Hilditch Pty Limited v Dorval Kaiun KK [2007] FCA 1495

FEDERAL COURT OF AUSTRALIA

Hilditch Pty Limited v Dorval Kaiun KK [2007] FCA 1495

HILDITCH PTY LIMITED v DORVAL KAIUN KK NSD 360 OF 2007

RARES J

14 SEPTEMBER 2007

SYDNEY IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 360 OF 2007

BETWEEN: HILDITCH PTY LIMITED

Plaintiff

AND: DORVAL KAIUN KK

Defendant

JUDGE: RARES J

DATE OF ORDER: 14 SEPTEMBER 2007

WHERE MADE: SYDNEY

THE COURT:

1. Grants leave to the plaintiff to amend paragraph 11 of the explanation of the plaintiff's case filed on 25 May 2007 and paragraph 15 of its version of the statement of agreed relevant facts and issues to conform with the amendment proposed in the letter from the plaintiff's solicitors to the defendant's solicitors of 10 September 2007. 2. Directs each of the parties to exchange and file on or before 21 September 2007 a brief statement of the basis upon which it contends damage to the cargo occurred when discharged. 3. Directs that the parties co-operate in preparing and filing on or before 28 September 2007 a substitute bundle of material giving effect to the amendments made by the plaintiff and containing an agreed statement of issues likely to, or which may, require resolution together with the statements on causation referred to in order 2. 4. Orders that the plaintiff pay the defendant's costs of and thrown away by reason of the amendment. 5. Reserves the other costs of the application today. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD 360 OF 2007

BETWEEN: HILDITCH PTY LIMITED

Plaintiff

AND: DORVAL KAIUN KK

Defendant

JUDGE: RARES J

DATE: 14 SEPTEMBER 2007

PLACE: SYDNEY

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 In these proceedings Allsop J, as the admiralty list judge, gave directions with a view to preventing a cargo claim descending into an arid debate about who had pleaded what: Hilditch Pty Ltd v Dorval Kaiun KK [2007] FCA 752 at [6]. When giving that judgment, on 11 May 2007, his Honour perceived that the plaintiff's principal allegation was that the Yubase 6 liquid cargo had been contaminated on discharge from the vessel in Sydney by the residue of a previous cargo of molasses in the cargo tank or the ship's pipes: see Hilditch [2007] FCA 752 at [20]. 2 His Honour expressed the desire that the parties direct themselves with some precision and frankness to what the issues were in light of the fact that he had perceived, correctly in my respectful view, that the statement of claim had not clearly illuminated to the defendant what the case was then all about. Accordingly, he devised a mechanism to distil a sense of clarity and reality about the determination of the real issues for trial in the proceedings. He directed that the statement of claim be struck out and that the operation of the rules relating to pleadings be suspended. Instead, he directed the parties to prepare statements about what were perceived to be the issues and made directions with a view to getting the proceedings prepared for an early trial. 3 The matter returned to his Honour's list on 2 July 2007. He observed in the judgment he gave that day that this was commercial litigation and the parties should approach it on a basis of litigating only issues that were of such a character that required significant expenditure of private and public funds for their resolution. He noted that this was an obligation not only of the parties but of their solicitors and that the use of the court system to resolve issues that were not truly in dispute, and which were such as should not be in dispute, was something to be strongly discouraged: Hilditch Pty Ltd v Dorval Kaiun KK [2007] FCA 999 at [8]. 4 Consequent upon directions that his Honour made on that day, a bundle of material was prepared by the parties and filed on 9 July 2007. It consisted of: · a document entitled, 'Explanation of the Plaintiff's Case'; · the plaintiff's statement of issues likely to arise or which may require resolution; · a statement of agreed relevant facts and issues that was signed by the plaintiff's solicitor; and · the defendant's proposed agreed statement of issues likely to or which may require resolution, signed by the defendant's counsel. 5 The explanation of the plaintiff's case noted (in par 11) that: 'After slopping 12,000 litres, sampling at the ship, shore and terminal manifold indicated that the contaminant within the vessel's lines had been cleared. At that point pumping into the shore tanks VO.17 and VO.20 commenced (discovered document 13).' 6 Discovered document 13 was headed 'Statement of events, Golden Lucy 1 discharging Yubase 6 at Bulk Liquids Berth 8 to 9 July 2006'. It was prepared by a Mr P. Kanagasabai of Intertek Caleb Brett. He wrote in that statement: 'At the commencement of discharge of Yubase 6, samples were drawn at the ship, shore and terminal manifolds. There was brown colour substance in the initial samples drawn. After slopping approximately 12,000 litres, the samples at the terminal and wharf were clear of any brown substance and appeared to be clearing in appearance as the discharge progressed.' 7 The explanation of the plaintiff's case proceeded to state that samples were drawn from the two tanks on 10 July 2006, that is, after discharge. The statement said in par 12 that '[t]he samples demonstrated that the consignment was cloudy and out of specification' and a number of references were given to discovered documents. The explanation of the plaintiff's case also identified the plaintiff's damages. It made a claim for the difference between the sound arrived value of the consignment, incidental discharge and handling costs less salvage. The claim totalled approximately AUD625,000, based on damage to about 400 metric tonnes of the Yubase 6 consignment. 8 The plaintiff's version of agreed relevant facts and issues noted in par 15 that the plaintiff had made an admission in par 11 of the explanation of the plaintiff's case concerning the time at which the decision was made to discharge into the shore tanks VO.17 and VO.20, being the admission I have already quoted. 9 I gave further directions in the matter on 27 July 2007 for the purposes of preparing the case for hearing on the basis of the parties' differing proposed short minutes. On 20 August 2007 the solicitors for the plaintiff wrote to the solicitors for the defendant seeking to amend par 11 of the explanation of the plaintiff's case, and self-evidently the proposed agreed statement of facts, by making it read as follows: 'After slopping 12,000 litres, sampling at the ship and terminal manifold indicated that the contaminant within the vessel's lines had cleared samples at the terminal and wharf were clearing of any brown substance and the cloudiness also appeared to be clearing, although it was still present. Because the slop tanks were now filled, a decision had to be made regarding the balance of the consignment. At that point pumping into the shore tanks VO.17 and VO.20 commenced.' 10 In essence, the amendment sought to change the statement of what the sampling indicated from being one that the lines had been cleared of contaminant to one that those lines were clearing of it, although it was still present. 11 On 21 August 2007 the solicitors for the defendant responded. They referred to what Allsop J had said about the explanation of the plaintiff's case being a clear and helpful document and to a query I raised during the previous directions hearing concerning the nature of the admission to which I have just referred. The defendant's solicitors said that the proposed amendment would '… alter completely the complexion of the dispute and actually result in broadening the issues to be resolved by the Court, diametrically in contrast with the intentions of Allsop J in suspending the rules of the Court'. 12 They asserted that the defendant would be seriously prejudiced in having to revisit its preparation for trial and collection of evidence. The plaintiff's solicitors responded by noting that the parties should have been able to resolve the matter expeditiously and that it was likely that an amendment would be allowed three months before the trial date, referring to Queensland v JL Holdings Pty Limited (1997) 189 CLR 146. 13 After that there was an exchange of emails earlier this week between the solicitors for the parties at which it became clear that there was no consent to the amendment. The plaintiff reformulated the amendment which now reads: 'After slopping 12,000 litres, sampling at the ship and terminal manifold indicated that the contaminant within the vessel's lines had cleared samples at the terminal and wharf were clearing of any brown substance and the cloudiness also appeared to be clearing, although it was still present. Because the slop tanks were now filled, a decision had to be made regarding the balance of the consignment. At that point pumping into t he shore tanks VO.17 and VO.20 commenced.' 14 Unfortunate as it is, Mr Anderson, solicitor for the plaintiff, who appears on the application, has said that when interviewing Mr Kanagasabai, it became evident to him that his evidence would be different from the form of par 11 of the explanation of the plaintiff's case. That evidence was served, I have been told, earlier in August. The defendant was thus on notice from that time as to how the plaintiff was proposing to prove its case at the hearing. 15 Mr Rajadurai, the solicitor for the defendant, who appeared today, told me that the plaintiff's statements had been received. He perceived there would be difficulties for his client. It was a time charterer of the vessel whose time charter had ended late last year. The difficulties were in locating and interviewing the master and chief officer for the purposes of Mr Rajadurai satisfying himself about the factual matters raised in the statement of Mr Kanagasabai. He claimed that was a sufficient prejudice to warrant refusing to allow the amendment. 16 It is unfortunate that the objectives Allsop J had sought to attain by requiring the preparation of the documents to which I have referred have not been completely achieved. However, I do not think that the Court should prevent the articulation of a real issue for decision informed by what the witnesses will say about it. It is the role of the Court to decide disputes between parties. An application for an amendment is not, as Dawson, Gaudron and McHugh JJ said in JL Holdings 189 CLR at 155: '… the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedure of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties.' 17 I am of opinion that the amendment proposed raises a real issue between the parties which, in the interests of justice, ought be determined by the Court. I can see how its articulation may raise an issue as to causation of damage having regard to the earlier articulation of the events at discharge. But it seems to me that the case was always one about the cause of the damage claimed, namely approximately AUD625,000, to this Yubase cargo. In those circumstances I am not satisfied that the defendant failed to understand that the question of causation of damage to the whole cargo was always going to be an issue at the trial or that its case could not involve providing some explanation as to how after the initial sampling, the balance of the cargo appeared contaminated when discharged. 18 In my opinion on the material presently before me that was always going to be an issue that required factual and expert investigation for the purposes of the hearing. The precise formulation which the plaintiff now seeks to put has varied slightly from its earlier formulation. I do not see any basis upon which the amendment should have been opposed. It is regrettable the parties delayed in bringing the matter back before the Court. I propose to grant leave to the plaintiff to amend the explanation of the plaintiff's case filed on 25 May 2007 in the manner now proposed. Each of the parties should formulate a brief statement of the issue they say arises as to the cause of the damage at discharge that should be exchanged next week and filed. The plaintiff should pay any costs thrown away by reason of the amendment and I will otherwise reserve the costs of the application today. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate: Dated: 25 September 2007

Solicitor for the Plaintiff: T Anderson of DLA Phillips Fox

Solicitor for the Defendant: A Rajadurai of Ambrose Rajadurai & Associates

Date of Hearing: 14 September 2007

Date of Judgment: 14 September 2007