Ixom Operations Pty Ltd v Blue One Shipping SA

Link copied
Case Copied 75 min read

FEDERAL COURT OF AUSTRALIA

Ixom Operations Pty Ltd v Blue One Shipping SA [2022] FCA 1101  

File number(s): NSD 1266 of 2020
Judgment of: BURLEY J
Date of judgment: 19 September 2022
Catchwords:

ADMIRALTY – demise charter – where owner not a party to contract of carriage evidenced by bill of lading – where extensions to limitation period on bringing a claim over contaminated cargo given to the consignee of the cargo by lawyers acting for both owner and demise charterer of vessel – where consignee only brought proceedings initially against owner – where demise charterer sought to rely on limitation period – meaning of ‘owner’ – extension found to be granted on behalf of demise charterer

CONSUMER LAW – whether conduct of owner and demise charterer regarding extensions to the limitation period amounted to a contravention of section 18 of the Australian Consumer Law – whether contributory negligence reduced any damages to which the consignee may be entitled

ESTOPPEL – whether owner of vessel estopped from denying it was a party to the contract of carriage evidenced by the bill of lading – whether demise charterer estopped from relying on limitation period

Legislation:

Carriage of Goods by Sea Act 1991 (Cth) s 8, Sch 1A, Amended Hague Visby Rules Arts 1, 3

Competition and Consumer Act 2010 (Cth) ss 87CB, 137B, Sch 2, Australian Consumer Law s 18

Sea-Carriage Documents Act 1997 (NSW) ss 5, 8

Cases cited:

Air Tahiti Nui Pty Ltd v McKenzie [2009] NSWCA 429; 77 NSWLR 299

Butcher v Lachlan Elder Reality Pty Ltd [2004] HCA 60; 218 CLR 592

Commonwealth vVerwayen [1990] HCA 39; 170 CLR 394

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; 160 CLR 226

Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357

Miller Heiman Pty Ltd v Sales Principles Pty Ltd [2017] NSWCA 106; 94 NSWLR 500

Pacol Ltd v Trade Line Ltd (The “Henrik Sif”) [1982] 1 Lloyds Rep 456

Sidhu v van Dyke [2014] HCA 19; 251 CLR 505

Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] 1 QB 133

The “Stolt Loyalty” [1993] 2 Lloyds Rep 281

The “Stolt Loyalty” [1995] 1 Lloyds Rep 598 (CA)

The August Leonhardt [1985] 1 Lloyds Rep 28

Tritton Resources Pty Ltd v Ever Rock Navigation S.A. [2019] FCA 276; 369 ALR 205

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; 164 CLR 387
Division: General Division
Registry: New South Wales
National Practice Area: Admiralty and Maritime
Number of paragraphs: 175
Date of last submission: 10 May 2022
Date of hearing: 4-6, 12 April 2022
Counsel for the Plaintiff: Mr E G H Cox
Solicitor for the Plaintiff: Mills Oakley
Counsel for the First and Third Defendants: Mr G Nell SC
Solicitor for the First and Third Defendants: Thynne + Macartney

ORDERS

NSD 1266 of 2020
BETWEEN:

IXOM OPERATIONS PTY LTD

CaseChat AU logo

Keep reading for free

Create a free CaseChat account to read Ixom Operations Pty Ltd v Blue One Shipping SA and more:

  • Read every judgment in full
  • Ask AI and get answers linked to paragraphs
  • See how each paragraph was cited in later cases
  • Download judgments as PDF or Word
Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details
Case
[2022] FCA 1101
Decision Date

CaseChat Overview and Summary

In the Federal Court of Australia, Ixom Operations Pty Ltd, a consignee of a consignment of contaminated cargo, brought proceedings against Blue One Shipping SA, the registered owner of the vessel CS Onsan, and CS Marine, the demise charterer of the vessel. Ixom sought to recover damages for the contamination of the consignment, which it alleged was caused by CS Marine's failure to properly maintain the vessel. Blue One Shipping and CS Marine argued that Ixom's claim was time-barred by the Hague Visby Rules, and that any representations made by their lawyers to Ixom did not amount to an estoppel preventing them from relying on the limitation period.

The court was required to determine whether Blue One Shipping and/or CS Marine engaged in conduct in contravention of section 18 of the Australian Consumer Law (ACL), and whether they could rely on the limitation period in the Hague Visby Rules. The court also needed to consider whether Blue One Shipping was estopped from denying it was a party to the contract of carriage evidenced by the bill of lading, and whether CS Marine was estopped from relying on the limitation period.

The court found that Blue One Shipping and CS Marine did not engage in conduct in contravention of section 18 of the ACL, and that they were not estopped from relying on the limitation period. The court held that the representation made by their lawyers to Ixom did not amount to an estoppel because it did not induce Ixom to incur a detriment. The court also found that the limitation period in the Hague Visby Rules applied to Ixom's claim, and that it was not extended by the representation made by Blue One Shipping and CS Marine's lawyers. The court held that the proceedings must be dismissed, and that Ixom must pay the costs of Blue One Shipping and CS Marine.

In summary, the court found that Blue One Shipping and CS Marine did not engage in conduct in contravention of section 18 of the ACL, and that they were not estopped from relying on the limitation period in the Hague Visby Rules. The court held that Ixom's claim was time-barred and dismissed the proceedings. The court ordered that Ixom pay the costs of Blue One Shipping and CS Marine, but allowed any party to apply for a different costs order within 14 days.

Orders

Orders of the court

1. The application be dismissed.

2. The plaintiff pay the costs of the first and third defendants.

3. Any party may apply to the chambers of Burley J within 14 days if they wish to contend for a costs order different to that set out in (2).

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

In its submissions, IXOM identifies three pivotal representations upon which its estoppel and misrepresentation cases turn:(a)The 25 May 2018 email failed to indicate who was T&M’s client or who was giving the extension. To the extent the extension was only given by owners, it failed to indicate that the owner was not the carrier or advert to the demise charter;(b)The 25 May 2018 email impliedly represented that the extension was only given by the owner of the CS Onsan and that the owner was able to give an extension because it was the contractual carrier;(c)The 25 May 2018 email was misleading and deceptive because it failed to indicate that whilst the owner was requested to give, and agreed to give, an extension of the one-year time bar, the owner was not a party to the contract of carriage, not a bailee, and could not grant any meaningful extension to the Bill of Lading. 4. RELEVANT FACTUAL BACKGROUND On 8 June 2017, Mr Hockaday of T&M was retained to act on behalf of Blue One Shipping and CS Marine in connection with issues arising from the consignment. From 13 June 2017, when Mr Hockaday received a response to his enquiry from Mr Choi, Mr Hockaday had a firm understanding that he was acting for Blue One Shipping as registered owner, and CS Marine as bareboat charterer. On 14 June 2017, Mr Andersen was informed of a potential dispute about the consignment and retained Mr Tulloch to act on behalf of IXOM on the following day. Mr Andersen delegated consideration of who might be the contracting party for any future claim to Mr Tulloch. He was no expert in maritime law, did not know the concept of a “demise charterer”, and, I find, left such matters to Mr Tulloch. On 15 June 2017, Mr Tulloch gave written advice to IXOM, and later that day received copies of the Bill of Lading and Charter Party. Upon receiving them, his initial view was that IXOM’s claim would be based on its rights under the Bill of Lading rather than the Charter Party. He noted that the Bill of Lading had been signed by the master, and was of the opinion that this ordinarily evidences a contract made with the vessel’s registered owner. He noted that the Charter Party named CS Marine as the owner and that the Bill of Lading was signed by the master under the seal of CS Marine, which supported this view. Also on 15 June 2017, Mr Tulloch wrote to the port agent in Gladstone, attaching a demand on behalf of IXOM for security from the “owners/demise charterers of the vessel ‘CS Onsan’” (emphasis added) which said:In circumstances where this cargo has arrived at Gladstone, Queensland aboard the vessel in contaminated condition, we now demand that security for a claim be provided by way of a satisfactorily worded letter of undertaking from your P & I Club in the amount of US$2 million, failing which steps will be taken to arrest the vessel at Gladstone to protect our client’s position. Mr Tulloch explained in his evidence that he had expressed the demand in this way because he considered that there may be uncertainty as to whether the vessel was under demise charter, in which case it was his understanding that the demise charterer, rather than the registered owner, which he thought was CS Marine, would be the carrier under the contract evidenced by the Bill of Lading.

Evidence

Evidence Before The Court

The evidence of the witnesses was given orally, with a prior exchange of proofs of evidence between the parties. What follows is a summary of their evidence in chief. 2.1 The evidence on behalf of IXOM Nicholas John Andersen has since February 2015 been the general counsel and company secretary of IXOM. He is a legal practitioner, and was first admitted to practice in 2001. He began working as a solicitor for Orica in February 2007. In February 2015 IXOM was divested from Orica. Mr Andersen gave evidence that he had never worked in a shipping law capacity and that he relied heavily on IXOM’s external shipping lawyer, Andrew Tulloch of CBP, to assist in ascertaining the plaintiff’s legal rights. IXOM entered into a long term contract with Transammonia (as Trammo was then called) for the procurement of sulphuric acid for its operations, which was managed within IXOM by Michael Grant, who reported to Todd Martin, the person within IXOM who ran the sulphuric acid side of the business. Before commencing proceedings, Mr Andersen sought instructions from Mr Martin and IXOM’s chief financial officer and, in the present case because an insurance underwriter was involved, that underwriter. Mr Andersen gave evidence in chief about first being involved in the present dispute on about 14 June 2017, when he was informed that there was a cargo of about 25,000 tonnes of sulphuric acid sitting in a vessel off the coast of Queensland that was non-conforming. He gave evidence of his knowledge of negotiations being conducted between relevant parties about whether the plaintiff could reject the cargo. Mr Andersen retained Mr Tulloch on behalf of IXOM on 15 June 2017 and thereafter did not turn his mind to the identity of the party with whom the plaintiff had contracted, or the proper defendant to any later proceedings, because he considered that this was Mr Tulloch’s job, as the shipping law expert. He gave evidence that he was given instructions by Mr Grant and Mr Martin concerning operational matters that in particular related to where the cargo might be discharged and the security that was sought in lieu of any arrest of the CS Onsan. As far as he was concerned, the provision of security by an underwriter (the Club) and arrangements for the discharge of the cargo in Port Kembla, NSW, were made by the end of June 2017, after which the dispute went quiet until 10 August 2017 when Trammo Navigation Pty Ltd sent an invoice for demurrage rendered to it by CS Marine in the amount of USD311,200. Mr Anderson was involved in preparing a deed of release in relation to that invoice, which was never signed. Mr Andersen gave evidence that on 22 May 2018 he was informed by Mr Tulloch that the claim in respect of the consignment would become time barred by 6 June 2018 unless an extension of time was secured. By that time, IXOM had secured confirmation from its insurer (Vero) that it indemnified part, but not the entirety, of its claim in respect of the consignment and negotiations with it were continuing. He gave instructions to Mr Tulloch to seek an extension.

Decision

Reasons for decision

There was some suggestion in oral submissions by counsel for IXOM that the ACL claim could succeed notwithstanding the failure of the estoppel claim regarding the overall context of representations. Whilst as a matter of theory that may be possible, in the present case, having regard to my conclusions as to the representations made on 23 and 25 May 2018, I do not accept that the ACL claim can succeed in the present case. Having regard to this conclusion, it is not necessary to address separately any questions of reliance that may arise regarding the subsequent email exchanges.7. CONCLUSION AND DISPOSITION For the reasons given above, the separate questions are to be answered as follows:(1)Blue One Shipping is not estopped from denying that it was and is a party to the contract of carriage evidenced by the Bill of Lading dated 22 May 2017 by reason of the matters pleaded in paragraph 2 of IXOM’s reply to Blue One Shipping’s defence to the amended statement of claim dated 1 December 2021;(2)CS Marine is not estopped from relying on Article 3 rule 6 of the Australian Amended Hague Visby Rules in response to IXOM’s claim against CS Marine in paragraphs 12 to 22 of IXOM’s further amended statement of claim dated 9 November 2021 by reason of the matters pleaded in paragraphs 2 and 3 of IXOM’s reply to CS Marine’s defence to the amended statement of claim; (3)Blue One Shipping and/or CS Marine did not engage in conduct in contravention of s 18 of the ACL by reason of the matters pleaded in paragraphs 25 to 33 of IXOM’s amended statement of claim dated 9 November 2021; and (4)It is not necessary to decide whether Blue One Shipping and CS Marine’s allegations of contributory negligence and concurrent wrongdoers in paragraphs 56 to 61 of the defence of Blue One Shipping to the amended statement of claim dated 24 November 2021 and paragraphs 37 to 42 of the defence of CS Marine to the amended statement of claim dated 24 November 2021 apply to reduce any damages that IXOM may be entitled to by reason of Blue One Shipping and/or CS Marine’s alleged contravention of s 18 of the ACL. The parties accept that negative answers to questions (1) to (3) are determinative of the matter as a whole, with the result that the proceedings must be dismissed. The question of costs was not addressed during the course of the hearing. My present view is that the plaintiff must pay the defendants’ costs on an ordinary basis, however, if any party contends for a different outcome, they may approach my associate within 14 days for the matter to be relisted in relation to that question.

Ratio Decidendi

Legal Principle Established

The defendants finally submit that even if the representations alleged had been made by T&M’s email of 25 May 2018, there was no prejudice to IXOM at that time, because CS Marine had also agreed to the extension of the limitation period sought, and IXOM had not lost its cause of action against CS Marine. 6. CONSIDERATION In this litigation, there is no dispute between the parties that at all material times CS Marine was the “carrier” pursuant to the contract of carriage as evidenced by the Bill of Lading. The documents in evidence indicate that at all material times Blue One Shipping was the registered owner of the CS Onsan, and CS Marine was the demise charterer of the vessel, having chartered her from Blue One Shipping pursuant to a bareboat charter dated 17 June 2013. It was CS Marine, not Blue One Shipping, who was responsible for the maintenance and crewing of the Vessel. It arranged for the master, officers and crew of the vessel to be employed on CS Marine’s behalf pursuant to a Ship Crew Management Agreement between CS Marine and Korea Shipmanagers Co Ltd dated 5 January 2015. CS Marine as demise charterer was in possession of the CS Onsan at all material times, and operated her commercially for its own purposes. The CS Onsan was entered with the Club in the names of Blue One Shipping as the registered owner and CS Marine as bareboat charterer. The carriage of the consignment on board the CS Onsan to Australia was pursuant to the Charter Party dated 2 May 2017 that recorded CS Marine as the “owner”, being the disponent owner, and Trammo as charterer. Each of the four primary claims advanced by IXOM in respect of the allegedly contaminated consignment arise from the contract of carriage as evidenced by the Bill of Lading. There is no dispute in the present case that all of those claims are subject to the limitation period applicable by the operation of the Hague Visby Rules, which are given force of law by s 8 of the Act, and set out in Schedule 1A of that Act. In this regard, article 1 of the Hague Visby Rules defines “carrier” to include the owner or charterer who enters into a contract of carriage with a shipper, and “contract of carriage” as:…a contract of carriage covered by a sea carriage document (to the extent that the document relates to the carriage of goods by sea), and includes a negotiable sea carriage document issued under a charterparty from the moment at which that document regulates the relations between its holder and the carrier concerned. Article 3 relevantly provides in rule 6 that notice of any loss or damage must be given in writing to the carrier or its agent at the port of discharge before or at the time of discharge into the custody of the person entitled to delivery under the contract of carriage and that, subject to rule 6(bis) (which is not applicable here):…the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered. This period may, however, be extended if the parties so agree after the cause of action has arisen.