Case: Port Kembla Coal Terminal Ltd v Braverus Maritime Inc [2004] FCA 1211 ; (2004) 140 FCR 445
Outcome: applied
In Davidson v JS Gilbert Fabrications Pty Ltd [1986] 1 Qd R 1 at 9, McPherson J (Andrews ACJ agreeing) held that the time, trouble, expense and risks of repair and sale were ordinarily to be borne by a defendant. That principle is also of longstanding in cases in Admiralty. Dr Lushington said in The Gazelle (1844) 2 W. Rob (Adm) 279 at 281; 166 ER 759 at 760 that in cases of collision the suffering party is entitled to indemnification which is co-extensive with the damage, that is, to restitutio in integrum . He continued, in a passage part of which is cited in McGregor on Damages (17 th edn) at [32-006] as authoritative on the common law of assessment of the cost of repair (and see too The Munster (1896) 12 TLR 264 at 265-266 per Jeune P; Port Kembla Coal Terminal Ltd v Braverus Maritime Inc [2004] FCA 1211 ; (2004) 140 FCR 445 at 542 [487] and see too at 542-543 [484]-[488] per Hely J): 'If the settlement of the indemnification be attended with any difficulty (and in those cases difficulties must and will frequently occur), the party in fault must bear the inconvenience. He has no right to fix this inconvenience upon the injured party; and if that party derives incidentally a greater benefit than mere indemnification, it arises only from the impossibility of otherwise effecting such indemnification without exposing him to some loss or burden, which the law will not place upon him.' 74 The principle identified by these authorities establishes that a tortfeasor must bear the cost of replacement or repair of the plaintiff's property where that has been damaged or destroyed by the tortfeasor's negligence. And the quantum of that cost is not diminished by any betterment of the plaintiff's property as a result of the repairs which the plaintiff achieves provided that the plaintiff does not act extravagantly: Port Kembla Coal Terminal Ltd v Braverus Maritime Inc [2004] FCA 1211 ; (2004) 140 FCR 445 at 542 [485] - [486] per Hely J. 75 The third basis upon which damages fall to be assessed in the present case is that provided pursuant to s 82 of the Act. That measure is one which is flexible so as to be appropriately adapted to the circumstances of compensating a person who suffers loss or damage by conduct of another person that was done in contravention of s 52 of the Act. 76 Here, Consort argues that it suffered loss by reason of J-Mac's contravention of s 52 because it was exposed to being in default under its financing arrangements with ANZ. It had caused its subsidiary to acquire the ship at a price far greater than its true worth. Rho Beta 7 had no assets other than the ship itself with which to repay the loan provided by Consort. Accordingly, Rho Beta 7 had a loan of USD 3.5m and its only asset was worth only half of that amount. Consort was obliged to maintain the asset value of its subsidiary so as to remain within its own covenants to ANZ. Thus, Consort argued that since it wished to run the ship in connection with its business, and not be in default under its loan facility it was necessary for Consort to pay for the repairs and restoration work and hire of substitute vessels. The ship had to be in a condition where it could keep its class certificates and registrations. And, it needed to be repaired and restored so as to be able to operate with appropriate efficiency in the conduct of Consort's business for which it had been purchased. Thus, Consort was exposed to the necessity of either itself paying those costs or alternatively of financing them. 77 I am satisfied that the repairs performed to the hydraulics of the vessel's cranes by Perrott Engineering Pty Limited in November 1999 were necessary and the sum claimed for them is reasonable. 78 In the period between July 2000 and September 2000 major repairs and restoration work were undertaken when the ship was at the Tropical Reef Shipyard. Further repairs were carried out in 2004. I accept Mr McInnes' evidence as to the circumstances in which the various repairs of the vessel were undertaken between 1999 and 2004 in respect of which damages are claimed in the schedule. I am of opinion that his evidence establishes that Consort acted reasonably in the way in which it went about arranging for and paying for the repairs and the hire of substitute vessels. Consort paid hire for a replacement vessels during that period.