Consideration
97I will deal first with the operation of cl 4.1(d) in its unamended form and then with the effect of the Amendment Deed.
98OneSteel submitted that a request pursuant to cl 4.1(d) did not absolve BlueScope from the obligation to take the scheduled deliveries.
99It put that the word "requests" in its usual and ordinary meaning denotes asking for, soliciting or begging for something, and that the object of such a request is free to either accede to it or to decline it. On this footing, if OneSteel declined the request not to load, OneSteel remained entitled to proceed to load and BlueScope remained obliged to accept and pay for the delivery.
100It put that a construction which absolved BlueScope from taking the scheduled deliveries with impunity, except for the payment of Dead Freight, was uncommercial, unreasonable, capricious and did not supply a congruent operation to the various other components of the Deed. It put that such a construction would enable BlueScope, by utilising requests under cl 4.1(d), to undermine "the fundamental right" of OneSteel to supply up to the Maximum Tonnage in any (or for that matter every) Contract Year at the prices under the Deed. It put that, to the knowledge of both parties, the Dead Freight Rate under the Deed was higher than OneSteel's freight costs in respect of the Iron Chieftain under the Charter Party and that OneSteel would accordingly be disadvantaged if requests not to load had the effect contended for by BlueScope.
101It put that to give cl 4.1(a) such operation would enable BlueScope to circumvent other provisions in the Deed which envisage supply being reduced, shipments being ballasted or eliminated but which give OneSteel greater protection. It identified cls 6.4, 12.3.6, 12.8(c), 13.1 and 14.2 as such provisions.
102OneSteel's submissions are unsustainable.
103The ordinary meaning of the words leaves no room for reading in a requirement that OneSteel must accede to the request not to load before it has any effect. Clause 4.1(d) is activated by a request not to load a scheduled shipment wholly or partially. Upon the request being made, certain consequences follow without OneSteel having to respond. They are that tonnage is "foregone" and that subject to cl 12.8, BlueScope must pay Dead Freight in respect of the shipment the subject of the request.
104If BlueScope makes a request not to load, it must advise OneSteel whether it wishes to take the foregone tonnage at a later time. In contrast to the request not to load (which requires no response), OneSteel must respond to any request to take the foregone tonnage.
105OneSteel is not unfettered in its response to a request to take the foregone tonnage. It must not unreasonably withhold its agreement. If OneSteel were, as it suggests, free to decline the initial request not to load, there is no rational explanation or field of operation for the fetter on its entitlement not to agree to a request by BlueScope to take the foregone tonnage later.
106BlueScope may request OneSteel not to load "for any reason (other than pursuant to cl 6.4)". These words would have no work to do if OneSteel was free to decline the initial request, whatever the reason BlueScope had for making it.
107Clause 4.1(a) entitles OneSteel to offer to supply and obliges BlueScope to purchase "subject to and upon the terms of the Deed". Clause 4.1(d) is one of those terms. OneSteel does not have any right to supply under the Deed shorn of this limitation. The proposition that it provides an opportunity to BlueScope to undermine OneSteel's "fundamental right" to supply is circular because that right has the inbuilt limitation of cl 4.1(d). OneSteel's position entails reading that specific limitation out of the contract.
108When BlueScope makes a request not to load a scheduled shipment, it may later not get the foregone tonnage even if it wants it so long as OneSteel does not act unreasonably in withholding its agreement. A request not to load entails BlueScope taking a commercial risk.
109Any differential between the freight rates payable, respectively, under the Charter Party and the Deed is but one commercial consideration. OneSteel no doubt has other commercial benefits under both instruments. The Charter Party is a complex document providing for freight rates, demurrage rates, dispatch rates and escalation. It relates not only to iron ore shipments but also coal shipments. It provides for substitute vessels.
110It is not for the Court to weigh the importance of conditions which the parties have chosen to put into their contracts; Bowes v Chaleyer (1923) 32 CLR 159 at 191 per Higgins J.
111The submission that cl 4.1(d) does not operate congruently with other clauses of the Deed is also unsustainable. The clause is not unclear or ambiguous and there is no difficulty in giving it operation according to its plain meaning and at the same time giving the other specified clauses operation according to their plain meaning.
112Giving cl 4.1(d) the operation contended for by BlueScope does not result in any ability on its part to circumvent other provisions in the Deed identified by OneSteel. Each of those other provisions has a different field of operation and different commercial consequences, as the following analysis reveals.
113Clause 6.4 provides a regime for the suspension of shipments or termination of the Deed for reasons concerned with non-conforming shipments. Clause 4.1(d) expressly excepts reasons pursuant to cl 6.4 from the reasons for which BlueScope may make a request under cl 4.1(d) not to load. The provisions work congruently.
114Clause 12.3.6 concerns changes to a schedule which has been established in accordance with cl 12.3.5. Clause 12.3.2 requires the parties to liaise with each other in respect of shipping arrangements and shipping schedules in order to best utilise the Iron Chieftain and any other Vessels selected by OneSteel for the provision of transport of the iron ore for BlueScope's consumption of iron ore and OneSteel's consumption of coal. Unlike cl 4.1(d), cl 12.3.6 appears to be concerned only with the Iron Chieftain.
115OneSteel puts that cl 12.3.6 is incongruent with cl 4.1(d) because whilst the former makes it clear that BlueScope cannot require a ballast voyage in the Iron Chieftain's schedule, a request under cl 4.1(d) may necessitate such a voyage. In my view, this does not entail incongruity. A request not to load does not necessarily involve a ballast voyage if OneSteel is otherwise able, nevertheless, to utilise the Iron Chieftain. By contrast with cl 4.1(d), if OneSteel agrees to a ballast voyage in the schedule, BlueScope must pay any additional costs incurred by OneSteel as a result of the change which includes, but is not limited to, Dead Freight. Clause 12.3.6 also does not involve the potential commercial detriment that BlueScope might forego any tonnage.
116Unlike cl 4.1(d), cl 12.8(c) applies in limited circumstances and does not only apply to scheduled shipments. It makes no provision for taking foregone tonnage. The two provisions are not incongruent.
117Clause 13 concerns force majeure . It suspends the obligations of the affected party (not including any obligation to pay money). Unlike cl 4.1(d), cl 13.4 provides for shipments that would have been made but for the existence of the intervening event to be made at a time mutually agreed by both parties and as soon as practicable following termination of the intervening event. It provides that the Term shall be extended for such period as is necessary to achieve the intent of the clause. Clause 13.5 also provides for termination of the Deed if force majeure continues for longer than four months.
118Clause 14.2 provides for BlueScope to reduce its level of purchases to the extent required where BlueScope is required by any Government Authority or by law to change, vary or alter the emission standards or levels, emission contents or emission targets at its sinter plant and if OneSteel's iron ore can be shown with reasonable certainty to be a major contributor to the emissions, targets, standards, contents or levels of the emissions. It also provides for either party to terminate the Deed without penalty on one month's written notice if the reductions last longer than three months.
119It may well be that a single set of circumstances potentially activates more than one provision, and involves potentially different outcomes. This does not make the provisions incongruent.
120I turn to the effect of the Amendment Deed on cl 4.1(d).
121The Amendment Deed, in its final paragraph, provides that except as modified by it, all other terms of the Deed apply to the Replacement Shipments. It provides that to the extent that any provisions of the Deed are inconsistent with it, it prevails over the provisions of the Deed.
122The question is whether the provisions of the Amendment Deed are inconsistent with the provisions of the Deed so as to oust the application of cl 4.1(d) with respect to the Replacement Shipments.
123OneSteel puts that inconsistency is revealed because the statement in cl 4 of the Amendment Deed that the Replacement Shipments " will be made between 22 December 2008 and 30 June 2009 to a schedule mutually agreed between the parties" connotes certainty that the Replacement Shipments will occur. It puts that this is in tension with the ability of BlueScope to require OneSteel not to load them. It puts that a further indication of inconsistency is that the Amendment Deed operates at a higher level of particularity than the Deed, dealing with individual, special and identified shipments.
124It submits that there are commercial considerations which make the continued operation of cl 4.1(d) in relation to the Replacement Shipments unreasonable and capricious. It puts that the existence of a right on the part of BlueScope to require the Replacement Shipments to be ballasted, when those shipments replace the Ballasted Shipments which BlueScope was obliged to accept (because they had already been scheduled) "would turn [the] bargain on its head". It draws attention to the fact that, under the Amendment Deed, BlueScope receives the benefit of revised price and payment terms in respect of voyage nos. 202, 204, 206 and 208 and to the fact that OneSteel was obliged to offer the Replacement Shipments.
125For its part, BlueScope points to the fact that OneSteel agreed to pay the Dead Freight in respect of the Ballasted Shipments, the commercial explanation for which is that the Iron Chieftain's voyage time would be shortened and OneSteel would be able to receive an extra load of coal prior to July 2008 at a more favourable price and could also sell the iron ore at higher spot prices than under the Deed. The ballasting of the shipments, on its own, accordingly represented a commercial benefit to OneSteel.
126It is neither appropriate nor feasible to attempt to divine the respective commercial motivations of the parties or to engage in the exercise of trying to weigh all potential commercial benefits and disadvantages to each party of the arrangements reflected in the Deed as amended by the Amendment Deed as a means of, or to call in aid in, construing the words of those instruments.
127For the following reasons I do not consider that there is any inconsistency between the Deed and the Amendment Deed so as to eliminate the operation of cl 4.1(d) in relation to the Replacement Shipments.
128The second paragraph of the Amendment records that both parties agree to vary the terms and conditions of the Deed in respect of four shipments nos. 192, 194, 196 and 198, and also in respect of four shipments to be sold to the Buyer on a DEQ Port Kembla basis on revised price and payment terms - being nos. 202, 204, 206 and 208 and that " otherwise the conditions of the Deed remain unamended" . There is no reference to the Deed being amended in relation to the Replacement Shipments.
129The Amendment Deed clearly and directly modifies cl 4.1(d)(i) by requiring OneSteel rather than BlueScope to pay Dead Freight and it modifies cl 4.2 by BlueScope waiving its right to purchase on a FOB Whyalla Port Kembla basis, any shortfall from the Maximum Tonnage accrued in the Contract Year 2007/2008. The same cannot be said with respect to cl 4.1(a), that is, there is no clear and direct modification of it.
130The Amendment Deed records that the Replacement Shipments are in addition to the number of shipments that would have been supplied between 1 July 2008 and 21 December 2008. It could hardly be suggested that cl 4.1(d) would not have applied to those shipments, even though the Amendment Deed refers to them as shipments that would have been supplied. They would not have been supplied if BlueScope had made requests not to load them. Similar considerations apply to the Amendment Deed where it says that the Replacement Shipments will be made. In so providing, the Amendment Deed imposes no greater degree of certainty of delivery on the Replacement Shipments than the Deed itself imposes on other scheduled shipments. The Replacement Shipments remain shipments otherwise to be supplied and delivered in accordance with the Deed. Once their schedule has been mutually agreed, they become scheduled shipments to which cl 4.1(d) applies.
131In my view the application to the Replacement Shipments of cl 4.1(d) of the Deed is not inconsistent with anything in the Amendment Deed. Accordingly, the Amendment Deed did not derogate from BlueScope's entitlement to request OneSteel not to load the Replacement Shipments under cl 4.1(d).
132The result is that OneSteel's claim must fail.
133Although it is not necessary to consider BlueScope's other answers, I will nevertheless do so on the assumption that BlueScope's refusal to take the seven shipments was, contrary to my finding, in breach of the Deed.