Mitsui OSK Lines (Thailand) Co Ltd v Jack Fair Pty Ltd
[2015] FCCA 558
•10 March 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MITSUI OSK LINES (THAILAND) CO LTD v JACK FAIR PTY LTD | [2015] FCCA 558 |
| Catchwords: CONSUMER PROTECTION – Misleading and deceptive conduct – remedies. CONTRACT – Implied presenting endorsed bill of lading. TORTS – Conversion – bailee rights to sue. |
| Legislation: Bills of Lading Act 1855 (NSW) |
| BHP Trading Asia Ltd v Oceaname Shipping Ltd, (1996) 67 FCR 211 BNP Paribis v Pacific Carriers Ltd [2005] NSWCA 72 Brandt v Liverpool, Brazil and River Steam Navigation Co Ltd [1923] All ER Rep 656; [1924] 1 KB 575; (1923) 29 Com Cas 57 City Motors (1933) Pty Ltd v Southern Aerial Super Service Pty Ltd (1961) 106 CLR 477; [1962] ALR 184; (1961) 35 ALJR 206 Glyn Mills Currie & Co v The East and West India Dock Company in (1882) 7 AC 591 Heperu Pty Ltd v Morgan Brooks Pty Ltd (No.2) [2007] NSWSC 1438 Khoury v Sidhu [2011] FCAFC 71 Kum v Wah Tat Bank Ltd (1971) 1 Lloyd’s LR 439 Maschinenfabrik Augsburg-Nurnberg Aktiengesellschaft v Altikar Pty Ltd (1984) 3 NSWR 152 Maynegrain Pty Ltd v Compafina Bank [1984] 1 NSWLR 258; (1984) 58 ALJR 389 Mitsui OSK Lines Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564 Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204; [1946] ALR 517 Quadro Shipping NV v Bizley & Co Pty Ltd (1992) 113 FLR 280 Swiss Bank Corporation v State of New South Wales (1993) 33 NSWR 63 The Winkfield [1902] P 42; [1900-3] All ER Rep 346; (1901) 71 LJP 21 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603; (1998) 154 ALR 361; [1998] HCA 38 |
| Plaintiff: | MITSUI OSK LINES (THAILAND) CO LTD |
| Defendant: | JACK FAIR PTY LTD |
| File Number: | SYG 2426 of 2013 |
| Judgment of: | Judge Street |
| Hearing dates: | 9-10 March 2015 |
| Date of Last Submission: | 10 March 2015 |
| Delivered at: | Sydney |
| Delivered on: | 10 March 2015 |
REPRESENTATION
| Counsel for the Plaintiff: | Mr Q.A Rares |
| Solicitors for the Plaintiff: | Aus Ship Lawyers |
| Counsel for the Defendant: | Mr D.W Rayment |
| Solicitors for the Defendant: | Pancific Legal Solicitors |
ORDERS
Under s.236 of the Competition and Consumer Act 2010 that the defendant pay the plaintiff damages in the sum of 1561442.99 Baht with interest to run as if entered on 10 March 2015 under s.77 of the Federal Circuit Court of Australia Act 1999.
Under s.237 of the Competition and Consumer Act 2010 that defendant fully indemnify the plaintiff in respects of the legal costs incurred by the plaintiff in defending the Thai proceedings by engaging CTPL International Law Office that this indemnity extends to the whole of the costs and expenses incurred including the represention of the plaintiff’s agent which was joined in the proceeding which was the disclosed agent on the plaintiff’s bill.
Defendant pay the Plaintiff’s costs.
Exhibits be returned to the parties within 28 days.
| FEDERAL CIRCUIT COURT AT SYDNEY |
SYG 2426 of 2013
| MITSUI OSK LINES (THAILAND) CO LTD |
Plaintiff
And
| JACK FAIR PTY LTD |
Defendant
REASONS FOR JUDGMENT
As Corrected
The plaintiff in this matter was the ocean carrier under a combined transport bill of lading number MOLU13802535060 in respect of the carriage of two containers said to contain 1760 bags of jasmine rice issued at Bangkok on 19 May 2013 for carriage from Bangkok, Thailand to Sydney, Australia.
The plaintiff delivered the cargo to the notify party being the defendant on production of a non-negotiable copy of the bill of lading in circumstances where the non-negotiable copy was endorsed on the reverse side with the corporate seal of the defendant, being the notify party, and signed by a director of the defendant.
The proceedings are within this Court’s jurisdiction under s.4(3)(f) of the Admiralty Act 1988 which provides as follows:
4(1) A reference in this Act to a maritime claim is a reference to a proprietary maritime claim or a general maritime claim.
(3) A reference in this Act to a general maritime claim is a reference to:
…
(f) a claim arising out of an agreement that relates to the carriage of goods or persons by a ship or to the use or hire of a ship, whether by charterparty or otherwise;
…
Read together with s.9 of the Admiralty Act as follows:
Section 9 – Admiralty jurisdiction in personam
(1) Jurisdiction is conferred on the Federal Court, the Federal Circuit Court and on the courts of the Territories, and the courts of the States are invested with federal jurisdiction, in respect of proceedings commenced as actions in personam :
(a) on a maritime claim; or
(b) on a claim for damage done to a ship.
The claim brought by the plaintiff, arises out of a settlement by the plaintiff of proceedings brought by the holder and true owner of the bills of lading in Thailand, in essence, for conversion of its goods by the plaintiff carrier. Those proceedings were settled on 2 October 2014 by the plaintiff paying the true owner 1,518,711.04 Thai baht.
The plaintiff brought a claim under the Australian Consumer Law in respect of the alleged misleading conduct of the defendant in presenting the non-negotiable copy bill of lading endorsed by the defendant to obtain delivery orders in respect of the cargo which had not been paid for, and was never paid for by the defendant.
The pleading purported to give rise to a claim in conversion against the notify party by the carrier, and, subject to the matters I will identify later in these reasons a claim of implied contract, and breach of that implied contract, by the defendant in failing to surrender a duly endorsed original bill of lading.
The jurisdiction under s.4(3)(f) in referring to a ‘claim arising out of an agreement that relates to the carriage of goods’ is of broad scope. The conferral on this Court of civil jurisdiction in respect of a ‘maritime claim’ under s.4 is not, in any way, limited by quantum. The scope of a claim arising out of an agreement that relates to the carriage of goods clearly includes a cause of action of the kind raised in respect of misleading and deceptive conduct as alleged by the plaintiff in this case. The jurisdiction conferred by s.4(3)(f) includes a claim by the carrier as bailee for conversion against the defendant and, also, a claim of alleged breach of an implied agreement by the carrier against the defendant of a Brandt v Liverpool, Brazil and River Steam Navigation Co Ltd [1923] All ER Rep 656; [1924] 1 KB 575; (1923) 29 Com Cas 57 nature.
The jurisdiction conferred on this Court under s.9 of the Admiralty Act must be read with s.5 of the Admiralty Act that, relevantly, identifies as follows:
Section 5 - Application
(1) Subject to the succeeding provisions of this section, this Act applies in relation to:
(a) all ships, irrespective of the places of residence or domicile of their owners; and
(b) all maritime claims, wherever arising. (emphasis added).
…
This means that the civil jurisdiction in respect of ‘maritime claims’ of this Court extends to the full ambit of ‘maritime claims’ wherever arising in respect of the oceans of the world. That jurisdiction is conferred pursuant to s.76(iii) and s.77 of the Constitution relevantly as follows:
Section 76 – Additional original jurisdiction
The Parliament may make laws conferring original jurisdiction on the High Court in any matter:
…
(iii) of Admiralty and maritime jurisdiction;
…
Section 77 - Power to define jurisdiction
With respect to any of the matters mentioned in the last two sections the Parliament may make laws:
(i) defining the jurisdiction of any federal court other than the High Court;
…
The scope of this Court’s civil maritime jurisdiction is limited only by the scope of that power under s.76(iii), as identified in s.13 of the Admiralty Act. In respect of that jurisdiction, the High Court in The Owners Of The Ship " Shin Kobe Maru " v Empire Shipping Company Inc. [1994] HCA 54; (1994) 181 CLR 404 at [423] said as follows:
39. It has long been accepted in the United States that the word "maritime" in the Constitutional expression "Cases of admiralty and maritime Jurisdiction" in Art.III s.2(1), on which our s.76(iii) was modelled, serves to extend the jurisdiction beyond those matters which, historically, fell within the Admiralty jurisdiction of the United Kingdom ((40) See Story's 1833 Commentaries on the Constitution of the United States, 5th ed. (1891), vol.2, ss.1665-1666.). It is accepted that the composite phrase "admiralty and maritime" was intended to extend the jurisdiction to matters of the kind regarded by the maritime nations of Europe as falling within the special jurisdiction of their courts as to "maritime contracts and concerns" ((41) De Lovio v. Boit (1815) 7 Fed Cas 418 at 441 (CCD Mass); see also at 442-443.). In consequence, the admiralty and maritime jurisdiction of the United States extends to contracts "touching rights and duties appertaining to commerce and navigation" ((42) People's Ferry Company of Boston v. Beers [1857] USSC 52; (1857) 61 US 393 at 401. See also Story's Commentaries on the Constitution of the United States, op.cit., s.1666; and Sisson v. Ruby [1990] USSC 126; (1990) 111 L Ed 2d 292 at 305.).
40. Ordinary principles of constitutional construction, which require constitutional provisions to be interpreted liberally according to their terms without imposing limitations that are not found in the express words ((43) See Reg. v. Public Vehicles Licensing Appeal Tribunal (Tas.); Ex parte Australian National Airways Pty. Ltd. [1964] HCA 15; (1964) 113 CLR 207 at 225.) compel the conclusion that "maritime" in s.76(iii) serves to extend jurisdiction beyond Admiralty jurisdiction as it existed in 1901.
The admiralty and maritime jurisdiction not being limited to the admiralty jurisdiction of the United Kingdom, means that this Court has a fulsome and effective admiralty jurisdiction to assist the resolution of local and international disputes relevantly in this case arising out of an agreement, that relates to the carriage of goods by a ship. Section 4(3)(f) is not, in my opinion, limited, in that regard, to a claim against the ocean carrier. To read down s.4(3)(f) in that way would be contrary to what was said by the High Court in Shin Kobe Maru to which I have referred.
This Court’s jurisdiction is one in which it has original jurisdiction as is vested in it by laws made by the parliament under s.10 of the Federal Circuit Court of Australia Act 1999 and, relevantly that picks up s.9 of the Admiralty Act 1988. The jurisdiction of the Court includes jurisdiction in associated matters pursuant to s.18 of the Federal Circuit Court Act 1999 which is as follows:
Section 18 – Jurisdiction in associated matters
To the extent that the Constitution permits, jurisdiction is conferred on the Federal Circuit Court of Australia in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Circuit Court of Australia is invoked.
Where an alleged claim within s.4(3)(f) is advanced in respect of a controversy that jurisdiction is effective for the full and final determination of the whole of that matter regardless of whether there is some technical limitation alleged to arise under s.4(3)(f). This ability to resolve the whole of the controversy once the jurisdiction of the Court is invoked is made clear by Starke J in R v Bevan [1942] HCA 12; (1942) 66 CLR 452 as follows:
And the jurisdiction being thus attracted, this Court is clothed with full authority essential for the complete adjudication of the matter and not merely the interpretation of the Constitution (Troy v. Wrigglesworth[12]; Hume v. Palmer[13]; O. Gilpin Ltd. v. Commissioner for Road Transport & Tramways (N.S.W.)[14]; Hopper v. Egg and Egg Pulp Marketing Board (Vict.)[15]). Once jurisdiction is acquired by the Court, that jurisdiction is not lost by reason of the rejection of the constitutional point (R. v. Carter; Ex parte Kisch[16]).
I have identified the fulsome admiralty jurisdiction of this Court to deal with a ‘maritime claim’ because of its importance in the resolution of international maritime disputes. This is not the occasion to explore further the full scope of that admiralty and maritime jurisdiction.
The circumstances in which the plaintiff came to issue two delivery orders dated 11 June 2013 against production of a non-negotiable copy of the combined transport bill of lading, to which I have referred, were addressed in evidence by three officers of the plaintiff. Ms Gorman, the Import Seafreight Coordinator, Sydney on behalf of the plaintiff, set out, in some detail, the practice for the obtaining of delivery orders by the plaintiff. Notwithstanding the cross-examination, I accept her evidence that the practice required production of an original bill of lading, and, if marked “To Order”, the checking that the bill of lading was duly endorsed, albeit that the plaintiff was willing to accept endorsement, by either notify party or shipper. This evidence of practice also supported by Mr Mathew the NSW manager of the plaintiff.
The combined transport bill of lading, produced to the plaintiff by the defendant was a non-negotiable copy of the combined transport bill of lading. Although marked non-negotiable and marked “copy”, the bill of lading was a colour version with blue print on its face and the logo and name of the plaintiff. Beside the printed name consignee are words in brackets “not negotiable under consigned to order.” The bill of lading recorded the number of originals three as well as noting that it was purportedly signed by Mitsui OSK Lines (Thailand) Co Ltd as agents for the carrier, and the plaintiff was the named carrier.
On the face of the non-negotiable copy, as with the original copies, there is noted the following under the heading Combined Transport Bill of Lading:
Received in apparent external good order and condition except as otherwise noted the total number of containers or other packages or units enumerated below(*) for transportation from the place of receipt to the place of delivery subject to the terms hereof.
Underneath that:
One of the original bills of lading must be surrendered duly endorsed in exchange for the goods or delivery order unless otherwise provided herein.
In accepting this bill of lading the Merchant expressly accepts and agrees to all its terms whether printed stamped or written or otherwise incorporated notwithstanding the non-signing of this bill by the merchant.
IN WITNESS whereof the number of original bills of lading stated below have been signed one of which being accomplished the other(s) to be void (emphasis added).
Underneath that notation on the face of the bill it records:
Terms of bill of lading continued on the back hereof.
Relevantly, in the definitions in clause 1, ‘Merchant’ is defined to include:
The shipper, holder of this bill of lading, consignee, receiver of goods, any person owning or entitled to possession of the goods or of this bill of lading and anyone acting on behalf of any such person.
The defendant had not, at the time of presenting the non-negotiable copy bill of lading to the carrier, paid the seller, International Rice and Products Co Limited, for the goods. It is equally clear that the contract between the seller and the defendant required payment before release of the original bills of lading. The invoice dated 19 May 2013 relevantly recorded term of payment:
TT telex release.
Details were provided in the invoice for the payment direct via Swift.
On 4 June 2013 prior to the presenting of the endorsed bill of lading, the defendant had received an email from the seller, relevantly:
Your shipment will ETA Sydney around 11 June. PLS kindly scan your Swift copy to us before arrival date. We will surrender B/L for your shipment.
The bill of lading identified International Rice and Products Co Limited as the shipper, the consignee was recorded:
To the order of shipper –
and the notify party was described as the defendant with the defendant’s address.
The evidence of Ms Yates at the time an Import Seafreight Coordinator of the plaintiff, who was not cross-examined, said that she mistakenly thought the bill of lading with the endorsement of the defendant was a negotiable bill of lading and in fact the original bill of lading. It was in those circumstances that Ms Yates registered on the computer system of the plaintiff, the original bill of lading as having been surrendered. Exhibit D identifies the computer screenshots that clearly record, on 5 June at 15:19:46, what appears to be the surrender is as follows:
OBL B/L 13802535060A OBL SRND.
It is clear that the plaintiff believed that the defendant had surrendered the original bill of lading on 5 June, and recorded in its computer system the non-negotiable copy bill of lading as if it was an original bill of lading. It is clear, and I accept the evidence of Ms Yates, that but for the endorsement by the defendant on the reverse side with its common seal, and signed by a director of the defendant, that the document would not have been entered as an original bill of lading and no delivery orders would have issued.
The Court finds on the evidence of Mr Chau, the director who signed the reverse side of the non-negotiable copy bill of lading, that he intended to obtain the delivery orders by presenting the endorsed non-negotiable copy to the defendant before the defendant had paid for the goods. Indeed, the defence of the defendant relevantly records:
The defendant admits that a bill of lading was presented to the plaintiff’s agent with the intention of taking delivery of the goods.
Mr Chau’s evidence was to the effect that he looked at the colour of the bill of lading and tore it off, and did not observe that it was not an original bill of lading. Mr Chau said words to the effect, “I wouldn’t have done it,” in terms of presenting the endorsed non-negotiable copy bill of lading to the carrier if he had appreciated it was not the original. I do not accept the evidence of Mr Chau that he did not observe that it was not an original bill of lading. Mr Chau knew at the time the defendant had not paid the seller to obtain the original bill of lading. I find the evidence of Mr Chau that he simply looked at the colour and tore it off to not be credible in respect of a business that had been conducted by Mr Chau for almost 10 years involving the importation of more than 200 containers.
In relation to my assessment of Mr Chau’s credibility I take into account his assertion that he advanced in relation to his failure to pay the seller that this was something that he would do in one month or two, and that this is what he had done before. This answer doesn’t record with the contractual terms or the subsequent conduct of the defendant.
The two other transactions involving the same seller have invoices that clearly identified ‘TT on arrival’ relating to term of payment. It is clear that the contract with the seller and the defendant required payment before the release of the original bills of lading. Counsel for the defendant points out that it appears, nonetheless, that payment was made on two occasions belatedly, and it appears that the defendant may have received the original bill of lading before payment.
I find Mr Chau was evasive in his response because he clearly knew and understood the terms upon which his company was purchasing rice from the seller, and it would have been well in his mind the nature of the terms of payment referable to presentation of the original bills of lading. Mr Chau well understood the difference between the practice he might have adopted and what the contractual rights and obligations of the parties were under the contract of sale.
I also take into account what I thought was the evasive response by Mr Chau in relation to the questions that were put to him. Part way through the cross examination of Mr Chau, an issue was raised as to the adequacy of the role of the interpreter. In that regard, it is the case that the defendant, through its solicitor, raised an issue of the accuracy of the interpretation by the official interpreter. Mr Chau was, thereafter, assisted in with the benefit of an officer of this Court being the solicitor acting for the defendant who was sworn as a second interpreter and assisted in the translation of questions and answers together with the official interpreter. Mr Chau confirmed through the second interpreter that he had no problems in understanding the questions that were put to him by the Court.
In response to questions put by counsel for the plaintiff at one stage Mr Chau raised his voice in what, in my opinion, appeared to be for theatrical effect and not a genuine response to the questions. I find his answers to counsel for the plaintiff were evasive and deliberately so.
It is crystal clear that Mr Chau fully appreciated the difference between the non-negotiable bill of lading and the original bill of lading from the answers he gave in his evidence. I am satisfied that Mr Chau at the time that he endorsed the non-negotiable copy, appreciated the difference and that what he was proposing to endorse and present to the carrier was not an original bill of lading. Mr Chau knew that without the endorsement with the Defendant’s company seal and his signature that the non-negotiable copy bill of lading would not obtain the delivery orders. It was in those circumstances that Mr Chau, with the intention of obtaining delivery of the cargo, caused the non-original copy bill of lading as endorsed by Mr Chau with the company seal and his signature to be presented to the plaintiff.
Mr Chau conceded that, after obtaining the goods as a result of the deliver orders issued by the plaintiff in response to the endorsed non-negotiable copy bill of lading, the defendant treated the cargo as if it was the property of the defendant. In response to the question of why the defendant hadn’t paid the seller Mr Chau raised the proposition that the rice was in some way of poor quality. Mr Chau identified an invoice in relation to the sale of 210 packets of rice that he alleged were the subject of this shipment in an invoice dated 28 June 2013 for $6300 with a handwritten notation:
Rice quality cash settlement half price.
Mr Chau annexed a further invoice dated 23 July 2013 again for the same number of packets with the same price of $6300 and, again, with the same handwritten notation on it. I do not accept Mr Chau’s evidence that the rice was of poor quality. Nor do I accept that the alleged poor quality of rice was the reason for Mr Chau not making payment to the seller. I find that Mr Chau, having obtained the advantage of delivery of the goods on behalf of the defendant through the presentation of the endorsed non-negotiable copy bill of lading, sought to obtain the advantage that the defendant now had of enjoying the goods without having to pay for them.
The plaintiff’s case in respect of misleading and deceptive conduct in contravention of s.18 of the Australian Consumer Law was founded upon a number of alternate representations. I am satisfied, taking into account the whole of the conduct and the terms of the non-negotiable copy bill of lading with the endorsement by the defendant, that there was conveyed to the plaintiff a representation that the defendant was entitled to delivery of the goods.
Whilst counsel for the defendant skilfully sought to identify why such a representation could not arise because of what he said was the apparent non-negotiable copy nature of the bill of lading I am satisfied that the endorsement signed by the director, together with the defendant’s seal, was intended to, and did, convey to the plaintiff that the defendant was entitled to delivery of the goods. It was acting on that representation, as conveyed by the endorsement signed by the defendant that caused the plaintiff to record in its computer system the surrender of the original bill of lading.
It is, indeed, the case that international carriers must be careful and diligent in checking the presentation of bills of lading given the importance of an ocean bill of lading. The modern ocean bill of lading is not merely a receipt for the goods. It is also the document that evidences the contract of carriage between the carrier and the shipper, and a document of title. With an original “To the order of shipper” ocean carrier’s bill of lading ordinarily title will pass on delivery of the original bill of lading to the proper holder for value where endorsed by the shipper. An endorsement by the notify party is ordinarily only capable of passing title if the notify party has already acquired title for value endorsed by the shipper on the ocean carriers bill of lading. A notify party may be acting as agent for the proper holder of the ocean carriers bill of lading. A notify party who endorses the ocean carrier’s bill of lading as agent, for an undisclosed principal, to obtain delivery of goods will generally mean both the agent and the undisclosed principal are parties to and bound by the terms of the contract of carriage evidenced by the ocean carrier’s bill of lading.
The terms of that contract of carriage in an ocean carrier’s bill of lading are of considerable importance for the commercial operation of international carriers, and provide terms of limitation, liability and exclusion consistent with the applicable international codes for the carriage of goods by sea.
The importance of modern bills of lading in the commercial world, albeit that electronic transactions now have a significant role, has been manifest for more than two centuries. The decision of the House of Lords in Glyn Mills Currie & Co v The East and West India Dock Company in (1882) 7 AC 591 identifies, in the judgment of Lord Blackburn, that:
It has been more than 100 years since bills of lading were transferable documents of title.
The commercial and legal importance of bills of lading as a matter of history can be seen from the jurisdictional reference to bills of lading in the Admiralty Act 1861(UK) which was the subject of exercise of admiralty jurisdiction by courts in Australia up until the commencement of the Admiralty Act 1988. The commercial importance of bills of lading is also manifest by reference to bills of lading in the Customs Act 1840 (NSW), the Bills of Lading Act 1855 (NSW), the Usary Bills of Lading Act 1902 (NSW) and then Sea Carriage of Documents Act 1997 (NSW).
In addition to that, the commercial and legal importance of bills of lading as a matter of history is made clear in Commonwealth legislation, relevantly, from the Sea Carriage of Goods Act 1904, the Sea Carriage of Goods Act 1924 and the Carriage of Goods by Sea Act 1991. It is not necessary, in this case, to discuss further the importance of the ocean carrier’s bill of lading under the Hague-Visby Rules. Nor is it necessary to discuss house bills of lading or the other types of non-negotiable bills of lading.
The practice of a number of originals of the ocean carrier bills of lading one of which must be surrender and the others to stand void, was the subject of comment by Lord Blackburn in the case to which I have referred. In this case there were three original bills of lading that the defendant buyer knew he had not received or paid for at the time of presenting the endorsed copy bill of lading.
I am satisfied that the plaintiff did have in place a sound system for inspecting documents presented by cargo interests seeking to obtain delivery orders, and that the sound system included careful inspection to ensure that it was only original bills of lading that were properly endorsed that were entered in the system of the defendant for the release of delivery orders.
The mistake that occurred in this case was, I am satisfied, one made despite the exercise of reasonable care by the plaintiff and having a sound system in place. The mistake was solely due to the defendant’s company sealed endorsement signed by a director on the reverse side of the bill of lading and presentation thereof by the defendant to the plaintiff.
I am satisfied that the plaintiff was led into error by the representation made by the defendant that the defendant was entitled to delivery of the goods in circumstances where the defendant was clearly not entitled to delivery of the goods. This constitutes misleading and deceptive conduct in trade and commerce by the defendant.
This Court’s jurisdiction under s.18 of the Australian Consumer Law is conferred by s.138A of the Competition and Consumer Act 2010. That Act, relevantly, has a limitation on quantum in respect of the scope of relief that could be granted under s.236 or under Part 3-5 of the Australian Consumer Law instituted in the Court. That limitation on jurisdiction is a defining of jurisdiction within Abebe v Commonwealth of Australia (1999) 197 CLR 510; (1999) 162 ALR 1; [1999] HCA 14 pursuant to s.77 of the Constitution. That limitation, in respect of s.236, does not operate in relation to causes of action that otherwise arise within the Court’s jurisdiction pursuant to s.4(3)(f) of the Admiralty Act 1988 and/or the associated jurisdiction.
The Court’s jurisdiction under s.138A in respect of the Australian Consumer Law has a broad smorgasbord of remedies available to do justice between the parties that extend beyond s.236 and include s.237. Section 237 is not the subject of limitation of quantum identified by s.138A(2).
Section 87CB of the Competition and Consumer Act applies an apportionment regime in respect of damages under s.236 of the Australian Consumer Law, relevantly, for economic loss or damage to property caused by conduct that was done in contravention of s.18 of the Australian Consumer Law.
There is an interesting intersection between s.236 and s.237 of the Australian Consumer Law insofar as that proportionate liability legislation is capable of application. Counsel for the defendant took the Court to Khoury v Sidhu [2011] FCAFC 71, and, in particular, the passages at [12]-[16]. It was put that, if there was, in fact, a suffering of damage within s.236, then s.237 operated, in essence, only as a mop up provision.
Counsel for the defendant drew attention to the need for a harmonious construction of the Act as a whole, and, relevantly, the need for giving effect to the work intended by Part 6A of the Act in relation to proportional liability.
I am satisfied that the Court has a discretion to be exercised judicially in determining whether or not to apply s.236 or s.237 depending on what the Court thinks is appropriate in respect of the conduct involved in the case and the dictates of justice.
Further, I find that the defendant intended to cause the economic loss that is the subject of the claim by the plaintiff within the meaning of s.87CC(1) of the Competition and Consumer Act 2010 which excludes the work done by the proportionate liability provisions. That intention follows from the findings that I have made referred to above in relation to Mr Chau.
I would note that, even if I had not come to the view that s.87CC applied in the circumstances of this case, it is one where the conduct of the defendant and the finding of sound system of the defendant did not require any apportionment of liability. I find this was not a case where the plaintiff was careless within s.87CB. Further the dictates of justice in this case as a result of the defendant’s conduct would have warranted application of the discretion to apply s. 237 in relation to the quantification of compensation for the plaintiff in any event.
It is extremely important, as a matter of commerce, that merchants around the world do not present to carriers documents that purport to be, but are not, original bills of lading in order to obtain improperly the delivery of cargo. The court, in its admiralty jurisdiction sits in part as a court of equity, to assist resolution of commercial disputes. In an area of maritime commerce in respect of instruments as important as original bills of lading, a merchant that deliberately presents a non-negotiable bill of lading in circumstances where they are not the owner of the goods, and are not the holder of the original bills of lading, and have not paid for the goods, and are not acting as an agent for the shipper of the goods, are not advancing the interests of international commerce, and can expect courts to be swift in providing fulsome remedies to prevent any such practice.
Maritime commerce is of the greatest importance for the economy of the Commonwealth of Australia, and maintaining the business standards and norm of conduct identified by the Australian Consumer Law in this important area of maritime commerce is a matter in respect of which a court is unlikely to be slow in granting effective relief.
I am satisfied that the settlement of the proceedings by the carrier in the present case was caused by the misleading conduct of the defendant and that the settlement was reasonable; Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603 at 607, 608, 616; (1998) 154 ALR 361; [1998] HCA 38; BNP Paribis v Pacific Carriers Ltd [2005] NSWCA 72.
It is crystal clear that a carrier that delivers goods without presentation of the original bill of lading is ordinarily liable in conversion, see Kum v Wah Tat Bank Ltd (1971) 1 Lloyd’s LR 439. In this case, the settlement by the plaintiff clearly took place with the benefit of legal representation for the plaintiff was the ordinary foreseeable consequence of the defendant’s conversion. Further I am satisfied that the settlement for 1,518,711.04 Thai baht was reasonable in circumstances where it is clear the carrier had a liability in conversion for the full sound arrived market value of the rice.
The argument developed by the defendant that the settlement was not reasonable because the cargo was of poor quality is an argument the court would not have entertained where the buyer has failed to pay the seller even if I had been satisfied that there was a problem with the quality of the rice, which, in this case, I am not. The Court expects Australian buyers from overseas sellers to comply with their contracts in terms of their obligation to make payment to the seller. Compliance with those expectations is of considerable importance for maritime commerce and commercial certainty in this country.
In those circumstances, I find that the plaintiff has suffered damage by reason of the defendant’s contravention of s.18 of the Australian Consumer Law in the quantum of 1,518,711.04 baht Thai baht.
In addition to the plaintiff suffering the damage identified in respect of the compromise with the shipper, it is clear the plaintiff had to incur the cost and expense of engaging lawyers to represent it in Thailand in respect of the claim advanced by the seller/shipper. I am satisfied that that cost and expense incurred by the plaintiff to the Thai proceedings was loss suffered by reason of the defendant’s conduct in contravention of s.18 of the Australian Consumer Law, and should be the subject of an indemnity order in addition to damages in the amount identified, together with interest to date of 4273.95, totalling 1,561,442.99 Thai baht.
I make an order under s.237 of the Australian Consumer Law that the defendant fully indemnify the plaintiff in respect of the legal costs and expenses incurred by the plaintiff in defending the Thai proceedings by engaging CTPL International Law Office, and that that indemnity extends to the whole of the costs incurred in those proceedings, including the representation of the plaintiff’s agent that was joined to those proceedings. That agent was the disclosed agent on the plaintiff’s bill.
It was clearly reasonable for the seller to join the agent, given the potential one-year time bar under the Hague-Visby Rules, and I am satisfied that an indemnity order is appropriate to prevent the loss and damage that the plaintiff has suffered in respect of those costs and expenses.
The plaintiff also brought a claim for conversion, albeit that the pleading of the same was not as clear as would be ideal. Nonetheless the material facts claiming conversion emerged on the second further amended statement of claim. Relevantly, to be a conversion the pleading needed no more than as identified in Maynegrain Pty Ltd v Compafina Bank [1984] 1 NSWLR 258; (1984) 58 ALJR 389 at [392]:
Conversion consists of a positive wrongful act of dealing with goods in a manner inconsistent with the rights of the owner.
The pleading, although inelegant made clear the positive wrongful acts of the defendant that clearly amounted to conversion.
The plaintiff’s pleading also sought to raise a right of subrogation and assignment in order to sue in conversion, however, it is accepted by the defendant that a bailee in possession like an ocean carrier has special property and as such has title to sue for the full value of the goods. That right of the bailee to sue is supported by Windeyer J in City Motors (1933) Pty Ltd v Southern Aerial Super Service Pty Ltd (1961) 106 CLR 477; [1962] ALR 184; (1961) 35 ALJR 206. This is also supported by the decision in The Winkfield [1902] P 42; [1900-3] All ER Rep 346; (1901) 71 LJP 21, relevantly at 58 and as that decision made clear a bailee who sues in respect of a wrong done in respect of the goods, the subject of the bailment, must account to the bailor for the benefit of that suit.
It makes considerable good sense that a carrier who has unintentionally engaged in a conversion of goods by delivering cargo against a non-negotiable bill of lading in circumstances where the party presenting the bill was not, in fact, the owner, to permit the bailee to seek recovery from the other converter, consistent with the right to sue as a bailee.
I do accept the proposition identified by counsel for the defendant that there are some circumstances in which the bailee may have engaged in an act so wholly repugnant to the bailment to no longer be entitled to bring such a suit as identified in Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 227 ; [1946] ALR 517. In this case it is clear that, in fact, the bailee was purporting to, and thought it was acting consistent with the bailment and the obligation to deliver the cargo against the original bill of lading. This is not a case where the conduct of the bailee was wholly repugnant falling within the principle identified in Penfold Wines.
I note in this regard that contributory negligence is not, in any event, a defence to a suit in conversion, Heperu Pty Ltd v Morgan Brooks Pty Ltd (No 2) [2007] NSWSC 1438 at [171]-[173]. In any event I have found no contributory negligence by the plaintiff.
In circumstances where the plaintiff has entered into a reasonable settlement with the seller in respect of the cause of action brought against the plaintiff carrier for delivering the cargo without surrender of the original bill of lading I am satisfied that the quantum of that settlement caused by the defendant’s wrongful conversion was a reasonable settlement for the purpose of identifying the damages that would flow. The plaintiff would be entitled to succeed under that cause of action, of conversion for the full settlement sum, and also be entitled to an indemnity order of the kind I have identified under section 237 in respect of the costs and expenses incurred in the Thai proceedings.
The plaintiff’s case was also advanced on the basis of a Brandt v Liverpool contract. As identified by Bankes LJ at [589]-[590]:
The argument in this Court has been mainly directed to the question whether there was a contract between Brandt & Co. and the shipowners which entitled Brandt & Co. to sue for damages for the delay in delivery of these goods and for the return of the money they had had to pay for reconditioning them. Now, it is quite true that there is no authority expressly covering the question how far, that is to what extent, the shipowner is bound by the contract which may be inferred from the offer made by the holder of a bill of lading to take delivery of the goods, which offer is accepted by the shipowner. Is his obligation merely to deliver the goods which he has on board, or is he bound to the extent of the contract contained in the bill of lading so far as its terms are applicable to the circumstances of the case. We have been referred to three authorities: Stindt v. Roberts (1); Young v. Moeller (2); and Allen v. Coltart & Co. (3) By those authorities it has been clearly established that where the holder of a bill of lading presents it and offers to accept delivery, if that offer is accepted by the shipowner, the holder of the bill of lading comes under an obligation to pay the freight and to pay the demurrage, if any, and there are general expressions in all those three cases, I think, in which the learned judges have said that the contract so made by that offer and acceptance covers, so as to include, the terms of the bill of lading. In my opinion in this particular case the contract must include the terms and conditions of the bills of lading and for this reason. In this case the bill of lading holder offered the freight before the goods were delivered; and in fact paid it, and under those circumstances it seems to me that by the acceptance of the freight and the subsequent delivery the shipowners undertook an obligation to deliver the goods as described in the bill of lading. I think from the shipowner's point of view it must necessarily include the whole of the terms of the bill of lading, because he must desire that he should be covered by the exceptions in the bill of lading. I think, therefore, that the learned judge is right when he states his conclusion that on the facts in this case it is sufficient to say there was a promise by the shipowners to deliver the goods to Brandt & Co. in the condition in which they ought to be delivered under the bill of lading. much for the scope and extent of the contract. I entirely agree with the learned judge's conclusion upon this very important matter.
That decision has been the subject of consideration by the Court of Appeal, the Supreme Court of New South Wales in Quadro Shipping NV v Bizley & Co Pty Ltd (1992) 113 FLR 280 in which Gleeson CJ identified the need to determine as a matter of factual inference whether, in the particular commercial and legal context, an implied agreement could arise. Relevantly, his Honour said:
The reasoning in Brandt was as follows. The shipowners acknowledged receipt of the cargo in apparent good order and condition, and their contractual obligation under the bill of lading was to deliver them in good order and condition, subject to any exceptions or qualifications contained in the bill of lading. The plaintiffs, who were indorsees of the bill of lading, presented it to the shipowners and thereby offered to take delivery and (according to settled authority) impliedly promised to pay the freight, and any other charges due to the shipowner. The Court inferred, as a fact, that in consideration for those promises the shipowners agreed to deliver the goods according to the terms and conditions of the bill of lading, which included an obligation to deliver the goods in the same condition as that in which they were shipped, unless they could establish that they were excused from delivering the goods in that condition by one or other of the excepted clauses. This, it should be stressed, was a process of factual inference, although one undertaken in the light of the particular commercial and legal context.
Carruthers J reasoned by analogy in the present case, and I accept the force of the analogy. However, the analogy is not perfect. In Brandt the indorsee of the bill of lading undertook to pay the freight on delivery. Here the freight had been prepaid by Tomago, presumably to Transcontinental. Furthermore, the contract made between Tomago and Quadro (to which, incidentally, the other two plaintiffs were not parties) was made in special circumstances, and was not made with the party that had (as in Brandt) undertaken the original obligations contained in the bill of lading. It is also not without significance that, when Quadro informed the various consignees that it was willing to carry the cargo then on board the Protea Trader to Sydney, it announced its intention to discharge it there irrespective of its port of destination. That is not easy to reconcile with an inference that Quadro was offering to perform all the contractual obligations under the relevant bills of lading.
As his Honour approached the matter, he was concerned with implied terms of a contract made when the vessel was between Fremantle and Sydney, to complete the voyage and deliver the cargo at Sydney. It is fairly arguable that any such implied terms were limited in their application to the completion of the voyage and the delivery of the cargo, and did not necessarily comprehend an assumption of a liability for pre-existing damage to the cargo or a general undertaking of the obligations under the bill of lading. I express no concluded view on that matter, but it seems to me a question that ought to be available to be litigated.
That was a case where the charter was terminated and the vessel withdrawn as a result of which the cargo was discharged otherwise than at the port intended on the bill of lading, and the court identified, relevantly:
On 12 and 13 July 1990 there was an exchange of communications to which further reference will be made below. It suffices for the moment to say that certain arrangements were made between Quadro and Tomago for the purpose of dealing with the situation that had arisen by reason of the insolvency of Transcontinental, and the withdrawal of the charter. Quadro stated that it was prepared to enter the port of Sydney for the sole purpose of discharging cargo, irrespective of its port of destination, but it required an irrevocable undertaking from the consignees to the effect that they would accept all charges arising out of the discharge of the vessel. That undertaking was given. On 16 July 1990, the Protea Trader arrived at Sydney and commenced discharge. Tomago tendered the bill of lading, together with a cheque for the relevant charges, to Quadro's representatives. A delivery order was issued, but, when Tomago's carrier collected the consignment, it was found that damage had been occasioned to the cargo.
It is certainly the case, as pointed out by counsel for the defendant, that similar to the Quadro Shipping case, in this instance the bill of lading recorded that the freight had been prepaid. However, materially when one comes to look at the context of this case there is a compelling inference that there was an implied agreement given the steps taken by the director of the defendant to place the defendant’s seal on the reverse side of the non-negotiable copy bill of lading for the very purpose of presenting the same to the defendant, and in circumstances where it was common knowledge by the plaintiff and the defendant that without that endorsement no delivery order would be issued by the defendant.
It is also the case, in this instance, that upon surrendering the non-negotiable copy bill of lading the first defendant agreed to and, in fact, paid on 6 June the charges necessary for the issue of the delivery orders in response to the surrendered bill of lading. A further material factor in this case, supporting the existence of such an implied contract, are the words on the face of the bill to which I have referred above, and in that regard I emphasise the following:
In accepting this bill of lading the merchant expressly accepts and agrees to all its terms, whether printed, stamped or written, or otherwise incorporated, notwithstanding the non-signing of this bill of lading by the merchant.
In this case the merchant clearly signed the bill of lading, and I am satisfied that the definition of merchant, in the present case, included the defendant as the receiver of the goods. Accordingly, this case can be distinguished from that factual implication circumstances discussed in Quadro Shipping v Bizley, and indeed in BHP Trading Asia Ltd v Oceaname Shipping Ltd, (1996) 67 FCR 211. I find that there was an implied agreement between the plaintiff and the defendant by the presenting of the endorsed non-negotiable copy bill of lading by the defendant that bound the defendant to the terms of the contract of carriage.
I would add that it makes considerable common sense and accords with commercial practice and required commercial certainty that the person presenting a bill of lading with their endorsement on it is agreeing to and is bound by the terms and conditions of the carrier’s contract of carriage that is evidenced by the bill of lading.
An implied agreement of that kind assists commercial certainty and deters conduct of a kind that occurred by the defendant in this case. In respect of that implied agreement it is clear that there was a term that one of the original bills of lading must be surrendered, duly endorsed, in exchange for the goods or delivery order, unless otherwise provided herein.
While the defendant sought to argue that the presentation of the non-negotiable copy exhausted the application of that term, I am satisfied that that term was a continuing obligation under the implied contract, which the defendant breached. I am satisfied that by reason of that breach of contract the defendant would be liable for damages in the same amount that I have already identified in respect of the reasonable settlement of the Thai proceedings as a loss naturally arising upon breach and within the reasonable contemplation of the parties at the time of contract. These damages for breach of contract should place the plaintiff in the same position had the contract been performed. The need for the defendant to indemnify the plaintiff in respect of the costs and expenses incurred in the Thai proceedings caused by that breach is within the scope of the Court’s jurisdiction to grant all remedies to which a party is entitled so as to finally determine the controversy of s. 14 of the Federal Circuit Court Act.
The issue was raised as to the extent to which the pleading adequately identified a cause of action of implied agreement. Again I am satisfied that the facts identified in the second further amended statement of claim sufficiently identified the facts giving rise to an implied agreement, and it is not necessary for the legal effect of those material facts to be set out.
Further this Chapter III court, when sitting in admiralty, is not a court of strict pleading and is in effect exercising the same equitable jurisdiction in respect of matters of admiralty and maritime jurisdiction in respect of maritime claims in personam as that exercised by the Federal Court of Australia in respect to the jurisdiction conferred on this court.
Section 3 of the Federal Circuit Court of Australia Act provides as follows:
Section 3 - Objects
(1) The main object of this Act is to continue in existence the Federal Magistrates Court created under Chapter III of the Constitution as the Federal Circuit Court of Australia.
(2) The other objects of this Act are:
(a) to enable the Federal Circuit Court of Australia to operate as informally as possible in the exercise of judicial power; and
(b) to enable the Federal Circuit Court of Australia to use streamlined procedures; and
(c) to encourage the use of a range of appropriate dispute resolution processes.
Rule 1.03 of the Federal Circuit Court rules applies:
Rule 1.03 Objects
(1) The object of these Rules is to assist the just, efficient and economical resolution of proceedings.
(2) In accordance with the objects of the Act, the Rules aim to help the Court:
(a) to operate as informally as possible
(b) to use streamlined processes
(c) to encourage the use of appropriate dispute resolution procedures.
(3) The Court will apply the Rules in accordance with their objects.
(4) To assist the Court, the parties must:
(a) avoid undue delay, expense and technicality
(b) consider options for primary dispute resolution as early as possible.
(5) If appropriate, the Court will help to implement primary dispute resolution.
The fact that the proceedings were conducted, upon the pleadings does not prevent the obligation upon this court to do justice between the parties. In this case it is clearly one where justice entitles the plaintiff to succeed on each of the causes of action in respect of which material facts are adequately disclosed, on the face of its pleading. Further it was not suggested that any further evidence was required to meet the issues of implied agreement. For the reasons given the cause of action of implied contract on a Brandt v Liverpool basis would have also entitled the plaintiff to succeed against the defendant.
It is appropriate in relation to the breadth of the powers under the Australian Consumer Law, as it would be for the breach of contract or conversion, to ensure that where the loss has been suffered in a foreign currency, if that foreign currency best expresses the plaintiff’s loss, judgment can be given in that foreign currency, Mitsui OSK Lines Ltd v The Ship Mineral Transporter [1983] 2 NSWLR 564 at 153 (the appeal to the Privy Council did not depart from this principle, See Candlewood Navigation Corp Ltd v Mitsui OSK Lines Ltd (The Mineral Transporter)(1985) 3 NSWLR 159.
There will be judgment for the plaintiff as identified above.
I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of Judge Street
Associate:
Date: 15 April 2015
CORRECTIONS
Order 1 amended by deleting “CCL” in Order 1 and substituting “Competition and Consumer Act 2010”.
Parties amended by deleting “Applicant” and “Respondent” and substituting “Plaintiff” and “Defendant”.
Para.17 amended by deleting “The bill of lading recorded to number of originals…” and substituting “The bill of lading recorded the number of originals…”
Para.87 amended by deleting “Australia Consumer Act” and substituting “Australia Consumer Law”.
Para.2 amended by correcting the spelling of “defendent” to “defendant”.
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