Borgship Tankers Inc. v Product Transport Corporation Ltd (The Casco) [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cresswell |
| Judgment Date | 28 February 2005 |
| Neutral Citation | [2005] EWHC 273 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2004 FOLIO NO 759 |
| Date | 28 February 2005 |
[2005] EWHC 273 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Justice Cresswell
Case No: 2004 FOLIO NO 759
Mr Michael Coburn (instructed by Bentleys Stokes & Lowless) for the Claimant
Mr Nathan Tamblyn (instructed by More Fisher Brown) for the Respondent
Judgment Approved by the court
for handing down
(subject to editorial corrections)
This judgment follows a hearing to determine whether or not the claimant's claims against the respondent in an arbitration commenced in July 2004 (under a charter-party based on the "Shelltime 4" form) are time-barred. There is also a contingent application under section 12 of the Arbitration Act 1996, which does not arise unless the claims are held to be time-barred.
On 11 January 2002, the claimant charterers chartered the product tanker 'CASCO' from the respondent owners for a period of 60 to 90 days +/- 20 days. The terms of the charter-party were contained in a fixture recap and were otherwise on the Shelltime 4 form.
Clause 27(a) of the Shelltime 4 form sets out various exceptions, and clause 27(b) provides various liberties. The issue I have to decide relates to clause 27(c) which provides:
"Clause 27(a) shall not apply to or affect any liability of owners or the vessel or any other relevant person in respect of:
(ii) any claim (whether brought by charterers or any other person) arising out of any loss of or damage to or in connection with cargo. All such claims shall be subject to the Hague-Visby Rules or the Hague Rules, as the case may be, which ought pursuant to Clause 38 hereof to have been incorporated in the relevant bill of lading (whether or not such Rules were so incorporated) or, if no such bill of lading is issued, to the Hague-Visby Rules."
Article III rule 6 of the Hague-Visby Rules provides:
"Subject to paragraph 6 bis the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods unless suit is brought within one year of their delivery or of the date when they should have been delivered."
The claimant's case is set out in detail in its Points of Claim. It is contested by the respondent, but nevertheless it is appropriate to take that claim at face value for the purposes of determining this preliminary issue. The salient features of the case are as follows.
The vessel was delivered into the charter-party. She carried a cargo of palm oil from the Far East to Barcelona and Hamburg.
On 19 March 2002, the claimant sub-chartered the vessel to Sahara Energy Resource SARL ("Sahara"). The sub-charter-party was based on the Asbatankvoy form and was for a voyage from Rotterdam to West Africa.
On 10 April 2002, the vessel completed discharge of the palm oil at Hamburg and proceeded as ordered to Amsterdam. Tank cleaning commenced. The cancelling date was extended under the sub-charter-party to 19 April 2002.
NOR was tendered on 19 April 2002. Sahara intended to load gasoline. On 20 April 2002, Sahara's surveyors (Saybolt) boarded the vessel and inspected the tanks. Saybolt issued a letter of protest that the vessel was not "ready and suitable in every respect to load the intended cargo".
The vessel shifted to another mooring. On 20 April 2002, Sahara cancelled the sub-charter-party. Further cleaning was undertaken after 20 April 2002. On 26 April 2002, Saybolt conducted a further inspection and concluded that the tanks were "substantially not suitable to load the nominated cargo". On the same day Saybolt asserted: —
"Vessels cargo tanks are in a very poor condition due to the state of the epoxy coating.
Tankwashing by hot water only was not sufficient.
Centre tanks 4 and 8 are accepted for lading Gas Oil. All other cargo tanks are rejected for lading Gas Oil/Gasoline ."
The claimant maintains that the tanks' epoxy coatings were in a poor state.
The vessel was re-delivered on 28 April 2003 by mutual agreement without prejudice to any pre-existing claims.
The claimant asserts that the respondent is in breach of a number of terms of the charter-party as set out in paragraph 27 of the Points of Claim. As for loss, the claimant alleges:
"By reason of the foregoing the charterers were unable to obtain further employment for the vessel and as a result they were deprived of the use of the vessel for the purpose for which it was to be available to them. As a result, charterers have suffered loss and damage calculated and particularized in schedule 1 hereto by reference to their loss and damage due to the cancellation of the sub-charter and in the sum of US$795,041."
Schedule 1 to the Points of Claim contains three distinct elements. Firstly, net freight under the sub-charter-party is the main element (around 97%) of the claim. Secondly, there is a claim for wasted bunkers. Thirdly, there is a claim for a balance of account on the final hire statement.
The respondent contends that the first two claims (but not the third) are time-barred.
The claimant accepts that if Art III rule 6 is applicable, the date when the goods should have been delivered would have been sometime in late April/early May 2003. Arbitration was not commenced until July 2004.
THE CLAIMANT'S SUBMISSIONS
Mr Michael Coburn for the claimant/charterers submitted as follows.
The charterers' claims are unaffected by clause 27(c)(ii) and Article III rule 6 because: —
(1) The charterers' claims are not claims "arising out of any loss of or damage to or in connection with cargo" within the meaning of clause 27(c)(ii) of the Shelltime 4 form; nor (if it is necessary to go further) are they claims "in respect of the goods" within Article III rule 6 of the Hague-Visby Rules.
(II) The charterers' claims are for breaches of charter obligations independent of the Hague-Visby Rules and, on the authority of The Stena Pacifica [1990] 2 Lloyd's Rep 234, 237rhc, clause 27(c)(ii) of the Shelltime 4 form does not apply to such claims.
[If the charterers' contentions are not accepted, the charterers say they would wish to consider whether there are other approaches available to them—claims for reduction of hire under clause 3 of the Shelltime 4 form and/or off-hire under clause 21(a) and/or further claims for wasted hire and bunkers].
Mr Coburn made the submissions set out below under the following headings.
What are claims "arising out of any loss of or damage to or in connection with cargo"?
Clause 27(c)(ii) applies only to what can generally be called "cargo claims". It refers only to claims sufficiently connected with cargo, that is to say claims (whether original or derivative) of the sort which are normally brought by cargo-interests (bill of lading holders), claiming loss or damage arising in relation to the cargo and measured by reference to the cargo. Included in this category are claims for physical loss of cargo and claims for physical damage to cargo. Also included are claims for financial loss such as (by way of example) a fall in the value of a particular cargo or the costs of storing/transshipping a particular cargo. The focus is on the loss and damage claimed, not on the basis of the liability giving rise to the loss and damage. This follows from the wording of the clause and of the phrase from which it derives (see G.H. Renton & Co Ltd v Palmyra Trading Corporation of Panama [1957] AC 149). The last "or" is too far from "claims" for the phrase naturally to include "claim[s]….in connection with cargo", as opposed to (e.g.) "claim[s] rising out of any…damage…in connection with cargo".
All other claims which do not fall into the category of "cargo claims" are outside clause 27(c)(ii). On any view, there are very many types of potential claim under a time charter which fall outside the scope of the clause.
As to the wording and context of the clause, clause 27(c)(ii) is part of a standard charter-party form. The words were chosen specifically for a charter-party context. The fact that the draftsman chose a phrase very similar (but not identical) to one appearing in the Hague and Hague-Visby Rules suggests that he was concerned with cargo claims of the sort which a bill of lading holder and cargo interest might bring. The express reference to clause 38 and "the relevant bill of lading" further supports the notion that the clause is concerned with cargo claims of the sort which a bill of lading holder and cargo interests might bring.
As to the Hague and Hague-Visby Rules background, the same phrase (minus the "of" after "loss") appeared in Article III rule 8 and Article IV rule 5 of the Hague Rules. Article III rule 6 of the Hague Rules (which did not have any express requirement of connection) was held implicitly to require a link to the goods: "the loss or damage referred to must be loss or damage which is related to the cargo owner's goods." ( Goulandris Brothers Ltd v B Goldman & Sons Ltd [1958] 1 QB 74 at p 105).
Article III rule 8 was held to extend beyond merely physical loss or damage (see Renton v Palymra e.g. at p169 per Lord Morton),—but still in the context of a classic "cargo claim" type of loss: i.e. storage and transshipment costs.
The Stena Pacifica is authority for the propositions that: (i) the general intention of clause 27(c)(ii) of the Shelltime 4 form is that liability for what can generally be called "cargo claims" shall be governed by the Hague or Hague-Visby Rules; (ii) the clause covers most (though not all) of the claims which may be brought by a cargo-owner, and can cover claims for damages by charterers measured by reference to third party cargo interests; but (iii) the clause does not cover claims for damages "measured otherwise than by...
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