The Ship Go Star v Daebo International Shipping Co Ltd

[2013] HCATrans 212

[2013] HCATrans 212

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth   No P39 of 2012

B e t w e e n -

THE SHIP GO STAR

Applicant

and

DAEBO INTERNATIONAL SHIPPING CO LTD

Respondent

Application for special leave to appeal

FRENCH CJ
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON WEDNESDAY, 11 SEPTEMBER 2013, AT 9.31 AM

Copyright in the High Court of Australia

MR J.A. THOMSON, SC:   May it please the Court, I appear for the applicant.  (instructed by DLA Piper Australia)

FRENCH CJ:   I note there is a submitting appearance for the respondent.

MR THOMSON:   That is correct, your Honour.

FRENCH CJ:   Yes, Mr Thomson.

MR THOMSON:   The first question which this case raises is the choice of law rule applicable to determine the place of wrong for the tort of interfering with contractual relations.

FRENCH CJ:   Is the tort one of inducing breach of contract or is it a more general level than that?

MR THOMSON:   The particular tort here is interfering with contractual relations and, in particular, interference was alleged to be an inducement to breach of contract, but the question probably applies more broadly to a range of economic torts.

FRENCH CJ:   Because if it is inducing breach of contract it is a secondary liability, is it not, whereas some of the other torts in this field are primary?

MR THOMSON:   Yes, that is correct, your Honour.

FRENCH CJ:   So what are you saying it is?

MR THOMSON:   It was alleged and the question arises in respect of the inducement to breach of contract.

FRENCH CJ:   Yes, all right.

MR THOMSON:   The question arises in the international context of this particular case which only had a relationship to Western Australia because subsequently the ship sailed into Albany, but the question revolved around these circumstances.  There was a ship owner’s agent in Greece who communicated with a charterer’s agent in Singapore and that communication caused the charterer not to load a vessel located in Chinese waters and it also caused the charterer to terminate the charter of the vessel while the vessel was in Chinese waters.

The relevant choice of law rule might be the place where the breach of contract occurred, and that was what was selected as the relevant choice of law rule by the trial judge, or it might be the place where the person who induced the breach of contract was located ‑ in this case the charterer’s agent located in Singapore – and that was the choice of law rule selected by the Full Federal Court.

The significance in this particular case of the difference between the two different rules was that there was unchallenged evidence that there was no acknowledgement of that type of tort in China and therefore if the relevant law was Chinese law then the claim would fail.  There was no evidence led of Singaporean law and therefore if it was the relevant law that applied then we would assume Australian law should adjudicate the claim.

There were three factors which caused the trial judge to hold that the applicable law was Chinese law.  They were that he considered the place where the person was induced was, in fact, China; secondly, the ship owner’s agent intended that the statements which he made should be relied upon and acted upon in China and, thirdly, the statements were, in fact, acted upon in China when the vessel was not loaded there so the subject matter of the contract where the breach occurred was in Chinese waters.

The Full Federal Court focused only on the first matter.  They overturned the decision of the trial judge that the person who was induced, the decision‑maker who caused the contract to be terminated, was based in China, but found as a matter of fact that that person was based in Singapore.

GAGELER J:   You do not challenge that finding of fact?

MR THOMSON:   We do not challenge that finding of fact, but we do say that it is relevant to note that the test posed by the Full Federal Court pivots upon findings about the location of a decision‑maker where no person from that enterprise was called – the enterprise was Nanyuan – and therefore the consequence of the test proposed by the Full Federal Court is that it depends upon drawing inferences based on slim evidentiary basis.  It may be that that is a problem that occurs in many of these sorts of cases because the person induced to breach the contract may not be a party to the proceedings.  That is one of the problems we say that arises in respect of the test applied by the Full Federal Court.

Another problem with it we say is that it gives no weight at all to the place where the breach of contract, in fact, occurred, and we also say ‑ and this is perhaps the most important point ‑ that it creates a haphazard solution in an era of modern instantaneous communication because wheresoever the person is that may open the relevant email, wherever they may be located, would then provide the applicable law and that applicable law may have no relevant connection with anything that the parties contracted about.  So if, for example, the charterer’s agent had been travelling in Iceland at the time then, according to the Full Federal Court’s test, Iceland would supply the relevant law ‑ ‑ ‑

GAGELER J:   Is it more haphazard than where the ship happens to be at any particular time?

MR THOMSON:   It is not haphazard in this sense because everyone understands that a ship is chartered to travel the seas, it follows a particular itinerary and it forms the subject matter of the contract.  It is, therefore, we would say, a better choice because it forms the subject matter of the contract as the basis for the application of the rule of law compared to wheresoever the person who happens to open the email is located.  It bears a greater connection with the nature of the tort.

FRENCH CJ:   Perhaps we could hear from you in relation to the second ground.

MR THOMSON:   Certainly.  The second question concerns the proper construction of a standard form charter party; that is the 1981 version of the Asbatime NYPE time charter party.  We say in our submissions that that is not the latest version of that charter party, but it was the version that was adopted by all four of the charterers in this case and therefore we would say it is still a relevant thing.  It appears to be adopted quite widely.

FRENCH CJ:   What do you say about the observation of the Full Court at paragraph 105 on page 70 of the application book?

MR THOMSON:   The reason why the Full Federal Court decided that it was unnecessary to resolve the issue is because they came to a conclusion of fact that the demands that were made by ship owner’s agents were not simply demands for the exercise of a lien but were demands made also for the non‑payment of bunkers.

FRENCH CJ:   Characterisation of the demands as a matter of fact.

MR THOMSON:   That is correct.

FRENCH CJ:   So this aspect of your argument is critically dependent on issues of fact?

MR THOMSON:   It is critically dependent on examination of four emails which are contained within the reasons ‑ ‑ ‑

FRENCH CJ:   Small issues of fact.

MR THOMSON:   Yes.  And, precisely, we have to penetrate those issues of fact.  If it assists your Honours, can I show you the particular words used to demonstrate why it may not present much of a problem for your Honours to penetrate them?

FRENCH CJ:   Well, the question is, is it a matter meriting the grant of special leave?  That is the first issue.

MR THOMSON:   Yes.  In respect of the questions of fact, we would say that they are very much in our favour, there is no mention whatsoever of the bunkers in any of the emails.  This is in a context where the emails specifically say that they seek to exercise a lien and the only lien is a lien over the sub‑freight which only was ever understood as relating to the hire.  That was the unchallenged evidence at trial.  That was the unchallenged evidence of the person who exercised the lien that he only ever intended it to relate to sub‑hire.

We would say in those circumstances that the merits of the factual argument are very much in our favour and it is a small factual issue that the Court can dispose of fairly swiftly.  If we penetrate that factual issue then it opens up that much larger question of the interesting debate between Lord Steyn and Lord Lloyd, both of whom were eminent Admiralty judges, who in the same case ‑ ‑ ‑

FRENCH CJ:   Why are we interested in that?

MR THOMSON:   Because it relates to the proper construction of a time charter party which is a standard time charter party used around the world.

GAGELER J:   Which is or was?

MR THOMSON:   Well, certainly in this case was used.  The evidence at trial was that it was still used, notwithstanding that in 1994, I think, there was a further version of that charter party which solved the problem.

GAGELER J:   So it is a problem that existed before 1994, is that right?

MR THOMSON:   It still exists for those people that choose to contract on the basis of the 1981 version, as indeed occurred in this case, and as the evidence at trial was people still continue to use the 1981 version notwithstanding that it has been superseded in the sense that a new version has been published.  If I can point out what the Full Federal Court also said on that issue?  If you look at paragraph 97, they say that the point of construction is regarded as unsettled, and then they say at paragraphs 103 to 104, in effect, that it is curious that no one has construed the US charter party by reference to what the US view might be as to the meaning of it.

So in respect of the second question we would say there is a small factual issue, the merits of which in this short time we have been able to expose as heavily weighted in our favour.  Once we get through that issue then there is the question of construction.  It is a question of construction which I accept arises in respect of a previous version of the time charter party, but the evidence at trial and the fact of the time charters in this case which were hindered, obviously, after 1994 – they were entered in 2007 and 2008 ‑ demonstrates that people still contract on that basis.

FRENCH CJ:   Now, Mr Thomson, as we see, there is no contradictor.

MR THOMSON:   Yes.

FRENCH CJ:   There has been a submitting appearance and it would obviously be most undesirable that if special leave were to be granted the Court should be unassisted by submissions from a contradictor.  I imagine you are not in the position at the moment to say whether your client could accept a condition of the grant of special leave, if special were to be granted, that it meet the reasonable costs of counsel appointed by the Court to act as amicus curiae on the hearing of any appeal.

MR THOMSON:   I do not have those instructions.

FRENCH CJ:   No.

MR THOMSON:   I had assumed that if special leave were granted that there would be a contradictor at the time of the hearing, that ‑ ‑ ‑

FRENCH CJ:   What is the basis of that assumption?  All we have is a submitting appearance.

MR THOMSON:   Yes.  It has been heavily contested both at trial and on appeal.  I had assumed that the reason there was no contradictor is because it may be that there was nothing to say against the importance of the case.

FRENCH CJ:   Yes, I see.  All right.  Anything further?

MR THOMSON:   In respect of the condition, if your Honours are minded to grant special leave, subject to that condition, we would gratefully accept that but perhaps it could incorporate – provided that the respondent did not choose to appear at the hearing.

FRENCH CJ:   I suppose the difficulty is it – I will just give some thought to that for a moment.  Yes, thank you.

MR THOMSON:   Thank you, your Honour.

FRENCH CJ:   Yes, thank you.

There will be a grant of special leave on ground number 2, Mr Thomson.

MR THOMSON:   May it please the Court.  In the book of materials that was provided to you, you will see that there was a decision of Justice McKerracher staying the judgment of the Full Federal Court until determination of the special leave application.

FRENCH CJ:   Yes.

MR THOMSON:   I wonder if that order can be extended but with liberty to apply granted to the ‑ ‑ ‑

FRENCH CJ:   What page of the materials is that?

MR THOMSON:   It is page 4 of the booklet that was given to your Honour.

FRENCH CJ:   There will be an order that the stay ordered by Justice McKerracher on 20 December 2012 be extended until the hearing and determination of the appeal or further order.

MR THOMSON:   Thank you, your Honour.

FRENCH CJ:   The Court will adjourn briefly to reconstitute.

AT 9.47 AM THE MATTER WAS CONCLUDED