Stemcor (A/sia) Pty Ltd v C.V. Scheepvaartonderneming Ankergracht
[2006] FCA 313
•10 MARCH 2006
FEDERAL COURT OF AUSTRALIA
Stemcor (A/sia) Pty Ltd v C.V. Scheepvaartonderneming Ankergracht [2006] FCA 313
STEMCOR (A/SIA) PTY LTD & ANOR v C.V. SCHEEPVAARTONDERNEMING ANKERGRACHT
NSD1245 OF 2002
STEMCOR (A/SIA) PTY LTD & ANOR v C.V. SCHEEPVAARTONDERNEMING ARCHANGELGRACHT
NSD84 OF 2003
EMMETT J
10 MARCH 2006
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD1245 OF 2002
BETWEEN:
STEMCOR (AUSTRALASIA) PTY LTD
FIRST PLAINTIFFTSUDA CORPORATION
SECOND PLAINTIFFAND:
C.V. SCHEEPVAARTONDERNEMING ANKERGRACHT
DEFENDANTJUDGE:
EMMETT J
DATE OF ORDER:
10 MARCH 2006
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The defendant pay the plaintiff's costs incurred up to and including 16 May 2003 on a party/party basis
2. The defendant pay the plaintiff's costs incurred thereafter on an indemnity basis.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 84 OF 2003
BETWEEN:
STEMCOR (AUSTRALASIA) PTY LTD
FIRST PLAINTIFFTSUDA CORPORATION
SECOND PLAINTIFFAND:
C.V. SCHEEPVAARTONDERNEMING ARCHANGELGRACHT
DEFENDANTJUDGE:
EMMETT J
DATE OF ORDER:
10 MARCH 2006
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The defendant pay the plaintiff's costs incurred up to and including 16 May 2003 on a party/party basis
2. The defendant pay the plaintiff's costs incurred thereafter on an indemnity basis.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD1245 OF 2002
BETWEEN:
STEMCOR (AUSTRALASIA) PTY LTD
FIRST PLAINTIFFTSUDA CORPORATION
SECOND PLAINTIFFAND:
C.V. SCHEEPVAARTONDERNEMING ANKERGRACHT
DEFENDANTNSD 84 OF 2003
BETWEEN:
STEMCOR (AUSTRALASIA) PTY LTD
FIRST PLAINTIFFTSUDA CORPORATION
SECOND PLAINTIFFAND:
C.V. SCHEEPVAARTONDERNEMING ARCHANGELGRACHT
DEFENDANTJUDGE:
EMMETT J
DATE:
10 MARCH 2006
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 16 December 2005, I directed the entry of judgment for the plaintiff in these two matters. Each proceeding relates to a different shipment of steel coils. While the plaintiffs are the same, the defendants are different having regard to the different ownership of the two vessels involved. I ordered the defendants to pay the plaintiffs’ costs but reserved leave to the plaintiffs to apply for a special order as to costs. By notice of motion filed on 25 January 2006, the plaintiffs took up that leave.
The plaintiffs seek orders pursuant to Order 23 rule 11(4) of the Federal Court Rules. Order 23 r 11(4) provides that, if an offer is made by an applicant and not accepted by the respondent and the applicant obtains judgment on the claim to which the offer relates not less favourable than the terms of the offer then, unless the Court otherwise orders, the applicant is entitled to an order against the respondent for costs incurred in respect of the claim, up to and including the day the offer was made, taxed on a party and party basis, and after that day taxed on an indemnity basis.
On 16 May 2003, a notice of offer of compromise was filed and served in each proceeding. The effect of the offer was to indicate that the plaintiff would accept approximately 70 per cent of the amount which was ultimately the subject of judgment. Prima facie, therefore, order 23 rule 11(4) applies and orders should be made in accordance with that rule, as the plaintiff asks. However, the defendants say that the Court should order otherwise, as contemplated by order 23 rule 11(4). The basis upon which the defendant invites the Court to rebut the presumption is that the basis upon which the plaintiff succeeded in both proceedings was different from that originally pleaded.
In the original statements of claim, the plaintiffs asserted that the defendants failed to keep safe and deliver the steel coils to the Port of Sydney in the same good order and condition as when shipped. They also alleged that, in breach of duties under the relevant bills of lading and the Hague Visby Rules, the respective defendants, before and at the beginning of the voyages, failed to exercise due diligence to make the respective vessels seaworthy and fit and safe for the reception, carriage and preservation of the coils. The particulars of the breach relevantly included the following:
‘(b)Failed to protect the goods whilst in their custody and control from rain and water exposure.
(c)Failed to take any or any adequate steps to prevent the said goods from water exposure during carriage.
…
(e)Failed to ensure that the holds of the vessel were adequately ventilated or at all.’
Following amendment, the breaches were further particularised to include the following:
‘(g)Ventilating holds of the vessel contrary to accepted industry practice to avoid condensation of steel cargo such as the subject cargo.
Failing to install dehumidifiers.’
The defendants discovered ventilation records, which showed that both vessels had, in fact, ventilated their holds at certain times. The amendments and additional paragraphs were made on 24 September 2004, alleging that the vessels were unseaworthy because of the failure to install dehumidifiers and failure to clear properly by ventilating. The defendants say that they did not act imprudently or unreasonably in May 2003 in rejecting the offers, which were to remain open for 14 days. They say that there was a relevant change in the plaintiffs’ case from the time of the offers compared to the case at trial upon which the plaintiffs succeeded.
In my reasons I concluded that it was more likely than not that water in the form of vapour was introduced into the holds in the course of ventilation during the course of the voyages. In circumstances where the coils in question were known to be sensitive to moisture and there was no dehumidification system installed in the holds, the admission of water into the holds during the course of the voyage was a failure to carry, keep and care for the coils properly and carefully.
I also found that it was more likely than not that the holds were closed at the port of loading with water trapped inside in the form of wet dunnage and liquid water on some cargoes that were wet with rain. Ventilation then occurred during the course of the voyages at times when the vessels were likely to have been in the Tropics. Ventilation probably resulted in the ingress of air containing water vapour, rather than the removal of water vapour from the holds, which is an object of ventilation.
There has been no evidence from the defendants by way of explaining why the offers were not accepted. Such evidence would not be decisive, but, in circumstances where the Court is invited to depart from a presumptive rule, such evidence could have some bearing on the matter of the exercise of discretion. Even if an unsuccessful litigant acts reasonably in rejecting an offer of compromise based on its asserted defences that of itself is not a sufficient reason to displace the prima facie operation of the rules (see Port Kembla Coal Terminal Ltd v Braverus Maritime Inc (No 2) [2004] FCA 1437 at 18).
It could well be that a change in the basis on which a case is put would justify the Court ordering otherwise, pursuant to order 23 rule 11(4). So much was accepted by the New South Wales Court of Appeal in Fowdh v Fowdh (Kirby ACJ, Mahoney AP and Meagher JA, unreported, NSWCA, 4 November 1993). In that case, the Court of Appeal had before it circumstances in which material, which became available after an offer of settlement had been made, indicated that the plaintiff’s condition had changed significantly. The decision in the plaintiff’s favour at the trial came not from the material available when the offer was made but from other material.
Some distinction is to be drawn in my view between the operation of a provision such as rule 11(4) in the case of a claim for personal injuries, on the one hand, and a claim such as the one before me. In the claim for damage to cargo, apart from the question of the basis of assessment of damage, the real issue is one that means the plaintiff gets all or nothing. The issue that seems to have been before the Court of Appeal was the question of how much damages the plaintiff should be awarded. There is no clear cut distinction between the two types of cases, but the way in which rule 11(4) operates in an all or nothing case can sometimes make the rule operate in a slightly arbitrary fashion. Once an offer is made and a judgment no less favourable obtained, a rebuttable presumption in favour of indemnity costs is created. It then becomes incumbent on the defendant to show reason why the presumption should not crystallise.
The rules are there and it may be that in some circumstances an arbitrary result follows. Be that as it may, I do not consider that the development of the plaintiffs’ cases in these proceedings is such to rebut the presumption created by the operation of rule 11(4). The defendants had the evidence of Professor Young and Captain Pyett available to them before the offers were made. It is clear that they had ample opportunity to examine and inquire as to the cause of the damage to the steel coils.
I consider that the basis upon which I concluded that there was a breach was sufficiently exposed in the particulars that were furnished, albeit that one allegation was inconsistent with the case that was ultimately advanced and succeeded, namely, alleged failure to ventilate the holds. As I have said, in the circumstances I am not persuaded that the presumption has been rebutted.
Accordingly, in each case, I propose to order that the defendants pay the plaintiffs’ costs incurred up to and including 16 May 2003 on a party/party basis and that the defendants pay the plaintiffs’ costs incurred thereafter on an indemnity basis.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 28 March 2006
Counsel for the Plaintiffs: Mr IG Roberts Solicitor for the Plaintiffs: O'Reilly Sever Counsel for the Defendants: Mr EGH Cox Solicitor for the Defendants: Ebsworth & Ebsworth Date of Hearing: 10 March 2006 Date of Judgment: 10 March 2006
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