RW Miller and Co Pty Ltd v Australian Oil Refining Pty Ltd

[1967] HCA 50

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Kitto, Windeyer and Owen JJ.

R.W. MILLER &CO. PTY. LTD. v. AUSTRALIAN OIL REFINING PTY. LTD.

(1967) 117 CLR 288

21 December 1967

Shipping and Navigation

Shipping and Navigation—Charter-party—Clause limiting liability of shipowner to charterer—Clause requiring engagement of pilot when ship berthing at charterer's wharf—Wharf damaged by ship because of pilot's negligence—Whether shipowner liable for damage.

Decisions

December 21.
The following written judgments were delivered : -
BARWICK C.J. In this matter I have had the advantage of reading the reasons for judgment prepared by my brother Owen. I agree with them and with the conclusions to which he has come. For myself, I would merely desire to add that, if the relationship between the parties to the agreement in this case were no more than that of shipper and carrier as in the usual case of a contract of affreightment of goods, I would conclude that the operation of cl. 15 of the agreement was limited to loss or damage in relation to the loading, handling, stowage, carriage, custody, care, and discharge of the goods, the subject of the contract of carriage ; but not to the physical loss or damage to the goods themselves. For such a conclusion there is authority as well as satisfying reasons. In such a case, the accepted obligation of the carrier is expressed by the collocation of acts relating to the goods which I have just used. The contract we are called upon to construe was a contract for a single voyage between two named ports, with liberty to change orders ; but the parties to it did not stand merely in relation to each other as shipper and carrier ; nor was the obligation of the carrier limited to those acts, which I have listed, carried out in a manner of his own choosing. The shipper was also the owner of the wharf at which the goods were to be received by the carrier, and the shipper sought and obtained the contractual right to require the carrier's vessel to be brought to its wharf at its direction and, in relation to the navigation of the ship to that wharf, to carry a pilot of a particular kind. (at p291)

2. Consideration of the cases which confine the unlimited expression "loss or damage" in a charter-party to loss or damage in relation to the handling, stowage etc. of the goods the subject of carriage, leads me to think that the conclusion that this was the proper construction of those expressions in such a contract was reached because of the relationship in which the parties stood, and of the extent of the rights and obligations of the contract they had made. (at p291)

3. In this case, in my opinion, the limitation of the generality of the expression "loss or damage" in cl. 15 must similarly be found in the relationship of the parties and the nature and extent of the rights and obligations exacted and given by each to other rather than in the attribution to them of an intention to use the expression in their contract regulating their mutual rights and obligations in a sense which is traditionally appropriate to the more limited relationship and to the more limited contractual obligation. (at p292)

4. In this connexion, I would wish to say that I do not find that the referential inclusion in this contract of the rights and immunities to be found in the Schedule to the Sea-Carriage of Goods Act 1924 (Cth) compels a conclusion that the relevant words in cl. 15 must be construed in the same sense that the same words would be construed in a bill of lading in which they were incorporated by that Act and its Schedule. (at p292)

5. The presence of the obligation to come to the respondent's wharf at its direction and to do so with the aid of a pilot of a particular employment, in my opinion, requires on the one hand a construction which allows of the inclusion in the operation of cl. 15 of any loss or damage caused in the performance of that obligation and, on the other hand, the exclusion therefrom of any loss or damage which is unrelated to the performance of the agreement to handle, stow etc. the goods or to the obligation to berth at the respondent's wharf or to load the goods at its submarine terminal. (at p292)

6. Thus, although the contract which the parties made was called a charter-party, and contained many provisions commonly found in contracts relating merely to the carriage of goods, that contract must, in my opinion, be construed having regard to the whole relationship in which the parties stood and to all the rights and obligations they sought to create or to accept. My brother Owen has reflected these matters in his construction of the clauses of the contract, with which I respectfully and fully agree. (at p292)

7. In my opinion, the appeal should be allowed. (at p292)

MCTIERNAN J. I am of opinion this appeal should be dismissed. (at p292)

2. The charter-party in question is a contract of affreightment and under its provisions the defendant, the shipowner, was in charge of the ship. In my opinion none of the exceptions in cl. 15 is an answer to the plaintiff's claim in respect of damage to its wharf. The subject of "loss or damage" is not express. The intention of cl. 15 is to limit the shipowner's obligation to take good care of the cargo and to perform the contract of carriage. In the nature of things the words "loss or damage" have a restricted application. I think that the effect of the exceptions, including that relating to the navigation and management of the ship, is to relieve the shipowner from liability only in respect of the cargo. The provisions of the charter-party contractually incorporate the Rules in the Schedule to the Sea-Carriage of Goods Act 1924. The relevant parts of the Schedule are Article II and Article IV (2). These provisions concern goods. In my view the words of cl. 15 of the charter-party do not require a different standard of obligation, liability, right and immunity from that which subsists under the Rules. (at p293)

3. In order to relieve the shipowner from negligence resulting in damage to the wharf there ought to be clear and explicit language in the charter-party which has that effect. I believe that it should not be decided that the charterer contracted out of its common-law rights to sue on any proper cause of action for loss or damage in respect to its wharf unless there is clear and explicit language to that effect. The words of cl. 30 do not, in my opinion, have the effect of extending the exception in cl. 15 in respect of negligent navigation and management of the ship. Clause 30 is inserted in the contract, no doubt, for the protection of the wharf and the submarine terminal. But in my opinion it is an incorrect extension of this clause to hold that it involves that the charterer contracted out of its right to bring this action. The clause does not say that berthing pursuant to the clause is at the risk or peril of the charterer (cf. cl. 10). (at p293)

4. I agree with the conclusion of the learned judge that the defendant is vicariously liable for the fault of the pilot. His reasons are, in my opinion, entirely right. (at p293)

KITTO J. If it were not for the presence of cll. 10 and 30 in the charter-party, and the fact that under cl. 10 the respondent as charterer had indicated its wharf in Botany Bay as the place where the cargo was to be loaded, I should have held that the application of cl. 15 was limited to loss or damage to the cargo. But this would have been because the stipulation in cl. 15 that the owners should not be responsible for loss or damage, though not explicitly limited to loss or damage suffered by the charterers in respect of any particular property, must have been construed as referring only to loss or damage in respect of property of the charterers which the contract envisaged as involved in the performance of the contract on the part of the shipowners, and the only such property would have been the cargo of oil. The justification for so restricting the generality of the words would have been found in the wide-ranging rule of the common law, which Lord Westbury applied to the case of a release in London &South Western Railway Co. (Directors, &.) v. Blackmore (1870) LR 4 HL 610: "The general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given" (1870) LR 4 HL, at p 623 That rule and the extensions of it which were developed by courts of equity were discussed in a joint judgment of Dixon C.J., Fullagar and Taylor JJ. and myself in Grant v. John Grant &Sons Pty. Ltd.(1954) 91 CLR 112, at pp 123-128 (at p294)

2. But with cll. 10 and 30 in the charter-party it is simply not the case, as it seems to me, that at the time when the prospective release in cl. 15 was given, the oil was the only thing specially in the contemplation of the parties, that is to say in their contemplation as property of the charterers which the contract was subjecting to a risk of loss or damage for which the shipowners might be responsible in the absence of such a provision. The contract, taking effect in conjunction with the charterers' direction to load at their wharf in Botany Bay as cl. 30 contemplated it might, required on the part of the shipowners conduct with respect to the charterers' wharf (including of course its ancillary dolphins) no less certainly than conduct with respect to their oil. To describe the contract simply as one of affreightment is to treat what in fact was only a part of the shipowners' obligations as if it were the whole. What the contract obliged the owners to do was to berth the ship at the wharf, to take on there the cargo of oil, and then to carry the cargo in the ship to the proper destination. That being so, there is, in my opinion, no warrant for restricting the general words of cl. 15 as if the carriage of the cargo were the only thing shown by the contract to have been in the contemplation of the parties. The berthing of the ship at the charterers' wharf was as clearly in their contemplation as the carriage of the oil; and there is no more reason to be found in the contract for excluding damage to the wharf from the protection of cl. 15 than for excluding damage to the oil. (at p294)

3. I would allow the appeal. (at p294)

WINDEYER J. In this case the appellant was the defendant in an action brought by the respondent as plaintiff in the Admiralty Jurisdiction of the Supreme Court of New South Wales. The claim was for damages for negligence in the navigation, management and control of the appellant's motor vessel, which hit and damaged a dolphin appurtenant to the respondent's wharf in Botany Bay. The accident happened when the ship was approaching the wharf preparatory to berthing for the purpose of loading there. The ship was under charter to the respondent; but not as a demise. The charter-party provided that the ship proceed to Botany Bay, load a cargo of bulk oil, and deliver it to named ports in Queensland in consideration of freight. The loading was to be at a place to be indicated by the charterer, the respondent; and the respondent's wharf in Botany Bay had been indicated as that place. Macfarlan J. who heard the case, found for the plaintiff, the present respondent, and awarded it $9,600 for the damage done to the dolphin. From this judgment the shipowner appeals to this Court. (at p295)

2. It appears from cll. 1, 2 and 3 of the charter-party, that bills of lading were to be issued. However, the cargo to be carried was oil belonging to the respondent from its establishment at Botany Bay. The case is therefore one in which the charterer was the shipper. A bill of lading in such a case is, as between the charterer and the shipowner, merely a receipt for the goods; the charter-party states the terms of the contract of carriage: Rodocanachi, Sons &Co. v. Milburn Bros. (1886) 18 QBD 67; Love &Stewart Ltd. v. Rowtor Steamship Co. Ltd. (1916) 2 AC 527, at p 540 But, of course, provisions which ordinarily are in bills of lading, or which by statute govern bills of lading, may be introduced into the charter-party and thus become part of the contract of carriage. They are then to be construed as they would be in a bill of lading. (at p295)

3. Turning then to those terms of the charter-party: The appellant says, in the first place, that it was not responsible for the fault of the pilot in charge of the ship when she hit the dolphin. It bases this proposition mainly on cl. 30 of the charter-party, which reads as follows:

"30. Whenever the vessel is about to proceed to a berth at the Charterer's wharf or submarine terminal in Botany Bay and notwithstanding anything to the contrary contained in this Charter Party the Owners shall instruct the Master of the ship to engage a pilot employed by the Maritime Services Board of New South Wales for the purpose of directing or advising the Master as to such berthing and the Charterers shall pay the charges of such pilot."

In this case the master of the vessel held a certificate which exempted him from the obligation under the State law to take a pilot aboard. However, pursuant to the contractual obligation, a pilot was engaged; and at the time of the accident the vessel was proceeding under his direction. Notwithstanding the argument about voluntary and compulsory pilotage addressed to us by counsel for the appellant, I do not see that the owner was relieved of liability for negligence in the navigation and management of the vessel because there was a pilot aboard. I agree with the conclusion of the learned trial judge on this aspect, and I say no more about it. (at p296)

4. In my opinion the case turns entirely upon cll. 15 and 33 of the charter-party. I therefore set out each. The first is set out only so far as relevant (the seemingly odd use of capital letters in some places appears in the copy of the document in the appeal book):

"15. The Owners shall not be responsible for loss or damage arising or resulting from . . . Act, Neglect or Default of the Master mariner, ((sic) in the appeal book sed semble 'master, mariner') pilot or the servants of the Owners in the navigation or in the management of the vessel; . . . Collisions, stranding and other accidents of navigation. . . ." "33. Notwithstanding anything herein contained no absolute warranty of seaworthiness is given or shall be implied in this Charter Party, and it is expressly agreed that the Owners shall have the benefit of the 'rights and Immunities' in favour of the carrier or ship contained in the Enactment in the country of shipment giving effect to the Hague Rules as set out in the International Convention for the Unification of certain rules relating to Bills of Lading dated Brussels, the 25th August 1924. If no such Enactment is in force in the country of shipment the terms of Article 4 of the said rules shall apply." (at p296)

5. The effect of cl. 33 is to incorporate in the charter-party the provisions of Article IV of the "Rules Relating to Bills of Lading", the Hague Rules, which are enacted for Australia as the Schedule to the Sea-Carriage of Goods Act 1924 (Cth). These Rules are not, of their own statutory force, applicable to charter-parties. But so far as incorporated by reference they become part of the contract between the parties. The provision which is directly relevant in the present case is in Article IV (2):

"Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from - (a) act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship." (at p296)

6. The contract is a contract of affreightment. Generally speaking, when a carrier stipulates with the owner of goods to be carried that he will not be responsible for loss or damage, what is meant is loss or damage to the goods. At one time it was suggested that the words "loss or damage" in the Rules were confined to loss of the goods or physical damage to the goods. It has however been held by the House of Lords that this is not so. In a case where the provisions of the Rules were made part of a charter-party, the words "loss or damage" were held to cover the charterer's loss when the chartered vessel was, as a result of unseaworthiness, unable to make as many voyages as otherwise she could have made : Adamastos Shipping Co. Ltd. v. Anglo-Saxon Petroleum Co. Ltd. (1959) AC 133 And it appears that in the United States it has been similarly held that "loss or damage" covers loss or damage by delay without physical damage to the cargo. I have not at the time of writing the report of the case : but it is mentioned at p. 75 of Mr. W. Tetley's work Marine Cargo Claims (1965), a useful book my indebtedness to which, in this case, I acknowledge. Uniformity of interpretation of the Rules is of the utmost importance ; and this Court should without any question follow the decision of the House of Lords on this matter. But where does that lead us in this case ? (at p297)

7. Do the words "loss or damage" in cl. 15 mean that the appellant was to be absolved from all liability for damages of any kind, and howsoever arising, which its vessels, or its servants or agents, should cause to the respondent when carrying out or attempting to carry out the contract ? If the words "loss or damage" be quite unconfined, then presumably they would extend to a case in which the shipowner's vessel collided on the high seas with another ship or boat belonging to the charterer or carrying cargo for the charterer, thereby causing the charterer pecuniary loss or damage. They would also extend to an injury done to a servant of the charterer per quod servitium amisit. Or, to take a more particular illustration, they would extend to damage done to the terminal of the respondent's submarine pipe in Botany Bay if the ship were to foul this when she was proceeding seawards after having loaded at the wharf. I do not think that cl. 15 means that. After all it is an exception clause in a contract for the carriage of goods. It is to be read contra proferentem. When read in relation to the subject matter of the contract, and in its context with cl. 33, I consider it covers the same loss or damage as Article IV (2) (A) of the Rules. That is to say, I read it as exonerating the shipowner from loss or damage arising from the breach of the contract to take aboard, safely carry and deliver the goods. Clause 33 makes Article IV of the Rules apply to the contract. The immunity which Article IV gives is from responsibility for loss or damage "in relation to the loading, handling, stowage, carriage, custody, care and discharge of the goods" (Article II). Article III (8) renders null and void any provision in a bill of lading relieving the carrier of liability to a greater degree than the Rules permit. This provision does not directly affect cl. 15 in the present case ; for here we are concerned with a charter-party, not with a bill of lading ; and there is no "paramount clause" bringing in the Rules as a whole. Nevertheless, as I construe this charter-party, the effect of cl. 33 is to make the provisions of Article IV of the Rules determine the scope of the contractual limitation of the shipowner's liability - and thus to limit what might otherwise appear to be an unrestrained generality of the words "loss or damage" in cl. 15. The contract between the parties provides, I think, that the appellant should be relieved of liability for negligence in performing its contract in respect of loading, handling, stowage, carriage, custody, care and discharge of the cargo. But negligently running into and damaging the respondent's wharf seems to me to be outside the exemption. It was a tortious act. It was done, it is true, in the course of performing the contractual obligation that the ship proceed to Botany Bay to load at a place to be indicated, which, as it turned out, was the wharf ; but it was not, in my view, done in relation to the loading, handling or stowage of the cargo. (at p298)

8. I would dismiss the appeal. (at p298)

OWEN J. The plaintiff, the respondent to this appeal, conducted an oil refinery at Kurnell on the southern side of Botany Bay. From the refinery there ran out into the Bay a wharf of which the plaintiff was the lessee and occupier, and which was equipped for loading ships with oil from the refinery. There was also an oil pipe line running from the refinery to a submarine terminal in the Bay at which ships could be loaded. The defendant, now the appellant, was the owner of a tank ship, the Miller's McArthur, which at the relevant time was chartered to the plaintiff. (at p298)

2. The action was one in which the plaintiff sought to recover compensation for damage done to its wharf at Botany Bay when the defendant's ship struck it while endeavouring to berth at it. After a careful examination of the evidence, the learned trial judge found that the damage to the wharf was solely due to the negligence of a pilot who had been taken on board the ship pursuant to the terms of the charter-party and awarded the plaintiff damages of $9,600, that figure having been agreed upon by the parties. (at p298)

3. No attack is made upon his Honour's findings of fact and the question that arises on the appeal is whether, on the true construction of the charter-party, the defendant is liable for the damage to the wharf caused by the pilot's negligence. (at p299)

4. By cl. 1 of the charter-party the vessel was required to proceed to Botany Bay, or so near thereto as she might safely get, and there laod a cargo of the plaintiff's oil produced at the refinery. Clause 10 provided that :

"The vessel shall load . . . at a place or at a dock . . . which shall be indicated by the Charterers. . . . "

And it is not disputed that the wharf in question was indicated by the defendant as the place where the ship was to load its cargo. By cl. 15 it was agreed (inter alia) that the ship owner :

"shall not be responsible for loss or damage arising or resulting from : . . . Act, Neglect or Default of the Master, mariner, pilot or the servants of the Owners in the navigation or in the management of the vessel. . . ."

Clause 30 provided that :

"Whenever the vessel is about to proceed to a berth at the Charterer's wharf or submarine terminal in Botany Bay and notwithstanding anything to the contrary contained in this Charter Party the Owners shall instruct the Master of the ship to engage a pilot employed by the Maritime Services Board of New South Wales for the purpose of directing or advising the Master as to such berthing and the Charterers shall pay the charges of such pilot."

Clause 33 provided that :

"the Owners shall have the benefit of the 'Rights and Immunities' in favour of the carrier or ship contained in the Enactment in the country of shipment giving effect to the Hague Rules. . . ."

The relevant enactment in Australia is the Commonwealth Sea-Carriage of Goods Act 1924 and Article IV of the Schedule to that Act sets out the "Rights and Immunities" to which cl. 33 refers. Under r. 2 of that Article it is provided that neither the carrier nor the ship shall be responsible for "loss or damage" arising or resulting from various specified causes, including -

"act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship".

It is conceded that the "loss or damage" of which r. 2 speaks is limited to loss or damage "in relation to the loading, handling, stowage, carriage, custody, care and discharge" of the goods the subject of the contract of carriage contained in the charter-party : Adamastos Shipping Co. Ltd. v. Anglo-Saxon Petroleum Co. Ltd. (1959) AC 133, and no suggestion has been made that in the present case any of the provisions of Article IV afford an answer to the plaintiff's claim. (at p300)

5. The learned trial judge was of opinion that the words "loss or damage" in cl. 15 should be given the construction which would be placed on the same words where they are used in r.2 of Article IV and therefore should be read as limited to loss or damage "in relation to the loading, handling, stowage, carriage, custody, care and discharge" of the cargo. Construing cl. 15 in this way, he concluded that the defendant was not entitled to rely upon it as relieving it from liability for the damage to the wharf. I would have agreed, with respect, with that conclusion had it not been for the inclusion of cl. 30 in the charter-party. Clause 30 contemplates that the vessel will load either at the "Charterer's wharf" or at its "submarine terminal" and I can see no reason why the general words of cl. 15 should be read so as to exclude from its operation loss or damage which might occur to any property of the plaintiff which the parties intended to be used by the shipowner for the purpose of loading the oil contracted to be carried. Accordingly I am of opinion that the defendant is entitled to the protection afforded by cl. 15 and it becomes unnecessary to consider a further submission put on behalf of the defendant that, apart from the provisions of cl. 15, the defendant was under no liability for the negligence of a pilot taken aboard its vessel pursuant to cl. 30. (at p300)

6. I would allow the appeal. (at p300)

Orders

Appeal allowed with costs. Order of the Supreme Court set aside and in lieu thereof order that judgment be entered for the defendant.