Pacific Asia Express Pty Limited v Renegade Gas Pty Limited

Pacific Asia Express Pty Limited v Renegade Gas Pty Limited - [2010] NSWSC 1188 - NSWSC 2010 case summary — Zoe

[14]

JUDGMENT 1 REIN J: The appellant, Pacific Asia Express Pty Limited ("Pacific"), for whom Mr M McHugh of counsel appears, is a shipping agent and the Australian agent for Pacific International Lines (Pte) Ltd ("PIL"), a Singaporean shipping company. Pacific appeals from a decision of the Local Court of New South Wales. 2 The respondent, Renegade Gas Pty Limited ("Renegade")(which trades as "Supagas (NSW)"), for whom Mr N Bilinsky of counsel appears, imports gas to Australia and arranged to purchase a shipment of argon gas from Malaysia to Australia. Its shipping agent, Salt Global Logistics Pty Limited ("Salt"), arranged the shipment of a "tanktainer" of gas through PIL. For this purpose, Salt sent an empty tanktainer to Port Klang, Malaysia, and the tanktainer was filled in Malaysia. 3 PIL arranged for carriage of the tanktainer on a ship known as the "Northern Victory", and the ship arrived in Brisbane on 7 September 2009 and in Sydney on 10 September, with the tanktainer on board. The tanktainer was unloaded in Sydney, but Pacific, as agent for PIL, refused to permit Salt to collect the tanktainer unless Salt or its client, Renegade, provided security in the amount of $50,000. 4 The reason for Pacific's refusal to release the tanktainer without the provision of security (in the form of a $50,000 bank cheque) was that when the "Northern Victory" arrived in Brisbane, crew members of another ship noticed gas being expelled from the tanktainer, became concerned, and contacted the stevedores, Patrick Stevedores Operations Pty Limited ("Patricks"), who contacted the Queensland Fire and Rescue Service. Action was taken to isolate the tanktainer, remove it from the ship, and have it inspected. The tanktainer was subsequently returned to the ship, and the ship was permitted to continue on its voyage to Sydney. 5 Renegade contends that the tanktainer is designed to vent and that argon is inert and harmless. The Queensland Fire and Rescue Service's report supports these contentions. 6 When Pacific informed Salt on 10 September that it would hold Renegade responsible for any costs under the contract evidenced by the bill of lading, Salt denied that Pacific (or its principal, PIL) had any right to do so. Pacific sought security of USD 50,000 against the costs and potential costs of the incident, which security Salt, on behalf of Renegade, refused to provide. 7 Clauses 15(3) and 17 of the bill of lading (see pages 34-35 of Exhibit A) provide: "15. Shipper's/Merchant's Responsibility (3) The Merchant shall indemnify the Carrier against all claims, loss , damage, fines and expenses arising or resulting from any breach of any of the warranties in Clause 15(2) hereof or from any other cause in connection with the Goods for which the Carrier is not responsible.

[18]

17 The plaintiff then pleaded that it had requested or demanded return of the money, which had been refused. 18 No reference was made in the pleading to the Salt agreement. 19 In its Defence, Pacific denied that it had wrongfully demanded $50,000 or wrongfully refused to return the money, and it asserted that the bank cheque had been handed over pursuant to the Salt agreement. 20 Mr Bilinsky, who appeared for Renegade in the Local Court, provided written submissions to her Honour (see pages 252-261 of Exhibit A), and Mr P Coady of counsel, who appeared for Pacific in the Local Court, also provided written submissions: see pages 245-251 of Exhibit A. 21 The only paragraphs of Mr Bilinsky's submissions in the Local Court which touch on the issue of the Salt agreement are paragraphs 31 and 32 (see page 257 of Exhibit A): "31. It is pleaded (in the alternative) by the defendant that there was agreement and accord between the parties for the payment of the $50,000 for release of the container. It is said that this precludes the plaintiff from arguing that the defendant did not have a legitimate lien. The starting point, however, is the claim made by the defendant that it was entitled to possession of the plaintiff's container. From this it follows ineluctably that if the purported exercise of the lien was unlawful there was no entitlement to possession on the defendant's party and, therefore, no consideration capable of being given in exchange for the $50,000. The lien was not discharged by the plaintiff's payment because there was no legitimate lien. 32. In addition, the contemporaneous correspondence illustrates that the money was ultimately made over in protest and immediately demanded back following the release by the defendant of the plaintiff's container. This, in itself, illustrates the absence of any accord or satisfaction on the plaintiff's part in respect of the payment of money to the defendant." 22 Mr Coady's submissions were directed to the question of whether PIL had a valid lien under the original contract, but he also referred to the Salt agreement and proceeded to deal with matters that were not put by Renegade, that is, whether the agreement was effective and whether it failed for mistake, duress or lack of consideration: see pages 247-251 of Exhibit A. He wrote that "there was a bona fide assertion of a right of lien under contract": see page 250 of Exhibit A. 23 Renegade asserted that all Pacific could claim for a lien was a definite and stated amount which, pursuant to cl 15 of the bill of lading, had to be an amount "payable", which it contended meant "imposing an immediate obligation on the debtor", relying on the Macquarie Dictionary and Yuill v Kidman (1910) 11 CLR 601. Wrongful assertion of a lien, it submitted, relieved the owner from having to tender payment, because the purported lien was a nullity. In Yuill, the High Court had to consider, in the context of an agreement for the sale of a one-eighth interest in a partnership, whether the purchaser was entitled to a deduction from the purchase price because a loss was identified in the partnership accounts, which loss was more than offset by undistributed profits carried forward from previous years. The Court unanimously held that there was no "sum payable by the vendor as his share of the loss or liabilities [of the partnership]…as shown on the balance sheet", so the purchaser was not entitled to a deduction. Griffith CJ said at page 609: "I think that the term "sum payable" must be read in an extended sense as meaning any sum which, if the partnership had been dissolved on that day, would appear, on taking the accounts, to be chargeable to the plaintiff before he could claim repayment of his capital in full. But this is the widest sense that can be given to it."

[20]

Michael Atkins: Why didn't you contact us first? Mario Fernando: We can't be held responsible for what Patricks have done. They have certain procedures. Michael Atkins: Please give me a copy of those procedures. Nicki Cookson: It is normal for the container to vent it is designed to do that. Mario Fernando: It is not our responsibility. I need authorisation from Head Office to release the container. Two other vessels stopped working because of all this. You will be liable for any third party claim. Nicki Cookson: There was no requirement to do what you did. Mario Fernando: That was Patricks procedure. Nicki Cookson: Why didn't you contact us? Mario Fernando: Patricks did it. They contacted our office in Brisbane, who contacted our office in Sydney and then we contacted you." 25 In the judgment, O'Shane LCM referred to the position as at 11 September and said: "[7] It is clear on the defendant's own evidence at that point in the course of events, that there was [no] basis which founded such a demand by it. … [9] The only basis which the defendant puts forward as entitlement to make the claims which it did of the plaintiff is cl. 17 of the Bill of Lading. Notwithstanding the terms of that clause, the Defendants failed to otherwise inform the [plaintiff] of the grounds for their demands, and of greater concern, have failed to notify the Court. [10] That much is made clear in their letter dated 16 September 2009, addressed to the plaintiff's solicitors. In that correspondence it is clear that the defendant foreshadowed that there could be further charges incurred in relation to the incident that had occurred some nine days previously. But there is nothing in that apprehension which gave rise to the defendant asserting a right to exercise the lien the subject of cl. 17 of the [bill of lading], nor to their continued retention of the plaintiff's goods." 26 It is clear from the evidence that Pacific was asserting to Renegade that part of its reason for seeking security was that in addition to the prospective claim by Patricks, there was the prospect of claims from vessels (one of them being the "Northern Victory") affected by the temporary cessation of loading and unloading as a result of the incident: see pages 18-19, 48, 99 and 190-191 of Exhibit A. There was also the clear prospect of a bill from the Queensland Fire and Rescue Service being added to the amount claimed by Patricks: see pages 18-19 of Exhibit A. It is not apparent why O'Shane LCM stated that Pacific had failed to inform Renegade or the Court of the grounds for its demands. 27 Her Honour's judgment does not mention the Salt agreement and it therefore does not address a significant aspect of Pacific's defence, namely that Pacific and Salt had reached an agreement in relation to the claim to a lien. Mr Bilinsky contended that her Honour must be taken, by the reference in the reasons to bad faith, to have found that there was no basis for any claim beyond $15,639.75 plus GST (that is, $17,203.73) and hence that there was no consideration for the Salt agreement. Mr Bilinsky relied on Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 271 per Mahoney JA, Housing Commission of NSW v Tatmar Pastoral Co. Pty Ltd [1983] 3 NSWLR 378 at 386 per Mahoney JA and Selvarayagam v University of the West Indies [1983] 1 WLR 585 at 588, which hold that a judgment need not contain express findings in respect of every fact and that "It will be sufficient, if the inference as to what is found is appropriately clear": see Tatmar Pastoral at 386 per Mahoney JA. 28 The decisions referred to in the preceding paragraph focused on factual findings, not the reasoning process for rejecting a defence (or a claim). In my view, if O'Shane LCM intended to treat the Salt agreement as of no effect, it was necessary to identify the agreement and explain why it was ineffective, and further, to explain how the existence of a claim for $17,203.73 was disregarded in determining that there was no consideration. The absence of any such statement of reasoning leads me to have considerable doubt as to whether her Honour was cognisant of the Salt agreement and its significance, and constitutes an error of law: see Reitano v Commissioner of Police [2004] NSWCA 99. The effect of that error is that the judgment should be set aside. The matter not addressed is an important one, and I do not accept the respondent's contention that it is clear why her Honour made the decision she did.

[25]

36 In Thaina Town, which involved an appeal from a decision of the Land and Environment Court, Spigelman CJ, in a judgment with which Mason P and Beazley and Ipp JJA agreed, said at page 252 ([103]): "This Court must be concerned that the course of administration of justice in this State does not impose unnecessary cost burdens on parties by adopting a narrow interpretation of statutory powers conferred upon the Court to ensure the just and efficient administration of justice. Where no new findings of primary fact are required to be made, this Court should exercise a power conferred upon it in wide terms so as to ensure that the cost of legal disputation is minimised and thereby apply the guiding principle in s 56 of the Civil Procedure Act 2005 to the exercise of powers conferred by an Act other than that Act or by Rules of Court, so as to facilitate the just, quick and cheap resolution of the issues in dispute in civil proceedings." 37 The issue in Thaina Town was whether the power given to the Supreme Court to "make such other order in relation to the appeal as seems fit" (the words of s 57(2)(b) of the Land and Environment Court Act 1979 (NSW)) included a power to award costs pursuant to s 69(2) of that Act. 38 I do not think that what was said at [103] of Thaina Town (see also [102]) encourages the view that this Court could, on the basis of s 41 of the Local Court Act, proceed to determine questions of fact that have not been determined in the Court below (that is, whether or not Pacific had a bona fide belief that it was entitled to assert a lien). Not only is the legislative framework different, the Chief Justice's view was qualified by "Where no new findings of primary fact are required to be made". 39 Having further raised this issue with counsel, Mr McHugh drew attention to s 75A of the Supreme Court Act 1970 (NSW), which is relevantly in the following terms: "(1) Subject to subsections (2) and (3), this section applies to an appeal to the Court and to an appeal in proceedings in the Court. … (4) This section has effect subject to any Act. (5) Where the decision or other matter under appeal has been given after a hearing, the appeal shall be by way of rehearing. (6) The Court shall have the powers and duties of the court, body or other person from whom the appeal is brought, including powers and duties concerning: (a) amendment, (b) the drawing of inferences and the making of findings of fact, and (c) the assessment of damages and other money sums. (7) The Court may receive further evidence. (8) Notwithstanding subsection (7), where the appeal is from a judgment after a trial or hearing on the merits, the Court shall not receive further evidence except on special grounds. (9) Subsection (8) does not apply to evidence concerning matters occurring after the trial or hearing. (10) The Court may make any finding or assessment, give any judgment, make any order or give any direction which ought to have been given or made or which the nature of the case requires." Mr McHugh submitted, and Mr Bilinsky did not disagree, that s 75A permits this Court to proceed to make findings of fact and re-determine the matter. 40 I should note too that rule 50.16 of the Uniform Civil Procedure Rules 2005 (NSW) also deals with this topic, and there have been a number of cases in which reliance has been placed on it in order to re-determine matters on appeal from the Local Court: see Lee v Surry Hills Mutual Loan Club [2007] NSWSC 650, Kells v Waters [2007] NSWSC 885 and BDS Recruit v Parris & Shah Pty Ltd [2008] NSWSC 614.

[27]

Was the Salt agreement effective? 42 There are a number of factual matters which would be relevant to determining whether Pacific was entitled to assert a lien: (1) was the carrier "not responsible" for the incident within the meaning of cl 15(3) of the bill of lading; and (2) the answer to (1) may depend on: (a) whether the stevedores made incorrect assumptions about the tanktainer and whether the carrier is liable for any error of the stevedores; (b) whether the description of the tanktainer as "empty" and its having been stowed in an unsuitable position were the responsibility of the carrier, and whether those two matters had a causative impact; (c) whether Pacific had an obligation to advise the stevedores that their concerns about the tanktainer venting were unfounded; and (d) whether the public authority's response was a correct response to the problem, and if it was not, what flows from that. 43 Further, there are questions of law as to: (1) whether authorities dealing with repairer's liens which hold that a lien can only be for a specific, identified amount of money (see Albermarle Supply Company Limited v Hind and Company [1928] 1 KB 307, Automobile & General Co. Ltd v Cowley-Cooper (1948) 49 SR (NSW) 31 at 137 and White v Bini [2003] FCA 669) are applicable to a contractual lien under a bill of lading; (2) whether a lien can be claimed for an estimated amount where the event giving rise to the claimed lien has already occurred; (3) whether Pacific imperilled its right to claim a lien by not advising Renegade of such amounts as it had already been notified; and (4) whether Yuill is relevant to Renegade's argument that there was no amount "payable". 44 There is a question as to whether Yuill assists in determining what "payable" means in the very different context of a bill of lading. There is authority that no lien can be claimed in respect of freight not yet earned (see Mutual Export Corporation v Asia Australian Express Ltd ('The Lakatoi Express") (1990) 19 NSWLR 285), but here the claim is in respect of costs arising out of an incident that had already occurred. 45 The question that I have to determine is not whether Pacific/PIL would ultimately have been successful on its claim for recompense, nor whether Pacific was entitled to make a claim for a lien, but rather whether the Salt agreement is an effective answer to Renegade's claim for return of the bank cheque.

[31]

52 Where parties have resolved their differences, consideration will be established where the claimant had a bona fide belief that the other party was liable (see Butler v Fairclough (1917) 23 CLR 78) or that the claim was "a serious claim honestly made": see Miles v New Zealand Alford Estate Co. (1886) 32 ChD 266 at 283 per Cotton LJ, cited in J W Carter, E Peden and G J Tolhurst, Contract Law in Australia (5th ed, 2007), LexisNexis Butterworths, Sydney at [6-52]. Courts, as a matter of public policy, encourage the resolution of disputes, whether prior to the commencement of proceedings or before the hearing. 53 So far as the $17,202.75 is concerned, Pacific had already been advised of that amount. It might be said that the $50,000 bank cheque was an excessive amount of security, but I think that it is important to note that it was not known if the owners of the two vessels affected by the incident would make a claim or how much the Queensland Fire and Rescue Service would charge, and the agreement as struck required: (1) Pacific not to bank the cheque without providing Renegade with the opportunity of paying particular amounts claimed by third parties; (2) Pacific to provide details of all claims received; (3) Pacific to return the cheque on the expiry of six months should all claims received and notified be paid; and (4) Pacific to refund the balance of monies paid after deduction of all claims received within six months after the incident. 54 The decision to enter into the Salt agreement was taken with the benefit of legal advice. It would be inappropriate, I think, for lawyers to recommend entry into a document that purported to record an agreement for which there was no consideration. 55 Pacific was not obtaining simply a bank cheque for $50,000, it was receiving security in the form of $50,000 to which conditions were attached. It would have been fairer if one of the conditions were that all of the money would be refunded if it should be established that the removal of the vessel was caused by error on the part of PIL or its agents, but that is not what was negotiated. 56 The issues to which I have referred earlier suggest that Pacific would have faced a number of hurdles in seeking to recover money from Renegade in any contested hearing, and similarly in relation to maintaining a lien pending the hearing of any such proceedings, but I do not think that the claim to recover money or to the lien was without any legitimate basis so as to establish a lack of good faith in seeking security in an amount of $50,000. 57 In my view, there was sufficient consideration for the compromise, and I do not have to determine whether it was adequate consideration. It follows that there should be judgment for the appellant, Pacific. 58 The appellant will have to account to the respondent in relation to the balance beyond the $18,003.68, which, I understand it is accepted, was paid by Pacific to Patricks, including the Queensland Fire and Rescue Service, but that is a matter between the parties contractually.

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