Anonima Petroli Italiana Spa and Another v Marlucidez Armadora SA (The Filiatra Legacy)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE MUSTILL,OR |
| Judgment Date | 10 April 1991 |
| Judgment citation (vLex) | [1991] EWCA Civ J0326-10 |
| Docket Number | 91/0465 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 April 1991 |
[1991] EWCA Civ J0326-10
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LEGGATT J.
Royal Courts of Justice
Lord Justice Mustill
Lord Justice Staughton
and
Lord Justice Mccowan
91/0465
and
MR. K.S. ROKISON Q.C., MR. BERNARD EDER and MR. DAVID FOXTON (instructed by Messrs Holman Fenwick & Willan) appeared on behalf of the Appellants (Defendants).
MR. CHRISTOPHER CLARKE Q.C., THE HON. PEREGRINE SIMON and MR. RICHARD SOUTHERN (instructed by Messrs Clyde & Co) appeared on behalf of the Respondents (Plaintiffs).
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I. THE APPEAL ON TITLE TO SUE
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1. The Claim by Neste Oy.
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2. The Position of A.P.I.
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3. Title to sue—the law.
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4. Title to sue—conclusion.
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II. THE APPEAL ON THE FACTS
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A. Introduction
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1. The principal events.
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2. The problems.
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B. The Trial.
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C. Evidence concerning the refinery
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1. The Shape of the issues.
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2. The evidence for the plaintiffs.
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3. The evidence for the defendants.
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4. The material stock balances.
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D. Shipside Evidence
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1. Possible sources of loss.
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2. Ballasting.
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3. Disposal of the stolen cargo.
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4. The U-Bend Pipe.
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5. The evidence of Mr. Pappas.
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E. The Judgment.
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F. The Appeal
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1. The inspection.
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2. The U-bend pipe and other allegations.
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3. Burden of proof.
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4. The facts.
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G. Conclusions.
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This is a judgment to which all members of the court have contributed, in an appeal concerning short delivery of a cargo of crude oil. The first plaintiffs are Anonima Petroli Italiana SA ("A.P.I."), who own a refinery at Falconara on the Adriatic coast of Italy. We shall call them "the buyers". The second plaintiffs are Neste Oy, a Finnish Corporation ("the sellers"). Both are respondents to this appeal, in the sense that the notice of appeal is addressed to them and counsel professes to represent them both. We shall have more to say shortly about the part that the sellers have played in these proceedings. The defendants and appellants are Marlucidez Armadora S.A. of Piraeus ("the shipowners"), who were the owners of the m.t. " Filiatra Legacy".
On 25th November 1983 the vessel completed loading a cargo of crude oil at Ceyhan in Turkey, the terminus of a pipeline from Iraq. After a voyage without incident, so far as we are aware, she arrived at Falconara on 30th November 1983. There were a number of interruptions in the discharging process due to bad weather, pipeline leakage and such like, so that it was only completed on 19th December 1983.
The agreed figure for the quantity of cargo which ought to have been discharged is 104,623 metric tons. According to the buyers the quantity actually discharged was 100,121 m.t., leaving a shortage of 4,502 m.t. They say that this quantity must have been deliberately retained on board the ship, and thus was stolen and converted by the shipowners or their employees. If that is right the principal sum to be awarded by way of damages is agreed at $946,230.
The shipowners maintain that all the cargo on board was discharged with the exception of a small quantity amounting to 30 m.t. which was unpumpable. It would follow that the buyers' records of the quantity discharged are inaccurate or incomplete.
At the trial before Leggatt J. there were two issues to be decided. The first was whether the buyers had title to sue as owners of the cargo at the time of discharge. If they did, the second issue was whether they had proved that the missing oil was not discharged at Falconara, but remained on board the ship. The judge decided both issues in favour of the buyers; and the shipowners now appeal.
I. THE APPEAL ON TITLE TO SUE
1. The claim by Neste Oy.
The position of the sellers, Neste Oy, is curious to say the least. They have at all times been and still remain parties to the litigation, but no relief was sought on their behalf in the points of claim. They were f.o.b. buyers of the oil, from a Soviet concern who had evidently bought from the Iraq National Oil Company; and they sold it c.i.f. to the buyers. Since they were also charterers of the " Filiatra Legacy", it is agreed that they can have no claim under the bill of lading; their only contractual claim would be upon the charterparty, which contained an arbitration clause.
It is likewise agreed that the buyers have no claim under the bill of lading, which did not come into their hands until some time after discharge was completed. The buyers' claim must be in tort. Accordingly they have to establish that they were owners of the oil at the time of discharge: Leigh & Sillavan Ltd v. Aliakmon Shipping Co Ltd [1986] AC 785.
The contest on the first issue is as to whether the buyers were owners of the oil at the time of discharge; if they were not, the only other candidate is the sellers, who had bought f.o.b. Ceyhan as we have already said.
In those circumstances one might have thought that there would be an alternative claim in the action on behalf of the sellers. The issue as to title to sue would then be immaterial: if the claim of either party succeeded, there would be a subsequent adjustment of their rights inter se—unless, as we suspect, the claim is in reality brought in the interest of the insurers of them both, in which case no adjustment would be necessary.
That sensible solution has not, in the event, been achieved. The points of claim originally were based on the bill of lading, or bailment, or breach of duty, without any mention of the charterparty; and only the buyers were alleged to have suffered loss. Much later there was an application to amend the points of claim by adding an alternative claim under the charterparty, and an alternative allegation that the sellers had suffered loss. This application was disallowed by Webster J. on the ground that any such dispute between the sellers and the shipowners was within the arbitration clause in the charterparty, so that the shipowners would be able to apply for a mandatory stay of court proceedings under the Arbitration Act 1975.
So the only claim in these proceedings remains that made by the buyers. But it does not follow that, if the sellers and not the buyers turn out to have owned the cargo at the time of discharge, the shipowners will necessarily escape all liability. An arbitration has been commenced by the sellers against the shipowners, although it has made precious little progress and there is a dispute as to whether it is time-barred. There thus arises the appalling prospect that the issue of the shipowners' liability for loss may have to be tried all over again in the arbitration; if we ruled that the buyers had no title to sue in the action, the sellers might well proceed with their arbitration. The question whether there would then be an issue estoppel was canvassed before us. If we upheld the conclusion of Leggatt J., that the shipowners were liable for the loss (although not to the buyers), would the sellers be able to rely on that in the arbitration? Or if we disagreed with Leggatt J. and found the shipowners not liable, could they rely on our finding to defeat a claim by the sellers in the arbitration? In either case it might be material that the sellers had been a party to this action and in this appeal. Neither counsel for the sellers and buyers nor counsel for the shipowners were willing to take a stance on the application of issue estoppel in those circumstances, for reasons which can readily be understood. So we say nothing further on the topic.
2. The position of A.P.I.
The charterparty, dated 14th November 1983, provided for a voyage from one safe port Turkey to
"Discharging ports; one or two safe Euromediterranean including Italian Adriatic intention FALCONARA."
However, freight was payable at Worldscale 47.5, so that any agreed change of destination would not necessarily require any change in the freight rate.
By contrast the bill of lading provided for delivery of the goods at Porvoo in Finland. We have no information as to why it was issued in that form. What is important is that the goods were to be delivered
"unto NESTE OY, ESPOO, FINLAND, order or to their assigns".
Again we have no information as to how the bill of lading, which describes the goods as shipped by Iraq National Oil Company, came into the hands of the sellers.
The contract between the sellers and the buyers is for the most part set out in a telex dated 7th November 1983. There were the following important terms:
" (5) Delivery
In one full cargo lot c.i.f. Falconara…Seller to instruct owners/master of performing vessel to deliver the cargo to receivers without presentation of original or copy of B/L if same not yet received by Buyer. Due to short voyage upon vessel's sailing, Seller to send TLX proforma invoice for customs purposes.
( 6) Price
US dlrs 28.88/bbl c.i.f. Falconara…based on B/L quantity….
(7) Payment
In US dlrs by telegraphic transfer in favour of Seller with bank to be indicated by Seller, within 30 days from bill of lading date provided that commercial invoice and usual shipping documents have reached Buyer in good order, in Rome—Corso d' Italia 6—at least 5 (five) working days before due date.
Such payment to be supported by stand-by letter of credit issued within November 21st, 1983 by first class Italian bank…having the following wording…"
We do not set out the requirements as to a letter of credit, since the letter of credit actually issued was in slightly different terms, and the sale contract may be said...
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