Victrawl Pty Ltd (Victrawl)'s vessel the Lorna Dorn collided with a cable owned by the defendants. Victrawl subsequently sought to limit its liability for the incident under the Limitation of Liability for Maritime Claims Act 1989 (Cth) (the LLMC Act) which gives effect to the LLMC 1976 and renders it law in Australia. Victrawl commenced proceedings in the Federal Court for a declaration that it was entitled to limit its liability under that Convention, which was joined with a claim by the defendants for damages.

The defendants contended that Victrawl was not entitled to rely on the LLMC 1976, because that Convention gained the force of law in Australia on 1 June 1991, which was after the incident in question occurred.

The sole question before the Court was whether Victrawl was able to rely on the LLMC 1976 to limit its liability with respect to the collision.

Held: Victrawl was precluded from relying on the LLMC 1976.

The Convention in place prior to the LLMC 1976 was the LLMC 1957. The latter was given force of law in Australia through the Navigation Amendment Act 1979 (Cth), s 333. This was also what s 3(1) of the Admiralty Act 1988 (Cth) referred to as the 'Liability Convention', before the LLMC 1957 was superseded, at which point the LLMC 1976 became the only relevant limitation Convention for the purposes of that Act. The LLMC 1957 was effectively denounced in Australia as of 31 May 1991. Schedule 3 of the LLMC Act repealed s 333 of the Navigation Amendment Act 1979 (Cth).

The Court referred to art 4 of the Vienna Convention on the Law of Treaties 1969, which establishes that the Convention applies only to treaties concluded by States after the Vienna Convention came into effect in that State. The Vienna Convention came into force on 27 January 1980 in Australia, meaning that the Vienna Convention applied to the LLMC 1976 (which commenced on 1 June 1991).

There were two key differences between the LLMC 1957 and LLMC 1976. The first was that the LLMC 1976 abandoned the words 'actual fault or privity' from the LLMC 1957, replacing these with art 4, which instead bars a person's right to limit where their personal act or omission was done with the intent to cause such loss, or was done recklessly and with knowledge that loss would likely result. The second difference was that the LLMC 1976 dramatically increased the upper limits of liability.

In this case, Victrawl wanted to rely on art 2.1.a of the LLMC 1976 to limit its liability. The Court drew attention to other relevant portions of the Convention including art 1.4, which would allow the operator of the Lorna Dorn to avail himself of Victrawl's limitation fund if one was constituted, and art 1.7, which clarifies that constituting a limitation fund is not an admission of liability, which Victrawl had previously sustained. Other relevant articles included arts 11.1 and 11.2. These articles explain the process of constituting a limitation fund and the requirements, including the process of either depositing a sum or producing a guarantee to properly constitute the fund (art 11.2). Furthermore, arts 10.1, 10.2, and 10.3 explain how limitation of liability can occur when a fund has not been constituted. The Court observed that limitation of liability under art 10 does leave the party exposed to additional claims against their personal assets, per art 13 (about barring further actions), as a limitation fund must exist before art 13 can operate.

The Court acknowledged that, prima facie, the LLMC Act would be no different from any other Act in that it would apply prospectively. Further, the Vienna Convention, which has been shown to apply to the LLMC 1976 for Australia's purposes, states in art 28 that in the absence of a contrary intention, a treaty applies prospectively from the date it entered into force for a State.

The Court disagreed with the plaintiff's submission that both art 15 of the LLMC 1976 and the Vienna Convention evinced opposing intentions. The submission suggested that, based on a particular reading of art 15.1, this article would apply as long as limitation of liability was sought before a court, or release of a ship or discharge of security was sought, after the LLMC 1976 entered into force. The Court answered this by referring to how art 15.1 connects to art 1, which itself connects directly to art 2. Those two articles, and the articles following, were enough to indicate what the opening words of art 15.1 actually meant and when liability can actually be limited. The plaintiff's reading of art 15.1 was blatantly inconsistent with the rest of the Convention.

The Court considered the creation of the LLMC Act in Australia and the reactions it would have met if it purported to have anything other than a prospective application. This would have been an inappropriate way to implement the LLMC 1976. There was no other sign of a contrary intention to displace the prima facie assumption of prospectivity.

As a result, the incident that occurred on 13 April 1991 was unaffected by the LLMC 1976 and LLMC Act, as these were not in force at the time. 

[This case was unsuccessfully appealed to the High Court: see Victrawl Pty Ltd v Telstra Corp Ltd (CMI667).]