On 18 December 1982, at approximately 01h05, a collision occurred about 4.6 nm off Cape Flattery in North Queensland waters between the Tiruna, a prawn trawler owned by the plaintiff, Baremeda Enterprises Pty Ltd (Baremeda), and the Pelorus, a fishing trawler owned by the second defendant, KFV Fisheries (Qld) Pty Ltd (KFV), skippered by the first defendant, Ronald Patrick O'Connor. Both vessels were travelling on the same course, with the Pelorus overtaking the Tiruna from astern at approximately 3 times its speed. The Pelorus struck the Tiruna at the stern, causing it to sink within minutes.

The plaintiff claimed damages for loss of the vessel and its contents, loss of income, and the cost of wreck removal, the latter incurred pursuant to a statutory direction issued by the Acting Harbour Master under s 212 of the Marine Acts (Qld). Total damages were assessed at AUD 311,136.62. The defendants denied liability, alleged contributory negligence, and claimed limitation of liability under Pt VIII of the Navigation Act 1912 (Cth), which incorporated the LLMC 1957 as Sch 6, with the express exclusion of art 1.1.c of the Convention.

O'Connor was found to have kept no effective lookout and was probably absent from, or unconscious in the wheelhouse during the critical period before the collision. The plaintiff's master was not contributorily negligent. On limitation, the plaintiff challenged KFV's system of operations across multiple grounds including master selection, watch-keeping rules, log requirements, standing orders, radar equipment, and the practice of steaming with elevated deck lights in breach of r 20.b of the COLREGs 1972. The Court rejected each ground and found KFV had disproved actual fault or privity, entitling it to limit its liability. The agreed limitation amount was AUD 23,051.15.

The distinct question arose whether the wreck removal costs of AUD 35,000 were subject to limitation. The defendants argued that they fell within art 1.1.b of the Convention. The Court held that the three subparas of art 1.1 were mutually exclusive, and that claims of the kind addressed by art 1.1.c, which Parliament had expressly excluded from domestic law, could not be absorbed into art 1.1.b.

Held: Judgment for the plaintiff.

No contributory negligence is established. KFV is entitled to limit its liability under arts 1.1.a and 1.1.b of the Convention, with the limitation amount of AUD 23,051.15 applicable to AUD 276,136.62 of total damages. The wreck removal claim of AUD 35,000 was not subject to limitation, as it fell within art 1.1.c of the Convention which had been expressly excluded from domestic law, and could thus not be absorbed into art 1.1.b.