Pacific Carriers -v- Banque Nationale de Paris [2000] NSWSC 722

Supreme Court of NSW|2000-07-26|Before: Hunter J

CITATION : Pacific Carriers -v- Banque Nationale de Paris [2000] NSWSC 722 CURRENT JURISDICTION: Equity Division Admiralty List FILE NUMBER(S) : SC 08/99 HEARING DATE(S) : 19.6.00, 20.6.00, 21.6.00, 22.6.00, 26.6.00, 27.6.00, 28.6.00, 29.6.00, 4.7.00 JUDGMENT DATE : 26 July 2000

PARTIES : Pacific Carriers Limited -v- Banque Nationale de Paris & New England Agricultural Traders Pty Limited JUDGMENT OF : Hunter J

Plaintiff: A Street SC & G Nell First Defendant: P King & M Pesman COUNSEL : Second Defendant: In person Cross Defendant on Second Cross Claim : F Douglas QC & G Rich Plaintiff: Norton White SOLICITORS : First Defendant: Corrs Chambers Westgarth Second Defendant: In person Cross Defendant on Second Cross Claim: Phillips Fox CATCHWORDS : Practice and procedure - adjournment the consequence of default of parties' - liability for costs of cross defendants occasioned by adjournment. DECISION : On application of first defendant proceedings adjourned to 11 December 2000. The plaintiff and first defendant jointly and severally liable for the cross defendant's costs occasioned by and thrown away by the adjournment. Leave to the plaintiff to amend. Plaintiff to pay the parties' costs occasioned by or incidential to the amendment. First defendant to pay the parties' costs of its application for leave to amend.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

08/99 PACIFIC CARRIERS LIMITED -V- BANQUE NATIONALE DE PARIS & NEW ENGLAND AGRICULTURAL TRADERS PTY LIMITED

1 On 4 July 2000 I adjourned this matter to 11 December 2000 on the application of the first defendant, an application, which, eventually, was not opposed by the plaintiff, although opposed by Swiss Singapore Overseas Enterprises (Swiss) and New England Agricultural Traders Pty Ltd (NEAT). In addition to the application for adjournment, the first defendant sought leave to amend its defence. That application was opposed by the plaintiff. The bases of the application for adjournment were twofold: namely, to meet the convenience of counsel for the first defendant and second, on the ground of prejudice to it occasioned by the late filing of statements of evidence as to quantum upon which the plaintiff seeks to rely, some of which, it is said, goes outside the matters pleaded. 2 I think it is clear from the way in which the plaintiff and the first defendant addressed the quantum issue that an adjournment should be granted in order to ensure that the quantum issue is properly addressed. 3 In considering the question of an adjournment I think no significance should be attached to the plaintiff's consent to the first defendant's application. That consent was initially generated as a response to the application based upon the unavailability of counsel for the first defendant after the second week of hearing of a case which, at the time it was set down for hearing, was estimated as a four-day case. That consent was initially conditional upon the basis that the first defendant would not take advantage of the adjournment to file further statements of evidence upon which it sought to rely, a condition which I was not prepared to accept. 4 Although there appears to have been some confusion over another aspect, it seems that the consent was conditional upon the resumption of hearing taking place this year. In any event, having regard to the views I have formed as to the real need for an adjournment, I think the plaintiff's consent to the application is of no significance. 5 In order to understand the unsatisfactory state of evidence in relation to quantum, it is useful to follow the way in which the Court sought to supervise the parties' preparation for hearing and to take into account communications between the solicitors for the plaintiff and the first defendant relating to the filing of statements of evidence upon which the parties proposed to rely. 6 The first direction for statements was given on 30 July 1999 and that required the plaintiff to file and serve its statements by 27 August 1999. On 29 October 1999 that time was extended to 19 November 1999. At the same time the Court fixed the hearing of the matter for 19 June 2000. There appears to have been no further directions as to statements of evidence prior to 5 May 2000 when a direction was given requiring the parties to file any statements by way of reply by 26 May 2000. At that time the only evidence as to quantum that had been filed and served by the plaintiff was the statement of Lam Wing Hong of 26 January 2000 (the Lam statement), the legal officer of the plaintiff. For a better understanding of the Lam statement, it is useful to outline the issues between the plaintiff and the first defendant. 7 The proceedings by the plaintiff are founded upon the execution by officers of the first defendant of two letters of indemnity dated respectively 28 January and 19 February 1999, provided by NEAT, as shippers, to "owners of M/V Nelson" (the Nelson) for the delivery of grain cargo of the Nelson to an entity known as Royal Trading Company (Royal) without production of the original bills of lading. 8 The cargo had been shipped on the Nelson from Australia to Calcutta under a voyage charter between the plaintiff and NEAT dated 8 December 1998 (the voyage charter). The plaintiff, in turn, was the charterer under a time charter of 9 December 1998 (the time charter), with the Nelson's owner, Bolton Navigation Inc (Bolton). By their terms, the letters of indemnity indemnified the plaintiff in respect of any liability it might sustain by reason of delivering the cargo to Royal without the title documents. 9 The capacity in which the officers of the first defendant executed the letters of indemnity on behalf of the first defendant is in dispute. The first defendant asserts that the execution was limited to verification of the signatures of the NEAT officers who executed the letters of indemnity on behalf of NEAT, whereas the plaintiff asserts that they were executed by the first defendant as a principal. 10 The plaintiff sues the first defendant on the indemnities in addition to alternative related causes of action for damages arising out of the arrest of the Nelson at the discharge port at the instance of Swiss, as the party claiming title to the cargo, the discharge of which had commenced without presentation of the original bills of lading. 11 The plaintiff seeks indemnity in relation to the value of the cargo so discharged and in respect of liabilities, costs and expenses incurred in several foreign proceedings: one in India relating to the arrest of the Nelson at the instance of Swiss (the Indian proceedings) : another in South Africa brought by Bolton for the arrest of another of the plaintiff's vessels (the South African proceedings): proceedings in Singapore by the plaintiff brought against NEAT (the Singapore proceedings): arbitration proceedings in London , the principal one being by Swiss against Bolton in respect of which the plaintiff has undertaken the Bolton defence pursuant to a settlement of disputes reached between the plaintiff and Bolton (the London arbitration). 12 The manner in which those claims were advanced in the amended summons by the plaintiff and the way in which some of them were addressed in the Lam statement is not free from ambiguity. 13 The specific relief claimed by the plaintiff consisted of the following:

(a) several declaratory orders, essentially, seeking a declaration of the liability of the first defendant as a principal under the letters of indemnity (b) similarly based claims for declaratory orders pursuant to the provisions of the Trade Practices Act 1974 (Cth)

(c) Damages 14 In its contentions the plaintiff particularised its damage as follows: "(a) liability to [Bolton] for the ...arrest of the ... vessel; (b) liability in respect of damages sustained by cargo interests by reason of the delivery of cargo without surrender of the original bills of lading."

It will be seen that the particulars were no particulars at all and, so far as the evidence goes, were not the subject of any request for further particulars. 15 The Lam statement traces the history of the events leading up to the arrest of the Nelson in terms which, in substance, are not in dispute. A summary of the Lam statement follows. 16 Pars 15-20 - evidenced the notice of motion and the order for arrest of the plaintiff's vessel in the South African proceedings: the steps taken by the plaintiff to secure the release of the vessel in South Africa and the release of the Nelson from arrest: the provision of a letter of undertaking dated 24 April 1999, by SKULD (the P&I Club) in favour of Bolton and an agreement between Bolton and the plaintiff dated 12 May 1999. 17 Under the letter of undertaking of 24 April 1999, the P & I Club irrevocably undertook to pay Bolton on demand any sums: "awarded...by a competent Court....to be due to [Bolton] or which may be agreed to be due to you in respect of ....

Claims for an indemnity or damages, plus interest and costs... connected with the discharge of cargo by [the] Nelson at the port of Calcutta during January -March 1999, in the sums of:

(a) USD 3,219,725.00 ... in respect of principal claims; and

Claims for payment of charterhire due up to and including 22nd April 1999 pursuant to the [time] charterparty....in the sums of

Claims for [Bolton's] costs in London arbitration proceedings...in the sum of GBP 50,000...

Claims in respect of [Bolton's] costs in English High Court proceedings...in the sum of GBP 50,000..." The proceedings referred to in par 4 were High Court proceedings in respect of the claims referred to in par 1 and arbitration proceedings in respect of the claims referred to in par 2. The undertaking was noted as having been given "without admission of liability and without prejudice to the rights ... of the plaintiff." 18 The agreement of 12 May 1999 provided for payment by the plaintiff to Bolton of "US $250,000 on account of charter hire arrears up to 23rd May 1999 [and of] charter hire while the vessel [remained] under arrest"... "with a full reservation of [Pacific's] rights against [Bolton]". The plaintiff also undertook to provide security in the Indian proceedings to procure the Nelson's release. 19 To secure the release of the Nelson, the plaintiff provided a bank guarantee in favour of Swiss in the sum of US $3,200,000. 20 By a further agreement dated 24 June 1999 between the plaintiff and Bolton, the plaintiff agreed to:

(a) pay Bolton $US 50,000 "by way of partial reimbursement of [Bolton's] legal cost and expenses... incurred ... in connection with the arrest of the [Nelson] in Calcutta" : the plaintiff reserving "the right to challenge the charges"

(b) undertake Bolton's defence of the London arbitration and to satisfy any order for costs against Bolton.

The agreement noted the commencement of the London arbitration by Swiss and the latter's agreement to a stay of the Indian proceedings. 21 It was not expressly stated in the Lam statement that the plaintiff seeks to be indemnified in respect of any or all of the matters so referred to in those paragraphs. That is left to be inferred, notwithstanding the reservation of rights by the plaintiff under the agreements and under the letter of undertaking. 22 Par 21- evidenced a hire statement in the sum of $US 13,071.65, described as "outstanding hire" paid by the plaintiff to Bolton. 23 Par 22 - set out twenty three items, described as "Charter Hire and Expenses during Arrest", which identified expenses incurred by the plaintiff, either in the form of a lump sum or on a per diem basis, without any supporting particulars or documents. 24 Par 23 - evidenced a handling commission incurred by the plaintiff in the provision of the bank guarantee referred to above. 25 Pars 24 and 25 - evidenced costs incurred in relation to the Indian proceedings, including a payment of $US 50,000 "by way of partial reimbursement" of Bolton's costs. 26 Pars 26 and 27- evidenced costs incurred in relation to the South African proceedings and noted that the legal costs of Bolton had not been ascertained at the time of the Lam statement. 27 Pars 28 and 29 - evidenced legal costs incurred to 23 August 1999 in relation to the London arbitration noting that the hearing of that matter was to "take place sometime in the second half of 2000". 28 The Lam statement is unsatisfactory in a number of respects, not the least of which is the absence of documentation to substantiate claims and the absence of a clear statement of what is claimed: particularly those other than the expenses set out in par 22. 29 Still, the inference was clear enough that claims in relation to the subject matter of the Lam statement were being advanced by the plaintiff. It is not disputed that the first defendant took no steps to obtain further details of those claims and failed to retain an expert to evaluate any of those areas of claim. 30 In the light of the current position adopted by the first defendant, it is also significant that no question was raised by the first defendant, prior to hearing, challenging the ambit of those claims as going beyond the matters pleaded. 31 I am satisfied that, had the first defendant taken steps to clarify any ambiguity in the claim advanced through the Lam statement and retained an expert to evaluate any area of claim disputed by the first defendant, much of the difficulties that arose during the hearing in relation to the proof of quantum would not have arisen. It is essentially for that reason that I think the first defendant must shoulder a significant responsibility in relation to the costs that will be thrown away or incurred by Swiss and NEAT by reason of the adjournment of these proceedings. 32 But for the matters to which I am about to refer, I regard those failures of the first defendant as disentitling it to an adjournment to enable it, now, to address quantum issues. There has been no satisfactory explanation offered by the first defendant for its failure to address those claims other than that it was submitted that the form of the claims in the Lam statement was such as not to require response. I am unable to accept that contention and, if that was the stand adopted by the first defendant, I would have required it to live by that decision. 33 However, I am strongly of the view that the plaintiff also bears a significant responsibility for the unsatisfactory state of the quantum evidence. 34 In support of the application for an adjournment the first defendant has read several affidavits of Ian Dallen (Dallen), the solicitor for the first defendant. The first of those affidavits is that sworn 13 April 2000 in which he deposed to the interlocutory history of the matter and of the exchange of correspondence between the parties, relating, in particular, to compliance with the directions for the filing of statements of evidence. 35 In relation to the directions of 29 October 1999, he caused a facsimile of 2 December 1999 to be forwarded to the plaintiff's solicitors which included the following: "We refer to the orders of the Court made on 29 October 1999 in the above proceedings and, in particular, the order that your client file and serve any additional statements upon which it intends to rely at the hearing on or before 19 November 1999. Despite this order, we note that we have not received any further statements from you. As you are aware, your client was initially ordered to file and serve any further statements on or before 27 August 1999. Your client did not, however, file any such statements. Further, on 6 October 1999 you wrote to us advising that you hoped to be in a position to file and serve your client's further statement "very shortly". This, again, did not occur, and, instead, you sought a further extension of time when the matter was before the Court on 29 October 1999. If your client still intends to file and serve further statements, please advise us of this intention in writing by return facsimile." 36 That facsimile was followed by a letter from Dallen to the solicitors for the plaintiff of 20 January 2000 which was in the following terms: "We refer to our letter of 2 December 1999. We also refer to the order of the Court made on 29 October 1999 that your client file and serve on or before 19 November 1999 any additional statements upon which it intends to rely at the hearing. We note, however, that despite this order and our previous letter, we have not received any further statements from you. In the circumstances, we request that you please advise us by return facsimile whether or not your client still intends to file and serve any further statements. If it is still your client's intention to file and serve further statements, please also advise us of the names of persons who will be giving such statements, a brief outline of their statements and when we will be likely served with the statements. We put you on notice that if it is necessary for us to relist the proceedings because of your client's non-compliance with the Court orders, we will look to your client to pay the costs of such relisting on an indemnity basis. We trust, however that this will not be necessary and that your client's further statements (if any) will be served in the very near future." 37 The response of the plaintiff was to serve the Lam statement on 28 January 2000. Dallen next communicated with the plaintiff's solicitors on 31 January 2000 in the following terms: "We refer to our letter of 20 January 2000. We also refer to your letter of 28 January 2000 enclosing unfiled statement of Lam Wing Hong dated 26 January 2000. Could you please confirm whether or not you have now served all additional statements upon which your client intends to rely at the hearing. If you have not, we reiterate our request in our letter of 20 January 2000 that you please advise us of the names of persons who will be giving such statements, a brief outline of their statements and when it is anticipated that we will be served with the statements. We trust that by providing us with this information, it will not be necessary for us to re-list the proceedings as set out in our letter of 20 January 2000." 38 There was no reply and a reminder was forwarded on 15 February 2000 which concluded with the following: "In the circumstances, unless we hear from you to the contrary by the end of this week, we shall assume that you have filed all further statements which your client intends to rely upon at the hearing."

39 There was no reply to that communication either and, on 14 April 2000, Dallen wrote to the solicitors for the plaintiff in terms which included the following: "As we have received no reply to our letter we have assumed that you have filed and served all your client's statements upon which they intend to rely at the hearing." That matter was deposed to in the further affidavit of Dallen sworn 28 April 2000. 40 In his affidavit sworn 29 June 2000, Dallen deposed to the fact that the several letters that he had written to the plaintiff's solicitors seeking confirmation as to the completion of the filing of statements had been unanswered. As a consequence, on 1 May 2000 he served the first defendant's notice of motion of 1 May 2000 together with affidavits in support, being the two April affidavits referred to in these reasons. That motion sought a direction that : "Pacific Carriers Limited, NEAT and Swiss Singapore file no further statements in chief after 8 May 2000 without leave of the court". 41 On 2 May 2000 he caused draft short minutes of order to be submitted to the plaintiff and other parties to the proceedings which included an order that the plaintiff file no further statements in chief after 8 May 2000 without leave of the Court. 42 In response to the proposed short minutes of order he had a telephone conversation with the solicitor for the plaintiff on 2 May 2000, the file note of which is somewhat contradictory. It recorded a statement by the plaintiff's solicitor that he did not intend to file any further statements in chief and that situation was proffered as an explanation for the absence of a reply to the correspondence referred to earlier in these reasons. 43 However, the same file note recorded the statement that the plaintiff would "only be putting on an updated statement from [Lam] re quantum saying (where London arbitration is up to; any further costs.)" 44 As a consequence of that conversation, the orders made by consent on 5 May 2000, did not include an order restricting the filing of statements of evidence in chief by the plaintiff. 45 However, on 25 May 2000 in the absence of any further statement from the first defendant, Dallen forwarded a facsimile to the plaintiff's solicitors in the following terms: "We note that you served four affidavits/statements in chief in the proceedings, being the affidavits of Chua Say Ong sworn 14, 14 and 16 April 1999 and the statement of Lam Wing Hong made 26 January 2000. We note your previous advice that you only intend to serve a further statement of Lam Wing Hong to update your quantum claim in the proceedings. Could we please have this further statement on quantum as soon as it is available. Please note that we require Chua Say Ong and Lam Wing Hong to attend the hearing of this matter commencing 19 June 2000 for the purpose of cross examination."

46 No reply appears to have been received to that letter. However, on 2 June 2000 the plaintiff moved the Court for an order for a separate hearing of the issues of quantum and liability. In the light of the circumstances outlined later in these reasons, it is difficult to disassociate that application with the problems that emerged on the hearing in relation to the evidence of quantum relied upon by the plaintiff. 47 On 2 June 2000 I adjourned the motion to 8 June 2000 directing the filing of any affidavit evidence in opposition to the motion and requiring the parties to exchange submissions prior to the adjourned date of 8 June 2000. 48 In addition to the application for a Pt 31 order, the plaintiff's motion also sought an extension to 7 June 2000 to file an affidavit of evidence of Chua Say Ong (Chua) of 2 June 2000. 49 On 8 June 2000 I declined to order a separate hearing under Pt 31. However, I granted leave to the plaintiff to amend its summons: extended the time for filing the Chua affidavit of 2 June 2000 and an affidavit of Tan Chin Hee to 9 June 2000. I deferred until the hearing further consideration of the matters raised on the application, with the objective of giving directions on hearing which would best address the hearing of the quantum issues. 50 During the course of the hearing of the application on 8 June 2000, senior counsel for the plaintiff, in submissions supporting the making of a Pt 31 order, contended as follows: "The plaintiff contends that the real issue in these proceedings is one of liability and that given the ongoing arbitrations in London, the most expedient and efficacious course is to sever the determination of quantum. The issue of quantum is likely to protract the hearing and the plaintiff will, if necessary, as has been earlier notified to the first defendant, expand and update the damages evidence from Mr Lam Wing Hong (in respect of whom an initial statement was served in January 2000)." 51 What in fact occurred was that on the Sunday evening of 18 June 2000, that being the day before the commencement of the hearing of the proceedings, the plaintiff's solicitors forwarded by facsimile to the first defendant's solicitors a copy of an affidavit by Chua, omitting the documents exhibited to that affidavit (Chua's supplementary affidavit). Those exhibits, which were voluminous, were not served until the first day of hearing, namely 19 June 2000. It was not until that day that Dallen became aware of the receipt of the facsimile copy of Chua's supplementary affidavit which had been forwarded on the previous evening. 52 As it happened, Chua's supplementary affidavit comprised the substance of the plaintiff's evidence as to quantum and, for the most part superseded the material in the Lam affidavit. It was additional to the Chua affidavit of 2 June 2000. 53 The state of preparation of the plaintiff on the quantum issue may be inferred from the plaintiff's outline of topics and propositions which had been forwarded by facsimile to the first defendant's solicitors on the Friday prior to hearing. In that outline there was included a section entitled "Plaintiff's summary of damages". Under that heading the following material appeared: "27. The plaintiff claims damages for any liability for delivery of the goods or liability to indemnify Bolton in respect of the goods: Cargo of dun peas US$2,102,000.00 Cargo of chick peas US$1,132,000.00 28. The plaintiff also claims damages for the following heads of damage: Hire paid under time charter party from $ cessation of discharge to arrest on 31 March 1999.

Time charter hire payable from arrest of MV "Nelson" until redelivery on 30 June 1999 $ Expenses incurred at Calcutta $ Demurrage charges for barges at Calcutta $ Commission to date for DBS bank guarantee in favour of Swiss Singapore $ Legal costs incurred by PCL in the arrest proceedings by Victor Moses & Co at Calcutta $ Liability for Bolton's legal costs in arrest proceedings at Calcutta $ Legal costs incurred by PCL in the arrest of MV "Iran Selangat" in South Africa (Adams & Adams) $ Liability to pay Bolton's legal costs of South African proceedings $ Legal costs incurred by PCL in London arbitration bought by Swiss Singapore to date $ Legal costs incurred by PCL in London arbitration with NEAT $

The plaintiff also seeks to recover relief for the expenses and legal costs of Swiss Singapore to be established by the London arbitration (to be proved separately if necessary)."

54 In relation to that summary it may be observed that par 27 is ambiguous: it may be inferred, possibly, that the value of the cargo was the measure of damages sought to be summarised in that paragraph. As to paras 28 and 29, it may be inferred that the plaintiff was not at that late stage in a position to quantify the damages referred to in those paragraphs. 55 The plaintiff seeks to gain some comfort from the fact that no objection was taken by the first defendant to senior counsel's statement to the Court on 8 June 2000 that a supplementary affidavit of Lam would be relied upon, nor to the identification of the heads of damage as set out in the plaintiff's outline, nor to the opening submissions of senior counsel for the plaintiff at the commencement of hearing on 19 June 2000 which, in substance, followed the plaintiff's outline. 56 In the course of those submissions, senior counsel referred to the intended affidavit evidence of the plaintiff in the following terms: "We have also put on an affidavit by Mr Lam, which I think I handed up to your Honour last week, relating to damages. We do take a position that the order we really seek is one for declaration in order to indemnity, but to the extent that damages are able to be quantified we have Mr Lam's affidavit, and Mr Chua has over the weekend annexed some further invoices in support of one of the paragraphs that had a whole lot of invoices and expenses that would support it. We have summarised I think the Heads of Loss in Mr Lam's affidavit, and then the expenses referred to in Mr Chua's affidavit, together with our submissions."

57 The first day of hearing was taken up with addresses. On 20 June 2000 the first witness called by the plaintiff was Chua whose supplementary affidavit was filed in Court by leave, as appears from the following transcript extract: "HIS HONOUR: I grant leave to the plaintiff to file in court the affidavit of Chua Say Ong of 18 June 2000. STREET: Could I just indicate, that affidavit relates to damages. I wonder if it is possible to have his evidence dealt with in one hit. If my learned friends need to have an opportunity to deal with damages so be it, but we have Mr Lam to deal with damages." (T57:19 -T57:26) 58 The course I then followed in relation to the tender of the several affidavits affirmed by Chua was to admit four into evidence. Objection was taken to the whole of Chua's supplementary affidavit on the basis of its lateness of filing. That aspect was addressed as appears from the following transcript: "HIS HONOUR: Mr King, is there a significant problem about meeting the contents of this affidavit?

KING: There is in this sense that we have only just received it and we have not had a good opportunity to examine its contents. I would just like to reserve my position.

HIS HONOUR: I have not read it at all. Is it just a quantum - when I say "just", is it limited to quantum?

KING: I understand from Mr Street that that is its purpose. What I would ask your Honour to do is to--

HIS HONOUR: Would it suit you if I leave it until the morning adjournment and you might have an opportunity then of having a look at it and taking some instructions.

HIS HONOUR: And we will then see what is the best way of dealing with it. KING: Yes, certainly.

HIS HONOUR: So at this stage I won't admit the affidavit of 18 June; I will defer ruling on that until after the morning tea adjournment." (T60:38 - T61:7) 59 At that stage I was unfamiliar with the contents of Chua's supplementary affidavit and had not read the Lam statement on quantum. In accordance with that approach the matter was revisited after the morning tea adjournment in the following way:

"STREET: Your Honour deferred until after the morning tea adjournment the question of the further affidavit of Mr Chua of 18 June. Can I just take your Honour back into the history slightly in the nature of the objection? Your Honour, it is an affidavit that deals only with quantum. Your Honour doesn't need to actually read it now. Flicking through pages, 2, 3 and 4 your Honour will see that it refers to different heads of damage. Mr Lam's affidavit has been served on the first defendant, which your Honour will recall from having read it in court on 2 June. There were a number of paragraphs referring to expenses without annexures. Mr Lam's affidavit was handed up on 2 June which refers to a whole lot of expenses with no annexures. On 2 June we foreshadowed that we would supplement his affidavit to deal with the expenses.

HIS HONOUR: Is it fair to describe the contents of this affidavit as elaborating the heads of damage that have not been subject to any earlier statements?

HIS HONOUR: Mr King, what is your position in relation to the material?

KING: Your Honour, I think you have indicated that you were concerned with paragraph 12 to which I have taken specific objection.

HIS HONOUR: Only the first sentence, which is not tendered, with "accordingly", so that now is the only evidence of the appointment of a replacement port agent and that I understood would only serve to explain certain expenses that are claimed.

KING: Thank you, your Honour, as long as my position is preserved, reserving the right to respond to that, I am content to proceed.

HIS HONOUR: Yes. What about the cross-examination of Mr Chua.

KING: What I would propose is this, the matters that he referred to specifically should be deferred until the cross-examination of Mr Lam, who deals with the quantum issue generally. It may be that having dealt with him you can excuse Mr Chua altogether, but I would ask your Honour not to excuse him until the end of my cross-examination for that purpose.

HIS HONOUR: Do you propose to cross-examine him later on on the subject matter of this affidavit?

KING: If I do, I will let your Honour know, but I don't propose to, but I ask that it be deferred, if necessary, until the conclusion of Mr Lam's material is dealt with.

STREET: Mr Lam is an officer of the plaintiff and he has gone through the record and obtained records relevant to the expenses that there had been proven payments of and is in a position to give the evidence of the subject to this affidavit. I gave some evidence in relation to what I might describe as the heads of damage in relation to this affidavit, and it has been supplemented, as I said.

(Further discussions ensued regarding the nature of Mr Lam's evidence and the further cross-examination of Mr Chua by Mr King.)

HIS HONOUR: One approach, Mr King, is to permit you to complete your cross-examination without addressing the specific matters in this affidavit with the view to - maybe you can take instructions and to complete the cross-examination at a later time, however, it seems to me that if it is merely a matter of quantum or quantification, then in preparing your cross-examination of Mr Lam, there seems to be a great deal of sense in including this material in the cross-examine.

HIS HONOUR: That's the way we will proceed. On that basis have you any objection? I think the only objection was to that paragraph 12, which has been deal (sic) with.

HIS HONOUR: The further affidavit of Mr Chua, Say Ong of 18 June 2000 Exhibit E noting that the first sentence and the word "accordingly" in paragraph 12 are not tendered.

EXHIBIT #E FURTHER AFFIDAVIT OF SAY ONG CHUA OF 18/06/2000 WITH ITS EXHIBITS CSOA AND CSOB TENDERED AND ADMITTED AFTER OBJECTION." (T78:1-T 79:37) 60 At that point it was my understanding that the principal quantum affidavit was the Lam statement and that Chua's supplementary affidavit merely brought up to date the quantum claim. I assumed that the first defendant had filed evidence as to quantum in reply to the Lam statement, and that cross examination of Lam could encompass the additional material contained in Chua's supplementary affidavit. I assumed Lam was a competent technical officer of the plaintiff. He turned out to be one of its legal officers. In the course I proposed, I had the objective that it may have been unnecessary to recall Chua to be further examined on quantum issues. 61 The documents exhibited to Chua's supplementary affidavit comprised in total some two hundred and eighty five pages of which approximately two hundred and twenty pages consisted of documents evidencing various costs and expenses said to have been incurred by the plaintiff and which formed part of its quantum claim. 62 Far from being a mere supplementary affidavit to the Lam statement, the Chua supplementary affidavit represented the core of the quantum claim. 63 Moreover, the vast majority of material exhibited to the Chua supplementary affidavit predated the Lam statement and, indeed, consisted mainly of records that were brought into existence prior to the time covered by the records evidenced in the Lam statement. No explanation, certainly no satisfactory explanation, has been offered as to why that documentary material was not included in the Lam statement in January 2000. 64 On 21 June 2000, at the conclusion of the cross examination of Chua by counsel for the first defendant, the subject matter of the Chua supplementary affidavit was raised in the following way:

"KING: Yes. The only other matter is simply to note, with respect to exhibit E, the matters discussed with your Honour yesterday - this is the quantum affidavit. I also note, your Honour, in case it may have passed, that we take the position primarily with respect to that affidavit that none of that evidence is relevant in the present case, but of course that will be an argument in due course. That is the completion of my cross-examination.

HIS HONOUR: It might be of assistance, Mr King, given the extent of the affidavit, which I haven't tried to absorb, I haven't read, that you might formulate your submissions on the relevance of that material in writing."

(T140:44 -T40:56) 65 In response to that request, on the following morning of 22 June 2000, counsel for the first defendant provided the document entitled "BNP's Outline of Issues on Quantum". Under that heading the following submissions were presented: "1. The principal head of damage, from the outset of proceedings, has been the cost to PCL of providing security for the release of the vessel from arrest and the expenses it has been required to pay Bolton in respect of the continuation of the arrest. (Chua 14 April 1999 paragraph 12). 2. There is an issue as to whether any moneys paid to Bolton are damages related to this head; especially bearing in mind the terms of clause 63 of the time charterparty (bundle pages 253 and 264). 3. There is an issue as to the period in respect of which costs under this head are properly payable; a reasonable approach to mitigation of loss would suggest that a few days only were necessary to provide the appropriate bond to obtain release of the vessel from arrest (eg as in the South African proceedings): in any event PCL agreed with Bolton to provide the security before the end of April and there is no reason to extend the time for the claim past that date (bundle 1467 and 1434). 4. There is an issue regarding the reasonableness of, nature of and calculation of the various expenses claimed which will require an expert accountant with experience in shipping matters to examine the vouchers which were served this week. For example the legal costs exceeding US$100,000 in Calcutta plus another RUP840,000 do not all appear to relate to the head of damage and appear excessive. The South African costs are not costs of the arrest. 5. Examination of the further affidavit of Mr Chua served after the hearing commenced indicates that the items in paragraphs 22 (l), (m), (n), (t), (u) and (v) of Mr Lam's affidavit are expenses incurred for the ordinary working of the cargo; the log and vessel records will need to be examined to determine their precise nature and whether they have been incurred as claimed and are reasonable. 6. There is an issue regarding the status of the claim in respect of the London arbitration brought by Swiss. It is not an expense of the arrest. There is no or no sufficiently pleaded claim for specific performance of clause 1 of the alleged contracts of indemnity so as to give rise to a right to the expense incurred as distinct from a claim for damages. BNP objects to such a claim being litigated in these proceedings. 7. Whilst no claim has been particularised it appears that PCL is proposing to claim either as damages or as an indemnity the amount of any award which is made against it under its agreement with Bolton. This issue should immediately be clarified and if such claim is to be made BNP proposes to move to strike it out on the grounds that it has not been pleaded, nor particularised properly at all, and/or is not available in the proceedings as instituted. 8. The late service of the further material which BNP is unable to meet in the confines of the present hearing and the dangers of proceeding to determine the damages or make any declaration with so many issues outstanding and in circumstances where it is not possible to quantify the loss, or which make it highly prejudicial to BNP to do so mean that if the heads of damage complained of are not struck out, then the whole question of damages should if that becomes necessary be dealt with separately." 66 In anticipation of those submissions the plaintiff prepared a detailed schedule of heads of damages claimed by the plaintiff and provided references to those heads of claim in the evidence to be found in the Lam statement and Chua's supplementary affidavit. In addition, there was presented on behalf of the plaintiff a summary, in narrative form, of the heads of damages set out in that schedule. That schedule and the summary were provided to the first defendant's solicitors on 22 June 2000. 67 It has not been a particularly rewarding exercise in carrying out a comparison of the content of the Lam statement with that of Chua's supplementary affidavit, nor in endeavouring to identify the particular heads of damages under the relief claimed or particularised in the contentions. 68 However, a careful comparison of that kind reveals that, of some twenty nine heads of damage, the substantial heads of damage were identified as a head of claim in the Lam statement, or were adverted to in a form which, in my view, should have prompted requests for particulars of any damages claim. Notable exceptions to that description were heads of claim identified in sections G, H, J and K of the plaintiff's summary, referred to under headings respectively as follows:

"G. Potential Liability to Bolton for Legal Costs of Bolton v PCL Arbitration...

H. The Singapore Proceedings ... J. London Arbitration Commenced by PCL against NEAT....

K. Costs of advising Plaintiff [in respect of the Indian proceedings, the South African proceedings and the Singapore proceedings]." Those claims were new claims. 69 In its schedule of claims, the plaintiff made "related claims for indemnity for future losses" in respect of the foreign proceedings without making any attempt to identify those "losses". In relation to item I, identified in the summary as the London arbitration, that quantum of damage was summarised by the plaintiff as follows: "25. Following the Plaintiff providing security on behalf of Bolton in respect of the Swiss Singapore claims, the Plaintiff took over the defence of the Arbitration proceedings commenced by Swiss Singapore against Bolton: see Lam at paragraph 28 and the agreement behind tab 4 of the Supplementary Quantum Documents bundle. 26. The Plaintiff claims indemnity in respect of its potential liability in this arbitration to Swiss Singapore: see exhibit CSO-B at page 6 in respect of the relief claimed by Swiss Singapore. 27. Further, the Plaintiff has incurred, and will continue to incur, legal costs in respect of these proceedings: see Lam at paragraph 29, annexure LWH-17, Chua at paragraphs 46-47 and exhibit CSO-A at pages 221- 3."

70 "CSO" is a reference to documents exhibited to Chua's supplementary affidavit. Pars 28 and 29 of the Lam statement follow a heading "London Arbitration at Suit of Swiss Singapore". Those two paragraphs do not reveal that the plaintiff makes a claim for indemnity as summarised above. 71 In relation to the expanded claim for damages by the plaintiff, the first defendant moved on notice of motion returnable on 26 June 2000 for the following orders:

"2 Order that any particulars of loss and damage outside particulars pleaded in paragraph 38 of the Amended Summons be struck out. 3 Grant leave to the First Defendant to file any expert evidence in respect of the various tape recordings of telephone conversations between its officers and NEAT. 4 Grant leave to the First Defendant to file and serve expert evidence on quantum on or before 30 July 2000. 5 In the alternative to order 2, the proceedings be adjourned until the determination of the London arbitration between Bolton Navigation SA and Swiss Singapore. 6 In the alternative to order 5, the hearing of liability and damages be split."

As to order 2, there was no basis upon which any order of that kind could be made. As to order 3, that matter was resolved by agreement between the parties. As to orders 4,5 and 6, to a certain extent, they were overtaken by related circumstances giving rise to the application for an adjournment. 72 The application was supported by a further affidavit of Dallen sworn 26 June 2000. In that affidavit he gave evidence of the steps taken by him on receipt of Chua's supplementary affidavit as follows: "3. On 19 June 2000 (outside Court), I was provided with the exhibits to the affidavit of Chua Say Ong sworn 18 June 2000. 4. Throughout 19 and 20 June 2000 I made enquiries of various accountants to ascertain their availability to review and report on the Plaintiff's quantum claim. 5. On 20 June 2000 I forwarded the affidavit of Chua Say Ong sworn 18 June 2000 together with the exhibits thereto and the statement of Lam Wing Hong made 26 January 2000 to Arthur Anderson to review and report on the Plaintiff's quantum claim. 6. On 21 June 2000 I had a meeting with Mr Halligan of Arthur Anderson to discuss his preliminary review of the Plaintiff's quantum claim. 7. At 10:00am on 22 June 2000 Mr King (counsel for the First Defendant) handed to His Honour Mr Justice Hunter the First Defendant's Outline of Issues on Quantum. Annexed hereto and marked "A" is a copy of the First Defendant's Outline of Issues on Quantum. 8. Later on the morning of 22 June 2000 (during the Court morning tea break), I was given by the solicitors or the plaintiff a schedule and explanatory notes of the Plaintiff's quantum claim (which I arranged to be forwarded to Arthur Anderson). Annexed hereto and marked "B" is a copy of the Plaintiff's quantum schedule and explanatory notes."

73 The schedule and explanatory notes referred to in par 8 are the plaintiff's schedule and summary which I have referred to in these reasons. 74 The response of Arthur Anderson to the request for a report on the quantum issues set out the steps which would be necessary to be undertaken and advised in the following terms: "You have asked us to write a report expressing our opinion on the quantum of the claim for damages made by Pacific Carriers Ltd (the Plaintiff) against Banque Nationale de Paris (the First Defendant) and another. For this purpose, you have provided us with the following documents: · Statement of Lam Wing Hong dated 26 January 2000 with annexures (in total 78 pages); · Affidavit of Chua Say Ong sworn 18 June 2000 with exhibits (in total 242 pages); · Plaintiff's Summary on Damages dated 22 June 2000 (in total 7 pages); and · Amended Summons dated 2 May 2000 (it total 14 pages) You have asked us to write this letter explaining briefly what we expect we will have to do in order to prepare our report and how long it will take to prepare. First, we will have to check the quantum of each of the heads of damage of the Plaintiff's claim as they appear in the Summary on Damages against the supporting documents. (A copy of the table forming part of the Summary on Damages is attached for convenience.) In most cases, each head of damages comprises a number of specific payments which are generally expressed in foreign currencies. There is a large volume of invoices, receipts and other documentation attached to Mr Lam's statement and Mr Chua's affidavit of 18 June 2000. It is possible that our review will lead us to ask for further documents. Second, we will have to consider the quantum of each of the elements of the Plaintiff's claim that are not yet quantified. Chief amongst these is the claim by the Plaintiff for indemnity in respect of its potential liability in the London arbitration (see paragraph 26 of the Summary on Damages). We are instructed that no statements as to quantum have yet been filed in that arbitration. Third, we will have to consider the extent, if any, to which the alleged losses were caused by the alleged breaches of the First Defendant. For example, we understand that the Plaintiff's damages claim is based on the assumption that the period of arrest of the MV Nelson lasted about three months to 30 June 1999, but we also understand that we are likely to be instructed to assume that the period was significantly shorter with the consequence that we will have to recalculate the loss (if any) for the shorter period. Also in regard to this third point, we may consult shipping experts within our own firm. This is a list of the major matters we will have to attend to but it is not an exhaustive list. As to timing, you will appreciate that it is difficult to assess accurately the amount of work required in advance. That said, on the basis of the documents we have seen we estimate that it would take us two to three weeks to prepare a report."

75 Clearly, on that assessment, the first defendant was not in a position to meet the plaintiff's quantum claim in these proceedings without the benefit of an adjournment which, in the circumstances, would have involved several months delay. 76 Counsel for the first defendant has submitted that the consequence of the inclusion of the additional matters, particularly in relation to the foreign proceedings, is to increase the claim by the plaintiff by several million dollars. This submission proceeds on the basis that the first defendant had not anticipated a claim of the magnitude of the indemnities now sought in relation to the foreign proceedings, in particular the London arbitration. 77 Certainly, when one looks at the relief claimed in the amended summons and the matters particularised in the contentions in the amended summons, and regard is had to the Lam statement, there is, on the face of it, some justification in that compliant. 78 However, given the nature of the letter of indemnity relied upon by the plaintiff it must have been obvious to the first defendant that indemnities and costs of the kind articulated by the plaintiff were likely to be raised. The fact that they have emerged only during the course of the hearing is the combined consequence of the plaintiff's failure to comply with the Court's directions for the filing of statements of evidence; the plaintiff's failing to respond to the several requests of the first defendant's solicitors to clarify the position as to statements of evidence; the plaintiff's waiting until the hearing to put on the evidence contained in Chua's supplementary affidavit and to provide the particulars contained in the plaintiff's schedule and summary of damages; that, plus the conduct of the first defendant in failing to make any response to the inadequacy of the particulars in the amended summons or to the contents of the Lam statement. 79 Given the nature of the proceedings against the first defendant, I have no doubt that clarification by requests for particulars and the obtaining of expert assistance to assist in the examination of the claims advanced through the Lam statement were required. It seems to me that the plaintiff and first defendant must bear the consequence of the interruption to these proceedings which I think is essential to enable the quantum issues to be addressed by the parties and by the Court. 80 In my view, an alternative of separating the issues of liability and quantum provided no advantage given the need to defer the hearing of quantum issues to some later time. 81 I think the only practical course open to the Court was to adjourn the proceedings to the earliest possible time, namely 11 December 2000 and to require the parties to complete preparation of the case so that all issues can be finalised at that time. 82 There will always be a problem in relation to the plaintiff's claim for damages on an indemnity basis, particularly in relation to the subject matter of the London arbitration, which is not anticipated to be completed prior to 11 December 2000. 83 I have gone to some length in examining the circumstances causing this adjournment, essentially in an endeavour to reach a fair conclusion as to the way in which costs thrown away by the adjournment should be treated. 84 So far as the plaintiff and the first defendant's costs are concerned, I think that is a fairly simple exercise. Each must bear their own respective costs occasioned by or thrown away by the adjournment, regardless of the outcome of these proceedings. 85 However, both Swiss and NEAT are likely to have incurred and I expect will incur costs of that kind and there is no basis upon which either should be asked to bear the burden of those costs. The only question is whether the costs should be borne solely by the first defendant, whose application it is for an adjournment, or whether the costs should be borne by both the first defendant and the plaintiff. 86 I have been unable to distinguish, as between those two parties, which is more responsible for the need for an adjournment and, in those circumstances, I think the fairest adjudication on costs is that the plaintiff and first defendant should jointly and severally bear the costs of Swiss and of NEAT thrown away or occasioned by the adjournment of the these proceedings, and I so order. I regard the costs of the first defendant's motion of 26 June 2000 to be part of the costs thrown away by the adjournment of these proceedings. 87 It was urged upon me by senior counsel for the plaintiff that I should reserve the question of costs until the quantum issues have been explored on the resumed hearing, principally on the basis that the Court would be better informed once it had seen the true impact of the recently provided quantum material upon the quantum evidence advanced through the Lam statement. 88 I think there is some merit in that application in so far as I suspect that, when the Arthur Anderson report is to hand, the issues relating to quantum will not turn so much on the reasonableness of any of the amounts claimed as on challenges on the basis of causation or upon questions of law arising out of the terms of the voyage charter party in the circumstances in which the Nelson discharged its cargo, was arrested and released from arrest. 89 Even so that will not remove the fact that, in my view, the first defendant is entitled to have the benefit of expert advice and otherwise evaluate the recently provided material, notwithstanding the position it adopted in relation to the Lam statement. 90 Other issues arose during the course of argument relating to the future conduct of these proceedings, in particular concerning an application by the first defendant to further amend its defence. That application was withdrawn by notice to the Court and to the other parties to the proceedings on 5 July 2000. 91 During the course of the hearing I granted leave to the plaintiff to file in court its further amended summons and deferred the granting of leave to amend until the first defendant had the opportunity of considering the application. That has been overtaken by the events covered in these reasons. 92 Accordingly, leave so to amend is granted. 93 The plaintiff is to pay the costs of the other parties occasioned by or incidental to that amendment. 94 The first defendant is to pay the cost of the other parties of its application for leave to amend. 95 In relation to the fifth cross claim, I note the agreement between the parties to that cross claim that the security provided by agreement between them following the cross defendant's notice of motion for security of 24 May 2000 is to be released.

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