Dry Bulk Handy Holding Inc. (a company incorporated in Panama) & Compania Sud Americana de Vapores SA v Fayette International Holdings Ltd (a company incorporated in the British Virgin Islands) & Metinvest International SA
| Jurisdiction | England & Wales |
| Judge | Lord Justice Tomlinson,Lord Justice Toulson,Lord Justice Pill |
| Judgment Date | 14 March 2013 |
| Neutral Citation | [2013] EWCA Civ 184 |
| Docket Number | Case No: A3/2012/2088 |
| Court | Court of Appeal (Civil Division) |
| Date | 14 March 2013 |
[2013] EWCA Civ 184
Lord Justice Pill
Lord Justice Toulson
and
Lord Justice Tomlinson
Case No: A3/2012/2088
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEENS'S BENCH DIVISION, COMMERCIAL COURT
Mr Andrew Smith
Royal Courts of Justice
Strand, London, WC2A 2LL
John Bignall (instructed by Hill Dickinson LLP) for the Respondents
Dominic Happé (instructed by Eversheds LLP) for the Appellants
Hearing date : 7 February 2013
Introduction
Is a shipowner entitled to demand payment to himself of freight under his bill of lading when that contract stipulates for payment to another party, provided that he makes his demand before the freight has been paid to that other party?
This was in substance the first of four questions posed by Rix LJ at the outset of his judgment in Tradigrain SA and Ors v King Diamond Shipping SA (The "Spiros C") [2000] 2 Lloyd's Rep 319 at page 322. In the event that question did not need to be answered in that case but having heard full argument on the point Rix LJ answered it in the affirmative, and Henry and Brooke LJJ agreed with him. In this case Andrew Smith J in the Commercial Court thought that it would be inappropriate for him to depart from such a view, even if he doubted it, which he did not. On this appeal we are asked to revisit the point. In one of the textbooks, Bills of Lading, Aikens et al, 2006, it is suggested that the view of Rix LJ "needs to be treated with some caution".
A second issue determined by Andrew Smith J was whether two notices given by the shipowners to the shippers and bill of lading holders were effective to require payment of bill of lading freight to the shipowners, rather than to the disponent owners from whom the shippers had voyage chartered the vessel. Under the bills of lading issued with the shipowners' authority the freight was payable "as per charterparty dated 19.01.2011", which it is accepted was a reference to the voyage charterparty. This issue simply raises a question of the proper construction to be given to the two notices.
In the present case these problems arose only because of the failure of an intermediate time charterer to whom the shipowners had chartered the vessel. The time charterers failed to pay hire, in consequence of which the vessel was withdrawn from their service whilst the vessel was performing the contracts of carriage evidenced by the bills of lading. A third and final question on this appeal is whether the judge was right to construe two messages from the disponent owners, one addressed to the shipowners and one addressed to the Master of the vessel, as amounting to an express or an implied request to the shipowners to complete the voyage, thereby generating in the disponent owners an obligation to pay reasonable remuneration to the shipowners for so doing.
The facts in outline
The facts are set out in detail in the judgment below, [2012] EWHC 2107 (Comm). The head owners of the Bulk Chile, a bulk carrier, are Dry Bulk Handy Holding Inc, "DBHH", by whom the vessel was time chartered to Compania Sud Americana de Vapores SA, "CSAV", on 25 January 2007 whilst still under construction. The time charter was for a period of minimum 35 maximum 37 months.
On 7 June 2007 DBHH in their own name, but for the account of CSAV as undisclosed principals, time chartered the vessel to Korea Line Corporation, "KLC", for a minimum 35 maximum 37 months on terms which appear to have been essentially back to back with the charter between DBHH and CSAV. I shall call the charter from DBHH to KLC "the head charter". The vessel was delivered into service under both time charters on completion of construction in 2009. It is unnecessary to draw any practical distinction between DBHH and CSAV. It was DBHH who held themselves out to KCL and to all other relevant parties as owners of the vessel and with whom all relevant parties communicated. Judgment was ultimately given in favour of CSAV but again nothing turns on this.
The head charter was on the New York Produce Exchange Form. Relevant terms included the following:-
Clause 4 provided that Charterers were to give the Owners notice "as per clause 59 of vessel's expected date of re-delivery, and probable port." Clause 59 provided as follows:
"At delivery and redelivery notices to be the same; 30 days range, 20/15 days approximate, 10 days approximate notices and probable port, 7/5 days approximate, 3/2/1 definite notices."
Clause 8 was the standard NYPE employment clause, whereby it was agreed:
"That the Captain shall prosecute his voyages with the utmost despatch, and shall render all customary assistance with ship's crew and boats. The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employment and agency; and Charterers are to load, stow and trim and discharge the cargo at their expense under the supervision of the Captain, who is to authorize Charterers or their agents to sign Bills of Lading for cargo as presented, in conformity with Mate's or Tally Clerk's receipts without prejudice to this Charter Party."
Clause 18 was also in standard form:-
"That the Owners shall have a lien upon all cargoes, and all sub-freights for any amounts due under this Charter, including General Average contributions, and the Charterers to have a lien on the Ship for all monies paid in advance and not earned, and any overpaid hire or excess deposit to be returned at once. Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the owners in the vessel."
There were the usual provisions for the payment of hire semi-monthly in advance and conferring upon the owners the right of withdrawal in the event of late payment. Hire was US$ 24,587.50 per day. There was also an anti-technicality clause preventing owners from exercising the right to withdraw for late payment, save on four banking days' notice to rectify the failure.
On 19 January 2011 KLC let the vessel to Fayette International Holdings Limited, "Fayette", the First Appellants, for a time charter trip of 45 days duration, without guarantee, in order to carry a cargo including steel slabs and/or steel plates between the intended load ports of Sevastopol and Odessa and the intended discharge ports of Jakarta (Tanjung Priok) and Port Kelang. The daily hire was US$ 24,000. The charterparty was otherwise on terms back to back with the head charter.
On the same day, 19 January 2011, Fayette entered into a voyage charterparty on the Gencon Form with Metinvest International SA, "Metinvest", the Second Appellants. The voyage charter was for the carriage of 47,000 tonnes of steel products from Sevastopol and Odessa to Jakarta and Port Kelang. The freight was $44.00 pmt for cargo carried from Sevastopol (or Avlita) to Jakarta and $61.04 pmt for cargo carried from Sevastopol or Odessa to Port Kelang: box 13. Box 14 of the standard Gencon form reads: "Freight payment (state currency and method of payment; also beneficiary and bank account) (Cl 4)", and it was completed, "See cl 31". Clause 4 stated that "The freight at the rate stated in box 13 shall be paid in cash calculated on the intaken quantity of cargo" but otherwise the standard wording of clause 13 was deleted and the words "(See cl 31)" were added. The rider to the voyage charterparty provided (by clause 30) that bills of lading were to be marked "Freight Prepaid", and the "Charterers are authorised to issue Bill(s) of lading on behalf of Master, subject freight payment". By clause 31 freight was to be paid within two banking days of the completion of loading, and bills of lading were to be marked "freight prepaid", and were "to be released after the receiving by the Owners Charterers' banking SWIFT".
The judge found that the voyage charterparty had in turn been concluded pursuant to the terms of a Contract of Affreightment between Fayette and Metinvest dated 20 July 200The only significance, if any, of the earlier contract is that it provided that, as between Fayette and Metinvest, freight was deemed earned on loading and was non-returnable, vessel and/or cargo lost or not lost.
The shippers of the cargo named in the bills of lading as such were Metinvest. Three bills of lading were issued, two in respect of cargo loaded at Sevastopol and one in respect of cargo loaded at Odessa. By far the greater part of the cargo, 39,358 tonnes of steel slabs, was loaded at Sevastopol for carriage to Jakarta and was covered by bill of lading No.1 BC/AV. Bill of lading No.2 was for 2,701 tonnes of steel slabs loaded at Sevastopol for Port Kelang. The third bill of lading, No. 1SO related to 4,500 tonnes hot rolled steel plates loaded at Odessa for Port Kelang. All three bills of lading are dated 4 February 2011 although we were told at the hearing that it was only the Sevastopol cargo which had by then been loaded. Loading at Odessa was completed on 6 February 2011. All three bills of lading were signed by Fayette as agent for and on behalf of the Master and it is common ground that they are owners' bills, i.e. that they evidence a contract of carriage concluded between the owners and Metinvest. Although all dated 4 February, the bills of lading were in fact issued on 8...
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