Bremer Handelsgesellschaft m.b.H. v C. Mackprang Jr. (Pegasus)

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE STEPHENSON,LORD JUSTICE SHAW
Judgment Date15 November 1978
Judgment citation (vLex)[1978] EWCA Civ J1115-2
Date15 November 1978
CourtCourt of Appeal (Civil Division)

In the Matter of the Arbitration Act 1950 and

In the Matter of an Arbitration

Bremer Handelsgesellschaft m.b.H.
Appellants (Sellers)
and
C. Mackprang Jr.
Respondents (Buyers)

[1978] EWCA Civ J1115-2

Before:

The Master of the Rolls (Lord Denning)

Lord Justice Stephenson and

Lord Justice Shaw

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the High Court of Justice

Queen's Bench Division

Commercial Court

(Mr. Justice Robert Goff)

MR. B. DAVENPORT and MR. P. LEGH-JONES (instructed by Messrs. Richards, Butler & Co., Solicitors, London) appeared on behalf of the Appellants (Sellers).

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

THE MASTER OF THE ROLLS
1

Whenever one of these cases comes before us on GAFTA Form 100 we get lost in the complications and technicalities which they present. Three years ago in Toepfer v. Cremer (1975) 2 Lloyd's 118 and Tradax v. Andre (1976) 1 Lloyd's 416, the trade set us an examination paper with many questions to answer. We did our best, but recently our papers were marked by the House of Lords, see Bremer v. Vanden (1978) 2 Lloyd's 109. They only gave us about 50 per cent. The House of Lords are fortunate in that there is no one to examine them or mark their papers. If there were, I do not suppose they would get any higher marks than we. At any rate, their answers in Bremer v. Vanden mean that we have now to reconsider a number of points.

2

The Board of Appeal have set out the commercial background to these eases. There is a big trade in soya bean meal. Much of it is produced in the United States, exported to Europe, and used as food for cattle. The export trade from the United States is in the hands of about a dozen big firms. They buy from the producers all the soya bean meal that is produced and store it in their warehouses in bulk. They charter relatively large vessels to carry it to Europe. They load it on to these vessels in large quantities. Always in bulk so there is no difference in parcels. On getting to Europe, it is discharged into lighters. These hold about 200 metric tons each. They are then taken by river for supply to the farmers.

3

The United States' shippers sell the soya bean meal long before it is shipped. They sell quantities of it whilst still in store or even before they get it. They sell it on c.i.f. terms for shipment in succeeding months. The first buyers resell it or portions of it to second buyers: and so on alonga string. There is usually a string of several traders between the shipper and the ultimate c.i.f. receiver. Contracts are invariably on the terms of GAFTA Form 100.

4

I am not going to set out the details of our present case. They are all printed very conveniently in the report in (1977) 2 Lloyd's 467. Sufficient to say that Bremer are intermediate sellers. In October 1972 they sold 1,200 metric tons of soya bean meal to intermediate buyers called Mackprang. The price was $135.25 per metric ton c.i.f. Rotterdam. Shipment was to be 200 tons each April, May, June, July, August, September, 1973. It incorporated GAFTA Form 100.

5

The case is only concerned with the shipment of 200 tons agreed to be made in June 1973. This shipment was never made. So the sellers were prima facie liable in damages. The price had risen to $585 a ton. So the damages were colossal. The sellers, however, claimed to be exempt from liability under clause 21 and clause 22 of GAFTA Form 100: because of an embargo that had been imposed by the United States Government. All exports of soya bean were prohibited from the 27th June, 1973 to the 2nd July, 1973, save for two exceptions. On the 2nd July, 1973 the embargo was partially lifted so as to permit shipment of 40 per cent of existing contracts. On the 19th July, 1973 the embargo was further lifted in respect of goods en route on the 27th June, 1973. On the 21st September, 1973 the embargo was lifted altogether.

6

At all stages hitherto the buyers have succeeded. The sellers have not satisfied anyone that they are exempted. The sellers appeal to this court.

7

BREKER v. VANDEN

8

Before I consider this particular case, I will summarisethe decision in Bremer v. Vanden. All the details will be found in the Award which is set out in (1977) 1 Lloyd's at pages 135 to 146. The important facts are these: The sellers were the shippers under contract to ship 44,000 metric tons of soya bean meal in June 1973. This included 220 tons for these buyers. On the 27th June, 1973 the sellers had 44,000 metric tons of soya bean meal available to fulfil all their commitments. These 44,000 tons were stored in warehouses or were actually in transit to the ports. The sellers intended to ship them in the last three days of June 1973 (or the next eight days) so as to fulfil their obligation of June shipment. They had chartered four vessels for the purpose. No doubt they would have fulfilled all their obligations but for the embargo. This came down on the 27th June, 1973. It prevented the sellers from fulfilling their obligations of June shipments. The sellers thus proved - and it was conceded - that they were absolutely prevented from making the shipment. On this account they were held to be exempted from liability by reason of clause 21 of GAFTA Form 100. The sellers had also an alternative defence by reason of clause 22 - the force majeure clause. As soon as the embargo was imposed, they gave a warning notice and an extension notice claiming an extension of time. These notices were defective in some respects, but the buyers waived the defects. So the notices were to be treated as good. The embargo was lifted on the 2nd July, 1973 so as to permit the shipment of 40 per cent. The sellers were ready and willing to ship this 40 per cent within the extended time given by the force majeure clause. But the buyers refused to accept this 40 per cent, and claimed damages for non-shipment of the whole of the June 1973 shipment. They failed: because the sellershad carried out the requirements of the force majeure clause and were protected by it.

9

CLAUSE 21

10

Now the present case differs from Bremer v. Vanden: because here the sellers were not the shippers. It differs, too, because there is no evidence here that the shippers were prevented by the embargo. There is no evidence whatever to show who were the shippers: nor as to whether there were any goods available for shipment: nor as to whether they were caught by the embargo or not. The absence of evidence raises the crucial point in this case. It is this:

11

If the seller relied on clause 21 - claiming that there was a prohibition "preventing fulfilment" - on whom is the burden of proof? plainly the burden is on the supplier. At common law a party who relies on an exception clause must prove the facts to support his exception. In addition, clause 21 itself says: "If required, sellers must produce proof to justify their claim for cancellation". But, in order to discharge their burden, how much has the seller to prove? The seller here says that it is sufficient for him to prove the general embargo which came down on the 27th June, 1973. If this had been a total embargo on all shipments, that might be sufficient. But this was not a total embargo. There were two exceptions - two "loop-holes". The bulletin permitted the export of goods "already on lighters destined for an exporting vessel or for which loading on board an exporting vessel had actually commenced as of 5.00 p.m. on 27th June, 1973".

12

In view of these two "loop-holes", I do not think it is sufficient for the seller to rely on the general prohibition. He must go further and show that the shipper had no goodsavailable within the permitted loop-holes. In Tradax v. Andre (1976) Lloyd's 416 we considered this very point. At page 423 I said:

13

"In order to prove that shipment was prevented, the seller would have to prove that the shipper had no goods on lighter and none in course of loading, which could be used to fulfil the contract. If the shipper had enough goods on lightens for this contract of 220 tons, he would prima facie be in a position to fulfil this contract: and would not be prevented from fulfilling it".

14

And at page 426 Lord Justice Browne said:

15

"As to the 'lighters' point, it is clear that, if a prohibition of export is subject to exceptions or relaxations (for example by licensing) the seller must prove that he was not, and could not, by reasonable efforts have brought himself within the exception or relaxation … The sellers must therefore prove that they were not within either of these exceptions (of goods on lighters or being loaded). If they had been, the goods could have been shipped in spite of the embargo".

16

These two statements were reinforced by Lord Justice Megaw in Bremer v. Vander (1977) 2 Lloyd's at page 357, where he said:

17

"If there are 'loopholes', such as the right to load goods already in lighters … the burden of proof is on the sellers to show that these possible exemptions did not avail …"

18

All those statements were in turn approved by Lord Wilberforce in (1978) 2 Lloyd's at page 114. The only qualification which he made was that if there was an absolute prohibition - without loopholes - which operated on the last days of the shipment period completely preventing fulfilment -then the sellers could rely on the prohibition without more as a frustrating event.

19

Such being the burden of proof, I am quite clear that the sellers did not discharge it. For aught that appears, it may well be that the shippers had already loaded, on or before the 27th June, 1973, goods which they could have appropriated to the contract: or, it may be that they had goods on lighters, or in the process of being loaded, which they could have appropriated to the contract. In the absence of proof that the shippers...

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36 cases
2 books & journal articles
  • Frustration
    • Canada
    • Irwin Books The Law of Contracts. Third Edition Vitiating Factors
    • 4 August 2020
    ...10–14. 191 The Super Servant Two , above note 168 (CA). 192 See, for example, Bremer Handelsgesellschaft mbH v C Mackprang Jr , [1979] 1 Lloyd’s Rep 221 (CA); PJ Van der Zijden v Tucker & Cross , [1975] 2 Lloyd’s Rep 240 (QB). 193 See, for example, Taylor v Caldwell , above note 2 at 840 (B......
  • DEMYSTIFYING THE RIGHT OF ELECTION IN CONTRACT LAW
    • Singapore
    • Singapore Academy of Law Journal No. 2006, December 2006
    • 1 December 2006
    ...mbH v Vanden Avenne-Izegem PVBA [1978] 2 Lloyd’s Rep 109 (“Bremer v Vanden”); Bremer Handelsgesellschaft mbH v C Mackprang Jr[1979] 1 Lloyd’s Rep 221 (“Bremer v Mackprang”); The Happy Day[2002] 2 Lloyd’s Rep 487: unequivocal conduct with knowledge of the underlying facts relevant to the cho......

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