Australia: Transport: A New Zealand Perspective

Insurance Update (Australia)
Last Updated: 15 April 2013
Article by Neil Beadle

From a legal perspective, in 2012 the New Zealand maritime scene has been dominated by the consequences of the grounding of the Rena at Tauranga on 5 October 2011. An environmental oil pollution disaster was threatened but largely averted, but that grounding has proved to be the most costly maritime event in New Zealand's history.

On a different topic, transport operators and their insurers averted changes in the law that would have seriously impacted upon New Zealand's domestic legislation governing carriage of goods, though some changes will be made.

Lastly, while the courts have not been busy with transport matters, of international interest, the law was clarified in relation to enforcement of possessory liens by reference to English and Singaporean authorities.


The master and second officer of the Rena were prosecuted under the Maritime Transport Act 1994 (NZ) (Maritime Transport Act) for operating a ship in a manner which caused unnecessary danger or risk, and also under the Resource Management Act 1991 (NZ) (RMA) for the oil pollution. However, the most serious charge was that of perverting the course of justice arising from their alteration of the ship's documents and computer system to try and make it look as though the accident had not occurred as a result of their poor navigation. In May, upon guilty pleas, they were each sentenced to seven months' imprisonment, but served half the term and were released in September. The ship owner was also prosecuted under the RMA but its guilty plea was deferred until the anniversary of the grounding, and it was fined NZ$305,000 for its part in the incident.

Meanwhile, the clean-up costs were finally estimated at NZ$47 million. As we reported last year, the limitation of liability under the Convention of Limitation of Liability for Maritime Claims 1976 (1976 Convention), as enacted in New Zealand, meant that any liability on the part of the carrier was limited to about NZ$12 million. The 1996 International Maritime Organization (IMO) Protocol would have applied a limit of about NZ$28 million, but had not been enacted. Early in the year, the ship owners constituted a limitation fund under the 1976 Convention in London. While falling short of the money spent, to its credit, the Crown negotiated payment by the ship owners of a sum equivalent to the value of the fund in London: NZ$27.6 million with a possibility of over NZ$10 million more if the ship owners gain a resource consent to leave part of the wreck on the reef, rather than remove it.

Meanwhile, on 30 August the Marine Legislation Bill was introduced to Parliament. That is an omnibus Bill dealing with numerous matters, including enacting the higher limits applying under the 1996 IMO Protocol. It will also enable a simple mechanism for applying any future higher limits under the Convention and avoid the need for Parliamentary intervention to do that – which appears sensible, given competing priorities for Parliamentary time.

Of interest, the amendments create a greater limit of liability than that which ordinarily applies under the 1976 Convention. They do that by enacting the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001, but with a twist. Clause 25 in the Bill is to amend the Maritime Transport Act to say that the limits of liability for claims for pollution damage must not be aggregated with other claims that arise on that occasion.

The purported effect of the amendments is to create an additional liability for ship owners for bunker pollution, over and above the limits of liability under the 1976 Convention and the 1996 IMO Protocol.

The Bill does not require a limitation fund to be constituted in New Zealand as a precondition of invoking limitation of liability, which might be seen by some as opportunity missed.


Early in the year, changes were proposed by the Consumer Law Reform Bill to extend statutory guarantees for consumers to domestic carriers, even though there is already a well-developed and longstanding legal code that applies to domestic carriage in New Zealand.

Following submissions to the Parliamentary Select Committee, the revised Bill no longer tinkers with the Carriage of Goods Act 1979 (NZ), with the Committee recognising that this would have unintended consequences. The limit of liability to NZ$1,500 per unit of goods also remains unaltered.

Instead consumers will have a new right of redress against the supplier of goods that are to be delivered, rather than a right of recovery against the carrier.


The Global Financial Crisis has highlighted the importance to creditors of establishing their right to priority over others in line to be paid. Ship repairers can retain possession of a ship as security for unpaid repairs, but a recent case in the High Court at Auckland highlights the importance of adopting the correct process to secure payment in priority to other secured creditors. In this case sense prevailed to enable the repairer to recover on arrest and sale of the ship, in priority to the bank, but old English case law had to be distinguished to achieve that.

The established position in admiralty law is that the holder of a possessory lien over a vessel will not lose its right to have unpaid repair costs reimbursed if a third party (such as a mortgagee) commences litigation against a vessel (The "Tergeste" [1903] P 26 (CA)). However, in order to retain priority, the lien holder must be in possession of the vessel at the relevant time. On arrest, the admiralty registrar only assumes custody of the arrested ship, while the possessory lien holder continues to maintain possession and the claim is then paid out by way of a notional lien against the ship's sale proceeds.

In this case, Babcock had undertaken repairs to the ship, had maintained possession and so had a possessory lien, but then had the vessel arrested. The question was whether by the process of arrest Babcock had surrendered possession of the ship and so its possessory lien.

Priestley J considered the Singaporean authorities cited by Babcock to be compelling. One of these cases was The "Dwima 1" [1996] SGHC 83, a dispute between a ship repairer (the possessory lien holder) and a mortgagee. The court noted that although the plaintiffs parted with possession of the ship for the purpose of the sale, the parting of possession was without prejudice to their possessory lien, and it indicated that the plaintiffs did not intend to abandon their possessory lien. Other cases that also supported the right of a repairer to enforce a statutory in rem right against the sale proceeds included The "Opal 3" ex "Kuchino" [1992] 2 SLR 585 and Pan-United Ship Yard Pte Ltd v Chase Manhattan Bank (National Association) [1999] 1 SLR (R) 703. He decided Babcock was entitled to ask the court for an order that its possessory lien be preserved by a notional lien over the sale proceeds of the vessel and as a result would have priority over the sum owing to the mortgagee.

© 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

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions