FEDERAL COURT OF AUSTRALIA

Sumitomo Corporation v CV Scheepvaartonderneming Emmagracht

[2009] FCA 1127

COSTS –– proper approach to admiralty and commercial litigation –– goods transported under bill of lading incorporating Himalaya clause –– shipper and consignee sued ship owner and stevedore for damage to cargo –– stevedore successful in obtaining consent orders on motion dismissing proceedings against it based on Himalaya clause  –– stevedore not furnishing critical evidence or information until after motion filed –– whether stevedore should have its costs –– importance of parties cooperating to identify the real issues in dispute –– duty to resolve uncontentious issues at an early stage of litigation –– stevedore awarded 75% of its costs of the proceedings

Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243 cited

Maniotis v JH Lever & Co Pty Ltd [2006] FCAFC 7 followed

New Zealand Shipping Co Limited v Satterthwaite & Co Limited [1975] AC 154 cited

Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116 discussed

Port Jackson Stevedoring Pty Limited v Salmond & Spraggon (Australia) Pty Limited (1978) 139 CLR 231 discussed

Port Jackson Stevedoring Pty Limited v Salmond & Spraggon (Australia) Pty Limited (“The New York Star”) (1980) 144 CLR 300 discussed

Snowy Mountains Organic Dairy Products Pty Ltd v Wholefoods Pty Ltd [2006] FCA 1361 cited

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

White v Overland [2001] FCA 1333 followed

SUMITOMO CORPORATION and SUMITOMO AUSTRALIA PTY LIMITED (ACN 000 371 497) v CV SCHEEPVAARTONDERNEMING EMMAGRACHT and P & O AUTOMOTIVE AND GENERAL STEVEDORING PTY LIMITED (ACN 123 021 492)

NSD 93 of 2009

RARES J

18 SEPTEMBER 2009

SYDNEY

THE COURT ORDERS THAT:

1.                  The plaintiffs pay 75% of the second defendant's costs of its motion incurred up to and including 8 September 2009.

2.                  The second defendant in default of agreement between the parties concerned may tax the costs to which it is entitled under Orders 3 and 5 forthwith notwithstanding that the proceeding is not concluded.

3.                  Any party have liberty to apply on 24 hours notice.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

1                     This is, as happens so often in litigation, an argument about the sterile issue of costs.  The plaintiffs are the consignor and consignee of a cargo of steel pipes sent under a bill of lading on the “MV Emmagracht” from Japan to Port Kembla.  The owner of the “MV Emmagracht” is the first defendant in the proceedings.  The stevedore alleged to be responsible for unloading the steel pipes, P&O Automotive & General Stevedoring Pty Limited, is the second defendant. 

2                     As might have been expected, the bill of lading contains a “Himalaya” clause in the widest terms which is usual in such transactions.  In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 193 [79], Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ noted that courts have been ready to conclude in cases of a stevedore seeking the benefit of a Himalaya clause that the carrier was acting with the stevedore’s authority.  They referred to the judgment of Barwick CJ in Port Jackson Stevedoring Pty Limited v Salmond & Spraggon (Australia) Pty Limited (1978) 139 CLR 231 at 241.  His judgment was expressly approved in the last appeal to the Privy Council from the High Court of Australia:  Port Jackson Stevedoring Pty Limited v Salmond & Spraggon (Australia) Pty Limited (“The New York Star”) (1980) 144 CLR 300 at 305.  As Lord Wilberforce, delivering the judgment of a powerful board, said in The New York Star 144 CLR at 304, the significance of the majority decision of the Privy Council in New Zealand Shipping Co Limited v Satterthwaite & Co Limited [1975] AC 154 was:

“…not so much in the establishment of any new legal principle, as in the finding that in the normal situation involving the employment of stevedores by carriers, accepted principles enable and require the stevedore to enjoy the benefit of contractual provisions in the bill of lading.”

3                     The authorities make it clear that it is relatively easy for a stevedore to establish a conclusion that it will be entitled to the benefit of the Himalaya clause such as is contained in clause 10(a) in the bill of lading in this case.  That being so, while it may be seen as prudent and precautionary for the plaintiffs to have commenced the proceedings against the stevedore, once that had been done both sides should have taken prompt steps to establish without delay whether or not the stevedore would be likely to enjoy the benefit of the bill of lading.  The correspondence between solicitors reveals some lack of engagement with that critical, clear and definite issue.

4                     The time has long since past where courts should be obliged to deal with matters that are not seriously in dispute.  Parties to litigation, particularly in commercial and international trade litigation, ought to put their real cases forward at the earliest opportunity.  Where there may be an issue about the capacity in which a stevedore is acting, namely, whether in truth it was the appointed agent of the carrier for the purposes of loading or discharge from a vessel, it is a commonplace and very simple for the stevedore who wishes to rely on a Himalaya clause to put the complete facts concerning its capacity before the cargo interest seeking to allege liability against it.  I am of opinion that it was incumbent both on the plaintiffs and the second defendant to ensure that that matter, if it were ever to be an issue, were put squarely on the litigious table at the beginning of the proceedings.  This question should not have been allowed to continue to this point.

5                     After the motion for a stay had been filed by the stevedore, matters came to a head on 8 September 2009 in correspondence between the parties’ solicitors.  At that point, the plaintiffs sought to be provided with evidence that, as a matter of law, the stevedore would be entitled to the benefit of the Himalaya clause.  Ultimately, that evidence was provided earlier this week in an affidavit served by the carrier’s solicitor.  However, this is not now an appropriate way for parties in this kind of litigation to engage.  It has been almost a tradition in the past in cargo claim litigation to protract sterile, pointless disputes unnecessarily that could be resolved easily by one or both parties laying its forensic cards on the table at the beginning of the proceedings or before they are commenced.  This has resulted in one or both parties bedevilling the serious identification of the real issues that the court will be required to resolve when the matter is to be heard.  This conduct is not conformable with the Court’s expectation as to how cargo claim litigation should be approached as identified in the Notice to Practitioners and Litigants issued on 18 December 2008 by the Chief Justice on the conduct of Admiralty and Maritime work in the Federal Court of Australia (see new Practice Note ADM1 issued by the Chief Justice on 25 September 2009:  Admiralty and Maritime work in the Federal Court of Australia:  s 11).  

6                     As I see it, each of the parties bears some responsibility for their joint failure to bring forward the true issue between them that required prompt identification and resolution.  I pointed out during the course of argument that in commercial litigation of this character and, as indeed in other litigation in today’s society, that approach is unacceptable for the reasons given by Allsop J in White v Overland [2001] FCA 1333 at [4] which were applied by Heydon JA with the endorsement of Mason P and Young CJ in Eq in Nowlan v Marson Transport Pty Ltd (2001) 53 NSWLR 116 at 128–129 [28]–[32] and by a Full Court of this Court in Maniotis v JH Lever & Co Pty Ltd [2006] FCAFC 7 at [72] per Finn, Emmett and Bennett JJ. In the last case, the Court said:

“In the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that, in the propounding of issues for trial, the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are. Quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue is a practice that must be firmly discouraged. Where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, common sense will, as a general rule, mandate that a party ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said. No one’s interests are advanced by litigation proceeding on assumptions which are seen or suspected to be false. The only consequence of keeping issues hidden or not clearly identifying them is to disrupt the business of the court leading to the waste of valuable public resources and to lead to the incurring of unnecessary costs by the parties, costs which ultimately have to be borne by someone: see White v Overland [2001] FCA 1333 at [4].”

7                     And as Heydon JA noted even in personal injury litigation ‘the ambush theory of life has been abandoned’ (53 NSWLR at 128 [30]); see too Snowy Mountains Organic Dairy Products Pty Ltd v Wholefoods Pty Ltd [2006] FCA 1361 at [15] per myself; Baulderstone Hornibrook Engineering Pty Ltd v Gordian Runoff Ltd [2008] NSWCA 243 at [160]–[162] per Allsop P, with whom Beazley and Campbell JJA agreed.

8                     These litigants and their lawyers are seasoned and experienced in the intricacies of this class of litigation.  They all know the likely issues and what material or evidence will be sufficient to satisfy the other side that particular issues are not worth pursing (such as the commonplace applicability of a Himalaya clause).  The parties have a duty to eliminate such issues as quickly and efficiently as possible.

9                     Ultimately, the stevedore put a fall back position that it would seek its costs up to and including 8 September 2009 in respect of its motion for a stay.  That was the time that it was clear, between the parties, that there was no longer any issue between them because the question of the stevedore’s ability to rely on the Himalaya clause had been or would soon be addressed. 

10                  I will order that the stevedore receive 75 per cent of its costs up to and including 8 September 2009 in respect of its motion. 

Associate:

Dated:         2 October 2009