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

JurisdictionEngland & Wales
JudgeMR JUSTICE ANDREW SMITH,Mr Justice Andrew Smith
Judgment Date24 July 2012
Neutral Citation[2012] EWHC 2107 (Comm)
Docket NumberCase No: 2011-485
CourtQueen's Bench Division (Commercial Court)
Date24 July 2012
Between:
(1) Dry Bulk Handy Holding Inc
Claimants
(2) Compania Sud Americana De Vapores S.A.
and
(1) Fayette International Holdings Limited
Defendants
(2) Metinvest International S.A.

[2012] EWHC 2107 (Comm)

Before:

Mr Justice Andrew Smith

Case No: 2011-485

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

John Bignall (instructed by Hill Dickinson) for the Claimants

Dominic Happé (instructed by Eversheds) for the Defendants

Hearing dates: 25, 26 and 27 June 2012

MR JUSTICE ANDREW SMITH Mr Justice Andrew Smith

Introduction

1

The claimants are Dry Bulk Handy Holding Inc ("DBHH"), the owners of the "Bulk Chile", which carried cargo from Odessa to Jakarta in February and March 2011, and Compania Sud Americana de Vapores SA ("CSAV"), who chartered her from DBHH. The intermediate charterers, Korea Line Corporation ("KLC"), have failed to pay hire and are apparently insolvent, and the claimants bring claims against Fayette International Holdings Ltd ("Fayette"), who chartered the vessel from KLC, and Metinvest International SA ("Metinvest"), who chartered her from Fayette. The claims relate both to a period between 18 January 2011 and 26 February 2011, when the vessel was hired to KLC, and to a period between 26 February 2011, when the vessel was withdrawn from KLC's service, and 10 March 2011, when the claimants accept that the vessel was redelivered to them after discharge of the cargo. The claims are:

i) "Lien claims": the claimants contend that, in respect of the period of KLC's hire to 26 February 2011, they are entitled under the terms of the charterparty with KLC to hire from Fayette and freight from Metinvest.

ii) "Post-withdrawal claims": the claimants say that Fayette and Metinvest are liable to pay them in respect of the period after the vessel was withdrawn from KLC's service either because they agreed to pay hire for the voyage to be completed or by way of a quantum meruit claim in unjust enrichment.

iii) "Bills of lading claims": the claimants say that Metinvest are liable to pay them freight under contracts recorded in bills of lading issued for the carriage.

2

There are no issues for determination between DBHH and CSAV, who were both represented by Mr John Bignall, or between Fayette and Metinvest, who were both represented by Mr Dominic Happé The primary facts are largely uncontroversial, and no witnesses were called at the trial. The evidence of fact comprised documents in an agreed bundle that were in evidence under CPR32PD27.2. The parties had permission to adduce expert evidence about charter rates for a bulk carrier such as the "Bulk Chile", but they reached agreement that the applicable daily hire rate was $23,000 and adduced no evidence about that. They also had permission to adduce evidence of Korean law concerning the interpretation and application of orders made in the 4 th Bankruptcy Division of the Seoul Central District Court (the "Seoul Court") about the "rehabilitation" of KLC. The evidence of Korean law comprised three expert reports of Korean attorneys, two of Mr J H Choi, the claimants' witness, and one of Mr Chul-Man Kim, who gave evidence for the defendants: they did not give oral evidence.

3

There might be some difference between the parties about the exact sums recoverable by the claimants if their various claims succeed. I did not hear submissions about these issues, and, as I told the parties during the trial, in this judgment I shall not determine them. Further, Mr Bignall acknowledged that in some circumstances the claimants will have to account to others in respect of sums recovered under this judgment, but I was not asked to determine their obligations in that regard.

The contracts

4

DBHH, as owners, and CSAV, as charterers, entered into a time charterparty dated 25 January 2007 and on the 1946 New York Product Exchange ("NYPE") form of the "Bulk Chile", which was then under construction in Japan. DBHH also entered into a charterparty of her with KLC (the "KLC charterparty") dated 7 June 2007. The Commercial reason that the charterparty was made by DBHH, rather than CSAV, is not explained in the evidence, but by a "Side Agreement" dated 13 January 2009 DBHH and CSAV agreed that DBHH entered into it "in its own name and for the account of" CSAV. The KLC charterparty was also on the 1946 NYPE form. The lien claims are based on clause 18, which provided as follows:

"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."

5

The KLC charterparty also included the following provisions:

i) It was for a period of a minimum of 35 months and a maximum of 37 months, at KLC's option.

ii) The rate of hire was US$24,587.50 per day (or pro rata for part of a day).

iii) Clause 5 provided that:

"Payment of said hire to be made in Monaco in cash by telegraphic transfer remittance to Owners' designated bank—see Clause 40—in United States currency semi-monthly in advance…otherwise failing the punctual and regular payment of the hire…or any breach of this Charter Party, the Owners shall be at liberty to withdraw the vessel from service of the Charterers, without prejudice to any claim they (the Owners) may otherwise have on the Charterers…".

Clause 40 stated that the Owners' bank account was "to be advised". While there is no specific evidence of such advice, it is apparent that by the relevant time the Owners had nominated as their bank HSBC Private Bank, Monaco.

iv) 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."

v) Clause 30, an additional clause that was headed "Late Payment", provided as follows:

"Notwithstanding anything contained herein to the contrary, if any time hire becomes due on a Saturday, Sunday or a national holiday, or outside normal office hours, payment shall be made on the last banking day preceding the date on which hire becomes due. Where there is any failure to pay hire on the due date because of an oversight or negligence, error or omission of Charterers' employees, bankers or their agents, or otherwise for any reason where there is an absence of intention to fail to make payment as set out, Owners shall give Charterers four banking days notice to rectify the failure, and where so rectified the payment shall stand as a punctual and regular payment."

vi) 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."

6

On 19 January 2011 KLC entered into a trip charterparty (the "trip charterparty") with Fayette that was recorded in an email "recap": there was apparently no more formal contractual document. It was for a trip of about 45 days (without guarantee) with 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, Klang and/or Kuantan. The daily hire was $24,000 and was payable 15 days in advance (with 3.75% address Commission). The recap provided "O[ther]wise as per Owners BTB [back to back] as attached logically amended in accordance with the above…": the KLC charterparty was attached, and so the trip charterparty incorporated clause 18 of the 1946 NYPE form.

7

Also on 19 January 2011 Fayette entered into a voyage charterparty (the "voyage charterparty") with Metinvest on the Gencon form for the carriage of 47,000 mts of steel products from Sevastopol and Odessa to Jakarta and Klang. 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 Klang: 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...

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7 cases
5 firm's commentaries
  • Rights of a vessel owner in relation to bunkers and sub time charter hire
    • Australia
    • Mondaq Australia
    • 15 February 2013
    ...In the English High Court decision last year of Dry Bulk Handy Holding Inc v Fayette International Holdings Ltd (the Bulk Chile (2012) 2 Lloyds Rep 594) it was held by Smith J that sub-freights in clause 18 of a NYPE charter did not extend to hire. However this decision is also of interest ......
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    • Mondaq Canada
    • 25 October 2013
    ...preventing payment to Byatt. In particular, it followed Dry Bulk Handy Holding Inc. v. Fayette International Holdings Limited, [2012] EWHC 2107 (Comm), aff'd [2013] EWCA Civ 184, in finding that compromises made in insolvency proceedings are not relevant in assessing the legal entitlements ......
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    • 5 December 2012
    ...Following the High Court's decision in Dry Bulk Handy Holding Inc & another v Fayette International Holdings Ltd & another [2012] EWHC 2107 (Comm) ("BULK CHILE"), however, it is now clear that one of the key weapons in the owners' armoury when dealing with unpaid hire – namely the e......
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    • 25 October 2012
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