Berg (v) & Son Ltd v Vanden Avennelzegem P.v.B.A.

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE ROSKILL,LORD JUSTICE LAWTON
Judgment Date12 November 1976
Judgment citation (vLex)[1976] EWCA Civ J1112-1
Date12 November 1976
CourtCourt of Appeal (Civil Division)

[1976] EWCA Civ J1112-1

In The Supreme Court of Judicature

Court of Appeal

On Appeal From The High Court of Justice

Queen's Bench Division

(Mr. Justice Donaldson)

Before:

The Master of the Rolls (Lord Denning)

Lord Justice Roskill and

Lord Justice Lawton

Between:
V. Berg & Sons Limited
Respondents (Sellers)
and
Vanden Avenue-Izsgem P.V.B.A.
Appellants (Buyers)

MR K.S. ROKISON. Q.C. and MR. R. WOOD (instructed by Messrs. Thomas Cooper & Stibbard, Solicitors, London) appeared on behalf of the Respondents (Sellers).

MR. A. HALLGARTEN (instructed by Messrs, Crawley & De Reya, Solicitors, London) appeared on behalf of the Appellants (Buyers).

THE MASTER OF THE ROLLS
1

This is another case about the force majeure clause in the G.A.F.T.A. contract. This time it does not concern Soya beans but Chinese dried sweet potato slices. They were to be shipped from China to Antwerp. As you would expect, dried potato slices are best shipped in fine weather and not in wet weather.

2

The original contract. In June 1972 a Chinese supplier, the China National Native Produce & Animal By-Froducts Import & Export Corporation, agreed to sell 5,000 metric tennes of these slices to an English firm V. Berg & Sons Ltd. They were to be shipped at 1,000 tonnes a time during the winter of 1972/73 from Shanghai to one of the European ports. That is the contract between the Chinese suppliers and V. Berg & Sons Ltd. in England. It was not on a G.A.F.T.A. form. It did not contain any force majeure clause or any exemption for force majeure or rainy weather or anything like that.

3

About the same time V. Berg be Sons Ltd., who were the buyers under that contract, made a contract of re-sale under will which they were sellers. V. Berg & Sons Ltd. sold to a Belgian firm Vanden Avenne-Izegem. They sold 5,000 tonnes, again deliverable in the coming winter at 1,000 tons a time. In that agreement (unlike the original contract) Shanghai was not specified as the port of shipment. The only provision was that shipment was to be "from China to Antwerp by separate steamers". It incorporated the G.A.F.T.A. form No. 1. It contained the clause which we have had so often, the force majore clause. It is No. 21 in this form but it is No. 22 in some others.

4

All the instalments in both contracts were sufficiently fulfilled except the third one of 1,000 tons, of which shipment was to be "January/February 1973". So the latest date for shipment was 28 the February, 1973. There seems, according to theevidence, to have been a good deal of rain in Shanghai in February 1973, much more than they were used to. During the 28 days of February they had had about days of rain as against the average of 10.

5

On the 28th February, 1973 the Chinese suppliers sent a telex to England. The heading shows that it came from Shanghai. It says: "Spelices owing to bad weather cannot load therefore please extend shipment to 31st March cable". That was sent by the Chinese suppliers in Shanghai to V, Berg in London. It was a request for extension of time under the original contract (which did not contain a force majeure clause). The Chinese suppliers had no legal excuse for non-supply. This was a friendly request to extend the time of shipment because of the bad weather in Shanghai.

6

This message was passed on by V. Berg - whom I shall call the ". English sellers" - to their Belgian buyers by teleprinter the next day. They specified the contract, and then said this: "With reference the above contract, kindly note that we have received the following cable from Shanghai: 'Spslices owing to bad weather cannot load therefore please extend shipment to 31st March cable'. Kindly let us have Buyers agreement to the above".

7

There was an immediate reply by the Belgian buyers saying: "Buyers cannot extend shipment as required and they must maintain the conditions of the contract".

8

There was an immediate come-back by the English sellers to the Belgian buyers. On the 1st March, 1973, after identifying the contract (that is, the re-sale contract incorporating the G.A.F.T.A. form contract) the English sellers said: "Under the contract Buyers have to grant an extension for delays in shipment occasioned by any Act of God. If Buyers are notprepared to grant such an extension, then we understand Buyers repudiate the contract without penalty". In other words, the English sellers claimed to hold the Belgian buyers liable for repudiation. "Kindly let us have your reply latest by 1100 hrs. your time tomorrow Friday".

9

The reply of the Belgian buyers came back the next day: "Re your telex 1/3/73 regret but we cannot agree with 'force majeure' invoked by Sellers. We maintain the contractual shipment and all conditions of contract. We will be obliged to declare Sellers in default and claim eventually arbitration for price fixation (allowance)'

10

I need read no more. In subsequent telexes each side maintained his viewpoint. She English sellers claimed an extension of time. The Belgian buyers refused to grant any extension.

11

The final message from the Belgian buyers was: "Buyers do not agree extension. They do not agree Act of God. If not shipped in time, they claim default and allowance".

12

There was an arbitration under the G. A. F. T. A. conditions. Each side appointed an arbitrator, but the arbitrators disagreed. The umpire found in favour of the Belgian buyers against the English sellers. It went on appeal to the Board of Appeal of (G.A.P.T.A. The Board of Appeal of five members upheld the umpire's decision, and held again in fevour our of the buyers against the sellers.

13

On the case stated coming before Mr. Justice Donaldson, he reversed the umpire's and the Board of Appeal's decision. He held that the Belgian buyers were not entitled to claim because the English sellers were entitled to rely on the force majeure clause.

14

It appears that the Judge was influenced a great deal bythe eighth sentence of that clause, as to which the judge had already expressed his own view in an earlier Tradax case, a view with which this court disagreed in Tradax Export S.A. v. Andre & Cie S.A. (1976) 1 Lloyd's Law Reports 416 at pages 422 and 423. So insofar as the judge relied on his construction of the eighth sentence of that clause, his decision is no longer supported in this court.

15

The question that remains is whether the English sellers can escape liability by reason the force majeure clause. It is to he noticed that there was not a string of contracts, all on the G.A.F.T.A. form - as there was in the soya bean cases. Here the original contract - the shipper's contract - was not on the G.A.F.T.A. form at all. It was on a form which had no force majeure clause at all. Mr. Hallgarten suggests that in this situation the English sellers cannot rely on the G.A.F.T.A. clause at all because he says that it only applies where there is a string of contracts. We do not think that that is a good argument. If the English sellers can show that the force majevre clause was satisfied - as for instance the original Chinese shippers (by a chance or fluke) did give a proper notice so as to comply with the requirements of the force majeure clause (and it was duly passed on) - then the English sellers can rely on It.

16

The first question is whether the original Chinese shippers did give a notice which complies with the force majeure clause. It would be a remarkable chance if they managed to succeed in fulfilling it. But did they do it? The second sentence of the force majeure clause requires this notice: "If delay in shipment is likely to occur for any of the above reasons" - that includes acts of God or other force majeure - "Shippers shall give notice to their buyers by telegram, telex or teleprinter or by similaradvice within 7 consecutive days of the occurrence The notice shall state the reason(s) for the anticipated delay".

17

Then the fourth sentence says: "If after giving such notice an extension to the shipment period is required, then Shippers shall give further notice not later than 2 days after the last day of the contract period of shipment stating the port or ports of loading from which the goods were intended to be shipped".

18

It is said by the English sellers that, by a lucky chance, the telex which was sent in this case by the shippers satisfied those requirements. I will read it again: "Shanghai, Spslicee owing to bad weather cannot load therefore please extend shipment to Jlst tfarch".

19

It seems to me - and I think it was conceded - that you can have a rolled up notice to include both the warning notice (under the second sentence) and the extension notice (under the fourth sentence). So be it. But even so the notice must be a good notice when it is passed on by the English sellers to the Belgian buyers. It is passed on under clause 22 as to "Notices". At that time it must fulfil all the requirements of the force majeure clause. This telex does not do that for these reasons:-

20

First, it does not sufficiently specify the port or ports of loading from which the goods were intended to be shipped, Under the...

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