Carlton International Plc v Crayford Freight Services Ltd
[1997] FCA 726
•5 August 1997
FEDERAL COURT OF AUSTRALIA
COSTS - application for solicitor-client costs - whether a properly advised plaintiff should have been aware that there was no chance of success - whether proceedings unnecessarily prolonged.
Federal Court of AustraliaAct 1976 (Cth), s 43
Federal Court Rules, O 62
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, applied
Huntsman Chemical Company Australia Ltd v International; Pools Australia Ltd (1995) 36 NSWLR 242, cited
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225, cited
CARLTON INTERNATIONAL PLC and BRADMANS STORES PTY LIMITED - v -
CRAYFORD FREIGHT SERVICES LIMITED, CORAL SEATEL NAVIGATION CO, LLOYD TRIESTINO DI NAVIGAZIONE SPA and CONTSHIP CONTAINERLINES LIMITED
No NG 166 of 1997
TAMBERLIN J
SYDNEY
5 AUGUST 1997
IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NG 166 of 1997 ) GENERAL DIVISION
IN ADMIRALTY
)
)
)
BETWEEN: CARLTON INTERNATIONAL PLC
First PlaintiffBRADMANS STORES PTY LIMITED
Second PlaintiffAND: CRAYFORD FREIGHT SERVICES
LIMITED
First DefendantCORAL SEATEL NAVIGATION CO
Second DefendantLLOYD TRIESTINO DI NAVIGAZIONE
SPA
Third DefendantCONTSHIP CONTAINERLINES
LIMITED
Fourth Defendant
JUDGE: TAMBERLIN J PLACE: SYDNEY DATED: 5 AUGUST 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The plaintiffs pay the costs of the second defendant on a party-party basis.
The plaintiffs pay the costs of the third and fourth defendants up to 1 May 1997 on a party-party basis and thereafter on a solicitor-client basis.
The Notice of Motion be dismissed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NG 166 of 1997 ) GENERAL DIVISION
IN ADMIRALTY
)
)
)
BETWEEN: CARLTON INTERNATIONAL PLC
First PlaintiffBRADMANS STORES PTY LIMITED
Second PlaintiffAND: CRAYFORD FREIGHT SERVICES
LIMITED
First DefendantCORAL SEATEL NAVIGATION CO
Second DefendantLLOYD TRIESTINO DI NAVIGAZIONE
SPA
Third DefendantCONTSHIP CONTAINERLINES
LIMITED
Fourth Defendant
JUDGE: TAMBERLIN J PLACE: SYDNEY DATED: 5 AUGUST 1997
REASONS FOR JUDGMENT
I have granted leave to the plaintiffs to discontinue and directed them to file a Notice of Discontinuance. As a result of the discontinuance the third and fourth defendants have now applied for costs, to be awarded, in part, on a solicitor-client basis.
The plaintiffs oppose any order for costs in favour of the third defendant. They also resist the application by the fourth defendant for costs to be awarded on a solicitor-client basis.
There is no dispute as to the Court’s power to award costs on a solicitor-client basis in an appropriate case. The Federal Court of Australia Act 1976 (Cth), s 43, and the Federal Court Rules, O 62, confer this power.
What is an appropriate case for the award of solicitor-client costs is covered by well-settled authority. In the present case the remarks of Woodward J in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401 are apposite:
“... I believe that it is appropriate to consider awarding “solicitor and client” or “indemnity” costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success.”
These principles were reiterated and applied in Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 at 246-250, 250-251 and 271. See also Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 230 ff.
In short, the case for the third and fourth defendants is that the proceedings were continued by the plaintiffs against them in circumstances where a properly advised plaintiff must have known that it had no chance of success and that continuance entailed disregard of known facts or clearly established law.
The basis for this submission is said to be that on 15 April 1997 the solicitor for the plaintiffs acknowledged, in correspondence with the solicitor for the second defendant, that the plaintiffs had joined, not only the vessel’s owners but three other parties as defendants. It was stated by the solicitor for the plaintiffs that, if the vessel was only under time charter from its owners, the plaintiffs’ claim would lay in part against the vessel’s owner and not against either the third or fourth defendants.
Two days later the solicitor for the plaintiff was informed that the fourth defendant was the time charterer of the vessel and that it had slot-chartered space to P & O which in turn had sub-slot chartered space on the vessel to the third defendant.
The law is clear that, in contrast to a demise charter, a time charter, like a voyage charter, is a contract for the rendering of services by the owner and not for the hiring out of a ship. The consequence is that possession does not pass under a time charter: see N E Palmer, Bailment, 1991 (2nd edn) at 193.
The third and fourth defendants submit that on and after 17 April 1997, when the plaintiffs became aware of the interest of the third and fourth defendants, the proceedings ought to have been discontinued. In fact, the proceedings were continued to the stage where a Notice of Motion was taken out on 13 June 1997 to set aside the Application and Statement of Claim as against the third and fourth defendants. This Notice of Motion was based on an affidavit attaching correspondence which was read in evidence on the costs application.
Counsel for the plaintiffs submits that the plaintiffs had a prima facie case. They took steps to minimise costs, as was evidenced in the correspondence. They point out that as at 22 July 1997 the third defendant had not been served with the proceeding and the fourth defendant was only served on 28 May 1997, although there had been a considerable amount of correspondence between the parties by that time. The plaintiffs refer to a “Waybill for Combined Transport or Port to Port Shipment” (“the Waybill”) issued by the third defendant, which states on its face that it is deemed to be a contract of carriage under the Hague Rules. The goods are described in the Waybill as “255 cartons STC Airtec suitcases”. The plaintiffs’ solicitor, it is apparent, did not receive a copy of the terms and conditions on the reverse of the Waybill until 1 May 1997 despite having made requests at earlier stages of the proceeding.
By letter dated 15 April 1997, the solicitor for the third and fourth defendants pointed out that the plaintiff had no contract with the third defendant because the non-negotiable Waybill evidenced a contract between the third defendant and the first defendant. The letter stated that the third defendant was neither the owner nor the operator of the vessel and could not be held responsible for loss of the goods and could not be liable.
In a letter of 16 April 1997 from the solicitor for the plaintiffs to the solicitor for the third and fourth defendants, it is pointed out that these defendants had not been served with proceedings in the matter and that there was therefore no need to seek instructions in relation to the filing of an appearance.
The reverse side of the Waybill, which contained detailed terms and conditions, was provided by letter of 1 May 1997. On 2 May 1997 the Application and Statement of Claim was served on the fourth defendant.
During May 1997 there was a further exchange of correspondence between the parties wherein the plaintiffs express their unwillingness to discontinue the proceedings prior to discovery. The third and fourth defendants pressed for discontinuance of the proceedings against them but the plaintiffs refused. This led to the Notice of Motion being filed on 13 June 1997. This Notice of Motion also sought an order for indemnity costs.
The third and fourth defendants also rely on a conversation between solicitors on 15 May 1997 in which, it is said, the solicitor for the plaintiffs took a stance inconsistent with that in his letter of 15 April 1997 to the effect that if the vessel was only under time charter the claim would not lie against them. However, the terms of that conversation are disputed and I make no finding on that matter.
In relative terms, the claim in the present case is for a small amount and every attempt ought be made to minimise costs at the earliest possible stage. Experience shows that parties in small cargo claim cases almost invariably adopt a reasonable approach with the result that they are usually settled or discontinued. This practice should be encouraged both in the interests of the parties and the effective determination of justice. The award of solicitor-client costs in a proper case will be conducive to this end. This is a relevant, but not of itself a determinative, consideration.
In the present case, I am satisfied that as from 1 May 1997 the costs of the third and fourth defendants ought to be awarded on a solicitor-client basis. It was, I think, incumbent on the plaintiffs to act promptly and with a proper diligence to fully investigate the situation to ensure that all defendants had been properly joined in the proceeding. In my view, the matter dragged out unduly after that date. It should have become apparent, on the statement by the plaintiffs’ solicitor, that the case could not be sustained against the third and fourth defendants. Instead, the matter proceeded to the stage where a Notice of Motion was taken out. This involved unnecessary expense and prolongation of the proceedings. The Notice of Motion led to the application for leave to discontinue the proceedings.
Taking these matters into account the appropriate orders as to costs of the present proceeding are that the plaintiffs pay the costs of the second defendant on a party-party basis; that the plaintiffs pay the costs of the third and fourth defendants up to 1 May 1997 on a party-party basis, and thereafter on a solicitor-client basis. The Notice of Motion is dismissed.
I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin
Associate:
Dated: 5 August 1997
Counsel for the Plaintiffs: Ms L Muston Solicitor for the Plaintiffs: Conway O’Reilly Solicitor for the Second Defendant
Michell Sillar with
Webeck Farland PenderCounsel for the Third and Fourth Defendants: Dr A S Bell Solicitor for the Third and Fourth Defendants: Ebsworth and Ebsworth Date of Hearing: 31 July 1997 Date of Judgment: 5 August 1997
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