Oldendorff Carriers GmbH & Co. KG v Tharmalingam

The respondents' submissions 13 In substance, the respondents' submissions comprised two substantive arguments that they had put unsuccessfully to the referees: first, the existence of a settlement agreement, dated 21 December 2015, between Oldendorff and Vkandasamy Arullkumar trading as Vahini Enterprises with whom the respondents had contracted in India for the transport and sale of the coal cargo the subject of the charterparty and, secondly, over the course of the dispute, Oldendorff had claimed four different amounts as its damages, ranging between USD1,385,883 and USD2,104,000. The former was the amount of a London arbitration award given on 11 April 2018 in an arbitration under the arbitration clause in the charterparty between Oldendorff and Battelle.

Consideration 14 The settlement agreement provided that, in consideration of Vahini paying Oldendorff USD2,104,000 in full and final satisfaction of Oldendorff's claims for loss or damage arising from the failure of the charterparty between it and Battelle, Oldendorff agreed to release and discharge both Vahini and Battelle (but, I interpolate, not Mr Tharmalingam) from all actions and claims which Oldendorff had or, at any time in the future, might have against Vahini and or Battelle arising from the charterparty and or the failure of both Battelle and Vahini to enable it to be performed. 15 The referees found that the settlement agreement provided for a release only in the event that Vahini paid the consideration of USD2,104,000. They found that Vahini had not paid that sum and, therefore, the settlement agreement did not operate in accordance with its terms to create any release or discharge of any possible liabilities of Battelle or anyone else. 16 The referees considered in detail the various claims which Oldendorff had made against the respondents over time, including the claims the subject of the arbitration award and in the evidence of Oldendorff's senior chartering manager, Jesper Andersen, in an affidavit he made that was before them. In the event, the referees accepted some of Mr Andersen's evidence and rejected other parts that asserted a higher monetary value than that at which they arrived. 17 The report engaged in a careful and considered examination of the evidence in accordance with the terms of the reference. The referees' analysis reflected an appreciation of the difference between Oldendorff's contractual entitlement to damages under the charterparty as reflected in what the arbitration award had determined, and the quantum of damages under s 236 of the Australian Consumer Law, the assessment of which can proceed on different bases. 18 In arriving at their opinion of the quantum that Oldendorff was entitled to recover, the referees had regard to evidence of Mr Andersen that they summarised. This included his method of calculating Oldendorff's loss as a result of entering into the charterparty. This comprised the expenses of the voyage and other running costs, including about USD320,000 for bunker fuel consumed on her voyage to Newcastle, and standing by there ready to load, while she remained there, until 1 December 2015, to arrive at a total of USD1,400,898.95. Oldendorff made this non-contractual claim based on its pleaded reliance on the respondents' repeated representations they would be in a position to deliver a cargo of coal to the ship for carriage to her Indian destination, if Oldendorff allowed the charterparty to remain on foot. 19 The referees also considered an additional claim in Mr Andersen's affidavit for Oldendorff's loss of opportunity to employ the vessel on other charters that she could have performed over the period during which she was ready and waiting at Newcastle to perform the charterparty with Battelle. They accepted Mr Andersen's evidence that, immediately following the termination of charterparty on or about 1 December 2015, Oldendorff entered into a subsequent charterparty for the ship to sail laden, but at a loss, to a location from where she could be more profitably chartered in the future. 20 Mr Andersen had explained that, originally, a similar loss-making situation would have arisen under the charterparty with Battelle. That was because, he said, Oldendorff was expecting to make a loss on that voyage but was prepared to do so on the basis that the ship would have been employed and earnt freight to offset some of her running costs while she sailed to a location where Oldendorff considered she would be likely to be fixed on a charter with more profitable freight rates. 21 The referees' report accepted Mr Andersen's evidence that, had Oldendorff entered into a similar charter from Newcastle to Krishnapatnam on 28 August 2015, a week after the date of the charterparty with Battelle, the ship would have arrived in Newcastle, loaded and sailed to her port of discharge by about 3 October 2015. He calculated that had this occurred, Oldendorff would have incurred a loss of USD119,340. Importantly, Mr Andersen said that, at the time, based on then prevailing international freight rates, it was likely that Oldendorff could have fixed a voyage for the ship to sail from Krishnapatnam to Brazil to lift a cargo for delivery to Kaohsiung in Taiwan, during the period between 8 October and 6 December 2015, that would have resulted in a profit of USD325,197. The referees accepted Mr Andersen's calculation that, had those two alternative charters been made, Oldendorff would have earned a net profit from the use of its ship of USD205,797 (being the difference between the expected loss on the first leg of that hypothetical set of voyages and the profit on the second). 22 The referees concluded that this was a claim for the loss of an opportunity that ought be assessed in accordance with well-established principles. They found that the value of Oldendorff's loss of opportunity to employ the ship on other charters in the period during which it had kept the charterparty with Battelle on foot in reliance on the respondents' representations, should be assessed at USD154,347.75, being 75% of Mr Andersen's calculation of net profit. 23 The referees found that Oldendorff could recover a total of USD1,559,246.75 under s 236 of the Australian Consumer Law, comprised of its direct costs of the ship sailing to, and keeping her until 1 December 2015, at Newcastle of USD1,404,898.95, together with the value of its loss of opportunity to employ her on other voyages of USD154,347.75. 24 I have considered the respondents' statement made under r 28.65(7). That did not identify any alternate means of calculating damages or substantive flaws with any of Mr Andersen's analysis. 25 The referees appear to have analysed the material before them thoroughly. It was for the referees to make the findings of fact in the mode of trial they were conducting. There was material before them to enable them to come to those findings. I see no reason why I should not adopt their assessment of damages.

Costs 26 The respondents also contested, before the referees, the amount of costs (of $46,845.50) that Oldendorff claimed. They did not make any submissions on costs to me. The referees had regard to the respondents' submissions on costs, and, indeed, substantially reduced the claimed amount to their assessment of $32,678. 27 The referees were persons uniquely well placed to make assessments of the amount of costs to which parties are entitled, having regard to their role as Registrars of the Court with responsibility for taxing bills of costs. The referees' assessment of the amount of costs appears to be reasonable and I will adopt it.

Interest 28 Oldendorff asked the referees to award it interest. However, they found that it had not provided any basis on which its claim for interest in the originating application should be calculated, and they left the quantification and assessment of any interest to the Court. 29 Oldendorff initially argued that the following prejudgment interest rates, based on the prejudgment interest rate applicable to judgments in Australian dollars, be applied in the following periods: Period Rate p.a. 1 December 2015 - 30 June 2016 6% 1 July 2016 - 31 December 2016 5.75% 1 January 2017 - 30 June 2019 5.5% 1 July 2019 - 12 September 2019 5.25%

30 In my opinion, that was not an appropriate basis on which to assess the compensatory nature of an award of prejudgment interest in respect of a foreign currency. As I said in Suzlon Energy Ltd v Bangad (No 2) [2014] FCA 1173 at [7]: There is, and for some years past has been, a well-known and large interest rate differential between cash rates in Australia as compared with those in the United States and the Eurozone for their respective currencies. Accordingly, the compensatory purpose of an award of pre-judgment interest under s 51A and its analogues would not necessarily be achieved by applying the 4% uplift from the Australian cash rate to the calculation of pre-judgment interest on judgment sums in foreign currencies. 31 Prejudgment interest is intended to be compensatory and is not contractual. Accordingly, during the hearing on 14 November 2019, I required Oldendorff to establish, by evidence, a basis to arrive at a relevant rate of interest on the United States (US) dollar sums to which it is entitled. I granted leave to Oldendorff to file and serve any affidavit and written submissions, limited to two pages, to support an interest rate on the judgment in US dollar, that I would determine on the papers.

The calculation of interest 32 On 28 November 2019, Kirsten James, a solicitor for the applicant, filed an affidavit in which she gave evidence that in the period between December 2015 and October 2019, the average difference between the official maximum target (interest) rate of the Federal Reserve Bank of New York and the Federal Reserve's data recording the weekly average majority prime loan rates was 3.106%. Ms James added the average differential of 3.106% to the Federal Reserve's official rate for each month in the period for which Oldendorff was entitled to prejudgment interest to arrive at a total of USD269,218.21 up to 31 October 2019. Since the Federal Reserve had not published data for the prime rate in November 2019, Ms James calculated interest of USD1,943.72 between 1 November 2019 and 28 November 2019 using only the official rate for November 2019 of 1.63%, making a total of prejudgment interest to then USD271,161.93. 33 I am satisfied that the average differential which Ms James calculated was an appropriate figure, when added to the official rate, to use to arrive at a rate of interest that can be applied to achieve a sum of prejudgment interest that is compensatory and consistent with the purpose of such an award within the meaning of s 51A of the Federal Court of Act.

Conclusion 34 I will order that judgment be entered as at 28 November 2019 using the sum for prejudgment interest of USD271,161.93 and otherwise giving effect to the referees' opinion in their report as to the amounts of the judgment sum and costs. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.