Damon Compania Naviera SA v Hapag-Lloyd International SA
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE FOX,LORD JUSTICE ROBERT GOFF,LORD JUSTICE STEPHENSON |
| Judgment Date | 01 November 1984 |
| Judgment citation (vLex) | [1984] EWCA Civ J1101-1 |
| Docket Number | 84/0395 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 November 1984 |
In the Matter of the Arbitration Act 1950 and in the Matter of an Arbitration
[1984] EWCA Civ J1101-1
Lord Justice Stephenson
Lord Justice Fox
and
Lord Justice Robert Goff
84/0395
CCM F 27/83
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MR. JUSTICE LEGGATT)
Royal Courts of Justice
MR. BERNARD EDER (instructed by Messrs. Lloyd Denby Neal, Solicitors, London EC3R 8DU) appeared on behalf of the Applicants (Appellants)
MR. MARTIN MOORE-BICK (instructed by Messrs. Richards, Butler & Co, Solicitors', London EC2A 4DQ) appeared on behalf of the Respondents (Respondents)
This is an appeal from a decision of Mr. Justice Leggatt on a Special Case stated by an arbitrator, Mr. Robert Reed, pursuant to s.21(1) of the Arbitration Act 1950.
The case is concerned with an agreement for the sale of three ships called "Blankenstein", "Bartenstein", and "Birkenstein" which were owned by the respondents Hapag-Lloyd International S.A. ("Hapag-Lloyd"). The arbitrator decided that there was a concluded contract for the sale of the ships to the appellant, Damon Compania Naviera S.A. ("Damon") and he awarded Hapag-Lloyd U.S.$60,000. damages for breach of that contract. Hapag-Lloyd contended that they were entitled instead to the sum of $236,000. being the amount of the deposit which Damon failed to pay. That contention was accepted by Mr. Justice Leggatt. Damon now appeal. The appeal raises questions on the law of contract which are, to some extent, the subject of conflicting authorities.
I come to the facts of the case in more detail. Hapag-Lloyd decided to sell the three ships about the end of 1976. They were small general cargo vessels built in 1955 or thereabouts. With the introduction of containers they had become of limited use. They did not prove very easy to sell; there were a number of inquiries and offers which came to nothing. Then, in mid-April 1977 Mr. Nebelsiek, one of the brokers acting for Hapag-Lloyd, made contact with a broker in the Piraeus, Mr. Panas who was acting for two Greek businessmen, Mr. Menelaos Raftopoulos and his brother Mr. George Raftopoulos. Some negotiations between Mr. Panas and Mr. Nebelsiek then ensued, and in June 1977 Mr. George Raftopoulos made an inspection of two of the ships at Amsterdam and found them acceptable.
"Thereafter" (I quote from paragraph 8(f) of the Special Case "formal negotiations commenced with a telex dated 4th July 1977 from Mr. Panas to Mr. Nebelsiek containing 'an Official firm offer' for all three vessels at a price of $2,250,000. The offer was expressed to be made….for and on behalf of Messrs. Raftopoulos of Athens and for company or companies to be nominated by them in due course…..".
Mr. Panas had, it seems, earlier informed Mr. Nebelsiek that (as is commonly the practice when second-hand ships are bought and sold) those conducting the negotiations (in this case the Raftopoulos brothers) did not intend to buy the vessels personally but would
"eventually nominate one or more companies in their control whose name(s) would be inserted into the contract as the real purchaser". (see Special Case paragraph 9(g)).
Negotiations proceeded by means of telex messages until 8th July 1977. By that date, so the arbitrator found,
"all the terms and conditions of the sale were agreed save that the name of the purchasing company or companies had yet to be disclosed". (Special Case paragraph 9(h)).
With one exception none of those telex messages is set out in the Special Case. Neither side, however, takes any point on that. It is common ground that the agreement reached by 8th July incorporated the terms of the Norwegian Saleform Agreement. The exception to which I have referred is a telex of 8th July 1977 from Mr. Nebelsiek to Mr. Panas which is in the following terms:
"…..I am very pleased to reconfirm the deal at USD 2,365,000—cash for the three vessels en bloc. Re paragraph 7 as per your stipulation, all other terms have been agreed.
"Sellers supervisory board approval has been obtained. I am drawing up Memorandum of Agreement on Monday and kindly asking to let us know exact style and address of buying Company".
As regards the position as it stood immediately after the conclusion of negotiations on 8th July 1977, the arbitrator makes the following finding (Special Case 9(j)):
"It was quite evident at this stage as confirmed at the hearing orally by Mr. Nebelsiek and in statement form by Mr. Panas, that both these experienced brokers were convinced that they had concluded a valid sale contract between their respective principals and all that remained was the performance by the Sellers and the Respondents of their respective obligations".
After 8th July there followed an exchange of telexes between the brokers over a period of some days.
On 11th July, Mr. Panas telexed:
"Sorry for delay in telexing details for M.O.A. but understand buyers are in consultation with their Solicitors as to the exact style they will officially use…..".
On 12th July, Mr. Panas replied:
"In order save time and expedite signatures and deposit of 10% should suggest you issue M.O.A. in the name of Messrs. Menelaos Raftopoulos and George Raftopoulos of 10, Eupolidos Street, Athens and urge mail it signed by sellers. Should farther suggest you make a note that prior of delivery of each ship the officially purchasing company should have to be nominated by buyers for Bill of Sale purposes".
On 12th July Mr. Panas telexed:
"Had just now a phone conversation with Mr. Menelaos Raftopoulos (who is the senior one) and who confirmed that formation of the Panamanian Companies who will officially appear as buyers per each ship in due course and that he is pressing Panamanian Consulate to expedite formalities.
"However personally maintain view expressed in my previous telex (with only one eventual alteration, one name to be inserted only that of Mr. Menelaos Raftopoulos)…..".
Also on 12th July Mr. Panas, Mr. Nebelsiek replied that he had prepared the Memorandum of Agreement and had inserted as buyers:
"Messrs. Menelaos Raftopoulos and George Raftopoulos…. for and on behalf of companies still to be nominated".
A copy of the memorandum of agreement was sent to Mr. Panas by Mr. Nebelsiek on 15th July. It was dated 8th July. The memorandum used was the Norwegian Saleform. It recited that the sellers were Hapag-Lloyd and the buyers Messrs. Menelaos and George Raftopoulos for and on behalf of companies still to be nominated. There are two clauses in the memorandum of agreement to which I should specifically refer. They are clauses 2 and 13.
Clause 2 provides:
"As security for the correct fulfilment of this contract the buyers shall pay a deposit of 10% of the purchase money on signing this contract. The amount shall be deposited with Bremer Bank…..and held by them in a joint account for the Sellers and the Buyers…..".
Clause 13 provides:
"Should the purchase money not be paid as per Clause 16" (which provided for payment of specified sums on the delivery of each ship) "the Sellers shall have the right to cancel this contract in which case the amount deposited shall be forfeited to the Sellers. If the deposit does not cover the sellers loss they shall be entitled to claim further compensation for any loss and for all expenses together with interest at the rate of 5% per annum".
The memorandum, though received by Mr. Panas, was never signed by Messrs. Raftopoulos or either of them or any company nominated by them.
On 19th July Mr. Panas telexed to Mr. Nebelsiek as follows:
"M.O.A. in hand handed over to Buyers by Saturday morning (17th July) Have seen them today and expect to have M.O.A. returned to me signed either this afternoon or tomorrow morning. Meantime from conversation I had with them today got feeling that some internal formalities of them might (sic) are not as yet fully settled. However am following everything very close indeed furthermore have to report that most probably all three vessels will be officially purchased under the style of one company only".
The buyers having failed to sign the memorandum, Mr. Panas on 27th July telexed to Mr. Nebelsiek:
"Official statement of buyers should read as follows Quote Buyers regret for inconvenience and anxiety they might cause to sellers but they consciously declare that delay has been entirely unforseeable and beyond their control. Buyers officially declare that they fully maintain deal already stipulated during negotiations confirmed on 8th instant and assure sellers there has never been any intention of stepping out of same. Buyers furthermore declare that the whole inconvenience was caused because of an unforeseen complication with bankers involved. Such complications have been now solved practically but officially will be confirmed by Tuesday 2nd August, when Buyers will proceed without any other delays in complete fulfilment of all their contractual obligations towards sellers".
On 28th July Mr. Nebelsiek telexed that Hapag-Lloyd agreed to an alteration of the agreement so that the deposit might be lodged by 3rd August.
On 1st August Mr. Panas telexed to Mr. Nebelsiek:
"Buyers hereby nominate as purchasing company Messrs. Damon Compania Naviera S.A……They further request sellers to issue and urge forward here a new M.O.A. (dated of course 8th July) but in which Damon…..will appear as purchasing company, again with option of nomination of further companies prior of delivery of 2nd and 3rd Unit....
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