CGU Insurance Limited v Malaysia International Shipping Corporation Berhad

REASONS FOR JUDGMENT 1 This application raises an issue concerning preliminary discovery for the purpose of making of a decision whether to commence proceedings. It arises from the grounding of the MV "Bunga Teratai Satu" ("the vessel") on the Great Barrier Reef on 2 November 2000. So far as the researches of Counsel are concerned, this issue has not previously been considered in the context of a marine incident. 2 This notice of motion, filed on 27 April 2001, is to rescind Order 2 made by Madgwick J of this Court relating to preliminary discovery pursuant to O 15A r 6 of the Federal Court Rules. The preliminary discovery order made by Madgwick on 24 November 2000, pursuant to an application filed in Court on that day, is in these terms: "2. Further, an order be made under Order 15A Rule 6 that the respondent make discovery to the applicants of the following records: (a) ship's articles/contract of employment of the Master as at 2 November 2000; (b) in relation to the grounding on 2 November 2000: ship's deck log, any draft ship's log, deck charts/plots, navigator's notebook, echo soundings, helm orders book, engine logs, engine movement orders, stowage plans, night orders book, owner's/manager's standing navigational instructions/manual, radar manual/instructions, Pilots, admiralty notices, chart update records, notes of protest, incident notification reports or other similar records; (c) in relation to any alleged salvage services from and including 2 November 2000 to 18 November 2000: all salvage agreements, stability and buoyancy data, turning data, stress analysis, salvage operation instructions, salvage operation working papers, towage agreements, tidal calculations, cargo manifests, copy bills of lading, fuel/bunker tank records, fresh water/provisions records, crew lists, weather forecasts, meteorological data or similar records; (d) in relation to any alleged general average act from and including 2 November 2000 to 18 November 2000: all agreements in relation to any alleged general average expenditure, all instructions in relation to any alleged general average expenditure, terms of engagement of any adjuster, notification of alleged peril, notification of alleged general average sacrifice, or similar records." 3 His Honour granted leave to the applicants to amend the application by adding Phrear Rugs Pty Limited ("Phrear") as an additional party to the application. Phrear was the owner of cargo on the vessel. His Honour reserved liberty to apply generally on twenty four hours notice or less as the Court may grant. 4 The application came before his Honour on 24 November 2000 in urgent circumstances. The transcript indicates that it was heard at 12.18 pm for ten minutes and then adjourned until 3.04 pm on that day when Senior Counsel appeared and made submissions on behalf of the defendant. The matter was urgent because the vessel in respect of which the orders were made was due to leave Sydney later that afternoon and the first order sought by the plaintiffs, which was granted pursuant to O 15A r 12, was that the respondent permit the applicants by their surveyor and/or solicitor to inspect the vessel. There was no special urgency in relation to the making of the preliminary discovery orders sought under O 15 r 6, as was pointed out by the defendant. 5 His Honour made orders after some discussion and reserved liberty to apply. In so doing he stated: "My reasons in making these orders are that I do so in circumstances of extreme urgency. Transcript will record exchanges. In general, as will appear from the transcript, I've accepted the submissions of Mr Street and been [sic] unable to accept those of Mr Rayment, who has informed the Court that, as could well be imagined, he has barely had time to consider the matter, and hence the generous provision of leave to, liberty to apply to the respondent." 6 The dispute in relation to preliminary discovery arises in this context. The vessel is a Malaysian flag container ship which sailed from Singapore on 26 October 2000 bound for Sydney via the inner route of the Great Barrier Reef with a cargo of 857 containers. A licensed pilot was embarked to conduct the navigation through the inner route between Goods Island and Cairns. The pilot was disembarked at Yorkeys Knob, off Cairns, at 0554 AEST on 2 November 2000. At 0600, the vessel resumed its passage to Sydney. At about 0723, the ship struck the north end of Sudbury Reef in the Great Barrier Reef at a speed of over 20 knots. Nobody was hurt and no oil or other pollutant escaped from the ship. The ship was detained. Queensland and Commonwealth authorities issued detention orders while the vessel's situation was being assessed. It was eventually refloated with the aid of tugs at 0928 on 14 November 2000. A subsequent investigation by the Inspector of Marine Accidents found that the significant unsafe act that resulted in the grounding was the inattention of the mate on watch aboard the vessel who was distracted by a telephone call to his family. There were a number of other contributing factors as set out in the report of the Australian Transport Safety Bureau, entitled "The Marine Safety Investigation Report 162", which was issued in May 2001, six months after the grounding. 7 In his affidavit of 24 November 2000 in support of the application for preliminary discovery and inspection of the vessel, the solicitor for the plaintiffs, Mr Derek Luxford, stated that he was informed on behalf of each of the first five plaintiffs that they, on behalf of the defendant (owners of the vessel) and the salvors, on behalf of their respective insureds, had provided salvage security and general average security. He was also informed that the owners declared general average in respect of the grounding on or about 17 November 2000. 8 The solicitor's affidavit sets out the circumstances in which the application was made for the preliminary discovery order in these terms: "12. The Plaintiffs believe that they may, in their own right or in their subrogated right, have a cause of action in tort and/ or in contract for recovery of economic loss against Owners and/ or the Vessel's managers and/ or the employer of the Master. The cause of action in contract would arise out of the contracts evidenced by the bills of lading and the General Average securities. The cause of action in tort would arise out of failure to exercise reasonable care in the circumstances giving rise to the Grounding and in the circumstances relating to the alleged salvage services and alleged General Average act. Any such proceedings are likely to include issues as to the Plaintiffs' entitlement to claim compensation from Owners for any loss or damage suffered by the Plaintiffs' insureds' as a consequence of the Grounding, Owners' entitlement to declare General Average, Owners' entitlement to a General Average contribution, the Plaintiffs' or their insureds' entitlement to obtain recovery for Owners for any salvage contribution and whether or not salvage and/ or General Average are likely to give rise to a loss to the Plaintiffs or their insureds for which relief in the nature of damages would be obtained. 13. Neither Phillips Fox nor the Plaintiffs have sufficient information to enable a decision to be made as to whether or not to commence proceedings against Owners and/ or the Vessel's managers and/ or the employers of the Vessel's Master for relief in the nature of damages. Further, neither Phillips Fox nor the Plaintiffs have sufficient information to enable a decision to be made as to whether any proceedings to be commenced against Owners and/ or the Vessel's managers and/ or the employers of the Master should be commenced in the names of the Plaintiffs, in the names of their insureds or both. 14. Based on my 20 years experience as a maritime lawyer, both in England and Australia, I am of the view that it would enable the Plaintiffs to make such decision if they, whether themselves or through their servants or agents, were able to inspect the Vessel and to inspect and obtain copies of the Vessel's relevant documents, including the deck logs, charts, stowage plans, engine logs, engine movement orders, documents relating to the employment of the Master, papers relating to the Grounding and papers relating to the salvage. Given my experience as a maritime lawyer, I believe that Owners have or are likely to have or have had or are likely to have had possession of such documents. 15. On behalf of the Plaintiffs, I have made attempts to obtain copies of or access to the documents referred to in paragraph 14 above and to obtain access to the Vessel. 16. On 22 November 2000 I had a telephone conversation with Owners' solicitor, Mr Timothy Elsworth of Ebsworth & Ebsworth. Mr Elsworth informed me that authority from Owners for the surveyor appointed by me on behalf of the Plaintiffs to inspect the Vessel and her papers was not likely to be forthcoming. Mr Elsworth further informed me that my clients could not expect Owners to produce the Vessel's papers until discovery. Later that day, I forwarded a facsimile to Mr Elsworth, a copy of which is annexed and marked "D". On 23 November 2000 I had a further telephone conversation with Mr Elsworth (also with Mr Craig Cater, also of Ebsworth & Ebsworth). Mr Elswoth and Mr Cater informed me that they could not, at that time, consent to my request for access to the Vessel and her papers. They further informed me that they were awaiting instructions in that regard from Kuala Lumpur. Mr Elsworth further informed me that Owners had arranged with the stevedores discharging the Vessel that nobody would be given access to the Vessel or the terminal area without Owners' written permission. I enquired whether the surveyor appointed by me had been given such written permission. Mr Elsworth's answer was 'no'. 17. On 22 November 2000 I retained Captain Iain Frost, marine surveyor, on behalf of the Plaintiffs, to attempt to investigate the Grounding and in particular to inspect the Vessel and her papers. On 23 November 2000 I had a telephone conversation with Captain Frost. Captain Frost informed me and I believe all his attempts so far to obtain access to the Vessel and/ or her papers had been refused. 18. On 23 November 2000 I requested Mr Troy Anderson, a solicitor in my employ, to make enquiries of the Great Barrier Reef Marine Park Authority ("GBRMPA") to attempt to ascertain whether GBRMPA had conducted, was in the process of conducting or was intending to conduct an investigation or an enquiry into the Grounding. I am informed by Mr Anderson and believe that the result of his enquiries of GBRMPA was that no such investigation or enqiuiry had been or would be conducted by GBRMPA. 19. My attempts to obtain copies of or access to the documents referred to in paragraph 14 above and to obtain access to the Vessel have so far not been successful. 20. I am not aware of any other source within Australia from which I can obtain this information to enable the Plaintiffs to make a decision in relation to commencement of proceedings. 21. I have been informed by Captain Frost and believe that the Vessel may be sailing from Sydney for Singapore on the afternoon of Friday 24 November 2000 or shortly thereafter." 9 On or about 23 November 2000, the day before the plaintiff's application, a number of important documents were removed from the vessel in Sydney prior to any proceedings being commenced, given to the defendant's solicitor, and couriered to the owner's office in Kuala Lumpur. These included original deck and engine log books, original engine movement books in relation to the deck and engine room, original data log of printout, original course recorder traces and echo sounder traces, original night order books, original GPS log book, original passage planning form and original master standing orders/night orders, together with the original in-out file of faxes and telexes. A note in evidence stated that "No copies of the above documents, or the working chart, the original of which is currently with Norton White, should remain on board the vessel. This is to avoid difficulties for the Master in denying access to copies of the documents". This removal was evidently designed to prevent access to these documents by potentially interested parties as a consequence of the grounding. There is also a reference to further documentation which is described as "number 11 salvage logs by Master dtd: 3/11-15/11". There is a photocopy of a receipt which appears to be that of Ebsworth and Ebsworth, the solicitors for the defendant, stating that the above documents have been received in order and the date of 23 November 2000 appears. 10 A marine surveyor retained on behalf of the plaintiffs boarded the vessel at approximately 1520 on 24 November 2000 and requested access to the ship's records in accordance with the Court orders including the full cargo stowing plan. He was then informed that a number of records which fell within the Court's order had been removed by the previous master. He carried out an inspection within the limited time available but was informed that the stowage plan was with the Chief Officer. The surveyor was required to leave the vessel at approximately 1720 on 24 November 2000. 11 Although the solicitor for the plaintiffs expected instructions to be obtained in relation to this matter by Phillips Fox, as at 24 November 2000 detailed instructions were outstanding. The relevant surrounding details were largely unknown when the application was made to the Court on 24 November 2000.