Empire Shipping Co Inc v Navix Line Inc

[1996] FCA 367

LIMITED DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 290 of 1989
GENERAL DIVISION IN ADMIRALTY        )

BETWEEN:          EMPIRE SHIPPING COMPANY INC.
  Plaintiff

AND:              NAVIX LINE INC.
  Defendant

CORAM:       TAMBERLIN J
PLACE:       SYDNEY
DATED:       9 MAY 1996

REASONS FOR JUDGMENT

TAMBERLIN J:

LOSS OF PROFITS DISCOVERY

The plaintiff seeks "full and proper Discovery" of all records which relate to the profits derived by the defendant between June 1987 and the sale of the vessel Shin Kobe Maru in July 1991.

In a letter dated 14 February 1996 the plaintiff's solicitors say:

"... So far as the discovery by the Defendant is concerned, the Plaintiff maintains that the Defendant has failed to give full and proper discovery both of the documents relating to the sale of the vessel as well as all records relating to the profits derived by the defendant for the period from June 1987 up to and including the sale of the vessel.

Our client was not aware that your client had sold the vessel and did not consent to the same. Your client has now deprived itself from being able to comply with any Court order in respect of the vessel and our client is entitled, upon the close of the case and prior to Judgment, to elect in these circumstances between the alternative remedies of damages or an account of profits, see Dart Industries Inc. v Decor Corporation Pty Ltd (1993) 179 CLR 101 at 110-111. Our client is clearly entitled to discovery of the records in respect of the profits wrongfully derived by the Defendant by use of the vessel and half interest in the net proceeds of sale. To determine whether to pursue the alternative of an account of profits, we are instructed to press for discovery of these records by the Defendant. Please confirm that the records will be discovered within 14 days."

The defendant resists the application and makes three submissions. These are:

1. That the pleadings do not make any claim which raises or seeks an account for loss of profits.

1. Loss of profits is not an available remedy in any event.

1. The Amended Statement of Claim does not seek loss of profits but only damages for breach of contract and the plaintiff has elected thereby to seek damages and must be bound by that election so that any alternative claim for an account of profits is now precluded.

In relation to the first argument, the plaintiff in the Amended Statement of Claim, alleges a breach of, inter-alia, a joint venture agreement and seeks a retransfer of the subject vessel. The claimed entitlement to a retransfer of the vessel could include the necessity for a consequential accounting for profits, so that arguably, loss of profits are relevant to the issues raised in the Amended Statement of Claim.

In the Amended Defence filed, pursuant to leave, an order is sought that the Court settle accounts between the parties, and it is claimed  that on a proper balance of accounts there should be an order that there are no sums due to the plaintiff. It is claimed that on a proper settling of accounts there are moneys owing by the plaintiff to the defendant. The Amended Cross-Claim repeats the allegations in the Defence and seeks a declaration that on a balance of accounts there are no moneys due and owing by the plaintiff.

Therefore it cannot be said that, on the pleadings, documents relating to loss of profits during the period in question, are irrelevant to the matter presently before the Court.

As to the second matter, which is that an order for an account of profits is not open, I am not persuaded that loss of profits cannot be reasonably claimed, having regard to the relevant contractual arrangements. This submission is one for argument on the hearing and is not appropriate for determination at this late interlocutory stage.

As to the third submission, namely that the plaintiff has elected to pursue damages and is therefore precluded from seeking an account of profits, I do not consider that this is so. The letter of 14 February 1996 referred to the decision of Dart Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101. That was a patent infringement case where it appears the election was made between damages and an account of profits, after judgment. See Dart Industries (supra) at 102-3, 109-110 and 122.

Assuming that an account of profits or damages are alternative methods of relief available, if the plaintiff can make good its case, then I do not think it is necessary for the plaintiff to elect, before hearing, as to which remedy ultimately will be pursued. The appropriate course is to hear the evidence and submissions, and then determine which is the appropriate remedy. Of course, the plaintiff would not be entitled to double satisfaction. Damages will often be an inadequate remedy and in these circumstances where alternative relief, in the form of loss of profits, is available then it is not to be precluded by imposing a requirement to elect prior to hearing. See United Australia Limited v Barclays Bank Limited (1941) AC 1 at 17, 30 and 34; Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 30-31 per Windeyer J; Keith Mason and J W Carter, Restitution Law in Australia (1995), para [1718]

These are the considerations, on the basis of which, last Thursday 9 May 1996, I ordered the defendant/cross-claimant to give verified discovery of documents relating to loss of profits during the specified period.

I reserve the costs of the motion.

I certify that this and
the preceding four (4)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.

Associate:

Date:  9 May 1996           

Counsel for Plaintiff:               Mr G Downes QC
  Mr A W Street
  Ms M S C York

Solicitor for Plaintiff:                   Norton Smith & Co

Counsel for Defendant:               Mr P E King
  Mr J Lockhart  

Solicitor for Defendant:                   Middletons Moore & Bevins

Date of Hearing:  9 May 1996                

Date Judgment Delivered:                   9 May 1996