Switzerland Insurance Australia Ltd v Mowie Fisheries Pty Ltd [1997] FCA 231

For the reasons we have given, reg.402, having regard to the terms of reg.103(4) as it stood in 1994, was ultra vires the Marine Act (Vic) at the date the Pacific Queen was lost. It follows that any failure by the respondent to comply with the terms of Schedule II to the Code, as published in 1988, did not constitute a breach of the second warranty. It also follows that it is unnecessary to consider Switzerland's alternative submission, which was founded on the assumption that reg.402 was valid. We express no view on the effect on reg.402 of the amendment to reg.103(4), which took effect in 1994. That question was not argued before us and does not arise for determination. Interpretation Act (Vic), s.22 The respondent submitted that if reg.402 were otherwise invalid, this was a case for the application of s.22 of the Interpretation Act (Vic), which provides that every subordinate instrument shall be construed as operating to the full extent of, but not so as to exceed, the power to make the subordinate instrument conferred by the Act under or pursuant to which it is made. Mr Street contended that s.22 applies to reg.402, so that it should be read as referring to the Code as amended from time to time. But s.22 does not authorise the Court to rewrite a subordinate instrument so as to give it a valid operation, regardless of the language used in the instrument: Bank of New South Wales v Commonwealth (1948) 76 CLR 1, at 371-372, per Dixon J. There must be some foundation in the language to justify a different operation being given to the instrument. It is not permissible for a court to redraft a set of regulations so that they conform to the governing legislation: R. v Burgess; Ex parte Henry (1936) 55 CLR 608, at 655, per Latham CJ; Sloane v McDonald Industries (Sales) Pty Ltd (1989) 17 NSWLR 86, at 99-101, per Cole J. Section 22 of the Interpretation Act (Vic) therefore does not assist the respondent to save reg.402 from invalidity. 3. THE IMPLIED WARRANTY The Implied Warranty Argument Switzerland contended that, even if reg.402 of the Victorian Marine Regulations was invalid, the respondent had breached the implied warranty of legality created by s.417 of the Marine Insurance Act. Section 47 provides as follows: "There is an implied warranty that the adventure insured is a lawful one, and that, so far as the assured can control the matter, the adventure shall be carried out in a lawful manner." Switzerland submitted that the Pacific Queen was subject to s.119 of the Marine Act 1976 (Tas) (the "Marine Act (Tas)") and had failed to comply with its requirements. Section 119, which is within Part XIII, Division 3 of the Marine Act (Tas), provides as follows: "(1)...a vessel to which this Division applies - (a) when plying to seaward from any port within the jurisdiction of the Authority; or (b) when plying within the limits of any port as defined pursuant to section 143 or on any inland waters in this State, shall be provided with a duly certificated master and the prescribed complement of officers and crew. ... (2) For the purposes of subsection (1), the prescribed complement of officers or crew of a vessel is such number of officers and crew- (a) as may be prescribed in the regulations; or (b) ... being officers and crew holding such certificates or possessed of such experience and qualifications, if any, as may be prescribed in the regulations." The expression "port" is defined in s.4(1) to include, unless the contrary intention appears: "any harbour, haven, roadstead or place of resort for shipping, and any navigable river". "Plying", when used in relation to a vessel, is defined to include "proceeding, going, and navigating (whether for trading purposes or not)": s.4(1). Section 4(2)(a) of the Act provides as follows: "In this Act: (a) a reference (however expressed) to a vessel going to sea, or proceeding to sea, or being taken to sea, or being sent to sea includes a reference to a vessel - (i) plying seaward beyond the limits of a port or of sheltered waters (being those limits as defined pursuant to section 143); and (ii)getting under way or attempting to get under way for the purpose of going to sea." The relevant regulations, for the purposes of s.119(2)(a) are the Marine (Safety Manning) Regulations 1992 (Tas) (the "Manning Regulations (Tas)"). The regulations at the relevant time provided that vessels of 250 kW propulsion power and over (but les than 500 kW) required an MED 2 when operating in an "offshore" area: regs. 16, 20, Schedule 3, Table 2. Switzerland contended that the Pacific Queen plied seawards from its anchorage at Boulder Point on King Island, where it anchored for about three hours on 16 March 1996, before resuming its voyage from Eden in New South Wales to Portland in Victoria. It also contended that the anchorage was a "port" within s.119 of the Marine Act (Tas), so that the section applied to the vessel. Since (so it was said) the Pacific Queen had a propulsion power of more than 250 kW, it was required under the Manning Regulations (Tas) to have an MED 2 on board for offshore operations. Because the vessel did not comply with this requirement, the adventure had not been carried out in a lawful manner and the implied warranty created by s.47 was breached. The Trial Judge's Conclusions on the Implied Warranty The trial Judge rejected Switzerland's contentions on this point. His Honour concluded that, on the evidence, he was not satisfied that the place of anchorage at Boulder Point was a "harbour, haven or place of resort for shipping". He found that only one trawler went there. In addition, some cray-fishing boats from Apollo Bay in Victoria used the spot as an anchorage if there was a sudden front, since they worked in the area the whole time. However, the cray-fishing boats went back home to unload. His Honour also expressed the view that at the time of the loss the vessel was not plying seaward from a "harbour, haven or place of resort for shipping" within the meaning of s.4(1). His Honour did not, however, explain the basis for this view. Other Tasmanian Provisions Before proceeding further on this point, it is convenient to consider why Division 3 of Part XIII of the Marine Act (Tas), including s.119, applied to the Pacific Queen. Section 118 of the Marine Act (Tas) provides that Division 3 of Part XIII applies to and in relation to all vessels specified in Part XV (dealing with survey of vessels) which are used for navigation within such limits as are defined in accordance with s.143 of the Act. Section 149, which is within Part XV, specifies that vessels for which survey certificates are required include "commercial vessels", an expression which clearly included the Pacific Queen (see definition in s.4(1)). An exemption is provided for vessels which the Authority recognises as having a valid and unexpired certificate from another Australian authority: s.148(1). However, the recognition requires an affirmative exercise of discretion by the Authority and no such exercise of discretion occurred in relation to the Pacific Queen. Section 143 provides that, for the purposes of s.142 (which deals with the extent of authority to navigate conferred by a certificate of survey) regulations may be made defining the limits of "a port in sheltered waters or part of any port or sheltered waters, or the limits applicable to coastal waters". The power conferred by s.143 has been exercised by the making of the Marine (Limits of Operational Areas) Regulations 1985 (Tas) (the "Operational Regulations (Tas)"). Regulation 5 and Schedule 3 define Tasmanian coastal water limits by categories that extend up to 600 nautical miles to seaward of the coast (see definition of "Tasmanian coastal and middle water operations" in s.4(1) of the Marine Act (Tas)). The categories include "offshore" waters, which extend from 30 to 200 nautical miles to seaward of the coast. Regulation 3 and Schedule 1 of the Operational Regulations (Tas) define the limits of a number of Tasmanian ports, for the purposes of s.143 of the Marine Act (Tas). Three of these ports whose limits are so defined are ports of King Island, namely, Currie, Grassy and Naracoopa. Regulation 3 and Schedule 1 do not refer to the area off Boulder Point where the Pacific Queen anchored for about three hours on 16 March 1994, before resuming its voyage from Eden towards Portland. Was s.119(1)(a) of the Marine Act (Tas) Infringed? In our view, Switzerland's contentions on this issue should not be accepted. It was open to his Honour to make the findings of fact he did relating to the use of the anchorage at Boulder Point. Mr Rayment relied on a 1982 edition of the "Australian Pilot", which suggested that during westerly gales coasting vessels often anchor in depths of about 16 metres on the bank near Boulder Point formed by sand heaped up at the junction of tidal streams. However, this document was published 12 years before the relevant events. It was open to the trial Judge to prefer evidence as to the extent of more recent usage by vessels of the area near Boulder Point. The only part of the definition of "port" on which Mr Rayment placed reliance was the phrase "place of resort". The full phrase employed in the definition is "place of resort for shipping". The word "shipping" is defined by s.4(1) of the Marine Act (Tas) to include "the putting of persons and things aboard a vessel and the transporting of persons and things by vessel". The definition, perhaps, does not advance matters very far. But it tends to reinforce what would follow in any event, namely, that for an area near the coast to be a place of resort for shipping, it must be resorted to frequently or customarily by shipping generally. This does not mean that an area can be a place of resort for shipping only if it is resorted to by every category of vessel that navigates nearby waters. Nonetheless, where the finding is that only one trawler and some cray boats from a particular location use the area, it is difficult to regard the area as a place of resort for shipping, for the purposes of the definition of "port" in s.4(1) of the Act. The context in which s.119(1)(a) uses the word "port" supports this view. The effect of s.119(1)(a) is that any vessel plying to seaward from a "port" must comply with Tasmanian crewing requirements. It is not enough that the vessel has a valid certificate from the competent authority of another State, unless the Authority specifically accords recognition to that certificate (see s.148(1)). Nor is there any exception available for emergencies, as where a vessel en route from a New South Wales port to a Victorian port is forced to seek shelter on the Tasmanian coast. In such circumstances, the consequences of inadvertent non-compliance with Tasmanian law could be very serious (as the argument in the present case illustrates). It should not be assumed that the Tasmanian Parliament intended s.119(1) to have such a broad sweep that it catches vessels which simply shelter in an area not frequently used for that purpose by shipping generally. We tend to the view that there is a second answer to Switzerland's contentions. The definition of "port" in s.4(1) of the Marine Act (Tas) applies only in the absence of a contrary intention. Section 119(1) applies to vessels "when plying to seaward from any port within the jurisdiction of the Authority". Plying is defined to include "proceeding" and "going". While this appears to be a very broad definition, s.4(2) provides that a reference, however expressed, to a vessel going to sea or proceeding to sea includes a reference to a vessel plying seaward beyond the limits of a port being those limits as defined pursuant to s.143. Having regard to the definition of "plying" in s.4(1), s.119(1)(a) of the Act contains a sufficient reference to a vessel going to sea or proceeding to sea to attract s.4(2). It is true that s.4(2) contains an inclusive definition of the expressions "going to sea" and "proceeding to sea". Nonetheless, the explicit reference in that definition to a port, the limits of which are defined pursuant to s.143, suggests that s.119(1)(a) is intended to apply only to ports the limits of which have been so defined. In other words, s.119(1)(a), when read with s.4(2), reveals an intention that the manning requirements specified in the regulations should apply only to vessels plying to seaward from a port the limits of which have been defined pursuant to s.143. This construction of s.119(1)(a) does not limit the power to define the limits of a port pursuant to s.143; the definition of "port" in s.4(1) applies to the word as used in s.143. However, the construction of s.119(1)(a) recognises that the broad definition of "port" in s.4(1), could lead to surprising consequences that are unlikely to have been intended by the Tasmanian Parliament. In particular, s.119(1)(a) would apply to any vessel leaving a "place of resort for shipping" on the Tasmanian coast, regardless of the duration or purpose of the stay at the place of resort and regardless of whether the place of resort was designated as a port by the Operational Regulations (Tas). As we have said, an emergency stop at a place of resort, even for a short period, could attract the manning requirements of Tasmanian law. This would be so despite the facts that the place of resort had not been defined as a port by the Operational Regulations (Tas) and that the master or owner of the vessel had no means of ascertaining that the area would or might be classified as a "place of resort for shipping". We appreciate that s.119(1)(a) uses the expression "plying to seaward from any port within the jurisdiction of the authority", while s.119(1)(b) refers to a vessel "plying within the limits of any port as defined pursuant to section 143". The reason that s.119(1)(a) does not refer expressly to s.143 is that, for reasons that have been explained, s.4(2) incorporates the reference to the "limits [of a port] as defined pursuant to section 143". Since s.119(1)(b) does not contain language which refers to a vessel going to sea or proceeding to sea, s.4(2) does not apply to it and thus an express reference is required to the limits of a port as defined pursuant to s.143. Unless the construction we tend to favour is adopted, the result is that a vessel must comply with State manning requirements if it is plying seaward from a port, whether or not the limits of the port are defined pursuant to s.143. The vessel must also comply if it is plying within the limits of a port so defined. But if the vessel is "plying" within a port, not being a port the limits of which are defined pursuant to s.143, the manning requirements do not apply. It is difficult to see why such a result would be intended. We prefer to limit ourselves to a tentative expression of opinion on the construction of s.119(1)(a), as we have not had the benefit of a detailed analysis of the scope and operation of the Marine Act (Tas). It is enough to rely on the first answer to Switzerland's argument that the respondent was in breach of the implied warranty created by s.47 of the Marine Insurance Act. In our view, there was no such breach. 4. CONCLUSION For the reasons we have given, we conclude that Switzerland has not made out a case in defence to Mowie's claim for indemnity. It is not, therefore, necessary for us to express a view as to whether any conduct on the part of Switzerland constituted a waiver of any breach on the part of Mowie. The appeal should be dismissed. Our present view is that costs should follow the event. However, we shall stay the costs order for a period of 14 days in order to allow either party to file written submissions on costs. Should either party file any such submissions, the other party should respond within 14 days. I certify that this and the preceding 35 pages are a true copy of the Reasons for Judgment of the Honourable Justices Hill and Sackville. Associate: