Crayford Freight Services Ltd v Coral Seatel Navigation Co
[1998] FCA 263
•26 MARCH 1998
FEDERAL COURT OF AUSTRALIA
PRACTICE AND PROCEDURE - summary judgment - whether a cross claim irregularly filed out of time without leave was a nullity - whether leave to file the cross claim could be granted nunc pro tunc after the discontinuance of the principal proceeding - circumstances where solicitor’s error provided ground for a grant of leave.
Federal Court of Australia Act 1976 (Cth) ss 19, 51
Federal Court Rules O 5 r 5, O 11 r 20(11)
Dey v Victorian Railways Commissioners (1949) 78 CLR 62, applied
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, applied
Webster v Lampard (1993) 177 CLR 598, applied
Emanuele v Australian Securities Commission (1997) 188 CLR 114, applied
Re Saunders (A Bankrupt) [1997] Ch 60, followed
National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209, followed
Dorrough v Bank of Melbourne (Cooper J, 1 August 1996, unreported), distinguished
Jess v Scott (1986) 12 FCR 187, applied
CRAYFORD FREIGHT SERVICES LTD v CORAL SEATEL NAVIGATION CO, LLOYD TRIESTINO DI NAVIGAZIONE SPA and CONTSHIP CONTAINERLINES LIMITED
NG 166 of 1997
BURCHETT, RYAN & MARSHALL JJ
SYDNEY
26 MARCH 1998
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 166 of 1997
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
CRAYFORD FREIGHT SERVICES LTD
APPELLANTAND:
CORAL SEATEL NAVIGATION CO
FIRST RESPONDENTLLOYD TRIESTINO DI NAVIGAZIONE SPA
SECOND RESPONDENTCONTSHIP CONTAINERLINES LIMITED
THIRD RESPONDENTJUDGES:
BURCHETT, RYAN & MARSHALL JJ
DATE OF ORDER:
26 MARCH 1998
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
Leave to appeal be granted.
The appeal be allowed; the orders made at first instance be set aside; and in lieu thereof it be ordered that the motion filed 19 August 1997 be dismissed and that leave be granted to the appellant to file its cross claim nunc pro tunc with effect from 22 July 1997.
The matter be remitted to the primary judge to give any further directions in relation to the cross claim and its hearing and determination.
The respondents Lloyd Triestino and Contship Containerlines pay the appellant’s costs of the appeal.
There be no order as to costs of the motion before the primary judge.
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
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
CRAYFORD FREIGHT SERVICES LTD
APPELLANTAND:
CORAL SEATEL NAVIGATION CO
FIRST RESPONDENTLLOYD TRIESTINO DI NAVIGAZIONE SPA
SECOND RESPONDENTCONTSHIP CONTAINERLINES LIMITED
THIRD RESPONDENT
JUDGES:
BURCHETT, RYAN & MARSHALL JJ
DATE:
26 MARCH 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT
THE COURT: This is an application by Crayford Freight Services Ltd (“Crayford”) for leave to appeal from a judgment of a judge of the Court given on 8 September 1997. With the agreement of the parties the Court heard submissions on the substantive appeal at the same time as the application for leave to appeal was argued. By his orders of 8 September 1997 the primary judge refused Crayford’s “application for leave to file a cross claim or for an extension of time within which to file a cross claim against the second and third cross defendants ...”
The proceedings before this Full Court raise the following two issues:
Does a cross claim filed without the leave of the Court when such leave is required become spent once the substantive proceeding has been discontinued or can leave to file such a cross claim be granted nunc pro tunc or retrospectively?
Should Crayford’s claim against the third respondent, Contship Containers Limited, be struck out as disclosing no cause of action against that party?
BACKGROUND - THE FACTS
On 4 February 1996 Crayford, in its capacity as a freight forwarder, agreed with Carlton International PLC (“Carlton”) to carry 255 cartons of luggage (“the goods”) in a twenty foot container from Enfield in the United Kingdom to Melbourne. Carlton as producer of the goods was concerned to have them delivered to Bradman’s Stores Pty Ltd (“Bradman’s”), the purchaser of the goods.
The goods were to be transported by land from Enfield in Middlesex to the Port of Tilbury on the River Thames (a distance of approximately thirty kilometres) and from Tilbury to Melbourne by sea. Crayford issued a “Multimodal Transport Bill of Lading” on 4 February 1996. The bill of lading acknowledged that Crayford had the goods “[t]aken in charge in apparent good order and condition ... at the place of receipt for transport ...”. The place of receipt was “Enfield”. The bill of lading bore a notation which indicated that the goods had been “shipped on board” on “4 Feb 96”. It is not clear whether this means that the goods had actually been loaded on to a vessel on that day or had been loaded on road or rail transport for the trip to Tilbury.
By receiving the goods and issuing a clean bill of lading Crayford became a bailee of the goods. It became liable to Carlton and Bradman’s for the delivery of the goods to Bradman’s in Melbourne. The goods were not delivered in Melbourne. It has been accepted that the container became “lost”. Consequently, Carlton and Bradman’s issued proceedings against Crayford in the admiralty jurisdiction of the Court. The Court became seized of the matter pursuant to s 19 Federal Court of Australia Act 1976 (Cth) (“the Federal Court Act”). Crayford accepted liability but sought to proceed against the other corporate entities which were known by it to have been involved in the carriage or proposed carriage of the goods. Those entities were the other defendants to the application issued by Carlton and Bradman’s. They were:
Coral Seatel Navigation (“Coral Seatel”) - the owner of the ship on which the goods were intended to or did travel.
Lloyd Triestino Di Navigazione SPA (“Lloyd Triestino”); and
Contship Containerlines Limited (“Contship”).
Crayford did not, itself, carry the goods by sea. It entered into an arrangement with Lloyd Triestino which issued a document to Crayford entitled “Waybill For Combined Transport or Port to Port Shipment”. The waybill was stamped “Non Negotiable Waybill”. The waybill was not signed by the Master of the “Contship Sydney” (“the vessel”) or by anybody on behalf of the Master but it stated that the goods had been “shipped on board 04/02/96” and in a box headed “Intended Ocean Vessel/Voy No” was typed “ CS Sydney 6006”. The “Intended Port of Loading” was designated as “Tilbury” and the “Intended Port of Discharge” was “Melbourne”. Given the relatively short distance from Enfield to Tilbury it is not unlikely that the goods had been collected from Carlton and loaded on the vessel on the same day.
According to an affidavit sworn by Ms Ellis, a solicitor for Lloyd Triestino and Contship, in the course of a conversation which she had on 15 April 1997 with a solicitor for Carlton and Bradman’s she indicated:
“I understand that Crayford entered into a non-negotiable waybill with Lloyd Triestino. I also understand that Lloyd Triestino slot chartered the vessel from P&O and P&O slot chartered the vessel from Contship. Contship are the time charterers of the vessel on an NYPE charterparty from the vessel owners.”
Crayford, according to the submissions of its counsel, Mr Rares SC who appeared with Ms Muston, does not know the answer to the question how the cargo was received on the vessel nor indeed what exactly happened to the goods. There has been no discovery in the proceeding. Crayford is unaware of the precise commercial relationship between Lloyd Triestino, Contship, P & O and Coral Seatel. Mr Rares referred to the possibility that various sub-bailments might have been created as exemplified by The Pioneer Container [1994] 2 AC 324. Mr Rares contended that it was possible that Contship had issued a waybill and, if so, it would have been a bailee of the goods. At this early stage of the proceedings, he contended, it was simply too early to tell. Mr Rares raised the further possibility that Contship might have obtained possession of the goods before they had been loaded on to the vessel. In reply Dr Bell, who appeared for Lloyd Triestino and Contship, referred to the notations on the bill of lading and waybill that the goods were “shipped on board” on 4 February 1996.
BACKGROUND - THE PROCEEDING
On 6 March 1997 Carlton and Bradman’s commenced proceedings against Crayford, Coral Seatel, Lloyd Triestino and Contship under the Admiralty Act 1988 (Cth) seeking damages in the sum of $23,117.20. The application was accompanied by a statement of claim. On 22 July 1997 Crayford filed a cross claim in the New South Wales District Registry of the Court, to which Coral Seatel, Lloyd Triestino and Contship were cross-defendants. Pursuant to O 5 r 5 of the Federal Court Rules, a cross claim may be filed within the time fixed for the filing of a defence. Where, as here, the application has been accompanied by a statement of claim, that is within seven days after the directions hearing; (see O 11 r 20(1)). By 22 July 1997 the time stipulated by the Rules within which a cross claim might have been filed in the present case had expired. It was incumbent upon Crayford’s legal advisers to seek an extension of time within which to file the cross claim. However, they wrongly thought that no such leave or extension was necessary.
By 5 August 1997 Carlton and Bradman’s as plaintiffs and Crayford as defendant had settled the controversy in existence between them. On 5 August 1997 Carlton and Bradman’s were granted leave to discontinue their application and a notice of discontinuance was accordingly filed on 13 August 1997.
On 19 August 1997 Lloyd Triestino and Contship moved the Court for orders, amongst others, that:
“1.The Court has no jurisdiction to entertain the purported Cross Claim filed 22 July 1997.
2.In the alternative, if the proceedings are competent, an order striking out the Cross Claim against the Third Defendant.”
The motion was heard by the primary judge on 19 August 1997. Dr Bell appeared for Lloyd Triestino and Contship. Ms Muston appeared for Crayford. Counsel for Coral Seatel appeared and was excused from further attendance.
The notice of motion, although dated 18 August 1997, was filed in Court on 19 August 1997. Ms Muston asked for an adjournment to allow Crayford to file affidavits in response to the affidavit filed in support of the notice of motion. The learned primary judge was disposed to continue to hear the notice of motion at least on the issue of whether or not the Court had jurisdiction to entertain Crayford’s cross claim. At p 3 of the transcript the following exchange between his Honour and Ms Muston is recorded:
“HIS HONOUR: Yes, well I do not want the matter to blow up beyond its real necessity or at all. The point that seems to be raised against you at least on the cross claim is that there is no power to file the cross claim or keep it on foot and it seems to me that that is a simple matter of law that can be argued.
MS MUSTON: Yes, with that I agree, your Honour.
HIS HONOUR: Well, could we argue that now?
MS MUSTON: Yes, I could certainly face that this morning.”
His Honour is then recorded at p 4 as having said:
“Well I will reserve your rights in relation to this so far as evidence is concerned but I will hear the argument on the power question.”
Dr Bell then recounted to his Honour the background to the notice of motion. In the course of doing so Dr Bell referred to Contship’s claim that Crayford’s case against it was unsustainable. Notwithstanding his earlier intimation that he would deal only with the “power question” the primary judge asked Ms Muston whether there was “any correspondence you want to file or hand up on this point”.
Ms Muston replied to the effect that her instructing solicitor’s file was not in Court but that he would have it brought to Court. His Honour then said:
“Yes, well there may be some further evidence but we can perhaps continue with the hearing until that arrives.”
Dr Bell then returned to the “cross claim” point. He submitted that leave to file a cross claim could not be granted retrospectively after the principal proceeding had been discontinued. Dr Bell then very shortly addressed the question of whether Contship as a time charterer became a bailee of the goods. Because the answer was clearly no, Dr Bell argued, Crayford’s claim against Contship, being one based entirely upon a bailment, was bound to fail. Ms Muston commenced her submissions by contending that bailment was not the only cause of action alleged against Contship. She referred to the pleading of various duties under the Hague-Visby rules alleged to be owed to Crayford by all cross-defendants. Significantly, at p 17 of the transcript Ms Muston referred to a letter which her instructing solicitors had written to Dr Bell’s instructing solicitors requesting a copy of the charter-party between Contship and Lloyd Triestino, failing which discovery might be sought. The charter-party was not produced. Ms Muston told his Honour that:
“... until such time as the cross claimant has access to that charter-party it reserves its rights in relation to Contship.”
We regard those remarks as tantamount to a submission that it was premature to determine whether Crayford’s claim against Contship was hopeless. To a question from the judge, Ms Muston replied that it was not conceded to be “absolutely clear that there is no bailment relationship” and went on to address the “cross claim point”. She contended that leave was not required to file the cross claim and indicated that leave had not been sought in the belief that it was not required. Dr Bell then replied on the “cross claim point”. At p 25 of the transcript he revisited the “bailment point”. The primary judge then reserved his judgment and invited Ms Muston “to file some further evidence”, saying that he would “give a judgment in the next day or so”. No application was made on behalf of Crayford to adduce evidence in opposition to the motion of Lloyd Triestino and Contship.
THE JUDGMENT BELOW
On 8 September 1997 the primary judge delivered reasons for judgment on the motion which was described as raising “two short points” identified as the “cross claim point” and the “bailment point”. His Honour held that no bailment had arisen between Crayford and Contship, as the latter as a time charterer of the vessel, did not take possession of the goods.
The learned primary judge went on to say:
“The only breach alleged against Contship is breach of a duty as bailee. Accordingly, the claim against Contship should be struck out as having no basis in law.
Counsel for the cross claimant (“Crayford”) submitted that paragraph 12 of the Statement of Claim gave rise to separate and independent allegations. However, the particulars furnished in relation to that paragraph refer back to pars 11 and 9 which in turn are framed in bailment.”
On the “cross claim point”, his Honour accepted Dr Bell’s submission that “there is presently no proceeding on foot in respect of which an extension of time can be granted”. From that premise it was held that the cross claim having been filed without leave “had no legal effect”, and the Court had no jurisdiction to entertain it.
On the assumption that the Court did have jurisdiction to grant an extension of time for leave to file a cross claim, the primary judge held that “as a matter of discretion” he would not grant such an extension as “[n]o adequate explanation is proffered as to why an extension was not sought before the proceedings were discontinued.” Accordingly, in disposing of the “cross claim point”, it was ordered:
“1.The application for leave to file a cross claim or for an extension of time within which to file a cross claim against the second and third cross defendants be refused.”
THE BAILMENT POINT
Mr Rares did not dispute the proposition accepted below that a time charterer of a vessel does not thereby become a bailee of goods carried on board. However, he submitted that it is possible that Contship had acquired possession of the goods before the container was loaded on board the vessel. In reply, Dr Bell pointed out that the bill of lading and the waybill each refer to the goods as having been “shipped on board”, thereby precluding the possibility that Contship might have taken possession of them before they were loaded on the vessel.
Mr Rares submitted that Crayford had another claim against Contship apart from bailment. He reiterated the reference made below to paragraph 7 of the cross claim in which Coral Seatel, Lloyd Triestino and Contship are sued as “the carriers or alternatively as agents for undisclosed principals” and alleged to be thereby liable to Crayford for the loss of the goods. Paragraph 7(d) of the cross claim refers to Contship as “the time charterer of the vessel”. In paragraph 7(e) it is pleaded:
“Crayford has no knowledge of any of the arrangements made by or involving the Cross-Defendants in relation to the actual ocean carriage of the Consignment.”
Paragraph 12 of the cross claim alleges that the Cross-Defendants “... or one or more of them” failed in their duty to properly care for the cargo as required by the Hague-Visby rules. Mr Rares finally submitted that in the absence of discovery it was too early to conclude that Crayford’s claim against Contship was bound to fail.
In our view it is premature, at this stage of the proceeding, to characterise Crayford’s claim against Contship as hopeless. Although it presently appears unlikely that the claim in bailment will succeed, it remains possible that discovery will shed further light on the issue of whether Contship ever acquired possession of the goods pursuant to a sub-bailment. Discovery will also assist in resolving whether any claim other than one in bailment is arguable against Contship. It is critical that the proceedings below were conducted by Ms Muston on the basis that Crayford reserved its rights pending discovery. In those circumstances, we do not believe that it was open to his Honour to conclude that Crayford had no arguable claim against Contship. An applicant for summary judgment, who is seeking to bar the door of the court against an opponent, bears a heavy onus: Dey v Victorian Railways Commissioners (1949) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Webster v Lampard (1993) 177 CLR 598. We therefore grant leave to appeal and allow Crayford’s appeal on this point.
THE CROSS CLAIM POINT
In our view the failure of Crayford to seek leave to file a cross claim before Carlton and Bradman’s had discontinued their application constituted “a formal defect or an irregularity” within the meaning of s 51 of the Federal Court Act. That section provides:
“(1) No proceedings in the Court are invalidated by a formal defect or an irregularity, unless the Court is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of the Court.
(2) The Court or a Judge may, on such conditions (if any) as the Court or Judge thinks fit, make an order declaring that the proceeding is not invalid by reason of a defect that it or he or she considers to be formal, or by reason of an irregularity.”
We reject Dr Bell’s submission that the failure of Crayford to seek leave to file a cross claim before the discontinuance of the originating application entails that the Court has no jurisdiction to deal with the cross claim. There is no mandatory requirement under the Federal Court Rules that a cross claim be filed within a specified time. We agree with the submission of Mr Rares that the requirement imposed by O 5 r 9 to seek leave to file a cross claim is directory only. The failure to obtain leave before filing a cross claim after the time fixed for the filing of a defence is a formal defect or irregularity which can be remedied by an order of the Court that leave be given to file the cross claim with effect from the date on which it was filed, in the present case 22 July 1997. We cannot perceive that any substantial injustice would be caused to any of the cross-defendants by such an order. The prejudice to Crayford, if it had to issue a fresh application against the cross-defendants, can and should be averted by such an order.
It should also be noted that the word “proceedings” is used in s 51(1) of the Federal Court Act. The use of the plural rather than the singular supports the view that an irregularity or formal defect in relation to a step taken in prosecution of a controversy justiciable by the Court may be remedied.
Further support for the proposition that the failure to seek leave to file the cross claim was a mere defect capable of being remedied by an order nunc pro tunc can be gleaned from the judgments of the majority of the High Court of Australia in Emanuele v Australian Securities Commission (1997) 188 CLR 114. The issue in Emanuele was whether this Court lacked jurisdiction to make winding up orders against several companies when the applicant had not obtained the leave required by s 459P(2) of the Corporations Law.
At 125 Dawson J said:
“Section 459P does not confer jurisdiction on the Federal Court to make a winding up order; it does no more than identify the parties who may make an application, requiring leave to be obtained ... The failure to obtain leave was a mere defect or irregularity in the exercise of that jurisdiction.”
The rules of Court, similarly, do not confer jurisdiction on this Court to entertain a cross claim. As a superior court of record, this Court, has the power to regulate its own procedure. The rules do no more than indicate the usual time constraints upon the filing of cross claims and require leave for the filing of cross claims after those time limits have expired. The failure to obtain leave of that sort is not fatal to jurisdiction but a mere irregularity capable of being remedied.
In Emanuele, Kirby J said at 147:
“A feature of the administration of justice in more recent times has been a general disfavour towards procedural rigidities and a preference for a somewhat more flexible approach to statutory preconditions where these are of a procedural character. In Woods v Bate (1986) 7 NSWLR 560 at 567, McHugh JA (with the concurrence of Hope JA) said:
‘In recent times the courts have shown great reluctance to invalidate an act done pursuant to a statutory provision because of the failure to comply with an antecedent condition. Speaking generally, I think that, at the present time, the proper approach is to regard a statutory requirement, expressed in positive language, as directory unless the purpose of the provision can only be achieved by invalidating the result of any departure from it, irrespective of the circumstances or resulting injustice.’ ”
A similar “general disfavour towards procedural rigidities” has also influenced the approach taken by Courts in the United Kingdom; see e.g. Re Saunders (A Bankrupt) [1997] Ch 60. In Saunders (in which judgment was given about a year before Emanuele) the plaintiffs had commenced proceedings against the defendants without knowledge of the bankruptcy of the defendants. They sought leave nunc pro tunc to commence the proceedings. After an extensive review of United Kingdom and Commonwealth authorities, Lindsay J said at 76:
“At this point I make only the point that in cases spread over all those jurisdictions and over a century, from Thomson v. Mulgoa Irrigation Co. Ltd., 4 B.C. (N.S.W.) 33 in February 1894 to Canada (Wheat Board) v. Krupski, 26 C.B.R. (3d) 293 in June 1994, no judge seems to have encountered any practical or other difficulties or injustices attendant upon treating the defect in proceedings begun without leave as curable by a late grant of leave.”
In National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209, 217 - 218, Gummow J treated a cross claim which had not been filed with leave as being “irregularly filed” and capable of being validated by the grant of an extension of time. Gummow J’s approach in Sentry is consistent with our view that s 51 of the Federal Court Act can be availed of to correct the defect arising from the irregular filing of Crayford’s cross claim.
Dr Bell relied, as did the judge below, on the judgment of Cooper J in Dorrough v Bank of Melbourne (Cooper J, 1 August 1996, unreported). Cooper J there dealt with an application to file a cross claim after the principal action had been settled. There is nothing exceptionable about his Honour’s view in Dorrough that a proceeding must be in existence at the time when the cross claim is to be filed pursuant to an application for leave to do so. However, different considerations apply to the present case, where the cross claim had been filed (although irregularly) when the principal action was still on foot.
Dr Bell submitted that the primary judge’s indication that he would have refused to grant leave to Crayford to file a cross claim out of time, had he been persuaded that leave could have been granted, should not be interfered with on appeal. We disagree. The only reason why leave had not been sought was that the solicitors acting for Crayford did not think that leave was necessary. That was the explanation which was proffered. In our view, an obvious and curable detriment should not be visited upon Crayford, where a defect has been caused by the mistake of its legal advisers. See Jess v Scott (1986) 12 FCR 187.
ORDER
In the circumstances we would order as follows:
Leave to appeal be granted.
The appeal be allowed; the orders made at first instance be set aside; and in lieu thereof it be ordered that the motion filed 19 August 1997 be dismissed and that leave be granted to the appellant to file its cross claim nunc pro tunc with effect from 22 July 1997.
The matter be remitted to the primary judge to give any further directions in relation to the cross claim and its hearing and determination.
The respondents Lloyd Triestino and Contship Containerlines pay the appellant’s costs of the appeal.
There be no order as to costs of the motion before the primary judge.
I certify that this and the preceding eleven (11) pages are a true copy of the Reasons for Judgment herein of the Full Court
Associate:
Dated: 26 March 1998
Counsel for the Appellant: Mr S Rares SC
Ms L MustonSolicitor for the Appellant: Conway Leather Shaw Counsel for the Second and Third Respondents: Dr A Bell Solicitor for the Second and Third Respondents: Ebsworth & Ebsworth Date of Hearing: 6 March 1998 Date of Judgment: 26 March 1998
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