Federal Court of Australia CSBP Limited v BBC Chartering Carriers GmbH & Co KG [2021] FCA 554 File number(s): NSD 1384 of 2020 Judgment of: RARES J Date of judgment: 7 May 2021 Legislation: Carriage of Goods by Sea Act 1991 (Cth) Federal Court Rules 2011 rr 10.42, 10.43 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965 International Convention for the Unification of Certain Rules of Law relating to Bills of Lading done at Brussels on 25 August 1924 Cases cited: Ho v Akai Limited (In Liq) (2006) 247 FCR 205 Mount Isa Mines Ltd v The Ship "Thor Commander" (2018) 263 FCR 181 Division: General Division Registry: New South Wales National Practice Area: Admiralty and Maritime Number of paragraphs: 28 Date of hearing: 7 May 2021 Counsel for the Plaintiff: Mr J. Kennedy Solicitor for the Plaintiff: HWL Ebsworth ORDERS NSD 1384 of 2020 BETWEEN: CSBP LIMITED Plaintiff AND: BBC CHARTERING CARRIERS GMBH & CO KG Defendant order made by: RARES J DATE OF ORDER: 7 MAY 2021 THE COURT ORDERS THAT: 1. The plaintiff have leave to serve the following documents on the defendant in Germany in accordance with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done at the Hague on 15 November 1965: (a) the originating application; (b) the concise statement of claim; together with (c) this order. 2. Costs of the interlocutory application filed on 4 May 2021 be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) RARES J: 1 The plaintiff, CSBP Limited, is the consignee named in a bill of lading issued on behalf of the master of Caspian Harmony on 24 May 2020. The bill of lading named the defendant, BBC Chartering Carriers GmbH & Co KG, as carrier and noted that 10,000 tonnes of ammonium nitrate in 8000 bags of 1250 kilos each had been loaded onboard the ship, freight prepaid. The shipper was Enaex SA, a Chilean company, and the cargo was loaded in Puerto Angamos, Chile, for delivery to Kwinana in Western Australia. The bill of lading is on the 1994 CONGENBILL form commonly used with the GENCON 1994 uniform general charter party. However, there is no evidence of the actual charter party, and there is no suggestion that CSBP was a party to it. Enaex time chartered Caspian Harmony from BBC as owners or disponent owners. Background 2 The master of Caspian Harmony issued a notice of readiness on 9 July 2020 indicating she was ready to discharge her cargo in accordance with the terms of the charter party. It appears that CSBP presented one of the original bills of lading in a set of three to obtain discharge of the charter party and arranged for stevedores to assist in the discharge operation. 3 CSBP claims that the bill of lading contained a clause paramount on its reverse side incorporating the corresponding legislation of the country of destination, namely Australia, where no enactment of any version of the Hague Rules derived from the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading done at Brussels on 25 August 1924 was in force in the country of shipment, as is the case in Chile. Thus, the amended Hague Rules in Sch 1A to the Carriage of Goods by Sea Act 1991 (Cth) applies. Relevantly, those Rules provide, in Arts 3(1) and (2) that: 1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to— (a) Make the ship seaworthy. (b) Properly man, equip and supply the ship. 2. Subject to the provisions of Article 4, the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. 4 CSBP relies on two affidavits in support of its application to serve BBC in Germany, namely one by Gerard Chan, a commercial manager for ammonium nitrate products with CSBP affirmed on 4 May 2021 and one by an employee of CSBP's solicitors, Jesper Martens, sworn on 4 May 2021. 5 Mr Chan's responsibilities included arranging for contracts for the supply of ammonium nitrate and supervising CSBP's contracting for, discharge and receipt of cargoes, including that carried on Caspian Harmony to Kwinana. He annexed to his affidavit a copy of the logistics offer of the shipper that, among other matters, noted that the discharge rate would be 2000 metric tonnes per day, the carriage would be on terms of the 1994 GENCON and CONGENBILLS and the vessel's cranes would be in good working condition. 6 On 11 July 2020 at 12:01am, the ship's agents, Indian Ocean Shipping Agencies, noted that an original bill of lading was presented to the master of Caspian Harmony on berthing. The agents said that sometime shortly after Caspian Harmony berthed and the discharge operations commenced, but that at 1:35am on 11 July 2020, the stevedores reported that the deck crane markings were not clearly visible or tallying with the distinguishing marks of the class certificate. The agents said that this required a classification society survey to be undertaken before the ship's cranes could be used to continue discharge. By 9:04pm on 11 July 2020, the agents informed Mr Chan and others that the class certificates now matched the crane block numbers and the stevedores had accepted that they could use the cranes. 7 By 9:00am on 12 July 2020, the stevedores reported that crane No 2 had numerous defects, including hydraulic oil on the landing under the steering, a kink in the hoist wire that appeared to be rusted at the dead end, an anchor point not apparently in good condition, and a seized auxiliary hook. The agents responded at 10.37am on 12 July 2020 noting that the master had rectified concerns with crane No 1 raised on the previous evening, and it was ready to use. The agents said that they had requested the stevedores to come on board as soon as possible to verify this and the master was seeking to address the issues with crane No 2 and work with the stevedores to remedy these. 8 Matters appear to have deteriorated by 5.30pm that night when the stevedores emailed that they had recommenced discharging using crane No 1, but that crane No 2 had a seized hook block, which the crew were still working on but was as yet not useable, and that crane No 3 had a technical fault that caused it to cut out when under load. 9 By 11:00am on 13 July 2020, the master had reported that all three cranes were operational and invited the stevedores to recommence discharge operations. 10 On 14 July 2020, another officer of CSBP reported to Mr Chan that some bags from the ship had apparently been sitting in "a foot of water", and attached a photograph of a bag that, when slashed, showed water pouring out of it. 11 On 16 July 2020, CSBP decided to order Caspian Harmony off the discharge wharf two days later on Saturday morning, 18 July 2020, at which point it would be one or two days shy of completing the discharge of the ammonium nitrate cargo. CSBP said that it made that decision because it thought the overall demurrage it would incur in respect of other contracts would be greater than costs it might incur in removing Caspian Harmony from her berth. She ought to have discharged all her cargo within about 5 days from 11 July 2020 had she been operating with appropriately equipped cranes at a discharge rate of 2000 tonnes per day, weather permitting. 12 On 18 July 2020, the stevedores reported that crane No 3 had been cutting out constantly during the discharge of the bags on the previous day and that during the evening shift the crane's functioning appeared to deteriorate. Discharge operations were stopped in order to fix what appeared to be an electrical fault. The crew said there was no electrician on board and that they did not know how to fix crane No 3. At 1:00am on 18 July 2020, according to the stevedores, the master asked the mechanic or engineer to see if he could fix the problem. At 2:00am, the stevedores said that they had tried to use crane No 3 again and it cut out straight away. Consequently, the stevedores went home at 3:00am. The stevedores reported they could not transfer to crane No 2 because that was jammed and that they would require crane No 2 to be resurveyed before they would use it again. They also said that crane No 3 required an electrician to rectify any faults. They reported that they had discharged a total of 5455 bags and that 2545 bags remained in hold No 2. 13 On the morning of 18 July 2020, the master of Caspian Harmony sent an email saying that at daylight he found out that the wires of crane No 2 had been damaged and needed to be replaced because the crane was required for service. The ship's agents informed, among others, Mr Chan and the stevedores that as soon as they received further advice from the master or the owners, they would know when the repair work would be performed. 14 According to Mr Chan's evidence, on 3 August 2020 the ship returned to berth and finished discharging on 6 August 2020. Because crane No 2 was still inoperative, it was necessary to use another vessel, BBC Kibo, which I infer was one in the group of vessel owners of which BBC was a member, to be berthed alongside Caspian Harmony using pontoons to facilitate the discharge through her heavy lift crane. 15 The survey report of Captain Gautam Malhotra dated 4 August 2020 recorded his attendance on that day. He said that the shifting of the pontoons had been expected to take two to three hours but, in fact, took 26 hours according to the log maintained by the stevedores. CSBP's claim 16 The test for granting leave under r 10.43(4) of the Federal Court Rules 2011 is well-established (Ho v Akai Limited (In Liq) (2006) 247 FCR 205 at 208 [10] per Finn, Weinberg and Rares JJ). 17 CSBP filed a concise statement identifying the bases on which it claims damages. CSBP seeks damages for breach of the contract constituted by the bill of lading which it presented for the discharge of the cargo on the basis that it appears to be the contract of carriage or contractual document that CSBP had with BBC as carrier. CSBP submitted that its principal claim was for demurrage that it incurred in respect of other ships, that were waiting to berth, or would be delayed in berthing during the protracted unloading operations of the ammonium nitrate. At the moment, there is no evidence of the demurrage claim. 18 In Mount Isa Mines Ltd v The Ship "Thor Commander" (2018) 263 FCR 181 at 208– 211, [104]–[117], I considered analogous circumstances where the contract relied on by the consignee of the cargo was a bill of lading for carriage from Chile to Australia, to which the amended Hague Rules applied. I found that the prima facie inference to be drawn, where the ship required presentation of a bill of lading against which the cargo could be discharged, was that the bill was a document of title, the presentation of which created a contractual relationship between the carrier and the presenting party. I am satisfied that CSBP has a prima facie claim against BBC under the contract constituted by the master's acceptance of CSBP's presentation of the bill of lading, as the basis on which the ship discharged the cargo at CSBP's direction. 19 I am also satisfied that there is a prima facie case that the cranes on Caspian Harmony were not in a condition in which they could properly discharge the goods carried, amounting to an apparent breach of Art 3(2) of the amended Hague Rules at the time of her arrival in Kwinana. 20 In addition, the evidence about the condition of the cranes supports the prima facie inference that there was a substantial delay in completing discharge beyond the anticipated normal discharge rate of 2000 tonnes per day. That delay was caused by the cranes not being in a condition to properly and carefully discharge the goods carried, and the ship was not properly equipped, which I infer was a state of affairs, on the material presently before me, that is likely to have existed prior to the commencement of the voyage in breach of Art 3(1) of the amended Hague Rules. 21 The fact that the stevedores were engaged for more days than apparently the five days that should have necessary and had to be sent home from time to time because of the condition of the cranes satisfies me on a prima facie basis that CSBP incurred extra expense to the stevedores for their inability to perform stevedoring operations when required, and that the discharge operation took significantly longer than it ought to have done. Captain Malhotra's survey report also suggests that CSBP became liable for further costs in respect of the discharge operation taking longer than would have been the case had the vessel's gear been in a proper condition to discharge the cargo in the ordinary course in accordance with BBC's obligations as carrier under the bill of lading and Art 3(1) and (2). 22 Mr Martens' evidence establishes that BBC's registered address is in Leer, Germany and that Germany is a party to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters done in the Hague on 15 November 1965 (the Convention). 23 For the reasons above, I am satisfied for the purposes of r 10.43(4) that the Court has jurisdiction in the proceeding, the proceeding is of the kind mentioned in the table in r 10.42 in item 2, being based on a breach of contract in Australia, item 3(c), being in relation to a contract that is governed by the law of the Commonwealth, namely the Carriage of Goods by Sea Act, in which CSBP seeks an order for damages as relief in relation to a breach of that contract and, item 15, being in which CSBP seeks relief or a remedy under that Act. 24 I am also satisfied, for the reasons I have explained, that CSBP has prima facie case for relief, based on the increased costs of discharge in the cargo attributable to the apparently poor state of the cranes and their inability to discharge at the rate of 2000 tonnes per day. 25 Of course, in arriving at the above findings, I have not had the benefit of any evidence or arguments that BBC may be able to put if it appears, that could affect the inferences available only on the current evidence. Costs 26 In the period between 29 December 2020 and 1 February 2021, the solicitors for CSBP corresponded with Aus Ship Lawyers, the solicitors acting for BBC and their P&I club to ascertain whether Aus Ship had, or could obtain, instructions to accept service of the originating application and concise statement in Australia. 27 On 1 February 2021, Aus Ship's principal, James Neil, emailed Mr Martens, informing him that they acted for BBC and its P&I club but had no instructions either to accept or not accept service at that time. Mr Neil said that he would get in touch with his clients and revert. Mr Neil did not revert. Mr Martens sought to follow up by a letter dated 29 March 2021 and emails later in April 2021, which Mr Neil acknowledged receiving. But Mr Neil did not subsequently convey to Mr Martens that he had received any instructions. In those circumstances, I will reserve the costs of the application to serve out of the jurisdiction. Conclusion 28 Accordingly, I will grant leave to CSBP to serve the originating application and concise statement on BBC in Germany in accordance with the Convention. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rares. Associate: Dated: 24 May 2021