Galaxy Energy International Ltd v Murco Petroleum Ltd (The Seacrown) [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | HH Judge Mackie |
| Judgment Date | 27 November 2013 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 November 2013 |
Queen's Bench Division (Commercial Court).
HH Judge Mackie QC.
Sean O'Sullivan (instructed by Ince & Co LLP) for the claimant.
Dominic Happ (instructed by Eversheds LLP) for the defendant.
The following cases were referred to in the judgment:
Brogden v Metropolitan Railway CoELR(1877) 2 App Cas 666.
Choil Trading SA v Sahara Energy Resources LtdUNK[2010] EWHC 374 (Comm).
ERG Raffinerie Mediterranee SpA v Chevron USA Inc (The Luxmar)[2007] 1 CLC 807.
Glencore Energy UK Ltd v Transworld Oil LtdUNK[2010] EWHC 141 (Comm); [2010] 1 CLC 284.
Sale of goods FOB contract Breach of contract Delivery date Measure of damages Claim by oil trader against oil refiner for late delivery under FOB sale of fuel oil Contract not including additional wording put forward by seller permitting extension of delivery period Delivery provision not merely laytime provision but providing for latest delivery date Claimant seeking difference between market price on last contractual date and actual date for delivery Market value to be determined by spread of Platts prices rather than price on date of seller's breach.
It was common ground that the fuel oil was not delivered by the end of the contractual period. Murco contended that the contract contained a term permitting extension of the delivery period and alternatively contested the construction of the contract. It also disputed the damages claimed. Galaxy sought the difference between the market price on the last contractual date for delivery and the market price on the actual date of delivery.
Held, giving judgment for the claimant:
1. The contract did not include the additional delivery wording on which Murco sought to rely to extend the delivery period.
2. Contrary to Murco's argument, the provision for delivery was not merely a laytime provision and provided for the latest date of delivery.
3. Damages were to be assessed on the basis of market value but there was a disagreement between the experts as to whether, to determine the market price at the date of the seller's breach, one used the Platts quotation for that particular day, or some combination of prior and/or future quotations. Platts was the best source of information about prices, but was not itself a market or exchange. The experts agreed that it was usual for prices in oil deals to be based on a spread of Platts days, and it was clear from the evidence that trades in the market on the relevant day would be much more likely to be priced on a spread of Platts than on the quoted figure for that day. That spread of prices was closer to the market value for real deals on the day than the single day's Platts figure, which was not the quoted price on an exchange. The fact that it was easier to reach a value by using a single day's Platts was not a reason to prefer that approach to a more complex but fairer one. The claimant succeeded and would recover damages based on a spread of days of Platts prices.
HH Judge MackieQC:
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.
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.
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.
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 1517 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 1517 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 e-mail 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 1415 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 e-mail 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...
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