BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd

11 October 2004 6 At 0944 hours Mr Bartlett emailed Mr Liu and advised: "Have discussed with BHP and VSL is still open. Owners advising if can do hire payment in full up front then would be no problem to fix. Suggest forward chartrs firm offer along with chrtrs full style/background to develop. Please advise if we can do subs within today." 7 At 1238 hours Mr Liu emailed "Jacky" (Jacky Cao), a person purportedly acting on behalf of NCI and passed on the request by Seawise that the charterers make a firm offer for the Global Hawk in a format prepared by Seawise. Jacky responded at 1334 hours: Can offer firm: Acct: New Century International Leasing Corp MV Global Hawk … Hire USD24,000 daily incl overtime 16 days hire to be paid on dely" 8 Mr Bartlett emailed the offer to Mr Elsworth at 1356 hours. Mr Bartlett then emailed Mr Liu at 1408 hours as follows: "Many thanks yr offer earlier and will be recverting shortly with owners reply. Meantime chartrs kindy asking briefly back ground and list of recent fixtures of chrtrs. Pls advise." 9 At 1449 Mr Elsworth emailed Mr Bartlett, rejecting NCI's offer and making a counter-offer. The email reads: "Can kindly decline Chtr's offer and re-offer firm as follows, valid until 15:00 Melbourne today 11-Oct-04, Acct: NCI Leasing (please advise full-style address & references?) MV: Global Hawk as described … Itinerary: ETD Lianyungang PM 11-Oct-04 … USD25,300 per day inclot … Full voyage time charter hire to be paid in advance on delivery 10 Cosco had in its possession certain information about NCI which would partly satisfy the requirement for "references". Mr Liu emailed that information to Seawise at 1453 hours. The information was then emailed to BHPB at 1503 hours. The email from Seawise reads: Hi Bruce - Have been advised following description and background of chrtrs NCIL has received from Cosco; QTE NCIL BACKGROUND INFORMATION New Century International Leasing Pty Ltd NCIL approved by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) and registered at the National Administration [illegible] Industry and Commerce on September 19th,1994 is a large, and leasing corporation jointly funded by RAD International Investment Fund Co., Ltd. (US) and China Communication Construction Corporation with a registered capital of USDUSD15.00 million. NCIL is mainly engaged in Finance Lease, Operating Lase, including domestic and foreign currency exchange, Finance Lease by way of Direct Lease, Sub-lease, Sale-lese back, Leverage Leave, Entrusted Lease and Combined Lease for advanced or applicable foreign and domenstic equipment for production, communications, medical engineering, communications and transport vehicles (including airplanes, automobiles and ships) with associated technologies leasing goods, discounted selling, and disposal business: operational leasing of advanced and applicable foreign and domestic goods such as construction machinery, telecommunications equipment, manufacturing equipment, and scientific research equipment: consulting and warranty services in connection with lease transactions. International Trading, from 1995 to 2004, NCIL has signed and implemented various leasing contracts amounting to a total of USD1100 million USD and RMB4.2 billion yuan with a sum total of more than RMB 12 billion leasing assets and in total USD400 million USD international trading. 11 This was important information. BHPB had not previously dealt with NCI. Accordingly, Mr Elsworth wanted to be satisfied about NCI's credit-worthiness. When he read the email it appeared to Mr Elsworth that NCI was, at face value, a credit-worthy organisation. In particular Mr Elsworth noted that NCI had "registered capital" of $15 million, was involved in the shipping industry and "appeared [to be] a major firm in China, a conglomerate [involved in] various activities." 12 Mr Elsworth also commissioned an independent report concerning NCI from Lloyd's MIU Company Research (usually referred to as MRC). Mr Elsworth did not receive the report until 13 October. The report gave NCI a clean bill of health. It concluded: Overall, based upon the information available to Lloyd's MIU, there seem to be no reasons to object a chartering relationship with NCIL, although it would be wise to seek some form of security for initial dealings. 13 Returning to the chronology, at 1534 hours Mr Liu emailed Mr Bartlett as follows: I am going to be travelling late today. If the talk on the biz would be continued today, pls keep contact with PIC of the chtrs as follows, PIC, Mr Jacky Cao Email: Jacky AT nerashpg.com In case of that is urgent, you may call: 008613602713335" [which is likely to be Jacky's mobile telephone number]. A few minutes later Mr Liu emailed Jacky suggesting that he should deal directly with Mr Bartlett about the hire. 14 Mr Bartlett and Jacky then continued the negotiations. Their negotiations resulted in the vessel being "fixed on subs" (ie a fixture subject to certain conditions being met by NCI). The main terms of the fixture were set out in an email from Seawise to Jacky sent at 1910 hours. The email records that the fixture was for the account of NCI Leasing, the vessel was to be delivered at Lianyungang on 11 October 2004, the hire was US$24,500 per day and that the "full voyage time charter hire [was] to be paid in advance on delivery." 15 Notwithstanding that the terms of the fixture had been agreed, at 2212 hours Mr Bartlett emailed Mr Elsworth that NCI wished to take delivery of the vessel at the Port of Xingang on 12 October 04. In due course this was agreed, subject to the payment of a ballast bonus of US$40,000.

12 October 2004 16 The revised terms of the fixture were set out in an email from Mr Bartlett to Mr Elsworth which was sent at 1257 hours. Later in the afternoon the conditions were lifted with the result that the vessel was now "fixed clean." 17 Once the Global Hawk was fixed clean Mr Reker took over the management of the vessel. The first thing Mr Reker did was send a message to the Master of the Global Hawk. The message read: Your vessel has been sublet to QTE NCI Leasing UNQTE who will contact you with voyage orders shortly. The intention is to load steel billets in Xingang for a discharge in Vietnam. FYG delivery time and bunkers will be at pilot station Xingang, can you pls get underway and proceed there are normal sea. Pls send me a copy of sub-chrtrrs voyage orders when rcvd. Please acknowledge. Mr Reker explained that he asked for a copy of the voyage orders so that they could be sent to Inui. 18 At 1744 hours Jacky asked that the "first load port" be changed to Qinhuangdao. BHPB agreed and at 2147 hours Mr Reker advised the Master of the change. 19 At 2154 Mr Bartlett circulated an 'amended clean recap' reflecting the agreed changes to the terms of the charter. 20 Earlier in the day, when the Global Hawk had been fixed clean, Mr Bartlett handed over the Global Hawk file to Ms Hendricks. Ms Hendricks was one of two operations administrators in Seawise's operations department. Once a charter is fixed the operations department assumes responsibility for all operational issues. 21 At 2104 hours Ms Hendricks emailed Mr Reker advising that she would "obtain from the charterers a copy of the voyage orders for your [Mr Reker's] records." Ms Hendricks explained that the fixture to NCI was a spot fixture and she wanted to make sure the voyage orders went to BHPB so that they were aware of the cargo to be carried.

13 October 2004 22 At 0322 hours the Master sent BHPB the voyage instructions he had received from Super Shipping Ltd. The voyage instructions read: Dear Captain & Crew Members, We are pleased to inform you that we, Super shipping Hong Kong being the operator on behalf of yr charter messrs. Nera Shipping Ltd for a Time-Chartered trip of about 16-25days w/out g'tee. We, welcome you, your officers and crew to join us and working together to achieve mutual benefit. We wish you all runs in luck. The instructions also gave Super Shipping's "full style" (ie its address, telephone, facsimile and telex numbers and email addresses). On the second page of the instructions there was this statement: "Upon delivery, please advise us (supership@netvigator.com) and Chtrs Messrs NERA shipping (email: jacky@nerashpg.com) the date, time (both in gmt & local time) and bunkers remain onboard." This was followed by detailed instructions concerning the cargo and sailing. 23 There are two things to notice about the voyage instructions. First, the charterer is identified as Nera Shipping Ltd. Second, the operator is identified as Super Shipping of Hong Kong. There is no evidence what the Master thought upon receipt of instructions from Nera. Because he had been expecting to receive voyage instructions from NCI, it may have come as a surprise that the instructions had come from another organisation. If the Master was surprised, he did not say anything to Mr Reker. 24 Mr Reker acknowledged he would have seen the email from the Master as soon as he arrived at work that morning. Mr Reker said he did not regard the voyage instructions as being particularly important. In fact he asserted he did not always receive voyage instructions for vessels BHPB let out on charter "so that's how important they are to me in that respect." Importantly Mr Reker said he does not recollect reading the instructions. This was for the reason that his only interest in the voyage instructions was to pass them on to Inui. He explained: "[Inui are] a small company as far as I know, they're very protective of their vessels, they like to know what's going on with sub-charterers. When it's in our direct hands, they are always confident that it's in good hands. When it's sub-chartered, they've always had a little bit of a - they've had a habit of asking for voyage instructions from the sub-charterer." 25 In court, Mr Reker's attention was drawn to the references in the voyage instructions to Super Shipping and Nera Shipping. He said that if he had noticed those names it would not have caused him any concern "because this could just be an arm of NCI just like BHP has many arms, different operating arms. It could, itself, also could be a sub-charterer again of NCI, for all I know. Super Shipping, yes that - yes. Again, that falls into the same category." 26 Mr Reker sent the voyage instructions to Seawise at 0812 hours. Ms Hendricks also said she has no recollection of reading them. Her function was to send the voyage instructions to Inui, which Ms Hendricks did by forwarding them to Inui's representative, Nishi San. While she was not able to recall reading the voyage instructions, Ms Hendricks did concede that she probably did read them. Her practice was to look at every document that came across her desk, some more carefully than others, dependent upon its contents. I accept Ms Hendricks' evidence that she did not pay much attention to the voyage instructions because she only received them to send to Inui. 27 Shortly after she received the file Ms Hendricks drew up the charterparty. For this purpose she used the amended clean recap of 12 October. The amended clean recap indicated that the charterer was NCI. The draft charterparty was prepared on that basis. 28 At 1506 hours Ms Hendricks emailed Jacky at Nera Shipping nominating the surveyor for the on-hire bunker and condition survey. The email stated: "In the m/time for good order sake can we pls have your full style together tphone/fax nbrs, etc." 29 Ms Hendricks wanted this information because Seawise had not previously dealt with NCI and she needed Jacky's out of hours contact details in case there was an urgent need to call him. Ms Hendricks said she only requested "full style" details when dealing with new people. 30 The full style details were sought from Jacky because the documents in the file showed him to be the PIC (person in charge). Accordingly, Ms Hendricks thought he was the "agent, contact for the charterer NCI." It is possible that the email was sent to Jacky at Jacky@nerashipping.com because Ms Hendricks noticed in the voyage instructions that this was his email address. It is equally possible that Ms Hendricks obtained Jacky's email address from emails he sent to Mr Bartlett on 11 or 12 October. 31 At 1525 hours Jacky replied to the full style request in an email entitled "RE: GLOBAL HAWK/NCI LEASING CP 12/10/04 - VSL ITENERARY" stating: "Please find our full style asf: Nera Shipping Co., Ltd." 32 Ms Hendricks did not send the full style email to BHPB. She did not do so because the information was only required by Seawise, it being the shipbroker's role to deal with issues arising out of the charterparty.

Post 13 October 33 The vessel was delivered to Nera at 0230. The Master sent a confirming delivery notice to Nera Shipping, Super Shipping and BHPB. The notice read: "Please be noted TT M/V Global Hawk arvd Qinhuangdao P/STN at 0230L/14TH (GMT1830/13TH) and was delivered to chtr Messrs Nera Shppg as per c/p." 34 While the terms of the fixture were that NCI would pay the hire in advance of delivery, it is standard practice to prepare and send the first hire invoice on the day of delivery. One reason is that bunkers cannot be surveyed until delivery. Payment usually takes 24 to 48 hours to be transacted through the banking system. 35 At 1058 hours Mr Reker sent the first hire invoice to Seawise for delivery to NCI. The invoice was in the sum of US$669,533.96 comprising US$392,000 for hire, US$247,545 for bunkers, US$40,000 for the ballast bonus plus miscellaneous expenses of US$788.96, less commissions. The invoice was not paid. Nor were the amounts included in invoices raised between 29 October 2004 and 15 November 2004 in relation to further amounts owing under the charter. The details of the invoices are: Invoice date Invoice number Invoice amount (USD) 29 October 2004 30811089 $66,933.56 12 November 2004 30811195 $47,873.62 13 November 2004 30811202 $23,936.81 14 November 2004 30811203 $23,936.81 15 November 2004 30811205 $23,936.81

The invoices related to charges for hire, bunkers, port costs, ballast bonus, in lieu of hold cleaning costs and other miscellaneous items. 36 On 27 November 2004 the vessel was redelivered into the possession of BHPB. BHPB then issued the final invoice to NCI in the sum of US$353,514.47. 37 Because the amounts due were not paid, BHPB commenced arbitration proceedings against Nera in London. On 18 May 2005 BHPB received an award in its favour for US$1,063,316.19. Save for one payment of US$120,000, the award has not been satisfied.

The Claims Against COSCO 38 BHPB claims against Cosco that it (1) breached s 52 of the Trade Practices Act 1974 (Cth) (TPA) (by engaging in misleading or deceptive conduct); (2) breached s 53B(bb) (by falsely representing that a particular person had agreed to acquire services from BHPB); (3) breached s 53(d) (by representing that it had approval of or affiliation with NCI it did not have); (4) was negligent; and (5) wrongly warranted that it had the authority of NCI to conclude a charterparty. 39 BHPB must succeed in its claim against Cosco on several of the pleaded causes of action. The damages recoverable are not the same under each cause. In respect of some, defences of (what I loosely describe as) contributory negligence and apportionment, which Cosco has pleaded, are not available. 40 The cause of action most beneficial to BHPB, and the one it presses first, is breach of warranty of authority. The cases establish that where a person (the first person) falsely represents that he has authority to act on behalf of another person in a particular transaction and the person to whom the representation is made (the second person) is induced to act on the faith of the representation and suffers loss, the second person may recover the amount of the loss from the first person in an action for breach of a collateral contract. It matters not that the first person acted in good faith, believing he had the authority which he purported to have. See generally Bowstead and Reynolds on Agency (18th ed 2006) 541; Chitty on Contracts, (30th ed, 2008) vol 2 65; Dal Pont, The Law of Agency (2nd ed 2008) 697; Collen v Wright (1857) 8 E & B 647. The action is based on collateral contract: Penn v Bristol & West Building Society [1997] 1 WLR 1356. 41 The first element of the cause of action which BHPB must establish is that Cosco represented it had authority to act on behalf of NCI. There is no doubt this is the effect of the emails from Cosco to Seawise. Mr Muller, a shipbroking expert called by Cosco, acknowledged that shipbrokers rely on statements made by fellow brokers. He explained that the essence of the relationship between brokers is captured in the motto of the Baltic Exchange: "Our word our bond". Mr Muller all but acknowledged that when a shipbroker is negotiating as an intermediary between shipowner and charterer, the shipbroker is deemed to warrant that he has the full authority of the principal to contact on the terms of the offer that he makes or accepts. 42 Mr Harvey, who appeared for Cosco, accepted his client had represented to Seawise (and therefore to BHPB) that it was acting for NCI. But he says there is no evidence the representation was false, at least up to the point Mr Bartlett was asked to, and did, deal directly with Jacky. Mr Harvey suggests that Jacky may have changed principals (from NCI to Nera) around 11 October 2004 when there was the change in the port of delivery from Lianyungang to Xingang. 43 In my view there is more than enough evidence from which to infer that Jacky had never acted for NCI. For one thing NCI appears to be a reputable organisation. Jacky, on the other hand, is a rogue. From June 2004 or thereabouts Jacky had been using Cosco's services in an attempt to charter a vessel for a variety of charterers other than NCI. Among the charterers for whom he was purporting to act were Hunan Walin International Shipping and Full Young Shipping Ltd. The negotiations for a charter got nowhere. Some fell through when hire was not paid in advance. Others did not go ahead because Jacky told Cosco that money had been remitted to the owner and it turned out it had not. When one considers what transpired with the Global Hawk, and with the other vessels Jacky attempted to charter, it is impossible to avoid the conclusion that Jacky was involved in several fraudulent schemes to charter a vessel without making payment until, if at all, the voyages were completed and money had come in. 44 Secondly, Jacky appears to have first mentioned to Cosco that he represented NCI around June 2004. It is notable that this was when a number of his other dealings had turned sour. 45 Thirdly, there is nothing, apart from assertions of authority by Jacky, to tie him to NCI in relation to his dealings with the Global Hawk. Indeed, in an email of 3 November 2004, Jacky dismissed any such link. Responding to a request from Mr Liu to clarify the nature of the relationship between NCI and Nera, Jacky wrote: Chtrs rather confused by owners as this CP was under the account of Nera Shipping Co Ltd Hong Kong an individual HGK registered company. Further investigated was tha the misunderstanding could be since the beginning a Korean chtrs was trying to obtain an L/C from NCI Leasing to conclude the hiring… Nera's negotiating on subject vessel was on a different issue and not this L/C basis, so there was nil connection whatsoever with NCI Leasing Company like applying with them for the L/C. Obviously they were 'named' as leasing and Nera being in shipping business… (emphasis added) 46 On this aspect it is also necessary to have regard to the pleadings. By its defence, Cosco denies it had ever acted on behalf of NCI. Implicit in this denial is that Jacky, the only person with whom Cosco was dealing, was not representing NCI. 47 To make out its warranty of authority claim BHPB must also show it was induced to act on the assertion that Cosco represented NCI by engaging in conduct which, but for the assertion of authority by Cosco, it would not have entered into. BHPB's pleading on this aspect is obscure. It alleges that Cosco had warranted it was acting on behalf of NCI. It alleges that in breach of that warranty Cosco was not authorised to act on behalf of NCI. But it says nothing about the respect in which it was induced to act. No point, however, has been taken about this potential deficiency in BHPB's pleading, apart from a comment by counsel during closing submissions. 48 Whatever is said in the pleadings, it is an inescapable conclusion that BHPB (through Seawise) was induced to enter into the charterparty in the belief that the arrangements were with NCI. Having not dealt with NCI previously, BHPB had satisfied itself that NCI was a reliable party to do business with prior to entering into the charterparty. The identity of NCI - and, therefore, Cosco's authority to represent NCI - was important to BHPB in its decision to enter into the charterparty. It is true, as Mr Harvey points out, that the charterparty was concluded during negotiations between Seawise and Jacky, at which point BHPB (through Seawise) was relying on Jacky being the representative of NCI. No doubt Seawise was of that view because Cosco said that Jacky acted for NCI. But the true or effective cause of the problem which has arisen here is Cosco's representation that it was authorised to act for NCI and it was on that basis Seawise concluded the fixture with Jacky. 49 In this connection reference should be made to Firbank's Executors v Humphreys (1886) 18 QBD 54. There Lord Esher MR said (at 60): The rule to be deduced is, that where a person by asserting that he has the authority of the principal induces another person to enter into any transaction which he would not have entered into but for that assertion, and that assertion turns out to be untrue, to the injury of the person to whom it is made, it must be taken that the person making it undertook that it was true, and he is liable personally for the damage that has occurred. That is to say, it is not necessary for the plaintiff to enter into a transaction with the supposed principal in order to establish an action for breach of warranty of authority. The cause of action is established even if the plaintiff enters into a transaction with another person: see also Penn v Bristol & West Building Society [1997] 1 WLR 1356. 50 As regards causation, if Cosco had actual instructions from NCI to enter into a charterparty Seawise would not have concluded the charterparty with Jacky and the vessel would not have been delivered to Nera. Cosco's failure to hold the authority which it warranted caused the loss that BHPB has suffered. That the vessel was delivered prior to the payment of the first hire in accordance with the usual practice, does not affect this conclusion. 51 So far as quantification of the loss is concerned, it is to be determined on the contractual measure. In a case where the plaintiff is induced to enter into some form of contract, the normal measure of damage is what the plaintiff would have recovered under that contract. That is to say, the measure of damage is arrived at by considering the difference in the position the plaintiff would have been in had the representation been true and the position he actually is in, in consequence of it being untrue: Firbank (1886) 18 QBD 54, 60. In this case the damage is the amount which BHPB has lost in being unable to recover from NCI the balance due under the charterparty. 52 Moving to the first of the statutory causes of action, s 53(bb) relevantly provides that a corporation shall not "in trade or commerce, in connexion with the supply or possible supply of goods of services or in connexion with the promotion by any means of the supply of goods or services (bb) … falsely represent that a particular person has agreed to acquire goods or services." There are several references to 'goods or services'. There is a question whether the 'goods or services' referred to in the preamble may be different from the 'goods or services' mentioned in subparagraph (bb). Section 53(bb) was introduced by the Trade Practices Revision Act 1986 (Cth). The Explanatory Memorandum (at para [88]) states that s 53(bb) "is directed at such practices as a person asserting a right to payment for goods or services that the person falsely asserts have been ordered by a recently deceased person." This suggests that ordinarily the various references are to the same 'goods or services'. In my view, however, s 53(bb) can be breached where the 'goods or services' the subject of the representation are different from the 'goods or services' referred to in the preamble. First, it is notable that subparagraph (bb) does not refer to 'those' goods or services (or words to similar effect suggesting that the goods or services must be the same). Second, the preamble refers to the promotion of goods or services, which contemplates future agreement regarding goods or services. In contrast subparagraph (bb) refers to 'goods or services' which a person 'has agreed' to acquire, which contemplates a concluded agreement. The 'goods or services' the subject of future and concluded agreements might well be different. Third, given that s 53(bb) aims to protect consumers, there is no reason to confine its operations to instances where the 'goods or services' are the same. The type of misconduct which s 53(bb) seeks to deter can easily involve different 'goods or services'. 53 In my opinion, Cosco has contravened s 53(bb) by falsely representing that it was supplying shipbroking services to NCI. That representation induced BHPB to conclude the hire with Jacky. 54 BHPB seeks to recover the loss it has suffered under s 82 or asks for compensation under s 87. The measure of damages which BHPB is entitled to recover under s 82 is similar to the measure of damages recoverable in an action in deceit: Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494, 512. In certain circumstances, it may be possible to recover more under s 87 (For the Good Times Pty Ltd v Coltern Pty Ltd [2007] NSWSC 807, [243]). This, however, is not a case where that could occur. Thus, BHBP's loss is to be measured by comparing BHPB's actual position with the position it would have been in but for Cosco's breach of section 53(bb). 55 If not for the breach, in October 2004 BHPB would have had a vessel for hire in a reasonably buoyant market. Mr Elsworth did say the vessel may have ballasted to Australia, but more likely it would have been let at around the same hire as had been agreed with NCI which, according to the evidence, was at a reasonable rate. It would, however, have taken some days to fix the vessel and to have it delivered to a new charterer. Mr Everton, an expert called by BHPB, said the time the vessel would have been unemployed was 2 to 3 days, possibly less. Even in a buoyant market it may have been necessary for there to be an alternative charter. All in all, on the little evidence there is, it may fairly be concluded that BHPB's loss can be broadly characterised as follows: The lost benefit of a charterparty (or charterparties) for 25 days (having made allowance for two periods of unemployment, and giving some time to fix the vessel and deliver it) at a rate of US$24,500 per day US$612,500 Less commission (at 5%) (US$30,625) Less part payment (US$120,000) KSI Port costs incurred US$9,393.00 Bunkers US$89,127.90 Total loss US$560,395.90

56 While I have found in favour of BHPB on the contract claim and under s 53(bb), I will briefly say something about the claims under s 52 and in negligence. There is no doubting that Cosco has contravened s 52. It represented to Seawise that it was acting for NCI when it was not. The representation induced, first, the negotiations and, second, the agreement with Jacky. As a result, BHPB suffered damage. So much was not seriously in dispute, apart from a minor argument about causation. Cosco's liability in negligence is also not seriously disputed. However, the damages to which BHPB is entitled for Cosco's breaches of s 52 and negligence raise more contentious issues. 57 One issue is whether BHPB is partly responsible for its loss. Cosco relies on s 82(1B) of the TPA, which relevantly provides that where a claimant makes a claim under s 82(1) in relation to economic loss caused by the defendant's contravention of s 52, damages are to be reduced to the extent which the court thinks just and equitable having regard to the claimant's share in the responsibility for the loss and damage. Cosco argues that BHPB is partly responsible for its loss and that BHPB's damages for its s 52 claim should be reduced accordingly. 58 The principal reason why BHPB is responsible for its loss, Cosco argues, is that BHPB negligently delivered the vessel to Nera, notwithstanding that Mr Reker had earlier received the voyage instructions which should have alerted him to the fact that something was amiss. 59 I have already mentioned that Mr Reker said he did not read the voyage instructions with any care. I rather suspect that Mr Reker looked at the voyage instructions more carefully than he conceded. But I am convinced he did not appreciate from anything contained in the instructions that the vessel had not been chartered by NCI. And I am not satisfied (although with a little hesitation) that Mr Reker should have appreciated that something was wrong. 60 Cosco also argues that BHPB is partly responsible for its loss because when Mr Reker received the delivery notice specifying Nera as the charterparty, BHPB should have taken steps to terminate or withdraw from the charter. Again, I am not convinced that Mr Reker should have appreciated that something was wrong merely because of the reference in the delivery notice to Nera. As he said, there might easily have been a subcharter. 61 Accordingly, s 82(1B) has no application. Similarly, Cosco's defence (which was orally put) of contributory negligence to BHPB's negligence action must also fail. 62 For the sake of completeness on this issue, I should address an argument raised by BHPB that it could seek relief under s 87 for its s 52 claim and so avoid s 82(1B) because that section does not apply to claims under s 87. I cannot accept this argument. BHPB's claim for damages under s 82 and compensation under s 87 are essentially for the same loss. To obtain a compensation order under s 87 where damages under s 52 might be limited by s 82(1B), would be to use s 87 to circumvent the operation of s 82(1B). The power of a court to make an order under s 87 is discretionary. It would not be an appropriate exercise of that discretion to allow the section to be used in this way. 63 The remaining statutory cause of action is based on s 53(d), which provides that a corporation shall not in trade or commerce "represent that the corporation has a sponsorship, approval or affiliation it does not have". Once again the representation relied upon is that Cosco was NCI's shipbroker. That is a representation about the existence of an agency relationship, an arms length commercial dealing. Such a relationship does not imply any sponsorship, approval or affiliation, which is a connection of a different character.

Claims Against Seawise 64 BHPB's claims against Seawise stand on a different footing. BHBP claims that (1) Seawise breached its retainer with BHPB and (2) Seawise was negligent. As regards the contract claim, BHPB contends that Seawise breached a number of implied terms of its retainer. The first implied term alleged is that Seawise would bring to BHPB's attention or pass on information which Seawise became aware which was relevant to the negotiations of the terms of the proposed charterparty, the proposed charterer and the fixing of the charterparty. The second implied term alleged is that Seawise was required to bring to BHPB's attention or pass on all information of which Seawise became aware which was relevant to the operation and performance of the charterparty. The third implied term alleged is that Seawise was to exercise reasonable care and skill in carrying out the services provided for in the retainer. Seawise concedes the first and third terms alleged by BHPB but denies the second term. 65 The first issue is whether the retainer contains the alleged implied terms. Many contracts are entered into on a casual basis. Without the addition of terms, the contract could not be fulfilled or the parties' rights adequately protected. In particular types of contracts certain terms are readily implied to fulfil what the law regards as the normal expectations of the parties. So, for example, in contracts involving buyers and sellers, the courts have implied terms as to quality and fitness. In contracts for the provision of services the courts have implied an obligation that the supplier will carry out the service with reasonable care and skill. In the case of a contract for the supply of professional services the courts hold the supplier must exercise the degree of care and skill which is to be expected of a professional man of ordinary competence and experience. 66 Speaking very loosely, terms will be implied into a given class of contract (for convenience this is sometimes referred to as terms implied as a matter of law) if the implication is "necessary": Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 450. Terms will also be implied on an ad hoc basis to cure an omission. The implication of a term as a matter of factual inference in a particular case is governed by the principles in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266. 67 BHPB's putative implied terms fall into the former category. That is to say, BHPB has identified obligations which, on its argument, should be imposed in all shipbroking contracts. The case for the first and second alleged implied terms (imposing obligations on Seawise to pass on information), is certainly a bold one, for which there is no authority and, so far as my researches show, finds no support from textbook writers. And, in my view, no such terms need exist. They are not necessary given there is an implied obligation that the shipbroker must carry out its services with reasonable care and skill (ie the third implied term, conceded by Seawise). Put another way, whatever might be required by the test of "necessity" for the purpose of the implication (and it may not be necessary to link the putative term to the essential functioning of the contract), it is not satisfied here. Seawise's concession is erroneous, in my opinion. 68 This brings me to the allegation that Seawise failed to exercise reasonable care and skill in carrying out its post-fixing services. I observe that the alternative claim for breach of duty has no greater content than the obligation which is owed under the contract, the consequence being that the disposition of one cause of action will dictate the outcome of the other. 69 There is little evidence concerning the type of post-fixing services Seawise was required to perform. BHPB contends in its pleadings that the services related to "the operation and performance of the charterparty", which I take to mean that Seawise had been retained to oversee the charterparty for its duration. But the evidence does not support a finding to this effect. 70 To be sure, the parties anticipated that Seawise would draw up the charterparty and attend to its execution. Andrew Jamieson in Shipbrokers and the Law (1977) at 115 observes that a shipbroker's services do not come to an end once the fixture is made. "In this respect, although not usually included in its own, the shipbroker's first post-fixture service is to draft the [charterparty]." As I have said, that was one of the first steps Ms Hendricks embarked upon. That, however, seems to be part of the work to be performed under a retainer to fix a vessel. 71 Jamieson goes on to say (also at 115) that: "In addition to ensuring that the agreement is properly recorded the shipbroker will maintain an interest in its fulfilment. This is not merely because their remuneration is linked to its performance. A professional service is important in terms of client goodwill and the hope of future business. The nature and extent of post-fixture services provided will vary according to the particular market and the requirements of the individual client." I am not sure what to make of this. If all it means is that the post-fixture services are to be determined by what the parties agreed, including what they are taken to have agreed by reason of local custom, there can be no objection. That is just to say that the parties' obligations are to be found in their contract. If, on the other hand, it means that the broker's obligation exists independently of the contract, I do not agree, although I accept that some services may voluntarily be performed. 72 However that may be, BHPB's case in essence is that Seawise should have picked up the possibility that the Global Hawk had not been chartered by NCI and that the person who had taken possession of the vessel was not a sub-charterer from NCI. This, according to BHPB, would have been evident to a reasonably prudent shipbroker who looked sufficiently closely at the voyage instructions and the full style email. 73 To support this contention BHPB relies upon the evidence of Mr Everton, who has broad-ranging experience in the shipping industry, shipbroking in particular. Mr Everton's central thesis, set out in a written report, is that Seawise failed to act with reasonable skill and care. For the purpose of his report Mr Everton was requested to look at the voyage instructions, Seawise's email of 13 October 2004 to Jacky with a request to provide "your details" and Jacky's response to that email. Mr Everton was asked to state what enquiries a reasonably prudent broker would have made in light of those documents. In his answer Mr Everton referred only to the full style email and said the email "would have caused concern to a reasonable and prudent shipbroker. It was quite clear that the broker had authority from BHPB to conclude a fixture of the Global Hawk with New Century International Leasing Corp and all the correspondence to this point refers to a fixture with these charterers. Negotiations were largely handled by 'Jacky' who had been identified as an employee of or connected with the charterers. And yet in response to a simple request for the full details of the charterer's style 'Jacky' responds with information that they are not New Century International Leasing Corp, but were in fact Nera Shipping Co Ltd. … On receipt of this email I would have expected a reasonable and prudent shipbroker to have replied immediately to 'Jacky' and seek clarification and correction of what should have been obvious with a clear error; identifying the wrong charterer of the vessel". 74 Mr Everton modified his stance considerably during cross-examination by Mr Scotter, who appeared for Seawise. First of all Mr Everton acknowledged that Cosco had made clear to Seawise that "Jacky" had authority to speak on behalf of NCI and that it was reasonable for Seawise to accept what it had been told. This forced Mr Everton into the position that it was not simply the full style email that should have alerted Seawise to a problem about the identity of the charterer but a combination of the voyage instructions which had been sent by Mr Reker and the full style email. Mr Everton said: "I think the combination of these two in the broker's mind would have raised doubts and certainly opened up a line of inquiry, fruitless or not." 75 Having moved away from his initial position Mr Everton acknowledged that the situation Seawise was in was "a very difficult area" and that "perhaps I'm drawing too much out of that [full style email], I don't know". In the end, the best Mr Everton could come up with was that the combination of the voyage instructions and full style email "would have led to [his] suspicions being aroused" and that his "curiosity would have been aroused about who exactly Nera Shipping were". 76 It is evident from Mr Everton's evidence that what he thought a reasonable shipbroker should do in the circumstances was heavily dependent on the shipbroker being familiar with both the voyage instructions and the full style email. In other words, his evidence assumed that Seawise should have considered carefully the contents of the voyage instructions. 77 I cannot accept the premise. Mr Reker sent the voyage instructions to Ms Hendricks for the sole purpose of them being passed on to Inui. Mr Reker did not expect that Seawise would examine them. I accept Ms Hendricks may have read the voyage instructions. She at least must have looked at them to ascertain what they were. But she had no reason (and no obligation) to consider the instructions in any detail and, given her lack of recollection of their contents, I doubt she did anything more than pay cursory attention to the instructions. She cannot be criticised in that regard. Nor can it be said that Seawise (through Ms Hendricks) breached its duty to take care for having failed to look closely at the voyage instructions. That task was beyond its remit. 78 Nor do I accept that Ms Hendricks (or anybody else at Seawise) should have been put on notice of something untoward simply from the contents of the full style email. First, Ms Hendricks sought the information so that she had an after hours contact. In my view there is nothing in the email to alert her to any problem. The yardstick of reasonable practice I would adopt in this case is not the standard articulated by Mr Everton, who conceded that "it is a very difficult area" and that the issue is "grey", but that of Mr Reker, a person with much greater experience than Ms Hendricks, who looked at the voyage instructions and was not alerted to any problem. At various times, Mr Reker said he would not in any event have been concerned by the reference in the voyage instructions to Nera as the charterer. If that would not alert Mr Reker to a problem, it is difficult to see why the reference to Nera in the full style email should put Seawise on notice, particularly in circumstances where Seawise had been advised to deal with Jacky. Put another way, Mr Reker, who had far greater experience with charterparties than Ms Hendricks, carried out his duties with adequate care and diligence and BHPB is not entitled to expect more of Seawise. I rather think Mr Reker is of the same view. He said that Nera could have been a related company to NCI, or could have been a sub-charterer. When asked whether Seawise should have been aware whether there was any such sub-charter, Mr Reker answered "No, because there's another broker there as well, there's Cosco. Cosco may have been aware of it. Seawise, not necessarily, of a fixture as such, no" 79 For the sake of completeness I note that with the finding that Seawise did not breach its retainer and was not negligent, there is no separate basis upon which to make any order for contribution or apportion liability as between Seawise and Cosco as sought by Cosco in its cross-claim. 80 It will be necessary for BHPB to elect which cause of action it will take to judgment and in what currency and amount. The parties should also file written submissions on costs. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein

Counsel for the Applicant: D L Williams SC H N G Austin

Solicitor for the Applicant: Holman Fenwick Willan

Solicitor for the Second Respondent: DLA Phillips Fox