James Alexander Smith (the plaintiff) was injured on 12 October 2001 while spearfishing off Brush Island near Kioloa, New South Wales, Australia. Denis Guy Renton (the cross-defendant) joined the plaintiff in the water. A motor launch driven by Benjamin Richard Perese (the first defendant) collided with the plaintiff. The injured plaintiff suffered an amputation below the knee.

The plaintiff sued: (1) the first defendant; (2) the father of the first defendant, Richard Perese (the second defendant); and (3) Perese Abalone Diving Pty Ltd as the trustee of the Perese Family Trust (the third defendant). The first defendant joined and claimed against the cross-defendant. The plaintiff's claim and the first defendant's cross-claim were heard together.

The issues included: (1) whether the first defendant was negligent; (2) whether there was contributory negligence on the part of the plaintiff; and (3) defences under the Civil Liability Act 2002 (NSW).

As to quantum of damages, the parties agreed that AUD 1,800,000 was appropriate if not limited by the Limitation of Liability for Maritime Claims Act 1989 (Cth) (the Act). The defendants relied on the Act and the LLMC 1976. The Act gave domestic effect in Australia to the LLMC 1976.

Sections 5, 6 and 9 of the Act provide:

5. This Act does not apply in relation to a ship to the extent that a law of a State … makes provision giving effect to the Convention in relation to that ship.

6. Subject to this Act, the provisions of the Convention … have the force of law in Australia.

9. (1) Where a claim is made … against a person in respect of any liability of the person that may be limited under the applied provisions, the person may apply:

(a) where a claim has been made against the person in proceedings in the Supreme Court of a State or Territory - to that Court …

to determine the limit of that liability under the applied provisions, and the Court may determine that limit.

The LLMC 1976 enables those persons identified in art 1 to limit their liability. Articles 1.1 and 1.2 of the LLMC 1976 provide:

1. Shipowners … as hereinafter defined, may limit their liability in accordance with the rules of this Convention for claims set out in Article 2.

2. The term 'shipowner' shall mean the owner, charterer, manager and operator of a seagoing ship.

Article 2 of the LLMC 1976 identifies claims that are subject to limitation:

1. Subject to Articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability:

(a) claims in respect of loss of life or personal injury … occurring … in direct connexion with the operation of the ship … and consequential loss resulting therefrom …

The parties agreed that it was impossible to assess damages limited by the LLMC 1976 until a judgment determining whether the LLMC 1976 applied was published.

Held: Judgment for the plaintiff against the first and third defendants.

The first defendant was negligent. He was obliged to keep a proper look out and travel at an appropriate speed. He failed to comply with either obligation. There was no contributory negligence on the part of the plaintiff. The third defendant was vicariously liable for the first defendant's negligence. The second defendant, however, was not liable for the negligence of the first defendant. The Court rejected the defendants' reliance on defences based on the Civil Liability Act 2002 (NSW). The first defendant's cross-claim against the cross-defendant failed because the cross-defendant would not have been liable to the plaintiff in negligence.

As to quantum, the first and third defendants were entitled to limit their liability under the LLMC 1976. The first defendant's vessel was a seagoing ship for the purposes of the LLMC 1976.

Although there was evidence that the motor launch did not appear to be a seagoing ship, this issue must be addressed by reference to statutory provisions and case law. The Court first referred to the Macquarie Dictionary and the Oxford English Dictionary for the dictionary meanings of 'ship' and 'seagoing'. The Court then referred to various statutory definitions of 'ship' which tend to broaden the dictionary definitions: (1) s 3 of the Navigation Act 1901 (NSW); (2) s 3 of the Admiralty Act 1988 (Cth); (3) s 3 of the Shipping Registration Act 1987 (Cth); and (4) s 6 of the Navigation Act 1912 (Cth). While the statutory definitions are somewhat distinct, the common element is that the definitions of 'ship' are broad. Although certain classes of objects are expressly included or excluded in the statutory definitions, a common element of the various statutes is that a ship means 'any kind of vessel' either capable of, or used in navigation by water.

The concept of use in navigation involves an ability for 'free and ordered movement from one place to another': Polpen Shipping Co Ltd v Commercial Union Assurance Co Ltd [1943] KB 161, 167 (Atkinson J). In Steedman v Schofield [1992] 2 Lloyd's Rep 163, 166, Sheen J stated that 'the phrase "used in navigation" conveys the concept of transporting persons or property by water to an intended destination'. In Salt Union Ltd v Wood [1893] 1 QB 370, 374 (Lord Coleridge CJ), it was stated that '[i]t is a simple proposition to hold that a seagoing ship means a ship that does go to sea' and that its capacity to go to sea was not to the point. See also Union Steamship Co of New Zealand Ltd v The Commonwealth (1925) 36 CLR 130, 145 (Isaacs J) and The Von Rocks [1998] 2 Lloyd's Rep 198 (Supreme Court of Ireland) 200 (Barr J), 207 (Keane J), which examined the definition of 'ship' under the Jurisdiction of Courts (Maritime Conventions) Act 1989 (Ire), which in turn gave effect to the Arrest Convention 1952.

The first defendant's motor launch was a ship. It has many of the fundamental characteristics of a ship: it is a highly manoeuvrable vessel used in navigation by water; it goes to sea, albeit that it would appear to operate in waters close to the coast and not the 'high seas' (art 86 of UNCLOS); and it is used in ocean fishing for abalone. The vessel is fitted with a wave-breaker windscreen. The first defendant used it as a means of transport to fishing areas. The vessel has been used in diving operations between the Victorian boarder and as far north as Kiama. In the year prior to October 2001 it was used in the general Kioloa/Brush Island area twice per week. The vessel is small: approximately five metres in length and, save for the windscreen described, is an open vessel without any cabin. The vessel is not designed for use outside coastal waters. It is questionable whether it could navigate the high seas.

While there was no evidence as to its tonnage, the vessel's obviously limited tonnage does not disqualify it from being categorised as a ship. The Act gave effect to the LLMC 1976. There is no relevant enactment to limit the application of the LLMC 1976 to exclude ships of less than 300 tons, despite the LLMC 1976 art 15.2 providing the opportunity for a State Party to do so. Thus the LLMC 1976 art 15.2 suggests that, prima facie, in the absence of some enactment addressing the question, ships of less than 300 tons are within the scope of LLMC 1976. In Noferi v Smithers [2002] NSWSC 508, parties agreed that the LLMC 1976 applied to personal injury claims arising out of an accident involving a motorboat.

As the parties were agreed that it is impossible to assess damages limited by the LLMC 1976 until a judgment determining whether the LLMC 1976 applies had been published, the Court did not consider provisions of the LLMC 1976 concerning calculation of the limits of liability.