STX Pan Ocean Co Ltd v Bowen Basin Coal Group Pty Ltd (No 3) [2010] FCA 1374
Parties:
DAVID JOHN THOMSON v STX PAN OCEAN CO LTD
File number:
NSD 1767 of 2010
Judges:
GREENWOOD, MCKERRACHER AND REEVES JJ
Date of judgment:
29 February 2012
Catchwords:
ADMIRALTY – contract of affreightment – voyage charterparty – payment of freight and load port demurrage due within five banking days after signing and release of bills of landing – time when charterer defaults - separate liability of director in addition to the charterer for ongoing representations as to capacity to pay
TRADE PRACTICES – misleading and deceptive conduct – officer of charterer made post-contractual representations that the charterer was imminently “ready, willing and able” to perform the contract when it was insolvent – delay in termination of the charterparty – logical Gould v Vaggelas inference of reliance on misleading and deceptive representation
DAMAGES – measure of damages –damages for loss of use of vessel to be assessed by determining what she would have earned but for the tortious conduct – plaintiff’s failure to adduce any evidence of a market or alternative charter rate during the period of contract – appropriate for question of damages remitted to primary judge to receive evidence on loss of profit caused by breach
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15
Case
[2012] FCAFC 15
Decision Date
CaseChat Overview and Summary
The appeal, Thomson v STX Pan Ocean Co Ltd, involved the dispute between the charterer and the shipowner in a voyage charterparty. The primary issue was whether the charterer's fraudulent post-contractual representations induced the shipowner to delay terminating the charter, thereby incurring losses. The shipowner sought damages for the loss of use of the vessels due to the delay. The Federal Court of Appeal was tasked with determining the validity of the primary judge's findings and the measure of damages awarded.
The court had to decide whether the charterer's fraudulent representations induced the shipowner to delay terminating the charter and, if so, the appropriate measure of damages. The court also needed to address the shipowner's failure to provide evidence supporting their loss of profit claim due to the delay. The appeal raised questions about the applicability of the principles from Gould v Vaggelas and the sufficiency of the evidence presented to support the damages claim.
The court found that the primary judge was correct in inferring that the shipowner's delay in terminating the charter was at least partly induced by the charterer's fraudulent representations. The court also noted that the shipowner's failure to provide evidence of their loss of profit during the delay period was a significant issue. The appeal was allowed in part, and the damages claim was remitted to the primary judge for the purpose of receiving evidence on the loss of profit caused by the breach. The shipowner was ordered to pay the charterer's costs of the appeal.
The final orders of the court were to allow the appeal in part, remit the respondent's damages claim to the primary judge to receive evidence on loss of profit caused by the breach, and order the respondent to pay the appellant's costs of the appeal.
Orders
Orders of the court
1. The appeal be allowed in part.
2. The respondent’s damages claim be remitted to the primary judge to receive evidence on loss of profit caused by the breach.
3. The respondent pay the appellant’s costs of the appeal, to be taxed if not agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Moreover, as Mr Rayment correctly submitted, on this aspect the learned primary judge relied upon the principles stated in Gould v Vaggelas (1984) 157 CLR 215 (at [98]) as follows: ‘First Mr Thomson desired to bring about the result that STX would not terminate. His conduct in making the post-contractual representations in May was a cause of STX not doing so until 17 May 2010’: Gould v Vaggelas (at 236) per Wilson J. In the circumstances where delay was the unchallenged purpose of Mr Thomson’s representations and STX did in fact delay in terminating the charter, we consider the learned primary judge was entitled to rely upon Gould v Vaggelas to draw the inference that that delay was, at least in part, induced by Mr Thomson’s representation.CONCLUSION ON REPRESENTATIONS ISSUES For these reasons, we reject Mr Thomson’s appeal insofar as it relates to the first and second questions and, therefore, grounds 1–5 inclusive of the notice of appeal. We now turn to deal with the third question, which relates to the damages issue.DAMAGES A major difficulty faced by the primary judge was the lack of evidence adduced by STX to support any permissible claim in damages. Indeed, STX failed to address those inadequacies despite clear warning by Mr Thomson. His Honour was left to do the best he could in those circumstances. Grounds of appeal The grounds of appeal in relation to damages deal with two areas. The first, dealing with wasted fuel (bunkers), was that the primary judge erred in awarding damages of $10,000 per ship for loss of bunkers while the ships were idle when there was no specific evidence to support that conclusion. STX adduced no evidence and offered no, or no sensible or satisfactory, explanation for its failure to adduce such evidence. The second and major argument, at least as developed orally, was quite simple. It was that there was, again, no evidence of any loss suffered in reliance upon the post-contractual representations. The cost of engaging the vessels had already been incurred. (Had the pre‑contractual representations been established, those costs would clearly have been recoverable. That part of STX’s case, however, failed (Trial Reasons at [72])). As to the post-contractual representation, there was no evidence that if STX had not been induced to delay termination by 11 days it could or would have derived other income by deploying the vessels elsewhere in that time. Again, this unexplained absence of evidence was in circumstances where STX would be expected to be in a position to call such evidence but did not do so. The approach of the primary judge It is necessary to examine the way in which the damages claims were developed and addressed in order to consider the grounds of appeal. The primary judge having found a fraudulent misrepresentation by Mr Thomson (Trial Reasons at [92]-[98]), his Honour noted (at [99]) that had STX known of the fact that Bowen Basin was then ‘hopelessly insolvent’, it would have terminated the charterparty immediately on 6 May 2010. His Honour continued (at [99]):I am of [the] opinion that STX is entitled to recover its loss as a result of the moneys it expended on Yong An 2 and Izola in the period between noon on 6 May and the time of termination on 17 May 2010. That loss was a direct and foreseeable consequence of Mr Thomson’s fraudulent representations and his causing Bowen Basin to make the similar post-contractual representations in this period.