Birkenfeld (the appellant) had been severely injured as a result of a collision between her windsurfer and a rigid inflatable boat (RIB) owned by Yachting New Zealand Inc and driven by Mr Kendall (the respondents). The appellant appealed against a judgment of the High Court delivered by Randerson J in a claim for damages against the respondents (see CMI532). Randerson J ordered a permanent stay of the proceedings on the ground that the limitation provisions of the Maritime Transport Act 1994 (MTA), which enact the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 1976) in New Zealand, limited the sum which the respondents could be ordered to pay and that they had arranged to pay the appellant the maximum sum that she could claim in any proceeding. The issue on appeal was whether the appellant was entitled to a trial to determine whether the collision was due to Mr Kendall's negligence or whether the respondents were entitled to the benefit of the permanent stay of proceedings ordered in the High Court.

Held: Appeal dismissed.

Were it not for the statutory limitation provision, the Court would be minded to refer the case back to the High Court to exercise its discretion under s 2 of the Declaratory Judgments Act 1908, weighing the appellant's interests against the cost and other burdens upon the respondents of the trial of such an issue. However, to do so would infringe the policy of pt 7 of the MTA and the LLMC 1976.

Limitation of liability is well known in the law as an encouragement to the enterprise, which is of particular relevance in marine cases. The purpose of the limitation provisions is to encourage shipping and trade by removing the possibility of unlimited liability. When one considers the international nature of the shipping trade to which the policy of the limitation provisions is directed, the policy argument that costs of trial of proceedings for declaration should not be imposed on a defendant who has succeeded in a limitation application and tendered the amount of the limitation fund is of obvious importance. By analogy to the accident compensation regime, public policy does not require the costs and burden of the litigation to be imposed on the respondents where the maximum compensation has been tendered.

Given that Parliament had established both the limitation regime and a system for the investigation of mishaps, including means for experts to establish findings which might increase transport safety, it was neither necessary nor desirable for the judiciary by exercise of discretion under the Declaratory Judgments Act 1908 to impose a parallel system of investigation by lay judges which was not required for the purpose of compensation for injury.