Megalift Pty Limited v Terminals Pty Limited - [2009] NSWSC 324

No judgment structure available for this case.

CITATION: Megalift Pty Limited v Terminals Pty Limited [2009] NSWSC 324

HEARING DATE(S): 2, 3, 4, 5 and 6 March 2009

JUDGMENT DATE :
29 April 2009

JUDGMENT OF: Bergin CJ in Eq

DECISION: Plaintiff entitled to recover $162,278 from defendant. Defendant entitled to recover $176,998 from plaintiff.

CATCHWORDS: [CONTRACT] - Whether parties entered into contract - Where offer referred to "estimates" - Responsibility for insurance of barge and assessment of shoreline - Competing claims for demurrage

CASES CITED: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Croshaw v Pritchard and Renwick (1899) 16 TLR 45
Concut Pty Ltd v Worrell & Anor (2000) 176 ALR 693
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153

PARTIES: Megalift Pty Limited
Terminals Pty Limited

FILE NUMBER(S): SC 5962 of 2006

COUNSEL: GE Underwood/RK Newton (Plaintiff)
S Burchell (Defendant)

SOLICITORS: Hewitts Commercial Lawyers (Plaintiff)
Mallesons Stephen Jaques (Defendant)

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BERGIN CJ in Eq

29 APRIL 2009

5962/06 MEGALIFT PTY LIMITED v TERMINALS PTY LIMITED

Introduction

1 The plaintiff, Megalift Pty Limited, specialises in the transportation of heavy materials and has been described in the proceedings as the heavy lift specialist in Australia. The defendant, Terminals Pty Limited, operates premises at Corio Bay near Geelong, in Victoria, at which it stores bulk liquids and gas. In 2005 the defendant commissioned the manufacture of a 270 tonne sphere in Thailand to enable it to store large quantities of butadiene. It was necessary to transport the sphere from Thailand to the defendant’s premises in Corio Bay by sea.

2 The sphere was transported on the vessel MV BBC Frisia (the Frisia) which arrived in Port Melbourne in April 2006. Once the Frisia docked in Melbourne, it was necessary to lift the sphere off the ship onto a barge on which it was then transported across Corio Bay to the defendant’s premises. It was then necessary to discharge the sphere from the barge and lift it onto the foundations that had been constructed at the defendant’s premises. Unfortunately when the barge arrived at the defendant’s premises it was not possible to discharge the sphere without excavating the defendant’s land to enable a safe discharge from the barge onto the defendant’s property. Although there was quite a deal of inconvenience, delay and cost incurred, the sphere was transported and placed onto the foundations without damage. The plaintiff claims that the defendant is indebted to it for the services that it provided including a claim for demurrage. The defendant claims that the plaintiff is indebted to it for various amounts, including for the excavation costs to facilitate the safe discharge of the sphere from the barge.

The facts

3 In early 2005 the plaintiff and the defendant commenced discussions in relation to the proposed transportation of the sphere from Thailand to Australia. Those discussions petered out in mid 2005 and did not resume until February 2006 when they centred around the plan for the plaintiff to be involved in the ship to shore transportation of the sphere from the Frisia onto the barge, across Corio Bay to the defendant’s premises and discharging it onto the foundations at the defendant’s premises.

4 On 21 March 2006 the plaintiff wrote to the defendant in the following terms:

RE: TRANSPORTATION OF GAS SPHERE EX LASCELLES WHARF TO TERMINALS, CORIO

In response to our original quotation No. 7050209 dated 28 February, 2005 and subsequent communications, we have much pleasure in submitting our quotation for your consideration as follows.

Goods One (1) x Sphere (Gas Tank) @ (mm) 20030 L x 19300 W x 22000 H – 270.0 Tonnes

Scope of Work

Barge Status & Conditions of Hire:
SWISSCO MARINE V dumb barge has a design deck loading of 50 KPa.
The barge is owned by Austral Marine Pty Ltd.
Austral Marine Logistics (AML) performed the two recent ocean transits from Coffs Harbour.
Additional to the above quotation will be; plus cost of on/off survey, restoration of any damage and/or modifications, grinding and spot priming where any weldments are removed, insurances and contract preparation. If required (which would be determined by Naval Architect), Terminals will also be responsible for pumping out ballast water, flushing with fresh water and drying ballast compartments.

There will be some modification required to fit ramps that are suitable for the trailer configuration.
Swissco’s standard set up will not work for this job and they don’t have their ramps available in any case. We would most likely hire ramps or supply Lampson’s 15 meter long ramps.

Please note that the barge sailing would be undertaken under the BIMCO Conditions (refer to copy attached), as well as the conditions of the Bill of Lading, which would be raised closer to the sailing date.

Our Budget Offer

ELEMENT	PRICE ESTIMATES A$ (Excl. GST)
1. Supply of barge, transport trailers, cranes and tugs for delivery operation, including bridging ramps, stools, lash/secure for sea voyage, unlashing at Landing Point	$239,000.00
2. Project Management, Engineering (Newcastle based), Execution Plans (transport only)	Included
3. Naval Architects Assessments	EST: $12,000.00
4. Supply of spacer barges (two off) to hold the 16 metre barge out	EST: $20,000.00
5. Pilot and Worboats (sic)	To Terminals Account
6. Barge Modifications to make suitable for Sphere Tank sailing and all restorations of the same – details to be confirmed following Naval Architect assessment	To Terminals Account
7. Modification required to fit ramps that are suitable for the trailer configuration	To Terminals Account
8. Cost of ‘On’/‘Off’ Survey	To Terminals Account
9. Cost of pumping out ballast water, flushing with fresh water and drying ballast compartments – details to be confirmed following Naval Architect assessment	To Terminals Account
10. Supply of Barge, the following conditions apply; i) Bunkers at 80cents per litre ii) Total of 2 days free port time at Lascelles & Oyster Cove iii) Carriage under BIMCO Terms and Shipping Company’s Bill of Lading iv) Price excludes loading from heavy lift ship crane
11. Any wharf requirements, escorts, permits, storage, and the like	To Terminals Account
12. Overheads / Route Clearance Works	At Cost +10% Administration Fee
13. Applicable demurrage rates; - Barge – per day or part thereof - Transport trailer – per day or part thereof	$17,000.00 $12,000.00

Proposed ETD To be advised

Inclusions

Clients Responsibility

Insurance (Refer Insurance Section below)

Price Exclusions

1. Any costs or charges incurred for bridge work or road works that may be deemed necessary by the authorities, or detours made necessary by inclement weather or change of route for any unforeseen reason.

2. Any costs or charges incurred by overhead escorts.

3. Suitable transport saddles and/or lugs to be mutually agreed upon and, if required, would have to be supplied and installed by yourselves.

4. Route investigation costs by Megalift and all relevant authorities.

5. Any payments made on behalf of your Company would incur a 10% administration fee. You do have the option of paying ‘out of pocket’ expenses direct, thus avoiding this additional fee.

6. Any site works.

7. Payment of any site specific bonuses or agreements.

Special Conditions

Our offer is subject to our normal terms and conditions of trade as set out on the reverse side of our letterhead and the sea transport carrier’s terms and conditions, as well as the following;

1. We advise demurrage will be applicable for delays caused beyond our control.

2. Subject to receipt of full detailed drawings.

3. To facilitate our operations, consolidated work areas must be provided to the suitability of our weight loadings.

4. Megalift must stress that clear accessibility at all sites is made available.

5. This quotation is provided for budget purposes only.

6. Price is subject to availability of equipment at time of placing official order.

7. Client to provide sufficient notice of requirements.

8. Subject to statutory authority approvals for equipment, escorts and travel route allowed for in this quotation.

9. This quotation is based on existing conditions, Government authorities’ laws and/or regulations and may be subject to variation due to changes in such conditions and costs.

10. Should our company be awarded this contract, your written agreement to all terms and conditions as detailed in this correspondence along with a notation of our reference number are to be forwarded to our office.

11. The payment of Australian GST is not included in above pricing and would be additional to your account at the applicable rate.

Insurance

1. We do not carry an automatic All Risks Cover for the Insurance of goods handled by us. If requested in writing by yourselves, we could arrange such a cover through our Insurance Brokers, the cost of which would be to your account.

2. Otherwise, we strongly recommend that you notify your Insurance Brokers of these forthcoming moves and ask them to incorporate the name of our company in your current policy for the duration of the move.

5 On 4 April 2006 the defendant sent a signed Purchase Order to the plaintiff in the following terms:

Description	Qty	UOM	Direct Unit Cost	Expect Receipt Date	Amount
Supply transport to unload sphere ref 7050209 21/3	1	Per Event	239,000.00	04/05/06	239,000.00
Naval architects engineering – est $12000 – TBA	04/05/06
Supply spacers – est $20000 – TBA	04/05/06
Pilot/workboats – cost TBA	04/05/06
Barge mods – cost TBA	04/05/06
Mods to fit ramps – cost TBA	04/05/06
On/Off survey – cost TBA	04/05/06
Pumpout ballast water – cost TBA	04/05/06
ETA lascelles Wharf abt 28/4 – actual date TBA	04/05/06
Total AUD 10% GST Total AUD incl. GST	239,000.00 23,900.00 262,900.00

6 On 7 April 2006 the plaintiff sent to the defendant what was described as a “Working Copy” of the front sheet of the Baltic and International Maritime Council Standard Transportation Contract (BIMCO) in respect of the transportation of the barge. This document was overtaken by the further negotiations in relation to the Charter Party referred to below.

7 On 12 April 2006 Eastern Seaboard Marine Services (Eastern Seaboard) on behalf of the plaintiff conducted an inspection of the SWISSCO MARINE V barge (the barge) owned by Austral Marine Pty Ltd (Austral Marine). Eastern Seaboard provided a report dated 13 April 2006 to the plaintiff which included the observation that at the time of its inspection, “it was not intended that the vessels tanks would be opened up or ballasted for the current charter operation and consequently the existing condition of these spaces would not be expected to suffer any measurable or consequential change in condition”. Eastern Seaboard reported that on that basis it was unnecessary to conduct further inspection of the remaining tanks.

8 On 12 April 2006 the plaintiff wrote to Austral Marine advising that:

9 Austral Marine and the plaintiff commenced negotiations for a Charter Party for the hiring of the barge. On 18 April 2006 Piper Alderman, solicitors for Austral Marine, wrote to the plaintiff enclosing the draft Charter Party and advising as follows:

10 The plaintiff is a subsidiary of Lampson, the company referred to in this communication, and although Lampson is mentioned in a number of the communications, there is no issue in relation to the corporate structure. It is appropriate in these reasons to refer simply to the plaintiff without reference to Lampson.

11 On 19 April 2006 the plaintiff wrote to the defendant requesting the urgent provision of a letter stating that the plaintiff was acting as agent for the defendant as the plaintiff wanted to take the barge to Geelong the following day. The defendant responded stating that, “Megalift are authorised to act on Terminals Pty Ltd behalf for the sphere movement at Geelong”. On the same day Piper Alderman wrote to the plaintiff confirming that the defendant’s email was “sufficient authorisation for Austral Marine’s purposes subject to email confirmation from Terminals that you are authorised to execute the charterparty as their agents’.” On 20 April 2006 the defendant wrote to the plaintiff advising that Megalift was authorised to execute the Charter Party documents “and any insurances therein as Terminal Pty Ltd agents”.

12 The draft Charter Party was between Austral Marine, as owner, and the plaintiff, as agent for the defendant. The Charter Party period was four weeks with an initial delivery period of “18 April 2006 – 20 April 2006”. Clause 16(ii) was applicable with a stated valuation at $635,000. Clause 16(ii) provided relevantly as follows:

13 On 19 April 2006 the plaintiff’s accountant wrote to the plaintiff’s insurance brokers in the following terms:

We (Megalift) are hiring a Barge for 4 weeks starting tomorrow and we are obliged under the hire agreement to ensure the barge is insured for the 4 weeks.

I am faxing to you a copy of a valuation carried out in March 2005 provided to us by the company we are hiring the barge from, Austral Marine Pty Limited.

14 On the same day the insurance brokers wrote back to the accountant in the following terms:

15 On 20 April 2006 the plaintiff requested details from Austral Marine in respect of the insurance company with which the barge was “currently insured”. The plaintiff suggested that as it was acting as agent for the defendant, insurances might be taken out with Austral Marine’s preferred insurers and “the account for such be onforwarded to either terminals or megalift”. By reply email Austral Marine advised the plaintiff that it had not had such a request before in relation to insurance of the barge and it was trying to contact the broker. Later that day Austral Marine wrote to the plaintiff in the following terms:

16 In the meantime Piper Alderman advised the plaintiff that the defendant’s email did not actually authorise the plaintiff to execute the Charter Party documents and any insurances as the defendant’s agent. They advised that for “the sake of good order” the defendant should confirm this by return email and that they looked forward to hearing from the plaintiff “re insurance”. When the plaintiff requested the defendant to confirm that the plaintiff was authorised to sign the Charter Party, the defendant requested a copy of the draft Charter Party documents so that it could be forwarded to its solicitors, Gadens.

17 On 20 April 2006 Piper Alderman wrote to Gadens enclosing the draft Charter Party and advising that as agreed with the plaintiff, “the barge has been delivered today and hire is accruing”. Piper Alderman expressed concern at the lateness of the defendant seeking advice and requested Gadens deal with the matter urgently because the terms of the Charter Party had been negotiated and it was due to be signed on that day.

18 On the evening of 20 April 2006 Gadens wrote to the defendant in relation to the draft Charter Party in terms that included the following:

* In very general terms the CP sets out all the provisions you would expect to see when chartering a vessel, such as restrictions as to where the barge can be taken, the need to maintain the barge, insurance and damage to third parties, consequential loss, disputes etc.

* There are strict provisions in relation to extending the hire period – see cl 2(b).

* Insurance is important and you should check that Terminals has appropriate insurances in place.

19 On 21 April 2006 this advice was provided to the plaintiff who forwarded it to its accountant with the following message:

20 On 21 April 2006 the plaintiff wrote to the defendant in respect of Gaden’s advice and asked the defendant whether it had “appropriate insurance in place” because “this may solve the problem”. On the same day the plaintiff also wrote to its accountant enclosing the draft Charter Party and advised that the matter of insurance still remained unresolved.

21 On 21 April 2006 the defendant was advised that it was insured for any damage caused to the barge due to its own negligence; that the insurance extended to the transportation of the sphere from water to land; that the defendant was insured for damage caused to the barge by the defendant’s agent, the plaintiff, that was due to the defendant’s negligence; and that the insurance did not cover the plaintiff if it was negligent in providing its services as agent. The defendant was also advised that the plaintiff should have its own insurance cover in respect of public liability that would cover its own duty of care and responsibility and it should seek a certificate of insurance from the plaintiff to ensure that it had cover prior to 26 April 2006. This advice was sent to the plaintiff and it obtained a certificate of currency for the plaintiff’s public liability insurance.

22 On the morning of 21 April 2006 Austral Marine wrote to the plaintiff in the following terms:

· The information provided to date, allied with what we already have on hand, may be sufficient to develop a PRELIMINARY stability profile only.

· The work method statement requisite for discharging the unit overside has not been sighted so I have no idea as to how such activity is to be driven.

· We are not in receipt of any ship particulars which will be necessary for parts of our uplift/downset calculations.

· The final discharge attitude of the barge at Terminals has not been determined so the issue of ballast disposition and handling is unknown to us.

· The preliminary downset lashing profile has not been prepared.

As per our conversation of a few moments ago, I indicated that it would be my view based on information to hand and known to me at this instant, that there remains some very substantial and consequential issues to be dealt with including insurance related matters.

The development and setting up of the ‘marine’ side of things (ie: to do with the ship and barge) requires some degree of specialist expertise which is available from this office.

In addition, the matters relating to all the necessary insurances required for that side of the operation can be dealt with from this end if required.

I refer to our involvement with both the Mobil and Basell jobs ex Coffs harbour wherein we dealt with all aspects of the marine and left the road transport people to manage the land side of things.

At this instant in time we find ourselves in a somewhat invidious position wherein we have been asked to provide stability calculations for a proposed operation and do not have anywhere near enough information on the project.

Simultaneously we are aware that there is a substantial number of outstanding issues that need to be urgently addressed to ensure a smooth transition of the cargo and its safe delivery.

Effectively, to be of any value to Megalift we need to be either directly involved with all aspects of the marine side of the exercise or not involved at all.

We are ready and willing to provide whatever expertise is needed to assist you in achieving a satisfactory result however it must be noted that the window of opportunity to complete within the expected time frame is shrinking at an alarming rate.

23 The plaintiff responded to Austral Marine’s email on 21 April 2006 as follows:

one was opinion that as a result of our meeting on wednesday that you would undertake the required services to revert with the required calculations and format to the handling of this loading/transfer/discharge. one can agree that it is not under the best circumstances that this project has been presented to you, however we will and obtain whatever detail you require to assist you in formulating the report/s for the discharge.

what we have offered to do is the following.

place barge alongside heavy-lift ship a barge of capacity, such barge to have 2 x multi axled trailers set at the spacings required, barge to have 2 x breasting pontoons to maintain a spacing frpm (sic) shipside to enable the gas sphere to loaded centrally onto the trailers/barge.

barge to have fitted with ramps of 15m long x 4 off fitted to hinges as supplied by megalift and fitted by uptime eng of geelong at the set out positions.

once the item is prepared by others for offloading from ship, by ships gear onto the trailers as referred, lash and secure item to barge/trailers to satisfy a marine arch/surveyor for transit from alongside to the area known as corio day (sic) terminals site.
cranes will be deployed to place the ramps onto the hinges as fitted to the barge ensure that all barge to shore securing is in place as barge does not have any sea anchors, tugs and work boats to remain “on station” for the discharge by way of driving the load off the barge onto the receival area turn and reverse onto concrete foundations, lower and position.
after the barge has completed it’s discharge return same to an area for the cleaning off of all added items, ie pad-eyes, etc, anything that is added to the deck and if ballasting is done ensure that all compartments utilised to be cleaned and dryed, to ensure that barge is returned in as chartered state with an off-hire survey confirming same.
this is what I believe we spoke about as you did indicate this will cost, but not known to what extent.

24 On the same day Austral Marine advised the plaintiff that it had been advised by Piper Alderman that the defendant acknowledged that the plaintiff was authorised to sign the Charter Party on the defendant’s behalf but that the required insurances had not been produced. Austral Marine advised the plaintiff that until such time that the insurances had been produced, the plaintiff was not at liberty to collect the barge from its mooring at the North Wharf, Melbourne Docklands. Austral Marine also advised:

25 On 22 April 2006 Austral Marine wrote to the plaintiff in the following terms:

As per our discussion I would suggest that the most efficient and effective manner to deal with the “marine” side of things (ie: generally speaking, from that point when the ship ties up through to the landed roll off at Terminals) would be for you to commission us to deal with all aspects of the lift off/set down/barge and tug operation through to the point in time when the Megalift crew are ready to run off the trailers – as well as being there to ensure that the whole system stays together during that phase as well.

However, we will need to clarify existing arrangements, particularly what Megalift has agreed with the ship re responsibility for discharge.

This means that we will need to see copies of all relevant contracts and specifications ie we will need to see your file covering the entire arrangements made to date.

I appreciate that Megalift has already made some arrangements with certain parties and I would suggest that whatever has been established to date could be incorporated in any plan that we devise henceforth.

This will need to be discussed soonest.

The matters concerning the barge/stability/towage etc would fall under our control as would the actual initial loading of the empty trailers during the preparation stage. (Needless to say such operation would be in full conjunction with the Megalift team).

As far as the setting up and securing of the unit onto the barge is concerned again we would look to that item.

We would also look to the barge hire/charter party and insurance arrangements to satisfy all the various client interests – again this is a matter which can be addressed in similar format to previous occasions.

In the interim, as per our discussion, I have started ‘pressing the buttons” to get all the necessary wheels rolling and people in action required to get the project under way. At this instant we have not expended any large sums however as the weekend progresses so will the preparations and obviously the costs as well!!

26 On 23 April 2006 Austral Marine wrote again to the plaintiff advising that it remained in “urgent in (sic) need of some positive written instructions to go forward”. On 24 April 2006 Austral Marine wrote to the plaintiff as follows:

1. Megalift to appoint AML to provide all services to do with the marine side of the transit between the ships rail during discharge and the truck rolling off the barge shoreside.

2. AML will look after all the cargo handling, uplift/setdown and roll off activities as is normal in these events.

3. The parties already appointed by Megalift to be used by AML for the services referred to in 1 above, where possible. (eg Korevaar).

4. AML will appoint a naval architecture (sic) for technical drawings, stability calculations, etc. The actual requirements to impliment (sic) recommendiations (sic) by the naval archetect (sic) will be specified as the project progresses and will be in concert with the needs of Megalift.

5. The insurances as needed for the barge and any other aspect will be dealt with by AML to the satisfaction of all parties and the costs involved can be directed straight to the party responsible for their payment (presumably Terminals at this stage but such may change on agreement if a more favourable situation can be found).

6. AML will charge Megalift for their services based on the per man day and cost plus basis, percentage uplift to be negotiated and agreed, with payment arrangements to be agreed before commencement of any further works.

7. Megalift will provide AML with a formal order for works as is normal practice.

8. AML/Megalift will work together with the ship and the German engineer who did the Thailand load out and any other survey parties involved.

9. Port accesses and survey requirements will be dealt with by AML in conjunction with Megalift where appropriate.

27 On 24 April 2006 Piper Alderman wrote to the plaintiff and the defendant advising that the barge had been available in accordance with the Charter Party on 19 April 2006 and was awaiting completion of insurance arrangements. That email included the following:

28 On 24 April 2006 the defendant wrote to the plaintiff requesting urgent advice as to what its response was to Piper Alderman’s email and stating its assumption that the barge hire was part of the defendant’s Purchase Order with the plaintiff. On this same day the plaintiff forwarded Piper Alderman’s email to Austral Marine advising “looks like we have a problem”. On 25 April 2006 Austral Marine responded exclaiming that “the overall planning of this exercise leaves something to be desired”.

29 On 26 April 2006 the plaintiff responded to the defendant advising that “the barge hire is related to our terms and conditions” and suggested that the defendant refer to the section of the letter of 21 March 2006 headed “Barge Status & Conditions of Hire”. That email included the observation, “as you can agree that until the insurances etc are satisfied we cannot move forward”. The email also advised that the plaintiff was attending to “this matter”.

Meeting – 27 April 2006

30 On 27 April 2006 a meeting took place in Austral Marine’s offices at which representatives from the plaintiff, the defendant and Austral Marine were present. There is little controversy about what was said at the meeting. The plaintiff claimed that there was discussion in which it advised that it would not “pick up” the insurance on the barge and thereafter the following discussion took place:

Austral Marine: Will Lampsons pick up the barge insurance?

Plaintiff: No, I am under instructions not to agree to this on this or on any other occasion.

Austral Marine: It would be in Terminals’ best interests to engage Seaboard to look after the marine aspects of the job including insurances.

Plaintiff: We should review our offer to remove all aspects of the marine activities. We will provide the land aspects and work with Peter Lambert [Austral Marine] to get the best result in getting the sphere to shore and onto its foundations. There will be two parties, each responsible for its own activities. I will send an email confirming our conversations and Megalift will also send out a revised offer.

31 One of the defendant’s representatives (Mr Bozinoski) gave evidence that the words, “Yes, we will agree with that” were not said and that what was said was, “We need to proceed and get the job done”. However another of the defendant’s representatives (Mr Hibbert) gave evidence that the plaintiff’s representative (Mr Curtis) said that the defendant “should handle the barge component and deal directly with Austral” and that he said, “we agree”.

32 Prior to this meeting, Austral Marine had instructed a naval architect who wrote to Austral Marine on 27 April 2006 advising that he had completed “all the requisite stability calculations pertaining to the on/off loading” to the barge and that he was reviewing the final discharge process for the “roll off” at the defendant’s site. He advised that in the interim he wished to draw Austral Marine’s attention to the following points which he considered most relevant to the discharge:

· The centre of gravity of the sphere is considerably higher than typical project cargoes and after, conducting my preliminary analysis, whilst this does not cause any stability problems under normal upright conditions whilst the loaded barge is operated in sheltered calm waters, it is undesirable to have the barge experience anything but calm to slight conditions for both wind and wave action.

· The sphere combined with equipment and the barge presents a large profile windage of approximately 330 square metres and consequently any wind either existing at the time of movement or anticipated during the load/unload program must be given due consideration. The use of two tugs is strongly advisable for berthing at Terminals along with deployment of sufficient lines and mooring equipment to hold the barge steady during the roll off. This is especially important to prevent damage to the barge’s aft skeg arrangements.

· The section of the barge which addresses the shore line should be brought to ground and strongly secured prior to the installation of the discharge ramps and infill suitable for the barge to be settled upon should be inserted to assist the grounding process.

· It is also strongly recommend (sic) that some form of mobile heavy tow truck be on standby and possibly utilised during the unloading procedure to make dynamic adjustments if and when necessary.

33 Later that day a representative of Austral Marine’s insurer provided to Austral Marine various drawings, including a “site drawing of the discharge area at the terminal”.

34 On 28 April 2006 the plaintiff wrote to the defendant in the following terms:

As a direct result of the meeting yesterday and the conference call including your self we would suggest the following:

1/ terminals engage the services of austral marine logistics p/l for all marine activities.

2/ megalift will amend the workscope and provide a seamless operation with austral marine logistics p/l in providing the trailers/prime movers required to remove the sphere from the barge to shore and position as previously described in our offer.

3/ terminals pay each party for the services rendered, we will review our offer and advise by close of trading today what our amended offer shall be.

4/ the heavycon agreement which is currently between legal offices be limited to the 2 parties ie terminals/austral marine logistics p/l.

4/ megalift will only charge terminals pty ltd for the trailers/prime movers and labour associated with our equipment involved with the movement, hinges/ramps/concrete/timber blocks all as outlined.

the barge did arrive at lascelles no 1 berth last night approx 5.30 pm in preperation ( sic ) to proceed to be fitted out for the job. the costs for the barge has (sic) increased considerably since our original, but in line with our offer there was considerable “other works” to take place which was unknown at that time due the requirements of naval architects, surveyors and calculations to be completed prior to any activity so that the movement could take place with the safety requirement to satisfy all parties involved and including your insurers.

…

35 This email was forwarded to Austral Marine with the advice that the plaintiff had suggested to the defendant that they deal direct with Austral Marine and engage it on that basis to work together in a “seamless operation to complete the job”.

36 On 28 April 2006 the plaintiff wrote to the defendant in the following terms:

have just received the contract between AML P/L and TERMINALS P/L and note the content.

we have reviewed our original offer and advise you that it will be reduced to now read $aud 127000.00 + gst noting exclusions/inclusions, conditions etc.

37 On 28 April 2006 the plaintiff wrote to the defendant in terms that included the following:

RE: TRANSPORTATION OF GAS SPHERE EX LASCELLES WHARF TO TERMINALS, CORIO

Further to our quotation No. 7050209 – Terminals – 001 dated 21 March 2006 and subsequent communications, we have much pleasure in submitting our revised quotation for your consideration as follows:

Goods One (1) x Sphere (Gas Tank) @ (mm) 20030 L x 19300 W x 22000 H – 270.0 Tonnes

Scope of Work

Our Budget Offer

ELEMENT	PRICE ESTIMATES A$ (Excl. GST)
1. Supply of transport trailers, bridging ramps & stools for delivery operations	$127,000.00
2. Any wharf requirements, escorts, permits, storage, and the like	To Terminals Account
3. Overheads/Route Clearance Works	At Cost plus 10% Administration Fee
4. Applicable demurrage rates; - Transport trailer – per day or part thereof Such Demurrages to be Linked to Heavy Con Contract Dates	$12,000.00

38 The balance of the letter, including the price exclusions and special conditions, was in almost identical terms to the letter of 21 March 2006.

39 On 29 April 2006 the plaintiff forwarded the Job Safety Analysis Worksheet to the defendant and Austral Marine which included the following:

12. On barge mooring at Terminals job site landing, position (crane) loadout ramps into hinge beams on barge.

13. Install and position ramp timbers at loadout ramps and on barge.

14. Position prime movers and drawbars onto barge and couple to trailers.

16. Discharge loaded trailers off barge over loadout ramps onto Terminals job site.

40 The Worksheet identified the potential hazards, however there was no suggestion that there would be anything other than a horizontal discharge across the ramps onto the defendant’s site. On the same day the plaintiff also forwarded a detailed Execution Plan to the defendant which included the statement that in addition to other considerations, the plaintiff would review “all critical dimensions and clearances from the transport source to the delivery site and other structures to the load. (Details supplied by others)”. It also included the following:

4.3.4 Ground Conditions

Should a uniform travel path/road surface be required for the relevant transport area it shall be made firm and capable of withstanding the expected ground bearing pressure under the transporters. Preparation, positioning, compaction and levelling of this road surface shall be the responsibility of Terminals Pty Ltd.

…

5.4 ACCESS

During discharge, transport and placement operations an exclusion zone shall be established and maintained by Terminals Pty Ltd such that only Megalift personnel directly involved with the discharge, transport and placement operations will be allowed access to the area.

This zone shall extend 5m either side of the transport equipment and load during all stages of the discharge/transport/placement operations.

This exclusion zone shall be maintained throughout the discharge/transport/placement operations.

Exceptions to the exclusion zone shall be authorised Terminals Pty Ltd personnel and Megalift and barge operator loading and associated personnel.

…

6.0 HAZARD ASSESSMENT

Discharge/Transport/Placement Area:

…

· Drive ways and hard stand areas to be of sufficient capacity to take the combined weight of the load and the trailer.

Barge/Wharf Area (As Applicable):

…

· Drive ways, wharf and hard stand areas to be of sufficient capacity to take the combined weight of the load and the trailer.

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8.0 TRANSPORT DOCUMENTATION PHILOSOPHY

8.1 PROCEDURE DESCRIPTION

Documentation of the procedure that will be utilised by the MPE/MPS comprises two (2) elements:

drawings

The drawings show the location of the equipment items, the transporter locations, capacities, anticipated load share and clearances.

The second element of the procedure is the step-by-step written procedure and checklist verification – Refer to Section 9.0.

The procedure and checklist verification

A Procedure and Verification Checklist that closely follows the step-by-step procedure is used to ensure progressive compliance with the procedure. Activities that are assigned a hold point must have the corresponding checklist item signed off by the RESPONSIBLE PARTY before subsequent operations can proceed.

41 A table designated the following responsibilities to the plaintiff:

9.2.13 Check and inspect barge berthing dock at Terminals job site.

9.2.14 Ensure shore assist crane is set up and positioned correctly for lifting and positioning barge loadout ramps.

9.2.15 Standby whilst barge berthing and mooring procedure is carried out.

9.2.16 When all clear, crane to progressively lift loadout ramps into position into hinge beams previously installed onto barge.

9.2.17 When all clear given to use loadout ramps, additional timber ramps and packing to be positioned to enable loaded trailers discharge off barge.

9.3.2 When all clear given, prime movers to be progressively manoeuvred into their correct locations over loadout ramps and onto barge and coupled to their respective trailers.

9.3.3 Confirm suitable conditions for proceeding off barge (e.g. favourable tide and weather conditions) and standby for the all clear to proceed with discharge.

9.3.4 When all clear given commence and complete removal of all lashings/sea fastening securing Sphere to barge.

9.3.5 Raise trailers to travel height, progressively releasing Sphere supports off stands and blocking on barge.

9.3.6 Check and confirm that load is stable and secure on trailers.

9.3.7 Ensure all tie downs securing Sphere to trailers are installed and tightened.

9.3.8 Remove any stands or blocking remaining on barge which may impede trailers travel path.

9.3.9 Confirm that 2-way radio communications carried by all Megalift personnel are in correct working order.

9.3.10 When clear to proceed, trailers to be slowly manoeuvred along barge towards and progressively over loadout ramps.

9.3.11 Rate of travel of trailers to proceed in conjunction with barge ballasting requirements in order to maintain correct barge trim at all times during the discharge operation.

42 On 29 April 2006 Austral Marine prepared a “Safe Work Method Statement” setting out the procedure for the loading and transportation of the sphere. That Statement included the following:

13. During the on barge loading process the terminals berth will have final preparations completed as follows:

14. Place suitable fine screenings onto the berth rock face to make a mattress for the berthing of the barge after swim end.

15. Give prior notification to the Harbour Control for the entry of the tug and the Swissco Barge into the Terminals berth. Under suitable sea conditions, remove the Barge to the Terminals berth.

16. Manoeuvre and position the Barge so as to berth stern first. Berthing the vessel will only be done in suitable sea state and weather conditions and when a minimum water depth of 500 mm is available at the beaching location. Position the Barge to the loading ramp with mooring winches and the assistance of the tug “VITAL” and 2 workboats.

17. When the Swissco Barge has been winched into position, ballast the stern compartments to allow the Barge to be beached onto the mattress on the rock face. Secure the Barge with 2 anchor wires from the bow fairleads to 3000 kg talon stealth anchors or similar (with Yellow Pendant Buoys) on the Port and Starboard sides and secure 4 mooring wires from the stern to existing land bollards.

43 On 1 May 2006 the plaintiff wrote to the defendant referring to the revised offer and requested a reply from the defendant confirming acceptance. The plaintiff advised that it was still working with Austral Marine to ensure seamless activity for the safe discharge of the sphere from the ship. The defendant responded that day advising that it accepted the revised offer from the plaintiff.

44 There was some debate about the time at which the trailers could be loaded onto the barge. Austral Marine wanted to load them during the “hours of darkness” whereas the plaintiff refused to allow this and required them to be lifted in “daylight hours” which meant that Tuesday 2 May 2006 had to be set aside for the loading of the trailers by crane.

45 On 2 May 2006 Austral Marine, as Owners, entered into a “Heavycon Charter Party“ with the defendant, as Charterers. The special conditions to that Charter Party provided that the defendant was to arrange insurance in accordance with clause 22 and to name Austral Marine as the co-insured. Clause 22 required the defendant to put in place policies of insurance in respect of “all loss or damage to the cargo”. Special condition 35 of the Charter Party provided that the defendant would be responsible for and to pay for and indemnify Austral against any loss or damage to the barge or any property of Austral even if the same arose from or was caused by the negligence of Austral. The parties included in clause 4.6 the “Proposed Discharge Plan” and the “Safe Work Method Statement” as part of their agreement in relation to the method of discharge of the sphere.

46 On 2 May 2006 the plaintiff wrote to Austral Marine in the following terms:

there are questions that require advice.

1/ what will the departure angle be with the barge grounded to shore.

2/ with the ramps set back on the deck as you have placed them and will the ballasting ensure that no increase of angle or damage to the ramps should the barge become away from being grounded to floatation.

47 A little later in the day the plaintiff wrote to the defendant with a copy to Austral Marine in the following terms:

we have requested from peter, austral marine logistics p/l, the amended angle imposed on the ramp for the discharge of the sphere once barge is grounded.

we will have to provide additional block truck/power to ensure that the discharge will be effected.

in all our drawings and comments it has been established that the ramp angle would remain level without imposing any additional traction concerns and not forgetting the current ground conditions that are not condusive ( sic ) to maintaining traction at all times during the discharge procedures.

48 The defendant responded advising that it agreed that additional equipment would be required and requested the plaintiff to expedite the materials and advise the additional cost when it could.

49 Captain Peter Charles Lambert, a marine surveyor and director of Austral Marine, who gave evidence in the defendant’s case, said that although the plaintiff had requested advice from Austral Marine as to the departure angle, no such information was provided to the plaintiff (tr 311-312). When asked why no response was provided to the plaintiff, Captain Lambert gave the following evidence (tr 317):

50 Captain Lambert suggested that he did not profess competence or capability in handling this aspect of the job, however he gave the following evidence (tr 318-319):

Q. So that you bring it stern in first, the nature of the grounding is a matter for you, correct?
A. Yes.

Q. The depth of the water is within your knowledge?
A. Yes.

Q. The position of the barge when grounded is within your knowledge?
A. Yes.

Q. And if you were to use a mattress or fill or whatever you call it and do the ballasting, the ultimate resting point of the barge is exquisitely within your knowledge, is that not right?
A. In a broad sense yes. The mattress, all the mattress per se does is basically fill in the voids, or any highs and lows to put the maximum amount of the bottom of the hull on the seabed to spread the load as much as is possible and the difference that it would make might be, you know, only a few inches.

51 Captain Lambert said that although he was not capable or competent to determine that angle, others in Austral Marine would have been able to make that determination. In any event it is apparent that Austral Marine did not determine the angle and no information in relation to such angle was provided to the plaintiff.

52 The sphere was loaded onto the trailers on Wednesday 3 May 2006. On Thursday 4 May 2006 the sphere was transported on the barge across the bay to the defendant’s site. When the barge arrived at the defendant’s site it became obvious that the barge deck was too far below the shoreline to allow a reasonable angle for the discharge ramp. A crane was used to lower a single ramp between the concrete headstock on the ramp and the barge. The ramp was at quite a steep angle and the land end protruded up into the air. Austral Marine then de-ballasted the barge and moved it a little further from the shore. A crane was used to lower the other ramps between the concrete headstock on the ramp and the barge, however the ramp angle was still at a dangerously steep angle for moving the trailers across.

53 The plaintiff advised Austral Marine that the angle was not acceptable and suggested that a floating discharge should occur. Austral Marine rejected this suggestion and the plaintiff then made some calculations which confirmed the extent of the necessary excavation for a safe angle to discharge the sphere. These calculations were then provided to the defendant.

54 The following day, 5 May 2006, excavations commenced in the area of the barge landing point. On 7 May 2006 the two prime movers belonging to the plaintiff and two additional hired prime movers were backed onto the barge and the sphere was discharged safely.

55 On 19 May 2006 the plaintiff sent the defendant a Tax Invoice for the amount claimed in these proceedings for $402,137.67 for the “transportation and unloading” of the sphere. That amount was particularised in the Invoice as follows:

1)	As quoted, our Ref. No. 7050209-Terminals-002	$127,000.00
2)	Applicable Demurrage Rate $12,000.00 Per Trailer/Per Day – Total of 9 Days for 2 Trailers	$216,000.00
3)	Additional Costs: i) Block Trucks (Discharge off Barge/Positioning Load) – OD Transport Invoice 16460 – 2 x Trucks @ $1,500.00 per truck plus 10% Admin. Fee ii) Cranes utilised to load both trailers onto barge as barge not positioned to receive the trailers as a drive on at Terminals site, prior to positioning alongside ship to receive sphere - Williamstown Crane Hire Tax Invoices (Ref No. 05495/05497/05499) plus 10% Admin. Fee iii) Barge Inspection & Report – Eastern Seaboard Marine Services Invoice 56132 plus 10% Admin. Fee	$3,300.00 $17,569.75 $1,709.95

56 On 28 August 2006 the defendant’s solicitors wrote to the plaintiff alleging that the plaintiff had failed to procure the barge in time for the arrival of the Frisia and that the defendant considered that this constituted a fundamental breach of the first agreement. They also alleged that the failure by the plaintiff to take out insurance was a repudiation of the agreement after which the defendant orally terminated the first agreement on 27 April 2006 and, in attempting to mitigate its losses, it entered into a Charter Party agreement directly with Austral Marine. The solicitors advised that the defendant had suffered substantial loss and damage and made a claim on the defendant’s behalf for $749,399.41, which the defendant was prepared to adjust to $422,201.68 (GST included) by setting off the claimed amount against the invoiced amount from the plaintiff, exclusive of GST ($365,579.70).

Proceedings

57 The plaintiff commenced these proceedings on 24 November 2006. The proceedings were heard on 2, 3, 4, 5 and 6 March 2009, when Mr GE Underwood, of counsel, leading Mr RK Newton, of counsel, appeared for the plaintiff and Ms S Burchell, of counsel, appeared for the defendant.

Issues

58 There are a number of issues for determination. It is common ground that the plaintiff and the defendant entered into a contractual relationship on 1 May 2006 when the defendant sent its email to the plaintiff accepting the “revised quotation” of 28 April 2006. One issue is the status of the contractual relationship, if any, between the parties prior to that date. If there was a binding contract between the parties prior to that date there then arises the issue as to the proper characterisation of the way in which that agreement was brought to an end (Contract Issue). The next issue relates to insurance of the barge and involves determining whether the plaintiff was obliged under the first agreement to insure the barge and if so, the consequences, if any, of the failure to secure insurance by 27 April 2006 (Insurance Issue). The next issue relates to the problems with disembarkation at the defendant’s premises and involves determining whether the plaintiff was responsible under the first and/or second agreement to assess the condition and/or make calculations in relation to the shoreline at the defendant’s premises to ensure an efficient “roll off” of the sphere and if so, the consequences, if any, of its failure to perform that assessment or make those calculations (Disembarkation Issue). There are then the competing claims for damages. The plaintiff claims the amount agreed in the second agreement together with a claim for demurrage and some other minor claims. The defendant denies the plaintiff is entitled to the demurrage claims and seeks to set off its damages claim against the amount claimed by the plaintiff (Damages).

Contract Issue

59 The defendant claims that the parties entered into a contract evidenced by the plaintiff’s letter of 21 March 2006 and the defendant’s Purchase Order of 4 April 2006. The plaintiff submitted that the 21 March 2006 letter was merely a quotation, or “budget offer”, and not an offer capable of acceptance. The plaintiff also submitted that the Purchase Order did not respond exactly to the letter of 21 March 2006.

60 The assessment of whether the parties entered into a contract prior to 1 May 2006 involves the objective determination of the intention of the parties by the consideration of their communications in the context of their dealings at the relevant time: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, per Gleeson CJ at 550. An “estimate” provided by one commercial party to another may amount to an offer capable of acceptance. The determination of whether an estimate is such an offer will depend upon the context and circumstances in which the expression is used: Croshaw v Pritchard and Renwick (1899) 16 TLR 45.

61 These were commercial parties negotiating terms of a transaction involving numerous elements. They had been anticipating and discussing the transportation and delivery of the sphere for many months.

62 The column in the Budget Offer section of the letter of 21 March 2006 was headed “Price Estimates”. Only some of the prices were estimates whilst others were fixed. There was the fixed figure of $239,000 for Element 1 with project management, engineering and execution plans included in that price. The “estimates” for the naval architect’s assessment and the supply of spacer barges of $12,000 and $20,000 respectively in Elements 3 and 4, did not make the offer uncertain. The word “estimate” in this context meant the likely price or approximate cost of doing a specified piece of work: The New Oxford Dictionary of English, Clarendon Press, Oxford (1998); The Macquarie Dictionary, Federation Edition, The Macquarie Library (2001). This offer was available for acceptance on the basis that these services would be provided at the likely cost of $12,000 and $20,000 respectively and the plaintiff would charge the defendant whatever it ultimately cost the plaintiff on the understanding that the cost would be in the vicinity of these approximate figures. Elements 5 to 11 were clearly offered on the basis that these services were to be paid for by the defendant. Item 12 listed overheads and route clearance works at a cost price plus 10%. Finally the demurrage rates were stipulated at $17,000 per day for the barge and $12,000 per day for the transport trailers.

63 In support of the submission that the offer was not capable of acceptance, the plaintiff emphasised clause 5 of the Special Conditions which provided that the “quotation” was provided for “budget purposes only”. That submission seems to me to defy the reality of clause 10 of the Special Conditions that required the defendant to provide its “written agreement to all terms and conditions as detailed in” the correspondence.

64 The Purchase Order complied with Special Condition 10 of the letter by the provision of a notation of the plaintiff’s reference number 7050209 and referred to each of the Elements 1 to 9. It accepted the figure of $239,000 and, as referred to in Special Condition 11, added the GST component to reach the total of $262,900. It also accepted that the plaintiff had estimated the cost at which it would provide the naval architect’s services at $12,000 and the spacer barges at $20,000 and accepted that it would pay the final figure for those services when notified by the plaintiff. That is clear from the inclusion in the Purchase Order of the expression “TBA” in respect of each of these items. It also accepted each of the other Elements at its cost, once again using the expression “TBA”. There was a provision at the foot of the Purchase Order that stipulated that it was “not valid unless signed”. It also provided for the identification of the person who placed the order. Jeffrey Hibbert, the defendant’s Engineering Manager at the time, was identified as the person who placed the Order and there is no issue that he also signed the Order. The Purchase Order did not expressly refer to the matters in Elements 10 to 12 or demurrage rates in Element 13, however the entry “ETA lascelles Wharf abt 28/4 – actual date TBA” was relevant to and, in my view, accepted those conditions. The plaintiff’s submission that the Purchase Order did not correspond to or accept the terms in the 21 March 2006 letter is not sustainable.

65 I am satisfied that the plaintiff and the defendant entered into a contract on 4 April 2006 by the defendant accepting the terms of the plaintiff’s offer of 21 March 2006 by its Purchase Order dated 4 April 2006. The declaration sought by the plaintiff that there was no binding agreement will be refused.

66 The meeting on 27 April 2006 brought matters to a head. There was no insurance in place and the plaintiff was unable to collect the barge until it was in place. The problem was exacerbated by the imminent arrival of the Frisia, due on 28 April 2006. It was agreed in principle at that meeting that the defendant and Austral would take over from the plaintiff the marine or barge component of the operation and be responsible for insurances. It was also agreed in principle that the plaintiff would provide what was described as the “land aspects” of the operation.

67 The second agreement between the plaintiff and the defendant evidenced by the plaintiff’s “revised quotation” of 28 April 2006 and accepted by the defendant’s email of 1 May 2006, was for the supply of the trailers onto the barge to receive the sphere from the Frisia and to “roll off” the sphere at the defendant’s premises and place it onto the permanent foundations.

68 Neither the plaintiff nor the defendant claimed that the first agreement was varied. Each claimed that a new agreement was entered into on 1 May 2006; the plaintiff submitting that the first agreement was discharged with rights and obligations, including compromise of the defendant’s entitlement to sue the plaintiff for any breaches of that agreement; the defendant submitting that the right to sue for damages for breach of that agreement remained.

69 To assess whether all subsisting rights and liabilities, including those arising by reason of any breach of contract, were compromised or released at the time of the entry into the second agreement, it is necessary to review the terms of the second agreement as well as the surrounding circumstances: Concut Pty Ltd v Worrell & Anor (2000) 176 ALR 693 per Gleeson CJ, Gaudron & Gummow JJ at [20]. There is nothing in the express terms of the second agreement, either in the letter of 28 April 2006 or the email of 1 May 2006, to suggest that the defendant’s right to sue the plaintiff for damages for breach of the first agreement had been compromised or released. The approach adopted by the plaintiff when it failed to fulfil its obligations under the first agreement was to suggest that it could, with Austral Marine, fulfil a “seamless operation” for the transportation of the sphere from the barge to the shore if the defendant were willing to contract directly with Austral in relation to the hire of the barge. There is no doubt that it saw this as a way to remove the problem with obtaining the insurance and enabling the operation to move forward.

70 There was no discussion at the meeting on 27 April 2006 in relation to releasing the plaintiff from any liability to the defendant in respect of its failure to secure the insurance and collect the barge. The Frisia was due to dock the following day and the defendant was presented with what appeared to be the only sensible option in the light of the plaintiff’s failure to perform its obligations. Had the defendant refused to take up the plaintiff’s suggestion to contract directly with Austral Marine and demanded that the plaintiff perform its obligations under the first agreement there would no doubt have been further delay and damage to the defendant. Taking up this option enabled the defendant to mitigate some of that damage.

71 I am satisfied that the correct characterisation of what occurred in relation to the first agreement was that the plaintiff’s conduct amounted to a repudiation and the defendant accepted that repudiation and is entitled to seek damages from the plaintiff in respect of any breach of the first agreement.

Insurance Issue

72 The plaintiff submitted that even if a contractual relationship existed between the plaintiff and the defendant as at 4 April 2006, the plaintiff was not obliged to insure the barge and was not responsible for any delay in the supply of the barge that was caused by the failure to obtain insurance in a timely fashion. The letter of 21 March 2006 included the following in relation to insurance:

73 The “on/off survey” referred to in this paragraph of the letter was expressly included as Element 8 in the “Budget Offer” section of the letter. The “restoration” and “modifications” referred to in the paragraph were expressly included in Elements 6 and 7 and the “pumping out of the ballast water” etc was expressly included as Element 9. All of these were “To Terminals Account” and in that regard they were “additional to” the amount fixed for the barge hire and project management at $239,000. There was no specific mention of “grinding” or “spot priming” in the “Budget Offer” section of the letter however these items would reasonably form part of the restoration to the barge.

74 The “insurances and contract preparation” referred to in the paragraph extracted above were not included as Elements in the Budget Offer section of the letter. However the letter referred to “Insurance” under the heading “Clients Responsibility” with a note, “Refer Insurance Section below”. The “Insurance” section of the letter referred only to All Risks Cover for “goods”. There was no mention of the insurance of the barge. The paragraph of the letter extracted above advised the defendant that there were “additional” costs to be incurred; that is, costs additional to the cost of the barge hire. The plaintiff offered to the defendant the “supply of the barge” with the additional cost of, inter alia, the “insurances”. In my view, that was an offer accepted by the defendant that the plaintiff would effect, or put in place, the “insurances” and the defendant would pay the “additional” cost of those insurances.

75 The post contractual conduct of the parties on this issue may be taken into account for the limited purpose of assessing whether there was an agreement that the plaintiff would effect the insurances on the barge: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 per Heydon JA (as his Honour then was) at 163-164. The plaintiff’s accountant’s communication with its insurance broker on 19 April 2006 acknowledged the plaintiff’s obligation to insure the barge from 20 April 2006. Even though the plaintiff sought some assistance from the defendant in its pursuit to obtain the insurance of the barge, the defendant advised it that it was not going to “chase around for insurance” at such a late hour. The steps taken by the plaintiff in its attempts to put the insurance of the barge in place together with the correspondence referred to earlier in this judgment support the conclusion that the parties intended that the plaintiff would effect, or put in place, the insurance on the barge. Irrespective of whether the plaintiff was acting as the defendant’s agent, it had the responsibility to put that insurance in place.

76 I am satisfied that the parties agreed in the first agreement that the plaintiff would insure the barge and the defendant would pay for that insurance. Once the defendant entered into the second agreement with the plaintiff on 1 May 2006 and the Heavycon Charter Party with Austral Marine on 2 May 2006, the plaintiff was relieved of the obligation to insure the barge. I am satisfied that the plaintiff was in breach of the first agreement in failing to insure the barge and it is therefore necessary to determine the consequence of that breach.

77 The plaintiff knew that the Frisia would be docking on 27 or 28 April 2006 and its obligation was to have the barge available to receive the sphere as soon as practicable thereafter. The pre-requisite to its entitlement to collect the barge was the insurance of the barge.

78 There were a number of matters that had to be attended to once the barge was collected. There was adjustment to the ramp hinges to reposition them over a stronger part of the bulkhead of the barge. There were also necessary adjustments for fittings for the lashings to secure the sphere. It was also necessary for assessments and/or calculations to be made in relation to the positioning of the barge at the defendant’s premises to ensure that a horizontal or flat roll off could occur. If the plaintiff had put in place the insurance on the barge prior to 20 April 2006, all of these matters could have been achieved in a timely fashion. The barge was available for collection on 20 April 2006 and the failure of the plaintiff to put the insurance in place caused a delay from 20 April 2006 to 28 April 2006 when the barge was secured alongside the wharf. However further delay was encountered because the plaintiff had not prepared a job safety analysis or an execution plan with drawings until 29 April 2006. There was then a further delay because the naval architect raised some concerns about the weight of the sphere on the deck of the barge during the transfer from the ship to the barge. It was decided that additional grillages would be placed on the deck of the barge. When this was completed there was an additional delay because the plaintiff would not allow its trailers to be craned onto the barge during the hours of darkness. Therefore this did not occur until 2 May 2006. It was only on 3 May 2006 that the sphere was craned onto the barge.

79 The consequence of the failure to insure the barge was a delay from 28 April 2006 to 3 May 2006.

Disembarkation Issue

80 The defendant submitted that the plaintiff was obliged under the first agreement to identify what, if any, excavations were needed at the defendant’s site to enable a safe and efficient discharge of the sphere. It was submitted that the plaintiff’s obligations in providing “project management” and “engineering” included the obligation to ensure that when the barge docked or was grounded at the shoreline, a horizontal or flat discharge could occur. The defendant submitted that the plaintiff should have made relevant calculations to ensure that such a discharge could occur.

81 The defendant submitted that the second agreement also required the plaintiff to identify what, if any, excavations were needed at its site, prior to the discharge of the sphere. It submitted that the plaintiff failed to identify whether any such site works would be required and as a consequence of that failure the defendant suffered loss, including the delay and consequential demurrage claims and in addition, the cost of the excavations which were necessary to enable a safe discharge of the sphere.

82 The plaintiff’s general manager at the time of the events the subject of this litigation, Brian Lay, accepted in his evidence that Element 3 of the first agreement indicated that the plaintiff was going to engage a naval architect to do stability calculations (tr 50-51). Mr Lay was asked about the project management section of the first agreement and gave the following evidence (tr 66-67):

Q. As project managers under the 21 March 2006 offer you should have identified what excavation works were required to lay down the ramps to discharge the sphere.
A. None of that would be highlighted until you have physically done a naval architect and the condition of the barge with a load on it, how far the barge is going to be in the water, how the barge is going to be berthed; so you couldn’t ascertain from that head stock what’s needed. On the land side where the trailers are you can ascertain because that’s a given. It is X amount of compaction, X amount of space they need to turn the sphere.

83 Mr Lay was shown the report from the naval architect to Austral Marine dated 27 April 2006. Mr Lay resisted the suggestion that he and the plaintiff knew, as at 27 April 2006 that the barge would be grounded (tr 67-68). It would appear that Mr Lay’s recollection is faulty in that there is in evidence an email enclosing the naval architect’s report that was sent to the plaintiff (Ex PD; 883) although it may be that Mr Lay did not see it. Mr Lay’s recollection was faulty in respect of his knowledge that the barge would be grounded at the time of discharge. The email of 2 May 2006 from the plaintiff to Austral Marine asking for advice as to the angle of the grounded barge seems to me to be quite conclusive that the plaintiff was aware that the barge would be grounded.

84 On 18 April 2006 the plaintiff’s Project Engineer, Brett Weavell, had instructed a naval architect. Those instructions included the following:

Per my call late last week, we invite you to consider assessing and carrying out the necessary calculations and seafastening requirements for the following voyage.

The heavy lift ship “BBC Frisia” will be berthed at Lascelles Wharf, Corio Bay, Geelong. The Austral barge ‘Swissco Marine V’ which will have previously been loaded with 2 x Megalift platform trailers will berth alongside to receive the load (270 te. gas storage sphere). Once secured to the trailers and seafastened as required, the barge will then make the short run to the landing point, Terminals site on the Southern side of the Shell Refinery Pier where the loaded trailers will be discharged over landing ramps to the shore.

Please find attached drawings showing proposed stowage plan (note there may be some change to trailers layout – will confirm as soon as known), the landing site and subject barge dimensions. Also attached are photos of 1) the landing site and 2) view looking South (Refinery Pier on the left).

85 Mr Weavell gave evidence that he did not receive a response from that naval architect (tr 159). He admitted that he knew that the Frisia would arrive on about 28 April 2006 and that by that date he had not carried out any calculations for the angle of the ramp from the barge to the landing point at the defendant’s premises (tr 165). He accepted that as at 28 April 2006 he did not know whether a floating discharge was possible to offload the sphere at the defendant’s premises nor did he know whether site excavations needed to be done in order to get the ramp angle at a permissible level to discharge the sphere. Mr Weavell was cross-examined about the ramp angles once the barge was grounded. He did not accept that it was the plaintiff’s obligation to do the calculations in respect of such an angle. He gave the following evidence in cross-examination (tr 174):

Q. And why do you say that it wasn’t your job to do it?
A. The determination of the ramp angle is part of the discharge or barging calculations or normally part of the barging calculations which, irrespective of grounded or floating discharge, take into account the levels of the barge in relation to the shore landing point, various tides, other matters, and that’s information, well, certainly I didn’t have and didn’t seek as it was not considered, I didn’t consider that part of certainly my job spec.

86 Mr Weavell accepted that such calculations were originally the plaintiff’s obligation under the first agreement (tr 175). However once the contractual position changed and the obligations for the barge transportation were handed over to Austral Marine, Mr Weavell claimed that such calculations were a matter for Austral Marine. Mr Weavell had provided drawings to Austral Marine which included the depiction of a level ramp from the barge to the shoreline. He was cross-examined as follows (tr 177):

87 Mr Weavell said that he did not follow the naval architect up after he sent the email of 18 April 2006 because he had other matters that needed attention (tr 185).

88 The plaintiff was obliged under the first agreement to perform calculations and/or make assessments of the defendant’s landing site for the barge. It is quite clear that it intended to do just that, evidenced by Mr Weavell’s email to the naval architect on 18 April 2006. It was necessary to ensure that a proper plan was put in place which included taking into account the time at which the barge would transport the sphere across to the defendant’s premises taking the tide into account. Once the tidal information was assessed, it was necessary to make the appropriate calculations to ensure that a horizontal or flat discharge of the sphere could occur at the defendant’s premises. These calculations should have been performed by the plaintiff through its naval architect and/or by the plaintiff in conjunction with the naval architect. It was necessary to have the appropriate dimensions of the barge and it would have been prudent for the barge to have been taken to the defendant’s premises well prior to the arrival of the Frisia so that such assessment and calculation would have been made.

89 Mr Weavell’s explanation as to why he did not follow up the architect was extremely telling. He said that he had other matters to attend to. The plaintiff simply did not put in place an appropriate and careful plan to enable proper assessment and calculations so that a horizontal discharge could occur. Nothing in this regard apart from the instructions to the naval architect had been done by the plaintiff up to the time the Frisia arrived on 28 April 2006.

90 The plaintiff claimed that it did not regard itself as responsible under the second agreement for making the appropriate calculations to ensure a flat or horizontal discharge. The plaintiff promised the defendant that it would work with Austral to provide a “seamless operation” to discharge the sphere from the barge to the shore. The second agreement included in the plaintiff’s scope of work the “roll-off” of the trailers loaded with the sphere over the stern ramps of the barge and placement onto the permanent foundations at the defendant’s site. The plaintiff’s Job Safety Analysis Worksheet referred to the barge mooring at the defendant’s site and the positioning of the ramps into the hinged beams on the barge prior to the discharge of the loaded trailers onto the defendant’s premises. The Execution Plan designated the task of checking and inspecting the barge berthing dock at the defendant’s site as part of the plaintiff’s responsibility (clause 9.2.13). This was not done.

91 It is all very well for the plaintiff to have requested advice from Austral Marine about the “departure angle” with the barge grounded to shore, but the plaintiff failed to follow that request up or do anything to discuss further the prospect of any change in the angle from horizontal. It was not until 4 May 2006 when the barge was brought alongside the shoreline at the defendant’s premises that the difficulty was exposed. Thereafter excavations had to occur to enable a flat, horizontal and safe discharge of the sphere. There was a delay of three days, with the incursion of excavation costs.

92 I am satisfied that it was the plaintiff’s obligation under the first agreement to ensure that an assessment of the defendant’s landing site was made, by using calculations or otherwise, to ensure that a flat or horizontal discharge of the sphere could occur. I am also satisfied that the plaintiff had an obligation under the second agreement to ensure that a flat or horizontal discharge could occur. That obligation is the obvious incident of its scope of works in the second agreement. In addition the plaintiff recognized this obligation in the Worksheet by the imposition on itself of the requirement in clause 9.2.13. There is nothing in evidence to suggest that the plaintiff checked or inspected the barge berthing dock to ensure that a flat or horizontal discharge of the sphere could occur.

93 The consequence of the plaintiff’s failure to check the site and/or make the appropriate assessment or calculations in relation to the shoreline so that a flat or horizontal discharge could occur was a delay of three days. It is probable that the excavation works would have to have been done in any event, unless a discharge could have occurred by a different method at a site that did not require such excavation works. As to this latter matter I should say something about the evidence called by the plaintiff in this regard. The plaintiff called an expert marine surveyor in support of the proposition that a floating, rather than a grounded discharge of the sphere could have occurred, avoiding the need for excavation works. The evidence of this witness was not addressed upon in final address. That is because this witness was discredited in cross-examination. He claimed that there were no advantages in a grounded discharge only to be challenged with a previous version of his report in which he had referred to an advantage of a grounded discharge. He then accepted that there were advantages in a grounded discharge. I am not persuaded that a floating discharge would have been efficient or safe, nor am I persuaded that it would have avoided the need for excavation works.

Damages

94 The plaintiff claims the fee as agreed for the transportation of the sphere from the barge to the foundations at the defendant’s site at the agreed price of $127,000. I am satisfied that the plaintiff is entitled to recover that amount from the defendant for those services. The plaintiff also claims $216,000 demurrage for 2 trailers for 9 days at $12,000 per day. That claim is based on Element 4 in the second agreement and special condition 1, which provided that demurrage would be applicable for “delays caused beyond our control”. The delays were not beyond the plaintiff’s control. The plaintiff caused the delays. The demurrage claim will not be allowed. The additional costs for the block trucks ($3,300), the cranes ($17,569) and the inspection report ($1,709) are reasonable claims in the circumstances and will be allowed. Accordingly the plaintiff is entitled to recover $149,578 plus GST on the $127,000 component, bringing the amount to the total of $162,278.

95 The defendant was liable for demurrage of $128,823 on the Frisia for the delay of 4.26 days and an additional berth hire of $17,602. Those delays and berth hire were a direct result of the plaintiff’s failure to effect insurance on the barge and the defendant is entitled to recover that amount from the plaintiff for its breach of the first agreement.

96 Although the defendant claimed an amount for legal costs ($2,731) in relation to the second agreement its evidence did not support such a claim. Accordingly there will be no award in respect of those claimed legal costs.

97 The defendant made a claim for $58,808.37 said to be for Austral Marine’s additional costs caused by the delay and paid by the defendant. The material relied upon by the defendant in support of this claim is a list of costs that are not the subject of any explanation or detail. They include: Labour for $27,688; Auslift for $3,433.06; Cedray Pty Ltd for $129.59; Coates Hire for $6,968.34; Comfort Inn for 702.30, Elstone Diving Services for $4,067.25; Korevaar Marine Group for $9,178.15; Piper Alderman for $2,125.97; Polaris Marine Constructions and Recovery for $2,288.00; Quinlan Cranes for $432.14; Robbie Walker Transport Operations Pty Ltd for $350.63; Toll Geelong for $3,027.45 and Uptime Management for $4,297.70. There is no evidence of how these costs relate to any delay, nor is there evidence of the services provided or the nature of or reasons for the incursion of these claimed costs. Accordingly these costs will not be allowed.

98 The defendant claimed standby charges for the stevedoring company and the welders by reason of the delay in making the barge available. The costs ($11,700 and $1,653) are recoverable.

99 The defendant claimed $10,000 for a premium for the insurance because it did not have time to tender for a cheaper cover. There is no evidence supporting this claim. Ms Burchell suggested that it was just a reasonable amount in the circumstances. I disagree. The defendant knew there was a problem with the insurance and had been making inquiries at the time the plaintiff was seeking to secure insurance on the barge. I do not intend to allow this amount.

100 The defendant claimed an amount of $223,500 as the difference between the amount for which the plaintiff had agreed to supply the barge and the amount it had to pay Austral Marine. The defendant subtracted the plaintiff’s revised quotation of $127,000 from the original quotation of $239,000 to reach $112,000, as representing the marine component of the original quotation. It then subtracted that figure from Austral Marine’s invoice excluding GST of $367,500 to reach $255,500. It then deducted the fee for the naval architect and the spacer barges totalling $32,000 to reach the total claim for this item of $223,500.

101 Austral Marine’s account for $367,500 was made up of a number of items. The actual barge hire figure was only $40,000. The labour figure was $65,000. There were then a series of charges that seem to me to be part of what the defendant had agreed with the plaintiff in the first agreement to be to its account. These included the wharfage at $5,000; the hire of pumps etc $35,000; tug hire at $70,000; anchoring equipment at $3,500; and extras of $6,000. There is a figure of $80,000 that is not particularised and there is no evidence as to what this figure relates. In those circumstances this figure will be excluded. The cranage of $20,000 will be allowed. Accordingly the fair and reasonable calculation of this item is a total of the barge hire, the labour and the cranage ($40,000, $65,000 and $20,000) being $125,000. The price agreed with the plaintiff for the marine component of $112,000 is then deducted from this figure amounting to an allowable amount for this item of $13,000.

102 The defendant also claimed $51,024 for the civil excavation works at its site to accommodate the barge. Both the first and second agreements with the plaintiff provided that the cost of site works was excluded from the price as quoted. However it is still necessary to determine whether the plaintiff is liable for those costs. These costs would have to have been incurred in any event. The defendant’s site needed to be excavated to accommodate this barge irrespective of the plaintiff’s conduct. This was a cost that the defendant had to incur to have the barge delivered. This amount will not be allowed.

103 There was an alternative claim for the amount of $21,889 in respect of the civil works. That claim comprised what was described as a “premium” of $15,000 for the defendant’s inability to seek competitive tenders and $6,889 for overtime and penalty rates over a weekend. The defendant submitted that if the civil works were necessary in any event, it could have arranged for their completion during normal business hours rather than on the urgent basis upon which they were completed during a weekend. This alternative claim has force. If the plaintiff had made the assessment and measurements of the shoreline against the barge in a timely fashion, the defendant could have avoided the penalty rates charged for the excavation works.

104 The evidence relied upon in support of this claim consists of Daily Time Sheets from the contractor, PM Excavation and Construction, in which various rates of time-and-a-half and double-time are set out for the hours claimed. There are two Daily Time Sheets, one for 5 May 2006 in which there is a claim for $2,644.80 and one for 10 May 2006 in which there is a claim for $24.40, which are weekdays and not part of the weekend. I do not regard those claims as justified. However the other two days of the weekend, 6 and 7 May 2006 are recoverable from the plaintiff. Although the plaintiff challenged the defendant’s entitlement to this claim in a general sense, there was no issue raised in respect of the calculations made by the defendant in respect of these Time Sheets. Accordingly the defendant is entitled to recover from the plaintiff the amount of $4,220 as claimed for 6 and 7 May 2006.

105 The defendant’s claim for the $15,000 at “premium” is not supported by any evidence and in my view is unjustified. It will not be allowed.

Conclusion

106 The plaintiff is entitled to recover $162,278 from the defendant. The defendant is entitled to recover from the plaintiff the amount of $176,998. If a set off is allowed, that would entitle the defendant to entry of judgment against the plaintiff in the amount of $14,720. I list the matter for the entry of judgment and argument as to costs and interest on 6 May 2009.

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Citations

Megalift Pty Limited v Terminals Pty Limited [2009] NSWSC 324

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CITATION:	Megalift Pty Limited v Terminals Pty Limited [2009] NSWSC 324
HEARING DATE(S):	2, 3, 4, 5 and 6 March 2009
JUDGMENT DATE :	29 April 2009
JUDGMENT OF:	Bergin CJ in Eq
DECISION:	Plaintiff entitled to recover $162,278 from defendant. Defendant entitled to recover $176,998 from plaintiff.
CATCHWORDS:	[CONTRACT] - Whether parties entered into contract - Where offer referred to "estimates" - Responsibility for insurance of barge and assessment of shoreline - Competing claims for demurrage
CASES CITED:	Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 Croshaw v Pritchard and Renwick (1899) 16 TLR 45 Concut Pty Ltd v Worrell & Anor (2000) 176 ALR 693 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
PARTIES:	Megalift Pty Limited Terminals Pty Limited
FILE NUMBER(S):	SC 5962 of 2006
COUNSEL:	GE Underwood/RK Newton (Plaintiff) S Burchell (Defendant)
SOLICITORS:	Hewitts Commercial Lawyers (Plaintiff) Mallesons Stephen Jaques (Defendant)