FEDERAL COURT OF AUSTRALIA

STX Pan Ocean Co Ltd v Bowen Basin Coal Group Pty Ltd (No 3)[2010] FCA 1374

THE COURT ORDERS THAT:

1.    The second defendant pay the plaintiff the sum of USD509,771.10.

2.    The second defendant pay 80% of the plaintiff’s costs of the proceedings, including reserved costs.

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 Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

(REVISED FROM THE JUDGMENT)

1    There remain two outstanding issues following delivery of my reasons on 12 November 2010 in STX Pan Ocean Co Limited v Bowen Basin Coal Group Pty Limited (No 2) [2010] FCA 1240. These are, first, the quantification of STX’s damages for charter hire and bunkerage and, secondly, costs.

Damages - Introduction

2    I found that STX was entitled to recover its loss as a result of the moneys it expended on the two ships it chartered, Yong An 2 and Izola, in the period between noon on 6 May to the time of termination on 17 May 2010: STX [2010] FCA 1240 at [99]. I directed that on or before 16 November 2010 the parties bring in short minutes of orders as to the sum of damages and interest for which judgment should be entered in respect of that period. STX provided a calculation seeking charter hire for the two vessels and further amounts for bunkers consumed while they were at idle during the period, together with interest at the USA LIBOR rate at May 2010 of 0.28469%. I received no calculation put forward by Mr Thompson in accordance with my directions.

Damages - Submissions

3    During the course of argument today, the amounts of damages for hire under the two time charters have been agreed for the 11.1736 (days being the period for which I awarded damages) at the rate of USD24,000 per day for the Yong An 2 amounting to USD268,166.40, and the Izola at the rate of USD19,500 per day amounting to USD217,885.20.

4    STX claimed that Yong An 2 consumed bunkers at the daily rate of 2.5 metric tonnes of diesel oil at idle. Its total bunkerage expenses were USD803,807 for the nearly 72 days she was on hire. That cost, of course, included bunkers consumed during the voyage from Kwinana to Shanghai, as I set out in STX (No 2) [2010] FCA 1240 at [44]. STX claimed that Izola consumed bunkers worth USD182,180.59, including for the voyage she made to Kwinana, over the nearly 44 days she was on hire. STX’s calculation for bunkers consumed by Izola for the 11.736 days included fuel oil at the rate of 1 metric tonne per day at $415.90 and diesel oil at the rate of 2.5 metric tonnes per day at $930.02.

5    STX claimed that, for the period of just over 11 days, the bunkers consumed by Yong An 2 at idle should be allowed at about USD21,000, and for Izola at about USD30,000. A rough calculation for 11 days of the average cost per day, using the total bunkerage costs in evidence for each of the two vessels, would have produced, for Yong An 2, in the order of USD67,000 per day, and for Izola, in the order of USD45,000 per day. There was no evidence as to the rate of, or actual, consumption of bunkers while either vessel was underway or how STX arrived at the figures which it sought in its calculation. Nor was there any evidence to explain why Izola would be likely to consume almost 50% more bunkers at idle than Yong An 2 during the same period of approximately 11 days.

6    Mr Thompson contended that STX should have proved with some greater precision the rates at which each vessel consumed bunkers while at idle if it were to be awarded any sum by way of damages. He contended that, because STX had failed to lead any evidence directed at proving that issue, it was entitled to no more than nominal damages in respect of the bunkers consumed.

Damages - Consideration

7    I reject that contention. The assessment of damages can sometimes of necessity involve what is guesswork rather than estimation. Where precise evidence is not available, a court must do the best it can, and uncertainty as to contingencies is not a reason to refuse to assess damages: Commonwealth v Amann Aviation Pty Limited (1991) 174 CLR 64 at 83 per Mason CJ and Dawson J, 199 per Deane J, 138 per Toohey J; see too: Aristocrat Technologies Australia Pty Limited v DAP Services (Kempsey) Pty Limited (2007) 157 FCR 564 [98]-[101], where I discussed the principles.

8    As a matter of common sense, each of the vessels had to consume some amount of bunkers while they sat at idle. Here, the quantification of these damages may have been better proved by evidence of the actual consumption of each of the vessels at idle during any particular period. However, the likelihood of the ultimate finding which I made as to the period for which damages could be recoverable, and the basis upon which it might be recoverable, was not necessarily able to be precisely addressed in the evidence. STX adduced evidence of its overall expenses and substantiated them. One possibility open is whether those damages should be assessed by adopting simply an average of the total bunkerage costs for the whole of the period for which each vessel was on hire and then applying that average to the 11 odd days for which I allowed damages to be recovered. Another possibility is that some lesser rate should be adopted so as to recognise that less bunkers were likely to have been consumed while the ships were at idle.

9    I am of opinion that it is appropriate to award a sum for what is an obvious and actual loss incurred by STX in maintaining the two vessels at idle in port in performing the charter party. It is likely that each vessel consumed substantially less at idle than she would have while steaming at sea fully laden or in ballast. The expense for which STX is entitled to damages was induced by the fraudulent representation that I found Mr Thompson had made. In addition, the nature of the fraud was calculated to induce STX to incur loss of this kind. Doing the best I can, I will allow bunkerage, for Yong An 2 while she was at idle in port, at the rate of USD10,000 for the period in question. I will allow the same rate in respect of Izola, making a total of $20,000 for the bunkerage of the two vessels. I will ask the parties to calculate interest and add that to the judgment sum.

Costs - Submissions

10    The parties also addressed on costs. STX argued that it was entitled to its full costs of the proceedings. It also contended that these should be assessed in a fixed sum, totalling AUD280,502.90 being two-thirds of its actual legal costs and disbursements, including the costs of the attendance of Mr Kang and Mr Ahn to give evidence personally.

11    Mr Thompson contended that no fixed sum costs order should be made. He pointed out that STX’s claim under the Trade Practices Act 1974 (Cth) had failed. He argued that STX had only succeeded partly in its claim for damages because it recovered only in the order of about 20% of what it had originally claimed against him. Mr Thompson argued that STX should be deprived of any costs relating to evidence of Mr Ahn and other witnesses that had been rejected, and that its costs ought to be limited to a one day trial.

12    Mr Thompson argued that the time taken up by the hearings was substantially protracted by reason of mistakes made during the preparation and advancement of its case by STX. There is some substance in that contention. That was shown in my judgment that dealt with STX’s attempt to adduce Mr Ahn’s affidavits: STX Pan Ocean Co Limited v Bowen Basin Coal Group Pty Limited (2010) 188 FCR 528. There, I made a costs order reflecting the fact that some of the argument was caused by the failure of STX properly to prove, at the time it served the latest affidavits, the validity of their attestation. STX had been on notice that that was an issue since that question had been raised during an earlier hearing when STX tried to read another similarly attested affidavit.

13    Mr Thompson also submitted that the proceedings could, and should, have been brought in a lower court. That argument is, in my opinion, without substance and can be disposed of now. To begin with, STX claimed damages of over USD2.4 million against both Bowen Basin, as charterer, and Mr Thomson. STX recovered judgment against Bowen Basin for over USD2.4 million. Mr Thompson was properly joined as second defendant because STX had then anticipated there were common issues. Secondly, the proceedings raised issues of commercial, Admiralty and maritime law and were eminently suited to be determined in this Court.

Costs - Consideration

14    In my opinion, these proceedings have not been conducted with the attention to the proof of STX’s claim which ought to have been given by it. STX approached the proceedings on a misconception that the rate of demurrage in the charterparty could represent a tortious measure of damages or, alternatively, a measure applicable under s 82 of the Trade Practices Act. I rejected that contention in STX (No 2) [2010] FCA 1240 at [100]-[108].

15    When STX appreciated that error, it sought leave to reopen its case to prove its damages on a different basis, that I ultimately upheld. There were additional expenses and the need for an additional hearing, occasioned by that change of tack. The need to prove reliance loss ought to have been anticipated by STX at the outset, when the proceedings were set down for trial. On the other hand, there were instances of Mr Thompson taking points which ultimately failed, such as the challenge to the method of attestation and verification of Mr Ahn’s affidavit under Korean law: STX 188 FCR 528.

16    Doing the best I can, I am of opinion that this is a case in which STX should receive 80% of its costs. Such an award will recognise that there was some degree of unnecessary protraction of the hearing due to STX’s error in preparation of its evidence. However, overall Mr Thompson had an undoubted liability, which STX was forced to establish at considerable effort because it was put to proof. This is not an appropriate case in which to make a costs order in a fixed sum. I am by no means satisfied that the material tendered is of sufficient detail and justification to warrant such an order. Costs ought to be taxed in the usual way.

Associate:

Dated:    8 December 2010