Manassen Foods v Seaway Logistics (No 4)
[2025] VSC 32
•14 February 2025
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
ADMIRALTY LIST
S ECI 2018 00309
BETWEEN:
| MANASSEN FOODS AUSTRALIA PTY LTD (ACN 001 356 449) | Plaintiff |
| - and - | |
| SEAWAY LOGISTICS PTY LTD (ACN 094 204 609) | First Defendant |
| - and - | |
| ANL SINGAPORE PTE LTD | Second Defendant |
| - and - | |
| INTELLIGENT SCM LLC | Third Party |
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JUDGE: | Matthews J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 - 24 October and 14 November 2024 |
DATE OF JUDGMENT: | 14 February 2025 |
CASE MAY BE CITED AS: | Manassen Foods v Seaway Logistics (No 4) |
MEDIUM NEUTRAL CITATION: | [2025] VSC 32 |
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CONTRACTS – Formation – Whether contractual relationship between first defendant and third party – Implied term of due care and skill – Liability for breach of an implied term – Foreseeability – Remoteness – Mitigation of loss via litigation – Reasonableness of settlement – Contributory negligence – Proportionate liability.
SHIPPING – Freight forwarding services – Contracts of carriage – Combined transport bills – Bills of lading – Incoterms – Ex Works - Agent-principal relationship.
TORTS – Negligence – Wrongs Act 1958 (Vic) – Contribution – Proportionate liability – Non‑delegable duties.
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APPEARANCES: | Counsel | Solicitors |
| For the First Defendant | Mr C Madder | Colin Biggers & Paisley |
| For the Third Party | Mr M Ravech | Carmody Lawyers |
Contents
A.. Introduction and overview
B... Factual background
B.1 Shipping agreement between Seaway and Manassen
B.2 Booking confirmations
B.3 Shipments
B.4 Notification of alleged damage to cargo
C.. Procedural history and pleadings
D.. Issues for the Court
D.1 First issue: Liability of AWA to Seaway in damages for breach of contract
D.2 Second issue: Liability of AWA to Seaway to contribute to the Settlement Sum
E... Evidence
F... Relevant law
G.. Issue 1: Contractual liability
G.1 Seaway’s submissions
G.1.1 Relationship between Seaway and AWA
G.1.2 Implied term of due care and skill
G.1.3 Breach by AWA
G.1.4 Remoteness
G.1.5 Mitigation of loss by Seaway
G.1.6 Contributory negligence of Seaway
G.1.7 Proportionate liability of ANL
G.2 AWA’s submissions
G.2.1 Relationship between Seaway and AWA
G.2.2 Implied term of due care and skill
G.2.3 Breach by AWA
G.2.4 Remoteness
G.2.5 Mitigation of loss by Seaway
G.2.6 Contributory negligence of Seaway
G.2.7 Proportionate liability of ANL
G.3 Consideration
G.3.1 Relationship between Seaway and AWA
G.3.2 Implied term of due care and skill
G.3.3 Breach by AWA
G.3.4 Remoteness
G.3.5 Mitigation of loss by Seaway
G.3.6 Contributory negligence of Seaway
G.3.7 Proportionate liability of ANL
G.3.8 Calculation of breach of contract damages to be paid by AWA to Seaway, including any reduction for proportionate liability
G.4 Conclusion regarding Issue 1
H.. Issue 2: Liability to contribute to the settlement sum
H.1 Seaway’s submissions
H.1.1 Basis for Manassen’s claim against Seaway
H.1.2 AWA’s alleged duty to Manassen
H.1.3 Breach of duty by AWA
H.1.4 Non-delegable duty vs contribution
H.2 AWA’s submissions
H.2.1 Basis for Manassen’s claim against Seaway
H.2.2 AWA’s alleged duty to Manassen
H.2.3 Breach of duty by AWA
H.2.4 Non-delegable duty vs contribution
H.3 Consideration
H.3.1 Basis for Manassen’s claim against Seaway
H.3.2 AWA’s alleged duty to Manassen
H.3.3 Breach of duty by AWA
H.3.4 Non-delegable duty vs contribution
H.4 Conclusion regarding Issue 2
I.... Conclusion
HER HONOUR:
A Introduction and overview
This proceeding relates to three international shipments by sea of bottled salad dressing purchased by the plaintiff, Manassen Foods Australia Pty Ltd (Manassen), which spoiled during transit. In 2017, Manassen purchased the goods from Van Law Foods, a food manufacturer based in Fullerton, California, United States of America, and arranged for them to be shipped to Sydney and Melbourne.[1] The three shipments suffered temperature damage as a result of being transported in ‘reefer units’ that were set at a temperature of -10°C when they should have been set at +10°C.
[1]The brand of salad dressing was ‘Newman’s Own’ – this brand name and Van Law Foods were used interchangeably by the parties for the purpose of this proceeding, and I have followed the same approach.
The ocean carrier for the three shipments was the second defendant, ANL Singapore Pte Ltd (ANL). The Australian transport and logistics provider and freight forwarder was the first defendant, Seaway Logistics Pty Ltd (Seaway).
The three cargoes were shipped under three separate ‘combined transport bills of lading’ issued by ANL as follows:
(a)OCE114573 dated 2 July 2017 (reefer container CAIU5447879) (the First Shipment);
(b)OCE115413 dated 16 July 2017 (reefer container APRU5839940) (the Second Shipment); and
(c)OCE0114570 dated 9 July 2017 (reefer container GESU9460104) (the Third Shipment).
Each of the bills of lading issued by ANL named:
(a)Seaway as the consignee;
(b)a third party, Intelligent SCM LLC (AWA), as the shipper/exporter and forwarding agent;
(c)Fullerton, California as the point of origin;
(d)Long Beach, California as the port of loading; and
(e)either Sydney or Melbourne as the port of discharge.
This judgment concerns a dispute between Seaway and AWA and, in this judgment, a reference to ‘the parties’ is a reference to Seaway and AWA.
B Factual background
B.1 Shipping agreement between Seaway and Manassen
On 20 March 2017, Manassen notified Seaway by email that Seaway had been successful in winning Manassen’s export business for the next 12 months.
On 24 March 2017, Manassen notified Seaway by email that Seaway had been successful in becoming Manassen’s shipping partner for imports relating to an estimated 400 full container loads from several countries, including the USA.
On 29 March 2017, Seaway notified AWA by email that Seaway had been awarded a large tender involving major trade lanes from the USA to Australia, and sought confirmation as to whether AWA could handle Seaway’s business in respect of trade from the USA to Australia.
On 1 May 2017, Seaway and Manassen entered into a Service Agreement, which contained the following key clause:
10.2SEAWAY agrees to indemnify, defend and hold MFA [Manassen] and SDF harmless from and against any claim, demand, cause of action, liability, loss, damage, cost or expenses which directly or indirectly arises out of or is in anyway associated with the action or inaction of SEAWAY, which is in breach of the terms of this agreement.
10.4SEAWAY shall be liable towards Customer when negligent according to the standards of the trade. SEAWAY contracts towards Customer as Principal and/or Carrier and assumes liability for its subcontractors as for itself.
On or around 18 April 2017, Seaway and AWA entered into a Carrier to Carrier Agreement (C2C Agreement), ostensibly for the purpose of satisfying requirements of the USA’s Federal Maritime Commission (FMC).
On 4 May 2017, at AWA’s request Seaway provided AWA with a Standard Operating Procedure (SOP) for the USA/Australia Manassen Foods Australia business. This document allowed AWA to enter into carriage contracts with ANL using Seaway’s service contract with ANL.
B.2 Booking confirmations
On 19 and 20 May 2017, AWA and ANL began to correspond regarding the booking confirmation for the First and Third Shipments, along with another shipment not the subject of this proceeding.
On 19 May 2017, AWA sent through a booking request in respect of the First and Third Shipments and ANL provided a booking confirmation on the same date.
The booking request from AWA noted that for the booking requiring a reefer unit, the temperature should be set at +10°C. However, the booking confirmation from ANL regarding the First Shipment dated 19 May 2017 incorrectly recorded that the reefer container should be set at -10°C.
On 1 and 2 June 2017, AWA first corresponded by email with ANL in respect of the Second Shipment, and ANL provided a booking confirmation in respect of it.
B.3 Shipments
At 5:36pm on 28 June 2017, ANL set the reefer unit for the First Shipment to -10°C.
On 2 July 2017, the First Shipment was loaded onboard the carrier vessel and the vessel departed from Long Beach. ANL issued bill of lading OCE0114573.
At 10:29pm on 6 July 2017, ANL set the reefer unit for the Third Shipment to -10°C.
On 9 July 2017, the Third Shipment was loaded onboard the carrier vessel and the vessel departed from Long Beach. ANL issued bill of lading OCE0114570.
At 10:22pm on 11 July 2017, ANL set the reefer unit for the Second Shipment to -10°C.
On 16 July 2017, the Second Shipment was loaded onboard the carrier vessel and the vessel departed from Long Beach. ANL issued bill of lading OCE0115413.
Each of the bills of lading issued by ANL recorded:
(a)AWA as the ‘SHIPPER/EXPORTER’; and
(b)Seaway as the ‘CONSIGNEE’.
On 18 July 2017, the First Shipment arrived in Sydney.
On 25 July 2017, the Third Shipment arrived in Melbourne.
On 3 August 2017, the Second Shipment arrived in Sydney.
B.4 Notification of alleged damage to cargo
In August and September 2017, Manassen notified Seaway that the salad dressing delivered in each of the three shipments was spoiled, due to it having been shipped at -10°C. Correspondence ensued between the various players involved. Manassen informed Seaway that it would hold Seaway fully responsible for the damage caused, and Seaway informed AWA that unless AWA could show that Van Law Foods had instructed AWA to set the reefer units for the shipments at -10°C, Seaway would hold AWA totally responsible for Manassen’s claim.
C Procedural history and pleadings
This proceeding has been on foot for more than six years. In order to understand the context of the present judgment, it is necessary to outline the procedural history in some detail.
On 12 July 2018, Manassen commenced this proceeding by issuing a generally indorsed writ against Seaway and ANL, claiming damages for breach of contract, or alternatively in tort.
On 19 July 2019, Manassen filed its statement of claim in the proceeding, more than a year after filing its writ.
On 21 and 23 August 2019, ANL and Seaway filed a defence in the proceeding, respectively.
On 4 September 2019, orders were made by consent, among other things, for the defendants to join any additional parties by 26 September 2019, mutual discovery, and for a private mediation to be held. No additional parties were joined to the proceedings by the ordered deadline. Seaway made discovery on 25 October 2019 and ANL made discovery on 22 November 2019.
On 7 February 2020, by consent, Manassen was granted leave to discontinue the proceeding against ANL and was ordered to pay ANL’s costs of the proceeding in the amount of $7,500. Orders were also made extending the time for Manassen’s discovery, for supplementary discovery by Seaway, and for Seaway to make any joinder application.[2]
[2]The deadline for Seaway to make a joinder application was 23 March 2020.
On 13 February 2020, Manassen filed a Notice of Discontinuance against ANL.
On 25 March 2020, Seaway filed a Third Party Notice joining AWA to the proceeding. The Statement of Claim to the Third Party Notice alleges that if Seaway is liable to Manassen (which is denied), that liability is dependent upon the acts or omissions of AWA as Seaway’s agent, or alternatively, as its subcontractor.
On 23 June 2020, AWA filed its Defence to the Third Party Notice. AWA’s Defence denies that AWA was an agent or subcontractor of Seaway, and asserts that these allegations ought to be struck out. No case is pleaded by AWA as to how or why the containers were set at -10°C, or who was responsible for this.
On 24 July 2020, AWA made an application for summary judgment against Seaway. In turn, on 7 August 2020, Seaway made an application for summary judgment against Manassen. Both applications were made on the ground that the other’s claims had no real prospect of success. These applications were heard by Digby J on 1 October 2020.
On 18 December 2020, Digby J made orders dismissing both summary judgment applications, finding that neither Seaway nor AWA had demonstrated that the claims against them had no real prospects of success.
On 11 February 2021, Seaway filed an Amended Third Party Notice, which pleads further facts and particulars of Seaway’s claim, including that AWA was its agent or subcontractor by reference to the bills of lading.
On 19 May 2021, AWA filed its Defence to the Amended Third Party Notice. AWA admits that it was the carrier of the cargoes pursuant to the bills of lading, but says that Seaway was the ‘Merchant’ under them. AWA denies that the bills of lading constitute contracts of agency or are subcontracts.
On 7 July 2021, Seaway filed a Reply to AWA’s Defence to the Amended Third Party Notice. On 2 August 2021, AWA filed an Amended Defence to the Amended Third Party Notice, by which it pleads an alternative claim of contributory negligence by Seaway under the Wrongs Act 1958 (Vic) (Wrongs Act), by reason of Seaway failing to inform AWA of the correct carriage temperature.
On 9 August 2021, Seaway filed a Reply to AWA’s Amended Defence to the Amended Third Party Notice, by which it denies contributory negligence on the grounds that it did not know and could not know the correct carriage temperature. Seaway pleads that it did not advise AWA or any other person as to the carriage temperature.
On 15 September 2021, Manassen, Seaway and AWA attended a judicial mediation before a judicial registrar of this Court. The proceeding did not resolve and the timetable for pre-trial directions was extended by consent.
On 20 September 2021, Manassen served Seaway with an offer of compromise in the sum of $328,449.60 plus interest of $104,833.92 plus costs. Seaway accepted Manassen’s offer of compromise on 18 October 2021.
On 18 February 2022, Seaway filed a Further Amended Statement of Claim to the Third Party Notice (FASOC). The FASOC removes Seaway’s previous claims in agency and subcontract. The new pleading alleges a ‘freight forwarding agreement’ (FFA) between Seaway and AWA, whereby AWA was appointed as Seaway’s local agent in the USA.
On 18 February 2022, AWA filed its Defence to Seaway’s FASOC. In this Defence, AWA’s primary case comprises bare denials as to the existence of the FFA, its alleged breach, the loss and damage said to have been suffered by Seaway, and Seaway’s claim for indemnity or contribution pursuant to the Wrongs Act. AWA also pleads an alternative proportionate liability defence under the Wrongs Act by which it seeks to hold ANL, the former second defendant to Manassen’s claim, responsible for some or all of the damage to the cargo. AWA alleges that ANL is a concurrent wrongdoer and is responsible on the basis that it did not comply with AWA’s instructions to set the temperature at +10°C.
On 8 March 2022, AWA filed a summons seeking orders for ANL to be joined as a defendant to the proceeding and leave to amend its Defence to Seaway’s FASOC. On 3 November 2022, Steffensen AsJ made orders dismissing the summons. Those orders were made subsequent to the delivery of her Honour’s reasons in Manassen Foods v Seaway Logistics (No 2),[3] which state at [109] that ‘the significant delay, failure to satisfactorily explain that delay, and the prejudice that arises or may arise from that delay’ were factors that weighed against her Honour’s exercise of discretion to join ANL to the proceeding.[4]
[3][2022] VSC 659.
[4]Ruling of Steffensen AsJ, 3 November 2022, [109].
On 21 November 2022, Steffensen AsJ made orders that AWA pay Manassen and Seaway’s cost arising from the hearing of AWA’s summons.
On 11 November 2022, AWA filed a Notice of Appeal against the decision of Steffensen AsJ on the grounds that, inter alia, her Honour erred in concluding that:
(a)there had been significant delay by AWA in bringing the application;
(b)the crux of the proceeding was the question of who is responsible for the instructions for the carriage temperature settings;
(c)AWA delay in bringing the application would result in prejudice; and
(d)AWA had not provided a satisfactory explanation for why it did not raise a proportionate liability defence until February 2022.
On 5 December 2022, Seaway and Manassen each filed a Notice of Contention, contending that Steffensen AsJ ought to have found that AWA’s pleaded proportionate liability defence had no real prospect of success. That same day, AWA filed an Amended Notice of Appeal opposing the order for costs made by Steffensen AsJ on 21 November 2022.
On 23 March 2023, Manassen filed a Notice of Discontinuance against Seaway.
AWA’s appeal was heard by Croft J on 17 May 2023. On 9 June 2023, his Honour handed down his reasons for judgment in Manassen Foods v Seaway Logistics (No 3).[5] On 23 June 2023, Croft J made orders pursuant to his Honour’s judgment:
(a)allowing AWA’s appeal;
(b)joining ANL as a defendant to this proceeding; and
(c)granting AWA leave to file an Amended Defence to Seaway’s FASOC.
[5][2023] VSC 316.
By the time of trial, the current relevant pleadings were:
(a)the FASOC;
(b)AWA’s Second Further Amended Defence to the FASOC filed 9 April 2024; and
(c)Seaway’s Amended Reply filed 2 May 2024.
The parties also provided the following prior to trial:
(a)a joint chronology;
(b)a joint statement of issues;
(c)Seaway’s written outline of opening submissions filed 12 August 2024; and
(d)AWA’s written outline of opening submissions filed 26 September 2024.
Following the conclusion of evidence on 24 October 2024, the parties filed closing written submissions on 7 November 2024 (AWA) and 12 November 2024 (Seaway), and oral closing addresses occurred on 14 November 2024.
D Issues for the Court
There are two main issues identified by the parties for the Court to determine in this proceeding.
D.1 First issue: Liability of AWA to Seaway in damages for breach of contract
The key disputed issues here are whether there was a contractual relationship between Seaway and AWA, and whether it contained an implied term of due care and skill that was breached by AWA. If so, there is a dispute as to whether ANL was a concurrent wrongdoer and/or whether Seaway was contributorily negligent.
I now set this out more fully, by reference to the joint statement of issues.
Did Seaway enter into an FFA with AWA as Seaway’s local agent in the USA for the purpose of providing freight forwarding services to Manassen, including in respect of Ex Works shipments of food products from Van Law Foods’ premises in California to Sydney, Melbourne and Fremantle?
If the answer to the above question is yes, was it an implied term of the FFA that AWA would perform its services thereunder with due care and skill (the Implied Term)?
If the Implied Term was included in the FFA, did AWA breach the Implied Term:
(a)concerning the First Shipment, by virtue of the fact that:
(i)ANL’s booking confirmation dated 19 May 2017 recorded that AWA had instructed the carrier that the first container should be set at -10°C?
(ii)in an email sent on 6 July 2017 at 6.41am by Nancy Janosky-Newman of AWA, to a representative of ANL, AWA instructed ANL to set the temperature of the first container at -10°C?
(b)concerning the Second Shipment, by virtue of the fact that:
(i)in an email dated 2 June 2017, Stacey Prestwood on behalf of AWA confirmed with ANL Oceana that the cargo in bill of lading S00082174 should be carried at -10°C as per an attached screenshot?
(ii)in an email dated 14 July 2017, April Ransick of AWA confirmed with ANL Oceana that the second cargo should be carried at -10°C?
(c)concerning the Third Shipment, by virtue of the fact that:
(i)in ANL’s shipping instructions document with reference no. OCEO11475, AWA’s instructions to ANL were recorded to be that the temperature of third container should be set at -10°C?
(ii)ANL’s booking confirmation dated 19 May 2017 recorded that AWA had instructed it that the temperature of the third container should be set at -10°C?
(iii)in an email sent on 14 July 2017 at 12.02am April Ransick of AWA instructed ANL to set the temperature of the third container at -10°C?
If there was a breach of the Implied Term by virtue of any of the facts above, then:
(a)was ANL a concurrent wrongdoer, within the meaning of s 24AH of the Wrongs Act, by reason that it owed Seaway a duty, as the ocean carrier of the cargoes under bills of lading for combined transport and port to port shipment which named AWA as shipper and Seaway as consignee, to exercise due care and skill in and about the carriage of the cargoes, which ANL breached? and
(b)what is the amount that AWA’s liability is limited to, for the purposes of s 24AI of the Wrongs Act, being the amount which reflects the proportion of Seaway’s loss that the Court considers just, having regard to the extent of AWA’s responsibility for the loss?
Further or alternatively, was the loss or damage caused to Seaway, by AWA’s breach of the Implied Term (the wrong), suffered as the result partly of the wrong and partly due to Seaway’s failure to take reasonable care (contributory negligence)?
Further, if ANL was a concurrent wrongdoer, then is the Settlement Sum an excessive amount, having regard to the extent of ANL’s proportionate responsibility for Seaway’s loss?
Further, if the loss or damage to Seaway was suffered as the result partly of the wrong and partly due to Seaway’s contributory negligence, then is the Settlement Sum an excessive amount, having regard to Seaway’s contributory negligence?
If ANL was not a concurrent wrongdoer, and/or the loss or damage to Seaway was not suffered as the result partly of the wrong and partly due to Seaway’s contributory negligence, was AWA’s breach causative of loss to Seaway, and if so, in respect to what amount?
D.2 Second issue: Liability of AWA to Seaway to contribute to the Settlement Sum
Further or alternatively, did AWA owe Manassen, as the owner of the cargoes, a duty in tort to take reasonable care to prevent the loss of the cargoes?
If AWA did owe such a duty in tort, did AWA breach that duty:
(a)concerning the First Shipment, by virtue of any of the matters set out in paragraph 60(a) above?
(b)concerning the Second Shipment, by virtue of any of the matters set out in paragraph 60(b) above?
(c)concerning the Third Shipment, by virtue of any of the matters set out in paragraph 60(c) above?
If AWA did breach that duty, then was Manassen’s claim against Seaway an apportionable claim within the meaning of s 24AE of the Act?
If it was an apportionable claim within the meaning of s 24AE of the Act, was ANL a concurrent wrongdoer, within the meaning of s 24AH of the Act, by reason that it owed Manassen, as owner of the cargoes:
(a)a duty to return those cargoes, which were bailed to ANL for the purpose of being carried under the bills of lading, in the same good order and condition in which they were received by ANL;
(b)further or alternatively, a common law duty of care with respect to each of those cargoes,
which ANL breached?
If ANL was a concurrent wrongdoer, then:
(a)is the Settlement Sum the amount that AWA’s liability should be limited to, for the purposes of s 24AI of the Act, being the amount that reflects the proportion of Manassen’s loss that the Court considers just, having regard to the AWA’s responsibility for the loss of the cargoes? or
(b)is the Settlement Sum excessive, having regard to the extent of ANL’s proportionate responsibility for Manassen’s loss and, if so, how much of the Settlement Sum should be disregarded as excessive under s 24(2B) of the Act?
If Manassen’s claim against Seaway was not an apportionable claim within the meaning of s 24AE, or ANL was not a concurrent wrongdoer, then was AWA’s breach causative of loss to Manassen and, if so, how much is AWA liable to pay Seaway, by way of contribution, to the Settlement Sum?
E Evidence
Seaway called three lay witnesses in support of its case:
(a)Pravin Singh, a Business Development Manager at Seaway during the relevant period;
(b)Jessica Isom, a Customer Service Manager at ANL during the relevant period, and the company’s current Senior Director of Export Trade in Oceania; and
(c)Craig McElvaney, the Chief Executive Officer of Seaway.
All of Seaway’s lay witnesses filed witness statements.[6] All three were cross‑examined. Isom gave her evidence remotely via audio-visual link from Norfolk, Virginia.
[6]Singh’s witness statement was dated 15 March 2023. Isom’s witness statement was dated 29 February 2024. McElvaney’s witness statement was dated 29 April 2024
AWA called two lay witness in support of its case:
(a)Stacey Prestwood, the branch manager of AWA’s Houston office during the relevant period; and
(b)Graham Burford, a founding member of AWA and the company’s Chief Commercial Officer during the relevant period.
Both of AWA’s lay witnesses filed witness statements, including some reply statements[7] and both were cross-examined. Prestwood gave her evidence remotely via audio-visual link from Houston, Texas. Burford gave his evidence remotely via audio-visual link from Hawthorne, Texas.
[7]Prestwood’s witness statements were dated 6 April 2022 and 1 February 2024. Burford’s witness statements were dated 6 April 2022 and 1 February 2024.
AWA also relied on the Expert Report of Evan Stacey dated 8 December 2023. Stacey was called to give evidence and was cross-examined. Stacey gave his evidence remotely via audio-visual link from Queensland. I make some comments in paragraph 360 below regarding this evidence.
Prior to each witness being called, objections to aspects of their witness statements were heard and determined.
I will have more to say in the course of this judgment about my assessment of the evidence in the context of the particular claims under discussion. At this point, I make some high level observations about the lay witnesses.
Singh came across as a honest witness. He contemplated the questions put to him and was forthcoming in his answers. Singh was willing to make concessions where appropriate, and even where he may not have needed to, as I will mention later.
Isom was also an honest and forthcoming witness. She came across as knowledgeable about ANL’s booking processes, and was willing to concede that those processes may not have all been properly followed with regard to the relevant shipments.
McElvaney was initially a cooperative witness. His answer to questions from counsel were straightforward, clear and concise. He was somewhat unwilling to answer questions about documents he had not previously seen or personally signed, suggesting instead that he could only offer his opinion. Under cross-examination McElvaney became somewhat combative toward counsel for AWA. However, this did not escalate beyond mild belligerence, and I do not believe it undermines McElvaney’s credibility as a witness.
Prestwood was an exceedingly honest and respectful witness. She took time to consider the questions put to her and provided answers that were clear and confident. When asked about her processing of AWA’s booking requests with ANL, Prestwood readily acknowledged the mistakes she or others had likely made at that time. This was greatly to her credit.
Burford was a less than impressive witness. He often provided unresponsive answers to questions under cross-examination and was often uncooperative. He was reluctant to concede even obvious points, often preferring to say that whatever document he was taken to did seem to reflect what counsel was suggesting, rather than confirming that it also reflected his understanding of the relevant agreement or arrangement between the parties.
When asked about his understanding of how liability for damages might arise in international freight forwarding, Burford remained evasive, despite having many years of experience in the industry. For example, the following exchange took place during cross-examination:
Madder:You’re aware of the Sea Carriage Documents Act, Burford, or are you not aware of that either?
Burford:I’m not aware of the independent act, no.
Madder:So you’re not aware of who can sue who under bills of lading. Is that your evidence, Mr Burford?
Burford:My evidence is I’m not a lawyer and don’t know the details of an act, the specific act, no.
Madder:Mr Burford, these are not difficult propositions. You’re a person who has been practicing in shipping work for many years?
Burford:Yes, that is correct.
Madder:And you know that an owner of goods can sue a carrier where their goods get damaged?
Burford:I understand there are a number of recourses based on the terms and conditions of carriage.
F Relevant law
Section 26(1) of the Wrongs Act provides that:
If a person (the claimant) suffers damage as the result partly of the claimant's failure to take reasonable care (contributory negligence) and partly of the wrong of any other person or persons—
(a)except as provided in section 63, a claim in respect of the damage is not defeated by reason of the contributory negligence of the claimant; and
(b)the damages recoverable in respect of the wrong must be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage.
Section 24AI of the Wrongs Act provides that:
(1) In any proceeding involving an apportionable claim—
(a)the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the court considers just having regard to the extent of the defendant's responsibility for the loss or damage; and
(b)judgment must not be given against the defendant for more than that amount in relation to that claim.
(2)If the proceeding involves both an apportionable claim and a claim that is not an apportionable claim—
(a)liability for the apportionable claim is to be determined in accordance with this Part; and
(b)liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant.
(3)In apportioning responsibility between defendants in the proceeding the court must not have regard to the comparative responsibility of any person who is not a party to the proceeding unless the person is not a party to the proceeding because the person is dead or, if the person is a corporation, the corporation has been wound-up.
Section 24AJ of the Wrongs Act provides that:
Despite anything to the contrary in Part IV, a defendant against whom judgment is given under this Part as a concurrent wrongdoer in relation to an apportionable claim—
(a)cannot be required to contribute to the damages recovered or recoverable from another concurrent wrongdoer in the same proceeding for the apportionable claim; and
(b) cannot be required to indemnify any such wrongdoer.
G Issue 1: Contractual liability
G.1 Seaway’s submissions
G.1.1 Relationship between Seaway and AWA
Seaway alleges that a contractual relationship existed between it and AWA, as evidenced by an FFA, the SOP, the C2C Agreement, and the house bills of lading provided by AWA for each of the relevant shipments.
G.1.1.1 Freight Forwarding Agreement
Seaway alleges that the parties entered into an agreement whereby AWA would provide freight forwarding services within the USA for shipments to Australia for Seaway’s customer, Manassen. Seaway submits that the negotiation and acknowledgment of this contractual relationship is evidenced by the following email correspondence:
(a)29 March 2017 email from Singh to Burford;
(b)31 March 2017 email from Prestwood to Singh attaching AWA’s rates;
(c)1 April 2017 email from Singh to Prestwood;
(d)12-13 April 2017 email discussion between Singh and Burford;
(e)14 April 2017 email from AWA’s Vice President, Jess Maugle, attaching the C2C Agreement, which was subsequently signed by Singh;
(f)18 April 2017 email from Burford to Peter Marvulic of Seaway acknowledging receipt of Federal Maritime Trade documentation and following up the SOP;
(g)4 May 2017 email from Singh to Prestwood attaching the SOP; and
(h)5 May 2017 email exchange between Singh and Burford regarding house bills of lading and Burford’s concern as to waiting times and not having accounts with ‘s/’, meaning shippers.
I will discuss each of these emails in detail later in these reasons.
Seaway submits that, at a general level, the parties agreed that AWA would provide freight forwarding services within the USA for Seaway’s customer, Manassen. The carrier was to be either ANL, using Seaway’s negotiated rates and its contract with ANL, or a carrier chosen by AWA.
Seaway highlights that Singh said in re-examination that, during his time at Seaway, around 70% of Manassen’s cargoes were transported using ANL as the ocean carrier, depending on the availability of space, and otherwise AWA charged Seaway for freight and all other charges.
G.1.1.2 Standard Operation Procedure
Seaway submits that, as regards the shipments where ANL was the carrier, the SOP set out the process by which AWA could enter into carriage contracts with ANL using Seaway’s service contract with ANL. Seaway subsequently invoiced Manassen for the freight based on rates Seaway had negotiated with ANL.
Seaway submits that AWA entered into the contracts of carriage, as evidenced by the ANL bills of lading, knowing that Manassen was Seaway’s customer.
Burford said in cross-examination that he understood that Seaway instructed for all cargo from Manassen to be booked under Seaway’s contract with ANL. He also accepted that he understood that under an Ex Works contract it is the buyer’s obligation to arrange for the goods to be picked up from the seller’s warehouse, and to arrange transport of the goods from the seller’s warehouse.[8]
[8]The three shipments the subject of this proceeding are all Ex Works contracts.
Seaway submits that Burford’s suggestion that the SOP permitted one of the named suppliers (eg Van Law Foods) to book carriage using Seaway’s contract with ANL should be rejected. The SOP was headed ‘Seaway/AWA: Manassen Foods Australia SOP’ and was clearly directed to the arrangement between Seaway and AWA. Seaway submits that these were Ex Works shipments, and the named suppliers were not required to obtain carriage contracts for the delivery of the goods.
G.1.1.3 Carrier to Carrier Agreement
Seaway submits that the C2C Agreement, which was provided by AWA's vice president and subsequently signed by Singh, was entered into for the sole purpose of satisfying the requirements of the USA’s Federal Maritime Commission. Seaway submits that this was not merely a simple formality — ie compliance with USA law — but that it is also evidence of an intention to create legal relations between the parties.
G.1.1.4 The nature of the shipments
Seaway submits that, according to the 2020 Incoterms,[9] under an Ex Works trade arrangement, among other things:
(a)it is up to the buyer to contract or arrange at its own cost for the carriage of the goods from the named place of delivery (in this case, Van Law Foods’ premises at Fullerton);
(b)the seller has no obligation to the buyer to make a contract of carriage;
(c)the seller must provide the buyer (at the buyer's request, risk and cost) with any information in the possession of the seller, including transport-related security requirements that the buyer needs for arranging carriage;
(d)the seller must deliver the goods by placing them at the disposal of the buyer at the agreed point (in this case, Van Law Foods' premises at Fullerton); and
(e)the buyer must take delivery of the goods when they've been delivered to the agreed point.
[9]The 2020 Incoterms are a set of internationally recognized rules, produced by the International Chamber of Commerce, which define the responsibilities of sellers and buyers in the export transaction.
In other words, risk in and title to the goods pass at the agreed delivery point, being Van Law Foods’ premises in Fullerton, California.
Seaway submits that this is how delivery took place, and that the contract of carriage was entered into on no uncertain terms by or on behalf of Manassen, having regard to the Ex Works nature of the contract. Seaway submits that this can be contrasted with a Cost Insurance Freight (CIF) trade arrangement.
Seaway submits that under a CIF trade arrangement, among other things:
(a)the seller must contract or procure a contract for the carriage of the goods from the agreed point of delivery, if any, at place of delivery to the named port;
(b)it is for the seller to comply with transport-related security requirements;
(c)the buyer has no obligation to the seller to make a contract of carriage;
(d)the seller must deliver the goods either by placing them onboard the vessel, or by procuring the goods so delivered. In either case, the seller must deliver the goods on the agreed date or within the agreed period and in the manner customary at the port;
(e)the buyer must take delivery of the goods when they have been delivered and receive them from the carrier at the named port of destination; and
(f)unless otherwise agreed or customary in the particular trade, the seller must obtain, at its own cost, compliant cargo insurance.
Seaway submits that, generally speaking, under a CIF contract one would obtain a port-to-port bill of lading rather than a combined transport bill (as was obtained in this case). A combined transport bill of lading is more consistent with an Ex Works shipment because it is the buyer who must arrange the whole of the transport from the seller’s warehouse. Seaway submits that these are straightforward commercial terms in respect of the international sale of goods.
Seaway submits that the documentation in evidence is consistent with an Ex Works trade arrangement, namely the emails of:
(a)10 May 2017 from Stephanie Wilson of Newman’s Own to Prestwood containing a list of Manassen orders ‘for pickup’ (ie not for both pick up and carriage);
(b)18 May 2017 from Prestwood asking ANL to make those bookings, which is consistent with AWA making the bookings with the carrier on an Ex Works basis for Manassen;
(c)18 May 2017 from Samantha Madbury of ANL to Prestwood asking for the loading addresses and contact details for the two pickup locations, which is consistent with Ex Works terms under which ANL needs to know where they will need to pick the goods up from; and
(d)9 May 2017 from Prestwood to Madbury specifying the reefer temperature for the First and Third Shipments at +10°C, which is consistent with AWA being the one to arrange for the carriage of goods with ANL, including specifying the temperature.
Furthermore, Prestwood’s evidence was that she knew the shipments were Ex Works, and that it was Manassen's goods that were being shipped. Burford’s evidence was that he knew that it was for the buyer to arrange for carriage of the goods, and that Manassen was a customer of Seaway.
AWA’s position, as put at trial, was that Seaway was Manassen’s agent (ie Manassen’s freight forwarder) and that AWA was Van Law Foods’ agent (ie Van Law Foods’ freight forwarder), that is, that Manassen was Seaway’s client and Van Law Foods was AWA’s client. AWA’s position was that its contract was with Van Law Foods and Seaway’s contract was with Manassen.
Seaway rejected this position, arguing the following.
Seaway submits that it is important to draw a distinction between a bill of lading in a strict sense — whether it be an ocean bill or a combined transport and port-to-port shipment bill — and a freight forwarder's house bill of lading.
Seaway submits that a ‘bill of lading’ in the true sense:
(a)evidences a contract of carriage between the shipper and the carrier;
(b)evidences receipt by the carrier of the goods; and
(c)permits the lawful holder of the bill of lading to present the original at the port of discharge for delivery of the cargo;
while a ‘sea waybill’ (which best describes the ANL combined transport bills of lading the subject of the proceeding) serves only the first two functions;[10] and a ‘house bill of lading’ does not evidence a contract of carriage at all.[11]
[10]Martin Davies and Anthony Dickey, Shipping Law (Thomson Reuters, 4th ed, 2016), [11.20].
[11]Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd (the Cape Comerin) (1991) 24 NSWLR 745, 753.
Seaway relies on Carrington Slipways Pty Ltd v Patrick Operations Pty Ltd,[12] where Handley JA said that he derived considerable assistance from the following statement by the editors of the 19th edition of Scrutton:[13]
A ‘house bill of lading’ issued by a forwarding agent acting solely in the capacity of an agent to arrange carriage is not a bill of lading at all, but at most a receipt for the goods coupled with an authority to enter into a contract of carriage on behalf of the shipper.
[12](1991) 24 NSWLR 745.
[13]Sir Alan Abraham Mocata, Sir Michael J Mustill, and Stewart C Boyd, Scrutton on Charterparties and Bills of Lading, (Sweet & Maxwell Ltd, 19th ed, 1984), 384.
Seaway also relies on Bills of Lading: Law and Contracts by Nicholas Gaskell (citations omitted):[14]
There is also some confusion over ‘house bills’. There really is no settled meaning for this expression. ‘House to house bills’ may be another way of indicating a door to door service, as provided under a combined transport bill. A house bill is sometimes used to refer to the specific bill personal to a particular operator but, if anything, it should be reserved for persons such as freight forwarders who issue transport documents to individual cargo owners and then procure a contract of carriage with a carrier covered by an ocean or combined transport bill. Again, the crucial question will be whether the issuer of the house bill assumes responsibility as a principal or agent. Where the issuer acts as an agent, its house bill is little more than a merchant’s delivery order.
[14]Nicholas Gaskell, Bills of Lading: Law and Contracts (Routledge, 2017), 17.
Seaway submits that AWA appears to rely on the so-described house bills of lading it issued as evidence of a contract between it and Van Law Foods as the shipper, permitting AWA to enter into the respective carriage contracts with ANL as agent for Van Law Foods as undisclosed principal.
Seaway submits that the house bills of lading issued by AWA do not evidence a contract of carriage, or a contract of any kind. True, each bill named Van Law Foods as the shipper. However, this did not evidence a contract of carriage with Van Law Foods because each document:
(a)was a house bill of lading;
(b)specified Ex Works as the Incoterm;[15] and
(c)contained an export reference number that matched the order number on the original Manassen’s purchase order with Newman’s Own.[16]
[15]See for example CB 306.
[16]See for example CB 296.
Seaway submits that the passage relied on by AWA as to the role of a freight forwarder (see paragraph 171 below) is consistent with, for example, a ‘CIF’ contract, where the buyer receives the goods from the seller at the port of destination, and it is for the seller to contract or procure a contract for the carriage of the goods. Under this arrangement, the buyer has no obligation to the seller to make a contract of carriage. Again, Seaway submits that a house bill of lading does not evidence a contract between the freight forwarder and the shipper (as opposed to a bill of lading or sea waybill), but may evidence the shipper’s authorisation to enter into a contract with the actual carrier of the cargo as agent for the shipper as undisclosed principal.
However, Seaway submits that the footnote to the passage cited by AWA is critical (emphasis added by Seaway):
The forwarder may also act as agent for the receiver of the goods if, for example, the receiver has purchased them on an FOB or FCA terms. For convenience, this section refers only to the forwarder acting for the shipper.
Seaway submits that the learned authors are stating, in effect, that where the goods are sold, for example, on ‘Free on Board’ (FOB) terms, the buyer of the goods will need to obtain a port-to-port bill of lading, issued by the ocean carrier. Under an FOB contract, it is for the buyer to arrange for carriage of the goods, and delivery takes place at the ship’s rail. The freight forwarder will in those circumstances act as agent for the buyer of the goods as undisclosed principal when entering into the carriage contract with the carrier.
Seaway submits that, in the present case, Manassen purchased the goods on an Ex Works basis. Van Law Foods did not require a contract of carriage with anyone. Each of the house bills of lading specifically described the Incoterm as ‘EXW’ (ie Ex Works). Consistent with the learned authors’ commentary, the house bills of lading issued by AWA at best served as an authority to enter into the ANL combined transport bills of lading from Fullerton to Australia as agent on behalf of Manassen as undisclosed principal.
During closing submissions, counsel for Seaway expanded on this point:
It’s not an agency agreement of some sort of fiduciary relationship type agency. It’s just in respect of booking goods. It’s making a booking. It’s a booking agent, that’s all it is. It’s booking on behalf of someone else, and the person that required the booking to occur was Manassen, because it was its goods that were purchased on an Ex Works basis.
That’s what is meant by the word agent in this context. And of course, ANL don’t know necessarily who they’re booking the goods for, and that’s why it’s described as undisclosed principal. But there’s nothing complicated about that, it’s just the goods were booked for someone else. Or the carriage contract was booked for someone else. So, we say it’s very clear that AWA had no contractual relationship whatsoever with Van Law [Foods].
Seaway submits that this is entirely consistent with the SOP and AWA’s use of Seaway’s service contract with ANL when booking the shipments with ANL for Manassen, and with AWA being the named ‘shipper’, and Seaway being the named ‘consignee’ under the ANL combined transport bills of lading in respect to Manassen’s goods. It is also consistent with the email exchange between Singh and Burford of 5 May 2017 in which Burford expressed his concern that AWA did not have an account with the shippers, and was concerned with any ‘waiting time’.
Seaway submits that in re-examination Burford gave evidence to the effect that he was concerned that AWA would be liable for detention or demurrage type charges from ANL if Van Law Foods was slow in loading the cargo. He wanted to recover those charges from Manassen by using the house bills of lading as an original, or ocean bill of lading providing title to the goods until those fees were paid. Seaway submits that it is to be assumed that Burford had in mind exercising a lien over Manassen’s goods.
Seaway submits that this is also consistent with AWA having no contractual arrangement with Van Law Foods (or Newman’s Own). If Van Law Foods was slow in delivering the goods and there were truck delays, then ANL could claim detention charges against AWA. AWA had no recourse against Van Law Foods because it had no contractual relationship with Van Law Foods. It appears that AWA wanted to exercise rights against Manassen by treating the house bills of lading as ocean bills (by refusing delivery of the goods until detention charges ANL imposed on AWA were paid).
Seaway submits that when one looks at the totality of the documents, it is clear that AWA had a contractual relationship with Seaway; there is sufficient formality to demonstrate a binding intention to create legal relations.
G.1.2 Implied term of due care and skill
Seaway submits that, when entering into the carriage contracts with ANL as evidenced by the respective ANL combined transport bills of lading, AWA was required to exercise due care and skill to ensure that the correct carriage temperature was recorded on the respective booking confirmations and the shipping instructions relied upon by ANL when preparing the bills of lading.
Seaway relies on Landauer & Co v Smits & Co, where Roche J of the King’s Bench said:[17]
The question is what responsibility did they take? A forwarding agent may take more or it may take less responsibility. He always takes some. As a rule, he takes more. It may be only an obligation to use due care in making proper contracts with regard to the forwarding of the goods. It may be a great deal more.
[17](1921) 6 Ll. L. Rep 577 (Landauer & Co), 579.
Seaway submits that, consistent with the above passage, a term of due care and skill should be implied into the contractual relationship between the parties to give business efficacy to the agreement.
G.1.3 Breach by AWA
Seaway submits that Isom and Prestwood were forthright in their evidence.
Seaway submits that according to the evidence of Isom in respect of the First and Third Shipments:
(a)Tyler Briggs, an export specialist at ANL, may have made a mistake in reading the original email from AWA as -10°C when it should have been +10°C;
(b)it was irregular that the booking confirmations were issued prior to the customer reconfirming the temperature setting;
(c)when Briggs sent the email stating that the temperature had been set at ‑10°C, and attached the booking confirmations showing that the temperature of the reefer unit was to be set at -10°C, the responsibility of replying and correcting this error lay with AWA; and
(d)once a booking confirmation was issued, ANL would not go back to the customer to confirm its accuracy on an ongoing basis. If no reply was received, it was assumed that the booking confirmation was correct as generated;
Seaway submits that Isom also confirmed that the correct procedures were followed in respect to the Second Shipment.
Seaway submits that Prestwood in her email of 1 June 2017 said that she wanted to make a booking ‘just like’ the First Shipment. Ashlee Erestain, an Export Documentation Support Coordinator at ANL, subsequently sent an email to Prestwood containing a screenshot of the booking confirmation for the First Shipment showing the carriage temperature as ‑10C (14F). In her reply email to ANL on 1 June 2017, Prestwood said ‘[h]ello CS. Yes that is fine’, and ANL then issued a booking confirmation for the Second Shipment accordingly. Seaway submits that this too was confirmation by AWA to ANL that the temperature was +10°C.
Seaway submits that Prestwood also:
(a)admitted that she overlooked reading the booking confirmations for the First and Third Shipments, and agreed that it was important to ensure that the temperature as recorded on the booking confirmations was correct;
(b)accepted that it would have been sensible to state in her email of 1 June 2017 that the booking in respect to the Second Shipment needed to be +10°C;
(c)acknowledged that it was careless not to look at the screenshot more carefully; and
(d)admitted that she definitely overlooked the temperature recorded in the booking confirmation for the Second Shipment.
Seaway submits that, according to Prestwood, had it been apparent to her that the temperature setting in respect to the Second Shipment was going to be set at -10°C, she would have:
(a)gone back to ANL and said that the temperature needed to be +10°C;
(b)expected that ANL would make the relevant correction to the booking once notified of the error;
(c)made sure that the other shipments with Manassen were also set at +10°C; and
(d)expected that ANL would make the relevant corrections to the other booking confirmations once notified of the error.
Seaway submits that from this evidence it can be seen that Prestwood’s acts and omissions caused the respective booking confirmations to record a carriage temperature of -10°C by:
(a)not reviewing the email of 19 May 2017 from Briggs;
(b)not reviewing the booking confirmations in respect to the First and Third Shipments on 20 May 2017;
(c)failing to advise ANL of the requested carriage temperature in the email dated 1 June 2017;
(d)failing to review the screenshot in respect to the Second Shipment;
(e)failing to review the booking confirmation carefully in respect to the Second Shipment; and
(f)failing to advise ANL in her email of 1 June 2017 that it should change the booking confirmations for not only the Second Shipment, but also the First and Third Shipments, which Prestwood acknowledged would have occurred had she advised ANL to do so.
Seaway describes Prestwood’s acts and omissions as the principle cause of the temperature being recorded incorrectly.
Further, Seaway submits that Isom’s evidence that the shipping instruction is the ‘load stow and count’ for the purpose of ANL preparing the bill of lading should be accepted. Prestwood confirmed this in cross-examination, and confirmed that it was very important to ensure that the temperature to be specified on the bill of lading was the correct temperature. Seaway submits that, despite some resistance, Burford ultimately also accepted this to be the case.
Seaway submits that ANL followed up a mismatch between the booking confirmations and the shipping instructions for the First and Second Shipments (the Shipping Instruction for the Third Shipment already stated that the carriage temperature should be recorded as -10°C), and AWA confirmed that the cargoes should be carried at -10°C. Seaway submits that this was yet another opportunity to rectify the carriage temperature instructions that was missed by AWA, and that Isom’s evidence that the reefer units’ temperature settings could have been altered should be accepted. Seaway submits that it was AWA’s conduct, and not the conduct of ANL, that meant this opportunity was missed.
G.1.4 Remoteness
Seaway submits that its loss is not too remote.
Seaway relies on Unity Insurance Brokers v Rocco Pezzano,[18] where McHugh J stated:
Whether a settlement was within the contemplation of a defendant or a reasonable person in its position must depend upon the nature of the contract between the plaintiff and the defendant, their actual or imputed knowledge of the consequences of a breach, and the nature of the third party's claim against the plaintiff. As a general rule, a contract breaker must be taken to have reasonably contemplated that its breach may force the innocent party into litigation with third parties and that the innocent party may conclude that it is in its best interest to compromise the third party’s claim. But it does not follow that the fact that it was reasonable for the plaintiff to compromise the claim against the third party necessarily means that the settlement was within the reasonable contemplation of the defendant. That is so even in those cases where the defendant’s breach was proved to be causally connected with the settlement. Each case must depend upon its own facts.
[18](1998) 192 CLR 603 (Rocco Pezzano), [33].
Seaway submits that, according to McHugh J, a settlement for an unreasonable amount may be regarded as too remote, but where a settlement is found to be reasonable, the insured will be entitled to recover the settlement sum.[19]
[19]Ibid, [39]–[40].
Seaway submits that, in the present case, AWA knew that it was arranging carriage of Manassen's goods on an Ex Works basis. It knew that Manassen was Seaway’s customer. It was within AWA’s reasonable contemplation that if it failed to exercise due care and skill when making the bookings, Manassen could seek recovery from Seaway, because it knew that Manassen was Seaway’s customer. The claim by Manassen against Seaway was not too remote. Far from it. Seaway was Manassen’s freight forwarder, which AWA knew.
During closing submissions at trial, counsel for Seaway drew further from Rocco Pezzano:[20]
First, the broker’s breach of obligation caused the insured to obtain a policy that was open to doubt or challenge. The very fact that the policy is open to doubt or challenge may cause loss to the insured. If the doubts are capable of ready resolution without resort to litigation, as for example, by the insured taking the opinion of counsel and providing it to the insurer, comparatively little cost may be incurred but the broker's breach would nevertheless have caused that loss. At the other extreme, however, if the doubts are obvious and irremediable, and the insured could not recover under the policy, the broker’s breach would have caused the insured to lose the whole benefit of that policy. The insured suffers loss in both kinds of case - not just the second. And the loss in both cases is caused by the broker's breach of obligation.
The fact that the dispute between insured and insurer may be resolved by agreement does not lead to any different result. The loss suffered by the insured, if the compromise is reasonable, is caused by the broker’s breach of obligation. To the extent that policy is to be considered in answering the question whether the breach caused the loss, policy considerations reinforce the conclusion that the breach caused the loss.
[20][121]-[122].
Seaway submits that the above is directly analogous to the present case.
Continuing with Rocco Pezzano:[21]
No doubt the broker may be wholly excluded from any negotiations to resolve the differences between insured and insurer and it seems that that was the case here. But that does not mean that the broker is left to the mercies of parties over which it has no control or that those parties may impose on the broker any liability that they choose. The settlement between insurer and insured must be reasonable.
Next, and most importantly, to require the insured to prove, as part of its case against the broker, the case which the insurer would have mounted against it is to encourage the prolonging of litigation and to discourage settlement. If the insured must prove the insurer's case, that is a significant reason not to settle its claim against the insurer but to conduct alternative claims against the insurer and the broker. If, without working injustice to the broker, the settlement of disputes can be encouraged, the desirability (some may say the necessity) of doing so is obvious.
-----
Next, the question whether the settlement was reasonable must be judged by reference to the material the parties had available to them at the time the compromise was reached. It is not to be judged according to whether material which was obtained later shows that the opposite party could or could not have prosecuted or defended the claim successfully but according to the assessment which could properly be made at the time of settlement of the chances of success or failure.
Often that will require consideration of whether the party that later seeks to say that the settlement was reasonable had made sufficient inquiries and had sufficient information available to it to warrant reaching a compromise. In turn that may invite attention to whether the cost of seeking further information would outweigh the benefit that it was reasonable to expect may be obtained from doing so, but it does not assume knowledge of the opposite party's brief to counsel.
[21][123]-[124], [130]-[131].
Seaway submits that, during cross-examination, Burford:
(a)acknowledged that AWA had local jurisdiction expertise within the USA to facilitate cargo to and from a number of countries;
(b)accepted that on an Ex Works shipment AWA was acting to arrange carriage and to assist the buyer to take delivery of the goods;
(c)accepted that the only entity that would suffer property damage if the reefer was set at the incorrect temperature would be the buyer;
(d)admitted that he knew:
(i)that the contracts of sale were on Ex Works terms, and as such, the goods were Manassen’s;
(ii)that Manassen was Seaway’s customer;
(iii)that Seaway had contacted AWA because AWA had a footing in the USA and could potentially assist; and
(iv)that there was a contractual relationship between Seaway and Manassen, but acknowledged that generally one would not disclose the terms of the contract given the commercial relationship; and
(e)acknowledged that it was not surprising that ANL required that it be provided in writing with up to date information and knowledge as to the requirements for the safe care, custody and carriage of the goods, and that this included the temperature requirements of the cargo.
Seaway submits that the above matters are clear from the documentation, and were within AWA’s reasonable contemplation when conferring with Seaway regarding the Manassen Ex Works shipments. In circumstances where AWA was using Seaway’s service contract with ANL to arrange carriage of Manassen’s Ex Works shipments, Manassen’s claim against Seaway flows naturally from AWA’s failure to exercise due care and skill. Seaway’s loss and damage was not too remote because the settlement sum was reasonable.
Seaway further submits that it was not too remote for Manassen to claim against Seaway alone for the USA freight forwarder that Seaway used to arrange Manassen’s Ex Works shipments, given that Manassen and Seaway are within the Australian jurisdiction, and AWA is not. In any event, AWA gave no evidence that it would not have contracted with Seaway if it knew that Manassen could claim against Seaway directly if AWA negligently caused damage to the respective shipments.
G.1.5 Mitigation of loss by Seaway
Seaway submits that settlement of Manassen’s claim was achieved in this proceeding by Seaway accepting Manassen’s offer of compromise for $328,449.60 plus interest of $104,833.92 plus costs. Had Seaway consented to judgment being entered against it, it would have been liable for the full amount of Manassen’s claim of $401,692 plus interest and costs.
The effect of accepting the offer was that Seaway was liable for costs in the manner prescribed by the Supreme Court (General Civil Procedure) Rules 2015 (Vic). Seaway reached a settlement regarding Manassen’s costs on 6 July 2023 by agreeing to pay $177,500, which was substantially less than the costs claimed by Manassen of $319,440.83. Seaway submits that AWA has not pleaded that the settlement of Manassen’s legal costs was unreasonable.
In relation to its application for summary judgment against Manassen, Seaway submits that:
(a)interlocutory applications are reasonably foreseeable legal costs in the context of commercial litigation;
(b)Seaway’s application for summary judgment against Manassen was a reasonable attempt to minimize its legal costs; and
(c)if Manassen’s claim had been dismissed, AWA would have been the beneficiary.
Seaway also submits that there is no evidence that a lesser settlement sum could have been achieved had Seaway raised a proportionate liability defence against ANL.
Seaway submits that it therefore acted reasonably in accepting Manassen’s offer of compromise, and that, in doing so, it reasonably mitigated its loss.
G.1.6 Contributory negligence of Seaway
Seaway submits that none of its acts or omissions contributed to its loss. Seaway contractually assigned the task of booking the respective cargoes to AWA in the USA, using Seaway’s service contract with ANL. It reasonably assumed that AWA, an experienced ‘non-vessel operating common carrier’ with local jurisdictional expertise within the USA, would exercise due care and skill when carrying out that task, and reasonably relied on the Implied Term to the same effect.
G.1.7 Proportionate liability of ANL
Seaway submits that the principal sum for which Manassen and Seaway settled ($328,449.60) is already a reduction on the principal sum claimed by Manassen ($401,692), which originally included ANL as a defendant. Manassen discontinued the proceeding against ANL on 13 February 2020. Manassen served its offer of compromise on Seaway on 20 September 2021 after it had discontinued the proceeding against ANL.
Seaway submits that when determining whether a further reduction should be made, the Court should have regard to the total sum originally claimed by Manassen in the proceeding, and the 20% reduction on the principal sum offered by Manassen to Seaway by its offer of compromise after Manassen discontinued the proceeding against ANL.
As to causation, and the relative responsibility of ANL and AWA, Seaway makes the following submissions.
First, even if ANL failed to follow its usual procedures in respect of the First and Third Shipments, AWA should have reviewed the relevant booking confirmations. Furthermore, when making the booking for the Second Shipment, AWA should have reviewed the booking confirmations for the First and Third Shipments before seeking a booking ‘just like’ the First Shipment. In fact ANL followed its procedures regarding the Second Shipment exactly, and AWA should have rectified any previous miscommunications regarding the First and Third Shipments at that time. Consequently there should be no reduction for proportionate liability.
Second, if any reduction for proportionate liability is to be made, it should be based only on the First and Third Shipments, with no discount made in respect of the Second Shipment. In its Statement of Claim, Manassen claimed loss and damage $401,692 comprising:
(a)$180,801 in respect of the First Shipment (45% of Manassen’s loss);
(b)$192,604 in respect of the Second Shipment (48% of Manassen’s loss); and
(c)$28,287 in respect of the Third Shipment (7% of Manassen’s loss).
The First and Third Shipments comprise 52% of Manassen’s loss. Seaway submits that ANL’s proportionate liability (if any) for the First and Third Shipments should be no more than 20% of such proportion, having regard to the evidence of Isom and Prestwood.
Thus, Seaway submits that ANL’s proportionate liability for the damage to the First and Third Cargoes is: 20% x 52% x $328,449.60 = $34,164. $34,164 is approximately 10% of the principal amount in the offer of compromise. The total interest ($104,833.92) and costs ($177,500) paid to Manassen could also both be reduced by 10%.
G.2 AWA’s submissions
G.2.1 Relationship between Seaway and AWA
G.2.1.1 Freight Forwarding Agreement
AWA submits that the FFA alleged by Seaway is not borne out by the evidence, and never existed.
AWA submits that the cases in which a contract will be inferred otherwise than by the traditional analysis of offer and acceptance will be rare,[22] and that the present case is not one of them. AWA further submits that it is now accepted that the existence of a contract can be established or inferred where a manifestation of mutual assent must be implied from the circumstances.[23]
[22]P’Auer AG & Anor v Polybuild Technologies International Pty Ltd & Anor [2015] VSCA 42 (P’Auer), [11].
[23]P’Auer, [10].
AWA submits that the emails and conduct relied upon by Seaway do not establish any undertaking by AWA to perform freight forwarding services for Seaway in the USA.
AWA submits that no principal-agent relationship was created between the parties, as the fact that they each carried on an independent business, and were each to be responsible for charging their own fees, as distinct from AWA receiving an agent’s commission or fee from Seaway, was indicative of an arrangement that was inconsistent with agency.[24]
[24]See Colonial Mutual Life Assurance Society Ltd v Producers & Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41, 69; Wilson v Darling Island Stevedoring & Lighterage Co Ltd (1956) 95 CLR 43, 70.
AWA submits that there was no suggestion of an agency relationship in the email from Singh to Burford on 29 March 2017, and that the word ‘agency’ was not even mentioned. Therefore, the fact that Singh subsequently used the word ‘agent’ in his email to Prestwood and Burford on 1 April 2017 to describe AWA’s role is not to the point. AWA submits that there is ‘no magic’ in the word ‘agent’,[25] and ‘[y]ou cannot make a man an agent by calling him an agent when he is not in law an agent’.[26]
[25]John Towle and Co v White (1873) 29 LT 45, 46.
[26]Fraser Ramsay (New Zealand) v De Renzy NZCA [1912] NZGazLawRp 337, 341.
AWA submits that the fact that AWA invoiced Seaway for a handling fee of USD75 and an automated export system filing fee of USD25 in respect of each of the shipments does not point to the existence of the alleged FFA on the facts of this case. It is accepted by Seaway that the goods the subject of each of the shipments were purchased by Manassen on an Ex Works basis. Since purchasing under the Ex Works incoterm constituted an agreement between Manassen and the seller that Manassen would be liable for all export and import carriage charges, duties and taxes, including AWA’s fees which Manassen ultimately paid, it is understandable that AWA chose to recover AWA’s fees via Seaway with whom it had the SOP. AWA submits that it had no relationship of its own with Manassen, but knew that Manassen was Seaway’s customer because Seaway had so advised AWA.
G.2.1.2 Standard Operation Procedure
AWA submits that the emails Seaway was given leave to tender do not establish the alleged Freight Forwarding Agreement. Instead, they go no further than establishing an SOP between two independent freight forwarders, each of which carried on an independent business in its own right — Seaway in Australia, and AWA in the USA — to bring about the transportation of goods purchased by Seaway’s customer, Manassen (under Ex Works terms with the seller), from Fullerton to Australia.
AWA submits that the SOP is in writing and was provided to Burford by Singh, by way of an attachment to an email on 4 May 2017, at Burford’s request so as ‘to get all expectations set out and aligned’.
AWA submits that during cross-examination:
(a)Burford confirmed that he had never been provided with a copy of the carrier contract number 179011 between ANL and Seaway;
(b)Singh agreed that for the purposes of the ‘SUPPLIER DETAILS/TERMS’, Newman’s Own and Van Law Foods were synonymous and interchangeable terms;
(c)Singh agreed that for the purposes of the ‘LOWER HOUSE BOL INSTRUCTIONS’ the ‘Shipper’ of the First, Second and Third Shipments was Van Law Foods; and
(d)Singh agreed that the ‘BOOKING INSTRUCTIONS/CONFIRMATION’ section of the SOP made no mention whatsoever of reefer containers or a temperature setting of +10°C. He agreed that if it had been AWA’s obligation to tell ANL to set the reefer containers at +10°C, then that obligation would have been stated in the SOP.
AWA submits that its alleged obligation to ensure that the carriage temperature for the reefer containers was set at the correct temperature is illusory because it is not spelt out anywhere. The SOP did not impose any obligation at all on AWA with respect to reefer containers, let alone require it specifically to instruct ANL to set their temperature at +10°C.
AWA submits that, under the SOP, all it was required to do after a booking was made was to send a booking confirmation to Marvulic, with a copy to Singh, and that was this obligation was complied with.
AWA submits that, during cross-examination, Singh:
(a)confirmed that Prestwood sent him the booking confirmation for the First Shipment on 23 May 2017, so that Seaway could check the information recorded in it to make sure it was correct, since Seaway, as Manassen’s forwarding agent under the Service Agreement, would be responsible to Manassen for any damage suffered to, or loss of, the goods in transit;
(b)admitted that he did not vet the booking confirmations; and
(c)agreed that if he had picked up that the booking confirmation for the First Shipment recorded an incorrect temperature setting of -10°C, he could have contacted ANL, corrected that error, and thereby avoided the damage to all of the Shipments in issue in this proceeding.
G.2.1.3 Carrier to Carrier Agreement
AWA submits that the C2C Agreement is not indicative of the existence of the alleged FFA and, further, has nothing to do with the shipments in issue in this proceeding. The C2C Agreement states that it is ‘a cooperative, non-exclusive working agreement between two non-vessel operating common carriers (NVOCCs), in which one carrier will share space on containers loaded by the other carrier on behalf of their respective shippers’. AWA submits that it is therefore apparent, on its own terms, that the C2C Agreement — like the SOP — is not an agency agreement. Instead, it is — like the SOP — a collaboration between two independent contractors, each carrying on its own independent business.
G.2.1.4 The nature of the shipments
AWA submits that its arranging for the carriage and delivery of the shipments by ANL puts a lie to the fiction of the alleged FFA. AWA relies on Davies and Dickey’s Shipping Law (4th ed),[27] where the learned authors observe at [12.840] that (citations omitted):
The traditional view of the role of a freight forwarder is that it acts as agent for the shipper of goods, arranging for carriage and delivery of the goods by others, without contracting to carry and deliver the goods itself. The forwarder enters into a contract of carriage with a sea-carrier on behalf of the shipper as an undisclosed principal. The freight forwarder may issue to the shipper a document called a consignment note or a house bill of lading, but that document is not a true bill of lading when the forwarder acts merely as an agent. The document is, at most, a receipt for the goods coupled with an authority to enter into a contract of carriage on behalf of the shipper.
[27]Martin Davies and Anthony Dickey, Shipping Law (Thomson Reuters, 4th ed, 2016).
AWA submits that, consistent with the above observation, it is clear in this case that it acted as forwarding agent for Van Law Foods, who, in accordance with the SOP, was named as the ‘shipper’ on each of the house bills of lading, arranging for the carriage and delivery of the goods by others, without contracting to carry and deliver the goods itself.
AWA submits that it then entered into contracts of carriage with ANL, being the ocean carrier, as evidenced by each of the ocean bills of lading issued by ANL in respect of each of the shipments, on behalf of Van Law Foods (the ‘shipper’) as an undisclosed principal.
AWA submits that the house bills of lading issued by AWA to Van Law Foods were not true bills of lading, because AWA acted merely as an agent and did not undertake any carriage or delivery services itself. At no time did AWA have physical possession of the goods, either as a bailee or otherwise, and no allegation to the contrary is made by Seaway. Consequently, the house bills of lading were, at most, a receipt for the goods the subject of the shipments, coupled with an authority to enter into contracts of carriage with ANL on behalf of Van Law Foods.
AWA submits that the Court ought reject Seaway’s submissions that the house bills of lading issued by AWA at best served as an authority to enter into the ANL combined transport bills of lading from Fullerton to Australia as agent on behalf of Manassen as undisclosed principal for the following reasons:
(a)First, it has never before been pleaded or alleged by Seaway that AWA acted as agent on behalf of Manassen as an undisclosed principal. Further, it was never put to Burford during cross-examination and, per the rule in Browne v Dunn, should not be permitted now.
(b)Second, AWA was never authorised by Manassen to act as its agent. There was no contract. Manassen never ever had any communication with AWA.
G.2.2 Implied term of due care and skill
AWA made few submissions on the topic of whether the alleged FFA contained an implied term of due care and skill, save that the FFA and the duty are fictions created by Seaway that are not borne out by the evidence.
G.2.3 Breach by AWA
AWA likewise made few submissions on the topic of whether it breached the alleged implied term of due care and skill, save that even if the FFA existed, it was not breached by AWA. Nonetheless, many of the questions put to Seaway’s witnesses seemed to be directed to eliciting admissions that Seaway or ANL were to blame for the incorrect temperature setting. AWA’s case was that its initial emails for the First and Third Shipments correctly specified the temperature as 10°C (ie +10°C), that ANL then incorrectly recorded that in its responding email as -10°C, which error ANL then perpetuated in the booking confirmations. AWA seemed to contend that it was not AWA’s role to check the booking confirmations or correct the error. Insofar as the Second Shipment was concerned, AWA sought to emphasise AWA’s email to book it on the same terms as the First and Third Shipments, contending that ANL should have checked AWA’s initial email requesting those shipments rather than the booking confirmations or screenshots.
G.2.4 Remoteness
AWA submits that Seaway never informed AWA that Seaway had voluntarily assumed a contractual liability under the Service Agreement for the negligence of its subcontractors. As such, AWA submits that even if the FFA existed as alleged by Seaway, and was breached by AWA, AWA would still not be liable for the loss claimed by Seaway because AWA could not reasonably have known that the loss in question was a probable result of the breach. According to AWA, the loss caused by AWA’s alleged breach would not be compensable because it is too remote under the rule in Hadley v Baxendale, as restated by the High Court in European Bank Ltd v Evans.[28]
[28](2010) 240 CLR 432, [13].
AWA submits that due to Seaway’s failure to put AWA on notice of its contractual liability to Manassen at the time the alleged FFA was made, it cannot be said that AWA knew, or should have known, that a liability on AWA’s part, to indemnify Seaway for the amount paid by Seaway to Manassen under the Service Agreement, would probably result from a breach of the alleged FFA by AWA.
G.2.5 Mitigation of loss by Seaway
AWA submits that it should not be held liable to Seaway for either the interest or costs for any award of damages made in this proceeding because those amounts were incurred as a result of Seaway defending Manassen’s claim without having a viable basis for doing so, rather than as a result of any action or inaction on the part of AWA.
On this point, AWA submits that McElvaney says in his witness statement that:
… [Seaway’s] ability to defend [Manassen’s] claim was extremely limited in view of the terms of the bespoke contract between [Manassen] and [Seaway].
G.2.6 Contributory negligence of Seaway
AWA submits that if the Court concludes that AWA has a liability to Seaway for loss suffered by it as a result of the breach of the alleged FFA which is not too remote, then the Court should find that the loss was suffered partly as a result of Seaway’s contributory negligence.
AWA submits that Seaway voluntarily assumed a contractual obligation under the Service Agreement:
(a)to indemnify, defend and hold Manassen harmless from and against any claim, demand, cause of action, loss, damage, cost or expenses which directly or indirectly arise out of or are in any way associated with the action or inaction of Seaway, which is in breach of the terms of the Service Agreement (cl 10.2); and
(b)to be liable towards Manassen when negligent according to the standards of trade and to contract towards Manassen as a principal and/or carrier and to assume liability for Seaway’s subcontractors as for itself (cl 10.4).
However, AWA submits that Seaway neglected:
(a)to inform AWA, when Seaway knew or ought to have known, that the refrigerated containers for the shipments should be set at +10°C;
(b)to give AWA any or adequate instructions regarding the temperature at which the shipments should be carried; and
(c)to check, before they were packed, that reefer containers for the First, Second and Third Shipments were each set at the correct temperature for carrying the cargoes,
so as to avoid a liability to indemnify Manassen under the Service Agreement.
AWA submits that as a result of Seaway’s contributory negligence, the damages (if any) recoverable by Seaway must be reduced to such extent as the Court thinks just and equitable having regard to Seaway’s share in the responsibility for the loss and damage. AWA submits that it would be just and equitable, in the circumstances of this case, to reduce any damages awarded to Seaway by 80%. AWA did not expand upon the basis for this level of reduction.
In respect of the settlement amount (exclusive of interest and costs), AWA’s liability is the amount of $260,132.08. This comprises:
(a)$102,476.27, being the proportion of the settlement sum referable to the First and Third Shipments of $170,793.79 multiplied by 60%; and
(b)$157,655.81, being the proportion of the settlement sum referable to the Second Shipment.
I have already found that AWA’s liability extends to amounts paid by Seaway to Manassen for interest and costs. Of the settlement sum of $328,449.60, the amount of AWA’s liability as set out in the previous paragraph is approximately 80%. In my view, the same percentage should be applied to interest and costs, such that AWA is also liable for 80% of the interest and cost components. I set out those calculations as follows:
(a)80% of the interest paid of $104,833.92 is $83,867.14; and
(b)80% of the costs paid of $177,500 is $142,000.
Thus, the total amount for which AWA is liable is $485,999.22, which I will round up to $486,000. This is roughly 80% of the amount claimed by Seaway against AWA.
G.4 Conclusion regarding Issue 1
Based on the above analysis, the Court’s conclusions regarding relevant matters within Issue 1, by reference to the joint statement issues, are summarised in the below table.
No.
Description
Answer
1.
Did Seaway enter into an FFA with AWA as Seaway’s local agent in the USA for the purpose of providing freight forwarding services to Manassen, including in respect of Ex Works shipments of food products from Van Law Foods’ premises in California to Sydney, Melbourne and Fremantle?
Yes
2.
If the answer to the above question is yes, was it an implied term of the FFA that AWA would perform its services thereunder with due care and skill (the Implied Term)?
Yes
3.
If the Implied Term was included in the FFA, did AWA breach the Implied Term:
(a)
concerning the First Shipment, by virtue of the fact that:
(i)
in an email dated 2 June 2017, Stacey Prestwood on behalf of AWA confirmed with ANL Oceana that the cargo carried bill of lading S00082174 should be carried at -10°C as per an attached screenshot?
Yes
(ii)
in an email sent on 6 July 2017 at 6.41am by Nancy Janosky-Newman of AWA, to a representative of ANL, AWA instructed ANL to set the temperature of the first container at -10°C?
Yes
(b)
concerning the Second Shipment, by virtue of the fact that:
(i)
in an email dated 2 June 2017, Stacey Prestwood on behalf of AWA confirmed with ANL Oceana that the cargo carried bill of lading S00082174 should be carried at -10°C as per an attached screenshot?
Yes
(ii)
in an email dated 14 July 2017, April Ransick of AWA confirmed with ANL Oceana that the second cargo should be carried at -10°C?
Yes
(c)
concerning the Third Shipment, by virtue of the fact that:
(i)
in ANL’s shipping instructions document with reference no. OCEO11475, AWA’s instructions to ANL were recorded to be that the temperature of third container should be set at -10°C?
Not answered, as no submissions were made on this issue
(ii)
ANL’s booking confirmation dated 19 May 2017 recorded that AWA had instructed it that the temperature of the third container should be set at -10°C?
Yes
(iii)
in an email sent on 14 July 2017 at 12.02am April Ransick of AWA instructed ANL to set the temperature of the third container at -10°C?
Yes
4.
If there was a breach of the Implied Term by virtue of any of the facts above, then:
(a)
was ANL a concurrent wrongdoer, within the meaning of s 24AH of the Wrongs Act, by reason that it owed Seaway a duty, as the ocean carrier of the cargoes under bills of lading for combined transport and port to port shipment which named AWA as shipper and Seaway as consignee, to exercise due care and skill in and about the carriage of the cargoes, which ANL breached? And
Yes, in respect of the First and Third Shipments
(b)
what is the amount that AWA’s liability is limited to, for the purposes of s 24AI of the Wrongs Act, being the amount which reflects the proportion of Seaway’s loss that the Court considers just, having regard to the extent of AWA’s responsibility for the loss?
$486,000
5.
Further or alternatively, was the loss or damage caused to Seaway, by AWA’s breach of the Implied Term (the wrong), suffered as the result partly of the wrong and partly due to Seaway’s failure to take reasonable care (contributory negligence)?
No
6.
Further, if ANL was a concurrent wrongdoer, then is the Settlement Sum an excessive amount, having regard to the extent of ANL’s proportionate responsibility for Seaway’s loss?
Yes
7.
Further, if the loss or damage to Seaway was suffered as the result partly of the wrong and partly due to Seaway’s contributory negligence, then is the Settlement Sum an excessive amount, having regard to Seaway’s contributory negligence?
No, not on account of alleged contributory negligence
8.
If ANL was not a concurrent wrongdoer, and/or the loss or damage to Seaway was not suffered as the result partly of the wrong and partly due to Seaway’s contributory negligence, was AWA’s breach causative of loss to Seaway, and if so, in respect to what amount?
Yes, AWA’s breach was causative of loss to Seaway, in the amount of $486,000
H Issue 2: Liability to contribute to the settlement sum
Given that I have already found AWA liable to Seaway for its breaches of the FFA (ie Issue 1), strictly speaking it is unnecessary for me to deal with Issue 2. Nonetheless, given that Issue 2 was advanced further or alternatively, I will set out the parties’ submissions in that regard and my conclusions.
H.1 Seaway’s submissions
H.1.1 Basis for Manassen’s claim against Seaway
Seaway seeks contribution or indemnity from AWA in respect of the settlement it entered into with Manassen. Seaway submits that the contribution legislation provides for a statutory remedy reflecting the equitable doctrine of contribution, that where there are co-ordinate liabilities to make good the one loss,[50] and one party has borne a liability disproportionate to its causal responsibility for that loss, there should be a redistribution having regard to what is just and equitable.
[50]Godfrey Spowers (Victoria) Pty Ltd v Lincoln Scott Australia Pty Ltd (2008) 21 VR 84, [6].
Seaway relies on the following passage from Halsbury’s Laws of Australia:
In Victoria, a person who in good faith has made or agreed to make any payment in settlement or compromise a claim made against them in respect of any damage (including a payment into court which has been accepted) is entitled to recover contribution without regard to whether that person is or ever was liable in respect of that damage, as long as (assuming that the factual basis of the claim against them could be established) that person would have been liable. This means that a person may recover contribution even though they would not have been held liable by a court if there had been a hearing. Such provision is said to encourage settlements in instances of consent judgments.
Seaway submits that, in respect to a claim brought under s 23B(4) of the Wrongs Act, although there does not need to be a trial within a trial as to whether Seaway would have been liable to Manassen if the matter proceeded to hearing, Manassen’s pleaded claim against Seaway was nonetheless strong, given that Seaway had assumed liability for its subcontractors under cls 10.2 and 10.4 of the Service Agreement.
H.1.2 AWA’s alleged duty to Manassen
Seaway submits that AWA owed a duty to Manassen to exercise reasonable care when conveying instructions to ANL as to the carriage temperature. These were Ex Works shipments, and it was inevitable that Manassen would suffer property damage if they were carried at -10°C .
Seaway submits that AWA’s assertion that it owed a duty in tort to Van Law Foods alone because Van Law Foods was its principal should be rejected. In support of this, Seaway refers to its submissions addressing the ‘house’ bills of lading, summarised at paragraphs 107 to 120 above. AWA was at best acting as agent for its undisclosed principal Manassen when entering into the contracts of carriage with ANL. There is no evidence of a contract between Van Law Foods and AWA.
Seaway submits that, even if there were a contractual relationship between AWA and Van Law Foods, it is well established that a duty of care to prevent injury (ie property damage) may be owed to parties outside the confines of a contractual relationship.[51]
[51]Donoghue v Stevenson [1932] AC 562; Voli v Inglewood Shire Council (1963) 110 CLR 74, 85.
H.1.3 Breach of duty by AWA
Seaway submits that AWA’s acts or omissions directly caused loss to Manassen. AWA may not have turned the dial on the reefer units; but ANL reasonably followed AWA’s instructions to arrange for that to happen. In support of this, Seaway refers to its submissions addressing the evidence of Isom and Prestwood, summarised at paragraphs 126 to 132 above.
H.1.4 Non-delegable duty vs contribution
Seaway submits that neither Manassen nor Seaway has alleged that Seaway owed a non-delegable duty of care to Manassen. Seaway’s liability to Manassen was in contract. Seaway claims contribution from AWA by reason of AWA’s liability to Manassen in negligence.
Seaway submits that Manassen could have sued either party, but relevantly elected to pursue its claim against Seaway and not AWA. That is the very reason why Seaway claims contribution from AWA.
Seaway submits that when assessing contribution, the Court may have regard to what is just and equitable,[52] which may amount to a complete indemnity.[53]
H.2 AWA’s submissions
[52]Podreberseck v Australian Iron & Steel Pty Ltd (1985) 59 ALRT 529, 532-3; Godfrey Spowers (Victoria) v Lincoln Scott Australia (2008) 21 VR 84, [7]–[8].
[53]Yeung v Santosa Realty Co Pty Ltd (2020) 60 VR 161, [111]–[112].
H.2.1 Basis for Manassen’s claim against Seaway
As noted in section G.3.5 above, AWA submits that Seaway defended Manassen’s claim without having a viable basis for doing so, rather than as a result of any action or inaction on the part of AWA. However, AWA does not expand upon this point in relation to issue two.
H.2.2 AWA’s alleged duty to Manassen
AWA submits that it did not owe Manassen a duty in tort to take reasonable care to prevent Manassen from suffering loss or damage. AWA submits that it may be accepted that AWA owed such a duty in tort to Van Law Foods, for whom AWA acted as a forwarding agent, but not to Manassen, who was not its client.
H.2.3 Breach of duty by AWA
AWA submits that in no sense can it be said that AWA inflicted physical injury to the shipments. AWA never took custody of the shipments, or the reefer containers into which those goods were packed. AWA’s sole function was to act as the forwarding agent for Van Law Foods, who was named as ‘shipper’ in the house bills of lading, which AWA fulfilled by arranging for others to carry and deliver the shipments that had been purchased by Manassen on an Ex Works basis.
AWA submits that for each of the three shipments, AWA fulfilled the functions allocated to it under the SOP for the reasons that follow.
AWA submits that, with respect to the First Shipment, it instructed ANL by email to set the temperature of the reefer container into which the goods were packed at +10°C. AWA submits that it was not obliged to reply to the email sent by ANL on 20 May 2017 seeking instructions concerning a booking confirmation wherein a temperature setting of -10°C had been recorded.
AWA submits that in the absence of a response from AWA, and having previously received express written instructions from AWA to set the reefer container for the First Shipment at +10°C, ANL should not have taken any further step in relation to the First Shipment until it had resolved its uncertainty as to the correct temperature setting. AWA submits that ANL’s uncertainty appears to have been compounded by the fact that the shipping instruction for the First Shipment recorded a temperature setting of 0.000 degrees Celsius. Had ANL resolved its uncertainty before taking a further step, the spoilage of all the Shipments could have been avoided.
AWA submits that its email to ANL on 5 July 2017, in which AWA advised ANL that the temperature setting for the First Shipment should be -10°C, was not a cause of the loss of the First Shipment, as that shipment had already been spoiled by the time that email was sent. Further, as the carrier of the First Shipment, ANL had a common law duty to return the First Shipment in the same good order and condition in which it was received. AWA submits that ANL breached that duty in that when the First Shipment was delivered, it was found to be damaged. Further or alternatively, ANL was under a common law duty of care with respect to the First Shipment, which it breached by setting and/or keeping the First Shipment at -10°C notwithstanding that it was instructed by AWA to set and keep the First Shipment at +10°C. In consequence of that breach, the First Shipment was delivered in spoiled condition.
AWA submits that, with respect to the Second Shipment, it also instructed ANL by email to set the temperature of the reefer container into which the goods were packed at +10°C. Given that AWA’s shipping instructions to ANL for the Second Shipment also recorded that the temperature should be set at +10°C, it ought to have been crystal clear to ANL that the correct temperature setting was +10°C, rather than -10°C. AWA submits that by the time AWA sent its email of 14 July 2017 to ANL advising that the correct temperature setting was -10°C, the goods had already been packed into a reefer container set at -10°C and were destined to spoil.
AWA submits that, with respect to the Third Shipment, it also instructed ANL by email to set the temperature of the reefer container into which the goods were packed at +10°C. AWA repeats its submission that it was not obliged to reply to the email sent by ANL on 20 May 2017 seeking instructions concerning a booking confirmation wherein a temperature setting of -10°C had been recorded. AWA submits that its observations concerning ANL’s role in the spoilage of the First Shipment apply equally to its role in the spoilage of the Third Shipment, as ANL also set the temperature of the reefer container for that shipment at -10°C.
AWA submits that, with respect to all of the Shipments, Seaway owed contractual obligations to Manassen under the Service Agreement, which included performing dedicated door-to-door order management service, and management of third-party FCL transport providers such as AWA. Had Seaway carried out those contractual obligations, rather than being entirely derelict in the performance of them, the spoilage of the First Shipment could have been avoided.
H.2.4 Non-delegable duty vs contribution
AWA submits that Seaway’s case is predicated upon the assumption the AWA owed Manassen not merely a duty to take reasonable care but, rather, a personal duty to ensure that reasonable care was taken by ANL in recording AWA’s instructions for setting the temperature of the reefer containers for the shipments.[54]
[54]AWA submits that such a personal duty is known as a non-delegable duty of care per Kondis v State Transport Authority (1984) 154 CLR 672 (Kondis), 686.
AWA submits that no such personal duty was owed by AWA to Manassen. A non‑delegable duty only arises when the person upon whom it is imposed has undertaken the care, supervision or control of the person or property of another, or is so placed in relation to that person or property as to assume a particular responsibility for the safety of the person or the property in circumstances where the person affected might reasonably expect that due care will be exercised.[55] AWA submits that the special responsibility may be identified by viewing the relationship from the perspective of the person to whom the duty is owed, the duty of care arising in cases where there is a special dependence or vulnerability on the part of that person.[56]
[55]Ibid 687.
[56]Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520, 551.
AWA submits that there was no special dependence by Manassen on AWA and nor was Manassen vulnerable on the facts of this case. Manassen had engaged Seaway as its forwarding agent, under the Service Agreement, to look after the shipments and ensure that they were delivered from the USA to Manassen in good order. AWA submits that the Service Agreement was adequate to protect Manassen because Seaway ultimately indemnified it for the loss that it suffered as a result of the spoilage of the shipments.
H.3 Consideration
H.3.1 Basis for Manassen’s claim against Seaway
AWA submits that Seaway had no viable basis for defending Manassen’s claim but makes no submission connecting this to AWA’s liability, or lack thereof, to contribute to the settlement sum. Seaway accepts that Manassen’s claim against it was strong, but submits that it settled that claim in good faith and should therefore be entitled to recover a contribution from AWA as the party that caused Manassen’s loss.
The same analysis set out in section G.3.5 above applies here, in that it was reasonable for Seaway to:
(a)defend Manassen's claim against it; and
(b)accept Manassen’s offer of compromise.
H.3.2 AWA’s alleged duty to Manassen
Seaway submits that AWA owed a duty to Manassen to exercise reasonable care when conveying its instructions to ANL. AWA disputes this and submits that it may have instead owed such a duty in tort to Van Law Foods. I prefer Seaway’s submissions on this topic.
As I have concluded at paragraphs 226 to 233 above, the goods were purchased by Manassen on an Ex Works basis. That being the case, no contract existed between AWA and Van Law Foods. Both parties made submissions that AWA was acting as agent for an undisclosed principal. Contrary to AWA’s submission that this was Van Law Foods, I have concluded that the undisclosed principal was in fact Manassen. Manassen was the buyer of the goods, while Van Law Foods was the supplier. According to the Incoterms, under an Ex Works arrangement it is up to the buyer to arrange carriage. Hence, the freight forwarding services were always being provided on behalf of Manassen as undisclosed principal.
Although AWA was mistaken about the identity of the principal for whom it acted as a forwarding agent, it was willing to accept that it may have owed that principal a duty in tort to exercise reasonable care. As such, I consider it straightforward enough to say that AWA instead owed Manassen that duty when providing its freight forwarding services under Ex Works terms.
H.3.3 Breach of duty by AWA
Seaway relies on the evidence of Isom and Prestwood in support of its submission that Manassen’s loss was caused by the acts or omissions of AWA. However, AWA submits that it cannot be said to have to caused the damage to the shipments because it never had custody of the goods or the reefer containers into which they were packed.
I reject this submission.
One does not need to take possession of goods in order to damage them. Instructing another to deal with goods in a way that will cause damage to them will have just the same effect. In this case, ANL recorded an incorrect temperature setting after taking a booking request from AWA; a temperature setting that would freeze the goods rather than keeping them stable. However, as has already been discussed in the reasons, AWA had multiple opportunities, as well as a duty, to identify and correct this error yet failed to do so. I consider AWA’s breach to be clear for the purpose of contribution under s 24AI of the Wrongs Act.
AWA makes several submissions to the effect that it fulfilled all the functions allocated to it under the SOP. I will address each of these in turn.
First, I reject AWA’s assertion that it was not obliged to reply to Briggs’ email on 20 May 2017 in which he sought instructions concerning a booking confirmation wherein a temperature setting of -10°C had been recorded. I have found that the FFA contained a term of due care and skill. When providing instructions, it is a sensible practice to confirm that the other party has heard and understood those instructions. This is especially important in a commercial setting where even the smallest error, such as placing a minus symbol before a temperature setting, can have dire financial consequences. Therefore, Prestwood’s failure to review Briggs’ email and correct the erroneous temperature setting was a breach of AWA’s duty to act with due care and skill.
Second, I reject AWA’s assertion that ANL should not have taken any further step in relation to the First Shipment until it had resolved its uncertainty as to the correct temperature setting. At the time of Briggs’ email on 20 May 2017, there was no uncertainty on the part of ANL. Briggs emailed Prestwood confirming the booking details for the First Shipment and only sought further instructions if the booking contained an error. True it is that the booking confirmation did in fact contain an error. However, one can be certain while still being wrong. In the absence of a reply from AWA to Briggs asking that it ‘[p]lease let us know if these should be changed’, it was reasonable for ANL to proceed with the booking. If any uncertainty had existed, ANL would not have proceeded with the booking before hearing back from AWA.
Third, AWA submits that its email to ANL on 5 July 2017, in which AWA advised ANL that the temperature setting for the First Shipment should be -10°C, was not a cause of the loss of the First Shipment, as that shipment had already been spoiled by the time that email was sent.
According to ANL’s reefer download log for the First Shipment, the reefer unit was set to -10°C by ANL at 5.36pm on 28 June 2017. According to Prestwood, the temperature of a reefer container is usually set within 24 hours of the time it is going to be packed. The First Shipment was then loaded onboard the carrier vessel on 2 July 2017. The email from ANL to AWA noting the discrepancy between ANL’s booking information and AWA’s shipping instructions for the First Shipment was received at 1:18pm on 5 July 2017.
In his Expert Report, Stacey concludes that (emphasis added):
The elapsed time between closing the doors on the Reefer and when ice crystals began forming in the product can only be estimated without sacrificing another container of product to the same process with temperature monitoring devices (data loggers) distributed throughout the load. My educated guess is that the first ice crystals would have formed in the product within 4 to 10 days of the sealing of the container and setting the temperature of the refrigeration unit - seven days (or one week) being likely.
On the basis of Stacey’s expert opinion, it was possibly too late by 5 July 2017 to salvage the goods by correcting the reefer temperature setting for the First Shipment. By this time, the goods were likely frozen, having been stored at -10°C for a period of almost seven full days. Accordingly, it cannot be said that AWA’s incorrect instructions to ANL in its 5 July 2017 email caused the loss.
However, this point is somewhat immaterial, given I have already concluded that AWA was in breach by failing to properly review the booking confirmations. Furthermore, if the erroneous temperature setting for the First Shipment had been corrected by AWA, this would likely have had a flow-on effect for the Second and Third Shipments. Prestwood’s evidence was that if she had become aware of the incorrect temperature settings, she would have issued a correction to ANL for each of the shipments.
It is somewhat difficult to deal with this material, in particular Stacey’s Expert Report, as no submissions were made about it by either party. This is surprising, particularly on the part of AWA, who had commissioned the Expert Report and called Stacey to give evidence. In his report and during his oral evidence, Stacey rightly pointed out and accepted shortcomings in the exercise he had performed, given that it was really a ‘desk review’ based on a number of assumptions about how quickly pallets of bottled salad dressing would freeze, assumptions which were not tested through any experimentation. As a consequence, I have taken Stacey’s report into account but have not given it a great deal of weight, particularly in terms of identifying when would have been too late after each of the three cargoes were loaded into the reefer units with the temperature set for -10°C. Given my conclusions, both here and in section G.3.3 above, as to AWA’s liability, in particular that AWA breached its contractual obligations and its common law duty by failing to identify and correct the instruction for the temperature setting, the question of when would have been too late to salvage the goods had the error been corrected at some point after loading is of little or no importance in the circumstances of this case. Similarly, it is only of importance if AWA’s breach only arose at the time it confirmed the (incorrect) setting of -10°C on 5 or 14 July 2017.
Fourth, AWA submits that, with respect to the Second Shipment, it also instructed ANL to set the temperature of the reefer units at +10°C. However, this is not borne out by the evidence. As explained at paragraph 309 above, in requesting a booking ‘just like OCE0114573’ Prestwood made reference to the booking confirmation for the First Shipment that contained the incorrect reefer temperature setting. As a result, the error was duplicated. It therefore cannot be said that AWA instructed ANL to set the temperature of the reefer units for the Second Shipment at +10°C.
AWA repeats its submission that by the time it confirmed in its 14 July 2017 email to ANL that the correct temperature setting was -10°C, the goods had already been packed and were destined to spoil. However, unlike with the First Shipment, AWA’s assertion is not borne out by the evidence. According to ANL’s reefer download log for the Second Shipment, the reefer unit was set to -10°C by ANL at 10:22pm on 11 July 2017. The Second Shipment was then loaded aboard the carrier vessel on 16 July 2017. The email from ANL to AWA noting the discrepancy between ANL’s booking information and AWA’s shipping instructions for the Second Shipment was received at 9:01am on 13 July 2017. On the basis of Stacey’s expert opinion, it is possible that there was time to correct the error. Assuming that the goods were loaded into the container within 24 hours of the reefer unit being set at -10°C, they would not have start to freeze until four days later at the earliest and seven days later at the most likely. It follows that there is no question of causation in relation to the damage caused to the Second Shipment.
Again, this point is immaterial given my findings at paragraph 359 above.
Fifth, AWA submits that its observations concerning ANL’s role in the spoilage of the First Shipment apply equally to its role in the spoilage of the Third Shipment. I reject this submission for the reasons given at paragraphs 353 to 354 above.
Lastly, AWA submits that if Seaway had carried out its obligations to Manassen under the Service Agreement, which included performing dedicated door-to-door order management service and management of third-party FCL transport providers, the spoilage of the First, Second and Third Shipments could have been avoided. I reject this submission. As I have already concluded, Seaway contracted AWA to perform freight forwarding services in the USA on behalf of its customer, Manassen. That being the case, Seaway was not obligated to check ANL’s booking confirmations or to ensure their accuracy. The responsibility to perform the freight forwarding services, and to perform them with due care and skill, lay entirely with AWA.
H.3.4 Non-delegable duty vs contribution
Before addressing the parties’ submissions, I consider it necessary to canvas the authorities on the question of non-delegable duties, some of which are relied upon by AWA.
In Commonwealth v Introvigne,[57] Mason J (as his Honour then was) stated that ‘the law has, for various reasons, imposed a special duty on persons in certain situations to take particular precautions for the safety of others’. His Honour elaborated further on this statement in Kondis v State Transport Authority,[58] confirming it should be expanded ‘by adding a reference to safeguarding or protecting the property of other persons’.
[57](1982) 150 CLR 258, 271.
[58]Kondis, 687.
In Burnie Port Authority v General Jones Pty Ltd,[59] the High Court referred to Kondis, stating that (citations omitted, emphasis added):
It has long been recognized that there are certain categories of case in which a duty to take reasonable care to avoid a foreseeable risk of injury to another will not be discharged merely by the employment of a qualified and ostensibly competent independent contractor. In those categories of case, the nature of the relationship of proximity gives rise to a duty of care of a special and “more stringent” kind, namely a “duty to ensure that reasonable care is taken”. Put differently, the requirement of reasonable care in those categories of case extends to seeing that care is taken.
[59](1994) 179 CLR 520 (‘Burnie Port Authority’), 551.
Returning to Mason J’s findings in Kondis,[60] his Honour stated that:
The element in the relationship between the parties which generates a special responsibility or duty to see that care is taken may be found in one or more of several circumstances … In these situations the special duty arises because the person on whom it is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised.
[60]Kondis, 687.
In Burnie Port Authority, the High Court stated that the relationship of proximity giving rise to the non-delegable duty of care should be viewed from the perspective of the person to whom the duty is owed.[61] The High Court went on to expand upon this:[62]
The relationship of proximity which exists, for the purposes of ordinary negligence, between a plaintiff and a defendant … is characterized by … a central element of control and by … special dependence and vulnerability. One party to that relationship is a person who is in control of premises and who has taken advantage of that control to introduce thereon or to retain therein a dangerous substance or to undertake thereon a dangerous activity or to allow another person to do one of those things. The other party to that relationship is a person, outside the premises and without control over what occurs therein, whose person or property is thereby exposed to a foreseeable risk of danger. In such a case, the person outside the premises is obviously in a position of special vulnerability and dependence. He or she is specially vulnerable to danger if reasonable precautions are not taken in relation to what is done on the premises. He or she is specially dependent upon the person in control of the premises to ensure that such reasonable precautions are in fact taken.
[61]Burnie Port Authority, 551.
[62]Burnie Port Authority, 551.
AWA submits that there was no special dependence by Manassen on AWA and that Manassen was not vulnerable on the facts of this case; Manassen had engaged Seaway as its forwarding agent, under the Service Agreement, to look after the shipments and ensure that they were delivered from the USA to Manassen in good order. I do not accept this submission.
First, it was AWA that exercised control over the booking process in the USA. Under the SOP, AWA booked the carriage services with ANL. Manassen originally entrusted its logistics to Seaway. However, Seaway contracted AWA to perform those services in the USA on behalf of its client, Manassen. As already stated, its rationale for doing so, that being that it was not in a position to perform freight forwarding services in the USA without the requisite license, is immaterial.
Put simply, the process of the goods travelling from the seller to the buyer can be summarised as follows:
(a)Van Law Foods was responsible for making the goods available for pickup at its warehouse;
(b)AWA was responsible for arranging carriage of the goods from the USA to Australia (using Seaway’s contract with ANL under the SOP); and
(c)Seaway was responsible for delivering the goods to Manassen once they arrived in Australia.
That being the case, AWA was in control of the process when the damage to the goods occurred. It booked the contracts of carriage with ANL, provided the shipping instructions, and had a duty to perform this role with due care and skill.
Second, both Manassen and Seaway depended on AWA to oversee that process with reasonable care. Manassen and Seaway were dependent upon AWA to book ocean carriage of the goods and do so with reasonable care.
Third, Manassen was vulnerable in that its goods could be damaged or destroyed if reasonable precautions were not taken to ensure that they were transported properly. The fact that Manassen may be able to recover damages from Seaway under the Services Agreement does not negate the fact that Manassen could still suffer loss. Manassen was aware of Seaway’s agreement with AWA; and AWA was aware that Manassen was Seaway’s client. Given that the goods were purchased on an Ex Works basis, AWA was providing freight forwarding services in the USA on behalf of Manassen as an undisclosed principal. As such, Manassen was vulnerable to loss should AWA fail to perform those services without taking reasonable care.
All of this is a basis for finding AWA liable under the contribution provisions to contribute to the settlement. This does not require the duty to be non-delegable for it to arise. AWA’s contention that Seaway’s contribution case, ie Issue 2, is predicated on a non-delegable duty is simply wrong: that is not Seaway’s case. Seaway does not allege that AWA had an obligation to ensure ANL carried out its obligations with due care and skill. Seaway does not allege that AWA had a duty to ensure ANL exercised due care and skill. Rather, Seaway alleges that AWA had a duty to it and to Manassen to book the shipping of Manassen’s cargo and to exercise due care and skill when performing those booking services.
H.4 Conclusion regarding Issue 2
For the reasons given, I find that AWA’s breach of its duty caused Manassen’s loss and that, therefore, AWA is liable to contribute to the sum paid by Seaway to settle Manassen’s claim against it.
I see no reason for the amount of AWA’s contribution, if considered pursuant to Issue 2, to be any different to that determined by reference to Issue 1.
Based on the above analysis, the Court’s conclusions regarding relevant matters within Issue 2, by reference to the joint statement issues, are summarised in the below table (with the question number following on from the table for Issue 1).
No.
Description
Answer
9.
Further or alternatively (to Issue 1), did AWA owe Manassen, as the owner of the cargoes, a duty in tort to take reasonable care to prevent the loss of the cargoes?
Yes
10.
If AWA did owe such a duty in tort, did AWA breach that duty:
(a)
concerning the First Shipment, by virtue of any of the matters set out in (3)(a)(i) to (ii) of the table at paragraph 319 above?
Yes
(b)
concerning the Second Shipment, by virtue of any of the matters set out in (3)(b)(i) to (ii) of the table at paragraph 319 above?
Yes
(c)
concerning the Third Shipment, by virtue of any of the matters set out in (3)(c)(i) to (iii) of the table at paragraph 319 above?
Yes
11.
If AWA did breach that duty, then was Manassen’s claim against Seaway an apportionable claim within the meaning of s 24AE of the Act?
Yes
12.
If it was an apportionable claim within the meaning of s 24AE of the Act, was ANL a concurrent wrongdoer, within the meaning of s 24AH of the Act, by reason that it owed Manassen, as owner of the cargoes:
(a)
a duty to return those cargoes, which were bailed to ANL for the purpose of being carried under the bills of lading, in the same good order and condition in which they were received by ANL, which ANL breached?
Yes, in respect of the First and Third Shipments
(b)
further or alternatively, a common law duty of care with respect to each of those cargoes, which ANL breached?
Yes, in respect of the First and Third Shipments
13.
If ANL was a concurrent wrongdoer, then:
(a)
is the Settlement Sum the amount that AWA’s liability should be limited to, for the purposes of s 24AI of the Act, being the amount that reflects the proportion of Manassen’s loss that the Court considers just, having regard to the AWA’s responsibility for the loss of the cargoes? Or
No
(b)
is the Settlement Sum excessive, having regard to the extent of ANL’s proportionate responsibility for Manassen’s loss and, if so, how much of the Settlement Sum should be disregarded as excessive under s 24(2B) of the Act?
Yes. The amount to be disregarded as excessive is $124,783.52
14.
If Manassen’s claim against Seaway was not an apportionable claim within the meaning of s 24AE, or ANL was not a concurrent wrongdoer, then was AWA’s breach causative of loss to Manassen and, if so, how much is AWA liable to pay Seaway, by way of contribution, to the Settlement Sum?
AWA’s breach was causative of loss to Manassen and AWA is liable to pay to Seaway $486,000
Conclusion
For the reasons set out above, I have found that AWA breached the Implied Term in the FFA and that it is liable to Seaway for a proportion of the amount Seaway paid to Manassen to settle its claim, which amount included interest and costs. The amount which AWA must pay to Seaway is $486,000. Had it been necessary to determine Seaway’s alternative claim to contribution, I would have granted that claim in the same amount.
The parties are to confer with a view to providing proposed orders to my Chambers which give effect to these reasons, including as to interest and costs as between Seaway and AWA.
To that end, the parties are to provide to my Chambers, by no later than 4.00pm on 3 March 2025:
(a)agreed orders to give effect to these reasons, including as to interest and costs as between Seaway and AWA; or
(b)if there is no agreement, each party’s preferred form of orders.
If the parties do not agree on the form of orders, the proceeding will be listed for 10:00am on 7 March 2025, where I will hear from the parties and make final orders.
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SCHEDULE OF PARTIES
| S ECI 2018 00309 | |
| BETWEEN: | |
| MANASSEN FOODS AUSTRALIA PTY LTD (ACN 001 356 449) | Plaintiff |
| - and - | |
| SEAWAY LOGISTICS PTY LTD (ACN 094 204 609) | First Defendant |
| ANL SINGAPORE PTE LTD | Second Defendant |
| - and - | |
| INTELLIGENT SCM LLC | Third Party |
0
12
0