Birkenfeld (the plaintiff) sustained serious injuries in a collision at sea off the coast of Greece on 8 August 2002. In the collision, the plaintiff's windsurfer collided with a rigid inflatable boat (RIB) owned by Yachting New Zealand (the second defendant) and driven by Kendall (the first defendant).

The plaintiff claimed NZD 15,000,000 in general damages for her injuries along with special damages of over NZD 55,000. The second defendant applied under s 85 of the Maritime Transport Act 1994 (MTA) to limit its liability to a figure less than $400,000. The MTA regime is based on the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 1976). Keane J granted the application to limit liability. The plaintiff appealed to the Court of Appeal, arguing that the RIB should not be regarded as a 'ship' for the purposes of limitation of liability under s 85 of the MTA.

The plaintiff argued that the rationale of the LLMC 1976 is to facilitate commercial shipping and the commercial shipping trade. What is a 'ship' has to be interpreted in that light. New Zealand has not enacted specific legislation applying the limitation of liability regime to vessels which are ships of less than 300 tons as the plaintiff says is required by art 15.2 of the LLMC 1976. The plaintiff also highlighted that for the purposes of establishing limitation of liability, ships are to be measured in terms of the Tonnage Convention. That Convention applies only to ships of more than 24 metres. As the RIB was less than 24 metres long it could not have been measured in accordance with the Tonnage Convention and therefore the limitation of liability regime did not apply.

Held: Appeal dismissed.

The plaintiff is correct as to the initial rationale for the LLMC 1976. For example, Meeson Admiralty Jurisdiction and Practice (3ed 2003) at [8.1] observes: 'The rationale for such a concept is the public policy in encouraging shipping and trade which overrides the competing public policy in compensating the victims of wrongdoing.' However, the critical definition here is the definition of 'ship' in s 84 of the MTA. The MTA is to be read 'in the context of the international law of the sea and, if possible, consistently with that law': Sellers v Maritime Safety Inspector [1999] 2 NZLR 44, 57 (CA). In this case, that approach does not assist the plaintiff because the definition of 'ship' in s 84 of the MTA would include the RIB and the LLMC 1976 does not warrant a different view.

Article 15.2 of the LLMC 1976 does not limit the matter in the way the plaintiff suggests. The LLMC 1976 begins by setting out those persons who are entitled to limit liability and the claims which are subject to limitation. The next chapter in the Convention provides for the limits of liability by reference to the units of account and the related tonnage. The third chapter deals with the constitution of a limitation fund and its distribution. Article 15 is found in chapter four dealing with the scope of application of the Convention. Article 15.1 provides that the Convention shall apply whenever any of the persons referred to in art 1 of the Convention seeks to limit his or liability before the court of a State Party. Article 15.2 provides:

A State Party may regulate by specific provisions of national law the system of limitation of liability to be applied to vessels which are:

(a) according to the law that State ships intended for navigation on inland water ways;

(b) ships of less than 300 tons.

A State Party which makes use of the option provided for in this paragraph shall inform the depositary of the limits of liability adopted in its national legislation or of the fact that there are none.

There has been no relevant enactment in New Zealand to limit the application of the Convention to exclude ships of less than 300 tons. Hence the provisions of art 15.2 suggest that, prima facie, in the absence of some enactment addressing the question, ships of less than 300 tons are within the scope of Convention. In other words, despite the rationale for the LLMC 1976, the starting point is that does apply to ships of less than 300 tons unless provision is made otherwise.

Finally, the reference to the Tonnage Convention does not advance the plaintiff's position either. Section 87(1) of the MTA refers to ships up to 300 tons. It is also relevant that s 87(5)(c) provides for an alternative procedure for measurement where the gross tonnage of a ship is unable to be ascertained applying the tonnage measurement rules in the Convention.