Uata v Kingdom of Tonga [2006] TOSC 29; C APP 69 1999 (31 July 2006)

IN THE SUPREME COURT OF TONGA
APPELLATE JURISDICTION
NUKU’ALOFA REGISTRY

CASE NO: CA 69/99

1. ‘ULITI UATA
2. PACIFIC TRADING (TONGA) LTD
Appellants

v

KINGDOM OF TONGA
Respondent

HEARD BEFORE HON CHIEF JUSTICE WEBSTER AT NUKU’ALOFA
ON 3 MAY 2005 & 31 MARCH 2006

RESERVED DECISION ON APPEAL GIVEN ON 31 JULY 2006

Preliminary

This was an appeal under section 201 of the Shipping Act (Cap 136), read with Part VII of the Magistrates’ Courts Act (Cap 11), against Part III of the decision, on 16 November 1998, of a Court of Marine Inquiry [the Marine Inquiry] set up under section 196 of the Shipping Act (Cap 136). Section 196(1) provides that the Magistrates' Court, sitting with assessors, is to be the Court of Marine Inquiry.

The Marine Inquiry was set up to inquire into the sinking on 24 December 1996 of the MV Fokololo, owned by the present Appellants, ‘Uliti Uata and Pacific Trading (Tonga) Ltd. In Part III of the decision the Appellants were ordered to pay to the Respondent, the Kingdom of Tonga, the costs of instituting Parts I and II of the Court of Marine Inquiry, amounting to $41,282.56.

The Appellants sought to have that part of the decision of the Marine Inquiry quashed, the principal grounds of appeal being that the Marine Inquiry erred in fact and in law in interpreting Section 196(2)(e) to mean that the Appellants were liable for the costs of setting up and. running the Marine Inquiry. The Respondent contested the appeal.

Statutory provisions

Section 196 of the Shipping Act (Cap 136) provides:

Magistrates’ Court to hold formal inquiry.

196. (1) The Magistrates' Court shall be the Court of Marine Inquiry. The Court shall sit with assessors for the purpose of inquiring into any shipping casualty.

(2) When holding an inquiry into a shipping casualty the Court, in addition to the jurisdiction it may exercise under any other law or by custom shall have jurisdiction:-

(a) to inquire into any charge of incompetency or misconduct arising, in the course of the investigation, against any owner, master, mate or engineer, as well as into any charge of a wrongful act or default on his part causing the shipping casualty;

(b) to go on board the vessel and inspect it or anything on board;

(c) to enter and inspect any premises;

(d) to order the cancellation of any certificate of competency of any master;

(e) to order costs to be paid by whomsoever it thinks proper.

Further relevant provisions of Part XI (Investigations and Inquiries) of that Act are:

Shipping casualties

194. (1) For the purpose of investigations and enquiries under this part of this Act a shipping casualty shall be deemed to occur:-

(a) when any Tongan ship is lost, abandoned, or damaged, or causes loss or damage to any other ship; or

(b) when loss of life ensues by reason of any casualty on board any Tongan ship; or

(c) when any ship has been lost or supposed to have been lost, stranded, or damaged, or blown away, provided such event occurs on or near the coasts of Tonga or when occurring elsewhere a witness is found in Tonga; or

(d) when on or near the coasts of Tonga any loss of life ensues by reason of any casualty happening to or on board any ship on or near the coasts of Tonga.

(2) In the cases mentioned above, the master of the ship, pilot, harbour master, the owner or other person in charge of the ship, as the case may be, or where 2 or more ships are concerned, the master in charge of each ship at the time of the shipping casualty or any of the above persons shall, on arriving in Tonga, give immediate notice of the shipping casualty to the Minister.

Report of shipping casualties

195. (1) Whenever a shipping casualty comes to the knowledge of any concerned person mentioned in subsection (2) of the preceding section he shall make a preliminary inquiry into the casualty and report the information along with his report to the Minister as soon as possible.

(2) The Minister, unless he decides that it is not necessary to do so, shall request the court to make a formal investigation into any shipping casualty, and the court shall thereupon make such investigation.

..........

Report by Court to Government.

200. The Court shall transmit to the Minister a full report of all cases of investigation or inquiry.

Right of appeal.

201. Any owner, master or other person may appeal against the decision of the Court of Marine Inquiry to the Supreme Court. The fees on an appeal shall be those chargeable for appeals in civil cases.

Background and previous events in the Inquiry

On 24 December 1996 the motor vessel Fokololo ‘o e Hau sank close to ‘Atata Island in Nuku'alofa Harbour on a trip from Ha'apai.

The Minister of Marine and Ports then set up the Court of Marine Inquiry to make a formal investigation into that shipping casualty. On 29 October 1997 the Court delivered its decision in what is referred to as Part I of the Inquiry and found the Master of the motor vessel negligent and cancelled his certificate of competency. The Court also held that the costs of the Tonga Defence Services and the Marine and Ports Ministry should be left to be decided by them and the owner; but it did not at that time make any order for the Appellants to pay any costs for establishing and running the Court.

On 5 November 1997 the Acting Prime Minister and Minister of Marine contacted the Chairman of the Court to recall the Court to deal with the costs involved in the rescue and cleaning up operations incurred by the Tonga Defence Services and the Ministry of Marine and Ports, which had already been held by the Court in Part I of its decision on 29 October 1997 to be left to the parties to deal with. It was not held by the Court on 29 October 1997 that should there be any disagreement the parties might come back to the Court for further orders or directions.

On 11 November 1997 the Court commenced sitting again to deal with the request by the Acting Prime Minister and Minister of Marine in respect of the rescue and cleaning up costs. On 14 November 1997 witnesses were called to give evidence in Court in relation to that request. On 1 April 1998 the Court delivered its decision in Part II, ordering the Second Appellant to pay the costs totalling $5,620.50, relying on Section 196(2)(e) of the Shipping Act for its jurisdiction to order those costs. The total costs that the Tonga Defence Services and the Marine and Ports Ministry had sought were $7,754.61.

Then on 8 April 1998 the Cabinet in decision CD 428 directed the Crown Law Department to submit to the Court to make a decision for the payment of the costs of establishing and running the Court. On 30 April 1998 the Crown Law Department filed an application for such costs with the Court. For the first time during the sitting of the Court dealing with the application for costs, Counsel appeared for the Appellants, along with Crown Counsel from the Crown Law Department appearing for the Respondent. On 16 November 1998 the Court made its decision in Part III which is the subject of this appeal.

Findings in Part III of Court of Marine Inquiry

The relevant parts of the findings in Part III of the Court are:

12. But the casualty of the 24/12/96 which the "Fokololo" sunk was a different nature, the Master of the ship and his crew were shortfall in their duties and are listed.
    

(a) The Court thinks that the Master of the Ship acted carelessly in choosing crew for the "Fokololo" before the voyage of the 18/12/96 to Niuatoputapu before it return to sink. Even though that there were enough crews the Ship's Captain and Engineer had certificate of navigation and were experience enough.

The ship's captain said that he did not pick the crews and the Court thinks that he had no involvement.

Even though he said that had he been given the task of picking the crew he would have only pick the engineer but he hadn't mention this to 'Uliti Uata the owner of the company which owns the boat.

(b) This court believes that the Ship's Captain was incompetent in tieing the ships cargo when they sail from Niuatoputapu until it sunk. The captain did not tie the cargoes properly because when the waves struck the vessel the cargoes shifted to the left side of the vessel which the vessel then nearly went on it sides until it sunk.

(c) The Court believes that the Captain did not do the proper thing. He should have checked the damage to the vessel at the Pangai wharf. The left front was dented when it reached Pangai and the back was dented when they depart for Ha'afeva. Both of these sides were confirmed that that was where most of the water rushed in to the vessel which was one of the main reason the vessel sunk.

(d) The Court believes that the Captain had erred when he did not go down to the cargo hull to check how much damages were there for there was plenty of time to do that. If he had done that he would have an idea of how serious the incident was and would have think of how to tackle the casualty. He should have asked in details of the incident from the person who reported it but he did not.

(e) The Court believes that the Captain should have called for Mayday at approximately 11 and 12 noon and for the crew and the passengers go down to level the cargoes. He erred also when he stopped the Pulupaki from sailing to their rescue and asked them to standby at 1:00 pm.

(f) The Court believes that there was no mate in this voyage. Lopeti Sisifa was not told he was the mate and he did not know he was the mate.

13. The Court says that they did not do anything to try and avoid the casualty. They did not do their best to try and avoid the sinking of the Fokololo ‘o e Hau but was fortunate that no lives were lost only the cargoes. Was it their error in their duties and being negligent and employing the wrong person that the Government should bear the cost but the owner of the vessel?
    
14. This is how this court interprets sub section (e) of s 196(2)(e) Cap 136 where it reads that this Court may exercise its power to order costs to be paid by whomsoever it thinks proper for setting up and running of this court. The counsel for the vessel submitted that we should only use the amendment of s 196(2)(e) and should not use any foreign laws. That this section should be interpreted broadly and should not be limited as submitted by the counsel for the owner of the vessel that it is only for costs for investigation not cost for setting up and running this court.
    
15. Research was made into English Law that it might assist but s 196(2)(e) was sufficient only to be properly interpreted. The Court believes that costs that sub section (e) speaks about is for costs in respect of setting up and running of courts like this.
    
16. Therefore it was a major shortfall by the captain and the crews by incompetency negligent and employing an unqualified mate and the company who owns the vessel should be vicariously liable for the cost.
    
17. This was the failure of the employee and Mr Tu'utafaiva's submission was that vicarious liability was not part of the application.
    
18. Based on the what the court have considered it is ordered that the application by the Crown Law for the cost to be paid by the owner of the vessel for setting up and running this court Part I and Part II which is a total of $41,282.56.
    

19. The Cost of this Part III be paid by the Government.

To be paid with 12 months from the day ‘Uliti Uata and the company who owns the vessel which is Pacific Trading (Tonga) Limited receives this judgment and if in lieu to be distraint. Each parties pay their cost.

Applicable law

The law in England, apparently referred to by the Court of Inquiry in its Para 15 [above], is not the same as the law in Tonga, as the power in England to award costs in a marine inquiry is since 1983 contained in section 56(5) of the [British] Merchant Shipping Act 1970, which cannot have applied under the Civil Law Act (Cap 25) applicable in 1997-8, as section 4 of that Act provided at that time:

Extent of application

4. The common law of England and the rules of equity and the statutes of general application referred to in section 3 shall be applied by the Court –

(a) only so far as no other provision has been, or may hereafter be made by or under any Act or Ordinance in force in the Kingdom; and

(b) only so far as the circumstances of the Kingdom and of its inhabitants permit and subject to such qualifications as local circumstances render necessary.

and in this case it is quite clear that other provision has been made in the law of Tonga in section 196(2)(e) of the Shipping Act.

Section 56(5) of the British 1970 Act reads:

(5) The wreck commissioner or sheriff may make such order with regard to the costs of the investigation as he thinks just and shall make a report on the case to the Board of Trade.

Formerly the power in England was contained in section 466 of the [British] Merchant Shipping Act 1894, to which the same applies, and which made a different provision:

(8) The court [so holding a formal investigation] may make such order as the court think fit respecting the costs of the investigation, or any part thereof, and such order shall be enforced by the court as an order for costs under the Summary Jurisdiction Acts.

(9) The [Department] of Trade may, if in any case they think fit so to do, pay the costs of any such formal investigation.

Also under the then Rule 16 of the [British] Shipping Casualties Rules 1923:

16. The Judge may order the costs and expenses of the investigation, or any part thereof, to be paid by the Board of Trade or by any other party.

(See R v a Wreck Commissioner, ex p Knight [1976] 3 All ER 8 (DC))

These powers, referred to in ex p Knight, are very different from the simple words of section 196(2)(e) of the Shipping Act of Tonga, and although the Marine Inquiry stated that it was only interpreting paragraph (e) of section 196(2), it does appear that it has followed the same approach as the English law, notwithstanding its disclaimer that it was not doing so.

Turning therefore to the meaning of the words in section 196(2)(e), superior courts of general jurisdiction may have power in the exercise of their discretion to award costs, with full power to determine by whom and to what extent they are to be paid, although with a number of limitations on the exercise of that discretion: Halsbury’s Laws (4th Ed) Vol 37 paras 713-4. Indeed the power of the Supreme Court of Tonga to award costs, contained in section 15 of the Supreme Court Act (Cap 10), gives this Court a wide discretion:

Costs.

15. In every action the costs of the whole action of each particular proceeding therein and the costs of every proceeding in the court shall be in the discretion of the court as regards the person by whom they shall be paid: ...

However the same does not apply to courts or tribunals of limited jurisdiction which are wholly creatures of statute, where the power to award costs must be found in the statute giving them existence. Costs are the creation of statute: London Scottish Benefit Society v Chorley [1884] UKLawRpKQB 115; (1884) 13 QBD 872,876; [1881-5] All ER Rep 1111,1113 (CA) per Bowen LJ; Words & Phrases Legally Defined.

In Walton v McBride [1995] NSWSC 17; (1995) 36 NSWLR 440 (CA) it was stated by the New South Wales Court of Appeal:

In the case of courts which are created by statute, at least where they are not superior courts of general jurisdiction in law and equity, the source of the court's power to order costs of any kind, must be found in the enabling statute. This is because costs are not, as such, a right or privilege created by the common law. The power to award costs in common law countries is ancient. But, as the High Court pointed out in Cachia v Hanes (1994) 179 CLR 403,410 it is usually traced back to the Statute of Gloucester 1278 (UK) 6 Edw I c 1.

Where a subordinate court of limited jurisdiction is created, it must find its powers in the express language of the statute which gives it existence, in the implications which derive from that language and are necessarily involved in it or such powers as may be inferred from the very fact that the legislature has created a court, with jurisdiction to perform and therefore with the necessary means of carrying out that jurisdiction and giving it effect: cf John Fairfax and Sons Ltd v Police Tribunal of New South Wales (1986) 5 NSWLR 465,476.

The distinction between inherent and implied statutory powers is ... an important one: see Logwon Pty Ltd v Warringah Shire Council (1993) 33 NSWLR 13,16f. But it is not necessary to revisit the question here because the body whose powers are questioned in these proceedings is undoubtedly a creature of statute and is in no view a superior court of general jurisdiction.

For at least a century courts in England, which partook of the Royal Prerogative, considered that they had the power to make special orders as to costs. ...... it is important to see the cost powers of superior courts of record as distinguishable from the powers of inferior courts and tribunals. The former have traditionally had large (and often inherent) powers. The latter must always source their power to the statute which establishes them.

Many statutes which create courts and tribunals of limited and particular jurisdiction provide, in differing ways, for the making of costs orders. When this is done, it is necessary, in each case, to consider whether the court or tribunal in question has power to make the order which is challenged. The decision-maker will then look to the terms by which the power is conferred, consider the implications of the grant of the facility for ordering costs and reflect upon the nature and purposes of the body afforded that power. Just because a power to award "costs" is conferred in general terms, does not mean that the power is entirely open-ended. It cannot authorise the making of an order which is entirely at large. Nor will it sustain idiosyncratic orders or orders beyond the provision of what can truly be described as "costs". If Cachia v Hanes, in the High Court of Australia, establishes nothing else, it makes the foregoing plain, for in that case both the Supreme Court Act 1970 and the rules of court spoke of "costs" in perfectly general terms. A fortiori, a judge, magistrate or tribunal member of a limited and inferior statutory body given the power to award "costs" may have, thereby, a large discretion. But it is one to be exercised judicially, for the purpose of achieving the objects of the legislature which has conferred the power, not for the attainment of some personal view about justice in the particular case ... .

(P 447 B – 448 B)

The fact that "costs" are left undefined ... far from suggesting the large power to provide indemnity costs suggests to my mind the contrary, that is, that no such power is intended. The word "costs" must be read in the context of the legislation here in question (as of legislation empowering other tribunals). It must be read against the backdrop of the provisions authorizing orders for the payment of costs by the courts. As Cachia v Hanes in the High Court and in this Court demonstrates, that power is severely limited. From its earliest days in the Statute of Gloucester it was "never intended to be a comprehensive compensation for any loss suffered by a litigant": see Cachia (at 410). Where parliament intends a larger provision, it will say so expressly, at least in the case of inferior courts and tribunals ... Cachia (at 416);

(P 449 E)

Nothing was said by the minister or by anyone else when the [Medical Tribunal] was empowered by parliament to award costs which even hinted at a power to award other than "costs" in the ordinary sense of that word. That ordinary sense is the sense long accepted by the courts of common law, that is, party and party costs: cf Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400. On the contrary, the minister made it plain that what was concerning him was empowerment of the Tribunal to award costs against [a medical practitioner]. To the extent that the Second Reading Speech or other material may be looked at, they lend no support to the notion that "costs" was intended to extend to indemnity costs;

(P 449 G – 450 A)

Whilst it is true that the word "costs" is unconfined in the language of the statute, it is equally true that no express source of power is given to enlarge the ordinary meaning of the word, which would be party and party costs. Assuming such express power to be unnecessary to a superior court of record, such as the Supreme Court or the Federal Court of Australia, it is far from clear that it is unnecessary for a subordinate tribunal of limited jurisdiction. Yet if it is true of this Tribunal that it has such powers, it is presumably true of all the other tribunals of the State which have a general power to award undefined "costs".

(P 450 D)

In Cachia v Hanes (1994) 179 CLR 403,410 it was said by the High Court of Australia:

It has not been doubted since 1278, when the Statute of Gloucester (30) introduced the notion of costs to the common law, that costs are awarded by way of indemnity (or, more accurately, partial indemnity) for professional legal costs actually incurred in the conduct of litigation. They were never intended to be comprehensive compensation for any loss suffered by a litigant. As Coke observed of the Statute of Gloucester, the costs which might be awarded to a litigant extended to the legal costs of the suit, "but not to the costs and expences of his travell and losse of time" (31).
(P 410-411)

Grounds of decision

As the Marine Inquiry in its original finding in Part I did rule on the costs of the Tonga Defence Services and the Marine and Ports Ministry (albeit leaving those to the parties), but did not reserve power to reach a subsequent decision on any other costs, at that stage it had exhausted its powers when it made its report to the Minister under section 200 and so, having done that and completed its work, it was functus officio, in the sense of having discharged its duty by exercising its authority and brought it to an end in this particular case, eg Re VGM Holdings [1941] 3 All ER 417 (ChD). It thus had no further power to make any orders for costs, except with the consent of the parties, as appears to be the case in relation to these costs of the Tonga Defence Services and the Marine and Ports Ministry in Part II. It is always important that there is finality in litigation and that parties do not get two bites at the cherry, as it were. This is underlined by the power of appeal in section 201, and if the Cabinet did not like the Marine Inquiry’s failure to award it the costs of running the Inquiry, its proper course was to appeal to this Court, not to seek to have the matter raised again with the Marine Inquiry. The Marine Inquiry’s award of the costs of establishing and running that Court is therefore ultra vires and this appeal succeeds on this ground alone.

In any event in this case, following the authoritative cases of Walton v McBride and Cachia v Hanes referred to above, it is clear that the Marine Inquiry is a creature of statute and not a superior court of general jurisdiction, so that its power to award costs can only be found in the words of the statute establishing it, the Shipping Act. The terms of section 196(2)(e) are general, but equally not specific, as to whether the Marine Inquiry can award costs at large, but that does not mean that they are open-ended or that costs can be awarded at large. The implications of that are very severe, as it means that a Marine Inquiry cannot go beyond what are generally understood to form costs in ordinary litigation, ie limited reimbursement of the expense of litigation incurred, being fees, charges, disbursements, expenses and remuneration, but rarely complete reimbursement of expenses, as costs have never been intended to be a comprehensive compensation for any loss suffered. A Marine Inquiry’s discretion is to be exercised judicially for the purpose of achieving the objects of the legislation, ie in this case as set out in Part XI of the Act, and particularly sections 194-196, to inquire into a shipping casualty in the public interest of safety at sea, including safety of life at sea. Because the power to award costs is undefined, it is clear that no special powers are intended, and the actual power is severely limited.

It comes down to a simple question of interpretation of the words in the Tongan Shipping Act, as the Marine Inquiry rightly concluded, but unfortunately in answering that question they went further than the meaning the words can bear. There is a great difference between the straightforward word "costs" in section 196(2)(e) and the words "the costs of the investigation" in the [British] 1894 and 1970 Acts and 1923 Rules. Although section 196(2)(e) refers to the power to order costs to be paid by whomsoever it thinks proper, these latter words cannot enlarge the meaning of the word "costs" and I cannot accept the submission for the Respondent to that effect.

The passage referred to in the written submissions for the Respondent in my view underlined the restrictive interpretation which must be given to the word "costs" in section 196(2)(e), rather than supporting the Respondent’s interpretation:

"They [Courts of Marine Inquiry] are therefore administrative courts of a special character, and at a time when the rapid growth of the system of administrative justice is the subject of an increasing volume of criticism, the origin and nature of their jurisdiction, and the precise place which they occupy in the system of British jurisprudence, are questions of some interest."

ARG McMillan, Shipping Inquiries and Courts, Stevens & Sons Ltd London, 1929 p iii

I also accepted the submission for the Appellants that the Marine Inquiry was still a Magistrates’ Court, although sitting with assessors to carry out the special task of inquiring into a shipping casualty, and so did not have any jurisdiction under the Magistrates’ Court Act to order payment of the costs of its establishment and running. I further accepted the submission for the Appellants that, as the setting up of the Marine Inquiry was requested by the Minister under section 195, without any control by the Appellants, it would be highly unjust for them to be ordered to pay its costs.

I was unable to accept the submissions for the Respondent that the interpretation of the word "costs" should be distinguished from the approach taken in Walton v McBride., especially in the context of this legislation (with reference to 449 F-G). Nor is the reference at 452 D to the possibility of awarding costs of attendance to a party relevant in this question in relation to the costs of running and establishing the Marine Inquiry. The whole question of whether legal representation should be allowed at an inquiry such as this, or whether there should be an independent counsel to such an inquiry, as suggested by this Marine Inquiry, is a live issue, but I do not consider that justifies the extension of the meaning of "costs" in this way. As was said in Walton v McBride (450 D), there is certainly a large question of policy, but in the absence of specific legislation by the Legislative Assembly that is not a matter for this Court.

I am thus satisfied that the Marine Inquiry erred in making its Part III finding; and so I shall therefore allow the appeal and revoke and reverse the Marine Inquiry’s Part III finding that the present Appellants pay the costs of setting up and running Parts I & II of the Marine Inquiry.

I see no reason why at this stage costs should not follow the event and so under section 80(1) of the Magistrates’ Courts Act I shall award costs, as agreed or taxed, to the Appellants against the Respondent in this Court and in Part III of the Marine Inquiry.

31 July 2006

R M Webster
Chief Justice