Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M)
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE FLAUX,Mr Justice Flaux |
| Judgment Date | 15 July 2008 |
| Neutral Citation | [2008] EWHC 1615 (Comm) |
| Docket Number | Case No: 2008 FOLIO 427 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 15 July 2008 |
[2008] EWHC 1615 (Comm)
The Honourable Mr Justice Flaux
Case No: 2008 FOLIO 427
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr R. Waller (instructed by Barlow Lyde & Gilbert) for the Claimant
Mr S. Swaroop (instructed by Messrs KLaw) for the Defendant
Hearing dates: 4 th and 7 th July 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.
Mr Justice Flaux
Introduction and background
There are before the Court two related applications, the application of the Claimant for the continuation of a freezing injunction which I granted ex parte against the Defendant on 2 May 2008 and the Defendant's application to set aside the injunction on various grounds. I heard these applications on 4 an 7 July 2008 and at the conclusion of the hearing stated that, whilst I could not deliver judgment immediately (the applications having substantially exceeded their time estimate) my conclusion was that the injunction had been properly obtained and that it should not be set aside. I indicated that I would hand down a reasoned judgment as soon as I could thereafter.
The Defendant (to which I will refer as “the owners”) is the owner of the vessel NICHOLAS M. The Claimant (to which I will refer as “the charterers”) chartered the vessel under a time charter trip dated 10 October 2007. The charter contains a London arbitration clause and is expressly governed by English law. The dispute between the parties which is currently before a tribunal consisting of Mr Mark Hamsher, Mr Christopher Moss and Mr Alec Kazantsis, concerns the circumstances of the vessel's call to discharge cargo at St Petersburg in December 2007. Because the dispute is subject to arbitration, the Court is only concerned with the threshold question whether for the purposes of obtaining a freezing injunction the charterers can show a good arguable case. However, given the nature of the issues before the Court it is necessary to set out the dispute in some detail. The basic facts (as to which there is not much dispute although ultimately all issues of fact are for the arbitrators) are as follows.
A cargo of soyabean meal was carried on the vessel from Argentina to St Petersburg. Upon arrival, a proportion of the cargo was found to be wet and mouldy. There is a dispute as to the cause of the damage, the owners maintaining that it was damaged by fresh water pre-shipment and the charterers that it was caused by water ingress through defective hatch covers. The vessel completed discharge on 28 December 2007 but was detained in St Petersburg until 11 January 2008 apparently as a consequence of a combination of repairs and maintenance required by the vessel's Classification Society Bureau Veritas (“BV”) and by the Port State Control (“PSC”).
On 25 December 2007, Mr Zavyalov, the BV surveyor, attended on board during discharge and noticed that the right hydraulic support of the number 6 hatch cover was damaged and needed repair. At that stage, he was content that the repairs be undertaken by the vessel's own fitters. However, on 28 December Mr Zavyalov returned to the vessel. The charterers' case is that he issued a notice that the vessel's Class certificates were withdrawn and that the repairs had to be undertaken by Class certified welders. Mr Zavyalov took possession of the vessel's certificates. The owners admit that he took possession of the certificates but they contend that he did not formally withdraw the vessel's Class status. They also contend that it was not until the following day, 29 December, that he decided that the repairs would have to be undertaken by Class certified welders.
On 29 December 2007, PSC went on board the vessel and detained her apparently on finding a number of deficiencies, including the damage to the steelwork under repair and the fact that there was a hole in the bilge tank. The repairs were carried out by Class certified welders and completed on 8 January 2008, the vessel's certificates having been returned on 6 January. The vessel was eventually released by PSC on 11 January 2008. However by that time the owners had lost the vessel's next fixture to Britannia Bulkers to whom the vessel was to be delivered by 31 December 2007. Britannia cancelled that charter on 10 January 2008.
The owners contend that this loss occurred as a consequence of a conspiracy between the charterers and various entities. The owners commenced the arbitration on 7 February 2008. On 8 February 2008 the owners issued a Verified Complaint in the United States District Court for the Southern District of New York seeking a maritime attachment of the charterers' assets under Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims (“the Admiralty Rules”). That attachment was sought in support of the claim in arbitration. The sum claimed was US$5,260,000. By an Amended Verified Complaint filed on 20 February 2008, the sum claimed was reduced to US$4,141,118.32. The allegations in the Amended Verified Complaint were in essence that the charterers and two other entities, Euroweg, the consignees of the cargo and Anteks, sought to delay the vessel's discharge in bad faith by refusing to segregate and discharge sound and damaged cargo. On 29 December 2007 they sought to delay the vessel further by requesting ultrasonic tests of the holds and at about that time, they found out that BV had temporarily withdrawn the vessel's certificate of class pending repairs to the hydraulic support. They then “persuaded” the PSC to go on board and detain the vessel. It was contended by the owners that the repairs to the damaged steelwork were completed before 31 December 2007 and that the vessel's certificates were returned before 2 January 2008 by which date it had been determined that the vessel had no problems justifying her detention by the PSC. However she continued to be detained until after the date when Britannia cancelled the next fixture. These matters were said to amount to breach of charter by the charterers or wrongful interference with the owners' business or conspiracy with Euroweg and Anteks.
On the basis of the allegations in the Amended Verified Complaint, the owners obtained an Attachment Order against the charterers at an ex parte hearing before Judge McKenna in New York on 20 February 2008. On 4 March 2008, the charterers issued a Motion to Vacate that Order under Rule E(4)(f) of the Admiralty Rules. Although the grounds upon which a defendant to such an Attachment Order can successfully challenge and vacate such an Order are extremely limited and technical (and do not include contending that the plaintiff does not have a good arguable claim) as I shall discuss in more detail below, the charterers did seek to contend in their Motion that the underlying claim by the owners is wholly without foundation.
The owners served their Claim Submissions in the arbitration on 20 March 200In these Submissions, their case is put in a somewhat different manner from what was in the Amended Verified Complaint. What is now alleged is a conspiracy between the charterers, Anteks, BV and PSC to injure the owners' business in order to punish them for refusing to permit ultrasonic testing in the holds. The conspiracy is said to have been set in motion by a threatening telephone call between Mr Priymak of the charterers and Captain Bourdis, operations manager of the vessel's managers, Chian Spirit, on 28 December 2007. The owners allege that this took place at 1600 hours Greek time and that during it, Mr Priymak made menacing threats that he would create problems for the owners and for the vessel if the owners did not allow the charterers to send a surveyor on board the vessel, which the owners were refusing to do. It is contended that it was after this threatening conversation that Mr Zavyalov went back on board the vessel, took possession of the vessel's class certificates and insisted that the repairs be conducted by class approved welders. The owners allege that this change of stance and the confiscation of the certificates were induced by the charterers. It is then said, as in the New York Complaint that it was the charterers who persuaded PSC to come on board the vessel.
The charterers' case is that the telephone conversation in fact took place at 20.51 hours after Mr Zavylov had been on board. Unbeknownst to Captain Bourdis, Mr Priymak recorded the conversation and that recording shows that no threats were made by Mr Priymak at all. The charterers accordingly contended in the Motion to Vacate that there had been no factual basis for the Complaint. Both Mr Priymak and Captain Bourdis served declarations under oath in the United States District Court supporting their respective versions of the telephone conversations. At the oral hearing of the Motion before Judge Baer, both gave evidence and were cross-examined, each maintaining his position. The owners alleged before Judge Baer that the recording had been edited to omit the threatening words of Mr Priymak. A ruling from Judge Baer is still awaited.
The charterers served Defence and Counterclaim Submissions on 22 April 2008. The counterclaim is for damages for the tort of wrongful attachment which the charterers contend is analogous to wrongful arrest. They contend that the attachment in New York was obtained by the owners in bad faith or with malice or gross negligence (crassa negligentia) being the test for wrongful arrest in English law. In particular they contend that (i) the owners have changed their case from that advanced before the New York Court...
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