South Sea Cruises Ltd v Mody [2014] FJCA 71; ABU0034.2010 (29 May 2014)

IN THE COURT OF APPEAL
ON APPEAL FROM THE HIGH COURT

CIVIL APPEAL NO. ABU0034 of 2010
(High Court Civil Action No. HBC 224 of 2008)

BETWEEN:

SOUTH SEA CRUISES LIMITED
Appellant

AND:

SAMSUL MODY
Respondent

Coram : Calanchini P

Lecamwasam JA

Kotigalage JA

Counsel : Mr J Apted for the Appellant

Mr M Thompson with Mr R Maopa for the Respondent

Date of Hearing : 21 November 2013

Date of Judgment : 29 May 2014

JUDGMENT

Calanchini P

[1] I agree with the orders proposed by Kotigalage JA. Although it was appropriate for the learned High Court Judge to consider first whether the Convention applied to the facts of the case as a preliminary issue, the learned Judge had wrongly concluded that liability could only be limited if there was a collision at sea. The real issue was whether the ship owner could limit its liability by showing that the injury suffered by the Respondent was not due to the actual fault or privity of the Appellant. I agree with the conclusion of Kotigalage JA on that matter. The Appellant failed to establish the absence of actual fault or privity.

[2] I also agree that, assuming the Appellant's case was at its best for the application by summons, if the affidavit evidence was insufficient, the Appellant's position would not be any stronger in the trial of the action. I would dismiss ground 3 for the same reason as ground 2. I have nothing further to add on ground 4 and agree that there was no basis for ordering indemnity costs. I also agree that the Appellant should pay the costs in the court below. I agree that the summons and the Writ were correctly dismissed although for very different reasons from the reasons relied upon by the learned Judge in the court below.

Lecamwasam JA

[3] I agree with the reasons and conclusion of Kotigalage JA.

Kotigalage JA

[4] A Writ of Summons was filed on 20 October 2008 in the Lautoka Registry of the High Court. The Writ related to an incident that occurred on 19 February 2006 in which the Respondent (Mr Mody) allegedly consumed caustic liquid out of a bottle labeled as "Water" whilst he was on a vessel named SV Sea Spray owned by South Sea Cruises Limited the Appellant in this case (South Seas). The Respondent (Mody) was on a holiday in Fiji with his family. As a result of consuming caustic soda, Mody suffered chemical burns to his mouth, throat, esophagus and stomach. He sued South Seas in the Supreme Court of New South Wales in Australia.

[5] The Appellant being the owner of the SV Sea Spray sought in the Writ to have its limitation of liability determined pursuant to Section 178(1) of the Marine Act, 1986, in respect of the injury suffered by Mody.

[6] South Seas claimed inter-alia in the Writ:

[i] A Declaration that by reason of the Marine Act, 1986, adopting the International Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships and the Protocol Amending the International Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships and pursuant to Section 178(1) of the Marine Act, 1986, it is not answerable in damages beyond Special Drawing rights of 62001 converted into Fiji Dollar currency at the time of making such Declaration in respect of the injury suffered by the Defendant on 19 February 2006 on board the ship SV Seaspray.

[7] On 22 December 2008, the Appellant filed a summons for Decree of Limitation of Liability and sought the following Orders:

[i] A Declaration that by reason of the provisions of the Marine Act, 1986 adopting the International Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships and the Protocol Amending the International Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships and pursuant to Section 178(1) of the Marine Act, 1986, it is not answerable in damages beyond Special Drawing Rights of 62001 converted into Fiji Dollar currency at the time of making such Declaration in respect of the injury suffered by the Defendant on 19 February 2006 on board the ship SV Seaspray.

[ii] An Order that the time for filing further pleadings be extended until the hearing and determination of the Plaintiff's application for a decree of limitation of liability.

[8] An Affidavit in Support sworn on 10 December 2008 by Christopher James Nixon CEO and Managing Director was filed by the Appellant.

[9] An Affidavit in Response sworn on 24 February 2009 by the Respondent and a further Affidavit sworn by Vrege Kolokossian Solicitor for the Respondent on 17 February 2009 were filed on behalf of the Respondent.

[10] Further Affidavits sworn on 24 March 2009 by Daniel Heffernan Operations Manager of the Appellant and by Nasoni Tamani who was then the Hospitality Manager of the Appellant were filed in support of the summons.

[11] By consent the parties adopted the record of the proceedings before Madam Justice Phillips on 27 March 2009. Accordingly, having heard the summons the Learned High Court Judge delivered the Interlocutory Judgment on 20 April 2010 dismissing the summons and striking out the Writ. Leave to Appeal was granted on 26 of August 2010 by Marshall JA.

[12] The appeal is against the Interlocutory Judgment delivered on 20 April 2010 on the following grounds:

1. The Learned Judge erred in law in dismissing the Plaintiff/Appellant's application for a decree of limitation of liability by holding that Division 2 of Part IX of the Marine Act 1986 and the Limitation of Liability Convention contained in Schedules 6 and 7 of the Marine Act, 1986 only apply in situations where personal injury occurred as a result of a collision between two vessels.

2. The Learned Judge erred in law and in fact by failing to find that the injury to the Defendant, Samsul Mody, occurred without the actual fault or privity of the Plaintiff, South Sea Cruises Limited and that pursuant to Section 178(1) of the Marine Act, 1986, the Plaintiff/Appellant was not answerable in damages beyond Special Drawing Rights of 62,001 converted into Fiji Dollar currency at the time of making such Declaration in respect of the injury suffered by the Defendant/Respondent on 19 February 2006 on board the ship SV Seaspray.

3. The Learned Judge erred in law in dismissing the Writ of Summons by holding that Division 2 of Part IX of the Marine Act, 1986 and the Limitation of Liability Convention contained in Schedules 6 and 7 of the Marine Act, 1986 only apply in situations where personal injury occurred as a result of a collision between two vessels.

4. The Learned Judge erred in law and in fact and failed to exercise his discretion judicially by awarding indemnity costs against the Plaintiff in that:

(a) the Defendant did not seek indemnity costs;

(b) the Learned Judge failed to give notice to the Plaintiff that he was considering awarding indemnity costs against the Plaintiff;

(c) the Learned Judge did not give reasons or sufficient reasons for awarding indemnity costs and/or did not specify the conduct of the Plaintiff that would justify the awarding of indemnity costs.

(d) there were in any event no grounds upon which indemnity costs should have been awarded against the Plaintiff.

[13] Subsequent to the filing of Grounds of Appeal and prior to hearing this appeal, the Respondent filed a motion dated 4 February 2013 and moved this court for Leave to adduce fresh evidence. This application was made on the basis that it was necessary to lead new evidence to enlighten the court that the Appellant did not file any document to support the assertions in the Affidavits filed on behalf of the Appellant; i.e. Affidavits sworn by Christopher James Nixon, Daniel Hefferman and Nasoni Tamani. Having heard this application, Basnayake JA by his Judgment dated 30 May 2013 it was held that there was no merit in the application and it was dismissed. Calanchini P and Chandra JA concurred.

[14] Now I deal with the Grounds of Appeal to consider the merits. At the hearing of the appeal, Mr J Apted and Mr M Thompson made their oral submissions. Both parties have also filed written submissions.

[15] The Respondent submitted that he does not wish to be heard as to the Appellant's submissions on the question of collision (1st Ground of Appeal) and with regard to the costs (4th Ground of Appeal). The Respondent limited his submissions to the second Ground of Appeal i.e. "without the actual fault or privity of the owner" and the 3rd Ground of Appeal. However, the Appellant made submissions on the first and fourth Grounds of Appeal and I am of the view that the said submissions should be considered for the completeness of this Judgment.

[16] 1st Ground of Appeal

(a) The Appellant argued that the finding by the Judge in the court below that the Limitation of Liability only applies in situations where personal injury occurred as a result of a collision between two vessels is wrong.

(b) The relief sought by the Appellant was to limit its liability pursuant to Section 178(1) and (2) of the Marine Act, 1986:

"Section 178–(1) Where a claim is made against or apprehended by a person in respect of liability of that person which that person may limit in accordance with the applied provisions of the convention he may apply to the Court to determine the limit of liability in accordance with those provisions.

(2) Where an application is made under sub section (1) the Court may –

(a) determine the limit of the applicant's liability; and

(b) make such Order or Orders as it thinks fit in respect of the constitution, administration and distribution in accordance with the applied provisions of the Convention, of a limitation fund for the payment of claims in respect of which the applicant is so entitled to limit his liability."

[17] The Learned Judge, in the court below held that Part IX of the Marine Act, 1986 applies only in cases of collisions between vessels; which was challenged by the Appellant. The Appellant submitted each Division in Part IX operates independently of each other and each Division sets out rights and obligations pertaining to that Division. The applicable division of Part IX for the Respondent's situation is Division 2. Further it was submitted Section 177 of the Act adopts the Limitation of the Liability Convention. Pursuant to Section 5 of the Act, the applicable convention is the Limitation of Liability of the Owners of Sea-going vessels signed in Brussels on 10 October 1957 and its amendments. Unless, such amendments are not accepted by Fiji.

[18] It was submitted by counsel for South Seas whilst considering Section 172(2) and Article 1(a) of the 1957 Convention it is clear the finding of the High Court Judge is wrong by stating that the Convention applies only when personal injury is suffered as a result of a collision between vessels.

[19] Article 1(a) of the 1957 Brussels Convention states as follows:

"(1) The owner of a sea-going ship may limit his liability in accordance with Article 3 of this Convention in respect of claims arising from any of the following occurrences unless the occurrence giving rise to the claim resulted from the actual fault or privity of the owner;

(a) loss of life of, or personal injury to, any persons being carried in the ship, and loss of, or damage to, any property on board the ship".

Pursuant to Article 1(a) of the 1957 Brussels Convention, Fiji being a signatory, instead of deciding on the aspect of collision the Learned Judge should have considered the principle of the actual fault or privity of the Owner.

[20] Although the learned Judge quite properly considered as a preliminary issue whether the injury must result from a collision at sea between ships, I consider that he erred in his conclusion. The limitation of liability that can be claimed under the convention is not restricted to injury and loss resulting from a collision at sea between ships. On this issue the Appellant is successful.

[21] 2nd Ground of Appeal
It was agreed by the Appellant in his submission that the onus of establishing that the alleged injury suffered by the Respondent occurred without the Appellant's actual fault or privity lies on the Appellant. In the case of BHP Trading Limited (second Plaintiff) & Others v. Oceaname Shipping Ltd and Another [1996] FCA 1415 (unreported No. 271 of 1996; 24 April 1996) Hill J. cited the case of James Patrick and Co. Ltd v. The Union Steamship Co. of New Zealand Ltd [1938] HCA 22; (1938) 60 CLR 650 at 670 per Dixon J,:

"Actual fault or privity implies some culpability on the part of the owner. It may consist in being privy to the neglect, unskilfulness, or improper act or omission of a servant or agent. It may be the neglect or the imprudent or wrongful act of the ship owner himself. But the ship owner must in some way be to blame in respect of an act or omission on his own part or of his privity to the act of omission of someone else. A failure to make himself aware of what he ought to know is or may be an actual fault. To limit his liability he must show that he himself has not in any such manner been blameworthy in respect of a cause of the loss or damage." (emphasis mine)

[22] In the same case at page 654 Dixon J. further stated "unless (the shipowners) discharge the burden of excluding actual fault or privity on their part, they cannot obtain a decree for the limitation of their liability, and, if a given fact or state of facts would stand in the way of their doing so, it is enough that its existence appears probable or even to be a reasonable supposition. It is not necessary that it should be positively found." It is a well established principle that the ship owner has the responsibility of proving that there was no actual fault or privity on the part of the ship owner which is a matter of fact. It should be established prima facie before the court when an application for limitation of liability is made.

[23] The Appellant quoted the case of The Lady Gwendolen [1965] 2 ALL E.R. 283 and Compania Maritima San Basilo SA v. The Oceanus Mutual Under Writing Association (Bermuda) Ltd [1976] 3 ALL E.R. 243 and several other authorities to establish the meaning of "Actual fault or privity" and submitted that the Company's (Appellant) liability does not arise on the principle of actual fault or privity of the Shipowner.

[24] The Respondent too relied on the case of The Lady Gwendolen (supra) and quoted Winn J. who stated at page 298:

"First an owner who seeks to limit his liability must establish that although for the immediate cause of the occurrence he is responsible on the basis of respondeat superior; in no respect which might possibly have causatively contributed was he himself at fault. An established causative link is an essential element of any actionable breach of duty; therefore, "actual fault" in this context does not invariably connote actionable breach of duty. Second, an owner is not himself without actual fault if he owed any duty to the party damaged or injured which (a) was not discharged (b) to secure the proper discharge of which he should himself have done, but failed to do, something which in the given circumstances lay within his personal sphere of performance".

It was further stated at page 298:

"The matter is not determined by any discrimination between duties arising at common law and duties arising under a statute. Although an owner owed a duty which was not performed, nevertheless he may in any given case have delegated to another performance of his own duty; and if he has acted reasonably and with all proper care in making that delegation; and taking no action himself, he may be free from any actual fault; albeit not from liability where his delegate has been negligent."

It is clear from this statement that mere delegation of duty by the principal (owners) does not absolve him from liability for the negligent acts of the delegate. However, in order to avoid actual fault when a duty is delegated there should be clearly stated proper procedures and due supervision.

[25] To arrive at a conclusion in this case it is necessary for this court, (with the available evidence) to determine whether the ship owners have established that there was no actual fault or privity on their part with regard to the claim of Respondent. I concur with the submission made by the Respondent's counsel that the approach to weighing the evidence with regard to actual fault or privity of a company should be on the basis that the ship owners should ensure efficient management of the ship. It was the contention of the Respondent's counsel that there was no evidence placed before the court on this issue by the Respondent and now I deal with that submission.

[26] The evidence that the Appellant relied upon before this court was limited to the Affidavits filed by the following persons:

(a) Affidavit dated 19 December 2008 sworn by Christopher James Nixon – Managing Director of the Appellant Company (referred to as Nixon's Affiavit);

(b) Affidavit dated 24 March 2009 sworn by Daniel Heffernan – Operations Manager of the Appellant Company (referred to as Daniel's Company Affidavit);

(c) Affidavit dated 24 March 2009 sworn by Nasoni Tamani – Hospitality Manager of the Appellant Company (referred to as Nasoni's Affidavit).

[27] Consideration of Nixon's Affidavit

(i) In paragraph 8 Nixon states that he had read the incident report. However, he had failed to annex the copy of the incident report which is material to the incident. His statement with regard to the incident was based on the said report and his investigation;

(ii) I further find Nixon failed to detail in his Affidavit when and how the investigations were carried out by him. This is very critical to establish there was no actual fault or privity on the part of the Appellant;

(iii) Nixon stated in his Affidavit how Setareki Ratatagia Chef on board cleaned the Griller with caustic liquid. It is further stated the caustic liquid was filled into an empty water bottle. After cleaning the grill, Ratatagia kept the bottle near the main mast. Barbeque grill is located in the main mast and Nixon further stated in his Affidavit that the empty water bottle containing caustic liquid was placed in a "popular eating area". It was claimed by Nixon that by leaving the bottle containing caustic liquid near the barbeque grill which could be mistaken by the guests on board as water, the subsequent injury suffered by Mody was without the actual fault or privity of the Appellant. I do not agree. The inference that this court can draw is that the company was aware that Barbeque grill had been located in the eating area and that the cleaning of the grill would take place near the eating area.

The said failures and the facts cannot be accepted by this court for the reasons:

1. The Appellant failed to produce any procedural instructions circulated to the crew members with regard to use of cleaning material on board;

2. Ratatagia as admitted by the Appellant had only cooking experience and therefore it was the duty and responsibility of the Appellant to give necessary directives and instructions how the cleaning caustic liquid should be stored. Mere statement that it's the responsibility of the Chef not to leave the caustic liquid in the eating area in water bottle will not absolve the Appellant from actual fault for the reason that the duty and care of the passengers on board of SV Sea Spray lies with the Appellant.

[28] Daniel Hefferman's Affidavit

(a) Hefferman stated in his Affidavit that he was the Operation Manager. It was his responsibility to ensure that company policy and procedures were in place and that the workers were familiar with them. He further states in paragraph 4 that there was a procedure laid down by the Appellant for the ordering, dispensing and storing of the chemical agent which is used for cleaning the barbeque stove on board the vessel.

However, this Court cannot agree that it was the responsibility of the Chef to follow the instructions for use of the chemical issued by the agent. I find that:

(i) The Appellant failed to give his own instructions or make available a manual for the workers to ensure how the chemicals were used in accordance with necessary safety measures;

(ii) There is no evidence that either the supplier of the chemical agent trained the workers and/or the Appellant trained each of the workers with regard to the use of the chemical agent and how to take safety measures;

(iii) Although Herfferman affirms that he had carried out periodical checks on roughly a quarterly basis, no evidence was made available for such periodical checks. In the absence of evidence to support that there was a written procedure laid down, the Appellant's argument to establish that there was no fault or privity fails;

(iv) It is well established that Ratatagia was only the Chef and he did not possess any experience with regard to safety measures to be taken on usage of caustic liquid and the Appellant fails in this argument.

[29] Tamani's Affidavit

Tamani's Affidavit did not support the Appellant's contention. He had annexed his job description which does not reveal any responsibility with regard to ensuring that safety measures were taken with regard to usage of chemicals. The Appellant had failed in its duty of care.

[30] Considering all the evidence submitted to the Court it is abundantly clear that the Appellant failed to establish that there was no fault or privity which entitles the Appellant to claim the Limitation of Liability.

[31] The Appellant submitted that there is no evidence offered by Mody that Ratatagia's actions of decanting the caustic liquid in a water bottle in a popular eating area of the Seaspray was done without actual fault and/or privity of the Appellant. In this case admittedly the onus of establishing that there was no actual fault or privity lies with the Appellant owner of the Seaspray. The onus cannot be shifted to the Respondent Mody; specifically the Limitation of Liability claimed by the Appellant is subject to the proof of no actual fault or privity of the owner. The Appellant's submission fails.

[32] It is observed by this court that no Affidavit evidence from Mr Ratatagia or the crew on board who were present at the time of the incident was tendered. No explanation was given in this regard. As stated in the preceding paragraph [24] (i) of this Judgment, Nixon failed to annex the copy of the report thus he had failed to establish responsibility on the Chef Ratatagia. When all the evidence is considered the conclusion is that the Appellant failed to establish that the claim did not result from the actual fault or privity of the Appellant owner.

[33] I further conclude that the Appellant failed to establish it had taken safety measures by instructing, giving directions to its crew, and/or failed to have a code accessible by the crew giving them proper guidelines and directions to enforce same and which by implication could have avoided the subject incident. I further conclude that the Respondent's claim resulted from the actual fault or privity by the owner. As such my finding is that the Appellant cannot claim to limit its liability under Section 178(1) and (2) of the Marine Act 1986.

[34] My conclusions are supported by the statement made by Dixon J. in Patrick and Co. Limited v. Union Steam Ship Co. of New Zealand Limited [1938] HCA 22; (1935) 60 CLR 650 at 654:

"..........the burden of proof in the present proceedings is upon the opposite party, the owners of the Caradale. Unless they discharge the burden of excluding actual fault or privity on their part, they cannot obtain a decree for the limitation of their liability, and if a given fact or state of facts would stand in the way of their doing so, it is enough that its existence appears probable or even to be a reasonable supposition. It is not necessary that it should be positively found." (emphasis mine)

3rd Ground of Appeal

[35] The Learned Judge in court below had dismissed the Writ of Summons filed by the Appellant. The Learned Judge in his Judgment dated 20th April 2010 in paragraph (17) states:

THE WRIT

The Writ claims the same principal relief as the Limitation Application so it too should be dismissed and I do so as an exercise of this court's inherent jurisdiction to ensure that its process is not abused."

[36] In addition to inherent jurisdiction there is a procedure for striking out summons a claim in Order 18 Rule 18 of the High Court Rules which states:

"18-(1) The court may at any stage of the proceedings order to be struck out or amended any pleadings or the indorsement of any writ in the action, or anything in any pleading or in the indorsement, on the ground that-

(a) it discloses no reasonable cause of action or defence, as the case may be; or

(b) it is scandalous, frivolous or vexatious; or

(c) it may prejudice, embarrass or delay the fair trial of the action; or

(d) it is otherwise an abuse of process of the court;

and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

(2) No evidence shall be admissible on an application under paragraph (1) (a).

(3) This rule shall, so far as applicable, apply to an originating summons and a petition as if summons or petition, as the case may be, were a pleading.

[37] The Learned Judge in the court below as stated in paragraph [32] had dismissed the Writ on the basis that the same principle relief was claimed by the Appellant in the Writ of Summons.

[38] It is important to determine whether the Learned Judge in the court below could have dismissed the Writ of Summons by using the courts inherent powers or for that matter pursuant to Order 18 Rule 18 in the absence of an application by the Respondent. Although there had been no formal application by the Respondent, it was deposed in the Affidavit dated 17 February 2009 by Wrege Kolokossain Solicitor for the Respondent in paragraph 7:

"7) The summons for Decree of Limitation of Liability filed in the High Court of Fiji at Lautoka seeks to agitate issues which are already properly before the Supreme Court of New South Wales and are an attempt by South Sea Cruises to circumvent the jurisdiction of the Supreme Court of New South Wales and are therefore an improper use of the process of this Honorable Court."

[39] I have determined that ground 2 fails on account of the Appellant's failure on the evidence in court below to establish that the injury suffered by the Respondent was not due to the actual fault or privity of the ship owner. As a result the Appellant was not entitled to the declaration sought in the summons. The same declaration was sought in the Writ. I accept that the Appellant put before the court below all the evidence that was available to it in Affidavit form. If that evidence did not establish the absence of actual fault or privity, the Appellant's position was not going to get any stronger in the event that the action commenced by Writ was permitted to proceed. Although for different reasons, the learned Judge was correct when he struck out the Writ.

[40] Because of my findings on Ground 2, the claim in the Writ cannot be sustained. It was stated in the case of Attorney General of Duchy of Lancaster v. L. and N. W. Ry Co. [1892] 3Ch 274 C.A. that the summary procedure under this rule can only be adopted when it can be clearly seen that a claim or answer is on the face of it "obviously unsustainable" which principle is relevant to this case on the determination made on Ground 2 of the appeal and applied to Ground 3.

[41] It is my view that if the Writ is allowed, there will be great prejudice caused to the Respondent in his case before the Supreme Court of New South Wales and I find that exercising the discretion of the court below was justifiable.

4th Ground of Appeal
[42] Further submissions were made by the Appellant's counsel on the issue of indemnity costs. The Appellant claimed that the Learned Judge erred in law by awarding costs on indemnity basis and that indemnity costs should be awarded only in the case of blame-worthy, reprehensible and exceptional circumstances. The Appellant relied on the principle applied by Scott J. in the case of Prasad v. Divisional Engineer Northern (No. 2) [2008] FJHC 234 (unreported HBJ 3 of 2007; 25 September 2008).

[43] I agree with the submissions made by the Appellant. The Appellant had made its application for a decree of limitation of liability in terms of the established procedure and it is not reprehensible conduct. An application for indemnity costs was not made by Mody and no notice was given to the Appellant before His Lordship made the indemnity costs order. As such I conclude that the Learned Judge erred in law by awarding indemnity costs.

[44] Now I turn to the Judgment in the court below. The Learned Judge concluded that the Appellant was not entitled to a declaration limiting its liability pursuant to Section 178 (1) and (2) on the basis that Mody's injuries were not as a result of a collision between the Sea Spray and another vessel. Although that conclusion was not correct, I would uphold his decision to dismiss the summons and the writ on the basis that the Appellant is not entitled to rely on the limitation since it has failed to establish that the injuries to the Respondent were not due to actual fault or privity on the part of the Appellant. I would allow the appeal on the question of indemnity costs.

Orders of Court

(a) The Appeal is dismissed other than on the question of indemnity costs.

(b) The order for costs made in the court below is varied by substituting an order that the Appellant pay to the Respondent costs summarily fixed in the sum of $2,000.00 within 28 days from the date of this Judgment.

(c) Each party should pay their own costs in this appeal.

.........................................
Hon. Mr Justice Calanchini
PRESIDENT, COURT OF APPEAL

........................................
Hon. Mr Justice Lecamwasam
JUSTICE OF APPEAL

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Hon. Mr Justice Kotigalage
JUSTICE OF APPEAL