Glen King Marine and Trading Services v Owners of the Ship "Armada Ternak" and Quality Livestock Australia Pty Ltd v Owners of the Ship "Armada Ternak"
[1998] FCA 747
•16 June 1998
FEDERAL COURT OF AUSTRALIA
QG 82 of 1997
CONTRACT - agency agreement - whether expenses relating to repair of vessel properly incurred by agent of ship owners - whether agent entitled to be paid on a quantum meruit for preparation of livestock capacity plan - where payment for preparation of plan not provided for in agency agreement
CONTRACT - construction - construction of agreement in relation to 10 per cent loading entitlement - meaning of “disbursements” - whether agent entitled to recover moneys from principal for which agent was liable to third parties - whether agent entitled to lost commission under first and second charterparties - whether entitlement waived
QG 152 of 1997
MARITIME LAW - breach of charterparty - where second charterparty entered into for transportation of live cattle following failure of shipowners to present vessel pursuant to first charterparty - whether terms of second charterparty precluded litigation arising from breach of the first - whether forbearance to sue in respect of first charterparty expressed in second charterparty was dependent on performance of second charterparty
CONTRACT - frustration - whether doctrine of frustration applicable - where vessel did not present for performance of charterparty due to failure of ship owners to comply with maritime safety requirements
DAMAGES - assessment of damages - where substitute voyages undertaken to transport cargo due to shipowner’s failure to present vessel for six voyages contracted for - where charter of substitute vessels occurred at spot rates which were higher than rates payable under the continuous voyage charterparty
Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 - cited
McDermott v Black (1940) 63 CLR 161 - cited
Davies Contractors Ltd v Foreham Urban District Council [1956] AC 696 - appl
Paal Wilson & Co v Partenreederei Hannah Blumenthal [1983] 1 AC 854 - appl
The Aragon (1975) 2 Lloyds Rep 216 - cited
Robinson v Harman [1848] 1 Ex 850 - cited
Commonwealth v Amann Aviation (1991-92) 174 CLR 64 - cited
Yeung Kai Yung v Hongkong and Shanghai Banking Corporation [1981] AC 787 - cited
Teheran-Europe Co Ltd v S T Belton (Tractors) Ltd [1968] 2 QB 545 - cited
The Orienta (1895) p 49 - cited
GLEN KING MARINE & TRADING SERVICES v THE OWNERS OF THE SHIP “ARMADA TERNAK”
No QG 82 of 1997
QUALITY LIVESTOCK AUSTRALIA PTY LTD (ACN 005 508 243) v THE OWNERS OF THE SHIP “ARMADA TERNAK”
No QG 152 of 1997
SPENDER J
BRISBANE
16 JUNE 1998
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
QG 82 of 1997
BETWEEN:
GLEN KING MARINE & TRADING SERVICES
PlaintiffAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
DefendantAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
Cross-ClaimantAND:
GLEN KING MARINE & TRADING SERVICES
Cross-Respondent
QG 152 of 1997
BETWEEN:
QUALITY LIVESTOCK AUSTRALIA PTY LTD (ACN 005 508 243)
PlaintiffAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
DefendantAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
Cross-ClaimantAND:
GLEN KING MARINE & TRADING SERVICES
Cross-RespondentJUDGE:
SPENDER J
DATE OF ORDER:
16 JUNE 1998
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
In proceedings QG 82/97 there be judgment for the plaintiff (Glen King Marine & Trading Services) against the defendant (The Owners of the Ship “Armada Ternak” - P T Pelayaran Nasional Kalla Lines) in the sum of A$531,600.00 and in United States dollars of $US 37,900.00.
In proceedings QG 152/97 there be judgment for the plaintiff (Quality Livestock Australia Pty Ltd) against the defendant (The Owners of the Ship “Armada Ternak” - P T Pelayaran Nasional Kalla Lines) in the sum of US$448,800.00 and in Australian dollars of $A 54,100.00.
.../2
The cross claims in QG 82/97 and QG 152/97 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
IN ADMIRALTY
QG 82 of 1997
BETWEEN:
GLEN KING MARINE & TRADING SERVICES
PlaintiffAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
DefendantAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
Cross-ClaimantAND:
GLEN KING MARINE & TRADING SERVICES
Cross-Respondent
QG 152 of 1997
BETWEEN:
QUALITY LIVESTOCK AUSTRALIA PTY LTD (ACN 005 508 243)
PlaintiffAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
DefendantAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
Cross-ClaimantAND:
GLEN KING MARINE & TRADING SERVICES
Cross-Respondent
JUDGE:
SPENDER J
DATE:
16 JUNE 1998
PLACE:
BRISBANE
REASONS FOR JUDGMENT
These two proceedings are matters in Admiralty in which the plaintiff in QG 82 of 1997 and in QG 152 of 1997 are pursuing claims against the owners of a ship the “Armada Ternak”. The proceedings arise out of attempts by the owners of the “Armada Ternak”, which was a motor vehicle carrier converted into a carrier for live cattle, to break into the live cattle export trade from northern ports of Australia to South-East Asia, particularly Indonesia and the Philippines.
In proceedings QG 82 of 1997 Glen King Marine & Trading Services seeks to recover from P T Pelayaran Nasional Kalla Lines (‘Kalla Lines‘) moneys which represent damages for breach of contract, being a contract to act as consultant to the owners as an engineer and business manager in relation to, amongst other matters, the conversion of the “Armada Ternak” into a livestock carrier and the carriage of live cattle from Australia in that vessel to ports overseas. Glen King Marine & Trading Services is a partnership of Mr Glen King and his wife, Narelle, and it will be convenient, if not strictly accurate, to refer to the plaintiff in proceedings QG 82 of 1997 as ‘Mr King’. The plaintiff also claims moneys for disbursements by way of repairs to the vessel and other disbursements including crew’s wages, for which the plaintiff says the defendant is liable.
In proceedings QG 152 of 1997 Quality Livestock Australia Pty Ltd (‘Quality Livestock’), claims damages for breach by the owners of the “Armada Ternak” of two charterparties. Quality Livestock pleads that on 20 March 1996 it entered into a consecutive voyage charterparty for the carriage of livestock, the terms of which included that the defendant would endeavour to have the “Armada Ternak” ready to load in Darwin on or before 15 April 1996; the charterparty would cover six consecutive voyages from an Australian port, with the first voyage having a destination of a designated Indonesian port, with the plaintiff reserving the option, so it was claimed, for a further six voyages with the option to be exercised before the commencement of the fourth and eighth voyage, the claim being that the first charterparty permitted the plaintiff the possibility of a total of 18 voyages. Quality Livestock says the defendant did not furnish the ship under the charterparty to load cargo at any time, and that as a consequence Quality Livestock incurred additional expenditure in securing alternative carriers for cargo that it would have shipped under the charterparty. In addition, Quality Livestock says that during the period that the owners of the “Armada Ternak” failed to furnish the ship to receive a cargo under the first charterparty, Quality Livestock lost the profit it would have made on two shipments of livestock to Pt Kresna Nandi Arsetama when the plaintiff was unable to obtain alternative shipping, the lost profits being said to be US$80,000.
Further, Quality Livestock pleads that on or about 6 February 1997 it entered into a second consecutive voyage charterparty with the owners of the “Armada Ternak” for the carriage of livestock. Under that charterparty the owners contracted to have the “Armada Ternak” ready to load in Darwin on or before 1 March 1997; the charterparty would cover six consecutive voyages from an Australian port with the first voyage beginning in Darwin, and that the plaintiff reserved the option for a further 6 consecutive voyages, which option was to be executed before the commencement of the fourth voyage. Quality Livestock says that it was an express term of the second charterparty that the “Armada Ternak” had the capability of travelling at a speed of 11 knots on each voyage. It is said on Quality Livestock’s behalf that in breach of the second charterparty the vessel was not provided on or before 1 March 1997, and was only presented on 21 March 1997. By reason of the delay, Quality Livestock says that it had to pay for agistment of the cattle from 17 March 1997 to 20 March 1997, that it had to incur additional expenditure in securing an alternative carrier for the cargo intended to be despatched on the “Armada Ternak” on the first voyage under the second charterparty, that on the first voyage that in fact occurred, the ship did not prosecute the voyage at a speed of 11 knots, and that there was a shortfall in the fodder which was to be supplied at the port of discharge but which in fact had been consumed by the cattle on the voyage due to its extended length. There was a second voyage under the charterparty which commenced with the presentment of the “Armada Ternak” ready to load in Darwin on 14 May 1997. Again there were agistment costs because of the late arrival of the vessel, and again on the second voyage the ship was not able to travel at a speed of 11 knots with the consequence that Quality Livestock incurred liability for a cancellation fee in respect of trucks which had to be stood down by reason of the late arrival of the ship. Quality Livestock claims that in breach of the second charterparty the owners of the “Armada Ternak” failed to furnish the ship for any further voyages, with the consequence that Quality Livestock incurred additional expenditure in securing alternative carriers for the cargo that it would have shipped under the second charterparty. Quality Livestock claims damages for breach of the charterparties, interest on damages, as well as costs.
Because the proceedings QG 152 of 1996 are more straightforward than those in QG 82 of 1996, and the issues more defined, it is convenient to deal with the Quality Livestock claim first. The facts I find were as follows.
Quality Livestock was incorporated in January 1979 and a livestock export licence, which Mr John Montague had previously obtained, was transferred to that company. Mr Montague was at all material times the moving party behind the activities of Quality Livestock. On 27 September 1994 Kalla Lines raised the question of a joint venture with Perkins Shipping Pty Ltd (‘Perkins’) of Darwin in relation to the proposed purchase of a cattle ship. Mr King had previously been employed by Perkins as Slipway Manager of their Darwin based operations, and in October 1992 had been appointed as Manager, East Indonesia, for Perkins and had moved to Kupang in 1993. On 12 October 1994, Mr King informed Kalla Lines that Perkins Shipping was not interested in the joint venture and that he would not be working for Perkins Shipping for much longer. Later in that month he informed Kalla Lines that he was interested in acting as a consultant for them.
Kalla Lines purchased the vessel known as the“MV Armada Mobile”, a motor vehicle carrier, on 3 November 1994. The ship was sent to Jakarta for conversion to a cattle transport ship. On 3 November 1994, Pak Rudhy, the managing director of Kalla Lines, informed Mr King that the completion date for the vessel conversion would be late March or early April 1995. In December 1994 Mr King ceased work for Perkins and on 20 January 1995 a consultancy agreement between Mr King and Kalla Lines was signed.
On 2 February 1995 Quality Livestock wrote to Kalla Lines requesting information about the vessel. That communication said in part:
“At the present time we have contracts to supply well in advance of 60,000 cattle during the next 12 months. We have the use for a further cattle ship.”
The letter continued:
“John Kaus who works as our representative and sales co-ordinator informs me that your company is in the process of converting a cattle carrier which should be completed late February early March.
Please confirm specification:
LOA 90 M 4 DECKS
DRAFT 4.5 M 12.5 KNOTSPen space 2,000 Square Metres
Converted to Aust DOT standards
Water capacity?
Fodder space?
Ventilation and change of air?If the above specifications are correct then Quality Livestock Australia would be interested in a medium - long term charter on fully equipped and crewed basis. Or alternatively on a voyage FIOS basis. The price considered is around $5,500 to $6,000 US/day or as attached voyage basis.”
On 4 February 1995 Kalla Lines replied inviting Quality Livestock to contact Mr King concerning details of the ship. Mr King was described by Pak Rudhy as the Australian Consultant Surveyor and Representative of Kalla Lines. On 10 February 1995 Mr King sent Quality Livestock some details of the vessel and said in part:
“Vessel ‘should’ be available early April.”
On 29 March Mr King wrote to Mr Montague, enclosing information on the vessel and stating that the calculations had been done at 11 knots. There were further negotiations concerning proposed charter rates.
In about early April 1995 Pak Rudhy informed Mr King that the vessel would be ready at the latest by June 1995. On 23 April, Mr King wrote to Quality Livestock indicating that the “Armada Ternak” would not be operational until early to mid 1995 and indicating that Kalla Lines wished to offer Quality Livestock first option in charter negotiations.
On 19 May 1995 Mr King informed Mr Montague that ‘there was a long way to go with the ship”. On 14 November 1995 Mr King wrote to Kalla Lines indicating that Mr Montague wished to charter a vessel before the end of December for a six month term with a two year option, and on the same day Kalla Lines informed Mr King that the “Armada Ternak” would be completed in early January 1996. There were further discussions and in February 1996 Mr Montague asked Mr King to approach Kalla Lines with an agreement so as to tie up the ship. On 29 February Mr Montague wrote to Mr King setting out terms of an agreement, and on the same day setting out a proposed shipping timetable. On 1 March 1996 Mr King wrote to Kalla Lines informing them that he had a serious offer to charter the “Armada Ternak” from Quality Livestock and that Quality Livestock required a notice of readiness from Kalla Lines 30 days before 15 April 1996, the date from which he wished to charter the ship. Kalla Lines requested that Mr King tell Quality Livestock that the “Armada Ternak” would be completed by the end of April 1996. Mr Montague telephoned Mr King complaining that the owners of the ship were making it very difficult for him to programme his cattle exports without a confirmed date. Mr Montague made the suggestion that there would be a bonus of $10,000 if the vessel was ready by 15 April 1996. On 5 March 1996 Pak Rudhy informed Mr King that he would endeavour to have the vessel ready to comply with Mr Montague’s request. On 13 March 1996 Kalla Lines wrote to Mr King stating optimistically that the vessel would be ready by mid-April and to make a commitment with Quality Livestock. On 18 March, Mr King wrote to Kalla Lines enclosing a draft charterparty that Mr Montague was willing to sign. That letter stated:
“This contract does not lock you [Kalla Lines] into a completion date.”
However, it did state that Kalla Lines would supply a date of readiness by 15 April 1996 and that “whatever date you give at this time will be legally binding under the terms of the Charter Party”. On 20 March 1996 the original copies of the charterparty signed by Mr Montague were sent by air to Kalla Lines, and on 23 March 1996 Kalla Lines signed the first charterparty agreement.
That charterparty shows that the broker or agent in respect of the charterparty is Glen King Marine & Trading Services, Post Office Box 1159, Townsville Qld, Mr King and his wife having moved from Darwin to Townsville prior to the execution of that charterparty. The covering facsimile enclosing the draft of that charterparty of 18 March 1996 reflects Mr King’s identification of the financial position of Kalla Lines at that time. The time and date of delivery in the covering page of the charterparty directs reference to special condition cl 22. The cancelling date is said to be 13 April 1996. Special Condition Clause 22 provided:
“The owners will endeavour to have the vessel ready to load in Darwin on or before the fifteenth of April 1996 and if not will give a notice of readiness before the fifteenth of April 1996 of a confirmed date to which this Charter Party will be covered.”
Clause 23 provided:
“This Charter Party will cover six (6) consecutive voyages from an Australian Port with the first voyage having a destination to a designated Indonesian Port. The charterers reserve the option for a further six (6) voyages with the option to be exercised before the commencement of the fourth (4th) and eighth (8th) voyage.”
Clause 24 provided:
“The charterers agree to pay a bonus (above the freight rates stated in clause 25) of US$10,000 on the first voyage starting on or before the fifteenth of April 1996.”
Clause 25 provided:
“Freight rates will be charged on a voyage basis as follows:-”
and there is set out various amounts denominated in US dollars from Darwin to various ports in Malaysia and the Philippines.
Clause 26 provided:
“Charterers to have the option to load to other destinations than mentioned, however, destinations and freight rates to be mutually agreed upon using a formula of US $6000-00 per day at a speed of 11 knots.”
On 16 April Pak Rudhy wrote to Mr Montague advising of further delay in departure of the vessel due to the docking timetable, and the facsimile continued:
“We fully wish to honour charter party as soon [as] possible and now date of arrival [in] Darwin will be before May 12th.”
Mr Montague in response on 16 April advised that his programme was to load on 3 May and that a further delay after this date would make it very costly and inconvenient. The facsimile advised:
“We have contracts in Indonesia to fulfil plus having programmed deliveries of cattle to Darwin with holding and feeding costs.”
On 23 April 1996 Mr King had flown to Jakarta and found that 90 per cent of the jobs that needed to be done to the ship were partially completed. On 24 April Mr Montague advised that Quality Livestock had commitments for six shiploads of cattle to Indonesia and had purchased over 7,000 cattle to cover the same. Mr Montague was advised by facsimile on 24 May 1996 of further delay and that the “‘Armada Ternak’ will be ready about the end of June”. On approximately 24 May 1996, Mr King had telephoned Pak Rudhy and expressed concerns that the owners of the “Armada Ternak” would end up in possible litigation with Mr Montague if they did not hurry to complete the work on the “Armada Ternak”.
On 12 May Mr Robinson of the Australian Maritime Safety Authority advised Mr King of deficiencies in the livestock capacity plan (‘LCP’) for the “Armada Ternak”; the plan needed to be reworked and represented. On 8 July 1996 Pak Rudhy wrote to Mr Montague indicating the vessel was not yet ready and that “we [are] unable to inform you exact time due to some of problem to fulfil standard of cattle carrier. We would like to suggest you to postpone/cancel this charter party than (sic) charter another vessel since our engineerings could not guarantee when the vessel will finish.”
Mr King was invited by Pak Rudhy to fly to Jakarta to attend sea trials on 20 September 1996. On 2 October Mr King and Mr Robinson flew to Jakarta. On 24 December 1996, Kalla Lines wrote to Mr King saying the vessel would be completed in January 1997 and requested that he go to Jakarta to inspect the vessel. A further request was made on 2 January 1997 to Mr King to go to Jakarta; he in fact he travelled to Jakarta on 22 January 1997 and noted a large number of defects.
On 29 January 1997 Mr King wrote to Kalla Lines indicating that Mr Montague would be ready to sign for a shipment on 29 February ex Darwin to Lampung and was willing to sign a charter for the following six consecutive voyages with an option for another six as long as a speed guarantee could be given. On 30 January 1997 Kalla Lines authorised Mr King to make a decision with whom the “Armada Ternak” was to be chartered.
In January and early February there were negotiations between Mr King and Mr Montague as to the second charterparty. On 4 February 1997 the second charterparty was sent to Kalla Lines and on the following day Kalla Lines wrote to Mr King stating that the speed should be 10-11 knots and the cancellation date 8 March 1997. The proposed sailing date ex Jakarta was 20 February 1997. In February 1997 Kalla Lines signed the second charterparty. Quality Livestock, after the failure of the owners of the “Armada Ternak” to present the ship in accordance with the first charterparty, exported a number of live cattle on various live cattle carriers at freight costs in excess of that which it would have had to pay had the “Armada Ternak” been used as the carrier.
The first charterparty had deemed the minimum pen area to be 1726 sq metres. The second charterparty deemed the minimum pen area to be 1823 sq metres, “pending clarification by an Australian Maritime Safety Authority surveyor before 26th February 1997”. Clauses 22 and 23 of the second charterparty provided:
“22. The owners will have the vessel ready to load in Darwin on or before the 1st of March 1997 and if not will give notice of readiness to the Charterer before the 20th February 1997 of a confirmed date to which this Charter Party will be covered.”
23. This Charter Party will cover six (6) consecutive [voyages] from an Australian port with the first voyage beginning in Darwin. The charterers reserve the option for a further six (6) consecutive voyages which is to be executed before the commencement of the fourth voyage. The charterer also reserves the option to be the first to negotiate further [blank] consecutive voyages which is to then [be] exercised before the tenth voyage.”
The freight rates specified in cl 4 were on some voyages greater and on some voyages lower than the freight rate charges set out in the first charterparty. Clause 25 provided:
“Charterers have the option to load to other destinations than mentioned, however destinations and freight rates to be mutually agreed upon using a formula of US $6,200 per day at a speed of 11 knots.”
And cl 27 importantly provided:
“The owners and the charterers agree that this charter party cancels any previous charter parties between the two and that no conflicts or litigation shall be possible from such previous agreements.”
The cancellation date for the second charterparty was specified as 28 February 1997. On 17 February 1997, Pak Rudhy informed Mr King that it would be another two days before BKI (the Indonesian Maritime Authority) would issue the certificates required for the ship. On 20 February 1997, Kalla Lines informed Mr King that there would again be delays because of testing of the electric generator and indicated that it was expected that the ship would sail on 28 February 1997. On the same day Mr King wrote to Kalla Lines saying that the information in the earlier facsimile of that day was totally unacceptable to himself and Mr Montague. On 21 February 1997 Kalla Lines wrote to Mr King advising that the vessel was still unready to sail, and was now expected to sail on 28 February, and Kalla Lines requested Mr King to ascertain whether Mr Montague was prepared to make an advance payment because the dockyards in Indonesia required payment of the balance of their account before releasing the ship, and Kalla Lines was not able to pay.
On 21 February Quality Livestock wrote to Mr King threatening legal action and said that Mr King would be responsible for cattle storage at $5.00 per head per day as from midnight on 28 February 1997. The letter said in part:
“The last time you involved me with the Armada Ternak, I suffered losses of $32 000 in excess payments for cattle storage as well as having to pay $22 500 more than your charter price for another short term charter vessel.
Although I signed your latest charter party in which I relinquished all right to litigate against your previous agreement, I will not suffer this same loss again.
As per my legal advice, I must inform you that I hold you responsible for the costs of cattle storage at $5.00 per head/per day as from midnight the 28th Feb 1997.
I shall take legal measures to recover these costs until such time as your Principal honor’s (sic) its agreement and the cattle successfully depart Darwin.”
[emphasis added]
On the following day, 22 February 1997, Mr Montague strongly rejected the request by Mr King that Quality Livestock pay in advance.
On 4 March 1997 the vessel left Jakarta, and on 7 March Kalla Lines informed Mr King that the expected time of arrival of the “Armada Ternak” in Darwin was 12 March. On 9 March Pak Rudhy informed Mr King that the vessel was delayed a further day as it had to stop for more lubrication oil at Kupang. The vessel arrived in Darwin on 13 March 1997 and Mr King found out that most if not all of the Port State Control items and Marine Order 43 items (that is to say the requirements of AMSA) he had requested be finished in Jakarta had not been started. Mr Robinson from AMSA inspected the vessel and prepared a report on 13 March, and on the following day made a further inspection and a further report. There were further inspections on 18 and 21 March 1997.
On 21 March 1997 the “Armada Ternak” left for Jakarta with 1299 head of Brahman steers for Quality Livestock. It is an accurate description to say that the voyage was very difficult. The daily reports from Kalla Lines shows the speed of the vessel was about 8.3 knots. On 25 March there was a report by the owners to Mr King that the vessel had a 4º list. Kalla Lines informed Mr King that the cattle were dying of stress because the flow discharge pipes were not running well. The vessel eventually arrived in Jakarta on 30 March 1997 and two men who had accompanied the cattle on the first voyage, Mr Dunn (an officer of AMSA) and Mr Larry Murphy (Australian stockman), wrote reports on the voyage. On 1 April 1997 Mr King inspected the ship and found the bottom deck was one metre deep in cattle manure. It took three days to clean the “Armada Ternak”. Mr King wrote to Kalla Lines regarding all the problems experienced on the voyage, setting out the repair works required and making suggestions concerning officers for the vessel.
On 13 April 1997 the vessel departed Jakarta and the owners informed Mr King that the arrival time in Darwin was 22 April 1997; the speed of the vessel at that time being 7.5 knots. On 17 April 1997 the consignee of the cattle of the first voyage wrote to the owners concerning non-delivery of fodder.
The “Armada Ternak” arrived at the five mile buoy outside Darwin on 22 April 1997 and took approximately three days to clean. On 25 April 1997 Mr King wrote to Kalla Lines concerning the extensive work required to be done on the vessel. On 6 May 1997 Mr King wrote to Mr Montague stating that the “Armada Ternak” would not be available to load at Darwin until Friday, 9 May, in the afternoon. On 14 May 1997, a notice of readiness was issued by the Master of the “Armada Ternak”, and on the following day the “Armada Ternak” departed Darwin.
In the course of the voyage, on 17 May 1997, Kalla Lines sent to Mr King a report of problems experienced on the vessel in relation to the overheating of engines. On 19 May Mr King advised Kalla Lines that the problems with the vessel were due to lack of maintenance to the ship’s running equipment during the 2½ years’ stay in Jakarta, as well as poor and inadequate supervision by the surveyor of the owner involved. In late May Mr Montague was advised that there had been a delay in arrival of the vessel. A truck cancellation fee was incurred and eight head of cattle had died on the voyage. The “Armada Ternak” in fact arrived at Lampung two days late on 25 May 1997. Quality Livestock paid $5,016 cancellation fees for trucks which had arrived on the date which had been given for the ship’s arrival. Later in May Mr Pankhurst wrote to Mr Montague describing the condition of the ship as appalling, and the quality of the cattle because of the voyage as poor.
On 19 June 1997 Mr King resigned as the agent of Kalla Lines, and on 23 June the “Armada Ternak” was arrested. On that same day, 23 June 1997, Quality Livestock wrote to Kalla Lines asking them to confirm that the vessel would be ready to load at Wyndham on 26 June at 7.00 am for a shipload of cattle to Tanjung Priok, as per the charterparty agreement. On 25 May Kalla Lines wrote to Quality Livestock stating they could not be ready to load on 26 June 1997. On 3 July the owners wrote to Quality Livestock stating that the vessel was not available to travel to the Philippines and suggested that Quality Livestock nominate an Indonesian port. On 19 July the owners wrote to Quality Livestock stating that when the ship was released they would load Quality Livestock’s cattle. In fact, the vessel sailed from Darwin, without cargo, upon its release from arrest on the lodging of a bail bond for A$1 million.
At no time did it receive approval of the LCP from AMSA and no further voyages were undertaken by Quality Livestock pursuant to the second charterparty.
I am satisfied that Quality Livestock is unable to maintain any claim for damages in respect of dealings with the owners of the “Armada Ternak” in respect of the first charterparty. Clause 27 of the charterparty provided:
“The owners and the charterers agree that this charter party cancels any previous charter parties between the two and that no conflicts or litigation shall be possible from such previous agreements.”
I accept that this clause amounts to a forbearance by Quality Livestock to sue, and requires consideration moving from the owners to make it binding. Clause 27 was inserted by Mr King, he says, to protect the owners of the “Armada Ternak” against possible litigation that may have arisen from the first charterparty.
The construction of commercial contracts requires a common sense approach. Commercial contracts may be expressed in an imperfectly worded document. Both charter parties here are obviously meant to be working documents, but they do not bedazzle by the felicity of the drafting. As was noted by the House of Lords in Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 at 201:
“... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business commonsense.”
“The words of the document must if possible be construed liberally so as to give effect to the intention of the parties”: Ivamy, Carriage of Goods by Sea 13th ed, p 135.”
In this particular case, the circumstances of the execution of the second charterparty were acknowledged by Mr Montague to include the fact that he was desperate for ships. In my opinion, he was prepared to enter into the second charterparty with (generally) higher freight rates, but with the relinquishment in cl 27, for that reason.
In my view cl 27 is not ambiguous and its effect was properly recognised by Mr Montague in his facsimile of 21 February 1997 to Mr King, where he said:
“Although I signed your latest charter party in which I relinquished all right to litigate against your previous agreement, I will not suffer the same loss again.”
It is contended on behalf of Quality Livestock that the consideration for cl 27 was the performance of the second charterparty and not the mere execution of it. I do not agree.
In McDermott v Black (1940) 63 CLR 161 Dixon J, as he then was, stated at 183:
“An agreement not to sue upon particular allegations might give a defendant a good equitable plea, but at common law it would be necessary for him to show that it amounted to an accord and satisfaction discharging the cause of action or else that it gave rise to an estoppel.
The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted the cause of action remains alive and unimpaired. The accord is the agreement or consent to accept the satisfaction. Until the satisfaction is given the accord remains executory and cannot bar the claim. The distinction between an accord executory and an accord and satisfaction remains as valid and important as ever. An accord executory neither extinguishes the old cause of action nor affords a new one”.
The forbearance to sue, expressed in cl 27 of the second charterparty was not dependent, in my judgment, on the performance of the second charterparty by the owners, but on the execution of it and was in consideration of the promises by the owners contained in it. The statement by Mr Montague just referred to highlights the connection between signing of the charterparty and the relinquishment of the right to litigate for breach of the first charterparty. It follows, in my opinion, that none of the three methods of assessing damages which Quality Livestock alleges flows from breach of the first charterparty is applicable.
Should I be wrong as to the effect of cl 27 of the second charterparty, I should indicate my opinion that the ambiguity in cl 23 of the first charterparty is to be resolved by reading it as a consecutive voyage charterparty for six voyages, with an option for a further six voyages, that option to be exercised before the commencement of the fourth voyage, so that the remaining words “and eighth voyage” are to be treated as surplusage.
It is clear, in my opinion, that the owners of the “Armada Ternak” are in breach of the second charterparty. The charterparty provides for a date for commencement, namely, 1 March 1997, with no timing for the balance of the voyages. Demurrage and despatch were provided for. It follows, in my opinion, that the voyages were to be undertaken one after the other with no periods of inordinate delay between such voyages. In breach of the second charterparty, the vessel did not attend until 21 March 1997 and did not re-present until 14 May 1997, despite the average turnaround time being approximately 15 days. The owners were in further breach by not presenting the ship for further voyages after 15 May 1997. I accept that, had the owners not been in breach in respect of the charterparty for six consecutive voyages, Quality Livestock would have exercised the option contained in that charterparty. Demand was high, the freight rates were cheap and were considerably below spot charter rates at about the time that the six further voyages would occur.
The only matter raised by way of defence is the claim by the owners that:
“The second charter party was made impossible of performance, and thereby frustrated, by reason of the ship failing to comply with the requirements of the Australian Maritime Safety Authority.”
The particulars promised before trial in respect of that failure have not been provided. The defence of frustration, in my opinion, does not apply here. Lord Radcliffe in Davies Contractors Ltd v Foreham Urban District Council [1956] AC 696, in a passage at 728-9, (cited with approval by the High Court in Codelfa Constructions Pty Ltd v State Railway Authority of New South Wales (1982) 149 CLR 337) said:
“..frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not that I promised to do.”
In Paal Wilson & Co v Partenreederei Hannah Blumenthal [1983] 1 AC 854, Lord Brandon of Oakbrook in the House of Lords (with whom Lords Diplock, Keith of Kinkel, Roskill and Brightman agreed) said at 909:
“...there are two essential factors which must be present in order to frustrate a contract. The first essential factor is that there must be some outside event or extraneous change of situation, not foreseen or provided for by the parties at the time of contracting, which either makes it impossible for the contract to be performed at all, or at least renders its performance something radically different from what the parties contemplated when they entered into it. The second essential factor is that the outside event or extraneous change of situation concerned, and the consequences of either in relation to the performance of the contract, must have occurred without either the fault or the default of either party to the contract.”
In the circumstances of this case, the failure to satisfy the AMSA requirements cannot avail the owners because such requirements cannot sensibly be described as “outside events” or as an “extraneous change of situation”. The failure to meet such requirements was the fault of the owners. The owners and Mr King knew of the requirements of AMSA before the signing of the second charterparty and there were detailed discussions between Mr Robinson of AMSA and Mr King in relation to the AMSA requirements prior to the second charterparty being entered into. Mr Robinson had in October 1996 inspected the ship in Jakarta and provided a list of works to be undertaken; most of such works were not carried out. Pak Rudhy acknowledged the facsimile that Mr King had sent to him, enclosing the report from Mr Robinson showing what had to be done. The evidence indicates that the requirements of Mr Robinson were translated into Indonesian.
It may be noted that the first two voyages occurred without the approval of AMSA. It may be that further voyages might have been possible as long as attempts were being made to satisfy the requirements of AMSA. In the circumstances of this case, that did not happen.
As to damages, the “Armada Ternak” was supposed to load on 17 March 1997 but did not present until 21 March 1997, and $12,827.60 was incurred on agistment. I think, however, that this extra expense was the subject of a compromise whereby $5,000 was deducted by Quality Livestock from the amount of the freight charge, that amount being “for holding expenses incurred by QLA”. I think the evidence of Mr Montague, who impressed me as a thoroughly honest and decent witness, and who said that he thought the $5,000 related to the costs of stockmen on the vessel but conceded that he might be wrong, supports the conclusion in respect of this amount
In The Aragon (1975) 2 Lloyds Rep 216, Donaldson J said:
“Charter parties are like any other contract and must be construed as such. Their true construction is a matter of law not fact. The duty of the Court is to ascertain the presumed common intention of the parties, to be deduced from the words used and the background to the transaction.”
Calculation of Damages
In respect of an action against a shipowner for not furnishing a ship to receive cargo under a charterparty, if the charterer in fact charters a vessel to replace her, the excess freight he has to pay will be, prima facie, the measure of damages: Featherston v Wilkinson [1873] LR 8 Ex 122. In Carver “Carriage by Sea” 13th ed, vol 2, para 2176 dealing with the damages payable when a ship owner fails to supply a ship or take in goods as agreed, the learned author says:
“The freighter loses the benefit of the agreed means of conveyance. He can, however, ordinarily obtain other means; but that may involve delay, and also increased freight. If so, he is entitled to recover the amount of the extra freight and charges to which he may be put, and also compensation for the delay in the transit.”
Various methods were suggested in the alternative by Quality Livestock as to how the extra freight loss might be calculated. The first method analyses a number of voyages in which a total number of cattle were shipped, obtaining a price per head of beast and comparing the price for the freight of those cattle on the “Armada Ternak” and arriving at a cost per head. The second method propounded was to consider the additional charter fees paid for the next ten voyages. The third alternative method was the calculation of the additional charter fees paid for what was said to be substitute voyages based on the assertions in para 29A of the statement of claim.
It has to be accepted that the real problems a plaintiff has in assessing the extra freight paid where there has been default in supplying vessels for a number of voyages have to be approached benevolently. The price of vessels varied during the period in which substitute transport had to be obtained, as did the size of the ships used; what freight the owner wanted for it; what the charterer could afford to pay; and what the charterer thought it could be chartered for. Because of the failure to supply the “Armada Ternak”, the plaintiff was forced to charter at spot rates, which are, I accept, higher than the freight rates that would be charged on a continuous voyage charterparty. In this particular case, at the time of the second charterparty, the default of Kalla Lines left Quality Livestock in a position where it had to ship a lot of stock in a short period to meet outstanding orders. The original timetable of Quality Livestock had voyages reasonably spread out, being about two per month. In fact, in May 1996, three shipments and one partial shipment were made, all being reasonably close together. All of these factors make it very difficult to say what shipments the “Armada Ternak” would have taken and what vessels were in fact engaged to undertake the shipments in substitution.
I accept the evidence of Mr Montague that the procedure he adopts is to sell the cattle to purchasers before he actually acquires the cattle for shipment. As a general rule, of course, as stated by Parke B in Robinson v Harman [1848] 1 Ex 850 at 855; 154 ER 363 at 365:
“.. where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation with respect to damages, as if the contract had been performed.”
The assessment required here is difficult. It cannot be sensibly said that exactly equivalent substitute voyages were able to be obtained in respect of each of the proposed voyages by the “Armada Ternak”. In those circumstances the Court is required to do the best it can to be fair to both parties.
In Commonwealth v Amann Aviation (1991-92) 174 CLR 64 at 118, Deane J said:
“In many cases, proof of the full extent of the loss or injury sustained will involve establishing an evidentiary foundation for positive and detailed ultimate findings by the court upon the balance of probabilities. There are, however, cases where considerations of justice or the limitations of curial method render ultimate findings, about what would have been or will be, impractical or inappropriate. In such cases, damages must be assessed on some basis other than findings about what would have ultimately happened if the repudiation or breach had not occurred or about the precise ultimate implications of the situation which exists after the repudiation or breach. In particular, it may be appropriate that damages be assessed by reference to the probabilities or the possibilities of what would have happened or will happen rather than on the basis of speculation that probabilities would have or will come to pass and that possibilities would not have or will not...”
Mason CJ and Dawson J said in that case, at 83:
“The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can. Indeed, in Jones v Schiffmann Menzies J went so far as to say that the “assessment of damages...does sometimes, of necessity involve what is guess work rather than estimation”. Where precise evidence is not available the court must do the best it can. And uncertainty as to the profits to be derived from a business by reason of contingencies is not a reason for a court refusing to assess damages.”
Toohey J at 138 in Amann (supra) recorded with approval the statement of Bowen LJ in Radcliffe v Evans [1892] 2 QB 524 at 532-533:
“As much certainty and particularity must be insisted on...in...proof of damage, as is reasonable having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry.”
While the legal representatives for Quality Livestock were at pains to present a scenario of voyages that, it was said, could be fairly regarded as substitute voyages as their preferred method of computation, Mr Montague personally did not see that as the preferred method of calculation of the extra freight incurred by the non-presentment of the “Armada Ternak”. He approached his preferred assessment on the basis that under the “Armada Ternak” he would have been able to ship a certain number of cattle at a certain cost; he shipped the same number of cattle for the higher amount; the difference is a fair indication of the measure of his loss. I agree that this approach provides a fair basis for assessment of the extra freight paid.
It is clear that the number of cattle to be carried on any particular voyage is a function of the pen area of the ship and the pen area per beast, which is in turn a function of the weight of the beast. On 21 March 1997 the “Armada Ternak” left Darwin on the first voyage with 1299 head of Brahman steers. On 14 May 1997, the vessel left Darwin on the second voyage with 1223 head of cattle.
Mr Montague has sworn to a schedule which lists “the voyages which the Armada Ternak would, in all probability, have made had the contract been performed”. It is recognised that the schedule which I set out below with modifications encompasses vessels which are bigger, or smaller, than the “Armada Ternak” in terms of carrying capacity. In this regard, voyage 42 by the “Murray Express” carried 1318 cattle; voyage 46 by the “Sahiwal Express” carried 910; voyage 48 the “Kerry Express” 1829; voyage 52 by the “Friesian Express” 1927; and voyage 54 with the “Camilla” 911. As those figures show, both the “Kerry Express” and the “Friesian Express” were large cattle transporters. The “Murray Express” and the “Bison Express” by comparison with the “Armada Ternak” are very fast ships, being able to travel at 17 or 18 knots. Having regard to the variations in the cattle numbers, and accepting that on a ‘swings and roundabouts’ basis the size of cattle would roughly even out over the various voyages, I accept that the ten non “Armada Ternak” voyages in that schedule represent a fair basis of comparison between what would have been achieved had the owners of the “Armada Ternak” complied with the second charterparty, as compared with the cost to Quality Livestock of having to make alternative arrangements to ship an equivalent number of cattle by the voyages which would have been the subject of the voyages in the second charterparty not undertaken.
There are two amendments to the schedule as set out below from that which originally appears in Mr Montague’s affidavit evidence. In respect of the first voyage, voyage 42, it was accepted that the “Armada Ternak” freight figure would have been US$89,000 for that voyage, with the corresponding additional cost being US$51,000; and in respect of voyage 4 of 1997, while there were differences that came out of the evidence, I think it fair to accept that the “Armada Ternak” freight would be likely to be calculated at US$130,000, meaning that there would be no additional cost in respect of that voyage. That schedule is as follows:
Date Ref # Ship Destination Paid Freight Armada T Addit’n.
10.03.97 # 42 Murray X FRE/Cilicap US $140,000 US $89,000 US$51,000 21.03.96 # 43 Armada T DRW/TJ Priok US $89,000 US $89,000 15.04.96 # 46 Sahiwal X DRW/JKT US $99,000 US $89,000 US$10,000 05.05.97 # 48 Kerry X DRW/JKT US $180,864 US $89,000 US$91,864 15.05.97 # 47 Armada T DRW/Panjang US $88,500 US $88,500 05.06.97 # 52 Friesian X DRW/Panjang US $192,542 US $88,500 US$88,500 24.06.97 # 54 Camilla DRW/Panjang US $102,000 US $88,500 US$13,500 08.07.97 #01/97 Friesian X DRW/Cilacap US$4145,000 US $82,500 US$62,500 25.07.97 #04/97 Carabao 1 Karumba/Subic US $130,000 US$130,000 19.08.97 #05/97 Anomis DRW/TJ Priok US $110,000 US $89,000 US$21,000 04.09.97 #07/97 Bison X DRW/Cilacap US $139,750 US $82,500 US$57,250 15.09.97 #09/97 Amelia DRW/Cilicap US $89,000 US $82,500 US$ 6,500
The additional freight to be derived from that schedule in respect of the extra voyages totals US$402,114.
In addition to the amounts for additional charter fees of US$402,114, I accept that the claim for loss on the fodder in respect of the first voyage should be allowed in the amount of US$2,484, which was the amount claimed against Quality Livestock by the consignee of the cattle on the first voyage. I also accept that Quality Livestock is entitled to damages for the extra costs of agistment from 29 April 1997 to 15 May 1997 caused by the late arrival of that vessel being calculated at 1223 head x 16 days x A$2.50, making a total of A$48,920. I further accept that Quality Livestock incurred a liability, being a cancellation fee of US$5016 with respect to trucks which had to be stood down by reason of the late arrival of the “Armada Ternak” on its second voyage.
The total for damages based on the above figures is US$409,614 (being US$402,114 plus US$2,484 plus US$5,016), and A$48,920.
Quality Livestock is also entitled to interest on its damages. It is not suggested that 10 per cent is an inappropriate rate to apply. The twelve voyages contemplated by the second charterparty would have in all probability occurred from the beginning of March to the end of August 1997. Adopting a rather broad brush approach, I think it fair to the parties if I award interest at 10 per cent on US$409,614 from 1 July 1997 to the date of judgment, an amount of US$39,254 making a total for judgment in US dollars, rounded down, of US$448,800.
In addition there should be judgment in Australian dollars of $48,920, together with interest of A$5,197 (being based on 10 per cent on $48,920 from 8 May 1997 to date of judgment), making a total amount for judgment in Australian dollars, rounded down, of A$54,100.
I will hear the parties on the terms of the order I should make, consistent with these findings. The plaintiff should have its costs, including reserved costs, to be taxed if not agreed.
The owners of the ship seek by way of cross-claim in proceedings QG 152 of 1997 an indemnity for any sums that they are obliged to pay to Quality Livestock. For reasons which appear later there is no merit in that claim for an indemnity and the cross-claim in proceedings QG 152 of 1997 is dismissed, with costs, including any reserved costs.
Proceedings QG 82 of 1997
Some of the facts relevant to these proceedings appear in the facts found in the other proceedings.
Mr King and his wife commenced trading as Glen King Marine & Trading Services from about October 1994 whilst they were living in Indonesia. On returning to Darwin, the partnership was registered with the Northern Territory Department of Law Business Registration and initially conducted business from 26 Mullens Garden, Anula, a suburb of Darwin. Mr King first met Pak Jusuf Kalla and Pak Rudhy of Kalla Lines in July 1992.
Pak Jusuf Kalla is the President of Kalla Lines, which is part of the NV Hadji Kalla group of companies (‘Hadji Kalla’). Hadji Kalla has a large number of investment companies, business interests and projects. Mr King in Indonesia had operated out of an office in the Kalla Lines building in Ujung Pandang. Kalla Lines purchased “MV Armada Ternak” on 3 November 1994 for Rph 500 million with the intention of converting it to a livestock carrier and operating between Australia and, in particular Darwin, and Indonesia. Pak Jusuf had an estimate for the conversion, suggesting it would cost Rph 1 billion, but in fact more than approx Rph 6.9 billion was spent on the ship in the docks in Jakarta.
Pak Jusuf Kalla was President of the company. The managing director, who previously had been Pak Syukri, was Pak Rudhy for most of the period and, in particular, the latter period of the events with which these proceedings are concerned. Pak Rachmat had been the superintendent engineer, but he was replaced by Pak Ramadhan. There had been a request by Pak Rudhy of Kalla Lines in August 1994 sent to Mr King’s then employers, Perkins, requesting the supply of marketing information, freight rates and Australian regulatory requirements in respect of the operation of a cattle ship from Indonesia to Australia. Over the next few months there was a deal of correspondence as well as the indication by Perkins that it would withdraw from the Indonesian market by the end of 1994. Mr King suggested on about 18 October 1994 that he act as a consultant in relation to the marketing and operation of the ship for Kalla Lines as well as handling the associated costs for the ship when loading in Darwin or other Australian ports.
In respect of the conversion Pak Jusuf said:
“As I knew it would be necessary for the ship to pass the more strict requirements of AMSA (in comparison to Indonesia’s Biro Klasifikasi Indonesia (‘BKI’) standards) for the ship to operate out of Australian waters, I was concerned to ensure that such requirements would be met.”
A consultancy agreement dated 20 January 1995 was prepared and signed. At about that time, a number of suggestions were made by Mr King concerning the conversion, many of which were not in fact acted upon. Pursuant to the agreement, Mr King was to be paid the sum of $6,000 a month plus all expenses incurred with this consultancy, to commence on 1 January 1995. The agreement provided:
“Payment for Mr Glen King’s accounts shall be paid in full within 14 days of receipt of Invoice.”
Fourteen days written notice by Kalla Lines was required to terminate the agreement.
Mr King flew to Jakarta on 17 May 1995 and remained there until 2 June 1995, during which period he had meetings at the dockyard and with the contractors working on the ship and the staff of Kalla Lines to identify why progress on the conversion of the ship was so slow and why he had not received drawings and information required by him to complete the LCP. The ventilation system on the vessel was never completed according to the drawings and recommendations of Mr King. In the visit by Mr Robinson in October 1996, the completion of the ventilation system was an item on the repair list required by AMSA and, contrary to information received from Pak Rudhy in February 1997, the ventilation system had not been completed on the ship’s arrival in Darwin in March 1997. The original specifications of the ship nominated a speed of 12 knots and, as part of the complete overhaul of the engines, Mr King directed that the engines in their rebuilding should be set back to the original specifications.
An invoice for Rph 19.4 million for services rendered for the month of January 1995 was forwarded in February 1995 to the Ujung Pandang office of Kalla Lines.
In a facsimile of January 1995 it was recorded that expenses in relation to Mr King’s travel were to be paid on production of travel summaries and all receipts in relation to meals, drinks, tips and taxis would be necessary. It was acknowledged that the Stability Book was to be produced by Pak Pasrul, an engineer with Kalla Lines, while the LCP was to be produced by Glen King Marine & Trading Services. Any consultancies required to have this document accepted were to be to Kalla’s account. The standard of work and equipment in relation to the “Class” requirements, (which is the grading of the ship by a classification society which is necessary for a ship owner to obtain insurance cover) and in relation to SOLAS requirements, (being the International Convention pertaining to safety of lives at sea) was to be the responsibility of Kalla Lines.
In February 1995 Mr King organised visas for Kalla employees to enter Australia, and there were a number of meetings in which the marketing of the ship, drawings and recommendations for the LCP, including water capacity, fodder space, ventilation and cattle pen layout, was discussed. There were a number of meetings and correspondence between Mr King and AMSA. Further monthly invoices were sent in March 1995, which included the outstanding moneys owed from January. On about 22 March, an Australian dollar amount was received by a direct deposit, which was accepted by Mr King as part payment of the January 1995 invoice. Mr King visited Jakarta between 17 and 20 March 1995, and there were discussions concerning aspects of the conversion. On that occasion he saw the fixed ballast in No 2 tanks port and starboard. Much of this was later found to have been removed.
There were discussions on that occasion with Pak Jusuf in which Pak Jusuf told Mr King that he would push Pak Rachmat to complete the vessel as quickly as possible so that Mr King could obtain a firm contract. At that meeting, Pak Rudhy indicated that the vessel would be available at the latest by June 1995 and Pak Jusuf instructed Mr King to try to get a contract for that date. In the ensuing months there was further correspondence between Mr King and various officers of Kalla Lines. At the end of April Mr King telephoned indicating concern for payment for his invoices rendered to date. On about 16 May, Mr King flew to Surabaya to meet with Pak Rudhy as representative of Kalla Lines and delivered to him a copy of the cumulative April 1995 account which totalled Rph 53,724,925. Mr King was pressing for payment as he was under pressure from the mortgagee of his home. At the end of May, correspondence from Mr King and from Mrs King indicated the significant financial pressure they were under as a consequence of non-payment of the monthly invoices. On about 16 June, the cumulative May account, less a payment of Rph 10,000,000 received on 2 June 1995, which account totalled Rph 64,159,676 was forwarded to Kalla Lines. There is a great deal of correspondence seeking payment of these amounts.
On or about 1 July 1995, a facsimile from Pak Syukri, then managing director of Kalla Lines, stated that Mr King’s consultancy would not be extended. On telephoning him, Mr King was informed that there was still a lot of work to be done to complete the conversion and that Mr King would be reinstated once a completion date was given. He continued to press for payment of the money. On about 10 July, Mr King telephoned Pak Jusuf and discussed with him a variation or alternative consultancy fee arrangement where he would be paid Rph 10 million per month by Kalla Lines up until the commencement of the operation of the “Armada Ternak” as a means of paying out his outstanding fees and that, according to Mr King, he operate on a costs only plus 10 per cent mark-up on disbursements until that stage. A cumulative invoice for July 1995 of fees to date less payment received on 8 August 1995 showed a balance owing of Rph 70,713,095. Invoices were later sent for August, September and October. On 18 November, Mr King sent a facsimile to Pak Jusuf stating that, unless payment was received, he would have to sell his house. There were further complaints about non-payment and the Kings sold the house on 10 December 1995, settlement occurring on 20 January 1996.
In February 1996 Mr Montague requested Mr King to approach Kalla Lines with an agreement so as to tie up the ship to make sure it was his. A facsimile was sent by Mr King to Pak Rudhy in early March, indicating that there was a serious offer for charter of the “Armada Ternak”, the date 15 April 1996 being the date from which Mr Montague wished to charter the ship. As earlier indicated, the first charterparty was executed on 20 March 1996. The variation of the consultancy agreement is suggested in a hand printed facsimile by Mr King of 10 July 1995. That facsimile contained the statement:
“I can fully understand that you did not budget for my consultancy to last this long...”
He referred to the suggestion that until the “Armada Ternak” nears completion, Mr King’s consultancy fees for the meantime should be reduced, and he would be willing to negotiate terms for July and August or until he was required again. In the second page he said:
“I would be willing to continue this work on a cost only basis...”
The letter contained a request:
“I would dearly appreciate any payment of my account you could make.”
and concluded:
“Ps help with some payment if possible.”
There is no mention of a 10 per cent surcharge in the offer in this document.
Mr King flew to Jakarta about 23 April 1996 and found that “90 per cent of the jobs that needed to be done were partially completed”. Mr King says that he was assured by Pak Rachmat and the dockyard management and contractors that the time to complete these tasks was minimal, as the required equipment had been purchased. A draft copy of the LCP was forwarded to Mr Doug Robinson of AMSA Darwin office on 2 May 1996, and in July 1996 Mr King had a number of telephone conversations with Mr Montague concerning the losses sustained as a result of the failure of the “Armada Ternak” to be available for charter as has been agreed. Mr King says that Mr Montague told him that he was willing to postpone the date from which the charterparty was to commence until the ship was ready. Mr King informed Kalla Lines of this by facsimile on 21 July 1996.
The general agency agreement was executed in May 1996, and provided that all previous agreements and arrangements were to be cancelled but without any prejudice to any rights which had already accrued thereunder to either party. That agreement, so far as commission was concerned, provided that:
“The company (P.T. Kalla Lines) shall pay or allow to be paid to the agent (Marine and Trading Services) in consideration for their services to the Company a commission of three and a half percent (3 1/2 %) per voyage charter as paid by the Charterer under the terms of the charter party.
This payment plus disbursement costs and communication costs plus 10% will be deducted from the charter payment on a per voyage basis, before the said funds are transfered [sic] to the Jakarta bank account of the Company.”
After the inspection of the vessel in Jakarta by Mr King and Mr Robinson, check lists were prepared and provided for the works to be undertaken to meet the requirements of AMSA. On 29 October 1996, Mr King sent a facsimile to Pak Rudhy informing him that:
“I am still organising quotes etc for a lot of the work to be done in Australia.”
That facsimile said in part:
“The following pages are a complete list of work to be carried out to finish all the cattle installation work. These pages show the jobs that I will organise here in Darwin and a quoted price for each job. All costs incurred through Marine and Trading Services will include a 10 per cent service fee and shall be payable on receipt of the first B/L. All work will be organised by myself and will take no longer than ten days after arrival in Darwin.”
The second charterparty was executed on 6 February 1997. On 13 March 1997 the “Armada Ternak” arrived in Darwin for the first time, but most, if not all, of the requirements for AMSA had not been complied with. Pak Ramadhan, the director of Kalla Lines and a qualified engineer, indicated in his evidence that, following the inspection by Mr Robinson in October 1996, he, Pak Ramadhan, believed that it would take six months for the ship to have the work identified in Mr Robinson’s report subsequently completed. In January 1997, before Mr King departed Jakarta, Pak Ramadhan advised Mr King that he expected the remaining work to the ship could be completed within two weeks. Before the departure from Jakarta of the ship for the first time, Pak Ramadhan had advised Mr King that some, but not all, of the work required to be done had been completed. He said:
“The majority of the work was unable to be completed because of the poor financial position of Kalla Lines. There was simply not enough moneys available to purchase necessary materials or parts, nor to pay the various contractors.”
The first voyage from Darwin commenced on 21 March 1997. On 30 March 1997 Pak Rudhy phoned Mr King requesting him to come to Jakarta as the sewerage pump was not working and the captain of the ship did not wish to sail to Darwin as it would take too long in Darwin to clean the ship. On 13 April 1997 the vessel departed Jakarta and arrived in Darwin on 22 April 1997. Quite extensive work was done on the ship in Darwin, organised by Mr King. She departed on the second voyage to Lampung on 15 May 1997, and arrived in Lampung on 25 May 1997 and returned to Darwin on 11 June 1997, and was arrested on 23 June 1997.
Pak Jusuf said, in relation to the terms of commission in the second agreement, that while he had not agreed the rates for his [Mr King’s] commission and expenses under the agency agreement with Mr King, he had seen the agency agreement and, in particular the appendix, after it had been signed on behalf of Kalla Lines by Pak Rudhy. He said:
“Although I have not agreed these amounts with Mr King, I thought that the amounts of the commission in the agreement were in accordance with usual industry standards and that it was a standard agreement. I therefore had no concerns about the agreement, and let it stand.”
Pak Jusuf said that: “Because much of the repairs required to be done in Darwin was work that was supposed to have been completed in Jakarta (as stated to me by Mr King in various facsimiles), and if the ship returned there it was expected that these repairs would be done without charge to Kalla Lines, my fleet director, Pak Ramadhan, recommended that I return the ship to Jakarta for the repairs to be done there. In spite of this recommendation and because of Mr King’s constant assertions that the work would be done better and faster in Darwin, I agreed that the work would be done in Darwin”.
He later said that in his discussions with Mr King:
“... I always understood from Mr King that the repairs that needed to be done to the ship would cost no more than $500,000.”
The cost of the repairs he understood would come out of the charter fees for five voyages of the ship, apart from moneys to pay for associated expenses of the voyages themselves. He says that if he had known how much money he would have to pay out for the repairs, he would have had the ship returned to Jakarta for the repairs in March 1997. Pak Jusuf says that he regarded Mr King’s involvement in the repairs to be done to the ship as being outside of his original consultancy agreement (which had come to an end when he signed the agency agreement) and outside of his appointment as agent.
On 26 March 1997 Pak Jusuf sent a facsimile to Mr King in the following terms:
“Thank you very much for all the kind assistance that you and your team do to us since our ship anchored in Darwin until left for Jakarta. We are really appreciate it.
Considering all of the major points which have to be concerned I agree with you that it is better to repair Armada Ternak in Australia.”
On 2 June 1997 Mr King sent a facsimile to Pak Jusuf, which communication said in part:
“Total of account for Armada Ternak for May is A$987,095.31. As per my report which was received in Kalla Lines office on the 17.4.97, work that was required to be carried out on the vessel on Voyage Two totalled US$753,000 but as per my phone conversation to you a few days later an actual figure would be closer to A$600,000.
The quote at this time did not include painting of the entire hold areas which were severley [sic] corroded due to a poor quality paint and application in Jakarta Dock. The actual figure for these repairs including the paint work totalled A$678,000 which is still well within the range of my quote to you. At no stage did yourself or Pak Rudhy indicate to me that approval for this work needed to be given and as the vessel could not sail without this work being completed then it was natural that the work be done as quickly as possible.”
In June 1997 there was a great deal of correspondence concerning the payment of moneys that had been expended, and on 17 June 1997 Mr King received a transfer of US$250,000 from Kalla Lines, which was used to pay creditors of the ship. On 19 June, Mr King sent a facsimile to Pak Jusuf stating that he was resigning as agent for Kalla Lines and that the ship would be arrested on 20 June.
Mr Camello, a qualified accountant with Kalla Lines, travelled to Darwin, but he arrived without any amount of US$150,000 as had been earlier agreed, according to Mr King. Fruitless negotiations ensued and Mr King had the vessel arrested on 23 June 1997. On 30 June it was agreed that Mr King’s accounts would be audited by Deloitte Touche Tohmatsu in Darwin with the assistance of Mr Ron Halstead, a Darwin based Lloyds surveyor.
Mr King says in his affidavit that:
“Any time I engaged a contractual supplier, I informed he, she, or if a company, a representative of that company, that I was the agent of Kalla Lines, an Indonesian company who was the registered owner of the Armada Ternak. On my business cards at that time I had this agency noted on the card which I provided a copy to for most creditors.”
Against that background, I turn to consider the plaintiff’s claim for moneys owing.
The plaintiff’s claim for damages in proceedings QG 82 of 1997 is based on the corrected amount of the June 1997 invoice supplied, as audited by Deloittes. It is agreed that the corrected figure for that invoice is $923,299.37. Exhibit 16B deals with the plaintiff’s claim for damages based on that amount. On that gross sum credit is given for amounts paid by Kalla Lines direct to creditors. When credit is given for that amount, the balance is $597,066.50. After credit is then given for accounting errors and for corrections on conversion rates and for other matters, the figure is further reduced to $503,275.25. The vast bulk of this sum depends on the plaintiff’s entitlement to be paid for the cost of the work done on the vessel in Darwin, plus 10 per cent of the cost of that work.
There is no argument that whatever is the correct figure for that amount there is to be added $4,517.12 for invoices from third parties since the Deloittes audit in respect of work done to the vessel; fees and disbursements incurred in respect of proceedings by Skilled Engineering Limited against the plaintiff of $4,621.40; legal costs incurred by the plaintiff in defending proceedings brought by Skilled Engineering Limited of $4,798; and costs and expenses in relation to the Brambles claim of $441. In addition to these modest sums, the plaintiff claims losses from the first charterparty of $115,718.75, losses from the second charterparty of $52,500, plus a claim, which in final submissions was advanced as an alternative quantum meruit claim to the 10 per cent surcharge claim, in respect of the preparation of the LCP of $100,372.
In respect of the LCP claim, there is no contractual basis for it and it is significant that the plaintiff never invoiced the defendant for this claim. It did not emerge in the Deloittes audit process and was never claimed against the defendant prior to delivery of the statement of claim. Whatever was the work done in respect of the LCP, it was all done in circumstances where there was an effective contract in place which regulated the relationship between the parties. In those circumstances, in my opinion, a restitutionary claim is not open: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 234,256; Monks v Poynice Pty Ltd (1987) 8 NSWLR 662 at 664. In fact, no LCP was produced which gained approval of AMSA.
So far as the quantum of the claim is concerned, the evidence is wholly unreliable. Mr King admits that the figures for hours identified in respect of this aspect of his claim was “pulled out of the sky”. No evidence was given by Mrs King as to the work that she did and no basis advanced to support the figure claimed of $30,000 which is said to be the amount for work which she is said to have performed. There is no verification by way of time sheets, documentary records or other reliable evidence which support the claim. Moreover, there are amendments in the diary of Mr King which clearly suggest that figures have been altered to suit his claim. There is simply no evidence on which reliance can be placed to conclude that any amount represented a reasonable remuneration for the plaintiff’s work in respect of the LCP.
In respect of the claim for a 10 per cent surcharge, the agency agreement, which appears as Exhibit PRS8 to the affidavit of Pak Rudhy Syahruddin, in addition to a commission of 3½% per voyage charter, further provided:
“This payment plus disbursemsnt (sic) costs and communication costs plus ten percent (10%) will be deducted from the charter payment on a per voyage basis, before the said funds are transfered (sic) to the Jakarta bank account of the company.”
In my opinion, and despite the absence of any strong support from counsel, this agency agreement provided for a 10 percent loading on communication costs, but the loading did not apply to disbursement costs. The sentence is ambiguous, but it is telling that two full years from January 1995 to December 1996, Mr King made no claim on any of its invoices of a 10 per cent surcharge on any expense, other than for phone and facsimile expenses; that is to say, communication costs. I recognise that the 10 per cent loading on communication costs predated the agreement, because those loadings were charged in the invoices from January 1995, but the absence of any loading in respect of disbursements after May 1996 is significant.
Next, in relation to the October 1996 agreement, it will be remembered that Mr King, by facsimile on 29 November 1996, indicated that a 10 per cent service fee would be charged on all expenses by way of repairs. Pak Rudhy, in his oral evidence, agreed that on 17 April 1997 Mr King forwarded by facsimile a full report of jobs that needed to be completed next voyage in Darwin. That facsimile referred to a total of US$753,000, but continued that, as instructed by telephone, the repairs should cost only around A$600,000, but this did not include the cost to repaint the entire inside of the vessel, which “we did not know required repair at this stage”. Pak Rudhy was asked:
“It is the case, is it not, that when Mr King spoke to you about repairs costing $600,000, after he told you that, it was found out that there was a lot more work that had to be done to the vessel, that is right, is it not?”
To which Pak Rudhy replied:
“Yes.”
He was asked:
“And you told him it was all right for him to do that extra work?”
To which Pak Rudhy said:
“Yes. As long as requested by AMSA.
“As long as it was work that had to be done to satisfy the AMSA requirements?.”
“Yes”.
I am satisfied that there was express authorisation by Kalla Lines for Mr King to arrange for very extensive repairs to be done in Darwin.
With regard to the facsimile of 29 October 1996 and the subsequent dealings, including the delivery of invoices with the 10 per cent service fee by way of repairs prior to the doing of further work, I am satisfied that the agreement between Kalla Lines and the plaintiff permitted Mr King to charge 10 per cent of the repairs that Mr King arranged, as well as in respect of communication costs.
I do not accept that the entitlement in respect of the repairs (and the other costs), were not liable to be paid by Kalla Lines, but could only be derived from charter payments. The relevant clause in the agency agreement, in my opinion, on its proper construction permitted the agent to do something which he was not otherwise allowed to do, namely, make deductions of fees and expenses before remitting charterparty payments to the principal. The clause, in my opinion, did not prescribe the only way in which the plaintiff could receive payment of the moneys for which the defendant became liable; it entitled him to deduct amounts owing to him from charter payments before remitting any balance to the Jakarta bank account of the defendant.
Further, I do not accept the contention by the defendant that Mr King is not entitled to recover from the defendant in respect of unpaid creditors who performed work on the ship. The general rule, I accept, is that:
“In the absence of other indications, where an agent makes a contract, purporting to act solely on behalf of a disclosed principal, whether named or unnamed, he is not liable to the third party on it”: Bowstead on Agency 15th ed, Article 104.
The mere fact, however, that a person acts as agent and is known to do so does not necessarily negate his involvement in the transaction. In Yeung Kai Yung v Hongkong and Shanghai Banking Corporation [1981] AC 787, Lord Scarman said at 795:
“It is not the law that, if a principal is liable, his agent cannot be. The true principle of the law is that a person is liable for his engagements (as for his torts) even though he is acting for another, unless he can show that by the law of agency he is to be held to have expressly or impliedly negatived his personal liability.”
The fact that a principal is a foreign principal is, in my view, a relevant factor to be taken into account in determining whether or not the agent is under a primary liability to the third party. In Teheran-Europe Co Ltd v S T Belton (Tractors) Ltd [1968] 2 QB 545, Diplock LJ said at 558:
“...the fact that the principal is a foreigner is one of the circumstances to be taken into account in determining whether or not the other party to the contract was willing, or led the agent to believe that he was willing, to treat as a party to the contract the agent’s principal, and, if he was so willing, whether the mutual intention of the other party and the agent was that the agent should be personally entitled to sue and liable to be sued on the contract as well as his principal. But it is only one of many circumstances, and as respects the creation of privity of contract between the other party and the principal its weight may be minimal, particularly in a case such as the present where the terms of payment are cash before delivery and no credit is extended by the other party to the principal. It may have considerably more weight in determining whether the mutual intention of the other party and the agent was that the agent should be personally liable to be sued as well as the principal, particularly if credit has been extended by the other party.”
In the circumstances of this case, while Mr King disclosed the agency on behalf of the owners of the ship, he gave evidence, which I accept, that he is and remains liable to pay the third parties. His evidence was that he would pay them and that he would then be reimbursed by the defendant. The vast majority of the invoices and statements rendered by the third parties were directed to the plaintiff without any mention of the defendant, and a number of the creditors have proceeded to obtain judgment against the plaintiff. I am satisfied that the intention of the third parties when entering into the works contracts on the ship was that they would seek and receive payment from the plaintiff.
From the conclusion expressed above, it is not strictly necessary to deal with whether disbursement costs, as Mr David Logan for the defendant submitted, should be confined only to those where money has in fact been expended, and does not extend to situations where a liability has been incurred but remains unpaid. While in its ordinary meaning “disbursement” means “that which is disbursed; money expended”, (from the Macquarie Dictionary definition) and “disbursement costs” one can readily understand encompasses costs relating to the operation of the vessel, such as fuel, port charges, customs duties and provisions and so on, I would not confine disbursement costs to those costs relating to the ship which have been paid by the agent. There are a number of old cases which indicate that a disbursement relates not only to an actual payment but also to the incurring of a liability for payment in the future: Bristow v Whitmore (1861) 9 HL Cas 391; The Feronia (1868) LR 2 A & E 65; The Red Rose (1866) LR 2 A & E 80. The term has been considered, particularly in the context of identifying those payments or liabilities for future payments which may constitute or give rise to a master’s disbursement lien. In that context, Lord Escher said, in The Orienta (1895) p 49 at 55:
“The real meaning of the word ‘disbursement’ in admiralty practice is disbursement by the master, which he makes himself liable for in respect of necessary things for the ship, for the purpose of navigation, which he, as master of the ship, is there to carry out...”
I am satisfied on the evidence that the plaintiff was authorised to engage the third parties in Darwin to perform works required in order to obtain AMSA approval. I am further satisfied that the claims in this respect are proper. In my judgment, the plaintiff is entitled to be reimbursed for the items for phone, facsimile and postal charges, and for the adjusted costs for provisioning, bunkering and crew’s wages. I accept also that the defendant is liable to reimburse the plaintiff for the travel and accommodation expenses on the trips to Indonesia. So far as the charges invoiced by the plaintiff in respect of travel from Townsville to Darwin and accommodation in Darwin is concerned, the defendant knew that the plaintiff was in Townsville when the first charterparty was signed. Travel from the plaintiff’s base in Townsville to Darwin was a necessary incident of the performance of the duties under the agency, or otherwise of the requirement by the defendant of Mr King that he attend to the ship to bring it up to AMSA requirements. The relation of principal and agent raises by implication the contract on the part of the principal to reimburse the agent in respect of all expenses, and to indemnify him against all liabilities, incurred in the reasonable performance of the agency, provided that such implication is not excluded by the express terms of the contract between them and provided that such expenses and liabilities are in fact occasioned by his employment: 1 Halsbury’s Laws of England 4th ed, para 807.
The expenses in bringing workmen to Darwin is more problematical. However, Mr King told Pak Rudhy that he was flying workers to Darwin because to find good marine foremen in Darwin for short term projects was difficult. Pak Rudhy was asked:
“He had to fly them in because to find good marine foremen in Darwin for short term projects is very difficult.”
To which Pak Rudhy said:
“Yes. He say.”
He was then asked:
“And you agreed to him doing that?”
Pak Rudhy responded:
“I agree for doing for this but I do not know when he finds people for work so I can pay him. But he finish our ships as - with the AMSA request.”
Later he was asked:
“You were telling Mr King to do whatever he had to do to get the ship finished?”
“Yes.”
“To comply with the AMSA requirements.”
“Yes.”
I am satisfied that these expenses were properly invoiced. It is accepted that the amounts included in the plaintiff’s invoices for commission on the two voyages undertaken by the “Armada Ternak” were correctly calculated and he is entitled to the commission. So too, with the “other expenses” referred to in the June 1997 invoice. These were expenses incurred by the plaintiff in the performance of the agency.
I do not accept that the plaintiff is entitled to damages in respect of loss of commission based on the first charterparty. I have already indicated that, on its proper construction, the first charterparty provides for six voyages with an option of a further six. The claim in Mr King’s statement for 23 voyages is a gross overstatement on any view. In his evidence, Mr King discussed the first charterparty with Mr Montague and arranged for it to be postponed until the vessel was ready. He communicated this success to Kalla Lines on 21 July 1996. It was submitted on behalf of the defendant that Mr King conceded that he proceeded on the basis that there would be no more voyages under the first charterparty and that he would forego his commission thereunder with a view to receiving fees under the second charterparty. While I think this overstates the evidence, Mr King said that he discussed with Mr Montague that “it would be easier to make a new charterparty than to have to do some sort of other contract to - to change the rates.” In these circumstances, I do not think it is open to the plaintiff to claim any commission in respect of the first charterparty.
The question of entitlement to lost commission in respect of the ten voyages of the second charterparty that were not undertaken, is difficult. The plaintiff terminated the agency agreement. In my view, he was entitled to terminate it for breach by the defendant. Following the fundamental principle in Robinson v Harman (supra) I think the plaintiff is entitled to the commission he would have earned had the second charterparty been performed. In my view, the owners of the ship were in serious breach of the second charterparty and were in serious breach of the agency agreement. On my assessment earlier indicated that the 10 voyages are fairly represented by the 10 non-”Armada Ternak” voyages set out in Exhibit D to Exhibit 20, the freight charge on the 10 untaken voyages total $990,000, on which the commission would be $34,650.
It would be a curious result if Mr Montague would be precluded from any claim under the first charterparty as a result of “the clause that I [Mr King] put in at the bottom to protect Kalla lines”, yet Mr King himself was able to maintain a claim for commission in respect of a charterparty that, on his urging, Mr Montague was “willing to postpone”.
As to the cross-claim, shortly put, the defendant has failed to prove any part of that claim. The assertion that the plaintiff was to oversee the conversion from a car carrier to a livestock transport vessel is not made out on the evidence, and in fact the evidence is to the contrary. The allegation of negligence is not borne out by any evidence. There is simply nothing in the evidence, in my opinion, to demonstrate any negligence on the part of the plaintiff which resulted in the vessel not being available for charter to Quality Livestock and, in my view, while the plaintiff certainly suggested that it would be better and cheaper for the vessel to be repaired in Jakarta, the decision to have the work performed in Darwin was made by the defendant and, having regard to the singular lack of success over a lengthy time by the dockyard in Jakarta in respect of the vessel, it is difficult on the evidence to dispute the correctness of that opinion. As to the allegations of false representations by the plaintiff, the evidence does not permit any finding of falsity. There is simply an absence of evidence to support the defendant’s cross-claim.
The cross-claim should be dismissed, with costs, including reserved costs, to be taxed.
For the above reasons, in my judgment, the plaintiff in proceedings QG 82 of 1997 is entitled to the following:
Amount Exhibit Reference
$503,275.25 Ex 16B:
$4,517.12 Invoices after Deloittes audit:
$4,621.40 Ex 29:
$4,788.00 Ex 29:
$441.00 Ex 30:$34,650.00 Lost commission from 2nd charterparty.
$552,292.77
While various components of this sum originate at different times, so far as my understanding of the evidence goes, Exhibit GFK 188 indicates that the plaintiff has outstanding creditors in respect of obligations related to the “Armada Ternak” of $357,282.57. It may be that this schedule is not an accurate reflection of the true position, and the evidence is deficient in this regard, but I have to proceed on the evidence as it is. To this sum should be added the amounts of the second to fifth items in the above schedule. I do not think I should allow interest in respect of that part of the judgment amount. I propose to allow interest at 10 per cent from 1 July 1997.
In proceedings QG 82 of 1997, I give judgment for the plaintiff in the sum of $552,292.77, together with interest totalling $17,310, making a total amount of judgment for the plaintiff against the defendant in those proceedings, rounded down, of $569,600.
The defendant is to pay the plaintiff’s costs, including reserved costs, to be taxed.
In proceedings QG 152 of 1997, I will hear the parties as to the terms of the orders I should make.
I certify that this and the preceding thirty-seven (37) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.
Associate:
Dated: 16 June 1998
QG 82 of 1997
Counsel for the plaintiff and the cross-respondent: Mr Martin Daubney Solicitor for the plaintiff and the cross-respondent: Redchip Lawyers Counsel for the defendant and the cross-claimant: Mr David Logan Solicitor for the defendant and the cross-claimant: Cridlands QG 152 of 1997
Counsel for plaintiff Mr John Kimmins Solicitor for the plaintiff Thynne & Macartney Counsel for the defendant and the cross-claimant Mr David Logan Solicitor for the defendant and the cross-claimant Cridlands Counsel for the cross-respondent Mr Martin Daubney Solicitor for the cross- respondent Redchip Lawyers Dates of Hearing: 5-8 May inclusive and
11-15 May inclusive 1998Date of Judgment: 16 June 1998
IN THE FEDERAL COURT OF AUSTRALIA
IN ADMIRALTY
QG 82 of 1997
BETWEEN:
GLEN KING MARINE & TRADING SERVICES
PlaintiffAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
DefendantAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
Cross-ClaimantAND:
GLEN KING MARINE & TRADING SERVICES
Cross-Respondent
QG 152 of 1997
BETWEEN:
QUALITY LIVESTOCK AUSTRALIA PTY LTD (ACN 005 508 243)
PlaintiffAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
DefendantAND:
THE OWNERS OF THE SHIP "ARMADA TERNAK"
Cross-ClaimantAND:
GLEN KING MARINE & TRADING SERVICES
Cross-Respondent
JUDGE:
SPENDER J
DATE:
16 JUNE 1998
PLACE:
BRISBANE
REASONS FOR JUDGMENT (EX TEMPORE)
When my reasons for judgment were handed down in these proceedings this morning, it was pointed out by the solicitor for the plaintiff in proceedings QG82 of 1997, Ms Nelson, that my reasons contained an error in that the amount which I had awarded to the plaintiff in proceedings QG82 included $34,650 which was denominated in my reasons in Australian dollars and ought to have been in United States dollars. The figure represents the lost commission on the second charterparty and is calculated on 3½ per cent of the freight that the “Armada Ternak” would have on it on the 10 voyages as they appear in the amended schedule D to Mr Montague's second affidavit. That notional freight charge comes to $US990,000 and the lost commission on the basis of my reasoning ought to have been $US34,650.
In those circumstances, it is necessary to make calculations which are different from and in substitution for the figures which appear at pages 37 and 38 of the certified reasons. The plaintiff, in my opinion, is entitled to a total of $517,642.77 for its claim in Australian dollars and for $US34,650 for its claim in respect of lost commission. In respect of the Australian dollar component, there are a number of items on which I do not think I ought to award interest. The first of those is the list of outstanding creditors which appears in exhibit GFK188 and which, according to that exhibit, totals $357,282.57. I have noted in my earlier reasons that that may not be an accurate reflection of the true position but I can only go on the evidence; it may be that there is a deficiency in the evidence in that respect.
To that sum there ought to be added the four figures which appear in the schedule at the foot of page 37, being the invoices after the Deloittes audit, the two amounts which are referred to in exhibit 29 and the small figure from exhibit 30. Those amounts, which do not attract interest, total on my calculation $371,650.09. I therefore propose to award interest on the Australian dollar component of the award only on the sum of $145,992.68 which is the difference between the Australian dollar amount of the claim ($517,642.77) and the amount on which I have decided not to award interest, being $371,650.09.
The interest, broadly speaking, which is calculated at 10 per cent from 1 July on $371,650.09, comes to $13,990, with the consequence that I propose to give judgment for the plaintiff against the defendant in Australian dollars in the sum of $531,600, being the rounded down figure of $531,632 which is, in turn, obtained from adding the interest amount of $13,990 to the Australian dollar component of the claim, $517,642. So far as the American dollar component of the claim for the plaintiff is concerned, the amount of the claim is $34,650, interest calculated at 10 per cent from 1 July 1997 comes to $3320, making a total amount of judgment for the plaintiff against the defendant in United States dollars rounded down of $37,900, being a figure rounded down from $37,970.
Having heard from Mr Logan, counsel for the respondent in each proceeding, I propose to make no order as to costs today notwithstanding what is contained in my reasons. I will reserve the question of costs both in respect of each proceeding and the cross-claims in each proceeding for oral submissions at 10.30 tomorrow. Subject then to making orders as to costs in proceedings QG82 of 1997 I give judgment for the plaintiff in the sum of $A531,600 and for the sum of $US37,900. In proceedings QG 152 of 1997 I give judgment for the plaintiff in American dollars in the sum of $US448,800 and judgment for the plaintiff against the defendant the amount of $A54,100.
I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.
Associate:
Dated: 16 June 1998
QG 82 of 1997
Solicitor for the Plaintiff and the cross-respondent: Ms M J Nelson of Redchip Lawyers Counsel for the Defendant and the cross-claimant: Mr David Logan Solicitor for the Defendant and the cross-claimant: Cridlands QG 152 of 1997
Solicitor for the Plaintiff Mr F C Turner of Thynne & Macartney Counsel for the Defendant and the cross-claimant Mr D M Logan Solicitor for the Defendant and the cross-claimant Cridlands Dates of Hearing: 5-8 May inclusive and
11-15 May inclusive 1998Date of Judgment: 16 June 1998
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