Soufflet Beheer v AWB Limited

REASONS FOR JUDGMENT introduction 1 The parties to this proceeding seek orders under O 29 r 2 of the Federal Court Rules for the determination of separate and preliminary questions. The proposed questions are: (a) whether, on about 3 August 1999, Soufflet USA and the respondent entered into a binding agreement whereby the respondent would pay to Soufflet USA the sum of US$421,380.22; (b) if so, whether, in the circumstances, the applicant is entitled to recover from the respondent the sum of US$421,380.22 for which it is liable under that agreement. On 18 March 2004, the parties submitted a minute of orders proposing this course. Counsel for both parties attended Court this morning to support their proposal. The applicant also relied on written submissions that were filed on 20 April 2004. 2 Order 29 rules 1 and 2 provide: 1. In this Order, question includes any question or issue in any proceeding, whether of fact or law or partly of fact and partly of law, and whether raised by pleadings, agreement of parties or otherwise. 2. The Court may make orders for - (a) the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings; and (b) the statement of a case and the question for decision. the proceeding 3 By a further amended application, which was filed 8 September 2003, the applicant seeks the following relief: 1. a declaration that, in the circumstances, the respondent is estopped from relying upon the provisions of clause 36 of the charter party to deny, and from otherwise denying, the applicant's claim for payment of the compromise amount, US$421,380.22; 2. damages, being the Australian dollar equivalent of US$421,380.22 converted at the exchange rate applying on the day of judgment; 2A. alternatively, equitable compensation, being the Australian dollar equivalent of US$421,380.22 converted at the exchange rate applying on the day of judgment; 3. alternatively, damages pursuant to section 82 of the Trade Practices Act 1974 (Cth); 4. alternatively, compensation pursuant to section 87 of the Trade Practices Act 1974 (Cth); 5. such further or other orders and relief (including orders pursuant to section 87 of the Trade Practices Act 1974 (Cth)) as the Court may deem necessary or appropriate in the circumstances; 6. interest; 7. costs. 4 The applicant, Soufflet Beheer, is a company incorporated in the Netherlands and claims as the assignee under certain deeds of assignment. According to the further amended statement of claim, which was filed on 8 September 2003, by these deeds of assignment, Soufflet USA Inc, which is a wholly owned subsidiary of the applicant, assigned to the applicant "Soufflet USA's right, title and interest in the debt being the subject of this proceeding" and "all of Soufflet USA's right, title and interest in the choses in action being the subject of this proceeding". The respondent was, at all relevant times, the chartered owner of the ocean going vessel MV Panamax Star ("the vessel"). In addition, according to the further amended statement of claim, "Soufflet Négoce acted as the agent of Soufflet USA with respect to negotiation of contractual and other business arrangements between Soufflet USA and third parties". 5 According to the further amended statement of claim, on about 18 February 1999, Soufflet USA and the respondent entered into a charter-party, pursuant to which the respondent agreed to charter the vessel to Soufflet USA to carry a cargo of hard red winter wheat ("the wheat") from Paulina, Louisiana, USA, to Damietta or El Dekheila, Egypt. The charter-party is said to be in writing. The applicant alleges that there were terms of the charter-party that: · the vessel was to be loaded by no later than 15 March 1999, failing which the respondent would pay to Soufflet USA demurrage in accordance with the charter-party; · the respondent was to pay to Soufflet USA a despatch premium if the vessel was despatched sooner than provided in clauses 12 and 20 of the charter-party; · the respondent was to pay to Soufflet USA an overage premium in the event that the age of the vessel exceeded 10 years, which premium was to be in accordance with the Lloyd's scale; · all disputes arising out of the charter-party were, within three months of the discharge of the cargo, to be referred to an arbitrator (or arbitrators) appointed under the charter-party and, in the absence of such appointment, all claims were deemed to be waived and absolutely barred; and · if the respondent wished to raise a dispute arising out of the charger party, it would notify Soufflet USA of that dispute within the time limit specified in clause 36 to enable Soufflet USA to exercise its rights under the charter-party. By its defence, filed on 17 October 2003, the respondent denies the first and last of these terms. 6 The applicant alleges that, in breach of the charter-party, the respondent did not complete loading the vessel until 28 March 1999. The parties agree that the wheat was discharged on 27 April 1999. The applicant further alleges that, as a consequence of the respondent's charter-party breach, Soufflet USA was unable to deliver the wheat to its Egyptian purchaser on time, thereby incurring additional charges and expenses. It claims that its loss amounted to US$439,557.83. By its defence, the respondent puts this matter in issue and says, in any event, it would not be liable for such a loss because of cl 37 of the charter-party. The respondent denies that it is liable to pay the amount of US$439,557.83. 7 By its further amended statement of claim, the applicant also alleges that, on 3 August 1999, Soufflet USA and the respondent entered into an agreement to compromise Soufflet USA's claim against the respondent in respect of the charter-party breach and incidental charges by reducing it from US$439,557.83 to US$421,380.22 ("the compromise amount"). The compromise agreement is alleged to be in writing. The applicant also alleges an accord and satisfaction, alternatively, an account stated. The applicant claims: In reliance upon the contract of compromise and/or the accord and satisfaction and/or the account stated, and the respondent's failure to advise that the parties were in dispute, Soufflet USA took no further action against the respondent believing that its claim in respect of the charter party breach and the incidental charges had been accepted. The applicant alleges that, in breach of these arrangements, the respondent has failed to make payment of the compromise amount. By its defence, the respondent denies this part of the applicant's case. 8 The applicant also pleads that, by its conduct, the respondent represented to Soufflet USA and caused it to assume that there was no dispute between the parties as to the amount Soufflet USA was entitled to receive in respect of the charter-party breach or that the dispute had been resolved. The applicant further alleges that, in reliance upon these assumptions, it did not take any further action against the respondent to enforce the charter-party and acted to its detriment in so doing. The applicant's case in this regard is that, in the circumstances, it is unconscionable for the respondent to rely on cl 36 of the charter-party to defeat its claim or to refuse payment of the compromise amount. Also, according to the applicant, the respondent is estopped from relying upon cl 36 or otherwise denying Soufflet USA's entitlement to payment, or has waived any such rights in this regard. By its defence, the respondent denies all these allegations. 9 Finally, the applicant alleges that the conduct of the respondent was misleading and deceptive or likely to mislead and deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth), in that the respondent did not notify Soufflet USA Inc "that they were in dispute, had no intention of being bound by its agreement to pay the compromise amount and failed to disclose that intention to Soufflet USA". The respondent denies this allegation. 10 In summary, by its defence, the respondent admits the charter-party and such of its terms as were in writing, but otherwise denies virtually all of the substantive allegations in the further amended statement of claim. In particular, the respondent denies that part of the applicant's case concerning the compromise amount. consideration 11 Order 29 r 2 gives the Court wide powers to regulate the procedures for the hearing and determination of a proceeding. The principles that govern the circumstances in which an order of the kind presently sought by the parties may be made are set out in Reading Australia Pty Ltd v Australian Mutual Providete Society [1999] FCA 718 ("Reading Australia") at [7] and [8] per Branson J. Her Honour's statement of these principles was recently reiterated by French J in Olbers Co Ltd v Commonwealth (No 3) [2003] FCA 651 ("Olbers") at [7]. In Reading Australia at [8], Branson J summarised the relevant principles as follows: The principles that govern the circumstances in which an order will be made under O 29 r 2 are relatively well established. They may be summarised as follows: (a) the term "question" in O 29 r 1 includes any question or issue of fact or law in a proceeding. The distinction in the rule between an "issue" and a "question" is the distinction between that which, when resolved, will result in an adjudication in favour of one party or the other, being an "issue", and less decisive matters of dispute being "questions" (Landsal Pty Ltd (in liq) v REI Building Society (1993) 113 ALR 643 at 647); (b) a question can be the subject of an order for a separate decision under O 29 r 2 even though a decision on such a question will not determine any of the parties' rights (Landsal Pty Ltd (in liq) v REI Building Society at 647); (c) however, the judicial determination of a question under O 29 r 2 must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties (Bass v Permanent Trustee Co Ltd [1999] HCA 9 at para 45); (d) where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined (Jacobson v Ross [1995] 1 VR 337 at 341, referring to Nissan v Attorney-General [1970] AC 179 at 242-243 per Lord Pearson; Bass v Perpetual Trustee at para 53); (e) care must be taken in utilising the procedure provided for in O 29 r 1 to avoid the determination of issues not "ripe" for separate and preliminary determination. An issue may not be "ripe" for separate and preliminary determination in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved (CBS Productions Pty Ltd v O'Neill [(1985) 1 NSWLR 601] per Kirby P at 606); (f) factors which tend to support the making of an order under O 29 r 2 include that the separate determination of the question may - (i) contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or (ii) contribute to the settlement of the litigation (CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 per Kirby P at 607). (g) factors which tell against the making of an order under O 29 r 2 include that the separate determination of the question may - (i) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial (GMB Research & Development Pty Ltd v The Commonwealth [1997] FCA 934); (ii) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding (GMB Research & Development Pty Ltd v The Commonwealth; Arnold v Attorney-General for Victoria [1995] FCA 727). This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or (iii) prolong rather than shorten the litigation (GMB Research & Development Pty Ltd v The Commonwealth). 12 As French observed in Olbers at [8]: The overarching consideration informing the discretion to make an order under O 29 r 2 is efficient case management. It is subject to the limitation that the Court cannot give an advisory opinion on theoretical or hypothetical facts even if such an opinion were likely to lead to a settlement or resolution of the proceedings. 13 The parties invite the Court to make an order pursuant to O 29 r 2 upon the basis that: [T]he Court is to have regard to the following, which shall be treated as evidence for the purposes of that determination: (a) agreed statement of facts; (b) statement of Jean-Marc Philouze dated 19 June 2003, together with the annexures referred to in it; and (c) statement of Rohitha Welmillage dated 11 August 2003.