Australia: Grounding of Rena in New Zealand

Last Updated: 29 February 2012
Article by Neil Beadle

The New Zealand maritime scene has been dominated by the grounding of the Rena at Tauranga, by which an environmental oil pollution disaster was threatened, but largely averted. The salvage continues, and only time will tell as to where liabilities lie, but we offer some thoughts on that issue.

Meanwhile, the High Court has provided a useful clarification of the application of domestic legislation relating to the carriage of goods.

The Rena grounded on the Astrolabe reef just outside Tauranga Harbour in the early hours of 5 October 2011. Thankfully nobody died or was injured, and the focus has been on the potential environmental damage from bunker oil, though only about 200 of the 1,300 containers on board have so far been salvaged, and cargo losses will be heavy.

The Hague Visby Rules govern liability between cargo and carrier. On the limited information available so far, arguably the direct cause of the grounding was a navigational error in grounding on the reef. For cargo claims to succeed, the court will have to find on the balance of probabilities that either:

  • By want of due diligence, the ship was unseaworthy at the commencement of the voyage (ie in her crew or equipment); or
  • The grounding was not a navigational error and no other exception to liability applies.

By contrast, the Crown's costs of clean-up are recoverable as a debt to the Crown. So all the Crown has to do is justify them as reasonable and make a demand. The New Zealand Government has made much of its intent to hold the owners and also the charterer of the vessel, Mediterranean Shipping Company (MSC) accountable for the cost of cleaning up the oil pollution damage. The costs as at early December 2011 were estimated at NZ$19.5 million.

However, under the Convention of Limitation of Liability for Maritime Claims 1976 as enacted in New Zealand, any liability on the part of the carrier is limited to about NZ$12 million. The 1996 IMO Protocol would have applied a limit of about NZ$28 million, but has not been enacted. In light of this casualty, the Protocol is likely to be enacted as soon as the parliamentary calendar permits, though it is unlikely to apply to the Rena.

If the clean-up costs are subject to limitation, naturally the New Zealand Government will have an eye on recovering as much of this fund as possible, though it may have to share in the fund if cargo interests succeed in a recovery action against the owners and/or MSC.

The Transport Accident Investigation Authority is undertaking an independent investigation into the cause of the accident. It has gathered all the documents and the electronic recordings of events on the bridge of the ship. It is expected to issue its preliminary report shortly. It will be interesting to see how events play out.

Application of the Carriage of Goods Act to export cargo

Domestic carriage in New Zealand is governed by a strict liability regime under the Carriage of Goods Act 1979 (Act). The Act applies a package limit of liability of NZ$1,500, with limited exceptions. As a result, there is little litigation over domestic carriage of goods. However, the New Zealand High Court has clarified how that limitation applies when cargo is ostensibly damaged prior to export, but then also suffers further damage during the international carriage of the goods.

On 7 December 2011, the High Court delivered its decision in GVI Logistics Limited v Goat NZ Limited. Goat NZ Limited instructed GVI to arrange carriage of 648 cartons of goat meat to Japan in a reefer container set at -1.5°C. The freight forwarder, GVI, provided incorrect written directions to Auckland Metro Port (where the cargo was to be loaded on board the vessel) to set the container at +1°C. Metro Port followed the booking instruction and as a result, when the meat arrived in Japan it had deteriorated and the entire consignment was rejected by the receiver. The temperature monitors inside the container showed that the temperature of the meat had increased to +1°C in New Zealand, before the container was loaded on board the vessel.

The High Court considered the meaning of "loss of or damage to" goods under section 9 of the Act and confirmed that section 9(1) was intended to identify and confine liability under the Act to loss or damage occurring in New Zealand.

The court applied the Tasmanian Supreme Court decision in Ranicar & Anor v Frigmobile Pty Ltd [1983] 2 ANZ Insurance Cases 60-525, Green CJ, which defined the phrase "damage to" (in the context of a contract for insurance) as "...a physical alteration or change, not necessarily permanent or irreparable, which impairs the value or usefulness of the thing said to have been damaged".

In the absence of evidence in this case that the meat had lost its value or functionality while it was in New Zealand and as the change to the temperature setting did not prevent the meat from being exported, GVI had not proved the damage occurred in New Zealand and it was unable to limit its liability under the Act, and so was liable for the exporter's loss of NZ$108,012.27.

Although somewhat dependent upon its facts, the case is a helpful guide in the prosecution or defence of similar claims.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

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