Worldwide: Shipowner liable for injury to stevedore who was aware of the danger and failed to exercise his power under safety legislation to halt operations
CSL Australia Pty Limited v Formosa [2009] NSWCA 363

CSL Australia Pty Limited v Formosa [2009] NSWCA 363

New South Wales Court of Appeal¹

In Brief

• A shipowner was found liable for injury to a stevedore working aboard, even though the latter was the "person in charge" under safety legislation, knew of the danger, and had power to halt operations but failed to do so.

• The judgment surveys the ambit of maritime law obligations laid upon a shipowner/operator in regard to the safety of stevedores working aboard. The court followed a number of international decisions, in particular two leading judgments of the Supreme Court of the United States

• The content of maritime law concerning safety aboard ships may be different to that of the "terrene" common law. In particular, maritime law recognizes that safety aboard is the responsibility of every person concerned.

Background

The ship "Iron Chieftain" was a self-unloading bulk carrier engaged on the so-called "black and tan" run, carrying iron ore fines from Whyalla to Port Kembla and loading coal for the return voyage. The ship was equipped with a water spraying system to suppress iron ore dust when unloading. Some iron ore dust would escape, settle on the deck and form a slurry, making the deck slippery.

On 8 February 2005 a stevedore, Mr Formosa, slipped and fell during the loading of coal and injured his knee. He brought a claim in negligence in the District Court of NSW against the owner and operator of the ship (shipowners).

The shipowners defended the proceedings on the basis that:

1. Mr Formosa was an experienced stevedore in the employ of a stevedoring company contracted by the shipowner;
2. Mr Formosa was aware of the precise danger from slurry making the deck slippery. He had worked on this particular ship for over 10 years;

3. Mr Formosa was the "person in charge" pursuant to the Marine Orders made under the Navigation Act,² and had power to halt loading operations if he considered them to be dangerous, but did not do so; and

4. The shipowner as occupier had no liability to warn an independent contractor of defects³.

The primary judge noted that a previous operator had used two ships on this run, which allowed the Iron Chieftain to be loaded less full, so that loading could be supervised from the bridge and access to the deck was prohibited because of its slippery nature. Thus the occasion to use the slippery deck was brought about partly by the commercial choice of the appellants in using one ship on the run.

The primary judge concluded that the shipowners were in breach of a duty of care by failing to sweep the slurry from the deck, and failing to instruct the stevedores not to walk in the area where the iron ore fines were most likely to be wet.

He assessed total damages at $A231,918.03, but apportioned 40% of the liability to Mr Formosa's employer for breach of its obligations under the Workers Compensation Act 1987 (NSW). He reduced the damages by a further 15% for Mr Formosa's contributory negligence. The shipowners were thus liable to pay $A118,278.00 to Mr Formosa.

The shipowners appealed to the NSW Court of Appeal. Mr Formosa cross-appealed against the finding of contributory negligence.

Decision on Appeal

The Court of Appeal held that the relevant maritime safety legislation⁴ does not purport to create a statutory cause of action, therefore civil liability for breach of safety is governed by the common law. However, maritime law is influenced by the realities of maritime activities and commerce and "has its own marine (as opposed to terrene) roots".⁵ The court surveyed a plethora of Australian, English and American cases⁶, which demonstrated a principle in accord with that set out in relevant International Labour Organisation Instruments⁷, viz, that "the safety and well-being of those who work on the ship is the responsibility of everyone connected with the operation of the ship".⁸

The Court of Appeal therefore declined to find that the safety obligations owed by the stevedoring company and Mr Formosa himself could exclude or outweigh the safety obligations of the shipowner. This was despite the fact that Mr Formosa, being aware of the danger, had both the power and the duty under the Marine Orders to order the cessation of loading operations.⁹

The court recognized that stevedores bring a degree of expertise and experience to their work, however they do this in the environment, and using equipment and machinery provided by the ship. Whilst the master and officers retain a right to direct the stevedores, the latter are not the employees of the ship or its owners.

Decisions of the United States Supreme Court in the leading cases of Burnside ¹⁰ and Scindia ¹¹ supported the proposition that a shipowner's obligations extend "at least to the exercise of ordinary (viz reasonable) care under the circumstances to have the ship and its equipment in such condition that an expert and experienced stevedore will be able, by the exercise of reasonable care, to carry on its cargo operations with reasonable safety to persons and property and to warning the stevedores of any hazards on the ship or with respect to its equipment that are known to the ship or ought reasonably to be known to the ship and that are not known or would not be obvious to or anticipated by him or her if he or she were reasonably competent in his or her work".¹²

The primary obligation on the part of the shipowner was to provide a safe place on board to work. This could have been done either (a) by sweeping the deck area of slurry prior to commencing loading operations, or (b) by advising or requiring the stevedores to only inspect the holds from the starboard side. Having failed to do these things, it was not to the point that Mr Formosa himself (as "person in charge") or his employer the stevedoring company also were subject to duties in respect of safety.

The shipowner attempted to rely on section 5H of the Civil Liability Act 2002 (NSW), which provides that a defendant does not owe a duty of care to another person to warn of an obvious risk. The Court of Appeal found that section 5H was not applicable, as the breach in this case was not a failure to warn but a failure to take reasonable steps to minimize or remove a danger. However, the Court of Appeal noted that there was "a real issue" as to whether state legislation such as the Civil Liability Act applied at all, as it appeared that this area was covered by Federal legislation, viz, the Occupational Health & Safety (Maritime Industry) Act 1993 (Cth)¹³. This is likely to be a significant issue in a future case on somewhat different facts.

The Court of Appeal noted that the primary judge's finding that Mr Formosa was 15% contributorily negligent "might be seen as somewhat harsh", given that Mr Formosa had complained to his employer about the slippery working conditions (without result). However, as "person in charge" under the Marine Orders, Mr Formosa held a position which required him to act if he was aware of a danger, and he in fact had power to order unloading operations to cease on that basis. It was therefore open to the primary judge to find that he had contributed to the accident by failing to exercise his statutory duty.

The Court of Appeal similarly declined to interfere with the primary judge's finding that the stevedoring company (employer) was 40% responsible for the damage. Although the appellate judges felt that they would have attributed a higher proportion of responsibility to the employer if they had decided the case at first instance, the figure was within the range of acceptable outcomes. The primary judge had in effect recognized the primary responsibility of the shipowner to provide a safe working environment.

Implications

The decision is an important contribution to the corpus of international maritime law regarding the respective duties of shipowners, operators, stevedores and stevedoring companies with regard to safety at sea. The Court of Appeal has considered and applied a number of leading international authorities, Australian, English and American, in relation to a particular factual situation.

The Court of Appeal has left open the issue of whether the Civil Liability Act 2002 (NSW) (and equivalent State legislation) applies to purely federal actions such as this. Given the extensive provisions in such state legislation concerning personal injury actions, this issue is bound to arise in a similar case in future.

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