What relief is open to the shipowner on the pleadings?
29 In essence, Esso and BHP argued that they had fought the case on the pleadings. They argued that they had not assumed a positive burden of proof by pleading that there were four distinct occasions. They contended that the onus of proof of each occasion for which limitation was sought to be invoked fell on the person seeking to limit. Thus, Esso and BHP argued that the shipowner had failed to discharge its onus of proof. They contended that they had sought merely to defeat the shipowner's only pleaded claim that it was entitled to establish a single limitation fund to answer all claims that may have arisen against it from the events on 13 December 2008. They argued that having succeeded in demonstrating, as I found, that there had been more than one distinct occasion, the shipowner's case failed entirely.
30 Esso and BHP argued that the right to limit under the Convention applied to the aggregate of all claims that had arisen on a distinct occasion. They contended that Art 6 applied to identify a total sum that may be constituted in one limitation fund. Thus, they argued that the shipowner had assumed the burden of proving in this proceeding that all their claims had arisen on one distinct occasion.
31 I reject these arguments. First, the Convention does not deny a shipowner the right to limit his liability because he misidentifies the number of distinct occasions or the description of the occasion for which he seeks to invoke his right to limit. Only Art 4 excludes the entitlement of a shipowner to limit liability in the very particular circumstance that it stipulates. Indeed, the scheme of the Convention envisages that the shipowner has a right to limit his liability for however many distinct occasions are alleged or occurred.
32 Secondly, the Convention is not a domestic statute. It is an international treaty designed to give effect to the policy and purposes to which I referred in my earlier reasons: Strong Wise [2010] FCA 240 at [43]-[52]. Article 15(1) commences by declaring that:
"This Convention shall apply whenever any person referred to in Article 1 seeks to limit his liability before the Court of a State Party or seeks to procure the release of a ship or other property or the discharge of any security given within the jurisdiction of any such State."
33 The shipowner did seek to limit his liability, and the Convention, thus, applied to his claim by force of Art 15.
34 Thirdly, the scheme of Arts 6, 7 and 9 is to fix the limitation amount applicable to the aggregate of claims arising on each distinct occasion. Those articles do qualify the substantive right to limit liability that is created in Arts 1(1) and 2. Importantly, Art 2 is concerned with "… claims whatever the basis of liability may be", not occasions. And, Art 10 shows that the right to invoke limitation of liability is different from the protection of the establishment of a fund under Art 11. The former is declaratory of a right; the latter, together with Arts 12 and 13, gives effect to that right by a process equivalent to its enforcement.
35 The effect of my finding of two distinct occasions is that the shipowner is entitled to limit his liability for each distinct occasion. If the shipowner only creates a limitation fund in respect of the first distinct occasion, he will not have the protection of the provisions of the Convention against claims that arose on the second distinct occasion. But the text of the Convention should not be narrowly construed to deny the shipowner the rights to limit established in proceedings to which the Convention applies. No sensible purpose would be achieved by such an approach.
36 Fourthly, the findings of two distinct occasions would entitle the shipowner to plead, in separate proceedings, defences under the Convention that it could limit liability in respect of each such occasion. If the shipowner subsequently pleaded the effect of my findings of there being two distinct occasions in Esso and BHP's action for damages it would be entitled to immediate relief there of the kind it now seeks pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth). That is because of the issue-estoppels that my findings have created: Blair v Curran (1939) 62 CLR 464 at 531-532 per Dixon J. If, as Esso and BHP argued, the shipowner's claim here must be dismissed, the legal foundation or justification of that order was that there was not one, but two, and only two, distinct occasions for which the shipowner was entitled to limit. And, I rejected Esso and BHP's pleaded defences of two other distinct occasions, so that those may not be re-litigated. As Dixon J explained in Blair 62 CLR at 532.
"The distinction between res judicata and issue-estoppel is that in the first the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second, for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.
Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue-estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established. Where the conclusion is against the existence of a right or claim which in point of law depends upon a number of ingredients or ultimate facts the absence of any one of which would be enough to defeat the claim, the estoppel covers only the actual ground upon which the existence of the right was negatived. But in neither case is the estoppel confined to the final legal conclusion expressed in the judgment, decree or order." (emphasis added)
37 A shipowner is not precluded from bringing a limitation proceeding under the Convention after he has been sued to judgment on a claim within Art 2(1). He can then make that judgment answerable only against the limitation fund established in the subsequent limitation proceeding: Victrawl 183 CLR at 619.
38 The controversy between the parties that was litigated involved the determination of whether the material facts pleaded by the parties were established. Here, the shipowner has proved that it is entitled to establish, at least, a limitation fund, but failed to establish on its pleaded claim, that that fund extended to meet all claims that might have arisen on 13 December 2008.
39 The statutory conferral of the right to limitation of liability under the Convention in s 25 of the Admiralty Act and s 9 of the Limitation of Liability for Maritime Claims Act is not merely procedural. Rather, it is a substantive right conferred on a shipowner to limit his liability in respect of all relevant maritime claims arising from a particular occurrence: Victrawl 183 CLR at 619. Those Acts give force to the international regime established in the Convention. Each State Party must participate in and observe that regime. It controls and limits substantive rights and liabilities in respect of the claims that are subjected to its provisions: Victrawl 183 CLR at 617.
40 Importantly, in Victrawl 183 CLR at 619 Deane, Dawson, Toohey and Gaudron JJ approved, as apposite to explain the nature of the shipowner's substantive right to limitation of his liability, the observations of Dixon J in explaining the law maritime and ss 503 and 504 of the Merchant Shipping Act 1894 (Imp) in James Patrick & Co Ltd v Union Steamship Co of New Zealand Ltd (1938) 60 CLR 650 at 673. He said that the shipowner's right to limit his liability is not a defence; rather it limits the damages he can be called upon to pay. Dixon J explained that the relief that the shipowner obtained in a limitation proceeding was that a fund, representing his maximum liability, was established and administered by the Court. He said (James Patrick 60 CLR at 673):
"The court then administers the fund brought into court by the shipowner. The court ascertains the claims upon it, marshals them and distributes the fund ratably among the claimants. In principle the title to relief of such a nature is a substantive right enforceable by independent proceedings. It is more than one of the conditions affecting the amount of the loss or damage to be awarded in the collision action. A limitation decree operates upon claims that have passed into judgment as well as upon those that rest upon the original cause of action. Failure to assert the right in the collision action ought, therefore, to be no bar to its subsequent enforcement." (emphasis added)
41 A similar position in respect of the position once a limitation fund is constituted under Art 11, was taken by Clarke LJ with whom Rix LJ and Sir Martin Nourse agreed in The Western Regent (Seismic Shipping Inc v Total E&P UK plc) [2005] 2 Lloyd's Rep 359 at 363-364; [2005] 2 All ER (Comm) 515 at 523-524 [14]-[16], [20]; see too Bouygues Offshore SA v Capsian Shipping Co (Nos 1, 3, 4 and 5) [1998] 2 Lloyd's Rep 461 Sir John Knox at 471, 474 with whom Evans LJ at [34] and Mummery LJ at 467 agreed: R Williams: Practical Problems in the Current Global Limitation Regime published as Chapter 15 inDR Thomas: Liability Regimes Contemporary Maritime Law (2007 Informa) pp 279-299 at [15.49]-[15.54].
42 Although, the shipowner did not plead an alternative case, and denied that claims had arisen on more than one distinct occasion, I do not consider that it has failed to establish that it may limit its liability under the Convention. Its pleaded claim was found to be both too wide (because it sought only one fund for all claims) and too narrow (because it did not seek relief, even in the alternative, if there were claims arising on more than one distinct occasion). However, that cannot be decisive, given the nature of this right. The right is one to constitute a fund that will meet all claims of a particular description - namely that they arise on a distinct occasion. The identification of the occasion for which a limitation fund may be established can be controversial, as it was here. But a shipowner's imprecision, and even error, in the task of identifying a claim or occasion is not a ground under the Convention on which the right to limit is lost. The existence of more than one distinct occasion means that the shipowner's right to limit is both narrowed and expanded. It is narrowed, because he must establish a distinct fund for each occasion on which he wishes to invoke the right to limit; and the right is expanded to embrace each occasion on which he does establish a limitation fund. The right to limit can be lost under Art 4 only if a claimant can demonstrate that the shipowner is not entitled because the loss resulted from his personal act or omission committed with the intention to cause it, or recklessly with knowledge that such loss would probably result.
43 A shipowner who wants to establish a limitation fund quickly, so as to free his ship from arrest, and the risk of future arrests, should not be at risk of having to begin afresh if he pleads and pursues a case that misidentifies the number of occasions on which claims arose. The purposes of these proceedings were, first, to invoke limitation of liability under Art 10(1) of the Convention, and, secondly, if that were permitted, to constitute a limitation fund under Art 11. Once a fund has been constituted, because it is a substitute for the ship, it has the nature of a fund realised by sale of a ship in an action in rem: cf James Patrick 60 CLR at 675. By force of Art 13(1) all persons who had a claim that was subject to limitation can only proceed against the fund. The ship is freed from all maritime liens that had attached to her in respect of those claims and the fund is the only res answerable for any such lien: see The Tolten [1946] P 135 at 144, 153 per Scott LJ; Strong Wise [2010] FCA 240 at [51]-[52].
44 Of course, the real controversy between the parties has always been whether the shipowner can invoke limitation of liability under Art 10 on one or more than one distinct occasion. That was a controversy litigated at the trial and I am able to decide it: Vale v Sutherland (2009) 237 CLR 638 at 657 [41] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ.
45 Here, no new issue will be raised by allowing the shipowner to rely on the findings of there being two distinct occasions. There is an analogy, albeit not exact, in the preparedness of courts to allow a verdict for the plaintiff to stand even where he or she had been refused or had failed to apply for an amendment, but the evidence disclosed a case fit to be determined by the tribunal of fact: Leotta v Public Transport Commission (NSW) (1976) 9 ALR 437 at 446 per Stephen, Mason and Jacobs JJ applying Mummery v Irvings Pty Ltd (1956) 96 CLR 99 at 112; see too Dare v Pulham (1982) 148 CLR 658 at 664 per Murphy, Wilson, Brennan, Deane and Dawson JJ. In Mummery 96 CLR at 112 Dixon CJ, Webb, Fullagar and Taylor JJ said:
"There is, of course, no doubt that the question of extending the issues at the trial was peculiarly within the discretion of the trial judge. But, on the assumption that there was some evidence upon which the jury could have reached a conclusion on this additional issue, there was every reason why it should have been submitted to the jury. If, as the members of the Full Court appear to have thought, the present judgment precludes the appellant from bringing any further action that was an additional reason why that course should have been adopted. We find it unnecessary to express any view upon that question but our doubts on this point do not lessen our belief that, if there was evidence upon this additional issue, a refusal to extend the issues was not, in the circumstances, justifiable." (emphasis added)
46 As they had observed immediately beforehand:
"But in answer to all of these considerations the appellant was in a position to say that the additional issue had been thrown into the ring by the respondent itself and that, having adopted this course, it was in no position to resist an application to re-open the case and make the question of the foreman's negligence a real issue. Why, it might have been asked, should the jury be invited to conclude that the appellant's injuries were caused by the negligence of the foreman and, thereupon, to find for the respondent when that very circumstance would, if the pleadings were in proper form, constitute a ground for awarding damages to the appellant?" (emphasis added)
47 When the shipowner's counsel opened its case on the first day of the hearing he stated its alternative position to the pleaded single distinct occasion. He said that the shipowner's "second position" was that it wanted to be able to indicate its preferred course as to what fund or funds it would seek to constitute after I made any finding of four (or less) occasions. Counsel for Esso and BHP consistently objected to this "second position", stating in his opening that if more than one distinct occasion were found then they would argue, as they now have, that the proceedings fail.
48 As is clear from my principal reasons, the controversy tendered by the parties involved a determination of whether claims arose on one or more occasions. The evidence in the proceedings was admitted on that basis, in order to either demonstrate or negate the existence of more than one occasion. Esso and BHP argued that there was some possible unfairness to them were I to decide that the shipowner was entitled to limit its liability by establishing a fund for the first occasion and to have a declaration that it was entitled to a limit in respect of the second. They argued that they could have conducted the case differently.
49 However, the opening of counsel for the shipowner on the first day of the trial foreshadowed that it would seek such relief if its wider claim failed, as it has. Esso and BHP had sought to establish in the litigation that there was more than one occasion on which claims arose so as to prevent the shipowner being able to limit their potential claims to be met by a single fund. That fund was likely to be exhausted by claims for sums significantly in excess of the limitation amount made not only by them but also by Huntsman and Qenos. Although they asserted they might have conducted the claim differently had the shipowner pleaded a case in the alternative, they did not identify how that would have occurred in a practical sense. At all times the shipowner intended to promote its primary position that it could constitute one fund to answer all claims. The shipowner never sought to establish, as a primary position, that more than one occasion had arisen. Its interests were to concentrate liability into as few occasions as possible, most preferably into one. If the shipowner failed to counter Esso's and BHP's arguments that more than one occasion had arisen it would be in its present position.
50 The pleaded positions of the parties were driven by their economic interests in establishing a smaller or larger number of occasions. Very considerable forensic effort was devoted by Esso and BHP at the trial and in the expert evidence they prepared for it, in seeking to establish the second and fourth of their pleaded distinct occasions (namely the dead slow astern engine movement commencing at 15:46:01, that I found to be part of the first distinct occasion; and the slow astern engine movement commencing at 16:27:59 that I found to be part of the second distinct occasion).
51 I am not persuaded by the unsupported suggestion that Esso and BHP would have conducted their case in any different way had the shipowner pleaded an alternate claim. Esso and BHP wanted to maximise the number of distinct occasions and, hence, possible limitation funds in order to escape the likelihood of a partial recovery of their claims against one, or a lesser number of, limitation funds. The more distinct occasions that they could prove, the greater their potential for a larger recovery.
52 Since the parties fought the proceedings on these issues, I am of opinion that I can give effect to my findings by ordering the constitution of a limitation fund in respect of the first distinct occasion and making a declaration in respect of the second. It is not necessary for the pleadings to be amended to do so: Leotta 9 ALR at 446; Mummery 96 CLR at 112.