Elpis Maritime Company Ltd v Marti Chartering Company Inc. (Maria D)
| Jurisdiction | UK Non-devolved |
| Judge | Lord Keith of Kinkel,Lord Brandon of Oakbrook,Lord Ackner,Lord Oliver of Aylmerton,Lord Lowry |
| Judgment Date | 24 July 1991 |
| Judgment citation (vLex) | [1991] UKHL J0724-3 |
| Date | 24 July 1991 |
| Court | House of Lords |
[1991] UKHL J0724-3
Lord Keith of Kinkel
Lord Brandon of Oakbrook
Lord Ackner
Lord Oliver of Aylmerton
Lord Lowry
House of Lords
My Lords,
I have had the opportunity of considering in draft the speech to be delivered by my noble and learned friend Lord Brandon of Oakbrook. I agree with it, and for the reasons he gives would allow this appeal.
My Lords,
This appeal is concerned with the enforceability by the appellants ("the owners") against the respondents ("Marti") of a contract of guarantee associated with a charterparty dated 27 October 1988 made between the owners and Okan Dis Ticaret A.S. ("the charterers"). The matter came first before Saville J. in an action brought by the owners against Marti in the Commercial Court. The owners applied for summary judgment for U.S. $175,533.10 under the contract of guarantee concerned. Marti, while admitting the contract of guarantee, contended that it was unenforceable by reason of section 4 of the Statute of Frauds 1677. They further contended that, even if the contract of guarantee was enforceable, the amount due under it was no more than U.S. $144,820.59. Saville J. held that the requirements of section 4 of the Act of 1677 were satisfied, so that the contract of guarantee was enforceable, and by order dated 21 March 1990 gave summary judgment for the owners against Marti for U.S. $144,820.59 with interest, and leave to Marti to defend as to the balance of the claim. Marti appealed to the Court of Appeal (Parker and Bingham L.JJ.) against so much of Saville J.'s order as gave the owners summary judgment for U.S. $144,820.59. That court held that it was not clear that the requirements of section 4 were satisfied, so that the contract of guarantee might be unenforceable, and accordingly by order dated 31 October 1990 allowed the appeal and set aside the relevant part of Saville J.'s order. The owners now bring a further appeal to your Lordships' House by leave of the House, seeking to have the order of the Court of Appeal set aside and the relevant part of Saville J.'s order restored.
The material facts, which are not in dispute, are as follows. By the charterparty dated 27 October 1988 referred to earlier the owners chartered their m.v. Maria D ("the ship") to the charterers for a voyage from one safe berth Izmir, Turkey, to one safe port in Algeria for the carriage of a cargo of wheat. The charterparty was negotiated through brokers on either side, Tramp Maritime Co. Ltd. ("Tramp") on behalf of the owners and Marti on behalf of the charterers.
Negotiations for the charterparty were carried out partly by telephone and partly by telex. The terms agreed upon included provisions relating to demurrage and freight, the latter to be payable as to 95 per cent. within four banking days after the signing of bills of lading but in any case before breaking bulk, and as to the balance upon final settlement of demurrage and despatch at the loading and discharging ports.
During the course of negotiations Tramp insisted that Marti should themselves provide a guarantee, initially only in respect of the charterers' liability for demurrage. Mr. Mufit Atala, the General Manager of Marti, agreed to this on behalf of Marti in a telephone conversation with Mr. Dimitris Zafeiriou on behalf of Tramp. The agreement was confirmed in a telex from Tramp to Marti sent at 12.13 hours on 26 October 1988, in which there appears the provision "demm guaranteed and payable by chrtrs to to owner at bends however Marti to guarantee abt outstanding demm if any directly to owners." No objection was taken to this provision in Marti's telex in reply sent at 14.57 hours on the same day. The scope of the guarantee was subsequently extended to include the 5 per cent. balance of freight. That extension was agreed in the course of a further telephone conversation between Mr. Zafeiriou for Tramp and Mr. Atala for Marti. Mr. Atala agreed to this extension of the guarantee because he had the impression that unless he did so there would be no deal.
The written charterparty, as finally concluded, was on the GENCON standard form. It consisted of a front sheet, described as Part I, containing on its face 21 boxes with printed headings, in which there were typed the basic terms of the charter. That sheet was followed by a second sheet, described as Part II, containing partly on its face and partly on it reverse side printed clauses numbered 1 to 17, many of which were struck out in whole or in part. There then followed a further three sheets containing six pages of additional clauses numbered 18 to 55. These clauses were expressly incorporated into the charter by words typed in box 21 on the face of the front sheet.
The front sheet was stamped and signed for the owners as principals. It was also stamped and signed for Marti with the following words typed above the stamp and signature: "For and on behalf of Charterers as Brokers only." On all the succeeding pages except the last there appeared either a signature or initials for the owners but without any stamp, and a stamp and signature for Marti but without any words indicating that they were put there by Marti as brokers for charterers only. At the end of the last page there appeared a stamp and signature for owners with the word "OWNERS" typed above them, and a stamp and signature for Marti with the word "CHARTERERS" typed above them.
Clause 24 of the charterparty, which was on the second page of the additional typed clauses, provided:
"Owners to pay charterers dispatch at half demurrage rate working time saved at both ends. Dispatch may be deducted from balance freight. Demurrage guaranteed and payable directly by charterers to owners. However Marti guarantees about outstanding demurrage, if any, and for balance freight." (The emphasis is mine.)
Clause 40 provided for payment of freight in two stages of 95 per cent. and 5 per cent. as indicated earlier and clause 53 provided:
"Charterers guarantee that demurrage at disch port will be paid within latest 30 days after presentation of time sheets and statement of facts for discharging port by owners. Load port despatch to be settled together with balance freight."
The ship berthed and loaded at Izmir in November 1988. She then proceeded to Algeria, berthed at Oran and completed her discharge on 16 January 1989. On 20 January 1989 time sheets and statements of facts concerning the discharging port were presented by the owners to the charterers through the brokers, together with a final freight statement, showing U.S. $175,533.10 as due to the owners in respect of demurrage and final freight. No part of this sum was paid by the charterers in due time or at all, in consequence of which the owners brought arbitration proceedings against the charterers. By an award dated 26 June 1990 the arbitration tribunal awarded the owners the full amount of their claim, namely U.S.$175,533.10, with interest and costs. No part of that award having been paid by the charterers to the owners, the latter brought the action against Marti in the Commercial Court out of which this appeal arises.
Section 4 of the Statute of Frauds provides so far as material:
"no action shall be brought … whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriages of another person … unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized."
It is to be observed that section 4 prescribes two separate ways in which a contract of guarantee may be made enforceable. The first way is by having a written agreement signed by the party to be charged or his agent. The second way is by having a note or memorandum of the agreement similarly signed. In the latter case the agreement itself may be oral. The distinction between these two ways of achieving enforceability is of great importance in the present case.
According to a note of the judgment of Saville J. approved by him he dealt with the question of the enforceability of the contract of guarantee as follows:
"It seems to me there is a note or memorandum of the guarantee on which the plaintiffs sue in the form of clause 24. The opening page of the charter is indeed signed by Marti 'for and on behalf of charterers as brokers only' but the typed page including clause 24 is signed without qualification so that when one looks at the charterparty as a whole and their signature on that page they were also signing unconditionally on their own behalf as well as on behalf of their principals, the charterers."
The Court of Appeal, in reversing the decision of Saville J. on the question of enforceability, founded itself mainly on an earlier decision of that court, Young v. Schuler (1883) 11 Q.B.D. 651. Counsel for the owners invited your Lordships to hold that the Court of Appeal misunderstood that earlier decision, and that, on a proper interpretation of it, the present case was plainly distinguishable from it. It therefore becomes necessary to examine Young v. Schuler in order to see what were the nature and basis of the decision in it.
The facts of that case were these. By articles of agreement under seal Henry Young & Co. agreed to do certain work for which John Abrahams & Co. were to make certain payments to them. The agreement also contained this clause:
"It is further understood between the parties to this contract that the aforesaid J. Otto Schuler guarantees payment to the said H. Young & Co. of all moneys due to them under this contract."
Schuler executed the articles of agreement in the name and on behalf of John Abrahams & Co....
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