Christopher, Christopher, Garnier, Garnier, Aki & Daniel v Motor Vessel 'Fiji Gas' [1993] QCA 22

IN THE COURT OF APPEAL [1993] QCA 022 SUPREME COURT OF QUEENSLAND Appeal No. 52 of 1992 BETWEEN: G.D. & H.M. CHRISTOPHER (Plaintiffs) AND: H.P. & T. GARNIER, WUNING DARUA IPA AKI and SOBOVA DANIEL (Second Plaintiffs) Appellants AND: THE MOTOR VESSEL "FIJI GAS" (Defendant) Respondent JOINT JUDGMENT - PINCUS J.A. & THOMAS J. Delivered the Twenty-sixth day of February 1993 This is an appeal from a judgment of the Supreme Court in a case concerning a collision between two vessels. The appellants were members of the crew of the fishing vessel, "Antonia", with which the "Fiji Gas" collided at Thursday Island in 1987. The owner of the "Fiji Gas" was sued by the owners of the "Antonia", admitted liability to them, but denied the existence of any duty of care to the crew of the "Antonia". The judge held that there was no such duty and the appellants accordingly failed in their suit. The appellants were engaged on the basis that they would be paid "remuneration calculated by reference to a percentage of the sale price of the produce caught and sold on each fishing voyage ...". It was admitted that if the "Antonia" had not been damaged, the appellants would have worked as crew on -- 1 of 18 -- 2 it and would have been paid $15.00 per kilo for craytails during the period in which the "Antonia" was being repaired. The judge referred to evidence that those in charge of the "Fiji Gas" knew that there were fishing vessels in the areas in which it sailed and that a collision with one of those vessels would cost its crew money. The judge found that it was reasonably foreseeable that negligent navigation causing damage to the "Antonia" would cause its crew loss of employment, but that the appellants "as individuals were not shown on the evidence to be known to Captain Pope [Master of the 'Fiji Gas'] or the defendant owner" and that they were not in the contemplation of Pope or the owner "as specific individuals who would suffer economic loss in consequence of any negligent collision between the 'Fiji Gas' and the 'Antonia'". His Honour held that there was no reliance or dependence, on the part of the appellants, on the conduct of the owner or master of the "Fiji Gas" or any assumption of responsibility on the part of the latter to take positive steps to avoid economic loss to the appellants. The judge described the appellants as an "unascertained class the precise membership and identity" of which was unknown to the master or owner of the "Fiji Gas" before the collision. He held that the appellants had no interest in the "Antonia" nor property in nor a right to any particular share of the catch, but that their right to income derived from their contracts of employment and the discharge of -- 2 of 18 -- 3 their duties as crewmen. The judge drew a distinction between "the direct consequence of economic loss from the deprivation of use of a profit-earning chattel" and the "possible loss of income of an employee paid by his or her employer from the latter's exploitation of the chattel ...". His Honour observed that damaging the "Antonia" did not necessarily prevent the appellants from earning income, and that loss on their part was premised upon a further circumstance namely their inability to obtain equally well-renumerated work elsewhere. His Honour held that although the loss to the appellants was foreseeable, there were not established any of the "special elements necessary to establish a relationship of proximity". The proposition underlying his Honour's reasons may perhaps be generalised by saying that one who negligently damages a fishing vessel is not ordinarily liable to the crew, not being owners of the vessel, for their loss of income while the fishing vessel is unusable, even if that loss is a foreseeable consequence of the damage to the vessel. The distinction between knowledge that there was a crew of the "Antonia" and knowledge that the crew was composed of certain identified persons was an important aspect of the judge's reasons, although it was only one of many points addressed by his Honour in reaching a conclusion. Such a distinction may be seen as one of the tests of proximity -- 3 of 18 -- 4 between the wrongdoer and those who may be affected by his act. Standing alone, it is a less than satisfactory determinant, because it would seem strange if the result were different merely if, perhaps by social contact while ashore, those responsible for "The Fiji Gas" had happened to come to know the appellants as members of the crew of the fishing vessel. However, there has to be some dividing line that prevents persons indirectly affected by the act of another becoming an endless chain of claimants. The tests which have so far been framed may be seen as designed to contain liability and litigation within reasonable limits, and also perhaps to discourage claims based on indirect loss which may be difficult to determine. The need to limit claims by persons having so called "relational interests" is thought by Professor Fleming to be based not so much upon the circumstance of pecuniary detriment as upon the fact that "the burden of compensating anyone besides the primary casualty is feared to be unduly oppressive because most accidents are bound to entail repercussions, great or small, upon all with whom he had family, business or other valuable relations". The case against recovery, in Professor Fleming's view, "becomes even stronger when the claimant has a non-vested expectancy, like employees who lost their jobs when their factory was burnt down ..." (Fleming 'The Law of Torts' 7th Edition p.163). Two American decisions support the last example, namely Adams v. S.P. 123 Cal. Rptr. 216 [1975], and Stevenson v. E. Ohio Gas 73 NE 2d 200 [1946]. The difficulty -- 4 of 18 -- 5 confronting courts at the present time is the formulation of principles which will permit an acceptable dividing line to be identified with a reasonable degree of predictability. The appellants' counsel argued that the appellants had a relationship of proximity with the owner of the "Fiji Gas", relying on the knowledge of the owner and master of that vessel of the likely results of the collision and also upon the physical circumstances; the "Fiji Gas" was said to have been "engaged in an activity which involved a foreseeable risk of causing direct physical injury to those nearby". It was also contended that the damages claimed by the appellants were directly consequential on the collision and that the master and owner knew the identity of the appellants sufficiently to create a duty of care. The appellants' counsel said that in one sense they were engaged in a common venture with the owner of their vessel. The evidence was that they were treated as employees for tax purposes, but were not paid a wage. Some uncertainty exists as to the precise basis on which they were paid. One of the owners of the vessel, Mr. G.V. Christopher, said that the crayfish caught were "weighed individually for each diver", but the general burden of his evidence appeared to be that the allocation of the proceeds of the catch depended substantially upon estimation. Mr. Christopher gave evidence to the effect that the appellants and he would decide on a likely price for -- 5 of 18 -- 6 the product, say $32 a kilogram, and that sum would then be divided between the owners and the crew, allowing $2 or $3 a kilogram for the owners' expenses and dividing the remaining proceeds equally between the owners, on the one hand, and the crew on the other. The important point is that whether they were employees or not, the appellants' return from their activities was a share of the amounts received, or estimated to be likely to be received, for the catch. The appellants had no proprietary or possessory interest in the fishing vessel and were far removed from any proprietorial role. They had no interest in the vessel or the business, and the best description of the arrangement is that they were crewmen who were paid under an incentive system. The case on which the appellants principally rely is Caltex Oil (Australia) Pty. Limited v. The Dredge "Willemstad" (1976) 136 C.L.R. 529. There, Caltex recovered damages in respect of a loss to them caused by the breaking of an oil pipeline connecting their oil refinery with a terminal. Caltex did not own the pipeline, but did own the oil which passed through it. The fracture of the pipeline deprived Caltex for a time of that means of transporting oil, resulting in extra transport costs. All the judges of the High Court held that Caltex was entitled to recover its additional expenses from the persons through whose fault the pipe was broken, but their grounds for doing so were not all the same. In San Sebastian Pty. Ltd. v. -- 6 of 18 -- 7 The Minister (1986) 162 C.L.R. 340 at 354, the views of four of the judges in Caltex were summarised: "It will be recalled that in that case Gibbs J. (45) considered that economic loss is recoverable in negligence where the defendant has knowledge or means of knowledge that the plaintiff individually, and not merely as a member of an unascertained class, will be likely to suffer economic loss as a consequence of his negligence. Mason J. (46) expressed a similar view, while Stephen J. (47) said that recovery depended upon sufficient proximity between the tortious act and the injury. And Jacobs J. (48) concluded that if economic loss arises out of the physical effect on the person or property of the plaintiff, it is not irrecoverable simply because it is economic loss". The fifth judge in Caltex decided the case on a broader basis, involving rejection of the "contention that economic loss not connected with physical damage to the plaintiff's property is not recoverable" (606). That must be taken to be unorthodox, for the view of the majority in Caltex was that damages based upon purely economic loss not connected with damage to the person or property of the plaintiff are not, in general, recoverable. However, the Caltex case has, so far as presently relevant, no ratio other than that rule; there was no majority in favour of the "unascertained class" test favoured by two of the judges. As to the other two judges, Stephen J. favoured development of a case by case "proximity" test (575), whereas Jacobs J. appeared to favour a "physical propinquity" test (604). -- 7 of 18 -- 8 In subsequent cases, these principles have undergone some further analysis, but it is desirable to determine in the first place what is the result if one applies what was said in Caltex itself. The unascertained class principle was discussed before us; it was submitted, in effect, that because the identity of the fishermen working on the damaged vessel was easily and precisely ascertainable both before and after the collision, there was an ascertained class. In discussing the concept, Gibbs J. at 555 referred to "exceptional cases in which the defendant has knowledge or means of knowledge that the plaintiff individually, and not merely as a member of an unascertained class, will be likely to suffer economic loss ...". When speaking of knowledge of the defendants in the Caltex case, the judge pointed out that the defendants knew the pipeline led to Caltex's terminal and "should have known" that it was the physical means by which products flowed to the terminal. Mason J. expressed himself similarly (593) and also said: "The defendant would only be liable for economic damage due to his negligent conduct when he can reasonably foresee that a specific individual, as distinct from a general class of persons, will suffer financial loss as a consequence of his conduct". Applying this test in the present case, there is no evidence that the owner or master of "Fiji Gas" knew anything -- 8 of 18 -- 9 of the crew of the "Antonia". No doubt they knew there was a crew and that they were few in number, but as it seems to us that should not make a difference. Negligence putting out of action a passenger liner providing employment to hundreds should not for this purpose be distinguished from negligence damaging a small vessel employing only a few people. There must necessarily be a difficulty, at the margins, in differentiating between loss caused to people who are, from the point of view of the tortfeasor, identified individuals and loss caused to those who are, from that point of view, an unascertained class. Nevertheless, it appears to us that if such a division exists, the appellants are on the wrong side of it. The master could certainly foresee that the crew of what he knew to be a fishing vessel would be likely to suffer damage if the "Antonia" was unavailable to them, but his only knowledge of the crew was an inference that there was a group of people who at the relevant time constituted the crew. As to constructive knowledge, there was nothing in the evidence to show that the master of the "Fiji Gas" had special means of knowledge of the identity of the members of the crew of the "Antonia", or to support a conclusion that he should have known who they were. In our opinion therefore, the appellants were known to the tortfeasors only as members of a class. It follows that the test applied by Gibbs C.J. and Mason J. would not suffice to give the appellants success. -- 9 of 18 -- 10 It remains to consider whether that favoured by Stephen J. or by Jacobs J. would do so. Stephen J. applied a proximity test; by "proximity", his Honour plainly did not mean merely physical nearness. That this is so may be seen by looking at the first two features his Honour considered in determining that there was sufficient proximity. They were, in summary, (1) that to damage a pipeline is very likely to cause users of the pipeline economic loss and (2) that the defendant knew or should have known that the pipeline extended to the plaintiff's terminal (576). His Honour added: "These two factors lead to the conclusion that Caltex was within the reasonable contemplation of the defendants as a person likely to suffer economic loss if the pipelines were cut" (577). That implies that because the damage to Caltex was foreseeable, it was more proximate than it otherwise would have been. The same might apply even where the negligent act was very remote in distance and even perhaps in time from the damage. The proximity test as explained by Stephen J. does not give any clear answer, in the present case. His Honour recognised that its precise content would have to be worked out in the course of time: "The articulation, through the cases, of circumstances which denote sufficient -- 10 of 18 -- 11 proximity will provide a body of precedent productive of the necessary certainty ..." (575). The overwhelming consideration in favour of holding that the damage to the crewmen was sufficiently proximate is that it must have been obvious to the tortfeasor that there would be a crew of the vessel and that damaging the vessel would cause economic loss to the crew. But the argument, to our minds, is too wide. In pure economic loss claims, one can very often bring the claimants within a class of people likely to be economically damaged by a particular physical loss. There remains for consideration the test proposed by Jacobs J. The primary test applied by his Honour was that of the physical propinquity of property of the plaintiff to the place where the tort was committed (604); and that would not suffice to enable the appellants to succeed. The conclusion thus is that tests adopted by a majority of the judges in the Caltex case - Gibbs C.J., Mason J. and Jacobs J. - are not of such a character as to bring success to the appellants. Subsequent decisions in the High Court have, in our opinion, not been such as to encourage reliance on the proximity test and have tended to support the view expressed by McHugh J.A. in Finn "Essays on Torts" at p.36; there his Honour described the doctrine as "a legal rule without specific -- 11 of 18 -- 12 content". In discussing the notion of proximity in Jaensch v. Coffey (1984) 155 C.L.R. 549 at 584, Deane J. remarked, speaking of Lord Atkin's treatment of the subject: "It was left as a broad and flexible touchstone of the circumstances in which the common law would admit the existence of a relevant duty of care to avoid reasonably foreseeable injury to another. ... The identity and relative importance of the considerations relevant to an issue proximity will obviously vary in different classes of case and the question .... may involve value judgments on matters of policy and degree". See also his Honour's remarks in Sutherland Shire Council v. Heyman (1985) 157 C.L.R. 424 at 497, 498. In San Sebastian Pty. Ltd. v. Minister (1986) 162 C.L.R. 340 at 368, 369, Brennan J. remarked: "I beg leave to doubt whether proximity, if it is understood as having a wider connotation than reasonable foreseeability of loss, will prove to be a unifying rationale of particular limiting propositions of law. The particular propositions have not hitherto revealed a common element". In our opinion, while it is accepted that judges may develop the law by exposition of the meaning of a word like "proximity", used in a metaphorical sense, it is idle to pretend that the process necessarily gives rise to a satisfactory degree of predictability of result. The criteria which may in particular cases be used to determine whether -- 12 of 18 -- 13 there is the requisite proximity are various: physical closeness, reliance, degree of foreseeability of the existence and identity of the claimant, the degree of probability that a loss will be inflicted upon the claimant, the urgings of justice and no doubt others. The extent to which each of these should be given weight in a particular case would be hard to define in advance, even if a comprehensive list of the relevant criteria were established. Agreeing as we respectfully do with the view expressed by McHugh J. when a member of the New South Wales Court of Appeal, we are not inclined to rely on the proximity test in this case. It is now 16 years since the High Court decided Caltex and it is not obvious that hopes which might then have been raised for settlement of a more precise notion of the doctrine of proximity, as applied to economic loss cases, have been realised. In summary, our view of the application of Caltex to the present case is that of the judges who started from the position that pure economic loss is generally irrecoverable in a negligence suit, only one (Stephen J.) used a test which could help the appellants here; that test, proximity, is difficult to apply on other than a discretionary basis. It may be that "proximity" is a compendious expression of what has to be shown to establish liability in these cases, and that it is intended as a composite of all the other tests that have been formulated by the courts. It is, however, impossible to see how the application of such a wide test requires a conclusion favourable to the appellants. -- 13 of 18 -- 14 Something should be said of two more recent decisions, in England. In Leigh and Sillavin Ltd. v. Aliakmon Shipping Co. Ltd. [1986] 1 A.C. 785, plaintiff buyers of steel happened to have, at the time the steel was damaged by negligence, neither legal ownership nor possessory title. They had, however, a contract under which their rights had been adversely affected. But that was held not to be enough, the House of Lords preferring to apply - "... a general rule, which is simple to understand and easy to apply ... established by a long line of authority over many years ..." (816, 817). That rule was that: "... in order to enable a person to claim in negligence for loss caused to him by reason of loss of or damage to property, he must have had either the legal ownership of or a possessory title to the property ..." (809). Then in Esso Petroleum Co. Ltd. v. Hall Russell and Co. Ltd. [1989] 1 A.C. 643, what was said in the 1986 case was referred to with approval (675, 676). Counsel for the appellants, reasonably enough, relied upon Main v. Leask [1910] S.C. 772 and Morrison Steamship Co. Ltd. v. Greystoke Castle [1947] A.C. 265. In the former case, a claim of the present kind succeeded in the Court of Session for reasons described in Caltex as "not entirely clear" (547). In -- 14 of 18 -- 15 the latter, an economic loss claim succeeded in circumstances which are not similar to those of the present case. Main v. Leask appears to be too old an authority to provide useful guidance as to the proper result of a pure economic loss claim under current doctrine and, as to Greystoke Castle, no principle helpful to the appellants is to be found stated therein. It is our opinion that one either starts from the general proposition that damages are not recoverable for negligence causing pure economic loss, or from the narrower proposition that those without a proprietary right in respect of property which is negligently damaged may not sue for that negligence. Here, success for the appellants depends on our acting on the view that a small group of persons who have suffered loss, but whose identity was unknown to the tortfeasor at the time when the tort was committed, should succeed in their claim, so long as such a loss by such a group was foreseeable by the tortfeasor. That should not be taken to represent the law in this country. We should add that the distinction between an ascertained class or group and an unascertained one, for relevant purposes, does not appear to be very satisfactory as a criterion of liability. However, no alternative test of reasonable precision seems to have attained general acceptance. -- 15 of 18 -- 16 In our opinion, the appeal should be dismissed, with costs. -- 16 of 18 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 52 of 1992 BETWEEN: G.D. & H.M. CHRISTOPHER (Plaintiffs) AND: H.P. & T. GARNIER, WUNING DARUA IPA AKI and SOBOVA DANIEL (Second Plaintiffs) Appellants AND: THE MOTOR VESSEL "FIJI GAS" (Defendant) Respondent _______________________________________________ Mr. Justice Pincus Mr. Justice McPherson Mr. Justice Thomas _______________________________________________ Judgment delivered on 26th February, 1993. Joint reasons of Pincus J.A. and Thomas J., McPherson J.A. delivering separate reasons. All concurring as to the order made. _______________________________________________ APPEAL DISMISSED, WITH COSTS. _______________________________________________ -- 17 of 18 -- IN THE COURT OF APPEAL SUPREME COURT OF QUEENSLAND Appeal No. 52 of 1992 Before the Court of Appeal Mr. Justice Pincus Mr. Justice McPherson Mr. Justice Thomas BETWEEN: G.D. & H.M. CHRISTOPHER (Plaintiffs) AND: H.P. & T. GARNIER, WUNING DARUA IPA AKI and SOBOVA DANIEL (Second Plaintiffs) Appellants AND: THE MOTOR VESSEL "FIJI GAS" (Defendant) Respondent JOINT JUDGMENT - PINCUS J.A. & THOMAS J. Delivered the Twenty-sixth day of February 1993 MINUTE OF ORDER: Appeal dismissed, with costs. CATCHWORDS: NEGLIGENCE - DUTY OF CARE - ECONOMIC LOSS - Second plaintiffs/crew members lost income when defendant collided with first plaintiffs - whether relationship of proximity established sufficient to give rise to duty of care to avoid economic loss to second plaintiffs - whether sufficiently directly casual connection between negligence and loss. Counsel: C.F. Wall Q.C., with him M.E. Pope for the Appellants G.A. Thompson for the Respondent Solicitors: L.R. Middleton for the Appellants Williams Graham & Carman for the Respondent Hearing Date(s): 6 August 1992 -- 18 of 18 --