PERUSAHAAN PERSEROAN (PERSERO) PT PERTAMINA v. TREVASKIS LTD AND OTHERS

CACV 102/2021

[2022] HKCA 1089

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 102 OF 2021

(ON APPEAL FROM HCAJ NO 98 OF 2019)

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J U D G M E N T

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Hon Kwan VP:

1.  This appeal brought by the plaintiff raises a question of the proper construction of section 15 of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance, Cap 434 (“the Ordinance”) and certain provisions of the Convention on Limitation of Liability for Maritime Claims 1976 (“1976 Convention”), which have the force of law in Hong Kong as provided in section 12 of the Ordinance and Schedule 2 thereto. We are concerned in particular with articles 2(1)(a), 2(1)(c), 2(1)(d) and 18(1) in the 1976 Convention.

2.  The plaintiff’s vessel “ANTEA” collided with Trevaskis Ltd’s vessel “STAR CENTURION” whilst the latter was lying at anchor in Indonesian waters; as a result STAR CENTURION sank. The plaintiff brought this action (HCAJ 98/2019) against the defendants (Trevaskis Ltd and all other persons claiming or being entitled to claim damages arising from the collision) to limit its liability. The defendants issued a summons in this action (“the Summons”) for a declaration that part of the claim by Trevaskis Ltd in respect of the raising, removal, destruction or the rendering harmless[1] of STAR CENTURION not be subject to limitation under article 2 of the 1976 Convention and/or the limitation fund constituted by the plaintiff.

3.  By his decision on 22 February 2021 (“the Decision”)[2], Anthony Chan J granted the declaration sought in the Summons, holding that on the proper construction of the relevant provisions, the wreck removal claim of Trevaskis Ltd fell within article 2(1)(d) exclusively, and was therefore excluded from the limitation regime under the Ordinance through a reservation made under article 18(1).

4.  Article 2(1) sets out the claims that shall be subject to limitation of liability. Article 2(1)(d) covers “claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship”. The operation of article 2(1)(d) has been suspended by section 15(3) of the Ordinance. As it was held that the present wreck removal claim fell exclusively within that article, the claim was not subject to limitation.

5.  The plaintiff contended before the judge and on appeal that the subject wreck removal claim did not just fall within article 2(1)(d) but also within articles 2(1)(a) and (c), which are not affected by the suspension in section 15(3). The judge was in error in holding that the more general terms of articles 2(1)(a) and (c) should give way to the specific terms of article 2(1)(d) in this situation, applying the maxim of generalia specialibus non derogant[3] , that the sub-paragraphs in article 2(1) should be regarded as mutually exclusive, and that the claim here fell exclusively within article 2(1)(d).

Factual background

6.  The relevant background matters were summarised in §§4 to 13 of the Decision and are as follows:

“4. The facts are not in dispute and may be succinctly stated as follows. On 13 January 2019, “ANTEA” collided with “STAR CENTURION” whilst STAR CENTURION was lying at anchor in Indonesian waters. As a result of the Collision, STAR CENTURION sank.

5. On 14 January 2019, Trevaskis Ltd, the owner of STAR CENTURION commenced in personam proceedings against the plaintiff, the owner of ANTEA in HCAJ 3/2019.

6. Shortly after the Collision, salvors were engaged to remove pollutants from the wreck. On 24 January 2019, the Indonesian Ministry of Transportation issued a Wreck Removal Order requiring the defendants to raise, remove and render harmless the wreck[4].

7. On 3 February 2019, the salvors were engaged under a new contract to continue removing the remaining pollutants from the wreck and to provide caretaker services to prevent other vessels from colliding with the wreck pending its removal.

8. On 28 May 2019, another salvor was engaged to remove, render harmless and dispose of the vessel including anything that was on board the vessel in compliance with the Wreck Removal Order.

9. On 10 October 2019, the plaintiff commenced this action against the defendants to limit their liability in respect of the Collision. On 28 April 2020, the plaintiff and Trevaskis Ltd entered into a settlement agreement whereby it was agreed, inter alia, that ANTEA was 100% to blame for the Collision.

10. On 6 May 2020, a limitation decree was granted by Master Ho by consent[5]. The limitation decree was made expressly without prejudice to the present application. On 26 May 2020, the plaintiff constituted a Limitation Fund in this action by paying into court the sum of HK$175,062,000.

11. The Summons was filed on 22 June 2020.

12. As of 6 August 2020, the Wreck Removal Claims in question (including claims in relation to wreck buoyage) amounted to US$17,780,994.36[6] (or about HK$139 million). Since the wreck removal operations are still underway, the quantum of these claims will increase with time.

13. Given that the Wreck Removal Claims alone are approaching the size of the Limitation Fund, the defendants’ recovery in respect of the loss of STAR CENTURION[7] will be significantly impaired if such Claims are to be subject to limitation.”

Legislative history

7.  In light of the submissions of Mr Alder, who appeared for the plaintiff throughout, that the legislative history and English case law on the earlier Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships in 1957 (“1957 Convention”) should have significant impact on the proper construction of the provisions under discussion in the 1976 Convention, I would give an account of the legislative history to make the ensuing discussion intelligible.

8.  The right of a shipowner to limit his liability for damage caused to a third party dated back to the 17^th century and was very much a continental concept. The UK enacted its first legislation in 1733, which provided for limitation of liability in respect of theft by master or crew, without knowledge or privity of the shipowner. The rights of limitation of liability were extended through the early part of the 19^th century and were consolidated in the Merchant Shipping Act 1894, which covered limitation of liability in cases of loss of life or personal injury or loss or damage to property[8].

9.  Under section 503(1)(d) of the 1894 Act, a claim that a shipowner was “liable to damages” for loss or damage caused to another vessel or goods or other things on board caused by reason of “improper navigation of the ship” taking place without the actual fault or privity of the shipowner, was subject to limitation. By section 1 of the Merchant Shipping (Liability of Shipowners and Others) Act 1900, the limitation of liability of shipowners set by section 503 was extended to all cases where, without their actual fault or privity, “any loss or damage is caused to property or rights of any kind, whether on land or on water, or whether fixed or moveable, by reason of the improper navigation or management of the ship”.

10.  Because of the way section 503 was framed (the vital words are “be liable to damages”), the English courts interpreted the provision as allowing shipowners to limit liability sounding in damages only. Thus, claims under statute by water authorities against shipowners for wreck raising expenses, not being claims in damages but recoverable as debt, were not subject to limitation[9]. Claims by a shipowner against another shipowner for wreck removal expenses as damages for negligence were held by English courts[10] to be limitable, as they were damages within the meaning of section 503 of the 1894 Act and/or section 1 of the 1900 Act[11].

11.  In 1957, the UK entered into the 1957 Convention. Article 1(1) provided that a shipowner may limit his liability in respect of claims arising from any of the following occurrences, unless the occurrence giving rise to the claim resulted from the actual fault or privity of the shipowner:

“(a) loss of life of, or personal injury to, any person being carried in the ship, and loss of, or damage to, any property on board the ship;

(b) loss of life of, or personal injury to, any other person, whether on land or on water, loss of or damage to any other property or infringement of any rights caused by the act, neglect or default of any person on board the ship for whose act, neglect or default the owner is responsible or any person not on board the ship for whose act, neglect or default the owner is responsible: Provided however that in regard to the act, neglect or default of this last class of person, the owner shall only be entitled to limit his liability when the act, neglect or default is one which occurs in the navigation or management of the ship or in the loading, carriage or discharge of its cargo or in the embarkation, carriage or disembarkation of its passengers;

(c) any obligation or liability imposed by any law relating to the removal of wreck and arising from or in connection with the raising, removal or destruction of any ship which is sunk, stranded or abandoned (including anything which may be on board such ship) and any obligation or liability arising out of damage caused to harbour works, basins and navigable waterways.”

12.  Mr Alder asked the court to note that head (b) in the 1957 Convention is similar in effect to articles 2(1)(a) and (c)[12] combined in the 1976 Convention, and head (c) is similar to article 2(1)(d). It was provided in the Protocol of Signature that any state at the time of signing, ratifying or acceding to the 1957 Convention may make a reservation of the right to exclude head (c). The UK made such a reservation.

13.  The 1957 Convention was not directly incorporated into the law of the UK. Instead, the changes were given effect to by the Merchant Shipping (Liability of Shipowners and Others) Act 1958, which amended the 1894 Act in an awkward and inelegant way.

14.  To give effect to head (b), section 2(1) of the 1958 Act provided that the following paragraphs shall be substituted for section 503(1)(c) and (d) of the 1894 Act:

“(c) where any loss of life or personal injury is caused to any person not carried in the ship through the act or omission of any person (whether on board the ship or not) in the navigation or management of the ship or in the loading, carriage or discharge of its cargo or in the embarkation, carriage or disembarkation of its passengers, or through any other act or omission of any person on board the ship;

(d) where any loss or damage is caused to any property (other than any property mentioned in paragraph (b) of this subsection) or any rights are infringed through the act or omission of any person (whether on board the ship or not) in the navigation or management of the ship, or in the loading, carriage or discharge of its cargo or in the embarkation, carriage or disembarkation of its passengers, or through any other act or omission of any person on board the ship;”.

15.  In respect of head (c), a provision was enacted in section 2(2) of the 1958 Act deeming that for the purposes of section 503(1) of the 1894 Act, where any obligation or liability arises “(a) in connection with the raising, removal or destruction of any ship which is sunk, stranded or abandoned or of anything on board such a ship, or (b) in respect of any damage (however caused) to harbour works, basins or navigable waterways”, the occurrence giving rise to the obligation or liability shall be treated as one of the occurrences mentioned in section 503(1)(b) and (d), “and the obligation or liability as a liability to damages”.

16.  In light of the reservation made by the UK of head (c), section 2(5) of the 1958 Act suspended the operation of section 2(2)(a) until such day as the Minister of Transport and Civil Aviation might by statutory instrument appoint. No date has ever been appointed and hence head (c) has never been effective in the UK.

17.  Further radical changes to limitation of shipowners liability were introduced in the 1976 Convention. With the entry into force of the 1976 Convention, the UK and continental approaches to limitation finally merged. It sought to produce a harmonised and uniform set of rules in relation to limitation of liability for maritime claims around the world. The significant changes were: the raising of the amount of the limitation fund to what was perceived to be the maximum insurable level; a re-definition of the circumstances in which the limit could be broken such that the entitlement to limit could only be challenged in quite exceptional circumstances; and the extension of the benefit of limitation to salvors not working on board a ship, which in effect reversed the decision in The Tojo Maru [1972] AC 242[13].

18.  The overall effect has been “completely to transform the law” in relation to the rights of shipowners and others to limit liability. Under the 1957 Convention, a successful claimant was entitled to full reimbursement of his claim unless the defendant was able to positively prove his right to limit liability by establishing that there was no “fault or privity” on his part. The 1976 Convention reverses the burden of proof; it entitles the paying party to limit his liability unless the claimant proves that the person liable is guilty of “conduct barring limitation”. Limitation is available as of right unless the claimant can show “conduct barring limitation”[14].

19.  The UK ratified the 1976 Convention on 31 January 1980. Hong Kong was included in the ratification. In keeping with its policy of unlimited liability for wreck removal expenses, by article 18(1) of the 1976 Convention, the UK made a reservation in respect of “the application of article 2, paragraph 1(d)” on its own behalf and on behalf of Hong Kong. The Merchant Shipping Act 1979 included provisions which gave effect to the 1976 Convention and were extended to Hong Kong by the Merchant Shipping Act 1979 (Hong Kong) Order 1980, since amended by the Merchant Shipping Act 1979 (Hong Kong) (Amendment) Orders 1981 and 1984. These Orders were replaced by the Ordinance enacted in 1993, as it was necessary to enact local legislation to replace the UK enactments to enable their legal effect to continue after 1997.

20.  When China resumed the exercise of sovereignty over Hong Kong, a notification dated 5 June 1997 was made by the Minister of Foreign Affairs of the PRC to the International Maritime Organization that the 1976 Convention will continue to apply to Hong Kong with effect from 1 July 1997 and it was further declared that with respect to Hong Kong, “it reserves the right in accordance with Article 18(1), to exclude the application of the Article 2(1)(d)”.

21.  On 9 February 2015, China acceded on behalf of Hong Kong to the 1996 Protocol to amend the 1976 Convention. The instrument of accession was accompanied by the declaration that Hong Kong “shall not be bound by article 2, paragraph 1(d)” of the 1976 Convention.

Relevant provisions of the Ordinance and the 1976 Convention

22.  Part III of the Ordinance relates to the limitation of liability for maritime claims. For present purposes, the material provisions in this part are sections 12 and 15.

23.  Section 12 is headed “Convention to have force of law” and reads as follows:

“Subject to this Part, the provisions of the [1976 Convention] set out in Schedule 2 … have the force of law in Hong Kong.”

24.  Section 15 is headed “Claims subject to limitation” and the relevant parts read as follows:

“(1) The Chief Executive may by order provide for —

(a) the setting up and management of a fund to be used for the making to harbour or conservancy authorities of payments needed to compensate them for the reduction, in consequence of paragraph 1(d) of Article 2 of the Convention, of amounts recoverable by them in claims of the kind there mentioned; and

(b) the maintaining of such a fund by contributions from such authorities raised and collected by them in respect of vessels in the same manner as other sums so raised by them.

…

(3) Paragraph 1(d) of Article 2 of the Convention shall not apply unless an order has been made under subsection (1).”[15]

25.  To date, no order has been made by the Chief Executive under section 15(1). With the possible exception of section 21 of the Shipping and Port Control Ordinance, Cap 313, there is no statutory provision under which the Marine Department (ie the harbour authority) may make a claim for wreck removal expenses. Section 21(7) of Cap 313 allows the Director of Marine to deduct the expenses of wreck removal from the proceeds of sale of the wreck. No conservancy authority mentioned in section 15(1) has been established.

26.  Turning to Schedule 2 which sets out the provisions in the 1976 Convention that have the force of law in Hong Kong subject to Part III of the Ordinance, article 2 sets out the “Claims subject to limitation” and the relevant parts read as follows:

“1. Subject to Articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability —

(a) claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;

…

(c) claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connection with the operation of the ship or salvage operations;

(d) claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship;

(e) claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship;

(f) claims of a person other than the person liable in respect of measures taken in order to avert or minimize loss for which the person liable may limit his liability in accordance with this Convention, and further loss caused by such measures.

2. Claims set out in paragraph 1 shall be subject to limitation of liability even if brought by way of recourse or for indemnity under a contract or otherwise. However, claims set out under paragraph 1(d), (e) and (f) shall not be subject to limitation of liability to the extent that they relate to remuneration under a contract with the person liable.”

27.  In providing in article 2(1) that the claims listed shall be subject to limitation “whatever the basis of liability may be”, this makes clear that the right to limit exists whether the claim is brought in contract, tort or otherwise. The 1957 Convention and preceding regimes contained no equivalent provision[16].

28.  Article 3 relates to “Claims excepted from limitation” and provides that the rules of the 1976 Convention shall not apply to five types of claims including claims for salvage or contribution in general average. Article 4 governs “Conduct barring limitation” and provides that a person shall not be entitled to limit his liability if it is proved that “the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result”.

29.  Article 6 provides for the general limits of liability, which are calculated by reference to the tonnage of the ship concerned.

30.  Article 18 of the 1976 Convention, which relates to reservations and has not been incorporated into Schedule 2 of the Ordinance, provides as follows in article 18(1):

“1. Any State may, at the time of signature, ratification, acceptance, approval or accession, reserve the right to exclude the application of Article 2, paragraph 1(d) and (e). No other reservations shall be admissible to the substantive provisions of this Convention.”

The approach to statutory construction

31.  In construing the statutory provisions, the judge applied these well-established general principles of statutory construction: (1) words are construed in their context and purpose, and given their natural and ordinary meaning within context and purpose from the start, not merely at some later stage when an ambiguity is thought to arise; (2) a purposive and contextual interpretation does not mean one can disregard the actual words used; to the contrary, the court is to ascertain the legislative intent expressed in the language of the statute and cannot give a provision a meaning which the language of the statute, understood in the light of its context and purpose, cannot bear[17].

32.  In the context of the 1976 Convention, the judge had regard to the statements of Lord Clarke of Stone-cum-Ebony JSC in The Ocean Victory at §§72 to 75[18], where Lord Clarke quoted with approval from the judgment of Longmore LJ in The CMA Djakarta [2004] 1 All ER (Comm) 865 at §§9 to 11. In gist, given that the 1976 Convention is in its own words incorporated into English law, the task of the court is to construe the Convention as it stands “without any English law preconceptions”. Further, “the interpretation of international Conventions must not be controlled by domestic principles but by reference to broad and general principles of construction”, including the principles enshrined in articles 31 and 32 of the Vienna Convention on the Law of Treaties 1969. The conclusions derived from these articles were as summarised by Longmore LJ: “The duty of a court is to ascertain the ordinary meaning of the words used, not just in their context but also in the light of the evident object and purpose of the Convention. The court may then, in order to confirm that ordinary meaning, have recourse to the travaux préparatoires and the circumstances of the conclusion of the Convention.”

33.  Lord Clarke would regard the existence and terms of a previous international convention (even if not made between all the same parties) as one of the circumstances which are part of a conclusion of a new convention, “but recourse to such earlier Convention can only be made once the ordinary meaning has been ascertained”. Such recourse may confirm that ordinary meaning. It may also sometimes determine that meaning but “only when the ordinary meaning makes the Convention ambiguous or obscure or when such ordinary meaning leads to a manifestly absurd or unreasonable result”.

34.  Mr Alder submitted that the guidance in The Ocean Victory only extends to interpreting the 1976 Convention itself, not the overall scheme of the Ordinance which is domestic Hong Kong law. Although the meaning of the text in the Convention must be the same in all states, the overall result of the Convention plus the implementing domestic legislation may differ, depending on what was implemented and local legal principles and policy. In particular, the reason for an exclusion or suspension of article 2(1)(d) will be a matter of construction of the local legislation.

35.  Mr Alder further submitted that in construing the 1976 Convention, it is relevant to have regard to the 1957 Convention and the case law on the previous Convention. He referred to the decision of the English Court of Appeal in The Putbus [1969] P 136 and the decision of the Singapore Court of Appeal in The Seaway [2005] 1 SLR 435. He contended that substantially the same question arose under the 1957 Convention and the courts in The Putbus and The Seaway have held that the temporary suspension of head (c) in the 1957 Convention (similar to article 2(1)(d) in the 1976 Convention) had no effect on the owner’s right to limit liability for wreck removal under head (b) (equivalent to articles 2(1)(a) and (c) combined). He also prayed in aid the words of Lord Merriman P in The Arabert [1963] P 102 at 107, that it would seem absurd, on the face of it, that the cost of repairs should be recoverable and should be the subject of limitation, whereas the cost of restoring the vessel to the surface should be admittedly recoverable but should not be the subject of limitation[19].

36.  He argued that the above was “settled law” and if it was intended to change the settled law, that change would have been made clearly and there would need to be a reason for change. With regard to Hong Kong’s enactment, it could not have been intended to denude shipowners of a longstanding limitation right to which they are otherwise entitled under the 1957 Convention by an “unintended sidewind”. He pointed out that between 1957 and 1976, there was no event or decision, such as The Tojo Maru, that pointed to any need or policy development for change in this particular area. Further, although the 1976 Convention was intended to radically alter the limitation regime, the significant changes as mentioned earlier did not affect in any relevant sense the area relating to the limitation of wreck removal claims by shipowners.

37.  Mr Sussex, SC[20], who appeared for the defendants throughout, submitted that an international treaty should be construed “without any [domestic] law preconceptions” (The Ocean Victory at §72) for the “true autonomous and international meaning of the treaty” and “there can only be one true meaning” (R v Secretary of State for the Home Department, Ex parte Adan [2001] 2 AC 477 at 516H to 517B). The meaning of article 2(1) cannot depend on the content of each state party’s domestic legislation. He submitted that The Putbus and The Seaway must be read in light of the manner in which the 1957 Convention was implemented in the UK and Singapore and the courts in both cases had disavowed the notion that they were construing article 1(1) of the 1957 Convention.

38.  The judge agreed with Mr Sussex that cases decided prior to the 1976 Convention are of little assistance, noting that the distinction drawn by English courts between a wreck removal claim based on recourse and one founded in debt based on a statutory right appears to be unique to English law[21].

39.  I agree with the judge’s approach that the ordinary meaning of the relevant provisions in the 1976 Convention should first be ascertained in their context and in light of the object and purpose of the Convention, by reference to broad and general principles of construction, without any preconception of the case law decided prior to the Convention. To confirm the ordinary meaning thus ascertained, one may then have recourse to the travaux préparatoires and the circumstances of the conclusion of the Convention, including the terms of a previous international convention. In this particular situation, in light of the history of the English enactments that have been set out earlier, and the peculiar manner in which the UK Parliament gave effect to the 1957 Convention by the amendments to domestic legislation, I agree with the judge and Mr Sussex that it would not be helpful to have recourse to the previous case law as an aid to construction. In light of the special way section 503 of the 1894 Act (and the amending legislation) was framed, it would not be right to start with the preconception that the case law is “settled law” and work from the premise that cogent reasons would have to be shown why such law should be changed.

40.  Nor do I agree with Mr Alder that it was decided in The Putbus the temporary suspension of head (c) in the 1957 Convention would have no effect on the owner’s right to limit liability for wreck removal under head (b), such that a claim for recourse in respect of wreck removal could qualify for limitation under head (b) notwithstanding the overlapping nature of the heads of limitation[22]. The court was required to determine if the wreck removal claim of the Netherlands government, which was fault based, was subject to limitation of liability in order to exercise its discretion to order the release of security under section 5 of the 1958 Act enacted in pursuance of the 1957 Convention. The construction of the 1957 Convention was not at issue and the Convention was regarded as providing limited guidance on the claim (at 149F). The vital question was whether the liability under Dutch law was a type of liability to which a limit was set by section 503 of the 1894 Act as amended. It was answered in the affirmative. The court was concerned with the scope of section 503(1)(d) of the 1894 Act as amended by section 2(1) of the 1958 Act and its possible interaction with the deeming provision in section 2(2)(a), which had not yet come into force (at 151A to D and 154A to D). The Arabert was likewise a decision on the scope of section 503(1)(d) of the 1894 Act as amended by section 1 of the 1900 Act.

41.  As for The Seaway, as rightly pointed out by Mr Sussex, the legislative technique used in Singapore’s legislation was in pari materia to the UK legislation (at §§13 to 16, 31, 33 to 35, 38 to 40). The court remarked that the domestic legislation in the UK and Singapore was “enacted in a form substantially and materially different from the 1957 Convention” and “it would not be quite so helpful to resort to Art 1(1)(c)” of the 1957 Convention to construe the local statute (at §§42 and 53).

42.  The statements in The Breydon Merchant [1992] 1 Lloyd’s Rep 373 at 376 col 2 relied on by Mr Alder (that it cannot have been intended the slightly different wording of the 1976 Convention should have the “dramatic effect” of taking away from shipowners the right under section 503(1)(b) of the 1894 Act as amended to limit liability in damages for consequential loss or damage resulting from a fire on board the ship) were said in a rather different context and are not of assistance here.

The plaintiff’s arguments

43.  To facilitate discussion on the proper construction of relevant provisions, I would first set out Mr Alder’s arguments, which may be summarised along the following lines:

(1) Article 18(1) of the 1976 Convention allowed the state parties to reserve the right to exclude the application of article 2(1)(d), leaving it to the state parties how to implement the reservation in domestic legislation. Some have excluded article 2(1)(d) in the domestic legislation which gave effect to the Convention. Others have enacted this article in domestic legislation but temporarily suspended it. Hong Kong is among the latter. Article 2(1)(d) was incorporated into Hong Kong law but temporarily suspended by section 15 of the Ordinance. The court should look at the Convention first and then at the domestic law to see whether there is anything in the domestic law that would subjugate, override or prevent the court from implementing the natural and international meaning of article 2 so as not to undermine the domestic law.

(2) Wreck raising or removal in article 2(1)(d) is not a term of art. Claims under this provision may arise in unconnected situations. The provision covers and includes (i) a consequential loss element of a private collision property loss claim, the wreck not being the limiting ship; and (ii) a direct claim against a limiting ship by a statutory authority that incurs costs for removing the wreck of the limiting ship, not related to or resulting from damage to the claimant’s property or the infringement of rights.

(3) Statutory authorities of state parties may be charged with raising and removing dangerous wrecks in the public interest. Some may be government funded and some may be intended to be self-funding. Policy considerations may dictate the permanent or temporary exclusion from limitation of claims in (ii), so that statutory authorities are adequately self-funded or temporarily self-funded pending permanent external funding, as in the UK and Hong Kong. Claims in (ii) would not fall within article 2(1)(a) and/or (c) because, inter alia, such statutory authority would not have suffered any loss or damage to its property or infringement of its rights, but would fall within article 2(1)(d). The suspension of article 2(1)(d) renders the class of claims in (ii) not limitable[23].

(4) No policy reason has been identified why private recourse claims in (i), which would also fall within articles 2(1)(a) and/or (c), should be excluded from limitation of liability[24]. None of the aspects of limitation that underwent radical alteration under the 1976 Convention are relevant to the possible exclusion from limitation of private recourse claims in (i). Nor is there any conflict between articles 2(1)(a) and (d) (they simply overlap partially and point the same way) to which the maxim of generalia specialibus non derogant could apply, unlike the conflict situation in the provisions of the Hague Rules considered in The Giannis NK [1998] AC 605.

(5) By reason of the overlapping of various heads of claims, the plaintiff is entitled to limit its liability in respect of the wreck raising component under article 2(1)(a) or (c), and the temporary suspension of article 2(1)(d) is irrelevant to this entitlement. The 1976 Convention and the Ordinance do not provide for the consequence of the temporary suspension for claims that fall within one or more of the heads of claims as well as within article 2(1)(d). The consequence of temporary suspension for claims that fall only within article 2(1)(d) but no other head (ie the claims in (ii) mentioned above) is that the shipowner may not limit liability in this instance[25].

(6) It is mutually contradictory for the judge to conclude that the various heads of claims may overlap in their scope[26] and yet to hold that the more general terms of articles 2(1)(a) or (c) should give way to the specific terms of article 2(1)(d) when the claim is for wreck removal[27] and that “the appropriate gateway” for a wreck removal claim is article 2(1)(d)[28].

(7) To construe a wreck removal claim as falling within both articles 2(1)(a) and (d) would not “render it meaningless to opt out of 1(d)”[29], as the claims in (ii) mentioned above would not fall within articles 2(1)(a) or (c) but would only fall within (d)[30]. This is not reading down article 2(1)(d) to cover only statutory or debt claims. Nor is this making a “partial reservation” under article 18(1) to exclude the application of article 2(1)(d). The plaintiff’s submission is merely that claims in (ii) form an important part of the scope of article 2(1)(d) that do not overlap with any other head.

(8) As Hong Kong has chosen to enact and suspend article 2(1)(d) rather than to exclude this provision, the general policy of the legislature is to favour limitation of liability for wreck removal. Section 15 of the Ordinance suspended article 2(1)(d) temporarily for a specific purpose that is unrelated to private claims like the claims in this case. The event that will trigger article 2(1)(d) under section 15 (when an order is made under section 15(1) by the Chief Executive to provide for the setting up and management of a fund to be used for making payments to harbour or conservancy authorities to compensate them for reduction of amounts recoverable in respect of claims in consequence of article 2(1)(d)) has nothing to do with collision or property damage claims[31].

(9) Hence, the legislative intent of the suspension of article 2(1)(d) under section 15 is to render wreck removal claims that only fall within article 2(1)(d) temporarily non-limitable. There is good reason to temporarily suspend from limitation claims for state funded authorities and no good reason to exclude from limitation wreck removal components of private property damage claims that fall within article 2(1)(a). Not excluding them from limitation would not defeat the legislative intent or render the reservation under article 18(1) nugatory. Section 15 leaves article 2(1)(a) unaffected as to overlapping claims. It does not reach into article 2(1)(a) and suspend part of it temporarily.

The ordinary meaning of the relevant provisions

44.  To recap, one should first look at the relevant provisions of the 1976 Convention and ascertain their ordinary meaning in context and in light of the object and purpose of the Convention, without any preconception of the case law prior to the Convention.

45.  The heads of claims subject to limitation of liability set out in article 2(1) are governed by the opening phrase “whatever the basis of liability”. The intention would appear to be that the heads of claims are extensive in application. Article 2(2) emphasises that claims set out in article 2(1) shall be subject to limitation of liability “even if brought by way of recourse or for indemnity under a contract or otherwise”.

46.  Similar to other heads of claim stated in article 2(1), article 2(1)(d) is formulated in wide terms. It is inevitable that the heads of claims may overlap linguistically. As stated by the judge, “on the face of the provisions”, the provisions “may overlap in their scope”[32]. But an overlap in terms of language is not the same as overlap in terms of effect, as Mr Sussex was keen to emphasise.

47.  In article 2(1)(d), words special to wreck removal are used, and cover all forms and guises of wreck removal. Claims under this head encompass direct claims by statutory authorities, whether under statute or at common law, and private recourse claims by shipowners for consequential loss or damage to property or resulting from the infringement of rights. It is common ground that there can be no “partial reservation” under article 18(1) in excluding the application of article 2(1)(d).

48.  As a matter of language, articles 2(1)(a), (c) and (d) are each capable of encompassing claims of costs for wreck removal, irrespective of whether they are claims by statutory bodies or private recourse claims. If article 2(1)(a) or (c) applies, such claims will be subject to limitation. If article 2(1)(d) applies and a reservation is made under article 18(1) to exclude the application of article 2(1)(d), such claims will not be subject to limitation. There is an apparent conflict. I do not agree with Mr Alder that no conflict arises in that these provisions only partially overlap and point the same way. I agree with the judge the maxim of generalia specialibus non derogant applies, “when the claims for wreck removal were specifically provided for” under article 2(1)(d) and “the more general terms of [article 2(1)(a)] (or (1)(c)) should give way to the specific terms of 1(d) when the claim is for wreck removal”[33].

49.  The maxim is not a mechanical rule, it represents common sense and ordinary usage and its application depends on the context (The Giannis NK at 622C to D, 627F). A helpful exposition of the principle was stated in Goodwin v Phillips (1908) 7 CLR 1 at 14: “Where there is a general provision which, if applied in its entirety, would neutralize a special provision dealing with the same subject matter, the special provision must be read as a proviso to the general provision, and the general provision, in so far as it is inconsistent with the special provision, must be deemed not to apply.” The application of the maxim is “particularly appropriate” where the conflict arises from different sections in the same statute and applies with “even greater force” where the conflict arises within the same section (AAI Ltd v Moon (2020) 92 MVR 271 at §134).

50.  Mr Sussex cited the case of No 20 Cannon St v Singer Ltd [1974] 1 Ch 229 as illustration. The court was concerned with two similar prohibitions in the Counter-Inflation (Business Rents) Order 1973, one wide and the other applying only to a limited class of case wholly within the wide prohibition. Megarry J held that while it was arguable the case falls within both paragraphs, to read the two paragraphs literally would produce an absurd result, in that an excess attributable to variations in the terms of a tenancy would escape the limited prohibition only to be caught by the wide prohibition, and so rendering the limited prohibition nugatory. Applying the maxim, he construed the wide prohibition as not applying to cases within the limited prohibition to the extent of the partial overlap (at 235).

51.  Closer to the present situation, the maxim was applied in two cases concerned with claims for wreck removal expenses. In both instances, it was held that limitation of liability under the wider provision (article 1(1)(b) of the 1957 Convention and article 2(1)(a) of the 1976 Convention respectively) could not be invoked, where reservation was made by Australia to exclude the application of article 1(1)(c) of the 1957 Convention and by the Netherlands in respect of article 2(1)(d) of the 1976 Convention. The Tiruna [1987] 2 Lloyd’s Rep 666 was a decision of the Full Court in the Supreme Court of Queensland; the holding concerning the limitation of liability for wreck removal expenses under article 1(1)(c) was on an obiter basis and by a majority (Kelly SP and McPherson J, with Macrossan J dissenting). Shipping Company MS Amasus BV v ELG Haneil Trading GmbH [34](16/04439) was a decision of the Supreme Court of the Netherlands.

52.  In The Tiruna, under the domestic legislation in Australia[35], it was provided that the provisions of the 1957 Convention, other than article 1(1)(c), have the force of law as part of the law of the Commonwealth. The majority held that the domestic legislation operated not simply to omit article 1(1)(c) but affirmatively to prevent claims for wreck removal expenses from being the subject of limitation of liability. Kelly J took the view that articles 1(1)(b) and (1)(c) should be regarded as mutually exclusive and not as overlapping (at 673 col 1). McPherson J noted that the claim appeared to be within article 1(1)(b) and remarked that “if that is so, then the omission, although deliberate, of art 1(1)(c) has achieved nothing” and “has failed in its purpose” (at 687 col 2). To read the omission of article 1(1)(c) pursuant to the domestic legislation in a literal fashion would lead to a manifestly absurd or unreasonable result. Having referred to the relevant extract of the Hansard, he concluded that “the only rational explanation” for the omission of article 1(1)(c) was the desire “to exclude the wreck removal and other expenses specified in art 1(1)(c) from the ambit of claims for which a shipowner is entitled to limit his liability whether under art 1(1)(c) or otherwise” (at 688 col 1).

53.  The Tiruna was cited to the judge, who noted that notwithstanding the majority decision was obiter, he found the reasoning of the majority persuasive[36]. I am inclined to think likewise. I do not agree with Macrossan J that the heads of claims are not “completely mutually exclusive”. I note that in rejecting the opposite contention, he mentioned that “if a reading were suggested which gave no effect to one of the clauses beyond what flowed from the others, that would be a different matter altogether and would constitute sound reason for rejecting the suggestion” (at 677 col 1).

54.  Mr Alder sought to distinguish The Tiruna in that Australia had excluded the application of article 1(1)(c) and did not merely suspend this provision temporarily until an appointed date of the government when a fund has been set up, being the situation in the UK (and Hong Kong in respect of the 1976 Convention). He submitted that Kelly J took into account Parliament’s decision not to enact article 1(1)(c) at all in construing article 1(1)(b) and thus held articles 1(1)(b) and (c) were mutually exclusive, and contended in effect the domestic legislative scheme gave rise to a lex specialis. This does not appear to me to be a proper reading of the judgment.

55.  Kelly J reasoned that article 1(1)(c) is not limited to a claim in relation to the ship of the owner seeking to limit his liability but extends also to the ship of an innocent shipowner claiming against the owner at fault and seeking to avail himself of the provision for limitation. He took the view it would then be proper to regard article 1(1)(c) as being intended to cover a category of cases which does not come within article 1(1)(b). That being so, it would not be correct to interpret article 1(1)(b) as to include matters which are the subject of article 1(1)(c). He therefore came to the view the two sub-paragraphs should be regarded as mutually exclusive and not as overlapping, which led to his conclusion that when Parliament enacted the domestic legislation by exercising its right to exclude article 1(1)(c), “it intended that claims which arise by reason of matters which were the subject of that sub-paragraph should not be the subject of limitation of liability” (at 673 col 1).

56.  In agreeing with Kelly J that to allow the claim to be limited under article 1(1)(b) would defeat the obvious intention of Parliament, I do not think it is essential to McPherson J’s ruling that article 1(1)(c) was excluded rather than temporarily suspended by the domestic legislation. What is important is that domestic legislation enacted to give effect to the reservation to exclude the application of article 1(1)(c) – whether by exclusion of this provision or temporary suspension – would have failed in its purpose if claims for wreck removal expenses could be made under article 1(1)(b).

57.  A similar argument raised in the Federal Court of Australia in Atlasnavios v The Ship Xin Tai Hai (No 2) (2012) 215 FCR 265 was rejected. The domestic legislation[37] provided that the provisions of the 1976 Convention, other than articles 2(1)(d) and (e), have the force of law in Australia. It was argued that the damage suffered by paying for wreck removal was consequential loss resulting from the operation of the ship and so within article 2(1)(a) of the 1976 Convention. While it was not necessary to decide the point, Rares J expressed the view on an obiter basis that such a construction would give article 2(1)(d) “very little work to do when it expressly relates to claims in respect of wreck removal”. “The State Parties to the [1976 Convention] no doubt had in mind that there could be good policy reasons to allow a State Party to exclude claims under Art 2(1)(d) from being subject to limitation, as Australia has done, and for that exclusion to mean what it said.” (at §139)

58.  The other case, Amasus, was not considered by the judge. The Netherlands reserved the right to exclude the application of articles 2(1)(d) and (e) of the 1976 Convention. Domestic legislation[38] was enacted to provide for the possibility to limit the liability for claims under these provisions by setting up a wreckage fund, whereby the person who has incurred the costs associated with the disposal of wreck and cargo does not have to share in the business fund[39] with the redress of the costs but shares in a separate fund with a possibly higher limit. The rationale for legislation of a separate wreckage fund is related to the safety of marine traffic, more specifically the importance of keeping the waterways free from obstacle[40].

59.  The Court of Appeal determined inter alia these issues as follows: (1) for the answer to the question whether there is a claim as referred to in article 2(1)(d), the 1976 Convention is the determining factor of whether there is an operation described in the text of that provision; (2) the contention of Amasus that the recourse claims in respect of operations as referred to in article 2(1)(d), insofar as carried out in the context of assistance [ie salvage] or general average, and governed only by article 2(1)(a), was rejected; and (3) if in connection with a claim, there is an overlap between article 2(1)(a) and article 2(1)(d), the latter provision shall prevail, by reason of the possibility of a reservation under article 18(1)[41].

60.  On appeal to the Supreme Court, Amasus’ argument on these issues was that the Court of Appeal failed to recognise that, with reference to a recourse claim with regard to salvage, the limitation under the opening lines of article 2(1) and under articles 2(1)(d) and (e) might not or need not be invoked, but that of the opening lines of article 2(1) and article 2(1)(a) should be invoked, and that for invoking the limitation of liability in respect of such a claim not being a wreckage fund, a business fund will suffice[42].

61.  The Supreme Court held that the above contention raises questions concerning the interpretation of the 1976 Convention and this must be governed by the standards in articles 31 to 33 of the Vienna Convention[43]. It noted that various claims for limitation of liability under article 2(1) are determined by the subject of the claim as described under (a) to (f) and that the basis of the claim is irrelevant[44]. While it is true that claims for salvage are excepted from limitation in article 3, this exemption only extends to claims based directly on salvage and not to any recourse claims in respect of salvage.[45]

62.  In respect of articles 2(1)(d) and (e), the Supreme Court held that the description of claims in these provisions “undeniably encompasses more than just the removal of ‘wreckages’ in the common, linguistic sense” and the provisions stipulated in article 2(1) opening lines and under (d) and (e) must be read in conjunction with article 18(1). By making the reservation, the state parties have the option to exclude the power to limit liability for the claims described in articles 2(1)(d) and (e) or to regulate them differently. “This possibility is related to the importance of financing the safety of shipping traffic. It is in accordance with this intention to interpret the wording of article 2(1) opening lines and under (d) and (e) … in accordance with its usual meaning (Article 31 Vienna Convention).”[46]

63.  The Supreme Court noted that the subjects referred to in article 2(1) may overlap and a claim may be subject to limitation on various grounds listed. A recourse claim with regard to salvage from a shipowner that falls under articles 2(1)(d) and (e) can also be regarded as a claim referred to in article 2(1)(a) under certain circumstances[47]. The court went on to say in §3.6.9:

“Based on the system of the [1976 Convention], this concurrence does not lead to questions of interpretation because the same limits (regulated in Article 6 etc [of the Convention]) apply in both cases. However, this is different if a signatory state has made the reservation of Article 18(1) and on the basis thereof a different regime applies to that signatory state with regard to claims falling under that reservation, as is the case for the Netherlands. In view of the content and scope of [article 18(1)], that other special regime takes precedence as a special rule (‘lex specialis’) over the competence of article 2(1) opening lines and under (a). The Court of Appeal has therefore rightly stated … that the reservation of [article 18(1)] also precludes an appeal to that limitation option.”

64.  The Supreme Court addressed an alternative argument that the reservation in article 18(1) exclusively pertains to recourse claims by waterway authorities and does not apply to claims by shipowners. This argument was rejected in §3.7.2:

“There is no ground for an explanation that the reservation of [article 18(1)] only pertains to recourse claims by waterway authorities and therefore does not apply to recourse claims by shipowners. The text of [article 18(1)] does not contain this restriction. The other provisions of the [1976 Convention] and the Travaux Préparatoires also do not provide any basis for adopting this limitation. Nor can this limitation be read in the reservation made by the Netherlands on the basis of this provision. Adopting this limitation is also not obvious, given that the importance of the safety of shipping traffic, which is concerned that [article 18(1)], can be promoted by parties other than waterway authorities, through work-related activities as described in [article 2(1)] under d and e. Furthermore, there is no justification for the outcome to which acceptance of the opinion of the grievance would lead, namely that the shipowner would not be able to seek recourse against the person who caused the collision to the same extent as for a waterway authority to take recourse against the shipowner, because the person by whose fault caused the collision, other than the shipowner, can limit his liability on the basis of [article 2(1)] opening lines and under a.”

65.  For the above reasons, it was held that the Court of Appeal is correct in holding that the claims in issue fall under article 2(1)(d) and that liability for those claims can only be limited by instituting a wreckage fund under the domestic legislation.

66.  Mr Alder sought to distinguish Amasus on the basis that in carrying into effect the reservation under article 18(1), the domestic legislation in the Netherlands provided for a separate limitation regime for wreck removal by a wreckage fund, which must override a claim to assert limitation under article 2(1)(a) and such legislation was a true lex specialis, as stated in §3.6.9. It is not article 2(1)(d) that is the lex specialis, but the special regime under the domestic legislation. Dutch domestic law “overrode and prevented the Court from implementing the natural and international meaning of the Convention, because that would undermine the local statute”. The decision of the Supreme Court was “a conclusion of Dutch law, not one on the meaning of Article 2”. The situation in Hong Kong is different in that section 15 of the Ordinance merely suspends the application of article 2(1)(d) and does not impliedly demand the temporary withholding of article 2(1)(a) from recourse wreck removal claims, and section 15 is the lex specialis not article 2(1)(d).

67.  I have set out the reasoning of the Supreme Court in some detail. It is worthy to note that first and foremost the court construed the provisions of 1976 Convention, governed by the standards in the Vienna Convention. It held that the description of claims in articles 2(1)(d) and (e) “undeniably encompasses more than just the removal of ‘wreckages’ in the common, linguistic sense” and the provisions stipulated in article 2(1) opening lines and under (d) and (e) must be read in conjunction with article 18(1). Where no reservation is made pursuant to article 18(1), the overlap of subjects referred to in article 2(1) does not give rise to interpretation questions. Where reservation is made under article 18(1), “a different regime applies to that signatory state with regard to claims falling under that reservation” and “In view of the content and scope of [article 18(1)], that other special regime takes precedence as a special rule (‘lex specialis’) over the competence of article 2(1) opening lines and under (a)”, to preclude the application of the limitation option under article 2(1)(a).

68.  I do not read the judgment of the Supreme Court that a “different regime” would apply and take precedence as a lex specialis over article 2(1)(a) only where domestic legislation provided for a separate limitation regime by a wreckage fund, as contended by Mr Alder. What the court repeatedly stressed in §3.6.9 was “the content and scope of [article 18(1)]”, and it upheld the Court of Appeal that article 2(1)(d) should prevail by reason of “the reservation of [article 18(1)]”. The right of reservation in article 18(1) is to “exclude the application” of articles 2(1)(d) and (e); a different regime should apply where this right is invoked by a state party, whether by excluding article 2(1)(d) and/or (e) in the domestic legislation, or by suspending these provisions temporarily. I would read Amasus as supporting the position of the defendants in this case. It is a misreading of Amasus to describe it as “a conclusion of Dutch law, not one on the meaning of Article 2”.

69.  Whilst it is true that the domestic legislation in The Tiruna and Amasus provided for the exclusion of article 2(1)(d) and not its temporary suspension, I do not think it warranted to draw this distinction regarding the mode of exercise of the right of reservation in article 18(1). No authority was cited to support this construction of article 18(1), that a reservation can only be made effectively by permanent exclusion in the domestic legislation. When the UK made the reservation under article 18(1) on behalf of Hong Kong, this was “to exclude the application of article 2, paragraph 1(d)”. The same reservation was made by China in 1997 and when China acceded on behalf of Hong Kong to the 1996 Protocol to the 1976 Convention in 2015, it was declared that Hong Kong “shall not be bound by article 2, paragraph 1(d)” of the 1976 Convention. There is no justification to whittle down the complete reservation made on behalf of Hong Kong. Mr Alder asserted that he has not advanced a case of partial reservation. It seems to me the effect of his contention is broadly similar, in that the reservation would not take effect where the domestic legislation only provides for temporary suspension.

70.  Nor do I agree with Mr Alder that in construing article 2(1)(d) to cover claims that fall only within this provision but no other head (ie direct claims by statutory authority for wreck removal, not related to or resulting from damage to the claimant’s property or the infringement of rights), this is not tantamount to reading down article 2(1)(d). This construction is not supported by the holding in Amasus at §3.7.2, in which it was held that the text of article 18(1) does not contain a restriction that the reservation should pertain only to claims by waterway authorities and not apply to recourse claims by shipowners, nor do the Travaux Préparatoires provide any basis for this interpretation. The court opined that this interpretation is “not obvious”, “given the importance of the safety of shipping traffic”, which “can be promoted by parties other than waterway authorities, through work-related activities as described in [article 2(1)] under d and e.”

71.  In support of his submission that the plaintiff is wrong to say there is no policy reason why private recourse claims should be excluded from limitation, Mr Sussex referred us also to the Travaux Préparatoires of the 1976 Convention and of the Protocol 1996. At the 25^th session of the legal committee on 20 to 24 January 1975, some delegations noted that “the existence of a limitation might, regrettably, be conducive to the neglect of wreck removal by shipowners, and might similarly discourage removal, destruction or rendering harmless of cargoes in cases of necessity” (p 74). The majority of members appeared to be against giving priority to claims by public bodies, and pointed out “this would be at the expense of private claimants; such a result would be contrary to public policy” (p 142). At the 5^th meeting of the Committee of the Whole on 3 November 1976, a proposal of Canada to make an exception in article 2(1)(d) for claims by a State for wreck costs recovery was not adopted. A proposal of the United States to move wreck removal claims “made by public authorities for actions taken for the safety of navigation or for public health and safety” to article 3 as claims not subject to limitation was also not adopted. (p 76) It would appear that a conscious choice was made not to include a specific provision to regulate wreck removal claims by public bodies.

72.  It would appear from the above there are legitimate concerns arising out of the impact of limitation on public safety, as shipowners who are unable to fully recover wreck removal costs by way of recourse claims against owners of another vessel may be inclined to neglect removing the wreck promptly even in cases of necessity. I am inclined to agree with Mr Sussex there is no good reason why the legislature would want to undermine the incentives for private shipowners to remove wrecks and place the burden solely on the public authorities.

73.  I do not accept Mr Alder’s contention that section 15 of the Ordinance suspended article 2(1)(d) for a specific purpose unrelated to private recourse claims and hence there is no policy reason why private recourse claims should be excluded from limitation. Under section 15(1), the order that may be made by the Chief Executive to set up a fund “to be used for the making to harbour or conservancy authorities of payments” is merely a condition precedent for article 2(1)(d) to come into effect. It does not follow that section 15(1) must have a bearing on the type of claims that are suspended from limitation.

74.  Mr Sussex also made a valid point it is unclear why the reservation should only apply to statutory claims of water authorities, when there is no statutory provision under which the harbour authority (ie the Director of Marine) may make a claim for wreck removal expenses, with the possible exception of section 21(7) of the Shipping and Port Control Ordinance. There being no statutory wreck removal claim in Hong Kong, it is questionable that the UK or China intended to make a reservation which applies only to statutory claims that do not exist in Hong Kong. Mr Alder’s reply that the legislature could amend sections 21(6) and (7) of that ordinance to confer on the Director of Marine a right to send a bill to the shipowner to make good any shortfall in his costs is entirely speculative.

75.  Lastly, Mr Alder referred to The Breydon Merchant (in which Sheen J held that the claim of the cargo owners against the shipowners were not in whole or in part a claim for salvage under article 3(a) of the 1976 Convention notwithstanding that one element in the assessment of damages would be the amount for which the cargo owners were liable to the salvors) and The Aegean Sea at 55 (in which Thomas J held that the claim against the charterers for an indemnity in respect of amounts paid to the salvors was a consequential loss within article 2(1)(a) and were not excluded by article 3(a) of the 1976 Convention, applying The Breydon Merchant). I do not consider these cases helpful to the present discussion.

Conclusion and costs

76.  For the above reasons, I agree with the judge on the proper construction of the ordinary meaning of the relevant provisions in the 1976 Convention and that the plaintiff’s claim was excluded from the limitation regime under the Ordinance through the reservation made under article 18(1). I would dismiss the plaintiff’s appeal.

77.  As there is no dispute that costs of the appeal should follow the event, I would order the plaintiff to pay the defendants’ costs of this appeal, with a certificate for two counsel.

Hon Barma JA:

78.  I agree with the judgment of Kwan VP.

Hon G Lam JA:

79.  I agree with the judgment of Kwan VP.