The University of Queensland Respondent€¦ · The University of Queensland Memorandum for...

The University of Queensland Memorandum for Respondent

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UNIVERSITY OF QUEENSLAND A U S T R A L I A

Team 20

MEMORANDUM FOR RESPONDENT

CLAIMANT Cerulean Beans and Aromas Ltd

945 Moccasin Road Cerulean

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RESPONDENT Dynamic Shipping LLC 23 Fuchsia Crescent Cerulean

COUNSEL ▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁

SANGEETHA BADYA | LAURA HEIT | JOSHUA MCKERSEY | PRIAM RANGIAH

19th Annual International Maritime Law Arbitration Moot ▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁▁

In the matter of an arbitration under the LMAA Arbitration Rules


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TABLE OF CONTENTS LISTOFAUTHORITIES......................................................................................................................................................II

SUBMISSIONSONTHETRIBUNAL’SJURISDICTION..................................................................................................3

I. THEDISPUTESHOULDBEREFERREDTOEXPERTDETERMINATION...............................................................3

A. All‘technicalmatters’mustbereferredtoexpertdeterminationbeforearbitrationcanbecommenced

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B. TheDisputeConcerns‘TechnicalMatters’...............................................................................................................................4

SUBMISSIONSONTHEINCORPORATIONOFTHEHAGUERULES.........................................................................5

I. CLAUSE28INCORPORATESTHE1924HAGUERULES.............................................................................................5

SUBMISSIONSONDELAYANDDEVIATION.................................................................................................................6

I. THERESPONDENTISEXCUSEDFROMLIABILITYFORLOSSCAUSEDBYITSBREACHOFCL1.................6

A. TheStormwasaneventofForceMajeure..............................................................................................................................6

B. TheStormwastheeffectivecauseofdelay.............................................................................................................................7

II. ALTERNATIVELYTHERESPONDENTISEXCUSEDFROMLIABILITYFORLOSSCAUSEDBYITS

DEVIATIONTOSPECTRE.....................................................................................................................................................8

A. TheRESPONDENT’sdeviationwasreasonable..........................................................................................................................8

B. Alternatively,theRESPONDENT’sdeviationwastosavelifeorpropertyatsea......................................................9

SUBMISSIONSONDAMAGETOCOFFEEBEANS........................................................................................................10

I. THERESPONDENTDELIVEREDTHECOFFEEBEANSINGOODCONDITION.................................................11

B. Alternatively,theRESPONDENTdeliveredtheCoffeeBeans‘ascustomary’...........................................................12

II. THERESPONDENTEXERCISEDDUEDILIGENCETOENSURETHEVESSELWASSEAWORTHYIN

ACCORDANCEWITHART3(1)OFTHEHAGUERULES..........................................................................................12

III. THERESPONDENTPROPERLYANDCAREFULLYCAREDFORANDDISCHARGEDTHECOFFEEBEANS

INACCORDANCEWITHART3(2)OFTHEHAGUERULES.....................................................................................13


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A. TheRESPONDENTdischargedtheCoffeeBeansproperlyandcarefully...................................................................13

B. Alternatively,theRESPONDENTisexemptedfromliabilityunderart4(2).............................................................14

IV. THERESPONDENTDIDNOTBREACHCL34OFTHECHARTERPARTY...........................................................15

SUBMISSIONSONDAMAGES.........................................................................................................................................15

I. THECLAIMANTCANNOTRECOVERTHECOSTSOFBOTHTHEDAMAGEDCOFFEEBEANSANDTHE

SETTLEMENTPAYMENT..................................................................................................................................................16

II. INANYEVENT,THERESPONDENT’SLIABILITYISLIMITEDUNDERART4(5)OFTHEHAGUERULES17

SUBMISSIONSONTHEMARITIMELIENCLAIM........................................................................................................18

I. THECLAIMANTISNOTENTITLEDTOAMARITIMELIENOVERTHEVESSEL..............................................18

A. Thepresentfactsdonotfallwithintherecognisedcategorieswhichgiverisetoamaritimelien........18

B. TheCLAIMANTisnotentitledtobesubrogatedtothecrew’slien..............................................................................18

SUBMISSIONSONTHECOUNTERCLAIM....................................................................................................................20

I. THECLAIMANTISLIABLETOPAYTHERESPONDENTUSD1,610,000OWINGUNDERTHECHARTERPARTY................20

A. TheCLAIMANTisliableforfreightintheamountofUSD500,000..............................................................................20

B. TheCLAIMANTisliabletotheRESPONDENTfordemurrageintheamountofUSD100,000.............................21

C. TheCLAIMANTisliableforrepairstotheVessel’shullintheamountofUSD875,000.....................................21

D. TheCLAIMANTisliableforagencyfeesandthecostofelectronicaccesssystemsatDillamondinthe

amountofUSD60,000..................................................................................................................................................................................23

E. TheCLAIMANTisliableforagencyfeesatSpectreintheamountofUSD75,000................................................23

PRAYERFORRELIEF.......................................................................................................................................................25


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LIST OF ABBREVIATIONS

ABBREVIATION TERM

Access Authority Pass Electronic Access Authority Pass issued at the Port of

Dillamond

Australian Hague-Visby Rules Schedules 1 and 1A Carriage of Goods by Sea Act 1991 (Cth)

Charterparty The Voyage Charterparty

Coffee Beans 1000 x 70kg bags of Native Cerulean Coffee Beans

Claimant Cerulean Beans and Aromas Ltd

Dillamond The Port of Dillamond

Expert Report Statement of Expert Opinion of Simon Webster

Record International Maritime Law Arbitration Moot 2018 Moot

Scenario

Purchaser Coffees of the World

Respondent Dynamic Shipping LLC

Spectre The Port of Spectre

Storm Storm at Dillamond which commenced on 28 July 2017

Vessel The Ship ‘Madam Dragonfly’


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LIST OF AUTHORITIES

A. CASE

Albacora v Westcott & Laurance Line Ltd [1966] 2 Lloyd’s Rep 53

Athel Line Ltd v Liverpool & London War Risks Ins Assn Ltd [1994] KB 87

Australian Coastal Shipping Commission v Green [1971] 1 QB 456

Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653

Bunge AG v Fuga AG [1980] 2 Lloyd's Rep 513

Compania Naviera Azuero SA v British Oil & Cake Mills Ltd [1957] 1 Lloyd’s Rep 312

Constable v National SS Co (1894) 154 US 51

The Tasman Discoverer [2002] 2 Lloyd’s Rep 528

E L Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1973] 2 Lloyd’s

Rep 285

Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527

Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234

Gatliffe v Bourne 4 Bing NC 314

Goulandris Brothers v B Goldman & Sons [1957] 2 Lloyd’s Rep 207

Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998)

196 CLR 161

Hartono v Ministry for Primary Industries [2018] NZSC 17 (2 March 2018)

International Packers London Ltd v Ocean Steam Ship Co Ltd [1955] 2 Lloyd’s Rep 218

Keane v Australian Steamships Pty Ltd (1929) 41 CLR 484


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Kyokuyo Co Ltd v AP Møller-Maersk A/S [2017] 2 All ER (Comm) 922

Matsoukis v Priestman & Co [1915] 1 KB 681

Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196

Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazaros) [1976] 2 Lloyd’s Rep 47

Nesbitt v Lushington (1792) 4 TR 783

Nickolay Malakhov Shipping v Seas Sapfor (1998) 44 NSWLR 371

Peterson v Freebody & Co [1895] 2 QB 294

Phelps, James v Hill [1891] 1 QB 605

Postlethwaite v Freeland (1880) 5 App Cas 599

Premier Telecom Communications Group Ltd v Webb [2014] EWCA Civ 994

Re Dalma No 1 Pty Ltd (in liq) (2013) 279 FLR 80

Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries & Food [1963] 1 Lloyd’s Rep 12

Reveille Independent LLC v Anotech International (UK) Ltd [2016] EWCA Civ 443

Seabridge Shipping AB v AC Orssleff’s Eftf’s A/S (The Fjellvang) [1999] 2 Lloyd’s Rep 685

Shell International Petroleum Co v Seabridge Shipping (The Metula) [1978] 2 Lloyd’s Rep 5

Shipping Corporation of India Ltd, v Gamlen Chemical Co A/Asia Pty Ltd (1980) 147 CLR

142

Shoalhaven City Council v Firedam Civil Engineering Pty Ltd (2011) 244 CLR 305

Société Nouvelle d’Armement v Spillers & Bakers Ltd [1917] 1 KB 865

Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyd’s Rep 605


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Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328

TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130

The Al Taha [1990] 2 Lloyd's Rep 117

The Janet Wilson (1857) Swab 261

The Petone [1917] P 198

The River Gurara [1998] 1 Lloyd’s Rep 225

The Rosa S [1988] 2 Lloyd’s Rep 574

The Ship ‘Hako Endeavour’ v Programmed Total Marine Services Pty Ltd (2013) 211 FCR

369

The St Lawrence (188) 5 PD 250

The Tagus [1903] P 44

The Wasp (1867) LR 1 A & E 367

The William F Safford (1860) Lush 69, 167 ER 37

Toepfer v Cremer [1975] 2 Lloyd's Rep 118

Trade Green Shipping Inc v Securitas Bremer Allgemeine Verischerungs AG (The Trade

Green) [2000] 2 Lloyd’s Rep 451

Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603

Vlassopoulos v British and Foreign Marine Insurance Co (The Makis) [1929] 1 KB 187

Wenham v Ella (1972) 127 CLR 454

Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563


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B. ARTICLE/BOOK

D R Thomas, Maritime Liens (Stevens & Sons, 1980)

Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Ladings (Sweet & Maxwell,

23rd ed, 2015)

Kate Lewins, ‘Are the 1998 Amendments to COGSA Holding Water?’ (2000) 28 Australian

Business Law Review 422

Julian Cooke et al, Voyage Charters (Informa Law, 4th ed, 2014)

Justice Steven Rares, ‘The Onus of Proof in a Cargo Claim - Articles III and IV of the Hague-

Visby Rules and the Uncitral Draft Convention’ (2008) 31 Australian Bar Review 159

Sarah C Derrington and James M Turner QC, The Law and Practice of Admiralty Matters

(Oxford University Press, 2nd ed, 2016)

Martin Davies and Anthony Dickey, Shipping Law (Thomson Reuters, 4th ed, 2016)

Yvonne Baatz ‘Clauses Paramount’ in Charterparties; Law, Practice and Emerging Legal

Issues eds Andrew Tettenborn and Baris Soyer (Taylor & Francis: 2017)

C. LEGISLATION

International Convention for the Unification of Certain Rules of Law Relating to Bills of

Lading, open for signature 25 August 1924


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STATEMENT OF FACTS

1. On 22 July 2017, Dynamic Shipping LLC (RESPONDENT) entered into a voyage charterparty

(Charterparty) with Cerulean Beans and Aromas Ltd (CLAIMANT) for the shipment of native

Cerulean coffee beans (Coffee Beans) on the Madam Dragonfly (Vessel).1 The Charterparty

required delivery of the Coffee Beans from Cerulean to the Port of Dillamond (Dillamond) by 7pm

on 28 July, for use at a festival organised by the purchaser of the Coffee Beans, Coffees of the

World Ltd (Purchaser).2 The Vessel was expected to arrive at 5.00pm on 28 July.3

2. Prior to the execution of the Charterparty, the RESPONDENT requested that the CLAIMANT pay

USD100,000 into an account for crew’s wages.4 The RESPONDENT also amended the quantity of

goods in the Charterparty to read ‘4 containers of coffee’.5 The CLAIMANT did not object.

3. On 24 July, the Coffee Beans were inspected, and, consistent with industry standards placed into

sealed, waterproof shipping containers before the Vessel departed.6 During the voyage, solar flares

knocked out the Vessel’s communications and satellite systems, forcing the Vessel to deviate to

the Port of Spectre (Spectre).7 The solar flares were described as an ‘unprecedented international

emergency’, leaving outdoor travellers ‘fearing for their lives’.8

4. At approximately 4.28pm on 28 July, after the RESPONDENT had re-commenced the voyage, the

Vessel encountered a ‘freak storm’ (Storm).9 The crew dropped anchor in an attempt to avoid the

1 Record, 2: Letter from Claimant to Respondent of 22 July 2017. 2 Record, 2: Letter from Claimant to Respondent of 22 July 2017. 3 Record, 15: Letter from Respondent to Claimant of 24 July 2017. 4 Record, 1: Claimant’s Internal Memo of 19 July 2017. 5 Record, 14: Letter from Respondent to Claimant of 22 July 2017. 6 Procedural Order 2, [13]. 7 Record, 18: Email from Respondent to Claimant of 27 July 2017 at 7.17am. 8 Record, 35: ‘Solar Flares Knock out Global Communications’ Article in the Cerulean Mail of 25 July 2017. 9 Record, 22: Email from Respondent to Claimant of 28 July 2017 at 4.58pm.


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Storm. When the crew lifted anchor, the Vessel’s hull was damaged.10 At 7.00am on 29 July the

Dillamond Port Authority instructed the Vessel to wait ~100nm from Dillamond due to congestion

following the Storm.11

5. At 4.28pm on 29 July, the RESPONDENT notified the CLAIMANT that the Vessel was due to berth.12

The RESPONDENT discharged the Coffee Beans at 8.42pm.13 After waiting until midnight for the

CLAIMANT to take delivery, the RESPONDENT issued an electronic barcode created by the Dillamond

Port Authority (Access Authority Pass) at 12.02am on 30 July. 14 The Access Authority Pass

allowed the CLAIMANT to access the Coffee Beans at any time.15 According to maritime engineer

Simon Webster's expert opinion (Expert Report), three containers of Coffee Beans were

subsequently damaged between 4.30am on 30 July and 4.30am on 31 July due to prolonged use of

the sealant and unprecedented rainfall.16 The CLAIMANT claims damages for the value of the Coffee

Beans (USD15,750,000).17

6. The CLAIMANT also seeks compensation for the cost of supplying the Purchaser with alternative

coffee beans (USD9,450,000).18 In addition, the CLAIMANT requests the RESPONDENT to indemnify

the CLAIMANT for its voluntary settlement payment to the Purchaser (USD5,000,000).19 The

RESPONDENT denies liability for these amounts.20 The RESPONDENT counterclaims for damages

10 Record, 20: Email from Respondent to Claimant of 29 July 2017 at 8.58am. 11 Record, 20: Email from Respondent to Claimant of 29 July 2017 at 8.58am. 12 Record, 22: Email from Respondent to Claimant of 28 July 2017 at 4.58pm. 13 Record, 24: Email from Respondent to Claimant of 29 July 2017 at 8.42pm. 14 Record, 23: Access Authority Pass. 15 Ibid. 16 Record, 43: Maritime Engineer Simon Webster’s Expert Report. 17 Record, 37: Claimant Points of Claim [13]; Record, 30: Email from Claimant to Respondent of 2 August 2017 at 10.59am. 18 Ibid. 19 Ibid. 20 Record, 40: Respondent Points of Defence and Counterclaim [9].


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for freight, agency fees incurred at Spectre, hull repairs, demurrage and use of electronic access

systems at Dillamond (USD1,610,000).21 The CLAIMANT has referred these disputes to arbitration.

SUBMISSIONS ON THE TRIBUNAL’S JURISDICTION

I. THE DISPUTE SHOULD BE REFERRED TO EXPERT DETERMINATION

7. The Tribunal should refer the dispute to expert determination because: (A) all ‘technical matters’

must be referred to expert determination before arbitration can be commenced; and (B) the dispute

concerns ‘technical matters’.

A. All ‘technical matters’ must be referred to expert determination before arbitration can be

commenced

8. The Tribunal has prima facie jurisdiction to determine disputes ‘arising out of or in connection

with’ the Charterparty.22 However, this jurisdiction is limited by cl 27(d), which provides that ‘any

dispute as to technical matters... shall be referred to expert determination by an independent Master

Mariner.’23 Subclause (e) further provides that a party may not commence arbitration in respect of

disputes unless sub-cl (d) ‘has been complied with’.24 Clause 27, read as a whole, therefore requires

all ‘technical matters’ to be referred to expert determination prior to commencement of arbitration.

This interpretation accords with the commercial purpose of expert determination – to quickly and

inexpensively resolve matters involving the application of the expert’s special knowledge.25

9. Whether the Tribunal should stay the present proceedings therefore depends on whether the matters

pleaded by the CLAIMANT involve ‘technical matters.’

21 Ibid, 41[11]. 22 Record, 12: Charterparty, cl 27(a). 23 Ibid. 24 Ibid. 25 Shoalhaven City Council v Firedam Civil Engineering Pty Ltd (2011) 244 CLR 305, 315 [25] (French CJ, Crennan and Kiefel JJ); Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563, 570 [27] (Chesterman J); Premier Telecom Communications Group Ltd v Webb [2014] EWCA Civ 994, 9-13.


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B. The Dispute Concerns ‘Technical Matters’

10. Technical matters are defined in cl 27(g) as ‘matters surrounding technical aspects of the

performance of the charterparty, such as the vessel’s route, loading and unloading of cargo, storage

conditions.’26 This list of ‘technical matters’ is non-exhaustive and the concluding phrase, ‘and

other matters which can reasonably be considered within the expert technical knowledge of a

Master Mariner’, creates a class to which any technical matters must belong.

11. The dispute between the parties turns on the determination of several technical issues which may

reasonably be considered within the expert technical knowledge of a Master Mariner. The

following are examples of ‘technical matters’ in this dispute:

a. Whether the Vessel would have avoided the Storm if it had not deviated to Spectre.

A Master Mariner would have the expert technical knowledge required to calculate the time

added by the deviation, the average speed of ships of the Vessel’s class, the time required to

dock and depart from Spectre and Dillamond, and the sea conditions that could be expected.

b. Whether the deviation to Spectre was reasonable. This is a dispute about the ‘vessel’s

route’,27 turning on whether a ‘prudent person controlling the voyage’ would have deviated in

the circumstances.28 A Master Mariner would have expert technical knowledge about what a

prudent Master in the circumstances would have done.

c. Whether the Vessel was fit to encounter the ordinary perils of the voyage and the Coffee

Beans were properly cared for and discharged. This involves fact-intensive inquiry,

particularly into ‘the nature of the particular goods and conditions of weather and sea likely to

26 Record, 12: Charterparty, cl 27(g). 27 Ibid. 28 Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328, 343, 338, 346, 349.


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be encountered on the voyage.’29 A Master Mariner would have expert technical knowledge

of the conditions that would ordinarily be encountered on a voyage of this type and whether it

would have usually been adequate to apply a short term sealant. Indeed evidence from experts

is often sought on this issue.30

12. Resolution of these technical matters is critical to the determination of whether the RESPONDENT

has breached its obligations under the Charterparty. Whether the RESPONDENT is liable for the

delay in the delivery turns on (a) and (b).31 Whether the RESPONDENT has complied with art 3(1)

and 3(2) Hague Rules depends on (c).32 It would therefore be futile and contrary to the parties’

agreement for the Tribunal to hear the disputes until these matters have been referred to expert

determination.

SUBMISSIONS ON THE INCORPORATION OF THE HAGUE RULES

I. CLAUSE 28 INCORPORATES THE 1924 HAGUE RULES

13. In determining which version of the Hague Rules is incorporated, the Tribunal should consider

what the clause would mean to ‘reasonable shipping men’.33 When used in a Charterparty, the

words ‘Clause Paramount’, without further qualification, have been understood as a reference to

the 1924 Hague Rules.34 This is so even where the countries of shipment, destination and

governing law have enacted the Hague-Visby Rules.35

29 Shipping Corporation of India Ltd, v. Gamlen Chemical Co. A/Asia Pty.ltd. (1980) 147 CLR 142, 150 (Stephen J); Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 181 [49], 175 [34], 194 [86]. 30 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 203. 31 See below, [20]-[21], [23]-[25]. 32 See [37]-[38]. 33 Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazaros) [1976] 2 Lloyd’s Rep 47, 50. 34 Ibid; Seabridge Shipping AB v AC Orssleff’s Eftf’s A/S (The Fjellvang) [1999] 2 Lloyd’s Rep 685, 689; Julian Cooke et al, Voyage Charters (Informa Law, 4th ed, 2014) 996. 35 Seabridge Shipping AB v AC Orssleff’s Eftf’s A/S (The Fjellvang) [1999] 2 Lloyd’s Rep 685, 689.


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14. In the absence of ‘plain’ evidence to the contrary, it must be presumed that the parties intended to

wholly incorporate the Hague Rules.36 Here, there is no qualification on the words ‘Clause

Paramount’ and hence nothing to suggest that reasonable shipping men would understand cl 28 as

incorporating anything but the Hague Rules.37

SUBMISSIONS ON DELAY AND DEVIATION

15. The RESPONDENT concedes that it did not deliver the Coffee Beans by 7.00pm on 28 July. The

CLAIMANT contends that, as a result, it incurred costs of USD9,450,000 in sourcing alternative

coffee beans and USD5,000,000 to settle the Purchaser’s potential claims.

16. The RESPONDENT is not liable for these losses because: (I) the RESPONDENT is excused from

liability for loss caused by its breach of cl 1; or (II) alternatively, the RESPONDENT is excused from

liability for loss caused by its deviation to Spectre.

I. THE RESPONDENT IS EXCUSED FROM LIABILITY FOR LOSS CAUSED BY ITS

BREACH OF CL 1

17. Clause 17 of the Charterparty provides that ‘neither party shall be liable for any...delay in

performing its obligations under the Contract, where the party is being...delayed from doing so by

reasons of any Force Majeure Event’.38 The RESPONDENT is excused from any liability for loss

caused by its breach of cl 1 pursuant to cl 17 because: (A) the Storm was an event Force Majeure;

and (B) the Storm was the effective cause of delay.

A. The Storm was an event of Force Majeure

18. The Storm was a ‘Force Majeure Event’ within the meaning of cl 17(b) as it was not an ‘unforeseen

36 Nea Agrex SA v Baltic Shipping Co Ltd (The Agios Lazaros) [1976] 2 Lloyd’s Rep 47, 50; Dairy Containers Ltd v The Ship The ‘Tasman Discoverer’ [2002] 2 Lloyd’s Rep 528, [30]. 37 Yvonne Baatz ‘Clauses Paramount’ in Charterparties; Law, Practice and Emerging Legal Issues eds Andrew Tettenborn and Baris Soyer (Taylor & Francis: 2017), 249. 38 Record, 9: Charterparty, cl 17.


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weather event’.39

19. The Storm was not picked up by radars until roughly 45 minutes before it hit and was described as

a ‘freak’ and ‘once in a lifetime’ event.40 It has been consistently held by the courts that abnormal

weather events, such as hurricanes and subsequent rain and flood events, can be instances of force

majeure.41 Unlike simple bad weather, which is a usual event of voyages,42 the effects of the Storm

on 28 July were felt for four days, and the Storm forced the evacuation of thousands of Dillamond

residents.43 Further, an event characterised as ‘freak’ and ‘once in a lifetime’ cannot also be

considered a usual event capable of foreseeability. Although, at the time of entering the

Charterparty, the RESPONDENT may have contemplated bad weather as part of the usual events of

a voyage,44 it could not have foreseen, or be expected to have foreseen, a storm of this magnitude.

B. The Storm was the effective cause of delay

20. The Tribunal should find that the Storm, which hit at 5.15pm on 28 July, caused the Coffee Beans

to be delivered after 7.00pm. At 4.28pm on 28 July, when the Storm was detected on radars, the

Vessel stopped to avoid its impact.45 It would have been futile for the Vessel to proceed, as the

Storm caused the closure of the Port of Dillamond for 12 hours,46 and resulted in significant

congestion. Due to this congestion, the Vessel was ordered to wait 100nm from Dillamond until at

least 8.58am on 29 July.47

39 Ibid. 40 Record, 21: ‘“Once in a Lifetime” Storm Closes Airport, Port, Rivers’ Article in the Dillamond Times of 29 July 2017. 41 See Toepfer v Cremer [1975] 2 Lloyd's Rep 118, 121; Bunge AG v Fuga AG [1980] 2 Lloyd's Rep 513, 513. 42 Matsoukis v Priestman & Co [1915] 1 K.B. 681, 687. 43 Record, 36: ‘Flooding After Storm’ Article in the Dillamond Times Article of 1 August 2017. 44 Matsoukis v Priestman & Co [1915] 1 KB 681, 687. 45 Record, 19: Email from Respondent to Claimant of 28 July 2017 at 5.48pm. 46 Record, 21: ‘“Once in a Lifetime” Storm Closes Airport, Port, Rivers’ Article in the Dillamond Times of 29 July 2017. 47 Record, 20: Email from Respondent to Claimant of 29 July 2017 at 8.58am.


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21. The Tribunal should find that, on the balance of probabilities, the RESPONDENT would have

discharged the Coffee Beans by 7.00pm 28 July but for the Storm. The Storm was therefore the

cause of the CLAIMANT’s loss.

II. ALTERNATIVELY THE RESPONDENT IS EXCUSED FROM LIABILITY FOR LOSS

CAUSED BY ITS DEVIATION TO SPECTRE

22. On 25 July the RESPONDENT stopped at Spectre,48 deviating from the customary route.49 However,

even if this deviation, not the Storm, caused the delay, the RESPONDENT is excused from liability

for any resulting losses by art 4(4) of the Hague Rules because: (A) the RESPONDENT’s deviation

was reasonable; or (B) alternatively, the RESPONDENT’s deviation was to save life or property at

sea.

A. The RESPONDENT’s deviation was reasonable

1. A prudent person would have deviated in the circumstances

23. Article 4(4) of the Hague Rules provides that the carrier is not liable for damage caused by a

‘reasonable deviation’. A reasonable deviation is one that would have been made by a ‘prudent

person controlling the Vessel, in light of all the circumstances.50 A prudent master must have

regard to his or her duty to take care of the crew, ship and cargo, and, where an imminent peril

becomes apparent, to deviate to avoid the danger.51

24. For 17 hours from 9.30pm on 25 July, the Vessel had no access to communication or navigational

systems,52 and was thus unable to chart a safe, direct course to Dillamond. Not only was the Vessel

48 Record, 17: Email from Respondent to Claimant of 26 July 2017 at 2.32pm. 49 Record, 19: Email from Respondent to Claimant of 28 July 2017 at 4.58pm; Record, 39: Claimant Points of Claim, Annexure A. 50 Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328, 343-4 (Lord Wright). 51 International Packers London Ltd v Ocean Steam Ship Co Ltd [1955] 2 Lloyd’s Rep 218, 235; Phelps, James v Hill [1891] 1 QB 605, 611; Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Ladings (Sweet & Maxwell, 23rd ed, 2015) 291-2. 52 Record, 35: ‘Solar Flares Knock out Global Communications’ Article in the Cerulean Mail of 25 July 2017.


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unable to navigate, but it was also unable to request assistance or ascertain how long satellite

systems may be down for. Further, without maps to Dillamond, it was futile for the RESPONDENT

to continue the planned voyage. In the premises, the only reasonable course of action available to

the RESPONDENT was to deviate to a port where it could seek to have its systems repaired.

2. The liberty to deviate is not displaced by the Vessel’s unseaworthiness

25. Shipowners have liberty to deviate even if necessitated by the vessel’s own unseaworthiness, unless

the shipowner actually knew of the unseaworthiness before loading.53 It is not enough that the

RESPONDENT should have had knowledge – the CLAIMANT must show that the RESPONDENT had

actual knowledge of the factors necessitating deviation; ‘mere imprudence… is not knowledge’.54

There is no indication that the RESPONDENT had actual knowledge of the Vessel’s unseaworthiness

owing to its lack of current hard copy maps.55

B. Alternatively, the RESPONDENT’s deviation was to save life or property at sea

1. The Respondent was entitled to deviate to save life or property under cl 17 of the

Charterparty and/or art 4(4) of the Hague Rules

26. Article 4(4) of the Hague Rules provides that the carrier is not liable for damage caused by a

‘deviation in saving or attempting to save life or property at sea’. This liberty is, in substance,

identical to the liberty set out in cl 17 of the Charterparty.

27. Once the solar flares disrupted the Vessel’s navigational equipment at approximately 9.30pm, the

Vessel could not safely navigate to Dillamond.56 Further, the Vessel’s communication systems

had failed, meaning she had no way to communicate her distress. The combination of these

53 Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196, 211 (Lord Porter); The Al Taha [1990] 2 Lloyd's Rep 117, 128. 54 A/B Karlshamns Oljefabriker and Another v Monarch Steamship Company Ltd (1948) 82 Lloyd’s Rep 137, 145. 55 The Al Taha [1990] 2 Lloyd's Rep 117, 127. 56 See above, [23]-[24].


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circumstances was such that it would have caused the crew to fear for their safety.57 The

RESPONDENT’S paramount duty was to ensure the safety of the crew, ship and cargo,58 and, as such,

it would have been dangerous for the Vessel not to seek harbour at Spectre.

2. The liberty to deviate is not qualified by an obligation of due diligence

28. The qualification in cl 17 provides that ‘all the above exceptions are conditional on the exercise of

due diligence to make the ship seaworthy’.59 The liberty to deviate to save life or property

enunciated in art 4(4) and cl 17 is a right afforded to the shipowner, rather than an exception from

liability. The purpose of the liberty is to allow the shipowner to discontinue an unsafe voyage

without fear of liability. If this liberty was tempered by an obligation of due diligence, it would

have a chilling effect, discouraging shipowners from deviating where the vessel, crew and cargo

were in peril. Accordingly, the Tribunal should find that the liberty to deviate afforded by art 4(4)

and cl 17 is not conditional on the exercise of due diligence.

SUBMISSIONS ON DAMAGE TO COFFEE BEANS

29. The RESPONDENT is not liable to pay the CLAIMANT USD15,750,000 for the damaged Coffee Beans

because: (I) the RESPONDENT delivered the Coffee Beans in good condition; (II) the RESPONDENT

exercised due diligence to ensure the Vessel was seaworthy in accordance with art 3(1) of the

Hague Rules; (III) the RESPONDENT properly and carefully cared for and discharged the Coffee

Beans in accordance with art 3(2) of the Hague Rules; and (IV) the RESPONDENT did not breach cl

34 of the Charterparty.

57 The Al Taha [1990] 2 Lloyd's Rep 117, 127. 58 International Packers London Ltd v Ocean Steam Ship Co Ltd [1955] 2 Lloyd’s Rep 218, 235; Phelps, James v Hill [1891] 1 QB 605, 611; Eder, et al, Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Ladings (Sweet & Maxwell, 23rd ed, 2015) 291-2. 59 Record, 9: Charterparty, cl 17.


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I. THE RESPONDENT DELIVERED THE COFFEE BEANS IN GOOD CONDITION

30. If the goods were delivered in good condition, no prima facie case arises that the carrier has

breached its obligation under art 3(1) or 3(2).60 Delivery occurred at 12.02am on 30 July. This is

because: (A) the RESPONDENT waited a ‘reasonable time’ before leaving the Coffee Beans at

Dillamond; or (B) alternatively, the RESPONDENT delivered the Coffee Beans ‘as customary’.

31. According to the Expert Report, the Coffee Beans were damaged sometime between 4.30am on 30

July and 4.30am on 31 July.61 As such, the Coffee Beans were damaged prior to delivery, meaning

that there is no prima facie breach.

A. The RESPONDENT waited a ‘reasonable time’ before leaving the Coffee Beans at Dillamond

32. Delivery ordinarily requires the cooperation of both shipowner and charterer.62 However, where a

charterer fails to collect discharged goods after a ‘reasonable time’ has passed, the shipowner can

complete delivery by leaving the goods at the port of discharge.63

33. At 4.28pm on 29 July, the RESPONDENT notified the CLAIMANT that delivery was expected at

approximately 7.00pm and that the RESPONDENT would wait with the Coffee Beans until

midnight.64 At 8.42pm, the RESPONDENT once again notified the CLAIMANT of discharge.65

Despite the RESPONDENT giving the CLAIMANT approximately 8 hours’ notice, the CLAIMANT did

not make any attempt to communicate with the RESPONDENT or accept delivery, even in

circumstances where it considered delivery to be urgent and weather conditions posed a serious

60 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 197 [98] (McHugh J); Justice Steven Rares, ‘The Onus of Proof in a Cargo Claim - Articles III and IV of the Hague-Visby Rules and the Uncitral Draft Convention’ (2008) 31 Australian Bar Review 159[56]. 61 Record, 43: Maritime Engineer Simon Webster’s Expert Report. 62 Peterson v Freebody & Co [1895] 2 QB 294, 297. 63 Keane v Australian Steamships Pty Ltd (1929) 41 CLR 484, 491 ( Knox CJ, Gavan & Duffy JJ); Gatliffe v Bourne 4 Bing NC 314. 64 Record, 23: Access Authority Pass. 65 Record, 24: Email from Respondent to Claimant of 29 July 2017 at 8.42pm.


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threat to the Coffee Beans.66 At 12.02am on 30 July, having waited for approximately 8 hours,

without any response from the CLAIMANT, the RESPONDENT had allowed a reasonable time to

elapse. The RESPONDENT was therefore entitled to leave the Coffee Beans at a secure facility at

Dillamond, accessible only with a barcode and delivered via the Access Authority Pass at 12.02am

B. Alternatively, the RESPONDENT delivered the Coffee Beans ‘as customary’

34. Delivery may occur in accordance with the ‘custom and usage of the Port’.67 Specifically, here the

RESPONDENT was entitled to deliver ‘as customary’ to the port of discharge.68 The Access

Authority Pass, created and maintained by the Dillamond Port Authority is a unique custom of

Dillamond.69 Consequently, the issuing of the Access Authority Pass from the RESPONDENT to the

CLAIMANT at 12.02am constituted delivery.

35. For these reasons, the RESPONDENT delivered the Coffee Beans at 12.02am on 30 July, well before

the damage occurred. Consequently, no prima facie case of breach arises under art 3(1).

II. THE RESPONDENT EXERCISED DUE DILIGENCE TO ENSURE THE VESSEL WAS

SEAWORTHY IN ACCORDANCE WITH ART 3(1) OF THE HAGUE RULES

36. The RESPONDENT complied with art 3(1) of the Australian Hague Visby Rules, which provides that

a carrier must, at the beginning of the voyage, exercise ‘due diligence’ to make the ship seaworthy.

The obligation of due diligence under art 3(1), requires carriers to ensure the vessel is fit to meet

the conditions it may encounter on the voyage in light of all the circumstances.70 Whether the

RESPONDENT has met this obligation must be assessed at the beginning of the voyage.71

66 Record, 2: Letter from Claimant to Respondent of 22 July 2017. 67 Constable v. National SS. Co (1894) 154 US 51, 63. 68 Record, 8: Charterparty, cl 14(a). 69 Procedural Order 2, [16]. 70 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 175; Martin Davies and Anthony Dickey, Shipping Law (Thomson Reuters, 4th ed, 2016) 450. 71 Ibid.


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37. The voyage was anticipated to take 4 days and 8 hours, with delivery by 5.00pm on 28 July,72 and

the RESPONDENT applied a sealant with guaranteed waterproofing for 5 days - 16 hours beyond the

duration of the scheduled voyage.73 The RESPONDENT could not have anticipated that the voyage

would be delayed for more than 16 hours by the Storm, as it was unforeseen,74 and the sealant

would expire prior to delivery.75 In light of the circumstances known to the parties at the beginning

of the voyage, the RESPONDENT exercised due diligence to ensure the Vessel was seaworthy.

III. THE RESPONDENT PROPERLY AND CAREFULLY CARED FOR AND DISCHARGED

THE COFFEE BEANS IN ACCORDANCE WITH ART 3(2) OF THE HAGUE RULES

38. Article 3(2) of the Hague Rules obliges the carrier to ‘properly and carefully load, handle, stow,

carry, keep, care for, and discharge the goods carried.’ The RESPONDENT has satisfied this

obligation because: (A) the RESPONDENT discharged the Coffee Beans properly and carefully; or

(B) alternatively, the RESPONDENT is exempted from liability under art 4(2).

A. The RESPONDENT discharged the Coffee Beans properly and carefully

39. The obligations under art 3(2) end on discharge, when the cargo crosses the ship’s rail or is

delivered from the ship’s tackle.76 After discharge, the parties’ respective liability will depend on

the terms of the Charterparty.77 There is no indication that the RESPONDENT has contractually

undertaken to care for the Coffee Beans after discharge.

72 Procedural Order 2, [7]; Record, 15: Letter from Respondent to Claimant of 24 July 2017. 73 Record, 14: Letter from Respondent to Claimant of 22 July. 74 See above, [18] – [19]. 75 Record, 19: Email from Respondent to Claimant of 28 July 2017 at 4.58pm. 76 Nickolay Malakhov Shipping v Seas Sapfor (1998) 44 NSWLR 371, 408 (Close JA); for discussion in the context of Australilan Hague-Visby Rules see Kate Lewins, ‘Are the 1998 Amendments to COGSA Holding Water?’ (2000) 28 Australian Business Law Review 422. 77 Nickolay Malakhov Shipping v Seas Sapfor (1998) 44 NSWLR 371, 389.


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40. The Coffee Beans were discharged safely at Dillamond at 8.42pm on 29 July78 – approximately

8hrs before the Coffee Beans were damaged.79 Consequently, the RESPONDENT has satisfied its

obligation to properly and carefully discharge.

B. Alternatively, the RESPONDENT is exempted from liability under art 4(2)

41. The obligations under art 3(2) are expressly subject to art 4.80 In this case, the RESPONDENT is

exempted from liability for the damage to the Coffee Beans because it was caused by either: (1)

the Storm, which was a peril of the sea;81 or (2) the deviation to Spectre, which was an attempt to

save life or property.82

1. The Damage was caused by the Storm, which was a Peril of the Sea

42. Article 4(2)(c) exempts parties from liability caused by ‘perils, dangers and accidents of the sea.’

The Storm, a peril of the sea, delayed the voyage, causing the sealant to expire prior to delivery.

43. Perils of the sea need not be ‘catastrophic’ or ‘unforeseeable’, but such expressions assist in

explaining why cargo which was otherwise properly cared for under art 3(2) was nonetheless

damaged.83 The Storm was unforeseeable, appearing on radars just 30 minutes before it hit.84 It

brought ‘rain, hail, and severe winds’, knocked down powerlines and trees, and forced the

evacuation of 40,000 Dillamond residents.85

44. The Storm, being of such a magnitude, caused significant delays. It was these delays which caused

the sealant, which would otherwise have been adequate for the voyage, to expire.

78 Record, 24: Email from Respondent to Claimant of 29 July 2017 at 8.42pm. 79 Record, 43: Maritime Engineer Simon Webster’s Expert Report. 80 International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, open for signature 25 August 1924, art 3(2) (‘Hague Rules’). 81 Hague Rules, art 4(2)(c). 82 Ibid, art 4(2)(l). 83 Great China Metal Industries Co Ltd v Malaysian International Shipping Corp Berhad (1998) 196 CLR 161, 179 [44]. 84 Record, 19: Email from Respondent to Claimant of 28 July 2017 at 4:58pm. 85 Record, 21;‘“Once in a Lifetime” Storm Closes Airport, Port, Rivers’ Article in the Dillamond Times of 29 July 2017; Record, 36: ‘Flooding After Storm’ Article in the Dillamond Times of 1 August 2017.


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2. Alternatively, the damage was caused by the deviation to Spectre, which was an attempt

to save life or property

45. Alternatively, the RESPONDENT will be exempted from liability if the damage was caused by an

attempt to save life or property.86 The RESPONDENT’s deviation to Spectre was an attempt to save

life or property.87

IV. THE RESPONDENT DID NOT BREACH CL 34 OF THE CHARTERPARTY

46. Under cl 34 of the Charterparty, the RESPONDENT warranted that the Vessel would, ‘at presentation

for both loading and discharge, conform with the quality standards required to transport the

nominated coffee cargo for the duration of the scheduled voyage.’88

47. In this case, the duration of the scheduled voyage was 4 days and 8 hours.89 Consistent with normal

industry practice, the RESPONDENT shipped the Coffee Beans in fibre bags in waterproof

containers.90 It used a sealant with ‘guaranteed waterproofing’ for up to five days,91 ensuring that

the Coffee Beans would be waterproofed for at least 16 hours after the scheduled voyage. The

RESPONDENT did not breach cl 34 because it ensured that the Coffee Beans remained waterproof

for the duration of the scheduled voyage.

SUBMISSIONS ON DAMAGES

48. Even if the RESPONDENT breached the Charterparty, the CLAIMANT cannot recover the full

USD30,200,000 it claims in damages because: (I) the CLAIMANT cannot recover the costs of both

the damaged Coffee Beans and the settlement payment; and (II) in any event, the RESPONDENT’s

liability is limited under art 4(5) of the Hague Rules.

86 Hague Rules art 4(2)(l). 87 See above [27]-[28]. 88 Record, 13: Charterparty, cl 34. 89 Procedural Order 2, [7]. 90 Ibid, [12]. 91 Record, 14: Letter from Respondent to Claimant of 22 July 2017.


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I. THE CLAIMANT CANNOT RECOVER THE COSTS OF BOTH THE DAMAGED

COFFEE BEANS AND THE SETTLEMENT PAYMENT

49. It is unclear whether the CLAIMANT received the purchase price of USD15,750,000 from the

Purchaser but: (A) if the CLAIMANT received the purchase price for the Coffee Beans, it cannot

recover the value of the damaged Coffee Beans as this would amount to double recovery; and (B)

if the CLAIMANT did not receive the purchase price of the Coffee Beans, it cannot recover the cost

of the settlement payment with the Purchaser.

A. If the CLAIMANT received the purchase price for the Coffee Beans, it cannot recover the value

of the damaged Coffee Beans

50. Had the Charterparty been performed, the CLAIMANT would have received USD15,750,000 for the

three damaged containers of Coffee Beans from the Purchaser. If the CLAIMANT received the

purchase price, it cannot claim USD15,750,000 from the RESPONDENT for the value of the damaged

Coffee Beans, as this would mean it would receive the purchase price for the Coffee beans twice

and would be placed in a better position than it would have been had the Charterparty been

performed.92

B. If the CLAIMANT did not receive the purchase price for the Coffee Beans, it cannot recover

the cost of the settlement payment with the Purchaser

51. If the CLAIMANT did not receive the purchase price, it cannot recover the cost of the settlement

payment with the Purchaser, as this costs was incurred unreasonably.93 The CLAIMANT will have

provided the Purchaser with USD9,450,000 worth of coffee beans free of charge and nonetheless

paid an additional USD5,000,000 as a settlement payment. This would only have been reasonable

92 Wenham v Ella (1972) 127 CLR 454, 471; Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653, 667. 93 Sotiros Shipping Inc v Sameiet Solholt (The Solholt) [1983] 1 Lloyd’s Rep 605, 608; Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603, 608-9[6]; TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130, 162.


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if the loss incurred by the Purchaser was close to USD14,450,000. However, the festival was ‘very

successful’, meaning the CLAIMANT could not possibly have suffered such a large loss.94 In any

event, the settlement payment was paid less than 4 days after the alleged breach occurred,95 in

which time it would have been impossible for the CLAIMANT to assess its potential liability.96 For

these reasons, the CLAIMANT cannot recover the USD5,000,00 on the settlement payment.

II. IN ANY EVENT, THE RESPONDENT’S LIABILITY IS LIMITED UNDER ART 4(5) OF

THE HAGUE RULES

52. The RESPONDENT’s liability for loss is limited pursuant to art 4(5) of the Hague Rules. The

RESPONDENT’s limitation under art 4(5) should be calculated by reference to the three damaged

containers.97

53. Although generally a container will not constitute the relevant ‘package’ for the purpose of art

4(5),98 in this case the circumstances are distinguishable from the authorities because the parties

have contractually agreed to limitation by reference to the number of containers. In the River

Gurara,99 Phillips LJ found that statements in a bill of lading were not binding for the purposes of

art 4(5) because such statements ‘do not constitute an agreement between the parties as to the

identity of the cargo’. In contrast, here, the agreed form of the Charterparty stated the goods as ‘4

containers of Coffee Beans’.100

54. Although the final form of the Charterparty was not signed by the CLAIMANT, it was accepted by

the CLAIMANT’s conduct,101 and the parties proceeded with their contractual obligations on the

94 Record, 29: Letter from Purchaser to Claimant of 1 August 2017. 95 Ibid. 96 See Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603, 608-9[6] 97 Hague Rules art 4(5). 98 Kyokuyo Co Ltd v A.P. Møller – Maersk A/S (trading as “Maersk Line”) [2017] 2 All ER (Comm) 922, [67]. 99 [1998] 1 Lloyd’s Rep 225, 233 (Phillips LJ). 100 Record, 14: Letter from Respondent to Claimant of 22 July 2017. 101 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 527; Reveille Independent LLC v Anotech International (UK) Ltd [2016] EWCA Civ 443, [45].


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assumption that the lower limit of liability applied. This Tribunal should uphold the contractual

allocation of risk between the parties and find that the RESPONDENT’s liability is limited pursuant

to art 4(5) in the amount of USD29,812.41 per container,102 and USD89,437.23 in total.

SUBMISSIONS ON THE MARITIME LIEN CLAIM

I. THE CLAIMANT IS NOT ENTITLED TO A MARITIME LIEN OVER THE VESSEL

55. The CLAIMANT contends it holds a ‘maritime equitable lien’ over the Vessel.103 No such concept

is recognised in the laws of admiralty. The Tribunal should find that: (A) the present facts do not

fall within the recognised categories which give rise to a maritime lien. Further, if the RESPONDENT

is claiming subrogation as an equitable remedy (B) the CLAIMANT is not entitled to be subrogated

to the crew’s lien.

A. The present facts do not fall within the recognised categories which give rise to a maritime

lien

56. The categories in which a maritime lien can be recognised are closed, capable only of extension by

statute.104 While a lien for the unpaid wages of a crew is well established, the present facts do not

fall within any of the recognised categories of maritime lien.105

B. The CLAIMANT is not entitled to be subrogated to the crew’s lien

1. Subrogation, as a remedy, is not available where a third party pays a crew’s wages

57. It is firmly established that a person who purports to pay the crew’s wages is not, by that fact alone,

102 732.238g of fine gold as calculated in The Rosa S [1988] 2 Lloyd’s Rep 574, 577 × 40.7527 (value of gold per gram at date of delivery, 31 July 2017) = 29,812.4112 (3) = USD89,437.23 total. 103 Record, 38: Claimant’s Points of Claim, [13]. 104 Sarah C Derrington and James M Turner QC, The Law and Practice of Admiralty Matters (Oxford University Press, 2nd ed, 2016), 55. 105 The Ripon City [1897] P 226, 242 (Gorrell Barnes J); Derrington and Turner, above n 102, 57.


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entitled to be subrogated to the crew’s lien.106 In the Petone, Hill J concluded that the weight of

authority was strongly against the doctrine ‘that the man who has paid off the privileged claimant

stands in the shoes of the privileged claimant and has his lien, whether it be regarded as a general

doctrine or applied to wages only’.107 While the Admiralty Court originally countenanced

subrogation in circumstances where a third party had paid a crew’s wages without prior court

sanction, this practice was abolished by Dr Lushington in the Janet Wilson, primarily because it

unfairly prejudiced other bona fide third party creditors.108 Justice Hill affirmed this in the

Petone.109 The Tribunal would be disregarding an unquestioned line of authority if it were to allow

the CLAIMANT to be subrogated to the crew’s position.

2. In the alternative, the CLAIMANT is not entitled to a remedy of subrogation on the present

facts

58. In any event, the circumstances of the case are such that the doctrine of subrogation is not engaged.

The CLAIMANT has not paid the crew’s wages.110 Thus, it has not actually discharged the

RESPONDENT’s obligation and it is still open for the Vessel’s crew to exercise a lien over the Vessel.

Indeed, the crew of the Vessel ‘have foreshadowed separate legal action against the company to

recover unpaid wages for a number of voyages’.111

59. Further, the CLAIMANT cannot prove that the payment was not made voluntarily. The CLAIMANT

was under no legal compulsion to advance the crew’s wages. The correspondence relating to the

106 The Petone [1917] P 198, 208–9 (Hill J); The Ship ‘Hako Endeavour’ v Programmed Total Marine Services Pty Ltd (2013) 211 FCR 369, 398 [102] (Rares J); Hartono v Ministry for Primary Industries [2018] NZSC 17 (2 March 2018) [28]; D R Thomas, Maritime Liens (Stevens & Sons, 1980) 267. 107 See the William F Safford (1860) Lush 69, 167 ER 37; The Wasp (1867) LR 1 A & E 367; The St Lawrence (188) 5 PD 250; The Tagus [1903] P 44. 108 The Janet Wilson (1857) Swab 261. 109 The Petone [1917] P 198, 200. 110 Record, 38: Claimant’s Statement of Claim [12]; Record, 41: Respondent’s Points of Defence and Counterclaim [10]. 111 Procedural Order 2, [20].


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payment of the USD100,000 appears in an internal memo of the CLAIMANT.112 Although the

CLAIMANT expresses an intention to be repaid the sum advanced, it is not clear whether this was

communicated to the RESPONDENT.113 Parties who voluntarily discharge payments owed to the

crew cannot be subrogated to the crew’s lien for wages.114

60. In the premises, the Tribunal should find that the CLAIMANT is not entitled to a maritime lien over

the Vessel either by direct entitlement or by subrogation.

SUBMISSIONS ON THE COUNTERCLAIM

I. The CLAIMANT is liable to pay the RESPONDENT USD 1,610,000 owing under the Charterparty

61. This amount consists of: (A) freight; (B) demurrage; (C) repairs to the hull; (D) agency fees and

use of the electronic access systems at Dillamond; and (E) agency fees at Spectre.

A. The CLAIMANT is liable for freight in the amount of USD500,000

62. The RESPONDENT delivered the Coffee Beans to the CLAIMANT, undamaged and in a merchantable

condition, at 12.02am on 30 July.115 Freight was earned in full upon delivery.116 Thus, the

CLAIMANT is liable to the RESPONDENT for USD500,000 in respect of freight.117

63. In any event, under cl 22, freight was to be ‘calculated on Bill of Lading weight on completion of

load’.118 The amount of freight payable was therefore fixed as the amount ascertained at loading,119

being USD500,000. Upon delivery, this amount became payable by the CLAIMANT under the

Charterparty.

112 Record, 1: Claimant’s Internal Memo of 19 July 2017. 113 Ibid. 114 The Petone [1917]; Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 (CA), Bowen LJ at 248 (referred to in Re Dalma No 1 Pty Ltd (in liq) (2013) 279 FLR 80. 115 Paragraph [31]-[36]. 116 Record, 11: Charterparty, cl 22. 117 Record, 3: Charterparty, Box 11. 118 Record, 11: Charterparty, cl 22. 119 Shell International Petroleum Co v Seabridge Shipping (The Metula) [1978] 2 Lloyd’s Rep 5, 7 (Lord Denning MR), 8 (Roskill LJ).


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B. The CLAIMANT is liable to the RESPONDENT for demurrage in the amount of USD100,000

64. Clause 8(c)(ii) provides for fixed laytime of half a weather working day in respect of discharge.120

The Tribunal should find that 29 July was a weather working day because the Vessel was, in fact,

unloaded.121

65. Laytime commences when the vessel ‘arrives at the discharge port’.122 A vessel is considered to

have arrived at the port of discharge when, in circumstances where it cannot proceed directly to a

berth, it is at a place where ships usually lie when waiting for a berth at that port.123 The Vessel

arrived at Dillamond at 7.00am on 29 July because, at this time, the Port Authority ordered that it

wait in position to berth with other vessels, and it was within the pilotage limits of the Port.124 In

the premises, laytime expired at 7.00pm on that day.

66. The discharging operation concluded at approximately 12.00am on 30 July, exceeding laytime by

approximately five hours.125 Consequently the CLAIMANT is liable to the RESPONDENT for

demurrage in the amount of USD100,000.

C. The CLAIMANT is liable for repairs to the Vessel’s hull in the amount of USD875,000

67. Clause 19 of the Charterparty incorporates the York Antwerp Rules. Article A of the Rules

provides that parties must contribute to payment of general average where: the parties are in a

‘common maritime adventure’, a party makes an ‘extraordinary sacrifice or expenditure’ for the

purpose of preserving property, and the sacrifice is ‘intentionally and reasonably made’.126 It is

120 Record, 6: Charterparty, cl 8(c)(ii). 121 Record, 24: Email from Respondent to Claimant 29 July 2017 at 8.42pm; Compania Naviera Azuero SA v British Oil & Cake Mills Ltd [1957] 1 Lloyd’s Rep 312, 329 (Pearson J); Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries & Food [1963] 1 Lloyd’s Rep 12, 41 (Lord Devlin). 122 Record, 6: Charterparty cl 8(c)(ii). 123 E L Oldendorff & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1973] 2 Lloyd’s Rep 285, 291 (Lord Reid), 302 (Viscount Dilhorne), 307 (Lord Diplock). 124 Record, 20: Email from Respondent to Claimant of 29 July 2017 at 8.58am. 125 Record, 22: Email from Respondent to Claimant of 28 July at 4.58pm; Record, 23: Access Authority Pass. 126 York-Antwerp Rules 2016, Rule A.


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uncontentious that the parties are in a common maritime adventure.127

1. The RESPONDENT dropped anchor as ‘a sacrifice to preserve imperilled property’

68. A general average act must be done in response to a real peril faced by the common adventure.128

The Storm on 28 July was a peril to both the ship and the Coffee Beans. The Storm brought hail

and severe winds,129 each of which posed a distinct risk to the Vessel. Further, the Coffee Beans

were particularly sensitive to moisture.130 In summary, the Storm posed a substantial and real

peril.131 The RESPONDENT anchored the Vessel as they thought they would avoid the Storm’.132

This was a precautionary measure to avert the imminent threat the Storm posed.133

69. The RESPONDENT’s act of dropping anchor an ‘extraordinary sacrifice’. This type of loss is

encompassed by art II: ‘loss of or damage to the property involved in the common maritime

adventure by or in consequence of a sacrifice made for the common safety... shall be allowed as

general average.’

2. The RESPONDENT’s act was reasonable

70. The Rule Paramount of the York-Antwerp Rules provides that ‘in no case shall there be any

allowance for sacrifice or expenditure unless reasonably made or incurred’. The Master has

freedom to choose which action will best benefit the common adventure.134 Under Rule D, the

general average contribution is not affected even where one party was at fault.

71. Although the decision to drop anchor did not cause the crew to avoid the peril, it was still

127 Trade Green Shipping Inc v. Securitas Bremer Allgemeine Verischerungs AG (The Trade Green) [2000] 2 Lloyd’s Rep 451, [4]. 128 Nesbitt v Lushington (1792) 4 TR 783. 129 Record, 21: ‘“Once in a Lifetime” Storm Closes Airport, Port, Rivers’ Article in the Dillamond Times of 29 July 2017. 130 Record, 2: Letter from Respondent to Claimant of 22 July 2017. 131 Société Nouvelle d’Armement v Spillers & Bakers Ltd [1917] 1 KB 865, 871. 132 Record, 20: Email from Respondent to Claimant of 29 July 2017 at 8:58am. 133 Vlassopoulos v British and Foreign Marine Insurance Co (The Makis) [1929] 1 KB 187, 199. 134 Athel Line Ltd v Liverpool & London War Risks Ins Assn Ltd [1994] KB 87, 94.


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reasonable. Reasonableness must be assessed in the context of a ‘time of danger’, and the Tribunal

should afford the RESPONDENT a margin of appreciation.135 The RESPONDENT’s decision was made

under extreme pressure, and ‘there wasn’t really any [other] option for the crew’.136

72. This decision caused the damage to the hull.137 The CLAIMANT is therefore liable for general

average for the loss incurred from the RESPONDENT dropping anchor to avoid the Storm.

D. The CLAIMANT is liable for agency fees and the cost of electronic access systems at Dillamond

in the amount of USD60,000

73. The CLAIMANT was under a duty to provide and make use of sufficient means for the discharge of

the Coffee Beans once the Vessel arrived at Dillamond.138 However, the CLAIMANT failed to

provide any means whereby the Coffee Beans could be consigned to their agents.

74. The CLAIMANT’s failure caused the RESPONDENT to incur additional costs in discharging the Coffee

Beans at Dillamond in the amount of USD50,000, and the cost of the use of the electronic access

system, which amounted to USD10,000.139 The RESPONDENT would not have incurred these costs

but for the CLAIMANT’s failure to provide and make use of sufficient means for the discharge of

the Coffee Beans.

75. In the premises, the CLAIMANT is liable to the RESPONDENT the agency fees at Dillamond, and the

use of the electronic access system at Dillamond, amounting to USD60,000.

E. The CLAIMANT is liable for agency fees at Spectre in the amount of USD75,000

76. The parties have incorporated the York-Antwerp Rules.140 The CLAIMANT is liable for general

average of the loss incurred by the RESPONDENT seeking refuge at Spectre on 26 July. As above,

135Australian Coastal Shipping Commission v Green [1971] 1 QB 456, 483. 136 Record, 20: Email from Respondent to Claimant of 29 July 2017 at 8.58am. 137 Goulandris Brothers v B Goldman & Sons [1957] 2 Lloyd’s Rep 207, 213. 138 Postlethwaite v Freeland (1880) 5 App Cas 599, 608 (Lord Selbourne LC); Sir Bernard Eder et al, Scrutton on Charterparties and Bills of Ladings (Sweet & Maxwell, 23rd ed, 2015), 259. 139 Record, 32: Email from Respondent to Claimant of 7 August 2017 at 3.40pm. 140 See above, [68].


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the RESPONDENT and CLAIMANT were in a common maritime adventure, given that the

RESPONDENT transported the CLAIMANT’s Coffee Beans in return for freight.141

1. The RESPONDENT deviation to Spectre was ‘a sacrifice to preserve imperilled property’

77. The solar flare event on 25 July 2017 was a peril to the ship. The solar flare event meant that the

Vessel had no system of navigation and was required to deviate to ‘save life and property’.142 The

failure of the Vessel’s navigation systems meant that the Vessel could not continue on its voyage,

threatening the ‘common adventure’. Prima facie, an inability to navigate poses a substantial, and

not negligible peril.143 The harm posed was immediate,144 and the Master was required to act

quickly to minimise any harm caused to the ship or the voyage more generally.

78. The RESPONDENT’s deviation to Spectre and the incurring of agency fees, was an ‘extraordinary

sacrifice’ in accordance with Rule X(a)(i): ‘when a ship shall have entered a port or place of

refuge...in consequence of accident, sacrifice or other extraordinary circumstances which render

that necessary for the common safety, the expenses of entering such port or place shall be allowed

as general average’.

2. The RESPONDENT’s act was reasonable

79. The RESPONDENT’s decision to berth at Spectre was reasonable, as its deviation to Spectre was

reasonable. Under Rule D of the York-Antwerp Rules, the amount of general average contribution

is not affected even where the sacrifice is due to the fault of one of the parties. The CLAIMANT has

the burden of proving any interruptions to the causal chain.145

141 Trade Green Shipping Inc v. Securitas Bremer Allgemeine Verischerungs AG (The Trade Green) [2000] 2 Lloyd’s Rep 451, 453. 142 See above,[27]-[28]; Record, 8: Charterparty, cl 17 143 Société Nouvelle d’Armement v Spillers & Bakers Ltd [1917] 1 KB 865. 144 Cf Société Nouvelle d’Armement v Spillers & Bakers Ltd [1917] 1 KB 865 145 Goulandris Brothers v B Goldman & Sons [1957] 2 Lloyd’s Rep 207.


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PRAYER FOR RELIEF

For the reasons set out above the RESPONDENT seeks the following orders and declarations:

a. An order that the CLAIMANT is liable to pay the RESPONDENT USD1,610,000 owing under

the Charterparty comprising:

i. Freight in the amount of USD500,000;

ii. Agency fees at Spectre in the amount of USD75,000;

iii. Damage to the Vessel’s hull in the amount of USD875,000;

iv. Agency fees at Dillamond in the amount of USD50,000;

v. Demurrage in the amount of USD100,000;

vi. Use of the Access Authority Pass at Dillamond in the amount of USD10,000;

b. A declaration that the CLAIMANT does not hold an equitable maritime lien over the Vessel;

c. An award for interest under s 49 of the Arbitration Act 1996 (UK); and

d. An order for costs.

The University of Queensland Respondent€¦ · The University of Queensland Memorandum for...

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