Aectra Refining and Marketing Inc. v Exmar NV
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HIRST |
| Judgment Date | 22 July 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J0722-4 |
| Docket Number | QBCMI 93/0757/B |
| Court | Court of Appeal (Civil Division) |
| Date | 22 July 1994 |
[1994] EWCA Civ J0722-4
(Mr. Justice Hobhouse)
Before: Lord Justice Hirst and Lord Justice Hoffmann
QBCMI 93/0757/B
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
(ON APPEAL FROM THE HIGH COURT)
(QUEEN'S BENCH DIVISION)
MR. A. GLENNIE QC and MISS K. MAXWELL (instructed by Messrs. Lawrence Graham, London) appeared on behalf of the Appellants.
MR. R. SOUTHERN (instructed by Messrs. Middleton Potts, London) appeared on behalf of the Respondents.
This is an appeal by the defendants Exmar N.V., against the order of Hobhouse J. (as he then was) dated 30th April 1993 in which he gave judgment for the plaintiffs Aectra Refining and Marketing Inc. in the sum of $76,889.37 plus interest and costs under Order 14.
There are two questions at issue, the first is whether the defendants have an arguable case sufficient to defeat an application for summary judgment on the ground that they are entitled in principle to set off certain claims against the plaintiffs' claim in the action.
The set-off on which they seek to rely is a legal set-off, and the key question under this head is whether these cross claims are liquidated so as to fall within the rules as to legal set-off.
The learned Judge held that they were not, and in consequence awarded summary judgment in the plaintiffs' favour.
Should the appellants succeed on this point, there arises a second question, which is was unnecessary for the learned Judge to decide, namely whether, as the respondents' notice contends, the set-off pleaded is not actionable, seeing that the claims there raised fall within an arbitration clause and are the subject of pending arbitration proceedings.
The first question turns on whether claims sought to be set-off fall within the classic definition of Cockburn CJ. in Stooke v. Taylor [1880] 5 QBD 569 that "this plea is available only where the claims on both sides are in respect of liquidated debts, or money demands which can be readily and without difficulty ascertained".
It is common ground that this definition applies to the present case, but there is acute controversy between the two sides as to its interpretation, and as to its application to the proceedings in the present case.
The second question (if it arises) raises a point of considerable importance which, so far as counsel's researches show, is not directly covered by any decided authority.
The action arises out of the settlement of an arbitration claim by the plaintiff against the defendant which arose out of a charterparty dated 12th April 1988 of the "MT New Vanguard". The terms of the settlement are immaterial, save to note that the plaintiff agreed to pay the defendant $120,000 within three months, the settlement having been made on 7th October 1992, and payment being due on 7th January 1993.
However, by a telex despatched at 1750 hours on the latter date, the defendant's solicitors informed the plaintiff's solicitors as follows:-
"Please note that we have still not received all the settlement monies due under the settlement agreement entered into between the parties dated 5th October 1992 but in the meaning we should ask you to note that our clients, Exmar, are owed various sums by your clients under a charterparty of a vessel called the 'Pacifica' dated 30th October 1987. The claim is being handled on behalf of Aectra by Holmes Hardingham under reference MGC/JSP/JVT/AE027. Our client has recently been awarded an interim payment of US $42,070.63 plus the arbitrator's costs of £675 and as of today's date, that award remains unsatisfied by your clients.
We should be grateful if you could take instructions from your clients and obtain their confirmation that we may deduct from the settlement monies due the sum of US $42,070.63 plus the arbitrator's costs and something by way of interest and legal costs involved in connection with obtaining the interim award. We are hoping very shortly to agree a figure for interest and costs with Holmes Hardingham.
The claims which our clients have against your clients under the 'Pacifica' charterparty far exceed the US $120,000 due to your clients under this settlement. We have in the past asked your clients for security but so far none has been supplied. One of the ways we could obtain this is by maraevering the balance of the settlement monies. Once they are received. In our accounts but this would involve unnecessary additional expense and we should be grateful, therefore, if you could get your clients to confirm that our clients may hang on to the balance of the US $120,000. The sum could, alternatively be paid into an escrow account pending the outcome of the 'Pacifica' proceedings. in the further alternative your clients could propose some other method of security for the 'Pacifica' claims.
We should warn you that even if your clients do not agree, our clients would have a right of set off in any event and may well instruct us to hold on to the funds. But we would prefer to resolve this amicably".
As a result, the plaintiffs issued a specially endorsed writ claiming the sum of $76,889.37 plus interest, i.e., the original agreed settlement sum of $120,000 less the interim award in the 'Pacifica' arbitration referred to in the telex.
The Pacifica charterparty was a time charterparty on the Shell-Time 3 form dated 18th December 1987, whereby the defendants as disponent owners chartered the vessel to the plaintiffs for a period of 90 days, subject subsequently to very substantial extensions. The vessel was delivered under the charter on 22nd December 1987 and re-delivered on 9th December 1989.
The relevant clauses of the charterparty are as follows, retaining for convenience their original numbering:
"7. Subject as herein provided Charterers shall pay for the use and hire of the vessel at the rate of United Stated dollars 10.000 per day per ton of 20 cwts. on the vessel's total deadweight on summer freeboard, as assigned at the date hereof, commencing at and from the time and date of her delivery as aforesaid, and pro rata for any part of a month, and continuing until the time and date of her redelivery to Owners. Hire payable to a bank designated by Owners every 14 days in advance.
8. Payment of the said hire shall be made monthly in advance …..
21. In the event of loss of time (whether arising from interruption in the performance of the vessel's service or from reduction in the speed of the performance thereof or in any other manner)
(i)due to deficiency of personnel or stores, repairs, breakdown (whether partial or otherwise) of machinery or boilers, collision or stranding or accident or damage to the vessel or any other cause preventing the efficient working of the vessel; or
(ii)due to strikes, refusal to sail, breach of orders or neglect of duty on the part of the master, offices or crew; or
(iii)for the purpose of obtaining medical advice or treatment for or landing any sick or injured person (other than a passenger carried under clause 15 hereof) or for the purpose of landing the body of any person (other than a passenger);
hire shall cease to be due or payable from the commencement of such loss of time until the vessel is again ready and in an efficient state to resume her service from a position not less favourable to Charterers than that at which such loss of time commenced.
40. (a) This charter shall be construed and the relations between the parties determined in accordance with the law of England.
(b) Any dispute arising under this charter shall be decided by the English Courts to whose jurisdiction the parties agree whatever their domicile may be:
Provided that either party may elect to have the dispute referred to the arbitration of a single arbitrator in London in accordance with the provisions of the Arbitration Acts 1950, or any statutory modification or re-enactment thereof for the time being in force. Such election shall be made by written notice by one party to the other not later than 21 days after receipt of a notice given by one party to the other of a dispute having arisen under this charter".
"Clause 45:
all annual and special survey, with falls due under the currency of this charter, owners agree to execute after consultation of charterers program.
Subject to the foregoing, owners undertake that approximately twelve months after the vessel was last drydocked and at the expiry thereafter of each twelve months continuous use under this charter, will at it's expense drydock, clean and paint vessel's bottom, if necessary, as well as maintain and repair tankcoating in cargo tanks, if necessary, and make all overhaul and other necessary repairs, for which purpose charterers shall allow vessel to proceed to an appropriate port, owners shall be solely responsible therefore, and also for gas freeing vessel, upon each such occasion. all towage, pilotage, fuel, water and other expenses incurred while proceeding to and from and while in drydock, shall be for owners account.
if such drydocking pursuant to this article takes place at a port where vessel is to load, discharge or bunker, under charterers' order, hire shall be suspended from the time vessel receives free practique on arrival, if in ballast, or upon completion of discharge or cargo, if loaded, until vessel is again ready for service. in case of drydocking at a port other than where vessel loads, discharges, or bunkers, payment of hire shall cease from time of deviation until vessel is again in the same or equivalent position".
The parties appointed Mr. Mark Hamsher as sole arbitrator under the arbitration clause, and by their Points...
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