Aries Tanker Corporation v Total Transport Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Wilberforce,Viscount Dilhorne,Lord Simon of Glaisdale,Lord Salmon,Lord Edmund-Davies |
| Judgment Date | 27 January 1977 |
| Judgment citation (vLex) | [1977] UKHL J0127-1 |
| Date | 27 January 1977 |
| Court | House of Lords |
[1977] UKHL J0127-1
Lord Wilberforce
Viscount Dilhorne
Lord Simon of Glaisdale
Lord Salmon
Lord Edmund-Davies
House of Lords
Upon Report from the Appellate Committee, to whom was referred the Cause Aries Tanker Corporation against Total Transport Limited, That the Committee had heard Counsel, as well on Monday the 25th, Tuesday the 26th, Wednesday the 27th and Thursday the 28th, days of October last, as on Monday the 1st day of November last, upon the Petition and Appeal of Total Transport Limited of Fifth Floor, Bank of Bermuda Building, Front Street, Hamilton, Bermuda, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 6th of February 1976, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order, so far as aforesaid, might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament, might seem meet; as also upon the Case of Aries Tanker Corporation lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 6th day of February 1976, in part complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
This appeal arises out of the carriage of a cargo of petroleum from the Arabian Gulf to Rotterdam under a voyage charterparty. The respondents, a Liberian corporation, are the owners of the vessel Aries which is a Greek ship; the appellants, a Bermuda company, are the charterers; the contract was made in Paris and is expressed to be governed by English law. Since, on the view which I take, the case turns upon the terms of the contract, I must first refer to its essential provisions.
The charterparty, dated 21 March 1973, was on a standard (B.P.) voyage charter form. The vessel was to proceed to a port or ports in the Arabian Gulf as ordered by the charterers, and was there to load a full and complete cargo of petroleum. It was then to proceed to a port or ports in the United Kingdom or Europe as ordered by the charterers—in fact Rotterdam was nominated—and there to deliver the cargo in consideration of the payment of freight. The freight payable was specified in clause 6 by a formula which, it is not disputed, meant that it was to be calculated upon the intaken quantity of cargo. Clause 7 provided that freight was to be payable after completion of discharge—the currency and place of payment was stated—in cash without discount. Clause 30 provided as follows:
"The provisions of Articles III (other than Rule 8), IV and VIII of the Schedule to the Carriage of Goods by Sea Act, 1924, of the United Kingdom shall apply to this Charter and shall be deemed to be inserted in extenso herein. This Charter shall be deemed to be a contract for the carriage of goods by sea to which the said articles apply and Owners shall be entitled to the protection of the said articles in respect of any claim made hereunder …"
Article III, rule 6, of that Schedule (the Hague rules) contains the following vital words:
"… in any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered …"
The vessel duly loaded a cargo of regular gasoline and premium gasoline in April 1973. It arrived in Rotterdam in May 1973 and there discharged. On measurement of the quantity discharged, it was found that there was a short delivery in respect of each product, the value of which is claimed by the appellants to be $(U.S.)30,000. In or about June 1973 the appellants paid, as provided in the charterparty, the amount due for freight but they did so subject to deduction of $30,000: the respondents made it clear that they did not accept the validity of this deduction.
On 17 October 1974 the respondents issued in the Queen's Bench Division a specially endorsed writ for £11,753·18, being the then sterling equivalent of $30,000 as unpaid freight. On 21 February 1975 the appellants served a Defence and Counterclaim in which they admitted that they had withheld $30,000 from the freight, but claimed that they were entitled to set off against the freight the loss claimed on the cargo and that they were not liable for $30,000. They also counterclaimed for $30,000.
The respondents proceeded under R.S.C. 0.14 for summary judgment. It was not disputed that the appellants had a triable case in respect of a claim for short delivery, and that the appellants had not instituted suit within 12 months of discharge. Donaldson J. refused the appellants leave to defend and gave judgment in favour of the respondents for £11,753·18 with interest, subject to a stay pending appeal. His judgment was affirmed by the Court of Appeal.
My Lords, if this case is to be decided on the terms of the contract it would appear to me to be a comparatively simple one. There is an obligation to pay freight, calculated upon the amount of cargo intaken, which obligation arises upon discharge. There is no dispute as to the amount: it is a liquidated claim. The contract contemplates the possibility of a cross claim by the charterers in respect of loss or damage to the cargo and it expressly provides by incorporation of Article III(6) of the Hague Rules that the carrier and the ship shall be discharged unless suit is brought within one year after the date of delivery or the date when delivery should have been made. This amounts to a time bar created by contract. But, and I do not think that sufficient recognition to this has been given in the courts below, it is a time bar of a special kind, viz., one which extinguishes the claim (cf. Article 29 of the Warsaw Convention 1929) not one which, as most English Statutes of Limitation (e.g. the Limitation Act 1939, The Maritime Conventions Act 1911), and some international Conventions (e.g. the Brussels Convention on Collisions 1910 Article 7) do, bars the remedy while leaving the claim itself in existence. Therefore, arguments to which much attention and refined discussion has been given, as to whether the charterer's claim is a defence, or in the nature of a cross action, or a set off of one kind or another, however relevant to cases to which the Limitation Act 1939 or similar Acts apply, appear to me, with all respect, to be misplaced. The charterers' claim, after May 1974 and before the date of the writ, had not merely become unenforceable by action, it had simply ceased to exist, and I fail to understand how a claim which has ceased to exist can be introduced for any purpose into legal proceedings, whether by defence or (if this is different) as a means of reducing the respondents' claim, or as a set off, or in any way whatsoever. It is a claim which, after May 1974, had no existence in law, and could have no relevance in proceedings commenced, as these were, in October 1974. I would add, though this is unnecessary since the provision is clear in its terms, that to provide for the discharge of these claims after 12 months meets an obvious commercial need, namely, to allow shipowners, after that period, to clear their books.
The appellants tried to escape from this result in two ways. First, they said (which was factually correct) that they had asserted their claim within the 12 months by deducting the amount of it from the freight, that there was nothing more that they need, or could do; that after they had taken this step, it would be absurd to require them to commence a suit for money they already had; that the action taken had, as it were, firmly placed the ball in the respondents' court and not in theirs. The appellants' counsel made all this sound very attractive but to my mind it has no substance.
The deduction of $30,000, unaccepted by the respondents, conferred no legal rights, and could not alter the legal position. After it, as before, the appellants had a disputed—and unquantified—claim against the respondents: after it, as before, if they wished to pursue and to quantify this claim, they had to bring a suit for damages, or to refer the matter to arbitration. By failing to commence a suit before May 1974, a necessary condition to the survival of their claim, they contractually agreed to discharge it. There is no suggestion that the respondents in any way lulled the appellants into a false sense of security so that it would be unfair for them to rely on the time bar: the respondents made it clear that they did not agree the deduction: thereafter it had to be established by suit, with the risk of becoming discharged if the suit were not started by May 1974.
Secondly, the appellants relied on some authorities in the United States of America which allow what is called a right of recoupment to charterers or freighters, as to which, it is said, a time bar does not apply. (See Bull v. U.S. 295 U.S. 247, Pennsylvania R. Co. v. Miller 124 Fed. 2nd, 160, C.N. Puerto Madrin S. A. v. Esso, 1962 A.M.C. 147.) As to these I could, in a proper case, respectfully follow the decision in Bull v. U.S. which appears to relate to a normal limitation statute, but I...
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