Galaxy Energy International Ltd v Murco Petroleum Ltd MV "Seacrown"

JurisdictionEngland & Wales
JudgeHis Honour Judge Mackie,Judge Mackie
Judgment Date27 November 2013
Neutral Citation[2013] EWHC 3720 (Comm)
Docket NumberCase No: 2012 Folio 1077
CourtQueen's Bench Division (Commercial Court)
Date27 November 2013

[2013] EWHC 3720 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

His Honour Judge Mackie QC

Case No: 2012 Folio 1077

Between:
Galaxy Energy International Limited
Claimant
and
Murco Petroleum Limited
Defendant
MV "Seacrown"

Sean O'Sullivan (instructed by Ince & Co LLP) for the Claimant

Dominic Happé (instructed by Eversheds LLP) for the Defendant

Approved Judgment

Hearing dates: 14 to 16 October 2013

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.

His Honour Judge Mackie QC

Judge Mackie QC :

1

The Claimant oil trader ("Galaxy") claims US$271,396.80 from the Defendant oil refiner ("Murco") for alleged late delivery by Murco of 35,000 MT of fuel oil, sold on FOB terms to " be delivered…in one lot…during period 15/17 January 2012". It is common ground that the fuel oil was not delivered by 17 January 2012. Murco contends that the contract contained a term extending delivery and alternatively contests the construction of the contract. Murco, if it is found liable, also disputes the damages claimed.

The Parties

2

Galaxy is registered in the British Virgin Islands but is based in Monaco.

3

Murco is part of the Murphy Oil group, based in El Dorado Arkansas, and owns a refinery in Milford Haven. The parties had traded amicably on previous deals in 2011.

The Trial

4

I had seven bundles of documents and heard the following evidence. Galaxy called Mr Baronti, the trader who agreed the deal on its behalf and his boss Mr Chimenti, the company's Products Trading Manager. Murco, remarkably at a trial where it relies on what was said in a disputed telephone conversation, called no evidence of fact. Experts on market price and hedging, Ms Jago for Galaxy and Mr Daly for Murco produced a useful joint report and gave helpful evidence.

Facts agreed or not much in dispute

5

On 3 and 4 January 2012, Mr Warner of Tullett Prebon, brokers acting for Murco, communicated by Instant Messenger with Mr Baronti about a cargo of fuel oil being offered by Murco for 15–17 January loading. Mr Baronti said that he spoke with Mr Warner on the telephone and that they agreed terms for the sale as recorded in his internal recap. " delivery fob milford 15–17 jan" and otherwise " as previous deal". In evidence he confirmed his statement that " We did not discuss anything other than what I put in my internal recap" and I accept that, there being no evidence to the contrary. However, Mr Tomes of Murco (not Mr Warner of its brokers) then sent a confirmation email containing some slightly different terms including at the end of that delivery provision in the Contract: " PLUS SUCH EXTENSION TO THAT PERIOD AS IS REQUIRED BY THE SELLER TO EFFECT OR COMPLETE DELIVERY" ("the additional delivery wording"). Mr Baronti responded that C would revert with comments " in due time".

6

Galaxy considered this internally and proposed some deletions but these were not communicated to Murco until 11 January 2012 when Mr Dron of Galaxy responded to the effect that the additional delivery wording should be deleted. This fax concluded " PLEASE CONFIRM YOUR AGREEMENT TO THE ABOVE. IF YOU DO NOT DO SO YOU WILL BE TAKEN TO HAVE AGREED WITH THE TERMS SET OUT IN ANY EVENT". It appears from Murco's disclosure that these proposed changes were reviewed and agreed internally the following day but Murco did not communicate this to Galaxy. Murco did however proceed with the deal.

7

Meanwhile, the Seacrown ("the Vessel") was nominated for the lifting by Galaxy on 6 January 2012 and accepted on 9 January 2012. The laycan was 14–15 January 2012. The Vessel arrived at the Milford Haven anchorage at 1018hrs LT on 13 January 2012 and tendered NOR.

8

By the afternoon of 17 January 2012, the local agent was estimating that the Vessel would berth at about 0700hrs on 20 January 2012 and then be ready to sail by 1300hrs on 21 January 2012. Galaxy sent an email to Murco to complain about this delay stating that it expected to receive a claim from its receivers and had no alternative but to hold Murco responsible for the costs and consequences of the delay. Murco responded on 18 January saying that they had received the message " regards being outside laycan" and that this was " confirmed and understood". There were communications between the parties on 19 January 2012 through Mr Warner, the broker. Galaxy said that the delay in berthing was making them late with their end receivers and sought a revised price mechanism to compensate them for the delay. The Vessel in fact berthed at about 1000hrs on 20 January 2012 and sailed at 1420hrs on 21 January 2012.

9

Discussions did not bear fruit and on 26 January 2012 Galaxy indicated that it would be referring the matter to its external legal advisers. Ince & Co sent a letter before action on 23 February 2012 to which Murco responded on 17 March 2012, accepting that Galaxy could have cancelled the Contract, but stating that it had chosen to accept delivery so its rights were limited to a claim for demurrage.

Previous deals

10

Mr Baronti described in evidence and, for the most part the contemporaneous documents confirm, what happened on each of the four previous deals, the purchase of 30–35kt of fuel oil agreed on 10 August 2011, of 30–35kt of fuel oil agreed on 19 August 2011, of 30–35kt of fuel oil agreed via Mr Warner of Tullett Prebon on 27 October 2011 and of 30–35kt of fuel oil agreed via another broker, PVM, on 7 December 2011.

11

In each case Murco responded to notification of the terms with a confirmation referring to an extended delivery period which in turn Galaxy rejected. In no case did Murco object to this course and on at least two of the deals clearly accepted it internally. The pattern is clear but its legal relevance is disputed.

Effect of the evidence of fact

12

I will shorten my summary of the competing submissions about when the contract was made and what its terms were by first making some points that might seem obvious.

13

Mr Baronti gave clear and credible evidence consistent with the documents and commercial probabilities. I believe him. Murco's attempt to challenge his evidence about the discussion of 4 January was based on extrapolation from the documents and not even on instructions from Mr Warner who is, as far as the Court is aware, alive and well and capable of giving evidence. This was a hopeless and unattractive position for Murco to adopt.

14

The additional delivery wording is obviously a standard provision that Murco, as seller, seeks to introduce into deals, repeatedly so as the evidence in this case shows. There is nothing to suggest that an extension was ever discussed and both parties knew it had been repeatedly rejected by Galaxy in the past.

15

Subject to Mr Happe's submissions about course of dealing which I will come to, it is obvious that a contract in terms which did not include the additional delivery wording came into existence either as a result of the telephone call on 4 January or following the 11 January message, the latter unchallenged by Murco.

Course of dealing

16

Murco points to what happened between 4 and 11 January. On 6 January Galaxy nominated the vessel to Murco. On 9 January Murco accepted the nomination. On the same day, Mr Warner, clearly passing on the enquiry from Galaxy, had asked if there was any possibility " that the vessel might load a day earlier", than the proposed laycan of 15/17 January. He passed on to Galaxy Mr Tomes's response. On 10 January Galaxy confirmed the Vessel and gave instructions to Murco as to the quantity to be loaded. On 11 January, before its message of the same day, Galaxy gave Murco " Documentary Instructions" " regarding the issuance and the distribution of the documents we require". These documents were to include, to accompany one set of bills, an E-aad showing the receiver as the EAC.

17

Galaxy also took all the operational steps that would be expected in order to perform the contract, fixing and lifting subs on a performing Vessel, arranging the attendance of agents at the loadport and instructing the Vessel to load the preferred quantity.

18

All this was done, Mr Happe submits, as must have been apparent to anyone in Galaxy's position, in direct response to Murco's own email of 4 January. If there was no agreement in the conversations of 4 January, then Murco's 4 January email represented a proposal to enter a contract on the terms set out. If there was some partial form of agreement in the conversations, Murco's 4 January email represented a proposal to supplement that agreement and conclude the contract on the terms there set out. On that basis, the conduct of Galaxy on 6, 9, 10 and (it may be) 11 January was only referable to accepting such terms; and a party in the position of Murco could only be taken to have understood that Galaxy were acting on and agreeing to the terms set out in Murco's 4 January email. The contract was then concluded on the basis of Murco's 4 January email, before Galaxy's 11 January counter ever entered the picture.

19

Mr Happe cites well known authority on acceptance by conduct such as Brogden v Metropolitan Railway (1877) 2 AC 666 at 686 for the proposition that a course of dealing and conduct, construed objectively, can amount to acceptance, in contractual terms of an offer made by a party.

20

Mr O'Sullivan points out that his opponent's narrative overlooks the fact that Mr Baronti responded promptly to the email from Mr Tomes to make clear that Galaxy " will revert in due time with our comments", thereby putting Murco on notice that Galaxy would respond and that a brief period of silence should not be taken as acceptance. He asks how it can be said that...

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