Australia: Transport & Logistics News - March 2017: part 5

This article is part of a series: Click Transport & Logistics News - March 2017: part 4 for the previous article.

Star Polaris LLC v HHIC-PHIL Inc (2016) EWHC 2941

This was a judgment of Sir Jeremy Cooke, being an appeal from an award from three arbitrators which included two QCs and Sir David Steele, a retired admiralty judge from the High Court in England. The appeal raised two questions:

  1. what is the correct construction of the phrase "consequential or special losses, damages or expenses" in Article IX.4(a) of the ship building contract in issue, and in particular, does that phrase mean such losses, damages or expenses as fall within the second limb of Hadley v Baxendale (1854) 9 Ex 341? Alternatively, does the phrase have a "cause and effect" meaning, as held by the tribunal? and
  2. if the tribunal is right as to the meaning of "consequential or special losses, damages or expenses", on a proper construction of Article IX.4(a) does diminution in value constitute a "consequential or special loss"?

The facts giving rise to those questions were that the "Star Polaris" had been built by the defendant yard and delivered to the buyer on 14 November 2011. On 29 June 2012, it suffered a serious engine failure. The buyer commenced arbitration proceedings against the yard and apart from the cost of repairs and other expenses incurred, it sought to make a claim for diminution in value of the vessel. The tribunal determined that such a claim would fail if made.

In their award, the tribunal had accepted that, on the authorities, the meaning of "consequential loss" in an exemption clause, usually meant the exclusion of losses falling within the second limb of Hadley v Baxendale. But unless the particular contractual provision with which they were concerned had been the subject of special judicial consideration, they were not bound to follow such decisions. In the circumstance, the clause had to be construed on its own wording in the context of the particular agreement as a whole and its particular factual background. In essence, as explained by Cooke J, the arbitrators reached their decision on the basis that the yard's obligations in respect of the guarantee, were only to repair or replace defective items of the kind described in the Article and the physical damage caused thereby with all other financial consequences falling on the buyer. They concluded that, "on a proper reading of paragraph 4, it is clear that the extent of the yard's liability is governed not just by paragraph 4 but by Article IX as a whole".

Article IX sets out the 12 month guarantee of material and workmanship which represented the warranty of quality to which the heading of the Article referred. Paragraph 3 set out the positive obligations of the yard under the guarantee of defects.

As explained by Flaux J, the arbitrators had held in the context of this contract "where the only positive obligations assumed under the guarantee were the repair or replacement of defects and physical damage caused by such defects, that consequential or special losses had a wider meaning than the second limb of Hadley v Baxendale."

Cooke J agreed with the arbitrators therefore that "consequential or special losses, damages or expenses" does not mean such losses, damages or expenses as fall within the second limb of Hadley v Baxendale but does have the wider meaning of financial losses caused by guaranteed defects, above and beyond the cost of replacement and repair of civil damage".

Simon Rainey QC, in a recent article, has commented that this decision "illustrates that the fact that the wording has a well-settled meaning will not always provide the answer. One cannot simply fall back on the way in which the phrase has previously been interpreted in standalone contexts and expect to arrive at the same result."

The well-settled meaning to which he referred was that the concept of "consequential loss" being construed "as not covering loss which directly and naturally results in the ordinary course of events from the breach and which would be ordinarily foreseeable and which would be recoverable only if the special circumstances out of which it arises were known to the parties when contracting." In lawyer speak, it covers Hadley v Baxendale "limb 2" but not "limb 1".


Changes at Civil Aviation Safety Authority

Following the resignation of Mark Skidmore, Shane Carmody has been appointed as Acting Director of Aviation Safety and Chief Executive Officer of CASA.

Drones regulation

New regulations came into force on 29 September 2016 to govern the use of Remotely Piloted Aircraft (RPAs), with different requirements for RPAs of different weight classifications.

Micro RPAs (100g or less) are automatically excluded from the regulatory framework.

Very Small RPAs (100g-2kg) are excluded if operated for sport or recreation or within the Standard RPA Operating Conditions - which require operators to:

  • fly during daylight hours within visual line of sight
  • not fly higher than 120 metres
  • keep 30 metres away from other people
  • keep at least 5.5km away from an aerodrome
  • not fly over populous areas
  • not fly over prohibited or restricted areas or where emergency operations are under way
  • only fly one RPA at a time

Small (2kg-25kg), Medium (25kg-150kg) and Large (150kg and above) RPAs have greater restrictions, particularly where being used for commercial purposes.

In response to industry concerns, Minister Darren Chester announced in October 2016 that a safety review of the new regulations will be conducted.

Second Sydney Airport

Having completed an Environmental Impact Statement in September 2016, progress is now being made on the implementation of the Australian government's decision to build a new airport in western Sydney at Badgerys Creek. On 20 December 2016, the government issued a Notice of Intention to the owners of Sydney airport, setting out the contractual terms for developing and operating the Western Sydney Airport. The owners of Sydney Airport have the right of first refusal to build and operate the new airport. AU$115 million was committed in the 2016 Federal budget for initial planning and preparation work.

MH370 search suspended

In mid-January, the underwater search for the wreckage of Malaysian Airlines flight MH370 was suspended after it was not located in the 120,000 square kilometre search zone in the southern Indian Ocean.

Australian decisions

Lam v Rolls Royce PLC (No 5) [2016] NSWSC 1332

Justice Beech-Jones in the New South Wales Supreme Court has dismissed the claims of various group members who had failed to take steps to register their claims as part of a class action arising from the Qantas A380 flight from Singapore that experienced an engine failure on 4 November 2010. They had failed to meet a deadline of 3 June 2015 to register their interest and a later deadline of 1 August 2016, and Rolls Royce sought orders to dismiss any such claims.

Reliance was placed on section 183 of the Civil Procedure Act 2005 (NSW), which permits the making of orders "appropriate or necessary to ensure that justice is done in the proceedings" and section 182, which related to suspension of limitation periods.

Bartlett v Weatherill [2017] NSWSC 31

This case concerned a claim made by the purchaser of a Cessna 400 aircraft by Dr Weatherill who sought to recover damages from a licensed aircraft maintenance engineer who had provided him with an estimate of $52,395 to bring an aircraft which Dr Weatherill had decided to purchase in the United States to Australia. When the cost actually incurred in bringing it to Australia amounted to $120,000, Dr Weatherill claimed damages for misleading and deceptive conduct in breach of section 18 of the Australian Consumer Law.

He succeeded in the Local Court, the Magistrate finding the estimate was misleading or deceptive or likely to mislead or deceive and a reasonable estimate would have been $86,000. However, the Magistrate rejected a claim for the difference between the costs actually incurred and the estimate, as he said that Dr Weatherill now had a valuable asset and the only compensation should be for the loss of use of money over time while taking into account the increasing value of the asset.

On appeal, Justice Adamson of the New South Wales Supreme Court found that Dr Weatherill was obliged to prove he had suffered actual loss by the purchase in reliance on the estimate of costs and in this case he had spent less than the value of the aircraft in Australia and so was better off. He had accordingly suffered no recoverable loss.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

This article is part of a series: Click Transport & Logistics News - March 2017: part 4 for the previous article.
This article is part of a series: Click Transport & Logistics News - March 2017: part 6 for the next article.
Andrew Probert
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.