by the shipper.124 Under the Hague and Hague-Visby Rules and the Australian modification of the latter, the shipper is deemed to guarantee to the carrier the accuracy at the time of shipment of the particulars of marks, number, quantity and weight furnished by it, and is obliged to indemnify the carrier against all loss, damages and expenses arising from inaccuracies.125 Thus, for example, if a carrier is found liable to a receiver for non-delivery of part of a consignment of goods, and it is discovered that the particulars furnished by the shipper inaccurately described the quantity of goods shipped, the carrier is entitled to an indemnity from the shipper,126 although that right may be difficult to exercise in practice. The shipper is not deemed to guarantee particulars of the condition of goods on shipment. The onus lies on the carrier to ensure that the goods are indeed “shipped in apparent good order and condition” if the bill of lading or sea waybill states them to be so, or to clause the document if they are not. However, in cases involving negotiable bills of lading the shipper may put pressure on the carrier to issue a clean bill of lading, even when the goods are not, in fact, in good order and condition on shipment. If the shipper must have a clean bill of lading in order to fulfil its obligations under a contract of sale of the goods to the receiver, and in order to be paid by the receiver’s bank under a documentary credit, it has an incentive to induce the carrier to issue a clean, rather than a claused, bill of lading.127 The carrier may agree to do so in return for an indemnity from the shipper to cover any loss the carrier may incur in an action subsequently brought by the receiver of the goods, because in any such action, the carrier is estopped from denying that the goods were received in apparent good order and condition if the receiver relied on the representation in the bill of lading.128 The Hague and Hague-Visby Rules are silent about this practice, but such an indemnity has been held to be 124 See, eg, the Conlinebill 2016 and Linewaybill 2016 forms (Appendices 1 and 3). 125 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 5 (Hague-Visby Rules); Sch 1A, Art 3, r 5 (Australian modification). 126 In the case of goods carried under the unamended Hague Rules, the discovery would have to made after the carrier had compensated the receiver, because if the inaccuracy in the bill of lading had been discovered before the suit for non-delivery, the carrier would be entitled to adduce this as evidence of non-shipment: see [12.130]. The situation is otherwise under the Hague-Visby and Hamburg Rules: see [12.130]. 127 See, eg, Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401. 128 See Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507; Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401 (Hague Rules); Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 4 (Hague-Visby Rules).

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[12.120]

illegal and unenforceable if the agreement requires the carrier to make a representation that it knows to be false,129 although it may be valid and enforceable if there is a genuine dispute between the shipper and the carrier about the condition of the goods on shipment.130 The carrier may held liable to the receiver in the tort of deceit (also called fraudulent misrepresentation), as well as under the contract of carriage.131 It is also possible that the carrier could be held liable under the Australian Consumer Law, s 18, for engaging in conduct that is misleading or deceptive or is likely to mislead or deceive, even if the receiver cannot satisfy the stringent requirements of proving fraud on the carrier’s part.

Receipt as to condition Introduction

[12.120]

The acknowledgment of receipt in sea-carriage documents usually states that the goods have been shipped on board (or received for shipment) “in apparent good order and condition”.132 This is taken to be a representation by the carrier of the external, observable condition of the goods on shipment; it is not a representation about their internal condition, as this cannot be verified by the carrier.133 Where the words “condition unknown” appear in the document, they are taken to refer to the internal condition of the goods, rather than their external, observable condition.134 The acknowledgment “shipped on board in apparent good order and condition” is of only limited effect in the case of containerised cargoes, because the carrier’s acknowledgment relates only to the external, observable condition of the containers themselves (or the packaging of the goods inside them if the carrier stuffed the container). Where the container is packed by the shipper, the carrier’s acknowledgment relates only to the container itself. In these circumstances, the carrier usually indorses the sea-carriage document “Shipper’s Load, Stow and Count”, 129 Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507; Brown, Jenkinson & Co Ltd v Percy Dalton (London) Ltd [1957] 2 QB 621; TJ Stevenson & Co Inc v 81,193 Bags of Flour 629 F 2d 338 (5th Cir 1980) at 373 n 81. 130 Brown, Jenkinson & Co Ltd v Percy Dalton (London) Ltd [1957] 2 QB 621 at 639 per Pearce LJ. 131 Boukadoura Maritime Corp v SA Marocaine de l’Industrie et du Raffinage (The Boukadoura) [1989] 1 Lloyd’s Rep 393 at 398 per Evans J; Standard Chartered Bank v Pakistan National Shipping Corp (No 4) [2001] QB 167 at 170 per Sir Anthony Evans; Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401. 132 See, eg, the Conlinebill 2016 and Linewaybill 2016 forms (Appendices 1 and 3). 133 The Peter der Grosse (1875) 1 PD 414; Marbig Rexel Pty Ltd v ABC Container Line NV (The TNT Express) [1992] 2 Lloyd’s Rep 636 at 642 per Carruthers J (Sup Ct NSW); Caemint Food Inc v Lloyd Brasileiro Cia de Navegaçao 647 F 2d 347; 1981 AMC 1801 (2d Cir 1981) at 353-354 n 5; 1810 n 5: “Clean on-board bills of lading of packaged goods … merely attest to the apparent good condition of the cargo based on external inspection”. 134 The Tromp [1921] P 337; The Skarp [1935] P 134.

[12.140]

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and/or it records the particulars of the goods after the words “Said To Contain” or the abbreviation “STC”. The effect of these notations is considered at [12.210]. The position of the shipper

[12.130]

In an action for loss or damage brought by the shipper of the goods,135 the representation “shipped in apparent good order and condition” is prima facie evidence of the condition of the goods on shipment under the Hague and Hague-Visby Rules and the Australian modification of the latter.136 If sued by the shipper rather than the receiver, the carrier is entitled to adduce evidence that the goods were in fact damaged when shipped, notwithstanding the representation in the sea-carriage document.137

The position of a consignee or indorsee138 Under the Hague-Visby Rules and the Australian modification

[12.140]

Under the Hague-Visby Rules, a representation of condition is conclusive against the carrier when a bill of lading has been transferred to a third party acting in good faith.139 The carrier cannot adduce evidence that the goods were not in fact in good order and condition on shipment, because such evidence is inadmissible.140 It is not necessary for the consignee or indorsee to show that it relied on the representation to its detriment, as is the case at common law and under the unamended Hague Rules.141 The representation is conclusive when the bill of lading is in the hands of a third party acting in good faith, whether or not that third party actually relied on the representation to its detriment. It seems to follow that the consignee of goods under a straight bill of lading is 135 The shipper is not usually the plaintiff in an action for loss or damage during transit. 136 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, rr 3(c), 4 (Hague-Visby Rules); Sch 1A, Art 3, rr 3(c), 4 (Australian modification). Article 3, rr 3(c), 4 of the unamended Hague Rules are in the same terms as Art 3, r 3(c) and the first sentence of Art 3, r 4 of the Hague-Visby Rules. 137 J Kaufman Ltd v Cunard Steam-Ship Co Ltd [1965] 2 Lloyd’s Rep 564 (Can); Portland Fish Co v States SS Co 510 F 2d 628 (9th Cir 1974) at 633: “[T]here can be no estoppel … in a suit by a shipper against a carrier”. See also Agrosin Pte Ltd v Highway Shipping Co Ltd (The Mata K) [1998] 2 Lloyd’s Rep 614 (evidence to contradict bill of lading weight in claim brought by shipper). 138 If the receiver of the goods is named in the sea-carriage document (as it is under a sea waybill or straight bill of lading), that person is known as the consignee. If a negotiable bill of lading is transferred to a third party by the shipper, the transferee is known as an indorsee, as the transferor effects transfer by indorsing the bill of lading to the transferee: see [12.670]. 139 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 4. The second sentence of Art 3, r 4 was added when the Visby amendments were made. 140 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 4. The second sentence of Art 3, r 4 was added when the Visby amendments were made. 141 See [12.150].

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[12.150]

entitled to raise this statutory estoppel, even though it is unlikely to have relied on the statement to its detriment, because a straight bill of lading is a “bill of lading”.142 Under the Australian modification of the Hague-Visby Rules, this statutory version of estoppel arises only when “a negotiable sea carriage document” is transferred to a third party acting in good faith.143 In other words, this is one of the few rules in the Australian modification that is still confined in its operation to “order” bills of lading.144 It follows that the consignee of goods under a non-negotiable sea-carriage of document (for example, the named consignee under a sea waybill or straight bill of lading) is in the same position as under the unamended Hague Rules, which is considered next. The carrier can adduce evidence to controvert the statement of condition in a non-negotiable sea-carriage document unless the consignee can establish an estoppel by showing that it relied on the statement in the sea-carriage document to its detriment. Because the consignee is unlikely to have given value in return for a non-negotiable sea-carriage document, the requirements of an estoppel are unlikely to be found. Thus, a named consignee under a straight bill of lading is in a worse position under the Australian version of the Hague-Visby Rules than under the unmodified version. Under the unamended Hague Rules

[12.150]

If a negotiable sea-carriage document such as a bill of lading is in the hands of a consignee or indorsee, the carrier is estopped from denying a representation of condition if the requirements for estoppel by representation are satisfied.145 Those requirements were described as follows by Scrutton LJ in Silver v Ocean Steamship Co Ltd:146 “There must be: (1) a statement of fact, (2) relied upon by the person alleging estoppel, and (3) he must have acted on the representations to his detriment.” The signature of a clean negotiable bill of lading stating the goods to be “shipped in apparent good order and condition” is in itself a 142 JI MacWilliam Co Inc v Mediterranean Shipping Co SA (The Rafaela S) [2005] 2 AC 423; Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791. See generally, [12.20]. 143 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 3, r 4, second sentence. 144 “Negotiable sea carriage document” is defined as a negotiable bill of lading or a negotiable document of title similar to a negotiable bill of lading: Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 1(f). 145 Compania Naviera Vasconzada v Churchill and Sim [1906] 1 KB 237; Brandt v Liverpool, Brazil and River Plate Steam Navigation Co Ltd [1924] 1 KB 575; Silver v Ocean Steamship Co Ltd [1930] 1 KB 416; The Carso 53 F 2d 374 (2d Cir 1931); Cremer v General Carriers SA (The Dona Mari) [1973] 2 Lloyd’s Rep 366; Cummins Sales & Service Inc v London & Overseas Insurance Co 476 F 2d 498 (5th Cir 1973) at 500-501; Associated Packaging Pty Ltd v Sankyo Kaiun Kabushiki Kaisha [1983] 3 NSWLR 293. See also Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507, where an estoppel based on fraud by the carrier was established. 146 Silver v Ocean Steamship Co Ltd [1930] 1 KB 416 at 433.

[12.150]

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representation of fact about the external, observable condition of the goods on shipment.147 Thus, in most cases, the consignee or indorsee will succeed in raising an estoppel against the carrier if it can satisfy the second and third of the requirements identified by Scrutton LJ. These two requirements can conveniently be combined into a single requirement of detrimental reliance. The very fact that an indorsee has accepted transfer of a clean negotiable bill of lading in return for value gives rise to a presumption that it has relied to its detriment on the representation of the condition of the goods.148 This presumption can be rebutted by the carrier only on proof that the indorsee did not rely on the representation when accepting transfer of the bill of lading. For example, the carrier is able to rebut the presumption of reliance where the indorsee is contractually obliged under the contract of sale with the shipper to accept transfer of the negotiable bill of lading even if it is claused.149 In these circumstances, it is not the representation of condition that induces the consignee or indorsee to accept the bill of lading, but the contractual obligation. However, where the consignee or indorsee can satisfy the court that it would refuse, in breach of that contractual obligation, to accept a claused bill of lading, it can succeed in raising an estoppel against the carrier.150 In these circumstances, the consignee or indorsee relies on the representations in the negotiable bill of lading in fact, notwithstanding its obligations under the contract. The contractual obligation to accept the bill of lading, clean or claused, is of no effect between the consignee or indorsee and the carrier, as it is no part of the contract between them.151 Similarly, if the indorsee of a negotiable bill of lading does not pay for the goods by documentary credit — that is, if it does not pay the seller in return for the bill of lading — then the carrier is not estopped because the indorsee does not rely on the statement about the condition of the goods when making payment.152 Under the unamended Hague Rules, a representation that goods are “shipped in apparent good order and condition” is prima facie evidence of the receipt by the carrier of the goods in that condition.153 For an indorsee who can establish detrimental reliance on a representation of 147 See The Peter der Grosse (1875) 1 PD 414; Marbig Rexel Pty Ltd v ABC Container Line NV (The TNT Express) [1992] 2 Lloyd’s Rep 636 at 642 per Carruthers J (Sup Ct NSW); Caemint Food Inc v Lloyd Brasileiro Cia de Navegaçao 647 F 2d 347; 1981 AMC 1801 (2d Cir 1981) at 353-354 n 5; 1810 n 5: “Clean on-board bills of lading of packaged goods … merely attest to the apparent good condition of the cargo based on external inspection”. 148 Silver v Ocean Steamship Co Ltd [1930] 1 KB 416. 149 The Skarp [1935] P 134. 150 Cremer v General Carriers SA (The Dona Mari) [1973] 2 Lloyd’s Rep 366. 151 Cremer v General Carriers SA (The Dona Mari) [1973] 2 Lloyd’s Rep 366. 152 Freedman v The Concordia Star 250 F 2d 867 (2d Cir 1958). 153 Art III, r 4: see, eg, Carriage of Goods by Sea Act 1936 (US), 46 USC § 30701, Statutory Note, § 3(4).

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[12.160]

condition, the Hague Rules provision adds nothing, as it is entitled to estop the carrier from denying the representation, in any event.154 A receiver who cannot establish detrimental reliance on a representation of condition is nevertheless entitled to adduce it as prima facie evidence by virtue of the Hague Rules.155 For example, the named consignee under a straight bill of lading or sea waybill may still use the document as prima facie evidence of apparent condition on shipment, even though it does not rely on the statement of condition to its detriment. “Said to contain”/“STC”/“Shipper’s load stow and count”

[12.160]

When a sea-carriage document is issued for goods in a container packed by the shipper, the carrier has no practicable means of checking the particulars or condition of the goods, as to do so would involve unstuffing and restuffing the container at the wharf. In these circumstances, the carrier commonly issues a sea-carriage document acknowledging receipt of the container itself, and notes on the document that the container is “said to contain” the number of packages that the shipper has declared it to contain. The words “said to contain” are commonly reduced to the abbreviation “STC”. These words may be supplemented or replaced by the words “shipper’s load stow and count”, which are also designed to indicate that the carrier has not verified the description of the contents of the container.

In Marbig Rexel Pty Ltd v ABC Container Line NV (The TNT Express),156 the defendant carrier issued a clean bill of lading bearing the words “shipper’s load stow and count” and the abbreviation “STC” before the description of the goods. The bill of lading also stated that all particulars of the goods had been “declared by the shipper”. On arrival at the port of destination, the goods were found to be damaged by water. The plaintiff, the indorsee of the bill of lading, claimed that the defendant was estopped from denying that the goods were in apparent good order and

154 Art III, r 4 does not displace the right of a consignee or indorsee to raise an estoppel at common law: Silver v Ocean Steamship Co Ltd [1930] 1 KB 416 at 425 per Scrutton LJ; Australian General Electric Pty Ltd v AUSN Co Ltd [1946] SASR 278 at 281 per Gavan Duffy J; Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamship Ltd [1947] AC 46 (PC). The Hague Rules are not a code: see Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 159 per Mason and Wilson JJ. 155 See A Mocatta, M Mustill and S Boyd, Scrutton on Charterparties and Bills of Lading (18th ed, Sweet & Maxwell, London, 1974), p 109. (This argument does not appear in the 22nd ed (2011).) Although the proposition in the text seems correct given the wording of Art III, r 4, it produces an odd result where the consignee or indorsee actually knows that the representation of condition is incorrect: see Scrutton on Charterparties and Bills of Lading (18th ed, 1974), p 109, n 21. 156 Marbig Rexel Pty Ltd v ABC Container Line NV (The TNT Express) [1992] 2 Lloyd’s Rep 636 (NSWSC).

[12.160]

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condition on shipment, because a clean bill of lading had been issued. This contention was rejected by Carruthers J, who said:157 It is, in my view, apparent from the wording of the receipt clause and the notation inserted in the box beneath that clause that the defendant is merely acknowledging the receipt of the 20’ container in apparent good order and condition. The acknowledgment could not possibly extend to the apparent good order and condition of the contents of the sealed container which had been consolidated by the shipper.

As a result, the plaintiff was required to adduce evidence that the goods had in fact been in apparent good order and condition on shipment.158 Although the goods in question were carried under the unamended Hague Rules,159 Carruthers J’s decision turned solely on the nature of the representation in the bill of lading, rather than on any provision of the Rules. The result is the same when the carriage is governed by the Hague-Visby Rules or the Australian modification of the latter. The TNT Express was followed by Ryan J of the Federal Court in Seafood Imports Pty Ltd v ANL Singapore Pte Ltd160 in relation to carriage of goods from Japan to Australia under the Hague-Visby Rules. In the United States, it is possible for a plaintiff to prove by inference that the goods were in good condition on shipment, notwithstanding a “said to contain” or STC notation on the sea-carriage document. In Transatlantic Marine Claims Agency Inc v M/V OOCL Inspiration,161 a cargo of paper carried in sealed containers was found on arrival to have been damaged by sea water. The United States Court of Appeals for the Second Circuit held that the bills of lading issued by the carrier did not provide evidence of the condition of the paper on shipment, but merely the condition of the containers containing the paper. Nevertheless, the court held that the evidence of sea water damage made it possible to infer that the paper

157 Marbig Rexel Pty Ltd v ABC Container Line NV (The TNT Express) [1992] 2 Lloyd’s Rep 636 at 642, following Ace Imports Pty Ltd v Companhia de Navegacao Lloyd Brasileiro (1987) 10 NSWLR 32. Carruthers J also cited the following decisions: Lufty Ltd v Canadian Pacific Railway Co (The Alex) [1974] 1 Lloyd’s Rep 106 (Fed Ct, Can); Red Arrow Freight Lines Inc v Roy G Howe 480 SW 2d 281 (Ct App Tx 1972). This principle is well-established in US law: see, eg, Plastique Tags Inc v Asia Trans Line Inc 83 F 3d 1367; 1996 AMC 2304 (11th Cir 1996) , except in the Ninth Circuit, where notations such as “shipper’s load stow and count” do not alter the effect of the bill as a clean bill for the goods listed: see, eg, Portland Fish Co v States Steamship Co 510 F 2d 628 (9th Cir 1974) at 633 n 15; Fox and Assocs Inc v M/V Hanjin Yokohama 977 F Supp 1022; 1998 AMC 1090 (CD Cal 1997). 158 Marbig Rexel Pty Ltd v ABC Container Line NV (The TNT Express) [1992] 2 Lloyd’s Rep 636. See also Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149 (evidence of good condition when container stuffed at shipper’s warehouse). 159 Apparently by virtue of the Indonesian Commercial Code, Arts 466 – 520. 160 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149. 161 Transatlantic Marine Claims Agency Inc v M/V OOCL Inspiration 137 F 3d 94; 1998 AMC 1327 (2d Cir 1998).

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[12.170]

itself had been in good order and condition when handed over to the carrier.162 Delivering the judgment of the court, Calabresi J said:163 There are, moreover, two general ways a plaintiff can make out … a prima facie case under COGSA. First, the plaintiff may present direct evidence relating to the healthy condition of the goods at delivery and their damaged condition at outturn … The second way a plaintiff may discharge its burden … is to show that the characteristics of the damage suffered by the goods justify the conclusion that the harm occurred while the goods were in the defendant’s custody … This second avenue is available because not infrequently a plaintiff who is unable to provide specific evidence as to the condition of the goods at delivery or outturn, can nonetheless show, by the nature of the damage, that the injury complained of happened to the cargo while it was in the carrier’s custody.

Under the Hague and Hague-Visby Rules, the shipper is entitled to demand a bill of lading stating the apparent order and condition of the goods themselves.164 Under the Australian modification of the HagueVisby Rules, the shipper is entitled to demand that any sea-carriage document state the apparent order and condition of the goods.165 In effect, this means that the shipper is entitled to demand that the carrier issue a document that does not state “shipper’s load stow and count” or “said to contain”. In practice, however, shippers seldom, if ever, do so, both because their interests are not affected by the notations,166 and because of the inconvenience that would be caused to both carrier and shipper if the carrier were required to verify the condition of the contents of a shipper-packed container before shipment. As a result, the consignee or indorsee is left unprotected by the rules. Apparent condition unknown — Retla rust and lumber clauses

[12.170]

It is often difficult for the carrier to determine whether a metal cargo is in good condition on shipment, because the presence of visible rust may or may not signify a serious problem with the cargo. As a result, sea-carriage documents for iron or steel cargoes often contain an indorsement known as a “Retla rust clause”, which purports to negate any representation that the goods were even shipped in apparent good order and condition.167 Similar clauses are used for lumber cargoes.168 Because the Hague and Hague-Visby Rules provide that the shipper is 162 The inference does not arise if the goods are shown to have been damaged by fresh water: see American Home Assurance Co v MV Zim Jamaica 296 F Supp 2d 494 (SDNY 2003). 163 Transatlantic Marine Claims Agency Inc v M/V OOCL Inspiration 137 F 3d 94; 1998 AMC 1327 (2d Cir 1998) at 98-99; 1330-1331. 164 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 3(c). 165 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 3, r 3(c). 166 Words such as “said to contain” do not affect the negotiability of an “order” bill of lading: see Golodetz & Co Inc v Czarnikow-Rionda Co (The Galatia) [1980] 1 Lloyd’s Rep 453. 167 A typical Retla rust clause provides: “The term ‘apparent good order and condition’ when used in this bill of lading with reference to iron, steel or metal products does not

[12.170]

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entitled to demand a receipt stating the apparent good order and condition of the goods,169 Retla rust and lumber clauses also provide that a substitute sea-carriage document without the clause, describing the presence of rust or moisture (in the case of metal cargoes) or moisture staining, chafing or breakage (in the case of lumber), will be provided if the shipper so requests.170 However, as we have just seen, shippers seldom, if ever, request a substitute because they have no interest in doing so — indeed, the shipper’s interest is usually exactly the opposite, as it would prefer to receive a clean bill of lading that it can present for payment under a documentary letter of credit, rather than a substitute bill of lading showing the true condition of the cargo. Thus, the clause usually remains in the sea-carriage document when it is transferred to the receiver. Retla rust and lumber clauses have consistently been upheld in United States courts,171 if the clause is given sufficient prominence on the sea-carriage document that is brought to the holder’s attention.172 However, in Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer),173 Simon J of the Commercial Court in England acknowledged that a Retla rust clause “should be construed as a legitimate clarification of what was to be understood by the representation as to the appearance of the steel cargo upon shipment”,174 but went on to hold that the clause could only be effective in relation to the superficial mean that the goods, when received, were free of visible rust or moisture. If the shipper so requests, a substitute bill of lading will be issued omitting the above definition and setting forth any notations as to rust or moisture which may appear on the mates’ or tally clerks’ receipts”: see, eg, Tokio Marine & Fire Insurance Co v Retla Steamship Co 426 F 2d 1372 (9th Cir 1970). 168 The typical lumber clause states that the term “apparent good order and condition” does not mean that the goods were free of moisture staining, chafing or breakage: see, eg, GF Co v Pan Ocean Shipping Co Ltd 23 F 3d 1498 (9th Cir 1994). 169 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 3(c) (Hague-Visby Rules). 170 A typical Retla rust clause provides: “The term ‘apparent good order and condition’ when used in this bill of lading with reference to iron, steel or metal products does not mean that the goods, when received, were free of visible rust or moisture. If the shipper so requests, a substitute bill of lading will be issued omitting the above definition and setting forth any notations as to rust or moisture which may appear on the mates’ or tally clerks’ receipts”: see, eg, Tokio Marine & Fire Insurance Co v Retla Steamship Co 426 F 2d 1372 (9th Cir 1970). 171 Tokio Marine & Fire Insurance Co v Retla Steamship Co 426 F 2d 1372 (9th Cir 1970); Acwoo International Steel Corp v Toko [sic] Kaiun Kaisha Ltd 840 F 2d 1284 (6th Cir 1988); GF Co v Pan Ocean Shipping Co Ltd 23 F 3d 1498 (9th Cir 1994); Dorsid Trading Co v SS Rose 343 F Supp 617 (SD Tex 1972); Gradmann & Holler GmbH v Continental Lines SA 504 F Supp 785 (DPR 1980). 172 In Sumitomo Corp of America v M/V Saint Venture 683 F Supp 1361 (MD Fla 1988) (Retla rust) and Plywood Panels Inc v M/V Sun Valley 804 F Supp 804 (ED Va 1992) (lumber clause) the clauses were held to be ineffective because “buried in fine print”. 173 Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401. 174 Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401 at 407 [44] per Simon J.

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[12.180]

appearance of the cargo — “visible rust or moisture” — and not the presence of rust of whatever severity. In The Saga Explorer, a survey report provided evidence of substantial rusting before loading. Simon J held that the Retla rust clause in the bill of lading did not contradict the standard representation that the cargo had been loaded in good order and condition, which was accordingly found to be deliberately misleading. There is nothing in Art 3, r 3(c) of the Hague or Hague-Visby Rules that requires a carrier to issue a sea-carriage document showing the apparent order and condition of the goods — it is only obliged to do so “on demand of the shipper”. According to the plain words of Art 3, r 3(c), if the shipper does not demand a bill of lading showing the apparent order and condition of the goods, then the carrier is under no obligation to issue one and has committed no wrong by failing to do so. However, as noted above, the shipper’s right to demand an unqualified bill of lading is largely illusory, because the shipper has no interest in demanding a claused bill of lading showing the true condition of the cargo. It is the receiver, not the shipper, who is interested in having the bill of lading accurately reflect the condition of the goods, but the receiver has no right to demand an accurate bill of lading under either Art 3, r 3(c) or the Retla clause. Accordingly, in The Saga Explorer, Simon J held that the bill of lading should represent the true facts of the cargo, so far as the carrier knows them, whether or not the shipper avails itself of the (largely pointless) right conferred on it by Art 3, r 3(c) and the Retla clause.175 To allow the carrier to escape liability for the statement of apparent order and condition undermines the fundamental goal of protecting the bill of lading as a commercial document on which third parties can rely.176 Thus, if Retla rust or lumber clauses are to be enforced in Australia, it seems their effect should be confined to a statement that it is impossible to discern the true condition of the cargo from observing its external condition. If the true condition is known to the carrier, as it was in The Saga Explorer, it should be stated on the face of the bill of lading, or the bill of lading becomes a vehicle to defraud the receiver.

Receipt as to quantity or weight General

[12.180]

Sea-carriage documents usually include a description of the quantity of goods shipped, either by stating the number of containers and/or packages, or the weight or volume of the goods when they are

175 Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401 at 407-408 [45]-[50] per Simon J, referring to M Sturley, “Carriage of Goods by Sea” (2000) 31 JMLC 241 at 244-248. 176 Breffka & Hehnke GmbH & Co KG v Navire Shipping Co Ltd (The Saga Explorer) [2013] 1 Lloyd’s Rep 401 at 408 [47], quoting M Sturley, “Carriage of Goods by Sea” (2000) 31 JMLC 241 at 244-248.

[12.200]

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shipped in bulk. The effect of an unqualified representation of quantity or weight is different under the Hague and Hague-Visby Rules and the Australian modification of the latter. Under the Hague-Visby Rules and the Australian modification

[12.190]

A representation of the quantity or weight of the goods on shipment has the same effect as a representation of condition under the Hague-Visby Rules.177 The representation is prima facie evidence of receipt by the carrier of the quantity or weight of the goods so described.178 Proof to the contrary is not admissible under the HagueVisby Rules when a bill of lading has been transferred to a third party acting in good faith, whether or not that party relied on the representation in the bill of lading.179 The same is true in relation to a negotiable sea-carriage document under the Australian modification of the HagueVisby Rules.180 Thus, in an action brought by the shipper, the carrier may adduce evidence that the quantity or weight of the goods was not as represented on the bill of lading. In an action brought by the consignee or indorsee, such evidence is inadmissible. Similarly, the named consignee of a straight bill of lading may be able to bind the carrier to the representation in the bill of lading if the document is subject to the Hague-Visby Rules, because the second sentence of Art 3, r 4 provides that evidence controverting the contents of the bill of lading is not admissible “when the bill of lading has been transferred to a third party acting in good faith”. There is no requirement that the transfer be for value, so the simple act of transferring the straight bill of lading to the named consignee should be sufficient to provide the consignee with the protection afforded by the Hague-Visby Rules. The position appears to be different in relation to the named consignee of a non-negotiable sea waybill. Neither the State and Territory legislation making representations conclusive181 nor Art 3, r 4 of the Hague-Visby Rules applies to non-negotiable sea waybills, although Art 3, r 4 of the Australian modification does.182 Under the unamended Hague Rules

[12.200]

The position at common law was that an agent signing a sea-carriage document could not bind the carrier as principal for goods

177 See [12.130]–[12.140]. 178 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, rr 3(b), 4. 179 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, rr 3(b), 4. The second sentence of Art 3, r 4 abrogates the rule in Grant v Norway (1851) 10 CB 665; 138 ER 263, which is considered at [12.200]. 180 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 3, rr 3(b), 4. 181 See Sea-Carriage Documents Act 1997 (NSW), s 12(2), (3); Sea-Carriage Documents Act (NT), s 12(2), (3); Sea-Carriage Documents Act 1996 (Qld), s 10(2), (3); Sea-Carriage Documents Act 1998 (SA), s 11(2), (3); Sea-Carriage Documents Act 1997 (Tas), s 11(2), (3); Goods Act 1958 (Vic), s 96(2), (3); Sea-Carriage Documents Act 1997 (WA), s 12(2), (3). 182 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 4; Sch 1A, Art 3, r 4.

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[12.200]

that had never been shipped; this was the notorious rule in Grant v Norway,183 which was followed by the High Court of Australia in Rosenfeld Hillas & Co Pty Ltd v The Ship Fort Laramie.184 Thus, where the sea-carriage document was signed by the master or an agent, the carrier was entitled to adduce evidence that the goods were not in fact shipped, whether the party alleging non-delivery was the shipper185 or, more significantly, an indorsee.186 The rule was long the subject of scathing criticism, and its practical significance for Australia reduced gradually over the years as more and more countries adopted the Hague-Visby Rules, which reverse the effect of the rule (at least so far as bills of lading are concerned) in the second sentence of Art 3, r 4.187 The rule was finally removed by uniform State and Territory legislation, which provides that a bill of lading representing goods to have been shipped on board or received for shipment and signed by the master or an agent is evidence of shipment so far as the shipper is concerned and conclusive evidence of shipment so far as an indorsee is concerned.188 The State and Territory legislation reversing the rule in Grant v Norway applies only to “bills of lading”.189 The legislation defines “bill of lading” to mean a bill of lading that is capable of transfer by endorsement or as a bearer bill, by delivery without endorsement.190 In Beluga Shipping GmbH v Headway Shipping Ltd (No 1),191 Rares J of the Federal Court held that a straight (that is, non-negotiable) bill of lading is a document of title that must be presented by the named consignee to take delivery of the cargo at 183 Grant v Norway (1851) 10 CB 665; 138 ER 263. The rule was described as “notorious” in Alimport v Soubert Shipping Co Ltd [2000] 2 Lloyd’s Rep 447 at 448 per Timothy Walker J. 184 Rosenfeld Hillas & Co Pty Ltd v The Ship Fort Laramie (1923) 32 CLR 25. The Supreme Court of the United States adopted a similar rule in Friedlander v Texas & Pacific Railway Co 130 US 416 (1889), but its effect was reversed by the Pomerene Act, now codified at 49 USC § 80113(a). 185 McLean v Fleming (1871) LR 2 Sc & Div 128. 186 Grant v Norway (1851) 10 CB 665; 138 ER 263; Jessel v Bath (1867) LR 2 Ex 267; Rosenfeld Hillas & Co Pty Ltd v The Ship Fort Laramie (1923) 32 CLR 25. 187 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 4. This citation is to the unmodified version of the Hague-Visby Rules, as that is the version most commonly applied in Australian courts considering a Grant v Norway-like situation under inward-bound international carriage. 188 Sea-Carriage Documents Act 1997 (NSW), s 12(2), (3); Sea-Carriage Documents Act (NT), s 12(2), (3); Sea-Carriage Documents Act 1996 (Qld), s 10(2), (3); Sea-Carriage Documents Act 1998 (SA), s 11(2), (3); Sea-Carriage Documents Act 1997 (Tas), s 11(2), (3); Goods Act 1958 (Vic), s 96(2), (3); Sea-Carriage Documents Act 1997 (WA), s 12(2), (3). 189 Sea-Carriage Documents Act 1997 (NSW), s 12(2), (3); Sea-Carriage Documents Act (NT), s 12(2), (3); Sea-Carriage Documents Act 1996 (Qld), s 10(2), (3); Sea-Carriage Documents Act 1998 (SA), s 11(2), (3); Sea-Carriage Documents Act 1997 (Tas), s 11(2), (3); Goods Act 1958 (Vic), s 96(2), (3); Sea-Carriage Documents Act 1997 (WA), s 12(2), (3). 190 Sea-Carriage Documents Act 1997 (NSW), s 5; Sea-Carriage Documents Act (NT), s 5; Sea-Carriage Documents Act 1996 (Qld), s 3; Sea-Carriage Documents Act 1998 (SA), s 4; Sea-Carriage Documents Act 1997 (Tas), s 4; Goods Act 1958 (Vic), s 89; Sea-Carriage Documents Act 1997 (WA), s 5. 191 Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791.

[12.200]

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the port of discharge. Although Rares J did not expressly hold (indeed, did not need to hold) that a straight bill of lading is a “bill of lading” for purposes of the State and Territory Sea-Carriage Documents Acts, that conclusion would seem to follow from his reasoning. It seems, however, that the legislative provisions overruling the rule in Grant v Norway cannot apply to non-negotiable sea waybills, which are not “bills of lading” at all, and which are not capable of transfer by endorsement or as a bearer document. Thus, the rule in Grant v Norway may still apply to an action brought in Australia by the receiver of goods shipped under a non-negotiable sea waybill that is subject to the unamended Hague Rules. Thus, the consignee under a sea waybill subject to the unamended Hague Rules finds itself in the same position as the shipper. When the waybill is signed by the master or an agent (as it usually is), there is nothing to prevent the carrier from adducing evidence that the goods were never shipped, notwithstanding the representation in the sea waybill. Of course, the shipper is obliged by Art 3, r 5 of the Hague Rules to guarantee the accuracy of the details it provides to the carrier,192 so it seems reasonable to allow the carrier to adduce contradictory evidence of non-shipment when sued by the shipper.193 Unlike the shipper, however, the consignee is unlikely to know whether the goods have actually been shipped, so it is much more likely to rely on the statement to that effect in the sea waybill. Indeed, it may even have paid the shipper in return for the sea waybill, despite the fact that that document is non-negotiable — documentary credits can and do stipulate payment against presentation of non-negotiable sea waybills.194 Nevertheless, the consignee under a non-negotiable sea waybill remains at the mercy of the rule in Grant v Norway, even if it can show that it has detrimentally relied on the statement in the waybill. Because the rule in Grant v Norway is a rule of evidence, it should be applied in an Australian court as the law of the forum (lex fori),195 even if substantive liability

192 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 5 (Hague-Visby Rules); Sch 1A, Art 3, r 5 (Australian modification). 193 See the discussion of the “statutory quid pro quo” in Nitram Inc v MV Cretan Life 599 F 2d 1359 (5th Cir 1979) at 1374-1375. 194 Uniform Customs and Practice for Documentary Credits (UCP 600) (ICC, 2007), Art 21 makes provision for such an arrangement, stating that under documentary letters of credit, banks will accept a non-negotiable sea waybill covering a port-to-port shipment if it is the sole original waybill. Because the bank issuing the credit cannot hold the sea waybill as security for payment, it will only issue a credit in these terms if it has been given adequate side security by the applicant for the credit, which will be the consignee under the sea waybill. 195 The law of evidence is always governed by the law of the forum (lex fori): see M Davies, A Bell and P Brereton, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, Chatswood, 2014) at [16.20]-[16.23].

240

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[12.210]

under the sea waybill is governed by the law of a country, such as the United States, which has reversed the effect of the rule.196 “Weight and quantity unknown” and “said to contain”: clauses for the protection of the carrier

[12.210]

There is authority for the proposition that if the sea-carriage document states the goods to be shipped “weight and quantity unknown”,197 it does not even constitute prima facie evidence of the shipment of a given weight or quantity.198 That result is acceptable so far as statements of quantity are concerned, particularly where the goods are packed in containers, because the carrier has no practicable means of checking quantity. Thus, the words “said to contain” (or the abbreviation “STC”) before the quantity of goods listed on the sea-carriage document have the effect that the statement does not constitute prima facie evidence of the quantity shipped,199 in the same way that they negate any evidence of the condition of the goods on shipment.200 The same is true of containerised goods where the sea-carriage document states “FCL/FCL”, short for “full container load”, meaning that the container was packed by the shipper and will be unpacked by the receiver, so that the carrier has no opportunity of checking the contents.201 It is questionable, however, whether the same outcome is defensible in relation to statements of weight, because the carrier always has a reasonable means of checking the weight of the goods, whether or not it is able to check their quantity or condition when they are sealed in containers. United States courts hold that the notation “weight unknown” has no effect, even when coupled with an effective statement of “quantity unknown”. For example, in Bally Inc v M/V Zim America,202 the United 196 The Pomerene Act, 49 USC § 80113(a) provides that the carrier is liable to the owner of goods transported under a non-negotiable bill if the owner gave value in good faith relying on the description of the goods in the bill. 197 See, eg, the Conlinebill 2016 and Linewaybill 2016 forms (Appendices 1 and 3). 198 New Chinese Antimony Co v Ocean Steamship Co [1917] 2 KB 664; Rosenfeld Hillas & Co Pty Ltd v The Ship Fort Laramie (1923) 32 CLR 25 at 38 per Starke J; Noble Resources Ltd v Cavalier Shipping Corp (The Atlas) [1996] 1 Lloyd’s Rep 642; Agrosin Pte Ltd v Highway Shipping Co Ltd (The Mata K) [1998] 2 Lloyd’s Rep 614. 199 Rosenfeld Hillas & Co Pty Ltd v The Ship Fort Laramie (1923) 32 CLR 25 at 34, 38; Ace Imports Pty Ltd v Companhia De Navegacao Lloyd Brasileiro (1987) 10 NSWLR 32. See also Marbig Rexel Pty Ltd v ABC Container Line NV (The TNT Express) [1992] 2 Lloyd’s Rep 636, considered at [12.160]. 200 See [12.160]. 201 In Ace Imports Pty Ltd v Companhia De Navegacao Lloyd Brasileiro (1987) 10 NSWLR 32, the notation “FCL/FCL” appeared on a bill of lading that also bore the words “said to contain — packed by shippers”. It is not clear whether the notation “FCL/FCL” would be sufficient in itself to achieve the result described in the text. 202 Bally Inc v M/V Zim America 22 F 3d 65; 1994 AMC 2762 (2d Cir 1994). See also Westway Coffee Corp v M/V Netuno 675 F 2d 30 (2d Cir 1982).

[12.210]

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States Court of Appeals for the Second Circuit distinguished between statements of weight and statements of quantity under an “STC” bill of lading, saying:203 [T]he weight listed on a bill of lading is prima facie proof of receipt by the carrier of that weight regardless of attempted reservations like “said to weigh”, “shipper’s load and count” and “contents of packages are shipper’s declaration” … Accordingly, the bill of lading in this case was prima facie proof of the weight of the cargo loaded at Leghorn. However, it was not of itself prima facie evidence of the number of cartons within the sealed containers because that aspect of the cargo was not ascertainable from any external examination of the containers.

This distinction seems entirely sensible and is preferable to the English cases holding that the notation “weight unknown” is effective.204 Under the Hague and Hague-Visby Rules, the shipper is entitled to demand the issue of a bill of lading that states without qualification the number, quantity or weight of the goods shipped.205 Under the Australian modification of the Hague-Visby Rules, the shipper is entitled to demand that any sea-carriage document state the number, quantity or weight of the goods.206 In effect, this means that the shipper is entitled to demand a document that does not contain such words as “weight or quantity unknown” or “said to contain”. In practice, though, the shipper seldom, if ever, does so, and so has no reason to object to the issue of a bill of lading stating these details to be “unknown”.207 The shipper has little interest in demanding a bill of lading stating the quantity of goods shipped, as it is able to negotiate the bill to a third party whether or not it contains statements of quantity. Words such as “weight or quantity unknown” or “said to contain” do not affect the negotiability of a bill of lading,208 so the shipper has no interest in ensuring their exclusion. Furthermore, it would be impracticable to require the carrier to check the particulars of quantity for goods in containers packed by the shipper, although it is possible to check the weight of a container without opening and unstuffing it. The end result is that the shipper has a right to demand a bill of lading that states the quantity of goods shipped, but no interest in exercising that right, whereas the consignee or indorsee has an interest in receiving a bill of lading containing statements of quantity, but no right to demand one. To this extent, then, the Hague and Hague-Visby Rules fail to protect the position of the consignee or indorsee. Indeed, they specifically state that 203 Bally Inc v M/V Zim America 22 F 3d; 1994 AMC at 69; 2766. 204 New Chinese Antimony Co v Ocean Steamship Co [1917] 2 KB 664; Noble Resources Ltd v Cavalier Shipping Corp (The Atlas) [1996] 1 Lloyd’s Rep 642; Agrosin Pte Ltd v Highway Shipping Co Ltd (The Mata K) [1998] 2 Lloyd’s Rep 614. 205 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 3(b). 206 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 3, r 3(b). 207 See, eg, Agrosin Pte Ltd v Highway Shipping Co Ltd (The Mata K) [1998] 2 Lloyd’s Rep 614 (carrier entitled to rely on “weight unknown” in action brought by shipper, who did not object to the terms of the bill of lading). 208 See Golodetz & Co Inc v Czarnikow-Rionda Co (The Galatia) [1980] 1 Lloyd’s Rep 453.

242

Shipping Law

[12.220]

the carrier is not obliged to state the weight or quantity of goods in the document if it has no reasonable means of checking that weight or quantity.209 “Conclusive evidence”: a clause for the protection of shipper, consignee or indorsee

[12.220]

The sea-carriage document may contain a clause which states that the representation of the quantity of the goods shall constitute conclusive evidence against the carrier. Such clauses are now very rare in practice. They were mainly used in the timber trade,210 where there are often difficulties of measurement of the quantity of cargo shipped.211

Receipt as to “leading marks” Introduction

[12.230]

In addition to acknowledging the condition and quantity of the goods shipped, the sea-carriage document may also record the manner in which the goods are marked. For example, where goods are carried in containers, the document commonly records the container numbers. Where goods destined for several different ultimate receivers are carried under a sea-carriage document, it commonly records the identification marks that indicate which parts of the cargo are destined for which receiver. As a matter of law, a distinction is made between marks of identity or commercial character, and marks of identification. For example, a consignment of 150 numbered cartons marked “Red Wine – Cabernet Sauvignon” bears both marks of identity and marks of identification: the marks “Red Wine – Cabernet Sauvignon” are marks of identity, denoting the commercial character of the contents, whereas the numbers 1 to 150 marked on the cartons are marks of identification for the convenience of those handling the consignment.

Marks of identification

[12.240]

Where a bill of lading records the leading marks necessary for the identification of the goods, it constitutes prima facie evidence of shipment of goods bearing those marks under the Hague and HagueVisby Rules;212 the same is true for all sea-carriage documents under the

209 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 3 proviso (Hague-Visby Rules — bills of lading only); Sch 1A, Art 3, r 3 proviso (Australian modification — all sea-carriage documents). 210 See Fisher, Renwick & Co v Calder & Co (1896) 1 Com Cas 456 at 458 per Mathew J. 211 Lishman v Christie (1887) 19 QBD 333; Crossfield & Co v Kyle Shipping Co Ltd [1916] 2 KB 885. 212 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, rr 3(a), 4. Article 3, rr 3(a) and 4 of the unamended Hague Rules are in the same terms as Art 3, r 3(a) and the first sentence of Art 3, r 4 of the Hague-Visby Rules.

[12.250]

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Australian modification of the Hague-Visby Rules.213 Proof to the contrary is not admissible under the Hague-Visby Rules when the bill of lading has been transferred to a third party acting in good faith, whether or not that party relied on the representation in the bill of lading;214 the same is true for negotiable sea-carriage documents under the Australian modification of the Hague-Visby Rules.215 For example, if a carrier delivers goods of the kind described in the sea-carriage document, but in a different container from that identified in that document, the receiver might well think it prudent to reject delivery, on the ground that the numbered container in question contains goods belonging to someone else. The receiver may then proceed against the carrier for failing to deliver the container bearing the correct identification marks. Under the unamended Hague Rules, the carrier is entitled to adduce evidence that the container number was incorrectly recorded on the bill of lading. The same would seem to be true in relation to an action brought on a non-negotiable sea waybill. Under the Hague-Visby Rules, however, the carrier is bound by the representation in any kind of bill of lading, negotiable or straight, and is liable to the consignee or indorsee for failure to deliver the numbered container, whether or not the consignee or indorsee relied on the representation about the container number in the bill of lading;216 under the Australian modification of the Hague-Visby Rules this is only true of negotiable bills of lading.217 Marks of identity

[12.250]

Neither the Hague Rules, the Hague-Visby Rules nor the Australian modification of the latter specifically refers to marks of identity. However, if the bill of lading records any marks of identity or commercial character borne by the goods, it is prima facie evidence at common law that goods of that identity or character have been shipped.218 In Parsons v New Zealand Shipping Co,219 a majority of the English Court of Appeal said, obiter, that an article bearing a mark of identity is a different article from one not so marked. As a result, if goods of one identity are loaded but goods of a different identity are recorded on the sea-carriage document, the relevant principles are those that govern the situation where the sea-carriage document acknowledges 213 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 3, rr 3(a), 4. 214 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 4, second sentence. 215 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 3, rr 3(a), 4, second sentence. 216 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 4, second sentence. If the carrier can establish that the mistake occurred because of insufficiency or inadequacy of the marks on the container, it has a defence under the Hague-Visby Rules: see Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 2(o), and [12.500]. 217 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 3, r 4, second sentence. 218 Compania Importada de Arroces Collette y Kamp SA v Peninsular and Orient Steam Navigation Co (1927) 28 L1 L Rep 63. 219 Parsons v New Zealand Shipping Co [1901] 1 KB 548 at 565-566, 571.

244

Shipping Law

[12.260]

shipment of goods that were not shipped at all.220 Since the statutory abolition of the rule in Grant v Norway,221 the carrier cannot deny shipment of goods bearing marks of identity if sued by an indorsee under a negotiable bill of lading because to do so would be to deny receipt by the carrier of the identified goods. Similarly, under the unamended version of the Hague-Visby Rules, the carrier cannot deny shipment of goods bearing marks of identity if sued by the indorsee of a negotiable bill of lading or the consignee of a straight bill of lading, because the carrier is estopped from denying receipt of the identified goods when the bill of lading has been transferred to a consignee or indorsee.222 The carrier can deny shipment of the goods bearing marks of identity if sued by the consignee named in a sea waybill.223 For example, if a sea-carriage document acknowledges shipment of 150 bales marked “Australian wool”, the carrier cannot adduce evidence that the bales were in fact marked “New Zealand wool”, because to do so would be to deny that 150 bales of Australian wool were shipped at all, which the carrier is estopped from doing, except in the case of a non-negotiable sea waybill.

Receipt as to quality [12.260]

Acknowledgment in the bill of lading of the quality of the goods shipped (for example, “First Class Red Wine – Cabernet Sauvignon”) is of no effect at all.224

THE SEA-CARRIAGE DOCUMENT AND THE CONTRACT OF CARRIAGE The relationship between the sea-carriage document and the contract of carriage [12.270]

The bill of lading or sea waybill is only evidence of the contract of carriage between shipper and carrier.225 The contract itself is made when the shipper (or its forwarding agent) books space on the 220 See [12.180]–[12.200]. 221 See Sea-Carriage Documents Act 1997 (NSW), s 12(2), (3); Sea-Carriage Documents Act (NT), s 12(2), (3); Sea-Carriage Documents Act 1996 (Qld), s 10(2), (3); Sea-Carriage Documents Act 1998 (SA), s 11(2), (3); Sea-Carriage Documents Act 1997 (Tas), s 11(2), (3); Goods Act 1958 (Vic), s 96(2), (3); Sea-Carriage Documents Act 1997 (WA), s 12(2), (3). 222 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 4, second sentence. 223 See footnotes and accompanying text at [12.200]. 224 Cox, Patterson & Co v Bruce & Co (1886) 18 QBD 147. 225 Sewell v Burdick (1884) 10 App Cas 74 at 105 per Lord Bramwell; Leduc & Co v Ward (1888) 20 QBD 475 at 479 per Lord Esher MR; SS Ardennes (Cargo Owners) v SS Ardennes (Owners) [1951] 1 KB 55; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263 at 267 [23] per Tamberlin J; Hines Exports Pty Ltd v Mediterranean Shipping Co SA (2001) 80 SASR 268 at [27] per Bleby J; Puccini Festival Australia Pty Ltd v Nippon Express (Australia) Pty Ltd (2007) 17 VR 36.

[12.270]

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carrier’s ship, long before the goods are actually delivered to the ship for carriage. The contract is finally reduced into writing when the seacarriage document is issued,226 and the document is evidence (but not conclusive evidence) of the terms of the contract. Extrinsic evidence may be adduced to show that the true terms of the contract differ from those in the sea-carriage document — for example because of a previous oral or written agreement of the parties,227 or because an unusual clause in small print has not been brought to the attention of the shipper.228 For example, in Puccini Festival Australia Pty Ltd v Nippon Express (Australia) Pty Ltd,229 the carrier issued a straight bill of lading for carriage of sets and costumes for the opera Turandot from Italy to Melbourne. The straight bill named an Italian organisation as shipper and a named person from an Australian organisation called Australian Land and Development as consignee. The carrier was sued by Puccini Festival Australia Pty Ltd (PFA), which claimed substantial damages allegedly caused by the late delivery of the sets and costumes. The writ was served on the carrier outside Australia, and the carrier applied to have service set aside on the ground that it had not contracted with PFA.230 The Supreme Court of Victoria refused to set aside service, holding that the evidence indicated that it was “strongly arguable”231 that the defendant carrier had dealt with PFA throughout, and had contracted with it, notwithstanding the fact that the terms of the bill of lading named other entities as shipper and consignee. In practice, however, the sea-carriage document is usually treated as the contract itself.232 Thus, for example, in Pyrene Co v Scindia Navigation

226 Leduc & Co v Ward (1888) 20 QBD 475 at 479 per Lord Esher MR. 227 SS Ardennes (Cargo Owners) v SS Ardennes (Owners) [1951] 1 KB 55. 228 Crooks v Allan (1879) 5 QBD 38. Where the clause is not unusual, the shipper is bound, however small the print: see Wilson v Compagnie des Messageries Maritimes (1954) 54 SR (NSW) 258 (aff’d on other grounds Compagnie des Messageries Maritimes v Wilson (1954) 94 CLR 577). 229 Puccini Festival Australia Pty Ltd v Nippon Express (Australia) Pty Ltd (2007) 17 VR 36. 230 The plaintiff relied on the Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 7.01(1)(g), which authorised service on the defendant outside Australia if there had been a breach within Victoria of a contract, wherever made. 231 Both parties accepted that the “strongly arguable” standard was the right one to be applied when considering an application to set aside service outside Australia, so the court proceeded on that basis, while observing that the decision of the High Court in Agar v Hyde (2000) 201 CLR 552 indicated that a different standard of review was appropriate: see Puccini Festival Australia Pty Ltd v Nippon Express (Australia) Pty Ltd (2007) 17 VR 36 at 39-40 [14] per Cavanough J. Cavanough J’s doubt about the “strongly arguable” standard was itself rejected in Castel Electronics Pty Ltd v TCL Airconditioner (Zhongshan) Co Ltd [2013] VSC 92, where Davies J took a different view of the effect of Agar. See M Davies, A Bell and P Brereton, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, Chatswood, 2014), p 44 at [3.41]. 232 Armour & Co v Walford [1921] 3 KB 473 at 477 per McCardie J.

246

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[12.270]

Co,233 the shipper’s goods were damaged by the carrier after the contract of carriage was made, but before the bill of lading was issued. It was held that the terms of the contract were those in the bill of lading, which were in force from the inception of the contract, even though the bill was not issued until a later date. In contrast, when the same situation arose in Hines Exports Pty Ltd v Mediterranean Shipping Co SA,234 Lunn J of the District Court of South Australia distinguished Pyrene, holding that the shipper was not bound by the terms of the subsequently-issued bill of lading. Lunn J pointed out, quite correctly, that Devlin J in Pyrene had held that the subsequentlyissued bill of lading only supplied the terms of the contract if the parties had originally entered the contract in the expectation that it would be in particular terms which they knew or expected the bill of lading would contain. His Honour held that in the case before him there was no evidence that the parties had made their contract on the basis that it would be governed by the terms of a particular standard bill of lading. There being insufficient evidence to show what bill of lading terms the parties had in mind (if any) when they made their contract orally, the shipper was not bound by the terms of the bill of lading later issued by the carrier. If one accepts the facts to be as found by Lunn J in Hines Export, the result seems to be orthodox. If the carrier does not issue a booking note when the contract is first made and makes no other effort to draw its standard terms to the attention of the shipper at that time, it surely cannot expect to rely on the protection that those standard terms are designed to give. However, it seems doubtful that that was what happened in Hines Export itself. A Full Court of the Supreme Court of South Australia later reopened the case, giving the carrier the opportunity to adduce further evidence to support its contention that the shipper knew quite well what the terms of the bill of lading would be.235 In practice, carriers usually do issue some kind of documentary acknowledgment to the shipper as soon as the shipper books the voyage on the carrier’s ship, recording acceptance of the booking and setting out the terms upon which it is accepted. Booking notes of this kind often contain terms and conditions, but they typically also provide that the contract between carrier and shipper will be on the terms of the carrier’s bill of lading, to be issued later, when the cargo is actually delivered to 233 Pyrene Co v Scindia Navigation Co [1954] 2 QB 402. 234 Hines Exports Pty Ltd v Mediterranean Shipping Co SA (2000) 209 LSJS 127; [2000] SADC 71. 235 Hines Exports Pty Ltd v Mediterranean Shipping Co (SA) (2001) 80 SASR 268. The application to reopen the case was made by the shipper, which had lost before Lunn J because it had not provided evidence that it had suffered any loss as a result of the carrier’s breach of the carriage contract. When the Full Court reluctantly reopened the case to allow the shipper the opportunity to prove its loss, it ordered that the carrier should also be at liberty to reopen its case that the carriage contract was on the terms of its standard bill of lading.

[12.280]

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the carrier. For example, in US Shipping Ltd v Leisure Freight & Import Pty Ltd (No 2),236 the shipper of a pleasure craft that was to be carried from the United States to Australia on the carrier’s ship agreed by email to the terms of the carrier’s booking note, which in turn referred to the terms of the carrier’s bill of lading. The booking note did not contain a provision entitling the carrier to exercise a lien for outstanding payments, but the bill of lading did. Greenwood J of the Federal Court held that the carrier was entitled to exercise a lien over the pleasure craft for outstanding payments, as the terms of the contract included those in the bill of lading, even though that document was not issued until the pleasure craft was loaded, some time after the contract was made by the shipper’s acceptance of the terms of the booking note. Although the sea-carriage document is evidence of the terms of the contract of carriage, the parties’ most significant contractual obligations do not usually appear in the document itself. All sea-carriage documents for carriage of goods by sea are governed by either the Hague Rules, the Hague-Visby Rules or the Hamburg Rules, or the Australian modification of the Hague-Visby Rules (or, possibly, by the Rotterdam Rules at some time in the future),237 but the provisions of the relevant set of rules are not usually set out in standard form sea-carriage documents. Instead, most standard forms expressly incorporate the relevant rules by reference, using a clause known as a Clause Paramount.238 The relationship between the carrier’s obligations and its immunities under the rules is a complicated and contested one, which is considered now, before consideration of the content of those obligations and immunities.

The order of proof in cargo claims: the relationship between the carrier’s obligations and its immunities [12.280]

There have been many cases about the order of proof in cargo claims under the Hague and Hague-Visby Rules. The process has been described as “the ping-pong game of burden-shifting”,239 where the burden of proof “shifts more frequently than the wind on a stormy sea”.240 The traditional view of the order of proof, still followed in the United Kingdom and the United States, is as follows.241 First, the cargo claimant (the plaintiff) must prove the contract of carriage, and that goods 236 US Shipping Ltd v Leisure Freight & Import Pty Ltd (No 2) [2015] FCA 347. 237 For a consideration of which set of rules governs which contracts, see [12.40]. 238 See, eg, cl 3 of the Conlinebill 2016 form (Appendix 1) and cl 10 of the Linewaybill 2016 form (Appendix 3). 239 Nitram Inc v MV Cretan Life 599 F 2d 1359 (5th Cir 1979) at 1373. 240 Banana Services Inc v M/V Fleetwave 911 F 2d 519; 1991 AMC 439 (11th Cir 1990) at 521; 442. 241 The Glendarroch [1894] P 226 at 231 per Lord Esher MR; The Hellenic Dolphin [1978] 2 Lloyd’s Rep 336 at 339 per Lloyd J; Aktieselskabet de Danske Sukkerfabrikker v Bajamar Compania Naviera SA (The Torenia) [1983] 2 Lloyd’s Rep 210 at 215-216 per Hobhouse J; Phillips Petroleum Co v Cabaneli Naviera SA (The Theodegmon) [1990] 1 Lloyd’s Rep 52 at

248

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[12.280]

which were shipped in apparent good order and condition were damaged on arrival, or did not arrive at all. This proof by the plaintiff of “good order in, bad order out” is sufficient to raise a prima facie case that the defendant carrier breached the obligation of proper and careful carriage imposed by Art 3, r 2 of the Hague and Hague-Visby Rules.242 The onus then shifts to the defendant carrier to rebut that inference of breach by establishing one of the exceptions in Art 4, r 2, which involves showing which of the excepted perils243 caused the loss or damage. If the carrier succeeds in this, the onus shifts back to the plaintiff, who may displace the carrier’s Art 4, r 2 defence by proving affirmatively that the carrier breached Art 3, r 2 by failing to load, handle, stow, etc the goods “properly and carefully”.244 Alternatively, the plaintiff may prove that the cause of the damage or loss was the unseaworthiness of the carrying ship, which is a prima facie breach of Art 3, r 1 of the Hague and Hague-Visby Rules.245 The onus then shifts to the defendant carrier, who can escape liability by establishing the defence in Art 4, r 1, upon proof that the relevant unseaworthiness was not due to any want of due diligence on its part or on the part of its employees, agents or independent contractors.246

54 per Phillips J; Volcafe Ltd v Cia Sud Americana de Vapores SA (T/as CSAV) [2015] 1 Lloyd’s Rep 639. The US position was summarised, with considerable citation of authority, in US v Ocean Bulk Ships Inc 248 F 3d 331; 2001 AMC 1487 (5th Cir 2001) at 336; 1489-1490. 242 The carrier’s obligations under Art 3 r 2 are considered at [12.290]–[12.360]. 243 The excepted perils are described at [12.370]–[12.500]. 244 In the US, there is theoretically another shift in the burden of proof if this stage has been reached. If the carrier has established that one of the excepted perils caused the loss, but the plaintiff can respond by proving affirmatively that the carrier negligently handled the goods, the onus shifts back to the carrier to establish how much of the loss was caused by the excepted peril and how much by its own fault: see The Vallescura 293 US 296 (1934). If the carrier cannot pick apart the results of the two concurrent causes (the excepted peril and its own fault), it bears the whole loss, because it has not discharged the last shift in the burden of proof: The Vallescura 293 US 296 (1934). Because it is almost impossible in practice to pick apart the consequences of two concurrent causes, the effect of the Vallescura rule in practice is almost always that the carrier bears the whole loss: see, eg, Edmond Weil Inc v American West African Line Inc 147 F 2d 363; 1945 AMC 191 (2d Cir 1945). See, to the same effect, Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125, considered at [12.450]. 245 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 365 [70] per Ryan and Dowsett JJ. The carrier’s obligations under Art 3, r 1 are considered at [12.300]. 246 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 365 [70] per Ryan and Dowsett JJ. See also The Hellenic Dolphin [1978] 2 Lloyd’s Rep 336 at 339 per Lloyd J; Phillips Petroleum Co v Cabaneli Naviera SA (The Theodegmon) [1990] 1 Lloyd’s Rep 52 at 54 per Phillips J. The carrier’s defence under Art 4, r 1 is considered at [12.300] and [12.370].

[12.280]

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In Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad,247 a majority of the High Court of Australia cast doubt on whether the traditional view of the order of proof is correct, at least in relation to the carrier’s obligation under Art 3, r 2. The majority’s comments were obiter, because, as the court noted itself, the case did not turn “upon any nice questions of onus of proof”,248 so no final decision was necessary. Nevertheless, Gaudron, Gummow and Hayne JJ said that they “very much doubt[ed] that principles established in cases like The Glendarroch can be used as an aid to construing the Hague Rules”,249 because the rules are intended to be “a self-contained code”.250 They said that the key to understanding the rules is the carrier’s obligations in Art 3.251 The carrier’s obligations are merely to exercise due diligence in relation to seaworthiness (Art 3, r 1) and to handle the goods “properly and carefully” (Art 3, r 2): the rules impose no obligation on the carrier to deliver the goods in the same condition as it received them.252 According to the Great China Metal approach, proof by the plaintiff that the goods were damaged on delivery (or did not arrive at all) is some evidence that the carrier has not “properly and carefully” performed its obligations under Art 3, r 2, but it does not cast any legal onus on the carrier to bring the case within one of the Art 4, r 2 exceptions. “At most, it presents a case for inquiry”,253 putting the carrier under “an evidentiary burden … to show that no breach of Art 3 has occurred”.254 Thus, the carrier need not prove that one of the specific immunities in Art 4, r 2 caused the loss in order to rebut the presumption of fault that arises from the loading of the cargo in good order and its delivery in bad order (or non-delivery). The carrier’s evidentiary burden is not to provide an alternative explanation of how the cargo came to be damaged or lost, but merely to produce evidence that it has not breached its Art 3 obligations. 247 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161. 248 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 182 [54] per Gaudron, Gummow and Hayne JJ, citing the trial judge (Carruthers J) in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (The Bunga Seroja) [1994] 1 Lloyd’s Rep 455 at 471. See also at 220-221 [150] per Kirby J. 249 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 172 [22] per Gaudron, Gummow and Hayne JJ. 250 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 172 [20] per Gaudron, Gummow and Hayne JJ. 251 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 172 [25] per Gaudron, Gummow and Hayne JJ. 252 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 197 [98] per McHugh J, and at 216-217 [143] per Kirby J. 253 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 178 [43] per Gaudron, Gummow and Hayne JJ. 254 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 197 [98] per McHugh J.

250

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[12.280]

The unorthodox approach expressed by the majority in Great China Metal was obiter. Furthermore, Kirby and Callinan JJ separately expressed support for the traditional position, where proof by the plaintiff of shipment in good order and delivery in bad order requires the carrier to discharge the burden of proving that the loss or damage was caused by one of the grounds of immunity listed in Art 4, r 2.255 The unorthodox majority approach to Art 3, r 2 had little or no impact on the practice of cargo claims in Australia until it was applied, some nine years later, by a Full Court of the Federal Court in C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd.256 Since then, it has been applied several times by the Federal Court257 and so must now be regarded (regrettably, for reasons that will soon be explained further) as the established Australian approach to cargo claims. Thus, a plaintiff making a cargo claim must positively identify some negligence of the defendant carrier that constitutes a breach of Art 3, r 2 before any question of the defences in Art 4, r 2 arises.258 In Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd,259 Mason and Wilson JJ said that Art 4, r 2(q) “expresses the fundamental scheme of the [Hague and Hague-Visby] Rules”, because it requires the carrier to show that any cargo loss or damage was caused without fault on the part of the carrier, or its servants or agents.260 In contrast, the Great China Metal approach to Art 3, r 2 effectively makes Art 4, r 2(q) redundant, as Ryan and Dowsett JJ astutely pointed out in C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd.261 According to Great China Metal, the carrier is only called on to establish one of the Art 4, r 2 defences if the cargo plaintiff can show that the carrier breached the duty of proper care imposed by Art 3, r 2. The carrier “cannot sensibly rely” on an Art 4, r 2(q) defence that it was not at fault if the plaintiff has successfully established fault on the carrier’s part under Art 3, r 2, so as to shift the burden to the carrier.262 It is not only Art 4, r 2(q) that is rendered largely redundant by the Great China Metal interpretation of the order of proof. Article 4, r 2(m) provides 255 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 223 [156] per Kirby J, and at 243-244 [229] per Callinan J. 256 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342. 257 See, eg, Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125; Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149. 258 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 361 [56] per Ryan and Dowsett JJ. 259 Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 165 per Mason and Wilson JJ (with whom Aickin J agreed). 260 The Art 4, r 2(q) defence is considered at [12.490]. 261 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 382 [127] per Ryan and Dowsett JJ. 262 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 382 [127] per Ryan and Dowsett JJ.

[12.280]

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the carrier with a defence if the cargo is damaged by “wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods”. Given that the carrier’s Art 3, r 2 obligation to carry the goods carefully and in accordance with a sound system must take into account any particular sensitivity of the cargo to sustain damage on the proposed voyage, it seems that proof of breach of that obligation would negate any possibility of a successful defence under Art 4, r 2(m), leaving that paragraph with no effect.263 Similarly, Art 4, r 2(p) provides the carrier with a defence if the cargo was lost or damaged by “latent defects not discoverable by due diligence”.264 No carrier could establish that a latent defect in the ship or its equipment was “not discoverable by due diligence” if the cargo plaintiff had already discharged the Great China Metal burden of establishing that the carrier was at fault in relation to the harm caused by that defect, in breach of Art 3, r 2. Thus, for example, in Seafood Imports Pty Ltd v ANL Singapore Pte Ltd,265 Ryan J of the Federal Court observed that the evidence that persuaded him that the defendant carrier had breached Art 3, r 2 by failing adequately to monitor a defective refrigerated container was the same as the evidence that would have persuaded him that the defect in the container was not latent, because it was discoverable by due diligence.266 It is a fundamental rule of statutory interpretation that a statute must be interpreted in such a way that “no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful or pertinent”.267 Although the Great China Metal interpretation of the Hague and Hague-Visby Rules seems to violate this fundamental rule, it must nevertheless be accepted as binding by Australian courts. The Great China Metal majority restated the traditional view of the relationship between the duty in Art 3, r 2 and the defences in Art 4, r 2, but it did not change the law about the relationship between the duty in Art 3, r 1 and the defence in Art 4, r 1. It had always been the case that the burden lay on the plaintiff to show that the loss or damage of its cargo was caused by unseaworthiness before the carrier was required to establish that it exercised due diligence in relation to that unseaworthiness,

263 See [12.460]. 264 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 4 (Hague-Visby Rules); Sch 1A, Art 3, r 4 (Australian modification). The latent defect defence is considered at [12.480]. 265 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149. 266 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149 at 170 [63] per Ryan J. 267 Commonwealth v Baume (1905) 2 CLR 405 at 414 per Griffith CJ, citing R v Berchet (1688) 1 Show KB 106; 89 ER 480; both cases cited with approval in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 382 [71] per McHugh, Gummow, Kirby and Hayne JJ.

252

Shipping Law

[12.290]

so as to raise the defence in Art 4, r 1.268 The Great China Metal majority simply repeated that proposition, stating that no question of due diligence arises under Art 4, r 1 if the plaintiff has not established that the loss or damage was caused by unseaworthiness.269

The carrier’s obligations [12.290]

At common law, three fundamental undertakings by the carrier are implied into every contract for carriage of goods by sea. The carrier undertakes: (a) that the ship is seaworthy at the beginning of the voyage; (b) that it will proceed with reasonable despatch; and (c) that it will carry the goods in question without unjustifiable deviation. The first and third of these implied obligations are substantially modified by the Hague and Hague-Visby Rules, which also impose on the carrier a fundamental obligation with respect to carriage of goods,270 and additional obligations with respect to the ship.271

Seaworthiness: due diligence before and at the beginning of the voyage

[12.300]

At common law, the carrier’s implied undertaking that the ship is seaworthy at the beginning of the voyage was absolute,272 unless excluded by express provision in the contract of carriage. The carrier was liable for all loss of or damage to the goods caused by the unseaworthiness of the ship, however the unseaworthiness arose,273 unless it was protected by the carriage contract. Section 17 of the Carriage of Goods by Sea Act 1991 (Cth) abolishes the absolute undertaking to provide a seaworthy ship for those contracts to which the Hague-Visby Rules apply. Under the Hague and Hague-Visby Rules, the carrier’s absolute undertaking is replaced with an obligation “before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy”.274 Although this obligation with respect to seaworthiness is different from that at common law, the meaning of 268 Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 at 312 per Jordan CJ. See also The Hellenic Dolphin [1978] 2 Lloyd’s Rep 336 at 339 per Lloyd J; Phillips Petroleum Co v Cabaneli Naviera SA (The Theodegmon) [1990] 1 Lloyd’s Rep 52 at 54 per Phillips J. 269 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 175 [36] per Gaudron, Gummow and Hayne JJ. See also at 194 [87] per McHugh J. See also C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 370 [87] per Ryan and Dowsett JJ, at 393 [182] per Rares J. 270 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 2 (Hague-Visby Rules); Sch 1A, Art 3, r 2 (Australian modification). See [12.310]. 271 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 1(b), (c) (Hague-Visby Rules); Sch 1A, Art 3, r 1(b), (c) (Australian modification). See [12.300]. 272 See Kopitoff v Wilson (1876) 1 QBD 377, and the authorities cited therein. 273 The Europa [1908] P 84. 274 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 1(a) (Hague-Visby Rules); Sch 1A, Art 3, r 1(a) (Australian modification).

[12.300]

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seaworthiness is the same. As McHugh J observed in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad:275 In Art III, r 1, the term “seaworthiness” should be given its common law meaning. Nothing in the Rules generally or in the travaux préparatoires suggests otherwise. It was a term well known at common law and … it is probable that that was the meaning that the drafters of the Rules intended it to have.

Gaudron, Gummow and Hayne JJ explained the meaning of seaworthiness in the following way in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad:276 [S]eaworthiness is to be assessed according to the voyage under consideration; there is no single standard of fitness which a vessel must meet. Thus, seaworthiness is judged having regard to the conditions the vessel will encounter. The vessel may be seaworthy for a coastal voyage in a season of light weather but not for a voyage in the North Atlantic in mid winter. Thus, definitions of seaworthiness found in the cases (albeit cases arising in different contexts) all emphasise that the state of fitness required “must depend on the whole nature of the adventure”. The vessel must be “fit to encounter the ordinary perils of the voyage”; it must be “in a fit state as to repairs, equipment, and crew, and in all other respects, to encounter the ordinary perils of the voyage insured”. Further, if the question of seaworthiness is to be judged at the time that the vessel sails, it will be important to consider how it is loaded and stowed. If the vessel is overladen it may be unseaworthy. If it is loaded or stowed badly so, for example, as to make it unduly stiff or tender it may be unseaworthy. Nor is the standard of fitness unchanging. The standard can and does rise with improved knowledge of shipbuilding and navigation. Fitness for the voyage may also encompass other considerations as, for example, the fitness of the vessel to carry the particular kind of goods or the fitness of crew, equipment and the like. The question of seaworthiness, then, may require consideration of many and varied matters.

Although unseaworthiness can arise from “many and varied matters”, it usually arises because of defects in the ship’s hull, machinery or supplies,277 inefficiency or incompetence of the master or crew,278 or the manner in which the cargo is stowed.279 275 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 194 [87]. See also at 174 [28] per Gaudron, Gummow and Hayne JJ, where the parenthetical words “(albeit cases arising in different contexts)” imply acknowledgment that definitions of seaworthiness used in other contexts are relevant in this context. See also Actis Steamship Co Ltd v The Sanko Steamship Co Ltd (The Aquacharm) [1982] 1 Lloyd’s Rep 7 at 9: “The word ‘seaworthiness’ in the Hague Rules is used in its ordinary meaning and not in any extended or unnatural meaning. It means that the vessel — with her master and crew — is herself fit to encounter the perils of the voyage and also that she is fit to carry the cargo safely on that voyage.” 276 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 174 [27]-[31]. 277 See, eg, Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd (The Muncaster Castle) [1961] AC 807 (unseaworthiness due to faulty replacement of inspection covers on storm valves); Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 (unseaworthiness due to design of watertight bulkhead doors); Fyffes Group Ltd v Reefer

254

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[12.300]

When the International Management Code for the Safe Operation of Ships and for Pollution Prevention (the ISM Code) was first promulgated by the International Maritime Organization in 1998 (for passenger ships, tankers and bulk carriers) and 2002 (for all other ships), it was expected that it would become a significant factor in relation to questions of unseaworthiness, both in relation to crew competence and shipboard systems, because it is designed to provide an international standard for the safe management and operation of ships.280 Despite the apparent relevance of the ISM Code to the fitness of the ship and its crew, there have (rather surprisingly) been no decided cases in which the ISM Code has been regarded as being directly relevant to the issue of unseaworthiness in relation to cargo claims.281 As Gaudron, Gummow and Hayne JJ observed in Great China Metal, the seaworthiness of the ship is adjudged relative to the nature of the cargo and the destination. For example, in The Waltraud,282 it was held that an otherwise seaworthy ship was unseaworthy for the carriage of containers, as it did not have the proper equipment for securing containers. In The Good Friend,283 the holds of the carrying ship were infested before the beginning of the voyage with an insect, which contaminated the cargo of soya bean meal during the voyage to Havana. Cuban quarantine regulations forbade discharge of cargoes containing the particular insect in question. Staughton J held that the ship was unseaworthy, because it Express Lines Pty Ltd (The Kriti Rex) [1996] 2 Lloyd’s Rep 171 (unseaworthiness due to contamination of ship’s lubricating oil); Steel Coils Inc v M/V Lake Marion 331 F 3d 422 (5th Cir 2003) (unseaworthiness due to ship’s hatch covers not being watertight); Sanko Steamship Co Ltd v Sumitomo Australia Ltd (No 2) (1995) 63 FCR 227 at 281 per Sheppard J (unseaworthiness due to insufficiency of charts). 278 See, eg, Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 at 314 per Jordan CJ (ship unseaworthy because officer did not know how to close watertight bulkhead doors); In re Ta Chi Navigation (Panama) Corp SA 513 F Supp 148; 1981 AMC 2350 (ED La 1981) (ship unseaworthy because of incompetent crew); Sanko Steamship Co Ltd v Sumitomo Australia Ltd (No 2) (1995) 63 FCR 227 at 281 per Sheppard J (ship unseaworthy because of incompetent crew); Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] 1 Lloyd’s Rep 719 (ship unseaworthy because of incompetent master and crew). See also R White, “Human Unseaworthiness” [1996] LMCLQ 24. 279 See, eg, Northern Shipping Co v Deutsche Seereederei GmbH (The Kapitan Sakharov) [2000] 2 Lloyd’s Rep 255 (unseaworthiness caused by stowing dangerous and flammable cargo below deck). 280 See, eg, W Tetley, Marine Cargo Claims (4th ed, Editions Y Blais, Cowansville (Quebec), 2007), Ch 15. 281 The ISM Code has been considered in relation to unseaworthiness in the US in the context of the no-fault remedy that an injured seafarer has if he or she has been injured by the unseaworthiness of the vessel on which he or she is employed: see, eg, Vaughn v USA 2015 AMC 1482 (CD Cal 2011). 282 The Waltraud [1991] 1 Lloyd’s Rep 389. 283 Empresa Cubana Importada de Alimentos “Alimport” v Iasmos Shipping Co SA (The Good Friend) [1984] 2 Lloyd’s Rep 586.

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was not reasonably fit to carry the particular cargo of soya bean meal to the particular destination of Havana. In C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd,284 a majority of the Full Court of the Federal Court held that the chance that a steel cargo might be adversely affected by moisture during the carrying voyage was not enough, in itself, to indicate that the carrying ship was unseaworthy if the carrier did not take steps, such as the installation of dehumidifiers, to reduce the possible effect of moisture.285 The carrier would only be liable to take steps to protect against the effect of condensation if the condition of the ship was such that the presence of condensation was likely to cause damage to the cargo in the absence of protective measures.286 Article 4, r 1 of the Hague and Hague-Visby Rules (and the Australian modification of the latter) provides:287 Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence on the part of the carrier to make the ship seaworthy … in accordance with the provisions of para 1 of Art 3. Whenever loss or damage has resulted from unseaworthiness the burden of proving the exercise of due diligence shall be on the carrier or other person claiming exemption under this Article.

The plaintiff bears the onus of proving that the loss of or damage to the cargo was caused by unseaworthiness existing at the beginning of the voyage.288 Because the plaintiff is usually the receiver of the cargo, it often has difficulty in getting evidence about the state of the ship and crew before and at the beginning of the voyage. It may, however, rely on inference to establish that unseaworthiness was the cause of the loss.289 The plaintiff may say, for example, that the very fact that the cargo has 284 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342. 285 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 369 [85] per Ryan and Dowsett JJ. 286 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 369-370 [86] per Ryan and Dowsett JJ. 287 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 1 (Hague-Visby Rules); Sch 1A, Art 4, r 1 (Australian modification). 288 Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 at 312 per Jordan CJ; Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 175 [36] per Gaudron, Gummow and Hayne JJ, at 194 [87] per McHugh J; C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 370 [87] per Ryan and Dowsett JJ. See also The Hellenic Dolphin [1978] 2 Lloyd’s Rep 336 at 339 per Lloyd J; Phillips Petroleum Co v Cabaneli Naviera SA (The Theodegmon) [1990] 1 Lloyd’s Rep 52 at 54 per Phillips J. 289 Lindsay v Klein: The Tatjana [1911] AC 194; The Hellenic Dolphin [1978] 2 Lloyd’s Rep 336 at 339 per Lloyd J; Phillips Petroleum Co v Cabaneli Naviera SA (The Theodegmon) [1990] 1 Lloyd’s Rep 52 (conclusion that steering gear defect was present at beginning of voyage inferred from failure of steering gear soon after the beginning of the voyage); Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149.

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been damaged by sea water affords prima facie evidence of damage by unseaworthiness, which calls for an explanation by the carrier.290 Once the plaintiff has established loss or damage caused by unseaworthiness, the onus of proof shifts to the carrier to establish that it exercised due diligence before and at the beginning of the voyage. “Due diligence” is broadly equivalent to the standard of reasonable care in the tort of negligence,291 requiring of the carrier reasonable skill, care and competence in the light of the circumstances reasonably apparent at the time.292 Evidence of the standard practice of carriers is relevant, but not conclusive, in determining what constitutes due diligence to guard against a foreseen risk.293 The obligation to exercise due diligence is “an inescapable personal” one;294 the carrier is responsible if any employee or agent, including an independent contractor, fails to exercise due diligence in making the ship seaworthy before and at the beginning of the voyage.295 Where the plaintiff has established unseaworthiness by inference without being able to identify the cause of the loss or damage, the carrier need not prove how and why the loss or damage occurred in order to discharge the onus upon it; the court may be satisfied on the evidence that due diligence was 290 Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 at 312 per Jordan CJ; BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 229 per Hill J. See also American Marine Corp v Barge American Gulf III 100 F Supp 2d 393 (ED La 2000) at 396: “The entry of seawater into a cargo hold raises a presumption that the seawater damage resulted from the fault and privity of the carriers in their failure to exercise due diligence to make the [vessel] seaworthy”. 291 See Union of India v NV Reederij Amsterdam [1963] 2 Lloyd’s Rep 223 at 235 per Lord Devlin: “Lack of due diligence is negligence.” See also China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 243 [226] per Callinan J: “[I]n cases in which the carrier has acted as expressly required by rules, and is not guilty of negligence … the carrier should be entitled to immunity”. 292 See, eg, Union of India v NV Reederij Amsterdam [1962] 1 Lloyd’s Rep 539 (aff’d Union of India v NV Reederij Amsterdam [1963] 2 Lloyd’s Rep 223) (known as The Amstelslot: no want of due diligence where the circumstances requiring special care were not apparent before the beginning of the voyage); The Australia Star (1940) 67 Ll L Rep 110 (no want of due diligence in the light of shipowner’s knowledge at the time in question); Kuo International Oil Ltd v Daisy Shipping Co Ltd (The Yamatogawa) [1990] 2 Lloyd’s Rep 39 at 50 per Hobhouse J: “A reasonable difference of opinion does not amount to want of due diligence.” 293 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 409 [248] per Rares J (dissenting, but not on this point). 294 Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd [1961] AC 807 at 871 per Lord Keith of Avonholm. 295 Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd [1961] AC 807 (reported sub nom The Muncaster Castle [1961] 1 Lloyd’s Rep 57); Eridania SpA v Oetker (The Fjord Wind) [2000] 2 Lloyd’s Rep 191 at 199 per Clarke LJ. The position is the same in the US: see Nissan Fire & Marine Insurance Co Ltd v M/V Hyundai Explorer 93 F 3d 641 (9th Cir 1996) at 646; Steel Coils Inc v M/V Lake Marion 331 F 3d 422 (5th Cir 2003) at 430. See also Harpers Trading (Singapore) Pte Ltd v RFL International Ltd (The Planeta) (unreported, NSW Sup Ct, Carruthers J, 12 December 1994); Andre Toulemonde Wool Co Pty Ltd v Knutsen Offshore (Panama) SA (unreported, WA Sup Ct, Anderson J, 26 June 1998).

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exercised, even though the cause remains inexplicable.296 However, the carrier will find it much easier to establish due diligence if it can identify a latent defect that could reasonably have been overlooked before and at the beginning of the voyage, and much more difficult if it can suggest none, or only one which is wholly implausible.297 For example, in The Amstelslot,298 the goods were damaged after the ship suffered a fatigue crack in the main engine. Although the origin of the crack was unknown, the House of Lords held that the carrier had discharged the burden of proving that it had exercised due diligence because it had produced evidence that no defect had been discovered during inspections conducted by two surveyors of unchallenged reputation, who explained what they had done and why they had not done more. In contrast, in The Fjord Wind,299 the cargo was damaged after the failure of a crankpin bearing. The ship had suffered a series of crankpin bearing failures over a period of time, but the carrier had not been able to discover the reason for them. The due diligence obligation would have been breached if the carrier had failed to give the manufacturer of the bearings instructions to carry out a proper and thorough investigation, or if the manufacturer had failed to carry out the owner’s instructions. The obligation would have been satisfied only if the manufacturer had carried out a proper and thorough investigation but had still been unable to identify the problem. Because the carrier had not produced any evidence of what had been done by the manufacturer, the English Court of Appeal held that it had failed to discharge the onus of proving that it and its independent contractors (that is, the manufacturer) had exercised due diligence. If the loss or damage is caused by a latent defect not discoverable by due diligence, the carrier is protected by Art 4, r 1 even if it has not exercised due diligence before and at the beginning of the voyage, because the want of due diligence has no relevant causal effect.300 The carrier is not liable for any want of due diligence before the ship comes into its hands. Thus, for example, if a carrier buys a ship (whether or not newly built) and adopts all reasonable precautions, such as having 296 The Antigoni [1991] 1 Lloyd’s Rep 209 at 213 per Staughton LJ, citing Woods v Duncan [1946] AC 401 at 439 per Lord Simonds. 297 The Antigoni [1991] 1 Lloyd’s Rep 209 at 213 per Staughton LJ; Eridania SpA v Oetker (The Fjord Wind) [2000] 2 Lloyd’s Rep 191 at 199-200 per Clarke LJ. As a result, there is considerable overlap between Art 4, r 1 and the defence of latent defect under Art 4, r 2(p), which is considered at [12.480]. 298 Union of India v NV Reederij Amsterdam [1963] 2 Lloyd’s Rep 223. See also Anderson v Attorney General of New Zealand (The Danica Brown) [1995] 2 Lloyd’s Rep 264 (due diligence established in relation to unexpected seizure of bearings). 299 Eridania SpA v Oetker (The Fjord Wind) [2000] 2 Lloyd’s Rep 191. 300 Kuo International Oil Ltd v Daisy Shipping Co Ltd (The Yamatogawa) [1990] 2 Lloyd’s Rep 39. The contrary view may be implicit in the discussion of Art 4, r 2(p) in The Antigoni [1991] 1 Lloyd’s Rep 209 at 213 per Staughton LJ. The carrier would, in any event, be protected by Art 4, r 2(p) in the circumstances described.

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the ship surveyed by a reputable classification society and/or a naval architect, it is not liable if the ship proves to be unseaworthy because of the actions of the previous owner or the shipbuilder, if no defect is revealed by the carrier’s own surveys, conducted with due diligence.301 The carrier is obliged to exercise due diligence “before and at the beginning of the voyage”. The obligation commences at least with the beginning of the loading of the goods,302 and ceases with the commencement of the contractual voyage from the port of loading to the port of discharge,303 even where the contractual voyage is broken up into stages.304 For example, where a ship on a liner service makes a round trip from port A to ports B, C and D before returning to A, a contract for carriage of goods from C to A involves a voyage from C to D followed by a voyage from D to A. In these circumstances, the carrier is obliged at common law to make the ship seaworthy at the beginning of each stage,305 but under the Hague and Hague-Visby Rules and the Australian modification of the latter, the carrier is obliged only to exercise due diligence to make the ship seaworthy before the first stage begins.306 Thus, if the ship becomes unseaworthy at port D, the carrier is not liable for a want of due diligence under the contract for carriage of goods from C to A, but may be liable under a contract for carriage of goods from D to any of the other ports on the line, if it has failed to exercise due diligence. For example, in Sellers Fabrics Pty Ltd v Hapag-Lloyd AG,307 the plaintiff’s cargo was carried from Fos Sur Mer, France to Sydney under a bill of lading issued by the defendant. The cargo was damaged between Melbourne and Sydney when a container stack collapsed because of restowing of cargo that was done in Melbourne. The Supreme Court of New South Wales held that the defendant had not breached the due diligence obligation under Art 3, r 1 by leaving the container stack insufficiently supported at Melbourne, because the obligation terminated with the beginning of the carrying voyage in Fos Sur Mer and did not revive in Melbourne. However, the court went on to hold that the defendant had breached the obligation imposed on it by Art 3, r 2,

301 W Angliss & Co (Australia) Pty Ltd v Peninsular and Orient Steam Naviation Co [1927] 2 KB 456, as explained in Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd [1961] AC 807 at 841-842 per Viscount Simonds. 302 Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589 (PC). 303 Owners of Cargo Lately Laden on Board the Ship or Vessel Makedonia v Makedonia (Owners): The Makedonia [1962] P 190. 304 Sellers Fabrics Pty Ltd v Hapag-Lloyd AG [1998] NSWSC 644. 305 Bouillon et Cie v Lupton (1863) 15 CB (NS) 113; 143 ER 726; The Vortigern [1899] P 140. 306 Leesh River Tea Co Ltd v British India Steam Navigation Co Ltd (The Chyebassa) [1966] 1 Lloyd’s Rep 450 (aff’d Leesh River Tea Co Ltd v British India Steam Navigation Co Ltd (The Chyebassa) [1967] 2 QB 250); Owners of Cargo Lately Laden on Board the Ship or Vessel Makedonia v Makedonia (Owners): The Makedonia [1962] P 190. 307 Sellers Fabrics Pty Ltd v Hapag-Lloyd AG [1998] NSWSC 644.

[12.310]

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because the collapse of the stack had been caused by the negligence of the crew in not properly lashing or restowing the cargo at Melbourne.308 The carrier’s obligation with respect to the goods

[12.310]

Article 3, r 2 of the Hague and Hague-Visby Rules (and the Australian modification of the latter) provides,309 “Subject to the provisions of Art 4, the carrier shall properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried”. This rule (together with Art 3, r 1) is central to an understanding of the rules and their operation.310 It is the basis of an action for loss of or damage to goods in those sea-carriage documents to which the rules apply. In Albacora SRL v Westcott & Laurance Line Ltd,311 the House of Lords held that “properly” is not synonymous with “carefully”. It means “in accordance with a sound system”, so that Art 3, r 2 requires more of the carrier than care alone.312 In Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd,313 a majority of the High Court of Australia left open the question whether, and to what extent, the carrier’s obligation under Art 3, r 2 goes beyond a duty to take reasonable care, but the view that “properly and carefully” means “in accordance with a sound system” was adopted by Carruthers J in Caltex Refining Co Pty Ltd v BHP Transport Ltd (The Iron Gippsland),314 by Kirby J in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad,315 by a majority of a Full Court of the Federal Court in C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd,316 and by Rares J in Hilditch Pty Ltd v Dorval Kaiun KK (No 2).317 Like the Art 3, r 1 obligation of due diligence in relation to seaworthiness, the Art 3, r 2 obligation to load, stow and care for the goods also depends 308 As to the obligation under Art 3, r 2, see [12.310]. 309 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 2 (Hague-Visby Rules); Sch 1A, Art 3, r 2 (Australian modification). 310 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 172 [25] per Gaudron, Gummow and Hayne JJ. 311 Albacora SRL v Westcott & Laurance Line Ltd [1966] 2 Lloyd’s Rep 53. 312 Albacora SRL v Westcott & Laurance Line Ltd [1966] 2 Lloyd’s Rep 53 at 58 per Lord Reid (with whom Lords Guest and Upjohn agreed), and at 62 per Lord Pearce. See also GH Renton & Co Ltd v Palmyra Trading Corp of Panama [1957] AC 149 at 166 per Viscount Kilmuir LC. 313 Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 163 per Mason and Wilson JJ (with whom Aickin J agreed). 314 Caltex Refining Co Pty Ltd v BHP Transport Ltd (The Iron Gippsland) [1994] 1 Lloyd’s Rep 335 at 357 (Sup Ct NSW). 315 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 216-217 [143] per Kirby J. 316 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 370 [88] per Ryan and Dowsett JJ. 317 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 142 [78] per Rares J.

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upon the kinds of conditions it is anticipated the ship will meet.318 Unlike the Art 3, r 1 obligation, which is confined to the period “before and at the beginning of the voyage”,319 the Art 3, r 2 obligation to handle the goods “properly and carefully” continues throughout the carrying voyage and the discharging process too. In Seafood Imports Pty Ltd v ANL Singapore Pte Ltd,320 Ryan J of the Federal Court held that the carrier’s Art 3, r 2 obligation “properly and carefully” to discharge goods in a refrigerated container extended to ensuring that the container did not defrost the goods in the port terminal after discharge,321 despite the fact that the Hague-Visby Rules apply only in the “tackle-to-tackle” period from the completion of loading to the completion of discharge.322 Although Art 3, r 2 provides that the carrier shall properly and carefully load, stow and discharge the cargo, the parties are nevertheless free to contract on an FIO (free in and out), FIOS (free in and out, stowed) or FIOST (free in and out, stowed and trimmed) basis, whereby the cargo-owner undertakes to perform some or all of the obligations of loading, stowing, trimming and discharging the goods. This is commonly done when a shipper-charterer under a voyage charterparty in FIO, FIOS or FIOST terms indorses to a third party a negotiable bill of lading incorporating the terms of the voyage charterparty.323 Under English law, the effect of an FIO, FIOS or FIOST clause in a bill of lading is that the carrier has thereby contracted out of responsibility for the functions of loading, stowing, trimming and discharging, as well as the performance of them.324 The English view of Art 3, r 2 is that it does not impose on the carrier any obligation to load, handle, stow, etc, the cargo, but merely provides that the carrier must perform properly and carefully those obligations that it has agreed to undertake, and that any such provision does not violate the prohibition under Art 3, r 8 against contracting out of the obligations imposed by the Rules.325 In contrast, the United States view of Art 3, r 2 is that it imposes on the carrier a non-delegable 318 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 175 [34] per Gaudron, Gummow and Hayne JJ. 319 See [12.300]. 320 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149. 321 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149 at 174 [76]. 322 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(e) (Hague-Visby Rules). The Australian modification of the Hague-Visby Rules is extended to apply within the port terminal until the goods are “placed at the disposal of the consignee”: Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 3. 323 See [12.710]. 324 Balli Trading Ltd v Afalona Shipping Co Ltd (The Coral) [1993] 1 Lloyd’s Rep 1; Jindal Iron and Steel Co Ltd v Islamic Solidarity Co Jordan Inc (The MV Jordan II) [2005] 1 Lloyd’s Rep 57 (HL); Yuzhny Zavod Metall Profil LLC v Eems Beheerder BV (The MV Eems Solar) [2013] 2 Lloyd’s Rep 487. 325 Pyrene Co v Scindia Navigation Co [1954] 2 QB 402 at 417-418 per Devlin J; Renton & Co v Palmyra Trading Corp of Panama [1957] AC 149; Jindal Iron and Steel Co Ltd v Islamic Solidarity Co Jordan Inc (The MV Jordan II) [2003] 2 Lloyd’s Rep 87. If the carrier does agree to undertake obligations to load, handle, stow, etc, the goods, those obligations

[12.310]

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obligation to load, stow, trim and discharge the cargo.326 Accordingly, the carrier may contract out of performance of those obligations by incorporating an FIO, FIOS or FIOST clause into the bill of lading, but it cannot contract out of responsibility for them.327 It may avoid liability if it can prove that the damage was caused by those who loaded the cargo,328 but it cannot simply contract out of liability altogether.329 The United States view of Art 3, r 2 is more consistent with the intentions of those who drafted the Hague Rules.330 Nevertheless, in Jindal Iron and Steel Co Ltd v Islamic Solidarity Co Jordan Inc (The MV Jordan II),331 the House of Lords declined an invitation to change the English position, which had been followed for 50 years (and which has since been followed again),332 although all members of the court pointedly declined to express a concluded view on the correctness of that position.333 In Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd,334 Sheller JA observed, obiter, that the United States approach may be more appropriate for Australian conditions than the English. Whatever the correct view in relation to FIO clauses, it is clear that the carrier cannot shift responsibility to the shipper or receiver in the absence of some contractual provision. The carrier cannot escape liability for loading or discharging badly or negligently simply because the shipper or receiver can see that cargo operations are being done badly or

are non-delegable, in the sense that the carrier is liable for negligent performance of them by employees, agents and independent contractors: see International Packers London Ltd v Ocean Steam Ship Co Ltd [1955] 2 Lloyd’s Rep 218 at 236 per McNair J. 326 Nichimen Co Inc v M/V Farland 462 F 2d 319; 1972 AMC 1573 (2d Cir 1972) at 330; 1587; Demsey & Assoc Inc v S/S Sea Star 461 F 2d 1009 (2d Cir 1972). 327 Associated Metals & Minerals Corp v M/V Arktis Sky 978 F 2d 47; 1993 AMC 509 (2d Cir 1992); Tubacex Inc v M/V Risan 45 F 3d 951; 1995 AMC 1305 (5th Cir 1995). 328 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 2(i) (Hague-Visby Rules); Sch 1A, Art 4, r 2(i) (Australian modification), which provides the carrier with a defence for loss or damage caused by “act or omission of the shipper or owner of the goods, his agent or representative”. See [12.450]. 329 See, eg, Itochu International Inc v M/V Western Avenir 1998 AMC 555 (ED La 1998), where the carrier proved that damage was caused during loading and that the shipper’s stevedores had total control of the loading process. In this context, see [12.450] for a consideration of the relationship between FIO, FIOS and FIOST clauses and Art 4, r 2(i) of the Hague and Hague-Visby Rules. 330 See M Davies, “Two View of FIOS Clauses in Bills of Lading” (1994) 22 ABLR 198. 331 Jindal Iron and Steel Co Ltd v Islamic Solidarity Co Jordan Inc (The MV Jordan II) [2005] 1 Lloyd’s Rep 57. 332 Yuzhny Zavod Metall Profil LLC v Eems Beheerder BV (The MV Eems Solar) [2013] 2 Lloyd’s Rep 487. 333 Jindal Iron and Steel Co Ltd v Islamic Solidarity Co Jordan Inc (The MV Jordan II) [2005] 1 Lloyd’s Rep 57 at 59 [2] per Lord Nicholls of Birkenhead, at 65 [26] per Lord Steyn (with whom Lords Bingham, Hoffmann and Scott agreed). 334 Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371 at 387-388.

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negligently.335 The Art 3, r 2 obligation is the carrier’s alone; the cargo-owner has no obligation to ask the carrier to stop acting inconsistently with the Rules.336 Reasonable despatch and liability for delay

[12.320]

The carrier’s implied promise to undertake the contractual voyage with reasonable despatch is the same as the shipowner’s implied undertaking of reasonable despatch in a voyage charterparty, which is considered in Chapter 13. This obligation is not affected by any provision in the Hague or Hague-Visby Rules,337 but it is often modified by terms of the sea-carriage document that leave it devoid of any real content.338 Where there is no such clause, the carrier may be held liable for delayed delivery, even under the Hague or Hague-Visby Rules. For example, in The Ship Socofl Stream v CMC (Australia) Pty Ltd,339 cargo bound from Singapore to Newcastle, New South Wales, was delayed when the ship was arrested in Brisbane. The cargo had to be carried by road from Brisbane to Newcastle. About three weeks had elapsed between loading of the plaintiff’s cargo in Singapore and arrival of the ship in Brisbane. The remainder of the voyage from Brisbane to Newcastle took over two weeks more. A Full Court of the Federal Court of Australia held that the delay was sufficiently great to amount to a breach of the implied term for reasonable dispatch. Unlike the unmodified version of the Hague-Visby Rules, the Australian modification of the Hague-Visby Rules deals specifically with liability for delay. Article 4A provides that the carrier is liable for loss caused by unreasonable delay unless it (the carrier) can prove that the delay was excusable by one of eight (and only eight) excuses and that it took all reasonable measures to avoid the delay.340 The eight excuses are:341 1. deviation authorised by the shipper; 2. circumstances beyond the reasonable control of the carrier or its servants or agents; 3. reasonable necessity for compliance with an express or implied warranty (in what contract, it is not clear); 4. reasonable necessity to save the ship or its cargo; 335 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 142-143 [80]-[83] per Rares J. 336 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 142-143 [80]-[83] per Rares J. 337 In contrast, both the Hamburg Rules and the Rotterdam Rules deal with delay in delivery: see Hamburg Rules, Art 5(1), (2); Rotterdam Rules, Arts 17(1), 21. 338 See, eg, cl 5 of the Conlinebill 2016 form (Appendix 1) and cl 4(a) of the Linewaybill 2016 form (Appendix 3). 339 The Ship Socofl Stream v CMC (Australia) Pty Ltd [2001] FCA 961. 340 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 4A. 341 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 4A, rr 3, 4.

[12.330]

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5. saving human life or aiding a ship in distress; 6. reasonable necessity for obtaining medical or surgical aid for a person on board; 7. barratrous conduct of master or crew; and 8. industrial action if that action was not substantially caused or contributed to by the carrier’s unreasonable conduct. However, an oddity of drafting may have the effect of drastically reducing the availability of the new remedy for delay.342 The new Art 4A provides that the carrier is liable to “a shipper for loss … caused to the shipper by the shipper’s goods being delayed”.343 On the face of it, a receiver of goods (the consignee or indorsee of a sea-carriage document) therefore has no remedy for delay under Art 4A. This is peculiar, to say the least, because the receiver is far more likely to suffer as a result of delay than is the shipper.344 The receiver may only have a remedy for delay if the shipper’s Art 4A remedy is transferred to it by operation of the State and Territory Sea-Carriage Documents Acts.345 Because the Australian modification of the Hague-Visby Rules specifically makes the carrier liable for delay except in these circumstances, any clause in a sea-carriage document purporting to relieve the carrier from liability has no effect,346 if the Australian modification applies (which will seldom be the case).347 Carriage without deviation

[12.330]

At common law, the carrier impliedly promises that the contractual voyage will be undertaken without unjustifiable deviation. This undertaking is the same as that of a shipowner under a voyage charterparty, which is considered in Chapter 13. In voyage charterparties, the implied promise not to deviate is commonly varied by express provision in the charterparty permitting reasonable deviation, and the Hague and Hague-Visby Rules and the Australian modification of the latter achieve a similar result in the contracts of carriage to which they apply. Article 4, r 4 provides:348 Any deviation in attempting to save life or property at sea, or any reasonable deviation shall not be deemed to be an infringement or breach of this

342 See K Lewins, “Are the 1998 Amendments to COGSA Holding Water?” (2000) 28 ABLR 422 at 425-426. 343 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 4A, r 1 (emphases in the text added). 344 See K Lewins, “Are the 1998 Amendments to COGSA Holding Water?” (2000) 28 ABLR 422 at 425. 345 See [12.670]. 346 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 3, r 8. The same is true under the Hamburg Rules and Rotterdam Rules: see Hamburg Rules, Art 5(1), (2); Rotterdam Rules, Arts 17(1), 21. 347 See [12.40]. 348 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 4 (Hague-Visby Rules); Sch 1A, Art 4, r 4 (Australian modification).

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convention [in the Australian modification, “these Rules”] or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom.

This is a considerable extension of the carrier’s right to deviate as, at common law, only deviations to save human life or the carrying adventure are justifiable.349 Article 4, r 4 permits “any reasonable deviation”. A deviation is not necessarily unreasonable merely because it is solely for the benefit of one of the parties,350 but in most cases, a deviation is unreasonable unless it is for the benefit of both parties to the contract of carriage. In Thiess Brothers (Qld) Pty Ltd v Australian Steamships Pty Ltd,351 the carrier deviated on the contractual voyage from Gladstone to Melbourne in order to pick up bunker fuel in Newcastle. Although the deviation took the ship a mere 6.4 km (four miles) from its route, it had no connection with the contract voyage, because the fuel taken on board in Newcastle was not necessary for the completion of the voyage. The deviation was held to be unreasonable for the purposes of Art 4, r 4.352 A deviation need not be ex improviso in order for it to be reasonable for the purposes of Art 4, r 4; a deviation planned before the voyage commences may nevertheless be reasonable, provided that it is for the purposes of the contractual adventure.353 Negligence by the carrier in the manner of performing a reasonable deviation does not, of itself, render the deviation unreasonable.354 To determine whether negligent performance of a deviation renders it unreasonable, it is necessary to consider the act of negligence in the context of the deviation as a whole.355 If the deviation is reasonable, and if the act of negligence is by the master and crew in the navigation or

349 See [13.620]. 350 Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328 at 343 per Lord Atkin; Thiess Brothers (Qld) Pty Ltd v Australian Steamships Pty Ltd [1955] 1 Lloyd’s Rep 459 at 464 per Kinsella J (Sup Ct NSW); Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117 at 125-126 per Phillips J. 351 Thiess Brothers (Qld) Pty Ltd v Australian Steamships Pty Ltd [1955] 1 Lloyd’s Rep 459 (Sup Ct NSW). 352 See also General Electric Co v Steamship Nancy Lykes 536 F Supp 687; 1982 AMC 1726 (SDNY 1982) (aff’d General Electric Co v Steamship Nancy Lykes 706 F 2d 80; 1983 AMC 1947 (2d Cir 1983)) (deviation for the purposes of getting cheap bunkers held unreasonable). 353 Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117. 354 Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117 at 129 per Phillips J. 355 Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328 at 344 per Lord Atkin; Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117 at 129 per Phillips J.

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management of the vessel during the deviation, the carrier may rely on the defence in Art 4, r 2(a), just as it could if the negligence had not occurred during a deviation.356 In normal circumstances, the contractual route is the direct geographical route from the port of loading to the port of discharge,357 and the ship deviates if it leaves that route. However, a route may be usual and reasonable notwithstanding that it involves departure from the shortest geographical route, if that departure is for the purpose of making a routine and reasonable visit to a port to take on bunker fuel.358 In practice, though, sea-carriage documents usually contain clauses, known as liberty clauses, which give the carrier the right to follow a route other than the most direct one between ports.359 Clauses that purport to give the carrier rights over and above those provided in the Hague or Hague-Visby Rules are deemed null and void by Art 3, r 8.360 The Anglo-Australian view of liberty clauses is that they do not give the carrier a right to deviate from the contractual route, but rather define the contractual route within certain limits imposed by the nature of the commercial enterprise undertaken.361 Thus, liberty clauses are not automatically struck down by Art 3, r 8 as an attempt to give the carrier greater protection than is permitted by Art 4, r 4.362 Under this view, where the sea-carriage document contains a liberty clause, the carrier is entitled to follow any route permitted by the clause and is entitled by Art 4, r 4 to make reasonable deviations from that route. In contrast, the position in the United States is that liberty clauses must be interpreted to permit only reasonable deviations from the anticipated journey, because to do otherwise would be to deprive Art 4, r 4 of any real content.363 The United States view has much to commend it. 356 Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117 at 129 per Phillips J. See also Danae Shipping Corp v TPAO (The Daffodil B) [1983] 1 Lloyd’s Rep 498. For a consideration of the defence in Art 4, r 2(a), see [12.390]. 357 See Achille Lauro Fu Gioacchino & C v Total Societa Italiana per Azioni [1968] 2 Lloyd’s Rep 247. 358 Reardon Smith Line Ltd v Black Sea and Baltic General Insurance Co [1939] AC 562 at 575 per Lord Wright; Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117. 359 See, eg, cl 5 of the Conlinebill 2016 form (Appendix 1), and cl 4(a) of the Linewaybill 2016 form (Appendix 3). 360 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 8 (Hague-Visby Rules); Sch 1A, Art 3, r 8 (Australian modification). 361 Glynn v Margetson & Co [1893] AC 351. 362 See, eg, Thiess Brothers (Qld) Pty Ltd v Australian Steamships Pty Ltd [1955] 1 Lloyd’s Rep 459 (Sup Ct NSW), where the court considered the effect of a liberty clause and Art IV, r 4 of the unamended Hague Rules. 363 General Electric Co v Steamship Nancy Lykes 536 F Supp 687; 1982 AMC 1726 (SDNY 1982) (aff’d General Electric Co v Steamship Nancy Lykes 706 F 2d 80; 1983 AMC 1947 (2d Cir 1983)).

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In F Kanematsu & Co Ltd v The Ship Shahzada,364 Taylor J held, in the original jurisdiction of the High Court of Australia, that a wrongful deviation by the carrier deprived it of all rights and immunities under the bill of lading and the Hague Rules, leaving it with only the defences available to a common carrier at common law, namely act of God or the Queen’s enemies, or inherent vice. As explained at [12.340], it is questionable whether this still represents the law in Australia. Because cases involving geographical deviation are rare, particularly given the permissive Australian interpretation of broad liberty clauses, the consequences of deviation are best considered in the context of unauthorised deck carriage under the unmodified Hague and HagueVisby Rules. Deck carriage and deviation under the unmodified Hague and Hague-Visby Rules

[12.340]

Containers are often carried above deck. The carriage of deck cargo under bills of lading is not governed by the unmodified Hague or Hague-Visby Rules if the bill of lading expressly states that the cargo is carried on deck.365 If the bill of lading bears an indorsement showing clearly that the goods have, in fact, been loaded on deck, the carriage is governed solely by the terms of the bill of lading, and any other terms agreed between the parties.366 The Hague or Hague-Visby Rules are not excluded by a bill of lading clause that merely gives the carrier liberty to carry cargo on deck,367 as the receiver of the goods (the consignee or indorsee of the sea-carriage document) has no means of knowing whether the carrier has exercised that liberty.368

If, however, the cargo is carried on deck but the bill of lading does not bear any record of that fact, the carriage is governed by the Hague or Hague-Visby Rules, as if the cargo were carried under deck. Because the risks to cargo carried on deck are greater than the risks to cargo carried below deck, the shipper is entitled to expect under-deck carriage, and the carrier may only carry cargo on deck if it is authorised by the shipper to do so. Unauthorised deck carriage is a breach of contract by the carrier, the result of which may be that the carrier is deprived of the protection of the Hague or Hague-Visby Rules. In F Kanematsu & Co Ltd v The Ship 364 F Kanematsu & Co Ltd v The Ship Shahzada (1956) 96 CLR 477. See also Thiess Brothers (Qld) Pty Ltd v Australian Steamships Pty Ltd [1955] 1 Lloyd’s Rep 459 (Sup Ct NSW); Stag Line Ltd v Foscolo Mango & Co Ltd [1932] AC 328 at 340 per Lord Atkin. 365 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(c). 366 See, eg, Tasman Express Line Ltd v JI Case (Australia) Pty Ltd (The Canterbury Express) (1992) 111 FLR 108 (NSW Sup Ct, CA). 367 See, eg, cl 7 of the Combiconbill 2016 form (Appendix 2). 368 Svenska Traktor Akt v Maritime Agencies (Southampton) Ltd [1953] 2 QB 295; Encyclopaedia Britannica Inc v S/S Hong Kong Producer 422 F 2d 7 (2d Cir 1969); [1969] 2 Lloyd’s Rep 536.

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Shahzada,369 it was held that unauthorised deck carriage was so fundamental a breach of contract that it was equivalent to a deviation, and had the same result, namely that the carrier was deprived of all rights and immunities under the bill of lading and the Hague Rules, leaving it with only the defences available to a common carrier at common law: act of God or the Queen’s enemies, or inherent vice. However, it is arguable that this decision no longer represents the law in Australia, both because of the demise of the doctrine of fundamental breach and because of the manner in which the unmodified Hague-Visby Rules are given the force of law by the Carriage of Goods by Sea Act 1991 (Cth). Since the demise of the doctrine of fundamental breach, the question whether an exclusion clause applies to a fundamental breach of contract is purely one of construction.370 In Tasman Express Line Ltd v JI Case (Australia) Pty Ltd (The Canterbury Express),371 the Court of Appeal of New South Wales held that, although a geographical deviation might still deprive a sea-carrier automatically of the benefit of exclusion clauses in a bill of lading, “quasi-deviations” clearly do not. As a result, where the carriage is governed by the unamended Hague Rules, some of the provisions of the rules should continue to apply according to their terms, even if the carrier has breached the bill of lading contract by unauthorised deck carriage. For example, Art 4, r 5 provides that “in any event” the carrier’s liability shall be limited to the stipulated amount,372 and it should follow that, as a matter of construction, the limit should continue to apply even where the carrier has carried cargo on deck without authorisation.373 In Wibau Maschinenfabric Hartman SA v Mackinnon Mackenzie & Co (The Chanda),374 Hirst J held that unauthorised deck carriage deprived the carrier of the protection of Art 4, r 5 of the unamended Hague Rules, but that decision was overruled by the English Court of Appeal in Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd

369 F Kanematsu & Co Ltd v The Ship Shahzada (1956) 96 CLR 477. See also Thiess Brothers (Qld) Pty Ltd v Australian Steamships Pty Ltd [1955] 1 Lloyd’s Rep 459 (Sup Ct NSW); Stag Line Ltd v Foscolo Mango & Co Ltd [1932] AC 328 at 340 per Lord Atkin. 370 See, eg, Darlington Futures Ltd v Delco (Australia) Pty Ltd (1986) 161 CLR 500; Nissho Iwai (Australia) Ltd v Malaysian International Shipping Corp Berhad (1989) 167 CLR 219. 371 Tasman Express Line Ltd v JI Case (Australia) Pty Ltd (The Canterbury Express) (1992) 111 FLR 108 (NSWCA). 372 For a consideration of the limit of the carrier’s liability under the unamended Hague Rules, see [12.550]. 373 See, eg, Ahmad v Mitsui OSK Lines Ltd (2005) 222 ALR 338, where Emmett J held, as a matter of interpretation, that the words “in any event” had the effect of limiting the carrier’s liability for wrongful misdelivery. 374 Wibau Maschinenfabric Hartman SA v Mackinnon Mackenzie & Co (The Chanda) [1989] 2 Lloyd’s Rep 494. This decision was followed by the High Court of New Zealand in Nelson Pine Industries Ltd v Seatrans New Zealand Ltd (The Pembroke) [1995] 2 Lloyd’s Rep 290.

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(The Kapitan Petko Voivoda).375 The position in England is now that a carrier may rely on Art 4, r 5, even in the event of unauthorised deck carriage. The position in the United States is that deviation deprives the carrier of the protection of Art 4, r 5,376 except in the Seventh Circuit.377 However, most United States courts also hold that carriage of containers above deck does not amount to deviation at all, even if there is no express authorisation in the bill of lading, because there is a well-established custom of the trade to carry containers above deck.378 Thus, the carrier only loses the protection of Art 4, r 5 in the event of unauthorised deck carriage of non-containerised cargo. In contrast, both the Fifth and the Eleventh Circuits have held that the one-year limitation period in Art 3, r 6 does apply to claims brought under the unamended Hague Rules, even after an unreasonable deviation.379 Whether Australian courts choose to follow the English or the United States cases in relation to unauthorised deck carriage, The Canterbury Express leaves open the possibility that the Kanematsu decision may still be good law in a case of geographical deviation in breach of Art 4, r 4, at least where the carriage is governed by the unamended Hague Rules. Where the Hague-Visby Rules apply, though, it is more strongly arguable that some of the provisions of the rules continue to apply, both where the carrier has breached Art 4, r 4, and where it has carried goods on deck without authorisation. The position has, however, been rendered slightly less clear by the 1998 reforms to the Carriage of Goods by Sea Act 1991 (Cth). Under the Sea-Carriage of Goods Act 1924 (Cth), the unamended Hague Rules governed the bills of lading to which they applied because they were incorporated compulsorily into the bill of lading contract by s 4. Thus, if a wrongful deviation abrogated the contract, the rules fell with the rest of the provisions of the contract. In contrast, the 375 Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s Rep 1. 376 Sedco Inc v S/S Strathewe 800 F 2d 27; 1986 AMC 2801 (2d Cir 1986); SNC SLB v M/V Newark Bay 111 F 3d 243; 1997 AMC 1952 (2d Cir 1997); SPM Corp v M/V Ming Moon 965 F 2d 1297; 1992 AMC 2409 (3d Cir 1992); Aetna Insurance Co v M/V Lash Italia 858 F 2d 190 (4th Cir 1988) at 192; Spartus Corp v S/S Yafo 590 F 2d 1310; 1979 AMC 2294 (5th Cir 1979); Searoad Shipping Co v EI du Pont de Nemours 361 F 2d 833 (5th Cir 1966) at 835-836; Nemeth v General Steamship Corp 694 F 2d 609 (9th Cir 1982); Unimac Co Inc v CF Ocean Service Inc 43 F 3d 1434; 1995 AMC 1484 (11th Cir 1995). 377 Atlantic Mutual Insurance Co v Poseidon Schiffahrt GmbH 313 F 2d 872 (7th Cir 1963). 378 English Electric Valve Co Ltd v M/V Hoegh Mallard 814 F 2d 84; 1987 AMC 1351 (2d Cir 1987); Du Pont de Nemours International SA v S/S Mormacvega 493 F 2d 97; 1974 AMC 67 (2d Cir 1974); Konica Business Machines Inc v Vessel Sea-Land Consumer 153 F 3d 1076; 1998 AMC 2705 (9th Cir 1998); Deltamax Freight System v M/V Aristotelis 1999 AMC 1789 (CD Cal 1998); Alternative Glass Supplies v M/V Nomzi 1999 AMC 1080 (SDNY 1999). 379 Bunge Edible Oil Corp v M/V Torm Rask 756 F Supp 261 (ED La 1991) at 266 (aff’d Bunge Edible Oil Corp v M/V Torm Rask 949 F 2d 786 (5th Cir 1992) at 788); Mesocap Industries Ltd v Torm Lines 194 F 3d 1342 (11th Cir 1999).

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Hague-Visby Rules are generally given the force of law independently of the provisions of the bill of lading contract, with the result that they should continue to govern the relationship between the parties, whatever effect a wrongful deviation by the carrier might have on the contract.380 For example, in Kenya Railways v Antares Co Pte Ltd (The Antares) (Nos 1 and 2),381 the defendant carrier breached the bill of lading contract by carrying the plaintiff’s goods on deck without authorisation, but the English Court of Appeal held that the plaintiff’s claim was still subject to the time bar in Art 3, r 6 of the Hague-Visby Rules, which provides that the carrier shall be relieved of “all liability whatsoever” if suit is not brought within one year of delivery.382 This was so, said the Court of Appeal, because Art 3, r 6 applied irrespective of the contract between the parties.383 Before 1998, the position in Australia seemed clearly to be the same as that stated in The Antares, because the Carriage of Goods by Sea Act 1991 (Cth), s 8 simply stated that the Hague-Visby Rules “have the force of law in Australia”. It became less clear after 1998, because s 8 now provides that the Australian modification of the Hague-Visby Rules has the force of law. Unauthorised deck carriage poses no problem under the Australian modification of the Hague-Visby Rules, which generally applies to deck cargo.384 The Act no longer gives the unmodified Hague-Visby Rules the force of Australian law: it merely saves their operation if they apply to a sea-carriage document for inward-bound international carriage to Australia “by agreement or by law”.385 Where the unmodified HagueVisby Rules take effect only by agreement, there might once again be room for an argument that deviation deprives the carrier of their protection completely. However, as noted above in relation to the unamended Hague Rules, the better view is that Art 3, r 6 and Art 4, r 5 should continue to apply after deviation even where the rules only take effect by agreement of the parties. Because unauthorised deck carriage may have wide-reaching effects, it is important to determine when the carrier is authorised to carry goods on deck. Modern sea-carriage documents often contain clauses providing both that the carrier is at liberty to carry any goods on deck, and that any such deck carriage shall be governed by the Hague or Hague-Visby Rules, as the case may be.386 It has been held that a clause that merely gives the carrier liberty to carry on deck is sufficient to constitute consent by the 380 See Kenya Railways v Antares Co Pte Ltd (The Antares) (Nos 1 and 2) [1987] 1 Lloyd’s Rep 424; S Baughen, “Does Deviation Still Matter?” [1991] LMCLQ 70 at 94-96. 381 Kenya Railways v Antares Co Pte Ltd (The Antares) (Nos 1 and 2) [1987] 1 Lloyd’s Rep 424. 382 For a consideration of the one-year time bar in Art 3, r 6, see [12.580]–[12.610]. 383 Kenya Railways v Antares Co Pte Ltd (The Antares) (Nos 1 and 2) [1987] 1 Lloyd’s Rep 424 at 429 per Lloyd LJ (with whom Glidewell and O’Connor LJJ agreed). 384 See [12.350]. 385 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 10, r 2. 386 See, eg, cl 11(2) of the Combiconbill 2016 form (Appendix 2).

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shipper to deck carriage under the Hague Rules.387 The same result should follow even more clearly where the document also provides specifically that deck carriage should be governed by the Hague or Hague-Visby Rules. Indeed, as noted above, there is United States authority to the effect that the shipper consents to the possibility of deck carriage under the Hague or Hague-Visby Rules simply by shipping goods on a container ship.388 This conclusion seems sensible, given the design of modern container ships, and it would have the result that deck carriage would only be unauthorised in such a case if the sea-carriage document were to stipulate that the goods were to be carried below deck. Deck carriage under the Australian modification of the Hague-Visby Rules

[12.350]

The Australian modification of the Hague-Visby Rules applies to goods (except live animals) carried on or above deck.389 Thus, no question of deviation or its consequences should arise in relation to deck carriage. The rules should apply to deck cargo whether or not the carrier was authorised to stow it on deck.

The shipper and carrier may, however, contract out of the operation of the rules in relation to deck cargo if: (a) the goods must be carried on deck; and (b) the character or condition of the goods reasonably justifies a special non-Hague-Visby agreement in relation to them.390 That cannot occur simply because the goods are containerised, however, even if that means that the goods must be carried on deck for that particular voyage.391 Thus, containers carried on or above deck in the ordinary way are governed by the modified version of the Hague-Visby Rules. There can only be a special agreement to contract out of the rules in relation to containerised cargo that will not fit within the ordinary cell guides, or in relation to breakbulk cargo.392 Any such special agreement is only effective if the sea-carriage document for the carriage bears an indorsement on its face stating that there is a special deck carriage agreement in operation.393 If the carrier has expressly agreed with the shipper (at or before the time of booking the cargo) to carry the goods below deck, it loses the protection 387 Svenska Traktor Akt v Maritime Agencies (Southampton) Ltd [1953] 2 QB 295. 388 See English Electric Valve Co Ltd v M/V Hoegh Mallard 814 F 2d 84; 1987 AMC 1351 (2d Cir 1987); Du Pont de Nemours International SA v S/S Mormacvega 493 F 2d 97; 1974 AMC 67 (2d Cir 1974); Konica Business Machines Inc v Vessel Sea-Land Consumer 153 F 3d 1076; 1998 AMC 2705 (9th Cir 1998); Deltamax Freight System v M/V Aristotelis 1999 AMC 1789 (CD Cal 1998); Alternative Glass Supplies v M/V Nomzi 1999 AMC 1080 (SDNY 1999). 389 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 2, r 2, which states that for the purposes of Art 2, r 1 (which is the rule imposing the obligations of the rules on the carrier and entitling it to the immunities conferred by the rules), “‘goods’ includes goods (except live animals) carried on or above deck”. 390 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 6A, r 1. 391 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 6A, r 2(a). 392 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 6A, r 2(a), (b). 393 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 6A, r 3.

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of the exclusions and limitations of liability in the rules if it then carries the goods on or above deck.394 If the shipper has specific stowage requirements for goods to be carried on or above deck, it must tell the carrier in writing at or before the booking of the cargo or else the rules will not apply to the goods at all.395 Other obligations

[12.360]

Article 3, r 1 of the Hague and Hague-Visby Rules (and the Australian modification of the latter) requires the carrier, “before and at the beginning of the voyage to exercise due diligence to … (b) Properly man, equip, and supply the ship. (c) Make the holds, refrigerating and cool chambers and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation”.396 Given the breadth of the definition of seaworthiness, which extends to the competence of the crew and the cargoworthiness of the ship, it seems that these obligations merely spell out aspects of the carrier’s general obligation with respect to seaworthiness under Art 3, r 1(a).397 In Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad,398 Gaudron, Gummow and Hayne JJ described the obligations imposed by paras (b) and (c) of Art 3, r 11 as being the “direct expression” of some of the “many and varied matters” relevant to the question of seaworthiness. Although Art 3, r 1(c) refers simply to “goods” rather than “the goods”, a majority of a Full Court of the Federal Court held in C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd,399 that the approach adopted by the High Court in Great China Metal required the conclusion that Art 3, r 1(c) requires the carrying ship’s cargo spaces to be fit to carry the specific cargo loaded by the shipper, an obligation identical to that imposed by Art 3, r 1(a) and (b).400

The carrier’s immunities Introduction

[12.370]

At common law, the carrier is free to include as many exclusion clauses in the contract of carriage as it chooses. Where the Hague or Hague-Visby Rules apply (or the Australian modification of the latter), the carrier’s immunities are confined to those in Art 4, which sets

394 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 2, r 4. 395 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 2, r 3. 396 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 1(b), (c) (Hague-Visby Rules); Sch 1A, Art 3, r 1(b), (c) (Australian modification). 397 See [12.300]. 398 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 175 [31]-[32] per Gaudron, Gummow and Hayne JJ. 399 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342. 400 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 365 [69] per Ryan and Dowsett JJ.

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out the circumstances in which the carrier is relieved of liability for loss of or damage to the goods. Any clause in a sea-carriage document purporting to add to this list is deemed null and void,401 although the carrier can validly contract out of their protection.402 The carrier bears the onus of establishing the defences in Art 4: under r 1, because the rule says so, and under r 2, by virtue of the usual principle that a person who seeks to rely on an exception clause must bring himself or herself within it.403 However, if the carrier fails to exercise due diligence before and at the beginning of the voyage to make the ship seaworthy, thus breaching the overriding obligation imposed by Art 3, r 1, it has no defence under Art 4, r 1, and is deprived of the protection of the defences in Art 4, r 2,404 although it may still limit its liability under Art 4, r 5.405 As explained at [12.280], a majority of the High Court of Australia held in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad406 that the question of the carrier’s right to rely on the defences in Art 4, r 2 does not arise unless and until the plaintiff making a cargo claim 401 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 8 (Hague-Visby Rules); Sch 1A, Art 3, r 8 (Australian modification). 402 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 5 (Hague-Visby Rules); Sch 1A, Art 5 (Australian modification). 403 The Antigoni [1991] 1 Lloyd’s Rep 209 at 212 per Staughton LJ. 404 See Maxine Footwear Co Ltd v Canadian Government Merchant Marine Ltd [1959] AC 589 at 602-603 (PC); Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 152 per Stephen J; Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 193 [85] per McHugh J, and at 216 [143] per Kirby J. See also Empresa Cubana Importada de Alimentos “Alimport” v Iasmos Shipping Co SA (The Good Friend) [1984] 2 Lloyd’s Rep 586 at 593 per Staughton J; Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1991] 1 Lloyd’s Rep 456 at 473 per Hirst J (overruled on other grounds Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyd’s Rep 311); Northern Shipping Co v Deutsche Seereederei GmbH (The Kapitan Sakharov) [2000] 2 Lloyd’s Rep 255 at 270 per Auld LJ; Parsons Corp v CV Scheepvaartonderneming “Happy Ranger” (The Happy Ranger) [2002] 2 Lloyd’s Rep 357 at 364 [37] per Tuckey LJ. In The Good Friend, Staughton J suggested that a carrier in breach of Art 3, r 1 might still raise the defence of inherent vice under Art 4, r 2(m); that suggestion was doubted in The Gudermes per Hirst J. In Northern Shipping Co v Deutsche Seereederei GmbH (The Kapitan Sakharov) [2000] 2 Lloyd’s Rep 255 at 272, Auld LJ suggested that breach of Art 3, r 1 does not deprive the carrier of the right to rely on the defence of act or omission of the shipper under Art 4, r 2(i). This passage was quoted with approval in C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 396-397 [193] per Rares J (dissenting). It is also possible that the carrier may be entitled to the fire defence under Art 4, r 2(b) (see [12.400]), notwithstanding a breach of the obligations in Art 3, rr 1 and 2 if the fire that damaged the cargo arose during the voyage without fault on the part of the carrier itself. 405 Parsons Corp v CV Scheepvaartonderneming “Happy Ranger” (The Happy Ranger) [2002] 2 Lloyd’s Rep 357 at 364 [37]-[38] per Tuckey LJ. Breaking the limit under Art 4, r 5 is considered in greater detail at [12.530]. 406 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161.

[12.370]

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has positively identified some negligence constituting a breach of Art 3, r 2 by the part of the defendant carrier.407 In order to escape liability by raising one of the defences in Art 4, r 2, the carrier must establish that the peril excepted by the relevant paragraph of Art 4, r 2 was the cause of the loss or damage.408 Where loss or damage is caused concurrently by an excepted peril under Art 4, r 2 and by the carrier’s breach of Art 3, r 1 or r 2, the carrier’s defence under Art 4, r 2 fails, even if the loss or damage would not have occurred but for the peril excepted by Art 4, r 2.409 Although there is authority to the effect that a wrongful deviation by the carrier deprives it of the protection of all of the immunities in Art 4, it is questionable whether that is still the law in Australia. The effect of deviation on the carrier’s immunities is considered in detail at [12.330]. Article 4, r 1 provides that, “Neither the carrier nor the ship shall be liable for loss or damage arising or resulting from unseaworthiness unless caused by want of due diligence”, and Art 4, r 2 provides that, “Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from” the list of exceptions. In this context, “loss or damage” is

407 See also C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 361 [56] per Ryan and Dowsett JJ; Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125; Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149. 408 Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 at 312-313 per Jordan CJ; Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 163-164 per Mason and Wilson JJ (with whom Aickin J agreed); Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 194 [88] per McHugh J; C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 404 [227] per Rares J; Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 145 [90]-[93] per Rares J. See also, Smith, Hogg & Co v Black Sea and Baltic General Insurance Co [1940] AC 997 at 1004 per Lord Wright; Akt de Danske Sukkerfabrikker v Bajamar Compania Naviera SA (The Torenia) [1983] 2 Lloyd’s Rep 210 at 218-219 per Hobhouse J; The Waltraud [1991] 1 Lloyd’s Rep 389 at 390 per Sheen J; Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1993] 1 Lloyd’s Rep 257 at 288 per Judge Diamond QC. 409 Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 at 312-313 per Jordan CJ; Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 163-164 per Mason and Wilson JJ (with whom Aickin J agreed); Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 194 [88] per McHugh J; C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 404 [227] per Rares J; Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 145 [90]-[93] per Rares J. See also, Smith, Hogg & Co v Black Sea and Baltic General Insurance Co [1940] AC 997 at 1004 per Lord Wright; Akt de Danske Sukkerfabrikker v Bajamar Compania Naviera SA (The Torenia) [1983] 2 Lloyd’s Rep 210 at 218-219 per Hobhouse J; The Waltraud [1991] 1 Lloyd’s Rep 389 at 390 per Sheen J; Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1993] 1 Lloyd’s Rep 257 at 288 per Judge Diamond QC.

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not confined to physical loss of or damage to the goods themselves, but includes other losses in connection with the goods, such as losses caused by delay or misdelivery.410 “Carrier” includes the owner or charterer who enters into a contract of carriage with a shipper,411 but does not include those who are not parties to the contract, unless the contract extends its protection to third parties by use of a Himalaya clause.412 For example, in J Gadsden Pty Ltd v Australian Coastal Shipping Commission,413 the plaintiff’s goods were damaged in transit under a contract of carriage between the shipper and the charterer of the carrying ship. The plaintiff brought an action for negligence in bailment against the shipowner, who was not a party to the contract of carriage, and it was held that that action was not governed by the unamended Hague Rules. Although the shipowner was, in some sense, the carrier of the goods because it was the shipowner’s ship and crew that were carrying them, it was not the “carrier” for the purposes of the Rules, which only governed the rights and liabilities of the parties to the contract evidenced by the bill of lading. Thus, if a defendant who is not a party to the contract of carriage is sued in tort or bailment, it is not entitled in its own right to the protection of the defences in Art 4 of the unamended Hague Rules.414 The defendant may, however, be protected by the Art 4 defences if the shipper and contracting carrier have agreed to extend their operation to selected non-parties, by including a Himalaya clause in the sea-carriage document evidencing the contract of carriage.415 However, in Homburg Houtimport BV v Agrosin Private Ltd (The Starsin),416 the House of Lords held that Art 3, r 8 of the Hague Rules invalidates any attempt by a shipowner or demise charterer to rely on a Himalaya clause in a bill of lading issued by a time charterer as contracting carrier. Article 3, r 8 strikes down any clause relieving “the carrier or the ship” 410 Anglo-Saxon Petroleum Co v Adamastos Shipping Co [1957] 2 QB 233 at 253 per Devlin J (aff’d GH Renton & Co Ltd v Palmyra Trading Corporation of Panama [1957] AC 149; dictum approved at 157 per Viscount Simonds, and at 186 per Lord Somervell); SS Ardennes (Cargo Owners) v SS Ardennes (Owners) [1951] 1 KB 55. Liability for delay under the Australian modification of the Hague-Visby Rules is considered at [12.320]. 411 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(a); Sch 1A, Art 1, r 1(a). 412 Himalaya clauses are considered in more detail at [12.740]. 413 J Gadsden Pty Ltd v Australian Coastal Shipping Commission [1977] 1 NSWLR 575. See also Sidney Cooke Ltd v Hapag-Lloyd Aktiengesellschaft [1980] 2 NSWLR 587 at 594-595 per Yeldham J. 414 Unless it is a sub-bailee on terms incorporating the Hague or Hague-Visby Rules: see [12.840]. See also Anglo Irish Beef Processors International v Federated Stevedores Geelong [1997] 2 VR 676 at 672 per Phillips JA: “[T]he rules apply only as between the parties to a relevant contract and their privies (if we include in that term those who can claim the benefit of the contract)”. 415 See, eg, Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (The Antwerpen) (1993) 40 NSWLR 206; [1994] 1 Lloyd’s Rep 213 (NSW Sup Ct, CA). Himalaya clauses are considered in more detail at [12.740]. 416 Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715.

[12.370]

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from liability otherwise than as provided by the Rules.417 The House of Lords held that unless the words “or the ship” were to be regarded as tautologous, they must have been intended to cover the situation where the owner or demise charterer of the ship was not the contracting carrier. Thus, Art 3, r 8 prevented the shipowner from excluding its liability, even when it was not party to the contract of carriage. The contracting carrier may also be entitled to a stay of the proceedings brought against a defendant who is not party to the contract of carriage, if that contract contains a circular indemnity clause, by which the shipper undertakes to sue only the contracting carrier.418 Article 4 bis, r 1 of the Hague-Visby Rules (and the Australian modification) provides that the defences and limits of liability in the rules apply in any action against the carrier in respect of loss or damage to goods covered by a contract of carriage whether the action be founded in contract or in tort.419 Some writers have argued that the effect of Art 4 bis, r 1 was that the contracting carrier was entitled to the defences in the Hague-Visby Rules, even if it were sued by a plaintiff who was not a party to the contract of carriage.420 However, in Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos),421 the English Court of Appeal held that the Hague-Visby Rules only regulate the rights and duties of the parties to the bill of lading, and they have no effect in actions brought by or against non-parties. Thus, the effect of Art 4 bis, r 1 is that it extends the protection of the Hague-Visby Rules to the contracting carrier, even if it is sued in tort or bailment by a plaintiff who is party to the contract of carriage, but it does not extend the protection of the rules to the contracting carrier when it is sued by a non-party,422 and it does not extend the protection of the rules to a defendant in a cargo claim who is not a party to the contract of carriage, although such a defendant may be protected by operation of a Himalaya clause in the contract of carriage.423 417 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 8 (Hague-Visby Rules). 418 See, eg, Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178. Circular indemnity clauses are considered in more detail at [12.820]. 419 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4 bis, r 1 (Hague-Visby Rules); Sch 1A, Art 4 bis, r 1 (Australian modification). This Article does not appear in the unamended Hague Rules. 420 See, eg, A Diamond, “The Hague-Visby Rules” [1978] LMCLQ 225 at 248-249. 421 Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) [1990] 1 Lloyd’s Rep 311. 422 The position is the opposite in the US, where their version of the unamended Hague Rules protects a contracting carrier if it is sued in tort or bailment by a non-party to the contract of carriage, provided that non-party had notice that the carriage would likely be subject to the Rules: see Stolt Tank Containers Inc v Evergreen Marine Corp 962 F 2d 276; 1992 AMC 2015 (2d Cir 1992); Orion Insurance Co PLC v M/V Humacao 851 F Supp 575 (SDNY 1994); Gibbs International Inc v Federal Insurance Co 1997 AMC 2954 (DSC 1997) at 2955. 423 Himalaya clauses are considered in detail at [12.740].

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[12.380]

The carrier’s immunities under the Hague and Hague-Visby Rules and the Australian modification

[12.380]

The carrier’s immunity under Art 4, r 1 is considered at [12.300], in the context of the obligation to provide a seaworthy ship.424 The following examination of the immunities in Art 4, r 2 focuses on those that are most significant in practice. Art 4, r 2(a): “Act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or management of the ship”

[12.390]

If the goods are damaged or lost as a result of negligence in the navigation or management of the ship, the carrier avoids liability, however gross the negligence on its employees’ part,425 and however reprehensible or outrageous their behaviour, unless it is sufficiently egregious to amount to barratry, in which case it would be intentional, rather than merely negligent.426 To succeed in attracting the protection of Art 4, r 2(a), the carrier does not have to prove negligence by express evidence of every element of the event in question; it is sufficient that the court be judicially satisfied of negligence by inference from other evidence.427 Although the negligence must be “in the navigation or management” of the ship, it is not necessary for the negligence to be likely to cause damage to the ship itself in order for the carrier to be protected under Art 4, r 2(a).428 The idea that the carrier should be excused because of the negligence of its employees is unusual,429 to say the least, and the Art 4, r 2(a) defence has always been acutely controversial. During the consultation process that led to the 1998 reforms in Australia, serious consideration was given to unilaterally abolishing the so-called “nautical fault” defence. The justification for the defence has always been that the carrier has little control over what happens on the ship once it is under way, but that justification, always suspect, has become almost completely untenable in an era of satellite navigation, wireless internet access, continuous radar 424 See [12.300]. 425 See, eg, Seven Seas Transportation Ltd v Pacifico Union Marina Corp (The Satya Kailash and Oceanic Amity) [1984] 1 Lloyd’s Rep 588 (CA). 426 Tasman Orient Line CV v New Zealand China Clays Ltd (The Tasman Pioneer) [2010] 3 NZLR 1 (NZSC). 427 Chubu Asahi Cotton Spinning Co Ltd v The Ship Tenos (1968) 12 FLR 291 at 296 per Macfarlan J; Parke, Lacey, Hardie Ltd v The Ship Clan MacFadyen (1930) 30 SR (NSW) 438 at 442 per Street CJ. 428 Minnesota Mining & Manufacturing (Australia) Pty Ltd v The Ship Novoaltaisk [1972] 2 NSWLR 476. 429 See, eg, the relatively mild comments of Callinan J in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 242 [221]: “It seems to be going a long way, as (a) does, to exculpate the carrier from vicarious liability for its servants or agents in managing and navigating the ship.”

[12.390]

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weather updates, and so on. The defence did not appear in the Hamburg Rules, and it does not appear in the Rotterdam Rules.430 Most of the litigation concerning Art 4, r 2(a) has been concerned with the meaning of the phrase “in the navigation or management of the ship”. There are many tests describing the meaning of this phrase but, for the most part, they are merely different ways of saying the same thing. Those activities that are primarily concerned with the ship “as a navigational unit”431 are done “in the management of the ship”; those activities that are primarily concerned with the ship as a cargo-carrying unit are not. The distinction can be difficult to make, but it is a vital one, because Art 4, r 2(a) relieves the carrier of liability for negligence in the management of the ship, but Art 3, r 2 makes the carrier liable for negligence in the handling of the cargo.432 For example, in Chubu Asahi Cotton Spinning Co Ltd v The Ship Tenos,433 a crew-member of the carrier’s ship tested vegetable-oil tanks in the ship by filling them with water. As a result of negligence on the part of this crew-member, the water overflowed from the tanks into the adjacent hold, where it damaged part of a cargo of wool. It was held that the crew-member’s acts were not “in the management of the ship” for the purposes of Art 4, r 2(a), because their “primary purpose was to undertake activities which were in relation to part of the ship which was solely used for the purpose of carrying cargo”,434 namely the vegetable-oil tanks. It was irrelevant that the acts of negligence did not relate to the cargo damaged435 (the wool in the hold) because their primary purpose was related to the ship’s cargo-carrying function.436 In contrast, in Minnesota Mining & Manufacturing (Australia) Pty Ltd v The Ship Novoaltaisk,437 damage to cargo during the filling of fresh-water tanks was held to be caused by negligence “in the management of the ship”, because the fresh water was solely for the use of those navigating and managing the ship. 430 Hamburg Rules, Art 5.1; Rotterdam Rules, Art 17(3). 431 Halsbury’s Laws of England (subscription service, LexisNexis Butterworths, 2015), Vol 7 at [389]. 432 See [12.310]. 433 Chubu Asahi Cotton Spinning Co Ltd v The Ship Tenos (1968) 12 FLR 291, considered and applied in Caltex Refining Co Pty Ltd v BHP Transport Ltd (The Iron Gippsland) [1994] 1 Lloyd’s Rep 335 (NSWSC). 434 Chubu Asahi Cotton Spinning Co Ltd v The Ship Tenos (1968) 12 FLR 291 at 301 per Macfarlan J, paraphrasing Wright J in Foreman & Ellams Ltd v Federal Steam Navigation Co Ltd [1928] 2 KB 424 at 439. 435 Chubu Asahi Cotton Spinning Co Ltd v The Ship Tenos (1968) 12 FLR 291, citing The Germanic 196 US 589 (1904). 436 Chubu Asahi Cotton Spinning Co Ltd v The Ship Tenos (1968) 12 FLR 291, citing Commonwealth v Burns Philp & Co Ltd (1946) 46 SR (NSW) 307 at 312-313 per Owen J. 437 Minnesota Mining & Manufacturing (Australia) Pty Ltd v The Ship Novoaltaisk [1972] 2 NSWLR 476, considered and applied in Yulianto v The Ship Glory Cape (1995) 134 ALR 92.

278

Shipping Law

[12.390]

Although the test for determining whether the negligence of the master and crew is “in the navigation or management of the ship” is tolerably clear, its application to the facts of a case can prove troublesome. For example, it can prove difficult to distinguish between negligence in navigation or management, which relieves the carrier of liability, and a failure to exercise due diligence before and at the beginning of the voyage in relation to unseaworthiness, which renders the carrier liable. A collision or stranding caused by improper use of charts is an error of navigation, but a collision or stranding caused by faulty charts or other navigational equipment arises from unseaworthiness.438 However, the mere presence of defective charts or other navigational equipment is not enough to make the carrier liable if the casualty was caused not by the defective charts or equipment but by the negligence of the master and crew sailing the ship.439 To take another example, a casual act of negligence by an otherwise competent master or crew brings the carrier within Art 4, r 2(a),440 but if the master and crew are generally incompetent, the ship is unseaworthy, so that any error on their part giving rise to loss or damage to the cargo results in the carrier being held liable.441 Similarly, the ship-handling steps taken by the master and crew at sea are as much for the safety of the cargo as they are for the safety of the ship itself and, in such a case, it can be difficult to determine whether the

438 T Schoenbaum, Admiralty and Maritime Law (5th ed, Thomson West, Eagan, 2011), § 10-28, citing Daisy Philippine Underwear Co v United States Steel Products Co 11 F Supp 175 (SDNY 1935) (aff’d US Steel Products Co v AM Foreign Ins 82 F 2d 752 (2d Cir 1936)) (improper use of charts); The Maria 91 F 2d 810 (4th Cir 1937). 439 Rey Banano del Pacifico CA v Transportes Navieros Ecuatorianos (The Isla Fernandina) [2000] 2 Lloyd’s Rep 15 (effective cause of grounding was negligent navigation not defective charts); Director General of the India Supply Mission for and on behalf of the President of the Union of India v S/S Maru 459 F 2d 1370; 1972 AMC 1694 (2d Cir 1972) (master navigated negligently without using 20-year-old charts); Usinas Siderurgicas de Minas Geras, SA-Usiminias v Scindia Steam Navigation Co Ltd 118 F 3d 328; 1997 AMC 2762 (5th Cir 1997) (grounding caused by simple error of master and pilot, not unseaworthiness arising from lack of dedicated pilot, radar mechanism or policy requiring master to discuss routing manoeuvres with pilot). 440 See, eg, Rey Banano del Pacifico CA v Transportes Navieros Ecuatorianos (The Isla Fernandina) [2000] 2 Lloyd’s Rep 15; Director General of the India Supply Mission for and on behalf of the President of the Union of India v S/S Maru 459 F 2d 1370; 1972 AMC 1694 (2d Cir 1972); Usinas Siderurgicas de Minas Geras, SA-Usiminias v Scindia Steam Navigation Co Ltd 118 F 3d 328; 1997 AMC 2762 (5th Cir 1997). 441 See, eg, Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 at 314 per Jordan CJ; In re Ta Chi Navigation (Panama) Corp SA 513 F Supp 148; 1981 AMC 2350 (ED La 1981); Sanko Steamship Co Ltd v Sumitomo Australia Ltd (No 2) (1995) 63 FCR 227 at 281 per Sheppard J; Papera Traders Co Ltd v Hyundai Merchant Marine Co Ltd (The Eurasian Dream) [2002] 1 Lloyd’s Rep 719.

[12.400]

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negligence of the master or crew was in the navigation or management of the ship, or in the handling of the cargo.442 Art 4, r 2(b): “Fire unless caused by the actual fault or privity of the carrier”

[12.400]

Article 4, r 2(b) uses the words “arising or resulting from … fire”, so it provides a defence where goods are damaged by smoke from a fire, or by water used to extinguish a fire, as well as by fire itself.443 For example, in Banana Services Inc v M/V Tasman Star,444 the United States Court of Appeals for the Eleventh Circuit held that the defendant carrier was protected by Art 4, r 2(b)445 when a cargo of bananas spoiled after a fire in the ship’s refrigeration system left the ship unable to refrigerate the cargo properly. However, damage caused by heat without fire does not fall within the defence.446 In Maxine Footwear Co Ltd v Canadian Government Merchant Marine,447 the plaintiff’s goods were lost when the defendant’s ship was scuttled as the result of a fire caused by the negligence of one of the defendant’s employees while the ship was in berth at the port of loading. The Privy Council held that the ship was unseaworthy from the moment the fire began, and that the negligence which caused the fire constituted a failure to exercise due diligence before and at the beginning of the voyage. The court held that because the defendant had breached Art 3, r 1, it was not entitled to exclude its liability under Art 4, r 2(b). However, in A Meredith Jones & Co Ltd v Vangemar Shipping Co Ltd (The Apostolis),448 the English Court of Appeal described the Maxine Footwear decision as “difficult”,449 and went on to hold that the carrier is not liable for a want of due diligence in relation to seaworthiness simply because its ship has caught fire. Leggatt LJ said:450 [I]t was not unseaworthiness which caused the fire, but the fire which rendered the vessel unseaworthy … Nothing about the state of the ship rendered her unseaworthy. The owners were not in breach of Art 3, r 1 merely because 442 See, eg, Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (The Bunga Seroja) [1994] 1 Lloyd’s Rep 455 (aff’d Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (1998) 196 CLR 161), where this issue was raised, but it was not necessary to decide it, as it was found that the master and crew had not been negligent at all. 443 See The Diamond [1906] P 282. 444 Banana Services Inc v M/V Tasman Star 68 F 3d 418; 1996 AMC 260 (11th Cir 1995). 445 The US version of Art 4, r 2(b) is 46 USC § 30701, Statutory Note, § 4(2)(b). 446 Tempus Shipping Co v Louis Dreyfus & Co [1930] 1 KB 699 at 709 per Wright J (aff’d on other grounds Louis Dreyfus & Co v Tempus Shipping Co [1931] AC 726). 447 Maxine Footwear Co Ltd v Canadian Government Merchant Marine [1959] AC 589. 448 A Meredith Jones & Co Ltd v Vangemar Shipping Co Ltd (The Apostolis) [1997] 2 Lloyd’s Rep 241. 449 A Meredith Jones & Co Ltd v Vangemar Shipping Co Ltd (The Apostolis) [1997] 2 Lloyd’s Rep 241 at 257 per Phillips LJ (with whom Morritt LJ agreed). 450 A Meredith Jones & Co Ltd v Vangemar Shipping Co Ltd (The Apostolis) [1997] 2 Lloyd’s Rep 241 at 244-245.

280

Shipping Law

[12.400]

welding exposed the cargo to an ephemeral risk of ignition. The holds themselves were not intrinsically unsafe. In Maxine the House of Lords found it unnecessary to decide whether the vessel was on fire before the cargo was loaded. It was fire in the fabric of the vessel, namely the cork lining of the hold, which rendered her unseaworthy. Here, the ship only became so on account of the fire in the cargo.

Thus, even if the fire was not directly caused by the “actual fault or privity” of the carrier, the carrier is still deprived of the right to rely on Art 4, r 2(b) if the fire was caused by some pre-existing unseaworthiness in the ship itself, which the carrier (or its servants, agents or independent contractors) could have remedied by exercising due diligence. Article 4, r 2(b) does not specify whether the onus is on the carrier to prove that it was not guilty of “actual fault or privity”, or whether it is on the cargo-owner to show that the carrier was guilty. In the United States, circuit courts of appeal are split on this issue. The Second, Fifth and Eleventh Circuits hold that it is for the cargo-owner to prove fault on the part of the carrier once the carrier has shown that the loss or damage was caused by fire.451 The cargo-owner can only succeed in its claim if it is able to show fault on the part of the carrier itself — it is not sufficient to show fault on the part of the carrier’s employees or agents.452 The Ninth Circuit disagrees, holding that carrier is required to show that it did exercise due diligence and that the fire was caused without its fault.453 However, the Ninth Circuit agrees with the other circuits that the carrier only loses the benefit of the defence if it itself was at fault.454 In Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd,455 Stephen J expressed some support for the conclusion in Maxine Footwear,456 but a majority of the court (including Stephen J) also stated that the carrier’s defence under Art 4, r 2(b) is not subject to the performance of its obligations under Art 3, r 2.457 In Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad,458 451 In re Ta Chi Navigation Corp SA 677 F 2d 225; 1982 AMC 1710 (2d Cir 1982); Westinghouse Electric Corp v M/V Leslie Lykes 734 F 2d 199; 1985 AMC 247 (5th Cir 1984); Banana Services Inc v M/V Tasman Star 68 F 3d 418; 1996 AMC 260 (11th Cir 1995). 452 In re Ta Chi Navigation Corp SA 677 F 2d 225; 1982 AMC 1710 (2d Cir 1982); Westinghouse Electric Corp v M/V Leslie Lykes 734 F 2d 199; 1985 AMC 247 (5th Cir 1984); Banana Services Inc v M/V Tasman Star 68 F 3d 418; 1996 AMC 260 (11th Cir 1995). 453 Nissan Fire & Marine Insurance Co Ltd v M/V Hyundai Explorer 93 F 3d 641; 1996 AMC 2409 (9th Cir 1996). 454 Nissan Fire & Marine Insurance Co Ltd v M/V Hyundai Explorer 93 F 3d 641; 1996 AMC 2409 (9th Cir 1996). 455 Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142. 456 Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 153. See also at 162 per Mason and Wilson JJ (with whom Aickin J agreed). 457 Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 154 per Stephen J, and at 165 per Mason and Wilson JJ (with whom Aickin J agreed). 458 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 196-197 [96] per McHugh J.

[12.410]

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McHugh J expressed agreement with the views of the majority in Gamlen. Although the Great China Metal view of the relationship between Art 3, r 2 and Art 4, r 2 is that the Art 4, r 2 defences are not called into question unless the plaintiff has established Art 3, r 2 negligence on the part of the carrier, that view does not render Art 4, r 2(b) completely meaningless, as it does with Art 4, r 2(p) and (q).459 A cargo plaintiff could establish Art 3, r 2 negligence on the part of the carrier’s employees (most probably the master and crew), thus shifting the burden to the carrier, which could then successfully establish the fire defence in Art 4, r 2(b) by showing that it itself (for example, the corporate shipowner) was not guilty of “actual fault or privity”. In other words, the view of the fire defence expressed by the majority in Gamlen is consistent with the new approach stated by the majority in Great China Metal. Similarly, if the fire that damaged the cargo arose during the voyage and was not caused by some failure before and at the beginning of the voyage to exercise due diligence in relation to unseaworthiness, the carrier should be able to rely on the Art 4, r 2(b) defence, notwithstanding its breach of Art 3, r 1.460 In contrast, the carrier should not be able to exclude its liability under Art 4, r 2(b) if its crew is not properly trained in firefighting procedures and techniques, because the failure to provide a competent crew constitutes both a want of due diligence before and at the beginning of the voyage to make the ship seaworthy, and also fault or privity on the part of the carrier itself.461 Art 4, r 2(c): “Perils, dangers and accidents of the sea or other navigable waters”462

[12.410]

The question of what constitutes a “peril of the sea” for the purpose of Art 4, r 2(c) is closely linked to the question whether the carrier has exercised due diligence in relation to unseaworthiness under Art 3, r 1 and the question whether the goods have been carried “properly and carefully” for the purposes of Art 3, r 2. At first sight, it would seem obvious that in order to exercise due diligence in relation to seaworthiness, the carrier must provide a ship that is capable of carrying the cargo undamaged through weather conditions that can be expected on the voyage. Similarly, it is difficult to see how a carrier can be held to have

459 See [12.280], [12.480]. 460 It is possible that the carrier may be entitled to the fire defence under Art 4, r 2(b) (see [12.400]), notwithstanding a breach of the obligations in Art 3, rr 1 and 2 if the fire that damaged the cargo arose during the voyage without fault on the part of the carrier itself. 461 See, eg, Hasbro Industries Inc v M/S St Constantine 705 F 2d 339; 1983 AMC 1841 (9th Cir 1983); Commonwealth v Burns Philp & Co (1946) 46 SR (NSW) 307 at 314 per Jordan CJ. 462 For an example of a case involving “perils of … other navigable waters”, see Phillips Petroleum Co v Cabaneli Naviera SA (The Theodegmon) [1990] 1 Lloyd’s Rep 52 (stranding in Orinoco River).

282

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[12.410]

“kept and carried” the cargo properly and carefully for the purposes of Art 3, r 2 if the goods have been damaged in weather conditions that were foreseeable. For that reason, United States and Canadian courts hold that heavy weather does not constitute a “peril of the sea” if it is expectable.463 Accordingly, most storms occurring in the winter North Atlantic, for example, have been held not to constitute perils of the sea, because they are reasonably foreseeable.464 The North American view approach was expressly rejected by a majority of the High Court of Australia in the Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd,465 and by all members of the High Court, obiter, in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad.466 On their face, and read in isolation, “perils of the sea” constitute all perils, not simply those that are exceptional or unpredictable.467 To confine “perils of the sea” to perils that were not reasonably foreseeable and could not reasonably be guarded against by the carrier “seeks to strain the language of [Art 4, r 2(c)] by grafting onto it a limiting phrase”.468 For that reason, the North American approach is simply wrong, said Gaudron, Gummow and Hayne JJ in Great China Metal:469 The fact that the sea and weather conditions that were encountered could reasonably be foreseen, or were actually forecast, may be important in deciding issues like an issue of alleged want of seaworthiness of the vessel, an alleged default of the master in navigation or management, or an alleged want of proper stowage. Similarly, the fact that the conditions encountered could have been guarded against may be important, if not decisive, in considering those issues. (Their decision may then make it unnecessary to consider the “perils of the sea” question.) But if it is necessary to consider the “perils of the sea” exception, the fact that the conditions that were encountered could reasonably be expected or were forecast should not be taken to conclude that question … Such an approach, even if it is different from the American and Canadian approach, better reflects the history of the rules, their international origins and is the better construction of the rules as a whole. 463 J Gerber & Co v S/S Sabine Howaldt 437 F 2d 580 (2d Cir 1971); New Rotterdam Insurance Co v S/S Loppersum 215 F Supp 563 (SDNY 1963); Re Complaint of Tecomar SA (The Tuxpan) 765 F Supp 1150 (SDNY 1991); Charles Goodfellow Lumber Sales Ltd v Verreault [1971] 1 Lloyd’s Rep 185 (Sup Ct Can). 464 See, eg, Edmond Weil Inc v American West African Line Inc 147 F 2d 363 (2d Cir 1945); Re Complaint of Tecomar SA (The Tuxpan) 765 F Supp 1150 (SDNY 1991). 465 Shipping Corp of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 166 per Mason and Wilson JJ (with whom Aickin J agreed). 466 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161. 467 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 218 [145] per Kirby J. 468 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 198 [100] per McHugh J. 469 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 181 [51] per Gaudron, Gummow and Hayne JJ.

[12.410]

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This interpretation of Art 4, r 2(c) leaves very little work for the paragraph to do. If the carrier has exercised due diligence to make the ship seaworthy to encounter the expected perils of the voyage, and if it has properly and carefully “conducted itself”470 in relation to the goods so as to make them ready to encounter those expected perils, then there is little or no need to consider Art 4, r 2(c) at all, because the carrier has not breached the obligations imposed on it by Art 3. (That is what the High Court decided in Great China Metal itself.) If, however, the carrier does not take reasonable care to guard the ship and its cargo against the expected perils of the voyage, then it has breached the obligations imposed on it by Art 3, rr 1 and 2, and it may be held liable without any need to consider Art 4, r 2.471 This reduced role for Art 4, r 2(c) is consistent with the view expressed by the High Court in Great China Metal that the key to a proper understanding of the Hague and Hague-Visby Rules lies in the carrier’s Art 3 obligations.472 According to the High Court, a carrier can be held to have kept and carried the cargo properly and carefully for purposes of Art 3, r 2, even if the cargo is damaged or lost in precisely the manner that could have been expected given the predicted weather conditions. Gaudron, Gummow and Hayne JJ said:473 If the ship was fit to encounter the ordinary perils of the voyage, it was fit to encounter sea and weather conditions which could reasonably be foreseen and guarded against. If, despite being fit to encounter those conditions and despite proper stowage and handling of the cargo, the cargo is damaged when the foreseen conditions happen, the question is which interests, carrier or cargo interests, are to bear the loss. Holding the carrier liable would be to transform the obligation to use due diligence to make the ship seaworthy into an obligation very like the obligation of the owner of a general ship, which the whole history of the development of the rules in this area would deny.

With respect, this focus on the general fitness of the ship fails to address adequately the question of how a carrier can be said to have “properly and carefully” kept and carried the goods if they have been damaged in weather conditions that were not only foreseeable but actually foreseen. The words “properly and carefully … keep, carry and discharge” make it plain that the carrier’s obligations under Art 3, r 2 extend well beyond the beginning of the carrying voyage, in a way that the seaworthiness obligation imposed by Art 3, r 1 does not. Despite the contrary assertion 470 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 216-217 [143] per Kirby J. 471 See the sentence in parentheses in the quotation from Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 181 [51] per Gaudron, Gummow and Hayne JJ: “(Their decision may then make it unnecessary to consider the ‘perils of the sea’ question.)”. 472 See Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 172 [25] per Gaudron, Gummow and Hayne JJ. 473 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 178 [42] per Gaudron, Gummow and Hayne JJ.

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[12.420]

of Gaudron, Gummow and Hayne JJ, it is the North American view that is more consistent with the history of the development of the rules.474 The following simple quotation seems to be a preferable view of the scope of all of the words of Art 3, r 2:475 The obligation of the carrier is not limited to the careful stowage of the cargo, but also to “keep, care for and discharge the goods carried” and if a cargo shipped in good condition is delivered in a manner preventible by reasonable precaution, the burden to show exemption from liability rests on the carrier.

Whatever the proper scope of operation of the Art 4, r 2(c) defence, it is clear that the perils must be “of the sea”, in the sense that they are peculiar to the sea and not found on land. In Skandia Insurance Co Ltd v Skoljarev,476 a marine insurance case, Mason J gave a series of examples that shed further light on when a peril can be said to be “of the sea”. Losses caused by violent weather or collision are losses caused by “perils of the sea” because they are the kind of thing that happens at sea. Not all sea-water damage is necessarily caused by a “peril of the sea”. Losses caused by incursion of sea water into a ship’s hull because of the condition of the hull or ordinary wear and tear are not losses caused by “perils of the sea”, because the cause of the loss is not fortuitous,477 but rather is the result of the carrier’s fault. Whereas rats gnawing a hole in a pipe and causing the entry of sea water is a “peril of the sea”,478 damage by rats gnawing the cargo itself is not.479 For the same reason, rain is not a “peril of the sea”.480 Art 4, r 2(d): “Act of God”

[12.420]

An act of God is an accident “due to natural causes, directly and exclusively, without human intervention … that could not have been prevented by any amount of foresight and pains and care reasonably to be expected”.481 Thus, certain perils which do not fall within Art 4, r 2(c) may fall within Art 4, r 2(d). For example, rain cannot be a “peril of the

474 See generally, W Tetley, Marine Cargo Claims (4th ed, Editions Y Blais, Cowansville (Quebec), 2007), Ch 18. 475 The Asturias 40 F Supp 168 (SDNY 1941) at 174 (aff’d Wessels v The Asturias 126 F 2d 999 (2d Cir 1942)). 476 Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 at 387 per Mason J. 477 Thomas Wilson, Sons & Co v Owners of the Cargo per the Xantho: The Xantho (1887) 12 App Cas 503 at 509 per Lord Herschell; Grant Smith & Co v Seattle Construction and Dry Dock Co [1920] AC 162 at 171 per Lord Buckmaster; ED Sassoon & Co v Western Assurance Co [1912] AC 561. 478 Hamilton, Fraser & Co v Pandorf & Co (1887) 12 App Cas 518. 479 Laveroni v Drury (1852) 8 Ex 166; 155 ER 1304; Kay v Wheeler (1867) LR 2 CP 302. 480 Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55 at 64 per Lord Wright. 481 Nugent v Smith (1876) 1 CPD 423 at 444 per Mellish LJ.

[12.440]

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sea” because it is not peculiar to the sea,482 but extraordinary rain might constitute an act of God if it exceeds all reasonable expectations,483 as might other natural phenomena, such as lightning or high winds.484 Art 4, r 2(e),(f): “Act of war” and “act of public enemies”

[12.430]

In Art 4, r 2(e), “war” is not confined to those conflicts where there has been a formal declaration of war and a severing of diplomatic relations.485 It includes war-like hostilities such as civil wars.486 In contrast, “act of public enemies” applies solely to enemies in an actual state of war with the carrier’s government, although it may extend to pirates on the high seas or rebels in insurrection against their own government.487 It does not extend to thieves, rioters, robbers or hijackers,488 although the carrier may have a defence under Art 4, r 2(q) if neither it nor its employees could reasonably have protected against loss caused by thieves, rioters, robbers or hijackers.489 It seems likely that damage caused by terrorist acts would be covered by one or other of these two defences.490 Art 4, r 2(g): “Arrest or restraint of princes, rulers or people or seizure under legal process”

[12.440]

“Restraint of princes and rulers means the act of a state or government interfering with a strong hand”,491 such as arrest, seizure,492 requisition493 or blockade of the ship and/or the goods. Although “restraint of princes” does not extend to arrest pursuant to private legal 482 Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55 at 64 per Lord Wright. 483 Acraman v Johnston (1871) 5 SALR 65; Noritake Co Inc v M/V Hellenic Champion 627 F 2d 724 (5th Cir 1980). 484 Mamiye Bros v Barber SS Lines Inc 241 F Supp 99 (SDNY 1965) (aff’d Mamiye Bros v Barber Steamship Lines, Inc 360 F 2d 774 (2d Cir 1966)); Skandia Insurance Co Ltd v Star Shipping A/S 173 F Supp 2d 1228; 2001 AMC 1527 (SD Ala 2001). 485 Kawasaki Kisen Kabushiki Kaisya v Belships Co Ltd (The Belpareil) (1939) 63 Ll L R 175; Kawasaki Kisen Kabushiki Kaisha of Kobe v Bantham Steamship Co Ltd [1939] 2 KB 544. 486 Curtis & Sons v Mathews [1919] 1 KB 425; Pesquerias y Secaderos de Bacalao de Espana SA v Beer [1949] 1 All ER 845. 487 Anvil Knitwear Inc v Crowley American Transport Inc 2001 AMC 2382 (SDNY 2001) at 2386. See also Russell v Niemann (1864) 17 CB (NS) 163. 488 Anvil Knitwear Inc v Crowley American Transport Inc 2001 AMC 2382 (SDNY 2001) at 2386. 489 See, eg, UN/FAO World Food Programme v M/V Tay 138 F 3d 197; 1998 AMC 2729 (5th Cir 1998) and [12.490]–[12.500]. 490 B Eder et al, Scrutton on Charterparties and Bills of Lading (22nd ed, Sweet & Maxwell, London, 2011), p 234 at [11-037] says that the defence should cover the actions of “any belligerent”. 491 Finlay v Liverpool and Great Western Steamship Co Ltd (1870) 23 LT 251 at 254 per Martin B. See also Sedco Inc v S/S Strathewe 800 F 2d 27 (2d Cir 1986) at 33 n 3: “This defense refers to a sovereign’s exercise of its power controlling and divesting the dominion or

286

Shipping Law

[12.450]

action,494 the inclusion of the words “or seizure under legal process” makes it clear that damage or delay to cargo caused by arrest of the ship falls within the exclusion. However, if the circumstances that give rise to the arrest during the voyage were, to the carrier’s knowledge, in existence before and at the beginning of the voyage and the carrier took no steps to forestall arrest, it may be deprived of the right to rely on Art 4, r 2(g) because of a breach of the obligation of seaworthiness in Art 3, r 1(a), at least where there is a strong probability of arrest during the voyage. Seaworthiness includes “cargoworthiness”, in the sense of the ship’s ability to carry the cargo to the chosen destination,495 and if the carrier leaves the ship unprotected against foreseeable seizure by creditors, it is just as liable to be stopped short of its destination as if it were left unprotected against the ordinary perils of navigation.496 Art 4, r 2(i): “Act or omission of the shipper or owner of the goods, his agent or representative”

[12.450]

This defence is not likely to be raised unless the shipper or receiver has agreed in the sea-carriage document to undertake (or at least participate in) loading or discharging operations. In Hilditch Pty Ltd v Dorval Kaiun KK (No 2),497 Rares J of the Federal Court held that the carrier cannot rely on the Art 4, r 2(i) defence simply because the shipper or receiver can see that cargo operations are being done badly or negligently, but does not intervene. The cargo-owner has no obligation to ask the carrier to stop acting inconsistently with the Rules.498 Furthermore, any “act or omission” of the shipper or its agent in the packing or other preparation of the cargo for carriage is likely to fall within Art 4, r 2(n) rather than Art 4, r 2(i).499 Where the bill of lading contains an FIO (free in and out), FIOS (free in and out, stowed) or FIOST (free in and out, stowed and trimmed clause), authority of an owner over its ship.” In ED & F Man Sugar Ltd v Unicargo Transport Gesellschaft mbH (The Ladytramp) [2012] 2 Lloyd’s Rep 660 (a voyage charterparty case), it was held that there was insufficient evidence that a port authority that delayed berthing was a “government entity”. 492 See, eg, Benjamin v M/V Balder Eems 639 F Supp 1497; 1987 AMC 52 (SDNY 1986) (seizure of container by customs authorities). 493 See, eg, Lekas & Drivas Inc v Goulandris 306 F 2d 426 (2d Cir 1962); Sedco Inc v S/S Strathewe 800 F 2d 27 (2d Cir 1986). 494 Finlay v Liverpool and Great Western Steamship Co Ltd (1870) 23 LT 251; Crew, Widgery & Co v Great Western Steamship Co [1887] WN 161. 495 See [12.300]. 496 Morrissey v S/S A & J Faith 252 F Supp 54 (ND Oh 1965) at 58-59. See also Ciampa v British India Steam Navigation Co Ltd [1915] 2 KB 774; Mare Schiffahrtskontor GmbH v M/V Oceanhaven 763 F 2d 633 (4th Cir 1985). 497 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 142-143 [80]-[83] per Rares J. 498 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 142-143 [80]-[83] per Rares J. 499 Art 4, r 2(n) is considered at [12.470].

[12.460]

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the shipper agrees to arrange performance of the loading, stowing and trimming operations (and undertakes that the receiver of the goods will arrange performance of the discharging operations). As noted above at [12.310],500 the English view of such clauses is that they relieve the carrier of responsibility for those operations,501 so that it is not necessary to consider the effect of Art 4, r 2(i) if the goods are damaged during loading or discharge, or as the result of bad stowage or trimming. The United States view is that the carrier can contract out of performance of the loading, stowing, trimming and discharging operations, but cannot contract out of responsibility for them.502 Under the United States approach, the carrier remains responsible for loss or damage during loading or discharge, or as the result of bad stowage or trimming, unless it can prove, on the balance of probabilities, that the cause of the loss was an act or omission of the stevedores engaged by the shipper or the receiver of the goods, in which case its liability is excluded by Art 4, r 2(i).503 In Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd,504 Sheller JA observed, obiter, that the United States approach may be more appropriate for Australian conditions than the English. Art 4, r 2(m): “Wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods”

[12.460]

In order for damage to be excused under Art 4, r 2(m), it must be caused by the “inherent vice” of the goods, rather than merely exacerbated by their condition. For example, in Colonial Sugar Refining Co Ltd v British India Steam Navigation Co Ltd,505 a cargo of jute and hessian was damaged by condensation absorbed from the hull of the carrying ship. The nature of the goods was such that the condensation was absorbed rapidly, thereby increasing the extent of the damage. However, the carrier was not entitled to the protection of Art 4, r 2(m), because the damage was not caused by the nature of the goods themselves, but by the condensation from the hull of the ship. 500 See [12.310]. 501 Balli Trading Ltd v Afalona Shipping Co Ltd (The Coral) [1993] 1 Lloyd’s Rep 1; Jindal Iron and Steel Co Ltd v Islamic Solidarity Co Jordan Inc (The MV Jordan II) [2005] 1 Lloyd’s Rep 57; Yuzhny Zavod Metall Profil LLC v Eems Beheerder BV (The MV Eems Solar) [2013] 2 Lloyd’s Rep 487. 502 Associated Metals & Minerals Corp v M/V Arktis Sky 978 F 2d 47; 1993 AMC 509 (2d Cir 1992); Tubacex Inc v M/V Risan 45 F 3d 951; 1995 AMC 1305 (5th Cir 1995). 503 See, eg, Itochu International Inc v M/V Western Avenir 1998 AMC 555 (ED La 1998), where the carrier proved that damage was caused during loading and that the shipper’s stevedores had total control of the loading process. In Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507, the fact that the damage was caused by the shipper’s stevedores was established on the evidence, rather than simply by reference to an FIO clause. 504 Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371 at 387-388. 505 Colonial Sugar Refining Co Ltd v British India Steam Navigation Co Ltd (1931) 32 SR (NSW) 245.

288

Shipping Law

[12.470]

The fact that the cargo may be inherently sensitive to damage is not enough in itself to entitle the carrier to raise the Art 4, r 2(m) defence, as the carrier is obliged under Art 3, r 2 to have a sound system for the safe handling of any particularly sensitive cargoes that it has agreed to carry. In Volcafe Ltd v Cia Sud Americana de Vapores SA (t/as CSAV),506 Deputy Judge David Donaldson QC of the English High Court expressed that proposition by saying that the relevant question is whether the goods are fit in themselves to withstand the ordinary incidents of a voyage in which the carrier has complied with its obligations under Art 3, r 2. Deputy Judge Donaldson went on to say:507 Given that the obligations in article III(2) are made subject to article IV(2), there is here complete circularity. Article IV(2)(m) is not in any real sense, as it is often described, an excepted peril (unlike many of the other causes listed in article IV(2)). Properly analysed, it is no more than a category of case (like, most obviously, article IV(2)(p) and (q)) in which breach of the article III(2) obligations is necessarily negatived.

These comments prompt a reconsideration of how Art 4, r 2(m) should be understood in Australia, where the Great China Metal approach to the relationship between Art 3, r 2 and Art 4, r 2 prevails. According to that approach, no question of the availability of the Art 4, r 2(m) defence can arise unless the cargo plaintiff can establish a breach of Art 3, r 2 by the carrier by showing that the cargo was not carried carefully and in accordance with a sound system.508 Given that the carrier’s Art 3, r 2 obligation to have a sound system for handling the cargo must take into account any particular sensitivity that the cargo has to sustaining damage on the proposed voyage, it seems that proof of breach of that obligation would negate any possibility of a successful defence under Art 4, r 2(m). Art 4, r 2(n): “Insufficiency of packing”

[12.470]

In order to establish this defence, the carrier must usually show that the method of packing employed by the shipper or its agent fell short of the normal, established practice for the particular kind of goods on the particular kind of voyage in question, in the light of the general state of knowledge in the industry.509 It does not follow that the goods must have been insufficiently packed if they were damaged in some way, because, as Ryan and Dowsett JJ said in C/V Scheepvaartonderneming 506 Volcafe Ltd v Cia Sud Americana de Vapores SA (t/as CSAV) [2015] 1 Lloyd’s Rep 639 at 644 [16]. 507 Volcafe Ltd v Cia Sud Americana de Vapores SA (t/as CSAV) [2015] 1 Lloyd’s Rep 639 at 644 [16]. 508 See [12.310]. 509 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 378-379 [116]-[117] per Ryan and Dowsett JJ. In Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (The Bunga Seroja) [1994] 1 Lloyd’s Rep 455 (Sup Ct NSW), it was held that the packing was in accordance with “normal, well-established practice for world-wide voyages”. The Art 4, r 2(n) defence was not considered on appeal, sub nom Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161.

[12.480]

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Ankergracht v Stemcor (A/Asia) Pty Ltd,510 “[I]t cannot have been the intention of the framers of Art 4 that packing should only be sufficient if it were capable of protecting the relevant goods from all conceivable damage”. There is old authority to the effect that the carrier is entitled to the protection of Art 4, r 2(n) even where the insufficiency of packing is obvious when the goods are shipped, but only where the action is brought by the original shipper.511 Where the action is brought by a consignee or indorsee of the sea-carriage document (as is usually the case), the carrier is estopped from raising the Art 2, r 4(n) defence if it has not claused the sea-carriage document to make clear the insufficiency of the packaging in cases where that is evident upon loading.512 Art 4, r 2(p): “Latent defects not discoverable by due diligence”

[12.480]

This paragraph adds little or nothing to the defence afforded by Art 4, r 1,513 and it may be rendered completely superfluous by the Great China Metal interpretation of the relationship between Art 3, r 2 and the defences in Art 4, r 2. In The Antigoni,514 Staughton LJ suggested that Art 4, r 2(p) might not be completely superfluous, because it might afford a defence where the ship had a latent defect that would not have been discovered by the exercise of due diligence before and at the beginning of the voyage, but where the carrier cannot show that it had in fact exercised such diligence.515 However, in Kuo International Oil Ltd v Daisy Shipping Co Ltd (The Yamatogawa),516 it was held that a carrier has a defence under Art 4, r 1 in these circumstances, too, because any want of due diligence on the part of the carrier before and at the beginning of the voyage would not have been the cause of the damage by a condition of latent unseaworthiness arising during the voyage. Under the Great China Metal interpretation of the Hague and Hague-Visby Rules, no question of the availability of the Art 4, r 2(p) defence can arise 510 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 378 [116] per Ryan and Dowsett JJ. 511 Australian General Electric Pty Ltd v AUSN Co Ltd [1946] SASR 278, following Gould v South Eastern and Chatham Railway Co [1920] 2 KB 186. See also Rail Equipment Leasing Pty Ltd v CV Scheepvaartonderneming Emmagracht [2008] NSWSC 850 (action brought by receiver, which was original party to carriage contract). 512 Australian General Electric Pty Ltd v AUSN Co Ltd [1946] SASR 278 at 281 per Abbott J, citing and relying on Silver v Ocean Steamship Co Ltd [1930] 1 KB 416; C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 416 [282] per Rares J. 513 For a consideration of Art 4, r 1, see [12.300], [12.370]. 514 The Antigoni [1991] 1 Lloyd’s Rep 209. 515 The Antigoni [1991] 1 Lloyd’s Rep 209 at 213, citing Corporacion Argentina de Productores de Carnes v Royal Mail Lines Ltd (1939) 64 Ll L Rep 188 at 192 per Branson J. 516 Kuo International Oil Ltd v Daisy Shipping Co Ltd (The Yamatogawa) [1990] 2 Lloyd’s Rep 39.

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Shipping Law

[12.490]

unless the cargo plaintiff can establish a breach of Art 3, r 2 by the carrier by showing that the cargo was not carried properly and carefully.517 No carrier could establish that a latent defect in the ship or its equipment was “not discoverable by due diligence” if the cargo plaintiff had already discharged the Great China Metal burden of establishing that the carrier was at fault in relation to the harm caused by that defect, in breach of Art 3, r 2. For example, in Seafood Imports Pty Ltd v ANL Singapore Pte Ltd,518 Ryan J of the Federal Court observed that the evidence that persuaded him that the defendant carrier had breached Art 3, r 2 by failing adequately to monitor a defective refrigerated container was the same as the evidence that would have persuaded him that the defect in the container was not latent, because it was discoverable by due diligence.519 Thus, to use the words of Deputy Judge David Donaldson QC of the English High Court in Volcafe Ltd v Cia Sud Americana de Vapores SA (t/as CSAV),520 Art 4, r 2(p) “is not in any real sense … an excepted peril … [but] is no more than a category of case … in which breach of the [Art 3, r 2] obligations is necessarily negatived”. Art 4, r 2(q)

[12.490] Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants or the carrier contributed to the loss or damage. In order to succeed under Art 4, r 2(q) the carrier must be able to prove what caused the loss or damage to the goods, and that neither it nor521 any of its servants and agents was guilty of negligence at any stage in the carriage of the goods, or, if it or they were negligent, that that negligence played no part in causing the loss or damage.522 As Ryan and Dowsett JJ pointed out in C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd,523 the Great China Metal approach to Art 3, r 2 effectively makes 517 See [12.280]. 518 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149. 519 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149 at 170 [63] per Ryan J. 520 Volcafe Ltd v Cia Sud Americana de Vapores SA (t/as CSAV) [2015] 1 Lloyd’s Rep 639 at 644 [16]. The passage from the judgment is quoted at more length at [12.460]. 521 The “or” between “shipper” and “without” is to be read as “and”: see Hourani v T & J Harrison (1927) 28 L1 L Rep 120 at 125-126 per Atkin LJ. 522 See, eg, Quaker Oats Co v M/V Torvanger 734 F 2d 238 (5th Cir 1984) at 241; US v Ocean Bulk Ships Inc 248 F 3d 331; 2001 AMC 1487 (5th Cir 2001) at 342. 523 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342.

[12.500]

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Art 4, r 2(q) redundant because no carrier could “sensibly rely” on an Art 4, r 2(q) defence if the plaintiff could successfully establish fault on the carrier’s part under Art 3, r 2, so as to shift the burden of proof to the carrier.524 Even under the traditional approach to the burden of proof followed in the United Kingdom and the United States,525 examples of successful Art 4, r 2(q) defences are rare. One example is UN/FAO World Food Programme v M/V Tay,526 where a cargo of humanitarian food aid was stolen from the holds of the carrying ship once the hatch covers had been opened at the port of destination in Angola. Given the situation of political unrest at the port — the crew constantly heard gunfire from the battles between warring factions in the city of Luanda — the master and crew had no control over the actions of the discharge port stevedores, who had been selected by the port authority, and who were largely responsible for the theft of the cargo. The United States Court of Appeals for the Fifth Circuit held that the carrier was protected by the Art 4, r 2(q) defence.527 None of the other defences in Art 4, r 2 would have protected the carrier: the thieving stevedores did not act with government authority, so as to bring the Art 4, r 2(g) “restraint of princes” defence into operation; as we have seen,528 the Art 4, r 2(f) “act of public enemies” defence does not apply to the actions of rioters or robbers; and finally, although there were “riots and civil commotions” in the city itself, they were not the cause of the loss of the cargo at the port, so as to bring the defence in Art 4, r 2(k) into operation. The carrier was able to establish what had caused the loss, and also that neither it nor its servants or agents was responsible for that loss, so it was protected by Art 4, r 2(q). The MV Tay example reinforces the observation made by Ryan and Dowsett JJ in C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd that Great China Metal makes Art 4, r 2(q) redundant in Australia. Under the Australian approach, no question of an Art 4, r 2 defence would arise in the circumstances of the MV Tay case because the cargo plaintiff would not be able to establish any breach of Art 3, r 2 by the defendant carrier. Other immunities

[12.500]

The other immunities under Art 4, r 2 are “quarantine restrictions” (Art 4, r 2(h)); “strikes or lock-outs or stoppage or restraint of

524 C/V Scheepvaartonderneming Ankergracht v Stemcor (A/Asia) Pty Ltd (2007) 160 FCR 342 at 382 [127] per Ryan and Dowsett JJ. 525 See [12.280]. 526 UN/FAO World Food Programme v M/V Tay 138 F 3d 197; 1998 AMC 2729 (5th Cir 1998). 527 See also Tapco Nigeria Ltd v M/V Westwind 702 F 2d 1252 (5th Cir 1983) and All Commodities Supplies Co Ltd v M/V Acritas 702 F 2d 1260 (5th Cir 1983), two cases with similar facts and a similar result. 528 Anvil Knitwear Inc v Crowley American Transport Inc 2001 AMC 2382 (SDNY 2001) at 2386.

292

Shipping Law

[12.510]

labour from whatever cause, whether partial or general” (Art 4, r 2(j)); “riots and civil commotions” (Art 4, r 2(k)); “saving or attempting to save life or property at sea” (Art 4, r 2(l)); and “insufficiency or inadequacy of marks” (Art 4, r 2(o)).

Limitation of the carrier’s liability The value of the plaintiff’s loss

[12.510]

The possibility of limitation of the carrier’s liability is relevant only if the plaintiff’s loss exceeds the limitation amount provided for in the Rules. Thus, the first step in any case of cargo loss or damage must be to determine the amount of the plaintiff’s loss. Only then does calculation of the relevant limitation amount become relevant. Art 4, r 5(b) of the Hague-Visby Rules and the Australian modification provides that:529 The total amount recoverable shall be calculated by reference to the value of such goods at the place and time at which the goods are discharged from the ship in accordance with the contract or should have been so discharged. The value of the goods shall be fixed according to the commodity exchange price, or, if there be no such price, according to the current market price, or, if there be no commodity exchange price or current market price, by reference to the normal value of goods of the same kind and quality.

In El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA,530 a Full Court of the Federal Court held (unanimously on this point, but obiter) that Art 4, r 5(b) is not optional, but rather requires the trial court to calculate the value of the goods at the port of discharge, however difficult that might be in practice. It is not appropriate to use evidence of the value of the goods at the port of loading, even if that evidence seems to be more reliable. Thus, the Full Court said that Kiefel J had erred at first instance on this point, by calculating the value of posters and prints carried from Brisbane to Piraeus by reference to evidence about the value of the goods in Australia. The unamended Hague Rules do not include Art 4, r 5(b) or any other form of words indicating how the value of lost or damaged goods should be calculated. In the United States, which still uses the unamended Hague Rules in the Carriage of Goods by Sea Act 1936 (COGSA),531 there is a considerable body of authority for the proposition that the plaintiff’s loss should be calculated by reference to the difference between the fair market value of the goods at their destination in the condition in which they should have arrived and the fair market value of the goods in the condition in which they actually did arrive (in the case of damaged 529 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 5(b) (Hague-Visby Rules); Sch 1A, Art 4, r 5(b) (Australian modification). 530 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296. 531 Now codified as 46 USC § 30701, Statutory Note.

[12.520]

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goods).532 Normally, comparable sales at the port of discharge are the best evidence of market value.533 In the absence of evidence of comparable sales, the testimony of an expert witness may be used as a means of estimating fair market value.534 The invoice value of the goods may be used as evidence of their market value in undamaged condition, but only when the fair market value is uncertain or is not proved.535 Although these principles were established in the context of the amended Hague Rules, they may be of assistance for purposes of Art 4, r 5(b) of the Hague-Visby Rules and the Australian modification, which both require calculation of value at the port of discharge. Limitation of liability under the Hague-Visby Rules and the Australian modification Packages, units and kilograms

[12.520]

Art 4, r 5(a) of the unmodified Hague-Visby Rules provides:536

Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading, neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding 666.67 units of account per package or unit or 2 units of account per kilogramme weight of the goods lost or damaged, whichever is the higher.

The Australian modification of Art 4, r 5 is identical but for the inclusion of the words “sea carriage document” instead of “bill of lading”.537 A “unit of account” is defined as being a special drawing right (SDR) as defined by the International Monetary Fund (IMF).538 Thus, the carrier’s liability is limited to 666.67 SDRs for “packages or units” of less than 333.34 kg, and 2 SDRs per kg of gross weight for “packages or units” heavier than 333.34 kg.539 Art 4, r 5(c) provides that where the goods are carried inside a container or pallet or similar article of transport, the number of packages or units enumerated in the sea-carriage document as packed in such article of 532 Kanematsu-Gosho Ltd v M/T Messiniaki Aigli 814 F 2d 115 (2d Cir 1987); Atlantic Mutual Insurance Co Inc v CSX Lines LLC 432 F 3d 428; 2006 AMC 1 (2d Cir 2005); Santiago v Sea-Land Service Inc 366 F Supp 1309 (DPR 1973). 533 RT Jones Lumber Co v Roen SS Co 270 F 2d 456 (2d Cir 1959). 534 Empresa Central Mercantil de Representaçoes Ltda v Republic of the United States of Brazil 257 F 2d 747 (2d Cir 1958). 535 Emmco Insurance Co v Wallenius Caribbean Line SA 492 F 2d 508 (5th Cir 1974); Terman Foods Inc v Omega Lines 707 F 2d 1225 (11th Cir 1983). 536 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 5(a). 537 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 4, r 5(a). 538 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 5(d) (Hague-Visby Rules); Sch 1A, Art 4, r 5(d) (Australian modification). 539 The IMF publishes a five-day table of exchange rates of SDRs per currency unit and currency units per SDR on its website at http://www.imf.org/external/np/tre/sdr/ db/rms_five.cfm.

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[12.520]

transport is deemed to be the number of packages or units for the purposes of Art 4, r 5, but where the number of packages or units is not recorded on the sea-carriage document, the container or pallet itself is deemed to be the package or unit for limitation purposes.540 In El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA,541 a majority of a Full Court of the Federal Court542 held that because Art 4, r 5(c) refers to the number of packages or units enumerated on the sea-carriage document “as packed in such article of transport”, the paragraph does not refer to any itemised individual articles of cargo said to be within the container. If one cannot tell from the face of the document how many of the enumerated items were “packed” inside the container, there is only one package or unit, which is the container itself. An enumeration on the face of the document of the number of pieces of cargo inside is not an enumeration for the purposes of Art 4, r 5(c) if the pieces could be packed in a variety of ways and the document does not show how the pieces were packed.543 The enumeration of items “as packed” on the face of the sea-carriage document is conclusive for purposes of Art 4, r 5, whether or not the parties agree the enumeration to be accurate.544 Thus, the number of packages or units enumerated on the face of the sea-carriage document is used for limitation purposes, even if it is qualified by such words as “said to contain”, which state that the carrier is unaware of the actual number of items within the container, because of the use of the word “deemed” in Art 4, r 5(c).545 In El Greco itself, the sea-carriage document provided that the container was said to contain 200,945 pieces comprising posters and prints. One could not tell from that description how the cargo was made up for transportation into packages or units for packing. Thus, the majority held that there was no relevant enumeration of packages or units for the purposes of Art 4, r 5(c). The fact that the “No of Pkgs” column on the sea-carriage document contained the number “1” reinforced the conclusion that the enumeration of 200,945 pieces was not an enumeration of packages or units “as packed”. The majority accordingly held that there 540 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 5(c) (Hague-Visby Rules); Sch 1A, Art 4, r 5(c) (Australian modification). 541 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296. See also River Gurara (Owners of Cargo Lately Laden On Board) v Nigerian National Shipping Line Ltd [1998] QB 610, a case concerning the unamended Hague Rules, on which the majority in El Greco relied extensively. 542 Black CJ and Allsop J, Beaumont J dissenting on this point. 543 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296 at 363-365 [276]-[282] per Allsop J (with whom Black CJ agreed). 544 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296 at 360-363 [262]-[274] per Allsop J (with whom Black CJ agreed). 545 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296 at 364 [280] per Allsop J (with whom Black CJ agreed).

[12.530]

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was a single package for limitation purposes, which led to the conclusion that the carrier was entitled to limit its liability to the higher amount of 2 SDRs per kilogram.546 The El Greco case also dealt with the common situation where the sea-carriage document either defines the container to be the “package or unit” for limitation purposes, or lists the number “1” in the column for “number of packages or units”, or both, but also records the number of items said to be packed inside the container. The majority held that any clause in a sea-carriage document that purports to override the effect of an enumeration of packages or units is struck down by the Hague-Visby Rules, Art 3, r 8. Clause 21 of the sea-carriage document in the El Greco case provided that where goods were packed in containers the container itself was to be taken to be the package. Because that clause was contrary to the enumeration of packages or units on the face of the sea-carriage document, it was denied effect by Art 3, r 8.547 However, that conclusion did not affect the final decision that there was only one “package” for purposes of Art 4, r 5. That decision followed from the fact that the sea-carriage document did not enumerate the number of packages inside the container, nor from the fact that the document defined the container to be the “package” for purposes of Art 4, r 5. Breaking the limit

[12.530]

Art 4, r 5(e) provides that neither the carrier nor the ship is entitled to the benefit of the limitation of liability in Art 4, r 5 if the damage resulted from the act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result. The carrier is not deprived of the right to limit its liability unless it itself (its “governing mind”) intended to cause damage or was reckless and knew that damage would probably result — intention or recklessness on the part of employees and agents is not enough.548 Furthermore, it must be shown that the carrier subjectively intended to cause damage or knew that damage would probably result from its reckless conduct — it is not enough to show objectively that the carrier

546 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296 at 371 [308]-[309] per Allsop J (with whom Black CJ agreed). 547 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296 at 360 [260] per Allsop J (with whom Black CJ agreed). 548 Sellers Fabrics Pty Ltd v Hapag-Lloyd AG [1998] NSWSC 644, citing Browner International Ltd v Monarch Shipping Co Ltd (The European Enterprise) [1989] 2 Lloyd’s Rep 185. See also Mayor (t/as Granville Coaches) v P & O Ferries Ltd (The Lion) [1990] 2 Lloyd’s Rep 144, a decision to the same effect on the equivalent provision in the Athens Convention on the carriage of passengers by sea (Art 13). Compare Nelson Pine Industries Ltd v Seatrans New Zealand Ltd (The Pembroke) [1995] 2 Lloyd’s Rep 290 at 297 per Ellis J, to the opposite effect.

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[12.530]

could not fail to have been aware of the risk of damage.549 As a result, the limit is virtually unbreakable.550 The carrier may limit its liability even if it has breached its (otherwise overriding) obligation in relation to unseaworthiness, because Art 4, r 5(e) would be rendered meaningless if that were not the case.551 Australian courts have held that, where the unamended Hague Rules apply, a plaintiff can recover the limited amount from each of several defendants in the same proceedings.552 There is nothing in the HagueVisby Rules or the Australian modification to preclude such a result in general, but Art 4 bis, r 3 provides that the aggregate of the amounts recoverable from the carrier and its servants or agents (other than independent contractors)553 shall not exceed the limit set by Art 4, r 5(a). Thus, for example, if a plaintiff were to succeed in a cargo claim against the carrier, the master of the ship, and a stevedore, it should recover the limited amount twice, not three times.554 In Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd (The Kapitan Petko Voivoda),555 the English Court of Appeal held that a carrier may limit its liability under Art 4, r 5 of the unamended Hague Rules even when it is guilty of a wrongful deviation.556 Because the Australian modification of the Hague-Visby Rules is given the force of law in Australia by the

549 SS Pharmaceutical Pty Ltd v Qantas Airways Ltd [1991] 1 Lloyd’s Rep 288 (NSWCA), a decision on the equivalent provision in the Warsaw Convention as amended at the Hague 1955 (Art 25). 550 The shipowner’s right to limit under the Limitation Convention 1976 (on which, see Chapter 16) contains very similar provisions about breaking the limit of liability, and that limit has been described as “almost indisputable”: see The Bowbelle [1990] 1 Lloyd’s Rep 532 at 535 per Sheen J, cited with approval in Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291 at 294 per Lord Phillips MR. See also Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; 2 Lloyd’s Rep 315 (Sup Ct Can), considered at [16.160]. 551 Parsons Corp v CV Scheepvaartonderneming “Happy Ranger” (The Happy Ranger) [2002] 2 Lloyd’s Rep 357 at 364 [37]-[38] per Tuckey LJ. 552 Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd (The Cape Comorin) (1991) 24 NSWLR 745; Toshiba Corp v Mitsui OSK Lines Ltd (The Nichigoh Maru) (unreported, NSW Sup Ct, 1991). 553 Servants and agents other than independent contractors are entitled to limit their liability under Art 4, r 5(a): see Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4 bis, r 2 (Hague-Visby Rules); Sch 1A, Art 4 bis, r 2 (Australian modification). 554 Assuming that the stevedore is entitled to limit its liability because of the operation of a Himalaya clause: see [12.740]. 555 Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s Rep 1, overruling Wibau Maschinenfabric Hartman SA v Mackinnon Mackenzie & Co (The Chanda) [1989] 2 Lloyd’s Rep 494. 556 Heavy Industries Ltd v Klipriver Shipping Ltd (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s Rep 1.

[12.530]

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Carriage of Goods by Sea Act 1991 (Cth), s 8, the carrier should be entitled to limit its liability under Art 4, r 5, even where it has wrongfully deviated.557 The carrier’s liability is not limited if the nature and value of the goods are declared by the shipper before shipment and inserted in the sea-carriage document.558 The declaration is prima facie evidence of the value of the goods, but it is not binding or conclusive on the carrier.559 In practice, the shipper seldom if ever declares the value of the goods, as the carrier invariably responds by charging a much higher freight rate.The parties may agree that the carrier’s liability shall be limited to an amount higher than that set by Art 4, r 5(a).560 This may be done (perhaps inadvertently) if the sea-carriage document contains a Clause Paramount incorporating the original version of the Hague Rules, which limits the carrier’s liability by reference to the price of gold.561 Because the gold-value limit of liability in the original version of the Hague Rules is higher than the SDR-based limit of liability in the Hague-Visby Rules or the Australian modification, incorporation of the original version of the Hague Rules may be interpreted as an agreement for a higher limit of liability for purposes of Art 4, r 5(g) of the Hague-Visby Rules or the Australian modification. In The Superior Pescadores,562 Males J of the English High Court held that a Clause Paramount incorporating the unamended Hague Rules “as enacted in the country of shipment” does not incorporate the higher Hague Rules limit by reference when the Hague-Visby Rules apply by force of law in the country of shipment (in that case, Belgium). Males J said that a Clause Paramount would only have the effect of incorporating the higher Hague Rules limit if it simply incorporated the Brussels Convention 1924 or the Hague Rules gold value limit without reference to the country of shipment.563 There is a considerable body of United States authority to the effect that a Clause Paramount incorporating the Hague-Visby Rules “as enacted in the country of shipment” constitutes an agreement to increase the $500-per-package limitation that would otherwise apply compulsorily by 557 This point is examined in greater detail at [12.340]. 558 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 5(a) (Hague-Visby Rules); Sch 1A, Art 4, r 5(a) (Australian modification). 559 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 5(f) (Hague-Visby Rules); Sch 1A, Art 4, r 5(f) (Australian modification). 560 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 5(g) and Art 5 (Hague-Visby Rules); Sch 1A, Art 4, r 5(g) and Art 5 (Australian modification). 561 See [12.550]. 562 Yemgaz FZCo v Superior Pescadores SA Panama (The Superior Pescadores) [2014] 1 Lloyd’s Rep 660. 563 Yemgaz FZCo v Superior Pescadores SA Panama (The Superior Pescadores) [2014] 1 Lloyd’s Rep 660 at 669 [52], [55] per Males J.

298

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[12.540]

force of United States law to inward-bound international carriage.564 The United States cases deal with the converse situation from that in The Superior Pescadores, because they are concerned with carriage from a country of shipment enacting a higher limit by force of law to a country (the United States) enacting a lower limit by force of law. Thus, there is nothing in the United States cases to suggest that the distinction made in The Superior Pescadores is inappropriate. Delay and the Australian modification

[12.540]

Article 4A of the Australian modification of the Hague-Visby Rules, which imposes liability on the carrier for delay, also contains a special provision limiting the carrier’s liability for delay. The carrier’s liability under Art 4A for loss caused by delay is limited to whichever is the lesser of: (a) the actual amount of the loss; (b) two-and-a-half times the sea freight payable for the goods delayed; or (c) the total amount payable as sea freight for all of the goods shipped by the shipper concerned under the contract of carriage concerned.565

Under the unamended Hague Rules Gold value or national currency

[12.550]

In the original version of the Hague Rules, Art 4, r 5 provides that the carrier’s liability for loss of or damage to the goods is limited to “one hundred pounds per package or unit” unless the nature or value of the goods is declared before shipment and inserted in the bill of lading, and Art 9 provides that, “The monetary units mentioned in these Rules are to be taken to be gold value”. In Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (The Nadezhda Krupskaya),566 the Court of Appeal of New South Wales held that the combined effect of Art 4, r 5 and Art 9 in a contract that incorporated the original version of the Hague Rules by agreement of the parties was that the carrier’s liability was limited to the market value, at the date of breach, of the quantity of gold which was the

564 JCB Sales Ltd v Wallenius Lines 124 F 3d 132; 1997 AMC 2705 (2d Cir 1997); Daval Steel Products v MV Acadia Forest 683 F Supp 444; 1988 AMC 1669 (SDNY 1988); Insurance Company of North America v MV Atlantic Corona 704 F Supp 528; 1989 AMC 875 (SDNY 1989); Francosteel Corp v MV Deppe Europe 1990 AMC 2962 (SDNY 1990); Francosteel Corp v M/V Pal Marinos 885 F Supp 86; 1995 AMC 2327 (SDNY 1995). The COGSA applies to inward-bound carriage from foreign ports: see 46 USC § 30701, Statutory Note; the $500-per-package limitation applies by § 4(5) of the Act. 565 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 4A, r 6. 566 Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (The Nadezhda Krupskaya) [1989] 1 Lloyd’s Rep 518 (NSWCA). See also William Holyman & Sons Pty Ltd v Foy & Gibson Pty Ltd (1945) 73 CLR 622 at 630, 632, 634; Hussain v Great Eastern Shipping Co Ltd ILR (1960) Ker 1028 (High Ct, Kerala, India); Norway and Asia Lines v Adamjee Jute Mills Ltd (1981) 1 BLD 152 (High Ct, Bangladesh); The Rosa S [1988] 2 Lloyd’s Rep 574. In Dairy Containers Ltd v The Ship Tasman Discoverer [2005] 1 NZLR 433, the Privy Council agreed that the limit of liability under the ordinary version of the Hague Rules was to be calculated by reference to gold value, but held that the parties had agreed by the terms of the bill of lading to calculate limitation by reference to pounds sterling.

[12.560]

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equivalent of 100 gold sovereigns in 1924. For these purposes, the “date of breach” is the date of delivery of the goods or (in the case of loss) when they ought to have been delivered.567 At current market prices of gold, the limit under the unamended Hague Rules is much more than the limit under the Hague-Visby Rules or the Australian modification.568 When adopting the original version of the Hague Rules, several countries amended Art 4, r 5 by domestic legislation referring to their national currency. For example, the Art 4, r 5 limit of liability is US$500 per package or customary freight unit under the United States version of the Hague Rules.569 Where goods are carried by sea into Australia from these countries, Australian courts apply the limit in the relevant domestic currency, rather than the gold-based limit under the unamended Hague Rules.570 The result should be the same where the sea-carriage document fixes the Hague Rules limit by reference to national currency rather than gold value.571 The special position of carriage from the United States

[12.560]

The United States is one of the few countries that still adheres to the unamended Hague Rules. The complicated and inconsistent United States jurisprudence about package limitation572 is relevant in Australia, because inward-bound carriage of goods to Australia from the United States is generally governed by United States, not Australian, law.573

The United States version of Art 4, r 5 is different from the original version made in the Brussels Convention in two respects. First, it limits 567 Yemgaz FZCo v Superior Pescadores SA Panama (The Superior Pescadores) [2014] 1 Lloyd’s Rep 660 at 670 [59] per Males J (obiter). 568 The method of calculation is explained in the first edition of this book, at p 210. One hundred 1924 gold sovereigns contained a total of 798.805g (equal to 28.177 ounces) of gold of millesimal fineness 916.66. The market price of gold can be found in many places, but the price usually quoted is for fine gold (millesimal fineness 1,000), which means that the market figure must be multiplied by 0.91666 to calculate the value of gold in a 1924 sovereign. 569 46 USC § 30701, Statutory Note, § 4(5). 570 See, eg, Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178 (applying US$500 limit). 571 Dairy Containers Ltd v The Ship Tasman Discoverer [2005] 1 NZLR 433 (PC). 572 In Groupe Chegaray/V De Chalus v P & O Containers 251 F 3d 1359; 2001 AMC 1858 (11th Cir 2001) at 1365 (F 3d), the US Court of Appeals for the Eleventh Circuit said: “It is remarkable that after so many decades and dollars spent litigating the package liability limitation clause under §1304(5), the shipping industry has not yet settled upon a sound strategy for protecting both parties’ interests”. 573 Carriage of Goods by Sea Act 1991 (Cth), s 11 makes Australian jurisdiction compulsory for inward-bound carriage from the US, but not Australian law: see [12.90]. Bills of lading for sea carriage of goods from the US to Australia are governed by US law, at least so far as US courts are concerned: see the preliminary Statutory Note to the COGSA, codified at 46 USC § 30701, Statutory Note. An Australian court would probably not apply the US statute of its own force, so it is possible that inward-bound carriage to Australia from the US might be governed by another country’s law if the sea-carriage document contained a choice of law clause to that effect.

300

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[12.560]

the carrier’s liability to “$500 … lawful money of the United States”, rather than gold value.574 Secondly, the limit is not expressed to be “per package or unit” but rather “per package … or, in case of goods not shipped in packages, per customary freight unit”.575 Thus, the United States statute places strong primary emphasis on the question whether the goods in question have been “shipped in packages”. If the item is unpackaged, in the sense that “no appurtenances or packaging [are] attached to facilitate its handling during transportation”, then it is not a “package” and limitation will be calculated by reference to “customary freight units”.576 If the item has some packaging preparation to protect it against the rigours of transportation or to facilitate handling, then it can qualify as a “package”, even if the “packaging” does not conceal or completely enclose the goods.577 To determine the number of packages in the case of goods not in containers, the court looks only at the number of packages stated on the bill of lading578 unless the number refers to items that cannot qualify as “packages”, in which case the court looks at the manner in which the goods were physically prepared for carriage.579 In the case of containerised goods, the outcome depends both on the description in the bill of lading and the nature of the packaging of the goods inside the container. Where the bill of lading discloses the number of items inside the container, the court uses that number for limitation purposes and ignores any attempt (whether in “boilerplate” language of definition or by listing the number of packages as “1”) to make the 574 46 USC § 30701, Statutory Note, § 4(5). 575 46 USC § 30701, Statutory Note, § 4(5). 576 See, eg, Tamini v Salen Dry Cargo AB 866 F 2d 741; 1989 AMC 892 (5th Cir 1989) at 743; 895 (fully-exposed freestanding portable drilling rig with minimal amount of wooden sheathing held not to be a “package” for COGSA purposes). 577 Aluminios Pozuelo Ltd v S/S Navigator 407 F 2d 152; 1968 AMC 2532 (2d Cir 1968) at 155; 2535-2536; Travelers Indemnity Co v Vessel Sam Houston 26 F 3d 895; 1994 AMC 2162 (9th Cir 1994) at 900-901; 2168-2170; Maersk Line Ltd v United States 513 F 3d 418; 2008 AMC 278 (4th Cir 2008). 578 Seguros Illimani SA v M/V Popi P 929 F 2d 89; 1991 AMC 1521 (2d Cir 1991) at 94; 1528: “The number appearing under the heading ‘NO OF PKGS’ is our starting point for determining the number of packages for purposes of the COGSA per-package limitation, and unless the significance of that number is plainly contradicted by contrary evidence of the parties’ intent, or unless the number refers to items that cannot qualify as ‘packages’, it is also the ending point of our inquiry.” See also St Paul Travelers Insurance Co Ltd v Wallenius Wilhelmsen Logistics A/S 433 Fed Appx 19; 2011 AMC 2701 (2d Cir 2011). Although the Popi P concerned goods in containers, the Second Circuit later held that the test there stated applied only to non-containerised goods: Monica Textile Corp v S/S Tana 952 F 2d 636; 1992 AMC 609 (2d Cir 1991). 579 See, eg, Seguros Illimani SA v M/V Popi P 929 F 2d 89; 1991 AMC 1521 (2d Cir 1991), where bills of lading for 600 tin ingots listed 600 “packages”, but the individual ingots could not qualify as COGSA “packages” because they were unpackaged, so the court calculated limitation on the basis of 15 bundles, both because the bill of lading identified the number of bundles and “because the ingots were in fact strapped together in bundles”: at 95; 1530.

[12.560]

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container itself count as the package.580 However, where the bill of lading states the number of items inside the container, but those items are not packaged sufficiently to qualify as “packages”, then the container itself is used as the package for limitation purposes.581 Similarly, the container itself is used as the package for limitation purposes if the bill of lading does not list the number of packages inside the container,582 or if it states the number of items without indicating whether or not they are packages.583 In the case of goods not shipped in packages — such as, for example, goods in bulk — limitation is calculated “per customary freight unit”. Despite the use of the word “customary”, it is settled that the “customary freight unit” is not the standard unit of measure used in the industry, but rather the unit by which the freight was calculated in the particular case.584 That unit may be found by reference to the bill of lading or by reference to the tariff filed by the carrier with the Federal Maritime Commission, but not by looking at extrinsic evidence.585 Thus, for example, if freight is charged as a lump sum for the whole item, then it is a single “customary freight unit” for limitation purposes.586 Under United States law, a carrier is entitled to enforce the US$500 per package limitation only if it gave the shipper notice of the liability 580 Monica Textile Corp v S/S Tana 952 F 2d 636; 1992 AMC 609 (2d Cir 1991); Universal Leaf Tobacco Co Inc v Companhia De Navegacao Maritime Netumar 993 F 2d 414; 1993 AMC 2439 (4th Cir 1993). 581 Rosenbruch v American Export Isbrandtsen Lines Inc 543 F 2d 967; 1976 AMC 487 (2d Cir 1976) (container held to be package rather than unpackaged household items inside); Binladen BSB Landscaping v M/V Nedlloyd Rotterdam 759 F 2d 1006; 1985 AMC 2113 (2d Cir 1985) at 1015; 2125; Stolt Tank Containers Inc v Evergreen Marine Corp 962 F 2d 276; 1992 AMC 2015 (2d Cir 1992) (containers holding liquid held to be packages); Alternative Glass Supplies v M/V Nomzi 1999 AMC 1080 (SDNY 1999) (container held to be package rather than two unpackaged machinery parts inside); Orient Overseas Container Line (UK) Ltd v Sea-Land Service Inc 122 F Supp 2d 481; 2001 AMC 1005 (SDNY 2000) (container held to be package rather than unpackaged engine parts inside); Fishman & Tobin Inc v Tropical Shipping & Construction Co Ltd 240 F 3d 956; 2001 AMC 1663 (11th Cir 2001) (container held to be package rather than unpackaged clothing items inside). 582 Binladen BSB Landscaping v M/V Nedlloyd Rotterdam 759 F 2d 1006; 1985 AMC 2113 (2d Cir 1985) at 1015; 2125; Hayes-Leger Associates v M/V Oriental Knight 765 F 2d 1076; 1986 AMC 1724 (11th Cir 1985) at 1080; 1729. 583 Aviles v S/S San Juan 1991 AMC 2681 (SDNY 1991) (container used as package where bill of lading recited “249 pieces” without indicating whether or how they had been packaged). 584 See, eg, FMC Corp v S/S Marjorie Lykes 851 F 2d 78; 1988 AMC 2113 (2d Cir 1988); Edso Exporting LP v Atlantic Container Line AB 471 Fed Appx 8; 2012 AMC 1811 (2d Cir 2012). 585 Edso Exporting LP v Atlantic Container Line AB 471 Fed Appx 8; 2012 AMC 1811 (2d Cir 2012). See, eg, Ulrich Ammann Building Equipment Ltd v M/V Monsun 609 F Supp 87; 1985 AMC 1965 (SDNY 1985). 586 Craddock International Inc v WKP Wilson & Son Inc 116 F 3d 1095; 1998 AMC 1107 (5th Cir 1997).

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limitation and a fair opportunity to declare a higher value for the cargo.587 A carrier seeking to enforce the package limitation must establish prima facie that notice of the limitation was given to the shipper and that the shipper was given an opportunity to opt out of the limitation, in which case the burden shifts to the shipper to demonstrate that a fair opportunity did not exist.588 The circuits differ to some extent about what amounts to fair opportunity, but United States courts are generally unsympathetic to claims made by sophisticated commercial parties or freight forwarders that they were not given fair opportunity to declare a higher value.589 Although the “fair opportunity” doctrine is a “judicial invention”590 that does not appear in the text of the Hague Rules or the COGSA, it may be applied by Australian courts deciding cases governed by United States law.591 As is the case under the Hague-Visby Rules, the parties may agree that the carrier’s liability shall be limited to an amount higher than that set by the United States equivalent of Art 4, r 5.592 There is a considerable body of United States cases holding that incorporation of the Hague-Visby

587 The doctrine derives from a dictum in Tessler Bros (BC) v Italpacific Line 494 F 2d 438; 1974 AMC 937 (9th Cir 1974) at 443; 942. It is accepted in the Second, Fourth, Fifth, Sixth, Eighth, Ninth and Eleventh Circuits: see Nippon Fire & Marine Insurance 167 F 3d 99 (2d Cir 1999); Caterpillar Overseas SA v Marine Transportation Inc 900 F 2d 714 (4th Cir 1990) at 719; Sabah Shipyard Sdn Bhd v M/V Harbel Tapper 178 F 3d 400 (5th Cir 1999) at 404; Acwoo International Steel Corp v Tokyo Kaiun Kaisha Ltd 840 F 2d 1284 (6th Cir 1988) at 1288-1289; Gamma-10 Plastics v American President Lines 32 F 3d 1244 (8th Cir 1994) at 1251-1254; Kukje Hwajae Insurance Co v M/V Hyundai Liberty 408 F 3d 1250 (9th Cir 2005) at 1255; Fireman’s Fund Insurance Co v Tropical Shipping & Construction Co 254 F 3d 987 (11th Cir 2001) at 996. The Third Circuit stands alone in rejecting the “fair opportunity” doctrine, holding it to be inconsistent with both the text and the underlying policies of COGSA, and not required by Supreme Court precedent: see Ferrostaal Inc v MV Sea Phoenix 447 F 3d 212; 2006 AMC 1217 (3d Cir 2006). 588 See, eg, Couthino Caro & Co v M/V Sava 849 F 2d 166; 1988 AMC 2941 (5th Cir 1988); Kukje Hwajae Insurance Co Ltd v M/V Hyundai Liberty 294 F 3d 826; 2002 AMC 1598 (9th Cir 2002). 589 See, eg, Vision Air Flight Service Inc v M/V National Pride 155 F 3d 1165; 1999 AMC 1168 (9th Cir 1998); Intercargo Insurance Co v Container Innovations Inc 100 F Supp 2d 198; 2000 AMC 2395 (SDNY 2000). 590 See M Sturley, “The Fair Opportunity Requirement under COGSA s 4(5): A Case Study in the Misinterpretation of the Carriage of Goods by Sea Act” (1988) 19 JMLC 1 and 157. 591 The “fair opportunity” doctrine was argued before the Supreme Court of New South Wales in PS Chellaram & Co Ltd v China Ocean Shipping Co [1989] 1 Lloyd’s Rep 413, a case not governed by US law, but Carruthers J did not find it necessary to make any decision about it. The point was not considered on appeal: PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] 1 Lloyd’s Rep 493 (NSW Sup Ct CA) and PS Chellaram & Co Ltd v China Ocean Shipping Co (unreported, High Court of Aust, 1993). Compare Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178, a case governed by US law, where the doctrine could have been, but was not, argued. 592 46 USC § 30701, Statutory Note, §§ 4(5)(g), 5.

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Rules by reference in the bill of lading is sufficient to constitute agreement to a higher limit than the US$500 set by the United States statute.593 The position in the United States is that deviation deprives the carrier of the protection of the United States equivalent of Art 4, r 5,594 except in the Seventh Circuit.595 Other matters

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Australian courts have held that a plaintiff can recover the limited amount available under the unamended Hague Rules from each of several defendants in the same proceedings,596 but no reasons were given for that decision, which seems inconsistent with the whole purpose of Art 4, r 5. As a result, plaintiffs may seek to avoid the effects of Art 4, r 5 by multiplying defendants simply to achieve multiple recovery of the limited amount. For example, a plaintiff would not usually bother to sue the master of the ship as well as the carrier when the latter is vicariously liable for the actions of the former. Where the amount set by Art 4, r 5 is available from each defendant, though, there is an incentive to proceed against the master as well as the carrier. The English Court of Appeal has held that a carrier may rely on Art 4, r 5 of the unamended Hague Rules, even in the event of a wrongful deviation.597

Limitation of time Introduction

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The third paragraph of Art 3, r 6 of the Hague-Visby Rules and the Australian modification provides:598

593 The COGSA applies to inward-bound carriage from foreign ports: see 46 USC § 30701, Statutory Note; the $500-per-package limitation applies by § 4(5) of the Act. 594 Sedco Inc v S/S Strathewe 800 F 2d 27; 1986 AMC 2801 (2d Cir 1986); SNC SLB v M/V Newark Bay 111 F 3d 243; 1997 AMC 1952 (2d Cir 1997); SPM Corp v M/V Ming Moon 965 F 2d 1297; 1992 AMC 2409 (3d Cir 1992); Aetna Insurance Co v M/V Lash Italia 858 F 2d 190 (4th Cir 1988) at 192; Spartus Corp v S/S Yafo 590 F 2d 1310; 1979 AMC 2294 (5th Cir 1979); Scapa Forming Fabrics v Blue Anchor Line 243 Fed Appx 846; 2007 AMC 2108 (5th Cir 2007); Searoad Shipping Co v EI du Pont de Nemours 361 F 2d 833 (5th Cir 1966) at 835-836; Nemeth v General Steamship Corp 694 F 2d 609 (9th Cir 1982); Unimac Co Inc v CF Ocean Service Inc 43 F 3d 1434; 1995 AMC 1484 (11th Cir 1995). 595 Atlantic Mutual Insurance Co v Poseidon Schiffahrt GmbH 313 F 2d 872 (7th Cir 1963). 596 Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd (The Cape Comorin) (1991) 24 NSWLR 745; Toshiba Corp v Mitsui OSK Lines Ltd (The Nichigoh Maru) (unreported, NSW Sup Ct, 1991). 597 Daewoo Heavy Industries Ltd v Klipriver Shipping Ltd (The Kapitan Petko Voivoda) [2003] 2 Lloyd’s Rep 1, overruling Wibau Maschinenfabric Hartman SA v Mackinnon Mackenzie & Co (The Chanda) [1989] 2 Lloyd’s Rep 494. 598 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 6 (Hague-Visby Rules); Sch 1A, Art 3, r 6 (Australian modification).

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Subject to paragraph 6bis, the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods unless suit is brought within one year of their delivery of the goods or of the date when they should have been delivered.

The fourth paragraph of Art 3, r 6 provides that the one-year period may be extended if the parties so agree. Any clause in a sea-carriage document purporting to set a limitation period shorter than that in Art 3, r 6 is null and void by virtue of Art 3, r 8.599 If the time period of one year expires without “suit” being brought, Art 3, r 6 extinguishes the plaintiff’s claim, rather than merely barring the remedy.600 Art 3, r 6 extinguishes a cargo plaintiff’s claim after one year, but it does not prevent a cargo-owner from raising a defence based on the carrier’s liability after the one-year period has expired — for example, by arguing that the carrier’s breach of the seaworthiness obligation imposed by Art 3, r 1 deprives the carrier of the right conferred by Art 4, r 6 to seek compensation for damage caused to the ship by dangerous cargo.601 Art 3, r 6 only relieves “the carrier and the ship” from liability; it does not apply to actions brought by or against non-parties to the contract of carriage. For example, in J Gadsden Pty Ltd v Australian Coastal Shipping Commission,602 the plaintiff’s goods were damaged in transit under a contract of carriage between the shipper and the charterer of the carrying ship. Three years later, the plaintiff brought an action for negligence in bailment against the shipowner, who was not a party to the contract of carriage. It was held that this action was not time-barred under Art 3, r 6 of the unamended Hague Rules. Similarly, in Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos),603 the English Court of Appeal held that the Hague-Visby Rules only regulate the rights and duties of the parties to the contract of carriage evidenced by the bill 599 Colonial Sugar Refining Co Ltd v British India Steam Navigation Co Ltd (1931) 32 SR (NSW) 245. Compare Government of Sierra Leone v Marmaro Shipping Co Ltd (The Amazona and Yayamaria) [1989] 2 Lloyd’s Rep 130 (option to arbitrate to be exercised within 30 days not struck down by Art 3, r 8). 600 J Gadsden Pty Ltd v Australian Coastal Shipping Commission [1977] 1 NSWLR 575 at 577, 586; Australian Shipping Commission v Kooragang Cement Pty Ltd [1988] VR 29 at 31, 35; Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371 at 392 per Sheller JA. See also Aries Tanker Corp v Total Transport Ltd (The Aries) [1977] 1 Lloyd’s Rep 334 at 336 per Lord Wilberforce; The Nordglimt [1988] 1 QB 183 at 190-191 per Hobhouse J; Payabi v Armstel Shipping Corp (The Jay Bola) [1992] 2 Lloyd’s Rep 62 at 69 per Hobhouse J; Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1994] 2 Lloyd’s Rep 506 at 520 per Hirst LJ. 601 Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1994] 2 Lloyd’s Rep 506 (CA). For further consideration of Art 4, r 6 and dangerous cargo, see [12.650]. 602 J Gadsden Pty Ltd v Australian Coastal Shipping Commission [1977] 1 NSWLR 575. The carrying ship was the ill-fated “Lake Illawarra”, which caused the collapse of the Tasman Bridge in 1972, and which now lies at the bottom of Hobart Harbour. See also Kim Meller Imports Pty Ltd v Eurolevant SPA (1986) 7 NSWLR 269 at 272 per Rogers J 603 Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) [1990] 1 Lloyd’s Rep 311.

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of lading, and they have no effect in actions brought by or against non-parties. As a result, it was held in Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) (No 2)604 that Art 3, r 6 of the Hague-Visby Rules did not apply to a claim brought by a plaintiff who was not a party to a bill of lading. That was so notwithstanding the provisions of Art 4 bis, r 1 of the Hague-Visby Rules, which provides that the carrier is protected by the rules, even if it is sued in tort.605 Article 4 bis, r 1 of the Hague-Visby Rules makes it clear that the carrier may rely on Art 3, r 6 if sued by a party to the contract of carriage, no matter what the cause of action. Although Art 4 bis does not appear in the unamended Hague Rules, the Victorian Court of Appeal came to the same conclusion about Art 3, r 6 of the unamended Hague Rules in Anglo Irish Beef Processors International v Federated Stevedores Geelong.606 The court held that Art 3, r 6 of the unamended Hague Rules does not merely relieve the carrier and the ship from liability under the contract of carriage — it relieves the carrier and the ship from all liability, of whatever kind. Because the discharge of liability under Art 3, r 6 extends to liability in tort, it follows that a proceeding to enforce that liability in tort must amount to “suit” for the purposes of precluding that discharge. Thus, the plaintiff’s action need not be brought against the carrier in its capacity as contracting carrier in order to prevent the operation of the time-bar in Art 3, r 6. Phillips JA said, because:607 All that the [carrier] can say is that it was not sued as “contracting carrier” — that is, it was not sued on the ground that it was the “carrier” within the meaning of the Hague Rules. To my mind, that is not necessary if the [carrier] is in fact the contracting carrier and the Hague Rules do apply.

The facts of Anglo Irish Beef Processors were rather unusual, because the plaintiff sued in negligence within one year and on the bill of lading contract after one year had expired. The practical significance of the decision may lie in its implications for the converse situation, where no action has been brought under the contract of carriage within one year, but where the plaintiff subsequently brings an action against the contracting carrier alleging negligence but not breach of contract. In such a case, Anglo Irish Beef Processors would say that the negligence claim is

604 Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) (No 2) [1990] 2 Lloyd’s Rep 395. 605 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4 bis, r 1 (Hague-Visby Rules); Sch 1A, Art 4 bis, r 1 (Australian modification). This article does not appear in the unamended Hague Rules. 606 Anglo Irish Beef Processors International v Federated Stevedores Geelong [1997] 2 VR 676. 607 Anglo Irish Beef Processors International v Federated Stevedores Geelong [1997] 2 VR 676 at 694.

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extinguished by Art 3, r 6 of the unamended Hague Rules, notwithstanding the fact that the plaintiff’s claim makes no mention of the contract of carriage.608 In Australian Shipping Commission v Kooragang Cement Pty Ltd,609 a Full Court of the Supreme Court of Victoria held that a cause of action extinguished by Art 3, r 6 is revived if a court orders an extension of the time within which arbitration proceedings may be commenced. However, the power to order an extension was conferred by a provision of the Commercial Arbitration Act 1984 (Vic) that has since been repealed.610 The new State and Territory Model Commercial Arbitration Acts contain no equivalent provision, and they specifically provide that a court cannot intervene in matters governed by the Act except where so provided in the Act.611 It would seem to follow that the revival of a cause of action by court order allowing the commencement of arbitration, such as in Kooragang Cement, is no longer possible. The words “loss or damage” in the unamended Hague Rules are given the same meaning in Art 3, r 6 as they are given in Art 4, r 2. They are not confined to physical loss of or damage to the goods themselves, but include other losses in connection with the goods, such as losses caused by delay or misdelivery.612 Thus, for example, the time limit in unamended Art 3, r 6 of the Hague Rules operates to bar a claim even when the goods to which the loss or damage relates have never in fact been loaded on the carrying ship.613 Beating the time-bar: what amounts to “suit”?

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The plaintiff must bring “suit” within one year to avoid its claim being time-barred by Art 3, r 6. “Suit” refers to the institution of proceedings by issue of the writ against the defendant, and not to the subsequent service of process.614 However, the mere issue of a writ within

608 Anglo Irish Beef Processors International v Federated Stevedores Geelong [1997] 2 VR 676 at 694 per Phillips JA: “[T]he defendant may take the point [that it was contracting carrier under the Hague Rules] whether or not the plaintiff has asserted it”. 609 Australian Shipping Commission v Kooragang Cement Pty Ltd [1988] VR 29. See also Ridge v Taylor & Larner Construction Pty Ltd (1974) 9 SASR 428; Consolidated Investment & Contracting Co v Saponaria Shipping Co Ltd (The Virgo) [1978] 1 WLR 986; Transpetrol Ltd v Ekali Shipping Ltd (The Aghia Marina) [1989] 1 Lloyd’s Rep 62. 610 Commercial Arbitration Act 1984 (Vic), s 48. 611 Commercial Arbitration Act 2010 (NSW), s 5; Commercial Arbitration (National Uniform Legislation) Act (NT); Commercial Arbitration Act 2013 (Qld), s 5; Commercial Arbitration Act 2011 (SA), s 5; Commercial Arbitration Act 2011 (Tas), s 5; Commercial Arbitration Act 2011 (Vic), s 5; Commercial Arbitration Act 2011 (WA), s 5. 612 Cargill International SA v CPN Tankers (Bermuda) Ltd (The Ot Sonja) [1993] 2 Lloyd’s Rep 435. 613 Cargill International SA v CPN Tankers (Bermuda) Ltd (The Ot Sonja) [1993] 2 Lloyd’s Rep 435; Noranda Inc v Barton Ltd (The Marinor) [1996] 1 Lloyd’s Rep 301. 614 Van Leer Australia Pty Ltd v Palace Shipping KK (1981) 180 CLR 337 (HCA, original jurisdiction).

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time without more does not mean that the carrier is forever precluded from claiming that it is discharged from liability by Art 3, r 6. If a writ issued within time is served but the plaintiff then conducts the proceedings in such breach of the timetable laid down by the rules of civil procedure that the action is dismissed for want of prosecution, it does not constitute “suit” for the purposes of Art 3, r 6.615 The same is true a fortiori of a writ that is issued but never served within the time permitted by the rules, or (possibly) if the proceedings are abandoned.616 In each of these cases, if the plaintiff institutes fresh proceedings after the one-year period has expired, the defendant carrier can successfully claim that the action is time-barred by Art 3, r 6. “Suit” includes the commencement of arbitration proceedings by appointment of an arbitrator where that is the type of “suit” the contract contemplates,617 even where that appointment proves subsequently to be invalid.618 Thus, notification of the opposing party of appointment of an arbitrator is sufficient to prevent the claim from being extinguished by Art 3, r 6,619 and, conversely, the arbitration must be commenced within the one-year period stipulated in Art 3, r 6.620 The position is otherwise in the United States, where it has been held that “suit” does not include arbitration for the purposes of the United States version of Art 3, r 6621 because arbitration “is the performance of a contract providing for the resolution of controversy without suit”.622 Thus, in the United States, arbitration can be commenced after expiration of the one-year time limit, provided it is done within a reasonable time,623 and conversely, it is possible for the contract validly to stipulate a shorter period within which 615 Fort Sterling Ltd v South Atlantic Cargo Shipping NV (The Finnrose) [1994] 1 Lloyd’s Rep 559. See also Bua International Ltd v Hai Hing Shipping Co Ltd (The Hai Hing) [2000] 1 Lloyd’s Rep 300 at 309 per Rix J. There is at least one US decision to the same effect: see Howmet Corp v Tokyo Shipping Co 318 F Supp 658; 1971 AMC 1993 (D Del 1970). The fact that dismissal of the proceedings for want of prosecution was effective to prevent the plaintiff from reinstituting proceedings against the carrier is evident from the fact that it later pursued a different defendant in respect of the same claim: Howmet Corp v Tokyo Shipping Co 320 F Supp 975; 1971 AMC 1987 (D Del 1971). 616 Fort Sterling Ltd v South Atlantic Cargo Shipping NV (The Finnrose) [1994] 1 Lloyd’s Rep 559 at 574-575 per Rix J. 617 Australian Shipping Commission v Kooragang Cement Pty Ltd [1988] VR 29 at 30 per Kaye J; Anglo Irish Beef Processors International v Federated Stevedores Geelong [1997] 2 VR 676 at 695-696 per Phillips JA. See also Owners of Cargo on board The Merak v The Merak (Owners): The Merak [1965] P 223; Nea Agrex SA v Baltic Shipping Co Ltd [1976] 1 QB 933. 618 Transpetrol Ltd v Ekali Shipping Ltd (The Aghia Marina) [1989] 1 Lloyd’s Rep 62. 619 Transpetrol Ltd v Ekali Shipping Ltd (The Aghia Marina) [1989] 1 Lloyd’s Rep 62. 620 Nea Agrex SA v Baltic Shipping Co Ltd [1976] 1 QB 933. 621 46 USC § 30107, Statutory Note, § 3(6). 622 Son Shipping Co Inc v De Fosse & Tanghe 199 F 2d 687 (2nd Cir 1952) at 689. 623 Son Shipping Co Inc v De Fosse & Tanghe 199 F 2d 687 (2nd Cir 1952) at 689; Cargill BV v S/S Ocean Traveller 726 F Supp 56; 1989 AMC 953 (SDNY 1989). See also Office of Supply, Government of Republic of Korea v New York Navigation Co 469 F 2d 377 (2d Cir 1972) (arbitration not barred by COGSA time limit, but two-year delay held unreasonable).

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arbitration must be commenced.624 It is for the arbitrators to determine whether the claim has been extinguished.625 “Suit” does not mean “suit brought anywhere by anyone”: it is confined to suit properly brought before a competent court by the person properly entitled to bring it.626 Thus, suit brought by a party with no title to sue cannot prevent the carrier from being discharged from liability by the operation of Art 3, r 6.627 For example, in Compania Colombiana de Seguros v Pacific Steam Navigation Co,628 the plaintiff’s claim in the Queen’s Bench Division of the English High Court was time-barred under Art 3, r 6 of the unamended Hague Rules, even though proceedings had been commenced in New York within the one-year period by a different person, who had no title to sue. It is possible, though, that suit brought by an assignee of the plaintiff, or by one of several plaintiffs with a joint cause of action, may suffice to prevent the carrier from being discharged from liability under Art 3, r 6 if the other plaintiffs sue after the period of one year has expired.629 Similarly, suit against the wrong defendant is not sufficient in itself to prevent a claim being time-barred under Art 3, r 6,630 but it may ultimately prove to be so if the plaintiff is given leave to substitute the name of the correct defendant on the ground that it has made a mistake about the name of the defendant.631 Suit brought before a court of competent jurisdiction is, in general, sufficient to preclude the carrier from raising a defence based on Art 3, r 6 in separate proceedings brought in a different court of competent 624 See, eg, Government of Indonesia v The General San Martin 114 F Supp 289 (SDNY 1953) (three-month limit for bringing arbitration held valid notwithstanding US equivalents of Art 3, r 6 and Art 3, r 8). 625 Tokio Marine & Fire Insurance Co v M/V Saffron Trader 257 F Supp 2d 651 (SDNY 2003) at 656 n 3 (citing several other cases). 626 Compania Colombiana de Seguros v Pacific Steam Navigation Co [1965] 1 QB 101; The Nordglimt [1988] 1 QB 183 at 192 per Hobhouse J; Payabi v Armstel Shipping Corp (The Jay Bola) [1992] 2 Lloyd’s Rep 62 at 69 per Hobhouse J; The Havhelt [1993] 1 Lloyd’s Rep 523; Fort Sterling Ltd v South Atlantic Cargo Shipping NV (The Finnrose) [1994] 1 Lloyd’s Rep 559 at 573 per Rix J; Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243 at 247-248 per David Steel J. 627 Compania Colombiana de Seguros v Pacific Steam Navigation Co [1965] 1 QB 101, as explained in The Nordglimt [1988] QB 183 at 192 per Hobhouse J. See also Transworld Oil (USA) Inc v Minos Compania Naviera SA (The Leni) [1992] 2 Lloyd’s Rep 48 (suit brought in the name of the wrong plaintiff). 628 Compania Colombiana de Seguros v Pacific Steam Navigation Co [1965] 1 QB 101. 629 The Nordglimt [1988] 1 QB 183 at 192 per Hobhouse J. 630 Payabi v Armstel Shipping Corp (The Jay Bola) [1992] 2 Lloyd’s Rep 62. 631 Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231, esp at 259-262 per McHugh J (with whom Brennan and Deane JJ agreed); Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371. To the extent that Payabi v Armstel Shipping Corp (The Jay Bola) [1992] 2 Lloyd’s Rep 62 is inconsistent with Bridge Shipping on this point it should not be followed in Australia: see Nikolay Malakhov at 396.

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jurisdiction. For example, in The Nordglimt,632 the plaintiff instituted an action against the carrier in personam in Belgium before the one-year period had expired, and an action against the ship in rem in England after the one-year period had expired. Hobhouse J held that the carrier was not entitled to have the English action in rem struck out, because the Belgian action had been brought in a competent court by the party with title to sue, and this was sufficient to constitute “suit” for the purposes of Art 3, r 6. Suit brought in a court that is not competent is not sufficient to prevent the carrier from being discharged from liability under Art 3, r 6.633 Australian courts have yet to decide what makes a court “incompetent” for these purposes. English courts have held that a court is “incompetent” if it has no jurisdiction,634 or because the parties have agreed to the exclusive jurisdiction of a court in a different country,635 or because they have agreed to submit all disputes between them to arbitration.636 For example, in The Havhelt,637 it was held that an action brought in England in breach of an exclusive Norwegian jurisdiction clause did not constitute “suit” for the purposes of Art 3, r 6. Similarly, in Thyssen Inc v Calypso Shipping Corp SA,638 it was held that suit brought in New York in breach of a London arbitration clause was not sufficient to constitute “suit” for the purposes of Art 3, r 6. The English cases seem to go too far, taking much too technical an approach to the interpretation of Art 3, r 6. Under Australian law, choice of forum clauses do not have the effect of depriving the court of jurisdiction, although they may provide the court with a reason not to exercise its jurisdiction.639 Suit brought by the right plaintiff against the right defendant in a court that has jurisdiction under its own rules should be sufficient to prevent the claim being extinguished by Art 3, r 6, even if it is brought in breach of a choice of forum clause. The essential purpose 632 The Nordglimt [1988] 1 QB 183. 633 The Nordglimt [1988] 1 QB 183 at 192 per Hobhouse J; Payabi v Armstel Shipping Corp (The Jay Bola) [1992] 2 Lloyd’s Rep 62 at 69 per Hobhouse J; The Havhelt [1993] 1 Lloyd’s Rep 523; Fort Sterling Ltd v South Atlantic Cargo Shipping NV (The Finnrose) [1994] 1 Lloyd’s Rep 559 at 571 per Rix J; Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243. 634 Compania Colombiana de Seguros v Pacific Steam Navigation Co [1965] 1 QB 101. 635 The Havhelt [1993] 1 Lloyd’s Rep 523; Fort Sterling Ltd v South Atlantic Cargo Shipping NV (The Finnrose) [1994] 1 Lloyd’s Rep 559 at 573 per Rix J. 636 Government of Sierra Leone v Marmaro Shipping Co Ltd (The Amazona and Yayamaria) [1989] 2 Lloyd’s Rep 130 at 135-136 per Parker LJ, as explained in Fort Sterling Ltd v South Atlantic Cargo Shipping NV (The Finnrose) [1994] 1 Lloyd’s Rep 559 at 571-572 per Rix J; Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243. 637 The Havhelt [1993] 1 Lloyd’s Rep 523. 638 Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243. 639 Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418 at 444-445 per Toohey, Gaudron and Gummow JJ: “The stay in the present case was sought essentially in aid of such an implied negative stipulation that no other court have jurisdiction to

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of Art 3, r 6 is to ensure that the carrier has prompt notice of the existence of a claim against it. That result is achieved just as effectively by suit in a competent court as it is by suit (or institution of arbitration proceedings) in the agreed forum, at least once the existence of the claim has been brought to the defendant’s attention by service or by other means. Nevertheless, in Thyssen Inc v Calypso Shipping Corp SA,640 David Steel J said, “It is not enough for the correct claimant to commence proceedings before a competent court against the correct defendant”.641 That cannot be enough, said David Steel J, because:642 It would mean, for instance, that if the claimants in the present case had instituted proceedings in rem in any jurisdiction in the world which was a party to the 1952 Convention on Arrest of Ships, or otherwise recognized jurisdiction in rem for cargo claims, regardless of whether the vessel was in the jurisdiction at the time, let alone whether, following arrest the proceedings were later stayed in the face of an arbitration clause, those proceedings would remain a suit for the purposes of Art 3, r 6. This is not just a surprising proposition. It gives rise to absurd results. The mere institution of proceedings in any court with jurisdiction in principle, regardless of whether service of those proceedings could in fact be effected and even regardless of any contractual commitment to use another forum, would prevent the shipowner from being discharged from liability by reason of the passage of time and allow the claimant to institute proceedings in an appropriate contractual forum at any time thereafter, immune from any time bar threat.

Admittedly, it would be undesirable for the carrier to lose the right to rely on Art 3, r 6 in the chosen forum because the plaintiff had previously instituted proceedings in a foreign court, competent by its own rules, without ever bringing them to the carrier’s attention. However, it seems excessive to say that arrest of a ship in a court of competent jurisdiction is not sufficient to prevent Art 3, r 6 from barring the claim, even if the in rem proceedings are later stayed because of a choice of forum clause. In practice, plaintiffs routinely arrest ships wherever they can be found, for the sole purpose of getting security for their claim, knowing that their claims in rem will later be stayed and the substance of the dispute heard elsewhere. In Australia, the Admiralty Act 1988 (Cth), s 29 specifically contemplates such a possibility. There is nothing in the purpose of Art 3, r 6 to suggest that the carrier should later be allowed to raise the time-bar defence in the agreed forum, even though it was fully aware of the

determine disputes. This stipulation, which may be described as a foreign jurisdiction clause, does not operate to exclude the jurisdiction of the Supreme Court of New South Wales, although it may constitute a ground for that Court to refuse to exercise its jurisdiction.” 640 Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243. 641 Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243 at 248 per David Steel J. 642 Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243 at 246 per David Steel J.

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existence of a claim brought against it within time in a court of competent jurisdiction. Nevertheless, that was, regrettably, the outcome in Thyssen Inc v Calypso Shipping Corp SA.643 Even English courts have expressed the view, obiter, that if the plaintiff brings an action in time in a court that has jurisdiction to hear the claim but that action is then stayed on the ground that the court is forum non conveniens, the plaintiff should not be prevented by Art 3, r 6 from bringing an action in the convenient forum after the one-year time-bar has expired.644 If the period of one year expires on a Saturday or Sunday or a public holiday or bank holiday, “suit” on the business day immediately following is sufficient.645 When does time begin to run? The meaning of “delivery”

[12.600]

Art 3, r 6 provides that suit must be brought within one year of “delivery or of the date when [the goods] should have been delivered”. The rule does not say “whichever is earlier” or, indeed, “whichever is later”.646 In most cases, the absence of an explanatory phrase creates no difficulty. If the goods are damaged, the one-year period begins to run from the time they are actually delivered; if the goods are lost, the one-year period begins to run from the time when they should have been delivered. Some difficulty arises, however, if the goods are actually delivered after they should have been delivered, or if they are actually delivered at a different port from the one where they should have been delivered. In such cases, the one-year period runs from the (later) moment of actual delivery if it can fairly be said that that amounts to delivery under the original contract of carriage,647 even if it occurs at a different port.648 If, however, the actual delivery takes place under a separate and distinct transaction, time begins to run from the moment when delivery should have taken place under the original contract of carriage.649 643 Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243. 644 See Hispanica de Petroleos SA v Vencedora Oceania Navigacion SA (The Kapetan Markos NL) [1986] 2 Lloyd’s Rep 211 at 231 per Parker LJ; Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243 at 248 per David Steel J. 645 Acts Interpretation Act 1901 (Cth), s 36(2); Automatic Tube Co Pty Ltd v Adelaide Steamship (Operations) Ltd [1966] WAR 103 (reported sub nom The Beltana [1967] 1 Lloyd’s Rep 531). 646 Trafigura Beheer BV v Golden Stavreatos Maritime Inc (The Sonia) [2003] 2 Lloyd’s Rep 201 at 207 [31] per Clarke LJ. 647 Universal Ruma Co v Mediterranean Shipping Co SA 2001 AMC 110 (SDNY 2000). But cf Servicios-Expoarma CA v Industrial Maritime Carriers Inc 135 F 3d 984; 1998 AMC 1453 (5th Cir 1998) at 988; 1457-1458 suggesting, obiter, that time should run from when the cargo should have been delivered. 648 Trafigura Beheer BV v Golden Stavreatos Maritime Inc (The Sonia) [2003] 2 Lloyd’s Rep 201. 649 Western Gear Corp v State Marine Lines Inc 362 F 2d 328 (9th Cir 1966); Cerro Sales Corp v Atlantic Marine Enterprises Inc 403 F Supp 562; 1976 AMC 375 (SDNY 1975).

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[12.600]

For example, in Cerro Sales Corp v Atlantic Marine Enterprises Inc,650 the carrying ship and its cargo were both damaged by fire on a voyage from the Philippines to Peru. The ship was taken to Honolulu under tow, and the cargo was eventually taken from Honolulu to Peru by a different ship under a separate sea-carriage document. The United States District Court for the Southern District of New York held that time ran from when delivery should have been made under the original contract of carriage, not when delivery was actually made. In contrast, in Trafigura Beheer BV v Golden Stavreatos Maritime Inc (The Sonia),651 the cargo could not be discharged at the intended port of destination in Nigeria and it was eventually discharged in Greece. The English Court of Appeal held that time ran from when delivery was actually made in Greece, rather than when it should have been made in Lagos, because the delivery in Greece amounted to delivery under the original contract of carriage. Where the sea-carriage document requires the receiver to take delivery of the goods from the ship’s tackle and permits the carrier to put the goods into a warehouse or store if the consignee or indorsee fails to do so,652 “delivery” is complete on discharge or when the goods are put into the store,653 so that time runs for the purposes of Art 3, r 6 from the time when the goods are freed from the ship’s tackle or, at the very latest, when the receiver has had a reasonable opportunity to take actual possession of the goods from the warehouse or store.654 Where, however, the sea-carriage document does not define discharge as delivery,655 it must be determined whether “delivery” means delivery from the carrier, or delivery to the receiver, as the two may not coincide. In Servicios-Expoarma CA v Industrial Maritime Carriers Inc,656 the United States Court of Appeals for the Fifth Circuit preferred the latter position, holding that “delivery” occurs for the purposes of Art 3, r 6 at “the point at which the carrier has fulfilled its responsibilities to carry, discharge, and otherwise perform its contractual duties with respect to cargo, [that is] when the carrier places the cargo into the custody of whomever is 650 Cerro Sales Corp v Atlantic Marine Enterprises Inc 403 F Supp 562; 1976 AMC 375 (SDNY 1975). 651 Trafigura Beheer BV v Golden Stavreatos Maritime Inc (The Sonia) [2003] 2 Lloyd’s Rep 201. 652 See, eg, cl 9 of the Conlinebill 2016 form (Appendix 1). 653 Keane v Australian Steamships Pty Ltd (1929) 41 CLR 484. 654 Automatic Tube Co Pty Ltd v Adelaide Steamship (Operations) Ltd [1966] WAR 103 (reported sub nom The Beltana [1967] 1 Lloyd’s Rep 531). See also Great Eastern Shipping Co Ltd v Far East Chartering Ltd (The Jag Ravi) [2012] 1 Lloyd’s Rep 637, holding in a different context that “delivery” was complete when the carrier effectively divested itself or relinquished the power to compel any dealing in or with the cargo that could prevent the consignee from obtaining possession. 655 See, eg, Nissho Iwai Aust Ltd v Malaysian International Shipping Corp Berhad (1989) 167 CLR 219 at 230-231. 656 Servicios-Expoarma CA v Industrial Maritime Carriers Inc 135 F 3d 988; 1998 AMC 1457 (5th Cir 1998).

[12.610]

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legally entitled to receive it from the carrier”.657 This interpretation of the unamended Hague Rules is consistent with the position adopted by Australia when modifying the Hague-Visby Rules, namely that the carrier’s period of responsibility ceases when the goods are “delivered to or placed at the disposal of the consignee”.658 Claims arising outside the “tackle-to-tackle” period

[12.610]

Time begins to run under Art 3, r 6 from the moment of “delivery”, but the Hague Rules and the Hague-Visby Rules as a whole (but not the Australian modification) apply only to the “tackle-to-tackle” period up to the moment of discharge from the ship.659 Because delivery to the receiver often takes place after discharge from the ship, there is some doubt whether Art 3, r 6 applies to claims arising after discharge but before delivery, or where discharge from the ship takes place but proper delivery never occurs because the goods are misdelivered to the wrong receiver.

In Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos),660 the English Court of Appeal held that the inclusion of the word “whatsoever” in the Hague-Visby version of Art 3, r 6 made it clear that the one-year time bar was intended to apply to claims arising outside the temporal “tackle-to-tackle” period, such as claims for misdelivery. In PS Chellaram & Co Ltd v China Ocean Shipping Co (The Zhi Jiang Kou),661 the Court of Appeal of New South Wales gave strong support, albeit obiter, to the position adopted by the Court of Appeal in The Captain Gregos, namely that Art 3, r 6 does apply to claims arising after discharge. In contrast, in Teys Bros (Beenleigh) Pty Ltd v ANL Cargo Operations Pty Ltd,662 the Supreme Court of Queensland followed the decision at first instance in The Captain Gregos,663 and held that Art 3, r 6 did not apply to claims arising after discharge.664 Similarly, in NPL (Australia) Pty Ltd v 657 Servicios-Expoarma CA v Industrial Maritime Carriers Inc 135 F 3d 988; 1998 AMC 1457 (5th Cir 1998) at 992; 1464. 658 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 4(b). 659 See [12.50]. 660 Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) [1990] 1 Lloyd’s Rep 311. 661 PS Chellaram & Co Ltd v China Ocean Shipping Co (The Zhi Jiang Kou) [1991] 1 Lloyd’s Rep 493 (NSWCA). The point was not considered on appeal PS Chellaram & Co Ltd v China Ocean Shipping Co (The Zhi Jiang Kou) (unreported, High Ct of Aust, 1993). 662 Teys Bros (Beenleigh) Pty Ltd v ANL Cargo Operations Pty Ltd [1990] 2 Qd R 288. 663 The Captain Gregos [1989] 2 Lloyd’s Rep 63. 664 Teys Bros was followed by the District Court of South Australia in Hines Exports Pty Ltd v Mediterranean Shipping Co (2000) 209 LSJS 127; [2000] SADC 71 in relation to a claim arising before loading. The Art 3, r 6 point was not considered by the Full Court of the Supreme Court of South Australia on appeal: Hines Exports Pty Ltd v Mediterranean Shipping Co (2001) 80 SASR 268.

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[12.620]

Kamil Export (Aust) Pty Ltd,665 the Appeal Division of the Supreme Court of Victoria held that Art 3, r 6 does not apply to claims arising after discharge. At first instance in that case, Hayne J said that the answer was anything but clear given the conflict of authority, and that the question should await authoritative resolution by the High Court of Australia. That seems particularly appropriate given that the word “whatsoever”, which was the basis of the decision of the Court of Appeal in The Captain Gregos, does not appear in Art 3, r 6 of the unamended Hague Rules, which governed the contracts of carriage in Teys Bros, The Zhi Jiang Kou and Kamil Export (although the words “in any event” do). The carrier in the NPL case was, however, refused special leave to appeal to the High Court of Australia on this point (among others). Until the High Court settles the matter authoritatively, the position must be taken to be as stated by the Appeal Division in the Kamil Export case, that being the most senior court to have reached a conclusion on the point as ratio decidendi. That was the position taken (somewhat reluctantly) by Fryberg J of the Supreme Court of Queensland in Topaloglu v P & O Nedlloyd Ltd,666 in a case governed by the Hague-Visby version of the Rules. This issue is less pressing in relation to whatever contracts of carriage may be governed by the Australian modification, which applies before and after the “tackle-to-tackle” period, including the period while the goods are in the carrier’s charge at the port or wharf at each end of the carrying voyage.667 Because the carrier’s responsibility under the Australian modification does not cease until the goods are “delivered to or placed at the disposal of the consignee”,668 it seems clear that the one-year time period should begin to run from that moment. Miscellaneous matters: deviation, notice and indemnity

[12.620]

The inclusion of the word “whatsoever” in Art 3, r 6 of the Hague-Visby Rules and the Australian modification, and the fact that the rules are given the force of law by the Carriage of Goods by Sea Act 1991 (Cth), s 8, make it clear that the one-year time-bar applies even when the carrier has committed a wrongful deviation,669 or is guilty of conduct that would deprive it of the right to limit its liability because of Art 4, r 5(e).670 In the United States, both the Fifth and the Eleventh Circuits have held 665 NPL (Australia) Pty Ltd v Kamil Export (Aust) Pty Ltd [1996] 1 VR 538. 666 Topaloglu v P & O Nedlloyd Ltd [2006] QSC 17, citing Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485, which is authority for the proposition that any State court (either an intermediate court of appeal or, even more so, a trial judge) should apply the interpretation of a statute made by another State’s intermediate appellate court unless convinced that that court’s interpretation is plainly wrong. 667 See [12.50]. 668 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 4(b). 669 Kenya Railways v Antares Co Pte Ltd (The Antares) (Nos 1 and 2) [1987] 1 Lloyd’s Rep 424. See [12.330]. 670 See [12.530].

[12.620]

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that the one-year limitation period in Art 3, r 6 of the unamended Hague Rules applies even after an unreasonable deviation, because of the presence of the words “in any event”.671 In all versions of the rules, Art 3, r 6 also imposes an obligation on the plaintiff to give the carrier (or its agent) notice in writing of any loss or damage before or at the time of removing the goods from the port of discharge. If the loss or damage is not apparent, notice must be given within three days of delivery. If notice is nsot given, removal of the goods is prima facie evidence that the goods were delivered as described in the bill of lading. This part of Art 3, r 6 is generally regarded as having little or no effect, as the burden of proving loss or damage lies on the plaintiff whether or not written notice has been given to the carrier, so that the presumption of sound delivery is easily rebutted by the cargo plaintiff’s evidence of non-delivery or delivery in defective condition.672 In any event, Art 3, r 6 provides that notice need not be given if the state of the goods has been the subject of a joint survey or inspection at the time of their receipt. Art 3, r 6 bis of the Hague-Visby Rules (and the Australian modification) provides that the one-year time-bar in Art 3, r 6 does not apply to a claim for an indemnity. An indemnity claim must be brought within the time allowed by “the law of the court seized of the case”, but the time allowed must not be less than three months from the day when the person seeking the indemnity has settled the claim or has been served with process in the action against himself or herself. Thus, the indemnity claim may be brought within the period allowed by the local rules, or three months, whichever is longer. The three-month period under Art 3, r 6 bis applies when the indemnity claim is made under a contract of carriage governed by the Hague-Visby Rules, whether or not the initial claim is also governed by a contract to which the Hague-Visby Rules apply.673 Art 3, r 6 bis does not appear in the unamended Hague Rules, and as a result, it seems that the time limits for indemnity claims under the unamended Rules are to be found in the general legislation governing time limits.674 The one-year Hague Rules period applies if the claim for contribution or an indemnity is made under a contract governed by the

671 Bunge Edible Oil Corp v M/V Torm Rask 756 F Supp 261 (ED La 1991) at 266 (aff’d Bunge Edible Oil Corp v M/V Torm Rask 949 F 2d 786 (5th Cir 1992) at 788); Mesocap Industries Ltd v Torm Lines 194 F 3d 1342 (11th Cir 1999). See [12.620]. 672 Colonial Sugar Refining Co Ltd v British India Steam Navigation Co Ltd (1931) 32 SR (NSW) 245 at 258 per Halse Rogers J; Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 148 [105] per Rares J. 673 China Ocean Shipping Co v The Owners of the Vessel Andros (The Xingcheng) [1987] 2 Lloyd’s Rep 210 (PC). 674 See [12.580].

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[12.630]

Hague Rules,675 but if it is made under some other contract, or in tort, or for contribution under statute, the Hague Rules period does not apply.676

The shipper’s obligations [12.630]

At common law, in a contract for carriage of goods by sea the shipper impliedly undertakes: (1) to pay freight for the carriage of its goods;677 and (2) that the goods shipped are not dangerous, unless the carrier has agreed to carry them in circumstances where it knows or ought to know of their dangerous nature.678 Both of these obligations have been modified by statute. In those contracts of carriage governed by the Hague or Hague-Visby Rules or the Australian modification of the latter, an additional obligation is imposed on the shipper to guarantee the accuracy of any particulars of the goods furnished to the carrier.679 Freight

[12.640]

The shipper’s common law obligation to pay freight for the carriage of the goods arises independently of the terms of the sea-carriage document; it is implied from the mere fact of shipping goods into the carrier’s ship for carriage.680 Under the State and Territory Sea-Carriage Documents Acts, the shipper’s liability to pay freight is transferred to the lawful holder of a bill of lading or the named consignee under a sea waybill or ship’s delivery order when that person demands or takes delivery of the goods from the carrier or makes a claim under the contract,681 although if that person demands or takes delivery before rights under the contract are transferred to it,682 liability is only 675 For example, where a freight forwarder sues an ocean carrier under a sea-carriage document issued by the latter to the former, seeking indemnity for a claim brought against it by the cargo-owner. 676 See, eg, ITT Rayonier Inc v Southeastern Maritime Co 620 F 2d 512; 1981 AMC 854 (5th Cir 1980); Hercules Inc v Stevens Shipping Co Inc 698 F 2d 726; 1983 AMC 1786 (5th Cir 1983) (en banc); American Home Assurance Inc v Internaves Shipping Corp 985 F Supp 1154; 1998 AMC 2266 (SD Fla 1997). 677 Domett v Beckford (1833) 5 B & Ad 521; 110 ER 883; Dickenson v Lano (1860) 2 F & F 188; 175 ER 1017; Fox v Nott (1861) 6 H & N 630; 158 ER 261; Sewell v Burdick (1884) 10 App Cas 74 at 91 per Lord Blackburn. 678 Brass v Maitland (1856) 6 El & Bl 470; 119 ER 940 at 484; 945-946 per Lord Campbell CJ; Bamfield v Goole and Sheffield Transport Co Ltd [1910] 2 KB 94; Mitchell, Cotts & Co v Steel Bros Ltd [1916] 2 KB 610 at 614 per Atkin J. 679 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 5 (Hague-Visby Rules); Sch 1A, Art 3, r 5 (Australian modification). See [12.660]. 680 Domett v Beckford (1833) 5 B & Ad 521; 110 ER 883; Fox v Nott (1861) 6 H & N 630; 158 ER 261. 681 Sea-Carriage Documents Act 1997 (NSW), s 10(1), (2); Sea-Carriage Documents Act (NT), s 10(1), (2); Sea-Carriage Documents Act 1996 (Qld), s 8(1), (2); Sea-Carriage Documents Act 1998 (SA), s 9(1), (2); Sea-Carriage Documents Act 1997 (Tas), s 9(1), (2); Goods Act 1958 (Vic), s 94(1), (2); Sea-Carriage Documents Act 1997 (WA), s 10(1), (2). 682 As to transfer of rights, see [12.670]–[12.680].

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transferred when rights are later transferred to that person.683 The transferee becomes subject to all the liabilities under the contract of carriage (including the obligation to pay freight) as if it had been an original party to the contract,684 but the original shipper is not thereby relieved of liability.685 The position of the consignee of a straight bill of lading is more difficult. The relevant provisions of the Sea-Carriage Documents Acts state that the shipper’s liabilities (including the liability to pay freight) are transferred to “each successive lawful holder” of a bill of lading,686 and “lawful holder” is defined to include a person who “has come into possession of the bill, in good faith, as the consignee of the goods, by virtue of being identified in the bill”.687 The apparent intention is to include the named consignee of a straight bill of lading, who comes into possession of the original bill of lading “by virtue of being identified” in it.688 However, the term “bill of lading” is defined in such a way as to suggest that it covers only negotiable bills of lading, because it refers to transfer by indorsement or by delivery of a bearer bill without indorsement.689 Thus, it is not obvious, purely as a matter of interpretation, that the named consignee of a straight bill of lading can qualify to be a “lawful holder”, because a straight bill of lading is not a negotiable document.690 683 Sea-Carriage Documents Act 1997 (NSW), s 10(3); Sea-Carriage Documents Act (NT), s 10(3); Sea-Carriage Documents Act 1996 (Qld), s 8(3); Sea-Carriage Documents Act 1998 (SA), s 9(3); Sea-Carriage Documents Act 1997 (Tas), s 9(3); Goods Act 1958 (Vic), s 94(3); Sea-Carriage Documents Act 1997 (WA), s 10(3). 684 Sea-Carriage Documents Act 1997 (NSW), s 10(2); Sea-Carriage Documents Act (NT), s 10(2); Sea-Carriage Documents Act 1996 (Qld), s 8(2); Sea-Carriage Documents Act 1998 (SA), s 9(2); Sea-Carriage Documents Act 1997 (Tas), s 9(2); Goods Act 1958 (Vic), s 94(2); Sea-Carriage Documents Act 1997 (WA), s 10(2). 685 Sea-Carriage Documents Act 1997 (NSW), s 11; Sea-Carriage Documents Act (NT), s 11; Sea-Carriage Documents Act 1996 (Qld), s 9; Sea-Carriage Documents Act 1998 (SA), s 10; Sea-Carriage Documents Act 1997 (Tas), s 10; Goods Act 1958 (Vic), s 95; Sea-Carriage Documents Act 1997 (WA), s 11. 686 Sea-Carriage Documents Act 1997 (NSW), ss 8(1)(a), 10(1); Sea-Carriage Documents Act (NT), ss 8(1)(a), 10(1); Sea-Carriage Documents Act 1996 (Qld), ss 6(1)(a), 8(1); Sea-Carriage Documents Act 1998 (SA), ss 7(1)(a), 9(1); Sea-Carriage Documents Act 1997 (Tas), ss 7(1)(a), 9(1); Goods Act 1958 (Vic), s 94(1), (2); Sea-Carriage Documents Act 1997 (WA), s 10(1), (2). 687 Sea-Carriage Documents Act 1997 (NSW), s 5, para (a) of definition of “lawful holder”; Sea-Carriage Documents Act (NT), s 5; Sea-Carriage Documents Act 1996 (Qld), s 3; Sea-Carriage Documents Act 1998 (SA), s 4; Sea-Carriage Documents Act 1997 (Tas), s 4; Goods Act 1958 (Vic), s 89; Sea-Carriage Documents Act 1997 (WA), s 5. 688 See [12.680]. 689 Sea-Carriage Documents Act 1997 (NSW), s 5, definition of “bill of lading”; Sea-Carriage Documents Act (NT), s 5; Sea-Carriage Documents Act 1996 (Qld), s 3; Sea-Carriage Documents Act 1998 (SA), s 4; Sea-Carriage Documents Act 1997 (Tas), s 4; Goods Act 1958 (Vic), s 89; Sea-Carriage Documents Act 1997 (WA), s 5. 690 See BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 222-223 per Hill J; Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791 at [4] per Rares J.

318

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[12.640]

At first instance in El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA,691 the parties agreed that the straight bill of lading in that case qualified as a “sea waybill” for purposes of the definition in the Sea-Carriage Documents Act 1996 (Qld), s 3. The question whether the Act applied to the straight bill of lading was not considered on appeal in that case. The solution of treating a straight bill of lading as a sea waybill is an expedient one for these purposes, but it is questionable whether it is correct, given that the definition of “sea waybill” in the Acts begins with the words: “a document, other than a bill of lading”. On appeal in El Greco, Allsop J (with whom Black CJ agreed) said that it was unnecessary for purposes of that case to decide whether the document was better described as a non-negotiable bill of lading or as a sea waybill, because the Carriage of Goods by Sea Act 1991 (Cth) applies to both, and because there had been no appeal of the question whether title to sue had passed to the receiver under the Sea-Carriage Documents Act 1996 (Qld).692 However, Allsop J noted, without further comment, that the definition of “bill of lading” in the Sea-Carriage Documents Acts is much narrower than the definitions in the Carriage of Goods by Sea Act 1991 (Cth).693 Unless a broadly purposive interpretation is given to the definition of “bill of lading” in the State and Territory Sea-Carriage Documents Acts, the paragraph defining “lawful holder” is meaningless to the extent that it purports to include the consignee named in a straight bill of lading, because the naming of the consignee would have the effect that the document would then not be a “bill of lading” for purposes of the Acts. Some violence to the language is needed to avoid that absurd conclusion, but a purposive approach would say that the obvious intention of the Acts as a whole was that the transfer of rights and liabilities effected by the Acts should apply to the consignee named in a straight bill of lading. If this approach were not taken, the transfer of the obligation to pay freight under a straight bill of lading could only take place by the terms of the contract.

691 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA [2003] FCA 588 at [23] per Kiefel J. 692 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296 at 324 [133]-[134] per Allsop J (with whom Black CJ agreed), citing the Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 1(g). See also Beluga Shipping GmbH v Headway Shipping Ltd (No 1) [2008] FCA 1791 (straight bill of lading governed by Carriage of Goods by Sea Act 1991 (Cth)). For a consideration of transfer of the title to sue, see [12.670]–[12.680]. 693 El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296 at 324 [133] per Allsop J (with whom Black CJ agreed).

[12.650]

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Even where the sea-carriage document contains express provisions making the receiver liable for payment of freight,694 the shipper remains liable.695 However, payment of freight by the receiver relieves the shipper of liability.696 The shipper’s obligation to pay freight is often secured by a clause in the sea-carriage document giving the carrier a lien over the cargo for payment of outstanding freight,697 as well as other outstanding charges.698 The carrier’s lien for unpaid freight takes precedence over an unpaid seller’s lien (which is exercised by stoppage in transit).699 If properly drafted, a lien clause may give the carrier the right to exercise a lien for freight outstanding from the shipper (or other contracting party) under previous contracts.700 Dangerous goods

[12.650]

At common law, the shipper of goods under a contract of carriage has two similar but distinct obligations: first, not to ship goods that are liable to cause damage to the vessel or other cargo shipped on it without giving notice to the carrier of the character of the goods,701 and secondly, not to ship goods which are liable to cause delay to the vessel.702 The corollary of the shipper’s obligation not to ship goods of these kinds is the carrier’s right to refuse to carry them.703 The question whether the goods pose a danger to ship and cargo or a risk of delay is one of degree, to be judged in the light of all the circumstances, including the destination of the carrying voyage and the cargoes likely to be shipped there.704 The shipper’s liability at common law is strict: it is 694 See, eg, cll 1 and 10 of Conlinebill 2016 form (Appendix 1). 695 Sea-Carriage Documents Act 1997 (NSW), s 11; Sea-Carriage Documents Act (NT), s 11; Sea-Carriage Documents Act 1996 (Qld), s 9; Sea-Carriage Documents Act 1998 (SA), s 10; Sea-Carriage Documents Act 1997 (Tas), s 10; Goods Act 1958 (Vic), s 95; Sea-Carriage Documents Act 1997 (WA), s 11. 696 Anderson v Hillies (1852) 12 CB 499; 138 ER 1002. 697 See, eg, the Conlinebill 2016 form (Appendix 1), cl 11. 698 In Pacific Asia Express Pty Ltd v Renegade Gas Pty Ltd [2010] NSWSC 1188, it was held that the carrier had a lien for outstanding charges incurred in rendering the cargo safe, even though the amount of those charges remained in dispute. 699 Gilgandra Marketing Co-Operative Ltd v Australian Merchandise Pty Ltd (In liq) (No 3) [2011] NSWSC 69. 700 See, eg, Australian Tallow & Agri-Commodities Pty Ltd v Malaysia International Shipping Corp (2001) 50 NSWLR 576. 701 Brass v Maitland (1856) 6 El & Bl 470; 119 ER 940; Effort Shipping Co Ltd v Linden Management SA: The Giannis NK [1998] AC 605 at 618 per Lord Lloyd. 702 Mitchell v Steel [1916] 2 KB 610. 703 Brass v Maitland (1856) 6 El & Bl 470; 119 ER 940 at 485; 946 per Lord Campbell CJ. 704 Sig Bergesen DY & Co v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453 at 463 per Staughton LJ (with whom Balcombe LJ agreed).

320

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[12.650]

responsible for any damage or delay caused by the goods, even if it neither knows nor ought to know of the defect in the cargo that is likely to cause damage or delay.705 These common law rights and obligations of the parties with respect to dangerous goods are modified (but not completely superseded)706 by the Navigation Act 2012 (Cth), Ch 3, Pt 4, Div 4, SubdivB; Marine Order 41 (Carriage of Dangerous Cargoes) 2009 (Cth) and by Art 4, r 6 of the Hague or Hague-Visby Rules or the Australian modification of the latter.707 Section 119 of the Navigation Act 2012 (Cth) requires the shipper of dangerous goods to give notice of its intention to ship them. Section 9.1.1 of Marine Order 41 requires notice to be given by completing a Multimodal Dangerous Goods Form as required by Ch 5.4 of the International Maritime Dangerous Goods Code (the IMDG Code); it must be given to the master as soon as practical after the ship arrives at the port of shipment — in any case before the goods are loaded on board the ship — along with the Competent Authority Approval and Certificate required by the IMDG Code. Failure to give notice in the required manner is an offence punishable by a penalty of imprisonment for 12 months, or 60 penalty units, or both.708 It is also an offence, with the same penalty for violation, to ship dangerous goods that are not distinctly marked on the outside of the package with a correct description of the goods.709 Where the Hague or Hague-Visby Rules apply, or the Australian modification of the latter, the carrier is entitled by Art 4, r 6 to land at any place, destroy or render innocuous “goods of an inflammable, explosive or dangerous nature” without compensation if the carrier, master or carrier’s agent has not consented to their shipment with knowledge of their nature and character, or if they were shipped with such knowledge and consent but became a danger to the ship or cargo. In the context of Art 4, r 6, “goods of a dangerous nature” means goods that are liable to 705 Effort Shipping Co Ltd v Linden Management SA: The Giannis NK [1998] AC 605 at 618-619 per Lord Lloyd (with whom Lords Goff and Clyde agreed). 706 In Effort Shipping Co Ltd v Linden Management SA: The Giannis NK [1998] AC 605 at 612-613, Lord Lloyd (with whom Lords Goff and Clyde agreed) accepted an argument that the word “dangerous” in Art 4, r 6 “means, or at any rate includes, cargo which is physically dangerous to other cargo”, and so held that it was not necessary to determine whether it included goods that are “legally” dangerous in the sense that they are liable to cause delay to ship and cargo. If Art 4, r 6 does apply only to physically dangerous goods, the shipper’s obligations in respect to cargo that is not physically dangerous are still governed by the common law. 707 Carriage of Goods by Sea Act 1991 (Cth), s 19(a) saves the effect of Navigation Act 2012 (Cth), Ch 3, Pt 4. Navigation Act 2012 (Cth), s 112(6), (7) provide that regulations may be made in relation to dangerous goods, and s 342(1) provides that the Australian Maritime Safety Authority (AMSA) may make Marine Orders with respect to any matter for which provision may be made under the regulations; AMSA made Marine Order 41 (Carriage of Dangerous Cargoes) 2009 (Cth) pursuant to that power. 708 Navigation Act 2012 (Cth), s 119(2). 709 Navigation Act 2012 (Cth), s 115.

[12.650]

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cause some physical damage to the carrying ship or other cargo on board, whether directly or indirectly,710 but not goods that might merely cause delay.711 In Effort Shipping Co Ltd v Linden Management SA: The Giannis NK,712 the House of Lords held that a cargo of groundnut extraction meal pellets infested with Khapra beetle was “dangerous” for the purposes of Art 4, r 6 because it was liable to cause indirect physical damage to the other cargo on the ship by causing the loss of that cargo by dumping at sea as a result of refusal by quarantine authorities for it to be discharged on land. In contrast, in Bunge SA v ADM Do Brasil Ltda (The Darya Radhe),713 a rat-infested cargo of soya bean pellets was held not to be a “dangerous cargo” for purposes of Art 4, r 6, despite the fact that it had caused delay to the carrying ship because of a need for fumigation, because there was no evidence that the rats were likely to cause any direct or indirect physical damage to the ship or other cargoes carried on it. The shipper of dangerous goods is liable for all damages and expenses directly or indirectly arising out of or resulting from the shipment of dangerous goods without the knowledge and consent of the carrier, master or carrier’s agent.714 The shipper’s liability is strict; it is liable whether or not it (or the carrier) knew or ought to have known that the goods were dangerous.715 Strict liability is imposed by Art 4, r 6 notwithstanding the more general provisions of Art 4, r 3, which states that the shipper shall not be responsible for loss or damage sustained by the carrier or the ship without act, fault or neglect on the part of the shipper, its agents or servants.716 However, the carrier loses the right to rely on Art 4, r 6 if it failed before and at the beginning of the voyage to exercise due diligence in relation to seaworthiness of the ship, in breach of Art 3, r 1,717 or if it failed at any point during the carriage to take proper

710 Effort Shipping Co Ltd v Linden Management SA: The Giannis NK [1998] AC 605. 711 Bunge SA v ADM Do Brasil Ltda (The Darya Radhe) [2009] 2 Lloyd’s Rep 175. This is different from the position at common law: see Mitchell v Steel [1916] 2 KB 610. 712 Effort Shipping Co Ltd v Linden Management SA: The Giannis NK [1998] AC 605. 713 Bunge SA v ADM Do Brasil Ltda (The Darya Radhe) [2009] 2 Lloyd’s Rep 175. 714 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 6 (Hague-Visby Rules); Sch 1A, Art 4, r 6 (Australian modification). 715 Effort Shipping Co Ltd v Linden Management SA: The Giannis NK [1998] AC 605; Senator Linie GmbH & Co KG v Sunway Line Inc 291 F 3d 145; 2002 AMC 1217 (2d Cir 2002). 716 Effort Shipping Co Ltd v Linden Management SA: The Giannis NK [1998] AC 605; Senator Linie GmbH & Co KG v Sunway Line Inc 291 F 3d 145; 2002 AMC 1217 (2d Cir 2002). 717 Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1994] 2 Lloyd’s Rep 506 (CA); Northern Shipping Co v Deutsche Seereederei GmbH (The Kapitan Sakharov) [2000] 2 Lloyd’s Rep 255 at 268-270 per Auld LJ; Cia Sud Americana de Vapores SA v Sinochem Tianjin Import and Export Corp (The Aconcagua) [2010] 1 Lloyd’s Rep 1.

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care of the cargo, in breach of Art 3, r 2.718 Where, however, the carrier’s negligent handling amounts to negligence “in the management of the ship” for purposes of Art 4, r 2(a), so that the carrier would have a defence to liability in respect of it, the carrier may nevertheless be entitled to rely on the Art 4, r 6 indemnity.719 It is not strictly correct to say that Art 4, r 6 imposes on the shipper a duty to warn the carrier of any dangerous propensities of the cargo, but a duty to warn is implicit, because the shipper may become liable to indemnify the carrier if it does not give a warning to that effect.720 Similarly, United States courts have found an implicit duty to warn in Art 4, r 3, which provides that the shipper is not liable for loss or damage sustained by the carrier “without the act, fault or neglect of the shipper, his agents or his servants”.721 In order to establish a negligent failure to warn according to this theory, the carrier must prove causation, which would require first that it (the carrier) could not reasonably be expected to know of the danger posed by the cargo and, secondly, that a warning would have had an impact on the manner of the carrier’s handling of the cargo, if the warning had been given.722 Guarantee of the particulars of the goods shipped

[12.660]

Where the Hague or Hague-Visby Rules apply, or the Australian modification of the latter, the shipper is deemed to guarantee to the carrier the accuracy at the time of shipment of the particulars of marks, number, quantity and weight as furnished by it, and is obliged to indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such particulars.723

718 Contship Containerlines Ltd v PPG Industries Inc 442 F 3d 72 (2d Cir 2006); In re MV DG Harmony 533 F 3d 83; 2008 AMC 1848 (2d Cir 2008); Cia Sud Americana de Vapores SA v Sinochem Tianjin Import and Export Corp (The Aconcagua) [2010] 1 Lloyd’s Rep 1 at 54 [374] per Christopher Clarke J. 719 Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1993] 1 Lloyd’s Rep 257 at 288 per Judge Diamond QC (obiter) (aff’d on other grounds Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1994] 2 Lloyd’s Rep 506 (CA)); Cia Sud Americana de Vapores SA v Sinochem Tianjin Import and Export Corp (The Aconcagua) [2010] 1 Lloyd’s Rep 1 at 53-54 [371]-[373] per Christopher Clarke J. 720 Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1993] 1 Lloyd’s Rep 257 at 284 per Judge Diamond QC (aff’d on other grounds Mediterranean Freight Services Ltd v BP Oil International Ltd (The Fiona) [1994] 2 Lloyd’s Rep 506 (CA)). 721 Contship Containerlines Ltd v PPG Industries Inc 442 F 3d 72 (2d Cir 2006) at 78; In re MV DG Harmony 533 F 3d 83 (2d Cir 2008). 722 Contship Containerlines Ltd v PPG Industries Inc 442 F 3d 72 (2d Cir 2006) at 78; In re MV DG Harmony 533 F 3d 83 (2d Cir 2008) at 96. 723 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 5 (Hague-Visby Rules); Sch 1A, Art 3, r 5. For a more detailed examination of the guarantees and indemnities given by the shipper, see [12.110].

[12.670]

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Transfer of rights and liabilities under the contract of carriage: title to sue Negotiable bills of lading, sea waybills and ship’s delivery orders

[12.670]

The contract evidenced by a negotiable bill of lading is an agreement between the shipper and the carrier. However, it is commonly the case that the right to possession of the goods is passed to a third party by indorsement of the bill of lading, usually while the goods are at sea. As there is no privity of contract between the carrier and the indorsee, neither party can sue or be sued on the contract of carriage at common law. This state of affairs proved highly inconvenient, because the indorsee had the right to demand possession of the goods, but at common law, all rights under the contract of carriage remained with the shipper. As a result, the Bills of Lading Act was passed in the United Kingdom in 1855, to transfer the rights and liabilities under a bill of lading to the consignee or indorsee. Legislation modelled on the Bills of Lading Act 1855 (UK) was later adopted in each of the Australian States, but it was found to be inadequate in several respects.724 The legislation was eventually repealed and replaced by the State and Territory Sea-Carriage Documents Acts, which were modelled (but not exactly) on the Carriage of Goods by Sea Act 1992 (UK), which repealed and replaced the Act of 1855.725

The State and Territory Sea-Carriage Documents Acts are in general terms, and the intention seems to be that they should be applied in all cases in Australian courts raising questions of title to sue on a sea-carriage document. However, it is questionable whether the title to sue question should properly be determined by applying the law of the relevant Australian State or Territory as the law of the forum (lex fori).726 There are compelling arguments for applying the governing law of the contract. If the title to sue question is characterised as being one of identifying the parties who may sue on the contract of carriage, it would normally be governed by the proper law of the contract.727 If the question is characterised as being one of assignment of the shipper’s contractual rights, conflictual principles would still point toward application of the proper law, because the assignability of a chose in action is governed by the proper law of the chose, whereas the validity of the assignment is 724 The former Australian legislation and its shortcomings were considered in the second edition of this book (1995), pp 314-316. 725 For a detailed consideration of the Act of 1855, the problems it created, the law reform process that led to its repeal, and the drafting of the Carriage of Goods by Sea Act 1992 (UK), see Borealis AB v Stargas Ltd: The Berge Sisar [2002] 2 AC 205 at 218-230 per Lord Hobhouse. 726 See M Davies, “Australian Maritime Law Decisions 1997” [1998] LMCLQ 394 at 396-397. 727 For example, an Australian court would ignore the privity doctrine and would allow a non-party to sue on a contract governed by French law, if that non-party would have standing to sue under French law: Scott v Pilkington (1862) 2 B & S 11; 121 ER 978 at 43-44; 990 per Cockburn CJ; Hartmann v Konig (1933) 50 TLR 114 (HL).

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[12.670]

governed by the proper law of the assignment agreement.728 If the chose in action is the shipper’s rights under the contract of carriage, its assignability (that is, the question whether the rights can be transferred at all, how, and to whom) should be governed by the proper law of the contract of carriage, not the law of the forum (the lex fori). Nevertheless, it can be expected that the Sea-Carriage Documents Acts will routinely be applied by Australian courts to contracts of carriage governed by foreign law, unless and until there is a true conflict (that is, a different indicated outcome) between the Acts and the governing law of the carriage contract.729 The State and Territory Sea-Carriage Documents Acts provide that all rights under the contract of carriage evidenced by a negotiable bill of lading are transferred to each successive lawful holder of the bill.730 All rights under a contract of carriage evidenced by a sea waybill are transferred to the named consignee.731 All rights under a contract of carriage evidenced by a ship’s delivery order are transferred to the person to whom delivery of the goods is to be made in accordance with the order.732 In each case, the rights vest in the transferee as if it had been an original party to the contract,733 and the rights of the original party to the

728 See, eg, Macmillan Inc v Bishopsgate Investment Trust PLC (No 3) [1996] 1 WLR 585 (CA). See also Compania Colombiana de Seguros v Pacific Steam Navigation Co Ltd [1965] 1 QB 101 at 128 per Roskill J. 729 For example, the Australian legislation differs from its UK equivalent in relation to electronic versions of sea-carriage documents, which may produce different outcomes in circumstances where a PIN code is issued instead of a ship’s delivery order: see Glencore International AG v MSC Mediterranean Shipping Co SA [2015] 2 Lloyd’s Rep 508, considered at [12.770]. 730 Sea-Carriage Documents Act 1997 (NSW), s 8(1)(a); Sea-Carriage Documents Act (NT), s 8(1)(a); Sea-Carriage Documents Act 1996 (Qld), s 6(1)(a); Sea-Carriage Documents Act 1998 (SA), s 7(1)(a); Sea-Carriage Documents Act 1997 (Tas), s 7(1)(a); Goods Act 1958 (Vic), s 92(1)(a); Sea-Carriage Documents Act 1997 (WA), s 8(1)(a). 731 Sea-Carriage Documents Act 1997 (NSW), s 8(1)(b); Sea-Carriage Documents Act (NT), s 8(1)(b); Sea-Carriage Documents Act 1996 (Qld), s 6(1)(b); Sea-Carriage Documents Act 1998 (SA), s 7(1)(b); Sea-Carriage Documents Act 1997 (Tas), s 7(1)(b); Goods Act 1958 (Vic), s 92(1)(b); Sea-Carriage Documents Act 1997 (WA), s 8(1)(b). 732 Sea-Carriage Documents Act 1997 (NSW), s 8(1)(c); Sea-Carriage Documents Act (NT), s 8(1)(c); Sea-Carriage Documents Act 1996 (Qld), s 6(1)(c); Sea-Carriage Documents Act 1998 (SA), s 7(1)(c); Sea-Carriage Documents Act 1997 (Tas), s 7(1)(c); Goods Act 1958 (Vic), s 92(1)(c); Sea-Carriage Documents Act 1997 (WA), s 8(1)(c). In Glencore International AG v MSC Mediterranean Shipping Co SA [2015] 2 Lloyd’s Rep 508, it was held that an electronic Personal Identification Number (PIN) code did not constitute a “ship’s delivery order” for purposes of the UK equivalent of this legislation. 733 Sea-Carriage Documents Act 1997 (NSW), s 8(2); Sea-Carriage Documents Act (NT), s 8(2); Sea-Carriage Documents Act 1996 (Qld), s 6(2); Sea-Carriage Documents Act 1998 (SA), s 7(2); Sea-Carriage Documents Act 1997 (Tas), s 7(2); Goods Act 1958 (Vic), s 92(2); Sea-Carriage Documents Act 1997 (WA), s 8(2).

[12.670]

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contract of carriage (the shipper) are extinguished on transfer.734 Thus, the legislation completely solves the privity of contract problem for negotiable bills of lading, non-negotiable sea waybills, and ship’s delivery orders, in those cases to which it applies. The State and Territory Sea-Carriage Documents Acts define “lawful holder” of a negotiable bill of lading as a person who “has come into possession of the bill, in good faith, as a result of the completion, by delivery of the bill, (i) of any endorsement of the bill, or (ii) in the case of a bearer bill — of any other transfer of the bill”.735 In The Erin Schulte,736 the English Court of Appeal held that mere transfer of physical possession of a bill of lading was not sufficient to constitute completion of an endorsement by delivery under the equivalent words in the United Kingdom legislation,737 but, rather, it was necessary that the transferor and transferee should both intend that the rights under the bill of lading should pass from one to the other by reason of the combined effect of the indorsement and the transfer of possession. Thus, for example, if the notify party comes into physical possession of the indorsed original bill of lading in circumstances where there is no evidence that the parties intended that the notify party should thereby be entitled to take delivery of the goods, the notify party does not become a “lawful holder” for purposes of the Acts.738 In contrast, mere physical possession of an indorsed bearer bill of lading is sufficient to make the possessor of the bill a “lawful holder” for purposes of the Act.739 Although it has long been common practice for the carrier to issue three original bills of lading, it is only necessary for one of them to be indorsed to the receiver in order for the latter to have title to sue on the bill of lading contract as “lawful holder”.740

734 Sea-Carriage Documents Act 1997 (NSW), s 9; Sea-Carriage Documents Act (NT), s 9; Sea-Carriage Documents Act 1996 (Qld), s 7; Sea-Carriage Documents Act 1998 (SA), s 8; Sea-Carriage Documents Act 1997 (Tas), s 8; Goods Act 1958 (Vic), s 93; Sea-Carriage Documents Act 1997 (WA), s 9. 735 Sea-Carriage Documents Act 1997 (NSW), s 5, para (b) of definition of “lawful holder”; Sea-Carriage Documents Act (NT), s 5; Sea-Carriage Documents Act 1996 (Qld), s 3; Sea-Carriage Documents Act 1998 (SA), s 4; Sea-Carriage Documents Act 1997 (Tas), s 4; Goods Act 1958 (Vic), s 89; Sea-Carriage Documents Act 1997 (WA), s 5. 736 Standard Chartered Bank v Dorchester LNG (2) Ltd (The Erin Schulte) [2015] 1 Lloyd’s Rep 97. 737 Carriage of Goods by Sea Act 1992 (UK), s 5(2)(b). 738 Ahmad v Mitsui OSK Lines Ltd (2005) 222 ALR 338 at 344-350 [34]-[68] per Emmett J. 739 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 133-134 [31] per Rares J. 740 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 133 [27]-[30] per Rares J.

326

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[12.680]

Straight bills of lading

[12.680]

The State and Territory Sea-Carriage Documents Acts apply to electronic sea-carriage documents,741 but it is not clear whether they apply to straight bills of lading, whether in paper or electronic form. The statutes define a “bill of lading” as “a bill of lading that is capable of transfer (a) by endorsement; or (b) as a bearer bill, by delivery without endorsement”.742 A straight bill of lading is not capable of transfer in either of those ways. Although the Acts define a “lawful holder” of a bill of lading to include a person who “has come into possession of the bill, in good faith, as the consignee of the goods, by virtue of being identified in the bill”,743 they also effect transfer of rights and liabilities to “each successive lawful holder of the bill”, an idea that makes no sense in relation to a straight bill of lading, where there is only one “lawful holder” other than the shipper, because the carrier’s obligation is to deliver only to the named consignee. A straight bill of lading cannot be treated as a sea waybill for the purposes of the Acts because a sea waybill is defined as being a document “other than a bill of lading” that names the consignee.744 As noted in [12.640], in relation to the specific question of the receiver’s obligation to pay unpaid freight,745 a purposive reading of the SeaCarriage Documents Acts would simply gloss over these definitional difficulties and hold that the legislation is effective to transfer rights and liabilities to the named consignee under a straight bill of lading when the original document is transferred to it. 741 Sea-Carriage Documents Act 1997 (NSW), s 6; Sea-Carriage Documents Act (NT), s 6; Sea-Carriage Documents Act 1996 (Qld), s 4; Sea-Carriage Documents Act 1998 (SA), s 5; Sea-Carriage Documents Act 1997 (Tas), s 5; Goods Act 1958 (Vic), s 90; Sea-Carriage Documents Act 1997 (WA), s 6. 742 Sea-Carriage Documents Act 1997 (NSW), s 5, definition of “bill of lading”; Sea-Carriage Documents Act (NT), s 5; Sea-Carriage Documents Act 1996 (Qld), s 3; Sea-Carriage Documents Act 1998 (SA), s 4; Sea-Carriage Documents Act 1997 (Tas), s 4; Goods Act 1958 (Vic), s 89; Sea-Carriage Documents Act 1997 (WA), s 5. 743 Sea-Carriage Documents Act 1997 (NSW), s 5, para (a) of definition of “lawful holder”; Sea-Carriage Documents Act (NT), s 5; Sea-Carriage Documents Act 1996 (Qld), s 3; Sea-Carriage Documents Act 1998 (SA), s 4; Sea-Carriage Documents Act 1997 (Tas), s 4; Goods Act 1958 (Vic), s 89; Sea-Carriage Documents Act 1997 (WA), s 5. 744 Sea-Carriage Documents Act 1997 (NSW), s 5, para (a) of definition of “lawful holder”; Sea-Carriage Documents Act (NT), s 5; Sea-Carriage Documents Act 1996 (Qld), s 3; Sea-Carriage Documents Act 1998 (SA), s 4; Sea-Carriage Documents Act 1997 (Tas), s 4; Goods Act 1958 (Vic), s 89; Sea-Carriage Documents Act 1997 (WA), s 5. At first instance in El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA [2003] FCA 588, the parties agreed that a straight bill of lading was a “sea waybill” for purposes of the Sea-Carriage Documents Act 1996 (Qld): at [23] per Kiefel J. That question was not considered on appeal, but a majority of the Full Court noted that the definition of “bill of lading” in the Act applies only to documents that can be transferred by indorsement or delivery: see El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 296 at 324 [133] per Allsop J (with whom Black CJ agreed). 745 See [12.640].

[12.680]

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If the definitional difficulties cannot be glossed over, how else could the named consignee under a straight bill of lading acquire rights under the contract of carriage? The simplest solution would be to regard it as the original contracting party, who contracted with the carrier through the agency of the shipper.746 If that solution is not plausible in the circumstances of the particular case, it may be necessary to fall back on the device known as the Brandt v Liverpool contract,which alleviated some of the problems posed by the restricted operation of the 1855 Act and its Australian equivalents.747 Where the holder of a bill of lading presents it to the carrier for delivery of the goods, the common law implies a contract (a Brandt v Liverpool contract) between the holder and the carrier on the same terms as the bill of lading, if the holder gives the carrier some consideration in return for delivery. Thus, if the consignee of a straight bill of lading does not acquire rights and liabilities under the contract by operation of the Sea-Carriage Documents Acts, it may do so by presentation of the bill of lading to the carrier for delivery.748 However, the Brandt v Liverpool device is not a universal panacea, because an implied contract is not found in every case. A Brandt v Liverpool contract is not a fiction.749 There must be the requisite element of offer and acceptance and mutuality.750 Thus, the contract is implied only if it is necessary to do so in order to give business reality to a transaction and to create enforceable obligations between parties who are dealing with one another in circumstances in which one would expect that business reality and those enforceable obligations to exist.751 There must be something more than the mere facts (a) that a consignee, entitled as holder of the bill of lading to demand delivery, does so; and (b) that the carrier, who is bound by its contract with the shipper to deliver the goods to the party presenting the bill of lading, duly makes such delivery.752 In Brandt’s case itself, there was the additional element that the indorsee of the bill of lading paid freight to the carrier in return for delivery. That element would seldom be found in modern practice, however, because 746 Borealis AB v Stargas Ltd: The Berge Sisar [2002] 2 AC 205 at 220 per Lord Hobhouse, citing The Albazero [1977] AC 774 at 786 per Brandon J and the cases there cited. 747 Brandt v Liverpool, Brazil and River Plate Steam Navigation Co Ltd [1924] 1 KB 575. Brandt’s case “did not lack ancestors and has not lacked progeny”: see The Aramis [1989] 1 Lloyd’s Rep 213 at 219 per Bingham LJ. 748 Although the consignee is named, it must still present the bill of lading to the carrier to take delivery: see [12.20]. 749 Borealis AB v Stargas Ltd: The Berge Sisar [2002] 2 AC 205 at 221 per Lord Hobhouse. 750 Borealis AB v Stargas Ltd: The Berge Sisar [2002] 2 AC 205 at 221 per Lord Hobhouse. 751 BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 226-227 per Hill J. See also Ilyssia Compania Naviera SA v Bamaodah (The Elli 2) [1985] 1 Lloyd’s Rep 107 at 115 per May LJ; The Aramis [1989] 1 Lloyd’s Rep 213 at 224 per Bingham LJ; Compania Portorafti Commerciale SA v Ultramar Panama Inc (The Captain Gregos) (No 2) [1990] 2 Lloyd’s Rep 395 at 402 per Bingham LJ; Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyd’s Rep 311 at 319 (CA). 752 BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 226-227 per Hill J; The Aramis [1989] 1 Lloyd’s Rep 213 at 224 per Bingham LJ.

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Shipping Law

[12.680]

freight is usually prepaid by the shipper. Although there is authority to the effect that it is sufficient if the bill of lading holder gives the carrier some consideration other than freight in return for delivery, such as an agreement to pay demurrage,753 the Court of Appeal of New South Wales in Quadro Shipping NV v Bizley and Co Pty Ltd (The Protea Trader)754 expressed doubts about whether a Brandt v Liverpool contract could be implied where the bill of lading holder had not promised to pay freight in return for delivery of the cargo, even though it had agreed to pay, and had paid, stevedoring and wharfage charges at the port of discharge.755 Whether or not some consideration other than the payment of freight is sufficient, a contract can only be implied when the conduct of the bill of lading holder in securing delivery of the cargo is referable only to the existence of such a contract.756 Even when a Brandt v Liverpool contract can be implied in the circumstances of the case, difficult legal questions remain. For example, the proper law of the implied contract is not necessarily the same as the proper law of the bill of lading contract,757 and it is not clear when the implied contract should be taken to have been made for the purposes of the Hadley v Baxendale758 remoteness of damage rule, which refers to the losses that would be in the reasonable contemplation of the parties at the time they entered into the contract.759

753 Stindt v Roberts (1848) 17 LJQB 166; Ilyssia Compania Naviera SA v Bamaodah (The Elli 2) [1985] 1 Lloyd’s Rep 107. 754 Quadro Shipping NV v Bizley and Co Pty Ltd (The Protea Trader) (1992) 113 FLR 280. See M Davies (1993) 21 ABLR 227. 755 See also BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 226-227 per Hill J, implying that there can be no Brandt v Liverpool contract where freight is prepaid. Compare Compania Continental del Peru SA v Evelpis Shipping Corp (The Agia Skepi) [1992] 2 Lloyd’s Rep 467 at 470, where Saville J suggested that payment of stevedoring charges and taxes and dues on the cargo might be sufficient consideration for the purposes of a Brandt v Liverpool contract. The court in Quadro Shipping NV v Bizley and Co Pty Ltd (The Protea Trader) (1992) 113 FLR 280 also expressed doubts about whether a Brandt v Liverpool contract could be implied where the carrier agreeing to deliver the cargo was not the carrier who had originally issued the bill of lading. 756 Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyd’s Rep 311. 757 The St Joseph [1933] P 119; Ilyssia Compania Naviera SA v Bamaodah (The Elli 2) [1985] 1 Lloyd’s Rep 107 at 117 per May LJ. Compare Compania Continental del Peru SA v Evelpis Shipping Corp (The Agia Skepi) [1992] 2 Lloyd’s Rep 467 at 470 per Saville J. 758 Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145. 759 Mitsui & Co Ltd v Novorossiysk Shipping Co (The Gudermes) [1993] 1 Lloyd’s Rep 311 at 321 (CA).

[12.700]

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Contracts of carriage on chartered ships760 Introduction When a charterer ships goods under a voyage charterparty,761 a bill of lading or sea waybill is still usually issued when the goods are shipped on board the carrying ship. In these circumstances, there are two documents that appear to regulate the relationship between the charterer and the shipowner-carrier: the voyage charterparty and the bill of lading or sea waybill. Where the receiver of goods shipped under a negotiable bill of lading is the voyage charterer of the carrying ship, there are two documents, charterparty and bill of lading, that appear to regulate the relationship between the parties once the bill of lading has been transferred to the charterer.762 Similarly, where the named consignee of goods shipped under a straight bill of lading or sea waybill is also the voyage charterer, there appear to be two contractual documents regulating the relationship between consignee and carrier.

[12.690]

In both of these situations, it is important to determine whether it is the charterparty or the other sea-carriage document (the bill of lading or sea waybill) that regulates the relationship between the cargo-owner and the shipowner-carrier, as the two documents are usually very different. In particular, most bills of lading and sea waybills incorporate the provisions of the Hague or Hague-Visby Rules or the Australian modification of the latter, either by statutory provision763 or by reference,764 whereas most charterparties do not.765 Sea-carriage document in the hands of the charterer

[12.700]

Where the charterer is the shipper of the goods, any negotiable bill of lading issued by the carrier acts only as a receipt for and a document of title to the goods, because the contract of carriage between

760 This section is concerned with contracts for the carriage of goods under voyage or trip time charterparties or contracts of affreightment. Sea-carriage documents for carriage of goods on time-chartered ships are considered at [12.810]–[12.830]. 761 Or a trip time charterparty, which is a time charterparty for carriage of goods on a “trip” or voyage: see [14.260]. 762 The former situation, where the charterer is the shipper, usually occurs when the charterer-shipper has sold goods on CIF terms; the latter situation, where the charterer is the receiver, often occurs when the charterer-receiver has bought goods on FOB terms. 763 See [12.40]. 764 By Clause Paramount: see, eg, cl 3 of the Conlinebill 2016 form (Appendix 1) and cl 10 of the Linewaybill 2016 form (Appendix 3). 765 The Hague and Hague-Visby Rules and the Australian modification of the latter do not apply compulsorily to charterparties: Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 5 (Hague-Visby Rules); Sch 1A, Arts 5 and 10, r 6 (Australian modification). Charterparties are subject to the Hague or Hague-Visby Rules or the Australian modification of the latter only if they are incorporated by reference, by use of a Clause Paramount.

330

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[12.700]

charterer-shipper and shipowner-carrier is the voyage charterparty.766 By a similar process of reasoning, any straight bill of lading or sea waybill issued by the carrier to a charterer-shipper acts only as a receipt for the goods so far as the charterer-shipper is concerned. Any terms in the sea-carriage document that are inconsistent with those in the charterparty do not affect the contractual relationship between the charterer and the shipowner,767 unless the parties expressly agree that the terms in the bill of lading or sea waybill shall vary the terms of the charterparty.768 In contrast, if a time charterer enters into a voyage sub-charterparty, and if the shipowner issues a bill of lading or sea waybill to the voyage sub-charterer on shipment of the goods, the bill of lading or sea waybill does act as evidence of a contract of carriage between the shipowner and the voyage sub-charterer.769 It seems, though, that if the time charterer were to issue a bill of lading or sea waybill in its own name to the voyage sub-charterer, that document would not be evidence of a contract of carriage between the time charterer and the voyage sub-charterer, because the contract of carriage between these two parties would be the voyage sub-charterparty. Where the voyage charterer is the indorsee of a negotiable bill of lading, transfer of the bill of lading to the charterer-receiver does not affect the contractual relationship between shipowner and charterer, which continues to be governed by the charterparty.770 The agent of the shipowner-carrier does not have authority to vary the terms of the contract between its principal and the charterer, and so any bills of lading issued by the carrier’s agent in terms different from the charterparty do 766 Rodocanachi v Milburn (1886) 18 QBD 67; Leduc & Co v Ward (1888) 20 QBD 475 at 479 per Lord Esher MR; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263 at 267-268 [24]-[26] per Tamberlin J; The Ship Socofl Stream v CMC (Australia) Pty Ltd [2001] FCA 961 at [57]-[58] per Ryan, Tamberlin and Conti JJ. See also R v Roach (1879) 13 SALR 96 at 106 per Way CJ; The Al Battani [1993] 2 Lloyd’s Rep 219 at 222 per Sheen J. 767 Houston & Co v Sansinena & Co (1893) 7 Asp MLC 311; Temperley Steam Shipping Co v Smyth & Co [1905] 2 KB 791; Royal Commission on the Sugar Supply v Hartlepools Seatonia Steamship Co Ltd [1927] 2 KB 419. 768 See, eg, the “supersession clause” in Moscow V/O Exportkhleb v Helmville Ltd (The Jocelyne) [1977] 1 Lloyd’s Rep 121. Compare Oriental Maritime Pte Ltd v Ministry of Food, Government of People’s Republic of Bangladesh (The Silva Plana, Bahamastars and Magic Sky) [1989] 2 Lloyd’s Rep 371, where a supersession clause in a bill of lading issued by the shipowner did not exclude the operation of a charterparty between the charterer and a sub-charterer. 769 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263; The Ship Socofl Stream v CMC (Australia) Pty Ltd [2001] FCA 961. See also Turner v Haji Goolam Mahomed Azam [1904] AC 826 (PC). 770 Gardner Smith Pty Ltd v The Ship Tomoe 8 (1990) 19 NSWLR 588; Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507 at 510 per Sheppard J. See also Love and Stewart Ltd v Rowtor Steamship Co Ltd [1916] 2 AC 527; President of India v Metcalfe Shipping Co Ltd [1970] 1 QB 289.

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not bind either party to the charterparty.771 This situation is usually confirmed by express provision in the charterparty, which commonly provides “The Captain to sign bills of lading as presented without prejudice to this charterparty”, or words to that effect.772 By a similar process of reasoning, where the receiver-charterer is the named consignee under a straight bill of lading or sea waybill, the contract of carriage between shipowner and charterer should be the charterparty, not the bill of lading or sea waybill. In contrast, where the receiver has voyagechartered the ship from a time charterer, and then becomes indorsee of a negotiable bill of lading issued by the shipowner, the bill of lading does evidence a contract of carriage between the receiver and the shipowner.773 The usual rule does not apply because the parties to the bill of lading contract (shipowner and receiver-charterer) are different from the parties to the existing voyage sub-charterparty (time charterer and receivercharterer).774 Sea-carriage document in the hands of a third party Negotiable bills of lading

[12.710]

It is often the case that a negotiable bill of lading for goods on a chartered ship is endorsed to a third party who is a stranger to the charterparty. Although the charterparty cannot be the source of the rights and liabilities of such a third party, its existence may affect the relationship between it and the parties to the charterparty. Where the third party is the shipper, the contractual relationship between the carrier and the shipper is governed by the bill of lading and whichever of the Hague or Hague-Visby Rules or the Australian modification of the latter apply compulsorily to that document.775

Where, however, the charterer is the shipper and the third party is the indorsee of the bill of lading, the position is more complex. The State and Territory Sea-Carriage Documents Acts provide that indorsement of a negotiable bill of lading transfers to the indorsee the rights and liabilities under “the contract of carriage”,776 and “the contract of carriage” is defined as being “the contract contained in or evidenced by” the bill of 771 Meyer v Dresser (1864) 16 CB (NS) 646; 143 ER 1280. 772 See, eg, cl 10 of the Gencon 1994 form (Appendix 6). See also President of India v Metcalfe Shipping Co Ltd [1970] 1 QB 289. 773 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263; The Ship Socofl Stream v CMC (Australia) Pty Ltd [2001] FCA 961. 774 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263; The Ship Socofl Stream v CMC (Australia) Pty Ltd [2001] FCA 961. 775 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1, r 1(b) (Hague-Visby Rules); Sch 1A, Art 1, r 1(b), Art 10, r 7 (Australian modification). 776 Sea-Carriage Documents Act 1997 (NSW), ss 8, 10; Sea-Carriage Documents Act (NT), ss 8, 10; Sea-Carriage Documents Act 1996 (Qld), ss 6, 8; Sea-Carriage Documents Act 1998 (SA), ss 7, 9; Sea-Carriage Documents Act 1997 (Tas), ss 7, 9; Goods Act 1958 (Vic), ss 92, 94; Sea-Carriage Documents Act 1997 (WA), ss 8, 10.

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lading.777 However, when a charterer ships goods on a chartered ship, the contract of carriage between charterer and shipowner is the charterparty, not the bill of lading, which acts merely as a receipt for the goods.778 Thus, there is no “contract contained in or evidenced by the bill of lading” between charterer and shipowner and thus, strictly speaking, no work for the Sea-Carriage Documents Acts to do. Nevertheless, it has always been held that indorsement of a negotiable bill of lading makes the indorsee subject to the rights and liabilities of a contract in the terms of the bill of lading, by operation of the relevant legislation. Thus, for example, in Hilditch Pty Ltd v Dorval Kaiun KK (No 2),779 Rares J of the Federal Court held that the indorsee of a bill of lading was the “lawful holder” under the Sea-Carriage Documents Act 1997 (NSW) of that bill, which had been issued to a charterer-shipper and then indorsed in blank and delivered to the indorsee. The need for this expedient approach has long been evident. As Lord Atkin observed in Hain Steamship Co Ltd v Tate and Lyle Ltd:780 The consignee has not assigned to him the obligations under the charterparty, nor, in fact, any obligations of the contract under the bill of lading for ex hypothesi there is none. A new contract appears to spring up between the ship and the consignee on the terms of the bill of lading.

Although this result is conceptually inelegant, and only questionably justified by the words of the legislation, it is settled law, and derives from commercial necessity. Lord Esher MR explained it thus in Leduc & Co v Ward:781 As between the shipowner and the indorsee, the bill of lading must be considered to contain the contract, because the former has given it for the purpose of enabling the charterer to pass it on as the contract of carriage in respect of the goods.

The indorsee of a negotiable bill of lading in this situation is entitled to delivery of the goods on the terms contained in the bill of lading, even where they differ from the charterparty.782 Further, it pays freight at the 777 Sea-Carriage Documents Act 1997 (NSW), s 5; Sea-Carriage Documents Act (NT), s 5; Sea-Carriage Documents Act 1996 (Qld), s 3; Sea-Carriage Documents Act 1998 (SA), s 4; Sea-Carriage Documents Act 1997 (Tas), s 4; Goods Act 1958 (Vic), s 89; Sea-Carriage Documents Act 1997 (WA), s 5. 778 Rodocanachi v Milburn (1886) 18 QBD 67; Leduc & Co v Ward (1888) 20 QBD 475 at 479 per Lord Esher MR; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263 at 267-268 [24]-[26] per Tamberlin J; The Ship Socofl Stream v CMC (Australia) Pty Ltd [2001] FCA 961 at [57]-[58] per Ryan, Tamberlin and Conti JJ. See also R v Roach (1879) 13 SALR 96 at 106 per Way CJ; The Al Battani [1993] 2 Lloyd’s Rep 219 at 222 per Sheen J. 779 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 133-134 [31] per Rares J. 780 Hain Steamship Co Ltd v Tate and Lyle Ltd (1936) 55 Ll L Rep 159 at 174. 781 Leduc & Co v Ward (1888) 20 QBD 475 at 479. See also The Al Battani [1993] 2 Lloyd’s Rep 219 at 222 per Sheen J. 782 Chappel v Comfort (1861) 10 CB (NS) 802; 142 ER 669.

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bill of lading and not the charterparty rate (if they are different),783 and the shipowner-carrier cannot exercise any lien for freight contained in the charterparty which does not also appear in the bill of lading.784 The contract of carriage between the indorsee and the shipowner-carrier is on the terms of the bill of lading even where the former has notice of the terms of the charterparty.785 In the hands of a third party indorsee, a negotiable bill of lading for carriage into Australia is governed by the Australian modification of the Hague-Visby Rules by force of Australian law unless it is governed by the Hague, Hague-Visby or Hamburg Rules (or a modification of them by a contracting state) “by agreement or by law”.786 A bill of lading issued to a voyage charterer as shipper will seldom be governed by any version of the rules “by law”, because most countries do not apply the rules compulsorily to charterparties or to bills of lading in the hands of a charterer. For example, the COGSA applies the United States version of the Hague Rules compulsorily to “every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States in foreign trade”,787 but the COGSA would not apply by force of law to a bill of lading issued to a voyage charterer, because it would be regarded simply as a receipt for the cargo shipped.788 The bill of lading would be governed by the unamended Hague Rules only if it incorporated them by reference, but the rules would then take effect as a matter of contract only, and the parties would be free to modify the terms of the rules as they pleased if they agreed to exclude Art 3, r 8,789 which they could not do if the rules were incorporated compulsorily. Incorporation of charterparty terms into negotiable bills of lading

[12.720]

The transformation in the nature of a negotiable bill of lading on indorsement from a shipper-charterer to an indorsee might, in theory, be inconvenient for the carrier. Before indorsement of the bill of lading, the carrier carries the goods on the terms of the charterparty; after

783 Mitchell v Scaife (1815) 4 Camp 298; 171 ER 95; Gilkison v Middleton (1857) 2 CB (NS) 134; 140 ER 363; Foster v Colby (1858) 3 H & N 705; 157 ER 651; Gardner & Sons v Trechmann (1884) 15 QBD 154. 784 Tamvaco v Simpson (1866) LR 1 CP 363. 785 Manchester Trust v Furness [1895] 2 QB 539. 786 Carriage of Goods by Sea Act 1991 (Cth), ss 8, 10(1)(b)(i); Sch 1A, Art 10, r 3. See [12.40]. 787 46 USC § 30701, Statutory Note. 788 See, eg, The Fri 154 F 333 (2d Cir 1907); In re Marine Sulphur Queen 460 F 2d 89 (2d Cir 1972) at 103: “A bill of lading may serve three functions: as a receipt, as a document of title, and as a contract for the carriage of goods; however, it does not perform this third function for the shipper and the carrier when there is a charter party containing the terms of the carriage contract.” 789 See, eg, Browner International Ltd v Monarch Shipping Ltd (The European Enterprise) [1989] 2 Lloyd’s Rep 185, a case about incorporation of the Hague-Visby Rules by reference into a sea waybill.

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indorsement, it carries them on the terms of the bill of lading. As charterparties and bills of lading usually contain different terms, the carrier’s rights and liabilities would change in mid-voyage when the bill of lading is indorsed. In practice, carriers avoid the inconvenience of this outcome by including in their bills of lading clauses which purport to incorporate the terms of the charterparty into the bill of lading.790 If the bill of lading contains the same terms as the charterparty, there is continuity of right and obligation before and after its transfer. Charterparties contain many terms that would make no sense in a bill of lading. For example, a charterparty clause dealing with the loading voyage (that is, the voyage to the loading port) would be meaningless in a bill of lading, which is concerned with the process of loading and carrying the cargo.791 However, bill of lading incorporation clauses commonly use very general words, such as “all conditions and exceptions as per charterparty”. As incorporation of charterparty terms en bloc would produce a meaningless hybrid of appropriate and inappropriate terms in the bill of lading, a restrictive approach is taken to the interpretation of generally-worded incorporation clauses. Such clauses incorporate only those charterparty terms which are germane to the subject-matter of the bill of lading, namely the shipment, carriage and delivery of goods or the payment of freight.792 Germane terms are treated as incorporated even if some degree of manipulation is required to make their words fit the context of the bill of lading.793 However, manipulation is not permitted in order to make non-germane terms appear germane. For example, in Miramar Maritime Corporation v Holborn Oil Trading Ltd,794 the bill of lading purported to incorporate “all the terms whatsoever of the said charter”. The charterparty included a demurrage clause which began with the words “Charterer shall pay demurrage”. The House of Lords held that this clause was not incorporated into the bill of lading despite the very wide words of the incorporation clause, because the words “Charterer shall pay demurrage” made no sense in a bill of lading, and because it was impermissible to read the word “charterer” as “consignee of cargo” or “bill of lading holder”. 790 See Park, “Incorporation of Charterparty Terms into Bill of Lading Contracts — A Case Rationalisation” (1986) 16 Victoria University of Wellington Law Review 177; P Todd, “Incorporation of Arbitration Clauses into Bills of Lading” [1997] JBL 331. 791 See, eg, Eridania SpA v Oetker (The Fjord Wind) [2000] 2 Lloyd’s Rep 191 at 196 per Clarke LJ. 792 TW Thomas & Co Ltd v Portsea Steamship Co Ltd: The Portsmouth [1912] AC 1; Namchow Chemical v Botany Bay Shipping Co (Aust) Pty Ltd [1982] 2 NSWLR 523. 793 The Merak [1965] P 223 at 260 per Russell LJ; The Annefield [1971] P 178 at 184 per Lord Denning MR, both as explained in Miramar Maritime Corporation v Holborn Oil Trading Ltd [1984] AC 676 at 683 per Lord Diplock. 794 Miramar Maritime Corporation v Holborn Oil Trading Ltd [1984] AC 676.

[12.720]

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Charterparty terms that are not germane to the shipment, carriage and delivery of goods or the payment of freight can only be incorporated by specific words in a bill of lading incorporation clause.795 Charterparty terms that are inconsistent with the express terms of the bill of lading are not incorporated, whatever the wording of the incorporation clause.796 Much of the litigation about incorporation of charterparty terms into bills of lading has concerned arbitration clauses. Because arbitration is not in itself germane to the shipment, carriage and delivery of goods or the payment of freight, a generally-worded incorporation clause in a bill of lading is not sufficient in itself to incorporate a charterparty arbitration clause,797 unless the arbitration clause in the charterparty is wide enough on its true construction without any verbal manipulation to include disputes under the bill of lading and between the parties to the bill of lading,798 or unless the arbitration clause makes specific reference to the subject-matter of the bill of lading, as in The Merak,799 where the arbitration clause in the charterparty provided for arbitration of “Any dispute arising out of this charter or any bill of lading issued hereunder”. If the incorporation clause in the bill of lading refers specifically to the arbitration clause in the charterparty, it is effective to incorporate that arbitration clause, even if it is necessary to manipulate the terms of the arbitration clause to make the words fit the context of the bill of lading by substituting the words “carrier” and “shipper or receiver” for the words “owner” and “charterer”.800 795 The Annefield [1971] P 178 at 184 per Lord Denning MR; Caresse Navigation Ltd v Zurich Assurances Maroc (The Channel Ranger) [2015] 1 Lloyd’s Rep 256. 796 Gardner & Sons v Trechmann (1884) 15 QBD 154; Miramar Maritime Corporation v Holborn Oil Trading Ltd [1984] AC 676. 797 The Annefield [1971] P 178; Skips A/S Nordheim v Syrian Petroleum Co Ltd (The Varenna) [1983] 2 Lloyd’s Rep 592; Federal Bulk Carriers Inc v C Itoh & Co Ltd (The Federal Bulker) [1989] 1 Lloyd’s Rep 103; Daval Aciers D’Usinor et de Sacilor v Armare SRL (The Nerano) [1994] 2 Lloyd’s Rep 50; The Delos [2001] 1 Lloyd’s Rep 703; Caresse Navigation Ltd v Zurich Assurances Maroc (The Channel Ranger) [2015] 1 Lloyd’s Rep 256. However, cf the position in the US, where a generally-worded incorporation clause may be sufficient in itself, if the indorsee of the bill of lading has adequate constructive notice of the identity of the incorporated charterparty: see, eg, Duferco Steel Inc v M/V Kalisti 121 F 3d 321; 1998 AMC 171 (7th Cir 1997) at 325; 175: “There is no requirement, as there apparently is in English law, that the incorporation language make explicit reference to the arbitration clause.” See also Steel Warehouse Co Inc v Abalone Shipping Ltd of Nicosai 141 F 3d 234; 1998 AMC 2054 (5th Cir 1998). 798 Daval Aciers D’Usinor et de Sacilor v Armare SRL (The Nerano) [1994] 2 Lloyd’s Rep 50 at 52 per Clarke J. 799 The Merak [1965] P 223. 800 The Rena K [1978] 1 Lloyd’s Rep 545; Pride Shipping Corp v Chung Hwa Pulp Corp (The Oinoussian Pride) [1991] 1 Lloyd’s Rep 126; Daval Aciers D’Usinor et de Sacilor v Armare SRL (The Nerano) [1994] 2 Lloyd’s Rep 50 at 52 per Clarke J. In Navigazione Alta Italia SpA v Svenska Petroleum AB (The Nai Matteini) [1988] 1 Lloyd’s Rep 452, Gatehouse J said that the decision in The Rena K was inconsistent with the principles stated by the House of Lords in Miramar Maritime Corporation v Holborn Oil Trading Ltd [1984] AC 676, and held that a charterparty arbitration clause was not incorporated into a bill of lading

336

Shipping Law

[12.720]

In the (very widely used) Congenbill form of bill of lading for use with charterparties,801 the incorporation clause refers to “the Law and Arbitration Clause” in the specified charterparty. In Caresse Navigation Ltd v Zurich Assurances Maroc (The Channel Ranger),802 the English Court of Appeal held that the incorporation clause in the Congenbill form was sufficiently specific to incorporate a choice-of-English-courts clause in the charterparty referred to in the bill of lading. With respect, this decision does such violence to the language of the incorporation clause as to render it totally meaningless. A third party indorsee of a negotiable bill of lading that refers to an arbitration clause can at least expect that its claim might be referred to arbitration somewhere, even if it does not know where; to hold that the indorsee must bring its claim in the courts of a particular country seems to ignore the reasonable expectations of the third party holder when faced with a “law and arbitration” incorporation clause. Even if an arbitration clause is validly incorporated into the bill of lading, it does not bind a non-charterer third party if the bill of lading contract is for carriage into or out of Australia.803 Incorporation clauses often purport to incorporate the terms of “the charterparty” without adequately identifying which charterparty. A general incorporation clause of this kind is ambiguous if there are several different charterparties in relation to the carrying ship, as there often are. Charterparty bills of lading typically leave a blank space after the incorporation phrase “all terms as per charterparty dated”, the intention being that the parties should identify the charterparty to be incorporated into the bill of lading. In practice, that is not always done. United States courts are emphatic that charterparty terms are not incorporated into a bill of lading if the charterparty has not been identified with sufficient clarity.804 Thus, if the space for the name and date of the charterparty is left blank, the charterparty terms are not incorporated.805 In contrast, Australian courts have taken a more benign approach to incorporation where the charterparty is not identified in the bill of lading by an incorporation clause that referred to it specifically if it was necessary to manipulate the terms of the arbitration clause to make it meaningful in the bill of lading. In The Oinoussian Pride, Webster J preferred The Rena K to The Nai Matteini, saying that manipulation of the terms of the arbitration clause was not inconsistent with the principles stated in Miramar Maritime. 801 See Appendix 5. 802 Caresse Navigation Ltd v Zurich Assurances Maroc (The Channel Ranger) [2015] 1 Lloyd’s Rep 256. 803 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1; Carriage of Goods by Sea Act 1991 (Cth), s 11(2). See [12.90]. 804 See, eg, Hawkspere Shipping Co Ltd v Intamex SA 330 F 3d 225 (4th Cir 2003). 805 Hawkspere Shipping Co Ltd v Intamex SA 330 F 3d 225 (4th Cir 2003) at 233-234; Cargill Inc v M/V Golden Chariot 31 F 3d 316; 1995 AMC 1077 (5th Cir 1994) at 318; 1081: “[W]here the date and name of the charter party is left blank, there is no incorporation”; Associated Metals & Minerals Corp v M/V Arktis Sky 1991 AMC 1499 (SDNY 1991) at 1502.

[12.730]

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itself. In BHP Trading Asia Ltd v Oceaname Shipping Ltd,806 Hill J said it was “not of great significance” that the bill of lading did not identify the charterparty to be incorporated, because surrounding circumstances made it clear which of the several possible charterparties was intended. In Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc,807 the shipowner issued a negotiable bill of lading, which was indorsed by the shipper to a receiver who had voyage-chartered the ship from its time charterer.808 The bill of lading provided that freight was payable “as per charterparty”, but it also contained a clause incorporating “all the terms, conditions and exceptions of the Governing Charterparty including arbitration clauses”. The clause did not identify what was the “Governing Charterparty”. There were two alternatives: the time charterparty between shipowner and time charterer, or the voyage sub-charterparty between the time charterer and the sub-charterer-receiver. Tamberlin J held that the bill of lading incorporated the freight obligation from the voyage sub-charterparty, but all other obligations were incorporated from the charterparty between the shipowner and the time charterer, because the issuer of the bills of lading (the shipowner) was a party to that charterparty but not the voyage sub-charterparty.809 Tamberlin J did not consider the possibility, which would have been stressed in the United States, that neither charterparty was incorporated because neither was sufficiently identified. Straight bills of lading and sea waybills

[12.730]

The Australian modification of the Hague-Visby Rules does not apply to non-negotiable sea-carriage documents issued for carriage on a chartered ship. Art 10, r 7 provides: These Rules apply to a sea carriage document issued under a charterparty only if the sea carriage document is a negotiable sea carriage document, and only while the document regulates the relationship between the holder of it and the carrier of the relevant goods.

As a result, a straight bill of lading or sea waybill for goods on a chartered ship is governed by the Hague or Hague-Visby Rules only if the parties so agree.810 If it is not the charterer, the named consignee of a sea waybill for goods on a chartered ship should be entitled to sue the carrier by the same However, a cargo-owner that is party to the charterparty contract may be bound by the incorporation, because it has no doubt about the identity of the charterparty: see Cargill Ferrous International v M/V Sea Phoenix 325 F 3d 695 (5th Cir 2003). 806 BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 220 per Hill J. 807 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263. 808 The contract between the time charterer and the sub-charterer-receiver was actually a long-term contract of affreightment. For the difference between a contract of affreightment and a voyage charterparty, see Chapter 11. 809 See also Pacific Molasses Co v Entre Rios Compania Naviera SA (The San Nicholas) [1976] 1 Lloyd’s Rep 8. 810 See K Lewins, “Are the 1998 Amendments to COGSA Holding Water?” (2000) 28 ABLR 422 at 426-427.

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[12.740]

generous process of statutory interpretation that recognises endorsement of a negotiable bill of lading as effecting transfer of the rights and liabilities “contained in or evidenced by the bill of lading”, even though, strictly speaking, there are none.811 The same reasoning process would interpret the State and Territory Sea-Carriage Documents Acts as effecting transfer to the named consignee of the rights and liabilities “contained in or evidenced by” a sea waybill issued to a charterer-shipper, even though, strictly speaking, there are none. The named consignee of a straight bill of lading may not be able to rely on the State and Territory Sea-Carriage Documents Acts in the same way, because the legislation may not apply to straight bills of lading.812 If neither the Sea-Carriage Documents Acts nor the Australian modification of the Hague-Visby Rules applies to a straight bill of lading for goods on a chartered ship so far as the non-charterer is concerned, it seems that the bill of lading can contain whatever terms the carrier wishes to impose, and the non-charterer may be unable to sue the carrier, in any event.

Before loading and after discharge Where the unamended Hague Rules or unmodified Hague-Visby Rules apply

[12.740]

In their original form, the Hague and Hague-Visby Rules apply only in the “tackle-to-tackle” period from loading on to discharge from the ship.813 That period includes the whole processes of loading and discharging, including those parts that occur on the shore side of the ship’s rail, at least if the ship’s own gear is used.814 In Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd,815 the Court of Appeal of New South Wales held that for these purposes, the process of “discharge” ends when the goods leave the ship’s tackle or (if shore gear is used) when they pass the ship’s rail. However, in Seafood Imports Pty Ltd v ANL Singapore Pte Ltd,816 Ryan J of the Federal Court held that the process of “discharge” is not complete for purposes of the Rules when the goods leave the ship in a carrier-supplied container if their safe discharge requires further attention after that moment (as in the case of refrigerated cargoes), and in Volcafe Ltd v Cia Sud Americana de Vapores SA (t/as CSAV),817 the English High Court held that the process of “loading” for purposes of the Rules may begin well before the goods reach the ship’s “tackle” if the carrier is responsible for stuffing containers at the loading port. 811 See [12.710]. 812 See [12.680]. 813 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(e). See [12.50]. 814 Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402 (loading); Falconbridge Nickel Mines Ltd v Chimo Shipping Ltd [1974] SCR 933; [1973] 2 Lloyd’s Rep 469 (Sup Ct Can) (discharge); (1998) 44 NSWLR 371 (discharge). 815 Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371. 816 Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149. 817 Volcafe Ltd v Cia Sud Americana de Vapores SA (t/as CSAV) [2015] 1 Lloyd’s Rep 639.

[12.740]

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Outside the “tackle-to-tackle” period, the rights and liabilities of the parties are governed by the terms of the sea-carriage document,818 although the one-year limitation period in Art 3, r 6 may apply to claims arising after discharge but before delivery.819 Thus, if the sea-carriage document is for combined transport,820 the stages before and after the sea carriage are governed by the terms of the contract document, unless some other international convention or domestic legislation applies compulsorily to those stages. In Australia, the contract of carriage may completely exclude the carrier’s liability for loss or damage occurring before loading or after discharge, whatever the cause,821 because the overriding statutory warranties incorporated by the Australian Consumer Law into contracts for the supply of services do not apply to transportation contracts, when the transportation is for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported.822 Before loading and after discharge, the goods are usually in the hands of a container terminal operator; the processes of loading and discharge are performed by stevedores. These parties are independent contractors, usually engaged by the carrier. Sea-carriage documents commonly contain a clause, known as the Himalaya clause, which extends the protection of the exclusions and limitations in the contract of carriage to

818 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 7; Nissho Iwai (Australia) Ltd v Malaysian International Shipping Corp Berhad (1989) 167 CLR 219 at 224-225. 819 See [12.610]. 820 See, eg, the Combiconbill and Combiconwaybill forms (Appendices 2 and 4), which are designed for use for combined transport. Carriers often try to make what is essentially a port-to-port contract into a combined transport one by stipulating that the place of acceptance and place of delivery are “CY” or “CFS” at the named port, meaning “Container Yard” or “Container Freight Station”. In New Holland Australia Pty Ltd v TTA Australia Pty Ltd (The Resolution Bay) (unreported, NSW Sup Ct, Carruthers J, 6 December 1994), it was held that this notation is meaningless and does not make a port-to-port bill of lading into a combined transport one, so as to confer the protection of the terms of the bill of lading on the carrier outside the “tackle-to-tackle” period. See also Parlux SpA v M & U Imports Pty Ltd (2008) 21 VR 170 (use of combined transport form not enough in itself to make the sea-carriage document one for combined transport if it is filled out in such a way as to make it a port-to-port bill). 821 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 7. See, eg, cl 3(a) of the Conlinebill 2016 (Appendix 1) and cl 10 of the Linewaybill 2016 form (Appendix 3); Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371. 822 Australian Consumer Law, s 63. If the contract is for carriage of goods for private or domestic purposes, rather than for carriage of commercial goods, the statutory warranties apply outside the tackle-to-tackle period: see Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388. The Hague-Visby Rules or the Australian modification of them prevail over the Australian Consumer Law within the period of their operation: Carriage of Goods by Sea Act 1991 (Cth), s 18.

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employees, agents and independent contractors of the carrier.823 The Himalaya clause is effective to grant protection to third parties such as stevedores and terminal operators if: (a) the terms of the clause make it clear that the third party is intended to be protected; (b) the terms of the clause make it clear that the carrier is contracting as agent for the third party; (c) the carrier has authority from the third party to do that; and (d) that the third party provides some form of consideration to the plaintiff.824 Thus, if the sea-carriage document contains both a Himalaya clause and exclusion clauses providing that the carrier is not responsible for any loss or damage occurring after discharge, even if caused by a fundamental breach of contract, then neither the carrier nor a stevedore or container terminal operator has any liability whatever to the owner of the goods for loss or damage occurring after discharge.825 The High Court of Australia granted special leave to appeal in two cases where appellants sought to attack the authority of those cases that established the validity of the Himalaya clause.826 Both cases were resolved on grounds that did not require reconsideration of the validity of the clause. The next time the High Court of Australia considered a contract of carriage containing a Himalaya clause,827 it upheld the validity of the clause without question. It has been said that it is relatively easy for a stevedore to establish a conclusion that it is entitled to the benefit of a Himalaya clause.828 Himalaya clauses typically extend the protection of the contract of carriage to “any independent contractor”. United States courts have held that a Himalaya clause protects an independent contractor who is not engaged by the carrier itself — that is, that the clause protects a 823 See, eg, cl 15 of the Conlinebill 2016 form (Appendix 1) and cl 15 of the Linewaybill 2016 form (Appendix 3). The clause is known as the Himalaya clause because it was designed to counteract the result of a case involving the ship “Himalaya”: Adler v Dickson [1955] 1 QB 158. 824 New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd (The Eurymedon) [1975] AC 154; Port Jackson Stevedoring Pty Ltd v Salmond & Spraggon (Aust) Pty Ltd (The New York Star) (1980) 144 CLR 300; Scruttons Ltd v Midland Silicones Ltd [1962] AC 446 at 474 per Lord Reid; Celthene Pty Ltd v WJK Hauliers Ltd [1981] 1 NSWLR 606; Life Savers (Aust) Pty Ltd v Frigmobile Ltd [1983] 1 NSWLR 431; Godina v Patrick Operations Pty Ltd [1984] 1 Lloyd’s Rep 333; Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd (The Cape Comorin) (1991) 24 NSWLR 745; The Mahkutai [1996] AC 650 at 664 per Lord Goff. 825 See, eg, Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (The Antwerpen) (1993) 40 NSWLR 206; [1994] 1 Lloyd’s Rep 213 (NSW Sup Ct CA). 826 Nissho Iwai (Australia) Ltd v Malaysian International Shipping Corp Berhad (1989) 167 CLR 219; Rockwell Graphic Systems Ltd v Fremantle Terminals Ltd (1991) 65 ALJR 514. 827 PS Chellaram & Co Ltd v China Ocean Shipping Co (The Zhi Jiang Kou) (unreported, High Court of Aust, 1993). See also Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 190 [79] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ. 828 Sumitomo Corp v CV Scheepvaartonderneming Emmagracht (2009) 260 ALR 264 at 265 [3] per Rares J. In Marine & Civil Construction Co Pty Ltd v SGS Australia Pty Ltd [2012] FCA 907, the plaintiff accepted that a Himalaya clause protected the master and time charterer of the ship in question.

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sub-sub-contractor.829 The position may be different, however, when the clause is worded so as to extend the protection of the contract to “any independent contractor engaged by the carrier”, or words to that effect.830 Sea-carriage documents often contain a clause, known as the circular indemnity clause, that goes one step further than a Himalaya clause, by providing that the cargo-owner may not sue any agent or independent contractor at all.831 Where the contract of carriage contains a circular indemnity clause, the carrier may obtain a stay of any proceedings brought by the bill of lading holder against anyone other than the carrier.832 Where the Australian modification of the Hague-Visby Rules applies

[12.750]

The Australian modification applies from the moment the goods are delivered to the carrier (or its servant or agent) within the limits of a port or wharf to the moment the goods are delivered to or placed at the disposal of the consignee within the limits of a port or wharf that is the intended destination of the goods.833 The obvious intention is that the terms of the sea-carriage document should only govern in unregulated fashion before or after this extended period of responsibility. For example, where the carrier has issued a combined transport sea-carriage document for door-to-door carriage, the contract of carriage alone would govern the stages before hand-over to the carrier at the port or wharf of loading and after delivery by the carrier at the port or wharf of discharge. However, this apparent intention seems to be undercut, perhaps fatally, by the fact that Art 7 of the Hague-Visby Rules was not amended when the Australian modifications were made in 1998.834 Article 7 provides that nothing in the rules prevents a carrier or shipper from agreeing to exemptions for loss or damage occurring before loading or after 829 Norfolk Southern Railway Co v James N Kirby Pty Ltd 543 US 14 (2004). 830 See, eg, cl 14 of the Conlinebill 2000 form: “every independent contractor from time to time employed by the Carrier”. Compare cl 15(b) of the Conlinebill 2016 form (Appendix 1) (“any subcontractor (including their own subcontractors)”), which is clearly broader in scope. 831 See [12.820]–[12.830]. 832 See, eg, Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178. See also Federal Insurance Co v Union Pacific Railroad Co 651 F 3d 1175 (9th Cir 2011); Sompo Japan Insurance Co of America v Norfolk Southern Railway Co 762 F 3d 165 (2d Cir 2014) at 182-183; Nipponkoa Insurance Co Ltd v Norfolk Southern Railway Co 794 F Supp 2d 838 (ED Oh 2012). 833 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, rr 1(e), 3. For these purposes, the limits of a port or wharf in Australia are defined by reference to the area fixed by the Chief Executive Officer of Customs under the Customs Act 1901 (Cth), s 15 and the limits of a port or wharf outside Australia are the limits fixed by local law: see Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, rr 4, 6. See generally, [12.50]. 834 See K Lewins, “Are the 1998 Amendments to COGSA Holding Water?” (2000) 28 ABLR 422 at 424.

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discharge.835 Although the rules as a whole apply within the extended period of responsibility spelled out in Art 1, r 3, no provision states any particular duties of the carrier towards the goods before loading or after discharge. Because standard form sea-carriage documents often restrict or completely exclude the carrier’s liability before loading and after discharge, it seems that the failure to amend Art 7 has left the pre-1998 position unchanged, namely that the rules only apply compulsorily in the “tackle-to-tackle” period.

THE NEGOTIABLE BILL OF LADING AS DOCUMENT OF TITLE: ENTITLING THE RECEIVER TO TAKE DELIVERY Introduction [12.760]

Although it is often stated that a negotiable bill of lading acts as a document of title to the goods named therein, that is true only to a limited extent. The bill of lading is not a document that gives title to the goods, as does a bill of exchange,836 but is a document that represents title to the goods, by virtue of the “custom of merchants”.837 Mustill LJ described the two parts of this function of a negotiable bill of lading as follows in Enichem Anic SpA v Ampelos Shipping Co Ltd (The Delfini):838 1. It is a symbol of constructive possession of the goods which (unlike many such symbols) can transfer constructive possession by endorsement and transfer: it is a transferable “key to the warehouse”. 2. It is a document which, although not itself capable of directly transferring the property in the goods which it represents, merely by endorsement and delivery, nevertheless is capable of being part of the mechanism by which property is passed.

In Borealis AB v Stargas Ltd: The Berge Sisar,839 Lord Hobhouse of Woodborough said: Endorsed bills of lading were recognised by the law merchant to be symbols of the goods by the delivery of which the goods covered by the bill of lading could likewise be delivered.

To be negotiable, and therefore capable of transfer by indorsement, a bill of lading must be made out “To Order”.840 These words signify that the carrier must deliver the goods to the shipper’s order — that is, to the person to whom the shipper has indorsed the bill of lading. If, as is often 835 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 7. 836 The Future Express [1993] 2 Lloyd’s Rep 542 at 547 per Lloyd LJ. 837 Lickbarrow v Mason (1794) 5 TR 683; 101 ER 380. See also Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 132 [22] per Rares J. 838 Enichem Anic SpA v Ampelos Shipping Co Ltd (The Delfini) [1990] 1 Lloyd’s Rep 252 at 268. The phrase “the key to the warehouse” comes from Sanders Bros v Maclean & Co (1883) 11 QBD 327 at 341 per Bowen LJ. 839 Borealis AB v Stargas Ltd: The Berge Sisar [2002] 2 AC 205 at 219 [18]. 840 BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 223 per Hill J, citing Henderson & Co v Comptoir d’Escompte de Paris (1873) LR 5 PC 253; Soproma SpA v Marine & Animal By-Products Corp [1966] 1 Lloyd’s Rep 367.

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the case, the shipper knows the identity of the intended receiver, that person’s name and address is usually put in the box marked “Notify Party”, an appellation that has no legal significance whatever. Negotiable bills of lading are usually indorsed “in blank”, which means that they are not indorsed to a particular person, but merely signed by the shipper or subsequent holder, so that passing the indorsed bill from hand to hand by mere delivery is sufficient to transfer the right to possession of the goods.841 A “straight” bill of lading that names the consignee is not negotiable, but the consignee must still present the original to the carrier in order to be entitled to take delivery.842 Possession of an indorsed negotiable bill of lading entitles the lawful holder to possession of the goods, but the ultimate question of title to the goods is determined by the ordinary rules of the law of personal property, by reference to the title of the transferor and the intentions of the parties on transfer. Thus, for example, in The Future Express,843 the English Court of Appeal held that endorsement and delivery of the bill of lading does not pass a property or possessory title to the goods if the transferor and transferee do not intend that it should do so. The holder of a negotiable bill of lading is entitled to sell or pledge the goods by dealing with the bill of lading.844 This custom is an ancient one, and it derives from the fact that it is impossible for the parties to deal with the goods themselves while they are in transit at sea. Thus, it is accepted that dealings with a negotiable bill of lading operate as dealings with the goods themselves. In the case of sale of goods, there is often a documentary credit arrangement between the buyer’s bank and the seller under which the purchase price is released by or on behalf of the former to the latter in return for the bill of lading.845 In the same way, the shipper-seller receives the purchase price from a bank in its own country in return for the bill of lading, and the buyer must pay the purchase price to its bank in return for the bill of lading, which it then presents to the carrier at the port of discharge.846 Where the purchase price is paid in 841 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 132 [22] per Rares J. 842 See [12.20]. 843 The Future Express [1993] 2 Lloyd’s Rep 542. 844 See, eg, Wright v Campbell (1767) 4 Burr 2046; 98 ER 66 (sale); Sewell v Burdick (1884) 10 App Cas 74 (pledge). A mate’s receipt (see [12.100]) is not negotiable in this way (see Nippon Yusen Kaisha v Ramjiban Serowgee [1938] AC 429) unless there is a mercantile custom to treat it as being so, as there used to be in the trade between Singapore and Sarawak: see Kum v Wah Tat Bank [1971] Lloyd’s Rep 439 (PC). 845 Documentary credit arrangements usually require other documents as well, such as, eg, an insurance policy or certificate, an invoice, packing lists or pre-shipment survey certificates, certificates of origin, etc. 846 See, eg, Westpac Banking Corp v MV Stone Gemini (1999) 110 FCR 47; [1999] 2 Lloyd’s Rep 255.

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return for transfer of the bill of lading, the bill does, indeed, act as a document of title, by which property (and not merely the right to possession) is passed.847 Although there are many cases that deal with the transfer of title to goods by transfer of bills of lading, it is not proposed to deal with them here. The question of who has full legal title to the goods carried on a ship does not concern the carrier or the ship, who may simply deliver the goods to the holder of the bill of lading. A dispute between a shipper, a consignee or indorsee and their respective banks about title to goods does not usually have any direct effect on the ship or the carrier. Its resolution depends on the terms of the sale contract and the law of sale of goods, personal property or securities, and is properly left to texts which are devoted to those subjects.848

Delivery of the cargo at the port of discharge [12.770]

Although it is not, technically, a document of title to the goods, a negotiable bill of lading does effectively act as one so far as the carrier is concerned, because it gives the holder the right to possession. The carrier is obliged849 and entitled850 to deliver the goods to the holder of the indorsed original bill of lading, without inquiring further about that person’s title to the goods. Delivery in good faith to the holder of the bill of lading discharges the carrier of all liability for the goods.851 Further, the carrier is entitled to withhold delivery of the goods from their rightful owner until the bill of lading is produced.852 It has also been said that the carrier is entitled to withhold delivery until it is proved to the carrier’s reasonable satisfaction both that the person calling for the goods is entitled to possession of them and that there is some reasonable explanation for the absence of the bill of lading,853 but that proposition

847 See, eg, Hilditch Pty Ltd v Dorval Kaiun KK (No 2) (2007) 245 ALR 125 at 132 [24] per Rares J. 848 See, eg, M Davies, “Australia” in A von Ziegler, C Debattista, A Plégat and J Windahl (eds), Transfer of Ownership in International Trade (2nd ed, Kluwer Law International, London, 2011). 849 Barber v Meyerstein (1870) LR 4 HL 317. 850 The Tigress (1863) Br & L 38; 167 ER 286; Barber v Meyerstein (1870) LR 4 HL 317; Gabarron v Kreeft (1875) LR 10 Ex 274; Glyn, Mills Currie & Co v East and West India Dock Co (1881) 7 App Cas 591 at 610 per Lord Blackburn. 851 The Tigress (1863) Br & L 38; 167 ER 286; Barber v Meyerstein (1870) LR 4 HL 317; Gabarron v Kreeft (1875) LR 10 Ex 274; Glyn, Mills Currie & Co v East and West India Dock Co (1881) 7 App Cas 591 at 610 per Lord Blackburn. 852 Erichsen v Barkworth (1858) 3 H & N 894; 157 ER 730; Trucks & Spares Ltd v Maritime Agencies (Southampton) Ltd [1951] 2 Lloyd’s Rep 345 (CA). 853 Barclays Bank Ltd v Commissioners of Customs and Excise [1963] 1 Lloyd’s Rep 81 at 88-89 per Diplock LJ; SA Sucre Export v Northern River Shipping Ltd (The Sormovskiy 3068) [1994] 2 Lloyd’s Rep 266 at 270, 272 per Clarke J.

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remains controversial.854 The carrier may not, however, call for the bill of lading until the goods are ready to be discharged.855 Delivery of the goods to a person who has not produced the indorsed original bill of lading is at the carrier’s own risk, because the carrier is liable to the true holder of the bill of lading (or someone such as a bank that has a special title to them by reason of possession of the bill of lading), both for breach of contract and in the tort of conversion, if the person to whom delivery is made is not entitled to possession of the goods.856 Importantly, because delivery without presentation of the original bill of lading amounts to a deliberate breach of contract, the carrier automatically loses the insurance against liability provided by its P & I Club.857 In Mitsui OSK Lines (Thailand) Co Ltd v Jack Fair Pty Ltd,858 the notify party identified on a negotiable bill of lading took possession of the goods at the port of discharge by presenting a copy of the bill of lading indorsed with its own seal and signature, rather than that of the true holder. The carrier settled a claim brought by the true holder of the bill of lading, and then sought an indemnity from the notify party. The Federal Circuit Court held that the notify party was liable to the carrier in conversion, and also for misleading or deceptive conduct in breach of the Australian Consumer Law, s 18. The function of a negotiable bill of lading as a document of title does not cease on delivery to a person having no right under the bill to call for possession of the goods.859 The bill of lading is not exhausted as a 854 In Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab [1999] 1 Lloyd’s Rep 837 (aff’d on other grounds Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab [2000] 1 Lloyd’s Rep 211), Rix J doubted that such an exception exists, as did Thomas J and Mance LJ in East West Corp v Dkbs 1912 [2003] 1 Lloyd’s Rep 239. In Standard Chartered Bank v Dorchester LNG (2) Ltd (The Erin Schulte) [2013] 2 Lloyd’s Rep 338 at 349 [77] (aff’d on other grounds Standard Chartered Bank v Dorchester LNG (2) Ltd (The Erin Schulte) [2015] 1 Lloyd’s Rep 97), Teare J said that the existence of this exception is “controversial”, but was prepared to assume that it exists. 855 Wilson v Watts (1891) 12 NSWR (L) 104. 856 The Stettin (1889) 14 PD 142; Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] AC 576; Westpac Banking Corp v MV Stone Gemini (1999) 110 FCR 47; [1999] 2 Lloyd’s Rep 255 (plaintiff was nominated bank under letter of credit); East West Corp v Dkbs 1912 [2003] 1 Lloyd’s Rep 239 (CA). See also Allied Chemical International Corp v Companhia de Navegacao Lloyd Brasileiro 775 F 2d 476; 1986 AMC 826 (2d Cir 1985); C-ART Ltd v Hong Kong Islands Line America SA 940 F 2d 530; 1991 AMC 2888 (9th Cir 1991). 857 See, eg, Steamship Mutual, Rules and Lists of Correspondents 2015-2016, Rule 25(xiii), Proviso (viii): http://www.steamshipmutual.com/Downloads/Rules-and-Maps-/ SteamshipRules2015.pdf. All International Group P & I Clubs have a similar rule. 858 Mitsui OSK Lines (Thailand) Co Ltd v Jack Fair Pty Ltd [2015] 1 Lloyd’s Rep Plus 55; [2015] FCCA 558. 859 The Future Express [1992] 2 Lloyd’s Rep 79 at 99-100 per Judge Diamond QC (aff’d on appeal The Future Express [1993] 2 Lloyd’s Rep 542 without consideration of this point); Standard Chartered Bank v Dorchester LNG (2) Ltd (The Erin Schulte) [2015] 1 Lloyd’s Rep 97 at 109 [53] per Moore-Bick LJ (with whom Briggs LJ and Sir Bernard Rix agreed).

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document of title by an act of misdelivery, and title to the goods may still be transferred thereafter if the parties intend that it should be so.860 In practice, the original negotiable bill of lading is often exchanged for a ship’s delivery order at the port of discharge, rather than for the goods themselves, particularly in the case of containerised cargoes. The delivery order entitles the receiver to take delivery of the goods from the cargo terminal at the port of discharge, a system recognised by the fact that all the operative provisions of the State and Territory Sea-Carriage Documents Acts refer to ship’s delivery orders, as well as to bills of lading and sea waybills. Some ports have replaced the delivery order system with an electronic system, under which the receiver is given a computergenerated Personal Identification Number (PIN) code by the ship’s agent in return for presentation of the original bill of lading. The receiver then presents the PIN code at the cargo terminal to take delivery of the goods. In Glencore International AG v MSC Mediterranean Shipping Co SA,861 the English High Court held that the PIN code under such a system did not constitute a “ship’s delivery order” for purposes of the Carriage of Goods by Sea Act 1992 (UK). Because the “surrender clause” in the bills of lading required surrender of the bill of lading “duly endorsed in exchange for the cargo or delivery order”,862 Andrew Smith J held that the carrier had breached the terms of the bill of lading by giving the holder a PIN code rather than the goods themselves or a delivery order. There should be a different result in Australia, however, because the State and Territory Sea-Carriage Documents Acts explicitly make electronic and computerised sea-carriage documents equivalent to their paper counterparts, in a way that the United Kingdom legislation does not.863 Because an electronic message containing a PIN code is equivalent to a paper delivery order for purposes of Australian legislation,864 it should be regarded as a “delivery order” for purposes of the standard surrender clause appearing in bills of lading. Nevertheless, the Glencore decision may lead to amendment of the 860 The Future Express [1992] 2 Lloyd’s Rep 79 at 99-100 per Judge Diamond QC (aff’d on appeal The Future Express [1993] 2 Lloyd’s Rep 542 without consideration of this point); Standard Chartered Bank v Dorchester LNG (2) Ltd (The Erin Schulte) [2015] 1 Lloyd’s Rep 97 at 109 [53] per Moore-Bick LJ (with whom Briggs LJ and Sir Bernard Rix agreed). 861 Glencore International AG v MSC Mediterranean Shipping Co SA [2015] 2 Lloyd’s Rep 508. 862 The same form of words is used in the Conlinebill 2016 form (Appendix 1): “One original bill of lading must be surrendered duly endorsed in exchange for the cargo or delivery order, whereupon all other Bills of Lading to be void.” 863 Carriage of Goods by Sea Act 1992 (UK), s 1(5) makes provision for regulations to be made to apply the Act to electronic communications. Although that subsection was added to the Act in 2003 by the Communications Act 2003 (UK), no regulations have yet been made. 864 A “sea-carriage document” includes a ship’s delivery order; the Acts apply to a sea-carriage document in the form of a data message in the same way that they apply to tangible documents: see Sea-Carriage Documents Act 1997 (NSW), ss 5, 6(1); Sea-Carriage Documents Act (NT), ss 5, 6(1); Sea-Carriage Documents Act 1996 (Qld), ss 3, 4(1); Sea-Carriage Documents Act 1998 (SA), ss 4, 5(1); Sea-Carriage Documents Act 1997 (Tas), ss 4, 5(1); Goods Act 1958 (Vic), ss 89, 90(1); Sea-Carriage Documents Act 1997 (WA), ss 5, 6(1).

[12.770]

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surrender clause in standard bills of lading to make it clear that an electronic substitute is equivalent to a delivery order, because without such a step, the decision stands as yet another obstacle to the goal of achieving paperless shipping transactions.865 In practice, it is not always possible for the carrier to insist on production of the indorsed original bill of lading by the receiver of the goods before delivery is made. It is often the case that the indorsee is not yet in possession of the bill of lading when the carrying ship arrives at the port of discharge.866 Delays in the transfer of the bill of lading may occur for many reasons: for example, the bill may be held as security by a bank for an advance made to one of the parties, or a short voyage may be completed before the paper transactions which accompany it. In these circumstances, the carrier often delivers the goods to the receiver in return for the giving of security against possible claims, usually by a letter of indemnity.867 If the letter of indemnity is counter-signed by a bank, the bank acts as co-indemnitor, but only if the person signing on behalf of the bank has authority to bind the bank.868 The indemnity is the carrier’s only protection if it is held liable to the holder of the bill of lading, because it loses the liability insurance protection provided by its P & I Club when it delivers the goods without presentation of the original bill.869 As a result, the International Group of P & I Clubs has drafted standard form letters of indemnity to substitute for the protection that is lost when the owner (or disponent owner) agrees to follow the charterer’s order to deliver without presentation of original bills and/or at a different port.870

865 See C Debattista, “Possession by PIN: Will Software ever Safely Supplant Paper?” (2015) 10 Shipping & Transport International 4(4). 866 This occurrence is so common in the tanker trade that standard form tanker time charterparties include a provision entitling the time charterer to order the shipowner to deliver without production of original bills of lading, if the charterer undertakes to indemnify the owner: see Shelltime 4, cl 13(b). The time charterer should then secure a back-to-back indemnity from the cargo receiver: see Farenco Shipping Co Ltd v Daebo Shipping Co Ltd (The Bremen Max) [2009] 1 Lloyd’s Rep 81. 867 See, eg, BNP Paribas v Pacific Carriers Ltd (2004) 218 CLR 451; The Future Express [1993] 2 Lloyd’s Rep 542; Westpac Banking Corp v MV Stone Gemini (1999) 110 FCR 47; [1999] 2 Lloyd’s Rep 255. 868 BNP Paribas v Pacific Carriers Ltd (2004) 218 CLR 451. 869 See, eg, Steamship Mutual, Rules and Lists of Correspondents 2015-2016, Rule 25(xiii), Proviso (viii): http://www.steamshipmutual.com/Downloads/Rules-and-Maps-/ SteamshipRules2015.pdf. All International Group P & I Clubs have a similar rule. 870 The six standard form letters of indemnity, named A, AA, B, BB, C, and CC, deal respectively with: indemnity for delivery without presentation of original bills; that indemnity guaranteed by a bank; indemnity delivery at a port other than that stated in the bill of lading; that indemnity guaranteed by a bank; indemnity for delivery without presentation of original bills and at a port other than that stated in the bill of lading; that indemnity guaranteed by a bank. They can be found at: http://www.ukpandi.com/ knowledge/industry-developments/international-group-standard-letters-ofindemnity/. The standard form letters of indemnity were redrafted in 2010 in the light

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[12.780]

Excluding and limiting liability for misdelivery [12.780]

The carrier’s obligation to deliver the goods to the holder of the bill of lading is a fundamental one, but since the demise of the doctrine of fundamental breach, the carrier may be able to protect itself against the consequences of misdelivery by an appropriately-drawn exclusion clause.871 In both Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (The Antwerpen)872 and NPL (Australia) Pty Ltd v Kamil Export (Aust) Pty Ltd,873 the bill of lading contained a clause to the effect that the carrier was not liable for any loss occurring after the goods had been discharged over the ship’s rail at the port of discharge. The Court of Appeal of New South Wales (in the former case) and the Appeal Division of the Supreme Court of Victoria (in the latter) both held that such a generally-worded clause should not be read as applying to a deliberate misdelivery of the goods after they had been discharged over the ship’s rail. A deliberate misdelivery was not an act done in the intended performance of the contract, but was an act falling outside the “four corners” of the contract, to which, as a matter of construction, the exclusion clauses did not apply. However, in The Antwerpen, the Court of Appeal of New South Wales went on to hold, by a majority, that the carrier was protected by the exclusion clause because the bill of lading also contained a clause which provided that the exclusions in the bill should apply whether or not loss or damage was caused by actions constituting a fundamental breach of contract.

The “fundamental breach” clause in The Antwerpen had, no doubt, been left in the bill of lading since the heyday of the now-discredited doctrine of fundamental breach. The fact that it became operative once again shows the extent to which the decisions in The Antwerpen and the NPL case are tainted by that heretical doctrine. Although both courts approached the operation of the exclusion clauses as a matter of construction, as orthodoxy now requires,874 their conclusion was very similar to the old notion that exclusion clauses simply do not apply to fundamental breaches. Nevertheless, the English Court of Appeal came to a similar conclusion in Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab875 and (obiter) in East West Corp v Dkbs 1912.876 In Motis Exports, the Court of Appeal held that an exclusion clause providing that of the decision in Farenco Shipping Co Ltd v Daebo Shipping Co Ltd (The Bremen Max) [2009] 1 Lloyd’s Rep 81. For a consideration of the indemnity given by the time charterer to a shipowner in these circumstances, see [14.420]. 871 Nissho Iwai (Australia) Ltd v Malaysian International Shipping Corp Berhad (1989) 167 CLR 219. 872 Glebe Island Terminals Pty Ltd v Continental Seagram Pty Ltd (The Antwerpen) (1993) 40 NSWLR 206; [1994] 1 Lloyd’s Rep 213 (NSW Sup Ct CA). 873 NPL (Australia) Pty Ltd v Kamil Export (Aust) Pty Ltd [1996] 1 VR 538. 874 See Darlington Futures Ltd v Delco (Australia) Pty Ltd (1986) 161 CLR 500; Nissho Iwai (Australia) Ltd v Malaysian International Shipping Corp Berhad (1989) 167 CLR 219. 875 Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab [2000] 1 Lloyd’s Rep 211.

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the carrier had no liability for loss of goods after discharge from the ship did not protect the carrier in the event of misdelivery to a rogue under forged bills of lading. In contrast, in Ahmad v Mitsui OSK Lines Ltd,877 Emmett J of the Federal Court held that a carrier liable for wrongful misdelivery would be entitled to limit its liability by virtue of a clause in the bill of lading incorporating by reference the unamended Hague Rules, because the limit of liability under Art 4, r 5 of the Rules is expressed to apply “in any event”.

Negotiable electronic bills of lading [12.790]

Electronic sea waybills are quite common in practice, but electronic bills of lading are not. Endorsement of a paper bill of lading is achieved by the simple process of signing the back of the bill of lading. Odd though it may sound in this technologically advanced age, this process cannot be reproduced exactly in electronic form. A digital signature on an electronic document is functionally equivalent to an “original” paper document, except that the first holder retains a copy (and the means of attaching the signature) when the document is passed on to a new holder. In this respect, an electronic bill of lading is unlike a paper bill of lading: when a paper bill of lading is indorsed from one person to another, the new holder has the document and the original holder no longer does. In order to keep track of which version of a digitally-signed electronic document is the true “original”, some trusted third party must be employed to keep track of when the document has been transferred and to whom. There are several electronic bill of lading systems that offer a “central registry” of this kind,878 but none is yet universally used or accepted. The “central registry” keeping track of all transactions is an essential part of an electronic bill of lading regime, but it is also the reason why many importers and exporters mistrust negotiable electronic bills of lading. Thus, although the Carriage of Goods by Sea Act 1991 (Cth) and the State and Territory Sea-Carriage Documents Acts apply in the same way to electronic bills of lading as they do to paper ones,879 shipping practice belies the impression given by the legislation. Paper bills of lading will remain in use for some time yet.

876 East West Corp v Dkbs 1912 [2003] 1 Lloyd’s Rep 239 at 263-264 per Mance LJ (with whom Laws and Brooke LJJ agreed). 877 Ahmad v Mitsui OSK Lines Ltd (2005) 222 ALR 338. 878 The best-known is Bolero: see http://www.bolero.net. 879 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1A, r 1; Sea-Carriage Documents Act 1997 (NSW), s 6; Sea-Carriage Documents Act 1996 (Qld), s 4; Sea-Carriage Documents Act 1998 (SA), s 5; Sea-Carriage Documents Act 1997 (Tas), s 5; Goods Act 1958 (Vic), s 90; Sea-Carriage Documents Act 1997 (WA), s 6; Sea-Carriage Documents Act (NT), s 6.

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WHO IS THE CARRIER? Introduction [12.800]

Many of the principles of the law relating to carriage of goods by sea were first developed in the days of sailing ships, when the master was co-owner of the ship and signed bills of lading personally. Much has changed since then, particularly since the advent of containerised cargoes. With a few notable exceptions, it is now quite unusual to find a carrier in the liner trade that owns the ships on which it carries cargo. There is a bewildering variety of commercial arrangements in modern shipping practice, which can make identification of the carrier a very difficult task. The most common of these arrangements divide the responsibility for operation of the ship. Typically, the owner or demise charterer of the ship is responsible solely for the navigational operation of the ship, and its commercial exploitation as a cargo-carrying entity is devolved to a charterer, usually a time charterer. The ship may be painted in the time charterer’s colours and bear a name that identifies it as part of the charterer’s fleet, but the charterer-operator has no possessory rights in the ship itself.880

Although the shipping business is very competitive, there is also much collaboration between operators. For many years, shipping lines have operated price-fixing cartels known as liner conferences, in which the operators on a particular route agree with one another on the tariffs for carriage on that route.881 Conference members commonly issue seacarriage documents for carriage on one another’s ships, so that a ship operated by one conference member may carry cargoes under carriage documents issued by several other shipping lines.882 This practice is not confined to conferences: it is also used by shipping lines who have agreed to run a liner service as a joint operational venture.883 The shipping line that charters the ship may sub-charter parts of the ship’s carrying capacity to its colleagues under contracts known as slot charters,884 or it may simply allow them to issue carriage documents for carriage on its ship in return for reciprocal rights over their ships. The picture is further complicated by the role played by freight forwarders, who also issue documents that at least appear to be bills of lading or sea waybills. Originally, a freight forwarder acted merely as an 880 See [14.10], [14.170]. 881 Liner conferences for carriage into and out of Australia are exempt from the pro-competition provisions of the Competition and Consumer Act 2010 (Cth), by virtue of Pt 10. 882 See, eg, Pacific Composites Pty Ltd v Transpac Container System Ltd (unreported, FCA, Tamberlin J, 11 May 1998). 883 See, eg, The Hamburg Star [1994] 1 Lloyd’s Rep 399. 884 See, eg, Seafood Imports Pty Ltd v ANL Singapore Pte Ltd (2010) 272 ALR 149. See generally, M Reilly, “Identity of the Carrier: Issues under Slot Charters” (2001) 22 Tulane Maritime Law Journal 505.

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agent, arranging carriage with an ocean carrier on behalf of the shipper or receiver of the goods. Since the advent of containerised carriage, though, many freight forwarders offer a “door-to-door” service, contracting to pick up the goods from an exporter’s warehouse, stuff them into containers, carry them by road or rail to the port of loading, then carry them by sea to the port of discharge, then carry them by road or rail from the port of discharge to the importer’s warehouse, then unstuff them there. Although the forwarder may contract to perform all these functions, it may sub-contract some or all of those functions to others. (In the United States, entities who perform this type of function are not called “freight forwarders”, but by the very descriptive expression Non-VesselOwning Common Carriers, or NVOCCs.) Freight forwarders who offer this kind of service usually issue to the exporter a document that looks like a bill of lading, and is sometimes known (using terminology borrowed from carriage of goods by air) as a “house” bill of lading. When the goods in the container are put on the ship, though, the ocean carrier (which may be a time charterer, slot charterer or conference operator) also issues a sea-carriage document, often a sea waybill or straight bill of lading, which usually names the freight forwarder as shipper and the forwarder’s agent at the discharge port as named consignee. To confuse matters still further, the freight forwarder may itself charter part of the ship under a slot charter, if it has many containers to carry to the same destination. If goods are lost or damaged during carriage by sea, the receiver of the goods (or, in practice, its cargo insurer) must find the right defendant or defendants to sue. Unravelling the arrangements between the various parties who are, or appear to be, carriers is often no mean feat, and errors may prove fatal given the one-year limitation period under the Hague and Hague-Visby Rules and the Australian modification of the latter.

Sea-carriage documents for carriage on time-chartered ships General: who signed the document and in what capacity?

[12.810]

The definition of “carrier” in the original version of the Hague Rules and Hague-Visby Rules provides little or no assistance in identifying the contracting carrier, because it merely provides that “carrier” includes the owner or the charterer who enters into a contract of carriage with the shipper.885 In contrast, the Hamburg Rules stipulate which obligations are undertaken by the contracting carrier, and which by the actual carrier if that is a different person from the contracting carrier.886 Similarly, although the Rotterdam Rules define “carrier” in general terms to mean “a person that enters into a contract of carriage with a shipper”,887 the rules also deal with the situation where a

885 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(a). 886 Carriage of Goods by Sea Act 1991 (Cth), Sch 2, Art 10 (now repealed). 887 Rotterdam Rules, Art 1(5).

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“performing party” performs or undertakes any of the carrier’s obligations with respect to the receipt, loading, handling, stowage, carriage, care, unloading or delivery of the goods.888 Although several aspects of the Hamburg Rules were grafted onto the Hague-Visby Rules when Australia unilaterally modified the latter in 1998, the vague and unhelpful definition of “carrier” was left untouched. Where there is both a shipowner (or demise charterer) and a time charterer, the lack of a useful statutory definition of “carrier” makes it necessary to consider all the circumstances of the case to determine which of them entered into the contract of carriage with the shipper. The question is of considerable practical significance, because the Hague and Hague-Visby Rules and the Australian modification of the latter only govern the rights and obligations of the parties to the contract of carriage.889 Standard form time charterparties usually contain a clause requiring the master of the chartered ship to sign bills of lading “as presented by the charterer”, or words to that effect.890 (Older versions of the charterparty clause typically refer only to bills of lading, but more modern ones refer to “bills of lading or waybills”.)891 The charterer prepares the document from the particulars provided by the shipper and presents it to the master for signature, or to a ship’s agent authorised by the master to sign on its behalf. Alternatively, the charterer or its agent may sign the document itself on behalf of the master, if authorised to do so by the master or by the terms of the charterparty.892 A bill of lading or sea waybill prepared by a charterer but signed by or on behalf of the master in this way is usually evidence of a contract of carriage between the shipper and the shipowner893 (or demise charterer if there is one),894 and is definitely so 888 Rotterdam Rules, Art 1(6), (7) define “performing party” and “maritime performing party”, respectively. 889 See [12.370]. 890 See, eg, lines 504-505 of the NYPE 2015 form (Appendix 7). 891 See, eg, NYPE 2015, cl 31(a) (see Appendix 7). 892 See, eg, lines 505-506 of the NYPE 2015 form (Appendix 7); Kaleej International Pty Ltd v Gulf Shipping Lines Ltd (1986) 6 NSWLR 569; LEP International Pty Ltd v Atlanttrafic Express Service Inc (1987) 10 NSWLR 614 (aff’d on other grounds sub nom Contender 1 Ltd v LEP International Pty Ltd (1988) 63 ALJR 26); Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507. 893 Namchow Chemical v Botany Bay Shipping Co (Aust) Pty Ltd [1982] 2 NSWLR 523 at 527 per Samuels JA; Kaleej International Pty Ltd v Gulf Shipping Lines Ltd (1986) 6 NSWLR 569; LEP International Pty Ltd v Atlanttrafic Express Service Inc (1987) 10 NSWLR 614 (aff’d on other grounds sub nom Contender 1 Ltd v LEP International Pty Ltd (1988) 63 ALJR 26); BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 219 per Hill J. See also Wehner v Dene Steam Shipping Co [1905] 2 KB 92; Tillmanns & Co v S/S Knutsford Ltd [1908] 1 KB 185 (aff’d Tillmanns & Co v S/S Knutsford Ltd [1908] AC 406 (HL)); The Venezuela [1980] 1 Lloyd’s Rep 393 at 395 per Sheen J. 894 Where the carrying ship is under demise charter, a bill of lading or sea waybill signed by or on behalf of the master is evidence of a contract with the demise charterer, not the

[12.810]

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when the shipper is unaware of the existence of the charterparty.895 In this situation, although the time charterer is normally entitled to keep the freight paid by the cargo-owner, it acts merely as an intermediary whose role it is to find the cargo, and it is the shipowner (or demise charterer) who is the contracting carrier.896 That is not always so, though: the identity of the carrier is always to be decided on the facts and documents of the particular case.897 Where the bill of lading or sea waybill is signed in the charterer’s own name or by agents on its behalf, the shipper’s contract is usually with the charterer, not the shipowner.898 In Namchow Chemical v Botany Bay Shipping Co (Aust) Pty Ltd,899 the Court of Appeal of New South Wales held that this was so, even though the charterer’s employee had signed the bill of lading above the printed words “For Master”, which were disregarded in the particular circumstances of the case. In Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd,900 the Supreme Court of New South Wales held that where the bill of lading was signed by the charterer’s agent as “duly authorised agent of the [carrying] vessel”, it bound the charterer, not the shipowner, because disclosure of the charterer’s agency for the vessel was not sufficient to disclose its agency for the shipowner. In contrast, in LEP International Pty Ltd v Atlanttrafic Express Service Inc,901 the bill of lading was in the charterer’s own standard form, and was signed by the charterer’s agent above the words “As agent only”. The Supreme Court of New South Wales held that it evidenced a contract with the shipowner: see, eg, Samuel, Samuel & Co v West Hartlepool Steam Navigation Co (1906) 11 Com Cas 115; Baumwoll Manufactur von Carl Scheibler v Furness [1893] AC 8; The Ship Socofl Stream v CMC (Australia) Pty Ltd [2001] FCA 961. 895 Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870; Namchow Chemical v Botany Bay Shipping Co (Aust) Pty Ltd [1982] 2 NSWLR 523 at 527 per Samuels JA; Kaleej International Pty Ltd v Gulf Shipping Lines Ltd (1986) 6 NSWLR 569 at 572 per Samuels JA. See also Sandeman v Scurr (1866) LR 2 QB 86. 896 See, eg, Dry Bulk Handy Holding Inc v Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s Rep 38 (CA), where it was held that although the time charterer is the nominated recipient of the freight, it is to be regarded as the shipowner’s agent in the making of the bill of lading contract. 897 Namchow Chemical v Botany Bay Shipping Co (Aust) Pty Ltd [1982] 2 NSWLR 523 at 527 per Samuels JA, citing Wilston Steamship Co Ltd v Andrew Weir & Co (1925) 22 Ll L Rep 521 at 522 per Roche J; The Venezuela [1980] 1 Lloyd’s Rep 393 at 395 per Sheen J; Samuel, Samuel & Co v West Hartlepool Steam Navigation Co (1906) 11 Com Cas 115. 898 Samuel, Samuel & Co v West Hartlepool Steam Navigation Co (1906) 11 Com Cas 115; Namchow Chemical v Botany Bay Shipping Co (Aust) Pty Ltd [1982] 2 NSWLR 523; Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870; Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express) (1990) 19 NSWLR 285; Hunter Grain Pty Ltd v Hyundai Merchant Marine Co Ltd (1993) 117 ALR 507. See also Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715. 899 Namchow Chemical v Botany Bay Shipping Co (Aust) Pty Ltd [1982] 2 NSWLR 523. 900 Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870. 901 LEP International Pty Ltd v Atlanttrafic Express Service Inc (1987) 10 NSWLR 614 (aff’d sub nom Contender 1 Ltd v LEP International Pty Ltd (1988) 63 ALJR 26).

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shipowner, not the charterer, because the charterparty authorised the charterer to sign bills of lading on behalf of the master and shipowner, and signature by the charterer’s agent was no different in effect from signature by the charterer itself as agent for the shipowner. This decision is questionable, though, because the words “As agent only” might merely have signified that the agent was signing on behalf of the charterer,902 and there was nothing else in the terms of the bill of lading to disclose to the shipper the possibility that the charterer’s agent was signing on behalf of the shipowner.903 In BHP Trading Asia Ltd v Oceaname Shipping Ltd,904 an agent authorised by the master signed a bill of lading bearing the time charterer’s imprint on its face. The Federal Court held that the bill of lading was evidence of a contract of carriage with the shipowner, not the time charterer. Hill J distinguished Namchow Chemical on the basis that there was nothing to indicate that the master’s agent had signed the bill as agent for the charterer rather than as agent for the ship and its owner, and nothing to indicate that the master (or its agent) had authority to bind the charterer.905 Thus, there was no reason to depart from the usual rule that a bill of lading signed by or on behalf of the master evidences a contract with the shipowner, not the charterer. In the United States, the question of the identity of the carrier is simpler in two significant respects. Some circuits, such as the Fifth Circuit, take an orthodox view similar to the Australian one, that there cannot be liability under the COGSA without privity of contract, and there can only be one contracting carrier, shipowner or charterer.906 In contrast, however, courts in the Second Circuit hold that there can be more than one “carrier” for the purposes of the COGSA and that there can be liability even in the absence of privity of contract.907 This possibility seems not to have been considered in Australia, but the Second Circuit position is quite convincing. The definition of “carrier” in the Hague and Hague-Visby Rules908 states that it includes the owner or charterer who contracted with 902 See Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870 at 875 per Hunt J. 903 Compare Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express) (1990) 19 NSWLR 285 (bills of lading signed “as agents for carrier” held to be charterer’s bills). 904 BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211. 905 BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211 at 219-222. 906 Thyssen Steel Co v M/V Kavo Yerakas 50 F 3d 1349; 1995 AMC 2317 (5th Cir 1995); QT Trading LP v MV Saga Morus 641 F 3d 105; 2012 AMC 1778 (5th Cir 2011). 907 See, eg, Joo Seng Hong Kong Co Ltd v S/S Unibulkfir 483 F Supp 43 (SDNY 1979); Central National-Gottesman Inc v M/V Gertrude Oldendorff 204 F Supp 2d 675; 2002 AMC 1477 (SDNY 2002) at 680-681; 1482-1483 (citing many other cases); Man Ferrostaal, Inc v MV Akili 763 F Supp 2d 599 (SDNY 2011) at 610 (aff’d on other grounds Man Ferrostaal, Inc v MV Akili 704 F 3d 77 (2d Cir 2013)). 908 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 1(a). The definition is the same in the COGSA (46 App USC § 1301(a)) and the Australian modification of the Hague-Visby Rules: Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 1(a).

[12.820]

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the shipper, which certainly implies the possibility that non-contracting parties might also qualify as carriers. Secondly, under the United States doctrine of ratification, which is applied in all circuits, the ship itself is liable in rem on all bills of lading, whether or not they were issued by or on behalf of the shipowner.909 By sailing with the goods on board, the ship is taken to have ratified the bill of lading, thereby becoming bound to the contract evidenced by it. Thus, the ship is liable in rem on a charterer’s bill of lading, even though the shipowner may not be liable in personam.910 Identifying the carrier by contract: demise and circular indemnity clauses

[12.820]

The question of the identity of the carrier is made more complex if the bill of lading or sea waybill contains a demise clause or identity of carrier clause. This type of clause provides that, where the carrying ship is not owned or demise-chartered by the party issuing the bill of lading or sea waybill, the contract evidenced by the document is between the shipper and the shipowner or demise charterer. The clause is intended to have the effect that the shipper’s contract of carriage is with the shipowner (or demise charterer), not the charterer, even where the bill of lading or sea waybill is signed by the charterer or its agent.911 Such clauses have been criticised,912 and United States courts use Art 3, r 8 of the Hague Rules913 to strike them down as an attempt by the contracting carrier to exclude itself from liability.914 Nevertheless, English courts have 909 See, eg, Man Ferrostaal, Inc v MV Akili 704 F 3d 77 (2d Cir 2013). See generally, M Davies, “In Defense of Unpopular Virtues: Personification and Ratification” (2000) 75 Tulane Law Review 337. 910 See, eg, United Nations Children’s Fund v S/S Nordstern 251 F Supp 833 (SDNY 1966); Tube Products of India v S/S Rio Grande 334 F Supp 1039; 1971 AMC 1629 (SDNY 1971); Demsey & Associates Inc v S/S Sea Star 461 F 2d 1009; 1972 AMC 1440 (2d Cir 1972); British West Indies Produce Inc v S/S Atlantic Clipper 353 F Supp 548; 1973 AMC 163 (SDNY 1973); Cavcar Co v M/V Suzdal 723 F 2d 1096; 1984 AMC 609 (3d Cir 1983); Cactus Pipe & Supply Co v M/V Montmartre 756 F 2d 1103; 1985 AMC 2150 (5th Cir 1985); Man Ferrostaal, Inc v MV Akili 704 F 3d 77 (2d Cir 2013). The doctrine of ratification does not apply to a bill of lading issued by an NVOCC (similar to an Australian freight forwarder): Insurance Company of North America v S/S American Argosy 732 F 2d 299; 1984 AMC 1547 (2d Cir 1984). 911 See, eg, The Berkshire [1974] 1 Lloyd’s Rep 185. 912 W Tetley, Marine Cargo Claims (3rd ed, International Shipping Publications, BLAIS, Montreal, 1988), pp 248-251, gave seven arguments against the validity of the demise clause. Tetley’s views were rejected in Ngo Chew Hong Edible Oil Pty Ltd v Scindia Steam Navigation Co Ltd (The Jalamohan) [1988] 1 Lloyd’s Rep 443 at 450 per Hirst J. 913 46 USC § 30701, Statutory Note, § 3(8). 914 Thyssen Steel Co v M/V Kavo Yerakas 50 F 3d 1349; 1995 AMC 2317 (5th Cir 1995) at 1353: “Although the district court did not directly address the argument that the ‘Demise’ clause in the bills of lading shifted liability from the charterer to the vessel owner, the court correctly disregarded the argument as such clauses are void under COGSA, 46 App USC §1303(8).”

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held them to be effective915 where the charterparty expressly916 or impliedly917 authorises the charterer to include a demise or identity of carrier clause in the bill of lading or sea waybill. However, in Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd,918 Hunt J said that a demise clause is only brought into operation if the face of the bill of lading contains some other indication, apart from the demise clause itself, that the charterer is acting as agent for the shipowner. The House of Lords came to much the same conclusion in Homburg Houtimport BV v Agrosin Private Ltd (The Starsin),919 holding that where the bill of lading was signed on its face by an agent for the charterer, which was named on the face of the bill as “the Carrier”, the charterer was plainly identified as contracting carrier and there was no reason to look at the demise clause on the back of the bill and no need to try to reconcile the inconsistency between front and back. In contrast, the circular indemnity clause is intended to have precisely the opposite effect to a demise clause. In a circular indemnity clause, the party issuing the carriage document (usually a time charterer) undertakes that it and it only is the contracting carrier and, in return, the shipper undertakes not to sue anyone other than that party, and to indemnify that party against any loss it may suffer as a result of any other person (such as a later holder of a negotiable bill of lading) suing anyone other than it, the contracting carrier.920 Where the sea-carriage document contains such a clause, the party identified as the contracting carrier may obtain a permanent stay of any proceedings brought by the consignee or indorsee of the document against another party if there is a real possibility that, if the claim is allowed to proceed, the contracting carrier may suffer financial loss by reason of that other party seeking an indemnity from 915 The Berkshire [1974] 1 Lloyd’s Rep 185; W & R Fletcher (New Zealand) Ltd v Sigurd Haavik Aksjeselskap (The Vikfrost) [1980] 1 Lloyd’s Rep 560; Pacol Ltd v Trade Lines Ltd (The Henrik Sij) [1982] 1 Lloyd’s Rep 456; Ngo Chew Hong Edible Oil Pte Ltd v Scindia Steam Navigation Co Ltd (The Jalamohan) [1988] 1 Lloyd’s Rep 443; Fetim v Oceanspeed Shipping BV (The Flecha) [1999] 1 Lloyd’s Rep 612. See also the obiter dicta in Kaleej International Pty Ltd v Gulf Shipping Lines Ltd (1986) 6 NSWLR 569 at 573-575 per Samuels JA. 916 Tillmanns & Co v S/S Knutsford Ltd [1908] 2 KB 385 (CA) (aff’d Tillmanns & Co v S/S Knutsford Ltd [1908] AC 406 (HL)); The Berkshire [1974] 1 Lloyd’s Rep 185. 917 W & R Fletcher (New Zealand) Ltd v Sigurd Haavik Aksjeselskap (The Vikfrost) [1980] 1 Lloyd’s Rep 560 (CA) 918 Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870 at 875. 919 Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715. 920 See, eg, cl 15(d) of the Conlinebill 2016 form (Appendix 1) and cl 15(d) of the Linewaybill 2016 form (Appendix 3). The name “circular indemnity” comes from the fact that if the consignee or indorsee of the sea-carriage document sues a third party, and the third party recovers an indemnity from the contracting carrier, the contracting carrier may recover an indemnity from the consignee or indorsee, thereby closing the circle: see the description of the pleadings in Broken Hill Co Pty Ltd v Hapag-Lloyd Aktiengesellschaft [1980] 2 NSWLR 572 at 577-578; Sidney Cooke Ltd v Hapag-Lloyd Aktiengesellschaft [1980] 2 NSWLR 587 at 590.

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it.921 The effect of a circular indemnity clause is that the consignee or indorsee of the sea-carriage document may not sue the shipowner (among others) in tort or bailment. Nevertheless, the clause is not struck down by Art 3, r 8 of the Hague or Hague-Visby Rules (or the Australian modification of the latter) as an attempt to exclude liability in a manner not permitted by the Rules.922 Although the shipowner is the carrier of the goods in one sense, it is not the “carrier” of the goods for the purposes of the Hague or Hague-Visby Rules (or the Australian modification of the latter), because it is not a party to the contract of carriage evidenced by the sea-carriage document, and so there is no reason why the contract should not exclude it from liability completely.923 Furthermore, because the Rules only govern the rights and obligations of the contracting parties, Art 3, r 8 is concerned only with provisions that limit the direct liability of the carrier to the cargo-owner, and so it has no effect on the circular indemnity clause, which is concerned with the liability of the carrier to third parties.924 Other issues

[12.830]

Because a charterer may only issue bills of lading or sea waybills as carrier with the authority of the shipowner or demise charterer, the shipowner or demise charterer takes over the carrier’s rights and obligations under the contract of carriage from the time charterer if it (the shipowner or demise charterer) withdraws the ship from the service of the charterer during the carrying voyage.925 The shipowner or demise charterer is obliged to carry the goods to the destination specified in the sea-carriage document, and is not entitled to demand freight from the consignee or indorsee if the shipper has pre-paid freight to the defaulting time charterer.926 However, it is not clear whether the obligations

921 Broken Hill Co Pty Ltd v Hapag-Lloyd Aktiengesellschaft [1980] 2 NSWLR 572; Sidney Cooke Ltd v Hapag-Lloyd Aktiengesellschaft [1980] 2 NSWLR 587; Sellers Fabrics Pty Ltd v Hapag-Lloyd AG [1998] NSWSC 644; Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178. See also The Elbe Maru [1978] 1 Lloyd’s Rep 206; Federal Insurance Co v Union Pacific Railroad Co 651 F 3d 1175 (9th Cir 2011). 922 Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178. 923 Sidney Cooke Ltd v Hapag-Lloyd Aktiengesellschaft [1980] 2 NSWLR 587 at 594-595 per Yeldham J. See also J Gadsden Pty Ltd v Australian Coastal Shipping Commission [1977] 1 NSWLR 575 and [12.370]. 924 Chapman Marine Pty Ltd v Wilhelmsen Lines A/S [1999] FCA 178 at [64] per Emmett J. 925 J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57; Bizley & Co Pty Ltd v Transcontinental Services Ltd (The Protea Trader) (1992) (unreported, NSW Sup Ct, Carruthers J, 10 April 1992) (reversed on other grounds Quadro Shipping NV v Bizley & Co Pty Ltd (1992) 113 FLR 280). See also Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials LLC (The Alev) [1989] 1 Lloyd’s Rep 138 at 145 per Hobhouse J. For a consideration of withdrawal in time charterparties, see [14.430]–[14.470]. 926 J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57. See also Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials LLC (The Alev) [1989] 1 Lloyd’s Rep 138 at 145 per Hobhouse J.

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assumed by the shipowner or demise charterer include liability for damage caused to the goods before withdrawal of the ship from the charterer’s service.927 Because of the difficulties of identifying the contracting carrier, the plaintiff in a cargo claim may find that it has sued the wrong party, mistakenly choosing the shipowner instead of a demise or time charterer, or vice versa. If the plaintiff’s pleadings make it clear that it intended to sue the chosen party as the contracting carrier, rather than in its capacity as shipowner or charterer as the case may be, then the plaintiff is permitted to substitute the name of the correct defendant under the Supreme Court or Federal Court rules that permit a correction of pleadings where there has been a mistake in the name of a party.928 Such a substitution may be made, even though the one year limitation period under Art 3, r 6 of the Hague or Hague-Visby Rules (or the Australian modification of the latter) has expired, because the proceedings against the substituted party are taken to have been commenced on the day the original proceedings were commenced, if the relevant court rules so provide.929 If the contracting carrier is a time charterer, there is no privity of contract between the shipper (or the consignee or indorsee) and the shipowner or demise charterer. Although the shipper can sue the time charterer under the contract of carriage, it may prefer to sue the shipowner or demise charterer directly in tort or bailment, as may the consignee or indorsee, depending on the passage of title to the goods under the terms of the contract of sale.930 One advantage of suing the shipowner or demise charterer rather than a time charterer is that the cargo plaintiff may then proceed in rem against the carrying ship.931 The shipowner or demise charterer may nevertheless be entitled to the benefit of the exclusions and limitations in the Hague or Hague-Visby Rules (or the Australian modification of the latter) in an action brought by the shipper, consignee 927 Quadro Shipping NV v Bizley and Co Pty Ltd (The Protea Trader) (1992) 113 FLR 280. 928 Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231, esp at 259-262 per McHugh J (with whom Brennan and Deane JJ agreed); Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371. 929 Bridge Shipping Pty Ltd v Grand Shipping SA (1991) 173 CLR 231, esp at 259-262 per McHugh J (with whom Brennan and Deane JJ agreed); Nikolay Malakhov Shipping Co Ltd v SEAS Sapfor Ltd (1998) 44 NSWLR 371. 930 The consignee or indorsee may bring an action in tort or bailment only if it has title to the goods at the time they were lost or damaged. Without title to the goods, there can be no bailment of them to the sea-carrier nor title to sue in tort: see Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785 at 818 per Lord Brandon of Oakbrook; Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715. 931 It is a prerequisite for an action in rem that the person who would be liable in personam (the “relevant person”) was the owner or charterer or in possession or control of the ship when the cause of action arose, and the owner or demise charterer when the action was commenced: Admiralty Act 1988 (Cth), ss 17, 18. Thus, an action cannot be brought in rem if the “relevant person” was the time charterer.

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or indorsee.932 If it is regarded as an “independent contractor” or “sub-contractor” from the time charterer as contracting carrier,933 the shipowner or demise charterer may be entitled to rely on the terms of the time charterer’s carriage contract if it contains a Himalaya clause extending the protection of the contract to employees and independent contractors,934 or it may escape liability altogether if the time charterer’s contract contains a circular indemnity clause.935 However, in Homburg Houtimport BV v Agrosin Private Ltd (The Starsin),936 the House of Lords held that Art 3, r 8 of the Hague Rules invalidates any attempt by a shipowner to rely on a Himalaya clause in a bill of lading issued by a time charterer. Art 3, r 8 strikes down any clause relieving “the carrier or the ship” from liability otherwise than as provided by the rules.937 The House of Lords held that unless the words “or the ship” were to be regarded as tautologous, they must have been intended to cover the situation where the owner or demise charterer of the ship was not the contracting carrier. Thus, Art 3, r 8 prevented the shipowner from excluding its liability, even when it was not party to the contract of carriage. Alternatively, if the arrangement between the shipowner or demise charterer and the contracting carrier is such that the former has issued the latter a bill of lading or sea waybill rather than entering into a time or slot charter, the shipowner or demise charterer may be able to rely on the terms of its own contract of carriage if it is sued in tort or bailment by the shipper, consignee or indorsee of the sea-carriage document issued by the contracting carrier. Under the doctrine of sub-bailment on terms, the shipowner or demise charterer may rely on the terms of sea-carriage document it issued to the contracting carrier if the sea-carriage document issued by the contracting carrier contains a clause giving the contracting carrier authority to subcontract any part of the carriage to other parties on any terms.938 In these circumstances, the shipper under the contracting carrier’s carriage document is taken to have consented to the contracting carrier sub-bailing the goods on terms that may be different from those in that contract.939 Having taken possession of the goods from the 932 See F Reynolds, “The Significance of Tort in Claims in Respect of Carriage by Sea” [1986] LMCLQ 97 at 104-108. 933 The House of Lords held that the shipowner could be classed as a “sub-contractor” for these purposes: see Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715 at 742-743 [28] per Lord Bingham, at 759 [95] per Lord Hoffmann, at 799 [199] per Lord Millett. 934 See [12.740]. 935 See [12.820]. 936 Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715. 937 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 8 (Hague-Visby Rules). 938 The Pioneer Container [1994] 2 AC 324. The doctrine of sub-bailment on terms is considered in greater detail at [12.840]. 939 But note that doubts have been expressed in Australian cases about the reality of that consent: see [12.840].

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contracting carrier, the shipowner or demise charterer owes the cargoowner the duties of a bailee, as modified by the terms of its contract with the contracting carrier.

Freight forwarders [12.840]

The traditional view of the role of a freight forwarder is that it acts as agent for the shipper940 of goods, arranging for carriage and delivery of the goods by others, without contracting to carry and deliver the goods itself.941 The forwarder enters into a contract of carriage with a sea-carrier on behalf of the shipper as an undisclosed principal. The freight forwarder may issue to the shipper a document called a consignment note or a house bill of lading, but that document is not a true bill of lading when the forwarder acts merely as an agent. The document is, at most, a receipt for the goods coupled with an authority to enter into a contract of carriage on behalf of the shipper.942

More recently, however, freight forwarders have been held to have contracted as carrier, and not merely as agent, particularly where they provide a “door-to-door” service involving carriage to and from the port at either end of the sea carriage.943 Where the freight forwarder is the contractual carrier, the analysis of the relationships between the parties is quite different. The forwarder contracts with both the shipper and the sea-carrier as principal. The shipper is not a party to the contract between the forwarder and the sea-carrier. Conversely, the sea-carrier is not a party to the contract between the shipper and the forwarder, but is merely a subcontractor of the forwarder. The consignment note or house bill of lading issued by the forwarder to the shipper is a true bill of lading if it is made out “To Order”, or a non-negotiable sea-carriage document if not. Thus, according to this analysis, there are two sea-carriage documents 940 The forwarder may also act as agent for the receiver of the goods if, for example, the receiver has purchased them on FOB or FCA terms. For convenience, this section refers only to the forwarder acting for the shipper. 941 See Jones v European & General Express (1920) 25 Com Cas 296 at 298 per Rowlatt J; A Gagniere & Co v Eastern Co of Warehouses (1921) 7 Ll L Rep 188 (aff’d on other grounds A Gagniere & Co v Eastern Co of Warehouses (1921) 8 Ll L Rep 365); Clot v Compagnie Commerciale du Nord (1921) 8 Ll L Rep 380; Langley, Beldon & Gaunt Ltd v Morley [1965] 1 Lloyd’s Rep 297 at 306 per Mocatta J; Marston Excelsior Ltd v Arbuckle, Smith & Co Ltd [1971] 2 Lloyd’s Rep 306; Hair and Skin Trading Co Ltd v Norman Airfreight Carriers Ltd [1974] 1 Lloyd’s Rep 443; EMI (New Zealand) Ltd v William Holyman & Sons Pty Ltd [1976] NZLR 566. 942 Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd (The Cape Comorin) (1991) 24 NSWLR 745. See also A Gagniere & Co v Eastern Co of Warehouses (1921) 7 Ll L Rep 188 at 189 per Roche J; B Eder et al, Scrutton on Charterparties and Bills of Lading (22nd ed, Sweet & Maxwell, London, 2011), pp 373-374 at [17-019]. 943 Comalco Aluminium Ltd v Mogal Freight Services Pty Ltd (1993) 113 ALR 677. See also Johnson Matthey & Co v Constantine Terminals Ltd [1976] 2 Lloyd’s Rep 214; Salsi v Jetspeed Air Services Ltd [1977] 2 Lloyd’s Rep 57; Singer Co (UK) Ltd v Tees and Hartlepool Port Authority [1988] 2 Lloyd’s Rep 164 at 167 per Steyn J; Aqualon (UK) Ltd v Vallana Shipping Corp [1994] 1 Lloyd’s Rep 669.

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covering the carriage of one consignment of goods: the forwarder’s document issued to the shipper, and the sea-carrier’s document issued to the forwarder.944 If the forwarder is the contracting carrier, and if the goods are lost or damaged while they are at sea, the shipper may sue the forwarder-carrier on the contract of carriage evidenced by the forwarder’s sea-carriage document, as may the consignee or indorsee under that document, by operation of the State and Territory Sea-Carriage Documents Acts.945 The forwarder-carrier may then seek an indemnity from the sea-carrier in an action under its contract of carriage with the sea-carrier. Alternatively, the shipper may sue the subcontracting sea-carrier directly in tort or bailment,946 as may the consignee or indorsee, depending on the passage of title to the goods under the terms of the contract of sale.947 Although there is no privity of contract between the shipper (or the consignee or indorsee) and the sea-carrier, the sea-carrier may nevertheless be entitled to the benefit of the exclusions and limitations in the Hague or Hague-Visby Rules (or the Australian modification of the latter) in an action brought by the shipper, consignee or indorsee.948 As a subcontractor, the sea-carrier may rely on the terms of the forwarder’s contract of carriage with the cargo-owner if that contract contains a Himalaya clause extending the protection of the contract to employees and independent contractors,949 or it may escape liability altogether if that contract contains a circular indemnity clause.950 Alternatively, the sea-carrier may try to rely on the terms of its own contract of carriage with the forwarder, even though the cargo-owner is not party to that contract. Under the doctrine of sub-bailment on terms, which was approved by the Privy Council in The Pioneer Container,951 the sea-carrier may rely on the terms of its 944 See, eg, Rail Equipment Leasing Pty Ltd v CV Scheepvaartonderneming Emmagracht [2008] NSWSC 850. 945 See footnotes citing the appropriate legislation at [12.670]. 946 Where the shipper bails the goods to the forwarder, who sub-bails them to the sea-carrier with the authority of the shipper, the sea-carrier owes the shipper the duties of a bailee for reward and the shipper can proceed directly against the sea-carrier as sub-bailee: The Premier Group Pty Ltd v Followmont Transport Pty Ltd [2000] 2 Qd R 338, citing The Pioneer Container [1994] 2 AC 324. 947 The consignee or indorsee may bring an action in tort or bailment only if it has title to the goods at the time they were damaged. Without title to the goods, there can be no bailment of them to the sea-carrier nor standing to sue in tort: see Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785 at 818 per Lord Brandon of Oakbrook; Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2004] 1 AC 715. 948 See F Reynolds, “The Significance of Tort in Claims in Respect of Carriage by Sea” [1986] LMCLQ 97 at 104-108. 949 See, eg, cl 15 of the Conlinebill 2016 form (Appendix 1) and cl 15 of the Linewaybill 2016 form (Appendix 3). The clause is known as the Himalaya clause because it was designed to counteract the result of a case involving the ship “Himalaya”: Adler v Dickson [1955] 1 QB 158: see [12.740]. 950 See [12.820]. 951 The Pioneer Container [1994] 2 AC 324.

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contract with the forwarder if the shipper expressly or impliedly consented to the forwarder sub-bailing the goods to the sea-carrier on the terms of that contract. Such consent may be found in a generally-worded clause in the forwarder’s consignment note or house bill of lading, by which the shipper gives the forwarder authority to subcontract any part of the carriage to carriers on any terms. If the shipper does consent to sub-bailment of the goods to a sea-carrier in this way, it seems that the receiver of the goods is also bound by the terms of the sea-carrier’s bill of lading, even though it did not give its consent to being so bound.952 Attempts to rely on The Pioneer Container and the doctrine of sub-bailment on terms in Australia have met with mixed success, so much so that the operation of the doctrine here remains doubtful. In WMC Engineering Services Pty Ltd v Brambles Holdings Ltd,953 Wheeler J of the Supreme Court of Western Australia, obiter, expressed frank doubts about the doctrine, quoting an observation of Fullagar J in Wilson v Darling Island Stevedoring and Lighterage Co Ltd954 that when no precise legal ground for supporting an immunity can be found, there must be strong reason for suspecting that the immunity cannot be supported at all. Wheeler J went on to say (also obiter) that the shipper’s consent, which is essential to the operation of the doctrine, could only be implied if both bailor and contemplated sub-bailee were engaged in the same trade, in which case the bailor would be aware of the precise nature of the terms on which sub-bailment would be made. To go any further than that would be anomalous. The Western Australian Court of Appeal affirmed Wheeler J’s decision on grounds that made it unnecessary to make any comment about the doctrine of sub-bailment on terms.955 In Matthew Short & Associates Pty Ltd v Riviera Marine (International) Pty Ltd,956 the New South Wales Court of Appeal held that the doctrine of sub-bailment on terms does not apply when the freight forwarder does not take possession of the goods itself.957 According to this view, if the forwarder never takes possession, it is not a bailee and thus cannot sub-bail the goods. The goods are bailed directly by the shipper to the sea-carrier, and because there is no contract between these two parties, the sea-carrier cannot rely on any contractual exclusion clauses to protect itself against liability to the shipper. In an echo of Wheeler J in WMC 952 The Pioneer Container [1994] 2 AC 324; Gilchrist Watt and Sanderson Pty Ltd v York Products Pty Ltd [1970] 1 WLR 1262 (PC). 953 WMC Engineering Services Pty Ltd v Brambles Holdings Ltd (unreported, WA Sup Ct, Wheeler J, 31 October 1997). 954 Wilson v Darling Island Stevedoring and Lighterage Co Ltd (1955) 95 CLR 43 at 73. 955 WMC Engineering Services Pty Ltd v Brambles Holdings Ltd (unreported, WA Sup Ct CA, Kennedy, Wallwork and Anderson JJ, 4 March 1999). 956 Matthew Short & Associates Pty Ltd v Riviera Marine (International) Pty Ltd [2001] NSWCA 281. 957 The sea-carrier actually conceded that this would be so, and the Court of Appeal accepted that concession without comment.

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Engineering, Heydon JA (with whom Meagher JA and Ipp AJA agreed) also said that in any event, there was insufficient evidence that the shipper had consented to the term on which the sea-carrier sought to rely.958 In Westrac Equipment Pty Ltd v The ship Assets Venture,959 the Federal Court considered an alternative that was not raised in Matthew Short, that of quasi-bailment. Lee J held that a forwarder who does not take possession of the goods is a quasi-bailee and thus owes the same duty to the owner of the goods as does the actual bailee, the sea-carrier.960 Lee J also spoke of the forwarder as quasi-bailee sub-bailing the goods to the sea-carrier as sub-bailee.961 This seems a little odd, because if the forwarder is merely a quasi-bailee, it would seem to follow that the sea-carrier must simply be a bailee from the shipper as bailor, rather than a sub-bailee from someone who has never taken possession.962 Nevertheless, if Lee J’s analysis of the relationship between the parties is correct, it is possible that the sea-carrier as sub-bailee (rather than mere bailee) might be able to rely on the terms of its contract with the forwarder/sub-bailor/quasi-bailee under Pioneer Container principles — if, of course, the original bailor sufficiently consented to sub-bailment on terms. Lee J did not have to consider that possibility on the facts of the case because, very unusually, the contract between the sea-carrier and the freight forwarder contained no terms, as the former had not issued any sea-carriage document to the latter. However, in Lukoil-Kalingradmorneft Plc v Tata Ltd (No 2),963 Toulson J of the English High Court explicitly held that the principles of The Pioneer Container applied to quasi-bailment as well as to sub-bailment, saying:964 Lord Goff in The Pioneer Container formally left open the question whether the doctrine of sub-bailment on terms extends to quasi-bailments; but I can see no good reason why it should not (or in other words, why it should make any

958 Matthew Short & Associates Pty Ltd v Riviera Marine (International) Pty Ltd [2001] NSWCA 281 at [64] per Heydon JA (with whom Meagher JA and Ipp AJA agreed). See also Heilbrunn v Lightwood PLC (2007) 164 FCR 1 at 12 [58] per Allsop J. 959 Westrac Equipment Pty Ltd v The ship Assets Venture (2002) 192 ALR 277. 960 Westrac Equipment Pty Ltd v The ship Assets Venture (2002) 192 ALR 277 at 285-286 [41]-[44]. 961 Westrac Equipment Pty Ltd v The ship Assets Venture (2002) 192 ALR 277 at 286 [45]-[46]. See also Heilbrunn v Lightwood PLC (2007) 164 FCR 1 at 12 [58] per Allsop J. 962 However, in Cash Logistics Pty Ltd v Nelson [2015] SASC 117 (not a shipping case), Stanley J of the Supreme Court of South Australia held that a party who had taken possession of goods directly from an original bailor by reason of a contract with an intermediate quasi-bailee, who never took possession, was liable to the quasi-bailee as sub-bailee: at [81]. 963 Lukoil-Kalingradmorneft Plc v Tata Ltd (No 2) [1999] 1 Lloyd’s Rep 365. 964 Lukoil-Kalingradmorneft Plc v Tata Ltd (No 2) [1999] 1 Lloyd’s Rep 365 at 374-375. The Lukoil case was not concerned with carriage of goods, but with towage of two vessels from Canada to India. In the passage here quoted, Toulson J uses the proper names of the parties involved in the case. The text has been modified to fit the context of the present discussion.

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difference in this case whether [the goods] notionally entered the possession of [the freight forwarder] before they came into the possession of [the actual carrier]).

The English Court of Appeal affirmed Toulson J’s decision on grounds that did not call for a consideration of the principles of quasi-bailment.965 As a matter of principle, it is difficult to choose between the Matthew Short view and the Westrac/Lukoil quasi-bailment view, as each has something to commend it. In quasi-bailment, the relationships between the original bailor and the intermediary and between the intermediary and the bailee are both contractual: the only bailment relationship is between original bailor and ultimate bailee. As the Matthew Short decision suggests, it is difficult to see why the bailee’s obligations in that bailment relationship should be governed by any contractual terms when there is no privity of contract between the bailee and the original bailor. On the other hand, it seems capricious for the bailee’s rights to depend on the relatively fortuitous circumstance whether the intermediary ever took possession of the goods. The sea-carrier can say with some justification that it only agreed to take possession on the terms of its contract with the intermediary, whether that intermediary was quasi-bailee or sub-bailor. Nevertheless, the question is moot if Australian courts follow the suggestion of Wheeler J in WMC Engineering and the New South Wales Court of Appeal in Matthew Short, holding that the shipper as original bailor can only be bound by the (sub-)bailee’s terms if it knew in some detail what they were. Furthermore, in the case of damage to, but not loss of, the goods, there is some authority to suggest that the plaintiff may circumvent any contractual protection that might be available to the sea-carrier by framing its action in negligence, not bailment.966 However, because the duty of care owed by the sea-carrier to the cargo-owner arises as a result of possession by the former of the goods of the latter, it is difficult to see how the latter can properly plead the existence of a duty of care in negligence without being bound by the terms of the the bailment.967 If the forwarder is merely an agent, any claim in respect of loss of or damage to the goods must be made against the sea-carrier. The shipper may bring an action against the sea-carrier on the contract of carriage evidenced by the sea-carrier’s carriage document, but the receiver of the 965 Tata Ltd & Global Marine Transportation Inc [1999] 2 Lloyd’s Rep 129 (CA). 966 Lee Cooper Ltd v CH Jeakins & Sons Ltd [1964] 1 Lloyd’s Rep 300 (also reported, but much less fully, in Lee Cooper Ltd v CH Jeakins & Sons Ltd [1967] 2 QB 1); Johnson Matthey & Co v Constantine Terminals Ltd [1976] 2 Lloyd’s Rep 214 per Donaldson J; Gillespie Brothers & Co Ltd v Roy Bowles Transport Ltd; Rennie Hogg Ltd (Third Party) [1973] 1 QB 400 at 411 per Lord Denning MR. 967 M Davies, “The Elusive Carrier: Whom do I Sue and How?” (1991) 19 ABLR 230. This point was not expressly considered in The Pioneer Container [1994] 2 AC 324 (PC), but it seems implicit in the result.

[12.840]

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goods may not have title to sue the sea-carrier.968 The carriage document issued by the sea-carrier is unlikely to be a negotiable bill of lading; it is more likely to be a straight bill of lading or sea waybill naming the forwarder as shipper and its foreign agent as named consignee.969 The actual receiver of the goods can only acquire the right to sue the sea-carrier under the State and Territory Sea-Carriage Documents Acts970 if the named consignee on the straight bill or waybill (the forwarder’s foreign agent) is treated as being an agent for the receiver as unnamed principal. If a forwarder acting merely as agent has issued a “house” bill of lading made out “To Order”, indorsement of that document to the receiver is not effective to give it title to sue anyone under the State and Territory Sea-Carriage Documents Acts,971 because it is not a contract of carriage of goods at all.972 If the receiver does not acquire standing to sue the sea-carrier, it must prevail upon the shipper to sue the sea-carrier on its behalf.973 It should be obvious from this discussion that it is crucial to determine whether the freight forwarder has contracted as principal or agent. That question is one of fact, to be determined by reference to all the circumstances of the case. Where the carriage covered by the forwarder’s house bill is exactly the same as that covered by the sea-carrier’s bill of lading, the forwarder is more likely to be merely an agent;974 where the forwarder’s house bill covers land carriage at either end of the sea carriage, the forwarder is more likely to have contracted as carrier.975 Summarising the effect of several English decisions in Aqualon (UK) Ltd v Vallana Shipping Corp,976 Mance J of the English High Court said: 968 Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd (The Cape Comorin) (1991) 24 NSWLR 745 at 752 per Handley JA. 969 Or vice-versa if the forwarder is acting for the receiver. The forwarder may also act as agent for the receiver of the goods if, for example, the receiver has purchased them on FOB or FCA terms. 970 See footnotes citing the appropriate legislation at [12.670]. There is some doubt about whether the legislation applies to straight bills of lading: see footnotes citing the appropriate legislation at [12.680]. 971 See footnotes citing the appropriate legislation at [12.670]. There is some doubt about whether the legislation applies to straight bills of lading: see footnotes citing the appropriate legislation at [12.680]. 972 Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd (The Cape Comorin) (1991) 24 NSWLR 745. 973 Dunlop v Lambert (1839) 6 Cl & F 600; 7 ER 825; Albacruz (Cargo Owners) v Albazero (Owners): The Albazero [1977] AC 774. 974 Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd (The Cape Comorin) (1991) 24 NSWLR 745. 975 Comalco Aluminium Ltd v Mogal Freight Services Pty Ltd (1993) 113 ALR 677. 976 Aqualon (UK) Ltd v Vallana Shipping Corp [1994] 1 Lloyd’s Rep 669 at 674, adopted by the English Court of Appeal in Lukoil-Kalingradmorneft Plc v Tata Ltd (No 2) [1999] 2 Lloyd’s Rep 129 at 137 per Tuckey LJ (with whom May and Morritt LJJ agreed). In Royal & Sun Alliance Insurance PLC v MK Digital Fze (Cyprus) Ltd [2005] 2 Lloyd’s Rep

366

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Various factors are identified in these cases which may throw light on the role undertaken. The most obvious are: (a) the terms of the particular contract including the nature of the instructions given, for example whether they were to carry or for carriage or were to arrange carriage …; in this connection the nature and terms of any governing conditions also arise for consideration; (b) any description used or adopted by the parties in relation to the contracting party’s role; (c) the course of any dealings, including the manner of performance — at least in so far as it throws light on the way in which the parties understood their relationship; thus whether or not the contracting party informed the goods-owner of or identified the actual arrangements made for carriage may be one factor in determining the former’s role; (d) the nature and basis of charging (in particular whether an all-in fee was charged, leaving the contracting party to make such profit as he could from the margin between it and costs incurred) …; (e) the nature and terms of any [carriage document] issued.

679, both parties accepted that the Aqualon test should be applied to determine the status of a freight forwarder as principal or agent: at 686 [37] per Aikens J. The Aqualon test was applied in Westrac Equipment Pty Ltd v The Ship Assets Venture (2002) 192 ALR 277 at 284-285 [36] per Lee J.

13

Voyage Charterparties [13.10] INTRODUCTION ........................................................................................... 368

[13.10] General ............................................................................................... 368 [13.20] Arbitration and choice of law ....................................................... 369 [13.30] FORMATION OF THE CONTRACT .......................................................... 370 [13.40] THE LOADING VOYAGE ............................................................................ 372

[13.40] Introduction ...................................................................................... 372 [13.50] The destination of the loading voyage — the loading port or berth ................................................................................................... 373 [13.100] The time of arrival and readiness for loading ......................... 382 [13.140] Cancellation .................................................................................... 386 [13.150] THE LOADING OPERATION ................................................................... 388

[13.150] Introduction .................................................................................... 388 [13.160] The commencement of laytime ................................................... 389 [13.230] The duration of laytime ................................................................ 406 [13.430] Demurrage and despatch ............................................................. 422 [13.510] Loading the cargo .......................................................................... 434 [13.580] THE CARRYING VOYAGE ........................................................................ 446

[13.580] Introduction .................................................................................... 446 [13.590] The commencement of the carrying voyage ............................. 447 [13.600] Seaworthiness ................................................................................. 449 [13.610] Reasonable despatch ..................................................................... 451 [13.620] Deviation ......................................................................................... 452 [13.630] Losses and expenditures on the carrying voyage ................... 454 [13.640] The destination of the carrying voyage — the place of discharge .......................................................................................... 456 [13.650] DISCHARGING ............................................................................................ 457 [13.660] FREIGHT ........................................................................................................ 458 [13.670] CONTRACTS OF AFFREIGHTMENT ...................................................... 461

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[13.10]

INTRODUCTION General [13.10]

A voyage charterparty is a contract for the carriage of goods by sea on a single voyage.1 Under such a contract, the owner of a ship2 agrees to allow the charterer to use the carrying capacity of the ship3 to carry goods from one port to another. Although the voyage from the port where the goods are loaded to the port where they are discharged is the central element in a voyage charterparty, the adventure as a whole involves four successive stages:4 1. The loading voyage. This is the voyage of the chartered ship from the end of its previous engagement to the place where the goods are to be loaded. 2. The loading operation. This is the delivery of the goods to the ship at the place of loading and their stowage on board. 3. The carrying voyage. This is the voyage with the goods from the loading port to the place specified in the charterparty as the place of delivery (the discharge port, berth or place). 4. The discharging operation. This is the delivery of the goods from the ship at the discharge port and their receipt there by the charterer or other consignee. In the second and fourth stages (loading and unloading), there are obligations on both shipowner and charterer. The first and third stages are concerned primarily with performance by the shipowner. The stages of the voyage charterparty venture are considered separately in this chapter (at [13.40]–[13.650]), in chronological order after a consideration of the formation of the voyage charterparty contract. 1 Some voyage charterparties are for several consecutive voyages; they are known as consecutive voyage charterparties. For convenience, this chapter refers only to charterparties for single voyages. 2 The person who charters out the ship may be the owner, a demise charterer, a time charterer or a voyage charterer. In practice, any charterer who sub-charters the ship is referred to as the “disponent owner”, although this description can only be used properly of a demise charterer. For convenience, this chapter refers simply to “the shipowner”, which term refers both to the owner of the ship and to any disponent owner in the sense just described. 3 In most cases, the charterer charters the entire carrying capacity of the ship, but a voyage charterparty may be for only part of the carrying capacity, such as a single hold or tank. This practice is common in the carriage of bulk liquids in parcel tankers, which are ships with many relatively small tanks. 4 See EL Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479 at 556 per Lord Diplock. Lord Diplock said that the loading voyage is the voyage to the loading port from wherever the ship is at the time the charterparty is made, but the charterparty may be made at a time when the ship is still engaged in carrying cargo under a different contract.

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Arbitration and choice of law [13.20]

The parties to a voyage charterparty very often agree that all disputes shall be determined by arbitration, usually in London according to English law or in New York according to United States law, although parties in the Australia-Pacific region have increasingly begun to have recourse to the Singapore International Arbitration Centre (SIAC). In Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd,5 a Full Court of the Federal Court of Australia held, by a majority, that the Carriage of Goods by Sea Act 1991 (Cth), s 11 does not apply to voyage charterparties. Section 11 strikes down any forum selection agreement purporting to “preclude or limit the jurisdiction” of an Australian court in any “sea carriage document relating to the carriage of goods”. Despite the fact that a voyage charterparty is plainly a document relating to the carriage of goods by sea, the court held that s 11 does not apply to voyage charterparties into or out of Australia. The effect of this decision is to export from Australia to London or New York any dispute arising out of the many voyage charterparties for carriage of goods into or out of Australia. Quite why the Federal Court thought that disputes about Australian charterparties were better decided by London and New York arbitrators than by the judges of Australian courts must remain a mystery; the fact is that that is what Norden decided, despite the plain words of s 11. As originally enacted, the Carriage of Goods by Sea Act 1991 (Cth), s 11(2) struck down any choice of foreign forum clause appearing in “a bill of lading or a similar document of title”.6 Under that form of words, it was clear that s 11(2) did not apply to voyage charterparties, because a voyage charterparty is neither a bill of lading nor a document of title. Section 11(2)(b), (c)(ii) applied (and continue to apply) to a non-negotiable document which provided that it was to be governed by the Hague-Visby Rules as if it were a bill of lading.7 Although some voyage charterparties incorporate the Hague or Hague-Visby Rules by reference, that is not an attempt to make the relevant rules apply to the charterparty “as if it were a bill of lading”, a phrase that has been held to mean what it says.8 Thus, as originally enacted, the jurisdictional protection provided by s 11(2) did not apply to voyage charterparties and contracts of affreightment.

5 Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd (2013) 216 FCR 469. 6 Carriage of Goods by Sea Act 1991 (Cth), s 11(2)(b) (outward-bound), s 11(2)(c)(i) (inward-bound). 7 Carriage of Goods by Sea Act 1991 (Cth), s 11(2)(b), (c)(ii), referring to “a non-negotiable document of a kind mentioned in [s 10(1)(b)(iii)]”. 8 See, eg, Browner International Ltd v Monarch Shipping Ltd (The European Enterprise) [1989] 2 Lloyd’s Rep 185, a decision about the same phrase as used in the Carriage of Goods by Sea Act 1971 (UK), s 1(6)(b).

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Section 11 was amended twice in 1998,9 and the key phrase “a bill of lading or a similar document of title” in s 11 was replaced by the phrase “a sea carriage document”.10 That phrase is not defined in the Act. The phrase is defined in the modified version of the Hague-Visby Rules contained in Sch 1A to the Act, but that definition applies only to “these Rules”, not the Act itself.11 Section 9 of the 1991 Act provides that a word or expression used in the Part containing s 11 has “the same meaning as it has in the Brussels Convention as amended by the Visby Protocol and the SDR Protocol”, but the expression “a sea carriage document” is not used in those international instruments. Despite all of this textual support for the proposition that s 11 should apply — indeed, was intended by Parliament to apply, as evidenced by its 1998 amendments to the Act — to voyage charterparties, the Norden majority decided otherwise, a conclusion to be regretted.

FORMATION OF THE CONTRACT [13.30]

Voyage charterparties are generally made (or “fixed”, in the terminology of the trade) by agents or brokers acting on behalf of the principals concerned, the shipowner and the charterer. Brokers usually communicate with one another by email (or, formerly, by telex) in a specialised jargon of abbreviations and acronyms. They often establish the fundamentals of the agreement first and leave the details until later, particularly when it is necessary for agreement to be reached quickly, as is often the case. The essentials of the agreement are often contained in a “fixture recap”, in which one or other of the brokers summarises what has been agreed in the negotiations to date. The “fixture recap”, usually contained in an email, settles the main points of agreement — the cargo to be carried, the load and discharge ports or ranges, the freight rate, the details of the carrying ship, etc — and often refers to a standard form charterparty, which may contain options between which the parties must choose. Sometimes, the fixture recap is the only evidence of the agreement between the parties, and no formal charterparty document is ever generated or even referred to in the recap.12

Brokers often use the phrase “subject to details” in a fixture recap, or the contraction “subdets”. In English law, the charterparty contract is not 9 Carriage of Goods by Sea Regulations 1998 (Cth); Carriage of Goods by Sea Regulations (No 2) 1998 (Cth). 10 Carriage of Goods by Sea Act 1991 (Cth), s 11(1)(a), (2)(c)(i). 11 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 1, r 1(g). 12 See, eg, Thyssen Inc v Calypso Shipping Corp SA [2000] 2 Lloyd’s Rep 243 (36 voyage charterparties each made by fixture recap referring to and incorporating terms in a charterparty made many years before); Novologistics SARL v Five Ocean Corp (The Merida) [2010] 1 Lloyd’s Rep 274 (no reference to a standard charterparty form in the fixture recap).

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made until agreement has been reached on every one of the terms,13 and agreement “subject to details” does not give rise to a concluded charterparty contract.14 In contrast, under United States law, agreement “subject to details” does give rise to a binding contract, provided that the essential terms have been agreed, and that the parties propose to use a standard printed form.15 The English approach has been followed at least once in Australia16 and (implicitly) in Canada.17 However, the Singapore Court of Appeal has expressed a view that is more consistent with the United States approach than the English, holding that a binding charterparty contract was made in a “recap” telex, notwithstanding the fact that some (minor) details were yet to be agreed.18 In The Rainbow Spring, the Singapore Court of Appeal said: “The important question is whether the parties by their words and conduct have made it clear, objectively, that they intend to be bound despite the unsettled terms”,19 a sensible proposition very different from that in The Junior K, which is that failure to agree on every one of the terms, however apparently minor, precludes creation of a binding contract. The principal (shipowner or charterer) is bound to the charterparty contract only if the broker had actual or ostensible authority to act on the

13 See, eg, Hofflinghouse & Co Ltd v C-Trade SA (The Intra Transporter) [1985] 2 Lloyd’s Rep 158. 14 Star Steamship Society v Beogradska Plovidba (The Junior K) [1988] 2 Lloyd’s Rep 583; CPC Consolidated Pool Carriers GmbH v CTM Cia Transmediterranea SA (The CPC Gallia) [1994] 1 Lloyd’s Rep 68 (“subject to details/logical amendments”); Egon Oldendorff v Libera Corp [1996] 1 Lloyd’s Rep 380 at 387 per Clarke J. Compare Granit SA v Benship International Inc [1994] 1 Lloyd’s Rep 526, where the phrase “subject to details” was not used, and where it was held that the fact that some minor matters remained to be agreed did not mean that no binding charterparty had been concluded. See also Thoresen & Co (Bangkok) Ltd v Fathom Marine Co Ltd [2004] 1 Lloyd’s Rep 62 (ship sale contract “subject to details”). 15 Interocean Shipping Co v National Shipping and Trading Corp 523 F 2d 527 (2nd Cir 1975); Atlantic & Great Lakes Steamship Corp v Steelmet Inc 565 F 2d 848 (2nd Cir 1977); Pollux Marine Agencies Inc v Louis Dreyfus Corp 455 F Supp 211 (SDNY 1978); Great Circle Lines Ltd v Matheson & Co Ltd 681 F 2d 121 (2nd Cir 1982); PEP Shipping (Scandinavia) ApS v Normaco Shipping Corp 1997 AMC 2933 (ED La 1997); US Titan Inc v Guangzhou Zhen Hua Shipping 241 F 3d 135; 2001 AMC 2080 (2nd Cir 2001). 16 I/S Rederiet Erik B Kromann v Ocean Bridge Shipping Pty Ltd (The Hermann C Boye) (unreported, WA Sup Ct, 1991). Although this case was concerned with fixture of a time charterparty, it expressly adopted the decision in Star Steamship Society v Beogradska Plovidba (The Junior K) [1988] 2 Lloyd’s Rep 583. 17 In Margem Chartering Co v The BOCSA [1997] 2 FC 1001, the Trial Division of the Federal Court of Canada quoted and applied Star Steamship Society v Beogradska Plovidba (The Junior K) [1988] 2 Lloyd’s Rep 583, but found that the brokers in that case had agreed all the details. 18 The Rainbow Spring [2003] 3 SLR (R) 362, followed in Grossner Jens v Raffles Holdings Ltd [2004] 1 SLR (R) 202; Rudhra Minerals Pte Ltd v MRI Trading Pte Ltd [2013] 4 SLR 1023. 19 The Rainbow Spring [2003] 3 SLR (R) 362 at [20].

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principal’s behalf.20 The principal is bound by the agent’s ostensible authority if the other party enters into the charterparty contract in reliance on a representation by the principal that the broker has authority to enter into charterparty contracts on its behalf.21 There is authority for the proposition that a broker does not have “customary authority” to bind its principal, so that in the absence of actual authority or some indication from the principal to the counterparty that the broker has authority to bind the principal, the principal is not bound by the broker’s actions.22 A party may waive its right to claim that there is no binding charterparty contract if it elects to act in a manner that indicates that it will no longer contend that no contract exists, such as, for example, by beginning to provide services under the supposed contract.23 The broker owes a duty of care both to its own principal and to the party on the other side of the negotiations, and is liable in tort if losses arise as a result of its negligence.24

THE LOADING VOYAGE Introduction [13.40]

The loading voyage is not merely a preparation for performance; it is part of the process by which the shipowner earns freight under the charterparty.25 The shipowner’s primary obligation in this stage is to ensure that the chartered ship is at the loading place in time, ready to receive the cargo. Thus, the charterparty must specify where and when the ship must be ready to load, or must provide how that place and time are to be determined, and by whom. Standard form voyage charterparties usually contain a clause entitling the charterer to cancel the charterparty if the chartered ship has not arrived at the loading place by a specified date, known as the cancelling date.

20 Polish Steamship Co v AJ Williams Fuels (Overseas Sales) Ltd (The Suwalki) [1989] 1 Lloyd’s Rep 511. 21 Polish Steamship Co v AJ Williams Fuels (Overseas Sales) Ltd (The Suwalki) [1989] 1 Lloyd’s Rep 511, following Freeman & Lockyer Ltd v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480. 22 Polish Steamship Co v AJ Williams Fuels (Overseas Sales) Ltd (The Suwalki) [1989] 1 Lloyd’s Rep 511, following Freeman & Lockyer Ltd v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480; BP Oil International Ltd v Target Shipping Ltd (The Target) [2012] 2 Lloyd’s Rep 245 at 285 [221] per Andrew Smith J. 23 Oceanografia SA de CV v DSND Subsea AS (The Botnica) [2007] 1 Lloyd’s Rep 37. 24 See, eg, Markappa Inc v NW Spratt & Son Ltd (The Arta) [1985] 1 Lloyd’s Rep 534. 25 SIB International SRL v Metallgesellschaft Corp (The Noel Bay) [1989] 1 Lloyd’s Rep 361 at 366 per Staughton LJ. For a consideration of freight, see [13.660].

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The destination of the loading voyage — the loading port or berth [13.50]

The loading port may be specified in the charterparty, in which case the shipowner is obliged to send the chartered ship there (and must take the risk of the ship being unable to berth safely)26 unless the charterparty also provides that the charterer must nominate a safe berth within the port. In England, if the charterparty states that the charterer must send the chartered ship only to “safe ports”, but also names the loading port, the effect is that the charterer promises that the named port is safe.27 The position is the opposite in the United States, where there is a “named port exception” to the charterer’s promise of safety, which requires the shipowner to accept all reasonably foreseeable risks of entering a named port, if the master chooses to enter the port without protest.28 However, even under English law, there is no implied safe berth obligation if the charterparty names the loading port but does not expressly state that the nominated berth within the named port must be safe.29 The charterer’s “safe port” promise is usually relevant only when the charterparty gives the charterer the right to nominate a port or place from a list of named ports or places.30 If the loading berth is specified in the charterparty, the shipowner bears the risk of that berth being unsafe, because it has agreed to load at that particular place.31 If the charterparty does not specify the berth within the port, the charterer may nominate any available berth in the specified port, unless the charterparty limits its choice to safe berths. 26 Australian Wheat Board v Reardon Smith Line Ltd (1954) 91 CLR 233 at 243 per Dixon CJ (decision reversed in Privy Council Reardon Smith Line Ltd v Australian Wheat Board (1956) 93 CLR 577). Dixon CJ dissented in the High Court of Australia, but his judgment was largely adopted by the Privy Council on appeal. 27 AIC Ltd v Marine Pilot Ltd (The Archimidis) [2008] 1 Lloyd’s Rep 597 (“one safe port Ventspils”); STX Pan Ocean Ltd v Ugland Bulk Transport AS (The Livanita) [2008] 1 Lloyd’s Rep 86 (St Petersburg named; general clause “trading to be … between safe ports”). 28 The Helios 115 F 705 (2d Cir 1902); Pan Cargo Shipping Corp v United States 234 F Supp 623 (SDNY 1964) at 638 (aff’d Pan Cargo Shipping Corp v United States 373 F 2d 525 (2d Cir 1967)); Bunge Corp v M/V Furness Bridge 558 F 2d 790 (5th Cir 1977) at 802; Duferco International Steel Trading v T Klaveness Shipping A/S 333 F 3d 383 (2d Cir 2003) at 387; In re petition of Frescati Shipping Co Ltd 718 F 3d 184; 2013 AMC 1521 (3d Cir 2013). 29 Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc (The Reborn) [2009] 2 Lloyd’s Rep 639. 30 Atkins International HA v Islamic Republic of Iran Shipping Lines (The APJ Priti) [1987] 2 Lloyd’s Rep 37 at 41 per Bingham LJ. The discharge place was “1/2 safe berths Bandar Abbas, 1/2 safe berths Bandar Bushire, 1/2 safe berths Bandar Khomeini in charterer’s option”. The Court of Appeal held that the charterer did not warrant the safety of any of these ports. 31 Australian Wheat Board v Reardon Smith Line Ltd (1954) 91 CLR 233 at 243 per Dixon CJ (decision reversed in Privy Council Reardon Smith Line Ltd v Australian Wheat Board (1956) 93 CLR 577). Dixon CJ dissented in the High Court of Australia, but his judgment was largely adopted by the Privy Council on appeal.

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Alternatively, the charterparty may specify a geographic range of unspecified ports, from which the charterer nominates the loading port or ports when it knows where the cargo will become available for shipment. In the absence of any special provision in the charterparty allowing the charterer to change its nomination,32 the effect of the nomination of a loading port or berth by the charterer is that the charterparty must thereafter be treated as if the nominated port or berth had originally been written into the charterparty, and the charterer has neither the right nor the obligation to change that nomination unilaterally.33 Although the charterer can choose among the ports within the stipulated range, it has an obligation to exercise the option by making a choice; it cannot leave the chartered ship without orders about where the chartered service should begin.34 Once the charterer has exercised its right to nominate a port or berth, the nomination of another port or berth is in itself a breach of contract unless the charterparty gives the charterer the right to change the nomination.35 The shipowner does not waive its right to complain of that breach merely by accepting the new nomination.36 If the shipowner accepts the new nomination, it may recover damages representing the additional costs incurred in complying with the new order, or compensation on a quantum meruit basis, whichever is the greater.37

32 See, eg, Bulk Shipping AG v Ipco Trading SA (The Jasmine B) [1992] 1 Lloyd’s Rep 39. It seems that any change of nomination must be made before the ship arrives and gives notice of readiness at the first-nominated port (see Batis Maritime Corp v Petroleos de Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345), but everything depends on the construction of the term giving the charterer the right to change nominations. 33 King Line Ltd v Moxey, Savon & Co Ltd (1939) 62 Ll L Rep 252; Anglo-Danubian Transport Co Ltd v Ministry of Food (1950) 83 Ll L Rep 137; Venizelos ANE of Athens v Societe Commerciale de Cereales et Financieres SA of Zurich (The Prometheus) [1974] 1 Lloyd’s Rep 350 at 355 per Mocatta J; Batis Maritime Corp v Petroleos de Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345; Bulk Shipping AG v Ipco Trading SA (The Jasmine B) [1992] 1 Lloyd’s Rep 39 at 42 per Judge Diamond QC; P v A [2008] 2 Lloyd’s Rep 415 at 419 [16] per David Steel J; ED & F Man Sugar Ltd v Unicargo Transportgesellschaft mbH (The Ladytramp) [2012] 2 Lloyd’s Rep 660 at 665 [12] per Eder J. 34 Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2008] 2 Lloyd’s Rep 384 (aff’d Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2009] 2 Lloyd’s Rep 371 (time charterparty)). 35 Anglo-Danubian Transport Co Ltd v Ministry of Food (1950) 83 Ll L Rep 137; Batis Maritime Corp v Petroleos de Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345; Antiparos ENE v SK Shipping Co Ltd (The Antiparos) [2008] 2 Lloyd’s Rep 237 (implied right to change nomination in Asbatankvoy form). 36 Batis Maritime Corp v Petroleos de Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345. 37 Batis Maritime Corp v Petroleos de Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345.

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“To proceed … to any port or place as ordered by the charterer”

[13.60]

If the charterparty does not qualify the type of port or berth that may be chosen, the charterer may nominate any port or berth, provided that it is not impossible of access.38 In such a case, the shipowner generally bears the risk of the ship being unable to berth safely, just as it does if the charterparty merely specifies the port or berth without qualification.39 However, in Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea),40 Thomas J held that where the charterer must nominate from a range of unspecified ports41 (or berths) the court may imply an obligation that the chosen port (or berth) must be a safe one.42 Such a term should only be implied if the usual rules for implying a contractual term are satisfied.43 Thus, it cannot be said that a term as to safety will always be implied into a voyage charterparty provided for an unspecified range of ports; much depends on the circumstances and the other terms of the particular charterparty.44 Because the breadth of the charterer’s choice under such a clause may prove inconvenient to the shipowner in the absence of an implied term as to safety, standard form charterparties typically provide expressly that the nominated port or berth must be safe. Safe port or safe berth

[13.70]

The charterparty (or fixture recap) may provide that the charterer must nominate a safe port from a specified range (for example, “one safe port US Gulf”), or a safe berth within a specified port (“one safe berth Newcastle”), or a safe berth in a safe port from a specified range (“one safe berth one safe port US Gulf”). In such a case, the charterer warrants that the nominated port and/or berth is safe; the promise is absolute and is breached even if the charterer could not, with reasonable

38 Aktieselskabet Olivebank v Dansk Svovlsyre Fabrik [1919] 2 KB 162; Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1962] 2 QB 42 at 110 per Willmer LJ; Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39 at 67 per Thomas J. 39 See, eg, Bulk Shipping AG v Ipco Trading SA (The Jasmine B) [1992] 1 Lloyd’s Rep 39. It seems that any change of nomination must be made before the ship arrives and gives notice of readiness at the first-nominated port (see Batis Maritime Corp v Petroleos de Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345), but everything depends on the construction of the term giving the charterer the right to change nominations. 40 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39 at 67-68. 41 For example, “one port US Gulf”, rather than “Houston, New Orleans, Mobile or Tampa”. 42 See also Vardinoyannis v Egyptian General Petroleum Corp (The Evaggelos Th) [1971] 2 Lloyd’s Rep 200, implying a term as to safety in a time charterparty. 43 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39 at 68 per Thomas J, referring to the “officious bystander” test. 44 Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc (The Reborn) [2009] 2 Lloyd’s Rep 639 at 645-646 per Lord Clarke of Stone-cum-Ebony MR.

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diligence, have determined whether the port or berth was safe.45 The question whether the warranty of safety is breached by nomination of a port or berth that proves to be unsafe is one of fact in all the circumstances.46 If the port or berth is unsafe, the charterer’s order to load there is an actual, not an anticipatory, breach of contract.47 The classic definition of a safe port was made by Sellers LJ in Leeds Shipping Co v Societe Francaise Bunge (The Eastern City):48 If it were said that a port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship, it would probably meet all circumstances as a broad statement of the law.

This test does not stipulate that the port or berth is safe if the ship could only come to harm through negligence. The proposition is that the port or berth is safe if the ship will only be exposed to danger through negligence.49 For example, if the situation in a port is such that even with ordinary care and skill there is a risk of collision or grounding, the port is unsafe even if the ship does not in fact come to harm, because the ship is exposed to danger despite the use of care and skill.50

45 Reardon Smith Line Ltd v Australian Wheat Board (1956) 93 CLR 577 (PC) (this case is known, but not reported, as The Houston City). Compare the position in the US, where some federal circuits take the same position as The Houston City (Paragon Oil Co v Republic Tankers SA 310 F 2d 169 (2nd Cir 1962); Ore Carriers of Liberia Inc v Navigen Co 435 F 2d 549 (2nd Cir 1970); Venore Transportation Co v Oswego Shipping Corp 498 F 2d 469 (2nd Cir 1974); In re petition of Frescati Shipping Co Ltd 718 F 3d 184; 2013 AMC 1521 (3d Cir 2013)), but others hold that the charterer does not warrant the safety of the berth under a safe berth clause, which merely imposes upon the charterer a duty of due diligence to select a safe berth: see Orduna SA v Zen-Noh Grain Corp 913 F 2d 1149 (5th Cir 1990). 46 Unitramp v Garnac Grain Co Inc (The Hermine) [1979] 1 Lloyd’s Rep 212 at 214-215 per Roskill LJ. 47 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1987] 2 Lloyd’s Rep 509 at 514-515 per Hobhouse J (implicitly approved by the House of Lords in The Kanchenjunga [1990] 1 Lloyd’s Rep 391 at 397); Batis Maritime Corp v Petroleos del Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345 at 350 per Hobhouse J. 48 Leeds Shipping Co v Societe Francaise Bunge (The Eastern City) [1958] 2 Lloyd’s Rep 127 at 131. 49 Kristiansands Tankrederi A/S v Standard Tankers (Bahamas) Ltd (The Polyglory) [1977] 2 Lloyd’s Rep 353 at 365 per Parker J; Prekookeanska Plovidba v Felstar Shipping Corp (The Carnival) [1992] 1 Lloyd’s Rep 449 at 457-458 per Sheen J (aff’d on other grounds Prekookeanska Plovidba v Felstar Shipping Corp (The Carnival) [1994] 2 Lloyd’s Rep 14). 50 Kristiansands Tankrederi A/S v Standard Tankers (Bahamas) Ltd (The Polyglory) [1977] 2 Lloyd’s Rep 353 at 365 per Parker J; Prekookeanska Plovidba v Felstar Shipping Corp (The Carnival) [1992] 1 Lloyd’s Rep 449 at 457-458 per Sheen J (aff’d on other grounds Prekookeanska Plovidba v Felstar Shipping Corp (The Carnival) [1994] 2 Lloyd’s Rep 14); Independent Petroleum Group Ltd v Seacarriers Count Pte Ltd (The Count) [2008] 1 Lloyd’s Rep 72 (Beira unsafe because of risk of grounding, even though chartered ship did not ground when entering or leaving Beira).

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In Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2),51 the House of Lords held that a time charterer was not in breach of a safe port warranty by nominating a port which, at the time of nomination, was “prospectively safe”, but which became unsafe while the ship was there. In Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga),52 the House of Lords applied the “prospective safety” test from The Evia (No 2), to hold that a voyage charterer was in breach of a safe port warranty by nominating a port that was prospectively unsafe at the time of nomination. The Evia (No 2) and The Kanchenjunga establish that the prospective safety of a port or berth is to be determined by considering whether, at the time when the charterer gave the order to go there, it could be said that the port or berth would be safe when the ship arrived, and would remain so until it left. If the port or berth is actually unsafe when nominated by the charterer, but it appears then that it will be safe by the time the ship arrives there, the charterer is not in breach of its obligation, because the port or berth is prospectively safe.53 Prospective safety is not solely a matter of appearance, though. If the port or berth appears prospectively safe at the time of the nomination, but is, in fact, unsafe at that time and when the ship arrives there, it is an unsafe port or berth, and the charterer is in breach of its absolute obligation to nominate a safe port or berth.54 In The Evia (No 2), the House of Lords stated that, if a port or berth is prospectively safe when it is nominated by a time charterer, but becomes unsafe before the ship arrives, or while the ship is there, the time charterer is then under a secondary obligation to make an alternative nomination of a safe port or berth.55 The House of Lords expressly left open the question whether a voyage charterer would also be under a secondary obligation to make an alternative nomination in such a case,56 51 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] 1 AC 736. 52 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391. 53 In Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] 1 AC 736 at 757, Lord Roskill gave the example of a charterer ordering a ship to a port that is ice-bound at the time of the order, but which both charterer and owner know “in all human probability” will be ice-free by the time the ship reaches it. Although The Evia (No 2) concerned a time charterparty, this passage from the judgment of Lord Roskill was adopted in Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 at 397 per Lord Goff. 54 See, eg, Prekookeanska Plovidba v Felstar Shipping Corp (The Carnival) [1994] 2 Lloyd’s Rep 14 (concealed condition of submerged fender made berth unsafe); In re petition of Frescati Shipping Co Ltd 718 F 3d 184; 2013 AMC 1521 (3d Cir 2013) (submerged anchor on river bottom made port unsafe, despite the fact that its presence was uncharted and unknown). 55 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] 1 AC 736 at 763-764 per Lord Roskill, with whom the other Law Lords agreed. 56 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] 1 AC 736 at 763-764 per Lord Roskill, with whom the other Law Lords agreed.

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Shipping Law

[13.70]

and the court did not address that question in The Kanchenjunga. Unlike a time charterer, who can at any time order the ship to go anywhere within the geographical limits set by the charterparty,57 a voyage charterer does not ordinarily have any right or obligation to change its nomination once it has nominated the loading port or berth.58 Until there is authority to the contrary, it seems that a voyage charterer who nominates a prospectively safe port or berth is under no secondary obligation to nominate an alternative port or berth if the nominated loading place becomes unsafe before the ship arrives, or while it is there. If the shipowner accepts the charterer’s order to load at a prospectively unsafe port or berth, it waives its right to reject the nomination of that port or berth, provided that it makes an unequivocal representation to that effect with knowledge of the relevant facts and the rights that it has as a result.59 This representation may be made, for example, by giving notice of readiness to load at the nominated port or berth.60 Having waived the right to reject the nomination on the grounds of unsafety, the shipowner is in breach of contract if the ship leaves the port or berth before completion of loading because of the very danger that made the port or berth unsafe from the outset.61 The situation may be different, however, if the known danger becomes significantly different, or if a new

57 See Chapter 14. 58 King Line Ltd v Moxey, Savon & Co Ltd (1939) 62 Ll L Rep 252; Anglo-Danubian Transport Co Ltd v Ministry of Food (1950) 83 Ll L Rep 137; Venizelos ANE of Athens v Societe Commerciale de Cereales et Financieres SA of Zurich (The Prometheus) [1974] 1 Lloyd’s Rep 350 at 355 per Mocatta J; Batis Maritime Corp v Petroleos de Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345; Bulk Shipping AG v Ipco Trading SA (The Jasmine B) [1992] 1 Lloyd’s Rep 39 at 42 per Judge Diamond QC; P v A [2008] 2 Lloyd’s Rep 415 at 419 [16] per David Steel J; ED & F Man Sugar Ltd v Unicargo Transportgesellschaft mbH (The Ladytramp) [2012] 2 Lloyd’s Rep 660 at 665 [12] per Eder J. See also Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] 1 AC 736 at 763 per Lord Roskill. 59 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 (HL). See also Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] 2 Lloyd’s Rep 487 at 506-509 per Potter LJ, and GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 at [356]-[364] per Finn J, for a consideration of the principles governing waiver by election. The Kanchenjunga proposition that the election only takes effect if communicated in “clear and unequivocal terms” was cited with approval in Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 39 per Deane, Toohey, Gaudron and McHugh JJ. The position in the US is the same as in The Kanchenjunga: see Atkins v Fibre Disintegrating Co 2 Fed Cas 78 (EDNY 1868) (aff’d Atkins v Fibre Disintegrating Co 85 US (18 Wall) 272 (1873)). 60 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 (HL). 61 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 (HL). On the facts of the case, the shipowner was protected against the consequences of its breach by an exclusion clause in the charterparty.

[13.70]

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and different danger develops, or if some other danger, hitherto unknown, already existed at the port or berth.62 Although the shipowner waives the right to reject the nomination if it elects to accept the order to load at a prospectively unsafe port or berth, under English law it retains the right to claim damages if it suffers loss as a result of the unsafety of that port or berth, because by giving the order to load there, the charterer still warrants that the port or berth is safe, even though it appears prospectively unsafe.63 It used to be the case that if the ship did choose to enter the nominated port or berth, the charterer was not liable for any damage caused as a result of the unsafety of the port or berth.64 This is still the position in the United States: by accepting to load at a port or berth known to be unsafe, the shipowner waives the right to claim damages as a result of the unsafety of the port.65 In Anglo-Australian law, however, that position has since been modified for the reasons outlined by Devlin J in Compania Naviera Maropan S/A v Bowaters Lloyd Pulp & Paper Mills Ltd:66 Even if the breach is clear, it is vital to the proper conduct of business that the promisee should be able, if he considers the breach to be a minor one, to proceed without sacrificing his right to be indemnified. That is just as important in a voyage charterparty as it is in any other sort of business. Suppose that the master thinks that the nominated berth is barely large enough and that he might scrape his vessel’s sides and damage her paintwork. If … it is the only berth that can be nominated, is he to throw up the voyage? … It is possible … that a prudent master, without knowing for certain whether he was right or not and so acting in the interests of all concerned, might have felt that the risk of damage to the vessel’s bottom was outweighed by the certainty of time lost.

The Privy Council adopted Devlin J’s approach in Reardon Smith Line Ltd v Australian Wheat Board,67 on appeal from the High Court of Australia. The question of the shipowner’s recovery of damages if the nominated port or berth is unsafe is now governed by ordinary principles of causation and remoteness of damage in contract.68 Thus, if the master chooses to 62 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 at 400 per Lord Goff. 63 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 at 397 per Lord Goff. See also Anglo-Danubian Transport Co Ltd v Ministry of Food (1950) 83 Ll L Rep 137. 64 SS Boveric Co Ltd v Howard Smith & Sons Pty Ltd (1901) 27 VLR 347. 65 Atkins v Fibre Disintegrating Co 2 Ben 381; 2 F Cas 78 (EDNY 1868) (No 601) (aff’d Atkins v Fibre Disintegrating Co 85 US (18 Wall) 272 (1873)). 66 Compania Naviera Maropan S/A v Bowaters Lloyd Pulp & Paper Mills Ltd [1955] 2 QB 68 at 77. This case is reported as sub nom The Stork [1955] 1 Lloyd’s Rep 349. 67 Reardon Smith Line Ltd v Australian Wheat Board (1956) 93 CLR 577. This case is known, but not reported, as The Houston City. 68 Reardon Smith Line Ltd v Australian Wheat Board (1956) 93 CLR 577 at 585. See also Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 at 397 per Lord Goff.

380

Shipping Law

[13.80]

repudiate the charterparty on the owner’s behalf, and sails away because of a very slight risk of damage to the ship arising out of possible unsafety of the port, the shipowner is unable to recover damages for time lost, as the master did nothing to try to minimise the loss suffered by the shipowner.69 However, it may be the case that a refusal to load at an obviously unsafe port or berth may be excused on the ground that it constitutes a reasonable action by the master to mitigate the damages that the charterer would otherwise have to pay as a result of the unsafety of the port or berth.70 The classic Eastern City definition of safe port states that a port will not be regarded as unsafe if the event or condition that causes harm to the chartered ship is “an abnormal occurrence”. An event is “abnormal” for these purposes unless it happens sufficiently frequently for it to be regarded as a normal characteristic of the port.71 For example, in Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory),72 the chartered ship was totally lost after being ordered off the berth by the port authority at the Japanese port of Kashima because of an impending typhoon. The sea state that caused the ship’s grounding and ultimate loss was a combination of a long wave swell and the high winds associated with the typhoon. Each of those weather conditions was foreseeable, and so “normal” in the sense that they had been experienced previously at Kashima, but the English Court of Appeal held (reversing the trial court) that the combination of the two events was abnormal, because it had never previously been encountered. When the charterer’s nomination must be made and when the shipowner must act on the nomination

[13.80]

Standard form charterparties often specify a time by which the charterer must nominate the loading port or berth. If a nomination period is not specified, the charterer must nominate within a reasonable time, and early enough to ensure that the chartered ship suffers no delay if the nomination is not made in timely fashion.73 If the nomination is not made in time, the charterer is in breach of contract. In these circumstances, the shipowner can recover substantial damages for the detention of the ship 69 Compania Naviera Maropan S/A v Bowaters Lloyd Pulp & Paper Mills Ltd [1955] 2 QB 68 (The Stork) at 77-78 per Devlin J. 70 In Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391, Lords Brandon and Keith suggested (obiter) that this should be so; Lords Goff and Griffiths argued strongly (obiter) that it should not; Lord Templeman expressed no opinion on this point. 71 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 at 550-551 (CA); Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2015] 1 Lloyd’s Rep 381 (CA). 72 Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2015] 1 Lloyd’s Rep 381 (CA). 73 Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2008] 2 Lloyd’s Rep 384 at 391-392 per Christopher Clarke J (aff’d Mansel Oil Ltd v Troon Storage Tankers SA (The

[13.90]

13 Voyage Charterparties

381

unless the charterer can prove that the shipowner has suffered no loss because the chartered ship would have earned no profits in the period of delay.74 Until the nomination of the port is made, the master of the ship must await the charterer’s voyage orders until the charterer’s delay becomes such as to frustrate the charterparty contract.75 Once the charterer’s order is given, the master and the owner are allowed a reasonable time to consider and evaluate the nomination if there is reason to doubt that it may be invalid for some reason76 — for example, because of lack of authority to give the order77 or because of unsafety of the nominated port. “Or so near thereto as she may safely get and lie always afloat”

[13.90]

These words are commonly found in charterparties immediately following the name or description of the loading port, whether that port is specified in the charterparty, or is to be nominated by the charterer at a later date. They provide the shipowner with a right to inform the charterer that the nominated loading port or place cannot safely be reached, and that loading must therefore take place at the nearest safe port or place,78 provided that the substituted place is reasonably close to the originally intended port or place.79 The ship must wait a reasonable time at or near the nominated place of loading in order to determine whether or not it can safely be reached. If the port is unsafe because of seasonal weather conditions, the chartered ship must wait until the weather changes, if it would be reasonable for it to do so. The nature of the voyage, the cargo and the interests of both parties determine what constitutes a reasonable waiting period.80 Thus, for example, if the nominated loading port is temporarily icebound, the chartered ship must Ailsa Craig) [2009] 2 Lloyd’s Rep 371 (CA) (time charterparty)). See also Gatoil International Inc v Tradax Petroleum Ltd (The Rio Sun) [1985] 1 Lloyd’s Rep 350 for the same proposition in relation to a CIF buyer’s right to nominate under a sale contract, a similar but not identical situation. 74 Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1971] 2 Lloyd’s Rep 91 (CA). 75 Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1970] 2 Lloyd’s Rep 409 (aff’d on different grounds Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1971] 2 Lloyd’s Rep 91). Although this case deals with nomination of a discharging port, the principle is equally applicable to nomination of a loading port. 76 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541. 77 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541. 78 See, eg, Ellis Shipping Corp v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109, where the shipowner would have been entitled to discharge at the port of Bushire as the nearest safe port to the unsafe nominated port, Bandar Khomeini, but it was held that the “or so near thereto” clause did not form part of the charterparty: at 111 per Lloyd LJ. 79 Athamas (Owner) v Dig Vijay Cement Co Ltd (The Athamas) [1963] 1 Lloyd’s Rep 287 (CA) (cargo bound for Phnom Penh discharged at Saigon; held shipowner entitled to do so under “or so near thereto” clause). 80 Nelson v Dahl (1879) 12 Ch D 568 (CA) at 593 per Brett LJ; Dahl v Nelson, Donkin & Co (1881) 6 App Cas 38 (HL) at 54 per Lord Blackburn.

382

Shipping Law

[13.100]

wait a reasonable time for the ice to melt if the cargo is not perishable, but is entitled to proceed to the nearest safe port if the cargo is perishable and would be lost if the chartered ship were to wait. If the ship can get into and out of the port in ballast (that is, unloaded), but cannot do so loaded, it is not obliged to enter the port. The chartered ship is not obliged to load as much of the cargo as can safely be loaded inside the nominated port, and then load the rest of the cargo outside the port.81 The ship must be able to “lie always afloat”. Under United States law, the effect of these words in a voyage charterparty is very different from their effect under English law. In the United States, the words “or so near thereto as she may safely get and lie always afloat” are interpreted as imposing a safe port/safe berth obligation on the charterer, even if no such obligation is otherwise expressed in the charterparty.82

The time of arrival and readiness for loading [13.100]

Voyage charterparties contain an implied term that the chartered ship will use all convenient speed to get from its current position to the loading port. Furthermore, the charterparty usually expressly provides, albeit in approximate terms, a time by which the chartered ship must be ready to load. The combined effect of these express and implied terms was described as follows by Branson J in Louis Dreyfus & Co v Lauro:83 In view of the combination of the expected date and of the implied term that the ship will use all convenient speed to get to her port of loading, the obligation is … that she shall start from wherever she may happen to be, at a date when, by proceeding with reasonable dispatch, she will arrive at the port of loading by the expected date.

“She shall start from wherever she may happen to be”

[13.110]

The chartered ship’s starting position is of significance because it affects the ship’s ability to reach the loading port by the specified date. The charterparty usually states the ship’s position when the contract is made, although this is often done with such bland and uninformative expressions as “Trading”. The question whether this description constitutes a condition of the contract or a mere representation

81 The Alhambra (1881) 6 PD 68. 82 See, eg, Mencke v A Cargo of Java Sugar 187 US 248 (1902); Cities Service Transportation Co v Gulf Refining Co 79 F 2d 521; 1935 AMC 1513 (2d Cir 1935). 83 Louis Dreyfus & Co v Lauro (1938) 60 LI L Rep 94 at 97, cited with approval in Evera SA Commercial v North Shipping Co Ltd [1956] 2 Lloyd’s Rep 367; Mitsui OSK Lines Ltd v Garnac Grain Co Inc (The Myrtos) [1984] 2 Lloyd’s Rep 449; Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215 at 225 per Neill LJ.

[13.120]

13 Voyage Charterparties

383

is one to be determined by looking at all the surrounding circumstances.84 The onus of proving that the words describing the ship’s position constitute a material part of the contract lies on the party intending to rely on those words.85 If the ship is unable to reach the loading port at or about the specified date because it started from a place other than that stated by the shipowner when the charterparty was made, the shipowner is in breach of contract because of the failure to arrive on time rather than because the starting place was misstated. If the ship’s starting position is immaterial to the ship’s ability to be at the loading port on time, the relevant clause of the charterparty may be rectified so that it states the starting position correctly.86 “Proceeding with reasonable despatch”

[13.120]

Although the charterparty may contain a clause specifying the manner in which the loading voyage must be undertaken, the chartered ship’s obligation is simply to travel at sufficient speed to arrive at the loading place on time.87 Thus, such words as “to proceed with utmost despatch” or “convenient speed” or “reasonable despatch” are all merely different descriptions of the shipowner’s absolute obligation to have the ship ready to load on time.88 An obligation to proceed with reasonable despatch will ordinarily be implied even if it is not expressed in the charterparty.89 The obligation to proceed with reasonable dispatch is not confined to the loading voyage from the ship’s last port of call to the loading place under the charterparty.90 If the chartered ship is engaged on another voyage when the charterparty is made, or if it becomes engaged on an intermediate fixture between the time when the charterparty is made and the time when it is due to arrive at the loading place, it is under a duty to the charterer91 to proceed on those voyages with reasonable despatch, 84 Breckwoldt v Colonial Guano Co Ltd (1890) 16 VLR 166. In Behn v Burness (1863) 3 B & S 751; 122 ER 281, Williams J expressed the view that the statement of the current location of the ship will usually be a condition, but this statement should be viewed in the light of the 19th century’s bipartite classification of contractual terms into conditions and warranties. 85 Breckwoldt v Colonial Guano Co Ltd (1890) 16 VLR 166. 86 Etablissements Georges Et Paul Levy v Adderley Navigation Co Panama SA (The Olympic Pride) [1980] 2 Lloyd’s Rep 67. 87 Although the implied undertaking of reasonable despatch applies to the loading voyage, the implied undertaking of seaworthiness (see [13.600]) does not: see Compagnie Algerienne de Meunerie v Katana Societa di Navigazione Marittima SpA (The Nizeti) [1960] 1 Lloyd’s Rep 132 (CA). 88 Mitsui OSK Lines Ltd v Garnac Grain Co Inc (The Myrtos) [1984] 2 Lloyd’s Rep 449 at 454 per Leggatt J. 89 Fyffes Group Ltd v Reefer Express Lines Pty Ltd (The Kriti Rex) [1996] 2 Lloyd’s Rep 171 at 191 per Moore-Bick J. 90 Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215. 91 That is, the charterer under the new charterparty just made.

384

Shipping Law

[13.130]

before it commences the approach voyage to the loading place.92 However, the situation may be different if the shipowner has the right to substitute another ship for that named in the charterparty.93 In such a case, when it becomes apparent that the named ship is not travelling at sufficient speed to arrive at the loading place in time, the shipowner may be under an obligation to nominate a substitute ship that is in a position to arrive in time. “She will arrive at the port of loading by the expected date”

[13.130]

The charterparty usually provides that the ship must be expected to be ready to load “on or about” or simply “about” an agreed date, or specifies the ship’s estimated time of arrival at the loading place.94 An obligation on the shipowner to have the chartered ship ready to load on an exact date was regarded as too onerous, and clauses using the word “about” were designed to introduce some degree of flexibility.95 The word “about” has no exact meaning,96 but it appears that its interpretation is a mixed issue of fact and law.97 If the chartered ship arrives after the specified date, the question of whether it can be said to have arrived “about” that date can only be determined by looking at all the circumstances of the case, particularly the number of days that have elapsed between the specified date and the ship’s arrival. The shipowner’s obligation to have the ship ready to load on time is an absolute one.98 Unless the ship is late because of an occurrence for which the shipowner has expressly excluded liability,99 any late arrival100 is a breach of the “expected readiness” or “expected time of arrival” term. Such a term is also breached if, in the light of the facts known to the shipowner at the time of making the contract, the shipowner did not 92 Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215. 93 Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215 at 226 per Neill LJ, who raised the issue, but left it unresolved. 94 “Expected time of arrival” and “ETA” have been held to be equivalent to “expected ready to load”, even though the ship may not be ready to load when it arrives: see Mitsui OSK Lines Ltd v Garnac Grain Co Inc (The Myrtos) [1984] 2 Lloyd’s Rep 449. 95 Monroe Bros Ltd v Ryan [1935] 2 KB 28 at 36 per Greer LJ. 96 Monroe Bros Ltd v Ryan [1935] 2 KB 28 at 37. 97 Louis Dreyfus & Co v Lauro (1938) 60 LI L Rep 94 at 97 per Branson J, quoting Brett LJ in Morris v Levison (1876) 1 CPD 155 at 158. 98 Evera SA Commercial v North Shipping Co Ltd [1956] 2 Lloyd’s Rep 367; Mitsui OSK Lines Ltd v Garnac Grain Co Inc (The Myrtos) [1984] 2 Lloyd’s Rep 449; Geogas SA v Trammo Gas Ltd (The Baleares) [1990] 2 Lloyd’s Rep 130 at 138 per Webster J (reversed on other grounds Geogas SA v Trammo Gas Ltd [1993] 1 Lloyd’s Rep 215). 99 The exclusion clauses in the charterparty apply to the loading voyage or voyages, so that if the chartered ship is late in being ready to load because of excepted perils, the shipowner is not in breach of the readiness to load or estimated time of arrival clause: Harrison v Garthorne (1872) 26 LT (NS) 508; Barker v M’Andrew (1865) 18 CB (NS) 759; 144 ER 643; Monroe Bros Ltd v Ryan [1935] 2 KB 28 at 38 per Greer LJ; Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215 at 224-225 per Neill LJ. 100 That is, any arrival that is too late to be considered to be “about” the specified date.

[13.130]

13 Voyage Charterparties

385

honestly and reasonably expect the vessel to be ready as stated,101 in which case the shipowner is in breach of its obligation from the moment the contract is made.102 The effect of such a breach has yet to be determined in Australia. In England, an “expected readiness” or “estimated time of arrival” clause is considered to be a condition of the charterparty, and any breach by the shipowner, however insignificant, entitles the charterer to terminate the contract.103 This seems undesirable. It is usual for voyage charterparties to contain a cancelling clause, in which the parties expressly provide that the charterer can terminate the contract if the ship has not arrived by the date in the cancelling clause.104 There seems to be no good reason why a court should also allow the charterer to terminate the contract at an earlier date for a different reason, based on the classification of the “expected readiness” term as a condition. Nevertheless, Neill LJ of the English Court of Appeal explicitly recognised this possibility, with apparent equanimity, in Geogas SA v Trammo Gas Ltd (The Baleares).105 The development of a tripartite classification of contractual terms into conditions, warranties and intermediate or innominate terms106 has provided the courts with an opportunity to take a more flexible approach to termination for breach of contract.107 The English Court of Appeal has held that the shipowner’s undertaking that the chartered ship is seaworthy is not a condition automatically entitling the charterer to repudiate for breach.108 In many cases, the shipowner’s undertaking that the chartered ship is seaworthy is just as important as its undertaking that the ship is expected to be ready to load on a certain date; if the former is 101 Samuel Sanday v Keighley Maxted & Co (1922) 27 Com Cas 296; Monroe Bros Ltd v Ryan [1935] 2 KB 28; Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164 at 197 per Edmund-Davies LJ; Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215 at 225, 234. 102 See, eg, Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215. 103 Finnish Government v H Ford and Co Ltd (1921) 6 LI L Rep 188; Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164; Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215. 104 See [13.140]. 105 Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215 at 226. 106 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, adopted by a majority of the High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 136-140 [47]-[53] per Gleeson CJ, Gummow, Heydon and Crennan JJ. Although the classification of a term as “intermediate” implies that it occupies a position between two extremes, it does indeed seem that all non-essential terms are to be regarded as “intermediate terms”: see Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 139-140 [51]-[53] per Gleeson CJ, Gummow, Heydon and Crennan JJ. 107 Ankar Pty Ltd v National Westminster Finance (Australia) Ltd (1987) 162 CLR 549 at 562 per Mason ACJ, Wilson, Brennan and Dawson JJ; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 139 [51] per Gleeson CJ, Gummow, Heydon and Crennan JJ 108 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26.

386

Shipping Law

[13.140]

considered to be an intermediate term rather than a condition, so should the latter.109 The usual remedy for breach of the expected readiness obligation would then be damages, but the charterer might still have the right to terminate if the shipowner’s breach were sufficiently serious to go to the root of the contract.

Cancellation [13.140]

Voyage charterparties usually contain a clause that entitles the charterer to cancel the contract if the chartered ship has not arrived at the loading port by a specified date known as the cancelling date. The cancelling date is always later than the “expected ready to load” date, and is more precisely stated. The shipowner must have the ship ready to load “on or about” the “expected ready to load” date. If the ship is not ready “on or before” the cancelling date, the charterer is entitled to cancel the contract. The cancelling date marks the end of the laycan period, which is the “window of opportunity” within which the chartered ship must arrive at the port of loading, and which is usually stated in the fixture recap. Laytime cannot commence before the beginning of the laycan period,110 and the charterer is entitled to refuse to accept performance if the ship is not ready to load by the end of the laycan period. Unless the charterparty provides that the charterer must exercise its option to cancel within a specified time,111 the charterer is under no legal obligation to inform the shipowner whether it intends to cancel or to affirm the contract once the cancellation date has passed.112 Until the charterer elects to cancel, the contract is still on foot, and both parties must continue to perform their obligations under it. The ship must continue to proceed toward the loading port with all reasonable speed, notwithstanding the fact that it is already too late, and notwithstanding the fact that the shipowner does not know whether or not the charterer intends to load the cargo when it arrives.

109 This argument was advanced by Robert Goff QC (as Lord Goff of Chieveley then was) on behalf of the shipowners in Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164, but it did not find favour with the Court of Appeal. 110 Unless the charterparty expressly provides that loading may commence before the beginning of the laycan period “with the charterer’s sanction”, as the tanker charterparty form Asbatankvoy does, in cl 5: see Tidebrook Maritime Corp v Vitol SA (The Front Commander) [2006] 2 Lloyd’s Rep 251. 111 See, eg, Shellvoy 6, Pt II, cl 11, which requires the shipowner to give notice to the charterer if the ship will not, despite the exercise of due diligence, be ready to load by the cancelling date. The owner may then suggest a new cancelling date and request the charterer to indicate whether the new date is acceptable, or whether the charterer intends to cancel the charter. The charterer must respond to any such request within four days from the notice or two days from the original cancelling date, whichever is earlier. 112 Moel Tryvan Ship Co Ltd v Andrew Weir & Co [1910] 2 KB 844.

[13.140]

13 Voyage Charterparties

387

In practice, the exercise of the charterer’s option to cancel usually depends on the current state of the freight market. If freight rates have risen since the charterparty was made, it is usually in the charterer’s interest to affirm the contract and load the cargo on the chartered ship, however late its arrival. If freight rates have fallen, it is in the charterer’s interest to remain silent and seek an alternative, cheaper means of shipping its cargo. Once an alternative carrier has been found, the charterer cancels the original charterparty and ships the goods at less cost under a new charterparty. Although there is no general obligation on the charterer to inform the shipowner of its intentions about cancellation until the ship is ready to load, charterparties commonly make express provision for a period of exercise of the cancellation option.113 Such clauses lessen the inconvenience to the shipowner of waiting to see whether the charterer is able to take advantage of fluctuations in the freight market. However, even if the charterparty does provide a date by which the cancellation option must be exercised, a late exercise is not necessarily ineffective. The shipowner can accept a late notice of cancellation and waive any rights it has in respect of the delay in giving notice.114 The contract is then terminated by agreement, rather than by the unilateral exercise of the cancellation option by the charterer. Similarly, if the charterer purports to cancel the contract before the cancellation date, this is effective if accepted by the shipowner, but not otherwise.115 Exercise of the option to cancel does not preclude the charterer from seeking damages from the shipowner. If additional expenditure is incurred in securing alternative carriers for the cargo, the charterer can recover the additional sums from the shipowner notwithstanding the fact that the contract has been cancelled.116 In these circumstances, the charterer’s loss is caused by the shipowner’s breach of the “expected ready to load” or “estimated time of arrival” obligation, and ought reasonably to be in the shipowner’s contemplation at the date of the charterparty as not unlikely to occur. Arrival after the cancellation date does not, in itself, constitute a breach of contract, although it always entitles the charterer to cancel, unless the charterer agrees to extend the laycan period by agreeing to a later cancelling date.117 The shipowner is not in breach of the “expected 113 See, eg, cl 9 of the Gencon 1994 form (Appendix 6): cancellation may be demanded at least 48 hours before the ship’s expected arrival at the loading port. 114 Den Norske Afrika Og Australie Linie v Port Said Salt Association Ltd (1924) 20 Ll L Rep 184 (CA). 115 Christie & Vesey Ltd v Maatschappij Tot Exploitatie van Schepen en Andere Zaken, Helvetia NV (The Helvetia-S) [1960] 1 Lloyd’s Rep 540. 116 Blackgold Trading Co Ltd of Monrovia v Almare SpA di Navigazione of Genoa (The Almare Seconda and Almare Quinta) [1981] 2 Lloyd’s Rep 433, applying Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145. 117 Triton Navigation Ltd v Vitol SA (The Nikmary) [2004] 1 Lloyd’s Rep 55 at 65 [29] per Mance LJ (with whom Mummery and Simon Brown LJJ agreed).

388

Shipping Law

[13.150]

readiness” clause if the ship is delayed beyond the “expected ready to load” date by perils excepted by exclusion clauses in the charterparty.118 If those excepted perils delay the ship beyond the cancellation date as well, the charterer is still entitled to cancel the charterparty, even though the shipowner is not in breach of contract.119 The cancelling clause overrides all the other provisions of the charterparty.120 Charterparties often give the charterer the right to choose from a range of possible loading ports.121 The charterer does not have to go through the futile process of exercising that right by nominating a loading port if it is obvious that the chartered ship will not be able to reach any of the ports within the range before the cancelling date.122 The charterer may cancel when the cancelling date arrives, without having first gone through the motions of nominating a loading port.123

THE LOADING OPERATION Introduction [13.150]

Whereas the voyage stages are solely the responsibility of the shipowner, the loading operation involves both the shipowner and the charterer. The shipowner’s obligation is to provide the ship, ready to load; the charterer’s obligation is to provide the cargo and, usually, to arrange for its loading.124 The shipowner has an interest in ensuring that the ship is loaded and unloaded as quickly as possible, because the sooner a voyage charterparty venture is completed, the sooner the ship is freed to be chartered again.125 On the other hand, the voyage charterer has paid for the use of the ship for the carrying voyage and the periods of loading and discharging.126 The charterer would normally have no particular

118 The exclusion clauses in the charterparty apply to the loading voyage or voyages, so that if the chartered ship is late in being ready to load because of excepted perils, the shipowner is not in breach of the readiness to load or estimated time of arrival clause: Harrison v Garthorne (1872) 26 LT (NS) 508; Barker v M’Andrew (1865) 18 CB (NS) 759; 144 ER 643; Monroe Bros Ltd v Ryan [1935] 2 KB 28 at 38 per Greer LJ; Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215 at 224-225 per Neill LJ. 119 Smith v Dart (1884) 14 QBD 105. 120 Smith v Dart (1884) 14 QBD 105. 121 See [13.60]. 122 Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2008] 2 Lloyd’s Rep 384 (aff’d Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2009] 2 Lloyd’s Rep 371 (time charterparty)). 123 Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2008] 2 Lloyd’s Rep 384. 124 Responsibility for the processes of loading is considered at [13.560]. 125 If the shipowner has time-chartered the ship, this interest is transferred to the time charterer, who is “disponent owner” under the voyage sub-charterparty. Readers are reminded of the fact that the word “shipowner” is used throughout this chapter to mean both the actual shipowner and any so-called “disponent owner”. 126 See Inverkip Steamship Co Ltd v Bunge & Co (1917) 22 Com Cas 200 at 204 per Scrutton LJ.

[13.160]

13 Voyage Charterparties

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interest in ensuring that the loading and unloading periods are as brief as possible, as they are paid for in any event. The charterer would be more interested in ensuring that the cargo is loaded and unloaded safely and cheaply, however long that takes, unless time is of the essence because of its obligations under a contract for sale of the cargo. The conflict between the shipowner’s desire for speedy loading and unloading and the charterer’s desire to load and unload at leisure is resolved by agreement of the parties that the charterer shall be allowed a specified period, known as laytime, in which to load and unload the ship.127 Laytime has been described as a kind of “par for the course”.128 If the ship is not loaded by the end of the agreed period of laytime — that is, if the charterer is over par — the charterer must pay to the shipowner a sum of liquidated damages known as demurrage. If, however, the ship is loaded before the end of the agreed period of laytime — that is, if the charterer is under par — the charterer may receive from the shipowner a payment known as despatch.129 Laytime is bought and paid for in the freight, so the charterer is entitled to use the whole of laytime as it pleases. Thus, if the charterer has some commercial reason for wanting to delay loading, it is entitled to order the chartered ship to wait off the load port during laytime, notwithstanding the fact that such an order inevitably means that the ship will incur demurrage.130 Similarly, the charterer is entitled to keep the ship at the port of loading until the end of laytime if it wants to do so, notwithstanding the fact that loading could be completed before the end of laytime.131 In practice, most legal disputes arising out of voyage charterparties are concerned with laytime and demurrage.

The commencement of laytime [13.160]

The general maritime law rule is that loading laytime commences when the chartered ship has arrived at the loading place, is ready to load and has given notice of readiness.132 In the absence of

127 Laytime is allowed for both loading and discharging, and some cases considered in this section deal with discharging laytime. In almost all respects, there is no significant difference between loading laytime and discharging laytime. For convenience, the text refers hereafter only to loading laytime, except where different principles apply on loading and discharging. 128 See Lodza Compania de Navigacione SA v Government of Ceylon (The Theraios) [1971] 1 Lloyd’s Rep 209 at 210 per Salmon LJ, who actually described it as “a sort of bogey for the course”. 129 Demurrage is always payable; despatch is payable only if the parties agree: see [13.500]. 130 Novorossisk Shipping Co v Neopetro Co Ltd (The Ulyanovsk) [1990] 1 Lloyd’s Rep 425. 131 Margaronis Navigation Agency Ltd v Henry W Peabody & Co of London Ltd [1965] 1 QB 300; Kurt A Becher GmbH & Co KG v Tradax Ocean Transportation SA (The World Navigator) [1991] 2 Lloyd’s Rep 23 at 32 per Staughton LJ. See [13.520]. 132 Fairbridge v Pace (1844) 1 Car & K 317; 174 ER 828; Stanton v Austin (1872) LR 7 CP 651.

390

Shipping Law

[13.170]

contract or custom, the general maritime law does not require notice of readiness at the discharge port or berth,133 but in practice, charterparties routinely require notice of readiness at both loading and discharging places.134 Arrival at the loading place General principles

[13.170]

The loading voyage comes to an end when the chartered ship becomes an “arrived ship” at the loading port or place. For the purpose of determining what constitutes arrival, charterparties are classified into three types: berth charterparties, dock charterparties and port charterparties, although the second category is not frequently encountered in practice any more. Berth charterparties specify a particular berth at the loading port, dock charterparties specify a particular dock, and port charterparties merely name the loading port without specifying any particular loading place within it.135 In order to be an “arrived ship”, the ship must arrive at the very place specified in the charterparty. Thus, in a berth charterparty, the ship is not an “arrived ship” at the moment it arrives at the nominated loading port; laytime cannot begin to run until the ship arrives in the specified berth. As Lord Diplock observed in EL Oldendorff & Co GmbH v Tradax Export SA:136 If the specified berth [is] occupied by other shipping, the vessel [is] still at the voyage stage while waiting in the vicinity of the port until it becomes available, and time so spent [is] at the shipowner’s expense.

Dock and port charterparties pose more complex problems than berth charterparties, as Lord Diplock noted in the Oldendorff case:137 If on her arrival within the dock or port there is a berth available at which the charterer is willing and able to load or discharge the cargo, the vessel must proceed straight there and her loading or carrying voyage will not be completed until she reaches it. But if no berth is available, the voyage stage ends when she is moored within the larger area at any convenient place from which she can get to a berth as soon as one is vacant. The subsequent delay while waiting for a berth does not fall within the voyage stage under a dock charter or port charter, but in the loading or discharging stage. 133 See Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) [1990] 1 Lloyd’s Rep 507 at 513 per Mustill LJ; Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] 2 Lloyd’s Rep 487 at 494 per Potter LJ. See [13.650]. 134 See, eg, cl 6(c) of the Gencon 1994 form (Appendix 6). The charterparty may also impose additional requirements: see, eg, Plakoura Maritime Corp v Shell International Petroleum Co Ltd (The Plakoura) [1987] 2 Lloyd’s Rep 258 (“when vessel is securely moored at loading place”) and the cases referred to in the footnotes to [13.220]. 135 See, eg, Novologistics SARL v Five Ocean Corp (The Merida) [2010] 1 Lloyd’s Rep 274 (dispute about whether charterparty contained only in fixture recap was a port or a berth charterparty). 136 EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479 at 557. The case is known and reported as The Johanna Oldendorff [1973] 2 Lloyd’s Rep 285. 137 EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479 at 557-558.

[13.170]

13 Voyage Charterparties

391

If the ship is not an arrived ship while waiting to berth, the burden of any delay falls on the shipowner, as the loading voyage is not yet over.138 If, on the other hand, the ship is an arrived ship while waiting to berth, the burden of delay falls on the charterer,139 who must complete loading within laytime or pay demurrage to the shipowner. Not surprisingly, there are many reported cases concerning the status of ships as arrived ships under dock or port charterparties, although few in recent years.140 The older cases are unclear and contradictory.141 In England, most of those contradictions were resolved by the House of Lords in EL Oldendorff & Co GmbH v Tradax Export SA142 (also known as The Johanna Oldendorff), a decision that has largely laid to rest any disputes about whether a chartered ship has “arrived” for the purposes of a port (or dock) charterparty. The “Johanna Oldendorff” was chartered under a port voyage charterparty to carry grain to Liverpool/Birkenhead. On 3 January 1968, it anchored at the Mersey Bar, which was the usual waiting place for grain ships discharging at that port. The Mersey Bar is 17 miles from the docks, but is within the legal limits of the port. Notice of readiness to load was given on 3 January, but a berth did not become available until 20 January 1968. The House of Lords held that the ship was an “arrived ship” on 3 January, when it anchored at the Bar, even though at that date it was still 17 miles from the docks. Lord Reid laid down a general test for when a ship becomes an arrived ship under a port charterparty, in the following terms:143 I would therefore state what I would hope to be the true legal position in this way. Before a ship can be said to have arrived at a port she must, if she cannot proceed immediately to a berth, have reached a position within the port where she is at the immediate and effective disposition of the charterer. If she is waiting at a place where waiting ships usually lie, she will be in such a position unless in some extraordinary circumstances, proof of which would lie in the charterer. … If the ship is waiting at some other place in the port then it will be for the owner to prove that she is as fully at the disposition of the charterer as she would have been if in the vicinity of the berth for loading or discharge.

This is known as the Reid test, and it supersedes the older Parker test, which depended upon a degree of geographical proximity between the 138 See, eg, Novologistics SARL v Five Ocean Corp (The Merida) [2010] 1 Lloyd’s Rep 274 (voyage charter held to be berth charter despite ambiguity in fixture recap; delay in berthing on shipowner’s time). 139 Provided the other requirements for the commencement of laytime are satisfied. 140 An exception is Novologistics SARL v Five Ocean Corp (The Merida) [2010] 1 Lloyd’s Rep 274. 141 For a review of the older cases, see D Davies, Commencement of Laytime (4th ed, Informa Law (Routledge), Oxford, 2006), pp 3-8. 142 EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479 (reported sub nom as The Johanna Oldendorff [1973] 2 Lloyd’s Rep 285). 143 EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479 at 535-536.

392

Shipping Law

[13.170]

ship and the loading berth.144 The effect of the test is that, when the ship arrives at the normal waiting place within the nominated port, the loading voyage is over. Even though the ship cannot yet be loaded, it is “at the immediate and effective disposition of the charterer”, and laytime commences, provided the ship is ready to load and notice of readiness has been given, if required. Even under the Reid test, the ship must be waiting within the limits of the port itself in order to be an arrived ship. If the normal waiting place is outside the limits of the port, the ship is not an arrived ship under a port charterparty while waiting there, and laytime cannot commence unless the charterparty provides that it shall commence “whether in port or not” (WIPON).145 Although the plain meaning of the words “whether in port or not” would seem to suggest that the chartered ship could give notice of readiness however close to the port limits it might be, it is generally accepted that notice of readiness can be given under a WIPON clause only if the ship is in some outer anchorage that is “a — albeit not the only — usual waiting place for a vessel loading at the” port.146 In Federal Commerce and Navigation Co Ltd v Tradax Export SA,147 (also known as The Maratha Envoy), the House of Lords held that a ship was not an arrived ship at the port of Brake on the River Weser when it anchored at the Weser Lightship, which is the usual waiting place for all of the ports on the River Weser, because “the Weser Lightship anchorage is outside the legal, fiscal and administrative limits of the port of Brake”.148 Furthermore, the ship did not become an arrived ship when it made a short “voyage of convenience” from the Lightship to Brake, turned around in midstream in the River Weser, signalling readiness to

144 EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479 at 561 per Lord Diplock. The Parker test derived from a passage in the judgment of Parker LJ in Agrimpex Hungarian Trading Company for Agricultural Products v Sociedad Financiera De Bienes Raices SA (The Aello) [1958] 2 Lloyd’s Rep 65 at 77. 145 See, eg, Bulk Transport Group Shipping Co Ltd v Seacrystal Shipping Ltd [1989] AC 1264 (reported sub nom as The Kyzikos [1989] 1 Lloyd’s Rep 1), where laytime was to commence “WIPON/WIBON/WIFPON/WCCON” — that is, “whether in port or not/whether in berth or not/whether in free pratique or not/whether cleared Customs or not”. The effect of WIBON clauses in berth charterparties is considered at [13.180]. 146 Ocean Pride Maritime Ltd Partnership v Qingdao Ocean Shipping Co (The Northgate) [2008] 1 Lloyd’s Rep 511 at 519 [41], [45] per Deputy Judge Richard Siberry QC. See also R Pagnan & Fratelli v Finagrain Compagnie Commerciale Agricole et Financiere SA (The Adolf Leonhardt) [1986] 2 Lloyd’s Rep 395 at 403 per Staughton J (obiter) (“a usual waiting area which is some distance from the port”); Emeraldian Ltd Partnership v Wellmix Shipping Ltd (The Vine) [2011] 1 Lloyd’s Rep 301. 147 Federal Commerce and Navigation Co Ltd v Tradax Export SA [1978] AC 1 (reported sub nom as The Maratha Envoy [1977] 2 Lloyd’s Rep 301). 148 Federal Commerce and Navigation Co Ltd v Tradax Export SA [1978] AC 1 at 13 per Lord Diplock.

[13.180]

13 Voyage Charterparties

393

load as it did so, and then returned to the Lightship.149 In coming to those conclusions, the House of Lords expressly reaffirmed the Reid test from The Johanna Oldendorff. The effect of the Reid test is that time spent waiting for berth counts as laytime under a port charterparty (if the other requirements for commencement of laytime have been satisfied), and is thus at the charterer’s expense. Standard form charterparties often contain express provisions designed to achieve the same result in berth charterparties, where time lost waiting for berth would ordinarily be at the shipowner’s expense. The most common of such clauses are the “time lost to count”, “WIBON” and “reachable on arrival” clauses. “Time lost to count” and WIBON clauses

[13.180]

A “time lost to count” clause provides that all time lost in waiting for a berth is to count as laytime.150 A WIBON clause provides that laytime is to commence “whether in berth or not”. Such clauses are redundant in port charterparties, as the Reid test from The Johanna Oldendorff ensures that all time spent waiting for berth within the port counts as laytime anyway, provided the other requirements for commencement of laytime have been satisfied. A WIBON clause in a berth charterparty makes the Reid test apply to that charterparty,151 provided that it is clear from the contractual context that the clause is intended to throw the entire burden of waiting for berth onto the charterer.152 In other words, such clauses have the effect of turning the berth charterparty into a port charterparty for the purposes of the commencement of laytime,153 thereby shifting the risk of waiting for berth from the shipowner to the charterer. There are two main limitations on the operation of a WIBON clause. First, it does not permit laytime to commence if the chartered ship is forced to wait for berth outside the legal, fiscal and administrative limits of the 149 Federal Commerce and Navigation Co Ltd v Tradax Export SA [1978] AC 1 at 13 per Lord Diplock. 150 See, eg, cl 6 of the Gencon 1994 form (Appendix 6). 151 Federal Commerce and Navigation Co Ltd v Tradax Export SA [1978] AC 1 at 14 per Lord Diplock. 152 In Cosmar Compania Naviera SA v Total Transport Corp (The Isabelle) [1984] 1 Lloyd’s Rep 366 (CA), affirming and adopting the judgment of Goff J in The Isabelle [1982] 2 Lloyd’s Rep 81, the particular waiting for berth clause was interpreted as applying only to the situation where the ship was delayed from berthing by the charterer’s own actions. All other delays continued to be at the shipowner’s risk. See also Navrom v Callitsis Ship Management SA (The Radauti) [1987] 2 Lloyd’s Rep 276 (aff’d on other grounds in Navrom v Callitsis Ship Management SA (The Radauti) [1988] 2 Lloyd’s Rep 416), where it was said that a clause suspending laytime during a strike might apply notwithstanding the presence of a WIBON clause. 153 Federal Commerce and Navigation Co Ltd v Tradax Export SA [1978] AC 1 at 14 per Lord Diplock; Seacrystal Shipping Ltd v Bulk Transport Group Shipping Co Ltd (The Kyzikos) [1987] 2 Lloyd’s Rep 122 at 126, 128, 129 (reversed on other grounds, Bulk Transport Group Shipping Co Ltd v Seacrystal Shipping Ltd (The Kyzikos) [1989] AC 1264).

394

Shipping Law

[13.180]

port.154 Secondly, the clause causes laytime to commence only if the specified or nominated berth is unavailable when the ship arrives at the port; it has no effect if the berth is unreachable for some reason other than congestion,155 such as bad weather.156 The second limitation applies to a “time lost to count” clause,157 and it is arguable that the first should, too, although there is no authority on the point.158 Neither limitation applies to a “reachable on arrival” clause, which is considered at [13.190]. Some charterparties expressly state that notice of readiness can only be given before arrival at the berth if the berth is occupied on arrival.159 Such a clause permits the chartered ship to give notice of readiness at the usual waiting place within the port if the berth is occupied, even if the ship would not have been able to berth for other reasons, such as bad weather.160 Voyage charterparties usually provide for the suspension of laytime on days when loading cannot take place because of strikes, bad weather or other excepted perils, or because the days in question are not working days at the port.161 Under a “time lost to count” or WIBON clause, time spent waiting for berth is counted as laytime only on those days that would count as laytime days if the ship were in berth.162 Thus, an appropriately worded exclusion clause suspending laytime operates whether or not the ship is in berth.163 154 Carga del Sur Compania Naviera SA v Ross T Smyth & Co Ltd (The Seafort) [1962] 2 Lloyd’s Rep 147 at 154 per McNair J. See also Federal Commerce and Navigation Co Ltd v Tradax Export SA [1978] AC 1 at 14 per Lord Diplock. 155 See, eg, Northfield Steamship Co v Compagnie L’Union des Gaz [1912] 1 KB 434 (CA) for an example of the operation of the clause in a case of congestion. 156 Bulk Transport Group Shipping Co Ltd v Seacrystal Shipping Ltd [1989] AC 1264 (reported sub nom as The Kyzikos [1989] 1 Lloyd’s Rep 1). 157 Aldebaran Compania Maritima SA Panama v Aussenhandel AG Zurich [1977] AC 157 at 165 per Lord Diplock (reported sub nom as The Darrah [1976] 2 Lloyd’s Rep 359). 158 J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [3.419] states that under a “time lost to count” clause, the place where the vessel waits “need not necessarily be within the port limits”, provided it can say “we have gone as far as we can and we are now waiting for a berth”. 159 See, eg, Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] 2 Lloyd’s Rep 487; Suek AG v Glencore International AG (The Hang Ta) [2011] 2 Lloyd’s Rep 278 (sale contract). 160 Suek AG v Glencore International AG (The Hang Ta) [2011] 2 Lloyd’s Rep 278 (sale contract). 161 See [13.370]–[13.420]. 162 Aldebaran Compania Maritima SA Panama v Aussenhandel AG Zurich [1977] AC 157 (HL) (reported sub nom as The Darrah [1976] 2 Lloyd’s Rep 359); The Finix [1978] 1 Lloyd’s Rep 16. 163 NV Reederij Amsterdam v President of India (The Amstelmolen) [1961] 2 Lloyd’s Rep 1; Magnolia Shipping Co Ltd v Joint Venture of the International Trading and Shipping Enterprises and Kinship Management Co Ltd (The Camelia and The Magnolia) [1978] 2 Lloyd’s Rep 182; Navrom v Callitsis Ship Management SA (The Radauti) [1988] 2 Lloyd’s Rep 416.

[13.190]

13 Voyage Charterparties

395

“Reachable on arrival” and “always accessible” clauses

[13.190]

Another common device for throwing the risk of delay onto charterers is the specification that the charterer must nominate a berth “reachable on arrival” or one that is “always accessible”.164 Under such a clause, the charterer is in breach of contract if it nominates a berth that cannot be entered by the chartered ship when it arrives at the port. “Arrival” does not have the same meaning in this context as it does when determining when a ship is an arrived ship. Thus, a charterer may be in breach of a “reachable on arrival” or “always accessible” clause even if the ship is forced to wait for the nominated berth outside the legal, fiscal and administrative limits of the port.165 In this respect, the effect of these clauses is different from that of a time lost to count or WIBON clause. A berth is not reachable on arrival or accessible for the purposes of the clause if the ship cannot reach it for any reason, whether it be port congestion,166 a strike at the port,167 bad weather,168 or a combination of causes.169 The charterer is in breach if the ship cannot reach the berth, even if the charterparty excuses delays beyond the charterer’s control.170 A “reachable on arrival” or “always accessible” clause does not affect the commencement of laytime or the incurring of demurrage. However, the shipowner’s remedy for breach of the clause is damages for detention of the ship at the demurrage rate.171 If the chartered ship is forced to wait for the nominated berth before it has arrived at the port in the technical sense, the shipowner is not entitled to demurrage proper, as laytime cannot commence, but it is entitled to damages at the demurrage rate for the period of any delay.172 If the ship arrives at the port in the technical 164 The phrase “reachable on arrival” is more often found in tanker charters and “always accessible” in dry cargo charters: see J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [3.452]. 165 Sociedad Carga Oceania SA v Idolinoele Vertriebs GmbH (The Angelos Lusis) [1964] 2 Lloyd’s Rep 28; Shipping Developments Corp v V/O Sojuzneftexport: The Delian Spirit [1972] 1 QB 103; Inca Cia Naviera SA v Mofinol Inc (The President Brand) [1967] 2 Lloyd’s Rep 338; Palm Shipping Inc v Kuwait Petroleum Corp (The Sea Queen) [1988] 1 Lloyd’s Rep 500 at 502 per Saville J. 166 Nereide SpA di Navigazione v Bulk Oil International Ltd (The Laura Prima) [1982] 1 Lloyd’s Rep 1 (HL). 167 Sametiet M/T Johs Stove v Istanbul Petrol Rafinerisi A/S (The Johs Stove) [1984] 1 Lloyd’s Rep 38. 168 K/S Arnt J Moerland v Kuwait Petroleum Corp (The Fjordaas) [1988] 1 Lloyd’s Rep 336; Palm Shipping Inc v Kuwait Petroleum Corp (The Sea Queen) [1988] 1 Lloyd’s Rep 500. 169 K/S Arnt J Moerland v Kuwait Petroleum Corp (The Fjordaas) [1988] 1 Lloyd’s Rep 336; Palm Shipping Inc v Kuwait Petroleum Corp (The Sea Queen) [1988] 1 Lloyd’s Rep 500. See also Sale Corp of Monrovia v Turkish Cargo Lines General Manager (The Amiral Fahri Engin) [1993] 1 Lloyd’s Rep 75 at 79-80 per Saville J, obiter. 170 Nereide SpA di Navigazione v Bulk Oil International Ltd (The Laura Prima) [1982] 1 Lloyd’s Rep 1 (HL). 171 Inca Cia Naviera SA v Mofinol Inc (The President Brand) [1967] 2 Lloyd’s Rep 338. 172 Inca Cia Naviera SA v Mofinol Inc (The President Brand) [1967] 2 Lloyd’s Rep 338.

396

Shipping Law

[13.200]

sense, and laytime commences then, but the ship cannot reach the nominated berth, the shipowner is not entitled to recover damages for breach of the “reachable on arrival” or “always accessible” clause, as well as demurrage, if loading is not completed within laytime.173 If the shipowner would have been entitled to demurrage if the berth had been reachable on arrival, but recovers less or no demurrage when the ship enters the berth after waiting, the damages include an amount equal to the extra demurrage the charterer would have had to pay if it had not been in breach.174 A “reachable on arrival” or “always accessible” clause does not oblige the charterer to order the ship to enter the berth when it arrives. If the charterer has some reason for wanting the ship to wait outside an accessible berth, the charterer is entitled to order the ship to do so, notwithstanding the presence of such a clause in the charterparty.175 Readiness to load

[13.200]

Readiness to load is concerned with the ship’s readiness, not that of the charterer or the loading port. If the ship is ready “so far as [it] is concerned”,176 then it matters not that loading cannot actually take place because of other circumstances, such as the unavailability of a loading berth. If the ship has arrived and is ready to load, laytime commences (if the other requirements are satisfied).

Lopes J stated in Groves Maclean & Co v Volkart Brothers:177 “A ship, to be ready to load, must be completely ready and discharged in all her holds so as to give the [charterer] complete control of every portion of the ship available for cargo.” If the ship is not ready to obey the charterer’s orders to load, whenever they are given,178 it is not ready to load. Thus, where a ship had to be fumigated in all holds before receiving a cargo of grain, it

173 Shipping Developments Corp v V/O Sojuzneftexport: The Delian Spirit [1972] 1 QB 103. 174 Sale Corp of Monrovia v Turkish Cargo Lines General Manager (The Amiral Fahri Engin) [1993] 1 Lloyd’s Rep 75 at 79 per Saville J. 175 Novorossisk Shipping Co v Neopetro Co Ltd (The Ulyanovsk) [1990] 1 Lloyd’s Rep 425. 176 Leonis Steamship Co Ltd v Rank Ltd [1908] 1 KB 499 at 511 per Buckley LJ. 177 Groves Maclean & Co v Volkart Brothers (1884) 1 TLR 92 at 92-93 per Lopes J (dictum approved when decision affirmed in Groves Maclean & Co v Volkart Brothers (1885) 1 TLR 454 (CA)), cited with approval in Noemijulia Steamship Co Ltd v Minister of Food [1951] 1 KB 223 at 227; Compania Naviera Nedelka SA v Tradax International SA (The Tres Flores) [1974] QB 264 at 273. 178 The importance of the ship’s readiness to obey the charterer’s orders whenever they are given was stressed in Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558 at 564 per Parker LJ, echoing Compania Naviera Nedelka SA v Tradax International SA (The Tres Flores) [1974] QB 264 at 278 per Roskill LJ.

[13.200]

13 Voyage Charterparties

397

was not ready to load until the fumigation was complete.179 If the previous cargo is not, or cannot be completely discharged, the ship is not ready to load.180 Although the ship must be ready to obey the charterer’s order to load as soon as it is given, it does not have to be in a position to begin loading immediately in order to be ready to load. Where a berth charterparty provides for laytime to commence whether in berth or not (WIBON), the ship can be ready to load on arrival at the port, notwithstanding that it may take many hours steaming before it can reach a berth and in fact be physically ready to load.181 Similarly, a chartered ship is properly regarded as ready to load before the hatch covers have been opened and the ship’s tackle prepared (if it is to be used), although the ship is not physically ready to begin loading until those preliminaries have been completed.182 However, where the state of the ship’s tackle is such that it is in a position to load some, but not all, of the contract cargo, the ship is not ready to load.183 Physical readiness to load is the important element in the commencement of laytime. A ship may be ready to load even if it does not have all the necessary legal and administrative clearances to begin loading, if those clearances are mere formalities. For example, when a ship arrives in a port from a foreign country, it must receive a licence from the port medical authorities to allow its crew to go ashore, and for local people to go aboard. This is known as “free pratique”,184 and it is often given electronically (a practice still known, rather anachronistically, as “radio free pratique”). If a ship is denied free pratique, it will be placed in quarantine. If the ship is in quarantine, it is not ready to load, because the 179 Compania Naviera Nedelka SA v Tradax International SA (The Tres Flores) [1974] QB 264; United Nations Food and Agriculture Organisation-World Food Programme v Caspian Navigation Inc (The Jay Ganesh) [1994] 2 Lloyd’s Rep 358. Compare Eurico SpA v Philipp Bros (The Epaphus) [1987] 2 Lloyd’s Rep 215 (fumigation of cargo did not prevent ship’s readiness to discharge). 180 See Lyderhorn Sailing Ship Co Ltd v Duncan Fox Co [1909] 2 KB 929, where the previous cargo could not be completely unloaded without endangering the ship for want of stiffening. It was held that the ship was not ready to load. 181 Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558 at 564 per Parker LJ. 182 Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558 at 564 per Parker LJ; Armement Adolf Deppe v John Robinson & Co Ltd [1917] 2 KB 204. 183 See Unifert International SAL v Panous Shipping Co Inc (The Virginia M) [1989] 1 Lloyd’s Rep 603, where the ship’s winches needed 20 tons of fresh water per day to discharge the contract cargo, and the ship arrived at the discharge port with only 15 tons of fresh water aboard. 184 For a consideration of what constitutes free pratique, and when and how it can be given, see Sale Corp of Monrovia v Turkish Cargo Lines General Manager (The Amiral Fahri Engin) [1993] 1 Lloyd’s Rep 75: although the expression is sometimes used to describe clearances given by other authorities, it is only used properly when referring to clearance given by the health authority.

398

Shipping Law

[13.200]

ship is not completely at the charterer’s disposal.185 If it is known to be infected by disease, then it is not ready to load even if it has not been placed in quarantine.186 If, however, the ship apparently has a clean bill of health, but has not yet been granted free pratique, the absence of free pratique will not prevent the ship from being considered ready to load, because the granting of the free pratique certificate in such a case is a mere formality.187 However, some tanker charterparties provide that notice of readiness to load (NOR) is invalidated if free pratique is not given within six hours after NOR is given, unless it is the practice at the port in question not to give free pratique until the ship actually berths.188 Similarly, the absence of routine clearances such as a berthing permit,189 Customs190 or other administrative clearance191 does not prevent a ship

185 Smith v Dart & Son (1884) 14 QBD 105. 186 The Austin Friars (1894) 10 TLR 633, as explained in Shipping Developments Corporation v V/O Sojuzneftexport: The Delian Spirit [1972] 1 QB 103. 187 Shipping Developments Corp v V/O Sojuzneftexport: The Delian Spirit [1972] 1 QB 103; Logs & Timber Products (Singapore) Pte Ltd v Keeley Granite (Pty) Ltd (The Freijo) [1978] 2 Lloyd’s Rep 1. The situation is different if the charterparty provides that laytime cannot commence until the ship is granted free pratique: see, eg, Sale Corp of Monrovia v Turkish Cargo Lines General Manager (The Amiral Fahri Engin) [1993] 1 Lloyd’s Rep 75. 188 See, eg, Shellvoy 6, cl 13(1)(a), lines 217-227. The wording in question was first introduced into Shellvoy 5 as the additional Clearance Clause, which had to be incorporated by reference from the Shell Additional Clauses 1999. See, eg, AET Inc Ltd v Arcadia Petroleum Ltd (The Eagle Valencia) [2010] 2 Lloyd’s Rep 257. 189 Sociedad Financiera de Bienes Raices SA v Agrimpex Hungarian Trading Company for Agricultural Products (The Aello) [1961] AC 135 (HL). Although the House of Lords in EL Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479 declined to follow The Aello with respect to the definition of arrived ship, it did not question the finding that the absence of a berthing permit would not have prevented the ship from being ready to load if it had been considered to be an arrived ship. 190 Compania Argentina De Navigacion de Ultramar v Tradax Export SA (The Puerto Rocca) [1978] 1 Lloyd’s Rep 252. However, the charterparty may specify that laytime cannot commence until the ship is entered at the Customs House. This provision is commonly found when the ship is sent to a port in India: see Michalos v Food Corp of India (The Apollon) [1983] 1 Lloyd’s Rep 409; Food Corp of India v Carras Shipping Co Ltd (The Delian Leto) [1983] 2 Lloyd’s Rep 496; President of India v Davenport Marine Panama SA (The Albion) [1987] 2 Lloyd’s Rep 365; President of India v Diamantis Pateras (Hellas) Marine Enterprises Ltd (The Nestor) [1987] 2 Lloyd’s Rep 649; Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558. 191 Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558 (“entry inwards” order by preventive officer).

[13.200]

13 Voyage Charterparties

399

from being ready to load for the purposes of the running of laytime.192 As Parker LJ put it in Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2):193 When the notice is given, the situation must be such that at the earliest time that the charterers or consignees can be ready to perform their part in loading or discharging, the vessel will, barring accidents, be ready at once to perform her part in such operations.

The words “barring accidents” make it clear that the possibility that the ship may not be granted the relevant routine clearances, or may be unable to open the hatch covers, is not sufficient to keep the ship from being ready to load. The basic principle that laytime begins to run if the ship is physically ready to load (and the other requirements, such as notice of readiness, have been complied with) is modified in the widely-used tanker voyage charterparty Asbatankvoy.194 Clause 6 of Asbatankvoy provides that the ship may give notice of readiness “Upon arrival at customary anchorage … berth or no berth”, but it goes on to provide that “where delay is caused to Vessel getting into berth after giving notice of readiness for any reason over which Charterer has no control, such delay shall not count as used laytime”.195 There is scope for considerable disagreement about which causes of delay are beyond the charterer’s control, but the effect of cl 6 is that a chartered ship physically ready in itself to load may nevertheless wait for berth on the shipowner’s time if the cause of delay is beyond the charterer’s control. However, courts have generally construed cl 6 narrowly. For example, in Triton Navigation Ltd v Vitol SA (The

192 The “clearance clause” found in tanker charterparties, which invalidates NOR if free pratique is not given within six hours after NOR applies to other administrative clearances too, such as Customs clearance: see, eg, Shellvoy 6, cl 13(1)(a), lines 217-227. The wording in question was first introduced into Shellvoy 5 as the additional Clearance Clause, which had to be incorporated by reference from the Shell Additional Clauses 1999. 193 Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558 at 564. The quotation from the judgment of Lord Denning MR in Compania Naviera Nedelka SA v Tradax International SA (The Tres Flores) [1974] QB 264 at 273 that appeared at this point in the first edition of this book has been replaced because doubt was expressed by Hirst J in Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1991] 2 Lloyd’s Rep 485 at 502 whether the subjective test suggested by Lord Denning MR in that quotation should be followed in preference to the objective test suggested by Roskill LJ in the same case. The approach adopted by the Court of Appeal in The Anticlizo (No 2) is closer to that of Roskill LJ than that of Lord Denning MR. 194 And in the similar form designed for chemical tankers, Asbachemvoy. 195 See also the tanker charterparty form BPVoy 3, cl 21, which provides that delay is excused for reasons beyond “the reasonable control of Charterers … or their respective servants or agents”. For an example of the interpretation of cl 21 in a case involving “restraint of princes” by the Nigerian authorities, see Great Elephant Corp v Trafigura Beheer BV (The Crudesky) [2014] 1 Lloyd’s Rep 1 (CA).

400

Shipping Law

[13.210]

Nikmary),196 the chartered ship gave a notice of readiness that was held to be invalid because when the ship berthed, its tanks were found to be unfit to load the agreed cargo of gasoil. The ship returned to the waiting anchorage, washed its tanks, and gave a second, valid, NOR. Loading was delayed for four weeks because the charterer’s supplier had already exported its entire quota of gasoil for the month.197 The Court of Appeal rejected the charterer’s argument that the inability of its supplier to providc gasoil was a cause of delay beyond the charterer’s control for purposes of cl 6. Similarly, because cl 9 of Asbatankvoy provides that the berth must be “reachable on arrival”, it has been held that cl 6 does not excuse causes beyond the charterer’s control that prevent the berth from being reachable on arrival, such as bad weather or the unavailability of tugs.198 Although in general a valid notice of readiness cannot be given unless and until the ship is in truth ready to load, it is always open to the parties to ameliorate the black or white provisions of this principle by express provisions to the contrary, such as a clause providing that laytime commences when the master certifies that the ship is in all respects ready to load.199 In such a case, laytime commences when that certification is given, whether or not it is subsequently found to be inaccurate.200 However, if the master certifies that the ship is ready, knowing that that is untrue, then laytime does not commence, because there is an implied requirement of good faith in such a case.201 Notice of readiness In Fairbridge v Pace202 and Stanton v Austin,203 it was held that the general maritime law requires a chartered ship to give notice of

[13.210]

196 Triton Navigation Ltd v Vitol SA (The Nikmary) [2004] 1 Lloyd’s Rep 55. 197 The first, invalid, NOR was given on 2 December 2000; the second, valid, one on 5 December 2000. The supplier, Reliance, had by then sold its December quota, so loading did not commence until 2 January 2001. 198 K/S Arnt J Moerland v Kuwait Petroleum Corp (The Fjordaas) [1988] 1 Lloyd’s Rep 336; Palm Shipping Inc v Kuwait Petroleum Corp (The Sea Queen) [1988] 1 Lloyd’s Rep 500. 199 Cobelfret NV v Cyclades Shipping Co Ltd (The Linardos) [1994] 1 Lloyd’s Rep 28, citing Compania Naviera Nedelka SA v Tradax International SA (The Tres Flores) [1974] QB 264 at 278 per Roskill LJ. In the absence of such a clause, the honest belief of the master is insufficient if the ship is not physically ready: see United Nations Food and Agriculture Organisation-World Food Programme v Caspian Navigation Inc (The Jay Ganesh) [1994] 2 Lloyd’s Rep 358 (master gave notice of readiness to load when unaware that the holds were infested with insects). 200 Cobelfret NV v Cyclades Shipping Co Ltd (The Linardos) [1994] 1 Lloyd’s Rep 28. 201 Cobelfret NV v Cyclades Shipping Co Ltd (The Linardos) [1994] 1 Lloyd’s Rep 28 at 32 per Colman J. 202 Fairbridge v Pace (1844) 1 Car & K 317; 174 ER 828. 203 Stanton v Austin (1872) LR 7 CP 651.

[13.210]

13 Voyage Charterparties

401

readiness at the port of loading, even if the charterparty does not expressly require notice to be given. It is not clear, though, whether notice is necessary in such a case if the charterer knows, or ought to know, of the ship’s readiness. In A/B Nordiska Lloyd v J Brownlie & Co (Hull) Ltd, Scrutton LJ said:204 [I]n charters worded in different ways [ie without provisions stipulating for notice of readiness to be given] at least two questions of importance may arise. One is whether it is enough that the charterer knows of the presence of the ship from other circumstances, although he has no notice from the shipowner. That question, in my view, is not decided by Stanton v Austin and remains open for decision in some other case.

Several distinguished commentators have argued that, where the charterparty does not provide for notice to be given, and where no notice is actually given, laytime commences at the time the charterer knows or ought to know that the ship is ready to load.205 In almost all cases, however, the charterparty expressly requires the ship to give the charterer notice of readiness to load in order for laytime to commence.206 If the charterparty stipulates that notice be given in a particular manner, laytime does not commence if notice is given in a different manner.207 For example, in Trafigura Beheer BV v Ravennavi SpA (The Port Russel),208 the charterparty (in BPVoy 3 form) provided that notice of readiness “may be given either by letter, facsimile transmission, telegram, telex, radio or telephone”.209 Popplewell J held that the word “may” indicated that only these six methods of giving notice were permissible. A notice of readiness sent by email was therefore held to be invalid. However, an email notice of readiness would presumably be held to be valid if the charterparty merely stipulated that notice be given “in writing”, although neither English nor Australian law has statutory provisions rendering electronic communications completely equivalent to paper writing.210 204 A/B Nordiska Lloyd v J Brownlie & Co (Hull) Ltd (1925) Com Cas 307 at 313. 205 J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [227]-[230]; S Baughen, Summerskill on Laytime (5th ed, Sweet & Maxwell, London, 2013), pp 123-125; D Davies, Commencement of Laytime (4th ed, Informa Law (Routledge), Oxford, 2006), pp 216-217. 206 See, eg, cl 6 of the Gencon 1994 form (Appendix 6). 207 Gordon v Powis (1892) 8 TLR 397. 208 Trafigura Beheer BV v Ravennavi SpA (The Port Russel) [2013] 2 Lloyd’s Rep 57. 209 The clause goes on to stipulate that if notice is given by radio or telephone it shall subsequently be confirmed in writing, and if given by fax, it shall be confirmed by telex. 210 In R Pagnan & Fratelli v Finagrain Compagnie Commerciale Agricole et Financiere SA (The Adolf Leonhardt) [1986] 2 Lloyd’s Rep 395 at 403, Staughton J held that NOR by telex satisfied the requirement in the Centrocon charterparty that notice be given in writing. Telexes did send an acknowledgment receipt, so requiring a “read receipt” for an email might be prudent if giving NOR by this means.

402

Shipping Law

[13.210]

Whether or not the charterparty expressly provides for notice of readiness to be given, notice is almost invariably given in practice. As Donaldson J observed in Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna):211 It is a good working rule … to give notice of readiness and to go on giving such notices in order that, when later the lawyers are brought in, no one shall be able to say: “If only the master had given notice of readiness, laytime would have begun and the owners would now be able to claim demurrage.” … Just as it is a good working rule for masters, when in doubt, to give notices of readiness, it is an equally good working rule for charterers’ agents to reject them if there is any conceivable doubt as to their validity.

The wisdom of these words was reinforced in a series of English cases concerning the effect (or lack of it) of a premature or invalid notice of readiness. Those cases clearly establish the proposition that the function of a notice of readiness is not merely to let the charterer know that the vessel is ready to load. It is the agreed trigger for the commencement of laytime, and it must be given, and the trigger pulled, even if the charterer knows that the ship has arrived and is ready to load. The first case in the series was Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1),212 where the English Court of Appeal held that if notice of readiness is given prematurely, when the ship is not in fact ready to load or discharge, it does not operate as an inchoate notice that subsequently comes into operation as a kind of delayed action device. The premature notice does not come into operation automatically when the ship subsequently becomes ready to load or discharge, and it does not come into operation to start laytime when the charterer knows or ought to know that the ship has become ready to load or discharge.213 It is, effectively, a nullity.214 In The Mexico 1 itself, the charterers accepted that laytime began when discharge began. Although the Court of Appeal accepted that concession, it expressly left open the question whether it was properly made. Logically, if valid notice of readiness is required to start the laytime clock running and no valid notice of readiness is ever given, laytime never begins and the charterer should be entitled to despatch for the whole of the loading period. That was the position adopted by Langley J at first instance in Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day).215 The master of the “Happy Day” gave notice of readiness outside the discharge port, Cochin, because the ship was unable immediately to enter 211 Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1970] 2 Lloyd’s Rep 409 at 411. 212 Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) [1990] 1 Lloyd’s Rep 507. 213 Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) [1990] 1 Lloyd’s Rep 507 at 513 per Mustill LJ, with whom the other members of the court agreed. 214 See also TA Shipping Ltd v Comet Shipping Ltd (The Agamemnon) [1998] 1 Lloyd’s Rep 675 (notice of readiness given when ship ready but not yet arrived was a nullity). 215 Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2001] 1 Lloyd’s Rep 754.

[13.210]

13 Voyage Charterparties

403

the port as it had missed the tide. The notice of readiness was invalid.216 No further notice of readiness was ever given. The vessel entered the berth the following day, then spent three months in a protracted discharging process.217 Langley J followed the decision in The Mexico 1 to its logical conclusion, holding that laytime had never commenced and therefore not only was the shipowner not entitled to any demurrage at all but the charterers were entitled to three months’ worth of despatch. Soon after, Moore-Bick J came to a similar conclusion in Glencore Grain Ltd v Goldbeam Shipping Inc (The Mass Glory),218 holding that a shipowner was not entitled to any demurrage after two months’ worth of delay because no valid notice of readiness had ever been given. The charterer was entitled to despatch for the whole period of discharging. After referring to Langley J’s decision in The Happy Day, Moore-Bick J said:219 I entirely agree. When, as here, the terms of the contract are clear and the parties have not demonstrated an intention, by one means or another, to depart from them, there is no justification for seeking to modify those terms in an attempt to alleviate what is perceived to be some element of unfairness, especially in a case where that unfairness arises from the failure of one party to operate the contract in accordance with its terms. Nor do I think that one can properly resort to some wider concept of “futility” to obviate the need to give a notice of readiness under these circumstances. … It is well understood that under a charter of this kind, notice of readiness is given in order to start laytime running, not merely to provide the charterer with information which in many cases will already be in their possession.

Like Archbishop Lefebvre, The Happy Day and The Mass Glory were too orthodox for their own good.220 Although entirely consistent with The Mexico 1, they were widely viewed as unfair and commercially inappropriate. The Court of Appeal reversed Langley J’s decision in The Happy Day, alleviating the shipowner’s position but without disturbing the primacy placed by The Mexico 1 on the giving of a valid notice of readiness. The Court of Appeal held that, in the circumstances, the 216 The charterparty was a berth charterparty, which provided that notice of readiness could be given “whether in berth or not” (that is, WIBON: see [13.180]) but only “[i]f by reason of congestion the vessel is unable to enter the … discharging ports”. Because the berth was not congested, the master had no right to give notice of readiness outside the berth: Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2001] 1 Lloyd’s Rep 754 at 756. 217 The invalid notice of readiness was given on 25 September 1998; the vessel berthed on 26 September 1998; discharge was completed on 25 December 1998: Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2001] 1 Lloyd’s Rep 754 at 756. 218 Glencore Grain Ltd v Goldbeam Shipping Inc (The Mass Glory) [2002] 2 Lloyd’s Rep 244. 219 Glencore Grain Ltd v Goldbeam Shipping Inc (The Mass Glory) [2002] 2 Lloyd’s Rep 244 at 254. 220 Lefebvre refused to abandon the Latin form of Mass after the Second Vatican Council adopted consecration of Mass in vernacular languages. He was excommunicated from the Roman Catholic Church in 1988 for the schismatical act of consecrating four bishops without the Pope’s approval. See “Decree of Excommunication: Dominus Marcellus Lefebvre”: http://www.credo.stormloader.com/Reviews/exdecree.htm.

404

Shipping Law

[13.210]

charterer had waived the invalidity of the notice of readiness by not objecting to it and by commencing discharge.221 Speaking for the whole Court of Appeal, Potter LJ stated the appropriate principle as follows:222 Laytime can commence under a voyage charterparty requiring service of a notice of readiness when no valid notice of readiness has been served in circumstances where (a) a notice of readiness valid in form is served upon the charterers or receivers as required under the charterparty prior to the arrival of the vessel; (b) the vessel thereafter arrives and is, or is accepted to be, ready to discharge to the knowledge of the charterers; (c) discharge thereafter commences to the order of the charterers or receivers without either having given any intimation of rejection or reservation in respect of the notice of readiness previously served or any indication that further notice of readiness is required before laytime commences. In such circumstances, the charterers may be deemed to have waived reliance upon the invalidity of the original notice as from the time of commencement of discharge and laytime will commence in accordance with the regime provided for in the charterparty as if a valid notice of readiness had been served at that time. By answering the question in that way, I should not be thought to doubt that, in appropriate circumstances, the same result may follow by application of the doctrines of variation and estoppel.

It is important to note that this is a very narrow exception to the general rule. It avoided the most egregious aspect of Langley J’s decision — the fact that the charterers earned three months’ worth of despatch — but it does not detract from the principle stated in The Mexico 1, that an invalid notice of readiness is a nullity. If the “Happy Day” had spent three months waiting for berth, rather than three months discharging, it still would have earned no demurrage under the principle stated by the Court of Appeal. It is the commencement of loading (or, in the cases themselves, discharging) that confirms the charterer’s waiver of the invalidity of the notice of readiness. Thus, if an invalid notice of readiness is given, laytime commences upon loading but not before. If the charterer accepts a premature notice of readiness in circumstances where it knows or ought to know that the notice is premature, it is estopped from rejecting it thereafter, except in cases of fraud.223 However, if the charterer accepts a premature notice of readiness in circumstances where it has no other means of knowing whether the notice is premature, 221 Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] 2 Lloyd’s Rep 487. 222 Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] 2 Lloyd’s Rep 487 at 510-511 per Potter LJ (with whom Arden LJ and Sir Denis Henry agreed). 223 Surrey Shipping Co Ltd v Compagnie Continentale (France) SA (The Shackleford) [1978] 2 Lloyd’s Rep 154; Tidebrook Maritime Corp v Vitol SA (The Front Commander) [2006] 2 Lloyd’s Rep 251 at 258 per Rix LJ; Ocean Pride Maritime Ltd Partnership v Qingdao Ocean Shipping Co (The Northgate) [2008] 1 Lloyd’s Rep 511. See also Tidebrook Maritime Corp v Vitol SA (The Front Commander) [2006] 2 Lloyd’s Rep 251, where the charterer was held bound by its acceptance of a notice of readiness given before commencement of the laycan period, because the charterparty permitted early loading “with the charterer’s sanction”.

[13.220]

13 Voyage Charterparties

405

it is not estopped from rejecting it thereafter.224 The charterer’s acceptance of the premature notice has no value in such a case, because it is given solely in reliance on the master’s implied assurance that the ship is in fact ready.225 Where the chartered ship is carrying two part-cargoes for the same charterer under two different charterparties, it may be possible to regard them as a single cargo if the circumstances indicate that the two charterparties are to be read together, so that notice of readiness for one counts as notice of readiness for the other.226 Unless the circumstances indicate that the two charterparties are to be read as one, though, separate notices of readiness must be given for each part-cargo, because the law will not imply a term into the first-made charterparty that its laytime provisions are to be annulled by the formation of the second-made charterparty and a new set of laytime provisions substituted for them.227 Special provisions for the commencement of laytime

[13.220]

The charterparty may specify other preconditions for the commencement of laytime, in addition to or in substitution for the three requirements described at [13.160].228 For example, the charterparty may impose the additional requirement that laytime shall not commence until the ship is entered at the customs house,229 or until it has been granted free pratique.230 Alternatively, the charterparty may dispense with one or more of the usual requirements, as, for example, in Ellis Shipping Corp v 224 Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) [1990] 1 Lloyd’s Rep 507. 225 Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) [1990] 1 Lloyd’s Rep 507 at 514 per Mustill LJ. 226 Sarma Navigation SA v Sidermar SpA (The Sea Pioneer) [1982] 1 Lloyd’s Rep 13. 227 Transamerican Steamship Corp v Tradax Export SA (The Oriental Envoy) [1982] 2 Lloyd’s Rep 266; Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) [1990] 1 Lloyd’s Rep 507. 228 For a more complete discussion of clauses modifying the commencement of laytime, see S Baughen, Summerskill on Laytime (5th ed, Sweet & Maxwell, London, 2013), Ch 6. 229 Such a provision is commonly found in charterparties that require the chartered ship to visit a port in India: see, eg, Michalos v Food Corp of India (The Apollon) [1983] 1 Lloyd’s Rep 409; Food Corp of India v Carras Shipping Co Ltd (The Delian Leto) [1983] 2 Lloyd’s Rep 496; President of India v Davenport Marine Panama SA (The Albion) [1987] 2 Lloyd’s Rep 365; President of India v Diamantis Pateras (Hellas) Marine Enterprises Ltd (The Nestor) [1987] 2 Lloyd’s Rep 649; Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558. 230 See, eg, Sale Corp of Monrovia v Turkish Cargo Lines General Manager (The Amiral Fahri Engin) [1993] 1 Lloyd’s Rep 75. The “clearance clause” found in tanker charterparties, which invalidates NOR if free pratique is not given within six hours after NOR applies to other administrative clearances too, such as Customs clearance: see, eg, Shellvoy 6, cl 13(1)(a), lines 217-227. The wording in question was first introduced into Shellvoy 5 as the additional Clearance Clause, which had to be incorporated by reference from the Shell Additional Clauses 1999.

406

Shipping Law

[13.230]

Voest Alpine Intertrading (The Lefthero),231 where the charterparty provided that laytime was to count from the moment the vessel arrived at the pilot station at the port of Bandar Abbas at the entrance to the Persian Gulf, even though the loading port was Bandar Khomeini, many miles away up the Gulf.

The duration of laytime [13.230]

There are three ways in which the duration of the laytime period may be ascertained. First, it may be fixed by provision of a set number of days or hours: for example, “72 running hours”. Secondly, it may be calculable by provision of a set loading rate: for example, “1,500 tonnes per weather working day”. Thirdly, it may be unspecified, either because the charterparty makes no express provision, or because it contains a provision such as, “with all dispatch, according to the custom of the port”.

Fixed laytime

[13.240]

The charterparty may fix the duration of the laytime period by specifying a number of hours or days in which loading and discharging must be completed. Days are variously described as “days”, “running days”, “working days”, “weather working days”, “weather working days of 24 consecutive hours” or “working days weather permitting”. The more elaborate expressions are an attempt to give the charterer the benefit of a useable period of laytime, in which time runs only when loading or discharging can actually take place. The various expressions achieve that goal with varying degrees of success.

“Days”

[13.250]

In the 19th century, the word “days” was commonly used without qualification. As Lord Devlin observed in Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food:232 In the beginning, a day was a day — a Monday, a Tuesday or a Wednesday, as the case might be. Work began, one may suppose, sometime in the morning and ended in the evening, the number of hours that were worked varying from port to port and in different trades.

231 Ellis Shipping Corp v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109. See also Islamic Republic of Iran Shipping Lines v Royal Bank of Scotland plc (The Anna Ch) [1987] 1 Lloyd’s Rep 266, where there was a similar provision. Such clauses were quite common during the Iran-Iraq war; they reflected the practicalities of the system whereby cargo vessels sailed up and down the Gulf in protected convoys. 232 Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] AC 691 at 738.

[13.260]

13 Voyage Charterparties

407

The use of the simple word “days” gave rise to disputes over whether days on which work was not normally done, such as Sundays, should be included in the laytime period. The old cases suggest that the word “days” should be interpreted as meaning “working days” if there is a custom of the port or the country not to work on certain days of the week,233 but the word “days” makes no provision for ad hoc interruptions to loading or discharging time, such as delays caused by bad weather. If laytime is expressed in “days”, every day counts as a laytime day, whether or not the weather permits work to be done on that day. As a result, the charterer may not get the benefit of a useable period of laytime, so charterparties now commonly make express provision for which days are to count as laytime and which not. The word “days” is now seldom used without qualification, particularly in “dry” cargo trades such as grain or phosphates, where loading and discharging are particularly susceptible to weather interruptions. “Running days” and “Running hours”

[13.260]

“Running days” is an expression that is used to specify that all days are to count as laytime. Lord Esher MR described “running days” as follows in Nielsen & Co v Wait, James & Co:234 “Running days” therefore mean the whole of every day when a ship is running. What is that? That is every day, day and night. … They are the days, during which, if the ship were at sea, she would be running. That means every day.

Thus, unless Sundays and public holidays are excluded expressly,235 they are included in laytime defined by running days, even if no loading can take place on those days. Similarly, if the charterparty describes laytime in terms of running hours, laytime runs continuously day and night unless specified periods are excluded. Charterparties in bulk liquid trades such as oil, vegetable oils and chemicals often provide for laytime in running hours, because loading and discharging are generally not so affected by weather interruptions as in dry cargo trades.236

233 See Cochran v Retberg (1800) 3 Esp 121; 170 ER 560; Commercial Steamship Co v Boulton (1875) LR 10 QB 346. 234 Nielsen & Co v Wait, James & Co (1885) 16 QBD 67 at 72. 235 For a consideration of expressions used to exclude laytime days, see [13.310]. 236 However, swells can affect the use of sealines used for loading or discharging: see, eg, Societe Anonyme Marocaine de L’Industrie du Raffinage v Notos Maritime Corporation (The Notos) [1987] 1 Lloyd’s Rep 503 (HL).

408

Shipping Law

[13.270]

“Working days”

[13.270]

The expression “working days” confines the running of laytime to those days when work can normally be expected to take place. “Working days” automatically excludes from laytime days such as Sundays and public holidays, on which no work is done. It is immaterial whether the day is a rest day at the port for secular or religious reasons; what is important is simply that it is a day on which work is not done.237 Like all laytime expressions, the phrase “working days” is purely descriptive. It describes a calendar day in terms of whether or not work is done on that day. It does not confine the running of laytime to the normal working hours on the working day in question.238 For laytime purposes, a working day is a day of 24 hours if work is normally done on that day, notwithstanding the fact that work does not continue for the whole 24 hours of that day. Thus, for example, if the port in question normally works a five-and-a-half-day week, comprising a full day Monday to Friday and a half-day on Saturday morning, this constitutes six full working days for the purposes of laytime.239 “Weather working days”

[13.280]

For the protection of the charterer, the running of laytime is often further confined to “weather working days”. This expression is also descriptive; it describes a day on which the weather permits work, whether or not work is actually done for the whole or any part of that day. As Pearson J put it in Compania Naviera Azuero SA v British Oil & Cake Mills Ltd:240 [A] “weather working day” is a day on which the weather permits the relevant work to be done, whether or not any person avails himself of that permission; in other words so far as the weather is concerned, it is a working day. … [T]he converse proposition must be on the same basis. A day is not a weather working day … insofar as the weather on that day does not permit the relevant work to be done, and it is not material to inquire whether any person has intended or planned or prepared to do any relevant work on that day.

237 British and Mexican Shipping Co Ltd v Lockett Brothers Co Ltd [1911] 1 KB 264. 238 Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] AC 691, overruling Alvion Steamship Corporation Panama v Galban Lobo Trading Co SA of Havana (The Rubystone) [1955] 1 QB 430. In Reardon Smith, the House of Lords decided three cases heard together: they are known as the Vancouver Strikes cases. 239 Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] AC 691. Laytime could be tailored for such a port by expressing it in terms of working days “SATPMSHEXUU” — Saturday afternoons, Sundays and holidays excluded unless used. See [13.310]. 240 Compania Naviera Azuero SA v British Oil & Cake Mills Ltd [1957] 2 QB 293 at 303, approved in the House of Lords in Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] AC 691 at 740.

[13.280]

13 Voyage Charterparties

409

Thus, bad weather interrupts the running of weather working days even if the ship is still waiting for a berth.241 To this extent, then, the expression does not wholly achieve the desired result of ensuring that the charterer gets the benefit of useable laytime. If the weather interrupts (or would interrupt) work for part of the day only, difficulties arise over whether that day should be considered a weather working day. On the one hand, it could be argued by the shipowner that such a day should count as a weather working day notwithstanding the interruption, because the weather permitted work for some part of it. On the other hand, it could be argued by the charterer that the day should not count as a weather working day at all, because the weather did not permit loading on that day as a whole. The actual position is somewhere between these two extremes; a proportion of the day is treated as a weather working day for the purposes of laytime. The method of calculating what proportion of the partly-interrupted weather working day should count as laytime is as follows.242 If the interruption by weather is outside working hours on the day in question, the whole day counts towards laytime. If the interruption by weather is during working hours, the interruption is calculated as a proportion of the whole of the working day on the particular ship in question. If the working day on that ship is extended by overtime, the time lost is calculated as a proportion of the extended day, not the normal working hours.243 Conversely, if the working day on that ship is shortened because it is a half-day at the port, the time lost is calculated as a proportion of the shortened day.244 Then, because a working day is a day of 24 hours,245 the same proportion of the 24-hour day is treated as lost for the purposes of laytime:

241 Aldebaran Compania Maritima SA v Aussenhandel AG Zurich [1977] AC 157 (reported sub nom as The Darrah [1976] 2 Lloyd’s Rep 359). In The Darrah, laytime was running because of a clause in the charterparty which provided “time lost waiting for berth to count as laytime”. 242 The method is laid down in Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] AC 691 (the Vancouver Strikes cases). 243 Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] AC 691 at 723-724 per Viscount Radcliffe, who said that the calculation must be done on the basis of the part of the calendar day that was actually used, or would have been used, to do work, which is a question of fact for the arbitrator. See also at 726 per Lord Keith, and 744 per Lord Devlin. 244 J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [2.74] and n 92 suggests that a bad weather interruption on a half-day should be treated as if it were an interruption to the hours worked “generally throughout the working week”: ie, to a full working day. This seems inconsistent with the view expressed in the Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] AC 691 (the Vancouver Strikes cases) at 723-724, 744-745, that the relevant hours are a question of fact to be determined by the arbitrator. 245 See [13.270].

410

Shipping Law

[13.290]

Example 13.1 A ship is allowed three weather working days as laytime to load at port X. Laytime commences at 00-00 hours on Friday, 30 September. On Friday, 30 September, there is a storm between 02-00 and 05-00, which would have interrupted loading, but no loading is taking place at that time. Loading takes place between 07-00 and 17-00 on 30 September; these are the normal working hours during the week. The whole of 30 September counts as a weather working day. On Saturday, 1 October, which is a half-day at the port, work is done on the ship between 07-00 and 13-00, but is interrupted by bad weather between 10-00 and 11-00. The one-hour interruption to the working day of six hours means that 1 October counts as five sixths of a weather working day, or 20 laytime hours. No work is done on the ship on Sunday, 2 October, which is a rest day at the port. It does not count as a weather working day, because it is not a working day. On Monday, 3 October, loading commences at 07-00, but is interrupted by a storm lasting from 10-00 to 14-00. Loading resumes and continues, with overtime, until 19-00. The four-hour interruption to the extended working day of 12 hours means that 3 October counts as two thirds of a weather working day, or 16 laytime hours. Laytime expires at 12-00 on Tuesday, 4 October, the total of five hours of weather interruptions having produced a proportional interruption of 12 laytime hours.246

“Weather working day of 24 consecutive hours”

[13.290]

The expression “weather working day of 24 consecutive hours” is designed to avoid the problems of proportional calculation that can arise when laytime is expressed in terms of weather working days. When laytime is expressed in terms of weather working days of 24 consecutive hours, laytime is interrupted for the actual duration of any bad weather interruption, rather than on a proportional basis, because the working day for the ship is effectively deemed to be 24 consecutive hours.247 In other respects, the expression “weather working day of 24 consecutive hours” is the same as the expression “weather working day”.

“Working day weather permitting”/“weather permitting working day”

[13.300]

The addition of the words “weather permitting” either before or after the words “working day” has much the same effect as the expression “weather working day”. The words are descriptive; laytime is

246 If Schofield’s analysis is correct (that a bad weather interruption on a half-day should be treated as if it were an interruption to the hours worked “generally throughout the working week”: ie, to a full working day), the one-hour interruption on Saturday morning would be regarded for laytime purposes as an interruption to the normal working day of 07-00 to 17-00. This would mean that Saturday would be nine-tenths of a weather working day, or 21.6 laytime hours, so that laytime would expire at 10:24 on Tuesday, 4 October. 247 The Voyage Charterparty Laytime Interpretation Rules 1993 are issued jointly by the Baltic and International Maritime Conference (BIMCO), the Comite Maritime International (CMI), The Federation of National Associations of Ship Brokers and Agents (FONASBA), and the International Association of Dry Cargo Shipowners (Intercargo). They are known as “Voylayrules 1993”: see J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011), Appendix C. They define “weather working day of 24 consecutive hours” as “a working day of 24 consecutive hours except for any time when weather prevents the loading or discharging of the vessel or would have prevented it, had work been in progress”.

[13.310]

13 Voyage Charterparties

411

interrupted by bad weather even if loading would not have taken place on the day in question because the ship cannot gain access to a berth, or for some other reason.248 The position is the same if laytime is expressed in terms of hours “weather permitting”; it is not only those weather interruptions which actually prevent loading that prevent laytime from running.249 If loading of the particular ship250 would not have taken place because of the weather, laytime does not run. The expression “working day weather permitting” differs from “weather working day” in the way in which interruptions to laytime are calculated. Interruptions to “weather working days” are calculated on the basis of the proportion of the working day lost expressed as a proportion of the 24-hour day,251 but when the expression “working days weather permitting” is used, laytime is only interrupted for the actual period when bad weather would have prevented loading.252 If the weather is such that the ship refrains, for its own safety, from going into berth or chooses to leave berth, laytime only ceases to run if it is defined by reference to the weather. In these circumstances, the choice to seek refuge is not enough in itself to prevent laytime from running; laytime is only interrupted because the weather is so bad that it would also prevent loading.253 Other expressions used to include or exclude days from laytime

[13.310]

When fixing charterparties on behalf of their principals, brokers usually agree on which days shall not be counted as laytime, by the use of such acronyms as SHEX (Sundays and holidays excluded), SSHEX (Saturdays, Sundays and holidays excluded) or, if the ship is to go to ports in Muslim countries, FHEX (Fridays and holidays excluded). The letters UU (standing for “unless used”) are often added to indicate that such days are to count as laytime if they are in fact used for loading or discharging: for example, SATPMSHEXUU means Saturday afternoons, Sundays and holidays excluded, unless used. The abbreviation EIU, for “except if used”, has the same effect. Conversely, the parties may

248 Dow Chemical (Nederland) BV v BP Tanker Co Ltd (The Vorras) [1983] 1 Lloyd’s Rep 579 (CA), overruling Magnolia Shipping Co Ltd of Limassol v Joint Venture of the International Trading and Shipping Enterprises and Kinship Management Co Ltd of Brussels (The Camelia and Magnolia) [1978] 2 Lloyd’s Rep 182. 249 Gebr Broere BV v Saras Chimica SpA [1982] 2 Lloyd’s Rep 436. 250 Dow Chemical (Nederland) BV v BP Tanker Co Ltd (The Vorras) [1983] 1 Lloyd’s Rep 579 suggests that laytime is interrupted if any ship of a similar type would have been unable to load on the day in question, whereas Gebr Broere BV v Saras Chimica SpA [1982] 2 Lloyd’s Rep 436 suggests that laytime is interrupted only if the particular ship would have been unable to load. It is submitted that on this point the Gebr Broere decision is to be preferred: see J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [2-108]. 251 See [13.280]. 252 Dow Chemical (Nederland) BV v BP Tanker Co Ltd (The Vorras) [1983] 1 Lloyd’s Rep 579. 253 Gebr Broere BV v Saras Chimica SpA [1982] 2 Lloyd’s Rep 436.

412

Shipping Law

[13.320]

expressly agree that certain specified days are to be included, whether or not they are used, by such expressions as SSHINC — “Saturdays, Sundays and holidays included” — or by even more elaborate expressions, such as “SHINC, excluding Super Holidays”, a term used in the bulk trades to refer to holidays that are observed, on whichever day of the week they fall, such as Christmas Day.254 Reversible laytime

[13.320]

Some charterparties provide for reversible laytime, which is a single period that covers both loading and discharging without stipulating how much of that period is allowed at each end. For example, if the charterparty provides for six weather working days of reversible laytime, and the chartered ship is loaded in two weather working days, it has four weather working days of laytime left in which to discharge. If it loads in four weather working days, it is allowed two weather working days for discharging. There is authority for the proposition that under a reversible laytime clause, the charterer is entitled both to claim despatch for any days saved in loading (if the charterparty provides for payment of despatch on loading),255 and also to credit those days towards the permitted laytime for discharging.256 Although this rule has been criticised on the basis that it gives the charterer credit twice for a single saving of time,257 it is consistent with the general principle that laytime clauses are descriptive and have nothing to do with the matter of when and how work is actually done.258

Calculable laytime General principles

[13.330]

The charterparty may provide for the calculation of the laytime period by reference to a rate of loading or discharging for the particular cargo in question. This is usually done only in dry bulk trades, where the loading and discharging rates may differ dramatically; for

254 See, eg, Cobelfret Bulk Carriers NV v Swissmarine Services SA (The Lowlands Orchid) [2010] 1 Lloyd’s Rep 317 (time ran during holidays that were not “Super Holidays” because of the H in SHINC). 255 For a consideration of despatch, see [13.500]. 256 Z Steamship Co Ltd v Amtorg, New York (1938) 61 Ll L Rep 97. The charterer cannot claim discharge despatch for time carried over from loading if the charterparty provides only for despatch on discharging time saved: see Rowland & Marwood’s Steamship Co Ltd v Wilson, Sons & Co Ltd (1897) 2 Com Cas 198. 257 See J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [5.92], [7.28], quoting Mocatta J in Fury Shipping Co Ltd v State Trading Corporation of India Ltd (The Atlantic Sun) [1972] 1 Lloyd’s Rep 509 at 512. Schofield says that “it is now generally accepted that payment of despatch money at the load port wipes out all obligations with respect to the time so saved” (see [5.92]), but cites no authority for that proposition. 258 See [13.270].

[13.330]

13 Voyage Charterparties

413

example, it is much quicker to load dry bulk cargo onto a ship from a conveyor belt dropping cargo into the ship’s hold than it is to discharge the same cargo with grabs at the other end. Liquid bulk cargoes can generally be pumped into and out of the ship at the same rate at either end. The laytime period may be expressed in terms of rates of cargo per day, per hour, per weather working day, or per any other of the units of time considered at [13.250]–[13.300]. The laytime period can only be calculated once it is known how much cargo is loaded onto the ship in question. For example, a charterparty might provide that a cargo of 20,000 metric tonnes, 10% MOLCHOPT259 is to be loaded and discharged “at an average rate of 2,000 MT per weather working day”. If exactly 20,000 tonnes are loaded, the laytime at each end is exactly 10 weather working days, the running of which is calculated as described at [13.280]. If, however, the charterer loads 21,345 tonnes, laytime is 10.6725 weather working days at each end. The laytime period is calculated by reference to the actual size of the cargo loaded, not the amount stipulated in the charterparty, if that is different.260 Where only part of the cargo can be loaded when the ship is in berth and the rest must be loaded from lighters because the ship’s draught is too great for it to leave berth fully laden, the laytime period is calculated by reference to the entire cargo loaded and not merely that part of the cargo loaded in berth.261 Calculable laytime allows for more precision in giving the charterer a reasonable laytime period in the light of the turnaround times to be expected at the ports of loading and discharge. For example, the specified average rates of loading and discharging often differ, to reflect the fact that different ports have different cargo-handling capabilities, which are reflected in different rates of loading and discharging, and also (as noted previously) the simple fact that loading and discharging of dry bulk cargoes are performed very differently, at different speeds. Calculable laytime clauses are, like all laytime clauses, descriptive. Although they provide for a laytime period by reference to a loading rate, they do not prescribe a particular method of loading. The period is calculated as if loading were to continue simultaneously in all holds, as that is the method which is most economical of the ship’s time, and the period is not affected if the charterer chooses to load the holds at different rates, or consecutively rather than simultaneously.262

259 Ten per cent more or less at charterer’s option. 260 Hain Steamship Co Ltd v Minister of Food (1949) 82 Ll L Rep 386. 261 Clerco Compania Naviera SA v The Food Corporation of India (The Savvas) [1982] 1 Lloyd’s Rep 22. Although this case deals with laytime for discharge after the ship has been lightened so that it can enter port, the principles are the same for loading laytime. 262 Compania de Navigacion Zita SA v Louis Dreyfus & Cie [1953] 2 Lloyd’s Rep 472.

414

Shipping Law

[13.340]

Rates “per hatch”

[13.340]

Calculable laytime clauses sometimes specify a rate of loading “per hatch”. Laytime calculated by reference to a rate “per hatch per day” is, in effect, merely another way of providing a total agreed rate per day.263 If the ship has four hatches and the agreed rate is 200 tonnes per hatch per day, the ship must load at 800 tonnes per day whether or not any or all of the hatches are out of service. Rates “per working hatch”/“per available hatch”/“per workable hatch”/“per available workable hatch”

[13.350]

Laytime calculated by reference to a rate “per working hatch per day”, “per available hatch per day”, “per workable hatch per day” or “per available workable hatch per day” is more favourable to the charterer than laytime calculated “per hatch per day”. A working or workable hatch is one that is working or workable on the particular day in question.264 Once the hold under the hatch is full (or empty, in the case of discharging), the hatch is no longer a working hatch.265

Per working hatch clauses have been described as “ambiguous and mysterious”266 because the laytime calculations involved are considerably more complicated than those for a simple loading rate per day. In The Sandgate,267 the agreed rate of discharge268 was 125 tons269 per working hatch per day, and the ship had four hatches. The shipowner advanced the “captivating argument”270 that the clause meant that the ship was to be discharged at the rate of 500 tons per day: that is, as if the clause read “per hatch per day”. The English Court of Appeal rejected this argument, saying that the clause was not simply a roundabout way of providing for a rate of 500 tons per day. A working hatch was one from which there was still cargo to be discharged. Once a hold was empty, its hatch was no longer a working hatch, and the agreed daily rate per working hatch per day was reduced proportionately. It follows from the decision in The Sandgate that the laytime period can be calculated only retrospectively, once it is known how much cargo is 263 Lodza Compania de Navigacione SA v Government of Ceylon (The Theraios) [1971] 1 Lloyd’s Rep 209 (CA). 264 The expression “per available hatch” is treated as meaning the same as “per working hatch”: see Compania de Navigacion Zita SA v Louis Dreyfus & Cie [1953] 2 Lloyd’s Rep 472 (this case is known, but not reported, as The Corfu Island). 265 The Sandgate [1930] P 30; Compania de Navigacion Zita SA v Louis Dreyfus & Cie [1953] 2 Lloyd’s Rep 472 (The Corfu Island) at 475 per Devlin J; Cargill Inc v Rionda de Pass Ltd (The Giannis Xilas) [1982] 2 Lloyd’s Rep 511 at 513 per Bingham J. 266 The Sandgate [1930] P 30 at 32 per Scrutton LJ. 267 The Sandgate [1930] P 30. 268 The principles are the same with respect to loading. 269 Of 2240 lbs. 270 The Sandgate [1930] P 30 at 33 per Scrutton LJ.

[13.350]

13 Voyage Charterparties

415

contained in each hold. Because the largest hold takes the longest to fill in the notional process of filling all the holds simultaneously at the stipulated rate,271 it is the one by which the laytime period can be calculated.272 The smaller holds can effectively be ignored, as the following example shows.

Example 13.2 The charterer has a cargo of 11,000 tonnes to be loaded onto the chartered ship at “the average rate of loading of 500 tonnes per working hatch per day”. The ship has four hatches, serving holds 1, 2, 3 and 4. After loading, it is found that 4,000 tonnes of cargo were loaded into hold 2, 3,000 into hold 4, and 2,000 into holds 1 and 3. The laytime rate is calculated on the basis that all four hatches are loaded simultaneously. While all four hatches are working, the total agreed loading rate is 2,000 tonnes per day. Eight thousand tonnes are loaded while all four hatches are working (2,000 tonnes in each hold), so at the agreed rate, the first 8,000 tonnes should be loaded in 4 days. Once holds 1 and 3 are full, there are only two working hatches, and the total agreed loading rate is 1,000 tonnes per day. While these two hatches are working, a further 2,000 tonnes are loaded — 1,000 to fill hold 4, and another 1,000 into hold 2. At the agreed rate, these 2,000 tonnes should be loaded in a further 2 days. When only hold 2 is loading there is only one working hatch, so the agreed rate is 500 tonnes per day. One thousand tonnes are needed to fill hold 2, and this last 1,000 tonnes should be loaded in 2 days. Thus, the total laytime period is 4 + 2 + 2 days = 8 days. However, this can be calculated more simply by ignoring holds 1, 3 and 4. Hold 2 holds 4,000 tonnes of cargo which should be loaded at 500 tonnes per day, thus the laytime period is 4,000 divided by 500, which is 8 days.273

If more than one hatch serves the largest hold, laytime is calculated by dividing the quantity of cargo in that hold by the agreed daily rate for that hold, which is the daily rate per hatch multiplied by the number of hatches.274

271 See Compania de Navigacion Zita SA v Louis Dreyfus & Cie [1953] 2 Lloyd’s Rep 472. 272 Compania de Navigacion Zita SA v Louis Dreyfus & Cie [1953] 2 Lloyd’s Rep 472 (The Corfu Island) at 475 per Devlin J. 273 Note how a rate per working hatch per day is more favourable to the charterer than a rate per hatch per day. In this example, if the rate were 500 tonnes per hatch per day, the laytime period would be calculated by dividing 11,000 tonnes total cargo by a rate of 2,000 tonnes per day, producing a period of 5.5 days. 274 Rule 6 of the Voylayrules 1993 (see footnote at [13.290]) provides: “‘per working hatch per day’ (WHD) or ‘per workable hatch per day’ (WHD) means that laytime is to be calculated by dividing (A), the quantity of cargo in the hold with the largest quantity, by (B), the result of multiplying the agreed daily rate per working or workable hatch by the number of hatches serving that hold”. Thus: Largest quantity in one hold

Laytime =

Days Daily rate per hatch x Number of hatches serving that hold

416

Shipping Law

[13.360]

The Sandgate was distinguished in President of India v Jebsens (UK) Ltd (The General Capinpin, Proteus and Free Wave),275 where the charterparties in question provided for discharge “at the average rate of 1,000 MT basis 5 or more available workable hatches, pro rata if less number of hatches per weather working day”. The House of Lords held that this clause did not have the same effect as a clause providing for an average rate of 200 metric tonnes per available workable hatch per weather working day. The court held that the clause provided for an overall rate of discharge of 1,000 tonnes per weather working day and did not expressly provide for a rate per hatch, despite the reference to “basis 5 or more available workable hatches”. These words did not substitute a rate per hatch, but imposed a qualification upon the overall rate, so that that overall rate of 1,000 tonnes per weather working day would not apply if all five hatches were not available and workable. Thus, if only three hatches were available and workable, the overall rate would be reduced pro rata to 600 tonnes per weather working day, but the mere fact that discharge from any particular hatch was completed did not in itself affect the computation of laytime, as it would in the case of a rate per available workable hatch.276 Customary laytime Every voyage charterparty has a period of laytime.277 If the charterparty makes no express provision for laytime, the law implies an obligation on the charterer to load within a reasonable time.278 Similarly, if the charterparty provides for laytime by using an expression such as “loading to take place as fast as the ship can receive” or “loading with all dispatch according to the custom of the port”, the charterer’s obligation is to load within a reasonable time.279 There are many cases that deal with what constitutes a reasonable time for loading or discharge and their combined effect is that what is a reasonable time depends on (1) the existing circumstances of the port (as opposed to the normal circumstances); and (2) the customary methods of the port.

[13.360]

It is now uncommon, but not entirely unknown, for a charterparty to make no express provision for laytime. “Customary dispatch” and “FAC” (fast as can) clauses do not serve the interests of either party particularly well, although they are, if anything, favourable to the charterer. Unlike fixed laytime, the period allowed cannot be determined in advance, and so the contractual obligations of each party are not clear before 275 President of India v Jebsens (UK) Ltd (The General Capinpin, Proteus and Free Wave) [1991] 1 Lloyd’s Rep 1. 276 President of India v Jebsens (UK) Ltd (The General Capinpin, Proteus and Free Wave) [1991] 1 Lloyd’s Rep 1 at 7 per Lord Goff of Chieveley. 277 For a detailed account of the law relating to customary laytime, see J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [2-207]–[2-285]; S Baughen, Summerskill on Laytime (5th ed, Sweet & Maxwell, London, 2013), Ch 3. 278 Pantland Hick v Raymond & Reid [1893] AC 22. 279 Postlethwaite v Freeland (1880) 5 App Cas 599.

[13.380]

13 Voyage Charterparties

417

performance commences.280 The question whether laytime has been exceeded, and demurrage incurred, is one of fact in every case. In order to claim demurrage, the shipowner must prove that the ship has been loaded or discharged unreasonably slowly in the circumstances. As a result, many shipowners do not bother to claim demurrage except in cases of excessive delay, because the expense of proving their entitlement to demurrage in arbitral or judicial proceedings is often greater than the demurrage received at the end of the day. As it is in the commercial interests of both parties that their obligations be agreed as clearly as possible, modern charterparties usually provide either for fixed or for calculable laytime. Exceptions to laytime

[13.370]

Laytime runs continuously unless there is provision in the charterparty for its suspension in given circumstances. For example, if loading is delayed because of a strike at the loading port, the charterer must bear the cost of the delay unless the charterparty provides otherwise. Clauses suspending the running of laytime are often found in standard form charterparties. They are regarded as exclusion clauses and, as a result, are interpreted strictly contra proferentem.

Strike clauses

[13.380]

Perhaps the most common form of laytime exclusion clause is the strike clause.281 In this context, “strike” is given a broad interpretation, as was indicated by Lord Denning MR in Tramp Shipping Corp v Greenwich Marine Inc (The New Horizon):282 I think a strike is a concerted stoppage of work by men [sic] done with a view to improving their wages or conditions, or giving vent to a grievance or making a protest about something or other, or supporting or sympathising with other workmen in such endeavour.

Thus, strikes are not confined to stoppages of work in pursuit of better terms and conditions for the workers themselves. Go-slows283 and sympathy strikes284 both count as strikes. 280 J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [2-208]. 281 For a detailed consideration of the effect of the two most common strike clauses, the Gencon General Strike Clause and the Centrocon Strike Clause, see J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [4-315] to [4-437]. The Gencon General Strike Clause is considered in J Cooke, T Young and M Ashcroft, Voyage Charters (4th ed, Informa Law (Routledge), Oxford, 2014), Ch 25. 282 Tramp Shipping Corp v Greenwich Marine Inc (The New Horizon) [1975] 2 Lloyd’s Rep 314 at 317. 283 Tramp Shipping Corporation v Greenwich Marine Inc (The New Horizon) [1975] 2 Lloyd’s Rep 314 (CA). 284 J Vermaas’ Scheepvaartbedrijf NV v Association Technique de L’Importation Charbonniere (The Laga) [1966] 1 Lloyd’s Rep 582.

418

Shipping Law

[13.380]

The Gencon General Strike Clause285 provides that loading laytime shall not run while loading is interrupted by a strike or lock-out, unless the shipowner asks the charterer to declare that laytime shall be reckoned as if there were no strike or lock-out. If the charterer refuses to make such a declaration within 24 hours, and if no cargo has yet been loaded, the shipowner may either do nothing, in which case laytime will not run until the consequences of the strike are over,286 or it may cancel the contract. If, however, part of the cargo has been loaded when the strike or lock-out begins, the owner must then leave the port with the part cargo and carry it to the agreed destination, although it has liberty to fill the ship with other cargo on the way. Because of the breadth of the definition of strike, some standard form strike clauses are confined in their operation to strikes by certain types of workers. For example, the strike clause in the Centrocon form provides that laytime shall not run during a strike or lock-out of “any class of workmen essential to the berthing of the vessel or to the loading or discharging of cargo”. This clause was considered by the Supreme Court of Victoria in Dampskibsselskabet Torm A/S v Australian Wheat Board,287 where it was held that a strike by tug operators suspended the running of laytime. In order to be protected by a strike clause, the charterer must show that the delay that interrupted loading was caused by the strike. If there is a strike, but it is not the cause of the delay in loading, the charterer is not protected by the exclusion clause.288 Conversely, if the strike delays loading, but the delay continues after the strike has finished, the question whether laytime continues to be suspended depends upon the terms of the strike clause. The Gencon General Strike Clause refers to “the consequences of any strikes”,289 so laytime is suspended until the end of the delay caused by the strike, whether or not the strike itself finishes earlier.290 In contrast, the Centrocon Strike Clause confines the suspension of laytime to the duration of the strike itself.291 285 Gencon 1994, cl 16 (see Appendix 6). The Gencon Strike Clause makes different provision for a strike affecting discharging than for a strike affecting loading. 286 Central Argentine Railway Ltd v Marwood [1915] AC 981; Salamis Shipping (Panama) SA v Edm van Meerbeeck & Co SA (The Onisilos) [1971] 2 QB 500 (CA). See also Carboex SA v Louis Dreyfus Commodities Suisse SA [2012] 2 Lloyd’s Rep 379 (CA) (Amwelsh Coal Charter, decision to the same effect). 287 Dampskibsselskabet Torm A/S v Australian Wheat Board [1981] VR 145. 288 See, eg, Dampskibsselskabet Danmark (Owners of SS Helge) v Christian Poulsen & Co 1913 SC 1043. 289 Gencon 1994, cl 16 (see Appendix 6). The Gencon Strike Clause makes different provision for a strike affecting discharging than for a strike affecting loading. 290 Central Argentine Railway Ltd v Marwood [1915] AC 981; Salamis Shipping (Panama) SA v Edm van Meerbeeck & Co SA (The Onisilos) [1971] 2 QB 500 (CA). See also Carboex SA v Louis Dreyfus Commodities Suisse SA [2012] 2 Lloyd’s Rep 379 (CA) (Amwelsh Coal Charter, decision to the same effect). 291 See, eg, Dampskibsselskabet Torm A/S v Australian Wheat Board [1981] VR 145.

[13.390]

13 Voyage Charterparties

419

Because strike clauses are generally designed to relieve the parties of the consequences of what would otherwise be a breach of contract, they must be construed strictly contra proferentem.292 For example, in Cero Navigation Corp v Jean Lion & Cie (The Solon),293 Thomas J of the English High Court held that a clause providing “Strikes or lockouts of men … occurring beyond the control of the Shippers or Consignees, which may prevent or delay the loading and discharging the vessel, always excepted” did not prevent the running of laytime during a strike at the loading port, because it was not sufficiently clear that the clause was intended to provide an exception to laytime. The clause could sensibly be given content without it including an exception to the obligation to load within laytime, so it was confined to that narrower interpretation.294 In contrast, in Carboex SA v Louis Dreyfus Commodities Suisse SA,295 the strike clause provided that time should not count if caused by “strikes … beyond the control of the charterers”. The English Court of Appeal held that the clause was not confined only to strikes that directly interfered with cargo-handling operations once the vessel had berthed,296 but extended to delay in getting into berth because of congestion caused as a consequence of a strike of lorry drivers that affected cargo-handling operations. Although the Court of Appeal in Carboex did not refer to the earlier decision in The Solon, it is difficult to reconcile the two decisions, so Carboex should naturally be preferred, being a decision of an appellate court. Other exception clauses

[13.390]

Voyage charterparties may contain a broad array of exception clauses, either tailored for the particular voyage or the particular trade, or more general clauses excusing both parties for any delay caused by circumstances beyond their control. For particular tailored clauses, the question whether delay is excused is simply one of interpretation. For example, cl 8 of the widely-used tanker voyage charter standard form Asbatankvoy provides that in the event of “breakdown of machinery in or about the plant of the Charterer, supplier, shipper or consignee of the cargo”, the rate of demurrage shall be reduced by half. In Portolana Compania Naviera Ltd v Vitol SA Inc (The Afrapearl),297 discharge of a cargo of fuel oil was delayed at the port of Dakar, Senegal, because it was discovered that the sealine through which discharge was to be made to the consignee’s terminal was leaking. The owner argued that it was 292 Cero Navigation Corp v Jean Lion & Cie (The Solon) [2000] 1 Lloyd’s Rep 292 at 298-299 per Thomas J; Carboex SA v Louis Dreyfus Commodities Suisse SA [2012] 2 Lloyd’s Rep 379 (CA). 293 Cero Navigation Corp v Jean Lion & Cie (The Solon) [2000] 1 Lloyd’s Rep 292. 294 Cero Navigation Corp v Jean Lion & Cie (The Solon) [2000] 1 Lloyd’s Rep 292 at 298-299. 295 Carboex SA v Louis Dreyfus Commodities Suisse SA [2012] 2 Lloyd’s Rep 379 (CA). 296 Such as, eg, in Frontier International Shipping Corp v Swissmarine Corp Inc (The Cape Equinox) [2005] 1 Lloyd’s Rep 390. 297 Portolana Compania Naviera Ltd v Vitol SA Inc (The Afrapearl) [2004] 2 Lloyd’s Rep 305.

420

Shipping Law

[13.400]

entitled to full demurrage because there had been no “breakdown” of the sealine, which was broken before the ship arrived in Dakar. The English Court of Appeal rejected that argument, holding that there was a “breakdown” of the discharge pipe whenever it malfunctioned so as to cause excessive leakage. Similarly, in ED & F Man Sugar Ltd v Unicargo Transportgesellschaft mbH (The Ladytramp),298 the voyage charterparty, in the Sugar Charter Party 1999 form, provided that laytime should not count if loading of the vessel was prevented or delayed by “mechanical breakdowns at mechanical loading plants”. The ship had to wait for berth because the loading equipment had been damaged by fire. Distinguishing The Afrapearl, the English Court of Appeal held that the inoperability of the loading equipment was not caused by a “mechanical breakdown”, because the nature of the malfunction was not the mechanism of the loading equipment, but a wider or external cause. In contrast to the specifically-worded exclusion clauses considered in The Afrapearl and The Ladytramp, some standard form charterparties contain generally-worded exclusion clauses excusing both parties for any delay caused by circumstances beyond their control. Because of the contra proferentem principle of interpretation, these general clauses do not apply to laytime unless they expressly refer to the suspension of laytime,299 in language that is “very precise and clear”.300 Shifting from waiting anchorage to berth

[13.400]

Whether laytime counts during shifting from a waiting anchorage to berth depends first of all upon whether the charterparty is a berth charterparty or a port charterparty, which in turn affects whether the ship is still on the loading voyage while waiting for berth or whether laytime has already commenced.301 If laytime is running while the ship is waiting for berth (as is often the case), it continues to run during shifting from anchorage to berth unless the charterparty provides otherwise. Tanker charterparties usually provide for the suspension of laytime during shifting from anchorage to berth.302 298 ED & F Man Sugar Ltd v Unicargo Transportgesellschaft mbH (The Ladytramp) [2014] 1 Lloyd’s Rep 412. 299 Sametiet M/T Johs Stove v Istanbul Petrol Rafinerisi A/S (The Johs Stove) [1984] 1 Lloyd’s Rep 38 at 41 per Lloyd J; Caltex Oil (Australia) Pty Ltd v Howard Smith Industries Pty Ltd [1973] 2 NSWLR 89 (NSW CA). 300 Sametiet M/T Johs Stove v Istanbul Petrol Rafinerisi A/S (The Johs Stove) [1984] 1 Lloyd’s Rep 38 at 41 per Lloyd J; Cero Navigation Corp v Jean Lion & Cie (The Solon) [2000] 1 Lloyd’s Rep 292 at 294-297 per Thomas J. 301 See [13.170]–[13.190]. 302 See, eg, Asbatankvoy cl 7, considered in J Cooke, T Young and M Ashcroft, Voyage Charters (4th ed, Informa Law (Routledge), Oxford, 2014), Ch 57. The effect of this clause was considered in Portolana Compania Naviera Ltd v Vitol SA Inc (The Afrapearl) [2004] 2 Lloyd’s Rep 305. The clause does not cover shifting from the berth back to the anchorage or a second (or third) trip from the anchorage to the berth if the ship has to leave the berth during loading.

[13.410]

13 Voyage Charterparties

421

Shifting from berth to berth

[13.410]

If the charterparty specifies that loading shall take place at a single berth, or gives the charterer the right to nominate a single berth, the ship is not bound to shift to another berth once it has arrived at the nominated berth.303 Unless the charterparty specifically grants the charterer the right to order the ship to shift berths, the charterer must take the risk of the ship being unable to load at the nominated berth. If the ship is forced to shift to another berth, laytime continues to run during shifting, even if the ship is forced to shift by circumstances beyond the charterer’s control, such as an order of the port authorities.304

Tanker charterparties often contain clauses that grant the charterer the right to order the ship to shift from one berth to another. Such clauses usually make explicit what would otherwise be implicit, namely that laytime runs during shifting.305 The shipowner must bear the cost of shifting if the charterparty makes no provision for whom must pay shifting expenses, and/or if the ship is forced to shift by some circumstance other than the charterer’s order.306 The charterer is required to pay shifting expenses only if the charterparty specifically so provides307 and then only if the charterer has ordered the vessel to shift.308

303 King Line Ltd v Moxey, Savon & Co Ltd (1939) 62 Ll L Rep 252; Anglo-Danubian Transport Co Ltd v Ministry of Food (1950) 83 Ll L Rep 137; Venizelos ANE of Athens v Societe Commerciale de Cereales et Financieres SA of Zurich (The Prometheus) [1974] 1 Lloyd’s Rep 350 at 355 per Mocatta J; Batis Maritime Corp v Petroleos de Mediterraneo SA (The Batis) [1990] 1 Lloyd’s Rep 345; Bulk Shipping AG v Ipco Trading SA (The Jasmine B) [1992] 1 Lloyd’s Rep 39 at 42 per Judge Diamond QC; P v A [2008] 2 Lloyd’s Rep 415 at 419 [16] per David Steel J; ED & F Man Sugar Ltd v Unicargo Transportgesellschaft mbH (The Ladytramp) [2012] 2 Lloyd’s Rep 660 at 665 [12] per Eder J. 304 Cantiere Navale Triestina v Handelsvertretung der Russe Soviet Republik Naphtha Export [1925] 2 KB 172 (reported sub nom as The Dora (1925) 21 Ll L Rep 204). 305 See, eg, Asbantankvoy cl 9, considered in J Cooke, T Young and M Ashcroft, Voyage Charters (4th ed, Informa Law (Routledge), Oxford, 2014), Ch 59. 306 Cosmar Compania Naviera SA v Total Transport Corporation (The Isabelle) [1984] 1 Lloyd’s Rep 366 (CA) (affirming and adopting the judgment of Goff J in Cosmar Compania Naviera SA v Total Transport Corporation (The Isabelle) [1982] 2 Lloyd’s Rep 81). 307 Clause 9 of the Asbatankvoy form provides that the charterer must bear shifting expenses: see J Cooke, T Young and M Ashcroft, Voyage Charters (4th ed, Informa Law (Routledge), Oxford, 2014), Ch 59. See also, eg, Portolana Compania Naviera Ltd v Vitol SA Inc (The Afrapearl) [2004] 2 Lloyd’s Rep 305. 308 Cosmar Compania Naviera SA v Total Transport Corporation (The Isabelle) [1984] 1 Lloyd’s Rep 366 (CA) (affirming and adopting the judgment of Goff J in Cosmar Compania Naviera SA v Total Transport Corporation (The Isabelle) [1982] 2 Lloyd’s Rep 81).

422

Shipping Law

[13.420]

Use of the ship by the shipowner for other purposes In Stolt Tankers Inc v Landmark Chemicals SA (The Stolt Spur),309 laytime was suspended when the chartered ship left the waiting anchorage while waiting for berth, in order to discharge cargo for other parties. Andrew Smith J said:310

[13.420]

I consider that if a vessel is unavailable for cargo operations, it is natural to regard that in itself as preventing the loading or discharging of the vessel. It is a cause of any delay in cargo operations. … If a vessel is not available for the charterers’ cargo operations but being used by owners for their own purposes, there is no reason that they should pay compensation. She is not being detained by charterers.

Demurrage and despatch General principles

[13.430]

If the charterer does not complete loading within the laytime period, it must pay demurrage to the shipowner. Demurrage is liquidated damages for the charterer’s breach of contract in failing to load within laytime.311 If the charterparty does not provide for liquidated damages in the form of demurrage, or if it only provides for demurrage to be paid for a limited period which has been exceeded,312 the shipowner is entitled to recover unliquidated damages for detention of the chartered ship. Where the charterparty provides a rate for demurrage, that rate is often used as the appropriate rate for assessing unliquidated damages for detention,313 unless the charterer proves that the shipowner’s actual loss is less than the demurrage rate, or the shipowner proves that its loss is more. 309 Stolt Tankers Inc v Landmark Chemicals SA (The Stolt Spur) [2002] 1 Lloyd’s Rep 786. 310 Stolt Tankers Inc v Landmark Chemicals SA (The Stolt Spur) [2002] 1 Lloyd’s Rep 786 at 796. 311 See Dias Compania Naviera SA v Louis Dreyfus Corporation (The Dias) [1978] 1 Lloyd’s Rep 325 at 328 per Lord Diplock. Previously, it was not clear whether the charterer’s failure to load within laytime constituted breach: see, eg, Steel, Young & Co v Grand Canary Coaling Co (1902) 7 Com Cas 213 at 217 per Collins MR. See also Islamic Republic of Iran Shipping Lines v Royal Bank of Scotland plc (The Anna Ch) [1987] 1 Lloyd’s Rep 266 at 269 per Steyn J; Novorossisk Shipping Co v Neopetro Co Ltd (The Ulyanovsk) [1990] 1 Lloyd’s Rep 425 at 431 per Steyn J (who also referred to the alternative view, adopted in some countries, that demurrage is additional freight); Islamic Republic of Iran Shipping Lines v Ierax Shipping Co of Panama (The Forum Craftsman) [1991] 1 Lloyd’s Rep 81 at 87 per Hobhouse J. 312 Clause 7 of the older versions of the Gencon form provided for the limited period of ten running days on demurrage. This is not so in Gencon 1994, cl 7 (Appendix 6). With this important exception, most modern charterparties do not put a time limit on demurrage. 313 See, eg, Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1970] 2 Lloyd’s Rep 409 (aff’d on different grounds in Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1971] 2 Lloyd’s Rep 91), where the parties agreed to use the demurrage rate as the appropriate rate; Rashtriya Chemicals and Fertilizers Ltd v Huddart Parker Industries Ltd (The Boral Gas) [1988] 1 Lloyd’s Rep 342 at 346 per Evans J. For a detailed account of unliquidated damages for detention, see J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011), Ch 8.

[13.440]

13 Voyage Charterparties

423

Despatch (or dispatch) is the opposite of demurrage. If the charterer completes loading before the expiry of the laytime period, the charterparty may require the shipowner to pay to the charterer a sum known as despatch money by way of reward for prompt performance. Despatch money is payable only if there is express provision for it in the charterparty, but demurrage or unliquidated damages for detention are always payable if laytime is exceeded, as this detention is a breach of the charterparty. The amount and currency of demurrage

[13.440]

Standard form charterparties usually fix the amount of demurrage at a specified sum per day and pro rata for part of a day.314 “Day” means the same as it does in laytime clauses, namely a calendar day of 24 hours. Under such a clause, demurrage is payable for every calendar day (that is, for every running day) after the expiry of laytime, and for portions of a 24-hour day on a pro rata basis. If the charterparty does not provide for demurrage to be paid pro rata for fractions of a day, the shipowner is entitled to a full day’s demurrage for any part of a day on which the ship is detained.315 Tanker charterparties often provide for demurrage (and freight) by reference to an agreed international scale known as Worldscale. Freight and demurrage tables are published for a notional tanker of deadweight capacity of 75,000 metric tonnes, known as Worldscale 100.316 If the demurrage rate for a chartered tanker of deadweight capacity of 100,000 metric tonnes is expressed to be Worldscale 75, the rate per metric tonne is 75% of the published Worldscale 100 figure.317 In charterparties involving international carriage of goods, demurrage and freight rates are commonly expressed in US dollars. In English courts, judgment can be given for a sum of money expressed in a foreign currency by virtue of the decision of the House of Lords in Miliangos v George Frank (Textiles) Ltd.318 Arbitrators conducting an arbitration under English law may also express their award in foreign currency.319 If the plaintiff’s claim is for the sterling equivalent of a sum expressed in foreign 314 See, eg, Box 20 and cl 7 of the Gencon 1994 form (Appendix 6). 315 Commercial Steamship Co v Boulton (1875) LR 10 QB 346; South Australian Voluntary Wheat Pool v Owners of the Riol (1926) 24 Ll L Rep 363. 316 The original Worldscale notional ship, which was used from 1969 to 1988, was a tanker of 19,500 long tons deadweight: see J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [6.24] n 47. When the present Worldscale was first introduced on 1 January 1989, it was known for a while as “New Worldscale”, but the reference to “New” has been dropped over time. 317 The Worldscale Tanker Nominal Freight Scale is now available on the internet at a subscription site: http://www.worldscale.co.uk. 318 Miliangos v George Frank (Textiles) Ltd [1976] AC 443. 319 Arbitration Act 1996 (UK), s 48(4); Lesotho Highlands Development Authority v Impreglio SpA [2006] 1 AC 221.

424

Shipping Law

[13.440]

currency, conversion to sterling is calculated on the basis of the rate of exchange at the date when the court authorises enforcement of the judgment unless the charterparty expressly provides otherwise.320 This principle has been applied to demurrage payments expressed in US dollars even when freight payments under the same charterparty were expressed in pounds sterling.321 Thus, the rate of exchange of demurrage expressed in US dollars is taken at the date of payment and not the date when demurrage calculations are completed,322 unless the charterparty provides a different date for conversion.323 The Miliangos decision has yet to be considered in a reasoned decision by the High Court of Australia. In Chief Collector of Taxes Papua New Guinea v TA Field Pty Ltd,324 the High Court upheld the registration under Pt IV of the (now repealed) Service and Execution of Process Act 1901 (Cth) of a Papua New Guinea judgment expressed in kina, but at that time the kina was the currency of an Australian Territory authorised by Australian law. More recently, in European Bank Ltd v Evans,325 the High Court affirmed a judgment of the Supreme Court of New South Wales, which was originally given in US dollars, but which was subsequently converted by consent order into Australian dollars. The unanimous judgment of the High Court made no comment, positive or negative, about the propriety of the original judgment in US dollars. Although it is obviously possible to read too much into silence, one would think it more likely that the High Court would express its disapproval of the practice, if it indeed disapproved, than its express approval of a practice that has become routine.326 The practice has been accepted at the appellate level by the New South Wales Court of Appeal in Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co327 and State Bank of New South Wales Ltd v Swiss Bank Corp,328 by the Queensland Court of Appeal in Queensland v Northaus Trading Co Ltd,329 and by the Northern Territory Court of Appeal in Preti v 320 See, eg, President of India v Lips Maritime Corp [1988] AC 395 (reported sub nom as The Lips [1987] 2 Lloyd’s Rep 311). 321 George Veflings Rederi A/S v The President of India (The Bellami, The Pearl Merchant and the Doric Chariot) [1979] 1 Lloyd’s Rep 123 (CA). 322 George Veflings Rederi A/S v The President of India (The Bellami, The Pearl Merchant and the Doric Chariot) [1979] 1 Lloyd’s Rep 123 (CA). 323 See, eg, President of India v Lips Maritime Corp [1988] AC 395 (reported sub nom as The Lips [1987] 2 Lloyd’s Rep 311). 324 Chief Collector of Taxes Papua New Guinea v TA Field Pty Ltd (1975) 49 ALJR 351. 325 European Bank Ltd v Evans (2010) 240 CLR 432; 264 ALR 1. 326 In Uganda Telecom Ltd v Hi Tech Telecom Pty Ltd (2011) 277 ALR 441 at 445 [20], Foster J said that judgments in Australian courts are now “routinely given in a foreign currency”. 327 Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448 at 464 per Kirby P, at 472 per Hope JA. 328 State Bank of New South Wales Ltd v Swiss Bank Corp (1995) 39 NSWLR 350. 329 Queensland v Northaus Trading Co Ltd [1999] QCA 313 at [14] per Pincus JA, Moynihan and Atkinson JJ.

[13.450]

13 Voyage Charterparties

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Sahara Tours Pty Ltd.330 Examples at first instance can be found in the Federal Court, the Supreme Court of New South Wales, the Supreme Court of Victoria, the Supreme Court of Queensland, the Supreme Court of South Australia, the Supreme Court of Tasmania and the Supreme Court of Western Australia.331 In Victoria, the power of the Supreme Court to give judgment in foreign currency is implicitly accepted in the provisions of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 21.03(1.2), which refers to “a claim for the recovery of a debt or damages in a currency not Australian dollars”. Although the court has power to express a judgment in foreign currency, it is not required to do so.332 The duration of demurrage

[13.450]

Unless the charterparty itself provides for a specific duration for demurrage time,333 it continues to run until the charterparty is frustrated or is repudiated by the shipowner.334 Until frustration or repudiation, the shipowner must keep the chartered ship on demurrage at the loading port until loading is complete, as the only remedy for the charterer’s breach of contract is damages in the form of demurrage.335 330 Preti v Sahara Tours Pty Ltd [2008] NTCA 2 at [43] per Mildren, Thomas and Riley JJ. 331 Mitsui OSK Lines Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564 (reversed on other grounds: Candlewood Navigation Corporation v Mitsui Osk Lines (The Mineral Transporter and The Ibaraki Maru) [1986] AC 1); Maschinenfabrik Augsburg-Nuremburg AG v Altikar Pty Ltd [1984] 3 NSWLR 152; ANZ Banking Group Ltd v Cawood [1987] 1 Qd R 131; Foti v Banque Nationale de Paris (No 1) (1989) 54 SASR 354 at 430-432 per Legoe J; International Factors (Singapore) Pty Ltd v Speedy Tyres Pty Ltd [1991] Tas R (NC) N9; (1991) 5 ACSR 250; Westpac Banking Corp v MV Stone Gemini [1999] FCA 917 (final orders after decision at Westpac Banking Corp v MV Stone Gemini (1999) 110 FCR 47); Hong Kong Kapok Vacuum Flask Enterprises Pty Ltd v Megavest International Pty Ltd [2003] VSC 330; Tacko v Talacko [2009] VSC 579 (judgment given in euros); BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 4) (2009) 263 ALR 63 (FCA) (judgment given in both US and Australian dollars); Orica Australia Pty Ltd v Limit (No 2) Ltd (2011) ANZ Ins Cases 61-877; [2011] VSC 65 (judgment in US dollars); Uganda Telecom Ltd v Hi-Tech Telecom Pty Ltd (2011) 277 ALR 441 (FCA) (judgment in US dollars); Alstom Ltd v Sirakas [2012] NSWSC 1064 (judgment in euros); Hightime Investments Pty Ltd v Adamus Resources [2012] WASC 295 at [200] per Edelman J (obiter) (judgment could be given in US dollars). 332 Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (1989) 15 NSWLR 448 at 464 per Kirby P; Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd (No 2) [1998] VSC 135 at [11] per Byrne J; Preti v Sahara Tours Pty Ltd (2008) 22 NTLR 215 at [43] per Mildren, Thomas and Riley JJ. 333 Clause 7 of the older versions of the Gencon form provided for the limited period of ten running days on demurrage. This is not so in Gencon 1994, cl 7 (Appendix 6). With this important exception, most modern charterparties do not put a time limit on demurrage. 334 Inverkip Steamship Co Ltd v Bunge & Co [1917] 2 KB 198 at 201 per Scrutton LJ. 335 Dias Compania Naviera SA v Louis Dreyfus Corporation (The Dias) [1978] 1 Lloyd’s Rep 325 at 328 per Lord Diplock; Novorossisk Shipping Co v Neopetro Co Ltd (The Ulyanovsk) [1990]

426

Shipping Law

[13.460]

Clauses interrupting demurrage time

[13.460]

The general principle is often stated as “once on demurrage, always on demurrage”.336 Demurrage time runs without interruption once laytime has expired unless exclusion clauses in the charterparty specifically provide otherwise.337 The phrase “once on demurrage, always on demurrage” has been described as a shibboleth,338 and in Ellis Shipping Co v Voest Alpine Intertrading (The Lefthero),339 Lloyd LJ expressed the view that it might be better if the use of the maxim were confined to the operation of laytime exceptions strictly so called, such as “Sundays and holidays excepted” (SHEX),340 which do not apply once laytime has expired. Lloyd LJ expressed this view because the use of the maxim has tended to confuse rather than clarify the issue in cases of exclusion clauses interrupting the running of demurrage time. When applied to the operation of exclusion clauses on the running of demurrage time, the maxim “once on demurrage, always on demurrage” is merely an example of the general principle of interpretation that an ambiguous exclusion clause provides no protection for the party seeking to rely on it.341 Thus, an exclusion clause in the charterparty interrupts the running of demurrage time only if it contains precise and clear words to 1 Lloyd’s Rep 425 at 431 per Steyn J. For an example of a court considering whether the charter was frustrated by delay at the port of discharge, see DGM Commodities Corp v Sea Metropolitan SA (The Andra) [2012] 2 Lloyd’s Rep 587. 336 In Ellis Shipping Co v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109 at 113, Lloyd LJ said that the phrase “has received judicial blessing from time to time”: see, eg, Superfos Chartering A/S v NBR (London) Ltd (The Saturnia) [1987] 2 Lloyd’s Rep 43 at 46 per Sir John Donaldson MR; President of India v NG Livanos Maritime Co (The John Michalos) [1987] 2 Lloyd’s Rep 188 at 190 per Leggatt J; Islamic Republic of Iran Shipping Lines v Ierax Shipping Co of Panama (The Forum Craftsman) [1991] 1 Lloyd’s Rep 81 at 83 per Hobhouse J; Metall Market OOO v Vitorio Shipping Co Ltd (The Lehmann Timber) [2013] 2 Lloyd’s Rep 541 at 571 [114] per Sir Bernard Rix (with whom Arden and Patten LJJ agreed). 337 “When once a vessel is on demurrage no exceptions will operate to prevent demurrage continuing to be payable unless the exceptions clause is clearly worded so as to have that effect”: this passage from W McNair and A Mocatta, Scrutton on Charterparties (16th ed, Sweet & Maxwell, London, 1955) was approved in Compania Naviera Aeolus SA v Union of India [1964] AC 868 at 879 per Lord Reid (reported sub nom as The Spalmatori [1962] 2 Lloyd’s Rep 175); Dias Compania Naviera SA v Louis Dreyfus Corp (The Dias) [1978] 1 Lloyd’s Rep 325 at 328 per Lord Diplock; Marc Rich & Co Ltd v Tourloti Compania Naviera SA (The Kalliopi A) [1988] 2 Lloyd’s Rep 101 at 106 per Staughton LJ. It now appears in B Eder et al, Scrutton on Charterparties (22nd ed, Sweet & Maxwell, London, 2011), p 307 at [14-011]. 338 See Marc Rich & Co Ltd v Tourloti Compania Naviera SA (The Kalliopi A) [1988] 2 Lloyd’s Rep 101 at 106 per Staughton LJ. 339 Ellis Shipping Co v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109 at 114. See also Cero Navigation Corp v Jean Lion & Cie (The Solon) [2000] 1 Lloyd’s Rep 292 at 297 per Thomas J (rule can “make for a lack of clarity”; best confined to the proposition that express exceptions to laytime do not apply when ship is on demurrage). 340 See [13.310]. 341 Marc Rich & Co Ltd v Tourloti Compania Naviera SA (The Kalliopi A) [1988] 2 Lloyd’s Rep 101 at 106 per Staughton LJ; Ellis Shipping Co v Voest Alpine Intertrading (The Lefthero)

[13.460]

13 Voyage Charterparties

427

that effect.342 For example, in Societe Anonyme Marocaine de L’Industrie du Raffinage v Notos Maritime Corporation (The Notos),343 the charterparty contained a clause that provided “if vessel is on demurrage, demurrage shall not accrue, for any delay … or any other cause of whatever nature or kind over which the Charterer has no control”. The House of Lords held that the clause relieved the charterer of liability to pay demurrage for periods when heavy swells interrupted discharging through sealines, because swells were beyond the charterers’ control. In contrast, in Marc Rich & Co Ltd v Tourloti Compania Naviera SA (The Kalliopi A),344 the Court of Appeal held that a charterparty clause providing that specified perils were “always mutually excepted” was not sufficiently clear and precise to relieve the charterer of the obligation to pay demurrage. Although it is possible for an exclusion clause to interrupt the running of demurrage time without specifically referring to demurrage,345 such cases must be regarded as exceptional. If the clause can sensibly be construed as applying to obligations or liabilities other than demurrage, it will not be construed as relieving the charterer of the liability to pay demurrage.346 In most cases, the requisite freedom from ambiguity can only be provided by terms such as those used in The Notos. [1992] 2 Lloyd’s Rep 109 at 112 per Lloyd LJ, both relying on an observation of Lord Diplock in Dias Compania Naviera SA v Louis Dreyfus Corporation (The Dias) [1978] 1 Lloyd’s Rep 325 at 328, who in turn cited Compania Naviera Aeolus SA v Union of India [1964] AC 868 at 899 per Lord Guest (The Spalmatori). Because the charterer is the party seeking to rely on the clause, it is for the charterer to show that it is applicable in the circumstances: see Islamic Republic of Iran Shipping Lines v Ierax Shipping Co of Panama (The Forum Craftsman) [1991] 1 Lloyd’s Rep 81 at 83 per Hobhouse J. 342 Islamic Republic of Iran Shipping Lines v Ierax Shipping Co of Panama (The Forum Craftsman) [1991] 1 Lloyd’s Rep 81 at 83 per Hobhouse J. See also Cero Navigation Corp v Jean Lion & Cie (The Solon) [2000] 1 Lloyd’s Rep 292 at 297 per Thomas J: “When the question is whether a general exception clause applies to excuse performance of the relevant obligation during laytime or demurrage, the rule ‘once on demurrage always on demurrage’ is not relevant; it is the general principle that an ambiguous clause is no protection which applies.” 343 Societe Anonyme Marocaine de L’Industrie du Raffinage v Notos Maritime Corporation (The Notos) [1987] 1 Lloyd’s Rep 503 (HL). 344 Marc Rich & Co Ltd v Tourloti Compania Naviera SA (The Kalliopi A) [1988] 2 Lloyd’s Rep 101. This decision was followed in Islamic Republic of Iran Shipping Lines v Ierax Shipping Co of Panama (The Forum Craftsman) [1991] 1 Lloyd’s Rep 81 in relation to a clause providing that perils were “always excepted”. 345 See, eg, President of India v NG Livanos Maritime Co (The John Michalos) [1987] 2 Lloyd’s Rep 188. Although The John Michalos is the only reported case to this effect, there may one day be others: see Marc Rich & Co Ltd v Tourloti Compania Naviera SA (The Kalliopi A) [1988] 2 Lloyd’s Rep 101 at 106 per Staughton LJ. 346 Islamic Republic of Iran Shipping Lines v Ierax Shipping Co of Panama (The Forum Craftsman) [1991] 1 Lloyd’s Rep 81 at 87 per Hobhouse J. See also Nippon Yusen Kaisha v SA Marocaine de L’Industrie Du Raffinage (The Tsukuba Maru) [1979] 1 Lloyd’s Rep 459; Superfos Chartering A/S v NBR (London) Ltd (The Saturnia) [1987] 2 Lloyd’s Rep 43 (CA) (a decision on the strike clause in the Gencon form (cl 16, Appendix 6)). In Cero Navigation Corp v Jean Lion & Cie (The Solon) [2000] 1 Lloyd’s Rep 292, Thomas J came to the same conclusion about the operation of an ambiguous clause in relation to the running of laytime.

428

Shipping Law

[13.470]

In some cases, the application of the general principle of interpretation can be justified by reference to the principles of causation: if the ship had not been delayed beyond laytime by the charterer’s breach of contract, the peril excluded by the charterparty term would have no causative effect, as the ship would have left the port by the time it came into operation.347 However, the causative justification is not applicable if the excepted peril is already in operation during laytime, before demurrage commences. Nevertheless, the general principle of interpretation still applies in such a case.348 To this extent, then, it is misleading to use the maxim “once on demurrage, always on demurrage” to describe the general principle of interpretation in this context, because the principle applies whether or not the ship is on demurrage when the excepted peril becomes effective. Some charterparties contain exclusion clauses that do not relieve the charterer of the obligation to pay demurrage, but reduce the rate of demurrage to half in the specified circumstances. Clauses such as this are also applied strictly contra proferentem. For example, it was held in Sametiet M/T Johs Stove v Istanbul Petrol Rafinerisi A/S (The Johs Stove),349 that the clause “If … demurrage shall be incurred at ports of loading … by a strike … the rate of demurrage shall be reduced one-half of the amount …” did not apply where the delay in loading was caused not by the long-term strike itself, but by congestion following it. The charterer had to pay demurrage at the full rate.350 The effect of shipowner “default”

[13.470]

It is not only exclusion clauses that can interrupt the running of laytime or demurrage time. The running of laytime or demurrage time is also interrupted if the reason for the delay is some default on the part of the shipowner, which includes an act done for its own purposes.351 For example, in Re Ropner Shipping Co Ltd and Cleeves Western Valleys

347 See, eg, Compania Naviera Aeolus SA v Union of India [1964] AC 868 (The Spalmatori) at 896 per Lord Hodson; Superfos Chartering A/S v NBR (London) Ltd (The Saturnia) [1987] 2 Lloyd’s Rep 43 at 46 per Sir John Donaldson MR; Marc Rich & Co Ltd v Tourloti Compania Naviera SA (The Kalliopi A) [1988] 2 Lloyd’s Rep 101 at 106 per Staughton LJ; Islamic Republic of Iran Shipping Lines v Ierax Shipping Co of Panama (The Forum Craftsman) [1991] 1 Lloyd’s Rep 81 at 87 per Hobhouse J. Compare President of India v NG Livanos Maritime Co (The John Michalos) [1987] 2 Lloyd’s Rep 188, where an argument based on causation was rejected on the facts. 348 Marc Rich & Co Ltd v Tourloti Compania Naviera SA (The Kalliopi A) [1988] 2 Lloyd’s Rep 101; Ellis Shipping Co v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109. 349 Sametiet M/T Johs Stove v Istanbul Petrol Rafinerisi A/S (The Johs Stove) [1984] 1 Lloyd’s Rep 38. 350 Compare the decision in Portolana Compania Naviera Ltd v Vitol SA Inc (The Afrapearl) [2004] 2 Lloyd’s Rep 305, considered at [13.390]. 351 Triton Navigation Ltd v Vitol SA (The Nikmary) [2004] 1 Lloyd’s Rep 55 at 65 [28] per Mance LJ (with whom Mummery and Simon Brown LJJ agreed).

[13.470]

13 Voyage Charterparties

429

Anthracite Collieries Ltd,352 the shipowner removed the chartered ship for bunkering (that is, loading fuel) while it was on demurrage, before loading was complete. The English Court of Appeal held that demurrage was not payable for the period when the ship was bunkering. Bankes LJ said:353 In my opinion, this being a claim for demurrage in respect of detention of the vessel by the charterers, it does not lie in the mouth of the owners to say that the vessel was being detained by the charterers during the time that they, the owners, for their own convenience, were bunkering.

Similarly, in Stolt Tankers Inc v Landmark Chemicals SA (The Stolt Spur),354 it was held that laytime and demurrage time were suspended when the chartered ship undertook cargo operations (loading and discharging) for other parties while waiting for berth to discharge the charterer’s cargo.355 The principle operates in the same way if the chartered ship is delayed by the negligence of the shipowner’s employees after laytime has expired: the charterer is not obliged to pay demurrage.356 For example, in Blue Anchor Line Ltd v Alfred C Toepfer International GmbH (The Union Amsterdam),357 the charterer was not obliged to pay demurrage in respect of a period of five days when the ship was aground after laytime had expired, because it was held that the grounding had been caused by the negligence of the shipowner’s employees, the master and crew. In this context, “default” by the shipowner is not necessarily to be equated with breach of contract by it. The shipowner is not in default for these purposes, and demurrage continues to run, if the shipowner does some act that constitutes a breach of contract in circumstances where it is protected from liability for that breach by an exclusion clause in the charterparty.358 Conversely, the running of laytime or demurrage may be interrupted by an action of the shipowner that does not constitute a breach of contract on its part.359 352 Re Ropner Shipping Co Ltd and Cleeves Western Valleys Anthracite Collieries Ltd [1927] 1 KB 879 (CA). 353 Re Ropner Shipping Co Ltd and Cleeves Western Valleys Anthracite Collieries Ltd [1927] 1 KB 879 at 887-888. 354 Stolt Tankers Inc v Landmark Chemicals SA (The Stolt Spur) [2002] 1 Lloyd’s Rep 786. 355 The ship shifted from the waiting anchorage to discharge other cargoes while waiting on laytime, and also to load other cargoes after laytime had expired. 356 Harris v Best, Ryley & Co (1892) 68 LT 76 (CA). 357 Blue Anchor Line Ltd v Alfred C Toepfer International GmbH (The Union Amsterdam) [1982] 2 Lloyd’s Rep 432. 358 Cantiere Navale Triestina v Handelsvertretung der Russe Soviet Republik Naphtha Export [1925] 2 KB 172 (reported sub nom as The Dora (1925) 21 Ll L Rep 204); Islamic Republic of Iran Shipping Lines v Royal Bank of Scotland plc (The Anna Ch) [1987] 1 Lloyd’s Rep 266; Ellis Shipping Corp v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109. 359 Total Transport Corporation v Amoco Trading Co (The Altus) [1985] 1 Lloyd’s Rep 423 at 430 per Webster J; Triton Navigation Ltd v Vitol SA (The Nikmary) [2004] 1 Lloyd’s Rep 55 at 65 [28] per Mance LJ (with whom Mummery and Simon Brown LJJ agreed).

430

Shipping Law

[13.480]

In the absence of special provision to the contrary, if the charterparty provides for loading at two ports or berths, and if the ship exceeds the total permitted laytime at the first port or berth, so that it is already on demurrage when it leaves for the second port or berth, demurrage time does not run while the ship is sailing from the first port or berth to the second port or berth, because it is not then being detained by the charterer.360 Liability to pay demurrage

[13.480]

The obligation to pay demurrage falls on the charterer unless the charterparty provides otherwise. Where the charterer is the shipper of the goods carried under the charterparty, and where it sells them to a receiver while they are at sea, the charterparty often provides that the receiver shall be liable for demurrage at the discharging port, and that demurrage shall be settled directly between the receiver and the shipowner. Even if the charterparty does provide that the receiver is liable for demurrage, the charterer is not thereby relieved of liability unless the charterparty also contains a cesser clause that gives the shipowner an effective lien for demurrage.361 In the absence of such a clause, the shipowner can still recover demurrage from the charterer,362 unless the charterparty makes it clear that the charterer is contracting solely as agent for the receiver, in which case the receiver is the true charterer, and is solely liable for demurrage.363 Strictly speaking, the charterer is not liable to pay demurrage if the receiver does not do so, but rather to pay damages for breach of its promise to the shipowner that the receiver will pay demurrage, but the end result is the same.364 The fact that the charterparty provides that the receiver shall pay demurrage cannot, in itself, impose an obligation on the receiver if it is not party to the charterparty contract. The receiver is under an obligation to pay demurrage only if there is a contract between it and the shipowner containing such an obligation. If such a contract exists at all, it is in the terms of the bill of lading or other sea-carriage document issued by the shipowner, not the charterparty.365 If the rights and obligations of the sea-carriage document issued by the shipowner to the charterer-shipper 360 Breynton (Owners) v Theodoridi & Co (1924) 19 Ll L Rep 409. 361 For a consideration of cesser clauses, see [13.570]. 362 Gerani Compania Naviera SA v Alfred C Toepfer (The Demosthenes V) (No 2) [1982] 1 Lloyd’s Rep 282. 363 In Tudor Marine Ltd v Tradax Export SA (The Virgo) [1976] 2 Lloyd’s Rep 135 (CA) and Etablissement Biret Et Cie SA v Yukiteru Kaiun KK and Nissui Shipping Corporation (The Sun Happiness) [1984] 1 Lloyd’s Rep 381, it was held that the charterer-shipper had not contracted solely as agent for the receiver. 364 See Gerani Compania Naviera SA v Alfred C Toepfer (The Demosthenes V) (No 2) [1982] 1 Lloyd’s Rep 282 at 285 per Staughton J. 365 For a consideration of sea-carriage documents for goods on voyage-chartered ships, see [12.700]–[12.710].

[13.490]

13 Voyage Charterparties

431

are transferred to the receiver,366 the receiver becomes liable for demurrage under that sea-carriage document if the document expressly so provides (which it seldom does),367 or if it incorporates the terms of the charterparty by reference and the charterparty contains a clause providing that demurrage shall be paid by the charterer or the holder of the sea-carriage document.368 If the charterparty merely provides that demurrage shall be paid by the charterer, the receiver is not liable to pay demurrage, even if the terms of the charterparty are incorporated into the bill of lading.369 Where the charterer is the receiver and purchaser of the goods, the charterparty may provide that the shipper is liable for demurrage at the loading port, although this is less common than the situation where the charterparty provides for discharge port demurrage to be paid by the receiver. For the reasons stated above, the shipper is liable to pay demurrage only if the sea-carriage document issued by the shipowner imposes an obligation on it to do so, either by expressly so providing, or by incorporating appropriately-drafted terms from the charterparty. If the shipper does not pay demurrage, the charterer-receiver is liable to the shipowner for breach of its promise that the shipper will pay demurrage.370 Limitation of time for making a claim for demurrage

[13.490]

Voyage charterparties often provide a limitation period within which claims for demurrage must be made. For example, the Shellvoy 5 and Shellvoy 6 standard forms for tanker voyage charterparties provide that the shipowner must notify the charterer within 60 days after completion of discharge if demurrage has been incurred, and that “any demurrage claim shall be fully and correctly documented, and received by Charterers” within 90 days after completion of discharge. In AET Inc Ltd v Arcadia Petroleum Ltd (The Eagle Valencia),371 the shipowner sent the charterer documentation supporting a demurrage claim based upon calculations that referred to a notice of readiness (NOR) that subsequently proved to be invalid because the ship had not received free pratique

366 For a detailed consideration of transfer of the rights and obligations under a sea-carriage document, see [12.670]–[12.680]. 367 The demurrage clause in the Conlinebill 2016 form (Appendix 1) is an optional clause, included only if the parties expressly so agree. 368 Incorporation of charterparty terms into bills of lading is dealt with in detail at [12.720]. 369 Miramar Maritime Corp v Holborn Oil Trading Ltd [1984] AC 676. 370 See Gerani Compania Naviera SA v Alfred C Toepfer (The Demosthenes V) (No 2) [1982] 1 Lloyd’s Rep 282 at 285 per Staughton J. 371 AET Inc Ltd v Arcadia Petroleum Ltd (The Eagle Valencia) [2010] 2 Lloyd’s Rep 257.

432

Shipping Law

[13.490]

within six hours of giving NOR.372 Although the ship did give later, valid, notices of readiness after receiving free pratique, the shipowner did not send the charterer documentation supporting alternative demurrage claims based on those notices. The English Court of Appeal held that the shipowner was not entitled to any demurrage, because it had not complied with the contractual 90-day period for providing documentation to support a valid demurrage claim. In the light of the decision in The Eagle Valencia, it is important to determine whether the shipowner has provided the charterer with all the documents necessary to substantiate the demurrage claim within the 90-day time limit. In National Shipping Co of Saudi Arabia v BP Oil Supply Co (The Abqaiq),373 the English Court of Appeal held that the equivalent requirement in the BPVoy 4 form was satisfied, even though the shipowner had sent the supporting documentation separately from the demurrage invoice; both had been sent within the 90-day period, and taken together, they gave the charterer everything it needed to know. In Kassiopi Maritime Co Ltd v Fal Shipping Co Ltd (The Adventure),374 it was held that a contractual requirement in BPVoy 4 for “all supporting documentation substantiating each and every constituent part of the [demurrage] claim” had been satisfied by the shipowner providing the charterers with “the factual material which they required in order to satisfy themselves that the claim was well-founded”.375 That information includes, but is not limited to, a copy of the notice of readiness. Referring to the documents held in The Abqaiq to be sufficient for these purposes, Hamblen J said in The Adventure that the requirement for “all supporting documentation” would be satisfied by “(1) a summary demurrage report, plus detailed demurrage reports …; (2) notice of readiness, port log, statement of facts and master’s letters of protest …; and (3) notice of readiness, statement of facts, discharging log, timesheet, master’s letter of protest and pumping log”.376 Whether anything less than this would be acceptable remains to be decided. Obviously, however, a contractual requirement to provide “all supporting documentation” within 90 days is fairly onerous, and The Eagle Valencia suggests that failure to comply is 372 The relevant provision is known as the “Clearance Clause”. See, eg, Shellvoy 6, cl 13(1)(a), lines 217-227. The wording in question was first introduced into Shellvoy 5 as the additional Clearance Clause, which had to be incorporated by reference from the Shell Additional Clauses 1999. See, eg, AET Inc Ltd v Arcadia Petroleum Ltd (The Eagle Valencia) [2010] 2 Lloyd’s Rep 257. 373 National Shipping Co of Saudi Arabia v BP Oil Supply Co (The Abqaiq) [2012] 1 Lloyd’s Rep 18. 374 Kassiopi Maritime Co Ltd v Fal Shipping Co Ltd (The Adventure) [2015] 1 Lloyd’s Rep 473. 375 Kassiopi Maritime Co Ltd v Fal Shipping Co Ltd (The Adventure) [2015] 1 Lloyd’s Rep 473 at 481 [37] per Hamblen J, quoting National Shipping Co of Saudi Arabia v BP Oil Supply Co (The Abqaiq) [2012] 1 Lloyd’s Rep 18 at 32 [65] per Longmore LJ. 376 Kassiopi Maritime Co Ltd v Fal Shipping Co Ltd (The Adventure) [2015] 1 Lloyd’s Rep 473 at 481 [39] per Hamblen J, referring to National Shipping Co of Saudi Arabia v BP Oil Supply Co (The Abqaiq) [2012] 1 Lloyd’s Rep 18 at 23 [15] per Longmore LJ.

[13.500]

13 Voyage Charterparties

433

fatal to a demurrage claim, even if the shipowner has clearly informed the charterer that it believes itself to be entitled to demurrage. Despatch

[13.500]

Despatch is payable by the shipowner to the charterer only if the charterparty expressly so provides. Despatch clauses are not as common as demurrage clauses. Where the charterparty does provide for despatch, it is usually at half the rate for demurrage, because it is usually less to the shipowner’s advantage to have the ship at its disposal earlier than expected than it is to its disadvantage for the ship to be detained beyond the expected time.377

Despatch clauses usually provide that despatch is payable for “all time saved” or “any time saved”. The effect of such a clause is that the shipowner pays money to the charterer for all time saved to the ship, calculated in the same way as demurrage time is calculated, without taking account of laytime exceptions.378 Thus, for example, Sundays count as despatch days even if they do not count as laydays.379 Further, time saved earns despatch whether or not it saves working time. For example, in Themistocles (Owners) v Compagnie Intercontinentale de L’Hyperphosphate of Tangier (The Themistocles),380 the “Themistocles” was chartered to carry phosphate from Sfax and Casablanca to one or two safe ports in Finland. The “Themistocles” was loaded so quickly at both ports that it had completed loading at both before the laytime period at Sfax, the first port, had elapsed. Morris J rejected the shipowners’ contention that they were only obliged to pay despatch for working time saved, saying that the expression “all time saved” in the despatch clause meant all calendar time saved.381 He held that the charterers were entitled to despatch for the total calendar time saved, even though the calendar days saved at Casablanca were the same calendar days that were saved at Sfax. The ship had loaded before the expiry of laytime at each port and was entitled to despatch at each port, regardless of the fact that loading was being done at Casablanca while laytime was still running at Sfax. Such a result is avoided if the charterparty provides that the shipowner must pay despatch for “all working time saved”. Under such a clause, Sundays, holidays and other non-working days are excluded from 377 See Navico AG v Vrontados Naftiki Etairia PE [1968] 1 Lloyd’s Rep 379 at 383 per Donaldson J. 378 Mawson Steamship Co Ltd v Beyer [1914] 1 KB 304 at 312 per Bailhache J. 379 Mawson Steamship Co Ltd v Beyer [1914] 1 KB 304. 380 Themistocles (Owners) v Compagnie Intercontinentale de L’Hyperphosphate of Tangier (The Themistocles) (1949) 82 LI L Rep 232. 381 Themistocles (Owners) v Compagnie Intercontinentale de L’Hyperphosphate of Tangier (The Themistocles) (1949) 82 LI L Rep 232 at 240.

434

Shipping Law

[13.510]

despatch time, and despatch is calculated on the basis of the given rate per day and pro rata for each part of a day on which working time is saved.382 If the charterparty provides for reversible laytime, the charterer is entitled both to claim despatch for any days saved in loading (if the charterparty provides for payment of despatch on loading), and also to credit those days towards the permitted laytime for discharging.383

Loading the cargo [13.510]

The quantity and nature of the cargo to be carried under a voyage charterparty are of great significance, as are the arrangements for loading and unloading. The amount of the cargo and the manner in which it is to be loaded and unloaded affect the time taken to complete the voyage charterparty venture and the amount of spare space on the ship, both of which affect the commercial viability of the venture. The charterer’s fundamental obligation at this stage is to provide the cargo. The other obligations with respect to loading and unloading the cargo are allocated between the parties by agreement.

The charterer’s obligation to provide the cargo General principles

[13.520]

The charterer’s obligation is to provide the agreed amount of the agreed type of cargo. That obligation is absolute and non-delegable; exclusion clauses in the charterparty will normally be read as protecting a charterer only in respect of its duty to load rather than its absolute duty to provide cargo, although they may cover the latter if sufficiently clear and distinct words are used.384 For example, the phrase “subject to stem” or “sub stem” is sometimes used in voyage charter fixture recaps; the word “stem” is an abbreviation meaning “subject to enough merchandise”. If the charterparty is fixed “sub stem”, the charterer is not in breach if it fails to load a cargo,385 but any other expression does not have the same effect. For example, in Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd,386 the charterer agreed to load a cargo of coal “as contracted under the relevant sales contract”. Kiefel J of the Federal Court held that 382 Thomasson Shipping Co Ltd v Peabody & Co Ltd [1959] 2 Lloyd’s Rep 297. For the calculation of working time saved on a pro rata basis, see [13.280]. 383 Z Steamship Co Ltd v Amtorg, New York (1938) 61 Ll L Rep 97. The charterer cannot claim discharge despatch for time carried over from loading if the charterparty provides only for despatch on discharging time saved: see Rowland & Marwood’s Steamship Co Ltd v Wilson, Sons & Co Ltd (1897) 2 Com Cas 198. 384 Triton Navigation Ltd v Vitol SA (The Nikmary) [2004] 1 Lloyd’s Rep 55 at 60 per Mance LJ. 385 Kokusai Kisen Kabushiki Kaisha v Johnson (1921) 8 Ll L Rep 434; Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd (2006) 236 ALR 115 at 129 [58] per Kiefel J. 386 Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd (2006) 236 ALR 115.

[13.520]

13 Voyage Charterparties

435

this phrase did not make the charterer’s obligation to load under the charterparty conditional upon conclusion of a sales contract. The charterer is in breach of contract if it loads a cargo of a different type from that agreed, and is liable for any loss the shipowner suffers as a result, such as damage to the ship,387 increased costs of loading or discharging the cargo,388 or the difference between the freight for the cargo actually loaded and the freight for the agreed cargo, if the former is less than the latter.389 If the freight for the cargo actually loaded is higher than the freight for the agreed cargo, the shipowner is entitled only to nominal damages unless the court can imply a contract to carry the cargo actually loaded at the market rate, in which case the shipowner is entitled to freight at the market rate.390 By agreeing to carry cargo of a certain description, the shipowner is taken to accept any known risks of danger posed by that cargo, so the charterer is not in breach of contract if the shipowner suffers loss as a result of those known risks eventuating.391 If the agreed cargo poses a known risk of danger, but the cargo actually loaded poses a special risk that is different in degree, rather than in kind, from that known risk, the cargo is outside the contractual description, and the charterer is in breach of the charterparty contract,392 although the difference in degree must approximate a difference in kind for this to be so.393 For example, in General Feeds Inc v Burnham Shipping Corp (The Amphion),394 it was held that the charterer had breached its obligation to load “anti-oxidant treated fishmeal” by loading a cargo of fishmeal that included a small quantity which had been improperly treated with anti-oxidant, because the cargo actually loaded posed a greater risk of combustion than a cargo of properly-treated fishmeal. If the agreed cargo does not pose any known risk of danger, but the cargo actually loaded causes damage to the ship or some other loss to the shipowner, the shipowner can establish prima facie that the cargo actually

387 The Athanasia Comninos (1979) [1990] 1 Lloyd’s Rep 277. 388 General Feeds Inc v Burnham Shipping Corp (The Amphion) [1991] 2 Lloyd’s Rep 101; Islamic Investment Co 1 SA v Transorient Shipping Ltd (The Nour) [1999] 1 Lloyd’s Rep 1 (CA). 389 Potter & Co v New Zealand Shipping Co Ltd (1895) 64 LJQB 689. 390 Steven v Bromley & Son [1919] 2 KB 722 (CA). 391 General Feeds Inc v Burnham Shipping Corp (The Amphion) [1991] 2 Lloyd’s Rep 101 at 106 per Evans J. 392 General Feeds Inc v Burnham Shipping Corp (The Amphion) [1991] 2 Lloyd’s Rep 101 at 105 per Evans J. 393 The Athanasia Comninos (1979) [1990] 1 Lloyd’s Rep 277 at 283 per Mustill J, citing Atlantic Oil Carriers Ltd v British Petroleum Co (The Atlantic Duchess) [1957] 2 Lloyd’s Rep 55. 394 General Feeds Inc v Burnham Shipping Corp (The Amphion) [1991] 2 Lloyd’s Rep 101.

436

Shipping Law

[13.520]

loaded did not conform with the contractual description simply by proving that the cargo was carried in accordance with the rules of safe carriage.395 If the charterer refuses to load the ship at all, either expressly or by implication, the shipowner is entitled to treat the charterparty as at an end from the moment of refusal, without having to wait until the end of the permitted period of laytime,396 and may recover damages for the charterer’s anticipatory breach.397 The charterparty may specify the amount of cargo to be loaded by the charterer. This is usually done within a range of tolerance, such as 10% MOLCHOPT (more or less at charterer’s option) or 10% MOLOO (more or less at owner’s option). If the charterer loads less than the agreed amount, or less than the smallest permitted amount in the case of a range,398 it must pay damages known as deadfreight, which is freight for the difference between the amount loaded and the agreed amount.399 Alternatively, the charterparty may merely provide that the charterer must load a “full and complete cargo”, in which case the charterer must fill the ship’s entire carrying capacity, or pay deadfreight.400 The charterer has a right as well as an obligation to load the agreed amount of cargo. In Margaronis Navigation Agency Ltd v Henry W Peabody & Co of London Ltd,401 the charterer was under an obligation to load a full and complete cargo of maize, not more than 12,600 tons402 and not less than 11,400 tons. After three working days of loading, the ship had loaded 12,588 tons and 4 hundredweight. The charterers then suspended loading for three days before loading the final 11 tons and 16 hundredweight, which were loaded within laytime. The shipowners contended that the ship had loaded a full and complete cargo at the end of the first three days, and that the charterer had wrongfully detained the ship thereafter. It was held that the charterers had a right as well as an obligation to load up to 12,600 tons of cargo, and that they were entitled to detain the ship until the end of laytime to load the full amount. 395 General Feeds Inc v Burnham Shipping Corp (The Amphion) [1991] 2 Lloyd’s Rep 101 at 306 per Evans J. 396 See Hochster v De la Tour (1853) 2 El & Bl 678; 118 ER 922; Frost v Knight (1872) LR 7 Ex 111; Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401 at 436-437 per Devlin J. 397 For a consideration of damages for failure to load, see [13.550]. 398 See Abrahams v Herbert Reiach Ltd [1922] 1 KB 477; Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 156 per McHugh JA. See also Maredelanto Compania Naviera SA v Bergbau-Handel GmbH; The Mihalis Angelos [1971] 1 QB 164; SIB International SRL v Metallgesellschaft Corp (The Noel Bay) [1989] 1 Lloyd’s Rep 361 at 363 per Staughton LJ; TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130. 399 Deadfreight is considered at [13.540]. 400 The obligation to load a “full and complete cargo” is considered at [13.530]. 401 Margaronis Navigation Agency Ltd v Henry W Peabody & Co of London Ltd [1965] 1 QB 300. 402 Of 2240 lbs.

[13.530]

13 Voyage Charterparties

437

“To load a full and complete cargo” The standard “full and complete cargo” clause403 imposes a mutual obligation on the shipowner to receive on board, and the charterers to supply, a full and complete cargo.404 There is no absolute obligation on the shipowner to load; its obligation is contingent upon and cannot be performed without performance by the charterer of its obligation to ship or to tender for shipment a full and complete cargo.405 Unless limited by express provision in the charterparty, the charterer’s obligation to load a full and complete cargo is an absolute one. It must load as much cargo as the ship can carry safely. For example, in China Offshore Oil (Singapore) International Pte Ltd v Giant Shipping Ltd (The Posidon),406 the chartered ship was ordered off the loading berth because of bad weather when it had loaded about two-thirds of its full carrying capacity. After three days of continuing bad weather, the charterer ordered the ship to proceed on the carrying voyage to the discharge port. It was held that the charterer had breached its obligation to load a full and complete cargo. The shipowner was not in breach of its obligation by failing to load cargo that had not been tendered for shipment.407

[13.530]

Specifications in the charterparty of the cargo capacity of the ship may have no effect on the charterer’s obligation. There is old authority to the effect that, even if the charterparty specifies that the ship can load to a certain deadweight capacity, the charterer is obliged to load more if the ship can take more, and is in breach of the obligation to load a full and complete cargo if it loads only to the specified capacity.408 More recent (but still old) authority suggests that a contractual description of the ship’s carrying capacity limits the charterer’s obligation to provide a full and complete cargo.409 The more recent authority seems preferable, because the charterer may only have brought enough cargo to the wharf to fill the carrying capacity described in the charterparty and it seems unreasonable to hold it responsible for not loading more. 403 See, eg, the Gencon 1994 form, cl 1 (Appendix 6). 404 China Offshore Oil (Singapore) International Pte Ltd v Giant Shipping Ltd (The Posidon) [2001] 1 Lloyd’s Rep 697 at 701 per Tomlinson J. See also Cargill International SA v CPN Tankers Ltd (Bermuda) (The OT Sonja) [1993] 2 Lloyd’s Rep 435 at 444 per Hirst LJ (with whom Roch LJ and Sir David Croom-Johnson agreed): “The obligation to load is thus the other side of the same coin as the obligation to deliver.” 405 China Offshore Oil (Singapore) International Pte Ltd v Giant Shipping Ltd (The Posidon) [2001] 1 Lloyd’s Rep 697 at 701 per Tomlinson J. 406 China Offshore Oil (Singapore) International Pte Ltd v Giant Shipping Ltd (The Posidon) [2001] 1 Lloyd’s Rep 697. 407 China Offshore Oil (Singapore) International Pte Ltd v Giant Shipping Ltd (The Posidon) [2001] 1 Lloyd’s Rep 697 at 702 per Tomlinson J. 408 Hunter v Fry (1819) 2 B & Ald 421; 106 ER 420; Barker v Windle (1856) 6 El & Bl 675; 119 ER 1015. 409 Rederiaktiebolaget Urania v Zachariades (1931) 41 Ll L Rep 145 (charterparty description of capacity as “about 80,000 grain cubic feet”; held that shipowner was only entitled to deadfreight for a maximum of about 80,000 cubic feet).

438

Shipping Law

[13.540]

If the charterer loads a full and complete cargo of the agreed kind, it is not in breach of contract even if there is still space left in the ship’s holds. In Westralian Wheat Farmers Ltd v Westfal-Larsen & Co,410 the ship “Torvanger” was chartered to carry a full and complete cargo of wheat in bulk or in bags. Exercising an option reserved to them in the charterparty, the charterers notified the master of the “Torvanger” that they intended to supply wheat in bulk. The ship’s capacity for wheat in bulk and bags was greater than its capacity for bulk wheat, as it was permitted to carry bagged, but not bulk, wheat in its between-decks, the small decks between the main deck and the holds below. Having provided a full cargo of bulk wheat, the charterers refused to supply an additional quantity in bags. It was held that as the charterers’ obligation was to provide a full and complete cargo of bulk wheat by virtue of the exercise of the option in the charterparty, they were not in breach of contract even though the ship had not been completely filled with wheat. Similarly, in The Steamship Isis Co Ltd v Bahr,411 the charterers’ obligation was to provide a full and complete cargo of wet wood pulp. They loaded a full cargo of wet wood pulp that had been frozen. The ship could carry much more pulp by weight if it were loaded unfrozen, and the shipowners contended that the charterers were in breach for not loading a greater tonnage of unfrozen pulp. It was held that the charterers were not in breach of contract. The charterparty had not specified that they should provide a particular weight of cargo, but rather that they should provide a full cargo of a certain kind, and this they had done. Lord Halsbury LC said:412 The well-known and familiar expression “to ship a full and complete cargo” must have relation to the article which is to be shipped. … The full and complete cargo may undoubtedly, according to different circumstances, be more or less in respect of tonnage. But here again, if the parties had intended to make stipulations which should bring about some relation to the amount of tonnage to be carried, they should have provided for it by the charterparty.

Deadfreight

[13.540]

Breach of the obligation to load the agreed amount of cargo renders the charterer liable in damages known as deadfreight. Unless the charterparty provides otherwise, the measure of deadfreight is the difference between the full freight that the shipowner would have received if the agreed cargo had been loaded and the freight paid for the quantity of cargo actually loaded. From this figure there are deducted any benefits which the shipowner receives as a result of the loading of a smaller cargo. In particular, time savings are taken into account. The loading of a less-than-full cargo almost always takes less time than the

410 Westralian Wheat Farmers Ltd v Westfal-Larsen & Co (1935) 38 WALR 54. 411 The Steamship Isis Co Ltd v Bahr [1900] AC 340. 412 The Steamship Isis Co Ltd v Bahr [1900] AC 340 at 342-343.

[13.540]

13 Voyage Charterparties

439

loading of a full cargo would have done, and the time saved is a benefit to the shipowner. This saving is taken into account when determining the amount of deadfreight. Where a contract provides for optional modes of performance, damages for breach are calculated on the basis of the option least onerous to the defendant and least favourable to the plaintiff,413 unless the evidence indicates that the defendant would not in fact have chosen that mode of performance.414 Thus, where the charterparty provides that the weight of cargo loaded must be within a certain range, deadfreight is calculated on the difference between the cargo actually loaded and the smallest permitted amount in the range. For example, if the charterparty stipulates a cargo of 30,000 MT 10% MOLCHOPT (more or less at charterer’s option), and the charterer loads 25,000 MT, it must pay deadfreight on 2,000 MT, which is the difference between the amount loaded (25,000 MT) and the smallest amount that could have been loaded without breach (27,000 MT). However, if the charterparty gives the shipowner the option of choosing the exact quantity loaded, deadfreight is calculated on the basis of the difference between the quantity actually loaded by the charterer and the amount selected by the shipowner in exercise of its option. Deadfreight is the shipowner’s only remedy for breach of the charterer’s obligation to load the agreed amount of cargo. If the charterer loads only part of the agreed cargo, the shipowner cannot refuse to carry it, but must deliver it according to the terms of the charterparty,415 although it may spend a reasonable time trying to find an additional cargo to fill the dead space left by the charterer.416 Charterparties often make express provision for the payment of deadfreight. It is not clear whether a deadfreight clause of this kind means that deadfreight is liquidated damages, but it is clear that the shipowner is entitled to unliquidated damages in addition to demurrage and deadfreight for any losses that are consequential upon the failure to load the full quantity of cargo. The authority for these propositions is Total Transport Corporation v Amoco Trading Co (The Altus),417 where the “Altus” was chartered to carry a cargo of a minimum of 40,000 tons of crude oil from Ashtart in Tunisia to Genoa in Italy. The ship loaded 34,447 tons of crude oil at Ashtart, and in doing so it exceeded the permitted period of laytime. The shipowners claimed demurrage for the delay, deadfreight for the charterers’ breach of the obligation to load a 413 See Abrahams v Herbert Reiach Ltd [1922] 1 KB 477; Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 156 per McHugh JA. See also Maredelanto Compania Naviera SA v Bergbau-Handel GmbH; The Mihalis Angelos [1971] 1 QB 164; SIB International SRL v Metallgesellschaft Corp (The Noel Bay) [1989] 1 Lloyd’s Rep 361 at 363 per Staughton LJ. 414 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130. 415 Smith v Beaver (1876) 2 VLR (L) 110. 416 Wallems Rederij A/S v Wm H Muller & Co, Batavia [1927] 2 KB 99. 417 Total Transport Corporation v Amoco Trading Co (The Altus) [1985] 1 Lloyd’s Rep 423.

440

Shipping Law

[13.550]

minimum of 40,000 tons, and, in addition, a sum by way of unliquidated damages for the demurrage they had lost by reason of the charterers’ failure to load the full quantity of cargo agreed. The charterers contended that the deadfreight clause was a liquidated damages clause, so that no other damages could be recovered for their breach of their obligation to load the agreed amount. Webster J declined to decide whether or not the deadfreight clause was a liquidated damages clause,418 but held that the charterers were liable in any event. If the deadfreight clause were not a liquidated damages clause at all, the shipowners’ recovery was not confined to the damages specified therein. However, even if the deadfreight clause were a liquidated damages clause, the shipowner was still entitled to recover the additional sum of damages claimed. Webster J said:419 [W]here a charterer commits any breach, even if it is only one breach, of his obligation either to provide the minimum contractual load or to detain the vessel for no longer than the stipulated period, the owner is entitled not only to the liquidated damages directly recoverable for the breach of the obligation to load (deadfreight) or for the breach of the obligation with regard to detention (demurrage), but also for, in the first case, to [sic] the damages flowing indirectly or consequentially from any detention of the vessel (if it occurs) and, in the second case, to damages flowing indirectly or consequentially from any failure to load a complete cargo if there is such a failure.

Damages for failure to load any cargo

[13.550]

If the charterer fails to load any cargo at all, the shipowner is not automatically entitled to deadfreight for the entire amount of the agreed cargo, because it is free to find substitute employment for the chartered ship, the profits from which should reduce the amount of its loss. Thus, the basic measure of damages is the net profit lost by the shipowner, which is, in general, the difference between the contract freight on the agreed amount of cargo and the market freight on the same amount of cargo at the time the voyage would have been performed.420 The “contract minus market” formula assumes that the expenses of earning the substitute freight are equal to the expenses that would have been incurred in earning the contract freight. Because those expenses appear on both sides of the equation, they cancel one another out. The “contract minus market” formula also assumes that there is substitute employment available for the chartered ship at the market rate. In Cobelfret (UK) Ltd v Austen & Butta (Sales) Pty Ltd,421 the Court of Appeal of New South Wales held that where the shipowner would have 418 Total Transport Corporation v Amoco Trading Co (The Altus) [1985] 1 Lloyd’s Rep 423 at 432. 419 Total Transport Corporation v Amoco Trading Co (The Altus) [1985] 1 Lloyd’s Rep 423 at 435, citing Aktieselskabet Reidar v Arcos Ltd [1927] 1 KB 352 (CA). 420 See Cobelfret (UK) Ltd v Austen & Butta (Sales) Pty Ltd (unreported, NSWCA, Kirby P, Preistely and Meagher, JJP, 1 January 1991). 421 Cobelfret (UK) Ltd v Austen & Butta (Sales) Pty Ltd (unreported, NSW CA, 1991).

[13.550]

13 Voyage Charterparties

441

performed the contract voyage with one of its own ships, or with a ship on long-term time charter, it must show which of four possible situations was in existence at the time the voyage should have been performed: (a) that other ships were available in the chartering market and that cargoes for them were available (that is, that there was both supply and demand); (b) that other ships were available in the chartering market but no cargoes were available for them (that is, that there was supply, but no demand); (c) that no other ships were available in the chartering market, but cargoes would have been available for them (that is, that there was demand, but no supply); or (d) that no other ships were available in the chartering market, and there were no cargoes available for them in any event (that is, that there was neither demand nor supply). If the shipowner fails to show which of these four situations was in existence at the time the voyage should have been performed, it recovers no damages at all in respect of a ship that it owns or has time-chartered, because it has failed to prove its loss.422 If the shipowner proves that situation (a) or (c) existed, the “contract minus market” formula provides the measure of damages, because in these circumstances, it would be likely that the ship could earn profits in substitution for those which it would have earned under the contract. If the shipowner proves that situation (b) or (d) existed, it recovers the entire contract freight as damages (that is, deadfreight for the entire cargo), because it could not have earned substitute profits with the ship. In Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd,423 Kiefel J of the Federal Court of Australia held that the normal “contract minus market” rule applies only where the plaintiff already has a ship at its disposal, ready to be used for the agreed voyage. In such a case, if the shipowner does not go into the market to seek a substitute cargo for its ship, its loss flows from its own unreasonable inaction and not from the charterer’s breach of contract.424 Where, however, the shipowner has not yet hired a ship to perform the charterparty contract, the “normal rule” does not apply. In such a case, the measure of damages is the contract freight (plus any demurrage that might have been earned), minus the cost that the shipowner would have incurred to hire a ship to perform the chartered voyage. Thus, the principles stated by the New South Wales Court of Appeal in Cobelfret apply only where the shipowner already has a ship at its disposal when the charterer breaches its obligation to load. Where the chartered ship actually performs a substitute voyage, damages are assessed by comparing the money the shipowner would have earned, 422 Cobelfret (UK) Ltd v Austen & Butta (Sales) Pty Ltd (unreported, NSW CA, 1991). Although some of the older cases speak in terms of mitigation by the shipowner finding substitute employment for the ship (which would put the onus of proof on the charterer to show that the shipowner had failed to mitigate its loss), the Court of Appeal of New South Wales held that the proper view is that the onus is on the shipowner to prove the measure of its loss. 423 Hyundai Merchant Marine Co Ltd v Dartbrook Coal (Sales) Pty Ltd (2006) 236 ALR 115. 424 See also The Elena D’Amico [1980] 1 Lloyd’s Rep 75 at 89-90 per Robert Goff J.

442

Shipping Law

[13.550]

less running expenses, on the contract voyage with the money it in fact earned, less running expenses, on the contract voyage; fixed expenses such as insurance, crew wages and repairs may be disregarded since they are the same on both sides of the account.425 If the substitute voyage takes longer than the voyage under the original charterparty would have taken, damages are calculated by setting off a proportion of the profits on the substitute voyage against the profits lost on the original voyage; otherwise one would be involved in calculations to the end of the ship’s working life.426 The relevant portion of the substitute voyage is the period of overlap with the voyage that should have been performed under the charterparty.427 In calculating the net profits on the substitute engagement, the expenses of the loading voyage from the port of loading under the original contract to the substitute port of loading are added to the expenses of the substitute voyage itself, and the total is subtracted from the total freight earned under the substitute engagement.428 The shipowner may also claim additional losses as a result of the charterer’s failure to load. For example, if a ship is chartered for a voyage from Adelaide to Bandar Khomeini in Iran, the shipowner may fix it for a subsequent engagement from, say, Alexandria in Egypt, which is relatively close to Bandar Khomeini. If the voyage from Adelaide to Bandar Khomeini does not take place because of the charterer’s failure to load a cargo at Adelaide, the ship is no longer in a position to perform the voyage out of Alexandria. The shipowner may then incur extra expense in finding another ship to perform the Alexandria voyage, and it may claim this loss from the Adelaide charterer, on the basis that it was caused by that charterer’s failure to load at Adelaide. Under ordinary principles of remoteness of damage in contract, such losses are recoverable if the court takes the view that they arose in “the usual course of things”, given the charterer’s knowledge of the nature of the shipowner’s business.429 If the court does not take that view on the facts, such losses are recoverable only if the charterer knows or ought to know of the specific subsequent engagement proposed by the shipowner; it is not enough that the charterer knows or ought to know in general that the shipowner would be likely to seek a subsequent engagement from a loading port close to the discharging port under the original charterparty.430 425 SIB International SRL v Metallgesellschaft Corp (The Noel Bay) [1989] 1 Lloyd’s Rep 361 at 363 per Staughton LJ. 426 SIB International SRL v Metallgesellschaft Corp (The Noel Bay) [1989] 1 Lloyd’s Rep 361 at 363 per Staughton LJ. 427 SIB International SRL v Metallgesellschaft Corp (The Noel Bay) [1989] 1 Lloyd’s Rep 361 at 363 per Staughton LJ; Rheinoel GmbH v Huron Liberian Co (The Concordia C) [1985] 2 Lloyd’s Rep 55. 428 SIB International SRL v Metallgesellschaft Corp (The Noel Bay) [1989] 1 Lloyd’s Rep 361. 429 Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145. See, eg, Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350. 430 See, eg, Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528.

[13.560]

13 Voyage Charterparties

443

Responsibility for loading, stowing and trimming and liability for damage during those processes

[13.560]

The charterer’s obligation to provide the cargo does not include an obligation to load and unload it. Responsibility for the actual processes of loading and unloading is determined by agreement of the parties, and may rest on either the shipowner or the charterer.

The most common clauses which place the main responsibility for loading on the charterer are known as “FIO” (free in and out), “FIOS” (free in and out and stowed), or “FIOST” (free in and out, stowed and trimmed) clauses.431 Under FIO terms, loading and unloading is arranged and paid for by the charterer; under FIOS terms, the charterer also arranges and pays for stowing, and under FIOST terms, it also arranges and pays for trimming. Under each of these clauses, the charterer is responsible for damage to the ship or the cargo during loading or unloading, or as a result of bad stowing or trimming. This is so even if the charterparty provides that the charterer is to load, stow and trim the cargo “under the supervision of the master”,432 because the master would be entitled to supervise loading, stowing and trimming in any event, in order to maintain the seaworthiness of the ship.433 If, however, the master actually intervenes in the processes of loading, stowing or trimming, the charterer’s liability is limited to a corresponding degree.434 Furthermore, if the charterparty provides that loading, stowing and trimming are to be carried out under the responsibility of the master, the effect is to transfer responsibility for proper performance back to the shipowner.435 The charterparty may provide that liability for damage caused by stevedores “is to be settled directly between the shipowner and the stevedore”. On its own, such a provision would not be enough to relieve the charterer of its obligation to compensate the shipowner for damage 431 See, eg, cl 5(b) of the older versions of the Gencon form. The Gencon 1994 form provides only for FIO: see cl 5(a) (Appendix 6). FIO clauses can appear in dry cargo or tanker charterparties. FIOS and FIOST clauses are only usual in dry cargo charterparties, where stowing and trimming must be undertaken after loading before the ship leaves on the carrying voyage. For a consideration of FIO, FIOS and FIOST clauses in the context of the Hague-Visby Rules, see [12.310]. 432 Canadian Transport Co v Court Line [1940] AC 934. (This case is known, but not reported, as The Ovington Court.) 433 Canadian Transport Co v Court Line [1940] AC 934 at 937-938, 944. 434 Canadian Transport Co v Court Line [1940] AC 934 at 944 per Lord Wright. 435 AB Marintrans v Comet Shipping Co Ltd (The Shinjitsu Maru No 5) [1985] 1 Lloyd’s Rep 568; MSC Mediterranean Shipping Co SA v Alianca Bay Shipping Co Ltd (The Argonaut) [1985] 2 Lloyd’s Rep 216; Alexandros Shipping Co of Piraeus v MSC Mediterranean Shipping Co SA of Geneva (The Alexandros P) [1986] 1 Lloyd’s Rep 421; Exercise Shipping Co Ltd v Bay Maritime Lines Ltd (The Fantasy) [1992] 1 Lloyd’s Rep 235 at 237-238 per Lloyd LJ. Each of these cases is about the equivalent position in a time charterparty, but the principle should apply in the same way in voyage charterparties: see J Cooke, T Young and M Ashcroft, Voyage Charters (4th ed, Informa Law (Routledge), Oxford, 2014) at [14.36]-[14.37].

444

Shipping Law

[13.560]

caused by charterer-appointed stevedores,436 but the terms of the clause may go further, to make it clear that the charterer’s liability for stevedore damage is excluded.437 If the shipowner undertakes to pay for loading and discharge, the charterparty usually contains what is known as a “liner terms” or “gross terms” clause.438 Although liner terms are commonly used in the liner trade,439 the expression is imprecise, as it is not confined to that type of trade. Under liner or gross terms the shipowner arranges and pays for all work “from tackle to tackle”. The obligations of the parties under gross terms were described as follows by Lord Esher MR in Harris v Best, Ryley & Co:440 Loading is a joint act of the shipper or charterer and of the shipowner; neither of them is to do it alone, but is to be the joint act of both. … [T]he shipper has to bring the cargo alongside so as to enable the shipowner to load the ship within the time stipulated by the charterparty, and to lift that cargo to the rail of the ship. It is then the duty of the shipowner to be ready to take such cargo on board and to stow it in the vessel. The stowage of the cargo is the sole act of the shipowner.

In the absence of express provision for responsibility for loading and discharge (which would be unusual in practice), the position at law is the same as that under liner or gross terms.441 The parties may also agree on a combination of responsibilities, by using such terms as “free in, gross out” or “gross in, free out”. Under the former, the charterer is responsible for loading, and the shipowner for discharging; under the latter, the responsibilities are reversed. The risk of delay in loading and discharge falls primarily on the charterer. If the ship is not loaded by the time laytime has expired, the charterer must pay demurrage to the shipowner, even where the shipowner is partly or wholly responsible for the actual loading process. However, if the delay in loading is the result of some default on the shipowner’s part, laytime or demurrage is suspended and the charterer does not bear the 436 A Meredith Jones & Co Ltd v Vangemar Shipping Co Ltd (The Apostolis) (No 2) [2000] 2 Lloyd’s Rep 337 at 347-348 per Waller LJ, referring by analogy to the cases that establish that the charterer remains liable for demurrage even if the charterparty provides that the shipowner may recover discharge port demurrage directly from the receiver: see Gerani Compania Naviera SA v Alfred C Toepfer (The Demosthenes V) (No 2) [1982] 1 Lloyd’s Rep 282. 437 See, eg, A Meredith Jones & Co Ltd v Vangemar Shipping Co Ltd (The Apostolis) (No 2) [2000] 2 Lloyd’s Rep 337. 438 See, eg, cl 5(a) of the older versions of the Gencon form. This option is not available under the Gencon 1994 form (Appendix 6). 439 For a description of liner trade, see Chapter 11. 440 Harris v Best, Ryley & Co (1892) 68 LT 76 at 77; approved in Argonaut Navigation Co Ltd v Ministry of Food (The SS Argobec) [1949] 1 KB 572 and Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402. 441 See Canadian Transport Co v Court Line [1940] AC 934 at 943 per Lord Wright (The Ovington Court).

[13.570]

13 Voyage Charterparties

445

cost of the delay.442 If, however, loading is delayed through no fault of the shipowner, the charterer bears the cost of the delay. Thus, where a shipowner was unable to accept cargo outside normal working hours because stevedores were not available at those times, there was no breach of the shipowner’s obligation to allow the charterer to load continuously.443 Even though loading was the shipowner’s responsibility, the charterer bore the cost of the shipowner’s inability to find stevedores outside normal working hours. Cesser clauses and shipowners’ liens

[13.570]

Charterparties commonly contain a clause, known as a cesser clause, which seeks to relieve the charterer of any liability under the charterparty once the cargo has been loaded. This drastic exemption from liability is given to the charterer in consideration for the granting to the shipowner of a lien over the cargo for freight, deadfreight and demurrage. The clause is designed for use in a charterparty where the charterer is the shipper and where it sells the cargo to a receiver while the ship is at sea. The intention behind the cesser and lien arrangement is that, once loading is complete, the shipowner’s claims are made against the receiver as owner of the cargo, rather than against the charterer, and the shipowner has some form of security over the cargo in respect of those claims.444 For example, if the chartered ship attracts demurrage at the discharging port,445 the shipowner can exercise its lien and decline to release the cargo to the receiver until demurrage has been paid;446 the contract between the charterer-shipper and the receiver of the cargo places responsibility for discharge demurrage on the latter, and the charterer drops out of the picture once loading is complete.447

Because cesser and lien are so intimately related, they are frequently combined in a single clause, which both gives the shipowner a lien on the cargo for freight, deadfreight and demurrage, and relieves the charterer of liability after loading, but only to the extent that the shipowner has an alternative remedy by exercising the lien.448 Such a clause makes explicit 442 See [13.470]. 443 President of India v Moor Line Ltd (1958) 99 CLR 185. 444 The converse is true, too: if there is no cesser of liability, there can be no lien. See Partenreederei M/S Heidberg v Grosvenor Grain and Feed Co Ltd [1994] 2 Lloyd’s Rep 287 at 312 per Judge Diamond QC: “[I]t is unheard of for an owner to exercise a lien for demurrage where this can be claimed from the charterer under the terms of the charterparty”. 445 The cesser clause in the older versions of the Gencon form, cl 8, specifically provides that the charterer remains responsible for deadfreight and demurrage incurred at the port of loading. 446 This assumes, of course, that demurrage has been incurred before discharging is complete, such as, for example, by the ship using up laytime while waiting for berth. 447 For a consideration of the liability that the charterer and the receiver have to the shipowner to pay demurrage, see [13.480]. 448 See, eg, cl 8 of the older versions of the Gencon form.

446

Shipping Law

[13.580]

something that would otherwise be implicit, namely that the cesser of the charterer’s liability and the shipowner’s lien are dependent on one another. As Donaldson J observed in Overseas Transportation Co v Mineralimportexport (The Sinoe):449 Cesser clauses are curious animals because it is now well established that they do not mean what they appear to say, namely that the charterers’ liability shall cease as soon as the cargo is on board. Instead, in the absence of special wording … they mean that the charterers’ liability shall cease if and to the extent that the owners have an alternative remedy by way of lien on the cargo.

Thus, cesser and lien are co-extensive. The charterer is not relieved of its obligations unless the shipowner can in fact enforce the alternative remedy by way of lien. Kerr J stated in The Cunard Carrier, Eleranta and Martha:450 “The mere presence of a lien clause in the charter is not enough; the lien must be effective.” Thus, if the purported lien is ineffective for any reason, the charterer remains liable under the charterparty, notwithstanding the cesser clause.451 If no effective lien is given to the shipowner, the clearest possible words must be used in order to relieve the charterer of liability under the charterparty, such as “notwithstanding that the owners have no lien in respect of the liability in question”.452 Even if the ordinary English meaning of the cesser clause would be to relieve the charterer of liability, the clause does not have this effect unless there is a corresponding effective lien with respect to that liability.453

THE CARRYING VOYAGE Introduction [13.580]

Once loading is complete, the ship must carry the cargo from the loading port to the port of discharge. The carrying voyage begins when the ship leaves the loading port, and finishes when it arrives at the discharging port. As with the loading voyage, the questions of when exactly the ship arrives and departs are important ones, which can pose problems.

449 Overseas Transportation Co v Mineralimportexport (The Sinoe) [1971] 1 Lloyd’s Rep 514 at 516 (aff’d on appeal Overseas Transportation Co v Mineralimportexport (The Sinoe) [1972] 1 Lloyd’s Rep 201 (CA)). 450 The Cunard Carrier, Eleranta and Martha [1977] 2 Lloyd’s Rep 261 at 263 per Kerr J. 451 Overseas Transportation Co v Mineralimportexport (The Sinoe) [1972] 1 Lloyd’s Rep 201 (CA) (lien ineffective because government of country of discharging port did not permit it to be exercised); The Cunard Carrier, Eleranta and Martha [1977] 2 Lloyd’s Rep 261 (lien ineffective because receivers of cargo were government departments, and also because of difficulties created by civil disorder in Beirut). 452 Action SA v Britannic Shipping Corporation Ltd (The Aegis Britannic) [1985] 2 Lloyd’s Rep 481 at 484 per Staughton J (aff’d on appeal Action SA v Britannic Shipping Corporation Ltd (The Aegis Britannic) [1987] 1 Lloyd’s Rep 119 (CA)). 453 Action SA v Britannic Shipping Corporation Ltd (The Aegis Britannic) [1987] 1 Lloyd’s Rep 119 (CA).

[13.590]

13 Voyage Charterparties

447

For the duration of the carrying voyage, the ship and its cargo are the responsibility of the shipowner. At common law, three obligations on the shipowner with respect to this stage are implied in the voyage charterparty.454 First, the shipowner impliedly undertakes that the ship is seaworthy. Secondly, it undertakes that the ship will undertake the voyage with reasonable diligence and despatch. Thirdly, it undertakes that the ship will undertake the voyage without unjustifiable deviation. Any or all of these undertakings may be modified by express provision in the charterparty, and commonly are.

The commencement of the carrying voyage [13.590]

The moment at which the loading stage ends and the carrying voyage begins is significant for a number of reasons. The time when the voyage commences may have important consequences for insurance purposes,455 the operation of exemption clauses, and also in determining when advance or pre-paid freight becomes payable.456 Although there is some old authority for the proposition that the carrying voyage begins when the chartered ship “breaks ground”, that is, when it leaves its moorings for the purpose of proceeding with the voyage,457 the better view is that the voyage does not commence until the ship has “finally sailed” from the loading port. Scrutton on Charterparties states:458 A vessel has finally sailed from her port of loading when she has passed the limits of the port, ready for her voyage with the purpose of proceeding on her voyage and without any intention of coming back.

For the purpose of determining when a ship has finally sailed, the “commercial limits” of the port are considered, rather than the legal, fiscal or administrative limits. As Jessel MR observed in Price v Livingstone:459 The word “port” must be understood in its ordinary commercial sense. There are ports which extend to miles for fiscal purposes, but they are not for commercial purposes to be treated as having that extent.

Thus, where a ship had left the commercial area of the port of Cardiff, but was driven back by bad weather before it had left the fiscal area of that 454 For the same obligations on the carrier under a bill of lading or other sea-carriage document, see [12.290]. 455 For a consideration of the attachment of risks in voyage policies of marine insurance, see [17.190]. 456 See D Gilchrist, “Proceeding with the Chartered Voyage” (1975) 49 Tulane Law Review 922 at 923-924. 457 Mersey Mutual Underwriting Association Ltd v Poland (1910) 15 Com Cas 205. “Breaking ground” constitutes the commencement of the voyage in the United States: see D Gilchrist, “Proceeding with the Chartered Voyage” (1975) 49 Tulane Law Review 922 at 923-927. 458 B Eder et al, Scrutton on Charterparties (22nd ed, Sweet & Maxwell, London, 2011), p 260 at [12-001]. 459 Price v Livingstone (1882) 9 QBD 679 at 681.

448

Shipping Law

[13.590]

port, it was held to have “finally sailed”.460 However, this view of the limits of a port may have to be reconsidered in the light of the decision of the House of Lords in EL Oldendorff & Co GmbH v Tradax Export SA,461 which cast doubts on the usefulness of the idea of the commercial area of a port in determining when a ship becomes an arrived ship.462 Although, at first sight, it might seem that a ship should be held to have finally sailed from the loading port when it passes the point at which it became an arrived ship at that port, there is no reason why different approaches should not be taken to the questions of arrival and departure. The moment of arrival must be determined in order to ascertain when laytime commences. For these purposes, the exact geographical location of the ship is not of primary importance. What is important, according to the test adopted in the Oldendorff case, is the fact that the ship is at the immediate and effective disposition of the charterer. The moment of departure, on the other hand, must be determined for an entirely different reason. The question of whether or not the ship is at the charterer’s disposal is irrelevant. The ship has loaded the charterer’s cargo, and it is in the interests of both charterer and shipowner that it leave forthwith. The moment of departure is relevant because it marks the point at which the carrying voyage begins and the ship and cargo become entirely the responsibility of the shipowner. For these purposes, the ship should be taken to have departed at the moment when it leaves the commercial area of the port. In the Oldendorff case, the “Johanna Oldendorff” was held to have arrived at the port of Liverpool/Birkenhead when it anchored at the Mersey Bar, some 17 miles from the docks, because this was within the legal, fiscal and administrative limits of the port, and was the normal waiting place for ships at that port. According to the view adopted in Price v Livingstone, the ship departed when it left the port itself, not when it repassed the Mersey Bar.463 This still seems appropriate. The normal waiting place for loading is of no significance in determining when a ship has departed after completion of loading. This view gains support from the fact that intention is relevant to the issue of final sailing. If the ship leaves the port for some reason, but does not intend at that time to travel to the discharge port, it has not finally sailed.464 The moment of departure is the moment when the ship leaves the port intending to travel to the discharge port.

460 Price v Livingstone (1882) 9 QBD 679. See also SS Garston Co v Hickie & Co (1885) 15 QBD 580; Roelandts v Harrison (1854) 9 Ex 444; 156 ER 189. 461 EL Oldendorff & Co GmbH v Tradax Export SA [1974] AC 479 (The Johanna Oldendorff). 462 See [13.170]. 463 The point of departure was not at issue in the Oldendorff case itself. 464 Thompson v Gillespy (1855) 5 El & Bl 209; 119 ER 459; Hudson v Bilton (1856) 6 El & Bl 565; 119 ER 975.

[13.600]

13 Voyage Charterparties

449

Seaworthiness [13.600]

By virtue of the agreement to carry cargo on a voyage, the shipowner impliedly undertakes that the chartered ship is seaworthy at the beginning of the voyage.465 Seaworthiness is a very broad concept, embracing fitness of the ship’s hull, machinery, stores, equipment and crew. The ship’s seaworthiness is considered relative to the cargo to be carried and the voyage to be undertaken. If the ship is not fit, in all respects, to encounter the ordinary perils of the voyage and to carry the cargo safely on that voyage, then it is unseaworthy.466 Gaudron, Gummow and Hayne JJ explained the meaning of seaworthiness in the following way in Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad:467 [S]eaworthiness is to be assessed according to the voyage under consideration; there is no single standard of fitness which a vessel must meet. Thus, seaworthiness is judged having regard to the conditions the vessel will encounter. The vessel may be seaworthy for a coastal voyage in a season of light weather but not for a voyage in the North Atlantic in mid winter. Thus, definitions of seaworthiness found in the cases (albeit cases arising in different contexts) all emphasise that the state of fitness required “must depend on the whole nature of the adventure”. The vessel must be “fit to encounter the ordinary perils of the voyage”; it must be “in a fit state as to repairs, equipment, and crew, and in all other respects, to encounter the ordinary perils of the voyage insured”.

Thus, there are many ways in which the chartered ship may be found to be unseaworthy, including, for example, physical unfitness of the ship itself,468 bad stowage of the cargo endangering the safety of the ship,469

465 Kopitoff v Wilson (1876) 1 QBD 377; Steel v The State Line Steamship Co (1877) 3 App Cas 72. In consecutive voyage charterparties incorporating the Hague or Hague-Visby Rules, the shipowner undertakes to exercise due diligence to make the ship seaworthy at the beginning of each voyage: Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133 (HL). The implied undertaking of seaworthiness does not apply to the loading voyage: see [13.120]; see also Compagnie Algerienne de Meunerie v Katana Societa di Navigazione Marittima SpA (The Nizeti) [1960] 1 Lloyd’s Rep 132 (CA). 466 Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm) [1982] 1 Lloyd’s Rep 7 at 9 per Lord Denning MR, citing A Mocatta, M Mustill and S Boyd, Scrutton on Charterparties and Bills of Lading (18th ed, Sweet & Maxwell, London, 1974), p 83. The passage now appears in B Eder et al, Scrutton on Charterparties and Bills of Lading (22nd ed, Sweet & Maxwell, London, 2011), p 117 at [7-016]. 467 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161 at 174 [27]-[31]. 468 See, eg, Commonwealth v Burns Philp & Co Ltd (1946) 46 SR (NSW) 307; BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211. 469 See, eg, Elder, Dempster & Co v Paterson, Zochonis & Co [1924] AC 522.

450

Shipping Law

[13.600]

absence of the necessary documents to establish seaworthiness,470 and incompetence471 or short-handedness472 of the crew.473 In order to be able to carry the cargo to the specified destination, the ship must have sufficient bunkers (fuel) to complete the voyage. However, it would be unreasonable if the seaworthiness obligation required the shipowner to have bunkers for the whole voyage on board at the beginning of the voyage, because many long ocean voyages cannot be completed without one or more stops for refuelling. Thus, by the doctrine of stages, the shipowner’s obligation is merely to have sufficient bunkers on board to complete the stage of the voyage to the next bunkering port,474 provided that the bunkering stages are usual and reasonable.475 Under the general maritime law, the shipowner’s undertaking in respect to seaworthiness is absolute. It matters not that the shipowner may have taken reasonable care to make the ship seaworthy.476 If the ship is unseaworthy in any respect, the shipowner is in breach of contract. The shipowner’s implied undertaking that the ship is seaworthy is not a condition, but an intermediate or innominate term.477 As Sellers LJ observed in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd:478 It would be unthinkable that all the relatively trivial matters which have been held to be unseaworthiness could be regarded as conditions of the contract … and justify in themselves a cancellation or refusal to perform on the part of the charterer.

Thus, the usual remedy for breach of the implied obligation of seaworthiness is damages for any loss caused by the unseaworthiness (unless the shipowner is protected by an exclusion clause), but if the unseaworthiness is sufficiently serious, the charterer may be entitled to treat the contract as at an end. The parties are free to exclude or modify the implied obligation of seaworthiness. In practice, this is very often done, either by modifying or 470 See Levy v Costerton (1816) 4 Camp 389; 171 ER 124; Ciampa v British India Steam Navigation Co Ltd [1915] 2 KB 774; Cheikh Boutros Selim El-Khoury v Ceylon Shipping Lines Ltd (The Madeleine) [1967] 2 Lloyd’s Rep 224. 471 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. 472 See, eg, Horn v Cia de Navegacion Fruco SA 404 F 2d 422 (5th Cir 1968) (reported sub nom as The Heinz Horn [1970] 1 Lloyd’s Rep 191). 473 For other examples of unseaworthiness, see [12.300]. 474 The Vortigern [1899] P 140, esp at 152-153 per AL Smith LJ; Northumbrian Shipping Co Ltd v E Timm & Son Ltd [1939] AC 397; Project Asia Line Inc v Shone (The Pride of Donegal) [2002] 1 Lloyd’s Rep 659 at 666 per Andrew Smith J. 475 Reardon Smith Line Ltd v Black Sea and Baltic General Insurance Co Ltd [1939] AC 562; Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117. 476 See Steel v State Line Steamship Co (1877) 3 App Cas 72 at 86 per Lord Blackburn; Owners of Cargo on Ship Maori King v Hughes [1895] 2 QB 550 at 558-559 per Kay LJ. 477 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. 478 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 56.

[13.610]

13 Voyage Charterparties

451

excluding the obligation by express provision in the charterparty, or by incorporating by reference the due diligence obligation in the Hague or Hague-Visby Rules. If the charterparty incorporates the Hague or Hague-Visby Rules, the shipowner’s obligation with respect to seaworthiness is no longer absolute. Under a charterparty incorporating the Hague or Hague-Visby Rules, the shipowner is bound, before and at the beginning of the voyage, to exercise due diligence to make the ship seaworthy.479

Reasonable despatch [13.610]

The shipowner impliedly undertakes that the ship will complete the carrying voyage with all reasonable despatch.480 Charterparties often make this obligation explicit by providing that the chartered ship shall proceed with “all convenient speed”, or words to that effect.481 Although the ship is not required to perform constantly to its maximum speed capability, it must make some progress — if the ship stops for any sustained period on the voyage, the shipowner is in breach of the obligation, because the ship is not proceeding with any despatch or at any speed if it is stationary.482 However, the shipowner may protect itself against the consequences of breach by use of an appropriately worded exclusion clause in the charterparty.483 For example, if the charterparty incorporates the Hague or Hague-Visby Rules by reference, the shipowner may excuse a failure to proceed with reasonable despatch by proving that it exercised due diligence before and at the beginning of the voyage in respect of the unseaworthiness that caused the delay.484 The usual remedy for breach of the reasonable despatch obligation is such damages as are recoverable under the ordinary rules of remoteness of damage,485 but if the delay continues long enough to frustrate the

479 For a consideration of the obligation of seaworthiness under the Hague or Hague-Visby Rules, see [12.300]. 480 See, eg, Fyffes Group Ltd v Reefer Express Lines Pty Ltd (The Kriti Rex) [1996] 2 Lloyd’s Rep 171 at 191 per Moore-Bick J. 481 See, eg, President of India v Hariana Overseas Corp (The Takafa) [1990] 1 Lloyd’s Rep 536. 482 President of India v Hariana Overseas Corp (The Takafa) [1990] 1 Lloyd’s Rep 536. 483 See, eg, cl 2 of the Gencon 1994 form (Appendix 6). Many exclusion clauses that protect the shipowner from the consequences of deviation may also be effective to protect it against the consequences of delay: see [13.620] and cl 3 of the Gencon 1994 form (Appendix 6). 484 An argument to this effect failed in President of India v Hariana Overseas Corp (The Takafa) [1990] 1 Lloyd’s Rep 536, because the arbitrators had made no express finding of due diligence. 485 See The Wilhelm (1866) 14 LT 636; Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196; President of India v Hariana Overseas Corp (The Takafa) [1990] 1 Lloyd’s Rep 536; Fyffes Group Ltd v Reefer Express Lines Pty Ltd (The Kriti Rex) [1996] 2 Lloyd’s Rep 171.

452

Shipping Law

[13.620]

commercial purpose of the venture, the charterer may accept the shipowner’s breach as a repudiation, and treat the contract as at an end.486

Deviation [13.620]

Unless the charterparty expressly provides otherwise, the shipowner is under an implied obligation to proceed to the discharge port by a usual and reasonable route, which, prima facie, is the direct geographical route.487 If the chartered ship follows a route other than the most direct geographical one, the onus is on the shipowner to establish that the usual route between ports is not the most direct one.488 Thus, for example, the most direct route between the Arabian Gulf and the Mediterranean is through the Suez Canal, but when the Canal was closed in 1967, the usual route was around the Cape of Good Hope.489 Under the doctrine of stages,490 the chartered ship is entitled to make necessary stops for bunkers on the way to the agreed destination, and a diversion to a bunkering port does not constitute a deviation if the bunkering place is a usual and reasonable one, even if that place is further away from the direct geographical route than other possible bunkering places.491 The ship is not entitled to deviate from the route so determined unless the charterparty expressly authorises it to do so, or unless deviation is justifiable. Deviations that are necessary for the safety of the ship and crew are justifiable even if the necessity is caused by the unseaworthiness of the ship.492 Deviation to save human life is justifiable, but deviation to save property is not, unless it is the only means by which human lives can be saved.493 Standard form charterparties commonly expressly authorise deviation.494 Deviation clauses of this kind are construed as applying only within the confines of the voyage described in the charterparty. Thus, in Glynn v 486 Universal Cargo Carriers Corp v Citati [1957] 2 QB 401 at 430-436 per Devlin J. 487 Achille Lauro Fu Gioacchino & C v Total Societa Italiana Per Azioni [1968] 2 Lloyd’s Rep 247 at 251 per Donaldson J. 488 Reardon Smith Line Ltd v Black Sea and Baltic General Insurance Co Ltd [1939] AC 562. See also Whistler International Ltd v Kawasaki Kisen Kaisha Ltd [2001] 1 AC 638 (reported sub nom as The Hill Harmony [2001] 1 Lloyd’s Rep 147), a decision about routing orders under a time charterparty. 489 See Palmco Shipping Inc v Continental Ore Corp [1970] 2 Lloyd’s Rep 21, where it was held that the closure of the Suez Canal had not frustrated a voyage charterparty for carriage of sulphur from Mexico to India. 490 See [13.600]. 491 Reardon Smith Line Ltd v Black Sea and Baltic General Insurance Co Ltd [1939] AC 562; Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117. 492 Kish v Taylor & Co [1912] AC 604. 493 Scaramanga v Stamp (1880) 5 CPD 295. 494 See, eg, cl 3 of the Gencon 1994 form (Appendix 6).

[13.620]

13 Voyage Charterparties

453

Margetson & Co,495 the ship “Zena” was chartered to carry oranges from Malaga to Liverpool, with liberty to visit any ports in the Mediterranean, Levant, Black Sea or Adriatic, or on the African, Spanish, Portuguese, French, British or Irish coasts, for any purpose whatsoever. The “Zena” left Malaga and headed not towards Liverpool but in the opposite direction, towards the Spanish port of Burriana. It was held that the deviation clause only gave the shipowner a liberty which was consistent with the main object of the charterparty. The clause applied only to deviations on the specified voyage from Malaga to Liverpool. The ship was entitled to deviate on its way to Liverpool, but was not entitled to proceed in any direction that it pleased. According to the older cases, adherence to the specified route is a fundamental requirement of the charterparty. Any unjustified deviation from that route deprives the shipowner of the benefit of exemption clauses with respect to loss or damage,496 unless it can be shown that the same loss or damage would have occurred even if there had not been a deviation.497 Further, deviation is such a serious breach that it automatically entitles the charterer to treat the contract as at an end.498 The charterer can elect to waive the shipowner’s breach as a repudiation and treat the contract as subsisting, thereafter bringing an action for damages in respect of the breach.499 If the charterer elects to affirm the contract, it continues to be bound by its terms, including any exemption clauses therein, and can only recover damages in respect of the deviation itself.500 In these circumstances, the charterer must pay to the shipowner the full amount of freight due under the charterparty. If the shipowner carries the goods to the discharge port after acceptance of a repudiatory deviation, it is probable that it will be able to recover a reasonable amount of freight on a quantum meruit basis.501 However, in practice, it is unlikely that a shipowner who has carried goods to their destination after a deviation will be refused payment of freight by the charterer.502 It is not clear to what extent the state of the law is still as described in the previous paragraph. The old geographical deviation cases that established 495 Glynn v Margetson & Co [1893] AC 351. 496 See, eg, Dunne v Australasian Steam Navigation Co (1876) 14 SCR (NSW) (L) 131; Glynn v Margetson & Co [1893] AC 351. 497 James Morrison & Co Ltd v Shaw, Savill and Albion Co Ltd [1916] 2 KB 783; F Kanematsu & Co Ltd v The Ship Shahzada (1957) 96 CLR 477 at 487 per Taylor J; Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Australia) Pty Ltd (1966) 115 CLR 353 at 382 per Windeyer J. 498 Hain Steamship Co Ltd v Tate and Lyle Ltd (1936) 41 Com Cas 350 at 354 per Lord Atkin. 499 Compagnie Primera de Navagaziona Panama v Compania Arrendataria de Monopolio de Petroleos SA [1940] 1 KB 362 at 375 per MacKinnon LJ. 500 Hain Steamship Co Ltd v Tate and Lyle Ltd (1936) 41 Com Cas 350. 501 See Hain Steamship Co Ltd v Tate and Lyle Ltd (1936) 41 Com Cas 350 at 368-369 per Lord Wright MR (HL). 502 Hain Steamship Co Ltd v Tate and Lyle Ltd (1936) 41 Com Cas 350 at 368-369 per Lord Wright MR (HL).

454

Shipping Law

[13.630]

the propositions stated therein were the seed from which the heretical doctrine of fundamental breach grew, and the demise of the doctrine of fundamental breach may also have done away with the effect of the deviation cases.503 In Tasman Express Line Ltd v JI Case (Australia) Pty Ltd (The Canterbury Express),504 the Court of Appeal of New South Wales was not prepared to go further than saying that a geographical deviation might still deprive a sea-carrier automatically of the benefit of exclusion clauses in a bill of lading. If the deviation cases are no longer good law, the question whether an exclusion clause applies after a geographical deviation is purely one of construction.505 There seems to be no reason, though, why deviation should not continue to be regarded as a breach sufficiently serious to entitle the charterer to treat the contract as at an end.506 In any event, given the breadth of liberty clauses in charterparties, cases involving geographical deviation are now rare. In The Canterbury Express, the Court of Appeal of New South Wales made it clear that “quasi-deviations” such as unauthorised deck carriage do not automatically deprive the carrier of the protection of exclusion clauses in a bill of lading.507 It seems appropriate that there should be the same result in cases involving voyage charterparties.

Losses and expenditures on the carrying voyage [13.630]

In ordinary circumstances, all losses and expenditures on the carrying voyage are the shipowner’s responsibility, unless the charterparty expressly provides otherwise. However, if the charterparty is on FIO, FIOS or FIOST terms, the charterer is liable for any damage to the ship and/or the cargo occurring on the voyage if that damage is caused by the loading process or by bad stowing or trimming.508 The charterer is also

503 However, in Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab [2000] 1 Lloyd’s Rep 211 at 215, Stuart-Smith LJ said that the demise of the doctrine of fundamental breach “[did] not affect the reasoning based on Glynn v Margetson & Co”. 504 Tasman Express Line Ltd v JI Case (Australia) Pty Ltd (The Canterbury Express) (1992) 111 FLR 108. 505 See, eg, Darlington Futures Ltd v Delco (Australia) Pty Ltd (1986) 161 CLR 500; Nissho Iwai (Australia) Ltd v Malaysian International Shipping Corp Berhad (1989) 167 CLR 219. 506 That seems to be the position in England: in Motis Exports Ltd v Dampskibsselskabet AF 1912 Aktieselskab [2000] 1 Lloyd’s Rep 211 at 215, Stuart-Smith LJ said that the demise of the doctrine of fundamental breach “[did] not affect the reasoning based on Glynn v Margetson & Co”. J Cooke, T Young and M Ashcroft, Voyage Charters (4th ed, Informa Law (Routledge), Oxford, 2014) at [12.28] state: “The obligation to proceed without unjustifiable deviation is a fundamental term, or condition, of the contract and any breach of it, although slight in degree, confers on the charterer the right to elect whether to affirm or rescind the contract.” 507 See [12.340]. 508 For a consideration of liability under FIO, FIOS and FIOST terms, see [13.560].

[13.630]

13 Voyage Charterparties

455

liable for any damage to the ship and/or the cargo caused by its own failure to load a cargo complying with the description in the charterparty contract.509 The shipowner is under a general maritime law duty to take reasonable care for cargo carried under a voyage charterparty, similar to the duty imposed on a bill of lading carrier by Art 3, r 2 of the Hague and Hague-Visby Rules.510 However, unlike contracts for the carriage of goods under bills of lading, where the Hague and Hague-Visby Rules (and the Australian modification of the latter) limit the exclusions available to the carrier,511 voyage charterparties may contain whatever exclusion clauses the parties agree to include.512 The parties may choose to limit the exceptions available to the shipowner to those in the Hague or Hague-Visby Rules, by incorporating the Rules by reference, using a clause known as the Clause Paramount.513 The bulk cargoes that are commonly carried under voyage charterparties (coal, wheat, oil, phosphates, etc) are generally less susceptible to loss or damage than the general or containerised cargoes carried under bills of lading and sea waybills. As a result, claims for loss of or damage to cargo are less common under voyage charterparties than under bills of lading and sea waybills:514 many voyage charterparty disputes are about laytime and demurrage. Where the charterer does make a claim in respect of loss or damage to cargo, it is resolved according to the terms of the charterparty including, in particular, any exclusion clauses therein.515 Where the charterer is the shipper of the goods carried under the charterparty, most claims for loss of or damage to the goods are brought by the receiver, who claims under the bill of lading or other carriage document issued by the shipowner-carrier, not under the charterparty, although the former may incorporate the terms of the latter.516 If losses are suffered or expenditures are incurred in extraordinary circumstances, it may be the case that the shipowner does not bear the 509 See, eg, General Feeds Inc v Burnham Shipping Corp (The Amphion) [1991] 2 Lloyd’s Rep 101. See also [13.520]. 510 For a consideration of Art 3, r 2 of the Hague and Hague-Visby Rules, see [12.310]. 511 See [12.370]. 512 For a “tolerably comprehensive” list of exception clauses and the cases in which they have been considered, see B Eder et al, Scrutton on Charterparties (22nd ed, Sweet & Maxwell, London, 2011), pp 224-229. 513 See, eg, Furness Withy (Aust) Pty Ltd v Metal Distributors (UK) Ltd (The Amazonia) [1990] 1 Lloyd’s Rep 236. 514 Voyage charterparties for the carriage of bulk liquids in parcel tankers are something of an exception. Claims that the contract cargo has been contaminated by the residue of previous cargoes carried in the relevant tank are relatively common: see, eg, Gardner Smith Pty Ltd v The Ship Tomoe 8 (1990) 19 NSWLR 588. 515 Gardner Smith Pty Ltd v The Ship Tomoe 8 (1990) 19 NSWLR 588; President of India v Metcalfe Shipping Co Ltd [1970] 1 QB 289. 516 Such claims are considered in detail in Chapter 12, especially at [12.720].

456

Shipping Law

[13.640]

risk alone, but is entitled to receive a general average contribution from the other parties interested in the venture. Because general average involves the shippers or receivers of the cargo as well as the charterer and shipowner, it is dealt with separately in Chapter 18.

The destination of the carrying voyage — the place of discharge [13.640]

In almost all cases, the discharge port or place is either named in the charterparty itself or is nominated by the charterer before the chartered ship leaves the loading port. As Hobhouse J observed in Heinrich Hanno & Co BV v Fairlight Shipping Co Ltd (The Kostas K):517 Under any charterparty which does not identify the discharging port to which the vessel has to proceed, there is an obligation, either express or implied, of the charterer to nominate a discharging port … [A]ny nomination, once made, is irrevocable because the effect in law of making a nomination is that the port nominated must be treated as if it was [sic] written into the charterparty as the discharge port.

If the charterparty expressly provides a date by which the discharging port must be nominated, the charterer is in breach of contract if it does not nominate a port by that date. If no nomination is made by the due date, the ship cannot then proceed to the port of the master’s choice, but is obliged to wait for orders until the charterparty is frustrated by the charterer’s delay.518 If the charterparty does not specify a date by which the nomination must be made, the charterer is obliged to nominate within a reasonable time. As in the case of the loading port, the charterparty may specify that the nominated discharge port or place be a “safe port” or “safe berth”, or that discharge may take place “so near thereto as she may safely get and lie always afloat”. The same principles apply to the safety of the discharge port as apply to the safety of the loading port.519 If the cargo cannot be discharged safely at the nominated port, the chartered ship is entitled to proceed to the nearest safe port, and to discharge the cargo there.520 Further, if the chartered ship is already on demurrage when it arrives at the nominated, unsafe port (total laytime having been used in loading), demurrage time continues to run while the ship moves to the alternative, safe port, unless the charterparty expressly provides otherwise.521 517 Heinrich Hanno & Co BV v Fairlight Shipping Co Ltd (The Kostas K) [1985] 1 Lloyd’s Rep 231 at 234. 518 Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1970] 2 Lloyd’s Rep 409 (aff’d on different grounds Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1971] 2 Lloyd’s Rep 91 (CA)). 519 See [13.70]. 520 Dahl v Nelson, Donkin & Co (1881) 6 App Cas 38. See also The Athamas (Owners) v Dig Vijay Cement Co Ltd [1963] 1 Lloyd’s Rep 287. 521 See Ricargo Trading SA v Spliethoff’s Bevrachtingskantor BV (The Tassos N) [1983] 1 Lloyd’s Rep 648.

[13.650]

13 Voyage Charterparties

457

DISCHARGING [13.650]

Under the general maritime law, the chartered ship is not required to give notice of readiness at the discharging port or berth: discharging laytime commences when the ship arrives and is ready to discharge, and the charterer is expected to be on the lookout for the ship and its cargo.522 In practice, the charterparty almost invariably provides for notice of readiness at the discharging place as well as the loading place.523 In other respects, the law relating to laytime and demurrage is the same for discharging as for loading.524 One issue that may arise in relation to discharge port laytime but not load port laytime is whether the shipowner may validly give notice of readiness to discharge if it is exercising a lien over the contract cargo for freight, load port demurrage or general average contributions. In Gill & Duffus SA v Rionda Futures Ltd,525 it was held that the shipowner could give a valid notice of readiness in these circumstances, provided the exercise of the lien was both lawful and reasonable. The chartered ship may be legally and physically ready to discharge even though it is not willing to discharge the cargo to the receivers, because of the exercise of the lien. The shipowner’s obligation to discharge the cargo to the receivers at the port of discharge is subject to its right to exercise a lien given by the charterparty. If the charterparty contains an effective cesser clause, the charterer is not liable for discharge port demurrage, as its liability ceases when loading is complete.526 In these circumstances, the receiver of the cargo pays any discharge demurrage, or the shipowner exercises the lien for demurrage given in consideration of the cesser clause. If there is no cesser clause, or if the shipowner’s lien is not effective for any reason, the charterer remains liable for discharge demurrage, even if the charterparty expressly provides that the receiver of the cargo shall be liable.527 As in the case of loading, responsibility for the physical processes of discharging may rest with either the shipowner or the charterer, 522 Harman v Clarke (1815) 4 Camp 159; 171 ER 51; Harman v Mant (1815) 4 Camp 161; 171 ER 52; Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) [1990] 1 Lloyd’s Rep 507 at 513 per Mustill LJ; Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] 2 Lloyd’s Rep 487 at 494 per Potter LJ. 523 See, eg, cl 6 of the Gencon 1994 form (Appendix 6). 524 For a consideration of loading laytime and demurrage, see [13.160]–[13.490]. The Gencon Strike Clause (cl 16, Appendix 6), which is considered at [13.380], makes different provision for a strike affecting discharging than for a strike affecting loading. 525 Gill & Duffus SA v Rionda Futures Ltd [1994] 2 Lloyd’s Rep 67 at 76 per Clarke J, relying on comments made by Evans J in Rashtriya Chemicals and Fertilizers Ltd v Huddart Parker Industries Ltd (The Boral Gas) [1988] 1 Lloyd’s Rep 342 at 346. 526 See [13.570]. 527 Tudor Marine Ltd v Tradax Export SA (The Virgo) [1976] 2 Lloyd’s Rep 135 (CA); Etablissement Biret Et Cie SA v Yukiteru Kaiun KK and Nissui Shipping Corporation (The Sun Happiness) [1984] 1 Lloyd’s Rep 381. See [13.480].

458

Shipping Law

[13.660]

depending on what they agree in the charterparty.528 In the rare cases where the charterparty makes no express provision for responsibility for discharging, the shipowner is obliged to take the cargo from the ship’s hold and place it alongside the ship, as on liner or gross terms.529

FREIGHT [13.660]

Freight was defined by Sir John Donaldson MR as follows in Compania Naviera General SA v Kerametal Ltd (The Lorna I):530 Freight is the consideration payable for the carriage of the goods to and their delivery at the destination. In the absence of special contractual provisions, it is earned only upon the delivery of the goods at their destination.

Freight rates are usually agreed by weight or volume, so that the total freight paid depends on the quantity of cargo. If the cargo swells531 or shrinks532 during the carrying voyage, freight is payable on the amount of cargo shipped, and not the amount delivered, unless the charterparty provides otherwise. Less commonly, the freight may be fixed at a gross sum without reference to the amount of cargo shipped. This is known as “lump freight”, and it is payable in full even if the cargo is damaged in transit, provided that some of the cargo is delivered.533 A third possibility is for freight to be fixed by weight but also by reference to the deadweight capacity of the ship, as is common in tanker charterparties, where freight rates are often fixed by reference to published rates for a notional tanker of deadweight capacity of 75,000 metric tonnes, known as Worldscale 100. If the freight rate for a chartered tanker of deadweight capacity of 100,000 metric tonnes is expressed to be “Worldscale 75”, the rate per metric tonne is 75% of the published Worldscale 100 figure.534 Freight must be paid in full, without deduction. The charterer is not entitled to make deductions from the freight if the cargo has been 528 See [13.560]. 529 See Ballantyne & Co v Paton & Hendry 1912 SC 246. 530 Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] 1 Lloyd’s Rep 373 at 374. However, note Gaudet v Brown: Cargo Ex Argos (1873) LR 5 PC 134 (which is authority for the proposition that freight is earned when the cargo is ready for delivery, and that actual delivery need not take place) and Asfar & Co v Blundell [1896] 1 QB 123 (which is authority for the proposition that the cargo must be delivered in merchantable condition for freight to be earned). 531 Gibson v Sturge (1855) 10 Ex 622; 156 ER 588. 532 Shell International Petroleum Ltd v Seabridge Shipping Ltd (The Metula) [1978] 2 Lloyd’s Rep 5. “Boil off” of liquid natural gas (LNG) cargoes during the carrying voyage is a common phenomenon, with the result that the tonnage at discharge is less than the tonnage on loading. 533 William Thomas & Sons v Harrowing Steamship Co [1915] AC 58 (HL). 534 The original Worldscale notional ship, which was used from 1969 to 1988, was a tanker of 19,500 long tons deadweight: see J Schofield, Laytime and Demurrage (5th ed, Informa Law (Routledge), Oxford, 2011) at [6.24] n 47. When the present Worldscale was first introduced on 1 January 1989, it was known for a while as “New Worldscale”, but the reference to “New” has been dropped over time. The Worldscale Tanker Nominal

[13.660]

13 Voyage Charterparties

459

damaged or diminished; it must pay freight in full and seek redress in a separate action or counterclaim.535 The charterer also cannot rely on any claim for damage or short delivery by way of defence to the shipowner’s claim for payment of freight. In this respect, freight is an exception to the common law rule: it “stands uneroded like an outcrop of pre-Cambrian amid the detritus of sedimentary deposits”.536 This is so even where the shipowner has repudiated the contract by breach.537 There can be no dispute about the shipowner’s entitlement: if the charterer does not pay, the shipowner is entitled to summary judgment for freight, even if the charterparty contains a clause by which the parties agree to submit all disputes to arbitration.538 However, if the charterparty expressly reserves to the charterer the right to deduct from freight for short delivery, the deducted amount is not merely a form of security for the amount claimed by the charterer: it can be kept by the charterer.539 The shipowner’s right to full freight is affected only if the cargo delivered has been damaged to such an extent that “as a matter of business, the nature of the thing has been altered”.540 The mere fact that the cargo delivered is not identical commercially with the cargo loaded does not deprive the shipowner of the right to full freight.541

Freight Scale is now available on the internet at a subscription site: http:// www.worldscale.co.uk. For an example of a dispute about the calculation of freight by reference to Worldscale, see BP Oil International Ltd v Target Shipping Ltd (The Target) [2013] 1 Lloyd’s Rep 561 (CA). 535 Henriksens Rederi A/S v THZ Rolimpex (The Brede) [1974] QB 233 (CA), expressly approved in Aries Tanker Corporation v Total Transport Ltd (The Aries) [1977] 1 Lloyd’s Rep 334 (HL). See also A/S Gunnstein & Co K/S v Jensen, Krebs and Nielsen (The Alfa Nord) [1977] 2 Lloyd’s Rep 434; Cleobulus Shipping Co Ltd v Intertanker Ltd (The Cleon) [1983] 1 Lloyd’s Rep 586; Elena Shipping v Aidenfeld Ltd (The Elena) [1986] 1 Lloyd’s Rep 425; Opal Maritime Agencies Pty Ltd v Baltic Shipping Co (1998) 158 ALR 416 at 424-425 (reversed on other grounds in Opal Maritime Agencies Pty Ltd v Proceeds of Sale of MV Skulptor Konenkov (2000) 98 FCR 519); Andrea Merzario Ltd v Internationale Spedition Leitner Gesellschaft GmbH [2001] 1 Lloyd’s Rep 490 at 503 per Rix LJ. Contrast a claim for demurrage, where the charterer is entitled to set off a counter-claim if there is sufficient connection between claim and counter-claim: see Exmar BV v National Iranian Tanker Co (The Trade Fortitude) [1992] 1 Lloyd’s Rep 169. 536 Aries Tanker Corporation v Total Transport Ltd (The Aries) [1977] 1 Lloyd’s Rep 334 at 340 per Lord Simon of Glaisdale. 537 See Colonial Bank (now Bank of Boston Connecticut) v European Grain & Shipping Ltd (The Dominique) [1989] 1 Lloyd’s Rep 431 (HL), where it was held that an assignee of the shipowner’s rights was entitled to recover freight, even though the shipowner had abandoned the charterparty in mid-voyage, because the charterparty provided that freight was deemed earned on signing of the bills of lading at the beginning of the voyage. 538 Cleobulus Shipping Co Ltd v Intertanker Ltd (The Cleon) [1983] 1 Lloyd’s Rep 586. 539 Lakeport Navigation Co Panama SA v Anonima Petroli Italiana SpA (The Olympic Brilliance) [1982] 2 Lloyd’s Rep 205 (CA). 540 Asfar & Co v Blundell [1896] 1 QB 123 at 127 per Lord Esher MR. 541 Montedison SpA v Icroma SpA (The Caspian Sea) [1980] 1 Lloyd’s Rep 91.

460

Shipping Law

[13.660]

Although freight is earned only on delivery, the charterparty may provide for freight to be paid in advance, or for some other arrangement — such as 90% to be paid within seven days of the bills of lading being signed, the remaining 10% to be paid after completion of discharge and settlement of demurrage/despatch.542 Arrangements of this kind do not affect the time when freight is earned, unless they expressly so provide. If the charterparty merely provides for pre-payment of freight, the charterer’s obligation is simply to make a payment on account of freight at a time when it has not yet been earned.543 However, in these circumstances, any advance payments are not returnable, even if the charterparty is frustrated by loss of the ship and cargo on the carrying voyage.544 This rule is often confirmed by express stipulation in the charterparty, by the use of such expressions as, “Freight non-returnable cargo and/or vessel lost or not lost”. Such a clause does not mean that freight is earned on shipment of the goods, but merely that pre-payments on account of freight may be kept by the shipowner.545 Thus, if the charterer does not make the required pre-payment and the ship is lost in mid-voyage, the shipowner is not entitled to recover the amount of freight that should have been pre-paid, because it was not earned before the contract was frustrated by the sinking of the chartered ship.546 In order to vary the rule that freight is earned only on delivery, the charterparty must expressly provide otherwise. For example, in Vagres Compania Maritima SA v Nissho-Iwai American Corp (The Karin Vatis),547 the charterparty provided “Freight deemed earned as cargo loaded”, and that 95% of freight was to be paid within three days of completion of loading, 542 In the latter case, the remaining 10% becomes payable on agreement or determination of the amount of demurrage or despatch payable, not on actual payment of the agreed or determined amount: see Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1991] 2 Lloyd’s Rep 485 (aff’d on other grounds Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558; decision on this point implicitly approved at 567, 569), preferring Minerals and Metals Trading Corp of India v Encounter Bay Shipping Co Ltd (The Samos Glory) [1986] 2 Lloyd’s Rep 601 to La Pintada Compania Naviera SA v President of India (The La Pintada) [1983] 1 Lloyd’s Rep 37, on the basis of the decision in President of India v Lips Maritime Corp [1988] AC 395 (reported sub nom as The Lips [1987] 2 Lloyd’s Rep 311). 543 Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] 1 Lloyd’s Rep 373 at 374 per Sir John Donaldson MR. 544 Byrne v Schiller (1871) LR 5 Ex 319; Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at 43 per Viscount Simon LC. 545 Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] 1 Lloyd’s Rep 373 at 375, 376, 377. 546 Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] 1 Lloyd’s Rep 373. 547 Vagres Compania Maritima SA v Nissho-Iwai American Corp (The Karin Vatis) [1988] 2 Lloyd’s Rep 330. See also Colonial Bank (now Bank of Boston Connecticut) v European Grain & Shipping Ltd (The Dominique) [1989] 1 Lloyd’s Rep 431 (HL), where it was held that an assignee of the shipowner’s rights was entitled to recover freight, even though the shipowner had abandoned the charterparty in mid-voyage, because the charterparty provided that freight was deemed earned on signing of the bills of lading at the beginning of the voyage.

[13.670]

13 Voyage Charterparties

461

the remaining 5% to be paid within 20 days of the completion of discharge and the shipowner’s presentation of its laytime statements. The ship was lost in mid-voyage, so discharge never occurred, but the English Court of Appeal nevertheless held that the shipowner was entitled to recover the 5% of freight that became payable after discharge, because it had been earned on loading. Similarly, in Ellis Shipping Corp v Voest Alpine Intertrading (The Lefthero),548 the charterparty provided that freight was deemed earned on signing of bills of lading, and that 90% was to be paid within five days of that date, the remaining 10% to be payable after “right and true delivery” of the cargo. It was held that the shipowner was entitled to recover the balance of 10%, even though it had never made “right and true delivery” because it had wrongfully discharged the cargo at a port other than the one stipulated in the charterparty. In both The Karin Vatis and The Lefthero, it was held that the provisions relating to payment after discharge or delivery merely provided the timetable for payment, not a condition precedent to the shipowner’s entitlement to freight. In contrast, in Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2),549 the charterparty provided that 90% of freight should be paid within seven days of signing bills of lading, the remaining 10% to be paid after completion of discharge and settlement of demurrage/despatch. The English Court of Appeal proceeded on the basis that completion of discharge and settlement of demurrage and despatch were conditions precedent to the charterer’s obligation to pay the balance of the freight.550 It is possible to reconcile these cases on the basis that the charterparty in The Antclizo (No 2) did not modify the usual rule that freight is earned on delivery, unlike those in The Karin Vatis and The Lefthero. It is safer, though, to confine oneself to the observation that the question whether the requirements for payment constitute a condition precedent is always one of construction.551

CONTRACTS OF AFFREIGHTMENT [13.670]

Strictly speaking, any contract for the carriage of goods by sea is a contract of affreightment. In practice, though, the expression is mainly used to describe a contract for the carriage of such large quantities of goods that several voyages are needed. Such contracts are also sometimes known as volume contracts. Contracts of affreightment have many of the characteristics of voyage charterparties, and the parties to a contract of

548 Ellis Shipping Corp v Voest Alpine Intertrading (The Lefthero) [1991] 2 Lloyd’s Rep 599 (reversed without consideration of this point Ellis Shipping Corp v Voest Alpine Intertrading (The Lefthero) [1992] 2 Lloyd’s Rep 109). 549 Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558. 550 Antclizo Shipping Corp v Food Corp of India (The Antclizo) (No 2) [1992] 1 Lloyd’s Rep 558 at 567 per Parker LJ, with whom Stocker LJ agreed. 551 Ellis Shipping Corp v Voest Alpine Intertrading (The Lefthero) [1991] 2 Lloyd’s Rep 599 at 610 per Evans J.

462

Shipping Law

[13.670]

affreightment often use a modified version of a voyage charterparty standard form, although specialised standard form contracts of affreightment do exist.552 The three fundamental aspects of a contract of affreightment are the amount of cargo to be carried, the number of voyages that are needed and the period of time in which the contract is to be performed. As is often the case under single voyage charterparties,553 the amount of cargo to be carried is usually not stated precisely, because it cannot be. Instead, the total quantity of cargo to be carried is stated in terms of a range of acceptable quantities, such as “400,000 metric tonnes 10% MOLCHOPT” (more or less at charterer’s option). Because the quantity of cargo is stated as an acceptable range, the requisite number of voyages, or “liftings” as they are usually called, must also be stated as an acceptable range. For example, a contract of affreightment for the carriage of 400,000 metric tonnes of coal, 10% MOLCHOPT, might provide for nine to 11 liftings. The average lifting would then be about 40,000 metric tonnes, but the contract may also provide for a minimum or maximum amount per lifting, such as “not less than 35,000 MT and not more than 50,000 MT, at owner’s option”. The contract also stipulates the period of time in which the agreed number of liftings must be completed, although the distribution of liftings within the period is often stated only vaguely: for example, “nine to 11 liftings fairly evenly spread over three years from 30 September 2015”. The contract may name the ships that are to perform the liftings, but it is often the case that the contract provides only a specification, which focuses on the deadweight capacity of the ship. For example, the contract of affreightment may specify that the carrying ships must have deadweight capacity of not less than 35,000 MT and not more than 50,000 MT, with four holds, four hatches, and their own loading and discharging gear. When the charterer is ready for a lifting under the contract of affreightment, it notifies the shipowner, by specifying a period of time within which the carrying ship must arrive at the port of loading. This period is known as the “laycan” period, which is an abbreviation of laytime/cancelling period: loading laytime cannot commence before the beginning of the laycan period; if the carrying ship has not arrived by the end of the period, the charterer may cancel the lifting.554 The contract of affreightment usually stipulates the duration of the laycan period to be nominated by the charterer, and how soon it may commence after notice is given. For example, the contract might provide that the charterer must nominate a ten-day laycan period, not less than 14 days in advance. Once 552 The Baltic and International Maritime Conference (BIMCO) has produced a standard form contract of affreightment for dry bulk cargoes called VOLCOA, which is available at the BIMCO website: http://www.bimco.org/~/media/Chartering/Document_ Samples/Withdrawn/Sample_Copy_VOLCOA.ashx. 553 See [13.520]. 554 For a consideration of the commencement of loading laytime and cancellation, see [13.160]–[13.220].

[13.670]

13 Voyage Charterparties

463

the charterer has nominated the laycan period, the shipowner must arrange for a ship of the agreed specification to be at the loading port within the nominated laycan, ready to load the charterer’s cargo.

14

Time Charterparties [14.10] INTRODUCTION ........................................................................................... 467

[14.10] General ............................................................................................... 467 [14.20] Classification of contractual terms ................................................ 468 [14.30] FORMATION OF THE CONTRACT .......................................................... 469 [14.40] THE DESCRIPTION OF THE SHIP ............................................................ 471

[14.40] Introduction ...................................................................................... 471 [14.50] Name .................................................................................................. 471 [14.60] Nationality/flag ............................................................................... 472 [14.70] Classification and other certification ............................................ 473 [14.80] Speed and fuel consumption ......................................................... 474 [14.100] Carrying capacity ........................................................................... 478 [14.110] Seaworthiness ................................................................................. 482 [14.160] Limitation of time .......................................................................... 490 [14.170] DELIVERY ..................................................................................................... 492

[14.170] The meaning of “delivery” .......................................................... 492 [14.180] The time for delivery and cancellation ...................................... 492 [14.190] The place and moment of delivery ............................................ 495 [14.200] Bunkers on delivery ...................................................................... 496 [14.210] THE DURATION OF THE CHARTER PERIOD .................................... 498

[14.210] Introduction .................................................................................... 498 [14.220] Express overlap/underlap ........................................................... 499 [14.230] Implied overlap/underlap ........................................................... 501 [14.240] Late redelivery ................................................................................ 501 [14.250] Early redelivery .............................................................................. 508 [14.260] Duration by reference to a trip ................................................... 512 [14.270] TRADING LIMITS ....................................................................................... 513

[14.270] Introduction .................................................................................... 513 [14.280] Geographical trading limits ......................................................... 513 [14.300] Safe ports ......................................................................................... 516

466

Shipping Law

[14.310] HIRE ................................................................................................................ 521

[14.310] Introduction .................................................................................... 521 [14.320] Deductions from hire .................................................................... 523 [14.330] Off-hire clauses ............................................................................... 525 [14.350] Frustration ....................................................................................... 533 [14.360] EMPLOYMENT OF THE SHIP AND RESPONSIBILITY FOR CARGO DURING THE CHARTER PERIOD .......................................... 533

[14.360] Employment of the ship and agency ......................................... 533 [14.400] Cargo handling and liability for loss of or damage to cargo ................................................................................................. 541 [14.420] Issuing and signing bills of lading and other carriage documents ....................................................................................... 550 [14.430] WITHDRAWAL ............................................................................................ 552

[14.430] Introduction .................................................................................... 552 [14.440] Withdrawal for non-payment of hire ......................................... 552 [14.460] Withdrawal for reasons other than non-payment of hire ...... 557 [14.470] The consequences of withdrawal ................................................ 558 [14.480] FRUSTRATION ............................................................................................. 561 [14.490] REDELIVERY ................................................................................................ 565

[14.490] Time of redelivery .......................................................................... 565 [14.500] Place of redelivery ......................................................................... 565 [14.510] The condition of the ship on redelivery .................................... 566 [14.520] Bunkers on redelivery ................................................................... 567 [14.530] LIENS .............................................................................................................. 568

[14.530] Introduction .................................................................................... 568 [14.540] Clause 18 of NYPE 1946 ............................................................... 569

[14.10]

14 Time Charterparties

467

INTRODUCTION General [14.10]

A time charterparty differs from a voyage charterparty in that it is not usually a contract for the carriage of a particular cargo of goods.1 In Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia),2 Bingham LJ defined this type of contract as follows:3 A time charterparty is a contract by which the shipowner agrees with the time charterer that during a certain named period he will render services by his servants and crew to carry the goods which are put on board his ship by the time charterer. It is for the time charterer to decide, within the terms of the charterparty, what use he will make of the vessel.

In almost all cases, the charterer uses the ship to engage in the business of carriage of goods by sea, by making further contracts under bills of lading, sea waybills or voyage sub-charterparties with third parties wishing to ship goods on the ship.4 The effect of this arrangement is to divide responsibility for the navigational and commercial operations of the ship. The shipowner runs the ship, along with its master and crew, without having to worry about finding commercial employment for it. The charterer finds commercial employment for the ship without having to worry about the technical and navigational aspects of running it, such as employing the master and crew. The charterer pays for the commercial use of the ship, and in return is entitled to keep the freight paid by the cargo-owners for carriage of their goods on the ship. The shipowner is guaranteed payment for the use of the ship without having to find cargoes in the market; the charterer makes profits in the cargo market (the freights it receives from cargo-owners minus the hire it has to pay the shipowner) without having to run the ship itself. The commercial implications of the distinction between time and voyage charters were described as follows by Lord Hobhouse in Whistler International Ltd v Kawasaki Kisen Kaisha Ltd (The Hill Harmony):5 1 A time charterparty for the duration of a single voyage, known as a trip time charterparty, may be a contract for the carriage of a particular named cargo. 2 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100. 3 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107 per Bingham LJ, quoting Mackinnon LJ in Sea and Land Securities Ltd v William Dickinson & Co Ltd [1942] 2 KB 65 at 69 for the first but not the second sentence. See also Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 337 per Hirst LJ (reversed on other grounds Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1). 4 Kuwait Maritime Transport Co v Rickmers Linie KG (The Danah) [1993] 1 Lloyd’s Rep 351 at 353 per Saville J. The question whether the third party’s contract of carriage is with the shipowner or the charterer is considered at [12.810]–[12.830] and at [14.400]–[14.420]. 5 Whistler International Ltd v Kawasaki Kisen Kaisha Ltd (The Hill Harmony) [2001] 1 AC 638 at 652 (reported sub nom as The Hill Harmony [2001] 1 Lloyd’s Rep 147).

468

Shipping Law

[14.20]

Under a voyage charter the owner or disponent owner is using the vessel to trade for his own account. He decides and controls how he will exploit the earning capacity of the vessel, what trades he will compete in, what cargoes he will carry. He bears the full commercial risk and expense and enjoys the full benefit of the earnings of the vessel. A time charter is different. The owner still has to bear the expense of maintaining the ship and the crew. He still carries the risk of marine accidents and has to insure his interest in the vessel appropriately. But, in return for the payment of hire, he transfers the right to exploit the earning capacity of the vessel to the time charterer. The time charterer also agrees to provide and pay for the fuel consumed and to bear disbursements which arise from the trading of the vessel.

Time charterparties specify the port at which (or range of ports within which) the chartered ship is to be delivered to the charterer, the port at which (or range of ports within which) it is to be redelivered to the shipowner, the permitted geographical trading limits, and the period of hire between delivery and redelivery. Within those agreed limits of space and time, the chartered ship is completely at the disposal of the charterer, although the charterparty may also place limits on the kinds of cargoes that can be carried.6 Although the ship’s master is still employed by the owner, he or she takes voyage orders from the charterer.7 The remuneration paid by the charterer to the shipowner for use of the ship is called hire, and it is paid periodically rather than on completion of any particular voyage. The shipowner is usually given the right to withdraw the ship from the charterer’s service for non-payment of hire. By entering into a time charterparty, the shipowner insulates itself from the fluctuations of the freight market, as it receives the agreed rate of hire from the charterer for the period of the charter, no matter what the market freight rate. Having chartered the ship, the time charterer may wish to do the same, by sub-chartering the ship to a sub-charterer, usually (and preferably) at a higher rate. For that reason, it is not uncommon for ships to be the subject of long chains of intermediate time charters, which separate the shipowner from the sub-charterer at the bottom of the chain, who has the right to give voyage orders.8 Although common, this method of hedging against the effects of market movement is relatively unsophisticated, as futures hedging devices go.

Classification of contractual terms [14.20]

The effect of a breach of contract depends on the classification of the term breached. It was once the case that contractual terms were classified as conditions or warranties. A condition was an essential term, breach of which automatically entitled the non-breaching party to terminate the contract; warranties were non-essential terms, for which the only remedy for breach was damages. That simple dual classification has

6 See, eg, NYPE 2015, cl 16, lines 364-370 (Appendix 7). 7 See NYPE 2015, cl 8, lines 130-136 (Appendix 7) and [14.360]. 8 See, eg, Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220, which is considered at [14.200].

[14.30]

14 Time Charterparties

469

now been abandoned, and it is now recognised that some breaches of non-essential obligations are significantly serious to justify termination of the contract by the non-breaching party.9 Non-essential terms are now classified as intermediate terms.10 Although the usual remedy for breach of an intermediate term is damages, the non-breaching party may have a right to terminate if the breach goes to the root of the contract, a conclusory description that takes into account the nature of the contract, the nature of the term, the kind and degree of the breach, the consequences of breach, and the adequacy of damages as a remedy.11 Breach of an essential term, still called a condition, entitles the non-breaching party to terminate. The modern classification of contractual terms was developed in a time charterparty case (Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd),12 and it has particular significance in such cases, because timechartered ships are usually engaged in carrying goods under contracts with third parties. If a dispute arises between the shipowner and the charterer as a result of a breach of contract by one of them, the question whether the non-breaching party has the right to terminate the charterparty contract is of great significance, as it has an inevitable effect on the third party contracts.

FORMATION OF THE CONTRACT [14.30]

Like voyage charterparties, time charterparties are usually made by brokers acting on behalf of their principals, the shipowner and charterer, each of which is bound by the actual or ostensible authority of its broker as agent.13 The brokers commonly agree the terms of the

9 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, adopted by a majority of the High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 136-140 [47]-[53] per Gleeson CJ, Gummow, Heydon and Crennan JJ. 10 In Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, Diplock LJ divided contractual obligations into three categories — conditions, intermediate terms and warranties. In Compagnie Generale Maritime v Diakan Spirit SA (The Ymnos) [1982] 2 Lloyd’s Rep 574 at 583, Robert Goff J said that the use of the term “warranty” to describe a minor term of the contract is superfluous and an aberration. Although the classification of a term as “intermediate” implies that it occupies a position between two extremes, it does indeed seem that all non-essential terms are to be regarded as “intermediate terms”: see Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 139-140 [51]-[53] per Gleeson CJ, Gummow, Heydon and Crennan JJ. 11 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 140 [54] per Gleeson CJ, Gummow, Heydon and Crennan JJ. 12 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. 13 See, eg, Ridgeway Maritime Inc v Beulah Wings Ltd (The Leon) [1991] 2 Lloyd’s Rep 611 (principal being bound by the ostensible authority of a broker); Yukong Lines Ltd of Korea v Rendsburg Investments Corp [1998] 1 Lloyd’s Rep 322 (broker held to be agent not principal); Seatrade Groningen BV v Geest Industries Ltd (The Frost Express) [1996] 2 Lloyd’s Rep 375 (CA) (signature on charterparty not qualified by “as agent” bound party as principal). For a description of the process of “fixing” a voyage charterparty, see [13.30].

470

Shipping Law

[14.30]

charterparty in an exchange of emails, and a written contract, usually in one of the standard forms, is not produced until some time later. Indeed, it is often the case that no written contract is ever produced, and the terms of the contract are to be found only in the final “recap” email between the brokers.14 The brokers’ agreement to “fix” the ship is often expressed to be subject to various conditions being satisfied, such as “subject to management approval”15 or “subject to signing”.16 The English view is that there is no contract until all “subjects” have been satisfied, or “lifted”,17 which means that carefully crafted “subjects” can give the parties (or one of them) a unilateral escape route from a fixture that has become unattractive because of the movement of the market. The vaguest of these escape routes is the expression “subject to details” or “subdets”. The English view is that if the fixture is made “subdets”, there is no concluded contract until all details have been agreed.18 In contrast, the United States view is that agreement “subject to details” is sufficient to make a binding contract, provided that the essential terms, such as the description of the ship’s characteristics, the time and place of delivery, the duration of the charter, the place of redelivery, the hire rate and any trading exclusions have been agreed.19 The English view has been followed in Australia20 and (implicitly) in Canada.21 If the initial agreement is final, and the written document produced later does not accurately record the terms agreed by the parties, the court may rectify it, whether or not it has been signed or executed by the parties in 14 See, eg, Hyundai Merchant Marine Co Ltd v Americas Bulk Transport Ltd (The Pacific Champ) [2013] 2 Lloyd’s Rep 320 (considering which of two “recap” emails constituted a binding contract between the parties). 15 A rather extreme example is The Asia Star [2010] 2 Lloyd’s Rep 121 (Sin CA), where the fixture of a voyage charterparty was said to be “Subject to stem/suppliers/receivers/ terminals/chtrs management approval”. 16 Oceanografia SA de CV v DSND Subsea AS (The Botnica) [2007] 1 Lloyd’s Rep 37 (“subject to signing”). 17 The Baltic Code, which contains guidance for brokers who operate on the Baltic Exchange in London, states quite firmly that “[i]t is important to note that no fixture has been concluded until all ‘subjects’ have been lifted”: see Baltic Code (2014), p 19. 18 Star Steamship Society v Beogradska Plovidba (The Junior K) [1988] 2 Lloyd’s Rep 583. Compare Hanjin Shipping Co Ltd v Zenith Chartering Corp (The Mercedes Envoy) [1995] 2 Lloyd’s Rep 559 (final agreement made between brokers not affected by addition of words “fixed in good faith”). 19 Great Circle Lines Ltd v Matheson & Co Ltd 681 F 2d 121 (2d Cir 1982); Hornbeck Offshore Services LLC v Fairfield Industries Inc No 09-2905; 2010 WL 2008971 (ED La 17 May 2010). 20 I/S Rederiet Erik B Kromann v Ocean Bridge Shipping Pty Ltd (The Hermann C Boye) (unreported, WA Sup Ct, 1991), following Star Steamship Society v Beogradska Plovidba (The Junior K) [1988] 2 Lloyd’s Rep 583. 21 In Margem Chartering Co v Cosena SrL [1997] 2 FC 1001, the Trial Division of the Federal Court of Canada quoted and applied The Junior K, but found that the brokers in that case had agreed all the details.

[14.50]

14 Time Charterparties

471

any formal way.22 When the parties intend that the agreement will be reduced to writing and signed (as in a fixture “subject to signing”), the written document produced by the brokers does not constitute the agreement if it remains unsigned; one or other of the parties may prove that the draft document does not accurately represent the agreement.23 In such a case, if one of the parties seeks to rely on a particular term, the onus is on that party to prove that the term forms part of the contract.24 If the parties begin to perform the contract notwithstanding the fact that one or more of the “subjects” has not been satisfied, principles of waiver and estoppel dictate the conclusion that neither party can subsequently purport to withdraw on the basis that no binding contract was ever made.25

THE DESCRIPTION OF THE SHIP Introduction [14.40]

The description of the chartered ship is an important part of every time charterparty. Such details as the ship’s cruising speed, fuel consumption and cargo capacity all affect the profits the charterer can expect to make during the period of the charter. A minor difference between the ship’s stated capability and its actual performance may have a major effect on its profitability. For example, a difference of only one knot between the ship’s actual cruising speed and the cruising speed stated in the charterparty affects the time taken to complete a voyage, and, thus, affects the number of voyages the ship can be expected to complete over a period of time.26

Name [14.50]

The contractual term specifying the name of the chartered ship is a condition.27 The shipowner is obliged to deliver the named ship, and is in breach if another ship is delivered, even if it is identical to that named in the charterparty. Delivery of a ship other than that named gives the charterer the right to terminate the contract, unless the charterparty

22 Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1991] 1 Lloyd’s Rep 246 (this point not considered on appeal: Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1992] 2 Lloyd’s Rep 103). 23 Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1992] 2 Lloyd’s Rep 103. 24 Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1992] 2 Lloyd’s Rep 103. 25 Oceanografia SA de CV v DSND Subsea AS (The Botnica) [2007] 1 Lloyd’s Rep 37. 26 See, eg, Ocean Glory Compania Naviera SA v A/S PV Christensen (The Ioanna) [1985] 2 Lloyd’s Rep 164. 27 Societe Navale de L’Ouest v RWJ Sutherland & Co (1920) 4 Ll L Rep 58. See also Reardon Smith Line Ltd v Hansen-Tangen (The Diana Prosperity) [1976] 2 Lloyd’s Rep 621 (HL); Sanko Steamship Co Ltd v Kano Trading Ltd [1978] 1 Lloyd’s Rep 156 for examples of ships identified by hull number during construction.

472

Shipping Law

[14.60]

gives the shipowner the right to deliver a substitute.28 For that reason, time charterparties often identify the ship as being “TBN” (meaning To Be Nominated), or name the ship but specify “or substitute”, although the nominated ship (or substitute) must meet the criteria specified in the contract about carrying capacity, performance, etc.

Nationality/flag [14.60]

Although there is some authority for the proposition that the term specifying the nationality of the chartered ship is a condition,29 the better view is that it is an intermediate term, unless at the time of making the charter the ship’s flag is likely to have a vital bearing on the ship’s safety or trading opportunities.30 The nationality of the ship is not usually a quality that is essential to the purpose of the contract, and it should not be the case that the charterer is entitled to terminate the contract in every case if the ship is not of the specified nationality. Breach of the nationality term should give rise to a right to terminate only in special circumstances where the nationality of the ship is important. For example, in 1987, Kuwaiti oil tankers were reflagged as American ships to protect them from attack in the conflict between Iran and Iraq. In these circumstances, the nationality of the ship was of great significance, and breach of a nationality clause describing a chartered ship as American would have gone to the root of the contract, thus giving a charterer the right to terminate even if the clause were treated as an intermediate term. Less dramatically, but equally significantly, the cabotage laws of many countries confine the right to conduct coastal voyages to ships flagged in the country in question (as the United States does),31 or give priority to ships flagged on the national register, as Australia does.32 If the chartered ship is to be employed on coastal voyages in a country with cabotage restrictions, its nationality is obviously an essential term.

28 See, eg, SA Maritime et Commerciale v Anglo-Iranian Oil Co Ltd [1954] 1 Lloyd’s Rep l; Niarchos (London) Ltd v Shell Tankers Ltd [1961] 2 Lloyd’s Rep 496 for examples of cases concerning substitutions. 29 B Eder et al, Scrutton on Charterparties (22nd ed, Sweet & Maxwell, London, 2011), p 114 at [7-007], citing Behn v Burness (1863) 3 B & S 751; 122 ER 281. In fact, Williams J in Behn says that the statement of the ship’s nationality can constitute “a warranty” (at 757; 284) in certain circumstances. 30 See M Wilford, T Coghlin and J Kimball, Time Charters (7th ed, Informa Law (Routledge), London, 2014) at [3.39]. 31 Under the Merchant Marine Act 1920 (US) (Jones Act), trade between domestic US ports is limited to ships built in US shipyards, owned by US citizens and operated under the US flag: 46 USC §§ 12102, 12103, 12111, 12112. This has a dramatic impact on the supply of all kinds of goods to far-flung parts of the US, such as Hawaii, Guam, and Puerto Rico. See, eg, In re Hawaiian and Guamanian Cabotage Antitrust Litigation 647 F Supp 2d 1250 (WD Wash 2009). 32 Coastal Trading (Revitalising Australian Shipping) Act 2012 (Cth).

[14.70]

14 Time Charterparties

473

Classification and other certification [14.70]

The term of the charterparty stating the ship’s classification status is a condition.33 It is a promise that the ship is actually classed as described at the time of making the charterparty. It does not amount to a promise that the ship is properly so classed,34 with the result that it has been said that the term requires only “documentary compliance”, meaning possession of the relevant classification society or other certificates, whether or not those certificates accurately reflect the condition of the ship.35 Similarly, the term is not a promise that the ship will still be in the same class when delivered to the charterer,36 nor that it will continue in that classification throughout the charter period.37 To impose an obligation on the shipowner to keep the chartered ship at the same classification after the contract is made would be to make it responsible for the subsequent actions of the classification society, over which it has no control.38 However, if the ship loses its classification during the charter period because of the shipowner’s failure to keep it in good repair, the shipowner may be liable for breach of the separate obligation to maintain the ship in a seaworthy condition.39 Because the classification clause is a condition, any breach of it gives the charterer the right to terminate the contract and to recover damages representing the cost of finding another ship of the agreed classification. If the charterer waives the right to terminate for breach and accepts delivery of the ship, it is still entitled to recover damages for any losses suffered as a result of the fact that the ship was not classed as described. Usually, the

33 Ollive v Booker (1847) 1 Ex 416; 154 ER 177 at 423; 180 per Parke B; Hurst v Usborne (1856) 18 CB 144; 139 ER 1321; Routh v Macmillan (1863) 2 H & C 749; 159 ER 310; French v Newgass (1878) 3 CPD 163 at 166 per Brett LJ; Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corp (The Apollonius) [1978] 1 Lloyd’s Rep 53 at 61-62 per Mocatta J; BS & N Ltd (BVI) v Micado Shipping Ltd (Malta) (The Seaflower) [2001] 1 Lloyd’s Rep 341 at 350-351 per Rix LJ. See also B Eder et al, Scrutton on Charterparties (22nd ed, Sweet & Maxwell, London, 2011), p 112 at [7-003]; M Wilford, T Coghlin and J Kimball, Time Charters (7th ed, Informa Law (Routledge), London, 2014) at [3.46]-[3.49]. 34 French v Newgass (1878) 3 CPD 163; Transpetrol Maritime Services Ltd v SJB (Marine Energy) BV (The Rowan) [2012] 1 Lloyd’s Rep 564 at 569 [23] per Longmore LJ. 35 Sea Glory Maritime Co v Al Sagr National Insurance Co (The Nancy) [2014] 1 Lloyd’s Rep 14 at 42 [217] per Blair J. 36 French v Newgass (1878) 3 CPD 163. 37 Hurst v Usborne (1856) 18 CB 144; 139 ER 1321; French v Newgass (1878) 3 CPD 163; Lorentzen v White Shipping Co Ltd (1942) 74 Ll L Rep 161 at 163 per Atkinson J; BS & N Ltd (BVI) v Micado Shipping Ltd (Malta) (The Seaflower) [2001] 1 Lloyd’s Rep 341 at 350-351 per Rix LJ. 38 See Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corp (The Apollonius) [1978] 1 Lloyd’s Rep 53 at 62 per Mocatta J. 39 See, eg, Koch Marine Inc v D’Amica Societa di Navigazione ARL (The Elena D’Amico) [1980] 1 Lloyd’s Rep 75. For the obligation of maintenance, see [14.130].

474

Shipping Law

[14.80]

only loss that the charterer suffers in these circumstances is that of increased insurance premiums that may have to be paid for a ship with an inferior classification.40 In modern shipping practice, ships must carry many other certificates indicating compliance with regulations, as well as their standard classification society certification. If a time charterparty includes a term promising that the chartered ship is compliant with some regulatory regime other than class, it seems that this, too, requires only “documentary compliance”, meaning that it amounts merely to a promise that the ship has the required certification, not that it is properly so certified.41

Speed and fuel consumption Generally

[14.80]

Time charterparties usually contain a clause whereby the shipowner undertakes that the ship is capable of sailing at a specified rate of knots at a specified rate of fuel consumption. This clause is an intermediate term, although it is usual to describe it as a “speed warranty” or, more fully, “speed and consumption warranty”. The use of the word “warranty” is misleading, because the possibility exists that a breach of the undertaking with respect to speed may, in certain circumstances, be sufficiently serious to allow the charterer to terminate the contract.42

Because weather conditions and the size of the cargo carried affect the speed of the ship, it is usual for the agreed speed to be expressed in approximate terms only, often by use of the word “about”. The effect of the word “about” is to import some margin on either side of the stated figure, the size of the margin being a question of fact in the particular case.43 However, if the charterparty contains an additional qualification such as “all details given in good faith without guarantee”, the effect is that the shipowner makes no promise at all about speed and consumption;

40 Routh v MacMillan (1863) 2 H & C 749; 159 ER 310. See also Huppert v Stock Options of Australia Pty Ltd (1965) 112 CLR 414. 41 Sea Glory Maritime Co v Al Sagr National Insurance Co (The Nancy) [2014] 1 Lloyd’s Rep 14 (a marine insurance case about compliance with the International Safety Management (ISM) Code). 42 See, eg, Dolphin Hellas Shipping SA v Itemslot SA (The Aegean Dolphin) [1992] 2 Lloyd’s Rep 178, where a passenger cruise ship’s inability to make the speed specified in the charterparty was held to be a repudiatory breach entitling the charterer to terminate, because the ship’s ability to maintain that speed was fundamental to the commercial venture proposed by the charterer. 43 Arab Maritime Petroleum Transport Co v Luxor Trading Corp (The Al Bida) [1987] 1 Lloyd’s Rep 124. In Ocean Glory Compania Naviera SA v A/S PV Christensen (The Ioanna) [1985] 2 Lloyd’s Rep 164, the parties agreed that the expression “about 13 knots” imported a margin of half a knot, which is the usual rule of thumb.

[14.80]

14 Time Charterparties

475

in such a case, there is no warranty.44 The speed and consumption warranty may either be an “all weather warranty”, in which case the promised average speed and consumption must be met, no matter what weather conditions the ship encounters during its service, or it may be a promise that the ship will make the promised average performance in stipulated weather conditions.45 Although there is some authority to the effect that the speed-andconsumption term is a promise that the ship is capable of making the agreed speed when the contract is made,46 the better view is that it is a promise that the ship is capable of making that speed when it is delivered to the charterer.47 The whole commercial purpose of the speed and consumption clause is that the ship should be capable of making the agreed speed at the agreed rate of consumption when it enters into the service of the charterer.48 Its speed capabilities at the time of making the contract are of little significance, particularly in the light of the fact that sufficient time may elapse between the making of the contract and the delivery of the ship for its average speed to be affected, usually by fouling of its bottom.

44 Losinjska Plovidba Brodarstovo DD v Valfracht Maritime Co Ltd (The Lipa) [2001] 2 Lloyd’s Rep 17. See also Continental Pacific Shipping Ltd v Deemand Shipping Co Ltd (The Lendoudis Evangelos II) [1997] 1 Lloyd’s Rep 404 (charterer’s estimate of trip duration given “without guarantee” held not to impose contractual obligation). See also Transpetrol Maritime Services Ltd v SJB (Marine Energy) BV (The Rowan) [2012] 1 Lloyd’s Rep 564, a voyage charterparty case where it was held that the expression “TBOOK WOG” (meaning “to the best of our knowledge, without guarantee”) meant that there was no liability for non-compliance in the absence of fraud or bad faith. 45 See, eg, Bulk Ship Union SA v Clipper Bulk Shipping Ltd (The Pearl C) [2012] 2 Lloyd’s Rep 533: “Speed and consumptions [sic] is given for good weather conditions up to Beaufort Scale 4 and Douglas Sea State 3 and no adverse currents”; see also Hyundai Merchant Marine Co Ltd v Trafigura Beheer BV (The Gaz Energy) [2012] 1 Lloyd’s Rep 211, where the question was whether the speed and consumption warranty was an “all weather” warranty or only a warranty in relation to performance in weather conditions of Beaufort Force 4 or less. The court held that the provision was an “all weather” warranty. The speed and consumption warranty in NYPE 2015, cl 12(a) (Appendix 7) specifies both wind speed and sea state. 46 Lorentzen v White Shipping Co Ltd (1942) 74 Ll L Rep 161. 47 Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corp (The Apollonius) [1978] 1 Lloyd’s Rep 53; Arab Maritime Petroleum Transport Co v Luxor Trading Corp (The Al Bida) [1987] 1 Lloyd’s Rep 124. In Bulk Ship Union SA v Clipper Bulk Shipping Ltd (The Pearl C) [2012] 2 Lloyd’s Rep 533, it was common ground that the speed-and-consumption warranty was a promise about the ship’s performance at the moment of delivery, not throughout the service. See also Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd (The Pamphilos) [2002] 2 Lloyd’s Rep 681, where the key question of fact was whether hull fouling that later caused slow steaming and excessive fuel consumption had been present on delivery to the charterer, or had occurred after delivery. The court held that the arbitrators had correctly decided the latter, and so there was no breach of the speed-and-consumption clause. 48 See Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corp (The Apollonius) [1978] 1 Lloyd’s Rep 53 at 64 per Mocatta J.

476

Shipping Law

[14.80]

The speed-and-consumption clause does not impose a continuing obligation49 unless the charterparty expressly so provides.50 If the ship is capable of making the agreed speed at the agreed rate of consumption at the time of delivery, but falls below that capability during the charter period, the shipowner is not in breach of its promise under the clause.51 However, if the reason for the reduction in the speed of the ship is poor maintenance, the shipowner may be in breach of the continuing obligation (commonly found in charterparties) to maintain the ship in a thoroughly efficient state in hull and machinery.52 Similarly, a failure to make the promised speed and consumption during the charter period may constitute a breach by the shipowner of its obligation to prosecute all voyages with “due despatch”.53 If the shipowner is in breach of the speed-and-consumption clause, the charterer can recover any money lost as a result of the slowness of the ship and/or the extra fuel used, less any money saved.54 Although the moment of breach is the moment of delivery, the losses sustained by the charterer (and any benefits gained by it) are felt throughout the charter period, or until the problem is rectified. For example, in Ocean Glory Compania Naviera SA v A/S PV Christensen (The Ioanna),55 the chartered ship was incapable of making the agreed speed of “about 13 knots” at the time of delivery. The charterers lost 7.2 days by way of extra time taken to complete the voyages undertaken during the charter period. They brought an action against the shipowner to recover 7.2 days of wasted hire and the cost of 1.5 tonnes of marine diesel oil consumed on each of the 7.2 extra days. Although the charterers succeeded in recovering these sums, the court set off against them the cost of 50 tonnes of fuel oil which had been saved because the fuel consumption of the ship was lower while it was travelling at a slower speed than that agreed. Staughton J said that to allow the charterer to recover lost hire and extra fuel costs without 49 Arab Maritime Petroleum Transport Co v Luxor Trading Corp (The Al Bida) [1987] 1 Lloyd’s Rep 124 at 129 per Parker LJ. 50 See, eg, Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1992] 2 Lloyd’s Rep 103; Dolphin Hellas Shipping SA v Itemslot SA (The Aegean Dolphin) [1992] 2 Lloyd’s Rep 178; Exmar NV v BP Shipping Ltd (The Gas Enterprise) [1993] 2 Lloyd’s Rep 352 for examples of charterparties imposing a continuing obligation to make the stipulated speed. The speed-and-consumption warranty in NYPE 2015, cl 12(a) (Appendix 7) imposes a continuing obligation “throughout the duration of this Charter Party”. 51 See, eg, Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd (The Pamphilos) [2002] 2 Lloyd’s Rep 681, described above. 52 For the obligation of maintenance, see [14.130]. 53 Bulk Ship Union SA v Clipper Bulk Shipping Ltd (The Pearl C) [2012] 2 Lloyd’s Rep 533. For an example of the “due despatch” obligation, see NYPE 2015, cl 8(a), line 130 (Appendix 7). 54 The charterer may be entitled to make deductions from payments of hire on account of the slowness of the ship: see [14.320]. 55 Ocean Glory Compania Naviera SA v A/S PV Christensen (The Ioanna) [1985] 2 Lloyd’s Rep 164.

[14.90]

14 Time Charterparties

477

taking into account the savings made because of the ship’s slower speed would be to give the charterer “the plums but not the duff”.56 The speed-and-consumption clause stipulates a minimum speed and a maximum consumption, not a guaranteed rate of either. The shipowner is not in breach of contract in the event of “over-performance” by the ship averaging more than the agreed speed and/or using less than the agreed amount of fuel,57 but it is also not entitled to be paid more in the event of over-performance unless the charterparty expressly so provides.58 Some charterparties make provision for both over- and under-performance in hire adjustment clauses that provide a formula for increasing or decreasing the rate of hire paid by the charterer in the event that the ship averages a different speed and consumption from that agreed in the charterparty.59 Although hire adjustment clauses commonly provide that the shipowner shall be “indemnified” or “compensated” in the event of over-performance, the shipowner is entitled to an increased rate of hire, even though it does not in fact suffer any loss in the event of over-performance.60 Slow steaming

[14.90]

Although disputes about speed and fuel consumption have traditionally arisen because of charterers complaining that the chartered ship has not been able to sail as quickly as promised, or used too much fuel when doing so, the position has been reversed to some extent in recent years. The price of fuel and lubricating oil is now so high that charterers, who must provide and pay for this oil (see [14.200]), often want to order the ship to steam slowly or even “ultra-slowly”, particularly on ballast (unladen) voyages, because the ship’s engines

56 Ocean Glory Compania Naviera SA v A/S PV Christensen (The Ioanna) [1985] 2 Lloyd’s Rep 164 at 166-167. 57 Showa Oil Tanker Co Ltd of Japan v Maravan SA of Caracas (The Larissa) [1983] 2 Lloyd’s Rep 325. 58 In Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1991] 1 Lloyd’s Rep 246, it was held that a provision for adjustment of hire in the event of over-performance was not to be implied as a necessary consequence of the shipowner guaranteeing the speed and consumption of the ship throughout the charter period. This point was not considered on appeal: Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1992] 2 Lloyd’s Rep 103. 59 See, eg, cl 24 of the Shelltime 4 form, which is Form 17-11A in Benedict on Admiralty (6th ed, Bender/LexisNexis, New York, subscription service to 1993), Vol 2C. The clause is also reproduced in M Wilford, T Coghlin and J Kimball, Time Charters (7th ed, Informa Law (Routledge), London, 2014) at [37.118]. It provides for adjustment of hire in the event of both under- and over-performance. See, eg, Petroleo Brasiliero S/A v Elounda Shipping Co (The Evanthia M) [1985] 2 Lloyd’s Rep 154, which considered the application of cl 24 while the chartered ship was being used for storage at the charterer’s option. 60 Didymi Corp v Atlantic Lines and Navigation Co Inc (The Didymi) [1988] 2 Lloyd’s Rep 108. (This case should not be confused with Atlantic Lines and Navigation Co Inc v Didymi Corp (The Didymi) [1988] 1 Lloyd’s Rep 97, which is a dispute between the same parties about the same ship, but about a different matter in a different court, the Federal Court of Canada.)

478

Shipping Law

[14.100]

consume much less fuel at slower speeds. In deciding whether to give slow steaming orders, the charterer must calculate whether the savings on fuel offset the revenue that will be lost as a result of performing fewer voyages during the charter period. Shipowners are concerned about such orders because slow steaming can have an adverse effect on the ship’s engines and may possibly expose them to liability to the owners of any cargo on board because of delay. Thus, ironically, it can now be the charterer who wants to steam slowly and the owner who wants to steam quickly. Older standard form time charterparties do not deal with this situation, which is related to the question of what orders the charterer may give about operation of the ship during the charter period and also the shipowner’s obligation to prosecute voyages with “due despatch”,61 so specialised clauses have been developed, which spell out the circumstances in which the charterer may give slow steaming orders.62 The 2015 version of the New York Produce Exchange form contains a detailed Slow Steaming clause.63 In the absence of special provision of this kind, slow steaming is a breach of the speed-and-consumption warranty and the obligation to prosecute voyages with due despatch, unless ordered by the charterer.64

Carrying capacity [14.100]

The description of the carrying capacity of the chartered ship is an intermediate term. Although there is old authority for the view that the description of the carrying capacity of the ship is a condition of the contract if the parties state it to be so,65 and that it is not even part of the contract at all if they do not,66 the better view is that cargo capacity clauses are intermediate terms of the contract whatever the parties choose to call them.67 In Compagnie Generale Maritime v Diakan Spirit SA (The Ymnos),68 the charterparty stated that the owners “guaranteed” the loading of containers onto the chartered ship according to an agreed stowage plan without any stability problems. Considerable stability problems were encountered in loading and discharging according to the stowage plan, and the charterers sought to discharge the contract either 61 See [14.80] and [14.360]. 62 The Baltic and International Maritime Council (BIMCO) published a Slow Steaming Clause for Time Charter Parties in December 2011. See: https://www.bimco.org/ Chartering/Clauses_and_Documents/Clauses/Slow_Steaming_Clause.aspx. 63 NYPE 2015, cl 38 (Appendix 7). 64 Bulk Ship Union SA v Clipper Bulk Shipping Ltd (The Pearl C) [2012] 2 Lloyd’s Rep 533. 65 Pust v Dowie (1865) 5 B & S 33; 122 ER 745. 66 Barker v Windle (1856) 6 El & Bl 675; 119 ER 1015; Gibbs v Grey (1857) 2 H & N 22; 157 ER 10. 67 Cargo Ships El-Yam Ltd v Invoer-En Transport Onderneming Invotra NV [1958] 1 Lloyd’s Rep 39; Compagnie Generale Maritime v Diakan Spirit SA (The Ymnos) [1982] 2 Lloyd’s Rep 574; Tor Line AB v Alltrans Group of Canada Ltd (The TFL Prosperity) [1984] 1 Lloyd’s Rep 123 (HL). 68 Compagnie Generale Maritime v Diakan Spirit SA (The Ymnos) [1982] 2 Lloyd’s Rep 574.

[14.100]

14 Time Charterparties

479

on the ground that the shipowners had been in breach of condition, or on the ground that the shipowners’ breach of the cargo capacity term was one going to the root of the contract. Robert Goff J held that the “container guarantee clause” was not a condition of the contract, notwithstanding the use of the word “guarantee”. Following the Hongkong Fir case,69 he held that the clause created an intermediate obligation, thus entitling the charterers to terminate only if the shipowner’s breach went to the root of the contract.70 The carrying capacity of the chartered ship can be expressed in terms of volume or weight or, in the case of container ships, in the number of containers it can carry.71 A description by volume or container capacity can usually be made with complete accuracy, as the size of the holds of the ship or the number of its container cells should be well-known and easily verified. In contrast, the deadweight capacity72 of the chartered ship may vary during the life of the charter period. Ships are marked with load lines on their sides, indicating the maximum draught to which the ship can be loaded safely. That maximum draught (and, thus, the deadweight capacity) varies between summer and winter, fresh water and salt water, tropical waters and temperate waters and, to a certain extent, with the density of the cargo to be carried. For example, if the cargo is of very low density, the holds of the ship may be filled to capacity, even though the ship is not loaded down to the maximum load lines.73 Charterparties for ships designed to carry cargoes of low but variable

69 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, adopted by a majority of the High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at 136-140 [47]-[53] per Gleeson CJ, Gummow, Heydon and Crennan JJ. 70 Although the shipowners’ breach was an egregious one, the judge declined to interfere with the arbitrators’ decision that it was not sufficiently serious to justify termination: see Compagnie Generale Maritime v Diakan Spirit SA (The Ymnos) [1982] 2 Lloyd’s Rep 574 at 587, following Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) [1981] 2 Lloyd’s Rep 239 (HL) with respect to the judge’s (then) power to interfere with arbitral awards. The standard of review of arbitral awards in the UK was changed by the Arbitration Act 1996 (UK). 71 The capacity of container ships is stated in terms of 20 ft equivalent units, or TEUs. Standard shipping containers are 8 ft 6 ins high, 8 ft wide, and either 20 ft or 40 ft long. A 20 ft container is one TEU; a 40 ft container is two TEUs. 72 The deadweight capacity of a ship is the tonnage of cargo that it is capable of carrying. The deadweight tonnage of a ship is different from its gross tonnage, which is the displacement weight of the ship itself, calculated in accordance with the provisions of the Navigation Act 2012 (Cth). In the case of tankers and bulk carriers, the former is about one-and-a-half to two times as much as the latter; in the case of container ships and other general cargo carriers, the two are much closer to being equal, with the former often being slightly more than the latter. 73 In such a case, the ship may need to take on extra ballast to ensure stability during the voyage.

480

Shipping Law

[14.100]

density, such as woodchip carriers, usually state the carrying capacity by reference to a specified “stowage factor”, which indicates the density of the cargo.74 If the deadweight capacity is given with reference to a particular cargo, it will be taken to be a description of the ship’s ability to carry the agreed amount of that cargo.75 If, as is more common, the deadweight capacity of the ship is given without reference to a particular cargo, it is taken to be a description of the general carrying capacity of the ship “in the abstract”, even if the charterparty states elsewhere the cargoes that may or are to be carried.76 Provided that the general carrying capacity of the ship is accurately described, the charterer has no action against the shipowner if the ship cannot carry the agreed amount of some particular cargo.77 Because of the inevitable inaccuracy of description by deadweight capacity, cargo capacity clauses in standard form charterparties commonly state deadweight capacity in approximate terms only, usually by use of the word “about”. The word “about” gives the shipowner some margin of error in describing the carrying capacity of the chartered ship, the size of the permitted margin being determined by reference to reasonable commercial expectations.78 Although the description of the ship’s carrying capacity is probably, like all other aspects of the ship’s description, only a promise that the ship has the promised capacity at the time of delivery,79 the shipowner may 74 The “stowage factor” is the number of cubic metres occupied by one metric tonne. For iron ore, the stowage factor is usually about 0.40 m3/MT; for coal, it is usually about 1.5 m3/MT; for woodchips, it is usually about 2.5 m3/MT. 75 Mackill v Wright Brothers & Co (1888) 14 App Cas 106 (HL). 76 W Millar & Co Ltd v Owners of SA Freden [1918] 1 KB 611 (CA); Re Thomson & Co and Brocklebank Ltd [1918] 1 KB 655. 77 See Cargo Ships El-Yam Ltd v Invoer-En Transport Onderneming Invotra NV [1958] 1 Lloyd’s Rep 39 at 52 per Devlin J: “the sort of margin as a matter of business so contemplated within the meaning of the word ‘about’”; Louis Dreyfus & Cie v Parnaso Cia Naviera SA [1960] 2 QB 49 at 55 per Sellers LJ: “In the absence of any trade evidence on the matter … within a reasonable commercial margin”. 78 See Cargo Ships El-Yam Ltd v Invoer-En Transport Onderneming Invotra NV [1958] 1 Lloyd’s Rep 39 at 52 per Devlin J: “the sort of margin as a matter of business so contemplated within the meaning of the word ‘about’”; Louis Dreyfus & Cie v Parnaso Cia Naviera SA [1960] 2 QB 49 at 55 per Sellers LJ: “In the absence of any trade evidence on the matter … within a reasonable commercial margin”. 79 In relation to speed and consumption, see Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corp (The Apollonius) [1978] 1 Lloyd’s Rep 53 at 64 per Mocatta J; Arab Maritime Petroleum Transport Co v Luxor Trading Corp (The Al Bida) [1987] 1 Lloyd’s Rep 124 at 129 per Parker LJ. For examples of charterparties imposing a continuing obligation to make the stipulated speed, see Atlantic Marine Transport Corp v Coscol Petroleum Corp (The Pina) [1992] 2 Lloyd’s Rep 103; Dolphin Hellas Shipping SA v Itemslot SA (The Aegean Dolphin) [1992] 2 Lloyd’s Rep 178; Exmar NV v BP Shipping Ltd (The Gas Enterprise) [1993] 2 Lloyd’s Rep 352. The speed-and-consumption warranty in NYPE 2015, cl 12(a) (Appendix 7) imposes a continuing obligation “throughout the duration of this Charter Party”.

[14.100]

14 Time Charterparties

481

nevertheless be held liable if the carrying capacity becomes smaller during the life of the charter, depending on the provisions of the charterparty. In Golden Fleece Maritime Inc v ST Shipping and Transport Inc (The Elli and the Frixos),80 the carrying capacity of two tankers was reduced by changes to MARPOL81 regulations about the carriage of fuel oil. The shipowner was held liable for breach of a provision of the Shelltime 4 time charterparty requiring the ships to have on board “all certificates, documents and equipment required from time to time” to comply with any relevant laws. Although the clause (cl 1) containing the description of the ship was a promise that the ship would conform to the description “At the date of delivery”, the English Court of Appeal held that precedence was to be given to the words “from time to time” in the specific promise about compliance with legal regulations, which therefore imposed a continuing obligation. The Elli and the Frixos was a controversial decision, to put it mildly, and organisations representing shipowners have drafted standard form clauses for inclusion in time charterparties, designed to spread the cost of complying with changed regulations between owners and charterers.82 Breach of the cargo capacity clause usually83 gives rise to damages based on the difference between the hire paid for a ship of the specified cargo capacity, and the hire that would be payable for a ship of the actual capacity of the one chartered.84 Damages for any other losses suffered by the charterer as a result of the breach may be recoverable according to the ordinary principles of remoteness of damage in contract.85 80 Golden Fleece Maritime Inc v ST Shipping and Transport Inc (The Elli and the Frixos) [2008] 2 Lloyd’s Rep 119 (CA). 81 The International Convention for the Prevention of Pollution by Ships 1973, as amended 1978 (known as MARPOL 73/78): see Chapter 19. 82 In January 2014, Intertanko (the International Association of Independent Tanker Owners) published a “Vessel Modification Due to Change in Regulations Clause”, which was specifically designed to respond to Golden Fleece Maritime Inc v ST Shipping and Transport Inc (The Elli and the Frixos) [2008] 2 Lloyd’s Rep 119 (CA): see http:// www.intertanko.com/Topics/Legal-and-Documentary-/INTERTANKO-ModelClauses/INTERTANKO-Model-Clauses1/Vessel-Modification-due-to-Change-inRegulations-Clause/. 83 As the cargo capacity clause is an intermediate term, it is possible that breach of it may be sufficiently serious to go to the root of the contract, thus entitling the charterer to terminate the contract: see Compagnie Generale Maritime v Diakan Spirit SA (The Ymnos) [1982] 2 Lloyd’s Rep 574. In this case, although the shipowners’ breach was an egregious one, the judge declined to interfere with the arbitrators’ decision that it was not sufficiently serious to justify termination: at 587, following Pioneer Shipping Ltd v BTP Tioxide Ltd (The Nema) [1981] 2 Lloyd’s Rep 239 (HL) with respect to the judge’s (then) power to interfere with arbitral awards. The standard of review of arbitral awards in the UK was changed by the Arbitration Act 1996 (UK). 84 Tibermede v Graham (1921) 7 Ll L Rep 250. 85 See, eg, Tor Line AB v Alltrans Group of Canada Ltd (The TFL Prosperity) [1982] 1 Lloyd’s Rep 617 (this point not considered on appeal: Tor Line AB v Alltrans Group of Canada Ltd (The TFL Prosperity) [1984] 1 Lloyd’s Rep 123 (HL)).

482

Shipping Law

[14.110]

In general, the shipowner’s obligation is to make the whole of the carrying capacity of the ship available to the charterer. It is often the case, though, that the charterparty qualifies that obligation by stating that the whole carrying capacity is available to the charterer, but “not more than the ship can reasonably and safely stow and carry”.86 This qualification is not restricted by reference to considerations of physical safety or seaworthiness, although these must clearly be major considerations.87 There may be other relevant considerations making it reasonable not to load or carry further cargo, such as, for example, loading restrictions stipulated by the ship’s classification society.88

Seaworthiness Seaworthiness generally

[14.110]

Seaworthiness is primarily but not exclusively a question of the physical state of the ship,89 and there is a multitude of cases dealing with various aspects of the condition of chartered ships. In Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd,90 Diplock LJ said of the concept of seaworthiness,91 “It embraces obligations with respect to every part of the hull and machinery, stores and equipment”. As a general rule, an undertaking of seaworthiness in a time charterparty requires that the ship itself be in all respects sound and able to encounter and withstand the ordinary perils of the sea, and also that the ship be fit to carry the kinds of cargo agreed in the charterparty.92 However, seaworthiness is not confined to the physical condition of the ship. It includes the provision of a sufficient and competent crew.93 It also requires the ship to carry certain 86 See, eg, lines 342-343 of the NYPE 2015 form (Appendix 7). 87 Furness Withy (Australia) Pty Ltd v Black Sea Shipping Co (The Roman Karmen) [1994] 1 Lloyd’s Rep 644. 88 Furness Withy (Australia) Pty Ltd v Black Sea Shipping Co (The Roman Karmen) [1994] 1 Lloyd’s Rep 644. 89 Alfred C Toepfer Schiffahrtsgesellschaft GmbH v Tossa Marine Co Ltd (The Derby) [1985] 2 Lloyd’s Rep 325 at 331 per Kerr LJ. 90 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. 91 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 71. 92 Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm) [1982] 1 Lloyd’s Rep 7 at 11 per Griffiths LJ. See, eg, Athenian Tankers Management SA v Pyrena Shipping Inc (The Arianna) [1987] 2 Lloyd’s Rep 376 (defect with no real commercial significance did not render chartered ship unseaworthy). For a consideration of seaworthiness in the context of contracts for the carriage of goods by sea, see [12.300] and [13.600]. 93 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. If the crew is sufficient and competent, the ship is seaworthy even if there are other crew-related problems causing delay: see Alfred C Toepfer Schiffarhtsgesellschaft GmbH v Tossa Marine Co Ltd (The Derby) [1985] 2 Lloyd’s Rep 325, where it was held that the absence of a “blue card” declaring the crew to be acceptable to the International Transport Workers Federation did not render the chartered ship unseaworthy, even though it kept it from putting to sea.

[14.120]

14 Time Charterparties

483

kinds of documents that bear upon its seaworthiness or fitness to perform the services for which the charterparty provides.94 Charterparty clauses imposing an obligation of seaworthiness are intermediate terms.95 As Sellers LJ said in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd,96 “It would be unthinkable that all the relatively trivial matters which have been held to be unseaworthiness could be regarded as conditions of the contract … and justify in themselves a cancellation or refusal to perform on the part of the charterer”. Thus, the usual remedy for unseaworthiness of the chartered ship is damages. The charterer is entitled to terminate the contract only if the shipowner’s breach of the seaworthiness obligation is such as to go to the root of the contract. Seaworthiness at the time of delivery

[14.120]

There is an implied term in every time charterparty that imposes an obligation on the shipowner to provide a ship that is seaworthy on delivery.97 However, standard form charterparties commonly include express seaworthiness clauses, which usually take the form that, on delivery, the ship will be “in every way fitted for the service”, or some variant thereof.98 A clause in these terms imposes an absolute obligation, which is breached if the ship is not seaworthy in any respect on delivery, unless the charterparty imposes a lesser obligation, such as one of due diligence.99 Unseaworthiness on delivery entitles the charterer to refuse to accept delivery of the ship until it is made 94 See Levy v Costerton (1816) 4 Camp 389; 171 ER 124 (absence of “clean bill of health” certificate); Ciampa v British India Steam Navigation Co Ltd [1915] 2 KB 774 (absence of “clean bill of health” certificate); Cheikh Boutros Selim El-Khoury v Ceylon Shipping Lines Ltd (The Madeleine) [1967] 2 Lloyd’s Rep 224 (absence of certificate from port health authority declaring chartered ship free from rats); Project Asia Line Inc v Shone (The Pride of Donegal) [2002] 1 Lloyd’s Rep 659 at 666 per Andrew Smith J. 95 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26. 96 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 56. 97 Giertsen v Turnbull 1908 SC 1101. In this case the Court of Session held that although the implied obligation of seaworthiness ceased on delivery, the express obligation extended for the whole of the charter period: at 1110. The court held that breakdown of the chartered ship due to unseaworthiness arising after delivery did not amount to a repudiatory breach entitling the charterer to cease payments of hire, but it would have entitled the charterer to damages: at 1110. 98 In Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, it was held that the words “in every way fitted for ordinary service” in the Baltime form imposed an obligation of seaworthiness; in Alfred C Toepfer Schiffarhtsgesellschaft GmbH v Tossa Marine Co Ltd (The Derby) [1985] 2 Lloyd’s Rep 325, it was held that the words “tight, staunch, strong and in every way fitted for the service” in the New York Produce Exchange 1946 form had the same effect. That time-honoured phrase has been replaced by the rather more prosaic expression “in every way fit to be employed for the intended service” in NYPE 2015, cl 2(b), lines 40-41 (Appendix 7). 99 For an example of a clause imposing the lesser obligation that the shipowner exercise due diligence to make the ship seaworthy on delivery, see Athenian Tankers Management SA v Pyrena Shipping Inc (The Arianna) [1987] 2 Lloyd’s Rep 376.

484

Shipping Law

[14.130]

seaworthy, and to claim damages for the delay.100 If the ship remains unseaworthy for a sufficient period after delivery to frustrate the commercial purpose of the charterparty, the charterer is entitled to terminate the contract.101 Seaworthiness throughout the charter period General

[14.130]

The obligation of seaworthiness implied by law does not extend beyond the time of delivery.102 Thus, the shipowner’s obligation with respect to seaworthiness does not continue for the duration of the charter period unless there is express provision to that effect in the charterparty. Standard form charterparties usually contain clauses imposing an obligation on the shipowner to “maintain the ship in a thoroughly efficient state in hull and machinery during service” or some variant thereof.103 Although there is authority to the effect that such clauses do not impose an absolute obligation to keep the ship seaworthy for the whole of the charter period,104 there is authority of equal or greater weight for the proposition that they do, unless the charterparty also contains an exclusion clause protecting the shipowner against the consequences of unseaworthiness arising during the charter period.105 100 Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 56 per Sellers LJ. 101 Tully v Howling (1877) 2 QBD 182 (CA); Snia Societa di Navigazione Industria e Commercio v Suzuki & Co (1924) 18 Ll L Rep 333, as interpreted in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 39 per Salmon J approved in the Court of Appeal: at 61, 65, 73. See also Universal Cargo Carriers Corp v Citati [1957] 2 QB 401 for the same principle with respect to voyage charterparties. 102 Giertsen v Turnbull 1908 SC 1101, where the Court of Session held that although the implied obligation of seaworthiness ceased on delivery, the express obligation extended for the whole of the charter period: at 1110. The court held that breakdown of the chartered ship due to unseaworthiness arising after delivery did not amount to a repudiatory breach entitling the charterer to cease payments of hire, but it would have entitled the charterer to damages: at 1110. 103 See, eg, NYPE 2015, cl 6(a), lines 94-96 (Appendix 7): “keep her in a thoroughly efficient state in hull, machinery and equipment for and during the service”. 104 Snia Societa di Navigazione Industria e Commercio v Suzuki & Co (1924) 17 Ll L Rep 78 at 88 per Greer J (this point not considered on appeal: Snia Societa di Navigazione Industria e Commercio v Suzuki & Co (1924) 18 Ll L Rep 333). A dictum of Lord Roche in Tynedale Steam Shipping Co v Anglo-Soviet Shipping Co (1936) 54 Ll L Rep 341 at 344 is often cited as authority for the same proposition, but the passage as a whole indicates that Lord Roche took this view only because of the presence of an exclusion clause in the charterparty protecting the shipowner against the consequences of unseaworthiness arising during the charter period. 105 Minister of Materials v Wold Steamship Co Ltd [1952] 1 Lloyd’s Rep 485 at 497-498 per Sellers J; Anglo-Saxon Petroleum Co Ltd v Adamastos Shipping Co Ltd [1957] 2 QB 255 (CA) (reversed on other grounds: Anglo-Saxon Petroleum Co Ltd v Adamastos Shipping Co Ltd [1959] AC 133). Giertsen v Turnbull 1908 SC 1101 is some authority for the same proposition, although the headnote misleadingly gives a different impression. The Court of Session held that although the implied obligation of seaworthiness ceased on delivery, the express obligation extended for the whole of the charter period: at 1110.

[14.130]

14 Time Charterparties

485

Given the plain meaning of the words, the latter view is to be preferred. If the obligation is absolute and continuing and if the chartered ship becomes unseaworthy for any reason at any time during the charter period, the shipowner is in breach of contract and is liable for damages in respect of any loss the charterer may suffer as a result of the unseaworthiness, unless the shipowner is protected by the provisions of an exclusion clause in the charterparty.106 The charterer is entitled to terminate the contract for breach of this intermediate term if the unseaworthiness is sufficiently serious to go to the root of the contract, or if the ship remains unseaworthy for a sufficient period to frustrate the commercial purpose of the charterparty.107 Some standard form charterparties specifically provide that the absolute obligation of seaworthiness continues throughout the charter period. Others impose a lesser obligation of due diligence in relation to unseaworthiness,108 sometimes by incorporation of the Hague or HagueVisby Rules (which practice is considered at [14.150]), or alternatively an obligation to exercise due diligence to maintain or restore the vessel to a condition of seaworthiness if it falls short of that condition during the charter period.109

The court held that breakdown of the chartered ship due to unseaworthiness arising after delivery did not amount to a repudiatory breach entitling the charterer to cease payments of hire, but it would have entitled the charterer to damages: at 1110. See also International Fina Services AG v Katrina Shipping Ltd (The Fina Samco) [1994] 2 Lloyd’s Rep 344 (CA); Poseidon Schiffahrt GmbH v Nomadic Navigation Co Ltd (The Trade Nomad) [1999] 1 Lloyd’s Rep 723 (CA). 106 Minister of Materials v Wold Steamship Co Ltd [1952] 1 Lloyd’s Rep 485 at 497-498 per Sellers J; Anglo-Saxon Petroleum Co Ltd v Adamastos Shipping Co Ltd [1957] 2 QB 255 (CA) (reversed on other grounds: Anglo-Saxon Petroleum Co Ltd v Adamastos Shipping Co Ltd [1959] AC 133). Giertsen v Turnbull 1908 SC 1101 is some authority for the same proposition, although the headnote misleadingly gives a different impression. The Court of Session held that although the implied obligation of seaworthiness ceased on delivery, the express obligation extended for the whole of the charter period: at 1110. The court held that breakdown of the chartered ship due to unseaworthiness arising after delivery did not amount to a repudiatory breach entitling the charterer to cease payments of hire, but it would have entitled the charterer to damages: at 1110. See also International Fina Services AG v Katrina Shipping Ltd (The Fina Samco) [1994] 2 Lloyd’s Rep 344 (CA); Poseidon Schiffahrt GmbH v Nomadic Navigation Co Ltd (The Trade Nomad) [1999] 1 Lloyd’s Rep 723 (CA). 107 Tully v Howling (1877) 2 QBD 182 (CA); Snia Societa di Navigazione Industria e Commercio v Suzuki & Co (1924) 18 Ll L Rep 333, as interpreted in Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 at 39 per Salmon J approved in the Court of Appeal: at 61, 65, 73. See also Universal Cargo Carriers Corp v Citati [1957] 2 QB 401 for the same principle with respect to voyage charterparties. 108 See, eg, cl 6 of the Boxtime form for container ships: https://www.bimco.org/~/ media/Chartering/Document_Samples/Time_Charter_Parties/Sample_Copy_ BOXTIME_2004.ashx. 109 See, eg, UBC Chartering Ltd v Liepaya Shipping Co Ltd (The Liepaya) [1999] 1 Lloyd’s Rep 649.

486

Shipping Law

[14.140]

Vetting clauses

[14.140]

Tanker time charterparties commonly contain vetting clauses, which are a form of continuing undertaking of the fitness of the ship for the duration of the charter period. A typical vetting clause is an undertaking by the shipowner that the chartered ship is acceptable to a list of named “oil company majors”, and it provides that the charterer may either reduce the rate of hire or cancel the charter altogether if the ship ceases to be acceptable to any of those oil companies during the term of the charter.110

Obviously, vetting clauses of this kind may impose a very onerous burden on the shipowner, depending on their terms. Many of the “oil company majors” understandably have little interest in vetting and approving a tanker unless one of their cargoes is to be carried on that ship. For that reason, the language of vetting clauses has generally been toned down in recent years. Where older vetting clauses required “approval” of some or all of the listed oil company majors,111 more recent ones require that the vessel be “acceptable” or “not unacceptable” to oil company majors, which requires only that the ship would be approved if vetted, not that it has actually been approved by every one of the listed companies.112 Vetting clauses in tanker charterparties also now generally refer to the Ship Inspection Report Programme (SIRE), which is run by the Oil Companies International Marine Forum (OCIMF), a system for oil company charterers to share information with one another via an online database about tankers that they have vetted, thereby obviating the need for each individual oil company to conduct its own exhaustive vetting inspection.113 Vetting clauses now typically require shipowners to have a current SIRE report at the time of delivery, and to take corrective action if the ship is found unacceptable after a vetting inspection under the SIRE system during the life of the charter.114 Some clauses require the

110 See, eg, BS & N Ltd (BVI) v Micado Shipping Ltd (Malta) (The Seaflower) [2001] 1 Lloyd’s Rep 341; Dolphin Tanker SrL v Westport Petroleum Inc (The Savina Caylyn) [2011] 1 Lloyd’s Rep 550. 111 See, eg, In re Product Transport Corp Ltd and Blystad Shipping & Trading Inc (The Harold K Hudner) SMA No 3619 (Arb in NY 2000), where the vetting clause read: “Owners warrant that they will … have vessel approved and maintain such approvals during the Time Charter by major oil companies included but not limited to Shell/BP/Mobil/ Texaco/Exxon/Chevron within 90 days of delivery”. 112 See, eg, the Vetting Inspection Clause published by Intertanko (the International Association of Independent Tanker Owners) in 2009, which stipulates that the chartered tanker be “not unacceptable” to the listed companies. 113 For information about the SIRE system, see: http://www.ocimf.org/sire/about-sire/. 114 See, eg, the Intertanko Vetting Inspection Clause published by Intertanko (the International Association of Independent Tanker Owners) in 2009, which stipulates that the chartered tanker be “not unacceptable” to the listed companies.

[14.150]

14 Time Charterparties

487

shipowner to cooperate in having a SIRE report updated during the life of the charter by having the vessel inspected by one or more of the participants in the SIRE system.115 In Transpetrol Maritime Services Ltd v SJB (Marine Energy) BV (The Rowan),116 the vessel information section of the recap email for a voyage charterparty included the words “TBOOK WOG VSL IS APPROVED BY BP/LITASCO/STATOIL – EXXON VIA SIRE”. The English Court of Appeal held that “TBOOK” (meaning “to the best of our knowledge”) and “WOG” (“without guarantee”) meant only that the shipowner had, to the best of its knowledge, at the date the charterparty was made, procured approvals from the named oil companies, and that no promise was made that the ship would retain those approvals throughout the charter period. There exists a similar organisation to SIRE for vetting dry bulk carriers, named RightShip.117 A charterparty provision requiring the chartered ship to carry all certificates necessary to make it eligible to enter all ports within the agreed trading limits118 does not require the shipowner to obtain and retain RightShip approval,119 but the general requirement that the ship must follow the charterer’s orders “as regards employment”120 does require the shipowner to permit a RightShip inspection for the purpose of RightShip approval.121 Seaworthiness under the Hague or Hague-Visby Rules — the “Clause Paramount”

[14.150]

The Hague and Hague-Visby Rules (and the Australian modification of the latter) contain detailed provisions setting out the rights and obligations of carriers and the holders of bills of lading and other sea-carriage documents.122 Article 3, r 1(a) states that the carrier must exercise due diligence before and at the beginning of the voyage to make the ship seaworthy. This obligation is considerably less onerous than the absolute obligations of seaworthiness considered at [14.120], and,

115 See, eg, Dolphin Tanker SrL v Westport Petroleum Inc (The Savina Caylyn) [2011] 1 Lloyd’s Rep 550. 116 Transpetrol Maritime Services Ltd v SJB (Marine Energy) BV (The Rowan) [2012] 1 Lloyd’s Rep 564. 117 See http://www.rightship.com. Australia is regarded as one of the “hotbeds” of the RightShip system: see Seagate Shipping Ltd v Glencore International AG (The Silver Constellation) [2008] 2 Lloyd’s Rep 440 at 450 [38] per David Steel J. 118 For a consideration of trading limits, see [14.270]–[14.290]. 119 Seagate Shipping Ltd v Glencore International AG (The Silver Constellation) [2008] 2 Lloyd’s Rep 440. 120 For a consideration of the charterer’s right to give orders in relation to employment of the ship, see [14.360]. 121 Seagate Shipping Ltd v Glencore International AG (The Silver Constellation) [2008] 2 Lloyd’s Rep 440. 122 See generally, Chapter 12.

488

Shipping Law

[14.150]

as a result, the Hague or Hague-Visby Rules are frequently incorporated into charterparties by agreement,123 to provide some degree of protection for the shipowner, particularly in trip time charterparties, which are effectively time charterparties for the carriage of a particular cargo on a single voyage.124 Incorporation of the Hague or Hague-Visby Rules into the time charterparty also produces the result that the relationship between the shipowner and the time charterer contains the same rights and obligations as the relationship between the carrier and the cargoowner under the bills of lading or other sea-transport documents issued for carriage on the chartered ship.125 The typical incorporating clause is called the “Clause Paramount”, and it usually incorporates the Hague or Hague-Visby Rules in toto, despite the fact that they refer to bills of lading and similar documents of title.126 The effect of a Clause Paramount incorporating the rules into the charterparty is that the rules are read as if they had been written into the charterparty, and meaningless and superfluous words relating to bills of lading are reinterpreted or ignored.127 The practice of incorporating into charterparties terms which were designed to appear in bills of lading has been described as “careless and slovenly”128 and it can give rise to considerable difficulty, particularly in relation to trip time charterparties.129 It has been held that a charterparty incorporating the Hague or Hague-Visby Rules should be interpreted to produce the result that the 123 The Hague-Visby Rules do not apply to a charterparty by force of Australian law unless the charterparty provides that they are to govern it as if it were a bill of lading: see Carriage of Goods by Sea Act 1991 (Cth), s 10(1)(b)(iii), (2); Sch 1, Art 5 (Hague-Visby Rules); Sch 1A, Art 5, Art 10, rr 5, 6 (Australian modification). 124 See, eg, Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117; Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] 2 Lloyd’s Rep 221. Trip time charterparties are considered at [14.260]. 125 Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133 at 154 per Viscount Simonds; Eridania SpA v Rudolf A Oetker, Flensburger UberseeSchiffahrtsgesellschaft mbH & Co KG (The Fjord Wind) [2000] 2 Lloyd’s Rep 191 at 197 [15] per Clarke LJ; Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] 2 Lloyd’s Rep 221 at 228 [31]-[32] per Hamblen J. 126 In some time charterparties, the Clause Paramount does not incorporate the Hague or Hague-Visby Rules into the charterparty itself, but merely stipulates that the charterer must procure that all bills of lading issued pursuant to the charter incorporate the Hague or Hague-Visby Rules: see, eg, Shelltime 4, cl 38. 127 See Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133 (HL); Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazaros) [1976] 2 Lloyd’s Rep 47 (CA); D/S A/S Idaho v Peninsular and Orient Steam Navigation Co (The Strathnewton) [1982] 2 Lloyd’s Rep 296; Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] 2 Lloyd’s Rep 221. 128 Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133 at 157 per Viscount Simonds. 129 See, eg, Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] 2 Lloyd’s Rep 221, where the Hague-Visby Rules, which do not apply to deck carriage, were incorporated by reference into a trip time charterparty that made provision for carriage of deck cargo.

[14.150]

14 Time Charterparties

489

same contractual regime applies to the charterparty as to claims for cargo loss or damage under bills of lading issued for carriage on the chartered ship.130 In the context of a time charterparty, an obligation to exercise due diligence “before and at the beginning of the voyage” makes little sense, as the contract is not concerned with the making of a particular voyage. It appears that the incorporation of the Hague or Hague-Visby Rules into a time charterparty imposes on the shipowner an obligation to exercise due diligence to maintain the ship in a seaworthy condition at the commencement of each voyage within the charter period. There is authority to the effect that the incorporation of the rules into a consecutive voyage charterparty imposes an obligation to exercise due diligence to provide a seaworthy ship at the beginning of each voyage.131 Despite the differences between time and voyage charterparties, it is suggested that there should be a similar result in time charterparty cases, namely that when the Hague or Hague-Visby Rules are incorporated, the shipowner’s obligation is to exercise due diligence before and at the beginning of each voyage.132 This conclusion is consistent with the idea that the Hague or Hague-Visby Rules are incorporated into time charterparties to ensure that the parties’ rights and liabilities under the charterparty are co-extensive with those under bills of lading or other transport documents issued for carriage on the chartered ship.133

130 Eridania SpA v Rudolf A Oetker, Flensburger Ubersee-Schiffahrtsgesellschaft mbH & Co KG (The Fjord Wind) [2000] 2 Lloyd’s Rep 191 at 197 [15] per Clarke LJ; Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] 2 Lloyd’s Rep 221 at 228 [31]-[32] per Hamblen J. 131 Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133 (HL). Courts in the US imply such an obligation even in the absence of a Clause Paramount: see, eg, Horn v Cia de Navegacion Fruco 404 F 2d 422 (5th Cir 1968); Coca Cola Co v SS Norholt 333 F Supp 946; 1972 AMC 388 (SDNY 1971). 132 See M Wilford, T Coghlin and J Kimball, Time Charters (7th ed, Informa Law (Routledge), London, 2014) at [34.13]-[34.16]. Implicit support for the proposition in the text can be found in Stargas SpA v Petredec Ltd (The Sargasso) [1994] 1 Lloyd’s Rep 412, where the court assumed that the incorporated Hague Rules obligation applied to a voyage performed mid-way through the charter period. See also Mobil Shipping & Transportation Co v Wonsild Liquid Carriers Ltd 190 F 3d 64; 1999 AMC 2705 (2d Cir 1999). However, cf the doubts expressed in Chilean Nitrate Sales Corp v Marine Transportation Co Ltd (The Hermosa) [1980] 1 Lloyd’s Rep 638 at 647 per Mustill J (aff’d on other grounds: Chilean Nitrate Sales Corp v Marine Transportation Co Ltd (The Hermosa) [1982] 1 Lloyd’s Rep 570). 133 See Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133 at 154 per Viscount Simonds; Eridania SpA v Rudolf A Oetker, Flensburger UberseeSchiffahrtsgesellschaft mbH & Co KG (The Fjord Wind) [2000] 2 Lloyd’s Rep 191 at 197 [15] per Clarke LJ; Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] 2 Lloyd’s Rep 221 at 228 [31]-[32] per Hamblen J; Eridania SpA v Rudolf A Oetker, Flensburger Ubersee-Schiffahrtsgesellschaft mbH & Co KG (The Fjord Wind) [2000] 2 Lloyd’s Rep 191 at 197 [15] per Clarke LJ; Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] 2 Lloyd’s Rep 221 at 228 [31]-[32] per Hamblen J.

490

Shipping Law

[14.160]

Limitation of time [14.160]

Any claim by the charterer for failure by the ship to comply with the contractual description must be made within the time limit set by the charterparty contract. Standard form charterparties do not usually contain express time limitation provisions, but (as noted in the preceding section) they often contain a Clause Paramount incorporating the Hague or Hague-Visby Rules.134 The effect of that incorporation is that some but not all claims must be brought within the 12-month time limit established by Art 3, r 6 of the Rules.135 Article 3, r 6 speaks of “loss or damage” and the relevant part provides:136 [T]he carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered.

The difficulty with incorporating this provision into a time charter is in knowing what to make of the references to “loss or damage” and “liability … in respect of the goods” and the fact that time is expressed to run from the date of delivery of “the goods”.137 In Interbulk Ltd v Ponte Dei Sospiri Shipping Co (The Standard Ardour),138 Saville J held that a claim by a time charterer for loss caused by the shipowner’s delay in issuing bills of lading was not subject to the Art 3, r 6 time-bar incorporated into the time charterparty, because it was not a claim for “loss or damage” of or to or in connection with the goods. The goods themselves had not been in any way lost or damaged or otherwise affected at all by any breach of the charterparty by the owners; the charterer’s claim related exclusively to the shipping documents and not to the goods themselves.139 Saville J said:140 It so happens in the present case that goods were loaded on the vessel and subsequently discharged. However, if, as I hold to be the case, the loss or 134 NYPE 2015, cl 33, lines 527-528 (Appendix 7) provides: “The following protective clauses shall be deemed to form part of this Charter Party and all Bills of Lading or waybills issued under this Charter Party shall contain the following clauses”. It then goes on to list a Clause Paramount (inter alia): see cl 33(a). This clause and its equivalents in the previous versions of the New York Produce Exchange form incorporate the relevant version of the Rules into the charterparty: see, eg, Grimaldi Compagnia di Navigazione SpA v Sekihyo Lines Ltd (The Seki Rolette) [1998] 2 Lloyd’s Rep 638 at 647 per Mance J. 135 For an extended consideration of the Art 3, r 6 time-bar, see [12.580]–[12.600]. 136 See Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 3, r 6 (Hague-Visby Rules); Sch 1A, Art 3, r 6 (Australian modification). 137 Some charterparties specifically state that the incorporated version of the Hague-Visby Rules applies only to claims “arising out of any loss of or damage to or in connection with cargo”: see, eg, Shelltime 4, cl 27(c)(ii). 138 Interbulk Ltd v Ponte Dei Sospiri Shipping Co (The Standard Ardour) [1988] 2 Lloyd’s Rep 159. 139 Interbulk Ltd v Ponte Dei Sospiri Shipping Co (The Standard Ardour) [1988] 2 Lloyd’s Rep 159 at 162. 140 Interbulk Ltd v Ponte Dei Sospiri Shipping Co (The Standard Ardour) [1988] 2 Lloyd’s Rep 159 at 163.

[14.160]

14 Time Charterparties

491

damage claimed from the owners cannot be described as relating to those goods, it is difficult to see how those goods can be described as “the goods” for the purpose of [Art 3, r 6]. Why should those goods be “the goods” if the loss or damage is not connected with them? If, for example, the charterers had made a claim unconnected with any goods arising out of the ballast voyage or over an incident before any goods had been loaded at all, it could hardly be suggested that a time bar should, or indeed could, be applied, for there would be nothing upon which [Art 3, r 6] could operate.

In contrast, in Noranda Inc v Barton (Time Charter) Ltd (The Marinor),141 Colman J held that the Art 3, r 6 time bar did apply to claims made by a charterer for lost time and expenses on a substitute voyage made because the chartered ship had previously delivered several similar cargoes in contaminated condition. Colman J said:142 [W]here there is incorporation by general words into a time charter of legislation enacting the Hague Rules or Hague-Visby Rules, the shipowners will be entitled to rely on the protection of the time bar against claims for breach of any of the terms of the charter, even if not co-extensive with obligations under the rules, provided that (i) those claims assert (a) a liability involving physical loss of or damage to goods or (b) a liability for financial loss sustained in relation to goods and (ii) the goods in question were either shipped or were intended to be shipped pursuant to the charter.

Applying this test in Grimaldi Compagnia di Navigazione SpA v Sekihyo Lines Ltd (The Seki Rolette),143 Mance J held that it would be wrong to restrict the application of Art 3, r 6 to goods being carried under a specific contract of carriage, as distinct from goods exposed to risk by reason of the charterers’ involvement in the contractual adventure, although the absence of any specific contract of carriage may mean that it is not possible to identify any date of or for delivery so that Art 3, r 6 may not apply for that reason.144 Thus, a claim for bunkers that were lost when the ship sank did not fall within Art 3, r 6 but claims for lost lashing equipment, a car deck and a forklift truck owned by the charterers were subject to the 12-month limitation period, which ran from the date the charter was due to terminate, because that was the day on which the shipowner would have been obliged to redeliver the items in question to the charterer.145 141 Noranda Inc v Barton (Time Charter) Ltd (The Marinor) [1996] 1 Lloyd’s Rep 301. See also Mauritius Oil Refineries Ltd v Stolt-Nielsen Nederlands BV (The Stolt Sydness) [1997] 1 Lloyd’s Rep 273 (claim for financial loss caused by late delivery governed by Art 3, r 6 incorporated into voyage charterparty). 142 Noranda Inc v Barton (Time Charter) Ltd (The Marinor) [1996] 1 Lloyd’s Rep 301 at 311. 143 Grimaldi Compagnia di Navigazione SpA v Sekihyo Lines Ltd (The Seki Rolette) [1998] 2 Lloyd’s Rep 638. 144 Grimaldi Compagnia di Navigazione SpA v Sekihyo Lines Ltd (The Seki Rolette) [1998] 2 Lloyd’s Rep 638 at 648. 145 Grimaldi Compagnia di Navigazione SpA v Sekihyo Lines Ltd (The Seki Rolette) [1998] 2 Lloyd’s Rep 638 at 648.

492

Shipping Law

[14.170]

Similarly, in Borgship Tankers Inc v Product Transport Corp Ltd (The Casco),146 Cresswell J held that Art 3, r 6 did not apply to a claim made by a time charterer that it was unable to sub-charter the ship because of the poor condition of its cargo tanks, nor to a claim for wasted bunkers, as these were claims for loss of use of the ship, not “a cargo claim in the sense understood in the marine market”.147

DELIVERY The meaning of “delivery” [14.170]

In a time charterparty, the services of the ship and its crew are put at the disposal of the charterer for the duration of the charterparty. Strictly speaking, it is not correct to speak of “delivery” and “redelivery”, as these terms are appropriate only to demise charterparties, where possession of the ship is transferred to the charterer and retransferred to the shipowner.148 However, the terms “delivery” and “redelivery” are ubiquitous in standard form time charterparties, and their use in this context is accepted. In this context, they simply denote the moment when the master of the chartered ship must begin to take orders from the charterer about employment of the ship, and when he or she must cease to do so. Speaking of “delivery” of a ship in a time charterparty, Roskill J said in Cheikh Boutros Selim El-Khoury v Ceylon Shipping Lines Ltd (The Madeleine):149 It is, of course, axiomatic that in a time charter … delivery does not import any transfer of possession. An owner delivers a ship to a time charterer under this form of charterparty by placing her at the charterers’ disposal and by placing the services of her master, officers and crew at the charterers’ disposal, so that the charterers may thenceforth give orders (within the terms of the charterparty) as to the employment of the vessel to the master, officers and crew, which orders the owners contract that their servants shall obey.

The time for delivery and cancellation [14.180]

The shipowner is seldom able to specify precisely when the chartered ship will be available for delivery to the time charterer. In most

146 Borgship Tankers Inc v Product Transport Corp Ltd (The Casco) [2005] 1 Lloyd’s Rep 565. 147 Borgship Tankers Inc v Product Transport Corp Ltd (The Casco) [2005] 1 Lloyd’s Rep 565 at 571 [47]. 148 See Tankexpress A/S v Compagnie Financiere Belge des Petroles SA (The Petrofina) [1949] AC 76 at 90 per Lord Porter; Skibsaktieselskapet Snefonn, Skibsaktieselskapet Bergehus & Sig Bergesen DY & Co v Kawasaki Kisen Kaisha Ltd (The Berge Tasta) [1975] 1 Lloyd’s Rep 422 at 424 per Donaldson J; Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107 per Bingham LJ; Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 337 per Hirst LJ (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1). 149 Cheikh Boutros Selim El-Khoury v Ceylon Shipping Lines Ltd (The Madeleine) [1967] 2 Lloyd’s Rep 224 at 238, quoted with approval in Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 237 [72] per Keane CJ, Rares and Besanko JJ.

[14.180]

14 Time Charterparties

493

cases, the ship must complete voyages under other contracts before it can be delivered to the charterer, and the precise moment of its availability depends upon performance of those other obligations. As a result, standard form charterparties usually provide for a period within which the shipowner must deliver the ship to the charterer, rather than a particular date for delivery. The charterparty specifies the dates at the beginning and the end of this period: a date before which the charterer is not obliged to accept delivery, and a date on which the charterer is entitled to cancel the charterparty if the ship has not been delivered. In voyage charterparties, the equivalent period is known as the “lay/can” period, this being the period between the commencement of laytime and the cancelling date.150 The delivery period in time charterparties is also known as the “lay/can” period, even though this terminology is inappropriate because laytime is exclusively a voyage charterparty concept.151 The shipowner is not necessarily in breach of contract if the chartered ship has not been delivered by the cancelling date.152 The obligation to deliver before the cancelling date is not an absolute one, and if the shipowner has used reasonable diligence to deliver the ship by that date, it is not in breach.153 Thus, although the charterer is entitled to cancel the charterparty for non-delivery, it cannot also recover damages for breach of contract.154 If the late delivery does constitute a breach because of the shipowner’s failure to make a reasonable effort to deliver the ship on time, the charterer is entitled both to cancel and to recover damages, unless the charterparty contains an exclusion clause protecting the shipowner from the consequences of the breach.155 The measure of 150 See [13.140]. 151 In practice, it is also not uncommon for time charterparties to refer to the delivery period as “laydays”. For examples of time charterparty cases using the voyage charterparty concept of a laycan spread, see Hyundai Merchant Marine Co Ltd v Karander Maritime Inc (The Niizuru) [1996] 2 Lloyd’s Rep 66; Gas Natural Aprovisionamientos SDG SA v Methane Services Ltd (The Khannur) [2010] 1 Lloyd’s Rep 610; Dalwood Marine Co v Nordana Line A/S (The Elbrus) [2010] 2 Lloyd’s Rep 315. 152 Cheikh Boutros Selim El-Khoury v Ceylon Shipping Lines Ltd (The Madeleine) [1967] 2 Lloyd’s Rep 224 at 239 per Roskill J; Marbienes Compania Naviera SA v Ferrostaal AG (The Democritos) [1976] 2 Lloyd’s Rep 149. For a similar rule with respect to voyage charterparties, see Smith v Dart (1884) 14 QBD 105. 153 Marbienes Compania Naviera SA v Ferrostaal AG (The Democritos) [1976] 2 Lloyd’s Rep 149; ERG Raffinerie Mediterranee SpA v Chevron USA Inc (The Luxmar) [2007] 2 Lloyd’s Rep 542 at 546 [16] per Longmore LJ. 154 Nelson & Sons v The Dundee East Coast Shipping Co Ltd (1907) 44 SLR 661; United States Gypsum Transport Co v Dampskibs Aktieselskabet Karmoy 48 F 2d 376 (EDNY 1930) (aff’d for reasons given at first instance: United States Gypsum Transport Co v Dampskibs Aktieselskabet Karmoy 54 F 2d 1086 (2d Cir 1931)), quoted in Marbienes Compania Naviera SA v Ferrostaal AG (The Democritos) [1976] 2 Lloyd’s Rep 149 at 152 per Lord Denning MR; see also ERG Raffinerie Mediterranee SpA v Chevron USA Inc (The Luxmar) [2007] 2 Lloyd’s Rep 542 at 546 [16] per Longmore LJ. 155 For examples of exclusion clauses relieving the shipowner of the obligation to pay damages for late delivery, see Christie & Vesey Ltd v Maatschappij Tot Exploitatie van

494

Shipping Law

[14.180]

damages is the charterer’s additional expenditure in finding an alternative ship of the same description as that in the charterparty.156 Because a cancelling clause is, in effect, a forfeiture provision, it should be narrowly construed.157 Thus, for example, if the ship is generally fit and ready to perform the chartered service upon delivery, the charterer may not cancel on the ground that the ship does not comply with some other requirement of the charterparty, such as an obligation to have a specified quantity of bunkers on board at the time of delivery.158 If the charterer is to have the right to cancel for such a reason, the charterparty must specifically so provide.159 The charterer is not entitled to cancel the charterparty before the cancelling date, but if it purports to do so and the cancellation is accepted by the shipowner, the charterparty is brought to an end by agreement.160 Conversely, the charterer can waive its right to cancel the charterparty for late delivery by unequivocally accepting delivery after the cancelling date. The charterer is not entitled to cancel the charterparty if the reason for the late delivery of the chartered ship is the charterer’s own fault.161 If the charterparty gives the charterer the right to nominate the place of delivery,162 the charterer may cancel the charter without first exercising its right of nomination if it is obvious that the condition of the ship or its estimated time of arrival is such that the right to cancel will accrue no matter which delivery place is nominated.163 Schepen en Andere Zaken, Helvetia NV (The Helvetia-S) [1960] 1 Lloyd’s Rep 540; Westfal-Larsen & Co A/S v Colonial Sugar Refining Co Ltd (1960) 77 WN(NSW) 550; [1960] 2 Lloyd’s Rep 206 (NSW SC); Gesellschaft Burgerlichen Rechts v Stockholms Rederiaktiebolag Svea (The Brabant) [1965] 2 Lloyd’s Rep 546. 156 Blackgold Trading Co Ltd of Monrovia v Almare SpA di Navigazione of Genoa (The Almare Seconda and Almare Quinta) [1981] 2 Lloyd’s Rep 433. 157 Georgian Maritime Corp v Sealand Industries (Bermuda) Ltd (The North Sea) [1997] 2 Lloyd’s Rep 324 at 328-329 per Mance J (aff’d on other grounds: Georgian Maritime Corp v Sealand Industries (Bermuda) Ltd (The North Sea) [1999] 1 Lloyd’s Rep 21); Owneast Shipping Ltd v Qatar Navigation QSC (The Qatar Star) [2011] 1 Lloyd’s Rep 350 at 357 [37] per Christopher Clarke J. 158 Georgian Maritime Corp v Sealand Industries (Bermuda) Ltd (The North Sea) [1997] 2 Lloyd’s Rep 324 at 329 per Mance J (aff’d on other grounds: Georgian Maritime Corp v Sealand Industries (Bermuda) Ltd (The North Sea) [1999] 1 Lloyd’s Rep 21). 159 Georgian Maritime Corp v Sealand Industries (Bermuda) Ltd (The North Sea) [1997] 2 Lloyd’s Rep 324 at 329 per Mance J. 160 Christie & Vesey Ltd v Maatschappij Tot Exploitatie van Schepen en Andere Zaken, Helvetia NV (The Helvetia-S) [1960] 1 Lloyd’s Rep 540. 161 Shipping Corporation of India Ltd v Naviera Letasa SA [1976] 1 Lloyd’s Rep 132, applying Mackay v Dick (1881) 6 App Cas 251. 162 For a consideration of the right to nominate the place of delivery, see [14.190]. 163 Georgian Maritime Corp Plc v Sealand Industries Ltd (The North Sea) [1999] 1 Lloyd’s Rep 21 at 26 per Hobhouse LJ (obiter); Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2009] 2 Lloyd’s Rep 371 (CA).

[14.190]

14 Time Charterparties

495

The place and moment of delivery [14.190]

For the convenience of one, or other, or both, of the parties, time charterparties often specify a range of ports within which delivery must be made, rather than a particular delivery port. From the charterer’s point of view, it may be convenient to have a range of ports to choose from if it is not sure at the time of making the charterparty where its first cargo will be available to be loaded. Alternatively, from the shipowner’s point of view, it may not be clear where exactly the chartered ship will become available after completing its previous engagements. If a range of ports is named, the parties must agree which of them has the right to nominate the actual delivery port. In practice, it is usually the shipowner who nominates the delivery port and the charterer who nominates the redelivery port,164 but any allocation is possible. Ranges of ports are defined and interpreted by reference to geographical areas. For example, in Segovia Compagnia Naviera SA v R Pagnan & Fratelli (The Aragon),165 the charterers nominated the port of New Orleans from a range specified as “USA East of Panama Canal”. They argued that the range so defined included all those ports on the eastern side of the United States which can be reached without going through the Panama Canal, of which New Orleans is one. The shipowners argued that the range included only those ports east of the meridian of longitude on which the Panama Canal lies, and that as the whole of the Gulf of Mexico lies to the west of the Panama Canal, the charterer was not entitled to nominate New Orleans. The Court of Appeal preferred the charterer’s interpretation, holding that ranges in charterparties are to be interpreted by reference to geographic areas rather than by reference to longitude and latitude.

Time charterparties often specify that delivery or redelivery shall occur “when dropping outward pilot at” the named or nominated port,166 which avoids any difficulty in determining the exact place and moment of delivery or redelivery. If, however, the charterparty merely provides for delivery or redelivery at a port, it seems that delivery takes place when the chartered ship arrives at a place within the legal, fiscal and administrative limits of the port where it is at the immediate and effective disposition of the charterer, although there is no reported decision to this 164 See L Gorton, P Hillenius, R Ihre and A Sandevarn, Shipbroking and Chartering Practice (7th ed, Informa Law (Routledge), London, 2009), p 270. 165 Segovia Compagnia Naviera SA v R Pagnan & Fratelli (The Aragon) [1977] 1 Lloyd’s Rep 343. 166 Gorton et al, Shipbroking and Chartering Practice (7th ed, 2009), p 270. See, eg, LD Seals NV v Mitsui OSK Lines Ltd (The Darya Tara) [1997] 1 Lloyd’s Rep 42 (delivery on dropping outward pilot at Ijmuiden); Gas Natural Aprovisionamientos SDG SA v Methane Services Ltd (The Khannur) [2010] 1 Lloyd’s Rep 610 (redelivery on dropping outward pilot at Barcelona). The abbreviation DLOSP is also used, which stands for “dropping last outward sea pilot”: see, eg, Hyundai Merchant Marine Co Ltd v Americas Bulk Transport Ltd (The Pacific Champ) [2013] 2 Lloyd’s Rep 320 (delivery “DLOSP Houston, USA, ATDNSHINC [any time day or night, Sundays and holidays included]”; redelivery “WWR [when, where, ready] Miss River ATDNSHINC”).

496

Shipping Law

[14.200]

effect.167 Alternatively, the charterparty may provide that delivery is to take place at a berth within the port. For example, cl 1 of the Baltime form provides for delivery of the chartered ship at the nominated port “in such available berth where she can safely lie always afloat”.168 Under such a clause, the party who nominates the port impliedly promises that a berth will be available for the ship on arrival at that port.169 If the ship is obliged to wait before berthing at the nominated port, the party who nominated the port must bear the cost of the delay. For example, if the charterer nominates a congested port with no available berths, delivery cannot take place and the charter period cannot commence under Baltime cl 1 until the chartered ship arrives in the berth, but the charterer must pay the shipowner damages at the charterparty rate for the period of waiting for berth, because that is the shipowner’s loss as a result of the fact that delivery did not take place in the berth when the ship first arrived at the port.170 The charterer may exercise its right to cancel171 the charter without first exercising its right to nominate the place of delivery, if is obvious that the condition of the ship or its estimated time of arrival are such that the right to cancel will accrue no matter which delivery place is nominated.172

Bunkers on delivery [14.200]

The term “bunker” is used in several different senses. A ship’s bunkers are the tanks or holds in which fuel oil is stored. However, the term “bunkers” is also used to denote the fuel which is put into those tanks or holds. Further, the word “bunker” is used as a verb to describe the action of loading fuel. Thus, a ship bunkers by filling its bunkers with bunkers. Confusing though this may seem, the meaning in which the word is used is usually apparent from the context.

167 This is the test for arrival in the context of a voyage charterparty that merely names a port: see [13.170]. A time charterparty of this kind may also require the master of the chartered ship to give notice of readiness to deliver: For a consideration of notice of readiness in voyage charterparties, see [13.210]. For an example of a time charterparty requiring notice of readiness for commencement of the obligation to pay hire, see Kawasaki Kisen Kabushiki Kaisha v Bantham Steamship Co Ltd [1938] 1 KB 805. 168 For the Baltime form, see: https://www.bimco.org/~/media/Chartering/Document_ Samples/Time_Charter_Parties/Sample_Copy_BALTIME1939Revised2001.ashx. 169 Anders Utkilens Rederi A/S v Compagnie Tunisienne de Navigation of Tunis (The Golfstraum) [1976] 2 Lloyd’s Rep 97, citing Harris and Dixon v Marcus Jacobs & Co (1885) 15 QBD 247. 170 Anders Utkilens Rederi A/S v Compagnie Tunisienne de Navigation of Tunis (The Golfstraum) [1976] 2 Lloyd’s Rep 97. 171 For a consideration of the right to cancel, see [14.180]. 172 Georgian Maritime Corp Plc v Sealand Industries Ltd (The North Sea) [1999] 1 Lloyd’s Rep 21 at 26 per Hobhouse LJ (obiter); Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2009] 2 Lloyd’s Rep 371 (CA).

[14.200]

14 Time Charterparties

497

It is usual for the charterer to bear the cost of all bunkers consumed during the charter period.173 To ensure that the charterer does not pay for bunkers used before or after the charter period, standard form charterparties provide that the charterer must take over and pay for the fuel in the ship’s bunkers at the port of delivery and the shipowner must take over and pay for the fuel in the bunkers at the port of redelivery.174 In Daebo Shipping Co Ltd v Ship Go Star,175 a Full Court of the Federal Court of Australia held that when the charterparty provides that the charterer shall “take over and pay for” bunkers on delivery, title to the bunkers passes to the charterer at the moment of delivery, even if the charterer has not paid for them at that time. The Full Court held that the words “take over” do not require the charterer to perform any act in relation to the bunkers, but rather they signify a change of ownership consequent upon and concurrent with delivery of the ship to the charterer.176 This conclusion was sufficient to dispose of the appeal on this point, because it meant that the plaintiff (Daebo), an intermediate charterer, did not have title to sue for conversion or detinue in relation to the bunkers on the chartered ship after it had delivered the ship to a sub-charterer (Nanyuan).177 The court did not need to consider what happened to the title of the bunkers after delivery to the sub-charterer Nanyuan. Nanyuan never paid for the bunkers, and it later purported to withdraw from or cancel the sub-charter, claiming that the chartered ship had never been properly delivered.178 Title to the bunkers would then presumably have reverted to the intermediate charterer Daebo. In any event, that question was rendered moot by the fact that the the shipowner withdrew the ship from the service of another intermediate charterer

173 The charterer also commonly pays all other running expenses, such as port charges, pilotage, towage, agency fees, commissions and consular charges: see, eg, cl 7(a) of the NYPE 2015 form (Appendix 7) and Care Shipping Corp v Itex Itagrani Export SA [1993] 1 QB 1 at 11-12 (reported sub nom as The Cebu (No 2) [1990] 1 Lloyd’s Rep 316), where Steyn J compared the payment of running costs under time and voyage charterparties. 174 See, eg, NYPE 2015, cl 9(a)(i) (Appendix 7). For a consideration of bunkers on redelivery, see [14.520]. The NYPE 2015 form provides two other alternatives (cl 9(a)(ii), (iii)), but cl 9(a)(i) is the default if no selection is made. 175 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220. 176 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 237 [76] per Keane CJ, Rares and Besanko JJ. 177 Both the Full Court and the trial court (see Daebo Shipping Co Ltd v Ship Go Star (2011) 283 ALR 255) proceeded on the basis that title to sue for conversion and detinue depended upon title to the bunkers, despite High Court authority for the proposition that standing to sue in these torts depends not on ownership of the goods but on the right to immediate possession of them: see Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204. 178 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 223 [7]-[8].

498

Shipping Law

[14.210]

(BMS) under another time charterparty higher up the chain of charters,179 which would presumably have had the effect of giving it (the shipowner) title to the bunkers once more.180 If the charterparty does not specify a price at which bunkers must be bought, the charterer is obliged to pay the market price at the delivery port, whether or not that bears any relation to the price paid by the shipowner for the bunkers.181 If a purchase price is fixed at the time of making the contract, it is also common for the parties to specify the means of calculating the amount of fuel to be purchased, by agreeing that the bunkers be surveyed by an independent surveyor on delivery and redelivery. If that is the case, the charterparty also specifies how the costs of the survey are to be allocated between the parties, and on whose time the survey is to be done.182 If, as is commonly the case, the shipowner makes an estimate in the charterparty of the fuel that will be in the ship’s bunkers on delivery, the estimate is an intermediate term of the contract, imposing an obligation on the shipowner to make an estimate that is both honest and based on reasonable grounds.183 If the shipowner is in breach of this obligation, the charterer can recover damages, but is not relieved of its obligation to pay for all the fuel in the bunkers on delivery, unless the breach is such as to go to the root of the contract.184

THE DURATION OF THE CHARTER PERIOD Introduction [14.210]

The charter period begins on delivery and ends on redelivery. Because the exigencies of maritime business often make it impossible to predict with certainty when a voyage will end and the ship will be free for redelivery, the charter period is usually expressed in approximate terms only, to give the charterer the same flexibility in redelivery as the shipowner is given in delivery.185 The agreed period includes an “overlap/underlap period” at the end, which is the margin within which the charterer must redeliver. Several different forms of words are used to express the overlap/underlap period: for example, “about 12 months”,

179 The owner (Go Star) time-chartered to BMS, which sub-chartered to Bluefield, which sub-chartered to Daebo, which sub-chartered to Nanyuan: at 222 [1]-[3]. 180 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 236 [67]. 181 Harmony Shipping Co SA v Saudi-Europe Line Ltd (The Good Helmsman) [1981] 1 Lloyd’s Rep 377 at 419 per Ackner LJ. 182 See, eg, NYPE 2015, cl 5 (Appendix 7). 183 Efploia Shipping Corp Ltd v Canadian Transport Co Ltd (The Pantanassa) [1958] 2 Lloyd’s Rep 449. 184 Efploia Shipping Corp Ltd v Canadian Transport Co Ltd (The Pantanassa) [1958] 2 Lloyd’s Rep 449. 185 See Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1992] 2 Lloyd’s Rep 40 at 42 per Evans J. In the English Court of Appeal, Hirst LJ also used the phrase “the

[14.220]

14 Time Charterparties

499

“12 months, 45 days more or less”, “12 months minimum, 14 months maximum”.186 If the charter period is stated in exact terms, the law implies an overlap/underlap margin unless the charterparty clearly indicates that there is to be none.187 The consequences of redelivery outside the overlap/underlap period differ according to whether the redelivery is late or early. Late delivery cases usually arise when the market rate of hire has risen above the contract rate of hire, as the charterer tries to use the ship’s services at the lower contract rate of hire for as long as possible. Conversely, early redelivery cases usually arise when the market rate of hire has fallen below the contract rate of hire, as the charterer tries to end its obligation to pay the contract rate of hire as soon as possible. Late and early redelivery are considered separately at [14.240] and [14.250].

Express overlap/underlap [14.220]

It was previously thought that a margin of reasonable tolerance would be implied in addition to an express overlap/underlap period,188 but that is no longer the case. The express period ousts the tolerance implied by law and is the only margin available to the charterer,189 unless the charterparty provides for an additional period of exigencies of maritime business” in the same context: see Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 337. This particular point was not considered on appeal to the House of Lords: see Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1. 186 Compare NYPE 2015, cl 1(a) (Appendix 7), which states, “The owners agree to let and the charterers agree to hire the vessel from the time of delivery for …”. In this version of the New York Produce Exchange form, the overlap/underlap period must thus be spelled out. 187 See Grey & Co v Christie & Co (1889) 5 TLR 577; Alma Shipping Corp of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep 115 at 117 per Lord Denning MR; Marbienes Compania Naviera SA v Ferrostaal AG (The Democritos) [1976] 2 Lloyd’s Rep 149; Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107 per Bingham LJ; Chiswell Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115 at 118 per Lord Donaldson MR; Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 337 per Hirst LJ (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1). See also, eg, Watson Steamship Co v Merryweather & Co (1913) 18 Com Cas 294. 188 See Timber Shipping Co SA v London & Overseas Freighters Ltd [1972] AC 1 at 20 per Lord Morris of Borth-y-Gest (reported sub nom as The London Explorer [1971] 1 Lloyd’s Rep 523). 189 Timber Shipping Co SA v London & Overseas Freighters Ltd [1972] AC 1 at 15 per Lord Reid (The London Explorer); Alma Shipping Corp of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep 115; Gulf Shipping Lines Ltd v Compania Naviera Alanje SA (The Aspa Maria) [1976] 2 Lloyd’s Rep 643; Mareva Navigation Co Ltd v Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd’s Rep 368; Jadranska Slobodna Plovidba v Gulf Shipping Line Ltd (The Matija Gubec) [1983] 1 Lloyd’s Rep 24; Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107 per Bingham LJ; Chiswell

500

Shipping Law

[14.220]

tolerance in addition to the express overlap/underlap period. In Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia),190 the Court of Appeal held that the inclusion of the word “about” before the express overlap/underlap period “minimum 10 months, maximum 12 months” was effective to provide for an additional margin of reasonable tolerance outside the stipulated range. If the word “about” had not been included, though, the charterer would have been in breach of the charterparty if the ship had been redelivered 12 months and one day after delivery,191 unless the lateness of redelivery was caused by fault on the part of the shipowner.192 Standard form charterparties often give the charterer an option to renew the charterparty on the same terms for the same period. Renewal of a time charterparty with an express overlap/underlap period raises the question whether the overlap margin should be allowed once or twice. In Gulf Shipping Lines Ltd v Compania Naviera Alanje SA (The Aspa Maria),193 a charterparty for “six months 30 days more or less at charterer’s option” contained a clause giving the charterer the option to renew “for a further six months 30 days”. After exercising the renewal option, the charterers contended that they were entitled to use the chartered ship for a total period of 12 months and 60 days. The shipowners argued that the maximum charter period was only 12 months and 30 days. The English Court of Appeal found in favour of the shipowners. For these purposes,

Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115 at 118 per Lord Donaldson MR; Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 337 per Hirst LJ (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1). 190 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100. 191 Timber Shipping Co SA v London & Overseas Freighters Ltd [1972] AC 1 at 15 per Lord Reid (The London Explorer); Alma Shipping Corp of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep 115; Gulf Shipping Lines Ltd v Compania Naviera Alanje SA (The Aspa Maria) [1976] 2 Lloyd’s Rep 643; Mareva Navigation Co Ltd v Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd’s Rep 368; Jadranska Slobodna Plovidba v Gulf Shipping Line Ltd (The Matija Gubec) [1983] 1 Lloyd’s Rep 24; Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107 per Bingham LJ; Chiswell Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115 at 118 per Lord Donaldson MR; Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 337 per Hirst LJ (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1). 192 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100; Chiswell Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115 at 118 per Lord Donaldson MR. 193 Gulf Shipping Lines Ltd v Compania Naviera Alanje SA (The Aspa Maria) [1976] 2 Lloyd’s Rep 643.

[14.240]

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at least,194 the phrase “30 days more or less” did not constitute an extension of the charter period, but was merely a period of tolerance in redelivery. In contrast, in Petroleo Brasileiro SA v Kriti Akti Shipping Co SA (The Kriti Akti),195 a charterparty for a period of “eleven months, 15 days more or less” gave the charterer an option to add any time off-hire196 to the end of the charter period, to count “as part of the charter period”. After exercising the option to have 36 days of off-hire time added to the charter period, the charterers contended they were also entitled to the 15-day “more or less” option period, giving them the use of the ship for a total of 11 months and 51 days (that is, 12 months and 23 days). The English Court of Appeal found in favour of the charterers: the option period merely acted as a period of tolerance in redelivery after the charter period had been extended by the provision in relation to off-hire.

Implied overlap/underlap [14.230]

If the charterparty states the charter period without expressing an overlap/underlap period, a reasonable margin of overlap/underlap is implied by law197 unless the charterparty expressly provides that there is to be no margin.198 The charterer is entitled to send the ship on a last voyage that will exceed the stated period by a few days. How much margin is implied is a question of commercial convenience.199

Late redelivery [14.240]

The consequences of late redelivery depend on the legitimacy of the last voyage order given by the charterer. The last voyage order is legitimate if there is a reasonable expectation that the voyage will be

194 For the purposes of determining the legitimacy of a last voyage order, the option period does form part of the charter period, so that the charterer may legitimately send the ship on a voyage that will not end before the expiry of the basic period, but will end before the expiry of the option period: see Petroleo Brasileiro SA v Kriti Akti Shipping Co SA (The Kriti Akti) [2004] 1 Lloyd’s Rep 712. 195 Petroleo Brasileiro SA v Kriti Akti Shipping Co SA (The Kriti Akti) [2004] 1 Lloyd’s Rep 712. 196 For a consideration of off-hire, see [14.330]–[14.340]. 197 Grey & Co v Christie & Co (1889) 5 TLR 577; Alma Shipping Corp of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep 115 at 117 per Lord Denning MR; Marbienes Compania Naviera SA v Ferrostaal AG (The Democritos) [1976] 2 Lloyd’s Rep 149; Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107 per Bingham LJ; Chiswell Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115 at 118 per Lord Donaldson MR; Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 337 per Hirst LJ (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1). 198 See, eg, Watson Steamship Co v Merryweather & Co (1913) 18 Com Cas 294. 199 Jadranska Slobodna Plovidba v Gulf Shipping Line Ltd (The Matija Gubec) [1983] 1 Lloyd’s Rep 24 at 27 per Staughton J.

502

Shipping Law

[14.240]

completed before the final terminal date (that is, the end of any overlap period, express and/or implied),200 but it is illegitimate if there is no such expectation.201 The legitimacy of the last voyage order is first tested when the order is given. If it appears illegitimate at that time, the order is in itself a breach of contract by the charterer, because it is an attempt by the charterer to avail itself of the services of the ship at a time when the shipowner had never agreed to render such services.202 An order for an illegitimate last voyage is not, without more, a repudiatory breach of contract entitling the shipowner to treat the contract as being at an end from the moment the order is given.203 Because the charterer’s obligation of timely redelivery is only an intermediate term, an illegitimate last voyage order constitutes a repudiatory breach only if the circumstances warrant that conclusion.204 For example, if the charterer insists on the order, despite a demand by the shipowner for an alternative, legitimate, last voyage order, the shipowner is entitled to accept the charterer’s conduct as a repudiatory breach, and to bring the contract to an end at that time.205 If the last voyage order appears legitimate when it is given, the validity of the order is no more than contingent, since the time for matching the service against the shipowner’s promise does not arrive until the nature of the service is definitely known, and that does not usually occur until 200 The expression “final terminal date” was coined by Bingham LJ in Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107. It is now routinely used: see, eg, Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1); Petroleo Brasileiro SA v Kriti Akti Shipping Co SA (The Kriti Akti) [2004] 1 Lloyd’s Rep 712; Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] 1 AC 61 at 79 [54] per Lord Rodger of Earlsferry. 201 Alma Shipping Corporation of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep 115; Skibsaktieselskapet Snefonn, Skibsaktieselskapet Bergehus & Sig Bergesen DY & Co v Kawasaki Kisen Kaisha Ltd (The Berge Tasta) [1975] 1 Lloyd’s Rep 422; Marbienes Compania Naviera SA v Ferrostaal AG (The Democritos) [1976] 2 Lloyd’s Rep 149; Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107 per Bingham LJ; Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 690 [8] per Lord Clarke of Stone-cum-Ebony MR (with whom Goldring and Patten LJJ agreed). The question of the legitimacy of the last voyage order is a mixed question of fact and law: see Marbienes Compania Naviera SA v Ferrostaal AG (The Democritos) [1976] 2 Lloyd’s Rep 149 at 155 per Bridge LJ. 202 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107-108 per Bingham LJ (with whom Balcombe LJ agreed); Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 690 [10] per Lord Clarke of Stone-cum-Ebony MR (with whom Goldring and Patten LJJ agreed). 203 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL). 204 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL). 205 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL) at 10 per Lord Mustill (with whom Lords Ackner, Slynn and Woolf agreed); Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 690 [10] per Lord Clarke of Stone-cum-Ebony MR (with whom Goldring and Patten LJJ agreed).

[14.240]

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the last voyage is due to begin, or in some instances until it is already in progress.206 As a result, if the last voyage appears legitimate when the order is given, but has become illegitimate when the time for performance arrives, the charterer then comes under a secondary obligation to change the order, replacing it with one for a last voyage that appears reasonably likely to be completed before the final terminal date.207 If it refuses to do so and persists with the original order, it commits a repudiatory breach, and the shipowner is entitled to treat the contract as at an end from that moment.208 The shipowner is not obliged to accept the charterer’s order for an illegitimate last voyage.209 It may refuse to accept the order, and demand an alternative order for a legitimate last voyage.210 If the shipowner chooses to accept an order for an illegitimate last voyage without waiving its right to damages, the charterer is obliged to pay hire at the charterparty rate until the final terminal date (not the date when redelivery would actually have taken place if the illegitimate last voyage had not been performed),211 and must pay damages for the difference between the market rate and the charterparty rate for the period between the final terminal date and the time of actual redelivery if (as expected) that is later than the final terminal date.212 If the market rate has fallen below the charterparty rate on the final terminal date (which would not

206 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 at 7 per Lord Mustill (with whom Lords Ackner, Slynn and Woolf agreed). 207 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL) at 9-10. 208 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL) at 10. 209 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 108 per Bingham LJ (with whom Balcombe LJ agreed); Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 690 [10] per Lord Clarke of Stone-cum-Ebony MR (with whom Goldring and Patten LJJ agreed). 210 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 108 per Bingham LJ (with whom Balcombe LJ agreed); Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 690 [10] per Lord Clarke of Stone-cum-Ebony MR (with whom Goldring and Patten LJJ agreed); Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] 1 AC 61 at 71 [23] per Lord Hoffmann. 211 Shipping Corp of India Ltd v NSB Niederelbe Schiffahrtsgesellschaft mbH & Co (The Black Falcon) [1991] 1 Lloyd’s Rep 77. 212 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 108 per Bingham LJ, with whom Balcombe LJ agreed; Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1); Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 690 [10] per Lord Clarke of Stone-cum-Ebony MR (with whom Goldring and Patten LJJ agreed); Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] 1 AC 61 at 71 [23] per Lord Hoffmann.

504

Shipping Law

[14.240]

often occur in the case of a late redelivery), the charterer must continue to pay the charterparty rate until actual redelivery.213 The shipowner is obliged to accept the charterer’s orders for a legitimate last voyage. If, contrary to reasonable expectations, the ship is delayed beyond the final terminal date on its legitimate last voyage, the charterer is in breach of contract unless the late redelivery arises out of a cause for which the shipowner is responsible.214 If the shipowner is responsible for the late redelivery, it cannot complain of the charterer’s failure to redeliver by the final terminal date.215 If, however, the charterer is responsible for the late redelivery, or if it is caused by circumstances for which neither party is responsible, the charterer must pay damages for any loss suffered by the shipowner as a result of the late redelivery.216 The charterparty is presumed to continue until the end of the voyage, so that if the market rate of hire has fallen below the charterparty rate, the charterer must continue to pay the charterparty rate until the moment of

213 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 108 per Bingham LJ (with whom Balcombe LJ agreed). In Alma Shipping Corporation of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep 115 at 118, Shipping Corp of India Ltd v NSB Niederelbe Schiffahrtsgesellschaft mbH & Co (The Black Falcon) [1991] 1 Lloyd’s Rep 77 at 80, and Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 690 [10], Lord Denning MR, Steyn J and Lord Clarke of Stone-cum-Ebony MR respectively said merely that the charterer must pay hire at the market rate for the period between the final terminal date and the time of actual redelivery, apparently without considering the possibility that the market rate might have fallen below the charterparty rate on the final terminal date. The formulation of the test by Bingham LJ in The Peonia is to be preferred. In Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1992] 2 Lloyd’s Rep 40 at 42 (aff’d on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL), where this point was not considered), Evans J said that this question had not been expressly decided, but that there were clear reasons of principle for requiring the charterer to pay the charterparty rate until redelivery if the market rate is below the charterparty rate. 214 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100; Chiswell Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115 at 118 per Lord Donaldson MR. In Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL), it was stressed that the term breached is an intermediate one, not a condition. 215 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 108 per Bingham LJ (with whom Balcombe LJ agreed). 216 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL). See also Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 690 [9] per Lord Clarke of Stone-cum-Ebony MR (with whom Goldring and Patten LJJ agreed). If the charterer is not responsible for the cause of the delay, the breach sounds in damages only, and does not give the shipowner the right to terminate: see Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 108 per Bingham LJ; Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1992] 2 Lloyd’s Rep 40 at 43 per Evans J (aff’d on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1 (HL)).

[14.240]

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redelivery.217 If the market rate is higher than the charterparty rate on the final terminal date, the charterer must pay damages representing the difference between the charterparty rate and the market rate for the period between the final terminal date and the time of actual redelivery.218 Thus, the measure of the damages is the same for a legitimate last voyage that unexpectedly continues past the final terminal date as for an illegitimate last voyage where the shipowner has accepted the voyage order.219 In Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon),220 the charterparty contained a clause purporting to give the shipowner the right to the market rate of damages for a period of 30 days in the event of any late redelivery. The English Court of Appeal held that this clause constituted a penalty and was for that reason unenforceable. On the facts of the case, redelivery was late by six days, and the Court of Appeal held that it would be unconscionable to award damages for 30 days’ worth of the market rate. The clause was not a genuine pre-estimate of the shipowner’s loss but was a penalty designed to deter the charterer from breaching by late redelivery. These principles calculating the measure of damages by reference to the difference between the contract rate and the market rate of hire are well settled by what is now a considerable body of judicial and academic opinion.221 In The Achilleas,222 the shipowner made a novel claim for damages for late redelivery based on traditional principles of remoteness of damage in contract. The claim ultimately proved unsuccessful, but it raised difficult questions of legal principle. The final terminal date for redelivery of the “Achilleas” was 2 May 2004. In April 2004, the market rate of hire was much higher than the contract rate, and the owners fixed a new time charter with a different charterer at a much higher rate, with a cancelling date of 8 May 2004. The last voyage under the first charter was delayed, and by 5 May 2004, the shipowner realised that the ship could 217 Timber Shipping Co SA v London & Overseas Freighters Ltd [1972] AC 1 (reported sub nom as The London Explorer [1971] 1 Lloyd’s Rep 523), as explained in Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100. Because the late redelivery is a breach of contract, the charterer must presumably also pay nominal damages. 218 Timber Shipping Co SA v London & Overseas Freighters Ltd [1972] AC 1 (The London Explorer); Alma Shipping Corporation of Monrovia v Mantovani (The Dione) [1975] 1 Lloyd’s Rep 115, as explained in Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100; Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] 1 AC 61 at 79 [54] per Lord Rodger of Earlsferry. 219 Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 691 [11] per Lord Clarke of Stone-cum-Ebony MR (with whom Goldring and Patten LJJ agreed). 220 Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688. 221 Lansat Shipping Co Ltd v Glencore Grain BV (The Paragon) [2009] 2 Lloyd’s Rep 688 at 691 [15] per Lord Clarke of Stone-cum-Ebony MR. 222 Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] 1 AC 61.

506

Shipping Law

[14.240]

not be delivered under the second charter by the cancelling date of 8 May 2004. By that time, the market rate had fallen sharply, and in order to secure the second charterer’s agreement to extend the cancellation date to 11 May 2004, the shipowner had to agree to a much lower rate of hire ($8,000 per day lower) than had originally been agreed. The shipowner claimed damages for late redelivery from the first charterer, including damages for the diminished rate of hire they had been forced to accept under the second charter as a result of the late redelivery — $8,000 per day for the whole period of the second charter. The shipowner’s claim succeeded in arbitration, and also before the High Court of England and Wales and the Court of Appeal,223 on the ground that the shipowner’s loss under the second charter was reasonably foreseeable at the time the first charter was made as a not unlikely result of a breach by late redelivery under that charter, applying the familiar remoteness of damage principles established in Hadley v Baxendale,224 as explained by the House of Lords in The Heron II.225 The House of Lords allowed the charterer’s appeal, holding that damages for breach are founded on the presumed intention of the parties, which must be determined objectively in the light of the nature and object of the business transaction, including the commercial context in which it was made. The House of Lords held that the parties’ presumed intention was that damages for late redelivery would be confined to the difference between the contract rate and the market rate for the period of overrun, as established by the well-settled principles described above, and would not include any loss of profits in excess of that amount caused by volatile market conditions. Lords Hoffmann and Hope also expressed the view that a breaching party cannot be liable for foreseeable losses that are not of the type or kind for which it assumed responsibility.226 The Achilleas settles the question of the recoverability of consequential damages for late redelivery under English law, which is the law that governs many time charterparties. It remains to be seen whether it will be followed in Australia. It is open to question whether the decision modified the traditional Hadley v Baxendale principles of remoteness of damage in contract cases. Several English decisions at first instance have

223 Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2007] 1 Lloyd’s Rep 19; [2007] 2 Lloyd’s Rep 555 (CA). Leave was given to appeal the arbitral award to the High Court under the Arbitration Act 1996 (UK), s 69. 224 Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145. 225 Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350. 226 Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] 1 AC 61 at 70 [21] per Lord Hoffmann, at 73 [32] per Lord Hope.

[14.240]

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held that it did not.227 The concept of assumption of responsibility advanced by Lords Hoffmann and Hope was clearly novel, but it did not command a majority.228 That concept has met with some favourable judicial comment in Australia,229 but it has been rejected in other jurisdictions230 and trenchantly criticised by academic writers.231 The well settled principles governing damages for late redelivery are modified if the charterparty contains a clause permitting the charterer to complete any last voyage at the charterparty rate. Clause 18 of the Shelltime 3 charterparty is such a clause, providing (inter alia):232 [S]hould the vessel be upon a voyage at the expiry of the period of this charter, charterers shall have the use of the vessel at the same rate and conditions for such extended time as may be necessary for the completion of the round voyage on which she is engaged and her return to a port of redelivery as provided by this charter.

If a “last voyage” clause of this kind expressly states that it is to apply notwithstanding the provisions relating to the time of redelivery, as cl 18 of Shelltime 3 does, then it authorises the charterer to send the ship on what would otherwise be an illegitimate last voyage.233 In these circumstances, the “last voyage” clause makes redundant the usual consideration of legitimate and illegitimate last voyages,234 and effectively

227 ASM Shipping Ltd of India v TTMI Ltd of England (The Amer Energy) [2009] 1 Lloyd’s Rep 293 at 295 [17] per Flaux J; Classic Maritime Inc v Lion Diversified Holdings Bhd [2010] 1 Lloyd’s Rep 59 at 71 [71] per Cooke J. 228 A point stressed by Flaux J in ASM Shipping Ltd of India v TTMI Ltd of England (The Amer Energy) [2009] 1 Lloyd’s Rep 293 at 295 [18], describing the view of Lords Hoffmann and Hope as “heterodox, to say the least”. 229 Evans & Associates v European Bank Ltd (2009) 255 ALR 171 at 186 [58] per Basten JA. 230 MFM Restaurants Pte Ltd v Fish & Co Restaurants Pte Ltd [2011] 1 SLR 150 (Sin CA); Out of the Box Pte Ltd v Wanin Industries Pte Ltd [2013] 2 SLR 363 (Sin CA). 231 In MFM Restaurants Pte Ltd v Fish & Co Restaurants Pte Ltd [2011] 1 SLR 150 at [117], a unanimous Singapore Court of Appeal said: “[F]ew decisions — particularly of the highest appellate court in England — have been subject to so much criticism in both leading textbooks as well as articles and comments in a variety of international journals”. 232 Shelltime 3 is reproduced as Form 17-11A in Benedict on Admiralty (6th ed, Bender/LexisNexis, New York, subscription service to 1993), Vol 2C. 233 Chiswell Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115; Petroleo Brasileiro SA v Kriti Akti Shipping Co SA (The Kriti Akti) [2004] 1 Lloyd’s Rep 712 (CA). The same interpretation had been given to a similar clause (cl 11 of Texacotime 2) by New York arbitrators in The Pacific Sun [1983] AMC 830 and The Narnian Sea [1991] AMC 274. In The Narnian Sea, it was held that cl 11 of Texacotime 2 did not apply where the ship was not engaged on a carrying voyage on expiration of the charterparty term, but was merely proceeding to a place for orders, in the hope of a fixture. 234 Chiswell Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115 at 119 per Sir David Croom-Johnson.

508

Shipping Law

[14.250]

“bolts on” a round trip time charter onto the end of one for a fixed term.235 In Petroleo Brasileiro SA v Kriti Akti Shipping Co SA (The Kriti Akti), Mance LJ said:236 Owners are thereby exposed to a final round voyage of no fixed length, which it is clear from the outset will extend very considerably beyond the final terminal date.

In contrast, if the “last voyage” clause does not expressly state that it is to apply notwithstanding the provisions relating to the time of redelivery, then it does not have the same effect.237 Clause 19 of Shelltime 4 differs from cl 18 of Shelltime 3 in this respect, and it has been held that it, unlike its predecessor, it is not clear enough or specific enough to protect the charterer from the consequences of ordering what would otherwise be an illegitimate last voyage.238

Early redelivery [14.250]

An attempt to redeliver the ship before the beginning of the underlap period is a repudiatory breach of contract by the charterer. The shipowner is only entitled to refuse the purported redelivery and to affirm the contract if it has a “legitimate interest” in keeping the charterparty contract alive.239 It has been held that the shipowner has a legitimate interest in affirming the contract unless it would be “wholly unreasonable”240 or “perverse”241 to do so. After reviewing the authorities in Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic),242 Simon J summarised their effect as follows:243 235 Chiswell Shipping Ltd v National Iranian Tanker Co (The World Symphony and World Renown) [1992] 2 Lloyd’s Rep 115 at 118 per Lord Donaldson MR, quoting the colourful phrase of Steven Gee, counsel for the charterer. 236 Petroleo Brasileiro SA v Kriti Akti Shipping Co SA (The Kriti Akti) [2004] 1 Lloyd’s Rep 712 at 718 per Mance LJ. 237 Marimpex v Compagnie de Gestion et d’Exploitation Ltd (The Ambor and the Once) [2001] 1 All ER (Comm) 182. 238 Marimpex v Compagnie de Gestion et d’Exploitation Ltd (The Ambor and the Once) [2001] 1 All ER (Comm) 182. 239 White and Carter (Councils) Ltd v McGregor [1962] AC 413 at 431 per Lord Reid; Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic) [2003] 2 Lloyd’s Rep 693; Isabella Shipowner SA v Shagang Shipping Co Ltd (The Aquafaith) [2012] 2 Lloyd’s Rep 61. 240 Gator Shipping Corporation v Trans-Asiatic Oil Ltd SA (The Odenfeld) [1978] 2 Lloyd’s Rep 357 at 372-374; Clea Shipping Corp v Bulk Oil International Ltd (The Alaskan Trader) (No 2) [1983] 2 Lloyd’s Rep 645 at 651 per Lloyd J; Stocznia Gdanzska SA v Latvian Shipping Co [1995] 2 Lloyd’s Rep 592 at 602 per Clarke J (aff’d Stocznia Gdanzska SA v Latvian Shipping Co [1996] 2 Lloyd’s Rep 132); Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic) [2003] 2 Lloyd’s Rep 693 at 698 per Simon J; Isabella Shipowner SA v Shagang Shipping Co Ltd (The Aquafaith) [2012] 2 Lloyd’s Rep 61 at 69 [44] per Cooke J. 241 Isabella Shipowner SA v Shagang Shipping Co Ltd (The Aquafaith) [2012] 2 Lloyd’s Rep 61 at 69 [44] per Cooke J. 242 Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic) [2003] 2 Lloyd’s Rep 693. 243 Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic) [2003] 2 Lloyd’s Rep 693 at 698 (emphasis in the original).

[14.250]

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509

These cases establish the following exception to the general rule that the innocent party has an option whether or not to accept a repudiation: (i) The burden is on the contract-breaker to show that the innocent party has no legitimate interest in performing the contract rather than claiming damages. (ii) This burden is not discharged merely by showing that the benefit to the other party is small in comparison to the loss to the contract breaker. (iii) The exception to the general rule applies only in extreme cases: where damages would be an adequate remedy and where an election to keep the contract alive would be unreasonable.

If the shipowner is entitled to affirm, it must continue to keep the ship at the charterer’s orders until the end of the charter period, and is entitled to the continued payment of hire without needing the charterer to do anything. In Isabella Shipowner SA v Shagang Shipping Co Ltd (The Aquafaith),244 Cooke J said: If the charterers failed to give any orders, the vessel would simply stay where it was, awaiting orders but earning hire. Although the master is under the orders of the charterer, the master and crew are the servants of the owners and the ship is available to the charterers for any order they wish to give. Hire continues to be earned. Although the charterers are obliged under the terms of the charter to provide and pay for fuel, should the bunkers run out whilst awaiting orders, it is open to the owners to stem the vessel and to charge that to the charterers’ account. In order to complete their side of the bargain, the owners do not need the charterers to do anything in order for them to earn the hire in question. The earning of hire after purported redelivery was not dependent on any performance by the charterers of their obligations.

When the shipowner has no legitimate interest in affirming the contract, it must accept the charterer’s repudiatory redelivery, and seek a remedy in damages.245 If there is an available market for the ship’s services, the normal measure of damages for repudiatory redelivery is the difference between the hire rate that would have been payable under the repudiated charterparty and the market hire rate for a charter of a similar kind, applied to the unperformed balance of the period of the repudiated charter.246 This is generally referred to as the “contract minus market” measure, and it is based on the rationale that acceptance of the market rate at the date of breach is deemed to constitute reasonable mitigation by the shipowner.247 The “contract minus market” measure is an example of the “breach date rule”, by which damages for breach of contract 244 Isabella Shipowner SA v Shagang Shipping Co Ltd (The Aquafaith) [2012] 2 Lloyd’s Rep 61 at 68 [37]. 245 See, eg, Attica Sea Carriers Corp v Ferrostaal Poseidon GmbH [1976] 1 Lloyd’s Rep 250; Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic) [2003] 2 Lloyd’s Rep 693 at 698-699 per Simon J. 246 Koch Marine Inc v D’Amica Societa di Navigazione Arl (The Elena D’Amico) [1980] 1 Lloyd’s Rep 75 at 89; Golden Strait Corp v Nippon Yusen Kubishika Kaisha: The Golden Victory [2007] 2 AC 353 at 371 [10] per Lord Bingham of Cornhill. 247 Zodiac Maritime Agencies Ltd v Fortescue Metals Group Ltd (The Kildare) [2011] 2 Lloyd’s Rep 360 at 368 [65] per David Steel J; Glory Wealth Shipping Pte Ltd v Korea Line Corp (The Wren) [2011] 2 Lloyd’s Rep 370 at 374 [18] per Blair J.

510

Shipping Law

[14.250]

ordinarily fall to be assessed as at the date of the breach.248 This principle allows damages to be calculated with certainty and finality as of the date of breach, without the need for a “running assessment of the state of play” over the rest of the period that the charter would have run if not repudiated.249 It “enables a market valuation to be made of what the innocent party has lost, [and] a line thereby to be drawn under the transaction”.250 However, application of the “contract minus market” principle may be modified to take into account actual events that have occurred before the assessment of damages takes place. In The Golden Victory,251 a time charterer repudiated the time charterparty by redelivering the vessel nearly four years early. The ordinary measure of damages would have been the contract rate minus the market rate for the whole of the repudiated period of four years. However, the Second Gulf War broke out some two years after the charterer’s repudiation and the arbitrators held that the charterer could and would have cancelled the charter in that event. The House of Lords held that damages should only be awarded for the period up to the outbreak of the Gulf War. The House of Lords held that, as a matter of general principle, damages should be assessed at the date of breach, but it would be artificial when assessing damages to ignore the known fact that the charter would not have run for the whole of the repudiated period. The charterer’s repudiation had caused the owner to lose a charter that contained a clause entitling the charterer to cancel the charter in the event of the outbreak of war. Measuring the value of the loss of that particular charter required the court to take into account the fact that war had in fact broken out when damages were assessed. The actual earnings of the ship during the repudiated period are ignored where there is an available market for a similar fixture because the shipowner’s decision whether or not to enter that market is regarded as a commercial decision independent of the wrong committed by the charterer in repudiating the charter.252 If the shipowner chooses not to take the comparable fixture available in the market, it cannot recover any additional losses it suffers if the market does not live up to its hopes, and its damages are not reduced if the market does live up to its hopes. Either way, the shipowner’s decision not to take the comparable fixture available in the market at the time of the repudiation is its own choice, independent 248 Golden Strait Corp v Nippon Yusen Kubishika Kaisha: The Golden Victory [2007] 2 AC 353 at 393 [71] per Lord Brown of Eaton-under-Heywood. 249 Glory Wealth Shipping Pte Ltd v Korea Line Corp (The Wren) [2011] 2 Lloyd’s Rep 370 at 374 [18] per Blair J. 250 Dampskibsselskabet Norden A/S v Andre & Cie [2003] 1 Lloyd’s Rep 287 at 292 per Toulson J. 251 Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 AC 353. 252 Koch Marine Inc v D’Amica Societa di Navigazione Arl (The Elena D’Amico) [1980] 1 Lloyd’s Rep 75 at 89-90 per Robert Goff J.

[14.250]

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of the charterer’s repudiatory breach of the charter. Similarly, the shipowner is not obliged to give credit for any decline in the sale value of the ship between the time of breach and the end of the repudiated period.253 Although the shipowner benefits from being able to sell the ship at a higher price at the earlier date as a result of the repudiatory redelivery, that benefit is not caused by the charterer’s breach.254 If the market rate of hire at the time of the repudiation is higher than the contract rate, the shipowner has suffered no loss as a result of the repudiation and cannot recover damages. It may recover any wasted expenditure incurred in preparing to perform the charter, but the benefits obtained as a result of the breach must be set off against that sum.255 Thus, if the ship earns more in the repudiated period than the shipowner’s wasted expenditure, no damages are recoverable.256 To hold otherwise would be to put the shipowner in a better position than it would have been in if the contract had been performed.257 Where there is no market for a comparable fixture at the time of the repudiatory breach, there is no choice but to consider the ship’s actual earnings during the repudiated period in order to make the necessary comparison between the position the shipowner would have been in if the contract had not been breached and the position it was left in as a result of the breach.258 It follows that, in such a case, damages can only be assessed after the end of the repudiated period, inconvenient though that may be. In both The Kildare259 and The Wren,260 it was held that the court should ignore any revival of the market that occurs later in the repudiated period, and should assess damages by reference to the ship’s actual earnings in the repudiated period without taking into account the impact of the subsequently emerging market. It may be in the interests of both parties for redelivery to take place before the period originally agreed. In these circumstances, the shipowner may 253 Fulton Shipping Inc of Panama v Globalia Business Travel SAU of Spain (The New Flamenco) [2014] 2 Lloyd’s Rep 230. 254 Fulton Shipping Inc of Panama v Globalia Business Travel SAU of Spain (The New Flamenco) [2014] 2 Lloyd’s Rep 230. 255 Omak Maritime Ltd v Mamola Challenger Shipping Co (The Mamola Challenger) [2011] 1 Lloyd’s Rep 47. 256 Omak Maritime Ltd v Mamola Challenger Shipping Co (The Mamola Challenger) [2011] 1 Lloyd’s Rep 47. 257 Omak Maritime Ltd v Mamola Challenger Shipping Co (The Mamola Challenger) [2011] 1 Lloyd’s Rep 47 at 58 [65] per Teare J. 258 Zodiac Maritime Agencies Ltd v Fortescue Metals Group Ltd (The Kildare) [2011] 2 Lloyd’s Rep 360; Glory Wealth Shipping Pte Ltd v Korea Line Corp (The Wren) [2011] 2 Lloyd’s Rep 370; Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2015] 2 Lloyd’s Rep 407 at 456-57 [221]-[223] per Popplewell J. 259 Zodiac Maritime Agencies Ltd v Fortescue Metals Group Ltd (The Kildare) [2011] 2 Lloyd’s Rep 360. 260 Glory Wealth Shipping Pte Ltd v Korea Line Corp (The Wren) [2011] 2 Lloyd’s Rep 370.

512

Shipping Law

[14.260]

agree to allow the ship to be redelivered early, on payment by the charterer of a lump sum known as “ballast bonus”, which represents the hire for the period between actual redelivery and the beginning of the underlap period.

Duration by reference to a trip [14.260]

Some charterparties define the duration of the charter period by reference to the time taken to complete a single voyage or round trip, rather than by reference to a specified number of years, months or days.261 Such charterparties are known as trip time charterparties, and they often specify the particular cargo to be carried on the voyage or voyages. A trip time charterparty for carriage of a particular cargo is rather like a voyage charterparty in which the charterer, rather than the owner, is responsible for running costs such as bunkers, port charges, etc, so that the trip time hire is less than voyage charterparty freight for the same voyage and cargo would be. Nevertheless, a trip time charterparty is a time charterparty, not a voyage charterparty. There is no provision for laytime and demurrage, because the charterer pays for all time used from delivery to redelivery.262 In some cases, an estimate of the duration of the time charter trip is included in the charterparty. In Continental Pacific Shipping Ltd v Deemand Shipping Co Ltd (The Lendoudis Evangelos II),263 a ship was time-chartered for a trip “duration about 70/80 days without guarantee”. The trip actually took 103 days, 12 hours and 40 minutes and the owners claimed compensation for wrongful detention of the vessel for 23.52 days. Longmore J rejected their claim, holding that the charterer was only under an obligation to make an estimate in good faith of the duration of the trip; there was no requirement that the estimate be a reasonable one. There was no evidence that the charterer did not genuinely believe the estimate at the time of fixing the charterparty, so they could not be held liable to the owners.

261 See, eg, Lyric Shipping Inc v Intermetals Ltd (The Al Taha) [1990] 2 Lloyd’s Rep 117; Continental Pacific Shipping Ltd v Deemand Shipping Co Ltd (The Lendoudis Evangelos II) [1997] 1 Lloyd’s Rep 404; Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] 2 Lloyd’s Rep 221; MH Progress Lines SA v Orient Shipping Rotterdam BV (The Genius Star 1) [2012] 1 Lloyd’s Rep 222. 262 In Care Shipping Corp v Latin American Shipping Corp [1983] QB 1005 at 1011 (reported sub nom as The Cebu [1983] 1 Lloyd’s Rep 302), Lloyd J said that one of the advantages of a trip time charterparty over a voyage charterparty is that it “avoids the hideous complexities of demurrage”. For a consideration of those hideous complexities, see [13.430]–[13.490]. 263 Continental Pacific Shipping Ltd v Deemand Shipping Co Ltd (The Lendoudis Evangelos II) [1997] 1 Lloyd’s Rep 404.

[14.280]

14 Time Charterparties

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TRADING LIMITS Introduction [14.270]

In the absence of express provision to the contrary, the chartered ship is completely at the charterer’s disposal for the duration of the charter period. The charterer is entitled to order the ship to any port in any part of the world.264 In practice, however, time charterparties usually contain clauses placing some limit on the charterer’s absolute right to direct the movements of the ship. The insurers who provide insurance cover for the ship dictate to the shipowner, and thus to the charterer, trading limits that minimise the risk of damage. There are two main types of clause that impose trading limits. The first type of clause limits the geographical areas to which the charterer may send the ship. The second requires the charterer to send the ship to safe ports only.

Geographical trading limits Limits set by hull underwriters

[14.280]

The shipowner insures the ship’s hull and machinery with hull underwriters, who specify permitted trading limits for the ship. These limits are designed to keep the ship away from areas where there is a high risk of damage from such perils as ice, reefs or bad weather. In practice, charterparties often refer to a standard set of limits devised by the International Underwriting Association in London,265 which are known as the Institute Warranty Limits (IWL),266 but other limits may be set, depending on the nature of the ship. The shipowner agrees not to send the ship outside the agreed limits, or, if it is sent outside the limits, to pay an additional premium. Having entered into this agreement with the hull insurer, the shipowner in turn requires the charterer not to send the ship outside the agreed limits, or to indemnify the shipowner for any extra premium that becomes payable to the insurer.

264 See, eg, Action Navigation Inc v Bottigliere di Navigazione SpA (The Kitsa) [2005] 1 Lloyd’s Rep 432 (charterer held entitled to send ship to warm water port where delay caused bottom fouling). 265 In 1999, the Institute of London Underwriters merged with the London International Insurance and Reinsurance Market Association (LIRMA) to form the International Underwriting Association of London (IUA): see [17.120] and the IUA website: http://www.iua.co.uk. Although “the Institute” no longer exists in name, the use of “Institute Warranty Limits” and “IWL” continues. 266 See, eg, Whistler International Ltd v Kawasaki Kisen Kaisha Ltd [2001] 1 AC 638 (reported sub nom as The Hill Harmony [2001] 1 Lloyd’s Rep 147).

514

Shipping Law

[14.290]

If the charterer orders the ship on a voyage outside the agreed range, it is in breach of contract, and the master may refuse to obey the order267 or to sign bills of lading requiring delivery outside the agreed range.268 If the shipowner does agree to undertake the voyage, the charterer is obliged to pay the shipowner the difference between the charterparty rate of hire and the market rate of hire outside the agreed range, if that is higher.269 If, as is usually the case, the charterer is given the privilege to breach the agreed limits on payment of any extra insurance premiums that apply outside them,270 that privilege does not impliedly entitle it to send the ship to unsafe ports if there is also a “safe port” clause in the charterparty.271 If a trip time charterparty defines permitted geographical limits as well as defining the duration of the charterparty by reference to a particular voyage or trip272 (as it may do if a standard form is used), the description of the voyage or trip overrides the description of the permissible geographical limits, so that the charterer is not entitled to send the ship anywhere in the world within the trading limits in completing the contract voyage or trip.273 Limits set by war risk underwriters

[14.290]

Similarly, war risk underwriters impose trading limits, either by specifying excluded countries or zones, to which the charterer is not entitled to send the ship at all,274 or by specifying restricted countries or zones, to which the charterer is entitled to send the ship on certain conditions, including the payment of extra insurance premiums.275 As time charterparties are often of long duration, provision is commonly made for the contingency of a war breaking out during the charter period 267 GW Grace & Co Ltd v General Steam Navigation Co Ltd (1950) 83 Ll L Rep 297 at 307 per Devlin J. 268 Halcyon Steamship Co Ltd v Continental Grain Co (1943) 75 Ll L Rep 80 at 84 per Mackinnon LJ. For a consideration of the master’s obligation to sign bills of lading as presented by the charterer, see [14.420]. 269 See, eg, Rederi Sverre Hansen A/S v Phs van Ommeren (1921) 6 Ll L Rep 193 (CA). 270 See, eg, Atlantic Lines & Navigation Co Inc v Hallam Ltd (The Lucy) [1983] 1 Lloyd’s Rep 188. 271 St Vincent Shipping Co Ltd v Bock, Godeffroy & Co (The Helen Miller) [1980] 2 Lloyd’s Rep 95. For a consideration of “safe port” clauses, see [14.300]. 272 For a description of trip time charterparties, see [14.260]. 273 Temple Steamship Co Ltd v V/O Sovfracht (1945) 79 Ll L Rep 1 (HL). 274 For example, in Atlantic Lines & Navigation Co Inc v Hallam Ltd (The Lucy) [1983] 1 Lloyd’s Rep 188, the list of excluded zones was Cuba, Israel, Vietnam, Cambodia, Angola, Cabinda, N Korea, Albania, Lebanon, Mozambique, Turkish controlled areas of Cyprus, Syria, Orinoco River, Churchill, Rhodesia. 275 See, eg, Abu Dhabi National Tanker Co v Product Star Shipping Ltd (The Product Star) (No 2) [1993] 1 Lloyd’s Rep 397, where the charterparty provided that the shipowner was to pay basic war risk premiums, but the charterer was to pay any extra premium for trading in the Arabian Gulf.

[14.290]

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in an area to which the charterer is entitled to send the chartered ship. War risk insurance policies usually contain a clause which entitles the insurer to declare extra premium zones where a war begins to threaten shipping. If the charterer sends the ship into such a zone, the shipowner is obliged to pay an extra war risk premium to the insurer. As a result, time charterparties usually include a premium indemnity clause which requires the charterer to reimburse the shipowner for extra insurance premiums incurred if the ship is sent into a zone that has been declared an extra premium zone by the shipowner’s war risk insurer.276 The effect of premium indemnity clauses of this kind was considered in a number of cases which arose as a result of the outbreak of hostilities between Iran and Iraq in 1980. Soon after the armed conflict began, a leading war risk insurer, Hellenic Mutual War Risks Association (Bermuda) Ltd, declared the Persian Gulf to be an extra premium zone. Shipowners whose ships had been ordered into the Gulf by time charterers paid extra premiums to Hellenic Mutual. The Hellenic Mutual war risk policy provided complete cover against risks arising from war, including the risk of detention or diversion of the insured ship. When the shipowners sought to recover the extra premiums from the time charterers under the charterparty premium indemnity clauses, the charterers argued that they were not obliged to indemnify the shipowners for the full cost of extra war risk insurance. The standard form premium indemnity clauses in question were expressed in terms of war risks to “hull, machinery and crew” or some similar form of words, and the charterers argued that these clauses did not impose on them an obligation to indemnify the shipowner for cover against the risk of detention or diversion of the chartered ship. The question of the charterer’s obligation to pay the detention and diversion component of the extra war risk premiums was raised in a number of cases, each of which considered a slightly different form of words in the premium indemnity clause. In each of the cases, it was held that the charterer was obliged to reimburse the shipowner for the full cost of additional war risk insurance, including diversion and detention cover.277

276 See, eg, NYPE 2015, cl 34(d) (Appendix 7). 277 Telfair Shipping Corporation v Athos Shipping Co SA (The Athos) [1981] 2 Lloyd’s Rep 74 (aff’d on other grounds: Telfair Shipping Corporation v Athos Shipping Co SA (The Athos) [1983] 1 Lloyd’s Rep 127) (New York Produce Exchange Form, charterer to indemnify for “extra War Risk Insurance”); Maritime Transport Overseas GmbH v Unitramp (The Antaios) [1981] 2 Lloyd’s Rep 284 (New York Produce Exchange Form, charterer to indemnify for “war risk premiums for vessel, officers and crew”); Schiffahrtsagentur Hamburg Middle East Line GmbH v Virtue Shipping Corp (The Oinoussian Virtue) (No 2) [1981] 2 Lloyd’s Rep 300 (New York Produce Exchange Form, charterer to indemnify for “any additional war risk premium”); Ocean Star Tankers SA v Total Transport Corp (The Taygetos) [1982] 2 Lloyd’s Rep 272 (BPTime 2 Form, charterer to indemnify for “any additional war risk insurance premiums on the vessel and/or crew”); Phoenix Shipping Co v Apex Shipping Corp (The Apex) [1982] 2 Lloyd’s Rep 407 (New York Produce

516

Shipping Law

[14.300]

Safe ports [14.300]

Time charterparties usually limit the charterer’s right to direct the ship’s movements by requiring that it send the ship only to safe ports and places.278 The classic definition279 of safe port was made by Sellers LJ in The Eastern City:280 A port will not be safe unless, in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship.

This definition was approved and applied by the House of Lords in Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2).281 Time charterers ordered the ship “Evia” to load a cargo at Basrah on the Shatt-al-Arab waterway in Iraq. Hostilities between Iran and Iraq broke out after the “Evia” arrived at Basrah, trapping it with many other ships in Shatt-al-Arab. The shipowners contended that the charterers were in breach of the safe port obligation in the charterparty, as the ship had not been able to enter and leave Basrah safely. The charterers argued that the outbreak of the war was an “abnormal occurrence” which excused their breach of the safe port clause. The House of Lords held that the question of the safety of a port must be considered prospectively at the time when the charterer makes the order for the ship to visit that port. If, at that time, it appears that the ship will be able to enter, use and leave the port safely, the charterer satisfies the obligation imposed by clause. Applying this test, the court found in favour of the charterers on the basis that Basrah was prospectively safe when the “Evia” was ordered to it.282 It was also stated, obiter, that if the nominated port becomes unsafe Exchange Form, charterer to indemnify for “any additional premium … for hull and machinery and crew”); Empresa Cubana de Fletes v Kissavos Shipping Co SA (The Agathon) (No 2) [1984] 1 Lloyd’s Rep 183 (Baltime form, charterer to indemnify premium for “interests in the vessel and/or hire”). 278 See, eg, NYPE 2015, cl 1(b) (Appendix 7): “The vessel shall be employed … between safe ports and places”. 279 In Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2014] 1 Lloyd’s Rep 59 at 77 [97], Teare J expressed surprise that another definition of “safe port”, by Lord Denning MR in Kodros Shipping Corp v Empresa Cubana de Fletes (The Evia) (No 2) [1982] 1 Lloyd’s Rep 334 at 338, was referred to by counsel as the “classic definition”. Teare J said: “In so far as there is a classic definition of a safe port, that definition has long been regarded as that of Sellers LJ in The Eastern City”. 280 Leeds Shipping Co v Societe Francaise Bunge (The Eastern City) [1958] 2 Lloyd’s Rep 127 at 131 per Sellers LJ, quoted with approval in Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] AC 736 at 749, 750, 756, 768. For a consideration of the application of this definition of safe ports in voyage charterparty cases, see [13.70]. 281 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] AC 736. 282 In arriving at this conclusion, the House of Lords overruled Transoceanic Petroleum Carriers v Cook Industries Inc (The Mary Lou) [1981] 2 Lloyd’s Rep 272, which had held that breach of the safe port obligation could occur at any time after the charterer’s nomination of the port, up to the time of the damage.

[14.300]

14 Time Charterparties

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between the time of nomination by the charterer and the arrival of the chartered ship at the port, the charterer is under a secondary obligation to cancel the original order and direct the ship elsewhere.283 Safety is a relative term, in the sense that it is concerned with the safety of the port for the particular ship that has been chartered. A port may be safe for some ships, but not others, depending on their size and other characteristics. In Brostrom & Son v Louis Dreyfus & Co,284 Roche J said: Let not the finding of the umpire be misunderstood. It was not a finding that the Port of Londonderry was not an entirely safe port for 99 out of 100 or an even larger proportion of the ships which may seek to resort thereto, but merely that it was not a safe port for the ship in question, the Sagoland, which was a ship of large dimensions.

A port is not prospectively unsafe merely because it is reasonably foreseeable that the ship may come to some harm there.285 The particular source of danger must be such that it can be regarded as a normal characteristic of the port.286 In K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob),287 the English Court of Appeal expressed these requirements in the form of a statement that a port will not be regarded as unsafe (at least in the case of “political” risks) unless the risk of damage is sufficient for a reasonable shipowner or master to decline to send or sail the ship there. However, it is not clear whether the relevant passage288 formed part of the ratio of the court’s decision, and in Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture),289 Gatehouse J doubted whether it should be followed, because it appears to add an unnecessary additional element (the judgment of a reasonable shipowner or master) to the classic test from The Eastern City, which was approved in The Evia (No 2), and which focuses on the normal physical or political characteristics of the 283 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] AC 736 at 749 per Lord Diplock, and at 764 per Lord Roskill. For a consideration of whether a similar obligation arises under a voyage charterparty, see [13.70]. 284 Brostrom & Son v Louis Dreyfus & Co (1932) 44 Ll L Rep 136 at 137 per Roche J. See also Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2014] 1 Lloyd’s Rep 59, which is considered below. 285 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 (possibility of attack by Eritrean guerrillas not sufficient to make the Ethiopian port of Massawa unsafe). 286 See, eg, Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508 (risk of attack by Iranian jets against ships using Kuwaiti port of Mina-al-Ahmadi a normal characteristic in 1984), distinguishing K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 (attack by Eritrean guerrillas an abnormal occurrence at Massawa). 287 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545. 288 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 at 551 per Parker LJ, delivering the judgment of the court. 289 Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508 at 519-520.

518

Shipping Law

[14.300]

port itself and the question whether any particular danger can be avoided by good navigation and seamanship. The classic Eastern City definition of safe port states that a port will not be regarded as unsafe if the event or condition that causes harm to the chartered ship is “an abnormal occurrence”. An event is “abnormal” for these purposes unless it happens sufficiently frequently for it to be regarded as a normal characteristic of the port.290 For example, in Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory),291 the chartered ship was totally lost after being ordered off the berth by the port authority at the Japanese port of Kashima because of an impending typhoon. The sea state that caused the ship’s grounding and ultimate loss was a combination of a long wave swell and the high winds associated with the typhoon. Each of those weather conditions was foreseeable, and so “normal” in the sense that they had been experienced previously at Kashima, but the English Court of Appeal held (reversing the trial court) that the combination of the two events was abnormal, because it had never previously been encountered. In determining whether a port was unsafe at the time the chartered ship visited it, the court may consider events that have occurred at the port after that time in order to determine whether an incident involving the chartered ship was a normal or an abnormal occurrence.292 A port may be prospectively unsafe because of administrative shortcomings, as well as physical or “political” threats. In Maintop Shipping Co Ltd v Bulkindo Lines Pte Ltd (The Marinicki),293 the chartered ship was damaged by an underwater obstruction in a dredged channel leading to the port of Jakarta, where it had been sent by the time charterer. The court held that the shipowner had discharged the onus of proving that Jakarta was an unsafe port at the time the ship arrived there. However, because the owners were unable to establish when the underwater obstruction came to rest in the channel, they could not discharge the Evia onus of proving that Jakarta was an unsafe port when the order to go there was given. Nevertheless, the court held that the charterers had breached the safe port warranty. Jakarta was an unsafe port when the order was given because there was no proper system in 290 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 at 550-551 (CA); Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2015] 1 Lloyd’s Rep 381 (CA). 291 Gard Marine & Energy Ltd v China National Chartering Co Ltd (The Ocean Victory) [2015] 1 Lloyd’s Rep 381 (CA). 292 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 at 550-551 (CA), doubted but followed in Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508. See, however, FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 469, where it was held, in another context, that the parties’ conduct after making the contract is irrelevant to the interpretation of the contract. 293 Maintop Shipping Co Ltd v Bulkindo Lines Pte Ltd (The Marinicki) [2003] 2 Lloyd’s Rep 655.

[14.300]

14 Time Charterparties

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place to investigate reports of obstacles in the channel or to find and remove such obstacles or warn vessels of obstacles. The shipowner or master may refuse an order to go to an unsafe port.294 If the shipowner accepts the charterer’s order to go to a prospectively unsafe port, it waives its right to reject the nomination of that port, provided that it makes an unequivocal representation to that effect with knowledge of the relevant facts and the rights that it has as a result.295 If the shipowner waives its right to reject the nomination and the chartered ship enters the port, it breaches the contract if the ship leaves the nominated port because of the very danger that made the port prospectively unsafe.296 However, waiver of the right to reject the nomination does not constitute waiver of the shipowner’s right to claim damages from the charterer.297 If the chartered ship is damaged as a result of the unsafety of the port, the charterer is liable for the damage caused and any other consequences of the breach that are not too remote in law. For example, in Uni-Ocean Lines Pty Ltd v C-Trade SA (The Lucille),298 the time charterers of the “Lucille” ordered it into Basrah on the day that the hostilities between Iran and Iraq began. The “Lucille” entered Shatt-alArab, and became trapped there for so long that it became a constructive total loss.299 The shipowners (or, rather, their hull insurers in their name) sought to recover the value of the “Lucille” from the charterers. Applying The Evia (No 2), the Court of Appeal held that Basrah had become a prospectively unsafe port at the time the order to enter it was given by the charterers, who were thus in breach of the safe port obligation in the charterparty. The charterers were held liable for the total loss of the “Lucille”, despite the fact that, in itself, this was not a foreseeable consequence of their breach. Losses caused by the closure of Shatt-al-Arab were a foreseeable consequence of the charterer’s breach, and it mattered 294 The Gazelle 128 US 474; 2006 AMC 1202 (1888). 295 Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508, applying the principles stated in Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 (HL), a voyage charterparty case considered in [13.70]. 296 See [13.70]. Compare Abu Dhabi National Tanker Co v Product Star Shipping Ltd (The Product Star) (No 2) [1993] 1 Lloyd’s Rep 397, where the charterparty gave the shipowner the right to require the charterer to nominate another port if the master or shipowner in their discretion considered it dangerous or impossible to reach the nominated port. It was held that the shipowner had to exercise its discretion honestly and in good faith, not arbitrarily, capriciously or unreasonably. 297 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391 at 397 per Lord Goff. The position is different in the US, where a shipowner waives its right to claim damages if it enters a port that it knows to be unsafe: see Atkins v Fibre Disintegrating Co 2 Ben 381; 2 F Cas 78 (EDNY 1868) (No 601) (aff’d Atkins v Fibre Disintegrating Co 85 US (18 Wall) 272 (1873)). 298 Uni-Ocean Lines Pty Ltd v C-Trade SA (The Lucille) [1984] 1 Lloyd’s Rep 244. 299 For a consideration of the meaning of “constructive total loss” in marine insurance, see [17.370]–[17.440].

520

Shipping Law

[14.300]

not that the extent and gravity of those losses were unforeseeable.300 Total loss as a result of closure of the Shatt was the same kind of damage as any other loss caused by that closure, and thus was not too remote to be recoverable.301 The same principles apply to safe berth clauses as to safe port clauses. If the charterer is under an obligation to send the ship to safe berths only, it must be the case that, at the time of the charterer’s nomination, the ship can enter, use and leave the berth safely with good navigation and seamanship.302 If the charterer nominates a safe berth, but the ship is moved from that berth to an unsafe one by a third party who is not the agent of the charterer, the charterer is not in breach of the safe berth obligation.303 Unless the charterparty provides otherwise, the obligation to send the ship to a safe port or berth is an absolute one, which is breached if the port or berth is unsafe, whether or not the charterer was aware of that fact or could have done anything about it.304 In contrast, some charterparties impose the lesser obligation to exercise due diligence to ensure the ship is sent only to safe ports.305 Although the due diligence obligation is a less onerous one than the usual absolute undertaking, it is non-delegable unless the clause clearly restricts the charterer’s obligation to one of personal due diligence.306 Thus, if the charterer delegates the task of nomination to someone else, it remains responsible for any want of due diligence in the process of nomination.307 If the port is in fact safe, the

300 Reasonable foreseeability is not relevant to the question whether a port is prospectively unsafe (see K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 (possibility of attack by Eritrean guerrillas not sufficient to make the Ethiopian port of Massawa unsafe)), but it is relevant to the question of remoteness of damage once the port has been held to be unsafe: see The Saga Cob at 551 per Parker LJ, delivering the judgment of the English Court of Appeal. 301 Uni-Ocean Lines Pty Ltd v C-Trade SA (The Lucille) [1984] 1 Lloyd’s Rep 244 at 250-251 per Kerr LJ, applying Hughes v Lord Advocate [1963] AC 837. 302 See, eg, Anders Utkilens Rederi A/S v O/Y Lovisa Stevedoring Co A/B (The Golfstraum) [1976] 1 Lloyd’s Rep 547; Islander Shipping Enterprises SA v Empresa Maritima del Estado SA (The Khian Sea) [1979] 1 Lloyd’s Rep 545 (CA). 303 Mediolanum Shipping Co v Japan Lines Ltd (The Mediolanum) [1984] 1 Lloyd’s Rep 136 (chartered ship moved from bunkering berth nominated by charterer to another, unsafe, bunkering berth by the refinery providing the bunkers). 304 Reardon Smith Line Ltd v Australian Wheat Board (1955) 93 CLR 577 (PC) (known as, but not reported as, The Houston City). See also Paragon Oil Co v Republic Tankers SA 310 F 2d 169 (2d Cir 1962); In re Petition of Frescati Shipping Co Ltd 718 F 3d 184 (3d Cir 2013). 305 See, eg, cl 4 of the Shelltime 4 charterparty, which provides, inter alia, “Charterers shall use due diligence to ensure that the vessel is only employed between and at safe places”. 306 Dow Europe SA v Novoklav Inc [1998] 1 Lloyd’s Rep 306. 307 Dow Europe SA v Novoklav Inc [1998] 1 Lloyd’s Rep 306.

[14.310]

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question of due diligence does not arise.308 If the port is unsafe and the charterer (or the person to whom it has delegated the task) has access to all the relevant information about the source of danger that makes it unsafe, then the charterer is assumed to have failed to exercise due diligence by sending the ship there, unless it can adduce evidence to justify its order.309 In determining whether the charterer exercised due diligence in sending a ship to a particular port, the court may consider events that have occurred at that port after the ship went there.310 If the standard form charterparty contains a due diligence obligation but the fixture recap311 simply refers to “safe ports”, “safe berths” or “safe places”, the contract imposes on the charterer an absolute obligation of safety, not an obligation merely to exercise due diligence.312

HIRE Introduction [14.310]

Standard form charterparties usually provide that hire is to be paid in cash, monthly, in advance.313 The word “cash” is given an extended meaning, because, “It would be absurd in modern business conditions to suppose that payment in dollar bills was contemplated … [T]he words simply mean that … payment must be in a form which does not involve the giving of credit.”314 When payment is made otherwise than literally in cash, it must be the equivalent of cash or as good as cash, so that it is immediately available to the shipowner in cash form.315 Thus, payment by cheque or banker’s draft satisfies the requirement that 308 See, eg, K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545, the first reported case to consider a due diligence safe port obligation, which was imposed by cl 3 of Shelltime 3, the predecessor of cl 4 of Shelltime 4. 309 Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508. 310 K/S Penta Shipping A/S v Ethiopian Shipping Lines Corp (The Saga Cob) [1992] 2 Lloyd’s Rep 545 at 550-551 (CA), doubted but followed in Pearl Carriers Inc v Japan Line Ltd (The Chemical Venture) [1993] 1 Lloyd’s Rep 508. See, however, FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 469, where it was held, in another context, that the parties’ conduct after making the contract is irrelevant to the interpretation of the contract. 311 For a description of fixture recaps, see [14.30]. 312 In Ullises Shipping Corp v Fal Shipping Co Ltd (The Greek Fighter) [2006] 2 Lloyd’s Rep Plus 99 at [315], Colman J said that the due diligence obligation in cl 4 of Shelltime 4 “must yield” to the absolute obligation created by a fixture recap stating “trading always afloat within IWL via safe ports/anchorages Arabian Gulf/China range”. 313 The New York Produce Exchange 1946 and NYPE 2015 forms (see Appendix 7) are notable exceptions in that cl 5 of the former and cl 11(a) of the latter provide for hire to be paid semi-monthly in advance. 314 The Brimnes: Tenax Steamship Co Ltd v The Brimnes (Owners) [1975] QB 929 at 968-969 per Cairns LJ. 315 A/S Awilco v Fulvia SpA di Navigazione (The Chikuma) [1981] 1 Lloyd’s Rep 371 (HL). In response to this decision, NYPE 2015, cl 11(a), line 276 (Appendix 7) provides (inter alia) that hire is to be paid “in funds available to the Owners on the due date”.

522

Shipping Law

[14.310]

payment be in cash,316 as does payment by transfer of funds from one account to another, provided in all cases that the money is immediately available to the shipowner on transfer.317 The word “month” is interpreted as meaning calendar month:318 in practice, the semi-monthly payments under the New York Produce Exchange form are usually made on the first and the fifteenth of each month. “In advance” is interpreted strictly; each payment must be made on or before the due date, and any late payment is a breach of the charterer’s obligation of punctual payment.319 If the due date for payment falls on a day when the banks are closed, the charterer must arrange for payment to be made on an earlier banking day, not the next day on which the banks are open.320 Late payment or non-payment of hire entitles the shipowner to withdraw the ship from the charterer’s service.321 Payment of hire is the charterer’s primary obligation under the charterparty and it continues throughout the charter period. Hire must be paid in full as provided in the charterparty; underpayment by even the smallest amount is a breach of contract by the charterer.322 The only exceptions to this rule are: (a) if the charterer is entitled to make deductions from hire, either by provision of the charterparty or by law; or (b) there is express provision for suspension of the charterer’s obligation to pay hire in circumstances which render the chartered ship off-hire; or (c) the charterparty is frustrated. Although the authorities contain dicta to the effect that the obligation to pay hire is not a condition of the contract, so that failure to pay hire does not automatically amount to a repudiatory breach by the charterer,323 316 The Brimnes: Tenax Steamship Co Ltd v The Brimnes (Owners) [1975] QB 929; Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia [1977] AC 850 (HL) (reported sub nom as The Laconia [1977] 1 Lloyd’s Rep 315). 317 Zim Israel Navigation Co Ltd v Effy Shipping Corp (The Effy) [1972] 1 Lloyd’s Rep 18. Compare A/S Awilco v Fulvia SpA di Navigazione (The Chikuma) [1981] 1 Lloyd’s Rep 371, where a transfer of funds was not “payment in cash” because the money was not immediately available from the shipowner’s account. 318 Jolly v Young (1794) 1 Esp 186; 170 ER 323. 319 Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia (The Laconia) [1977] AC 850 (HL). 320 Astro Amo Compania Naviera SA v Elf Union SA (The Zographia M) [1976] 2 Lloyd’s Rep 382 at 393 per Ackner J; Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia (The Laconia) [1977] AC 850 at 875 per Lord Salmon. 321 Withdrawal of the chartered ship for non-payment of hire is considered in detail as part of the larger issue of the shipowner’s right of withdrawal: see [14.440]–[14.450]. 322 See, eg, Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389 (deduction of US$500 from a hire payment of US$133,275 held to be a breach by the charterer entitling the shipowner to withdraw the ship from the charterer’s service). 323 See, eg, Ene Kos 1 Ltd v Petroleo Brasileiro SA [2012] 2 AC 164 at 173 [7] per Lord Sumption JSC (reported sub nom as The Kos [2012] 2 Lloyd’s Rep 292).

[14.320]

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Flaux J held in Kuwait Rocks Co v AMN Bulkcarriers Inc (The Astra),324 after an extensive review of the authorities, that the hire obligation is a condition and that failure to pay hire is a repudiatory breach entitling the shipowner to recover damages for future loss of earnings as well as withdrawing the ship from the charterer’s service.325 However, in Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd,326 Popplewell J declined to follow The Astra, holding that the obligation to pay hire is not a condition. Flaux J’s opinion in The Astra must be regarded as heterodox.

Deductions from hire [14.320]

It used to be the case that hire was treated like freight; the charterer was obliged to pay it in full, without deduction, even when it had a valid counter-claim against the shipower, unless the charterparty made express provision for a right to deduct.327 The position has now changed. The modern view is that hire is not like freight, and that the charterer is entitled to make deductions from hire by way of equitable set-off in respect of counter-claims, whether or not there is express provision in the charterparty for a right to deduct.328

The charterer is entitled to set off only those claims that go directly to impeach the shipowner’s demands for continued payment of hire: that is, claims that are so closely connected with those demands that it would be manifestly unjust to allow the shipowner to enforce payment without taking into account the cross-claim.329 Thus, the charterer is entitled to make deductions only for claims relating to loss of time, as only these 324 Kuwait Rocks Co v AMN Bulkcarriers Inc (The Astra) [2013] 2 Lloyd’s Rep 69. 325 The principles governing the recovery of damages for future loss of earnings after a repudiatory breach are considered at [14.250]. 326 Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2015] 2 Lloyd’s Rep 407. 327 See Seven Seas Transportation Ltd v Atlantic Shipping Co SA [1975] 2 Lloyd’s Rep 188; Steelwood Carriers Inc of Monrovia v Evimeria Compania Naviera SA of Panama (The Agios Giorgis) [1976] 2 Lloyd’s Rep 192. For the proposition that freight under a voyage charterparty must be paid in full, without deduction, see [13.660]. 328 See Sea and Land Securities Ltd v William Dickinson & Co Ltd [1942] 2 KB 65; (1942) 72 Ll L Rep 159 (CA) (note that the relevant passage in the judgment of MacKinnon LJ does not appear in the report at [1942] 2 KB 65, but it is to be found in the report in 72 Ll L Rep 159 at 165); Halcyon Steamship Co Ltd v Continental Grain Co (1943) 75 Ll L Rep 80; Nippon Yusen Kaisha v Acme Shipping Corporation (The Charalambos N Pateras) [1971] 2 Lloyd’s Rep 42; Compania Sud Americana de Vapores v Shipmair BV (The Teno) [1977] 2 Lloyd’s Rep 289; Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1978] QB 927 (CA) (aff’d on other grounds: Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1979] AC 757) (reported sub nom as The Nanfri, Benfri and Lorfri [1978] 2 Lloyd’s Rep 581 (CA); [1979] 1 Lloyd’s Rep 201 (HL)); SL Sethia Liners Ltd v Naviagro Maritime Corp (The Kostas Melas) [1981] 1 Lloyd’s Rep 159; Ocean Glory Compania Naviera SA v A/S PV Christensen (The Ioanna) [1985] 2 Lloyd’s Rep 164. 329 Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1978] QB 927 at 975 per Lord Denning MR (CA) (The Nanfri, Benfri and Lorfri), followed in Century Textiles and Industry Ltd v Tomoe Shipping (Singapore) Pte Ltd (The Aditya Vaibhav) [1991] 1 Lloyd’s Rep 573 at 574 per Saville J.

524

Shipping Law

[14.320]

claims are directly related to the payment of hire.330 Furthermore, the charterer is only entitled to make deductions from the hire payment or payments in respect of the period in which it was deprived of the use of the ship. If the charterer’s claim exceeds the amount of hire due for that period, it is not entitled to make a deduction from a hire payment for a period when the ship is not affected, because the requirements for equitable set-off are not satisfied in respect to that period.331 The charterer’s right to make deductions by way of set-off is an equitable one, so the charterer must act in a way that deserves equity’s protection.332 As Lord Denning MR observed in Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (known as The Nanfri, Benfri and Lorfri):333 If the charterer quantifies his loss by a reasonable assessment made in good faith, and deducts the sum quantified, then he is not in default. The shipowner cannot withdraw his vessel on account of non-payment of hire nor hold him guilty at that point of any breach of contract.

If the charterer makes an unreasonable over-estimation of the deduction, the shipowner has a right to withdraw the ship for under-payment of hire.334 If the charterer is not entitled to make deductions from hire by way of equitable set-off, the shipowner is entitled to summary judgment for any outstanding hire payments.335 In the absence of express provision, the charterer is not entitled to make deductions from hire for any purpose other than the set-off of counter-claims. Thus, for example, the charterer must pay hire in full even if it knows that the ship will be off-hire during that hire period, such as for a scheduled dry-docking.336 Similarly, unless the charterparty provides 330 See, eg, Leon Corp v Atlantic Lines and Navigation Co Inc (The Leon) [1985] 2 Lloyd’s Rep 470 (denial of the right to equitable set-off because the charterer’s claim did not affect the use of the chartered ship). 331 Century Textiles and Industry Ltd v Tomoe Shipping (Singapore) Pte Ltd (The Aditya Vaibhav) [1991] 1 Lloyd’s Rep 573 (not to be confused with Century Textiles and Industry Ltd v Tomoe Shipping (Singapore) Pte Ltd (The Aditya Vaibhav) [1993] 1 Lloyd’s Rep 63, a different dispute between the same parties about the same ship). 332 Nevertheless, comparisons with what equity requires to entitle set-off of claims in other types of contract are not particularly helpful, because although the principle is the same, the transaction and the nature of the claim and cross-claim are different: see Century Textiles and Industry Ltd v Tomoe Shipping (Singapore) Pte Ltd (The Aditya Vaibhav) [1991] 1 Lloyd’s Rep 573 at 575 per Saville J citing Leon Corp v Atlantic Lines and Navigation Co Inc (The Leon) [1985] 2 Lloyd’s Rep 470 at 475 per Hobhouse J. 333 Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1978] QB 927 at 975, followed in Santiren Shipping Ltd v Unimarine SA (The Chrysovalandou Dyo) [1981] 1 Lloyd’s Rep 159 at 163 per Mocatta J. 334 China National Foreign Trade Transportation Corp v Evlogia (The Mihalios Xilas) [1979] 2 Lloyd’s Rep 303 (HL). 335 Century Textiles and Industry Ltd v Tomoe Shipping (Singapore) Pte Ltd (The Aditya Vaibhav) [1991] 1 Lloyd’s Rep 573. 336 Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389.

[14.330]

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for a pro rata payment for part of a month, the charterer must pay the last month’s hire in full, even when it is clear that the ship will be redelivered before the end of the month.337 Hire paid in advance is not conditional in the sense that it is not due under the terms of the charterparty,338 but it is provisional in the sense that if it is not earned for the whole period covered by the payment, whether because of the expiration of the charter period,339 a period of off-hire340 or repudiation of the charterparty by the shipowner,341 the charterer is entitled to recover a proportion of the pre-paid hire from the shipowner. However, it is not entitled in these circumstances to recover a proportion of pre-paid hire from an assignee of the shipowner’s rights.342

Off-hire clauses General

[14.330]

The charterer must bear most of the losses suffered if the ship lies idle during the charter period. It pays for the use of the ship for the whole of the period, and must take the risk of loss caused by delay.343 However, if the ship is delayed because of deficiency in the ship or its crew, any losses suffered are properly borne by the shipowner, who usually bears the risks involved in the nautical operation of the ship. Accordingly, standard form charterparties usually contain an off-hire clause, which provides that the charterer is relieved of the obligation to pay hire if the ship is delayed by one of more of a number of causes related to the efficiency of the ship or its crew.344 Although hire is not earned while the ship is off-hire, the charterer’s other obligations under 337 Tonnelier v Smith (1897) 2 Com Cas 258 (CA); CA Stewart & Co v Phs van Ommeren (London) Ltd [1918] 2 KB 560 (CA); French Marine v Compagnie Napolitaine d’Eclairage et de Chauffage par le Gaz [1921] 2 AC 494 (HL); Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 Lloyd’s Rep 365 (HL). Clause 11(3) of the NYPE 2015 form (Appendix 7) provides for pro rata payment of the last half-month. 338 Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1993] 1 Lloyd’s Rep 443 at 452 per Beldam LJ. This dictum was approved, in slightly different terms, when the decision of the Court of Appeal was affirmed by the House of Lords: Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 Lloyd’s Rep 365 at 369 per Lord Goff. 339 Tonnelier v Smith (1897) 2 Com Cas 258. 340 CA Stewart & Co v Ph van Ommeren (London) Ltd [1918] 2 KB 560. Off-hire is considered at [14.330]–[14.340]. 341 Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 Lloyd’s Rep 365 (HL). 342 Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 Lloyd’s Rep 365 (HL). 343 See, eg, Nippon Yusen Kaisha Ltd v Scindia Steam Navigation Co Ltd (The Jalagouri) [1999] 1 Lloyd’s Rep 903 at 908 per Rix J: “[P]rima facie all risk of delay under a time charter is on the charterer, unless he can bring himself within the off-hire clause” (aff’d on other grounds: Nippon Yusen Kaisha Ltd v Scindia Steam Navigation Co Ltd (The Jalagouri) [2000] 1 Lloyd’s Rep 515 (CA)). 344 See, eg, NYPE 2015, cl 17 (Appendix 7).

526

Shipping Law

[14.330]

the charterparty are unaffected.345 The onus of proving that the ship is off-hire is on the charterer, and any ambiguity in the off-hire clause is resolved in favour of the owner.346 There are two types of off-hire clauses, “period” clauses and “net loss of time” clauses. Period clauses are so called because they relieve the charterer of the obligation to pay hire for a specified period, beginning with the inefficiency of the ship from one of the named causes and ending when it is in a fully efficient state to resume service. Under a period clause, the charterer is completely relieved of the obligation to pay hire during the period of inefficiency, even if the ship is partially capable of performing the services required of it.347 For example, in Hogarth v Miller, Brother & Co,348 the off-hire clause provided that “In the event of loss of time from [specified causes] … the payment of hire shall cease until she be again in an efficient state to resume her service”. The House of Lords held that the ship was off-hire while being towed, with cargo aboard, to its final destination (Harburg) after the engine had broken down, because it was not fully efficient during the tow, even though it was performing the service required of it, namely carrying cargo to Harburg. However, the ship was on-hire while discharging cargo at Harburg, even though the engine was still being repaired at that time, because it was fully efficient for the service then required of it.349 Similarly, a ship is not off-hire under a period clause when sailing from port to port, even though its cranes are not in working order, because it is fully efficient at that time to do the service immediately required of it.350 A period clause has an “all or nothing” effect: the ship is off-hire even if it is partially capable of

345 SS Arild (Owner) v SA de Navigation Hovrani [1923] 2 KB 141 (charterer’s obligation to provide and pay for bunkers continued during off-hire periods). For a consideration of the question of whether hire must be paid while the ship is off-hire, see [14.340]. 346 Mareva Navigation Co Ltd v Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd’s Rep 368 at 381 per Kerr J; Sig Bergesen DY & Co v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453 at 459 per Staughton LJ, quoting Royal Greek Government v Minister of Transport (1948) 82 Ll L Rep 196 at 199 per Bucknill LJ; Ocean Marine Navigation Ltd v Koch Carbon Inc (The Dynamic) [2003] 2 Lloyd’s Rep 693 at 696 per Simon J. 347 See Hogarth v Miller, Brother & Co [1891] AC 48; Tynedale Steamship Co v Anglo-Soviet Shipping Co (1936) 54 Ll L Rep 341; Western Sealanes Corp v Unimarine SA (The Pythia) [1982] 2 Lloyd’s Rep 160 at 168 per Robert Goff J. 348 Hogarth v Miller, Brother & Co [1891] AC 48. 349 Hogarth v Miller, Brother & Co [1891] AC 48 at 57 per Lord Halsbury LC: “[A]t that period there was a right in the shipowner to demand payment of the hire because at that time his vessel was efficiently working; the working of the vessel was proceeding as efficiently as it could with reference to the particular employment demanded of her at that time”. 350 Minerva Navigation Inc v Oceana Shipping AG (The Athena) [2013] 2 Lloyd’s Rep 673 at 677 [21] per Tomlinson LJ, citing Tynedale Steam Shipping Co Ltd v Anglo-Soviet Shipping Co Ltd (1936) 54 Ll L Rep 341 at 346 per Lord Roche.

[14.330]

14 Time Charterparties

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performing, and does perform, the service immediately required of it by the charterer, as was the case during the tow in Hogarth.351 In contrast, under a net loss of time clause, the charterer is only relieved of the obligation to pay hire for the time actually lost as a result of the inefficiency of the ship from the named causes.352 Thus, if the ship is partially capable of performing the services required of it, the charterer is liable to pay part of the hire, as off-hire deductions are made only in respect of the time lost through inefficiency.353 The focus is on the service immediately required of the ship, just as it is with period clauses. For example, in Minerva Navigation Inc v Oceana Shipping AG (The Athena),354 the off-hire clause (cl 15 of the widely-used New York Produce Exchange 1946 form) provided that “the payment of hire shall cease for the time … lost” as a result of specified causes, which included “default of the master”. The charterer ordered the ship to the roads off the port of Benghazi in Libya, but the ship spent 10.9416 days drifting in international waters outside Libya before finally proceeding to Benghazi to discharge its cargo. The arbitrators found as fact that the ship would not have been able to berth and begin discharging any earlier, even if it had proceeded directly to the roads off Benghazi as ordered. Nevertheless, the English Court of Appeal held that the ship was off-hire for the 10.9416 days spent drifting, because the service immediately required of it at that time was to proceed to the roads off Benghazi. Similarly, in TS Lines Ltd v Delphis NV (The TS Singapore),355 the chartered ship was held to be off-hire while sailing between Yokohama and Shanghai, its next intended port of call, because it was actually sailing to Guangzhou for repairs. It was immaterial that it was following the same route that it would have been following if it had been following the charterer’s orders to go to Shanghai, as it was not performing the service required of it by the charterer. Under both types of off-hire clause, hire becomes payable again once the ship is fully efficient to do what it is required to do under the charterparty,356 even if time continues to be lost thereafter.357 For example, in Eastern Mediterranean Maritime (Liechtenstein) Ltd v Unimarine 351 Minerva Navigation Inc v Oceana Shipping AG (The Athena) [2013] 2 Lloyd’s Rep 673 at 681 [31] per Tomlinson LJ. 352 NYPE 2015, cl 17 (see Appendix 7) and cl 15 of the New York Produce Exchange 1946 form (quoted below) are “net loss of time” clauses, because of the use of the words “for the time thereby lost”. 353 See Canadian Pacific (Bermuda) Ltd v Canadian Transport Co Ltd [1974] 1 Lloyd’s Rep 311 at 314 per Lord Denning MR. 354 Minerva Navigation Inc v Oceana Shipping AG (The Athena) [2013] 2 Lloyd’s Rep 673. 355 TS Lines Ltd v Delphis NV (The TS Singapore) [2009] 2 Lloyd’s Rep 54. 356 Sig Bergesen DY & Co v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453 at 459 per Staughton LJ, quoting Hogarth v Miller [1891] AC 48 at 55, 56 per Lord Halsbury LC. 357 Vogemann v Zanzibar Steamship Co Ltd (1901) 6 Com Cas 253; (1902) 7 Com Cas 254 (CA); Eastern Mediterranean Maritime (Liechtenstein) Ltd v Unimarine SA (The Marika M) [1981] 2

528

Shipping Law

[14.330]

SA (The Marika M),358 the chartered ship went off-hire when it ran aground while waiting for a berth. After it was refloated, it had to wait a considerable time before getting a berth, as it had lost its place in the berthing queue. Even though the time lost as a result of the grounding continued after the ship was refloated, it was held that the obligation to pay hire resumed on reflotation under cl 15 of the New York Produce Exchange form (a “net loss of time” clause), as the ship was then once again in a fully efficient state. Parker J said: “cl 15 … is intended to deal with periods during which the full working of the vessel is prevented and no further”.359 The circumstances that render the ship off-hire do not necessarily constitute a breach of contract by the shipowner,360 nor, conversely, do all breaches of contract by the shipowner necessarily render the ship off-hire.361 Most off-hire clauses recite a long list of causes that may render the ship off-hire. For example, cl 15 of the 1946 version of the New York Produce Exchange form provides (inter alia):362 That in the event of the loss of time from deficiency of men or stores, fire, breakdown or damages to hull, machinery or equipment, grounding, detention by average accidents to ship or cargo, drydocking for the purpose of examination or painting bottom, or by any other cause preventing the full working of the vessel, the payment of hire and overtime shall cease for the time thereby lost.

The words “or any other cause” must be interpreted eiusdem generis with those that precede them, and so are confined to other causes related to the physical condition of the ship or crew or (perhaps) the cargo.363 If the ship is efficient in itself, but is delayed by some extraneous cause, it Lloyd’s Rep 622; Western Sealanes Corp v Unimarine SA (The Pythia) [1982] 2 Lloyd’s Rep 160. Under a period clause, it is clear that hire becomes payable on resumption of efficiency, as this defines the end of the off-hire period. 358 Eastern Mediterranean Maritime (Liechtenstein) Ltd v Unimarine SA (The Marika M) [1981] 2 Lloyd’s Rep 622. 359 Eastern Mediterranean Maritime (Liechtenstein) Ltd v Unimarine SA (The Marika M) [1981] 2 Lloyd’s Rep 622 at 625. 360 Ocean Glory Compania Naviera SA v A/S P V Christensen (The Ioanna) [1985] 2 Lloyd’s Rep 164 at 167 per Staughton J. 361 See, eg, Nitrate Corporation of Chile Ltd v Pansuiza Compania de Navegacion (The Hermosa) [1980] 1 Lloyd’s Rep 638 (unseaworthiness did not render ship off-hire, because no time lost as a result). 362 Compare NYPE 2015, cl 17 (Appendix 7), to see the changes made in the 2015 version of the form. The older version is quoted here because most of the cases considered below are concerned with it: it is still widely used in practice. Another version of NYPE, published in 1993, did not supplant use of the 1946 version in the market. The same fate may await the 2015 version. 363 Court Line Ltd v Dant & Russell Inc (1939) 64 Ll L Rep 212; Barker v Moore & McCormack Inc 40 F 2d 410 (2nd Cir 1930); Mareva Navigation Co Ltd v Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd’s Rep 368; Harmony Shipping Co SA v Saudi-Europe Line Ltd (The Good Helmsman) [1981] 1 Lloyd’s Rep 377; Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm) [1982] 1 Lloyd’s Rep 7; Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139 at 150-151 per Rix J. See also Sanko

[14.330]

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remains on-hire.364 For example, in Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm),365 the chartered ship was not allowed to enter the Panama Canal because the canal authorities declared it to be overdraught. It had to be lightened by transfer of part of the cargo to another ship. The charterers claimed that the ship was off-hire during the lightening process, because the physical condition of the ship had prevented it from performing the service required of it. The English Court of Appeal held that the actions of the canal authority did not alter the fact that the ship was fully efficient in itself at all times. The delay did not send the ship off-hire because it arose from an extraneous cause. Similarly, in Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd (The Saldanha)366 it was held that the chartered ship was not off-hire under cl 15 of the New York Produce Exchange form while it was being held for ransom by Somali pirates, which Gross J described as a “classic example of a totally extraneous cause”.367 In contrast, in Osmium Shipping Corp v Cargill International SA (The Captain Stefanos),368 the chartered ship was held to be on-hire while detained by Somali pirates because the charterparty contained a “capture/seizure” clause, which specifically provided that the ship would be off-hire for any time lost caused by “capture/seizure”. The two cases are not inconsistent, despite the difference in result. In The Captain Stefanos, Cooke J agreed with The Saldanha that the ship would not have been off-hire under the ordinary off-hire clause, cl 15;369 in The Saldanha, Gross J said that if the parties were minded to treat seizure by pirates as an off-hire event, they could do Steamship Co Ltd v Fearnly and Eger A/S (The Manhattan Prince) [1985] 1 Lloyd’s Rep 140, a decision to the same effect on the equivalent clause in the Shelltime 3 form, cl 20. Compare Santa Martha Baay Scheepvaart and Handelsmaatschappij NV v Scanbulk A/S (The Rijn) [1981] 2 Lloyd’s Rep 267 at 271, where Mustill LJ said that the collection of terms in cl 15 was so heterogeneous that the eiusdem generis rule cannot providea helpful guide. See also Sig Bergesen DY A/S v Mobil Shipping and Transportation Co (The Berge Sund) [1992] 1 Lloyd’s Rep 460 at 463, where Steyn J made similar comments in relation to cl 11 of the Baltime form (reversed on other grounds: Sig Bergesen DY A/S v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453). 364 Court Line Ltd v Dant & Russell Inc (1939) 64 Ll L Rep 212 (ship detained by boom across Yangtse River not off-hire); Mareva Navigation Co Ltd v Canaria Armadora SA (The Mareva AS) [1977] 1 Lloyd’s Rep 368 (ship delayed as a result of cargo damage not off-hire); Harmony Shipping Co SA v Saudi-Europe Line Ltd (The Good Helmsman) [1981] 1 Lloyd’s Rep 377 (ship detained by immigration authorities because of absconding crew member not off-hire); Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm) [1982] 1 Lloyd’s Rep 7. 365 Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm) [1982] 1 Lloyd’s Rep 7. 366 Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd (The Saldanha) [2011] 1 Lloyd’s Rep 187. 367 Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd (The Saldanha) [2011] 1 Lloyd’s Rep 187 at 193 [33]. 368 Osmium Shipping Corp v Cargill International SA (The Captain Stefanos) [2012] 2 Lloyd’s Rep 46. 369 Osmium Shipping Corp v Cargill International SA (The Captain Stefanos) [2012] 2 Lloyd’s Rep 46 at 47 [5].

530

Shipping Law

[14.330]

so straightforwardly by including a “seizures” clause (or by adding the word “whatsoever” to cl 15, an expedient considered below).370 In Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence),371 Rix J held that the qualifying phrase “preventing the full working of the vessel” has the effect that the ship need not be inefficient in itself, because a ship’s working may be prevented by legal as well as physical means and by outside as well as internal causes.372 However, the cause must still be one eiusdem generis with the ones listed in cl 15 for the ship to go off-hire. In The Laconian Confidence itself, the ship was detained by port authorities in Bangladesh after completing discharge of its cargo because of the presence of residue sweepings. Rix J held that the ship was not off-hire under cl 15. The “unexpected and unforeseeable” detention by the authorities had prevented the ship from full working, but the cause was not one of those listed in cl 15. There had been no “average accident” to cargo; the detention of the ship by the port authorities was a totally extraneous cause unrelated to the characteristics of the ship or its crew.373 If the word “whatsoever” is inserted after the words “or any other cause”, the phrase is not to be interpreted eiusdem generis with those that precede it, so that it would apply even to extraneous causes.374 Although this much is clear (albeit only established by obiter dicta), there are conflicting views on the meaning of the similar phrase “or any cause whatsoever”. According to one view of the phrase, the ship goes off-hire if, for any reason, it is not fully efficient and capable in itself of performing the services required of it, whether or not the cause has anything to do with the ship itself.375 According to the other view, the delaying cause must be related in some way to the qualities, characteristics, history or 370 Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd (The Saldanha) [2011] 1 Lloyd’s Rep 187 at 194 [36]. 371 Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139. 372 Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139 at 150. 373 Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139 at 151. 374 Sidermar SpA v Apollo Corporation (The Apollo) [1978] 1 Lloyd’s Rep 200 at 205 per Mocatta J; Belcore Maritime Corp v F Lli Moretti Cereali SpA (The Mastro Giorgis) [1983] 2 Lloyd’s Rep 66 at 68 per Lloyd J; Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139 at 151 per Rix J; Cosco Bulk Carrier Co Ltd v Team-Up Owning Co Ltd (The Saldanha) [2011] 1 Lloyd’s Rep 187 at 194 [36]. 375 CA Venezolana de Navigacion v Bank Line (The Roachbank) [1987] 2 Lloyd’s Rep 498 at 508 per Webster J. See also Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139 at 151 per Rix J considering (obiter) what effect the addition of the word “whatsoever” would have had on the circumstances described above: “The vessel would have been prevented from working, albeit in unexpected circumstances. The cause would not have been ejusdem generis, but with the addition of the word ‘whatsoever’ would not have to be. It would not seem to me to matter that the authorities’ actions may have been capricious.”

[14.330]

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ownership of the ship, so that completely extraneous causes do not send the ship off-hire.376 This conflict of opinion has yet to be resolved.377 If, however, the full working of the ship is prevented as a natural consequence of the manner in which the charterer has chosen to employ it, it does not thereby go off-hire under cl 15 or other similar clauses. In Santa Martha Baay Scheepvaart and Handelsmaatschappij NV v Scanbulk A/S (The Rijn),378 the chartered ship lost time because the bottom of the hull became fouled by marine growth while it was kept waiting for cargo in tropical waters. Mustill J held that the ship was not off-hire during the time lost as a natural result of complying with the charterer’s orders.379 Similarly, cleaning and washing of the ship’s holds or tanks does not send the ship off-hire,380 because it can be regarded as a natural consequence of following the charterer’s orders to load the cargoes previously carried in those holds or tanks. This is so even if the cleaning required is in some way extraordinary or unusual, because cleaning is in the ordinary way a service required by the charterer, and because the ship is at the material time fully fit to carry out that service.381 Conversely, some charterparties provide that the ship goes off-hire if it fails to comply with the charterer’s orders.382 In such a case, there is no general principle that always entitles the master to delay, with the ship remaining on-hire, in order to satisfy himself or herself that the charterer’s

376 Belcore Maritime Corp v F Lli Moretti Cereali SpA (The Mastro Giorgis) [1983] 2 Lloyd’s Rep 66 at 69 per Lloyd J. 377 In CA Venezolana de Navegacion v Bank Line Ltd (The Roachbank) [1988] 2 Lloyd’s Rep 337, the Court of Appeal, in refusing to allow leave to appeal from the decision in CA Venezolana de Navigacion v Bank Line (The Roachbank) [1987] 2 Lloyd’s Rep 498, explicitly decined to choose between the conflicting views in Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139 and Belcore Maritime Corp v F Lli Moretti Cereali SpA (The Mastro Giorgis). See, however, the later obiter remarks of Rix J in Andre & Cie SA v Orient Shipping (Rotterdam) BV (The Laconian Confidence) [1997] 1 Lloyd’s Rep 139 at 151, described above. 378 Santa Martha Baay Scheepvaart and Handelsmaatschappij NV v Scanbulk A/S (The Rijn) [1981] 2 Lloyd’s Rep 267. See also Action Navigation Inc v Bottigliere di Navigazione SpA (The Kitsa) [2005] 1 Lloyd’s Rep 432 at 441-442 [43]-[45], implicitly endorsing the correctness of the decision in The Rijn. 379 Compare Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Corp (The Apollonius) [1978] 1 Lloyd’s Rep 53, where fouling described in Santa Martha Baay Scheepvaart and Handelsmaatschappij NV v Scanbulk A/S (The Rijn) [1981] 2 Lloyd’s Rep 267 as “wholly extraordinary and unpredictable” did render the ship off-hire. 380 Splosna Plovba of Piran v Agrelab Steamship Corp (The Bela Krajina) [1975] 1 Lloyd’s Rep 139; Sig Bergesen DY & Co v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453. 381 Sig Bergesen DY & Co v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453 at 461 per Staughton LJ. Sir Roger Parker took the view that all cleaning must be regarded as “normal” if there has been no neglect of duty on the part of the master, officers or crew: at 463. 382 See, eg, cl 21 of the Shelltime 4 form.

532

Shipping Law

[14.340]

orders are authorised, or lawful under the charterparty.383 However, there may be unusual circumstances, particularly in a war situation, where the reasonably prudent master may have the right, and indeed the duty, to pause to seek further information about the orders.384 In The Houda,385 Leggatt LJ said: Orders ordinarily require immediate compliance. But the circumstances in which an order is received or the nature of it may make it unreasonable for the master to comply without further consideration or enquiry. When an order is reasonably regarded as ambiguous, it must be clarified. When the lawfulness of an order is reasonably called in question, it must be established. When the authenticity of an order is reasonably doubted, it must be verified.

Payment of hire when the chartered ship is off-hire

[14.340]

It is unclear whether the charterer is entitled to defer payment of hire when the ship is off-hire. Although the ship does not earn hire for the periods when it is off-hire, it does not necessarily follow that the charterer is thereby relieved of the obligation to make regular monthly payments of hire in advance. There are three possible approaches if a payment of hire falls due at a time when the ship is off-hire. First, the charterer could pay hire in full as usual, seeking repayment of the overdue amount when the full extent of the off-hire period is ascertained. Secondly, the charterer could make a payment of hire, deducting a sum representing the anticipated future period of off-hire. Thirdly, the charterer could defer the payment of hire until the ship goes on-hire, then pay the remaining proportion of the month’s hire. These three alternatives were considered obiter in Tradax Export SA v Dorada Compania Naviera SA (The Lutetian),386 but no clear answer emerged. Bingham J considered both authority and the evidence of expert witnesses concerning trade practice, but was unable to make any general observations as a result, confining himself to deciding the point on the construction of the particular hire clause in question, cl 15 of the New York Produce Exchange 1946 form, which provides that “payment of hire shall cease” after an off-hire event.387 It seems that trade practice is to take either the second or the third of the above courses of action, but in the light of the uncertainty about which is the correct course in law, charterers would be unwise to make deductions from or deferrals of hire without the approval of the shipowner. 383 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1993] 1 Lloyd’s Rep 333 (reversed without disapproval of this point: Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541). See also [14.360]–[14.420]. 384 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541 (CA). 385 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541 at 553. 386 Tradax Export SA v Dorada Compania Naviera SA (The Lutetian) [1982] 2 Lloyd’s Rep 140 at 149-153. 387 Compare NYPE 2015, cl 17 (Appendix 7), to see the changes made in the 2015 version of the form.

[14.360]

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Some support for the view that the first course of action is the correct one as a matter of law is to be found in Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty),388 where Beldam LJ said that hire paid in advance is not conditional in the sense that it is not due under the terms of the charterparty. Similarly, in Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai),389 Jonathan Hirst QC, sitting as a Deputy Judge of the High Court, said that it is incompatible with the nature of a right to be paid an amount certain on a date certain that the amount payable should be capable of being eroded by events occurring after that date.

Frustration [14.350]

Frustration of the charterparty brings an end to all continuing obligations, including the charter’s obligation to pay hire. The consequences of frustration are considered in detail at [14.480].

EMPLOYMENT OF THE SHIP AND RESPONSIBILITY FOR CARGO DURING THE CHARTER PERIOD Employment of the ship and agency General: what orders the charterer may give

[14.360]

Almost all time charterparties are made for the purpose of allowing the time charterer to engage in the business of carriage of goods by sea, by making contracts with third parties wishing to ship goods on the ship.390 The shipowner agrees to provide the services of its ship, master and crew to carry the goods,391 but the commercial decisions about what cargoes are to be carried on what voyages are made by the charterer. Navigational matters, however, remain the province of the owner and the master. Accordingly, standard form time charterparties commonly provide that the master of the ship is obliged to follow the charterer’s orders on commercial matters concerning the employment of the vessel, but not on purely “maritime” matters concerning the navigation or management of the ship. For example, cl 8(a) of the NYPE 2015 form provides (inter alia):392 388 Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1993] 1 Lloyd’s Rep 443 at 452. This dictum was approved, in slightly different terms, when the decision of the Court of Appeal was affirmed by the House of Lords: Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 Lloyd’s Rep 365 at 369 per Lord Goff. 389 Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389 at 401 [57]. 390 Kuwait Maritime Transport Co v Rickmers Linie KG (The Danah) [1993] 1 Lloyd’s Rep 351 at 353 per Saville J. The question whether the third party’s contract of carriage is with the shipowner or the time charterer is considered in [12.810]–[12.830]. 391 Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) [1991] 1 Lloyd’s Rep 100 at 107 per Bingham LJ. 392 See lines 130-131, Appendix 7. For a consideration of slow steaming and its effect on the “due despatch” obligation, see [14.90].

534

Shipping Law

[14.360]

Subject to Clause 38 (Slow Steaming) the Master shall perform the voyages with due despatch and shall render all customary assistance with the Vessel’s crew. The Master shall be conversant with the English language and (although appointed by the Owners) shall be under the orders and directions of the Charterers as regards employment and agency.

This clause (and its predecessors in earlier NYPE forms) entitles the charterer to give orders relating to the employment of the ship, not the employment of the master and crew.393 In The Hill Harmony,394 the House of Lords held that cl 8 also gives the charterer the right to choose the route that the ship must follow, as well as the ports it must visit. The charterer had ordered the ship to follow the shorter, “Great Circle”, route across the Pacific from Canada to Japan, but the master had followed the longer, slower, “rhumb line” route. The House of Lords held that the master’s failure to follow the charterer’s instructions was a breach of cl 8. Lord Bingham of Cornhill said:395 It is not hard to think of orders which plainly relate to the employment of the vessel and others which plainly relate to its navigation. It is much less easy to formulate any test which clearly distinguishes between the two. The charterer’s right to use the vessel must be given full and fair effect; but it cannot encroach on matters falling within the specialised professional maritime expertise of the master, particularly where the safety or security of the vessel, her crew and her cargo are involved. He is the person, on the vessel, immediately responsible. Technical questions concerning the operation of the vessel are for him. Thus a decision when, in the prevailing conditions of wind, tide and weather, to sail from a given port is plainly a navigational matter … By contrast, a decision without good reason to remain in port instead of continuing with a voyage … or to economise on bunkers for no good maritime reason … were properly regarded as falling outside the navigational area reserved to the master’s professional judgment … The responsibility for making good, so far as practicable, whatever course is chosen of course remains with the master and crew, as does that for navigating the vessel safely into and out of port, and responding to maritime problems encountered in the open sea. But subject to safety considerations and the specific terms of the charter, the charterers may not only order a vessel to sail from A to B but may also direct the route to be followed between the two.

The master’s duty on receiving the charterer’s orders is to act reasonably; he or she is not necessarily obliged to obey them instantly.396 Some orders require immediate compliance of a master acting reasonably; others would require a great deal of thought and consideration before a 393 Larrinaga Steamship Co Ltd v R [1945] AC 246. 394 Whistler International Ltd v Kawasaki Kisen Kaisha Ltd [2001] 1 AC 638 (reported sub nom as The Hill Harmony [2001] 1 Lloyd’s Rep 147). 395 Whistler International Ltd v Kawasaki Kisen Kaisha Ltd [2001] 1 AC 638 at 646; The Hill Harmony [2001] 1 Lloyd’s Rep 147 at 152-153. 396 Midwest Shipping Co Ltd Inc v DI Henry (Jute) Ltd [1971] 1 Lloyd’s Rep 375 at 379 per Donaldson J; Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 346 per Hirst LJ, with whom Russell LJ agreed (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1).

[14.360]

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reasonable master would comply with them.397 If, however, neither the master nor the shipowner has responded within a reasonable time, their silence may legitimately be regarded as connoting consent to the charterer’s order.398 The master may delay reasonably in obeying, or may refuse to obey, an order that threatens to expose the ship and cargo to potential peril.399 In Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda),400 Millett LJ said:401 In my judgment the authorities establish two propositions of general application: (1) the master’s obligation on receipt of an order is not one of instant obedience but of reasonable conduct; and (2) not every delay constitutes a refusal to obey an order; only an unreasonable delay does so.

Applying these principles in The Houda itself, the English Court of Appeal held that the charterer is not entitled to order the shipowner or the master to deliver the cargo to a receiver who is not entitled to possession,402 and it is not entitled to order delivery without presentation of the original bill of lading.403 If the shipowner suffers loss as a result of the master obeying the charterer’s orders about employment or agency, it is entitled to an indemnity from the charterer. However, many standard form charterparties expressly provide that the master shall follow the charterer’s orders to deliver the cargo without presentation of the original bill of lading, and/or at a discharge place other than that specified in the bill of lading, provided that the charterer undertakes to indemnify the shipowner according to the terms set out in the clause.404 The charterer is obliged to 397 Midwest Shipping Co Ltd Inc v D I Henry (Jute) Ltd [1971] 1 Lloyd’s Rep 375 at 379 per Donaldson J; Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541 at 553 per Leggatt LJ (see concluding text and quote at [14.330]). 398 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 346 per Hirst LJ, with whom Russell LJ agreed (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1). 399 Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1993] 2 Lloyd’s Rep 335 at 346 per Hirst LJ, with whom Russell LJ agreed (reversed on other grounds: Torvald Klaveness A/S v Arni Maritime Corp (The Gregos) [1995] 1 Lloyd’s Rep 1); Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1993] 1 Lloyd’s Rep 333 at 345 per Phillips J. 400 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541. 401 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541 at 555. See also, to similar effect, Neill LJ at 549: “I consider that it is necessary to take a broad and comprehensive view of the duties and responsibilities of the owners and master and to ask … How would a man of reasonable prudence have acted in the circumstances?” 402 See also A/S Hansen-Tangens Rederi III v Total Transport Corp (The Sagona) [1984] 1 Lloyd’s Rep 194. 403 Kuwait Petroleum Corp v I & D Oil Carriers Ltd (The Houda) [1994] 2 Lloyd’s Rep 541 (CA). 404 See, eg, Shelltime 4, cl 13(b); Farenco Shipping Co Ltd v Daebo Shipping Co Ltd (The Bremen Max) [2009] 1 Lloyd’s Rep 81 (chain of back-to-back indemnities). The charterer’s duty to indemnify the shipowner is considered at [14.380].

536

Shipping Law

[14.370]

give the indemnity even if the shipowner has also received an indemnity from someone else, such as the receiver of the goods.405 Although the master is obliged to follow the charterer’s orders regarding employment or agency, the shipowner remains vicariously liable for any negligence of the master in the execution of those orders.406 War risk clauses

[14.370]

Charterparties commonly contain war risk clauses, which modify the charterer’s right to give voyage orders to the chartered ship. Although such clauses are common, their terms vary considerably, particularly in relation to the definition of “war”. Some clauses, such as the BIMCO war risks clause Conwartime 2013,407 are broad enough to include risks such as piracy and terrorism; others are not.408 Whatever the precise ambit of the risks covered by the war risk clause, it typically gives the shipowner and master the right to refuse to follow a charterer’s order to load or discharge cargo in an area that may be affected by war, or to require the charterer to pay reasonable additional expenses for going to areas affected by war, such as extra insurance premiums, crew bonuses, etc. The magnitude of the risk of war is a crucial question in considering such clauses. For example, in Abu Dhabi National Tanker Co v Product Star Shipping Ltd (The Product Star) (No 2),409 the war risk clause in the charterparty entitled the master and owners to refuse to load at any place “in his or their discretion dangerous or impossible … to reach”. After performing four uneventful voyages from Ruwais, a port at the southern end of the Arabian Gulf, to Chittagong in Bangladesh, the shipowner refused the charterer’s order to load a cargo at Ruwais on the ground that the master and owners considered the port to be dangerous because of hostilities between Iran and Iraq, which had led to ship casualties at the northern end of the Arabian Gulf. The English Court of Appeal held that the war risk clause did not entitle the shipowner to refuse an order to load at Ruwais. Leggatt LJ said:410 Where A and B contract with each other to confer a discretion on A, that does not render B subject to A’s uninhibited whim. In my judgment, the authorities show that not only must the discretion be exercised honestly and in good faith,

405 Farenco Shipping Co Ltd v Daebo Shipping Co Ltd (The Bremen Max) [2009] 1 Lloyd’s Rep 81. 406 Raynes v Ballantyne (1898) 14 TLR 399. 407 Conwartime 2013 is included as cl 34 of NYPE 2015: see Appendix 7. 408 See, eg, Shelltime 4, cl 35(a) which defines “war” as “blockade, war, hostilities, warlike operations, civil war, civil commotions or revolutions”. 409 Abu Dhabi National Tanker Co v Product Star Shipping Ltd (The Product Star) (No 2) [1993] 1 Lloyd’s Rep 397. 410 Abu Dhabi National Tanker Co v Product Star Shipping Ltd (The Product Star) (No 2) [1993] 1 Lloyd’s Rep 397 at 404.

[14.370]

14 Time Charterparties

537

but, having regard to the provisions of the contract by which it is conferred, it must not be exercised arbitrarily, capriciously or unreasonably. That entails a proper consideration of the matter after making any necessary inquiries.

In response to concerns such as these, war risk clauses now often require the risk of war to exist in “the reasonable judgment of the master or owner”.411 That still leaves open the question of how great the risk must be before a refusal is justifiable. In Pacific Basin IHX Ltd v Bulkhandling Handymax AS (The Triton Lark),412 the shipowner refused to follow the charterer’s order to carry a cargo of potash from Hamburg to China via the Suez Canal and the Gulf of Aden because of the risk of attack by pirates in the region of the Gulf of Aden. The shipowner completed the voyage by going around the Cape of Good Hope, and a dispute arose about who should bear the extra costs of the longer voyage. That question turned on the interpretation of the Conwartime 1993 war risk clause, which provided that the master or shipowner could refuse a voyage order if “the Vessel … in the reasonable judgment of the Master and/or the Owners, may be, or [is] likely to be, exposed to War Risks”.413 Teare J held that the phrase “likely to be” meant a real likelihood, not a serious likelihood, as the arbitrators had held. A real likelihood could include a less than an even chance of happening; it was to be understood in the sense that the place would be dangerous on account of acts of piracy. Statistics showed that at the material time, the risk of a ship being hijacked by pirates around the Gulf of Aden was about 1 in 300;414 Teare J remitted to the arbitrators the question whether this risk was large enough to constitute a real likelihood. In Taokas Navigation SA v Komrowski Bulk Shipping KG (The Paiwan Wisdom),415 Teare J held that the operation of the Conwartime clause (in that case, Conwartime 2004) was not confined to circumstances in which the war risk had escalated since the beginning of the charter period. The clause entitled the shipowner to refuse the charterer’s order to carry cargo to Mombasa in Kenya if, in the shipowner’s reasonable judgment, there was a real likelihood of attack by pirates, despite the fact that there had been no material change in the risk of attack by pirates between the date of the charterparty and the date of the charterer’s order.

411 See, eg, Conwartime 2013, included as NYPE 2015, cl 34, line 575. 412 Pacific Basin IHX Ltd v Bulkhandling Handymax AS (The Triton Lark) [2012] 1 Lloyd’s Rep 151 and 457. 413 The latest version of Conwartime, Conwartime 2013, does not use the words “likely to be”: see NYPE 2015, cl 34, lines 579-582: “the Vessel … in the reasonable judgment of the Master and/or the Owners, may be exposed to War Risks whether such risk existed at the time of entering into this Charter Party or occurred thereafter”. 414 Pacific Basin IHX Ltd v Bulkhandling Handymax AS (The Triton Lark) [2012] 1 Lloyd’s Rep 457 at 458 [13]. 415 Taokas Navigation SA v Komrowski Bulk Shipping KG (The Paiwan Wisdom) [2012] 2 Lloyd’s Rep 416.

538

Shipping Law

[14.380]

The charterer’s duty to indemnify the shipowner

[14.380]

Many standard forms make explicit the charterer’s obligation to indemnify the shipowner against the consequences of following employment orders,416 including an order to deliver cargo without presentation of original bills of lading and/or at a port other than that specified in the bill of lading.417 Although the New York Produce Exchange and NYPE 2015 standard forms make no express reference to an obligation to indemnify,418 such an obligation is commonly added to the form,419 or, if not added, implied into it.420 The implication is not automatic, however.421 An obligation to indemnify is not implied if there is some inconsistent express term in the charterparty, such as a provision that the chartered ship shall not go off-hire if the off-hire event was caused by the fault of the charterer.422 Whether express or implied, the general indemnity against the consequences of following charterer’s orders is not limited to the consequences of the master signing bills of lading presented by the charterer:423 it covers all matters relating to employment and agency of the ship, and may overlap with matters dealt with by other clauses of the charterparty, such as the off-hire clause.424 However, it does not require

416 See, eg, cl 9 of the Baltime form, considered in Royal Greek Government v Minister of Transport (1950) 83 Ll L Rep 228 (known, but not reported, as The Ann Stathatos); cl 20 of the BPTime 2 form, considered in A/S Hansen-Tangens Rederi III v Total Transport Corp (The Sagona) [1984] 1 Lloyd’s Rep 194. 417 See, eg, Shelltime 4, cl 13(a) (general indemnity against consequences of signing bills of lading), 13(b) (specific indemnity for delivering without presentation of original bills of lading and/or at different port of discharge). 418 See Appendix 7. 419 See, eg, Farenco Shipping Co Ltd v Daebo Shipping Co Ltd (The Bremen Max) [2009] 1 Lloyd’s Rep 81. 420 Sig Bergesen DY & Co v Mobil Shipping and Lloyd’s Rep 453; Deutsche Ost-Afrika-Linie Lloyd’s Rep 71 at 72 per Timothy Walker J; 2 AC 164 at 173-174 [9] per Lord Sumption Lloyd’s Rep 292).

Transportation Co (The Berge Sund) [1993] 2 GmbH v Legent Maritime Co Ltd [1998] 2 Ene Kos 1 Ltd v Petroleo Brasileiro SA [2012] JSC (reported sub nom as The Kos [2012] 2

421 Sig Bergesen DY & Co v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453 at 462 per Staughton LJ, arguing by analogy from Naviera Mogor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1 Lloyd’s Rep 412, which dealt with an implied obligation to indemnify in a voyage charterparty. 422 Sig Bergesen DY & Co v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453 (CA). 423 Royal Greek Government v Minister of Transport (1950) 83 Ll L Rep 228 at 233 per Devlin J (The Ann Stathatos). The charterer’s particular obligation to indemnify the shipowner against the consequences of the master signing bills of lading presented by it is also considered at [14.420]. 424 Royal Greek Government v Minister of Transport (1950) 83 Ll L Rep 228 (The Ann Stathatos); Sig Bergesen DY A/S v Mobil Shipping and Transportation Co (The Berge Sund) [1993] 2 Lloyd’s Rep 453.

[14.380]

14 Time Charterparties

539

the charterer to indemnify the shipowner for the ordinary incidents of the chartered service, which are compensated by the payment of hire.425 In The Kos,426 Lord Sumption JSC said: [The indemnity clause] has to be read in the context of the owners’ obligations under the charterparty as a whole. The owners are not entitled to an indemnity against things for which they are being remunerated by the payment of hire. There is therefore no indemnity in respect of the ordinary risks and costs associated with the performance of the chartered service. The purpose of the indemnity is to protect them against losses arising from risks or costs which they have not expressly or implicitly agreed in the charterparty to bear.

In The Kos, the chartered ship was withdrawn from the charterer’s service because of the charterer’s failure to pay hire.427 Because the charterer was unwilling to re-charter the ship at the increased market rate of hire, the cargo aboard the vessel at the time of withdrawal had to be discharged. The United Kingdom Supreme Court held, by a majority, that the shipowner was entitled to be indemnified for the time and cost of discharging the cargo after withdrawal. Because the discharge occurred after withdrawal, it had to be done in the shipowner’s own time and without earning contractual hire. For that reason, the shipowner was entitled to an indemnity under the standard clause, because discharge of cargo in the shipowner’s time and at its own expense was not an ordinary incident of the chartered service, was not compensated by the payment of hire, and was not a risk that the shipowner had assumed under the contract. Delivery without presentation of original bills of lading and/or at a port other than that named in the bill of lading deprives the carrier of its P & I insurance cover,428 so the International Group of P & I Clubs has drafted standard form letters of indemnity to substitute for the protection that is lost when the owner (or disponent owner) agrees to follow the charterer’s order to deliver without presentation of original bills and/or at a different port.429 The International Group letters of indemnity (or wording similar to them) are often incorporated into time charterparties as part of a clause 425 Triad Shipping Co v Stellar Chartering & Brokerage Inc (The Island Archon) [1994] 2 Lloyd’s Rep 227. 426 Ene Kos 1 Ltd v Petroleo Brasileiro SA [2012] 2 AC 164 at 174 (reported sub nom as The Kos [2012] 2 Lloyd’s Rep 292). 427 Withdrawal for non-payment of hire is considered at [14.440]–[14.450]. 428 See, eg, Steamship Mutual, Rules and Lists of Correspondents 2015-2016, Rule 25(xiii), Proviso (viii): http://www.steamshipmutual.com/Downloads/Rules-and-Maps-/ SteamshipRules2015.pdf. All International Group P & I Clubs have a similar rule. For consideration of delivery without presentation of original bills of lading, see [12.770]. 429 The six standard form letters of indemnity, named A, AA, B, BB, C, and CC, deal respectively with: indemnity for delivery without presentation of original bills; that indemnity guaranteed by a bank; indemnity delivery at a port other than that stated in the bill of lading; that indemnity guaranteed by a bank; indemnity for delivery without presentation of original bills and at a port other than that stated in the bill of lading; that indemnity guaranteed by a bank. See: http://www.ukpandi.com/knowledge/ industry-developments/international-group-standard-letters-of-indemnity/.

540

Shipping Law

[14.380]

entitling the charterer to require the shipowner to deliver without presentation of original bills of lading and/or at a port other than specified in the original bills of lading. The usual indemnity requires the charterer to provide security directly to the holder of the original bill of lading, if it is required to do so by the shipowner (or disponent owner), whether or not the shipowner has already given security to secure release of the ship from arrest.430 The undertaking to indemnify is activated only by delivery of the cargo by the shipowner (or disponent owner) to the person named in the charterer’s order.431 If the shipowner delivers to anyone else without production of the original bills of lading, the charterer’s undertaking to indemnify is not engaged.432 Under the usual general indemnity against the consequences of following charterer’s orders, the charterer must indemnify the shipowner if the chartered ship is damaged433 or delayed434 as a result of loading a particular cargo pursuant to the charterer’s orders, or is delayed at a port to which it has been ordered by the charterer, even if it is the harbour authority that directs the ship to the loading or discharging place within that port.435 However, the charterer is not bound to indemnify the shipowner against the consequences of orders as to navigation, because navigational matters always remain the shipowner’s responsibility.436 Thus, for example, if a pilot were to give orders on behalf of the charterer about where precisely the chartered ship should anchor at a port, the charterer would not be obliged to indemnify the shipowner for any loss it might suffer as a result, because the order would be a navigational one, rather than an order as to employment of the ship.437

430 Farenco Shipping Co Ltd v Daebo Shipping Co Ltd (The Bremen Max) [2009] 1 Lloyd’s Rep 81. 431 Farenco Shipping Co Ltd v Daebo Shipping Co Ltd (The Bremen Max) [2009] 1 Lloyd’s Rep 81. 432 Farenco Shipping Co Ltd v Daebo Shipping Co Ltd (The Bremen Max) [2009] 1 Lloyd’s Rep 81. 433 Royal Greek Government v Minister of Transport (1950) 83 Ll L Rep 228 (The Ann Stathatos); The Athanasia Comninos (1979) [1990] 1 Lloyd’s Rep 277. 434 Deutsche Ost-Afrika-Linie GmbH v Legent Maritime Co Ltd [1998] 2 Lloyd’s Rep 71. 435 See, eg, New A Line v Erechthion Shipping Co SA (The Erechthion) [1987] 2 Lloyd’s Rep 180. The charterer’s order is to go to such loading or discharging place on arrival there as the harbour authority should designate: at 183 per Staughton J. 436 Weir v Union Steamship Co Ltd [1900] AC 525; Larrinaga Steamship Co Ltd v R [1945] AC 246; Stag Line Ltd v Ellerman & Papayanni Lines Ltd (1949) 82 Ll L Rep 826; New A Line v Erechthion Shipping Co SA (The Erechthion) [1987] 2 Lloyd’s Rep 180 at 185 per Staughton J; Triad Shipping Co v Stellar Chartering & Brokerage Inc (The Island Archon) [1994] 2 Lloyd’s Rep 227 at 236, 237; Deutsche Ost-Afrika-Linie GmbH v Legent Maritime Co Ltd [1998] 2 Lloyd’s Rep 71 at 73 per Timothy Walker J. 437 New A Line v Erechthion Shipping Co SA (The Erechthion) [1987] 2 Lloyd’s Rep 180 at 185 per Staughton J. See also Larrinaga Steamship Co Ltd v R [1945] AC 246, described immediately below.

[14.400]

14 Time Charterparties

541

Although a time charterer is generally entitled to limit its liability under the Limitation Convention 1976 (LLMC 76),438 it was held in both Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea)439 and CMA CGM SA v Classica Shipping Co Ltd440 that LLMC 76 does not apply to indemnity claims made by a shipowner against a charterer. Agency

[14.390]

The reference in cl 8(a) of the NYPE 2015 form to orders regarding agency means that the charterer is entitled to appoint agents to act on behalf of the ship at its various ports of call, and must pay them. (Similar provisions are found in most standard form time charterparties.) The agents appointed by the charterer are authorised to act as the ship’s agents in dealing with port health, immigration and customs authorities; for securing the services of tugs and pilots; for arranging with the port authority for a loading or discharging place at the port; and for attending to the needs of the master in respect of provisions and stores, fuel, repatriation and replacement of crew and repairs.441 However, if the shipowner is responsible under the charterparty for loading and discharging the cargo,442 the agency clause does not entitle the charterer or its agents to hire loading and discharging tackle at the shipowner’s expense.443 Agents appointed and paid for by the charterer are to be considered as the charterer’s agents for all purposes as between the shipowner and the charterer,444 although they may be the shipowner’s agents for some purposes so far as third parties are concerned.445

Cargo handling and liability for loss of or damage to cargo General

[14.400]

In almost all cases, the cargo carried on a time-chartered ship does not belong to the time charterer, but to third parties who have contracted under bills of lading, sea waybills or voyage sub-charterparties for their goods to be carried on the ship. Those third parties will usually have contracted with the charterer, in the sense that it is the charterer with whom they will have dealt, but the contracting carrier may be either the

438 Convention on Limitation of Liability for Maritime Claims 1976: see [16.50]. 439 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39. 440 CMA CGM SA v Classica Shipping Co Ltd [2004] 1 Lloyd’s Rep 460 (CA). 441 A/S Hansen-Tangens Rederi III v Total Transport Corp (The Sagona) [1984] 1 Lloyd’s Rep 194 at 198-199 per Staughton J. 442 The allocation of responsibility for loading and discharging is considered at [14.400]. 443 Tynedale Steam Shipping Co v Anglo-Soviet Shipping Co (1936) 54 Ll L Rep 341 at 345 per Lord Roche. 444 A/S Hansen-Tangens Rederi III v Total Transport Corp (The Sagona) [1984] 1 Lloyd’s Rep 194. 445 A/S Hansen-Tangens Rederi III v Total Transport Corp (The Sagona) [1984] 1 Lloyd’s Rep 194; Strathlorne Steamship Co Ltd v Andrew Weir & Co (1934) 49 Ll L Rep 306 at 310 per Roche J.

542

Shipping Law

[14.400]

charterer or the shipowner, depending on the circumstances. The question whether the cargo-owner’s contract of carriage is with the time charterer or the shipowner is considered elsewhere in this book.446 The answer to that question is significant because it determines whether it is the shipowner or the time charterer who is liable to the cargo-owner for breach of the contract of carriage. Whatever the answer to that question, though, a separate question arises between the charterer and the shipowner, namely which of them must ultimately bear any loss arising from damage to or loss of cargo carried on the ship.447 That question is linked to the issue of responsibility for the physical processes of cargo handling in a manner summarised as follows by Sir John Donaldson MR in Filikos Shipping Corp of Monrovia v Shipmair BV (The Filikos):448 At common law, the task of loading from ship’s rail, stowing and discharging overside is the sole responsibility of the shipowner. However, either or both of the duties of (a) arranging for these processes to be carried out and (b) paying for them to be carried out may be transferred to the charterers. So too can liability for breach of the duty of care in these processes, whether or not either or both the duties of arranging for their performance have been so transferred.

In practice, most time charterparties transfer all three elements to the charterer: the duties to arrange and pay for the processes of cargo handling, and also liability as between shipowner and charterer for any failure to perform those processes properly. For example, cl 8(a) of the NYPE 2015 form provides (inter alia):449 [T]he Charterers shall perform all cargo handling, including but not limited to loading, stowing, trimming, lashing, securing, dunnaging, unlashing, discharging and tallying, at their risk and expense under the supervision of the Master.

Clause 8 of the 1946 version of the New York Produce Exchange form is terser, but to similar effect:450 Charterers are to load, stow and trim the cargo at their risk and expense under the supervision of the Captain.

In both versions, cl 8 plainly transfers to the charterer the duties to arrange and pay for all the processes of cargo handling. It also transfers to the charterer the responsibility for proper performance of those 446 See [12.810]–[12.820]. 447 See, eg, Stargas SpA v Petredec Ltd (The Sargasso) [1994] 1 Lloyd’s Rep 412, where a time charterer was held liable to a voyage sub-charterer under the voyage sub-charter, but successfully recovered an indemnity from the disponent owner under the time charterparty. 448 Filikos Shipping Corp of Monrovia v Shipmair BV (The Filikos) [1983] 1 Lloyd’s Rep 9 at 11. For a description of the similar position under voyage charterparties, see [13.560]. 449 See lines 133-136 (Appendix 7). 450 Although the printed form does not mention “discharge”, it is usually added after the word “trim”, often with other words such as “lash”, “unlash” and “tally”, as in the NYPE 2015 form.

[14.400]

14 Time Charterparties

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processes.451 This is so notwithstanding the words “under the supervision of the captain”, because the master would be entitled to supervise the processes in any event, in order to maintain the seaworthiness of the ship.452 If cargo is damaged by stevedores during loading or unloading, or as a result of bad stowing or trimming, it is the charterer, not the shipowner, who must bear the loss as between themselves.453 If the shipowner is obliged to compensate the cargo-owner in a claim made by the latter under a bill of lading (or other carriage contract) for damage caused by the stevedores, the charterer must indemnify the shipowner.454 Similarly, if the stevedores engaged and paid by the charterer damage the ship during loading or unloading, or if the shipowner suffers damage or loss as a result of bad stowing or trimming, the charterer must indemnify the shipowner.455 There is an implied term that the charterer must appoint reasonably competent stevedores.456 If, however, the master actually intervenes in the performance of the processes of cargo handling, the charterer’s liability to indemnify the shipowner is reduced to the extent that the master’s intervention contributed to the damage or loss.457 Clause 8 allocates responsibility for damage or loss caused by the processes of cargo handling at the ports of loading and discharge. It does not affect responsibility for loss or damage caused any cargo-handling by the master and crew during the voyage, which remains with the shipowner. The charterer remains responsible to the shipowner if it delegates any of the tasks of loading, stowing or discharging, but it is not responsible for actions that clearly go beyond the authority it delegated. In Merit Shipping 451 Canadian Transport Co v Court Line [1940] AC 934. (This case is known, but not reported, as The Ovington Court.) See also Cia Sud Americana Vapores v MS ER Schiffahrtsgesellshaft mbH & Co KG [2006] 2 Lloyd’s Rep 66 at 79 [41]-[42] per Morison J. 452 Canadian Transport Co v Court Line [1940] AC 934 at 937-938, 944; Transocean Liners Reederei GmbH v Euxine Shipping Co Ltd (The Imvros) [1999] 1 Lloyd’s Rep 848 at 852 per Langley J; Cia Sud Americana Vapores v MS ER Schiffahrtsgesellshaft mbH & Co KG [2006] 2 Lloyd’s Rep 66 at 79 [42] per Morison J. 453 Canadian Transport Co v Court Line [1940] AC 934 (The Ovington Court). 454 Canadian Transport Co v Court Line [1940] AC 934 (The Ovington Court). 455 See MSC Mediterranean Shipping Co SA v Alianca Bay Shipping Co Ltd (The Argonaut) [1985] 2 Lloyd’s Rep 216, where this would have been the result, but for the inclusion of the words “and responsibility” in cl 8: see below. See, however, Macieo Shipping Ltd v Clipper Shipping Lines Ltd (The Clipper Sao Luis) [2000] 1 Lloyd’s Rep 645 (charterer’s obligation to indemnify for actions of stevedores extends only to physical damage to ship); American Overseas Marine Corp v Golar Commodities Ltd (The LNG Gemini) [2014] 2 Lloyd’s Rep 113 (same result under a clause prohibiting loading of cargo “injurious to the vessel”; cargo could be injurious without causing physical damage but only if it had a tendency or propensity to cause physical damage). 456 Macieo Shipping Ltd v Clipper Shipping Lines Ltd (The Clipper Sao Luis) [2000] 1 Lloyd’s Rep 645 at 649-650 per David Steel J. 457 Canadian Transport Co v Court Line [1940] AC 934 at 944 per Lord Wright (The Ovington Court).

544

Shipping Law

[14.400]

Co Inc v TK Boesen A/S (The Goodpal),458 a ship time-chartered for a trip459 from South America to China discharged cargo at two Chinese ports. The charterers gave instructions to the master about how much cargo to deliver at the first port, but the receivers there persuaded the master to deliver more cargo than the charterers had instructed. The cargo receivers at the second port claimed against the shipowner for short delivery, and the shipowner claimed an indemnity from the charterers,460 arguing that when giving the instructions to discharge, the receivers at the first port had acted as agents for the charterers in performing their cl 8 obligation to discharge the ship. Colman J rejected that argument, saying:461 [The receivers at the first port] stood in the charterers’ position only to the extent that they were responsible for carrying out the discharging operation at the first port and the only permissible discharging operation was that in respect of 19,006.01 tonnes [the amount the charterers had instructed the owner to discharge]. Once that had been accomplished they were no longer the delegates of the charterers and there were no further orders that they could properly give to the master … It was and only was the owners’ decision to accede to the requests of the receivers at the first discharge port which caused the under-delivery at the second discharging port. That decision was an act, neglect or default of the owners.

Clause 8 governs the allocation of responsibility between shipowner and charterer even if the time charterparty incorporates the Hague or Hague-Visby Rules by reference. Article 3, r 2 of the Rules provides that the shipowner must properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried. In the context of a time charterparty, this provision does not impose a duty on the shipowner to perform these functions. Its effect is merely that the shipowner must perform properly and carefully those obligations that it has agreed to undertake;462 as between the shipowner and the charterer, the allocation of obligations is still effected by cl 8.463 Incorporation of the unamended Hague Rules into the charterparty has the result that any indemnity claim must be brought within the 12-month 458 Merit Shipping Co Inc v TK Boesen A/S (The Goodpal) [2000] 1 Lloyd’s Rep 638. 459 For a consideration of trip time charterparties, see [14.260]. 460 The head charterer had sub-chartered the ship for a time charterparty trip, and it passed on the owner’s claim to the sub-charterer. Back-to-back arbitrations took place under the head charter and sub-charter: see Merit Shipping Co Inc v TK Boesen A/S (The Goodpal) [2000] 1 Lloyd’s Rep 638 at 640 per Colman J. Because both charters were on the same terms, it is convenient to compress the description of the facts. 461 Merit Shipping Co Inc v TK Boesen A/S (The Goodpal) [2000] 1 Lloyd’s Rep 638 at 644 per Colman J. 462 Pyrene Co v Scindia Navigation Co [1954] 2 QB 402 at 417-418 per Devlin J; Renton & Co v Palmyra Trading Corp of Panama [1957] AC 149. See [12.310]. 463 D/S A/S Idaho v Peninsular and Oriental Steam Navigation Co (The Strathnewton) [1983] 1 Lloyd’s Rep 219 at 222-223 per Kerr LJ; Cia Sud Americana Vapores v MS ER Schiffahrtsgesellshaft mbH & Co KG [2006] 2 Lloyd’s Rep 66 at 77-78 [37]-[38] per Morison J.

[14.400]

14 Time Charterparties

545

time limit imposed by Art 3, r 6.464 In contrast, incorporation of the Hague-Visby Rules makes the indemnity claim subject to the special time limit in Art 3, r 6 bis.465 Clause 8 is often amended by the addition of the words “and responsibility” after the word “supervision”. The effect of this amendment is to transfer liability for improper cargo handling back to the shipowner, as between itself and the charterer.466 Thus, the obligations to arrange and pay for the processes of cargo handling by stevedores remain on the charterer, but the shipowner must bear any liability for cargo loss or damage arising as a result of improper performance of those processes, unless it can establish that the loss or damage was caused by some intervention or interference on the part of the charterer.467 The words “and responsibility” do not transfer all responsibility for cargo operations back to the owner, merely responsibility for loss or damage to cargo. Thus, if a crew member is injured by the negligence of the stevedores during cargo operations, it is the charterer who is liable to compensate the injured person, not the shipowner.468 If the charterparty includes both the amended cl 8, including the words “and responsibility”, and also a clause providing that the charterer is entitled to load deck cargo “at charterer’s risk”, the shipowner is not obliged to bear any loss arising as a result of damage to deck cargo unless it is caused by the negligence of the master or crew.469 In other words, the deck cargo clause negatives the shipowner’s assumption of responsibility under the amended cl 8 for damage or loss caused by cargo handling insofar as it relates to deck cargo, so that if the owner of the deck cargo 464 Lauritzen Reefers v Ocean Reef Transport SA (The Bukhta Russkaya) [1997] 2 Lloyd’s Rep 744. The 12-month time limit imposed by Art 3, r 6 is considered in detail at [12.580]–[12.600]. For a consideration of the effect of incorporation of the Hague or Hague-Visby Rules on other claims between owner and charterer, see [14.150]. 465 Lauritzen Reefers v Ocean Reef Transport SA (The Bukhta Russkaya) [1997] 2 Lloyd’s Rep 744. See [12.620] for a consideration of Art 3, r 6 bis, which provides that an indemnity claim must be brought within the time allowed by “the law of the court seized of the case”, but the time allowed must not be less than three months from the day when the person seeking the indemnity has settled the claim or has been served with process in the action against himself or herself. 466 CV Scheepvaartonderneming Flintermar v Sea Malta Co Ltd (The Flintermar) [2005] 1 Lloyd’s Rep 409 at 417 [32] per Rix LJ; Cia Sud Americana Vapores v MS ER Schiffahrtsgesellshaft mbH & Co KG [2006] 2 Lloyd’s Rep 66 at 77 [34] per Morison J. 467 AB Marintrans v Comet Shipping Co Ltd (The Shinjitsu Maru No 5) [1985] 1 Lloyd’s Rep 568; MSC Mediterranean Shipping Co SA v Alianca Bay Shipping Co Ltd (The Argonaut) [1985] 2 Lloyd’s Rep 216; Alexandros Shipping Co of Piraeus v MSC Mediterranean Shipping Co SA of Geneva (The Alexandros P) [1986] 1 Lloyd’s Rep 421; Exercise Shipping Co Ltd v Bay Maritime Lines Ltd (The Fantasy) [1992] 1 Lloyd’s Rep 235 at 237-238 per Lloyd LJ. 468 CV Scheepvaartonderneming Flintermar v Sea Malta Co Ltd (The Flintermar) [2005] 1 Lloyd’s Rep 409. 469 Exercise Shipping Co Ltd v Bay Maritime Lines Ltd (The Fantasy) [1992] 1 Lloyd’s Rep 235; LD Seals NV v Mitsui OSK Lines Ltd (The Darya Tara) [1997] 1 Lloyd’s Rep 42; Transocean Liners Reederei GmbH v Euxine Shipping Co Ltd (The Imvros) [1999] 1 Lloyd’s Rep 848.

546

Shipping Law

[14.410]

successfully claims against the shipowner under a bill of lading, the shipowner is entitled to an indemnity from the charterer.470 A clause providing that cargo may only be carried on deck at the shipper’s risk does not allocate responsibility between the shipowner and the charterer, as cl 8 of NYPE 46 and NYPE 2015 does. Such a clause is designed to regulate dealings with the third party shippers whose cargo is put aboard the ship. It imposes an obligation on the charterer to ensure that the bill of lading (or other carriage document) issued to the third party shipper contains a term specifying that cargo is carried on deck at the shipper’s risk.471 If included in the bill of lading, such a clause would be effective to exclude liability for want of care by the master or crew,472 so if the shipowner is obliged to compensate the cargo-owner because the bill of lading (or other carriage document) does not contain the clause, it is entitled to an indemnity from the charterer.473 Conversely, if the charterer is obliged to compensate the cargo-owner, it is not entitled to an indemnity from the shipowner.474 The Inter-Club New York Produce Exchange Agreement

[14.410]

Although the legal principles governing the allocation of responsibility between shipowner and time charterer under cl 8 of the New York Produce Exchange 1946 form are relatively clear, their application can still give rise to considerable difficulty on the facts. For example, there may be difficulty in determining the extent to which the master did in fact exercise a controlling supervision over the cargohandling processes, or in determining whether cargo loss or damage was caused by bad cargo handling or by unseaworthiness of the carrying ship.475 In many cases, there can be no allocation of responsibility under cl 8 without a cumbersome and expensive investigation of blameworthiness. In practice, that allocation of responsibility is, in effect, an allocation of losses between Protection and Indemnity Associations

470 Exercise Shipping Co Ltd v Bay Maritime Lines Ltd (The Fantasy) [1992] 1 Lloyd’s Rep 235; LD Seals NV v Mitsui OSK Lines Ltd (The Darya Tara) [1997] 1 Lloyd’s Rep 42; Transocean Liners Reederei GmbH v Euxine Shipping Co Ltd (The Imvros) [1999] 1 Lloyd’s Rep 848. 471 Kuwait Maritime Transport Co v Rickmers Linie KG (The Danah) [1993] 1 Lloyd’s Rep 351. For a consideration of the charterer’s obligation to issue bills of lading, see [14.420]. 472 Kuwait Maritime Transport Co v Rickmers Linie KG (The Danah) [1993] 1 Lloyd’s Rep 351, citing Travers v Cooper [1915] 1 KB 73. 473 Kuwait Maritime Transport Co v Rickmers Linie KG (The Danah) [1993] 1 Lloyd’s Rep 351 at 354 per Saville J; Transocean Liners Reederei GmbH v Euxine Shipping Co Ltd (The Imvros) [1999] 1 Lloyd’s Rep 848. 474 Kuwait Maritime Transport Co v Rickmers Linie KG (The Danah) [1993] 1 Lloyd’s Rep 351. In this case, the deck cargo was lost overboard and the charterer was also obliged to make payments to the Dutch authorities who recovered the containers. It was held that the charterer could recover an indemnity for the shipowner in respect of those payments, which arose independently of the contractual terms on which the charterer should have arranged deck carriage. 475 See D/S A/S Idaho v Peninsular and Oriental Steam Navigation Co (The Strathnewton) [1983] 1 Lloyd’s Rep 219 at 222-223 per Kerr LJ.

[14.410]

14 Time Charterparties

547

(P & I Clubs), because both the owner and the charterer of a time-chartered ship are usually insured against liability with P & I insurers. In an attempt to “cut through the difficulties with a broad brush”,476 the major P & I insurers made an agreement known as the Inter-Club New York Produce Exchange Agreement, which is similar in effect to “knock-for-knock” agreements between motor vehicle insurers.477 The agreement makes a rough and ready apportionment of financial liability between the shipowner’s insurers and the charterer’s insurers, without the need for any investigation of blameworthiness.478 The first version of the Agreement was made in 1970, the second in 1984, the third in 1996, and the fourth (the most recent version at the time of writing)479 in 2011.480 Although the agreement is an agreement between P & I insurers, cl 3 specifically provides that it may be applied by the shipowner and charterer, notwithstanding that it is not strictly applicable. If the time charterparty incorporates the Inter-Club Agreement by reference, responsibility is allocated between shipowner and charterer according to the terms of the agreement, rather than cl 8.481 The 2015 version of the NYPE form provides in the printed form itself that the shipowner and charterer shall settle claims in accordance with the Inter-Club Agreement or any subsequent modification or replacement thereof.482 The mechanisms of allocation of responsibility under the Inter-Club Agreement only come into operation if the cargo claim, including any legal costs incurred thereon,483 has been properly settled or

476 To use the mixed metaphor coined apologetically by Kerr LJ in D/S A/S Idaho v Peninsular and Oriental Steam Navigation Co (The Strathnewton) [1983] 1 Lloyd’s Rep 219 at 223. 477 D/S A/S Idaho v Peninsular and Oriental Steam Navigation Co (The Strathnewton) [1983] 1 Lloyd’s Rep 219 at 223 per Kerr LJ; Transpacific Discovery SA v Cargill International SA (The Elpa) [2001] 2 Lloyd’s Rep 596 at 600 per Morison J; MH Progress Lines SA v Orient Shipping Rotterdam BV (The Genius Star 1) [2012] 1 Lloyd’s Rep 222 at 224 [5] per Teare J. 478 See D/S A/S Idaho v Peninsular and Oriental Steam Navigation Co (The Strathnewton) [1983] 1 Lloyd’s Rep 219 at 223 per Kerr LJ. 479 January 2016. 480 For the 2011 version of the Agreement, see: http://www.gard.no/ikbViewer/Content/ 19258061/Member%20Circular%2007%202011%20Inter-Club%20New%20York%20 Produce%20Exchange%20Agreement%201996.pdf, and the websites of most other P & I Clubs. 481 See, eg, D/S A/S Idaho v Peninsular and Oriental Steam Navigation Co (The Strathnewton) [1983] 1 Lloyd’s Rep 219; Ben Line Steamers Ltd v Pacific Steam Navigation Co (The Benlawers) [1989] 2 Lloyd’s Rep 51. 482 NYPE 2015, cl 27 (Appendix 7). 483 That is, the cargo claimant’s costs, not the charterer’s costs in any action between the charterer and the shipowner: see A/S Iverans Rederi v KG MS Holstencruiser Seeschiffahrtsgesellschaft mbH & Co (The Holstencruiser) [1992] 2 Lloyd’s Rep 378. The 2011 version of the Agreement makes this clear in cl 3(a), which refers to “any legal costs

548

Shipping Law

[14.410]

compromised484 and if the cargo was carried under a bill or bills of lading incorporating the Hague or Hague-Visby Rules or containing terms no less favourable.485 If these conditions precedent have been satisfied, cargo claims are apportioned as follows:486 • claims for loss of or damage to cargo due to unseaworthiness487 and/or error or fault in navigation or management of the vessel: 100% owners, save where the owner proves that the unseaworthiness was caused by the loading, stowage, lashing, discharge or other handling of the cargo, in which case the claim comes under (b); • claims arising out of the loading, stowage, lashing, discharge, storage or other handling of the cargo: 100% charterers, unless the words “and responsibility” are added to cl 8 or there is a similar amendment making the master responsible, in which case the apportionment is 50% charterers, 50% owners,488 save where the charterer proves that the failure to load, stow, lash, discharge, or handle the cargo was caused by the unseaworthiness of the vessel, in which case 100% owners; • claims for shortage or overcarriage: 50% owners, 50% charterers unless there is clear and irrefutable evidence that the claim arose out of pilferage or act or neglect by one or the other (including their servants or subcontractors) in which case that party shall then bear 100% of the claim; • all other cargo claims whatsoever (including claims for delay to cargo): 50% charterers, 50% owners, unless there is clear and irrefutable evidence that the claim arose out of the act or neglect of one or the other (including their servants or subcontractors) in which case that party shall then bear 100% of the claim. If a cargo claim has been settled, the fact that it was disputed and could have been defended does not alter its character for the purposes of the Agreement, and the loss is allocated to the appropriate party in claimed by the original person making any such claim”: see http://www.gard.no/ ikbViewer/Content/19258061/Member%20Circular%2007%202011%20InterClub%20New%20York%20Produce%20Exchange%20Agreement%201996.pdf. 484 See cl 4(c): http://www.gard.no/ikbViewer/Content/19258061/Member%20Circular %2007%202011%20Inter-Club%20New%20York%20Produce%20Exchange%20 Agreement%201996.pdf. 485 See cl 4(a)(iv): http://www.gard.no/ikbViewer/Content/19258061/Member%20 Circular%2007%202011%20Inter-Club%20New%20York%20Produce%20Exchange%20 Agreement%201996.pdf. See Transpacific Discovery SA v Cargill International SA (The Elpa) [2001] 2 Lloyd’s Rep 596 at 600 per Morison J. 486 See cl 8: http://www.gard.no/ikbViewer/Content/19258061/Member%20Circular %2007%202011%20Inter-Club%20New%20York%20Produce%20Exchange%20 Agreement%201996.pdf. 487 This is used in the broader sense, incorporating cargoworthiness: see Ben Line Steamers Ltd v Pacific Steam Navigation Co (The Benlawers) [1989] 2 Lloyd’s Rep 51. 488 See, eg, Macieo Shipping Ltd v Clipper Shipping Lines Ltd (The Clipper Sao Luis) [2000] 1 Lloyd’s Rep 645 at 652 per David Steel J.

[14.410]

14 Time Charterparties

549

accordance with the terms of the Agreement.489 For example, in The Kamilla,490 a very small quantity (slightly more than 1%) of the chartered ship’s cargo of lentils in bulk was damaged by sea water as a result of the unseaworthiness of the ship’s hatch covers, but the port authorities at the port of discharge rejected the entire cargo, and the cargo receivers arrested the ship, causing the shipowner substantial loss. The shipowner accepted that it had to bear the very small proportion of the loss caused by the sea water ingress, but it disputed its liability for the rest of the loss. The court held that the relevant test was simply one of causation, not foreseeability. The unseaworthiness of the ship and the ingress of sea water were the cause of the whole loss, notwithstanding the fact that some of the loss came as a surprise to the shipowner. Accordingly, the shipowner had to bear 100% of the whole loss under the Inter-Club Agreement. The 2011 version of the Inter-Club Agreement apportions liability for a cargo claim made under any contract of carriage, whatever its form, if the contract was authorised under the charterparty.491 Thus, it applies to cargo claims under sea waybills, if they are issued in accordance with the time charterparty requirements.492 In Oceanfocus Shipping Ltd v Hyundai Merchant Marine Co Ltd (The Hawk)493 and Transpacific Discovery SA v Cargill International SA (The Elpa)494 it was held that the requirement that the carriage contract be issued as authorised by the charterparty should be interpreted broadly and flexibly. To take a narrow view would be to encourage litigation about whether or not the Inter-Club Agreement applied, which would be inconsistent with the whole purpose of the Agreement, which was intended to reduce litigation of cargo disputes. Thus, in The Hawk, Judge Diamond QC said that a bill of lading might be “authorised by the charterparty” even though it did not comply in all respects with the mate’s receipts, and in The Elpa, Morison J held that the 489 Ben Line Steamers Ltd v Pacific Steam Navigation Co (The Benlawers) [1989] 2 Lloyd’s Rep 51; A/S Iverans Rederi v KG MS Holstencruiser Seeschiffahrtsgesellschaft mbH & Co (The Holstencruiser) [1992] 2 Lloyd’s Rep 378; Kamilla Hans-Peter Eckhoff KG v AC Oersleff’s EFTF A/B (The Kamilla) [2006] 2 Lloyd’s Rep 238. 490 Kamilla Hans-Peter Eckhoff KG v AC Oersleff’s EFTF A/B (The Kamilla) [2006] 2 Lloyd’s Rep 238. 491 See cl 4(a)(i): http://www.gard.no/ikbViewer/Content/19258061/Member%20 Circular%2007%202011%20Inter-Club%20New%20York%20Produce%20Exchange%20 Agreement%201996.pdf. The original version of the Inter-Club Agreement applied only to cargo claims under bills of lading: see A/S Iverans Rederi v KG MS Holstencruiser Seeschiffahrtsgesellschaft mbH & Co (The Holstencruiser) [1992] 2 Lloyd’s Rep 378. 492 See [14.420]. 493 Oceanfocus Shipping Ltd v Hyundai Merchant Marine Co Ltd (The Hawk) [1999] 1 Lloyd’s Rep 176. 494 Transpacific Discovery SA v Cargill International SA (The Elpa) [2001] 2 Lloyd’s Rep 596.

550

Shipping Law

[14.420]

Agreement should apply to a claim in relation to bills of lading that had been improperly antedated. In The Elpa, Morison J said:495 The charter determines the rights and obligations of the parties inter se. The ICA is dealing with what should happen to third party claims successfully made against one or other of them. The ICA applies only to cargo claims which have been brought under bills of lading which contain the Hague-Visby Rules governing the carriage. If the goods were never shipped so that the bills were not issued in accordance with the charter, provided the cargo claim was not affected, that is provided the claim was still a claim under the bill and subject to the regime of the rules, then the ICA applies. The ICA only ceases to apply if the cargo claim is not made under the bill (for any reason) or alternatively, for any reason, the protections and limits in the rules are lost.

The Inter-Club Agreement contains a time bar provision, which provides that any recovery under the Agreement “shall be deemed to be waived and absolutely barred” unless written notification of the cargo claim is given to the other party within 24 months of the date of delivery of the cargo or the date on which cargo should have been delivered (36 months if the carriage is governed by the Hamburg Rules).496 Clause 2 of the Agreement provides that the time bar shall apply “notwithstanding any provision of the charterparty or rule of law to the contrary”,497 so the two-year time bar in the Agreement prevails over the one-year time bar in the Hague or Hague-Visby Rules, even if those rules have been incorporated into the time charterparty by a Clause Paramount.498

Issuing and signing bills of lading and other carriage documents [14.420]

Because it is the charterer who deals with the third parties shipping goods aboard the ship, it is the charterer who prepares and issues the bills of lading (or other carriage documents) in accordance with the particulars provided by those third party shippers. Having drawn up the carriage documents, the charterer either presents them to the master for signature, or signs them itself on behalf of the master if it has been

495 Transpacific Discovery SA v Cargill International SA (The Elpa) [2001] 2 Lloyd’s Rep 596 at 600. 496 See cl 6: http://www.gard.no/ikbViewer/Content/19258061/Member%20Circular %2007%202011%20Inter-Club%20New%20York%20Produce%20Exchange%20 Agreement%201996.pdf. 497 See cl 2: http://www.gard.no/ikbViewer/Content/19258061/Member%20Circular %2007%202011%20Inter-Club%20New%20York%20Produce%20Exchange%20 Agreement%201996.pdf. 498 MH Progress Lines SA v Orient Shipping Rotterdam BV (The Genius Star 1) [2012] 1 Lloyd’s Rep 222. For a consideration of the Hague/Hague-Visby time bar, see [12.580]–[12.600], and for the effect of a Clause Paramount, see [14.150].

[14.420]

14 Time Charterparties

551

authorised to do so under the terms of the charterparty. For example, cl 8 of the New York Produce Exchange form 1946 provides (inter alia):499 [T]he Captain … is to sign the bills of lading for cargo as presented in conformity with mate’s or tally clerk’s receipts. However, at Charterer’s option, the Charterers or their agents may sign bills of lading on behalf of the Captain always in conformity with mate’s or tally clerk’s receipts. All bills of lading shall be without prejudice to this Charter and the Charterers shall indemnify the Owners against all consequences or liabilities which may arise from any inconsistency between this Charter and any bills of lading signed by the Charterers or their agents or by the Captain at their request.

Because the master cannot refuse to sign the bills of lading presented by the charterer unless they are manifestly inconsistent with the charterparty500 an indemnity is implied even if the charterparty does not expressly provide for one, as does the last sentence quoted above. If there is any inconsistency between the terms of the bill of lading (or other carriage document) presented by the charterer and signed by the master, and the terms that the shipowner has agreed under the charterparty to accept, the charterer must indemnify the shipowner for any loss it suffers as a result.501 However, the charterer is not obliged to indemnify the shipowner against any liability the latter may incur as a result of the master signing a clean bill of lading presented by the charterer when the goods were, in fact, not in good order and condition on shipment.502 The master need not sign a clean bill of lading just because one is presented by the charterer; the master’s task is always to verify the condition of the goods before signing.503 If mate’s receipts are issued, they delimit the authority that the master or charterer has to issue bills of lading on behalf of the vessel.504 Although the master is authorised to sign bills of lading “as presented”, the bill of 499 NYPE 2015, cl 31(a), (b) (Appendix 7) are in almost identical terms, except that they refer to the “Master” instead of the “Captain”, and they include reference to sea waybills. 500 Kruger & Co Ltd v Moel Tryvan Ship Co [1907] AC 272 at 282 per Lord Halsbury. 501 Kruger & Co Ltd v Moel Tryvan Ship Co [1907] AC 272 (HL); Dawson Line Ltd v Aktiengesellschaft Adler Fuer Chemische Industrie [1932] 1 KB 433; Thomson v Louis Dreyfus & Co (1936) 56 Ll L Rep 44; Ben Shipping Co (Pte) Ltd v An-Board Bainne (The C Joyce) [1986] 2 Lloyd’s Rep 285 at 290 per Bingham J; Naviera Mogor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1 Lloyd’s Rep 412 at 417-420 per Mustill LJ; Boukadoura Maritime Corp v SA Marocaine de L’Industrie et du Raffinage (The Boukadoura) [1989] 1 Lloyd’s Rep 393. 502 Naviera Mogor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1 Lloyd’s Rep 412. 503 Naviera Mogor SA v Societe Metallurgique de Normandie (The Nogar Marin) [1988] 1 Lloyd’s Rep 412 at 422 per Mustill LJ. See also Sea Success Maritime Inc v African Maritime Carriers Ltd [2005] 2 Lloyd’s Rep 692, where the charterparty specifically provided that the master was to refuse to load any cargo when its condition would lead to clausing of the bill of lading. 504 Trade Star Line Corp v Mitsui & Co Ltd (The Arctic Trader) [1996] 2 Lloyd’s Rep 449 at 458 per Evans LJ.

552

Shipping Law

[14.430]

lading must be in accordance with the mate’s receipt.505 If the master or agent honestly takes the view, exercising his or her own judgment, that the cargo is not or not all in apparent good order and condition, and if that view could properly be held by a reasonably observant master or agent, then he or she is entitled to clause the sea-carriage document accordingly and is not obliged to sign a clean bill of lading presented by the charterer.506 If the shipowner enters into a voyage charterparty and issues a negotiable bill of lading to the voyage charterer when the goods are shipped on board the ship, that bill of lading is not evidence of a contract of carriage between the charterer-shipper and the shipowner, but acts merely as a receipt and a document of title in the charterer’s hands.507 In contrast, if a time charterer enters into a voyage sub-charterparty, and if the shipowner issues a bill of lading to the voyage sub-charterer on shipment of the goods, the bill of lading does act as evidence of a contract of carriage between the shipowner and the voyage sub-charterer.508 It seems, though, that if the time charterer were to issue a bill of lading in its own name to the voyage sub-charterer, that bill of lading would not be evidence of a contract of carriage between the time charterer and the voyage subcharterer, because the contract of carriage between these two parties would be the voyage sub-charterparty.

WITHDRAWAL Introduction [14.430]

Charterparties commonly contain clauses that give the shipowner the right to withdraw the chartered ship from the service of the charterer in specified circumstances. Non-payment of hire is the most common cause of withdrawal in practice, so it is considered separately from withdrawal for other reasons.

Withdrawal for non-payment of hire General

[14.440]

Standard form time charterparties generally contain a clause giving the shipowner the right to withdraw the ship for non-payment of hire.509 Withdrawal clauses often give rise to disputes, as they can

505 Trade Star Line Corp v Mitsui & Co Ltd (The Arctic Trader) [1996] 2 Lloyd’s Rep 449 at 458 per Evans LJ. 506 The David Agmashenebeli [2003] 1 Lloyd’s Rep 92 at 105 per Colman J. 507 See [12.710]: a negotiable bill of lading does act as evidence of a contract of carriage once indorsed to a third party. 508 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263; The Ship Socofl Stream v CMC (Australia) Pty Ltd [2001] FCA 961. See also Turner v Haji Goolam Mahomed Azam [1904] AC 826 (PC). See generally [12.700]. 509 See, eg, NYPE 2015, cl 11(c) (Appendix 7); cl 9, lines 195-205 of Shelltime 4.

[14.440]

14 Time Charterparties

553

provide an escape route from contractual obligations that have become burdensome. In a rising market, the shipowner is keen to take any opportunity to withdraw the ship from the service of the time charterer in order to take advantage of increased daily hire rates.510 Unless the charterparty provides for notice of withdrawal (as is usually now the case),511 the shipowner withdraws the ship if the charterer makes the slightest error in payment of hire, whether it be too little or too late. However, the shipowner often does not actually withdraw the ship,512 as it usually prefers to re-charter it to the original charterer at the increased, market rate of hire.513 In the past, English courts assisted shipowners in their efforts to withdraw ships on the slightest pretext by taking a strict, literal approach to the interpretation of withdrawal clauses. According to this view, there is no margin of flexibility in the payment of hire. The charterer’s obligation to pay hire in advance is taken to be an obligation to pay on or before the due date, and if payment is late for any reason, whether or not the charterer be at fault, the shipowner is entitled to withdraw the ship.514 The same is true of default by underpayment of hire; if the charterer pays less than the amount due, the shipowner is entitled to withdraw the ship515 unless the amount underpaid has been properly deducted by way of equitable set-off.516 English law provides no relief from the severity of this approach. Although once there were indications that the court might intervene on the charterer’s behalf in cases of hardship, as it does in cases of equitable

510 See, eg, Ene Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] 2 AC 164 at 173 [7] per Lord Sumption JSC (reported sub nom as The Kos [2012] 2 Lloyd’s Rep 292) (shipowners usually only exercise their right of withdrawal because market rates of hire have risen). 511 Notice of withdrawal clauses are usually called “anti-technicality clauses”. They are considered separately at [14.450]. 512 See Tropwood AG of Zug v Jade Enterprises Ltd (The Tropwind) [1982] 1 Lloyd’s Rep 232 at 234 per Lord Denning MR. 513 See, eg, Gatoil Anstalt v Omenial Ltd (The Balder London) (No 2) [1983] 1 Lloyd’s Rep 492. 514 Tankexpress A/S v Compagnie Financiere Belge des Petroles SA (The Petrofina) [1949] AC 76 (HL); The Brimnes: Tenax Steamship Co Ltd v The Brimnes (Owners) [1975] QB 929 (CA); Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia [1977] AC 850 (HL) (reported sub nom as The Laconia [1977] 1 Lloyd’s Rep 315), overruling Empresa Cubana de Fletes v Lagonisi Shipping Co Ltd [1971] 1 QB 488 (CA); A/S Awilco v Fulvia SpA di Navigazione (The Chikuma) [1981] 1 Lloyd’s Rep 371 (HL). 515 China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA (The Mihalios Xilas) [1979] 2 Lloyd’s Rep 303 (HL); Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389 (deduction of US$500 from a hire payment of US$133,275 held to be a breach by the charterer entitling the shipowner to withdraw the ship from the charterer’s service). 516 For a consideration of deductions from hire by way of equitable set-off, see [14.320].

554

Shipping Law

[14.440]

relief against forfeiture,517 this “beguiling heresy”518 was eschewed in England in favour of the view that the court has no jurisdiction to make any order preventing the shipowner from withdrawing the ship, whatever hardship withdrawal might cause the charterer.519 To grant an injunction preventing withdrawal would be effectively to make an affirmative order requiring the shipowner to perform its part of the contract, which would be indistinguishable from making a decree of specific performance of a contract to render services, a remedy that the courts are generally reluctant to grant.520 If the question were to arise under Australian law, however, the result might well be different.521 However, the severity of the English law approach has been largely undercut by the use of notice of withdrawal or “anti-technicality” clauses, which are considered at [14.450]. Under the usual form of withdrawal clause, the shipowner is not entitled to make a temporary withdrawal, but must withdraw the ship completely.522 Notice of withdrawal must be given to the charterer within

517 See Tankexpress A/S v Compagnie Financiere Belge des Petroles SA (The Petrofina) [1949] AC 76 at 100 per Lord Uthwatt; Mardorf Peach & Co Ltd v Attica Sea Carriers Corp of Liberia [1977] AC 850 at 873-874 per Lord Simon (The Laconia). 518 Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 Lloyd’s Rep 253 at 256 per Lord Diplock. 519 Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 Lloyd’s Rep 253 at 256 per Lord Diplock. 520 Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 Lloyd’s Rep 253 at 257 per Lord Diplock. 521 In Stern v McArthur (1988) 165 CLR 489 at 525, Deane and Dawson JJ said that the Australian law of equitable relief against forfeiture is “developing along divergent lines” from the law in England, citing The Scaptrade as an example. See also Federal Airports Corp v Makucha Developments Pty Ltd (1993) 115 ALR 679 at 699 per Davies J: “[T]he propositions enunciated in those authorities [English cases including The Scaptrade] are inconsistent with the approach taken by the High Court of Australia in Legione v Hateley … The decisions of the High Court of Australia establish the law for this country”. The possibility that Australian courts of equity might take a different approach in the light of the principles stated in Stern v McArthur and Legione v Hateley (1983) 152 CLR 406 is considered in M Davies, “Equitable Relief against Withdrawal for Non-payment of Hire in Time Charterparties” (1990) 18 ABLR 328. See also Dataforce Pty Ltd v Brambles Holdings Ltd [1988] VR 771 and the authorities considered therein, for the view that Australian courts may enforce by injunction the future long-term performance of a contract for services where the supplier of the services has well-established contractual relationships with the receiver of them, and has demonstrated a capacity to be able to perform the contract. These conditions would often be satisfied in cases involving time charterparties. 522 Steelwood Carriers Inc of Monrovia, Liberia v Evimeria Compania Naviera SA of Panama (The Agios Giorgis) [1976] 2 Lloyd’s Rep 192; Aegnoussiotis Shipping Corp of Monrovia v A/S Kristian Jebsens Rederi of Bergen (The Aegnoussiotis) [1977] 1 Lloyd’s Rep 168; International Bulk Carriers (Beirut) SARL v Evlogia Shipping Co SA (The Mihalios Xilas) [1978] 2 Lloyd’s Rep 186. (This last decision is not to be confused with that in China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA (The Mihalios Xilas) [1979] 2 Lloyd’s Rep 303, which is a dispute between different litigants concerning the same ship.)

[14.450]

14 Time Charterparties

555

a reasonable time of its default,523 unless the charterparty expressly provides for a period of notice.524 Although what constitutes a reasonable time depends on the circumstances of the case, it will usually be the shortest time reasonably necessary to enable the shipowner to hear of the default and to issue instructions.525 Notice of withdrawal is sufficient in itself to bring the contract to an end.526 The shipowner may waive the right to withdraw as a result of the charterer’s default by making a clear and unequivocal acceptance of a late payment of hire.527 If the shipowner consistently accepts payments of hire that are late because of the method of payment used by the charterer, the shipowner is obliged to give reasonable notice that punctual payment will be required in the future.528 “Anti-technicality” clauses

[14.450]

Some measure of flexibility in the payment of hire has been brought about by the introduction of “anti-technicality” clauses, which were designed in response to the English courts’ strict interpretation of withdrawal clauses, and which are now in widespread use.529 The name “anti-technicality” clause is a misnomer,530 because the effect of such a clause is not to modify the “technicalities” of payment of hire, but rather to give the charterer some notice of the shipowner’s intention to 523 Mardorf Peach & Co Ltd v Attica Sea Carriers Corp of Liberia [1977] AC 850 at 872 per Lord Wilberforce. 524 For a consideration of “anti-technicality” clauses which are, in fact, notice of withdrawal clauses, see [14.450]. 525 Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia [1977] AC 850 at 872 per Lord Wilberforce. For an application of this dictum, see Gatoil Anstalt v Omennial Ltd (The Balder London) [1980] 2 Lloyd’s Rep 489, where it was held that a delay of three days and 18 hours between default and notice was not unreasonable in the circumstances. 526 Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express) (1990) 19 NSWLR 285, preferring the views of Robert Goff J at first instance in Tropwood AG of Zug v Jade Enterprises Ltd (The Tropwind) [1981] 1 Lloyd’s Rep 45 to those of Lord Denning MR on appeal: Tropwood AG of Zug v Jade Enterprises Ltd (The Tropwind) [1982] 1 Lloyd’s Rep 232. Although a demise charterer must physically redeliver possession of the ship to the owner after withdrawal, a demise charterparty is also terminated as a matter of law upon notice of withdrawal, even though the charterer may retain possession, at least when the demise charterparty is in the Barecon 2001 form, which states that the charterer becomes a “gratuitous bailee” after notice of withdrawal: see Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369. 527 Wulfsberg & Co v SS Weardale (Owners) (1916) 85 LJKB 1717; Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia [1977] AC 850 at 871-872 per Lord Wilberforce; China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA (The Mihalios Xilas) [1979] 2 Lloyd’s Rep 303 (HL). 528 Tankexpress A/S v Compagnie Financiere Belge des Petroles SA (The Petrofina) [1949] AC 76. 529 See, eg, NYPE 2015, cl 11(b) (Appendix 7); Shelltime 4, cl 9, lines 195-205. 530 See Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) [1983] 2 Lloyd’s Rep 253 at 258, where Lord Diplock refers to “so-(mis)called ‘anti-technicality clauses’”.

556

Shipping Law

[14.450]

withdraw the ship for non-payment. Under such a clause, the shipowner is required to give the charterer a period of notice before withdrawal in order to give the charterer the opportunity of rectifying its default by tendering payment. Withdrawal without notice that complies with the requirements of the clause is ineffective.531 If notice is given and the charterer pays before the end of the prescribed period,532 the shipowner’s right to withdraw lapses.533 The earliest time at which effective notice of withdrawal can be given is the day after hire is due, as the shipowner is only entitled to withdraw when hire is overdue.534 A notice of withdrawal given before hire is overdue has no effect.535 Anti-technicality clauses are strictly interpreted. To be effective, the shipowner’s notice of withdrawal must comply exactly with the terms of the clause.536 It must require the charterer to remedy its default by paying hire,537 and must give the charterer an unequivocal ultimatum that the ship will be withdrawn from the charterer’s service if payment is not made by the end of the notice period.538 For example, in The Li Hai,539 the shipowner sent a purported notice of withdrawal by email captioned 531 APC Marine Pty Ltd v Ship APC Aussie 1 [2009] FCA 690 (withdrawal ineffective because anti-technicality clause stated that notice of withdrawal could only be given in the event of “oversight, negligence, errors or omissions”, which was not the case). See also Italmare Shipping Co Ltd v Ocean Tanker Co Inc (The Rio Sun) [1982] 1 Lloyd’s Rep 404. This decision ought to be called The Rio Sun (No 2) to avoid confusion with the earlier decision in Italmare Shipping Co Ltd v Ocean Tanker Co Inc (The Rio Sun) [1981] 2 Lloyd’s Rep 489, where the Court of Appeal gave the charterer leave to appeal against the arbitrator’s award. See also Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389 (requirements of anti-technicality clause not satisfied so withdrawal held to be improper). 532 The period runs from the giving of notice, not from the breach giving the right to withdraw: APC Marine Pty Ltd v Ship APC Aussie 1 [2009] FCA 690. 533 APC Marine Pty Ltd v Ship APC Aussie 1 [2009] FCA 690. 534 Afovos Shipping Co SA v R Pagnan and F Lli (The Afovos) [1983] 1 Lloyd’s Rep 335 (HL). The charterer was entitled to make payment at any time until midnight on the specified day, so a purported notice of withdrawal made at 1640 hours on the due day was ineffective, even though the charterparty required hire to be paid into the shipowner’s bank, which had closed. 535 North Range Shipping Ltd v Seatrans Shipping Corp (The Western Triumph) [2002] 2 Lloyd’s Rep 1: the Court of Appeal affirmed David Steel J’s decision not to grant leave to appeal against the arbitrators’ decision because no question of public importance was raised. Compare Schelde Delta Shipping BV v Astarte Shipping Ltd (The Pamela) [1995] 2 Lloyd’s Rep 249, where a notice sent before hire was overdue, but in circumstances where it was not expected to be read by charterers until after hire was overdue, was held to be validly given (although not effective because of its form). 536 See, eg, APC Marine Pty Ltd v Ship APC Aussie 1 [2009] FCA 690 (withdrawal ineffective because anti-technicality clause stated that notice of withdrawal could only be given in the event of “oversight, negligence, errors or omissions”, which was not the case). 537 Schelde Delta Shipping BV v Astarte Shipping Ltd (The Pamela) [1995] 2 Lloyd’s Rep 249. 538 Afovos Shipping Co SA v R Pagnan and F Lli (The Afovos) [1983] 1 Lloyd’s Rep 335 (HL); Schelde Delta Shipping BV v Astarte Shipping Ltd (The Pamela) [1995] 2 Lloyd’s Rep 249; Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389. 539 Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389.

[14.460]

14 Time Charterparties

557

“Notice of Withdrawal”, which read (inter alia): “Owners hereby give seventy-two hours notice that owners will withdraw the vessel from the service of the charterers without prejudice to any claims that owners may otherwise have upon the charterers.” It was held that this notice was ineffective because it did not spell out the amount that the charterer was required to pay to remedy the default,540 and it did not give an ultimatum that the ship would be withdrawn in 72 hours if the payment were not made, but rather said unconditionally that the vessel “will” be withdrawn in 72 hours.541

Withdrawal for reasons other than non-payment of hire [14.460]

Withdrawal of time-chartered ships for non-payment of hire was described by Lord Denning MR as a “game of wits … played out between shipowners and charterers, backed up by lawyers and bankers”542 although the vigour of the game has been considerably reduced by the common practice of inserting anti-technicality clauses into time charterparties. Extending Lord Denning MR’s metaphor, Kerr J said in Tropwood AG v Jade Enterprises Ltd (The Tropwind),543 that, “like the schoolboy who picked up the football and ran with it, the shipowners have … produced a variant of the game, [which] is not concerned with a failure to pay hire”. Some standard form charterparties give the shipowner the right to withdraw the chartered ship for reasons other than non-payment of hire. Notably, the New York Produce Exchange 1946 form contains a clause (cl 5) which states that the shipowner is entitled to withdraw the ship for non-payment of hire “or on any breach of this Charter”.544 At first sight, interpretation of a clause which gives the shipowner the right to withdraw for any breach of the charterparty seems straightforward. However, English courts have interpreted cl 5 of the 1946 version of the New York Produce Exchange form so as to restrict the 540 The underpaid sum was a mere US$500, wrongly deducted from a hire payment of US$133,275: see Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389 at 393 [12]. 541 Western Bulk Carriers K/S v Li Hai Maritime Inc (The Li Hai) [2005] 2 Lloyd’s Rep 389 at 406-407 [90]-[93] per Jonathan Hirst QC sitting as Deputy Judge. 542 Mardorf Peach & Co Ltd v Attica Sea Carriers Corporation of Liberia (The Laconia) [1976] 1 Lloyd’s Rep 395 at 401 per Lord Denning MR. See also Federal Commerce and Navigation Ltd v Molena Alpha Inc (The Nanfri, Benfri and Lorfri) [1978] 2 Lloyd’s Rep 132 at 134, where Lord Denning MR referred to time charterparties as “the sport of the shipping markets”. 543 Tropwood AG v Jade Enterprises Ltd (The Tropwind) [1977] 1 Lloyd’s Rep 397 at 398. This case is not to be confused with Tropwood AG of Zug v Jade Enterprises Ltd (The Tropwind) [1982] 1 Lloyd’s Rep 232, which is a different dispute between the same litigants concerning the same ship. 544 The NYPE 2015 form (Appendix 7) responds to calls for reform of the old cl 5 (see, eg, Telfair Shipping Corp v Athos Shipping Co SA (The Athos) [1983] 1 Lloyd’s Rep 127 at 138 per Kerr LJ); it provides for withdrawal only in the event of non-payment of hire by the end of the grace period given by the “anti-technicality” clause (cl 11(b)).

558

Shipping Law

[14.470]

shipowner’s apparently unlimited right of withdrawal. In Antaios Compania Naviera SA v Salen Rederierna AB,545 Lord Diplock (with whom Lords Keith, Scarman and Brandon agreed) said that the arbitrators in that case had been “obviously right”546 in their decision that cl 5 did not apply to any breach, however trivial, but only to repudiatory breaches — that is, to a fundamental breach of an innominate term or breach of a term expressly stated to be a condition.547 The most recent version of the New York Produce Exchange form (NYPE 2015) avoids any difficulty of interpreting “any breach” by removing the words altogether; the new version of the form does not give a right of withdrawal for any reason other than non-payment of hire.548

The consequences of withdrawal [14.470]

The charterparty comes to an end upon receipt by the charterer of a valid notice of withdrawal by the shipowner.549 The shipowner is not entitled to hire in respect of the period after withdrawal,550 but may recover damages from the charterer, representing the difference between the charterparty rate of hire and the market rate until the earliest date when the ship could validly have been redelivered (the beginning of the underlap period).551 The shipowner is also entitled to be indemnified by the charterer for any time and cost spent discharging cargo on board the ship after withdrawal becomes effective.552 If the ship is in the middle of a voyage carrying cargo at the time of withdrawal, the consequences of the termination of the charterparty 545 Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 (reported sub nom as The Antaios (No 2) [1984] 2 Lloyd’s Rep 235). 546 Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 205. 547 Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 200. See also Kuwait Rocks Co v AMN Bulkcarriers Inc (The Astra) [2013] 2 Lloyd’s Rep 69 at 77 [30] per Flaux J. 548 NYPE 2015, cl 11 (Appendix 7). 549 See Wulfsberg & Co v SS Weardale (Owners) (1916) 85 LJKB 1717. Although a demise charterer must physically redeliver possession of the ship to the owner after withdrawal, a demise charterparty is also terminated as a matter of law upon notice of withdrawal, even though the charterer may retain possession, at least when the demise charterparty is in the Barecon 2001 form, which states that the charterer becomes a “gratuitous bailee” after notice of withdrawal: see Ship Hako Endeavour v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369. 550 Wehner v Dene Steam Shipping Co [1905] 2 KB 92; China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA (The Mihalios Xilas) [1979] 2 Lloyd’s Rep 303 (HL); Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1993] 1 Lloyd’s Rep 443 at 448 per Neill LJ (aff’d without consideration of this point: Pan Ocean Shipping Co Ltd v Creditcorp Ltd (The Trident Beauty) [1994] 1 Lloyd’s Rep 365 (HL)). 551 Leslie Shipping Co v Welstead (The Raithwaite) [1921] 3 KB 420; Kuwait Rocks Co v AMN Bulkcarriers Inc (The Astra) [2013] 2 Lloyd’s Rep 69 at 77. For a consideration of the overlap/underlap period for redelivery, see [14.220]–[14.230]. 552 Ene Kos 1 Ltd v Petroleo Brasileiro SA [2012] 2 AC 164 (reported sub nom as The Kos [2012] 2 Lloyd’s Rep 292), considered at [14.380].

[14.470]

14 Time Charterparties

559

contract depend upon whether the contracts for carriage of the goods aboard the ship are with the shipowner or the (former) charterer.553 If the cargo on the ship is being carried under bills of lading (or other carriage documents) that evidence contracts of carriage with the shipowner, withdrawal of the ship from the service of the time charterer does not affect the shipowner’s contractual rights and obligations with respect to the holders of the bills of lading: the ship is still obliged to carry the cargo to the destination named in the bills of lading, notwithstanding the mid-voyage withdrawal. If freight is payable on delivery under the bills of lading, the shipowner is entitled to collect the freight, or to have the (former) charterer’s agent collect it on its behalf, but it must then account to the charterer for the difference between the bill of lading freight received and any hire or other sums due under the charterparty.554 If, as is more commonly the case, freight has been prepaid by the shippers to the charterer, the shipowner must carry the goods to their destination and deliver them under the terms of the bills of lading, and is not entitled to demand freight or any other payment from the receiver holding the bill of lading, at least where the time charterparty authorises the charterer to issue bills of lading in its own name,555 or where the bills of lading provide that freight is to be payable “as per charterparty”.556 In those circumstances, the shipowner’s only possible source of payment for its services is the charterer, which means that the shipowner is left in an unfortunate position if the reason for the withdrawal is a failure by the charterer to pay hire because it has become insolvent.557 The position is similar if the cargo is being carried under bills of lading (or other carriage documents) issued in the charterer’s own name, evidencing contracts with the charterer. In J Gadsden Pty Ltd v Strider 1 Ltd

553 The difficulties examined in this and the following paragraphs do not arise in the US, where the notice of withdrawal is not immediately effective if the ship is in the middle of a carrying voyage, but takes effect only after completion of discharge of the cargo: see Luckenbach v Pierson 229 F 130 (2nd Cir 1915); Schirmer Stevedoring Co Ltd v Seaboard Stevedoring Corp 306 F 2d 188 (9th Cir 1962); Ocean Cargo Lines Ltd v North Atlantic Marine Co 227 F Supp 872 (SDNY 1964) at 881; Diana Co Maritime SA of Panama v Subfreights of SS Admiralty Flyer 280 F Supp 607 (SDNY 1968). 554 Wehner v Dene Steam Shipping Co [1905] 2 KB 92 at 99 per Channell J. 555 Ngo Chew Hong Edible Oil Pte Ltd v Scindia Steam Navigation Co Ltd (The Jalamohan) [1988] 1 Lloyd’s Rep 443. 556 Tradigrain SA v King Diamond Shipping SA (The Spiros C) [2000] 2 Lloyd’s Rep 319 (CA). See also Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials Inc (The Alev) [1989] 1 Lloyd’s Rep 138, where an agreement between shipowner and receiver whereby the latter agreed to pay the former to make the delivery it was obliged to make in any event was held invalid because of economic duress and duress of goods. 557 See Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials Inc (The Alev) [1989] 1 Lloyd’s Rep 138 at 141, where Hobhouse J said, “On occasions, shipowners faced with that situation simply dump the cargo at some port convenient to themselves or even sell it in exercise of some pretended lien”. Needless to say, such actions are breaches of the shipowner’s obligations under the bill of lading contracts.

560

Shipping Law

[14.470]

(The AES Express),558 Carruthers J in the Supreme Court of New South Wales held that the shippers of goods under charterer’s bills of lading were entitled to have their cargo delivered to the destination nominated in the bills of lading, even after withdrawal of the ship from the charterer’s service by the shipowner.559 Upon withdrawal of the ship, the shipowner assumed the charterer’s obligations to the holders of the bills of lading, because those bills were issued by the charterer with the authority of the shipowner.560 Because the bill of lading freight had been paid in advance to the charterer, the shipowner was not entitled to recover freight or any other remuneration from the holders of the bill of lading. It seems, however, that if freight had been payable on delivery, the shipowner would have been entitled to demand freight from the holders of the bills of lading, just as the defaulting charterer would have been, and the shipowner would also have been entitled to retain the difference between the freight and the amounts due from the charterer under the charterparty.561 Scrutton suggests that if withdrawal takes place when the ship is carrying cargo, the shipowner should be entitled to remuneration on a restitutionary basis for its services after withdrawal, on the basis of an analogy with the payment of freight under a bill of lading after termination by deviation or frustration.562 The passage in question does not make it clear from whom the shipowner is entitled to claim that remuneration, but it seems that the shipowner should only be able to make a restitutionary claim against the charterer, not the cargo-owners. If, after termination of the charterparty, the shipowner carries the goods to their destination and delivers them as agreed, it has thereby provided services that enable the charterer to earn the bill of lading freights paid or payable to it, and it should be remunerated by the charterer accordingly in respect of the period between withdrawal and delivery. The holder of 558 J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57. 559 Carruthers J rejected the proposition, initially accepted by both parties, that after withdrawal, the shipowner was entitled in law to discharge the cargo at its own expense at the nearest convenient port. See also the footnote above regarding Vantage Navigation Corp v Suhail and Saud Bahwan Building Materials Inc (The Alev) [1989] 1 Lloyd’s Rep 138 at 141 per Hobhouse J. 560 In Quadro Shipping NV v Bizley and Co Pty Ltd (The Protea Trader) (1992) 113 FLR 280 at 285, Gleeson CJ (with whom Kirby P and Handley JA agreed) expressed doubts whether the obligations assumed by the shipowner on withdrawal included a liability for damage previously caused. See M Davies, “What Obligations Does a Shipowner Take Over from a Defaulting Time Charterer under Charterers’ Bills of Lading?” (1993) 21 ABLR 227. 561 J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57 at 65 per Carruthers J. 562 B Eder et al, Scrutton on Charterparties (22nd ed, Sweet & Maxwell, London, 2011), p 355 at [16-22]. The present editors state that the basis of such a right is not clear, but: “In our view, the right is best viewed as restitutionary”: n 88. The UK Supreme Court declined to consider that possibility in Ene Kos 1 Ltd v Petroleo Brasileiro SA [2012] 2 AC 164 (reported sub nom as The Kos [2012] 2 Lloyd’s Rep 292): at 181 [31] per Lord Sumption JSC.

[14.480]

14 Time Charterparties

561

the bill of lading is entitled to delivery from the shipowner under the bill of lading contract, whether that contract was originally made with the shipowner or the defaulting charterer, so there can be no question of the shipowner recovering on a restitutionary basis from the holder of the bill of lading, particularly if freight under the bill of lading was pre-paid.563 In The Kos,564 the United Kingdom Supreme Court held that a shipowner is entitled to be paid remuneration for any cargo services performed after withdrawal on the basis that it is a non-contractual bailee of the cargo while the cargo is still in its possession.565 The cargo was bailed to the shipowner under a contract (the time charterparty) that had come to an end, so the shipowner’s continuing obligation to care for the cargo after that time should be understood as arising in bailment. The shipowner had a correlative right to charge the charterer with the expenses reasonably incurred in performing that duty as bailee. The decision in The Kos is consistent with the principle suggested by Scrutton, and also with the proposition advanced in the previous paragraph, that any restitutionary recovery must be from the charterer, not the cargo-owner.

FRUSTRATION [14.480]

Although frustration can occur through loss of the chartered or delay in delivery,567 it most commonly arises from delays ship during the charter period. If the delay is only temporary, the question of whether the contract is frustrated usually depends on the probable length of delay, considered as a proportion of the time which the charter period has left to run.568 The delay must be of sufficient duration to deprive the parties of the commercial benefit of their original bargain. For example, many charterparties were frustrated by the outbreak of hostilities between Iran and Iraq in 1980, which trapped some 60 ships in the Shatt-al-Arab waterway leading to the port of Basrah. The outbreak of hostilities did not ipso facto frustrate time charterparties of the trapped ships, as initially it 566

563 In J Gadsden Pty Ltd v Strider 1 Ltd (The AES Express) (1990) 20 NSWLR 57 at 63-64, Carruthers J said that the passage in Scrutton should not be thought to refer to the situation where freight had been pre-paid, because if it did, the cargo-owner would be required to remunerate the shipowner as well as having paid the bill of lading freight, “which might be thought to be an unjust result”. 564 Ene Kos 1 Ltd v Petroleo Brasileiro SA [2012] 2 AC 164 (reported sub nom as The Kos [2012] 2 Lloyd’s Rep 292). 565 The actual cargo service performed by the shipowner in The Kos was discharge of the cargo on board at the time of withdrawal, which took place while the ship was still at the loading port: see [14.380]. 566 See, eg, Blane Steamships Ltd v Minister of Transport [1951] 2 KB 965. 567 See, eg, Bank Line Ltd v Arthur Capel & Co [1919] AC 435 (HL). 568 See, eg, Clea Shipping Corp v Bulk Oil International Ltd (The Alaskan Trader) (No 2) [1983] 2 Lloyd’s Rep 645, where no question of frustration arose in a dispute concerning a charterparty for 24 months, where the chartered ship broke down in circumstances where it was clear that repairs would take several months, and in fact took 5 months and 19 days.

562

Shipping Law

[14.480]

was possible that it might be of short duration only.569 The charterparties were frustrated only when it became clear that the conflict would continue for a sufficient period to bring an end to the contracts as commercial propositions. Although it has been stated that frustration is a question of law,570 it is clear that the issue must be decided by the tribunal of fact in the light of all the circumstances of the case. In one of the cases arising from the trapping of ships in Shatt-al-Arab, Kodros Shipping Corp v Empresa Cubana de Fletes (The Evia) (No 2),571 Lord Roskill said:572 I resolutely decline to investigate the facts found in other cases to see which choice of date is to be preferred. The choice of date in this case, as in the others, was for the umpire or arbitrator concerned and is not a matter for your Lordships’ House.

Several different frustration dates were chosen by arbitrators in different disputes arising from ships being trapped in Shatt-al-Arab, but none was interfered with by courts considering appeals from those decisions.573 More recently, the English Court of Appeal held in The Sea Angel574 that the doctrine of frustration requires a “multi-factorial approach”, taking into account:575 [T]he terms of the contract itself, its matrix or context, the parties’ knowledge, expectations, assumptions and contemplations, in particular as to risk, as at the time of contract, at any rate so far as these can be ascribed mutually and objectively, and then the nature of the supervening event, and the parties’ reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances.

The test of comparing the probable length of the delay with the unexpired duration of the charter was an important consideration, but it was not the 569 International Sea Tankers Inc v Hemisphere Shipping Co Ltd (The Wenjiang) (No 2) [1983] 1 Lloyd’s Rep 400; Vinava Shipping Co Ltd v Finelvet AG (The Chrysalis) [1983] 1 Lloyd’s Rep 503. 570 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 at 727 per Lord Radcliffe. 571 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] 1 AC 736. 572 Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] 1 AC 736 at 768. 573 Hostilities began on 20 September 1980. In International Sea Tankers Inc v Hemisphere Shipping Co Ltd (The Wenjiang) (No 2) [1983] 1 Lloyd’s Rep 400 and Vinava Shipping Co Ltd v Finelvet AG (The Chrysalis) [1983] 1 Lloyd’s Rep 503, the frustration date chosen was 24 November 1980; in Kodros Shipping Corp of Monrovia v Empresa Cubana de Fletes (The Evia) (No 2) [1983] 1 AC 736, it was 4 October 1980; in Uni-Ocean Lines Pte Ltd v C-Trade SA (The Lucille) [1983] 1 Lloyd’s Rep 387, it was 9 December 1980. 574 Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) [2007] 2 Lloyd’s Rep 517. 575 Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) [2007] 2 Lloyd’s Rep 517 at 537 [111] per Rix LJ (with whom Wall and Hooper LJJ agreed).

[14.480]

14 Time Charterparties

563

only test. In The Sea Angel itself, it was held that a charterparty for the short period of “up to 20 days” was not frustrated by detention of the chartered ship by a port authority near the very end of the charter period for reasons that were later held to be unlawful by the law of Pakistan, the country where the detention took place. Although the probable duration of the delay was unclear at the moment when it began, the detention could have been rectified by negotiation, diplomacy, and legal pressure on the port authority, and the charterer was obliged to bear the financial consequence of the detention by continuing to pay hire until the ship was eventually released. Similarly, in The Kyla,576 it was held, applying the “multi-factorial” approach from The Sea Angel, that a time charterparty was not frustrated by reason of damage that caused the chartered ship to become a constructive total loss in the middle of the charter period,577 because the charterparty imposed on the shipowner an obligation to keep the ship insured for the whole of the charter period. The contract thus allocated to the shipowner the risk that the ship might need repair during the charter period, provided that the cost of repair was within the insured value. At common law, the parties are relieved of all obligations which are due after the occurrence of the frustrating event.578 Thus, under a charterparty governed by the law of an Australian jurisdiction where the common law still governs the consequences of frustration,579 the charterer is not obliged to make any further payments of hire after frustration. However, all obligations prior to frustration remain unaffected. The charterer remains liable for all payments of hire due before the date of frustration,580 and hire paid in advance cannot be recovered from the shipowner.581 However, hire paid in advance can be recovered if there is a total failure of consideration by reason of the ship being unavailable for the whole of the period in respect of which advance payment was made.582 In New South Wales, Victoria and South Australia, there is statutory provision for the allocation of losses in the event of frustration. Under Victorian law, advance payments of hire under a time charterparty are

576 Bunge SA v Kyla Shipping Co Ltd (The Kyla) [2013] 1 Lloyd’s Rep 565. 577 The ship was a constructive total loss because the cost of repair exceeded the sound market value of the ship: see Bunge SA v Kyla Shipping Co Ltd (The Kyla) [2013] 1 Lloyd’s Rep 565 at 567 [5]-[7]. Constructive total loss of this kind is considered at [17.420]. 578 Taylor v Caldwell (1863) 3 B & S 826; 122 ER 309. 579 The consequences of frustration are governed by common law in the ACT, the Northern Territory, Queensland, Tasmania, and Western Australia. 580 French Marine v Compagnie Napolitaine d’Eclairage et de Chauffage par le Gaz [1921] 2 AC 494 (HL). 581 Lloyd Royal Belge SA v Stathatos (1917) 34 TLR 70 (CA). 582 Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 (HL).

564

Shipping Law

[14.480]

recoverable if paid, or cease to be payable if not already paid.583 The court can sever the part of the contract which has been performed before frustration from the remainder,584 so that payments of hire for the months prior to that in which frustration occurs are not recoverable or remain payable if not already paid. If the shipowner is obliged to return advance payments of hire, the court may allow it to retain a sum in respect of expenses incurred.585 Under New South Wales law, there is a slightly more sophisticated scheme. Payments of hire made in advance are recoverable or cease to be payable,586 but the shipowner is entitled to retain an amount equal to the “attributable value” of the part performance before frustration.587 Under South Australian law, the legislative scheme is more sophisticated still. Upon frustration, there is an adjustment between the parties so that neither is unfairly advantaged or disadvantaged.588 That adjustment is done by aggregating the contractual benefits received by the parties up to the date of frustration, aggregating the value of each party’s contractual performance up to that date,589 subtracting the latter from the former, then adjusting the position of the parties so that the “contractual return” of each is equalised at that figure.590

Example 14.1 A charterparty for 12 months is frustrated two-thirds of the way into the fourth month. The charterer has made four payments of hire in advance. 1. In Victoria, the shipowner returns the payment of hire for the fourth month, retaining the payments for the first three months (which are severed from the fourth) and also retaining a sum which represents its expenses (that is, running costs of the ship) for two-thirds of the fourth month. 2. In New South Wales, the shipowner returns one-third of a month’s worth of hire, retaining a sum equal to three and two-thirds of a month’s worth of hire, as the “attributable value” of the part performance before frustration.

583 Australian Consumer Law and Fair Trading Act 2012 (Vic), s 36. The Act applies to time and demise, but not voyage, charterparties by virtue of s 35(3)(a). 584 Australian Consumer Law and Fair Trading Act 2012 (Vic), s 42. 585 Australian Consumer Law and Fair Trading Act 2012 (Vic), s 37. 586 Frustrated Contracts Act 1978 (NSW), s 12. The Act applies to time and demise, but not voyage, charterparties by virtue of s 6(1)(b). 587 Frustrated Contracts Act 1978 (NSW), s 11(2)(a). 588 Frustrated Contracts Act 1988 (SA), s 7(1). The Act applies to time and demise, but not voyage, charterparties, by virtue of s 4(2)(b). It does not apply if the charterparty contains a provision as to the consequences of frustration: s 4(1)(b). 589 Contractual performance includes “anything done by the party preparatory to the performance of a contractual obligation”: see Frustrated Contracts Act 1988 (SA), s 3(1). The method of valuing contractual performance is set out in s 3(2). 590 Frustrated Contracts Act 1988 (SA), s 7(2).

[14.500]

14 Time Charterparties

565

3. In South Australia, the shipowner’s contractual benefit (four payments of hire) and the charterer’s contractual benefit (use of the ship for three and two-thirds months) are aggregated; the shipowner’s contractual performance (three and two-thirds months of running the ship plus the value of any preparatory acts such as the costs of the voyage to the delivery place) and the value of the charterer’s contractual performance (four payments of hire) are aggregated; the latter is subtracted from the former, then the parties’ respective positions are adjusted so that they both end up in that position. 4. In the Australian Capital Territory, the Northern Territory, Queensland, Tasmania, and Western Australia, where the common law applies, the shipowner retains all four payments of hire, as there has not been a total failure of consideration in respect of any advance payment.

REDELIVERY591 Time of redelivery [14.490]

The question of the time of redelivery is considered in detail at [14.210]–[14.250] in connection with the duration of the charter period.

Place of redelivery [14.500]

It is usually the case that a range of redelivery ports is specified rather than a particular port. However, even where the parties have agreed to a range for redelivery, it may be important to determine around which particular ports that range is centred. For example, in Reardon Smith Line Ltd v Sanko Steamship Co Ltd (The Sanko Honour),592 the charterer was obliged to redeliver the ship “not further in distance than the Persian Gulf is from Japan”. When the charterer redelivered the ship in Honolulu, the shipowner argued that as Honolulu was further from the Persian Gulf than was Japan, the ship had been redelivered outside the agreed range. The court held in favour of the charterer, who had argued that Honolulu was closer to Japan than was the Persian Gulf, and thus that redelivery was within the agreed range. Hobhouse J said that the clause clearly contemplated that Japan was the central point of the redelivery range, with all distances to be calculated to and from Japan. Redelivery outside the agreed range is a breach of contract. As damages, the charterer must pay to the shipowner the full charterparty hire for the shortest, quickest, voyage that would take the ship from the actual redelivery port to the agreed redelivery range, less whatever sums the ship could reasonably be expected to earn in that period.593 This is in accordance with the general principle in Cockburn v Alexander,594 that damages are to be calculated on the basis of the presumed mode of 591 For a consideration of the meaning of “delivery” and an explanation of the imprecision of the term, see [14.170]. Redelivery is delivery by the charterer to the shipowner. 592 Reardon Smith Line Ltd v Sanko Steamship Co Ltd (The Sanko Honour) [1985] 1 Lloyd’s Rep 418. 593 Malaysian International Shipping Corp v Empresa Cubana de Fletes (The Bunga Kenanga) [1981] 2 Lloyd’s Rep 518. 594 Cockburn v Alexander (1848) 6 CB 791; 136 ER 1459 at 814; 1468-1469 per Maule J.

566

Shipping Law

[14.510]

performance least profitable to the plaintiff and least burdensome to the defendant. Thus, the calculation of damages is done on the basis of a notional voyage in ballast (that is, without cargo) to the nearest port within the agreed range.595

The condition of the ship on redelivery [14.510]

Charterparties usually provide that the ship is to be redelivered in the same condition in which it was delivered, ordinary wear and tear excepted.596 The obligation to redeliver in good order is separate from the obligation to redeliver. Thus, a redelivery in the right place at the right time is a proper redelivery, thereby bringing to an end the charterer’s obligation to pay hire, even if the ship has been redelivered in poor condition.597 A breach of the obligation to redeliver in good order gives rise to damages based upon the cost of repair and loss of profits during repair, but not to payments of hire for the period of repair. The obligation to redeliver in good order is not an absolute one, as it must be read in the context of the charterparty as a whole. The shipowner is usually under an obligation to keep the ship in good order throughout the charter period, and in the light of this obligation, the charterer is clearly not liable for damage caused by the shipowner’s own defective maintenance.598 Notwithstanding some statements to the contrary,599 the better view is that the charterer is only liable for damage caused by its own default.600 Although the charterer is liable for the cost of repair if the ship is redelivered in a damaged condition, it is not liable for any ancillary costs of ensuring that the ship is repaired immediately after redelivery. In Somelas Corporation v A/S Gerrards Rederi (The Pantelis A Lemos),601 the parties agreed that each would appoint a surveyor to assess what damage on redelivery was attributable to fair wear and tear, and what to stevedore damage, for which the charterer was liable under the charterparty. In their joint report, the surveyors included an estimate of 595 Santa Martha Baay Scheepvaart and Handelsmaatschappij NV v Scanbulk A/S (The Rijn) [1981] 2 Lloyd’s Rep 267. 596 See, eg, NYPE 2015, cl 4(a), lines 68-69 (Appendix 7), which provides that “[t]he Vessel shall be redelivered to the Owners in like good order and condition, ordinary wear and tear excepted”. For an example of a finding that the poor condition of the ship on redelivery was caused by “ordinary wear and tear”, see Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd (The Pamphilos) [2002] 2 Lloyd’s Rep 681. 597 Wye Shipping Co Ltd v Compagnie du Chemin de Fer Paris-Orleans [1922] 1 KB 617; Attica Sea Carriers Corp v Ferrostaal Poseidon Bulk Reederei GmbH [1976] 1 Lloyd’s Rep 250 (CA) (this case is known, but not reported, as The Puerto Buitrago). 598 See [14.130]. 599 Chellew Navigation Co Ltd v AR Appelquist Kolimport AG (1933) 38 Com Cas 218 at 226 per Acton J. 600 Limerick SS Co Ltd v Stott & Co Ltd [1921] 2 KB 613 at 621 per Scrutton LJ; Wye Shipping Co Ltd v Compagnie du Chemin de Fer Paris-Orleans [1922] 1 KB 617 at 621 per McCardie J. 601 Somelas Corporation v A/S Gerrards Rederi (The Pantelis A Lemos) [1980] 2 Lloyd’s Rep 102.

[14.520]

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the costs of cleaning the ship’s tanks and rendering them gas-free, which operations would have to be undertaken if the ship were to be repaired at the time of redelivery. It was held that the charterer was not liable to pay these ancillary costs of repair. Robert Goff J said that it is “common knowledge” that shipowners do not necessarily carry out repairs immediately after delivery, and that the charterer’s liability for repair is assessed simply for the purpose of dealing with the final hire account.602

Bunkers on redelivery603 [14.520]

In most charterparties, the shipowner is obliged to take over and pay for all fuel and diesel oil remaining in the ship’s bunkers on redelivery, just as the charterer is obliged to take over and pay for bunkers on delivery.604 If the charterparty does not specify a price at which the bunkers must be bought, the shipowner is obliged to pay the market price at the redelivery port.605 Thus, if the market price on redelivery is greater than the price paid by the charterer when the bunkers were bought during the charter period, the charterer makes a windfall profit which can be retained.606 However, this does not entitle the charterer to buy bunkers unnecessarily if it happens to come across bunkers available at a cheap rate. In Mammoth Bulk Carriers Ltd v Holland Bulk Transport BV (The Captain Diamantis),607 the charterer ordered the master of the chartered ship to bunker at Kobe, even though the ship already had sufficient fuel to take it to Kakagawa, the redelivery port. The reason for the order was that the market price for bunkers at Kobe was considerably less than the price which the shipowner had agreed to pay on redelivery in Kakagawa. The shipowner instructed the master not to obey the charterer’s order. It was held that the charterer was not entitled to take on bunkers solely in order to make a trading profit; as the fuel was not required for the charterer’s service, the master was entitled to refuse the bunkering order. Clause 15 of the Shelltime 4 form provides that the charterer shall pay for bunkers on board at the time of delivery and the shipowner shall pay for bunkers on board at the time of redelivery “at the price actually paid, on a first-in-first-out basis”. In Eitzen Bulk AS v TTMI SARL (The Bonnie 602 Somelas Corporation v A/S Gerrards Rederi (The Pantelis A Lemos) [1980] 2 Lloyd’s Rep 102 at 105. 603 For an explanation of the term “bunkers”, see [14.200]. 604 See, eg, NYPE 2015, cl 9(a)(i) (Appendix 7). For a consideration of bunkers on delivery, see also [14.200]. The NYPE 2015 form provides two other alternatives (cl 9(a)(ii), (iii)), but cl 9(a)(i) is the default if no selection is made. 605 Harmony Shipping Co SA v Saudi-Europe Line Ltd (The Good Helmsman) [1981] 1 Lloyd’s Rep 377 at 419 per Ackner LJ. 606 Harmony Shipping Co SA v Saudi-Europe Line Ltd (The Good Helmsman) [1981] 1 Lloyd’s Rep 377 at 419 per Ackner LJ. 607 Mammoth Bulk Carriers Ltd v Holland Bulk Transport BV (The Captain Diamantis) [1978] 1 Lloyd’s Rep 346 (CA).

568

Shipping Law

[14.530]

Smithwick),608 the chartered ship was redelivered to the shipowner simultaneously with redelivery to the charterer under a sub-charter. The sub-charterparty required the charterer to pay the sub-charterer an agreed price of $625 per MT for bunkers on redelivery. The charterer argued that this was the price that should be paid by the shipowner on redelivery under the head charterparty because it was the “price actually paid” for the bunkers. There was evidence that the sub-charterer had bought bunkers for the ship at much lower prices (US$283 per MT and US$270 per MT) during the life of the sub-charter, and the shipowner argued that these were the prices it had to pay the charterer upon redelivery, because they were the “price[s] actually paid” for the bunkers. Eder J accepted the shipowner’s argument, holding that the “price actually paid” meant the price paid when the bunkers were bought. The addition of the words “on a first-in-first-out basis” linked the price actually paid to the physical movement of fuel in and out of the ship. Thus, the charterer was required to pay the sub-charterer $625 per MT upon redelivery under the sub-charter, but it received only US$283 per MT and US$270 per MT from the shipowner for the same bunkers upon simultaneous redelivery under the head charter. To add insult to the injury caused to the charterer by this decision, the sub-charterer was, in fact, the shipowner itself, which had chartered its own ship back from the charterer on a time charterparty basis, and which therefore made a handsome profit on the bunkers, by reason of the fact that the head charter and the sub-charter were not on “back to back” terms. The charterer is often given the right to deduct from the last payment of hire the estimated value of the bunkers on redelivery.609 Provided the charterer makes the deduction reasonably and in good faith, the shipowner is not entitled to withdraw the ship for under-payment of hire.610 When the final account is prepared after redelivery, adjustments are made to take into account the difference between the estimated amount of bunkers on redelivery and the actual amount taken over by the shipowner.

LIENS Introduction [14.530]

In voyage charterparties, the shipowner is usually given a lien over cargo to secure the payment of freight, deadfreight and demurrage.611 Lien clauses in time charterparties are more complex, because the cargoes 608 Eitzen Bulk AS v TTMI SARL (The Bonnie Smithwick) [2012] 1 Lloyd’s Rep 407. 609 See, eg, Tropwood AG of Zug v Jade Enterprises Ltd (The Tropwind) [1982] 1 Lloyd’s Rep 232 (CA). The right to deduct arises by agreement of the shipowner, not unilaterally by way of set-off: see Aurora Borealis Compania Armadora SA v Marine Midland Bank NA (The Maistros) [1984] 1 Lloyd’s Rep 646 at 651 per Staughton J. 610 See, eg, Santiren Shipping Ltd v Unimarine SA (The Chrysovolandou Dyo) [1981] 1 Lloyd’s Rep 159. 611 See [13.570].

[14.550]

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carried during the charter period do not usually belong to the time charterer itself. Any lien that the shipowner might have over the cargo is thus a lien over the property of a third party, which may be difficult to exercise as a means of securing payment from the charterer. As a result, lien clauses in time charterparties usually also give the shipowner a lien over sub-freights.612 Thus, for example, if the time charterer defaults in payment of hire, the shipowner can exercise a lien over the freights payable to the charterer by sub-charterers or holders of bills of lading or parties to other sea-carriage documents. The difficulties of exercising a lien over cargo belonging to a third party are avoided in the Baltime form, which restricts the shipowner to “a lien upon all cargoes and sub-freights belonging to the time charterers”.613 In contrast, however, cl 18 of the widely used New York Produce Exchange 1946 form gives the shipowner “a lien upon all cargoes and all sub-freights”, without specifying that they must belong to the time charterer. The operation of this clause has given rise to considerable litigation, so its effect is considered in detail here.

Clause 18 of NYPE 1946 [14.540]

The full text of the relevant part of cl 18 is as follows:

The owners shall have a lien upon all cargoes and all sub-freights for any amounts due under this charter, including general average contributions, and the charterers shall have a lien on the ship for all monies paid in advance and not earned.

The clause thus creates three liens,which are of different kinds.614 The shipowner’s lien upon cargo

[14.550]

Clause 18 does not give the shipowner the right to exercise a lien over cargo which does not belong to the charterer.615 If the shipowner purports to exercise a lien over cargo belonging to a third party who is a stranger to the charterparty contract, that third party is entitled to

612 See, eg, cl 18 of the New York Produce Exchange 1946 form and cl 23 NYPE 2015 form (Appendix 7), which are considered in detail in [14.540]. 613 See cl 17 of the Baltime form: https://www.bimco.org/~/media/Chartering/ Document_Samples/Time_Charter_Parties/Sample_Copy_ BALTIME1939Revised2001.ashx. See, eg, International Bulk Carriers (Beirut) SARL v Evlogia Shipping Co SA (The Mihalios Xilas) [1978] 2 Lloyd’s Rep 186. 614 See Ellerman Lines Ltd v Lancaster Maritime Co Ltd (The Lancaster) [1980] 2 Lloyd’s Rep 497 at 500 per Robert Goff J. 615 Turner v Haji Goolam Mahomed Azam [1904] AC 826 (PC); Steelwood Carriers Inc of Monrovia, Liberia v Evimeria Compania Naviera SA of Panama (The Agios Giorgis) [1976] 2 Lloyd’s Rep 192 at 204 per Mocatta J. The position is the same in the United States: see Finora Co Inc v Amitie Shipping Ltd 54 F 3d 209 (4th Cir 1995) at 213; Chembulk Trading LLC v Chemex Ltd 393 F 3d 550 (5th Cir 2004) at 554.

570

Shipping Law

[14.550]

possession from the shipowner.616 However, it is not clear whether such a purported exercise of the shipowner’s lien is valid so far as the charterer is concerned, or whether it constitutes a breach of the charterparty contract. In Steelwood Carriers Inc of Monrovia, Liberia v Evimeria Compania Naviera SA of Panama (The Agios Giorgis),617 Mocatta J held that an attempt by the shipowner to exercise a lien over cargo belonging to a third party was not authorised, even as against the charterer, by cl 18. As a result, the shipowner’s actions were a breach of its obligation under cl 8 of the New York Produce Exchange 1946 form618 to prosecute the voyages with the utmost despatch. A year later, in Aegnoussiotis Shipping Corporation of Monrovia v A/S Kristian Jebsens Rederi of Bergen (The Aegnoussiotis),619 Donaldson J said that cl 18 means what it says, namely, that the charterer agrees that the shipowner shall have a lien on all cargoes. This imposes on the charterer an obligation to secure from any third party cargo-owner a lien in favour of the shipowner. Failure to do this is a breach of contract by the charterer. In these circumstances, the shipowner’s lien is ineffective against the cargo-owner, but effective against the charterer. The charterer must continue to pay hire during the period when the shipowner refuses to discharge the third party’s cargo in purported exercise of its lien, because to allow the charterer to withhold hire during this period would be to allow it to assert and take advantage of its own breach of contract. There has been no authoritative resolution of these contradictory decisions. In Care Shipping Corp v Latin American Shipping Corp,620 Lloyd J said, obiter, that he preferred Donaldson J’s view in The Aegnoussiotis to that of Mocatta J in The Agios Giorgis, but his own decision has subsequently been doubted on other grounds.621 If Donaldson J’s view in The Aegnoussiotis is correct, the time charterer is obliged to secure from the cargo-owner a lien in favour of the shipowner. In practice, this is often done by incorporating the terms of the time charterparty, including the lien clause, into the bill of lading (or other carriage document) for the cargo in question. Thus, the shipowner’s lien 616 Turner v Haji Goolam Mahomed Azam [1904] AC 826 (PC); Aegnoussiotis Shipping Corporation of Monrovia v A/S Kristian Jebsens Rederi of Bergen (The Aegnoussiotis) [1977] 1 Lloyd’s Rep 268 at 276 per Donaldson J. 617 Steelwood Carriers Inc of Monrovia, Liberia v Evimeria Compania Naviera SA of Panama (The Agios Giorgis) [1976] 2 Lloyd’s Rep 192. 618 NYPE 2015, cl 8(a) (Appendix 7) is in similar terms. 619 Aegnoussiotis Shipping Corporation of Monrovia v A/S Kristian Jebsens Rederi of Bergen (The Aegnoussiotis) [1977] 1 Lloyd’s Rep 268. 620 Care Shipping Corp v Latin American Shipping Corp [1983] QB 1005 at 1013, citing Paul v Birch (1743) 2 Atk 621; 26 ER 771. (Reported sub nom as The Cebu [1983] 1 Lloyd’s Rep 302.) 621 In Care Shipping Corp v Itex Itagrani Export SA [1993] 1 QB 1 (reported sub nom as The Cebu (No 2) [1990] 1 Lloyd’s Rep 316), Steyn J declined to follow Lloyd J’s decision in The Cebu in relation to the shipowner’s lien over sub-freights under cl 18.

[14.560]

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becomes effective against any third party who is party to the carriage contract. This was the case in Santiren Shipping Ltd v Unimarine SA (The Chrysovolandou Dyo),622 where Mocatta J distinguished his own decision in The Agios Giorgis, and held that the shipowner’s lien could be exercised over the property of a third party cargo-owner because the terms of the charterparty had been incorporated into the bill of lading. The shipowner’s lien can be exercised simply by delaying delivery of the cargo.623 In Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express),624 Carruthers J held that cl 18 of NYPE 1946 can have no effect after termination of the contract by withdrawal of the chartered ship. Thus, if the shipowner has withdrawn the chartered ship from the service of the charterer, it cannot subsequently purport to exercise its cl 18 lien over any cargo. Also, Carruthers J held that the shipowner is only entitled to exercise its lien for “amounts due under [the] charter”. If no amounts are owing at the time of the shipowner’s purported exercise of the lien, that exercise is ineffective. The shipowner’s lien over sub-freights

[14.560]

In the context of a time charterparty, sub-freights are payments of freight made to the time charterer by the shipper under a bill of lading, or by a sub-charterer under a voyage sub-charterparty. The cl 18 lien over sub-freights gives the shipowner the right to intercept such payments, by demanding that the shipper or sub-charterer should pay freight to it, rather than to the time charterer. Although the shipowner can intercept sub-freights before they have been paid, it cannot trace them into the pockets of the time charterer once they have been paid.625

There was formerly some doubt about whether the expression “subfreights” in cl 18 includes payments of hire under a time sub-charterparty. In Care Shipping Corp v Latin American Shipping Corp626 (known as The Cebu), Lloyd J held that a shipowner could exercise a cl 18 lien over payments of hire under a time sub-charterparty, even though these were 622 Santiren Shipping Ltd v Unimarine SA (The Chrysovolandou Dyo) [1981] 1 Lloyd’s Rep 161. 623 See, eg, Santiren Shipping Ltd v Unimarine SA (The Chrysovolandou Dyo) [1981] 1 Lloyd’s Rep 161. 624 Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express) (1990) 19 NSWLR 285. 625 Tagart, Beaton & Co v James Fisher & Sons [1903] 1 KB 391 at 395 per Lord Alverstone CJ, quoted with approval in Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express) (1990) 19 NSWLR 285 at 300 per Carruthers J; Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 241 [95] per Keane CJ, Rares and Besanko JJ. See also Tradigrain SA v King Diamond Shipping SA (The Spiros C) [2000] 2 Lloyd’s Rep 319 at 323 per Rix LJ; Cornish Shipping Ltd v International Nederlanden Bank NV 53 F 3d 499 (2d Cir 1995). 626 Care Shipping Corp v Latin American Shipping Corp [1983] QB 1005. (Reported sub nom as The Cebu [1983] 1 Lloyd’s Rep 302.)

572

Shipping Law

[14.560]

not sub-freights stricto sensu. In Care Shipping Corp v Itex Itagrani Export SA627 (known as The Cebu (No 2)), a dispute involving the same series of time charterparties on the same ship, Steyn J declined to follow the decision of Lloyd J in The Cebu, and held that the cl 18 lien could not be exercised over payments of hire under a time sub-charterparty. Steyn J held that the word “sub-freights” had been used in cl 18 deliberately, to indicate payments of freight under a bill of lading or voyage subcharterparty, which were the only payments over which the lien could be exercised. In Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express),628 Carruthers J of the Supreme Court of New South Wales cited the decision of Lloyd J in The Cebu with approval, stating that, in principle, the phrase “sub-freights” in cl 18 is capable of embracing hire payable under a time sub-charterparty, although The Lakatoi Express was decided before Steyn J decided The Cebu (No 2).629 In Daebo Shipping Co Ltd v Ship Go Star,630 a unanimous Full Court of the Federal Court of Australia pointed out (obiter) that some, but not all, academic writers prefer the view of Steyn J in The Cebu (No 2) to that of Lloyd J in The Cebu, but the court went on to say that in the United States, where the NYPE forms were written, the expression “sub-freights” includes payments of hire under a time sub-charter as well as freight payable under voyage sub-charteparties and bills of lading.631 Despite this implied support for The Cebu rather than The Cebu (No 2), the Full Court said that it was not necessary to resolve the conflict between the two cases, because even on the broader view of the expression “sub-freight”, it did not include a payment due for bunkers on delivery under a time sub-charterparty, which was the payment in question on the facts of the case.632 The United States text quoted in Daebo Shipping has never cited any authority to support its assertion that “Subfreights are the hire under a subcharter as well as bill of lading freight payable by shippers and

627 Care Shipping Corp v Itex Itagrani Export SA627 (known as The Cebu (No 2)) [1993] 1 QB 1. (Reported sub nom as The Cebu (No 2) [1990] 1 Lloyd’s Rep 316.) 628 Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express) (1990) 19 NSWLR 285. 629 Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express) (1990) 19 NSWLR 285 at 300. 630 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 241 [95] per Keane CJ, Rares and Besanko JJ 631 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 243 [102]-[103], citing T Schoenbaum, Admiralty and Maritime Law (3rd ed, Thomson West, Eagan, 2001), Vol 2 at § 11-17. The quoted sentence now appears in T Schoenbaum, Admiralty and Maritime Law (5th ed, Thomson West, Eagan, 2011), Vol 2 at § 11-17. 632 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 244 [105]. For a fuller description of the dispute in Daebo Shipping, see [14.200].

[14.560]

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consignee”.633 There is no United States case law that directly supports that proposition.634 The only United States cases that have squarely addressed the issue of whether a shipowner has a lien over sub-hire have done so in relation to charterparties where cl 18 was amended so that it gave the shipowner a lien “upon all cargoes, and all subfreights and subhires”.635 Because the disagreement between The Cebu and The Cebu (No 2) has remained unresolved for over 25 years, it can only be concluded either that the issue seldom arises in practice, or that it is usually avoided quite simply, by including the two words “and subhires” in cl 18, as was done in the United States cases. This is, in effect, an argument for the view taken by Steyn J in The Cebu (No 2): commercial parties are quite capable of distinguishing between freight and hire if they choose to do so, so they should not be taken to have meant “hire” when they wrote simply “freight”. It should be noted that the word “subhires” is expressly included in the lien clause in the 2015 version of the NYPE form.636 Similarly, it is also not clear whether the expression “sub-freights” in cl 18 includes sub-sub-freights, meaning payments of freight under a voyage sub-sub-charterparty. In The Cebu, Lloyd J stated that the owner’s lien could be exercised over sub-sub-freights,637 and held that it could be exercised over payments of sub-sub-hire under a time sub-subcharterparty. Steyn J did not specifically address the question of sub-sub-freights in The Cebu (No 2), and it cannot be assumed that he would disagree with the former part of Lloyd J’s decision simply because he declined to follow the latter part. To this extent, then, The Cebu and The Cebu (No 2) may be reconciled by saying that the cl 18 lien extends to sub-sub-freights under a voyage sub-sub-charterparty, but not sub-subhire under a time sub-sub-charterparty. If the sub-freights that the shipowner seeks to divert are bill of lading freights, it may not be necessary for the shipowner to invoke cl 18 (or its equivalent in another charterparty) at all. If the shipowner is the carrier 633 The sentence quoted by the Daebo Shipping court now appears in T Schoenbaum, Admiralty and Maritime Law (5th ed, Thomson West, Eagan, 2011), Vol 2 at § 11-17, n 25. It has appeared in every edition of the book, but it has never been accompanied by citation to supporting authority. 634 Cornish Shipping Ltd v International Nederlanden Bank NV 53 F 3d 499 (2d Cir 1995) at 500 n 1 contains an obiter statement that “subfreights” includes hire under a sub-timecharterparty, but the court merely cites T Schoenbaum, Admiralty and Maritime Law (2nd ed, West Publishing Co, St Paul, 1994), Vol 2 at § 11-17 as authority, completing the circle. The actual issue to be decided in the Cornish case was the quite different question whether the lien could be asserted over payments already made to a charterer: see first paragraph and associated footnotes of [14.560]. The passage in Cornish was quoted, again obiter, in Chembulk Trading LLC v Chemex Ltd 393 F 3d 550 (5th Cir 2004) at 554. 635 Saint John Marine Co v US 92 F 3d 39 (2d Cir 1996); Ravenna Tankers Pte SRL v Omni Ships Pte Ltd 2014 AMC 1190 (ED La 2013). 636 NYPE 205, cl 23, line 412 (Appendix 7). 637 Care Shipping Corp v Latin American Shipping Corp [1983] QB 1005 at 1012-1013, 1017-1018, citing Jebsen v A Cargo of Hemp 228 F 143 (D Mass 1915).

574

Shipping Law

[14.560]

under the bill of lading, so that there is a direct contractual relationship between the shipowner and the bill of lading holder, then the bill of lading freight is actually due directly to the shipowner. The shipowner and the time charterer may have agreed that the time charterer may receive and keep the freight in return for payment of time charter hire, but that does not alter the fact that the bill of lading contract is between the shipowner and the holder of the bill of lading. That situation arose in The Bulk Chile,638 where the “Bulk Chile” was chartered by its owner DBHH to CSAV on a time charter basis, then sub-chartered by CSAV to Korea Line Corporation (KSC) on a time charter basis, then sub-subchartered by KSC to Fayette for a trip time charter. Bills of lading were issued upon loading of the cargo to be carried under the KSC-Fayette trip time charter, and it was common ground that they were owner’s bills, in the sense that they evidenced a contract between the shipper of the cargo and DBHH. After KSC failed to make any payments of hire, DBHH sent notices to Fayette and the shipper of the cargo, requiring them to pay the bill of lading freight directly to it (DBHH), rather than to KSC. The English Court of Appeal held that the bill of lading contract between DBHH and the shipper was not a contract by which DBHH promised to carry the shipper’s goods if the shipper paid freight to a third party, KSC, but rather should be understood as a contract by which the nominated recipient of the freight, KSC, was to be regarded as the shipowner’s agent in the making of the bill of lading contract. On that basis, there was no reason why DBHH should be precluded from cancelling its agent’s (KSL’s) authority to act on its behalf in receiving the freight, before such payment had been made, and requiring the freight to be paid directly to DBHH. Thus, the shipowner DBHH was entitled to divert the bill of lading freight to itself in its capacity as the carrier under the bill of lading, rather than by exercise of its lien over sub-freights. A similar analysis was suggested (obiter) by a unanimous Full Court of the Federal Court of Australia in Daebo Shipping Co Ltd v Ship Go Star639 before The Bulk Chile was decided. The Full Court stated that when bills of lading issued for carriage on a time-chartered ship are contracts of carriage with the shipowner, rather than the charterer, the shipowner’s “lien on sub-freight” is not a lien at all, because under a shipowner’s bill of lading the freight money is due to the shipowner, rather than the charterer.640 According to that analysis, the cl 18 lien (or its equivalent in other time charterparties) is needed only when the sub-freight is due to the charterer, rather than the shipowner.641 That situation will occur only 638 Dry Bulk Handy Holding Inc v Fayette International Holdings Ltd (The Bulk Chile) [2013] 2 Lloyd’s Rep 38 (CA). 639 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220. 640 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 242-243 [100] per Keane CJ, Rares and Besanko JJ. 641 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 242-243 [100] per Keane CJ, Rares and Besanko JJ.

[14.560]

14 Time Charterparties

575

when the sub-freight is due under a bill of lading issued in the charterer’s own name, or when it arises under a voyage sub-charterparty entered into by the time charterer. As sub-freights are choses in action, not chattels, the shipowner’s lien upon sub-freights cannot be possessory.642 Thus, strictly speaking, it is not a lien at all.643 Some cases suggested that the “lien” takes effect as an equitable assignment of the sub-freight,644 others suggested that it creates an equitable charge on the chose in action,645 but the idea that the cl 18 lien is equitable in nature was demolished by the Privy Council in Agnew v Commissioner of Inland Revenue.646 The characterisation preferred in Agnew was adopted (obiter) by a unanimous Full Court of the Federal Court of Australia in Daebo Shipping Co Ltd v Ship Go Star,647 where it was said that the lien is not the creation of common law or equity but originates in maritime law, based upon the shipowner’s lien on cargo. The lien cannot be equitable, because it is incapable of binding third parties. Thus, the correct legal analysis of the cl 18 “lien” is that it is a personal right, sui generis, to intercept freight before it is paid.648 In The Lakatoi Express,649 Carruthers J held that cl 18 can have no effect after termination of the contract by withdrawal of the chartered ship. Thus, if the shipowner has withdrawn the chartered ship from the service of the charterer, it cannot subsequently purport to exercise its cl 18 lien 642 See Ellerman Lines Ltd v Lancaster Maritime Co Ltd (The Lancaster) [1980] 2 Lloyd’s Rep 497 at 501 per Robert Goff J; Re Welsh Irish Ferries Ltd [1986] Ch 471 at 477 per Nourse J (reported sub nom as The Ugland Trailer [1985] 2 Lloyd’s Rep 372). 643 Re Welsh Irish Ferries Ltd [1986] Ch 471 at 478 per Nourse J (The Ugland Trailer); Tradigrain SA v King Diamond Shipping SA (The Spiros C) [2000] 2 Lloyd’s Rep 319 at 323 per Rix LJ. 644 Care Shipping Corp v Latin American Shipping Corp [1983] QB 1005 (The Cebu); G & N Angelakis Shipping Co SA v Compagnie National Algerienne de Navigation (The Attika Hope) [1988] 1 Lloyd’s Rep 439; Care Shipping Corp v Itex Itagrani Export SA [1993] 1 QB 1 (The Cebu (No 2)); Tradigrain SA v King Diamond Shipping SA (The Spiros C) [2000] 2 Lloyd’s Rep 319 at 323 per Rix LJ. 645 Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1979] AC 757 at 784 per Lord Russell of Killowen; Re Welsh Irish Ferries Ltd [1986] Ch 471 (The Ugland Trailer); Annangel Glory Compania Naviera SA v M Golodetz Ltd (The Annangel Glory) [1988] 1 Lloyd’s Rep 45 (noted in [1988] LMCLQ 145). 646 Agnew v Commissioner of Inland Revenue [2001] 2 AC 710 at 727-728 [41] (PC). Compare M Woolley, “The Ship Owner’s Lien on Sub-freights and Personal Property Securities Regimes” (2014) 28 Australian & New Zealand Maritime Law Journal 69, arguing that the lien is equitable and should be registered under the Personal Property Securities Act 2009 (Cth). 647 Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 241-242 [98]-[99] per Keane CJ, Rares and Besanko JJ. 648 F Oditah, “The Juridical Nature of a Lien on Sub-freights” [1989] LMCLQ 191; Agnew v Commissioner of Inland Revenue [2001] 2 AC 710 at 727-728 [41] (PC); Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220 at 241-242 [98] per Keane CJ, Rares and Besanko JJ. 649 Mutual Export Corp v Asia Australian Express Ltd (The Lakatoi Express) (1990) 19 NSWLR 285.

576

Shipping Law

[14.570]

over any sub-freights. Also, Carruthers J held that the shipowner is only entitled to exercise its lien for “amounts due under [the] charter”. If no amounts are owing at the time of the shipowner’s purported exercise of the lien, that exercise is ineffective. The charterer’s lien over the ship

[14.570]

The time charterer’s lien over the ship is not possessory, because charterers other than demise charterers do not take possession of the ship. Although it has been suggested that the charterer’s lien under cl 18 is an equitable one,650 the better view is that it is merely a contractual right to refuse redelivery.651 Thus, like the shipowner’s lien over sub-freights, it is not, strictly speaking, a lien at all.652 It does not take priority over subsequent mortgages, and cannot be traced into insurance money if the ship is lost.653

650 Citibank NA v Hobbs Savill & Co Ltd (The Panglobal Friendship) [1978] 1 Lloyd’s Rep 368 (CA). The point was taken in interlocutory proceedings, so there was little argument and no conclusive decision. 651 Ellerman Lines Ltd v Lancaster Maritime Co Ltd (The Lancaster) [1980] 2 Lloyd’s Rep 497 at 501 per Robert Goff J. 652 See French Marine v Compagnie Napolitaine D’Eclairage et de Chauffage par le Gaz [1921] 2 AC 494 at 516 per Lord Sumner. 653 Ellerman Lines Ltd v Lancaster Maritime Co Ltd (The Lancaster) [1980] 2 Lloyd’s Rep 497 at 501 per Robert Goff J citing Rayner v Preston (1881) 18 Ch D 1.

15

Collisions and Liability for Damage [15.10] INTRODUCTION ........................................................................................... 578 [15.20] VICARIOUS LIABILITY ................................................................................ 579

[15.20] Introduction ...................................................................................... 579 [15.30] Pilots ................................................................................................... 580 [15.40] Tugs .................................................................................................... 582 [15.50] DUTY OF CARE ............................................................................................. 583 [15.60] BREACH OF DUTY ....................................................................................... 584

[15.60] Introduction ...................................................................................... 584 [15.70] The Collision Regulations .............................................................. 585 [15.120] CAUSATION ................................................................................................. 599 [15.130] DIVISION OF LOSS ..................................................................................... 600

[15.130] Apportionment ............................................................................... 600 [15.150] Causation and “last opportunity” .............................................. 603 [15.160] Contribution and indemnity between wrongdoers ................. 605 [15.170] SCOPE OF LIABILITY: TYPES OF LOSS FOR WHICH DAMAGES ARE RECOVERABLE .................................................................................. 606 [15.180] PURELY ECONOMIC LOSS ....................................................................... 610

[15.180] General ............................................................................................. 610 [15.190] Charterers ........................................................................................ 611 [15.200] Receivers of cargo .......................................................................... 615 [15.210] LIMITATION OF TIME ............................................................................... 617

[15.210] Commonwealth .............................................................................. 617 [15.220] New South Wales, Tasmania, and the Northern Territory ..... 618 [15.260] Queensland, South Australia, Victoria, and Western Australia .......................................................................................... 621

578

Shipping Law

[15.10]

INTRODUCTION [15.10]

To a large extent, the law of collisions at sea is simply the ordinary law of the tort of negligence applied in a maritime context. In terms of legal principle, little distinguishes a collision between ships from a collision between motor cars. The usual issues of duty of care, breach of duty, causation and scope of liability are raised just as they would be on land. However, the application of those general principles in the maritime context is modified by legislation that takes into account the special circumstances prevailing at sea. For example, the common law concerning the standard of reasonable care is augmented by the provisions of the International Regulations for Preventing Collisions at Sea 1972, which have been adopted by legislation. Similarly, special legislative provisions relating to division of loss supplement, and to some extent replace, those of the general law of contributory negligence.

Collisions occurring within the territorial sea of Australia are governed by Commonwealth law and the law of the adjacent State in a manner described in more detail in [15.70].1 This is so even if the ships involved in the collision are foreign-flagged.2 It is less clear what law governs collisions on the high seas, but there is authority to suggest that it should be the law of the forum (lex fori), namely the law of the State or Territory where the action is brought. In Blunden v Commonwealth, Gleeson CJ, Gummow, Hayne and Heydon JJ posed the following rhetorical question:3 [W]here, as in this case, the relevant events giving rise to a “maritime tort” occurred on the high seas, one asks what body of law other than that in force in the forum has any better claim to be regarded by the forum as the body of law dispositive of the action litigated in the forum?

The relevant law of the forum is the common law of Australia, including what is sometimes called “the general principles of maritime law or the maritime law of the world”, which is Australian municipal law but which takes into account the international nature of events occurring on the high seas.4 Similarly, in CMA CGM SA v Ship “Chou Shan”,5 a Full Court of the Federal Court of Australia said, obiter, that collisions on the high seas have been historically governed by the general maritime law as administered in the forum, rather than strictly by the law of any particular country.6 Thus, the Full Court questioned whether Australian law should be applied to a high seas collision “if Australian domestic law 1 See [15.70]. 2 Mackinnon v Iberia Shipping Co Ltd 1955 SLT 49; Union Shipping (NZ) Ltd v Morgan (2002) 54 NSWLR 690. 3 Blunden v Commonwealth (2003) 218 CLR 330 at 340 [23] per Gleeson CJ, Gummow, Hayne and Heydon JJ. 4 Blunden v Commonwealth (2003) 218 CLR 330 at 337 [13]. 5 CMA CGM SA v Ship “Chou Shan” (2014) 224 FCR 384. 6 CMA CGM SA v Ship “Chou Shan” (2014) 224 FCR 384 at 405 [92].

[15.20]

15 Collisions and Liability for Damage

579

could be seen to have a feature peculiar to Australia and not reflective of the general maritime law or not conformable with general principles affecting international activity”.7 Liability in the tort of negligence for damage arising as a result of a collision depends upon proof of breach by the defendant of a duty of reasonable care owed to the plaintiff. The damage suffered by the plaintiff must have been caused in fact by the defendant’s negligence, and must be within the appropriate scope of liability for that negligent act or omission, as defined by the relevant State or Territory Civil Liability Act. The plaintiff in a collision case generally prefers to proceed against the owner of the ship that caused the damage, because the owner is insured against liability.8 Because the shipowner is usually the preferred defendant, it is appropriate to begin with a consideration of the shipowner’s vicarious liability for negligence in navigation.

VICARIOUS LIABILITY Introduction [15.20]

The master and crew of a ship are personally liable for any damage suffered as a result of a collision caused by their negligent navigation.9 However, the shipowner is vicariously liable for the negligence of the master and crew.10 The shipowner’s vicarious liability arises not from the fact of ownership but from the fact that it is the employer of the negligent crew.11 It follows that if the owner is not the employer of the master and crew, it is not vicariously liable for their negligence. Thus, if the ship is chartered and the charterer is the employer of the master and crew, it is the charterer who is vicariously liable for its employees’ negligence.12 Whether the person vicariously liable in personam is the owner or a demise charterer, the ship itself remains liable in rem for damage caused in the collision, even if there is a change of ownership.13 The vicarious liability of an employer is confined to those acts or omissions of the employees done in the course of their employment. Few, 7 CMA CGM SA v Ship “Chou Shan” (2014) 224 FCR 384 at 407 [99]. 8 Seventy-five per cent of liability for collision damage is covered by the ship’s hull insurer and 25% by the P & I Club in which it is entered: see [17.220]. 9 See Lawson v Dumlin (1850) 9 CB 54; 137 ER 811; Adler v Dickson [1955] 1 QB 158. 10 Simpson v Thomson (1877) 3 App Cas 279 at 293. 11 Simpson v Thomson (1877) 3 App Cas 279 at 293. 12 Baumwoll Manufactur von Carl Scheibler v Furness [1893] AC 8. This situation usually arises only in the case of a demise charterparty: see [11.70] for an explanation of the test for determining whether a charterparty is a demise charterparty. 13 Admiralty Act 1988 (Cth), s 15.

580

Shipping Law

[15.30]

if any, of the acts of the master and crew at sea will not be in the course of employment, and so, in general, the shipowner is vicariously liable for their negligence.14 It is not only as employer that a shipowner is vicariously liable for the negligence of others. It may also be vicariously liable for the negligence of pilots and of tugs towing the ship.

Pilots [15.30]

Each Australian jurisdiction has legislation making pilots, pilotage providers and port authorities immune from liability for damage caused by negligence.15 Liability for pilot negligence is borne by the owner of the ship under pilotage. The common law rule was that the owner of the ship under pilotage was vicariously liable for the negligence of a pilot if the pilotage were voluntary,16 but not if it were compulsory.17 This distinction was removed by legislation in 1958.18 The relevant provision now appears in the Navigation Act 2012 (Cth), s 326(3), which provides:19 The liability of the master or owner of a vessel in relation to loss or damage caused by the vessel or by a fault in the navigation of the vessel is not affected only because pilotage is compulsory under a law of the Commonwealth, a State or a Territory.

This section also has the effect of making the shipowner the only person vicariously liable for the negligence of a compulsory pilot; the pilotage authority that employs the pilot is not vicariously liable. That is the effect of the decision of the High Court of Australia in Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd,20 which is reinforced by State and 14 A rare example of a master found to be “on a frolic of his own” is The Druid (1842) 1 W Rob 391; 166 ER 619. 15 Navigation Act 2012 (Cth), s 326(4) (if pilot “in good faith”); Marine Safety Act 1998 (NSW), s 80; Ports Management Act (NT), s 92; Transport Operations (Marine Safety) Act 1994 (Qld), s 101(1); Harbors and Navigation Act 1993 (SA), s 36(2); Marine and Safety Authority Act 1997 (Tas), s 35; Marine Safety Act 2010 (Vic), s 257(3) (if pilot “in good faith”); Port Authorities Act 1999 (WA), s 100(2). 16 The Eden (1846) 2 W Rob 442; 166 ER 822. 17 Hubble & Co v Thomas (1890) 24 SALR 102; Townsville Harbour Board v Scottish Shire Line Ltd (1914) 18 CLR 306. See also The China 74 US 53; 2002 AMC 1504 (1868). 18 Navigation Act 1912 (Cth), s 410B(2) was introduced by the Navigation Act 1958 (Cth), s 195. It was modelled on the Pilotage Act 1913 (UK), s 15(1). 19 There are equivalent provisions in State and Territory law: see Marine Safety Act 1998 (NSW), s 79; Ports Management Act (NT), s 91; Transport Operations (Marine Safety) Act 1994 (Qld), s 102(3); Harbors and Navigation Act 1993 (SA), s 36(1), (3); Marine Safety Act 2010 (Vic), s 257(1), (2); Port Authorities Act 1999 (WA), s 99. 20 Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626. See also Esso Petroleum Co Ltd v Hall Russell & Co Ltd (The Esso Bernicia) [1989] AC 643 (sub nom The Esso Bernicia [1989] 1 Lloyd’s Rep 8); Oceangas (Gibraltar) Ltd v Port of London Authority (The Cavendish) [1993] 2 Lloyd’s Rep 292.

[15.30]

15 Collisions and Liability for Damage

581

Territory legislation.21 In that case, the Oceanic Crest Shipping Co was the owner of a ship that had caused damage to a dock as the result of the negligence of a compulsory pilot. Having been held vicariously liable for the losses suffered as a result of that negligence by virtue of the Navigation Act 1912 (Cth), s 410B(2) (the predecessor of the Navigation Act 2012 (Cth), s 326(3)), Oceanic Crest sought a contribution or complete indemnity from the pilot’s employer, Pilbara Harbour Services. The High Court held that although on ordinary principles Pilbara Harbour Services would also be vicariously liable as employer of the pilot, in this case it was not, because of the special nature of pilotage. The pilot was taken to be executing an independent duty, which the law cast upon him individually, and so his employer was not vicariously liable for his negligence.22 Further, it was said that the consequence of s 410B(2) casting the liability directly on the shipowner was that it excluded any liability of the pilot’s employer.23 As Pilbara Harbour Services was not liable for its pilot’s negligence, it was not liable to pay any contribution or indemnity to Oceanic Crest. Although the position with respect to vicarious liability for pilots is now clear as a result of the Oceanic Crest decision and State and Territory legislation,24 its rationale seems somewhat questionable. As Gibbs CJ said in the case itself:25 It might be thought at first sight that it is difficult to reconcile the fact that the shipowner is liable for the negligence of the pilot with the proposition that the pilot while navigating the ship is executing an independent duty that the law casts upon him.

Gibbs CJ’s reconciliation of these two propositions was that the pilot’s powers are not derived from the general employer, but that they are derived to some extent from the authority given by the shipowner. Whether or not this justification resolves the anomaly, it is clear that the majority of the court saw the result of the case as following necessarily from the combined effect of s 410B (now s 326) and the decision of the Privy Council in Fowles v Eastern and Australian Steamship Co Ltd,26 which 21 There are equivalent provisions in State and Territory law: see Marine Safety Act 1998 (NSW), s 79; Ports Management Act (NT), s 91; Transport Operations (Marine Safety) Act 1994 (Qld), s 102(3); Harbors and Navigation Act 1993 (SA), s 36(1), (3); Marine Safety Act 2010 (Vic), s 257(1), (2); Port Authorities Act 1999 (WA), s 99. 22 Following Fowles v Eastern and Australian Steamship Co Ltd [1916] 2 AC 556. 23 Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 at 641 per Gibbs CJ. 24 There are equivalent provisions in State and Territory law: see Marine Safety Act 1998 (NSW), s 79; Ports Management Act (NT), s 91; Transport Operations (Marine Safety) Act 1994 (Qld), s 102(3); Harbors and Navigation Act 1993 (SA), s 36(1), (3); Marine Safety Act 2010 (Vic), s 257(1), (2); Port Authorities Act 1999 (WA), s 99. 25 Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 at 641-642. 26 Fowles v Eastern and Australian Steamship Co Ltd [1916] 2 AC 556, also followed in Esso Petroleum Co Ltd v Hall Russell & Co Ltd [1989] AC 643 (sub nom The Esso Bernicia [1989] 1 Lloyd’s Rep 8); Oceangas (Gibraltar) Ltd v Port of London Authority (The Cavendish) [1993] 2 Lloyd’s Rep 292.

582

Shipping Law

[15.40]

first established the proposition that a pilotage authority is not vicariously liable for the negligence of its pilots. The High Court declined to impugn the authority of Fowles, even though its rationale seems somewhat at odds with that of s 410B.

Tugs [15.40]

The shipowner’s vicarious liability for the negligence of tugs towing its ship turns upon the locus of control of the towing operation. There is no general rule that the tow is vicariously liable for damage negligently caused by the tug.27 The master of a ship under tow must accept responsibility for the way in which the towing operation is conducted28 but it does not follow that the tow is vicariously responsible for actions by the tug over which it has no control. Vicarious liability of the tow for the tug is a question of fact, not law.29

If overall control of the towing operation is not with the ship under tow, the shipowner is not vicariously liable for the negligence of the tugs, as they are employed as independent contractors.30 In such circumstances, the tug is independent of the ship, and it is the tugowner who is vicariously liable for any negligence on the part of those navigating the tug.31 If, in such a case, there is negligence aboard both tug and tow, the shipowner is vicariously liable for the negligence of the ship under tow,32 and the tugowner is vicariously liable for the negligence of the tug.33 In practice, towage contracts commonly provide for the shipowner to indemnify the tugowner in the event of the latter being held vicariously liable for the negligence of the tug.34 Because a contract of this kind only regulates the rights of the parties to it, it does not thereby make the tow vicariously liable for the tug so far as third parties are concerned.35 In any event, in PNSL Bhd v Dalrymple Marine Services Pty Ltd (The Koumala),36 the Queensland Court of Appeal held that indemnity clauses of this kind are invalid under Australian law. The Trade Practices Act 1974 (Cth), s 74(1) 27 Elbe Shipping SA v Giant Marine Shipping SA [2008] FCA 1135 at [40] per Dowsett J. 28 Elbe Shipping SA v Giant Marine Shipping SA [2008] FCA 1135 at [34]-[37] per Dowsett J, citing The Niobe (1888) 13 PD 55. 29 Elbe Shipping SA v Giant Marine Shipping SA [2008] FCA 1135 at [37]-[39] per Dowsett J, citing The Quickstep (1890) 15 PD 196 at 200 per Butt J; Owners of the SS Devonshire v Owners of the Barge Leslie [1912] AC 634 at 648 per Lord Ashbourne. 30 Union Steamship Co v Owners of the Aracan (1874) LR 6 PC 127. 31 See The WH (No 1) and The Knight Errant [1911] AC 30. 32 See The Brig Byron (1879) 2 NSWR (Adm) 1. 33 See Brown v Owner of Lighter No 6 (1910) 10 SR (NSW) 905; The Panther and the Ericbank [1957] P 143. 34 See UK Standard Conditions for Towage and Other Services (Revised 1986), cll 3, 4. 35 Elbe Shipping SA v Giant Marine Shipping SA [2008] FCA 1135. 36 PNSL Bhd v Dalrymple Marine Services Pty Ltd (The Koumala) [2008] 1 Qd R 511.

[15.50]

15 Collisions and Liability for Damage

583

(now the Australian Consumer Law, s 6037) implied into every contract for the supply of services to a consumer38 a term that the services will be rendered with due care and skill. Section 68(1) of the Act (now the Australian Consumer Law, s 64) provided that any term of a contract purporting to exclude, restrict or modify any of the provisions implied by the Act was void. In The Koumala,39 the Court of Appeal held that those provisions of what is now the Australian Consumer Law operated to render void the exclusion and indemnity provisions of the UK Standard Towage Conditions on which the tugowner relied. Where the overall control of the towage operation is with the ship under tow, the shipowner is usually vicariously liable for the negligence of the tug, whatever the contractual relationship between ship and tug. The vicarious liability arises from the fact of control rather than the nature of the contractual relations between ship and tug. Although certain of the earlier cases contain dicta to the effect that the tug is always “the servant of the tow”,40 the better view is that the question of control is one of fact to be decided in the light of all the circumstances of the case.41

DUTY OF CARE [15.50]

In determining liability in negligence for the consequences of a collision, it is necessary as a first step to establish the existence of a duty of care owed by the defendant ship to the plaintiff ship. Where the plaintiff shipowner brings an action to recover losses sustained as a result of physical damage to the ship itself, the existence of a duty of care on the defendant’s part is established according to the usual principles that are applied in all negligence cases, although it is becoming increasingly difficult to identify what those principles are. After rejecting several other approaches to determining the existence and extent of a

37 For the Australian Consumer Law, see Competition and Consumer Act 2010 (Cth), Sch 2. 38 For the purposes of the Act “consumer” is defined broadly to include anyone paying a fee of less than A$40,000 for a service: Competition and Consumer Act 2010 (Cth), s 4B(1)(b), (2)(a). 39 PNSL Bhd v Dalrymple Marine Services Pty Ltd (The Koumala) [2008] 1 Qd R 511. 40 See Hubble v Thomas (1890) 24 SALR 102 at 103 per Way CJ. 41 Elbe Shipping SA v Giant Marine Shipping SA [2008] FCA 1135; Union Steamship Co v The Owners of the Aracan (1874) LR 6 PC 127.

584

Shipping Law

[15.60]

duty of care, the High Court of Australia seems to have settled on an approach that focuses on “salient features”,42 including, in particular, the vulnerability of the plaintiff.43 Notwithstanding the continuing difficulty in stating a general test for the existence of a duty of care, collisions between ships raise none of the issues that have made the search for a general duty test so intractably difficult, as it is fairly well settled that, save in exceptional circumstances, every ship owes a duty to other ships and cargoes to avoid causing physical damage to the latter.44 Most actions arising out of collisions at sea are brought by plaintiffs complaining of physical damage suffered by ship or cargo. However, there may be actions seeking recovery of losses of a different kind, and in these cases the question of the existence of a duty of care is more troublesome. The nature of the shipping industry is such that every ship and every voyage has a web of contractual relationships spun around it. A collision involving the ship at the heart of this web may cause a chain of repercussions to be felt. In particular, damage to the ship may cause loss not only to the owner of the ship, but also to its charterers. Similarly, damage to cargo may cause loss to persons other than its current owners, such as those who have contracted to buy it. In both kinds of case, the physical damage to the ship or cargo causes economic loss to other parties. The question of whether those parties can recover damages from the defendant ship in an action in negligence is a vexed one, and one that raises complex issues concerning duty of care. However, although the issue of the recoverability of economic loss is considered in terms of duty of care, it will not be dealt with at this point. It is considered separately at [15.180]–[15.200].

BREACH OF DUTY Introduction [15.60]

There have been international maritime codes containing rules of good navigation from the very earliest days of international sea

42 The phrase “salient features” was first used by Stephen J in Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529 at 576. It was adopted in Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 597-598 [149] per Gummow and Hayne JJ; Waller v James (2006) 226 CLR 136 at 148 [34] per Kirby J; Harriton v Stephens (2006) 226 CLR 52 at 74, 76 [64], [72] per Kirby J; Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 371 [20], per French CJ and Gummow J; Barclay v Penberthy (2012) 246 CLR 258 at 320 [173] per Kiefel J. A long inclusive list of “salient features” was set out by Allsop P in Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649 at 676 [102]-[104]. 43 The plaintiff’s vulnerability was emphasised in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 530-531 [23]-[24] per Gleeson CJ, Gummow, Hayne and Heydon JJ. 44 The position is similar to that in collisions of motor vehicles: see Sutherland Shire Council Council v Heyman (1985) 157 CLR 424 at 441-442 per Gibbs CJ: “no trial judge need inquire for himself whether one motorist on the highway owes a duty to another”.

[15.70]

15 Collisions and Liability for Damage

585

travel.45 The need for such codes is obvious. If ships from different countries were to follow different “rules of the road” to avoid collisions, the result would be more, not fewer, collisions. The foundations of the modern international system of rules for the prevention of collisions were laid in the United Kingdom in the 19th century. In 1846, the United Kingdom enacted statutory rules, based on the Trinity House Rules for the avoidance of collisions. Later, the Merchant Shipping Act 1862 (UK) was enacted, containing a comprehensive statutory code, which was adopted first by France, and then subsequently by 33 other maritime countries.46 Successive, more elaborate, codes were agreed upon after international conferences of maritime nations. International agreement is now co-ordinated by the International Maritime Organization (IMO), which undertook47 a comprehensive revision of the international rules in 1972. The result was a Convention under which the contracting parties ratified the International Regulations for Preventing Collisions at Sea 1972 (usually referred to simply as “the Collision Regulations” or, indulging the maritime passion for acronyms and abbreviations, COLREGS), and undertook to give effect to them as part of their municipal law. Those are the Regulations currently in force. In most cases arising from collisions at sea, the question whether the defendant ship was in breach of the duty of care can be determined simply by considering whether it was in breach of the Collision Regulations. Failure to observe the internationally agreed “rules of the road” is strong, and often sufficient, evidence of negligence on the defendant’s part. However, breach of the Regulations is not conclusive proof of negligence, and, conversely, observance of their provisions does not necessarily constitute reasonable care for the purposes of the law of negligence.48 Thus, the following examination of the issue of breach of duty in collision cases covers both the Collision Regulations and the general principles of liability in negligence.

The Collision Regulations Which version of the Regulations applies: Commonwealth, State or Northern Territory?

[15.70]

Australia acceded to the Convention on the International Regulations for Preventing Collisions at Sea 1972 (the Collision Regulations) on 29 February 1980. Thus, there arose the constitutional question of 45 See D Owen, “The Origins and Development of Marine Collision Law” (1977) 51 Tulane Law Review 759. Owen cites the erroneously named “Rhodian Sea Law” of AD 600–800 as the very first example of such a code. 46 D Owen, “The Origins and Development of Marine Collision Law” (1977) 51 Tulane Law Review 759 at 784. 47 In its former guise as the Inter-governmental Maritime Consultative Organization (IMCO). 48 Collision Regulations, r 2. See also Podmore v Aquatours Pty Ltd [1984] 1 NSWLR 111.

586

Shipping Law

[15.70]

whether the Collision Regulations 1972 should be adopted as part of the law of the Commonwealth, or of the States, or of both. In New South Wales v Commonwealth (The Seas and Submerged Lands Case),49 the High Court of Australia held that legislation giving effect to an international convention by vesting the territorial sea around Australia in the Crown in right of the Commonwealth was a constitutionally valid exercise of the “external affairs power” conferred on the Commonwealth by s 51(xxix) of the Commonwealth Constitution, and further held that the States had no sovereign rights in respect of the territorial sea. Adoption of the Collision Regulations in statutory form also required legislation to give effect to an international convention in relation to the territorial sea around Australia. The decision in The Seas and Submerged Lands Case thus indicated that only the Commonwealth had constitutional authority to make such legislation relating to the territorial sea. In the event, this effect of The Seas and Submerged Lands Case was circumvented by a scheme of interlocking Commonwealth and State legislation. The Commonwealth, the States and the Northern Territory have all legislated to give effect to the Collision Regulations, which also appear in s 16 of the Uniform Shipping Laws Code (the USL Code), adopted by the conference of Commonwealth, State and Territory Ministers known as the Australian Transport Advisory Council. The Commonwealth has given effect to the Collision Regulations by the mechanism of Marine Orders promulgated by the Australian Maritime Safety Authority (AMSA). Section 340(1)(b) of the Navigation Act 2012 (Cth) provides that regulations may be made to give effect to the Prevention of Collisions Convention (Convention on the International Regulations for Preventing Collisions at Sea 1972), and s 342(1) provides that AMSA may make Marine Orders with respect to any matter for which provision may be made under the regulations. A Marine Order giving effect to the Collision Regulations was in force under the Navigation Act 1912 (Cth), and it was given transitional effect by the Marine Order 4 (Transitional Modifications) 2013 (Cth) when the 2012 Act repealed and replaced the 1912 Act.50 The measures to be observed for the prevention of collisions are those in Marine Order 30 (Prevention of Collisions) 2009 (Cth).51 The States and the Northern Territory have also legislated to give effect to the Collision Regulations. In each State other than Victoria, the legislation applies to all vessels in State waters, whatever their nationality, and 49 New South Wales v Commonwealth (The Seas and Submerged Lands Case) (1975) 135 CLR 337. 50 Navigation Act 2012 (Cth), s 343(2) provides that Marine Orders may provide for specified orders that were in force under the Navigation Act 1912 (Cth) immediately before its repeal to have effect for purposes of the Navigation Act 2012 (Cth). 51 Marine Order 30 is available on the AMSA website: https://www.amsa.gov.au/vessels/ standards-regulations/marine-orders/documents/MO30-modcomp-130729Z.pdf.

[15.70]

15 Collisions and Liability for Damage

587

whether they are on overseas, interstate, or intrastate voyages.52 The legislation in Victoria applies only to “domestic commercial vessels” and “regulated Australian vessels” in State waters.53 The legislation in the Northern Territory applies only to recreational vessels in Northern Territory waters.54 Some jurisdictions purport to give effect to their legislation beyond State waters. New South Wales and Queensland apply their legislation to vessels “connected with the State”, wherever they may be found; a vessel is “connected with the State” for these purposes if it has a home port in that State, or is owned (or, in Queensland, chartered) by a person or entity resident in the State.55 The South Australian legislation is expressed to apply outside South Australian waters “to the full extent of the extraterritorial power of the Parliament”.56 The Tasmanian legislation applies in general terms to all seagoing vessels, without geographical limitation, so the only limitation on its operation is the limitation implicit in the scope of the State’s legislative power.57 The way in which these Commonwealth, State and Territory provisions interlock is set out in the Navigation Act 2012 (Cth), ss 12 and 175. Section 175 appears to cover the field by providing that Pt 3 of Ch 6 of the Act, which deals with the prevention of collisions, applies to Australian vessels on the high seas58 or in Australia’s Exclusive Economic Zone (EEZ),59 and to any vessels, including foreign vessels, within the territorial sea of Australia, waters of the sea on the landward side of the territorial sea, and inland waters.60 However, the blanket operation of the Commonwealth Act is qualified by s 12, which provides that the provisions dealing with the Prevention of Collisions Convention (in relation to an area other than the high seas) do not apply to a domestic 52 Marine Safety Act 1998 (NSW), s 8(1)(a); Transport Operations (Marine Safety) Act 1994 (Qld), s 11(1)(c), (d), (e); Harbors and Navigation Act 1993 (SA), ss 4, 6; Western Australian Marine Act 1982 (WA), s 79(1)(a); Marine and Safety Authority Act 1997 (Tas) and Marine and Safety Regulations 2007 (Tas) apply in their terms to all seagoing vessels, without geographical limitation. 53 Marine Safety Act 2010 (Vic), s 96(1). “Domestic commercial vessel” has the same meaning as in the Marine Safety (Domestic Commercial Vessel) National Law, which is Sch 1 to the Marine Safety (Domestic Commercial Vessel) National Law Act 2012 (Cth). “Regulated Australian vessel” has the same meaning as in the Navigation Act 2012 (Cth), s 15. 54 Marine Act (NT), ss 108, 110. 55 Marine Safety Act 1998 (NSW), s 8(1)(c); Transport Operations (Marine Safety) Act 1994 (Qld), s 11(1)(a). The definition of a ship “connected with the State” is in Transport Operations (Marine Safety) Act 1994 (Qld), s 6. 56 Harbors and Navigation Act 1993 (SA), s 6(2). 57 Marine and Safety Authority Act 1997 (Tas); Marine and Safety Regulations 2007 (Tas). 58 “Regulated Australian vessels”, “domestic commercial vessels” and recreational vessels having Australian nationality: Navigation Act 2012 (Cth), s 175(1)(a) – (c). 59 Navigation Act 2012 (Cth), s 175(2)(f). 60 Navigation Act 2012 (Cth), s 57(2)(e), (g).

588

Shipping Law

[15.70]

commercial vessel or an Australian recreational vessel if the Marine Safety (Domestic Commercial Vessel) National Law applies the Convention to that vessel, or if that National Law does not apply, the law of a State or Northern Territory gives effect to the Convention in relation to that vessel in that area. Thus, in summary, the State and Northern Territory provisions apply only to domestic commercial vessels or Australian recreational vessels in areas other than the high seas; the Commonwealth provisions apply to all other vessels in all other areas. The expression “the high seas” is not defined in the Commonwealth Act, but it is presumably intended to refer to seas beyond the territorial sea of Australia, which extends a distance of 12 nautical miles from the coastal baseline.61 State and Northern Territory waters extend only three nautical miles from the coastal baseline.62 Thus, in the band of sea between three and 12 nautical miles, the Commonwealth Act applies except to the extent that the State legislation purports to apply beyond State waters, as is the case in New South Wales, Queensland, South Australia, and Tasmania.63 States have only limited competence to make their legislation extend extra-territorially beyond three nautical miles.64 Because legislation to give effect to the Collision Regulations is not in any of the categories of case where the Commonwealth has expressly granted extra-territorial legislative competence to the States,65 State legislation can only take effect beyond three nautical miles if the usual requirements for extra-territorial operation of State legislation are met. Thus, there must be an essential connection between the enacting State and the extra-territorial person, things or events upon which the law operates.66

61 The territorial sea of Australia was declared to extend to 12 nautical miles as from 20 November 1990 by the Governor-General pursuant to Seas and Submerged Lands Act 1973 (Cth), ss 7, 14: see Gov Gaz S297. 62 Coastal Waters (State Powers) Act 1980 (Cth), s 4(2); Coastal Waters (Northern Territory Powers) Act 1980 (Cth), s 4(2). 63 New South Wales v Commonwealth (The Seas and Submerged Lands Case) (1975) 135 CLR 337. Navigation Act 2012 (Cth), s 343(2) provides that Marine Orders may provide for specified orders that were in force under the Navigation Act 1912 (Cth) immediately before its repeal to have effect for purposes of the Navigation Act 2012 (Cth). Marine Order 30 is available on the AMSA website: https://www.amsa.gov.au/vessels/ standards-regulations/marine-orders/documents/MO30-modcomp-130729Z.pdf. 64 Coastal Waters (State Powers) Act 1980 (Cth), ss 4(2), 5. Under s 5(b), the States may only legislate extra-territorially in relation to waters beyond the outer limits of the three-mile coastal waters limit in relation to subterranean mining, “ports, harbours or other shipping facilities”, and fisheries. 65 Coastal Waters (State Powers) Act 1980 (Cth), ss 4(2), 5. Under s 5(b), the States may only legislate extra-territorially in relation to waters beyond the outer limits of the three-mile coastal waters limit in relation to subterranean mining, “ports, harbours or other shipping facilities”, and fisheries. 66 Port MacDonnell Professional Fishermen’s Association Inc v South Australia (1989) 168 CLR 340.

[15.80]

15 Collisions and Liability for Damage

589

The provisions of the Collision Regulations

[15.80]

The Collision Regulations are divided into five Parts, A to E. Part A is headed “General”, and contains three rules. Rule 1 deals with the application of the Regulations: r 1(a) states that the Regulations apply to all vessels upon the high seas; r 1(b) provides that the Regulations shall not interfere with the operation of special rules in “roadsteads, harbours, rivers, lakes or inland waterways connected with the high seas and navigable by sea-going vessels” if those special rules have been made by the appropriate authority. Thus, although the rule states that as far as possible these special rules should conform as closely as possible to the international rules, in cases of conflict, the local rules prevail.67

Rule 2 provides that the rules do not relieve those in charge of any ship from observing the precautions required by “the ordinary practice of seamen”, and also recognises that a departure from the rules may be necessary in certain special circumstances, including immediate danger. As was noted in [15.60], the effect of this is to ensure that the rules are not conclusive of the question of good seamanship, and thus of the question of reasonable care. However, the rules are intended to apply in all circumstances, including special circumstances such as very heavy weather, although due regard should be had to the circumstances when determining whether there has been a breach.68 Rule 3 contains general definitions. Part B of the Regulations contains the Steering and Sailing Rules, and is divided into three sections. It is this Part that is of most significance in determining whether or not a defendant in an action in negligence arising out of a collision has been in breach of the common law duty of reasonable care. Section I of Part B is entitled “Conduct of Vessels in any Conditions of Visibility”. It contains seven rules, numbered 4 to 10. Rule 4 simply states that the rules in Section I apply in any condition of visibility. Rule 5 imposes an obligation to maintain a proper lookout “so as to make a full appraisal of the situation and of the risk of collision”. Rule 6 imposes an obligation to proceed at a safe speed so as to be able to “take proper and effective action to avoid collision”, and includes a number of factors to be taken into account in determining what constitutes a safe speed in various situations, such as the state of visibility, wind, sea, and current, the traffic density, and so on. Rule 7 imposes an obligation to use all available means, including radar if available, to determine whether a risk of collision exists, and r 8 is concerned with action to avoid collision, which must be “positive, made in ample time and with due regard to the observance of good seamanship”. Rule 9 provides “rules of the road” in narrow channels: vessels are obliged to keep as near to the starboard side 67 See, eg, The Stella Antares [1978] 1 Lloyd’s Rep 41; The Sanwa and Choyang Star [1998] 1 Lloyd’s Rep 283. 68 The Navios Enterprise and Puritan [1998] 2 Lloyd’s Rep 16 (Collision Regulations held to apply to collision between ships during very heavy weather caused by Hurricane Andrew).

590

Shipping Law

[15.80]

as is safe and practicable. Rule 10 provides for conduct in traffic separation schemes adopted by the IMO. It imposes an obligation to follow the traffic flow indicated for that scheme. Although r 10 is part of the Regulations of each of the States, the Commonwealth and the Northern Territory, there are only five traffic separation schemes currently in force in Australian waters. There is one south of Wilson Promontory in Bass Strait, another further offshore in Bass Strait, and three leading to the ports of Port Jackson (Sydney Harbour), Darwin and Botany Bay. Section II of Pt B is entitled “Conduct of Vessels in Sight of One Another”. Rule 11 simply states that the section applies to vessels in sight of one another. Rule 12 provides “rules of the road” for sailing vessels. Rules 13 and 15 provide for overtaking and crossing situations respectively; each imposes an obligation on one ship in such a situation to give way, and the other to “stand on” (that is, to continue its course). Under r 13, the overtaking vessel must keep out of the way; under r 15 the vessel with the other on its own starboard side must keep out of the way. Rule 16 states the duty of the give-way vessel, which is to “take early and substantial action to keep well clear”, and r 17 states the duty of the stand-on vessel, which is to “keep her course and speed” unless and until it is apparent that the give-way vessel is not taking the correct action, in which case the stand-on vessel can alter its course to avoid collision. Rule 14 deals with a head-on situation, and imposes the same obligation on both vessels, namely to alter course to starboard so that each passes to port of the other. Rule 18 provides for relative responsibilities between certain types of vessel, and is expressed to be subject to rr 9, 10 and 13. Thus, r 18 only applies outside narrow channels, traffic separation schemes or overtaking situations. It provides which of two types of vessels shall be the give-way vessel in other situations. Thus, for example, r 18(a) provides that a power-driven vessel underway shall keep out of the way of (1) a vessel not under command, (2) a vessel restricted in her ability to manoeuvre, (3) a vessel engaged in fishing, and (4) a sailing vessel. Section III of Pt B contains only one rule, r 19, which deals with the conduct of vessels in restricted visibility. Rule 19(b) requires every vessel in restricted visibility to proceed at a safe speed adapted to the prevailing circumstances and conditions of restricted visibility. Part C of the Regulations prescribes the lights that must be shown by vessels between sunset and sunrise, and the shapes that must be shown between sunrise and sunset. These lights and shapes are designed to ensure that other vessels are aware of the nature of the vessel in question: for example, whether or not it is moving, whether or not it is towing another vessel, and so on. Part C contains rr 20 – 31. Part D of the Regulations is entitled “Sound and Light Signals”. Rule 32 defines the terms “whistle”, “prolonged blast” and “short blast”. Rule 33 prescribes the proper equipment for the making of sound signals. Rule 34

[15.90]

15 Collisions and Liability for Damage

591

contains signals designed to indicate what manoeuvres a ship is undertaking, and is linked to the earlier rules which indicate the proper manoeuvres to make in certain circumstances. Thus, for example, when overtaking in a narrow channel in sight of the other vessel according to r 9(e)(i), the overtaking vessel must give the signals contained in r 34(c)(i): two prolonged blasts followed by one short blast signifying “I intend to overtake you on your starboard side”, or two prolonged blasts followed by two short blasts signifying “I intend to overtake you on your port side”. Rule 35 provides for sound signals in restricted visibility, r 36 for signals to attract attention, and r 37 for distress signals. The final Part of the Regulations is Pt E, which provides for exemptions. Vessels which complied with the 1960 version of the International Regulations for Preventing Collisions at Sea, and which were built before the 1972 Regulations came into operation are given certain exemptions from compliance with the 1972 Regulations by r 38. Some exemptions are permanent, such as, for example, that given by r 38(c) from the repositioning of lights as a result of conversion from Imperial to metric units, whereas others are limited in time, such as the exemption in r 38(a) which provides that a vessel to which the rule applies shall only be exempt from installing lights to the specifications in r 22 until four years after the entry into force of the 1972 Regulations. There are four Annexes to the regulations, which provide further technical details about the lights and shapes required by Pt C, details as to their positioning, and further details about distress signals and signals to be displayed by fishing vessels. Penalties for breach of the Collision Regulations

[15.90]

The Commonwealth, States and Northern Territory have all provided for sanctions for breach of the Collision Regulations. The Navigation Act 2012 (Cth) makes it a fault-based offence for the owner or master to operate a vessel in contravention of the Collision Regulations.69 The maximum penalty is imprisonment for 10 years, or 600 penalty units or both, for both owner and master,70 although the fine for a corporate body may be increased to a maximum of 3,000 penalty units.71 69 Navigation Act 2012 (Cth), ss 177(1), 178(1). 70 Navigation Act 2012 (Cth), ss 177(2), 178(2). Crimes Act 1914 (Cth), s 4AA(1) provides that in a law of the Commonwealth, “penalty unit” means $180, subject to indexation every three years, beginning on 1 July 2018, by reference to a formula set out in s 4AA(3), based on the All Groups Consumer Price Index. Thus, at the time of writing (January 2016), the maximum fine of 600 penalty units is equivalent to $108,000, but that will increase with indexation. 71 Crimes Act 1914 (Cth), s 4B(3) provides that the maximum penalty for a corporate offender against any Commonwealth law may be five times as much as for a natural person. At the time of writing (January 2016), the maximum penalty for a body corporate is, thus, $540,000, which will increase every three years after 1 July 2018 by indexation.

592

Shipping Law

[15.90]

Contravention of the Collision Regulations also makes the owner and master liable to pay a civil penalty of 6,000 penalty units.72 The enforcement procedure for civil penalties does not require criminal prosecution. The Australian Maritime Safety Authority (AMSA) may apply to any court of competent authority for an order that a person who is alleged to have contravened a civil penalty provision must pay the Commonwealth a pecuniary penalty.73 If the court determines that the provision has been contravened, the court may then make a civil penalty order for such pecuniary penalty as it determines to be appropriate.74 Any pecuniary penalty so ordered is a debt payable to the Commonwealth, which may enforce the civil penalty as if it were an order made in civil proceedings.75 The debt arising from the order is taken to be a judgment debt.76 Importantly, the court must apply the rules of evidence and procedure for civil matters when hearing proceedings for a civil penalty order,77 which means that the standard of proof is the civil standard requiring proof on the balance of probabilities, not the criminal standard requiring proof beyond a reasonable doubt. Civil penalty proceedings cannot be brought against a person who has been convicted of a criminal offence for the same, or substantially the same, conduct that constitutes the contravention of the civil penalty provision,78 but criminal proceedings may be brought against a person for the same, or substantially the same, conduct that previously led to the making of a civil penalty order.79 Evidence given in civil penalty proceedings is not admissible in criminal proceedings in relation to the same, or substantially the same, conduct.80 In New South Wales, the penalty for contravention of the Collision Regulations by the “master or any other person concerned in the operation of a vessel” is a maximum fine of 50 penalty units.81 In Queensland, the maximum penalty is 500 penalty units or one year’s imprisonment.82 In Victoria, the maximum penalty is 120 penalty units.83 In South Australia, the maximum penalty for owner and operator is 72 Navigation Act 2012 (Cth), ss 177(3), 178(3). 73 Navigation Act 2012 (Cth), s 291(1). 74 Navigation Act 2012 (Cth), s 291(3). 75 Navigation Act 2012 (Cth), s 292(1), (2). 76 Navigation Act 2012 (Cth), s 292(2). 77 Navigation Act 2012 (Cth), s 296. 78 Navigation Act 2012 (Cth), s 297. Civil penalty proceedings are to be stayed if criminal proceedings are commenced in relation to the same conduct: see Navigation Act 2012 (Cth), s 298. 79 Navigation Act 2012 (Cth), s 299. 80 Navigation Act 2012 (Cth), s 300. 81 Marine Safety Act 1998 (NSW), s 10(3). One penalty unit is presently worth $110: Crimes (Sentencing Procedure) Act 1999 (NSW), s 17. Thus, the maximum fine is presently $5,500. 82 Transport Operations (Marine Safety) Act 1994 (Qld), s 211(2) (unless the person has a reasonable excuse). Penalties and Sentences Act 1991 (Qld), ss 5, 5A provide that the value

[15.100]

15 Collisions and Liability for Damage

593

$5,000.84 In Western Australia, the penalties are $10,000 (not expressed as a maximum) or two years’ imprisonment.85 In Tasmania, the maximum penalty is 50 penalty units.86 In the Northern Territory, the penalty is 100 penalty units (not expressed as a maximum).87 The effect of a breach of the Collision Regulations on civil liability

[15.100]

A breach of the Collision Regulations may be taken into account as evidence of negligence, even if it also gives rise to a penalty under the provisions considered at [15.90]. Breach of the regulations is not conclusive proof of negligence for the purposes of civil liability,88 nor does observance of their provisions necessarily constitute reasonable care for the purpose of negligence.89 However, in most circumstances, breach of the regulations constitutes breach of the common law duty of care. The regulations cover most situations, and the reasonable person would depart from their provisions only if it were reasonable in all the circumstances of the case to do so. That would usually be the case only where departure from the regulations were necessary to avoid immediate danger.90 In the light of the detailed provisions of the Collision Regulations, the court must first determine which of the rules apply to the case in hand. For example, in order to determine whether there has been a breach of r 9, which prescribes the proper procedure for navigating in narrow channels, the court must first determine whether the collision occurred in a “narrow of a penalty unit is to be indexed and declared by the Queensland Treasurer. At the time of writing (January 2016), the value of a penalty unit was $117.80, which means that the maximum fine is presently equivalent to $58,900, but that amount will increase in subsequent years by indexation. 83 Marine Safety Act 2010 (Vic), s 96(2). The combined effect of Interpretation of Legislation Act 1986 (Vic), s 38 and Sentencing Act 1991 (Vic), s 110 gives “penalty units” the value fixed by the Victorian Treasurer from time to time under the Monetary Units Act 2004 (Vic), s 5(3). The amount is indexed each financial year, and increases each year on 1 July. At the time of writing (January 2016), a penalty unit was worth $151.67, which means the maximum fine is presently equivalent to $18,200.40, but that amount will increase in subsequent years by indexation. 84 Harbors and Navigation Regulations 2009 (SA), reg 165(2). 85 Western Australian Marine Act 1982 (WA), s 79(2) (“a person” guilty of breach). 86 Marine and Safety (Collision) Regulations 2007 (Tas), reg 5. Penalty Units and Other Penalties Act 1987 (Tas), ss 4, 4A provide a formula for indexing the value of a penalty unit on 1 July each year by reference to the Consumer Price Index for Hobart. At the time of writing (January 2016), the value of a Tasmanian penalty unit was $154, which means the maximum fine is presently equivalent to $7,700, but that amount will increase in subsequent years by indexation. 87 Marine Act (NT), s 110. The Penalty Units Act (NT) indexes the dollar amount of a penalty unit every financial year in accordance with the Consumer Price Index. At the time of writing (January 2016), the value of a penalty unit was $153, which produces a penalty of 15,300, but that amount will increase in subsequent years by indexation. 88 Navigation Act 2012 (Cth), s 179. 89 Collision Regulations, r 2. See, eg, Podmore v Aquatours Pty Ltd [1984] 1 NSWLR 111. 90 Collision Regulations, r 2(b). See, eg, The Satya Padam [1985] 1 Lloyd’s Rep 338.

594

Shipping Law

[15.105]

channel” for the purposes of the rule.91 Similarly, as r 11 states that the rules in Section II of Pt B apply to vessels in sight of one another, the court must determine whether or not the ships in question were in fact in sight of one another.92 In some circumstances, the issue may be not whether a particular rule applies, but which of two rules governs the situation in question. Thus, in a case where one ship proceeded on the basis that r 13 applied, as it considered that it was being overtaken, whereas the other ship involved in the collision had proceeded on the basis that r 15 applied, as it considered that there was a crossing situation, the court had first to determine which rule properly applied to the facts.93 Decisions of fact and the use of assessors and computer simulations

[15.105]

Once it has been established which rule applies to the situation at hand, the question whether or not it has been breached by the defendant ship is one of fact in each particular case. This inquiry usually involves a detailed examination of the relative speeds of the two ships, the prevailing weather conditions, radar contact, visibility, course alterations, and so on. For example, although r 6 contains some factors to be taken into account in determining what is a “safe speed”, the question of whether or not a ship involved in a collision was travelling at a “safe speed” at the time ultimately involves an evaluation of all the circumstances of the case. Thus, an application of the Collision Regulations involves the making of an informed opinion on maritime matters in the light of a detailed review of the facts. The English courts of Admiralty jurisdiction regularly sit with assessors to assist them in the determination of such matters. The Navigation Act 1912 (Cth) authorised the use of “assessors of nautical experience” in proceedings for a penalty for breach of the Collision Regulations,94 but there is no equivalent provision in the Navigation Act 2012 (Cth). Although the Australian courts of Admiralty jurisdiction are entitled to appoint a Registrar to assist in the assessment of damages,95 the Admiralty Act 1988 (Cth) does not contain any 91 The harbour of Port Jackson is a “narrow channel” for the purposes of the regulations: Australasian Steam Navigation Co v Smith (1886) 7 LR (NSW) 207. Hobson’s Bay near the mouth of the River Yarra is not (or was not, in 1937): Union Steamship Co of New Zealand Ltd v The Ship Caradale (1937) 60 CLR 633. The question is an objective one based on the proportions of the channel itself, not the size of the ships that usually use it: Weeding v Gaven [1970] QWN 11. 92 Howard Smith Industries Ltd v Melbourne Harbor Trust Commissioners [1970] VR 406 applied the then equivalent of r 34 (which also applies only when vessels are in sight of one another) in a situation where one of the ships in question was temporarily out of sight of the other. 93 The Nowy Sacz [1977] 2 Lloyd’s Rep 91 (held that r 13 applied). 94 Navigation Act 1912 (Cth), s 258(5). See also Marine Act 1988 (Vic), s 58(5) (Magistrates’ Court must be assisted by assessors in hearing of prosecutions). 95 Admiralty Rules 1988 (Cth), r 65.

[15.105]

15 Collisions and Liability for Damage

595

provisions entitling courts exercising admiralty jurisdiction to appoint nautical assessors to assist in the determination of liability in civil cases concerning collisions. Judges in Queensland, South Australia, Tasmania, Victoria and Western Australia have general power to appoint assessors.96 Although there are no provisions specifically entitling Federal Court judges to appoint assessors in maritime cases,97 they may be able to do so in these five States by virtue of the State procedures being “picked up” by the Judiciary Act 1903 (Cth), s 79.98 In the absence of specific empowering provisions (as in New South Wales and the Northern Territory), it seems that judges have no inherent power to appoint assessors and may not do so.99 Where the court has power to sit with nautical assessors, it should regard expert evidence about seamanship as inadmissible at the instance of either party. That has long been the practice in England, where the nautical assessors are not only technical advisers but the providers of evidence about questions of nautical science and skill.100 Thus, the parties may choose to obtain expert nautical advice in preparing for trial, but the cost of doing so is not recoverable by the successful party.101 It is now commonly the practice in collision cases to use computer simulations based on data retrieved from each ship’s computerised navigational systems. Although such reconstructive simulations are very helpful, they are to be relied on by the court with caution. In The Pelopidas and TRSL Concord,102 David Steel J of the High Court of England and Wales said: [T]here is a danger of losing sight of the true value of reconstructions. Of course they enable the Court and the parties to have a broad bird’s eye view of the events leading up to collision. But their true probative value is that they may sometimes enable the Court to determine, not what may have happened, but what could not possibly have happened. It is important, where a plot is to 96 Uniform Civil Procedure Rules 1999 (Qld), r 500; Supreme Court Act 1935 (SA), s 71; Supreme Court Rules 2000 (Tas), r 560(1); Supreme Court Act 1986 (Vic), s 77; Rules of the Supreme Court 1971 (WA), O 35 r 1. 97 The only provision for the use of assessors by the Federal Court is in native title cases: see Federal Court of Australia Act 1976 (Cth), Pt VA. 98 On the operation of the Judiciary Act 1903 (Cth), s 79, see M Davies, A Bell and P Brereton, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, Chatswood, 2014), pp 116-120. 99 In Peters Slip Pty Ltd v Commonwealth [1979] Qd R 123, it was held that a trial judge was not entitled to appoint nautical assessors to assist in consideration of matters of civil liability. 100 The Pelopidas and TRSL Concord [1999] 2 Lloyd’s Rep 675 at 681 per David Steel J, quoting The Australia [1927] AC 145 at 152 per Lord Sumner. Compare, however, The Antares II and Victory [1996] 2 Lloyd’s Rep 482 at 492-493 per Geoffrey Brice QC (as Deputy Judge), saying that the inadmissibility rule is not absolute. 101 The Pelopidas and TRSL Concord [1999] 2 Lloyd’s Rep 675 at 681 per David Steel J, quoting The Australia [1927] AC 145 at 152 per Lord Sumner. 102 The Pelopidas and TRSL Concord [1999] 2 Lloyd’s Rep 675 at 682.

596

Shipping Law

[15.110]

be relied upon to demonstrate what the tracks of the vessels must have been, parties understand that the impact of the plotting is more effective if, despite assuming every margin of error in favour of a particular hypothesis, that outcome can be demonstrated to be highly improbable if not impossible.

Similarly, in The Global Mariner and Atlantic Crusader,103 Gross J, sitting with two Elder Brethren of Trinity House as nautical assessors, observed that the computer simulations in that case were “not necessarily precise” and should be approached “with considerable caution”. Breach of duty at common law

[15.110]

As indicated at [15.100], breach of the Collision Regulations does not necessarily constitute breach of the common law duty of care. There is no longer, as there once was, a statutory presumption of fault, whereby a ship in breach of the Collision Regulations is deemed to be at fault.104

A defendant is not in breach of the common law duty if he or she acted reasonably, notwithstanding his or her breach of the letter of the rules. The relationship between the common law criterion of the behaviour of the reasonable person and the standards imposed by the Collision Regulations was considered by the High Court of Australia in Baggermaatschappij Boz & Kalis BV v Australian Shipping Commission.105 In that case, the defendant dredge, the “WH Resolution”, stood stationary at the mouth of a “one-ship” channel into Newcastle Harbour in New South Wales, waiting for the plaintiff ship, the “Musgrave Range”, to come through the channel. The dredge’s bow was facing toward the channel, giving the impression to the “Musgrave Range” that the dredge was making way towards it, and into the channel. As a result, the “Musgrave Range” took evasive action, moving to starboard in accordance with r 9(a) of the Collision Regulations, which provides that ships in a narrow channel shall keep as near to the starboard side of the channel as is safe and practicable, and also r 14, which requires ships in a head-on situation to move to starboard so that they shall pass port to port. The “Musgrave Range” then ran aground on an uncharted shoal, damaging its bottom. Its owners brought an action against the Harbour Authority for failing to mark the limits of the navigable channel properly, and also 103 The Global Mariner and Atlantic Crusader [2005] 1 Lloyd’s Rep 699 at 718 [104]. 104 Navigation Act 2012 (Cth), s 179. Compare the position in the United States, where the Pennsylvania rule is that a breach of any statutory safety standard, including the Collision Regulations, is presumed to constitute fault unless the defendant can show that its statutory violation could not have been causally connected to the loss. See The Pennsylvania 86 US (19 Wall) 125; 22 L Ed 148 (1873); Ching Sheng Fishery Co Ltd v United States 124 F 3d 152 (2d Cir 1997). The Pennsylvania rule is a substantive rule, not a procedural one, so it is not applied by American courts to collisions governed by the substantive law of another country or by the Collisions Convention 1910: see Otal Investments Ltd v MV Clary 494 F 3d 40; 2007 AMC 1817 (2d Cir 2007). 105 Baggermaatschappij Boz & Kalis BV v Australian Shipping Commission (1980) 54 ALJR 382.

[15.110]

15 Collisions and Liability for Damage

597

against the dredge “WH Resolution” for negligently causing the “Musgrave Range” to take the evasive action which had sent it into the shoal. In the action against the dredge, it was held at first instance that those in charge of the dredge had been guilty of unseamanlike conduct in not turning the dredge around to show its stern to the “Musgrave Range”. Nevertheless, it was held that those in charge of the dredge had not been negligent. Although the dredge had not followed the usual procedure of the port, which was to retreat well clear of the mouth of the channel when another ship was in it, it had sent a radio message to the Harbour Authority making its unorthodox intentions clear, and had relied on the Harbour Authority to relay this message to the “Musgrave Range”. Although the Harbour Authority had a signal post whose sole function was to co-ordinate the passage of ships through the channel, the dredge’s message was not relayed by that post to the ship. In these circumstances, it was held at first instance that the dredge had taken reasonable precautions to avoid danger to the plaintiff ship, and so was not in breach of its duty of care. On appeal, both the Court of Appeal of New South Wales and the High Court of Australia based their decisions on, inter alia, the trial judge’s finding of fact that the “Musgrave Range” was the “stand on” vessel, and so had right of way.106 Both courts differed from the trial judge on the issue of what the reasonable person would have done in the circumstances of the case, but neither overruled his finding that unseamanlike behaviour and a failure to give way did not necessarily constitute negligence. The High Court found the dredge to be guilty of negligence because its only precaution against its unseamanlike actions being misunderstood by the “Musgrave Range” was its radio message to the Harbour Authority. It was held, following Sibley v Kais,107 that the dredge should reasonably have foreseen that the Harbour Authority might fail in its duty to relay the message, and so it ought to have taken further precautions to guard against this risk. Such a finding implicitly recognised that it was possible in theory for the dredge to have acted reasonably for the purposes of the law of negligence, despite its unseamanlike decision to stand with its bow facing toward the channel. It could have redeemed its unseamanlike behaviour by acting reasonably in other respects. 106 See Baggermaatschappij Boz & Kalis BV v Australian Shipping Commission (1980) 54 ALJR 382 at 384 per Barwick CJ. It seems that the “Musgrave Range” must have had right of way under the local harbour regulations, presumably because it was in the channel. None of the Collision Regulations that speaks of “stand on” and “give way” (rr 12 (sailing vessels), 13 (overtaking) and 15 (crossing)) is appropriate. However, the case is still of significance with respect to the duty of a “give way” vessel under the Collision Regulations. 107 Sibley v Kais (1967) 118 CLR 424. For the proposition that a reasonable person foresees the possibility of negligence on the part of others, see also McLean v Tedman (1984) 155 CLR 306 at 311 per Mason, Wilson, Brennan and Dawson JJ; Bus v Sydney County Council (1989) 167 CLR 78 at 90 per Mason CJ, Deane, Dawson and Toohey JJ; Nagle v Rottnest Island Authority (1993) 177 CLR 423.

598

Shipping Law

[15.110]

Thus, although such criteria as “seamanlike behaviour” and observance of navigation regulations (whether local or international) are of relevance to the common law issue of breach of duty, the overriding criterion remains at all times that of the reasonable person. Here, as elsewhere in the tort of negligence, the reasonable person is not expected to show the same degree of care and skill in emergencies as when there is time to reflect. To make a navigational mistake or to depart from the requirements of the regulations in a situation of danger created by another vessel does not necessarily constitute negligence.108 Although most actions for damage caused by a ship will arise from an actual collision, the Baggermaatschappij case indicates that contact between ships is not essential for a plaintiff ship to be able to recover in an action in negligence. The “Musgrave Range” was damaged as a result of the evasive action it took before coming into close quarters with the “WH Resolution”, but this did not preclude it from recovering part of its damages from the defendant dredge. Some collisions occur in circumstances where the Collision Regulations have no application. In these circumstances, the plaintiff must show that, according to ordinary common law principles, the damage occurred because of the negligence of the defendant. In England, there is some authority to the effect that there is a presumption of negligence when a moving ship collides with one that is moored or at anchor. The accident is presumed to be caused by negligence on the moving ship, unless its owners can discharge the burden of proving that the collision was not caused by the negligence of their master and crew.109 That is definitely the position in the United States.110 However, it is not the law in Australia,111 although it was previously.112 In Australia, the owner of the moving ship (the defendant) bears an evidentiary burden, but the persuasive onus remains on the stationary ship (the plaintiff) throughout.113 Thus, if there is no evidence except that which proves the fact of the collision between the moving vessel and the stationary vessel, it is an unexplained event to 108 Collision Regulations, r 2(b); The Bywell Castle (1879) 4 PD 219. Compare Antonow v Leane (1989) 53 SASR 60 (“agony of the moment” principle not applicable where crisis created by plaintiff’s own negligence). 109 The Merchant Prince [1892] P 179. See also The Zaglebie Dabrowskie (No 2) [1978] 1 Lloyd’s Rep 573. Compare The Pearl and Jahre Venture [2003] 2 Lloyd’s Rep 188 (collision between two ships at anchor; moving ship dragged anchor and struck stationary ship; responsibility apportioned 50/50). 110 The Louisiana 70 US 164; 18 L Ed 85 (1866); The Oregon 158 US 186; 15 S Ct 804 (1895). 111 Jockel v Jockel [1963] SR (NSW) 230; Nominal Defendant v Haslbauer (1967) 117 CLR 448; Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121. 112 See, eg, Brown v Owner of Lighter No 6 (1910) 10 SR (NSW) 905; Charles Nelson Co v Ship Keishin Maru (1921) 22 SR (NSW) 102. 113 Podmore v Aquatours Pty Ltd [1984] 1 NSWLR 111; Marben Pty Ltd v Alexander (1985) 39 SASR 150; Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121. The principle is reinforced by Civil Liability Act 2002 (NSW), ss 5D, 5E; Civil Liability Act 2003 (Qld), ss 11, 12; Civil Liability Act 1936 (SA), ss 34, 35; Civil Liability Act 2002 (Tas), ss 13, 14; Wrongs Act 1958 (Vic), ss 51, 52; Civil Liability Act 2002 (WA), ss 5C, 5D.

[15.120]

15 Collisions and Liability for Damage

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which the doctrine of res ipsa loquitur applies so as to raise a prima facie case of negligence on the part of the defendant.114 However, once the defendant discharges the evidentiary onus by adducing credible evidence to explain the cause of the collision, the collision is no longer unexplained, the doctrine of res ipsa loquitur has no operation, and the plaintiff must show affirmatively, on the balance of probabilities, that the collision was caused by the negligence of the defendant.115

CAUSATION [15.120]

The court must be satisfied that the defendant’s breach of duty caused the collision to occur in fact. In cases involving application of the Collision Regulations, this issue resolves into one of whether or not the departure from the regulations caused the collision. As noted at [15.110], there is no longer a statutory presumption of fault, whereby a ship in breach of the Collision Regulations is deemed to be at fault.116 The plaintiff must affirmatively establish a link between the defendant’s breach of the regulations and the collision. That is a question of fact in each particular case. The court must be satisfied that, on the balance of probabilities, the collision would not have occurred but for the defendant’s breach, meaning that, on the balance of probabilities, the harm that in fact occurred would not have occurred absent the negligence.117 That task should not incorporate policy or value judgments, which considerations fall within the “scope of liability” analysis considered at [15.170].118 Even where the court is satisfied that the collision would not have occurred but for the defendant’s breach of duty, it does not necessarily follow that that breach is the sole cause of the collision. Of the other potential contributing causes, the one that is most likely to affect the liability of the defendant ship is negligence on the part of the plaintiff ship. Where both ships have been at fault, the court employs a procedure 114 Podmore v Aquatours Pty Ltd [1984] 1 NSWLR 111 at 115 per Glass JA; Marben Pty Ltd v Alexander (1985) 39 SASR 150 at 152 per Bollen J. 115 Podmore v Aquatours Pty Ltd [1984] 1 NSWLR 111 at 115 per Glass JA; Marben Pty Ltd v Alexander (1985) 39 SASR 150 at 152 per Bollen J. 116 Navigation Act 2012 (Cth), s 179. 117 Wallace v Kam (2013) 250 CLR 375 at 387 [16] per French CJ, Crennan, Kiefel, Gageler and Keane JJ, referring to the factual causation inquiry required by Civil Liability Act 2002 (NSW), s 5D(1)(a); Civil Liability Act 2003 (Qld), s 11(1)(a); Civil Liability Act 1936 (SA), s 34(1)(a); Civil Liability Act 2002 (Tas), s 13(1)(a); Wrongs Act 1958 (Vic), s 51(1)(a); Civil Liability Act 2002 (WA), s 5C(1)(a). See, eg, The St Louis [1984] 2 Lloyd’s Rep 174 (ship breached regulations by failing to give a proper signal, but held that on the balance of probabilities, collision would have occurred even if proper signal had been given). 118 Wallace v Kam (2013) 250 CLR 375 at 387 [15] per French CJ, Crennan, Kiefel, Gageler and Keane JJ. Scope of liability is considered at [15.170]. The scope of liability provisions are: Civil Liability Act 2002 (NSW), s 5D(1)(b); Civil Liability Act 2003 (Qld), s 11(1)(b); Civil Liability Act 1936 (SA), s 34(1)(b); Civil Liability Act 2002 (Tas), s 13(1)(b); Wrongs Act 1958 (Vic), s 51(1)(b); Civil Liability Act 2002 (WA), s 5C(1)(b).

600

Shipping Law

[15.130]

for dividing the total loss caused by the collision between the ships in accordance with their relative responsibility for the collision.

DIVISION OF LOSS Apportionment Ships

[15.130]

Maritime collision cases were the first to be governed by a scheme of apportionment of damages in proportion to the degree of fault where both parties were guilty of negligence. Even under the common law, where the general rule was that if the plaintiff had been guilty of contributory negligence his or her claim failed entirely,119 the Admiralty rule was that if both ships involved in a collision were at fault, the loss was to be borne equally by both.120 This rule was as arbitrary as that which said that the plaintiff could not recover at all if guilty of negligence, as there was equal division of loss even when there were not equal degrees of fault. As a result, legislation introducing apportionment of damage in proportion to the degree of fault in maritime collisions was first introduced into English law in 1911,121 some 34 years before general contributory negligence legislation was enacted.122 The current Australian position with respect to division of loss maintains the principle of apportionment in proportion to the degree of fault of each ship. Rather unhelpfully, the division of loss regime is to be found in the Navigation Regulation 2013 (Cth), rather than in the Navigation Act 2012 (Cth).123 Since 30 May 2013, when the Navigation Regulation 2013 (Cth) was made, there is only one regime for division of loss in Australia, which is that contained in the Commonwealth Regulation. Previously, the division of loss regime in the Navigation Act 1912 (Cth) applied only to specified ships on specified voyages, leaving legislative space for the operation of State and Northern Territory law in relation to other collisions.124 The Navigation Regulation 2013 (Cth) now covers the field. 119 Butterfield v Forrester (1809) 11 East 60; 103 ER 926. 120 Wildman v Blakes (The Petersfield and the Judith Randolph) (1789) Burrell 332; 167 ER 596. 121 Maritime Conventions Act 1911 (UK). The relevant provisions now appear in the Merchant Shipping Act 1995 (UK), Pt VII. 122 The first common law jurisdiction to introduce general apportionment legislation was Ontario: see Statutes of Ontario 1924, cl 32. The United Kingdom did not introduce general legislation until 1945 (the Law Reform (Contributory Negligence) Act 1945 (UK)). The UK Act was used as the model for general apportionment legislation in the Australian jurisdictions (other than Western Australia, which has unique legislation). 123 Navigation Act 2012 (Cth), s 176(3) confers the power to make regulations with respect to division of loss. 124 See, eg, Balnaves v Smith [2011] 2 Qd R 17, holding (contrary to the argument advanced in the third edition of this book, at pp 428-429) that the Queensland division of loss legislation applied to a collision between a river craft and a trading vessel on an intrastate voyage.

[15.130]

15 Collisions and Liability for Damage

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Unlike the position in relation to the Collision Regulations, where there is a saving provision (s 12) in the Navigation Act 2012 (Cth) preserving the operation of State and Northern Territory law in relation to the implementation of the Prevention of Collisions Convention, there is no saving provision in relation to division of loss. Section 175 of the Navigation Act 2012 (Cth) provides that Ch 6, Pt 3 of the Act, which includes the provision (s 176) conferring the power to make regulations in respect of division of loss, applies to Australian vessels on the high seas or in Australia’s Exclusive Economic Zone (EEZ), and to any vessel within the territorial sea of Australia. Thus, in the absence of any saving provision for State and Northern Territory legislation in relation to division of loss, Commonwealth law now governs throughout Australia. Regulation 14(1) of the Navigation Regulation 2013 (Cth) provides that liability of concurrent wrongdoers for personal injury or death is joint and several. Thus, anyone who suffers injury or dies as a result of a collision between ships may sue either ship to recover the whole of his or her loss. However, reg 14(2) preserves any right of defence or limitation of liability, such as under the Limitation of Liability for Maritime Claims Act 1976 (Cth), which is considered in Chapter 16. In contrast, the rule for division of loss in relation to property damage or economic loss is one of proportionate liability, where each ship involved in a collision is held liable only to the extent of its responsibility. (This is another example of maritime law far anticipating the general law: the maritime scheme of proportionate liability has been part of international law since 1911,125 and part of Australian law since 1912,126 but the States and Territories only introduced proportionate liability as part of the general law in the first few years of the 21st century.)127 Regulation 15(1) of the Navigation Regulation 2013 (Cth) provides that if damage or loss is caused to the vessels involved in a collision, cargo or freight on those vessels, or other property on board, liability to make good the damage or loss must be in proportion to the degree in which each vessel was at fault. Thus, each ship involved in a collision is responsible for its proportionate share of the total property loss or damage suffered in the collision. For example, consider the following situation. Two ships, A and B, collide. A is 25% to blame for the collision, B 75%. As a result of the collision, A suffers damage to the value of $100,000, and B suffers damage to the value of $150,000. The total loss suffered as a result of the collision is $250,000. B 125 International Convention for the Unification of Certain Rules of Law with Respect to Collisions 1910 (Brussels Convention). 126 Navigation Act 1912 (Cth), s 259. 127 Civil Liability Act 2002 (NSW), ss 34 – 39; Proportionate Liability Act (NT), Pt 2; Civil Liability Act 2003 (Qld), ss 28 – 33; Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), Pt 3; Civil Liability Act 2002 (Tas), Pt 9A; Wrongs Act 1958 (Vic), Pt IVAA; Civil Liability Act 2002 (WA), Pt 1F.

602

Shipping Law

[15.140]

is responsible for 75% of that figure, which equals $187,500. Of that $187,500, $150,000 is B’s own loss, which B must bear itself. B therefore pays A the net figure of $37,500. Regulation 15(2) of the Navigation Regulation 2013 (Cth) states that if, having regard to all the circumstances of the case, it is not possible to establish different degrees of fault, the liability is apportioned equally. That is different from the rule relating to collisions between motor vehicles. In Nesterczuk v Mortimore,128 the High Court of Australia declared that although an equal apportionment approach might be proper in some circumstances, there is no general rule requiring equal apportionment in the absence of clear evidence, because of the possibility in such cases that either one of the parties may not have been at fault at all.129 Cargo

[15.140]

Regulation 15(4) of the Navigation Regulation 2013 (Cth) provides that nothing in the Regulation affects the liability of any person under a contract of carriage or deprives him or her of the benefit of contractual exclusion clauses. Where cargo is damaged in a collision in which two or more ships are at fault, the effect of that provision is as follows. If the cargo-owner sues the other, non-carrying, ship, it can recover only a proportion of its loss, because the other ship’s liability is proportionate to its relative fault, by virtue of reg 15(1). In other words, the cargo-owner’s recovery from the non-carrying ship is reduced in accordance with the relative degree of responsibility of the ship on which the cargo was carried. If the cargo-owner sues the carrying ship, and if the cargo is carried under a sea-carriage document incorporating the Hague or Hague-Visby Rules, the claim will most probably fail by virtue of Art 4, r 2(a), which excuses the carrier from liability for negligence in the navigation or management of the ship.130 This contractual defence is saved by reg 15(4). The net effect is that the cargo-owner can recover only a proportion of its loss, from the non-carrying ship.

The position in the United States is different, and unique. The cargoowner may recover the whole of its loss from the non-carrying ship,131 which may then recover from the carrying ship a proportion of the amount it had to pay the cargo-owner, on the basis that this liability is one of the losses it has suffered as a result of the collision. The net effect is that the carrying ship is liable for part of the cargo-owner’s loss, 128 Nesterczuk v Mortimore (1965) 115 CLR 140. 129 Nesterczuk v Mortimore (1965) 115 CLR 140 at 151 per Menzies J, at 153 per Windeyer J, and at 158 per Owen J. 130 See [12.390]. 131 The Atlas 93 US (3 Otto) 302; 23 L Ed 863 (1876); The Chattahoochee 173 US 540; 19 S Ct 491; 43 L Ed 801 (1899); The New York 175 US 187; 20 S Ct 67; 44 L Ed 126 (1899); Allied Chemical Corp v Hess Tankship Co 661 F 2d 1044 (5th Cir 1981).

[15.150]

15 Collisions and Liability for Damage

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notwithstanding the protection of Art 4, r 2(a) of the Hague Rules.132 In response to this situation, sea-carriers trading to the United States usually include a clause in their contracts of carriage, known as the “Both to Blame Collision Clause”, which requires the cargo-owner to indemnify the carrier for any amount it has to pay the non-carrying ship as a result of an action brought by the cargo-owner against that ship. The intended effect of this clause is the same as the Australian position described above; the cargo-owner can recover only a proportion of its loss, from the non-carrying ship, and the carrier is immune from liability. In United States v Atlantic Mutual Insurance Co,133 the Supreme Court of the United States declared the Both to Blame Collision Clause to be invalid and unenforceable in cases governed by the Hague Rules by virtue of the Carriage of Goods by Sea Act 1936 (US) (COGSA), because it attempted to excuse the carrier from the consequences of its own negligence. However, there is lower court authority to the effect that the Both to Blame Collision Clause is effective in charterparty contracts, which are not governed by COGSA.134 Despite the Atlantic Mutual decision, the clause is still routinely included in many standard form contracts of carriage, particularly charterparties.

Causation and “last opportunity” [15.150]

As indicated at [15.120], causal questions are raised when both ships involved in a collision are at fault, as is usually the case. The “last opportunity rule” deals with causation when both parties are at fault. At common law, the rule was that negligence on the plaintiff’s part would not act to defeat his or her claim if the defendant’s negligence had occurred later in time than that of the plaintiff. It was said that if the defendant’s negligence had been temporally subsequent to that of the plaintiff, the defendant had the last opportunity to avoid the accident and so should bear full responsibility.135 As a result, the common law rule denying recovery applied only if the plaintiff had the last opportunity of avoiding the accident. Despite doubts that persisted for many years after contributory negligence legislation was introduced,136 the High Court of Australia established authoritatively, in March v E & MH Stramare Pty Ltd,137 that the “last

132 Carriage of Goods by Sea Act 1936 (US) (COGSA), § 4(2)(a), Statutory Note to 46 USC § 30701. 133 United States v Atlantic Mutual Insurance Co 343 US 236; 72 S Ct 666; 96 L Ed 907 (1952). This case is known, but not reported, as The Esso Belgium. 134 See, eg, Allseas Maritime SA v M/V Mimosa 574 F Supp 844 (SD Tex 1983) at 853; Alamo Chemical Transport Co v M/V Overseas Valdes 469 F Supp 203 (ED La 1979) at 215; In re Complaint of Murmansk Shipping Co 2002 AMC 2495 (ED La 2002) at 2498-2500. 135 Davies v Mann (1842) 10 M & W 546; 152 ER 588. 136 See, eg, Kammerman v Baster (1981) 28 SASR 571. 137 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 at 514 per Mason CJ (with whom Toohey and Gaudron JJ agreed).

604

Shipping Law

[15.150]

opportunity” rule no longer applies in a situation governed by the general contributory negligence legislation. However, the Navigation Regulation 2013 (Cth), reg 15(3) provides that nothing in the division of loss procedure shall operate to render any ship liable for any loss or damage if it was not at fault. There is authority from the House of Lords for the proposition that the effect of the provision upon which reg 15(3) is based138 is to preserve the “last opportunity” rule. In Admiralty Commissioners v SS Volute,139 Viscount Birkenhead LC said, “Where a clear line can be drawn, the subsequent negligence is the only one to look to”.140 The possibility thus exists that the “last opportunity” rule survives under the maritime division of loss regime, even though it does not survive in relation to land-based contributory negligence. In a collision where both ships are at fault, but where the negligence of the plaintiff is clearly subsequent to that of the defendant ship,141 the plaintiff would recover nothing if the last opportunity rule survives, but would recover a proportion of its loss if it does not. The anomalous survival of the “last opportunity” rule in the maritime context can be avoided most simply if a court applying reg 15(3) were to decline to follow the decision in the SS Volute in the light of the High Court’s decision (albeit in a different context) in March v E & MH Stramare Pty Ltd.142 It is notable that the English Court of Appeal refused to apply the “last opportunity” rule to a maritime collision in The Ouro Fino,143 without referring to the SS Volute.144 Alternatively, the result could be avoided by taking a liberal view of the SS Volute. In the case itself, although it was stated that “where a clear line can be drawn”, the “last opportunity” rule should apply, it was also recognised by Viscount Birkenhead LC that, There are cases in which the two acts come so closely together, and the second act of negligence is so much mixed up with the state of things brought about 138 Maritime Conventions Act 1911 (UK), s 1(b). 139 Admiralty Commissioners v SS Volute [1922] 1 AC 129. 140 Admiralty Commissioners v SS Volute [1922] 1 AC 129 at 144. 141 For example, a maritime version of March v E & MH Stramare Pty Ltd (1991) 171 CLR 506 itself, where the defendant negligently parked its truck in the middle of the road, and the plaintiff later negligently drove into it. An example is The Ouro Fino [1988] 2 Lloyd’s Rep 325, where a barge negligently anchored in an improper position was struck by a ship negligently navigated. The Court of Appeal approved the trial judge’s 50/50 apportionment of liability. 142 March v E & MH Stramare Pty Ltd (1991) 171 CLR 506. 143 The Ouro Fino [1988] 2 Lloyd’s Rep 325. 144 In The Ouro Fino [1988] 2 Lloyd’s Rep 325 at 329, O’Connor LJ said that it had been settled “for at least 40 years” that the last opportunity rule does not apply “in a collision whether on land or sea”. However, the Volute rule was applied by the English Court of Appeal in The Jan Laurenz [1973] 1 Lloyd’s Rep 329.

[15.160]

15 Collisions and Liability for Damage

605

by the first act, that the party secondly negligent … might … invoke the prior negligence as being part of the cause of the collision so as to make it a case of contribution.145

There is no good reason for the decision in the SS Volute to be followed in Australia, but if it is followed, the better approach would be to consider only the most obvious of cases as being ones of clear “subsequent negligence”. Very few cases should be regarded as cases of “last opportunity” under the division of loss scheme, with all others being regarded as sufficiently causally “mixed up” to warrant an apportionment of liability.

Contribution and indemnity between wrongdoers [15.160]

A fundamental feature of a proportionate liability regime is that there should be no actions between concurrent tortfeasors for contribution or indemnity. The underlying idea is that if no defendant can be held responsible for more than its proportionate share of responsibility, there should be no reason for any concurrent wrongdoer to seek contribution from any other, as no concurrent wrongdoer can be required by law to pay more than its fair share of responsibility. As a result, the general, land-based, legislation on proportionate liability for property damage and economic loss precludes the possibility of actions between concurrent wrongdoers for contribution or indemnity.146 The Navigation Regulation 2013 (Cth), reg 16(1) preserves a right of contribution in personal injury and death cases, which is understandable, given that liability in such cases continues to be joint and several.147 Unlike its land-based proportionate liability counterparts, however, the Navigation Regulation 2013 (Cth) does not contain any express provision precluding actions for contribution or indemnity between concurrent wrongdoers in property damage cases. Presumably, the absence of a right to contribution is regarded as being implicit in the basic idea of proportionate liability. If a ship should, for some reason, be held responsible for more than its appropriate share of loss, there is authority for the proposition that a right to contribution is effectively provided by the equivalent of reg 15, which deals with division of loss. If one of two ships at fault has compensated the plaintiff in full, it can then recover from the other negligent ship a proportion of the sum paid, by claiming that that sum is part of the loss that it has suffered as a result of the collision. As has been seen at [15.130], reg 15(1) provides that losses suffered as a result of the fault of two or more ships are to be borne in proportion to their relative degree of fault. The loss incurred in compensating the plaintiff is then divided between 145 Admiralty Commissioners v SS Volute [1922] 1 AC 129 at 144. See, eg, The Jan Laurenz [1973] 1 Lloyd’s Rep 329 (CA) (holding by majority that no clear line could be drawn). 146 Civil Liability Act 2002 (NSW), s 36; Proportionate Liability Act (NT), s 15; Civil Liability Act 2003 (Qld), s 32A; Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), s 9; Civil Liability Act 2002 (Tas), s 43C; Wrongs Act 1958 (Vic), s 24AJ; Civil Liability Act 2002 (WA), s 5AL. 147 Navigation Regulation 2013 (Cth), reg 14.

606

Shipping Law

[15.170]

the two negligent ships according to the division of loss procedure in reg 15(1), thus effectively providing a right of contribution.148 Importantly, the general, land-based, legislation on proportionate liability in some (but not all) jurisdictions preserves the right of a defendant to pursue an indemnity from other concurrent wrongdoers on the basis of contractual agreements between them.149 Such provisions preserve a right to contractual indemnity such as that provided by the “knock for knock” indemnity clauses commonly found in contracts between parties engaged in offshore oil and gas exploration, where each party contracts to bear losses sustained by it and its sub-contractors, without seeking contribution or indemnity from others involved in the exploration enterprise, even if they are at fault. These State and Territory provisions should be “picked up” into Federal Court proceedings by operation of the Judiciary Act 1903 (Cth), s 79.150 In those jurisdictions that do not have specific provisions validating contractual indemnity agreements, it is questionable whether a contractual right to indemnity would be enforceable in light of the general statutory prohibition against claims for indemnity among concurrent wrongdoers.151

SCOPE OF LIABILITY: TYPES OF LOSS FOR WHICH DAMAGES ARE RECOVERABLE [15.170]

The kinds of loss suffered as a result of a collision may be many and varied. Not all losses suffered by a plaintiff are recoverable from the defendant ship. At common law, the rules governing what kinds of loss are recoverable were called rules relating to remoteness of damage; the Civil Liability Acts now refer to them as rules relating to “scope of liability”.152 By whatever description, the relevant rules identify what kinds of loss suffered by the plaintiff are recoverable. The amount that the plaintiff receives by way of compensation for its losses is dependent on whether the defendant shipowner can limit its liability according to the tonnage of the defendant ship. Limitation of liability is dealt with in Chapter 16.

148 See, eg, The Cairnbahn [1914] P 25 for this procedure under the English provisions that are the predecessor to reg 15. 149 Proportionate Liability Act (NT), s 15(2); Civil Liability Act 2002 (Tas), s 43C(2); Civil Liability Act 2002 (WA), s 5AL(2). There is no specific equivalent provision in New South Wales, Queensland, South Australia or Victoria. 150 On the operation of the Judiciary Act 1903 (Cth), s 79, see M Davies, A Bell and P Brereton, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, Chatswood, 2014), pp 116-120. 151 Civil Liability Act 2002 (NSW), s 36(b); Civil Liability Act 2003 (Qld), s 32A(b); Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), s 9; Wrongs Act 1958 (Vic), s 24AJ(b). 152 Civil Liability Act 2002 (NSW), s 5D(1)(b); Civil Liability Act 2003 (Qld), s 11(1)(b); Civil Liability Act 1936 (SA), s 34(1)(b); Civil Liability Act 2002 (Tas), s 13(1)(b); Wrongs Act 1958 (Vic), s 51(1)(b); Civil Liability Act 2002 (WA), s 5C(1)(b).

[15.170]

15 Collisions and Liability for Damage

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The common law rule governing remoteness of damage was laid down in The Wagon Mound (No 1).153 The rule was that the plaintiff can recover for all damage that is a reasonably foreseeable consequence of the defendant’s negligence. The uniform Australian rule about scope of liability, enshrined in the State and Territory Civil Liability Acts, is simply that the court should consider “whether or not and why responsibility for the harm should be imposed on the responsible party”.154 Clearly, damages in respect of physical damage to ship or cargo are recoverable. In the case of a ship, those damages usually represent the cost of repairs. In the case of cargo,155 damages usually represent the loss of value of the cargo as a result of the damage. The measure of damage is the difference between the market value of the goods when the damage occurred minus their actual value at that time; the price received for the damaged goods in any later sale of them is immaterial.156 In the case of total loss, damages are the market value of the ship or cargo at the time of the loss. The plaintiff may also recover damages for any expenses incurred as a result of the damage, such as the expenses of keeping a ship in port during repairs, provided that there is sufficient proof that the delay was caused by the collision.157 Similarly, the plaintiff can recover the amount of wages paid to the master and crew of the ship while it is laid up for repairs.158 If the delay is initially caused by the collision but is extended for some other reason, the expenses of the delay are still recoverable if they were reasonably foreseeable. Thus, for example, extra expenses incurred as a result of a Court of Marine Inquiry into the collision and consequent bad weather have been held to be recoverable,159 as have expenses incurred as a result of strikes preventing departure of the ship after repairs were completed.160 If the plaintiff buys or hires a replacement vessel to undertake the functions of a damaged ship while it is under repair, the cost of 153 Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound (No 1)) [1961] AC 388. See also Mount Isa Mines Ltd v Pusey (1971) 125 CLR 383. 154 Civil Liability Act 2002 (NSW), s 5D(4); Civil Liability Act 2003 (Qld), s 11(4); Civil Liability Act 1936 (SA), s 34(4); Civil Liability Act 2002 (Tas), s 13(4); Wrongs Act 1958 (Vic), s 51(4); Civil Liability Act 2002 (WA), s 5C(4). 155 Where the cargo is carried under the Hague or Hague-Visby Rules, the cargo-owner may only recover damages from the other, non-carrying ship: see [15.140]. 156 Rodocanachi v Milburn (1886) 18 QBD 67; Williams Bros v Ed T Agius Ltd [1914] AC 510 at 520 per Viscount Haldane LC; Campbell Mostyn (Provisions) Ltd v Barnett Trading Co [1954] 1 Lloyd’s Rep 65; BP North American Petroleum v Solar S/T 250 F 3d 307; 2001 AMC 1844 (5th Cir 2001). 157 See, eg, Barque Strathearn C Ltd v McIlwraith McEacharn & Co Ltd (1895) 16 LR (NSW) 94. 158 See, eg, William Holyman & Sons Pty Ltd v Marine Board of Launceston (1929) 24 Tas LR 64. 159 Weston v Huddart Parker Ltd (1922) 23 SR (NSW) 261. 160 Mitsui OSK Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564, affirmed on this point by the Privy Council sub nom Candlewood Navigation Corpn Ltd v Mitsui OSK Lines Ltd [1986] AC 1. See also HMS London [1914] P 72.

608

Shipping Law

[15.170]

replacement is recoverable.161 If, however, as a result of the plaintiff’s own financial position, it can only afford to replace the damaged ship by paying unreasonably high rates of interest on a loan to purchase, or unreasonably high hire payments, or if the replacement ship is more expensive to run than the damaged ship, the extra losses incurred are not recoverable, as they stem from the plaintiff’s own financial position, and not from the defendant’s act of negligence.162 If the damaged ship is a profit-earning one, the shipowner may recover damages for any profits lost as a consequence of the damage.163 If the damaged ship is not a profit-earning one (such as a port authority dredger, a lightship or a warship), substantial damages are recoverable for loss of use, but the principles to be applied are more complex. It has been said that there is no single general principle that can be applied in all cases.164 Where the plaintiff has hired a substitute to do the work of the damaged ship, it may recover the cost of the hire as damages.165 Where the plaintiff has not hired a substitute, the measure of damages has often been taken to be a percentage of the capital value of the ship at the time of the collision, representing the depreciation in capital value over the period that the ship is out of service as a result of the collision.166 In other cases, the measure of damage has been taken to be the running costs of the ship for the number of working days lost as a result of the collision,167 or the running costs of a substitute if the plaintiff used another non-profit-earning ship of its own to do the work of the damaged ship.168 Some cases seem to suggest that these two approaches are alternatives

161 See, eg, R v Owners of the SS Argyllshire [1922] QSR 186. 162 Liesbosch, Dredger v SS Edison (Owners) [1933] AC 449. 163 Owners of the Steamship Gracie v Owners of the Steamship Argentino: The Argentino (1889) 14 App Cas 519. 164 Mersey Docks and Harbour Board v Owners of SS Marpessa: The Marpessa [1907] AC 241 at 244 per Lord Loreburn LC; Admiralty Commissioners v Owners of SS Chekiang [1926] AC 637 at 642 per Viscount Dunedin; Admiralty Commissioners v Owners of SS Susquehanna [1926] AC 655 at 662 per Viscount Dunedin. 165 Owners of No 7 Steam Sand Pump Dredger v Owners of SS Greta Holme: The Greta Holme [1897] AC 596 at 605 per Lord Herschell; Owners of SS Mediana v Owners, Master and Crew of Lightship Comet: The Mediana [1900] AC 113 at 122 per Lord Shand. 166 See, eg, Admiralty Commissioners v Owners of SS Chekiang [1926] AC 637; Lord Citrine (Owners) v Hebridean Coast (Owners): The Hebridean Coast [1961] AC 545. 167 See, eg, Mersey Docks and Harbour Board v Owners of SS Marpessa: The Marpessa [1907] AC 241; Admiralty Commissioners v Owners of SS Susquehanna [1926] AC 655 at 668-669 per Lord Blanesburgh. 168 See, eg, Owners of SS Mediana v Owners, Master and Crew of Lightship Comet: The Mediana [1900] AC 113.

[15.170]

15 Collisions and Liability for Damage

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where the plaintiff has not hired a substitute. For example, in The Hebridean Coast,169 Lord Reid said that the interest on capital approach derived from the judgment of Lord Herschell in The Greta Holme,170 implying that that was the approach most strongly supported by authority. Similarly, in Admiralty Commissioners v Owners of SS Chekiang,171 the House of Lords unanimously adopted the interest on capital approach, stating that it was following The Greta Holme in so doing. However, the SS Chekiang case is best understood as providing confirmation that the interest on capital approach can be applied in the case of a damaged warship, even though it is difficult to ascertain the capital value at the time of damage, rather than as an authoritative statement that the interest on capital approach is the only one to be applied in all cases. Close reading of the judgment of Lord Herschell in The Greta Holme and dicta in other cases makes it clear that the owner of a non-profit-earning ship damaged in a collision may recover damages for the running costs of the ship during the period in which it is laid up for repairs, plus a sum representing depreciation of the capital value of the ship over that period.172 As a matter of principle, this seems to be the appropriate measure of what the plaintiff has lost as a result of the damage to the ship.173 The above cases are examples of the operation of the rules relating to scope of liability in relation to physical damage suffered by a plaintiff as a result of a collision. However, it is often not only the shipowner who suffers loss as a result of damage to the ship, nor only the cargo-owner who suffers loss as a result of damage to the cargo. Other parties may be sufficiently closely interested in ship or cargo that they too suffer loss as a result of damage. As these parties do not own the ship or cargo itself, any losses they suffer are necessarily purely economic. The issue of the recoverability of purely economic loss is of particular significance in a maritime context, and so deserves separate treatment.

169 Lord Citrine (Owners) v Hebridean Coast (Owners): The Hebridean Coast [1961] AC 545 at 578. 170 Owners of No 7 Steam Sand Pump Dredger v Owners of SS Greta Holme: The Greta Holme [1897] AC 596. 171 Admiralty Commissioners v Owners of SS Chekiang [1926] AC 637. 172 See Owners of No 7 Steam Sand Pump Dredger v Owners of SS Greta Holme: The Greta Holme [1897] AC 596 at 605 per Lord Herschell; Mersey Docks and Harbour Board v Owners of SS Marpessa: The Marpessa [1907] AC 241 at 245-246 per Lord Loreburn LC; Admiralty Commissioners v Owners of SS Susquehanna [1926] AC 655 at 662 per Viscount Dunedin. 173 The cases considered in this paragraph were used by the New South Wales Court of Appeal in Anthanasopoulos v Moseley (2001) 52 NSWLR 262 to support the conclusion that damages were payable for loss of use of non-profit-earning motor vehicles, even though the plaintiffs had been provided with substitute vehicles by their insurers. The plaintiffs claimed and recovered the cost of renting substitute vehicles during the period of repair; the question of loss of capital value was not considered.

610

Shipping Law

[15.180]

PURELY ECONOMIC LOSS General In Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad”,174 the High Court of Australia allowed for the first time a plaintiff to recover losses suffered as a result of physical damage to property owned by another. Although claims in tort for purely economic losses have seldom been successful, the possibility of recovery in such cases was reaffirmed by the High Court of Australia in Perre v Apand Pty Ltd175 and Barclay v Penberthy.176 Although the principles governing such claims remain notoriously difficult to discern, the High Court’s decision in Woolcock Street Investments Pty Ltd v CDG Pty Ltd177 has been influential in its emphasis on the plaintiff’s vulnerability, in the sense of the plaintiff’s inability to protect herself or himself from the consequences of the defendant’s conduct, not merely the plaintiff’s susceptibility to loss as a result of that conduct. For example, in Fortuna Seafoods Pty Ltd v Ship Eternal Wind,178 the Queensland Court of Appeal held that a fish processing company was so closely related to the owner of a fishing vessel that it was entitled to recover purely economic losses when the fishing vessel sank after a collision caused by the defendant’s negligence, principally because of the fish processing company’s “vulnerability” in the Woolcock sense.

[15.180]

Recovery of purely economic losses is more likely in what have been called “transferred loss” cases.179 A “transferred loss” case is one in which a loss that would otherwise be suffered by the owner of property is transferred (usually by contract) to another person who is not the owner of that property. In the maritime context, purely economic losses are usually transferred losses, where the owner of a ship or cargo passes on the risk of damage or loss to another by contract. In Bryan v Maloney,180 the High Court held that purely economic losses were recoverable in a transferred loss situation (sale of a defective house), although without using the terminology of transferred loss. The terminology of transferred loss was used in both Seas Sapfor Forests Pty Ltd 174 Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529. 175 Perre v Apand Pty Ltd (1999) 198 CLR 180. 176 Barclay v Penberthy (2012) 246 CLR 258. 177 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515. 178 Fortuna Seafoods Pty Ltd v Ship Eternal Wind [2008] 1 Qd R 429. 179 The use of the phrase in this context seems to have been coined by the late John Fleming, although it is often associated with the judgment of La Forest J in Canadian National Railway v Norsk Pacific Steamship Co [1992] 1 SCR 1021. The phrase first appeared in the seventh edition of Fleming’s famous textbook: J Fleming, The Law of Torts (7th ed, Law Book Co, Sydney, 1987), p 164. It no longer appears in the posthumously-published tenth edition: C Sappideen and P Vines (eds), Fleming’s The Law of Torts (10th ed, Lawbook Co., Sydney, 2011). 180 Bryan v Maloney (1995) 182 CLR 609.

[15.190]

15 Collisions and Liability for Damage

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v Electricity Trust of South Australia181 and McMullin v ICI Australia Operations Pty Ltd182 to hold that a duty is owed in cases of transferred loss but not clearly otherwise. The following sections consider the recovery of purely economic losses in terms of transferred loss.

Charterers183 [15.190]

The owner of a ship damaged in a collision can recover damages from the other ship involved on proof of fault on that ship’s part. In contrast, if the damaged ship is chartered, the charterer cannot recover damages in a similar way unless it is a demise charterer, which has property rights in the ship as “disponent owner”.184 Other charterers have no proprietary rights in the chartered ship itself,185 and the general common law rule is that a plaintiff who has no rights in the property damaged cannot recover for any loss that he or she suffers as a result of that damage.186 However, although charterers have no right to the ship itself, they are closely, directly and identifiably connected to it. If they suffer loss at all as a result of the damage to the ship, it is usually because that loss has been transferred to them by the shipowner under the charterparty — for example, by requiring a time charterer to continue to pay hire (in part or in full) while the ship is laid up for repairs. It is arguable that in such a situation, Australian common law principles should allow recovery of any economic loss suffered by the charterer. Such an argument was advanced on behalf of a time charterer in Mitsui OSK Ltd v The Ship Mineral Transporter.187 In that case, the ship “Ibaraki Maru” was damaged while at anchor off Port Kembla. The defendant ship “Mineral Transporter” dragged its anchor and drifted onto the “Ibaraki Maru”, having taken no steps to avoid the collision. As a result of the collision, the owner of the “Ibaraki Maru”, Matsuoka Steamship Co, claimed damages for the cost of the repairs, and the time charterer, Mitsui OSK Ltd, sought to recover economic losses suffered as a result of the ship being not completely 181 Seas Sapfor Forests Pty Ltd v Electricity Trust of South Australia (1996) 187 LSJS 369. 182 McMullin v ICI Australia Operations Pty Ltd (1997) 72 FCR 1. 183 For a detailed analysis of potential economic loss claimants, see N Gaskell, “Economic Loss in the Maritime Context” [1985] Lloyd’s Maritime and Commercial Law Quarterly 81 at 94-108. 184 See, eg, Medway Drydock & Engineering Co Ltd v MV Andrea Ursula [1973] QB 265. 185 See, eg, Schuster v McKellar (1857) 7 El & Bl 704; 119 ER 1407; Oswald v Australian Steamships Ltd [1914] VLR 329; Anderson’s (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870. 186 Cattle v Stockton Waterworks Ltd (1875) LR 10 QB 453; SA de Remorquage & Helice v Bennetts [1911] 1 KB 243; Caltex Oil (Australia) Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 at 555 per Gibbs J. 187 Mitsui OSK Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564. Decision reversed on appeal sub nom Candlewood Navigation Corp Ltd v Mitsui OSK Lines Ltd [1986] AC 1 (PC).

612

Shipping Law

[15.190]

off-hire while those repairs were done.188 By the terms of the time charterparty, Mitsui was obliged to continue paying Matsuoka for the hire of the “Ibaraki Maru” when it was laid up for repair, at a reduced rate, 22% of the ordinary daily rate. Mitsui claimed from the owners of the “Mineral Transporter” the sums paid to Matsuoka, and also the loss of profit on a voyage that the “Ibaraki Maru” had been unable to make as a result of the damage. At first instance, in the Supreme Court of New South Wales, it was held that both Matsuoka and Mitsui could recover the sums sought from the owners of the “Mineral Transporter”. It is the decision that Mitsui could recover that raised the question of the recoverability of purely economic loss. Yeldham J considered the judgments of Gibbs, Stephen and Mason JJ in Caltex,189 and concluded that whichever of the tests enunciated there was the appropriate one, Mitsui was entitled to recover. He considered that knowledge of the precise identity of the plaintiff was not necessary in order for a duty to be owed, but rather:190 That it would be sufficient … that the defendant knew or should have been aware that it was at least likely that the “Ibaraki Maru”, like many other vessels, would be the subject of a time charter and hence the charterer would be likely to suffer economic loss if the ship was damaged.

Yeldham J considered that if knowledge of the precise identity of the plaintiff were to be required before a duty could be owed, there was sufficient evidence that Mitsui could be so identified in this case, as the “Ibaraki Maru” was painted in Mitsui’s colours. However, he was of the view that, “Plainly it was foreseeable that any time charterer would suffer economic loss if the vessel was damaged”.191 The owners of the “Mineral Transporter”, Candlewood Navigation Ltd, successfully appealed to the Privy Council against Yeldham J’s decision that they were liable for the economic losses suffered by Mitsui.192 The Privy Council strongly criticised the reasoning in the Caltex case before concluding:193 188 In fact, Mitsui was the true owner of the ship, and Matsuoka was the disponent owner under a demise charter. Mitsui had chartered its own ship back from Matsuoka on a time charter basis. Thus, for the purposes of the case, Matsuoka was the owner and Mitsui the charterer. 189 Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529. 190 Mitsui OSK Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564 at 572-573. 191 Mitsui OSK Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564 at 572-573 (emphasis added). 192 Sub nom Candlewood Navigation Corp Ltd v Mitsui OSK Lines Ltd [1986] AC 1. 193 Candlewood Navigation Corp Ltd v Mitsui OSK Lines Ltd [1986] AC 1 at 24. However, see also the rejoinder from the High Court of Australia in San Sebastian Pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (1986) 162 CLR 340 at 354: “The critics [of Caltex] have themselves been unable to offer a solution to the problem”.

[15.190]

15 Collisions and Liability for Damage

613

In these circumstances their Lordships have concluded that they are entitled, and indeed bound, to reach their own decision without the assistance of any single ratio decidendi to be found in the Caltex case.

The Privy Council’s decision to deny recovery to the time charterer was reached on the basis of a reaffirmation of the old “bright line” rule that a plaintiff who has suffered no damage to person or property as a result of a negligent act cannot recover any loss.194 Australian courts are obliged to follow the principles established by the High Court of Australia, rather than those stated by the Privy Council in Candlewood Navigation.195 Thus, if a time charterer’s claim to recover economic loss as a result of damage suffered by the chartered ship were to come before an Australian court again, it would still be open to that court to find in favour of the plaintiff, at least so far as damages for loss of use are concerned. In England, the position of the time charterer is clear. Speaking in 1967, Hewson J said:196 There is no reported case, so far as I am aware, in the long history of chartering where a time charterer has recovered damages for pecuniary loss because of damage by a third party to the chartered vessel.

It is significant that the defendant shipowner in Candlewood Navigation chose to appeal to the Privy Council rather than to the Court of Appeal of New South Wales. The Court of Appeal of New South Wales had recently reaffirmed and restated the Caltex principles as being part of the law of Australia, and this may explain the defendant’s choice.197 It seems likely that the defendant chose to appeal to a forum where Caltex could be challenged rather than one where it would have to be applied. Indeed, that was the final outcome; the Privy Council overruled Yeldham J’s decision because he had applied Caltex, not because he had misapplied it. As a matter of principle, there seems to be no sound basis for rejecting a claim made by a time charterer in these circumstances. The justification for the common law rule denying recovery of purely economic losses has always been the fear of indeterminate liability. In “transferred loss” cases, there is no fear of indeterminate liability: the loss that would be suffered by the property owner is transferred to a single person, who then becomes the plaintiff. Allowing the claim merely substitutes one claimant for another without increasing the defendant’s liability. For example, in 194 Cattle v Stockton Waterworks Ltd (1875) LR 10 QB 453; SA de Remorquage & Helice v Bennetts [1911] 1 KB 243. For another application of this rule to a time charterer, see The World Harmony [1967] P 341. 195 This seems to be the effect of Viro v The Queen (1978) 141 CLR 88 in the light of Australia Acts (Request) Act 1985 (Cth), s 11. See Barns v Barns (2003) 196 ALR 65 at [99]-[101] per Gummow and Hayne JJ; Fieldhouse v Commissioner of Taxation (1989) 25 FCR 187 at 223-224 per Hill J. 196 The World Harmony [1967] P 341 at 362. 197 See Minister Administering the Environmental Planning and Assessment Act 1979 v San Sebastian Pty Ltd [1983] 2 NSWLR 268.

614

Shipping Law

[15.190]

the Mitsui OSK case,198 the effect of the time charterparty contract was that the shipowner, Matsuoka, bore 78% of loss of use losses itself, but transferred 22% to Mitsui by contract. There was no prospect of indeterminate liability on the part of the shipowner. Indeed, the end result of the case was a windfall to the defendant. If the time charterparty on the “Ibaraki Maru” had provided that the ship should go completely off-hire during repairs (as time charterparties usually do),199 then the entire loss of use would have fallen on Matsuoka’s shoulders, and all of it would have been recoverable from the defendant as loss consequential upon the physical damage to the “Ibaraki Maru”. There seems to have been no good reason to allow the defendant to avoid paying for the loss of use of the ship that it negligently damaged, simply because some of that loss had been transferred to someone other than the owner. In the United States, federal courts exercising admiralty jurisdiction generally apply the rule, known as the “bright line” or Robins Dry Dock rule, that there can be no recovery of purely economic losses — that is, losses not consequent on physical damage to the plaintiff’s own property.200 However, some courts have held that the “bright line” rule provides no basis for denying recovery when there is no fear of indeterminate liability. For example, in Venore Transportation Co v M/V Struma,201 the United States Court of Appeals for the Fourth Circuit held that a time charterer could recover loss of use damages from a defendant who had negligently damaged the chartered ship, notwithstanding the “bright line” rule. The court said:202 The principle of Robins Dry Dock is perfectly defensible, if pragmatic considerations require the foreclosure of remote damage claims. The tortfeasor, having paid the owner for its loss of use of the vessel, should not be required to pay additionally for the time charterer’s loss of anticipated profits. A pragmatic approach would require that the offending vessel pay for loss of use of the damaged vessel once, but no more. Unless the offending vessel is required to pay for the loss of use of the Oswego Liberty in this case, however, it would never be required to pay at all. The owner lost no charter hire. It could not claim a loss it had not suffered, and it did not do so. But payment for loss of use of the damaged vessel is a conventional item of recovery, and the fact that the charter party has transferred the risk of loss of use from the owner to the time charterer should not extinguish the right to a recovery of a traditional item of damages. There is nothing remote about these damages; the only objection is that they were suffered by the time charterer rather than by the owner.

198 Mitsui OSK Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564. 199 See [14.330]. 200 Robins Dry Dock and Repair Co v Flint 275 US 303 (1927). 201 Venore Transportation Co v M/V Struma 583 F 2d 708; 1978 AMC 2146 (4th Cir 1978). 202 Venore Transportation Co v M/V Struma 583 F 2d 708; 1978 AMC 2146 (4th Cir 1978) at 710-711; 2149.

[15.200]

15 Collisions and Liability for Damage

615

This pragmatic approach is foreclosed by the English rule, but it seems entirely sensible and is wholly consistent with the Australian law on purely economic loss, by which “transferred losses” are generally regarded as being recoverable.203

Receivers of cargo [15.200]

The receiver of goods shipped pursuant to a CIF, CIP or CFR (also called C&F) contract for sale of goods204 does not usually get the right to possession of the goods until the bill of lading passes from seller to buyer.205 If, as a result of negligence on the part of the carrying ship during carriage, the cargo is damaged before the bill of lading has passed from seller to buyer, the buyer, having no property in or right to possession of the cargo, has no claim in tort under the general principles described at [15.190]. Nevertheless, the buyer of goods under a CIF, CIP or C&F contract is obliged to pay the purchase price on indorsement of the bill of lading, even if the goods have already been damaged.206 In these circumstances, he or she suffers a purely economic loss, because the goods are no longer worth what he or she has paid for them. As in the case of time charterers, the English courts simply deny that receivers of cargo in this position can recover their purely economic losses in a tort claim, on the grounds that they have not suffered any damage to person or property themselves.207 The Australian position is not yet clear, but several different factors combine to make the situation of the consignee of goods somewhat more complex than that of the time charterer. It is possible that Australian courts may also deny liability as a result of these factors. In such a situation, the shipowner often knows the specific identity of the receiver of the goods, who is identified in the bill of lading as consignee

203 Bryan v Maloney (1995) 182 CLR 609; Seas Sapfor Forests Pty Ltd v Electricity Trust of South Australia (1996) 187 LSJS 369; McMullin v ICI Australia Operations Pty Ltd (1997) 72 FCR 1. 204 Under a CIF (“cost, insurance, freight”) or CIP (“carriage and insurance paid”) sale contract, the seller of goods arranges for carriage and insurance of the goods to the place of delivery to the buyer, who pays the price of the goods, the insurance and the freight for carriage. Under a C&F contract (abbreviated as CFR in Incoterms 2010), the seller arranges, and the buyer pays for, the goods and carriage only; the buyer arranges and pays for its own insurance. 205 See [12.760]–[12.770]. 206 See, eg, Manbre Saccharine Co Ltd v Corn Products Co Ltd [1919] 1 KB 198; Slade v JJ Sullivan Ltd (1920) 21 SR (NSW) 90 at 93-94 per Cullen CJ; Plainar Ltd v Waters Trading Co Ltd (1945) 72 CLR 304 at 311-312 per Rich, Dixon and McTiernan JJ. 207 See Margarine Union GmbH v Cambay Prince Steamship Co Ltd [1969] 1 QB 219; Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785, overruling Schiffahrt & Kohlen GmbH v Chelsea Maritime Ltd [1982] QB 481.

616

Shipping Law

[15.200]

or notify party.208 At the very least, the shipowner knows that there is an identifiable recipient of the goods. The bill of lading also specifies the general nature of the goods shipped, so that the shipowner should know the kind of loss the receiver will suffer if the goods are damaged before property in them passes. The loss that would be suffered by the shipper (the owner of the goods at the time of the loss) is transferred to the buyer–receiver by operation of the sale contract. Prima facie, then, it seems that a receiver in this position (the consignee or indorsee of the bill of lading) would be owed a duty under the Australian common law principles described at [15.180]. However, the consignee or indorsee of a bill of lading already has some rights of recovery in the situation in question. The transfer of the bill of lading from the seller–shipper to the buyer acts as a transfer of all rights of suit vested in the seller.209 If the goods have been damaged before the bill of lading passes from seller to buyer, the seller has an action under the contract of carriage against the carrier, subject to the exclusions and limitations in that contract. That right of suit passes to the buyer with the bill of lading, and so the buyer can bring an action against the carrier, based on a breach of the contract originally made between the seller and the carrier. However, any such action is also subject to the exclusion and limitation clauses contained in the contract of carriage, and in particular those contained in the Hague or Hague-Visby Rules, or the Australian modification of the latter.210 Where the Hague-Visby Rules (or the Australian modification of them) govern the bill of lading contract, the buyer’s claim against the carrier is subject to the exclusions and limitations in the relevant set of rules, whether it is brought in contract, tort or otherwise.211 Thus, the buyer would be no better off framing his or her action in tort, rather than in contract. Where, however, the bill of lading contract is governed by the unamended Hague Rules,212 there is no provision in the rules that specifically states that the contractual exclusions and limitations apply to claims in tort. If the buyer could claim directly against the shipowner in tort, without relying on the bill of lading contract, his or her claim might not be subject to the exclusions and limitations in the bill of lading. This would be of considerable advantage to the buyer, although he or she 208 The “Notify Party” box on a bill of lading indicates the person whom the carrier must notify of the arrival of the goods; it usually indicates that that person is the intended indorsee of a negotiable bill of lading: see [12.760]. 209 Sea-Carriage Documents Act 1997 (NSW), s 8(1)(a); Sea-Carriage Documents Act 1996 (Qld), s 6(1)(a); Sea-Carriage Documents Act 1998 (SA), s 7(1)(a); Sea-Carriage Documents Act 1997 (Tas), s 7(1)(a); Goods Act 1958 (Vic), s 92(1)(a); Sea-Carriage Documents Act 1997 (WA), s 8(1)(a); Sea-Carriage Documents Act (NT), s 8(1)(a). 210 See Chapter 12. 211 Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4 bis, r 1 (Hague-Visby Rules); Sch 1A, Art 4 bis, r 1 (Australian modification). 212 See [12.40] for examples of contracts of carriage into Australia that are governed by the unamended Hague Rules.

[15.210]

15 Collisions and Liability for Damage

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would face a corresponding disadvantage of proving affirmatively that the goods were damaged by the negligence of the shipowner’s employees before the bill of lading was indorsed. In England, one of the reasons given for denying the buyer an action in the tort of negligence was the undesirability of giving a tactical advantage of this kind to the buyer. It was said that to allow recovery in tort would be to deny the carrier the protection that it enjoyed against a claim in contract, and so it was unnecessary and undesirable to recognise the claim in tort.213 The answer may well be the same in Australia, although the position is less certain. In Johnson Tiles Pty Ltd v Esso Australia Ltd (No 2),214 a Full Court of the Federal Court of Australia held that the presence of a contractual exclusion or limitation between the defendant and the owner of the property damaged by the defendant’s negligence is not enough in itself to prevent a “transferred loss” plaintiff from recovering damages in full from the defendant in a tort claim. At first instance, Merkel J (whose judgment was affirmed by the Full Court) said:215 The current position in Australia appears to be that the contract, including any exclusionary clause, between A and B may be relevant to, but is not necessarily determinative of, A’s liability in negligence for economic loss to C who has contracted with B but not A.

The key words here are those at the end of the sentence: “with B but not A”. Using Merkel J’s terminology in the present context, the carrier is A, the shipper B and the indorsee C. C has contracted with B (in the sale contract) but not A, but it does come into a contractual relationship with A when the bill of lading is indorsed from B to C. That may be enough to distinguish the Johnson Tiles position, and to make C’s tort claim against A (the indorsee’s tort claim against the carrier) subject to the exclusions and limitations imported into the contract between A and B (the carrier and the shipper) by operation of the Hague Rules.

LIMITATION OF TIME Commonwealth [15.210]

The Navigation Act 1912 (Cth), s 396(1) used to provide that no action could be brought against a ship for damage arising as a result of a collision after two years from the date on which the damage or loss was suffered. When the Navigation Act 1912 (Cth) was repealed and replaced by the Navigation Act 2012 (Cth), no equivalent provision was included to establish a limitation period for collision claims. Similarly, no equivalent

213 Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785 at 818-819 per Lord Brandon of Oakbrook. See G Treitel, “Bills of Lading and Third Parties” [1986] Lloyd’s Maritime and Commerical Law Quarterly 294. 214 Johnson Tiles Pty Ltd v Esso Australia Ltd (No 2) (2000) 104 FCR 564 (FCFCA); see at first instance Johnson Tiles Pty Ltd v Esso Australia Ltd (No 2) (2000) 97 FCR 175 per Merkel J. 215 Johnson Tiles Pty Ltd v Esso Australia Ltd (No 2) (2000) 97 FCR 175 at 183 [36].

618

Shipping Law

[15.220]

time-bar provision was included when the Navigation Regulation 2013 (Cth) was made. Unless and until the Navigation Act 1912 (Cth) or the Navigation Regulation 2013 (Cth) is amended to include a two-year limitation period for claims arising out of a collision, the only relevant limitation period under Commonwealth law is that contained in the Admiralty Act 1988 (Cth), s 37(1)(b), which provides for a limitation period of three years from when the cause of action arose. However, s 37(2) of that Act provides that the three-year period in s 37(1) does not apply if a limitation period is fixed in relation to the claim by a State or Territory Act. The unfortunate result is that the time limits for bringing claims after a collision are now a matter of State or Northern Territory law. The relevant State and Territory limitation provisions should be “picked up” and applied in Federal Court proceedings by operation of the Judiciary Act 1903 (Cth), s 79.216

New South Wales, Tasmania, and the Northern Territory Introduction

[15.220]

New South Wales, Tasmania, and the Northern Territory have passed legislation similar in effect to s 396(1) of the (now repealed) Navigation Act 1912 (Cth), establishing a two-year limitation period for claims for damage caused by a ship.217 In each jurisdiction, the court may at its discretion extend the special maritime limitation periods to such extent and on such terms as it thinks fit, and shall do so to give the plaintiff a reasonable opportunity of arresting the defendant vessel if the plaintiff has not had a reasonable opportunity of doing so during the limitation period.218 Actions against ships other than the one on which damage or injury occurs

[15.230]

The two-year limitation period established by the (now repealed) Navigation Act 1912 (Cth), s 396(1) applied only to actions against a ship other than the one on which the damage or injury occurred.219 Because the legislation in New South Wales, Tasmania and the Northern Territory is based on s 396(1), it follows that the limitation period in those jurisdictions for actions against ships other than the one on which damage or injury occurs is two years, whether the action be in rem against the ship itself, or in personam against its owners.

216 On the operation of the Judiciary Act 1903 (Cth), s 79, see M Davies, A Bell and P Brereton, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, Chatswood, 2014), pp 116-120. 217 Limitation Act 1969 (NSW), s 22(2); Limitation Act 1974 (Tas), s 8(2); Limitation Act (NT), s 20(3). 218 Limitation Act 1969 (NSW), s 22(4); Limitation Act 1974 (Tas), s 8(4); Limitation Act (NT), s 20(5). 219 Burns Philp & Co Ltd v Nelson and Robertson Pty Ltd (1958) 98 CLR 495 at 506 per Taylor J; Navarro v Larrinaga Steamship Co Ltd: The Niceto de Larrinaga [1966] P 80.

[15.240]

15 Collisions and Liability for Damage

619

Actions against the ship on which damage or injury occurs

[15.240]

The State and Northern Territory provisions corresponding to s 396(1) of the repealed Navigation Act 1912 (Cth) do not apply to actions against the ship on which damage or injury occurs,220 so the limitation periods for such actions are to be found in the general limitation legislation, or in other applicable legislation, or in contract.221 For in personam actions against the owners of the ship on which the damage or injury occurred, the limitation periods differ from jurisdiction to jurisdiction according to the type of harm suffered. In New South Wales and Tasmania, the limitation period for in personam property damage claims is six years;222 for in personam personal injury claims it is three years in New South Wales,223 and in Tasmania it is three years from the date of “discoverability” or 12 years from the date of the negligent act or omissions, whichever occurs sooner.224 In the Northern Territory, the limitation period for in personam actions is three years for both property damage and personal injury claims.225 In New South Wales, Tasmania and the Northern Territory, the relevant legislation specifically provides that it does not apply to actions brought in rem against the ship itself.226 Section 37(1) of the Admiralty Act 1988 (Cth) is apparently designed to apply to that situation.227 It applies only when no other limitation period, Imperial, Commonwealth or State, would apply,228 and it provides: A proceeding may be brought under this Act on a maritime claim, or on a claim on a maritime lien or other charge, at any time before the end of: (a) the limitation period that would have been applicable in relation to the claim if a proceeding on the claim had been brought otherwise than under this Act; or 220 Limitation Act 1969 (NSW), s 22(2); Limitation Act 1974 (Tas), s 8(2); Limitation Act (NT), s 20(3). 221 If the plaintiff’s action is for breach of a contract of carriage, the contract may provide for a different limitation period, such as that in the Hague or Hague-Visby Rules or the Australian modification of the latter: see [12.580]. 222 Limitation Act 1969 (NSW), s 14(1)(b); Limitation Act 1974 (Tas), s 4(1)(a). 223 Limitation Act 1969 (NSW), s 18A. The limitation periods may be extended at the discretion of the court: Limitation Act 1969 (NSW), ss 60A, 60C (maximum extension of five years). 224 Limitation Act 1974 (Tas), s 5A(3). This provision applies to causes of action arising after the commencement date of 1 January 2005. The limitation period may be extended at the discretion of the court: Limitation Act 1974 (Tas), s 5(3) (total period not to exceed six years from the date on which the cause of action accrued). 225 Limitation Act (NT), s 12(1)(b). The limitation period may be extended at the discretion of the court: Limitation Act (NT), s 44. 226 Limitation Act 1969 (NSW), s 22(1); Limitation Act 1974 (Tas), s 8(1); Limitation Act (NT), s 20(2). 227 See Australian Law Reform Commission, Civil Admiralty Jurisdiction, Report No 33 (1986), para 253. 228 Admiralty Act 1988 (Cth), s 37(2).

620

Shipping Law

[15.240]

(b) if no proceeding on the claim could have been so brought — a period of 3 years after the cause of action arose.

The drafting of the section is rather unfortunate, and its effect is not entirely clear. Any plaintiff proceeding in rem against a ship under the Act could have proceeded in personam against its owner by invoking the ordinary, non-Admiralty jurisdiction of the court. That would mean that s 37(1)(b) would have no effect at all, because s 37(1)(a) would always apply the limitation period that would apply if the action were brought in personam. However, the apparent intention of s 37(1) is that para (a) should apply to in personam proceedings in the Admiralty jurisdiction conferred by the Act, and para (b) should apply to actions in rem. That intention can only be effected by reading the section as if it included the words “of the same kind” after the word “proceeding” in each of the lettered paragraphs. An example may make this point clearer. Consider an action in rem in New South Wales, claiming damages in respect of property damage suffered on that ship. No limitation period applies to such a claim by New South Wales law,229 so s 37(1) comes into operation. If the action had been brought in personam against the shipowner in the ordinary jurisdiction of the court, the relevant limitation period would have been six years.230 Under the plain meaning of s 37(1)(a), the plaintiff’s in rem action in the Admiralty jurisdiction of the court should then be subject to a limitation period of six years because it could have been brought in personam against the shipowner in the non-Admiralty jurisdiction of the court. However, if s 37(1)(a) is read as if it contained the words “of the same kind” after the word “proceeding”, then it would not apply to the situation under consideration, because a proceeding of the kind instituted by the plaintiff (that is, an in rem proceeding) could not have been instituted otherwise than under the Act. Section 37(1)(b) would then come into operation, and would apply a three-year limitation period to the plaintiff’s in rem action. This example shows that the two different interpretations of s 37(1) may lead to the application of different limitation periods in any particular case. The “golden rule” of statutory interpretation may require the modification of the words of s 37(1) in order to avoid the absurd result that s 37(1)(b) has no effect whatever.231 If it does, the limitation period for actions in rem against the ship on which damage or injury occurred is three years in New South Wales, Tasmania, Western Australia and the

229 Limitation Act 1969 (NSW), s 22(1). The example assumes that no contractual limitation period is applicable. 230 Limitation Act 1969 (NSW), s 14(1)(b). 231 Grey v Pearson (1857) 6 HLC 61; 10 ER 1216 at 106; 1234 per Lord Wensleydale.

[15.270]

15 Collisions and Liability for Damage

621

Northern Territory, by virtue of s 37(1)(b).232 If not, the relevant limitation periods are the same as for in personam actions, which are described above. Claims for contribution

[15.250]

Section 396(2) of the Navigation Act 1912 (Cth) contained a one-year limitation period for contribution claims. There is no equivalent in the legislation in New South Wales, Tasmania or the Northern Territory, so claims for contribution are governed by the general limitation legislation. In New South Wales and the Northern Territory, the limitation period for contribution claims is two years from the date on which the right to contribution accrued (by determination or settlement of the original action), or four years from the end of the limitation period for the original action for damages, whichever is shorter.233 In Tasmania, the limitation period for contribution claims is one year from service of the writ in the original proceedings on the person seeking contribution.234

Queensland, South Australia, Victoria, and Western Australia Introduction

[15.260]

Queensland, South Australia, Victoria, and Western Australia do not have maritime-specific provisions corresponding to what was s 396(1) of the Navigation Act 1912 (Cth). (Western Australia used to do so,235 but the relevant provision was repealed in 2005.)236 Thus, all limitation questions are determined by reference to the general limitation legislation or other applicable legislation.

Property damage claims

[15.270]

Property damage claims in tort in South Australia, Victoria, and Western Australia are subject to a limitation period of six years.237 Because there is no exclusion for in rem claims, as there is in New South Wales, Tasmania and the Northern Territory (and Queensland), the six-year limitation period applies both to in personam and in rem claims, as both are based on an action in tort. 232 The limitation period may apparently be extended at the discretion of the court by virtue of the Admiralty Act 1988 (Cth), s 37(3), although the operation of that subsection is also far from clear. 233 Limitation Act 1969 (NSW), s 26(1); Limitation Act (NT), s 24. 234 Wrongs Act 1954 (Tas), s 3(5), saved by Limitation Act 1974 (Tas), s 7(1). 235 Supreme Court Act 1934 (WA), s 29. 236 Repealed by Limitation Legislation Amendment and Repeal Act 2005 (WA), s 18(1). 237 Limitation of Actions Act 1936 (SA), s 35(c); Limitation of Actions Act 1958 (Vic), s 5(1)(a); Limitation Act 2005 (WA), s 13(1). In South Australia, the period may be extended at the discretion of the court: Limitation of Actions Act 1936 (SA), s 48.

622

Shipping Law

[15.280]

In personam property damage claims in Queensland are subject to a limitation period of six years.238 The Queensland limitation legislation does not apply to actions in rem.239 As a result, the limitation period for actions in rem claiming damages for property damage should be three years by operation of s 37(1)(b) of the Admiralty Act 1988 (Cth).

Personal injury claims

[15.280]

Personal injury claims in South Australia, Victoria and Western Australia are subject to a limitation period of three years.240 Because there is no special in rem exclusion, as there is in New South Wales, Queensland, Tasmania and the Northern Territory, the three-year limitation period applies to claims in personam or in rem. In personam personal injury claims in Queensland are subject to a limitation period of three years.241 Because the Queensland legislation specifically provides that it does not apply to in rem claims,242 an in rem action claiming damages for personal injury should be subject to a limitation period of three years by operation of the Admiralty Act 1988 (Cth), s 37(1)(b).

Contribution claims

[15.290]

In Queensland, the limitation period for contribution claims is two years from the date on which the right to contribution accrued, or four years from the end of the limitation period for the original action for damages, whichever is shorter.243 In South Australia, the limitation period for contribution claims is the limitation period that would have applied if the plaintiff had proceeded directly against the person from whom contribution is sought, or two years after the damages payable by the person entitled to contribution are finally determined, whichever is the longer.244 In Victoria, the limitation period for contribution claims is one 238 Limitation of Actions Act 1974 (Qld), s 10(1)(a). 239 Limitation of Actions Act 1974 (Qld), s 10(6)(a) specifically provides that s 10 does not apply to an Admiralty action “that is enforceable in rem”. It is arguable that s 10 should not apply to Admiralty actions in personam, as they are “enforceable in rem”, at least where the ownership of the ship has not changed: see Admiralty Act 1988 (Cth), s 17. 240 Limitation of Actions Act 1936 (SA), s 36(1); Limitation of Actions Act 1958 (Vic), s 5(1AA); Limitation Act 2005 (WA), s 14(1). In each jurisdiction, the period may be extended at the discretion of the court: Limitation of Actions Act 1936 (SA), s 48; Limitation of Actions Act 1958 (Vic), s 23A; Limitation Act 2005 (WA), s 39(1). 241 Limitation of Actions Act 1974 (Qld), s 11(1). The period may be extended at the discretion of the court: Limitation of Actions Act 1974 (Qld), s 31. 242 Limitation of Actions Act 1974 (Qld), s 10(6)(a). 243 Limitation of Actions Act 1974 (Qld), s 40(1). 244 Law Reform (Contributory Negligence and Apportionment of Liability) Act 2001 (SA), s 6(4).

[15.290]

15 Collisions and Liability for Damage

623

year from service of the writ in the original action for damages, or the limitation period in the original action, whichever is longer.245 In Western Australia, the limitation period for contribution claims is two years from the date the cause of action accrued.246

245 Wrongs Act 1958 (Vic), s 24(4). 246 Limitation Act 2005 (WA), s 17.

16

Limitation of Liability [16.10] INTRODUCTION ........................................................................................... 625 [16.20] HISTORICAL DEVELOPMENT AND THE CONSTITUTIONAL POSITION ........................................................................................................ 630 [16.30] THE 1976 LIMITATION CONVENTION AS AMENDED BY THE 1996 PROTOCOL ............................................................................................ 634

[16.30] How a limitation claim or defence is made, and in what courts .................................................................................................. 634 [16.40] Constituting the limitation fund ................................................... 637 [16.50] Persons who may limit their liability .......................................... 640 [16.80] Ships protected by limitation of liability ..................................... 644 [16.90] Claims subject to limitation ........................................................... 645 [16.150] Claims excepted from limitation ................................................. 653 [16.160] Conduct barring limitation .......................................................... 653 [16.170] Calculating the amount of the limit ........................................... 657 [16.210] Distribution of the limitation fund ............................................. 661 [16.220] Claims may only be made against the limitation fund .......... 664 [16.230] CHOICE OF FORUM: SHOPPING FOR THE MOST FAVOURABLE CONVENTION ............................................................................................. 667

[16.230] Introduction .................................................................................... 667 [16.240] The requirements of the 1976 Convention and the 1996 Protocol ............................................................................................ 669 [16.250] Forum non conveniens ................................................................. 671 [16.260] Anti-suit injunctions ...................................................................... 676

INTRODUCTION [16.10]

The purpose of the statutory schemes limiting shipowners’ liability can be stated frankly. “The policy evident in [limitation provisions] is the protection of the owner engaged in the maritime carrying trade from financial ruin where his vessel causes damage of the

626

Shipping Law

[16.10]

prescribed kind”.1 Limitation of this kind is virtually unique to shipping law. Few other defendants are freed of the obligation to compensate in full those whom they have injured. As Sheppard J observed in Schlederer v The Ship Red Fin:2 In all fields of human endeavour the ordinary citizen is protected by the law relating to negligence. That applies whether he is on the highway, in the factory, entering premises, engaged in sport, or injured, perhaps, as the result of the careless use of a household implement such as a lawnmower. But when he goes to sea, the position changes; and he may be faced, whether he has suffered property damage or personal injury, with a limitation action … [which] … has the effect, for practical purposes, of either overriding, or substantially reducing, the effect of the principle that an employer is liable for the wrongful acts of his employees.

The United Kingdom introduced its first statute limiting liability in 1734,3 and it is clear that the shipping industry was singled out for this overt protectionism because of its importance to the British economy. Invisible exports such as shipping freight and marine insurance accounted for about three-quarters of the value of British produced exports until well into the 20th century.4 The importance of shipping trade to the national economy was openly cited as a reason for introducing limitation of liability. The preamble to the first limitation statute began, “Whereas it is of the greatest consequence and importance to this Kingdom, to promote the increase of the number of ships and vessels, and to prevent any discouragement to merchants and others from being interested and concerned therein”.5 Policy reasons not unlike these are still used to justify the existence of limitation. In Browner International Ltd v Monarch Shipping Co Ltd (The European Enterprise),6 Steyn J said: [A]lthough limitation provisions are often viewed with scepticism by lawyers, the undoubted advantage of limitation provisions … is that it makes it easier and less expensive to obtain the insurance vital to the conduct of the shipping trade. 1 China Ocean Shipping Co v South Australia (1979) 145 CLR 172 at 185 per Barwick CJ, quoted in Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555 at 561 [31] per Rares J. See also Victrawl Pty Ltd v Telstra Corp Ltd; Sanko Steamship Co Ltd v Sumitomo Australia Ltd (1995) 183 CLR 595 at 600 per Brennan J (dissenting but not on this point): “Rules for the limitation of liability have traditionally been seen as rules designed to encourage maritime commerce”. 2 Schlederer v The Ship Red Fin [1979] 1 NSWLR 258 at 272-273. 3 Responsibility of Shipowners Act 1734. See M Thomas, “British Concepts of Limitation of Liability” (1979) 53 Tulane Law Review 1205. 4 See W Ashworth, An Economic History of England 1870-1936 (1969), p 153. 5 M Thomas, “British Concepts of Limitation of Liability” (1979) 53 Tulane Law Review 1205 at 1206. 6 Browner International Ltd v Monarch Shipping Co Ltd (The European Enterprise) [1989] 2 Lloyd’s Rep 185 at 191. Although Steyn J was speaking of the limitation of liability under Art 4, r 5 of the Hague-Visby Rules (see [12.520]), the rationale applies equally to the “global” limitation considered in this chapter.

[16.10]

16 Limitation of Liability

627

Freight rates and insurance premiums are set by markets that operate on the assumption that liability will ultimately be limited in one way or another. However, although the commercial structure of maritime trade is built upon the foundation of limited liability, it is open to question whether the policy justification can be regarded as persuasive in all cases.7 There are cases where limitation of liability produces distinctly unsavoury results. For example, the owners of the “Titanic” successfully limited their liability to those killed and injured in the world’s best-known maritime disaster.8 Fifty-one people were drowned when the ship “Bowbelle” ran over the ship “Marchioness” on the River Thames in the middle of London in 1989, but the owner of the “Bowbelle” was nevertheless entitled to limit its liability.9 In such circumstances, where limitation of liability protects the shipowner’s insurer at the expense of the victims of disaster, the underlying policy justifications seem less convincing. Limitation of liability may produce the result that injured plaintiffs are “substantially under-compensated for the serious injuries which they … suffered”,10 although that possibility is receding in Australia because the limits of liability have been increased significantly in recent years. Notwithstanding arguments such as these, it is clear that limitation of liability is here to stay. The modern provisions limiting shipowners’ liability are to be found in two international conventions, known as the Limitation Convention 195711 and the Limitation Convention 1976 or, simply, LLMC 76.12 The Limitation Convention 1976 was amended by Protocol in 1996,13 and the limits in the 1996 Protocol were increased (at Australia’s suggestion)14 in accordance with the tacit acceptance procedure of the International Maritime Organization (IMO) with effect from 8 June

7 See Schlederer v The Ship Red Fin [1979] 1 NSWLR 258 at 273 per Sheppard J. See also The Bramley Moore [1964] P 200 at 220 per Lord Denning MR: “Limitation of liability is not a matter of justice. It is a rule of public policy which has its origin in history and its justification in convenience.” 8 Oceanic Steam Navigation Co v Mellor (The Titanic) 233 US 718 (1914). See G Duncan, “Limitation of Shipowners’ Liability” (1979) 53 Tulane Law Review 1046 at 1046-1049. 9 The Bowbelle [1990] 1 Lloyd’s Rep 532. 10 Noferi v Smithers [2002] NSWSC 508 at [5] per Newman AJ. 11 International Convention Relating to Limitation of the Liability of Owners of Sea-Going Ships 1957. 12 Limitation Convention 1976. 13 1996 Protocol to amend Convention on Limitation of Liability for Maritime Claims of 19 November 1976 (“1996 Protocol”). 14 IMO Legal Committee Resolution LEG.5(99), adopted by the Legal Committee on 19 April 2012, notes that the proposal to amend the Protocol limits was made by the delegation of Australia on behalf of 20 co-sponsoring delegates. See F Berlingieri, International Limitation Conventions (Informa Law (Routledge), Oxford, 2015), Vol 2, p 452.

628

Shipping Law

[16.10]

2015.15 The post-2015 limits are now high enough that shipowners may have an effective right to limit only in cases where considerable damage has been caused in a single incident.16 Nevertheless, the use of limitation proceedings can be expected to continue, if only because it provides a potential defendant with a possible means of selecting the forum in which claims against it must be made.17 The Limitation Convention 1957 had the force of law in Australia from 1979 to 1991; the provisions of LLMC 76 were given the force of law in Australia by the Limitation of Liability for Maritime Claims Act 1989 (Cth), with effect from 1 June 1991. The provisions of LLMC 76 still have the force of law as part of the 1996 Protocol,18 but Australia denounced the 1976 Convention itself on 31 May 2013, with effect from 1 June 2014.19 Article 9(1) of the 1996 Protocol provides that as between parties to the 1996 Protocol, the 1976 Convention and the 1996 Protocol are to be read and interpreted as one single instrument.20 This has the effect that countries that wish to apply the 1996 Protocol need only be party to the 1996 Protocol.21 Australia denounced the 1976 Convention with effect from 1 June 2014, so it is now party only to the 1996 Protocol (which includes the provisions of the 1976 Convention) and not the 1976 Convention itself. The denunciation was done to ensure that if an incident occurs in Australia involving a ship registered in a country party to the 1976 Convention but not the 1996 Protocol, the shipowner will not be entitled to claim that the lower liability limits in the 1976 Convention apply.22 15 Article 8 of the 1996 Protocol provides for the limits stated in the Protocol to be updated by a procedure which deems all Contracting States to have accepted the proposed increase unless more than one-fourth of them object within 18 months after the date of notification by the International Maritime Organization (IMO), and which brings the increased limits into effect automatically 18 months after the date of tacit acceptance (ie, 36 months after notification). See Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1A, Art 8. 16 See [16.170] and Example 16.1. Australia wanted the tacit acceptance increase to be even greater, but Japan’s more moderate counter-proposal won the day at IMO: see N Gaskell, “Compensation for Offshore Pollution: Ships and Platforms” in M Clarke (ed), Maritime Law Evolving (Hart Publishing, Oxford, 2013), p 124. 17 See [16.230]–[16.260]. 18 Limitation of Liability for Maritime Claims Act 1989 (Cth), s 6. 19 International Maritime Organization, Status of multilateral Conventions and instruments in respect of which the International Maritime Organization or its Secretary-General performs depositary or other functions (as at 26 February 2016), pp 359, 363. 20 Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1A, Art 9.1. 21 Six countries have become party to the 1996 Protocol but were never party to the 1976 Convention: IMO, Status of multilateral Conventions (as at 26 February 2016), pp 373-375. At the time of writing (January 2016), they were: Canada, Iceland, Malaysia, Malta, Palau, and Russia. 22 Parliament of the Commonwealth of Australia, Joint Standing Committee on Treaties, Review into Treaties, Report 115 (21 March 2011), para 10.11.

[16.10]

16 Limitation of Liability

629

Article 9(2) provides that a country (like Australia) that is party to the 1996 Protocol but not the 1976 Convention is bound by the provisions of the Convention as amended by the Protocol in relation to other countries party to the Protocol, but is not bound by the provisions of the Convention in relation to countries party only to the Convention. That means that Australia owes treaty obligations to other countries party to the Protocol, whether or not they are also party to the Convention, but not to countries party only to the Convention. Conversely, the denunciation of the Convention means that Australia is owed treaty obligations by all countries party to the Protocol, but not by countries party only to the Convention. At the time of writing,23 there were 50 countries party to the 1996 Protocol (16 party only to the 1996 Protocol24 and 34 party to the 1976 Convention as amended by the 1996 Protocol)25 and 20 that were party only to the 1976 Convention and not the 1996 Protocol.26 Australia’s denunciation of the 1976 Convention may have an impact on the obligation of other countries to release arrested ships or other security when a limitation fund has been constituted in Australia,27 and also on the use of limitation proceedings as a forum shopping device,28 because it has reduced by 20 the number of countries to which Australia owes treaty obligations (and by which it is owed treaty obligations). An example of the impact of the denunciation and the concomitant reduction in treaty obligations is given at [16.230]. Legislation to enact the 1996 Protocol in Australia was passed in 2001 and came into force in 2004.29 Because that legislation gives the force of law to the article in the 1996 Protocol that creates the tacit acceptance procedure (Art 8), the limits of liability were automatically increased with effect from

23 January 2016. 24 Ten countries other than Australia have denounced the 1976 Convention: see IMO, Status of multilateral Conventions (as at 26 February 2016), p 363. At the time of writing, they were: Belgium, Denmark, Finland, Germany, Japan, the Netherlands, Norway, Spain, Sweden, and the UK. Six countries (Canada, Iceland, Malaysia, Malta, Palau, and Russia) have adopted the 1996 Protocol but were never party to the 1976 Convention. 25 IMO, Status of multilateral Conventions (as at 26 February 2016), pp 362-363, 375-376. The total of 33 includes Hong Kong: China acceded to the Convention and the Protocol only for the Hong Kong Special Administrative Region. 26 IMO, Status of multilateral Conventions (as at 26 February 2016), pp 362-363, 375-376. At the time of writing, the countries in this category were: Algeria, Azerbaijan, Bahamas, Barbados, Benin, Dominica, Egypt, Equatorial Guinea, Georgia, Guyana, Kiribati, Mauritius, Mexico, Nigeria, Singapore, Switzerland, Trinidad and Tobago, United Arab Emirates, Vanuatu, and Yemen. 27 See [16.220]. 28 See [16.230]–[16.260]. 29 International Maritime Conventions Legislation Amendment Act 2001 (Cth), s 3, Sch 1, proclaimed on 13 May 2004.

630

Shipping Law

[16.20]

8 June 2015.30 The Limitation of Liability for Maritime Claims Act 1989 (Cth) was amended to reflect the “tacit acceptance” increases, with effect from the same day, 8 June 2015.31 Before 1979, the Australian law of limitation of liability derived directly from the Merchant Shipping Act 1894 (UK). This reliance on the continued operation of an Imperial statute raised a number of constitutional questions. Although the effect of Commonwealth and State legislation has rather complex sources, given the years of reliance on a United Kingdom statute of 1894, the result at the end of the day is quite straightforward, which is that the Commonwealth legislation applies to almost all incidents involving vessels in Australia.

HISTORICAL DEVELOPMENT AND THE CONSTITUTIONAL POSITION [16.20]

Australia had no general statutory provisions of its own relating to limitation of shipowners’ liability until 1979. Limitation of liability in respect of government ships was introduced by Commonwealth legislation in 1958,32 but for non-government ships the limitation provisions in force in Australia continued to be those of the British Merchant Shipping Act 1894. That Act came into force in the colonies because it applied generally to British possessions,33 and it continued in force in the Commonwealth and each of the States after Federation.34 For the same reason, amendments to the Act of 1894 became part of the law of the Australian States,35 and also of the Commonwealth, prior to the Statute of Westminster Adoption Act 1942 (Cth). In 1958, the United Kingdom amended the Act of 1894 by passing the Merchant Shipping (Liability of Shipowners and Others) Act 1958 (UK). That Act was passed mainly to give effect to the Limitation Convention 1957. However, the amendment could no longer form part of the law of the Commonwealth because of the Statute of Westminster Adoption Act 1942 30 IMO Legal Committee Resolution LEG.5(99), adopted by the Legal Committee on 19 April 2012, notes that the proposal to amend the Protocol limits was made by the delegation of Australia on behalf of 20 co-sponsoring delegates. See F Berlingieri, International Limitation Conventions (Informa Law (Routledge), Oxford, 2015), Vol 2, p 452. However, notification of Contracting States was done by IMO on 8 June 2012: see http://www.imo.org/About/Conventions/ListOfConventions/Pages/Convention-onLimitation-of-Liability-for-Maritime-Claims-%28LLMC%29.aspx. 31 Limitation of Liability for Maritime Claims Amendment Act 2015 (Cth). 32 The then Pt VIII of the Navigation Act 1912 (Cth) was introduced by the Navigation Act 1958 (Cth), s 161. 33 Merchant Shipping Act 1894 (UK), ss 735 – 736. 34 See Bistricic v Rokov (1976) 135 CLR 552 at 555 per Mason J; McIlwraith McEacharn Ltd v Shell Co of Australia Ltd (1945) 70 CLR 175. 35 See, eg, China Ocean Shipping Co v South Australia (1979) 145 CLR 172, where it was held that the Merchant Shipping (Liability of Shipowners and Others) Act 1900 (UK) was a law in force in South Australia.

[16.20]

16 Limitation of Liability

631

(Cth),36 and it did not apply in the States because the Act was not expressed to apply in the colonies or dominions.37 Hence, between 1958 and 1979, the law relating to limitation of liability in Australia did not conform to the Limitation Convention 1957. The Australian limitation provisions were still those of the Act of 1894, even though they no longer applied in the United Kingdom itself.38 One of the reasons for the late arrival of Australian limitation legislation was the restriction on the powers of the Australian legislatures. Prior to the Statute of Westminster Adoption Act 1942 (Cth), the Commonwealth could affect the application of the Act of 1894 only with the confirmation of Her Majesty in Council, and local proclamation of Her Majesty’s approval was required.39 After the passage of the Statute of Westminster Adoption Act 1942 (Cth), the Commonwealth was freed from those restrictions, but the States were still subject to them, and any State law made without conforming to the requirements would have been void on the grounds of repugnancy.40 In 1979, the Commonwealth finally legislated to adopt the provisions of the Limitation Convention 1957. This it did by repealing the limitation provisions of the Act of 1894, and by enacting the Limitation Convention 1957 in toto as a schedule to the Navigation Act 1912 (Cth).41 The provisions giving effect to the Limitation Convention 1957 were, in turn, repealed and replaced by the Limitation of Liability for Maritime Claims Act 1989 (Cth), which gives the force of law to the LLMC 76.42 Later amendments adopted the 1996 Protocol.43 36 Statute of Westminster Act 1931 (UK), s 4, adopted by Statute of Westminster Adoption Act 1942 (Cth), s 3. 37 Bistricic v Rokov (1976) 135 CLR 552. 38 The limitation provisions relating to government ships which were introduced into the Navigation Act 1912 (Cth) in 1958 were also modelled on the Act of 1894. 39 Merchant Shipping Act 1894 (UK), s 735; Hume v Palmer (1926) 38 CLR 441. See also Asiatic Steam Navigation Co Ltd v Commonwealth (1956) 96 CLR 397 at 418 per Dixon CJ, McTiernan and Williams JJ. 40 Colonial Laws Validity Act 1865 (UK). See China Ocean Shipping Co v South Australia (1979) 145 CLR 172 at 194-195 per Gibbs J. Western Australia was obliged to follow the procedure of consent and proclamation required by the Merchant Shipping Act 1894 (UK), s 735 when it enacted the limitation provisions of the Western Australian Marine Act 1982 (WA): see Kirmani v Captain Cook Cruises Pty Ltd (1985) 159 CLR 351 at 372 per Gibbs CJ. 41 Navigation Act 1912 (Cth), s 333, Sch 6. Article 1(1)(c) of the Limitation Convention 1957 was specifically excluded by s 333. A supplementary schedule, Sch 6A, came into force on 3 December 1985, to give effect to a 1979 Protocol replacing the references to “francs” in the Limitation Convention 1957 with references to “units of account”, which were Special Drawing Rights (SDRs). 42 Limitation of Liability for Maritime Claims Act 1989 (Cth), s 6. Article 2.1(d), (e) of the LLMC 76 are specifically excluded by s 6: see [16.130]. 43 International Maritime Conventions Legislation Amendment Act 2001 (Cth), s 3, Sch 1, proclaimed on 13 May 2004.

632

Shipping Law

[16.20]

Although the Limitation of Liability for Maritime Claims Act 1989 (Cth) received the Royal Assent on 30 November 1989, it did not come into force until 1 June 1991. The delay of 18 months between assent and commencement was caused by the need for Australia to denounce the Limitation Convention 1957. It gave rise to some controversy about when and how LLMC 76 actually came into force in Australia. In Victrawl Pty Ltd v Telstra Corp Ltd; Sanko Steamship Co Ltd v Sumitomo Australia Ltd,44 the High Court of Australia held that LLMC 76 did not apply to proceedings arising from occurrences before 1 June 1991. Thus, the Limitation Convention 1957 governed limitation proceedings in respect of occurrences up to and including 31 May 1991; LLMC 76 governs limitation proceedings in respect of occurrences on or after 1 June 1991. In Kirmani v Captain Cook Cruises Pty Ltd,45 the High Court of Australia held that the Navigation Amendment Act 1979 (Cth) (which introduced the Limitation Convention 1957 as part of Commonwealth law) repealed the limitation provisions of the Merchant Shipping Act 1894 (UK), both as part of the law of the Commonwealth and as part of the law of the States. It was said that the Commonwealth can legislate to repeal an Imperial statute in operation in the States by virtue of the “external affairs” power in s 51(xxix) of the Constitution, “even if the statute deals with a topic with respect to which the states alone possess legislative power, thereby opening the way to state legislation on the topic free from the fetters created by the repealed law”.46 The Commonwealth does not have legislative power to introduce either the Limitation Convention 1957 or LLMC 76 as part of the law of the States, but, according to Kirmani, it has opened the way for State legislation to that effect. The freedom of the States and the Northern Territory to legislate is reinforced by the Limitation of Liability for Maritime Claims Act 1989 (Cth), s 5, which provides that the Act does not apply to a ship to the extent that a law of a State or the Northern Territory makes provision giving effect to “the Convention” in relation to that ship. “The Convention” is defined by s 3(1) as being LLMC 76, as amended by the Protocol of 1996 and as amended by resolution LEG.5(99) adopted by the Legal Committee of the International Maritime Organization at London on 19 April 2012. To date, Western Australia is the only State to have adopted its own limitation legislation. The Western Australian Marine Act 1982 (WA), s 84 purports to apply the Limitation Convention 1957 to occurrences involving trading ships on intrastate Western Australian voyages, Australian fishing vessels on intrastate Western Australian voyages, inland waterways vessels in Western Australia, and pleasure craft in Western Australia.47 However, 44 Victrawl Pty Ltd v Tesltra Corp Ltd; Sanko Steamship Co Ltd v Sumitomo Australia Ltd (1995) 183 CLR 595. 45 Kirmani v Captain Cook Cruises Pty Ltd (1985) 159 CLR 351. 46 Kirmani v Captain Cook Cruises Pty Ltd (1985) 159 CLR 351 at 382 per Mason J. 47 The Western Australian Act also purports to apply to Western Australian off-shore industry vessels on intrastate voyages where the Commonwealth Minister for Transport

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seagoing ships of these kinds are also covered by the terms of the Limitation of Liability for Maritime Claims Act 1989 (Cth), which simply confers the right to limit on the owners of “seagoing ships”.48 The combined effect of ss 3(1) and 5 of the Commonwealth Act is to save the operation of State Acts that give effect to LLMC 76 as amended by the 1996 Protocol and IMO resolution LEG.5(99), so it does not save the operation of the limitation provisions of the Western Australian Marine Act 1982 (WA), because they do not give effect to that Convention, nor the Protocol, nor the IMO resolution. Thus, by virtue of s 109 of the Constitution, the provisions of LLMC 76/96 in the Commonwealth Act prevail over the provisions of the Limitation Convention 1957 in the Western Australian Act in relation to seagoing trading ships on intrastate Western Australian voyages, seagoing Australian fishing vessels on intrastate Western Australian voyages, seagoing inland waterways vessels in Western Australia (if there can be such a thing), and seagoing pleasure craft in Western Australia. There are no limitation provisions in force as part of the law of the other States, or of the Northern Territory. In those jurisdictions, the provisions of the Imperial Act of 1894 (and later Imperial Acts) have been repealed but not replaced,49 and so the common law fills the void in relation to any vessels not covered by the Commonwealth Act. There being no limitation of liability at common law, there is no limitation in the law of those States or the Northern Territory. However, the resulting lacuna is small; it contains only ships that are not seagoing, because seagoing ships are governed by the Limitation of Liability for Maritime Claims Act 1989 (Cth).50 Although small, it is not entirely insignificant. A ship is “seagoing” if it actually goes to sea; it is not “seagoing” if it could go to sea, but does not.51 Thus, for example, the ferries and pleasure craft that do not leave the waters of Sydney Harbour, Botany Bay, Port Phillip Bay, and Moreton Bay, and the inland waterway vessels that ply the Murray River are not protected by limitation of liability.52 As they are not seagoing ships, they has not made a declaration under Navigation Act 1912 (Cth), s 8A(5), that the vessel in question is one to which the Commonwealth Act applies: see Western Australian Marine Act 1982 (WA), s 84(1)(e). The Navigation Act 1912 (Cth) has been repealed and replaced by the Navigation Act 2012 (Cth), without corresponding amendment of the Western Australian Marine Act 1982 (WA). 48 Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1, Art 1.2. See [16.80]. 49 Amarantos Shipping Co Ltd v South Australia (2004) 89 SASR 438 (FC), which also held that the Merchant Shipping (Liability of Shipowners and Others) Act 1900 (UK) was repealed by the Commonwealth legislation that enacted the Limitation Convention 1957 in Australia. 50 Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1, Art 1.2. See [16.80]. 51 Salt Union Ltd v Wood [1893] 1 QB 370; The CS Butler (1874) LR 4 A & E 238; Ex parte Hutchinson (1871) LR 6 QB 280 at 291; Union Steamship Co of New Zealand Ltd v Commonwealth (1925) 36 CLR 130 at 145 per Isaacs J; Kirmani v Captain Cook Cruises Pty Ltd (1985) 159 CLR 351 at 369, 457; Smith v Perese [2006] NSWSC 288; Laoulach v El Khoury [2010] NSWSC 1009. 52 See Laoulach v El Khoury [2010] NSWSC 1009, where it was held that the Limitation of Liability for Maritime Claims Act 1989 (Cth) did not apply to a pleasure craft that did not

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are not protected by the Commonwealth Act, and they are afforded no protection by the laws of the relevant States.53 Such protection could be provided either by the Commonwealth deeming such ships to be seagoing for the purposes of the 1976 Limitation Convention (if it is constitutionally capable of so doing),54 or by the States (and the Northern Territory) enacting LLMC 76 as amended by the 1996 Protocol and IMO Resolution LEG.5(99), and deeming non-seagoing ships to be seagoing for the purposes of that legislation. That was done by Western Australia in order to make the Limitation Convention 1957 apply to “sheltered water passenger vessels”, such as the non-seagoing ferries that ply the Swan River in Perth.55 It seems that these are the only ships in Australia to be governed by the Limitation Convention 1957 after 1 June 1991. Thus, for practical purposes, almost all vessels in Australian waters are covered by the provisions of LLMC 76 as amended by the 1996 Protocol (hereafter LLMC 76/96).

THE 1976 LIMITATION CONVENTION AS AMENDED BY THE 1996 PROTOCOL How a limitation claim or defence is made, and in what courts The shipowner56 may rely on the provisions of LLMC 76/96 either by way of defence to an action, or in separate limitation proceedings.

[16.30]

Section 25(4) of the Admiralty Act 1988 (Cth) provides that, where a court has Admiralty jurisdiction under the Act in respect of a proceeding, that leave Botany Bay or Sydney Harbour. The same point was conceded in Nicol v Whiteoak (No 2) [2011] NSWSC 1486. Compare Smith v Perese [2006] NSWSC 288 (small open abalone dive boat held to be “seagoing” because it was used at sea). 53 Non-seagoing ships in Western Australia are in the same position. They would fall within the general ambit of the Western Australian Marine Act 1982 (WA) by virtue of its s 6(1), but they are not covered by the limitation provisions of the Limitation Convention 1957, because it is confined in its operation to seagoing ships. Thus, the limitation provisions of the Western Australian Marine Act 1982 (WA) have virtually no effect since the Limitation of Liability for Maritime Claims Act 1989 (Cth) came into operation. 54 LLMC 76 reserves to States Parties the right to apply national laws to ships intended for navigation on inland waterways: see Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1, Art 15.2(a). 55 Western Australian Marine Act 1982 (WA), s 85. “Sheltered water passenger vessel” is defined to mean a passenger vessel permitted to operate “in partially smooth and smooth waters only”: see Western Australian Marine Act 1982 (WA), s 76. “Smooth and partially smooth waters” are defined geographically by the Marine (Certificates of Competency and Safety Manning) Regulations 1985 (WA), reg 4 and Sch 1. 56 It is not only the shipowner that is entitled to limit its liability: see [16.50]. For convenience, this chapter refers only to “shipowner”, which should be read in the extended sense described at [16.50]. See also at [16.60], where the right of salvors to limit their liability is considered.

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jurisdiction extends to entertaining a defence57 in that proceeding by way of limitation of liability under LLMC 76/96. Thus, if a claim is made against the shipowner in the Admiralty jurisdiction of the Federal Court of Australia or of the Supreme Court of a State or Territory, that court may consider a defence of limitation under the Convention. Inferior courts may also have jurisdiction to entertain a limitation defence, although the intention of the Admiralty Act 1988 (Cth) appears to be otherwise. Section 9(1) of the Act confers Admiralty jurisdiction in personam on inferior courts (inter alia), although such courts do not have Admiralty jurisdiction in rem.58 Section 9(2) provides that s 9(1) does not invest inferior courts with jurisdiction “in respect of limitation proceedings”, but this may not affect the operation of s 25(4). If a claim is made against the shipowner in the in personam Admiralty jurisdiction of an inferior court, it is arguable that the jurisdiction of that court is extended by s 25(4), notwithstanding s 9(2). The extension of jurisdiction by s 25(4) would only be excluded by s 9(2) in such a case if the claim against the shipowner and the shipowner’s limitation defence were held to constitute “limitation proceedings” for the purposes of s 9(2). Although this construction seems strained,59 it is consistent with the apparent intention of s 9 to confine consideration of LLMC 76/96 to the superior courts. Given that the minimum limit of liability under LLMC 76/96 as amended by the 1996 Protocol (and as further amended by the IMO resolution LEG.5(99) in 2015) is 1.51 million Special Drawing Rights (SDRs),60 almost all claims with the potential of reaching the limit would be in superior courts in any event, because of the monetary limits on the jurisdiction of the inferior courts. However, that is not uniformly true, particularly in relation to personal injury claims, where inferior courts often have jurisdiction unlimited in amount.61 If the shipowner raises its right to limit by way of defence, its liability is limited to the amount stipulated in the Convention for each claim.62 Thus, 57 Strictly speaking, the Convention does not afford a defence, but only a limit on damages: see James Patrick & Co Ltd v Union Steamship Co of New Zealand Ltd (1938) 60 CLR 650 at 673 per Dixon J. Nevertheless, the intended meaning of the Admiralty Act 1988 (Cth), s 25(4) is plain. See Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555 at 558 [12] per Rares J, describing the effect of s 25(4) as providing a defence. 58 In rem jurisdiction is conferred only on the Federal Court and the Supreme Courts of the States and Territories: Admiralty Act 1988 (Cth), s 10. 59 Admiralty Act 1988 (Cth), s 3(1) defines “limitation proceeding” as (inter alia) “a proceeding under s 25 of this Act”, which seems to refer to a proceeding where the shipowner is applicant, under s 25(1). This is clearly the sense in which “limitation proceeding” is used in the Admiralty Rules 1988 (Cth), r 21. 60 Limitation of Liability for Maritime Claims Act 1991 (Cth), Sch 1A, Art 3. 61 For example, the jurisdiction of the District Court of Western Australia in respect of personal injury claims is not limited in amount: see District Court of Western Australia Act 1969 (WA), s 50(2). 62 Gaggin v Moss [1984] 2 Qd R 513 at 516 per Connolly J; China Ocean Shipping Co v South Australia (1979) 145 CLR 172 at 193 per Gibbs J; Victrawl Pty Ltd v Telstra Corp Ltd; Sanko

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a shipowner should not rely on the Convention by way of defence if more than one claim is or may be made against it. If many claims are (or are likely to be) made against it in respect of the same occurrence, the shipowner should institute limitation proceedings itself, as this is the only way in which it can achieve the effect of limiting its liability for all claims to the amount stipulated in the Convention.63 If many claims have been made against the shipowner, or if it apprehends that many claims may be made against it, it may apply to the Federal Court of Australia for a determination of the question of its right to limit its liability under LLMC 76/96.64 The Federal Court may transfer the limitation proceedings to the Supreme Court of a State or Territory65 and must do so if they are “related to” a proceeding on foot in the State court.66 In Smithers v Lokys,67 the Federal Court held that limitation proceedings should be transferred when the State court is considering liability proceedings in relation to the incident in question, at least when the liability claimants intend to argue that the shipowner is not entitled to limit its liability because it had acted “recklessly and with knowledge that … loss would probably result” for the purposes of Art 4 of the LLMC 76.68 Alternatively, if a claim has already been made against the shipowner in the Supreme Court of a State or Territory, the shipowner may apply to that court for a determination of its right to limit under the Convention.69 If no claim has yet been made against it in a Supreme Court, the shipowner may apply to the Supreme Court of any State or Territory.70 A State or Territory Supreme Court may transfer the proceedings to the Federal Court71 or to another Supreme Court72 upon application or of its Steamship Co Ltd v Sumitomo Australia Ltd (1995) 183 CLR 595 at 601 per Brennan J (dissenting but not on this point). See also Polish Steamship Co v Atlantic Maritime Co [1985] QB 41 at 54 per Eveleigh LJ; The Falstria [1988] 1 Lloyd’s Rep 495 at 497-498 per Sheen J. 63 Victrawl Pty Ltd v Telstra Corp Ltd; Sanko Steamship Co Ltd v Sumitomo Australia Ltd (1995) 183 CLR 595 at 601 per Brennan J (dissenting but not on this point). 64 Admiralty Act 1988 (Cth), s 25(1). 65 Admiralty Act 1988 (Cth), s 27(1). 66 Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), s 5(4). 67 Smithers v Lokys (2001) 108 FCR 303. 68 Smithers v Lokys (2001) 108 FCR 303 at 308 [14]-[15] per Tamberlin J. 69 Limitation of Liability for Maritime Claims Act 1989 (Cth), s 9(1)(a), the effect of which is saved by Admiralty Act 1988 (Cth), s 25(2). 70 Limitation of Liability for Maritime Claims Act 1989 (Cth), s 9(1)(b); Admiralty Act 1988 (Cth), s 25(2). It seems that s 9(1)(b) would also apply where claims have already been made against the shipowner in inferior courts. 71 Admiralty Act 1988 (Cth), s 27(1). 72 Admiralty Act 1988 (Cth), s 27(1); Limitation of Liability for Maritime Claims Act 1989 (Cth), s 9(3).

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own motion, which it may choose to do if it appears more convenient that the limitation claim be heard in the same jurisdiction as the liability claims against the shipowner. Where the shipowner applies to the Federal Court (or a Supreme Court) for determination of its right to limit its liability under LLMC 76/96, the shipowner is the applicant (or plaintiff) in the proceedings and the claimants or potential claimants in the liability proceedings are the respondents (or defendants). (Hereafter, this chapter refers to the shipowner as “the applicant” and the liability plaintiffs as “the respondents”; this terminology assumes that limitation of liability is raised in separate proceedings, as is usually the case.) The applicant’s limitation proceeding must be commenced as an action in personam, and the initiating process must name at least one actual or potential claimant as a respondent.73 Other liability plaintiffs, or potential plaintiffs, need not be named as respondents, but may be identified by reference to their being members of a specified class,74 which is usually simply the class of people suffering loss as a result of the incident in question. If respondents are identified by their membership of a specified class, initiating process need not be served on them.75 If this procedure is followed, and if the court then determines that the applicant is entitled to limit its liability, the court’s determination must be advertised, to let actual or potential liability plaintiffs (other than those already served with initiating process) know how and by when they must make their claims against the limitation fund,76 or apply to have the court’s determination set aside.77

Constituting the limitation fund [16.40]

The applicant may constitute a limitation fund either by paying into court the amount to which its liability will be limited if the court determines that it is so entitled, or “by producing a guarantee acceptable under the legislation of the State Party where the fund is constituted”.78 The limitation fund is very often constituted by means of a Protection and Indemnity (P & I) Club guarantee.79 However, in Barde AS v ABB Power 73 Admiralty Rules 1988 (Cth), r 21(1), (3). 74 Admiralty Rules 1988 (Cth), r 21(4). 75 Admiralty Rules 1988 (Cth), r 21(5). 76 Admiralty Rules 1988 (Cth), r 62, Form 24. For an example of an advertisement order under the old legislation, see James Patrick & Co Ltd v Union Steamship Co of New Zealand Ltd (1938) 60 CLR 650 at 679. 77 Admiralty Rules 1988 (Cth), rr 62(1)(b)(ii), 64. 78 Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1, Art 11.2. Henceforth, references in this chapter are to the Articles in LLMC 76/96; they should be read as references to the Limitation of Liability for Maritime Claims Act 1989 (Cth), Schs 1, 1A. 79 See, eg, Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555 at 559 [20] per Rares J, referring for the sake of convenience to the shipowner and its P & I Club jointly as “the limiting shipowner”.

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Systems (The Barde Team),80 Sheppard J observed, obiter, that because there is no legislation in force in Australia permitting constitution of a fund by guarantee, “it would appear that the fund must be constituted by deposit”. It is still true to say that there is no Australian legislation about how a limitation fund should be constituted. No regulations have been made pursuant to the regulation-making power in the Limitation of Liability for Maritime Claims Act 1989 (Cth),81 and there are no rules that deal specifically with limitation proceedings in the Federal Court Rules 2011 (Cth), or the civil procedure rules of the States and the Northern Territory. Part VIII of the Admiralty Rules 1988 (Cth) deals with limitation proceedings, but it contains no provision dealing with constitution of a limitation fund. In Kairos Shipping Ltd v Enka & Co LLC (The Atlantik Confidence),82 the English Court of Appeal held that a limitation fund could be constituted in the United Kingdom under LLMC 76/96 by P & I Club guarantee, even though there was no specific provision in the Civil Procedure Rules 1998 (UK) (CPR) or United Kingdom legislation specifically authorising that procedure.83 Gloster LJ said:84 The ordinary meaning of the phrase “acceptable under the legislation of the State Party” does not predicate, or require, specific additional enabling legislation, expressly defining what is “acceptable” for the purposes of the [Act implementing the Convention]. It simply means that the guarantee must be regarded as “acceptable” under any relevant United Kingdom legislation. “Acceptable” in this context does not need to be construed as having any technical meaning. It could equally mean a guarantee which was not regarded as “unacceptable” under any United Kingdom legislation; in other words, simply a guarantee that did not contravene any relevant statutory provision.

The convenience of this approach is obvious, but the court’s interpretation of the Convention is questionable. Under the generous view taken in The Atlantik Confidence, constitution of a fund by personal guarantee would be “acceptable” in the United Kingdom or Australia if it were to comply with the writing requirements in the Statute of Frauds,85 but it is very unlikely that it would be regarded as acceptable in practice. The only difference between a personal guarantee and a P & I Club undertaking lies in the creditworthiness of the guarantor. That is an obvious reason for 80 Barde AS v ABB Power Systems (The Barde Team) (1995) 69 FCR 277 at [10]. 81 Limitation of Liability for Maritime Claims Act 1989 (Cth), s 11. 82 Kairos Shipping Ltd v Enka & Co LLC (The Atlantik Confidence) [2014] 1 Lloyd’s Rep 586. 83 Civil Procedure Rules 1998 (UK), r 61.11 and Practice Direction 61, para 10 deal with constituting a limitation fund but they do not expressly authorise constitution of a fund by guarantee. 84 Kairos Shipping Ltd v Enka & Co LLC (The Atlantik Confidence) [2014] 1 Lloyd’s Rep 586 at 593 [52]. 85 The Australian equivalents are: Law of Property Act (NT), s 58; Property Law Act 1974 (Qld), s 56; Mercantile Law Act 1935 (Tas), s 6; Instruments Act 1958 (Vic), s 126; Law Reform (Statute of Frauds) Act 1962 (WA). There are no equivalent provisions in New South Wales or South Australia.

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distinguishing between them, of course, but the distinction does not lie in the formal “acceptability” of the guarantee, as that word is interpreted in The Atlantik Confidence. Admittedly, the further requirement in Art 11.2 of the LLMC 76/96 that the guarantee must be “considered to be adequate by the Court” would provide a legitimate basis for distinguishing between a personal guarantee and a P & I Club guarantee, but it seems inconsistent with the intention of Art 11.2 that the acceptability of a guarantee be left entirely to the discretion of the court, so long as it does not positively offend against any formal requirements in national legislation. Inconvenient though it may be in practice, it does seem preferable to regard the words “acceptable under the legislation” in Art 11.2 of the Convention to mean “authorised by legislation”, the view taken by Sheppard J in The Barde Team. Even so, it must be acknowledged that it would seldom be in the interest of any party, on either side, to argue that a P & I Club guarantee is not an acceptable means of constituting a limitation fund. The act of invoking limitation of liability under the Convention does not constitute an admission of liability,86 so if the applicant successfully defends the claimants’ claims in the liability proceedings, it is entitled to have the limitation fund returned. If some or all of the claimants’ claims are successful, and if the court determines that the applicant is entitled to limit its liability under the Convention, the claims are satisfied out of the limitation fund.87 Once the limitation fund has been constituted, the claimants are barred from making any claim against any other assets of the applicant.88 Alternatively, the applicant may apply to have its liability limited without constituting a limitation fund,89 although the wording of the Convention makes it clear that this is the exception, rather than the normal procedure.90 If the court determines that the applicant is entitled to limit its liability under the Convention, it then orders the applicant to constitute a limitation fund by paying into court the amount stipulated under the Convention.91 The invocation of limitation of liability without constitution of a limitation fund leaves the applicant still at hazard to some extent, because the claimants are not barred from making claims against other assets of the applicant until a limitation fund has been constituted.92 However, because the limitation fund is converted from 86 LLMC 76/96, Art 1.7. See generally Caspian Basin Specialised Emergency Salvage Administration v Bouygues Offshore SA (No 4) [1997] 2 Lloyd’s Rep 507. 87 LLMC 76/96, Art 12. See [16.210]. 88 LLMC 76/96, Art 13. See [16.220]. 89 LLMC 76/96, Art 10.1. 90 F Berlingieri, International Limitation Conventions (Informa Law (Routledge), Oxford, 2015), Vol 2, p 380, emphasising the use of the word “notwithstanding” in Art 10.1. 91 LLMC 76/96, Art 12.4. 92 LLMC 76/96, Art 13(1); Victrawl Pty Ltd v Telstra Corp Ltd (1993) 183 CLR 595; 117 ALR 347 at 356 per Gummow J.

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Special Drawing Rights (SDRs) into Australian dollars at the exchange rate on the day the fund is constituted,93 there may be some tactical advantage in invoking limitation without constituting the fund, if it appears that the Australian dollar will rise against the SDR during the limitation proceedings. The applicant is not precluded from instituting limitation proceedings by reason of its failure to raise a defence of limitation in prior liability proceedings.94

Persons who may limit their liability General: the meaning of “shipowner”

[16.50]

Although LLMC 76/96 refers throughout to the shipowner’s right to limit, it is not only the owner who is protected. Article 1.2 provides that the term “shipowner” means “the owner, charterer, manager and operator of a seagoing ship”. In CMA CGM SA v Classica Shipping Co Ltd,95 the English Court of Appeal held that in this context, “charterer” means any kind of charterer, including a slot charterer. Australian courts have taken a similarly expansive view of the meaning of the word “charterer”, albeit in different contexts. In Laemthong International Lines Co Ltd v BPS Shipping Ltd,96 the High Court of Australia held that the word “charterer” in the Admiralty Act 1988 (Cth), s 19(a) was broad enough to include a voyage charterer, and in Shagang Shipping Co Ltd v Ship “Bulk Peace”,97 a Full Court of the Federal Court of Australia held that the same word in the same paragraph included a person who guaranteed the obligations of a time charterer. In concluding in CMA CGM that “charterer” meant any charterer, the English Court of Appeal differed from the view taken by David Steel J at first instance,98 and also from the decision of Thomas J in Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea),99 both of whom had held that “charterer” was confined to charterers acting in the capacity of a shipowner. However, the Court of Appeal agreed with the conclusion arrived at by David Steel and Thomas JJ, namely that a charterer (such as a slot charterer) is not entitled to limit its liability for indemnity claims 93 LLMC 76/96, Art 8.1. The International Monetary Fund (IMF) publishes SDR exchange rates on its website: http://www.imf.org/external/np/tre/sdr/db/rms_five.cfm. 94 James Patrick & Co Ltd v Union Steamship Co of New Zealand Ltd (1938) 60 CLR 650 at 672-673 per Dixon J. 95 CMA CGM SA v Classica Shipping Co Ltd [2004] 1 Lloyd’s Rep 460, followed by Teare J in Metvale Ltd v Monsanto International SARL (The MSC Napoli) [2009] 1 Lloyd’s Rep 246. 96 Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181. 97 Shagang Shipping Co Ltd v Ship “Bulk Peace” (2014) 314 ALR 230. 98 CMA CGM SA v Classica Shipping Co Ltd [2003] 2 Lloyd’s Rep 50. 99 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39.

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brought against it by the shipowner in relation to damage to the ship itself. The Court of Appeal arrived at that conclusion by a different route. Longmore LJ said:100 [A] charterer’s ability to limit will depend on the type of claim that is brought against him rather than the capacity in which he was acting when his liability was incurred.

The types of claim subject to limitation are considered at [16.90]–[16.140]. Article 1.4 provides that any person for whom the shipowner is vicariously liable is also entitled to limit his or her liability in accordance with the Convention; Art 1.5 provides that the liability of the shipowner shall include liability in an action brought against the ship itself; Art 1.6 provides that an insurer of liability for claims subject to limitation (such as a P & I Club) is entitled to the benefits of the Convention to the same extent as the assured itself. The fact that several different parties are entitled to limit their liability under the Convention does not mean that the limited amount is available several times over. For example, consider the following situation. Ship A is damaged in a collision caused entirely by the fault of ship B. The owners of ship A proceed against the owner, the time charterer and the master of ship B in personam, and against ship B in rem. If the limited amount available under the terms of the Convention is 1.51 million Special Drawing Rights (SDRs),101 the owners of ship A can only recover a maximum of 1.51 million SDRs altogether, not 1.51 million SDRs from each of the parties entitled to limit their liability.102 The legislation enacting the Limitation Convention 1957 in Australia specifically provided that the Crown was entitled to limit its liability under the provisions of the Convention,103 including its liability with respect to ships belonging to an arm of the Defence Force of Australia.104 The Limitation of Liability for Maritime Claims Act 1989 (Cth) does not explicitly refer to the Crown, so LLMC 76/96 will only be held to apply to the Crown (including the defence forces, government instrumentalities and corporations) if a legislative intent to that effect can be discerned in the Act, when construed in a context which includes permissible extrinsic aids.105 The Act does provide that the Convention does not apply to a 100 CMA CGM SA v Classica Shipping Co Ltd [2004] 1 Lloyd’s Rep 460 at 469 [34] per Longmore LJ (with whom Neuberger and Waller LJJ agreed). 101 As it would be if ship B were of gross tonnage 2,000 metric tonnes or less: see Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1, Art 6.1(b)(i) and Sch 1A, Art 3. 102 LLMC 76/96, Art 9.1(a). There are similar provisions aggregating claims against salvors (Art 9.1(b), (c)) and passenger claims (Art 9.2). 103 Navigation Act 1912 (Cth), s 2A. 104 The now-repealed Navigation Act 1912 (Cth), s 332(2) excluded the operation of s 3 of that Act with respect to Australian defence force ships so far as Pt VIII, Div 1 was concerned, thereby including such ships within the operation of that Division. 105 Bropho v Western Australia (1990) 171 CLR 1.

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ship belonging to the naval, military or air forces of a foreign country.106 It can therefore be inferred that the Convention must apply to Australian defence force ships because the Act does not exclude them from its operation, as it does with foreign defence force ships. Salvors

[16.60]

LLMC 76/96 makes special provision for the rights of salvors, who are defined as any persons rendering services in direct connection with salvage operations,107 including any person for whom a salvor so defined is vicariously responsible.108 Salvors operating from a ship other than the one being salved (such as a salvage tug) may limit their liability, as may the owner of that ship; the total liability of shipowner and salvors together is limited to the amount calculated under the Convention from the tonnage of the vessel providing the salvage services.109 A salvor not operating from a ship, or a salvor operating solely on the ship to which salvage services are being rendered, may limit its liability to an amount calculated according to the tonnage of a hypothetical ship of 1,500 metric tonnes.110 Because the provisions relating to salvors make no reference to “seagoing ships”, it seems that salvors and the owners of salvage vessels are entitled to limit their liability whether or not the salving ship or the ship being salved is seagoing. Insolvent shipowners

[16.70]

The Cross-Border Insolvency Act 2008 (Cth) gives the force of law to the UNCITRAL Model Law on Cross-Border Insolvency (Model Law), subject to some minor variations. Article 20(1) of the Model Law, which has the force of law in Australia,111 mandates a stay of any proceedings in Australian courts “concerning the debtor’s assets, rights, obligations or liabilities” upon recognition of a “foreign main proceeding” in relation to the debtor. A “foreign main proceeding” is an insolvency proceeding in the country where the debtor has the centre of its main interests (COMI).112 Thus, if a “shipowner” (in the extended sense considered at [16.50]) has commenced limitation proceedings in Australia but is also in insolvency proceedings in its COMI, the Model Law indicates that the Australian limitation proceedings must be stayed. It would seem that in that event, the limitation fund constituted by the shipowner in Australia could not be transferred to the foreign insolvency proceedings, both 106 Limitation of Liability for Maritime Claims Act 1989 (Cth), s 7. 107 LLMC 76/96, Art 1.3. 108 LLMC 76/96, Art 1.4. 109 LLMC 76/96, Arts 6, 9.1(b). 110 LLMC 76/96, Art 6.4. This Article is designed to reverse the effect of the decision in Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242. 111 Cross-Border Insolvency Act 2008 (Cth), s 6. 112 Cross-Border Insolvency Act 2008 (Cth), Sch 1, Art 2(b).

[16.70]

16 Limitation of Liability

643

because it is not, technically, an asset of the shipowner-debtor113 and also because, if it is constituted by a P & I Club undertaking, that undertaking is usually specific to the limitation proceedings.114 The end result is that all claimants would be left worse off if the limitation proceedings were stayed: the claimants against the Australian limitation fund would be forced to participate in the foreign insolvency proceedings to have any chance of redress, and the other claimants in the foreign insolvency proceedings would recover fewer cents in the dollar because they would be joined by the claimants from Australia, without a corresponding increase in the assets available to satisfy the debtor’s debts. If the country of the debtor’s COMI is party to the 1996 Protocol, the situation is worse still, as that country must release any ship or other property arrested or attached in that country (or security given) in relation to the claims giving rise to the limitation proceedings in Australia, if Australia was where the occurrence took place or the first port of call thereafter, or was the port of disembarkation, in the case of personal injury claims, or was the port of discharge, in the case of cargo claims.115 In combination, the Model Law and the Protocol would thus produce the rather bizarre result that, like Alphonse and Gaston,116 Australia and the country of the COMI would each have to concede precedence to the other. The country of the COMI would have to release any security obtained in that country for any claims pending in the Australian limitation proceedings, but Australian courts would have to stay any limitation proceedings because of the insolvency proceedings in the country of the COMI. This highly undesirable result is a consequence of the fact that the UNCITRAL Model Law fails to recognise and take appropriate account of international maritime law.117 The outcome can be avoided only by allowing the Australian limitation proceedings to continue, notwithstanding the parallel insolvency proceedings in the debtor’s COMI. In Yu v STX Pan Ocean Co Ltd (South Korea),118 Buchanan J of the Federal Court refused to grant a preemptive order restraining arrest of any ships owned or operated by a foreign debtor in insolvency proceedings in its COMI, because of the possibility that maritime lien 113 E Røsæg, “Shipowner’s Limitation of Liability and Bankruptcy” in N Witzled, R Ellger, P Mankowski and D Martiny, Festschrift für Dieter Martiny zum 70 Geburstag (Mohr Siebeck, Tübingen, 2014), p 1201. 114 M Davies, “Parallel Proceedings for Insolvency and Limitation of Liability” [2015] Lloyd’s Maritime and Commercial Law Quarterly 24. 115 LLMC 76/96, Art 13(2). See [16.220]. 116 Alphonse and Gaston was an American comic strip by Frederick Burr Opper, which appeared in the New York Journal from 1901 to 1937. Alphonse and Gaston were very polite Frenchmen. Each always deferred to the other — “After you, Alphonse!”; “No, you first, my dear Gaston!” — with the result that they never went anywhere or achieved anything. 117 Yu v STX Pan Ocean Co Ltd (South Korea) (2013) 223 FCR 189 at 202 [39] per Buchanan J. 118 Yu v STX Pan Ocean Co Ltd (South Korea) (2013) 223 FCR 189.

644

Shipping Law

[16.80]

claims might be made in rem against the ships themselves, rather than in personam against their owner or operator. Australian law conceives of a maritime lien claim of this kind as being against the ship as a separate defendant.119 Similarly, in Kim v Daebo International Shipping Co Ltd,120 Hur v Samsun Logix Corp,121 and Yakushiji v Kaisha122 the Federal Court ordered that any arrest warrant for a ship owned or operated by a foreign debtor in insolvency proceedings in its COMI should come before a judge, rather than the Admiralty Registrar, so that the judge could determine whether the in rem claim giving rise to the arrest warrant was based upon a maritime lien, in which case it should be allowed to proceed. Unfortunately, it seems that this device cannot save the Alphonse-andGaston situation created by the interaction of the 1996 Protocol and the Model Law, as no claim can be brought in rem against the insolvent shipowner’s ship once a limitation fund has been constituted.123 Thus, a limitation action can only be allowed to proceed in Australia if the court ignores the mandate of the Model Law. Alternatively, because a stay is only a stay, and not a dismissal, a stay of proceedings under the Model Law could be lifted once made, and the Australian limitation proceedings should be allowed to proceed at the court’s discretion.

Ships protected by limitation of liability [16.80]

A shipowner may only limit its liability in respect of “seagoing ships”.124 As noted at [16.20], the word “seagoing” is interpreted restrictively, as referring only to those ships that actually go to sea,125 but it seems that salvors may limit their liability in respect of ships whether or not they are seagoing. Ships belonging to the naval, military or air forces of a country other than Australia are not protected by LLMC 76/96 under the Limitation of Liability for Maritime Claims Act 1989 (Cth).126

119 See generally Chapter 8. 120 Kim v Daebo International Shipping Co Ltd (2015) 232 FCR 275. 121 Hur v Samsun Logix Corp (2015) 109 ACSR 137. 122 Yakushiji v Kaisha [2015] FCA 1170. 123 LLMC 76/96, Art 13. See [16.220]. See, eg, The Bowbelle [1990] 1 Lloyd’s Rep 532. 124 LLMC 76/96, Art 1.2. 125 Salt Union Ltd v Wood [1893] 1 QB 370; The CS Butler (1874) LR 4 A & E 238; Ex parte Hutchinson (1871) LR 6 QB 280 at 291; Union Steamship Co of New Zealand Ltd v Commonwealth (1925) 36 CLR 130 at 145 per Isaacs J; Kirmani v Captain Cook Cruises Pty Ltd (1985) 159 CLR 351 at 369, 457; Smith v Perese [2006] NSWSC 288; Laoulach v El Khoury [2010] NSWSC 1009. 126 Limitation of Liability for Maritime Claims Act 1989 (Cth), s 7.

[16.100]

16 Limitation of Liability

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LLMC 76/96 does not apply to air-cushion vehicles,127 or to floating platforms constructed for the purpose of exploring or exploiting the natural resources of the sea-bed or the subsoil thereof.128

Claims subject to limitation [16.90]

Article 2 of LLMC 76/96 lists the claims that are subject to limitation. Article 2.1 provides that the applicant may limit its liability for such claims, whatever the basis of liability may be, provided that the claim is not excepted from limitation by the provisions of Art 3,129 and provided that the applicant is not guilty of the conduct specified in Art 4 as barring the right to limit.130 The inclusion of the words “whatever the basis of liability may be” has effected a change from the law under the Limitation Convention 1957 and the Merchant Shipping Act 1894 (UK).131 Under the old law, the shipowner was entitled to limit its liability only in respect of a liability in damages, and could not limit its liability for money due under a contract,132 or payable under a statute.133 Under LLMC 76/96, the shipowner is entitled to limit its liability, whether that liability arises in tort, contract, by statute, or for some other reason.134 Furthermore, Art 2.2 specifically provides that the claims set out in Art 2.1 shall be subject to limitation of liability even if they are brought by way of recourse or for indemnity under a contract or otherwise.135 However, in Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea)136 and CMA CGM SA v Classica Shipping Co Ltd,137 it was held that LLMC 76/96 does not apply to indemnity claims made by a shipowner against a charterer for damage to the ship itself. Article 2.1(a)

[16.100] claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss arising therefrom.

The phrase “loss of life” needs little further explanation. For the most part, the meaning of “personal injury” is also quite clear. However, some 127 LLMC 76/96, Art 15.5(a). 128 LLMC 76/96, Art 15.5(b). 129 See [16.150]. 130 See [16.160]. 131 The Breydon Merchant [1992] 1 Lloyd’s Rep 373 at 375 per Sheen J. 132 See, eg, The Kirknes [1957] P 51. 133 See, eg, The Stonedale No 1 [1955] 2 Lloyd’s Rep 9. 134 The Breydon Merchant [1992] 1 Lloyd’s Rep 373 at 375 per Sheen J. 135 See [16.140], for a consideration of the provisions of Art 2.2 in relation to Art 2.1(f). 136 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39. 137 CMA CGM SA v Classica Shipping Co Ltd [2004] 1 Lloyd’s Rep 460.

646

Shipping Law

[16.100]

questions may arise with respect to claims for negligently caused mental harm.138 It is clear that mental harm differs from physical injury, but it does not necessarily follow that it should therefore be treated as not being “personal injury” for the purposes of Art 2.1(a). In the light of High Court authority that seeks to place recovery for mental harm on the same conceptual footing as recovery for “ordinary” physical injuries,139 it is desirable that the two kinds of injury should also be treated similarly for the purposes of limitation. If one of the passengers on a cruise ship suffers emotional harm as a result of the negligence of the crew, there seems little reason in principle why he or she should be able to recover damages in full from the shipowner when a fellow passenger who has suffered physical injuries as a result of the same act of negligence can recover only a limited amount. Article 2.1(a) provides that a shipowner may limit its liability for claims “in respect of” loss or life or personal injury. The words “in respect of” must be given some meaning, so it seems that the shipowner’s right to limit may not be confined to claims made by the victims themselves. Generally speaking, the phrase “in respect of” has “the widest possible meaning of any expression intended to convey some connexion or relation between the two subject-matters to which the words refer”.140 An action brought by dependants under fatal accidents legislation141 is a claim “in respect of … loss of life”, and there seems to be no reason why a shipowner should not be able to limit its liability in such a case.142 Similarly, an action for loss of consortium brought by the spouse of an injured person143 is an action “in respect of … personal injury” and so should be considered as falling within Art 2.1(a). 138 In Tame v New South Wales; Annetts v Australian Stations Pty Ltd (2002) 211 CLR 317, the High Court of Australia abandoned the traditional requirement that emotional harm must be caused by sudden shock or trauma in order to be compensable in an action in negligence. 139 Jaensch v Coffey (1984) 155 CLR 549; Tame v New South Wales; Annetts v Australian Stations Pty Ltd (2002) 211 CLR 317. 140 State Government Insurance Office (Qld) v Crittenden (1966) 117 CLR 412 at 416 per Taylor J. 141 Compensation to Relatives Act 1897 (NSW), s 3(1); Compensation (Fatal Injuries) Act (NT), s 7; Supreme Court Act 1995 (Qld) ss 17 – 18; Civil Liability Act 1936 (SA), ss 19 – 23C; Fatal Accidents Act 1934 (Tas), s 4; Wrongs Act 1958 (Vic), ss 15 – 22; Fatal Accidents Act 1959 (WA), s 4. 142 See Qenos Pty Ltd v The Ship APL Sydney (2009) 187 FCR 282 at 289 [24] per Finkelstein J. The result stated in the text was certainly the case under the form of words (“where … any of the following occurrences take place”) used to adopt the Limitation Convention 1957 in the Merchant Shipping Act 1894 (UK): see Moore v Metcalf Motor Coasters Ltd [1958] 2 Lloyd’s Rep 179 (aff’d on different grounds Moore v Metcalf Motor Coasters Ltd [1959] 1 Lloyd’s Rep 264). 143 The action is available to both husband and wife in South Australia and Queensland: Wrongs Act 1936 (SA), s 33(1); Law Reform (Husband and Wife) Act 1968 (Qld), s 3(1). In New South Wales, Tasmania, Western Australia and the Australian Capital Territory, it is not available to either spouse: Law Reform (Marital Consortium) Act 1984 (NSW),

[16.100]

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The phrase “loss of, or damage to, any property” also needs little further explanation. It is clear from the context of Art 2 that “property” is confined to corporeal property. Throughout the Article, the word “property” is used to describe something which has a physical location — “on board the ship”, for example. Also, damage to property is contrasted with an “infringement of rights”, which appears in Art. 2.1(c). It is clear from this that the word “property” is not used in the broader sense of all those things, corporeal and incorporeal, in which the law recognises property rights. However, it is not necessary that the claim arise as a result of physical damage to property. In The Breydon Merchant,144 the owners of cargo carried on the ship “Breydon Merchant” were obliged to pay salvage reward to salvors who had salved the ship after a fire had broken out at sea. The cargo-owners sought to recover the amount of this salvage payment from the shipowners, arguing that the fire had been caused by unseaworthiness of the ship before the beginning of the voyage, which would have been a breach of contract by the shipowner.145 Sheen J held that the shipowner was entitled to limit its liability for such a claim under Art 2.1(a). The salvors had a lien over the cargo for payment of their salvage reward, and the diminution in the value of the cargo as a result of the salvors’ lien constituted “damage to cargo” for the purposes of Art 2.1(a). Sheen J said:146 “It matters not whether that diminution results from physical damage or actionable delay or by reason of a lien for salvage”. In considering whether a claim falls within Art 2.1(a), the court should look at the nature of the claim, rather than its legal basis or the manner in which it is pleaded.147 For example, in Caspian Basin Specialised Emergency Salvage Administration v Bouygues Offshore SA (No 4),148 a barge was lost while under tow. The barge-owner claimed that the tug-owner had misrepresented the pulling capacity of the tug. Rix J held that the claim fell within Art 2.1(a) even though it was cast as a claim for misrepresentation. It was a claim for compensation “in respect of … loss

s 3(1); Common Law (Miscellaneous Actions) Act 1986 (Tas), s 3; Law Reform (Miscellaneous Provisions) Act 1941 (WA), s 3; Law Reform (Miscellaneous Provisions) Act 1955 (ACT), s 32. The action continues to be available to the husband, but not the wife, in Victoria and the Northern Territory. 144 The Breydon Merchant [1992] 1 Lloyd’s Rep 373. 145 See [12.300]. 146 The Breydon Merchant [1992] 1 Lloyd’s Rep 373 at 376. 147 Caspian Basin Specialised Emergency Salvage Administration v Bouygues Offshore SA (No 4) [1997] 2 Lloyd’s Rep 507 at 521 per Rix J; Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39 at 51 per Thomas J. 148 Caspian Basin Specialised Emergency Salvage Administration v Bouygues Offshore SA (No 4) [1997] 2 Lloyd’s Rep 507, aff’d as part of a consolidated appeal in Bouygues Offshore SA v Caspian Shipping Co (Nos 1, 3, 4 and 5) [1998] 2 Lloyd’s Rep 461 at 473-474.

648

Shipping Law

[16.100]

of … property”. That conclusion was reinforced by the fact that the Convention included the words “whatever the basis of liability might be”.149 Although a ship is an item of personal property, Art 2.1(a) does not cover claims for loss of the ship itself, if made by a shipowner against a charterer.150 The reference in Art 2.1(a) to property damage claims specifically includes claims for damage to harbour works, basins and waterways and aids to navigation. This reference, coupled with the inclusion of the words “whatever the basis of liability may be” makes it clear that the shipowner may limit its liability under port authority statutes that impose strict liability for damage to wharves, harbour works, etc.151 In order for the shipowner to be able to limit its liability under Art 2.1(a), the loss of life, personal injury or property damage that gives rise to the claim must have occurred “on board or in direct connection with the operation of the ship”. The words “on board … the ship” seem clearly to designate a physical location. The Merchant Shipping Act 1894 (UK) and the Limitation Convention 1957 both used the expression “being carried in the ship” as well as the expression “on board the ship”, and the former was given a broader connotation than the latter. It was held that the words “being carried in the ship” expressed the status of the person carried, rather than his or her physical location at the time of the accident,152 so that if a crew-member or passenger were injured while mounting the gangplank toward the ship, or even perhaps while still on the wharf, the shipowner was still able to limit its liability, notwithstanding the fact that the accident did not occur on board the ship itself. The fact that LLMC 76/96 has abandoned the phrase “being carried in the ship” in favour of “on board the ship” makes it clear that the latter phrase is intended to refer to occurrences that take place on the ship itself. 149 Caspian Basin Specialised Emergency Salvage Administration v Bouygues Offshore SA (No 4) [1997] 2 Lloyd’s Rep 507 at 521 per Rix J. 150 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39 at 51 per Thomas J; CMA CGM SA v Classica Shipping Co Ltd [2004] 1 Lloyd’s Rep 460 (CA). 151 See, eg, Amarantos Shipping Co Ltd v South Australia (2004) 89 SASR 438 (FC). The relevant legislation is: Maritime Services Act 1935 (NSW), s 13YA(2); Darwin Port Corporation Act (NT), s 42; Transport Infrastructure Act 1994 (Qld), s 281E; Harbors and Navigation Act 1993 (SA), s 21; South Australian Ports Corporation Act 1994 (SA), s 24; Port Management Act 1995 (Vic), s 23; Port Authorities Act 1999 (WA), s 113. There is no equivalent provision in Tasmania. The position under the legislation giving effect to the Limitation Convention 1957 was different: see China Ocean Shipping Co v South Australia (1979) 145 CLR 172. Although these claims are subject to limitation, they take priority over other claims against the fund: see Limitation of Liability for Maritime Claims Act 1989 (Cth), s 8, and at [16.210]. 152 Moore v Metcalf Motor Coasters Ltd [1958] 2 Lloyd’s Rep 179 (aff’d on different grounds Moore v Metcalf Motor Coasters Ltd [1959] 1 Lloyd’s Rep 264).

[16.100]

16 Limitation of Liability

649

The words “in direct connection with the operation of the ship” are the way in which LLMC 76/96 expresses the necessary linkage between loss of or damage to property on the one hand and the ship in respect of which the claim to limit is made on the other.153 It has been suggested that they should be interpreted as referring to the navigation and management of the ship, rather than to commercial decisions about its employment,154 but in Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea),155 Thomas J said: I do not accept owners’ argument that the giving of orders was not an activity that was part of the operation of the ship; the phrase “operation of the ship” is not in my judgment confined to action occurring on the ship; it encompasses all that goes to the operation of the ship; the operation of the ship, in my view, includes the selection of the port and the ascertainment of its safety and suitability for the vessel and the provision of what might be necessary for the vessel to use it safely – charts, tugs and the like.

The requirement of “direct connection” is reminiscent of the amendments made to motor vehicle insurance legislation in response to the decision of the High Court of Australia in Dickinson v Motor Vehicle Insurance Trust,156 requiring some causal connection closer than the mere fact that death or injury was caused by or arose from negligence in the driving of a motor vehicle. Judicial interpretation of the amended legislation may be of some assistance in interpreting Art 2.1(a). For example, if a ship’s agent were to be injured by a crane while waiting at the wharf to meet the ship, this physical injury would be, in some sense, connected with the operation of the ship, but it would not be in direct connection with its operation, so it should not be subject to limitation.157 Article 2.1(a) expressly provides that the shipowner is entitled to limit its liability for any loss consequential upon physical injury, death or property damage falling within the article. This plainly includes liability for such losses as a shipowner’s lost profits as a result of damage to its own ship in a collision. It also includes liability for purely economic losses recoverable under the principles stated by the High Court of Australia in such cases 153 Caspian Basin Specialised Emergency Salvage Administration v Bouygues Offshore SA (No 4) [1997] 2 Lloyd’s Rep 507 at 522 per Rix J; Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39 at 51 per Thomas J. 154 G Brice, “The Scope of the Limitation Action” in Institute of Maritime Law (ed), Limitation of Shipowners’ Liability: The New Law (Sweet & Maxwell, London, 1986), pp 22-23. 155 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39 at 51. 156 Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500. See, eg, Motor Vehicle (Third Party) Insurance Act 1987 (WA), s 7 (as amended). 157 Although it is difficult to imagine how the ship’s agent would be able to bring an action against the shipowner in these circumstances, it should be remembered that charterers, managers and operators of seagoing ships are also entitled to limit their liability under the Convention, as are any employees for whom those persons are vicariously liable: see [16.50].

650

Shipping Law

[16.100]

as Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad,158 Bryan v Maloney,159 Perre v Apand Pty Ltd160 and Barclay v Penberthy.161 In such cases, a plaintiff may recover damages for purely economic losses suffered as a result of physical damage to the property of another. Because such losses are consequential upon property damage, albeit damage to the property of another, they fall within the closing words of Art 2.1(a), and should be subject to limitation of liability if the other requirements of Art 2.1(a) are satisfied. In Qenos Pty Ltd v The Ship APL Sydney,162 Finkelstein J of the Federal Court held that purely economic loss claims of this kind are subject to limitation. A claim for reimbursement of legal costs does not fall within Art 2.1(a).163 Because the Convention applies internationally, including in countries where costs do not automatically “follow the event” as they do in the Anglo-Australian system, the words “claims in respect of loss of life or personal injury or loss of or damage to property” should carry a literal meaning that does not go beyond the express words.164 Thus, the limitation fund constituted by the shipowner should be exclusive of legal costs.165 In many cases of damage to or loss of cargo being carried on the ship, the shipowner is entitled to limit its liability to the cargo-owner under Art 4, r 5 of the Hague or Hague-Visby Rules or the Australian modification of the latter.166 The shipowner is entitled to limit its liability for cargo damage under Art 2.1(a) of LLMC 76/96, even if it is also entitled to protection under the Hague or Hague-Visby Rules.167 In practice, this means that a shipowner will rely on the Hague or Hague-Visby limits per package or kilogram if the total of the separate limits for the cargo lost or damaged is less than the global limit under the 1996 Protocol, but will rely on the 1996 Protocol if the total of the separate Hague or Hague-Visby limits per package or kilogram would be higher. 158 Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529. 159 Bryan v Maloney (1995) 182 CLR 609. 160 Perre v Apand Pty Ltd (1999) 198 CLR 180 161 Barclay v Penberthy (2012) 246 CLR 258. 162 Qenos Pty Ltd v The Ship APL Sydney (2009) 187 FCR 282. Compare, to the opposite effect, Blue Nile Shipping Co Ltd v Iguana Shipping and Finance Inc (The Darfur) [2004] 2 Lloyd’s Rep 469, a decision that seems flatly inconsistent with the words of Art 2.1(a). 163 Newcastle Port Corp v Pevitt (2003) 58 NSWLR 548, disagreeing with the assumption made in Noferi v Smithers [2002] NSWSC 508. See also Thompson v Masterson [2004] 1 Lloyd’s Rep 304 (Royal Ct of Guernsey). 164 Newcastle Port Corp v Pevitt (2003) 58 NSWLR 548 at 558 [39]-[40] per Palmer J. 165 Newcastle Port Corp v Pevitt (2003) 58 NSWLR 548; Thompson v Masterson [2004] 1 Lloyd’s Rep 304 (Royal Ct of Guernsey). 166 See [12.520]. 167 Carriage of Goods by Sea Act 1991 (Cth), s 19(b) saves the operation of the Limitation of Liability for Maritime Claims Act 1989 (Cth).

[16.130]

16 Limitation of Liability

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Article 2.1(b)

[16.110] claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage.

In The Breydon Merchant,168 Sheen J said, obiter, that a diminution in value of goods as a result of delay would constitute “damage to cargo” for the purposes of Art 2.1(a). Whether or not that is so, any claim by a cargo-owner to recover losses arising from diminution in the value of the cargo as a result of delay would clearly fall within the terms of Art 2.1(b). Article 2.1(c)

[16.120] claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connection with the operation of the ship or salvage operations.

In Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea),169 Thomas J said that the purpose of Art 2.1(c) is to provide limitation where any rights other than contractual rights are infringed, so a claim for damages for loss of the right to earn freight did not fall within Art 2.1(c) because it was a claim for infringement of contractual rights. The reference to “other loss” in Art 2.1(c) appears, in context, to refer to losses other than those referred to in Art 2.1(a) and (b). If that is correct, Art 2.1(c) refers to losses other than those arising as a result of personal injury, death, property damage (including losses consequential upon any of these), or delay to cargo, passengers or luggage. In Qenos Pty Ltd v The Ship APL Sydney,170 Finkelstein J held that if claims in tort for purely economic loss do not fall within Art 2.1(a), they should fall within Art 2.1(c). Finkelstein J said:171 In my opinion the word “rights” in the expression “infringement of rights” [in Art 2.1(c)] includes a legally enforceable claim which results from the act or omission of another person. Thus if a system of law provides that an act or omission by A which causes damage to B gives rise to a cause of action (claim) by B, that system confers a right on B and a co-relative duty on A. B has a protected interest (the right), the violation of which is a wrong.

Article 2.1(d) and (e)

[16.130] claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such a ship. 168 The Breydon Merchant [1992] 1 Lloyd’s Rep 373 at 376. 169 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39 at 52. 170 Qenos Pty Ltd v The Ship APL Sydney (2009) 187 FCR 282 at [35]-[37]. 171 Qenos Pty Ltd v The Ship APL Sydney (2009) 187 FCR 282 at [35].

652

Shipping Law

[16.140]

claims in respect of the removal, destruction or the rendering harmless of the cargo in the ship.

Exercising a right reserved to it by Art 18.1 of LLMC 76/96, the Commonwealth excluded the application of Art 2.1(d) and (e) by s 6 of the Limitation of Liability for Maritime Claims Act 1989 (Cth). Such claims are not subject to limitation of liability. Article 2.1(f)

[16.140] claims of a person other than the person liable in respect of measures taken in order to avert or minimize loss for which the person liable may limit his liability in accordance with this Convention, and further loss caused by such measures.

In The Breydon Merchant,172 the owner of the “Breydon Merchant” engaged the services of salvors after a fire broke out on the ship at sea. The owners of the cargo aboard the ship were obliged to pay salvage reward to the salvors, and they sought to recover those sums from the shipowner, alleging that the shipowner had breached the contract of carriage because the ship was unseaworthy before and at the beginning of the voyage. Sheen J held that such a claim would fall within Art 2.1(f). The shipowner’s actions in engaging the salvors were clearly measures taken to avert or minimise a loss (damage to the cargo or further delay) for which the shipowner (the person liable) would be entitled to limit its liability under Art 2.1(a) or (b) of the Convention. The claim of the cargo-owner (a person other than the person liable) were “in large measure” claims in respect of such measures.173 Article 2.2 provides: Claims set out in [Art 2.1] shall be subject to limitation of liability even if brought by way of recourse or for indemnity under a contract or otherwise. However, claims set out under [Art 2.1(f)]174 shall not be subject to limitation of liability to the extent that they relate to remuneration under a contract with the person liable.

Sheen J did not refer to Art 2.2 in The Breydon Merchant. That was presumably because he took the view that the cargo-owner’s claim for damages for breach of the contract of carriage was not a claim for “remuneration under a contract”. In the context of the use of the words “recourse” and “indemnity” in the first sentence of Art 2.2, the word “remuneration” seems properly to refer to a payment envisaged as one of the primary obligations under the contract, rather than a payment of damages. 172 The Breydon Merchant [1992] 1 Lloyd’s Rep 373. 173 The Breydon Merchant [1992] 1 Lloyd’s Rep 373 at 376 per Sheen J. 174 Article 2.2 also applies to Art 2.1(d) and (e), but these paragraphs do not have the force of law in Australia. See [16.130].

[16.160]

16 Limitation of Liability

653

Another possible application of Art 2.1(f) would be to limit a claim to recover expenses incurred in avoiding damage threatened by a ship, by moving another ship or property out of its way.175

Claims excepted from limitation [16.150]

Five types of claim are specifically excluded from limitation under the Convention. They are:

1. Claims for salvage or contribution in general average.176 The exclusion of salvage claims relates solely to claims by a salvor against the owner of salved property; it does not extend to claims between other parties relating to salvage payments, which are subject to limitation.177 2. Claims for oil pollution damage within the meaning of the International Convention on Civil Liability for Oil Pollution Damage 1969, or any amendment or Protocol thereto.178 The present version of that Convention, known as CLC 92, contains its own regime for limiting the shipowner’s liability, which is considered in Chapter 19. 3. Claims subject to any international convention or national legislation governing or prohibiting limitation of liability for nuclear damage.179 4. Claims against the shipowner of a nuclear ship for nuclear damage.180 5. Claims by employees of the shipowner or salvor (for example, crew claims) or claims by their dependants if the proper law of the employment contract precludes the shipowner or salvor from limiting its liability for such claims, or limits the liability of the shipowner or salvor to an amount greater than that stipulated by the Convention.181 Section 93 of the Navigation Act 2012 (Cth) provides that the owner of a ship is not entitled to limit its liability in respect of a claim falling within Art 2.1(a) made by an employee of the owner whose duties are connected, or an heir or dependant of such a person.182

Conduct barring limitation [16.160]

Under the Limitation Convention 1957, the shipowner was deprived of the right to limit if it was guilty of “actual fault or privity”. In LLMC 76/96, shipowners agreed to higher limits of liability in exchange

175 G Brice, “The Scope of the Limitation Action” in Institute of Maritime Law (ed), Limitation of Shipowners’ Liability: The New Law (Sweet & Maxwell, London, 1986), p 27. 176 LLMC 76/96, Art 3(a). 177 The Breydon Merchant [1992] 1 Lloyd’s Rep 373. 178 LLMC 76/96, Art 3(b). 179 LLMC 76/96, Art 3(c). 180 LLMC 76/96, Art 3(d). 181 LLMC 76/96, Art 3(e). 182 The equivalent British provision (Merchant Shipping Act 1995 (UK), s 185(4)) was considered in Todd v Adams and Chope (t/a Trelawney Fishing Co) (The Maragetha Maria) [2002] 2 Lloyd’s Rep 293 (CA).

654

Shipping Law

[16.160]

for an almost indisputable right to limit their liability.183 The limit under LLMC 76/96 is virtually unbreakable.184 Article 4 provides: A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.

The words “personal act or omission” make it clear that the shipowner is not deprived of the right to limit its liability unless it itself intended to cause loss or was reckless and knew that loss would probably result — intention or recklessness on the part of employees and agents is not enough.185 Furthermore, it must be shown that the shipowner subjectively intended to cause loss or knew that loss would probably result from its reckless conduct — it is not enough to show objectively that the shipowner could not fail to have been aware of the risk of loss.186 In the absence of proof of intent, the person challenging the shipowner’s right to limit must establish both reckless conduct and knowledge that the relevant loss would probably result.187 The words “such loss” refer to the loss that actually resulted and which is the subject-matter of the claim in

183 The Bowbelle [1990] 1 Lloyd’s Rep 532 at 535 per Sheen J; The Breydon Merchant [1992] 1 Lloyd’s Rep 373 at 376 per Sheen J; Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291 at 294 per Lord Phillips MR. 184 The Herceg Novi and Ming Galaxy [1998] 2 Lloyd’s Rep 454 at 457 (CA); Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555 at 562-563 [35]-[36], [42]-[45] per Rares J; Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; [2014] 2 Lloyd’s Rep 315 at [23]-[25] (Sup Ct Can). 185 See Browner International Ltd v Monarch Shipping Co Ltd (The European Enterprise) [1989] 2 Lloyd’s Rep 185, a decision on the equivalent provision in the Hague-Visby Rules (Art 4, r 5(e)) and Mayor (t/as Granville Coaches) v P & O Ferries Ltd (The Lion) [1990] 2 Lloyd’s Rep 144, a decision on the equivalent provision in the Athens Convention on the carriage of passengers by sea (Art 13). 186 MSC Mediterranean Shipping Co v Delumar BVBA (The MSC Rosa M) [2000] 2 Lloyd’s Rep 399 at 401 [15] per David Steel J: “As regards knowledge, this means actual not constructive knowledge”. See also SS Pharmaceutical Pty Ltd v Qantas Airways Ltd [1991] 1 Lloyd’s Rep 288 (CANSW), a decision on the equivalent provision in the Warsaw Convention as amended at the Hague 1955 (Art 25), which also extends to intentional or reckless conduct on the part of employees or agents. 187 MSC Mediterranean Shipping Co v Delumar BVBA (The MSC Rosa M) [2000] 2 Lloyd’s Rep 399 at 401 [12] per David Steel J; Margolle v Delta Maritime Co Ltd (The Saint Jacques II and Gudermes) [2003] 1 Lloyd’s Rep 203 at 207 per Gross J.

[16.160]

16 Limitation of Liability

655

which the right to limit is asserted.188 Hence, it is not sufficient that the shipowner acted intentionally or recklessly, knowing that some kind of loss would result.189 Most modern shipowners are corporations, which raises the question of how a corporation can personally intend to cause loss, or be reckless about it. Cases concerning the loss of the right to limit under the Limitation Convention 1957 focused attention on the “very ego and centre of personality of the corporation”,190 and courts interpreting LLMC 76/96 have done the same.191 For example, in The Garden City,192 it was held that the Chief Navigator of the corporate shipowner was “not the directing mind of the company, either in practice or under the company’s constitution”.193 Similarly, in Grand Champion Tankers Ltd v Norpipe A/S: The Marion,194 it was accepted by both parties that no-one below the level of managing director could act as the corporate shipowner for the purposes of the loss of the right to limit. In contrast, in Peracomo Inc v TELUS Communications Co,195 the Supreme Court of Canada held that the only director and shareholder of a company that owned a fishing boat was the “alter ego” of the company for purposes of LLMC 76/96. Although his fault, his intentions, and his expectations were therefore imputed to the corporate shipowner, the Supreme Court held that the shipowner was still entitled to limit its liability because the director/ shareholder had not had the requisite intention to satisfy Art 4. He had deliberately cut through a fibre optic submarine cable that had come to the surface entangled in his fishing gear, causing almost a million Canadian dollars’ worth of damage. Although he intended to cut through the cable, and knew that doing so would cause some loss to the owner of 188 Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291 at 295 per Lord Phillips MR; Margolle v Delta Maritime Co Ltd (The Saint Jacques II and Gudermes) [2003] 1 Lloyd’s Rep 203 at 208 per Gross J; Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; [2014] 2 Lloyd’s Rep 315 (Sup Ct Can). 189 Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291 at 295 per Lord Phillips MR; Margolle v Delta Maritime Co Ltd (The Saint Jacques II and Gudermes) [2003] 1 Lloyd’s Rep 203 at 208 per Gross J; Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; [2014] 2 Lloyd’s Rep 315 (Sup Ct Can). 190 Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 at 713 per Viscount Haldane LC. 191 See, eg, MSC Mediterranean Shipping Co v Delumar BVBA (The MSC Rosa M) [2000] 2 Lloyd’s Rep 399; Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291; Tasman Orient Line CV v Alliance Group Ltd (unreported, NZ High Ct, Williams J, 21 August 2003); Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; [2014] 2 Lloyd’s Rep 315 (Sup Ct Can). 192 The Garden City [1982] 2 Lloyd’s Rep 382. 193 The Garden City [1982] 2 Lloyd’s Rep 382 at 397 per Haughton J. 194 Grand Champion Tankers Ltd v Norpipe A/S: The Marion [1984] AC 563. 195 Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; [2014] 2 Lloyd’s Rep 315 (Sup Ct Can).

656

Shipping Law

[16.160]

the cable, he did not realise that the cable was “live” and so did not realise or intend the particular loss suffered by the cable-owner. Hence, both he and the corporation he owned were entitled to limit their liability. Under the Limitation Convention 1957, the onus was on the shipowner to prove the absence of “actual fault or privity” on its part.196 Although Art 4 of LLMC 76/96 does not expressly so state, it is clear that the onus is on the liability claimant to break the limit, by proving that the shipowner had the requisite intention or was guilty of the requisite recklessness.197 Because the burden is so onerous, Lord Phillips MR wondered in The Leerort198 whether attempts by claimants to break the limit under LLMC 76/96 are still influenced by the previous regime under the Limitation Convention 1957, given that “the odds of success are very long indeed”. The shipowner is entitled to summary judgment on its right to limit unless the claimants “surmount a formidable hurdle” in opposition.199 Nevertheless, an allegation that the shipowner is guilty of conduct depriving it of the right to limit may be enough to ensure that the shipowner is required to give security for the entire amount of the claims made against it, even if that exceeds the limit. That is the result suggested by Barde AS v ABB Power Systems,200 where the owner of the ship “Barde Team” claimed the right to limit its liability for claims arising from an incident in which an industrial boiler and a large electrical transformer were damaged while being carried by the ship. The shipowner gave security in the sum of US$2.5 million to secure the release of the “Barde Team” from arrest by the claimants. Having invoked its LLMC 76 right to limit, and having constituted a limitation fund in the sum of 767,031 SDRs (worth about US$1.15 million at that time), the shipowner then applied for release of the security that it had given earlier. The claimants opposed the release of the US$2.5 million security, saying that they intended to argue that the shipowner was deprived of the right to limit its liability to 196 James Patrick & Co Ltd v Union Steamship Co of New Zealand Ltd (1938) 60 CLR 650; Gaggin v Moss [1984] 2 Qd R 513; Grand Champion Tankers Ltd v Norpipe A/S: The Marion [1984] AC 563. 197 The Capitan San Luis [1993] 2 Lloyd’s Rep 573; MSC Mediterranean Shipping Co v Delumar BVBA (The MSC Rosa M) [2000] 2 Lloyd’s Rep 399; Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291; Margolle v Delta Maritime Co Ltd (The Saint Jacques II and Gudermes) [2003] 1 Lloyd’s Rep 203; Tasman Orient Line CV v Alliance Group Ltd (unreported, NZ High Ct, Williams J, 21 August 2003). In Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555, the shipowner accepted that it bore the onus of establishing its right to limit: see at [9]. 198 Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291 at 298 [38]. 199 Margolle v Delta Maritime Co Ltd (The Saint Jacques II and Gudermes) [2003] 1 Lloyd’s Rep 203 at 209 per Gross J, who went on to note that the case before him was one of the exceptional cases that should be allowed to go to trial on the issue of breaking limitation. 200 Barde AS v ABB Power Systems (The Barde Team) (1995) 69 FCR 277.

[16.170]

16 Limitation of Liability

657

the smaller amount of the limitation fund. While recognising that the claimants were very unlikely to succeed in breaking limitation, Sheppard J nevertheless refused to release the US$2.5 million security, saying that the claimants were entitled to have “their day in court” on the question of breaking the right to limit.201 The practical consequence of the decision in The Barde Team is that the claimants’ “day in court” may come rather sooner than they hoped, in the form of an application for summary judgment by the shipowner. Until that day, however, it seems that the shipowner may be forced to give security for the full, unlimited, amount of the claims against it. There is possibly another tactical reason for alleging that the shipowner is guilty of conduct in breach of Art 4. In Smithers v Lokys,202 the Federal Court held that when liability claimants say that they intend to try to break the limit, and when liability proceedings are pending in a State court, the limitation proceedings should be transferred to the State court under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). Significantly, and predictably, the attempt to break the limit was later abandoned in the liability proceedings in the State court.203 Because the shipowner is entitled (prima facie) to a decree limiting its liability simply by establishing that its case falls within the ambit of Art 2, it is only obliged to bear the costs of establishing those matters necessary to obtain such a decree; if the claimants unsuccessfully seek to establish that the shipowner is not entitled to limit its liability by virtue of Art 4, they must bear the costs of the court’s consideration of the shipowner’s conduct and intentions.204

Calculating the amount of the limit Personal and property claims

[16.170]

The shipowner’s liability is limited to an amount calculated according to the tonnage of the ship. Under Art 6.1(a) as amended by the Protocol of 1996 and by IMO Resolution LEG.5(99) with effect from 2015, the limits for claims in respect of loss of life or personal injury (except claims by passengers of a ship against that ship) are as follows: • for ships of not more than 2,000 metric tonnes,205 3.02 million SDRs;206 • for ships of 2,001 metric tonnes to 30,000 metric tonnes, 3.02 million SDRs plus 1,208 SDRs per metric tonne over 2,000; 201 Barde AS v ABB Power Systems (1995) 69 FCR 277 at 297. 202 Smithers v Lokys (2001) 108 FCR 303. 203 Noferi v Smithers [2002] NSWSC 508 contains no consideration of Art 4; the point was not raised by the liability plaintiffs. 204 The Capitan San Luis [1993] 2 Lloyd’s Rep 573. 205 LLMC 76/96, Art 6 uses the word “tons”. Article 6.5 provides that the ship’s tonnage shall be the gross tonnage calculated in accordance with the tonnage measurement rules contained in Annex 1 of the International Convention on Tonnage Measurement of Ships 1969, which uses metric tonnes.

658

Shipping Law

[16.170]

• for ships of 30,001 metric tonnes to 70,000 metric tonnes, 36,844,000 SDRs plus 906 SDRs per metric tonne over 30,000; and • for ships of more than 70,000 metric tonnes, 73,084,000 SDRs plus 604 SDRs per metric tonne over 70,000. Under Art 6.1(b) as amended by the Protocol of 1996 and by IMO Resolution LEG.5(99) with effect from 2015, the limits for all other claims are as follows: • for ships of not more than 2,000 metric tonnes, 1.51 million SDRs; • for ships of 2,001 metric tonnes to 30,000 metric tonnes, 1.51 million SDRs plus 604 SDRs per metric tonne over 2,000; • for ships of 30,001 metric tonnes to 70,000 metric tonnes, 18,422,000 SDRs plus 453 SDRs per metric tonne over 30,000; and • for ships of more than 70,000 metric tonnes, 36,542,000 SDRs plus 302 SDRs per metric tonne over 70,000. In each case, the limit is calculated according to the gross tonnage of the ship calculated in accordance with the tonnage measurement rules contained in Annex 1 of the International Convention on Tonnage Measurement of Ships 1969.207 Each of the limits applies to all claims “arising on any distinct occasion”.208 If a single claim arises as a result of events on several different occasions, the shipowner is thus not entitled to limit its liability at all. For example, in Ballast Trailing NV v Decca Survey Australia Ltd,209 it was held that the owners of the dredge “Willemstad” were not entitled to limit their liability under the Act of 1894 for damage caused when the dredge cut through a pipeline at the bottom of Botany Bay because the damage had not occurred on any single “distinct occasion”, as the dredge had cut through the pipeline about nine times during the course of one night.

206 LLMC 76/96, Art 6 uses the words “Units of Account”. Article 8.1 provides that “Unit of Account” is the Special Drawing Right as defined by the International Monetary Fund (IMF). The IMF publishes SDR exchange rates on its website: http:// www.imf.org/external/np/tre/sdr/db/rms_five.cfm. 207 LLMC 76/96, Art 6.5. This is to be compared with the tonnage measure under the Limitation Convention 1957, which was the net tonnage (the gross tonnage minus the tonnage of the crew accommodation, the “propelling machinery space” and various other non-cargo-carrying spaces) plus the tonnage deducted from the gross tonnage for engine room space when calculating the net tonnage. 208 This form of words was also used in the Limitation Convention 1957 and the Merchant Shipping Act 1894 (UK). 209 Ballast Trailing NV v Decca Survey Australia Ltd (unreported, NSW Sup Ct, 1980), affirmed on appeal: Ballast Trailing NV v Decca Survey Australia Ltd (unreported, NSW Sup Ct CA, 1981). These were limitation proceedings that arose after liability was determined in Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad (1976) 136 CLR 529.

[16.180]

16 Limitation of Liability

659

Conversely, if several claims arise on separate occasions, there is a separate limitation fund for each distinct occasion.210 For example, in Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney),211 the ship “APL Sydney” dragged its anchor while waiting for berth in Port Phillip Bay, off the port of Melbourne. The anchor dragged and struck a submarine pipeline. After a delay of about 35 minutes, the ship manoeuvred, using its engines, to free itself from the obstacle that was restraining it. In the Federal Court, Rares J held that there were two “distinct occasions” for the purposes of LLMC 76/96, requiring constitution of two separate limitation funds: the fouling of the pipeline with the anchor and the rupture of the pipeline by the ship’s manoeuvring. In cases of tug and tow, the limitation fund may be calculated according to the tonnage of the tug alone, or the tonnage of the tug and tow together, or separately, depending on the circumstances. Where the tug and the tow are owned by the same person, and both tug and tow are at fault in causing the damage that gives rise to the claims, the shipowner is entitled to limit its liability according to the aggregate tonnage of tug and tow.212 Where the losses that give rise to the claims are caused by the fault of the tug alone, the limitation fund is calculated on the basis of the tonnage of the tug only.213 Where tug and tow are both at fault and are owned by different owners, each owner is entitled to limit its liability according to the tonnage of its own vessel. When the amount has been calculated in SDRs, it is converted into Australian dollars at the exchange rate on the day the limitation fund is constituted, payment is made, or security is given.214 Passenger claims

[16.180]

Under Art 7 of LLMC 76/96, the limit for claims for loss of life or personal injury to passengers on a ship215 is 175,000 SDRs for each passenger the ship is authorised to carry according to the ship’s certificate, but not exceeding 25,000,000 SDRs. These limits were not 210 See, eg, The Schwan; The Albano [1892] P 419; Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555. 211 Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555. 212 William Holyman & Sons Pty Ltd v Marine Board of Launceston (1929) 24 Tas LR 64; The Harlow [1922] P 175. 213 The Bramley Moore [1964] P 200; The Rhone and Peter AB Widener [1993] 1 Lloyd’s Rep 600 (Sup Ct Can). 214 LLMC 76/96, Art 8.1. The International Monetary Fund (IMF) publishes SDR exchange rates on its website: http://www.imf.org/external/np/tre/sdr/db/rms_five.cfm. 215 “Claims for loss of life or personal injury to passengers on a ship” means claims brought by or on behalf of a passenger: (a) under a contract of passenger carriage; or (b) who, with the consent of the carrier is accompanying a vehicle or live animals which are covered by a contract for the carriage of goods (eg, a supercargo): see LLMC 76/96, Art 7.2.

660

Shipping Law

[16.190]

increased when the Art 6 limits were increased by the tacit acceptance procedure with effect from 8 June 2015. The limit for passenger claims is calculated according to the number of passengers the ship can carry, not the number it is carrying at the time of the incident. For example, if a passenger ship is authorised to carry 500 passengers, the limit of liability is 87,500,000 SDRs, no matter how many passengers it is actually carrying at the time of the incident in question. The Art 7 passenger limit applies to the exclusion of the limit in Art 6.1(a).216 Thus, for example, if a cargo ship of 40,000 metric tonnes is authorised to carry five passengers, the limit of liability for claims by those passengers against that ship is 875,000 SDRs under Art 7, not 45,901,886 million SDRs under Art 6.1(a). If, however, those passengers are injured in a collision and sue the owners of the other ship involved, the limit of that shipowner’s liability would be calculated under Art 6.1(a) on the tonnage of its ship, not Art 7.217 Salvors

[16.190]

Where claims arise as a result of the actions of salvors operating from a ship other than the one being salved (such as a salvage tug), the size of the limitation fund is calculated under Art 6 in the ordinary way, using the tonnage of the vessel providing the salvage services. Where claims arise as a result of the actions of salvors not operating from a ship, or salvors operating solely on the ship to which salvage services are being rendered, the limitation fund is calculated according to the tonnage of a hypothetical ship of 1,500 metric tonnes.218

Interest and costs

[16.200]

The limitation fund may be constituted when the court orders that the applicant is entitled to limit its liability, or, alternatively, at any time after limitation proceedings have been commenced.219 The applicant must constitute the fund in the amount indicated by Arts 6 and/or 7, together with interest thereon from the date of the occurrence giving rise to the liability until the date of the constitution of the fund.220 Thus, if the applicant chooses to constitute the limitation fund by paying money into court before its right to limit has been established, it pays into court the limitation amount plus interest to that date. If the court subsequently

216 LLMC 76/96, Art 6.1(a) begins with the words “The limits of liability for claims other than those mentioned in Article 7 … shall be calculated as follows”. 217 This is the effect of the definition in LLMC 76/96, Art 7.2: “Claims for loss of life or personal injury to passengers on a ship” means claims brought by or on behalf of a passenger (a) under a contract of passenger carriage, or (b) who, with the consent of the carrier is accompanying a vehicle or live animals which are covered by a contract for the carriage of goods (eg, a supercargo). 218 LLMC 76/96, Art 6.4. 219 See [16.40]. 220 LLMC 76/96, Art 11.1.

[16.210]

16 Limitation of Liability

661

orders that the applicant is entitled to limit its liability, the limitation fund is increased by the amount of interest earned in the period between the payment into court and the date of the order. If the money paid into court has earned high interest at compound rates during that time, the applicant is entitled to retain the difference between the high compound interest actually earned and the simple interest on the limitation amount between payment into court and the date of the order.221 If the compound interest actually earned (including compound interest on the simple interest paid into court by the applicant) were to belong to the claimants, they would be in a better position than if the applicant had chosen not to constitute a limitation fund until the court ordered it to do so,222 because in such a case, the applicant would be ordered to constitute a fund in the amount stipulated by the Convention plus interest from the date of the incident to the date of the order. A claim for reimbursement of legal costs does not fall within Art 2.1(a), so the limitation fund constituted by the shipowner should be exclusive of legal costs.223

Distribution of the limitation fund [16.210]

Where the aggregate of the claims arising on any single distinct occasion exceeds the limitation fund calculated in the manner described at [16.170]–[16.180], the fund is distributed among the successful claimants in proportion to the amounts of their established claims.224

Example 16.1 A ship of gross tonnage 10,000 metric tonnes collides with another ship, causing damage in the sum of $8,000,000 to the other ship and $5,000,000 to its cargo (that is, the cargo of the other ship). Assume that the limitation fund is constituted at a time when the exchange rate of the Australian dollar to the SDR is 1.80 to 1.225 • Limitation fund (Art 6.1(b)): 6,342,000 SDRs = $11,415,600.226 • Total claims to be satisfied from the fund: $13,000,000.

221 Polish Steamship Co v Atlantic Maritime Co [1985] QB 41. 222 Polish Steamship Co v Atlantic Maritime Co [1985] QB 41 at 55 per Griffiths LJ. 223 Newcastle Port Corporation v Pevitt (2003) 58 NSWLR 548. 224 LLMC 76/96, Art 12.1. 225 For the exchange rate for SDRs to other currencies, see: http://www.imf.org/external/ np/fin/data/rms_five.aspx. 226 Plus interest from the date of the accident until the date of exchange into Australian dollars: see Art. 11.1. In this and the other examples that follow, interest is ignored for the sake of simplicity.

662

Shipping Law

[16.210]

• The owner of the other ship recovers: $8,000,000 x (11,415,600/13,000,000) = $7,024,985. • The owner of the cargo recovers: $5,000,000 x (11,415,600/13,000,000) = $4,390,615.

This example serves to illustrate the point made in the introduction to this chapter at [16.10], namely that the increased limits from 8 June 2015 have substantially reduced the practical impact of limitation of liability, particularly for larger ships. It would be unusual (but by no means impossible) for a ship of 10,000 gross tonnes to cause more than $11,415,600 of property damage on a single “distinct occasion”. Article 5 provides that where a person entitled to limitation of liability under the Convention has a claim against the claimant arising out of the same occurrence, their respective claims are set off against each other and the provisions of the Convention apply only to the balance, if any. If a single occurrence gives rise to both personal claims and other claims (such as property claims), two separate funds are constituted, one for all personal claims arising on that occasion, and one for all other claims. If the “personal” fund is insufficient to pay the personal claims in full, the personal claimants may claim against the “property-and-others” fund, but the unpaid balance of the personal claims ranks rateably with the other claimants against that fund.227

Example 16.2 A ship of gross tonnage 3,000 metric tonnes allides with another ship at anchor. The anchored ship explodes and sinks. Many of its crew are killed or injured. Its cargo is totally lost. The owner of the moving ship institutes limitation proceedings and constitutes two limitation funds, one for personal injury and death claims, and the other for property damage claims. Assume that the limitation fund is constituted at a time when the exchange rate of the Australian dollar to the SDR is 1.80 to 1.228 • Limitation fund for personal claims (Art 6.1(a)): 4,228,000 SDRs = $7,610,400. • Limitation fund for other claims (Art 6.1(b)): 2,114,000 SDRs = $3,805,200. • Death and injury claims total: $25,000,000. • Other claims total: $15,000,000.

227 LLMC 76/96, Art 6.2. 228 For the exchange rate for SDRs to other currencies, see: http://www.imf.org/external/ np/fin/data/rms_five.aspx.

[16.210]

16 Limitation of Liability

663

• The unpaid balance of personal claims after distribution of the personal fund is $17,389,600 ($25,000,000 minus the $7,610,400 available under Art 6.1(a)). To that extent, the personal claims rank rateably in the distribution of the “property-and-other” fund (Art 6.2). • Unpaid personal claims: $17,389,600. • Other claims: $15,000,000. • Total claims to be satisfied from “property-and-other” fund: $32,389,600. • Unpaid personal claims share: $17,389,600 x (3,805,200/32,389,600) = $2,042,968. • Other claims share: $15,000,000 x (3,805,200/32,389,600) = $1,762,232. • End result: personal claims receive 38.57% of the full value of their claims (30.4% from the Art 6.1(a) fund and 8.17% from the Art 6.1(b) fund), and other claimants receive 11.75% of the full value of their claims.

Exercising a right given to it by LLMC 76/96, Art 6.3, the Commonwealth has provided that claims in respect of damage to harbour works, basins and waterways and aids to navigation shall have priority over other claims against the “property-and-others” fund, including any claims unsatisfied after distribution of the “personal-injury-and-death” fund.229 This has the effect of reducing the proportionate recovery of all other types of claim, including those for personal injury and death.

Example 16.3 A ship of gross tonnage 3,000 metric tonnes allides with another ship moored at the wharf, then runs into the wharf itself. The moored ship sinks and many of its crew are killed or injured. Its cargo is totally lost. The wharf sustains considerable damage. The owner of the moving ship institutes limitation proceedings and constitutes two limitation funds. Assume that the limitation fund is constituted at a time when the exchange rate of the Australian dollar to the SDR is 1.80 to 1.230 • Limitation fund for personal claims (Art 6.1(a)): 4,228,000 SDRs = $7,610,400. • Limitation fund for other claims (Art 6.1(b)): 2,114,000 SDRs = $3,805,200.

229 Limitation of Liability for Maritime Claims Act 1989 (Cth), s 8. For the State and Territory legislation imposing strict liability for damage to harbour works, etc, see: Maritime Services Act 1935 (NSW), s 13YA(2); Darwin Port Corporation Act (NT), s 42; Transport Infrastructure Act 1994 (Qld), s 281E; Harbors and Navigation Act 1993 (SA), s 21; South Australian Ports Corporation Act 1994 (SA), s 24; Port Management Act 1995 (Vic), s 23; Port Authorities Act 1999 (WA), s 113. There is no equivalent provision in Tasmania. 230 For the exchange rate for SDRs to other currencies, see: http://www.imf.org/external/ np/fin/data/rms_five.aspx.

664

Shipping Law

[16.220]

• Death and injury claims total: $25,000,000. • Harbour works claim totals: $2,000,000. • Other claims total: $15,000,000. • In the distribution of the “property-and-other” fund, the harbour works claim takes priority over the other claims (Art 6.3, s 8). In other respects, the calculations are the same as in Example 16.2. • Total claims to be satisfied from “property-and-other” fund: $34,389,600 ($32,389,600 as in Example 16.2 plus $2,000,000 for harbour damage). • The harbour works claim of $2,000,000 would be paid in full out of the “other claims” fund of $3,805,200, leaving only $1,805,200 for distribution among other claimants. • The unpaid personal claims of $17,389,600 would share $969,190.60 ($1,805,200 x 17,389,600/32,389,600). • The property damage claims of $15,000,000 (other than harbour works damage) would share $836,009.40.

Claims may only be made against the limitation fund [16.220]

Once the limitation fund has been constituted, it is the only source against which claimants may claim. Article 13(1) provides that, once a limitation fund has been constituted, “any person having made a claim against the fund” is barred from exercising a claim against any other of the assets of the shipowner. In The Bowbelle,231 the owners of the “Bowbelle” constituted a limitation fund under Art 11 in respect of all claims arising from the running down of the “Marchioness” by the “Bowbelle” in the River Thames. Various claimants against the “Bowbelle” sought security for their claims by arresting surrogate ships in the same ownership as the “Bowbelle”, notwithstanding the provisions of Art 13. This tactic was employed both by claimants who had already made a claim against the fund, and by claimants who were entitled to make a claim, but had not yet done so. The owners of the “Bowbelle” filed a praecipe with the Admiralty Registrar,232 requesting that a caveat against the arrest of 14 named ships (surrogates for the “Bowbelle”) be entered in the caveat book. Sheen J ordered that such a caveat be entered. Claimants 231 The Bowbelle [1990] 1 Lloyd’s Rep 532. 232 The procedure is now called a “caution against arrest” in the UK: see CPR, Pt 61.7; P Griggs, R Williams and J Farr, Limitation of Liability for Maritime Claims (4th ed, Informa Law (Routledge), Oxford, 2005), p 75. In Australia it is called an application for a caveat against arrest: see Admiralty Rules 1988 (Cth), r 7.

[16.220]

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who had already made a claim against the limitation fund were clearly not entitled to proceed against surrogates for the “Bowbelle”, by virtue of Art 13(1). Claimants who had not yet made a claim against the fund were not prevented from arresting surrogates for the “Bowbelle” by virtue of Art 13(1), but the court would be bound to order the release of any surrogate arrested by such a claimant, because of the existence of the limitation fund. Sheen J held that there must be some mechanism to prevent the nuisance value of such claimants arresting surrogates for the “Bowbelle”, which would inevitably be released, so he ordered the entry of a caveat against arrest of those ships. Article 13(2) provides that once a limitation fund has been constituted under Art 11, other countries party to the Convention may release any ship or property arrested or attached for claims that may be raised against the fund, or any security given for those claims. Countries party to the Convention must always release arrested ships, property or security if the limitation fund has been constituted: (a) at the port where the occurrence took place or, if it did not occur in port, at the first port of call thereafter; or (b) at the port of disembarkation, in the case of loss of life or personal injury claims; or (c) at the port of discharge, in the case of cargo claims; or (d) in the country where the arrest was made.233 Thus, an Australian court must release an arrested ship or other security if a limitation fund is established in the relevant place in another Convention country in relation to the claims giving rise to the arrest. Conversely, a shipowner who has constituted a limitation fund in the relevant place in Australia is entitled to the release of any arrested ship, property or security being held in other Convention countries. Article 13(2) is unchanged in the 1996 Protocol, but for countries such as Australia, which have denounced the 1976 Convention, the words “a State Party” in Art 13(2) must be interpreted to refer only to a country party to the 1996 Protocol. Article 9(2) of the 1996 Protocol provides that a country (like Australia) that is party to the 1996 Protocol but not the 1976 Convention is bound by the provisions of the Convention as amended by the Protocol in relation to other countries party to the Protocol, but is not bound by the provisions of the Convention in relation to countries party only to the Convention. Thus, for example, if a limitation fund were to be constituted in Australia, Singapore234 would not have any obligation under Art 13(2) to release any ship arrested in that country or other security given there, because it is not party to the 1996 Protocol and Australia is not party to the 1976 Convention. For the same reason, and conversely, an Australian court would have no obligation under Art 13(2) to release an arrested ship or other security if a limitation fund were to be 233 LLMC 76/96, Art 13(2). 234 Or any of the 19 other countries in the same position. At the time of writing, the countries in this category were: Algeria, Azerbaijan, Bahamas, Barbados, Benin, Dominica, Egypt, Equatorial Guinea, Georgia, Guyana, Kiribati, Mauritius, Mexico, Nigeria, Switzerland, Trinidad and Tobago, United Arab Emirates, Vanuatu, and Yemen.

666

Shipping Law

[16.220]

constituted in Singapore in relation to the same incident because Australia’s denunciation of the 1976 Convention means it no longer owes Convention obligations to Singapore, which is not party to the 1996 Protocol. Because Art 13(2)(a) – (c) specifically refer to a limitation fund being constituted at a “port”, a technical reading would suggest that the obligation to release ships or security would not arise if a fund were to be constituted in a different city in the same country. This technical reading of Art 13 would produce inconvenient results, as it is not possible to constitute a limitation fund in many port cities in Australia, because limitation proceedings can only be commenced in the Federal Court or a State or Territory Supreme Court,235 and many port cities do not have a court registry for those courts. For example, if cargo were to be discharged at Albany, in Western Australia, it would be impossible to constitute a limitation fund in that port, because neither the Federal Court nor the Supreme Court of Western Australia has a registry in that city. If a limitation fund for claims arising out of the incident in question were to be constituted in Perth, the technical reading of Art 13(2) would mean that other countries party to the 1996 Protocol would not be obliged to release ships or property arrested or attached, or security given, in relation to the claims against the limitation fund, although they might choose to do so. Inconvenient though this narrow reading might be, it seems to be unavoidable, given that Art 13(2) differentiates between a limitation fund in a “port” and a limitation fund in a “State” (meaning country). It follows that the converse is true in relation to release of security held in Australia in relation to limitation proceedings in other 1996 Protocol countries. For example, if a limitation fund were to be constituted in Wellington in relation to an occurrence where the first port of call after the occurrence was Bluff, an Australian court would not be obliged under Art 13(2) to release any security given in Australia in relation to claims arising out of that occurrence, although it could do so in its discretion.236 In Barde AS v ABB Power Systems,237 the Federal Court held that Art 13(2) does not require release of a ship (or security given by the shipowner as a substitute for the ship) when the liability claimants seek to establish conduct that would preclude the owner from limiting its liability, by operation of Art 4.238 If a claimant successfully overcomes the very considerable barrier posed by Art 4, it is free to pursue unlimited 235 Limitation of Liability for Maritime Claims Act 1989 (Cth), s 9(1); Admiralty Act 1988 (Cth), s 9(2). 236 New Zealand has given effect to the 1976 Convention as amended by the 1996 Protocol in Maritime Transport Act 1994 (NZ), Pt 7. Only the High Court of New Zealand has jurisdiction to hear limitation proceedings (Maritime Transport Act 1994 (NZ), s 83), and there is no High Court registry in Bluff. 237 Barde AS v ABB Power Systems (The Barde Team) (1995) 69 FCR 277. 238 See [16.60].

[16.230]

16 Limitation of Liability

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recovery from the shipowner, but it no longer has access to the limitation fund, which is “available only for the payment of sums in respect of which limitation of liability can be invoked”.239 It follows that a claimant seeking to invoke Art 4 must be entitled to arrest the ship or hold substitute security for the full amount of its claim, notwithstanding the constitution of the limitation fund, or else it would be under a positive disadvantage because of its decision to challenge the shipowner’s right to limit, because its successful challenge under Art 4 would deprive it of security for its claim.240 Sheppard J said that The Bowbelle should be regarded as incorrect to the extent that it is inconsistent with that conclusion.241

CHOICE OF FORUM: SHOPPING FOR THE MOST FAVOURABLE CONVENTION Introduction [16.230]

If the incident giving rise to the shipowner’s attempt to limit is potentially connected to more than one country — as is often the case, such as when the incident occurs on the high seas — the shipowner may want to “forum-shop” by bringing its limitation action in the country with the most favourable Convention for its interests. Because there is no general jurisdiction provision in either the 1976 Convention or the 1996 Protocol stating where the right of limitation must be invoked, a shipowner may seek to limit its liability in any contracting State that has personal jurisdiction over the respondent (the liability plaintiff).242 LLMC 76/96, Art 11(1) provides that a limitation fund may be constituted in any country where legal proceedings have been instituted in respect of claims subject to limitation;243 it does not provide that a limitation fund may only be constituted in such a country.244 Thus, there is some textual support for the proposition that a shipowner may institute limitation proceedings and constitute a fund in any country of its choice, whether or not it has been sued there.245 It is also arguable that the phrase “in which legal proceedings are instituted in respect of claims subject to limitation” in 239 LLMC 76/96, Art 11.1. See Barde AS v ABB Power Systems (1995) 69 FCR 277 at 296-297 per Sheppard J. 240 Barde AS v ABB Power Systems (1995) 69 FCR 277 at 297 per Sheppard J. 241 Barde AS v ABB Power Systems (1995) 69 FCR 277 at 297 per Sheppard J. 242 Seismic Shipping Inc v Total E&P Plc (The Western Regent) [2005] 2 Lloyd’s Rep 359 at 364 [15] per Clarke LJ, at 371 [61] per Rix LJ. 243 For these purposes, “legal proceedings” includes arbitration: see ICL Shipping Ltd v Chin Tai Steel Enterprise Co Ltd (The ICL Vikraman) [2004] 1 Lloyd’s Rep 21. 244 Seismic Shipping Inc v Total E&P Plc (The Western Regent) [2005] 2 Lloyd’s Rep 359 at 371 [61] per Rix LJ (with whom Sir Martin Nourse agreed). Clarke LJ found it unnecessary to decide this point: see at 364-365 [20] per Clarke LJ. 245 Although see also F Berlingieri, International Limitation Conventions (Informa Law (Routledge), Oxford, 2015), Vol 2, p 381, arguing for the opposite proposition, that a fund may only be constituted where a liability claim has been made.

668

Shipping Law

[16.230]

Art 11(1) is not confined to liability claims brought against the shipowner, but may include limitation proceedings brought by the shipowner itself, which would allow it to constitute a limitation fund in a country of its own choosing by instituting limitation proceedings there.246 Furthermore, Art 10(1) allows a shipowner to invoke its right to limit without constituting a limitation fund,247 which allows the shipowner to act pre-emptively by bringing proceedings in a country where no liability claim has yet been brought, if the courts of that country have personal jurisdiction over the potential liability claimant.248 The shipowner may prefer the lower limits of the Limitation Convention 1957,249 or, if it has been guilty of conduct that might possibly amount to “actual fault or privity” for purposes of that Convention, it may prefer the unbreakable limits provided by LLMC 76/96. Because not all countries party to the 1976 Convention have yet adopted the 1996 Protocol,250 the shipowner may prefer to institute limitation proceedings in a country where the 1976 Convention still applies in unamended form, as the limits of liability are much lower there, given that the 2015 tacit acceptance increases as a result of IMO Resolution LEG.5(99) apply only to the 1996 Protocol and not to the unamended 1976 Convention. For example, if the incident in Example 16.1251 were to give rise to limitation proceedings in Australia, where the post-2015 limits apply, the limitation fund would be the equivalent in Australian dollars of 6,342,000 SDRs; if the same incident were to give rise to limitation proceedings in Singapore, which is still party only to the unamended 1976 Limitation Convention, the limitation fund would be the equivalent in Singapore dollars of 1,753,500 SDRs, little more than a quarter as much. 246 Seismic Shipping Inc v Total E&P Plc (The Western Regent) [2005] 2 Lloyd’s Rep 359 at 364-365 [20] per Clarke LJ, at 371 [61] per Rix LJ. 247 The second sentence of Art 10(1) permits a State Party to provide in its national law that limitation may only be invoked by constituting a fund if a liability claim has been brought in that country. Unlike the UK, which removed that sentence when enacting the 1976 Convention (see Merchant Shipping Act 1995 (UK), Sch 7, Art 10), Australia left the sentence in the Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1. Nevertheless, the second sentence itself cannot be read as an exercise of Australia’s right to make the permitted exception, as it is permissive in form. There is no express provision in the Act stating that Art 10(1) is restricted in the way permitted by the second sentence. 248 Seismic Shipping Inc v Total E&P Plc (The Western Regent) [2005] 2 Lloyd’s Rep 359. 249 The most significant maritime country that still adheres to a Limitation Convention 1957 regime (but which is not party to the Convention itself) is South Africa: see J Hare, Shipping Law and Admiralty Jurisdiction in South Africa (2nd ed, Juta & Co, Claremont, 2009), pp 514-539. 250 At the time of writing, the countries in this category were: Algeria, Azerbaijan, Bahamas, Barbados, Benin, Dominica, Egypt, Equatorial Guinea, Georgia, Guyana, Kiribati, Mauritius, Mexico, Nigeria, Singapore, Switzerland, Trinidad and Tobago, United Arab Emirates, Vanuatu, and Yemen. 251 See [16.210].

[16.240]

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The choice between available limitation regimes is complicated further by the fact that some countries, including Australia, have denounced the 1976 Convention, thereby renouncing their international obligations to other countries party to the Convention. The result is that there are several convention regimes in existence, imposing different international obligations on the countries party to them. A few countries are still party to the 1957 Convention but not the 1976 Convention; some are party to the 1976 Convention but not the 1996 Protocol; some are party to the 1976 Convention and the 1996 Protocol; some, like Australia, are party to the 1996 Protocol but not the 1976 Convention. Some countries, such as the United States and China, have limitation of liability legislation252 but are not party to any of the international conventions, and so owe no international obligations to other countries.

The requirements of the 1976 Convention and the 1996 Protocol [16.240]

As noted at [16.220], Art 13(1) of LLMC 76/96 provides that once a limitation fund has been constituted, any claimant against that fund is barred from exercising a claim against any other assets of the shipowner. Article 13(1) is effective to bar claimants against the fund from proceeding against the shipowner’s other assets in the country where the fund is constituted,253 and Art 13(2) may be effective to preclude proceedings against the shipowner’s assets in other convention countries as well.254 However, Art 13 is concerned only with protecting the shipowner’s assets; it does nothing to prevent liability claimants from bringing their claims on the merits in other countries, even in other countries party to the same version of the Convention, provided they do not proceed against the shipowner’s assets.255 This is particularly true in relation to claimants who have not already made a claim against the limitation fund, because Art 13(1) does not apply to them. It follows a fortiori that Art 13(1) does nothing to prevent any liability claimant from suing on the merits in a country party to a different version of the Convention. Thus, for example, the existence of a limitation fund in Australia, a 1996-Protocol-only country, would do nothing to prevent any liability claimant from bringing a claim on the merits against the shipowner in a country party to the 1976 Convention but not the 1996

252 The US limits the shipowner’s liability to the value of the ship at the end of the voyage, which may be less than under any of the Conventions, particularly if the ship has been lost, in which case the limitation fund is effectively zero: see 46 USC §§ 30501 – 30512. China has legislation that limits the shipowner’s liability to the amounts set out in the unamended 1976 Convention but which does not reproduce all of the 1976 Convention: see Chinese Maritime Code, Ch XI, especially Art 210. 253 The Bowbelle [1990] 1 Lloyd’s Rep 532, considered at [16.220]. 254 See [16.220]. 255 P Griggs, R Williams and J Farr, Limitation of Liability for Maritime Claims (4th ed, Informa Law (Routledge), Oxford, 2005), p 75.

670

Shipping Law

[16.240]

Protocol, such as Singapore.256 Furthermore, as noted at [16.220], any such claimant, even a claimant against the Australian limitation fund, could secure its claim in the other country by arresting ships, attaching property, or obtaining other security, because the 1976-Convention-only country would have no obligation under Art 13(2) of the 1976 Convention to release that security on account of constitution of the limitation fund in Australia, as Australia is no longer party to the 1976 Convention. Faced with the prospect of unlimited liability and retained security in the other country, the shipowner would have no choice but to establish a limitation fund there, too, and the two funds would then have to compete, which has been described as a manifestly unsatisfactory situation.257 The position is the same if the limitation fund is constituted in a country party to the Limitation Convention 1957 and action is taken in a 1976 Convention or 1996 Protocol country, or vice versa.258 Nothing in either Convention precludes liability claimants from proceeding on the merits in other countries. Furthermore, there is nothing in the Limitation Convention 1957, the 1976 Convention, or the 1996 Protocol that prevents a potential claimant against a limitation fund from setting up a competing fund of its own in another country. This may happen, for example, when two ships are damaged in a collision. The two shipowners may institute limitation proceedings in different countries, each fearing that its responsibility for the damage sustained in the collision might exceed the limitation value of its ship, and each seeking some tactical advantage available under the Convention it invokes.259 Because the Conventions (and the 1996 Protocol) do not effectively deal with the problem of parallel proceedings in different countries, the jurisdictional struggle can be resolved only by common law means, such as by a stay or dismissal on forum non conveniens grounds, or by seeking 256 Or any of the 19 other countries in the same position. At the time of writing, the countries in this category were: Algeria, Azerbaijan, Bahamas, Barbados, Benin, Dominica, Egypt, Equatorial Guinea, Georgia, Guyana, Kiribati, Mauritius, Mexico, Nigeria, Switzerland, Trinidad and Tobago, United Arab Emirates, Vanuatu, and Yemen. 257 J Hare, “Shopping for the Best Admiralty Bargain” in M Davies (ed), Jurisdiction and Forum Selection in International Maritime Law (Kluwer Law International, London, 2004), p 159: “a manifestly unsatisfactory situation”. 258 J Hare, “Shopping for the Best Admiralty Bargain” in M Davies (ed), Jurisdiction and Forum Selection in International Maritime Law (Kluwer Law International, London, 2004), p 159. 259 See, eg, Caltex Singapore Pte Ltd v BP Shipping Ltd [1996] 1 Lloyd’s Rep 286; Caltex Singapore Pte Ltd v BP Shipping Ltd [1996] 1 Lloyd’s Rep 286; The Kapitan Shvetsov [1998] 1 Lloyd’s Rep 199; The Herceg Novi and Ming Galaxy [1998] 2 Lloyd’s Rep 454. In each of these cases, a collision gave rise to parallel limitation actions, one in a 1957 Convention country and the other in a 1976 Convention country. See also Seismic Shipping Inc v Total E&P Plc (The Western Regent) [2005] 2 Lloyd’s Rep 359, where proceedings were brought in the US, where the limit of liability would have exceeded the value of the plaintiff’s claim, to avoid the effect of limitation proceedings under LLMC 76 in the UK.

[16.250]

16 Limitation of Liability

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an anti-suit injunction restraining a litigant from pursuing the foreign proceedings. Civil law countries grant little or no discretion to their courts to decline to exercise their jurisdiction for reasons of inconvenience or inappropriateness,260 so if a limitation fund is constituted in Australia but proceedings arising out of the same incident are brought in a civil law country, the two actions will continue in parallel if the Australian court does not grant a forum non conveniens stay or anti-suit injunction. The same is true if the other country is a common law country that declines to grant a forum non conveniens stay (or dismissal).261

Forum non conveniens [16.250]

If limitation proceedings or liability proceedings are properly brought in an Australian court, a forum non conveniens stay should be granted only if the court can be persuaded that it is a “clearly inappropriate forum” in the circumstances.262 This is so even when there are parallel proceedings on the same subject matter (often called lis alibi pendens) in another country.263 If the posture of the parties is different in the two countries — that is, if the liability claimant in one country is the limitation plaintiff in the other — the existence of the foreign proceedings does not necessarily indicate that the Australian proceedings should be stayed,264 although a stay may nevertheless be granted in an appropriate case if the court takes the view that it is a “clearly inappropriate forum” in the circumstances.265 Technically, the legal question in parallel proceedings about liability and limitation is not the same, although both sets of proceedings arise from the same incident. The legal question in liability proceedings is whether the shipowner is liable for the damage caused by its ship, but the legal question in limitation proceedings is whether the shipowner may limit any liability it is found to have. Speaking of this kind of case in CSR Ltd v Cigna Insurance Australia Ltd,266 Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ said: 260 M Davies, A Bell and P Brereton, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, Chatswood, 2014), p 188 at [8.7]. 261 See, eg, The Kapitan Shvetsov [1998] 1 Lloyd’s Rep 199, where competing limitation funds were established in Hong Kong and Singapore, and both jurisdictions refused to grant a forum non conveniens stay. In the US, the action is dismissed, not stayed, if the court considers itself to be forum non conveniens: see, eg, Piper Aircraft Co v Reyno 454 US 235; 102 S Ct 252 (1981). 262 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538; Puttick v Tenon Ltd (2008) 238 CLR 265. 263 Henry v Henry (1996) 185 CLR 571. 264 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 395 per Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ. 265 See, eg, Ferrier-Watson v McElrath (2000) 26 Fam LR 169; Re Point of Pay Pty Ltd [2012] VSC 380. 266 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 401.

672

Shipping Law

[16.250]

In cases such as the present, where different issues are involved in the local and foreign proceedings, albeit that the different proceedings arise out of the same sub-stratum of fact, the question is not whether the Australian court is a clearly inappropriate forum for the litigation of the issues involved in the Australian proceedings. Rather, the question must be whether, having regard to the controversy as a whole, the Australian proceedings are vexatious or oppressive in the Voth sense of those terms, namely, that they are “productive of serious and unjustified trouble and harassment” or “seriously and unfairly burdensome, prejudicial or damaging”.

Thus, the court should consider the application for a stay of the Australian proceedings in the context of the whole controversy, considering all proceedings arising out of the “same sub-stratum of fact” in order to determine whether continuation of the Australian proceedings would be vexatious or oppressive in the Voth sense,267 rather than considering only whether the Australian forum is appropriate for the litigation of the issues involved in the Australian proceedings.268 In CSR Ltd v Cigna Insurance Australia Ltd,269 Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ said that proceedings that are brought in Australia for the dominant purpose of preventing a party from pursuing remedies available abroad, but not in Australia, are oppressive in the Voth sense. On the face of it, this might seem to suggest that liability proceedings brought in Australia in an attempt to avoid a lower limit in another country should be stayed. If a shipowner has instituted limitation proceedings in a country that is not party to the 1996 Protocol, and a liability claimant sues the shipowner or its ship in Australia, where the higher limit of liability under the 1996 Protocol as amended in 2015 would apply, it could be said that the dominant purpose of the plaintiff in the Australian proceedings is to prevent the shipowner from pursuing the remedy of the non-Protocol limit of liability available in the other country. In such a case, it becomes important to determine whether the foreign limitation proceedings were commenced before the Australian liability proceedings and, if so, whether the plaintiff participated in the foreign proceedings (and to what extent) before suing in Australia. In Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2),270 two ships, “B Oceania” and “Xin Tai Hai”, collided in the Straits of Malacca. “B Oceania” sank. “Xin Tai Hai” sailed on and arrived at the port of Qingdao in the People’s Republic of China. The day after its arrival, its owner applied to the Qingdao Maritime Court to constitute a limitation fund under Ch XI of the Maritime Code of the People’s Republic of China, which limits the shipowner’s liability at a level equivalent to that of the unamended 1976 Convention, and which may allow the shipowner to 267 Referring to Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. 268 See, eg, James N Kirby Pty Ltd v International Cargo Control Pty Ltd [2000] NSWSC 289; Raveh v Official Receiver of the State of Israel [2002] WASCA 27. 269 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 402. 270 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265.

[16.250]

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limit its liability for wreck removal, which is not permitted under Australian law.271 “Xin Tai Hai” later visited Port Hedland in Western Australia, where it was arrested by the owner of “B Oceania”, claiming damages for the loss of the ship, including a substantial sum for removal of the wreck from the Straits of Malacca. Rares J of the Federal Court refused to grant a forum non conveniens stay, holding that Australia was not a clearly inappropriate forum. The owner of “B Oceania” admitted,272 and Rares J acknowledged,273 that the dominant purpose for proceeding in Australia was that the limit of liability was higher there than in China. Nevertheless, a stay was not warranted because Rares J rejected the argument made on behalf of “Xin Tai Hai” that the Chinese proceedings were commenced before the Australian ones.274 The Australian proceedings were commenced when the writ was issued, not when it was served on “Xin Tai Hai” in Port Hedland.275 The writ was issued before the owner of “B Oceania” submitted to the jurisdiction of the Chinese court, which it did only because the time limit for participation in the Chinese proceedings had expired before “Xin Tai Hai” arrived in Australia.276 Thus, the principle stated in CSR did not apply, which meant that the decision whether to grant a stay was to be decided solely by application of Voth principles. Applying those principles, Rares J concluded that the Federal Court was not a clearly inappropriate forum, because the owner of “B Oceania” had invoked its jurisdiction in the regular manner and sought the benefit of the legitimate advantages of the greater amount of security for its claim, a larger limitation fund, and exclusion from limitation of liability of wreck removal expenses.277 It was clear in The Xin Tai Hai (No 2) that neither China nor Australia was the “natural forum” for adjudication of a dispute about a collision on the high seas in the Straits of Malacca.278 It is questionable whether the concept of the “natural forum” has any part to play in the application of Voth principles, because it is shorthand for the “more appropriate forum” 271 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 at 268 [4], 270 [19] per Rares J. Compare Limitation of Liability for Maritime Claims Act 1989 (Cth), s 6 (no limitation for wreck removal claims) with Chinese Maritime Code, Art 207, which neither specifically permits limitation of liability for wreck removal nor (unlike Australia) specifically excludes it. The limit of liability is set at 1976 Convention levels by Chinese Maritime Code, Art 210. China is not party to the 1976 Convention, and Ch XI of the Chinese Maritime Code does not enact all of the provisions of the 1976 Convention. 272 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 at 276 [49]. 273 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 at 290 [104]. 274 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 at 294-295 [124]. 275 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 at 295 [125], citing Re Aro Co Ltd [1980] Ch 196. 276 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 at 276 [50]-[51], 296 [130]. 277 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 at 299 [143]. 278 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 at 294 [122] per Rares J.

674

Shipping Law

[16.250]

test adopted by the House of Lords in Spiliada Maritime Corp v Cansulex Ltd279 but rejected by the High Court of Australia in Voth v Manildra Flour Mills Ltd.280 Nevertheless, in CMA CGM SA v Ship Chou Shan,281 a Full Court of the Federal Court held that the trial judge in that case had not erred by considering whether another country was the “natural and obvious forum”, as that question was relevant to the assessment of whether Australia was a clearly inappropriate forum.282 In The Chou Shan, two ships collided in China’s Exclusive Economic Zone (EEZ). One, the “CMA CGM Florida”, was registered in the United Kingdom and was owned by a French company; the other, the “Chou Shan”, was registered in Panama and owned by a company domiciled in the Marshall Islands. The owner of “CMA CGM Florida” commenced proceedings against “Chou Shan” in the Federal Court of Australia, and eventually had the ship arrested in Port Hedland, in Western Australia. After the Australian writ was issued, the owner of “Chou Shan” commenced limitation proceedings in China. It then applied for a forum non conveniens stay of the Australian proceedings, which was granted. Although the Australian proceedings had been instituted before the Chinese proceedings, and although the parties were not identical, as the owner of “CMA CGM Florida” had proceeded on a maritime lien against the ship “Chou Shan” itself, rather than on an in personam claim against its owner, the court held that it would be inappropriate for the dispute to be resolved in Australia, rather than China, despite the fact that this deprived the owner of “CMA CGM Florida” of the juridical advantage of the higher limit under Australian law. The principal feature distinguishing The Chou Shan from The Xin Tai Hai (No 2) was the fact that the collision in question took place in the EEZ of the country (China) where the parallel proceedings were under way. (In The Xin Tai Hai (No 2), the collision took place in what were probably Malaysian waters,283 but the competing limitation proceedings were in China and Australia.) Even if the collision takes place in another country’s waters rather than on the high seas, it should not follow automatically that Australia becomes a clearly inappropriate forum to consider limitation or liability proceedings if jurisdiction is properly invoked. The High Court has made it quite clear that an Australian court does not become an inappropriate forum merely because another country’s courts 279 Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460. 280 Voth v Manildra Flour Mills Ltd (1990) 171 CLR 538. 281 CMA CGM SA v Ship Chou Shan (2014) 224 FCR 384. 282 CMA CGM SA v Ship Chou Shan (2014) 224 FCR 384 at 396-398 [51]-[57] per Allsop CJ, Besanko and Pagone JJ. 283 There is no agreement between Indonesia and Malaysia about the boundaries of their respective EEZs in the Straits of Malacca: see B Hamzah, V Forbes, J Jalil and M Basiron, “The Maritime Boundaries of Malaysia and Indonesia in the Malacca Strait: An Appraisal” (2014) 6 Australian Journal of Maritime and Ocean Affairs 207.

[16.250]

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may be a more appropriate forum.284 Nevertheless, the Full Court in The Chou Shan clearly stated that it is relevant to the Australian court’s determination of whether it is a clearly inappropriate forum that there are parallel proceedings in the “natural and obvious forum”, even where the Australian proceedings were commenced before the foreign proceedings. Where the foreign proceedings are commenced before the Australian proceedings, it is even more likely that a forum non conveniens stay should be granted, because of the principle from CSR Ltd v Cigna Insurance Australia Ltd described above, that it is oppressive in the Voth sense to bring proceedings in Australia for the dominant purpose of preventing a party from pursuing remedies available abroad, but not in Australia.285 The Chou Shan and The Xin Tai Hai (No 2) were both concerned with limitation proceedings in China, which is not party to any of the limitation Conventions. It is worth repeating, however, that little would have been different if the parallel limitation proceedings had been in a convention country. If there were limitation proceedings in a country party to the 1996 Protocol, an Australian court would have to release any arrested ship or other security if a limitation fund were to be constituted in one of the ports listed in Art 13(2), but otherwise it would have a discretion about what to do in relation to the security, as Art 13(2) merely says that in other cases, the ship or other security “may be released”. In all cases, the Australian court would have a discretion about whether to stay the proceedings before it, as Art 13 does not require that proceedings be stayed or discontinued, even when the foreign limitation fund is in a port in one of the listed places. If there were parallel proceedings in a country party to the 1976 Convention but not the 1996 Protocol, the situation would be exactly the same as it was in The Chou Shan and The Xin Tai Hai (No 2), as Australia would owe no Convention obligations to the other country, and be owed none by it. One of the factors relevant to the court’s decision about whether to stay proceedings on forum non conveniens grounds is the fact that liability will have to be determined by applying a foreign lex causae.286 The mere possibility that foreign law will apply is not a relevant consideration,287 and an Australian court cannot be a clearly inappropriate forum merely because it will be required to apply a foreign lex causae.288 In cases where 284 Puttick v Tenon Ltd (2008) 238 CLR 265 at 276 [27] per French CJ, Gummow, Hayne and Kiefel JJ: “[T]he focus must be upon the inappropriateness of the local court and not the appropriateness or comparative appropriateness of the suggested foreign forum”. 285 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 402. 286 Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 566 per Mason CJ, Deane, Dawson and Gaudron JJ; John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 at 521 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ. 287 Puttick v Tenon Ltd (2008) 238 CLR 265. 288 Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491 at 521 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ.

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[16.260]

a collision occurs on the high seas, outside the territorial waters of any country, the lex causae may be Australian law as the law of the forum, taking into account the general principles of maritime law and the international nature of events on the high seas, which would include consideration of the international Collision Regulations.289

Anti-suit injunctions [16.260]

Because Australian courts are, generally speaking, reluctant to interfere with the jurisdiction of other courts, even indirectly, the principles upon which an anti-suit injunction is ordered are different from those in relation to a forum non conveniens stay.290 The power to issue anti-suit injunctions derives in part from the court’s inherent power to protect the integrity of its processes once set in motion.291 It is not to be restricted to defined and closed categories, but is to be exercised when the administration of justice so demands, or when necessary for the protection of the court’s own proceedings or processes.292 In Atlasnavios Navegaçao Lda v Ship Xin Tai Hai,293 Rares J of the Federal Court granted a mandatory antisuit injunction to restrain the owner of “Xin Tai Hai” from applying to the Qingdao Maritime Court to seek an order requiring the owner of “B Oceania” to return the P & I Club letter of undertaking given in Australia in return for the release from arrest of “Xin Tai Hai”.294 The order sought by the owner of “Xin Tai Hai” in Qingdao would have interfered with the Australian proceedings, because it would have required return of the security given in Australia, which acted as the res in substitution for “Xin Tai Hai” itself, the in rem defendant in proceedings brought to enforce a maritime lien.295 Rares J 289 International Regulations for Preventing Collisions at Sea 1972; see CMA CGM SA v Ship Chou Shan (2014) 311 ALR 234 at 253-255 [91]-[101] per Allsop CJ, Besanko and Pagone JJ, citing Blunden v Commonwealth (2003) 218 CLR 330 at 340 per Gleeson CJ, Gummow, Hayne and Heydon JJ. For the same proposition in the context of a detailed consideration of the law governing torts committed on the sea or in the air, see M Davies, A Bell and P Brereton, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, Chatswood, 2014), pp 509-513. 290 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 390 per Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ. 291 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 391. 292 CSR Ltd v Cigna Insurance Australia Ltd (1997) 189 CLR 345 at 392. See also Société Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] 1 AC 871. Although the Australian law about forum non conveniens is different from the English (see Voth v Manildra Flour Mills Ltd (1990) 171 CLR 538), the Australian law about anti-suit injunctions is the same as the English, which means that Lee Kui Jak is followed in Australia: see M Davies, A Bell and P Brereton, Nygh’s Conflict of Laws in Australia (9th ed, LexisNexis Butterworths, Chatswood, 2014), p 222 at [9.8]. 293 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (2012) 291 ALR 795. 294 For a description of the facts giving rise to the dispute, see [16.250], considering a later stage of the proceedings, reported at Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265. 295 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (2012) 291 ALR 795 at 805 [40] per Rares J.

[16.260]

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said that there was no substantial threat of loss to “Xin Tai Hai” or its owner from the giving of the letter of undertaking, because it had not then been decided whether the jurisdiction was properly invoked or whether it ought to be exercised.296 The proper balance of the respective rights of the parties was best maintained by protecting the integrity of the processes of the Federal Court of Australia.297 If no action is taken in the foreign proceedings to interfere with the Australian proceedings, it would not be appropriate for an Australian court to grant an anti-suit injunction restraining a litigant from commencing or continuing the foreign proceedings. The mere fact of parallel proceedings in different countries is not enough in itself to warrant the grant of an anti-suit injunction. For example, in Seismic Shipping Inc v Total E&P UK Plc (The Western Regent),298 the English Court of Appeal affirmed the trial judge’s refusal to grant an anti-suit injunction restraining a liability claimant from proceeding on its claim in the United States, where limitation of liability would have been much higher than in the United Kingdom. The “Western Regent” damaged a marker buoy and well head in an oilfield in the North Sea, outside United Kingdom territorial waters. The owner and demise charterer of “Western Regent” commenced limitation proceedings in England and constituted a limitation fund there, even though no liability claim had been made against them in that country. The owner of the buoy and well head commenced liability proceedings in the United States District Court for the Southern District of Texas, seeking to recover damages for the damage to the buoy and well head. Under United States law, limitation of liability would be set at the value of “Western Regent” at the end of the voyage, plus pending freight, a sum much higher than the value of the LLMC 76 fund established in England and probably higher than the total amount of the claim.299 The owner of the “Western Regent” sought an anti-suit injunction in England, in an attempt to force the liability claimant to proceed against the limitation fund that it had set up there. The English Court of Appeal held that the owner of the “Western Regent” was entitled to bring limitation proceedings in the United Kingdom, even though it had not been sued there,300 but that was no reason to restrain the liability claimant (the defendant in the limitation proceedings) from proceeding in Texas. By proceeding in the United States, the liability claimant was neither acting 296 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (2012) 291 ALR 795 at 804 [36] per Rares J. As noted at [16.250], Rares J later decided that the jurisdiction was properly invoked and ought to be exercised, as he refused to grant the forum non conveniens stay sought by the owner of “Xin Tai Hai”: Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (No 2) (2012) 215 FCR 265. 297 Atlasnavios Navegaçao Lda v Ship Xin Tai Hai (2012) 291 ALR 79 at 805 [40] per Rares J. 298 Seismic Shipping Inc v Total E&P UK Plc (The Western Regent) [2005] 2 Lloyd’s Rep 359. 299 See the first instance decision, Seismic Shipping Inc v Total E&P UK Plc (The Western Regent) [2005] 2 Lloyd’s Rep 54 at 57 [6] per Julian Flaux QC. The relevant provision of US law is now codified at 46 USC § 30505. 300 See [16.230].

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[16.260]

unconscionably nor attempting to interfere with the English proceedings. Judicial comity required that the American litigation be allowed to proceed until a decision was made in the United States court about whether to allow the United States proceedings to proceed,301 and whether and how to recognise the English limitation decree.302

301 The US court had stayed its proceedings awaiting the decision of the English Court of Appeal: see Seismic Shipping Inc v Total E&P UK Plc (The Western Regent) [2005] 2 Lloyd’s Rep 359 at 369 [49]. That is unusual. American courts usually grant a lis alibi pendens stay of this kind only in exceptional circumstances, saying that they have an “unflagging obligation” to exercise the jurisdiction conferred upon them: see, eg, Ingersoll Milling Machine Co v Granger 833 F 2d 680 (7th Cir 1987). 302 Seismic Shipping Inc v Total E&P UK Plc (The Western Regent) [2005] 2 Lloyd’s Rep 359 at 369-370 [49]-[50] per Clarke LJ.

17

Marine Insurance [17.10] INTRODUCTION ........................................................................................... 680 [17.20] THE PARTIES TO THE CONTRACT ......................................................... 685

[17.20] Introduction ...................................................................................... 685 [17.30] Insurable interest .............................................................................. 686 [17.80] Assignment ....................................................................................... 693 [17.90] FORMATION OF THE CONTRACT .......................................................... 695

[17.90] Introduction ...................................................................................... 695 [17.100] Material non-disclosure ................................................................ 698 [17.110] Misrepresentation ........................................................................... 704 [17.120] THE FORM OF THE CONTRACT ............................................................ 706

[17.120] Standard forms ............................................................................... 706 [17.130] Classification of policies ............................................................... 707 [17.170] PERIL AND RISK ......................................................................................... 713

[17.170] Introduction .................................................................................... 713 [17.180] Attachment and termination of risk ........................................... 713 [17.210] Perils insured against .................................................................... 718 [17.260] Perils not insured against — exceptions ................................... 722 [17.290] PROXIMATE CAUSE ................................................................................... 725

[17.300] Where the cause is not apparent ................................................ 729 [17.310] Where there are two or more causes ......................................... 730 [17.320] LOSS ................................................................................................................ 732

[17.320] Types of loss ................................................................................... 732 [17.330] Actual total loss .............................................................................. 732 [17.370] Constructive total loss ................................................................... 734 [17.450] Partial loss ....................................................................................... 740 [17.480] Other expenses ............................................................................... 741 [17.490] THE MEASURE OF INDEMNITY ............................................................ 742

[17.490] General ............................................................................................. 742 [17.500] Total loss .......................................................................................... 742

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[17.10]

[17.510] Partial loss ....................................................................................... 743 [17.550] Deductible clauses ......................................................................... 745 [17.560] Double insurance ........................................................................... 746 [17.570] WARRANTIES .............................................................................................. 746

[17.570] General ............................................................................................. 746 [17.580] Express warranties ......................................................................... 748 [17.590] Implied warranties ........................................................................ 749 [17.620] Waiver and estoppel ...................................................................... 752 [17.630] UTMOST GOOD FAITH ............................................................................. 753 [17.640] THE PREMIUM ............................................................................................ 756 [17.650] SUBROGATION ............................................................................................ 758 [17.660] STATE LAWS ................................................................................................. 759

INTRODUCTION [17.10]

Marine insurance is an integral part of shipping business, and has been so for centuries. Whenever a commercial voyage is undertaken, the ship, cargo and profits are put at risk, and wherever there are marine risks, marine insurance is usually there to protect against them. For over 200 years, marine insurers used the same standard form policy1 to cover all kinds of risks, and its strange and antiquated wording2 was the subject of litigation in thousands of cases. The resulting body of law was complicated and confusing, and, as a result, the United Kingdom Parliament passed a codifying statute, the Marine Insurance Act 1906 (UK), in an attempt to introduce sense and order. Australia followed suit three years later, when the Commonwealth Parliament enacted the Marine Insurance Act 1909 (Cth), which had3 exactly the same provisions as the United Kingdom Act.4 Although the Act was designed to be a code, it did not completely replace the common law. Section 4 of the Act5 provides 1 The Lloyd’s SG (Ship and Goods) Policy, considered at [17.120]. The SG policy still appears as Sch 2 to the Marine Insurance Act 1909 (Cth). 2 In Athens Maritime Enterprises Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd [1983] QB 647 at 661, Staughton J said of the word “riot” in a policy, “If one takes the word in its current and popular meaning, nobody but a Sloane Ranger would say of this casualty: ‘It was a riot’.” 3 There have been some very minor amendments to the UK Act, but not the Australian equivalent. Thus, although the two Acts remain substantially similar, they are no longer identical. The provisions of the two Acts will diverge more dramatically when the Insurance Act 2015 (UK) comes into force. 4 The section numbers in the Commonwealth Act are to be found by adding six to the section numbers in the UK Act. 5 Marine Insurance Act 1909 (Cth), s 4, which corresponds, anomalously, to the Marine Insurance Act 1906 (UK), s 91(2).

[17.10]

17 Marine Insurance

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that the rules of the common law, including the law merchant, apply to contracts of marine insurance “save in so far as they are inconsistent with the express provisions of this Act”.6 The Insurance Contracts Act 1984 (Cth) applies to insurance that is not covered by the Marine Insurance Act 1909 (Cth).7 Generally speaking, the Insurance Contracts Act 1984 (Cth) is much more favourable to the insured8 than is the Marine Insurance Act 1909 (Cth), which strongly favours the insurer in many ways,9 although that may change, at least to some extent, if Australia amends the Marine Insurance Act 1909 (Cth) to follow reforms made to the Marine Insurance Act 1906 (UK) in 2015, which are described at [17.100], [17.570] and [17.630]. Whether or not the Marine Insurance Act 1909 (Cth) is amended to make it less pro-insurer, it will remain important to determine which Act applies to a particular insurance contract. In Gibbs v Mercantile Mutual Insurance (Australia) Ltd,10 the High Court of Australia had to decide whether a contract of liability insurance issued to the owner of a parasailing towboat on the Swan River in Perth was a contract of marine insurance for the purposes of the Marine Insurance Act 1909 (Cth). If the Marine Insurance Act 1909 (Cth) governed the contract, the boat-owner’s claim against the insurer would fail; if the Insurance Contracts Act 1984 (Cth) governed the contract, the claim would succeed.11 A Full Court of the Supreme Court of Western Australia had held that the contract was one of marine insurance, because the Swan River is estuarine and was affected by the ebb and flow of the tide at the place in question.12 On appeal, a bare majority of the High Court affirmed the Full Court’s decision. Gleeson CJ accepted the Full Court’s basis for distinguishing between sea and river,13 but Hayne and Callinan JJ rejected the idea that the boundary between the two Acts was properly marked by the 6 See also P Samuel & Co Ltd v Dumas [1924] AC 431 at 451 per Viscount Finlay: “It is legitimate to refer to previous cases to help in the explanation of anything left in doubt by the code.” 7 Insurance Contracts Act 1984 (Cth), s 9(1)(d). 8 In general insurance, the purchaser of insurance is called the “insured”; in marine insurance, it is called the “assured”. 9 See, eg, the Act’s treatment of warranties at [17.570]–[17.610]. 10 Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604. 11 The plaintiff had failed to give immediate notice to the insurer of an incident (a personal injury) that could give rise to liability covered by the policy. Both sides accepted that that failure would be fatal under the Marine Insurance Act 1909 (Cth). If the Insurance Contracts Act 1984 (Cth) governed, the insurer would not be entitled to deny cover as a result of the plaintiff’s breach unless it could show that it had been prejudiced thereby: see Insurance Contracts Act 1984 (Cth), s 54. 12 Mercantile Mutual Insurance (Australia) Ltd v Gibbs (2001) 24 WAR 453. 13 Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604 [17]-[18] per Gleeson CJ.

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[17.10]

boundary between the sea and the river.14 According to Hayne and Callinan JJ, the application of the Act was determined by the nature of the risk.15 The contract insured against the risk of liability incurred while towing persons behind the towboat. That was a form of maritime peril, said Hayne and Callinan JJ, and:16 Neither the way the injury was sustained nor the place where it happened detract [sic] from that conclusion.

The difficulty in determining what amounts to marine insurance stems in large part from the definition in the Marine Insurance Act 1909 (Cth), which is both elliptical and circular.17 The term “marine insurance” is defined by reference to other terms, which are defined by reference to one another and to other terms again. In summary, a contract of marine insurance is a contract of indemnity, whereby the insurer promises to indemnify the assured against losses incident to marine adventure,18 which occurs whenever ship or cargo,19 freight or other profits20 are exposed to “the perils consequent on, or incidental to, the navigation of the sea”,21 or when liability to a third party may be incurred thereby.22 In addition, a contract of marine insurance may be extended to cover land risks incidental to any sea voyage,23 provided that, as a whole, the risks covered are “substantially incident to marine adventure”.24 14 Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604 at 667-668 [200] per Hayne and Callinan JJ. 15 Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604 at 666 [194] per Hayne and Callinan JJ. 16 Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604 at 667 [198] per Hayne and Callinan JJ. 17 Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604 at 618 [38] per McHugh J. 18 Marine Insurance Act 1909 (Cth), ss 7, 9(1). 19 That is, “insurable property”: Marine Insurance Act 1909 (Cth), s 9(2)(a). 20 Payments or profits endangered by the exposure of insurable property to maritime perils: Marine Insurance Act 1909 (Cth), s 9(2)(b). 21 “Maritime perils”: Marine Insurance Act 1909 (Cth), s 9(2). The list of perils in s 9(2) is included by way of example only: see Continental Illinois National Bank & Trust Co of Chicago v Bathurst (The Capt Panagos DP) [1985] 1 Lloyd’s Rep 625 at 631 per Mustill J. (This case should not be confused with Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Capt Panagos DP) [1989] 1 Lloyd’s Rep 33.) 22 Marine Insurance Act 1909 (Cth), s 9(2)(c). In Hansen Development Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1999] NSWCA 186, the New South Wales Court of Appeal held that an insurance contract was not a marine insurance contract both because it only covered risks on inland waters and because it was a liability policy. The latter ground for decision is plainly wrong in the light of s 9(2)(c). The former is doubtful after the decision of the High Court in Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604. 23 Marine Insurance Act 1909 (Cth), s 8(1). 24 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur (Australia) Pty Ltd (1986) 160 CLR 226 at 243.

[17.10]

17 Marine Insurance

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In 1998, the Insurance Contracts Act 1984 (Cth) was amended to make it apply to pleasure craft, which were thereby removed from the ambit of the Marine Insurance Act 1909 (Cth). A “pleasure craft” is defined as being:25 [A] ship that is: (a) used or intended to be used (i) wholly for recreational activities, sporting activities or both; and (ii) otherwise than for reward; and (b) legally and beneficially owned by one or more individuals; and (c) not declared by the regulations to be exempt from this subsection.

The insurer’s promise to indemnify the assured is a promise that the assured shall not suffer loss as a result of the perils covered by the contract.26 As a result, the insurer is in breach of contract as soon as the assured suffers such a loss, because it (the insurer) has failed to hold the assured harmless, as it promised to do. The assured’s remedy for that breach is a claim in damages, not a claim in debt for the amount that the insurer promised to pay in the event of a loss.27 The Marine Insurance Act 1909 (Cth), s 6(1) provides that the Act applies to “marine insurance other than State marine insurance, and to State marine insurance extending beyond the limits of the State concerned”. The phrase “State marine insurance” is not defined in the Act, but it appears to mean marine insurance business conducted by a State, not intra-State marine insurance or insurance of State marine risks. Section 6(1) reproduces the wording of s 51(xiv) of the Constitution, which is similar in form to s 51(xiii), which deals with “State banking”. In Melbourne Corp v Commonwealth,28 the High Court of Australia held that the words “State banking” in s 51(xiii) of the Constitution refer to the business of banking

25 Insurance Contracts Act 1984 (Cth), s 9A(2). For the purposes of determining whether something is a “pleasure craft”, any minor, infrequent or irregular use for other activities is to be ignored: s 9A(3). 26 Firma C-Trade SA v Newcastle Protection & Indemnity Association [1991] 2 AC 1 at 35 per Lord Goff, and at 40 per Lord Jauncey (reported sub nom as The Fanti [1990] 2 Lloyd’s Rep 191). Although Lords Goff and Jauncey were referring to a contract of marine liability insurance, it was held in Ventouris v Mountain (The Italia Express (No 2)) [1992] 2 Lloyd’s Rep 281 that the dictum applied equally to a contract of marine property insurance. See also K/S Merc-Scandia XXXXII v Lloyd’s Underwriters Subscribing to Lloyd’s Policy No 25T 105487 (The Mercandian Continent) [2000] 2 Lloyd’s Rep 357 at 369 per Aikens J. 27 Firma C-Trade SA v Newcastle Protection & Indemnity Association [1991] 2 AC 1 at 35 per Lord Goff, and at 40 per Lord Jauncey (reported sub nom as The Fanti [1990] 2 Lloyd’s Rep 191). 28 Melbourne Corp v Commonwealth (1947) 74 CLR 31.

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[17.10]

engaged in by a State, not intra-State banking business. There is no reason to suppose that s 51(xiv) of the Constitution and s 6(1) of the Act should be interpreted differently.29 As the Act is a code, it regulates all aspects of marine insurance. There are sections dealing with (inter alia) who may be a party to the contract, how the contract is formed, the form that it takes, which perils are insured against and which are not, the concept of proximate cause, determination of when a loss has occurred and how it is to be valued, the extent of the indemnity that the assured receives, and the subrogation of the insurer to the rights and remedies of the assured. Each of these aspects is considered in turn in this chapter. In April 2001, the Australian Law Reform Commission (ALRC) published its Report No 91, entitled Review of the Marine Insurance Act 1909. The ALRC Report contained several recommendations for substantial change to the coverage and operation of the Marine Insurance Act 1909 (Cth), but none of those recommendations was adopted. Perhaps more significantly, the United Kingdom legislated in 2015 to make substantial changes to the Marine Insurance Act 1906 (UK), which will come into force on 12 August 2016.30 In particular, English law relating to pre-contractual disclosure and representations by the assured or its agent has been substantially reformed to make it less favourable to the insurer.31 At the time of writing,32 there was no proposal to reform the Marine Insurance Act 1909 (Cth) in a similar manner, but such a change can surely be expected at some point in the future. The changes made by the Insurance Contracts Act 2015 (UK) bring English marine insurance law into much the same place as the Australian law of general insurance under the Insurance Contracts Act 1984 (Cth), so far as pre-contractual disclosure and representations are concerned. It would be anomalous for Australia to continue to cleave to the old, pro-insurer, position abandoned both in relation to general insurance law in Australia and, now, in the United Kingdom Act upon which the Marine Insurance Act 1909 (Cth) is based. The anomaly would be even more notable given the significance of the London insurance market for global marine insurance. Many marine insurance risks underwritten in Australia are reinsured in the London market. Because a

29 That was the view of the Australian Law Reform Commission in its Report on Insurance Agents and Brokers (ALRC 16, AGPS, 1980), para 5. See also R Salter, “Marine Insurance Reform in Australia — Start, Pause and Go Where?” in M Huybrechts, E Van Hooydonk and C Dieryck (eds), Marine Insurance at the Turn of the Millennium (Intersentia, Antwerp, 2000), Vol 2, p 190. 30 Insurance Act 2015 (UK). 31 Insurance Act 2015 (UK), s 21(2) repeals Marine Insurance Act 1906 (UK), ss 18 – 20, equivalent to Marine Insurance Act 1909 (Cth), ss 24 – 26. 32 January 2016.

[17.20]

17 Marine Insurance

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reform to Australian law is likely during the lifetime of this edition,33 the relevant parts of this chapter will describe the position under English law with effect from 12 August 2016. One of the recommendations in the ALRC Report No 91 was that the Act should be extended to apply to commercial vessels operating on inland waters.34 The majority decision in Gibbs v Mercantile Mutual Insurance (Australia) Ltd35 may have achieved that result without the need for amending legislation. As we have seen, Hayne and Callinan JJ took the view that the determining factor is the nature of the risk, not the exact location of the incident giving rise to loss. However, the third member of the majority, Gleeson CJ, said that the application of the Act to vessels on inland waters “is a subject of some uncertainty”, while noting that it might be possible to argue that inland water risks are covered by the Act because they are “analogous to marine adventure” for the purposes of s 8(2).36 There is at least one decision of an appellate court holding that a contract to insure against risks on inland water is not a marine insurance contract.37

THE PARTIES TO THE CONTRACT Introduction [17.20]

The two parties to a contract of marine insurance are the insurer and the assured. The insurer is the party who undertakes to indemnify the assured against losses incident to marine adventure;38 the assured is the party whose property or profits are exposed to maritime perils.39

To be a party to a valid contract of marine insurance, the assured must have an insurable interest in the subject matter at risk. If the assured does not have an insurable interest in the subject matter, the contract of marine insurance is deemed to be a gaming or wagering contract,40 and is void.41 33 Past experience has shown that editions of this book are long-lived. It is likely that Australian marine insurance law will be amended before the next edition is published. 34 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), Recommendation 5, p 120. 35 Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604. 36 Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 214 CLR 604 at 612 [12] per Gleeson CJ. 37 Hansen Development Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1999] NSWCA 186. 38 Marine Insurance Act 1909 (Cth), s 7. 39 Marine Insurance Act 1909 (Cth), s 9(2). Unlike other kinds of insurance (apart from life insurance) it is proper to speak of the “assured” rather than the “insured”. 40 Marine Insurance Act 1909 (Cth), s 10(2)(a). 41 Marine Insurance Act 1909 (Cth), s 10(1). A brief account of the historical reasons for this provision is to be found in Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501 at 509-510 per Deputy Judge Colman QC.

686

Shipping Law

[17.30]

In this respect, contracts of marine insurance are unlike general insurance contracts, where an insurable interest is no longer a prerequisite to validity.42

Insurable interest General

[17.30]

Removal of the requirement of insurable interest was one of the most controversial aspects of the Australian Law Reform Commission’s reform proposals in 2001.43 No action was taken by the Commonwealth in response to that recommendation. The amendments to the Marine Insurance Act 1906 (UK) made in 2015 did not include removal of the requirement of insurable interest in marine insurance, so it can be expected to remain a requirement of Australian marine insurance law, just as it will remain part of English law. This is to be regretted. The requirement of insurable interest was first introduced into insurance law in relation to life insurance, where the concern was with “moral hazard”, namely the possibility that insuring someone else’s life would give the assured an incentive to murder the insured person.44 There is no reason to suppose that the “moral hazard” in relation to marine insurance is so much greater than in other forms of insurance that there is some special reason for retaining the requirement, but the law of marine insurance (both English and Australian) seems destined to be shackled to this vestige of history. Absurdly, the requirement of insurable interest remains in relation to marine insurance but has not existed since 1995 in relation to life insurance, or any other form of general insurance since 1984.45 The defence of a lack of insurable interest has been described justly as an “unmeritorious defence” but it remains open to marine insurers in Australia.46

42 Insurance Contracts Act 1984 (Cth), s 16(1). Insurance Contracts Act 1984 (Cth), s 9(1)(d) provides that the Act does not apply to a contract to which the Marine Insurance Act 1909 (Cth) applies. 43 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), Recommendation 28, p 258. 44 The Life Assurance Act 1774 (UK) was the original source of the requirement of insurable interest. 45 Insurance Contracts Act 1984 (Cth), s 18 (life insurance), amended by Life Insurance (Consequential Repeals and Amendments) Act 1995 (Cth). The requirement for insurable interest was removed for other forms of general insurance by Insurance Contracts Act 1984 (Cth), s 16. 46 D Galbraith, “An Unmeritorious Defence: The Requirement of Insurable Interest in the Law of Marine Insurance” (1993) 5 Insurance Law Journal 177. See also Cepheus Shipping Corp v Guardian Royal Exchange Assurance Plc (The Capricorn) [1995] 1 Lloyd’s Rep 622 at 641 per Mance J: “If underwriters make a contract in deliberate terms which covers their assured in respect of a specific situation, a Court is likely to hesitate before accepting a defence of lack of insurable interest.”

[17.30]

17 Marine Insurance

687

Every person who is interested in a marine adventure has an insurable interest for the purposes of the Marine Insurance Act 1909 (Cth),47 and may thus be a party to a valid contract of marine insurance. In particular, anyone with a legal or equitable interest in a marine adventure or any insurable property at risk therein has an insurable interest.48 Defeasible,49 contingent50 and partial51 interests are insurable. There is no “excluded middle” between insurable interest and wagering; it is not possible for the assured to have enough interest in the subject matter that it is not wagering on it, but yet not enough interest to have an insurable interest in it.52 Thus, the essential question in each case is whether the relationship between the assured and the subject matter is sufficiently close to justify the assured being paid in the event of its loss or damage, or whether the assured is merely wagering on the subject matter.53 The assured must have some interest in the subject matter itself; it is not enough that it merely stands eventually to benefit in some way from its preservation.54 The assured need not have an insurable interest when the contract of marine insurance is made, provided that it has one when a loss occurs.55 In NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd,56 the Court of Appeal of New South Wales reaffirmed the traditional view that in an FOB contract for the sale of goods,57 risk in the goods passes from the seller to the buyer when the goods pass the ship’s rail at the port of loading.58 Before that moment, the vendor has an insurable interest in the 47 Marine Insurance Act 1909 (Cth), s 11(1). 48 Marine Insurance Act 1909 (Cth), s 11(2). 49 Marine Insurance Act 1909 (Cth), s 13(1). 50 Marine Insurance Act 1909 (Cth), s 13(1). 51 Marine Insurance Act 1909 (Cth), s 14. 52 Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501 at 510 per Deputy Judge Colman QC. 53 Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501 at 510 per Deputy Judge Colman QC. 54 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699. 55 Marine Insurance Act 1909 (Cth), s 12(1). 56 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699. 57 In such a contract, the purchaser buys the goods “free on board” (FOB), arranging carriage and insurance itself. The position is different under a “cost, insurance, freight” (CIF) contract, where the seller arranges insurance and assigns the contract to the buyer. In such a case, pre-shipment losses are clearly covered by reason of the seller’s insurable interest, and the right to recover under the policy may be transferred to the buyer: see, eg, Wunsche Handelsgesellschaft International mbH v Tai Ping Insurance Co Ltd [1998] 2 Lloyd’s Rep 8 (CA). 58 This, the traditional rule, was reaffirmed in NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699 in preference to a proposed rule that risk passes in goods carried in a container when they are stuffed into and sealed in the container. The

688

Shipping Law

[17.30]

goods and the purchaser has none.59 If the goods are lost or damaged before that moment, the purchaser is not entitled to an indemnity as the assured under a contract of marine insurance, because it had no insurable interest, in the sense of legal or equitable title, in the goods at the time of the loss.60 However, if the goods are damaged or lost after they are placed on board the ship,61 the purchaser is entitled to an indemnity from the insurer, even if the contract of marine insurance was made before the goods passed the ship’s rail at the port of loading. Although the assured had no insurable interest in the goods when the contract was made, it did have such an interest when the loss or damage occurred. If the subject matter is insured “lost or not lost”, as it was in NSW Leather, the assured need not even have an insurable interest at the time of the loss, provided that it acquires one thereafter.62 For example, an FOB purchaser of goods may recover an indemnity as the assured under a “lost or not lost” contract, even if the goods are damaged63 or completely lost64 before they pass the ship’s rail at the port of loading, when it had no insurable interest in them, because it subsequently acquires an insurable interest when the goods pass the ship’s rail.65 An FOB or C&F/CFR pre-shipment clause is designed to provide an FOB or C&F/CFR buyer with cover for pre-shipment losses, but it is questionable whether such clauses are effective, because there is no special dispensation for them in the Act from the normal insurable interest requirement, as there is for “lost or not lost” clauses.66 Acknowledging the strength of opposition to its proposal in 2001 to remove the requirement of insurable interest from the law of marine insurance altogether, the ALRC made an alternative, “fall-back” recommendation in the event that its main recommendation for abolition not be adopted. The “fall-back” recommendation was that a purchaser of insurable property should acquire an insurable interest in that property traditional “ship’s rail” rule was changed in Incoterms 2010 (ICC, 2010), pp 88-91 (paras A4, A5, B4, B5 of definition of “FOB”) to make risk pass when the goods are “plac[ed] on board” the carrying ship, an expression that is not necessarily identical in effect. 59 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699. 60 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699. 61 The traditional “ship’s rail” rule was changed in Incoterms 2010 (ICC, 2010), pp 88-91 (paras A4, A5, B4, B5 of definition of “FOB”) to make risk pass when the goods are “plac[ed] on board” the carrying ship, an expression that is not necessarily identical in effect. 62 Marine Insurance Act 1909 (Cth), s 12(1), proviso. 63 Sutherland v Pratt (1843) 11 M & W 296; 152 ER 815. 64 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699. 65 Or would have passed the ship’s rail if they had not been lost: NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699. 66 M Taylor, “Is the Requirement of an Insurable Interest in the Marine Insurance Act still Valid?” (2000) 11 Insurance Law Journal 147 at 156-157.

[17.40]

17 Marine Insurance

689

no later than the time when it pays for the property or becomes bound to pay for it, providing that it subsequently pays for it.67 This narrower recommendation would have provided cover in cases (like NSW Leather) of pre-shipment loss under FOB contracts, without affecting the larger position. This eminently sensible proposal was also not adopted. There are two types of insurable property for the purposes of the Act: ships and goods or other movables.68 Freight or other profits may also be the subject matter of a contract of marine insurance.69 There are several possible insurable interests in each kind of subject matter, which are considered at [17.40]–[17.60]. Hull and machinery70

[17.40]

The hull and machinery of a ship may be insured by the owner,71 even when a third party (such as a charterer) has agreed to indemnify it in case of loss.72 A trustee with a legal interest in a ship may insure its hull and machinery to their full value, even though it is not the beneficial owner.73 As a charterer (other than a demise charterer) has no interest in the ship itself,74 it has no insurable interest in the ship. A demise charterer has an insurable interest.75 Where a ship is mortgaged, the mortgagor has an insurable interest in the full value of the ship, whether or not it be mortgaged for its full value, as the mortgagor continues to be liable for the mortgage debt after the ship is lost.76 The mortgagee may insure the sum due under the mortgage,77 67 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), p 260, Recommendation 30. The ALRC also made a “fall-back” recommendation in respect of loans over insurable property, recommending that the Marine Insurance Act 1909 (Cth), s 16 be amended to cover secured loans generally, not just bottomry and respondentia: (ALRC 91, 2001), p 260, Recommendation 31. 68 Marine Insurance Act 1909 (Cth), s 9(2)(a). 69 Marine Insurance Act 1909 (Cth), s 9(2)(b). If the right to freight is lost as a result of perils insured against, the assured is entitled to indemnity from the insurer. 70 Insurance contracts on ships are known as hull and machinery (or H & M) policies. 71 Marine Insurance Act 1909 (Cth), ss 9(2)(a), 11(2). 72 Marine Insurance Act 1909 (Cth), s 20(3). The insurer who indemnifies the owner is thereby subrogated to the owner’s rights against the charterer: see s 85 and [17.650]. 73 Ebsworth v Alliance Marine Insurance Co (1873) LR 8 CP 596 at 638 per Brett J. 74 See [11.70]. 75 See, eg, Kent v Vessel Maria Luisa (2003) 130 FCR 12. Although Kent is not concerned with marine insurance or insurable interest, it is concerned with the potential liability of a demise charterer who, among other things, had insured the ship in question. See also Linelevel Ltd v Powszechny Zaklad Ubezpieczen SA (The Nore Challenger) [2005] 2 Lloyd’s Rep 534. 76 Marine Insurance Act 1909 (Cth), s 20(1); Ross v Adelaide Marine Assurance Co (1870) 1 VR (L) 232. 77 Marine Insurance Act 1909 (Cth), s 20(1).

690

Shipping Law

[17.40]

and may also insure the ship’s hull and machinery to the extent of its own interest and that of the mortgagor.78 Thus, for example, if a mortgagee has advanced less than the full value of a ship to a mortgagor, it may nevertheless insure the ship for its full value, provided that it is made clear to the insurer that the mortgagor’s interest is also being insured.79 On recovery of the full value of the ship from the insurer, the mortgagee retains the sum due under the mortgage and holds the remainder on trust for the mortgagor.80 In Sharp v Sphere Drake Insurance plc (The Moonacre),81 the bailee of a yacht was held to have an insurable interest in it. Furthermore, Deputy Judge Colman QC held that the assured also had an insurable interest because the owner of the yacht had executed a power of attorney permitting him to use the yacht for his own purposes and to exercise such control over it as he saw fit, and would also have had an insurable interest simply because he owed the owner a duty to take reasonable care of the yacht.82 It is questionable whether this broad a view of insurable interest is consistent with the views expressed by the Court of Appeal of New South Wales in NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd,83 which require the assured to have some interest in the subject matter itself. In National Oilwell (UK) Ltd v Davy Offshore Ltd,84 it was held that a subcontractor engaged to provide a key component to a floating oil production facility under construction had an insurable interest in the entire facility, even though it was not the owner and did not have possession. Colman J (as Deputy Judge Colman QC had then become) said that there is no reason in principle why such a subcontractor should not, and every commercial reason why it should, be able to insure against loss of or damage to property involved in the common project not owned by it or in its possession.85 The argument that there must be possessory or proprietary interest before there can be insurable interest was misconceived, said Colman J.86 Like The Moonacre, it is questionable 78 Marine Insurance Act 1909 (Cth), s 20(2). 79 If the mortgagee does not make it clear that the mortgagor’s interest is also insured, it may recover only the value of the mortgage advance, as this is the extent of its insurable interest: see Carruthers v Sheddon (1815) 6 Taunt 14; 128 ER 937; Irving v Richardson (1831) 2 B & Ad 193; 109 ER 1115; Chartered Trust and Executor Co v London Scottish Assurance Corp Ltd (1923) 39 TLR 608. 80 Hepburn v A Tomlinson (Hauliers) Ltd [1966] AC 451. 81 Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501. See also O’Kane v Jones (The Martin P) [2004] 1 Lloyd’s Rep 389. 82 Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501 at 513. 83 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699. 84 National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd’s Rep 582. 85 National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd’s Rep 582 at 611 per Colman J. 86 National Oilwell (UK) Ltd v Davy Offshore Ltd [1993] 2 Lloyd’s Rep 582 at 611 per Colman J.

[17.50]

17 Marine Insurance

691

whether such a view, however desirable, is consistent with the decision of the Court of Appeal of New South Wales in NSW Leather. Although it is common (particularly in the offshore oil and gas exploration industry) to name others involved in the project in question as “additional insureds” — indeed, contracting parties often undertake an obligation to include their counterparties on their insurance in this way — this does not dispense with the requirement of insurable interest under the Act. A named “additional insured” who has no insurable interest is not covered by the contract of marine insurance.87 If the Admiralty Marshal executes an arrest warrant against a ship, he or she has an insurable interest in the ship.88 Cargo

[17.50]

The owner of goods has an insurable interest in them to their full value.89 Because risk does not pass to an FOB buyer of goods until the goods have been placed on board the carrying ship at the port of loading,90 the buyer has no insurable interest in the goods until that time but may have an insurable interest before then in the profits that it expects to make from the goods.91 Although risk does not pass to a CIF (or CFR/C&F) buyer until the goods have been placed on board the carrying ship at the port of loading,92 a CIF/CFR/C&F buyer is nevertheless in a different position from an FOB buyer. If the goods are damaged or lost before the CIF/CFR/C&F buyer acquires an insurable interest in them, the seller thereby acquires a right of indemnity against the insurer, which may be assigned, as a chose in action, to the buyer, by assignment of the policy.93 However, if goods are insured “lost or not lost” and are damaged or lost before the buyer acquires an insurable interest in them, the buyer acquires a right of indemnity against the insurer when it subsequently acquires an insurable interest in the goods, whether it be an FOB or a CIF/CFR/C&F buyer.94 87 Talbot Underwriting Ltd v Nausch, Hogan & Murray Inc (The Jascon 5) [2006] 2 Lloyd’s Rep 195. 88 Admiralty Rules 1988 (Cth), r 47(1) provides that the Admiralty Marshal has custody of a ship under arrest. 89 Marine Insurance Act 1909 (Cth), ss 9(2)(a), 11(2). 90 The traditional “ship’s rail” rule was changed in Incoterms 2010 (ICC, 2010), pp 88-91 (paras A4, A5, B4, B5 of definition of “FOB”) to make risk pass when the goods are “plac[ed] on board” the carrying ship, an expression that is not necessarily identical in effect. Risk passes at the same point for FOB, CIF, and CFR contracts. 91 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699. 92 Incoterms 2010 (ICC, 2010), pp 98-101, 110-113 (paras A4, A5, B4, B5 of definition of “CFR” and “CIF”). 93 See Lloyd v Fleming (1872) LR 7 QB 299. See also, eg, Wunsche Handelsgesellschaft International mbH v Tai Ping Insurance Co Ltd [1998] 2 Lloyd’s Rep 8 (CA). 94 See discussion concerning “lost or not lost” subject matter at [17.30] and accompanying footnotes.

692

Shipping Law

[17.60]

Any person who has a lien or charge on the cargo has an insurable interest to the extent of the lien or charge.95 Thus, for example, a buyer of goods who advances money to the seller before receiving title to the goods has a lien or charge to the extent of the advance, and has an insurable interest to that extent.96 A carrier has an insurable interest in the goods carried in respect of its liability to their owner.97 If the assured’s insurable interest is in less than the full value of the cargo, it may nevertheless insure the cargo to the full value, to the extent of its own interest and that of the owner or other person interested.98 On recovery of the full value of the goods from the insurer, such an assured retains the sum representing its own interest, and holds the remainder on trust for the other persons interested.99 Freight

[17.60]

The shipowner has an insurable interest in the freight to be paid for carriage of goods or for use of the ship under a charterparty.100 Similarly, a charterer has an insurable interest in any sub-freight payable under a sub-charter or other contract of carriage. The charterer’s insurable interest is in the gross amount of the sub-freight, not its net amount after deduction of the freight or hire under the head charterparty.101 Thus, for example, in United States Shipping Co v Empress Assurance Corp,102 the time charterer of a ship insured sub-freight and/or chartered sub-freight.103 The ship was stranded as a result of perils insured against, causing a loss of sub-freight to the time charterer, who thus became entitled to indemnity from the insurer. Although the stranding also saved the time charterer two days’ hire under the head charterparty, it was held that the 95 Sutherland v Pratt (1843) 12 M & W 16; 152 ER 1092. 96 Ebsworth v Alliance Marine Insurance Co (1873) LR 8 CP 596. Compare Truran Earthmovers Pty Ltd v Norwich Union Fire Insurance Society Ltd (1976) 17 SASR 1, a non-marine insurance case to the opposite effect. 97 Marine Insurance Act 1909 (Cth), ss 9(2)(c), 11(2); The Yasin [1979] 2 Lloyd’s Rep 45 at 53 per Lloyd J. 98 Marine Insurance Act 1909 (Cth), s 20(2). 99 Ebsworth v Alliance Marine Insurance Co (1873) LR 8 CP 596; Hepburn v A Tomlinson (Hauliers) Ltd [1966] AC 451. 100 Marine Insurance Act 1909 (Cth), ss 9(2)(b), 11(2). In the case of insurance of “freight” under a charterparty, the payments in question are called “chartered freight”, which expression represents both freight proper under a voyage charterparty, and hire under a time charterparty. 101 United States Shipping Co v Empress Assurance Corp [1907] 1 KB 259 (aff’d on other grounds: United States Shipping Co v Empress Assurance Corp [1908] 1 KB 115). 102 United States Shipping Co v Empress Assurance Corp [1907] 1 KB 259 (aff’d on other grounds: United States Shipping Co v Empress Assurance Corp [1908] 1 KB 115). 103 In the case of insurance of “freight” under a charterparty, the payments in question are called “chartered freight”, which expression represents both freight proper under a voyage charterparty, and hire under a time charterparty.

[17.80]

17 Marine Insurance

693

hire saved should not be deducted from the amount recoverable on the policy, which was the gross amount of the sub-freight lost. In order to have an insurable interest in freight, the shipowner or charterer must have more than a mere expectation that some freight will be earned by the ship at some unspecified time in the future.104 In L & M Electrics Pty Ltd v SGIO (Qld),105 Connolly J said:106 The party who insures freight must have an inchoate right to it, in order to entitle him to insure. … [H]e must be in such a position with regard to the expected freight that in the ordinary course, nothing would prevent him from ultimately having a perfect right to it but the intervention of the perils insured against.

In practice, contracts for carriage of goods by sea often provide for freight to be paid in advance.107 If advance freight is not repayable by the carrier on loss of the ship or cargo, the person advancing the freight has an insurable interest in it,108 as it is the person who bears the loss of freight if the ship or cargo is lost. Other insurable interests

[17.70]

The insurer under a contract of marine insurance has an insurable interest in its risk, and may reinsure in respect of it.109 The master and crew of a ship have an insurable interest in their wages,110 as do the assured in the charges of any insurance effected,111 and the lender of money on bottomry or respondentia in respect of the loan.112

Assignment [17.80]

It is often the case that an assured assigns its rights under a contract of marine insurance to a third party. Assignment thus introduces a new party to the contract. A marine policy113 is assignable, either before or after loss, unless it contains terms prohibiting assignment.114 To be ideally effective, assignment of the policy should be made at the same time as transfer of the subject matter insured. Assignment of the policy without transfer of

104 See, eg, Cepheus Shipping Corp v Guardian Royal Exchange Assurance Plc (The Capricorn) [1995] 1 Lloyd’s Rep 622 at 641-642 per Mance J. 105 L & M Electrics Pty Ltd v SGIO (Qld) [1985] 2 Qd R 370. 106 L & M Electrics Pty Ltd v SGIO (Qld) [1985] 2 Qd R 370 at 374-375. 107 In the absence of such express provision, freight is payable on discharge: see [13.660]. 108 Marine Insurance Act 1909 (Cth), s 18. 109 Marine Insurance Act 1909 (Cth), s 15(1). 110 Marine Insurance Act 1909 (Cth), s 17. 111 Marine Insurance Act 1909 (Cth), s 19. 112 Marine Insurance Act 1909 (Cth), s 16. 113 For the relationship between the policy and the contract, see [17.90]. 114 Marine Insurance Act 1909 (Cth), s 56(1).

694

Shipping Law

[17.80]

the subject matter is ineffective,115 as is transfer of the subject matter without assignment of the policy.116 Assignment of the policy before transfer of the subject matter becomes effective only when the assignee subsequently acquires an insurable interest by transfer of the subject matter,117 or is effective only to the extent that an agreement to transfer the subject matter constitutes an equitable assignment.118 Transfer of the subject matter before assignment of the policy renders any subsequent purported assignment inoperative.119 Loss of the subject matter does not render inoperative any subsequent assignment of the policy.120 After loss of the subject matter from perils insured against, the assured has a right of indemnity against the insurer, which may be assigned, as a chose in action, by assignment of the policy.121 Where a marine policy has been assigned so as to pass the whole beneficial interest in it, the assignee is entitled to sue on the policy in its own name.122 Assignment of part of the benefit of a marine policy does not entitle the assignee to sue in its own name.123 The insurer may raise the same defences against the assignee as it would have been entitled to raise against the original assured.124 For example, non-disclosure of material facts by the original assured defeats any claim by an assignee of the policy, in the same way that it would defeat a claim by the assured,125 even where the assignee has no notice of the non-disclosure.126 Assignment of the policy must be by indorsement on the policy, “or in other customary manner”.127 It is not essential that the policy be 115 Marine Insurance Act 1909 (Cth), s 12(1): the assignee has no insurable interest in the subject matter until transfer of the subject matter insured. 116 Marine Insurance Act 1909 (Cth), s 21: transfer of the subject matter does not automatically effect assignment of the policy. 117 Marine Insurance Act 1909 (Cth), s 12(1): it does not matter that the insurable interest is acquired after the insurance is effected. 118 Marine Insurance Act 1909 (Cth), s 11(2): an equitable interest is insurable. 119 Marine Insurance Act 1909 (Cth), s 57. 120 Marine Insurance Act 1909 (Cth), ss 56(1), 57 proviso. Thus, in this respect, loss of the subject matter is unlike transfer. 121 Lloyd v Fleming (1872) LR 7 QB 299. See, eg, Wunsche Handelsgesellschaft International mbH v Tai Ping Insurance Co Ltd [1998] 2 Lloyd’s Rep 8 (CA). 122 Marine Insurance Act 1909 (Cth), s 56(2). 123 Williams v Atlantic Assurance Co Ltd [1933] 1 KB 81; First National Bank of Chicago v West of England Mutual Protection and Indemnity Association (Luxembourg) (The Evelpidis Era) [1981] 1 Lloyd’s Rep 54 at 64 per Mocatta J; Raiffeisen Zentralbank Osterreich AG v Five Star General Trading (The Mount I) [2001] 1 Lloyd’s Rep 597. 124 Marine Insurance Act 1909 (Cth), s 56(2). 125 See [17.100]. 126 William Pickersgill & Sons Ltd v London and Provincial Marine and General Insurance Co Ltd [1912] 3 KB 614. 127 Marine Insurance Act 1909 (Cth), s 56(3).

[17.90]

17 Marine Insurance

695

indorsed,128 but, on the other hand, mere delivery of the policy to the assignee is insufficient unless there is a clear intention to assign by delivery.129 Because assignment is tied to the presence of an insurable interest under the present form of the Marine Insurance Act 1909 (Cth), s 57, the ALRC recommended repeal of the section if the requirement for insurable interest were to be removed.130 As noted in [17.30], that did not happen.

FORMATION OF THE CONTRACT Introduction [17.90]

The assured does not usually deal directly with the insurer when making a contract of marine insurance. In the majority of cases, negotiations between assured and insurer are conducted through the medium of a broker, who acts as agent for the assured.131 The process of negotiation usually begins with an approach to the broker by the assured. The broker records the essential details of the cover sought by the assured and approaches one or more insurers, seeking to place some or all of the risk with them. This approach may take one or two forms: either the broker seeks a quotation of the premium to be charged for the cover sought by the assured,132 or the broker asks the insurer to sign a slip or written memorandum containing the essential details of the cover sought.133 In the latter case, the slip or memorandum is the assured’s proposal, which is accepted on signature by the insurer; in the former case, the assured makes a formal proposal to the insurer after the broker has passed on the insurer’s quotation. In both cases, the contract of marine insurance is concluded when the assured’s proposal is accepted by the insurer, whether or not a policy is then issued.134 The question of when the proposal is accepted can be very important, as the assured’s cover often commences at that time. This question is one of fact, to be

128 Safadi v Western Assurance Co (1933) 46 Ll L Rep 140. 129 Safadi v Western Assurance Co (1933) 46 Ll L Rep 140 at 144 per Roche J; Baker v Adam (1910) 15 Com Cas 227 at 230 per Hamilton J. 130 Australian Law Reform Commission, Review of Marine Insurance Act 1909 (ALRC 91, 2001), paras 11.67–11.70, p 258, Recommendation 29. 131 The activities of insurance brokers are regulated by the Insurance (Agents and Brokers) Act 1984 (Cth). 132 This is usually the method when the insurer is an insurance company. 133 This is the usual method at Lloyd’s. As contracts made at Lloyd’s are usually governed by English law, the Lloyd’s practice is not considered in detail here. For a detailed account, see General Accident Fire and Life Assurance Corp v Tanter (The Zephyr) [1984] 1 Lloyd’s Rep 58 at 65-69 per Hobhouse J (reversed on other grounds: General Accident Fire and Life Assurance Corp v Tanter (The Zephyr) [1985] 2 Lloyd’s Rep 529). 134 Marine Insurance Act 1909 (Cth), s 27.

696

Shipping Law

[17.90]

determined from all the evidence,135 including any slip, cover note or other customary memorandum of the contract.136 Although the contract of marine insurance is made when the insurer accepts the assured’s proposal, it is inadmissible in evidence unless it is embodied in a marine policy in accordance with the requirements of the Marine Insurance Act 1909 (Cth),137 which may be issued at the time of making the contract or later.138 Although the policy is necessary evidence of the contract, it is not the contract itself. The terms of the contract are those of the proposal, slip or other memorandum accepted by the insurer.139 If the policy, when issued, is inconsistent with those terms, it is invalid to the extent of the inconsistency.140 It is not open to either party to argue that the slip or written memorandum is inconsistent with some prior oral agreement between them;141 the contract is concluded when the insurer accepts the assured’s proposal and it is in the written terms accepted and no others.142 The broker owes the assured a duty to take care in the negotiations with the insurer. If, through the negligence of the broker, the assured suffers

135 Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 561 (not considered on appeal Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 575). 136 Marine Insurance Act 1909 (Cth), s 27. In Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 575, it was held that the parties were not confined to the evidence mentioned in s 27. 137 Marine Insurance Act 1909 (Cth), s 28. The formal requirements are set out in ss 29 and 30. The policy must be signed by or on behalf of the insurer or marked with its seal if it is a corporation (s 30(1)) and must specify (i) the assured’s name (s 29(a)); (ii) the subject matter insured and the risks insured against (s 29(b)); (iii) the duration of cover (s 29(c)); (iv) the sum insured (s 29(d)); and (v) the name of the insurer (s 29(e)). The equivalents of ss 29 and 30 in the Marine Insurance Act 1906 (UK) were abolished in 1959. The ALRC considered recommending abolition of ss 29 and 30, but decided against it: Review of Marine Insurance Act 1909 (ALRC 91, 2001), para 15.38. 138 Marine Insurance Act 1909 (Cth), s 28. 139 If several insurers subscribe to a single policy, each accepting part of the risk (as is common at Lloyd’s), the policy embodies a distinct contract between each insurer and the assured: Marine Insurance Act 1909 (Cth), s 30(2). 140 Symington v Union Insurance Society of Canton (No 2) (1928) 34 Com Cas 233; Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253 (NSW Sup Ct). Compare Kyzuna Investments Ltd v Ocean Marine Mutual Insurance Assoc (Europe) [2000] 1 Lloyd’s Rep 505 at 509 per Thomas J. Where there is a policy, the slip, cover note or other memorandum may be referred to in legal proceedings (see Marine Insurance Act 1909 (Cth), s 95) to establish that the agreement is not as it appears from the policy. 141 Pindos Shipping Corp v Raven (The Mata Hari) [1983] 2 Lloyd’s Rep 449; General Accident Fire and Life Assurance Corp v Tanter (The Zephyr) [1985] 2 Lloyd’s Rep 529. 142 Pindos Shipping Corp v Raven (The Mata Hari) [1983] 2 Lloyd’s Rep 449; General Accident Fire and Life Assurance Corp v Tanter (The Zephyr) [1985] 2 Lloyd’s Rep 529.

[17.90]

17 Marine Insurance

697

loss by reason of a denial of indemnity by the insurer, the assured may recover damages from the broker in tort and/or contract.143 As the contract of marine insurance is in the terms of the proposal submitted by the assured to the insurer, it is of fundamental importance that the details in that proposal be full and correct. The assured is the source of the information on which the insurer relies in deciding whether or not to accept the risk, and at what premium. Accordingly, the law of marine insurance traditionally ensured that the information is reliable by requiring full, complete and accurate disclosure by the assured before the contract is made. Once made, a contract of marine insurance is a contract of utmost good faith (uberrimae fidei).144 Under the Marine Insurance Act 1909 (Cth), material misrepresentation or non-disclosure by the assured entitles the insurer to avoid the contract, but not to claim damages.145 This strict, pro-insurer rule will no longer form part of United Kingdom law by virtue of the Insurance Act 2015 (UK), and it may not survive much longer as part of Australian marine insurance law but, at the time of writing,146 the consequence of material misrepresentation or nondisclosure is that the insurer has the right to avoid the contract altogether. Each party’s obligation to deal with the other in the utmost good faith continues throughout the life of the contract, although it is exhausted by the litigation rules of disclosure once litigation between insurer and assured has begun.147 Because post-contract breaches of good faith raise different issues from material misrepresentation or non-disclosure in the process of contract formation, they are considered separately at [17.630].

143 See, eg, Helicopter Resources Pty Ltd v Sun Alliance Australia Ltd (The Icebird) (unreported, Vic Sup Ct, 1991); General Accident Fire and Life Assurance Corp v Tanter (The Zephyr) [1985] 2 Lloyd’s Rep 529; Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501; Lane v Dive Two Pty Ltd (2012) 17 ANZ Insurance Cases 61-294; [2012] NSWSC 104. 144 Marine Insurance Act 1909 (Cth), s 23. 145 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1990] 1 QB 818 (CA) (reported sub nom as The Good Luck [1989] 2 Lloyd’s Rep 238; reversed on other grounds Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1992] 1 AC 233, sub nom The Good Luck [1991] 2 Lloyd’s Rep 191 (HL)); Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd [1990] 1 QB 665 (CA) (not necessary to decide this point on appeal at Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd [1991] 2 AC 249 (HL), but agreed with obiter at 280 per Lord Templeman). 146 January 2016. 147 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 (reported sub nom as The Star Sea [2001] 1 Lloyd’s Rep 389); Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290 (WASCA). See [17.630].

698

Shipping Law

[17.100]

Material non-disclosure [17.100]

The Marine Insurance Act 1909 (Cth), s 24(1) requires the assured to disclose to the insurer, before the contract is concluded, every material circumstance known to it.148 In itself, a duty of full disclosure is insufficient, as full disclosure by an ignorant or forgetful assured is of little use to an insurer. Thus, the assured is deemed to know every circumstance which, in the ordinary course of business, it ought to know.149 “Circumstance” includes any communication made to, or information received by, the assured.150 Where the assured acts through a broker, the duty to disclose fully lies on both assured and broker; the latter must disclose all material circumstances known to it151 and all those circumstances that the assured is bound to disclose.152 Because the broker should know better than the assured what circumstances are material, the broker owes the assured a duty to make positive inquiries of the assured to uncover information that might prove material.153 Every circumstance is material that would influence the judgment of a prudent insurer in fixing the premium or determining whether it will take the risk.154 Because s 24(2) defines materiality in terms of whether a prudent insurer “will take the risk”, it has been interpreted to mean that anything is material if it would affect the manner in which a prudent insurer would insure the risk, not only by accepting or rejecting the proposal, but also by fixing the appropriate premium, or by including protective provisions in the contract of marine insurance. In Mayne Nickless Ltd v Pegler,155 Samuels J said:156 Accordingly, I do not think that it is generally open to examine what the insurer would in fact have done had he had the information not disclosed. The question is whether that information would have been relevant to the exercise of the insurer’s option to accept or reject the insurance proposed. 148 Failure to answer a question asked by the insurer is non-disclosure if the answer would have been material: see Claude R Ogden & Co Pty Ltd v Reliance Fire Sprinkler Co Pty Ltd [1973] 2 NSWLR at 24-25 per Macfarlan J. This is not the position in the US: see Phoenix Life Assurance Co v Raddin 120 US 183 (1886). 149 Marine Insurance Act 1909 (Cth), s 24(1). 150 Marine Insurance Act 1909 (Cth), s 24(5). 151 Marine Insurance Act 1909 (Cth), s 25(a). 152 Marine Insurance Act 1909 (Cth), s 25(b). See, eg, Blackburn v Haslam (1888) 21 QBD 144. 153 Helicopter Resources Pty Ltd v Sun Alliance Australia Ltd (The Icebird) (unreported, Vic Sup Ct, 1991); Lane v Dive Two Pty Ltd (2012) 17 ANZ Insurance Cases 61-294; [2012] NSWSC 104. See also Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501. 154 Marine Insurance Act 1909 (Cth), s 24(2). 155 Mayne Nickless Ltd v Pegler [1974] 1 NSWLR 228. See also Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd (In liq) (2003) 214 CLR 514 at 542-543 [67] per Gummow and Hayne JJ (obiter), citing Pegler. 156 Mayne Nickless Ltd v Pegler [1974] 1 NSWLR 228 at 239, quoted with approval in Marene Knitting Mills Pty Ltd v Greater Pacific General Insurance Ltd [1976] 2 Lloyd’s Rep 631 at 642 (PC).

[17.100]

17 Marine Insurance

699

The test of materiality is this: a fact is material if it would have reasonably affected the mind of a prudent insurer in determining whether he will accept the insurance, and if so, at what premium and on what conditions. The word “reasonably” is necessary to maintain control over the evidence of possibly absurdly stringent insurance practice.

According to this view, it is not necessary that the circumstance would have had a decisive influence on the mind of the prudent insurer,157 nor that the circumstance in question would have been directly material to the risk.158 All that is necessary is that the circumstance would have affected the prudent insurer’s “intellectual process when assessing the risk”.159 Also, the fact that Samuels J in Pegler used the words “and on what conditions” suggests that a circumstance is material if it would affect the underwriting judgment of the prudent insurer in any way, not only by causing the prudent insurer to decline the risk or to charge an increased premium, but also by leading the prudent insurer to change the terms of the contract by including warranties, exceptions, franchises or deductibles.160 There is some authority to support the latter proposition, both in England161 and in New South Wales.162 In Akedian Co Ltd v Royal Insurance Australia Ltd,163 Byrne J of the Supreme Court of Victoria adopted the Pegler test as explained by the majority of the Court of Appeal of New South Wales in Barclay Holdings (Australia) Pty Ltd v British National Insurance Co Ltd,164 a non-marine insurance case. In the Akedian case, Byrne J said of the Barclay Holdings case:165 Glass JA, with whom Priestley JA agreed, accepted that the proper test of materiality was that formulated by Samuels J, but interpreted it to mean that matters would affect the mind of the prudent insurer if they were matters to be included for consideration of that insurer in coming to an underwriting decision. They did not include matters which the prudent insurer would only need to be informed of and given an opportunity to investigate and, perhaps, then put to one side. The question of the impact upon the mind of the 157 Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501 at 517, 531, 538. 158 Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501 at 521 per Deputy Judge Colman QC. 159 See Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501 at 538 per Lord Mustill. 160 For the effect of warranties, see [17.570]–[17.610]; of exceptions, see [17.260]–[17.280]; of franchises, see [17.540]; of deductibles, see [17.550]. 161 Container Transport International Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 at 492 per Kerr LJ; Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501 at 517 per Lord Goff. 162 In Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253 at 271, Carruthers J said that to the extent that the test suggested by Samuels J was inconsistent with that used in the Queensland case referred to below (Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 561), he preferred the former. 163 Akedian Co Ltd v Royal Insurance Australia Ltd [1999] 1 VR 80. 164 Barclay Holdings (Australia) Pty Ltd v British National Insurance Co Ltd (1987) 8 NSWLR 514. 165 Akedian Co Ltd v Royal Insurance Australia Ltd [1999] 1 VR 80 at 90-91 per Byrne J.

700

Shipping Law

[17.100]

reasonable underwriter should therefore be assessed at the time the underwriter is deciding whether or not to accept the risk and not at the time that an investigation of the risk is undertaken.

It seems, however, that the position is different in Queensland, where a Full Court of the Supreme Court held in Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd166 that a circumstance is material only if it would actually have changed the prudent insurer’s decision about whether or not to decline the risk, or whether to stipulate for a higher premium.167 The Full Court also held that evidence from the actual insurer may be relevant to the issue of materiality under s 24, at least where the materiality of the circumstance is not obvious.168 In contrast, in Pegler, Samuels J also suggested that the question of what the actual insurer would have done had it had the undisclosed information is not generally important.169 According to this view, the fact that the actual insurer’s judgment would have been affected by the undisclosed circumstance does not, of itself, establish that the hypothetical prudent insurer would have been affected similarly. Where the materiality of the circumstance is not obvious, the court may consider evidence from independent expert witnesses concerning insurance practice,170 but not evidence from the actual insurer. Although evidence from the actual insurer is not relevant to the question of materiality (except perhaps in Queensland), it is still relevant (indeed, necessary) in order to establish a causal link between the non-disclosure and the making of the contract. In Akedian Co Ltd v Royal Insurance Australia Ltd,171 Byrne J of the Supreme Court of Victoria followed the House of Lords in Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd,172 in holding that the materiality inquiry has a second stage, which 166 Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 561. 167 Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 561 at 583 per W B Campbell J (with whom Wanstall CJ and Dunn J agreed), citing Mutual Life Insurance Co of New York v Ontario Products Co Ltd [1925] AC 344 at 351-352 (PC). See also Itobar Pty Ltd v MacKinnon (1984) 3 ANZ Insurance Cases 60-543. 168 Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 561 at 582 per W B Campbell J, citing Visscherij v Scottish Metropolitan Assurance Co Ltd (1921) 27 Com Cas 198 at 215 per Scrutton LJ; Berger and Light Diffusers Pty Ltd v Pollock [1973] 2 Lloyd’s Rep 442 at 463 per Kerr J. 169 Mayne Nickless Ltd v Pegler [1974] 1 NSWLR 228 at 239 per Samuels J; Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253 at 271 per Carruthers J. 170 Babatsikos v Car Owners’ Mutual Insurance Co Ltd [1970] VR 297 at 306-307 per Pape J; Visscher Enterprises Pty Ltd v Southern Pacific Insurance Co Ltd [1981] Qd R 561 at 582 per W B Campbell J; Container Transport International Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 at 492 per Kerr LJ. See, eg, Akedian Co Ltd v Royal Insurance Australia Ltd [1999] 1 VR 80 for the use of expert evidence in this way. 171 Akedian Co Ltd v Royal Insurance Australia Ltd [1999] 1 VR 80. 172 Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501. The House of Lords overruled the decision of the Court of Appeal in Container Transport International

[17.100]

17 Marine Insurance

701

involves considering whether the material non-disclosure induced the actual insurer to enter the contract. In Pine Top, the House of Lords held that if non-disclosure of a material fact did not in fact induce the making of the contract, the insurer is not entitled to rely on it as a ground for avoiding the contract under the equivalent of the Marine Insurance Act 1909 (Cth), s 24.173 Thus, if the actual insurer would have regarded the circumstance as immaterial and would have contracted on precisely the same terms even if it had been disclosed, the non-disclosure has no effect, even if the circumstance would have been regarded as material by a prudent insurer, because it did not induce the actual insurer to enter into the contract.174 Conversely, if the prudent insurer would have regarded the circumstance as immaterial according to the test described above, it makes no difference whether the actual insurer would have acted differently if there had been disclosure of the circumstance in question: although the non-disclosure might have induced the actual insurer to enter into the contract, it is not entitled to avoid the contract as a result, because s 24 only gives it a right to avoid for material non-disclosure. In Pine Top, Lord Goff said that the second stage of the materiality inquiry mitigated the severity to the assured of the materiality test used in the first stage,175 but in Akedian, Byrne J expressed the rather more realistic view that:176 [C]ases such as the present demonstrate the difficulty for an insured where the underwriter, without fear of contradiction, is able to swear that it was so induced.

The severity to the assured of the materiality test has been more extensively modified in the United Kingdom by the Insurance Act 2015 (UK), which repealed the equivalent of the Marine Insurance Act 1909 (Cth), s 24 and replaced it with a duty of “fair presentation”. With effect from 12 August 2016, the duty of fair presentation under United Kingdom law requires only that material disclosures made by the assured be “substantially correct and … made in good faith”,177 that the disclosures be made in a manner that “would be reasonably clear and accessible to a Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 on this issue, but not that of the test of materiality. See also Jaggar v QBE Insurance International Ltd [2007] 2 NZLR 336 (NZ CA). 173 Marine Insurance Act 1906 (UK), s 18, now repealed by Insurance Act 2015 (UK), s 21(2). 174 See Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501 at 533-534 per Lord Mustill: “The materiality or otherwise of a circumstance should be a constant; and the subjective characteristics, actions and knowledge of the individual underwriter should be relevant only to the fairness of holding him to the bargain if something objectively material is not disclosed.” See, eg, Sea Glory Maritime Co v Al Sagr National Insurance Co (The MV Nancy) [2014] 1 Lloyd’s Rep 14. 175 Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501 at 517 per Lord Goff. 176 Akedian Co Ltd v Royal Insurance Australia Ltd [1999] 1 VR 80 at 91 per Byrne J. 177 Insurance Act 2015 (UK), s 3(3)(c).

702

Shipping Law

[17.100]

prudent insurer”,178 and that if not disclosing everything the assured knows or ought to know, the disclosure at least “gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing … material circumstances”.179 The requirement that the disclosure be “reasonably clear and accessible” is designed to avoid the possibility that the assured and/or its broker may simply swamp the insurer with information, leaving it to the insurer to discern what is important, and what is not. Materiality is a question of fact.180 The Marine Insurance Act 1909 (Cth) contains some examples of circumstances that are not material and thus do not need to be disclosed,181 but, apart from those, materiality depends on the facts of the particular case. What is material in one case is not necessarily material in another. In general, the assured’s previous claims record is material.182 Rather surprisingly, the refusal of the assured’s risk by other insurers is not regarded as material in marine insurance.183 The insurer must make its own judgment of the risk in the light of the material facts about the subject matter and the perils to which it will be exposed, and information about the judgment of other potential insurers is immaterial.184 However, in North Star Shipping Ltd v Sphere Drake Insurance PLC,185 the English Court of Appeal held that the existence of criminal proceedings accusing the assured of fraud was material, despite the fact that the alleged fraud did not relate to the subject matter of the insurance. Waller LJ said:186 178 Insurance Act 2015 (UK), s 3(3)(b). 179 Insurance Act 2015 (UK), s 3(4)(b). 180 Marine Insurance Act 1909 (Cth), s 24(4). 181 Marine Insurance Act 1909 (Cth), s 24(3)(a) (any circumstance which diminishes the risk); s 24(3)(b) (any circumstance which the insurer knows or ought to know: see, eg, Helicopter Resources Pty Ltd v Sun Alliance Australia Ltd (The Icebird) (unreported, Vic Sup Ct, 1991), in which it was held that the insurer neither knew nor ought to have known of a clause in contracts of carriage with the Commonwealth as carrier, by which cargo-owners are unable to recover damages for loss of or damage to cargo); s 24(3)(c) (any information waived by the insurer); s 24(3)(d) (circumstances superfluous by reason of warranty). Insurance Act 2015 (UK), s 3(5) preserves this list of circumstances that do not need to be disclosed, except for the last. 182 Container Transport International Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476. Compare Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501 (trivial theft from yacht held not to be material circumstance). 183 Glasgow Assurance Corp Ltd v William Symondson & Co (1911) 104 LT 254 at 257 per Scrutton J; North British Fishing Boat Insurance Co Ltd v Starr (1922) 13 Ll L Rep 206 at 210 per Rowlatt J. 184 Glasgow Assurance Corp Ltd v William Symondson & Co (1911) 104 LT 254 at 257 per Scrutton J; North British Fishing Boat Insurance Co Ltd v Starr (1922) 13 Ll L Rep 206 at 210 per Rowlatt J. In the North British Fishing Boat case, Rowlatt J said, at 210: “What one man thinks is good business another man may not care to take.” 185 North Star Shipping Ltd v Sphere Drake Insurance PLC [2006] 2 Lloyd’s Rep 182. 186 North Star Shipping Ltd v Sphere Drake Insurance PLC [2006] 2 Lloyd’s Rep 182 at 189 [19].

[17.100]

17 Marine Insurance

703

Spent convictions no longer have to be disclosed, and old allegations of dishonesty or allegations of not very serious dishonesty, one would hope, expert underwriters would not suggest would influence the judgement of prudent underwriters. But it is unreal to contemplate as a general proposition that underwriters as expert witnesses would ever give evidence that a prudent underwriter would not take into account in assessing the risk or the terms of the insurance a recent allegation of serious dishonesty the truth or falsity of which has yet to be determined, even if it is quite unconnected with insurance or the risk being insured.

In the case of cargo insurance, any circumstance that might adversely affect the assured cargo-owner’s ability to proceed successfully against the carrier for loss of or damage to the cargo is material.187 As Australian law currently stands, non-disclosure of a material circumstance by the assured or its agent entitles the insurer to avoid the contract.188 This is the only remedy available to the insurer; breach of the obligation of utmost good faith by material non-disclosure does not give rise to a right to claim damages for breach.189 The insurer is entitled to avoid the contract even if the material information not disclosed by the assured is subsequently found to have been completely incorrect.190 The insurer must return the premium to the assured if it elects to avoid the contract, except in cases of fraud.191 However, the insurer is not obliged to avoid the contract, and may elect to retain the assured’s premium and defend any claims on grounds other than non-disclosure.192 Importantly, this traditional feature of marine insurance law has also been modified in the United Kingdom by the Insurance Act 2015 (UK), and may be modified in Australia at some time in the near future. The United Kingdom reforms ameliorate the “all or nothing” quality of the consequences of material non-disclosure. In the United Kingdom, the insurer has a remedy for breach of the duty of fair presentation only if it can show that it would not have entered into the contract of insurance at all, or would have done so only on different terms, in which case the breach is a “qualifying breach”.193 (This preserves the Pine Top position that a breach has no effect if the actual insurer would have regarded it as 187 Helicopter Resources Pty Ltd v Sun Alliance Australia Ltd (The Icebird) (unreported, Vic Sup Ct, 1991) (assured had no right of recovery for cargo damage under contract of carriage with Commonwealth; assured was personally responsible for stowing and lashing cargo; both circumstances were held to be material). 188 Marine Insurance Act 1909 (Cth), s 24(1). 189 Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd [1990] 1 QB 665 (CA) (not necessary to decide this point on appeal: Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd [1991] 2 AC 249 (HL), but agreed with obiter at 280 per Lord Templeman). 190 Sharp v Sphere Drake Insurance plc (The Moonacre) [1992] 2 Lloyd’s Rep 501 at 521 per Deputy Judge Colman QC. 191 Marine Insurance Act 1909 (Cth), s 90(3)(a). 192 See, eg, Black King Shipping Co Ltd v Massie (The Litsion Pride) [1985] 1 Lloyd’s Rep 437. 193 Insurance Act 2015 (UK), s 8(1).

704

Shipping Law

[17.110]

immaterial; under the new terminology, such a breach would not be a “qualifying breach”.) A qualifying breach that was deliberate or reckless entitles the insurer to avoid the contract, refuse all claims, and keep any of the premiums paid.194 If the qualifying breach was neither deliberate nor reckless, the insurer may only avoid the contract and refuse all claims if it can show that it would not have entered into the contract on any terms, but it must then return the premiums paid by the assured.195 If the insurer would have entered into the contract but on different terms (other than terms relating to the premium), the contract is treated as if it had been entered into on those different terms if the insurer so requires.196 If the insurer would have entered into the contract but at a higher premium, the insurer may reduce any claim proportionately by the ratio of the premium actually charged to the premium that would have been discharged if there had been fair disclosure.197 It is to be hoped that similar reforms will soon be adopted into Australian law.

Misrepresentation [17.110]

All material representations made by the assured or its agent before the contract is concluded must be true.198 To be true for the purposes of the Act, a representation of fact must be substantially correct, so that the difference between what is represented and what is actually correct would not be considered material by a prudent insurer.199 A representation of expectation or belief is true if it be made in good faith.200 A representation may be withdrawn or corrected before the contract is concluded.201 If any material representation is untrue, the insurer may avoid the contract,202 even when the misrepresentation is entirely innocent.203 The consequences of misrepresentation have been modified by United Kingdom law, just as have the consequences of material non-disclosure. The rolled-up duty of “fair presentation” includes a duty of accuracy in relation to what is disclosed, as well as a duty to disclose what should be disclosed. Under post-2016 United Kingdom law, the consequences of material misrepresentation are the same as those of material non194 Insurance Act 2015 (UK), s 8(4)(a), (5); Sch 1, para 2. 195 Insurance Act 2015 (UK), Sch 1, paras 3, 4. 196 Insurance Act 2015 (UK), Sch 1, para 5. 197 Insurance Act 2015 (UK), Sch 1, para 3. 198 Marine Insurance Act 1909 (Cth), s 26(1). 199 Marine Insurance Act 1909 (Cth), s 26(4). The Act thus, rather improbably, provides an answer to the question Pontius Pilate asked of Jesus: “What is truth?” See John 18:38. 200 Marine Insurance Act 1909 (Cth), s 26(5). 201 Marine Insurance Act 1909 (Cth), s 26(6). 202 Marine Insurance Act 1909 (Cth), s 26(1). 203 See, eg, Slattery v Mance [1962] 1 QB 676.

[17.110]

17 Marine Insurance

705

disclosure.204 Thus, misrepresentation no longer produces an “all or nothing” result but may produce a more nuanced outcome where the terms of the contract or the premium are adjusted. A representation is material if it would influence the judgment of a prudent insurer in fixing the premium or determining whether it will take the risk.205 The materiality of a representation is a question of fact206 determined in the same way as the materiality of the circumstances that must be disclosed by the assured,207 which is considered at [17.100]. There is some English authority for the proposition that the questions asked by the insurer (for example, in a printed proposal form) are presumed to relate to material circumstances, so that representations made in response to questions are always material.208 However, in Akedian Co Ltd v Royal Insurance Australia Ltd,209 Byrne J of the Supreme Court of Victoria said that he was “not at all confident” that it necessarily followed that all matters about which an insurer asked a question must be regarded as material.210 A question asked by an insurer may show that it (the particular insurer) regards the matter as material, but that is not conclusive of the issue of materiality. The issue is not what the particular insurer regarded as material but what a hypothetical prudent insurer would think. The questions asked by the actual insurer may or may not be relevant to that issue. As in the case of material non-disclosure, the insurer is not entitled to avoid the contract on the grounds of a material misrepresentation if that misrepresentation did not induce it to enter into the contract.211 Fraudulent misrepresentation of a non-material kind by the assured entitles the insurer to avoid the contract212 because of the assured’s fraud,213 not because of the misrepresentation.214 In these circumstances, the insurer is entitled to retain the premium.215 204 See [17.100]. 205 Marine Insurance Act 1909 (Cth), s 26(2). 206 Marine Insurance Act 1909 (Cth), s 26(7). 207 See Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253 at 271 per Carruthers J. Marine Insurance Act 1909 (Cth), s 26(2) contains the same definition of materiality as s 24(2). 208 Glicksman v Lancashire and General Assurance Co Ltd [1927] AC 139 at 143 per Viscount Dunedin; Schoolman v Hall [1951] 1 Lloyd’s Rep 139 at 142 per Cohen LJ; March Cabaret Club & Casino Ltd v The London Assurance [1975] 1 Lloyd’s Rep 139 at 176 per May J. 209 Akedian Co Ltd v Royal Insurance Australia Ltd [1999] 1 VR 80. 210 Akedian Co Ltd v Royal Insurance Australia Ltd [1999] 1 VR 80 at 92. 211 Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1995] 1 AC 501; Akedian Co Ltd v Royal Insurance Australia Ltd [1999] 1 VR 80. 212 The Bedouin [1894] P 1 at 12 per Lord Esher MR. 213 Marine Insurance Act 1909 (Cth), s 23. The duty to deal with the utmost good faith is not exhausted by the obligations of disclosure and accurate representation: see Container Transport International Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 at 525 per Stephenson LJ.

706

Shipping Law

[17.120]

THE FORM OF THE CONTRACT Standard forms [17.120]

In 1779, the members of Lloyd’s of London issued a printed form known as the Lloyd’s “SG” (Ship and Goods) policy. Although the use of the policy was formalised in 1779, most of its clauses were much older. The SG policy was the only standard form marine policy in common use from 1779 to 1982, and occasionally thereafter.216 The Marine Insurance Act 1909 (Cth), s 36(1) authorises, but does not require, the use of the SG policy, which is reproduced in Sch 2 to the Act.

Throughout the long period of its prominence in practice, the SG policy was often criticised in the courts.217 The criticism focused on the peculiar wording of the policy, described by Mackinnon LJ in Forestal Land, Timber and Railways Co Ltd v Richards218 as “clumsy, imperfect and obscure”. These shortcomings were multiplied by the practice of adding riders and extra clauses to the basic policy. Clauses were written, printed, stamped or simply stuck on to the margins of the policy as an ad hoc response to changing needs, producing a haphazard conglomerate of contractual provisions. The practice of adding provisions to the SG form was formalised and rationalised by the Institute of London Underwriters (ILU), a body formed in 1884. Beginning in 1912, ILU issued sets of standard form clauses, known as Institute Clauses, for use with the SG policy. Sets of Institute Clauses were drafted for each of the three main types of subject matter (hull, cargo and freight). These clauses were a comprehensive and up-to-date source of contractual terms, as each set was revised and expanded periodically. The SG policy thus became merely the hook on which other contractual material was hung, and its function was reduced to a vestige of its former importance. Its decline in significance culminated with the introduction, in 1982, of a new standard form, the MAR policy (short for Marine Policy), which contains little more than the essential details of the

214 A non-material misrepresentation does not entitle the insurer to avoid on the basis of the misrepresentation: see Smith v Chadwick (1884) 9 App Cas 187 at 190 per Lord Halsbury LC. 215 Marine Insurance Act 1909 (Cth), s 90(3)(a). 216 See, eg, Royal Boskalis Westminster NV v Mountain [1999] QB 674, where the policy was in the SG form. 217 For an early example of criticism of the policy, see Marsden v Reid (1803) 3 East 572-579; 102 ER 716 at 719 per Lawrence J. 218 Forestal Land, Timber and Railways Co Ltd v Richards [1941] 1 KB 225 at 246, quoting Sir Frederick Pollock.

[17.130]

17 Marine Insurance

707

insurance in question.219 The terms and conditions of the contract of marine insurance do not appear in the MAR policy, but in the new Institute Clauses that were drafted for use with that policy. Because of the decline in significance of the SG policy and its unsatisfactory nature, the ALRC recommended repeal of s 36 and Sch 2, another sensible suggested reform that was ignored by the Commonwealth.220 In 1999, the ILU merged with the London International Insurance and Reinsurance Market Association (LIRMA) to form the International Underwriting Association of London (IUA).221 Although the ILU itself no longer exists, many sets of Institute Clauses issued under its aegis are still in widespread use. There are presently over 150 sets of Institute Clauses designed for use with the MAR policy.222 To take cargo insurance as an example of the range of available clauses, there are: three sets of general clauses (the Institute Cargo Clauses (A), (B) and (C)); many sets for particular types of cargo (such as the Institute Frozen Food Clauses (A) and (C) (Excluding Frozen Meat), the Institute Frozen Meat Clauses (A) and (C) (with or without 24 Hours Breakdown), the Institute FOSFA Trades Clauses (A), (B) and (C) (agreed in conjunction with the Federation of Oils, Seeds and Fats Association (FOSFA), the Institute Jute Clauses, the Institute Natural Rubber Clauses (excluding Liquid Latex) and many others); as well as general sets for particular types of peril (such as the Institute War Clauses (Cargo)); and sets for particular types of cargo and particular types of peril (such as the Institute Strikes Clauses (Frozen Food) (Excluding Frozen Meat) and the Institute War Clauses (FOSFA Trades)). On 1 November 2003, the IUA issued a new set of hull clauses, the International Hull Clauses (01/11/03), which are intended to replace the Institute Time Clauses (Hulls), which have not been amended since 1995.223

Classification of policies Classification by subject matter

[17.130]

There are three main types of subject matter: ships, goods and freight. Ships and goods or other movables are the two types of insurable

219 Marine Insurance Act 1909 (Cth), s 36(1) provides that the SG policy may, not must, be used. Other forms are acceptable if they conform to the formal requirements set out in ss 29 and 30. 220 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), p 311, Recommendation 43. 221 For more information about the IUA, see: http://www.iua.co.uk. 222 For a comprehensive analysis of the clauses, see N Geoffrey Hudson, T Madge and K Sturges, Marine Insurance Clauses (5th ed, Informa Law (Routledge), London, 2012). 223 The International Hull Clauses (01/11/03) are also intended to replace the Institute Time Clauses (Hulls) (01/11/95) and the International Hull Clauses (01/11/02), neither of which gained widespread acceptance in the insurance market.

708

Shipping Law

[17.140]

property that may be the subject of a contract of marine insurance,224 as may freight or other payments or profits that are endangered by the exposure of insurable property to maritime perils.225 Each of the three terms, “ship”, “goods” and “freight”, is defined in the Rules of Construction that form part (for the time being at least)226 of Sch 2 to the Marine Insurance Act 1909 (Cth).227 In practice, ship policies are known as hull and machinery (or H & M) policies, goods policies as cargo policies, and freight policies as freight policies. Another important category of marine insurance, protection and indemnity (or P & I) insurance is considered separately at [17.250]. Marine policies may themselves be the subject matter of a contract of marine insurance, as insurers are permitted to reinsure against the risk of paying out to an assured.228 In practice, reinsurance policies are classified according to the subject matter of the original insurance, and usually incorporate the terms of the original policy. The subject matter must be designated in a marine policy with reasonable certainty,229 having regard to any usage regulating the designation of the subject matter in question.230 Valued and unvalued policies

[17.140]

The Marine Insurance Act 1909 (Cth), s 33(1) provides, “A policy may be either valued or unvalued”. In practice, marine policies are usually valued.231

A valued policy is a policy that specifies the agreed value of the subject matter insured.232 When the thing insured is damaged or destroyed, it is often difficult to assess what its value was at the moment of damage or destruction. Agreement of a value in advance (usually by the insurer 224 Marine Insurance Act 1909 (Cth), s 9(2)(a). 225 Marine Insurance Act 1909 (Cth), s 9(2)(b). 226 See Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), p 311, Recommendation 43. 227 See Marine Insurance Act 1909 (Cth), Sch 2, rr 15: “ship”; 17: “goods”; 16: “freight”. The rules are for interpretation of the SG policy, or “other like forms” (such as (perhaps) the MAR form). 228 Marine Insurance Act 1909 (Cth), s 15. 229 Marine Insurance Act 1909 (Cth), s 32(1). 230 Marine Insurance Act 1909 (Cth), s 32(4). 231 Continental Illinois National Bank and Trust Co of Chicago v Bathurst (The Capt Panagos DP) [1985] 1 Lloyd’s Rep 625 at 632 per Mustill J; Kyzuna Investments Ltd v Ocean Marine Mutual Insurance Assoc (Europe) [2000] 1 Lloyd’s Rep 505 at 508-509 per Thomas J; Clothing Management Technology Ltd v Beazley Solutions Ltd [2012] 1 Lloyd’s Rep 571 at 585 [60]: “It is rare for a marine insurance policy to be unvalued”. For three fairly rare examples of unvalued policies, see Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253; Franke v CIC General Insurance Ltd (The Coral) (1994) 33 NSWLR 373; Thor Navigation Inc v Ingosstrakh Insurance [2005] 1 Lloyd’s Rep 547. 232 Marine Insurance Act 1909 (Cth), s 33(2).

[17.140]

17 Marine Insurance

709

accepting the assured’s valuation) circumvents difficulties of valuation, and speeds settlement of claims. The agreed value is conclusive between insurer and assured, whether the loss be total or partial.233 An unvalued policy does not specify the value of the subject matter insured, but leaves the insurable value to be ascertained subsequently, subject to the limit of the sum insured.234 In determining whether a policy is valued or unvalued, the presence of a stated sum of money in the policy is not conclusive.235 The policy must state the sum for which the subject matter is insured,236 but it does not follow that the value of the subject matter is the same as the sum insured.237 For example, an assured may insure a ship for $1,000,000, but if it is worth only $500,000 when lost, the assured recovers only $500,000, unless the parties have agreed in advance that the ship is worth $1,000,000. Thus, a policy that merely states the sum insured is an unvalued policy.238 Addition of such words as “valued at the same” after the sum insured makes the policy a valued policy, the agreed value being the same as the sum insured.239 However, use of the words “valued at” is not essential if it is clearly the intention of the parties that there is a specified agreed value, proposed by the assured and accepted by the insurer.240 Alternatively, the policy may state an agreed value larger than the sum insured, in which case the assured is deemed to be its own insurer in respect of the uninsured balance.241 For example, if the agreed value of a ship is $1,000,000, and the assured insures it for $750,000, it is a self-insurer for, and therefore must bear $250,000 of, any total loss.242 233 Marine Insurance Act 1909 (Cth), s 33(3). 234 Marine Insurance Act 1909 (Cth), s 34. The method of ascertaining insurable value is to be found in s 22. 235 Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253 at 282-283 per Carruthers J, citing Wilson v Nelson (1864) 5 B & S 354; 122 ER 863; Thor Navigation Inc v Ingosstrakh Insurance [2005] 1 Lloyd’s Rep 547. 236 Marine Insurance Act 1909 (Cth), s 29(d). 237 Compare, however, Clothing Management Technology Ltd v Beazley Solutions Ltd [2012] 1 Lloyd’s Rep 571 (stipulation of “invoice value” of insured goods held to be sufficient statement of value to make policy valued). 238 Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253; Kyzuna Investments Ltd v Ocean Marine Mutual Insurance Assoc (Europe) [2000] 1 Lloyd’s Rep 505 at 509 per Thomas J; Thor Navigation Inc v Ingosstrakh Insurance [2005] 1 Lloyd’s Rep 547. See also Ross v Adelaide Marine Assurance Co (1870) 1 VR (L) 232. 239 Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253 at 282-283 per Carruthers J, citing Wilson v Nelson (1864) 5 B & S 354; 122 ER 863. 240 Kyzuna Investments Ltd v Ocean Marine Mutual Insurance Assoc (Europe) [2000] 1 Lloyd’s Rep 505 at 508-509 per Thomas J; Thor Navigation Inc v Ingosstrakh Insurance [2005] 1 Lloyd’s Rep 547 at 552 [18] per Gloster J. 241 Marine Insurance Act 1909 (Cth), s 87. 242 The measure of indemnity is considered at [17.490]–[17.530].

710

Shipping Law

[17.150]

Time, voyage, mixed, and floating policies

[17.150]

A voyage policy is a policy to insure the subject matter “at and from” one place to another, or “from” one place to another.243 A time policy is a policy for a definite period of time,244 which cannot exceed 12 months.245 A mixed policy embodies a contract for both voyage and time,246 but a policy for a specified period of time within fixed geographical limits is a time policy, not a mixed policy.247 In practice, the most important significance of the distinction between time, mixed, and voyage policies is that there is an implied warranty of seaworthiness in a voyage policy but not a time or mixed policy.248 A floating policy is a flexible policy that describes the insurance in general terms, and leaves the name of the ship or ships and other particulars to be defined by subsequent declaration.249 Goods are usually insured under voyage policies, as the voyage is the duration of their life as cargo. In practice, the voyage policy often arises as the result of a declaration by the assured under an open cover, which process is considered in [17.160]. Ships are usually insured under time policies, although a mixed policy may be used if the ship is to undertake a delivery voyage before commencing service with the assured.250 Floating policies are used by assureds who wish to effect a number of contracts of insurance with the same insurer over a period of time. For example, a shipper or consignee of goods that are to be carried in several 243 Marine Insurance Act 1909 (Cth), s 31(1). See, eg, Garnat Trading & Shipping (Singapore) Pte Ltd v Baominh Insurance Co [2011] 2 Lloyd’s Rep 492 (voyage policy on floating dry dock repositioning from Vladivostok to Vietnam). 244 Marine Insurance Act 1909 (Cth), s 31(1). 245 Marine Insurance Act 1909 (Cth), s 31(2). The ALRC recommended that the 12-month limitation, which was created for stamp duty reasons now defunct, should be removed: Australian Law Reform Commission, Review of Marine Insurance Act 1909 (ALRC 91, 2001), p 306, Recommendation 38. The equivalent provision in the Marine Insurance Act 1906 (UK) was repealed in 1959: Finance Act 1959 (UK), Sch 8, Pt II. 246 Marine Insurance Act 1909 (Cth), s 31(1). See, eg, M Almojil Establishment v Malayan Motor and General Underwriters Pty Ltd (The Al-Jubail IV) [1982] 2 Lloyd’s Rep 637 (Sin CA) (mixed policy for delivery voyage Singapore to Persian Gulf, and then for 12 months). 247 Wilson v Boag (1957) 57 SR (NSW) 384; Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2007] 1 Lloyd’s Rep 66 (Sin CA). 248 Marine Insurance Act 1909 (Cth), s 45; see [17.600]. See, eg, Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2007] 1 Lloyd’s Rep 66 (Sin CA) (no warranty of seaworthiness because policy held to be time, not mixed). 249 Marine Insurance Act 1909 (Cth), s 35(1). For examples, and the principles of when and how declarations should be made, see: s 35(2), (3), (4); Friend v Metcalfe (1873) 12 SCR (NSW) 169; Anderson v United Insurance Co (1876) 2 VLR (L) 129; Davies v National Fire and Marine Insurance Co of New Zealand [1891] AC 485. 250 See, eg, M Almojil Establishment v Malayan Motor and General Underwriters Pty Ltd (The Al-Jubail IV) [1982] 2 Lloyd’s Rep 637 (Sin CA), but cf Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2007] 1 Lloyd’s Rep 66 (Sin CA).

[17.160]

17 Marine Insurance

711

different consignments over a period of time may use a floating policy, as may the operator of a shipping line that regularly charters ships to supplement its fleet. The policy describes the class of subject matter insured and a maximum limit of value, and as each item is put at risk, the assured declares its value to the insurer,251 usually by completing a certificate of insurance in the insurer’s standard form, and forwarding a copy to the insurer. Each declaration reduces the cover remaining, and the policy lasts until the value of cover is exhausted.

Example 17.1 An assured effects a floating policy for $1,000,000 on goods to be declared. The first consignment is declared as being of value $50,000. $950,000 of cover remains. A floating policy may provide that declarations must be made within a specified period of time after each item is put at risk. If so, the assured is entitled to declare at any time until the end of the specified period,252 but declaration thereafter is a breach of warranty,253 which discharges the insurer from liability from the date of the breach.254 In practice, the use of floating policies has been largely superseded by insurance under open cover.

Open or annual cover

[17.160]

Open cover operates in much the same way as a floating policy, but without a maximum limit of value. Open cover is commonly used to insure cargo where the assured imports or exports goods so frequently as to make it inconvenient to effect a separate contract of cargo insurance for each shipment. It is also used for charterer’s liability cover by ship operators who regularly charter ships.255 An open cover on cargo states the kinds of goods that are to be covered, the terms on which each type of goods is to be covered, the rate of premium for each type of goods, and the limit of the sum to be insured on each shipment. The assured declares each shipment of goods covered by the open cover, usually by completing a certificate of insurance in the insurer’s standard form, and then forwarding a copy to the insurer. The premium is then calculated by reference to the type and value of the goods declared, according to the schedules set out in the open cover. Premiums are usually aggregated and paid by the assured periodically: for example, per

251 In the case of goods, all consignments must be declared: see Marine Insurance Act 1909 (Cth), s 35(3). The assured cannot choose to insure the riskiest shipments only: see Friend v Metcalfe (1873) 12 SCR (NSW) 169. 252 New Zealand Insurance Co v South Australian Insurance Co (1878) 1 SCR (NSW) 214 at 219 per Martin CJ. 253 Union Insurance Society of Canton v George Wills & Co [1916] 1 AC 281 (PC). 254 Marine Insurance Act 1909 (Cth), s 39(3). For a consideration of the effect of breach of warranty, see [17.570]–[17.610]. 255 See, eg, Glencore International AG v Ryan (The Beursgracht) [2002] 1 Lloyd’s Rep 574.

712

Shipping Law

[17.160]

month on all shipments for the preceding month. The open cover may be of indefinite duration with provision for termination on notice, or for a specified period of time with an option to renew. Open cover is of indefinite duration; annual cover works in the same way as open cover, but for the finite period of one year. In Glencore International v Alpina Insurance Co Ltd (No 2),256 Moore-Bick J said of an open cover on cargo: The essential purpose of a contract of this kind is to ensure that cover is continuously available in respect of goods bought and sold in the course of trading and is available when, and for as long as, it may be required. The nature of commodity trading is such that it will often be difficult to tell how long goods placed in store are likely to remain there, so it is likely to be of advantage to the insured to be able to obtain cover for an indefinite rather than a fixed period.

An open cover is not a contract of marine insurance,257 and it is not a marine policy, because it does not (indeed, cannot) state the sum insured.258 It is a standing offer by the insurer to insure the specified subject matter on the specified terms and at the specified premiums for any declarations made by the assured.259 Each declaration under an open cover gives rise to a separate contract of marine insurance in the terms specified by the open cover.260 If the assured makes a declaration that does not conform to the terms of the open cover (such as by exceeding the maximum value per shipment), no contract of marine insurance comes into existence at all,261 unless the insurer chooses to accept the non-conforming declaration.262 The insurance certificate that is issued for each declaration usually contains all the relevant details for the purposes of the open cover, but it may not satisfy the formal requirements for it to constitute a policy under the Marine Insurance Act 1909 (Cth).263 If it does not satisfy these 256 Glencore International v Alpina Insurance Co Ltd (No 2) [2004] 1 Lloyd’s Rep 567 at 569 [9]. 257 Empress Assurance Corp v Bowring & Co Ltd (1906) 11 Com Cas 107. 258 Statement of the sum insured is a formal requirement of a marine policy: see Marine Insurance Act 1909 (Cth), s 29(d). See Australian Law Reform Commission, Review of Marine Insurance Act 1909 (ALRC 91, 2001), p 300, para 15.50. 259 Citadel Insurance Co v Atlantic Union Insurance Co SA [1982] 2 Lloyd’s Rep 543 at 547-548 per Kerr J. 260 Citadel Insurance Co v Atlantic Union Insurance Co SA [1982] 2 Lloyd’s Rep 543 at 547-548 per Kerr J; Sedgwick Tomenson Inc v PT Reasuransi Umum Indonesia [1990] 2 Lloyd’s Rep 334 at 340 per Evans J; Tradigrain SA v SIAt SPA [2002] 2 Lloyd’s Rep 553 at 558 per Colman J. 261 Seavision Investment SA v Evennett (The Tiburon) [1990] 2 Lloyd’s Rep 418. 262 Sedgwick Tomenson Inc v PT Reasuransi Umum Indonesia [1990] 2 Lloyd’s Rep 334 at 340 per Evans J. 263 The formal requirements are set out in ss 29 and 30. The policy must be signed by or on behalf of the insurer or marked with its seal if it is a corporation (s 30(1)) and must specify (i) the assured’s name (s 29(a)); (ii) the subject matter insured and the risks insured against (s 29(b)); (iii) the duration of cover (s 29(c)); (iv) the sum insured

[17.180]

17 Marine Insurance

713

requirements, there is no formal policy at all, because neither the certificate nor the open cover itself qualifies as one. In these circumstances, the contract of marine insurance that arises as a result of the declaration is not admissible in evidence until a formal policy is issued.264 In practice, this defect is unlikely to give rise to any difficulty, as a formal policy may be issued after the contract has been concluded,265 so the assured may if necessary call for the insurer to issue a formal policy once litigation has been commenced, for the sole purpose of admissibility of the contract in evidence.

PERIL AND RISK Introduction [17.170]

The concepts of peril and risk are central to marine insurance. The assured’s property or profits are put at risk by maritime perils, and the insurer agrees to indemnify the assured against loss caused by those perils. Thus, the peril is at sea, but the risk is with the insurer. It is necessary for the contract to specify not only which maritime perils are, and which are not, insured against, but when, and for how long, the insurer accepts the risk of loss from those perils.

Attachment and termination of risk Time policies

[17.180]

A time policy specifies the period for which the subject matter is insured: that is what makes it a time policy.266 The period of cover is described by stating when the risk attaches and when it terminates. The stated period must be “definite”,267 and the attachment and termination dates should be stated as precisely as possible; for example, “From 12 noon Eastern Standard Time, 30th September 2015 to 12 noon Eastern Standard Time, 30th September 2016”. Time policies may,268 and in practice usually do,269 contain an agreement that if the ship is still at sea on expiry of the insurance cover, the subject matter is held covered until it reaches its destination, or for a reasonable time, not exceeding 30 days. (s 29(d)); and (v) the name of the insurer (s 29(e)). The equivalents of ss 29 and 30 in the Marine Insurance Act 1906 (UK) were abolished in 1959. The ALRC considered recommending abolition of ss 29 and 30, but decided against it: Review of Marine Insurance Act 1909 (ALRC 91, 2001), para 15.38. 264 Marine Insurance Act 1909 (Cth), s 28. 265 Marine Insurance Act 1909 (Cth), s 28. 266 Marine Insurance Act 1909 (Cth), s 31(1). 267 Marine Insurance Act 1909 (Cth), s 31(1). 268 Marine Insurance Act 1909 (Cth), s 31(2). 269 The Institute Time Clauses (Hulls) (01/10/83), cl 2 simply holds the ship covered until the completion of the voyage it is on when cover expires. Under the International Hull Clauses (01/11/03), cl 12, the ship must be in distress or missing at sea in order to be held covered if cover expires during a voyage.

714

Shipping Law

[17.190]

Time policies also usually contain termination clauses, which provide for termination of cover before expiry of the specified period if certain events occur; for example, change of the ship’s flag or class.270 Voyage policies Attachment

[17.190]

The attachment of risk in a voyage policy depends on the wording of the policy. When the subject matter is insured “from” one place to another, the risk attaches when the ship starts on the voyage insured,271 whatever the subject matter.

When a ship or freight is insured “at and from” a specified place, the risk attaches as soon as the ship is at that place in good safety.272 Thus, if the ship is already safely there when the contract is concluded, the risk attaches immediately. However, if the ship is not at the specified place when the contract is concluded, there is an implied condition that the adventure shall be commenced (and thus, the risk attached) in a reasonable time,273 or else the insurer may avoid the contract.274 When cargo is insured “at and from” a specified place, the risk attaches as soon as any portion of the cargo is put aboard the carrying ship at that place.275 In contrast, when cargo is insured “from the loading thereof” (as it is in the SG policy), the risk does not attach until all the goods are on board.276 In practice, most modern cargo policies contain a clause known as the “transit” or “warehouse-to-warehouse” clause, which attaches the risk when the goods are first moved in the named warehouse (or place of storage) for the purpose of immediate loading into or onto the carrying vehicle for the commencement of transit.277 The named warehouse is usually that of the exporter of the goods or its freight forwarder. Although the warehouse-to-warehouse clause purports to attach the risk as soon as the goods are readied to leave the warehouse, it cannot effectively do so if the assured does not have an insurable interest at that time. For example, 270 Institute Time Clauses (Hulls) (01/10/83), cl 4. 271 Marine Insurance Act 1909 (Cth), Sch 2, r 2. 272 Marine Insurance Act 1909 (Cth), Sch 2, r 3. 273 Marine Insurance Act 1909 (Cth), s 48(1). What constitutes a “reasonable time” is a question of fact: s 94. 274 Marine Insurance Act 1909 (Cth), s 48(2). 275 Colonial Insurance Co of New Zealand v Adelaide Marine Insurance Co (1886) 12 App Cas 128 (PC). 276 Marine Insurance Act 1909 (Cth), Sch 2, r 4. 277 See Institute Cargo Clauses (A), cl 8.1 (2009 version) (Appendix 8). The 1982 version of the Institute Cargo Clauses (A), cl 8.1 attached the risk when the goods “leave the warehouse named in the policy for commencement of transit”. The 2009 wording extends cover to the process of loading at the warehouse — if the assured then has an insurable interest.

[17.200]

17 Marine Insurance

715

if an FOB purchaser of goods insures them under a voyage policy containing the standard warehouse-to-warehouse clause, the risk does not attach until the purchaser-assured acquires an insurable interest when the goods are placed on board the carrying ship at the port of loading, notwithstanding the provisions of the warehouse-to-warehouse clause.278 The risk does not attach if the voyage undertaken is not the voyage insured. Thus, the risk does not attach, whatever the subject matter, if the ship sails from279 or to280 a port other than that specified in the policy. Similarly, in a cargo policy, the risk does not attach if the cargo is insured for a voyage on a named ship (which is no longer usually the case), but is carried to its destination on a different one.281 Termination

[17.200]

The general rule for voyage policies on hull and freight is that the risk ceases when the ship arrives at the port named in the policy. For these purposes,282 a ship arrives when it reaches the place where ships of that tonnage and kind usually cast anchor.283

In cargo policies containing the transit or warehouse-to-warehouse clause,284 the risk terminates when: (1) the goods are delivered to the consignee’s final warehouse; or (2) the goods are delivered to any other warehouse, whether prior to or at the named destination, which the assured elects to use for storage other than in the ordinary course of transit or for allocation or distribution;285 (3) the assured or its employees elect to use any carrying vehicle or other conveyance for storage other than in the ordinary course of transit; or (4) after 60 days after completion of discharge, whichever occurs first.286 For the purposes of this clause, goods cease to be “in the ordinary course of transit” when they are stored or carried in a manner that is not in reasonable furtherance of their 278 NSW Leather Co Pty Ltd v Vanguard Insurance Co Ltd (1991) 25 NSWLR 699. 279 Marine Insurance Act 1909 (Cth), s 49. 280 Marine Insurance Act 1909 (Cth), s 50. See, eg, Nam Kwong Medicines & Health Products Co Ltd v China Insurance Co Ltd [2002] 2 Lloyd’s Rep 591 (HK HC); Nima SARL v The Deves Insurance Public Co Ltd (The Prestrioka) [2003] 2 Lloyd’s Rep 327 (CA). 281 George Kallis (Manufacturers) Ltd v Success Insurance Ltd [1985] 2 Lloyd’s Rep 8 (PC). 282 Note that this definition of “arrival” differs from that used in voyage charterparty cases: see [13.170]. 283 Lindsay v Janson (1859) 4 H & N 699; 157 ER 1016. In the SG policy, the risk does not cease until the ship is moored there “twenty-four hours in good safety”. 284 See Institute Cargo Clauses (A), cl 8.1 (2009 version) (Appendix 8). The 1982 version of the Institute Cargo Clauses (A), cl 8.1 attached the risk when the goods “leave the warehouse named in the policy for commencement of transit”. The 2009 wording extends cover to the process of loading at the warehouse — if the assured then has an insurable interest. 285 See, eg, Leaders Shoes (Aust) Pty Ltd v Liverpool & London & Globe Insurance Co Ltd [1968] 1 NSWR 279; Verna Trading (Aust) Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129. 286 See Institute Cargo Clauses (A) (2009 version) (Appendix 8), cll 8.1.1 – 8.1.4. Clause 8.1.3 did not appear in the 1982 version of Institute Cargo Clauses (A).

716

Shipping Law

[17.200]

carriage to their ultimate destination.287 The “transit” may properly be interrupted to allow for efficient and economical loading, transhipment, discharge and storage to await the most convenient carrier, and any other necessary steps in transit, but not merely for the commercial convenience of one of the parties, especially that of the consignor or consignee.288 The risk in a voyage policy may be terminated by operation of the provisions of the Marine Insurance Act 1909 (Cth). Deviation289 and change of voyage290 terminate the risk, discharging the insurer from liability from the time of the deviation291 or change.292 A change of voyage occurs when a decision is made to change the ship’s destination after it has set out for the named destination.293 A deviation occurs when the ship departs from the designated294 or customary295 route to the named destination. In practice, these provisions terminating the risk for deviation, delay and change of voyage are of little effect. Voyage policies commonly provide that the assured is held covered during deviation296 or after change of voyage297 provided that prompt notice is given, so that an additional premium may be agreed.298 Cargo policies also excuse “delay beyond the control of the assured”.299 Section 54 of the Marine Insurance Act 1909 (Cth) provides that in the case of a voyage policy, the adventure insured must be prosecuted throughout its course with reasonable despatch and if it is not, the insurer is discharged from liability from the time when the delay becomes unreasonable. Clause 18 of the Institute Cargo Clauses (A) (2009 version) provides that “It is a condition of this insurance that the assured shall act with reasonable despatch in all circumstances within their control”.300 According to Arnould, the combined effect of these two provisions is that s 54 governs the whole of the insured voyage, including any warehouse287 Verna Trading (Aust) Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 at 147, 168, citing SCA (Freight) Ltd v Gibson [1974] 2 Lloyd’s Rep 533 at 535 per Ackner J. 288 Verna Trading (Aust) Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 at 168 per Ormiston J. 289 Marine Insurance Act 1909 (Cth), s 52. 290 Marine Insurance Act 1909 (Cth), s 51. 291 Marine Insurance Act 1909 (Cth), s 52(1). 292 Marine Insurance Act 1909 (Cth), s 51(2). 293 Marine Insurance Act 1909 (Cth): it seems that an actual change is not necessary once the decision has been made. See also Australian Law Reform Commission, Review of Marine Insurance Act 1909 (ALRC 91, 2001), p 182, para 9.210. 294 Marine Insurance Act 1909 (Cth), s 52(2)(a). 295 Marine Insurance Act 1909 (Cth), s 52(2)(b): if no designated route. 296 See, eg, Institute Cargo Clauses (A), cl 8.2 (2009 version) (Appendix 8). 297 See, eg, Institute Cargo Clauses (A), cl 10 (2009 version) (Appendix 8). 298 In addition to these contractual provisions, the Marine Insurance Act 1909 (Cth), s 55 lists circumstances in which deviation and delay are excused. 299 See, eg, Institute Cargo Clauses (A), cl 8.3 (2009 version) (Appendix 8). 300 See, eg, Institute Cargo Clauses (A), cl 18 (2009 version) (Appendix 8).

[17.200]

17 Marine Insurance

717

to-warehouse extension, and cl 18 merely imposes an obligation on the assured to act with reasonable despatch in minimising loss after a casualty has occurred.301 In Verna Trading (Aust) Pty Ltd v New India Assurance Co Ltd,302 a majority of the Appeal Division of the Supreme Court of Victoria rejected that interpretation, holding that s 54 applies only to the ocean leg of the insured adventure, and that cl 18 imposes a similar obligation on the assured to prosecute the adventure with reasonable despatch during the land stages at either end of a warehouseto-warehouse voyage.303 The effect of this difference in interpretation is significant, although perhaps not immediately apparent. Section 54 is qualified by s 55, which sets out a number of excuses for deviation and delay. According to the majority view in Verna Trading, the excuses in s 55 apply during the sea voyage, but not during the land stages at either end of a warehouse-to-warehouse adventure. As cl 18 is not qualified by any provision equivalent to s 55, the assured has less protection during the land stages than during the sea voyage.304 Furthermore, it is arguable that s 54 creates an exception to liability, so that the onus lies on the insurer to prove the assured’s failure to take reasonable despatch.305 In contrast, cl 18 is clearly expressed to be a condition of liability under the policy, so that the onus is on the assured to prove that it prosecuted the land stages of a warehouse-to-warehouse adventure with reasonable despatch. The effect of s 48 and ss 51 – 55 of the Marine Insurance Act 1909 (Cth) is to discharge the insurer automatically from liability (unless the policy contains a “held covered” clause). In this respect, the provisions operate like express warranties, which are considered at [17.580].306 Consistently with its recommendations for reform of the law of warranties, the ALRC

301 J Gilman et al, Arnould’s Law of Marine Insurance and Average (18th ed, Sweet & Maxwell, London, 2013), Vol 2, para 704. 302 Verna Trading (Aust) Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129. Ormiston J dissented on this point, adopting the Arnould interpretation. 303 See also Wiggins Teape Australia Pty Ltd v Baltica Insurance Co Ltd (1970) 2 NSWR 77 at 80, where Macfarlan J expressed a similar view. 304 Verna Trading (Aust) Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 at 173 per Ormiston J (dissenting). 305 Verna Trading (Aust) Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 at 173 per Ormiston J, arguing by analogy with the onus on the insurer to prove the assured’s breach of the implied warranty of seaworthiness under the Marine Insurance Act 1909 (Cth), s 45, on which, see Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 at 387 per Mason J. 306 Marine Insurance Act 1909 (Cth), s 9.

718

Shipping Law

[17.210]

recommended repeal of s 48 and ss 51 – 55.307 However, the ALRC recommended retention of ss 49 and 50,308 which deal with attachment of risk.309

Perils insured against [17.210]

The parties may agree to insure the subject matter against any perils that are “consequent on, or incidental to, the navigation of the sea”.310 In practice, the parties usually agree on the perils to be insured against by selecting the appropriate set of Institute Clauses for use with the marine policy.311

Perils covered in hull and freight policies

[17.220]

The principal perils insured against in hull and freight policies are “perils of the seas”.312 A “peril of the seas” is “a fortuitous accident or casualty of the seas rather than some other cause such as the ordinary action of the wind and waves or wear and tear”.313 The incursion of sea water into a ship’s hull does not, in itself, constitute a “peril of the seas”; the assured must prove that the incursion was accidental or fortuitous.314 Hull and freight policies usually list other perils which are not, or might not be, included in the definition of “perils of the seas”, but which are, nevertheless, “maritime perils” for the purposes of the Marine Insurance Act 1909 (Cth). Perils that commonly appear in hull and freight policies are as follows:315 fire;316 explosion; violent theft by persons from outside the vessel; jettison; piracy;317 breakdown of or accident to nuclear installations or reactors; contact with aircraft or similar objects or objects 307 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), p 183, para 9.214; p 187, Recommendation 16. 308 See, eg, Nam Kwong Medicines & Health Products Co Ltd v China Insurance Co Ltd [2002] 2 Lloyd’s Rep 591 (HK HC) and Nima SARL v The Deves Insurance Public Co Ltd (The Prestrioka) [2003] 2 Lloyd’s Rep 327 (CA) as examples of the operation of s 50. 309 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), p 183, para 9.215. 310 Marine Insurance Act 1909 (Cth), s 9(2): definition of “maritime perils”. 311 See [17.120]. 312 In modern policies, the classic formula is expanded by the addition of the words “rivers, lakes or other navigable waters”: see, eg, International Hull Clauses (01/11/03), cl 2.1.1. 313 Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 at 384 per Mason J. See also Marine Insurance Act 1909 (Cth), Sch 2, r 7. For a detailed examination of the meaning of “perils of the sea”, with examples, see [12.410]. 314 P Samuel & Co Ltd v Dumas [1924] AC 431; Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 2 Lloyd’s Rep 1 (HL); Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624. See also CCR Fishing Ltd v Tomenson Inc (The La Pointe) [1991] 1 Lloyd’s Rep 89 (Can SC). For an examination of the burden of proof that the proximate cause of a loss was a peril of the seas, see [17.300]. 315 See, eg, Institute Time Clauses (Hulls) (01/10/83), cl 6.1; International Hull Clauses (01/11/03), cl 2.1; Institute Voyage Clauses (Hulls), cl 4.1; Institute Time Clauses (Freight), cl 7.1; Institute Voyage Clauses (Freight), cl 5.1.

[17.220]

17 Marine Insurance

719

falling therefrom; contact with land conveyance, dock or harbour equipment or installation; earthquake; volcanic eruption; and lightning. In addition, a number of perils are typically insured against provided the loss or damage does not result from want of due diligence on the part of the assured, owners or managers; this provision is traditionally called the “Inchmaree” clause of the policy in question.318 They are: accidents in loading, discharging or shifting cargo or fuel; bursting of boilers, breakage of shafts or any latent defect in the machinery or hull; negligence of master, officers, crew or pilots; negligence of repairers or charterers other than the assured; and barratry of master, officers or crew.319 The peril of being held liable to a third party is not a “peril of the seas”,320 and so it must be insured against separately. Hull and freight policies usually contain clauses whereby the insurer agrees to indemnify the assured for three-quarters321 of any sum for which the assured becomes legally liable by way of damages for loss or damage or delay or loss of use of any other ship or property on a ship, if the liability arises from the

316 See, eg, Craig v Associated National Insurance Co Ltd [1984] 1 Qd R 209. “Fire” includes a fire deliberately started by a stranger to the insurance: Schiffshypothekenbank Zu Luebeck AG v Compton (The Alexion Hope) [1988] 1 Lloyd’s Rep 311 at 317 per Lloyd LJ; Kiriacoulis Lines SA v Compagnie D’Assurances Maritime Aeriennes et Terrestres (The Demetra K) [2002] 2 Lloyd’s Rep 581 at 584 [19] per Lord Phillips MR. For an examination of the burden of proof that fire was the proximate cause of the loss, see [17.290]. 317 See, eg, Athens Maritime Enterprises Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd (The Andreas Lemos) [1982] 2 Lloyd’s Rep 483. 318 See, eg, Institute Time Clauses (Hulls) (01/10/83), cl 6.2; International Hull Clauses (01/11/03), cl 2.2; Institute Voyage Clauses (Hulls), cl 4.2; Institute Time Clauses (Freight), cl 7.2; Institute Voyage Clauses (Freight), cl 5.2. The clause is so named because of the decision of the House of Lords in Thames and Mersey Marine Insurance Co Ltd v Hamilton, Fraser & Co (1887) 12 App Case 484, which was concerned with the total loss of the ship “Inchmaree”. For a recent example of the interpretation of the Inchmaree clause in the Institute Time Clauses (Hulls) (01/10/1983), cl 6.2, see Versloot Dredging BV v HDI-Gerling Industrie Versicherung BV (The DC Merwestone) [2013] 2 Lloyd’s Rep 131. 319 For examples of barratry see: Piermay Shipping Co SA v Chester (The Michael) [1979] 1 Lloyd’s Rep 55; Shell International Petroleum Co Ltd v Gibbs (The Salem) [1983] 1 Lloyd’s Rep 342; Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Captain Panagos DP) [1989] 1 Lloyd’s Rep 33 (CA). Compare Strive Shipping Corp v Hellenic Mutual War Risks Assoc (The Grecia Express) [2002] 2 Lloyd’s Rep 88 (barratry alleged but not found). Barratry “includes every wrongful act wilfully committed by the master or crew to the prejudice of the owner or, as the case may be, the charterer”: Marine Insurance Act 1909 (Cth), Sch 2, r 11. For an examination of the burden of proof that barratry was the proximate cause of the loss, see [17.290]. 320 De Vaux v Salvador (1836) 4 Ad & El 420; 111 ER 845. 321 The remaining quarter of collision liability insurance is usually covered by a Protection and Indemnity (P & I) Association: see [17.250].

720

Shipping Law

[17.220]

insured ship being in collision with any other vessel.322 Hull policies also cover liability for general average or salvage (but not life salvage).323 Hull policies usually contain a clause known as the “sue and labour” or “duty of assured” clause, under which the insurer undertakes to indemnify the assured for all reasonable expenditures undertaken to avert or minimise losses recoverable under the policy.324 The clause may, in any event, be superfluous in Australian polices, because in Emperor Goldmining Co Ltd v Switzerland General Insurance Co Ltd,325 it was held that reasonable expenditure to avert or minimise loss to the subject matter is recoverable by the assured even when there is no sue and labour or duty of assured clause in the policy. It was held that such expenditure is authorised by the Marine Insurance Act 1909 (Cth), s 84(4), which does not require the assured to incur the expenditure at its own expense. In State of the Netherlands v Youell,326 the English Court of Appeal held that the English equivalent of s 84(4)327 only operates to deprive an assured of cover for failure to sue and labour in the rare case where breach of the duty is so significant as to be held to displace the prior insured peril as the proximate cause of the loss. That decision was followed by the Supreme Court of Western Australia in Allison Pty Ltd v Lumley General Insurance Ltd.328 E M Heenan J took the view that any steps taken, or expenditure incurred, by the assured to avoid the effect of an imminent peril should be regarded as being proximately caused by the peril itself (in Allison itself, a peril of the seas, Cyclone Bobby), rather than as sue and labour.329

322 See, eg, Institute Time Clauses (Hulls) (01/10/83), cl 8; International Hull Clauses (01/11/03), cl 6. 323 See, eg, Institute Time Clauses (Hulls) (01/10/83), cl 11; International Hull Clauses (01/11/03), cl 8. Special compensation paid to salvors under the International Convention on Salvage 1989, Art 14 or similar provisions (like the SCOPIC 2014 clause) is not covered under the International Hull Clauses (01/11/03). Liability to pay such special compensation and also for life salvage are usually covered by the ship’s P & I Club: see [17.250]. For a consideration of salvage, see Chapter 19 and for a consideration of general average, see Chapter 18. 324 See, eg, Institute Time Clauses (Hulls) (01/10/83), cl 13; International Hull Clauses (01/11/03), cl 9. See generally, P Eggers, “Sue and Labour and Beyond: The Assured’s Duty to Mitigate” [1998] LMCLQ 228. 325 Emperor Goldmining Co Ltd v Switzerland General Insurance Co Ltd [1964] NSWR 1243. See also Fenton v Queensland Insurance Co Ltd (1915) 11 Tas LR 125. But see the obiter reservations about the Emperor Goldmining decision, at least for non-marine policies, in In Re Mining Technologies Australia Pty Ltd [1999] 1 Qd R 60 at 68 per Pincus JA. 326 State of the Netherlands v Youell [1998] 1 Lloyd’s Rep 236. 327 Marine Insurance Act 1906 (UK), s 78(4). 328 Allison Pty Ltd v Lumley General Insurance Ltd (2006) 200 FLR 394; 14 ANZ Insurance Cases 61-708; [2006] WASC 104. 329 Allison Pty Ltd v Lumley General Insurance Ltd (2006) 200 FLR 394; 14 ANZ Insurance Cases 61-708; [2006] WASC 104 at [132].

[17.240]

17 Marine Insurance

721

In Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua),330 the English Court of Appeal held that a ransom payment made to pirates was recoverable as a sue and labour expense under the United Kingdom equivalent of s 84(4).331 Although the duty to “sue and labour” does not require the assured to make a ransom payment to avert a total loss of the insured ship, it does not follow that a ransom payment made for that purpose cannot be recovered as a sue and labour expense.332 Perils covered in cargo policies

[17.230]

The perils insured against in cargo policies differ from those in hull and freight policies in that they reflect the fact that cargo interests have little or no control over the navigation and management of the ship. Thus, although cargo was insured against “perils of the seas” under the Lloyd’s SG policy itself,333 Institute Clauses appended to the policy commonly extended the cover to all risks. The “all risks” clauses for use with the MAR policy are the Institute Cargo Clauses (A).334 The Institute Cargo Clauses (B) cover the cargo against fewer perils for a smaller premium; the Institute Cargo Clauses (C) cover fewer perils still, for a smaller premium still. The Institute Cargo Clauses (A) are most widely used in practice. Because the Institute Cargo Clauses (A) cover all risks from warehouse to warehouse, the assured is entitled to an indemnity if the cargo suffers loss or damage as the result of any peril except those expressly excluded. Cargo policies also commonly include “sue and labour” or “duty of assured” clauses, which have the same effect in cargo policies as they do in hull policies.335 Other perils

[17.240]

As noted at [17.120], there are sets of Institute Clauses that deal with specific perils: for example, the Institute War and Strikes Clauses. These clauses provide cover against the perils excepted from the standard hull, freight and cargo policies.

330 Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua) [2011] 1 Lloyd’s Rep 630. 331 Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua) [2011] 1 Lloyd’s Rep 630 at 645 [75] per Rix LJ, referring to obiter comments in Royal Boskalis Westminster NV v Mountain [1999] QB 674 at 720 per Phillips LJ. 332 Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua) [2011] 1 Lloyd’s Rep 630 at 645 [72] per Rix LJ. 333 Marine Insurance Act 1909 (Cth), Sch 2. 334 The Institute Cargo Clauses (A) (2009 version) are reproduced as Appendix 8. 335 For a discussion of “sue and labour” clauses, see [17.220] and accompanying footnotes.

722

Shipping Law

[17.250]

Liability cover: P & I Associations

[17.250]

Hull policies commonly insure the ship against three-quarters of any liability for collision damage,336 but all other liabilities are covered by mutual self-insurance associations known formally as Protection and Indemnity Associations and less formally as P & I Clubs. Almost all commercial ships are entered in a P & I Club, most of them with one or other of the 13 clubs that are members of the International Group,337 which is a kind of club of clubs operating a mutual pool of club funds. The terms of the liability cover provided to a ship entered in a P & I Club are defined by the club rules, and it is generally very broad. For example, the rules of Assuranceforeningen Gard cover liabilities to crew, passengers and other persons carried on board, liability for diversion expenses, all costs and expenses incurred as a consequence of the ship having on board stowaways, refugees or persons saved at sea, liability for life salvage, liability for loss of or damage to cargo (including extra handling costs), one-quarter of collision liability, liability for damage to fixed or floating objects, liability for pollution, liability for obstruction and wreck removal, any proportion of general average not recoverable under the ship’s hull policy,338 liability for salvor’s expenses under Art 14 of the International Convention on Salvage 1989 or Art 14 as incorporated into Lloyd’s Open Form (LOF), or pursuant to the LOF form incorporating the Special Compensation P & I Clubs Clause (the SCOPIC clause),339 liability for towage, liability for disinfection and quarantine expenses, liability for confiscation of the ship by reason of infringement of customs laws, any damage to the member’s own property, and all legal costs, enquiry expenses, and fines.340

Perils not insured against — exceptions [17.260]

The insurer is entitled to stipulate those perils against which it is not prepared to insure, by inclusion of exceptions in the contract of marine insurance. In addition to the perils excepted by agreement of the parties, a number of perils are excepted by operation of the Marine Insurance Act 1909 (Cth).

336 See, eg, Institute Time Clauses (Hulls) (01/10/83), cl 8; International Hull Clauses (01/11/03), cl 6. 337 Some of the 13 clubs in the International Group exist through the medium of several different corporate entities. 338 For general average, see Chapter 18. 339 For salvage, see Chapter 20. Salvage expenses apart from those under Art 14 and the SCOPIC clause are covered by the hull insurer. Special compensation paid to salvors under the International Convention on Salvage 1989, Art 14 or similar provisions (like the SCOPIC 2014 clause) is not covered under the International Hull Clauses (01/11/03). 340 Gard Rules (2015 ed), rr 27 – 50. Like most Clubs, Gard reissues its Rules every year. For the current version of the Gard rules, see: http://www.gard.no.

[17.270]

17 Marine Insurance

723

Exceptions in the Act

[17.270]

Loss due to the perils listed in the Marine Insurance Act 1909 (Cth), s 61(2) does not give rise to liability unless the policy expressly provides otherwise.341 Section 61(2)(a) excludes losses attributable to the wilful misconduct of the assured,342 which includes reckless exposure of the ship to the perils of navigation, knowing that it is not in a condition to encounter them.343 Section 61(2)(b) excludes losses proximately caused344 by delay, although the delay be caused by a peril insured against.345 Section 61(2)(c) provides that the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice, or for any loss proximately caused by rats or vermin or for any injury to machinery not proximately caused by maritime perils. Perhaps the most important of the perils excluded by s 61(2)(c) is inherent vice, both because it occurs most frequently in practice346 and because it is the one most commonly included by agreement of the parties: fresh fruit cargoes are often insured against inherent vice, for example.347 However, if the parties want the contract to cover inherent vice, the policy must so provide clearly and unambiguously, because the general presumption is that the policy only responds to casualties, not to inherent shortcomings of the subject matter insured.348 “Inherent vice” means the same in the context of marine insurance as it does in the context of carriage of goods by sea, namely “a deterioration of the goods shipped as a result of their natural behaviour in the ordinary course of the contemplated voyage without the intervention of any fortuitous external accident or casualty”.349 It means the risk of deterioration of the goods shipped as a result of their 341 Several of the perils excluded by s 61(2) are also expressly excluded by cl 4 of the Institute Cargo Clauses (A) (2009 version) (see Appendix 8). 342 See, eg, Craig v Associated National Insurance Co Ltd [1984] 1 Qd R 209; Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297; Jeffery v Associated National Insurance Co Ltd [1984] 1 Qd R 238; Doak v Weekes (1986) 82 FLR 334. For a consideration of the relationship between proof of loss proximately caused by wilful misconduct and proof of loss proximately caused by perils of the sea, see [17.290]. 343 Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297 at 305 per McPherson J; Compania Maritima San Basilios SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1977] QB 49 at 66, 81 (known, but not reported as The Eurysthenes). 344 On proximate cause, see [17.300]–[17.310]. 345 Freight policies usually contain a “time charter” clause to the same effect: see Naviera de Canarias SA v Nacional Hispanica Aseguradora SA (The Playa de las Nieves) [1977] 1 Lloyd’s Rep 457 (HL). 346 See, eg, Global Process Systems Inc v Syarikat Takaful Malaysia Bhd (The Cendor MOPU) [2011] 1 Lloyd’s Rep 560; Alstom Ltd v Liberty Mutual Insurance Co (No 2) [2013] FCA 116. 347 For examples of policies expressly covering loss by inherent vice, see Guardian Industries Pty Ltd v Transport & General Insurance Co Ltd [1965] NSWR 1430; Soya GmbH Mainz Kommanditgesellschaft v White [1983] 1 Lloyd’s Rep 122; Modern Fruit and Vegetable Supermarket Pty Ltd v New Zealand Insurance Australia Ltd (unreported, NSW SC, 1991). 348 Shell UK Ltd v CLM Engineering Ltd [2000] 1 Lloyd’s Rep 612 at 617 per David Steel J. 349 Soya GmbH Mainz Kommanditgesellschaft v White [1982] 1 Lloyd’s Rep 136 at 139 per Donaldson LJ (aff’d on other grounds: Soya GmbH Mainz Kommanditgesellschaft v White

724

Shipping Law

[17.270]

natural behaviour in the ordinary course of the contemplated voyage without the intervention of any fortuitous external accident or casualty.350 Inherent vice is the peril by which a loss is proximately caused; it is not descriptive of the loss itself.351 Damage may be caused by inherent vice without being inevitable; it does not therefore avail the assured to prove that other cargoes of the same kind were shipped without damage.352 In certain circumstances, unseaworthiness is a peril not insured against. In time policies, there is no implied warranty of seaworthiness,353 but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness.354 In this context, “privity” means knowledge of and concurrence in the unseaworthiness, including recklessly “turning a blind eye” to it.355 However, for there to be “blind eye knowledge” for these purposes, the assured must have a suspicion that the relevant facts exist and deliberately decide to avoid confirming that they do exist.356 A failure by the assured to think about the facts, however grossly negligent that failure, does not amount to privity and so does not entitle the insurer to deny cover under s 45(5).357 Where the unseaworthiness is not the [1983] 1 Lloyd’s Rep 122 (HL)); TM Noten BV v Harding [1989] 2 Lloyd’s Rep 527 at 530 per Phillips J (reversed on other grounds: TM Noten BV v Harding [1990] 2 Lloyd’s Rep 283 (CA)); Global Process Systems Inc v Syarikat Takaful Malaysia Bhd (The Cendor MOPU) [2011] 1 Lloyd’s Rep 560 at 567 [45] per Lord Savile. For a consideration of inherent vice in the context of carriage of goods by sea, see [12.460]. 350 Soya GmbH Mainz Kommanditgesellschaft v White [1983] 1 Lloyd’s Rep 122 at 125 per Lord Diplock; Global Process Systems Inc v Syarikat Takaful Malaysia Bhd (The Cendor MOPU) [2011] 1 Lloyd’s Rep 560 at 567 [45] per Lord Savile. See also the definition by Donaldson LJ in Soya GmbH Mainz Kommanditgesellschaft v White [1982] 1 Lloyd’s Rep 136 at 139. 351 Soya GmbH Mainz Kommanditgesellschaft v White [1983] 1 Lloyd’s Rep 122 at 125 per Lord Diplock; TM Noten BV v Harding [1990] 2 Lloyd’s Rep 283 at 287 per Bingham LJ. 352 TM Noten BV v Harding [1990] 2 Lloyd’s Rep 283 at 289 per Bingham LJ, citing Soya GmbH Mainz Kommanditgesellschaft v White [1982] 1 Lloyd’s Rep 136 at 150 per Donaldson LJ (aff’d on other grounds: Soya GmbH Mainz Kommanditgesellschaft v White [1983] 1 Lloyd’s Rep 122 (HL)). 353 As there is in voyage policies: see Marine Insurance Act 1909 (Cth), s 45(1). Unseaworthiness at the commencement of the voyage relieves the insurer of all further liability under a voyage policy: see s 39(1). 354 Marine Insurance Act 1909 (Cth), s 45(5). See, eg, Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297); Doak v Weekes (1986) 82 FLR 334; Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 (reported sub nom as The Star Sea [2001] 1 Lloyd’s Rep 389). 355 Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297). See also Compania Maritima San Basilios SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1977] QB 49 at 68 per Lord Denning MR; Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 (reported sub nom as The Star Sea [2001] 1 Lloyd’s Rep 389). 356 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 at 517 per Lord Scott (with whom Lords Steyn and Hoffmann agreed). 357 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 at 516-517.

[17.290]

17 Marine Insurance

725

proximate cause of the loss, the assured is entitled to indemnity, even if it was privy to the ship being sent to sea in an unseaworthy state.358 Exceptions agreed by the parties

[17.280]

Any perils may be excluded by agreement of the parties. In practice, the exclusions agreed upon are usually those in the Institute Clauses,359 although it is not uncommon for the insurer to add extra exclusions in particular cases.360 The Institute Clauses exclude liability for loss by some or all of the following perils, depending on whether the policy is on hull, freight or cargo: war, strikes, unseaworthiness or unfitness, malicious act, nuclear explosions, and loading or unloading at sea. As in the case of any other exclusion clause, the application of these clauses is purely a matter of construction contra proferentem.361 Protection against loss from many of the perils excepted in the standard Institute Clauses may be purchased by the assured at an additional premium. There are Institute Clauses that interlock with the exceptions in the standard sets of clauses, providing cover against precisely those perils that are excluded in the standard forms. For example, there are sets of Institute Clauses providing cover against war, strikes and malicious damage by third parties, each of which is excluded from the standard clauses.

PROXIMATE CAUSE [17.290]

In order to be indemnified under a contract of marine insurance, the assured must prove that the loss was proximately caused by a peril insured against.362 The proximate cause of a loss is not the

358 Oleo Pty Ltd v Vanguard Insurance Co Ltd (unreported, WA SC, 1991), following Thomas v Tyne and Weir Steam Ship Freight Insurance Assoc [1917] 1 KB 938. 359 See [17.120]. 360 See, eg, Neuchatel Swiss General Insurance Co v Vlasons Shipping Inc [2001] VSCA 25; Vlasons Shipping Inc v Neuchatel Swiss General Insurance Co Ltd (2003) 12 ANZ Insurance Cases 61-572; [2002] VSC 549, two cases about the interpretation of a “typhoon clause” in a hull policy, which provided that the policy was “null and void” if the insured vessel was “allowed to sail” when there was a typhoon warning either at the port of destination or between the ports of departure and destination. 361 Youell v Bland Welch & Co Ltd [1992] 2 Lloyd’s Rep 127 at 134 per Staughton LJ; Zeus Tradition Marine Ltd v Bell (The Zeus V) [2000] 2 Lloyd’s Rep 587 at 597 per Potter LJ. See, eg, National Oil Co of Zimbabwe (Pte) Ltd v Sturge [1991] 2 Lloyd’s Rep 281, considering whether terrorist attacks by Renamo guerrillas in Zimbabwe constituted “civil war” for the purposes of a marine policy, or whether they were an external act of aggression by South Africa, because of the extent of South African support for Renamo; Alstom Ltd v Liberty Mutual Insurance Co (No 2) [2013] FCA 116 (interpretation of exclusion clause for “unsuitability of packaging”). 362 Marine Insurance Act 1909 (Cth), s 61(1). Although this section applies “unless the policy otherwise provides”, the only other phrase in common use in policies is “attributable to”, which has the same meaning as “proximately caused by”: see Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297.

726

Shipping Law

[17.290]

cause that is proximate in time,363 but that which is proximate in efficiency:364 the “real”, “effective” or “dominant” cause.365 The choice of the dominant cause from the whole complex of facts is made by applying the commonsense standards of the person in the street or the seafarer, not those of the scientist or metaphysician.366 The onus is on the assured to prove, on the balance of probabilities, that a peril insured against was the proximate cause of the loss.367 The insurer may, but need not, seek to prove that there was some other, uninsured, cause of the loss, but there is no onus on the insurer, even on the balance of probabilities, to prove its alternative explanation.368 Thus, the assured fails if it does no more than adduce evidence of facts that are equally consistent with several hypotheses about the cause of the loss.369 Similarly, if an examination of all the evidence leaves the court doubtful what was the real cause of the loss, the assured must fail.370 Thus, for example, if the insurer suspects that the subject matter has been wilfully destroyed by the assured (such as by scuttling its own ship), it may simply deny liability and leave it to the assured to prove that the loss 363 This was formerly the case: see Ionides v Universal Marine Insurance Co (1863) 14 CB (NS) 259; 143 ER 445. 364 Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350 at 369 per Lord Shaw of Dunfermline; Global Process Systems Inc v Syarikat Takaful Malaysia Bhd (The Cendor MOPU) [2011] 1 Lloyd’s Rep 560 at 564 [19] per Lord Savile; Versloot Dredging BV v HDI-Gerling Industrie Versicherung BV (The DC Merwestone) [2013] 2 Lloyd’s Rep 131 at 141 [30] (CA); Alstom Ltd v Liberty Mutual Insurance Co (No 2) [2013] FCA 116 at [93] per Siopis J. 365 Wayne Tank and Pump Co Ltd v Employers’ Liability Assurance Corp Ltd [1974] 1 QB 57 at 66 per Lord Denning MR; Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297 at 306 per McPherson J; HIH Casualty & General Insurance Ltd v Waterwell (1998) 43 NSWLR 601 at 608 per Sheller JA (with whom Beazley and Stein JJA agreed). 366 Yorkshire Dale Steamship Co v Minister of War Transport [1942] AC 691 at 706 per Lord Wright; HIH Casualty & General Insurance Ltd v Waterwell (1998) 43 NSWLR 601 at 607 per Sheller JA (with whom Beazley and Stein JJA agreed); Alstom Ltd v Liberty Mutual Insurance Co (No 2) [2013] FCA 116 at [92] per Siopis J. 367 Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 at 391 per Mason J; Ocean Harvester Holdings Pty Ltd v MMI General Insurance Ltd (2004) 12 ANZ Insurance Cases 61-592; [2004] QCA 41. 368 Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 2 Lloyd’s Rep 1 at 2 per Lord Brandon; Ocean Harvester Holdings Pty Ltd v MMI General Insurance Ltd (2004) 12 ANZ Insurance Cases 61-592; [2004] QCA 41 at [12] per McMurdo P (with whom Davies JA and McKenzie J agreed). 369 Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 at 391 per Mason J, citing La Compania Martiartu v Royal Exchange Assurance Corp [1923] 1 KB 650 at 657 per Scrutton LJ. See also Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 2 Lloyd’s Rep 1 (HL); Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624. 370 La Compania Martiartu v Royal Exchange Assurance Corp [1923] 1 KB 650 at 657 per Scrutton LJ; Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 2 Lloyd’s Rep 1; Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624; Ocean Harvester Holdings Pty Ltd v MMI General Insurance Ltd (2004) 12 ANZ Insurance Cases 61-592; [2004] QCA 41 at [12] per McMurdo P (with whom Davies JA and McKenzie J agreed).

[17.290]

17 Marine Insurance

727

was proximately caused by a peril insured against, or it may seek affirmatively to prove wilful destruction.371 If the insurer chooses the former course, it cannot then allege wilful destruction, and any evidence or line of questioning that purports to establish wilful destruction is inadmissible.372 If the insurer chooses the latter course, it bears the burden of proving, on the balance of probabilities that the loss was caused by scuttling. Given the seriousness of the allegation, the court should look for very clear proof, and must be satisfied on the whole of the evidence that it is highly improbable that the vessel was lost accidentally.373 Although it is usual to say that the requirement for more cogent and convincing evidence does not alter the standard of proof,374 this makes little sense. If the court requires clearer and more cogent evidence than usual to be satisfied, then it is, in effect, asking for a higher degree of probability (epistemological probability, the measure of certainty and uncertainty) than usual.375 In order to prove that the proximate cause of the loss of a ship was a “peril of the seas”, the assured must do more than merely prove the incursion of sea water into the ship’s hull;376 it must also prove that that incursion was accidental or fortuitous,377 rather than through the ordinary incidents of the operation of the vessel.378 For example, in Venetico Marine SA v International General Insurance Co Ltd (The Irene EM),379 it was held that a grounding amounted to a peril of the seas, with the result that it was not for the assured to show what caused the grounding; it was for the insurer to show that the grounding had occurred because of some unexcused fault on the part of the assured or its 371 See, eg, Ocean Harvester Holdings Pty Ltd v MMI General Insurance Ltd (2004) 12 ANZ Insurance Cases 61-592; [2004] QCA 41. 372 Palamisto General Enterprises SA v Ocean Marine Insurance Co Ltd [1972] 2 QB 625 at 647 per Cairns LJ (reported sub nom as The Dias [1972] 2 Lloyd’s Rep 60); Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624 at 631-632 per Dillon LJ (with whom Mann and Hirst LJJ agreed). 373 National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) [1995] 1 Lloyd’s Rep 455 at 459 per Stuart-Smith LJ; Strive Shipping Corp v Hellenic Mutual War Risks Assoc (The Grecia Express) [2002] 2 Lloyd’s Rep 88 at 98 per Colman J. 374 See, eg, Rejfek v McElroy (1965) 112 CLR 517 at 521; In re H [1996] AC 563 at 586 per Lord Nichols. 375 M Davies, “Proximate Cause in Insurance Law” (1996) 7 Insurance Law Journal 135. 376 Versloot Dredging BV v HDI-Gerling Industrie Versicherung BV (The DC Merwestone) [2013] 2 Lloyd’s Rep 131 at 142-143 [35] (CA). 377 P Samuel & Co Ltd v Dumas [1924] AC 431; Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 2 Lloyd’s Rep 1 (HL); Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624. See also CCR Fishing Ltd v Tomenson Inc (The La Pointe) [1991] 1 Lloyd’s Rep 89 (Can SC). 378 Shell UK Ltd v CLM Engineering Ltd [2000] 1 Lloyd’s Rep 612 at 617 per David Steel J: “Insurance covers fortuities, not losses which have occurred through the ordinary incidents of the operation of the vessel.” 379 Venetico Marine SA v International General Insurance Co Ltd (The Irene EM) [2014] 1 Lloyd’s Rep 349.

728

Shipping Law

[17.290]

employees.380 In Versloot Dredging BV v HDI-Gerling Industrie Versicherung BV (The DC Merwestone),381 the English Court of Appeal held that an accidental incursion of sea water caused by the negligence of the shipowner’s employees was covered as a “peril of the seas”, because the shipowner itself (or its owners or managers) was not guilty of due diligence in relation to the defect in question, as was required by the Inchmaree clause in the policy.382 In cases of fire or barratry,383 the assured’s burden may be lighter.384 If the assured proves that the subject matter was damaged or destroyed by barratry or fire, even a fire deliberately set by the master and crew, the onus then passes to the insurer to prove the assured’s connivance,385 in order to avoid liability on the ground of wilful misconduct of the assured.386 Although the insurer need prove only the assured’s connivance in the fire or barratry on the balance of probabilities, it is said that the burden is nevertheless a heavy one, commensurate with the gravity of the allegation of wilful misconduct.387

380 Venetico Marine SA v International General Insurance Co Ltd (The Irene EM) [2014] 1 Lloyd’s Rep 349 at 370 [290] per Andrew Smith J. 381 Versloot Dredging BV v HDI-Gerling Industrie Versicherung BV (The DC Merwestone) [2013] 2 Lloyd’s Rep 131. 382 The clause is so named because of the decision of the House of Lords in Thames and Mersey Marine Insurance Co Ltd v Hamilton, Fraser & Co (1887) 12 App Case 484, which was concerned with the total loss of the ship “Inchmaree”. For a recent example of the interpretation of the Inchmaree clause in the Institute Time Clauses (Hulls) (01/10/ 1983), cl 6.2, see Versloot Dredging BV v HDI-Gerling Industrie Versicherung BV (The DC Merwestone) [2013] 2 Lloyd’s Rep 131. 383 Barratry “includes every wrongful act wilfully committed by the master or crew to the prejudice of the owner or, as the case may be, the charterer”: Marine Insurance Act 1909 (Cth), Sch 2, r 11. 384 Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Capt Panagos DP) [1986] 2 Lloyd’s Rep 470 at 510 per Evans J (aff’d on other grounds: Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Capt Panagos DP) [1989] 1 Lloyd’s Rep 33); National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) [1995] 1 Lloyd’s Rep 455. 385 Issaias v Marine Insurance Co Ltd (The Elias Issaias) (1923) 15 Ll L Rep 186 (barratry); Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Capt Panagos DP) [1986] 2 Lloyd’s Rep 470 at 510 per Evans J (aff’d on other grounds: Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Capt Panagos DP) [1989] 1 Lloyd’s Rep 33) (fire). 386 Marine Insurance Act 1909 (Cth), s 61(2)(a). 387 Craig v Associated National Insurance Co Ltd [1984] 1 Qd R 209; Continental Illinois National Bank & Trust Co of Chicago v Alliance Assurance Co Ltd (The Capt Panagos DP) [1989] 1 Lloyd’s Rep 33 at 41 per Neill LJ; National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) [1995] 1 Lloyd’s Rep 455 at 459 per Stuart-Smith LJ; Strive Shipping Corp v Hellenic Mutual War Risks Assoc (The Grecia Express) [2002] 2 Lloyd’s Rep 88 at 98 per Colman J. See M Davies, “Proximate Cause in Insurance Law” (1996) 7 Insurance Law Journal 135.

[17.300]

17 Marine Insurance

729

The question of proximate cause poses few problems where there is clearly one cause that is dominant. However, difficulties arise where the cause of the loss is not apparent, and where there are two or more causes.

Where the cause is not apparent [17.300]

Where there is no direct evidence of the cause of a loss, proximate cause may be determined by inference from other evidence. Thus, when a ship sinks in unexplained circumstances on a smooth sea, there is an inference that the cause is unseaworthiness.388 However, where a seaworthy ship sinks in unexplained circumstances on a smooth sea there is an inference of loss by some unascertained perils of the seas.389 The onus is on the assured to raise the latter inference by proof of seaworthiness.390 However, it may be unrealistic to seek to rely on this presumption where the place of the ingress of sea water into the ship is known, and rival theories about the cause of that ingress are advanced and tested in court.391 In Lambs Head Shipping Co Ltd v Jennings (The Marel),392 Dillon LJ of the English Court of Appeal said that the presumption applies only when a seaworthy ship is lost in wholly unexplained circumstances. Thus, where the crew are rescued and tell their story in evidence, as in Brownsville Holdings Ltd v Adamjee Insurance Co Ltd (The Milasan),393 for example, the loss is not wholly unexplained and so the presumption is not available to the assured.394 In contrast, in Ocean Harvester Holdings Pty Ltd v MMI 388 Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 at 392 per Mason J. See also Anderson v Morice (1874) LR 10 CP 58. 389 Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375 at 392 per Mason J. See also Anderson v Morice (1874) LR 10 CP 58; Ocean Harvester Holdings Pty Ltd v MMI General Insurance Ltd (2003) 12 ANZ Insurance Cases 61-577; [2003] QSC 262. See also W Langley & Sons Ltd v Australian Provincial Assurance Assoc Ltd (1924) 24 SR (NSW) 280; Canada Rice Mills Ltd v Union Marine and General Insurance Co Ltd [1941] AC 55; Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624 at 629 per Dillon LJ (with whom Mann and Hirst LJJ agreed); Brownsville Holdings Ltd v Adamjee Insurance Co Ltd (The Milasan) [2000] 2 Lloyd’s Rep 458 at 465 per Aikens J. 390 Skandia Insurance Co Ltd v Skoljarev (1979) 142 CLR 375. In Lambs Head Shipping Co Ltd v Jennings (The Marel) [1992] 1 Lloyd’s Rep 402 at 412, Judge Diamond QC pointed out that this is the reverse of the usual situation, where the onus would be on the insurer to prove unseaworthiness (aff’d without mentioning this point: Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624). 391 Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 2 Lloyd’s Rep 1 at 4 per Lord Brandon; Lambs Head Shipping Co Ltd v Jennings (The Marel) [1992] 1 Lloyd’s Rep 402 at 425 per Judge Diamond QC; Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624 at 629 per Dillon LJ (with whom Mann and Hirst LJJ agreed). 392 Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624 at 629 per Dillon LJ (with whom Mann and Hirst LJJ agreed). 393 Brownsville Holdings Ltd v Adamjee Insurance Co Ltd (The Milasan) [2000] 2 Lloyd’s Rep 458. 394 Brownsville Holdings Ltd v Adamjee Insurance Co Ltd (The Milasan) [2000] 2 Lloyd’s Rep 458 at 465 per Aikens J.

730

Shipping Law

[17.310]

General Insurance Ltd,395 the Queensland Court of Appeal held that while the defendant’s evidence of scuttling was insufficient to prove that claim positively, it was sufficient to preclude the plaintiff from establishing loss by accident simply by inference from the fact that the vessel had sunk in unexplained circumstances on a smooth sea. Because the plaintiff could not rely on that inference, it had to persuade the court by evidence on the balance of probabilities, which it had not done. Where the evidence of the seaworthiness of the ship is equivocal, neither inference arises and the assured must satisfy the court, on the balance of probabilities, that the proximate cause of the loss was a peril insured against. As the assured would not seek to raise the inference of loss by perils of the seas if it could establish the cause of the loss directly, it follows that, in these circumstances, the assured usually fails to discharge the onus of proof.396 Alternatively, the assured may seek to prove the ship was lost by unspecified perils of the sea from the elimination of all other possible causes, provided that the process of elimination leaves only one possible solution.397

Where there are two or more causes [17.310]

Where there are two or more independent factors that combine to cause a loss, the court must determine, as a question of fact, which of the causes is dominant,398 if it is able to do so.399 However, the court should not “strain to find a dominant cause if there are two causes both of which can properly be described as effective causes of the loss”.400 Where there are two or more causes of equal, or about equal, effect, the assured is entitled to recover if one of the effective causes is a peril insured against and none of the others is expressly excluded.401 However, where one of the effective causes is an excluded peril, the assured is not 395 Ocean Harvester Holdings Pty Ltd v MMI General Insurance Ltd (2004) 12 ANZ Insurance Cases 61-592; [2004] QCA 41. 396 See, eg, Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 2 Lloyd’s Rep 1. 397 Lambs Head Shipping Co Ltd v Jennings (The Marel) [1992] 1 Lloyd’s Rep 402 at 425-427 per Judge Diamond QC; Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624 at 632-633 per Dillon LJ (with whom Mann and Hirst LJJ agreed). 398 Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd [1918] AC 350 at 363 per Lord Dunedin. 399 Wayne Tank and Pump Co Ltd v Employers’ Liability Assurance Corp Ltd [1974] 1 QB 57 at 72 per Roskill LJ; Alstom Ltd v Liberty Mutual Insurance Co (No 2) [2013] FCA 116. 400 Wayne Tank and Pump Co Ltd v Employers’ Liability Assurance Corp Ltd [1974] 1 QB 57 at 68-69 per Cairns LJ; City Centre Cold Store Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 739; HIH Casualty & General Insurance Ltd v Waterwell (1998) 43 NSWLR 601 at 612 per Sheller JA (with whom Beazley and Stein JJA agreed); Hams v CGU Insurance Ltd [2002] NSWSC 273 at [257] per Einstein J. 401 City Centre Cold Store Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 739; JJ Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyd’s Rep 32; HIH Casualty & General Insurance Ltd v Waterwell (1998) 43 NSWLR 601 at 612

[17.310]

17 Marine Insurance

731

entitled to recover, even when one of the other effective causes is a peril insured against.402 This is so whether the peril is excluded by warranty,403 exception clause in the contract,404 or by operation of the Marine Insurance Act 1909 (Cth).405 However, this principle (usually called the Wayne Tank principle) does not apply when the court can identify a single proximate cause.406 Where the Act merely provides that a peril (such as wear and tear) is not covered, rather than positively excluded, the assured may recover if another concurrent proximate cause is an insured peril.407 The Marine Insurance Act 1909 (Cth), s 61(2)(a) provides (inter alia) that, “unless the policy otherwise provides, [the insurer] is liable for any loss proximately caused by a peril insured against, even though the loss would not have happened but for the misconduct or negligence of the master or crew”.408 per Sheller JA (with whom Beazley and Stein JJA agreed). See also Dudgeon v Pembroke (1877) 2 App Cas 284; Kiriacoulis Lines SA v Compagnie D’Assurances Maritime Aeriennes et Terrestres (The Demetra K) [2002] 2 Lloyd’s Rep 581 at 584 [18] per Lord Phillips MR. 402 City Centre Cold Store Pty Ltd v Preservatrice Skandia Insurance Ltd (1985) 3 NSWLR 739; Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 at 528-529 per G N Williams J (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297); Petersen v Union des Assurances de Paris IARD (1995) 8 ANZ Insurance Cases 61-244 at 75,749 per Rolfe J (aff’d on other grounds: Petersen v Union des Assurances de Paris IARD (1997) 9 ANZ Insurance Cases 61-366); HIH Casualty & General Insurance Ltd v Waterwell (1998) 43 NSWLR 601 at 609-612 per Sheller JA (obiter) (with whom Beazley and Stein JJA agreed). See also John Cory & Sons v Burr (1883) 8 App Cas 393 at 400-401 per Lord Blackburn; P Samuel & Co Ltd v Dumas [1924] AC 431 at 467 per Lord Sumner; Board of Trade v Hain Steamship Co [1929] AC 534 at 541 per Viscount Sumner; Atlantic Maritime Co Inc v Gibbon [1954] 1 QB 88 at 138 per Morris LJ; Wayne Tank and Pump Co Ltd v Employers’ Liability Assurance Corp Ltd [1974] 1 QB 57 at 67 per Lord Denning MR; JJ Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The Miss Jay Jay) [1987] 1 Lloyd’s Rep 32; Lambs Head Shipping Co Ltd v Jennings (The Marel) [1992] 1 Lloyd’s Rep 402 at 425-427 per Judge Diamond QC (aff’d on other grounds: Lambs Head Shipping Co Ltd v Jennings (The Marel) [1994] 1 Lloyd’s Rep 624); Kiriacoulis Lines SA v Compagnie D’Assurances Maritime Aeriennes et Terrestres (The Demetra K) [2002] 2 Lloyd’s Rep 581 at 584 [18] per Lord Phillips MR; Global Process Systems Inc v Syarikat Takaful Malaysia Bhd (The Cendor MOPU) [2011] 1 Lloyd’s Rep 560 at 564-565 [22] per Lord Savile. 403 See, eg, Board of Trade v Hain Steamship Co [1929] AC 534 at 541 per Viscount Sumner. 404 See, eg, Wayne Tank and Pump Co Ltd v Employers’ Liability Assurance Corp Ltd [1974] 1 QB 57. 405 See, eg, Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297). However, see the doubts expressed in Global Process Systems Inc v Syarikat Takaful Malaysia Bhd (The Cendor MOPU) [2011] 1 Lloyd’s Rep 560 at 578-579 [88] per Lord Savile. 406 See, eg, Alstom Ltd v Liberty Mutual Insurance Co (No 2) [2013] FCA 116; Global Process Systems Inc v Syarikat Takaful Malaysia Bhd (The Cendor MOPU) [2011] 1 Lloyd’s Rep 560. 407 HIH Casualty & General Insurance Ltd v Waterwell (1998) 43 NSWLR 601 at 612-613 per Sheller JA (obiter) (with whom Beazley and Stein JJA agreed). See also Kiriacoulis Lines SA v Compagnie D’Assurances Maritime Aeriennes et Terrestres (The Demetra K) [2002] 2 Lloyd’s Rep 581 at 584-585 per Lord Phillips MR. 408 See Westport Coal Co v McPhail [1898] 2 QB 130, where a ship’s master who was also part-owner was held to have been negligent as master and not as part-owner.

732

Shipping Law

[17.320]

LOSS Types of loss [17.320]

The Marine Insurance Act 1909 (Cth) divides losses into two types, total and partial loss. Each type of loss is divided into two sub-types. A total loss may be either an actual total loss or a constructive total loss;409 a partial loss may be either a particular average loss410 or a general average loss.411

Actual total loss [17.330]

Actual total loss is a question of fact to be determined by reference to the subject matter insured.412 An actual total loss can occur in three ways: (1) by destruction of the subject matter; (2) by damage that changes the character of the subject matter; or (3) by irretrievable deprivation of the subject matter.413 Because an assured always has the fall-back possibility of claiming constructive total loss even if the insured subject matter has not been totally destroyed,414 the test for actual total loss has always been applied with the utmost rigour.415 Actual total loss by destruction

[17.340]

The whole of the subject matter must be destroyed for there to be an actual total loss by destruction, as, for example, in the loss of a ship by fire.416 Total destruction of part of the subject matter is partial, not total, loss. Thus, for example, in Lempriere v Miller,417 where a cargo of 66 horses was insured against total loss only,418 the assured was not entitled to recover when 26 horses were lost at sea, as the cargo as a whole had not been destroyed.419 Actual total loss by damage

[17.350]

For there to be actual total loss by damage, the subject matter must be so damaged as to cease to be a thing of the kind insured.420 If the

409 Marine Insurance Act 1909 (Cth), s 62(2). 410 Marine Insurance Act 1909 (Cth), s 70. 411 Marine Insurance Act 1909 (Cth), s 72. 412 Fenton v Queensland Insurance Co Ltd (1915) 11 Tas LR 125 at 128 per Crisp J. 413 Marine Insurance Act 1909 (Cth), s 63(1). 414 See [17.370]. 415 Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua) [2011] 1 Lloyd’s Rep 630 at 634 [16] per Rix LJ. 416 See, eg, Craig v Associated National Insurance Co Ltd [1984] 1 Qd R 209. 417 Lempriere v Miller (1871) 2 VR (L) 26. 418 The policy contained a particular average warranty: see [17.540]. 419 See also Boon and Cheah Steel Pipes Sdn Bhd v Asia Insurance Co Ltd [1975] 1 Lloyd’s Rep 452 (Malaysia HC): loss of 676 of 688 steel pipes not an actual total loss. 420 Marine Insurance Act 1909 (Cth), s 63(1).

[17.360]

17 Marine Insurance

733

subject matter retains its original character as ship or goods, however damaged, there is no actual total loss.421 For example, in Berger and Light Diffusers Pty Ltd v Pollock422 there was an actual total loss of steel moulds that were so badly damaged by rust that they were incapable of use as moulds. In contrast, in Francis v Boulton423 there was no actual total loss of a cargo of rice that became saturated by submersion in the River Thames, as the rice was saleable as rice, albeit at a reduced price, after being raised and dried. Actual total loss by deprivation

[17.360]

There is an actual total loss by deprivation when the assured is irretrievably deprived of the subject matter,424 as, for example, where a ship sinks in water too deep for it to be raised,425 or where goods are sold to a third party before delivery to a consignee,426 or where freight is payable on delivery of goods at the port of discharge and the goods are totally lost before delivery.427 The deprivation must be irretrievable for there to be an actual total loss. Thus, for example, in Panamanian Oriental Steamship Corp v Wright,428 there was no actual total loss where a ship was confiscated by Vietnamese customs officials, because it remained possible, although unlikely,429 that the assured might be able to secure release of the ship. Similarly, in Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua),430 there was no actual total loss of cargo on a ship held by Somali pirates, despite the indeterminate nature of the detention, because it remained possible that the cargo might at some point be returned when the ship was released. In Fraser Shipping Ltd v Colton,431 Potter LJ (sitting as a judge of the English High Court) said: As to the definition of actual total loss, whether the [assureds] were “irretrievably deprived” of the vessel prima facie depends upon whether, by reason of the vessel’s situation, it was wholly out of the power of the plaintiffs 421 There may, however, be a constructive total loss. See, eg, Kastor Navigation Co Ltd v AGF MAT [2003] 1 Lloyd’s Rep 296, where it was held that there was a constructive total loss, but no actual total loss, of a ship that sank after being damaged by fire. 422 Berger and Light Diffusers Pty Ltd v Pollock [1973] 2 Lloyd’s Rep 442. 423 Francis v Boulton (1895) 65 LJQB 153. 424 Marine Insurance Act 1909 (Cth), s 63(1). 425 See, eg, Rhesa Shipping Co SA v Edmunds (The Popi M) [1985] 2 Lloyd’s Rep 1 (HL). 426 See, eg, Norwich Union Fire Insurance Society Ltd v WH Price Ltd [1934] AC 455 (PC). 427 See, eg, Papadimitriou v Henderson [1939] 3 All ER 908. 428 Panamanian Oriental Steamship Corp v Wright [1970] 2 Lloyd’s Rep 365 (reversed on other grounds: Panamanian Oriental Steamship Corp v Wright [1971] 1 Lloyd’s Rep 487). 429 Unlikelihood of recovery may be sufficient to make the ship a constructive total loss: see [17.400]. 430 Masefield AG v Amlin Corporate Member Ltd (The Bunga Melati Dua) [2011] 1 Lloyd’s Rep 630 431 Fraser Shipping Ltd v Colton [1997] 1 Lloyd’s Rep 586 at 591 per Potter LJ.

734

Shipping Law

[17.370]

or the underwriters to procure its arrival. It seems to me that this, in turn, depends upon whether the vessel could have been physically salved or not.

The cost of salving the ship is not relevant to actual total loss, although it is central to the question whether there is a constructive total loss.432 If the ship can be salved, it is not an actual total loss, no matter how much the salvage might cost.433 It might, however, constitute a constructive total loss if the cost of salvage would exceed the value of the ship and cargo when salved.434 Actual total loss of a ship may be presumed if it is missing without news for a reasonable time.435

Constructive total loss Unlike actual total loss, which takes effect automatically,436 constructive total loss is treated as total loss only when notice of abandonment is given by the assured to the insurer.437 If the assured does not give notice of abandonment after a constructive total loss, the loss is treated as partial.438 However, this does not mean that notice of abandonment is a necessary condition of constructive total loss; a constructive total loss that is not followed by a notice of abandonment is treated as a partial loss, but it is a constructive total loss in fact.439 Notice of abandonment is also not an essential ingredient of the assured’s cause of action for an indemnity, which arises at the date of the loss, not the date when notice of abandonment is given.440 If the insurer rejects a properly given notice of abandonment by the assured, the notice remains open; the assured’s rights are not prejudiced by the insurer’s refusal to accept the notice of abandonment.441

[17.370]

There are six ways in which a constructive total loss can occur. The Marine Insurance Act 1909 (Cth), s 66(1) defines two situations in which there is a constructive total loss, and s 66(2) defines four. Although s 66(2) begins 432 Fraser Shipping Ltd v Colton [1997] 1 Lloyd’s Rep 586 at 592 per Potter LJ. 433 Fraser Shipping Ltd v Colton [1997] 1 Lloyd’s Rep 586 at 592 per Potter LJ. 434 See [17.390]. 435 Marine Insurance Act 1909 (Cth), s 64. What is a “reasonable time” is a question of fact: s 94. 436 Marine Insurance Act 1909 (Cth), s 63(2): no need for notice of abandonment where there is actual total loss. 437 Marine Insurance Act 1909 (Cth), ss 67, 68. See, eg, The WD Fairway [2009] 2 Lloyd’s Rep 191. 438 Marine Insurance Act 1909 (Cth), s 68(1). 439 Robertson v Petros M Nomikos Ltd [1939] AC 371 at 382, 392. 440 Bank of America National Trust and Savings Association v Chrismas (The Kyriaki) [1993] 1 Lloyd’s Rep 137; Kastor Navigation Co Ltd v AGF MAT [2003] 1 Lloyd’s Rep 296 at 300-301 per Tomlinson J. 441 Marine Insurance Act 1909 (Cth), s 68(4); The WD Fairway [2009] 2 Lloyd’s Rep 191.

[17.400]

17 Marine Insurance

735

with the words, “In particular”, it is not illustrative of the general principle in s 66(1), but is additional.442 The definition of constructive total loss in s 66 is exhaustive.443 Reasonable abandonment of the subject matter when actual total loss appears unavoidable444

[17.380]

In this context, “abandoned” does not mean “abandoned to the insurer”, as it does in ss 67 and 68, but refers to the objective fact of abandonment, in the sense of giving the subject matter up for lost.445 The abandonment must be reasonable, that is, not premature in the circumstances.446

Reasonable abandonment of the subject matter when the cost of its preservation from actual total loss would exceed its value after recovery447

[17.390]

In this context, “abandoned” means “given up for lost”, as it does in the case of reasonable abandonment when actual total loss appears unavoidable.448

Deprivation of possession where it is unlikely that the ship or goods449 can be recovered450 The assured must be deprived of possession451 of the subject matter by a peril insured against so that recovery is “unlikely”. To show that the subject matter is “unlikely” to be recovered, the assured must

[17.400]

442 Robertson v Petros M Nomikos Ltd [1939] AC 371 at 382 per Lord Wright; Rickards v Forestal Land, Timber and Railways Co [1942] AC 50 at 84 per Lord Wright. 443 Robertson v Petros M Nomikos Ltd [1939] AC 371 at 392 per Lord Porter. 444 Marine Insurance Act 1909 (Cth), s 66(1). See, eg, Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297). 445 Robertson v Petros M Nomikos Ltd [1939] AC 371 at 382 per Lord Wright; Court Line Ltd v The King (1945) 78 Ll L Rep 390; Clothing Management Technology Ltd v Beazley Solutions Ltd [2012] 1 Lloyd’s Rep 571 at 580-581 [55]-[56] per Mackie J. 446 See, eg, Lind v Mitchell (1928) 32 Ll L Rep 70. 447 Marine Insurance Act 1909 (Cth), s 66(1). See, eg, Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297); Sunshine Fisheries v Lambert-Bain Pty Ltd (1991) 6 ANZ Insurance Cases 61-069. 448 Robertson v Petros M Nomikos Ltd [1939] AC 371 at 382 per Lord Wright; Court Line Ltd v The King (1945) 78 Ll L Rep 390; Clothing Management Technology Ltd v Beazley Solutions Ltd [2012] 1 Lloyd’s Rep 571 at 580-581 [55]-[56] per Mackie J. 449 There cannot be constructive total loss of freight, as deprivation of the right to freight constitutes actual total loss: see [17.360]. 450 Marine Insurance Act 1909 (Cth), s 66(2)(a)(i). See, eg, Bayview Motors Ltd v Mitsui Marine and Fire Insurance Co Ltd [2003] 1 Lloyd’s Rep 131 (CA). 451 See The Bamburi [1982] 1 Lloyd’s Rep 312 (arbitration; sole arbitrator Staughton J).

736

Shipping Law

[17.410]

show that it is more likely that it will not be recovered than that it will.452 Uncertainty about recovery is insufficient.453 However, it is not necessary for the assured to show that the subject matter can never be recovered,454 but merely that it cannot be recovered within a reasonable time.455 Deprivation of possession where the cost of recovery of the ship or goods456 would exceed their value when recovered457

[17.410]

This kind of constructive total loss was aptly summed up in the words of Maule J in Moss v Smith:458 “A man may be said to have lost a shilling when he has dropped it into deep water, though it might be possible, by some very expensive contrivance, to recover it.” Damage to a ship where the cost of repair would exceed the value of the ship when repaired459

[17.420]

The Marine Insurance Act 1909 (Cth), s 33(4) provides that the insured value of the ship is not conclusive of its repaired value for the purposes of determining whether there is constructive total loss. However, it is usual for contracts of marine insurance to provide that the insured value is taken to be the repaired value when determining constructive total loss,460 although the International Hull Clauses (2003) provide that the repaired value shall be taken to be 80% of the insured value.461

452 Polurrian Steamship Co Ltd v Young [1915] 1 KB 922; Marstrand Fishing Co Ltd v Beer (The Girl Pat) (1936) 56 Ll L Rep 163. 453 Polurrian Steamship Co Ltd v Young [1915] 1 KB 922; Marstrand Fishing Co Ltd v Beer (The Girl Pat) (1936) 56 Ll L Rep 163. 454 That would constitute actual total loss: see Panamanian Oriental Steamship Corp v Wright [1970] 2 Lloyd’s Rep 365 (reversed on other grounds: Panamanian Oriental Steamship Corp v Wright [1971] 1 Lloyd’s Rep 487). 455 Polurrian Steamship Co Ltd v Young [1915] 1 KB 922 at 937 per Kennedy LJ (posthumously); Societe Belge des Batons SA v London & Lancashire Insurance Co Ltd (1938) 60 Ll L Rep 225 at 234 per Porter J; The Bamburi [1982] 1 Lloyd’s Rep 312 at 314 per Staughton J as sole arbitrator. 456 There cannot be constructive total loss of freight, as deprivation of the right to freight constitutes actual total loss: see [17.360]. 457 Marine Insurance Act 1909 (Cth), s 66(2)(a)(ii). 458 Moss v Smith (1850) 9 CB (NS) 94; 137 ER 827 at 103; 831. 459 Marine Insurance Act 1909 (Cth), s 66(2)(b). See, eg, Suez Fortune Investments Ltd v Talbot Underwriting Ltd (The Brillante Virtuoso) [2015] 1 Lloyd’s Rep 651. 460 See, eg, Institute Time Clauses (Hulls) (01/10/83), cl 19(1). 461 International Hull Clauses (01/11/03), cl 21.1.

[17.430]

17 Marine Insurance

737

Example 17.2 A ship is insured for and valued at $2,800,000, which is deemed by the policy to be the repaired value. It is damaged, and repairs would cost $3,700,000. There is a constructive total loss, as the cost of repairs exceeds the agreed repaired value. If the assured elects to abandon the ship, it receives the full $2,800,000, and the insurer retains the damaged ship.462 However, if the actual repaired value of the ship is greater than $2,800,000, say $4,700,000, the assured should elect to treat the constructive total loss as a partial loss.463 The assured then claims the full value of $2,800,000 from the insurer, retains the ship, repairs it for $3,700,000, and for a net expenditure of $900,000, keeps a ship which is worth $1,900,000 more than its original insured value.464 (If the repaired value is deemed to be 80% of the insured value, as it would be under the new International Hull Clauses, the deemed repaired value would be $2,240,000. That would make the assured’s choice clearer still.)

The repaired value of the ship is compared with the gross cost of repairs. In assessing the cost of repair, the court should ask what a prudent uninsured shipowner in the position of the assured would do in deciding whether or not to repair the ship, and also where and how the repair should be carried out.465 When assessing the cost of repairs for the purpose of calculating the measure of indemnity, it is usual to deduct one-third of the actual cost of repairs, because the repaired ship is more valuable than it was before repair.466 However, when determining whether a constructive total loss has occurred, no such “one third new for old” deduction is made.467 Also, the value of the ship as wreck is not added to the cost of repairs,468 and general average contributions are not deducted.469 Damage to goods where the cost of repair and forwarding the goods to their destination would exceed their value on arrival470

[17.430]

For these purposes, the gross cost of forwarding the goods is compared with their gross value on arrival.

462 See [17.440]. 463 The assured is entitled to do this by virtue of the Marine Insurance Act 1909 (Cth), s 67. 464 See Robertson v Petros M Nomikos Ltd [1939] AC 371. 465 Suez Fortune Investments Ltd v Talbot Underwriting Ltd (The Brillante Virtuoso) [2015] 1 Lloyd’s Rep 651. 466 See [17.510]. 467 Henderson Bros v Shankland & Co [1896] 1 QB 525. See, eg, Institute Time Clauses (Hulls) (01/10/83), cl 14; International Hull Clauses (01/11/03), cl 16. 468 Hall v Hyman [1912] 2 KB 5. See, eg, Institute Time Clauses (Hulls) (01/10/83), cl 19(1); International Hull Clauses (01/11/03), cl 21.1. 469 Marine Insurance Act 1909 (Cth), s 66(2)(b). 470 Marine Insurance Act 1909 (Cth), s 66(2)(c).

738

Shipping Law

[17.440]

Example 17.3 A cargo is to be carried from A to B at a freight of $10,000, to be paid on discharge. Between A and B, the cargo is damaged and is put ashore at X. The cost of repairing the cargo at X is $20,000. The gross cost of forwarding it from X to B is $10,000. (The net cost is nil, as the original charge of $10,000 for carriage from A to B does not have to be paid.) The gross value on arrival would be $25,000. There is a constructive total loss, even though the net cost of repair and forwarding the goods ($20,000) is less than their value on arrival ($25,000). The gross cost of repair and forwarding ($30,000) exceeds the gross value on arrival ($25,000).

Abandonment

[17.440]

As a contract of marine insurance is a contract of indemnity, the assured cannot both claim a total loss and keep what remains of the subject matter. It must abandon the subject matter to the insurer in order to treat a constructive total loss as if it were an actual total loss.471

The assured must give notice of abandonment to the insurer. If the assured fails to give notice,472 or does not do so with reasonable diligence after receiving reliable information,473 the loss is treated as partial.474 Notice of abandonment may be given in writing, or orally, or both, but it must make clear that the assured intends to abandon its interest to the insurer unconditionally.475 For example, in Sunshine Fisheries v LambertBain Pty Ltd,476 it was held that the assured, the owner of a ship that had become a constructive total loss, had not abandoned the ship unconditionally to the insurer, because it had participated in the process of selling the wreck after the loss by consenting to the sale, and because it had agreed to receive the proceeds of the sale as part of the indemnity from the insurer. In order to be able to give a valid notice of abandonment, the assured must be in a position to abandon the insured subject matter to the insurer. For example, if the assured under a hull policy has sold the wreck of the ship to a third party, it can no longer claim a constructive total loss, as it is no longer in a position to abandon the ship to the insurer.477 It is not necessary for the word “abandon” to be used for the notice to be effective.478 Notice of abandonment is not necessary where there is no 471 Marine Insurance Act 1909 (Cth), ss 67, 68(1). 472 Marine Insurance Act 1909 (Cth), s 68(1). 473 Marine Insurance Act 1909 (Cth), s 68(3). 474 Marine Insurance Act 1909 (Cth), s 68(1). 475 Marine Insurance Act 1909 (Cth), s 68(2). 476 Sunshine Fisheries v Lambert-Bain Pty Ltd (1991) 6 ANZ Insurance Cases 61-069 (FCAFC). 477 The WD Fairway [2009] 2 Lloyd’s Rep 191 at 203 [32] per Tomlinson J. 478 Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 at 535 per G N Williams J (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297).

[17.440]

17 Marine Insurance

739

possibility of benefit to the insurer,479 and need not be given by the insurer to its reinsurer, if there is one.480 Notice of abandonment may be waived by the insurer.481 The determinative date for deciding upon the validity of the notice of abandonment is the date of issue of the writ in proceedings brought by the assured against the insurer.482 The insurer is not obliged to accept the abandonment, but where it does so,483 acceptance is irrevocable, and conclusively admits the insurer’s liability for the constructive total loss.484 Notwithstanding the irrevocability of acceptance, the Privy Council held in Norwich Union Fire Insurance Society Ltd v WH Price Ltd485 that an insurer is entitled to recover any indemnity paid to the assured after acceptance of abandonment, as money paid under a mistake of fact, if it is later established that the purported notice was not properly given. In Sunshine Fisheries v Lambert-Bain Pty Ltd,486 the dissenting judge, Lee J, held that an insurer who has accepted a notice of abandonment is not entitled subsequently to exercise any rights it may have to avoid the contract, because the intention of the Marine Insurance Act 1909 (Cth), s 68(6) is to be a statutory confirmation that the rights and obligations of the insurer and the assured under the policy are crystallised on acceptance of notice of abandonment.487 A majority of the Federal Court did not find it necessary to consider the point. If Lee J’s view is to be followed, a prudent insurer will never accept a notice of abandonment until it has satisfied itself that there are no grounds on which it may deny indemnity to the assured. If an insurer refuses to accept a notice of abandonment that is properly given, the assured’s rights are not prejudiced by the refusal488 and it is

479 Marine Insurance Act 1909 (Cth), s 68(7). This subsection probably dispenses with the need to give notice of abandonment before the subject matter is sold: see Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 at 536 per GN Williams J (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297). See also Kastor Navigation Co Ltd v AGF MAT [2003] 1 Lloyd’s Rep 296 at 305 per Tomlinson J; Clothing Management Technology Ltd v Beazley Solutions Ltd [2012] 1 Lloyd’s Rep 571. 480 Marine Insurance Act 1909 (Cth), s 68(9). 481 Marine Insurance Act 1909 (Cth), s 68(8). 482 SS Blairmore Co v Macredie [1893] AC 593; Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 (reported sub nom as The Star Sea [2001] 1 Lloyd’s Rep 389) at 504 per Lord Hobhouse. 483 Either expressly or impliedly, but not by silence: Marine Insurance Act 1909 (Cth), s 68(5). 484 Marine Insurance Act 1909 (Cth), s 68(6); The WD Fairway [2009] 2 Lloyd’s Rep 191. 485 Norwich Union Fire Insurance Society Ltd v WH Price Ltd [1934] AC 455. 486 Sunshine Fisheries v Lambert-Bain Pty Ltd (1991) 6 ANZ Insurance Cases 61-069 (FCFCA). 487 Sunshine Fisheries v Lambert-Bain Pty Ltd (1991) 6 ANZ Insurance Cases 61-069 at 77,208. 488 Marine Insurance Act 1909 (Cth), s 68(4).

740

Shipping Law

[17.450]

entitled to withdraw the notice and treat the loss as if it were partial.489 Because notice of abandonment is revocable, so also is the “election” to claim for an actual total loss.490 If the assured claims for an actual total loss and it is subsequently determined that there was no actual total loss, the assured may still claim for a constructive total loss.491 Where the insurer accepts a valid notice of abandonment, it is entitled to take over the assured’s interest in whatever remains of the subject matter, and all proprietary rights incidental thereto.492 The insurer is not obliged to take over the subject matter, which may prove to be an expensive liability, as, for example, where it is a stranded ship blocking a waterway.493 If the insurer accepts the abandonment but does not take over the assured’s interest, the subject matter does not become res nullius, but remains vested in the assured.494 If the insurer indemnifies for a total loss despite having rejected the notice of abandonment, the insurer is still entitled to take over the assured’s interest in the abandoned property.495 A ship that is in the course of earning freight when it is abandoned to the insurer may succeed in earning freight even after it becomes a constructive total loss. If this occurs, the freight belongs to the hull insurer,496 not the freight insurer.497

Partial loss [17.450]

Any loss that is not a total loss, as described at [17.330]–[17.440], is a partial loss.498 There are two types of partial loss; particular average loss and general average loss. 489 Pesquerias y Secaderos de Bacalao de Espana SA v Beer (1946) 79 Ll L Rep 417 at 433 per Atkinson J (reversed on other grounds: Pesquerias y Secaderos de Bacalao de Espana SA v Beer (1949) 82 Ll L Rep 501 (HL)); Kastor Navigation Co Ltd v AGF MAT [2003] 1 Lloyd’s Rep 296 at 301-302 per Tomlinson J. 490 Kastor Navigation Co Ltd v AGF MAT [2003] 1 Lloyd’s Rep 296 at 308 per Tomlinson J. 491 Kastor Navigation Co Ltd v AGF MAT [2003] 1 Lloyd’s Rep 296 at 308 per Tomlinson J. 492 Marine Insurance Act 1909 (Cth), s 69(1). Note that this section does not subrogate the insurer to the assured’s right to bring action: see Attorney-General v Glen Line Ltd (1930) 37 Ll L Rep 55 at 61 per Lord Atkin. Subrogation is by s 85(1): see [17.650]. 493 Allgemeine Versicherungs-Gesellschaft Helvetia v Administrator of German Property [1931] 1 KB 672 at 688 per Scrutton LJ; Kastor Navigation Co Ltd v AGF MAT [2003] 1 Lloyd’s Rep 296 at 302 per Tomlinson J. 494 Oceanic Steam Navigation Co Ltd v Evans (1934) 50 Ll L Rep 1 at 3 per Greer LJ; Blane Steamships Ltd v Minister of Transport [1951] 2 KB 965 at 991 per Cohen LJ. Both of these dicta disapprove the “res nullius” view in Boston Corp v France, Fenwick & Co Ltd (1923) 15 Ll L Rep 85 at 91 per Bailhache J. 495 The WD Fairway [2009] 2 Lloyd’s Rep 191. 496 Marine Insurance Act 1909 (Cth), s 69(2). 497 Case v Davidson (1816) M & S 79; 105 ER 980 (aff’d Case v Davidson (1820) 2 Brod & B 379; 129 ER 1013). 498 Marine Insurance Act 1909 (Cth), s 62(1). See, eg, Kusel v Atkin (The Catariba) [1997] 2 Lloyd’s Rep 749 at 758 per Colman J (no notice of abandonment, therefore no constructive total loss, therefore partial loss only).

[17.480]

17 Marine Insurance

741

General average loss

[17.460]

A partial loss that is caused by, or is directly consequential on, a general average act is a general average loss.499 There is a general average act where any extraordinary sacrifice or expenditure is voluntarily and reasonably made in time of peril in order to save the property imperilled.500 Where the assured suffers a general average loss in avoiding a peril insured against,501 it is entitled to a contribution from the other parties interested in the marine adventure,502 and may recover from the insurer the proportion of the loss that falls on it (the assured).503 Similarly, the assured may recover from the insurer if it is obliged to make a general average contribution504 to a third party who has suffered a general average loss avoiding a peril insured against.505 The net effect of these provisions is that general average contributions are paid by the cargo insurer in the case of cargo and by the hull insurer in the case of hull and machinery insurance. Particular average loss

[17.470]

Any partial loss that is not a general average loss is a particular average loss.506 There is no right to contribution from others in respect of a particular average loss, but an assured may recover an indemnity from its insurer if the policy covers particular average loss. The task of quantifying which damage to ship or cargo is caused by perils insured against and which by wear and tear is a complex process undertaken by average adjusters.

Other expenses [17.480]

In addition to recovery for total or partial losses, the assured is entitled507 to indemnity for salvage charges, particular charges508 and expenses properly incurred under a “sue and labour” or duty of assured

499 Marine Insurance Act 1909 (Cth), s 72(1). 500 Marine Insurance Act 1909 (Cth), s 72(2). General average is considered more fully in Chapter 18. 501 Marine Insurance Act 1909 (Cth), s 72(6): no recovery is available if general average loss not avoiding a peril insured against. 502 Marine Insurance Act 1909 (Cth), s 72(3). 503 Marine Insurance Act 1909 (Cth), s 72(4). 504 Marine Insurance Act 1909 (Cth), s 72(5). 505 Marine Insurance Act 1909 (Cth), s 72(6). 506 Marine Insurance Act 1909 (Cth), s 70(1). See, eg, Ranicar v Frigmobile Pty Ltd [1983] Tas R 113. 507 Marine Insurance Act 1909 (Cth), s 82(2). 508 Particular charges are expenses properly incurred for the safety or preservation of the subject matter: see Marine Insurance Act 1909 (Cth), s 70(2).

742

Shipping Law

[17.490]

clause.509 It may also recover any sums paid as a result of liability to a third party, if the policy so provides in express terms.510

THE MEASURE OF INDEMNITY General [17.490]

The sum that the assured may recover in respect of a loss is called the measure of indemnity.511 The insurer, or each insurer if there is more than one, is liable for that proportion of the loss that its subscription bears to the value of the subject matter.512 The assured is deemed to be the insurer of any uninsured balance513 and must bear the appropriate proportion of the measure of indemnity.

Example 17.4 An assured, A, insures ship X with two insurers, I and J. In each policy the agreed value of the ship is $1,000,000. I underwrites $600,000, J underwrites $200,000 and A is self-insurer for the uninsured balance of $200,000. The ship sustains damage worth $500,000 from a peril insured against. I is liable for $300,000 (60% of the measure of indemnity), J for $100,000 (20%), and A must bear $100,000 (20%).

Calculation of the measure of indemnity depends on the type of loss suffered.

Total loss [17.500]

The measure of indemnity for a total loss under a valued policy is the value agreed in the policy.514

The measure of indemnity for a total loss under an unvalued policy is the insurable value of the subject matter.515 The insurable value of ship or goods is usually the market value at the commencement of the risk plus insurance charges,516 but where the real value to the assured is greater than the market value, as, for example, in the case of a yacht designed and fitted to the special requirements of the assured, the measure of indemnity is based on the cost of reinstatement, not the market value.517 509 Marine Insurance Act 1909 (Cth), s 84. On “sue and labour” clauses, see [17.220]. 510 Marine Insurance Act 1909 (Cth), s 80. 511 Marine Insurance Act 1909 (Cth), s 73(1). 512 Marine Insurance Act 1909 (Cth), s 73(2): in the case of a valued policy, to the agreed value; in the case of an unvalued policy, to the insurable value. 513 Marine Insurance Act 1909 (Cth), s 87. 514 Marine Insurance Act 1909 (Cth), s 74(a). 515 Marine Insurance Act 1909 (Cth), s 74(b). 516 Marine Insurance Act 1909 (Cth), s 22 provides the method for ascertaining insurable value, specifying which items are to be taken into account. 517 Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253.

[17.530]

17 Marine Insurance

743

The insurable value of freight is the gross amount of the freight at the risk of the assured, plus insurance charges.518 The insurer’s liability is limited to the agreed value or the insurable value; the assured cannot recover unliquidated damages for any additional losses that it may suffer as a result of not being indemnified by the insurer on demand.519

Partial loss Ship

[17.510]

When a ship is damaged but not lost (that is, when there is a partial loss), the measure of indemnity is based on the reasonable cost of repairs. The reasonable cost of repairs includes the cost of towage to a convenient port for repair.520 Where the ship has already been repaired, the assured is entitled to the reasonable cost of repairs “less the customary deductions”.521 Where the ship has been partly repaired, the assured is entitled to the reasonable cost of repairs plus the value of the reasonable depreciation arising from the unrepaired damage.522 Where the ship has not been repaired, the assured is entitled to reasonable depreciation if the ship has not been sold during the risk,523 or, if it has, the estimated cost of repairs less the customary deductions, not exceeding the depreciation ascertained from the sale price.524 Freight

[17.520]

The measure of indemnity for partial loss of freight is the proportion of the value of the freight insured525 that the freight lost bears to the whole freight at the risk of the assured.526 Goods

[17.530]

There are two ways in which a partial loss of goods can occur: by the total loss of a part, or by damage to the whole or a part. In case of total loss of a part, the measure of indemnity is the value of the part

518 Marine Insurance Act 1909 (Cth), s 22(b). 519 Ventouris v Mountain (The Italia Express (No 2)) [1992] 2 Lloyd’s Rep 281. 520 MacKinnon McErlane Booker Pty Ltd v P & O Australia Ltd [1988] VR 534. 521 Marine Insurance Act 1909 (Cth), s 75(a). The principal customary deduction is “one third new for old”, to take into account appreciation in the ship’s value after repair because of replacement of old parts with new. However, the Institute Time Clauses (Hulls) (01/10/83), cl 14 and International Hull Clauses (01/11/03), cl 16 provide that there shall be no deduction new for old. 522 Marine Insurance Act 1909 (Cth), s 75(b). 523 Marine Insurance Act 1909 (Cth), s 75(c). 524 Pitman v Universal Marine Insurance Co (1882) 9 QBD 192. 525 Marine Insurance Act 1909 (Cth), s 76. In the case of a valued policy, this is the agreed value; in the case of an unvalued policy, it is the insurable value. 526 Marine Insurance Act 1909 (Cth), s 76.

744

Shipping Law

[17.530]

lost.527 In the case of damage to the whole or a part, the measure of indemnity is the proportion of the value of the goods when the risk attaches528 which is equal to the proportion by which their value has been diminished by the damage.529 Thus, if: • A represents the value when the risk attaches;530 • S represents the gross531 sound value on arrival; and • D represents the gross damaged value on arrival; then the depreciation caused by the damage, expressed as a proportion, is: S–D S and the measure of indemnity is: (S – D) x A S Thus, the measure of indemnity is unaffected by the actual value of the goods on arrival.532

Example 17.5 (Rising Market) The agreed value of goods, A, is $10,000. Their gross sound value on arrival, S, would be $12,000. They are damaged by a peril insured against, and their gross damaged value on arrival, D, is $6,000. The measure of indemnity is: (12,000 – 6,000) x 10,000 12,000 which is $5,000.

527 Marine Insurance Act 1909 (Cth), s 77. In the case of an unvalued policy, this is the insurable value of the part lost: s 77(b). In the case of a valued policy, it is the proportion of the agreed value that the insurable value of the part lost bears to the insurable value of the whole, ascertained as in the case of an unvalued policy: s 77(a). 528 In an unvalued policy, this is the insurable value; in a valued policy it is the agreed value: Marine Insurance Act 1909 (Cth), s 77(c). 529 Marine Insurance Act 1909 (Cth), s 77(c). 530 In an unvalued policy, this is the insurable value; in a valued policy it is the agreed value: Marine Insurance Act 1909 (Cth), s 77(c). 531 The gross value is the wholesale price, inclusive of freight, landing charges and duty: Marine Insurance Act 1909 (Cth), s 77(d). 532 See Lewis v Rucker (1761) 2 Burr 1167; 97 ER 769 at 1172; 772 per Lord Mansfield CJ.

[17.550]

17 Marine Insurance

745

Example 17.6 (Falling Market) Assume the same facts as in Example 17.5, with the exceptions that: • the gross sound value on arrival, S, is $8,000; and • the gross damaged value, D, $4,000. The measure of indemnity is still $5,000: (8,000 – 4,000) 8,000

x 10,000 = 5,000.

Franchise clauses533 Marine policies sometimes contain a franchise clause,534 or particular average warranty, whereby the subject matter is “warranted free from particular average”, either wholly or under a certain percentage (often 3%). If the subject matter is warranted wholly free of particular average, the assured cannot recover for partial losses at all, and is confined to recovery for total loss.535 If the franchise clause specifies a percentage, the assured can recover nothing unless the partial loss actually suffered536 exceeds the specified percentage of the insured value.

[17.540]

However, if the specified percentage is exceeded, the assured can recover the full amount of the loss. Franchise clauses and particular average warranties commonly provide that they shall not apply where the vessel is stranded, sunk or burnt.

Deductible clauses [17.550]

Marine policies commonly contain a deductible or excess clause, which specifies an amount of money as the “excess”. Losses below this amount are not recoverable, and losses that exceed the amount are paid with the specified amount deducted.

533 Franchise clauses are common only in freight policies: see, eg, Institute Time Clauses (Freight), cl 12; Institute Voyage Clauses (Freight), cl 10. The Lloyd’s SG policy Memorandum contains a form of franchise clause. 534 The memorandum introducing “the franchise” into the Lloyd’s SG policy was adopted in 1749. “Franchise” is here used in its old sense, synonymous with liberty: see II Bl Comm 37. The insurer is at liberty not to indemnify the assured until the specified amount of loss is reached. 535 Marine Insurance Act 1909 (Cth), s 82(1). The assured may recover salvage charges, particular charges and “sue and labour” expenses: see s 82(2) and [17.220]. For an example of a ship insured against actual total loss only, see Fraser Shipping Ltd v Colton [1997] 1 Lloyd’s Rep 586. 536 Marine Insurance Act 1909 (Cth), s 82(4) (excluding particular charges and expenses of ascertaining and proving the loss).

746

Shipping Law

[17.560]

Double insurance [17.560]

The assured is not entitled to recover more than the measure of indemnity.537 Where the assured insures the subject matter for a sum greater than the measure of indemnity allowed, it is said to be over-insured by double insurance.538 In these circumstances, the insurers, if there are more than one, contribute rateably to the assured’s loss according to the proportion of the over-insured amount for which each is liable.539

Example 17.7 A insures cargo for $60,000 with X, for $40,000 with Y and for $20,000 with Z under unvalued policies totalling $120,000. The cargo is totally lost and the measure of indemnity is calculated at $100,000. X pays $50,000 (one half), Y pays $33,333.33 (one third), and Z pays $16,666.67 (one sixth).

Any insurer who pays more than the appropriate proportional share is entitled to a contribution from the other insurers.540 If the assured receives any money in excess of the measure of indemnity, it holds the extra amount in trust for the insurers according to their right of contribution among themselves.541

WARRANTIES General [17.570]

The Marine Insurance Act 1909 (Cth), s 39(3) provides that breach of warranty by the assured discharges the insurer from all further liability from the date of the breach. This provision reflects what has been described as “the inveterate practice in marine insurance of using the term ‘warranty’ as signifying a condition precedent”.542 The strongly pro-insurer law of marine insurance warranties is one of the most controversial aspects of the Marine Insurance Act 1909 (Cth). It was one of the key areas of reform proposed by the ALRC in its report entitled Review of the Marine Insurance Act 1909,543 and it was one of the principal features of the reforms made to United Kingdom law in the Insurance Act 2015 (UK). The ALRC Report recommended the abolition of the concept 537 Marine Insurance Act 1909 (Cth), ss 7, 38. 538 Marine Insurance Act 1909 (Cth), s 38(1). 539 Marine Insurance Act 1909 (Cth), s 86(1). 540 Marine Insurance Act 1909 (Cth), s 86(2). 541 Marine Insurance Act 1909 (Cth), s 38(2)(d). 542 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1992] 1 AC 233 at 262 per Lord Goff (reported sub nom as The Good Luck [1991] 2 Lloyd’s Rep 191), citing “successive editions of Chalmers’ Marine Insurance Act 1906”. 543 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001).

[17.570]

17 Marine Insurance

747

of warranties,544 to soften what it describes as “the harsh and disproportionate impact on an insured of the remedies currently provided”.545 The United Kingdom adopted a somewhat less farreaching, but still very significant, reform as from 2016, by abolishing the rule that any breach of warranty (express or implied) automatically discharges the insurer’s liability.546 Under United Kingdom law, breach of warranty does not relieve the insurer of liability if the assured can show that non-compliance could not have increased the risk of the loss that actually occurred.547 Breach of warranty does not terminate the contract but merely suspends the insurer’s obligation until the breach has been remedied by the assured.548 There is no reason, other than inertia, for Australia not to reform the draconian, pro-insurer law relating to marine insurance warranties in similar fashion. The paragraphs that follow describe the traditional, unamended, law of marine insurance in Australia. A warranty is a promise by the assured “that some particular thing shall or shall not be done, or that some conditions shall be fulfilled, or whereby [the assured] affirms or negatives the existence of a particular state of facts”.549 Non-fulfilment of the assured’s promise does not prevent the contract from coming into existence, nor does it have the effect of avoiding the contract ab initio.550 Strictly speaking, the assured’s breach of promise also does not bring the contract to an end at the date of breach, nor does it entitle the insurer to treat the contract as being at an end at that date.551 Thus, it is misleading to say that the insurer is entitled to avoid the contract as a result of the assured’s breach of warranty.552 Some obligations of the assured may continue, such as the obligation to pay premiums,553 but the insurer is discharged from all further liability from 544 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), p 186, Recommendation 7. 545 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), para 1.17. 546 Insurance Act 2015 (UK), s 10(1). 547 Insurance Act 2015 (UK), s 11(3). 548 Insurance Act 2015 (UK), s 10(2), (4). This provision may cause some difficulty in relation to breaches that cannot be remedied, such as a failure to provide a surveyor’s report within a stipulated period of time. 549 Marine Insurance Act 1909 (Cth), s 39(1). 550 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1992] 1 AC 233 (The Good Luck) at 263 per Lord Goff. 551 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1992] 1 AC 233 (The Good Luck) at 263 per Lord Goff. 552 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1992] 1 AC 233 (The Good Luck) at 263-264 per Lord Goff. 553 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1992] 1 AC 233 (The Good Luck) at 263 per Lord Goff.

748

Shipping Law

[17.580]

the date of breach.554 The discharge of the insurer is automatic and is not dependent on any election or decision by the insurer.555 The insurer is discharged from liability even if the assured remedies the breach before loss occurs,556 but the insurer may in any circumstances waive the breach and continue to treat itself as bound to perform its obligations under the contract.557 Non-compliance with a warranty is excused if it ceases to be applicable to the contract because of changed circumstances, or if compliance becomes illegal.558 Except in these very limited circumstances, a warranty requires strict and literal performance; it is breached unless it is complied with exactly, whether or not it is material to the risk.559 For example, in Yorkshire Insurance Co Ltd v Campbell,560 a contract of marine insurance on a racehorse contained an express warranty of the horse’s pedigree, which was breached by an incorrect statement of pedigree by the assured. This breach relieved the insurer of liability, even though the horse’s pedigree was not material to the risk of loss by perils of the seas. It seems indefensible in such a case to deprive the assured of recovery for a breach that had no causative connection with the loss. The ALRC recommended that breach of an express term should relieve an insurer of liability only where it is causative of loss,561 and the post-2016 law of marine insurance in the United Kingdom has the same effect.562 A warranty may be express or implied.563

Express warranties [17.580]

An express warranty may require compliance of any kind on the part of the assured.564 It must be included in, or written on, the policy,

554 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1992] 1 AC 233 (The Good Luck); Marine Insurance Act 1909 (Cth), s 39(3). 555 Bank of Nova Scotia v Hellenic Mutual War Risks Assoc (Bermuda) Ltd [1992] 1 AC 233 (The Good Luck); Marine Insurance Act 1909 (Cth), s 39(3). 556 Marine Insurance Act 1909 (Cth), s 40(2). 557 Marine Insurance Act 1909 (Cth), s 40(3). 558 Marine Insurance Act 1909 (Cth), s 40(1). See also Insurance Act 2015 (UK), s 10(3). 559 Overseas Commodities Ltd v Style [1958] 1 Lloyd’s Rep 546 at 558 per McNair J. See, eg, Hua Tyan Development Ltd v Zurich Insurance Co Ltd (The Ho Feng 7) [2014] 2 Lloyd’s Rep 637 (insurer not liable for total loss of cargo because of breach of “deadweight warranty” about carrying capacity of ship, even though the named ship did not have the warranted carrying capacity, a fact not within the direct control of the assured cargo-owner). 560 Yorkshire Insurance Co Ltd v Campbell (1916) 22 CLR 315 (PC). 561 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), p 186, Recommendation 7. 562 Insurance Act 2015 (UK), ss 10(1), 11(3). 563 Marine Insurance Act 1909 (Cth), s 39(2). 564 See, eg, Capital Coastal Shipping Corp v Hartford Fire Insurance Co 378 F Supp 163; 1974 AMC 2039 (ED Va 1974) (reported sub nom as The Cristie [1975] 2 Lloyd’s Rep 100)

[17.590]

17 Marine Insurance

749

or some document incorporated by reference into the policy.565 The words “warranty” or “warranted” need not be used to create an express warranty, which may be in any form of words from which the intention to warrant may be inferred.566 The inclusion of an express warranty in a policy does not exclude the implication of warranties unless they are inconsistent with the express warranty.567 As noted in [17.570], the ALRC recommended that breach of an express warranty should relieve an insurer of liability only where it is causative of loss.568 Perhaps because of the harshness of the law about warranties, there are occasional instances of courts striving to find an interpretation of a warranty that avoids the result that the assured is deprived of cover. For example, in Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd,569 a majority of a Full Court of the Federal Court of Australia held that the assured had not breached an express warranty requiring the insured ship to be in survey, because the ship held a survey certificate, even though that certificate stated conditions that had not been observed. The majority also held that the assured had not breached an express warranty requiring compliance with manning requirements. Although the ship had contravened a provision of the Marine (Vessels) Regulations 1988 (Vic) in relation to manning, the majority held that the relevant Regulation was invalid, having been made ultra vires the regulation-making power conferred by the Marine Act 1988 (Vic).

Implied warranties [17.590]

Two types of warranty are implied by operation of the Marine Insurance Act 1909 (Cth): seaworthiness and legality. The ALRC recommended abolition of both implied warranties, the intention being to force their inclusion among the express terms of the contract.570

The Act expressly provides that there is no implied warranty of nationality of a ship.571 (express warranty that a named captain be master of the insured ship); Seavision Investment SA v Evennett (The Tiburon) [1990] 2 Lloyd’s Rep 418 (express warranty of German flag, ownership or management of insured ship); Verna Trading (Aust) Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129 (express warranty by Institute Cargo Clauses (A), cl 18 of reasonable despatch by assured (see Appendix 8); see [17.200]); Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd (1997) 74 FCR 205 (express warranty that vessel would be in survey). 565 Marine Insurance Act 1909 (Cth), s 41(2). See Doak v Weekes (1986) 82 FLR 334. 566 Marine Insurance Act 1909 (Cth), s 41(1). 567 Marine Insurance Act 1909 (Cth), s 41(3). 568 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), p 186, Recommendation 7. 569 Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd (1997) 74 FCR 205. 570 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), pp 186-187, Recommendations 10-15. 571 Marine Insurance Act 1909 (Cth), s 43.

750

Shipping Law

[17.600]

Seaworthiness

[17.600]

In a voyage policy, there is an implied warranty that the ship is seaworthy at the commencement of the voyage.572 If the voyage is in stages, the warranty is of seaworthiness at the commencement of each stage.573 A ship is deemed seaworthy when it is reasonably fit to encounter the ordinary perils of the adventure insured.574

There is no implied warranty that a ship is seaworthy at any stage of a time policy,575 but there is in a mixed policy,576 at least where the risk attaches with the commencement of a voyage, such as a delivery voyage.577 There is no implied warranty of seaworthiness of goods in a policy on goods,578 but in a voyage policy on goods there is an implied warranty that the carrying ship is not only seaworthy as a ship, but is also reasonably fit to carry the goods.579 Although there is no warranty in a time policy that the ship is seaworthy at any stage of the adventure, the insurer is not liable for any loss attributable to unseaworthiness if, with the privity of the assured, the ship is sent to sea in an unseaworthy state.580 However, where the unseaworthiness is not the proximate cause of the loss, the assured is entitled to an indemnity, even if it was privy to the ship being sent to sea in an unseaworthy state.581 572 Marine Insurance Act 1909 (Cth), s 45(1). 573 Marine Insurance Act 1909 (Cth), s 45(3). 574 Marine Insurance Act 1909 (Cth), s 45(4). See Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253; Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297); Doak v Weekes (1986) 82 FLR 334. See also [12.300]. 575 Marine Insurance Act 1909 (Cth), s 45(5). See, eg, Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2007] 1 Lloyd’s Rep 66 (Sin CA). 576 M Almojil Establishment v Malayan Motor and General Underwriters (Pty) Ltd (The Al-Jubail IV) [1982] 2 Lloyd’s Rep 637 (Sin CA); Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2007] 1 Lloyd’s Rep 66 (Sin CA). 577 M Almojil Establishment v Malayan Motor and General Underwriters (Pty) Ltd (The Al-Jubail IV) [1982] 2 Lloyd’s Rep 637 (Sin CA); Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2007] 1 Lloyd’s Rep 66 (Sin CA). 578 Marine Insurance Act 1909 (Cth), s 46(1). 579 Marine Insurance Act 1909 (Cth), s 46(2). See also Hua Tyan Development Ltd v Zurich Insurance Co Ltd (The Ho Feng 7) [2014] 2 Lloyd’s Rep 637 (breach of “deadweight warranty” by assured). 580 Marine Insurance Act 1909 (Cth), s 45(5). See, eg, Randell v Atlantica Insurance Co Ltd (1985) 80 FLR 253; Wood v Associated National Insurance Co Ltd [1984] 1 Qd R 507 (aff’d on other grounds: Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297); Doak v Weekes (1986) 82 FLR 334; Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2007] 1 Lloyd’s Rep 66 (Sin CA). 581 Oleo Pty Ltd v Vanguard Insurance Co Ltd (unreported, WA SC, 1991), following Thomas v Tyne and Weir Steam Ship Freight Insurance Assoc [1917] 1 KB 938; Marina Offshore Pte Ltd v China Insurance Co (Singapore) Pte Ltd [2007] 1 Lloyd’s Rep 66 (Sin CA).

[17.610]

17 Marine Insurance

751

The burden of proof in alleging unseaworthiness lies on the insurer.582 Legality

[17.610]

The Marine Insurance Act 1909 (Cth), s 47 creates an implied warranty583 that the adventure is a lawful one, and, so far as the assured is in control of the matter, that it is carried out in a lawful manner.584 An adventure, or the manner of conducting it, may be unlawful at common law, by statute, or because it contravenes a treaty to which the Commonwealth of Australia is party.585 Unlawfulness by statute occurs not only when there is a contravention of a statutory prohibition, but also when a statutory penalty is incurred.586 In Doak v Weekes,587 the assured’s fishing vessel “Marandoo” was lost at a time when it did not have a duly certificated second hand on board, in breach of the Navigation (Manning of Fishing Vessels) Regulations 1974 (Qld), reg 8(b)(ii). Although this regulation did not prohibit fishing without a duly certificated crew, but merely imposed a penalty if it were done, it was held that the assured’s breach of the regulation was a breach of the implied warranty of legality imposed by s 47. In contrast, in Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd,588 a Full Court of the Federal Court of Australia held, by a majority, that the assured had not breached the implied warranty of legality imposed by s 47 by failing to comply with State manning regulations. The majority held that neither of the statutory requirements relied on by the insurer had been breached: the relevant Victorian regulation was invalid, and the relevant Tasmanian manning regulations applied only to vessels sailing from Tasmanian ports, and so did not apply to the insured ship.589 The effect of s 47 is so clear that an insurer may occasionally be tempted to apply for summary judgment on the basis that the assured’s claim has 582 Skandia Insurance Co v Skoljarev (1979) 142 CLR 375. 583 Although the Act uses the word “warranty”, it may be misleading in this context. A breach of warranty may be waived by the insurer (see s 40(3)), but in North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] 461 at 469, Lord Haldane LC said that there could be no waiver of a breach of the “warranty” of legality. The Western Australian Court of Appeal held the opposite in Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290. 584 Marine Insurance Act 1909 (Cth), s 47. 585 Wilson v Marryat (1798) 8 TR 31; 101 ER 1250 (aff’d Wilson v Marryat (1799) 1 Bos & Pul 430; 126 ER 993); Bird v Appleton (1800) 8 TR 562; 101 ER 1547. 586 Doak v Weekes (1986) 82 FLR 334. 587 Doak v Weekes (1986) 82 FLR 334. 588 Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd (1997) 74 FCR 205. 589 At the time of the loss, the insured ship was en route from Eden in New South Wales to Portland in Victoria. It paused for about three hours at an anchorage off King Island in Bass Strait before continuing towards Portland, but sank before reaching port. The majority held that the King Island anchorage was not a “port” for the purposes of the Tasmanian regulations: see Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd (1997) 74 FCR 205 at 256-258 per Hill and Sackville JJ.

752

Shipping Law

[17.620]

no real prospect of succeeding, given the assured’s breach of some statutory prohibition or other, however trivial. That strategy was tried unsuccessfully in Solway v Lumley General Insurance Co Ltd,590 where the insured ship was lost at a time when it was not registered in Queensland pursuant to the Transport Operations (Marine Safety) Act 1994 (Qld). Because the assured shipowner was a Queensland resident and because the ship was operating in Queensland waters, the Act and its subordinate regulations required the ship to be registered in Queensland “unless the owner has a reasonable excuse”.591 The insurer applied unsuccessfully for summary judgment on the assured’s claim for an indemnity. The Queensland Court of Appeal held that the question whether the assured had “a reasonable excuse” for not registering in Queensland should go to trial, the answer being not sufficiently clear for disposition by summary judgment. However, where the assured’s breach of a statutory prohibition can be determined objectively, the strategy of applying for summary judgment may well succeed.

Waiver and estoppel A breach of warranty may be waived by the insurer592 “by distinct act either expressly or by necessary implication of law, [indicating] an intention to treat the matter as if the breach of warranty had not occurred, and the act must be done with knowledge of the true facts”.593 The old view was that a waiver claim was different from a claim of estoppel, because estoppel is concerned chiefly with the conduct of the assured in relying on representations of the insurer whereas waiver is concerned with the conduct of the insurer, and also because conduct short of positive acts on the insurer’s part may be sufficient for estoppel but not waiver.594 More recently, courts have taken the view that contemporary law has no place for a doctrine of waiver distinct from estoppel, election, variation of contract or the doctrine of unconscionability, and that this is true in relation to marine insurance warranties, even though s 40(3) uses the term “waived”. That was the view taken by Tamberlin J at first instance in Mowie Fisheries Pty Ltd v Switzerland Insurance Australia Ltd,595 and by Beaumont J dissenting on appeal in that case.596 (In Mowie

[17.620]

590 Solway v Lumley General Insurance Co Ltd (2003) 12 ANZ Insurance Cases 61-567; [2003] QCA 136. 591 Transport Operations (Marine Safety) Regulations 1995 (Qld), reg 38. 592 Marine Insurance Act 1909 (Cth), s 40(3). 593 Ocean Trawling Co Pty Ltd v Fire and All Risks Insurance Co Ltd [1965] WAR 65 at 69 per Hale J; Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290 at [37] per Steytler P. See also Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326. 594 Ocean Trawling Co Pty Ltd v Fire and All Risks Insurance Co Ltd [1965] WAR 65 at 70 per Hale J; Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 327. 595 Mowie Fisheries Pty Ltd v Switzerland Insurance Australia Ltd (1996) 140 ALR 57 at 77-80. 596 Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd (1997) 74 FCR 205 at 238-243.

[17.630]

17 Marine Insurance

753

Fisheries, the majority of the Full Court of the Federal Court (Hill and Sackville JJ) did not consider waiver, as they held that the warranties in question had not been breached.) The modern English position is that in this context, waiver means “waiver in the form of equitable estoppel”.597 However, in Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd,598 the Western Australian Court of Appeal held that waiver is still a separate principle recognised by the law, describing the situation in which a party has chosen not to insist on the performance of a provision inserted in the contract for its benefit.599 Thus, when “waiver” is read in the context of the Marine Insurance Act 1909 (Cth), s 40(3), it necessarily imports the notion of the insurer choosing not to take the benefit of the automatic statutory discharge of the contract provided for by s 39(3).600 It has been held that the mere fact of accepting a premium payment after breach of warranty is insufficient to constitute “waiver” in this context,601 as is renewal of the policy for an extended period.602

UTMOST GOOD FAITH [17.630]

Section 23 of the Marine Insurance Act 1909 (Cth) provides:

A contract of marine insurance is a contract based upon the utmost good faith, and, if the utmost good faith be not observed by either party, the contract may be avoided by the other party.

Although the obligation imposed by s 23 is mutual, its effect in practice has usually been very pro-insurer. In consequence, the Insurance Act 2015 (UK), s 14(1) abolished the rule that failure to observe the duty of utmost good faith leads to avoidance of the contract. Australian law may follow suit. Although s 23 appears in the same Division of the Act as ss 24 – 27, which deal with pre-contractual disclosure and representations,603 the argument that s 23 applies only to pre-contractual conduct is “past praying for”,604 because there is a considerable body of authority to the effect that the 597 Agapitos v Agnew (The Aegeon) (No 2) [2003] Lloyds Rep IR 54 at [70] per Moore-Bick J; Riyad Bank v Ahli United Bank (UK) plc [2005] 2 Lloyd’s Rep 409 at 449 per Moore-Bick J. 598 Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290. 599 Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290 at [48] per Steytler P. 600 Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290 at [49] per Steytler P. 601 Brownsville Holdings Ltd v Adamjee Insurance Co Ltd (The Milasan) [2000] 2 Lloyd’s Rep 458. 602 Agapitos v Agnew (The Aegeon) (No 2) [2003] Lloyds Rep IR 54 (not to be confused with Agapatos v Agnew (The Aegeon) [2003] QB 556, a decision of the English Court of Appeal about a different aspect of the litigation). 603 See [17.100]–[17.110]. 604 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 at 482 per Lord Clyde (reported sub nom as The Star Sea [2001] 1 Lloyd’s Rep 389). See also K/S Merc-Scandia XXXXII v Certain Lloyd’s Underwriters Subscribing to Lloyd’s Policy No 25T

754

Shipping Law

[17.630]

duty of utmost good faith applies also to post-contractual activity.605 However, there is no remedy in damages for breach of the duty of good faith,606 and the consequences of a post-contractual breach of the duty of utmost good faith are not the same as the consequences of a breach during pre-contract negotiations. In relation to pre-contract negotiations the duty is a very extensive one, requiring the prospective insured to disclose all material facts.607 In Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd,608 the House of Lords unanimously concluded that it would be undesirable to impose a similarly onerous duty after the contract is made. The claimant609 in Manifest Shipping made a claim on its insurance policy with the defendant insurers after its ship “Star Sea” became a constructive total loss as a result of a fire at sea. Attempts to put out the fire using the ship’s carbon dioxide firefighting system had proved unsuccessful partly because (it was later held) of the master’s incompetence and partly because of the defective condition of dampers in the engine room, which reduced the effectiveness of the carbon dioxide system. The defendants refused to pay the claim, and the claimant sued them. Prior to trial, the claimant did not disclose to the insurers two accident reports showing that another ship owned by the claimant had been lost by fire because the master and officers did not know how to operate the ship’s carbon dioxide firefighting system. At the trial, the trial judge, Tuckey J, did not believe the evidence given by one of the claimant’s managers. The insurers argued that the claimant’s failure to disclose the accident reports and the giving of the disbelieved evidence constituted breaches by the claimant of the duty of utmost good faith, thereby entitling them to avoid the contract.610 The House of Lords held that the insurers were not entitled to avoid the contract on this ground, because the post-contractual duty of utmost good faith required no more than honesty in the 105847 [2001] 2 Lloyd’s Rep 563 at 575 per Longmore LJ. Nevertheless, prayers continue: in Agapatos v Agnew (The Aegeon) [2003] QB 556 at 563, Mance LJ expressed the hope that the House of Lords judicially or Parliament legislatively might one day reconsider the point. 605 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 (reported sub nom as The Star Sea [2001] 1 Lloyd’s Rep 389); Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290 (WASCA). 606 Banque Financiere de la Cite SA v Westgate Insurance Co Ltd [1991] 2 AC 249. Both parties in Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 accepted this proposition. 607 See [17.100]. 608 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469. 609 Since the reforms to English civil procedure effected as a result of the Woolf Report (Access to Justice — Final Report (UK Lord Chancellor’s Office, 1996)), the party formerly known as “plaintiff” is now referred to as “claimant”. 610 The insurers also argued that the claimant was not entitled to an indemnity because it was privy to the ship putting to sea in an unseaworthy condition: see [17.270]. The House of Lords rejected that argument too.

[17.630]

17 Marine Insurance

755

presentation and maintenance of a claim under the contract.611 The post-contract duty does not require disclosure of all material circumstances, as does the pre-contract duty. If it did, there would be difficult questions of materiality, as both Lord Scott and Lord Hobhouse pointed out.612 Pre-contract materiality is concerned with facts and circumstances that would affect the insurer’s decision about whether to take the risk and on what terms. Once the contract has been made, the risk has been accepted, and the purpose of further disclosure could only be to enable the insurer to form a view about what attitude to take towards claims made by the assured. As Lord Scott said:613 A decision to disclose or not to disclose would have to be taken at an early stage. Delayed disclosure would expose the assured to similar charges to those being made in the present case where disclosure of the two Kastora reports was made in the course of the trial. The assured will often not know where, in the spectrum that runs from “interesting” at one end to “issue determinative” at the other, the facts or information should be placed. … Nonetheless, it is submitted that a decision not to give early disclosure … constitutes a s 17614 breach and entitles the insurer to avoid the contract. If that were right, an assured would have to be advised to swamp his insurer with a mass of facts and information which might have some conceivable relevance to an issue in the case.

Not only is the s 23 duty not so far-reaching post-contract, but the House of Lords held that it is almost completely superseded when litigation is commenced.615 Lord Hobhouse said that the commencement of legal proceedings crystallises the rights of the parties.616 At that point, the procedural rules about the delivery of pleadings and the giving of discovery and privilege take over. It is those procedural rules that govern the extent of the disclosure required of the parties, not s 23 and the duty of utmost good faith.617 In the light of the decision in Manifest Shipping, the ALRC recommended that the Marine Insurance Act 1909 (Cth) be amended to include a provision that there can only be a duty of post-contractual disclosure if 611 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 at 512 per Lord Scott (with whom Lords Steyn and Hoffmann agreed). 612 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 at 495-496 per Lord Hobhouse, and at 514 per Lord Scott. 613 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 at 514. 614 Marine Insurance Act 1906 (UK), s 17, equivalent to Marine Insurance Act 1909 (Cth), s 23. 615 See also Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290 (WASCA), adopting the effect of the dicta in The Star Sea. 616 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 at 504 per Lord Hobhouse (with whom Lords Steyn and Hoffmann agreed). 617 Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd [2003] 1 AC 469 at 504 per Lord Hobhouse (with whom Lords Steyn and Hoffmann agreed). Lord Scott said that he could see “a great deal of force” in the argument that the English equivalent of s 23 does not apply to conduct in the prosecution of litigation, but he did not find it necessary to decide the point: at 515 per Lord Scott.

756

Shipping Law

[17.640]

there is an express term to that effect in the contract of marine insurance.618 Like other aspects of the ALRC report, that proposal was not adopted.

THE PREMIUM [17.640]

The premium is the consideration paid by the assured for the insurer’s promise to indemnify it against loss proximately caused by the perils insured against. The amount of the premium is usually fixed when the contract is made, but the parties may agree to arrange it at a later date. The parties may also agree to arrange an additional premium if a given event occurs, such as a change of voyage or entry into a zone of extra risk. Where the premium, or additional premium, is “to be arranged”, and no arrangement is made, a reasonable premium619 or additional premium620 is payable. The assured is not obliged to pay the premium until the insurer issues the policy, and vice versa.621 However, in practice, payment of the premium and issue of the policy often occur at different times. Where the policy is effected for the assured by a broker, the broker is directly responsible to the insurer for the premium,622 and has a lien on the policy for the amount of the premium and its charges.623 In practice, marine insurance brokers often keep a current account with marine insurers, the broker crediting all premiums on policies effected by it, and the insurer crediting all losses and returnable premiums. The balance is paid at the end of each month by whichever party is in debit. If the assured is aware of this custom, it is bound by it, and cannot recover any loss directly from the insurer.624 However, if the assured is not aware of this custom, it is entitled to recover any loss from the insurer, even if it has already been settled with the broker.625

618 Australian Law Reform Commission, Review of the Marine Insurance Act 1909 (ALRC 91, 2001), pp 226, 232, Recommendation 26. 619 Marine Insurance Act 1909 (Cth), s 37(1). 620 Marine Insurance Act 1909 (Cth), s 37(2). 621 Marine Insurance Act 1909 (Cth), s 58. 622 Marine Insurance Act 1909 (Cth), s 59(1). See Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Pty Ltd (1986) 160 CLR 226. 623 Marine Insurance Act 1909 (Cth), s 59(2). 624 Marine Insurance Act 1909 (Cth), s 93(1). See Stewart v Aberdein (1838) 4 M & W 211; 150 ER 1406. 625 Marine Insurance Act 1909 (Cth), s 59(1). See Sweeting v Pearce (1861) 9 CB (NS) 534; 142 ER 210; Pollard, Ashby & Co (France) Ltd v Franco-British Marine Insurance Co Ltd (1920) 5 Ll L Rep 286.

[17.640]

17 Marine Insurance

757

In Jetopay Pty Ltd v Ocean Marine Mutual Insurance Association (Europe) OV,626 the Federal Court of Australia held that an insurer can never cancel a contract of marine insurance for late payment of premium if the assured acts through a broker, because the broker is always assumed to have paid the premium to the insurer in time, by operation of the custom reflected in the Marine Insurance Act 1909 (Cth), s 59(1).627 In Jetopay, the assured’s hull insurance policy did not contain any provision entitling the insurer to cancel the contract for non-payment of an instalment of premium. Even if there had been an automatic termination clause, it would not have been effective because the assured had dealt with the insurer through the medium of a broker. In such a situation, there is a settled legal fiction that the premiums are deemed to be paid by the broker to the insurer, thus satisfying the payment requirements in the policy, and then lent back by the insurer to the broker.628 Thus, even if the policy had contained an express clause requiring the assured to pay the underwriters, that clause would have had no effect. The fiction would have deemed the broker to have paid the premium already, thereby discharging the assured’s liability to the insurer, whether or not the premium had actually been paid by the assured to the broker, or by the broker to the insurer (or its agent). The premium is returnable by the insurer where there is a total failure of consideration, except in cases of fraud or illegality.629 A proportionate part is returnable if there is a total failure of an apportionable part of the consideration.630 Where the premium, or a proportionate part of it, is returnable, either because of total failure of consideration631 or by agreement of the parties,632 it is to be returned to the assured,633 even if it was originally paid by a broker.634

626 Jetopay Pty Ltd v Ocean Marine Mutual Insurance Association (Europe) OV (1999) 95 FCR 570 (aff’d on other grounds: Ocean Marine Mutual Insurance Association (Europe) OV v Jetopay Pty Ltd (2000) 120 FCR 146). 627 See, to the same effect, Prentis Donegan & Partners Ltd v Leeds & Leeds Co Inc [1998] 2 Lloyd’s Rep 326. 628 The custom is reflected but not contained in the Marine Insurance Act 1909 (Cth), s 59(1), which provides that the broker is directly responsible to the underwriter for payment of the premium. 629 Marine Insurance Act 1909 (Cth), s 90(1). There are detailed examples of failure of consideration in s 90(3). 630 Marine Insurance Act 1909 (Cth), s 90(2). 631 Marine Insurance Act 1909 (Cth), s 88. 632 Marine Insurance Act 1909 (Cth), s 89. 633 Marine Insurance Act 1909 (Cth), ss 88, 89. 634 Marine Insurance Act 1909 (Cth), s 59(1).

758

Shipping Law

[17.650]

SUBROGATION635 [17.650]

On payment of a loss, the insurer is subrogated to the rights and remedies of the assured in and in respect of the subject matter insured.636 In particular, the insurer may bring an action in the assured’s name against any third party who has caused the loss. However, although the action is brought by the insurer, any judgment for damages can only be satisfied by payment to the assured.637 If the assured’s loss is reduced by the recovery of damages or by settlement with the wrongdoer, the insurer may recover from the assured the amount that has been overpaid in settlement under the policy.638 If the assured recovers damages in a greater amount than that paid by the insurer, the insurer is entitled to recover only the sum paid, and the assured may keep the excess.639

Example 17.8 A insures a ship with I at an agreed value of $1,200,000. It is totally lost, and I pays A $1,200,000 under the policy. I sues X in A’s name, and A recovers $1,000,000 in damages from X for causing the loss by negligence. I may recover the entire $1,000,000 from A.

Example 17.9 Assume the same facts as in Example 17.8, with the exception that A recovers $1,500,000 from X. I may only recover the sum paid to A, namely $1,200,000, and A may retain the windfall $300,000.

In addition to the right of subrogation, the insurer is entitled to take over the assured’s interest in whatever remains of the subject matter where the loss is total,640 but not where it is partial.641 635 For a detailed examination of the law of subrogation, see C Mitchell and S Watterson, Subrogation: Law and Practice (Oxford University Press, Oxford, 2007). 636 Marine Insurance Act 1909 (Cth), s 85. 637 See Yorkshire Insurance Co Ltd v Nisbet Shipping Co Ltd [1961] 1 Lloyd’s Rep 479 at 484 per Diplock J. 638 Randal v Cockran (1748) 1 Ves Sen 98; 27 ER 916 and Yates v Whyte (1838) 4 Bing (NC) 272; 132 ER 793 suggest that the insurer’s right is in equity. In Yorkshire Insurance Co Ltd v Nisbet Shipping Co Ltd [1961] 1 Lloyd’s Rep 479 at 484, Diplock J suggested that the insurer may recover the money at common law, but in Napier v Hunter [1993] 1 AC 713, the House of Lords preferred the view that subrogation was based on equitable principles. Napier held that payment to the assured gives the insurer an equitable proprietary right in the form of a lien over the damages or settlement moneys received by the assured. That view was adopted in Linsley v Petrie [1998] 1 VR 427 at 443-446 per Callaway JA. 639 Marine Insurance Act 1909 (Cth), s 85(2) (partial loss); Yorkshire Insurance Co Ltd v Nisbet Shipping Co Ltd [1961] 1 Lloyd’s Rep 479 (total loss); Travel Compensation Fund v Blair [2003] NSWSC 720 at [55] per Einstein J. 640 Marine Insurance Act 1909 (Cth), s 85(1). See also, for constructive total losses, s 69(1), at [17.440].

[17.660]

17 Marine Insurance

759

STATE LAWS Marine insurance business conducted by State governments642 for marine adventures entirely within the inland waters of the State concerned643 are governed by State laws. All other marine insurance is governed by the Marine Insurance Act 1909 (Cth). Although there is still some State legislation in force regulating marine insurance,644 it is unlikely that it applies to any contracts in practice, not least because States have largely discontinued the practice of acting as insurers.

[17.660]

641 Marine Insurance Act 1909 (Cth), s 85(2). 642 This is the meaning of “State marine insurance” in Marine Insurance Act 1909 (Cth), s 6: see Melbourne Corp v Commonwealth (1947) 74 CLR 31 and [17.10]. 643 Marine adventures in the territorial sea or beyond are outside the limits of the State concerned (see New South Wales v Commonwealth (1975) 135 CLR 337) and thus are governed by the Commonwealth Act: see Marine Insurance Act 1909 (Cth), s 6. 644 See, eg, Imperial Acts Application Act 1969 (NSW), ss 24 – 28; Imperial Acts Application Act 1984 (Qld), ss 9 – 11; Instruments Act 1958 (Vic), ss 15 – 18.

18

General Average [18.10] INTRODUCTION ........................................................................................... 761 [18.20] THE YORK-ANTWERP RULES ................................................................... 764

[18.20] When is there a general average act? .......................................... 764 [18.30] Who claims, and by when must a claim be made? .................. 766 [18.40] Causation ........................................................................................... 769 [18.50] Contributing values ......................................................................... 770 [18.70] Fault and the New Jason Clause .................................................. 773 [18.80] Securing payment of general average contributions ................. 775 [18.90] Salvage ............................................................................................... 776

INTRODUCTION [18.10]

The word “average” first appeared around 1500, in connection with maritime trade in the Mediterranean. The French word “averie”, the Spanish “averia”, the Portuguese and Italian “avaria” and the Dutch “averij” all meant a tax or customs duty charged on goods under the maritime codes of the Mediterranean countries.1 In English, payment of this “averia” duty was termed “average”, just as, for example, the act of piloting a ship is termed “pilotage”. Over time, “average” came to mean any charge, loss or expense over and above the basic freight cost for the carriage of goods, including expenses or losses arising from damage at sea. A distinction was made between types of “average” in this sense. Particular average was an average loss that was borne by a particular person; general average was an average loss that was shared in general between the various parties interested in the voyage on which the loss had occurred. The phrase “general average” was also used to mean the process of sharing a general average loss between the interested parties. (The modern, non-maritime use of “average” to denote a common or mean quantity derives from this use of “average”.) General average was (and is) the exception rather than the rule. The extraordinary step of sharing a loss, rather than leaving it to lie where it 1 See the Oxford English Dictionary entry for “average”: http://www.oed.com/view/Entry/ 13681?rskey=L9wn4f&result=2&isAdvanced=false#eid; and R Cornah and J Reeder, Lowndes and Rudolf: The Law of General Average and the York-Antwerp Rules (14th ed, Sweet & Maxwell, London, 2013), pp 1-19.

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[18.10]

fell, was taken only when the loss had benefited all the parties interested in a maritime venture. Thus, where a loss arose from a deliberate sacrifice made for the preservation of ship and cargo, it was borne proportionately by all those whose interests had been preserved as a result of the sacrifice. For example, if a ship were threatened with total loss by being blown onto a reef, the master might jettison part of the cargo in order to save the ship and the remainder of the cargo. If the sacrifice were successful, the loss was not borne solely by those whose cargo had been jettisoned, but was shared among all the parties involved, in proportion to the interests preserved as a result of the sacrifice. It was this process that was termed “general average”. (This type of general average loss would be relatively rare in modern times, when general average losses are usually expenses incurred by a shipowner at a port of refuge, temporary repairs to enable a voyage to be completed, or salvage or towage expenses.) There is a considerable body of law about what is, and what is not, a general average loss under the general law. The effect of the many decisions may be summarised as follows. There must be a real, not apprehended, common danger, which makes a sacrifice necessary. The sacrifice must be real, not merely the destruction of something that was already lost, and it must be voluntary. The voluntary sacrifice must save the imperilled property from the common danger. In these circumstances, the party who suffered loss as a result of the sacrifice is entitled to a general average contribution from the other parties interested, in proportion to their interest, provided that the common danger did not arise from his or her default. Although well settled, these legal principles are effectively obsolete. Few, if any, modern disputes about general average are determined by reference to the general law described above. In practice, disputes are now usually resolved by application of a version of the York-Antwerp Rules, a document now produced and revised by the Comité Maritime International (CMI).2 The York-Antwerp Rules began their existence as the York Rules of 1864, which were adopted by a body known as the International General Average Congress.3 The Congress amended the rules in Antwerp in 1877; thereafter, they were known as the York and Antwerp Rules. The York-Antwerp Rules were revised in 1890, 1924, 1950, 1974 (modified in 1990), 1994 and 2004. The 2004 version of the Rules, which was adopted at the 38th Assembly and Conference of the CMI in Vancouver, did not find acceptance among the shipowning community, and many maritime contracts continued to incorporate the 1994 version of the Rules, or even the previous version, the 1974 version as modified in 1990. Recognising that the 2004 version of the Rules had not been a 2 The CMI became custodian of the York-Antwerp Rules beginning with the 1950 version: see G Hudson and M Harvey, The York-Antwerp Rules: The Principles and Practice of General Average (3rd ed, Informa Law (Routledge), London, 2010), para 2.12. 3 G Hudson and M Harvey, The York-Antwerp Rules: The Principles and Practice of General Average (3rd ed, Informa Law (Routledge), London, 2010), para 2.04.

[18.10]

18 General Average

763

success, CMI resolved in 2012 to draft a new set of rules, to be adopted in 2016. The York-Antwerp Rules 2016 were adopted at the 42nd Assembly and Conference of the CMI in New York on 8 May 2016. The York-Antwerp Rules contain detailed provisions for the adjustment of general average.4 Unlike international conventions,5 these rules have not been adopted as part of the law of Australia. They take effect only when expressly incorporated into a contract. Because the different versions of the Rules differ from one another, it is important to determine which version has been incorporated into the contract in question. Although different contracts may adopt different versions of the YorkAntwerp Rules, almost all shipping contracts adopt one version or another. Thus, it is usually the case that all parties to a marine adventure are contractually bound to abide by the terms of one version or another of the rules with respect to general average. As one commentator has observed, “It may safely be said that general average is the field of maritime law where the international unification effort has succeeded to the greatest degree”.6 Although contractual agreement to general average is very widespread, the need for general average has occasionally been questioned. Insurance against marine risks is almost ubiquitous and it, too, has the effect of spreading marine losses rather than allowing them to lie where they fall. Given that the obligation to make general average contributions is a risk that is itself generally insured against,7 the result is a kind of double insurance.8 Because the aggregate value of the cargo carried is usually greater than the value of the carrying ship, cargo insurers bear a greater

4 Adjustment is the process of determining the rights and liabilities of the interested parties after a general average loss. 5 For example, the International Convention for the Unification of Certain Rules Relating to the Limitation of Liability of Owners of Seagoing Vessels 1924, as amended by the Visby Protocol 1968 and the SDR Protocol 1979 (the Hague-Visby Rules), was adopted in (and later modified by) the Carriage of Goods by Sea Act 1991 (Cth) (see Chapter 12); the Convention on the International Regulations for Preventing Collisions at Sea 1972 (the Collision Regulations) was adopted in Marine Orders made pursuant to the Navigation Act 2012 (Cth) (see Chapter 15); and the Convention on Limitation of Liability for Maritime Claims 1976, as amended by Protocol of 1996 (the 1976/1996 Limitation Convention), was adopted in the Limitation of Liability for Maritime Claims Act 1989 (Cth) (see Chapter 16). 6 K Selmer, The Survival of General Average: A Necessity or an Anachronism? (Pitman, London, 1958), p 58, quoted in G Hudson and M Harvey, The York-Antwerp Rules: The Principles and Practice of General Average (3rd ed, Informa Law (Routledge), London, 2010), para 2.01. 7 For example, under the International Hull Clauses (01/11/03), cl 8.1, a hull insurer agrees to indemnify the assured for general average liability. 8 See W Tetley, Marine Cargo Claims (4th ed, Editions Y Blais, Canada, 2008), Vol 2, p 1755; W Tetley, “General Average Now and in the Future” in Liber Amicorum Roger Roland (Larcier, Gent, 2003).

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[18.20]

proportion of average losses than hull underwriters do.9 Cargo underwriters complain that the effect of general average is that they are effectively subsidising shipowners’ repair costs. However, complete abolition of general average seems unlikely ever to occur. Because the York-Antwerp Rules 2004 did not successfully supersede the York-Antwerp Rules 1994 in practice, and because it is too soon to tell whether the York-Antwerp Rules 2016 will be accepted by the shipping markets, this chapter deals with the provisions of the York-Antwerp Rules in general terms, highlighting differences between the various versions of the rules, including those before 2016. It does not consider the general law.10

THE YORK-ANTWERP RULES When is there a general average act? [18.20]

The York-Antwerp Rules are made up of seven lettered rules (Rules A – G), 23 numbered Rules (Rules I – XXIII),11 a Rule of Interpretation and, in the versions since 1994, a Rule Paramount, which states that no allowance for general average sacrifice or expenditure shall be made unless reasonably incurred.12 The Rule of Interpretation, first introduced into the York-Antwerp Rules in 1950, makes clear the relationship between the numbered and lettered rules, which was formerly in doubt.13 It provides: In the adjustment of general average the following lettered and numbered Rules shall apply to the exclusion of any Law or Practice inconsistent therewith. Except as provided by the numbered Rules, general average shall be adjusted according to the lettered Rules.

Thus, it is the lettered rules that provide the general principles of general average. The numbered rules contain specific examples, which both clarify and augment the principles in the lettered rules. If a loss falls 9 E Magee, “General Average Reform – The IUMI Position”, Appendix B to Comite Maritime International Yearbook 2000 Annuaire (CMI, Antwerp, 2000), p 295 states that at that time, about US$300 million was spent on general average contributions per year, of which 67% was borne by the underwriters of cargo interests. 10 For a detailed examination of the general law, see R Cornah and J Reeder, Lowndes and Rudolf: The Law of General Average and the York–Antwerp Rules (14th ed, Sweet & Maxwell, London, 2013), pp 1-19. 11 Rule XXIII, on time bars for contributions to general average, was first introduced in the York-Antwerp Rules 2004. It is continued without change in the Rule XXIII of the York-Antwerp Rules 2016. 12 Despite the prominence given to the Rule Paramount in versions of the York-Antwerp Rules since 1994, it is questionable whether it has any significant effect. The Rules do not explain what it means to say that the rule is “paramount”, and the overriding requirement that there can only be general average when a sacrifice or expenditure was reasonably made or incurred has long been a part of Rule A, and it continues to be so. 13 See Vlassopoulos v British and Foreign Marine Insurance Co [1929] 1 KB 187 (this decision is commonly known as The Makis).

[18.20]

18 General Average

765

within the words of a specific provision in the numbered rules, it is subject to general average, even if it is not covered by the general words of the lettered rules.14 Conversely, if the numbered rules provide that a loss is not subject to general average,15 no claim for general average can be made, even if the situation is covered by the general words of the lettered rules. Rule A contains a fundamental general definition of a general average act. It provides:16 There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure.17

Notwithstanding the words “when and only when” in Rule A, the Rule of Interpretation makes it clear that a claim for general average may be allowed under the numbered rules even if it does not fall within the lettered rules. As a result, it follows that a claim for general average may be allowed even when there is not a “general average act” as defined in Rule A. For example, if damage is done to cargo while extinguishing a fire on board the ship, it is allowable as general average under Rule III, even if the fire did not imperil the whole of the property involved in the common maritime adventure, so as to bring Rule A into play. Because there can be general average in some cases where the sacrifice or expenditure was not made “for the common safety” of the maritime adventure, some commentators have said that the York-Antwerp Rules 14 Vlassopoulos v British and Foreign Marine Insurance Co [1929] 1 KB 187 (known as The Makis) was authority for the opposite proposition. It was this decision that led to the introduction of the Rule of Interpretation in 1950. In the United States, the position is as described in the text (see Eagle Terminal Tankers Inc v Insurance Co of USSR Ltd 637 F 2d 890; 1981 AMC 137 (2d Cir 1981)), although there is a widely-criticised decision to the opposite effect: see Orient Mid-East Lines Inc v Shipment of Rice on Board SS Orient Transporter 496 F 2d 1032; 1974 AMC 2593 (5th Cir 1974). The Orient Mid-East decision has not been followed on this point in other circuits (see, eg, Royal Insurance Co of America v Cineraria Shipping Co 894 F Supp 1557; 1996 AMC 2051 (MD Fla 1995)) and the Fifth Circuit has subsequently adopted a position much more like the Eagle Terminal one: see Deutsche Shell Tanker Gesellschaft v Placid Refining Co 993 F 2d 466 (5th Cir 1993) at 469 n 15. 15 See, eg, Rule I (Appendix 9), which provides that jettison of cargo is not allowable as general average unless it is carried in accordance with the recognised custom of the trade. 16 See also the almost identical definition in the Marine Insurance Act 1909 (Cth), s 72(2) and the Marine Insurance Act 1906 (UK), s 66(2). 17 The concept of “common maritime adventure” runs throughout the York-Antwerp Rules. Rule B deals with the situation when one or more vessels is towing or pushing another or others. Under the version of Rule B(1) adopted in 2016, there is a “common maritime adventure” in such a case provided that all of the pushing/towing vessels are involved in commercial activities and not in a salvage operation. Under Rule B(2), there is no “common peril” if one vessel can be in safety simply by disconnecting from the vessel or vessels, but if the disconnection is itself a general average act, the common maritime adventure continues.

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[18.30]

now make provision for “artificial general average” on a basis quite different from that of general average under the general law.18 In Eagle Terminal Tankers Inc v Insurance Co of USSR Ltd,19 the United States Court of Appeals for the Second Circuit explained the change by saying that general average continues to require a showing of peril, but that perils less than imminent are now recognised as being sufficient. That explanation has rightly been criticised as sophistry;20 some of the numbered rules, such as Rules X(b) and XI(b), clearly contemplate that expenses incurred other than in a situation of common peril should be allowed as general average.

Who claims, and by when must a claim be made? [18.30]

The party who has suffered a loss or incurred an expenditure that is allowable in general average is entitled to a contribution from the parties whose interests have been preserved by the general average sacrifice or expenditure. Rule E(1)21 provides that the onus of proof that a loss or expense is properly allowable as general average falls on the person claiming general average contribution. The cause of action for a contribution arises at the time the general average sacrifice is made or the general average expenditure is incurred, so any relevant limitation period would ordinarily begin to run at that time.22 Because the right to contribution arises out of the parties’ agreement to the York-Antwerp Rules, rather than under general maritime law, the relevant limitation period would thus ordinarily be the one applying to contract claims. Where the claim for contribution is made by the shipowner against cargo-owners, the relevant period would, in the absence of agreement, be the ordinary six-year period for contract claims (except in the Northern Territory, where the period is three years).23 Where, however, the claim is made by the cargo-owner against the shipowner, the claim should be subject to the one-year limitation period 18 L Buglass, Marine Insurance and General Average in the United States (3rd ed, Cornell Maritime Press, Centreville, Md, 1991), p 198; W Tetley, “General Average Now and in the Future” in Liber Amicorum Roger Roland (Larcier, Gent, 2003), pp 419-450. 19 Eagle Terminal Tankers Inc v Insurance Co of USSR Ltd 637 F 2d 890; 1981 AMC 137 (2d Cir 1981). 20 See W Tetley, “General Average Now and in the Future” in Liber Amicorum Roger Roland (Larcier, Gent, 2003). 21 The York-Antwerp Rules 2004 introduced a method of paragraph numbering that had not previously been used in the Rules. That method of numbering is continued in the York-Antwerp Rules 2016, so it is used throughout this chapter. 22 Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd [1984] AC 226 (PC) (sub nom The Potoi Chau [1983] 2 Lloyd’s Rep 376). 23 Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd [1984] AC 226 (PC) (sub nom The Potoi Chau [1983] 2 Lloyd’s Rep 376). The six-year limitation period for contract claims is imposed by the following: Limitation Act 1969 (NSW), s 14(1)(a); Limitation Act (NT), s 12(1)(a) (three years); Limitation of Actions Act 1974 (Qld), s 10(1)(a); Limitation of Actions Act 1936 (SA), s 35(a); Limitation Act 1974 (Tas) s 4(1)(a), (2); Limitation of Actions Act 1958 (Vic), s 5(1)(a); Limitation Act 2005 (WA), s 13.

[18.30]

18 General Average

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that governs claims under the Hague or Hague-Visby Rules.24 There is English and United States authority for the proposition that a cargoowner’s contractual claim for a general average contribution is a claim “in respect of the goods” for the purposes of Art 3, r 6 of the Hague or Hague-Visby Rules, and so is subject to the one-year limitation period from the time when the goods were delivered or (in the event of loss) should have been delivered.25 That is an unfortunate result, given the length of time that it can take for the adjustment to be made, as the cargo-owner’s claim might be extinguished by Art 3, r 6 before the adjustment could be completed. For that reason, a new Rule XXIII was introduced into the York-Antwerp Rules in 2004, para (a) of which provides that any claim for general average contribution is extinguished unless brought within one year after the date when the general average adjustment was issued, but no later than six years after the date of termination of the common maritime adventure. Both of those dates — the date of termination of the common maritime adventure and the date of issue of the adjustment — will always in practice be later than the date upon which the right to claim contribution arose, so Rule XXIII effects (or attempts to effect) a thoroughgoing change to the previously-existing position. It appears in the same form in the 2016 version of the Rules. However, in most cases, the effect of Rule XXIII(a) will be to shorten the relevant limitation period by agreement. For example, if the average adjustment were to be issued two years after the termination of the common maritime adventure, the general average claimant would then have only one more year in which to bring its claim under Rule XXIII(a), although the applicable statutes (except in the Northern Territory) would say that there would still be slightly less than26 four more years in which to bring the claim before expiration of the six-year statutory period. In contrast, Rule XXIII(a) cannot extend a statutory limitation period by agreement. For example, if a general average expenditure were to be incurred shortly before termination of the common maritime adventure, but the adjustment were not to be issued until five years and 11 months after the cause of action arose, it might seem that Rule XXIII(a) would give the claimant one more year to claim after the adjustment was issued, even though that would take the claimant beyond the statutory limitation period of six years from when the claim arose. Rule XXIII(a) expressly 24 See generally, [12.580]–[12.590]. 25 Goulandris Bros Ltd v B Goldman & Sons Ltd [1958] 1 QB 74 at 105-106 (Pearson J); Orient Mid-East Lines Inc v Shipment of Rice on Board SS Orient Transporter 496 F 2d 1032; 1974 AMC 2593 (5th Cir 1974) at 1042-1043; 2606-2607. 26 The statutory period runs from when the cause of action occurs, which is when the loss happens or the expenditure occurs. There would be some period of time between that moment and the end of the common maritime adventure. The statutory limitation period runs from when the cause of action arises. In the example, the adjustment is issued two years after the termination of the adventure.

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[18.30]

acknowledges that the parties cannot achieve such a result solely by their agreement. Its opening words are: “Subject always to any mandatory rule on time limitation contained in any applicable law …” Similarly, Rule XXIII(a) may not be effective to modify the pre-2004 position that Art 3, r 6 of the Hague or Hague-Visby Rules mandates that a cargo-owner’s contractual claim for a general average contribution must be brought within one year from the time when the goods were delivered or (in the event of loss) should have been delivered. Article 3, r 6 of the Hague-Visby Rules (but not the unamended Hague Rules) provides that the one-year limitation period may be extended “if the parties so agree after the cause of action has arisen” (emphasis added). Rule XXIII(a) is an agreement in advance to extend the one-year limitation period so that it begins only when the adjustment is issued, so it may not be sufficient to extend the one-year limitation period under Article 3, r 6 of the Hague-Visby Rules because it is not an agreement made after the cause of action has arisen.27 Because there is no equivalent provision permitting agreement to extend the limitation period under the unamended Hague Rules, it is clear that Rule XXIII(a) is not effective to override the one-year period that would be applicable to a cargo-owner’s claim for general average contribution under a contract governed by the unamended Hague Rules. As noted above, this is effectively acknowledged in the opening words of Rule XXIII(a). Rule XXIII(a) also applies to the situation where the claim is not for payment of the average contribution itself, but for payment on an average bond or guarantee.28 In such a case, there is no doubt that the limitation period runs from the date of the adjustment, which is usually what is contemplated in the bond or guarantee.29 In pre-2016 versions, Rule E(2) required anyone claiming in general average to give notice in writing to the average adjuster within 12 months of the date of termination of the common maritime adventure. Rule E(3) provided that the average adjuster could proceed with estimated values if the claimant failed to supply evidence in support of a notified claim within 12 months of a request by the adjuster. Although the intention of these provisions was clear and was sensibly intended to allow the adjustment to proceed expeditiously, the effect of the drafting was to give the claimant a further period of 12 months in which to bring its claim from the date when the average adjuster requested further details. That possibility has been removed under the 2016 version of the Rules. In the 2016 version, Rule E(2) simply says that the parties must give particulars of value to the adjuster “as soon as possible” and shall give notice of the 27 Goulandris Bros Ltd v B Goldman & Sons Ltd [1958] 1 QB 74 at 105-106 (Pearson J); Orient Mid-East Lines Inc v Shipment of Rice on Board SS Orient Transporter 496 F 2d 1032; 1974 AMC 2593 (5th Cir 1974) at 1042-1043; 2606-2607. 28 For an explanation of the practice of taking average bonds, see [18.80]. 29 Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd [1984] AC 226 (PC); Union of India v EB Aaby’s Rederi [1975] AC 797.

[18.40]

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loss or expense in respect of which they claim contribution; Rule E(3) provides that failing such notification or provision of particulars within 12 months, the adjuster may proceed on the basis of estimated values.

Causation [18.40]

As noted at [18.10], the classic example of cargo jettisoned to save the ship and its remaining cargo does not often occur in modern times. Nowadays, general average is usually declared by a shipowner who has incurred extraordinary expenses at a port of refuge (or in getting to one), such as temporary repairs or salvage or towage costs. This often raises the question of whether the expenditure in question was caused by the extraordinary breakdown, or by some other cause, such as ordinary wear and tear. This potential ambiguity lies at the very heart of cargo insurers’ dislike of the concept of general average. Rule C(1) of the York-Antwerp Rules provides that only such losses, damages or expenses that are the direct consequence of a general average act are allowed in general average. Rule C(3) provides that indirect losses such as demurrage, loss of market, and any loss or damage sustained or expense incurred by reason of delay, are not allowed as general average.

Direct consequences are those that flow in an unbroken sequence from the act; indirect consequences are those in which the sequence is broken by an intervening or extraneous cause.30 For example, in Australian Coastal Shipping Commission v Green,31 two ships in peril entered into towage contracts with tugs under terms (the UK Standard Towage Conditions) that required the ship to indemnify the tug for any losses incurred during the towage. In both cases, the propeller of the tug became fouled by broken towropes; one tug was lost, the other was saved by salvors. Both tug-owners claimed an indemnity from the shipowner32 under the towage contracts. The shipowner successfully defended the claim for total loss, but was found liable for the salvage costs of the salved tug. It then claimed a general average contribution from the owners of the cargo on board the ships, on the basis that both the legal expenses of the successful defence and the salvage indemnity were general average expenditures. The Court of Appeal held that these expenditures were general average expenditures under Rules A and C. The making of the towage contracts was a general average act, because they were reasonably made for the safety of the ships and their cargo, and the expenditures in connection with the indemnities under those contracts were reasonably incurred as a direct consequence of that general average act. Rule C(2) provides that there shall be no allowance in general average for losses, damages or expenses incurred in respect of damage to the 30 Australian Coastal Shipping Commission v Green [1971] 1 QB 456 at 481 per Lord Denning MR, who also said, “I realise that this is not very helpful … But still we have to do the best we can with it”. 31 Australian Coastal Shipping Commission v Green [1971] 1 QB 456. 32 The same shipowner owned both ships.

770

Shipping Law

[18.50]

environment as a consequence of the escape or release of “pollutant substances” from the property involved in the common maritime adventure. This paragraph was included for the first time in the 1994 version of the Rules; it was perhaps the most significant difference between the 1994 version and its predecessors. By ensuring that a shipowner (or its insurer) cannot recover general average contributions from cargo and freight in respect of oil pollution liabilities and expenses, the post-1994 versions of the Rules reflect the broader policies underlying the marine pollution conventions, which channel responsibility for compensating those who have suffered loss as a result of pollution damage to the shipowner and its insurers.33 However, Rule XI(d) provides that the cost of measures undertaken to prevent or minimise damage to the environment are allowable in general average if they are incurred: (i) for the common safety in circumstances where salvage reward would have been payable if the measures were undertaken by a third party outside the common maritime adventure; (ii) as a condition of entry into or departure from a port or place of refuge; (iii) as a condition of remaining at a port or place of refuge, except when there is an actual escape or release of “pollutant substances” at that port or place, in which case the cost of preventive measures is not allowable in general average; (iv) necessarily in connection with the handling on board of cargo, fuel or stores whenever the cost of those operations is allowable in general average.

Contributing values General

[18.50]

Rule G(1) provides that general average losses are borne by the contributing parties in proportion to the value of the interests preserved. Rule G(1) also provides that, for the purposes of adjustment of general average, the relevant value of these interests is their preserved value, that is, their value at the time and place when and where the maritime adventure ends. However, Rule G(2) points out that this does affect the determination of the place at which the general average adjustment is to be done. It is not uncommon for the parties to agree that the general average statement shall be prepared in a specified place, regardless of where the maritime adventure ends.34 The rules contain detailed provisions relating to the assessment of the value of the preserved property,35 and the assessment of the value of the general average loss.36 Assessment of these values and adjustment of general average are usually undertaken by professional average adjusters. Although the average statement produced by the adjuster is usually followed by the parties, it 33 See, in general, Chapter 19. 34 See, eg, the Conlinebill 2016 form (Appendix 1), cl 12, which provides that “General Average shall be adjusted, stated and settled in London”. 35 York-Antwerp Rules, Rule XVII. 36 York-Antwerp Rules, Rules XIII, XIV, XVI and XVIII.

[18.60]

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is, strictly speaking, not binding on them unless they have agreed to make it so; it is merely an expression of opinion about the appropriate sums payable.37 If any of the parties disputes the amount of contribution required, the final decision must be made by a court (or arbitrator if the parties have so agreed).38 Non-separation agreements and the “Bigham cap”

[18.60]

In some cases, the cargo must be discharged from the ship at a port of refuge in order to effect temporary repairs, or for the safety of both ship and cargo. If the cargo is then forwarded to its destination on another ship, the community of interest between it and the original carrying ship is lost. If the owner of the original ship incurs further expenses after the ship and cargo have been separated, the cargo-owners might be able to argue that those expenditures are not allowable in general average, as they are no longer for the benefit of both ship and cargo. Accordingly, it used to be the practice for the parties to sign a “non-separation agreement” in these circumstances, which provided that the parties’ rights and liabilities in general average were not affected by the forwarding of the goods to their destination by other means, the intention being to place the parties as nearly as possible in the same position as they would have been if the goods had been carried to their destination on the original ship.39

In 1994, two new paragraphs (Rule G(3) and (4)) were included at the end of Rule G, to make a non-separation agreement part of the York-Antwerp Rules. If cargo has to be forwarded from a port of refuge to its intended destination, the common maritime adventure is, strictly speaking, over at the moment the cargo and the original carrying ship are separated at the port of refuge. Because the average adjustment is done on the basis of contributory values at the time the common maritime adventure comes to an end (see Rule XVII), Rule G(3) makes it clear that where cargo has been forwarded to its intended destination from the port of refuge by other means, the average adjustment is to be done on the basis of contributing values calculated at the final destination as if there had been no forwarding. Thus, for example, if cargo is worth more at the final destination than at the port of refuge, its contributing value in the average adjustment is higher than it would be but for the inclusion of Rule G(3). The effect of 37 Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd [1984] AC 226 (PC) at 237: “So, as a matter of law, in the absence of any agreement to the contrary, the publication of the average statement settles nothing: it has no other legal effect than as an expression of opinion by a professional man as to what are the appropriate sums payable to one another by the various parties interested in ship and cargo”. For an example of the parties agreeing to treat the adjustment as binding, see Tharsis Sulphur & Copper Co v Loftus (1872) LR 8 CP 1. 38 Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd [1984] AC 226 (PC); Tharsis Sulphur & Copper Co v Loftus (1872) LR 8 CP 1. 39 See, eg, The Abt Rasha [2000] 2 Lloyd’s Rep 575 (CA).

772

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[18.60]

the inclusion of Rule G(3) is reinforced by Rule XVII(c), which provides that in the circumstances envisaged by the Rule G(3), the contributory value of the cargo shall be calculated on the basis of its value upon delivery at its original intended destination. Pre-1994 non-separation agreements often contained a clause, known as a Bigham clause, which provided that the cargo-owners’ liability to contribute to general average under the extension provided by the non-separation agreement was limited to the cost of transhipment of the goods from the port of refuge to their final destination. The Bigham clause was first introduced into non-separation agreements in the United States, as a result of a decision of the United States District Court for the Southern District of New York to the effect that a cargo-owner is entitled to demand delivery of its goods at the port of refuge, no matter what the agreed destination in the contract of carriage.40 If it would be cheaper for the cargo-owner to take delivery of its goods at the port of refuge and pay for transhipment itself than it would be to share in the continuing general average expenditure, it would always refuse to sign the non-separation agreement.41 As a result, the Bigham clause capped the cargo-owner’s contribution at the cost of transhipment, thereby ensuring that the cargo-owner cannot be in a worse position by signing the non-separation agreement than it would be if it had demanded delivery of the goods at the port of refuge. This became known as “the Bigham cap”. The 1994 amendments incorporated the Bigham clause into the YorkAntwerp Rules, in Rule G(4), which provides that in the event of forwarding, a cargo-owner’s proportion of general average “shall not exceed the cost which would have been borne by the owners of the cargo if the cargo had been forwarded at their expense”. Despite lobbying by shipowner organisations for the deletion of Rule G(4), which they think operates unfairly, it was retained in the 2016 version of the Rules. However, Rule G(4) was amended to remove an ambiguity that became apparent after 1994. Before 2016, it was not clear whether the “Bigham cap” should apply only to expenses allowable under Rule G(3) (such as wages, etc, during repairs), or whether it applied both to those expenses and to the costs of forwarding, which are allowable under Rule F. (The cargo-owner’s contribution in general average would be less under the latter interpretation.) An additional sentence was added to Rule G(4) in 2016, stating: “This limit shall not apply to any allowances made under Rule F”, thus making it clear that the “Bigham cap” does not apply to the costs of forwarding. 40 Willcox, Peck & Hughes v Alphonse Weil & Bros 24 F 2d 587; 1928 AMC 64 (SDNY 1927). This case is also known, but not reported, as The Domingo de Larrinaga. The law firm representing the successful cargo-owner was Bigham, Englar and Jones of New York City. The Bigham clause gets its name from the firm, although Bigham himself did not appear as counsel in The Domingo de Larrinaga. The Bigham firm no longer exists. 41 See The Abt Rasha [2000] 2 Lloyd’s Rep 575 at 581 per Clarke LJ.

[18.70]

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Fault and the New Jason Clause [18.70]

Even when undertaken by professionals, the process of adjusting general average is so complex that, in difficult cases, it can take years to complete.42 The process would be even more long and complicated if the average adjuster had to determine whether the loss was caused by the fault of one of the interested parties, and if so, what effect that fault would have on the average adjustment. Accordingly, for the convenience of all the parties involved, Rule D provides that adjustment of general average is undertaken without reference to fault. However, the second part of Rule D provides that the process of average adjustment does not prejudice any remedies or defences that may be open against or to a party who is at fault. Thus, although each party’s general average contribution is calculated without reference to fault, fault may affect its legal liability to make the calculated contribution.

Example 18.1 While carrying iron ore from Australia to China under a voyage charterparty incorporating the Hague-Visby Rules, the ship “Red Dragon” begins to take in water through a hole in the shell plating of the hull. Some of the cargo is damaged. The ship puts into a port of refuge, where considerable expenditure is incurred in undertaking temporary repairs so that the ship can safely complete the voyage to China. The shipowner claims a general average contribution from the owner of the cargo, citing Rule XIV of the York-Antwerp Rules, which are incorporated into the charterparty. Average adjusters assess the cargo-owner’s contribution at $100,000. The cargo-owner refuses to pay this contribution, and the shipowner institutes proceedings to recover it. The cargo-owner counter-claims for $200,000, which is the value of the damage to the cargo of iron ore. In making this claim, the cargo-owner alleges that the hole in the shell plating was caused by unseaworthiness of the ship before and at the beginning of the voyage. Under Rule D, the cargo-owner is at liberty to make this claim based on fault, even though the general average assessment has been calculated without reference to fault. Unless the shipowner can establish that it exercised due diligence before and at the beginning of the voyage in respect of the unseaworthiness that gave rise to the leak,43 the cargo-owner is not obliged to make a general average contribution, and may recover damages for the diminution in value of the cargo.44

42 See Goulandris Bros Ltd v B Goldman & Sons Ltd [1958] 1 QB 74 at 92 per Pearson J. Because the process of calculating and then collecting relatively small general average contributions from hundreds, perhaps thousands, of cargo-owners would not be cost-effective for a shipowner, many hull insurance policies (particularly on container ships) include a “General Average Absorption Clause”, by which the shipowner’s hull insurer agrees simply to absorb (ie, not to pursue) general average contribution claims up to a stipulated amount or percentage of the ship’s value: see, eg, the BIMCO General Average Absorption Clause: https://www.bimco.org/en/Chartering/Clauses_and_ Documents/Clauses/General_Average_Absorption_Clause.aspx. 43 See [12.300]. 44 See, eg, Andre Toulemonde Wool Co Pty Ltd v Knutsen Offshore (Panama) SA (unreported, WA SC, Anderson J, 26 June 1998) (shipowner’s right to general average contributions

774

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Under Anglo-Australian law, the shipowner is deprived of the right to recover a general average contribution from cargo only if it is guilty of actionable fault. If it or its employees are guilty of fault, but the shipowner is excused from liability for that fault by a clause in the contract for carriage of the cargo,45 it may still recover a general average contribution from the owners of cargo carried under those contractual terms.46 In the United States, the position used to be the opposite,47 until the Supreme Court of the United States held in The Jason48 that a contract for the carriage of goods by sea may validly stipulate that the shipowner is entitled to a general average contribution if it is relieved by statute of responsibility for the negligence of the master and crew that gave rise to the general average event. In the light of that decision, carriers routinely included clauses to that effect in their contracts of carriage, known as Jason clauses. After the passage by the United States Congress of the Carriage of Goods by Sea Act 1936,49 the scope of the typical Jason clause was broadened; the “New Jason Clause” provides that the shipowner can recover a general average contribution if the event that gave rise to the general average was one for which the carrier is not responsible “by statute, contract or otherwise”.50 Because the position in the United States is only the same as that under Anglo-Australian law if such a clause is

lost because harm was caused by want of due diligence in relation to unseaworthiness); Guinomar of Conakry v Samsung Fire & Marine Insurance Co Ltd (The Kamsar Voyager) [2002] 2 Lloyd’s Rep 57 (shipowner’s right to general average contributions lost because harm was caused by want of due diligence in relation to unseaworthiness). Compare Demand Shipping Co Ltd v Ministry of Food Government of the People’s Republic of Bangladesh (The Lendoudis Evangelos II) [2001] 2 Lloyd’s Rep 304 (ship held seaworthy and shipowner’s right to general average contributions confirmed). 45 See, eg, Carriage of Goods by Sea Act 1991 (Cth), Sch 1, Art 4, r 2(a) (Hague-Visby Rules); Sch 1A, Art 4 r 2(a) (Australian modification), which excuse the carrier from liability for negligence in the navigation or management of the vessel: see [12.390]. 46 The Carron Park (1890) 15 PD 203; Milburn & Co v Jamaica Fruit Importing and Trading Co of London [1900] 2 QB 540. 47 See Flint v Christall: The Irrawaddy 171 US 187; 18 S Ct 831; 43 L Ed 130 (1898), where the Supreme Court of the United States held that a shipowner could not claim general average contributions from cargo because a stranding was caused by the negligence of the master, even though the shipowner was not directly responsible to the cargo owners because of the provisions of the Harter Act. 48 The Jason 225 US 32; 32 S Ct 560; 56 L Ed 969 (1912). 49 Now codified as a 46 USC § 30701. 50 For an example of the New Jason Clause entitling a shipowner to general average contribution, despite fault on its part, see Usinas Siderurgicas de Minas Geras SA-Usiminas v Scindia Steam Navigation Co 118 F 3d 328; 1997 AMC 2762 (5th Cir 1997).

[18.80]

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included,51 contracts for the carriage of goods into or out of the United States often include a New Jason Clause.52

Securing payment of general average contributions [18.80]

The shipowner has a common law lien over the cargo for contributions to general average losses or expenses.53 In most cases, though, it would be extremely inconvenient for all concerned if the shipowner were to exercise the lien and delay delivery of the cargo until the general average contributions had been calculated and paid. In practice, it is more usual for the master of the ship (or some other agent acting on the shipowner’s behalf) to safeguard the shipowner’s position by accepting security in the form of a bond for an amount estimated to be sufficient to cover the probable contribution. On provision of such a bond, the owner of the cargo is entitled to delivery.54 In practice, the bond is usually given in a standard form known as the Lloyd’s Average Bond,55 although a guarantee or letter of credit from the cargo-owner’s bank or underwriter is also acceptable, and sometimes required in addition to the provision of a bond by the cargo-owner itself. However, the shipowner is entitled to demand an average bond from the cargo-owner itself, even when it has been given a guarantee by a bank or underwriter.56 A shipowner does not forego its lien if it has received a guarantee but no bond.57 Where cash deposits are collected in respect of cargo’s liability to contribute to general average, Rule XXII provides that they must be held in a special account. In versions before 2016, Rule XXII provided that they be held jointly in the name of a representative of the shipowner and a 51 Note that the position is also the same where the shipowner has failed to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage. In such a case, the shipowner is deprived of its right to a general average contribution notwithstanding the New Jason Clause, just as it would be under Anglo-Australian law (see Example 18.1 at [18.70]): see Louis Dreyfus Corp v 27,946 Long Tons of Corn 830 F 2d 1321 (5th Cir 1987); Deutsche Shell Tanker Gesellschaft mbH v Placid Refining Co 993 F 2d 466; 1993 AMC 2141 (5th Cir 1993); Birmingham Southeast LLC v M/V Merchant Patriot 2003 AMC 1559 (SD Ga 2000). 52 See, eg, cll 25, 31(c) of the NYPE 2015 form (Appendix 7). 53 The general average lien is not a maritime lien (see The North Star (1860) Lush 45; 167 ER 24) but it may be enforced by an action in rem against the cargo: see Admiralty Act 1988 (Cth), ss 4(3)(h), 17. 54 See, eg, McLean v Liverpool Association (1883) 9 VLR (L) 93; State Trading Corp of India v Doyle Carriers Inc (The Jute Express) [1991] 2 Lloyd’s Rep 55; Demand Shipping Co Ltd v Ministry of Food Government of the People’s Republic of Bangladesh (The Lendoudis Evangelos II) [2001] 2 Lloyd’s Rep 304. 55 See, eg, Galaxy Special Maritime Enterprise v Prima Ceylon Ltd (The Olympic Galaxy) [2006] 2 Lloyd’s Rep 27. 56 Metall Market OOO v Vitorio Shipping Co Ltd (The Lehmann Timber) [2013] 2 Lloyd’s Rep 541 (CA). 57 Metall Market OOO v Vitorio Shipping Co Ltd (The Lehmann Timber) [2013] 2 Lloyd’s Rep 541 (CA).

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representative of the depositors. However, because joint accounts of this kind are no longer generally available under modern banking practice, Rule XXII was amended in 2016 to provide that cash deposits shall be held in a special account in the name of the appointed average adjuster, earning interest where possible, which deposits are to be held as security for payment to the parties entitled to general average contribution. Whereas the shipowner can, if necessary, exercise a lien over cargo to secure contribution to its general average expenses, a cargo-owner who has suffered a general average loss is in a less secure position. It cannot exercise a lien over cargo belonging to other owners, as it does not have possession.58 However, the owner of cargo that has been sacrificed, or is otherwise entitled to general average contributions, can oblige the ship’s master (or other agent) to exercise the shipowner’s lien for general average contributions,59 and can recover damages from the shipowner representing the full amount of its general average entitlement if the shipowner releases the remaining cargo to its receivers without securing the payment of general average contributions from them.60 Thus, in practice, the shipowner usually secures a general average bond as security for the interests of all those entitled to general average contributions.

Salvage [18.90]

The treatment of salvage was the main difference between the 1994 version of the York-Antwerp Rules and the 2004 version, and it was the main reason for the failure of the 2004 version to gain market acceptance. In the 1994 version (and its predecessors), salvage expenses were included as general average expenditures under Rule VI. The 2004 version of Rule VI provided that salvage payments “shall lie where they fall and shall not be allowed in general average”. The significance of the distinction lay in the fact that contributing values in salvage are calculated upon successful completion of the salvage, which usually occurs at the port or place of refuge where the ship and cargo are delivered to safety, whereas contributing values in general average are calculated on the basis of values at the originally-intended port of final destination, under Rule G. As well, general average expenditures include expenses incurred after the end of the salvage, such as repair costs at the port of refuge and any additional costs incurred in completing the voyage from the port of refuge to the originally-contemplated destination. Those opposed to including salvage in general average argued that inclusion of salvage involves unnecessary duplication of the apportionment of the salvage remuneration. Those in favour of including

58 See, eg, Hallett v Bousfield (1811) 18 Ves 187; 34 ER 288. 59 Strang, Steel & Co v A Scott & Co (1889) 14 App Cas 601. 60 Crooks v Allan (1879) 5 QBD 38; Zim Israel Navigation Co Ltd v 3-D Imports Inc 29 F Supp 2d 186; 1999 AMC 1145 (SDNY 1998).

[18.90]

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salvage in general average argued that to leave salvage to lie where it falls might lead to injustice. The following example illustrates the difference in the operation of the 1994 and the 2004 Rules.

Example 18.2 The ship “Bon Temps” runs aground in heavy weather during a laden voyage. It is refloated and assisted to a port of refuge by salvage tugs. The ship, which was worth $1.5 million, sustains $300,000 worth of damage as a result of the grounding, so that its value upon completion of the salvage is $1.2 million. The ship’s cargo is not damaged as a result of the grounding; it is worth $2 million at the port of refuge. Thus, the reward paid to the salvors would be split between ship and cargo in a ratio of 1.2 to 2, or 37.5% to ship and 62.5% to cargo.61 The salvage reward is $200,000. After repairs at the port of refuge costing $250,000 (including port costs), the ship continues to its final destination, where its value is now $1.4 million, but where the value of the cargo is $2.2 million. Thus, the value of the cargo is 61% of the total value at the originally-planned destination; the value of the ship is 39% of the total value at that place. Calculation if salvage is included in general average (YAR 1994): • General average expenditure = $450,000 ($200,000 for salvage, $250,000 for repairs and port of refuge costs) • Total cargo share of GA expenditure = 61% of $450,000 = $274,500 • Total ship share of GA expenditure = 39% of $450,000 = $175,500 Calculation if salvage is excluded from general average (YAR 2004): • Salvage reward of $200,000 is apportioned on the basis of values at port of refuge, the place where the salvage was successfully completed • Cargo share of salvage = 62.5% of $200,000 = $125,000 • Ship share of salvage = 37.5% of $200,000 = $75,000 • General average expenditure = $250,000 for repairs and port of refuge costs • Cargo share of GA expenditure = 61% of $250,000 = $152,500 • Ship share of GA expenditure = 39% of $250,000 = $97,500 • Total amount to be paid by cargo = $125,000 (salvage) + $152,500 (GA) = $277,500 • Total amount to be paid by ship = $75,000 (salvage) + $97,500 (GA) = $172,500

61 For the sake of convenience, the example excludes other contributing property, such as bunkers, unpaid freight, and so on.

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The difference between the total contributions in this example is noticeable but not that great, which serves to illustrate the argument that to include salvage in the general average creates unnecessary duplication. The difference in total contributions would be much greater, however, if the contributory values at the port of intended destination were to be markedly different from those at the port of refuge (as they are not in the example). For example, if the cargo were to be totally lost as a result of another incident occurring between the port of refuge and the port of intended destination, the cargo-owner (or, rather, its insurer) would have to make no contribution at all, not even to the salvage reward for bringing the cargo to the place of refuge, if salvage were to be included in the general average. In the 2016 version of the York-Antwerp Rules, Rule VI compromises between the competing positions about whether or not to include salvage in the general average. In the 2016 version, Rule VI restores the 1994 position, by which salvage is included in the general average, subject to an exception for circumstances in which including salvage in the general average would be unfair. Rule VI(a) will revert to the form of words used in the 1994 version, providing that: “Expenditure incurred by the parties to the common maritime adventure in the nature of salvage, whether under contract or otherwise, shall be allowed in general average…” However, that general provision is subject to the detailed series of exceptions in Rule VI(b) which provides:62 (b) Notwithstanding (a) above, where the parties to the adventure have separate contractual or legal liability to salvors, salvage shall only be allowed should any of the following arise: (i) there is a subsequent accident or other circumstances resulting in loss or damage to goods occurring during the voyage that results in significant differences between salved and contributory values; (ii) there are significant general average sacrifices; (iii) salved values are manifestly incorrect and there is a significantly incorrect apportionment of salvage expenses; (iv) none of the parties to the salvage has paid a significant proportion of salvage due from another party; (v) a significant proportion of the parties have satisfied the salvage claim on substantially different terms, no regard being had to interest, currency correction or legal costs of either the salvor or the contributing interest.

In 1989, Art 14 of the International Convention on Salvage introduced a new right to special compensation for salvors who have prevented or minimised damage to the environment, but who have failed to earn 62 The text reproduced here is based upon the discussion draft circulated by the International Working Group at the CMI Colloquium in Istanbul in June 2015. Readers of this book after May 2016 should consult the version of the 2016 amendments that was finally adopted.

[18.90]

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salvage reward exceeding the cost of doing so.63 The Salvage Convention 1989 also provided that the skill and efforts of the salvors in preventing or minimising damage to the environment should be taken into account in fixing the salvage reward in cases where the salvage of ship and cargo is successful.64 As a result of dissatisfaction among salvors with the decision of the House of Lords in The Nagasaki Spirit,65 the International Salvage Union drafted a clause, known as the SCOPIC clause,66 which provides for additional compensation over and above that available under Art 14 of the International Salvage Convention 1989. The SCOPIC clause can be incorporated by agreement into the most recent version of the standard salvage agreement, Lloyd’s Open Form Salvage Agreement 2011 (LOF 2011). Rule VI(d) of the York-Antwerp Rules 2016 provides that: Special compensation payable to a salvor under Art 14 of the International Convention on Salvage 1989 to the extent specified in paragraph 4 of the Article or under any other provision similar in substance (such as SCOPIC) shall not be allowed in General Average and shall not be considered a salvage expenditure as referred to in paragraph (a) of this Rule.

This is consistent with the position taken in Rule C(2), which provides that there shall be no general average contribution in relation to liability for escape or release of “pollutant substances”, as that would be inconsistent with the “channelling” provisions of the international conventions on pollution from ships.67 Pollution liability, including liability under Art 14 of the International Salvage Convention 1989 and SCOPIC, is left to lie where it falls, which is with the shipowner. However, if the remuneration paid for a successful salvage takes into account the skill and efforts of the salvors in preventing or minimising damage to the environment (as it may under Art 13(1)(b) of the International Salvage Convention 1989), it still constitutes an expenditure allowed in general average by virtue of Rule VI(c) of the York-Antwerp Rules 2016, even though the salvors’ efforts to save the environment are not carried out solely “for the purpose of preserving from the peril the property involved in the common maritime adventure”, to use the words of Rule A.

63 International Salvage Convention 1989, Art 14. See generally, Chapter 20. 64 International Salvage Convention 1989, Art 13.1(b). 65 Semco Salvage and Marine Pte Ltd v Lancer Navigation Co Ltd: The Nagasaki Spirit [1997] AC 455. 66 SCOPIC stands for Special Compensation P & I Clause. The history of the SCOPIC clause is set out in G Brice, “The Law of Salvage: A Time for Change? “No Cure-No Pay” No Good?” (1999) 73 Tulane Law Review 1831. 67 See [18.40]. For a consideration of the “channelling” provisions in the international conventions on pollution, see Chapter 19.

19

Pollution from Ships [19.10] INTRODUCTION ........................................................................................... 781

[19.10] General ............................................................................................... 781 [19.20] The international conventions ....................................................... 782 [19.30] The adoption of the conventions into Australian law .............. 785 [19.40] PUNISHING THE POLLUTER .................................................................... 787

[19.40] Which Act applies: Commonwealth, State or Territory? .......... 787 [19.50] Oil pollution: Commonwealth ....................................................... 792 [19.100] Oil pollution: States and Northern Territory ............................ 802 [19.120] Other pollutants: MARPOL Annexes II to V ............................ 808 [19.150] Air pollution: MARPOL Annex VI ............................................. 814 [19.180] Other State and Territory environmental protection legislation ........................................................................................ 818 [19.190] Dumping ......................................................................................... 819 [19.210] COMPENSATION FOR LOSSES CAUSED BY POLLUTION .............. 825

[19.210] Introduction .................................................................................... 825 [19.220] Compensation under the Civil Liability Convention 1992 (CLC 92) ........................................................................................... 826 [19.300] Compensation under the Fund Convention and the Supplementary Fund Protocol ..................................................... 845 [19.390] Compensation under the Bunker Convention .......................... 853 [19.400] PREVENTION AND CLEAN-UP .............................................................. 856

INTRODUCTION General [19.10]

Virtually all of the Australian law governing pollution from ships takes the form of domestic enactment of international conventions. Many of those conventions were made as an international response to problems exposed by catastrophic pollution disasters that attracted much publicity around the world, such as the stranding of the “Torrey Canyon” in 1967 and the “Exxon Valdez” in 1989, and the sinking of the “Erika” in 1999 and the “Prestige” in 2002. Although the disasters that prompted the

782

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international responses were, for the most part, oil spills, some of the conventions regulate pollution from ships as a result of substances other than oil, such as hazardous and noxious substances, sewage and garbage. Accordingly, although this chapter focuses on the law governing oil pollution from ships, it also considers marine pollution of other kinds, including air pollution. The Australian law giving effect to the various international conventions is almost wilfully complex. In part, the problem arises because of the cumulative and overlapping effect of the conventions themselves, but the Australian Constitution is the main source of difficulty in discerning exactly what is the Australian law governing marine pollution from ships. The Commonwealth, the States and the Northern Territory have all legislated to give effect to some of the conventions described at [19.20], but there is little uniformity between the various jurisdictions. Different jurisdictions have given effect to the different conventions in different ways. The result is a maze of highly detailed legislation, which can only be navigated with a detailed chart of the division of legislative responsibility between Commonwealth and States under the Constitution.

The international conventions [19.20]

Australia is a party to each of the following conventions relating to pollution from ships:1

• the International Convention for the Prevention of Pollution by Ships 1973, as amended by Protocol in 1978 (MARPOL 73/78) (known as MARPOL); • the International Convention on Civil Liability for Oil Pollution Damage 1992, as amended by a resolution of the Legal Committee of the International Maritime Organization in 2000 (known as the Civil Liability Convention 1992, or simply, CLC 92); • the International Convention on the Establishment of an International Fund for Oil Pollution Damage 1992, as amended by Protocol in 2003 and by a resolution of the Legal Committee of the International Maritime Organization in 2000 (known as the Fund Convention 1992); • the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (known as the Bunker Convention); • the International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties 1969, as amended by a Protocol of 1973 and resolutions of the Marine Environment Protection Committee of the International Maritime Organization in 1991 and 1996 (known as the Intervention Convention);

1 See, generally, the “Protection of the Sea” page at the website of the Australian Maritime Safety Authority (AMSA): https://www.amsa.gov.au/environment/legislation-andprevention/protection-of-the-sea/index.asp.

[19.20]

19 Pollution from Ships

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• the 1996 Protocol to the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter 1972 (known as the Dumping Convention Protocol or the London Protocol);2 • the International Convention on Oil Pollution Preparedness Response and Co-Operation 1990, as amended by Protocol in 2000 (known as the OPRC Convention or OPRC 90). MARPOL was designed to create a uniform international scheme prohibiting the discharge of oil into the sea. It superseded the earlier International Convention for the Prevention of Pollution by Oil 1954 (known as OILPOL 54). The original version of MARPOL, made in 1973, did not attract enough signatures to bring it into force internationally. It was amended by a Protocol made in 1978, which successfully addressed the flaws that had prevented the original 1973 version from coming into force. As a result, the amended version of the convention did come into force internationally: it is often known as MARPOL 73/78 to highlight the fact that it is the amended version that has international effect. The original Civil Liability Convention 1969 (known as CLC 69) was intended, as its name suggests, to create a regime of civil liability for the consequences of oil pollution. It imposed on shipowners and their insurers strict but limited liability for damage caused by oil pollution. A Protocol to amend CLC 69 was made in 1984 but it did not come into force, principally because the United States unilaterally passed its own legislation (the Oil Pollution Act 1990 or OPA 90) in response to the “Exxon Valdez” oil spill, and so it refused to become a party to the Convention or the Protocol. In response to the failure of the 1984 Protocol, another Protocol was made in 1992, which reduced from six to four the number of large tanker-owning countries needed to bring the Protocol into force, thereby making it easier for it to come into force without the United States becoming a party. The 1992 Protocol came into force internationally on 30 May 1996. Although it was, strictly speaking, a Protocol to CLC 69, it effectively created a new Convention known as the International Convention of Civil Liability for Oil Pollution Damage 1992 or CLC 92.3 Countries like Australia that are party to the 1992 Protocol are no longer party to CLC 69. CLC 92 contains a mechanism for amendment of the limitation amounts in the Convention by tacit acceptance.4 As a direct response to the “Erika” oil spill of 1999/2000, the limitation amounts set 2 The 1996 Protocol superseded the Convention: see Environment Protection (Sea Dumping) Act 1981 (Cth), Sch 1, Art 23. 3 Article 11 of the 1992 Protocol provides that the original CLC 69 and the 1992 Protocol shall be read and interpreted together as one single instrument known as the International Convention of Civil Liability for Oil Pollution Damage 1992. Article 9 of the 1992 Protocol adds a new Art XII ter to the original CLC 69, providing that the final clauses of CLC 69 shall be Arts 12 – 18 of the 1992 Protocol, and that references in CLC 69 to Contracting States shall be taken to mean references to the Contracting States of the 1992 Protocol. See Protection of the Sea (Civil Liability) Act 1981 (Cth), Sch 2, Arts 9, 11. 4 Protection of the Sea (Civil Liability) Act 1981 (Cth), Sch 2, Art 15.

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in the 1992 Protocol were amended by the tacit acceptance process on 18 October 2000, with effect from 1 November 2003.5 CLC 69 was supplemented in 1971 by the Fund Convention, which provided a second tier of compensation over and above that provided by shipowners and their insurers under CLC 69. The Fund Convention 1971 provided that if the shipowner or its insurer was not liable under the CLC, or could not meet its CLC obligations in full, or if the limit of liability under the CLC had been exceeded, compensation for oil pollution damage would be made by an international body (the International Oil Pollution Compensation Fund or IOPC Fund) (known as the 1971 Fund), which was funded by importers of oil. The liability of the IOPC Fund was also strict, but limited. As was the case with CLC 69, an unsuccessful Protocol to amend the Fund Convention 1971 was made in 1984, and was replaced by a 1992 Protocol, which came into force internationally on 30 May 1996. The 1992 Protocol created a separate international compensation fund, known as the 1992 International Oil Pollution Compensation Fund, the 1992 IOPC Fund, or simply the 1992 Fund. The 1992 Fund superseded the 1971 Fund, which ceased to exist with effect from 31 December 2014.6 As is the case with CLC 92, the 1992 Protocol effectively created a new international convention known as the Fund Convention 1992.7 Also like CLC 92, the Fund Convention 1992 contains a mechanism for amendment of the limitation amounts in the Convention by tacit acceptance.8 The limitation amounts set in the 1992 Protocol were amended by the tacit acceptance process on 18 October 2000, with effect from 1 November 2003.9 The oil spill from the tanker “Erika” in 1999/2000 caused considerable damage to the coastline of Brittany. Because the “Erika” was a small ship, the limits of liability under CLC 92 were relatively small, and the second tier compensation provided by the 1992 Fund correspondingly large. Clean-up costs and compensation claims exceeded the maximum amount 5 The definition of “1992 Protocol” in the Protection of the Sea (Civil Liability) Act 1981 (Cth), s 3(1) is “the Protocol of 1992 to amend the International Convention on Civil Liability for Oil Pollution Damage, 1969 … as amended by resolution LEG.1(82) adopted by the Legal Committee of the International Maritime Organization on 18 October 2000”. The English text of the resolution appears as Sch 3 to the Protection of the Sea (Civil Liability) Act 1981 (Cth). 6 See the IOPC Funds website: http://www.iopcfunds.org/news-events/detail/item/327. 7 Article 27 of the 1992 Protocol provides that the original Fund Convention 1971 and the 1992 Protocol shall be read and interpreted together as one single instrument known as the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1992, or Fund Convention 1992. Article 26 of the 1992 Protocol adds a new Art 36 quinquies to the original Fund Convention 1971, providing that the final clauses of the Fund Convention 1971 shall be Arts 28 – 39 of the 1992 Protocol, and that references in the Fund Convention 1971 to Contracting States shall be taken to mean references to the Contracting States of the 1992 Protocol. See Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), Sch 3, Arts 26, 27. 8 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), Sch 3, Art 33. 9 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), Sch 4.

[19.30]

19 Pollution from Ships

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recoverable under the CLC 92/Fund regime.10 As noted above, the limits of liability under the 1992 Conventions were increased by tacit acceptance in response. Since 1 November 2003, the total compensation available under both Conventions is 203 million Special Drawing Rights (SDRs). Despite this substantial increase, there was considerable pressure, particularly from within the European Union, to increase the limits still further and to set up an optional third tier of compensation to be paid out of a Supplementary Fund. The Supplementary Fund Protocol was adopted in 2003, and it entered into force internationally in 2005. It increases the total amount of compensation to 750 million SDRs. Australia adopted the Supplementary Fund Protocol 2003 with effect from 13 October 2009.11 Before the CLC/Fund scheme was agreed, and in response to the international outcry over the damage caused by the “Torrey Canyon” oil spill, oil tanker owners entered into a voluntary agreement called the Tanker Owners’ Voluntary Agreement Concerning Liability for Oil Pollution 1968, or TOVALOP for short. The shipowners participating in TOVALOP agreed to make voluntary compensation to those who had suffered loss as a result of oil pollution damage caused by their ships. For their part, the owners of the cargo carried in oil tankers (that is, the oil companies) recognised that liability should not be borne solely by the shipowners and their insurers, not least because the costs of that liability would eventually be passed onto the cargo-owners in increased freight charges. Thus, the cargo-owners created their own voluntary scheme, known as the Contract Regarding an Interim Supplement to Tanker Liability for Oil Pollution 1968, or CRISTAL for short. TOVALOP and CRISTAL continued to operate alongside CLC 69 and the Fund Convention 1971, but they were made redundant by the changes made by the 1992 Protocols. They ceased to exist on 20 February 1997. The intention of the other three conventions (the Intervention Convention, the Dumping Convention Protocol and the OPRC Convention) is sufficiently clear from their long titles. Each is described in detail at [19.30] (with the exception of the OPRC Convention).

The adoption of the conventions into Australian law [19.30]

The CLC 69 was first enacted by the Commonwealth in the Protection of the Sea (Civil Liability) Act 1981 (Cth). The Act now gives the force of law to selected provisions of CLC 92. The Intervention Convention was implemented by the Commonwealth by enactment of the Protection of the Sea (Powers of Intervention) Act 1981 (Cth).

10 The total amount of compensation available under the 1992 Conventions at the time of the “Erika” spill was 135 million SDRs (Special Drawing Rights), which was then worth about US$184 million. The total of “Erika”-related claims was in the order of US$200 million. 11 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), Pt 3A.4.

786

Shipping Law

[19.30]

The original Dumping Convention was implemented by the Commonwealth by enactment of the Environment Protection (Sea Dumping) Act 1981 (Cth). That Act was amended in 2000 to give effect to the 1996 Protocol, which superseded the original Convention.12 Although there is some State legislation purporting to give effect to the original Dumping Convention in State coastal waters, that legislation is superseded by the Commonwealth Act.13 Both Commonwealth and State legislation give effect to MARPOL, but only the Commonwealth legislation gives the force of law to all six Annexes. Not all of the relevant Acts14 contain the text of MARPOL 73/78 in a Schedule or Schedules,15 but each of them (except the Northern Territory statute) provides that words in the Act are to be interpreted in the same way as in the Convention and its Annexes.16 Each Act creates offences in relation to the discharge of oil and other pollutants into the sea, and each Act imposes obligations on ship operators that are drawn from the convention. Legislation was passed in 1993 to give effect to the Fund Convention 1992 in Australia. As originally enacted, the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth) contained a chapter giving effect to the Fund Convention 1971 and another chapter giving effect to the Fund Convention 1992. Chapter 2, which gave effect to the Fund Convention 1971, was repealed with effect from 15 May 1998.17 Chapter 3, which gives effect to the Fund Convention 1992, was proclaimed on 9 October 1996.18 As amended, the Act provides who is to contribute to the 1992 Fund, how much they must contribute and how such contributions are to be 12 The 1996 Protocol superseded the Convention: see Environment Protection (Sea Dumping) Act 1981 (Cth), Sch 1, Art 23. 13 Environment Protection (Sea Dumping) Act 1981 (Cth), s 9(1). See [19.200]. 14 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth); Marine Pollution Act 2012 (NSW); Marine Pollution Act (NT); Transport Operations (Marine Pollution) Act 1995 (Qld); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA): Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic); Pollution of Waters by Oil and Noxious Substances Act 1986 (WA). 15 The text of MARPOL does not appear in the Commonwealth, New South Wales, Northern Territory or Queensland Acts. It does appear in Schedules to the South Australian, Tasmanian, Victorian and Western Australian legislation. 16 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 3(3), 8, 15, 26A, 26C, 26E, 26FEF; Marine Pollution Act 2012 (NSW), s 4; Transport Operations (Marine Pollution) Act 1995 (Qld), s 5; Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), ss 3(3), 7, 14, 24AA, 24AAC; Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), ss 3(3), 7, 16, 25A, 25CA, 25D; Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), ss 3(3), 7, 14, 23A, 23C, 23F; Pollution of Waters by Oil and Noxious Substances Act 1986 (WA), ss 3(3), 7, 16. 17 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), s 26, proclaimed in Gov Gaz 1998 (Cth), No S214. 18 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), ss 27 – 46, proclaimed in Gov Gaz 1996 (Cth), No S376.

[19.40]

19 Pollution from Ships

787

collected. The Act also specifies the circumstances in which the 1992 Fund must compensate those who have suffered loss as a result of oil pollution damage. Because s 55 of the Constitution provides that laws imposing taxation shall deal only with the imposition of taxation, the obligation to contribute to the 1992 Fund is not imposed by the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), but by one of three other Acts, the Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – Customs) Act 1993 (Cth), the Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – Excise) Act 1993 (Cth) and the Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – General) Act 1993 (Cth). As the titles of these three Acts suggest, they are a kind of hedging of the Commonwealth’s bets in constitutional terms. If, as a matter of law, the imposition of a contribution to the Fund is a customs charge, it is validated by the first of these three Acts; if it is an excise charge, it is validated by the second; if it is neither a customs nor an excise charge, then it is validated by the third Act. The Bunker Convention was given the force of law by the Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth).

PUNISHING THE POLLUTER Which Act applies: Commonwealth, State or Territory? [19.40]

The principal Act creating offences in relation to pollution of the marine environment is the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), which gives effect to the MARPOL Convention. Sections 9 – 14A of the Act govern pollution of the sea by oil and oily mixtures (Annex I of MARPOL); ss 15 – 26AA govern pollution of the sea by noxious liquid substances (Annex II of MARPOL); ss 26A – 26B govern pollution by packaged harmful substances (Annex III of MARPOL); ss 26BA – 26DAA govern pollution by sewage (Annex IV of MARPOL); ss 26E – 26FE govern pollution by garbage (Annex V of MARPOL); and ss 26FEF – 26FEW deal with air pollution (Annex VI of MARPOL). Section 6 provides that the Act applies both inside and outside Australia, and to the exclusive economic zone (EEZ),19 which extends to a distance of 200 nautical miles from the coastal baseline of Australia and its external Territories.20 However, the “roll-back” provisions of the Act provide that

19 The reference to the EEZ in s 6 was added by the Transport and Communications Amendment Act 1994 (Cth) with effect from 16 August 1994. Because the did not come into force internationally until 16 November 1994, it is questionable whether the purported application of this and other Acts to the EEZ was valid as a matter of international law in the days between 16 August 1994 and 15 November 1994. 20 “Exclusive economic zone” is defined by s 3(1) as being the exclusive economic zone, within the meaning of the Seas and Submerged Lands Act 1973 (Cth), adjacent to the coast of Australia or the coast of an external Territory. The external Territories of Australia are: the Ashmore and Cartier Islands, the Australian Antarctic Territory, Christmas Island,

788

Shipping Law

[19.40]

the operative provisions do not apply in relation to the sea near a State (which for these purposes includes the Northern Territory),21 the Jervis Bay Territory or an external Territory, to the extent that a law of that State or Territory makes provision giving effect to the relevant parts of the MARPOL 73/78 Convention.22 Each of the States and the Northern Territory has enacted legislation giving effect to parts of the MARPOL 73/78 Convention. New South Wales, Queensland and Tasmania have given effect to Annexes I – V but not Annex VI. South Australia has given effect to Annexes I – III and V, but not Annex IV or VI. Victoria has legislated to give effect to Annexes I – V, but has not proclaimed the legislation giving effect to Annex II, III or IV and has not legislated to give effect to Annex VI. The Northern Territory has legislated to give effect to Annexes I – V, but has not proclaimed the legislation giving effect to Annex IV and has not legislated to give effect to Annex VI. Western Australia has given effect to Annexes I and II, but not Annexes III – VI. Section 3(1A), (1B) and (1C) of the Commonwealth Act provide that the “sea near” a State or Territory means the part or parts of the territorial sea within three nautical miles of the baseline of the territorial sea and adjacent to the State, and the sea on the landward side of the baseline of the territorial sea that is adjacent to the State but not within the limits of the State.23 For its part, the relevant State and Territory legislation is expressed to apply in the territorial sea adjacent to the State or Territory, the sea on the landward side of that territorial sea and waters within the limits of the State.24 the Cocos (Keeling) Islands, the Coral Sea Islands Territory, Heard Island, the McDonald Islands and Norfolk Island. The fact that the Act applies to a distance of 200 nautical miles from the coastal baseline of each of these Territories significantly expands its territorial ambit. 21 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 3(1) (definition of “State”). 22 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1B)(b)(i) (oil or oily mixtures; no effect if State or Territory has given effect to regs 4, 15 and 34 of Annex I to MARPOL), s 21(1)(c)(i) (noxious substances; no effect if State or Territory has given effect to regs 3, 6 and 13 of Annex II of MARPOL), s 26AB(1)(c)(i) (packaged harmful substances; no effect if State or Territory has given effect to reg 7 of Annex III of MARPOL), s 26D(1)(c)(i) (sewage; no effect if State or Territory has given effect to reg 3 and reg 11, para 1 of Annex IV of MARPOL), s 26F(1)(c)(i) (garbage; no effect if State or Territory has given effect to regs 3, 4 and 7 of Annex V of MARPOL), s 26FEG(1)(d)(i) (air pollution; no effect if State or Territory has given effect to reg 14, para 1 of Annex VI of MARPOL). 23 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 3(1A) (States, which includes the Northern Territory), (1B) (Jervis Bay Territory), (1C) (external Territories). 24 See the definition of “State waters” in Marine Pollution Act 2012 (NSW), s 3; Marine Pollution Act (NT), s 6(1) (“coastal waters”); Transport Operations (Marine Pollution) Act 1995 (Qld), s 4(1), Sch (“coastal waters”); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 3(1); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 3(1); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 3(1); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 3(1).

[19.40]

19 Pollution from Ships

789

Before the “roll-back” provisions were amended in 2012,25 the Commonwealth Act purported to apply State and Territory legislation to the whole of the territorial sea of Australia, to the full distance of 12 nautical miles from the coastal base line, despite the fact that the legislative competence of the States and Territories was limited to a territorial sea of three nautical miles by the Coastal Waters (State Powers) Act 1980 (Cth) and the Coastal Waters (Northern Territory Powers) Act 1980 (Cth). The explicit limitation in these Acts on the legislative competence of the States and Territories meant that the former “roll-back” provisions were probably only effective up to three nautical miles, in any event.26 The 2012 amendments effectively acknowledge that fact, by providing that the “roll-back” of Commonwealth provisions applies only up to three nautical miles. The 2012 amendments also included a new definition of “outer territorial sea”, which is that part of the territorial sea of Australia between three and 12 nautical miles.27 In summary, the State and Territory MARPOL legislation applies within the territorial sea to the limit of three nautical miles,28 but the Commonwealth Act applies beyond that point. The question of which Act applies where can be an important one, because the different pieces of legislation impose fines of very different magnitudes. For example, if a foreign ship29 were to discharge oil into the band of sea between three and 200 nautical miles from the coastline of Australia, the master, charterer and owner would each be guilty of an offence punishable by a maximum fine of 20,000 penalty units for a natural person,30 and 100,000 penalty units for a body corporate.31 If, however, the same ship were to spill the same amount of oil into the sea within three nautical miles of the coastline of Victoria, the master and owner, but not the charterer, would each be guilty of an offence 25 By the Maritime Legislation Amendment Act 2012 (Cth), s 66. 26 See p 556 of the third edition of this book. 27 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 3(1D). 28 But see [19.180] in relation to the possible effect of the general State legislation protecting the environment in Victoria and Western Australia. 29 The example must be of a foreign ship because the Commonwealth Act applies to Australian ships no matter where the discharge takes place: see Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1B)(b)(iii). 30 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1B). Crimes Act 1914 (Cth), s 4AA(1) provides that in a law of the Commonwealth, “penalty unit” means $180, subject to indexation every three years, beginning on 1 July 2018, by reference to a formula set out in s 4AA(3), based on the All Groups Consumer Price Index. Thus, at the time of writing (January 2016), the maximum fine of 20,000 penalty units is equivalent to $3.6 million, but that will increase with indexation. 31 Crimes Act 1914 (Cth), s 4B(3) provides that the maximum penalty for a corporate offender against any Commonwealth law may be five times as much as for a natural person. At the time of writing (January 2016), the maximum penalty for a body corporate is, thus, $18 million, which will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3).

790

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[19.40]

punishable by a maximum fine of 2,000 penalty units,32 and/or two years’ imprisonment in the case of the master, and a maximum fine of 10,000 penalty units for the owner (assuming it to be a corporation).33 If the same ship were to spill the same amount of oil into the sea within three nautical miles of the coastline of New South Wales, the master and owner, but not the charterer, could be fined a maximum of $500,000 for the master (or the owner if a natural person) and $10,000,000 for the owner (if a corporation).34 To take another example, the Commonwealth legislation creates an offence of strict liability,35 which means that a defence of mistake of fact is available.36 In contrast, the Queensland legislation creates an offence of absolute liability,37 which means that defences of accident or honest and reasonable mistake are not available,38 even though the maximum fine is 100,000 penalty units for a corporate offender.39 There is another important difference between the Commonwealth legislation and the State and Territory legislation. In each case, the State or Territory legislation provides that where a discharge of a pollutant occurs outside the waters governed by the Act “onto or into waters or any structure or thing” and the pollutant eventually enters the waters governed by the Act, then the discharge is deemed to be a discharge into

32 Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(1). The combined effect of Interpretation of Legislation Act 1986 (Vic), s 38 and Sentencing Act 1991 (Vic), s 110 gives “penalty units” the value fixed by the Victorian Treasurer from time to time under the Monetary Units Act 2004 (Vic), s 5(3). The amount is indexed each financial year, and increases each year on 1 July. At the time of writing (January 2016), a penalty unit was worth $151.67, which means the maximum fine is presently equivalent to $303,340, but that number will increase in subsequent years by indexation. 33 Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(1). At the time of writing (January 2016), a Victorian penalty unit was worth $151.67, which means that the maximum fine is presently equivalent to $1,516,700, but that number will increase in subsequent years by indexation: see Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(1). The combined effect of Interpretation of Legislation Act 1986 (Vic), s 38 and Sentencing Act 1991 (Vic), s 110 gives “penalty units” the value fixed by the Victorian Treasurer from time to time under the Monetary Units Act 2004 (Vic), s 5(3). The amount is indexed each financial year, and increases each year on 1 July. 34 Marine Pollution Act 2012 (NSW), s 15(1). 35 See [19.70]. 36 See Criminal Code (Cth), ss 6.1, 9.2. 37 Strict liability is not the same as absolute liability: see He Kaw Teh v The Queen (1985) 157 CLR 523 at 528-530 per Gibbs CJ. 38 Transport Operations (Marine Pollution) Act 1995 (Qld), s 26(1), (2). 39 Penalties and Sentences Act 1991 (Qld), ss 5, 5A provide that the value of a penalty unit is to be indexed and declared by the Queensland Treasurer. At the time of writing (January 2016), the value of a penalty unit was $117.80 which means that the maximum fine is presently equivalent to $11,780,000, but that number will increase in subsequent years by indexation.

[19.40]

19 Pollution from Ships

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the waters governed by the Act.40 There is no equivalent provision in the Commonwealth legislation, which means that an oil spill from a foreign ship41 on the high seas does not constitute an offence if the oil enters Australia’s EEZ. Thus, if a foreign ship were to spill oil at a distance of 201 nautical miles from the coastline of New South Wales, and if the oil were subsequently to enter the territorial sea of New South Wales within three nautical miles, the owner and master of the ship would not have committed an offence under the Commonwealth Act, but would have committed an offence under the New South Wales Act. A more difficult question arises when there is a discharge into the band of sea between three and 200 nautical miles from the coastline, and when the pollutant in question later enters the three-nautical-mile limit. Suppose, for example, that a foreign ship discharges oil into the territorial sea at a distance of ten nautical miles from the coastline of Western Australia, and the oil then drifts the ten nautical miles into the coast. The discharge would be an offence under the Commonwealth Act,42 but it would also be an offence under the relevant Western Australian legislation.43 The “roll-back” provisions of the Commonwealth Act provide that the Act does not apply if the discharge occurs into the sea near a State, to the extent that the legislation of that State gives effect to the relevant part of the MARPOL 73/78 Convention in relation to the area of the sea where the discharge occurs.44 The Western Australian Act does not give effect to the Convention in relation to the sea at a distance of ten nautical miles from the coastline; it gives effect to the Convention in relation to a discharge occurring at that distance from the coastline, by effectively deeming it to have occurred in a different part of the sea, within the three-nautical-mile limit. Thus, the Commonwealth provisions “rolling back” the operation of the Commonwealth Act in favour of the Western Australian Act would seem not to apply. As a result, the discharge would be an offence at both Commonwealth and State levels unless it were held that s 109 of the Constitution makes the Commonwealth Act prevail over the State Act. There is no inconsistency between the two provisions so as to attract the operation of s 109. The Commonwealth Act declares that an offence occurs when the oil is discharged into the sea at ten nautical miles; the 40 Marine Pollution Act 2012 (NSW), s 13(1) (“onto or into any land or waters”); Marine Pollution Act (NT), s 9 (discharge outside coastal waters is taken to happen in coastal waters when it enters them); Transport Operations (Marine Pollution) Act 1995 (Qld), s 9 (same); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 3(6); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 3A; Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 3(6); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 3(5). 41 The example must be of a foreign ship because the Commonwealth Act applies to Australian ships no matter where the discharge takes place: see Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1B)(b)(iii). 42 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1B). 43 Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), ss 3(5), 8(1). 44 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1B)(b)(i).

792

Shipping Law

[19.50]

Western Australian Act declares that another offence occurs when the spilt oil comes within three nautical miles of the coastline. The events giving rise to liability are separate, although they stem from the same incident. There is no reason why, as a matter of common law, the same act may not be prohibited by two separate statutes and involve an offence under each of them.45 The law does not allow a person to be punished twice for the same offence, but it does allow a person to be punished twice for the same act.46

Oil pollution: Commonwealth The offences Oil and oily mixtures

[19.50]

Before the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) was amended in 2011,47 s 9 of the Act created a two-tier structure of offences, one fault-based and one of strict liability. The 2011 amendments abolished the old fault-based offence, leaving only an offence of strict liability.48 Thus, there are no fault elements for any of the physical elements of the offence, and the defence of mistake of fact is available.49 Significantly, the 2011 amendments included the words “the charterer” in s 9(1B) of the Act, thus making the owner, charterer and master each guilty of an offence if oil or an oily mixture is discharged from their ship into the sea. “Charterer” is not defined in the Act. In Laemthong International Lines Co Ltd v BPS Shipping Ltd,50 the High Court of Australia held that the word “charterer” in the Admiralty Act 1988 (Cth), s 19(a) was broad enough to include a voyage charterer, and in Shagang Shipping Co Ltd v Ship “Bulk Peace”,51 a Full Court of the Federal Court of Australia held that the same word in the same paragraph included a person who guaranteed the obligations of a time charterer. Similarly, the English Court of Appeal has held that, in the context of the International Convention Relating to the Arrest of Sea Going Ships 1952, the word 45 Australian Oil Refining Pty Ltd v Cooper (1987) 11 NSWLR 277 at 282 per Hunt J; Environment Protection Authority v Australian Iron & Steel Pty Ltd (1992) 28 NSWLR 502 at 507-508 per Gleeson CJ (with Carruthers and Smart JJ); Interim Advance Corp Pty Ltd v Fazio [2008] WASCA 140 at [65] per Buss JA (with whom Miller JA and Newnes AJA agreed). 46 Australian Oil Refining Pty Ltd v Cooper (1987) 11 NSWLR 277 at 282 per Hunt J; Environment Protection Authority v Australian Iron & Steel Pty Ltd (1992) 28 NSWLR 502 at 507-508 per Gleeson CJ (with Carruthers and Smart JJ); Interim Advance Corp Pty Ltd v Fazio [2008] WASCA 140 at [65] per Buss JA (with whom Miller JA and Newnes AJA agreed). 47 Maritime Legislation Amendment Act 2011 (Cth). 48 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1C). 49 Criminal Code (Cth), ss 6.1(1), 9.2. 50 Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181. 51 Shagang Shipping Co Ltd v Ship “Bulk Peace” (2014) 314 ALR 230.

[19.50]

19 Pollution from Ships

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“charterer” includes every kind of charterer, including slot charterers,52 a decision that has since been followed in England in relation to the Convention on Limitation of Liability for Maritime Claims 1976.53 If “charterer” is to be interpreted equally broadly in the different context54 of the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), charterers of all kinds — demise, time, voyage, slot — are guilty of an offence if oil or oily mixtures are discharged from the chartered ship, regardless of fault. However, the Act uses the words “the charterer” rather than “a charterer”, which suggests that there can be only one, just as there is only one master and one registered owner. If “charterer” is to be interpreted broadly to mean any kind of charterer, there may be many charterers in relation to any ship, either charterers of the same kind in a chain of charterparties,55 or charterers of different kinds, as it is quite common for a ship to be simultaneously the subject of demise, time, slot and voyage charterparties.56 Section 9(1B) provides that “the master, the charterer and the owner of the ship each commit an offence” when there is a discharge of oil or oily mixture into the sea, so a broad interpretation of “charterer” would lead to the distinctly odd result that many different persons would simultaneously commit an offence of strict liability.57 That result can only be avoided by interpreting the word “charterer” narrowly because of the use of the definite article “the”. However “charterer” is to be interpreted, the inclusion of charterers in the Act is, in effect, a kind of guilt by association, as a charterer has no operational control over the ship (unless it is a demise charterer), unlike the master and the owner. Of course, as liability no longer depends on fault there is no reason not to impose it on anyone associated with the ship from which a discharge occurs. Nevertheless, a voyage charterer may feel itself to be the victim of an oil spill, rather than its perpetrator, if the 52 The Tychy [1999] 2 Lloyd’s Rep 11. 53 CMA CGM SA v Classica Shipping Co Ltd [2004] 1 Lloyd’s Rep 460; Metvale Ltd v Monsanto International SARL (The MSC Napoli) [2009] 1 Lloyd’s Rep 246. 54 The Admiralty Act 1988 (Cth) uses the specific phrase “demise charterer” in s 18 as well as the general word “charterer” in ss 17, 18 and 19. In the context of that Act, the contrast between the word “charterer” and the phrase “demise charterer” clearly indicates that the former is broader than the latter: see Laemthong International Lines Co Ltd v BPS Shipping Ltd (1997) 190 CLR 181; Shagang Shipping Co Ltd v Ship “Bulk Peace” (2014) 314 ALR 230. The Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) does not distinguish between types of charterer. 55 Chains of time charterparties are considered at [14.10]. 56 See Chapter 11. 57 For example, in Daebo Shipping Co Ltd v Ship Go Star (2012) 207 FCR 220, the owner (Go Star) time-chartered to BMS, which sub-time-chartered to Bluefield, which sub-timechartered to Daebo, which sub-time-chartered to Nanyuan, which entered into a voyage sub-charterparty for carriage of cargo. The ship did not enter Australian waters while subject to this chain of charters, but if it had, and if it had discharged oil or an oily mixture into the sea, an offence would have been committed by seven different people according to the broad interpretation: the owner, the master, and the five different charterers.

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[19.50]

voyage charterer’s cargo of oil is lost because of default of those on the ship. Of course, that feeling may not be shared by those who suffer from the resulting oil pollution. For example, the French oil company Total-Fina-Elf was fined 375,000 euros, the maximum amount then allowed, as a result of the pollution caused by its oil escaping from the ship “Erika”, despite the company’s argument that it had done no more than charter the ship for a voyage. By imposing liability on charterers, the new Australian regime can be expected to heighten charterers’ vetting scrutiny of the vessels they charter, just as the response to the “Erika” spill did.58 The s 9 offence is committed if oil or an oily mixture is discharged from a ship into the sea. As noted in [19.40], the offence applies to any discharge of oil or oily mixtures within the exclusive economic zone (EEZ) of Australia, including its external Territories (subject to the effect of the “roll-back” provisions giving effect to State and Territory legislation),59 and to Australian ships anywhere.60 The maximum penalty is a fine of 20,000 penalty units,61 although that may be increased up to a maximum of 100,000 penalty units for a body corporate.62 Although the 2011 amendments abolished the old, fault-based, offence in the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), they introduced a series of fault-based offences in relation to pollution, which now appear in the Navigation Act 2012 (Cth). It is a fault-based offence for the master (and only the master) of any ship to operate the ship in a manner that causes pollution or damage to the coastal sea of Australia or its EEZ,63 or to fail to ensure that the ship is operated in a manner that does not cause such pollution or damage.64 In both cases, the fault element is recklessness or negligence.65 The provisions apply to any “pollution to the marine environment” or “damage to the marine environment”, which means that they include, but are not confined to, oil spills. Similar offences are created for Australian ships anywhere.66 The 58 Vetting of ships under time charter is considered at [14.140]. 59 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1B)(b)(i), (ii). 60 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1B)(b)(iii). 61 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1B). At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $3.6 million, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 62 See Crimes Act 1914 (Cth), s 4B(3) and s 4AA(3). Thus, at the time of writing (January 2016), the maximum penalty for a body corporate is $18 million, which will increase every three years after 1 July 2018 by indexation: Crimes Act 1914 (Cth), s 4AA(1), (3). 63 Navigation Act 2012 (Cth), s 140. 64 Navigation Act 2012 (Cth), s 141. 65 Navigation Act 2012 (Cth), ss 140(3), 141(3). 66 Navigation Act 2012 (Cth), ss 142, 143.

[19.50]

19 Pollution from Ships

795

penalty for each offence is 600 penalty units:67 the Act does not clearly indicate whether that is a maximum fine or a mandatory penalty. Contravention of the provisions can also result in the imposition of a civil penalty of 600 penalty units.68 (The civil penalty procedure and its relationship to criminal prosecution are considered below.) An “aggravated contravention” of any of these provisions is one that results in, or has the potential to cause, serious harm to the environment.69 In determining whether there is serious harm to the environment, or whether there was the potential for serious harm, the court may take into account the harm (or potential harm), the size, sensitivity and significance of the affected environment (or potentially affected environment), whether the harm is (or would have been) irreversible and the measures required (or that would have been required) to remedy the harm.70 The civil penalties for an aggravated contravention are ten times as high as for “ordinary” contraventions: 6,000 penalty units.71 The Navigation Act 2012 (Cth) establishes an enforcement procedure for civil penalties that does not require criminal prosecution. The Australian Maritime Safety Authority may apply to any court of competent authority for an order that a person who is alleged to have contravened a civil penalty provision must pay the Commonwealth a pecuniary penalty.72 If the court determines that the provision has been contravened, the court may then make a civil penalty order for such pecuniary penalty as it determines to be appropriate.73 Any pecuniary penalty so ordered is a debt payable to the Commonwealth, which may enforce the civil penalty

67 Navigation Act 2012 (Cth), ss 140(2), 141(2), 142(2), 143(2). At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $108,000, but that number will increase every three years after 1 July 2018 by indexation: Crimes Act 1914 (Cth), s 4AA(1), (3). Although the Crimes Act 1914 (Cth), s 4B(3) allows a five-fold increase of maximum penalties for corporate offenders (see Crimes Act 1914 (Cth), s 4B(3) and s 4AA(3)), that could not apply in relation to this offence, which can only be committed by the master of the polluting ship. 68 Navigation Act 2012 (Cth), ss 140(4)(b), 141(4)(b), 142(4)(b), 143(4)(b). 69 Navigation Act 2012 (Cth), s 144(1). 70 Navigation Act 2012 (Cth), s 144(2), (3). 71 Navigation Act 2012 (Cth), ss 140(4)(a), 141(4)(a), 142(4)(a), 143(4)(a). At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $1.08 million, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). Although the Crimes Act 1914 (Cth), s 4B(3) allows a five-fold increase of maximum penalties for corporate offenders (see Crimes Act 1914 (Cth), s 4B(3) and s 4AA(3)), that could not apply in relation to this offence, which can only be committed by the master of the polluting ship. 72 Navigation Act 2012 (Cth), s 291(1). 73 Navigation Act 2012 (Cth), s 291(3).

796

Shipping Law

[19.60]

as if it were an order made in civil proceedings.74 The debt arising from the order is taken to be a judgment debt.75 Importantly, the court must apply the rules of evidence and procedure for civil matters when hearing proceedings for a civil penalty order,76 which means that the standard of proof is the civil standard requiring proof on the balance of probabilities, not the criminal standard requiring proof beyond a reasonable doubt. Civil penalty proceedings cannot be brought against a person who has been convicted of a criminal offence for the same, or substantially the same, conduct that constitutes the contravention of the civil penalty provision,77 but criminal proceedings may be brought against a person for the same, or substantially the same, conduct that previously led to the making of a civil penalty order.78 Evidence given in civil penalty proceedings is not admissible in criminal proceedings in relation to the same, or substantially the same, conduct.79 Oil residues

[19.60]

Regulation 12 of Annex I of the MARPOL Convention requires the government of each Contracting State to have facilities for the reception of oily residues, which MARPOL also calls “sludges”, at oil loading terminals, repair ports and other ports in which ships have oily residues to discharge. Before it was amended in 2001, s 10(1) of the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) provided that if any oil residues that could not be discharged from an Australian ship into the sea without offending against s 9 were not retained aboard the ship, the master and owner were guilty of an offence. Section 10(2) provided that oil residues could be discharged from a ship into a reception facility provided in accordance with reg 12 of Annex I. The combined effect of these provisions was, thus, that the master and owner of an Australian ship committed an offence if oil residues were discharged from the ship to any place other than an approved reception facility. A discharge into the sea would have been an offence against s 9 in any event; the offence under s 10 was the failure to keep residues on board unless they were discharged into an approved reception facility. Section 10 was amended in 2001 in a way that seems to make it largely redundant. As amended, s 10 now mirrors s 9, creating an offence of strict liability for discharging an oil residue into the sea if such a discharge could not occur without committing an offence against s 9 or the law of a 74 Navigation Act 2012 (Cth), s 292(1), (2). 75 Navigation Act 2012 (Cth), s 292(2). 76 Navigation Act 2012 (Cth), s 296. 77 Navigation Act 2012 (Cth), s 297. Civil penalty proceedings are to be stayed if criminal proceedings are commenced in relation to the same conduct: see Navigation Act 2012 (Cth), s 298. 78 Navigation Act 2012 (Cth), s 299. 79 Navigation Act 2012 (Cth), s 300.

[19.70]

19 Pollution from Ships

797

State or Territory.80 No mention is made of discharge into reception facilities. Thus, as amended, s 10 applies only to discharges of oil residues into the sea, which would most probably amount to an offence under s 9 in any event. It seems that the only time s 10 now creates an offence when s 9 would not is if an oil residue is discharged into State or Territory waters. Whatever the operative effect of s 10, it is confined to Australian ships. There is no equivalent provision in relation to foreign ships. Like, s 9, the offence under s 10 is committed by each of the owner, the charterer and the master if an oil residue is discharged, and the maximum penalty is 20,000 penalty units for a natural person81 and 100,000 penalty units for a corporate body.82 The defences

[19.70]

Section 9(1B) is expressed to be subject to subss (2) and (4), which list five defences. Because s 9(1C) declares the s 9(1B) offence to be one of strict liability, the defence of mistake of fact is available.83 The defence of mistake of fact is made out if: (a) at or before the time of the conduct constituting the physical element, the accused considered whether or not facts existed, and was under a mistaken but reasonable belief about those facts; and (b) had those facts existed, the conduct would not have constituted an offence.84 For example, the defence might be available if the master of a foreign ship were to allow a discharge of oil under a mistaken but reasonable belief that the ship was outside Australia’s EEZ.85 As well as the general defence of mistake of fact, there are five possible defences to the strict liability offence in s 9(1B). They are as follows: 1. that the discharge occurred for the purpose of securing the safety of a ship (not necessarily the ship from which the discharge was made), or for saving life at sea: s 9(2)(c); 80 Navigation Act 2012 (Cth), s 10(3). The offence is one of strict liability: see Navigation Act 2012 (Cth), s 10(4). 81 Navigation Act 2012 (Cth), s 10(3). See the second and third paragraphs within [19.50] for a consideration of the extension of liability to charterers. At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $3.6 million, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 82 See Crimes Act 1914 (Cth), s 4B(3) and s 4AA(3). Thus, at the time of writing (January 2016), the maximum fine for a corporate offender is $18 million, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 83 Criminal Code (Cth), s 6.1(1)(b). 84 Criminal Code (Cth), s 9.2(1). 85 In Australian Fisheries Management Authority v Su (2009) 176 FCR 95, a Full Court of the Federal Court held that this kind of mistake was a mistake of fact providing a defence under Criminal Code (Cth), s 9.2(1). Thus, a mistake about the limits of the EEZ would be a mistake of law, which would not provide a defence.

798

Shipping Law

[19.70]

2. that the oil or oily mixture escaped from the ship in consequence of “non-intentional damage” to the ship or its equipment, and all reasonable precautions were taken after the occurrence of the damage or the discovery of the discharge to prevent or minimise the escape: s 9(2)(d); 3. in the case of a discharge of an oily mixture, that the discharge was for the purpose of combating specific pollution incidents in order to minimise the damage from pollution and was approved by a prescribed officer of the Australian Maritime Safety Authority (AMSA)86 or, if the discharge occurred into the waters of another country, the government of that country: s 9(2)(e); 4. that the discharge occurred in a “special area”,87 at more than a specified distance from the nearest land, that it did not exceed the rate and total quantity prescribed by the Act and, in certain cases, that the ship had monitoring and filtering equipment prescribed by regulations under the Navigation Act 2012 (Cth), s 130: s 9(4); 5. that the discharge was of clean or segregated ballast: s 9(4)(f).88 The Commonwealth amended the second of these defences in 2001 in response to the decision of the New South Wales Court of Criminal Appeal in Morrison v Peacock,89 which was subsequently reversed by the High Court of Australia.90 Morrison was concerned with the New South Wales equivalent of s 9(2)(d),91 which provided a defence if oil escaped from the ship “in consequence of damage, other than intentional damage, to the ship or its equipment” if reasonable precautions were taken after the discharge was discovered to prevent or minimise the discharge of the oil. The New South Wales Court of Criminal Appeal held that “damage … to the ship” was not confined to damage from external causes, but included damage caused by ordinary wear and tear. Because the 86 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 3(2) provides that a reference to a “prescribed officer”, such as appears in s 9(2)(e) is a reference to AMSA itself or to such office-holder as is prescribed for the purposes of that section. 87 “Special area” is not defined in the Act itself, but MARPOL defines the expression in each Annex as “a sea area where for recognised technical reasons in relation to its oceanographical and ecological condition and to the particular character of its traffic the adoption of special mandatory methods for the prevention of sea pollution [by the relevant pollutant] is required”. Special areas are listed for each MARPOL Annex. 88 Clean ballast is ballast carried in a cargo tank which has been thoroughly cleaned since last it carried a cargo, and from which the residues have been discharged and the tank emptied in accordance with the procedures specified in Annex II to the MARPOL Converntion: see Annex II, reg 1(2). Segregated ballast means ballast water in a ballast tank that is permanently allocated to the carriage of ballast or cargoes other than oil or noxious liquid substances, and which is completely separated from the cargo and oil fuel system: Annex II, reg 1(3). 89 Morrison v Peacock (2000) 50 NSWLR 178. 90 Morrison v Peacock (2002) 210 CLR 274. 91 Marine Pollution Act 1987 (NSW), s 8(2)(b). An amended version of this provision now appears in Marine Pollution Act 2012 (NSW), s 18.

[19.70]

19 Pollution from Ships

799

defendant had not intentionally or recklessly caused the wear and tear that had caused the damage, the court’s decision meant that the defence was available.92 The decision of the Court of Criminal Appeal was very controversial. In holding that a shipowner and master had a defence if the escape of oil was caused by wear and tear to the ship, the court clearly handicapped the ability of prosecuting authorities to pursue sub-standard ships. The Commonwealth moved speedily to reverse the effect of the decision, even though the High Court of Australia had granted special leave to appeal. However, the amending legislation went much further than merely closing the Morrison loophole. As a result of the post-Morrison amendment, s 9(3A) of the Act now provides that “damage” to a ship does not include “deterioration resulting from failure to maintain the ship or equipment” or “defects that develop during the normal operation of the ship or equipment”.93 That would have been enough in itself to reverse the result in Morrison, if the circumstances were to arise in waters covered by the Commonwealth Act. However, as amended, the Act now provides that damage to a ship is “not non-intentional” if the master acted with intent to cause the damage, or recklessly and with knowledge that the damage would probably result, or if the damage arose as a result of the negligence of the master, the charterer or owner of the ship.94 That is a significant change to the legislation, one that puts it out of step with the MARPOL Convention itself by equating negligence with intention and recklessness. For example, if oil were to be discharged into the sea as a result of a collision between ships, the defence would most probably not be available to the owner, charterer or master of either ship, as few collisions occur without negligence on the part of both colliding ships.95 Many might think it appropriate to make the masters and owners of the colliding ships guilty of an offence if oil were to be spilled as a result of the collision, but that is not the outcome indicated by the MARPOL Convention itself. Quite the reverse, in fact: the Convention provides that the owner and master should have a defence in such a case.96 The High Court of Australia eventually reversed the decision of the New South Wales Court of Criminal Appeal, holding that the word “damage” in the relevant provision of the New South Wales Act meant a sudden change in the condition of the ship or its equipment that was the instantaneous 92 The court held that the test for recklessness in this context was a subjective one requiring “actual advertence to the risk of damage by the owner or master involved in the incident”: Morrison v Peacock (2000) 50 NSWLR 178 at 191 [63] per Spigelman CJ. 93 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(3A). 94 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(3). 95 See generally Chapter 15. 96 MARPOL, Annex I, reg 11(b)(ii) which stipulates that there shall be no liability “except if the owner or the master acted either with intent to cause damage or recklessly and with knowledge that damage would probably result”.

800

Shipping Law

[19.80]

consequence of some event, whether the event was external or internal to the ship or its equipment.97 The High Court’s decision has no effect in relation to discharges occurring in waters covered by the Commonwealth Act, because of the legislative changes just discussed, which achieved much the same result (and more) by different means, but it remains significant in interpretation of the State and Territory legislation. Reporting obligations

[19.80]

The master of a ship must report any “prescribed incident”, which is defined as being a discharge from the ship of oil or an oily mixture or any incident involving the probability of a discharge from the ship of oil or an oily mixture.98 Where Australia or an external Territory is the nearest coastal state to the place where the incident occurred, the master must report to a “prescribed officer” of the Australian Maritime Safety Authority (AMSA);99 where a foreign country is the nearest coastal state to the place where the incident occurred, the master must report to the government of that foreign country.100 Foreign ships need only report prescribed incidents occurring in the sea near a State, the Jervis Bay Territory or an external Territory, the outer territorial sea,101 or the exclusive economic zone (EEZ).102 Because there is no equivalent provision in relation to Australian ships, they must report prescribed incidents no matter where they occur. However, the Commonwealth Act contains a “roll-back” provision stating that there is no reporting obligation in relation to “prescribed incidents” occurring in the sea near a State, the Jervis Bay Territory or an external Territory to the extent that a law of that State or Territory makes provision giving effect to Protocol I to MARPOL.103 An equivalent reporting obligation is then imposed by State or Territory law.104 Section 11(1) makes it an offence not to report a prescribed incident. The punishment for failure to report is a fine of 500 penalty units for a natural person105 and 2,500 penalty units for a corporate body.106 If the master is unable to comply with the obligation to report a prescribed incident, he or 97 Morrison v Peacock (2002) 210 CLR 274. 98 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(1), (10). Discharges permitted under s 9(4) need not be reported; they are excluded from the definition of “prescribed incident” in s 11(10). 99 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 3(2), 11(1)(a). 100 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(1)(b). 101 The “outer territorial sea” is that part of the territorial sea of Australia between three and 12 nautical miles: see Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 3(1D). 102 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(9A). 103 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(9). 104 See [19.100]. 105 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(1) merely states “Penalty: 500 penalty units”, without declaring it to be the maximum of a range of possible fines. That provision stands in stark contrast to the penalty provision in

[19.90]

19 Pollution from Ships

801

she has a defence to a prosecution under s 11(1),107 but the owner, charterer, manager or operator of the ship, or an agent of one of them, must then notify the same authorities of the incident.108 One of these people must also report a prescribed incident if it occurs in circumstances in which the ship is abandoned.109 If none of these people reports the prescribed incident, they are all guilty of a strict liability offence110 punishable by a fine of not more than 500 penalty units for a natural person111 and 2,500 penalty units for a corporate body.112 However, each person has a defence if he or she was not aware of the incident or of the master’s inability to report the incident.113 Any report of a prescribed incident must be accurate, whoever makes it. Section 11(8) makes it an offence for any person to give a notice that is false or misleading in a material particular. The offence is punishable by a fine of 200 penalty units for a natural person114 and 1,000 penalty units for a corporate body.115 Offences in relation to pollution certificates

[19.90]

MARPOL requires Contracting States to ensure that ships under their flag carry certificates attesting to the ship’s compliance with construction or equipment requirements for carriage of the pollutants regulated by the Convention. Port State authorities in Contracting States may inspect visiting ships from other Contracting States to verify that s 11(3), which imposes a fine “not exceeding 500 penalty units”. At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $90,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3).

106 See Crimes Act 1914 (Cth), s 4B(3) and s 4AA(3). 107 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(2). 108 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(3)(a). 109 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(3)(b). 110 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(3A). 111 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(3). At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $90,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 112 See Crimes Act 1914 (Cth), s 4B(3) and s 4AA(3). Thus, at the time of writing (January 2016), the maximum fine for a corporate body is $450,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 113 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(4). 114 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 11(1) merely states “Penalty: 500 penalty units”, without declaring it to be the maximum of a range of possible fines. That provision stands in stark contrast to the penalty provision in s 11(3), which imposes a fine “not exceeding 500 penalty units”. Like the penalty in s 11(1), the 200 penalty-unit penalty in s 11(8) is not expressed to be a maximum. 115 See Crimes Act 1914 (Cth), s 4B(3) and s 4AA(3).

802

Shipping Law

[19.100]

there are on board valid certificates of the required kind.116 Australia implemented these requirements in Ch 4 of the Navigation Act 2012 (Cth), which applies to “regulated Australian vessels”,117 domestic commercial vessels, and recreational vessels that have Australian nationality.118 If the regulations require a vessel to carry a pollution certificate, the owner and master both commit a fault-based offence if they take the vessel to sea, or cause or permit some other person to take the vessel to sea, without the required pollution certificate in force for that vessel.119 For both owner and master, the penalty is either imprisonment for 10 years, or 600 penalty units, or both.120 However, contravention of the requirement to carry valid pollution certificates also makes the owner and the master subject to a civil penalty of 6,000 penalty units.121

Oil pollution: States and Northern Territory The States Each of the States has passed legislation122 giving effect to parts of the MARPOL Convention in the same way that the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) does. Each State Act contains a provision equivalent to s 9(1B) of the Commonwealth Act, making the master and owner (but, unlike the Commonwealth Act, not the charterer) of a ship guilty of a strict liability offence if the ship discharges oil or an oily mixture into the sea.123 New South Wales also makes it an offence for any crew member of a ship to cause oil to be

[19.100]

116 MARPOL, Art 5(2). 117 A “regulated Australian vessel” is a vessel registered in Australia, or exempt from registration, if it is proceeding on an overseas voyage or is for use on an overseas voyage: see Navigation Act 2012 (Cth), s 15. 118 Navigation Act 2012 (Cth), ss 129, 130(2). 119 Navigation Act 2012 (Cth), ss 135(1), (2) (owner), 136(1), (2) (master). 120 Navigation Act 2012 (Cth), ss 135(2) (owner), 136(2) (master). At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $108,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 121 Navigation Act 2012 (Cth), ss 135(3) (owner), 136(3) (master). For provisions relating to the civil penalty procedure, see ss 291(1), (3), 292(1), (2), 296 – 300. 122 Marine Pollution Act 2012 (NSW); Transport Operations (Marine Pollution) Act 1995 (Qld); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA). 123 Marine Pollution Act 2012 (NSW), s 15(1); Marine Pollution Act (NT), s 14(2), (4), (5); Transport Operations (Marine Pollution) Act 1995 (Qld), s 26(1) (absolute liability: see s 26(2)); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 8(1); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 8(1); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(1); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 8(1).

[19.100]

19 Pollution from Ships

803

discharged into State waters,124 and for any person to be “responsible for” the discharge of oil into State waters.125 The breadth of the wording of the latter offence may mean that it extends beyond the master, owner, and members of the crew, to include anyone who has responsibility for shipboard operations, such as the ship’s manager. The maximum penalties for the basic offence of discharging oil or oily mixtures vary considerably from State to State. In Queensland, the offence is one of absolute liability, not strict liability, and the maximum penalty is 5,000 penalty units for an individual and 100,000 penalty units for a corporation.126 In New South Wales, the maximum penalty is a fine of $500,000 for a natural person and $10,000,000 for a body corporate.127 At the other end of the spectrum from Queensland and New South Wales is Western Australia, where the maximum penalties are $50,000 for a natural person and $250,000 for a body corporate.128 Between these two extremes lie South Australia, where the maximum penalties are $200,000 for a natural person and $1,000,000 for a body corporate,129 Victoria, where the maximum penalties are 2,000 penalty units and/or two years’ imprisonment for a natural person and 10,000 penalty units for a body corporate,130 and Tasmania, where the maximum penalties are 2,500 penalty units for a natural person and 10,000 penalty units for a body corporate.131

124 Marine Pollution Act 2012 (NSW), s 16(1). 125 Marine Pollution Act 2012 (NSW), s 17. 126 Transport Operations (Marine Pollution) Act 1995 (Qld), s 26(1), (2). Penalties and Sentences Act 1991 (Qld), ss 5, 5A provide that the value of a penalty unit is to be indexed and declared by the Queensland Treasurer. At the time of writing (January 2016), the value of a Queensland penalty unit was $117.80, which means that the maximum fines are presently equivalent to $589,000 and $11.78 million, respectively, but those numbers will increase in subsequent years by indexation. 127 Marine Pollution Act 2012 (NSW), s 15(1). 128 Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 8(1). 129 Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 8(1). 130 Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(1). The combined effect of Interpretation of Legislation Act 1986 (Vic), s 38 and Sentencing Act 1991 (Vic), s 110 gives “penalty units” the value fixed by the Victorian Treasurer from time to time under the Monetary Units Act 2004 (Vic), s 5(3). The amount is indexed each financial year, and increases each year on 1 July. At the time of writing (January 2016), a Victorian penalty unit was worth $151.67, which means the maximum fines are presently equivalent to $303,340 and $1,516,700, respectively, but those numbers will increase in subsequent years by indexation. 131 Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 8(1). Penalty Units and Other Penalties Act 1987 (Tas), ss 4, 4A provide a formula for indexing the value of a penalty unit on 1 July each year by reference to the Consumer Price Index for Hobart. At the time of writing (January 2016), the value of a Tasmanian penalty unit was $154, which means the maximum fines are presently equivalent to $385,000 and $1,540,000, respectively, but those numbers will increase in subsequent years by indexation.

804

Shipping Law

[19.100]

The defences are broadly equivalent to those available under s 9(2) of the Commonwealth Act.132 In all States, the accused has a defence: 1. if the discharge was for the purpose of securing the safety of persons or a ship at sea;133 2. if the discharge occurred in consequence of damage to the ship or its equipment, other than damage intentionally or recklessly caused, provided that all reasonable precautions were taken after the occurrence of the damage or the discovery of the discharge to prevent or minimise the escape;134 or 3. in the case of an oily mixture, if the discharge was for the purpose of combating specific pollution incidents in order to minimise the damage from pollution and was approved by a prescribed officer.135 In all States except Queensland, the accused also has a defence: 4. if the discharge occurred in a “special area”,136 at more than a specified distance from the nearest land and that it did not exceed the rate and total quantity prescribed by the Act;137 132 Section 9(2) of the Commonwealth Act is considered at [19.70]. 133 Marine Pollution Act 2012 (NSW), s 19; Transport Operations (Marine Pollution) Act 1995 (Qld), s 28(1)(a); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 8(2)(a); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 8(2)(a); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(2)(a); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 8(4)(a). See also Marine Pollution Act (NT), s 15(1)(a). 134 Marine Pollution Act 2012 (NSW), s 18 (“unavoidable damage”); Transport Operations (Marine Pollution) Act 1995 (Qld), s 28(1)(b), (2); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 8(3); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 8(3)(b); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(2)(b); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 8(4)(b). See also Marine Pollution Act (NT), s 15(2)(a), (3). 135 Marine Pollution Act 2012 (NSW), s 20; Transport Operations (Marine Pollution) Act 1995 (Qld), s 28(1)(c); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 8(2)(c); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 8(3)(c); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(2)(c); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 8(4)(c). See also Marine Pollution Act (NT), s 15(1)(b). 136 “Special area” is not defined in the Act itself, but MARPOL defines the expression in each Annex as “a sea area where for recognised technical reasons in relation to its oceanographical and ecological condition and to the particular character of its traffic the adoption of special mandatory methods for the prevention of sea pollution [by the relevant pollutant] is required”. Special areas are listed for each MARPOL Annex. 137 Marine Pollution Act 2012 (NSW), ss 22 – 23; Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 8(4)(a) – (i); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 8(6)(a) – (e)(vi); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(4)(a) – (i); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 8(6)(a) – (i). In Queensland, such discharges can be made only if an exemption is given: Transport Operations (Marine Pollution) Act 1995 (Qld), s 29(1). Any such exemption must be consistent with obligations under MARPOL: Transport Operations (Marine Pollution) Act 1995 (Qld), s 29(2). The position is the same in the Northern Territory: see Marine Pollution Act (NT), s 16.

[19.100]

19 Pollution from Ships

805

5. if the discharge was of clean or segregated ballast.138 In New South Wales and Queensland, the accused also has a defence if the discharge was authorised by the relevant Minister for training purposes.139 Only South Australia and Tasmania have followed the Commonwealth in amending the “unintentional damage” defence (number 2. above) to exclude negligently-caused damage as well as damage that was intentionally or recklessly caused.140 The defence may be similarly restricted in New South Wales, where the relevant provision refers to “unavoidable damage to the ship or its equipment”,141 and where it is an offence for any person involved in the operation or maintenance of a ship to cause oil to be discharged:142 it is at least arguable that damage is not “unavoidable” if it could have been prevented by the exercise of reasonable care. As noted in [19.70] in relation to the Commonwealth statute, it is not consistent with MARPOL to equate negligence with intention and recklessness. In the other States, the defence is available unless the owner or master acted with intent to cause the damage that led to the discharge, or recklessly and with knowledge that damage would probably result.143 “Damage” does not include wear and tear in these States by virtue of the High Court’s decision in Morrison v Peacock.144 The effect of Morrison’s case is confirmed by statute in Tasmania, where the statute specifically provides that “damage to a ship or to its equipment” does not include deterioration from a failure to maintain, or to defects that develop during the normal operation of the ship or its equipment.145 Each State Act also has a provision equivalent to the former s 10 of the Commonwealth Act,146 making it an offence to discharge oil residues 138 Marine Pollution Act 2012 (NSW), s 25; Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 8(4)(j); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 8(6)(e)(vii); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(4)(j); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 8(6)(j). There is no equivalent provision in the Marine Pollution Act (NT). 139 Marine Pollution Act 2012 (NSW), s 21; Transport Operations (Marine Pollution) Act 1995 (Qld), s 28(1)(d). See also Marine Pollution Act (NT), s 15(1)(c). 140 Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 8(3)(a) – (c); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), ss 8(3)(b), 4(a) (intention or recklessness), (b) (negligence). 141 Marine Pollution Act 2012 (NSW), s 18(a). 142 Marine Pollution Act 2012 (NSW), s 16(2). 143 Transport Operations (Marine Pollution) Act 1995 (Qld), s 28(1)(b), (2); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 8(3); Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 8(5). 144 Morrison v Peacock (2002) 210 CLR 274. See [19.70]. 145 Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 8(5). 146 Section 10 of the Commonwealth Act is considered at [19.60].

806

Shipping Law

[19.100]

except in approved reception facilities.147 Unlike s 10 of the Commonwealth Act, which is confined in its operation to Australian ships and which no longer refers to reception facilities,148 the State Acts apply to all ships within their ambit. In each State except Queensland, the relevant provision has the structure that the Commonwealth s 10 had before it was amended in 2001: the offence lies in the failure to retain oil residues on board the ship if it would be an offence to discharge them into the sea, unless they are discharged into an approved reception facility. Under the Queensland provision, an offence is committed simply if the oil residues are not retained on board the ship: no mention is made of reception facilities.149 In each State, the maximum penalties are the same as those for discharging oil or oily mixtures, with the same dramatic variation between States.150 Each State Act also contains a provision equivalent to s 11 of the Commonwealth Act,151 making it an offence not to report “prescribed incidents” of discharge or threatened discharge of oil or oily mixtures in State waters.152 Here, too, the maximum penalties vary from State to State, revealing a curious difference of emphasis on the importance of the reporting obligation: in New South Wales, the maximum penalty is $121,000 for a natural person and $2,750,000 for a body corporate;153 in Queensland, the maximum penalty is 850 penalty units;154 in South Australia, the maximum penalties are $50,000 for a natural person or $250,000 for a body corporate;155 in Victoria, the maximum penalties are 500 penalty units and/or one year’s imprisonment for a natural person 147 Marine Pollution Act 2012 (NSW), s 26; Transport Operations (Marine Pollution) Act 1995 (Qld), s 27; Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 9; Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 9; Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 9; Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 10. 148 See [19.60]. 149 Transport Operations (Oil Pollution) Act 1995 (Qld), s 27. 150 See the second paragraph within [19.100]. 151 Section 11 of the Commonwealth Act is considered at [19.80]. 152 Marine Pollution Act 2012 (NSW) ss 86, 87; Transport Operations (Marine Pollution) Act 1995 (Qld), s 67; Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 25A; Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 25I; Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 10; Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 11. 153 Marine Pollution Act 2012 (NSW), ss 87(1), 90(1). 154 Transport Operations (Marine Pollution) Act 1995 (Qld), s 67(2), (3). At the time of writing (January 2016), the value of a Queensland penalty unit was $117.80, which means that the maximum fines are presently equivalent to $100,130, but that number will increase in subsequent years by indexation. Penalties and Sentences Act 1991 (Qld), ss 5, 5A provide that the value of a penalty unit is to be indexed and declared by the Queensland Treasurer. 155 Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 25A(1), (3).

[19.110]

19 Pollution from Ships

807

and 2,500 penalty units for a corporation;156 in Tasmania, they are 500 penalty units for both natural persons and corporations;157 in Western Australia, $5,000 for a natural person and $25,000 for a corporation.158 The Northern Territory

[19.110]

The Northern Territory has a two-tier structure of offences in relation to discharge of oil, much as the Commonwealth did before the Commonwealth Act was amended in 2011. The Marine Pollution Act (NT) creates both fault-based and strict liability offences, in a cascading series of provisions that descend from discharges causing serious environmental harm, through discharges causing material environmental harm, to discharges that do not cause any environmental harm.159 The maximum penalties decrease with the decreasing seriousness of the offences. The strict liability offences make it an offence for the owner or master to cause or permit a discharge of oil from the ship into coastal waters that causes: (a) serious environmental harm;160 or (b) material environmental harm161 if, in either case, the owner or master knew, or ought reasonably be expected to know, that serious or material environmental harm would or might result from the discharge. There are two, more serious, offences for the master or owner to intentionally cause or permit a discharge of oil with 156 Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 10(1), (3)(c), (d). At the time of writing (January 2016), a Victorian penalty unit was worth $151.67, which means that the maximum fines are presently equivalent to $75,835 and $379,175, respectively, but those numbers will increase in subsequent years by indexation. The combined effect of Interpretation of Legislation Act 1986 (Vic), s 38 and Sentencing Act 1991 (Vic), s 110 gives “penalty units” the value fixed by the Victorian Treasurer from time to time under the Monetary Units Act 2004 (Vic), s 5(3). 157 Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 25I(1), (3). At the time of writing (January 2016), the value of a Tasmanian penalty unit was $154, which means the maximum fine is presently equivalent to $77,000, but that number will increase in subsequent years by indexation: Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 8(1). Penalty Units and Other Penalties Act 1987 (Tas), ss 4, 4A provide a formula for indexing the value of a penalty unit on 1 July each year by reference to the Consumer Price Index for Hobart. 158 Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), s 11(1), (3)(aa), (bb). 159 “Serious environmental harm” and “material environmental harm” are defined in Marine Pollution Act (NT), s 6. 160 Marine Pollution Act (NT), s 14(2). This is an environmental offence level 2, which has a minimum penalty of 154 penalty units and a maximum penalty of 540 penalty units for an individual and a minimum of 770 penalty units and a maximum of 7,700 penalty units for a body corporate: see Environmental Offences and Penalties Act (NT), s 5. The Penalty Units Act (NT) indexes the dollar amount of a penalty unit every financial year in accordance with the Consumer Price Index. At the time of writing (January 2016), the value of a penalty unit was $153, which produces minimum penalties of $23,562 (person) and $117,810 (corporation) and maximum penalties of $82,620 (person) and $1,178,100 (corporation). 161 Marine Pollution Act (NT), s 14(4). This is an environmental offence level 3 with minimum penalties of 77 penalty units (person) and 385 penalty units (corporation); maximum penalties 770 penalty units (person) and 3,850 penalty units (corporation): Environmental Offences and Penalties Act (NT), s 6.

808

Shipping Law

[19.120]

the same combinations of resultant harm and knowledge or reasonable expectation of harm.162 At the bottom end of the scale, the owner and master must simply ensure that oil is not discharged from the ship into coastal waters.163 The defences to all of the offences in the cascading series are the same as those in the State legislation, which is considered at [19.100].164 Unlike the States, the Northern Territory does not have legislation relating to the retention of oil residues, but it does have legislation equivalent to that of the States and the Commonwealth requiring the master of a ship to report “prescribed incidents” of discharge or threatened discharge of oil or oily mixtures into coastal waters.165

Other pollutants: MARPOL Annexes II to V Introduction

[19.120]

Annexes II – V of the MARPOL Convention deal with pollutants other than oil. All four have been implemented by the Commonwealth in the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth): Annex II, dealing with noxious liquid substances, is implemented by Pt III of the Act; Annex III, dealing with packaged harmful substances, is implemented by Pt IIIA of the Act; Annex IV, dealing with sewage, is implemented by Pt IIIB of the Act; and Annex V, dealing with garbage, is implemented by Pt IIIC of the Act. Because the enacting provisions in each Part are very similar to one another, they will be considered together at [19.130]. Part IIID, which implements Annex VI of MARPOL, dealing with air pollution, will be considered separately, as its structure is very different from the other Annexes. The States and the Northern Territory have all enacted legislation giving effect to some, but not all, of the Annexes to MARPOL. Different

162 Marine Pollution Act (NT), s 14(1) (intentional discharge resulting in serious environmental harm knowing or reasonably expecting it would result in serious or material environmental harm) (environmental offence level 1, minimum penalties of 385 penalty units (person) and 1,924 penalty units (corporation); maximum penalties 3,850 penalty units or 5 years’ imprisonment (person) and 19,240 penalty units (corporation): Environmental Offences and Penalties Act (NT), s 4; Marine Pollution Act (NT), s 14(3) (intentional discharge resulting in material environmental harm knowing or reasonably expecting it would result in serious or material environmental harm) (environmental offence level 2, minimum penalties of 154 penalty units (person) and 770 penalty units (corporation); maximum penalties 540 penalty units (person) and 7,700 penalty units (corporation)). 163 Marine Pollution Act (NT), s 14(6) (environmental offence level 4, no minimum penalties, maximum penalties 77 penalty units (person) and 385 penalty units (corporation): Environmental Offences and Penalties Act (NT), s 7). 164 The relevant provisions of the Northern Territory legislation are included in the footnotes to [19.100]. 165 Marine Pollution Act (NT), s 50, with a maximum penalty of 1,000 penalty units. The Penalty Units Act (NT) indexes the dollar amount of a penalty unit every financial year in accordance with the Consumer Price Index. At the time of writing (January 2016), the value of a penalty unit was $153, which produces a maximum penalty of $153,000.

[19.130]

19 Pollution from Ships

809

jurisdictions have enacted different Annexes. The various State and Territory provisions are considered in a separate subsection, along with the Commonwealth “roll-back” provisions that ensure the State and Territory legislation has effect in State or Territory waters. Other pollutants: MARPOL Annexes II to V in the Commonwealth legislation

[19.130]

Parts III – IIIC of the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) create a two-tier structure of offences, similar to that which existed for oil pollution under Pt II before the Act was amended in 2011. The Act creates both fault-based and strict liability offences in relation to each type of pollutant, the former being more serious than the latter.

In relation to each pollutant, the fault-based offence, called an “ordinary offence”, is committed if any person “engages in conduct” causing a discharge (or, in the case of packaged harmful substances “jettison”) of the relevant pollutant into the sea, and if that person “is reckless or negligent as to causing the discharge by that conduct”.166 “Engag[ing] in conduct” covers both acts and omissions.167 Thus, the offence is not confined in its operation to the master and owner of the ship from which the discharge occurs. In contrast, the strict liability offence is committed by the master and owner if the relevant pollutant is discharged (or, “jettisoned”, in the case of packaged harmful substances) from a ship into the sea.168 (Unlike Pt II, which deals with oil pollution, the strict liability offence does not extend to the ship’s charterer, as well as its owner and master.)169 The offence is committed whether or not the accused was the cause of the discharge (or, in the case of packaged harmful substances, the “jettisoning”). The Act expressly provides that these are offences of strict liability,170 which means, by operation of the Criminal Code (Cth), that a defence of mistake of fact is available.171 The defence of mistake of fact is made out if: (a) at or before the time of the conduct constituting the 166 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 21(1) (liquid substance to which Annex II applies), 26AB(1) (packaged harmful substance identified as a marine pollutant by the International Maritime Dangerous Goods (IMDG) Code, to which Annex III applies), 26D(1) (sewage, to which Annex IV applies), 26F(1) (garbage, to which Annex V applies). 167 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 3(1), definition of “engage in conduct”, referring to Criminal Code Act 1995 (Cth), which defines “engage in conduct” to mean: (a) do an act; or (b) omit to perform an act: see s 4.1(2). 168 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 21(1B) (noxious liquid substance), 26AB(3) (jettisoning of packaged harmful substance), 26D(3) (sewage), 26F(3) (garbage). 169 See [19.50]. 170 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 21(1C) (noxious liquid substance), 26AB(4) (packaged harmful substance), 26D(4) (sewage), 26F(4) (garbage). 171 Criminal Code (Cth), ss 6.1, 9.2.

810

Shipping Law

[19.130]

physical element, the accused considered whether or not facts existed, and was under a mistaken but reasonable belief about those facts; and (b) had those facts existed, the conduct would not have constituted an offence.172 For example, the defence might be available if the master of a foreign ship were to allow a discharge of one of the prohibited pollutants under a mistaken but reasonable belief that the ship was outside Australia’s EEZ.173 Where a mixture discharged from a ship contains both oil and noxious liquid substances, both Pts II and III apply, so that the master and owner may be guilty of offences under both Parts.174 Broadly speaking, the defences in relation to discharge of the pollutants covered by Annexes II – V are similar to those relating to oil pollution, but there are some special provisions dealing with particular types of pollutants. For all four pollutants covered by Annexes II – V, there is a defence to the strict liability offence (but not the fault-based offence) if the discharge was for the purpose of securing the safety of a ship or saving life at sea.175 This makes no sense. Any discharge of one of these pollutants for the purpose of saving the ship or a person’s life would surely have to be intentional, yet the defence does not apply to the fault-based offences that are committed when a discharge is made intentionally. In relation to noxious liquid substances, there is a defence to the strict liability offence (but not the fault-based offence) if the discharge occurred as a result of non-intentional damage to the ship or its equipment, and all reasonable precautions were taken to prevent or minimise the escape.176 As is the case in relation to oil under Pt II of the Act,177 “non-intentional” is defined to mean without intention, recklessness or negligence.178 In relation to sewage and garbage, there is a defence to the strict liability offence (but not the fault-based offence) if the discharge occurs as a consequence of damage to the ship, however occurring, if all reasonable precautions were taken before and after the damage to prevent or 172 Criminal Code (Cth), s 9.2(1). 173 In Australian Fisheries Management Authority v Su (2009) 176 FCR 95, a Full Court of the Federal Court held that this kind of mistake was a mistake of fact providing a defence under Criminal Code (Cth), s 9.2(1). A mistake about the limits of the EEZ would be a mistake of law, which would not provide a defence: Australian Fisheries Management Authority v Su (2009) 176 FCR 95. 174 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 16. 175 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 21(2)(c) (noxious liquid substance), 26AB(5) (packaged harmful substance), 26D(5)(a) (sewage), 26F(5) (garbage). 176 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 21(2)(d). 177 See [19.70]. 178 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 21(3).

[19.130]

19 Pollution from Ships

811

minimise the escape.179 In relation to all three pollutants, “damage” does not include wear and tear to the ship or its equipment.180 There is no equivalent defence in relation to packaged harmful substances (Annex III), because the relevant offences refer to “jettison” of the substance, which presumably cannot occur unintentionally. Where a packaged harmful substance is discharged because of leakage, the discharge is taken to have been “jettisoned”, but there is a defence to the strict liability offence (but not the fault-based offence) if the substance was washed overboard in accordance with regulations, unless compliance with the regulations would impair the safety of the ship or persons aboard.181 In relation to noxious liquid substances, there is a defence to the strict liability offence (but not the fault-based offence) if the discharge was for the purpose of combating specific pollution incidents in order to minimise the damage from pollution and was approved by a prescribed officer of the Australian Maritime Safety Authority (AMSA)182 or, if the discharge occurred into the waters of another country, the government of that country.183 Here, too, it seems that the defence makes no sense, as a discharge that satisfies the statutory requirements would surely have to be intentional, but the defence does not apply to the fault-based offence. In relation to sewage, there is a range of defences to the strict liability offence (but not the fault-based offence) for discharges of sewage that has been treated and stored in specified ways, or discharged in “special areas”.184 In relation to garbage, there are defences for the discharge of fishing gear for the protection of the marine environment or the safety of the ship or its crew,185 food wastes if their retention presents an imminent health risk

179 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 26D(5)(b) (sewage), 29F(9) (garbage) (“accidentally lost into the sea”). 180 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 21(3A) (noxious liquid substance), 26D(5A) (sewage), 26F(9A) (garbage). 181 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26AB(6). 182 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 3(2) provides that a reference to a “prescribed officer” is a reference to AMSA or to such office-holder as is prescribed for the purposes of that section. 183 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 21(2)(e). 184 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26D(6) – (9). “Special area” is not defined in the Act itself, but MARPOL defines the expression in each Annex as “a sea area where for recognised technical reasons in relation to its oceanographical and ecological condition and to the particular character of its traffic the adoption of special mandatory methods for the prevention of sea pollution [by the relevant pollutant] is required”. Special areas are listed for each MARPOL Annex. 185 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26F(5A).

812

Shipping Law

[19.140]

to those on the ship,186 and the discharge of food wastes, cargo residues, animal carcasses, or cleaning agents or additives outside a “special area”.187 The Act imposes reporting obligations in relation to discharges of noxious liquid substances and packaged harmful substances similar to those that apply in relation to discharges of oil, and there are similar offences for failing to report.188 The master (or, in the circumstances considered in [19.80] in relation to oil pollution, the owner, charterer, manager or operator of the ship, or an agent of one of them)189 must report a “prescribed incident” to AMSA where Australia or an external Territory is the nearest coastal state to the place where the incident occurred, or, where a foreign country is the nearest coastal state, to the government of that foreign country.190 Failure to comply with the reporting provisions is punishable by a fine of 500 penalty units.191 There is no requirement to report a discharge of sewage or garbage, but Australian ships are required to keep a garbage record book,192 to have a garbage management plan,193 and to post placards on the ship notifying the crew and any passengers of the requirements for discharge of garbage.194 Other pollutants: MARPOL Annexes II to V in the States and Northern Territory

[19.140]

The “roll-back” provisions of the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) provide that the relevant provisions of the Commonwealth Act do not apply in relation to the sea near a State

186 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26F(5B). 187 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26F(6) – (9). “Special area” is not defined in the Act itself, but MARPOL defines the expression in each Annex as “a sea area where for recognised technical reasons in relation to its oceanographical and ecological condition and to the particular character of its traffic the adoption of special mandatory methods for the prevention of sea pollution [by the relevant pollutant] is required”. Special areas are listed for each MARPOL Annex. 188 See [19.80] for a consideration of the reporting requirements and offences in relation to oil pollution, including a description of the circumstances in which someone other than the master must make a report. 189 See [19.80] for a consideration of the reporting requirements and offences in relation to oil pollution, including a description of the circumstances in which someone other than the master must make a report. 190 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 22 (noxious liquid substances), 26B (packaged harmful substances). 191 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 22 (noxious liquid substances), 26B (packaged harmful substances). At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $90,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 192 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 26FA, 26FB. 193 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FC. 194 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FD.

[19.140]

19 Pollution from Ships

813

(which for these purposes includes the Northern Territory),195 the Jervis Bay Territory or an external Territory, to the extent that a law of that State or Territory makes provision giving effect to the various Annexes of the MARPOL 73/78 Convention.196 As explained in [19.40], that means that the State and Territory provisions apply to a distance of three nautical miles from the coastal baseline if the relevant State or Territory has given effect to the relevant MARPOL Annex. If the State or Territory has not given effect to the relevant MARPOL Annex, the Commonwealth Act applies to the whole of the territorial sea, as well as to the EEZ. New South Wales, the Northern Territory, Queensland, Tasmania and Victoria have legislated to give effect to all four of the Annexes II – V,197 as the Commonwealth has done, but the provisions giving effect to Annex IV (sewage) are not yet in force in the Northern Territory, and the provisions giving effect to Annexes II (noxious liquid substances), III (packaged harmful substances) and IV (sewage) have not yet been proclaimed in Victoria. South Australia has legislated to give effect to Annexes II, III and V, but not Annex IV (sewage);198 Western Australia has legislated to give effect to Annex II (noxious liquid substances), but not Annexes III – V.199 The State and Territory legislation giving effect to the respective Annexes largely mirrors the State and Territory legislation in relation to oil pollution, rather than the Commonwealth legislation giving effect to Annexes II – V.200 Most significantly, that means that each State has only one, strict liability, offence in relation to each pollutant, rather than the two-tier structure of fault-based and strict liability offences found in the Commonwealth legislation.201 New South Wales also makes it an offence 195 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 3(1) (definition of “State”). 196 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 9(1)(c)(i), (1B)(b)(i) (oil or oily mixtures; no effect if State or Territory has given effect to regs 9 and 114, 15 and 34 of Annex I to MARPOL), s 21(1)(c)(i) (noxious substances; no effect if State or Territory has given effect to regs 3, 4, 5, 6 and 13 of Annex II of MARPOL), s 26AB(1)(c)(i) (packaged harmful substances; no effect if State or Territory has given effect to reg 7 of Annex III of MARPOL), s 26D(1)(c)(i) (sewage; no effect if State or Territory has given effect to reg 3 and reg 11, para 1 of Annex IV of MARPOL), s 26F(1)(c)(i) (garbage; no effect if State or Territory has given effect to regs 3, 4 and 7 of Annex V of MARPOL). 197 Marine Pollution Act 2012 (NSW), Pts 4 – 7; Marine Pollution Act (NT), Pts 3 – 6; Transport Operations (Marine Pollution) Act 1995 (Qld), Pts 5 – 8; Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), Pt II, Divs 2, 2A, 2AB, 2B; Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), Pt 2, Divs 2, 2A, 2B, 2C. 198 Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), Pts 3, 3AA, 3AB. 199 Pollution of Waters by Oil and Noxious Substances Act 1987 (WA), Pt III. 200 See [19.100]. 201 Noxious liquid substances: Marine Pollution Act 2012 (NSW), s 18(1); Transport Operations (Marine Pollution) Act 1995 (Qld), s 35(1) (absolute liability); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 18(1); Pollution of

814

Shipping Law

[19.150]

for any crew member of a ship to cause the relevant pollutants to be discharged into State waters,202 and for any person to be “responsible for” their discharge into State waters.203 The Northern Territory legislation giving effect to Annexes II – V mirrors the cascading series of offences in relation to oil pollution, with variations depending on the degree of environmental harm caused.204

Air pollution: MARPOL Annex VI Introduction

[19.150]

Annex VI to the MARPOL Convention, which deals with air pollution, was first adopted in 1997 but it did not come into force until 2005. It limits the main air pollutants contained in ships’ exhaust gas, including sulphur oxides (generally called SOx) and nitrous oxides (NOx), and it prohibits deliberate emissions of ozone-depleting substances. After Annex VI came into force in 2005, the Marine Environment Protection Committee (MEPC) of the International Maritime Organization (IMO) agreed to strengthen the emission limits significantly in the light of technological improvements and implementation experience. At its meeting MEPC 58 in October 2008, the MEPC adopted a revised Annex VI and an associated NOx Technical Code, which both entered into force on 1 July 2010. Corresponding to these developments at IMO, Pt IIID of the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) was first added to the Act in 2007 to give effect to Annex VI, and was then amended in 2010 to give effect to the revised, more stringent, Annex VI. Waters by Oil and Noxious Substances Act 1987 (Tas), s 20(1); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 18(1) (not yet in force); Pollution of Waters by Oil and Noxious Substances Act 1986 (WA), s 20(1). Jettisoning packaged harmful substances: Marine Pollution Act 2012 (NSW), s 45(1); Transport Operations (Marine Pollution) Act 1995 (Qld), s 42(1); Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 24AAB(1); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 25C(1); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 23E(1) (not yet in force). Sewage: Marine Pollution Act 2012 (NSW), s 53(1); Transport Operations (Marine Pollution) Act 1995 (Qld), ss 47, 48; Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 25CB(1); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 23G(1) (not yet in force). Garbage: Marine Pollution Act 2012 (NSW), s 60(1); Transport Operations (Marine Pollution) Act 1995 (Qld), s 55; Protection of Marine Waters (Prevention of Pollution from Ships) Act 1987 (SA), s 24AAD(1); Pollution of Waters by Oil and Noxious Substances Act 1987 (Tas), s 25F(1); Pollution of Waters by Oil and Noxious Substances Act 1986 (Vic), s 23B(1). 202 Marine Pollution Act 2012 (NSW), ss 30 (noxious liquid substances), 46 (packaged harmful substances), 54 (sewage), 61 (garbage). 203 Marine Pollution Act 2012 (NSW), ss 31 (noxious liquid substances), 47 (packaged harmful substances), 55 (sewage), 62 (garbage). 204 See [19.110], for consideration of the Northern Territory legislation in relation to oil pollution. See Marine Pollution Act (NT), ss 21 (noxious liquid substances), 27 (packaged harmful substances), 31 (sewage) (uncommenced), 38 (garbage).

[19.160]

19 Pollution from Ships

815

There is no State or Territory legislation purporting to give effect to Annex VI, and no “roll-back” provisions in the Commonwealth Act preserving the operation of State or Territory legislation. The operative Commonwealth provisions are expressed to apply to the whole of the sea near a State or Territory, as well as to the EEZ, so the only relevant Australian legislation in relation to air pollution is the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth). How Annex VI works

[19.160]

Annex VI creates a system by which the maximum permissible level of sulphur in fuel oil (bunkers) used by ships is set by the IMO and implemented by states party to the Annex. The maximum permissible level has decreased in a series of steps, and will continue to decrease in the future. The levels are stated in terms of the percentage by mass of solution, expressed using the abbreviation % m/m. For example, 2% m/m means 2% of the mass of the total solution, no matter what units of mass are used (pounds, tonnes or kilograms). The maximum permissible levels differ according to whether or not the ship is operating within an Emission Control Area, or ECA. There are presently four ECAs, the precise limits of which are defined by the IMO: the Baltic Sea ECA, the North Sea ECA, the North American ECA, and the United States Caribbean ECA. For fuel oil to be used outside an ECA, reg 14 of Annex VI stated a maximum permissible level of 4.50% m/m prior to 1 January 2012, and 3.50% m/m on and after 1 January 2012. That level will decrease to 0.50% m/m after 1 January 2020 (or possibly 2025, depending on the outcome of a review to be conducted in 2018). For fuel oil to be used within an ECA, the levels were 1.50% prior to 1 July 2010, 1.00% m/m on and after 1 July 2010, and 0.10% m/m after 1 January 2015. Two of the ECAs, the North American and United States Caribbean Sea ECAs, also state maximum levels of nitrous oxides (NOx) and particulate matter (PM). Low-sulphur fuel that complies with Annex VI requirements is considerably more expensive than non-compliant fuel. ECA-compliant fuel is mainly available at bunkering ports within the ECAs, which means that the ordinary laws of supply and demand add to its cost in those regions. Ships that operate both inside and outside an ECA, such as ships sailing between Australia and North America, must switch from one grade of fuel oil to another in order to remain compliant, which means that they must have segregated bunker tanks for different grades of fuel, or must completely rebunker with compliant fuel before entering an ECA. (It would not be economically viable or (in many cases) practically possible to use only ECA-compliant fuel even when outside an ECA.) The expense of compliant bunker fuel, the cost of fitting segregated bunker tanks, and the ever-decreasing Annex VI maxima combine to mean that it

816

Shipping Law

[19.170]

may become common in the future for newly-built ships to be designed to use liquid natural gas (LNG) rather than fuel oil, and for existing ships to be converted to LNG usage. Air pollution offences and defences

[19.170]

Like the Parts that give effect to Annexes II – V of MARPOL,205 Pt IIID of the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) creates a two-tier structure of offences, strict liability and fault-based. It is an offence (which the Act calls an “ordinary offence”) for any person on any ship intentionally or recklessly to use fuel oil with a sulphur content higher than the prescribed limit in the sea near a State, the outer territorial sea, or the EEZ206 — that is, anywhere from the coastal baseline (including that of the external Territories) to the 200 nautical-mile limit, including waters within the baseline and adjacent to the State or Territory but not within the limits of that State or Territory, such as Port Phillip Bay in Melbourne. Because no Australian waters are within an ECA, the prescribed limits are the non-ECA ones. The master and owner of a ship commit an offence of strict liability if fuel oil with a sulphur content more than the prescribed limit is used on board the ship within the same area of sea.207 The usual burden of proof is reversed, so that it is presumed that fuel oil with sulphur content above the prescribed limit has been used in contravention of the Act unless the contrary is proved.208

The master and owner of an Australian ship commit an offence if they take the ship, or permit it to be taken, into an ECA if the ship does not meet the SOx emission control conditions while the ship is in that area. Like its counterparts in other Parts, the relevant section of the Act purports to create two offences, one more serious than the other in terms of maximum penalty, but, bizarrely, the elements of the two offences are identical.209 There is no element of fault in the “ordinary offence”, which is elsewhere in the Act a fault-based offence, except to the extent that some degree of intention is implicit in the word “take”.210 If “take” is to be understood as implying some degree of intention, then the strict liability offence, which is identical in its terms, is not really a strict liability offence at all. This oddity is unlikely to have much significance in practice, as few Australian ships are likely to enter an ECA, and if one does so while burning non-ECA-compliant fuel, the Australian authorities are unlikely to find out unless it is prosecuted by one of the countries in 205 See [19.130]. 206 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEG(1). 207 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEG(2), (3). 208 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEG(4). 209 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEH(1), (2). 210 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEH(1).

[19.170]

19 Pollution from Ships

817

the ECA. The provisions in question are largely symbolic, constituting formal compliance by Australia with its international obligations as a party to Annex VI. The provision (s 26FEH) making it an offence to take an Australian ship (or to permit it to be taken) into an ECA with non-compliant fuel refers only to SOx emission control conditions. As noted in [19.160], the two ECAs centred on the United States — the two most likely to be visited by Australian ships in practice — also impose NOx and PM controls. It would not be an offence under Australian law to take an Australian ship into either of those ECAs with fuel that complied with the permitted SOx levels but not the permitted NOx or PM levels. It would, of course, still be an offence under the law of the United States. The master and the owner of an Australian ship also commit an offence if the ship uses fuel oil that does not comply with the non-ECA limits outside Australia’s EEZ but not within an ECA211 — that is, on the high seas or within the EEZ of a country not within an ECA. Thus, an Australian ship cannot use fuel oil of higher than permitted SOx levels anywhere in the world. A foreign ship would not commit an offence under Australian law by doing so until it entered Australian waters, although it might commit an offence by the law of its own flag state. Sensibly, the requirements for ships to use Annex VI-compliant fuel oil are tied to the availability of such oil, which cannot always be guaranteed. This is consistent with reg 18 of Annex VI, which is directed principally to fuel oil suppliers. Consistently with that regulation, Div 3 of Pt IIID creates a Register of Local Suppliers of Fuel Oil,212 and makes it an offence for any person to supply fuel oil to a ship in Australian waters if that person is not a registered local supplier.213 Any supplier who supplies fuel oil (other than gas fuel) to a ship within Australian waters must provide a completed bunker delivery note and a sample that comply with the regulations.214 It is a defence to the offence of using non-compliant fuel oil in Australian waters for the accused to show that he or she took all reasonable steps to obtain compliant fuel oil and notified either AMSA (in Australia) or the relevant foreign government if its next port of destination was in a foreign country that he or she was unable to obtain compliant fuel oil.215 The same defence applies to an Australian ship entering an ECA with non-compliant fuel oil.216 It is also a defence to the offence of an Australian ship entering an ECA with non-compliant fuel oil if the ship 211 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEG(1)(d)(iii) (fault-based), (2)(b)(iii) (strict liability). 212 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEM. 213 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEL. 214 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEO. 215 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEG(5), (6). 216 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEH(9).

818

Shipping Law

[19.180]

entered the ECA for the purpose of securing the safety of a ship or saving life at sea, or if the non-compliance was a result of unintentional damage to the ship or its equipment, and all reasonable precautions have been taken to prevent or minimise the emission.217 The maximum penalty for each of the fault-based offences (“ordinary offences”) under Pt IIID is 2,000 penalty units.218 The maximum penalty for each of the strict liability offences is 500 penalty units.219 The maximum penalty for supplying fuel oil in Australian waters without registering on the Register of Local Suppliers of Fuel Oil is 200 penalty units.220

Other State and Territory environmental protection legislation [19.180]

In addition to the State Acts giving effect to parts of the MARPOL Convention in State waters, there is a plethora of State legislation that purports to make it an offence, in one way or another, to pollute the sea, either by oil or other substances. For example, each of the States has environmental protection legislation that makes it an offence to pollute any waters governed by the relevant Act.221 In each State, the relevant Act is expressed to apply (or impliedly applies) in the territorial sea adjacent to the coast of the State in question.222 Notwithstanding the

217 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEH(6). Here, as in relation to the other Annexes, “unintentional” means without intent, recklessness or negligence (s 26FEH(7)) and “damage” does not include wear and tear: s 26FEH(8). 218 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 26FEG(1), 26FEH(1). At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $360,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 219 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), ss 26FEG(2), 26FEH(2). At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $90,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 220 Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth), s 26FEL. At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $36,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 221 Protection of the Environment Operations Act 1997 (NSW), s 120; Environmental Protection Act 1994 (Qld), Pt 3C; Environment Protection Act 1993 (SA), ss 25, 79, 80, 82; Environmental Management and Pollution Control Act 1994 (Tas), ss 5(2), 50, 51, 53; Environment Protection Act 1970 (Vic), s 39; Environmental Protection Act 1986 (WA), ss 49(1), 50A, 50B. 222 Protection of the Environment Operations Act 1997 (NSW), s 4 (Dictionary definition of “waters”); Environmental Protection Act 1994 (Qld), s 8 (Dictionary definition of “waters”); Environment Protection Act 1993 (SA), s 9(1); Environmental Management and Pollution Control Act 1994 (Tas), s 3(2) (“the environment”); Environment Protection Act 1970 (Vic), s 3(1); Environmental Protection Act 1986 (WA), s 3(1) (definition of “waters”).

[19.190]

19 Pollution from Ships

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breadth and detail of the relevant provisions, however, it seems that none of them is effective to create any offences in relation to pollution in the territorial sea. In New South Wales and Queensland the State version of the MARPOL legislation is expressed to prevail over the general State legislation protecting the environment to the extent of any inconsistency,223 which means that the latter legislation has no effect in relation to pollution in the territorial sea. In Victoria and Western Australia,224 the position is the opposite: the general State legislation protecting the environment is expressed to prevail over all other State legislation including, presumably, the State MARPOL legislation. In these two States, the general State environmental protection legislation should have no effect to the extent that it purports to create offences in relation to marine pollution in the territorial sea, because the Protection of the Sea (Prevention of Pollution from Ships) Act 1983 (Cth) will override it by virtue of s 109 of the Constitution, as it is plainly intended to “cover the field”. The “roll-back” provisions of the Commonwealth Act save the operation of State legislation that gives effect to the relevant parts of the MARPOL Convention; it does not save State legislation that purports in general terms to make it an offence to pollute the marine environment. This may mean that the State MARPOL legislation in these two States has no effect in the territorial sea, either: if the State environmental protection legislation overrides the State MARPOL legislation and the Commonwealth MARPOL legislation overrides the State environmental protection legislation, that may leave the Commonwealth MARPOL legislation as the only effective legislation in relation to the territorial sea. In South Australia and Tasmania, the general environmental protection legislation is expressed to be in addition to other State legislation, without limiting or derogating from it.225 It thus does not purport to derogate from the MARPOL legislation, which applies in the area preserved for its operation by the Commonwealth “roll-back” provisions. The operation of the general environmental protection legislation in State waters is pre-empted by the same “roll-back” provisions, because it does not purport to give effect to the MARPOL legislation.

Dumping Commonwealth

[19.190]

The Convention on the Prevention of Marine Pollution by Wastes and Other Matter 1972 (known as the Dumping Convention) was

223 Protection of the Environment Operations Act 1997 (NSW), s 7(3); Environmental Protection Act 1994 (Qld), s 23(2). 224 Environment Protection Act 1970 (Vic), s 3(2); Environmental Protection Act 1986 (WA), s 5. 225 Environment Protection Act 1993 (SA), s 7(1); Environmental Management and Pollution Control Act 1994 (Tas), s 9(2).

820

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[19.190]

made in an attempt to control the pollution of the sea by dumping, which was defined in the original Dumping Convention as “any deliberate disposal at sea of wastes or other matter from vessels, aircraft, platforms or other man-made structures at sea”. In order to give effect to its obligations under the Dumping Convention, the Commonwealth passed the Environment Protection (Sea Dumping) Act 1981 (Cth), which makes it an offence to dump or incinerate wastes or other matter at sea, or to load wastes or other matter for the purpose of dumping or incinerating them at sea. Article 8 of the original Dumping Convention provided that Contracting Parties with common interests in a particular geographical area should endeavour to enter into regional agreements taking into account characteristic regional features. In 1986, several countries of the South Pacific Region, including Australia, agreed a Protocol to the Dumping Convention, known as the Protocol for the Prevention of Pollution of the South Pacific Region by Dumping, or the SPREP Protocol for short. The Commonwealth legislated to give effect to the SPREP Protocol in 1994.226 The Annexes to the Dumping Convention were revised by a series of IMO resolutions made in November 1993, which were designed to strengthen the Annexes in several ways, including by phasing out sea disposal of industrial waste. The Commonwealth legislated to give effect to those resolutions in 1997.227 The Convention was then revised by a Protocol in 1996, which superseded the original Convention.228 The Protocol was designed to give greater protection to the environment and the marine ecosystem. The Commonwealth implemented the 1996 Protocol in 2000.229 In doing so, it repealed the 1994 amendments giving effect to the SPREP Protocol, and also the 1997 amendments giving effect to the IMO resolutions. Australia is still a member of an autonomous regional organisation known as SPREP, which has its headquarters in Samoa,230 but it no longer gives effect by legislation to the SPREP Protocol to the Dumping Convention. The Act makes it an offence to dump or incinerate wastes or other matter in Australian waters. For the purposes of this Act, “Australian waters” extend beyond the area covered by the rest of the Commonwealth’s marine pollution legislation. Section 4 of the Act (as amended) defines “Australian waters” as being made up of the following areas: 226 Environment Protection (Sea Dumping) Amendment Act 1993 (Cth), which was Act No 16 of 1994. 227 Environment Sport and Territories Legislation Amendment Act 1997 (Cth). 228 The 1996 Protocol superseded the Convention: see Environment Protection (Sea Dumping) Act 1981 (Cth), Sch 1, Art 23. 229 Environment and Heritage Legislation Amendment Act 2000 (Cth). 230 SPREP is the Secretariat of the Pacific Regional Environment Programme, a regional organisation established in 1992, which became autonomous in 1995: see http:// www.sprep.org.

[19.190]

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(a) the territorial sea of Australia and any sea on the landward side of the territorial sea, except sea that is within the limits of a State or the Northern Territory; (b) the territorial sea of an external territory and any sea that is on the landward side of that territorial sea; (c) the exclusive economic zone (EEZ) adjacent to the coast of Australia or an external Territory;231 (d) any area of the sea beyond 200 nautical miles from the coastal base line that is above the continental shelf of Australia or an external Territory,232 which can extend to 350 nautical miles in some areas.233 “Australian waters” do not include the “top hat area” described in Art 4.3 of the Torres Strait Treaty.234 There is also a provision to the effect that they do not include waters subject to the Australia-Indonesia Delimitation Treaty, but that treaty has never come into force and so neither has the section of the Act.235 The Act refers to the dumping or incineration of “controlled material”, which is defined as meaning “wastes or other matter” (within the meaning of the Protocol) and a vessel, aircraft or platform.236 “Wastes or other matter” is defined in the Dumping Convention Protocol as being “material and substance of any kind, form or description”.237 It thus applies, prima facie, to the deliberate disposal of absolutely anything into the sea. Sections 18 and 19 of the Act provide, however, that a person may apply for, and the Minister238 may grant, a permit to dump wastes or 231 The external Territories of Australia are: the Ashmore and Cartier Islands, the Australian Antarctic Territory, Christmas Island, the Cocos (Keeling) Islands, the Coral Sea Islands Territory, Heard Island, the McDonald Islands and Norfolk Island. The fact that the Act applies to a distance of 200 nautical miles from the coastal baseline of each of these Territories significantly expands its territorial ambit. 232 Paragraph (d) of the definition of “Australian waters” in Environment Protection (Sea Dumping) Act 1981 (Cth), s 4(1) includes any area of the sea above the continental shelf of Australia or an external Territory. The external Territories of Australia are: the Ashmore and Cartier Islands, the Australian Antarctic Territory, Christmas Island, the Cocos (Keeling) Islands, the Coral Sea Islands Territory, Heard Island, the McDonald Islands and Norfolk Island. The fact that the Act applies to a distance of 200 nautical miles from the coastal baseline of each of these Territories significantly expands its territorial ambit. 233 Seas and Submerged Lands Act 1973 (Cth), s 12, Sch, Art 76.5. 234 Environment Protection (Sea Dumping) Act 1981 (Cth), s 4A. 235 Environment Protection (Sea Dumping) Act 1981 (Cth), s 4B. 236 Environment Protection (Sea Dumping) Act 1981 (Cth), s 4(1). 237 Dumping Convention Protocol, Art 1.8. The expression has the same meaning in the Act as in the Protocol: see s 4(4). The Protocol used to appear as Sch 1 to the Act but, rather unhelpfully, it was removed by amendment in 2006. It appears in the Australian Treaty Series at [2006] ATS 11, which can be read at: http://www.austlii.edu.au/cgibin/sinodisp/au/other/dfat/treaties/ATS/2006/11.html. 238 The relevant Minister is, at present, the Minister for the Environment, Heritage, Water and the Arts or, within the Great Barrier Reef Marine Park, the Great Barrier Reef Marine Park Authority (GBRMPA).

822

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[19.190]

other matter at sea or to incinerate them at sea, or a permit to load such wastes onto vessels or aircraft for the purpose of dumping or incinerating them at sea. The provisions creating offences under the Act are phrased in such a way that it is not an offence to dump, incinerate or to load for dumping if a permit has been granted by the Minister. Section 19(5) provides that the Minister may only grant a permit for dumping (or loading for dumping) of controlled material that is within Annex 1 of the Protocol. However, s 19(7) provides that the Minister may grant a permit for dumping, incineration at sea (or loading for dumping or incineration at sea) of any controlled material if there is an emergency posing an unacceptable risk relating to human health, safety or the marine environment, and admitting of no other feasible solution. The combined effect of these provisions is that only Annex 1 materials can be dumped without there being an emergency of the kind described. A permit cannot be granted for incineration of any controlled materials at sea (whether or not in Annex 1) unless there is an emergency.239 Annex 1 lists wastes or other matter that may be considered for dumping: dredged material, sewage sludge, fish waste or material resulting from industrial fish processing operations, vessels and platforms or other man-made structures at sea, inert inorganic geological material, organic material of natural origin and bulky items primarily comprising iron, steel, concrete and similarly unharmful materials.240 The Minister may only grant a permit of Annex 1 materials if he or she has considered the matters set out in Annex 2.241 They include a waste prevention audit, consideration of waste management options, consideration of the chemical, physical and biological properties of the material to be dumped, assessment of the potential effects of dumping and compliance monitoring and reporting requirements.242 A person commits an offence if he or she: (a) dumps controlled material without a permit into Australian waters from any vessel, aircraft or platform, or into any waters from an Australian vessel or aircraft;243 or (b) incinerates controlled material without a permit on a vessel or platform in Australian waters or on an Australian vessel in any part of the sea;244 or (c) loads controlled material without a permit on any vessel, aircraft or platform in Australia or in Australian waters knowing that it will be dumped into the sea or incinerated at sea, or reckless as to whether it will 239 Environment Protection (Sea Dumping) Act 1981 (Cth), s 19(6). 240 Dumping Convention Protocol, Annex 1, para 1. 241 Environment Protection (Sea Dumping) Act 1981 (Cth), s 19(5)(b). 242 Dumping Convention Protocol, Annex 2. 243 Environment Protection (Sea Dumping) Act 1981 (Cth), s 10A(1)(a), (b). It is also an offence to dump a vessel, aircraft or platform into Australian waters, or an Australian vessel or aircraft into any part of the sea: s 10A(1)(c), (d). 244 Environment Protection (Sea Dumping) Act 1981 (Cth), s 10B(1).

[19.190]

19 Pollution from Ships

823

be dumped or incinerated at sea;245 or (d) exports controlled material from Australia to another country knowing that it will be dumped into the sea or incinerated at sea, or is reckless as to whether it will be dumped or incinerated at sea.246 For each of these offences, the maximum penalties are on a sliding scale depending on the nature of the material dumped, incinerated, loaded or exported.247 For seriously harmful material the maximum penalty is imprisonment for up to 10 years or a fine of up to 2,000 penalty units,248 or both; for material that is not within Annex 1 the maximum penalty is imprisonment for up to two years or a fine of up to 500 penalty units;249 in other cases the maximum penalty is imprisonment for up to one year or a fine of up to 250 penalty units,250 or both. A person charged with an offence under the Act has a defence if he or she proves that the dumping, loading or incineration was carried out in accordance with a permit granted by a foreign country that is a party to the Dumping Convention Protocol unless the dumping, loading or incineration took place in Australian waters,251 for which permits can only be granted by Australia. It is also a defence to a dumping charge, whatever the substance dumped, if the person charged proves that the dumping was necessary for the safety of human life or of a vessel, aircraft or platform in a case of force majeure caused by stress of weather, or that it appeared to be the only way of averting a threat to human life or to the safety of a vessel, aircraft or platform and there was every probability that the damage caused by such dumping would be less than would otherwise occur.252 In order to succeed in raising such a defence, though, the person charged must also prove that the necessary dumping was so conducted as to minimise the likelihood of damage to human or marine life and was reported to the Minister as soon as practicable after it occurred.253 245 Environment Protection (Sea Dumping) Act 1981 (Cth), s 10C(1). 246 Environment Protection (Sea Dumping) Act 1981 (Cth), s 10D(1). 247 Environment Protection (Sea Dumping) Act 1981 (Cth), ss 10A(2), 10B(2), 10C(2), 10D(2). 248 At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $360,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 249 Presently equivalent to $90,000. At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $360,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 250 Presently equivalent to $45,000. At the time of writing (January 2016), a Commonwealth penalty unit was worth $180, which means that the maximum fine is presently equivalent to $360,000, but that number will increase every three years after 1 July 2018 by indexation: see Crimes Act 1914 (Cth), s 4AA(1), (3). 251 Environment Protection (Sea Dumping) Act 1981 (Cth), s 15(1), (2). 252 Environment Protection (Sea Dumping) Act 1981 (Cth), s 15(3)(a), (b). 253 Environment Protection (Sea Dumping) Act 1981 (Cth), s 15(3)(c), (d).

824

Shipping Law

[19.200]

The Environment Protection (Sea Dumping) Act 1981 (Cth) does not apply to vessels or aircraft belonging to an arm of the Australian Defence Force when it is being used in a situation of armed conflict or in an emergency situation other than armed conflict,254 or to the naval, military or air forces of a foreign country in any circumstances.255 The Act also does not apply in relation to the disposal of wastes or other matter arising from, or related to, the exploration, exploitation and associated offshore processing, of seabed mineral resources,256 an important exception given the amount of oil and gas exploration off Australia’s coast. States and the Northern Territory

[19.200]

South Australia passed legislation to give effect to the original Dumping Convention in 1984 but the Act has still not been proclaimed, over 30 years after it received the Royal Assent.257 Queensland and Tasmania enacted similar legislation but then repealed it without replacing it.258 New South Wales, Victoria and the Northern Territory have never legislated to give effect to the Convention or the Protocol. Western Australia is the only State with sea dumping legislation in force.259 The Western Australian Act purports to apply to the coastal waters of the State, to a distance of three nautical miles from the coastal base line.260 However, its effect in Western Australian coastal waters is superseded by the Commonwealth Act. Section 9 of the Environment Protection (Sea Dumping) Act 1981 (Cth) provides that the Minister261 may make a declaration limiting the effect of the Commonwealth Act if he or she is satisfied that the law of a State makes provision for giving effect to the Dumping Convention Protocol in relation to the coastal waters of that State. Because the Western Australian legislation gives effect to the original Dumping Convention but not the Protocol, the Minister could not validly make (and has not made) any declaration in relation to Western Australia. As a result, the Western Australian legislation has no effect, except in relation to sea within the limits of the State. 254 Environment Protection (Sea Dumping) Act 1981 (Cth), s 7(1). 255 Environment Protection (Sea Dumping) Act 1981 (Cth), s 7(2). 256 Environment Protection (Sea Dumping) Act 1981 (Cth), s 5. 257 Environment Protection (Sea Dumping) Act 1984 (SA) (not yet proclaimed). 258 Queensland Marine (Sea Dumping) Act 1985 (Qld) (repealed by Statute Law Revision Act 1995 (Qld), s 5(1) and Sch 7); Environment Protection (Sea Dumping) Act 1987 (Tas) (repealed by Legislation Repeal Act 2000 (Tas), Sch 1). 259 Western Australian Marine (Sea Dumping) Act 1981 (WA) commenced on proclamation on 19 April 1984: WA Gov Gaz (19 April 1994), p 1103. 260 Western Australian Marine (Sea Dumping) Act 1981 (WA), s 2(1) (definition of “coastal waters”). 261 At present, the Minister for the Environment, Heritage, Water and the Arts or, within the Great Barrier Reef Marine Park, the Great Barrier Reef Marine Park Authority (GBRMPA).

[19.210]

19 Pollution from Ships

825

COMPENSATION FOR LOSSES CAUSED BY POLLUTION Introduction [19.210]

In the first instance, compensation for losses caused by pollution from oil spilled from oil tankers is recoverable under the International Convention on Civil Liability for Oil Pollution Damage 1992 (the CLC 92), the operative provisions of which are given the force of law in Australia by the Protection of the Sea (Civil Liability) Act 1981 (Cth).262 CLC 92 creates a regime of strict but limited liability on shipowners and/or their insurers for the consequences of pollution damage. If claims exceed the limited amount available under CLC 92, then claimants are entitled to recover “second tier” compensation from the 1992 International Oil Pollution Compensation Fund (known as “the 1992 Fund” or “the 1992 IOPC Fund”) under the International Convention on the Establishment of an International Fund for Oil Pollution Damage 1992 (known as the Fund Convention 1992). Australia’s participation in the Fund Convention was effected by the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth) and three related Acts.263 If claims exceed the amount available under CLC 92 and the 1992 Fund combined, claimants may recover “third tier” compensation from the International Oil Pollution Compensation Supplementary Fund 2003 (known as “the Supplementary Fund”) under the Protocol of 2003 to the Fund Convention 1992. Australia’s participation in the Supplementary Fund was effected by amendment of the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth) in 2008, which added a new chapter, Ch 3A. Although MARPOL deals with pollution of the sea by pollutants other than oil,264 CLC 92, the Fund Convention 1992 and the Supplementary Fund are confined to compensation for losses suffered as a result of pollution by oil. In 1996, the IMO made another convention to deal with civil liability for pollutants other than oil, the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea 1996 (HNS Convention). The Convention did not enter into force, and it was amended by Protocol in 2010 in an effort to bring it into operation.265 At the time of writing, the Convention is still not in force and Australia has not signed or ratified it. 262 Protection of the Sea (Civil Liability) Act 1981 (Cth), s 8, gives the force of law to Arts I – VI, VII.1, VII.8, VII.9, VIII, IX.1, IX.3, XII bis (except (b)), XI.1. 263 Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – Customs) Act 1993 (Cth); Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – Excise) Act 1993 (Cth); Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – General) Act 1993 (Cth). 264 See [19.120]–[19.130], [19.150]. 265 The HNS Convention 2010 will come into force 18 months after 12 countries have accepted the Convention, four of which must have not less than two million units of gross tonnage. At the time of writing, only eight countries have signed the Convention as amended by the 2010 Protocol: see the HNS Convention page at the IOPC Funds website: http://www.hnsconvention.org/Pages/Home.aspx.

826

Shipping Law

[19.220]

Unless and until it becomes part of the law of Australia, civil compensation for losses caused by other pollutants can only arise at common law, in the torts of negligence, nuisance or trespass.266 CLC 92, the Fund Convention and the Supplementary Fund Protocol apply only to ships “actually carrying oil in bulk as cargo”.267 Thus, they do not provide compensation for all oil pollution damage, but only damage from oil pollution emanating from oil tankers.268 The CLC 92/Fund/Supplementary Fund regime does apply to bunker oil spills from ships “actually carrying oil in bulk as cargo”,269 but it does not apply to bunker oil spills from other ships, such as bulk carriers, chemical tankers or container ships. Bunker oil spills from ships other than oil tankers are governed by the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (the Bunker Convention).

Compensation under the Civil Liability Convention 1992 (CLC 92) The basis of liability: pollution damage Article 3.1 of CLC 92270 provides that the owner of a ship at the time of an incident or, where the incident consists of a series of occurrences, at the time of the first such occurrence, shall be liable for any pollution damage caused by the ship as a result of the incident. The owner’s liability for pollution damage is strict, subject to some narrowlyconfined defences, which are considered at [12.290].

[19.220]

Article 3.4 is a “channelling” provision designed to ensure that the shipowner can only be held liable for pollution damage according to the provisions of CLC 92, and that no-one but the shipowner can be held liable for pollution damage. Article 3.4 provides that no claim for compensation for pollution damage may be made against the owner other than under CLC 92. The article also provides that no claim for compensation for pollution damage may be made against: (a) the servants or agents of the owner or the members of the crew; (b) the pilot or other non-crew-member performing services for the ship; (c) any charterer 266 As in Southport Corp v Esso Petroleum Co Ltd [1953] 2 All ER 1204 per Devlin J; Southport Corp v Esso Petroleum Co Ltd [1954] 2 QB 182 (CA); Esso Petroleum Co Ltd v Southport Corp [1956] AC 218 (HL). 267 CLC 92, Art 1.2; Fund Convention 1992, Art 1.2; Supplementary Fund Protocol 2003, Art 1.6. 268 The decision whether a ship is one to which the CLC 92 applies falls within the admiralty jurisdiction, and so a claim seeking recovery under the CLC 92 can be brought against the ship in rem under the Admiralty Act 1988 (Cth), ss 4(3)(b), 17: see Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439; 232 ALR 694. 269 CLC 92, Art 1.5; Fund Convention 1992, Art 1.2; Supplementary Fund Protocol 2003, Art 1.6. 270 References in this part of the chapter (ie, [19.220]–[19.290]) are to CLC 92 itself. They should be read as referring to the text of the Convention in the Protection of the Sea (Civil Liability) Act 1981 (Cth), Sch 1 as amended by the Protocol in Sch 2.

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(including a bareboat charterer), manager or operator of the ship; (d) any person performing salvage operations with the consent of the owner or on the instructions of a competent public authority; (e) any person taking preventive measures; and (f) all servants or agents of persons mentioned in (c), (d) or (e), unless the damage resulted from their personal act or omission, and was committed with the intent to cause such damage or recklessly and with knowledge that such damage would probably result. “Pollution damage” is defined in Art 1.6 as being: (a) loss or damage caused outside the ship by contamination resulting from the escape or discharge of oil from the ship, wherever such escape or discharge may occur, provided that compensation for impairment of the environment other than loss of profit shall be limited to costs of reasonable measures of reinstatement actually undertaken or to be undertaken; and (b) the cost of preventive measures and further loss or damage caused by preventive measures. Article 1.7 defines “preventive measures” as being any reasonable measures taken by any person after an incident has occurred to prevent or minimise pollution damage. Section 5 of the Protection of the Sea (Civil Liability) Act 1981 (Cth) provides that the Act applies both within and outside Australia and extends to every external Territory. Article 2 of CLC 92 confines the operation of the Convention to pollution damage caused “in the territory of” a Contracting State, including its territorial sea, or in the exclusive economic zone (EEZ), or to preventive measures, wherever taken. Accordingly, s 9 of the Act, which confers federal jurisdiction on the Supreme Courts of the States and Territories to hear and determine compensation claims under CLC 92,271 provides that those courts have jurisdiction over claims in respect of incidents “that have caused pollution damage in a place to which the Convention applies”, or “in relation to which preventive measures have been taken to prevent or minimise pollution damage in a place to which the Convention applies”. The territorial sea or EEZ of another Contracting State is “a place to which the Convention applies” and s 5 expressly provides that the Act shall apply “outside Australia”. Nevertheless, Australian courts do not have jurisdiction over pollution claims arising in the territorial sea or EEZ of other Contracting States. Article 9.1 of CLC 92 provides that actions for compensation may only be brought in the courts of the country where the pollution damage occurred, or where the preventive measures were taken, and that paragraph is given the force of law by s 8(1) of the Act. Because the definition of “pollution damage” in Art 1.6 specifically states that it includes contamination resulting from an escape or discharge of oil into the sea wherever that oil or discharge occurs, it is clear that the escape or discharge itself need not occur within the territorial sea or EEZ of 271 The Federal Court of Australia and the inferior courts of the States and Territories also have jurisdiction in personam in relation to compensation claims under CLC 92, by virtue of the Admiralty Act 1988 (Cth), ss 4(1), (3)(b), 9(1)(a).

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Australia in order to attract liability under CLC 92 as enacted by the Act. It is sufficient that the contamination causes pollution damage within Australia or its territorial sea or EEZ, or that preventive measures are taken within Australia. For example, if oil were to be spilled from a tanker beyond Australia’s EEZ, and if expenditure were to be incurred in Australia mobilising equipment in a reasonable attempt to prevent or minimise damage by the oil within the EEZ, it is clear that such expenditure would amount to “preventive measures” and thus “pollution damage” for the purposes of the Act, even if no oil were ever to enter the EEZ. Damage to private property and economic losses consequential upon such damage clearly fall within the definition of “pollution damage”. How far the definition extends beyond those straightforward cases is a vexed question, which is considered separately at [19.230]. Under the unamended CLC, preventive measures could only constitute “pollution damage” if there had been some actual escape or discharge of oil into the sea. Article 1.7 provided (as it still does in CLC 92) that preventive measures constitute “pollution damage” if they are reasonable, and if they are taken “after an incident has occurred”. “Incident” was defined by Art. 1.8 of the unamended CLC as being “any occurrence or series of occurrences having the same origin, which causes pollution damage”. Thus, measures taken to prevent an escape or discharge from occurring at all did not fall within the definition, and compensation could not be recovered in respect of them. That undesirable result was changed by the 1992 amendments, which added the following words to the end of the definition of “incident” in Art 1.8: “or creates a grave and imminent threat of causing such damage”. Under CLC 92, measures taken to prevent a spill from occurring at all therefore constitute “pollution damage”, so that compensation can be recovered in respect of them, provided that the measures are reasonable, and provided the threat of a spill was “grave and imminent”. Who may claim?

[19.230]

One of the most vexed questions under CLC 92 is that of who is entitled to make a claim. Apart from the reference to preventive measures, the definition of “pollution damage” in Art 1.6 merely refers to “loss or damage caused outside the ship”. In the 1992 version, Art 1.6 goes on to limit claims for compensation for impairment of the environment to claims for loss of profit from such impairment and the costs of reasonable measures of reinstatement actually undertaken or to be undertaken. The fact that the definition places these restrictions on claims for impairment of the environment merely serves to highlight the fact that for other types of claim, CLC 92 does not set out any test for remoteness of loss or damage that might indicate which claims are, and which are not, compensable. One possible interpretation of the words “loss or damage caused outside the ship” is that all loss or damage caused by pollution is compensable,

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however remote or indirectly caused. Such an interpretation would, however, pose grave practical problems. It would admit most, if not all, of the following types of claim that can arise as a result of an oil spill: • claims for economic losses directly caused by physical damage to property, such as the repair or replacement cost of oyster beds or fish farms damaged or destroyed by oil pollution; • claims for damages for physical injury suffered as a result of contact with spilled oil; • claims for economic losses consequential upon damage to the claimant’s own property or person, such as loss of profits that would have been earned by property damaged or destroyed by oil, or loss of a person’s earning capacity as a result of physical injury; • claims for purely economic losses suffered by claimants who have not suffered personal injury or physical damage to their own property, such as fishermen who have lost profits because they cannot fish in polluted waters, hoteliers who lose business because holiday-makers no longer patronise a resort whose beaches have been polluted by oil, and canning companies who have lost their supply of fish to can; • claims in respect of the cost of preventive measures; • claims in respect of clean-up costs and the cost of restoring the environment to its pre-spill condition; • claims for non-pecuniary losses by those who use but do not profit from the environment, such as birdwatchers, surfers and sailing enthusiasts who can no longer engage in their hobbies. In Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress),272 David Steel J observed: A whole range of potential claimants can and do emerge from an oil spill: fishermen, hotel owners, suppliers to hotels, suppliers to fishermen, fish processors, public authorities, restaurants, shops etc. The claims are also infinitely variable: loss of sales, loss of tax revenue, loss of bookings, loss of goodwill, costs of marketing campaigns, and so on. All these claims are likely to be foreseeable and there inevitably arises an echo of the words of Lord Wright in Liesbosch Dredger v SS Edison: “The law cannot take account of everything that follows a wrongful act, it regards some subsequent matters as outside the scope of its selection, because ‘it were infinite for the law to judge the cause of causes’ or consequences of consequences … In the varied web of affairs, the court must strike some consequences as relevant, and not perhaps on the grounds of pure logic, but simply for practical reasons.”

The more claims are admitted as compensable, the smaller the amount of compensation that each claimant receives if the total amount claimed exceeds the limit of liability under CLC 92, because the limited amount of money available under the 1992 Protocol is distributed among the 272 Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 123 at 127, aff’d on appeal Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 327.

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claimants in proportion to the amounts of their established claims.273 For that reason, those who have suffered property damage, personal injury or direct economic loss are reluctant to see the admission of claims made by claimants who have suffered more remote or indirect losses. The leading authority on the question of which claims are compensable under the CLC is Landcatch Ltd v International Oil Pollution Compensation Fund,274 a decision of the Inner House of the Court of Session (Scotland’s equivalent of England’s Court of Appeal). The litigation arose as a result of the oil spill from the tanker “Braer”, which ran aground off Shetland and discharged 84,700 tonnes of crude oil and 1,600 tonnes of bunker oil into the sea. The pursuers’ business included the rearing of salmon from eggs to smolt — that is, juvenile salmon — which were then moved from fresh water to sea water, where they grew to harvestable size. The pursuers’ business was not directly affected by the “Braer” oil spill (they produced their smolt on Scottish islands some distance from Shetland), but their principal market was sea-water salmon farmers in Shetland. The sale of Shetland salmon was prohibited by government order soon after the spill, which led the pursuers to cull large numbers of smolt because of lack of sales to the Shetland salmon farmers. The pursuers then sued the owners of the “Braer” and the IOPC Fund, claiming that their losses amounted to “pollution damage” for the purposes of the CLC and the Fund Convention 1971.275 In the Outer House of the Court of Session, Lord Gill held that the pursuers’ claims were not compensable.276 That decision was affirmed by the Inner House on appeal. The Inner House held that the pursuers had suffered “pure” or “relational” economic loss of a kind that would not be recoverable at common law in the United Kingdom.277 Lord Cullen, the Lord Justice Clerk, said:278 In these circumstances I consider that “loss”, as included in “damage” for the purposes of s 1(1) of the 1971 Act, does not cover secondary or relational 273 CLC 92, Art 5.4. Limitation of liability under CLC 92 is considered at [19.250]–[19.280]. 274 Landcatch Ltd v International Oil Pollution Compensation Fund [1999] 2 Lloyd’s Rep 316. 275 The claim against the shipowners was made under the Merchant Shipping (Oil Pollution) Act 1971 (UK), the United Kingdom’s enactment of the unamended CLC. Because the total amount of claims made against the “Braer” exceeded the limited amount of the shipowner’s CLC liability, the pursuers also sued the 1971 IOPC Fund under the Merchant Shipping Act 1974 (UK), s 4, which gave effect to the Fund Convention 1971. Because the “Braer” ran aground in January 1993, the 1992 amendments to the CLC and the Fund Convention were not yet in force. The two Acts relied on by the pursuers were repealed by the Merchant Shipping Act 1995 (UK), which gave effect to the 1992 Protocols. 276 Landcatch Ltd v International Oil Pollution Compensation Fund [1998] 2 Lloyd’s Rep 552. 277 Under the exclusionary rule in Cattle v Stockton Waterworks Co (1875) LR 10 QB 453, which was reaffirmed by the House of Lords in Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785. 278 Landcatch Ltd v International Oil Pollution Compensation Fund [1999] 2 Lloyd’s Rep 316 at 329.

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claims. I have arrived at that conclusion by applying considerations similar, though not identical, to those which have led to the development of a rule against such claims in actions at common law.

The Landcatch decision was applied by the English Court of Appeal in Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress),279 which arose out of the grounding of the oil tanker “Sea Empress” off Milford Haven in south-west Wales. Like the “Braer” spill, the “Sea Empress” spill led to a government ban on commercial fishing in the affected region. The claimant was a fish processor. Its factory was not directly affected by the oil spill, but it nevertheless suffered considerable loss, because its production relied predominantly on whelks harvested from the affected region. It claimed that its losses constituted “pollution damage” for the purposes of CLC 92 and the Fund Convention 1992.280 David Steel J denied the claim,281 and the Court of Appeal dismissed an appeal by the whelk processor. The claimant argued that if its claim was to be denied on the ground that it was for “pure” economic loss, then there was no defensible basis for allowing the claims of the whelk fishers themselves, which the defendants had paid. The Court of Appeal rejected that argument. Commercial fishers who are accustomed to fish in waters that become contaminated may be entitled to recover because their claims arise from the very close relationship between the contaminated waters and the fishermen’s activities and loss.282 In contrast, the whelk processor’s claim did not arise directly from the contamination. Mance LJ said:283 Despite the difficulty of drawing the line in any case such as the present, I consider, at the end of all the arguments, that the appellant falls on the wrong side of it. It was not engaged in any local activity in the physical area of the contamination. Its interest was in landed whelks, not in the whelks in their natural habitat. The contamination has prevented local fishermen, whose physical activities are closely affected by the contamination of the waters and of whelks, from supplying the appellant with the landed whelks for which it had contracted. The appellant’s resulting loss arises from its inability to carry out processing and packing and deliveries of processed and packed whelks at points far away from the contaminated areas. I consider that this is a form of secondary economic loss, which is outside the intended scope of a statute which is closely focused on physical contamination and its consequences. 279 Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 327. 280 The “Sea Empress” ran aground in February 1996, by which time the UK had enacted the 1992 Protocols. The plaintiff sued both the owner of the “Sea Empress” and the 1992 IOPC Fund. 281 Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 123. 282 Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 327 at 336 [33] per Mance LJ (with whom Kennedy LJ agreed). 283 Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 327 at 336 [33] per Mance LJ (with whom Kennedy LJ agreed).

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Neither the Inner House in Landcatch nor the Court of Appeal in The Sea Empress went so far as to hold that recovery under the Conventions was confined to those claimants who would be able to recover at common law if fault were established.284 Indeed, the Inner House in Landcatch carefully said that it was not simply applying common law concepts,285 and Mance LJ in The Sea Empress acknowledged that common law principles would preclude claims by commercial fishers, which he thought should be recoverable under the Convention regime.286 Nevertheless, both courts relied heavily on common law principles in determining which claims were compensable. There is as yet no Australian authority on the proper interpretation of the words “pollution damage” in the Conventions, but if Australian courts emulate Landcatch and The Sea Empress in drawing on common law principles, the pool of successful claimants may be larger in Australia than in Landcatch and The Sea Empress themselves, because Australian tort law recognises a wider class of economic loss claims than English (or Scottish) tort law. At first instance in The Sea Empress, David Steel J observed that the only case that might have assisted the claimant was Perre v Apand Pty Ltd,287 where the High Court of Australia held that purely economic losses might be recoverable in some circumstances. It is very difficult to identify any single ratio decidendi in Perre,288 but three common themes have been identified.289 First, the class of affected claimants must be of determinate size and readily ascertainable make-up; secondly, the claimants must have been vulnerable, in the sense that they were unable to do anything to protect themselves against the harm that befell them; thirdly, the imposition of liability should not unduly interfere with the defendant’s ordinary business activity. The second of these “salient features”,290 that 284 Lord Gill in the Outer House in Landcatch did say that common law principles should be applied in interpreting the Convention (see Landcatch Ltd v International Oil Pollution Compensation Fund [1998] 2 Lloyd’s Rep 552), a view he repeated in P & O Scottish Ferries Ltd v Braer Corp [1999] 2 Lloyd’s Rep 535. 285 Landcatch Ltd v International Oil Pollution Compensation Fund [1999] 2 Lloyd’s Rep 316 at 329. Lord Gill in the Outer House said that common law principles should be applied in interpreting the Convention (see Landcatch Ltd v International Oil Pollution Compensation Fund [1998] 2 Lloyd’s Rep 552), a view he repeated in P & O Scottish Ferries Ltd v Braer Corp [1999] 2 Lloyd’s Rep 535. 286 Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 327 at 336 [31] per Mance LJ (with whom Kennedy LJ agreed). 287 Perre v Apand Pty Ltd (1999) 198 CLR 180. 288 After considering Perre at some length in Reynolds v Katoomba RSL All Services Club Ltd (2001) 53 NSWLR 43 at 82 [124] Powell JA asked himself the pithy but inevitable question: “What, then, is one to make of all this?” 289 See P Cane, “The Blight of Economic Loss: Is there Life after Perre v Apand?” (2000) 8 Torts Law Journal 246. 290 The High Court of Australia currently uses a “salient features” approach to determine the existence of a duty of care: see Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 at 597-598 [149] per Gummow and Hayne JJ; Waller v James (2006) 226 CLR 136 at 148 [34] per Kirby J; Harriton v Stephens (2006) 226 CLR 52 at 74 [64], 76 [72] per Kirby J;

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of vulnerability, was also regarded as significant in Woolcock Street Investments Pty Ltd v CDG Pty Ltd,291 where it was said that the concept should be understood as a reference to the plaintiff’s inability to protect itself from the consequences of the defendant’s actions, either entirely or in a way that would cast the consequences on the defendant.292 This feature seems particularly apt to describe the position of those who might suffer loss as a result of an oil spill. Also, Australian courts have found tort liability in “transferred loss” cases, where a loss that would otherwise be suffered by the owner of property is transferred (usually by contract) to another person who is not the owner of that property.293 These Australian tort principles would probably not be broad enough to include the smolt growers in Landcatch or the fish processor in The Sea Empress, but they might well be broad enough to include hotels, restaurants and other tourist businesses in seaside resorts whose business was adversely affected by an oil spill in their immediate vicinity. The IOPC Fund does pay claims of this kind.294 Its Claims Manual states:295 Under certain circumstances compensation is also payable for loss of earnings caused by oil pollution suffered by persons whose property has not been polluted (pure economic loss). For example, a fisherman whose nets have not been contaminated may nevertheless be prevented from fishing because the area of the sea where he normally fishes is polluted and he cannot fish elsewhere. Similarly, an owner of a hotel or a restaurant located close to a contaminated public beach may suffer losses because the number of guests falls during the period of the pollution.

At its 35th Conference, in Sydney in October 1994, the Comité Maritime International (CMI) produced a document entitled Guidelines on Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 at 381-382 [20] per French CJ and Gummow J; Barclay v Penberthy (2012) 246 CLR 258 at 320 [173] per Kiefel J. See also Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649 at 676 [102]-[104] per Allsop P, setting out a non-exhaustive list of 17 “salient features” that have been regarded as relevant. 291 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515. 292 Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 530 [23] per Gleeson CJ, Gummow, Hayne and Heydon JJ. 293 See, eg, Bryan v Maloney (1995) 182 CLR 609; Seas Sapfor Forests Pty Ltd v Electricity Trust of South Australia (1996) 187 LSJS 369; McMullin v ICI Australia Operations Pty Ltd (1997) 72 FCR 1. 294 In practice, the IOPC Fund does pay claims of this kind. After the “Erika” spill off the coast of Brittany, the Fund paid claims made by tourist operators in the LoireAtlantique and Vendée regions: see International Oil Pollution Compensation Funds, Annual Report 2001, p 116, which contains tables showing that over half the payments authorised by the Fund in relation to the “Erika” spill were for tourism claims. Indeed, the Director of the Fund took the view that claims by four communes for reduction in tourist tax revenues were also admissible in principle, but the Executive Committee of the Fund postponed a final decision on these claims: see Annual Report 2001, p 117. 295 International Oil Pollution Compensation Fund 1992, Claims Manual (October 2013 edition), para 1.4.9.

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Admissibility and Assessment of Claims for Oil Pollution Damage.296 Although that document is not binding on any country, it is the product of extensive debate among experts in many countries. It may prove to be of assistance in determining which claims are, and which are not, generally regarded as admissible by the international maritime community. CLC 92 does identify affirmatively at least one type of claim that is entitled to receive compensation. Article 5.8 provides that claims in respect of expenses incurred or sacrifices reasonably made by the shipowner itself shall rank equally with other claims against the limitation fund, if they were made voluntarily to prevent or minimise pollution damage. Who is liable to pay?

[19.240]

Article 3.1 of the CLC 92 imposes liability on the “owner of the ship at the time of the incident”. “Owner” is defined by Art 1.3 as being the registered owner or, if the ship is not registered, the owner. This rather tautological definition makes it clear that charterers are not liable under CLC 92, even if they are demise charterers, unless they are also the owners of the ship.297 The point is reinforced by Art 3.4(c), which provides that no claim may be made against “any charterer (howsoever described, including a bareboat charterer), manager or operator of the ship”. Article 3.4 is often described as the “channelling” provision, because it is intended to channel all liability to the shipowner, and to ensure that the shipowner cannot be liable except as provided in CLC 92. It provides that no claim for compensation for pollution damage may be made against: (a) the servants or agents of the owner or the members of the crew; (b) the pilot or other non-crew-member performing services for the ship; (c) any charterer (including a bareboat charterer), manager or operator of the ship; (d) any person performing salvage operations with the consent of the owner or on the instructions of a competent public authority; (e) any person taking preventive measures; (f) all servants or agents of persons mentioned in (c), (d) or (e), unless the damage resulted from their personal act or omission, committed with the intent to cause such damage or recklessly and with knowledge that such damage would probably result. Although Art 3.4 channels direct liability to the shipowner alone, Art 3.5 preserves any right of recourse the shipowner may have against third parties. Thus, the burden of CLC liability may ultimately be borne by someone other than the shipowner. For example, in Aegean Sea Traders 296 The Guidelines are on the CMI website: http://www.comitemaritime.org/Guidelineson-Oil-Pollution-Damage/0,2726,12632,00.html. 297 As, eg, in the case of a registered owner that time-charters its own ship back from a demise charterer: see, eg, Mitsui OSK Lines Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564 (reversed sub nom Candlewood Navigation Corp Ltd v Mitsui OSK Lines Ltd [1986] AC 1). Where the ship is owned by the state but operated by a company that is registered in that state as the ship’s operator, that company is the “owner” for the purposes of the CLC: see CLC 92, Art 1.3.

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Corp v Repsol Petroleo SA (The Aegean Sea),298 the tanker “Aegean Sea” broke in two after striking the Torre de Hercules rocks near La Coruña, causing considerable pollution damage to the coastlines of Spain and southern France. The shipowner incurred liability under the unamended CLC, and it sought an indemnity from the ship’s voyage charterer, claiming that the charterer had breached the safe port warranty in the charterparty by sending the ship to La Coruña.299 That claim went to arbitration, as agreed in the voyage charterparty, but several questions of law were litigated in the Commercial Court. The court held that if the voyage charterer was liable for breach of the safe port warranty, it would not be entitled to limit that liability under the Limitation Convention 1976,300 and so would have to indemnify the owner in full for its CLC liability. Article 7.1 of CLC 92 requires the owner of any ship that can carry more than 2,000 tons of oil in bulk and that is registered in a Contracting State to maintain insurance up to the limits of liability prescribed in CLC 92301 to cover its liability for pollution damage. In most cases, that insurance is provided by a Protection and Indemnity Association (a P & I Club).302 Article 7.8 provides that any claim for compensation for pollution damage can be brought directly against the insurer of the owner’s liability for pollution damage. The insurer’s liability cannot, however, exceed the extent of the cover it provides to the owner, because Art 7.8 also provides that the insurer is entitled to limit its liability according to the provisions of the CLC 92, even if the shipowner is guilty of conduct that deprives it of the right to limit its liability under CLC 92.303 The insurer may avail itself of all the defences that are available to the owner (other than the bankruptcy or winding up of the owner), but it cannot raise against the claimant any of the defences that it would have been entitled to invoke against the shipowner, such as defences, limits of liability or excesses under the contract of insurance.304 It also has a complete defence if the pollution damage was caused by wilful misconduct on the part of the shipowner.305 Although there is no authority about the meaning of “wilful misconduct” in this context, there seems to be no reason why it should not be given the same interpretation as in other contexts. For example, in the context of marine insurance,

298 Aegean Sea Traders Corp v Repsol Petroleo SA (The Aegean Sea) [1998] 2 Lloyd’s Rep 39. 299 As to safe port warranties in voyage charterparties, see [13.70]. 300 As to the Limitation Convention 1976, see Chapter 16. 301 See [19.250] for a consideration of the limits of liability under CLC 92. 302 See [17.250] for a consideration of the cover provided by P & I Clubs. 303 See [19.280]. 304 CLC 92, Art 7.8. 305 CLC 92, Art 7.8.

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“wilful misconduct” includes reckless exposure of the ship to the perils of navigation, knowing that it is not in a condition to encounter them.306 Article 7.8 also provides that the insurer “shall in any event have the right to require the owner to be joined in the proceedings”. Because this sentence speaks of the right to require joinder of the owner, rather than simply of the right to join the owner, it seems that the insurer is entitled to require the claimant to join the owner as a defendant. This may prove inconvenient for Australian plaintiffs who have claimed directly against the insurers of foreign-owned ships under Art 7.8, because the insurer may then insist that the plaintiffs must also institute proceedings against the foreign owner. That would usually put the plaintiffs to the time and expense of serving initiating process on the foreign owner out of the jurisdiction, unless the polluting ship were still to be found in the jurisdiction, in which case an action in rem could be brought against it in the Federal Court of Australia or the Supreme Court of a State or Territory.307 If the polluting ship is no longer to be found in Australia, Australian plaintiffs wishing to make CLC 92 claims must proceed in personam against the shipowner or its insurer. Given that most oil tankers that visit Australia or pass near the Australian coast are owned by foreigners and are insured with foreign P & I Clubs, the question of service of process outside Australia may become very significant in practice. Australian plaintiffs cannot proceed on their claims in foreign courts against the foreign shipowner or its P & I Club, because Art 9.1 of CLC 92 provides that actions for compensation may only be brought in the courts of the country in which the pollution damage occurred, or where the preventive measures were taken. None of the civil procedure rules in any of the State or Territory jurisdictions specifically makes provision for service outside Australia of initiating process in a CLC 92 claim. Rule 10.42, Item 12 of the Federal Court Rules 2011 permits service outside Australia of proceedings “based on a breach of a provision of an Act that is committed in Australia” if the breach occurs in Australia.308 That rule should be sufficient to authorise service outside Australia of CLC 92 claims for pollution damage suffered in Australia or preventive measures taken in Australia.

306 Wood v Associated National Insurance Co Ltd [1985] 1 Qd R 297 at 305 per McPherson J; Compania Maritima San Basilios SA v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1977] QB 49 at 66, 81 (known, but not reported as The Eurysthenes). See also Transport Commission (Tas) v Neale Edwards Pty Ltd (1954) 92 CLR 214; Royal Victorian Aero Club v Commonwealth (1954) 92 CLR 236, decisions to the same effect in other contexts. 307 Admiralty Act 1988 (Cth), ss 4(1), (3)(b), 10. 308 The Protection of the Sea (Civil Liability) Act 1981 (Cth) does not itself confer jurisdiction on the Federal Court of Australia, but the Admiralty Act 1988 (Cth), ss 4(3)(b), 9, 10 do.

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The position in State and Territory courts is less straightforward.309 Service outside Australia of CLC 92 claims seems to be permitted in some jurisdictions, but not others. The South Australian rules permit service outside Australia of an action “brought under a statute of the Commonwealth or the State”,310 which would plainly permit service outside Australia of a statutory claim under CLC 92. New South Wales, Queensland and Tasmania permit service outside Australia of any proceeding founded on a cause of action arising in the jurisdiction.311 Those rules would permit service outside Australia of a CLC 92 claim based on pollution occurring in the relevant jurisdiction. In the Northern Territory, Victoria and Western Australia, there are neither special rules for statutory claims nor any general provision permitting service outside Australia in relation to causes of action arising within the jurisdiction. There is some authority for the proposition that a plaintiff whose cause of action is founded upon a statute may serve initiating process out of the relevant jurisdiction by relying on those rules that permit service ex juris of initiating process in claims based on a contract.312 The contract in question is an implied, constructive or fictitious one without any consensual element.313 It is said to exist because of the beguiling fiction that the law always implies a promise to do that which a party is legally liable to do. Thus, if a foreign shipowner or insurer is legally liable to make compensation to Australian plaintiffs under the Protection of the Sea (Civil Liability) Act 1981 (Cth), the law may imply (for service purposes, at least) a promise on the part of the shipowner to do what the Act requires it to do. If the shipowner or insurer does not compensate the Australian claimants on demand, then its refusal to pay may be held to constitute a breach in Australia of the constructive or fictitious contract,314 thereby justifying service outside 309 The Supreme Courts of the States and Territories have subject matter jurisdiction to entertain CLC 92 claims by operation of Protection of the Sea (Civil Liability) Act 1981 (Cth), s 9. Inferior State and Territory courts have jurisdiction by operation of Admiralty Act 1988 (Cth), ss 4(1), (3)(b), 9(1)(a). 310 Supreme Court Civil Rules 2006 (SA), r 40(1)(k). 311 Uniform Civil Procedure Rules 2005 (NSW), Sch 6, para (a); Uniform Civil Procedure Rules 1999 (Qld), r 124(1)(a); Supreme Court Rules 2000 (Tas), r 147A(1)(b). 312 Belyando Shire Council v Rivers (1908) 2 QJPR 47; Chenoweth v Summers [1941] ALR (CN) 364; Victoria v Hansen [1960] VR 582. 313 Wilson Electric Transformer Co Pty Ltd v Electricity Commission of NSW [1968] VR 330 at 332 per Adam J. 314 The place of breach would be the place where payment should be made, on the basis that for the purposes of the service-out rules, at least, the debtor is under an obligation to find the creditor and pay him or her at his or her place of residence: Durra v Bank of NSW [1940] VLR 170; Earthworks and Quarries Ltd v FT Eastment & Sons Pty Ltd [1966] VR 24 at 26-27 per Dean J; Nominal Defendant v MVIT (1982) 45 ALR 697; Coates v Charles Porter & Sons Pty Ltd (unreported, WA Sup Ct, 1990).

838

Shipping Law

[19.250]

Australia under the rules of each of the relevant jurisdictions permitting service outside Australia of a claim based upon breach of a contract within the jurisdiction.315 It is possible, however, that a constructive or fictitious contract of this kind can be implied only when the statute in question imposes an obligation to pay a fixed sum of money.316 Although the liability of a shipowner or insurer under CLC 92 is strict, it is liability for unliquidated damages to be determined by the court. The result may be that there cannot be service outside Australia of CLC 92 proceedings from the courts of the Northern Territory, Victoria or Western Australia. One expedient for plaintiffs wishing to proceed in these courts would be to institute proceedings in the Federal Court, using the Federal Court rules for service outside Australia, then apply for the proceedings to be transferred to the relevant State or Territory court under the cross-vesting rules.317 The Western Australian rules contain a provision explicitly stating that the rules governing the classes of case in which service of originating process may be made outside Australia do not apply “to or in relation to” service of originating process outside Australia under the Hague Service Convention.318 This means that the service procedures in the Convention can be used to serve initiating process for any claim, including a CLC 92 claim, on a defendant who can be found in another Hague Service Convention country. Limiting the owner’s liability

[19.250]

Article 5.1 of CLC 92 provides that the owner of a ship shall be entitled to limit its liability in respect of any one incident. The amount of the limit set by the 1992 Protocol itself was 3 million Special Drawing Rights (SDRs)319 for a ship not exceeding 5,000 tonnes, and for larger ships, 3 million SDRs plus 420 SDRs per tonne in excess of 5,000, with a maximum limit of 59.7 million SDRs. Those amounts were increased substantially in 2000, with effect from 1 November 2003.320 The limits are now 4,510,000 SDRs for a ship not exceeding 5,000 tonnes, and for larger

315 Supreme Court Rules (NT), r 7.01(1)(g); Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 7.01(1)(g); Rules of the Supreme Court 1971 (WA), O 20 r 1(f). 316 See Wilson Electric Transformer Co Pty Ltd v Electricity Commission of NSW [1968] VR 330 at 332 per Adam J (“previously ascertained sums of money”); Gosper v Sawyer (1985) 160 CLR 548 at 560 per Gibbs CJ, Wilson and Dawson JJ: “statutes under which fixed sums of money are payable”. 317 See, eg, Perdaman Chemicals and Fertilisers Pty Ltd v ICICI Bank [2013] FCA 175. 318 Rules of the Supreme Court 1971 (WA), O 10, r 1A(3), which excludes the operation of O 10 in Hague Service Convention cases. 319 CLC 92, Art 5.1 uses the phrase “units of account”. “Unit of account” is defined as being “the Special Drawing Right as defined by the International Monetary Fund”: Art 5.9(a). 320 Maritime Legislation Amendment Act 2003 (Cth), Sch 1, para 1 amends the definition of “1992 Protocol” in the Protection of the Sea (Civil Liability) Act 1981 (Cth) by adding “as amended by resolution LEG.1(82) adopted by the Legal Committee of the International

[19.260]

19 Pollution from Ships

839

ships, 4,510,000 SDRs plus 631 SDRs per tonne in excess of 5,000, until an absolute maximum of 89,770,000 million SDRs is reached.321 Article 7.8 provides that the insurer or other person providing financial security to the owner as required by CLC 92 may also limit its liability to the same amount. At the time of writing (January 2016), one SDR was worth about A$1.75,322 so that the limits of liability under CLC 92 as amended in 2003 were then A$1,104 per tonne over 5,000, with a maximum limit of A$157,097,500. The shipowner or insurer may limit its liability by instituting proceedings as plaintiff in the Supreme Court of a State or Territory,323 or as applicant in the Federal Court of Australia.324 Although the shipowner and insurer may also raise their respective rights to limit by way of defence,325 it seems that their liability is then limited to the amount stipulated in CLC 92 in respect of each claim made against them.326 Where there are many claimants (as is usually the case in incidents of marine pollution) the shipowner or insurer can only take advantage of the “global” effect of the CLC limitation by instituting proceedings as plaintiff or applicant. Article 5.10 of CLC 92 provides that for the purposes of calculating the limit of liability, a ship’s tonnage shall be the gross tonnage. Constituting the limitation fund

[19.260]

In order to take advantage of the limitation of liability under CLC 92, the shipowner or insurer must constitute a limitation fund by paying into court the total sum to which its liability is limited, or by giving a guarantee that is acceptable “under the legislation of the Maritime Organization on 18 October 2000”. The English text of the resolution now appears as Sch 3 to the Protection of the Sea (Civil Liability) Act 1981 (Cth). Resolution LEG.1(82) was adopted by the IMO’s tacit acceptance procedure. 321 Under the post-2003 figures, the maximum limit is reached by a ship of 140,118 tonnes or greater. Very Large Crude Carriers (VLCCs) and Ultra Large Crude Carriers (ULCC) have gross tonnage considerably greater than this maximum. 322 The International Monetary Fund (IMF) publishes SDR exchange rates on its website: http://www.imf.org/external/np/tre/sdr/db/rms_five.cfm. 323 Protection of the Sea (Civil Liability) Act 1981 (Cth), s 10(1). Although the inferior courts of the States and Territories have jurisdiction to hear and determine claims for compensation under the CLC by virtue of the Admiralty Act 1988 (Cth), ss 4(3)(b), 9(1)(a), they do not have jurisdiction in relation to limitation proceedings (see s 9(2)) which are defined in s 3(1) as including proceedings under Protection of the Sea (Civil Liability) Act 1981 (Cth), s 10. 324 Admiralty Act 1988 (Cth), s 25(1). In this subsection, “Liability Convention” includes the CLC: see the definition in s 3(1). 325 Admiralty Act 1988 (Cth), s 25(4). 326 The position is as stated in the text in relation to limitation under the Limitations Conventions 1957 and 1976: see Gaggin v Moss [1984] 2 Qd R 513 at 516 per Connolly J; China Ocean Shipping Co v South Australia (1979) 145 CLR 172 at 193 per Gibbs J. See also Polish Steamship Co v Atlantic Maritime Co [1985] QB 41 at 54 per Eveleigh LJ; The Falstria [1988] 1 Lloyd’s Rep 495 at 497-498 per Sheen J. See also [16.30], where the similar issue under the Limitation Convention 1976 is considered in more detail.

840

Shipping Law

[19.270]

Contracting State where the fund is constituted”.327 The limitation fund is very often constituted by means of a P & I Club undertaking. In Kairos Shipping Ltd v Enka & Co LLC (The Atlantik Confidence),328 the English Court of Appeal held in relation to the almost identical provision in the Limitation Convention 1976329 that a limitation fund could be constituted in the United Kingdom under the Limitation Convention 1976 by P & I Club guarantee, even though there was no specific provision in the Civil Procedure Rules 1998 (CPR) or United Kingdom legislation specifically authorising that procedure. Although the position may be different in Australia in relation to limitation funds under the Limitation Convention 1976,330 there can be no doubt that a limitation fund under the CLC 92 can be constituted by P & I Club guarantee, because the regulations specifically provide that that form of security is acceptable.331 Claims against the limitation fund

[19.270]

Once a fund has been constituted, it is distributed among the claimants in proportion to the amounts of their established claims,332 with the result being that every claimant receives the same number of cents in each dollar of his or her established claim. If the owner (or any of its servants or agents) or insurer (or other person providing financial security) has already paid some claims for pollution damage before the fund is distributed, it can recover from the limitation fund the amount that the person it has compensated would have been entitled to recover.333

Claimants can only claim against the fund, and cannot pursue any other assets of the owner.334 A claimant may pursue other assets if he or she does not have access to the court administering the fund, or if the fund is not “actually available” in respect of his or her claim.335 This apparently means that a claimant is entitled to proceed against other assets of the owner if the fund has been constituted by a bank guarantee or insurer’s undertaking, until payment into court by the bank or insurer is actually made. 327 CLC 92, Art 5.3. 328 Kairos Shipping Ltd v Enka & Co LLC (The Atlantik Confidence) [2014] 1 Lloyd’s Rep 586. 329 See Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1, Art 11.2 (Limitation Convention 1976): “acceptable under the legislation of the State Party where the fund is constituted”. The Limitation Convention 1976 is considered in Chapter 16. 330 Barde AS v ABB Power Systems (The Barde Team) (1996) 69 FCR 277. See [16.40]. 331 Protection of the Sea (Civil Liability) Regulations 1983 (Cth), reg 4(b): “a letter of guarantee given by an organization known as a Protection and Indemnity Club”. 332 CLC 92, Art 5.4. 333 CLC 92, Art 5.5. 334 CLC 92, Art 6.1(a). See [16.220] for a consideration of the equivalent provision in the Limitation Convention 1976, Art 13(1). 335 CLC 92, Art 6.2.

[19.280]

19 Pollution from Ships

841

Unlike the Limitation Convention 1976, where there is a separate limit of liability for claims “arising on any distinct occasion”,336 it is clear that there is a single limit of liability under CLC 92 for all claims arising out of a single “incident”, no matter how many separate occurrences constitute that “incident”. The CLC 92 limit applies to liability for any one “incident”, and “incident” is defined by Art 1.8 to include a series of occurrences having the same origin. Breaking the limit (or trying to)

[19.280]

Article 5.2 of CLC 92 provides that the owner is not entitled to limit its liability “if it is proved that the pollution damage resulted from his personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result”. This represents a significant change from the unamended CLC, which provided that the right to limit was lost if the incident occurred because of the shipowner’s “actual fault or privity”.

There are, as yet, no reported cases on the interpretation of Art 5.2 of CLC 92. However, the intention/recklessness standard that it imposes is a familiar one, as it is also used in the Limitation Convention 1976 (considered in Chapter 16),337 the Hague-Visby Rules (considered in Chapter 12)338 and the Montreal Convention 1999 governing carriage by air.339 Cases interpreting the standard in the context of those Conventions are obviously highly persuasive. The limit is much harder to break under the intention/recklessness standard than under the old “actual fault or privity” standard. The shipowner’s right to limit under the Limitation Convention 1976 has been described as “almost indisputable”,340 the limit “virtually unbreakable”.341 The words “personal act or omission” in Art 5.2 make it clear that the shipowner is not deprived of the right to limit its liability unless the shipowner itself intended to cause loss or was reckless and knew that loss would probably result — intention or recklessness on the part of 336 See Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555, considered in detail at [16.170]. The Limitation Convention 1976 does not apply to claims for compensation for pollution damage: see Art 3(b). 337 Limitation of Liability for Maritime Claims Act 1989 (Cth), Sch 1, Art 4. 338 Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Art 4, r 5(e). 339 See Civil Aviation (Carriers’ Liability) Act 1959 (Cth), Sch 1A, Art 22.5. 340 The Bowbelle [1990] 1 Lloyd’s Rep 532 at 535 per Sheen J, cited with approval in Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291 at 294 per Lord Phillips MR. 341 Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555 at [42] – [45] per Rares J; Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; 2 Lloyd’s Rep 315 at [23] (Sup Ct Can).

842

Shipping Law

[19.280]

employees and agents is not enough.342 Furthermore, it must be shown that the shipowner subjectively intended to cause loss, or knew that loss would probably result from its reckless conduct — it is not enough to show objectively that the shipowner could not fail to have been aware of the risk of loss.343 Because Art 5.2 speaks of intention to cause or recklessness about causing “such damage”, it is necessary for the shipowner to have intended or foreseen the very loss that actually occurred, not merely the type of loss that occurred.344 Most modern shipowners are corporations, which raises the question of how a corporation can personally intend to cause loss, or be reckless about it. Cases concerning the loss of the right to limit under the Limitations Conventions 1957 and 1976 focus attention on the “very ego and centre of personality of the corporation”.345 If the same approach is taken to corporate shipowners under CLC 92, a corporate shipowner is entitled to limit its liability unless the requisite intention or recklessness is found on the part of “someone who is not merely a servant or agent for whom the company is liable on the principle of respondeat superior, but somebody for whom the company is liable because his action is the very action of the company itself”.346 For example, in The Garden City,347 it was held that the Chief Navigator of the corporate shipowner was “not the directing mind of the company, either in practice or under the company’s

342 See Browner International Ltd v Monarch Shipping Co Ltd (The European Enterprise) [1989] 2 Lloyd’s Rep 185, a decision on the equivalent provision in the Hague-Visby Rules, Art 4, r 5(e); Mayor (t/as Granville Coaches) v P & O Ferries Ltd (The Lion) [1990] 2 Lloyd’s Rep 144, a decision on the equivalent provision in the Athens Convention, Art 13 on the carriage of passengers by sea; and Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291 at 294 per Lord Phillips MR, a decision on the equivalent provision in the Limitation Convention 1976, Art 4. 343 SS Pharmaceutical Pty Ltd v Qantas Airways Ltd [1991] 1 Lloyd’s Rep 288 (Ct App NSW), a decision on the equivalent provision in the Warsaw Convention, Art 25, as amended at the Hague in 1955. See also Margolle v Delta Maritime Co Ltd (The Saint Jacques II and Gudermes) [2003] 1 Lloyd’s Rep 203 at 207-208 per Gross J (a decision on the Limitation Convention 1976), citing Nugent v Goss Aviation [2000] 2 Lloyd’s Rep 222 at 229 per Auld LJ (a decision on the Warsaw Convention); Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; 2 Lloyd’s Rep 315 at [23] (Sup Ct Can) (a decision on the Limitation Convention 1976). 344 Schiffahrtsgesellschaft MS “Merkur Sky” MBH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort) [2001] 2 Lloyd’s Rep 291 at 294-295 per Lord Phillips MR; Margolle v Delta Maritime Co Ltd (The Saint Jacques II and Gudermes) [2003] 1 Lloyd’s Rep 203 at 208 per Gross J; Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; 2 Lloyd’s Rep 315 (Sup Ct Can), all decisions on the Limitation Convention 1976. 345 Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 at 713 per Viscount Haldane LC. See also Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; 2 Lloyd’s Rep 315 at [16] (Sup Ct Can): “directing mind and alter ego”. 346 Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 at 713 per Viscount Haldane LC. 347 The Garden City [1982] 2 Lloyd’s Rep 382.

[19.280]

19 Pollution from Ships

843

constitution”.348 In contrast, in Peracomo Inc v TELUS Communications Co,349 the Supreme Court of Canada held that a man who was the sole shareholder and officer of a corporation that was seeking to limit its liability was the “directing mind and alter ego” of the company. Nevertheless, the company was held to be entitled to limit its liability because the man did not intend to cause the loss suffered by the plaintiff, even though he intentionally performed the act (cutting a cable) that caused that loss. In summary, it can be said that the limit is virtually unbreakable.350 The shipowner is entitled to summary judgment on its right to limit unless the claimants “surmount a formidable hurdle” in opposition.351 Nevertheless, an allegation that the shipowner is guilty of conduct depriving it of the right to limit may be enough to ensure that the shipowner is required to give security for the entire amount of the claims made against it, even if that exceeds the limit. That is the result suggested by Barde AS v ABB Power Systems (The Barde Team),352 a decision of the Federal Court of Australia on the limitation provisions in the Limitation Convention 1976. The owner of the ship “Barde Team” claimed the right under the Limitation Convention 1976 to limit its liability for claims arising from an incident in which an industrial boiler and a large electrical transformer were damaged while being carried by the ship. The shipowner gave security in the sum of US$2.5 million to secure the release of the “Barde Team” from arrest by the claimants. Having invoked its 1976 Convention right to limit, and having constituted a limitation fund in the sum of 767,031 SDRs (worth about US$1.15 million at that time), the shipowner then applied for release of the security that it had given earlier. The claimants opposed the release of the US$2.5 million security, saying that they intended to argue that the shipowner was deprived of the right to limit its liability to the smaller amount of the limitation fund. While recognising that the claimants were very unlikely to succeed in breaking limitation, Sheppard J nevertheless refused to release the US$2.5 million security, saying that the claimants were entitled to have “their day in court” on the question of breaking the right to limit.353 The practical consequence of the decision in The Barde Team is that the claimants’ “day in court” may come rather sooner than they hoped, in the 348 The Garden City [1982] 2 Lloyd’s Rep 382 at 397 per Haughton J. 349 Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; 2 Lloyd’s Rep 315. 350 Strong Wise Ltd v Esso Australia Resources Pty Ltd (The APL Sydney) (2010) 185 FCR 149; [2010] 2 Lloyd’s Rep 555 at [42]-[45] per Rares J; Peracomo Inc v TELUS Communications Co [2014] 1 SCR 621; [2014] 2 Lloyd’s Rep 315 at [23] (Sup Ct Can). 351 Margolle v Delta Maritime Co Ltd (The Saint Jacques II and Gudermes) [2003] 1 Lloyd’s Rep 203 at 209 per Gross J, who went on to note that the case before him was one of the exceptional cases that should be allowed to go to trial on the issue of breaking limitation. 352 Barde AS v ABB Power Systems (The Barde Team) (1995) 69 FCR 277. 353 Barde AS v ABB Power Systems (The Barde Team) (1995) 69 FCR 277 at 297.

844

Shipping Law

[19.290]

form of an application for summary judgment by the shipowner. Until that day, however, it seems that the shipowner may be forced to give security for the full, unlimited, amount of the claims against it. Defences

[19.290]

Article 3.2 of CLC 92 provides that no liability for pollution damage shall attach to the owner if it proves that the damage: (a) resulted from an act of war, hostilities, civil war, insurrection or natural phenomenon of an exceptional, inevitable and irresistible character; or (b) was wholly caused by an act or omission done with intent to cause damage by a third party; or (c) was wholly caused by the negligence or other wrongful act of any government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function.

Because a natural phenomenon must be exceptional, inevitable and irresistible to fall within Art 3.2(a), it would seem that it must be so extreme that no ship could possibly have avoided causing pollution damage as a result of it.354 It should not be enough for the shipowner to show that the particular ship it owns could not have avoided the incident. The inclusion of the word “wholly” in Art 3.2(b) and (c) makes it clear that the shipowner has no defence if the specified event is merely one of several causes that combine to produce the oil pollution. For example, if an oil tanker were to run aground, causing a minor oil spill that was subsequently made much worse by the deliberate actions of saboteurs, the shipowner could not raise the defence in Art 3.2(b), because the oil pollution damage would not have been caused wholly by the actions of the saboteurs. The word “war” in Art 3.2(a) is not broad enough to include attacks by terrorists or pirates, which would fall within the intentional damage defence in Art 3.2(b). This is significant because the defence in paragraph (a) is available if damage “resulted from” war, which would mean that it would be sufficient if war were the proximate or dominant cause, whereas the defence in paragraph (b) is only available if damage was wholly caused by intentional harm.355 Contributory negligence on the part of the claimant gives rise to a defence under Art 3.3, as does an act or omission of the claimant done with intent to cause damage. Article 3.3 provides that in such a case, the shipowner “may be exonerated wholly or partially” from liability. Presumably, if the claimant was the sole cause of the pollution damage the shipowner has a complete defence, but if the claimant’s acts or omissions only contributed 354 M Forster, “Civil Liability of Shipowners for Oil Pollution” [1973] Journal of Business Law 23 at 26. 355 C De La Rue and C Anderson, Shipping and the Environment: Law and Practice (2nd ed, Informa Law, London, 2009), pp 99-100.

[19.300]

19 Pollution from Ships

845

to the happening of the incident or the loss, there should be an apportionment of liability similar to that which occurs under the general contributory negligence legislation in Australia. Article 11.1 provides that CLC 92 does not apply to warships or other ships owned or operated by a state and used, for the time being, only on government non-commercial services. Although CLC 92 does not expressly provide that the owner has a defence in the event of its bankruptcy or winding up, Art 7.8 provides that if an action is brought directly against the shipowner’s insurer, that insurer is entitled to any of the defences that the owner itself would have been entitled to invoke “(other than the bankruptcy or winding up of the owner)”. The words in brackets in Art 7.8 imply that the owner may invoke a defence of bankruptcy or winding up, but they are probably better understood as being a recognition of the fact that either of these events would effectively render the owner immune from the obligation to make compensation to those who have suffered pollution damage. As well as the defences available to the shipowner, the insurer has a defence if it can show that the pollution damage resulted from the wilful misconduct of the shipowner.356 Because the defences are so narrowly confined, they will be available only in the most unusual circumstances. For example, in 2002, the tanker “Limburg” was attacked by Al Qaeda suicide bombers off the coast of Yemen, who blew a hole in the side of the ship, causing an oil spill. Although the shipowner would have been entitled to a defence under CLC 92, Art 3(2)(b) it was required by the Yemeni authorities to make a “voluntary” payment in order to be allowed to leave.357 If the shipowner can successfully avail itself of one of the defences, anyone suffering pollution damage is entitled to recover his or her loss from the IOPC Fund, under the principles stated in [19.340].

Compensation under the Fund Convention and the Supplementary Fund Protocol Introduction

[19.300]

The Fund Convention 1971 was designed to provide compensation supplementary to that available under the CLC 69. The 1992 Protocols to the two Conventions did not change the relationship between them, which is that the Fund Convention provides a “second tier” of compensation after the amount available under CLC 92 is exhausted.

356 CLC 92, Art 7.8. 357 C De La Rue and C Anderson, Shipping and the Environment: Law and Practice (2nd ed, Informa Law, London, 2009), p 100.

846

Shipping Law

[19.310]

Following the large oil spills from the ships “Erika” and “Prestige” at the beginning of the new century, a third tier of compensation was created in 2003 by adding the Supplementary Fund Protocol 2003 to the Fund Convention 1992. Australia became party to the Supplementary Fund Protocol on 13 October 2009. The Supplementary Fund Protocol provides an extra layer of compensation if claims exceed the maximum amount recoverable under the Fund Convention 1992. Like CLC 92, the Fund Convention 1992 and Supplementary Fund Protocol provide for compensation on the basis of strict, but limited liability. Unlike CLC 92, though, that compensation is not made by shipowners and/or their insurers; it is made by two international organisations known as the International Oil Pollution Compensation Fund 1992 (known as the 1992 IOPC Fund, or simply the 1992 Fund for short) and the International Oil Pollution Compensation Supplementary Fund 2003 (known as the Supplementary Fund), which are funded by levies on importers of oil in countries that are parties to the Fund Convention 1992 and the 2003 Protocol, respectively. The 1992 Fund’s liability to make compensation arises only if the claims in question have not been compensated in full under CLC 92; the Supplementary Fund’s liability to make compensation arises only if the claims in question have not been compensated in full under CLC 92 and the 1992 Fund. Thus, the effect of the Fund Convention 1992 and the Supplementary Fund Protocol 2003 is to shift part of the overall burden of compensating for the effects of oil pollution from shipowners and their insurers to cargo-owners and their insurers. The Fund Convention and Supplementary Fund Protocol in Australia

[19.310]

Chapter 3 of the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth) gives the force of law to the operative provisions358 of the Fund Convention 1992;359 Ch 3A gives the force of law to the operative provisions of the Supplementary Fund Protocol 2003.360 Section 35(1) of the Act creates the obligation on importers of oil to make contributions to the 1992 Fund, by giving the force of law to Art 10 of the Fund Convention 1992 “in so far as it relates to ports or terminal 358 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), s 31. The Act does not give the force of law to those provisions of the Convention that relate to the obligations of Contracting Parties. 359 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), s 3 defines “the 1992 Convention” as being the Fund Convention 1971 as amended by the 1976 Protocol, and the 1992 Protocol as amended by resolution LEG.2(82) adopted by the Legal Committee of the International Maritime Organization on 18 October 2000 (a copy of the English text of which is set out in Sch 4). 360 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), s 46E. The Act does not give the force of law to those provisions of the Protocol that relate to the obligations of Contracting Parties.

[19.310]

19 Pollution from Ships

847

installations in Australia”.361 Similarly, s 46J of the Act creates the obligation on importers of oil to make contributions to the Supplementary Fund, by giving the force of law to Art 10 of the Supplementary Fund Protocol 2003 “in so far as it relates to ports or terminal installations in Australia”.362 The effect of this is that any importer of oil who has received more than 150,000 metric tonnes363 of oil in a calendar year through Australian ports or terminal installations is obliged to pay contributions to the 1992 Fund and the Supplementary Fund. Because s 55 of the Constitution provides that laws imposing taxation shall deal only with the imposition of taxation, ss 35(2) and 46J(2) of the Act provide that a person is not liable to contribute to the 1992 Fund or the Supplementary Fund, respectively, unless the contributions are imposed by an Act other than the Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth). Three accompanying Acts actually impose the obligation to contribute to the 1992 Fund and the Supplementary Fund, according to whether it is classified as a customs duty, an excise duty, or neither a customs nor an excise duty.364 Because there might be some difficulty in characterising the contribution as a tax at all, given that it is expressed to be payable to non-Australian bodies (the 1992 Fund and the Supplementary Fund), ss 35(4) and 46J(4) provide that contributions are payable to the 1992 Fund and the Supplementary Fund, respectively, “as agent of the Commonwealth”. In practice, the reverse is true: under ss 40(1) and 46N(1), contributions must be paid to the Commonwealth, and under ss 40(2) and 46N(2), the Commonwealth then pays an equivalent amount to the 1992 Fund and the Supplementary Fund, respectively. If contribution payments are not made by the importer as required by the Act, the 1992 Fund and the Supplementary Fund are themselves entitled to recover the payments and/or a late payment fee, as debts due to the Commonwealth.365 The amount of contribution per “contributing ton” of oil is determined by the Assemblies of the 1992 Fund and the Supplementary Fund, respectively, which consist of all the contracting states to the Fund Convention 1992 and the Supplementary Fund Protocol 2003, 361 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), s 35(1). 362 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), s 46J(1). 363 The Fund Convention uses the word “tons”, but defines “ton” to mean “metric ton”: see Art 1.6. The word “ton” has the same meaning in the Supplementary Fund Protocol 2003: see Art 1.7. 364 Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – Customs) Act 1993 (Cth); Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – Excise) Act 1993 (Cth); Protection of the Sea (Imposition of Contributions to Oil Pollution Compensation Funds – General) Act 1993 (Cth). 365 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), ss 41, 46P. The 1992 Fund or the Supplementary Fund must recover those amounts at their own expense, as they are not entitled to an indemnity from the Commonwealth for their costs or expenses: ss 41(3), 46P(3).

848

Shipping Law

[19.310]

respectively.366 The Australian Maritime Safety Authority (AMSA) is obliged to inform the Director of the 1992 Fund and the Supplementary Fund of the names and addresses of persons who have imported “contributing oil” into Australia, and the quantities of oil imported by those people.367 In order to enable AMSA to discharge that obligation, there is provision in the Act for regulations to be made governing the collection and keeping of records by oil importers, and disclosure of those records to AMSA.368 Failure to give AMSA information required under the Act is a strict liability offence369 punishable by a fine of 300 penalty units;370 intentionally giving false or misleading information is an offence punishable by a fine of 500 penalty units.371 Sections 29 and 46C of the Act provide that the 1992 Fund and the Supplementary Fund, respectively, have the same legal personality as a company incorporated under the Corporations Act 2001 (Cth) and, in particular, may sue and be sued. Sections 32(2) and 46F(2) provide that claims for compensation against the 1992 Fund and the Supplementary Fund, respectively, may be brought in the Federal Court of Australia or in the Supreme Court of a State or Territory, but ss 32(3), (4), (5) and 46F(3), (4), (5) provide that the court in which an action has been brought may, by order, transfer the proceedings to another court that has jurisdiction at any stage of the proceedings, either on application or on its own initiative. Sections 33 and 46G of the Act provide that the 1992 Fund and the Supplementary Fund may intervene in proceedings for compensation under the Protection of the Sea (Civil Liability) Act 1981 (Cth). This gives the Funds the opportunity to contest claims if they wish to do so.

366 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), Sch 1, Art 11; Supplementary Fund Protocol 2003, Art 11. The Supplementary Fund Protocol 2003 is not reproduced as a Schedule to the Act. 367 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), s 43; Sch 1, Art 15; s 46R and Supplementary Fund Protocol 2003, Arts 13, 15(1) and 20. 368 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), ss 44, 46S. The Protection of the Sea (1992 Fund) Regulations 1994 (Cth), regs 22 – 24 and the Protection of the Sea (Supplementary Fund) Regulations 2009 (Cth), regs 25 – 27 require records to be kept and given to AMSA. 369 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), ss 45(2), 46T(2) apply s 6.1 of the Criminal Code (Cth), which means that a defence of mistake of fact is available. 370 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), ss 45(1), 46T(1). 371 Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), ss 46, 46U.

[19.330]

19 Pollution from Ships

849

The basis of the liability of the 1992 Fund and the Supplementary Fund: pollution damage plus an inability to recover compensation under the lower tiers of compensation Article 4.1 of the Fund Convention 1992372 lays down two requirements that must be satisfied before the 1992 Fund is liable to compensate a claimant. First, the claimant must have suffered “pollution damage”, which has the same meaning in the Fund Convention 1992 as it does under CLC 92.373 Secondly, the claimant must have been unable to obtain full and adequate compensation under CLC 92 for one of three reasons: (a) because no liability for the damage arises under CLC 92: Art 4.1(a); or (b) because the shipowner liable under CLC 92 is financially incapable of meeting its obligations in full, and the financial security that it is required to provide under Art 7 of CLC 92 does not cover or is insufficient to satisfy the claims for compensation: Art 4.1(b); or (c) because the damage exceeds the limit of the shipowner’s liability under CLC 92: Art 4.1(c).374

[19.320]

Similarly, Art 4.1 of the Supplementary Fund Protocol 2003375 provides that the Supplementary Fund shall pay compensation to any person who has been unable to obtain full and adequate compensation under the terms of the Fund Convention 1992 because the total damage exceeds the amount the limit of the 1992 Fund’s liability. The Supplementary Fund is only obliged to compensate “established claims”, which are defined as meaning claims recognised by the 1992 Fund or by decision of a court binding on the 1992 Fund.376 Pollution damage

[19.330]

Because “pollution damage” means the same in the Fund Convention 1992 and the Supplementary Fund Protocol 2003 as it does in CLC 92, the same questions about admissibility of claims arise under the Fund Convention 1992 and the Supplementary Fund Protocol 2003 as under CLC 92. They will, presumably, be resolved in the same way, either by admitting all claims, however remote, or by developing some concept of remoteness of damage not unlike that used in the law of torts.377

372 Article 4.1 of the Fund Convention 1992 is given the force of law by Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), s 31(1). Hereafter, references are to the relevant article of the Convention itself. 373 CLC 92, Art 1.2. The meaning of “pollution damage” in the CLC 92 is considered at [19.220]. 374 The limit of the shipowner’s liability under CLC 92 is considered at [19.250]. 375 Article 4.1 of the Supplementary Fund Protocol 2003 is given the force of law by Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), s 46E(c). 376 Supplementary Fund Protocol 2003, Art 1.8. 377 See [19.230].

850

Shipping Law

[19.340]

Indeed, the reported cases so far on the meaning of “pollution damage” are actually concerned with the liability of the Fund, not the shipowner under the CLC.378 No liability under CLC 92: Art 4.1(a) of the Fund Convention 1992

[19.340]

Because the first basis of liability is the same under CLC 92, the Fund Convention 1992 and the Supplementary Fund Protocol 2003 (“pollution damage”), the requirement in Art 4.1(a) of the Fund Convention 1992 can only be satisfied if the pollution damage in question was caused in circumstances in which the shipowner would have a defence under CLC 92. However, Art 4.2 of the Fund Convention 1992 provides that the 1992 Fund shall incur no obligation under Art 4.1 if: (a) it proves that the pollution damage resulted from an act of war, hostilities, civil war or insurrection or was caused by oil which resulted from an act of war, hostilities, civil war or insurrection or was caused by oil which has escaped or been discharged from a warship or other ship owned or operated by a State and used, at the time of the incident, only on Government non-commercial service; or (b) the claimant cannot prove that the damage resulted from an incident involving one or more ships.

The 1992 Fund’s defences under Art 4.2(a) are the same as the shipowner’s defences under Art 11.1 of CLC 92 and the first part of Art 3.2(a) of that Convention.379 It follows, then, that the requirement in Art 4.1(a) of the Fund Convention 1992 is only satisfied if the shipowner has a defence under the second part of Art 3.2(a) of CLC 92, or under Art 3.2(b) and (c) of the Convention. In other words, the 1992 Fund is only obliged to compensate claimants on this ground if the pollution damage: (a) was caused by a natural phenomenon of an exceptional, inevitable and irresistible character: Art 3.2(a) of CLC 92; (b) was wholly caused by an act or omission done with intent to cause damage by a third party: Art 3.2(b) of CLC 92; or (c) was wholly caused by the negligence or other wrongful act of any government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function: Art 3.2(c) of CLC 92.380 The shipowner is also exonerated from liability, wholly or partially, by Art 3.3 of CLC 92 if the pollution damage is caused by an act or omission of the claimant done with intent to cause damage, or by the negligence of the claimant.381 Article 4.3 of the Fund Convention 1992 exonerates the 378 See Landcatch Ltd v International Oil Pollution Compensation Fund [1999] 2 Lloyd’s Rep 316; Algrete Shipping Co Inc v International Oil Pollution Fund (The Sea Empress) [2003] 1 Lloyd’s Rep 327, considered at [19.230]. 379 See [19.290]. 380 See [19.290]. 381 See [19.290].

[19.360]

19 Pollution from Ships

851

1992 IOPC Fund from liability in the same way, except in the case of claims to recover the cost of preventive measures in such a case, which must therefore be paid in full. There are no provisions in the Supplementary Fund Protocol 2003 conferring any defences on the Supplementary Fund. On the face of it, this would seem to lead to the conclusion that the Supplementary Fund must pay claims in full if they arise in circumstances (such as war) in which the shipowner and the 1992 Fund would have a defence. However, Art 4.1 of the Supplementary Fund Protocol 2003 provides that the Supplementary Fund shall pay compensation to any person suffering pollution damage if that person has been unable to obtain full and adequate compensation from the 1992 Fund “because the total damage exceeds … the applicable limit of compensation laid down in article 4, paragraph 4, of the Fund Convention 1992 in respect of any one incident”. This suggests that the Supplementary Fund is only obliged to pay compensation if the limit of liability under the Fund Convention 1992 is exceeded, and not if the 1992 Fund has a defence to liability under Art 4.2 of the Fund Convention 1992. Financial incapacity of the shipowner and absence of insurance cover: Art 4.1(b) of the Fund Convention 1992

[19.350]

It would not be unusual to find that the shipowner was financially incapable of meeting its obligations under CLC 92 in full, particularly because many ships are owned by one-ship companies whose sole asset is the ship in question. It would be more unusual, though, to find that the financial security that the shipowner is required to provide by Art 7 of the CLC 92 had failed to provide full cover for the shipowner’s obligations because of insolvency or shortage of funds. In most cases, that financial security is provided by a P & I Club as insurer, and it would be unlikely for such an institution to be financially incapable of providing cover.

It follows, then, that the prerequisite to the 1992 Fund’s liability in Art 4.1(b) of the Fund Convention 1992 will probably be satisfied only if the shipowner’s insurer is entitled to rely on the defence provided by Art 7.8 of CLC 92, that the pollution damage resulted from the wilful misconduct of the shipowner itself,382 or if the P & I insurer is entitled to deny insurance cover to the shipowner under its Rules. These are the only circumstances in which it is likely that the shipowner’s financial security under Art 7 would not cover the claims for compensation, unless that financial security is provided by an insolvent institution other than a P & I Club. Damage exceeds the limits of liability in the lower tiers

[19.360]

Of the three alternative prerequisites to liability in Art 4.1 of the Fund Convention 1992, this is the one that has occurred most often in

382 CLC 92, Art 7.8.

852

Shipping Law

[19.370]

practice. Indeed, this is the one that embodies the essential purpose of the Fund Convention 1992 and the Supplementary Fund Protocol 2003: to provide supplementary tiers of compensation when compensation under CLC 92 has been exhausted. Limitation of the liability of the 1992 Fund and the Supplementary Fund

[19.370]

The liability of the 1992 Fund under the Fund Convention 1992 is limited, but the maximum amount of its liability in relation to any one incident depends upon the amount actually paid by the shipowner or its insurer under CLC 92. Article 4.4(a) of the Fund Convention 1992 states a maximum aggregate amount of compensation under both CLC 92 and the Fund Convention 1992. The greater the compensation the shipowner has to pay under CLC 92 (that is, the larger the ship), the smaller is the 1992 Fund’s share of the maximum aggregate amount.

The maximum aggregate amount available under the Fund Convention 1992 was increased by the tacit acceptance process on 18 October 2000, with effect from 1 November 2003.383 The 2003 amendment raised the maximum aggregate from 135 million SDRs (the original 1992 Protocol figure) to 203 million SDRs. The maximum aggregate amount available under the Supplementary Fund Protocol 2003 is 750 million SDRs.384 Article 4.4(b) of the Fund Convention 1992 (as amended in 2003) provides that the aggregate amount of compensation payable by the 1992 Fund for pollution damage resulting from a natural phenomenon of an exceptional, inevitable and irresistible character shall not exceed 203 million SDRs. The reason for this special provision is that claims for compensation for pollution damage caused by such a phenomenon are borne entirely by the 1992 Fund, because the shipowner and its insurer have a defence to them under CLC 92.385 If the natural phenomenon in question (a tropical cyclone, for example) were to give rise to pollution damage from more than one ship, the liability of the 1992 Fund would arguably be limited to 203 million SDRs for each ship in the absence of a special provision such as Art 4.4(b), because each ship’s spill would constitute a different “incident” for the purposes of the Fund Convention 1992.386 Article 4.4(b) makes it clear that the liability of the 1992 IOPC Fund is 203 million SDRs for all the consequences of a single natural disaster. 383 Australia legislated to give effect to Resolution LEG.2(82), dated 18 October 2000, of the Legal Committee of the International Maritime Organization in the Maritime Legislation Amendment Act 2003 (Cth). The English text of the resolution is now set out in Protection of the Sea (Oil Pollution Compensation Funds) Act 1993 (Cth), Sch 4. 384 Supplementary Fund Protocol 2003, Art 4(2)(a). 385 See Arts 3.2(a), 7.8 of CLC 92; see [19.290]. 386 “Incident” has the same meaning in the Fund Convention 1992 as in CLC 92: see Art 1.2 and [19.270].

[19.390]

19 Pollution from Ships

853

Where the amount of established claims against the 1992 Fund exceeds the aggregate amount of compensation payable under Art 4 of the Fund Convention 1992, every claimant receives from the 1992 Fund the same number of cents in each dollar of his or her claim, so that the fund is then distributed among the claimants in proportion to the amounts of their established claims.387 Similarly, in the unlikely event that the amount of established claims against the Supplementary Fund exceeds the aggregate amount of compensation available from the Supplementary Fund, claims are paid pro rata in the same proportion.388 No indemnity by the Funds of shipowners’ liability under CLC 92

[19.380]

The original Fund Convention 1971 provided for the 1971 Fund to indemnify the shipowner to a limited extent for its liability under the CLC. The relevant provision (Art 5) was deleted by the 1992 Protocol, so the 1992 Fund has no obligation to indemnify shipowners or their guarantors.

Compensation under the Bunker Convention [19.390]

The Bunker Convention is very similar in structure to CLC 92. The principal difference between the two is that the Bunker Convention applies only to pollution damage caused by bunker oil from ships other than those to which CLC 92 applies (ships carrying oil as cargo). Both the Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), which gives effect to parts of the Bunker Convention in Australia389 and the Convention itself provide that the compensation regime in the Bunker Convention does not apply to pollution damage within the meaning of CLC 92, whether or not compensation is payable under CLC 92.390 Thus, there is no compensation under the Bunker Convention if there is a bunker oil spill from a laden oil tanker in circumstances where the shipowner has a defence under CLC 92. In such a case, the 1992 Fund would, however, provide compensation under the Fund Convention 1992 to anyone suffering pollution damage. The basis of liability under the Bunker Convention is the same as under CLC 92: “pollution damage”, which has the same definition in the Bunker 387 Article 4.5 of the Fund Convention 1992. 388 Article 4.3 of the Supplementary Fund Protocol 2003. 389 Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), s 11 gives the force of law to Arts 3, 5, 6, 7.10 and 8 of the Bunker Convention. Although Art 1, which contains the definitions for the Convention, is not given the force of law, s 3 of the Act provides that “gross tonnage”, “incident”, “offshore facility”, “person”, “pollution damage”, “preventive measures”, “registered owner”, “Secretary-General”, “ship” and “shipowner” have the same meaning as in the Bunker Convention. 390 Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), s 8. See also Bunker Convention, Art 4.1. Although Art 4.1 is not given the force of law by s 11, it is almost identical to s 8. The Convention itself does not appear as a Schedule to the Act. It can be found in the Australian Treaty Series at [2009] ATS 14 and at http://www.austlii.edu.au/au/other/dfat/treaties/ATS/2009/14.html.

854

Shipping Law

Convention as in CLC 92, except for the fact that it refers to rather than “oil”.391 For that reason, it can be expected principles to those used under CLC 92 will be applied in which Bunker Convention claims should be allowed excluded.392

[19.390]

“bunker oil” that similar determining and which

“Ship” is defined to mean any seagoing vessel or seaborne craft, of any type whatsoever.393 The non-overlap provisions with the CLC 92 mean that the Bunker Convention does not apply to oil tankers when carrying cargo, but it does apply to bunker oil spills from oil tankers when they are not carrying oil as cargo. Unlike CLC 92, which channels all liability to the registered owner of the ship, Art 1 of the Bunker Convention defines “shipowner” to mean “the owner, including the registered owner, bareboat charterer, manager and operator of the ship”.394 Article 3.2 provides that where more than one person is liable under the Convention, their liability shall be joint and several.395 Thus, claimants may proceed against any of the people listed in the definition of “shipowner” to recover the whole of their loss. In practice, of course, claimants are likely to proceed against whichever of those people is protected by the ship’s liability insurance coverage and/or whichever one can be most easily served with process.396 Part 3 of the Act requires ships entering or leaving ports in Australia (or offshore facilities in the coastal sea of Australia or an external Territory) to carry insurance certificates showing that the ship has insurance for an amount sufficient to cover the limits of liability under the Convention. Furthermore, claims may be brought directly against the insurer, as is the case under CLC 92.397 Article 3(5) of the Bunker Convention provides that no claim for pollution damage shall be made against the “shipowner” (broadly defined, as described above) otherwise than in accordance with the Convention. However, the Convention does not provide, as CLC 92 does, that no claim may be brought against anyone other than the “shipowner”. This may be a substantial weakness of the Convention in practice, as it leaves open the possibility that a plaintiff might attempt to make an “end run” around the 391 Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), s 3, referring to Bunker Convention, Art 1. 392 See [19.230]. 393 Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), s 3, referring to Bunker Convention, Art 1. 394 Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), s 3 provides that “shipowner” has the same meaning in the Act. 395 Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), s 11 gives the force of law to Art 3. 396 See [19.240], for a consideration of service of process outside Australia in relation to CLC 92. 397 Bunker Convention, Art 7.10, which is given the force of law by Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), s 11.

[19.390]

19 Pollution from Ships

855

Convention by suing the master and crew of the allegedly polluting ship alleging other, possibly unlimited, bases of liability separate from those created by the Convention.398 Unlike CLC 92, the Bunker Convention does not limit the shipowner’s liability, but merely refers to the shipowner’s right to limit its liability under “any applicable national or international regime, such as the Convention on Limitation of Liability for Maritime Claims 1976”.399 The Limitation Convention 1976 has the force of law in Australia,400 and the definition of “shipowner” in that Convention is broader than the definition in the Bunker Convention,401 so those shipowners who might be held liable under the Bunker Convention would be entitled to limit their liability under the Limitation Convention 1976. The limits of liability in the Limitation Convention 1976 are much lower than those in CLC 92. For example, for a Suezmax oil tanker (a medium-sized tanker, the largest size that can pass laden through the Suez Canal) of gross tonnage 80,000 MT, the limit of liability under CLC 92 would be 51,835,000 SDRs.402 The limit of liability for a ship of similar gross tonnage under the Limitation Convention 1976 would be 26,200,000 SDRs.403 The different limitation levels are not inappropriate, though. A Suezmax tanker has a deadweight carrying capacity of about 140,000 MT of oil, but the maximum capacity of the bunker tanks for a ship of that size would normally be about 4,000 MT. Obviously, the pollution threat from oil cargoes is much larger than that from bunker oil. The defences to liability under the Bunker Convention are identical to those under CLC 92, but the Act does not give the force of law to the relevant Article of the Bunker Convention (Art 4).404 Because there are no provisions in the Act itself creating defences to liability, it seems that the shipowner has no available defences in the event of a bunker oil spill. The shipowner’s insurer, however, may possibly be able to rely on the Art 4 defences if sued directly. The Act does give the force of law to Art 7.10 of the Bunker Convention, and Art 7.10 provides that the insurer may invoke any defences “which the shipowner would have been entitled to invoke”, including limitation of liability. That could be read as a reference to the defences in Art 4 of the Convention, although Art 7.10 does not specifically refer to Art 4. Alternatively, in the context of the Australian 398 See, eg, Mooney v MS Magdalene Schiffahrtsgesellschaft mBH [2014] NSWSC 1277. 399 Bunker Convention, Art 6, which is given the force of law by Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), s 11. 400 See Chapter 16. 401 The Limitation Convention 1976, Art 1.2 provides that the word “shipowner” means “the owner, charterer, manager, and operator of a seagoing ship”. See [16.50]. 402 See [19.250]. 403 See [16.170]. 404 Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 (Cth), s 11.

856

Shipping Law

[19.400]

Act, the reference to the defences “which the shipowner would have been entitled to invoke” may be read as giving the insurer no defence, just as the shipowner has none. Claims for compensation for pollution damage may be brought in the Federal Court, the Federal Circuit Court, or in a State court, as a Bunker Convention claim is a general maritime claim for purposes of the Admiralty Act 1988 (Cth).405

PREVENTION AND CLEAN-UP [19.400]

The general principle underlying the national legislation and international conventions relating to prevention and clean-up of pollution is that of “polluter pays”. Where marine pollution has been caused by a ship, it is the owner of that ship or its insurer who must pay the costs of preventing the spread of pollution damage and cleaning up the pollution that has already occurred. The shipowner is not obliged to undertake prevention or clean-up measures itself, but it is obliged (and may be compelled) to reimburse those who have incurred expenditure in doing so.

In Australia, the principal organisation authorised to conduct prevention or clean-up operations is the Australian Maritime Safety Authority (AMSA), which has a general power to do anything necessary to combat pollution of any kind in the marine environment.406 If AMSA suffers loss or damage or incurs costs or expenses in preventing or mitigating, or attempting to prevent or mitigate, pollution caused by a discharge or disposal of pollutants from a ship, it may recover the amount of that loss, damage, costs or expenses as a debt owing to it by the owner or master of the ship or any person whose act caused the discharge or disposal.407 AMSA’s general power to combat marine pollution may be exercised throughout the territorial sea of Australia (including its external Territories), by virtue of Australia’s sovereignty over the territorial sea under international law.408 It may presumably also be exercised throughout Australia’s Exclusive Economic Zone (the EEZ), by virtue of Australia’s sovereign rights to protect and preserve the marine environment in the EEZ under the United Nations Convention on the Law of

405 Admiralty Act 1988 (Cth), ss 4(3)(ba), 9 – 12. 406 Australian Maritime Safety Authority Act 1990 (Cth), ss 6(1)(a), 10(1). 407 Protection of the Sea (Civil Liability) Act 1981 (Cth), s 22A. 408 Seas and Submerged Lands Act 1973 (Cth), s 6 declares Australia’s sovereignty in the territorial sea of Australia, which extends to a distance of 12 nautical miles from the coastal base line. AMSA is also given general power to take such measures as it considers necessary within the territorial sea by Protection of the Sea (Powers of Intervention) Act 1981 (Cth), s 10(1)(b), (2).

[19.400]

19 Pollution from Ships

857

the Sea 1982 (UNCLOS 1982).409 Beyond the limits of Australia’s sovereign rights lie the high seas, and AMSA’s power to take action in the high seas is more restricted. The fact that AMSA has any power at all to take action in the high seas derives from the International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties 1969 (Intervention Convention) and the Protection of the Sea (Powers of Intervention) Act 1981 (Cth). The Intervention Convention was made in response to problems highlighted by the major oil spill from the ship “Torrey Canyon” off the southwest coast of the United Kingdom in 1967. Although the “Torrey Canyon” ran aground on rocks outside the territorial waters of the United Kingdom, the large quantities of oil that were spilled from the ship first threatened, then fouled, the beaches of southern England and, to a lesser extent, northern France. The fact that the spill occurred on the high seas, outside the territorial waters of the United Kingdom and France, meant that there was no basis sanctioned by international law for either of those coastal states to take action to control the spill until the oil entered their territorial waters. In the end, the United Kingdom simply ignored its lack of authority to intervene, and sent Royal Air Force bombers to destroy what remained of the “Torrey Canyon”, and to set fire to the oil that remained on board. Soon after this incident, it was internationally agreed in the Intervention Convention that coastal states should no longer have to wait until spilled oil entered the area that international law regarded as under their control before they could take action. The Convention gave coastal states the power to intervene beyond the limits of their territorial sea to prevent or minimise pollution of the sea by oil. It was extended by Protocol in 1973 to cover pollution by substances other than oil, and the list of substances was extended again in 1991 and 1996 by resolutions of the Marine Environment Protection Committee of the IMO.410 The Protection of the Sea (Powers of Intervention) Act 1981 (Cth) authorises AMSA to take anti-pollution measures on the high seas, if there is a grave and imminent danger to the coastline of Australia or to the “related interests of Australia”411 from pollution or threat of pollution of the sea by oil or other substances which may reasonably be expected to result in 409 Seas and Submerged Lands Act 1973 (Cth), s 10A declares Australia’s sovereign rights over the EEZ. 410 Resolution MEPC.49(31) of 1991 appears as Sch 3 to the Protection of the Sea (Powers of Intervention) Act 1981 (Cth); Resolution MEPC.72(38) appears as Sch 4. Schedule 3 was enacted in 1992 (Transport and Communications Legislation Amendment Act (No 2) 1992 (Cth)), Sch 4 in 2001: International Maritime Conventions Legislation Amendment Act 2001 (Cth). 411 “Related interests of Australia” means the interests directly affected or threatened, such as maritime coastal, port or estuarine activities like fishing, being activities constituting an essential means of livelihood of persons; tourist attractions of any part of Australia; and the health of the coastal population of and the well-being of, any area of Australia, including the conservation of living marine resources and of wildlife in or connected with any area of Australia: see Protection of the Sea (Powers of Intervention) Act 1981 (Cth), ss 8(6), 9(6), 10(8); Sch 1, Art II.4.

858

Shipping Law

[19.400]

major harmful consequences.412 It also gives AMSA the general power to take such measures as it considers necessary to prevent or minimise pollution, or likely pollution, from an Australian ship413 on the high seas. In all cases, AMSA must ensure that the measures it takes are in proportion to the actual or threatened damage; it must use its best endeavours to avoid any risk to human life; it should consult with other countries affected by the incident, particularly the country of the flag of the ship, and it should notify any person whose interests could reasonably be expected to be affected by the measures it proposes to take, although it may take action without prior notification or consultation in cases of extreme urgency.414 It must obtain the approval of “the Minister” before sinking or destroying a ship or part of a ship.415 The Minister responsible for AMSA’s operations is the Minister for Infrastructure and Transport, but the Minister responsible for granting dumping permits to non-governmental dumpers is the Minister for the Environment, Heritage, Water and the Arts,416 so it is not entirely clear from which Minister AMSA must gain approval. If the threat to the Australian coastline or “related interests” is not grave and imminent, or if it cannot reasonably be expected to result in major harmful consequences, AMSA thus has no power to intervene on the high seas unless the ship is an Australian ship. If intervention is authorised, however, AMSA may take such measures as it considers necessary to prevent, mitigate or eliminate the danger.417 If AMSA incurs any expense or liability in exercising its powers under the Protection of the Sea (Powers of Intervention) Act 1981 (Cth), it may recover the amount of that expense or liability as a debt due to the Commonwealth by the owner of the ship, which is a charge on the ship.418 The shipowner is not liable to AMSA if it can raise one of the defences in Art 3.2 of CLC 92,419 and its liability (if any) is limited by reference to the tonnage of the ship unless it (the owner) is guilty of actual fault or privity.420 The reference to “actual fault of privity” is anachronistic, as that is no longer 412 Protection of the Sea (Powers of Intervention) Act 1981 (Cth), ss 8, 9. 413 An Australian ship is a ship registered in Australia or an unregistered ship having Australian nationality: see Protection of the Sea (Powers of Intervention) Act 1981 (Cth), s 10(8). 414 Protection of the Sea (Powers of Intervention) Act 1981 (Cth), ss 8(4), 9(4), 10(1)(c), (2), (4); Sch 1, Arts III, V. 415 Protection of the Sea (Powers of Intervention) Act 1981 (Cth), ss 8(2A), 9(2A), 10(3A). 416 Within the Great Barrier Reef Marine Park, the relevant granting authority is the Great Barrier Reef Marine Park Authority (GBRMPA). 417 Protection of the Sea (Powers of Intervention) Act 1981 (Cth), ss 8(1), 9(1), 10(2). 418 Protection of the Sea (Civil Liability) Act 1981 (Cth), ss 20(1), 21. 419 Protection of the Sea (Civil Liability) Act 1981 (Cth), s 20(2). The defences conferred by Art 3.2 of CLC 92 are considered at [19.290]. 420 Protection of the Sea (Civil Liability) Act 1981 (Cth), s 20(3).

[19.400]

19 Pollution from Ships

859

the standard for loss of the right to limit under the relevant conventions, but the provision in question remains unamended. AMSA may authorise a person to detain the ship until the amount in question is paid or security is provided to AMSA’s satisfaction.421 The authorised person may escort the ship to a port in Australia.422 Foreign ships may only be detained in this way if they are in Australian waters or the EEZ.423 If the ship goes to sea before it has been released from detention, the owner and master are each guilty of an offence.424 In relation to oil pollution, it is not only AMSA that is entitled to recover the costs of taking preventive measures. Article 1.6 of CLC 92 defines “pollution damage” as including “preventive measures”, and Art 1.7 defines “preventive measures” as being any reasonable measures taken by any person after an incident has occurred to prevent or minimise oil pollution damage. Nowhere in CLC 92 is there any requirement that the person taking preventive measures be required or authorised to do so, or that he or she be doing so to protect his or her own property or interests. Thus, any private person or corporation who takes measures to prevent or minimise pollution damage after a spill has occurred is entitled to compensation from the shipowner for the expenses incurred in taking those measures provided that the measures were reasonable.425 The requirement of reasonableness may, but need not, exclude claims made by people with no commercial interest in the property affected by the incident, such as environmental groups and volunteers. If wastes or other matter are dumped into Australian waters, and if the Minister for the Environment, Heritage, Water and the Arts considers that such dumping is likely to cause an obstruction or constitute a danger to vessels or to human or marine life, or to interfere with the exercise of Australia’s sovereign rights over the seabed and the Continental Shelf, then the Environment Protection (Sea Dumping) Act 1981 (Cth) provides that the Minister may cause to be taken such steps as he or she thinks proper to repair, remedy or mitigate any damage arising from that dumping.426 Because the Act does not require that the dumping threatening the obstruction or danger must have been done in contravention of the provisions of the Act, it seems that the Minister has the power to take action whether or not the dumping was originally done under a permit that he or she issued. Where the Minister has exercised these powers and a person has been convicted of an offence of dumping, incineration or loading without a permit in contravention of the Act, then the person so convicted is liable to reimburse the Minister for the expenses of the 421 Protection of the Sea (Civil Liability) Act 1981 (Cth), s 22(1). 422 Protection of the Sea (Civil Liability) Act 1981 (Cth), s 22(1A). 423 Protection of the Sea (Civil Liability) Act 1981 (Cth), s 22(2). 424 Protection of the Sea (Civil Liability) Act 1981 (Cth), s 22(3). 425 Protection of the Sea (Civil Liability) Act 1981 (Cth), Sch 2, Art 3.1. 426 Environment Protection (Sea Dumping) Act 1981 (Cth), s 16.

860

Shipping Law

[19.400]

exercise of his or her powers, as a debt due to the Commonwealth, which is a charge upon the vessel, aircraft or platform in question.427

427 Environment Protection (Sea Dumping) Act 1981 (Cth), s 17(1), (3).

20 Salvage

[20.10] INTRODUCTION ........................................................................................... 862

[20.10] The nature of salvage ...................................................................... 862 [20.50] International Convention on Salvage 1989 ................................. 863 [20.60] REQUIREMENT OF DANGER TO SALVABLE PROPERTY AT SEA .. 864

[20.60] Salvable property ............................................................................. 864 [20.130] The element of “danger” .............................................................. 867 [20.190] Location of salvable property ...................................................... 871 [20.200] SALVAGE SERVICES ................................................................................... 871

[20.200] Services that can constitute salvage services ............................ 871 [20.240] Salvage services must be successful ........................................... 874 [20.270] CHARACTERISTICS OF A SALVOR ........................................................ 876

[20.270] Salvor must be a volunteer .......................................................... 876 [20.400] Motive and intention of a salvor ................................................ 883 [20.410] AUTHORITY REQUIRED FOR COMMENCEMENT OF SALVAGE SERVICES ....................................................................................................... 884 [20.450] QUANTUM OF SALVAGE REWARD ...................................................... 886

[20.450] Introduction: the two basic principles ....................................... 886 [20.490] Relevant considerations ................................................................ 889 [20.520] Rules concerning the valuation of salvaged property ............ 891 [20.530] Fault or misconduct by salvors ................................................... 891 [20.570] LIABILITY TO PAY SALVAGE REWARD ................................................ 893 [20.580] APPORTIONMENT OF SALVAGE REWARD ........................................ 894 [20.630] SALVAGE OF DERELICT AND WRECK ................................................ 896 [20.640] EFFECT OF SALVAGE AGREEMENT ON CREW AND MASTER OF SALVAGING SHIP ................................................................................ 897 [20.650] SALVAGE CONTRACTS ............................................................................. 898 [20.690] SPECIAL COMPENSATION FOR SALVORS PROTECTING THE ENVIRONMENT .......................................................................................... 900

[20.690] Introduction .................................................................................... 900 [20.700] Entitlement to special compensation .......................................... 900

862

Shipping Law

[20.10]

[20.730] Quantum of special compensation ............................................. 902 [20.790] LIFE SALVAGE ............................................................................................. 904 [20.810] SALVAGE CLAIMS BY AND AGAINST THE CROWN ...................... 905 [20.820] SALVAGE AND THE HISTORIC SHIPWRECKS ACT 1976 ................ 905

INTRODUCTION The nature of salvage [20.10]

Salvage concerns the rescue of a ship or cargo from danger at sea. As a noun, the term “salvage” is used in two different senses. On the one hand it signifies the service of saving property from danger at sea, and on the other it signifies the award — or more accurately reward — that is made for such services. The context makes the relevant meaning clear.

Under general maritime law (the common law of courts exercising Admiralty jurisdiction1 which is now part of the common law of Australia2), salvage in the sense of salvage service may shortly be defined as the service which is provided by a volunteer to save salvable property — in short, a ship or its cargo — from loss or damage at sea.3 In recent times statute has extended parts of this definition, but it still presents the basic elements of salvage service. As is evident from the definition just presented, for a service to constitute a salvage service under general maritime law, three conditions must be satisfied. First, salvable property must be in danger at sea. Secondly, the service must either be successful in rescuing the property or contribute towards such success. And thirdly, the person performing the service (the salvor) must be a volunteer. Each of these elements is considered in this chapter in detail.

[20.20]

Two distinctive features of salvage service

Salvage service is distinctive in common law jurisdictions in two respects. First, the performance of a successful salvage service ordinarily entitles the person who rendered it to payment of a financial reward from the owner of the rescued property even though the latter did not consent to the service. In other words, a financial reward can ordinarily be claimed by the performer of an entirely gratuitous service. Secondly, the performance of successful salvage service always creates a charge — specifically, a maritime lien — over the rescued property to secure the reward due to the person who rendered the service. 1 See The Gaetano and Maria (1882) 7 PD 137 at 143. 2 Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 471. 3 See The Neptune (1824) 1 Hagg Adm 227; 166 ER 81 at 236; 85; HMS Thetis (1833) 3 Hagg Adm 14; 166 ER 312 at 48; 324-325; Cargo Ex Schiller (1877) 2 PD 145 at 149.

[20.50]

[20.30]

20 Salvage

863

Terminology: “salvor”, “salve”, “civil salvage”, “prize salvage”

The term “salvor” signifies any person who performs salvage services.4 The verb “salve” means save by a salvor.5 The reward for salvage services of the kind being considered here is sometimes referred to as “civil salvage”, in contradistinction to “prize (or military) salvage”. Prize salvage concerns the recapture of a ship or goods belonging to a British subject (or semble in Australia today, an Australian subject) where this property had previously been taken by an enemy in time of war.6 Prize salvage is not considered further in this work.

[20.40]

Life salvage

Salvage is sometimes defined in terms of saving life as well as property. “Life salvage” is, however, a statutory creation which differs in several important respects from the salvage of goods. It is accordingly considered separately in this chapter.

International Convention on Salvage 1989 [20.50]

In 1989, a Diplomatic Conference convened by the International Maritime Organization agreed upon a convention on salvage called the International Convention on Salvage 1989, or Salvage Convention as it is popularly known.7 The main parts of this Convention became part of Australian law in 1998 by amendments made to the Navigation Act 1912 (Cth) in 1995.8 These parts of the Convention are now part of Australian law by reg 17 of the Navigation Regulation 2013 (Cth). The aim of the 1989 Convention was to make the law of salvage more appropriate to modern times and in particular in respect of the salvage of oil tankers. The accident which drew special attention to the problems that arise from distressed oil tankers was the grounding of the Amoco Cadiz five kilometres off the coast of Brittany, France, in 1978. This ship was laden with 220,000 tons of crude oil, and the leaking of this oil from the ship — the largest oil spill in history — caused major pollution both to the sea and to the French coastline. The salvage of oil tankers is of course hazardous. But in addition to this, it requires the use of very expensive equipment as well as the employment of skilled salvage personnel. Experience had shown, however, that salvage companies were reluctant to invest in expensive salvage 4 The Neptune (1824) 1 Hagg Adm 227; 166 ER 81 at 236; 85. 5 Cargo Ex Schiller (1877) 2 PD 145 at 150. 6 See Halsbury’s Laws of England (4th ed, Butterworth, 1982), Vol 37, p 838, para 1342; W Kennedy, Kennedy’s Law of Salvage (5th ed, Stevens & Sons Ltd, London, 1985), p 9, para 12. 7 For further on this Convention, see N J J Gaskell, “The International Convention on Salvage 1989” (1989) 4 International Journal of Estuarine & Coastal Law 268; G Brice, “The New Salvage Convention: Green Seas and Grey Areas” [1990] LMCLQ 32. 8 Transport Legislation Amendment Act 1995 (Cth). See now Navigation Act 1912 (Cth), s 315; Sch 9.

864

Shipping Law

[20.60]

equipment unless there was a reasonable likelihood that their investment would result in a profit. The likelihood of a profit was, however, diminished by two factors. The first was the general reliability of modern ships, including oil tankers, and thus the relative infrequency with which salvage services of large commercial vessels are these days sought. The second was the rule of general maritime law that salvage reward depended upon success in the performance of salvage services — the “no cure, no pay” rule. The corollary of this was that no reward was paid for unsuccessful salvage services no matter how extensive and expensive they might be. A further, obvious problem associated with distressed oil tankers is that a spill of cargo due to an accident at sea can result in substantial environmental pollution. There was thus a need for salvors to be provided with an incentive to minimise environmental damage resulting from a shipping accident at sea regardless of whether they succeeded in salvaging the ship. The Salvage Convention sought to tackle the foregoing problems by entitling salvors to an economic reward simply for minimising environmental damage at sea as part of a salvage operation. This reward is payable whether or not the salvage exercise is successful. The provisions of the Salvage Convention and the salvage provisions of the Navigation Act 2012 (Cth) are considered in the course of this chapter.

REQUIREMENT OF DANGER TO SALVABLE PROPERTY AT SEA Salvable property Introduction to salvable property

[20.60]

Under general maritime law, salvage services can be performed only in respect of “salvable property”, that is property the rescue of which is capable of giving rise to salvage reward. Salvable property (which is sometimes also called maritime property, or maritime res) is of two basic kinds: a ship and its cargo. It extends, however, from these items to include any related freight. The wreck or remains of a ship or its cargo are ordinarily included as salvable property.9 Salvable property thus does not cease to be such simply because it breaks up or deteriorates at sea.

[20.70]

Salvable property must be presently owned by someone

Although it may seem a trite point to make, in order to be salvable, property must be presently owned by someone. If property is not presently owned by anyone, the rescuer of the property becomes its 9 Note the exclusion from salvage of archaeological property on the seabed: Navigation Act 2012 (Cth), s 240(3)(c).

[20.90]

20 Salvage

865

finder, and not its salvor. He or she is then entitled to treat the entire property as his or her own and is not limited to a claim for salvage reward.10 Meaning of “ship”

[20.80]

The principal instance of salvable property is a ship. By “ship” here is meant any seagoing vessel. The characteristics of a ship are considered in detail in Chapter 1. Suffice it to say here that an object does not constitute salvable property simply because it floats,11 or because it otherwise has some, but not all, of the features of a ship.12 The term “ship” in the context of salvage covers not only the hull or structure of a ship, but also its tackle and equipment.13 It does not, however, include such intangible, transferable appurtenances as a fishing licence.14 This last point is important for the purpose of determining the value of salvable property, and thus the quantum of salvage reward. A ship for present purposes includes the wreck or remains of a ship after it has sunk or broken up.15

[20.90]

General application of the Navigation Act

The salvage provisions of the Navigation Act 2012 (Cth) apply to all vessels when judicial or arbitral salvage proceedings are brought in Australia.16 The term “vessel” is defined in the Act, in short, as any kind of vessel that is used in navigation by water, however propelled or moved.17 By virtue of the definition in the Act of the term “salvage operation”, however, the Act excludes any vessel that is permanently and intentionally attached to the shoreline.18 The salvage provisions of the Act do not apply to any fixed or floating platforms or to mobile offshore drilling units when they are on location engaged in the exploration, exploitation or production of mineral resources of the seabed or its subsoil.19 10 See P J O’Keefe, “Gold, Abandonment and Salvage” [1994] LMCLQ 7. 11 Nicholson v Chapman (1793) 2 H Bl 254; 126 ER 536; The Gas Float Whitton No 2 [1896] P 42, esp at 58. See also Raft of Timber (1844) 2 W Rob 251; 166 ER 749; Palmer v Rouse (1858) 3 H & N 505; 157 ER 569. 12 See, eg, Wells v Owners of the Gas Float Whitton No 2 [1897] AC 337. Compare the facts in The Cleopatra (1878) 3 PD 145. 13 The Gas Float Whitton No 2 [1896] P 42 at 49-50, 63; Wells v Owners of the Gas Float Whitton No 2 [1897] AC 337 at 343. 14 The Kristy Mae v The Santa Rita [1984] WAR 95 at 97, 99. 15 Stephens v Broomfield: The Great Pacific (1869) LR 2 PC 516 at 523. 16 Section 240(1). 17 Section 14(1). For a more detailed consideration of this definition, see [1.190]–[1.280]. 18 Section 14(1). 19 Section 240(2).

866

Shipping Law

[20.100]

Meaning of “cargo”

[20.100]

Cargo from on board a ship is salvable property. Cargo comprises any merchandise or wares that are conveyed in (and perhaps also towed by20) a ship. Cargo is salvable property regardless of whether it is saved whilst it is still on board ship, is floating on the sea, has sunk to the seabed, or has been washed up on shore.21 It thus does not matter that cargo is otherwise describable as flotsam, jetsam, lagan, wreck or a derelict.22 Nor does it matter that cargo has been damaged by the sea. Under general maritime law, chattels on board ship that do not constitute cargo are not salvable property. On this basis, salvage reward cannot be claimed for saving such items as the crews’ or passengers’ clothing or personal belongings,23 or the ship’s provisions.24

[20.110]

Relevant cargo provisions in the Navigation Act

The Salvage Convention does not use the word “cargo”; instead it uses the term “property”. The Navigation Act 2012 (Cth) accordingly uses this term as well in the context of salvage.25 The term “property” in the Convention is defined as any property not permanently and intentionally attached to the shoreline and includes freight at risk.26 This is effectively adopted by the definition of “salvage operation” in s 14(1) of the Navigation Act. This states that “salvage operation” means “any act or activity undertaken to assist a vessel or any other property not permanently and intentionally attached to the shoreline (including freight at risk) in danger in any waters”. Position of freight

[20.120]

It is traditionally said that freight (that is, ship’s earnings) is salvable property.27 Freight that was at risk due to danger at sea but is subsequently earned by reason of the salvage of a ship or its cargo is thus a subject of salvage reward.28 However, as freight cannot be salvaged by itself, it is probably better regarded as an adjunct of salvage of property rather than as salvable property in its own right. 20 See Wells v Owners of the Gas Float Whitton No 2 [1897] AC 337 at 345. 21 Wells v Owners of the Gas Float Whitton No 2 [1897] AC 337 at 347. 22 The Gas Float Whitton No 2 [1896] P 42 at 49, 50, 53, 63; Wells v Owners of the Gas Float Whitton No 2 [1897] AC 337 at 343. On the distinction between these forms of property, see Chapter 21. 23 The Willem III (1871) LR 3 A & E 487 at 490 (passengers’ clothing and personal belongings). 24 See Brown v Stapylton (1827) 4 Bing 119; 130 ER 713. 25 But note the definition of “cargo” in s 14(1). 26 Article 1(c). 27 See The Fusilier (1865) Br & Lush 341; 167 ER 391 at 344; 393; The Gas Float Whitton No 2 [1896] P 42 at 49, 53, 63. 28 The Westminster (1841) 1 W Rob 229; 166 ER 558 at 233; 559; The Gas Float Whitton No 2 [1896] P 42 at 49.

[20.140]

20 Salvage

867

The element of “danger” [20.130]

For services to constitute salvage services under general maritime law, it is necessary that the services concern salvable property that is in danger at sea. This is reflected in the current definition of “salvage operation” in the Navigation Act 2012 (Cth), which refers to services to assist property “in danger in any waters”.29 (“Any waters” in effect here means the sea because the Act elsewhere excludes salvage operations in inland waters.30) The term “danger” in the present context covers any situation which gives rise to a reasonable fear that a ship or its cargo might suffer damage or loss unless it receives outside help. The damage or loss might involve a prospective threat to salvable property as well as some immediate peril. It is thus not necessary that a ship be under threat of imminent damage or destruction: it is sufficient that there be present circumstances which lead to a reasonable fear that a ship might be damaged or lost unless it receives help from outside. The locus classicus concerning the broad scope of danger for the purposes of salvage is the statement by Dr Lushington in The Charlotte.31 There he said:32 It is not necessary … that the distress should be actual or immediate, or that the danger should be imminent or absolute; it will be sufficient if, at the time the assistance is rendered, the ship has encountered any damage or misfortune which might possibly expose her to destruction if the services were not rendered.

The same judge put this point more shortly in the later case of The Phantom,33 when he said: I am of opinion that it is not necessary there should be absolute danger in order to constitute a salvage service; it is sufficient if there is a state of difficulty, and reasonable apprehension.

[20.140]

Examples of danger

A typical case involving danger to a ship is where a storm and rough seas might cause a ship to founder. Another is where a ship has been damaged 29 Section 14(1). 30 Section 240(3)(a), (b). 31 The Charlotte (1848) 3 W Rob 68; 166 ER 888. 32 The Charlotte (1848) 3 W Rob 68; 166 ER 888 at 71; 890. Cited with approval in Turnbull v Owners of the Ship Strathnaver: The Strathnaver (1875) 1 App Cas 58 at 65; The Wotonga (1881) 2 LR (NSW) (Adm) 5 at 8; Fenwick v The Glencaim (1899) 15 WN (NSW) 166 at 167-168; The Calyx (1910) 27 TLR 166; Troilus (Cargo Owners) v Glenogle (Owners, Master, Crew) [1951] AC 820 at 834; Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 324-325, 326-327. See also The Troilus [1950] P 92 at 103; Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 326. Compare Akerblom v Price, Potter, Walker & Co (1881) 7 QBD 129 at 135, which is no longer considered to be an accurate statement of the law. 33 The Phantom (1866) LR 1 A & E 58 at 60. Cited with approval in Brown v Ship Darnholme (1922) 23 SR (NSW) 195 at 198.

868

Shipping Law

[20.150]

or there has been an accident on board, and without assistance the ship or its cargo are in peril.34 Yet another typical case is where a ship is sinking, or has indeed sunk, and without assistance the owners of the ship or its cargo will lose their property. It is clear from the wide notion of “danger” in the present context, however, that any circumstance involving a present likelihood of future peril is sufficient to constitute danger for the law of salvage. In no small number of cases, a ship has been held to be in danger, not because of bad weather, hazardous sea conditions or deficiencies in the ship itself, but because illness among the crew has made it very difficult to navigate the ship, with the result that without outside assistance there is a clear risk that the ship will not complete its voyage or will not be able to cope with deleterious changes in weather or sea conditions.35 A ship can also be in danger because it has lost its way, or because the master is unaware of local conditions, and without assistance the ship is likely to suffer damage from the elements or from hidden physical features.36 Despite what Dr Lushington said in The Charlotte,37 it is now clear that the threat to a ship need not be that of destruction. The threat of any damage is sufficient,38 provided it is not insignificant.

[20.150]

Ship ordinarily in danger if unseaworthy

In the early Australian case of The Wotonga,39 Windeyer J said that a ship must ordinarily be considered to be in danger if it is sailing when it is unseaworthy.40 He expressed the opinion that unseaworthiness may arise in respect of a ship which is otherwise in good condition by virtue of such problems as deficiencies in the crew or lack of motive power.41 A ship, he said, “is not in point of fact seaworthy if she is not in a state that a prudent man would think himself justified in sending her to sea”.42 34 See The Glaucus (1948) 81 Ll L Rep 262; The Troilus [1950] P 92. 35 See The Clifton (1834) 3 Hagg Adm 117; 166 ER 349; The Charlotte Wylie (1846) 2 W Rob 495; 166 ER 842; The Roe (1856) Swa 84; 166 ER 1032; The Aglaia (1888) 13 PD 160; North Coast Steam Navigation Co v Ship Eugene (1909) 9 SR (NSW) 246; Brown v Ship Darnholme (1922) 23 SR (NSW) 195. See also Australian United Steam Navigation Co Ltd v Ship William E Burnham (1921) 21 SR (NSW) 225 at 228. 36 See The Tower Bridge [1936] P 30; The Tres (1936) 55 Ll L Rep 16. 37 The Charlotte (1848) 3 W Rob 68; 166 ER 888 at 71; 890. 38 See Owners of the Tug Sea Tractor v Owners of the Ship Tramp [2007] 2 Lloyd’s Rep 363. 39 The Wotonga (1881) 2 LR (NSW) (Adm) 5. 40 The Wotonga (1881) 2 LR (NSW) (Adm) 5 at 9. See also The Jonge Andries (1857) Swa 226; 166 ER 1108 at 229; 1110; The City of Brisbane (1884) 5 LR (NSW) (P & D) 21 at 29. 41 The Wotonga (1881) 2 LR (NSW) (Adm) 5 at 9. 42 The Wotonga (1881) 2 LR (NSW) (Adm) 5 at 9. Note, however, the cautionary observation by Bucknill LJ in The Troilus [1950] P 92 at 103, approved by Lord Porter in Troilus (Cargo Owners) v Glenogle (Owners, Master, Crew) [1951] AC 820 at 830, 833.

[20.170]

20 Salvage

869

There is no doubt that the term “unseaworthy” in this context bears its general meaning of not fit to encounter the ordinary dangers of the voyage,43 and that it does not connote unseaworthiness in any technical sense.

[20.160]

Danger must be objectively apparent

For the purpose of the law of salvage, the danger facing a ship must be apparent in the sense that there must appear from an objective point of view to be a danger to the ship.44 Put another way, the question is whether the ship appears to be in such danger that a reasonable master would not refuse help.45 Provided the danger is apparent, it does not matter that the danger is in reality non-existent. If it were otherwise, salvors might be hesitant to render prompt salvage services lest a perceived danger ultimately be shown to be illusory. In The Smaragd,46 for example, a ship became enveloped in steam and it was feared that a boiler was about to explode. Salvage reward was granted to those responsible for taking the ship to a position of safety even though it was subsequently discovered that the vessel was never in any danger at all. A corollary of what has just been said is that a mere belief that a ship is in danger is not sufficient to justify salvage services if this belief is not supported by any evidence of apparent danger.47

[20.170]

Can “danger” include mere detriment to ship’s owner?

In the vast majority of salvage cases, the danger facing a ship is some physical peril. There is, however, authority for the proposition that the notion of danger goes further than this and covers any untoward circumstance relating to a ship that causes detriment to the ship’s owner. Cases show, for example, that there is danger to a ship for the purpose of the law of salvage if the ship is simply immobilised, notwithstanding that it will not, without more, suffer any physical harm.48 The reason for this appears to be that an immobilised ship is of no immediate value to its owner.49 The proposition that danger for the purposes of the law of salvage covers any untoward circumstance relating to a ship that causes detriment to a 43 See Actis Co Ltd v Sanko Steamship Co Ltd [1982] 1 WLR 119 at 122, 125. See also Marine Insurance Act 1909 (Cth), s 45(4). 44 The Hamilton and St John [1999] 1 Lloyd’s Rep 883 at 889. 45 Owners of the Tug Sea Tractor v Owners of the Ship Tramp [2007] 2 Lloyd’s Rep 363 at 365. 46 The Smaragd (1927) 28 Ll L Rep 302. 47 See The British Inventor (1933) 46 Ll L R 137 (claimants mistakenly believed ship had run aground and accordingly attempted to rescue it). 48 The Glaucus (1948) 81 Ll L Rep 262 at 266; Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 326. See also The Wotonga (1881) 2 LR (NSW) (Adm) 5 at 9. 49 See also the consideration of this general matter in Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 324-327.

870

Shipping Law

[20.180]

shipowner is supported by certain old cases in which salvage services were recognised for the recovery of ships seized by pirates, insurgents and other similar intruders even though there was no immediate peril to the ship itself.50 It is also supported in Australia by the more modern case of Société Maritime Caledonienne v The Cythera.51 In The Cythera, a claim for salvage reward was made in respect of action taken to prevent a stolen ship sailing to foreign parts and consequently out of the reach of its true owners. The judge, Macfarlan J, agreed that the ship was in danger in that its owner was in danger of losing his rights of possession and control of the ship.52 “In my judgment”, he said, “the kind of danger which falls within that considered by the Admiralty Court includes a danger to the proprietary rights of the owner and in cases where the ship is in the hands of persons whose declared object is feloniously and permanently to deprive the owner of his proprietary rights, the physical safety of the ship ceases to be the dominant element in assessing the degree of danger and the deprivation of the property, and the restoration of that property to the owners are sufficient.”53 If danger for the purposes of the law of salvage does cover any untoward circumstance relating to a ship that causes detriment to a shipowner, it might be that the traditional approach of viewing danger principally from the point of view of peril to a ship requires revision. The better approach might be to view danger principally from the point of view of harm to the ship’s owner, of which physical harm to the ship itself is simply the most obvious and most common example.

[20.180]

End of danger

Once a ship (or other maritime property) is in danger, it remains in danger until it is in a position of clear safety.54 When a ship is in a position of clear safety is a question of fact.55 There is no doubt, however, that a ship which has sunk to the seabed is not in a position of safety until it has been raised or otherwise retrieved. It cannot be said that a submerged ship is in a position of safety simply because it will not deteriorate any further under water. Mason J said on this point in Robinson v Western Australian Museum:56 “Salvage is not limited to 50 See The Trelawney (1802) 4 C Rob 223; 165 ER 592; The Calypso (1828) 2 Hagg Adm 209; 166 ER 221. See also The Lomonosoff [1921] P 97. Compare The Francis and Eliza (1816) 2 Dods 115; 165 ER 1433. 51 Société Maritime Caledonienne v The Cythera [1965] NSWR 146. 52 Société Maritime Caledonienne v The Cythera [1965] NSWR 146 at 152. Cited with approval in Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 323-324. 53 Société Maritime Caledonienne v The Cythera [1965] NSWR 146 at 153. 54 Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 283, 295. 55 See Troilus (Cargo Owners) v Glenogle (Owners, Master, Crew) [1951] AC 820, esp at 830. 56 Robinson v Western Australian Museum (1977) 138 CLR 283.

[20.200]

20 Salvage

871

recovery of property in or from a ship which is actually in distress; it extends to recovery of property in or from a ship which has lain at the bottom of the sea for a long time.”57

Location of salvable property [20.190]

Under general maritime law, services entitling a volunteer to salvage reward can be performed only in respect of property which is on, under, or alongside the high seas.58 The high seas comprise, in short, the sea itself and any inland tidal waters.59 Salvage services thus cannot be performed in non-tidal waters, including the non-tidal section of a river that subsequently becomes tidal.60 Salvage services are accordingly not possible in respect of property on landlocked inland waters. Under the Salvage Convention, however, a salvage operation includes any service undertaken to assist a vessel in danger not only in navigable waters but “in any other waters whatsoever”,61 and this definition has prima facie been included in the Navigation Act 2012 (Cth). This defines a salvage operation as any activity that assists a vessel or property “in danger in any waters”.62 The Act nonetheless provides that its salvage provisions do not apply to any salvage operation that takes place in inland waters and involves vessels all of which are of inland navigation, or to a salvage operation that takes place in inland waters and does not involve a vessel at all, or to a salvage operation of maritime cultural property that is of historic, archaeological or historic interest and is situated on the seabed.63

SALVAGE SERVICES Services that can constitute salvage services [20.200]

Any service that enables or assists an endangered ship or cargo to reach safety can constitute a salvage service.64 As Dr Lushington

57 Robinson v Western Australian Museum (1977) 138 CLR 283 at 330. See also at 317. 58 The Goring [1988] AC 831 at 856. See also The Goring [1987] QB 687; Halsbury’s Laws of England (4th ed, Butterworth, 1983), Vol 43, p 716, para 1031; Admiralty Act 1988 (Cth), s 4(3)(g) (which appears to assume that property washed up on shore can be made the subject of salvage). 59 General Iron Screw Collier Co v Schurmanns (1860) 29 LJ Ch 877 at 879; Bonser v La Macchia (1969) 122 CLR 177 at 184, 233; R v Bull (1974) 131 CLR 203 at 226; Gibbs v Mercantile Mutual Insurance (Australia) Ltd (2003) 77 ALJR 1396 at 1400, 1432. 60 The Goring [1987] QB 687, esp at 707, 722, 728, and on appeal to the House of Lords, The Goring [1988] AC 831 at 856-857. 61 Article 1(a). 62 Section 14(1) (definition of “salvage operation”). 63 Section 240(3). 64 For a non-exhaustive list of possible salvage services, see Halsbury’s Laws of England (4th ed, Butterworth, 1983), Vol 43, pp 714-715, para 1029; W Kennedy, Kennedy’s Law of Salvage (5th ed, Stevens & Sons Ltd, London, 1985), pp 144-148.

872

Shipping Law

[20.200]

said in The Charlotte,65 in respect of salvage of a ship, “All services rendered at sea to a vessel in danger or distress are salvage services”.66 Although it would appear from Dr Lushington’s statement in The Charlotte that to constitute a salvage service, the service must be rendered on water (in light of the provisions of the Salvage Convention and the Navigation Act, “at sea” is now too limited an expression), this is not entirely accurate. Whilst salvage services can be performed only in respect of property that is on water, any service that goes to save such property can constitute a salvage service, wherever it occurs. Salvage services can accordingly include any land-based acts which lead to, or assist in, the rescue of salvable property. It follows from what has just been said that setting in motion a salvage operation,67 or giving information or advice which assists salvors,68 comes within the scope of salvage services. Bucknill J said on this matter in The Marguerite Molinos:69 The law is clear, that where a person does something … of such a nature as to be the cause of an act done by another which is a salvage act, he may himself hold the position of a salvor although he has done no more than give information. A messenger from the sea coming in and telling another that a ship is in peril is entitled to be treated as a salvor if, in consequence of his information, that other goes out and renders salvage services to that ship.

Whether any preliminary or incidental act constitutes a salvage service is a matter of fact.70 However, to be a salvage service the act involved must have some clear and necessary connection with the services that ultimately secure the rescue of salvable property. It is thus not sufficient that a person give superfluous advice or assistance, no matter how good it might otherwise be.71 Action can constitute a salvage service even though it does not involve positive action directly in relation to a ship provided it results in services that do ultimately rescue a ship or its cargo from danger. So, for example, a ship can assist in salvage simply by standing by if this enables acts to be 65 The Charlotte (1848) 3 W Rob 68; 166 ER 888. 66 The Charlotte (1848) 3 W Rob 68; 166 ER 888 at 71; 890. 67 The Cayo Bonito [1904] P 310 at 317-318; Turnbull v Owners of the Ship Strathnaver: The Strathnaver (1875) 1 App Cas 58 at 62-63; The American Farmer (1947) 80 Ll L Rep 672 at 688-689; Robinson v Western Australian Museum (1977) 138 CLR 283 at 339. 68 The Eliza (1862) Lush 536; 167 ER 242; The Tower Bridge [1936] P 30. Compare The Little Joe (1860) Lush 88; 167 ER 46. 69 The Marguerite Molinos [1903] P 160 at 164. 70 The Marguerite Molinos [1903] P 160 at 164. Compare the stricter attitude adopted by the old Admiralty Court in, eg, The Vine (1825) 2 Hagg Adm 1; 166 ER 145 at 2 (Hagg Adm); The Charlotte (1848) 3 Wm Rob 68; 166 ER 888 at 72; 890. 71 Turnbull v Owners of the Ship Strathnaver: The Strathnaver (1875) 1 App Cas 58 at 63. See also The Marguerite Molinos [1903] P 160 at 164; The Port Caledonia and The Anna [1903] P 184 at 190-191.

[20.220]

20 Salvage

873

done by others which would not have occurred had the ship not stood by.72 In Société Maritime Caledonienne v The Cythera,73 for example, a ship was held to have assisted in the rescue of a stolen vessel merely by standing by as this delayed the movement of the stolen vessel and thereby enabled a government launch to apprehend it. In the earlier case of The London Merchant,74 a man who had simply reassured frightened passengers on a ship that had run onto a reef was held to have performed a salvage service because this assisted others to rescue the ship unhindered by the presence of alarmed passengers on board.75

[20.210]

Position of absent owner of salvaging vessel

It would seem to follow from the foregoing that unless the owner of a salvaging ship performs some action or otherwise assists in the rescue of a ship or its cargo, he or she does not perform a salvage service and is consequently not entitled to share any salvage reward. There is indeed old authority to support this proposition. From the early 19th century, however, Admiralty courts recognised that the absent owner of a ship engaging in salvage services was entitled to at least some “equitable compensation” for the use of the ship.76 Then with the advent of steam-powered ships, the courts adopted a more generous attitude towards absent shipowners on account of the improved assistance that such vessels could provide in salvage operations.77 It is now firmly established that an absent shipowner is entitled to share in the salvage reward earned by the crew of his or her ship. This is now justified not simply on account of any special power of the ship and the advantage that this provides to salvage services but also on account of the inconvenience and risk that such services entail to the shipowner by virtue of the crew’s salvage activities.78

[20.220]

“Owner” for the purposes of salvage reward

For the purposes of salvage reward, the owner of a ship on demise charter is the demise charterer.79 The owner of a ship under any other form of 72 Société Maritime Caledonienne v The Cythera [1965] NSWR 146 at 154. See also The Undaunted (1860) Lush 90; 167 ER 47 at 92; 48. 73 Société Maritime Caledonienne v The Cythera [1965] NSWR 146. 74 The London Merchant (1837) 3 Hagg Adm 394; 166 ER 451. 75 The London Merchant (1837) 3 Hagg Adm 394; 166 ER 451 at 398-399; 453. 76 The Vine (1825) 2 Hagg Adm 1; 166 ER 145 at 2 (Hagg Adm); The Charlotte (1848) 3 W Rob 68; 166 ER 888 at 72; 890. 77 See The Alfen (1857) Swab 189; 166 ER 1088 at 190; 1089; The Martin Luther (1857) Swab 287; 166 ER 1141 at 290; 1143; The Princess Helena (1861) Lush 190; 167 ER 91 at 196-197; 95. 78 Melhuish v Miller (1865) 3 WW & A’B (E) 61 at 67-68, 71; The City of Chester (1884) 9 PD 182 at 203. 79 Admiralty Commissioners v Page [1918] 2 KB 447 at 452; Hodson v Owners of the Ship Super Sport (1990) 26 FCR 157 at 157-158.

874

Shipping Law

[20.230]

charter is the true owner. A charterer other than a demise charterer thus cannot ordinarily claim salvage reward.80

[20.230]

Position of common owner of salvaging and salvaged ship

Under general maritime law, a shipowner could not claim a reward for the salvage of a ship which he or she also owned.81 The justification for this rule was that it was contrary to common sense for a salvor to claim a reward for saving his or her own property. This rule did not, however, affect the claim of the master or crew of the salvaging ship,82 or of a part-owner of the salvaging ship who was not also a part-owner of the ship saved,83 or of the owner of the salvaging ship against the owners of the cargo.84 Nor did it affect the claim of the owner of a ship that was simply under a non-demise charter to the owner of the ship that had been saved, for the ship was nonetheless owned by different people.85 The position of the common owner of a salvaging and salvaged ship is now governed by Art 12.3 of the Salvage Convention. This provides that Ch III of the Convention (“Rights of Salvors”) applies notwithstanding that the salved vessel and the vessel undertaking the salvage operations belong to the same owner.

Salvage services must be successful [20.240]

It is a fundamental rule of the law of salvage that to be entitled to a salvage reward, a salvor’s services must either be successful in saving property or contribute towards such success.86 Dr Lushington said on this matter in The Zephyrus:87 A mere attempt to save [a] vessel and cargo, however meritorious that attempt may be, or whatever degree of risk or danger may have been incurred, if unsuccessful, can never be considered in this court as furnishing any title to a salvage reward. The reason is obvious, viz that salvage reward is for benefits actually conferred, not for a service attempted to be rendered.

80 The Alfen (1857) Swab 189; 166 ER 1088 at 190; 1089. 81 The Marie Jane (1850) 14 Jur 857; The Sava Star [1995] 2 Lloyd’s Rep 134 at 139. 82 The Sappho (1870) LR 3 A & E 142 at 146-147; Owners of the SS Sappho v Denton: The Sappho (1871) LR 3 PC 690; The Glenfruin (1885) 10 PD 103 at 109; Owners, Charter, Master and Crew of the Ship Margaret Philippa v The Ship MV Santo Rocco Di Bagnara (1991) 101 ALR 491 at 501; The Sava Star [1995] 2 Lloyd’s Rep 134 at 139. 83 The Caroline (1861) Lush 334; 167 ER 149; The Glenfruin (1885) 10 PD 103 at 109. 84 The Sava Star [1995] 2 Lloyd’s Rep 134 at 139. 85 The Waterloo (1820) 2 Dods 433; 165 ER 1537 at 434; 1537. 86 See Melhuish v Miller (1865) 3 WW & A’B (E) 61 at 71; Owners of SS Melanie v Owners of SS San Onofre [1925] AC 246 at 249-250, 262; NV Bureau Wijsmuller v Owners of the MV Tojo Maru [1970] P 21 at 66; The Loretta v Bubb [1971] WAR 91 at 94; Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 293; Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 318; Ship Texaco Southampton v Burley [1982] 2 NSWLR 336 at 340. 87 The Zephyrus (1842) 1 W Rob 329; 166 ER 596 at 330-331 (W Rob). See also The Atlas (1862) Lush 518; 167 ER 235 at 527; 240; The City of Chester (1884) 9 PD 182 at 202-203.

[20.260]

20 Salvage

875

This rule is often expressed in the pithy statement, “No cure, no pay”. For the purposes of current Australian law, this rule is set out in Art 12 of the Salvage Convention as follows: 1. Salvage operations which have had a useful result give right to a reward. 2. Except as otherwise provided, no payment is due under this Convention if the salvage operations have had no useful result.

The term “useful result” in Art 12 means the same as success as understood in general maritime law.88 Salvage services are successful if and when they bring endangered maritime property to a position of safety.

[20.250]

Salvage reward for a contribution to successful salvage

Whether a person has contributed towards the successful rescue of property is a matter of fact. The classic statement on the entitlement to salvage reward of a contributor to the successful rescue of maritime property is that by Sir John Coleridge in The Atlas.89 Giving the advice of the Privy Council in this case, the judge said, “Where a salvage is finally effected, those who meritoriously contribute to that result are entitled to a share in the reward, although the part they took, standing by itself, would not in fact have produced it”.90 There is authority for the proposition that action which merely brings a ship to a spot where an ultimate salvor finds it does not, without more, constitute a contribution towards successful salvage services.91 This is clearly correct, for it is then only by chance that the initial action leads to a successful rescue. It goes without saying that services which rescue a ship from one danger but end up leaving it in equal or greater peril do not contribute towards its ultimate rescue.92

[20.260]

Reason why salvage services must be successful

The reason given by Dr Lushington in The Zephyrus93 for why salvage services must be successful to warrant a salvage reward — that salvage reward is for benefits actually conferred, not for a service attempted to be rendered — is not altogether accurate. A more accurate reason is that any salvage reward is technically payable only from the fund in court 88 The Mbashi [2002] 2 Lloyd’s Rep 602 at 607. 89 The Atlas (1862) Lush 518; 167 ER 235. 90 The Atlas (1862) Lush 518; 167 ER 235 at 527; 240. See also The Camelia (1883) 9 PD 27 at 30-31; Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 283. 91 Owners of SS Melanie v Owners of SS San Onofre [1925] AC 246 at 263. 92 The Cheerful (1885) 11 PD 3 at 5; Owners of SS Melanie v Owners of SS San Onofre [1925] AC 246 at 263; Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 283. See also The Tarbert [1921] P 372. 93 The Zephyrus (1842) 1 W Rob 329; 166 ER 596.

876

Shipping Law

[20.270]

represented by the salvaged property.94 Accordingly, without successful salvage services there is no fund before the court from which any salvage reward can be made. (It was for this reason that the old Admiralty Court found that it could not order salvage reward simply for saving life.)

CHARACTERISTICS OF A SALVOR Salvor must be a volunteer General

[20.270]

It has always been an essential element of salvage that a salvor be a volunteer. By this is meant that a salvor must render his or her services free of any pre-existing legal obligation to assist in the rescue of the particular ship or property involved. The most often quoted statement on this matter is by Lord Stowell in The Neptune.95 There he said:96 What is a salvor? A person who, without any particular relation to a ship in distress, proffers useful service, and gives it as a volunteer adventurer, without any pre-existing covenant that connected him with the duty of employing himself for the preservation of that ship.

A pre-existing legal obligation to assist in the rescue of maritime property may arise in any way, including by custom.97 In practice, it usually arises either from an employment duty or from a contract. Except, however, in the case of a person whose official duty it is to assist ships in distress, the pre-existing obligation must relate to the particular ship requiring salvage services before it will deprive a person of the status of volunteer. Accordingly, except in that one case, a general obligation on seafarers or others to assist any ship in distress is not sufficient to prevent him or her being a salvor. This last point is considered further at [20.320]. Application of the requirement of voluntary services

[20.280]

Although the requirement that a salvor be a volunteer is easy to state, problems frequently arise in its application to particular people and particular situations. Some of these are considered at [20.290]–[20.330]. The question of whether a pilot or a party to a towage contract can be a salvor requires more detailed consideration and is considered separately at [20.340]–[20.360].

[20.290]

Members of the crew of a distressed ship

The members of the crew of a ship are ordinarily unable to be salvors of either the ship or its cargo, because in the event of a ship finding itself in 94 See The Renpor (1883) 8 PD 115 at 117; The City of Chester (1884) 9 PD 182 at 202-203. 95 The Neptune (1824) 1 Hagg Adm 227; 166 ER 81. 96 The Neptune (1824) 1 Hagg Adm 227; 166 ER 81 at 236; 85. See also The Loretta v Bubb [1971] WAR 91 at 94; Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 318. 97 The Waterloo (1820) 2 Dods 433; 165 ER 1537 at 436; 1538; Owners, Charter, Master and Crew of the Ship Margaret Philippa v The Ship MV Santo Rocco Di Bagnara (1991) 101 ALR 491 at 495.

[20.300]

20 Salvage

877

difficulties, the crew are under a duty to save as much of the ship and its cargo as they can.98 This duty ends, however, when the crew’s contract of service has been terminated. Thereafter members of the crew can be salvors.99 Under general maritime law, a crew’s contract of service is terminated when the master orders the ship to be abandoned at sea in order to save life, and with no hope of returning to it.100 Members of the crew whose services have thus been terminated can then be salvors.101 In any case where the abandonment of a ship in such circumstances does not result in the termination of the crew’s contract of service, there would seem to be no reason why the crew should not still be able to be salvors for policy reasons concerning the limits of a mariner’s duty to assist in the rescue of his or her ship and its cargo.102 This would appear to be implicit in the view expressed in the modern case of The Sava Star103 that the reason why the master and crew of a vessel cannot ordinarily claim salvage from cargo-owners is not that they owe a duty to the cargo–owners but that they are performing services expected of them in their capacities of master and crew.104

[20.300]

Passengers on a distressed ship

The cases indicate that passengers on a distressed ship are not ordinarily entitled to claim salvage reward for their services in the rescue of the ship.105 The justification traditionally given for this is that passengers are under a duty to render assistance if their ship encounters any danger.106 This justification is curious, for unlike members of the crew, passengers are always entitled to leave a distressed ship if they so wish.107 The duty on passengers to render assistance would thus seem to be simply a moral duty, and not a legal one, in which case any assistance passengers give to a ship in danger must surely be as volunteers. The cases nonetheless indicate that only in exceptional circumstances (for example, where a

98 The Neptune (1824) 1 Hagg Adm 227; 166 ER 81 at 236-237; 84-85; Owners of the SS Sappho v Denton: The Sappho (1871) LR 3 PC 690 at 694. 99 The Vrede (1861) Lush 322; 167 ER 143 at 325; 144; The Warrior (1862) Lush 476; 167 ER 214; The Le Jonet (1872) LR 3 A & E 556; The Nightingale (1885) 6 LR (NSW) (P & D) 18 at 20. 100 The Florence (1852) 16 Jur 572 at 573-574; The San Demetrio (1941) 69 Ll L Rep 5 at 12; The Albionic [1942] P 81. 101 The Florence (1852) 16 Jur 572 at 573-574. 102 See The San Demetrio (1941) 69 Ll L Rep 5. 103 The Sava Star [1995] 2 Lloyd’s Rep 134. 104 The Sava Star [1995] 2 Lloyd’s Rep 134 at 142-143. 105 The Branston (1826) 2 Hagg Adm 3n; 166 ER 146; The Vrede (1861) Lush 322; 167 ER 143. 106 The Branston (1826) 2 Hagg Adm 3n; 166 ER 146; The Vrede (1861) Lush 322; 167 ER 143. 107 The Branston (1826) 2 Hagg Adm 3n; 166 ER 146; The Vrede (1861) Lush 322; 167 ER 143.

878

Shipping Law

[20.310]

passenger takes over control of a ship and thereby saves it108) is a passenger able to claim salvage reward for saving a ship.109 In the modern case of The Sava Star,110 Clarke J expressed the view that a passenger can claim salvage reward if he or she performs services that are greater than those ordinarily expected of passengers.111

[20.310]

Master or crew of salvaging ship acting under orders

The crew of a ship can be volunteers despite the fact that their master has ordered them to render assistance to another ship in distress.112 Provided there is no pre-existing legal obligation to assist between the crew and the owner of the endangered property, all the services provided are regarded as voluntary.113 For the same reason, the master and crew of a ship can be volunteers despite the fact that they are instructed by the shipowner or some other person in authority to assist a ship in distress.114

[20.320]

Master and crew discharging general duty to assist those in distress

It is now well established that the master and crew of a ship can provide salvage services to a ship in distress notwithstanding any general maritime duty or even statutory duty on ships to aid all vessels in difficulty.115 This is simply a product of a policy decision by the courts.116 It can be justified on the ground that it is proper that those who are required to fulfil such a general duty on top of their official duties be rewarded for the discharge of this additional obligation.

[20.330]

Public officials and persons responsible for public services

Public officials and those responsible for public services can be salvors of a ship or cargo provided they are under no pre-existing legal obligation to assist in the rescue of the property. In Fire Brigades Board v Elderslie 108 Newman v Walters (1804) 3 Bos & P 612; 127 ER 330. 109 The Vrede (1861) Lush 322; 167 ER 143 at 325; 144. See also The Merrimac (1868) 18 LT 92 at 93. 110 The Sava Star [1995] 2 Lloyd’s Rep 134. 111 The Sava Star [1995] 2 Lloyd’s Rep 134 at 143. 112 Owners of the SS Sappho v Denton: The Sappho (1871) LR 3 PC 690 at 694; The Sarpen [1916] P 306; Fisher v Oceanic Grandeur (1972) 127 CLR 312 at 331. 113 The Sarpen [1916] P 306 at 315; The Carrie [1917] P 224 at 230-231. 114 Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 331. This is so even though the shipowner is also the owner of the ship which is in distress: The Sappho (1870) LR 3 A & E 142 at 146-147; Owners of the SS Sappho v Denton: The Sappho (1871) LR 3 PC 690; The Glenfruin (1885) 10 PD 103 at 109; Owners, Charter, Master and Crew of the Ship Margaret Philippa v The Ship MV Santo Rocco Di Bagnara (1991) 101 ALR 491 at 501. 115 The Waterloo (1820) 2 Dods 433; 165 ER 1537 at 437; 1538-1539; The Hannibal; The Queen (1867) LR 2 A & E 53 at 56; Owners of SS Melanie v Owners of SS San Onofre [1925] AC 246 at 261-262; The Beaverford (Owners) v The Kafiristan (Owners) [1938] AC 136 at 147. 116 The Hannibal; The Queen (1867) LR 2 A & E 53 at 56.

[20.350]

20 Salvage

879

Steamship Co,117 for example, firemen who extinguished a fire on board a ship in Port Jackson were held to be salvors, notwithstanding that the fire brigade was under an official duty to extinguish fires generally, for this duty was found to end at the dockside. In The Bostonian v The Gregersö: The Gregersö,118 on the other hand, a port authority was held not to be entitled to salvage reward when one of its tugs removed a grounded ship from the entry to the port, because the authority was under a statutory duty to remove all such obstructions. Requirement of voluntary services where legal obligation to provide particular assistance to a ship already exists

[20.340]

The requirement that all salvage services be voluntary can cause problems in circumstances where a legal obligation to provide certain non-salvage services to a ship results in what are in effect salvage services. If the party under such an obligation acts in a way which saves the ship from damage or loss, this person might well wish to assert that he or she is nonetheless a salvor and thus claim increased remuneration in the form of salvage reward. The owner of the property saved, on the other hand, will usually want to resist this claim and pay only the contract or other regular amount due for the services performed. Two particular types of non-salvage services not infrequently lead to claims for salvage services in circumstances involving danger to a ship: these are towage services and pilotage services. Each is considered in turn.

Towage services

[20.350]

The classic definition of towage service is “the employment of one vessel to expedite the voyage of another, when nothing more is required than the accelerating [of] her progress”.119 This does not necessarily involve the use of a line, though that is a common method of towage: towage can involve pushing or simply guiding.120 If parties have entered into a contract for towage services, then in ordinary circumstances nothing more can be claimed for the performance of the contract than the amount due under the contract. This is so even if the effect of the towage is to save the subject ship from some danger. However, if services are performed by a party to an ordinary towage contract that are quite different from those contracted for, these other 117 Fire Brigades Board v Elderslie Steamship Co (1899) 15 WN (NSW) 320. 118 The Bostonian v The Gregersö: The Gregersö [1971] 1 Lloyd’s Rep 220. 119 The Princess Alice (1849) 3 W Rob 138; 166 ER 914 at 140; 915. Cited with approval in The Strathnaver (1875) 1 App Cas 58 at 63; The Troilus [1950] P 92 at 101, 110; Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 332; Ship Texaco Southampton v Burley [1982] 2 NSWLR 336 at 339. 120 Elbe Shipping SA v Ship Global Peace (2006) 154 FCR 439 at 464-465.

880

Shipping Law

[20.360]

services will constitute separate salvage services if they otherwise comply with the conditions relating to salvage.121 Related principles apply in respect of a contract for any other form of towage service. This includes a contract specifically for the towage of a ship out of danger to a position of safety.122 There is nothing exceptional in this regard. Parties are free to enter into a contract for particular services which involve the rescue of a ship as they are for any other contract. If these services include the towage of a vessel to safety, the towing party cannot claim a further amount over and above the contract price unless the services rendered are quite different from those contracted for.123 Pilotage services

[20.360]

The test for determining when pilotage services can constitute salvage services is the same as that in respect of towage.124 A pilot accordingly cannot claim salvage reward for services that are performed simply in accordance with his or her duties as pilot, be they statutory or contractual, though he or she can do so for services that are outside the scope of such duties.125 Barnes J said in respect of the latter situation in The Santiago,126 “If a pilot does render such services to a vessel in distress as no reasonable person, either owner or pilot, would consider ought to come within the scope of his contract, then there is no reason why he should not be paid some salvage reward, because he runs risk outside that which anybody has in contemplation”. Just as the courts are reluctant to recognise salvage claims by those otherwise bound by a towage contract, so they are also reluctant to recognise salvage claims by pilots who are otherwise bound by a pilotage contract or by legislation.127 121 The Princess Alice (1849) 3 W Rob 138; 166 ER 914 at 140; 915; The Minnehaha (1861) Lush 335 at 347-348; The Saratoga (1861) Lush 318; 167 ER 140 at 321; 142. See also The Isabella (1838) 3 Hagg Adm 428; 166 ER 463, referred to in The John Bullock (1870) 9 SCR (NSW) 300 at 303. Compare The Troilus [1950] P 92 at 110-111. 122 See The Kingalock (1854) 1 Sp Ecc & Ad 263; 164 ER 153 at 264-265; 153-154; The Minnehaha (1861) Lush 335 at 352; The Westbourne (1889) 14 PD 132. See also Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 331-332. 123 The Westbourne (1889) 14 PD 132 at 134. See also The Minnehaha (1861) Lush 335 at 352. Note, however, the more liberal attitude adopted by the High Court of Australia in Owners, Master and Crew of SS Cartela v Ship Inverness-shire (1916) 21 CLR 387, esp at 394 (but cf at 405). 124 The Galatia (1858) Swab 349; 166 ER 1162 at 350; 1163; The Saratoga (1861) Lush 318; 167 ER 140 at 321; 142. 125 Compare Owens v Ship Alexia (1914) 14 SR (NSW) 389 with Wilson v Ship Tasman (1915) SR (NSW) 128. 126 The Santiago (1900) 9 Asp MLC 147 at 149. See also Akerblom v Price, Potter, Walker & Co (1881) 7 QBD 129 at 135. 127 The Santiago (1900) 9 Asp MLC 147 at 149; The Bedeburn [1914] P 146 at 150-151.

[20.380]

20 Salvage

881

Salvage Convention on services pursuant to a contract

[20.370]

The Salvage Convention contains a provision which specifically concerns a claim for salvage reward following services rendered pursuant to a contract entered into before danger arises. Article 17 provides that where services are rendered under a contract entered into before the relevant danger arose, no payment128 is due under the provisions of the Convention unless those services exceed what can reasonably be considered as due performance of a contract. This does no more than reflect the general maritime law on point.

[20.380]

When are services so sufficiently different that they constitute salvage services?

The question of whether services rendered are sufficiently different from those contracted for as to warrant the payment of salvage reward either in substitution for, or in addition to, the amount due under a towage, pilotage or other contract depends upon the terms of the contract. In The Westbourne,129 Lord Esher MR said that a service may be regarded as a salvage service distinct from any service otherwise contracted for, if it is “a wholly different service from that which was originally contemplated by the parties, or a service of a wholly different class”.130 There is some authority for the proposition that services will not be regarded as wholly different from those originally contemplated by the parties unless supervening circumstances are such as to justify the termination of the original contract.131 However, the better view is that expressed by Sir James Hannan P in Five Steel Barges.132 There he said that all that is necessary is that the services rendered be beyond what could reasonably have been contemplated by the parties to the contract.133 Accordingly, salvage reward may be earned in addition to, and not necessarily always in substitution for, the payment due under a towage contract. The courts are normally reluctant to recognise claims for salvage services distinct from services due under a towage contract unless the former are clearly warranted. As Sir Samuel Evans said in The Maréchal Suchet,134 “It is essential in the public interest, for obvious reasons, that [a] towage contract should not be easily set aside, and a salvage service substituted 128 For the definition of “payment”, see Art 1(e). 129 The Westbourne (1889) 14 PD 132. 130 The Westbourne (1889) 14 PD 132 at 134. See also The Minnehaha (1861) Lush 335 at 347-348; The White Star (1866) LR 1 A & E 68 at 70, 71; The Liverpool [1893] P 154 at 160; Ship Texaco Southampton v Burley [1982] 2 NSWLR 336 at 340, 345. 131 The IC Potter (1870) LR 3 A & E 292 at 298-299; The Waverley (1871) LR 3 A & E 369 at 379. See also The Minnehaha (1861) Lush 335 at 347-348; The Leon Blum [1914] P 90 at 101. 132 Five Steel Barges (1890) 15 PD 142. 133 Five Steel Barges (1890) 15 PD 142 at 144. 134 The Maréchal Suchet [1911] P 1.

882

Shipping Law

[20.390]

for it.”135 Or as Gorrell Barnes J observed in The Liverpool,136 “While it is the duty of the court to take care to adequately remunerate all salvors for salvage services, in order to encourage those services to be performed … it is equally the duty of the court to see, where a towing contract has been made, that a little departure from the exact mode in which that contract is to be performed is not magnified so as to convert towage into salvage services.”137 So, for example, the courts ordinarily regard the parties to towage contracts as contemplating that bad weather might occur and that this might occasion delay and inconvenience.138 Changes of this kind are not normally treated as affecting the character of the original contract. Courts do, however, distinguish between ordinary bad weather and such adverse weather conditions that could not reasonably have been contemplated by the parties.139 The latter might well create circumstances that give rise to separate salvage services.

[20.390]

Agreement for towage services can constitute an agreement for salvage services

An agreement for towage services can constitute an agreement for salvage services. Whether it does so depends upon the facts and circumstances of the case. Take, for example, the modern Australian case of Owners, Charter, Master and Crew of the Ship Margaret Philippa v The Ship MV Santo Rocco Di Bagnara.140 There a ship in difficulties sought a tow to safety from another ship which was in the vicinity, and the other ship agreed to assist in this way. There was no reference at the time to the nature of the services involved, nor was there any discussion of the terms and conditions of remuneration for those services. The towing ship successfully towed the distressed ship to safety and the owners, master and crew then sought salvage reward for their services. This claim was resisted on the ground that all that had been sought, and all that had been provided, were mere towage services. The issue for the court to determine was whether there had been an agreement simply for towage services, with an implied term that the towing ship should receive a reasonable fee for its labours, or whether there had in effect been an agreement for salvage services. The court held that as there had been no agreement in respect of remuneration before the tow took place, and as the towing ship was not performing its ordinary functions, the services rendered were voluntary and not contractual and were therefore prima facie salvage services. However, it found that as both ships were insured by the same insurer 135 The Maréchal Suchet [1911] P 1 at 12. 136 The Liverpool [1893] P 154. 137 The Liverpool [1893] P 154 at 164. 138 The Galatia (1858) Swab 349; 166 ER 1162 at 1163; The Minnehaha (1861) Lush 335 at 347. 139 The Galatia (1858) Swab 349; 166 ER 1162 at 1163; The Minnehaha (1861) Lush 335 at 347. 140 The Ship MV Santo Rocco Di Bagnara (1991) 101 ALR 491.

[20.400]

20 Salvage

883

and there was a provision in the insurance policies requiring a ship insured by the company to aid any other ship in distress that was also insured by the same company, the owners of the towing ship were under a pre-existing obligation to render assistance to the ship in distress, with the result that they could not claim salvage reward. The master and crew of the ship, on the other hand, were found not to be affected by this fact with the result that they were granted salvage reward.

Motive and intention of a salvor [20.400]

There is Singaporean authority for the proposition that a person cannot be a salvor if he or she is motivated not by any intention to rescue property for its owner but simply out of his or her own self-interest.141 This view of the law was, however, doubted by both Stephen and Mason JJ in Robinson v Western Australian Museum,142 and with justification, for the encouragement of pecuniary self-interest through the award of generous salvage payments has long been recognised as a proper way of promoting the rescue of endangered maritime property. It is almost certainly the case that a person can be a salvor regardless of motive, at least if he or she intends to rescue maritime property for its owner.143

But is intention relevant at all? Is it sufficient simply that a person save maritime property for the benefit of its owner regardless of intention? This question most acutely arises in the case of a person who saves property as a means of saving his or her own life. The main case so far on point is The Lomonosoff.144 There men fleeing the Bolsheviks and in fear for their lives chose to escape from the Russian port of Murmansk not by sleigh, which was possible, but by seizing a vessel that would otherwise have been appropriated by the Bolsheviks. Hill J said:145 Where in a case like the present the salvor has two means of saving himself and elects one which also saves maritime property I have no doubt that qua that property he is a volunteer.

This case is thus authority for the proposition that a person can be a salvor if he or she intends to save property, even though this is done in order to save this person’s own life. The Lomonosoff, however, says nothing of the position of a person who saves property as a means of saving his or her own life where there is no alternative way of surviving. Would the plaintiffs, for example, have been successful if escape by sea was their only means of escape?146 The answer 141 Simon v Taylor [1975] 2 Lloyd’s Rep 338 at 345. 142 Australian Robinson v Western Museum (1977) 138 CLR 283 at 317, 330. See also The Sava Star [1995] 2 Lloyd’s Rep 134 at 144. 143 See The Tubantia [1924] P 78; Morris v Lyonesse Salvage Co Ltd [1970] 2 Lloyd’s Rep 59. 144 The Lomonosoff [1921] P 97. 145 The Lomonosoff [1921] P 97 at 103. 146 See the facts in The Nightingale (1885) 6 LR (NSW) (P & D) 18.

884

Shipping Law

[20.410]

to this question must remain uncertain for the time being. It does, however, seem clear from basic principles that to be a salvor, a person who saves property in order to save his or her own life must do more in respect of the property than simply the minimum necessary to ensure personal survival. So much would seem inherent in the notion of salvage “services”, as well as in the notion of being a volunteer.

AUTHORITY REQUIRED FOR COMMENCEMENT OF SALVAGE SERVICES [20.410]

If the owner of salvable property or his or her agent (most often the master of the ship) authorises a person to salve this property, the person so authorised is entitled to perform salvage services in respect of this property until such time as his or her authority is revoked.147 If, on the other hand, the owner or agent forbids a person to salvage the property, that is the end of the matter: he or she may not then perform salvage services.148 The latter rule is confirmed by Art 19 of the Salvage Convention. This provides that no payment of salvage reward is payable if services are rendered despite the express and reasonable prohibition of the owner or master of the vessel, or of the owner of other property that is in danger where this other property has never been on board the vessel.

Beyond the two broad propositions just stated, it is difficult to lay down any precise rules. In Fisher v The Oceanic Grandeur,149 Stephen J inclined to the view that if a master is in control of a ship, salvage services can be undertaken only with his consent.150 He noted, however, an alternative view that in the absence of any express rejection of salvage services, these services can always be rendered if a prudent master would have consented to them151 (the master here being regarded as the agent of the ship’s owner152). There is strong English authority to support the alternative view just referred to,153 which is based upon the premiss that in some salvage situations the danger to a ship might be such that it would be unreasonable for a prospective salvor to be required to seek the master’s 147 The Barefoot (1850) 14 Jur 841 at 842; The Unique Mariner (No 2) [1979] 1 Lloyd’s Rep 37 at 51. On the compensation that is payable upon the revocation of authority to salvage, see The Loch Tulla (1950) 84 Ll L Rep 62; The Unique Mariner (No 2) at 50. 148 The Samuel (1851) 17 LT (OS) 204 at 205. 149 Fisher v The Oceanic Grandeur (1972) 127 CLR 312. 150 Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 335. See also Cossman v West; Cossman v British America Assurance Co (1887) 13 App Cas 160 at 181; The Solway Prince [1896] P 120 at 126. 151 Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 335. 152 A master has implied authority to accept salvage services: The Unique Mariner [1978] 1 Lloyd’s Rep 438 at 449-450. 153 See The Anapolis; The Golden Light; The HM Hayes (1861) Lush 355; 167 ER 150 at 360-361, 375; 153-154, 161; The Vandyke (1882) 5 Asp MLC 17. See also The Emile Galline [1903] P 106; The Port Caledonia and The Anna [1903] P 184.

[20.430]

20 Salvage

885

consent. This less restrictive view of the law is not, however, confined to circumstances involving imminent danger.154 There is old Australian authority for the proposition that in any event if a ship is in danger, salvors may assume that salvage services are accepted by the master unless they have been informed to the contrary.155 In Fisher v The Oceanic Grandeur, Stephen J also held that if a master consents to particular services to his vessel, the approval cannot be subject to the qualification that these not constitute salvage services if they can otherwise properly be characterised as such.156 “Consent”, he said, “will no doubt be lacking when acts are done in disobedience to a master’s orders, but the relevant consent is consent to the acts performed and not to their legal characterisation and consequences.”157 Consent by a master to salvage services is not vitiated by the fact that he was ordered by someone in authority to consent to such services, or because the consent is under protest.158 If a master is not in control of his ship and the owner of the ship is unknown or cannot reasonably be contacted, anyone is entitled to perform salvage services,159 at least if there are no circumstances which would lead this person to suspect that a reasonable master in control of the ship would decline an offer to provide these services.

[20.420]

No right of exclusive possession by salvors

Except in the case of salvage of a derelict,160 or salvage pursuant to an agreement giving a salvor exclusive possession of a ship, salvors have no right of exclusive possession and accordingly cannot exclude other salvors without justification.161 There is old authority for the proposition that a salvor who wrongfully dispossesses another salvor cannot claim reward for his or her salvage services; instead, the salvage services of the former are credited to the latter.162

[20.430]

Authority of master in respect of salvage of cargo

The master of a ship ordinarily has authority to bind the owner of cargo in respect of salvage services to save the cargo provided it is reasonably 154 See The Auguste Legembre [1902] P 123, esp at 128-129. 155 Bingle v Ship Queen of England (1862) 1 SCR (NSW) Eq 47 at 53-54. 156 Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 339. 157 Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 339. 158 The Kangaroo [1918] P 327 at 331-332. 159 See Owners of Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 292. 160 On the nature of derelict, see [21.70]. 161 The Blenden Hall (1814) 1 Dods 414; 165 ER 1361 at 416; 1362; The Dantzic Packet (1837) 3 Hagg Adm 383; 166 ER 447 at 384-385; 448. See also Cossman v West; Cossman v British America Assurance Co (1887) 13 App Cas 160 at 181. 162 The Fleece (1850) 3 Wm Rob 278; 166 ER 966 at 281; 967; The Samuel (1851) 15 Jur 407.

886

Shipping Law

[20.440]

necessary to accept these services and it is not reasonably practicable to communicate with the cargo-owners to take their instructions on this matter.163 In these circumstances the master is regarded as an agent of necessity of the cargo-owners.164

[20.440]

Salvage reward and common law principles

To the extent that unsolicited services create an entitlement to salvage reward, maritime law differs from common law, which does not normally reward voluntary services by a stranger.165

QUANTUM OF SALVAGE REWARD Introduction: the two basic principles [20.450]

The quantum of salvage reward ordered by a court is not determined by any formula or mathematical exercise.166 Nor is it determined by any schedule or tariff of salvage reward, by any entitlement based simply upon the value or nature of the property saved167 or by any entitlement based on the status of the various salvors.168 The quantum of salvage reward is, within broad limits, entirely discretionary. Brett MR said on this matter in The City of Chester:169 There is no jurisdiction known which is so much at large as the jurisdiction given to award salvage. There is no jurisdiction known in which so many circumstances, including many beyond the circumstances of the particular case, are to be considered for the purpose of deciding the amount of the salvage reward. … It follows that there is no jurisdiction known the administration of which is more within the discretion of the judge who has to administer it.

In exercising its discretion, the court has, however, always taken certain well-established considerations into account. These include the degree of 163 Industrie Chimiche Italia Centrale and Cerealfin SA v Alexander G Tsavliris & Sons Maritime Co, Panchristo Shipping Co SA and Bula Shipping Corporation: The Choko Star [1990] 1 Lloyd’s Rep 516 at 525. 164 Industrie Chimiche Italia Centrale and Cerealfin SA v Alexander G Tsavliris & Sons Maritime Co, Panchristo Shipping Co SA and Bula Shipping Corporation: The Choko Star [1990] 1 Lloyd’s Rep 516 at 525. 165 See Nicholson v Chapman (1793) 2 H Bl 254; 126 ER 536; Aitchison v Lohre (1879) 4 App Cas 755 at 760; Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 at 248-249; Sorrell v Paget [1950] 1 KB 252 at 260; The Goring [1987] QB 687 at 700, 716. 166 See United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151 at 164; The Ocean Crown [2010] 1 Lloyd’s Rep 468 at 475-476. 167 See The Salacia (1829) 2 Hagg Adm 262; 166 ER 240 at 263-264; 241-242; The Cuba (1860) Lush 14; 167 ER 8; The City of Chester (1884) 9 PD 182 at 202. See also The Florence (1852) 16 Jur 572 at 578; The Janet Court [1897] P 59 at 62 (no right to a particular proportion in respect of derelict). Note, however, The Two Friends (1844) 2 Wm Rob 349; 166 ER 786 at 352; 788; The Walumba [1964] 2 Lloyd’s Rep 382 at 384, both to the effect that it is unusual for a court to award as salvage more than half of the value of the rescued property. 168 The San Demetrio (1941) 69 Ll L Rep 5 at 12. 169 The City of Chester (1884) 9 PD 182 at 187. Cited with approval in Brown v Ship Honolulu Maru (1924) 24 WN (NSW) 309 at 312; The Loretta v Bubb [1971] WAR 91 at 94-95.

[20.470]

20 Salvage

887

danger that the salvaged property was in, the skill and conduct of the salvors, and any perils to which the salvors were exposed. As Lindley LJ said in The City of Chester, “A salvage service which hardly exceeds ordinary towage is naturally remunerated on a very different scale from an heroic rescue from imminent destruction”.170 Factors which must now be considered by a court are indicated at [20.490]. In every case, however, the court must take into account two basic principles.

[20.460]

First principle

The first principle that the court must recognise is that a salvor should be generously rewarded for his or her efforts so as to encourage attempts at salvage. Dr Lushington said on this matter in The Albion:171 “It is of the utmost importance to the safety of shipping, that the owners of steam-tugs and other salvors should know that this court is inclined to reward liberally unusual efforts to assist vessels in distress.”172 The aim of rewarding (rather than merely compensating) a salvor is particularly important in light of the fact that a salvage award is made only in the event of the successful rescue of property. Accordingly, in order to be encouraged to provide salvage services, potential salvors need to know that although they will ordinarily receive no reward if they are unsuccessful, they will receive generous treatment from the courts if they are successful.173 This first principle is effectively confirmed by Art 13.1 of the Salvage Convention. This provides that salvage reward is to be fixed with a view to encouraging salvage operations. However, as Tamberlin J commented in United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC,174 although by virtue of Art 13 the court should apply a liberal and generous assessment when fixing salvage reward, this does not entitle the court to award an unreasonable or extravagant amount.175

[20.470]

Second principle

The second basic principle is that an award made to a salvor should not be so great as to deprive the owner of all benefit of the rescued property.176 This is founded on the proposition that the object of salvage 170 The City of Chester (1884) 9 PD 182 at 202. 171 The Albion (1861) Lush 282; 167 ER 121. 172 The Albion (1861) Lush 282; 167 ER 121 at 284; 122-123. See also The William Beckford (1801) 2 C Rob 355; 165 ER 492 at 355-356 (C Rob); The Clifton (1834) 3 Hagg Adm 117; 166 ER 349 at 121; 351; Fisher v Oceanic Grandeur (1972) 127 CLR 312 at 336. 173 See Brown v The Ship Honolulu Maru (1924) 24 WN (NSW) 309 at 313; Ship Korowa v Ship Kooraka [1949] SASR 45 at 54; The Walumba [1964] 2 Lloyd’s Rep 382 at 383. Note also Melhuish v Miller (1865) 3 WW & A’B (E) 61 at 71. 174 United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151. 175 United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151 at 164-165. 176 The City of Chester (1884) 9 PD 182 at 202; The Lyrma (No 2) [1978] 2 Lloyd’s Rep 30 at 33.

888

Shipping Law

[20.480]

is not the rescue of property for the benefit of the salvor, but the rescue of property for the benefit of its owner.177

[20.480]

Reconciling conflict between the two principles

These two basic principles might naturally conflict. They might well do so, for example, if the services rendered by a salvor are particularly meritorious but the value of the property saved is comparatively low. In this case the court must seek a compromise between the competing objects of these two basic principles. Not unexpectedly, it is usually the case that where the value of salvage property is comparatively low, the proportion of the value which it is reasonable to award by way of salvage reward is higher than would be reasonable where the value of the property is greater.178 In many cases, of course, the two basic principles will not conflict. In this event the salvor is entitled to a liberal reward, taking into account the various considerations referred to at [20.490]. It is important to observe, however, that where the value of the property salvaged is substantial (as it usually is when the salvaged property is a modern commercial vessel), the salvor is not entitled to a higher reward than he or she would otherwise receive in light of the relevant considerations on this matter.179 This reflects the fact that salvage entitlement is not determined by a mere arithmetical exercise or percentage approach,180 and in particular is not based simply upon the value of the property saved. In no circumstance, however, will an order for salvage reward go so far as to deprive an owner of all benefit of his or her property. This is so even where the value of the salvaged property is very small. So, for example, in Boiler ex Elephant,181 a boiler worth £58 was salvaged and the owner of this property was unknown. The salvors were awarded £50 and not the entire sum, thus leaving the owner some of the proceeds of sale for when he or she could be found. As Street DCJ said in North Coast Steam Navigation Co v Ship Eugene,182 the court “will not allow salvage services, however meritorious, to unduly and unfairly degenerate into an opportunity for extracting the last penny possible from the pockets of 177 See The City of Chester (1884) 9 PD 182 at 202; The Lyrma (No 2) [1978] 2 Lloyd’s Rep 30 at 33. 178 Compagnie Général Transatlantique v Owners of the FT Barry; Compagnie Général Transatlantique v Owners of the Spray: The Amérique (1874) LR 6 PC 468 at 475; Burley v The Ship Texaco Southampton [1981] 2 NSWLR 238 at 247-248; Hodson v Owners of the Ship Super Sport (1990) 26 FCR 157 at 169; Turnbull v The Ship The Esk [1991] ACL Rep 270 Vic 1. 179 See The Goring [1987] QB 687 at 690; The Ocean Crown [2010] 1 Lloyd’s Rep 468 at 475-476. 180 See The Ocean Crown [2010] 1 Lloyd’s Rep 468 at 474; United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151 at 164. 181 Boiler ex Elephant (1891) 64 LT 543. 182 North Coast Steam Navigation Co v Ship Eugene (1909) 9 SR (NSW) 246.

[20.490]

20 Salvage

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owners”.183 Or as Lindley LJ put it in The City of Chester,184 “The risk of getting little by reason of the comparatively small value of the property saved is one of those risks which salvors always run”.185 The related rule in the Salvage Convention would appear not to be as favourable to the owner of salved property as the traditional rule just described. Article 13.3 provides simply that salvage reward (exclusive of any interest186 and recoverable legal costs that may be payable in relation to the reward) must not exceed the salved value of the vessel and other property. It seems unlikely, however, that the courts will regard this Article as justifying any departure from the traditional rule.

Relevant considerations [20.490]

In determining the quantum of a salvage reward, the court has traditionally taken into account any factors that are relevant to the salvage exercise as a whole. These might concern either the salvor, the property salvaged, or the circumstances surrounding the exercise. In most salvage cases the courts have sought at least to compensate a salvor for his or her efforts. However, as Sir John Nicholl pointed out in The Clifton,187 a salvage award can go further than that and take into account such matters as the salvor’s enterprise, the risks he or she took in the enterprise, the value of the property saved, and the degree of danger from which the property was rescued.188

Many reported salvage cases have set out considerations which judges have found to be relevant in particular instances,189 and these have naturally provided guidance in subsequent cases. The list of matters which have often been used as a checklist by Australian courts in salvage cases190 has been that contained in the principal English practitioners’ textbook on salvage, Kennedy’s Law of Salvage. 183 North Coast Steam Navigation Co v Ship Eugene (1909) 9 SR (NSW) 246 at 250. See also Ship Korowa v Ship Kooraka [1949] SASR 45 at 54. 184 The City of Chester (1884) 9 PD 182. 185 The City of Chester (1884) 9 PD 182 at 202. 186 Interest is ordinarily allowed at a reasonable borrowing rate from the time of the termination of salvage services: Ley v Delaissé; The Yolaine [1995] 2 Lloyd’s Rep 7 at 14-15. 187 The Clifton (1834) 3 Hagg Adm 117; 166 ER 349. 188 The Clifton (1834) 3 Hagg Adm 117; 166 ER 349 at 121; 351. See also The Cleopatra (1878) 3 PD 145 at 149-150. 189 See The Clifton (1834) 3 Hagg Adm 117; 166 ER 349 at 121; 351; The City of Chester (1884) 9 PD 182, esp at 186-187, 202-204; North Coast Steam Navigation Co v Ship Eugene (1909) 9 SR (NSW) 246 at 249-250; Fisher v The Oceanic Grandeur (1972) 127 CLR 312 at 342; The Kristy Mae v The Santa Rita [1984] WAR 95 at 96. 190 See Ship Korowa v Ship Kooraka [1949] SASR 45 at 52-53; The Walumba [1964] 2 Lloyd’s Rep 382 at 383-384; Société Maritime Caledonienne v The Cythera [1965] NSWR 146 at 158-160; The Loretta v Bubb [1971] WAR 91 at 95-97.

890

Shipping Law

[20.500]

Today, the criteria for determining salvage reward are set out in Art 13.1 of the Salvage Convention. This provides that salvage reward must be fixed with a view to encouraging salvage operations taking into account the following criteria, without regard to the order in which they are presented:191 (a) the salved value of the vessel and other property;192 (b) the skills and efforts of the salvors in preventing or minimizing damage to the environment; (c) the measure of success obtained by the salvor; (d) the nature and degree of the danger; (e) the skill and efforts of the salvors in salving the vessel, other property and life; (f) the time used and expenses and losses incurred by the salvors; (g) the risk of liability and other risks run by the salvors or their equipment; (h) the promptness of the services rendered; (i) the availability and use of vessels or other equipment intended for salvage operations; (j) the state of readiness and efficiency of the salvor’s equipment and the value thereof.

The weight to be assigned to each factor naturally depends on the circumstances of the case.193

[20.500]

Are the considerations of Article 13(1) exclusive?

It would appear that the 10 considerations under Art 13(1) are the only ones which are strictly relevant to an assessment of salvage reward, though this does not preclude a court from bringing into account other factors if these are considered relevant. In United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC,194 Tamberlin J was of the view that in appropriate circumstances a court might bring into account the fact that salvage services had limited a liability that a salved vessel might otherwise have incured — for example, as a result of pollution — had the salvage services not been rendered.195 This is so even though this consideration did not come within the scope of Art 13(1).

191 For a consideration of these criteria, see United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151 at 166-181, 193. 192 On the definitions of “vessel” and “property”, see Art 1. 193 United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151 at 164. 194 United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151. 195 United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 151 at 165.

[20.530]

[20.510]

20 Salvage

891

Semble, incidence of tax on salvage reward is an irrelevant consideration

Although it is presently the subject of some doubt, it appears to be the rule that in determining the quantum of salvage reward, the court should not make an allowance for the tax payable by a salvor on the reward.196

Rules concerning the valuation of salvaged property [20.520]

The value of salvaged property is the value of the property at the time and place of the termination of the salvage services.197 It would appear that if the property is then in a damaged state, the value of the property is its value in its damaged state, and not the undamaged value of the property less the cost of the necessary repairs.198 It is irrelevant that salvaged property diminishes in value after it has been saved (for example, due to deterioration), even to the point where it becomes worthless.199 The responsibility for establishing the value of salvaged property lies with the salvor.200 The value of a ship includes the value of its tackle and equipment.201 It does not, however, include such intangible, transferable appurtenances as a fishing licence.202

Fault or misconduct by salvors Fault or misconduct leading to the need for salvage services

[20.530]

Until the middle of the 19th century, there was a firm rule that if a ship was responsible, whether wholly or in part, for another vessel being in danger, the owner, master or crew of the former vessel could not claim salvage reward for any services rendered to the latter.203 This rule applied even if both ships were partly to blame for the collision or

196 Island Tug & Barge Ltd v SS Makedonia (Owners); The Makedonia [1958] 1 QB 365 at 379; The Frisia [1960] 1 Lloyd’s Rep 90 at 94, 96. Compare, however, Tantalus (Master and Crew) v Telemachus, her Cargo and Freight (Owners): The Telemachus [1957] P 47; The Frisia [1960] 1 Lloyd’s Rep 90 at 95-96. 197 Bingle v Ship Queen of England (1862) 1 SCR (NSW) Eq 47 at 50, 51; Société Maritime Caledonienne v The Cythera [1965] NSWR 146 at 159; The Lyrma (No 2) [1978] 2 Lloyd’s Rep 30 at 33; Ley v Delaissé; The Yolaine [1995] 2 Lloyd’s Rep 7 at 11. 198 Hodson v Owners of the Ship Super Sport (1990) 26 FCR 157 at 169. Compare Ley v Delaissé; The Yolaine [1995] 2 Lloyd’s Rep 7 at 11. 199 The M Vatan [1990] 1 Lloyd’s Rep 336 at 344. 200 The Lyrma (No 1) [1978] 2 Lloyd’s Rep 27 at 28. 201 The Gas Float Whitton No 2 [1896] P 42 at 49-50, 63; Wells v Owners of the Gas Float Whitton No 2 [1897] AC 337 at 343. 202 The Kristy Mae v The Santa Rita [1984] WAR 95 at 97, 99. 203 The Minnehaha (1861) Lush 335 at 348; The Glengaber (1872) LR 3 A & E 534.

892

Shipping Law

[20.540]

accident to the endangered ship.204 The justification for this rule was said to be the common law maxim that no-one should profit by his or her own wrong. In The Beaverford (Owners) v The Kafiristan (Owners),205 however, the House of Lords indicated that that rule was incorrect. Lord Wright, who gave the principal judgment and with whom all the other Law Lords agreed, made it clear that as a claim for damage done to a ship and a claim for salvage reward are determined according to different principles, they should be considered separately, and that any fault or misconduct leading to damage to a ship should not affect a claim for salvage except to the extent that any damages recoverable by the owner of the salvaged ship may be set off against any salvage reward due to the salvors.206 This case did not formally overturn the old law, for the issue before the House of Lords was concerned with a more restricted point. The view adopted by Lord Wright is, however, now generally accepted as representing the modern law on point.207

[20.540]

Provision in the Salvage Convention

The related provision in the Salvage Convention is in Art 18. This provides that a salvor may be deprived of the whole or part of the payment due under the Convention to the extent that the salvage operations have become necessary or more difficult because of fault or neglect on the part of the salvor.208 The Article also goes on to provide that a salvor may be deprived of the whole or part of the payment due under the Convention if he or she has been guilty of fraud or other dishonest conduct. Fault or misconduct in the performance of salvage services

[20.550]

For policy considerations, courts have traditionally been slow to find salvors guilty of fault or misconduct in the performance of salvage services.209 The reason for this is that potential salvors might otherwise be reluctant to perform salvage services if they could find themselves readily liable for any damage they might cause. If clear fault or misconduct is nonetheless established, the courts may penalise the person responsible

204 Cargo ex Capella (1867) LR 1 A & E 356; The Duc d’Aumale (No 2) [1904] P 60 at 71-72. 205 The Beaverford (Owners) v The Kafiristan (Owners) [1938] AC 136. 206 The Beaverford (Owners) v The Kafiristan (Owners) [1938] AC 136, esp at 149. 207 See W Kennedy, Kennedy’s Law of Salvage (5th ed, Stevens & Sons Ltd, London, 1985), pp 406-407. 208 See Owner, Master and Crew of the Tug Maridive VIII v Owners and Demise Charterers of the Oil Rig Key Singapore [2005] 1 Lloyd’s Rep 91. 209 See The Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 267-268.

[20.570]

20 Salvage

893

by reducing the quantum of his or her salvage reward.210 Only in cases of gross misconduct will a salvor forfeit his or her entire reward.211 A negligent salvor can always be sued for any damage that he or she may cause.212 This is so whether or not the salvage exercise is successful.

[20.560]

Provision in the Salvage Convention

Article 18 of the Salvage Convention is consistent with the foregoing understanding of the law. As has already been observed, this provides that a salvor may be deprived of the whole or part of the payment due under the Convention to the extent that the salvage operations have become more difficult because of fault or neglect on the part of the salvor. It also provides that the salvor may similarly be deprived of the whole or part of the payment due under the Convention if he or she has been guilty of fraud or other dishonest conduct.

LIABILITY TO PAY SALVAGE REWARD [20.570]

The liability to pay salvage reward for the rescue of property is in theory very wide, for strictly it can fall upon any person who benefits financially from the salvage of the property.213 In practice, however, the liability usually falls upon the owner (including here the beneficial owner) of the salvaged property. For this reason many cases refer to the liability to pay salvage reward as resting simply upon the owner.214 An owner here includes a demise charterer.215

In case there should be any doubt on the matter, the owner of a ship is not liable to pay salvage reward for any cargo saved simply because the ship was carrying the cargo; nor is the owner of cargo liable to pay salvage reward for the salvage of the ship simply because it was being carried by the ship.216 Until payment of salvage reward is made, a maritime lien attaches to the salvaged property to secure the reward. A maritime lien for salvage reward is considered in detail in Chapter 8. 210 See The Cape Packet (1848) 3 W Rob 122; 166 ER 909 at 125; 910. 211 The Atlas (1862) Lush 518; 167 ER 235 at 528; 241. See also The Neptune (1842) 1 W Rob 297; 166 ER 583; The Cape Packet (1848) 3 W Rob 122; 166 ER 909 at 125; 910; NV Bureau Wijsmuller v Owners of the MV Tojo Maru: The Tojo Maru [1970] P 21. 212 The Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242, esp at 267, 275-276, 281, 283, 287, 289, 294, 295, 299-300. 213 Five Steel Barges (1890) 15 P 142 at 146; Cargo ex Port Victor [1901] P 243 at 256-258; The Meandros [1925] P 61 at 68; United Salvage Pty Ltd v Louis Dreyfus Armateurs SNC (2006) 163 FCR 183 at 199. 214 See The Geestland [1980] 1 Lloyd’s Rep 628 at 630; The M Vatan [1990] 1 Lloyd’s Rep 336 at 338. 215 The Collier (1866) LR 1 A & E 83 at 85; Elliott Steam Tug Co Ltd v Admiralty Commissioners; Page v Admiralty Commissioners [1921] 1 AC 137. 216 The M Vatan [1990] 1 Lloyd’s Rep 336 at 338.

894

Shipping Law

[20.580]

A claim for salvage reward may be enforced either by proceedings in personam against any person who benefits financially from the salvage exercise, or by proceedings in rem against the property to which the lien attaches.217 Anyone may assume a liability to pay a salvage reward by contract.218

APPORTIONMENT OF SALVAGE REWARD [20.580]

If more than one person assists in the salvage of property, or if a person who is entitled to salvage reward has salvaged or assisted in the salvage of more than one item of maritime property, rules of apportionment apply.

[20.590]

Apportionment of salvage reward between salvors

The apportionment of a salvage reward between different salvors is entirely at the discretion of the court.219 Article 15.1 of the Salvage Convention, however, makes it clear that the apportionment must nonetheless be made on the basis of the 10 criteria for fixing salvage reward set out in Art 13. It is sometimes said there is a rule of thumb that where success in a salvage operation is largely due to the power of the salvaging vessel, the owner of the vessel should receive three-quarters of the total award, the master should receive one-third of the remaining sum on account of his special responsibility and skills, and the rest should be divided among the crew according to their rating. Although cases can be found in which these proportions have been adopted,220 the courts have always emphasised that there are no firm rules or even a working principle to this effect, and that apportionment must depend upon the particular circumstances of the case.221 In the modern Australian case of The Goldean Falcon,222 Carruthers J expressed the view that in the absence of any exceptional contribution by particular members of a salvaging ship’s master and crew, it is appropriate to apportion salvage reward in Australia by reference to the differentials fixed by the relevant industrial award.223 217 See Admiralty Act 1988 (Cth), ss 4(3)(g), 9(1), 15. 218 The Cumbrian (1887) 6 Asp MLC 151; The Prince Heinrich (1888) 13 PD 31. 219 The Gipsy Queen [1895] P 176 at 177. 220 The Gipsy Queen [1895] P 176; The Tully Falls; United Geophysical Corp v Ship Tully Falls [1975] Qd R 85. 221 The Gipsy Queen [1895] P 176; Owners, Master and Crew of SS Nestor v Owners of SS Mungana, Cargo and Freight: The Mungana [1936] 3 All ER 670 at 672-673; The Tully Falls; United Geophysical Corp v Ship Tully Falls [1975] Qd R 85 at 86-87; The Goldean Falcon [1990] 2 Lloyd’s Rep 366 at 372, 374, 376. 222 The Goldean Falcon [1990] 2 Lloyd’s Rep 366. 223 The Goldean Falcon [1990] 2 Lloyd’s Rep 366 at 376.

[20.620]

[20.600]

20 Salvage

895

Salvors may agree to apportionment of salvage reward

Parties to salvage services may always agree among themselves on the apportionment of the salvage reward. Such an agreement is then binding upon the parties unless it is wholly unreasonable, in which case a court exercising Admiralty jurisdiction can review the apportionment.224

[20.610]

Apportionment between owner, master and crew determined by law of the flag

By Art 15.2 of the Salvage Convention, the apportionment of salvage reward between the owner, master and any other persons in the service of each salving vessel is to be determined by the law of the flag of the vessel.

[20.620]

Apportionment of salvage reward between owners of different salvaged property

Where more than one item of property has been saved and each has a different owner (for example, where salvors have saved both a ship and its cargo), each owner is ordinarily liable to pay that proportion of the reward that the value of his or her salvaged property has to the total value of the property saved.225 This is commonly known as the “pro rata” rule. This rule is confirmed by Art 13.2 of the Salvage Convention. The proper procedure for the apportionment of salvage reward between the owners of different salvaged property is as follows.226 First, the value of all the salvaged property is assessed. Then an assessment is made of the appropriate salvage reward. Finally, the pro rata rule is applied. It follows from this procedure that salvage services to cargo and salvage services to a ship are treated as being of equal importance.227 It also follows that salvage services in respect of a particular ship and its cargo are treated equally whatever the circumstances. It has been held that this method of apportionment applies even though:228 • the ship and its cargo were exposed to different dangers, and thus salvaged from different risks; • the value of the cargo has diminished (even to nothing) with the passage of time; • it is more difficult to obtain salvage reward from the owner of one item of salvaged property than from another; • the claim against the owner of a particular item of salvaged property has been settled; 224 The Wilhelm Tell [1892] P 337 at 347-349. 225 The Geestland [1980] 1 Lloyd’s Rep 628 at 630; The M Vatan [1990] 1 Lloyd’s Rep 336 at 338. 226 The M Vatan [1990] 1 Lloyd’s Rep 336 at 338-339. 227 The Emma (1844) 2 W Rob 315; 166 ER 774 at 775; The Mary Pleasant (1857) Swa 224; 166 ER 1107 at 225; 1108; The Longford (1881) 6 PD 60 at 67; The M Vatan [1990] 1 Lloyd’s Rep 336 at 338-339. 228 The M Vatan [1990] 1 Lloyd’s Rep 336 at 339, 344.

896

Shipping Law

[20.630]

• the claim against the owner of a particular item of salvaged property has failed; and • a claim is made against only one item of salvaged property (for example, the ship alone).

SALVAGE OF DERELICT AND WRECK [20.630]

The salvage of derelict and wreck deserves separate mention because the distinctive character of these two classes of ship and cargo can give rise to questions concerning the applicability of the ordinary rules of salvage to such property. A derelict is any ship or cargo that has been abandoned at sea by its master and crew with no hope of recovering it and no intention of returning to it.229 A wreck is technically any ship or cargo that is cast on the shore as a result of a shipwreck.230

The rules relating to the salvage of derelict and wreck are basically the same as for the salvage of any other maritime property.231 Such distinctive rules as there are rest principally upon the fact that neither form of property is in the possession or under the control of either its owner or the ship’s master. Because of this it is now well established that anyone may ordinarily render salvage services to a derelict or a wreck.232 There is, however, one distinctive rule relating to a derelict. This is that salvors are able to take exclusive possession of a derelict for the purpose of performing salvage services because all immediate possessory rights over the ship or cargo have, by definition, been abandoned.233 The right of exclusive possession applies even against the master and crew who abandoned the ship.234 This right can, however, be superseded where 229 The Aquila (1798) 1 C Rob 37; 165 ER 87 at 40; 88; HMS Thetis (1835) 3 Hagg Adm 228; 166 ER 390 at 235; 393; The Samuel (1851) 17 LT (OS) 204 at 205; The Zeta (1875) LR 4 A & E 460 at 462; Cargo ex Schiller (1877) 2 PD 145 at 148; Cossman v West; Cossman v British America Assurance Co (1887) 13 App Cas 160 at 180; Bradley v H Newsom, Sons & Co [1919] AC 16 at 24-28; Robinson v Western Australian Museum (1977) 138 CLR 283 at 307, 316, 329, 338; Pierce v Bemis: The Lusitania [1986] QB 384 at 384, 388. 230 Sir Henry Constable’s Case (1601) 5 Co Rep 106a; 77 ER 218 at 106a, 106b; 219-220; R v Forty-Nine Casks of Brandy (1836) 3 Hagg Adm 257; 166 ER 401 at 278; 409; R v Two Casks of Tallow (1837) 3 Hagg Adm 294; 166 ER 414 at 298; 416; Palmer v Rouse (1858) 3 H & N 505; 157 ER 569 at 510; 571; Robinson v Western Australian Museum (1977) 138 CLR 283 at 307, 316. 231 See The Samuel (1851) 17 LT (OS) 204 (wreck); Putwain v English, Scottish & Australian Bank: The Gothenburg (1875) 4 QSCR 133; Robinson v Western Australian Museum (1977) 138 CLR 283 at 316, 319, 330, 339 (derelict); Wells v Owners of the Gas Float Whitton No 2 [1897] AC 337 at 343 (flotsam, jetsam and lagan) and 347 (generally). 232 See Owners of Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 292. 233 The Dantzic Packet (1837) 3 Hagg Adm 383; 166 ER 447 at 385; 448; Cossman v West; Cossman v British America Assurance Co (1887) 13 App Cas 160 at 181; Bradley v H Newsom Sons & Co [1919] AC 16 at 27. The Tubantia [1924] P 78 at 87-88, 92-93. See also Morris v Lyonesse Salvage Co Ltd [1970] 2 Lloyd’s Rep 59, esp at 60-61; Robinson v Western Australian Museum (1977) 138 CLR 283 at 319-321, 322-323. 234 The Gertrude (1861) 30 LJPM & A 130.

[20.640]

20 Salvage

897

continued possession by the salvors in possession is unreasonable, for example where it is clear that they are unable to save the ship by their own efforts, but others can.235 It may finally be observed that an award for the salvage of a derelict ship is generally more liberal than that for the salvage of non-derelict maritime property.236 This is because of the special difficulties that commonly arise in the salvage of an unmanned vessel at sea, especially in rough seas or inclement weather.

EFFECT OF SALVAGE AGREEMENT ON CREW AND MASTER OF SALVAGING SHIP [20.640]

Because salvage services might need to be obtained as a matter of urgency, it is now settled that if the master of a ship able to provide salvage services enters into a salvage agreement with the owner or master of a ship in distress, this agreement binds both the owner and the crew of the salvaging ship.237 Similarly, the owner of a ship able to provide salvage services may enter into an agreement with a ship in distress and this binds the salvaging ship’s master and the crew.238 In both cases the agreement, without more, binds the owner, or master, and crew of the salvaging vessel only so far as it concerns such matters as the services to be performed and the character and amount of the salvage reward.239 Unless they have given their consent on point (which will, of course, usually be the case in a professional salvage operation), the agreement does not bind the owner, or master, and crew on matters such as the forum which is to determine any salvage dispute,240 or the manner in which the dispute is to be determined.241 An agreement between an owner or master of a salvaging ship does not ordinarily bind the master, or owner, and crew on any salvage matter arising either before salvage services are required242 or after salvage services have been rendered.243 235 See The Pickwick (1852) 16 Jur 669. 236 Bradley v H Newsom, Sons & Co [1919] AC 16 at 26. See also The Fenix (1855) Swab 13; 166 ER 992 at 15; 993-994. 237 The Margery [1902] P 157 at 165; Huddart Parker Ltd v Ship Mill Hill and her Cargo (1950) 81 CLR 502 at 510-511. See also Navigation Act 1912 (Cth), s 315; Sch 9, Art 6.2. 238 The Margery [1902] P 157 at 165; Huddart Parker Ltd v Ship Mill Hill and her Cargo (1950) 81 CLR 502 at 510-511. 239 The Nasmyth (1885) 10 PD 41; The Margery [1902] P 157 at 164; Huddart Parker Ltd v Ship Mill Hill and her Cargo (1950) 81 CLR 502 at 510-511. 240 Huddart Parker Ltd v Ship Mill Hill and her Cargo (1950) 81 CLR 502 at 511. 241 The Margery [1902] P 157 at 164. 242 The Margery [1902] P 157 at 165; Huddart Parker Ltd v Ship Mill Hill and her Cargo (1950) 81 CLR 502 at 510. 243 The Margery [1902] P 157 at 165; Huddart Parker Ltd v Ship Mill Hill and her Cargo (1950) 81 CLR 502 at 510.

898

Shipping Law

[20.650]

SALVAGE CONTRACTS [20.650]

Salvage contracts require special consideration because most salvage work is now carried out pursuant to a contract. The contract most commonly used by professional salvors is Lloyd’s Standard Form of Salvage Agreement. This is popularly known as “Lloyd’s Open Form” (“LOF” for short) because it leaves open the reward payable for the successful rescue of the property. The quantum of reward is determined later by arbitration in London.

[20.660]

Content and features of a salvage contract

A salvage contract can settle any of the incidents of salvage. It can thus determine, for example, how much the salvor shall receive by way of salvage reward,244 the way in which the reward is to be determined,245 where and how the reward is to be paid, the particular services that are to be provided,246 and any other incidental matter.247 A salvage contract can even bind the salvor to perform particular salvage services.248 Such a provision does not affect the salvor’s status as a volunteer provided the contract is entered into after salvage services have become necessary. A volunteer for the purposes of the law of salvage, it should be remembered, is a person who is under no pre-existing legal obligation to assist in the rescue of endangered property.249 In considering the subject of salvage contracts, a distinction must be drawn between two types of contract relating to the rescue of property in danger: the first is a contract for salvage services, and the second is a contract for services to assist an endangered ship or property in substitution for salvage services. The object of each type of contract is quite different. The object of a contract for salvage services is to achieve the successful rescue of property in danger. As a consequence, remuneration depends upon success. The object of a contract for services in substitution for salvage services, on the other hand, is simply the provision of particular services. The remuneration is accordingly here determined simply by the provision of these services, regardless of success. Only the first type of contract is a salvage contract in the strict sense. It is important to distinguish between contracts for salvage services and contracts in substitution for salvage services for two reasons. The first is 244 See The Hestia [1895] P 193 at 199. Note also The Inna [1938] P 148 at 155-157; The Lyrma (No 2) [1978] 2 Lloyd’s Rep 30 at 33-34 (party to a salvage contract cannot necessarily object that the amount of reward agreed upon is greater than the value of the property saved). 245 See The Margery [1902] P 157. 246 See Ship Texaco Southampton v Burley [1982] 2 NSWLR 336. 247 Admiralty Commissioners v Valverda (Owners) [1938] AC 173 at 187. 248 See Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 292; The Unique Mariner (No 2) [1979] 1 Lloyd’s Rep 37 at 52. 249 See [20.270].

[20.670]

20 Salvage

899

that the quantum of remuneration payable for success under a contract for salvage services is ordinarily reviewable by a court exercising Admiralty jurisdiction. In appropriate circumstances the court can either raise or lower the amount of salvage reward agreed upon.250 Remuneration for success under a salvage contract in the strict sense is thus not entirely dependent upon the terms of the contract, though the courts are traditionally reluctant to interfere with the quantum agreed upon.251 The quantum of remuneration under a contract in substitution for salvage services, on the other hand, is subject simply to the ordinary rules of contract. The second reason for distinguishing between these two types of contract is that the successful performance of salvage services gives rise to a maritime lien on the rescued property to secure the remuneration due. The fact that the services are performed pursuant to a salvage contract is irrelevant in this regard.252 No such lien arises under a contract in substitution for salvage services.253 Apart from the two matters just referred to, both contracts for salvage services and contracts in substitution for salvage services are ordinary contracts. Salvage contracts, including those entered into under Lloyd’s Open Form, have indeed been judicially described as “basically commercial contracts for work and labour”.254 They are accordingly governed by the law of contract and not by the law of salvage except to the extent that the law of salvage is either expressly or impliedly incorporated into the contract.255

[20.670]

Salvage contracts and the “no cure, no pay” principle

It is sometimes said that remuneration under a salvage contract must be based on the principle “no cure, no pay”. This is true provided “pay” here means simply salvage reward. A salvage contract may still entitle a prospective salvor to a payment for services rendered in the event of success not being achieved.256 Such a payment will, however, always be lower than the remuneration payable under the contract upon success because the object of any salvage contract is to achieve the successful 250 The Phantom (1866) LR 1 A & E 58 at 61; The Medina (1876) 1 PD 272, and on appeal The Medina (1876) 2 PD 5; The Mark Lane (1890) 15 PD 135; The Port Caledonia and The Anna [1903] P 184; The Inna [1938] P 148 at 156. See also Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 293-294. 251 See The True Blue (1843) 2 W Rob 176; 166 ER 721 at 180; 722; The Waverley (1871) LR 3 A & E 369; The Mark Lane (1890) 15 PD 135. 252 See The Goulandris [1927] P 182 at 191-192; The Lyrma (No 2) [1978] 2 Lloyd’s Rep 30. 253 See The Solway Prince [1896] P 120. 254 The Unique Mariner [1978] 1 Lloyd’s Rep 438 at 455. 255 The Unique Mariner (No 2) [1979] 1 Lloyd’s Rep 37 at 50-51. See also The Owners of the Motor Vessel Tojo Maru v NV Bureau Wijsmuller: The Tojo Maru [1972] AC 242 at 292. 256 Admiralty Commissioners v Valverda (Owners) [1938] AC 173 at 187; Ship Texaco Southampton v Burley [1982] 2 NSWLR 336 at 344-345. See also Huddart Parker Ltd v Ship Mill Hill and her Cargo (1950) 81 CLR 502 at 505.

900

Shipping Law

[20.680]

rescue of property and not simply to provide services. A provision for remuneration for services rendered in the event of failure does not affect a salvage contract’s status provided the amount of the principal remuneration payable — that is, the salvage reward — is still dependent upon success.

[20.680]

Provisions on salvage contracts in the Salvage Convention

Article 6.1 of the Salvage Convention provides that, with one exception, a salvage contract can exclude the provisions of the Convention either expressly or by implication. The exception is the duty to prevent or minimise damage to the environment.257 By Art 6.2, the master of a vessel has authority to conclude contracts for salvage operations on behalf of the owner of the vessel, and the master or the owner of a vessel has authority to conclude such contracts on behalf of the owner of any property on board the vessel. The Convention also provides that a salvage contract can be annulled or modified if the contract was entered into under either undue influence or the influence of danger and its terms are inequitable, or if the payment under the contract is in an excessive degree too large or too small for the services actually rendered.258

SPECIAL COMPENSATION FOR SALVORS PROTECTING THE ENVIRONMENT Introduction [20.690]

The innovation to the traditional law of salvage created by the Salvage Convention is provision for salvors to receive recompense for endeavouring to protect the environment, even where salvage services have been unsuccessful. The reason why this change in the law was considered necessary was discussed at the beginning of this chapter at [20.50]. In short, the signatories to the Convention wanted to encourage salvors to prevent damage to the environment, particularly in the case of oil spills from damaged ships, even where salvage of the ship or its cargo might not be successful. The recompense for endeavouring to protect the environment is termed in the Salvage Convention “special compensation”. The provisions are contained in Art 14.

Entitlement to special compensation [20.700]

Entitlement to special compensation is governed by Art 14.1 of the Salvage Convention. This Article provides that where a salvor has carried out a salvage operation in respect of a vessel which has threatened

257 Article 6.3. 258 Article 7.

[20.710]

20 Salvage

901

damage to the environment, either by itself or through its cargo, but the salvor has failed to earn salvage reward under Art 13 at least equal to any special compensation assessable under Art 14,259 the salvor is entitled to receive special compensation from the owner of the vessel. Four observations may be made in respect of Art 14.1. The first is that this Article gives a right of special compensation only upon the performance of a salvage operation, and not independently of it.260 The second is that the special compensation afforded by Art 14 is always subject to the quantum of any salvage reward under Art 13.261 It is interesting to note in this regard that the expression “special compensation” has two meanings in Art 14, one broad and the other narrow. In its broad sense this term means the amount of compensation that is assessed under the provisions of this Article. This is the “special compensation assessable in accordance with this article” referred to in Art 14.1. In its narrow sense, however, it means any amount that may be payable in addition to any salvage reward. This is the entitlement to “special compensation from the owner of [the] vessel” referred to in that same Article. The third observation is that any difference between the salvage awarded and the quantum of any special compensation is due to the salvor from the shipowner alone.262 The final observation is that it is possible for the quantum of special compensation (or of salvage reward plus any additional amount by way of special compensation) to exceed the value of the ship. It follows from the provisions of Art 14.1 that where salvage reward has been awarded under Art 13 and special compensation is then claimed, the total amount assessed under Art 14 must be set against the salvage reward. If the sum assessed under Art 14 exceeds the salvage award, the balance is then payable to the salvor by the shipowner alone.263 This is so even if salvage reward is payable by both the shipowner and cargo-owner pro rata.

[20.710]

Articles 13 and 14 are independent of each other

Because it was recognised that Art 14 might be unclear, the International Conference on Salvage which adopted the Salvage Convention in 1989 added a “common understanding” as an attachment to the Convention 259 See also Art 14.4. 260 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1997] 1 Lloyd’s Rep 323 at 332. 261 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1997] 1 Lloyd’s Rep 323 at 332. 262 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1997] 1 Lloyd’s Rep 323 at 327. 263 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1995] 2 Lloyd’s Rep 44 at 48.

902

Shipping Law

[20.720]

that the court or tribunal seized of the matter is under no duty to fix salvage reward under Art 13 up to the entire value of the salved property before assessing any special compensation to be paid under Art 14. This is set out in Sch 1 of the Navigation Regulation 2013 (Cth) and has the force of law in Australia.264 This makes it clear that assessment under Arts 13 and 14 is to be considered independently of each other.

[20.720]

“Damage to the environment”

By Art 1, the expression “damage to the environment” means substantial physical damage to human health or to marine life or resources in coastal or inland waters, or in adjacent areas, which is caused by pollution, contamination, fire, explosion or similar major incidents.

Quantum of special compensation [20.730]

The special compensation that is due to a salvor depends upon how successful he or she has been in protecting the environment. Provided a salvor has attempted to protect the environment as part of a salvage operation, then by Art 14.1 and 14.3 he or she is entitled to the equivalent of his or her out-of-pocket expenses reasonably incurred in the salvage operation, plus a fair rate for equipment and personnel actually and reasonably used in the salvage operation, taking into consideration the criteria for fixing salvage reward set out in paras (h), (i) and (j) of Art 13.1. These paragraphs have regard to the promptness of the services rendered, the availability and use of vessels or other equipment intended for salvage operations, the state of readiness and efficiency of the salvor’s equipment and the value of this equipment. By “the salvage operation” in the present context is meant the entirety of the operation.265 This is so whether or not the environmental threat extended to the whole of the time involved.266

The assessment of special compensation has been held not to be a matter of precise calculation.267

[20.740]

Attempt to protect environment need not be successful

A claim for special compensation exists even if an attempt to protect the environment is unsuccessful.268 264 Regulation 17(b). 265 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1997] 1 Lloyd’s Rep 323 at 334. 266 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1996] 1 Lloyd’s Rep 449 at 456, 460-462. 267 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1996] 1 Lloyd’s Rep 449 at 455. See also Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1995] 2 Lloyd’s Rep 44 at 54. 268 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1995] 2 Lloyd’s Rep 44 at 53-54.

[20.780]

[20.750]

20 Salvage

903

Increased entitlement for actually protecting the environment

If a salvor has actually prevented or minimised damage to the environment, the special compensation may be increased by up to 30% of the expenses incurred by the salvor.269 Moreover, if the court or relevant tribunal deems it fair and just to do so by virtue of the criteria for fixing salvage reward set out in Art 13.1, the special compensation may be increased further still up to a maximum of double the expenses incurred by the salvor.270 Although special compensation can thus be increased by up to 100% of expenses, it is important to observe that this award is based on the salvor’s expenses as defined in the Convention; it is not concerned with the salvor’s remuneration.271

[20.760]

“Expenses”

The term “expenses” in Art 14 signifies simply amounts either disbursed or borne by the salvor. It does not concern amounts otherwise earned by the salvor as profits.272 This term thus concerns simply recompense; it is not a source of profit.

[20.770]

“Fair rate”

A “fair rate” for equipment and personnel used in a salvage operation means a fair rate of expense which is inclusive of indirect or overhead expenses and (by virtue of the reference to Art 13.1(h), (i) and (j)) any additional cost of keeping a vessel or equipment on standby.273 It does not signify bringing the quantum up to the level of salvage reward, nor again does it include any element of profit.274

[20.780]

Negligence by salvor

If the salvor has been negligent and has thereby failed to prevent or minimise damage to the environment, he or she may be deprived of the whole or part of any special compensation that is otherwise due under Art 14.275

269 Article 14.2. 270 Article 14.2. 271 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1997] 1 Lloyd’s Rep 323 at 327, 333. 272 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1997] 1 Lloyd’s Rep 323 at 332. 273 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1997] 1 Lloyd’s Rep 323 at 330. 274 Semco Salvage & Marine Pte Ltd v Lancer Navigation Co Ltd; The Nagasaki Spirit [1997] 1 Lloyd’s Rep 323 at 330, 332. 275 Article 14.5.

904

Shipping Law

[20.790]

LIFE SALVAGE [20.790]

The old Admiralty Court did not recognise any entitlement to salvage reward for saving a life.276 This was so notwithstanding the undoubted fact that saving life is more deserving of reward than saving property. The reason why the Admiralty Court did not recognise any entitlement to reward for saving life was that salvage reward was — and ordinarily still is — payable from the fund represented by the salvaged property.277 As a person is not property, there was nothing from which the court could order the payment of a reward for saving life. If both property and life were saved by a salvor, the court would usually grant the salvor a more generous reward on account of saving life, but this depended upon the salvor saving property as well as life, and also upon the value of the property being sufficient to bear an increased reward.278

The entitlement of a person to claim a reward for saving life is now governed by the somewhat awkward provisions of Art 16.2 of the Salvage Convention. This provides that a salvor of human life who has taken part in the services rendered in an accident giving rise to salvage is entitled to a fair share of the payment awarded to the salvor for salving the vessel or other property, or of the payment awarded for preventing or minimising damage to the environment. It may be observed in this regard that Art 16.1 provides that, subject to national law, no remuneration is due from the persons whose lives are saved. It would seem from the terms of Art 16.2 that a person can claim salvage reward for saving life only if he or she also took part in the services that gave rise to a claim of salvage reward or special compensation for preventing or minimising damage to the environment. The simple saving of life independent of the performance of any salvage services is thus not sufficient.

[20.800]

Obligation of master to save life

By s 181 of the Navigation Act 2012 (Cth), the master of a ship at sea must render assistance to any person who is in distress at sea unless the master is unable to do so or, in the special circumstances of the case, it is unreasonable to do so.279

276 The Zephyrus (1842) 1 W Rob 329; 166 ER 596 at 331; 596-597; The Willem III (1871) LR 3 A & E 487 at 494. 277 The Zephyrus (1842) 1 W Rob 329; 166 ER 596 at 331; 597; The Renpor (1883) 8 PD 115 at 117. 278 See The Fusilier (1865) Br & Lush 341; 167 ER 391 at 344-345; 393. 279 See also the United Nations Convention on the Law of the Sea, Pt VII, Sec 1, Art 98 (“Duty to render assistance”).

[20.820]

20 Salvage

905

SALVAGE CLAIMS BY AND AGAINST THE CROWN [20.810]

The Commonwealth, the States and the Territories have the same salvage rights and remedies as any other salvor.280 Similarly, the Commonwealth, the States and the Territories are subject to the same salvage liabilities, though no claim for salvage reward lies against either the Commonwealth or Australia Post in respect of postal items being carried by sea.281

SALVAGE AND THE HISTORIC SHIPWRECKS ACT 1976 [20.820]

As is observed elsewhere in this chapter, a ship is ordinarily salvable property even though it has sunk to the bottom of the sea or has broken up. This is so notwithstanding the passage of the years, even of the centuries.282 There are, however, restrictions on the salvage of historic shipwrecks around the Australian coast. These arise from the provisions of the Historic Shipwrecks Act 1976 (Cth) and of any related legislation, including heritage legislation, of the States and the Northern Territory.283 The provisions of these Acts are considered in more detail in Chapter 21. The salvage provisions of Ch 7, Pt 3 (“Salvage”) of the Navigation Act 2012 (Cth) do not apply to any salvage operation to the extent that it involves maritime cultural property of prehistoric, archaeological or historic interest situated on the seabed.284

280 Navigation Act 2012 (Cth), s 243. 281 Section 242. 282 See, eg, Morris v Lyonesse Salvage Co [1970] 2 Lloyd’s Rep 59 (salvage of derelict 260 years old); Robinson v The Western Australian Museum (1977) 138 CLR 283 (derelict over 300 years old). 283 See Heritage Act 1977 (NSW), Pt 3C; Heritage Act 1995 (Vic), Pt 3; Queensland Heritage Act 1992 (Qld), Pt 9; Historic Shipwrecks Act 1981 (SA); Maritime Archaeology Act 1973 (WA); Historic Cultural Heritage Act 1995 (Tas), Pt 9; Heritage Act (NT). 284 Section 240(3).

21 Wrecks

[21.10] INTRODUCTION ........................................................................................... 907

[21.10] Objects of the law of wrecks ......................................................... 907 [21.50] The meaning of “wreck” ................................................................ 909 [21.90] WRECKS AND THE AUSTRALIAN MARITIME SAFETY AUTHORITY ................................................................................................... 912 [21.100] DUTY OF OWNER AND FINDER OF WRECKS TO NOTIFY THE AUSTRALIAN MARITIME SAFETY AUTHORITY ............................... 912

[21.100] Duty of owner of wreck to give notice ..................................... 912 [21.110] Duty of finder of wreck to give notice ...................................... 913 [21.120] Duties of the public in respect of wrecks .................................. 913 [21.130] POWERS OF THE AUSTRALIAN MARITIME SAFETY AUTHORITY OVER WRECKS .................................................................. 913 [21.170] REMOVAL OF WRECKS UNDER STATE LEGISLATION ................... 915 [21.180] RIGHT TO UNCLAIMED WRECK ........................................................... 915 [21.190] NAIROBI INTERNATIONAL CONVENTION ON THE REMOVAL OF WRECKS .................................................................................................. 915 [21.200] PRESERVATION OF HISTORIC SHIPWRECKS ..................................... 916

[21.200] Ambit of Commonwealth and State legislation ....................... 916 [21.220] Historic Shipwrecks Act 1976 (Cth) ............................................ 917

INTRODUCTION Objects of the law of wrecks [21.10]

Legislative provisions are necessary in respect of wrecks for three main reasons. One is to facilitate the removal of wrecks, especially where they might present a hazard to shipping or the environment. Another is to make provision for the custody of wrecked ships, and of any cargo, equipment or other articles that derive from maritime casualties pending reclamation by their owners. Provision is also required in this regard for the disposal of such property in the event of no claim of ownership being made. The third reason why legislative provisions are necessary in respect of wrecks is to discourage people from plundering or interfering with

908

Shipping Law

[21.20]

shipwrecks. Not only might the cargo and equipment on board a wrecked ship be valuable and thus attract looters, but the fabric of a wrecked ship might attract vandals and souvenir hunters. With the increase in the popularity of scuba diving, there has arisen an allied need to prevent underwater swimmers from interfering with the remains of sunken ships, particularly where they are of historical significance to the nation. The Commonwealth’s provisions relating to wrecks, which override inconsistent State and territorial legislative provisions, are contained in Ch 7, Pt 2 (“Wrecks”) of the Navigation Act 2012 (Cth). Special provisions relating to historic shipwrecks are contained in the Historic Shipwrecks Act 1976 (Cth) and in related State and territorial legislation.

[21.20]

Ambit of Chapter 7 of the Navigation Act

The Navigation Act provisions on wrecks apply to any wreck that is of, or from, a regulated Australian vessel, wherever this may be located, or is of or from a foreign vessel that is situated in Australia’s territorial sea.1 A regulated Australian vessel may be said shortly to be any Australian international commercial vessel, though the statutory definition is more complex than that. By s 15(1), a regulated Australian vessel is a vessel2 that is registered, required to be registered or exempt from registration under the Shipping Registration Act 1981 (Cth), and that is either proceeding or for use on an overseas voyage,3 has a certificate issued under the Act that is in force for the vessel,4 or is a regulated Australian vessel pursuant to an opt-in declaration. (An “opt-in declaration” is a declaration made at the request of the owner of an Australian registered vessel that it be a regulated Australian vessel.5) An Australian Border Force vessel is also a regulated Australian vessel.6 A recreational vessel is expressly excluded from the definition.7 A recreational vessel means any vessel that is not used in connection with a commercial, governmental or research activity.8 A domestic commercial vessel does not ordinarily come within the scope of the definition, and an Australian naval vessel does not come within the scope of the Act at all.9 A foreign vessel is any vessel that does not have Australian nationality and is not a recreational vessel.10 1 Sections 227, 232(2), 235(1)(b). 2 See s 14(1) (definition of “vessel”). 3 See ss 14(1) (definition of “proceeding on a voyage”), 16. 4 Note the exceptions in s 15(1)(c)(ii). 5 Section 25. 6 Sections 15(2), 17. 7 Section 15(1)(b). 8 Section 14(1) (definition of “recreational vessel”). 9 Section 10. 10 Section 14(1) (definition of “foreign vessel”).

[21.60]

[21.30]

21 Wrecks

909

No regulations yet made under the Navigation Act

Chapter 7, Pt 2 (“Wrecks”) of the Navigation Act 2012 (Cth) provides for regulations to be made on particular matters, for example the time within which notifications must be given to the Australian Maritime Safety Authority.11 No regulations have yet been made under this Part.

[21.40]

Law where the Navigation Act does not apply

Where the Navigation Act 2012 (Cth) does not apply in respect of a wreck, any relevant law of the State or the Northern Territory applies. The provisions of Pt IX (“Wreck and Salvage”) of the Merchant Shipping Act 1894 (IMP) have no operation where the Navigation Act does not apply. In Robinson v Western Australian Museum,12 the High Court held that the provisions concerning wreck in ss 511 – 522 and 524 – 537 of the Imperial Act do not apply to wreck around Australia as these sections were intended to apply only to wreck around the United Kingdom.13

The meaning of “wreck” Variety of meanings of “wreck”

[21.50]

The word “wreck” can be used in a number of senses. In common parlance it means any ruined ship, whether this be floating on the sea, resting on the seabed beneath the sea, or lying on the shore. As a legal term, however, “wreck” strictly means any ship or cargo, or part of a ship or cargo, that is cast on the shore as a result of a shipwreck.14 A wreck in this strict sense is sometimes also referred to, particularly in older works, as “wreccum maris” (literally, “wreck of the sea”), and also as legal wreck.

“Wreck” in Chapter 7 of the Navigation Act

[21.60]

The term “wreck” is given a very broad meaning for the purposes of the Navigation Act 2012 (Cth). Section 14(1) defines “wreck” non-exclusively as follows: “wreck” includes: (a) a vessel that is wrecked, derelict, stranded, sunk or abandoned or that has foundered; and (b) any thing that belonged to or came from a vessel mentioned in paragraph (a); and

11 Sections 232(1), 233(1), 234(2). 12 Robinson v Western Australian Museum (1977) 138 CLR 283. 13 Robinson v Western Australian Museum (1977) 138 CLR 283 at 308, 332, 341, 343. 14 Sir Henry Constable’s Case (1601) 5 Co Rep 106a; 77 ER 218 at 106a, 106b; 219-220. See also R v Forty-Nine Casks of Brandy (1836) 3 Hagg Adm 257; 166 ER 401 at 278; 409; R v Two Casks of Tallow (1837) 3 Hagg Adm 294; 166 ER 414 at 298; 416; Palmer v Rouse (1858) 3 H & N 505; 157 ER 569 at 510; 571; Robinson v Western Australian Museum (1977) 138 CLR 283 at 307, 316.

910

Shipping Law

[21.70]

(c) any thing that belonged to or came from a vessel in distress; and (d) jetsam, flotsam and lagan.

The notion of “wreck” here clearly comprehends any ship or cargo, or any part of a ship or cargo, that is found on or under the sea, or on the shore, with no-one in charge of it or able to control it. The definition is clearly founded on the strict, legal meaning of the term “wreck”,15 but is extended (by virtue of the word “includes”) to cover other species of abandoned maritime property. The expression “any thing that belonged to or came from a vessel” undoubtedly includes oil and hazardous materials.16 Certain terms used in the extended definition of “wreck” in s 14(1) have precise legal meanings. These are “derelict”, “jetsam”, “flotsam” and “lagan”.

[21.70]

“Derelict”

A vessel is derelict — and is accordingly known in law as “a derelict” — if it has been abandoned at sea by its master and crew with no hope on their part of recovering it and no intention on their part of returning to it.17 There are two necessary conditions for a derelict. First, the vessel must have been abandoned at sea by order of its master.18 It is thus not sufficient that the master and crew of a ship have simply died, been washed overboard or been taken captive, or that for some other reason there is no-one aboard a ship.19 Secondly, at the time of the abandonment, the master and crew must have had no hope of recovering the vessel themselves and no intention of returning to it.20 It is thus not sufficient 15 See Robinson v Western Australian Museum (1977) 138 CLR 283 at 307-308. 16 See, eg, s 232(1)(e). 17 The Aquila (1798) 1 C Rob 37; 165 ER 87 at 40; 88; The Zeta (1875) LR 4 A & E 460 at 462; Cossman v West; Cossman v British America Assurance Co (1887) 13 App Cas 160 at 180; Bradley v H Newsom Sons & Co [1919] AC 16 at 24-28; Robinson v Western Australian Museum (1977) 138 CLR 283 at 307, 316, 329, 338; Pierce v Bemis: The Lusitania [1986] QB 384 at 388. On cargo as derelict, see HMS Thetis (1835) 3 Hagg Adm 228; 166 ER 390 at 235; 393; The Samuel (1851) 17 LT (OS) 204 at 205; Cargo ex Schiller (1877) 2 PD 145 at 148; Robinson v Western Australian Museum (1977) 138 CLR 283 at 316, 329; Pierce v Bemis: The Lusitania [1986] QB 384. 18 The Florence (1852) 16 Jur 572 at 573; Bradley v H Newsom Sons & Co [1919] AC 16 at 26. 19 See The John and Jane (1802) 4 C Rob 216; 165 ER 590 (ship taken by enemy and then deserted by them held not to be a derelict); The Zeta (1875) LR 4 A & E 460 (moored barge which had come adrift held not to be a derelict); Bradley v H Newsom Sons & Co [1919] AC 16 at 25, 27-28 (ship whose crew had been forced off by enemy held not to be a derelict). 20 The Aquila (1798) 1 C Rob 37; 165 ER 87 at 40; 88; The Zeta (1875) LR 4 A & E 460 at 462; Bradley v H Newsom Sons & Co [1919] AC 16 at 25. Compare, however, The Genessee (1848) 12 Jur 401; The Gertrude (1861) 30 LJPM & A 130 (abandonment need not involve lack of any hope of recovery).

[21.80]

21 Wrecks

911

that the master and crew have temporarily left their ship in order to seek assistance or avoid some temporary danger.21 On the other hand, provided the master and crew have abandoned their vessel without any hope on their part of recovering it or returning to it, the vessel is a derelict notwithstanding that they might subsequently change their minds.22 A derelict may either be afloat or have sunk.23 A vessel ceases to be a derelict when its owner or owner’s agent takes possession of it.24 At law, cargo can also be a derelict if the same conditions are met. To be distinguished from a derelict is a res derelicta. The latter is a chattel that has been abandoned by its owner with no intention of retaining any property rights in it at all. The owner of a derelict, on the other hand, has not necessarily abandoned his or her property rights in the deserted vessel or cargo.25 The owner of a derelict thus ordinarily retains his or her property rights in the vessel or cargo.26 It is interesting to observe in this regard that at common law a person strictly cannot abandon his or her ownership rights in any chattel other than a ship.27

[21.80]

“Jetsam”, “flotsam”, “lagan”

Goods which have left a wrecked or foundered ship but are not technically wreck because they have not been washed up on land may be classifiable as flotsam, jetsam or lagan. Flotsam (or floatsam, or flotsan) is anything from a wrecked or foundered ship that floats on the sea. Jetsam is anything thrown overboard to lighten a ship which subsequently founders. Lagan (or ligan) is jetsam marked with a buoy or other form of marker so that it can easily be located and thus recovered.28 21 See The Aquila (1798) 1 C Rob 37; 165 ER 87 at 40; 88 (ship left in order to obtain assistance ashore); The Fenix (1855) Swab 13; 166 ER 992 at 15; 993-994 (ship left in order to escape imminent danger); The Lepanto [1892] P 122 at 130 (ship left through fatigue); Cossman v West; Cossman v British America Assurance Co (1887) 13 App Cas 160 at 180 (ship left temporarily). See also The FD Lambert [1917] P 232n. 22 Bradley v H Newsom Sons & Co [1919] AC 16 at 25. 23 See HMS Thetis (1835) 3 Hagg Adm 228; 166 ER 390 at 235; 393; Robinson v Western Australian Museum (1977) 138 CLR 283 at 308, 316, 318, 329, 338; Pierce v Bemis: The Lusitania [1986] QB 384 at 389-390. 24 Cargo ex Schiller (1877) 2 PD 145 at 148. 25 Bradley v H Newsom Sons & Co [1910] AC 16 at 27; Robinson v Western Australian Museum (1977) 138 CLR 283 at 318, 338. 26 R v Property Derelict (1825) 1 Hagg Adm 383; 166 ER 136; Bradley v H Newsom Sons & Co [1919] AC 16 at 27; Robinson v Western Australian Museum (1977) 138 CLR 283 at 318, 338. See also Simon v Taylor [1975] 2 Lloyd’s Rep 338 at 342-343. 27 Brown v Mallett (1848) 5 CB 599; 136 ER 1013 at 617; 1020; White v Crisp (1854) 10 Exch 312; 156 ER 463 at 322 (Exch); Arrow Shipping Co Ltd v Tyne Improvement Commissioners: The Crystal [1894] AC 508 at 519, 521, 532, 534; Johnstone & Wilmot Pty Ltd v Kaine (1928) 23 Tas LR 43 at 56-58. See also Munday v Australian Capital Territory (1998) 99 LGERA 312. 28 Sir Henry Constable’s Case (1601) 5 Co Rep 106a; 77 ER 218 at 106a-106b; 220; Palmer v Rouse (1858) 3 H & N 505; 157 ER 569 at 510; 571.

912

Shipping Law

[21.90]

An owner of goods does not necessarily lose his or her property rights in these items if they become flotsam, jetsam or lagan. In particular, the act involved in jettisoning property in order to lighten a ship does not by itself constitute a renunciation of rights of ownership.29 This is obviously the case in respect of lagan, where the property is marked with a buoy or other marker in order to facilitate its subsequent recovery.

WRECKS AND THE AUSTRALIAN MARITIME SAFETY AUTHORITY [21.90]

Before the commencement of the Navigation Act 2012 (Cth), rights and powers in respect of wrecks were exercised by a statutory official known as the receiver of wreck. This was a person appointed to the position by the Australian Maritime Safety Authority. The office of receiver of wreck no longer exists. The rights and powers of the receiver are now exercised directly by the Australian Maritime Safety Authority itself.

DUTY OF OWNER AND FINDER OF WRECKS TO NOTIFY THE AUSTRALIAN MARITIME SAFETY AUTHORITY Duty of owner of wreck to give notice [21.100]

The master or owner of any vessel that is wrecked, stranded, sunk, abandoned or has foundered must notify the Australian Maritime Safety Authority of the vessel’s owner, its location, its type, size and construction, the nature and quantity of cargo and of any hazardous or noxious substances on board, and the amount and type of oil on board.30 This applies to a foreign vessel only if it is situated in Australia’s territorial sea.31 The Australian Maritime Safety Authority must then publish a notice on its website setting out details concerning the vessel or wreck.32 A master or owner who does not comply with the notification requirement commits an offence and is also liable to a civil penalty.33

29 See W Blackstone, Commentaries on the Laws of England (15th ed, Strahan, London, 1809), Vol 1, p 292. 30 Section 232(1). 31 Section 232(2). 32 Section 234. 33 Section 232(3), (4).

[21.140]

21 Wrecks

913

Duty of finder of wreck to give notice [21.110]

Any person who finds or takes possession of any wreck in the territorial sea of Australia, or who brings any wreck into Australia’s territorial sea, must give details of this to the Australian Maritime Safety Authority, including its location and the marks by which the wreck may be recognised.34

Upon becoming aware of this information, the Australian Maritime Safety Authority must publish a notice on its website setting out details concerning the vessel or wreck.35 A person who does not comply with the notification requirement commits an offence and is also liable to a civil penalty.36

Duties of the public in respect of wrecks [21.120]

No-one may remove any wreck without the consent of either its legal owner or the Australian Maritime Safety Authority.37

No-one may deface or obliterate any mark on the wreck of a regulated Australian vessel located in Australia’s territorial sea or exclusive economic zone, or on the wreck of any foreign vessel in Australia’s territorial sea.38 A person who does not comply with any of these requirements commits an offence and is also liable to a civil penalty.39

POWERS OF THE AUSTRALIAN MARITIME SAFETY AUTHORITY OVER WRECKS [21.130]

Except in respect of historic wrecks, the Australian Maritime Safety Authority has wide powers to locate, remove or require the removal of any wreck, especially for the purpose of saving life, securing safe navigation or protecting the marine environment.

[21.140]

Power to pass over land

By s 231 of the Navigation Act 2012 (Cth), the Australian Maritime Safety Authority has the right to gain access to any wreck for the purpose of rendering assistance or saving life.40 To this end, the Authority may cross 34 Section 233(1). 35 Section 234. 36 Section 233(2), (3). 37 Section 236(1). 38 Section 235(1). Australia’s territorial sea is 12 nautical miles (22,224 metres) measured from low-water mark or from any proclaimed baseline: Commonwealth of Australia Gazette No S 297 (13 November 1990). See also Fair Work Ombudsman v Pocomwell Ltd (No 2) (2013) 218 FCR 94 at 100. 39 Sections 235(2), (3), 236(2), (3). 40 Section 231(1).

914

Shipping Law

[21.150]

land without the consent of the occupier.41 The Authority may also deposit any wreck on land without the occupier’s consent.42 Any person who impedes the Authority in exercising any of these powers commits an offence and is liable to a civil penalty.43 Although s 231 is headed “Powers to pass over land and require assistance etc”, there is no provision in this section that requires any person to provide positive assistance to the Authority in the discharge of its powers in respect of wrecks.

[21.150]

Power to deal with wrecks

The Australian Maritime Safety Authority may give the legal owner of a wreck written notice to remove or mark the wreck, or to give security for its removal or marking.44 The Authority may remove or mark a wreck itself if this is considered necessary to save life, secure safe navigation or protect the marine environment, or if it cannot locate or contact the legal owner of the wreck or the owner fails to comply with a notice to mark or remove the wreck.45 The Australian Maritime Safety Authority may destroy or sink a wreck if it considers this necessary to save human life, secure safe navigation or protect the marine environment.46 The Authority’s power to require a legal owner to remove or mark a wreck applies to the wreck of a regulated Australian vessel wherever it may be in the world. On the other hand, the Authority’s power itself to remove, mark, destroy or sink a wreck of a regulated Australian vessel extends only to a wreck in Australia’s exclusive economic zone.47 The Authority’s powers apply to the wreck of any foreign vessel that is situated in Australia’s territorial sea.48

[21.160]

Restriction on powers in relation to historic wrecks

The Australian Maritime Safety Authority may not remove, mark, destroy or sink any historic wreck or historic relic unless this is necessary for saving human life, securing the safe navigation of vessels or dealing with an emergency involving a serious threat to the environment.49 A historic 41 Section 231(1). 42 Section 231(2). 43 Section 231(3), (4). 44 Section 229(1)(a), (b). 45 Section 229(1)(c). 46 Section 229(1)(d). 47 Section 229(2)(a), (3)(a). 48 Section 229(2)(b), (3)(b). 49 Section 238.

[21.190]

21 Wrecks

915

wreck or relic here means any wreck or relic that comes within the Historic Shipwrecks Act 1976 (Cth)50 or the relevant provisions of State or territorial legislation.51

REMOVAL OF WRECKS UNDER STATE LEGISLATION [21.170]

The ability to remove wrecked or abandoned ships is particularly important in ports, harbours and waterways. Various State and territorial statutes make provision for the removal of such obstructions.

In Victoria v Commonwealth,52 the High Court held that there is not necessarily an inconsistency for the purposes of s 109 of the Constitution between overlapping Commonwealth and State provisions concerning the removal of wrecks. The High Court there held that the provisions of s 13 (“Power of Port Officer to require repair removal or destruction of sunken stranded unseaworthy dangerous or abandoned vessel in a port”) of Victoria’s Marine Act 1928 were not, without more, inconsistent with the provisions of s 329 (“Removal of wrecks on or near coast”) of the now-repealed Navigation Act 1912 (Cth).

RIGHT TO UNCLAIMED WRECK [21.180]

The Commonwealth is entitled to all unclaimed wreck found in Australia.53 By s 15B(1)(b), (4)(a) of the Acts Interpretation Act 1901 (Cth), “Australia” includes Australia’s territorial sea. Title to unclaimed wreck outside of Australia’s territorial sea remains with its ordinary owner at all times unless ownership has been abandoned. From the modern English case of Pierce v Bemis: The Lusitania,54 it would appear that the finder of any unclaimed wreck outside the territorial sea has better title against everyone other than the true owner, even if the finder is simply a salvor.55

NAIROBI INTERNATIONAL CONVENTION ON THE REMOVAL OF WRECKS [21.190]

In 2007, a Diplomatic Conference of the International Maritime Organization adopted an International Convention on the Removal of Wrecks. This authorises States which have ratified the Convention to remove wrecks from their exclusive economic zone if they pose a hazard to

50 Section 14(1) (definition of “historic wreck”). 51 Section 238(1)(b). 52 Victoria v Commonwealth (1937) 58 CLR 618. 53 Section 228. 54 Pierce v Bemis: The Lusitania [1986] QB 384. 55 See Pierce v Bemis: The Lusitania [1986] QB 384 at 400-401. Compare, however, Robinson v Western Australian Museum (1977) 138 CLR 283 at 318-319.

916

Shipping Law

[21.200]

navigation or the marine environment, and to impose strict liability on shipowners for the cost of removing hazardous wrecks. Australia has not yet ratified this Convention.

PRESERVATION OF HISTORIC SHIPWRECKS Ambit of Commonwealth and State legislation [21.200]

The main piece of legislation for the protection of historic shipwrecks is the Historic Shipwrecks Act 1976 (Cth). The provisions of this Act apply to historic shipwrecks and historic relics located in both Australia’s territorial sea and all the sea above Australia’s continental shelf.56 By Proclamations made under s 2(1), the Act applies to the waters adjacent to the coast of all States and Territories, including Australia’s external Territories.57 The waters “adjacent” to the coast of a State are the waters which cover either the area indicated in Sch 2 of the Petroleum (Submerged Lands) Act 1967 (Cth) as in force on 18 June 1981, or the continental shelf, whichever is the more landward.58

For constitutional reasons, the Commonwealth Act does not apply above the landward limits of Australia’s territorial sea.59 It accordingly does not operate above low-water mark or above any proclaimed baseline. The Historic Shipwrecks Act is currently being reviewed by the Department of Environment.

[21.210]

State and Territorial legislation

All States and the Northern Territory have enacted legislation for the protection of historic shipwrecks. Only two States, South Australia and Western Australia, have legislation specifically for the protection of historic shipwrecks.60 The other jurisdictions include historic shipwrecks within their broader heritage legislation.61 By virtue of the proclamations made under s 2(1) of the Historic Shipwrecks Act 1976 (Cth), these State Acts presently apply only to wrecks located above low-water mark or above any proclaimed baseline. Western Australia’s Maritime Archaeology Act 1973 was initially declared invalid by the High Court in Robinson v Western Australian Museum.62 However, its provisions are now saved so far as they apply to the State’s coastal waters (limited to three nautical miles) by s 5 of the Coastal Waters (State Powers) Act 1980 (Cth). 56 Historic Shipwrecks Act 1976 (Cth), s 5(1), with s 3(1) (definition of “Australian waters”). 57 Section 3(1) (definition of “Australia”). 58 Section 3(5). 59 See Chapter 2. 60 Historic Shipwrecks Act 1981 (SA); Marine Archaeology Act 1973 (WA). 61 Heritage Act 1977 (NSW), Pt 3C; Heritage Act 1995 (Vic), Pt 3; Queensland Heritage Act 1992 (Qld), Pt 9; Historic Cultural Heritage Act 1995 (Tas), Pt 9; Heritage Act (NT). 62 Robinson v Western Australian Museum (1977) 138 CLR 283.

[21.240]

21 Wrecks

917

Historic Shipwrecks Act 1976 (Cth) [21.220]

The Historic Shipwrecks Act 1976 (Cth) prohibits interference with any historic shipwreck or any historic relic as defined in the Act. It also imposes a duty on anyone who discovers any kind of ship or any articles from a ship in waters around the Australian coast to give notice of this to the Minister responsible for the administration of this Act. This is presently the Minister for the Environment.

[21.230]

“Historic shipwreck”, “historic relic”

Under the Historic Shipwrecks Act 1976 (Cth), a “historic shipwreck” is compendiously defined to cover the following nautical remains:63 • the remains of any ship lying off the coast of Western Australia which had belonged to the old Dutch East India Company; • the remains of any ship of special significance to Papua New Guinea which the Minister has declared to be a “Papua New Guinea shipwreck”; • the remains of any ship at least 75 years old lying off the coast of Australia which the Minister has declared to be a historic shipwreck; and • the remains of any particular ship of historical significance lying off the coast of Australia which the Minister has declared to be a historic shipwreck. Only one declaration is current in respect of historic shipwrecks. This declares the remains of all ships at least 75 years old to be historic shipwrecks.64 A historic relic is, in short, any article from a historic shipwreck, or from a ship at least 75 years old, which has been declared to be a historic relic.65

[21.240]

Preservation of historic shipwrecks

It is an offence for anyone to interfere with a historic shipwreck or historic relic other than in accordance with a permit granted by the Minister.66 It is also an offence for anyone to take salvage or exploration equipment into, or undertake certain activities within, a protected zone other than in accordance with a permit granted by the Minister or the Minister’s delegate.67 A protected zone is an area of sea, or sea and land, not exceeding 200 hectares which contains a historic shipwreck or historic relics and which the Minister has declared to be a protected zone.68 63 Historic Shipwrecks Act 1976 (Cth), s 3(1) (definition of “historic shipwreck”, with definition of “Dutch shipwreck”, “Papua New Guinea shipwreck”). 64 Commonwealth of Australia Gazette No S 98 (1 April 1993). 65 Section 3(1) (definition of “historic relic”). 66 Section 13. On the issue of permits, see s 15. Note also s 19 (“Arrangements for State and Northern Territory authorities to perform certain functions”). 67 Section 14(1); Historic Shipwrecks Regulations 1978 (Cth), reg 4. 68 Section 7.

918

Shipping Law

[21.250]

[21.250]

Duty to give notice upon discovery of a shipwreck

Anyone who finds in a fixed position the remains of any ship or any articles from any ship either in Australian waters or on the continental shelf must give the Minister information about this as soon as practicable.69 If the statutory conditions are met for these to constitute a historic shipwreck or historic relic, the Minister may then declare the wreck to be a historic shipwreck or the articles to be historic relics. The Minister may also make a declaration vesting the ownership of this property in the Commonwealth or a State, or in a specified country, authority or person, as the Minister considers appropriate.70 The Minister may reward any person who first notifies him or her of the hitherto unrecorded location of a historic shipwreck or a historic relic.71

[21.260]

Duties on person possessing historic shipwreck or historic relics

Anyone who has possession, custody or control of any part of a historic shipwreck, or any historic relic, is required to give notice of this fact to the Minister within 30 days of an official declaration being made bringing this article within the ambit of the Act, or within 30 days of the article coming into his or her possession, custody or control.72 The Minister has power to require any person whom he or she believes may have, or may once have had, possession, custody or control of a historic shipwreck or historic relic to provide information in this regard.73 The Minister may require anyone who has possession, custody or control of part of a historic shipwreck or a historic relic to keep it in a particular place, or to keep or treat it in a particular manner, and even to deliver it into the custody of a particular person, if the Minister considers that this is appropriate for the preservation, study or exhibition of the article.74 If the Minister deems it necessary for purposes associated with the Act, he or she may even make a declaration vesting the ownership of this property in the Commonwealth or a State, or in a specified country, authority or person.75

69 Section 17(1). 70 Section 20. 71 Section 18(1)(a). 72 Section 9. 73 Section 10. 74 Section 11. Note also s 19 (“Arrangements for State and Northern Territory authorities to perform certain functions”). 75 Section 20.

[21.270]

[21.270]

21 Wrecks

919

Register of Historic Shipwrecks

The Minister is required to keep a register, known as the Register of Historic Shipwrecks, which records particulars of all known Dutch shipwrecks and Dutch relics, all wrecks and relics declared under the Act, and all notices declaring protected zones.76 The Register is open for inspection by the public upon payment of a fee.77

76 Section 12(1), (2). 77 Section 12(3).

1

Appendix 1: Conlinebill 2016

Conlinebill 2016 is reproduced with the kind permission of BIMCO.

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Appendix 1: Conlinebill 2016

923

924

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Appendix 1: Conlinebill 2016

925

2

Appendix 2: Combiconbill 2016

Combiconbill 2016 is reproduced with the kind permission of BIMCO.

928

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Appendix 2: Combiconbill 2016

929

930

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Appendix 2: Combiconbill 2016

931

3

Appendix 3: Linewaybill 2016

Linewaybill 2016 is reproduced with the kind permission of BIMCO.

934

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Appendix 3: Linewaybill 2016

935

936

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Appendix 3: Linewaybill 2016

937

4

Appendix 4: Combiconwaybill 2016

Combiconwaybill 2016 is reproduced with the kind permission of BIMCO.

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Appendix 5: Congenbill 2016

Congenbill 2016 is reproduced with the kind permission of BIMCO.

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Appendix 6: Gencon 94

Gencon 94 is reproduced with the kind permission of BIMCO.

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Appendix 7: NYPE 2015

NYPE 2015 is reproduced with the kind permission of BIMCO.

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Appendix 8: Institute Cargo Clauses (A) 2009

Institute Cargo Clauses (A) 2009 is reproduced with the kind permission of Lloyd’s Market Association (LMA) and International Underwriting Association of London (IUA).

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Appendix 8: Institute Cargo Clauses (A) 2009

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9

Appendix 9: York-Antwerp Rules 2016

The York-Antwerp Rules 2016 are reproduced with the kind permission of Comité Maritime International (CMI).

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YORK-ANTWERP RULES 2016 Rule of Interpretation In the adjustment of general average the following Rules shall apply to the exclusion of any law and practice inconsistent therewith. Except as provided by the Rule Paramount and the numbered Rules, general average shall be adjusted according to the lettered Rules. Rule Paramount In no case shall there be any allowance for sacrifice or expenditure unless reasonably made or incurred. Rule A 1. There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure. 2. General average sacrifices and expenditures shall be borne by the different contributing interests on the basis hereinafter provided. Rule B 1. There is a common maritime adventure when one or more vessels are towing or pushing another vessel or vessels, provided that they are all involved in commercial activities and not in a salvage operation. When measures are taken to preserve the vessels and their cargoes, if any, from a common peril, these Rules shall apply. 2. If the vessels are in common peril and one is disconnected either to increase the disconnecting vessel’s safety alone, or the safety of all vessels in the common maritime adventure, the disconnection will be a general average act. 3. Where vessels involved in a common maritime adventure resort to a port or place of refuge, allowances under these Rules may be made in relation to each of the vessels. Subject to the provisions of paragraphs 3 and 4 of Rule G, allowances in general average shall cease at the time that the common maritime adventure comes to an end. Rule C 1. Only such losses, damages or expenses which are the direct consequence of the general average act shall be allowed as general average. 2. In no case shall there be any allowance in general average for losses, damages or expenses incurred in respect of damage to the environment or in consequence of the escape or release of pollutant substances from the property involved in the common maritime adventure. 3. Demurrage, loss of market, and any loss or damage sustained or expense incurred by reason of delay, whether on the voyage or subsequently, and any indirect loss whatsoever, shall not be allowed as general average.

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Rule D Rights to contribution in general average shall not be affected, though the event which gave rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the common maritime adventure, but this shall not prejudice any remedies or defences which may be open against or to that party in respect of such fault. Rule E 1. The onus of proof is upon the party claiming in general average to show that the loss or expense claimed is properly allowable as general average. 2. All parties to the common maritime adventure shall, as soon as possible, supply particulars of value in respect of their contributory interest and, if claiming in general average, shall give notice in writing to the average adjuster of the loss or expense in respect of which they claim contribution, and supply evidence in support thereof. 3. Failing notification, or if any party does not supply particulars in support of a notified claim, within 12 months of the termination of the common maritime adventure or payment of the expense, the average adjuster shall be at liberty to estimate the extent of the allowance on the basis of the information available to the adjuster. Particulars of value shall be provided within 12 months of the termination of the common maritime adventure, failing which the average adjuster shall be at liberty to estimate the contributory value on the same basis. Such estimates shall be communicated to the party in question in writing. Estimates may only be challenged within two months of receipt of the communication and only on the grounds that they are manifestly incorrect. 4. Any party to the common maritime adventure pursuing a recovery from a third party in respect of sacrifice or expenditure claimed in general average, shall so advise the average adjuster and, in the event that a recovery is achieved, shall supply to the average adjuster full particulars of the recovery within two months of receipt of the recovery. Rule F Any additional expense incurred in place of another expense which would have been allowable as general average shall be deemed to be general average and so allowed without regard to the saving, if any, to other interests, but only up to the amount of the general average expense avoided. Rule G 1. General average shall be adjusted as regards both loss and contribution upon the basis of values at the time and place when and where the common maritime adventure ends. 2. This rule shall not affect the determination of the place at which the average adjustment is to be prepared. 3. When a ship is at any port or place in circumstances which would give rise to an allowance in general average under the provisions of Rules X and XI, and the cargo or part thereof is forwarded to destination by

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other means, rights and liabilities in general average shall, subject to cargo interests being notified if practicable, remain as nearly as possible the same as they would have been in the absence of such forwarding, as if the common maritime adventure had continued in the original ship for so long as justifiable under the contract of carriage and the applicable law. 4. The proportion attaching to cargo of the allowances made in general average by reason of applying the third paragraph of this Rule shall be limited to the cost which would have been borne by the owners of cargo if the cargo had been forwarded at their expense. This limit shall not apply to any allowances made under Rule F. Rule I – Jettison of Cargo No jettison of cargo shall be allowed as general average, unless such cargo is carried in accordance with the recognised custom of the trade. Rule II – Loss or Damage by Sacrifices for the Common Safety Loss of or damage to the property involved in the common maritime adventure by or in consequence of a sacrifice made for the common safety, and by water which goes down a ship’s hatches opened or other opening made for the purpose of making a jettison for the common safety, shall be allowed as general average. Rule III – Extinguishing Fire on Shipboard Damage done to a ship and cargo, or either of them, by water or otherwise, including damage by beaching or scuttling a burning ship, in extinguishing a fire on board the ship, shall be allowed as general average; except that no allowance shall be made for damage by smoke however caused or by heat of the fire. Rule IV – Cutting Away Wreck Loss or damage sustained by cutting away wreck or parts of the ship which have been previously carried away or are effectively lost by accident shall not be allowed as general average. Rule V – Voluntary Stranding When a ship is intentionally run on shore for the common safety, whether or not she might have been driven on shore, the consequent loss or damage to the property involved in the common maritime adventure shall be allowed in general average. Rule VI – Salvage Remuneration (a) Expenditure incurred by the parties to the common maritime adventure in the nature of salvage, whether under contract or otherwise, shall be allowed in general average provided that the salvage operations were carried out for the purpose of preserving from peril the property involved in the common maritime adventure and subject to the provisions of paragraphs (b), (c) and (d)

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(b) Notwithstanding (a) above, where the parties to the common maritime adventure have separate contractual or legal liability to salvors, salvage shall only be allowed should any of the following arise: (i) there is a subsequent accident or other circumstances resulting in loss or damage to property during the voyage that results in significant differences between salved and contributory values, (ii)

there are significant general average sacrifices,

(iii) salved values are manifestly incorrect and there is a significantly incorrect apportionment of salvage expenses, (iv) any of the parties to the salvage has paid a significant proportion of salvage due from another party, (v) a significant proportion of the parties have satisfied the salvage claim on substantially different terms, no regard being had to interest, currency correction or legal costs of either the salvor or the contributing interest. (c) Salvage expenditures referred to in paragraph (a) above shall include any salvage remuneration in which the skill and efforts of the salvors in preventing or minimising damage to the environment such as is referred to in Article 13 paragraph 1(b) of the International Convention on Salvage, 1989 have been taken into account. (d) Special compensation payable to a salvor by the shipowner under Article 14 of the International Convention on Salvage, 1989 to the extent specified in paragraph 4 of that Article or under any other provision similar in substance (such as SCOPIC) shall not be allowed in general average and shall not be considered a salvage expenditure as referred to in paragraph (a) of this Rule. Rule VII – Damage to Machinery and Boilers Damage caused to any machinery and boilers of a ship which is ashore and in a position of peril, in endeavouring to refloat, shall be allowed in general average when shown to have arisen from an actual intention to float the ship for the common safety at the risk of such damage; but where a ship is afloat no loss or damage caused by working the propelling machinery and boilers shall in any circumstances be allowed as general average. Rule VIII – Expenses Lightening a Ship when Ashore, and Consequent Damage When a ship is ashore and cargo and ship’s fuel and stores or any of them are discharged as a general average act, the extra cost of lightening, lighter hire and reshipping (if incurred), and any loss or damage to the property involved in the common maritime adventure in consequence thereof, shall be allowed as general average. Rule IX – Cargo, Ship’s Materials and Stores Used for Fuel Cargo, ship’s materials and stores, or any of them, necessarily used for fuel for the common safety at a time of peril shall be allowed as general average, but when such an allowance is made for the cost of ship’s

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materials and stores the general average shall be credited with the estimated cost of the fuel which would otherwise have been consumed in prosecuting the intended voyage. Rule X – Expenses at Port of Refuge, etc. (a) (i) When a ship shall have entered a port or place of refuge or shall have returned to her port or place of loading in consequence of accident, sacrifice or other extraordinary circumstances which render that necessary for the common safety, the expenses of entering such port or place shall be allowed as general average; and when she shall have sailed thence with her original cargo, or a part of it, the corresponding expenses of leaving such port or place consequent upon such entry or return shall likewise be allowed as general average. (ii) When a ship is at any port or place of refuge and is necessarily removed to another port or place because repairs cannot be carried out in the first port or place, the provisions of this Rule shall be applied to the second port or place as if it were a port or place of refuge and the cost of such removal including temporary repairs and towage shall be allowed as general average. The provisions of Rule XI shall be applied to the prolongation of the voyage occasioned by such removal. (b) (i) The cost of handling on board or discharging cargo, fuel or stores, whether at a port or place of loading, call or refuge, shall be allowed as general average when the handling or discharge was necessary for the common safety or to enable damage to the ship caused by sacrifice or accident to be repaired, if the repairs were necessary for the safe prosecution of the voyage, except in cases where the damage to the ship is discovered at a port or place of loading or call without any accident or other extraordinary circumstances connected with such damage having taken place during the voyage. (ii) The cost of handling on board or discharging cargo, fuel or stores shall not be allowable as general average when incurred solely for the purpose of restowage due to shifting during the voyage, unless such restowage is necessary for the common safety. (c) Whenever the cost of handling or discharging cargo, fuel or stores is allowable as general average, the costs of storage, including insurance if reasonably incurred, reloading and stowing of such cargo, fuel or stores shall likewise be allowed as general average. The provisions of Rule XI shall apply to the extra period of detention occasioned by such reloading or restowing. (d) When the ship is condemned or does not proceed on her original voyage, storage expenses shall be allowed as general average only up to the date of the ship’s condemnation or of the abandonment of the voyage or up to the date of completion of discharge of cargo if the condemnation or abandonment takes place before that date. Rule XI – Wages and Maintenance of Crew and Other Expenses Putting in to and at a Port of Refuge, etc. (a) Wages and maintenance of master, officers and crew reasonably incurred and fuel and stores consumed during the prolongation of the voyage occasioned by a ship entering a port or place of refuge or

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returning to her port or place of loading shall be allowed as general average when the expenses of entering such port or place are allowable in general average in accordance with Rule X(a). (b) (i) When a ship shall have entered or been detained in any port or place in consequence of accident, sacrifice or other extra-ordinary circumstances which render that entry or detention necessary for the common safety, or to enable damage to the ship caused by sacrifice or accident to be repaired, if the repairs were necessary for the safe prosecution of the voyage, the wages and maintenance of the master, officers and crew reasonably incurred during the extra period of detention in such port or place until the ship shall or should have been made ready to proceed upon her voyage, shall be allowed in general average. (ii) Fuel and stores consumed during the extra period of detention shall be allowed as general average, except such fuel and stores as are consumed in effecting repairs not allowable in general average. (iii) Port charges incurred during the extra period of detention shall likewise be allowed as general average except such charges as are incurred solely by reason of repairs not allowable in general average. (iv) Provided that when damage to the ship is discovered at a port or place of loading or call without any accident or other extraordinary circumstance connected with such damage having taken place during the voyage, then the wages and maintenance of master, officers and crew and fuel and stores consumed and port charges incurred during the extra detention for repairs to damages so discovered shall not be allowable as general average, even if the repairs are necessary for the safe prosecution of the voyage. (v) When the ship is condemned or does not proceed on her original voyage, the wages and maintenance of the master, officers and crew and fuel and stores consumed and port charges shall be allowed as general average only up to the date of the ship’s condemnation or of the abandonment of the voyage or up to the date of completion of discharge of cargo if the condemnation or abandonment takes place before that date. (c) (i) For the purpose of these Rules wages shall include all payments made to or for the benefit of the master, officers and crew, whether such payments be imposed by law upon the shipowners or be made under the terms of articles of employment. (ii) For the purpose of these Rules, port charges shall include all customary or additional expenses incurred for the common safety or to enable a vessel to enter or remain at a port of refuge or call in the circumstances outlined in Rule XI(b)(i). (d) The cost of measures undertaken to prevent or minimise damage to the environment shall be allowed in general average when incurred in any or all of the following circumstances: (i) as part of an operation performed for the common safety which, had it been undertaken by a party outside the common maritime adventure, would have entitled such party to a salvage reward; (ii) as a condition of entry into or departure from any port or place in the circumstances prescribed in Rule X(a);

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(iii) as a condition of remaining at any port or place in the circumstances prescribed in Rule XI(b), provided that when there is an actual escape or release of pollutant substances, the cost of any additional measures required on that account to prevent or minimise pollution or environmental damage shall not be allowed as general average; (iv) necessarily in connection with the handling on board, discharging, storing or reloading of cargo, fuel or stores whenever the cost of those operations is allowable as general average. Rule XII – Damage to Cargo in Discharging, etc. Damage to or loss of cargo, fuel or stores sustained in consequence of their handling, discharging, storing, reloading and stowing shall be allowed as general average, when and only when the cost of those measures respectively is allowed as general average. Rule XIII – Deductions from Cost of Repairs (a) Repairs to be allowed in general average shall not be subject to deductions in respect of “new for old” where old material or parts are replaced by new unless the ship is over fifteen years old in which case there shall be a deduction of one third. The deductions shall be regulated by the age of the ship from the 31st December of the year of completion of construction to the date of the general average act, except for insulation, life and similar boats, communications and navigational apparatus and equipment, machinery and boilers for which the deductions shall be regulated by the age of the particular parts to which they apply. (b) The deductions shall be made only from the cost of the new material or parts when finished and ready to be installed in the ship. No deduction shall be made in respect of provisions, stores, anchors and chain cables. Drydock and slipway dues and costs of shifting the ship shall be allowed in full. (c) The costs of cleaning, painting or coating of bottom shall not be allowed in general average unless the bottom has been painted or coated within the 24 months preceding the date of the general average act in which case one half of such costs shall be allowed. Rule XIV – Temporary Repairs (a) Where temporary repairs are effected to a ship at a port of loading, call or refuge, for the common safety, or of damage caused by general average sacrifice, the cost of such repairs shall be allowed as general average. (b) Where temporary repairs of accidental damage are effected in order to enable the common maritime adventure to be completed, the cost of such repairs shall be allowed as general average without regard to the saving, if any, to other interests, but only up to the saving in expense which would have been incurred and allowed in general average if such repairs had not been effected there. (c) No deductions “new for old” shall be made from the cost of temporary repairs allowable as general average.

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Rule XV – Loss of Freight Loss of freight arising from damage to or loss of cargo shall be allowed as general average, either when caused by a general average act, or when the damage to or loss of cargo is so allowed. Deduction shall be made from the amount of gross freight lost, of the charges which the owner thereof would have incurred to earn such freight, but has, in consequence of the sacrifice, not incurred. Rule XVI – Amount to be Allowed for Cargo Lost or Damaged by Sacrifice (a) (i) The amount to be allowed as general average for damage to or loss of cargo sacrificed shall be the loss which has been sustained thereby based on the value at the time of discharge, ascertained from the commercial invoice rendered to the receiver or if there is no such invoice from the shipped value. Such commercial invoice may be deemed by the average adjuster to reflect the value at the time of discharge irrespective of the place of final delivery under the contract of carriage. (ii) The value at the time of discharge shall include the cost of insurance and freight except insofar as such freight is at the risk of interests other than the cargo. (b) When cargo so damaged is sold and the amount of the damage has not been otherwise agreed, the loss to be allowed in general average shall be the difference between the net proceeds of sale and the net sound value as computed in the first paragraph of this Rule. Rule XVII – Contributory Values (a) (i) The contribution to a general average shall be made upon the actual net values of the property at the termination of the common maritime adventure except that the value of cargo shall be the value at the time of discharge, ascertained from the commercial invoice rendered to the receiver or if there is no such invoice from the shipped value. Such commercial invoice may be deemed by the average adjuster to reflect the value at the time of discharge irrespective of the place of final delivery under the contract of carriage. (ii) The value of the cargo shall include the cost of insurance and freight unless and insofar as such freight is at the risk of interests other than the cargo, deducting therefrom any loss or damage suffered by the cargo prior to or at the time of discharge. Any cargo may be excluded from contributing to general average should the average adjuster consider that the cost of including it in the adjustment would be likely to be disproportionate to its eventual contribution. (iii) The value of the ship shall be assessed without taking into account the beneficial or detrimental effect of any demise or time charterparty to which the ship may be committed. (b) To these values shall be added the amount allowed as general average for property sacrificed, if not already included, deduction being made from the freight and passage money at risk of such charges and crew’s wages as would not have been incurred in earning

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the freight had the ship and cargo been totally lost at the date of the general average act and have not been allowed as general average; deduction being also made from the value of the property of all extra charges incurred in respect thereof subsequently to the general average act, except such charges as are allowed in general average. Where payment for salvage services has not been allowed as general average by reason of paragraph (b) of Rule VI, deductions in respect of payment for salvage services shall be limited to the amount paid to the salvors including interest and salvors’ costs. (c) In the circumstances envisaged in the third paragraph of Rule G, the cargo and other property shall contribute on the basis of its value upon delivery at original destination unless sold or otherwise disposed of short of that destination, and the ship shall contribute upon its actual net value at the time of completion of discharge of cargo. (d) Where cargo is sold short of destination, however, it shall contribute upon the actual net proceeds of sale, with the addition of any amount allowed as general average. (e) Mails, passengers’ luggage and accompanied personal effects and accompanied private motor vehicles shall not contribute to general average. Rule XVIII – Damage to Ship The amount to be allowed as general average for damage or loss to the ship, her machinery and/or gear caused by a general average act shall be as follows: (a) When repaired or replaced, The actual reasonable cost of repairing or replacing such damage or loss, subject to deductions in accordance with Rule XIII; (b) When not repaired or replaced, The reasonable depreciation arising from such damage or loss, but not exceeding the estimated cost of repairs. But where the ship is an actual total loss or when the cost of repairs of the damage would exceed the value of the ship when repaired, the amount to be allowed as general average shall be the difference between the estimated sound value of the ship after deducting therefrom the estimated cost of repairing damage which is not general average and the value of the ship in her damaged state which may be measured by the net proceeds of sale, if any. Rule XIX – Undeclared or Wrongfully Declared Cargo (a) Damage or loss caused to goods loaded without the knowledge of the shipowner or his agent or to goods wilfully misdescribed at the time of shipment shall not be allowed as general average, but such goods shall remain liable to contribute, if saved. (b) Where goods have been wrongfully declared at the time of shipment at a value which is lower than their real value, any general average loss or damage shall be allowed on the basis of their declared value, but such goods shall contribute on the basis of their actual value.

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Rule XX – Provision of Funds (a) The capital loss sustained by the owners of goods sold for the purpose of raising funds to defray general average disbursements shall be allowed in general average. (b) The cost of insuring general average disbursements shall be allowed in general average. Rule XXI – Interest on Losses Allowed in General Average (a) Interest shall be allowed on expenditure, sacrifices and allowances in general average until three months after the date of issue of the general average adjustment, due allowance being made for any payment on account by the contributory interests or from the general average deposit fund. (b) The rate for calculating interest accruing during each calendar year shall be the 12-month ICE LIBOR for the currency in which the adjustment is prepared, as announced on the first banking day of that calendar year, increased by four percentage points. If the adjustment is prepared in a currency for which no ICE LIBOR is announced, the rate shall be the 12-month US Dollar ICE LIBOR, increased by four percentage points. Rule XXII – Treatment of Cash Deposits (a) Where cash deposits have been collected in respect of general average, salvage or special charges, such sums shall be remitted forthwith to the average adjuster who shall deposit the sums into a special account, earning interest where possible, in the name of the average adjuster. (b) The special account shall be constituted in accordance with the law regarding client or third party funds applicable in the domicile of the average adjuster. The account shall be held separately from the average adjuster’s own funds, in trust or in compliance with similar rules of law providing for the administration of the funds of third parties. (c) The sums so deposited, together with accrued interest, if any, shall be held as security for payment to the parties entitled thereto, of the general average, salvage or special charges in respect of which the deposits have been collected. Payments on account or refunds of deposits may only be made when such payments are certified in writing by the average adjuster and notified to the depositor requesting their approval. Upon the receipt of the depositor’s approval, or in the absence of such approval within a period of 90 days, the average adjuster may deduct the amount of the payment on account or the final contribution from the deposit. (d) All deposits and payments or refunds shall be without prejudice to the ultimate liability of the parties. Rule XXIII – Time Bar for Contributing to General Average (a) Subject always to any mandatory rule on time limitation contained in any applicable law:

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(i) Any rights to general average contribution including any rights to claim under general average bonds and guarantees, shall be extinguished unless an action is brought by the party claiming such contribution within a period of one year after the date upon which the general average adjustment is issued. However, in no case shall such an action be brought after six years from the date of termination of the common maritime adventure. (ii) These periods may be extended if the parties so agree after the termination of the common maritime adventure. (b) This rule shall not apply as between the parties to the general average and their respective insurers.

Index A Abandonment maritime lien, of ........................ [8.520], [8.570] ship, of .... [17.370], [17.380], [17.390], [17.440], [19.80], [20.290], [20.630], [21.60], [21.70], [21.100] crew, by, when ordered .................. [20.290] derelict where .................... [20.630], [21.70] marine insurance and ... [17.370], [17.380], [17.390], [17.440] notice to Australian Maritime Safety Authority of .............................. [21.100] oil pollution and ............................... [19.80] wreck where ...................................... [21.60] Acquisition of ship construction, by ................. [3.260], [6.10]-[6.40] applicable law ..................................... [6.20] builder’s certificate ........................... [3.260] meaning of ........................................... [6.10] passing of property where no provision in shipbuilding contract .................. [6.40] property-passing provision in shipbuilding contract .................. [6.30] third party, by ...................................... [6.20] formerly ....................................................... [6.10] generally ...................................................... [5.40] transfer, by .. [5.40], [6.10], [6.50]-[6.200] — see also Transfer of property in ship transmission, by .............. [5.40], [6.10], [6.100], [6.210]-[6.280] — see also Transmission of property in ship Act of God carrier’s immunity ................................. [12.420] Admiralty jurisdiction Australian Law Reform Commission Report No 33, 1986 (Civil Admiralty Jurisdiction) ....... [8.110], [8.340], [8.610] basis of ....................................................... [2.130] conferral upon courts of, by Constitution ............................... [2.20], [2.130]-[2.150] defence in proceeding in ........................ [16.30] “high seas”, meaning of, in .... [1.320], [1.330], [4.90] in personam, conferral of, on inferior courts ........................................................ [16.30] in rem — see Proceedings in rem limitation of liability and — see Limitation of liability maritime lien and — see Maritime lien meaning of ................................................ [2.150] quantum of remuneration under salvage contract reviewable by court exercising ................................... [20.660] scope of ......................................... [2.130]-[2.150]

statutory lien and — see Statutory lien superior courts, of ................................... [16.30] Admiralty proceedings in rem — see Proceedings in rem Affreightment — see Contract of affreightment Agent — see also Registered agent creation of mortgage of ships by owner’s authorised ...................................... [7.20] fixing of contract for voyage charterparty by broker or ........................ [11.70], [13.30] authority to bind principal ............. [13.30] communication/negotiation ........... [11.70], [13.30] duty of care ........................................ [13.30] fixture recap ....................................... [13.30] liability .................................. [11.70], [13.30] freight fowarder as .. [11.80], [12.800], [12.840] liability for marine pollution of ............ [19.80] signing of sea-carriage document by ...................................... [12.100], [12.200] Air pollution — see also Marine pollution Commonwealth law .............. [19.150], [19.170] defences ................................................... [19.170] Marine Environment Protection Committee of IMO ............................................ [19.150] MARPOL Convention ............ [19.40], [19.120], [19.150]-[19.170] offences .................................................... [19.170] penalties .................................................. [19.170] permissible levels of sulphur in fuel oil ...................................................... [19.160] Arbitration maritime lien and provision of security for binding ......................................... [8.450] salvage contract, determination of quantum of reward by .................................. [20.650] sea-carriage documents, clauses for .... [12.90], [12.580], [12.590], [12.720], [13.20] voyage charterparty disputes, of ......... [13.20], [13.440], [13.660] choice of law, whether ..................... [13.20] currency of award ........................... [13.440] non-payment of freight and whether ...................................................... [13.660] Arrest of ship Admiralty Marshal’s insurable interest after execution of warrant for ........... [17.40] Admiralty proceedings in rem, in — see Proceedings in rem carrier’s immunity for seizure, requisition, blockade or, under legal process ...................................................... [12.440]

1044

Shipping Law

Arrest of ship — cont caveat against ............... [5.300], [5.310], [5.330] duration of ......................................... [5.330] procedure for ..................................... [5.310] release of ship under, after constitution of limitation fund .......................... [16.220] Australian defence force ships dumping and .......................................... [19.190] exemption from registration of ............ [3.100], [3.130] limitation of liability of .......................... [16.50] Australian General Shipping Register — see also Registration of ships closure of registration in .......... [3.500]-[3.520], [3.550]-[3.590], [4.60] application for ................................... [3.500] consequences of ....................................... [3.550] deletion certificate ................................... [3.560] demise charter to foreign resident, where .......................................... [3.580], [3.590] improper registration and ........................ [4.60] inquiries by Registrar of Ships or Australian Maritime Safety Authority as to justification for ............................ [3.520] lost ship, where .................... [3.500]-[3.520] re-registration after ........................... [3.570] suspension of registration instead of, whether ........................................ [3.580] correction of entries in .. [3.370], [3.490], [4.60] deletion certificate as extract of ............ [3.560] deemed closure of registration in ................ [3.500]-[3.530], [3.550]-[3.590] application for ................................... [3.500] consequences of ....................................... [3.550] deletion certificate ................................... [3.560] demise charter to foreign resident, where .......................................... [3.580], [3.590] inquiries by Registrar of Ships or Australian Maritime Safety Authority as to justification for ............................ [3.520] lost ship, where .................... [3.500]-[3.520] re-registration after ........................... [3.570] suspension of registration instead of, whether ........................................ [3.580] time from which effective ............... [3.530] electronic form of ..................................... [3.360] entry of alteration to registered ship ... [3.380] entry of information about equitable interests in registered ship in ..... [5.160], [5.170] exclusivity of registration in .................. [3.300] inspection of ............................................. [3.360] integrity of ................................................ [3.370] location of ................................................. [3.360] migration to Personal Property Securities Register of ship mortgages registered in ....................................... [4.10], [10.80] order for rectification of ......................... [3.490] provisional registration under ............... [3.420] registration by entry of prescribed particulars in ....................... [3.340], [3.350], [3.390] removal of entry from, whether ........... [3.490]

suspension certificate as extract of ....... [3.590] transfer to Australian International Shipping Register ........................................ [3.300] what may be registered in ......... [3.20], [3.310] Australian International Shipping Register — see also Registration of ships cancellation of registration in . [3.490], [3.540], [3.550], [3.600] consequences of ................................ [3.550] reasons for .......................................... [3.540] closure of registration in .......... [3.500]-[3.520], [3.550]-[3.590], [4.60] application for ................................... [3.500] consequences of ....................................... [3.550] deletion certificate ................................... [3.560] demise charter to foreign resident, where .......................................... [3.580], [3.590] improper registration and ........................ [4.60] inquiries by Registrar of Ships or Australian Maritime Safety Authority as to justification for ............................ [3.520] lost ship, where .................... [3.500]-[3.520] re-registration after ........................... [3.570] suspension of registration instead of, whether ........................................ [3.580] conditions for remaining on .................. [3.330] correction of entries in .. [3.370], [3.490], [4.60] deemed closure of ..................... [3.500]-[3.530], [3.550]-[3.590] application for ................................... [3.500] consequences of ....................................... [3.550] deletion certificate ................................... [3.560] demise charter to foreign resident, where .......................................... [3.580], [3.590] inquiries by Registrar of Ships or Australian Maritime Safety Authority as to justification for ............................ [3.520] lost ship, where .................... [3.500]-[3.520] re-registration after ........................... [3.570] suspension of registration instead of, whether ........................................ [3.580] time from which effective ............... [3.530] deletion certificate as extract of ............ [3.560] effect of registration in .............................. [3.20] electronic form of ..................................... [3.360] entry of alteration to registered ship ... [3.380] exclusivity of registration in .................. [3.300] inspection of ............................................. [3.360] integrity of ................................................ [3.370] location of ................................................. [3.360] order for rectification of ......................... [3.490] provisional registration under ............... [3.420] purpose of ................................................... [3.20] registration by entry of prescribed particulars in ..................................... [3.340], [3.350] refusal by Registrar of Ships of ...... [3.350] removal of entry from, whether ........... [3.490] suspension certificate as extract of ....... [3.590] transfer to Australian General Shipping Register ........................................ [3.300] what may be registered in ......... [3.20], [3.320]

Index Australian Law Reform Commission (ALRC) Report No 33, 1986 (Civil Admiralty Jurisdiction) ....... [8.110], [8.340], [8.610] Report No 91, 2001 (Review of the Marine Insurance Act 1909) ....... [17.10]-[17.30], [17.80], [17.120], [17.570]-[17.590], [17.630] Australian Maritime Safety Authority abandonment of ship, notice of, to .... [21.100] collisions at sea and role of ..... [15.70], [15.90] court application for enforcement of pecuniary penalties .................... [15.90] Marine Orders promulgated ........... [15.70] marine pollution and role of .. [19.40], [19.80], [19.130], [19.310], [19.400] court application for enforcement of pecuniary penalties .................... [19.40] general power to combat marine pollution ...................................................... [19.400] notification of details of “contributing oil” importers by .............................. [19.310] reporting of oil and other marine pollution incidents to ............... [19.80], [19.130] registration of ships and role of .......... [3.100], [3.120], [3.160], [3.260], [3.460], [3.500], [3.520] certificate of tonnage measurement of ship ........................................................ [3.160] deemed closure of registration ....... [3.500] direction to Registrar of Ships to grant temporary pass ........................... [3.460] exemption from registration .......... [3.100], [3.120] notice to Registrar of Ships to close registration .................................. [3.520] online forms ....................................... [3.260] website of ......... [3.260], [6.80], [6.150], [6.250], [21.100], [21.110] address ........ [3.260], [6.80], [6.150], [6.250] details of wrecks on ........ [21.100], [21.110] forms available on . [3.260], [6.80], [6.150], [6.250] wrecks and role of .................... [21.90]-[21.160] consent to removal of wreck ........ [21.120] duty of finder of wreck to notify . [21.110] duty of owner or master of wreck to notify .......................................... [21.100] duty of public and .......................... [21.120] powers to locate, access, remove or otherwise deal with wreck ....................................... [21.130]-[21.150] publication of details of wreck .... [21.100], [21.110] restriction on powers in relation to historic wrecks .......................... [21.160] rights and powers of former receiver of wreck exercised by .................... [21.90]

1045

Australian nationality — see Australian-owned ship; Nationality of ship Australian-owned ship — see also Nationality of ship “Australian ship”: defined ....................... [4.50] civil law on board ...................... [4.130], [4.140] concealment of nationality of .................. [4.30] criminal law on board ............... [4.100]-[4.120] before current cooperative scheme ........................................................ [4.110] current cooperative scheme ........... [4.110], [4.120] generally ............................................. [4.100] defined ......................................................... [3.80] exemption from registration of, where .............................. [3.100], [3.120], [4.20] marriage on board ................................... [4.140] registration of — see Registration of ships unregistered ....................... [3.430], [4.20]-[4.50] operated solely by Australian residents, Australian nationals or both ..... [4.20], [4.40] provisional registration, where ...... [3.430] wholly owned by Australian residents or by Australian residents and Australian nationals ............................. [4.20], [4.40] Australian Shipping Registration Office — see also Ownership of ship; Property in ship; Registration of ships application for registration form .......... [3.260] “Bill of Sale” ............................................... [6.80] builder’s certificate .................................. [3.260] declaration of ownership and nationality form ........................................................ [3.260] “Declaration of Transfer” ....................... [6.150] “Declaration of Transmission of Ownership by Operation of Law” ............... [6.250] “Notice of Appointment of Registered Agent (Ship’s Manager)” ........ [3.260], [6.150] prohibition on definite and indefinite articles in name of ship by ..................... [3.190] repository for Registers .......................... [3.360] Australian waters beyond territorial limits ............ [2.110], [2.260] commencement of ...................... [2.100], [2.110] drilling and other rigs in .......................... [1.70] dumping in ............................. [19.190], [19.400] fisheries in ........ [2.80], [2.100], [2.110], [2.260], [2.370] limitation of liability of vessels in ........ [16.20] meaning of ....... [2.80], [2.100], [2.110], [4.160], [19.190] national standards and safety law applicable to commercial vessels in ........... [2.390] right/obligation to fly alternative flags or national colours in ....... [4.150]-[4.170], [4.190] shipwreck in ........................................... [21.250] supply of fuel oil to ship in ................. [19.170] traffic separation schemes in ................. [15.80]

1046

Shipping Law

Australian waters — cont unregistered ship prohibited from being outside of ..................................... [4.190] Australia’s Exclusive Economic Zone — see Exclusive Economic Zone of Australia

B Baltic and International Maritime Conference approval of standard form contracts for carriage of goods by sea ........... [11.60] Bankruptcy insolvent foreign debtor, and maritime lien ........................................................ [16.70] insolvent shipowner, and limitation of liability ........................................................ [16.70] transmission of property in ship upon ........................................................ [6.240] Barge characteristics of ...................................... [1.300] inclusion in definition of “ship” ............ [1.60], [1.140], [1.160], [1.290], [1.310] inclusion in definition of “vessel” ....... [1.100], [1.130], [1.150], [1.160], [1.290], [1.310] Bill of lading — see also Sea-carriage documents accomplishment of ................................ [12.100] arbitration clauses in ............................. [12.720] carrier under .............. [12.10], [12.60], [12.310], [12.800]-[12.830], [13.630] — see also Carrier obligation of proper and careful carriage ...................................... [12.310], [13.630] who is ..... [12.10], [12.60], [12.800]-[12.830] charterparty, where, .. [12.10], [12.690]-[12.720] choice of law and forum ....... [12.90], [12.670], [13.20] “claused” ................................. [12.110], [12.150] “clean” ..................................... [12.110], [12.150] contract of carriage, whether always ... [12.10] damage to goods from collision, where ...................................................... [15.200] deck carriage .......................................... [12.340] defined ..................... [12.200], [12.640], [12.680] demise clause ......................................... [12.820] document entitling holder to possession of goods, as ....................... [11.20], [12.10], [12.760]-[12.790] delivery at port of discharge ......... [11.20], [12.770] electronic bill of lading, where ..... [12.790] meaning of ....................... [12.760], [12.770] misdelivery, excluding and limiting liability for ................................. [12.780] electronic, whether .... [11.20], [12.20], [12.100], [12.790] evidence of contract of carriage between shipper and carrier, as .............. [11.20], [12.10], [12.270], [14.420]

freight ....................................... [14.470], [14.560] freight forwarder and ............. [11.80], [12.800], [12.840] functions of ................................. [11.20], [12.10] guarantee of particulars by shipper ... [12.110] Hague Rules — see Hague Rules Hague-Visby Rules — see Hague-Visby Rules; Hague-Visby Rules as modified in Australia Hamburg Rules — see Hamburg Rules identity of carrier clause ...................... [12.820] indemnities given by shipper .............. [12.110] indorsement of .......... [11.20], [12.10], [12.670], [12.680], [12.710] “hand to hand” ................................. [11.20] third party indorsee, in hands of . [12.710] transfer of rights and liabilities ... [12.670], [12.680] issue to shipper of ...... [11.20], [12.10], [12.20], [12.100], [12.690] voyage charterparty, where ........... [12.690] “lawful holder of”, meaning of .......... [12.670], [12.680] payment of freight, liability for .......... [12.640] possession of, effect of ............ [12.10], [12.710] preparation of ........................................... [12.10] receipt for goods shipped, as . [11.20], [12.10], [12.100], [12.140], [12.150], [12.190], [12.240]-[12.260], [12.700] chartered ship, where .................... [12.700] condition, to ..................... [12.140], [12.150] content of .......................................... [12.100] “leading marks”, to ........ [12.240], [12.250] quality, to .......................................... [12.260] quantity or weight, to .................... [12.190] “received for shipment” ................ [12.100] “shipped on board” ........................ [12.100] redress of historical inequality of bargaining power of shippers about .......... [12.30] sea waybill distinguished ......... [11.20], [11.30] signing of ................ [12.100], [12.200], [12.810] straight — see Straight bill of lading third party indorsee, in hands of ....... [12.710] time charterparty and, with third parties ........ [14.10], [14.400], [14.420], [14.470] title, document of, as ................ [11.20], [12.10], [12.760]-[12.790] delivery at port of discharge, entitlement to ................................... [11.20], [12.770] electronic bill of lading, where ..... [12.790] meaning of ....................... [12.760], [12.770] misdelivery, excluding and limiting liability for ................................. [12.780] title to sue under ................... [12.670], [12.680] transfer of rights and liabilities under ...................................... [12.670], [12.680] unnecessary, where .................................. [12.20] voyage charterparty ... [11.30], [11.70], [12.690] distinguished ........................ [11.30], [11.70] issue of bill of lading where ......... [12.690] where not required .................................. [11.20] Boat characteristics of ........................................ [1.20]

Index Boat — cont function of ................................................... [1.20] raft distinguished ....................................... [1.20] ship distinguished ..................................... [1.20] Bottomry creation of ............... [7.20], [8.20], [9.50], [9.80] enforcement of ........................................... [9.70] generally ...................................................... [7.10] insurable interest of lender of money on ........................................................ [17.70] meaning of .................................................. [9.50] maritime lien distinguished ..................... [9.70] mortgage distinguished .. [9.70], [9.90], [10.10] obsolete nature of ............ [7.20], [9.50], [10.10] Personal Property Securities Act 2009 (Cth) and ...................... [7.40], [7.60], [9.80], [9.90] priority of ... [7.50], [7.60], [9.30], [9.80], [9.90], [10.10], [10.20] basic order ............................................ [7.50] between different charges of bottomry .......................................................... [9.90] between maritime lien and bottomry .......................................................... [9.80] between mortgage and bottomry ... [9.80], [10.10], [10.20] between possessory lien and bottomry .......................................................... [9.30] legislative ...................... [7.60], [9.80], [9.90] respondentia and ....................................... [9.60] Broker — see also Marine insurance duty of care of ............ [13.30], [17.90], [17.100] duty of disclosure where ...................... [17.100] fixing of contract for voyage charterparty by agent or .......................... [11.70], [13.30] authority to bind principal ............. [13.30] communication/negotiation ........... [11.70], [13.30] duty of care ........................................ [13.30] fixture recap ....................................... [13.30] liability .................................. [11.70], [13.30] formation of contract for time charterparty by ........................................................ [14.30] formation of contract of marine insurance through ........ [17.90], [17.100], [17.640] duty of care ........................................ [17.90] duty of disclosure ........................... [17.100] responsibility for premium ........... [17.640] lien on insurance policy for amount of premium .................................... [17.640] responsibility for premium, where ..... [17.640] role of .............. [11.70], [13.30], [14.30], [17.90], [17.100], [17.640] Brussels Convention — see International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924

C Cargo amount to be carried under contract of affreightment ............................. [13.670]

1047

bottomry as charge on .............................. [9.50] carriage of — see Carriage of goods by sea carrier’s liability for loss of or damage to — see Carrier carrier’s obligations in relation to — see Carrier claims ........ [12.50], [12.280], [12.830], [14.160], [14.410], [15.140], [15.200], [16.100] Hague Rules, under ........ [12.50], [12.280], [12.830], [14.160], [14.410], [15.140], [15.200], [16.100] — see also Hague Rules Hague-Visby Rules, under ........... [12.280], [12.830], [14.160], [14.410], [15.140], [15.200], [16.100] — see also Hague-Visby Rules damage to or loss of, from collision at sea ........ [15.50], [15.140], [15.170], [15.200] apportionment of damages for .... [15.140] receivers, where .............................. [15.200] scope of liability .............................. [15.170] delivery of — see Delivery derelict, where .......................................... [21.70] general average ..... [13.480], [13.570], [13.650], [14.530], [18.10], [18.30], [18.60] discharge/forwarding ...................... [18.60] non-separation agreement ............... [18.60] shipowner’s lien ............. [13.480], [13.570], [13.650], [14.530], [18.80] “goods” defined ..................................... [17.130] insurable interest/subject of insurance policy, as ................................... [17.50], [17.130] loading operation under voyage charterparty and .............. [13.510]-[13.570], [13.630], [13.650] acceptance by shipowner of risks of agreed cargo .............................. [13.520] cesser clause ..................... [13.570], [13.650] charterer’s obligation to provide ....................... [13.510]-[13.550], [13.630] charterer’s right to provide .......... [13.520], [13.530] damage caused by .......... [13.520], [13.630] deadfreight ....................... [13.520], [13.540] “FIO” clause ..................... [13.560], [13.630] “FIOS” clause .................. [13.560], [13.630] “FIOST” clause ................ [13.560], [13.630] “free in, gross out” clause ............. [13.560] “gross in, free out” clause ............. [13.560] “gross terms” clause ....................... [13.560] “liner terms” clause ........................ [13.560] quantity of ........................ [13.510], [13.520] responsibility for loading/unloading ...................................... [13.510], [13.560] loss of right to limit liability where removal or destruction of ......................... [16.30] maritime lien over ........... [8.60], [8.90], [17.50] extension to freight ................. [8.60], [8.90] insurable interest, as ......................... [17.50] salvage of cargo, where ..................... [8.90] order of proof in claims ....................... [12.280] perils insured against ............................ [17.230] physical damage to ............... [15.170], [15.200]

1048

Shipping Law

Cargo — cont scope of liability in negligence where collision at sea .......... [15.170], [15.200] receiver of ................................ [13.480], [15.200] collision at sea and scope of liability in negligence where ..................... [15.200] sale while at sea to, and liability to pay demurrage ................................. [13.480] relationship between shipowner-carrier and owner of, where charterparty ....................................... [12.690]-[12.730] rescue from danger at sea of — see Salvage responsibility for, during period of time charterparty .............................. [14.360], [14.400]-[14.420] allocation of losses .......... [14.410], [14.420] liability for loss or damage ....................................... [14.400]-[14.420] overview ........................................... [14.400] salvable property, as ............... [20.60], [20.100], [20.110] shipowner’s lien over .......... [12.640], [13.480], [13.570], [13.650], [14.530]-[14.550], [17.50], [18.80] cesser clause and ............. [13.570], [13.650] deadfreight, for ................ [13.570], [14.530] demurrage, for ................ [13.480], [13.570], [13.650], [14.530] general average contributions, for ........................................ [13.650], [18.80] insurable interest, as ......................... [17.50] notice of readiness to discharge and ...................................................... [13.650] unpaid freight, for ......... [12.640], [13.570], [13.650], [14.530] Carriage of goods by sea — see also Contract of carriage; Sea-carriage documents average — see General average Baltic and International Maritime Conference approval of standard form contracts for .................................................. [11.60] bill of lading — see Bill of lading; Straight bill of lading “Both to Blame Collision Clause” ...... [15.140] “bulk carrier”, meaning of ..................... [11.10] carrier — see Carrier contracts for .... [1.90], [11.10], [11.60], [15.140] — see also Contract of carriage bill of lading — see Bill of lading; Straight bill of lading contract of affreightment — see Contract of affreightment demise charterparty — see Demise charter interlocking of several, examples of .......................................................... [1.90] nature and size of goods, effect of, on ........................................................ [11.10] sea waybill — see Sea waybill time charterparty — see Time charterparty voyage charterparty — see Voyage charterparty feeder service ............................................ [11.10] forum selection agreement ..................... [13.20]

freedom of contract ................................. [11.60] freight — see Freight freight forwarder — see Freight forwarder governing law .......................................... [12.40] interstate carriage, summary of ..... [12.40] — see also Hague-Visby Rules as modified in Australia; intrastate/territory carriage ............ [12.40] inward-bound international carriage to Australia, summary of ... [12.40] — see also Hague Rules; Hague-Visby Rules; Hague-Visby Rules as modified in Australia; Hamburg Rules outward-bound international carriage from Australia, summary of law relating to ................. [12.40] — see also Hague-Visby Rules as modified in Australia liability for damage or loss ...... [12.50]-[12.80], [12.740], [12.750] — see also Carrier after delivery to/receipt by carrier to time of delivery ................................... [12.50] before loading and after discharge ........................ [12.50], [12.740], [12.750] by whom ............................................ [12.60] contracting out of, whether ............ [12.80] during loading time to discharge time (“tackle-to-tackle” period) ........ [12.50] for what cargo ................................... [12.70] liner service ................................. [11.10], [11.50] meaning of ......................................... [11.10] overview of .................................. [11.10]-[11.90] sensitivity of world freight market ....... [11.50] tramp ship, meaning of .......................... [11.10] Carrier bill of lading as evidence of contract of carriage between shipper and .......... [11.20], [12.10], [12.270], [14.420] defences of ............. [12.280], [12.300], [12.320], [12.330], [12.370], [12.400], [12.460], [12.480], [12.490] — see also “immunities of”, below due diligence in relation to seaworthiness of ship ........................ [12.280], [12.300] excusable delay ............................... [12.320] generally ........................................... [12.370] inherent defect, quality or vice of goods ...................................... [12.280], [12.460] latent defects .... [12.280], [12.300], [12.480] onus of establishing ....... [12.370], [12.400], [12.490] reasonable deviation ....................... [12.330] defined ....................... [12.60], [12.370], [12.810] third party, whether included ...... [12.370] freight forwarder, whether ..... [11.80], [12.840] Hague Rules — see Hague Rules Hague-Visby Rules — see Hague-Visby Rules Hague-Visby Rules as modified in Australia — see Hague-Visby Rules as modified in Australia

Index Carrier — cont immunities of ........ [12.280], [12.300], [12.330], [12.370]-[12.500], [15.140] — see also “defences of”, above act of God ......................................... [12.420] act of public enemies/terrorists ... [12.430] act of war ......................................... [12.430] act or omission of shipper or owner of goods .......................................... [12.450] arrest, seizure, requisition or blockade of ship or goods under legal process ...................................................... [12.440] cause arising without fault of carrier ...................................................... [12.490] deviation, effect of, on ................... [12.330] fire ...................................................... [12.400] inherent defect, quality or vice of goods ...................................................... [12.460] insufficiency of packing ................. [12.470] insufficiency or inadequacy of marks ...................................................... [12.500] latent defects .................................... [12.480] negligence in navigation or management of ship ........................ [12.390], [15.140] perils, dangers and accidents of the sea ...................................... [12.410], [12.420] quarantine restrictions ................... [12.500] relationship with obligations ........ [12.280] riots .................................................... [12.500] saving or attempting to save life or property at sea .......................... [12.500] seaworthiness, in relation to ........ [12.300], [12.370] strikes or lock-outs ......................... [12.500] insurable interest of ................................. [17.50] issue of bill of lading to shipper by .... [11.20], [12.20], [12.100], [12.690] lien for unpaid freight .......................... [12.640] limitation of actions against ...... [12.580]-[12.620], [12.740], [12.800], [12.830] beating time bar .............................. [12.590] delivery, date of .............................. [12.600] extension of time, where ............... [12.580] extinguishment of claim, where ... [12.580] indemnity claim .............................. [12.620] “loss or damage”, meaning of ...... [12.580] notice by plaintiff of loss or damage ...................................................... [12.620] overview ........................................... [12.580] “suit”, what amounts to ................ [12.590] “tackle-to-tackle” period, claims arising outside ........................................ [12.610] when time begins to run .............. [12.580], [12.600], [12.610] wrongful deviation, where ............ [12.620] limitation of liability of ....................... [12.370], [12.510]-[12.570], [12.780], [12.840] breaking the limit ........................... [12.530] calculation of relevant limitation amount ....................................... [12.510]-[12.570] carriage from United States, where ...................................................... [12.560] delay .................................................. [12.540]

1049

gold value ........................................ [12.550] how arises ........................................ [12.510] multiple recovery by plaintiff, whether ...................................................... [12.570] national currency ............................ [12.550] packages, units and kilograms ..... [12.520] obligations of .......... [12.280]-[12.370], [12.410], [12.530], [13.630] breach of, whether .......................... [12.280] carriage without deviation ........... [12.290], [12.330]-[12.350], [12.370], [12.530] contracting out of, whether ....................... [12.310]-[12.330], [12.350] proper and careful carriage ......... [12.280], [12.290], [12.310], [12.370], [12.410], [13.630] reasonable despatch ....... [12.290], [12.320] relationship with immunities ....... [12.280] seaworthiness of ship ..... [12.280]-[12.300], [12.360], [12.370], [12.410], [12.530] order and burden of proof in cargo claims against ....... [12.280], [12.300], [12.400], [12.460], [12.480], [12.490] relationship between obligations and immunities of ............................ [12.280] relationship between shipowner-carrier and cargo-owner, where charterparty ....................................... [12.690]-[12.730] right to refuse to carry certain goods ...................................................... [12.650] who is? ........................ [12.10], [12.60], [12.370], [12.800]-[12.840] definitions ........... [12.60], [12.370], [12.810] division of responsibility for operation of ship ............................................. [12.800] freight fowarder, where . [12.800], [12.840] identity of carrier clause ................ [12.820] sea-carriage documents for carriage on time-chartered ship, where ....................................... [12.810]-[12.830] third party, whether ....................... [12.370] Caveat against arrest of ship ... [5.300], [5.310], [5.330] duration of ......................................... [5.330] procedure for ..................................... [5.310] against release of ship ............. [5.300], [5.320], [5.330] duration of ......................................... [5.330] procedure for ..................................... [5.320] forbidding registration of certain instruments in relevant Register ....... [5.230]-[5.300] caveatable interests .............. [5.230]-[5.260] caveat against arrest or release of ships distinguished .............................. [5.300] cessation of ......................................... [5.290] effect of ................................. [5.270], [5.280] liability of caveator without reasonable cause ............................................. [5.250] meaning and purpose of ... [5.230], [5.240] procedure for ....................... [5.230], [5.260] preventing transfer of property in registered ship, whether .............................. [5.280]

1050

Shipping Law

Caveat — cont preventing transmission of property in registered ship, whether ........... [5.270] Certificate of registration — see Registration certificate Charges over ships bottomry — see Bottomry classification of ................................ [7.10]-[7.30] generally ......................................... [7.10]-[7.110] legal costs and ............................................ [7.70] maritime lien — see Maritime lien mortgage — see Mortgage of ships position of, under Personal Property Securities Act 2009 (Cth) .... [7.40], [7.60], [8.360], [8.380], [8.390], [8.640], [9.80], [9.90], [10.20], [10.70]-[10.130] possessory (or common law) lien — see Possessory lien priority of — see Priority of charges respondentia — see Respondentia statutory charges — see Paramount statutory charge; Statutory lien Charterparty — see also Demise charter; Sea-carriage documents; Time charterparty; Voyage charterparty bill of lading and ...... [12.10], [12.690]-[12.720] charterer ... [12.700], [13.10], [14.540], [14.570], [15.20], [16.50], [17.40], [17.60], [19.40], [19.50], [19.80], [19.390], [20.220] entitlement to salvage reward, whether ...................................................... [20.220] insurable interest of, whether ........ [17.40], [17.60] liability for marine pollution of .... [19.40], [19.50], [19.80], [19.390] lien over ship under time charterparty, whether ...................... [14.540], [14.570] limitation of liability of .................... [16.50] meaning of ............. [13.10], [16.50], [19.40] obligations under voyage charterparty — see Voyage charterparty responsibilities under time charterparty — see Time charterparty sea-carriage document in hands of ...................................................... [12.700] vicarious liability for negligence of employee of, in collision at sea ........................................................ [15.20] generally .................................................... [12.10] relationship between cargo-owner and shipowner-carrier ...... [12.690]-[12.730] scope of liability in negligence, where collisions at sea ......................... [15.190] sea-carriage documents and contracts of carriage ....................... [12.690]-[12.730] sea way bill and ...... [11.30], [12.690], [12.700], [12.730] receipt, as ............................ [11.30], [12.700] straight bill of lading and .... [12.700], [12.730] receipt, as .......................................... [12.700]

Choice of law and forum limitation of liability under Limitation Convention 1976 and 1996 Protocol amendments and ....................... [16.10], [16.230]-[16.260] anti-suit injunction .......... [16.140], [16.260] forum non conveniens stay or dismissal ...................................... [16.240], [16.250] overview ........................................... [16.230] sea-carriage documents generally ....... [12.90], [12.670], [13.20] forum selection agreement ............. [12.90], [13.20] sea waybill and ........................ [12.90], [12.670] voyage charterparty, arbitration of disputes and ................................................ [13.20] Collisions at sea apportionment of damages ................... [15.10], [15.130]-[15.160] cargo .................................................. [15.140] causation and “last opportunity rule” ...................................................... [15.150] contribution and indemnity between wrongdoers ............... [15.130], [15.160] principle of apportionment ........... [15.130] ships .................................................. [15.130] Australian Maritime Safety Authority, role of .......................................... [15.70], [15.90] court application for enforcement of pecuniary penalties .................... [15.90] promulgation of Marine Orders ..... [15.70] breach of duty ............. [15.10], [15.60]-[15.110] Collision Regulations and determination of .................................... [15.60]-[15.110] common law, at ............................... [15.110] causation .................... [15.10], [15.120], [15.150] Collision Regulations and determination of ................................................. [15.120] “last opportunity rule” ......................... [15.150] Collision Regulations . [15.10], [15.60]-[15.130] accession by Australia to ................. [15.70] adoption into Australian law of .... [15.10], [15.70] assessors, use of .............................. [15.105] breach of, whether ........... [15.105]-[15.120] causation of collision ...................... [15.120] computer simulations, use of ....... [15.105] conduct of vessels in differing conditions of visibility .................................. [15.80] court proceedings for civil penalty order under ............................................ [15.90] determination of breach of duty under ......................................... [15.60]-[15.100] effect on civil liability for negligence of breach of .................................... [15.100] exemptions under ............................. [15.80] foundations for .................................. [15.60] lights that must be shown .............. [15.80] Marine Order 30 (Prevention of Collisions) 2009 (Cth), within ...................... [15.70] penalties for breach of ..................... [15.90] Sound and Light Signals ................. [15.80]

Index Collisions at sea — cont State and Territory legislation giving effect to ................................................... [15.70] Steering and Sailing Rules .............. [15.80] structure and provisions of ............. [15.80] Uniform Shipping Laws Code (USL Code), within .............................. [15.70] which version applies? .................... [15.70] contact between ships, whether essential ...................................................... [15.110] contributory negligence ......... [15.10], [15.130], [15.150] damages ...................... [15.10], [15.130]-[15.170] amount and measure of ................. [15.170] apportionment of ............................. [15.10], [15.130]-[15.160] damage suffered ........ [15.10], [15.50], [15.130], [15.140], [15.170]-[15.200], [17.250] peril insured against ...................... [17.250] personal injury or death ................ [15.130] physical, by cargo ............ [15.50], [15.140], [15.170] physical, by ship .............. [15.50], [15.130], [15.170] pure economic loss .......... [15.180]-[15.200] division of loss .......... [15.10], [15.130]-[15.160] cargo .................................................. [15.140] causation and “last opportunity rule” ...................................................... [15.150] contribution and indemnity between wrongdoers ............... [15.130], [15.160] principle of apportionment ........... [15.130] ships .................................................. [15.130] duty of care ................................. [15.10], [15.50] establishment of ................................ [15.50] Exclusive Economic Zone, in . [15.70], [15.130] high seas, on ............... [15.10], [15.70], [15.130] relevant law of the forum ............... [15.10] inland waters, in ...................................... [15.70] International Convention for the Unification of Certain Rules of Law with respect to Collisions 1910 ..................... [15.130] liability in negligence for damage ......................................... [15.10]-[15.290] breach of duty ...... [15.10], [15.60]-[15.110] causation ............. [15.10], [15.120], [15.150] concurrent wrongdoers .. [15.130], [15.160] contributory negligence .. [15.10], [15.130], [15.150] division of loss ... [15.10], [15.130]-[15.160] duty of care owed by defendant ship .......................................... [15.10], [15.50] in rem, of ship ................................... [15.20] limitation of ..................................... [15.130] limitation periods ............. [15.210]-[15.290] personal injury or death, where ... [15.130] personal, of master and crew ......... [15.20] pilotage provider immunity from .. [15.30] pilot immunity from ........................ [15.30] port authority immunity from ....... [15.30] presumption of negligence, whether ...................................................... [15.110] proportionate ................................... [15.130] scope of ................ [15.10], [15.170]-[15.200]

1051

tugowner, whether of ....................... [15.40] vicarious liability of charterer ........ [15.20] vicarious liability of shipowner .... [15.10], [15.20]-[15.40] limitation of liability ............................. [15.130] limitation periods ................... [15.210]-[15.290] Commonwealth ............................... [15.210] New South Wales ............. [15.220]-[15.250] Northern Territory ........... [15.220]-[15.250] Queensland ....................... [15.260]-[15.290] South Australia ................. [15.260]-[15.290] Tasmania ............................ [15.220]-[15.250] Victoria ............................... [15.260]-[15.290] Western Australia ............. [15.260]-[15.290] Northern Territory waters, in ................ [15.70] overview of law about ............................ [15.10] scope of liability ........ [15.10], [15.170]-[15.200] charters, where ................................ [15.190] common law rule ............................ [15.170] physical damage to ship or cargo ...................................................... [15.170] pure economic loss .......... [15.180]-[15.200] receivers of cargo, where ............... [15.200] transferred loss ................. [15.180]-[15.200] uniform Australian rule ................. [15.170] State waters, in ......................................... [15.70] territorial sea, within . [15.10], [15.70], [15.130] Collision Regulations — see Collisions at sea Compensation for pollution damage — see also Marine pollution amount recoverable ................ [19.20], [19.210], [19.230], [19.370] basis of liability ...... [19.220], [19.320]-[19.360], [19.390] Bunker Convention, under ..... [19.20], [19.30], [19.210], [19.390] adoption into Australian law of .... [19.30], [19.390] application of ................... [19.210], [19.390] basis of liability ............................... [19.390] Civil Liability Convention 1992 distinguished ............................ [19.390] defences ............................................ [19.390] Limitation Convention 1976 and . [19.390] limitation of liability ...................... [19.390] “pollution damage”, meaning of . [19.390] Civil Liability Convention 1992, under .......... [19.20], [19.30], [19.210]-[19.290], [19.320]-[19.370], [19.390], [19.400] basis of liability ............................... [19.220] Bunker Convention distinguished ...................................................... [19.390] defences ........... [19.290], [19.340], [19.370], [19.390] financial incapacity of shipowner ...................................... [19.320], [19.350] jurisdiction of Australian courts .. [19.220] liability insurance .......... [19.240], [19.340], [19.350] limitation fund ................ [19.260], [19.270] limitation of liability ...... [19.240]-[19.280], [19.320], [19.360], [19.390]

1052

Shipping Law

Compensation for pollution damage — cont “owner” defined ............................. [19.240] “pollution damage” defined ........ [19.220], [19.230], [19.400] procedure for claim ........................ [19.240] purpose of .......................... [19.20], [19.210] who is liable to pay ....... [19.220], [19.240], [19.320]-[19.360] who may claim ................................ [19.230] defences to claim .. [19.240], [19.290], [19.340], [19.370], [19.390] Fund Convention 1992, under ............. [19.20], [19.30], [19.210], [19.300]-[19.390] adoption into Australian law of .... [19.30], [19.210], [19.310] amount available ............................. [19.370] application of ................... [19.210], [19.300] basis of liability ................ [19.320]-[19.360] defences ............................................ [19.340] limitation of liability ...................... [19.370] no indemnity of shipowner’s liability ...................................................... [19.380] “pollution damage”, meaning of . [19.330] purpose of .......... [19.20], [19.210], [19.300] “second tier” compensation ......... [19.210], [19.300] liability insurance .. [19.240], [19.340], [19.350] absence of ......................... [19.340], [19.350] defences of insurer ......................... [19.240] P & I Clubs ...................................... [19.240] pollution damage, for .................... [19.240] Limitation Convention 1976 ............... [19.240], [19.260]-[19.280], [19.390] Bunker Convention and ................ [19.390] limits of liability in ......................... [19.390] loss of right to limit liability, where ...................................................... [19.280] limitation of liability ............. [19.240]-[19.280], [19.320], [19.360], [19.370], [19.390] damage exceeds .............. [19.320], [19.360] loss of, where ................................... [19.280] oil pollution ............................. [19.210]-[19.390] “pollution damage”, meaning of ....... [19.220], [19.230], [19.330], [19.390], [19.400] preventative measures included in claim ...................... [19.220], [19.230], [19.400] procedure for claim ............... [19.240], [19.390] “second tier” ........................... [19.210], [19.300] Supplementary Fund Protocol 2003 .... [19.20], [19.210], [19.300]-[19.370] adoption into Australian law of .... [19.20], [19.310] amount available ............................. [19.370] application of ................... [19.210], [19.300] basis of liability ................ [19.320]-[19.360] limitation of liability ...................... [19.370] no defences ...................................... [19.340] “pollution damage”, meaning of . [19.330] purpose of ........................ [19.210], [19.300] “third tier” compensation ............ [19.210], [19.300] “third tier” .............................. [19.210], [19.300] who is liable to pay .............. [19.220], [19.240], [19.320]-[19.360]

who may claim ...................................... [19.230] Consignment note — see also Carriage of goods by sea; Sea-carriage documents application of Australian-modified Hague-Visby Rules to, where .. [12.40] meaning of ................................................ [12.40] issue by freight forwarder of .. [11.80], [11.90], [12.840] Constitutional powers — see Shipping law powers Construction of ship acquisition by .................................. [6.10]-[6.40] applicable law ..................................... [6.20] meaning of ........................................... [6.10] passing of property ................ [6.30], [6.40] third party, by ...................................... [6.20] builder’s certificate .................................. [3.260] passing of property ....................... [6.30], [6.40] no provision in shipbuilding contract, where .............................................. [6.40] provision in shipbuilding contract, where .......................................................... [6.30] Contract of affreightment — see also Carriage of goods by sea; Contract of carriage advantages of ............................................ [11.40] agreed freight rate ................................... [11.40] cargo to be carried, amount of ............ [13.670] function of ................................................. [11.40] fundamental aspects of ......................... [13.670] generally .......................... [11.10], [11.40]-[11.60] laytime/cancelling period .................... [13.670] meaning of .................. [11.10], [11.40], [13.670] period of time for performance .......... [13.670] sensitivity of world freight market and ........................................................ [11.50] standard forms ......................... [11.60], [13.670] voyage charterparty distinguished ..... [13.670] voyages necessary, number of ............. [13.670] Contract of carriage — see also Sea-carriage documents advance freight payment ........................ [17.60] bill of lading, whether always .............. [12.10] breach of .................................................. [12.280] carrier’s obligations, liabilities and immunities under ........ [12.280]-[12.570] — see also Carrier chartered ship, on ..... [12.10], [12.690]-[12.730] — see also Time charterparty; Voyage charterparty charterparty — see Charterparty; Time charterparty; Voyage charterparty contract of affreightment — see Contract of affreightment effect on jurisdiction of Commonwealth or State or Territory courts of ....... [12.90] evidence of ... [11.20], [12.10], [12.20], [12.270], [14.420]

Index Contract of carriage — cont bill of lading as ... [11.20], [12.10], [12.270], [14.420] extrinsic ............................................. [12.270] sea waybill as .................... [12.20], [12.270] formation of ............................................ [12.270] governing law of ..................................... [12.90] Himalaya clause .... [12.370], [12.740], [12.830], [12.840] limitation of actions under ... [12.580]-[12.620] — see also Carrier; Limitation of actions redress of historical inequality of bargaining power of shipper about ............ [12.30] sea-carriage document and ..... [12.10], [12.20], [12.270]-[12.750] — see also Sea-carriage documents relationship between ...................... [12.270] sea-carriage document as evidence of terms of ....... [12.10], [12.20], [12.270] — see also Sea-carriage documents shipper’s obligations under ................ [12.110], [12.630]-[12.660] goods liable to cause delay ........... [12.650] guarantee of accuracy of particulars ...................... [12.110], [12.630], [12.660] non-dangerous goods ..... [12.630], [12.650] payment of freight .......... [12.630], [12.640] ship’s delivery order as evidence of .. [12.670] third party, whether protected by Himalaya clause of .... [12.370], [12.740], [12.830], [12.840] title to sue under ................... [12.670], [12.680] transfer of rights and liabilities under ...................................... [12.670], [12.680] transfer of title ........................ [12.670], [12.680] void, where ............................................... [12.90] Craft — see also Wing-in-ground effect craft alternative for “vessel”, as ...... [1.100], [1.120], [1.150], [1.170], [1.340] meaning of .................................. [1.340], [3.310] small, meaning of .................................... [3.310] Crew ambit of term ............................................ [8.240] distressed ship, of .................. [20.290], [20.390] duty to save ship and cargo ................ [20.290] insurable interest of ................................. [17.70] liability for marine pollution of .......... [19.100] meaning of ................................................ [8.240] member of, defined ................................. [8.240] misconduct/negligence of, where proximate cause of loss by peril insured against ...................................................... [17.310] personal liability in negligence of, where collision at sea ............................ [15.20] salvaging ship, of ................... [20.310], [20.320] salvor, whether can be .......................... [20.290] synonym for “seaman”, as ..................... [8.240] termination of contract of service when ordered to abandon ship ........ [20.290] vicarious liability of shipowner for negligence of ..................................... [15.10], [15.20]

1053

wages of .............. [7.30], [8.10], [8.220]-[8.270], [8.310], [8.400], [8.420]-[8.440], [8.500], [9.30], [17.70] insurable interest, as ......................... [17.70] maritime lien for .................... [7.30], [8.10], [8.220]-[8.270], [8.310], [8.400], [8.420]-[8.440], [8.500], [9.30] meaning of ......................................... [8.230] Criminal law on board ships Australian ships .......................... [4.100]-[4.120] before current cooperative scheme ........................................................ [4.110] current cooperative scheme ........... [4.110], [4.120] generally ............................................. [4.100] British ships .............................................. [4.100] interstate voyage ...................................... [4.110] Crown immunity from process of ....................... [8.80] limitation of liability of .......................... [16.50] salvage claims by and against ............. [20.810] sovereign right to protect and preserve marine environment in Exclusive Economic Zone ......................... [19.400] sovereignty over territorial sea vested in, in right of Commonwealth .......... [2.350], [15.70], [19.400] unclaimed wreck, right to, of .............. [21.180]

D Damage caused by ship collision at sea, where — see Collisions at sea damages for — see Damages marine pollution — see Compensation for pollution damage; Marine pollution; Oil pollution maritime lien for ........................... [7.30], [8.10], [8.120]-[8.180], [8.310], [8.420], [8.440], [8.500] causation ............................................. [8.160] “damage”, meaning of ....... [8.130], [8.140] freight earned by damaged ship .... [8.180] limitation period ............................... [8.500] limits of claim ...................... [8.120], [8.170] location of accident, whether relevant ........................................................ [8.170] meaning of “ship” for purposes of ........................................................ [8.160] negligence or other wrongful act of shipowner .................................... [8.150] priority of ............................. [8.420], [8.440] Damages breach of contract, for .............. [13.70], [13.80], [13.130], [13.140], [13.190], [13.430], [13.520], [13.540], [13.550], [13.600]-[13.620], [14.50]-[14.80], [14.100]-[14.130], [14.180], [14.200],

1054

Shipping Law

Damages — cont [14.240], [14.250], [14.300], [14.310], [14.500], [17.10], [17.90] insurance broker, by ......................... [17.90] marine insurer, by ............................. [17.10] time charterparty ................ [14.50]-[14.80], [14.100]-[14.130], [14.180], [14.200], [14.240], [14.250], [14.300], [14.310], [14.500] voyage charterparty .......... [13.70], [13.80], [13.130], [13.140], [13.190], [13.430], [13.520], [13.540], [13.550], [13.600]-[13.620] collisions at sea, where .......................... [15.10], [15.130]-[15.170], [15.190] amount and measure of ................. [15.170] apportionment of ............................. [15.10], [15.130]-[15.160] demise charterparty, where ........... [15.190] negligence by insurance broker, for ..... [17.90] Dangerous goods shipper’s obligations in relation to .... [12.630], [12.650] Deadfreight charterer’s liability for ......... [13.520], [13.540], [13.550] measure of ............................................... [13.540] shipowner’s lien over cargo for ......... [13.570], [14.530] Death — see Loss of life Defence force ships Australian — see Australian defence force ships foreign .......................... [16.50], [16.80], [19.190] dumping and ................................... [19.190] exclusion from application of limitation of liability law ................... [16.50], [16.80] Delay breach of voyage charterparty by ....... [13.610] carrier’s defence of excusable .............. [12.320] carrier’s limited liability for . [12.540], [16.110] frustration of time charterparty by .... [14.480] limitation of liability in claim for loss arising from ............................ [12.540], [16.110] laches by maritime lienee, following change of ownership ............................... [8.450] loading cargo, in, as exception to/suspension of laytime in voyage charterparty ...................................................... [13.560] repudiation of contract for voyage charterparty where unreasonable ...................................................... [13.610] shipper’s obligations in relation to goods liable to cause ........................... [12.650] uninsured peril, as ................................. [17.270] Delivery bill of lading, under ............... [11.20], [12.770], [12.780]

entitlement to, at port of discharge ........................................ [11.20], [12.770] misdelivery, exclusion and limitation of liability ....................................... [12.780] carrier’s liability for damage or loss .... [12.50] after receipt to time of ..................... [12.50] limitation of actions and date of .. [12.600] registration certificate, of ......... [3.410], [6.120], [6.170], [6.180] on demand ......................................... [3.410] Registrar of Ships, to ......... [6.120], [6.170], [6.180] straight bill of lading, under, entitlement of consignee to .............................. [12.760] time charterparty, under ........................ [14.50], [14.170]-[14.210], [14.480], [14.520] bunkers on ....................... [14.200], [14.520] cancelling date ................................. [14.180] commencement of charter period on ...................................................... [14.210] frustration of contract by delay in ...................................................... [14.480] late ..... [14.190], [14.210], [14.240], [14.480] meaning of ....................................... [14.170] moment of ........................................ [14.190] non-delivery ..................................... [14.180] place of ............................. [14.180], [14.190] seaworthiness of ship at time for ...................................................... [14.120] time for ............................................. [14.180] wrong ship, of ................................... [14.50] Demise charter Australian-based operator, to . [3.100], [3.120], [3.130], [3.310], [3.320], [4.230] exemption from registration of ship .......................................... [3.100], [3.120] optional registration of ship .......... [3.130], [3.310], [3.320] overseas voyage ................................ [4.230] collisions concerning, and recovery of damages ..................................... [15.190] foreign resident, to ..... [3.100], [3.120], [3.580], [3.590] closure of registration of ship for period of ..................................... [3.580], [3.590] exemption from registration of Australian-owned ship ............ [3.100], [3.120] re-registration of ship after reverting to control of Australian owners ... [3.580] suspension certificate, where .......... [3.590] function of ................................................. [11.70] insurable interest of charterer ............... [17.40] meaning of ...................... [3.120], [5.50], [11.70] “owner” of ship under, meaning of ...... [5.50], [5.90], [5.100] salvage reward and ............................... [20.220] time charterparty distinguished ........... [11.70], [14.170] voyage charterparty distinguished ....... [11.70] Demurrage voyage charterparty, under . [13.150], [13.170],

Index Demurrage — cont [13.190], [13.210], [13.360], [13.390], [13.430]-[13.490], [13.560], [13.570], [13.640], [13.650], [14.530] arrival at discharging port and already on ...................................................... [13.640] burden of proof in claiming ......... [13.360] currency of ....................................... [13.440] discharge of ...................................... [13.570] duration of ....................... [13.450], [13.460] exclusion clauses interrupting ...... [13.460] liability to pay . [13.150], [13.430], [13.480] limitation of time for making claim for ...................................................... [13.490] meaning of ....................... [13.150], [13.430] not payable, where ......... [13.190], [13.210] not provided for in contract, where ...................................................... [13.430] rate of ................ [13.430], [13.440], [13.460] payment by charterer if “over par” during loading operation .... [13.150], [13.170], [13.190], [13.210], [13.360], [13.390], [13.430]-[13.490], [13.560], [13.570] payment of discharge ..................... [13.650] sale of cargo while at sea to receiver, and liability for ................................. [13.480] shipowner’s lien over cargo for .. [13.480], [13.570], [13.650], [14.530] shipowner’s “default” interrupting ...................................................... [13.470] Derelict — see also Wreck meaning of ................................ [20.630], [21.70] res derelicta distinguished ..................... [21.70] salvage services to ................................. [20.630] Despatch carrier’s obligation of reasonable ....... [12.290], [12.320] payment by shipowner of, under voyage charterparty, ............. [13.150], [13.320], [13.430], [13.500] liability to pay ................. [13.320], [13.500] meaning of “despatch” .. [13.150], [13.430] rate of ................................................ [13.500] shipowner’s obligation of reasonable or due ..... [12.320], [13.120], [13.580], [13.610], [14.80], [14.90] time charterparty, under .... [14.80], [14.90] voyage charterparty, under .......... [12.320], [13.120], [13.580], [13.610] Destruction of ship — see Loss of ship Detention of ship chartered ship, of, as breach of contract for voyage charterparty ................. [13.430] paramount statutory charge and ........... [7.80], [7.90] suspension of ............................................ [7.100] unregistered ship required to be registered, of .......................................................... [3.90]

1055

Deviation carrier’s obligation of no unjustifiable/unreasonable .... [12.290], [12.330]-[12.350], [12.370], [12.530], [12.620], [13.620] breach of ........................... [12.620], [13.620] defences for breach of .................... [12.330] limitation of action where breach of ...................................................... [12.620] liberty clause under voyage charterparty ...................................................... [13.620] shipowner’s obligation of no unjustifiable, under voyage charterparty .... [12.330], [13.10], [13.580], [13.600]-[13.630] unauthorised deck carriage as equivalent to, whether ...................................... [12.340] “unreasonable”, meaning of ................ [12.330] Dumping — see also Marine pollution Commonwealth law .............. [19.190], [19.200] “controlled material”, meaning of ...... [19.190] defences ................................................... [19.190] defence vessels and aircraft and ......... [19.190] Dumping Convention Protocol ............ [19.20], [19.30], [19.190], [19.200] adoption into Australian law of .... [19.30], [19.190] application of ................... [19.190], [19.200] mineral exploitation and ............... [19.190] offences ............................................. [19.190] penalties ............................................ [19.190] permit for ......................................... [19.190] purpose of ........................................ [19.190] State law ........................................... [19.200] Duty of care — see also Collisions at sea agent, of ..................................................... [13.30] breach of, causing collision at sea ....... [15.10], [15.20]-[15.40], [15.60]-[15.130], [15.150], [15.160] causation ............. [15.10], [15.120], [15.150] charterer, vicarious liability for ...... [15.20] Collision Regulations and determination of .................................... [15.60]-[15.110] common law, at ............................... [15.110] concurrent wrongdoers .. [15.130], [15.160] master’s and crew’s personal liability for ........................................................ [15.20] pilotage provider’s immunity from liability for ................................... [15.30] pilot’s immunity from liability for ........................................................ [15.30] port authority’s immunity from liability for .................................................. [15.30] shipowner’s vicarious liability for ............................. [15.10], [15.20]-[15.40] tugowner’s liability for, whether ... [15.40] Collision Regulations . [15.10], [15.60]-[15.130] determination of breach of duty under ......................................... [15.60]-[15.110] effect on civil liability for negligence of breach of .................................... [15.100]

1056

Shipping Law

Duty of care — cont contributory negligence ......... [15.10], [15.130], [15.150] establishment of ......................... [15.10], [15.50] insurance broker, of ................. [17.90], [17.100]

obligation/right to fly national flag or national colours ............. [3.140], [4.70], [4.150], [4.170], [4.190], [4.210] offences relating to ............................ [4.150] description of ship under time charterparty ........................................................ [14.60]

E Equitable interests equitable mortgage of ships .................. [10.70] registered ship, in .......... [5.30], [5.150]-[5.170], [5.210] no statutory restrictions on ............. [5.150] ownership in common of shares ...... [5.30] recognition of ....................... [5.150], [5.170] registration and entry on relevant Register of information about ... [5.160], [5.170] time charterparty and equitable set-off of hire payment ..................................... [14.320] Estoppel receipt as to condition of goods and, ...................................... [12.140], [12.150] common law, at ............................... [12.150] Hague Rules, Hague-Visby Rules and Australian-modified Hague-Visby Rules, under .............................. [12.140] waiver of breach of insurance warranty by ...................................................... [17.620] withdrawal from contract for time charterparty and ......................... [14.30] Exclusive Economic Zone of Australia Australia’s right to protect and preserve marine environment in ........... [19.400] collisions in ............................... [15.70], [15.130] wreck in ................... [21.120], [21.150], [21.190]

F Fire actual total loss of ship by destruction ...................................................... [17.340] carrier’s immunity ................................. [12.400] Fisheries — see Shipping law powers Fishing vessel boat or ship, as ........................................... [1.20] definition of .............................................. [3.320] exemption from registration of ............. [3.100] Flag Australian nationality, of ........... [3.140], [4.70], [4.90], [4.150]-[4.170], [4.190] alternatives to, right to fly ............. [4.160], [4.170] Australian waters, in .......... [4.150]-[4.170], [4.190] high seas, on ...................................... [3.140]

Flying boat exclusion from meaning of “ship” ....... [1.250] exclusion from meaning of “vessel” ... [1.210], [1.250] Foreign ship defence forces ............. [16.50], [16.80], [19.190] dumping and ................................... [19.190] exclusion from application of Limitation Convention 1976 of ...... [16.50], [16.80] exclusion from Australian registration of ........................................................ [3.140] master of ...................................................... [4.30] wreck of, in territorial sea ..... [21.20], [21.100], [21.120], [21.150] Freight adjunct of salvable property, as ........... [8.190], [20.60], [20.110], [20.120] bill of lading, under .............. [14.470], [14.560] bottomry as charge on .............................. [9.50] contract of affreightment and agreed rate ........................................................ [11.40] defined ..................................................... [13.660] insurable interest/subject under marine insurance policy .......... [17.10], [17.30], [17.60], [17.120], [17.130], [17.190], [17.200], [17.220], [17.240], [17.360], [17.440], [17.500], [17.520], [17.540] abandonment ................................... [17.440] actual total loss by deprivation .... [17.360] franchise clause ............................... [17.540] insurable value ................................ [17.500] measure of indemnity for partial loss ...................................................... [17.520] perils covered .................. [17.220], [17.240] lien for unpaid ...... [12.640], [13.570], [13.650], [14.530]-[14.550] lien over sub-freights ........... [14.530], [14.540], [14.560] maritime lien over .......... [8.60], [8.90], [8.180], [8.190], [8.220] meaning of ...... [8.60], [8.90], [13.660], [17.130] mortgage of ship including charge on ..... [10.150], [10.170], [10.190], [10.290], [10.310] perils insured against ............................ [17.220] sea waybill, liability to pay, under ..... [12.640] sensitivity of world market .................... [11.50] straight bill of lading, liability to pay, under ...................................................... [12.640] sub-freights, lien over .......... [14.530], [14.540], [14.560] time charterparty, under .......... [11.70], [14.10], [14.470], [14.530], [14.540], [14.560]

Index Freight — cont payment of, after withdrawal of ship ...................................................... [14.470] shipowner’s lien over sub-freights ...................... [14.530], [14.540], [14.560] unpaid, lien for ..... [12.640], [13.570], [13.650], [14.530]-[14.550] voyage charterparty, under ..... [13.30], [13.40], [13.140], [13.150], [13.440], [13.520], [13.540], [13.550], [13.570], [13.590], [13.620], [13.650], [13.660], [14.530] advance ............................. [13.590], [13.660] arbitration of dispute where non-payment of, whether ................................ [13.660] currency for ...................................... [13.440] deviation by shipowner and payment of ...................................................... [13.620] fixing of rate ...................... [13.30], [13.660] laytime bought and paid for within ...................................................... [13.150] non-payment of, summary judgment where .......................................... [13.660] obligation of charterer to pay ....... [13.660] payment by charterer of deadfreight as damages for breach ................ [13.520], [13.540], [13.550] payment of ....................................... [13.660] rates ................................................... [13.660] shipowner’s lien over cargo for .. [13.570], [13.650], [14.530] Worldscale tables ............ [13.440], [13.660] Freight forwarder agent, as ..................... [11.80], [12.800], [12.840] carrier, whether ........................ [11.80], [12.840] consignment note, issue of, by ............. [11.80], [11.90], [12.840] “house” bill of lading, issue of, by ...... [11.80], [12.800], [12.840] liability of ................................................ [12.840] quasi-bailment ........................................ [12.840] roles of ....................... [11.80], [12.800], [12.840] sea waybill and ........................................ [11.80] slot charter and ........................................ [11.80] straight bill of lading and ...................... [11.80] sub-bailment ........................................... [12.840] sub-contracting by ................................. [12.800]

G General average adjustment of .... [18.10]-[18.30], [18.50]-[18.70] fault, whether relevant ..................... [18.70] forwarded cargo, where .................. [18.60] place where done .............................. [18.50] professional average adjusters ....... [18.50] statement of, whether binding ....... [18.50] value of interests ................. [18.50], [18.60] “average”, meaning of ............................ [18.10] cargo . [13.650], [18.10], [18.30], [18.60], [18.80] discharge/forwarding of ................. [18.60] non-separation agreement ............... [18.60] shipowner’s lien over ....... [13.650], [18.80]

1057

causation ...................................... [18.10], [18.40] claim for ....................................... [18.10]-[18.40] circumstances allowing ..... [18.10], [18.20], [18.40] limitation period ............................... [18.30] onus of proof ..................................... [18.30] when cause of action arises ............ [18.30] who by ................................................ [18.30] common danger ....................................... [18.10] contribution from interested parties ... [18.10], [18.30], [18.50]-[18.90] Bigham cap ........................................ [18.60] disputes about amount of ............... [18.50] fault, whether relevant ..................... [18.70] New Jason Clause ............................. [18.70] proportionality with value of interests .......................................... [18.50], [18.60] salvage, where ................................... [18.90] securing payment of ......................... [18.80] environmental damage, prevention or minimisation of .......................... [18.40] exceptional nature of ............................... [18.10] exclusion from limitation of liability of claim for contribution in ................... [16.150] extraordinary expenditure ..................... [18.20] general average act .................... [18.20], [18.40] consequences of ................................ [18.40] defined ................................................ [18.20] generally ....................................... [18.10]-[18.90] limitation period for claim ..................... [18.30] marine insurance and .......... [17.320], [17.450], [17.460], [18.10] partial loss ........ [17.320], [17.450], [17.460] meaning of ................................................ [18.10] onus of proving allowable loss or expense ........................................................ [18.30] ordinary wear and tear expenses ......... [18.40] particular average distinguished .......... [18.10] perils insured against and .................... [17.220] pollution damage/liabilities .... [18.40], [18.90] sacrifice .......................................... [18.10], [8.20] salvage expenses .......... [18.10], [18.40], [18.90] shipowner’s lien over cargo ............... [13.480], [13.570], [13.650], [14.530], [18.80] temporary repair expenses ...... [18.10], [18.40] towage expenses ........................ [18.10], [18.40] York-Antwerp Rules ................... [18.10]-[18.90] application of rules within . [18.20]-[18.90] different versions of .......................... [18.10] historical development of ................ [18.10] how take effect .................................. [18.10] international unification .................. [18.10] lettered rules as general principles ........................................................ [18.20] numbered rules as specific examples ........................................................ [18.20] Rule of Interpretation ....................... [18.20] Rule Paramount ................................ [18.20] rules within, overview of ................ [18.20] which version applies ...................... [18.10] Government ship definition of .............................................. [3.320] exemption from registration of ............. [3.100]

1058

Shipping Law

Government ship — cont limitation of liability and ....................... [16.20]

H Hague Rules — see also International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 adoption by Australia of .......... [12.30], [12.40] amendment by 1968 Protocol of ...... [12.30] — see Hague-Visby Rules application of .............. [12.40]-[12.80], [12.100], [12.610], [12.730]-[12.750] bills of lading for inward-bound international carriage from contracting states, to ...... [12.40], [12.50] — see also Bill of lading contracting out prohibited .............. [12.80] deck cargo excepted from ............... [12.70] live animals excepted from ............. [12.70] loading time to discharge time (“tackle-to-tackle” period), to . [12.50], [12.610], [12.740], [12.750] straight bill of lading or sea waybill for goods on chartered ship, whether to ...................................................... [12.730] time when, and duration ................ [12.50], [12.610], [12.740], [12.750] whom, to ............................ [12.60], [12.100] arbitration clauses and choice of law and forum ............ [12.580], [12.590], [13.20] cargo claims under ............... [12.280], [12.830], [14.160], [14.410], [15.140], [15.200], [16.100] apportionment of ............................ [14.410] damage or loss from collision ...... [15.140] limitation of actions ........................ [14.160] limitation of shipowner’s liability ...................................... [12.830], [16.100] order of proof .................................. [12.280] receiver of cargo .............................. [15.200] cargo-owner, rights and liabilities of ... [12.50] carrier ........... [12.50], [12.60], [12.280]-[12.340], [12.360]-[12.510], [12.550]-[12.620], [12.740], [12.780], [12.800], [12.810]-[12.840], [13.630], [15.140] circular indemnity clause and ..... [12.820], [12.840] defined ................................ [12.60], [12.810] immunities/defences of ................ [12.280], [12.300], [12.370]-[12.500], [15.140] — see also Carrier liabilities of ........ [12.50], [12.320], [12.610], [12.740] limitation of actions against ...... [12.580]-[12.620], [12.740], [12.800], [12.830] — see also Carrier; Limitation of actions limitation of liability of . [12.370], [12.510], [12.550]-[12.570], [12.780], [12.840] — see also Carrier; Limitation of liability

obligations of ... [12.280]-[12.340], [12.360], [13.630] — see also Carrier rights outside “tackle-to-tackle” period ........................................................ [12.50] dangerous goods .................... [12.630], [12.650] effect on functions of bill of lading of . [12.10] historical development of ...................... [12.30] incorporation by reference of ............. [12.270], [12.690], [12.780], [13.20], [13.600], [13.610], [13.630], [14.130], [14.150], [14.160], [14.400], [14.410], [18.70] sea-carriage documents, in ........... [12.270], [12.690], [12.780] time charterparty, whether in ...... [14.130], [14.150], [14.160], [14.400], [14.410] voyage charterparty, whether in ... [13.20], [13.600], [13.610], [13.630], [14.150], [18.70] issue of sea-carriage document .......... [12.100], [12.110] limitation of actions .............. [12.580]-[12.620], [12.740], [12.800], [12.830], [14.160], [14.400], [18.30] carrier, against . [12.580]-[12.620], [12.740], [12.800], [12.830] general average claim ...................... [18.30] indemnity claim .............................. [14.400] loss or damage claim ..................... [14.160] potential replacement by Rotterdam Rules of ........................................................ [12.30] receipt as to condition of goods ....................................... [12.130]-[12.170] apparent condition unknown ....... [12.170] lumber clause .................................. [12.170] position of consignee or indorsee ...................................................... position of shipper ......................... Retla rust clause .............................. “said to contain” .............................

[12.150] [12.130] [12.170] [12.160]

“shipper’s load, stow and count” ...................................................... [12.160] receipt as to “leading marks” .............. [12.240] receipt as to quantity or weight of goods ...................... [12.180], [12.200], [12.210] seaworthiness under ............. [12.280]-[12.300], [12.360], [12.370], [12.410], [14.130], [14.150], [14.160], [14.410] Clause Paramount ......... [14.150], [14.160], [14.410] shipowner .............. [12.830], [13.600], [13.630], [14.400], [16.100] limitation of liability of .. [12.830], [16.100] obligations of ................... [13.600], [14.400] shipper, obligations of .......................... [12.110], [12.630]-[12.660] guarantee of particulars of goods ...................... [12.110], [12.630], [12.660] non-dangerous goods ..... [12.630], [12.650] payment of freight .......... [12.630], [12.640] third party as shipper on chartered ship ...................................................... [12.710]

Index Hague-Visby Rules adoption by Australia of ......... [12.30], [12.40], [12.340] amendments/modifications by Australia to ....................... [12.30], [12.40] — see also Hague-Visby Rules as modified in Australia application by countries other than Australia of ................................................... [12.40] application in Australia of ....... [12.40]-[12.80], [12.100], [12.340], [12.610], [12.730]-[12.750] bills of lading for inward-bound international carriage from contracting states, to ...... [12.40], [12.50] — see also Bill of lading contracting out prohibited .............. [12.80] deck cargo excepted from .............. [12.70], [12.340] live animals excepted from ............. [12.70] loading time to discharge time (“tackle-to-tackle” period), to . [12.50], [12.610], [12.740], [12.750] straight bill of lading or sea waybill for goods on chartered ship, whether to ...................................................... [12.730] time when and duration . [12.50], [12.740], [12.750] whom, to ............................ [12.60], [12.100] arbitration clauses and choice of law and forum ............ [12.580], [12.590], [13.20] cargo claims under ............... [12.280], [12.830], [14.160], [14.410], [15.140], [15.200], [16.100] apportionment of ............................ [14.410] damage or loss from collision ...... [15.140] limitation of actions, for ................ [14.160] limitation of shipowner’s liability ...................................... [12.830], [16.100] order of proof .................................. [12.280] receiver of cargo .............................. [15.200] cargo-owner, rights and liabilities of ... [12.50] carrier ........... [12.50], [12.60], [12.280]-[12.340], [12.360]-[12.530], [12.580]-[12.620], [12.740], [12.750], [12.800]-[12.840], [13.630], [15.140] circular indemnity clause and ..... [12.820], [12.840] defined ................................ [12.60], [12.810] immunities of ................. [12.280], [12.300], [12.370]-[12.500], [15.140] — see also Carrier liabilities of ........ [12.50], [12.320], [12.610], [12.740], [12.750] limitation of actions against ...... [12.580]-[12.620], [12.740], [12.800], [12.830] — see also Carrier; Limitation of actions limitation of liability of ................. [12.370], [12.510]-[12.530], [12.840] — see also Carrier; Limitation of liability obligations of ... [12.280], [12.290]-[12.340], [12.360], [13.630] — see also Carrier

1059

rights outside “tackle-to-tackle” period ........................................................ [12.50] choice of forum clause ............................ [13.20] decline in international uniformity ...... [12.30] dissatisfaction with .................................. [12.30] effect on functions of bill of lading of . [12.10] historical development of ...................... [12.30] incorporation by reference of, in sea-carriage documents ................. [12.270], [12.690] incorporation by reference of, in time charterparty, whether ............. [14.130], [14.150], [14.160], [14.400], [14.410] incorporation by reference of, in voyage charterparty, whether ............... [13.20], [13.600], [13.610] issue of sea-carriage document .......... [12.100], [12.110] limitation of actions .............. [12.580]-[12.620], [12.740], [12.800], [12.830], [14.160], [14.400], [18.30] carrier, against . [12.580]-[12.620], [12.740], [12.800], [12.830] general average claim, for ............... [18.30] indemnity claim, for ....................... [14.400] loss or damage claim, for .............. [14.160] limits of liability, translation into Special Drawing Rights by SDR Protocol ........................................................ [12.30] potential replacement by Rotterdam Rules of ........................................................ [12.30] receipt as to condition of goods ........ [12.130], [12.140], [12.160], [12.170] apparent condition unknown ....... [12.170] lumber clause .................................. [12.170] position of consignee or indorsee ...................................................... position of shipper ......................... Retla rust clause .............................. “said to contain” .............................

[12.140] [12.130] [12.170] [12.160]

“shipper’s load, stow and count” ...................................................... [12.160] receipt as to “leading marks” .............. [12.240] receipt as to quantity or weight of goods ...................... [12.180], [12.190], [12.210] seaworthiness under ............ [12.300], [12.360], [12.380], [14.130], [14.150], [14.160], [14.410] Clause Paramount ......... [14.150], [14.160], [14.410] shipowner .............. [12.830], [13.600], [13.630], [14.400], [16.100] limitation of liability of .. [12.830], [16.100] obligations of ... [13.600], [13.630], [14.400] shipper, obligations of .......................... [12.110], [12.630]-[12.660] guarantee of particulars of goods ...................... [12.110], [12.630], [12.660] non-dangerous goods ..... [12.630], [12.650] payment of freight .......... [12.630], [12.640] Special Drawing Rights .......................... [12.30] third party as shipper on chartered ship ...................................................... [12.710]

1060

Shipping Law

Hague-Visby Rules as modified in Australia application of . [12.40], [12.50], [12.70], [12.90], [12.340], [12.350], [12.730], [12.750] deck cargo (except live animals), to ........................ [12.70], [12.340], [12.350] delivery of goods to carrier to delivery at destination, to ............. [12.50], [12.750] interstate carriage (with exceptions), of .......................................... [12.40], [12.90] inward-bound international carriage (with exceptions), of ............................. [12.40] not necessarily by country of destination ........................................................ [12.40] not to non-negotiable sea-carriage documents for carriage on chartered ship ............................................. [12.730] sea-carriage documents (other than charterparties) for outward-bound international carriage, of ..... [12.40] — see also Sea-carriage documents cargo claims under ............... [12.830], [15.200], [16.100] limitation of shipowner’s liability ...................................... [12.830], [16.100] receiver of cargo .............................. [15.200] carrier ........ [12.300]-[12.330], [12.350]-[12.540], [12.580]-[12.620], [12.740], [12.800], [12.820]-[12.840], [15.140] circular indemnity clause and ..... [12.820], [12.840] immunities of .. [12.300], [12.370]-[12.500], [15.140] — see also Carrier liabilities of ....................................... [12.320] limitation of actions against ...... [12.580]-[12.620], [12.740], [12.800], [12.830] — see also Carrier; Limitation of actions limitation of liability of ................. [12.370], [12.510]-[12.540], [12.840] — see also Carrier; Limitation of liability obligations of ... [12.300]-[12.330], [12.350], [12.360] — see also Carrier contracting out prohibited ..................... [12.80] engraftment of feaures of Hamburg Rules on .......................... [12.30], [12.60], [12.810] incorporation by reference of, in sea-carriage documents ................. [12.270], [12.690] issue of sea-carriage document .......... [12.100], [12.110] receipt as to condition of goods ........ [12.130], [12.140], [12.160] position of consignee or indorsee ...................................................... [12.140] position of shipper ......................... [12.130] “said to contain” ............................. [12.160] “shipper’s load, stow and count” ...................................................... [12.160] receipt as to “leading marks” ............. [12.240], [12.250] receipt as to quantity or weight of goods ...................... [12.180], [12.190], [12.210] seaworthiness under ............ [12.300], [12.360], [12.380], [14.150]

shipowner, limitation of liability of ... [12.830], [16.100] shipper, obligations of .......................... [12.110], [12.630]-[12.660] guarantee of particulars of goods ...................... [12.110], [12.630], [12.660] non-dangerous goods ..... [12.630], [12.650] payment of freight .......... [12.630], [12.640] third party as shipper on chartered ship ...................................................... [12.710] Hamburg Rules adoption and repeal by Australia of .... [12.40] application of ............... [12.40]-[12.60], [12.810] sea-carriage document for inward-bound international carriage from contracting states, to ....................................... [12.40] time when, and duration ................. [12.50] while goods in carrier’s charge ...... [12.50] whom, to ............................ [12.60], [12.810] effect on functions of bill of lading of . [12.10] engraftment on Australian modification of Hague-Visby Rules of feaures of .......................... [12.30], [12.60], [12.810] historical development of ...................... [12.30] incorporation by reference of, in standard form sea-carriage documents . [12.270] limitation of actions .............................. [14.410] potential replacement by Rotterdam Rules of ........................................................ [12.30] relationship to Hague-Visby Rules of .. [12.30] third party as shipper on chartered ship ...................................................... [12.710] High seas collisions on ................ [15.10], [15.70], [15.130] definition of “ship” and ........... [1.320], [1.330] entitlement to sail on, under national flag ........................................................ [3.140] extra-territorial legislation, operation of, on ............................. [2.160]-[2.210], [2.230] marriages performed on ......................... [4.140] meaning of ....... [1.320], [1.330], [4.90], [15.70], [20.190] restricted power of Australia to combat marine pollution on ................. [19.400] salvage for reward of property on, under or alongside . [20.190] — see also Salvage States’ legislative power over ................ [2.230] Himalaya clause contract of carriage, in ......... [12.370], [12.740], [12.830], [12.840] Hire — see Time charterparty Historic shipwreck — see Wreck Hovercraft defined ......................................................... [1.60] inclusion in definition of “ship”, whether .................. [1.60], [1.140], [1.160], [8.70]

Index Hovercraft — cont inclusion in definition of “vessel” ....... [1.100], [1.130], [1.150], [1.160]

I Inland waters collision in ................................................. [15.70] meaning of, in context of maritime lien over damage in .................................... [8.170] sea distinguished, in marine insurance ........................................................ [17.10] Inland waterways vessel exclusion from definition of “ship” ....... [1.80] Insurance — see Marine insurance International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 — see also Hague Rules Brussels Convention, also known as .... [12.30] Clause Paramount and ......................... [12.530] generally .................................................. [12.560] meaning of words and expressions in . [13.20] ratification by Australia of ..................... [12.40] signing of .................................................. [12.40] International Convention for the Unification of Certain Rules of Law with respect to Collisions 1910 maritime scheme of proportionate liability ... [15.130] — see also Collisions at sea Interstate voyage application of relevant criminal law where ........................................................ [4.110] application of State legislation about collisions to ................................................... [15.70] carriage of goods on, summary of law governing . [12.40] — see also Carriage of goods by sea; Hague-Visby Rules as modified in Australia Commonwealth legislative responsibility for trading vessels on ........ [2.380], [2.390] International Maritime Organization (IMO) International Convention on Removal of Wrecks and ............. [21.190] — see also Wreck International Management Code for Safe Operation of Ships and for Pollution Prevention and ...... [12.300] — see also Oil pollution; Marine pollution Collisions Regulations and . [15.10], [15.60] — see also Collisions at sea Limitation Convention 1976 and ......... [16.10], [16.20] — see also Limitation of liability

1061

Marine Environment Protection Committee of ........ [19.150] — see also Air pollution; Marine pollution permissible levels of sulphur in fuel oil set by ........ [19.160] — see also Air pollution; Marine pollution Salvage Convention and ...... [20.50] — see also Salvage

J Jet ski exclusion from meaning of “vessel” .... [1.210] inclusion in definition of “boat”, whether .......................................................... [1.20] Jetty exclusion from definition of “ship” and “vessel” ........................................ [1.160]

L Law on board ship Australian-owned ship .. [4.70], [4.100]-[4.140] civil law ................................ [4.130], [4.140] criminal law .......................... [4.100]-[4.120] marriage on board ............................ [4.140] British ship ................................................ [4.100] interstate voyage ...................................... [4.110] nationality of ship and ... [4.70], [4.80], [4.100] Laytime — see Voyage charterparty Liens — see also Charges over ships; Maritime lien; Possessory lien; Statutory lien broker’s, on marine insurance policy ...................................................... [17.640] cargo, over ..... [8.60], [8.90], [12.640], [13.480], [13.570], [13.650], [14.530]-[14.550], [17.50], [18.80] cesser clause and ............. [13.570], [13.650] deadfreight, for ................ [13.570], [14.530] demurrage, for ................ [13.480], [13.570], [13.650], [14.530] general average contributions, for ........................................ [13.650], [18.80] insurable interest, as ......................... [17.50] maritime lien ........................... [8.60], [8.90] notice of readiness to discharge and ...................................................... [13.650] unpaid freight, for ......... [12.640], [13.570], [14.530] charterer’s, whether, under time charterparty ...................................... [14.540], [14.570] ship, whether over, under time charterparty ...................................... [14.540], [14.570] sub-freights, over ... [14.530], [14.540], [14.560] Lighter characteristics of ...................................... [1.300]

1062

Shipping Law

Lighter — cont inclusion in definition of “ship” ............ [1.60], [1.140], [1.160], [1.290], [1.310] inclusion in definition of “vessel” ....... [1.100], [1.130], [1.150], [1.160], [1.290], [1.310] Lighthouses, lightships, beacons and buoys — see Shipping law powers Limitation of actions carrier, against ........ [12.580]-[12.620], [12.740], [12.800], [12.830] beating time bar .............................. [12.590] delivery, date of .............................. [12.600] extension of time, where ............... [12.580] extinguishment of claim, where ... [12.580] indemnity claim .............................. [12.620] “loss or damage”, meaning of ...... [12.580] notice by plaintiff of loss or damage ...................................................... [12.620] overview ........................................... [12.580] “suit”, what amounts to ................ [12.590] “tackle-to-tackle” period, claims arising outside ........................................ [12.610] when time begins to run .............. [12.580], [12.600], [12.610] wrongful deviation, where ............ [12.620] collisions at sea and negligence actions ....................................... [15.210]-[15.290] Commonwealth ............................... [15.210] New South Wales ............. [15.220]-[15.250] Northern Territory ........... [15.220]-[15.250] Queensland ....................... [15.260]-[15.290] South Australia ................. [15.260]-[15.290] Tasmania ............................ [15.220]-[15.250] Victoria ............................... [15.260]-[15.290] Western Australia ............. [15.260]-[15.290] demurrage claim by shipowner .......... [13.490] general average claim ............................. [18.30] Hague Rules, under .............. [12.580]-[12.620], [12.740], [12.800], [12.830], [14.160], [14.400], [18.30] — see also Hague Rules Hague-Visby Rules, under ... [12.580]-[12.620], [12.740], [12.800], [12.830], [14.160] — see also Hague-Visby Rules Hague-Visby Rules as modified in Australia, under .......... [12.580]-[12.620], [12.740], [12.800], [12.830] — see also Hague-Visby Rules as modified in Australia Hamburg Rules, under ......................... [14.410] maritime lien, claims supporting ............................. [8.490]-[8.520], [8.560] expiry of time ...................... [8.520], [8.560] generally ............................................. [8.490] New South Wales .............................. [8.500] Northern Territory ............................ [8.500] other jurisdictions ............................. [8.510] South Australia .................................. [8.500] Tasmania ............................................. [8.500] time charterparty, claim for breach of contract and .............................................. [14.160]

Limitation of liability 1996 Protocol amendments to Limitation Convention 1976 .......... [16.10]-[16.240] 2015 increase in limits to ................. [16.10] application in Australia of .............. [16.20] calculating amount of limit ....................................... [16.170]-[16.200] choice of forum under ................... [16.240] claim under, procedure for ............. [16.30] claims barred by conduct ............... [16.90], [16.160] claims excepted/excluded from .... [16.50], [16.90], [16.100], [16.130], [16.150], [16.200] claims subject to limitation ............ [16.50], [16.90]-[16.140] defence under, procedure for ......... [16.30] force of law in Australia of ............ [16.10], [16.20] Hague Rules, Hague-Visby Rules or Hague-Visby Rules as modified in Australia and ............................ [16.100] interpretation of ................................ [16.10] judicial determination of right under .......................................... [16.30], [16.40] legislation enacting ............. [16.10], [16.20] limitation fund ................. [16.40], [16.100], [16.170]-[16.230] minimum limit ....... [16.30], [16.50]-[16.70] no general jurisdiction provision . [16.230] parties to ............................. [16.10], [16.230] persons who may limit liability ........................................... [16.50]-[16.70] ships protected by ............................ [16.80] Australian defence force ships .............. [16.50] Bunker Convention ............................... [19.390] calculating amount of limit .. [16.170]-[16.200] costs ................................................... [16.200] interest .............................................. [16.200] loss of life ......................... [16.170], [16.180] passenger claims ............................. [16.180] personal injury claims .... [16.170], [16.180] property claims ............................... [16.170] salvage claims .................................. [16.190] carrier, of . [12.370], [12.510]-[12.570], [12.780], [12.840] breaking the limit ........................... [12.530] calculation of relevant limitation amount ....................................... [12.510]-[12.570] carriage from United States, where ...................................................... [12.560] delay .................................................. [12.540] gold value ........................................ [12.550] how arises ........................................ [12.510] multiple recovery by plaintiff, whether ...................................................... [12.570] national currency ............................ [12.550] packages, units and kilograms ..... [12.520] “charterer”, meaning of .......................... [16.50] choice of forum ......... [16.10], [16.230]-[16.260] anti-suit injunction .......... [16.140], [16.260] forum non conveniens stay or dismissal ...................................... [16.240], [16.250] overview ........................................... [16.230]

Index Limitation of liability — cont claim, procedure for ................................ [16.30] claims barred by conduct ....... [16.90], [16.160] claims excepted/excluded from ........... [16.50], [16.80], [16.90], [16.100], [16.130], [16.150], [16.200] contribution in general average ... [16.150] foreign defence force ships, where .......................................... [16.50], [16.80] nuclear damage ............................... [16.150] oil pollution damage ...................... [16.150] reimbursement of legal costs, whether ...................................... [16.100], [16.200] removal or destruction of cargo ..... [16.30] salvage .............................. [16.130], [16.150] claims subject to ......... [16.50], [16.90]-[16.120], [16.140] damage to property ........................ [16.100] delay .................................................. [16.110] infringement of other than contractual rights .......................................... [16.120] loss aversion or minimisation ...... [16.140] loss of life ......................................... [16.100] loss of property ............................... [16.100] mental harm ..................................... [16.100] overview ............................................. [16.90] personal physical injury ................ [16.100] pure economic loss ......... [16.100], [16.120] reimbursement of legal costs, whether ...................................... [16.100], [16.200] collisions at sea ...................................... [15.130] constitutional position .............. [16.10], [16.20] Crown ........................................................ [16.50] defence, procedure for ............................ [16.30] generally ..................................... [16.10]-[16.260] Hague Rules, under ............................. [12.370], [12.510]-[12.530], [12.830], [12.840], [16.100] carrier . [12.370], [12.510]-[12.530], [12.840] shipowner ......................... [12.830], [16.100] Hague-Visby Rules, under .................. [12.370], [12.510]-[12.530], [12.830], [12.840], [16.100] carrier . [12.370], [12.510]-[12.530], [12.840] shipowner ......................... [12.830], [16.100] Hague-Visby Rules as modified in Australia, under .......... [12.370], [12.510]-[12.540], [12.830], [12.840], [16.100] carrier . [12.370], [12.510]-[12.540], [12.840] shipowner ......................... [12.830], [16.100] historical development of ........ [16.10], [16.20] Limitation Convention 1957 ... [16.10], [16.20], [16.90], [16.160], [16.230], [16.240] application (purported) in Western Australia of ................................. [16.20] force of law in Australia of ............ [16.10], [16.20] parties to ........................................... [16.230] Limitation Convention 1976 ... [16.10]-[16.240] 1996 Protocol amendments to ......................................... [16.10]-[16.220] application in Australia of ............. [16.10], [16.20] choice of forum under ................... [16.240]

1063

denunciation in Australia of .......... [16.10], [16.20], [16.220], [16.230] force of law in Australia of ............ [16.10], [16.20] interpretation of ................................ [16.10] no general jurisdiction provision . [16.230] parties to ............................. [16.10], [16.230] resolution LEG.5(99) amendments to .......................................... [16.20], [16.30] limitation fund .......... [16.10], [16.40], [16.100], [16.170]-[16.230] application without constituting .... [16.40] constitution of ... [16.40], [16.200], [16.220], [16.230] distribution of .................................. [16.210] exclusive of legal costs ... [16.100], [16.200] interest .............................................. [16.200] release of arrested or attached ship or property after constitution of ...................................................... [16.220] separate funds, where .................... [16.170] sole source, as .................................. [16.220] marine pollution, where — see Marine pollution; Oil pollution Merchant Shipping Act 1894 (IMP), application in Australia of, and ...... [16.10], [16.20] minimum limit .............. [16.30], [16.50]-[16.70] persons who may limit liability ........................................... [16.50]-[16.80] charterer .............................................. [16.50] Crown ................................................. [16.50] insolvent shipowner ......................... [16.70] manager .............................................. [16.50] operator .............................................. [16.50] salvor ..................................... [16.60], [16.80] shipowner .............................. [16.50]-[16.80] purpose of statutory schemes for ......... [16.10] ships protected by ................................... [16.80] Liner liner service ............................................... [11.10] meaning of ................................................ [11.10] Loss of life collision at sea, where ........................... [15.130] life salvage ................. [20.40], [20.790]-[20.820] master’s obligation to save life ..... [20.800] Salvage Convention provision ..... [20.790] limitation of liability ............ [16.100], [16.170], [16.180] calculation of limit .......... [16.170], [16.180] transmission of property in ship upon death of owner ...................................... [6.230] Loss of ship closure/deemed closure of registration where ........................................................ [3.500] frustration of time charterparty by .... [14.480] marine insurance and ............................ [3.510], [17.290]-[17.420], [17.440]-[17.510], [17.540]-[17.560], [17.650] — see also Marine insurance abandonment ................... [17.380], [17.390]

1064

Shipping Law

Loss of ship — cont actual total loss . [17.320]-[17.360], [17.500] constructive total loss .................... [17.320], [17.360]-[17.420], [17.440], [17.550] deemed total loss .............................. [3.510] measure of indemnity .... [17.490]-[17.510], [17.540]-[17.560] partial loss ........ [17.320], [17.450]-[17.480], [17.510] proximate cause ............... [17.290]-[17.310] salvage, relevance of ...................... [17.360] scuttling ............................................ [17.290] subrogation ...................................... [17.650] types of loss ..................... [17.320]-[17.420], [17.440]-[17.480] meaning of ................................................ [3.510] notice in writing to Registrar of Ships of ........................................................ [3.520] salvage — see Salvage wreck — see Wreck

M Management/operation of ship — see Ship Marine insurance admissibility in evidence of contract of ........................................................ [17.90] application of legislation ........ [17.10], [17.660] assignment of policy to third party ..... [17.80] assignment of right of indemnity under ........................................................ [17.80] Australian Law Reform Commission Report No 91, 2001 (Review of the Marine Insurance Act 1909) ....... [17.10]-[17.30], [17.80], [17.120], [17.570]-[17.590], [17.630] broker ......................... [17.90], [17.100], [17.640] duty of care of ................... [17.90], [17.100] duty of disclosure where ............... [17.100] lien on policy ................................... [17.640] responsibility for premium, where ...................................................... [17.640] role of .................. [17.90], [17.100], [17.640] calculation of measure of indemnity ....................................... [17.490]-[17.540] partial loss, where ............ [17.510]-[17.540] total loss, where .............................. [17.500] classification of policies ......... [17.130]-[17.160] contract of .................. [17.10]-[17.280], [17.630] admissibility in evidence of ............ [17.90] assignment of rights under, to third party ........................................................ [17.80] attachment and termination of acceptance of risk of loss from perils, specification of .................................. [17.170]-[17.200] embodiment in policy of ................. [17.90] extension of coverage of .................. [17.10] formation of .......... [17.10], [17.90]-[17.110] form of ................. [17.10], [17.120]-[17.160] meaning of ......................................... [17.10] parties to ................................ [17.10]-[17.80]

perils insured/not insured against, specification of ........... [17.10], [17.170], [17.210]-[17.280] policy as evidence of ........................ [17.90] pre-shipment clause ......................... [17.30] saving of common law rules .......... [17.10] terms of ............................................... [17.90] utmost good faith (uberrimae fidei), of ........................................ [17.90], [17.630] deemed total loss of ship for purposes of ........................................................ [3.510] defined ....................................................... [17.10] duty of disclosure .................... [17.90], [17.100] broker, where ................................... [17.100] remedy for breach of ........ [17.90], [17.100] scope of ............................................. [17.100] floating policy ......................................... [17.150] formation of contract of ......................... [17.10], [17.90]-[17.110] acceptance of assured’s proposal, time of ........................................................ [17.90] broker as agent for assured, role of ........................................................ [17.90] complete and accurate disclosure by assured ......................................... [17.90] duty of disclosure before .. [17.10], [17.90], [17.100] material misrepresentation ............. [17.90], [17.110] material non-disclosure ... [17.90], [17.100] proposal, slip or written memorandum ........................................................ [17.90] quotation of premium ...................... [17.90] form of contract of ... [17.10], [17.120]-[17.160] classification of policies .. [17.130]-[17.160] standard forms ................................ [17.120] general average and ................................ [18.10] generally ..................................... [17.10]-[17.660] indemnity ............... [14.380], [14.400], [14.420], [14.470], [17.10], [17.80], [17.490]-[17.560] assignment of right of ...................... [17.80] measure of ........... [17.10], [17.490]-[17.560] shipowner, of, under time charterparty ...... [14.380], [14.400], [14.420], [14.470] insurable interest ........................ [17.20]-[17.80] Admiralty Marshal after execution of arrest warrant against ship, of ........................................................ [17.40] assignment of policy and ................ [17.80] bailee, of ............................................. [17.40] buyer, of ................................ [17.30], [17.50] cargo .................................................... [17.50] carrier, of ............................................ [17.50] charge on cargo, where .................... [17.50] charges of any insurance ................. [17.70] charterer, whether of .......... [17.40], [17.60] contingent interest ............................ [17.30] crew, of ................................................ [17.70] defeasible interest ............................. [17.30] demise charterer, of .......................... [17.40] freight ..... [17.10], [17.30], [17.60], [17.120], [17.130], [17.190], [17.200], [17.220],

Index Marine insurance — cont [17.240], [17.360], [17.440], [17.500], [17.520], [17.540] — see also Freight hull ...................................................... [17.40] insurer, of ........................................... [17.70] lender of money on bottomry or respondentia ............................... [17.70] lien on cargo, where ......................... [17.50] machinery ........................................... [17.40] master, of ............................................ [17.70] mortgagor of ship ............................. [17.40] partial interest ................................... [17.30] requirement of ..................... [17.20], [17.30] risk, in ................................................. [17.70] shipowner, of ..................................... [17.60] subcontractor ..................................... [17.40] subject matter “lost or not lost” ..... [17.30] wages .................................................. [17.70] Insurance Contracts Act 1984 (Cth) ........ [17.10] Lloyd’s SG policy .................. [17.120], [17.230] London insurance market, significance of ........................................................ [17.10] loss ............................... [17.10], [17.320]-[17.540] calculation of value of ..................... [17.10] types of .............................. [17.320]-[17.540] when occurred ................................... [17.10] MAR policy ............................. [17.120], [17.230] Marine Insurance Act 1909 (Cth) ........... [17.10], [17.660] application of ..................... [17.10], [17.660] duty of disclosure under . [17.90], [17.100] duty of utmost good faith (uberrimae fidei) under ................. [17.90], [17.630] enactment of ...................................... [17.10] insurable property under ................ [17.30] Lloyd’s SG policy, authorisation of, by ...................................................... [17.120] loss, division of, under ... [17.320]-[17.480] perils not insured against under . [17.260], [17.270], [17.310] potential reform of ............. [17.10], [17.90], [17.100], [17.570], [17.630] risk, nature of .................................... [17.10] Rules of Construction .................... [17.130] saving of common law rules .......... [17.10] sea/inland water distinction .......... [17.10] State marine insurance and ........... [17.10], [17.660] warranties under .............. [17.570]-[17.610] material misrepresentation ..... [17.90], [17.110] “materiality”, meaning and test of ...................................................... [17.110] meaning of ....................................... [17.110] voidability of contract where ........ [17.90], [17.110] material non-disclosure ........... [17.80]-[17.100] assignment of policy, where ........... [17.80] expert evidence ............................... [17.100] “materiality”, meaning and test of ...................................................... [17.100] voidability of contract where ........ [17.90], [17.100] measure of indemnity ............................ [17.10], [17.490]-[17.560]

1065

calculation of .................... [17.490]-[17.540] dedictible clauses ............................ [17.550] double insurance, where ............... [17.560] meaning of ....................................... [17.490] mixed policy ........................... [17.150], [17.600] mortgage of ship and ............................ [10.150] overview of ............................................... [17.10] P & I Clubs ............................................. [17.250] partial loss .............. [17.320], [17.370], [17.440], [17.450], [17.510]-[17.540] calculation of measure of indemnity where ........................... [17.510]-[17.540] constructive total loss treated as, where ...................................... [17.370], [17.440] franchise clauses ............................. [17.540] freight ................................................ [17.520] general average .............. [17.320], [17.450], [17.460] goods ................................. [17.530], [17.540] particular average .......... [17.320], [17.450], [17.470] ship .................................................... [17.510] parties to contract of .................. [17.10]-[17.80] assignment of policy by .................. [17.80] assured ................................................ [17.20] insurable interest .................. [17.20]-[17.70] insurer ................................................. [17.20] perils insured against ........... [14.270], [14.280], [17.10], [17.170], [17.210]-[17.250], [17.270], [17.290]-[17.310], [17.600] “all risks” .......................................... [17.230] aversion or minimisation of recoverable losses .......................... [17.220], [17.230] cargo policy ...................................... [17.230] collision damage, where ................ [17.250] freight policy .................................... [17.220] general average ............................... [17.220] hull policy ....... [14.270], [14.280], [17.220], [17.250] Institute Clauses ............. [14.280], [17.210], [17.230], [17.240] liability .............................................. [17.250] liability to third party .................... [17.220] “maritime perils” ............ [17.220], [17.290] “perils of the seas” ........ [17.220], [17.230], [17.290], [17.300] proximate cause of .......... [17.10], [17.270], [17.290]-[17.310], [17.600] salvage .............................................. [17.220] specification of ................. [17.170], [17.270] specific perils ................................... [17.240] perils not insured against ... [14.290], [14.370], [17.10], [17.170], [17.240], [17.260]-[17.310] agreement of parties, by ............... [17.260], [17.280], [17.310] delay .................................................. [17.270] inherent vice .................................... [17.270] injury to machinery not proximately caused by maritime perils ...... [17.270] Institute Clauses .............................. [17.280] loading/unloading at sea .............. [17.280] malicious act .................................... [17.280] nuclear explosion ............................ [17.280]

1066

Shipping Law

Marine insurance — cont operation of statute, by . [17.260], [17.270], [17.310] ordinary leakage and breakage .... [17.270] ordinary wear and tear .................. [17.270] rats or vermin .................................. [17.270] specification of . [17.170], [17.260], [17.270] strikes ................................................ [17.280] time policy ....................................... [17.270] unseaworthiness, whether ............ [17.270], [17.280], [17.300] war, whether .... [14.290], [14.370], [17.280] wilful misconduct of assured ...... [17.270], [17.290] policies ....... [14.280], [17.90], [17.120]-[17.160], [17.180]-[17.200], [17.210], [17.230], [17.240], [17.270], [17.280], [17.600] annual cover .................................... [17.160] classification of ................. [17.130]-[17.160] embodiment of contract in .............. [17.90] evidence of contract, as ................... [17.90] floating policy .................................. [17.150] Institute Clauses ............. [14.280], [17.120], [17.200], [17.210], [17.230], [17.240], [17.280] issue of ................................................ [17.90] Lloyd’s SG policy ............ [17.120], [17.230] MAR policy ...................... [17.120], [17.230] mixed policy .................... [17.150], [17.600] open cover ........................................ [17.160] subject matter of ............. [17.130], [17.600] time policy ....... [17.150], [17.180], [17.270] unvalued policy .............................. [17.140] validity of ........................................... [17.90] valued policy ................................... [17.140] voyage policy . [17.150], [17.190], [17.200], [17.600] post-contract breach of good faith ....... [17.90] pre-contractual disclosure ....... [17.10], [17.90], [17.100] premium .................................... [17.90], [17.640] proximate cause of loss by peril insured against ......................... [17.10], [17.270], [17.290]-[17.310], [17.600] delay excluded ................................ [17.270] evidence establishing ..... [17.290], [17.300] meaning of ....................................... [17.290] misconduct/negligence of master or crew, where .......................................... [17.310] not apparent, where ....... [17.290], [17.300] onus of proof ................... [17.290], [17.300] test of ................................................ [17.290] two or more causes ........ [17.290], [17.310] reform of ...... [17.10], [17.90]-[17.110], [17.570], [17.630] English law ........... [17.10], [17.90]-[17.110], [17.570] potential Australian ........... [17.10], [17.90], [17.100], [17.570], [17.630] reinsurance .............................................. [17.130] remedies of assured .................. [17.10], [17.90] damages for breach of contract ...... [17.10] damages for negligence/breach of contract by broker ...................... [17.90]

remedies of insurer ................... [17.90]-[17.110] avoidance of contract for fraud .... [17.110] avoidance of contract for material misrepresentation or material non-disclosure ............. [17.90], [17.100] representations ........... [17.10], [17.90], [17.110] fraudulent non-material, where ... [17.110] risk ............................... [17.10], [17.170]-[17.200] attachment and termination of ..... [17.170] loss from perils, of, acceptance of ....................................... [17.170]-[17.200] nature of ............................................. [17.10] sea/river/inland water distinction ...... [17.10] State laws, application to marine insurance business conducted by State governments of ......................... [17.660] State marine insurance ........... [17.10], [17.660] application of Marine Insurance Act 1909 (Cth) to ......................... [17.10], [17.660] meaning of ......................................... [17.10] subject matter of policy ........................ [17.130] subrogation of insurer ............ [17.10], [17.650] third party, assignment of policy to ..... [17.80] time policy ............. [17.150], [17.180], [17.270], [17.600] total loss ... [17.320]-[17.440], [17.500], [17.650] actual .................................. [17.320]-[17.360] calculation of measure of indemnity where .......................................... [17.500] constructive ..................... [17.320], [17.330], [17.360]-[17.440] notice of abandonment, relevance and form of ....................... [17.370], [17.440] reasonable abandonment of subject matter ...................................... [17.380], [17.390] salvage costs, whether relevant .... [17.360] take-over by insurer of what remains of assured’s interest ...................... [17.650] types of loss ............................. [17.320]-[17.540] calculation of measure of indemnity and ....................................... [17.490]-[17.540] other expenses ................................. [17.480] partial ............... [17.320], [17.370], [17.440], [17.450], [17.510]-[17.540] total ..... [17.320]-[17.440], [17.500], [17.650] unvalued policy ..................... [17.140], [17.500] calculation of measure of indemnity where total loss ........................ [17.500] utmost good faith (uberrimae fidei), duty of ........................................ [17.90], [17.630] application of ................................... [17.630] effect of ............................................. [17.630] valued policy .......................... [17.140], [17.500] calculation of measure of indemnity where total loss ........................ [17.500] void, where ............................................... [17.20] voyage policy ........ [17.150], [17.190], [17.200], [17.600] war risk clauses of time charterparty ...................................... [14.290], [14.370] trading limits set by underwriters ...................................................... [14.290] warranty ................... [14.280], [17.570]-[17.620]

Index Marine insurance — cont breach by assured of, effect of ..... [17.570], [17.580] estoppel ............................................. [17.620] express .............................. [17.570], [17.580] implied ............. [17.570], [17.590], [17.600], [17.610] Institute Warranty Limits for time charterparty ............................... [14.280] meaning of ....................................... [17.570] performance of ................................ [17.570] seaworthiness, of, implied ........... [17.590], [17.600] waiver by insurer of breach of .... [17.570], [17.620] Marine pollution air pollution ............... [19.10], [19.40], [19.120], [19.150]-[19.170] Commonwealth law ....... [19.150], [19.170] defences ............................................ [19.170] Marine Environment Protection Committee of IMO ................... [19.150] MARPOL Convention ..... [19.40], [19.120], [19.150]-[19.170] offences ............................................. [19.170] penalties ............................................ [19.170] permissible levels of sulphur in fuel oil ...................................................... [19.160] Australian Maritime Safety Authority, role of ......... [19.40], [19.80], [19.130], [19.310], [19.400] court application for enforcement of pecuniary penalties .................... [19.40] general power to combat marine pollution ...................................................... [19.400] notification of details of “contributing oil” importers by .............................. [19.310] reporting of oil and other marine pollution incidents to ............... [19.80], [19.130] Bunker Convention .. [19.20], [19.30], [19.210], [19.390] adoption into Australian law of .... [19.30], [19.390] application of ................... [19.210], [19.390] basis of liability ............................... [19.390] Civil Liability Convention 1992 distinguished ............................ [19.390] defences ............................................ [19.390] limitation of liability ...................... [19.390] Civil Liability Convention 1992 ........... [19.20], [19.30], [19.210]-[19.400] adoption into Australian law of .... [19.30], [19.210] application of ................... [19.210], [19.220] basis of liability ............................... [19.220] Bunker Convention distinguished ...................................................... [19.390] jurisdiction of Australian courts .. [19.220] limitation fund ................ [19.260], [19.270] limitation of liability ...... [19.240]-[19.280], [19.320], [19.360], [19.390] procedure for claim ........................ [19.240]

1067

purpose of .......................... [19.20], [19.210] who is liable to pay compensation ....... [19.220], [19.240], [19.320]-[19.360] who may claim compensation ..... [19.230] clean-up ................................................... [19.400] compensation for loss caused by ......... [19.20], [19.30], [19.210]-[19.400] — see also Compensation for pollution damage amount recoverable ......... [19.20], [19.210], [19.230], [19.370] Bunker Convention ........... [19.20], [19.30], [19.210], [19.390] Civil Liability Convention 1992 .... [19.20], [19.30], [19.210]-[19.290], [19.320], [19.340]-[19.370] defences to claim ........... [19.290], [19.340], [19.370], [19.390] financial incapacity of shipowner ...................................... [19.320], [19.350] Fund Convention 1992 .... [19.20], [19.210], [19.300]-[19.390] Limitation Convention 1976 ........ [19.240], [19.260]-[19.280], [19.390] limitation of liability ...... [19.240]-[19.280], [19.320], [19.360], [19.370], [19.390] oil pollution ...................... [19.210]-[19.390] “pollution damage”, meaning of ..... [19.220], [19.230], [19.330], [19.390], [19.400] preventative measures included in claim ...................... [19.220], [19.230], [19.400] procedure for claim ........ [19.240], [19.390] “second tier” .................... [19.210], [19.300] Supplementary Fund Protocol 2003 ......... [19.20], [19.210], [19.300]-[19.370] “third tier” ....................... [19.210], [19.300] who is liable to pay compensation ...................... [19.220], [19.240], [19.320] who may claim compensation, .... [19.230] defences .......... [19.40], [19.50], [19.70], [19.80], [19.100], [19.110], [19.130], [19.190], [19.290], [19.340], [19.370], [19.390] dumping offence, to ....................... [19.190] Bunker Convention, under ........... [19.390] Civil Liability Convention 1992, under ...... [19.290], [19.340], [19.370], [19.390] garbage ............................................. [19.130] noxious liquid substances ............. [19.130] oil pollution .......... [19.40], [19.50], [19.70], [19.80], [19.100], [19.110], [19.130] packaged harmful substances ....... [19.130] sewage .............................................. [19.130] defences of liability insurer ................. [19.240] dumping ...... [19.20], [19.30], [19.190], [19.200] Commonwealth law ....... [19.190], [19.200] “controlled material”, meaning of ...................................................... [19.190] defences ............................................ [19.190] defence vessels and aircraft and .. [19.190] Dumping Convention Protocol ..... [19.20], [19.30], [19.190], [19.200] mineral exploitation and ............... [19.190] offences ............................................. [19.190] penalties ............................................ [19.190]

1068

Shipping Law

Marine pollution — cont permit for ......................................... [19.190] State law ........................................... [19.200] Dumping Convention Protocol ............ [19.20], [19.30], [19.190], [19.200] adoption into Australian law of .... [19.30], [19.190] application of ................... [19.190], [19.200] purpose of ........................................ [19.190] environmental protection generally .... [18.40], [19.150], [19.180] Marine Environment Protection Committee of IMO ................... [19.150] Fund Convention 1992 ............ [19.20], [19.30], [19.210], [19.300]-[19.390] adoption into Australian law of .... [19.30], [19.210], [19.310] amount available ............................. [19.370] application of ................... [19.210], [19.300] basis of liability of ........... [19.320]-[19.360] defences ............................................ [19.340] limitation of liability ...................... [19.370] no indemnity of shipowner’s liability ...................................................... [19.380] purpose of .......... [19.20], [19.210], [19.300] “second tier” compensation ......... [19.210], [19.300] garbage ......... [19.10], [19.40], [19.120]-[19.140] Commonwealth law ....... [19.120], [19.130] defences ............................................ [19.130] MARPOL Convention ..................... [19.40], [19.120]-[19.140] offences ............................. [19.130], [19.140] penalties ............................................ [19.130] punishment of polluter .. [19.130], [19.140] State and Northern Territory law ...................................................... [19.140] general average and .................. [18.40], [18.90] generally ..................................... [19.10]-[19.400] international conventions relating to .......... [19.10]-[19.30], [19.100], [19.120], [19.150], [19.180], [19.190], [19.210] adoption into Australian law of .... [19.20], [19.30], [19.100], [19.120], [19.150], [19.180] historical overview of ...... [19.20], [19.190] International Management Code for Safe Operation of Ships and for Pollution Prevention ................................. [12.300] Intervention Convention ......... [19.20], [19.30], [19.400] adoption into Australian law of ..... [19.30] purpose of .......................... [19.20], [19.400] legislative responsibility for, division among Commonwealth, States and Northern Territory under Constitution .... [19.10], [19.30], [19.40], [19.180] liability for ...... [19.30]-[19.60], [19.80]-[19.110], [19.130], [19.170], [19.210], [19.220], [19.240], [19.320], [19.380]-[19.400] agent, of .............................................. [19.80] charterer, of ........... [19.40], [19.50], [19.80], [19.390] crew member, of ............................. [19.100]

manager of ship, of ......... [19.80], [19.100], [19.390] master, of . [19.40]-[19.60], [19.80]-[19.110], [19.130], [19.170] operator of ship, of ........... [19.80], [19.390] shipowner, of ....................... [19.40]-[19.60], [19.80]-[19.110], [19.130], [19.170], [19.210], [19.220], [19.240], [19.320], [19.380]-[19.400] liability insurance .. [19.240], [19.340], [19.350] absence of ......................... [19.340], [19.350] Civil Liability Convention 1992 .. [19.240], [19.340], [19.350] defences of insurer ......................... [19.240] P & I Clubs ...................................... [19.240] pollution damage, for .................... [19.240] Limitation Convention 1976 . [16.50], [19.240], [19.260]-[19.280], [19.390] Bunker Convention and ................ [19.390] limits of liability in ......................... [19.390] loss of right to limit liability, where ........................................ [16.50], [19.280] limitation fund ....................... [19.260], [19.270] claims against .................................. [19.270] constitution of .................................. [19.260] distribution of .................................. [19.270] limitation of liability .............................. [16.50], [19.240]-[19.280], [19.320], [19.360], [19.370], [19.390] — see also Limitation of liability Bunker Convention ........................ [19.390] Civil Liability Convention 1992 ...... [19.240]-[19.280], [19.320], [19.360], [19.390] damage exceeds .............. [19.320], [19.360] Fund Convention 1992 ................... [19.370] Limitation Convention 1976 .......... [16.50], [19.240], [19.260]-[19.280], [19.390] loss of, where ..................... [16.50], [19.280] Supplementary Fund Protocol 2003 ...................................................... [19.370] MARPOL Convention ............... [19.20]-[19.40], [19.60]-[19.100], [19.120]-[19.180] adoption into Australian law of .... [19.30], [19.100], [19.120], [19.150] application of ....... [19.40], [19.60]-[19.100], [19.120]-[19.180] purpose of .......................................... [19.20] noxious liquid substances ....... [19.10], [19.40], [19.120]-[19.140] Commonwealth law ....... [19.120], [19.130] defences ............................................ [19.130] MARPOL Convention ..................... [19.40], [19.120]-[19.140] offences ............................. [19.130], [19.140] penalties ............................................ [19.130] punishment of polluter .. [19.130], [19.140] State and Northern Territory law ...................................................... [19.140] oil pollution ............................. [12.300], [16.50], [19.10]-[19.110], [19.130], [19.180], [19.210]-[19.400], [20.50] — see also Oil pollution applicable law ..... [19.40]-[19.110], [19.130]

Index Marine pollution — cont Bunker Convention ........... [19.20], [19.30], [19.210], [19.390] Civil Liability Convention 1992 .... [19.20], [19.30], [19.210]-[19.380] compensation for losses caused by ....................................... [19.210]-[19.390] defences ... [19.40], [19.50], [19.70], [19.80], [19.100], [19.110], [19.130] Fund Convention 1992 ...... [19.20], [19.30], [19.210] International Management Code for Safe Operation of Ships and for Pollution Prevention ................................. [12.300] Intervention Convention .. [19.20], [19.30], [19.400] loss of right to limit liability for damage ........................................................ [16.50] MARPOL Convention ........ [19.20]-[19.40], [19.60], [19.70], [19.90], [19.100], [19.130], [19.180] offences ..... [19.40]-[19.60], [19.80]-[19.110], [19.130], [19.180] OPRC Convention ............................ [19.20] penalties ... [19.40], [19.50], [19.80]-[19.110] prevention of ... [20.50] — see also Salvage punishment of polluter ................... [19.10], [19.40]-[19.110] reporting obligations ........................ [19.80] salvage of oil tankers ....................... [20.50] Supplementary Fund Protocol 2003 ........................................ [19.20], [19.210] OPRC Convention ................................... [19.20] packaged harmful substances .............. [19.10], [19.40], [19.120]-[19.140] Commonwealth law ....... [19.120], [19.130] defences ............................................ [19.130] MARPOL Convention ..................... [19.40], [19.120]-[19.140] offences ............................. [19.130], [19.140] penalties ............................................ [19.130] punishment of polluter .. [19.130], [19.140] State and Northern Territory law ...................................................... [19.140] “pollution damage”, meaning of ....... [19.220], [19.230], [19.330], [19.390], [19.400] prevention of ............. [12.300], [18.40], [19.30], [19.400], [20.50] — see also Salvage International Management Code for Safe Operation of Ships and for Pollution Prevention ................................. [12.300] punishment of polluter .......................... [19.10], [19.40]-[19.200] garbage ............................. [19.130], [19.140] noxious liquid substances ............ [19.130], [19.140] oil pollution ........... [19.10], [19.40]-[19.110] packaged harmful substances ...... [19.130], [19.140] sewage .............................. [19.130], [19.140] sewage .......... [19.10], [19.40], [19.120]-[19.140] Commonwealth law ....... [19.120], [19.130] defences ............................................ [19.130]

1069

MARPOL Convention ..................... [19.40], [19.120]-[19.140] offences ............................. [19.130], [19.140] penalties ............................................ [19.130] punishment of polluter .. [19.130], [19.140] State law ........................................... [19.140] Supplementary Fund Protocol 2003 .... [19.20], [19.210], [19.300]-[19.370] adoption into Australian law of .... [19.20], [19.310] amount available ............................. [19.370] application of ................... [19.210], [19.300] basis of liability of ........... [19.320]-[19.360] limitation of liability ...................... [19.370] purpose of ........................ [19.210], [19.300] “third tier” compensation ............ [19.210], [19.300] Maritime jurisdiction conferral upon courts of, by Constitution ............................... [2.20], [2.130]-[2.150] basis of ................................................ [2.130] scope of .................................. [2.130]-[2.150] meaning of ................................................ [2.150] Maritime lien abandonment of ......................... [8.520], [8.570] arbitration, provision of security to bind ........................................................ [8.450] Australian Law Reform Commission Report No 33, 1986 (Civil Admiralty Jurisdiction) and ........... [8.110], [8.340], [8.610] bottomry distinguished ............................ [9.70] change of ownership of ship, effect of, on .............................. [8.20], [8.450], [8.460] transfer to owner with immunity from process, where ............................ [8.460] characteristics of ............... [8.20], [8.30], [8.50], [8.350]-[8.410], [8.450], [8.460] automatic attachment to property ... [8.20] continuing adherence to property .. [8.20], [8.450], [8.460] enforceable charge over property enforceable by proceedings in rem ...... [8.20], [8.30], [8.50], [8.450], [8.460] priority over most other charges .... [8.20], [8.350]-[8.410] claim giving rise to, whether enforceable by proceedings in personam ........... [8.20] claims not supporting .. [8.200], [8.310]-[8.340] claims supporting . [7.30], [8.10], [8.50], [8.60], [8.90], [8.120]-[8.320], [8.400], [8.420]-[8.440], [8.500], [9.30], [20.20], [20.570], [20.660] claim giving rise to statutory right of action in rem distinguished ....... [8.50] crew’s wages ........................... [7.30], [8.10], [8.220]-[8.270], [8.310], [8.400], [8.420]-[8.440], [8.500], [9.30] damage caused by ship ........ [7.30], [8.10], [8.120]-[8.180], [8.310], [8.420], [8.440], [8.500]

1070

Shipping Law

Maritime lien — cont freight earned by ship ........... [8.60], [8.90], [8.180], [8.190], [8.220] salvage reward ....................... [7.30], [8.10], [8.190]-[8.210], [8.310], [8.320], [8.420], [8.440], [20.20], [20.570], [20.660] enforceable only by proceedings in rem ...... [8.20], [8.30], [8.50], [8.450], [8.460] extinguishment of ......... [8.470], [8.520]-[8.580] abandonment of lien, by ... [8.520], [8.570] effect of ............................................... [8.540] expiry of statutory limitation period, by .......................................... [8.520], [8.560] payment of sum secured, by ......... [8.520], [8.530] provision of bail or other security after arrest of ship, by .......... [8.520], [8.540] sale by court order, by ...... [8.470], [8.520], [8.550] total destruction of relevant property, by .......................................... [8.520], [8.580] generally ............................. [7.10], [8.10]-[8.610] how arises ......................... [7.30], [8.20], [8.190] insolvent foreign debtor and ................. [16.70] insurable interest, as ............................... [17.50] judicial sale following arrest of ship, effect of ........................................................ [8.470] limitation period for claims ..... [8.490]-[8.520], [8.560] expiry of ............................... [8.520], [8.560] generally ............................................. [8.490] New South Wales .............................. [8.500] Northern Territory ............................ [8.500] other jurisdictions ............................. [8.510] South Australia .................................. [8.500] Tasmania ............................................. [8.500] loss of ............................. [8.450], [8.470], [8.480] destruction of maritime property, where ........................................................ [8.480] judicial sale following arrest, by .... [8.470] laches, by lienee, following change of ownership .................................... [8.450] meaning of .................................................. [8.50] nature of ........................................... [8.10]-[8.50] Personal Property Securities Act 2009 (Cth), whether applicable to ..... [7.40], [7.60], [8.360] possession, irrelevance of ......................... [8.30] priority of . [7.50], [7.60], [8.20], [8.50], [8.220], [8.350]-[8.440], [8.650], [9.30] — see also Priority of charges basic order ................................ [7.50], [7.60] between different kinds of maritime liens .............. [8.410], [8.420], [8.430], [8.440] between maritime lien and other charges ... [7.50], [8.370]-[8.410], [8.440], [8.650] between maritime liens of same kind ........................................................ [8.440] between statutory maritime lien and maritime lien ..... [7.50], [8.410], [8.440] crew’s wages .......... [8.400], [8.420]-[8.440], [9.30] damage caused by ship ..... [8.420], [8.440] date of ................................................... [8.50]

master’s wages and disbursements .......................................... [8.410], [8.440] rules, complexity of system of ....... [8.350] salvage reward .................... [8.420], [8.440] private international law and ................ [8.590] proceedings in rem and .. [8.20]-[8.50], [8.450], [8.460], [9.70] — see also Proceedings in rem property to which attaches ........ [8.60]-[8.110], [8.160], [8.180], [8.190], [8.220], [8.480], [20.20] cargo .......................................... [8.60], [8.90] Crown-owned, whether ..................... [8.80] freight ........... [8.60], [8.90], [8.180], [8.190], [8.220] nationality of, relevance of ................ [8.80] rescued property ............................... [20.20] ship .................. [8.60], [8.70], [8.90], [8.160] salvage of cargo .................... [8.90], [20.20] surrogate ship not available .......... [8.100], [8.110] wreckage, where ................... [8.90], [8.480] purpose of ........................... [7.30], [8.10], [8.50] reform of law of, proposals for ............ [8.340], [8.600], [8.610] Australian Law Reform Commission .......................................... [8.340], [8.610] international conventions ................ [8.600] statutory ................ [7.30], [7.50], [8.10], [8.210] masters’ wages and disbursements, for ... [8.10], [8.270]-[8.300], [8.410], [8.440] priority of ............................................. [7.50] saving of life, where ......................... [8.210] “statutory lien” distinguished .......... [7.30] statutory lien distinguished ....... [7.30], [8.620] transfer of, whether ................................. [8.450] Markings on ship directed by Registrar of Ships . [3.170], [3.290] insufficiency or inadequacy of, and carrier’s immunity ................................... [12.500] maintenance of ......................................... [3.170] Marking Note ........................................... [3.290] offences relating to .................................. [3.170] requirement for registration .... [3.150], [3.170], [3.250], [3.290] Marriage on board ship ........................................... [4.140] Master authorisation to commence salvage services, by ................................................ [20.410] charge over ship by, whether .................. [7.20] concealment of Australian nationality of ship by .................................................... [4.30] custody of Registration Certificate by . [3.410] distressed ship, of .................................. [20.390] insurable interest of ................................. [17.70] liability for marine pollution of ............. [19.40]-[19.60], [19.80]-[19.110], [19.130], [19.170] meaning of, for purposes of statutory maritime lien ............................... [8.300]

Index Master — cont misconduct/negligence of ... [12.390], [14.360], [15.10], [15.20], [17.310] navigation or management of ship, in, and carrier’s immunity ........... [12.390] personal liability in negligence where collision at sea ............................ [15.20] proximate cause of loss by peril insured against, where ........................... [17.310] vicarious liability of shipowner for .......................... [14.360], [15.10], [15.20] non-Australian ship, of ............................. [4.30] obligation to save life, of ...................... [20.800] salvaging ship, of ................... [20.310], [20.320] salvor, whether can be .......................... [20.290] statutory maritime lien for wages and disbursements of ......................... [8.10], [8.270]-[8.300], [8.410], [8.440] Commonwealth legislation ............ [8.280], [8.290] priority of ............................. [8.410], [8.440] related State legislation .................... [8.290] scope of ............................................... [8.280] time charterparty and obligations and responsibilities of ..... [14.360], [14.370] Merchant Shipping Act 1894 (IMP) application in Australia of .................... [2.270], [2.290]-[2.330], [3.10], [3.30], [16.10], [16.20] amendments ......................... [2.310], [16.20] currently ...... [2.10], [2.290], [2.300]-[2.330] extent of ................................ [2.290], [2.300] historically ... [2.270], [3.10], [3.30], [16.10], [16.20] limitation of liability, in relation to .......................................... [16.10], [16.20] problems with ..................... [2.300], [2.310] wrecks, in relation to ........................ [2.300] continuation for States and Territories of (as amended) ....................... [2.290], [2.300] enactment of ............................................. [2.270] generally ....................................... [2.270]-[2.340] purpose of ................................................. [2.270] repeal for Commonwealth and external territories of all of ...................... [2.280] repeal for Commonwealth and States of parts of ..................................... [2.320], [16.20] repeal for States of parts of ..... [2.330], [2.340] Mortgage of ships advantage of ............................................. [10.10] bottomry distinguished .. [9.70], [9.90], [10.10] coverage of .................................................. [1.40] creation of ....................... [7.20], [10.60], [10.70] authorised agent of owner, by ......... [7.20] deposit of builder’s certificate, by . [10.70] equitable mortgage ........................... [10.70] owner, by .............................................. [7.20] transfer of interest by way of security ........................................................ [10.60] duties of mortgagee in possession .... [10.310], [10.350]

1071

duty of mortgagee not in pssession ... [10.350] duties of ship mortgagor in possession ....................................... [10.180]-[10.220] effect on ownership of mortgagee taking possession ..... [5.60], [10.160], [10.170], [10.220], [10.230] meaning of “owner” where registered ship in possession ........................ [5.60] equitable .................................................... [10.70] extinguishment/cessation of ................ [8.470], [10.320], [10.360], [10.370] mortgagee sale, by ......... [10.320], [10.360], [10.370] overview of other circumstances . [10.370] sale in proceedings in rem, by ...... [8.470], [10.320], [10.370] freight, inclusion of .............. [10.150], [10.170], [10.190], [10.290], [10.310] general law of ... [7.20], [10.30]-[10.70], [10.90], [10.140]-[10.360] application of ..................................... [10.30] creation of, under .... [7.20], [10.60], [10.70] effect on ownership of mortgagee taking possession . [10.160], [10.170], [10.220], [10.230] enforceability against bone fide purchaser for value without notice ........... [10.50] governing law ................................... [10.40] property secured ............. [10.140], [10.150] relationship to Personal Property Securities Act 2009 (Cth) of ........................ [10.90] rights, duties and liabilities of mortgagee ....................................... [10.250]-[10.360] rights, duties and liabilities of mortgagor ....................................... [10.180]-[10.240] generally ............. [7.10], [7.20], [10.10]-[10.370] insurable interest of mortgagor, as ....... [17.40] nature of .................................................... [10.10] Personal Property Securities Act 2009 (Cth) and ....... [4.10], [7.40], [7.60], [9.80], [10.20], [10.70]-[10.130] application of ..................................... [10.80] “collateral”, meaning of ................. [10.120] migration of ship mortgages registered in former Register of Ships to Personal Property Securities Register ...... [4.10], [10.80] registration in Personal Property Securities Register ........................ [4.10] relationship to general law of ........ [10.90] rules of priorities ............................ [10.130] scope of ................ [10.80], [10.100]-[10.120] “security interest”, meaning of .... [10.120] transitional provisions ..................... [10.80] priority of ............. [7.50], [7.60], [8.30], [8.380], [8.650], [9.30], [9.80], [10.10], [10.20], [10.250] — see also Priority of charges basic order ............................................ [7.50] between bottomry and ........ [9.80], [10.10], [10.20] between maritime lien and mortgage .............. [8.30], [8.380], [10.20], [10.250] between paramount statutory charge and mortgage ...................................... [10.20]

1072

Shipping Law

Mortgage of ships — cont between possessory lien and mortgage ............................................ [9.30], [10.20] between statutory lien and mortgage .......................................... [8.650], [10.20] legislative .... [7.60], [9.80], [10.20], [10.130] property secured by .............. [10.140], [10.150] generally ........................................... [10.140] freight, position of .......................... [10.150] ship’s insurance, position of ......... [10.150] purpose of ................................................... [7.20] registered ......... [4.10], [5.60], [10.160], [10.360] rights and liabilities of mortgagee ....................... [10.250]-[10.340], [10.360] foreclose, whether ........................... [10.330] maritime lien, where ...................... [10.250] receive freight .................................. [10.290] require mortgagor to insure ship . [10.340] take possession and sell ....... [10.250]-[10.280], [10.310], [10.320] rights of mortgagor in possession ....... [10.180]-[10.230], [10.240], [10.350] ability to dispose of mortgaged propertry ...................................................... [10.240] deal with ship and bind mortgagee ..... [10.180], [10.190], [10.220], [10.230], [10.350] restraints on ...................... [10.180]-[10.220] sale of ship or share in ship ....... [10.250]-[10.270], [10.300]-[10.320], [10.360], [10.370] duties of mortgagee ........................ [10.310] effect of existing rights and charges on ...................................................... [10.320] extinguishment of mortgage .......... [8.470], [10.320], [10.360], [10.370] proceeds of ....................................... [10.310] rights of mortgagee ........ [10.250]-[10.270], [10.300], [10.360]

N Name of ship change of ................................................... [3.210] description of ship in time charterparty and ........................................................ [14.50] disallowance of, where ............ [3.180], [3.190], [3.250] no property in .......................................... [3.220] prohibition against misdescription ....... [3.230] prohibition on definite and indefinite articles in ................................................... [3.190] requirement for registration ...... [3.180]-[3.230] suffix numerals allowed ......................... [3.200] Nationality of ship — see also Foreign ship Australian nationality ................ [3.80], [3.140], [4.10]-[4.210] — see also Australian-owned ship “Australian national” defined .......... [3.80] “Australian ship” defined ................. [4.50] concealment of nationality of Australian ship ................................................. [4.30]

conferred on ship by registration .. [4.10]-[4.210] — see also Registration of ships consequences of ...................... [4.70]-[4.210] exclusive, for registration ................ [3.140] non-Australian ship appearing to have .......................................................... [4.30] unregistered ships not recognised as being of, where ................ [4.20], [4.40], [4.50] description of ship, under time charterparty ........................................................ [14.60] flag of ..... [3.140], [4.70], [4.90], [4.150]-[4.170], [14.60] alternatives to, right to fly ............. [4.160], [4.170] description of ship, under time charterparty ................................. [14.60] offences relating to ............................ [4.150] law on board ....... [4.70], [4.80], [4.100]-[4.140] Australian-owned ship ..................... [4.70], [4.100]-[4.140] British ship ......................................... [4.100] interstate voyage ............................... [4.110] national colours ... [4.70], [4.90], [4.150]-[4.210] all other registered or exempt Australian ships, of .......................... [4.150], [4.170] alternatives to, right to fly ............. [4.150], [4.160] Australian ships required to be registered or on demise charter to Australian-based operators, of ........................................................ [4.150] international law and ....................... [4.210] meaning of ......................................... [4.150] obligation to fly ..................... [4.70], [4.190] offences relating to ............................ [4.150] position at which to be flown ........ [4.200] prima facie evidence of nationality of ship ........................................................ [4.180] references to, meaning of .................. [4.90] right to fly .. [4.70], [4.150], [4.170], [4.210] unregistered Australian ships and . [4.150] Navigation carrier’s immunity from negligence in ...................................................... [12.390] distribution of legislative powers over shipping and ................. [2.380], [2.390] element of definitions of “ship” and “vessel” ........................................... [1.230]-[1.270] meaning of ................................................ [1.240] meaning of “navigation and shipping” . [2.70] Offshore Constitutional Settlement and legislative powers over shipping and .......................................... [2.380], [2.390] trade and commerce head of power applicable to shipping and ................................... [2.20]-[2.50], [2.70] “used in”, meaning of ............................ [1.250] Negligence — see also Collisions at sea; Duty of care crew, of, where proximate cause of loss by peril insured against ................ [17.310]

Index Negligence — cont insurance broker, of, and damages for ........................................................ [17.90] master, of .... [12.390], [14.360], [15.10], [15.20], [17.310] shipowner, of, and maritime lien ......... [8.150] Northern Territory waters collision in ................................................. [15.70]

O Offences flag, relating to ......................................... [4.150] historic shipwreck, in relation to ........ [21.240] marine pollution ........................ [19.40]-[19.60], [19.80]-[19.110], [19.130], [19.140], [19.170], [19.180] air pollution ......................... [19.40]-[19.60], [19.80]-[19.110], [19.130], [19.170], [19.180] dumping ........................................... [19.190] garbage ............................. [19.130], [19.140] noxious liquid substances ............ [19.130], [19.140] packaged harmful substances ...... [19.130], [19.140] sewage .............................. [19.130], [19.140] markings on ships, relating to .............. [3.170] national colours, relating to ................... [4.150] registration of ships, relating to ............. [3.90], [3.170], [3.380], [3.400], [3.410], [3.480], [4.30], [4.230] transfer of property in registered ship, relating to .................................... [6.180] transmission of property in ship, relating to ........................................................ [6.270] wreck, in relation to .............. [21.100]-[21.110], [21.140], [21.240] Offshore Constitutional Settlement effects of ..................................................... [2.370] legislative powers over shipping and navigation ...................... [2.380], [2.390] legislative powers over territorial sea ........................................... [2.350]-[2.370] need for re-arrangement of powers ..... [2.350] terms of ......................................... [2.360]-[2.390] Oil pollution — see also Marine pollution applicable law ............ [19.40]-[19.110], [19.130] Commonwealth .... [19.40]-[19.90], [19.130] Northern Territory ............ [19.40], [19.110] States ................................... [19.40], [19.100] Bunker Convention .. [19.20], [19.30], [19.210], [19.390] Civil Liability Convention 1992 ........... [19.20], [19.30], [19.210]-[19.380] compensation for losses caused by ....................................... [19.210]-[19.390] defences .......... [19.40], [19.50], [19.70], [19.80], [19.100], [19.110], [19.130]

1073

Commonwealth .... [19.40], [19.50], [19.70], [19.80], [19.130] Northern Territory ............ [19.40], [19.110] States ................................... [19.40], [19.100] Fund Convention 1992 ............ [19.20], [19.30], [19.210] International Management Code for Safe Operation of Ships and for Pollution Prevention ................................. [12.300] Intervention Convention ......... [19.20], [19.30], [19.400] loss of right to limit liability for damage ........................................................ [16.50] MARPOL Convention . [19.20]-[19.40], [19.60], [19.70], [19.90], [19.100], [19.130], [19.180] adoption into Australian law of .... [19.30], [19.100] application of ....... [19.40], [19.60]-[19.100], [19.130], [19.180] purpose of .......................................... [19.20] offences ........... [19.40]-[19.60], [19.80]-[19.110], [19.130], [19.180] Commonwealth ..... [19.40]-[19.60], [19.80], [19.90], [19.130] Northern Territory .......................... [19.110] States ................................. [19.100], [19.180] OPRC Convention ................................... [19.20] penalties .......... [19.40], [19.50], [19.80]-[19.110] Commonwealth .... [19.40], [19.50], [19.80], [19.90] Northern Territory ............ [19.40], [19.110] States ................................... [19.40], [19.100] prevention of .......... [20.50] — see also Salvage reporting obligations ............................... [19.80] salvage of oil tankers .............................. [20.50] Supplementary Fund Protocol 2003, ... [19.20], [19.210] Overseas voyage custody of registration certificate when on ........................................................ [3.410] legislative responsibility for fishing vesels on .......................................... [2.380], [2.390] liberty for ship to travel ............. [4.10], [4.230] outward-bound international carriage of goods from Australia, summary of law governing .......... [12.40] — see also Carriage of goods by sea; Hague-Visby Rules as modified in Australia registration required for ......................... [4.230] “regulated Australian vessel” and ...... [19.90], [21.20] ship on demise charter to Australian-based operator ........................................ [4.230] small craft operated by Torres Strait Islanders and ................................................ [4.230] unregistered Australian ship and ........ [3.430], [3.460] Ownership of ship — see also Property in ship acquisition of .... [5.40] — see also Acquisition of ship

1074

Shipping Law

Ownership of ship — cont caveatable interests ....... [5.230]-[5.260], [5.300] caveat against arrest or release of ships distinguished .............................. [5.300] “caveat”, meaning and purpose of .......................................... [5.230], [5.240] cessation of caveat ............................ [5.290] effect of caveat ..................... [5.270], [5.280] liability of caveator without reasonable cause ............................................. [5.250] protection of ........... [5.230], [5.240], [5.260] summons to caveator to show cause ........................................................ [5.260] types of ............................................... [5.240] company, by .............................................. [5.140] co-owners .................................... [5.130], [5.140] ordinary rules about ...................... [5.40]-[5.70] “owner”, meaning of ................... [5.40]-[5.120] Commonwealth legislation, under . [5.50], [5.90], [5.100], [5.110] registered ship in possession of mortgagee, where ........................ [5.60] requisitioned vessel, of ...................... [5.70] ship under demise charter, of .......... [5.50], [5.90], [5.100] State legislation, under .................... [5.120] registered joint owners ................. [5.20], [5.30] beneficial interest through ................. [5.20] distinguished from ownership in common .......................................................... [5.30] registered owner .......................... [5.20], [5.150] beneficial interest through ... [5.20], [5.150] statutory limit on number of persons at any time as sole .......................... [5.150] registration of .............................. [5.180]-[5.220] evidence of title, as ........................... [5.220] relationship with title .......... [5.190]-[5.220] registration of ship and ............. [5.40], [5.100], [5.180], [5.190] ownership before registration, relevance of .............................. [5.40], [5.180], [5.190] transfer of ........... [5.40] — see also Transfer of property in ship transmission of ........................ [5.40] — see also Transmission of property in ship

P Paramount statutory charge generally ............................ [7.30], [7.80], [7.100] how arises ........................... [7.40], [7.80], [7.90] loss of ............................................. [7.90], [8.470] Personal Property Securities Act 2009 (Cth), whether applicable to ...... [7.40], [7.60] priority of ... [7.50], [7.60], [7.80], [7.90], [8.20], [8.370], [8.650], [10.20] basic order ................................ [7.50], [7.60] paramountcy of .......... [7.80], [7.90], [8.20], [8.370], [8.650], [10.20] purpose of ....................................... [7.80], [7.90] sale and ...................................................... [7.110] Peril of the sea carrier’s immunity ................. [12.410], [12.420]

insurance against .. [17.220], [17.230], [17.290], [17.300] what constitutes ..... [12.410], [12.420], [17.220] Personal injury liability for damages for, from collision at sea ...................................................... [15.130] limitation of liability for claim, and calculation of amount of limit ...................... [16.100], [16.170], [16.180] Personal Property Securities Register migration of ship mortgages registered in Australian General Shipping Register to ....................................... [4.10], [10.80] registration of security interest in ship in .......................................... [4.10], [10.130] Pilotage service claim for, statutory right of action in rem .......................................... [8.310], [8.320] entitlement by pilot to salvage reward, whether ...................... [20.360], [20.380] immunity from liability in negligence where collision at sea ............................ [15.30] salvage service, whether ...... [20.360], [20.380] vicarious liability in negligence of shipowner for pilot, where collision at sea .......................................... [15.20], [15.30] Pleasure craft definition of ................... [3.110], [3.320], [17.10] exemption from registration of ............ [3.100], [3.110], [4.20] marine insurance, whether applicable to ........................................................ [17.10] Pollution — see Marine pollution; Oil pollution Pontoon exclusion from definition of “ship” and “vessel” ........................................ [1.160] Port entitlement to delivery at discharge port, under sea-carriage documents generally ...................... [11.20], [12.770] time charterparty ................... [14.270], [14.300] trading limit of safe port only ..... [14.270], [14.300] voyage charterparty .. [13.50]-[13.90], [13.110], [13.130], [13.140], [13.640] arrival at discharging port ........... [13.580], [13.640] inability to reach loading port safely ........................................................ [13.90] late arrival at loading port or berth, whether breach of contract .... [13.110], [13.130], [13.140] nomination of loading port ........................... [13.50]-[13.80], [13.140]

Index Port — cont safe berth within loading port ........................................... [13.50]-[13.70] safe loading port ................. [13.60], [13.70] specified range of loading ports ... [13.50], [13.140] unsafe port or berth, whether breach of contract ........................................ [13.70] untimely nomination of discharging port, whether breach of contract .... [13.640] untimely nomination of loading port or berth, whether breach of contract ........................................................ [13.80] Possessory lien application of common law about .......... [9.10] generally ............................... [7.10], [9.10]-[9.40] how arises ........................... [7.30], [9.10], [9.20] loss of ......................................................... [8.470] Personal Propery Securities Act 2009 (Cth), whether applicable to ..... [7.40], [7.60], [8.360] “possession of ship”, meaning of ........... [9.20] priority of . [7.50], [7.60], [8.400], [9.30], [9.40], [10.20] advantage of ........................................ [9.40] basic order ............................................ [7.50] between bottomry and possessory lien .......................................................... [9.30] between maritime lien and possessory lien ............................................ [8.400], [9.30] between mortgage of ship and possessory lien .................................... [9.30], [10.20] between respondentia and possessory lien .......................................................... [9.30] between statutory lien and possessory lien .......................................................... [9.30] purpose of ................................................... [7.30] Priority of charges basic order ....................................... [7.50], [7.60] bottomry ... [7.50], [7.60], [8.390], [9.30], [9.80], [9.90], [10.10], [10.20] legislative ...................... [7.60], [9.80], [9.90] maritime lien and ............................. [8.390] mortgage of ship and .......... [9.80], [10.10], [10.20] possessory lien and ............................ [9.30] maritime lien ......... [7.50], [7.60], [8.20], [8.30], [8.50], [8.220], [8.350]-[8.440], [8.650], [9.30], [10.20], [10.250] bottomry bond and .......................... [8.390] crew’s wages .......... [8.400], [8.420]-[8.440], [9.30] damage caused by ship ..... [8.420], [8.440] date of priority .................................... [8.50] different kinds of maritime liens .. [8.410], [8.420], [8.430], [8.440] maritime lien and other charges ........................................... [8.370]-[8.410] maritime liens of same kind ........... [8.440] mortgage of ship and .......... [8.30], [8.380], [10.20], [10.250]

1075

paramount statutory charge and ... [8.370] possessory lien and .............. [8.400], [9.30] rules, complexity of system of ....... [8.350] salvage reward .................... [8.420], [8.440] statutory lien and ................ [8.410], [8.650] statutory maritime lien and ........... [8.410], [8.440] mortgage of ship . [7.50], [7.60], [8.30], [8.380], [8.650], [9.30], [9.80], [10.10], [10.20], [10.250] bottomry and ........... [9.80], [10.10], [10.20] maritime lien and .. [8.30], [8.380], [10.20], [10.250] paramount statutory charge and ... [10.20] possessory lien ...................... [9.30], [10.20] statutory lien ...................................... [10.20] paramount statutory charge ....... [7.50], [7.60], [7.80], [7.90], [8.20], [8.370], [8.650], [10.20] paramountcy of .......... [7.50], [7.80], [7.90], [8.20], [8.370], [8.650], [10.20] Personal Property Securities Act 2009 (Cth), under ....... [7.60], [9.80], [9.90], [10.20], [10.130] possessory lien .... [7.50], [7.60], [8.400], [9.30], [9.40], [10.20] advantage of ........................................ [9.40] bottomry and ....................................... [9.30] maritime lien and ................. [8.400], [9.30] mortgage of ship and ........... [9.30], [10.20] respondentia and ................................ [9.30] statutory lien and ................................ [9.30] respondentia ............................................... [9.30] possessory lien and ............................ [9.30] statutory lien .... [8.410], [8.650], [9.30], [10.20] maritime lien and ............... [8.410], [8.650] mortgage of ship and ......... [8.650], [10.20] possessory lien and ............................ [9.30] statutory maritime lien . [7.50], [8.410], [8.440] maritime lien and ............... [8.410], [8.440] masters’ wages and disbursements, for ... [8.10], [8.270]-[8.300], [8.410], [8.440] Proceedings in rem advantage of ............................................... [8.40] arrest of property on ship ......... [1.40], [5.300], [5.310], [5.330], [8.40] caveat against ........ [5.300], [5.310], [5.330] arrest of ship .. [5.300], [5.310], [5.330], [7.100], [8.40], [8.520], [8.540], [9.40] caveat against ........ [5.300], [5.310], [5.330] extinguishment of charge after provision of bail or other security following .......................................... [8.520], [8.540] possessory lien, priority of, and ...... [9.40] avoidance of ............................................. [8.100] bottomry, enforcement of, by .................. [9.70] commencement of ..................................... [8.40] defence of action ........................................ [8.40] disadvantage of .......................................... [8.40] entry of appearance by owner, effect of .......................................................... [8.40] institution of ................................. [5.100], [8.30]

1076

Shipping Law

Proceedings in rem — cont maritime lien and ............ [8.20]-[8.50], [8.450], [8.460], [9.70] enforcement of, by .... [8.20]-[8.50], [8.450], [8.460], [9.70] relationship with ................................. [8.50] nature of ...................................................... [8.40] paramount statutory charge and .......... [7.100] polluting ship in Australian jurisdiction, where .......................................... [19.240] release of property in ship ...... [5.300], [5.320], [5.330] caveat against ........ [5.300], [5.320], [5.330] release of ship ............... [5.300], [5.320], [5.330] caveat against ........ [5.300], [5.320], [5.330] sale of arrested property ............. [1.40], [7.90], [7.100], [8.40], [8.220], [8.470], [8.520], [8.550], [9.40], [10.320], [10.370] extinguishment of charge on ship .. [7.90], [8.470], [8.520], [8.550], [10.320], [10.370] order for ............................................... [8.40] priority over proceeds of .. [8.470], [8.550], [9.40] “ship”, meaning of, in ................ [1.40], [8.160] statutory right of action ............. [8.50], [8.110], [8.200], [8.310], [8.320], [8.330], [8.620]-[8.650] creation of statutory lien by commencement of proceedings under ........................................................ [8.620] nature of ............................................. [8.620] pilotage services and .......... [8.310], [8.320] position of subsequent purchaser .. [8.630] priority of ............................................. [8.50] supply of goods and services ......... [8.620] supply of necessaries and ............... [8.330] surrogate ship, against ..................... [8.110] towage services and ........... [8.200], [8.320] surrogate ship, against, where .............. [8.110] Property damage carriage by sea of cargo and liability for .......................... [12.50]-[12.80], [12.370], [12.510]-[12.570], [12.740], [12.750], [12.780], [12.840] after delivery to/receipt by carrier to time of delivery ................................... [12.50] before loading and after discharge ........................ [12.50], [12.740], [12.750] by whom ............................................ [12.60] contracting out of, whether ............ [12.80] during loading time to discharge time (“tackle-to-tackle” period) ........ [12.50] for what cargo ................................... [12.70] limitation of liability ..................... [12.370], [12.510]-[12.570], [12.780], [12.840] collisions at sea and — see Collisions at sea insurance for loss or — see Marine insurance limitation of actions .............. [12.580]-[12.620], [12.740], [12.800], [12.830] Property in ship — see also Ownership of ship acquisition of .. [5.40], [6.10]-[6.280] — see also Acquisition of ship

construction, by ........................ [6.10]-[6.40] formerly ................................................ [6.10] transfer, by . [5.40], [6.10], [6.50]-[6.200] — see also Transfer of property in ship transmission, by ....... [5.40], [6.10], [6.100], [6.210]-[6.280] — see also Transmission of property in ship caveatable interests ....... [5.230]-[5.260], [5.300] caveat against arrest or release of ships distinguished .............................. [5.300] “caveat”, meaning and purpose of .......................................... [5.230], [5.240] cessation of caveat ............................ [5.290] effect of caveat ..................... [5.270], [5.280] liability of caveator without reasonable cause ............................................. [5.250] protection of ........... [5.230], [5.240], [5.260] summons to caveator to show cause ........................................................ [5.260] types of ............................................... [5.240] equitable interests in registered ship ............................. [5.150]-[5.170], [5.210] no statutory restrictions on ............. [5.150] recognition of ....................... [5.150], [5.170] registration and entry on relevant Register of information about ... [5.160], [5.170] personal property ............ [5.10], [5.150], [6.20] registration of ownership .......... [5.180]-[5.220] evidence of title, as ........................... [5.220] relationship with title .......... [5.190]-[5.220] shares in registered ship . [5.20]-[5.40], [5.130], [5.140], [5.180], [5.190], [5.270], [5.280] acquisition of ....................................... [5.40] company or corporation as owner of .......................................................... [5.20] equitable ownership in common of .......................................................... [5.30] joint ownership of ..... [5.20], [5.30], [5.140] ownership in common ........... [5.20]-[5.40], [5.130], [5.140] registered owner of, not necessarily agent of any beneficial owner ............ [5.130] sole ownership of ............................... [5.20] transfer of ... [5.40], [5.180], [5.190], [5.280] transmission of ....... [5.40], [5.180], [5.190], [5.270] Public enemies carrier’s immunity for act of ............... [12.430]

Q Quarantine restrictions carrier’s immunity ................................. [12.500] “free pratique” ....... [13.200], [13.220], [13.490] voyage charterparty and ..... [13.200], [13.220], [13.490]

R Raft boat distinguished ..................................... [1.20]

Index Raft — cont exclusion from meaning of “vessel” ... [1.200], [1.210] Registered agent necessity for registration of ship .......... [3.270] notice of altered characteristics of registered ship to Registrar of Ships or diplomatic or consular official by ........................................................ [3.380] notice of appointment of, form for ..... [3.260], [6.150] provision of evidence to Australian Maritime Safety Authority of ownership of ship by .................................................. [3.520] whether change of, where transfer of property in registered ship ......... [6.140], [6.150] who must be ............................................. [3.270] Registers of ships — see Australian General Shipping Register; Australian International Shipping Register Registrar of Ships — see Registration of ships Registration certificate — see also Registration of ships delivery of ...... [3.410], [6.120], [6.170], [6.180], [6.210], [6.260], [6.270] person entitled to custody, to, on demand ........................................................ [3.410] Registrar of Ships, to, after transfer of property in ship .......... [6.120], [6.170], [6.180] Registrar of Ships, to, after transmission of property in ship ......... [6.210], [6.260], [6.270] endorsement by Registrar of Ships of, with particulars of change of ownership ............. [6.120], [6.170], [6.180], [6.260], [6.270] grant by Registrar of Ships of .............. [3.290], [3.380], [3.390], [3.430]-[3.450] improper use of ......................... [3.400], [3.480] interim — see “temporary pass”, below new, after entry of alteration to registered ship ............................................... [3.380] prima facie evidence, as ......................... [4.220] proper custody of .................................... [3.410] provisional ...... [3.380], [3.420]-[3.450], [3.480], [4.220] after entry of alteration to registered ship ........................................................ [3.380] effect and duration of ....................... [3.450] further ................................................. [3.450] improper use of ................................. [3.480] prima facie evidence, as .................. [4.220] registered ship outside Australia, for .......................................... [3.420], [3.440] surrender of ....................................... [3.450] unregistered ship, for ......... [3.420], [3.430]

1077

purpose for which may be used ........... [3.400] return of, on closure or deemed closure of registration .................................. [3.550] revocation of ............................................. [3.600] surrender of, on cancellation of registration ........................................................ [3.550] temporary pass .............. [3.460]-[3.480], [4.220] effect of ............................................... [3.470] grant of ............................................... [3.460] improper use of ................................. [3.480] prima facie evidence, as .................. [4.220] purpose of .......................................... [3.460] special circumstances ....................... [3.460] Registration of ships application for ............. [3.130], [3.250], [3.260], [3.290] fee ........................................................ [3.290] optional ............................................... [3.130] supporting documents ....... [3.250], [3.290] written ..................... [3.250], [3.260], [3.290] Australian General Shipping Register .. [3.20], [3.300], [3.310], [3.340]-[3.390], [3.420], [3.490], [3.500]-[3.530], [3.550]-[3.590], [4.60], [5.160], [5.170], [10.80] — see also Australian General Shipping Register Australian International Shipping Register .. [3.20], [3.300], [3.320]-[3.390], [3.420], [3.490]-[3.520], [3.550]-[3.590], [3.600], [4.60] — see also Australian International Shipping Register Australian Maritime Safety Authority, role of ............. [3.100], [3.120], [3.160], [3.260], [3.460], [3.500], [3.520] — see also Australian Maritime Safety Authority certificate of tonnage measurement of ship ........................................................ [3.160] deemed closure of registration ....... [3.500] direction to Registrar of Ships to grant temporary pass ........................... [3.460] exemption from registration .......... [3.100], [3.120] notice to Registrar of Ships to close registration .................................. [3.520] online forms ....................................... [3.260] “Australian national” defined ................. [3.80] Australian nationality and .......... [4.10]-[4.210] Australian-owned ships ............ [3.80], [3.100], [3.120], [4.20] definition of ......................................... [3.80] those exempt from registration ..... [3.100], [3.120], [4.20] Australian Shipping Registration Office ... [3.190], [3.260], [3.360], [6.150] — see also Australian Shipping Registration Office application for registration form .... [3.260] builder’s certificate ........................... [3.260] declaration of ownership and nationality form .............................................. [3.260] notice of appointment of registered agent form ................................ [3.260], [6.150]

1078

Shipping Law

Registration of ships — cont prohibition on definite and indefinite articles in name of ship by ....... [3.190] repository for Registers ................... [3.360] cancellation of, in Austalian International Shipping Register ........ [3.490], [3.540], [3.550], [3.600] certificate of tonnage measurement .... [3.150], [3.160] cessation in law of ................................... [3.490] closure of .......... [3.500]-[3.520], [3.550]-[3.590], [4.60] — see also Australian General Shipping Register; Australian International Shipping Register consequences of — see “legal consequences of”, below deemed closure of ..................... [3.500]-[3.530], [3.550]-[3.590] — see also Australian General Shipping Register; Australian International Shipping Register deletion certificate, grant of ................... [3.560] detention of unregistered ship when required to be registered ............................. [3.90] exclusivity of registration and nationality, purpose of ................................... [3.140] exemptions from ........................... [3.60], [3.70], [3.100]-[3.130], [4.20] Australian defence force ships ...... [3.100], [3.130] fishing vessels .................................... [3.100] Government ships ............................. [3.100] optional registration where ............. [3.130] pleasure craft ........... [3.100], [3.110], [4.20] ships less than 24 metres in tonnage length ........................................... [3.100] ships operated by foreign resident under demise charter and exempted by Australian Maritime Safety Authority .......................................... [3.100], [3.120] formalities for .............................. [3.250]-[3.290] completed construction of ship ...... [3.280] fee ........................................................ [3.290] registered agent ................................. [3.270] supporting documents ..................... [3.250] time for ............................................... [3.290] written application for ...... [3.250], [3.260], [3.290] generally ......................................... [3.10]-[3.610] general rule ......................... [3.60], [3.70], [3.90] improper .................................................... [3.490] international law requirement of ............ [3.50] law governing ............. [3.10], [3.30] — see also “Shipping Registration Act 1981 (Cth) regime”, below relevance of case law decided under former legislation ......................... [3.30] legal consequences of ................... [4.10]-[4.250] compared to registration of land ... [4.220] conferment of title to ship ... [4.10], [4.220] conferment of two-fold status of Australian ship and Australian nationality ......................... [4.10]-[4.210] formerly ................................................ [4.10]

liberty for ship to travel overseas ... [4.10], [4.230] limitation on method of transfer of ship ............................................ [4.10], [4.240] right to naval protection, whether . [4.250] markings on ship ......... [3.150], [3.170], [3.290] Marking Note .................................... [3.290] Minister of Transport and Communications, disallowance of name of ship by ........................................................ [3.180] name of ship ................................ [3.180]-[3.230] change of ............................................ [3.210] no property in ................................... [3.220] prescribed classes disallowed ........ [3.180], [3.190] prohibition against misdescription ........................................................ [3.230] prohibition on definite and indefinite articles in ..................................... [3.190] suffix numerals allowed ................... [3.200] nationality and .............................. [4.10]-[4.210] offences ............. [3.90], [3.170], [3.380], [3.400], [3.410], [3.480], [4.30], [4.230], [6.180], [6.270] optional .......................................... [3.60], [3.130] origin of requirement of ........................... [3.40] ownership of ship and ................ [5.40], [5.100] ownership of ship before, relevance of .............................. [5.40], [5.180], [5.190] penalty for non-registration of non-exempt ships ............................................... [3.90] practical steps for .................................... [3.290] provisional ....... [3.380], [3.420]-[3.450], [3.480] after entry of alteration to registered ship ........................................................ [3.380] registered ship outside Australia, for .......................................... [3.420], [3.440] unregistered ship, for ......... [3.420], [3.430] Registrar of Ships ........ [3.160]-[3.180], [3.250], [3.290], [3.340], [3.350], [3.370]-[3.390], [3.430]-[3.460], [3.500], [3.520], [.540]-[3.560], [3.590], [3.600], [5.230], [5.260], [6.120], [6.140], [6.160]-[6.180], [6.210], [6.260], [6.270] cancellation of registration in Australian International Shipping Register by ........................................................ [3.540] correction of entries in Registers by ........................................................ [3.370] deemed closure of registration resulting from action by ............................ [3.500] delivery of registration certificate to, after transfer of property in ship .... [6.120], [6.170], [6.180] delivery of registration certificate to, after transmission of property in ship ............................ [6.210], [6.260], [6.270] endorsement of bill of sale of registered ship by ......................................... [6.160] endorsement of registration certificate by, with particulars of change of ownership ....... [6.120], [6.170], [6.180], [6.260], [6.270]

Index Registration of ships — cont entry of alteration to registered ship in Register by .................................. [3.380] entry of caveat protecting interests in ownership in Register by ......... [5.260] extension of duration of provisional registration certificate by .......... [3.450] extension of time for registration by .......................................... [3.290], [3.390] grant of deletion certificate by ....... [3.560] grant of further provisional registration certificate by ................................ [3.450] grant of provisional registration certificate by .................................... [3.430], [3.440] grant of registration certificate by . [3.290], [3.380], [3.390], [3.430]-[3.450] grant of suspension certficate by ... [3.590] grant of temporary pass by ............ [3.460] inquiries as to justification for closure/deemed closure of registration of ship by Australian Maritime Safety Authority or ................................ [3.520] lodgment of caveat protecting interests in ownership with ............ [5.230], [5.260] lodgment of certificate of tonnage measurement with ..................... [3.160] lodgment of declaration of transfer of property in registered ship with .......................................... [6.120], [6.180] lodgment of declaration of transmission of property in registered ship and any prescribed evidence with ......... [6.210], [6.270] lodgment of provisional registration certificate with ............................ [3.380] lodgment of transfer of property documents with ........... [6.120], [6.140], [6.180] lodgment of written application for registration and supporting documents with ............ [3.250], [3.290] markings of ship directed by ........ [3.170], [3.290] name of ship disallowed by, where .......................................... [3.180], [3.250] notice by registered agent of altered characteristics of registered ship to (or to diplomatic or consular official where relevant) ........................... [3.380] notice of caveat protecting interests in ownership by .............................. [5.260] notice of lost ship to ......................... [3.520] refusal to register in Australian International Shipping Register by ........................................................ [3.350] registration by ..................... [3.340], [3.350] registration of bill of sale of registered ship by ......................................... [6.160] return of registration certificate to . [3.550] revocation of registration certificate by ........................................................ [3.600] surrender of registration certificate to ........................................................ [3.550]

1079

registration certificate .. [3.290], [3.380]-[3.450], [3.480], [3.550], [3.600], [4.220] — see also Registration certificate re-registration ............................. [3.570], [3.580] Shipping Registration Act 1981 (Cth) regime ......... [3.20], [3.60]-[3.610], [4.20]-[4.50], [4.230], [5.90], [6.180], [6.270] exemptions/exclusions from ........... [3.60], [3.70], [3.100]-[3.140] general rule .................. [3.60], [3.70], [3.90] object of registration provisions ...... [3.60], [3.90], [3.140] offences ...... [3.90], [3.170], [3.380], [3.400], [3.410], [3.480], [4.30], [4.230], [6.180], [6.270] penalty for non-registration of non-exempt ships ......................... [3.90] preservation of right of States and Territories to enact legislation for recording or registration of ships ........................................................ [3.600] Regulations made under ................. [3.150] requirements and formalities for registration ..................... [3.150]-[3.290] State and Territorial laws, under .......... [3.610] statutory requirements for ........ [3.150]-[3.250] certificate of tonnage measurement .......................................... [3.150], [3.160] markings in accordance with Regulations ............................ [3.150], [3.170], [3.250] name of ship ......................... [3.180]-[3.230] no minimum size of ship ................ [3.240] suspension of .............................. [3.580], [3.590] suspension certificate, where .......... [3.590] whether ............................................... [3.580] temporary pass .. [3.460]-[3.480], [4.220] — see also Registration certificate United Nations Convention on the Law of the Sea 1982 requirement of maintenance of register of ships ....................... [3.50] Respondentia bottomry and .............................................. [9.60] creation of ................................................... [8.20] generally ...................................................... [7.20] insurable interest of lender of money on ........................................................ [17.70] meaning of .................................................. [9.60] priority of ............. [7.50], [8.390], [9.30], [9.80], [10.10], [10.20] basic order ............................................ [7.50] between maritime lien and respondentia ........................................................ [8.390] between mortgage of ship and respondentia ..... [9.80], [10.10], [10.20] between possessory lien and respondentia .......................................................... [9.30] obsolescence of ............................... [7.20], [9.50] Rigs inclusion in definition of “ship” ............. [1.70]

1080

Shipping Law

Rotterdam Rules adoption internationally of ...... [12.30], [12.40] partial .................................................. [12.30] application of .............. [12.50], [12.60], [12.270] receipt of goods by carrier to delivery, to ........................................................ [12.50] time when, and duration ................. [12.50] whom, to ............................................ [12.60] “carrier” defined .................................... [12.810] extension beyond carriage of goods by sea ........................................................ [12.30] historical development of ...................... [12.30] no adoption by Australia of .................. [12.30]

S Salvage cargo, of, and maritime lien .................... [8.90] Crown, claims by and against ............. [20.810] danger, element of .... [20.60], [20.130]-[20.180] apparent objectivity of ................... [20.160] end of danger .................................. [20.180] examples of ...... [20.140], [20.160], [20.170] meaning and scope of .................... [20.130] mere detriment, whether ............... [20.170] unseaworthiness, where ................ [20.150] derelict, of ............................................... [20.630] general average contribution and expenses of ............................ [18.10], [18.40], [18.90] generally ..................................... [20.10]-[20.820] historic wreck, of ................................... [20.820] insurance against ................................... [17.220] life salvage ................. [20.40], [20.790]-[20.820] military ...................................................... [20.30] nature of .................................................... [20.10] object of ................................................... [20.470] oil tankers, of ............................................ [20.50] prize (military salvage) ........................... [20.30] salvable property ....... [8.190], [20.60]-[20.120], [20.190], [20.200] exclusions from .. [20.80]-[20.100], [20.190] location of ......................... [20.190], [20.200] meaning of ........................... [8.190], [20.60] salvage agreement, effect of ................. [20.640] salvage contract ....................... [20.650]-[20.680] content and features of .................. [20.660] contract for services to assist endangered ship or property distinguished ...................................................... [20.660] Lloyd’s Standard Form of Salvage Agreement (“Lloyd’s Open Form”) ...................................... [20.650], [20.660] “no cure, no pay” principle .......... [20.670] object of ............................................ [20.660] payment where unsuccessful ........ [20.670] quantum of remuneration reviewable by court ........................................... [20.660] Salvage Convention and ................ [20.680] Salvage Convention .. [18.90], [20.50], [20.110], [20.190], [20.200], [20.230], [20.240], [20.370], [20.410], [20.460], [20.480]-[20.500], [20.540], [20.560], [20.590]-[20.620], [20.680]-[20.790]

adoption in Australian law of ........ [20.50] aim of .................................... [18.90], [20.50] common owner of salvaging and salvaged ships, position of ...................... [20.230] life salvage ....................................... [20.790] location of salvable property ....... [20.190], [20.200] “property” defined ......................... [20.110] salvage contracts and ..................... [20.680] salvage reward . [18.90], [20.370], [20.410], [20.460], [20.480]-[20.500], [20.540], [20.560], [20.590]-[20.620], [20.700], [20.710], [20.790] — see also Salvage reward special compensation ........ [18.90], [20.50], [20.690]-[20.790] — see also “special compensation”, below success of salvage service ............ [20.240], [20.730]-[20.750] “salvage operation” defined ............... [20.110], [20.130], [20.190], [20.730] salvage reward (civil salvage) .... [7.30], [8.10], [8.190]-[8.210], [8.310], [8.320], [8.420], [8.440], [16.130], [16.150], [16.190], [20.10], [20.20], [20.50], [20.60], [20.210]-[20.260], [20.300]-[20.320], [20.340]-[20.390], [20.410], [20.440]-[20.630], [20.650], [20.660], [20.670], [20.700], [20.710], [20.790] — see also Salvage reward salvage services ........... [20.10], [20.20], [20.50], [20.60], [20.130], [20.200]-[20.260], [20.350]-[20.390], [20.410]-[20.430], [20.550], [20.630], [20.660] absent owner of salvaging vessel, where ...................................................... [20.210] agreement for .................................. [20.390] authority for commencement of ....................................... [20.410]-[20.430] defined ................................................ [20.10] derelict, to ......................................... [20.630] fault or misconduct in performance of ...................................................... [20.550] financial reward for ........... [20.10], [20.20], [20.50] — see also Salvage reward maritime lien over rescued property, creation of .................................... [20.20] performance of successful .............. [20.10], [20.20], [20.50], [20.240], [20.250] pilotage services, whether ............ [20.360], [20.380] salvable property in danger at sea, in respect of ..................... [20.60], [20.130] salvage contract, in ......................... [20.660] services constituting ........ [20.200]-[20.260] services pursuant to contract before danger arises, whether ............ [20.370] towage services, whether ............. [20.350], [20.380], [20.390] voluntariness ........................ [20.10], [20.20] wreck, to ........................................... [20.630] “salve”, meaning of ................................. [20.30] salvor .. [16.60], [16.80], [20.10]-[20.30], [20.50],

Index Salvage — cont

[20.270]-[20.400], [20.420], [20.530]-[20.560], [20.690]-[20.780] characteristics of ............... [20.270]-[20.400] fault or misconduct of, and quantum of salvage reward .......... [20.530]-[20.560] incentive to minimise environmental damage for ... [20.50], [20.690]-[20.780] limitation of liability of ...... [16.60], [16.80] meaning of ........... [16.60], [20.30], [20.270] motive and intention of ................. [20.400] no usual right of exclusive possession of ship by ....................................... [20.420] volunteer, must be ............. [20.10], [20.20], [20.270]-[2.390] special compensation ............... [18.90], [20.50], [20.690]-[20.790] basis for .............................. [20.50], [20.690] entitlement to ... [20.700], [20.740], [20.750] “expenses”, meaning of . [20.760], [20.770] “fair rate”, meaning of ................... [20.770] inclusion in general average of, whether ........................................................ [18.90] liability to pay ................................. [20.700] life salvage and ............................... [20.790] negligence by salvor ....................... [20.780] quantum of ...... [20.700], [20.730], [20.750] Salvage Convention provisions for ........... [18.90], [20.50], [20.690]-[20.790] salvage reward and, relationship between ........................ [18.90], [20.700], [20.710] unsuccessful ................................ [8.190], [20.50] use of term ................................................ [20.10] voluntariness, requirement of .............. [20.10], [20.20], [20.270]-[20.390], [20.440], [20.660] master or crew of salvaging ship ...................................... [20.310], [20.320] members of crew of distressed ship ...................................... [20.290], [20.390] passengers on distressed ship ...... [20.300] pilotage services .............. [20.360], [20.380] pre-existing legal obligation to assist and ..... [20.270], [20.290], [20.300], [20.340], [20.370]-[20.390], [20.660] problems in application of ............ [20.280] public officials .................................. [20.330] towage services .............. [20.350], [20.380], [20.390] wreck, of .................................. [20.630], [20.820]

Salvage reward — see also Salvage apportionment of .................... [20.580]-[20.620] between salvors ................ [20.590]-[20.610] between owners of different salvaged property ..................................... [20.620] claim for, enforcement of ..................... [20.570] common law principles and ................ [20.440] derelict, for .............................................. [20.630] entitlement to, whether ........ [20.210]-[20.230], [20.300]-[20.320], [20.340], [20.360]-[20.390] absent owner of salvaging vessel ...................................................... [20.210]

1081

charterer other than demise charterer ...................................................... [20.220] common owner of salvaging and salvaged ships ........................................... [20.230] demise charterer .............................. [20.220] master or crew of distressed ship ...................................................... [20.390] master or crew of salvaging ship ...................................... [20.310], [20.320] passengers on distressed ship ...... [20.300] pilot ................................... [20.360], [20.380] pre-existing legal obligation to assist, where .......................................... [20.340] Salvage Convention, under ........... [20.370] services rendered under contract before danger arises, where .............. [20.370], [20.380] fault or neglect of salvor and ....................................... [20.530]-[20.560] liability to pay ....... [16.130], [16.150], [16.190], [20.570], [20.620] apportionment of ............................ [20.620] limitation fund ................................ [16.190] loss of limitation of, where .......... [16.130], [16.150] owner of salvaged property, including demise charterer, of ................. [20.570] life salvage, where ................................. [20.790] Lloyd’s Standard Form of Salvage Agreement, under .......................................... [20.650] maritime lien to secure ................ [7.30], [8.10], [8.190]-[8.210], [8.310], [8.320], [8.420], [8.440], [20.20], [20.570], [20.660] more than one salvor, where .......... [8.190] priority of ............................. [8.420], [8.440] quantum of reward .......................... [8.190] salvable property .............................. [8.190] salvage operation undertaken by Commonwealth, State or Territory ........................................................ [8.190] saving of life irrelevant .................... [8.210] separate towage services ... [8.200], [8.320] unsuccesful salvage .......................... [8.190] “no cure, no pay” principle .. [20.50], [20.240], [20.670] not payable where salvage services prohibited ...................................................... [20.410] quantum of ............... [8.190], [20.450]-[20.560], [20.650], [20.660] basic principles ................. [20.460]-[20.480] fault or misconduct of salvor, where ....................................... [20.530]-[20.560] relevant consideratons .. [20.450], [20.460], [20.480]-[20.510] rules for valuing salvaged property ...................................................... [20.520] salvage contract, under .................. [20.650] Salvage Convention, under .......... [20.460], [20.480]-[20.500] salvage contract, under .......... [20.650]-[20.670] Salvage Convention, under ... [18.90], [20.370], [20.410], [20.460], [20.480]-[20.500], [20.540], [20.560], [20.590]-[20.620], [20.700], [20.710], [20.790]

1082

Shipping Law

Salvage reward — cont apportionment between owners of different salvaged property .... [20.620] apportionment between salvors .. [20.590], [20.610] fault or neglect of salvor .............. [20.540], [20.560] life salvage, where .......................... [20.790] not payable where salvage services prohibited .................................. [20.410] quantum of, relevant considerations and criteria in fixing ....................... [20.460], [20.480]-[20.500] relationship with special compensation ........................ [18.90], [20.700], [20.710] whether entitlement to .................. [20.370] “shipowner”, meaning of, for purposes of ...................................... [20.220], [20.230] special compensation and, relationship between ........ [8.190], [20.700], [20.710] successful (or contribution to successful) salvage, for .. [20.50], [20.240]-[20.260], [20.670] towing party, whether entitlement to ...................................... [20.350], [20.380] Scuttling marine insurance for ............................. [17.290] Sea-carriage documents arbitration clauses in .............. [12.90], [12.580], [12.590], [12.720], [13.20] Baltic and International Maritime Conference approval of standard form contracts ........................................................ [11.60] bill of lading — see Bill of lading carriage of cargo under — see Cargo; Hague Rules; Hague-Visby Rules; Hague-Visby Rules as modified in Australia; Rotterdam Rules charterer, in hands of ............................ [12.700] choice of law and forum ....... [12.90], [12.670], [13.20] “claused” ................................. [12.100], [12.110] “clean” ..................................... [12.100], [12.110] consignment note ......... [11.80], [11.90], [12.40] application of Australian-modified Hague-Visby Rules to, where .. [12.40] meaning of ......................................... [12.40] issue by freight forwarder of ......... [11.80], [11.90], [12.840] contract of affreightment — see Contract of affreightment contract of carriage and ........... [12.10], [12.20], [12.270]-[12.750] — see also Contract of carriage before loading and after discharge ...................................... [12.740], [12.750] carrier’s immunities ... [12.370]-[12.500] — see also Carrier carrier’s obligations .... [12.290]-[12.360] — see also Carrier chartered ships ................. [12.690]-[12.730]

limitation of carrier’s liability ...... [12.510]-[12.570] — see also Carrier limitation of actions ... [12.580]-[12.620] — see also Carrier order of proof in cargo claims ...... [12.280] relationship between ...................... [12.270] relationship between carrier’s obligations and immunities ........................ [12.280] shipper’s obligations ....... [12.630]-[12.660] title to sue ......................... [12.670], [12.680] transfer of title ................. [12.670], [12.680] defined ....................................................... [13.20] effect on jurisdiction of Commonwealth or State or Territory courts of ....... [12.90] electronic ................................. [12.100], [12.680] fraudulent misrepresentation ............... [12.110] governing law of contract ....... [12.40], [12.90], [12.270] carriage of goods into Australia .... [12.90] carriage of goods out of Australia .......................................... [12.40], [12.90] contracting out of, whether ........... [12.80], [12.90] interstate carriage ............................. [12.90] Hague Rules for carriage of cargo under — see Hague Rules Hague-Visby Rules for carriage of cargo under — see Hague-Visby Rules; Hague-Visby Rules as modified in Australia Hamburg Rules for carriage of goods under — see Hamburg Rules issue of ..................................... [12.100], [12.110] accomplishment .............................. [12.100] guarantee of particulars ................. [12.110] indemnities ....................................... [12.110] mate’s receipt ................................... [12.100] overview ........................................... [12.100] meaning of ................................................ [12.90] misleading or deceptive conduct ........ [12.110] receipt, as ................................. [12.100]-[12.260] condition of goods, to ..... [12.120]-[12.170] content of .......................................... [12.100] “leading marks”, to ......... [12.230]-[12.250] minimisation of evidentiary value of ...................................................... [12.100] overview ........................................... [12.100] quality, to, whether ......................... [12.260] quantity or weight, to ..... [12.180]-[12.220] “received for shipment” ................ [12.100] “shipped on board” ........................ [12.100] receipt as to condition of goods ....................................... [12.120]-[12.170] apparent condition unknown ....... [12.170] “condition unknown” .................... [12.120] lumber clause .................................. [12.170] position of consignee or indorsee ...................................... [12.140], [12.150] position of shipper ......................... [12.130] Retla rust clause .............................. [12.170] “said to contain” ............. [12.120], [12.160] “shipped in apparent good order and condition” .................. [12.120], [12.130]

Index Sea-carriage documents — cont “shipper’s load, stow and count” ...................................... [12.120], [12.160] receipt as to “leading marks” ....................................... [12.230]-[12.250] marks of identification ... [12.230], [12.240] marks of identity ............ [12.230], [12.250] receipt as to quality, whether .............. [12.260] receipt as to quantity or weight ....................................... [12.180]-[12.220] “conclusive evidence” .................... [12.220] “said to contain” ............................. [12.210] “weight and quantity unknown” ...................................................... [12.210] Rotterdam Rules for carriage of goods under — see Rotterdam Rules sea waybill — see Sea waybill signing of ................................ [12.100], [12.200] standard forms of .... [11.60], [12.270], [12.530] Baltic and International Maritime Conference approval .................. [11.60] incorporation of relevant rules by way of Clause Paramount .... [12.270], [12.530] straight bill of lading — see Straight bill of lading time charterparty — see Time charterparty third party, in hands of ......... [12.710]-[12.730] voyage charterparty — see Voyage charterparty Seagoing vessel — see Ship Seaman — see also Crew ambit of term ............................................ [8.240] “crew” as synonym for ........................... [8.240] seaman’s (or mariner’s) contract ........... [8.260] Seaplane exclusion from definition of “ship” ....... [1.80] exclusion from meaning of “vessel” .... [1.210] whilst on water, inclusion in definition of “vessel” ........................................ [1.120] Sea waybill — see also Sea-carriage documents bill of lading distinguished ...... [11.20], [11.30] chartered ship and . [12.690], [12.700], [12.730] choice of law and forum ........ [12.90], [12.670] “claused” ................................................. [12.110] demise clause ......................................... [12.820] electronic ...................................... [11.20], [12.20] evidence of contract between shipper and sea-carrier, as . [11.20], [12.20], [12.270] freight forwarder and .............................. [11.80] freight, liability to pay .......................... [12.640] functions of ... [11.20], [11.30], [12.20], [12.270] guarantee of particulars by shipper ... [12.110] identity of carrier clause ...................... [12.820] issue of, where voyage charterparty ... [11.30], [12.690], [12.700] receipt, as ...... [11.20], [11.30], [12.20], [12.100], [12.140], [12.190], [12.200], [12.240], [12.700] charterparty, where ........... [11.30], [12.700]

1083

condition of goods, to .................... [12.140] content, to ......................................... [12.100] “leading marks” .............................. [12.240] quantity or weight, to .... [12.190], [12.200] signing of ................................................ [12.810] straight bill of lading distinguished .... [12.20], [12.200], [12.640], [12.680] third party, with, and time charterparty ........................................ [14.10], [14.400] title to sue under ................................... [12.670] transfer of rights and liabilities under ...................................................... [12.670] use of ................. [11.10]-[11.30], [11.80], [12.20] voyage charterparty and ....... [11.30], [12.690], [12.700] Seaworthiness carrier’s duty of ..... [12.280]-[12.300], [12.360], [12.370], [12.410], [12.530] carrier’s immunity ................. [12.300], [12.370] carrier’s defence of due diligence in relation to ................................. [12.280], [12.300] Hague Rules, under .............. [12.280]-[12.300], [12.360], [12.370], [12.410], [14.130], [14.150], [14.160], [14.410] Hague-Visby Rules, under .. [12.300], [12.360], [12.380], [14.130], [14.150], [14.160], [14.410] Hague-Visby Rules as modified in Australia, under ......... [12.300], [12.360], [12.380], [14.150] International Management Code for Safe Operation of Ships and for Pollution Prevention (ISM Code) ........... [12.300] marine insurance .. [17.270], [17.280], [17.300], [17.590], [17.600] implied warranty of ....... [17.590], [17.600] unseaworthiness, whether uninsured peril ...................... [17.270], [17.280], [17.300] meaning of ............. [12.300], [12.360], [13.600], [14.110] time charterparty, under ........ [14.110]-[14.150] Clause Paramount .......................... [14.150] documentation of ............................ [14.110] meaning of ....................................... [14.110] shipowner’s responsibility ....................................... [14.110]-[14.150] sufficient and competent crew ...... [14.110] termination of contract for lack of, whether ....................... [14.110]-[14.150] throughout charter period ............ [14.130], [14.140] time of delivery, at .......................... [14.120] vetting clause ................................... [14.140] unseaworthiness ..... [12.300], [14.110]-[14.130], [17.270], [17.280], [17.300], [17.600], [20.150] burden of proving .......................... [17.600] how may arise ................................. [12.300] salvage and danger of ................... [20.150] termination of contract for time charterparty, whether for ....................................... [14.110]-[14.130]

1084

Shipping Law

Seaworthiness — cont whether insured against ............... [17.270], [17.280], [17.300] voyage charterparty, under .. [13.580], [13.600] meaning of ....................................... [13.600] shipowner’s responsibility for ..... [13.580], [13.600], [14.110]-[14.150] Seizure of ship carrier’s immunity for arrest, requisition, blockade or, under legal process ...................................................... [12.440] Shares in registered ship acquisition of .............................................. [5.40] company or corporation as owner of .... [5.20] equitable ownership in common of ....... [5.30] joint ownership of ........... [5.20], [5.30], [5.140] control and management of ship where ........................................................ [5.140] types of ................................................. [5.30] ownership in common .... [5.20]-[5.40], [5.130], [5.140] registered owner of, not necessarily agent of any beneficial owner ................. [5.130] sole ownership of ...................................... [5.20] transfer of .......... [5.40], [5.180], [5.190], [5.280] bill of sale, by ...................... [5.180], [5.190] entry of new owner’s name in relevant Register .......................... [5.180], [5.190] prevention by caveat of, whether .. [5.280] transmission of . [5.40], [5.180], [5.190], [5.270] entry of new owner’s name in relevant Register .......................... [5.180], [5.190] prevention by caveat of, whether .. [5.270] Ship — see also Vessel arrest of — see Arrest of ship; Proceedings in rem boat distinguished ..................................... [1.20] characteristics of ............................ [1.10], [1.40] crew of — see Crew definitions of ......... [1.10], [1.30]-[1.90], [1.110], [1.140], [1.160], [1.180], [1.230]-[1.270], [1.290], [1.310]-[1.330], [3.240], [3.280], [8.70], [8.160], [17.130], [19.390], [20.80], [20.90] application of ......................... [1.90], [1.180] “barge, lighter or other floating vessel”, scope of ........................................ [1.310] Commonwealth statutes ........ [1.40]-[1.90], [1.230], [1.290], [1.320], [3.240], [3.280] exclusions ................. [1.80], [1.140], [1.160] inclusions ......... [1.30], [1.40], [1.60], [1.70], [1.140], [1.160], [1.290], [1.310] liability under Bunker Convention, for ...................................................... [19.390] maritime lien, for purposes of ......... [8.70], [8.160] navigational element ........... [1.230]-[1.270] obsolete ................................................. [1.10] proceedings in rem, in ......... [1.40], [8.160] salvage, for purposes of .... [20.80], [20.90]

State and Territory statutes ............ [1.110], [1.140], [1.160], [1.180], [1.230], [1.290] forfeiture of ................................................. [4.30] law on board — see Law on board ship loss of — see Loss of ship management/operation of .... [5.140], [12.300], [12.390], [12.800], [15.140], [19.80], [19.100], [19.240], [19.390] carrier’s immunity from negligence in ...................................... [12.390], [15.140] co-owners, where .............................. [5.140] International Management Code for Safe Operation of Ships and for Pollution Prevention ................................. [12.300] joint owners of shares in, where .... [5.140] liability for marine pollution ......... [19.80], [19.100], [19.240], [19.390] responsibility for ............................. [12.800] wilful misconduct, and marine pollution ...................................................... [19.240] master of — see Master nationality of — see Nationality of ship non-seagoing vessel or, meaning of ..... [16.20] personal property, as ................... [5.10], [5.150] physical damage to, from collision at sea, and scope of liability in negligence ...................................................... [15.170] property in — see Property in ship protection by limitation of liability ...... [16.80] registration of — see Registration of ships rescue from danger at sea of — see Salvage salvable property, as ................................ [20.60] seagoing vessel, described as .................. [1.10] seagoing vessel or, meaning of ............ [16.20], [16.80] seaworthiness of — see Seaworthiness seizure of — see Seizure of ship subject of marine insurance policy, as ...................................................... [17.130] surrogate ...................................... [8.100], [8.110] enforcement of maritime lien, unavailability of ........... [8.100], [8.110] statutory right of action against in proceedings in rem .................... [8.110] unregistered — see Unregistered ship unseaworthiness of — see Seaworthiness use of term .................................................. [1.30] when ceases to be .................................... [1.280] Shipowner “default” of, interrupting demurrage ...................................................... [13.470] implied undertakings by, in voyage charterparty ............... [12.320], [12.330] carriage without deviation ............ [12.330] express variation of ........................ [12.330] reasonable despatch ....................... [12.320] indemnification of, under time charterparty ...... [14.380], [14.400], [14.420], [14.470] insolvent .................................................... [16.70] insurable interest of ................................. [17.60] liability for marine pollution of ......... [16.150], [19.40]-[19.60], [19.80]-[19.110],

Index Shipowner “default” of, interrupting demurrage — cont [19.130], [19.170], [19.210], [19.220], [19.240], [19.320], [19.350], [19.380]-[19.400] financial incapacity to pay compensation for damage ................ [19.320], [19.350] lien over cargo, of . [12.640], [13.480], [13.570], [13.650], [14.530]-[14.550], [17.50], [18.80] lien over sub-freights, of ..... [14.530], [14.540], [14.560] limitation of liability of — see Limitation of liability limitation of time for demurrage claim by ...................................................... [13.490] maritime lien for ship damage, and negligence or other wrongful act of ........................................................ [8.150] meaning of ......... [5.50], [5.90], [5.100], [13.10], [16.50], [19.240], [19.390], [20.220], [20.230] demise charter, under ........... [5.50], [5.90], [5.100] liability under Bunker Convention, for ...................................................... [19.390] liability under Civil Liability Convention 1992, for ..................................... [19.240] limitation of liability proceedings, in ........................................................ [16.50] registration, for .................................... [5.90] salvage reward, for ......... [20.220], [20.230] voyage charterparty, for .................. [13.10] mortgage of ship, creation of, by ............ [7.20] obligations during carrying voyage under voyage charterparty .. [12.330], [13.10], [13.580], [13.600]-[13.630] modification by contract of .......... [13.580], [13.600]-[13.620] no unjustifiable deviation ............. [12.330], [13.580], [13.620] reasonable care for cargo ............... [13.630] reasonable despatch and due diligence ...................................... [13.580], [13.610] seaworthiness of ship ..... [13.580], [13.600] obligation during discharging operation under voyage charterparty ...... [13.10], [13.650] obligations during loading operation under voyage charterparty ................ [13.150], [13.320], [13.430], [13.500] payment of despatch if charterer “under par” ............ [13.150], [13.320], [13.430], [13.500] relationship between shipowner-carrier and cargo-owner, where charterparty ....................................... [12.690]-[12.730] responsibilities under time charterparty .......... [14.10], [14.80]-[14.150], [14.180], [14.200], [14.240], [14.470], [14.520] vicarious liability for master’s negligence during time charterparty ........ [14.360] vicarious liability in negligence of, where collision at sea . [15.10], [15.20]-[15.40]

1085

employer of master and crew, as .. [15.10], [15.20] pilot negligence, for ............ [15.20], [15.30] scope of ................................. [15.20], [15.40] tug negligence, whether for ............ [15.40] Shipping law powers Commonwealth, of, under Constitution ... [2.10]-[2.220], [2.260]-[2.280], [2.320], [2.350]-[2.390], [15.70], [19.10], [19.30], [19.40] Admiralty and maritime jurisdiction ............................... [2.20], [2.130]-[2.150] corporations ......................................... [2.20] defence .................................................. [2.20] customs ............................................... [19.30] excise ................................................... [19.30] external affairs ........ [2.20], [2.120], [2.220], [2.260], [2.350], [15.70], [16.20] extra-territorial legislation .. [2.160]-[2.200] fisheries .......... [2.20], [2.80]-[2.110], [2.260] insurance .............................................. [2.20] lighthouses, lightships, beacons and buoys .......................................................... [2.20] marine pollution .. [19.10], [19.30], [19.40], [19.180] merchant shipping ............. [2.270], [2.280], [2.320] paramountcy of ................................... [2.10] scope of ............ [2.10]-[2.70], [2.90]-[2.110], [2.130]-[2.160], [2.190], [2.200], [2.220], [2.260], [2.350], [15.70], [16.20] shipping and navigation ... [2.380], [2.390] territorial sea .......... [2.220], [2.350]-[2.370], [19.40] trade and commerce ................ [2.20]-[2.70] imperial legislation, relevance of ........... [2.10], [2.120], [2.270]-[2.340] merchant shipping ... [2.10], [2.270]-[2.340] — see also Merchant Shipping Act 1894 (IMP) inconsistency between Commonwealth and State, whether .............. [2.260], [19.40], [19.180], [21.170] fisheries within territorial limits .... [2.260] marine pollution ............... [19.40], [19.180] removal of wrecks .......................... [21.170] limitation of liability laws ........ [16.10], [16.20] Northern Territory, of ... [2.10], [2.370], [16.20], [19.10], [19.40] limitation of liability, whether ........ [16.20] marine pollution ................. [19.10], [19.40] territorial sea, over ............. [2.370], [19.40] Offshore Constitutional Settlement ........................................... [2.350]-[2.390] effects of .............................................. [2.370] legislative powers over shipping and navigation ...................... [2.380], [2.390] legislative powers over territorial sea ........................................... [2.350]-[2.370] terms of .................................. [2.360]-[2.390] problems with shared ............................... [2.10] States, of ............ [2.10], [2.110], [2.160]-[2.180],

1086

Shipping Law

Shipping law powers — cont [2.210]-[2.270], [2.290]-[2.390], [16.20], [19.10], [19.30], [19.40], [21.170] adoption of Commonwealth legislation .......................................................... [2.10] exclusive legislative powers ............. [2.10] extra-territorial legislation . [2.160]-[2.180], [2.210]-[2.260] fisheries within territorial limits ... [2.110], [2.260] fishing legislation .. [2.230], [2.250], [2.260] high seas, over ................................... [2.230] limitation of liability ........................ [16.20] marine pollution ... [19.10], [19.30], [19.40] merchant shipping ............... [2.10], [2.270], [2.290]-[2.340] referral of powers to Commonwealth .......................................................... [2.10] removal of wrecks .......................... [21.170] shipping and navigation, over ...... [2.380], [2.390] territorial sea, over ............. [2.220]-[2.260], [2.350]-[2.370], [19.40] uniform legislation, whether possible .......................................................... [2.10] weighting of powers between Commonwealth and States ....................... [2.350]-[2.390] Shipping Registration Office — see Australian Shipping Registration Office; Registration of ships

basic order ................................ [7.50], [7.60] between maritime lien and statutory lien .......................................... [8.410], [8.650] between mortgage and statutory lien .......................................... [8.650], [10.20] between possessory lien and statutory lien .......................................................... [9.30] date of attachment or creation ...... [8.650], [9.30] statutory maritime lien distinguished .. [7.30], [8.620] Straight bill of lading — see also Sea-carriage documents chartered ship, where ........... [12.700], [12.730] entitlement of consignee to delivery, where ...................................................... [12.760] freight forwarder and .............................. [11.80] freight, liability to pay under .............. [12.640] function of ................................. [12.20], [12.200] receipt, as ............... [12.140], [12.190], [12.250], [12.700] charterparty, where ......................... [12.700] condition of goods, to .................... [12.140] leading marks, to ............................ [12.250] quantity or weight of goods, to ... [12.190] sea waybill distinguished ...... [12.20], [12.200], [12.640], [12.680] surrender clause ....................................... [12.20] title to sue under ................................... [12.680] transfer of rights and liabilities under, whether ...................................... [12.680]

Shipwreck — see Wreck Ski craft exclusion from meaning of “vessel” .... [1.210] inclusion in definition of “boat”, whether .......................................................... [1.20] Slot charterparty — see also Charterparty; Time charterparty; Voyage charterparty form of voyage or time charterparty, whether ........................................................ [11.70] State waters collision in ................................................. [15.70] dumping .................................................. [19.200] Statutory lien Admiralty procedure and rules relating to ........................................................ [2.130] generally .......................................... [7.10], [7.30] how arises ................................................... [7.40] maritime lien distinguished ....... [7.30], [8.620] nature of .................................................... [8.620] Personal Property Securities Act 2009 (Cth), whether applicable to ..... [7.40], [7.60], [8.640] position of subsequent purchaser of property after writ issued ......................... [8.630] priority of ........... [7.50], [7.60], [8.410], [8.650], [9.30], [10.20]

Strike or lock-out carrier’s immunity ................................. [12.500] marine insurance ... [17.120], [17.240], [17.280] coverage by Institute Strikes Clauses ...................... [17.120], [17.240], [17.280] exclusion by agreement ................. [17.280] “strike”, meaning of .............................. [13.380] voyage charterparty clauses, exception to or suspension of laytime where ...................... [13.180], [13.370], [13.380] Gencon General Strike Clause ...... [13.380] interpretation of .............................. [13.380] Submarine boat, as ......................................................... [1.20] Submersible inclusion in definition of “vessel” ....... [1.100], [1.150] Surrogate ship — see Ship

T Temporary pass — see Registration certificate Territorial sea “Australia” includes .............................. [21.180]

Index Territorial sea — cont “beyond territorial limits”, meaning of .......................................... [2.100], [2.110] collision in ................... [15.10], [15.70], [15.130] Commonwealth legislative power over ............... [2.220], [2.350]-[2.370], [19.40] external affairs power and ...... [2.120], [2.220], [15.70] fisheries power and ................... [2.110], [2.260] limits of ........................................ [2.110], [15.70] marine pollution laws, geographical application of, and ..... [19.40], [19.400] Offshore Constitutional Settlement and legislative powers over ........................................... [2.350]-[2.370] sovereignty over, vested in Crown in right of Commonwealth ........... [2.350], [15.70], [19.400] States’ legislative powers over .. [2.220]-[2.260], [2.350]-[2.370], [19.40] “territorial limits”, meaning of .. [2.80], [2.110] wreck in ..... [21.20], [21.100]-[21.120], [21.150], [21.180], [21.200] defacing or obliterating any mark prohibited .................................. [21.120] foreign vessel .... [21.20], [21.100], [21.120], [21.150] historic wreck .................................. [21.200] notification to Australian Maritime Safety Authority of .............................. [21.110] regulated Australian vessel ............ [21.20], [21.120] right to unclaimed .......................... [21.180] wreck outside ......................................... [21.180] Terrorists carrier’s immunity for act of ............... [12.430] Time charterparty bills of lading with third parties .......... [14.10], [14.400], [14.420], [14.470] breach of contract ........ [14.20], [14.50]-[14.80], [14.100]-[14.130], [14.160], [14.180], [14.200], [14.240], [14.250], [14.280], [14.300], [14.310], [14.500] limitation of time for claim ........... [14.160] remedies for ......................... [14.50]-[14.80], [14.100]-[14.130], [14.180], [14.200], [14.240], [14.250], [14.300], [14.310], [14.500] significance of classification of terms and ........................................................ [14.10] bunkers .................................... [14.200], [14.520] delivery, on ...................... [14.200], [14.520] meaning of ....................................... [14.200] payment for ..................... [14.200], [14.520] redelivery, on ................... [14.200], [14.520] cargo, responsibility for, during period of ....................... [14.360], [14.400]-[14.420] allocation of losses in cargo claims ...................................... [14.410], [14.420] liability for loss of or damage to cargo ....................................... [14.400]-[14.420]

1087

overview ........................................... [14.400] chains of intermediate ............................ [14.10] charterer’s responsibilities ..... [14.10], [14.200], [14.310], [14.360], [14.380], [14.400]-[14.420], [14.470], [14.510], [14.520] bills of lading and other carriage contracts, preparation and issue of ...................................................... [14.420] cargo handling . [14.360], [14.400], [14.410] delegation of .................................... [14.400] indemnification of shipowner ..... [14.380], [14.400], [14.420], [14.470] payment of bunkers on delivery ...................................... [14.200], [14.520] payment of hire ............................... [14.310] redelivery of ship in good order .. [14.510] classification of contractual terms ....... [14.20], [14.50]-[14.80], [14.100], [14.110], [14.130], [14.200], [14.240], [14.310] Clause Paramount . [14.150], [14.160], [14.410] delivery ..... [14.170]-[14.210], [14.480], [14.520] bunkers on ....................... [14.200], [14.520] cancelling date ................................. [14.180] commencement of charter period on ...................................................... [14.210] late ..................... [14.190], [14.210], [14.480] meaning of ....................................... [14.170] moment of ........................................ [14.190] place of ............................. [14.180], [14.190] time for ............................................. [14.180] demise charterparty distinguished ...... [11.70], [14.170] description of ship .................... [14.40]-[14.160] cargo capacity .................................. [14.100] certification ......................................... [14.70] classification status ........................... [14.70] flag ....................................................... [14.60] importance of .................................... [14.40] limitation of action for failure to comply with ............................................. [14.160] name .................................................... [14.50] nationality .......................................... [14.60] seaworthiness . [14.110]-[14.150] — see also Seaworthiness speed and fuel consumption ......... [14.80], [14.90] duration of charter period .................. [14.170], [14.210]-[14.260], [14.280], [14.480] commencement of ........... [14.170], [14.210] delays in ........................................... [14.480] early redelivery ............... [14.210], [14.250] end of ................................ [14.170], [14.210] express overlap/underlap period ...................................... [14.210], [14.220] final terminal date .......................... [14.240] implied overlap/underlap period ...................................... [14.210], [14.230] “last voyage” clause ....................... [14.240] late redelivery .................. [14.220], [14.240] reference to trip, by ........ [14.260], [14.280] employment of ship during period of ....................................... [14.360]-[14.420] agency ............... [14.360], [14.380], [14.390]

1088

Shipping Law

Time charterparty — cont cargo handling ................. [14.400], [14.410] charterer’s duty to indemnify shipowner ...................... [14.380], [14.400], [14.420] charterer’s orders on commercial matters ...................................... [14.360], [14.370] master’s obligations and responsibilities ...................................... [14.360], [14.370] shipowner’s vicarious liability for master’s negligence .................................. [14.360] war risk clauses ............................... [14.370] exclusion clause ..................... [14.130], [14.180] formation of contract .............................. [14.30] freight .......... [11.70], [14.10], [14.470], [14.530], [14.540], [14.560] payment of, after withdrawal of ship ...................................................... [14.470] shipowner’s lien over sub-freights, whether ...... [14.530], [14.540], [14.560] frustration of ........... [14.310], [14.350], [14.480] delay in delivery ............................. [14.480] delays during charter period ........ [14.480] loss of ship ....................................... [14.480] obligations of parties before and after ...................................................... [14.480] payment of hire and ...... [14.310], [14.350], [14.480] statutory allocation of losses ........ [14.480] function of ................................................. [11.70] generally ..................................... [14.10]-[14.570] Hague Rules, incorporation by reference of, whether ..... [14.130], [14.150], [14.160], [14.400], [14.410] Hague-Visby Rules, incorporation by reference of, whether .............. [14.130], [14.150], [14.160], [14.400], [14.410] Hamburg Rules ...................................... [14.410] hire payment ............. [14.10], [14.80], [14.240], [14.250], [14.280], [14.310]-[14.350], [14.380], [14.430]-[14.450], [14.470], [14.480], [14.520] adjustment clauses ............................ [14.80] advance, in ....... [14.310], [14.320], [14.480] “ballast bonus” ................................ [14.250] cash, in .............................................. [14.310] cheque or banker’s draft, by ......... [14.310] counter-claims ................................. [14.320] deductions from ............. [14.310], [14.320], [14.520] early redelivery and ....................... [14.250] equitable set-off ............................... [14.320] frustration of charterparty and ... [14.310], [14.350], [14.480] late ..................................................... [14.310] late redelivery and .......................... [14.240] monthly ............................................ [14.310] non-payment ..... [14.310], [14.430]-[14.450] off-hire clauses . [14.330], [14.340], [14.380] outside geographical trading limits, where ...................................................... [14.280] period after withdrawal of ship ... [14.470] suspension of ................................... [14.310] transfer of funds, by ....................... [14.310] underpayment ................. [14.310], [14.520]

withdrawal of ship for non- or underpayment, whether ........ [14.310], [14.320], [14.430]-[14.450], [14.520] indemnity claim, limitation of time for ...................................................... [14.400] issue and signing of .............................. [12.100] liens ........................................... [14.530]-[14.570] charterer’s, over ship, whether .... [14.540], [14.570] shipowner’s, over cargo . [14.530]-[14.550] shipowner’s, over sub-freights .... [14.530], [14.540], [14.560] meaning and purpose of ......... [11.70], [14.10], [14.360] overview .................................................... [14.10] redelivery ................ [14.170], [14.190]-[14.220], [14.240], [14.250], [14.490]-[14.520] bunkers on ....................... [14.200], [14.520] condition of ship on ....................... [14.510] early ................................... [14.210], [14.250] end of charter period on ............... [14.210] late ..................................... [14.220], [14.240] meaning of ....................................... [14.170] moment of ........................ [14.190], [14.240] outside overlap/underlap period ...................................................... [14.210] place of ............................. [14.190], [14.500] renewal option ....................................... [14.220] sea waybills with third parties ............. [14.10], [14.400] shipowner’s lien ...................... [14.530]-[14.560] cargo, over ......................... [14.530]-[14.550] sub-freights, over ........... [14.530], [14.540], [14.560] shipowner’s responsibilities .................. [14.10], [14.80]-[14.150], [14.180], [14.200], [14.240], [14.400], [14.470], [14.520] availability of carrying capacity ... [14.100] bailee, as ........................................... [14.470] delivery before cancelling date .... [14.180] due despatch ........................ [14.80], [14.90] honest and reasonable estimate of fuel in bunkers on delivery ................ [14.200] payment for bunkers on redelivery ...................................................... [14.520] proper and careful carriage .......... [14.400] seaworthiness .................... [14.110]-[14.150] timely redelivery ............................. [14.240] slot charterparty, whether form of ........ [11.70] standard form ............................ [14.30], [14.90], [14.120]-[14.140], [14.160]-[14.200], [14.220], [14.240], [14.280]-[14.300], [14.310], [14.330], [14.360]-[14.420], [14.440], [14.460], [14.520], [14.530]-[14.560] termination of contract .......................... [14.30], [14.50]-[14.80], [14.100]-[14.130], [14.180], [14.190], [14.240], [14.440], [14.470] breach of cargo capacity clause, whether for ................................................ [14.100] breach of classification clause, for . [14.70] breach of nationality term, whether for ........................................................ [14.60]

Index Time charterparty — cont delivery of wrong ship, for ............. [14.50] during voyage ................................. [14.470] late delivery, for .............................. [14.190] late redelivery, whether for ........... [14.240] non-delivery, for .............................. [14.180] serious breach of speed clause, for ........................................................ [14.80] unseaworthiness, whether for ....................................... [14.110]-[14.130] valid notice of withdrawal of ship, by ...................................................... [14.470] waiver of right of ............... [14.30], [14.70], [14.180], [14.440] trading limits ........................... [14.270]-[14.300] geographical ...................... [14.270]-[14.290] hull underwriters, set by .............. [14.270], [14.280] Institute Warranty Limits .............. [14.280] safe berths only ............................... [14.300] safe ports only ................. [14.270], [14.300] war risk underwriters, set by ....... [14.290] trip time charterparty ............... [11.70], [14.10], [14.260] meaning of ......................... [11.70], [14.260] voyage charterparty distinguished ...... [11.70], [14.10] voyage sub-charterparties with third parties ........................ [14.10], [14.400], [14.420] withdrawal of ship ... [14.10], [14.40], [14.310], [14.320], [14.430]-[14.470], [14.520] “anti-technicality clauses” ............ [14.440], [14.450] consequences of .............................. [14.470] non- or underpayment of hire, whether for ............................... [14.310], [14.320], [14.430]-[14.450], [14.520] notice of ............................ [14.440], [14.450] other than non-payment of hire, for ...................................................... [14.460] responsibility for cargo after ........ [14.470] waiver of right to ............................ [14.440] Towage service claim for, statutory right of action in rem ............................ [8.200], [8.310], [8.320] defined ..................................................... [20.350] expenses of, and general average ........ [18.10], [18.40] maritime lien for, whether ....... [8.200], [8.320] salvage service, whether ..... [20.350], [20.380], [20.390] Trade and commerce — see Shipping law powers Trading ship defined ....................................................... [3.320] Transfer of property in ship bill of sale of registered ship .. [5.180], [5.190], [6.60]-[6.140], [6.160], [6.180] “bill of sale”, meaning of .................. [6.60]

1089

effect of non-compliance with statutory requirements for ........................... [6.90] endorsement by Registrar of Ships of ........................................................ [6.160] form used for ....................................... [6.80] limits of statutory requirements for .......................................... [6.100], [6.110] lodgment of documents with Registrar of Ships ................. [6.120], [6.140], [6.180] registration by Registrar of Ships of ........................................................ [6.160] statutory requirements for ................ [6.70] declaration of, in registered ship ......... [6.120], [6.130], [6.150], [6.180] form and content of ........... [6.130], [6.150] lodgment with Registrar of Ships of .......................................... [6.120], [6.180] purpose of .......................................... [6.130] generally .......................................... [5.40], [6.10] meaning of .................................................. [6.10] prevention by caveat of, whether ......... [5.280] registered ship ............. [5.180], [5.190], [5.280], [6.50]-[6.180] bill of sale, by ..................... [5.180], [5.190], [6.60]-[6.140], [6.160], [6.180] change of registered agent, whether .......................................... [6.140], [6.150] declaration of transfer ....... [6.120], [6.130], [6.150], [6.180] entry of new owner’s name in relevant Register .......................... [5.180], [5.190] offences relating to ............................ [6.180] prevention by caveat of, whether .. [5.280] registration certificate, delivery and endorsement of ............ [6.120], [6.170], [6.180] right to transfer interest in ................ [6.50] unregistered ship ......... [6.100], [6.190], [6.200] bill of sale, whether necessary ....... [6.190] former restrictions on transferee .... [6.200] no current restrictions on transferee ........................................................ [6.200] rules for .............................................. [6.190] Transmission of property in ship bankruptcy, upon ..................................... [6.240] court order, as result of .......................... [6.230] death of owner, upon .............................. [6.230] declaration of, in registered ship ......... [6.210], [6.220], [6.250], [6.270] form and content of ........... [6.220], [6.250] lodgment with Registrar of Ships of any prescribed evidence and .......... [6.210], [6.270] generally .......................................... [5.40], [6.10] meaning of .................................................. [6.10] offences relating to .................................. [6.270] prevention by caveat of, whether ......... [5.270] registered ship ............. [5.180], [5.190], [5.270], [6.100], [6.210]-270 declaration of transmission ............ [6.210], [6.220], [6.250], [6.270] entry of new owner’s name in relevant Register .......................... [5.180], [5.190]

1090

Shipping Law

Transmission of property in ship — cont no special law for ............................. [6.210] prescribed evidence of transmission .............. [6.210], [6.230], [6.240], [6.270] prevention by caveat of, whether .. [5.270] registration certificate, delivery and endorsement of ............ [6.210], [6.260], [6.270] unregistered ship ..................................... [6.280] Tug liability in negligence of owner, whether, where collision at sea ................ [15.40]

U United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea 2008 — see Rotterdam Rules United Nations Convention on the Carriage of Goods by Sea 1978 — see Hamburg Rules United Nations Convention on the Law of the Sea 1982 duty to render assistance to save life ...................................................... [20.800] protection and preservation of marine environment under .................. [19.400] requirement of maintenance of register of ships ............................................... [3.50] Unregistered ship Australian-owned ............. [3.430], [4.20]-[4.50] operated solely by Australian residents, Australian nationals or both ..... [4.20], [4.40] provisional registration, where ...... [3.430] wholly owned by Australian residents or by Australian residents and Australian nationals ............................. [4.20], [4.40] detention of, when required to be registered .......................................................... [3.90] national colours and ............................... [4.150] not recognised as being of Australian nationality, where . [4.20], [4.40], [4.50] offences where, if required to be registered ............................................ [3.90], [4.230] overseas voyage and ... [3.430], [3.460], [4.230] prohibited from being outside Australian waters ........................................... [4.190] provisional registration, for ..... [3.420], [3.430] transfer of property in ............. [6.100], [6.190], [6.200] transmission of property in ................... [6.280]

V Vessel — see also Ship “craft” as alternative for .......... [1.100], [1.120], [1.150], [1.170], [1.340]

definitions of ................. [1.100], [1.110]-[1.130], [1.150]-[1.190], [1.230]-[1.270], [1.290], [1.310], [1.340], [1.350], [20.90], [21.20] “barge, lighter or other floating vessel”, scope of ........................................ [1.310] Commonwealth statutes ... [1.100], [1.180], [1.190], [1.230], [1.290], [1.350], [20.90], [21.20] exclusions . [1.100], [1.120], [1.150], [1.160] inclusions . [1.100], [1.120], [1.130], [1.150], [1.160], [1.290], [1.310], [1.350] navigational element ........... [1.230]-[1.270] problems in ........................................ [1.190] State and Territory statutes . [1.110]-[1.130], [1.150]-[1.180], [1.230], [1.290] “derelict vessel”, meaning of ................. [21.70] ordinary meanings of ................. [1.190]-[1.220] “owner” of requisitioned vessel, meaning of .......................................................... [5.70] “recreational vessel”, meaning of ......... [21.20] “regulated Australian vessel”, meaning of ........................................................ [21.20] under construction, exclusion from definition of “ship” of ................................... [1.80] use of term ........................ [1.30], [1.60], [1.180] when ceases to be .................................... [1.280] wreck of foreign, in territorial sea ....... [21.20], [21.100], [21.120], [21.150] Voyage charterparty — see also Sea-carriage documents arbitration of disputes ............. [12.90], [13.20], [13.440], [13.660] choice of law and forum, whether .......................................... [12.90], [13.20] currency of award ........................... [13.440] non-payment of freight and whether ...................................................... [13.660] bill of lading ................ [11.30], [11.70], [12.690] distinguished ........................ [11.30], [11.70] issue of, and ..................................... [12.690] breach of contract ....... [13.50], [13.70], [13.80], [13.110], [13.130], [13.140], [13.190], [13.430], [13.520], [13.540], [13.550], [13.600]-[13.620], [13.640] change of nomination of loading port or berth, whether ............................ [13.50] delay in voyage ............................... [13.610] detention of chartered ship ........... [13.430] failure to load any cargo ............... [13.550] late arrival at loading port or berth, whether ...... [13.110], [13.130], [13.140] loaded cargo different from that agreed ...................................... [13.520], [13.540] nomination of inaccessible berth . [13.190] non-payment by charterer of freight ...................... [13.520], [13.540], [13.550] refusal by charterer to load cargo ...................................................... [13.520] remedies for ........ [13.70], [13.80], [13.130], [13.140], [13.190], [13.430], [13.520], [13.540], [13.550], [13.600]-[13.620]

Index Voyage charterparty — cont repudiation, as, where ... [13.610], [13.620] unjustified deviation on voyage .. [13.620] unsafe port or berth ......................... [13.70] unseaworthy ship ........................... [13.600] untimely nomination of discharging port ...................................................... [13.640] untimely nomination of loading port or berth ............................................. [13.80] broker, liability of, .................................... [11.70] cancellation of contract .......... [13.40], [13.130], [13.140] cargo, and loading operation ....... [13.510]-[13.570], [13.630], [13.650] acceptance by shipowner of risks of agreed cargo .............................. [13.520] cesser clause ..................... [13.570], [13.650] charterer’s obligation to provide ....................... [13.510]-[13.550], [13.630] charterer’s right to provide .......... [13.520], [13.530] damage caused by .......... [13.520], [13.630] deadfreight ....................... [13.520], [13.540] “FIO” clause ..................... [13.560], [13.630] “FIOS” clause .................. [13.560], [13.630] “FIOST” clause ................ [13.560], [13.630] “free in, gross out” clause ............. [13.560] “gross in, free out” clause ............. [13.560] “gross terms” clause ....................... [13.560] “liner terms” clause ........................ [13.560] quantity of ........................ [13.510], [13.520] responsibility for loading/unloading ...................................... [13.510], [13.560] shipowner’s lien for freight, deadfreight and demurrage over ................ [13.570] carrying voyage ........ [13.10], [13.580]-[13.640] arrival at discharging port ........... [13.580], [13.640] commencement of ........... [13.580], [13.590] liberty clause .................................... [13.620] losses and expenditure on ............. [13.630] shipowner’s obligations .. [12.330], [13.10], [13.580], [13.600]-[13.630] charterer’s obligations ............ [13.10], [13.150], [13.170], [13.190], [13.210], [13.360], [13.390], [13.430]-[13.490], [13.510]-[13.570], [13.630], [13.650], [13.660] “charterer”, meaning of ................... [13.10] discharging operation, during ....... [13.10], [13.650] loading operation and ..... [13.10], [13.150], [13.150], [13.170], [13.190], [13.210], [13.360], [13.390], [13.430]-[13.490], [13.510]-[13.570], [13.630] payment of demurrage if “over par” ..... [13.150], [13.170], [13.190], [13.210], [13.360], [13.390], [13.430]-[13.490], [13.560], [13.570] payment of freight .......................... [13.660] Clause Paramount ................. [13.630], [14.150] commencement of laytime .... [13.160]-[13.220] “always accessible” clause ............ [13.190] arrival at loading place .. [13.160], [13.170]

1091

“free pratique” ................. [13.200], [13.220] notice of readiness .......... [13.160]-[13.180], [13.200], [13.210] “reachable on arival” clause ........ [13.170], [13.190] readiness to load ............................. [13.200] special provisions for ..................... [13.220] “time lost to count” clause .......... [13.170], [13.180] “WIBON” clause ............ [13.170], [13.180], [13.200] contract of affreightment distinguished ...................................................... [13.670] demise charterparty distinguished ....... [11.70] demurrage, payment by charterer of, if “over par” ............ [13.150], [13.170], [13.190], [13.210], [13.360], [13.390], [13.430]-[13.490], [13.560], [13.570] burden of proof in claiming ......... [13.360] currency of ....................................... [13.440] discharge of ...................................... [13.570] duration of ....................... [13.450], [13.460] exclusion clauses interrupting ...... [13.460] “free pratique” ................................. [13.490] liability to pay . [13.150], [13.430], [13.480] limitation of time for making claim for ...................................................... [13.490] meaning of ....................... [13.150], [13.430] not payable, where ......... [13.190], [13.210] not provided for in contract, where ...................................................... [13.430] rate of ................ [13.430], [13.440], [13.460] shipowner’s “default” interrupting ...................................................... [13.470] shipowner’s lien for ....... [13.480], [13.570] despatch, payment by shipowner of, if charterer “under par” ............ [13.150], [13.320], [13.430], [13.500] liability to pay ................. [13.320], [13.500] meaning of ....................... [13.150], [13.430] rate of ................................................ [13.500] discharging operation ............ [13.10], [13.650], [14.530] charterer’s obligations ...... [13.10], [13.650] commencement of discharging laytime ...................................................... [13.650] discharge demurrage, payment of ...................................................... [13.650] laytime .............................................. [13.560] notice of readiness .......................... [13.650] shipowner’s lien over cargo for freight, load port demurrage or general average contributions, and .... [13.650], [14.530] shipowner’s obligation ..... [13.10], [13.650] duration of laytime .............................. [13.180], [13.230]-[13.420], [13.560] calculable laytime .......................... [13.230], [13.330]-[13.360] customary laytime .......... [13.230], [12.360] exceptions to laytime .................... [13.180], [13.370]-[13.420], [13.470], [13.560] fixed laytime .... [13.230]-[13.320], [13.360], [13.500]

1092

Shipping Law

Voyage charterparty — cont exceptions to laytime ........................... [13.180], [13.370]-[13.420], [13.470], [13.560] delay in loading cargo ................... [13.560] interpretation .................... [13.370]-[13.390] shifting from berth to berth, whether ...................................................... [13.410] shifting from waiting anchorage to berth, whether ...................................... [13.400] shipowner “default” ....................... [13.470] strike clauses .................................... [13.380] tailored clauses ................................ [13.390] use of ship by shipowner for other purposes .................................... [13.420] foreign forum selection clause .............. [12.90] formation (or fixing) of contract .......... [11.70], [13.30] agent or broker, by ............. [11.70], [13.30] liability of broker ................ [11.70], [13.30] freight .......... [13.30], [13.40], [13.140], [13.150], [13.440], [13.520], [13.540], [13.550], [13.570], [13.590], [13.620], [13.650], [13.660], [14.530] advance ............................. [13.590], [13.660] arbitration of dispute where non-payment of, whether ................................ [13.660] currency for ...................................... [13.440] defined .............................................. [13.660] deviation by shipowner and payment of ...................................................... [13.620] fixing of rate ...................... [13.30], [13.660] laytime bought and paid for within ...................................................... [13.150] non-payment of, summary judgment where .......................................... [13.660] obligation of charterer to pay ....... [13.660] payment by charterer of deadfreight as damages for breach ................ [13.520], [13.540], [13.550] payment of ....................................... [13.660] rates ................................................... [13.660] shipowner’s lien over cargo for unpaid ...................... [13.570], [13.650], [14.530] Worldscale tables ............ [13.440], [13.660] function of ..................... [11.30], [11.70], [13.10] generally ..................................... [13.10]-[13.660] governing law of ..................................... [12.90] Hague Rules, incorporation by reference of, whether ....... [13.20], [13.600], [13.610], [13.630], [14.150], [18.70] Hague-Visby Rules, incorporation by reference of, whether ................ [13.20], [13.600], [13.610], [13.630], [14.150], [18.70] laytime ...... [13.150]-[13.500], [13.560], [13.570] commencement of ............ [13.160]-[13.220] demurrage, payment by charterer of, if “over par” ................ [13.150], [13.170], [13.190], [13.210], [13.360], [13.390], [13.430]-[13.490], [13.560], [13.570] despatch, payment by shipowner of, if charterer “under par” ............ [13.150], [13.320], [13.430], [13.500]

duration of ....... [13.180], [13.230]-[13.420], [13.560] exceptions to .... [13.180], [13.370]-[13.420], [13.470], [13.560] meaning of ....................................... [13.150] suspension of ... [13.180], [13.370]-[13.420], [13.470], [13.560] loading operation .... [13.10], [13.150]-[13.570], [13.630], [13.650] cargo ... [13.510]-[13.570], [13.630], [13.650] charterer’s obligations ..... [13.10], [13.150], [13.170], [13.190], [13.210], [13.360], [13.390], [13.430]-[13.490], [13.510]-[13.570], [13.630] laytime .............. [13.150]-[13.500], [13.560], [13.570] overview ........................................... [13.150] shipowner’s obligations .. [13.10], [13.150], [13.320], [13.430], [13.500] loading port or berth . [13.40]-[13.90], [13.140] inability to reach safely ................... [13.90] nomination of ....... [13.50]-[13.80], [13.140] safe berth within port ......... [13.50]-[13.70] safe port ................................ [13.60], [13.70] specified range .................. [13.50], [13.140] time for nomination ......................... [13.80] loading voyage ........... [13.10], [13.40]-[13.140], [13.170] cancelling date ... [13.40], [13.130], [13.140] destination of ........................ [13.50]-[13.90] end of ................................................ [13.170] expected readiness for loading .... [13.100], [13.130], [13.140] loading port or berth ......... [13.40]-[13.90], [13.140] overview ............................................. [13.40] proceeding with reasonable despatch ...................................................... [13.120] starting position .............................. [13.110] time of arrival ................... [13.100]-[13.140] meaning of ...... [11.10], [11.30], [11.70], [12.90], [13.10] repudiation of contract, where unreasonable delay ........................................... [13.610] sea waybill, issue of, where .. [11.30], [12.690], [12.700] sensitivity of world freight market and ........................................................ [11.50] “shipowner”, meaning of, for purposes of ........................................................ [13.10] shipowner’s implied undertakings in ...................................... [12.320], [12.330] carriage without deviation ............ [12.330] express variation of ........................ [12.330] reasonable despatch ....................... [12.320] shipowner’s lien over cargo for unpaid freight ...................... [13.570], [13.650], [14.530] shipowner’s obligations during carrying voyage ......... [12.330], [13.10], [13.580], [13.600]-[13.630] modification by contract of .......... [13.580], [13.600]-[13.620] no unjustifiable deviation ............. [12.330], [13.580], [13.620]

Index Voyage charterparty — cont reasonable care for cargo ............... [13.630] reasonable despatch and due diligence ...................................... [13.580], [13.610] seaworthiness of ship ..... [13.580], [13.600] shipowner’s obligation during discharging operation ...................... [13.10], [13.650] shipowner’s obligations during loading operation ... [13.150], [13.320], [13.430], [13.500] payment of despatch if charterer “under par” ............ [13.150], [13.320], [13.430], [13.500] slot charterparty, whether form of ........ [11.70] stages of voyage ....................................... [13.10] carrying voyage .............. [13.10] — see also “carrying voyage”, above discharging operation ... [13.10] — see also “discharging operation”, above loading operation ........... [13.10] — see also “loading operation”, above loading voyage ............... [13.10] — see also “loading voyage”, above standard form .............. [11.60], [13.30], [13.40], [13.60], [13.80], [13.170], [13.200], [13.370]-[13.410], [13.440], [13.490], [13.620] “subject to details”, meaning and effect of ........................................................ [13.30] suspension of laytime .......................... [13.180], [13.370]-[13.420], [13.470], [13.560] delay in loading cargo ................... [13.560] interpretation .................... [13.370]-[13.390] shifting from berth to berth, whether ...................................................... [13.410] shifting from waiting anchorage to berth, whether ...................................... [13.400] shipowner’s “default” .................... [13.470] strike clauses .... [13.180], [13.370], [13.380] tailored clauses ................................ [13.390] use of ship by shipowner for other purposes .................................... [13.420] termination of contract ......... [13.130], [13.140] agreement, by .................................. [13.140] late arrival at loading port or berth, where ...................................... [13.130], [13.140] right to damages where ................. [13.140] serious breach, whether ................. [13.130] time for ............................................. [13.140] time charterparty distinguished ........... [11.70], [14.10] use of .............................. [11.30], [11.70], [13.10]

W Wages crew, of .. [7.30], [8.10], [8.220]-[8.270], [8.310], [8.400], [8.420]-[8.440], [8.500], [9.30], [17.70] insurable interest, as ......................... [17.70] maritime lien for .................... [7.30], [8.10], [8.220]-[8.270], [8.310], [8.400], [8.420]-[8.440], [8.500], [9.30]

1093

master, of ....................... [8.280], [8.410], [8.440] statutory maritime lien for disbursements and ........ [8.10], [8.270]-[8.300], [8.410], [8.440] meaning of .................................. [8.230], [8.280] Waiver breach of insurance warranty by, and estoppel ...................................................... [17.620] right of termination of contract for time charterparty, of ............ [14.30], [14.70], [14.180], [14.440] estoppel and ...................................... [14.30] right to withdraw ship under time charterparty, of ......................... [14.440] War carrier’s immunity ................................. [12.430] Institute War and Strikes Clauses ...... [17.120], [17.240], [17.280] war risk clauses of time charterparty ...................................... [14.290], [14.370] whether insured against ....... [14.290], [17.280] Wharf maritime lien for damage to .................. [8.130] Wing-in-ground effect craft characteristics of ...................................... [1.350] inclusion within definition of “vessel” ............................ [1.100], [1.150], [1.350] Wreck Australian Maritime Safety Authority, role of ......................................... [21.90]-[21.160] consent to removal of wreck by ... [21.120] duty of finder of wreck to notify . [21.110] duty of owner or master of wreck to notify .......................................... [21.100] duty of public and .......................... [21.120] powers to locate, access, remove or otherwise deal with wreck ....................................... [21.130]-[21.150] publication of details of wreck on website by ................................ [21.100], [21.110] restriction on powers in relation to historic wrecks .......................... [21.160] rights and powers of former receiver of wreck exercised by .................... [21.90] defined .......................... [20.630], [21.50]-[21.80] duty to notify discovery of .. [21.110], [21.250] exclusive economic zone, in ............... [21.120], [21.150], [21.190] generally ..................................... [21.10]-[21.270] historic .................... [20.820], [21.130], [21.160], [21.200]-[21.270] Australian Maritime Safety Authority’s powers ........................................ [21.160] Commonwealth legislation .......... [21.200], [21.220]-[21.270] defined .............................................. [21.230]

1094

Shipping Law

Wreck — cont duty on person possessing or controlling ...................................................... [21.260] duty to notify discovery of ........... [21.250] “historic relic” defined ................... [21.230] Ministerial declaration of .............. [21.250] Ministerial declaration of ownership of ...................................................... [21.250] offences in relation to ..................... [21.240] preservation of ................. [21.200]-[21.270] Register of Historic Shipwrecks ... [21.270] salvage of ......................................... [20.820] State and Territory legislation ...... [21.210] maritime lien and ........................ [8.90], [8.480] meanings of ................. [20.630], [21.50]-[21.80] derelict vessel ...................... [21.60], [21.70] generally ............................. [20.630], [21.50] jetsam, flotsam and lagan .. [21.60], [21.80] Merchant Shipping Act 1894 (IMP), application in Australia of, and .................... [2.300] Navigation Act 2012 (Cth) ......... [21.10]-[21.40], [21.60]-[21.80] application of ....................... [21.20], [21.40] “wreck” defined ................... [21.60]-[21.80] objects of law of ....................................... [21.10] offences ..................... [21.100]-[21.110], [21.140] failure to notify Australian Maritime Safety Authority of wreck ..... [21.100], [21.110] failure by public to comply with any requirements ............................. [21.120] impeding Australian Maritime Safety Authority in exercisng powers ...................................................... [21.140] removal of ............................... [21.120], [21.170] International Convention on ......... [21.190] prohibited, unless consent of legal owner

or Australian Maritime Safety Authority ................................... [21.120] State legislation, under .................. [21.170] salvable property, as .. [20.60], [20.80], [20.100] salvage of ................................ [20.630], [20.820] State or Northern Territory law, application of .......................................... [21.10], [21.40] territorial sea, in ....... [21.20], [21.100]-[21.120], [21.150], [21.180], [21.200] defacing or obliterating any mark prohibited .................................. [21.120] foreign vessel .... [21.20], [21.100], [21.120], [21.150] historic wreck .................................. [21.200] notification to Australian Maritime Safety Authority of .............................. [21.110] regulated Australian vessel ............ [21.20], [21.120] right to unclaimed wreck in ......... [21.180] unclaimed, right to ................................ [21.180]

Y York-Antwerp Rules — see also General average application of rules within ........ [18.20]-[18.90] different versions of ................................ [18.10] generally ....................................... [18.10]-[18.90] historical development of ...................... [18.10] how take effect ......................................... [18.10] international unification ......................... [18.10] lettered rules as general principles ...... [18.20] numbered rules as specific examples ... [18.20] Rule of Interpretation ............................. [18.20] Rule Paramount ....................................... [18.20] rules within, overview of ....................... [18.20] which version applies ............................. [18.10]