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  4. PNSL Berhad v Dalrymple Marine Services Pty Ltd - [2007] QSC 101

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PNSL Berhad v Dalrymple Marine Services Pty Ltd[2007] QSC 101

PNSL Berhad v Dalrymple Marine Services Pty Ltd[2007] QSC 101

 

SUPREME COURT OF QUEENSLAND 

 

CITATION:

PNSL Berhad v Dalrymple Marine Services Pty Ltd and PNSL Berhad v The Owners of the Ship ‘Koumala’ [2007] QSC 101

PARTIES:

PNSL BERHAD
(plaintiff)
v.
DALRYMPLE MARINE SERVICES PTY LTD
(second defendant)

AND

PNSL BERHAD
(plaintiff)
v.
THE OWNERS OF THE SHIP ‘KOUMALA’
(defendant)

FILE NOS:

S1843 of 1997

S1844 of 1997

DIVISION:

Trial

PROCEEDINGS:

Claims

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

19 April 2007

DELIVERED AT:

Brisbane

HEARING DATES:

9, 10, 11, 12, 16, 17, and 23 October 2006, and 11 December 2006

JUDGE:

Helman J.

CATCHWORDS:

SHIPPING AND NAVIGATION – TOWAGE – COLLISION AND LIMITATION OF LIABILITY GENERALLY – towing contract –  tug experienced loss of steering control – collision between tug and bulk dry carrier – whether defendants negligent – whether defendants can rely on United Kingdom Standard Conditions  – ‘whilst towing’ – Trade Practices Act 1974 (Cth) – warranties under s. 74

The following cases were cited in the judgment:

Australian Steamships Pty Ltd v Koninklijke-Java-China Lynen [1955] V.L.R. 108

Braverus Maritime Inc v. Port Kembla Coal Terminal Ltd & Anor (2005) 148 F.C.R. 68

Comalco Aluminium Limited v. Mogal Freight Services Pty Ltd (1993) 113 A.L.R. 677

Dixon v. Sadler (1839) 5 M. & W. 405; 151 E.R. 172

Huddart Parker Ltd v. Cotter (1942) 66 C.L.R. at p. 664

Great China Metal Industries Co Ltd v. Malaysian International Shipping Corporation Berhad (1996) 196 C.L.R. 191

O'Grady v. Northern Queensland Co Ltd (1990) 169 C.L.R. 356

PMT Partners Pty Ltd v. Australian National Parks and Wildlife Service

The Apollon [1971] 1 Lloyds Rep 476

The Clan Colquhoun [1936] P 153

The Impetus [1959] P 111

The Uranienborg [1936] P 21

Wallis v. Downard-Pickford (North Queensland) Pty Ltd (1994) 179 C.L.R. 388

Limitation of Liability for Maritime Claims Act 1989 (Cth) s 9

Trade Practices Act 1974 (Cth) ss 4, 4B, 68, 74

COUNSEL:

Messrs A.B. Crowe S.C. and F.D. Asis for the plaintiff

Messrs G.A. Thompson S.C. and C. Wilson for the defendants

SOLICITORS:

Thynne & Macartney for the plaintiff

Allens Arthur Robinson for the defendants

  1. These proceedings, the trials of which were heard together, arise from a collision off Hay Point, Queensland between the tug Koumala and the motor vessel Pernas Arang in February 1995.  The latter was approaching the Dalrymple Bay Coal Terminal at the port of Hay Point.  The Pernas Arang is a dry bulk coal carrier of 35,132.48 tonnes, 224.5 metres in length.  The Koumala is 428 tonnes and 33 metres in length.  When the collision occurred the Koumala and another tug, the Kungurri, were preparing to tow the Pernas Arang pursuant to a contract made in February 1995 between the defendant in proceeding no. 1843 of 1997 and the plaintiff, under which the former agreed to provide towing services to the Pernas Arang.  In the collision the Pernas Arang was damaged, but the Koumala was not.  The plaintiff claims damages and other relief against the defendants.  I have used ‘defendants’ throughout these reasons to refer to the only remaining defendant, originally the second defendant,  in the in personam proceeding (no. 1843 of 1997) and the owners and charterers of the Koumala in the in rem proceeding (no. 1844 of 1997). 
  1. I was told in the course of the trial that the defendants admit that the plaintiff, a Malaysian corporation, was the owner of the Pernas Arang and that the plaintiff suffered loss as a result of the collision.  The defendants deny they are liable to the plaintiff and counter-claim that if they are held to be liable to the plaintiff any liability is limited pursuant to the Limitation of Liability for Maritime Claims Act 1989 (Cth).  The counter-claims have been settled.  The parties have agreed that, if the defendants are found to be liable to the plaintiff, the loss and damage suffered should be assessed at 167,000 special drawing rights.  The special drawing right as defined by the International Monetary Fund is the unit of account provided for in article 8 of the Convention on Limitation of Liability for Maritime Claims 1976 given effect to by the Limitation of Liability for Maritime Claims Act.
  1. At 7.00 a.m. on 28 February 1995 Captain Stephen Roscoe, senior marine pilot, boarded the Pernas Arang to take her from sea to port alongside the Dalrymple Bay Coal Terminal no. 2 berth.  At 7.15 a.m. she was heading at 185° true making four knots.  (A knot, one nautical mile per hour, is 1.852 kilometres per hour.)  Her engine was stopped.  The tide was flooding from north to south.  There was a low to moderate south-easterly swell.  The wind was east-south-east at fifteen to twenty knots with intermittent rain showers.  Visibility was good.  The Koumala and the Kungurri were attending the Pernas Arang.  They were ordered by Captain Roscoe by radio to make fast starboard shoulder and starboard quarter.  There was a good lee on the starboard side.
  1. The Kungurri crossed astern of the Pernas Arang from port to starboard to make fast at the starboard quarter.  The Koumala crossed ahead of the Pernas Arang from port to starboard at approximately 90° to the Pernas Arang’s heading.  Once on the starboard side of the Pernas Arang the Koumala then turned quickly to starboard and was seen to be blowing black smoke.  At 7.20 a.m. the Koumala collided heavily head-on with the starboard side of the Pernas Arang forward of the no. 2 hold, causing a dent about fifty centimetres deep and about seven metres in diameter, and tripping frames and brackets in the no. 2 cargo hold.  The bow fender tyre of the Koumala struck the Pernas Arang.  After the collision the Koumala lay dead in the water for a short time before she could be brought alongside the Pernas Arang, and then normal towing operations proceeded without incident. Loading of the Pernas Arang was cancelled and she was repaired in Brisbane.  Repairs were completed on 13 March 1995. 
  1. The account I have given of the movements of the Pernas Arang and the tugs is drawn from the account given in an incident report compiled for the Regional Harbourmaster of the Queensland Department of Transport – Marine Operations within twenty-four hours of the incident by Captain Roscoe, a pilot of great experience who had piloted ships since 1978.  I accept Captain Roscoe’s account in the report as accurate, except in one particular to which I shall refer later.  Not surprisingly, his evidence was that in 2006 he was unable to recall the details of the incident.  That difficulty, again not surprisingly, afflicted other witnesses, so I have treated contemporary documents as the most reliable evidence on the events in question, including the then recent history of the Koumala, so far as it is relevant to these proceedings.  In a statement by Captain Roscoe, dated 10 November 2006 but actually signed on 10 December 2006, which was admitted as exhibit 24, he was, however, able to give an account of the berthing procedure adopted for a ship like the Pernas Arang.  The invariable practice was, he said, to use the ship’s main engine and rudder when required while the ship was moving to a berth at the Dalrymple Bay Coal Terminal.  The ship’s engine was used turning both forward and astern with the rudder to control the ship’s speed and direction during the berthing operation from a time before the tugs’ making fast to the ship through to the ship’s being brought alongside the berth.  The ship’s main engine may at times have been stopped for short periods, as when the tugs were being made fast to the ship.  Captain Roscoe said that he had never piloted a ‘dead’ ship to berth at the Dalrymple Bay Coal Terminal and he had never heard of its being done.  The tugs assist in the berthing of a ship by easing her into the berth, pushing her into the berth when required, or holding her off when required.
  1. Referring to the question of control of a berthing, Captain Roscoe said this in paragraph 9 of exhibit 24:

 

  1. The operation to move a ship such as the ‘Pernas Arang’ to berth at Dalrymple Bay Coal Terminal is under the control of the ship’s master on the pilot’s advice.  By ‘control’ I mean that the pilot has the conduct of the ship in all respects including all orders concerning the ship’s main engine and rudder, and the placement and manoeuvres of the tugs, to effect the berthing operation.  In all berthing operation [sic] I have been involved in at Dalrymple Bay Coal Terminal, the tug masters and crew have controlled only their own tug, in response to the orders they receive from the pilot in conjunction with the master.  The operation has never been under the control of the tug masters.  Again, while I do not have any specific recollection of the operation to berth the ‘Pernas Arang’ on 28 February 1995, I can say that the control of the overall operation has always been, in any such operation I have been involved in, as just stated.
  1. I mentioned that there was something in Captain Roscoe’s incident report that I do not accept as accurate. It is this: in his report he reported ‘clouds of black smoke emanating from both engine exhausts’ on the Koumala, but on the evidence I find the black smoke was coming from only the exhaust on her starboard side.
  1. The master of the Koumala on 28 February 1995 was Captain Roy Eisen, who had been the fourth defendant in proceeding no. 1843 of 1997.  He had worked on tugs from about October 1983 until his retirement in April 1997.  He had been the master of the Kuttabul, the sister tug of the Koumala, for two years before he became the master of the Koumala in about 1985.  Before late 1994 he had been employed by McIlwraith McEachern Operations Pty Ltd, which had been the third defendant in proceeding no. 1843 of 1997, and after 1994 he was employed by the defendant in that proceeding.  At the time of the collision Captain Eisen held a fully validated master first class licence, a qualification above that required of the master of the Koumala.  Following the collision he completed an accident report dated 28 February 1995.  He also completed a commercial vessel incident report dated 2 March 1995 to the Queensland Department of Transport – Marine Operations. 
  1. The work and attendance sheet completed by Captain Eisen for 28 February 1995 shows hands-on-board the Koumala at 5.00 a.m., that she left the tug harbour at 5.40 a.m., made fast to an Indian ship at 6.11 a.m. and then acted under pilot’s orders until 6.30 a.m. when given the order to let go.  The sheet shows that the Koumala made fast to the Pernas Arang at 7.30 a.m. and was given the order to let go at 8.35 a.m. 
  1. At about 7.00 a.m. the Koumala was approximately one nautical mile off the port bow of the Pernas Arang when Captain Eisen received the order from Captain Roscoe to make fast forward on the starboard bow of the Pernas Arang.  Captain Eisen steered the Koumala so that she approached the Pernas Arang fine on the port bow and then crossed to the starboard side of the ship, turning the Koumala to starboard through a turn bringing her back towards the starboard side of the Pernas Arang, intending then to make a further turn to starboard to bring her alongside the Pernas Arang where a line could be secured.  During the execution of those manoeuvres, as the Koumala was coming out of the first turn and was heading towards the Pernas Arang’s starboard side, the steering failed on the Koumala approximately 150 metres from the Pernas Arang.  Captain Eisen showed the course of the vessels by marks on a chart (exhibit 12).  The Koumala, moving at approximately five knots towards the Pernas Arang at approximately 95° true, then collided with her. 
  1. In his affidavit sworn on 31 January 2003 (exhibit 16), Captain Eisen said that he was uncertain of the time that elapsed between the loss of steering and the collision or of the time that elapsed until full power was restored ‘save that it was a matter of minutes only’. In answers to interrogatories administered to him as the fourth defendant in proceeding no. 1843 of 1997, he gave as the approximate time between the steering failure and the collision as one and a half to two minutes, and the approximate time between steering failure and the restoration of the tug’s ability to steer as five and a half to seven minutes: exhibit 20. Captain Eisen’s estimate of the time between steering failure and collision is broadly consistent with a calculation by Captain Richard White, a marine surveyor called by the plaintiff. Captain White said that at five knots the tug would take fifty-eight seconds to travel 150 metres. Though mindful that Captain Eisen’s estimates of distance, speed, and time are approximations, I accept as correct his statement that approximately one and a half to two minutes elapsed between loss of steering and collision.
  1. Captain Eisen said when he gave evidence on 11 October 2006 that he remembered throttling back ‘well before’ and ‘a fair bit earlier’ than just before the Koumala hit the Pernas Arang, but added that it was very hard to be accurate about ‘actual time’.  He also said when giving evidence that he had a lot of difficulty in remembering the exact sequence of what happened, adding, ‘It is a long time ago as we all know’.  In paragraph 11 of exhibit 16, however, Captain Eisen had said, ‘Immediately prior to collision I recall throttling back the main engines through clutch to “idle” ’.  In my view the earlier statement is more likely to be correct than the later ones.
  1. Those on board the Koumala at the time of the incident, apart from Captain Eisen, were three deck hands, and the tug’s engineer, Mr John Smith. 
  1. As the Koumala approached the Pernas Arang the forward mooring team on the Pernas Arang were ready to throw a heaving line down, but only one member of the Koumala’s crew was on the deck near the forward winch as she approached the Pernas Arang.  Two crew members were required to carry out the procedure of taking a heaving line from the ship and then tying it to the tug’s heavy towing line which was then passed out and made fast to the ship:  one crew member controlled the forward winch and the other passed the line out.  I accept the evidence of Mr Rohaizad Othman, the boatswain on the Pernas Arang on the subject of the number of crew members on the bow of the Koumala in preference to the evidence of Captain Eisen:  the former recalled seeing only one crew member on the deck at the relevant time, the latter agreed he merely assumed all crew members were on the bow.
  1. Mr Smith, who had been the fifth defendant in proceeding no. 1843 of 1997, began his swing (tour of duty) on the Koumala on 28 February 1995 after time off during which Mr Anthony Wynne had been the engineer.  Messrs Smith and Wynne, both experienced engineers, were the only engineers on permanent roster on the Koumala.  From Mr Smith’s written record of the incident made in the engine room log book on 28 February 1995, supplemented by his later written and oral accounts, the sequence of the events about which he could speak is reasonably clear, although of course the speed at which the events occurred in a short time and the difficulty of remembering with precision what happened in a sudden emergency so long ago cannot be overlooked.
  1. Before I continue my account of those events I must digress to explain the workings of the Koumala’s steering system.
  1. There were four engines in the Koumala’s engine room:  two main propulsion engines and two to provide the power for steering.  The tugs did not have hydrodynamically efficient underwater forms, but they were very powerful.  The Koumala did not have a conventional steering system with a rudder but used twin propellers that could rotate through 360° around a vertical axle, permitting a powerful thrust in any direction, and, as Captain Eisen put it, ‘if it was necessary to stop in a hurry, they would stop on a sixpence’.  The power for the steering mechanism came from two hydraulic motors driven by hydraulic pumps, in turn driven by two electric motors.  There were two generators, or alternators, one port and one starboard, each driven by a 3300 series Caterpillar diesel engine.  The tug was designed so that one generator could provide all the power required for steering.  The second generator usually acted as a stand-by generator if the one that was running failed;  but they could also be used in parallel (i.e., synchronized), if power additional to that produced by one generator were needed.  Before the two generators could be run in parallel it was necessary that they be running at the same speed, have the same output voltage, and be in phase.  If the primary generator failed, the stand-by generator would start automatically if there was a total loss of supply from the primary generator provided the manually-operated governor fuel lever was in the ‘on’, or running, position. 
  1. Mr Peter McAulay, technical specialist and expert on Caterpillar diesel engines who was Technical Services Manager of Hastings Deering Australia, the agents for Caterpillar, from 1 June 1986 to 1 January 2003, described the workings of the Caterpillar engines used to supply power to the generators in a report dated 25 September 2003 prepared for the plaintiff’s solicitors:

 

The diesel engine (Caterpillar 3306) of the starboard generator set supplies power to turn the generator at a fixed speed.  If the electrical load on the generator increases it places an increased load on the engine which will start to slow down.  The governor on the engine senses this speed reduction and supplies more fuel to the engine in an attempt to maintain the fixed speed.

 

There is a limit to how much power the engine can produce.  If the engine is operating normally, this limit is set by the fuel setting.  There is, however, another requirement for the engine to produce power.  Air must be available to the engine in sufficient volume to ensure efficient combustion.  In this case a turbocharger is employed to supply adequate air to the engine to ensure combustion.

 

The air travels into the engine air intake, through the air filter assembly, through the turbocharger to the combustion chambers via the air intake manifold, cylinder head and inlet valves.

 

If the air intake is restricted beyond limits set by the manufacturer, or the turbocharger is not working properly, poor combustion will occur even if the engine is receiving an adequate fuel supply.  Poor combustion is most readily seen by an examination of the exhaust stream when the engine is under load – black smoke instead of clear due to soot caused by incomplete combustion.  Poor combustion, in turn, leads to a lowering of the power output of the engine.

 

The air filter assembly is equipped with easily replaceable elements as service items.  In a marine environment the air is generally quite clean and I would expect the filter elements to last well and not require servicing for hundreds or perhaps thousands of engine operating hours.  Rapid blocking (in periods of hours) is generally only seen in extremely dusty environments. (pp. 2-3)

The purpose of the air filter, or air cleaner, is to keep the air entering the engine clean by removing dust and other foreign matter that would otherwise enter the cylinders and thereby cause excessive wear.  A generator set can be run without an air filter, and if that were done for a short period at sea there would not be any risk of excessive wear because there is very little dust and other foreign matter in a marine environment, Mr McAulay said.  In his experience an air filter element can last from a day to 6,000 hours depending on how much grit or dirt, etc., is in the air;  but elements in engines on earthmoving equipment could require cleaning twice a day.  Mr McAulay agreed that a correctly-cleaned or new air filter element would operate for 2,000 hours under normal clean-air conditions, there being no material difference between the life of a new air filter and one that had been cleaned. 

  1. Mr McAulay went on to describe the air cleaner service indicator fitted to the Caterpillar engine:

 

The engine is fitted with an ‘Air Cleaner Service Indicator’ that gives an indication (a red ‘flag’ latches up inside a viewing window) of when the air filter elements are restricted and need cleaning or replacement.  The Indicator is sensing air pressure immediately after the air filter and before the turbocharger;  this is a less than atmospheric pressure.

 

Note firstly that the indicator will ‘show red’ at a limit determined by the manufacturer;  the engine will not be in any significant distress at this limit as it is a ‘Service Indicator’.

 

Note secondly that any reasonably competent person responsible for maintaining an engine should be aware that the Service Indicator is not a precision gauge and that, if there are other signs of engine distress due to a lack of air, it should fall under suspicion of being faulty and be replaced.  (p. 3)

  1. Mr Smith was sitting behind Captain Eisen in the wheelhouse of the Koumala when an alarm sounded.  The engine room was unmanned but there was a monitoring panel in the wheelhouse.  Mr Smith hurried down to the engine room.  As he turned to go down the companionway from the wheelhouse he noticed heavy black smoke was coming from the exhaust outlet of the starboard generator.  In the engine room Mr Smith found the only generator that was running, the starboard generator, was unable to carry the electrical load.  The voltage was low.  The port generator had failed to start automatically.  The governor fuel lever between the starboard and port generators had been in the shut, or ‘off’, position.  Mr Smith moved the lever to the running position, started the port generator, and made a number of attempts to run the two generators in parallel.  That attempt was pointless, as he should have realized:  synchronization could not occur while the starboard generator was unable to maintain sufficient voltage and the generators were not in phase.  After the collision, Mr Smith tripped the starboard generator and switched the main switchboard power supply to start the port generator, and Captain Eisen was able to steer the tug again.  After that the ship was towed using power from the port generator only.  Mr Smith accepted that it was likely that he had not checked to see that the governor fuel lever was in the ‘on’ position on the morning of 28 February 1995.  While Mr Smith was in the engine room Captain Eisen told him twice that the steering had failed. Changing from one generator to another would have caused a brief, five to ten second, blackout, whereas if Mr Smith had been successful in causing the generators to operate in parallel no blackout would have occurred.
  1. Mr Wynne gave evidence on 11 October 2006 but he had difficulty remembering the details of events that had occurred so long before. He had been the engineer on the Koumala in the weeks prior to Mr Smith’s resuming duty.  Mr Wynne had made notes of relevance to these proceedings in the engine room log during his swing.  On 10 January 1995 he had recorded that the starboard generator was blowing black smoke and the air filter was choked with carbon.  He changed to the port generator.  On 11 January 1995 he recorded cleaning both generator air filters. He may have cleaned the air filter elements himself, or he may have supervised a crew member who cleaned them, or he may have sent them out to be cleaned - he was not certain as to that detail.  Nothing turns on who cleaned the filters.  In his oral evidence Mr McAulay said he would not be critical of the re-use of the elements then, provided they were properly cleaned.  It is clear, however, that there were instances soon after the filters were cleaned of exhaust smoking from the starboard generator but none from the port generator.  It is also relevant to note that the Caterpillar manual included detailed instructions concerning the cleaning of air filter elements, although, as I shall mention when discussing the air cleaner service indicator further, there was a recommendation concerning the installation of new air filter elements after exhaust smoking and/or loss of power after servicing, and the installation of a new element at least once a year.
  1. On 27 January 1995 Mr Wynne recorded a modification to the air intake on the starboard generator. He explained in his oral evidence that the modification had been a one metre snorkel to improve the quality of the air entering the generator. On 1 February 1995 he recorded having finished securing the starboard generator air intake, which is a reference to completing the installation of the snorkel. On 20 February 1995 he recorded that the starboard generator was smoking.  On 21 February 1995 he recorded investigating a fault in the starboard generator and black smoke.  There follows a notation:  ‘TURBO SEEMS A BIT STIFF IN ROTATION.  LINE UP TURBO CARTRIDGE CHANGE?’  On 22 February 1995 he recorded a cartridge change on the starboard generator turbocharger by employees of Hastings Deering.   There is no evidence that the air filter was replaced then by the Hastings Deering employees, and I am satisfied that they did not do so.  On 27 February 1995 he recorded seeking Caterpillar air filters and spares to be put on Sarina Carriers.  That was a reference to the filters in the generators on the tug.  There follows : ‘RETURN THE TWO FILTERS IN WORKSHOP FOR CREDIT (WRONG ONES)’.
  1. The engine room log book showed no reference to the replacement of air filter elements on the starboard generator in 1995 before 28 February 1995. The replacements before 28 February 1995 had been in June 1988, on 8 March 1990 (at 4,814 hours of operation), and then on 24 February 1993 (at between approximately 5,930 and 6,020 hours of operation) as shown in Mr Wynne’s resumés of the logs. I should mention that on behalf of the plaintiff it was contended that the replacement in March 1990 was on the 12th and not the 8th, as the resumé shows.  I accept the resumé as correct, but in any event nothing turns on the discrepancy. 
  1. The Caterpillar service report dated 28 February 1995 recorded the cause of the loss of power in the starboard generator as follows:

 

AIR FILTER ELEMENT WAS BLOCKED & AIR FILTER RESTRICTION GAUGE WAS IN THE RED.  NB:  PREMATURE ELEMENT LIFE POSSIBLY ATTRIBUTED TO PREVIOUS EXHAUST LEAK CAUSING BUILD UP OF SOOT, CARBON ETC IN ELEMENT.

The repairs carried out were as follows:

 

A NEW ELEMENT WAS FITTED & RESTRICTION GAUGE RESET.  OPERATION UNDER LOAD WAS CHECKED.  OK.

  1. The Caterpillar manual contained a recommendation that an air cleaner element be installed when the air cleaner service indicator piston, which was red, locks up. The recommendation for the air cleaner service indicator was to observe the position of the indicator piston and if it locked in the ‘up’ position, to service the element. The following note, A, was added:

 

NOTE A:  Service intervals may be shortened in dusty operating conditions.  If the exhaust smoke and/or loss of power continues after servicing the air cleaner, discard that element and install a new element.  Install a new element at least once a year.

There is no evidence from the logs indicating that the air cleaner indicator piston had locked in the ‘up’ position before the collision, and in particular after 21 February 1995.  Mr Smith asserted he would have checked it when doing his pre-sailing checks on the morning of 28 February 1995 since it was his practice to do so;  and, having read in the log that there had been problems with the starboard generator, he would have paid particular attention to it.  On the evidence I am unable to find that either engineer failed to check the air cleaner indicator at any time relevant to these proceedings;  nor do I find that the indicator piston was showing red before the Koumala sailed on the day of the collision.

  1. I accept as correct Mr McAulay’s opinion that it was a blocked air filter in the starboard generator that caused the emission of black smoke. The loss of power caused by the restriction on the flow of air then caused the alarm to sound and loss of steering control.
  1. I also accept as correct the opinion of Mr Peter Hanson, rotating electrical machine specialist, that Mr Smith failed to adopt the necessary steps in the emergency. When Mr Smith found the starboard generator engine failing and the voltage low he should have tripped the starboard generator, something that would have taken only a few seconds. He should then have started the port generator manually after opening the fuel valve. The motors should then have been re-started. The total time from when Mr Smith reached the engine room control panel to restoration of steering control should have been less than a minute. In other words, Mr Smith, having failed to adopt the prudent course of using the port generator as the power source on 28 February 1995 from the beginning of the day’s work, should have, and could have, switched over to the port generator as soon as it was obvious that the starboard generator was faltering. Had he done so, the Koumala would have had her steering restored and could have been taken off her collision course, or she could have been stopped very quickly – as if ‘on a sixpence’.
  1. The plaintiff’s case as it is now framed in its third further amended statements of claim is that the collision was caused by the negligence and/or breach of duty of Captain Eisen and/or Mr Smith as servants or agents of the defendants. Further, and in the alternative, the plaintiff alleges that the collision was caused by the breach of contract and/or negligence and/or breach of duty of the defendants. The plaintiff alleges that it was an implied term of the towing contract that tugs provided to complete the towing service would be seaworthy. Further or alternatively, the plaintiff relies on ss. 4B and 74(1) and (2) of the Trade Practices Act 1974 (Cth) alleging that as the fee per service per tug was $12,500 it was a consumer of services within the meaning of that expression in ss. 4B and 74 of the Act, and that it was a warranty implied in the contract by s. 74(1) that the services would be rendered with due care and skill and that any materials supplied in connexion with those services would be reasonably fit for the purpose for which they were supplied.  Another warranty, implied in the contract by s. 74(2), was, it was further alleged, that the services supplied under the contract and any materials supplied in connexion with those services would be reasonably fit for the purpose of berthing the Pernas Arang at the coal terminal at Hay Point or were of such a nature and quality that they might reasonably be expected to achieve that result. 
  1. There is no issue that on 28 February 1995 Captain Eisen and Mr Smith were the servants or agents of the defendants. The defendants deny the alleged negligence and breach of duty of Captain Eisen and Mr Smith and deny the breach of contract, negligence, and breach of duty alleged against them. They say that the collision was not caused by any negligent act of, or omission by, Captain Eisen or Mr Smith, that the collision was not caused by any unseaworthiness of the Koumala, that the collision resulted from a failure of the Koumala’s starboard generator ‘the cause of which was not discoverable by reasonable inspection’.  The defendants deny that it was an implied term of the towing contract that tugs provided to complete the towing service would be seaworthy because the term was not implied as a matter of law and it was not necessary to give business efficacy to the agreement.  The defendants admit that the fee per service per tug for the towing services was $12,500, but deny that the plaintiff was a consumer of services within the meaning of that expression in ss. 4B and 74 of the Act because the towing services were provided under a contract for or in relation to the transportation of goods (the ship, or alternatively her intended cargo) for the purpose of a business carried on or engaged in by the plaintiff or, alternatively, the owner of the intended cargo, so that by operation of s. 74(3) of the Act and the definition of ‘goods’ in s. 4 of the Act the warranties implied by s. 74 do not apply.  Alternatively, the defendants say that if Division 2 (ss. 66-74, Conditions and Warranties in Consumer Transactions) of Part V (Consumer Protection) of the Act applies, s. 68 of the Act does not affect the operation of the United Kingdom Standard Conditions for Towage and Other Services (revised 1974) upon the terms of which, they say, the towing services were provided.  It is not in dispute that the services of the tugs were engaged by the Adelaide Steamship Co Ltd as agent of the plaintiff and that the terms of the engagement are to be found in a letter dated 21 December 1994 to the Adelaide Steamship Co, a letter in response dated 30 December 1994 and a facsimile transmission dated 24 February 1995 from the Adelaide Steamship Co;  nor is it in dispute that the contract was to undertake towage services in accordance with the United Kingdom Standard Conditions for Towage and Other Services (revised 1974).  The defendants plead that the collision occurred ‘whilst towing’ within the meaning of that expression in the United Kingdom Standard Conditions, that the Koumala was in a position to receive orders direct from the Pernas Arang to pick up ropes or lines when the collision occurred, and that therefore the defendants are not liable to the plaintiff. 
  1. The plaintiff pleads in reply that the Koumala was not in a position to receive orders direct from the Pernas Arang to commence pushing, holding, moving, escorting, or guiding the ship or to pick up ropes or lines before and when the collision occurred either because of the steering failure or at all;  that accordingly the collision did not occur ‘whilst towing’ within the meaning of that term in the United Kingdom Standard Conditions;  and that clause 4 of the United Kingdom Standard Conditions is void by operation of s. 68 of the Trade Practices Act.
  1. The relevant provisions of the Trade Practices Act, as they were at the material time, were:

 

4  Interpretation

 

(1)In this act, unless the contrary intention appears:

 

…

 

goods includes:

 

(a)ships, aircraft and other vehicles;

(b)animals, including fish;

(c)minerals, trees and crops, whether on, under or attached to land or not;  and

(d)gas and electricity.

 

4B  Consumers

 

(1)For the purposes of this Act, unless the contrary intention appears:

 

…

 

(b)a person shall be taken to have acquired particular services as a consumer if, and only if:

 

(i)the price of the services did not exceed the prescribed amount;  or

(ii)where that price exceeded the prescribed amount – the services were of a kind ordinarily acquired for personal, domestic or household use or consumption.

 

(2)For the purposes of subsection (1):

 

(a)the prescribed amount is $40,000 or, if a greater amount is prescribed for the purposes of this paragraph, that greater amount;

 

68  Application of provisions not to be excluded or modified

 

(1)Any term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) that purports to exclude, restrict or modify or has the effect of excluding, restricting or modifying:

 

(a)the application of all or any of the provisions of this Division;

(b)the exercise of a right conferred by such a provision;

(c)any liability of the corporation for breach of a condition or warranty implied by such a provision;  or

(d)the application of section 75A;

 

is void.

 

(2)A term or a contract shall not be taken to exclude, restrict or modify the application of a provision of this Division or the application of section 75A unless the term does so expressly or is inconsistent with that provision or section.

 

74  Warranties in relation to the supply of services

 

(1)In every contract for the supply by a corporation in the course of a business of services to a consumer there is an implied warranty that the services will be rendered with due care and skill and that any materials supplied in connexion with those services will be reasonably fit for the purpose for which they are supplied.

 

(2)Where a corporation supplies services (other than services of a professional nature provided by a qualified architect or engineer) to a consumer in the course of a business and the consumer, expressly or by implication, makes known to the corporation any particular purpose for which the services are required or the result that he desires the services to achieve, there is an implied warranty that the services supplied under the contract for the supply of the services and any materials supplied in connexion with those services will be reasonably fit for that purpose or are of such a nature and quality that they might reasonably be expected to achieve that result, except where the circumstances show that the consumer does not rely, or that it is unreasonable for him to rely, on the corporation’s skill or judgment.

 

(3)A reference in this section to services does not include a reference to services that are, or are to be, provided, granted or conferred under:

 

(a)a contract for or in relation to the 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;  or

 

(b)a contract of insurance.

  1. The United Kingdom Standard Conditions, so far as they are material, provide:

 

  1. (a)The agreement between the Tugowner and the Hirer is and shall at all times be subject to and include each and all of the conditions hereinafter set out.

 

(b)For the purpose of these conditions:-

 

(i)‘towing’ is any operation in connection with the holding, pushing, pulling, moving, escorting or guiding of the Hirer’s vessel, and the expressions ‘to tow’, ‘being towed’ and ‘towage’ shall be defined likewise.

 

…

 

(iv)The expression ‘whilst towing’ shall cover the period commencing when the tug … is in a position to receive orders direct from the Hirer’s vessel to commence pushing, holding, moving, escorting, or guiding the vessel or to pick up ropes or lines or when the tow rope has been passed to or by the tug … whichever is the sooner …

 

(v)Any service of whatsoever nature to be performed by the Tugowner other than towing shall be deemed to cover the period commencing when the tug … is placed physically at the disposal of the Hirer at the place designated by the Hirer, or, if such be at a vessel, when the tug … is in a position to receive and forthwith carry out orders to come alongside and shall continue until the employment for which the tug … has been engaged is ended. …

 

…

 

  1. Whilst towing or whilst at the request, express or implied, of the Hirer, rendering any service other than towing, the master and crew of the tug … shall be deemed to be the servants of the Hirer and under the control of the Hirer and/or his servants and/or his agents, and anyone on board the Hirer’s vessel who may be employed and/or paid by the Tugowner shall likewise be deemed to be the servant of the Hirer and the Hirer shall accordingly be vicariously liable for any act or omission by any such person so deemed to be the servant of the Hirer.

 

  1. Whilst towing, or whilst at the request, either express or implied of the Hirer, rendering any service of whatsoever nature other than towing:-

 

(a)The Tugowner shall not be responsible for or be liable

 

(i)for damage of any description done by or to the tug … or done by or to the Hirer’s vessel …

 

... arising from any cause, including (without prejudice  to the generality of the foregoing) negligence at any time of the Tugowner’s servants or agents, unseaworthiness, unfitness or breakdown of the tug …, its machinery, boilers, towing gear, equipment, lines, ropes or hawsers, lack of fuel, stores, speed or otherwise, and

 

(b)The Hirer shall be responsible for, pay for and indemnify the Tugowner against and in respect of any loss or damage and any claims of whatsoever nature or howsoever arising or caused whether covered by the provisions of Clause 4(a) hereof or not (including any arising from or caused by the negligence of the Tugowner or his servants or agents) including the loss of or damage to the tug …, provided that the Hirer shall not be liable to the Tugowner for or in respect of loss, damage or claims which the Hirer proves (the burden of proof being on the Hirer) to have been solely caused by the failure of the Tugowner, and due to the actual fault or privity of the Tugowner, to make his tug … seaworthy for the towage or service other than towage …

…

  1. The allegations by the plaintiff in each proceeding as to the cause of the collision are identical, except in one respect to which I shall refer later. The allegations in proceeding no. 1844 of 1997 are in paragraphs 8 and 9 of the third further amended statement of claim, which are as follows:

 

  1. The said collision was caused by the negligence and/or breach of duty of the Master and/or the Chief Engineer of the Tug for themselves and as servants or agents of the Tug Owner.

 

PARTICULARS

 

(a)The Master and the Chief Engineer negligently and in breach of duty failing to ensure that the tug was seaworthy prior to approaching the ship.

 

(b)The Master and the Chief Engineer negligently and in breach of duty failing to ensure that the tug’s electricity generating system was in good order prior to approaching the ship.

 

(c)The Master and the Chief Engineer negligently and in breach of duty failing to ensure that the tug’s starboard generator air filter was not, or not nearly blocked prior to approaching the ship.

 

PARTICULARS

 

(i)Failing to keep an adequate supply of filters to replace those requiring replacement.

 

(ii)Failing to replace the filter of the starboard generator in circumstances in which the Chief Engineer should have known the starboard generator’s air filter element was or was likely to be clogged with exhaust particles.

 

(iii)Refitting a used air filter element for the starboard generator after cleaning that element when the Chief Engineer knew or should have known that such cleaning would be ineffective.

 

(iv)Failing to replace the tug’s starboard generator air filter element with a new element as soon as possible after refitting a used element as aforesaid in circumstances where the Chief Engineer knew or should have known that a cleaned refitted filter would have a shortened working life.

 

(d)The Master and the Chief Engineer negligently and in breach of duty failing to ensure that the tug’s starboard generator air filter gauge was not showing red prior to approaching the ship.

 

(e)The Master and the Chief Engineer negligently and in breach of duty failing to ensure that the port (standby) generator governor fuel lever was in the running position prior to approaching the ship.

 

(f)The Master and the Chief Engineer negligently and in breach of duty failed to ensure that power was promptly reinstated prior to approaching the ship.

 

PARTICULARS

 

i.Attempting synchronization of the port and starboard generators when synchronization was not possible with the generators running at different speeds.

 

ii.Failing, to immediately shut down the starboard generator and to manually place the port generator on line so that power could be provided to the steering mechanism.

 

iii.Taking approximately 5-7 minutes to restore power and steering when power and steering could and should have been restored almost immediately by avoiding the attempt referred to in subparagraph i. and by taking the steps referred to in subparagraph ii.

 

(g)Negligently and in breach of duty the tug master deliberately rounding out of his turn onto a course towards the ship without reducing speed when an alarm had sounded indicating a generator problem and/or failing to turn away until the cause of the alarm had been established and any fault rectified.

 

(h)The tug master having failed to turn the tug away as referred to in subparagraph g. negligently and in breach of duty failing to cut power to the main engine to reduce the speed of the tug once it was on a collision course with the ship.

 

  1. Additionally, and in the alternative, the collision was caused by the breach of contract and/or the negligence and/or the breach of duty of the Tug Owner.

 

PARTICULARS

 

(a)See particulars under paragraph 8 above:  and

 

(b)Failing to ensure by a proper system of management that the tug was seaworthy prior to approaching the ship.

 

(c)Failing to ensure a proper system of maintenance of the vessel’s electricity generating systems.

 

(d)Failure to appoint a Master engineer and/or crew to the tug competent to prevent faults as particularized at paragraph 8 above.

 

(e)Failing to ensure a proper system of training of the tug master and chief engineer as to appropriate emergency measures to be taken in the circumstances of power and steering failure when approaching a ship.

  1. The only discrepancy of substance between that version of the plaintiff’s allegations and that in its third further amended statement of claim in proceeding no. 1843 of 1997, in which paragraphs 11 and 12 are the corresponding paragraphs, is that the allegation in paragraph 8(f) of the former pleading is made against only Mr Smith in the latter pleading.
  1. My findings on the allegations as to the cause of the collision are as follows. When Mr Smith began his swing on 28 February 1995 it should have been obvious to him from an examination of the engine room log that special attention to the state of the starboard generator was necessary. The log revealed that during Mr Wynne’s swing there had been smoking on 10 January 1995 and 20 and 21 February 1995. Various steps had been taken after the incidents of 10 January 1995 and 21 February 1995: cleaning air filter elements, installing a snorkel, and changing the cartridge on the starboard generator turbocharger. Furthermore there was no record of replacement of the air filter element after 24 February 1993. Clearly prudence required special attention to the state of the starboard generator and in particular its air filter. It would have been obvious to Mr Smith, who was an experienced engineer, that gradual clogging of the air filter could ultimately cause a loss of power in the generator with a consequently adverse effect on the tug’s steering system. Until the new air filter elements were installed it may have been prudent for Mr Smith to run the port generator and to leave the starboard generator as the stand-by source of power. He could also have run the starboard generator without the filter for short periods at sea while the tug was manoeuvring near the ship. The latter measure could have been taken without an adverse effect on the generator since it is unlikely that there would have been any dust or other foreign matter in the marine environment. Of those two measures, the former would have been the more appropriate because the latter could have possibly permitted some foreign matter into the cylinders and thus cause excessive wear, although that would, as I have indicated, be unlikely in a marine environment away from the dust and other foreign matter closer to land.
  1. Mr Smith elected, however, to continue to use the starboard generator as a power source and it cannot be concluded that he was negligent in doing so – nor is it alleged that he was – since the Koumala had performed without incident during her work with the Indian ship earlier on 28 February 1995 and up to the moment when the emergency began.  Although Mr Smith’s decision to use the starboard generator as a power source as the Koumala prepared to begin towing the Pernas Arang is not alleged to have been negligent, the history of the generator – particularly its recent history revealed in the engine room log – called for special vigilance to ensure that prompt action was taken to overcome any effect of a failure, or partial failure, of the generator.  In such an event it was of primary importance that Mr Smith take swift and effective action to restore power to the steering system so that any loss of control was as brief as possible. 
  1. There is no doubt that Captain Eisen lost control of the steering of the tug after the alarm sounded, whether immediately after or after some brief time had elapsed was an issue of fact debated before me. In his initial report Captain Eisen did not say he lost power immediately, but later he said he did.
  1. My conclusion is that if Captain Eisen’s loss of control was not immediately after the alarm sounded, it was within a few seconds of the sounding of the alarm. If there was a short interval between the alarm and the loss of steering Captain Eisen did not use the time available to steer the tug away from the ship. In addition to steering the tug away from the ship if he had been able to do so, Captain Eisen should immediately have stopped the Koumala’s main engine in an effort to slow her movement towards the ship.  Instead, he left that precaution until she was close to the ship. 
  1. As Mr Smith left the wheelhouse he saw the black smoke coming from the starboard generator exhaust. The prudent course would have been to switch the power source immediately to the port generator. Instead he wasted precious time in an attempt to operate the generators in parallel, an attempt that was bound to fail. The emergency caused some confusion, and Mr Smith was unable to recall precisely when Captain Eisen notified him of loss of steering control, but it is clear that Mr Smith became aware of that soon after he began trying to deal with the emergency.
  1. In the result I am satisfied that prior to the collision Captain Eisen and Mr Smith were negligent: Captain Eisen in failing to stop the main engine sooner than he did, and Mr Smith in failing to switch the power source to the port generator sooner than he did. In addition Captain Eisen should have tried to steer the tug away from the ship if steering control was not lost immediately. Mr Smith should have shut down the starboard generator and started the stand-by port generator immediately after he entered the engine room. It was Mr Smith’s negligence that was the effective cause of the collision because if steering control had been restored when it could have, and should have been, Captain Eisen would have been able to steer the Koumala off her collision course or stop her abruptly.
  1. The plaintiff makes allegations to the effect that the Koumala was unseaworthy as she approached the Pernas Arang.  I am not satisfied that that allegation has been made out.  To be ‘seaworthy’ a vessel must be ‘in a fit state as to repairs, equipment, and crew, and in all other respects to encounter ordinary perils of the voyage’:  Dixon v. Sadler (1839) 5 M. & W. 405 at p. 414;  151 E.R. 172, at p. 175, per Baron Parke.  A defect will render a vessel unseaworthy if it is sufficient to render the vessel unfit for the due and safe carrying of goods or crew and it is not a defect that can be readily cured on the voyage:  Huddart Parker Ltd v. Cotter (1942) 66 C.L.R. 624 at pp. 663-664 per Williams J., with whom Rich J. agreed;  and see Great China Metal Industries Co Limited v. Malaysian International Shipping Corporation, Berhad (1998) 196 C.L.R. 161 at pp. 173-174.   In this case there was a defect in the starboard generator, but any effect of the defect on the Koumala’s steering system was readily curable by employing the auxiliary, port generator.
  1. I shall set out my conclusions as to the allegations of negligence, breach of duty, and breach of contract by reference to the relevant paragraphs in the third further amended statement of claim in proceeding no. 1844 of 1997:

 

8(a):I am not satisfied that the plaintiff has made out that particular.  The Koumala was seaworthy on the morning of 28 February 1995. 

 

8(b):I am not satisfied that the plaintiff has proved that Captain Eisen and Mr Smith failed to ensure that the Koumala’s electricity generating system was in good order prior to approaching the Pernas Arang.  The history of the problems with the starboard generator evident from the events recorded in the engine room log in January and February 1995 indicated that there was a risk of failure of that generator, but it was not unreasonable for Messrs Wynne and Smith to conclude that the problems had been dealt with by cleaning the filters, installation of the snorkel, and the work performed on the turbocharger by Hastings Deering.  If there were such negligence and breach of duty it would have been by that of Mr Smith alone and not that of Captain Eisen. 

 

8(c)(i):It would have been prudent to keep an adequate supply of filters to replace those requiring replacement on board the Koumala, but it was not unreasonable for Mr Smith to conclude that it was safe to take the Koumala to sea with the existing filters on the morning of 28 February 1995.

 

8(c)(ii):While it may have been the prudent course to replace the filter of the starboard generator before the Koumala set sail on 28 February 1995 it was not unreasonable for Mr Smith to conclude that any difficulties with the air filter element had been dealt with by the means to which I referred in dealing with paragraph 8(b).

 

8(c)(iii):That allegation relates to Mr Wynne’s action recorded in the engine room log of 11 January 1995 and is not an allegation against Mr Smith.  But in any event it has not been established that cleaning an air filter element was negligent since the manufacturer’s manual contemplated such a course, and, provided it were done properly, it should have caused no difficulty.

 

8(c)(iv):My conclusion in respect of this allegation is the same as that in relation to paragraph 8(c)(iii) for the same reason. 

 

The allegations in paragraph 8(c) are made against Captain Eisen and Mr Smith.  If there had been negligence of the kind alleged it would have been that of Mr Smith only.

 

8(d):I am not satisfied that that particular has been proved.  In making that allegation the plaintiff relies on a finding that the starboard generator air filter gauge was showing red prior to the Koumala’s approaching the Pernas Arang.  On the evidence I am unable to conclude that that was so.  If there had been negligence in that respect it would have been that of Mr Smith only and not of Captain Eisen.

 

8(e):Mr Smith did fail to ensure that the governor fuel lever was in the running position prior to the Koumala’s approaching the Pernas Arang, but had the fuel lever been in the running position the port generator would not have begun running in any event.  I therefore conclude that that negligence on the part of Mr Smith was not in itself a cause of the collision.  Again, that allegation cannot be sustained against Captain Eisen.

 

8(f):I am satisfied that Mr Smith negligently and in breach of duty failed to ensure that power was promptly reinstated as the Koumala approached the Pernas Arang on a collision course.  Particulars i, ii, and iii have been proved and that negligence and breach of duty was, as I mentioned, the effective cause of the collision.  Again, that allegation cannot be sustained against Captain Eisen.

 

8(g):I am satisfied that that particular has been proved against Captain Eisen although I am not satisfied that that negligence was the effective cause of the collision.

 

8(h):I am satisfied that that particular has been proved against Captain Eisen but again I am not satisfied that that negligence has been proved to be an effective cause of the collision. 

 

9(a):The defendants are vicariously liable for the acts of Captain Eisen and Mr Smith that I find to have been negligent and in breach of duty and are thereby also in breach of their obligations under the towing contract.

 

9(b):I am not satisfied that that particular has been proved against the defendants.  The defendants engaged  an experienced and well-qualified master and engineer, and in any event I am not satisfied that the Koumala was not seaworthy on 28 February 1995.

 

9(c):An experienced and well-qualified master and an experienced and well-qualified engineer had been engaged to maintain the vessel’s electricity generating systems.  I am not satisfied that that particular has been proved against the defendants.

 

9(d):The defendants discharged their duty by engaging an experienced and well-qualified master and an experienced and well-qualified engineer for the Koumala.

 

9(e):I am not satisfied that there was a failure to ensure a proper system of training of the master and engineer.  Both were experienced and well-qualified and were capable of knowing what to do in an emergency of the kind that confronted the Koumala on the day in question.

  1. The plaintiff bases its claim against the defendants chiefly on the following line of reasoning set out in its written outline of argument. The towing contract was for a sum less than $40,000, the prescribed amount provided for in s. 4B of the Trade Practices Act, and it was a contract for the supply of services by a corporation in the course of a business.  Neither of those propositions was in issue.  The argument continued:  s. 68 operates to avoid any terms in the towage contract that purported to exclude, restrict, or modify, or have the effect of excluding, restricting, or modifying the warranties implied by s. 74, i.e., the terms of the United Kingdom Standard Conditions relied on by the defendants.  The warranties implied by s. 74(1) were breached in that the services provided under the towing contract were not rendered with due care and skill,  and also because the materials supplied in connexion with the towing were not reasonably fit for the purpose because of the failure to replace the air filter in the starboard generator.  In addition, it was argued that the warranty implied under s. 74(2) was breached, the terms of the contract having made it plain that the services were required for the purpose of towing.  The breaches of warranty were not pleaded explicitly although they were implied in the plaintiff’s pleadings.  At all events, that omission is of no great moment because the warranties implied by operation of s. 74 can be seen as the foundation of the plaintiffs’ claims for negligence and breaches of duty since they define obligations owed by the defendants to the plaintiff, and s. 68 can be relied on to overcome the exemption clause in the United Kingdom Standard Conditions.
  1. On behalf of the defendants it was submitted that, although the plaintiff is taken to be a ‘consumer’ by operation of s. 4B of the Trade Practices Act, the warranties under s. 74 of the Act do not apply in this case because the towing contract was ‘for or in relation to the transportation … of goods’ within the meaning of that expression in s. 74(3).   The word ‘goods’ is defined in s. 4 of the Trade Practices Act to include ships and minerals.  On behalf of the defendants it was argued that subsection 74(3) applies to this case in two ways:  first, the contract was one for or in relation to the transportation of goods (the ship) for the purposes of the business of the plaintiff;  and secondly the contract was one in relation to the transportation of goods (coal) for the purposes of a business carried on by the plaintiff or by the person for whom the coal was transported. 
  1. Elaborating their first argument, the defendants submitted that the Koumala was engaged in, or in relation to, ‘transportation’ of the ship for the purposes of the plaintiff’s shipping business;  that the towing contract provided that ‘“towing” is any operation in connection with the holding, pushing, pulling, moving, escorting, or guiding of the Hirer’s vessel and the expressions “to tow”, “being towed”, and “towage” shall be defined likewise’;  and that at the time the engines of the Pernas Arang were stopped, and the only means by which she could have been transported to the coal terminal was by the tugs.  Reliance was placed on the observations of Sheppard J. in Comalco Aluminium Limited v. Mogal Freight Services Pty Ltd (1994) 113 A.L.R. 677 that the proper approach to the construction of the words ‘contract for the supply … of services to a consumer’ in s. 74(1) is to construe the expression ‘broadly and in a common sense and commercial way’ and that a similar approach is required in relation to the words ‘a contract for or in relation to the transportation … of goods for the purposes of a business, trade …’ in s. 74(3):  p.689.  I was also referred to Wallis v. Downard-Pickford (North Queensland) Pty Ltd (1994) 179 C.L.R. 388 in which Toohey and Gaudron JJ. observed:

 

Section 74(3) must be read within the context of the Trade Practices Act as a whole and within Pt V “Consumer Protection” in particular.  The provision excludes from protection contracts for the transport of goods for the purposes of “a business, trade, profession or occupation” and thereby restricts its operation to persons acquiring services in a non-commercial capacity.  Section 4B(1)(b) defines a consumer of services to be a person who acquires services for less than $40,000 or “of a kind ordinarily acquired for personal, domestic or household use or consumption”.  In conjunction with this definition, the effect of s. 74(3) is to further restrict the scope of the term to exclude those services acquired for a commercial purpose for less than $40,000.  In the area of transportation and storage of goods, many contracts for commercial services would otherwise fall under the $40,000 limit and therefore be subject to the warranty implied by s. 74.  The services provided by a courier are an obvious example.  The exclusion from protection of these commercial services accords with the scheme of the Act but the converse would be true if s. 74(3) extended to deny protection in the case of personal, domestic and household services such as those provided in this case.  (pp. 399-400)

  1. In neither of those cases did the question that calls for decision in this case arise, i.e., was the contract in question one for or in relation to the transportation of goods?  Is towing a ship, even in the extended sense provided for in the contract, transporting the ship or her cargo?  In the Comalco case there was a contract for the carriage of goods and an issue that arose was whether, so far as the contract required the carrier to pack them, it was a contract for transportation.  In Wallis there was a contract for the carriage of goods and the issue was whether the goods were transported for the purposes of a relevant occupation.
  1. The width of the phrase ‘in relation to’ as explained in O'Grady v. Northern Queensland Co Ltd (1990) 169 C.L.R. 356 and PMT Partners Pty Ltd (In liq.)
    v. Australian National Parks and Wildlife Service (1995) 184 C.L.R. 301 was referred to on behalf of the defendants.  The words ‘in relation to’, read out of context, are wide enough to cover ‘every conceivable connexion’:  O'Grady at p. 367 per Dawson J.  But the connexion required is a question of degree.  There must be some ‘association’ which is ‘relevant’ or ‘appropriate’.  The question of the relevance or appropriateness of the connexion ‘is a question which cannot be divorced from the particular statutory context’:  P.M.T. at p. 331 per Toohey and Gummow JJ.  It was submitted on behalf of the defendants that in the present context, if it is concluded that the towing contract was not a contract ‘for’ the transportation of the plaintiff’s ship, it was undoubtedly a contract that had the necessary association with such transportation, that that  construction accords with a common sense and commercial approach to the statute, and that the consumer protection provisions contained within Part V of the Trade Practices Act were not enacted to apply in the arena of commercial shipping of coal to overseas ports.  But on the last point I should mention that in the Comalco case Sheppard J. noted that although s. 74 applies only in cases where there is a contract for the supply of services to a consumer, the section was capable of applying to the contract in question ‘because the amount of the freight payable under the contract was less than $40,000’:  p.689.  The contract in question was a contract for the carriage by sea of goods (aluminium coils) from Sydney to Auckland, i.e., the commercial shipping of goods to an overseas destination.
  1. A ship comes within the definition of ‘goods’ as that word is used in the Trade Practices Act, and so too a cargo of coal. But was the towing contract truly an agreement for the transportation of either the ship or any cargo that she held or was to load?  The relevant definition of the word ‘transportation’ in the Oxford English Dictionary, 2nd edition, 1989, vol. XVIII, p. 424, is ‘The action or process of transporting;  conveyance (of things or persons) from one place to another’.  ‘Transport’, the noun, is defined as ‘The action of carrying or conveying a thing or person from one place to another’ (p. 423), and ‘convey’, the verb, as ‘To transport, carry, take from one place to another’ (op. cit., vol. III, p. 875).  There is, I think, a distinction in ordinary language between carrying or conveying something and towing it.  Take the example of a motor truck:  the truck may tow another vehicle,  and in doing so it is not ordinarily regarded as transporting the other vehicle; whereas if the other vehicle is loaded onto the back of the truck it is regarded as being carried or transported by the truck.  A ship could be carried on another vessel, but when she is towed by a tug she is not being carried and therefore in my view not being transported in the ordinary sense:  see Kate Lewins, ‘What’s the Trade Practices Act Got To Do With It? Section 74 and Towage Contracts in Australia’, Murdoch University eLaw Journal, vol 13 no. 1, 2006, 58 at p. 66.  In my view then the towing contract was not a contract for the transportation of either the ship or any cargo (coal) carried by the ship.  Was it however a contract in relation to the transportation of ship or cargo?
  1. In Braverus Maritime Inc v. Port Kembla Coal Terminal Ltd & Anor (2005) 148 F.C.R. 68, a case arising from the collision between a ship and a bulk coal berth at a time when an unlicensed pilot provided to the ship owner by the port corporation, as required by law, was on duty, it was decided that there had been no contract between the ship owner and the corporation.  The following obiter dicta of the members of the Court (Tamberlin, Mansfield, and Allsop JJ.) are, however, of assistance in deciding the issue before me:

 

Whilst it is unnecessary to reach a final view on the matter, if we are wrong in our view as to the existence of a contract, we do not see s 74(3) of the TP Act as assisting the Corporation.  Section 74(3) of the TP Act is, relevantly, in the following terms:

 

(3)A reference in this section to services does not include a reference to services that are, or are to be, provided, granted or conferred under:

 

(a)a contract for or in relation to the 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; …

 

The pilotage services were provided (on this hypothesis) under a contract between Braverus and the Corporation.  That contract was not for the transportation of goods.  Was it a contract in relation to the transportation of goods for the purposes identified by the subsection?  We think not.  The purpose of s 74(3) was to ensure that the well-known law governing transportation of goods (by air, land or sea) and storage of goods was not to be radically amended by s 74, in particular given the well established insurance arrangements in respect thereof:  Explanatory Memorandum accompanying Trade Practices Revision Bill 1986 (Cth) at para 153;  see Heydon JD, Trade Practices Law, Vol 2 at [16.850].  With that purpose understood, there is no relevant relationship between the contract to provide the services and the transportation of goods.  It could be no more said that a contract to provide pilotage services related to the transportation of goods because it was a necessary precondition to get the ship to the berth, than it could be said that a contract to repair the ship before sailing related to the transportation of goods because, without the repairs, the ship would not sail.  (p. 118)

  1. In my respectful view that analysis is correct, and by the same process of reasoning one must conclude that there is no relevant relationship between a contract to provide towing services and the transportation of goods. The towing contract in this case was to provide those services under the ship’s master on the pilot’s advice. The connexion between the towing contract and the transportation of goods is no less remote than that between the contract to provide the pilot’s services and the transportation of goods or that between the repairer’s contract and the transportation of goods. There is a connexion, but one lacking a relevant relationship, such as exists in the case of the courier. There is no reason to conclude that the purpose of s. 74(3) extended to removing contracts like towing contracts from the purview of s. 74(1) and (2).
  1. It follows that the defendants cannot rely on the United Kingdom Standard Conditions, since by operation of s. 68 the exemption clause is void. The plaintiff has established the defendants’ liability for breach of the towing contract and negligence: in short, the services provided to it were not rendered with due care and skill, as I have explained. It is not strictly necessary for me to go further in considering any application the exemption clause in the United Kingdom Standard Conditions may have had in this case, but it is desirable that I record my findings on that subject.
  1. The defendants rely on clauses 1, 3, and 4 of the United Kingdom Standard Conditions asserting that the collision occurred ‘whilst towing’ within the meaning of that expression in the conditions, that the Koumala was in a position to receive orders direct from the Pernas Arang to pick up ropes or lines when the collision occurred, and so the defendants are not liable to the plaintiff. 
  1. The determination of the issue concerning the exemption clause in the United Kingdom Standard Conditions rests of course on the application of a correct construction of the relevant provisions of the Conditions, in particular the definitions in clause 1(b)(i) and (iv) and clause 4(a)(i), to the facts of the case. I was referred to a number of cases in which those provisions had been considered, and in particular the expression ‘whilst towing’. The outcome of each case turned upon its own facts, but in the reasons given by the judges observations relevant to the issues in this case were made.
  1. It should first be noted that the expression ‘whilst towing’ as it is defined in the Conditions enlarges the notion of what in ordinary language, and indeed at common law, would be regarded as the beginning of a towing operation: see The Clan Colquhoun [1936] P. 153, and Simon Rainey, The Law of Tug and Tow, 1996, p. 56. 
  1. In a case that has factual similarities to this one, The Uranienborg [1936] P. 21, in which a tug travelling too fast as she approached the ship she was to assist through a line of buoys (a barge tier) failed to reverse her engines in time and collided with the ship, Sir Boyd Merriman P. referred to the word ‘position’ in the definition of ‘whilst towing’ and said that he doubted whether it was ‘only used in the sense of local situation,  I think it involves the conception of the tug being herself in a condition to receive and act upon the orders’.  His Lordship observed that the orders a tug is to be in a position to receive are not ‘orders generally’ but the specific orders referred to in the definition, and added, ‘I think that that must have some reference to the intention of those on board the ship to give those orders, and to the readiness of those on board the tug to receive them’:  p. 27.  The Uranienborg had not finished discharging.  She lay alongside a wharf, and at the time of the collision neither pilot nor boatmen were on board so that she was not ready to give the relevant orders to the tug, but there was no evidence that anybody on the tug, from the master downwards, was even thinking in terms of ropes and lines at the material time.  At the moment the collision occurred ‘they were not thinking about, and had not begun to expect, an order to pick up ropes or lines.  On the contrary, all that the master was thinking of at that moment was the correction of his own errors in going through those barge tiers much too fast and in trying to avoid collision’:  p. 28. 
  1. Herring C.J. in Australian Steamships Pty Ltd v Koninklijke-Java-China Lynen [1955] V.L.R. 108 construed the word ‘position’ in the definition as Sir Boyd Merriman had: 

…the orders that a tug is to be in a position to receive are orders which can only be carried out when the tug is in a state of readiness, and this means both correctly positioned so far as the vessel is concerned and with everything ready on the tug itself to pick up the necessary ropes or lines.  In my view the word ‘position’ is not used solely with regard to matters of geography where the tug is placed vis-à-vis the vessel to be towed.  This comes into the matter, of course, but there is also to be considered the question of the tug’s readiness to get on with the tow.  (p. 112)

  1. In The Apollon [1971] 1 Lloyds Rep. 476, Brandon J. referred to previous decisions concerning the definition and observed:

 

It seems to me that authorities of this kind are only valuable in so far as it is possible to extract from them some general principle.  In so far as they are decisions upon the facts of the particular cases, which were all different from the facts of this case, while it is helpful to see how other Judges approached the matter, it does not seem that the cases assist very greatly.  However, I believe that it is possible to extract from these cases taken together certain general principles which I would state in this way.  It seems to me that, for a tug to be in a position to receive orders direct from the hirer’s vessel to pick up ropes or lines, three conditions must be fulfilled.  The first condition is that the situation is such that those on board the tug can reasonably expect the ship to give the tug an order to pick up ropes or lines.  The second condition is that the tug is ready to respond to such orders if given.  The third condition is that the tug should be close enough to the ship for the order to be passed direct:  in other words, that the tug should be within hailing distance.  (p. 480)

  1. Referring to the necessity for the tug to manoeuvre after having received orders Brandon J. said:

 

It seems to me that, in most cases, when an order is given to a tug to connect to a ship, it will be necessary for the tug to carry out certain manoeuvres in order to execute the order.  Those manoeuvres may involve her in turning round a right angle or 180 deg. or even more, or they may involve her in steaming round the ship’s bows or stern.  There are infinite manoeuvres one can visualise a tug having to execute in such a situation when such an order is given.

 

…  I cannot see that the fact that a tug has to manoeuvre in some way in order to carry out an order when given shows that she is not in a position to receive that order.  To my mind it is normal that she should have to make certain manoeuvres after receiving an order.  (p. 480)

  1. Mr Rainey commented on those passages in the judgment of Brandon J. as follows:

 

It is submitted that the statement of the law in The Apollon correctly summarises the effect of previous authorities.  While certain commentators (e.g. Kovats, Law of Tugs and Towage (1980) Barry Rose Publishers, p. 43) have in the past criticised the requirement that the tug be within “hailing distance” of the tow by reference to the possibilities of VHF and R/T communication, such criticism seems misplaced.  The towage service is to commence under Clause 1(b)(iv) of the U.K. Standard Conditions when the tug, in all practical respects, is alongside and at the disposal of the tow.  To extend that state of disposal to the position of the tow several miles out on her approach run in to the tow is both unrealistic and fails to give the meaning of the words “to receive orders direct from the Hirer’s vessel” (emphasis supplied).  The epithet “direct” signifies the close proximity and immediacy of preparation between tug and tow which Brandon J. described as being within hailing distance.  Such, realistically and commercially, is when the towage service in fact begins.  (op. cit., p. 61)

  1. In answer to the plaintiff’s contention that the Koumala was not in a position to receive orders from the Pernas Arang because of the steering failure it was argued for the defendants first that the Koumala had in fact received orders and was in the course of carrying them out when the steering failed, secondly that it is necessary to construe the definition of ‘whilst towing’ having regard to the terms of the United Kingdom Standard Conditions as a whole, and thirdly, if the term ‘position’ is a reference to both the geographic and functional position of a tug, the ‘position’ of the tug should be considered at the time the order relied on was given.  Those contentions rest upon the premiss that the order given by Captain Roscoe to make fast starboard shoulder and starboard quarter was an order of the kind referred to in the definition of the expression ‘whilst towing’.  In my view that argument must fail because Captain Roscoe’s order was a general order of the kind referred to by Merriman P. in The Uranienborg and not one of the specific orders referred to in the definition.  The true question for decision in this case is whether at any time after that general order was given and before the steering failure the Koumala was in a position to receive orders direct from the Pernas Arang to commence pushing, holding, moving, escorting, or guiding her or to pick up ropes or lines.  The Koumala was not of course in such a position after the steering failed up to the moment she struck the Pernas Arang.
  1. On behalf of the defendant considerable reliance was placed upon the decision in The Impetus [1959] P. 111.  In that case there was a collision in the River Tyne between the motor vessel Blenheim and the motor tug Impetus, while Impetus was turning in the river to come on a parallel course close to the Blenheim for the purpose of receiving the Blenheim’s line.  Shortly before the collision the Blenheim, with a pilot on board, had reduced her speed from slow to dead slow ahead and was proceeding on her normal up-river course.  The Impetus was one of two tugs waiting for the Blenheim.  The Impetus was heading down-river.  The Blenheim sounded a signal in accordance with local practice to show that she was ready for tugs.  The Impetus let go her moorings and moved at some speed towards the Blenheim, passing between her and the shore.  The Impetus attempted to turn hard-a-starboard and to come on a parallel course close to the Blenheim for the purpose of receiving the latter’s line.  The Impetus failed to complete her turn and struck the starboard side of the Blenheim, doing considerable damage to her.  Karminski J. concluded that it was clear on the evidence that, at the time of the collision, the Impetus was in a position to receive the order to heave the Blenheim’s line, but was not in a position until after the collision to carry out such an order.  His Lordship concluded that the fact that the Blenheim gave no order was ‘in a sense, irrelevant.  The question is whether at the collision the Impetus was in a position to receive orders from the Blenheim to pick up ropes or lines had such orders been given’:  p. 118.  His Lordship came to the conclusion that the exemption clause ‘means what it says and that the clause attached when the tug is in a position to receive orders to pick up ropes or lines.  This presupposes that the ship is ready to give such orders, if they are required’.  His Lordship added that he could not accept a submission that ‘a tug can thereafter put herself outside the conditions by getting into a position which may for a short period make it impossible for her to carry out such orders.  To import such a condition when the tug is already in attendance on the ship and therefore in danger of incurring damage would … be without justification’.  His Lordship accordingly found that the collision occurred whilst towing:  p. 121.
  1. On my assessment of the facts of this case the Koumala was not, at the time when the steering failed, in a position to receive orders from the Pernas Arang to commence pushing, holding, moving, escorting, or guiding the vessel or to pick up ropes or lines.  She was manoeuvring to put herself in that position alongside the Pernas Arang but had not reached it at the time when the steering failed.  While it is not material that at that time the orders had not come from the Pernas Arang, although she was on the evidence of the boatswain ready to give them, the point is that the Koumala was not in a position to receive any such orders up to the moment when the steering failed – or after it failed and up to the moment the collision occurred. 
  1. On behalf of the plaintiff the evidence of the boatswain of the Pernas Arang that as the Koumala made her final approach to the ship there was only one member of the crew of the tug at the bow was relied on.  That evidence, if accepted, showed, it was argued, that the Koumala was not in a position to receive the relevant orders from the Pernas Arang.  As I have said, I accept the evidence of the boatswain as correct.  That unpreparedness can, in my view, also be relied upon to defeat the exemption clause in this case.  A similar argument was advanced to Brandon J. in The Apollon:  it was submitted that the tug in that case could not be found to be ready to respond to an order because her crew were not at stations but assembled on the afterdeck chatting.  Rejecting that assessment of the evidence, his Lordship found that the master was on the bridge and accepted the evidence as to the position of other members of the tug’s crew given by witnesses from the tug.  His Lordship added that, on the assumption that he had taken the wrong view of the facts, he did not think ‘it would really make any difference’.  That was because even if the crew were not at their stations it would make no more than half a minute or one minute’s difference to the response to an order.  If the tug was not in a position to receive an order at the time when the order was given because it would take half a minute or a minute for her to get into a state of complete readiness, then it would follow that she was in such a position after that half minute or minute had elapsed when she had put herself in a state of complete readiness:  [1971] 1 Lloyd’s Rep. 476 at p. 481.  The same considerations do not apply to this case, because the Koumala was never able to put herself in a position to receive an order once the steering failed.
  1. I conclude then that before the collision the Koumala was not in the requisite position before, when, and after the steering failed to respond to any of the specific orders referred to in the definition of the expression ‘whilst towing’.  The defendants therefore would not have been able to rely upon the exemption clause in the United Kingdom Standard Conditions even if it had not been rendered void by operation of s. 68 of the Trade Practices Act.
  1. There will be judgment for the plaintiff in both proceedings. I shall invite further submissions on the form of the principal orders, interest, and costs.
Close

Editorial Notes

  • Published Case Name:

    PNSL Berhad v Dalrymple Marine Services Pty Ltd and PNSL Berhad v The Owners of the Ship 'Koumala'

  • Shortened Case Name:

    PNSL Berhad v Dalrymple Marine Services Pty Ltd

  • MNC:

    [2007] QSC 101

  • Court:

    QSC

  • Judge(s):

    Helman J

  • Date:

    19 Apr 2007

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2006] QSC 32110 Oct 2006-
Primary Judgment[2007] QSC 101 (2007) 210 FLR 24319 Apr 2007Trial of proceedings for damages for negligence and breach of warranty under the TPA, arising from collision of tugboat and ship at sea; defendant tugboat unable to rely on UK Standard Conditions because the collision did not occur "whilst towing"; judgment for the plaintiff: Helman J.
Appeal Determined (QCA)[2007] QCA 429 [2008] 1 Qd R 51130 Nov 2007Appeals dismissed with costs; appeal against findings at trial of negligence on the part of tugboat arising from a collision at sea with a ship; the learned judge at first instance was correct in concluding that towing had not commenced and the collision did not occur "whilst towing" within the protection of the Standard Conditions: Williams and Muir JJA and Daubney J.
Special Leave Refused (HCA)[2008] HCATrans 24618 Jun 2008Special leave refused with costs; decision of QCA on question of whether a section 74(3) TPA was engaged is not attended by doubt and therefore the matter does not provide a suitable vehicle to explore questions of construction and application of the United Kingdom Standard Conditions: Gummow ACJ, Hayne and Kiefel JJ.

Appeal Status

Appeal Determined - Special Leave Refused (HCA)

Cases Cited

Case NameFull CitationFrequency
Australian Steamships Pty Ltd v Koninklijke-Java-China Lynen [1955] VLR 108
2 citations
Jump To
Cite 1 - [1955] VLR 108
Cite 2 - [1955] VLR 108
Braverus Maritime Inc v Port Kembla Coal Terminal Ltd & Anor (2005) 148 FCR 68
2 citations
Jump To
Cite 1 - (2005) 148 FCR 68
Cite 2 - (2005) 148 FCR 68
Comalco Aluminium Limited v Mogal Freight Services Pty Ltd (1993) 113 ALR 677
1 citation
Jump To
Cite 1 - (1993) 113 ALR 677
Comalco Aluminium Limited v Mogal Freight Services Pty Ltd (1994) 113 ALR 677
1 citation
Jump To
Cite 1 - (1994) 113 ALR 677
Dixon v Sadler (1839) 5 M. & W. 405
2 citations
Jump To
Cite 1 - (1839) 5 M. & W. 405
Cite 2 - (1839) 5 M. & W. 405
Dixon v Sadler (1839) 151 ER 172
2 citations
Jump To
Cite 1 - (1839) 151 ER 172
Cite 2 - (1839) 151 ER 172
Great China Metal Industries Co Limited v Malaysian International Shipping Corporation, Berhad (1998) 196 CLR 161
1 citation
Jump To
Cite 1 - (1998) 196 CLR 161
Great China Metal Industries Co Ltd v Malaysian International Shipping Corporation Berhad (1996) 196 CLR 191
1 citation
Jump To
Cite 1 - (1996) 196 CLR 191
Huddart Parker Ltd v Cotter (1942) 66 CLR 624
2 citations
Jump To
Cite 1 - (1942) 66 CLR 624
Cite 2 - (1942) 66 CLR 624
O'Grady v Northern Queensland Co Ltd (1990) 169 C.L.R, 356
2 citations
Jump To
Cite 1 - (1990) 169 C.L.R, 356
Cite 2 - (1990) 169 C.L.R, 356
PMT Partners Pty Ltd v Australian National Parks and Wildlife Service (1995) 184 CLR 301
1 citation
Jump To
Cite 1 - (1995) 184 CLR 301
The Apollon [1971] 1 Lloyd's Rep 476
3 citations
Jump To
Cite 1 - [1971] 1 Lloyd's Rep 476
Cite 2 - [1971] 1 Lloyd's Rep 476
Cite 3 - [1971] 1 Lloyd's Rep 476
The Clan Colquhoun [1936] P 153
2 citations
Jump To
Cite 1 - [1936] P 153
Cite 2 - [1936] P 153
The Impetus [1959] P 111
2 citations
Jump To
Cite 1 - [1959] P 111
Cite 2 - [1959] P 111
The Uranienborg [1936] P 21
2 citations
Jump To
Cite 1 - [1936] P 21
Cite 2 - [1936] P 21
Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388
2 citations
Jump To
Cite 1 - (1994) 179 CLR 388
Cite 2 - (1994) 179 CLR 388

Cases Citing

Case NameFull CitationFrequency
PNSL Berhad v Dalrymple Marine Services Pty Ltd[2008] 1 Qd R 511; [2007] QCA 4291 citation
1

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