Associated British Ports v (1) Ferryways Statenv (2) Msc Belgium N.v
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE FIELD,Mr Justice Field |
| Judgment Date | 13 June 2008 |
| Neutral Citation | [2008] EWHC 1265 (Comm) |
| Docket Number | Case No: 2006 Folio 1049 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 13 June 2008 |
[2008] EWHC 1265 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
Mr Justice Field
Case No: 2006 Folio 1049
David Cavender (instructed by asblaw) for the Claimant
Christopher Smith (instructed by Stephenson Harwood) for the First Defendant
Peter Irvin and Victoria Wakefield (instructed by Constant & Constant) for the Second Defendant
Hearing dates: 26, 27 February, 3, 4, 5, 6 March 2008
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
Introduction
The First Agreement
In the late 1990s Mr Paul Magnus and Mr Jacques Dewilde conceived the idea of a short sea RoRo ferry service between Ostend and Ipswich to be operated by a company incorporated in Belgium. Mr Dewilde persuaded a state-owned Belgium investment company, Gimvindus NV (“Gimvindus”) to invest in the project and also sought support from Mr Jean Marie Denis, the Managing Director of MSC Belgium NV (“MSCB”), the second defendant. MSCB is indirectly controlled by Mediterranean Shipping Company (SA) Geneva Group (“MSC”), the second largest liner container shipping company in the world. MSCB did not want to become involved directly but it agreed that MSCB and MSCB's sister shipping agency company, D&W Agencies NV (“D&W”), could invest in the new venture. As a result, the first defendant, Ferryways NV (“Ferryways”) was incorporated with its share capital being held as to 40% by D&W (which is 50% owned by Deckers & Wirtz BVBA), 40% indirectly by Gimvindus and the remaining 20% by a company owned by Mr Magnus and Mr Dewilde, Mast (GB) Limited.
In 2001, the 40% stake owned indirectly by Gimvindus was acquired by D&W and by 2003 the 20% stake owned by Mast (GB) Limited was owned by a Panamanian company, Maritime Supplies SA.
On 5 January 2000, Ferryways signed a 5 year agreement (“the First Agreement”) with the claimant, Associated British Ports (“ABP”), under which ABP guaranteed a five-hour turnaround of 160 units at its port at Ipswich at designated slot times. ABP's charges for handling the units carried by Ferryways were set out in clause 4 which provided, inter alia:
The following charges have been agreed:-
a) Handling charges, excluding lashing.
i) For the first 12 months of the service
£ per trailer
First 30,000 units 20.00
30,001–50,000 units 21.00
50,001–70,000 units 22.50
70,001–82,500 units 24.00
82,500 +units25.00
ii) Years 2 – 5
First 50,000 units 25.00
50,001+ units22.50
NB —These rates will be subject to annual increases in line with RPI from the commencement of year 2 to the commencement of year 5.
Also set out in b) of Clause 4 were port charges per call for the next five years.
The original intention was that the RoRo service would be offered to shippers and freight forwarders requiring sea transport for trailers that would carry goods and which would be hauled to and from port by tractor units operated by road hauliers. The tractor units would either accompany the trailers on board the vessel or would pull the trailers to and away from the terminals, leaving them unaccompanied during the crossing. In either case, ABP's handling charge was for pulling the trailer on to and off the vessel at Ipswich. It soon became apparent, however, that it would be profitable to extend the service to the carriage of containers. A container cannot be carried lying on the deck. Instead it has to be brought into the terminal by a road vehicle and then offloaded and loaded onto a trailer which is wheeled onto the vessel and on which the container is carried to the port of destination. Such a trailer is provided by the vessel, not the customer, and is called in the trade a “ship's trailer” or a “slave trailer”.
Many more containerised goods were imported into Ipswich from Belgium than were exported to the Continent. The result was that many slave trailers were loaded with a container on the trip from Ostend to Ipswich but were empty when the vessel travelled back to Ostend. To begin with, ABP exacted the same charge for handling slave trailers, whether or not they were to be or had been carried empty, the charge being the agreed “per trailer” charge set out in the First Agreement. However, by a letter dated 15 January 2000, ABP agreed to charge only 50% of the trailer rate for empty slave trailers.
In January 2001, 2002, and 2003 the revised annual charges applicable under the first agreement were set out in letters sent by ABP to Ferryways. These revisions included charges for such things as “de-vanning flats of bricks/tiles”, “stacking empty brick trailers,” and “receiving and delivering of lift units”, the latter being the charge for lifting a container onto and off a slave trader. Under the heading “Handling charges, excluding lashing” the new rates per unit were specified and beneath that were included the following words:
(Empty slave trailers (vessel's equipment) at 50% of above rates ….).
Also under this heading was included a rate for cars, which was significantly lower than the rate for trailers. It seems that a rate for cars was agreed in light of the opportunities the parallel imports grey market business appeared to present.
When returning the empty slave trailers to Ferryways, ABP stacked up to six on top of each other, depending on type. ABP charged Ferryways a “lift” fee for each of the stacked empty trailers but as the stack could be pulled together onto and off the ship, ABP raised only one charge per “pull” at the agreed 50% rate for empty slave trailers. The stacked empty slave trailers were therefore in effect pulled for 1/6 th of the slave trailer rate.
The First Minimum Throughput Obligation
On 16 June 2001 an Addendum to the First Agreement in the following words was signed:
This confirms that (always provided Ferryways NV continues to operate, regardless of ownership, and that Associated British Ports Ipswich continues to supply the required and agreed service levels) …. Ferryways NV will guarantee an annual throughput of 25,000 units through Ipswich from 7 th February, 2001, until 6 th February, 2005.
Whilst this Addendum was operative, the parties proceeded on the basis that the “units” it referred to did not include cars, but only trailers other than slave trailers.
The Second Agreement
The Ostend/Ipswich RoRo business expanded rapidly. In the year ended 31 December 2002, ABP's total revenue from the business was £2.687 million. There were problems, however, with ABP's linkspan over which the trailers were moved from vessel to shore and vice versa. The linkspan was not in good condition and was prone to breakdowns. Ferryways asked ABP to provide a new linkspan, a project that ABP estimated would cost £6.1 million. ABP said that it was prepared to do this if a new 20 year agreement were concluded under which Ferryways would be subject to an annual minimum throughput requirement and another more substantial company than Ferryways in the MSC group would guarantee Ferryways' performance of the agreement, at least for the period required for ABP to recoup the expenditure on the linkspan and berth.
On 1 st September 2003, ABP and Ferryways entered into a Second Agreement (“the SA”) that replaced the First Agreement. The term of this new agreement was 1 st September 2003 to 31 st December 2024. Under clauses 2 and 3, ABP agreed: (i) to grant Ferryways the right to use the appropriate berths in priority to any other user of the port; (ii) subject to agreement of schedules, to provide sufficiently resourced stevedoring services to enable a vessel turnaround of up to 160 Units in aggregate within 5 hours of the vessel becoming available for unloading; and (iii) to maintain and make available the existing linkspan and construct a new linkspan and berth.
By clauses 4.1 and 4.2, payments under the SA were to be calculated in accordance with the Schedule and the charges were subject to upwards only adjustment in accordance with a formula based on the RPI or by 6%, whichever was the lesser.
The Empty Trailer Rate
The Handling Charges were set out in the Schedule as follows:
Charges
Handling Charges Ostend Service £26.66 per Unit for first 50,000 Units
Trailers£23.99 per Unit thereafter
Other Services £23.99 per Unit for all Units
Trailers
Containers and swap bodies
Receiving and Re-delivery £13.33 per unit
Empty Trailers50% of trailer rate
Cars/Tractors£16.00 each
The wording “Empty Trailers 50% of trailer rate” was a mistake. The draftsman, Mr Smith, ABP's Port Manager for the Port of Ipswich at the time, had meant to adopt the same wording as in the revised charges letters issued under the first agreement (“Empty Slave Trailers (vessel's equipment) 50% of trailer rate”). The mistake was spotted by ABP in December 2003 and the opportunity was taken to try to correct matters in ABP's 2004 Schedule of Charges which specified that the reduced 50% rate would apply to “Empty Slave Trailers (vessel's equipment)”.
The Second Minimum Throughput Obligation
Ferryways did not undertake to run a RoRo service into Ipswich. Instead, clause 4.3 provided:
If after the end of a Year the total number of Units discharged from and loaded to Services at the Port pursuant to this Agreement is less than the Minimum Throughput for the relevant Year then ABP will be entitled to be paid by Ferryways a sum equal to the amount ABP would have received had the Minimum Throughput been met provided that if the shortfall is less than 10% of the Minimum Throughput for the relevant Year no invoice will be issued therefor and...
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