On 13 December 2008, the APL Sydney dragged at anchor while in Port Phillip Bay, Melbourne. The anchor struck a submarine ethane gas pipeline owned jointly by the first and second defendants, Esso Australia Resources Pty Ltd (Esso) and BHP Billiton Petroleum (Bass Strait) Pty Ltd (BHP). The APL Sydney was owned by the plaintiff, Strong Wise Ltd (SWL). The anchor fouled the pipeline between 15h44 and 15h45, temporarily arresting the ship's movement. A minute afterwards, APL Sydney's engine was put astern, then it stopped again about a minute and a half after that. The ship yawed from side to side in the gale for around 35 minutes, then the engine was put ahead at around 16h20, following which the submarine pipeline ruptured. The engine was stopped, then put astern once again at about 16h28. This caused the ruptured pipeline to be displaced, bent, and a portion was broken off.

SWL initiated proceedings on 19 December 2008, claiming it was entitled to limit its liability for these events in accordance with the Limitation of Liability for Maritime Claims Act 1989 (Cth), s 6 of which gives the force of law to the Convention on Limitation of Liability for Maritime Claims 1976 as amended by the 1996 Protocol (LLMC 1996).

Under art 6.1.b of the LLMC 1996, shipowners are entitled to limit their liability for claims 'arising on any distinct occasion'. It was the meaning of this particular phrase that was at the centre of this case and was a main point of contention between the parties, along with the actual number of identifiable distinct occasions. Article 2.1.a of the LLMC 1996 refers to the limitation of claims arising from damage to property in connection with the operation of a ship, and the consequential loss resulting therefrom.

SWL argued that the entirety of the day's events, from the fouling of the pipeline to the breaking up of the pipeline and the dislodging of the anchor, formed one distinct occasion. A finding in its favour would entitle SWL to establish a single limitation fund to the value of the APL Sydney, which was about AUD 32 million, calculated using the LLMC 1996.

Esso and BHP, however, argued that there had been four distinct occasions arising from the day's events. The reason for this was that there had been multiple acts, neglects, or defaults, giving rise to entitlements of persons to bring claims against the APL Sydney and its owner, SWL. The distinct occasions they isolated were: a) the navigational errors leading to the fouling of the pipeline by the APL Sydney's anchor at around 15h44-15h45; b) the order made at about 15h46 to put the engine astern, which the defendants argued had further dislodged and bent the pipeline; c) the order made at about 16h20 to put the engine ahead again, which the defendants argued ruptured the pipeline, further deformed it, and caused a large quantity of ethane gas to escape; and d), the order made at about 16h28 to again put the engine astern, which the defendants said had caused the anchor to restrike the severed pipeline, which further displaced, bent, and broke up a section of pipe.

According to the defendants, the last three distinct occasions, all of which involved engine movements, caused separate and additional damage to the pipeline, and none of the three latter occasions had been necessarily inevitable based on the initial fouling of the pipeline, or even the preceding engine movement. Therefore responsibility had to be individually attributed to each of the orders given. If the defendants succeeded, this would require SWL to establish a limitation fund for each proven distinct occasion.

The onus was on SWL in this case to establish that it was entitled to obtain substantive relief under the LLMC 1996.

In separate proceedings, Esso and BHP also sued SWL for the cost of repairing the ethane gas pipeline, and for other alleged losses. Two significant consumers of ethane gas and beneficiaries of the pipeline, Huntsman Chemical Corporation Pty Ltd and Qenos Pty Ltd, began separate proceedings against SWL claiming for pure economic loss. This raised the significant question whether SWL could limit its liability for such claims under art 2 of the LLMC 1996, which was answered in the affirmative: see Qenos Pty Ltd v Ship 'APL Sydney' [2009] FCA 1090 (CMI1170).

Rares J noted that, while undesirable, the fragmentation of limitation of liability actions (as in this case) was a potentially necessary consequence of the LLMC 1996's provisions. Questions on the construction of the LLMC 1996 were raised in these proceedings that had not been raised before elsewhere.

Held: Claims against the plaintiff had arisen on two distinct occasions. The number of distinct occasions was determined by whether the causes of the claims arising from each act, neglect, or default were sufficiently discrete so as to be capable of isolation from other occasions, as a matter of commonsense.

Scheme of the LLMC 1996

SWL applied to the Federal Court under s 25 of the Admiralty Act 1988 (Cth) to have the Court determine whether it could limit its liability for the claims it predicted would be brought against it. This left it open to the Court to decide whether SWL could limit its liability in accordance with the LLMC 1996, to decide the limit of that liability, order SWL to constitute a limitation fund for the payment of those claims for which it was limiting its liability, and make other such orders as were just with regard to the administration and distribution of the fund (s 25(3)).

Under the LLMC 1996, shipowners (including charterers, managers, and operators) are able to limit their liability for the types of claims described in art 2, subject to the rules and exceptions in the convention. The right to limit incorporates claims against persons for whom a shipowner is responsible (art 1.4), and, under art 1.5, claims against actual ships (actions in rem). Insurers of liability for limitable claims benefit from the rules of the LLMC 1996 in the same way that those they have assured do (art 1.6).

Under art 4, liable persons cannot limit their liability in respect of claims brought against them when the loss resulted from their personal act or omission, committed with the intent to cause such loss, or recklessly with knowledge that such loss was likely to occur.

Article 6 describes the quantum of limitation of liability, and uses the phrase 'arising on any distinct occasion'. Likewise, art 7 refers to 'claims arising on any distinct occasion', and art 9 states that the limits of liability determined in accordance with art 6 apply to 'all claims which arise on any distinct occasion' against a person who has committed an act, neglect, or default.

Article 10 establishes the shipowner's right to limit even without a limitation fund, and art 11 allows for the constitution of a limitation fund to satisfy the right. Article 11.1 also refers to the accruing of interest, beginning from the 'date of the occurrence giving rise to the liability'. A fund constituted by any person named in art 1.2 (or their insurer, or a salvor) is deemed to have been constituted by all persons mentioned in art 9 as being entitled to constitute the fund (art 11.3). The fund may then be distributed between claimants on the fund (art 12), with regard to the amounts claimed and their priority under arts 6 and 7.

Under art 13, furthermore, shipowners as well as insurers or P&I Clubs are protected from further claims by persons who have already claimed against a constituted limitation fund (art 13.1). Once a limitation fund has been constituted under art 11, ships or other property (or security) belonging to a shipowner that are arrested pending claims that could be brought against the fund are able to be released. Courts are obliged to order the release of such a ship or other property if the limitation fund was constituted at the port that the occurrence happened (art 13.2.a).

History of limitation provisions

Rares J traced the history behind the LLMC 1996, touching on the prior existence of similar regimes for limiting the liability of shipowners with their roots in European medieval law. Many systems hinged on the idea of 'abandonment', whereby shipowners were personally liable for limitable claims, but could avoid or 'limit' this liability by 'abandoning' their ship and freight to be divided up by claimants. This notion disadvantaged claimants as well as shipowners, as claimants were given a smaller pool from which to recover (while also being subject to priority rules), and shipowners would lose significant assets.

An Act passed by the English Parliament in 1734 stated that the value of a ship and freight was the limit of liability, and decreed that this value should be determined before any incident takes place. Ships were conferred with monetary values, calculated in reference to their tonnage. Independent rights to recover for personal claims and for property damage were established, of which only property damage could be limited by shipowners. The order in which claimants took their share from the limitation fund was determined by the amount they were seeking rather than their place in the queue, as was usually decided by the priorities of maritime liens.

Complex and deep-seated connections have been described between maritime liens and the limitation of liability. In The Tolten [1946] P (CMI2112), Scott LJ stated that the LLMC 1924 had been an act of compromise between the economic effect of the European system, in which shipowners could escape their liabilities by 'abandoning' their freight and ship to claimants, with the English notion of establishing a maximum money liability with reference to a ship's tonnage. The idea was still to preserve the connection between maritime liens and limitation of liability, and the proceeds of a ship and freight or the fund derived from a statutory payment was to be distributed amongst claimants according to the rights and priorities of lien creditors, and the ranking of liens attached to the relevant ship. The LLMC 1924 contained the underlying assumption that the law of the seas would stand supreme regardless of any national court, country, or secured claim.

In The Bramley Moore [1964] P 200, Lord Denning MR described the limitation of liability for maritime claims as not merely a matter of justice, but as a rule of public policy, originating in history and justified by its own convenience. In China Ocean Shipping Co v South Australia (1979) 145 CLR 172, Barwick CJ stated that the policy behind the capacity of shipowners to limit liability in the Merchant Shipping Act 1894 (Imp) was to prevent shipowners from going bankrupt in the face of some accident or disaster.

Having compiled these viewpoints (amongst others), Rares J gave the opinion that these notions continued to inform the policy reasoning behind the LLMC 1996.

The LLMC 1924 gave shipowners the option of either limiting their liability to the value of the ship and freight, or limiting liability to an amount of GBP 8 sterling per tonne. The many limitable claims connected with a single accident were ranked according to the order of any maritime liens, if they existed, or else stood equally. Only 15 States became parties to the LLMC 1924, leading the CMI to deem it a failure, and it was seen to incorporate far more British customs than European.

Under the LLMC 1957, the limitation of liability applied to the totality of personal and property claims arising on any distinct occasion, without regard to claims that had arisen or might arise on any other occasion. This time, 46 State Parties signed. Like the Convention before it, the LLMC 1957 incorporated the foundational principles of the British system for limiting liability.

The LLMC 1976 expanded on previous limitation limits, with regard to the capacity of the insurance market to cover shipowners. The purpose of the LLMC 1976 was to enable limitation of liability for shipowners and their insurers and to prevent this right being impeded as far as possible. What was meant by 'unbreakable' was that a person would only be deprived of the right to limit if a loss from which claims arose was caused by that person's personal act or omission, committed with the intent to cause that loss, or recklessly and with knowledge that such loss would probably result. Article 4 of the LLMC 1996 provides this singular, very narrow exception to the shipowner's right to limit liability. This encourages insurers and P&I Clubs to set higher limitation values because they can ascertain a ship's value before anything happens, and are reassured that whatever amount they must pay out can be contained to that predetermined value. This is the trade-off for the trend in each successive LLMC of increasing the limitation limits.

Under the British system of limitation, which fixed the value of a ship and freight prior to any incident occurring, a shipowner's maximum liability was always knowable, and could be activated in response to claims made on a single distinct occasion, then refreshed or fully revived to meet claims on a second or other subsequent distinct occasion. In the European and US systems, the value of the ship would be calculated in relation to how damaged it was following an incident, and the value of the freight afterwards. Once a ship and freight had been abandoned by an owner, further, these would no longer be able to be invoked in response to later claims arising on another occasion, unless some value remained after other claimants had come up against the ship and freight. If a ship was lost, moreover, the shipowner had no liability, as the ship and any payable freight would completely lose value.

On a separate note, neither the LLMC 1924, LLMC 1957, nor the LLMC 1976 touched on the meaning or concept behind 'any distinct occasion' or 'an occurrence'.

Construing the LLMC 1996

The LLMC 1996 may be construed with reference to the Vienna Convention on the Law of Treaties of 1969 (VCLT) which, while it entered into force later than the LLMC 1976 (as amended by the 1996 Protocol), is recognised as forming part of customary international law, and can be applied retrospectively. This is true despite the fact that the VCLT has not been enacted as part of the law of Australia.

The relevant articles are arts 31 and 32. Article 31.1 provides the general rule of interpretation: treaties should be interpreted in good faith, in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose. 'Context' comprises the text itself, including preamble and annexes, and agreements relating to the treaty as made between all the parties in connection with the conclusion of the treaty, and instruments made by one or more parties, in connection with the conclusion of the treaty, and accepted by the other parties as an instrument relating to that treaty (art 31.2). Subsequent treaties between the parties as to the interpretation of the treaty or the application of its provisions are also relevant here, as is evidence of subsequent practice relating to the application of the treaty which demonstrates unanimity in interpretation by the parties, and rules of international law that may be applicable in the relations between the parties (art 31.3).

Article 32 allows for supplementary means of interpretation to be taken into account, to confirm the meaning resulting from the application of art 31, or to clarify its meaning when an interpretation under art 31 still leaves the meaning unclear, or has led to a result that is manifestly absurd or unreasonable.

Rares J took the decision in Victrawl Pty Ltd v Telstra Corp Ltd [1995] HCA 51 (CMI667) into consideration, in particular the findings by the majority that the LLMC in all its iterations conferred a substantive right on shipowners to limit their liability, which was enforceable through independent proceedings. Moreover, the majority in that case held that the shipowner's right of limitation restricted the rights of claimants, and altered the nature of their claims so that they must go through a fund rather than the shipowner and vessel. Shipowners are protected from additional claims against them personally.

The existence of an international limitation of liability Convention offers broad protections to shipowners and prevents, for example, the case where a ship might be arrested at every port it visits, and is forced to put up new security every time. The LLMC 1996 facilitates trade and commerce in this way, creating a system whereby the full value of a ship can be paid up instead and put into Court, and all claims that might be brought against the shipowner or ship are subtracted from the fund. The ship can then be released and may proceed as normal.

If this system did not exist, many shipowners would be forced to abandon their ships immediately, as claimants could demand security to the value of their claims upon every single arrest or attachment. This would quickly go beyond the value of the vessel itself. The insurance, protection, and indemnity regimes that exist would also be rapidly disincentivised, when it is these that have allowed maritime trade and commerce to flourish.

Shipowners are permitted to limit their liability for every distinct occasion from which liability arises under the LLMC 1996. Such occasions consist of acts, neglects, or defaults of a shipowner or someone for whom they are responsible. There were attempts in this case to argue that the meaning of 'distinct occasion' should be construed with reference to past UK judicial decisions, and in particular the way that the phrase had been used in UK legislation. Rares J rejected this argument, concluding instead that the meaning of 'distinct occasion' could only be determined by reference to the text and structure of the LLMC 1996 itself.

Throughout the LLMC 1996, different words are used to refer to substantially the same concept: 'distinct occasion', 'occurrence', 'occurrence giving rise to the liability', and 'act, neglect, or default'. All of these refer to factual circumstances from which claims against a shipowner arise. The expressions 'claims arising on any distinct occasion', 'the same occurrence', and 'the occurrence giving rise to the liability' also refer to such acts, neglects, or defaults. While similar, Rares J thought that the existence of these expressions within an international Convention meant they should be interpreted broadly, to reflect the broad intention behind the Convention to allow shipowners to limit their liabilities. Separate limitation funds have to be constituted under the LLMC 1996 to cover the claims that arise from every distinct act, neglect or default. Personal acts or omissions - also understood as neglects or defaults - when performed intentionally or recklessly with knowledge that a loss would probably result disqualify shipowners from limiting their liability under art 4. There is a consistent theme regarding the existence of distinct acts or neglects throughout the Convention.

There can be a series of distinct occasions when, for example, a shipowner makes several navigational errors, all of which cause separate damage and are identifiable from one another. A limitation fund would need to be constituted in respect of every error and the claims that result from it. Sometimes, acts blur together, or are connected, perhaps even causing one another, thus preventing their easy separation. It is sometimes possible that one act causing an initial incident can render a subsequent incident inevitable. It is important to look at which acts, neglects, or defaults have caused what incidents.

SWL argued that the critical question was whether, after the initial fouling of the pipeline by the APL Sydney's anchor, there had been another act, neglect, or default giving rise to claims that were distinct from claims that had already arisen based on the fouling. SWL also argued that the use of the expression 'on any distinct occasion' within arts 6 and 9 of the LLMC 1996 meant that if any acts, neglects or defaults gave rise to claims, then irrespective of subsequent acts, neglects, or defaults, the claims had arisen on a single distinct occasion.

Rares J held that this approach misinterpreted the LLMC 1996, in particular the concept of all claims arising on any distinct occasion. The purpose of this was to assist in finding the connections between acts, neglects, or defaults, and the causation of the claims for which a shipowner might limit their liability. To decide whether a claim and an occasion are causally connected, a causation test has to be applied as well as an independent judgment about the circumstances.

What actually classifies as a claim, moreover, can change depending on the law of the place where the claimant says they have suffered a loss, or the place where the act, neglect, or default happened. The LLMC 1996 allows for this uncertainty and unpredictability by facilitating the creation of a limitation fund under arts 11 and 13 that acts as a pool for all incoming claims. Further, art 14 provides that the rules which relate to the constitution and distribution of a limitation fund and the relevant rules of procedure are determined by the laws of the State in which the fund was created.

SWL also argued that the words 'arise' and 'arising' in arts 6 and 9 of the LLMC 1996 embodied the key concept in the Convention, meaning that all claims that had been made by the defendants, or that would be made, arose from occasion of the fouling of the pipeline. Every possible basis of liability was consequential on that fouling - including the engine movements that the ship made, and the further damage done to the pipeline through APL Sydney's manoeuvres. In support of this argument, SWL referenced common law cases where initial tortfeasors were held liable for the subsequent, reasonably foreseeable actions of third parties, and for unforeseeable consequences of reasonably foreseeable breaches of a duty of care.

Esso and BHP placed more emphasis in their arguments on whether the acts, neglects or defaults subsequent to the fouling of the pipeline had been inevitable, or whether the master and pilot of the vessel could have avoided these altogether. They relied on the common law cases in this area, arguing that these had considered the question of whether a ship could have taken another course of action as being determinative of whether those subsequent claims formed part of the original occasion, or had arisen on a distinct, separate occasion. If the occasion was distinct, it was because a fresh error had been made, or a step had been missed, and these mistakes meant that the subsequent event still happened.

Rares J found that the common law cases had established that just because a second tortfeasor was involved in a subsequent foreseeable injury or the consequences of a breach of a duty to take reasonable care in the wake of a first tortfeasor's negligence, did not mean the two acts were causally connected and the first tortfeasor should bear all responsibility for both acts. This would only be the case if the later tort and its consequences were foreseeable results of the first tortfeasor's own negligence. To avoid responsibility for the acts of a second tortfeasor, it needed to be possible to distinguish the first tortfeasor's negligence from that of the second. Frequently, the test for causation in Australian law is a question of fact.

Ultimately Rares J formed the view that SWL was incorrect to try and utilise common law decisions about a tortfeasor's liability for events subsequent to their own negligence to interpret the LLMC 1996, and the meaning of 'distinct occasion' used in the Convention. Just because additional damage or acts, neglects, or defaults after one event are foreseeable, does not mean that these directly arose from the initial occasion or that they form the same occasion.

Meaning of 'distinct occasion'

The words 'act, neglect or default', 'occasion', and 'occurrence' as appear throughout the LLMC 1996 all refer to the same concept of a discrete event. It is quite a narrow concept, based on the connection between a loss (or claim) and the act, neglect, or default that brought it about.

Where a shipowner's single act, neglect, or default creates a situation where a third party then suffers some loss or damage, as a matter of commonsense, the third party is entitled to claim against the shipowner under art 2 of the LLMC 1996. The claim is caused by an occurrence, and so arises on that distinct occasion.

Later acts, neglects or defaults by the same shipowner may then result in some completely different loss or damage to the same third party or to other third parties, and this causes new claims to arise from this different, distinct occasion. It is distinct because there has been a new event (or act, neglect, or default), some new loss or damage, and a new cause, which can be distinguished from the initial act, neglect, or default. The causes of the claims must be discrete and easily separable to create these distinct occasions. The complicating factor is that sometimes, one error can cause a number of losses from a number of resulting causes, while in other cases, several errors all lead to the same loss. It is a question of fact and degree for a Court to determine the number of distinct occasions (the factual context), and this can be a complex task.

In the LLMC 1996, the attention is on the act, neglect, or default that constitutes the occasion from which claims arise. This occasion is often formed from one avoidable discernible error, and the errors preceding this fatal error do not necessarily cause it. This concept can be distinguished from the 'but for' test found in tort. In seeking to afford as much protection as possible to shipowners, the LLMC 1996 gives wide meanings to 'claims' in art 2, and to the idea of these claims 'arising' on a distinct occasion. It is always preferable for a shipowner to be able to limit their liability to claims arising on the one distinct occasion, as then they only have to constitute the one fund. Acts, neglects, or defaults cannot be allowed to be viewed as giving rise to claims simply because they are logically close to the loss or damage. It has to be sufficiently separable from other acts, neglects, or defaults, and sufficiently connected with the loss or damage that is the subject of a claim, to be a distinct occasion from which claims arise.

As a lead-in to considering the actual evidence for this case, Rares J noted that the pipeline did not rupture for 35 minutes after it had been struck, and the three manoeuvres of the ship's engine before the rupturing happened deserved proper consideration.

Fouling of the pipeline - the first alleged distinct occasion

All maritime experts giving oral and written evidence in this case agreed the anchor fouled the gas pipeline between 15h44 and 15h45. The Court found that this was about as precise a time as could be agreed. Physical evidence such as the course recorder showed that the vessel's movement north east stopped for that short window, with the bow swinging to the south. The ship's windlass failed very shortly after this.

When the anchor made impact, the section of pipeline it hit was partially crushed. The force of impact as well as the ship's momentum also ripped the pipeline up from its position underneath the seabed, and it came laterally out of the trench by 12-14 metres. At this time, the damage was such that the section of pipe was no longer suitable for conveying gas under pressure. The steel of the pipeline behaved plastically when it was struck, meaning that it was unable to regain its former shape once stretched. The initial impact was found to have damaged about 125 metres of the pipeline, which required replacement.

This qualified as a distinct occasion from which claims arose.

Consequences and effects of the dead slow astern order at 15h46 - the second alleged distinct occasion

Rares J did not accept that when the order to move astern was made by the master at 15h46, there was no choice other than to assume the anchor had fouled the pipeline. The ship was in rough weather at the time and there were other possibilities explaining the ship's change of heading. Moreover the master's attention was on heaving the anchor. By 15h47 when the ship's position had been marked on the Admiralty chart by the second officer, the master knew the ship had crossed the pipeline's charted position.

It was accepted that when the anchor made initial contact with the pipeline, about 240 tonnes of force was imparted. A much smaller load would have been imparted by the alleged second distinct occasion - that is, the dead slow astern order - of only about 10 to 30 tonnes, and then potentially another 95 tonnes of force was exerted by the environmental conditions. These forces were unlikely to have caused any significant additional damage to the section of pipeline that had been affected already. Rares J accepted that some further deformation likely resulted from the astern order, but no further sections of pipeline were damaged. Further, any damage to parts of the pipeline that were already affected would not lead to a claim on a distinct occasion. The damage had been done upon the initial fouling, and the pipeline already needed replacement from that alone. His Honour found that it would go against the purpose of the LLMC 1996 to consider additional, but ultimately unimportant, damage to property already rendered unusable as giving rise to new claims on a new, distinct occasion.

The dead slow astern order did not constitute a distinct occasion. No new damage was inflicted. No claims could result from the order, as would be distinct from claims resulting from the fouling of the pipeline. Moreover, the dead slow astern order was a finely balanced decision made by the master under great pressure and yet with regard to the change in the vessel's heading and other relevant factors. It was in the class of orders that could be made by a competent master in his position at that time.

Rupturing of the pipeline - the third alleged distinct occasion

The master noticed gas bubbling to the surface of the ocean at about 16h21:27, after he had already agreed with the pilot to give the dead slow ahead order at 16h19:51.

This and subsequent orders caused the ship to move sideways to port away from the anchor, and south just after the vessel reached the extremity of the last swing to port.

The nautical experts as well as others gave a large amount of evidence and speculation on the impact of the dead slow ahead orders, and whether these were appropriate to give. A portion of pipe was used as evidence, displaying signs of fracture. Competing evidence was also given as to the possible causes of the fracture.

Rares J agreed with the evidence given by Dr Price and Mr Gartner, the former being a structural and mechanical engineer and the latter a metallurgical engineer. Both experts agreed that the fracture likely happened not due to a series of cumulative effects but due to a sudden peak force. There was no proof that it was certain the fracture would have happened even if the ship had continued yawing but the dead slow ahead orders had not been issued. Moreover, it was possible for the anchor cable to have been released from the bitter end before this happened.

The orders caused the ship to move sideways, and this in combination with the fact that the ship was at the extremity of a yaw to port, the power of the engine movement, and the location of the anchor cable at 1 o'clock caused the fracture to occur. The cable was already taut before the orders were given, and the abrupt new force exerted from the engine moving ahead pulled the pipeline to the side and fractured it.

Rares J rejected SWL's argument that what the master and pilot did in this situation was seafarerlike, and was a valid means of moving the ship away from the pipeline. Rares J found that a reasonable master would have, prior to giving the dead slow ahead orders, made sure that the ship's position relative to the pipeline was plotted accurately. A reasonable master would also have checked the direction the anchor cable was running, and the weight against it. There was no evidence about what information the master actually had, and at any rate it did not seem that he sought out this information. The pilot did not seek out this important information either, and suggested the dead slow ahead orders before knowing more. These inquiries should have been made in order to avoid the type of incident that followed.

The conclusion was also reached that if there was any chance at all that the gas pipeline had been fouled, then the only proper course of action would be to release the anchor cable from the bitter end. The pilot and master's decision to use the engine instead was dangerous, creating additional tension on the cable, and causing it to drag with the ship. A new and significant force was exerted on the pipeline. Taking these factors into consideration, using the engine was far from a seafarerlike approach. The pilot should not have suggested it, and the master should not have listened and obeyed. Both parties could have produced an alternative plan in the time they had since the pipeline was first struck. The pilot negligently plotted the positions of the ship and anchor, and the master did not check these to his own satisfaction, before adopting a course of action that could end in disaster if the pilot had made the wrong call, which he had.

Because of this and the failure to release the cable from the bitter end instead, Rares J found the pipeline had ruptured due to the pilot and master's lack of seamanship, and this occasion was distinct and independent from the occasion of the fouling. The events leading up to and immediately following the rupturing constituted the second actual distinct occasion.

Despite causing the pipeline to rupture, however, Rares J concluded that the additional force applied due to the engine movements did not cause substantive further damage to the pipeline, exceeding what lengths already needed to be replaced from the moment the anchor struck. The fracture occurred to a part of the pipeline that was already so badly damaged it demanded replacement. The fracture damage therefore could not give rise to a claim for loss or damage to property on a distinct occasion within the meaning of arts 2.1.a, 6, and 9 of the LLMC 1996. Allowing such a claim would contradict the LLMC 1996's purpose to restrict shipowner liability. Because the pipeline needed to be replaced anyway by the time the fracture happened, the latter incident had no real relevance. The pipeline had already been rendered practically useless; there was never any chance it could have merely been repaired after either the fouling or the fracturing. A maritime lien had already attached to the APL Sydney as well when the pipeline was fouled, this being for the full cost of replacing the damaged length of pipe. When the pipeline was fractured on the second occasion, this did not create a new lien.

Events after the pipeline ruptured - the fourth alleged distinct occasion

After the master and pilot noticed gas bubbling to the surface at 16h21:27, the master ordered stop engine, and did not issue another order until 16:27:59 when the pilot advised that he put the engine to slow astern. The consequence of the latter order was that about 6-7 metres of pipe broke off.

The pilot suggested the slow astern order because at the time, both he and the master were concerned about the high risk of an explosion, and could not be sure that all naked flames on the ship had been extinguished. It was necessary to get as far from the gas cloud as possible. Moving astern also meant that the bridge and accommodation areas of the ship did not have to pass through the gas cloud, which was where there was the highest risk of a flame. The ship was moving at slow astern from 16h27:59 through to 16h33:03. This decision was made despite the possibility that the anchor would re-engage with the pipeline; the pilot and master prioritised the safety of the crew.

Two of the three nautical experts offered a number of criticisms toward the conduct of the master and pilot in this situation, in particular about what orders should have been made and the ongoing risk of damage to the pipeline. Both experts ignored the safety issues confronting the pilot and master at the time. They also had far more time to consider what they would have done in that situation, and even changed their opinions on the matter.

The master and pilot's options necessarily shifted in regard to the safety issues that arose and these shaped the decisions they made. All three nautical experts ultimately agreed that the move astern order took the ship away from the gas cloud, which was what the pilot and master had set out to achieve, and that this was appropriate to have done.

The Court found the astern manoeuvre was logical and seafarerlike. There was a better chance that this manoeuvre would successfully take the APL Sydney out of harm's way than trying the alternatives. The anchor would be moved in any case. The pilot and master remained uncertain where the anchor was in relation to the pipeline, and in the absence of this information, it was appropriate for them to focus on escaping the gas cloud through a calculated manoeuvre.

Rares J disagreed with Esso and BHP's contention that the re-engagement of the anchor with the pipeline comprised a distinct occasion. The pilot and master, in their circumstances, lacked the time and opportunity to avoid the potential risk of this occurring, although they knew of the risk. They had to act swiftly in response to the nearby gas cloud and the conditions, and did not know where the anchor was in relation to the pipeline.

Further, this precise factual matrix was brought about by the rupturing of the pipeline. It was not a severable event. The pilot had newly realised that his assumptions about the position of the anchor were wrong, and the master now had to respond to the nearby gas leak. There was no guarantee that moving either ahead or astern at any particular moment would have avoided the risk of the anchor re-engaging.

The astern movement was a seafarerlike response to the circumstances.

Rares J went on to consider, at length, the evidence about how the anchor behaved underwater after the pipeline ruptured, and how the pipe was affected. In the end His Honour accepted that the anchor disengaged from the pipeline immediately following the rupture, and it appeared that the Mordialloc end of the pipeline had been pulled back either when the APL Sydney drifted astern or when it commenced the astern engine movement at 16h27:59. Regardless of which event caused the anchor to re-engage, the astern engine movement definitely pulled that end of the pipeline to an almost 90 degree angle out of its trench. This caused far greater damage to that side of the pipeline than the fouling had. As a result, something in the range of a further 30 metres of pipe had to be replaced.

This led Rares J to conclude that the anchor re-engaging with the pipeline because of the ship moving astern at 16h27:59 was inseverably connected to and part of the distinct occasion when the dead slow ahead order was given at 16h19:51 (and the pipeline ruptured).

There were two distinct occasions, overall, that arose in connection with the events on 13 December 2008. From these events, claims would be made for loss of or damage to property, and the consequential loss resulting from this, under arts 2.1.a and 6.1 of the LLMC 1996. The first distinct occasion comprised the sequence of events leading to and immediately following the fouling of the pipeline at around 15h44-15h45, and the second comprised the events leading to and immediately following the rupture of the pipeline at around 16h20-16h21.

[For subsequent proceedings in this matter, see Strong Wise Ltd v Esso Australia Resources Pty Ltd (No 2) [2010] FCA 575 (CMI1166).]