The Oceanic Crest, owned by Oceanic Crest Shipping Co (Oceanic), badly damaged a 'dolphin' - a structure consisting of a number of steel piles capped with a steel platform and faced with a fender system, designed to protect a wharf - in Dampier Harbour while berthing. The damage was caused by the pilot's negligence. The pilot was employed by Pilbara Harbour Services Pty Ltd (Pilbara). The dolphin was owned by Hamersley Iron Pty Ltd (Hamersley), which successfully claimed against Oceanic in the Supreme Court of Western Australia for the damage but failed in its claim against Pilbara. Oceanic was refused contribution from Pilbara pursuant to the Law Reform (Contributory Negligence and Tortfeasors' Contribution) Act 1947 (WA) (Law Reform Act), against which it appealed to the High Court.

Under the general rule in s 410B(2) of the Navigation Act 1912 (Cth), shipowners are responsible for the negligent navigation of pilots supplied to them compulsorily.

Held, by majority (Gibbs CJ, Wilson and Dawson JJ): Pilbara was not vicariously liable for the pilot's conduct.

Oceanic posed alternative arguments in its pursuit of contribution from Pilbara: first, that Pilbara had breached its non-contractual duty to Oceanic to provide a skilled and competent pilot, allowing Oceanic to claim for economic loss; second, that s 7(1)(c) of the Law Reform Act provided that liable tortfeasors could recover contribution from other tortfeasors who would be liable for the same tort if sued. Both arguments depended on Pilbara being found vicariously liable for the pilot's conduct.

The majority observed how changes to the law internationally, as in the International Convention for the Unification of Certain Rules of Law in Regard to Collisions 1910 (Collision Convention 1910), made it so that claims could be brought against shipowners/masters instead of pilots. Article 5 of the Collision Convention 1910 abolished the compulsory pilotage defence previously enjoyed by shipowners and masters.

Although Pilbara had not been found liable at first instance for the pilot's actions, it was still possible for Oceanic to claim against Pilbara if it could demonstrate that Pilbara ought to have been liable to Hamersley.

Pilbara supplied pilots whose services were required on all incoming ships by law; the pilot was an independent professional exercising the duty that the law required of him, rather than being under the control of the supplying authority. The circumstances could be distinguished from the usual case of employees who act negligently in the course of their employment, and who are directly beholden to their employer and granted authority by the employer, rather than being subject to a separate legal duty and discretion. Pilbara had no power over how the pilot discharged his authority, although he was obliged to follow their instructions as to which ships to board. The pilot's separate legal duty, the majority found, can be imposed either under common law or statute. Here, the pilot was appointed as such under the Shipping and Pilotage Act 1967 (WA), and appointed by the WA Governor as a pilot at Dampier. 

Section 410B of the Navigation Act 1912 (Cth) places pilots under the authority of the master of the ship they are assisting, and the master is responsible for their conduct. The owner or master of the ship, where the law in operation makes pilotage compulsory, is answerable for faulty navigation as though pilotage were not compulsory and they had taken on the pilot voluntarily. The fact that pilots have a separate legal duty and discretion, and yet shipowners can be responsible for their conduct, can be reconciled because some part of the pilots' powers are derived from the shipowners when control is handed over to them. Indeed, shipowners retain the power to take control back from pilots in exceptional circumstances.

Moreover, since the law functionally rendered Oceanic the pilot's employer, it did not make sense for Pilbara to also be vicariously liable in the same way. These two liabilities could not co-exist.

Pilbara also lacked any personal duty to Oceanic to ensure the pilot it employed would navigate the Oceanic Crest safely. Pilbara discharged its duty to Oceanic when it supplied a competent, qualified pilot who had been appointed by the government. It was not providing a service any different to that which a government body would supply.

Because of these factors, Pilbara was not vicariously liable for the pilot's conduct, nor had it breached any duty to Oceanic, and was not obliged to pay any contribution to Oceanic. Neither of Oceanic's main arguments could be sustained.

Brennan J, dissenting:

Trading corporations empowered to employ licenced pilots, such as Pilbara, should be held vicariously liable when those pilots act negligently in the course of their duties. Therefore Pilbara was liable to Hamersley, despite the findings of the Supreme Court of Western Australia. Further, Pilbara had a contract with Hamersley stating that the former would 'provide services of a high standard and competent manner of towing and pilotage of all vessels'. The pilot's negligence in this case and the damage his actions caused to the dolphin in the harbour breached the agreement as he did not act to a high standard or as competently as could be expected.

Because Pilbara was vicariously liable to Hamersley, it was a tortfeasor within the meaning of the Law Reform Act, s 7(1)(c), and was obliged to pay a contribution to Oceanic.

Brennan J noted that s 410B(2) of the Navigation Act 1912 (Cth) (rendering shipowners/masters liable for the negligent actions of compulsory pilots) was modelled on the Pilotage Act 1913 (UK), which itself took after the Collision Convention 1910, art 5. His Honour rejected Pilbara's argument that s 410B, in bringing home liability to the shipowner, excluded vicarious liability in respect of any other person, as this would deny plaintiffs relief against any person other than the shipowner or master for a pilot's negligence.

Brennan J also argued that since the master of a ship has no power over the pilot under s 410B(1), and cannot control how the pilot navigates a ship while it is under compulsory pilotage, the pilot is not a servant of the ship's master. Section 410B does not create a master-servant relationship between them. A greater measure of control belongs to the pilot's employer; here, Pilbara. Thus liability for damage caused by the pilot, judged as vicarious liability, still belongs to the employer.

This meant that Pilbara was liable alongside Oceanic as joint tortfeasors, Pilbara as the pilot's general employer, while s 410B imposed a parallel statutory liability on Oceanic. Either party could therefore claim for contribution against the other under s 7(1)(c) of the Law Reform Act. Hamersley's action against Pilbara ought to have succeeded, Pilbara was vicariously liable for the pilot's negligence and should be made to pay contribution to Oceanic.

Brennan J's suggested orders were that Oceanic may add Hamersley as a respondent to this appeal, if it consented, in order to set aside the judgment dismissing Hamersley's initial claim against Pilbara, and that judgment might be subsequently entered against Pilbara. Subject to Hamersley being added as a respondent, the appeal should be allowed and the Full Court's judgment set aside to the extent that it affirmed Hamersley had no claim against Pilbara. Pilbara was also to pay a contribution to Oceanic.

Deane J, dissenting:

Pursuant to the reasoning in Fowles v Eastern and Australian Steamship Co Ltd [1916] 2 AC 556 (Fowles), Pilbara was not prima facie vicariously liable for the negligence of the pilot, although it employed and paid him to perform those services. This was a longstanding authority supporting the principle that harbour authorities are not typically liable for the negligent acts of pilots they employ, who are supplied to ships compulsorily. The majority in this decision were of the view that the present facts were indistinguishable from Fowles.

Deane J took issue with the notion that employers ought not to be liable for the negligent acts of pilots when they employ and pay those pilots to perform those services and charge shipowners for the use of those pilots. This statement ran contrary to the normal principles of vicarious liability that had been established in Australia since Fowles was decided. The idea of 'control' in particular as a prerequisite to holding an employer accountable was no longer viable. Many employees in different fields have a level of expertise comparable to a pilot and which is generally relied upon by their employers without controlling them. Despite not controlling them, these employers are still as a general rule liable for the actions of those competent employees.

Deane J was also of the opinion that an over-reliance on Fowles could lead to 'real practical injustice', where uninsured plaintiffs who lack the bargaining power of a corporation are affected by a pilot's negligence, and cannot negotiate with that pilot's employer. In such cases it would be unjust for the injured party not to have recourse to sue the pilot's employer merely because pilotage was compulsory, and when the masters and owners of ships, or ships themselves are frequently out of reach or are subject to limited liability protections.

Because of these broader considerations, Deane J was of the view that Fowles should only be applied to cases involving similar facts, that is, when the employer of a pilot is the Crown or another government body, and not to the present case, which involves a trading corporation (Pilbara) as the pilot's employer. In the present case, the pilot was not a public servant; the pilot must be a public servant in order to exercise an 'independent duty' cast upon him by the law. It was not the same in the case of a pilot who, as in the present facts, was employed by a private company and whose services were provided for the company's reward; he was not a public officer merely because his appointment or license was granted under governmental authority.

For these reasons, Deane J concurred with the orders proposed by Brennan J.