Tritton Resources Pty Ltd v Ever Rock Navigation S.A

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FEDERAL COURT OF AUSTRALIA

Tritton Resources Pty Ltd v Ever Rock Navigation S.A. [2019] FCA 276

File number(s): NSD 1190 of 2017
Judge(s): DERRINGTON J
Date of judgment: 6 March 2019
Catchwords:

ADMIRALTY – bills of lading and carriage of goods by sea – actions for loss or injury in transit – who may bring action – rights as between successive holders of bills of lading – effect of transfer of bill of lading

ADMIRALTY – whether prior holder of bill of lading retains right to bring an action in negligence against ship owner – whether action one for pure economic loss
Legislation:

Carriage of Goods by Sea Act 1991 (Cth), Sch 1A, Amended Hague Visby Rules

Sea-Carriage Documents Act 1997 (NSW)

Carriage of Goods by Sea Act 1992 (UK)

Federal Court Rules 2011 (Cth)
Cases cited:

Aegean Sea Traders Corporation v Repsol Petroleo SA (The “Aegean Sea”) [1998] 2 Lloyds Rep 39

Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299

Amaya v Everest Property Holdings Pty Ltd [2010] NSWCA 315

Anglo Irish Beef Processors International v Federated Stevedores Geelong [1997] 2 VR 676

Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153

Castle Insurance Co Ltd v Hong Kong Islands Shipping Co Ltd [1984] 1 AC 226

China Ocean Shipping Co Ltd v P S Chellaram & Co Ltd (1990) 28 NSWLR 354

CIA Continental Hispanica SA v Westgate Shipping Co Ltd [1978] AMC 1560

Colgate-Palmolive Co v Cussons Pty Ltd (1933) 46 FCR 225

Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226

Craine v Colonial Mutual Fire Insurance Company Ltd (1920) 28 CLR 305

Cro Travel Pty Ltd v Australian Capital Financial Management Pty Ltd [2018] NSWCA 153

Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641

Lederberger v Mediterranean Olives Financial Pty Ltd (2012) 38 VR 509

Leigh & Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] 1 AC 785

Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500

MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39

Nurisvan Investment Ltd v Anyoption Holdings Ltd [2017] VSCA 141

Onley v Caitlin Syndicate Ltd as the Underwriting Member of Lloyd’s Syndicate 2003 (2018) 360 ALR 92

Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451

Qenos Pty Ltd v Ship “APL Sydney” (2009) 187 FCR 282

Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66

Sarat Chunder Dey v Gopal Chunder Laha (1892) LR 19 Ind App 203

Standard Chartered Bank v Dorchester LNG (2) Ltd (The “Erin Schulte”) [2013] 2 Lloyds Rep 338

The “Breydon Merchant” [1992] 1 Lloyds Rep 373

The “Stolt Loyalty” [1995] 1 Lloyds Rep 598 (CA)

The Henrik Sif [1982] 1 Lloyds Rep 456

The Sanix Ace [1987] 1 Lloyds Rep 465

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165

Trident General Insurance Co Ltd v McNiece Brothers…

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Details
Case
[2019] FCA 276
Decision Date

CaseChat Overview and Summary

Tritton Resources Pty Ltd, Sterlite Industries (India) Limited, and Freepoint Metals & Concentrates LLC (referred to as JP Morgan) are plaintiffs in an admiralty action against Ever Rock Navigation S.A, a ship owner. The dispute arises from the grounding of the vessel MV Ikan Jahan, carrying copper concentrate, which led to claims for indemnity and a negative declaration in respect of the plaintiffs' contributions towards the ship's salvage and general average. The core legal issues concern the rights of successive holders of bills of lading, the effect of transferring these bills, and the ability of prior holders to bring actions in negligence against the ship owner. Additionally, the court had to determine if the proposed new cause of action in negligence against the ship owner was a replication of existing claims or a distinct legal characterisation, and whether the proposed amendment to the statement of claim should be allowed.

The court concluded that the proposed cause of action in negligence was not without sufficient merit, warranting leave to amend the statement of claim. It was found that Sterlite, the latest holder of the bill of lading, was entitled to pursue all actions against Ever Rock arising under the bill of lading, irrespective of when the causes of action arose. JP Morgan, as the prior holder, was entitled to pursue a cause of action in tort for loss or damage to the goods during its ownership. Tritton, as an earlier holder, had no cause of action against Ever Rock. The court also allowed the plaintiffs to claim a loss in respect of the salvage agreement with Fukada, to the extent that Sterlite and JP Morgan were entitled to sue. The plaintiffs' request for indemnity costs for service out of jurisdiction was denied.

In conclusion, the court ruled that Sterlite had the title to sue under the bill of lading, JP Morgan was entitled to pursue a cause of action in tort if any existed during its ownership, and Tritton had no cause of action against Ever Rock. The plaintiffs were allowed to claim a loss in respect of the salvage agreement with Fukada, to the extent permitted by law. The costs of the application for service out were to be borne by each party. The plaintiffs were granted leave to amend their statement of claim to include a cause of action in negligence, and the court reserved the question of appropriate costs orders for a later hearing.

Orders

Orders of the court

1. The separate questions be answered as follows:

(a) Question 1: “Has the defendant granted an extension of the limitation period under Art III r 6 of the Amended Hague Visby Rules to the plaintiffs to commence these proceedings?”

Answer: “Yes.”

(b) Question 2: “Does the limitation period provided for in Art III r 6 of the Amended Hague Visby Rules apply by extension of time to these proceedings?”

Answer: “The time bar in Art III r 6 of the Amended Hague Visby Rules does not afford the defendant any defence to the plaintiffs’ claims in this action. The time bar was extended by the defendant in favour of all plaintiffs and the action was commenced within that extended period.”

(c) Question 3: “If any limitation applies to these proceedings, is the defendant estopped from relying on that defence?”

Answer: “It is not necessary to answer question 3, but if an answer was required an estoppel would exist to prevent the defendant from relying on a defence under Art III r 6 of the Amended Hague Visby Rules.”

(d) Question 4: “What are each of the plaintiffs’ interests in the cargo and do any of the plaintiffs have title to sue?”

Answer: “(i) Sterlite has title to sue under the BOL.

(ii) JP Morgan is entitled to pursue its independent claim in tort, if any, where such cause of action arose when it had title to the cargo.

(iii) Tritton has no identifiable cause of action against Ever Rock in relation to the cargo.”

(e) Question 5: “Are the plaintiffs entitled to claim a loss in respect of the salvage agreement with Fukada?”

Answer: “Yes, to the extent that Sterlite and JP Morgan are entitled to sue in respect of any such loss. Tritton has no entitlement to make a claim in respect of it.”

2. The plaintiffs’ application that the defendant pay the costs of its application for service out on an indemnity basis is refused.

3. The costs of the application for service out be each parties’ costs in the cause.

4. The plaintiffs have leave to amend the statement of claim to include a cause of action in negligence against the defendant in terms substantially in accordance with the terms of Exhibit 1.

5. The parties will be heard on the question of the appropriate costs order to make on the hearing of the separate questions.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The fourth and fifth questions affect whether the plaintiffs ought to be given leave to further amend their statement of claim to add a cause of action in negligence based on an alleged duty of care owed by the ship owners to the second plaintiff, JP Morgan Metals & Concentrates LLC. The parties argued the entitlement of the plaintiffs to amend their pleading on the basis that leave was required and a proposed form of amended pleading was marked as Exhibit 1 in the leave application. The plaintiffs say that amendment was necessitated by the defendant raising in its written submissions for the hearing of the separate questions, the operation of ss 8 and 9 of the Sea-Carriage Documents Act 1997 (NSW), to the effect that all causes of action which the second plaintiff held became vested in the third plaintiff. They also asserted that the proposed new cause of action was substantially a replication of the particulars of unseaworthiness which already appear in the extant statement of claim. In this way the proposed amendment is said to be merely a different legal characterisation of the existing allegations. The defendant argued that the proposed new cause of action could not succeed and that leave should be refused. In general terms the parties agreed that if the proposed amendment was futile it ought not be allowed and, conversely, if it was found not to be futile, leave would be given: Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66, 69-70 [21]-[22]. The facts The evidence, albeit somewhat complex, was not overly contentious and can be stated with relative ease. That said, the facts to be drawn from the evidence are disputed. In particular, the question of the construction of the agreement to extend time was the central issue and keenly fought. The claims advanced by the plaintiffs arise out of the grounding of the vessel MV Ikan Jahan (the ship) on 18 December 2011. The vessel was en route from Newcastle, Australia, to Tuticorin, India, carrying, amongst other shipments, a cargo of copper concentrate (the cargo). The plaintiffs There are three corporate plaintiffs in the action, each of which claim to have been interested in the cargo at different points in time, it having been the subject of successive contracts of sale between them. An important issue for the purposes of the separate questions is the identity of the plaintiff who is entitled to pursue the claimed damages and declarations. The plaintiffs are:(a)Tritton Resources Pty Ltd (Tritton); (b)Sterlite Industries (India) Limited (Sterlite); and (c)Freepoint Metals & Concentrates LLC (Freepoint). During the period of time relevant to this action, Freepoint changed its name and was variously named Sempra Metals & Concentrates Corp (Sempra) and JP Morgan Metals & Concentrates LLC (JP Morgan). It is convenient to refer to the company in these reasons as “JP Morgan”. The substance of the plaintiffs’ claims is for indemnity for sums paid for their contribution towards the cost of the ship’s salvage as well as a negative declaration in respect of their contribution to general average. The underlying foundation of those claims is that the ship’s owners breached the non-delegable duty under Art III r 1 of the Amended Hague Visby Rules to exercise due diligence to render the ship seaworthy. At present there is no need to consider the veracity of that claim.The identity of the relevant defendant

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

It follows that the proposed cause of action in negligence has not been shown to be without sufficient merit that leave to amend the statement of claim to allow its inclusion should be refused. Leave shall be granted to include a cause of action in negligence at the suit of JP Morgan in substantially the same form as that which was admitted into evidence as Exhibit 1.Conclusion in relation to questions 4 and 5 It follows that Sterlite, and it alone, is entitled to pursue all actions against Ever Rock arising under the BOL regardless of when the causes of action arose. JP Morgan is entitled to pursue a cause of action in tort, if any, for loss or damage done to the goods whilst it had title to them. That includes tortious claims in relation to the loss or damage arising from the obligation to pay the portion of salvage charges applicable to the cargo. From the facts as advanced at the hearing, Tritton has no cause of action against Ever Rock arising from the carriage of goods under the BOL or consequent upon the grounding. Answers to questions 4 and 5 The answer to question 4 which is “what are each of the plaintiffs’ interests in the cargo and whether any of the plaintiffs has title to sue” is as follows:(a)Sterlite has title to sue under the BOL.(b)JP Morgan is entitled to pursue its independent claim in tort, if any, where such cause of action arose when it had title to the cargo.(c)Tritton has no identifiable cause of action against Ever Rock. The answer to question 5 which is whether the plaintiffs are entitled to claim a loss in respect of the salvage agreement with Fukada is “Yes, to the extent that Sterlite and JP Morgan are entitled to sue in respect of any such loss. Tritton has no entitlement to make a claim in respect of it.” Costs of serving out of the jurisdiction The plaintiffs sought an order that the defendant pay their costs of the service out proceedings on an indemnity basis. The foundation of that submission is that The Japan P&I Club had, in its letter of guarantee and indemnity dated 21 February 2013, agreed that a solicitor would be appointed on behalf of the defendant and the defendant would accept service of the proceedings within 14 days of a request to do so. That letter warranted that the P&I Club was authorised by the defendant. The plaintiffs submit that, despite that undertaking, on being requested to appoint an Australian solicitor to accept service, the defendant failed to do. Substantial correspondence followed although the defendant and its insurer remained unperturbed and refused to nominate a solicitor to accept service on its behalf. The defendant was warned that the plaintiffs would seek an order for service out and would ask for an order that the defendant pay the costs on an indemnity basis. Still, they did not relent. The plaintiffs submit that the defendant’s conduct by itself and its insurers was of sufficient obliquity in the context of the litigation and the obligations on parties under s 37N of the Federal Court of Australia Act as to warrant the making of an order for indemnity costs. They accepted that the mere failure to comply with the contractual obligation to appoint solicitors to accept service is, of itself, insufficient to warrant an order for costs but it is a significant factor in the circumstance of this case.

Ratio Decidendi

Legal Principle Established

The ship remained grounded for about four weeks, until 11 January 2012, after which she proceeded to Singapore for repairs before resuming her voyage to India. She arrived in India on 13 February 2012 and discharged her cargo. Salvage charges claim and general average declaration Salvage charges claim On 19 December 2011, Ever Rock entered into a salvage agreement with Fukada Salvage and Marine Works Co Ltd (Fukada) (the Salvage Agreement) for the salvage of the ship and its cargo. Relevantly, the agreement provided:This Salvage Agreement is made and entered into between the Master of the Vessel in Box 2 above (“the Vessel”) for and on behalf of the Owners of the Property in Box 2 above (hereinafter referred to together as “the Property Owners”) and the salvor in Box 1 above (“the Salvor”) in accordance with the Provisions of Part I, and if the parties have chosen to incorporate the Special Remuneration Clause in Box 5 above, Part II of this Agreement. For reasons which are not apparent, nor probably relevant, the amount of the salvage remuneration was not agreed upon until about 16 October 2014. On that date, a tripartite “settlement agreement” was entered into between Ever Rock, “SAH & Co” which represented “the owners and underwriters of the cargo” laden on board the ship, and Fukada. By it the amount of salvage remuneration to be paid to Fukada was agreed as was the portion of that sum which was to be paid by the cargo interests. Of the amount to be paid by the cargo owners, US$2,718,675.24 was paid to Fukada in respect of the copper cargo by AEGIS on behalf of the cargo’s owner. That amount now forms part of the plaintiffs’ claim in this action against Ever Rock.Insurers’ guarantees for cost of salvage and general average On the grounding of the ship, Sterlite was anxious to ensure that the cargo insurers would provide any general average bond (GA Bond) and any salvage security on their behalf and, on 22 December 2011, it sent an email to Marsh Ltd, who were acting as the brokers of the policy, seeking confirmation that the bonds would be provided. This was relied upon by Ever Rock as an early indication that AEGIS was aware of the interest of Sterlite under the insurance policy. Shortly thereafter Xchanging Claims Services, instructed by the underwriters of both the zinc and copper cargoes, became involved in the matter for the purposes of obtaining and placing the necessary securities. They sought to identify the relevant interests in the cargo. At this point in time title remained with JP Morgan even though risk had passed to Sterlite as the purchaser, with the result that if a GA Bond was then provided by the underwriters it would have to be on behalf of JP Morgan. That, however, was not the view adopted by all concerned and in an email of 3 January 2012, Mr Bartholomew of Marsh suggested that risk and title had passed to Sterlite such that the GA Bond should be provided on its behalf. Although he was in error in that respect, understandable as it was in the circumstances, his email demonstrates that there existed some confusion by the underwriters as to whose interests were to be protected under the extant insurance.