PNG Ports Corporation Ltd v Star Ships (PNG) Ltd [2011] PGNC 175; N4586 (22 March 2011)

N4586

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 134 OF 2010

BETWEEN:

PNG PORTS CORPORATION LIMITED
First Plaintiff

AND:

MATHIAS GEOCTAU
Second Plaintiff

AND:

NATIONAL MARITIME SAFETY AUTHORITY
Third Plaintiff

AND:

STAR SHIPS (PNG) LIMITED
Defendant

Waigani: Hartshorn J.
2011: 23rd February
: 22nd June

Trial

Facts:

The vessel MV Kuana, went aground in May 2009 in or about the Port of Lae. The Plaintiffs, by originating summons, seek amongst others orders that they are authorised to remove, destroy, sell or moor the MV Kuana pursuant to provisions of the Harbours Act, Merchant Shipping Act and National Court Rules. The defendant Star Ships (PNG) Ltd, opposes the orders sought.

Held:

1. The defendant's submission that there was no delegated power by the previous Harbours Board to the new PNG Ports Corporation cannot be sustained because PNG Ports Corporation Ltd had the requisite delegated authority under the 2005 and 2010 delegations.

2. The word "vessel" as referred to in sections 39 and 40 Harbours Act, can include a ship or boat that is not floatable or moveable. The first and second plaintiffs are entitled to rely upon the provisions that they have in the originating summons and their demand of 26th November 2009.

3. The MV Kuanua is located within the limits of the Port of Lae as defined in the Gazettal Notice G1 dated 1st January 1977.

4. The plaintiffs have properly made out that the MV Kuanua is an obstruction, hindrance or danger to navigation.

5. The defendant's conduct has been unreasonable such that it is appropriate that the court exercise its discretion to order that the costs of the plaintiffs' of the proceeding are to be paid by the defendant on a solicitor and client basis.

Case cited:

Paki v. Motor Vehicle Insurance Ltd (2010) SC1015

Counsel:
Mr. D. L. Wood, for the Plaintiffs
Mr. A. Mana and Ms. J. Marubu, for the Defendant

22nd June, 2011

1. HARTSHORN J: The vessel MV Kuana, went aground in May 2009 in or about the Port of Lae.

2. The Plaintiffs, PNG Ports Corporation Ltd, Mr. Mathias Geoctau, the Port Manager at Lae and the National Maritime Safety Authority, by originating summons, seek amongst others orders that they are authorised to remove, destroy, sell or moor the MV Kuana pursuant to provisions of the Harbours Act, Merchant Shipping Act and National Court Rules. The defendant Star Ships (PNG) Ltd, opposes the orders sought.

3. It is agreed between the parties pursuant to a statement of agreed and disputed facts and issues for trial that the issues to be determined are:

a) Whether the MV Kuanua is an obstruction, hindrance or danger to navigation in the Port of Lae.

b) Whether the first plaintiff is authorised to destroy and/or scuttle the MV Kuanua pursuant to sections 15H (2) (g) and/or 15K (2) (d) of the Harbours Act.

c) Whether the first plaintiff is authorised to sell the MV Kuanua pursuant to sections 15K (2) (c), (e) and/or (h) of the Harbours Act and recover its costs for the removal of the vessel from the sale proceeds.

d) Whether the second plaintiff is authorised to destroy and/or scuttle the MV Kuanua pursuant to section 40 of the Harbours Act and/or Order 12 Rule 1 of the National Court Rules.

e) Whether the third plaintiff is authorised to destroy the MV Kuanua pursuant to section 264 (2) (d) of the Merchant Shipping Act.

f) Whether the third plaintiff is authorised pursuant to section 264 (2) (e) of the Merchant Shipping Act to sell the MV Kuanua in any manner it thinks fit and out of the proceeds of sale, pay after deduction of any expenses incurred by it, the net proceeds of such sale to the persons entitled to them.

g) Whether the plaintiff is entitled to damages relating to the refloating and/or removal, unmooring, placing, destruction, scuttling, towing, storage and sale of the MV Kuanua, including costs relating to any environmental assessments and/or reports.

h) Whether the first and second plaintiffs have the jurisdiction or authority to seek orders in relation to the MV Kuanua.

4. I will consider the issues in the order that they have been addressed by the defendant in its extract of argument, first.

5. The defendant submits that to the extent that the first defendant, PNG Ports Corporation Limited, relies on certain delegated powers under the Harbours Act, it is unable to do so as the plaintiffs were without relevant delegated authority at the time of the filing of the originating summons and that this is fatal to the plaintiffs' claim.

Authority under the Harbours Act

6. The first plaintiff submits that it has authority to seek orders in relation to the MV Kuanua as certain powers under the Harbours Act have been delegated to it pursuant to s. 15L Harbours Act. In evidence is an instrument dated 11th July 2005 by the Secretary for the Department of Transport, the Department Head of the Department responsible for transport matters under s. 15L Harbours Act, in which he delegates to PNG Harbours Ltd all the powers functions and responsibilities of the Secretary for the Department of Transport under sections 12A (2), 15H, 15I, 15K, 24, 25 and Part VI of the Harbours Act (2005 delegation). Also in evidence is a certificate of incorporation of a change of name of PNG Harbours Ltd to PNG Ports Corporation Limited on 7th March 2006.

7. The defendant submits that the 2005 delegation only relates to PNG Harbours Ltd, which it refers to as a predecessor company, and not PNG Ports Corporation Limited. There is no evidence that PNG Harbours Ltd and PNG Ports Corporation Ltd are different entities. The certificate of incorporation of a change of name issued by the Registrar of Companies, is evidence that they are one and the same. All that has changed is the name of the same company. This submission of the defendant cannot be sustained.

8. The further submission of the defendant that a similar delegation under s. 15L Harbours Act to PNG Ports Corporation Ltd dated 12th April 2010 (2010 delegation) postdates the date of issue of the originating summons and therefore PNG Ports Corporation Ltd did not have the relevant authority when the originating summons was filed, also cannot be sustained. Although the 2010 delegation states that it revokes and supersedes any previous delegation under s. 15L Harbours Act to PNG Harbours Ltd, it also states that the 2010 delegation takes effect on the date of the instrument. So the 2005 delegation remained in force up to the commencement of the 2010 delegation. I am satisfied that PNG Ports Corporation Ltd had the requisite delegated authority under the 2005 and 2010 delegations.

Applicability of provisions of Harbours Act

9. The defendant further submits that the provisions of the Harbours Act upon which the first and second plaintiffs rely in their demand of 26th November 2009 and in paragraphs 1 - 5 of the originating summons are not applicable as they only relate to floatable ships or objects and not wrecks.

10. As to this submission, s. 15K (2) (d) Harbours Act refers to, "...any object or thing that.... is an obstruction, hindrance or danger to navigation...." There is no requirement implied or otherwise that such object or thing be floatable. In sections 39 and 40 Harbours Act, reference is made to, "vessel". "vessel" in s. 1 (1) Harbours Act is defined as meaning a ship, boat or other description of vessel used for any purpose on the sea or in navigation. The defendant refers to the concept of mooring and unmooring being referred to in s. 39 and 40 Harbours Act. There is also reference in those sections to, "placing or removing". There is no indication in sections 39 and 40 or the definition of "vessel" that reference is only being made to a vessel that is floating or moveable. The submission by the defendant that in cross-examination, the second plaintiff Mr. Geoctau, said that he had never had any experience with mooring or unmooring wrecks, has no bearing on whether the wording of sections 39 and 40 Harbours Act only apply to vessels that are floatable or moveable.

11. I am satisfied that, "vessel" as referred to in sections 39 and 40 Harbours Act, can include a ship or boat that is not floatable or moveable. The first and second plaintiff are entitled to rely upon the provisions that they have in the originating summons and their demand of 26th November 2009.

The location of MV Kuanua

12. The defendant submits that MV Kuanua is positioned outside of the demarcations of the Port of Lae. This is notwithstanding that in the statement of agreed and disputed facts and issues for trial, the defendant agrees that, "On or about 11 May 2009 the MV Kuanua was blown onto the foreshore at the Port of Lae by strong winds, where it remains." Further, Captain Peter Sharp, the Managing Director of the defendant, deposes amongst others that if the MV Kuanua floats off, ".... we will advise the Port authority... and engage the tug company to immediately remove the vessel from the port area before it impedes the shipping lanes."

13. The evidence given on behalf of the plaintiffs on this point is that the Port of Lae as described in Gazettal Notice G1 dated 1st January 1977 is, "... all that piece or parcel of land and water situate partly within and partly without the city of Lae..." and that the northern boundary of the Port extends 10 metres inland from the high water mark or roads referred to in the Notice. Further, the evidence given on behalf of the plaintiffs is that the MV Kuanua is in the Port of Lae and went aground on the foreshore at the Port of Lae. The evidence of the plaintiffs' witnesses was not challenged. The evidence given on behalf of the defendant is that the MV Kuanua is located at certain specific points. There was no evidence though that these points are outside of the Port of Lae. I am satisfied on the evidence that the MV Kuanua is located within the limits of the Port of Lae as defined in the Gazettal Notice G1 dated 1st January 1977.

Whether the MV Kuanua is an obstruction, hindrance or danger to navigation in the Port of Lae

14. The defendant submits that the MV Kuanua cannot be an obstruction or hindrance as it is in shallow waters and way off the shipping lanes.

15. In evidence given on behalf of the plaintiffs, various reasons were given as to why MV Kuanua was an obstruction, hindrance or danger. These reasons included that there was a high likelihood of the vessel refloating and drifting out into the sea causing damage to the safe navigation of other vessels sailing in an out of the port during high tide; the longer the vessel sits ashore, it will eventually break up with the risk of parts floating out to sea causing danger and oil leaking and other contamination occurring as the vessel deteriorates and further, particularly at night or during poor visibility, other vessels could mistakenly believe that MV Kuanua was in the usual shipping lanes and not on the shore, thereby causing miscalculations of positions to occur.

16. The evidence that was challenged in my view, withstood cross-examination. I am satisfied that the plaintiffs have properly made out that the MV Kuanua is an obstruction, hindrance or danger to navigation.

Notification to the third plaintiff that MV Kuanua was a constructive loss

17. The defendant submits that as it notified the third plaintiff on 12th May 2009 that MV Kuanua was a constructive loss, the third plaintiff ought to have taken steps under s. 28 (5) Merchant Shipping Act resulting in the registry of MV Kuanua in the Register to be deemed to be closed. The Registrar shall act, pursuant to s. 28 (5), on receipt of a notice specifying that a ship registered under the Act is either actually or constructively lost, taken by the enemy, burnt or broken up. The email that purportedly gives notice, does not specify any of these events. In fact the content of the email ends by stating that staff in Lae are assessing the damage. I am not satisfied that this email and its content can be considered notice of the fact under s. 28 (1) (a) or notice under s. 28 (5) Merchant Shipping Act as submitted by the defendant. The defendant in my view is not able to rely upon the email for the purpose that it intended.

18. As to other issues to be determined:

Whether the third plaintiff has relevant powers under the Merchant Shipping Act

19. As to whether the third plaintiff has relevant powers to destroy or sell the MV Kuanua, the defendant concedes that the plaintiffs, "...picked the correct and applicable provision...." when they issued a further demand on 18th May 2010 pursuant to s. 264 (2) Merchant Shipping Act. The defendant further submits that the Merchant Shipping Act is a complete code regulating wrecks. In that regard I have already found that the first and second plaintiffs are able to rely upon the provisions of the Harbours Act as they have. It is not necessary to consider this issue further.

Whether the first plaintiff is authorised to destroy or scuttle the MV Kuanua or to sell the MV Kuanua and recover its costs for the removal

20. I have already determined that the first plaintiff has had delegated to it certain powers under the Harbours Act. These include powers functions and responsibilities under sections 15H and 15K Harbours Act. I am also satisfied, given the wording of s. 15H (2) (g) and s. 15K (2) (c), (d), (e) and (h) Harbours Act that these sections are able to be relied upon by the first plaintiff to destroy or scuttle the MV Kuanua and to sell the MV Kuanua and recover the first plaintiff's costs for the MV Kuanua's removal.

Whether the second plaintiff is authorised to destroy and scuttle the MV Kuanua

21. I am satisfied that the second plaintiff is authorised to destroy and scuttle the MV Kuanua because of the powers vested in the Port Manager pursuant to sections 39 and 40 Harbours Act.

Whether the third plaintiff is authorised to destroy or sell the MV Kuanua

22. Given the wording of s. 264 (2) (d) and (e) Merchant Shipping Act, I am satisfied that the third plaintiff is able to destroy the MV Kuanua and to sell it in any manner it thinks fit and out of the proceeds of sale, pay after deduction of any expenses incurred by it, the net proceeds of such sale to the persons entitled to them.

Damages

23. As to whether the plaintiffs are entitled to damages, it is not in dispute if I understand correctly, that MV Kuanua is in the process of being dismantled and scrapped. There is also no evidence of the plaintiffs suffering any damage or loss as a result of the circumstances listed in paragraphs 8, 9, 10 and 11 of the originating summons and so it is not necessary to consider this issue further.

Conclusion

24. After considering the issues agreed by the parties, the evidence and submissions, I am satisfied that the plaintiffs have properly proved their claim to the required standard. I am satisfied that they are entitled to the orders sought in paragraphs 2, 3, 4, 5, 6, 7, 12 and 13 of the originating summons

25. As to whether the costs of the proceeding should be paid to the plaintiffs on a solicitor and client basis as submitted by the plaintiffs, the awarding of costs is discretionary. The Supreme Court in Paki v. Motor Vehicle Insurance Ltd (2010) SC1015 recently confirmed that a court may order costs on a solicitor client basis against a party whose conduct has been either improper, unreasonable or blameworthy.

26. The plaintiffs submit that they were required to commence this proceeding unnecessarily as the defendant through its Managing Director Captain Peter Sharp, should have admitted to ownership of the MV Kuanua and made immediate attempts to remove or scrap it. Instead, after interim orders were made, the defendant attempted to distance itself from any responsibility by purportedly selling the vessel. As a consequence the plaintiffs have been put to considerable expense in this proceeding when the matter should have been resolved by the defendant taking a commonsense approach to the removal or scrapping of the vessel.

27. I also note that Captain Sharp was personally aware that MV Kuanua had dragged her anchor and gone ashore by virtue of the email he sent on 12th May 2009. Notwithstanding this, the defendant's then lawyers six months later, advised amongst others, that their client was not aware nor has any knowledge of MV Kuanua running aground. Whilst it may be correct that the defendant was not aware or had knowledge, its Managing Director certainly did. The conduct of the defendant's Managing Director in this regard and indeed through the course of this proceeding and at trial is best described as being disingenuous.

28. For the above reasons and in the absence of any persuasive submissions to the contrary made on behalf of the defendant, I am satisfied that the defendant's conduct has been unreasonable such that it is appropriate that the court exercise its discretion to order that the costs of the plaintiffs of the proceeding are to be paid by the defendant on a solicitor and client basis.

Orders

a) the orders sought in paragraphs 2, 3, 4, 5, 6, 7, 12 and 13 of the originating summons are granted,

b) the costs of the plaintiffs' of the proceeding are to be paid by the defendant on a solicitor and client basis.

________________________________________________________

Blake Dawson: Lawyers for the Plaintiffs
Allens Arthur Robinson: Lawyers for the Defendant