Australia: CBP Shipping News - April 2012

Colin Biggers & Paisley activities

A number of guests attended a lunch hosted by Colin Biggers & Paisley on 9 March 2012 for the honourable Duncan Gay MP. The lunch was organised by the North Sydney Forum.

Reform of Australian maritime law

The First and Second Readings of the package of reforms introduced into Federal Parliament by the government have now taken place.

The Coastal Trading (Revitalising Australian Shipping) Bill 2012 (Exposure Draft (17 February 2012)), identifies as its objects in s.3 the following:

  • Promoting a viable shipping industry that contributes to the broader Australian economy
  • Facilitating the long term growth of the Australian shipping industry
  • Enhancing the efficiency and reliability of Australian shipping as part of the national transport system
  • Maximising the use of vessels registered in the Australian General Shipping Register and the Australian International Shipping Register in coastal trading

This introduces a new system for coastal licences which will include a general licence which is only available in respect of vessels registered in the Australian General Shipping Register, whose seafarers must be Australian citizens or hold a permanent visa or a temporary visa that does not prohibit the seafarer from performing the work he or she performs on the vessel. Such licences can be granted for up to 5 years.

The second form of licence which can be obtained is a temporary licence for a 12 month period. This is not restricted to vessels registered on the Australian General Shipping Register or the new Australian International Shipping Register.

Single voyage permits will therefore cease to exist. There is, however, a third category of licence called an emergency licence, but what constitutes an "emergency" is yet to be prescribed in the regulations.

An applicant for a temporary licence is required to give information in relation to at least 10 voyages which it proposes to undertake during the 12 month period, as well as the details of the cargo which it expects to carry. That information is then published on the website of the Department of Infrastructure and Transport and holders of a general licence are then provided with an opportunity to state that they could carry some or all of that cargo.

A new international shipping register is to be established under the Shipping Registration Amendment (Australian International Shipping Register) Bill. Ships registered under the new Register will not be subject to the Fair Work Act 2009 or the Seafarers Rehabilitation and Compensation Act 1992 when the ship is engaged in international trading, unlike the position when the ship is engaged in the coastal trade. Whilst such ships must be owned or operated by Australian residents or on demise charter to Australian based operators, they are only required to have an Australian resident as the master or chief mate of the ship and an Australian national or resident as the chief engineer or first engineer of the ship.

In addition, the Shipping Reform (Tax Incentives) Bill and the Tax Laws Amendment (Shipping Reform) Bill provide for accelerated depreciation and an income tax exemption for Australian owners or operators of Australian registered eligible vessels on qualifying shipping income, a refund or tax offset for employers who employ eligible Australian seafarers and an exemption from royalty withholding tax for foreign owners of eligible vessels under a bare boat or demise charter to an Australian operator.

For more information about reform of maritime laws in Australia, please see our earlier articles Shipping reforms may not achieve desired results for Australian economy and Increased penalties for marine pollution under new maritime legislation.

Maritime cases

Supreme Court of NSW: Maritime of NSW v Nikolai Rofe [2012] NSWSC 5.

This case concerned a prosecution for reckless navigation of a vessel on navigable waters under the Marine Safety Act 1998 (NSW). The facts of the case were that a petty officer in the Royal Australian Navy took a number of officer cadets out on a 6.3m rigid hull inflatable boat with an outboard motor and unguarded propeller after the completion of fast water insertion exercises that had taken place. It was described as a "joy ride" and resulted in one officer cadet falling from the vessel and suffering horrific injuries.

The magistrate dismissed the charges against the petty officer, which were that he had operated a commercial vessel recklessly and that he had operated a commercial vessel negligently occasioning grievous bodily harm. In essence the question on appeal was whether the prosecution needed to establish more than a possibility of serious harm resulting from the activity in order to find that there had been recklessness. Brereton J found that the Magistrate had been correct "to insist that more than a mere possibility, but a real or obvious and serious risk of propeller strike was required" in order to establish recklessness and did not overturn the acquittal.

Although his Honour found that the Magistrate had adopted an incorrect test in relation to criminal negligence, he declined to remit the matter back to the Magistrate.

United States 2nd Circuit Decision May 20th, 2011, St Paul Travelers Insurance Company Ltd v Wallenius Wilhelmsen Logistics A/S

In this case a subrogated insurer sought to recover over $4 million in respect of damage to a yacht. The yacht was badly damaged when a crane toppled over whilst it was being discharged at a port in California. Both at first instance and on appeal, the court upheld the carrier's entitlement to limit its liability to $500 under the US Carriage of Goods by Sea Act. Interestingly, a similar decision was handed down by the Federal Court of Australia in the case of Chapman Marine Pty Ltd v Wilhelmsen Lines A/S (1999) FCA 178.

In that case Justice Emmett held that the carrier was entitled to limit its liability to US$500 in relation to a cruiser which was being transported from the United States to Sydney, where it arrived in a state which amounted to a constructive total loss. It had sustained the damage when containers were being moved at the intermediate Port of Melbourne and the cruiser fell over the side of the vessel and onto the wharf.

The New South Wales Court of Appeal - United Airlines Inc v Sercel Australia Ltd (2012) NSWCA 24.

The issue in this case was whether or not a subrogated claim brought by the workers compensation insurers against the airline was time barred. The facts giving rise to the claim were that an employee of Sercel Australia Pty Ltd had been injured whilst on a flight from Sydney to Houston and had received payments of workers compensation through his employer's insurers. They now sought a recovery under s.151Z(1) of the Workers Compensation Act 1987, but were met with a defence which relied upon Article 29 of the Warsaw Convention, which extinguishes rights unless an action is brought within two years from the aircraft's arrival at its destination. This claim was brought outside that period.

Allsop P wrote the leading judgment, which was agreed with by MacFarlan JA and Handley AJA. It was held that section 37 of the Civil Aviation (Carriers Liability) Act 1959, which made clear that nothing in the Convention was to be treated as excluding any liability of a carrier to indemnify an employer of a passenger in respect of any compensation, was not subject to the time limitation in Section 34 of the Act or Article 29 of the Convention.

New Zealand Transport Accident Investigation Report into "Rena" Grounding

An interim report concerning the grounding of the "MV Rena" on Astrolabe Reef on 5 October 2011 was handed down in March 2012. This interim report does not seek to apportion blame and contains, for the most part, a summary of the facts that the investigators have ascertained.

For example, it notes that: the vessel was bound for Tauranga from Napier; that at 0015 on the day of the grounding the Tauranga Harbour Control spoke with the vessel when the ship was informed that its estimated time of arrival of 0300 hours was the end of the time window for pilotage, and also requested the Rena to make best speed for the pilot station; and thereafter course alterations were made which took the vessel closer to Astrolabe Reef.

The report concludes that "The Commission is continuing to collate and verify information directly related to the grounding and is also pursuing several lines of enquiry of a wider systemic nature."

Cruise shipping in Sydney Harbour

The Minister of Defence has recently made public the Independent Review of the Potential for Enhanced Cruise Ship Access to Garden Island, Sydney, conducted by Dr Allan Hawke. The executive summary of this report identified the review as having come to the following strategic judgments:

  • maximising the economic contribution and benefits from both tourism and the Defence presence is in the economic interests of a Commonwealth and state governments
  • the full economic benefits from the cruise ship sector will only be realised through supporting infrastructure for large cruise vessels
  • use of taxpayer funded facilities to support numerous sectors simultaneously represents responsible use of government funds
  • primacy of Defence use of Garden Island must remain paramount
  • enhanced cruise ship access to Garden Island should not impede achievement of defence operational outcomes
  • enhanced cruise ship access to Commonwealth-owned Garden Island infrastructure should be on a full recovery "user-pays" basis for provided infrastructure and operational costs and overheads of alternative arrangements for Defence and Navy ships
  • enhanced cruise ship access to Garden Island will impact significantly on local residents

The report considered five options and concluded that it "would be possible to combine elements from the options canvassed above to arrive at agreed short-medium and long term outcomes."

The report also refers to two related enquiries: the Defence Force Posture Review Report, which is due before the end of June this year and the New South Wales Government Transport Infrastructure and Tourism Reviews, including the NSW Visitor Economy Task Force, whose findings are due in May this year.

The Review noted: "The enduring requirement to maintain a credible and effective national Defence capability, including through a highly professional, versatile and well trained, maintained and equipped Navy, and a highly visible presence in the Nation's largest recruiting pool, is of paramount importance". It also noted that: "If the Force Posture Review's preliminary conclusion about a new Fleet Base facility comes to pass, then the sensible way ahead would involve option 5 or some variation thereon and adoption of a phased approach drawing on aspects of the other options".

Option 5 involved the "disposal and transfer of Fleet based berths 1 to 5 (at Garden Island) to the Sydney Ports Corporation and a transfer of the navy's amphibious and afloat support group to new dedicated facilities in a Port other than Sydney." A "scope and costings study using the Port of Newcastle as an exemplar" was commissioned by this Review which estimated a minimum total investment of $1.003 billion for this option.

An article by Nicole Gooch in the 5 April 2012 edition of Lloyd's List Australia highlights the need for investment in further infrastructure to cater for the anticipated continued growth of the cruise shipping industry. The article refers to a study of the cruise industry commissioned by Carnival Cruises from Deloitte Access Economics, The economic contribution of the cruise sector to Australia, which has identified the significant contribution made to the national economy by this industry.

For more information about trade and transport law, please see the website of Colin Biggers & Paisley or contact Stuart Hetherington at

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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