Hi-Fert Pty Ltd v United Shipping Adriatic Inc & Ors [1998] FCA 1671

EX TEMPORE REASONS FOR JUDGMENT HIS HONOUR: I have before me two motions brought by United Shipping Adriatic Inc ("United") in proceedings NG 1082 of 1997 and NG 1084 of 1997. In NG 1082 of 1997, Hi-Fert Pty Limited ("Hi-Fert") seeks damages against United and against Marine Cargo Care Pty Limited ("Marine"). The claims arise out of a contract of affreightment between Hyundai Merchant Marine Co. Limited ("Hyundai") and Hi-Fert for the transportation to Australia from Qatar of a cargo of urea. When the cargo arrived in Adelaide, the Australian Quarantine Inspection Service ("AQIS") forbade its discharge because the vessel in which it had been carried had, in recent times, carried wheat which had an origin in North America. There was a concern that a disease known as karnal bunt may have affected the grain, remains of which were allegedly found in the holds of the vessel. United is the owner of the vessel and entered into a time charter with Rondeau Bulk AG ("Rondeau"), which in turn entered into a sub-charter with Hyundai. The other defendant in proceedings NG 1082 of 1997, Marine, was retained by Hi-Fert to inspect the vessel prior to loading. Hi-Fert seeks damages said to be the loss suffered by reason of having to re-sell part of the cargo to Thailand at a substantially reduced price from the value which the cargo would have had, had it been discharged in Australia. Marine has filed a cross-claim in proceedings NG 1082 of 1997 by which it joins as cross-defendants United, Hyundai, Rondeau and Ante Svilokos, the master of the vessel. The cross-claim has been served and Hyundai has now appeared. In proceedings NG 1084 of 1997, Hi-Fert has made allegations against Hyundai of conduct in contravention of section 52 of the Trade Practices Act 1974 (Cth), of negligence and breach of the contract of affreightment. The damages claimed against Hyundai are the same as those claimed against United in proceedings NG 1082 of 1997. However, at this stage the application in NG 1084 of 1997 has not been served on Hyundai. In the motion in NG 1084 of 1997, United seeks to be joined as a defendant and seeks an order that those proceedings be consolidated with NG 1082 of 1997. In NG 1082 of 1997, the reciprocal order is sought for consolidation. In both proceedings, an order is sought that an amended statement of claim and application in the consolidated proceedings be served. The orders are not opposed by Hi-Fert, nor are they consented to or supported. Counsel for Hyundai and for Marine have been in Court during the course of the argument and neither has sought to put arguments either for or against the motions. One of the reasons suggested by United for the somewhat unusual course that has been adopted by Hi-Fert is that Hi-Fert desired to achieve a tactical advantage by not having Hyundai as a party to the proceedings against the owner of the vessel. Reference was made to the decision of Tamberlin J in Hi-Fert Pty Limited & Anor v Kiukiang Maritime Carriers Inc & Anor (1996) 71 FCR 172, which is presently the subject of an appeal to the Full Court. I have heard from the solicitor for Hi-Fert that the reason for commencing separate proceedings was to avoid complication of the claims against United and Marine, which were thought to have greater substance than the claim against Hyundai. The proceedings were commenced in order to avoid the running of the time bar which would arise under the Hague-Visby rules, which are said to be applicable to the transaction. Evidence was called to refute any suggestion that there was conduct on the part of Hi-Fert which constituted an abuse of the Court's process. I am prepared to accept that the decision to commence separate proceedings was one taken in good faith and did not constitute an abuse of process. It is perfectly permissible, as the rules contemplate, for proceedings to be commenced in order to avoid the running of a time bar but to delay service and prosecution of the proceedings for the time being. The applications by United are based on the proposition that, if there are likely to be claims by Hi-Fert against Hyundai, it would be an undesirable use of the Court's time and resources for those claims to be heard separately from the claims against United and Marine, particularly in circumstances where Hyundai has been joined as a cross-defendant in proceedings NG 1082 of 1997. While Hi-Fert's solicitor was not able to say that he had instructions to prosecute the proceedings against Hyundai, he did not say that the proceedings would not be prosecuted. In the circumstances, it is desirable that the proceedings be brought together. If Hi-Fert intends to prosecute the proceedings against Hyundai it should be required to do so in conjunction with the prosecution of the proceedings against United and Marine. Section 22 of the Federal Court of Australia Act 1976 (Cth) provides as follows: The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided. Order 6, rule 2 of the Federal Court Rules provides relevantly as follows: Two or more persons may be joined as … respondents in any proceeding - (a) where - (i) if a separate proceeding were brought by or against each of them, … some common question of law or of fact would arise in all of the proceedings; and (ii) all rights to relief claimed in the proceeding … are in respect of or arise out of the same transaction or series of transactions; Finally, Order 29, rule 5 provides: Where several proceedings are pending … then, if it appears to the Court: (a) that some common question of law or fact arises in both or all of them; (b) that the rights to relief claimed therein are in respect of, or arise out of, the same transaction or series of transactions; ……………………………… the Court may order those proceedings be consolidated… It is apparent from the very brief summary above that precisely the same questions could arise in the two sets of proceedings. In any event, it is clear that the claims made in the two sets of proceedings arise out of the same transaction, namely the contract of affreightment for the carriage of urea from the Middle East to Australia. In the circumstances, I am satisfied that there ought not to be separate proceedings conducted in the Court against Hyundai on the one hand and against Marine and United on the other. It is, therefore, appropriate that orders be made to ensure that the proceedings be consolidated and be conducted as one proceeding. There are two possible ways in which that might be achieved. One would be to direct that Hyundai be joined as a defendant in proceedings NG 1082 of 1997. A possible difficulty with that course is that the time bar, which might affect the claim against Hyundai, will have been running. However, it ceased to run upon the commencement of proceedings NG 1084 of 1997. It has not been suggested that those proceedings are out of time for service. Accordingly, the appropriate course, although it is slightly more complex, is that which has been suggested by United. That is, United should be joined as a defendant in proceedings NG 1084 of 1997 and the two proceedings should then be consolidated. It is unusual to require that an applicant or plaintiff serve an application and statement of claim in circumstances where the applicant has itself not yet done so. However, according to the evidence which I have heard from Hi-Fert's solicitor, one reason why the proceedings would not have been served is the cost which might be involved in service out of Australia and the exposure to costs which the plaintiff may have if it prosecutes proceedings against a party against whom it might ultimately be unsuccessful. Nevertheless, as I have said, there has been no opposition to the making of the orders from Hi-Fert and, accordingly, it is appropriate that the orders sought in the notice of motion be made. The question of costs can be appropriately dealt with when a costs order is ultimately made. If Hi-Fert, having served Hyundai, does not actively prosecute the claim against Hyundai, it may nevertheless be exposed to an order for costs. However, to the extent that Hyundai is here because of the application of United, it may well be appropriate to give consideration to making a Bullock order or other similar order in the event that ultimately the proceedings against Hyundai are unsuccessful. That, however, is a matter which, it seems to me, I should not endeavour to resolve at this stage. It is something which the parties should bear in mind if it appears that Hi-Fert does not ultimately pursue the claim against Hyundai. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett