Frost v Warner

Frost v Warner - [2002] HCA 1 - HCA 2002 case summary — Zoe

[6]

GLEESON CJ, GUMMOW AND CALLINAN JJ. This is an appeal from the Court of Appeal of the Supreme Court of New South Wales. The Court of Appeal (Handley and Giles JJA, Rolfe AJA) allowed an appeal from the District Court (Garling DCJ), set aside that part of the judgment awarding damages to the appellants against the respondent, and substituted orders dismissing their actions against the respondent. In this Court the appellants seek orders which would restore their success against the respondent at the trial.
The circumstances giving rise to these proceedings may be shortly stated. On 8 January 1990 the motor vessel N'Gluka sank in Port Stephens resulting in the death of five children trapped in the front cabin. The appellants were on board the N'Gluka at the time of the accident and are the immediate family of Amanda Frost, one of the children who died in the accident.
The appellants commenced proceedings in the District Court claiming damages for nervous shock and other psychological trauma suffered as a result of the accident and the death of Amanda Frost. The defendants in that action were Mrs Warner and her husband. Mrs Warner is the sole respondent in this Court. The appellants alleged that Mr Warner was the "navigator and person in charge of the vessel" at all material times. They further alleged that the accident occurred because the vessel was overloaded and that Mr Warner had been negligent in allowing "far too many people to travel on this vessel"[1].
The appellants also sought to recover against Mrs Warner on two grounds. They submitted that Mr Warner was at all times acting as her agent and that therefore she was vicariously liable for his negligence. They further submitted that Mrs Warner was directly liable in negligence on the basis that she had "invited people on to the boat and she allowed the boat or vessel to become dangerously overloaded and she knew, or should have known that it was dangerously overloaded and that she should have taken steps to ensure the vessel was safe". Both these submissions were premised upon Mrs Warner possessing a sufficient degree of "control" over the vessel. This "control" was said to arise by virtue of her "status as registered controller" of the vessel under the Water Traffic Regulations (NSW) ("the Regulations"). The Regulations were made under power conferred by s 38 of the Maritime Services Act 1935 (NSW) ("the Act").

[28]

The appellants appeal to this Court on two grounds. The first ground is that the Court of Appeal erred in holding that the respondent's "status as registered controller" of the vessel did not make her responsible for the negligence of her husband (the vicarious liability issue). The second ground is that the Court of Appeal erred in holding that the respondent did not owe a duty of care, which included a duty to prevent the vessel sailing while it was grossly overloaded, by reason of her "status as registered controller" (the direct liability issue). In support of this submission the appellants further submit that the Court of Appeal was wrong to reject the trial judge's findings that the respondent knew or should have known of the overloading of the vessel. The construction of reg 11 is central to both the appellants' submissions. They contend in this Court, as they did below, that the Regulations gave the respondent the power to make another's use of the vessel unlawful and thus conferred an element of control upon her sufficient to found both direct and vicarious liability in the circumstances of this case.
It should be emphasised that the trial judge found that Mr Warner had de facto control of the vessel at all material times and that this finding is not challenged. As a result, if the Regulations do not have the effect contended for by the appellants in both branches of their submissions, the appeal must fail.
The respondent submits that while reg 11 does stipulate for the making of applications from persons who "control" registrable vessels, it does not, by force of the registration, confer a power of control upon the holder of a certificate of registration if that control otherwise is absent. The respondent further submits, in relation to the direct liability issue, that there was no evidence that she knew that the vessel was overloaded or "dangerously unstable" and that in fact the evidence demonstrated that she thought it was safe.
The respondent's construction of the Regulations is to be preferred; the Regulations do not confer a power of control on the respondent and the appeal must be dismissed. We turn to consider why this is so.

[34]

The circumstances surrounding the registration of Mrs Warner were not explored in the evidence. Mr Warner as owner may be taken to have encouraged or permitted or otherwise brought about or facilitated the registration of Mrs Warner as "registered controller". However, in no other respect did he either indefinitely or for a period confer upon her the immediate and exclusive possession of the N'Gluka or confer upon her the responsibility for its management and control[7].
The term "registered controller" does not appear in the Regulations or in the legislation, a point noted by Rolfe AJA. The trial judge appears to have used it as a synonym for the legislative expression "holder of the certificate of registration". "Holder of the certificate of registration for a vessel" is defined in reg 2(1) to mean "a person to whom a certificate signifying that a vessel is a registered vessel has been issued by the Board".
The application under reg 11 must comply with the requirements of sub‑reg (3), which include the requirement that the application be in writing and be accompanied by the prescribed fee. Once the application is granted and the vessel is registered, the Board is to issue a certificate of registration and an identification plate to the applicant (sub‑reg (4)). The applicant then becomes the "holder of the certificate of registration" for that vessel. The registration is valid for one year and is renewable (sub‑reg (5)).
The Regulations impose certain limited obligations on the holder of the certificate of registration. These include obligations to: affix the identification plate to the vessel (sub‑reg (6)(a)); produce the certificate of registration when required to do so (sub‑reg (6)(b)); notify the Board of any change in address (sub‑reg (6)(c)); and return the identification plate and certificate of registration upon expiration or cancellation of the registration (sub‑reg (6)(d)). The holder of the certificate of registration is also obliged to make the vessel available, when required, for the purposes of inspection or testing (sub‑reg (9)).
Upon ceasing to control the vessel, the holder of the certificate of registration is to return the certificate of registration and identification plate to the Board and is to supply to the Board the name and address of the person to whom control of the vessel has been transferred (sub‑reg (7)(a)). A person who acquires control of a registered vessel may apply for recording of acquisition of control of the vessel (sub‑reg (7)(b), (c)). If that application is successful then that person becomes the "holder of the certificate of registration" (sub‑reg (7)(c)). Registration may be cancelled or an application for registration or recording of acquisition of control refused under sub‑reg (10). It is significant to note the circumstances in which this power may be exercised. Sub‑regulation (10) provides:

[49]

The "control" contended for by the appellants is said to arise from the proper construction of two provisions of the Regulations, reg 11(2) and reg 11(11). It is convenient to deal with reg 11(2) first. The appellants submit that because the only person who may apply for registration is a person having "control" of the vessel, reg 11(2) operates so as to confer the control contemplated by the sub‑regulation upon the successful applicant. In this way the respondent is said to have been a person who had the right to decide the possession, disposition and use of the vessel. However, the reasoning depends upon a non sequitur. Regulation 11(2) does not confer "control" upon a successful applicant for registration either expressly or by implication. Rather, it operates in a negative sense to restrict the permissible class of applicants for registration to those who have the necessary "control" of the vessel.
This construction of reg 11(2) is further supported by examination of the other provisions of reg 11, particularly par (a) of sub‑reg (10) dealing with the refusal of applications and the cancellation of registrations. The significance of par (a) is that it allows the Board to refuse an application and to cancel registration if it discovers that the person who is the applicant or holder of the certificate of registration does not in fact "control" the vessel. Further, sub-reg (7)(b) provides that a person who acquires control of a vessel may apply for "recording of acquisition of control" and thereby become the holder of the certificate of registration in respect of that vessel. These provisions have no sensible operation if the holder of the certificate of registration is deemed by that registration itself to have "control". Registration is premised on control, but the Regulations do not operate to confer that control upon a person who does not in fact enjoy it.
The appellants' submission respecting reg 11(11) is that it conferred upon Mrs Warner the power to refuse to authorise or consent to the navigation of the vessel and thereby conferred the power to prevent the vessel from sailing on the day in question. The appellants submit that, when exercising that power, the respondent owed the occupants of the vessel a duty of care. The appellants further submit that at the material times the respondent knew or should have known that the vessel was overloaded and that she was in breach of her duty by failing to refuse her consent and thereby preventing the vessel from sailing while overloaded.
Regulation 11(11) does not confer a power to refuse to authorise or consent to the navigation of the vessel by a person. That power arises from being in "control" of the vessel in the defined sense. As already stated, the Regulations do not confer control; they are premised upon control. The effect of sub‑reg (11) is to make it an offence against the Regulations to navigate the vessel without the authority or consent of the holder of the certificate of registration.
Other provisions of the Regulations support this construction. The Regulations do not seek to impose liability on the person identified as the holder of the certificate of registration. Reference already has been made to the offences created by reg 11(13). It is significant that reg 11(13) makes the owner and the master guilty of an offence where the vessel's identification plate is not properly affixed (reg 11(13)(b)). This is so although sub‑reg (6) requires the holder of the certificate of registration to ensure that the identification plate is properly affixed. Further, the provisions in Pt II of the Regulations are not directed at the holder of the certificate. For example, regs 3, 5 and 6 are directed against the person navigating the vessel in violation of the conditions there set out, while reg 7(2) creates offences by "the owner" and "the master" of the vessel, but not by the holder of the certificate of registration.
Nor does the Act impose liability upon the holder of the certificate of registration. Section 13SA provides that "[t]he Board may, by notification published in the Gazette, limit the speed of vessels within navigable waters." Sub‑section (4) holds the master of the vessel liable if the notified speed is exceeded. Section 13YA holds the owner (and the master if negligent) liable for any damage to the Board's property. Section 21A is concerned with the "[l]iability of master and owner of ship under pilotage". Section 30F obliges the owner of the vessel, or the person having the control of the vessel, to identify the master of the vessel, where the master is alleged to be guilty of an offence.
The Regulations and the Act do not render the holder of the certificate of registration liable for contravention of the provisions therein contained or for other wrongs, except in so far as the holder may be either or both the "owner" and "master" of the vessel in question. The respondent was not the owner of the vessel; she did not at any relevant time have de facto control of the vessel; and she was not the employer of the person who did have de facto control.
The circumstance that the respondent was the holder of the certificate of registration under the Regulations is not sufficient to found liability either directly or vicariously. It is therefore unnecessary to consider the further point whether the Court of Appeal was correct in rejecting the trial judge's finding that the respondent knew or should have known the vessel was overloaded. Both limbs of the appellants' arguments require acceptance of a construction of the Regulations which should be rejected.
We should add that the appellants did not seek to rely upon any "holding out" by Mrs Warner of her husband. Such a submission would turn on their head the facts, and their appearance to those who boarded the vessel. Nor was the doctrine of "general reliance" pressed. The existence of such a doctrine was denied by a majority of this Court in Pyrenees Shire Council v Day[13] and, in any event, appears to have been concerned only with the liability of public authorities.

[63]

The evidence was that Mr Warner paid for the N'Gluka and that it was never intended that Mrs Warner should have any beneficial interest in it. Moreover, Mr Warner exercised actual control over the vessel and its navigation at all times following its purchase in October 1988. It seems that Mr Warner filled in the form for the N'Gluka's registration under the Regulations and that the form was thereafter signed by Mrs Warner. On two subsequent occasions, Mrs Warner signed the relevant forms for renewal of the registration.
So far as concerns Mrs Warner's signing of the application for the N'Gluka's registration and the forms for its renewal, she claimed that she was simply complying with her husband's request, as she had regularly done in relation to various companies with which her husband was associated, without concerning herself as to what was involved. More precisely, Mrs Warner denied that she knew that registration gave her any rights or responsibilities with respect to the N'Gluka. She accepted that she "never bothered to find out".
In her evidence, Mrs Warner denied any knowledge as to the precise number of people on the N'Gluka on the day in question. However, she was on board when, earlier in the day, the vessel had departed from Soldiers Point with various guests who were going to a restaurant, the Oyster Barn, for lunch. On the journey to the restaurant, Mrs Warner moved through the vessel serving savouries to the guests. She joined the other guests for lunch at the Oyster Barn and returned to the boat for its return, with the various guests, to Soldiers Point.
There was evidence that, as at January 1990, Mrs Warner had held a boating licence for nearly five years. She was familiar with the N'Gluka, having been on it on several occasions. She knew that there was seating for nine persons on the fly bridge and for another nine in the kitchen area and that it had six berths. She agreed in her evidence that she knew that there was "not anything like 20 life jackets on board". She also accepted that she knew it was dangerous for a boat to be overloaded.

[65]

The claim made against Mrs Warner, personally, is that she was negligent, on the day the N'Gluka sank, in that she failed to exercise her power, as registered controller, to prevent its setting off on its return journey. More precisely, it is put that, as registered controller, she should have withdrawn her husband's general authority to have possession and use of the vessel.
A duty to take positive steps to prevent a foreseeable risk of injury only arises if there is a relationship which gives rise to that duty[16]. The relationship may come into existence because of the known vulnerability of the persons who are at risk of being injured and the power of the person against whom the duty is asserted to control the situation that gives rise to the risk of injury[17].
In the present case, there was ample evidence from which the trial judge might properly infer that Mrs Warner knew the approximate number of people on board the N'Gluka and, also, that she knew or should have known the vessel was overloaded. There was, thus, evidence from which his Honour might properly infer that she was or should have been aware that the passengers on the N'Gluka were in a position of vulnerability. The more difficult issue is whether Mrs Warner was in a position to control the situation which put those passengers at risk.
The first question that arises is whether, in the face of her evidence that she did not know that she had any rights or responsibilities with respect to the vessel, it can be said that she was in any position at all to control the situation on the N'Gluka on the day of its sinking. And if that question is decided against Mrs Warner, there is the further question whether the withdrawal of Mr Warner's general authority to have possession and use of the N'Gluka would have made any difference. The latter question is not simply a question of causation; it goes also to the question whether, in fact, Mrs Warner did have control of the situation.
So far as concerns the first question that arises with respect to control, Mrs Warner cannot, in my view, escape liability on the basis that she did not know that, as registered controller, she was in a position to decide the possession, disposition and use of the N'Gluka. As a general rule, a person who allows his or her name to go forward for some purpose for which the law provides should not be heard to say that he or she does not know what rights are thereby conferred or what obligations are thereby imposed. At the very least, a person who fails to make inquiry as to the rights or obligations involved should be fixed with constructive knowledge of them.
Given that Mrs Warner accepted that she did not bother to find out what rights and responsibilities attached to her as registered controller of the N'Gluka, it should be held that she should have known that she could decide the possession and use of the N'Gluka. And it may be assumed, although it was not argued, that there was nothing in the terms of her conferral of general authority on her husband to prevent her withdrawing that authority immediately prior to the N'Gluka's departure for its return journey to Soldiers Point. However, that does not determine the matter.
On the assumption that Mrs Warner could have withdrawn her husband's authority to have possession and use of the N'Gluka, it is a matter of pure speculation as to whether the vessel would then have departed on its return voyage to Soldiers Point. There was no evidence to suggest that Mrs Warner's withdrawal of permission to have possession or use of the N'Gluka would have affected her husband's decision to make the return journey and there is much in the evidence to suggest otherwise. In particular, Mr Warner regarded himself as the owner of the vessel and the person entitled to make all decisions with respect to it. He apparently did not think the N'Gluka was overloaded and, in any event, it had earlier crossed without incident from Soldiers Point to the Oyster Barn with the same number of passengers on board.
In the absence of evidence that Mr Warner would not have commenced the return voyage if his wife has asserted her rights as registered controller of the N'Gluka, it cannot be said that, in fact, Mrs Warner had any control over the situation which, tragically, led to the loss of life. That being so, she was under no duty of care to the appellants.

[69]

It may be accepted that the Regulations have nothing, as such, to say about the question of the title to the vessel. But title (in the sense of ownership) and possession, represent only two bases for affixing legal responsibility to a person for a civil wrong done to another. The issue presented by the duty of care question is not the ownership or possession of the vessel, as such. It is the issue of power and responsibility. Did the respondent have the power and responsibility in the circumstances to prevent the damage and loss that occurred? Ownership and possession (or control of a vessel by its master) can answer such a question in the affirmative. But so, in a particular case, may other legal relationships - such as that here established by the Regulations.
Accordingly, the applicable question presented by the facts is whether, in the circumstances proved, the provisions and apparent purposes of the Regulations carry with them civil responsibility affixing to the "registered controller"[20] of the vessel liability for the consequences of setting to sea in circumstances of unsafe overloading of the kind that caused the loss and damage in issue in this case.
The respondent was undoubtedly the "registered controller" of the vessel under the Regulations. She was also on board the vessel at all material times and present as it was loaded with its passengers prior to its fateful journey. She must therefore be taken to be aware of the gross overloading of the vessel before it set to sea. Because of the terms of reg 11(11) of the Regulations, a registered vessel such as the N'Gluka could not be sailed without the authority or consent of the respondent as "registered controller". Accordingly, both by reason of this sub-regulation and the uncontested fact that the respondent was on board the vessel in its state of overloading, it may be inferred that those who navigated and sailed the vessel or who had custody of it (including the respondent's husband) and who permitted it to be navigated and sailed, did so with the respondent's express or implied authority and consent as "registered controller". Otherwise, they would have committed a criminal offence against the Regulations, an inference that would not readily be drawn in the circumstances. In my view, the inference of the respondent's implied authority or consent is irresistible.
The Regulations do not expressly provide that a "registered controller" is responsible in law for the damage and loss suffered by third parties as a result of negligence caused by, or arising out of, the use of the vessel. In this sense, the Regulations can be distinguished from the familiar statutory provisions imposing legal liability upon nominated individuals, such as commonly appeared in legislation governing compulsory insurance in respect of motor vehicles[21].

[71]

It therefore remains to elicit from the entirety of the facts, including such duties as are imposed by the Regulations, the extent to which the common law imposed upon a "registered controller" of a vessel, such as the respondent, liability for loss and damage caused by the use of the vessel. In this respect it is natural enough to ask, as the primary judge did, "[w]hy a person is registered under the … Regulations to be [the] registered controller if they have no responsibility in the control and/or operation of the vessel?" The words "controller" and "control" suggest precisely what they say - the "controller" is in "control" of the vessel. He or she is affixed by the law with the specified powers and responsibilities of "control". One obvious purpose of identifying and designating a person as such "controller" is to ensure compliance by a nominated person with the safety regime governing vessels on State waterways, subject to the Regulations. Safety was clearly a purpose of the Regulations. That can be seen from the type of subjects with which the Regulations dealt[22]. The need for safety on board vessels that carry passengers is self evident. The Regulations provide one means of ensuring such safety. They should not be given a narrow or restrictive interpretation. Nor should they be assigned a meaning that would defeat or undermine the achievement of that objective.
The respondent was not just another passenger on the vessel who happened to be its "registered controller" under the Regulations. By law, she assumed and enjoyed the power, and was subject to the consequent duties, that derived from that status. I agree, for the reasons given by Gaudron J[23], that the respondent could not escape legal liability on the basis that she did not know (and did not bother to find out) the entitlements she enjoyed by law as "controller" to decide the possession, disposition and use of a vessel such as the N'Gluka. The days in which a wife or other domestic partner of a person could sign documents, acquire a legal status at the behest of that person, and then disclaim legal responsibility when things go wrong have long since passed[24]. This Court should not encourage their revival. When people acquire a legal status it typically carries not only advantages but also duties.
By the Regulations, the power devolving on the respondent upon her registration as "controller" included, relevantly, that of depriving her husband and owner of the vessel, Mr Warner, of command over the vessel before it set out on its fateful voyage. Because the respondent and her husband were both physically present on board the vessel, the respondent had the capacity to exercise that power at any time prior to departure and thus prior to the accident. In fact, she failed to do so. This fact does not absolve her from liability in accordance with the common law, the content of which is adapted to, and expressed in a way consistent with, the applicable statutory law in the form of the Regulations[25]. We will never know what would have happened if the respondent had put down the savouries she was serving and exercised the duties which her status as "registered controller" permitted. I do not regard it as "pure speculation" to suggest that, had she done so, her husband would have proceeded on regardless[26]. The one thing that is clear is that the Regulations contemplated that she had the power to withdraw his authority and her consent to his navigating the vessel. She failed to exercise and assert that authority. Indeed, she did not even know that it existed She simply did as her husband asked - and that is conduct that contradicts the assumptions of the Regulations.
It is not to the point to demonstrate that another person, such as the respondent's husband, is also liable at common law as owner or master of the vessel. So much may be accepted. But those facts do not contradict the liability of the respondent for the failure to exercise her powers and to fulfil her duties as "registered controller". Such failure may render her personally liable in negligence where, as here, the failure resulted in a foreseeable injury to the appellants.
The joint reasons suggest that the flaw in the foregoing reasoning is that reg 11(11) does not confer "control" on the "registered controller" but is premised upon control[27]. I disagree. The only way that a "registered controller" could protect himself or herself from breach of the Regulations is to impute a power to all "registered controllers" to exercise control to the exclusion of others. By applying to be "registered controller", the respondent asserted that she was entitled to be, and would be, in control of the vessel for the purposes of the Regulations. Those purposes included exercising control over those who assumed command of the vessel. Whatever doubts might have arisen as to her position, had she been absent from the vessel at the critical time, these can be set to one side in this case because she was actually present. At all times she was therefore in both a legal and practical position to exercise her powers and to fulfil the duties contemplated by the Regulations. The fact that she was unaware of those powers and duties is irrelevant. If she did not wish to assume such powers and duties, she should not have procured or permitted her identification as the "registered controller" of the vessel. The Court should not send a signal that people like the respondent can acquire a legal status and then completely ignore the consequences.
Far from supporting the contrary interpretation[28], the provisions of reg 11(10)(a) to which the joint reasons refer support the construction which I favour. That paragraph addresses the attention of the Board which registers the "controller" to the factual "control" of the vessel. If the respondent was not in fact in a position to exercise "control" in accordance with the Regulations, that was a reason to refuse, or cancel, her registration as "registered controller". But it had not been cancelled before the fateful voyage.
One reason why, in Australian domestic waters, there have been fewer reported instances of vessels sinking because of overcrowding, with loss of life and much suffering, is that Australian waterways and vessels navigated upon them are subject to rigorous legal regulation. Such regulation is designed, amongst other things, to promote the safety of those who travel on our waterways. The Regulations are part of this fabric of legal regulation. They should not be construed as toothless provisions such as exist in other countries and help to explain the repeated instances of serious shipping mishaps that are reported, with grave loss of life. The Australian Regulations should be interpreted as having, and being intended to have, a real impact, relevantly, on passenger safety. The construction of the Regulations by the primary judge helps achieve that end. That adopted by the Court of Appeal defeats the attainment of safety. It rewards legal fictions, complacency and indifference. I am with the primary judge.

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