Allison Pty Ltd t/a Pilbara Marine Port Services v Lumley General Insurance Ltd

[2002] WASC 41

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   ALLISON PTY LTD t/a PILBARA MARINE PORT SERVICES -v- LUMLEY GENERAL INSURANCE LTD [2002] WASC 41

CORAM:   MASTER BREDMEYER

HEARD:   22 FEBRUARY 2002

DELIVERED          :   8 MARCH 2002

PUBLISHED           :  12 MARCH 2002

FILE NO/S:   CIV 2195 of 1995

BETWEEN:   ALLISON PTY LTD t/a PILBARA MARINE PORT SERVICES (ACN 056 940 437)

Plaintiff

AND

LUMLEY GENERAL INSURANCE LTD
Defendant

Catchwords:

Pleading - Contract - Surrounding circumstances

Legislation:

Nil

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiff:     Mr D M Stone

Defendant:     Mr G R Hancy

Solicitors:

Plaintiff:     Williams & Hughes

Defendant:     Phillips Fox

Case(s) referred to in judgment(s):

B & B Constructions (Aust) Pty Ltd v Brian A Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227

Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337

Manufacturers Mutual Insurance Ltd v Withers (1988) 5 ANZ Insurance Cases 60‑853

Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326

Case(s) also cited:

Acorn Consolidated Pty Ltd & Anor v Hawkslade Investments Pty Ltd [1999] WASC 218

Phillips & Anor v Dorintal Insurance Ltd [1987] 1 QB 482

1. MASTER BREDMEYER:  I have to determine a pleading point.  The defendant has applied to strike out the plaintiff's reply.  I ruled on part of that application with oral reasons on 19 November 2001.  Now, I have to rule on another point.

2. The pleading concerned is the plaintiff's minute of amended reply of January 2002.  The paragraph under attack is par 5 which pleads as follows:

   "5.     In support of the construction contended for at paragraphs 3(ii) and 4, the Plaintiff will say:-

   (a)at all material times it was acknowledged amongst mariners in Western Australia, including the directors of the Plaintiff, that a ship's master is entitled to take steps which are reasonably necessary to save his vessel, crew and/or cargo;

   (b)as a marine insurer, the Defendant was well aware, or may be taken to have been well aware, or ought to have been aware, of the matters referred to at paragraph (a)."

3. The plaintiff supports the plea of surrounding circumstances on the principles established in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352. The plea is supported as follows. The contract of insurance has an ambiguity in it. It contains a warranty given by the plaintiff that:

   "The vessels are moored on cyclone‑proof moorings."

   So, it is a breach of warranty to take a vessel off that cyclone‑proof mooring.  At the same time, the contract expressly incorporates the Institute Time Clause Hulls, etcetera, cls 14.1 and 14.3 of which permit the assured to take such measures as would be reasonable to avert or minimise loss and to save or protect against loss of the vessel. 

4. Mason J, who was one of the three majority Judges in Codelfa, said that evidence of surrounding circumstances of a contract is admissible as an aid to construction, not to raise an ambiguity, but where an ambiguity appears in the contract - to help resolve that ambiguity. 

5. Clarke JA in Trawl Industries of Australia Pty Ltd v Effem Foods Pty Ltd (1992) 27 NSWLR 326 at 358 quoted McHugh JA, as he then was, with approval in Manufacturers Mutual Insurance Ltd v Withers (1988) 5 ANZ Insurance Cases 60‑853 at 75,343. There, his Honour said:

   " … few, if any, English words are unambiguous or not susceptible of more than one meaning or have a plain meaning.  Until a word, phrase or sentence is understood in the light of the surrounding circumstances, it is rarely possible to know what it means.  In my view evidence of surrounding circumstances will generally be admissible if it is known to both parties or sufficiently notorious to be presumed to be within their knowledge."

   That passage was quoted with approval by Kirby P, as he then was, in B & B Constructions (Aust) Pty Ltd v Brian A Cheeseman & AssociatesPty Ltd (1994) 35 NSWLR 227.

6. The plaintiff has pleaded in par 5(a) that it was acknowledged among mariners in WA, including the directors of the plaintiff, that a ship's master is entitled to take steps which are reasonably necessary to save his vessel, crew, and/or cargo.  That is a plea of two matters:  (1) that the entitlement mentioned is notorious and (2) was known to the plaintiff.  In par 5(b), the plaintiff has pleaded that the defendant marine insurer was well aware, or may be taken to have been well aware, or ought to have been aware, of the matters referred to a par (a).  That plea, in effect, means that the defendant knew, or ought to have known, of the entitlement mentioned in (a).

7. The defendant's argument is that there is no ambiguity in the contract.  The warranty term means that the assured is to keep the vessel on a cyclone‑proof mooring which, by definition, is safe in a cyclone.  If the master tries and moves the vessel to some other mooring, he has broken the warranty and that is the end of his claim.  That is a logical, powerful argument, but I also consider the plaintiff's argument - that there is an ambiguity between the warranty and the Institute Time Clauses - is also arguable.  It is not appropriate in a strike‑out application that I strike out a pleading unless it is "manifestly hopeless". 

8. I think the plea is adequate.  It does not use the word "notorious" which is the word used by McHugh JA, but says "acknowledged among mariners".  I think that means the same.  It means notorious or well‑known to mariners.  Paragraph (b) refers to (a) and means, in effect, the principle asserted in (a) is notorious, not only to mariners, but to marine insurers.  Hence, this defendant knew, or was presumed to have known, of the entitlement asserted in (a). 

9. The plea could have followed McHugh JA's quote more precisely.  For example, it could have stated:

   "It is a notorious fact known to mariners in WA, and to marine insurers, that a master is entitled to take all reasonable steps to save his vessel, crew and/or cargo.

   That fact was known to the directors of the plaintiff. 

   Because of its notoriety, the defendant is presumed to have known of that fact.  "

   I think that is an improvement.  It accords more closely to the quote from the Judge.  In the present form of the plea, the plaintiff could be asked for particulars of the defendant's knowledge of this fact.  If the plaintiff pleads presumed knowledge, based on the notoriety, that request could be avoided. 

10. I decline to strike out the plea. 

11. I will hear the parties on the orders which should be made.