Supreme Court New South Wales Medium Neutral Citation: Mooney v MS Magdalene Schiffahrtsgesellschaft mbH [2014] NSWSC 1277 Hearing dates: 5 September 2014 Decision date: 05 September 2014 Jurisdiction: Equity Division - Admiralty List Before: Rein J Decision: Application for separate determination of specified questions refused. First and third defendants to pay the plaintiff's costs of the application. Catchwords: EQUITY - Admiralty - Application by the first and third defendants for separate determination of questions - Claims in negligence, nuisance and breach of statutory duty against owner and master - Master (second defendant) not yet served - Claims under provisions of the Marine Pollution Act and International Convention on Civil Liability for Bunker Oil Pollution on which there have been no previous cases - Limitation issue and an issue of inconsistency under s 109 of the Commonwealth Constitution Legislation Cited: Civil Liability Act 2002 (NSW) Civil Procedure Act 2005 (NSW) Hague Convention International Convention on Civil Liability for Bunker Oil Pollution Judiciary Act 1903 (Cth) Marine Pollution Act 1987 (NSW) Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 Uniform Civil Procedure Rules 2005 Cases Cited: Crawley v Vero Insurance [2012] NSWSC 593 Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 Ramsay v Schiller [2012] NSWSC 596 Southwell v Bennett [2010] NSWSC 1372 Street v Luna Park Sydney Pty Ltd [2007] NSWSC 588 Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 Wardley v Western Australia [1992] HCA 55; (1992) 175 CLR 514 Category: Interlocutory applications Parties: Peter Mooney (Plaintiff) MS Magdalene Schiffahrtsgesellschaft mbH (First Defendant) Volodymyr Vazhnenko (Second Defendant) North England Protection & Indemnity Association Limited (Third Defendant) Representation: Counsel: P Herzfeld (Plaintiff) G Nell SC (First and Third Defendants) Solicitors: Hicksons Lawyers (Plaintiff) Aus Ship Lawyers (First and Third Defendants) File Number(s): 2014/11598 Judgment 1This is an application for a separate determination of questions identified with precision by the first and third defendants in their notice of motion. I shall refer later to the questions themselves. 2The background to this matter is that the plaintiff is an oyster grower who claims against the owner of the ship MS Magdalene, whom I will refer to as "the owner"; Mr Volodymyr Vazhnenko, the master of the ship, who I shall refer to as "the master", and the North of England Protection and Indemnity Association Limited, the insurer of the ship, who I shall refer to "NEP", in respect of damage to his oyster business in the Hunter River in the Fern Bay Harvest area following the discharge of water contaminated by fuel oil from the ship's ballast on 25 August 2010. 3There appears to be no dispute that oil from the ship was released into the Hunter River nor that the contamination extended to the Fern Bay area causing the oysters farmed in the area leased by Fern Bay to either be affected by oil or potentially affected by oil to the point where they had to be condemned and were not available for sale by the plaintiff to purchasers. 4The plaintiff claims that approximately 71,000 oysters in total were rendered unsaleable by virtue of the contamination (or the threat of it) to a value of $61,000. He claims that he suffered further economic loss by reason of his inability to fatten and sell oysters and that he also lost money when he sold his business without the Fern Bay leases because they were of no value. He also claims a further $7,000 for clean-up costs. 5The estimate at the moment, and it is only an estimate, of the maximum total damages which the plaintiff would be entitled to recover, if he establishes liability against the defendants, is, I was informed, $200,000 which includes the amounts to which I have already made reference. 6The plaintiff's claim against the owner is that: (a)the discharge was a breach of s 8 of the Marine Pollution Act 1987 (NSW) ("the MPA") and that by virtue of s 51 of the MPA he is a person, who having suffered loss or damage and incurred costs, is entitled to recover loss, damage and costs as a debt from the owner, which I will refer to as "the s 51 claim"; (b)that further or alternatively the owner breached statutory duty and was liable to him for the breach of statutory duty; (c)that further or alternatively the owner was negligent in permitting the discharge and failed to take reasonable care in operating and maintaining the ship. It appears to be accepted that the oil pipes were corroded leading to escape of oil from the pipes into the ballast tanks; (d)that further or alternatively the master was negligent and the owner is vicariously liable for the master's negligence or liability under s 51 of the MPA breach of statutory duty and nuisance; (e)a claim in nuisance; and (f)a claim under paragraph 1 of Article 3 of the International Convention on Civil Liability for Bunker Oil Pollution ("the Bunker Oil Convention") which, it is said, has the force of law as part of the law of the Commonwealth by virtue of s 11 of the Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 ("the Bunker Oil Act"). 7The plaintiff claims against NEP solely on the basis that NEP provided financial security for the owner's liability for pollution damage and that by virtue of article 7(10) of the Bunker Oil Convention claims for compensation for pollution damage can be brought directly against NEP. 8The owner and NEP, by notice of motion, seek that pursuant to Uniform Civil Procedure Rules 2005 ("UCPR") pt 28 r 28.2 seek an order that the various questions annexed to the motion as annexure A and which I set out, be answered separately from all other issues in the case: (a)In relation to the plaintiff's claim against the First Defendant pursuant to s 51 of the MPA: Q1A: whether in pursuing that claim as against the First Defendant, the plaintiff is pursuing a claim for compensation for pollution damage otherwise than in accordance with those provisions of the Bunker Oil Convention that have force of law in Australia pursuant to the Bunker Oil Act, within the meaning of Article 3(5) of the Bunker Oil Convention? Q1B: if the answer to Q1A is in the affirmative, whether the plaintiff is precluded from pursuing that claim by the operation of the Bunker Oil Act and those provisions of the Bunker Oil Convention that have force of law in Australia, including Article 3(5) of the Convention? Q2A whether s 51 of the MPA and the liability which it purports to impose upon a shipowner is inconsistent with s 111 of the Bunker Oil Act and Article 3 of the Bunker Oil Convention and the liability imposed by those provisions and is thereby invalid and unenforceable (to the extent of that inconsistency) pursuant to s 109 of the Commonwealth Constitution? Q2B if the answer to Q2A is in the affirmative, whether the plaintiff is precluded from pursuing a claim against the First Defendant pursuant to s 51 of the MPA by reason of the invalidity and unenforceability of that section? (b)In relation to the plaintiff's claims against the first defendant for breach of statutory duty, in negligence and nuisance (the common law claims): Q3A whether in pursuing each of the common law claims against the first defendant, the plaintiff is pursuing a claim for compensation for pollution damage otherwise than in accordance with those provisions of the Bunker Oil Convention which have force of law in Australia, within the meaning of Article 3(5) of the Bunker Oil Convention? Q3B whether the plaintiff is thereby precluded from pursuing each of those common law claims as against the first defendant by the operation of the Bunker Oil Act and those provisions of the Bunker Oil Convention that have force of law in Australia, including Article 3(5) of the Convention? (c)In relation to the plaintiff's claims against the first defendant under the Bunker Oil Act and Article 3(1) of the Bunker Oil Convention: Q4A whether the plaintiff's right to compensation under the Bunker Oil Act and Bunker Oil Convention including from the first defendant for all or any part (and if so which part) of the loss and damage that the plaintiff claims to have suffered as a consequence of the HFO spill was extinguished prior to the commencement of the present proceedings by Article 8 of the Convention because no action was brought by the plaintiff in respect of that loss and damage within 3 years of when that loss and damage had occurred? Q4B if the answer to Q4A is in the affirmative, whether the first defendant is not liable to compensate the plaintiff in respect of that loss and damage under the Bunker Oil Act or those provisions of the Bunker Oil Convention that have force of law in Australian including Article 3(1), by reason of the operation Article 8 of the Convention? (d)In relation to the plaintiff's claims against the third defendant under the Bunker Oil Act and Article 7(10) of the Bunker Oil Convention: Q5A whether the plaintiff's right to compensation under the Bunker Oil Act and Bunker Oil Convention including from the third defendant all or any part (and if so which part) of the loss and damage that the plaintiff claims to have suffered as a consequence of the HFO spill was extinguished prior to the commencement of the present proceedings by Article 8 of the Convention because no action was brought by the plaintiff in respect of that loss and damage within 3 years of when that loss and damage had occurred? Q5B if the answer to Q5A is in the affirmative, whether the third defendant is not liable to compensate the plaintiff in respect of that loss and damage under the Bunker Oil Act or those provisions of the Bunker Oil Convention that have force of law in Australia including Article 7(10), by reason of Article 8 of the Convention? Q6A if the answers to Q4A and Q4B above are in the affirmative, then whether the extinguishment pursuant to Article 8 of the Convention of the plaintiff's rights to compensation under the Bunker Oil Act and the Bunker Oil Convention for all or any part of the loss and damage that the plaintiff claims to have suffered as a consequence of the HFO spill is: (a) a defence available to the first defendant to any claim by the plaintiff for compensation under the Bunker Oil Act and Bunker Oil Convention and (b) thereby a defence which the third defendant is also entitled to invoke pursuant to Article 7(10) of the Bunker Oil Convention in answer to any claim by the plaintiff for compensation under Article 7(10)? Q6B if the answer to Q6A is in the affirmative, whether the third defendant is not liable to compensate the plaintiff in respect of that loss and damage under the Bunker Oil Act or those provisions of the Bunker Oil Convention that have force of law in Australia including Article 7(10), by reason of Article 8 of the Convention? 9Mr Herzfeld of counsel appears for the plaintiff. Mr Nell SC appears for the owner and NEP. The master has not yet been served. He is a Ukrainian national and the plaintiff has been endeavouring, through diplomatic channels in accordance with the Hague Convention to serve him with the Statement of Claim. 10The solicitors for the plaintiff have written to the first and third defendants' solicitors asking them to accept service on the Master or to obtain from their clients instructions to do so, which request was answered by an email of 17 June 2014 which is Exhibit A tendered in evidence on this application. 11The owner and NEP in their defences have asserted that: (a)the claims which the plaintiff brings based on the Bunker Oil Act are statute barred as they were not brought within three years of the damage suffered; (b)that the claims not based on the Bunker Oil Act are claims which are inconsistent with the Bunker Oil Convention and Bunker Oil Act and hence cannot be pursued; and (c)that there is an inconsistency between s 51 of the MPA and the Bunker Oil Act and the Bunker Oil Convention which renders s 51 of the MPA invalid and unenforceable to the extent of the inconsistency and hence the plaintiff is precluded from pursuing those claims which it does pursue. Damage and loss are not admitted and it is also asserted the plaintiff has failed to mitigate his loss. 12The plaintiff responded to those claims and put in issue the defendants' reliance on the limitations clauses and the unclaimed inconsistency between the legislation. Notices pursuant to s 78B of the Judiciary Act 1903 (Cth) have been sent out by the solicitors for the owner and NEP. At this stage the State of NSW has not indicated its position but none of the other states wish to appear at the hearing when fixed. 13There was agreement on the principles which are to be considered in relation to applications of this kind. A very helpful summary of the relevant matters is set out in the judgment of Hallen AsJ, as he then was, in Southwell v Bennett [2010] NSWSC 1372, para [15]. Further matters relevant to these cases were mentioned by Beech-Jones J in Crawley v Vero Insurance [2012] NSWSC 593 at [16]-[20] where, having referred to the decision of Hallen J, he made some further points. 14I should also mention, as it has been referred to by counsel in their helpful written submissions, the question of the Civil Liability Act 2002 (NSW) which requires the Court, in considering matters relevant to procedural questions and exercising judicial discretion, to give effect to the overriding purpose of the Civil Procedure Act 2005 (NSW) and rules of court "to facilitate the just, quick and cheap resolution of the real issues in the proceedings", see s 56(2). 15My attention was also drawn to the decision of Hallen AsJ, as he was then, in Ramsay v Schiller [2012] NSWSC 596 and his reference in that case to two decisions of Brereton J, Integral Home Loans Pty Ltd v Interstar Wholesale Finance Pty Ltd [2006] NSWSC 1464 and Street v Luna Park Sydney Pty Ltd [2007] NSWSC 588, in which there was discussion of the effect of the Civil Procedure Act in relation to applications of this kind, suggesting what was described as "a more modern approach" in considering whether questions should be determined separately, although in the second case mentioned, Brereton J did make the point that considerations referred to by Kirby and Callinan JJ in Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 remain pertinent matters to be taken into account in determining "whether what remains the exceptional course of deciding preliminary issues rather than deciding an ordinary case in its totality is to be adopted". 16Mr Nell, in support of his contention that the separate questions put forward by the first and third defendants should be determined first, referred to the following matters: (a)that the questions proposed for separate determination are essentially questions of law and do not require evidence in order for them to be determined and do not involve questions of credit; (b)that the separate questions in totality would be likely to take not more than a day; (c)that no further evidence would be required since all of the plaintiff's lay evidence has been served and quantum is not relevant to the separate questions. The plaintiff would not be put to the expense of obtaining expert evidence in relation to the alleged negligence of the owner and master or on economic loss; (d)If the questions are determined favourably to the owner and NEP they will be able to exit and will not have to be involved in a case against the master; and (e)Since the master has not yet been served the time yet to be spent on serving him can be usefully utilised for the separate hearing. 17As an alternative, the first and third defendants propose that there could be a full hearing in relation to the claims against them under the Bunker Oil Convention, that is with all issues including economic loss and so forth to be determined, and Mr Nell also expands on this in paras 55 to 59 of his submissions, is similar in terms to those to which I have already referred. 18Mr Herzfeld, in comprehensive submissions both written and oral, has responded to Mr Nell's submissions and not only made reference to the appropriate principles but provided points as to why he says that the application should be denied. 19It is relevant in an application for a separate hearing to consider the position of all parties to the proceedings. The plaintiff opposes the separate hearing and does not see it as to its advantage to have the separate hearing. That is a relevant factor but of course it is not decisive. I am particularly mindful of the warnings that have been given in a number of cases, to which, Mr Nell quite properly concedes, a court should have regard, that often the attractions of a separate hearing turn out by the end of the case to have been illusory. 20In response to the contention that the separate questions can be pursued whilst attempts are made to serve the master, Mr Herzfeld made it clear that given the passage of time and what his solicitors have now been informed as to the progress of the attempt to serve the master, the plaintiff will be making an application for substituted service against the master, its efforts having failed and it being, in effect, impractical to serve the master. He has indicated that the plaintiff will make that application very soon, so that there is unlikely to be any significant delay in relation to the claim against the second defendant. Either leave will be granted as sought or it will be refused. If it is refused then the plaintiff will have to consider whether it has any basis to maintain its claim against the second defendant if it is not able to serve him. One way or the other the issue of the involvement of the master will come to a head in the very near future. 21The question of service on the master has another dimension. Mr Herzfeld points to the fact that in the prosecutions under s 8(1) of the MPA arising out of the discharge in the Land and Environment Court, the solicitors who act for the owner and NEP in these proceedings were also acting for the owner and the master in that Court. The plaintiff's solicitors wrote to those solicitors asking them if they would accept service but the response (Exh A) in effect required the plaintiff to agree to the separate hearing as the price for the owner and NEP's solicitors accepting service. Mr Herzfeld has indicated that the plaintiff's application for an order for substituted service will in part be based on that email. The owner (and NEP) tendered Exhibit 1 by which the master authorised those solicitors to act for him in the Land and Environment Court proceedings. The plaintiff claims that it is not appropriate for the owner and NEP to try to take advantage of the lack of service on the master in these proceedings in such circumstances and Mr Nell sought to argue that the plaintiff is, by opposing the separate questions, seeking to force the defendant for whom he currently appears to be kept in proceedings that remain on foot in their entirety against all in the hope of forcing those clients to settle the proceedings and pay money to the plaintiff in order to avoid the expense of the full hearing. 22What is important is that the master has been joined and the plaintiff wishes to proceed against him. I do not think that the plaintiff can be criticised for finding the separate hearing an unattractive proposition and wishing to resist it. The email at Exh A not only may be relevant to the application for substituted service it may also presage joint representation of all three defendants within the one hearing with a possible reduction in the attraction of a separate hearing from the defendants' collective point of view. 23Insofar as the claim against the first defendant is based upon vicarious liability of the master, this raises a question as to the operation of the Bunker Oil Act and the Bunker Oil Convention which will need to be resolved. But for present purposes this is not a case in which the separate questions, even if answered in a way favourable to those posing the questions, will dispose of all of the proceedings. There is also the prospect that if the questions are not all answered favourably to them that there will remain questions as against the first defendant that will be relevant or interlinked with the claim against the master. 24Further, whilst it is true that the claims against the master are not exactly the same as the claims against the first and third defendants, there is nevertheless an overlap, and close relationship particularly as between the claim against the first defendant and the claim against the second defendant. 25Also, the claim against the first defendant on the basis of vicarious liability for the negligence of the master provides a further linkage between the two. 26There is also another aspect. Mr Herzfeld contends that there are issues in relation to the limitation question which will need to be resolved and which he says may depend upon further evidence yet to be called, that is, the expert evidence. This is particularly so, says Mr Herzfeld, because part of the plaintiff's claim is for pure economic loss and is said to arise when the plaintiff sold his business, a time which it is agreed was within the limitation period imposed by the Bunker Oil Convention, if that be the relevant time. 27On the question of limitation Mr Herzfeld refers to the decision in Wardley v Western Australia [1992] HCA 55; (1992) 175 CLR 514, a decision of the High Court. At p 533 the court said this: "We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question." 28Whilst I agree that this case is of a different character to Wardley, nevertheless the High Court has emphasised that for a separate determination a limitation point needs to be a clear one with all relevant evidence before the Court and the plaintiff, as I have indicated, contends that there is yet to be filed expert evidence which may have some bearing on the characterisation of loss. Whilst it may not ultimately be relevant, I am not persuaded that it could not possibly so, and I think it is undesirable to determine the question of operation of the Bunker Oil Convention and the Bunker Oil Act, which on its face may involve different considerations to our local law, without all of the evidence being before the court. 29I think it is also relevant to note that whilst it is true that the questions posed are mainly questions of law, they involve consideration of an Act and of a Convention on which, I am informed, there have been no decisions to date and I think that the prospect of an appeal from the determination of the separate questions is significantly increased by reason of the novelty of the points for consideration. Constitutional issues are involved as well, which complicates matters further. 30I asked counsel to estimate how long they thought the case would take if all the matters in issue between all the parties were heard together and Mr Herzfeld estimated two to three days and Mr Nell thought that four to five days was more realistic. Both counsel have the difficulty that at this stage the plaintiff, in accordance with directions made earlier, has only filed its lay evidence and no expert evidence the first and third defendants have not filed any evidence and of course the second defendant has not filed any evidence, so both are attempting to do their best in making an estimate. I must say that I think Mr Nell's estimate is more realistic and I proceed on the basis that the case would be likely to take four to five days, although given the fact that evidence was given in the LEC there ought be scope for agreement on many factual matters that might well reduce the time to be taken at the hearing. 31I do not regard a hearing even of five days as particularly lengthy and the fact that the case is one of relatively small proportions and within a relatively narrow compass, both in terms of the amount of time that is to be taken and particularly having regard to the amount involved, is also relevant to the consideration of the utility of a separate hearing on the questions posed. 32Taking into account: (a)The fact that if the separate questions are answered favourably to the owner and NEP they will not in any way dispose of or reduce the claim against the master; (b)That there are limitations questions involved in the separate questions; (c)That there is an overlap between the issues relevant to the claim against the owner and the master; (d)The prospect of appeal in relation to the interpretation of the Bunker Oil Convention and the Bunker Oil Act; (e)The small proportions of the claims and the likely time which the case, if heard in one fixture, will take; (f)That the plaintiff opposes the separate hearing and for reasons that I think are, from his point of view, understandable including, it would seem, a concern that the prospects of settlement of the proceeding will not be enhanced by such a step; and (g)The fact that generally all questions of fact and law should be determined at the same time I am not persuaded that a separate hearing of any of the questions is in the interests of justice or that it is likely that much is to be saved in overall cost or Court time and I do not think that there should be any departure from the normal approach. 33There has been an issue in respect of costs. The first and third defendants have failed in their application for a separate determination and in my view the usual order, namely, that they pay the costs of the motion should be made. Whilst I am not critical of the defendants for having sought to have a separate hearing, it was opposed by plaintiff. That opposition has been shown to be justified and, accordingly, I do not see a reason to depart from the usual order as to costs, merely because the owner and NEP thought that the procedure for which they contended had some utility. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 September 2014