COMMISSIONER FOR MAIN ROADS v STANNARD BROS LAUNCH SERVICES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, PRIESTLEY and HANDLEY JJA 11, 12 September 1990, 2 November 1990 [1990] NSWCA 46 BAILMENT — Whether tug owner bailee of unmanned tow. CONTRACT — Whether express terms in standard contract for construction of roads or other works on land effectively incorporated in contract of towage — Whether provisions in contract imposed obligations of an insurer on tug. CONTRACT — Promise to insure tow — Promise to insure liability of tug in joint names — Effect on legal responsibility of tug to tow. NEGLIGENCE — Whether loss caused by negligent act or omission of appellant — Whether tug owner bailee of unmanned tow. TUG AND TOW — Whether tug bailee of unmanned tow.held The loss of the tow was due to the negligence of the owner in not ensuring it was seaworthy and tug owner not liable to owner of tow in tort or in contract. "The Julia" (1860) 15 ER 284 Harris v Anderson (1863) 143 ER 541 Morison Pollexfen and Blair v Walton (unreported House of Lords May 10 1909) Joseph Travers and Sons Limited v Cooper [1915] 1 KB 73 Utica City National Bank v Gunn (1918) 118 NE 607 Goldman v Hill [1919] 1 KB 443 Stevens v The White City (1932) 285 US 195 The Kite (1933) P 154 Canada Dredging Co v Russell [1936] 3 DLR 44 The Champlain v Canada SS Lines Limited [1939] 1 DLR 384 Vines v Djordjevitch (1955) 91 CLR 512 Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220 Port Swettenham Authority v TW Wu and Co [1979] AC 580 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Mark Rowlands Limited v Berni Inns Limited [1986] 1 QB 21 Mahoney JA I agree with the judgment of Handley JA. Priestley JA I agree with Handley JA. Handley JA This appeal arises out of the sinking of the appellant's timber hulled motor vehicle ferry No. 4 at sea off Yamba on 5 December 1981. The ferry was being towed by the respondent's tug, the "Coramba" in the course of a voyage from Riley's Hill Dock Richmond River to Settlement Point on the Hastings River when it sank. The ferry was a total loss. The appellant sued the respondent in the Admiralty Division in contract for breach of implied terms to tow the ferry with reasonable care and skill and in tort for negligence causing the loss of the vessel. At the trial the issues were expanded 2 UNREPORTED JUDGMENTS and the appellant was permitted to argue a case based on the express terms of the contract of towage under which it was submitted the defendant had undertaken a strict or absolute liability for the safety of the ferry during the voyage. The trial judge rejected the appellant's claim based upon the express terms of the contract holding that those terms, which were appropriate to contracts for the construction of road and other works on land, were meaningless and inapplicable to the contract of towage. The trial judge also rejected the plaintiff's claims in negligence and for breach of implied terms in the contract. He found that the defendant had not been negligent and that the ferry had sunk because it was unseaworthy. CONSTRUCTION OF EXPRESS TERMS The appellant relied upon CL16 of the general conditions of contract prepared by the Department of Main Roads for use in a "Minor Contract" (April 1978 edition). This clause provides so far as relevant: "From the commencement of the Contract to the date of practical completion of the Works...the Contractor shall be solely liable for the care of the Works and all materials, equipment and other things that are brought on to the site by or on behalf of the Contractor...for the purpose of carrying out the Works or that are entrusted to him by the Principal for that purpose. The Contractor shall at his own cost make good to the satisfaction of the Superintendent any loss of or damage to the Works, or the aforesaid materials, equipment and other things resulting from any cause whatsoever (save and except the Excepted Risks as defined hereunder) when such making good is necessary for the satisfactory completion of the Works.... The Excepted Risks are: (a) any negligent act or omission of the Principal, or his agents. (b)....." The trial judge said, in rejecting this claim: "The General Conditions of Contract are quite inappropriate for the type of work envisaged by the contract, namely the towing of a ferry by a tug. Plainly they were designed to apply to construction work done by a contractor for the plaintiff upon roads and the like...no consideration was given, when including the general conditions of contract as an annexure to the agreement, to the question of whether or not they were appropriate for the class of contract entered into between plaintiff and defendant... Words such as 'Works' and 'site' are entirely inappropriate in the context of contracts of towage and the clauses I have mentioned are meaningless in the case of such a contract. The general conditions are predicated throughout upon the basis of a construction contract, and hence I find that CL16 in particular...is to be regarded as not forming part of the contract of towage..." The appellant submitted that his Honour was incorrect in holding that "no consideration was given" by the parties to the appropriateness of incorporating the general conditions in the contract of towage. There is substance in this criticism. The contract was tendered at the trial and admitted without objection. It is undated and probably did not come into existence in that physical form until after the loss of the ferry. However that issue was not raised at the trial. The contract comprised a one page printed form of "Minor Contract". a statutory declaration of 18 December 1981 dealing with payment of award wages, a bound specification consisting of a printed cover and a typewritten specification containing twelve clauses, a twelve page printed form of General Conditions of \WROMMISSIONER FOR MAIN ROADS v STANNARD BROS LAUNCH SERVICES (Handle$ JA) Contract for a Minor Contract, including a three page index, and a two page Minor Contract Tender with a page of Conditions of Tendering. The defendant called for tenders for the towing of this ferry and another from the Richmond River to different destinations. The invitation is not in evidence but tenderers were invited to submit their tenders on the form of Minor Contract Tender supplied by the Department. The form of tender describes the "work" as "Ocean Towages of Ferry Vessels DMR No. 7 and No. 4" and this was further described in the Schedules to the tender form. The form provided that the party tendered "to execute the whole of the several works and supply all material and labour and everything of every kind respectively named, described and referred to in the drawings, specifications and General Conditions of Contract which have been inspected by me/us". The specification did not, in terms, refer to the General Conditions of Contract but these were referred to in the printed specification cover. The Department's Divisional Engineer wrote to the respondent advising it that it was the successful tenderer, and forwarding the formal instrument of agreement in duplicate for execution and return within fourteen days. The letter called for payment of the balance of the security deposit (dealt with in CLS of the General Conditions) and for copies of the respondent's Workers Compensation Policy in accordance with CL21 of the General Conditions, its Public Risk Policy in accordance with CL19 of the General Conditions, and its insurance policy in accordance with CL17 in the amount of $20,000. The Engineer further stated in his letter that these policies were to be in the "joint" names of the respondent and the Commissioner for their respective rights and interests. The letter also stated that the writer was the Superintendent under the Contract and that in accordance with CL24 of the General Conditions his representative was a Mr Doolan of the Grafton Office and that Mr Doolan was authorised to exercise the Superintendent's powers under CL9, CL35 and CL40 of the General Conditions. It is apparent therefore that prior to contracting the parties did specifically advert to some at least of the clauses in the General Conditions and treated them as applicable to their Contract of Towage. The form of Minor Contract evidenced a promise by the respondent to perform for the rates set out in its tender "the several works and services" described inter alia in the specification. The printed form of Minor Agreement contained four references to the General Conditions. The printed cover of the specification described "the work" as being situated at "The Shire of' Richmond River and comprising the ocean towage of the ferries. It further provided that "the works" described in the Specification were to be carried out inter alia in strict accordance with the General Conditions of Contract. The printed annexure to the General Conditions was completed by the parties typing in the spaces provided further matters which had been agreed upon between them. The parties agreed that for the purposes of CL2 the Superintendent was the Divisional Engineer of the Department at Grafton, that the amount of the Public Liability Insurance for the purposes of CL19 should be $200,000, that the time for performance for the purposes of CL35 should be one week and that liquidated damages for the purposes of the same clause should be $350.00 per week or part thereof. They further agreed that the defects liability clause in the General Conditions was not applicable to their contract. In these circumstances it is clear that the parties did give consideration to the 4 UNREPORTED JUDGMENTS appropriateness of including the General Conditions of Contract as part of the contract of towage, expressly incorporating some, and expressly rejecting at least one. CLI17 of the General Conditions was one of the conditions expressly referred to in the letter from the Divisional Engineer and the respondent was required to forwarded with the executed contract an insurance policy in accordance with that clause in the joint names of the parties for a sum insured of $20,000. CL17 provided: "Before commencing work under the Contract, the Contractor shall at his own cost effect an insurance policy with an insurer approved by the Principal in an amount not less than the Contract Sum, in the joint names of the Principal, the Contractor... to cover the Contractor's liabilities under CL16. The Contractor shall maintain the insurance policy until such liabilities cease." CLI7 therefore expressly refers to CL16 and the express reference in the letter from the Divisional Engineer to this clause is therefore an implied reference to CL16 as well. In these circumstances in my opinion the appellant established that CL16, so far as applicable, formed part of the contract of towage. The first sentence, so far as applicable, reads: "...the Contractor shall be solely liable for the care of... all... equipment and other things... that are entrusted to (the Contractor) by the Principal for (the) purpose (of carrying out the Works)." Assuming that the reference in this clause to "the Works" can be read, for the purposes of this contract, as meaning the towage services contracted for, there would be no difficulty in treating the ferry as either "equipment", or at least "another thing" entrusted to the respondent for the purpose of being towed under the contract. On this basis it would be necessary to determine the meaning and effect of the provision that the respondent "shall be solely liable for the care of" the ferry. The meaning and effect of these words is unclear. They may do no more than provide for the contractor to be responsible for the care of the ferry during the voyage and to be "solely" responsible to the exclusion of the Department or any authorised sub-contractor. However this printed clause from the General Conditions could not override the typewritten clause of the specification which provided that the Department would prepare the ferries for ocean towing. Whatever else "solely liable" might mean the Contractor could not be liable for any failure by the Department to properly prepare the ferries for ocean towing. In my opinion this vague and ambiguous provision in CL16 which must be construed against the Department is not capable of imposing on the respondent the obligations of an insurer of the ferry during the voyage. The appellant however also relied upon that part of the second sentence of CL16 which, so far as applicable, reads: "The Contractor shall at his own cost make good... any loss of... the aforesaid... equipment and other things resulting from any cause whatsoever (save and except the Excepted Risks as defined hereunder) when such making good is necessary for the satisfactory completion of the Works." The first question which arises relates to the effect of the qualification to the obligation of the contractor to make good any loss which is found at the end of the passage quoted. The obligation only arises "when such making good is necessary for the satisfactory completion of the Works". \WROMMISSIONER FOR MAIN ROADS v STANNARD BROS LAUNCH SERVICES (Handley JA) In my opinion in the context of the present contract the Works referred to in this clause can and should be read as meaning or including the towing services to be provided under the contract. The contractor's promise expressed in the Minor Contract was "to execute and perform... the several works and SERVICES... referred to in the... Specification" (emphasis added). The specification cover in one place describes the WORK as comprising "Ocean Towage" but later refers to "the WORKS described in this Specification" and this of course related to the ocean towage of the ferries. (Emphasis supplied). The form of tender also referred to "the work" and "the works" which were then defined in the typewritten schedules as the towage services in question. The matrix of fact and the genesis and aim of the transaction makes it perfectly clear that the subject matter of the contract was towing services and nothing else. These alone are the "services", the "work" and "the Works" to be executed, performed and completed under the contract. In the circumstances, particularly where the Minor Contract itself refers to "works and services" there is no difficulty in reading "Works" in CL16 as meaning towage services for the purposes of the present contract. The applicable legal principles are stated in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 especially at 349 where Mason J, after referring to the decision of Cardozo J in Utica City National Bank v Gun (1918) 118 NE 607 said: "There extrinsic evidence of the circumstances in which a guarantee was executed and of its object was received for the purpose of giving the words 'loans and discounts' the looser meaning of 'renewals'. Lord Wilberforce quoted with evident approval the comment of Cardozo J that surrounding circumstances may 'stamp upon a contract a popular or looser meaning' than the strict legal meaning..." Accordingly "the satisfactory completion of the Works" in the second sentence of CL16 refers, in this contract, to the satisfactory completion of the towing of the ferries to their destinations. In my opinion therefore the relevant part of the second sentence of CL16 read in the context of this contract obliged the respondent "at its own expense" to "make good... any loss of" the ferry as either "equipment" or another "thing entrusted to" the respondent by the Department for the purposes of carrying out the towage services. This conclusion still leaves for consideration the question whether the loss was caused by one of the Excepted Risks, the relevant one being "any negligent act or omission of the Principal or his agents". A further question might have arisen but was neither pleaded nor litigated at the trial. CL17 of the General Conditions required the contractor at his own expense to effect an insurance policy with an approved insurer in the joint names of the parties in an amount not less than the Contract Sum "to cover the Contractor's liabilities under CL16". The Department instructed the contractor to insure for the sum of $20,000, marginally below the Contract Sum of $20,140. Furthermore CLS of the typewritten specification provided that "The Department will insure the ferry vessels...". The respondent may have had available to it an argument that the terms of CLI17 and the issue of a valid policy limited the Department's rights under CL16 in the event of the loss of the ferry to the proceeds of that policy. The effect of CL17 may have been to exonerate the respondent from liability to the extent of 6 UNREPORTED JUDGMENTS the sum insured (see Mark Rowlands Limited v Berni Inns Limited (1986) 1 QB 211) and the direction as to the sum insured may have raised an estoppel against any greater claim under CL16. In any event the promise by the Department in CLS of the specification to insure the ferry vessels may itself have impliedly exonerated the respondent from all liability for the accidental loss of the ferries. The contractual intention may have been that the insurance would enure for the benefit of both parties so that the insurer would have had no effective right to sue the respondent in the name of the Department in exercise of its rights of subrogation under the policy. See Mark Rowlands Limited v Berni Inns Limited (above). I have not formed any final opinion on these matters as they were not raised or litigated either at the trial or on appeal. The remaining issue relates to the respondent's defence to the claim under CL19 based on the negligence of the Department or its agents bringing the case within the Excepted Risk. In my opinion the onus of proof under this exception would lie on the respondent in accordance with the principles discussed in Vines v Djordjevitch (1955) 91 CLR 512 at 519-520. LIABILITY UNDER THE GENERAL LAW The appellant also sued the respondent in contract for breach of its implied obligation to tow the ferry with reasonable care and skill, and in tort for negligent towage. In either case the legal onus of proving negligence lay on the appellant. However the loss of the ferry in fine weather so soon after the tow commenced in some circumstances could itself indicate that the likely explanation was negligent towage. The facts might speak for themselves and establish a prima facie case of negligence against the tug owner. Compare The Kite (1933) P 154 at 166-170. The appellant in its Points of Claim did not expressly plead any case of bailment against the respondent and the case does not appear to have been conducted at the trial on any such basis. However if the relationship between the parties during the performance of the contract of towage was such as to create a bailment of the ferry then all the necessary facts for that purpose have been both pleaded and proved. The ferry was a "dumb" tow and no employee of the Department was carried on either the tug or the tow during the voyage. Where the tow is manned by servants or agents of the owner of the tow it is clear that the owner of the tow remains in possession and the tug owner does not become a bailee of the tow. See "The Julia" (1860) 15 ER 284. Counsel for the respondent submitted that under Australian law the tug owner never becomes a bailee of the tow. Accordingly, in the event of loss, the tug owner never bears the legal onus disproving negligence which ordinarily lies on a bailee. See as to the onus of proof which ordinarily lies on a bailee Port Swettenham Authority v TW Wu and Co (1979) AC 580 and Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220. When asked for authority to support the proposition that the tug owner never becomes a bailee of the tow counsel referred to Newson "The Law of Salvage, Towage and Pilotage" 1886 (an English text book) and Parks "The Law of Tug, Tow and Pilotage" 2nd edition 1982 (a United States text book). The discussion of the respective duties of tug and tow in Newson (above) at pages 134-141, apart from being out of date in several respects, is confined to cases where the tow is manned and the tug is under the command of the master of the tow. \WROMMISSIONER FOR MAIN ROADS v STANNARD BROS LAUNCH SERVICES (Handley JA) Parks (above) especially at pages 9, 13 and 16-17 does support counsel's proposition. At pages 16-17 the authors state: "Tt is of great comfort to tow boat companies that under a straight towage contract - where the tug is towing a barge or other object belonging to another person or entity - the law does not impose liability on the tow boat company as if it were an insurer or bailee. It has been repeatedly held by the Courts that a tug is neither a bailee nor an insurer of the tow. The tug is obliged to use only reasonable and ordinary care and skill and the burden of proving a lack of it is on the one who asserts such liability. Negligence must therefore be proved." The authors cite some English authority to support these propositions but the cases referred to do not help in the present situation. In The Kite (1933) P 154, cited by the authors, the question of bailment was not raised or litigated and in Harris v Anderson (1863) 143 ER 541, the other English authority referred to, the tow was under the command of the owner's master as the tug was towing it into port. Accordingly no question of bailment could arise and the issue was simply never discussed. The Canadian authorities cited by the authors certainly support the proposition that the tug is not the insurer of the tow, but such a conclusion is not surprising and does not have to be established by the citation of authority. Those cases however do not support the proposition that a tug owner can never be a bailee of an unmanned tow. In Canada Dredging Co v Russell [1936] 3 DLR 44 and The Champlain v Canada SS Lines Limited [1939] 1 DLR 384, the only Canadian authorities cited, the tows were manned at all relevant times and under the command of their masters. On the other hand the United States authorities cited, particularly the decision of the United States Supreme Court in Stevens v The White City (1932) 285 US 195 certainly supports the authors' proposition that a tug owner can never be the bailee of an unmanned tow. However one cannot fail to have misgivings about that decision and in particular the result. In that case the tug received the tow, a forty-five foot motor boat, in good, indeed new condition, at the builder's yard in New York under an engagement to tow it to Port Newark alongside a steamer on which the motor boat was to be shipped. The tow was unmanned and no employee or representative of the owner sailed with the tug. The motor boat was delivered at its destination in a damaged condition. The Supreme Court held that the tug owner was not a bailee of the tow and that the owner of the tow bore the legal onus of proving negligence on the part of the tug. On the facts, not surprisingly, the owner of the tow failed to establish negligence on the part of the tug because neither party was able to explain how the tow had become damaged. The question does not arise for decision in this case, but as at present advised, I cannot see that any special legal principles apply in towage cases. The question is whether the owner of the tow or the owner of the tug is in possession of the tow. I would have thought that the owner of a tow truck had possession and was a bailee of an empty car that was being towed by the tow truck on a public street. As at present advised I can see no distinction between towage on land and towage at sea. Moreover it appears that in Morison Pollexfen and Blair v Walton the House of Lords in an unreported decision (May 10 1909) held that the owner of a tug towing an unmanned fire float from the Downs to Genoa was a bailee of the tow, and as such, following the loss of the tow, had the usual onus of a bailee of disproving negligence. The case is discussed and extracts from the speeches of Lords Loreburn and Halsbury are quoted extensively in Joseph Travers and Sons 8 UNREPORTED JUDGMENTS Limited v Cooper [1915] 1 KB 73 and also in Coldman v Hill [1919] 1 KB 443 especially at 447-8 and 457-8. The decision of the House of Lords was also cited with approval and discussed by the High Court in Hobbs v Petersham Transport Co Pty Ltd (above) at 230-231, 240. It therefore appears that in English law a tug owner may be bailee of an unmanned tow and that had the question arisen for decision in the present case this Court may have followed the decision of the House of Lords in preference to the United States decisions especially in the light of the decision of the High Court in Hobbs v Petersham Transport Co Pty Ltd (above) although the latter case was not concerned with a contract for towage by sea. HAS DEFENDANT PROVED LOSS BY EXCEPTED RISK In the present case, as I have already held, the onus of proof that the loss fell within an Excepted Risk lay on the respondent, so that it is not necessary to decide whether the respondent was a bailee, with the legal burden of disproving negligence. The trial judge held that the appellant had failed to prove negligence on the part of the tug, but further held that "the casualty occurred because the tow was unseaworthy" and that "the sole cause of the loss was the plaintiff's failure to ensure that the tow was seaworthy for the voyage in question". The appellant challenged these findings and submitted that the proper conclusion on the whole of the evidence was that the ferry was seaworthy, and that in these circumstances the only possible explanation for the ferry sinking after completing only twenty six miles of the intended voyage of one hundred and sixty miles was negligent towage. The trial judge's findings on these issues were closely interrelated. The appellant's case on negligence was circumstantial, as it was not in a position to call direct evidence of negligent towage because it had no representative on the tug during the voyage. The respondent went into evidence at the trial and called as its only eye witness Captain Wheeler, the Master of the tug. The trial judge accepted the whole of his evidence and in particular his evidence of the speed at which the tow proceeded. This finding was necessarily based in part on his assessment of Captain Wheeler's credibility. The appellant submits that this Court should reverse the trial judge's finding that the ferry was not seaworthy and that this finding did not depend on his assessment of Captain Wheeler. If the appellant were to succeed in displacing the finding of unseaworthiness the fact that a ferry which was seaworthy and fit for an ocean voyage of one hundred and sixty miles foundered at sea in moderate conditions after completing only twenty-six miles of that voyage in less than five hours might cast doubt on the reliability of the trial judge's acceptance of Captain Wheeler's evidence. This would largely depend on whether the issues of seaworthiness and negligent towage are severable in the present case. At the trial the appellant led evidence for the purpose of establishing that the ferry was seaworthy at the start of the tow. Over the previous ten years it had been held in reserve and only used during two or three relatively short periods when a regular ferry was withdrawn from service to be overhauled. However it had been dry docked for overhaul every year. Mr Barnes, a plant foreman employed by the Department was called who proved that in September 1981 the ferry was dry docked and under his direct supervision was given a "complete overhaul" to prepare it for ocean towage. All planking was inspected and renewed where necessary and the vessel was extensively recaulked. The hull was \WROMMISSIONER FOR MAIN ROADS v STANNARD BROS LAUNCH SERVICES (Handleg JA) not completely recaulked. Barnes had not previously prepared a wooden hulled ferry for a sea voyage of this length, and had only once before prepared such a ferry for a sea voyage. At the end of the overhaul the deck and the top of the sides of the ferry were covered with a plastic impregnated material known as Polyweave which was fixed by battens nailed to the deck and sides. This was designed to prevent or inhibit sea water entering the ferry through the deck. The ferry was not loaded with any solid ballast at the stern. Barnes last saw the ferry in September 1981 at the end of the overhaul and he expressed the opinion that at that time it was seaworthy and fit for ocean towage. Captain Gray, the Maritime Services Board Pilot for the Clarence and Richmond Rivers inspected the ferry on 22 October 1981 for the purpose of determining whether it was then suitably equipped for an ocean tow and seaworthy. He passed the ferry but in cross examination it appeared that it was in the water at the time, it was not dry docked, and he did not go inside the hull. The whole inspection had taken between ten and fifteen minutes. He said that he "just relied on their (the Department of Main Roads) word that the vessel was ready for sea." The evidence of independent experts called for the appellant established that a proper inspection of the ferry would have involved an examination of the interior of the hull while it was in the water and the dry docking of the ferry to enable inspection of the exterior of the hull timbers below the water line. It is clear that Captain Grey's inspection could not possibly establish that the ferry was seaworthy and able to withstand ocean towage. The ferry was also inspected on 18 October 1981 by a Mr Pilling, an Insurance Loss Assessor acting on behalf of the Government Insurance Office for the purpose of determining whether it was seaworthy and properly equipped for ocean towage. He inspected the exterior of the hull above the water line. His inspection took over an hour and he also went inside the hull and examined the fastenings and the condition of the timbers. He said that the vessel was water tight and not taking water and he inspected the seams in the hull "as far as you can see". He expressed the view that the ferry was seaworthy and fit for ocean towing. He carried out no further inspection of the ferry prior to the commencement of the voyage. It appeared in cross examination however that his principal concern was to satisfy himself that the ferry "was properly equipped for ocean towing" and that this meant that the towing bridle had been properly fixed and navigation lights installed. The soundness of the hull was not his major consideration and he had not carried out any previous inspection of a wooden hulled ferry. It appeared from his written report that the vessel was copper sheathed below the water line and was constructed from oregan side and bottom planking with hard wood transoms, frames and decking. Mr Pilling's marine experience prior to this inspection had been confined to fishing trawlers or steel hulled vessels. In cross examination he said that he was not aware that the water pressure on a hull from the ocean was greater than the water pressure in a river, he thought that a vessel which was seaworthy for a river ought to be seaworthy for ocean going and he doubted whether movements of the sea could affect the hull of a wooden vessel and cause the planks to twist and turn. The appellant called two other expert witnesses neither of whom had inspected the ferry. Mr Doherty, whose qualifications were basically those of an engineer, expressed the view that if the overhaul described by Barnes had been properly 10 UNREPORTED JUDGMENTS carried out the ferry was capable of reaching its destination if towed in the right weather conditions provided it was properly handled during the tow. However he said that the vessel would have been considered to be "an unsatisfactory tow" in conditions where there was anything much over a calm sea. He also said that the ferry would have started to twist or rack with the action of the waves and that in doing so the seams would have been opened up. Indeed he said that there was "a vast difference" between the effect on the hull of moving across the Richmond River and being towed in the ocean. A vessel in regular use would be better able to withstand water pressures than one which had been substantially idle for a long time. He also expressed the view that solid ballast should have been used to trim the ferry by the stern. The other expert witness called by the appellant, Captain Downes, had had extensive sea going experience along the north coast of New South Wales prior to 1960, including experience as a Master, and he had also extensive experience as a Marine Surveyor. He expressed the opinion that if the ferry had been properly overhauled and properly handled during the tow it should have been capable of being towed from Ballina to the Hastings River. He agreed that the seaworthiness of a wooden hulled ferry for movement, for example, within Sydney Harbour would not be the same as that required during the proposed tow to the Hastings River. He said that ferries such as this one had not been designed to go to sea and they were less stable and less water tight than ordinary wooden vessels designed for ocean sailing. In his opinion the ferry had leaked during the tow because of "the general strain" which had caused the seams to open. This could have been the result of an inherent weakness in the seams but he first expressed the opinion that this was not likely in view of the fact that the ferry had just had a refit. However he agreed in cross examination that everything depended on what had been done during the refit and whether the ferry had been made seaworthy for an ocean voyage. If the ferry had been seaworthy and fit to withstand the voyage its foundering after travelling only twenty-six miles in the moderate conditions prevailing on the day would establish a very strong prima facie case of negligent towage. However the opinion of Barnes that the ferry was seaworthy and fit for the voyage cannot be given significant weight in view of his lack of experience and the opinion of Captain Gray was quite worthless. Mr Pilling's opinion was also entitled to little weight. Other experts with impeccable qualifications agreed that a proper inspection of the hull timbers was not possible unless the ferry was dry docked. Pilling also lacked relevant experience and was unaware of the stresses imparted to a wooden hulled vessel by towage in the open sea. The evidence of Mr Doherty, another expert called for the appellant confirmed the evidence of Captain Wheeler as to his observations of the behaviour of the ferry during the tow. The ocean tow began at Ballina wharf at 9.30 a.m. and by 12.30 Captain Wheeler thought that the ferry was riding a little lower in the water. He concluded that there was slack water in her hull and he turned the tug around to make a closer inspection. When the tow was resumed the rolling movement of the ferry as the strain was taken on the tow line confirmed that there was slack water in the hull which was rolling freely around. While there were wash bulkheads at each end of the ferry there was thirty feet between them amidships and slack water could move freely fore and aft and from side to side within this space. \WROMMISSIONER FOR MAIN ROADS v STANNARD BROS LAUNCH SERVICES (Handley JA) Captain Wheeler's description of the movements of the ferry immediately before it capsized were also consistent with his opinion that a considerable volume of slack water was present in the hull and the opinion of Captain Downes based on Captain Wheeler's observations was to the same effect. In these circumstances in my opinion this Court is in no position to make findings as to the seaworthiness of this ferry for the purpose of an ocean tow which are independent of the findings of the trial judge on the issue of negligent towage. The inescapable conclusion on those findings is that the appellant failed to establish that at the start of the tow this oregan hulled ferry was capable of withstanding the ordinary stresses and strains of being towed at a proper speed in the open ocean in the moderate conditions which prevailed on the day. In the end therefore the appellant's case came to depend upon its success in establishing that the ferry foundered because she had been towed at an excessive speed and the resulting strain had caused her seams to open. The appellant's case of excessive speed was based on the distance travelled by the tug and tow over the ground up to 12.30 p.m. that day. Captain Downes calculated that her speed over the ground was 8.165 knots, that for various reasons this would have been made against a northerly set or current and that her speed through the water would have been in excess of 8.4 knots. In his opinion such a speed was excessive and had caused undue strain on the ferry leading to the opening of her seams which would not have occurred had she been towed at a more moderate speed which should not have exceeded 5 knots. The validity of Captain Downes' opinion as to the probable speed of the tug through the water depended on his view that it was sailing south against a northerly set or current and the probable speed of that current. Captain Wheeler however gave evidence that the ferry had been towed at a proper speed through the water and had the benefit of a strong southerly current which was running at about 3.5 knots. There was also evidence that the speed of the tug and the ferry over the ground would have been assisted by the north easterly wind which gradually strengthened during the day. In my opinion the acceptance of Captain Wheeler's evidence necessarily included his evidence as to the speed of the tug and the extent to which the tug and the ferry were assisted by a strong southerly current. In all the circumstances this Court is in no position to disturb the finding by the trial judge that the ferry was not towed at an excessive speed and that there was no negligence on the part of the tug. The acceptance of the trial judge's finding that there was no negligence on the part of the tug necessarily leads to the conclusion that unseaworthiness was the sole cause of the loss. It follows that on the whole of the evidence the defendant has established that the ferry sank as a result of negligent acts or omissions on the part of servants or agents of the Department, and thus proved that the case is within the Excepted Risk in CL16(a) of the General Conditions. In my opinion the appeal must be dismissed and with the usual consequences. Counsel for the Appellant: P KING Counsel for the Respondent: M. PEMBROKE Solicitors for the Appellant: SOLICITOR FOR THE GIO Solicitors for the Respondent: EBSWORTH and EBSWORTH