Elbe Shipping SA v Giant Marine Shipping SA
[2008] FCA 1135
•5 August 2008
FEDERAL COURT OF AUSTRALIA
Elbe Shipping SA v Giant Marine Shipping SA [2008] FCA 1135
ADMIRALTY – ship under tow – liability of ship under tow for loss and damage caused by tug – imputation of liability under contract – cannot be relied upon by third party
PRACTICE AND PROCEDURE – summary judgment and judgment on admissions – entering such a judgment for the plaintiff without appropriate orders
Evidence Act 1995 (Cth) s 190
Admiralty Act 1988 (Cth) ss 6, 15
Property Law Act 1974 (Qld)Quinlan v Safe International Forsakrings AB [2006] FCA 1718 cited
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 discussed
One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548 discussed
Baxter v Obacelo Pty Ltd (2001) 205 CLR 635 applied
Jameson v Central Electricity Generating Board [1998] QB 323 applied
Bankers Trust International Ltd v Todd Shipyards Corporation; “The Halcyon Isle” [1981] AC 221 cited
Currie v M’Knight [1896] AC 97 considered
“The Eschersheim” [1976] 1 WLR 430 considered
Opal Maritime Agencies Pty Ltd v Proceeds of Sale of Vessel MV “Skulptor Konenkov” (2000) 172 ALR 481 cited
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 distinguished
The Niobe (1888) 13 PD 55 discussed
The Quickstep (1890) 15 PD 196 considered
Owners of the “SS Devonshire” v Owners of the Barge “Leslie” [1912] AC 634 considered
The MSC Panther and the Ericbank [1957] 1 Lloyds Rep 57 citedUnited Kingdom Standard Conditions for Towage and Other Services (Revised 1974)
ELBE SHIPPING SA v GIANT MARINE SHIPPING SA, BEING THE OWNERS OF THE SHIP "GLOBAL PEACE" and ADSTEAM HARBOUR PTY LIMITED
NSD 124 OF 2006
SQ MARINE SA v GIANT MARINE SHIPPING SA, BEING THE OWNERS OF THE SHIP “GLOBAL PEACE” and ADSTEAM HARBOUR PTY LIMITED
NSD 125 OF 2006DOWSETT J
5 AUGUST 2008
BRISBANE (VIA VIDEO LINK TO SYDNEY)
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
NSD 124 OF 2006
IN ADMIRALTY
BETWEEN:
ELBE SHIPPING SA
Plaintiff
AND:
GIANT MARINE SHIPPING SA, BEING THE OWNERS OF THE SHIP "GLOBAL PEACE"
First DefendantADSTEAM HARBOUR PTY LIMITED
Second Defendant
JUDGE:
DOWSETT J
DATE OF ORDER:
5 AUGUST 2008
WHERE MADE:
BRISBANE (VIA VIDEO LINK TO SYDNEY)
THE COURT ORDERS THAT:
1.the plaintiff pay the first defendant’s costs of, and incidental to, preparation for trial, incurred after 7 February 2008 and prior to 11 March 2008, to be taxed and paid on an indemnity basis;
2.the plaintiff pay the first defendant’s costs of, and incidental to, the motion for judgment, to be taxed and paid on an indemnity basis;
3.the plaintiff pay the first defendant’s costs of, and incidental to, preparing for and appearing at the hearing on 17 and 18 March 2008 for the purpose of arguing all questions of costs (not including any costs incurred solely in appearing to consent to dismissal of the action) to be taxed and paid on an indemnity basis;
4.liberty to the plaintiff and first defendant to apply, at any time prior to the final taxation of costs, to vary the above orders as they apply to the first respondent’s counsels’ fees;
5.the notice of motion filed 22 March 2006 be dismissed; and
6.the action 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
QUEENSLAND DISTRICT REGISTRY
NSD 125 OF 2006
IN ADMIRALTY
BETWEEN:
SQ MARINE SA
PlaintiffAND:
GIANT MARINE SHIPPING SA, BEING THE OWNERS OF THE SHIP "GLOBAL PEACE"
First DefendantADSTEAM HARBOUR PTY LIMITED
Second Defendant
JUDGE:
DOWSETT J
DATE OF ORDER:
5 AUGUST 2008
WHERE MADE:
BRISBANE (VIA VIDEO LINK TO SYDNEY)
THE COURT ORDERS THAT:
1.the plaintiff pay the first defendant’s costs of, and incidental to, preparation for trial incurred after 21 February 2008 and prior to 11 March 2008, to be taxed and paid on an indemnity basis;
2.the plaintiff pay the first defendant’s costs of, and incidental to, the motion for judgment, to be taxed and paid on an indemnity basis;
3.the plaintiff pay the first defendant’s costs of, and incidental to, preparing for and appearing at the hearing on 17 and 18 March 2008 for the purpose of arguing all questions of costs (not including any costs incurred solely in appearing to consent to dismissal of the action) to be taxed and paid on an indemnity basis;
4.liberty to the plaintiff and first defendant to apply, at any time prior to the final taxation of costs, to vary the above orders as they apply to the first respondent’s counsels’ fees;
5.the notice of motion filed 22 March 2006 be dismissed; and
6.the action 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
QUEENSLAND DISTRICT REGISTRY
NSD 124 OF 2006
IN ADMIRALTY
BETWEEN:
ELBE SHIPPING SA
Plaintiff
AND:
GIANT MARINE SHIPPING SA, BEING THE OWNERS OF THE SHIP "GLOBAL PEACE"
First DefendantADSTEAM HARBOUR PTY LIMITED
Second Defendant
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
NSD 125 OF 2006
BETWEEN:
SQ MARINE SA
PlaintiffAND:
GIANT MARINE SHIPPING SA, BEING THE OWNERS OF THE SHIP "GLOBAL PEACE"
First DefendantADSTEAM HARBOUR PTY LIMITED
Second Defendant
JUDGE:
DOWSETT J
DATE:
5 AUGUST 2008
PLACE:
BRISBANE (VIA VIDEO LINK TO SYDNEY)
REASONS FOR JUDGMENT
BACKGROUND
At all material times the first defendant in each action (“Giant Marine”) was the owner of the ship “Global Peace”. On or about 24 or 25 January 2006 “Global Peace”, with a pilot on board, was berthing in the port of Gladstone (the “berthing operation”), assisted by the tug “Tom Tough” (the “tug”). The second respondent in each action (“Adsteam”) was the owner of the tug. During the berthing operation the tug came into contact with the hull of “Global Peace”, causing damage which permitted the escape of oil into Gladstone harbour. Some of that oil adhered to the hull of the vessel “Medi Vitoria”, owned by the plaintiff in action NSD 124 of 2006 (“Elbe”). Oil also adhered to the hull of the vessel “Nord Stream”, owned by the plaintiff in action NSD 125 of 2006 (“SQ Marine”). Where appropriate I shall refer to Elbe and SQ Marine collectively as the “plaintiffs”. Both plaintiffs incurred expenditure in cleaning the hulls. On 27 January 2006 Elbe issued a writ against “Global Peace”, seeking damages, interest and costs. On the same day SQ Marine issued a writ against the same vessel seeking similar relief. At that time no proceedings were commenced against Adsteam or the tug. Subsequently, Giant Marine became first defendant in each action. On 18 April 2007 Adsteam was joined as second defendant in each action.
The first statements of claim against Giant Marine were filed on 19 April 2006. They alleged negligence in the conduct of the master of “Global Peace”, the pilot and the master of the tug, and that Giant Marine was vicariously liable for the consequences of all such negligence. There was, at this stage, no allegation that the tug had been unfit to perform its function. Amended statements of claim filed on 11 December 2006 alleged that the tug was unfit for employment in the berthing operation because of defects in the starboard main engine clutch oil pump discharge pipe and in the starboard quarter fender. On 19 April 2007 further amended statements of claim were filed. By this time Adsteam had been joined.
Giant Marine, in its original defences filed on 18 August 2006, admitted the collision but denied, or did not admit, the other allegations in the statement of claim. Amended defences were filed on 6 October 2006, admitting that the collision between the tug and “Global Peace” was caused by the failure of the discharge pipe but denying any causal act or omission for which Giant Marine was vicariously liable. In the further amended defences filed on 10 January 2007 Giant Marine admitted that Adsteam had been negligent in connection with the discharge pipe and the fender but denied liability for such negligence. It is not necessary to address the defences to the further amended statements of claim, which defences were filed on 16 May 2007. On that date the second defendant also filed defences denying negligence.
By letters dated 4 December 2007, Adsteam admitted liability for each plaintiff’s loss. On 7 February 2008, the total amount of the claim in action NSD 124 of 2006 plus interest was paid to Elbe. On 21 February 2008 the total amount of the claim in action NSD 125 of 2006 plus interest was paid to SQ Marine. Notwithstanding receipt by both plaintiffs of the full amounts of their claims, until 15 March 2008, they and Giant Marine proceeded upon the basis that all matters (other than damages) remained in issue in the actions. As between each plaintiff and Adsteam, questions of costs remained outstanding.
MOTIONS
On 26 and 27 February 2008 the plaintiffs filed notices of motion against each defendant in each action. As against Giant Marine, each plaintiff sought orders pursuant to s 190 of the Evidence Act 1995 (Cth) (the “Evidence Act”) and the following orders:
2.An order pursuant to section 31A of the Federal Court of Australia Act 1976 and/or Order 18 r 4 of the Federal Court Rules that judgment be entered against the First Defendant.
3.An order pursuant to section 43 of the Federal Court of Australia Act 1976 and Order 62 rules 1 and/or 3 of the Federal Court Rules that the First Defendant pay the Plaintiff’s costs of the proceedings.
4.Further and in the alternative, an order pursuant to section 43 of the Federal Court of Australia Act 1976, Order 62 r 1 and/or r 3 that the First Defendant pay the Plaintiff’s costs of the proceedings up to the date of joinder of the Second Defendant.
5.Further and in the alternative, an order pursuant to section 43 of the Federal Court of Australia Act 1976, Order 62 r 3 that there be no order as to costs in favour of the First Defendant as against the Plaintiff.
6.An order that the First Defendant pay the costs of the instant motion.
7.Such other orders as the court deems fit.
The motions for orders under the Evidence Act were not pressed at the hearing.
As against Adsteam, the plaintiffs sought the following orders:
1.An order pursuant to section 31A of the Federal Court of Australia Act 1976 and/or Order 18 r 4 of the Federal Court Rules that judgment be entered against the Second Defendant;
2.An order pursuant to section 43 of the Federal Court of Australia Act 1976 and Order 62 r 1 and/or r 3 of the Federal Court Rules that the Second Defendant pay the costs of the Plaintiff in the proceedings from the time of commencement of the proceedings on 27 January 2006;
3.Further and in the alternative, an order pursuant to section 43 of the Federal Court of Australia Act 1976 and Order 62 r 1 and/or r 3 of the Federal Court Rules that the Second Defendant pay the costs of the Plaintiff incurred in the prosecution of the proceedings against the First Defendant prior to the joinder of the Second Defendant in so far as such costs would in any event have been incurred by the Plaintiff in prosecuting the proceedings against the Second Defendant;
4.Further and in the alternative, an order pursuant to section 43 of the Federal Court of Australia Act 1976 and Order 62 r 1 and/or r 3 of the Federal Court Rules that the Second Defendant pay the costs of the Plaintiff in the proceedings from the time of commencement of the proceedings against the Second Defendant;
5.An order pursuant to section 43 or the Federal Court of Australia Act 1976 and Order 62 r 3 of the Federal Court Rules that the Second Defendant pay any costs of the First Defendant ordered to be paid by the Plaintiff (or which but for this order would have been ordered to be paid by the Plaintiff);
6.An order that the Second Defendant pay the costs of the instant motion;
7.An order that the Second Defendant pay the Plaintiff’s costs of the notice of motion filed on 5 April 2007 and reserved pursuant to orders made on 18 April 2007;
8.Such other further orders as the court deems fit.
These notices of motion were made returnable on 17 March 2008. When the matter was called on, I was informed that all outstanding issues in each action had been resolved as between the plaintiffs and Adsteam, the terms of settlement being as follows:
Without prejudice to the Plaintiff’s rights in rem and in personam against the First Defendant, including outstanding motions and costs, the Plaintiff and Second Defendant agree to settle all outstanding issues between them in these proceedings on the following terms:
1.that the Second Defendant pay the Plaintiff’s costs of its notice of motion filed 11 April 2007 (seeking leave to file a Further Amended Statement of Claim and joinder of the Second Defendant) as against both Defendants in these proceedings that were reserved by the court, as taxed or agreed;
2.that the Second Defendant pay the Plaintiff’s costs of its notice of motion as against the Second Defendant dated 27 February 2008 up until and including 14 March 2008, as taxed or agreed;
3.that the Plaintiff’s notice of motion as against the Second Defendant dated 27 February 2008 otherwise be dismissed;
4.that the Second Defendant pay the Plaintiff’s costs of its claim against both Defendants in these proceedings (other than the Plaintiff’s notice of motion as against the First Defendant dated 27 February 2008) from 11 April 2007 (being the date of the notice of motion filed 11 April 2007 seeking to join the Second Defendant) until and including 14 March 2008, as taxed or agreed;
5.that the Second Defendant pay A$20,000 towards the costs incurred by the Plaintiff in these proceedings on the issues of negligence, loss and damage prior to the joinder of the Second Defendant on 18 April 2007;
6.that no order for costs be made as between the Plaintiff and the Second Defendant in relation to any other costs (including reserved costs) of the proceedings;
7.that by consent of the Plaintiff and Second Defendant, these terms of settlement be filed forthwith and as between the Plaintiff and Second Defendant the Court be requested to note the terms hereof and pursuant to the same, make orders as per paragraphs 1, 2, 3, 4, 5 and 6.
I made those orders. I then heard the plaintiffs’ motions as against Giant Marine. Excluding the relatively small amount of time spent in dealing with the matters concerning Adsteam, the hearing of these motions and associated arguments as to costs took about a day and a half. Although the plaintiffs were moving for judgment, it became relatively clear that their real purpose was to improve their chances of obtaining favourable costs orders against Giant Marine. Counsel for the plaintiffs said:
The issue that your Honour is being asked to agitate in essence relates to the costs up until the joinder of the second defendant, so far as the plaintiff is concerned.
We seek to deal with it in three very simple ways. The first way we seek to deal with it is we say on a summary judgment basis which isn’t trial, its an interlocutory process, and we take your Honour very briefly to the terms of the contract between the second defendant and the first defendant, the UK Standard Terms. It identifies a vicarious responsibility for the very subject matter of these proceedings and based on those terms and some admissions I’ll take your Honour to, we must be entitled to summary judgment. The significance of that is this, and this is the first way, is if we’re entitled to summary judgment it must follow like night and day we’re then successful. We’re the successful party and costs would follow the event. That’s the first issue that we seek to develop.
Counsel continued:
The second way we’d put it is this: applying Order 62 rule 3 which is a very broad rule, extremely broad, and addresses, without descending into the content, but addresses the type of problem that could emerge, such as in this case, that the Court may in the proceedings exercise its powers and its discretions as to costs at any stage of the proceedings or after conclusion of the proceedings, and its an extremely broad power that’s been given.
It’s been the subject of some observation by McHugh J, which your Honour would have seen in our written submissions, which means if your Honour is satisfied in essence that there was a strong prospect we would have succeeded, we should get costs under that. In essence, we say that for the same reasons in essence as we moved for summary judgment, we would plainly fall within Order 62 rule 3 which is a lower threshold than a General Steel-type test, but just so that your Honour understands the clarity with which we say one can be satisfied that we will have succeeded, we would meet a General Steel test when we come to look at it. We don’t have to for the purposes of Order 62 rule 3. That’s the second issue that we develop briefly and again, it turns on the same very brief and simple argument about the significance of the terms.
The third issue that we seek to develop is, well, if we’re not entitled, if we can’t persuade your Honour that we should have won, then absent my learned friend persuading your Honour likewise that he should have won, the appropriate position is walk away but for issue costs in respect of some relevant delinquency. We say there has been some relevant delinquency in three respects arising from the pleadings and that will be a short argument that I’ll take your Honour to, but in essence we would want issues costs, if I can describe it as that, issues costs in respect of negligence, seaworthiness and loss and damage from the commencement of the proceedings up until the joinder of the second defendant. So that’s the third category, if I can put it in that way, your Honour.
SUMMARY JUDGMENT AND JUDGMENT ON ADMISSIONS
It is commonly understood that applications for summary judgment should be brought promptly so as to avoid the incurrence of costs in preparing for trial. See Quinlan v Safe International Forsakrings AB [2006] FCA 1718 at [47]. This decision reflects a long line of cases in various jurisdictions. However it is not necessary to consider that proposition for present purposes. The plaintiffs assert that they are entitled to summary judgment or judgment upon the basis of admissions made by Giant Marine and upon the proper construction of the United Kingdom Standard Conditions for Towage and Other Services (Revised 1974) (the “Standard Conditions”) which were incorporated into the contract between Giant Marine and Adsteam.
Counsel for the plaintiffs submit that notwithstanding payment in each action, I should simply “enter judgment” for each plaintiff. It is said that not infrequently, courts pronounce orders in that form. In my own experience, when a claim has failed completely, it is not uncommon for a court to order that there be judgment for the defendant. In those circumstances there is no need to say more, save as to costs. However, where judgment is entered for a plaintiff, it is almost axiomatic that some relief must be identified. It may be declaratory relief. It may be an award of damages. It may be the making of an injunction or an order for specific performance. To give judgment for a plaintiff without identifying the appropriate relief could be nothing more than a shorthand way of indicating that the plaintiff had been successful and that appropriate orders would be made accordingly. Where there are to be no such orders, such a “judgment” is pointless. Counsel sought to justify the proposed orders upon the basis that they would avoid further disputes between the parties, or between parties and third parties, as to liability for the collision and/or for the relevant damage. In some circumstances, fear of such a future dispute might justify declaratory relief. However, for present purposes, there is no evidence to suggest any reasonable basis for such a fear.
A court should not engage upon a determination of the merits of the case where the only outstanding claim is as to costs. See Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 and One.Tel Ltd v Commissioner of Taxation (2000) 101 FCR 548 at 552-553. Those cases also demonstrate that a court may inquire as to the reasonableness of the conduct of the parties to ascertain whether or not orders for costs should be made. Those cases would have no point if it were open to a party to ask the court to make a judgment in the very general form suggested by counsel. That in the present actions against Giant Marine, the Adsteam payments have disposed of all issues other than costs appears from the decision of the High Court in Baxter v Obacelo Pty Ltd (2001) 205 CLR 635 per Gleeson CJ and Callinan J at [38], [39], [40], [43], [46] and [47] and per Gummow and Hayne JJ at [55] and [56]. In particular it should be noted that Gummow and Hayne JJ approved the statement of “general principle” contained in the passage cited at [56] from the judgment of Auld LJ in Jameson v Central Electricity Generating Board [1998] QB 323. That general principle is:
Where accord and satisfaction cannot be relied upon, as where a claimant settles with only one of two concurrent tortfeasors, the tortfeasor facing a claim will nevertheless have a defence if the plaintiff’s settlement with the other has fully compensated him for the separate wrongs done to him.
That is the present position. The plaintiffs seek to distinguish these decisions by asserting that they do not apply to proceedings in rem. Assuming that the actions continue to be proceedings in rem, I see no merit in that assertion. The plaintiffs assert that they are entitled to enforce against the vessel any order for costs, including marshal’s costs which they have paid. However, if any order for costs in these proceedings would, if accompanying a judgment on the merits, be enforceable as against the vessel then, as far as I can see, an order for costs, by itself, will be similarly enforceable. Nothing in the Admiralty Act 1988 (Cth) (the “Admiralty Act”) provides that enforcement against a vessel is dependent upon recovery of judgment on the substantive claim. In any event the plaintiffs are not presently entitled to any costs. They apply for a favourable exercise of the court’s discretion. The question of whether payment of such costs would be enforceable against the vessel should be left until they have obtained a relevant order.
In a similar vein, the plaintiffs seek to rely upon their claims to maritime liens as justifying their applications for judgment. Proceedings upon a maritime lien are recognized by s 15 of the Admiralty Act as the proper subject matter of proceedings in rem. However s 6 provides that the Admiralty Act (other than s 34, which concerns damages for unreasonable demands as to security or unreasonable arrest) does not create new maritime liens. In para 1 of each amended writ, the relevant plaintiff claims damages “(p)ursuant to a maritime lien under s 15 of the Admiralty Act 1988 for damages done by the vessel “Global Peace” and for damage done by the oil which escaped from the vessel “Global Peace” …”. Paragraph 35 of the further amended statement of claim in each case provides:
Further by reason of the matters aforesaid the plaintiff says that the Plaintiff has a maritime lien in respect of the Global Peace within the meaning of s 15 of the Admiralty Act 1988 and/or that the above matters are a maritime claim within s 4(3)(a), (d), (j), (k) of the said Act and/or within the associated jurisdiction under s 12 of the said Act.
The plaintiffs have not sought to establish such liens other than for the purpose of invoking the jurisdiction in admiralty. As they no longer seek damages from Giant Marine, their liens seem to be irrelevant. However the plaintiffs now assert that any order for costs, including marshal’s costs, will be enforceable pursuant to such lien. As I have observed, the plaintiffs are not presently entitled to any orders as to costs. They rather apply for a favourable exercise of the court’s discretion as to costs. Again, the question of whether such costs would be secured by any maritime lien should be considered after the plaintiffs have obtained appropriate orders.
In any event the plaintiffs may face substantial difficulty in seeking to establish their claims to maritime liens. They assert that their liens are for damage done to the vessels by the oil spillage. Such a lien is recognized by subs 15(2) of the Admiralty Act and in the textbooks and cases dealing with maritime liens. See, for example, Bankers Trust International Ltd v Todd Shipyards Corporation; “The Halcyon Isle” [1981] AC 221 at 232-233. However the circumstances in which a lien arises for “damage done by a ship” are limited. Currie v M’Knight [1897] AC 97 establishes that the damage must be “the fault of the ship itself”, that is the ship against which liability is alleged. See also the observations of Lord Herschell at 108 and Lord Morris at 109-110. In “The Eschersheim” [1976] 1 WLR 430 at 438 Lord Diplock applied the decision in Currie v M’Knight in construing a statutory provision similar to para 4(3)(a) of the Admiralty Act. The facts of that case were similar to those in the present actions. In Opal Maritime Agencies Pty Ltd v Proceeds of Sale of Vessel MV “Skulptor Konenkov” (2000) 172 ALR 481, the Full Court applied “The Eschersheim”, although in a somewhat different context. These cases might suggest that in the present case, the damage caused by the tug was not damage done by Global Peace which would give rise to such maritime liens. However it is not necessary to take the matter any further.
Finally, the plaintiffs seek to distinguish Lai Qin and One.Tel upon the basis that they presently ask for summary judgment or judgment on admissions and not a trial. I see no merit in that argument. In preparing for such an application costs will be incurred by both sides. In some cases those costs may be relatively insignificant. In others they may be substantial. The policy considerations supporting the decisions to which I have referred are as relevant to these applications as they are to trials.
I have not dealt with the “merits” of the plaintiffs’ attempts to establish cases in negligence against Giant Marine despite the absence of any remaining damage. However my view concerning such “merits” will emerge from my consideration of the plaintiffs’ prospects of success in the actions, to which question I now turn.
PROSPECTS OF SUCCESS
The plaintiffs submit that if they are not entitled to summary judgment they are nonetheless entitled, in claiming costs, to seek to demonstrate that they would probably have won had the actions gone to judgment. They rely on the same matters as they rely upon in connection with the summary judgment application plus some aspects of the evidence filed in anticipation of a trial. Their position seems to be that Giant Marine ought to have responded to that evidence, and that its failure to do so demonstrates that their evidence ought to be accepted. There is an incongruity between such an approach and the decisions in Lai Qin and One.Tel to which I have previously referred. If the parties are to call and cross-examine witnesses, then the process starts to look very much like a trial on the merits for the sole purpose of deciding questions of costs. The plaintiffs’ approach also ignores the possibility that even in the absence of contrary evidence, their evidence may have been discredited in cross-examination.
In Lai Qin (supra), McHugh J said:
In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the cost of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence the litigation. …
Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in South East Queensland Electricity Board v Australian Telecommunications Commission ... where his Honour ordered the respondent to pay 80 per cent of the applicant’s fixed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the costs discretion will usually mean that the Court will make no order as to the cost of the proceeding. This approach has been adopted in a large number of cases.
McHugh J was speaking in the context of a case in which the ultimate relief sought by the applicant had been obtained without the need for continued litigation. The court was fully aware of the basis upon which the matter was to be discontinued. In many cases the court will be told simply that the matter has been settled without any reference to the terms of settlement. In other cases the terms of settlement may say little or nothing about the relative merits of the case had it gone to trial. It seems unlikely that McHugh J, in referring to the likelihood of success, meant to suggest that such likelihood should be assessed by detailed reference to the evidence which would have been called had the matter gone to trial. Such an approach would be inconsistent with the second and third sentences in the above extract. McHugh J probably had in mind a settlement which occurred after a substantial part of the evidence had been heard.
In any event, even on the plaintiffs’ approach, I am far from satisfied that they would probably have succeeded. Such anticipated success is said to be based upon the fact that Giant Marine admitted that the damage to the two vessels was ultimately caused by the failure of the discharge pipe and/or the defective fender and that Adsteam had failed to take reasonable care in the management of the tug by failing to detect such defects. The plaintiffs assert that Giant Marine is liable for Adsteam’s negligence by virtue of the Standard Conditions. It is common ground that such conditions were part of the contract between Giant Marine and Adsteam. Clauses 3 and 4 are as follows:
3. Whilst towing or whilst at the request, express or implied, of the Hirer, rendering any service other than towing, the mater and crew of the tug or tender shall be deemed to be the servants of the Hirer and under the control of the Hirer and/or his servants and/or his agents and anyone on board the Hirer’s vessel who may be employed and/or paid by the Tugowner shall likewise be deemed to be the servant of the Hirer and the Hirer shall accordingly be vicariously liable for any act or omission by any such person so deemed to be the servant of the Hirer.
4. Whilst towing, or whist at the request, either express or implied of the Hirer, rendering any service of whatsoever nature other than towing:-
(a) The Tugowner shall not be responsible for or be liable
(i.)for damage of any description done by or to the tug or tender, or done by or to the Hirer’s vessel or done by or to any cargo or other thing on board or being loaded on board or intended to be loaded on board the Hirer’s vessel or the tug or tender or by or to any other object or property; or
(ii.)for loss of the tug or tender or the Hirer’s vessel or of any cargo or other thing on board or being loaded on board or intended to be loaded on board the Hirer’s vessel or the tug or tender or any other object or property; or
(iii.)for any personal injury or loss of life howsoever and wheresoever caused including personal injury or loss of life of the master and/or crew of and/or any person on board the tug or tender; or
(iv.)for any claim by a person not a party to that agreement for loss or damage of any description whatsoever.
arising from any cause, including (without prejudice to the generality of the foregoing) negligence at any time of the Tugowner’s servants or agents, unseaworthiness, unfitness or breakdown of the tug or tender, its machinery, boilers, towing gear, equipment, lines, ropes or hawsers, lack of fuel, stores, speed or otherwise, and
(b)The Hirer shall be responsible for, pay for and indemnify the Tugowner against and in respect of any loss or damage and any claims of whatsoever nature or howsoever arising or caused whether covered by the provisions of clause 4(a) hereof or not (including any arising from or caused by the negligence of the Tugowner or his servants or agents) including the loss of or damage to the tug or tender, provided that the Hirer shall not be liable to the Tugowner for or in respect of loss, damage or claims which the Hirer proves (the burden of proof being on the Hirer) to have been solely caused by the failure of the Tugowner, and due to the actual fault or privity of the Tugowner, to make his tug or tender seaworthy for the towage or service other than towage.
Provided however, notwithstanding anything, hereinbefore contained, the Tugowner shall under no circumstances be responsible for or be liable for any loss or damage caused or contributed to, by or arising out of any delay or detention of the Hirer’s vessel or of the cargo on board or being loaded on board or intended to be loaded on board the Hirer’s vessel or of any other object or property or of any person, or any consequences thereof, whether or not the same shall be caused or arise whilst towing or whilst at the request, either express or implied of the Hirer, rendering any service of whatsoever nature other than towing or at any other time whether before during or after the making of this agreement.
The following definitions contained in cl 1 are also relevant:
“towing” is any operation in connection with the holding, pushing, pulling, moving, escorting or guiding of the Hirer’s vessel and the expression “to tow”, “being towed” and “towage” shall be defined likewise.
The expression “whilst towing” shall cover the period commencing when the tug or tender is in a position to receive orders direct from the Hirer’s vessel to commence pushing, holding, moving, escorting or guiding the vessel or to pick up ropes or lines or when the tow rope has been passed to or by the tug or tender whichever is the sooner and ending when the final orders from the Hirer’s vessel to cease pushing, holding, moving, escorting or guiding the vessel or to cast off ropes or lines has been carried out or how the tow rope has been finally slipped, whichever is the later, and the tug or tender is safely clear of the vessel.
The plaintiffs submit that these provisions result in Giant Marine being vicariously liable for the damage inflicted upon their vessels. I do not accept that proposition. The plaintiffs have not demonstrated any proper basis for their being permitted to enforce the terms of a contract to which they are not parties. Reference was made to the decision of the High Court in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107. In that case an insurer under a public liability insurance policy agreed to indemnify a company against liability for injury to persons at specified building sites. “The insured” was defined to include the company’s contractors. A person was injured as the result of the negligence of a contractor which had not been a contractor when the policy was issued. That person recovered damages against the contractor. The majority of the High Court held that the contractor was entitled to relief against the insurer. However the reasons of the various members of the Court offer little assistance to the plaintiffs for present purposes.
Mason CJ and Wilson J said at 123-4:
In the ultimate analysis the limited question we have to decide is whether the old rules [concerning privity of contract] apply to a policy of insurance. The injustice which would flow from such a result arises not only from its failure to give effect to the expressed intention of the person who takes out the insurance but also from the common intention of the parties and the circumstance that others, aware of the existence of the policy, will order their affairs accordingly. We doubt that the doctrine of estoppel provides an adequate protection of the legitimate expectations of such persons and, even if it does, the rights of persons under a policy of insurance should not be made to depend on the vagaries of such an intricate doctrine. In the nature of things the likelihood of some degree of reliance on the part of the third party in the case of a benefit to be provided for him under insurance policy is so tangible that the common law rule should be shaped with that likelihood in mind.
This argument has even greater force when it is applied to an insurance against liabilities which is expressed to cover the insured and its subcontractors. It stands to reason that many subcontractors will assume that such an insurance is an effective indemnity in their favour and that they will refrain from making their own arrangements for insurance on that footing. That it seems is what happened in the present case. But why should the respondent’s rights depend entirely on its ability to make out a case of estoppel?
In the circumstances, notwithstanding the caution with which the Court ordinarily will review earlier authorities and the operation of long-established principle we conclude that the principled development of the law requires that it be recognized that McNiece was entitled to succeed in the action.
In other words, their Honours considered that there should, in the case of insurance policies, be an exception to the general rules relating to privity of contract, particularly where the policy contemplates the relevant claimant having the benefit of the cover, it knows of the policy and organizes its affairs accordingly. Speaking loosely, it might be said that pursuant to cl 4, Giant Marine “insured” Adsteam against certain loss, but it is fairly clear that Mason CJ and Wilson J were speaking only of insurance policies, properly so called. I see no justification for further extending the exception which their Honours were willing to make to a fundamental aspect of the law of contract.
Brennan and Dawson JJ both concluded that the contractor was not entitled to enforce the indemnity and ought fail in the action. Deane J considered that the contractor was not entitled to enforce the indemnity but might be able to demonstrate that the policy created a trust in its favour. The approach adopted by Toohey J (at 172) was similar to that adopted by Mason CJ and Wilson J. Gaudron J agreed generally with Mason CJ and Wilson J but differed from them in “two significant respects”. Her Honour said at 173:
In my view a promisor who has accepted an agreed consideration for a promise to benefit a third party comes under an obligation to the third party to fulfil that promise and the third party acquires a right to bring an action to secure the benefit of that promise. The right of third party is not a right to sue on the contract: rather, it is a right independent of, but ordinarily corresponding in content and duration with, the obligation owed under the contract by the promisor to the promisee.
The doctrine of privity of contract and the related requirement that consideration should be provided by the person seeking to enforce a contractual obligation do not deny the binding nature of a contractual promise the performance of which will benefit a third party. Breach of the contractual obligation may sound in damages at the suit of the promisee. However, it is not clear on existing authority whether the promisee is restricted to recovering damages for his loss only or whether the damages can also be recovered by the promisee for the third party’s loss … If damages are an inadequate remedy, the promisee may obtain a degree of specific performance of the contract … The third party, however, cannot institute an action for breach of contract or for specific performance unless he can bring himself within one of the recognized exceptions to or qualifications of the rules.
To my mind none of the reasons supports the plaintiffs’ present claims. There was no insurance policy, and so the views expressed by Mason CJ, Wilson and Toohey JJ do not apply. No attempt has been made to establish the existence of a trust. It cannot be said that either Adsteam or Giant Marine intended to benefit third parties such as the plaintiffs when they entered into the contract. At a relatively late stage in proceedings the plaintiffs sought to rely upon provisions in the Property Law Act 1974 (Qld) relating to contracts for the benefit of third parties. However no attempt has been made to plead or prove that either Giant Marine or Adsteam made any promise for the benefit of third parties such as the plaintiffs.
Clause 3 offers some evidence that the relationship between Giant Marine and Adsteam’s employees on the tug was that of master and servant, but that is unlikely to have been the case. It is unlikely, for example, that Giant Marine was under any contractual or other obligation to pay the employees’ wages. It is also unlikely that the employees would have understood that they were to obey direct instructions received from Giant Marine or its agents, rather than instructions relayed to them through the tug master. Further, it is unlikely that Giant Marine or Adsteam intended such results. Whilst the tug and the tug master may have been subject to directions by the pilot and the master of “Global Peace”, it is difficult to avoid the conclusion that the tug master was obliged to exercise his own judgment in the operation of the tug, having regard to his obligations to Adsteam and the crew. Crew members were obliged to follow the tug master’s directions. Clause 3 should be construed as regulating the relationship between Giant Marine and Adsteam and not that between either of them and the master and crew of the tug.
It is also important to keep in mind that cl 3 applies only during towing or whilst other services are being provided. I have already set out the definition of “towing”. At most Giant Marine would bear vicarious liability for conduct occurring during the towing operation. Whilst Giant Marine has admitted that the owner of the tug failed to take reasonable care in its management, both with respect to the discharge pipe and with respect to the fender, it is not clear to me that such failure occurred during the berthing operation. I have briefly considered the evidence of the expert witnesses McAuley, Boulton and Crawford. That evidence seems to be more consistent with a design and system failure prior to, and at the time of, start up of the engines than with negligent conduct by the master and/or the crew during towing.
For these reasons Giant Marine’s admission that Adsteam was negligent does not establish crew negligence for which it might arguably be liable as a result of cl 3. To establish any such negligence it would be necessary to go to the evidence. Even if, contrary to my initial impressions, the evidence establishes crew negligence, there is still the question of the extent to which I should go in assessing the possible outcomes in these actions had they gone to trial. As I have said, the plaintiffs assert that Giant Marine ought to have responded to their evidence, and that its failure to do so demonstrates that such evidence ought be accepted for present purposes. That assertion assumes that the plaintiffs are, in effect, entitled to insist upon trials of these issues, notwithstanding the fact that they are now entirely academic. It also overlooks the possibility that Giant Marine may have discredited the expert evidence by cross-examination rather than by calling its own evidence. I am not satisfied that the plaintiffs would have succeeded on the question of vicarious liability or on that of crew negligence. I accept that they had arguable, although not strong, cases.
I am unpersuaded that the plaintiffs can enforce cl 4 of the Standard Conditions against Giant Marine. I see no basis for so doing. I should also draw attention to the fact that cl 4 excludes liability for damage caused in the event of unseaworthiness brought about by default of the tug owner. Giant Marine indicated in its pleading its intention to rely upon this exclusion. On the material such a defence cannot be discounted.
The plaintiffs also seek, by reference to earlier decisions, to establish that under general principles of admiralty law, a vessel under tow is vicariously liable for damage done by the tug. The plaintiffs rely primarily upon the decision in The Niobe (1888) 13 PD 55. However that case, taken at its highest, does not support the proposition. The case appears to have been decided upon the basis of actual negligence on the part of the master of the vessel under tow. The President doubted “if the questions of law which have been discussed before me arise upon this occasion …”. Nonetheless his Lordship went on to consider the general question of liability as between tug and tow, observing at 59:
But it appears to me that the authorities clearly establish the tow has, under the ordinary contract of towage control over the tug. The tug and tow are engaged in a common undertaking, of which the general management and command belongs to the tow, and in order that she should efficiently execute this command it is necessary that she should have a good look-out and should not merely allow herself to be drawn, or the tug to go, in a course which would cause damage to another vessel. As Dr. Lushington has pointed out, it is essential for the safety of vessels being towed that there should not be a divided command, and convenience has established that the undivided authority shall belong to the tow. The pilot, if there be one, takes his station on his tow, and the officers of the tow are usually, as in the present case, of a higher class and better able to direct the navigation than those of the tug.
At p 60 his Lordship continued:
… I may observe that it is clear from the evidence in this case that it was perfectly well understood by the captains of the tug and tow that the latter had the control of their movements, and that it was the duty of those navigating the tow to keep a look-out and check the tug if it were going wrong.
His Lordship also observed:
If it had been shewn that the “Flying Serpent” had, by some sudden manoeuvre, which those on board the “Niobe” could not control, brought about the collision, I should have held the “Niobe” blameless.
The case is authority for the proposition that the master of the tow must accept responsibility for the way in which the towing operation is conducted. He must keep a proper lookout and direct the tug appropriately. It does not follow from that decision that the tow will be responsible for actions by the tug over which it has no control. As much also appears from other cases referred to in argument. In The Quickstep (1890) 15 PD 196 at 199 Butt J said, in delivering the reasons of a Divisional Court:
No doubt in many cases of towage the negligence relied on as making the owners of the vessel in tow liable for a collision has been the negligence of those on board the tug; and where, as in most of such cases, the navigation was under the direction of those on board the vessel being towed, such negligence has been rightly held to be in law the negligence of her owners. … In all such cases, however, the real question is whether or not the relation of master and servant exists between the defendants, the owners of the vessel towed, and the persons in charge of the navigation of the steam-tug. Unless that relation exists, considerations of expediency cannot avail to impose liability on the owners of the vessel in tow.
At 200 his Lordship observed:
The truth is, no general rule can be laid down. The question whether the crew of the tug are to be regarded as the servants of the owner of the vessel in tow must depend upon the circumstances in each case.
In Owners of the “SS Devonshire” v Owners of the Barge “Leslie” [1912] AC 634 at 645, Viscount Haldane LC approved the proposition advanced by Butt J in The Quickstep. At 648 Lord Ashbourne said:
There is nothing in the facts of this case to make the tow responsible for the navigation of the tug. This is not a question of law, but a question of fact, to be determined in each case on its own circumstances.
See also The MSC Panther and the Ericbank [1957] 1 Lloyds Rep 57 at 67 (per Willmer J).
There is no general rule that the tow is liable for damage done by the tug. I am not persuaded that the plaintiffs would probably have succeeded had the actions gone to trial.
REASONABLENESS AND COSTS
I deal firstly with costs incurred prior to Adsteam’s payments. Clearly, the reasonableness of the parties’ conduct is a relevant consideration in determining the question of costs. McHugh J said as much in Lai Qin (supra). The plaintiffs submit that Giant Marine was unreasonable in not admitting negligence, unseaworthiness of the tug and damages. Giant Marine submits that the plaintiffs were unreasonable in failing to join Adsteam at an earlier stage in the proceedings. These two matters are closely related. Giant Marine also seeks to rely upon certain offers to settle made in the correspondence between the solicitors.
At one stage I expressed surprise at Adsteam’s absence from the proceedings. At some time thereafter Adsteam was joined. My concern arose largely out of the fact that it seemed clear that the collision had been, at least substantially, caused by mechanical failure on the tug. The plaintiffs assert that their failure to join Adsteam at an earlier stage was the product of reasonable caution, designed to avoid the incurrence of unnecessary costs, given that they considered their cases against Giant Marine to be strong. That view was based upon an unrealistic assessment of the likelihood of establishing vicarious liability in Giant Marine. Although I disagree with the view taken by the plaintiffs, it was a matter of judgment. In any event, even if Adsteam had been joined earlier, it may not have paid earlier. Giant Marine’s costs were incurred in defending proceedings brought against it. I am unable to conclude that such costs would not have been incurred had Adsteam been joined at an earlier stage.
Giant Marine’s conduct in defending the actions must also be seen in light of the late joinder of Adsteam. From an early stage it was obvious that mechanical failure on the tug was the primary, if not the sole, cause of the plaintiffs’ losses. It is reasonable to infer that Giant Marine would, if held liable, have looked to Adsteam for contribution or indemnity, subject to issues arising out of the Standard Conditions and any complications arising out of insurance arrangements. In those circumstances, Giant Marine could not safely make concessions as to liability or damages without reference to Adsteam. Adsteam’s absence from the proceedings did not prevent Giant Marine from raising such matters with it, but Adsteam may have been reluctant to become involved. Further, despite the plaintiffs’ views concerning the strengths of their respective cases, Giant Marine had reasonable prospects of success in resisting any finding of liability. In those circumstances I cannot see that it acted unreasonably in putting the plaintiffs to proof on all issues.
In the circumstances, I am not satisfied that either of the plaintiffs or Giant Marine acted unreasonably in the conduct of the proceedings up to the dates of Adsteam’s payment in each action. I am therefore inclined to make no orders as to the costs incurred prior to those dates.
It is now necessary to deal with costs incurred after the dates of Adsteam’s payments, in the case of action NSD 124 of 2007, 7 February 2008, and in the case of action NSD 125 of 2006, 21 February 2008. Counsel for the plaintiffs gave somewhat later payment dates in the course of submissions, but these dates appear from both Mr Wilson’s affidavit filed on 27 February 2008 and Mr White’s affidavit filed on 10 March 2008, both filed in action NSD 124 of 2006. The relevant costs include the costs of continued preparation for trial, the costs of the plaintiffs’ motions for summary judgment and the costs associated with determining the appropriate orders as to costs. I should point out at this stage that numerous outstanding notices of motion were, during addresses, dismissed with no orders as to costs. Notices of motion dated 22 March 2006 remain outstanding. I understand that they are to be dismissed on a similar basis. I will do so, subject to any further submissions by the parties after delivery of these reasons.
Curiously, despite Adsteam’s payments, the parties continued to prepare for trial. On 25 February 2008, the plaintiffs served affidavits and lists of documents. On 27 February 2008 the plaintiffs served unsealed copies of the notices of motion for judgment, together with a supporting affidavit. On 29 February 2008 there was a directions hearing before me. On 3 March 2008, the sealed notices of motion were served. On 7 March 2008 Giant Marine requested the plaintiffs to advise the identities of the witnesses required for cross-examination, at the same time indicating that the court should not be asked to embark upon a hearing on the merits. On 10 March 2008 Giant Marine served two further affidavits by Mr Turner, its solicitor, responding to the notices of motion. On 11 March 2008 Giant Marine notified the plaintiffs of its intention to amend its defences. On that day the plaintiffs advised Giant Marine that should the court refuse summary judgment on admissions, they would not seek hearings on the merits. On 12 March 2008 the plaintiffs served notices to produce. On 14 March 2008 Giant Marine served sealed copies of notices of motion to amend its defences, with a supporting affidavit. On 14 March 2008 the plaintiffs settled all outstanding issues between them and Adsteam. I am unable to say whether steps taken on and after 11 March 2008 were in preparation for trial or in connection with the motions. To the extent necessary that question can be addressed on taxation.
I infer that until 11 March 2008 the matter was proceeding to trial, notwithstanding Adsteam’s payments. At the directions hearing on 29 February 2008, counsel for the plaintiffs informed me of the course which they proposed to take. I made it clear that unless the parties had previously disposed of all matters which remained in dispute, I would deal with them on the appointed hearing dates for the trials – 17 and 18 March 2008. In the face of that indication it was for the parties to decide how they wished to proceed. The plaintiffs continued to assert that each was entitled to judgment, either on summary application or after trial. For as long as they maintained that position, Giant Marine was obliged to prepare for trial. Once the plaintiffs indicated that in the event that their motions for judgment failed, they would not proceed to trial, preparation for trial should have ceased. For reasons which I have given, it was unreasonable for the plaintiffs to persist in seeking judgments against Giant Marine once their claims (save as to costs) had been satisfied by Adsteam.
I turn to the offers to settle. On 5 March 2008 the solicitors for Giant Marine wrote to the solicitors for the plaintiffs as follows:
The first defendant, Giant Marine Shipping SA, offers to settle each matter on a ‘drop-hands’ basis with the plaintiff in each action and the first defendant each carrying their own costs of the proceedings (including reserved costs), subject to any existing costs orders between the parties.”
Having regard to the fact that the trial is scheduled to commence on 17 March 2008 and arrangements are now necessarily being made for the attendance of witnesses, this offer is open for acceptance until 5.00pm 12 March 2008.
We reserve the right to appraise the court of the making of this offer in any submissions as to costs.
The letter was marked “Without prejudice save as to costs”. At 10.46 am on 12 March 2008 the solicitors for Giant Marine wrote to the plaintiffs’ solicitors “Without prejudice save as to costs”, as follows:
We refer to the without prejudice discussion between Senior Counsel yesterday and confirm the rejection by the first defendant of the settlement offer which was put to the first defendant.
We advise that we are instructed to hold open until 5.00pm this afternoon, Brisbane time, the first defendant’s offer to settle on the basis that in each action the claim against the first defendant is struck out with the plaintiff and the first defendant each carrying their own costs of the proceedings (including reserved costs), subject only to any existing costs orders between the parties.
The plaintiffs’ solicitors replied “Without prejudice save as to costs”, as follows:
We refer to the various discussions between Senior Counsel for our respective client yesterday and today.
Conditional and dependent upon the Plaintiff and Second Defendant in each proceeding resolving the outstanding issues between them, our client in each matter offers to settle the outstanding issues against your client on the following terms:
1.The First Defendant pay to the Plaintiff in each matter the Plaintiff’s costs in respect of the issues of negligence and loss and damage up to 19 April 2007 as agreed or taxed. Without prejudice to our clients’ entitlement to recover the full amount of such costs, which we say is substantially in excess of the following, our client is prepared to agree that the quantum of those costs is A$40,000.00 in each matter if, at the time of acceptance of this offer, your client agrees to that amount. In the event that your client does not accept the proposal as to the agreed amount, these costs are to be taxed.
2.All existing costs orders remain.
3.No order in relation to reserved costs as between the Plaintiff and the First Defendant in each matter.
4.The First Defendant’s motion in each matter in relation to the mediation is dismissed with no order as to costs.
5.The Plaintiff’s motion for summary judgment in each matter is dismissed with no order as to costs.
6.This offer is open for acceptance until 10.00am Queensland time tomorrow, Thursday 13 March 2008.
7.The Plaintiff in each matter expressly reserves the right to rely on this letter in relation to any application for indemnity or other costs orders and to produce this letter to the court as necessary.
That letter was said to be “Without prejudice save as to costs”.
On 14 March 2008 the solicitors for the plaintiffs wrote to the solicitors for Giant Marine as follows:
We refer to the various conversations between Senior Counsel.
We anticipate that our clients’ disputes will be resolved with the Second Defendant. Our clients’ rights in rem, in personam, on the motion for summary judgment/judgment on admissions and in relation to costs against your client have not been and will not be released.
Without prejudice to our clients’ rights against the Second Defendant as raised on the pleadings, on the motions and in relation to costs, our client’s offer to resolve the matter with the First Defendant (without any interdependent condition of resolution with the Second Defendant) on the following terms:
1.In each matter, the First Defendant agrees to an order for costs in favour of the Plaintiffs on the issues of loss and damage and negligence up to the date of joinder of the Second Defendant, as agreed or taxed.
2.Otherwise, both parties walk away with existing costs orders to stand and no further order as to costs or reserved costs.
3.All outstanding motions to be dismissed with no order as to costs.
The Plaintiffs expressly reserve the right to rely on this letter in relation to any application for indemnity or other costs orders and to produce this letter to the court as necessary.
That letter was said to be “without prejudice save as to costs”.
Finally, on 14 March 2008 the solicitors for Giant Marine wrote to the solicitors for the plaintiff on the same “without prejudice” basis, as follows:
The offer contained in your letter of 14 March 2008 is rejected.
As indicated in the email sent earlier this morning by Senior Counsel for the first defendant, Senior Counsel for the plaintiffs, the first defendant will favourably consider an offer that both parties “walk away” from the proceedings with no order as to costs (including no orders as to costs reserved), save for existing costs orders.
Obviously, Giant Marine has done considerably better than the orders which it proposed. Conversely, the plaintiffs have done significantly worse than the orders which they proposed.
ORDERS
In action NSD 124 of 2006 there will be no order as to costs incurred prior to 7 February 2008. In action NSD 125 of 2006 there will be no order as to costs incurred prior to 21 February 2008. This order is based upon my view that no party’s conduct prior to 21 February 2008 was such as to justify my making any other order. The offers to settle are irrelevant to these orders.
In the case of action NSD 124 of 2006 I am concerned with costs incurred between 7 February 2008 and 11 March 2008 in preparing for trial. In connection with action NSD 125 of 2006 I am concerned with costs incurred between 21 February 2008 and 11 March 2008. These costs were incurred simply because the plaintiffs declined to recognize the obvious consequences of their having accepted Adsteam’s payments, namely that they no longer had causes of action which they could prosecute to judgment as against Giant Marine. Counsels’ submissions to the contrary are without substance. In those circumstances, in action NSD 124 of 2006, I order that the plaintiff pay the first defendant’s costs of, and incidental to, preparation for trial, incurred after 7 February 2008 and prior to 11 March 2008. In action NSD 125 of 2006 I order that the plaintiff pay the first defendant’s costs of, and incidental to, preparation for trial incurred after 21 February 2008 and prior to 11 March 2008. As I consider that the plaintiffs’ conduct unnecessarily caused the incurrence of such costs, they should be taxed and paid on an indemnity basis. I order accordingly. Although Giant Marine’s offer of 5 March 2008 may have been relevant to some of these costs, my decision that they be taxed on an indemnity basis makes it unnecessary to have regard to it.
The plaintiffs’ motions for judgment were misconceived. Clearly, they were filed primarily in the hope of improving the plaintiffs’ chances of obtaining favourable costs orders. In each action I order that the plaintiff pay the first defendant’s costs of, and incidental to, the motion for judgment. Given that the motions were, in my view, completely misconceived, those costs should be taxed and paid on an indemnity basis. Again, it is not necessary to consider the effect of Giant Marine’s offer to settle.
It was, I think, inevitable that there be a hearing in connection with the ultimate disposition of the actions. However, in each case, the parties should only have appeared to consent to the dismissal of the actions. Subject to the offers to settle, it may also have been necessary to consider questions of costs. One might have hoped that the costs orders would be agreed, but there was always the chance of disagreement. As Giant Marine has been substantially successful in connection with costs, it should have its costs of, and incidental to, obtaining its orders. Again, subject to the offers to settle, I would order in each action that the plaintiff pay the first defendant’s costs of, and incidental to, preparing for and appearing at the hearing on 17 and 18 March 2008 for the purpose of arguing all questions of costs, not including any costs incurred solely in appearing to consent to the dismissal of each action. Were it not for Giant Marine’s offers to settle I would order that the costs be taxed on a party and party basis. However, in view of those offers, the costs of, and incidental to, the costs orders should be taxed and paid on an indemnity basis.
I am concerned that there may be some complication in applying these orders to Giant Marine’s counsels’ fees, depending upon whether, and when, they were briefed for trial. It is possible that the orders may not deal with all such fees or may deal twice with some of them. In each action I give liberty to the plaintiff and first defendant to apply, at any time prior to the final taxation of costs, to vary the above orders as they apply to the first respondent’s counsels’ fees.
CONCLUSION
Before finally disposing of these actions I should say something about the unfortunate circumstances attending their ultimate resolution. I do not wish to comment upon anything which occurred prior to Adsteam’s payments. Following those payments the actions ought to have been disposed of in a much more expeditious and economical way than has been the case. It is extraordinary that the parties continued to prepare for trial. The motions for summary judgment were quite inappropriate. The parties, properly advised, should have been able to agree upon a basis for disposing of the costs issues without the need for a further hearing taking in excess of a day and half. To say the least it is disappointing that the involvement in these actions of experienced and well-respected legal advisers did not lead to that result. Where the parties cannot agree the court must decide. However that will rarely be the best way of resolving ancillary matters such as costs where substantive matters have been agreed or are, for some other reason, no longer in dispute. The parties and their legal advisers must accept the reality of such a situation. It is the duty of the legal advisers to use their experience, objectivity and wisdom to minimize the cost, to the parties and to the public purse, of bringing such proceedings to speedy resolution. The parties should generally act upon legal advice concerning such practical matters.
As previously indicated, I order that the notice of motion filed in each action on 22 March 2006 be dismissed with no order as to costs. The orders will otherwise be as I have indicated.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate:
Dated: 5 August 2008
NSD 124 OF 2006 AND NSD 125 OF 2006:
Counsel for the Plaintiff: Mr AW Street SC and Mr CH Withers Solicitor for the Plaintiff: Norton White Counsel for the First Defendant: Mr GA Thompson SC and Dr S Derrington Solicitor for the First Defendant: Thynne & McCartney Solicitor for the Second Defendant: Mr B White of Brian White & Associates
Dates of Hearing: 17 & 18 March 2008 Date of Judgment: 5 August 2008
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