In CSL Australia Pty Ltd v Tasmanian Ports Corporation Pty Ltd (The Goliath) 2024 FCA 82, a shipowner was found to be entitled to limit its liability under the Limitation of Liability for Maritime Claims Act 1999 (Cth), giving effect to the Limitation Convention 1976 (1976 Convention), in respect of wreck removal expenses claimed by the port authority despite Australia's reservation when ratifying the Convention and the port authorities' standard terms and conditions.

The CSL Australia P/L (CSL) vessel "Goliath", a self loading bulk cement carrier, was manoeuvring to berth in the Port of Devonport, Tasmania when the vessel allided with two tugs (the York Cove and the Campbell Cove) and the wharf owned and operated by the Tasmanian Ports Corporation Pty Ltd (Tasports). The two tugs sank, causing diesel fuel and other hydrocarbons to enter the Mersey River. 

CSL sought to limit its liability, if any, which it had under the Limitation of Liability for Maritime Claims Act 1999 (Cth) (the Act) to $14,605,768 (being the AUD equivalent of 7,401,416 SDRs under the 1976 Convention).

Tasports challenged CSL's right to limit liability, firstly, on the basis that those of its claims which were in respect of costs of and associated with the containment, removal and disposal of hydrocarbons and the removal and disposal of the two tugs, being claims in respect of the matters identified in the Act, Schedule 1, Article 2(1)(d) as such claims are not limitable by reason of section 6 of the Act. 

Tasports further asserted that there was no right in CSL to limit its liability in reliance on clause 26.2 of its standard terms and conditions of port access. 

The issues which Stewart J identified for consideration were:

1.    With regard to whether CSL contractually excluded or waived its right to limit liability for the claims of Tasports:

(a)    Was the agreement pursuant to which the Goliath entered the port of Devonport subject to Tasports standard terms and conditions?
(b)    If so, does clause 26.2 of the standard terms & conditions exclude the right of CSL to limit its liability to Tasports under the Limitation Act. 

2.    With regard to the wreck removal issue, were Tasports' claims in respect to the raising, removal, destruction, or the rendering harmless of the tugs, limitable under article 2(1) of the 1976 Convention. 

Stewart J concluded that although the standard terms and conditions of Tasports applied, clause 26.2 did not exclude CSL's right to limit and that Tasports wreck removal claims were subject to limitation under Article 2(1) of the 1976 Convention. 

The issue as to whether the standard terms and conditions applied depended upon an assessment and interpretation of all the circumstances surrounding the contractual relationship between Tasports and its customer, both leading up to and during the vessel's entering into the Port of Devonport.

Having decided that the contractual terms included Tasport's standard terms and conditions his Honour next had to decide as to the applicability of clause 26.2. The clause itself simply provided that:

"To the fullest extent permitted by Law, all rights, representations, guarantees, conditions, warranties, undertakings, remedies or other terms that are not set out in these Terms and Conditions are expressly excluded."

Stewart J relied by way of analogy on two decisions: the Hong Kong case of Sun Wai Wah Transportation Limited v Cheung Kee Marine Services Co Limited (2009) HKCFI 1098 in which the judgment of Reyes J was expressly approved in the second case: Bahamas Oil Refining Company International Limited v the Owners of the Cape Bari (2016) UKPC 20, (2016) 2 Lloyds Rep 469. In the former case the shipowner had agreed to indemnify the charterer against "all action, liability, loss suits, claims, demands, proceedings…" by paying, "on demand, the full amount of any loss or damage whatsoever caused which the charterer may incur…". The question in that case was whether that form of complete indemnity by a necessary implication excluded the shipowner's right to limit under the 1976 Convention. It was held that in the absence of clear words to the contrary the reference to full indemnity in an indemnity agreement could not be read as meaning other than a full indemnity within the terms of what the convention permits. 

In the Cape Bari case the relevant clause had provided that the shipowner "shall hold BORCO (the owner of a berth at a storage facility) harmless from and indemnified against all and any loss, damages, costs and expenses incurred" and "shall hold BORCO harmless and indemnified against all and any claims, damages, costs and expenses arising out of any loss, damage or delay caused to any third party arising directly or indirectly of the use of the terminal facilities or of any part thereof by the vessel." 

That case went to the Privy Council in which the Board referred to the cases that it had cited as showing: "that the words of the particular contract must be construed in the light of the default provision, namely that the statutory rights of the owners were known to and understood by the parties to apply and were treated as being written into the Conditions of Use. It followed that that remains the position unless there is some provision which clearly and unequivocally excludes the right such that the two provisions cannot be read together and the statutory right must have been excluded." 

This question arose by reason of the manner in which Australia acceded to the Convention by exercising its right of reservation under Article 18(1) so as to exclude the application of Articles 2(1)(d) and (e). Section 6 of the Australian Act provides: "Subject to this Act, the provisions of the Convention (other than paragraphs 2(1)(d) and (e) of Article 2, have the force of law in Australia. That right of reservation was contained in article 18 of the Convention which provides that:

"Any State may, at the time of signature, ratification, acceptance, approval or accession, reserve the right to exclude the application of Article 2(1)(d) and (e). No other reservations shall be admissible to the substantive provisions of this Convention."

Those two provisions comprise the following:

"1 (d) claims in respect of the raising removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned including anything that is or has been on board such ship;
   (e) claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship."

After considering a number of authorities and the text of the Convention his Honour was of the opinion that the claims made by Tasports also fell within article 2(1)(a), such claims are those "in respect of loss or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation) occurring on board or in direct connection with the operation of the ship or salvage operations and consequential loss arising therefrom". The issue was how to reconcile those competing provisions in the Convention. 

The competing arguments that his Honour then had to consider as to whether the claim for limitation which was available under Article 2 (1)(a) was unavailable by reason of Article 2 (1)(d) are explained by Stewart J as being that "CSL says that the wreck removal claims made by Tasports came within Article 2(1)(a) as consequential loss claims arising from damage to or loss of property (being the tugs, the wharf and the hydrocarbons) and are therefore subject to limitation regardless whether they also come within Article 2(1)(d). Against that, Tasports says that Article 2(1)(d), which deals specifically with wreck removal claims, qualifies the earlier paragraphs which by necessary implication exclude the claims covered by Article 2(1)(d) - otherwise Article 2(1)(d) and the right of reservation in relation to it (Article 18(1)) have no work to do."

His Honour identified a number types of claims that might fall within the description contained in paragraph (d). They were: firstly, claims made by the owners of a wreck for the costs and expenses or removing the wreck, (such as Tasports), or for their liability to a public authority for such removal, against the owners of the ship that caused the wreck. His Honour noted that such claims also fall within article 2 (a). Secondly, he identified fault based claims (or claims arising from negligence) for the costs and expenses of removing a wreck from a harbour which could be brought by an authority or others who have suffered loss arising from a ship being sunk, wrecked, stranded or abandoned, including the expenses of removing the wreck-such claims could be brought against the owner of the wreck or against the owners of some other ship that might have caused the wreck to occur. His Honour noted that such claims could fall within article 2(c). Thirdly, his Honour identified no fault type claims, such as statutory strict liability claims brought by public authorities against the owner of the sunken ship, and his Honour noted that such claims do not fall within the ordinary meaning of articles 2(a) or (c). As his Honour explained that is because in relation to (a) although they are claims for consequential loss that loss did not result from the loss of or damage to property other than the limiting ship, and with regard to (c) the claim does not arise from infringement of a right but from the exercise of a statutory right or power. 

Whilst acknowledging that there was clearly an overlap between Articles 2(a) and (c), taken together, and Article 2(d) His Honour said: "but it is not complete -para (d) has its own non-overlapping sphere of operation." The third example given being an example of a separate sphere of operation. CSL had submitted that claims in respect of the removal of the wreck with reference to which limitation is claimed and calculated would come within Article (d). His Honour suggested that Article (d) was only referring to the limiting ship. 

It would be surprising if this decision is not appealed given its significance to port and harbour authorities.