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

HCAJ 98/2019

[2021] HKCFI 396

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO 98 OF 2019

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DECISION

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1.  There is before the court the Defendants’ Summons filed on 22 June 2020 (“Summons”) for the following relief :

“A Declaration that part of the claim by Trevaskis Ltd, their heirs, successors and/or assigns (including one to be entitled to be indemnified) against the Plaintiff in respect of the raising, removal, destruction or the rendering harmless of the ship “STAR CENTURION” which is sunk and wrecked including anything that is or has been on board such ship, not be subject to limitation under the Article 2 of the Convention on Limitation of Liability for Maritime Claims 1976 and/or the Limitation Fund constituted by the Plaintiff pursuant to the order herein dated 6 May 2020”.

Issue

2.  The Summons raises a question of statutory construction.  The court is concerned with the provisions of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance, Cap 434 (“Ordinance”).  In particular, Schedule 2 and section 15 of the Ordinance.  By Schedule 2, the Convention on Limitation of Liability for Maritime Claims 1976 (“1976 Convention”) was enacted in Hong Kong.  Under section 15, the application of para 1(d) of Article 2 of the 1976 Convention was put in suspension.

3.  Article 2, 1(d) is at the heart of the present dispute.  The determination of the Summons turns upon the proper scope of the claims falling within para 1(d).  Those claims are presently excluded from the limitation regime under the Ordinance. 

Background

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 Collison, 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.

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.  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 (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 will be significantly impaired if such Claims are to be subject to limitation.

Applicable principles

14.  The general principles of statutory construction are well established and had recently been summarised by Ma CJ and Cheung PJ (as he then was) in Chan Ka Lam v Country and Marine Parks Authority [2020] HKCFA 33, §§26-27 :

(1)  Words are construed in their context and purpose.  They are given their natural and ordinary meaning with context and purpose to be considered alongside the express wording from the start, and not merely at some later stage when an ambiguity is thought to arise;

(2)  It is important to emphasise that a purposive and contextual interpretation does not mean that one can disregard the actual words used in a statute.  To the contrary, the court is to ascertain the intention of the legislature as expressed in the language of the statute.  One cannot give a provision a meaning which the language of the statute, understood in the light of its context and purpose, cannot bear.

15.  In the context of the 1976 Convention, the English Supreme Court had held that, so far as the Convention is in its own words incorporated into domestic law, the task of the court is to construe the Convention as it stands “without any English law preconceptions”.  The interpretation of international conventions must not be controlled by domestic principles but by reference to “broad and general principles of construction”, including those enshrined in the Vienna Convention on the Law of Treaties 1969 (art 31 and 32): The “Ocean Victory” [2017] 1 WLR 1793, §§72-73, per Lord Clarke.

16.  At §74, these principles were summarised: “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.”

17.  As to the relevance of the existence and terms of a previous convention (even if not made between all the same parties), they constitute “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.” (§75).

18.  In respect of the context, object and purpose of the 1976 Convention, the Court referred to: (1) the general purpose of owners, charterers, managers and operators being able to limit their liability was to encourage the provision of international trade by way of sea-carriage; and (2) the main object of the Convention was to provide for limits which were higher than those previously available in return for making it more difficult to “break” the limit (§76).

19.  In Bennion, Bailey and Norbury on Statutory Interpretation, 8^th edn, [24.16], it was opined in relation to international treaties :

(1)  Where a statute is passed in order to give effect to international obligations under a treaty, the statute should if possible be given a meaning that conforms to that of the treaty;

(2)  It is legitimate to refer to travaux préparatoires at least to resolve ambiguities, but only where it is public and accessible;

(3)  Assistance from foreign courts and jurists may also be relied upon although of persuasive authority only.

20.  The maxim of construction generalia specialibus non derogant is of particular relevance in this case.  According to which, where there is a conflict between general and specific provisions, the specific provisions prevail.

21.  The maxim had been adopted in the construction of international conventions: see The “Giannis NK” [1998] AC 605, 614A-B per Lord Lloyd, 622C per Lord Steyn and 627D-H per Lord Cooke.  Lord Steyn and Lord Cooke regarded the maxim not as a technical rule peculiar to English statutory construction, but a matter of common sense and ordinary usage.

Relevant provisions of the Ordinance and 1976 Convention

22.  The 1976 Convention became part of Hong Kong law in October 1993 upon the enactment of the Ordinance.  Part III, s 12 of the Ordinance provides : 

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

23.  In light of the introductory words “Subject to this Part”, the 1976 Convention is only to have the force of law insofar as it is unaffected by anything in Part III of the Ordinance.

24.  Section 15 (“Claims subject to limitation”), which is part of Part III, is important :

“(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).”

25.  Article 2 of the scheduled 1976 Convention provides 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;

…

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.”

26.  Article 3 provides that the “rules of this Convention shall not apply to” 5 types of claims including claims for salvage or contribution in general average.  

27.  Under Article 6, where it applies, limits of liability shall be calculated by reference to the tonnage of the vessel concerned.

28.  Article 18 of the 1976 Convention has not been incorporated into Schedule 2 of the Ordinance (for obvious reason).  Article 18, paragraph 1 provides that: “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 rival contentions

29.  On behalf of the Defendants, Mr Sussex SC (with Mr Yu) submitted that considering the relevant provisions as a whole, the ordinary meaning of the words used in the statute is abundantly clear :

(1)  For a claim to be subject to limitation of liability, it must fall within the scope of Article 2 of the 1976 Convention;

(2)  Section 15(3), when read together with section 12, specifically suspends the operation of Article 2, para 1(d) from having the force of law in Hong Kong, until such time as the Chief Executive makes an order under s 15(1) of the Ordinance;

(3)  The Chief Executive has not made any such order[1];

(4)  Thus, the clear intention of the legislature is that any claim within the scope of Article 2, para 1(d) is at present specifically excluded as a limitable claim under the Ordinance.

30.  Appeared for the Plaintiff, Mr Alder argued that the case is a straight forward one :

(1)  The Defendants have a claim for consequential loss as a result of the Collision.  Such loss is made up of various constituents, one of which is the cost of wreck removal;

(2)  The claim for consequential loss (including wreck removal) clearly falls within Article 2, para 1(a)[2];

(3)  It has long been the law that a recourse claim for wreck removal is subject to limitation;

(4)  There is nothing in the language of Ordinance to disentitle the Plaintiff from relying on limitation for a claim within Article 2, para 1(a).

Ordinary meaning

31.  Para 1(d) of Article 2 was formulated in very wide terms and no doubt intended to be extensive in its application.  Such intention was confirmed by the terms of para 1 (“whatever the basis of liability may be”) and para 2 (“even if brought by way of recourse or for indemnity … or otherwise”). 

32.  On the face of the provisions, it can be seen that the various sub-paragraphs under para 1 may overlap in their scope.  Mr Sussex took no issue with that.  This point lies in the heart of the submissions of the Plaintiff.

33.  When the claims for wreck removal[3] were specifically provided for under a separate sub-paragraph, the maxim of generalia specialibus non derogant naturally applies.  The more general terms of para 1(a) (or 1(c)) should give way to the specific terms of 1(d) when the claim is one for wreck removal.

34.  Another way to approach the matter is to consider paras 1(a) and 1(d) in juxtaposition.  Bearing in mind the wide terms of paras 1 and 2 of Article 2, it is fairly plain that the appropriate gateway for a wreck removal claim is 1(d).

35.  The matter should also be considered in light of the provisions of Article 8 of the 1976 Convention.  Article 8 allowed the State Parties to opt out of limiting the claims under paras 1(d) and 1(e) of Article 2 but not the claims under the other sub-paragraphs.  Hong Kong had indeed opted out of para 1(d) until an order of the Chief Executive has been made pursuant to s 15(1) of the Ordinance. 

36.  Two important points arose from Article 8. Firstly, there was a good reason for the claims under 1(d) to be separately categorised as they might be excluded by individual State Parties.  Secondly, to construe a wreck removal claim as falling within both 1(a) and 1(d) would render it meaningless to opt out of 1(d). 

37.  It follows that the construction advocated by the Plaintiff would not be consistent with the 1976 Convention as whole, nor with the exclusion of Article 2, 1(d) under s 15 of the Ordinance.  It may also be seen that the above analysis fortifies the application of the maxim generalia specialibus non derogant. 

38.  In the premises, I am of the view that according to the ordinary meaning of the relevant provisions, construed in their context and purpose, the Defendants’ wreck removal claim falls within Article 2, 1(d) exclusively, and is not subject to limitation under Article 2. 

39.  The above construction is consistent with the majority view of the Full Court of the Supreme Court of Queensland in The “Tiruna” [1987] 2 Lloyd’s Rep 666. 

Legal history

40.  Before going to The “Tiruna”, I should say that I have been taken by both Mr Sussex and Mr Alder to the history of the legislation and the case law (both of which originated from the UK), as well as the earlier 1957 Convention[4].  I have found nothing in those materials which militates against the above construction.

41.  In any case, the 1976 Convention was regarded as having “radically altered the position” in introducing a harmonised and uniform set of rules in relation to limitation of liability around the world: see The “Cape Bari” [2017] 1 All ER (Comm) 189, §10.  Lord Clarke further observed at §13 :

“There are critical differences between the 1976 Convention and its predecessor, the 1957 Convention. In particular, art 1.1 confers on ‘shipowners’ and ‘salvors’ (as defined) a statutory entitlement to limit their liability in respect of claims falling within the categories listed in art 2, which provides by art 2.1 that the claims listed ‘whatever the basis of liability may be, shall be subject to limitation of liability’, which makes clear that the right to limit now exists whether the claim is brought in contract, tort, or otherwise. The 1957 Convention and preceding regimes contained no equivalent provision. Thus prior to the 1976 Convention, owners were unable to limit their liability where the claim was based on a contractual liability to indemnify (as opposed to a damages claim within a listed category—typically a claim in negligence).”

42.  I therefore agree with Mr Sussex that cases decided prior to the 1976 Convention are of little assistance. 

43.  With respect, I am unable to agree with Mr Alder’s submission that there is nothing in the Ordinance which had the effect of removing the Plaintiff’s right to limit a wreck removal claim based on recourse, which has long been recognised under English law[5]. Firstly, the distinction between a wreck removal claim based on recourse and one founded in debt based on a statutory right (see The Stonedale (No 1) [1956] AC 1) appears to be unique to English law.  As observed by Lord Clarke in The “Cape Bari”, the 1976 Convention sought to unify the rules on limitation of liability applied in the maritime world. 

44.  Secondly, the language of Article 2, paras 1 and 2 of the 1976 Convention (see para 31 above) clearly evidenced an intention to abandon the distinction found in English law.  In other words, wreck removal claims regardless of their causes of action are treated in the same way – they are subject to limitation under the 1976 Convention, unless the State Party concerned has opted out of it.

The “Tiruna”

45.  In The “Tiruna”, the Court was concerned with s 333 of the Navigation Act 1912 which provided that the provisions of the 1957 Convention, other than Article 1(1)(c), should have the force of law in Australia.  Article 1(1)(c) was formulated in terms[6] similar to Article 2, 1(d).  The effect of this was to remove wreck removal claims from the claims which were subject to limitation in Australia.

46.  The majority of the Full Court (Kelly J and McPherson J, with Macrossan J dissenting) considered that the sub-paragraphs of Article 1(1) of the 1957 Convention should be regarded as “mutually exclusive” and not as overlapping, with the consequence that claims covered by Article 1(1)(c) could not be the subject of limitation of liability.  At 688, col 1, McPherson J held[7] that :

“The only rational explanation for their requesting the omission of art. 1 (1)(c), and of the Commonwealth Parliament for acceding to it, is that it was desired to exclude the wreck removal and other expenses specified in art. l(l)(c) from the ambit of claims for which a shipowner is entitled to limit his liability whether under art. l(l)(c) or otherwise.

I am therefore disposed to accept the plaintiff’s submission before us that s.333 of the Navigation Act operates not simply to omit art. 1(1)(c) but affirmatively to prevent claims for wreck removal expenses from being the subject of limitation of liability.  … it makes no difference that the claim is made by the owner of the sunken ship against the vessel or its owner responsible for her being sunk and having to be removed.  The expenses incurred in doing so, and the liability to do so, are alike comprehended by the words of art. 1(1)(c), the content of which is intended to be excluded from the range of claims capable of limitation by a shipowner.  On that footing, the decision in The Arabert … can have no application in Australia.”

47.  Whilst I agree with Mr Alder that the majority decision was obiter in that it was held that there was no wreck removal claim in that case because the removal operation resulted in no net loss or gain to the plaintiff (see 685, col 2), I find the reasoning of the majority persuasive. 

Travaux préparatoires

48.  Finally, I have not been able to find much assistance in the travaux préparatoires with the exception that the suggestion that wreck removal claims by public authorities be given different treatment[8] was not adopted in the 1976 Convention.  Thus, fortifying the proposition that para 1(d) was designed to embrace all wreck removal claims. 

Disposition

49.  For these reasons, I believe that the Summons is well-founded and I grant the declaration sought with an order nisi that that the costs of and occasioned by the Summons be paid by the Plaintiff with a certificate for 2 counsel.

50.  Last but not least, I am grateful to counsel for their assistance.