NPL (Australia) Pty Ltd v Kamil Export (Aust) Pty Ltd

[1994] HCATrans 33

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
              Melbourne       No M5 of 1994

B e t w e e n -

N.P.L. (AUSTRALIA) PTY LTD                

Applicant

and

KAMIL EXPORT (AUST) PTY LTD

Respondent

Application for special leave
   to appeal

MASON CJ
BRENNAN J
DAWSON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 16 SEPTEMBER 1994, AT 3.14 PM

Copyright in the High Court of Australia

MR A.C. ARCHIBALD, QC:   If the Court pleases, I appear with my learned friend, MR C.R. NORTHROP, for the applicant.  (instructed by Mallesons Stephen Jacques)

MR C.L. PANNAM, QC:   If the Court pleases, I appear with my learned friend, MR K.W. ESSER, on behalf of the respondent.  (instructed by Barker Gosling)

MASON CJ:   Mr Archibald?

MR ARCHIBALD:   If the Court pleases.  We identified in our written leave summary three special leave points.  There is nothing we would wish to add by way of elaboration in relation to the third of them being the point concerning the reach of the Hague Rules when contractually incorporated into the relationship between the parties.

MASON CJ:   Let me say this at the outset.  Has the Court not, in the two cases, Darlington Futures and the Nissho case, settled the applicable principle?

MR ARCHIBALD:   There are three issues.  The issues which Nissho and Darlington relate to concern the construction of exemption clauses.

MASON CJ:   That is right, that is what I was referring to.

MR ARCHIBALD:   Yes.  The second issue that we seek to raise is the correct construction of the time bar provision in the Hague Rules, and we say that is a special leave point. 

MASON CJ:   It is a question of construction of a provision in a contract reflecting the Hague Rules.

MR ARCHIBALD:   The question of the construction of the Hague Rules when they apply to a contract by reason of their own force is, in our submission, a matter of general importance and there is serious controversy generated, in our submission, in the indications of the conclusion that should be reached on that point, including the reasoning of the President of the Court of Appeal in New South Wales in the Chellaram case.  At first instance, in this case, the learned trial judge, commercial list judge, expressed the view that in relation to that question it was difficult and vexed, page 22, lines 11 and 17.  He added a:

question about which opinions differ.

line 18.  And at page 24, line 13:

the point is anything but clear and must.....await authoritative resolution, perhaps in the High Court.

Those observations from the specialist judge in the area, in our submission, are apposite.  The learned trial judge also said, correctly, in our submission, that the trend of authority such as it is, favours the view that the carrier can rely on the time bar clause in respect of post discharge events.  The Full Court held to the contrary.  The Full Court’s conclusion is in direct conflict with the reasons of the learned President of the Court of Appeal in New South Wales. 

In the judgment of the learned Chief Justice in that case, Chief Justice Gleeson said that the question was interesting but unnecessary to decide.  His Honour the Chief Justice referred to one of the two leading articles on the question:  Mr Clarke’s article in Law Quarterly Review, we submit, regarding it as a non‑judicial analysis worthy of serious consideration, as did Mr Justice Hayne refer to that article, and the second leading article, that of Mr Davenport.  So that one really has a position where such authority as there is, in our submission, indicates a trend. 

The Full Court of the Supreme Court of Victoria has adopted a view which is in direct conflict with the view adopted by the President of the New South Wales Court of Appeal.  The Chief Justice of the New South Wales Court has said the point is interesting and such other authority as does exist does not either touch directly on the point or is in a context which made it unnecessary and inappropriate for a close analysis to be given to it. 

This Court has not, as we would understand the position, dealt with the issue after hearing debate upon a matter which arose for determination in a case before the Court.  In the Full Court Mr Justice Marks did refer to the passage at pages 224 to 225 in the decision of this Court in Nissho Iwai.  That passage is to the contrary of that for which we contend, but it is not our understanding that the matter was in controversy in Nissho Iwai, was not the subject of argument and those observations of the Court were not expressed upon a basis that they were in resolution of any controversy that was before the Court, rather by way of explanation and preamble to the issues that were. 

So that the issue, in our submission, is one in which there is a serious and substantial controversy.  There are a number of recent indications, both judicially and non-judicially of a conclusion in favour of the result for which we contend and the correct operation of the time bar provisions of the Hague Rules are of great significance to the shipping industry in this country and, indeed, no doubt of significance globally. 

So far as the position outside this country is concerned, there is a decision of the Malaysian Court in Rambler, which is to the contrary of the position for which we contend, but otherwise there is no substantive consideration of the issue, certainly in any direct or substantial way in the common law jurisdictions of the world. 

BRENNAN J:   I see at page 69, it is Justice Marks, is it?

MR ARCHIBALD:   Yes, it will be, Your Honour.

BRENNAN J:   He says that remarks of Justice Kirby in Chellaram:

expressed a contrary opinion.....his view stands alone among other judicial pronouncements. 

Is that correct?

MR ARCHIBALD:   We submit not.  There seems to be a different view, for example, as to the way one should conclude the Court of Appeal dealt with the issue in The “Captain Gregos”, which is referred to at the foot of page 69 in His Honour’s decision.  His Honour regarded what Lord Justice Bingham said as supporting the conclusion that His Honour was in favour of.  Mr Justice Kirby in the Chellaram case referred to Lord Justice Bingham’s reasons and relied upon them for the contrary proposition.  So that in that regard whether or not Lord Justice Bingham’s reasons in Gregos are in support of the proposition, or against, remains unclear. 

In Teys Bros, Mr Justice Cooper was dealing with a procedural matter, a question of amendment of a proceeding to introduce a party and the question really was whether the issue was hopeless or not.  So that it is not an analysis on the substantive point.  The decisions in Gosse Millard and Goodwin, that are then referred to by His Honour are really not directly in point, in our submission.  They only collaterally or obliquely come near the point. 

So there is, to a considerable extent, a vacuum, and certainly a vacuum in recent times in relation to the deliberate consideration of those matters.  And both the articles to which regard, in our submission, may properly be had, those of Mr Devonport and Mr Clarke, are in favour of the conclusion that the time bar provision should be regarded as one which extends the time bar to post discharge events because of the appropriateness of achieving finality in relations between the cargo owner and the shipper and enabling, as Lord Justice  Bingham said in The “Captain Gregos”, the carrier to close his books; a very artificial situation arising, if he can close his books for what happened from ship’s tackle to ship’s tackle after a year, but unable to close his books in relation to what happened from ship’s tackle to wharf or to warehouse. 

So there are many reasons, in our submission, why the argument for which we contend has merit.  It found favour with Mr Justice Kirby who analysed the matter in some detail.  In our submission, the point is one which it is desirable to resolve and clarify in order that there might be certainty in relation to this area.  So long as there is the conflict which, we submit, exists there cannot be that certainly which is plainly desirable.  Those are the submissions that we seek to make in relation to the second of our three points, the true reach of the time bar provision of the Hague Rules on their proper construction.

The third point, whether those rules, if not to be so construed, have a wider reach because of their contractual incorporation is one which we do not need to develop.  We say cases such as the Adamastos, support the contention that we there advance, it being natural and appropriate that the time bar provisions incorporated by the parties should be coterminous with their enterprise, to use the verbiage of Adamastos, and again the point is of importance.

We come then to the argument in relation to the exemption clauses.  Here we wish to make three points.  The first point is that, in our submission, the Full Court misunderstood and misapplied the principles explained by this Court in Darlington and Nissho Iwai. Mr Justice Marks, with whom Mr Justice Fullagar agreed, treated the words of the clause, the exemption clause, as clearly applying on their natural and ordinary construction to the circumstances of the case. That was the analysis of His Honour at page 46, lines 14 to 19. But His Honour appeared to deprive those words of the application which they would have upon their true construction by reference to some process that was independent of construction procedures and principles.

He spoke at page 61, line 21, of a “power to imply a limitation” and at page 65, line 18 he referred to “the existence of an implied qualification”.    Our submission is that the process of determining the ambit of the exemption clause involves neither an extraneous power, nor any process of implication.  It is, as this Court has said, a matter of construction of the provisions of the clause in their context having regard to the nature and object of the contract.  The error which, in our submission, is at the foundation of the reasoning of the Full Court is the disregard of this Court’s observations in Nissho Iwai, at page 227, that:

the meaning of the -

exempting provision -

depends on its language, read in context, and not on any a priori notion that the non-delivery of goods was not intended to be protected. 

The approach of the Full Court, in our submission, is to the contrary of that.  It does suggest that there is some extraneous notion, or a priori notion, that non-delivery per se is not intended to be protected.  The references by Mr Justice Marks to “fundamental breach”, page 49, line 4, and page 63, line 30, tend to suggest, in our submission, that His Honour may have allowed what Mr Justice Kirby has called the now discredited doctrine of fundamental breach to be reintroduced by the side door, as the learned President warned against in Chellaram at page 389.

So we say that those errors of principle lie at the heart of His Honour’s reasons.  Mr Justice Ormiston recognised the difficulty in this area when he said, at page 77, line 10, that he would:

not attempt to distinguish between the tests apparently laid down by the courts -

His Honour did express himself to be much attracted to the conclusion of the trial judge in favour of exemption but in substance bowed to comity between courts of intermediate appeal when His Honour concluded that the decision of the Court of Appeal in New South Wales in the Glebe case was pertinent and deferred to the analysis in that case.  We will submit in a moment, if we may, that the Glebe case is distinguishable, and properly distinguishable from the circumstances of the case before His Honour.  But it is highly undesirable, in our submission, that there be deferral to what may be an inappropriate approach when the approach of the other Court may be in friction with the principles enunciated by this Court. 

The second point that we seek to make about the approach of the Full Court is that the Court misconceived, in our submission, the concept of deliberate conduct and the effect of deliberate conduct upon the ambit of the exemption clause.  Both Mr Justice Marks and Mr Justice Ormiston treated the conduct of the Guam agent, or the Guam representative of the carrier as involving deliberate conversion.  That was their view at page 65 Mr Justice Marks, page 80 Mr Justice Ormiston.  The Court seized upon that element to conclude that there was an inevitable reading down of the clause so as not to apply to post‑discharge events.  The Court wrongly, in our submission, proceeded upon the basis that all unauthorised deliveries compel a reading down of exemption clauses.  We say that is erroneous.  We say here there was a failure to distinguish between intentional but negligent misdelivery on the one hand, and what is truly deliberate misdelivery on the other hand. 

In the Glebe case, with which Their Honours in the Full Court aligned themselves, there was wilful dishonest conduct.  And the wilful dishonest conduct led to the proper conclusion, in our submission, that conduct of that kind was not intended by the parties to be within the reach of the exemption clause.  Here the position was different.  Here, as our summary at paragraph 2(c) indicates, there was trusting delivery by the Guam representative to the consignee, to the notified party.  If the main object of the contract may be described as delivery to the consignee there was fulfilment of the main object because the goods were delivered to the consignee to the notified party.  The vice was that the agent trusted the promise of the consignee to produce the original bill later, and that never occurred.

In the Chellaram case, very analogous circumstances obtained.  There was a promise afforded by the consignee to whom delivery was given by way of indemnity.  The indemnity was not fulfilled.  In Chellaram the Court of Appeal concluded that the clause there covered the situation and this Court, on appeal, upheld the reasoning of the Chief Justice.  So that here delivery to the consignee occurred.  It was the very event which was intended to take place and we say that it is an error for the Full Court to have concluded that intentional but perhaps negligent misdelivery has to be castigated as deliberate conduct, deliberate conversion, which automatically takes the conduct outside the parameters of the clauses correctly construed.

The third and last point that we wish to make is that the position which obtains in decision making by State courts in this area is now the subject of much difficulty and much uncertainty.  Mr Justice Sheller in the Glebe case spoke of the great difficulty which obtained.  Mr Justice Marks at page 50 said that the application of the principles might easily lead to

different opinions and be applied in similar circumstances with variable results.  Other members of courts have expounded upon the difficulty which exists.  In our submission, it is highly desirable that this Court be able to expound upon the principles to redress those difficulties and to enable persons of commerce who must deal with these matters to be able to approach these issues with certainty and to achieve simplicity of outcome.  For those reasons, in our submission, special leave ought be granted in this case for those matters to be dealt with.

MASON CJ:   Thank you, Mr Archibald.  The Court need not trouble you, Dr Pannam.

Having regard to the decisions of this Court in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 and Nissho Iwai Aust Ltd v Malaysian International Shipping Corp, Berhad (1989) 167 CLR 219, we do not consider that the proposed appeal raises any question of general principle sufficient to warrant the grant of special leave to appeal to this Court. The application is therefore refused.

MR PANNAM:   We ask for costs.

MASON CJ:   You do not oppose that, Mr Archibald.

MR ARCHIBALD:   I do not.

MASON CJ:   The application is refused with costs.

AT 3.35 PM THE MATTER WAS ADJOURNED SINE DIE