Daina Shipping Company v Te Runanga O Ngati Awa

JurisdictionNew Zealand
CourtHigh Court
JudgeWoodhouse J
Judgment Date15 March 2013
Neutral Citation[2013] NZHC 500
Docket NumberCIV-2012-470-838

[2013] NZHC 500




In the Matter of a claim for limitation under Part 7 of the Maritime Transport Act 1994

Daina Shipping Company
First Plaintiff


Costamare Shipping Company Sa
Second Plaintiff


Ciel Shipmanagement Sa
Third Plaintiff


The Swedish Club
Fourth Plaintiff
Te Runanga O Ngati Awa
First Defendant


Te Runanga O Ngati Te Rangi Iwi Trust
Second Defendant


Nevan Lancaster
Third Defendant


All Persons Claiming or Being Entitled to Claim Damages by Reason of the Grounding of the Containership Mv Rena on the Astrolabe Reef Off the Bay of Plenty, New Zealand, at 0218 Hours New Zealand Time On 5 October 2011

Mr M Ring QC, Barrister, Auckland and Mr P David, Barrister, Auckland

Mr N Davidson QC, Barrister, Christchurch and Mr M Heard, LeeSalmonLong, Solicitors, Auckland


M Ring QC, P David and M McCarthy for the Plaintiffs

No appearance for the First Defendant, Second Defendant or other claimants

N Davidson QC, M Heard and R Makgill for the Third Defendant

Application for order under Part 7 Maritime Transport 1994 (“MTA”) (liability of ship owners and others) to limit liability of ship owners in respect and loss, damage or injury caused by the grounding of the container vessel Rena — third defendant was claiming for loss to his business as a result of oil pollution closing the beach — third defendant had applied for disclosure under r25.26(5) High Court Rules (plaintiff must apply to court within 5 working days) — apparent drafting error in s89 MTA which did not expressly state that an owner could apply for an order authorising the constitution of a limitation fund — whether third defendant had sufficient information already available to him to enable him to decide whether to dispute the limitation application — whether third defendant could establish required elements under s85(2) MTA (intention to cause loss or injury or damage or recklessness accompanied by knowledge that loss would probably result) — whether test had been met for correction of alleged drafting error — whether the High Court had jurisdiction to authorise a limitation fund on an owner's application.

Held: A claimant would find it very difficult to break the limit under s85(2) MTA. A claimant had to establish:

  • • a disentitling act or omission which was that of an identified person;

  • • if the owner was a corporation, the identified person had to be an alter ego of the corporation;

  • • the identified person had to have one of the states of mind stipulated in s85(2): either an intention or recklessness accompanied by knowledge that “such loss or injury or damage would probably result”;

  • • the “loss or injury or damage” alleged to have been intended or known about had to be the actual loss or injury or damage claimed by the claimant to have occurred;

  • • in the case of knowledge, where accompanying recklessness, there had to be knowledge that such loss or injury or damage would probably result.

The disentitling act or omission had to be that of an identified person. Conduct by an agent or a servant, or another person whose relationship with the plaintiff might give rise to vicarious liability in other areas of the law, was insufficient. In cases involving a corporate owner, the conduct would have to be that of the alter ego of the corporation (a person with sufficient seniority in the management structure of the company for that person's actions and state of mind to be equated with that of the company itself). Usually that restricted the class of eligible people to the board of directors, or the managing director, or an equivalent officer of the company.

L did not suggest that there was any basis for arguing actual intent. The focus was on the alternative of recklessness accompanied by knowledge. However for the purposes of interpretation, particular aspects requiring proof in relation to actual intent might also have to be proved in relation to recklessness with knowledge. This was because s85(2) said that the conduct had to occur in conjunction with the intent – “where the act or omission was committed, or omitted, with the intent …”. Although recklessness might not have a time specific element of that nature, the time specific element appeared to apply to the requirement of knowledge – “the act or omission was committed, or omitted … with knowledge …”. Both elements were linked to the same outcome – “such loss or injury or damage”. It seemed unlikely that s85(2) was drafted with the intention that the time element for the knowledge associated with recklessness could be different from the time element associated with actual intent.

The expression “loss or injury or damage” made it clear that it referred to the harm that was caused to the claimant as a result of the casualty with the ship. It was necessary for L to prove knowledge when related to the facts of this case, of the probability of loss or injury or damage to business owners operating from the beaches and with this arising from oil pollution from the grounding on the Astrolabe Reef.

The pursuit of disclosure could be seen as being “an expensive expedition up a blind alley”. The information sought by L had to be considered in relation to the extensive information already available as to the cause of the loss. L's theory that senior management directives caused the captain and other senior officers on the ship to cut corners and that this was causative of the grounding, came nowhere near to establishing the knowledge that would have to be established in terms of s85(2) MTA. The investigations leading to the prosecutions of the ship's officers had not resulted in any suggestion that the first plaintiff had done anything suggesting some form of responsibility for the actions of the master and the second officer.

A further consideration was that r25.26(5) HCR was not the equivalent of a right to discovery of documents in the course of a conventional action. L had requested a large number of documents which suggested he had embarked on a fishing expedition to see what emerged. That was not a proper basis for an application under r25.26(5) HCR. The costs of disclosure for the plaintiffs were wholly disproportional to the quantum of L's claim. L's application for disclosure was dismissed.

Although Part 7 MTA did not expressly state that an owner could apply for an order authorising the constitution of a limitation fund, there were a number of provisions which referred expressly, or by necessary implication, to a limitation fund, in addition to what was contained in s89(2) MTA (Court may consolidate claims). However the powers contained in s89 MTA appeared to be confined to cases where there was no limitation of liability because s89 MTA said that the court could consolidate claims of the kind referred to in s86(2) MTA (claims subject to limitation of liability), which defined claims which were not subject to liability.

In consideration of the full legislative history, and in the light of the other provisions in the current MTA, it was apparent that reference to s86(2) MTA had arisen through a drafting error which could be corrected. Section 87 MTA (calculation of limits of liability) made provision for calculation of the limit of liability for different types of claims. Section 88 MTA (units of account) made provision for determining the monetary value of units of account and expressly referred to the constitution of a limitation fund. Rule 25.28 HCR (order limiting plaintiff's liability) provided that any order limiting the plaintiff's liability in an action in personam for relief under Part 7 MTA could make any provision authorised by s89 MTA.

The express statement in s88(1)(a) MTA to “the date on which the limitation fund is constituted”, by itself indicated strongly that s89 MTA was also intended to be a section concerned with limited claims and limitation funds. Earlier statutory provisions in the Shipping and Seamen Act 1952 were clearly to give better effect to the management and disposal of all limited claims faced by an owner. Had Parliament intended that those important provisions should no longer be available for limited claims it was likely that this would have been apparent from the parliamentary record.

The test for correction of an apparent drafting error in a statute had been met. First, the intended purpose of Part 7 MTA was to make provision for limitation of liability and matters relating to a limitation fund. Secondly, effect had not been not given to that purpose through inadvertence in drafting. Thirdly, the substance of the provision Parliament would have made, if not the precise words that would have been used, was clear. The substance would have been words stating that the provisions in both subsections of s89 MTA applied to limited claims.

In case the preceding conclusion was wrong, and it was correctly held in The Tasman Pioneer that there was no jurisdiction to direct an unwilling ship owner to constitute a limitation fund, it was appropriate to consider whether there nevertheless was jurisdiction to authorise a willing owner, as in this case, to constitute a fund. There was such jurisdiction. Rule 25.4 HCR (parties can apply for directions if procedure not prescribed) in conjunction with the provisions of Part 7 MTA and in particular s88(1)(a) MTA, provided jurisdiction to authorise an owner to constitute a limitation fund. The express provision in s88(1)(a) MTA contemplated that a limitation fund would already have been constituted. By implication Parliament was recognising the Court's jurisdiction at least to authorise a willing ship owner to constitute a limitation fund. This was a jurisdiction which had been historically recognised in New Zealand...

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1 books & journal articles
  • Limitation of Liability as a Risk Allocation Mechanism in Maritime Law
    • Australia
    • Australian and New Zealand Maritime Law Journal Nbr. 29-1, June 2015
    • 1 June 2015
    ...a concept of limiting * Judge of the High Court of New Zealand. 1 See for example Daina Shipping Company v Te Runanga O Ngati Awa [2013] NZHC 500; 2 NZLR 799. 2 For an example of the operation of that principle, see Cox v Bankside Members Agency Ltd [1995] 2 Lloyd’s Rep 437 (CA). (2015) 29 ......

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