BGC (Australia) Pty Ltd v Fremantle Port Authority

REASONS FOR JUDGMENT 1 It is not uncommon for a person strolling along the magnificent Cottesloe beach to look out at the Indian Ocean and see a number of ships at anchor in Gage Roads waiting to enter the port of Fremantle. This case involves five such ships. Those ships had, at different times during 2010, been chartered by the applicant, BGC (Australia) Pty Ltd, a company which manufactures, amongst other products, plasterboard and cement. Four of the ships contained a shipment of gypsum and one of them contained a shipment of cement clinker. All the charter parties for the five ships in question contained a demurrage clause. 2 At all material times, the respondent, Fremantle Port Authority (the port authority), operated the Kwinana Bulk Terminal and Kwinana Bulk Jetty for the loading and unloading of bulk cargo. There is, and was, at the material time, only limited berthing capacity at the Kwinana Bulk Terminal and Kwinana Bulk Jetty. In 2010, and for at least five years prior thereto, the port authority operated a system for the booking of berths which it refers to as the "turn of arrival system". Under that system the port authority's customers advise the port authority of the anticipated time of arrival of the ship. The ships are given a booking slot. On arrival of the ship at Gage Roads, being the name given to that part of the Indian Ocean immediately outside of the port of Fremantle, the port authority allocates a berth when it becomes available, according to the ship's time of arrival by reference to the time of arrival of any other ships that may also be waiting in Gage Roads. Not all ships are delayed on arrival, but it is not uncommon for a ship that has booked a slot under the booking system, to be delayed for up to several days in Gage Roads whilst the ship waits its turn to be allocated a berth to load or unload. I observe that in its pleading, BGC refers to the port authority's booking system as the "over utilisation approach". 3 BGC alleges that in the last quarter of 2010, it was given booked slots for the berthing and unloading of five ships and that in respect of each of these bookings it entered into a port services agreement with the port authority. The agreements are not all in the same terms. However, each of the agreements contained a clause which exempted the port authority from any liability to pay BGC compensation arising from any delay by reason of the unavailability of a berth or any of the port's facilities. The agreements specifically excluded liability in respect of any demurrage costs incurred by BGC. 4 Each of the five ships chartered by BGC was delayed in Gage Roads before the ship could berth and unload its shipment of gypsum or clinker cement. BGC alleges that the following delays occurred: (a) The MV Livanita issued a notice of readiness on 13 September 2010, but only berthed on 19 September 2010. (b) The MV Maria TH issued a notice of readiness on 13 October 2010, but only berthed on 15 October 2010. (c) The MV Ideal Bulker issued a notice of readiness on 23 October 2010, but only berthed on 11 November 2010. (d) The MV Tern issued a notice of readiness on 21 November 2010, but only berthed on 5 December 2010. (e) The MV Livanita issued a notice of readiness on 16 December 2010, but only berthed on 19 December 2010. 5 BGC pleads that the unloading of each ship was delayed because of the berthing and operational delays, and that it was, therefore, required to pay demurrage in the following amounts: (a) MV Livanita $179,536.17 (b) MV Maria TH $103,400.50 (c) MV Ideal Bulker $283,528.87 (d) MV Tern $356,936.69 (e) MV Livanita $73,429.21 6 The port authority issued an invoice to BGC for the port services provided in the berthing and discharging of the cargo of each of the five ships. However, BGC only partially paid each of the invoices. BGC deducted from the invoiced amount, the amount which it had incurred by way of demurrage in respect of the delay in berthing and discharging the cargo from each ship. 7 BGC commenced this proceeding seeking a declaration that it was entitled to deduct the amounts paid as demurrage from the amounts invoiced by the port authority. BGC alleges that in requiring it to enter into each of the port services agreements which contained the demurrage exemption clause, the port authority engaged in unconscionable conduct, alternatively, acted beyond power. 8 The port authority has cross-claimed for the sum of $955,853.73, which the port authority claims is the amount which BGC has wrongfully withheld and accrued interest. 9 In support of its claim that the port authority engaged in unconscionable conduct in contravention of s 51AC of the Trade Practices Act 1974 (Cth) (and s 21 of Sch 2 to the Competition and Consumer Act 2010 (Cth)), and that it would be unconscionable to permit the port authority to enforce the demurrage exemption clause, BGC relies upon the following circumstances: (a) The port authority had exclusive control of the only port within the immediate vicinity of Perth with a capacity to handle bulk cargo. (b) The port authority and its customers were in an unequal bargaining position. (c) At the time of BGC's entry into the port services agreements, and for the preceding five years, the port authority adopted a berth booking approach which involved and resulted in ships being delayed for substantial periods after arrival at Gage Roads, whilst the ships waited for a berth to become available (d) In relation to three of the five shipments in issue, the port authority knew at the time that it allocated BGC a booking slot it was likely that each ship would be delayed in Gage Roads whilst the ship waited for a berth to become available. 10 BGC has also claimed that on the proper construction of the Port Authorities Act 1999 (WA), the port authority did not have the power to require users of the port of Fremantle to enter into an agreement by which the port authority limits the extent of its liability as it had purported to do in the impugned port services agreements. 11 At para 23 of its statement of claim, BGC pleads that the booking approach adopted by the port authority during the period 30 June 2006 to 30 June 2011 (which, as I have said, BGC pleads as the "over utilisation approach") "involved or resulted in vessels being delayed for substantial periods of time because of the unavailability of the berths". In support of that pleaded allegation, BGC referred to the following particulars: (3) the particulars of unavailability with respect to the Kwinana Bulk Terminal, which are set out below: (a) In the financial year 2006/2007, 19% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 80 hours. (b) In the financial year 2007/2008, 44% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 75 hours. (c) In the financial year 2008/2009, 37% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 66 hours. (d) In the financial year 2009/2010, 32% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 58 hours. (e) In the financial year 2010/2011, 61% of the vessels using the berths at the Kwinana Bulk Terminal were affected by the unavailability of the berths, with each affected vessel delayed an average of 158 hours. 12 The facts referred to in the particulars above, repeat the facts as to delays by reason of the unavailability of the berths, which the port authority reported in its annual report for each of the five years in question. In light of that circumstance, it is not surprising that the port authority in its defence and cross-claim, conceded that the facts alleged as to the extent of the delays caused to ships by the unavailability of berths during the five year period are accurate. 13 I might add that the port authority has not admitted in its pleading all of the facts and matters alleged in para 23 of BGC's statement of claim.