Bem Dis A Turk Ticaret S/A TR v International Agri Trade Company Ltd
| Jurisdiction | England & Wales |
| Judge | Hirst,Mummery,Buxton L JJ. |
| Judgment Date | 25 February 1999 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 February 1999 |
Court of Appeal (Civil Division).
Hirst, Mummery and Buxton L JJ.
Clare Ambrose (instructed by Thomas Cooper & Stibbard) for the appellant.
Stephen Males (instructed by Holman Fenwick & Willan) for the respondent.
The following cases were referred to in The judgment of Hirst LJ:
Aryeh v Lawrence Kostoris & Son LtdUNK [1967] 1 Ll Rep 63.
Bence Graphics International Ltd v Fasson UK Ltd [1997] CLC 373; [1998] QB 87.
Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) LtdELR [1974] AC 689.
Koch Marine Inc v D'Amica Societa di Navigazione ARL (“The Elena D'Amico”)UNK [1980] 1 Ll Rep 75.
Shipping — Sale of Goods — Measure of damages for breach of contract — Whether common law rule prevailed over cl. 28 of GAFTA form 100 — Whether defaulting buyers liable for costs and claims arising from cancellation of charterparty — Sale of Goods Act 1979, s. 50(2), (3).
This was an appeal by buyers from a decision of Clarke J dismissing the buyers' appeal from an arbitration award in favour of sellers.
The sellers sold 22,000 tonnes of Thai tapioca to Turkish buyers on the terms of GAFTA form 100 C & F FO two safe Turkish ports on a named vessel, the Selda. Payment was to be made by letter of credit opened on 5 January 1994 at the latest. On 4 January 1994 the buyers informed the sellers that importation of tapioca into Turkey had been prohibited by the government and that the opening of the letter of credit had been stopped. The buyers failed to obtain a permit to import the tapioca and asked the sellers to make sure that the Selda did not load the tapioca. The sellers did not load the tapioca but held the buyers liable for US$65,000 paid by the sellers to the shipowners to cancel the charterparty. The buyers argued that the sellers' claim was to be calculated under cl. 28 of GAFTA form 100 which provided that on default the damages payable were to be based on the difference between the contract price and the actual or estimated value of the goods. Arbitrators awarded the sum claimed to the sellers and the judge upheld that award. The judge held that at common law the sellers could frame their claim as one for wasted expenditure and that the loss had resulted from the buyers' breach within s. 50(2) of the Sale of Goods Act 1979. Sellers' right of recovery was not precluded by cl. 28 of the GAFTA form 100 which was intended to regulate the position where the claim was under s. 50(3) of the 1979 Act for damages “based on” the difference between the contract price and market price. The buyers appealed.
Held, dismissing the appeal:
1. The principle set out in s. 50(2) was the governing principle. The goods being by the contract for delivery C & F to Turkey there was no available market for the tapioca under s. 50(3) by reason of the import ban. That was implicit in the arbitrators' decision. There was ample evidence for the arbitrators' conclusion that the cancellation costs naturally flowed from the buyers' breach. Accordingly the judge was right that the sellers were entitled to recover the loss of US$65,000.
2. It was open to parties to exclude a remedy which would otherwise arise by operation of law but that required clear words and the terms of cl. 28 were nothing like clear enough to have that effect for the reasons given by the judge. The words “based on” did not mean “limited to” and the buyers' construction would produce anomalous results.
Hirst LJ: This is an appeal from the order of Clarke J ([1998] 1 Ll Rep 416) sitting in the Commercial Court whereby he dismissed the appeal of the appellant buyers, Bem Dis a Turk Ticaret S/A TR (“the buyers”), from an arbitration award of the Appeal Board of GAFTA in favour of the sellers, International Agritrade Co Ltd (“the sellers”).
The sole point at issue concerns the principles applicable to the measure of damages for breach of contract in the light of cl. 28 of GAFTA form 100. The award of the arbitrators, which the judge upheld, was for the recovery of the US$65,000 paid by the sellers to the shipowners in order to cancel the charterparty as a result of the buyer's default.
I gratefully adopt the judge's concise statement of the facts which was as follows:
“The facts as set out in the award are shortly as follows. By a contract dated 21 December 1993 International Agri Trade Co Ltd (‘the sellers’) sold to the buyers 22,000 tonnes 10 per cent more or less of Thailand manioc chips, or tapioca, for US$90.90 per tonne C & F FO two safe Turkish...
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