QUADRO SHIPPING NV v BIZLEY and CO PTY LTD, 'THE PROTEA TRADER' SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL GLEESON CJ, KIRBY P and HANDLEY JA 14 and 15 September 1992, 4 December 1992 [1992] NSWCA 193 PRACTICE and PROCEDURE — Adniralty Division — delivery of bricks following issue of bill of lading for shipping thereof from Antwerp to Sydney — shipment off-loaded and later trans-shipped on another vessel — time charter executed in NYPE form — charter hire later unpaid — charter terminated and vessel withdrawn — subsequent arrangements for delivery of bricks in Sydney — vessel owner claims immunity from action by reason of CL5(2) of bill of lading — motion to dismiss proceedings summarily for want of a reasonable cause of action — order dismissing motion for summary dismissal and striking out vessel owner's defence raising CL5(2) — on appeal to the Court of Appeal (by leave) — held: (Gleeson CJ; Kirby and Handley JA concurring): (1) The principles to be applied were those stated in General Steel Industries Inc vy Commissioner for Railways (NSW) and Ors (1964) 112 CLR 125; (2) The question of how and when the damage to the bricks occurred and what contract was made between the vessel owner and the notified party were ultimately ones of fact involving complex issues to be litigated as to the relationship between the new contract and the bill of lading containing CL5(2); (3) Those issues should go to trial so that the party disaffected by an adverse decision should have a full right of appeal; (4) Accordingly, the paragraphs of the vessel owner's defence which were struck out should be restored. SHIPPING and NAVIGATION — bill of lading — charterer's bill not signed by master of vessel — clause providing immunity from action — time charter — subsequent withdrawal of vessel and termination of charter when charter hire unpaid — later agreement to discharge cargo — subsequent discovery of defects in cargo — whether vessel owner entitled to immunity under bill of lading in its own terms or as accepted by contract for discharge of cargo — judge in Admiralty Division (Carruthers J) dismisses vessel owner's motion for summary judgment for want of a reasonable cause of action in notify party — strikes out defences based upon immunity provisions of bill of lading — held: (in appeal by leave) (per Gleeson CJ; Kirby P and Handley JA concurring): (1) The matter was not one appropriate for summary relief; (2) The complex issues of fact and law should be litigated in the ordinary way, including to establish the relationship between the contract agreed for the discharge of the goods and the bill of lading containing an immunity provision; (3) In the partial success (and failure) of both parties in proceedings, costs ordered as costs in the action. Gleeson CJ This is an appeal, by leave, from interlocutory orders made by Carruthers J in the Admiralty Division. The procedural background is somewhat complicated, and the issues that arise for determination on this appeal are limited. In order to identify those issues, it is necessary to outline what has happened in the proceedings to date. The appellant, Quadro Shipping NV (Quadro), is the second defendant in the proceedings. The first defendant, Transcontinental Services Ltd (Transcontinental), became insolvent, and has been dissolved. It has taken no part in the proceedings. 2 UNREPORTED JUDGMENTS The plaintiffs seek to recover damages from Quadro on account of harm occasioned to a shipment of refractory bricks that were carried from Antwerp to Sydney between March and July 1990. In February 1990, Transcontinental issued a bill of lading for shipment of the bricks for carriage from Antwerp to Sydney on the vessel Tulip Trader. Freight was prepaid. The plaintiffs in the proceedings (the respondents to the appeal) are the shipper, the notify party, and another company with a possible interest in the goods. The notify party, Tomago Aluminium Pty Ltd (Tomago), was the owner of the cargo at the material times. It was Tomago that prepaid the freight. The consignment, which was originally loaded on to the Tulip Trader at Antwerp, was off-loaded at Mombasa on about 3 April 1990, and reloaded on to the same vessel. The consignment was later transhipped on to the Protea Trader at Durban between 15 and 17 May 1990. The Protea Trader shortly thereafter sailed for Australia, arriving at Fremantle on 22 June 1990. On 20 March 1990, a time charter of the Protea Trader in the NYPE form was executed between Quadro as owner and Transcontinental. Charter hire, which was due on 26 June 1990, was not paid, whereupon Quadro terminated the charter and withdrew the vessel. Shortly thereafter, the vessel sailed from Fremantle to Burnie, Tasmania, arriving on 5 July 1990. On 12 and 13 July 1990 there was an exchange of communications to which further reference will be made below. It suffices for the moment to say that certain arrangements were made between Quadro and Tomago for the purpose of dealing with the situation that had arisen by reason of the insolvency of Transcontinental, and the withdrawal of the charter. Quadro stated that it was prepared to enter the port of Sydney for the sole purpose of discharging cargo, irrespective of its port of destination, but it required an irrevocable undertaking from the consignees to the effect that they would accept all charges arising out of the discharge of the vessel. That undertaking was given. On 16 July 1990, the Protea Trader arrived at Sydney and commenced discharge. Tomago tendered the bill of lading, together with a cheque for the relevant charges, to Quadro's representatives. A delivery order was issued, but, when Tomago's carrier collected the consignment, it was found that damage had been occasioned to the cargo. The question of when, where, and how, the cargo was damaged is an issue to be litigated at the hearing of the action. For purposes of the interlocutory proceedings before Carruthers J, it remained an open question. In particular, no finding or agreement has been made as to whether the damage occurred before or after the withdrawal of the charter. In its defence, Quadro claimed that it enjoyed an immunity from action by reason of the provisions of CLS(2) of the bill of lading. The bill of lading, it should be noted, was a charterer's bill and was not signed by the master of the vessel. (The charter party contained a provision as to apportionment of responsibility as between Transcontinental and Quadro for cargo claims). CL5(2) provided as follows: "5. (2) The Merchant undertakes that no claim or allegation shall be made against any person or vessel whatsoever, other than the Carrier, including, but not limited to, the Carrier's servants or agents, any independent contractor and his servants or agents, and all others by whom the whole or any part of the Carriage, whether directly or indirectly, is procured, performed or undertaken, which imposes or attempts to impose upon any such person or vessel any liability whatsoever in connection with the Goods or the Carriage; and if any claim or allegation should nevertheless be made to defend, indemnify and hold harmless \RIADRO SHIPPING NV v BIZLEY and CO PTY LTD, 'THE PROTEA TRADER' (Gleeso& CJ) the Carrier against all consequences thereof. Without prejudice to the foregoing every such person and vessel shall have the benefit of all provisions herein benefiting the Carrier as if such provisions were expressly for his benefit and in entering into this contract the Carrier, to the extent of these provisions, does so not only on his own behalf but also as agent or trustee for such persons and vessels and such persons and vessels shall to this extent be or be deemed to be parties to this contract". The bill of lading defined "Carrier" in such a way as to mean Transcontinental. Quadro, relying upon CL5(2), filed a notice of motion seeking dismissal of the action against it, pursuant to Pt13 R5. That rule provides for summary dismissal of proceedings where no reasonable cause of action is disclosed, where proceedings are frivolous or vexatious, or where the proceedings are an abuse of the process of the court. Quadro also applied, pursuant to Pt31 R2(a), for the separate determination of certain questions of law which were apparently regarded as being relevant to the operation of CL5(2). The rule empowers the Court to make orders for the separate decision of any question that arises in proceedings. At some stage before the commencement of the hearing before Carruthers J of Quadro's applications, the questions to be the subject of separate determination were revised, and were stated in a more extensive form than had originally been proposed by Quadro. In the result, Carruthers J did not make any formal decision in relation to the questions ordered to be separately determined. His Honour said in his judgment that the arguments addressed to him did not conform with the form of the questions that had been raised for separate consideration. However, he went on to state, in a summary form, certain arguments advanced on behalf of the plaintiffs and, having considered those arguments, came to the conclusion that Quadro was not able to rely upon CL5(2). His Honour ordered that Quadro's motion to have the proceedings summarily dismissed, pursuant to Ptl3 RS, should itself be dismissed. He also ordered that para9 to paral3 inclusive of Quadro's defence (the paragraphs which raised CL5(2)) should be struck out, and he ordered Quadro to pay the costs of the hearing before him. We were informed on the hearing of this appeal that the plaintiffs did not make any application for the striking out of para9 to paral3 of Quadro's defence, but it was acknowledged that the principles relevant to a decision to make such an order were those stated in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. This is of some practical importance. Resolving a question of law adversely to a party leaves open ordinary appellate rights. However, an order striking out that part of the defence which relied on CL5(2) removed that as an issue in the case. If the order stands, it will not be an issue available to be raised on an appeal (unless the appellate court allows an amendment). Presumably Carruthers J took the course he did because he had heard argument from both sides on their competing contentions as to the effect of CL5(2) but, owing to some problems as to the form of the questions raised for separate decision, did not feel it appropriate to answer those questions. Rather he seems ultimately to have asked himself whether Quadro could place any reliance on CL5(2), decided that it could not, and then struck out the relevant part of the defence, thereby, as was noted removing the clause as an issue in the case. Senior counsel for Quadro did not persist in asking this Court to decide, on the basis of CL5(2), that the proceedings against Quadro were bound to fail, and we were not invited to reverse his Honour's decision dismissing the application for 4 UNREPORTED JUDGMENTS summary dismissal of the entire proceedings against Quadro. This attitude was taken partly because it became apparent that the respondents, the plaintiffs in the action, desire, in answer to the argument based on CL5(2) of the bill of lading, if necessary to rely upon certain arguments that were not dealt with by Carruthers J, some of which were not even foreshadowed before him. It would be inappropriate for this Court to embark upon a consideration of those arguments without the benefit of any decision at first instance, especially where what was involved was a question of summary dismissal. In the circumstances, the proper approach for this Court to take is to deal with the appeal against the order striking out part of Quadro's defence, but to confine our consideration of that subject to the arguments that were accepted by Carruthers J as the basis for his striking out order. Those arguments were summarised by Carruthers J as follows: "Leading arguments advanced by the plaintiffs may be encapsulated in the following propositions. Firstly, it was argued that by withdrawing the vessel from the time charter Quadro assumed the obligations of Transcontinental under the bill of lading. Thus, it was argued, Quadro became 'The Carrier' under the bill of lading and CLS(2) could have no effect. Alternatively, it was argued that as Quadro agreed to release the cargo to Tomago in consideration for the surrender of the bill of lading and the payment of certain charges, a Brandt v Liverpool contract arose by implication, whereby Quadro became entitled to the same benefits and exposed to the same burdens as Transcontinental under the bill of lading just as the rights of Tomago were similarly governed by the terms of the bill. Accordingly, in such a context, it was argued, reliance could not be placed by Quadro upon CLS(2)." The reference to "a Brandt v Liverpool contract" is a reference to Brandt v Liverpool, Brazil and River Plate Steam Navigation Co Ltd [1924] 1 KB 575. For reasons related to the arguments summarised above, Carruthers J concluded that, in the circumstances, CL5(2) could not be relied upon by Quadro. Two things are to be noted about his Honour's reasoning. First, it was confined to a consideration and acceptance of some only of the plaintiff's arguments about CLS5(2), and there are various additional arguments relating to the meaning and possible effect of that clause, which were not dealt with by Carruthers J, and will not be dealt with by this Court. Secondly, nowhere in his Honour's reasons for judgment is there any reference to the possible significance of the issue as to when the damage to the cargo occurred in relation to the time of the withdrawal of the vessel from the service of Transcontinental. As was noted, it is still an open question whether that damage occurred whilst the vessel was on charter to Transcontinental. One of the arguments Quadro wishes to advance is that, if that be the fact, then Quadro can rely on CL5(2) even if it be the case that, on the basis of a process of reasoning of the kind that commended itself to Carruthers J, a different result might follow if the damage occurred after the withdrawal of the vessel. Although he did not mention the matter, his Honour must have been of the view that the time when the damage occurred, relative to the time of the withdrawal of the vessel, was an immaterial consideration. As will appear, it is not difficult to understand why, consistently with his reasoning, his Honour took that view. Carruthers J considered, and rejected, a submission on behalf of the respondents to the effect that, in the events that occurred, including in particular the communications between Quadro and Tomago following withdrawal of the vessel, there was a novation of contract, whereby Quadro replaced \WRIADRO SHIPPING NV v BIZLEY and CO PTY LTD, 'THE PROTEA TRADER' (GleesoB CJ) Transcontinental as a party to the bill of lading. If there had been such a novation it is easy to see why CLS.2 would not protect Quadro, at least from the time of the novation. It was never designed to protect Transcontinental. Whether, if there were a novation, a different consequence might apply in relation to damage that occurred prior to the novation is a question that need not be pursued. There was, his Honour held, no novation. The distinction between the argument that there was a novation and what Carruthers J described as the first of the two alternative leading arguments advanced by the respondents may be rather fine. In J Gadsden Pty Ltd v Strider 1 Ltd (The "AES Express") (1990) 20 NSWLR 57 Carruthers J analysed some of the consequences as between shipowner and shipper or consignee of the withdrawal of a vessel the subject of a time charter. Although the shipowner was, from the outset, a bailee of the cargo, it was not, prior to withdrawal, bound by the charterer's contractual obligations. However, his Honour held (at 65) that if the ship is carrying cargo under bills of lading issued by a time charterer with the authority of the shipowner, the shipowner assumes, upon withdrawal of the vessel from the charter, the charterer's obligations to the cargo interests. The assumption of such obligations was, his Honour said, a necessary incident of the withdrawal of the vessel from the service of the charterer. The legal basis of such an assumption of obligations may require consideration for two reasons. First, the conclusion for which the respondents contend, and which Carruthers J evidently accepted, was that what was assumed included a liability for damage previously caused. Secondly, the operation and effect of CL5(2) might depend at least in part on how and why the assumption by Quadro of Transcontinental's obligations occurred. However, Carruthers J appears to have decided the case by reference to the second of the respondents' leading arguments rather than the first. That, in turn, was related in part to the facts of the case and, in particular, to what his Honour regarded as the contract made between Quadro and Tomago following the withdrawal of the time charter. It is necessary to make further brief reference to those facts. On 9 July 1990 Quadro's agents communicated with Tomago and informed Tomago that the Protea Trader had been returned to its owners as a result of non-payment by Transcontinental of time charter hire, and that the vessel would discharge all cargo at Sydney for delivery at that port. The owners, it was said, were prepared to berth the vessel at Sydney in order to discharge all cargo irrespective of the nominated discharge port, provided the consignees were prepared to pay stevedoring and related charges. This proposal was said to be put forward on a "without prejudice basis" in an effort to assist in resolving any problems arising out of the termination of the time charter. On 13 July Tomago replied and said that they were in full agreement and would pay all charges arising out of the berthing and discharging. Carruthers J referred to his earlier decision in which he had held that in circumstances such as those that existed, where freight had been pre-paid by Tomago, Quadro was obliged to discharge Tomago's cargo in Sydney without entitlement to remuneration from Tomago. However, his Honour considered that in the present case the parties had come to a specific agreement about the matter to resolve any dispute that may have arisen between them. The fax from Quadro's representatives to Tomago constituted an offer by Quadro to carry Tomago's cargo to Sydney and to deliver it in consideration of the payment by Tomago of stevedoring and wharfage charges and surrender of the bill of lading. The reply 6 UNREPORTED JUDGMENTS by Tomago constituted an acceptance of that offer. Tomago duly surrendered the bill of lading, paid the agreed charges and obtained the requisite delivery order. His Honour regarded it as significant that the delivery order made specific reference to the bill of lading and required a written acknowledgment by Tomago's carrier that the cargo was received subject to the terms and conditions of the bill of lading. In that respect his Honour considered that the delivery order made explicit that which had hitherto been implicit. In short, his Honour found that, whilst the vessel was still at sea and proceeding to Sydney, Quadro entered into an agreement with Tomago to carry the goods to Sydney and there to deliver them. His Honour evidently regarded this as an express agreement constituted by the exchange of correspondence between the parties. What is important for present purposes, however, is that he found that it was an implied term of the agreement that the goods would be delivered in the condition in which they ought to be delivered under the bill of lading. That aspect of the agreement was regarded by his Honour as a matter to be inferred in accordance with the principles applied in Brandt v Liverpool Brazil and Riverplate Steam Navigation Ltd (above). This explains why his Honour regarded it as immaterial whether the damage to the goods had occurred before or after the withdrawal of the time charter. The final step in his Honour's process of reasoning was expressed as follows: "Quadro is entitled to the benefit of all the exceptions and limitations in the bill of lading. However, I consider that it cannot rely upon the immunity from suit by Tomago contained within CLS(2). This is because, as a matter of construction, Tomago's undertaking in CL5(2) is concerned solely with the contract of carriage entered into by Transcontinental with Tomago. That contract embraces (by definition) the whole of the operations and services undertaken (ie contracted to be undertaken by Transcontinental) or performed by or on behalf of Transcontinental. It is a distinctly different contract to that subsequently entered into by Quadro with Tomago, which is the subject of the instant proceedings." The appellant challenges this process of reasoning principally in two ways. First, it calls in question the finding that, assuming Quadro made a contract with Tomago as a result of the exchange of communications referred to above, it was a term and condition of that contract that Quadro undertook to deliver the goods to Tomago in the condition in which they ought to be delivered under the bill of lading. Secondly, challenge is made to the construction of CL5(2) of the bill of lading and what I have described as the final step in the process of reasoning of Carruthers J. In Brandt, the English Court of Appeal inferred, as a matter of fact, a contract in the following circumstances. A shipowner issued a clean bill of lading. At the discharge port the indorsee of the bill of lading (who did not have full property in the goods and was therefore unable to rely upon s1 of the Bills of Lading Act 1855) presented the bill to the shipowner and took delivery of the goods. The indorsee sued the shipowner for damages. The Court of Appeal held that in those circumstances there was a contract on the part of each side to perform the terms of the bill of lading, and the indorsee was entitled to rely upon the reference in the bill of lading to the goods being received in apparent good order and condition. The fact that the contract made between the shipowner and the indorsee included the terms and conditions of the bill of lading, of course, conferred significant protections upon the shipowner. That was relevant to the conclusion that it was the intention of the parties that the terms of the bill of lading formed part of their contract. Where a shipowner who has a lien on cargo \RIADRO SHIPPING NV v BIZLEY and CO PTY LTD, 'THE PROTEA TRADER' (Gleeso"i CJ) for unpaid freight or other charges agrees to deliver the cargo to the holder of a bill of lading who presents it, it is proper to conclude as a matter of fact that it is the intention of the parties that the goods are to be delivered upon the terms contained in the bill of lading. Carruthers J accepted the submission that, as Quadro agreed to release the cargo to Tomago in consideration for the surrender of the bill of lading and the payment of certain charges, a Brandt v Liverpool contract arose by implication. He held that the agreement between the parties, constituted by the exchange of communications prior to the arrival in Sydney of the vessel, included a promise to deliver the goods to Tomago in the condition in which they ought to be delivered under the bill of lading, and that Quadro was entitled to the benefit of all the exceptions and limitations in the bill of lading. Although he did not say so, one might infer that Carruthers J found it easier to reach this conclusion by reason of his previous opinion, expressed in the AES Express case, that in any event, as a matter of law, when it terminated the time charter Quadro assumed Transcontinental's obligations to the cargo interests. However, the legal process by which that assumption of obligations occurred was not spelled out in AES Express, and in the present case his Honour founded his decision on the agreement made by the exchange of communications earlier mentioned. Having regard to the principles that are relevant to a decision to strike out part of a pleading, a question for this Court is whether it is reasonably arguable that, even accepting the general approach taken by Carruthers J, a distinction ought to be made between damage to cargo that occurred prior to the withdrawal of the vessel and damage that occurred subsequently. It might well be argued that there is no reason to attribute to the parties an intention going beyond imposing upon Quadro the obligations of the carrier remaining to be performed at the date of withdrawal of the vessel. The reasoning in Brandt was as follows. The shipowners acknowledged receipt of the cargo in apparent good order and condition, and their contractual obligation under the bill of lading was to deliver them in good order and condition, subject to any exceptions or qualifications contained in the bill of lading. The plaintiffs, who were indorsees of the bill of lading, presented it to the shipowners and thereby offered to take delivery and (according to settled authority) impliedly promised to pay the freight, and any other charges due to the shipowner. The Court inferred, as a fact, that in consideration for those promises the shipowners agreed to deliver the goods according to the terms and conditions of the bill of lading, which included an obligation to deliver the goods in the same condition as that in which they were shipped, unless they could establish that they were excused from delivering the goods in that condition by one or other of the excepted clauses. This, it should be stressed, was a process of factual inference, although one undertaken in the light of the particular commercial and legal context. Carruthers J reasoned by analogy in the present case, and I accept the force of the analogy. However, the analogy is not perfect. In Brandt the indorsee of the bill of lading undertook to pay the freight on delivery. Here the freight had been prepaid by Tomago, presumably to Transcontinental. Furthermore, the contract made between Tomago and Quadro (to which, incidentally, the other two plaintiffs were not parties) was made in special circumstances, and was not made with the party that had (as in Brandt) undertaken the original obligations contained in the bill of lading. It is also not without significance that, when Quadro informed the various consignees that it was willing to carry the cargo 8 UNREPORTED JUDGMENTS then on board the Protea Trader to Sydney, it announced its intention to discharge it there irrespective of its port of destination. That is not easy to reconcile with an inference that Quadro was offering to perform all the contractual obligations under the relevant bills of lading. As his Honour approached the matter, he was concerned with implied terms of a contract made when the vessel was between Fremantle and Sydney, to complete the voyage and deliver the cargo at Sydney. It is fairly arguable that any such implied terms were limited in their application to the completion of the voyage and the delivery of the cargo, and did not necessarily comprehend an assumption of a liability for pre-existing damage to the cargo or a general undertaking of the obligations under the bill of lading. I express no concluded view on that matter, but it seems to me a question that ought to be available to be litigated. It is also arguable that there is a measure of inconsistency between the concluding step in his Honour's process of reasoning and the implication of terms based upon Brandt's case. As I understand his judgment, Carruthers J concluded that, whilst other terms and conditions of the bill of lading were applicable to Quadro's rights and liabilities, CL5(2) was simply irrelevant. That clause, his Honour said, was concerned solely with the contract of carriage entered into by Transcontinental with Tomago, which was "a distinctly different contract to that subsequently entered into by Quadro with Tomago". CLS5(2), by its terms, confers protection upon all persons other than Transcontinental by whom the whole or any part of the carriage, whether directly or indirectly, is performed or undertaken. I should have thought it at least arguable that that includes Quadro. Moreover, the opening words of CLS(2) contain a general undertaking that no claim will be made against any person other than the Carrier which attempts to impose upon any such person any liability in connection with the goods or the carriage. The Carrier was Transcontinental, and at least if the damage occurred whilst the vessel was still on time charter to Transcontinental, it might be thought fairly arguable that what Tomago is seeking to do is to impose upon Quadro B liability in respect of carriage by Transcontinental. Furthermore, insofar as the incorporation of the terms of the bill of lading turns upon questions of factual inference as to the intentions of the parties, it is also arguable that the immunity or protection inferred by CL5(2) would have been intended to cover damage occurring at a time when Quadro had not yet assumed the role of carrier. There are a number of questions which arise concerning the meaning and effect of a provision such as CL5(2) in a case such as the present. However, especially when there is an unresolved question as to how and when the damage to the cargo occurred, I consider that it cannot properly be said that Quadro had no reasonably arguable case for reliance upon the clause. Carruthers J was right to dismiss Quadro's attempt to have the whole action summarily dismissed by reason of the provisions of CLS5(2). However, his Honour went too far in making an order striking out of Quadro's defence the paragraphs based on the clause. The question of the terms of the contract made between Quadro and Tomago is ultimately one of fact, and there are complex issues to be litigated as to the relationship between that contract and CL5(2) of the bill of lading. Those issues should go to trial in the ordinary way, and any decision upon them should be subject to full rights of appeal. The appeal should be allowed in part. The order made by Carruthers J striking out the relevant paragraphs of the appellant's defence and his Honour's order as to costs should be set aside. As there was no motion to strike out those \RIADRO SHIPPING NV v BIZLEY and CO PTY LTD, 'THE PROTEA TRADER' (Handle9 JA) paragraphs, and as there was no determination by Carruthers J of the questions the subject of an order for separate determination, there is no occasion for this Court to make any other order apart from one relating to costs. In relation to the question of costs, the proceedings have had a somewhat unusual history. This Court has dealt with the matter on a much narrower basis than that upon which Carruthers J was originally asked to proceed. This in turn was dictated by an order made by his Honour that he was not actually invited to make by the respondents. The proceedings before Carruthers J began with an attempt by the appellants to have the whole action dismissed on the basis of CLS5(2). As things turned out, however, an equally extreme result the other way ensued. The decision this Court has reached is that the issues raised by the clause should go to litigation. In the somewhat unusual circumstances I consider that the proper order that should be made is that the order as to costs made by Carruthers J should be set aside, and the costs of both sides, at first instance and on this appeal, should be costs in the action. Kirby P I agree with the Chief Justice. Handley JA I agree with Gleeson CJ. Pursuant to leave to appeal earlier granted: 1. Appeal allowed in part; 2. Order of Carruthers J striking out paragraphs of the defence of Quadro Shipping NV and consequent order as to costs, set aside; 3. In lieu thereof, order the costs at first instance and in the Court of Appeal be costs in the action. Counsel for the Appellant: AJ Sullivan QC / H Coonan Instructed by: Ebsworth and Ebsworth Counsel for the Respondents: AW Street / GJ Nell Instructed by: Phillips Fox