Ultimate Lady

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Ultimate Lady Limited v. the "Northern Challenger"

New Zealand High Court, Admiralty Register: Williams J.: Unreported: September 2001


In a case where the claimants alleged that the paintwork of their luxury yacht was damaged by debris from cutting and grinding operations on a nearby fishing vessel, no action in rem lay in admiralty jurisdiction where the operations in question were carried out by an independent contractor who was not in possession or control of the fishing vessel at the time. An exhaustive analysis of the witness and expert evidence did not establish that, on the balance of probabilities, the damage suffered by the yacht was caused by dust particles and metal filings emanating from the operations on board the fishing vessel. By berthing the yacht in a marine facility primarily used for repair and maintenance work, the claimants had not voluntarily assumed the risk of damage from negligent operations on the fishing vessel but, had the case in negligence been proved, the claimants would have been held contributorily negligent to the extent of 25%. The Rule in Rylands v. Fletcher and the tort of private nuisance had no application in the context of Admiralty and maritime claims. 

DMC Category Rating: Confirmed

On February 4 2000, the luxury yacht Ultimate Lady, owned by the claimant company, and the defendant ship, Northern Challenger, were berthed respectively on the eastern and western sides of Refit Wharf at Tauranga, New Zealand - a marine repair and maintenance facility. On that day, a workman was engaged in cutting and grinding the aft top-deck guard rails and stanchions of the Northern Challenger. The claimants alleged that debris from those operations was either thrown or blew across the wharf onto the Ultimate Lady, damaging her paintwork to such an extent that she eventually required almost complete repainting at a cost of NZ$385,700. The claimants claimed this amount from the Northern Challenger in an action in rem and arrested her in late February 2000. The Northern Challenger remained under arrest until the action was heard.

The claim was issued under the NZ Admiralty Act 1973, ss. 4(1)(d) and (e) and s.5(2)( b).These sections read as follows:
"s.(4)(1)The court shall have jurisdiction in respect of the following questions or claims:
(d) any claim for damage done by a ship;
(e) any claim for damage received by a ship;
s.5(2) In addition to the rights conferred by subsection (1) of this section, the admiralty jurisdiction of the High Court may be invoked by an action in rem in respect of all questions and claims specified in subsection (1) of section (4) of this Act……. Provided that –………
(b) In questions and claims specified in paragraphs (d) to (r)……… arising in connection with a ship where the person who would be liable on an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship, the jurisdiction of the High Court may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against:
(i) that ship if, at the time when the action is brought, it is beneficially owned as respects all the shares therein by, or is on charter by demise to, that person;"

In addition to claims in negligence, the claimants pleaded causes of action in nuisance and also for breach of the Rule in Rylands v. Fletcher.

Northern Challenger asserted:

a) there was no Admiralty jurisdiction under s.4(1)(d) as the cutting and grinding was not done by the ship but by an independent contractor;

b) that the damage to Ultimate Lady was not damage within s.4(1)(e)

c) that there was no Admiralty jurisdiction under s.5(2)(b) since the cutting and grinding was carried out, not by Northern Challenger, but by an independent contractor who was the person who would be liable in personam and was not the actual or beneficial owner or charterer of Northern Challenger nor was he in possession or control of her when the cause of action arose.

The Northern Challenger also raised the defences of volenti non fit injuria (claimant voluntarily accepted the risk of damage arising from negligence) and contributory negligence.

On the quantum of damages, the Northern Challenger claimed that any damages recovered by the Ultimate Lady should be reduced on grounds of betterment, given that the expected lifetime of the coating with which she had been repainted was longer than that of her paintwork at the time of the alleged damage.

In determining whether the damage sustained by Ultimate Lady was a claim for ‘damages done by a ship’ within the meaning of s.4(1)(d) of the 1973 Admiralty Act, the judge examined the relevant authorities and concluded that ‘to have a claim in rem under s.4(1)(d), Ultimate Lady must demonstrate that the damage which she suffered was a direct result or natural consequence of actions done as part of the significant or active physical navigation operations or management of Northern Challenger or her gear by her crew or those lawfully in possession or control of her…….. If at the time of the damage, there was no negligent or wrongful act for which the owner is liable, there can be no lien. The ship’s owner must be liable either directly or vicariously… so if the damage to Ultimate Lady resulted from actions of an independent contractor for whom the owner is not directly or vicariously liable, the damage is not ‘damage done by a ship’.

The judge continued that under s.4(1)(e) of the Act, giving the court Admiralty jurisdiction in respect of ‘damage received by a ship’, the phrase ‘damage received’ was wide enough to include ‘damage received by a ship through something other than another ship’. With regard to s.5(2)(b), the judge noted that ‘no claim in rem can arise against Northern Challenger under this head unless the claim arises a) in connection with a ship; and b) where the person who would be liable in an action in personam was the owner or charterer or ‘in possession or control of the ship when the cause of action arose.’

It followed that in this case, no claim in rem would arise against the Northern Challenger unless the Ultimate Lady was able to demonstrate that the workman responsible for the cutting and grinding operations (the person who would be liable in an action in personam) was ‘in possession or control’ of Northern Challenger at the time of the grinding. In fact, Ultimate Lady could not discharge this burden as the evidence showed that the workman in question was an independent contractor who ‘was not in possession or control of the Northern Challenger at the time.’

This finding was also sufficient to dispose of the claim against the Northern Challenger in negligence, but the judge went on to hold that, after an exhaustive examination of both witness and expert evidence, the Ultimate Lady had failed ‘to prove that it is more probable than not that the contamination from which she suffered came from the grinding of the Northern Challenger’s guard rails. There was some evidence of volcanic ash on the instrument tower of Ultimate Lady.

Although the following considerations were not necessary for the judgement, the court held that the defence of volenti non fit injuria failed. ‘Merely berthing at Refit Wharf where such work (grinding and cutting) was undertaken not infrequently by others cannot amount to voluntary assumption of risk of damage from the negligent act of Northern Challenger of which Ultimate Lady complains.’ However, the judge added that, had the claim in negligence of the Ultimate Lady succeeded, he would have held her contributorily negligent to the extent of 25%, by reason of berthing her ‘at a work berth in a construction zone where there were a number of other work berths and where work, including the cutting and grinding of steel, was constantly in progress on a large number of other vessels.’ It was not common for vessels of her class to use Refit Wharf for berthing purposes alone.

The claim under the rule in Rylands v. Fletcher also failed. That case established that ‘the person who for his own purposes brings on his land and collects and keep there anything likely to do mischief if it escapes, must keep it in at his peril and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape.’ The use of the land must also be ‘non-natural’. The court found that ‘if no case has thought it appropriate to apply the Rule in Rylands v. Flectcher in Admiralty and maritime cases in the 137 years since it was decided, the facts of this case are not such as to warrant any change in the law….The court declines to accept that the claim under the Rule… lies either generally in Admiralty and maritime law or in the factual circumstances of this case. The action in nuisance similarly failed, the court quoting from the headnote to the English case of Hunter v. Canary Wharf Ltd [1997] AC 655, to the effect that ‘it is established law that an action in private nuisance was brought in respect of acts directed against the plaintiff’s enjoyment of his rights over the land so that generally only a person with an interest in land could sue.’

On the issue of betterment, the court considered it unnecessary to consider the question further, ‘since it has long been established that betterment does not lie marine claims.’

Judgment was accordingly given for the defendants.


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