Golden Ocean Group v Salgaocar Mining Industries PVT Ltd and another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE CHRISTOPHER CLARKE |
| Judgment Date | 21 January 2011 |
| Neutral Citation | [2011] EWHC 56 (Comm) |
| Docket Number | Case No: 2010 FOLIO 272 |
| Court | Queen's Bench Division (Commercial Court) |
[2011] EWHC 56 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Christopher Clarke
Case No: 2010 FOLIO 272
Timothy Young QC and Daniel Bovensiepen (instructed by Ince & Co) for the Claimant
Dominic Kendrick QC and Peter MacDonald-Eggers (instructed by MFB) for the 1st Defendant
Charles Kimmins QC and Luke Pearce (instructed by Bentleys, Stokes and Lowless) for the 2 nd Defendant
Hearing dates: 4 th and 5 th November 2010
Approved Judgment
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.
MR JUSTICE CHRISTOPHER CLARKE:
These are applications by the defendants – Salgaocar Mining Industries PVT Ltd ("SMI") and Mr Anil V. Salgaocar ("Mr Salgaocar") —to set aside an order made by me on 11 th March 2010 giving the claimant – Golden Ocean Group Limited ("Golden Ocean") – permission to issue a claim form for service, and to serve it, on the defendants in Goa.
The dispute
Golden Ocean claims (i) that Trustworth Shipping Pte Ltd ("Trustworth") repudiated a 10 year charterparty dated 2 nd February 2008: (ii) that Trustworth had been nominated by SMI as charterers; and (iii) that that the charter was guaranteed by SMI. Golden Ocean claims to have suffered losses of around US $ 54 million by reason of that repudiation and claims that sum against SMI under the guarantee. SMI and Trustworth say that Mr Salgaocar did not have authority to bind them to any contract either of charter or of guarantee, and it is on that account that Mr Salgaocar is sued for breach of warranty of authority to enter into both contracts on behalf of SMI and Trustworth.
Until very shortly before the hearing of the application the defendants claimed that there was no serious issue to be tried that Mr Salgaocar had authority, whether actual or ostensible, to contract on behalf of SMI. However, in late October, following disclosure ordered by Walker J of a number of previous fixtures, the defendants (first Mr Salgaocar, and then SMI) indicated that they would not be making that claim on the present application. There is, accordingly, and as I find, an arguable case that he did have such authority. I am also satisfied that there is, as the defendants also accept, an arguable case that he had authority to act on behalf of Trustworth. I shall, therefore, proceed, for the purposes of this judgment upon the assumption (without deciding) that Mr Salgaocar had authority to act on behalf of those two companies.
The background
SMI is a private family company. As at February 2008 Mr Salgaocar's shareholdings gave him ultimate control of about 82.5% of its shares. Members of his immediate family held a further 6.5% of the shares directly. Under the Articles of Association Mr Salgaocar had power to appoint and remove one third of the Board of Directors. Throughout 2008 SMI's website described SMI as a leading conglomerate of industries led by Mr Salgaocar. It featured a formal photograph of Mr Salgaocar with his two sons, Sameer and Arjun Salgaocar, who were described as directors of the company. Under the photograph were the words " Anil V. Salgaocar Chairman & Managing Director, Salgaocar Mining Industries Pvt. Ltd (Center)". Mr Salgaocar had, according to Mr Gautam Radia, his son-in law who is an authorised signatory of SMI, "…guided the fortunes of SMI for approximately 30 years…"
In fact Mr Salgaocar resigned as a director of SMI on 31 st March 2006. Thereafter his two sons appear to have been the only directors even though Article 113 (b) of SMI's Articles of Association requires there to be a multiple of 3 directors.
The website described SMI as being in the business of mining and exporting iron ore worldwide. Mr Salgaocar and SMI had extensive dealings with shipbrokers, Howe Robinson & Co Ltd ("Howe Robinson"). The main contact at Howe Robinson was Mr Guy Hindley ("Mr Hindley") who was based in London. Mr Hindley generally acted on the oral instructions of Mr Salgaocar which Mr Hindley confirmed by email to him.
The history
On 3 rd January 2008 Mr Hindley e-mailed Mr Salgaocar to tell him of the availability, from the 4 th quarter of 2009, of a number of new buildings for purchase from the Jinhaiwan yard, including 176,000 dwt Capesize bulkers. In the event negotiations began in early January 2008 between Golden Ocean and SMI for a 10 year charter of a Capesize new building expected to be delivered in October 2009.
Golden Ocean were the Owners of the subject vessel. The individuals concerned on their behalf were Mr Anders Zorn, Mr Jens Martin Jensen and Mr Jon Flaaten. Howe Robinson were their brokers as well. The individuals at Howe Robinson who acted for Golden Ocean were Mr Bernd Hintz and Mr Daniel Hall.
On 8 th January 2008 Golden Ocean offered to charter to SMI or an account to be guaranteed by SMI 1, a vessel described as "Golden Ocean Newbuilding Capesize Bulk Carrier Newbuilding ex Jinhaiwan, China", at $ 42,500 daily for 10 year 2 months more or less at charterers' option with an option to purchase at the end of the charter period at US$ 93 million. SMI countered at $ 40,000 per day and $ 85 million for the purchase price "a/c Trustworth Pte Limited Singapore fully guaranteed by Salgaocar Mining Industries Goa". That offer was "—subject all further terms + details —subject owners board approval —subject charts reconfirmation to be lifted latest 5 working days after owners board approval lifted".
The disclosure ordered by Walker J herein has revealed that since 2005 Howe Robinson has fixed around 125 vessels on Mr Salgaocar's instructions with Trustworth as charterers. In 43 of those fixtures Trustworth was guaranteed by SMI. Four of those fixtures post dated the fixture in issue in the present case. Of those 43 fixtures 36 involved guarantees in the same form as in the present case namely by a single line in the charterparty. In January and February 2008 Howe Robinson concluded 15 other fixtures on Mr Salgaocar's instructions, three of which were guaranteed by SMI.
Trustworth is a Singaporean company which, Golden Ocean claims, was used for tax reasons and because Indian foreign exchange regulations make it difficult to remit foreign currency abroad. The evidence indicates that it was, in effect, the chartering arm of SMI. Its use appears to have been in order to distance the charter from India.
The negotiations proceeded on the basis of the charterers being "Trustworth fully guaranteed by SMI". They were conducted by e-mail, by which Messrs Hintz and Hall of Howe Robinson communicated with Messrs Zorn, Flaaten and Jensen of
Golden Ocean; Mr Hindley of Howe Robinson communicated with Mr Salgaocar, and the Howe Robinson brokers communicated with each other.On 10 th January 2008 Mr Hindley e-mailed Mr Salgaocar to tell him that he had managed to get Owners to confirm the last offer he had made so "we are agreed on everything except subjects". Mr Hintz e-mailed to Mr Zorn of Golden Ocean to the same effect the next day.
At 17.56 on 11 th January 2008 Mr Hindley e-mailed to Mr Salgaocar, and at 19.40 Mr Hintz e-mailed to Mr Zorn recaps of the fixture in the same terms which included "—subject all further terms Owners nype/moa —subject Owners board approval to be lifted latest 1700 hours London on Monday 14th January 2008 —subject to Charterers approval to be lifted latest 1700 hours on Tuesday 15th January 2008". The recap was, as before, "A/c Trustworth Pte Limited Singapore fully guaranteed by Salgaocar Mining Industries Goa". These recaps followed agreement on the charterparty terms in e-mails passing between Mr Hintz and Mr Hindley.
The "approval" subjects were lifted on 14 th and 15 th January, leaving for negotiation the details of the NYPE charter and of the MOA for the purchase, if the option was exercised.
On 2 nd February Mr Flaaten of Golden Ocean replied to an e-mail of Mr Hintz setting out charterers' proposal on the last outstanding points: "Agreed to the below and therefore fully fixed".
On 4 th February Mr Hindley e-mailed to Mr Salgaocar "Pleased to confirm we have fixed subject to agreeing mutually acceptable terms on the MOA as follows…" and then set out a recap including the agreed charterparty terms. Mr Hintz e-mailed in the same terms to Mr Flaaten. The recaps were dated 2 nd February 2008.
st February The alleged making of the contracts
On 21 st February at 12.30 am Mr Hall e-mailed to Mr Jensen of Golden Ocean the charterers' proposed MOA terms. These included the following additional clause:
"Throughout this Charter Charterers are to be given access to all Drydock, damage, Port State Control reports and Charterers authorised representatives are to be granted access to visit vessel whether in the yard, drydock or in port"
At 09.00 Mr Jensen e-mailed to Mr Hall "All ok – except re deposit- say 5 days" (a reference to the time for provision of the deposit after declaration of the purchase option) and suggested that the additional clause suggested by the charterers belonged in the charterparty.
Mr Hall forwarded that 09.00 e-mail to Mr Hindley in the following terms:
"Following back from Golden Ocean on the MOA
In the end I did not mention anything about pulling the tail shaft to them, as on reviewing the VLCC we did with them it was in there …anyway they agree to all Salgaocar's changes except deposit which I think quite right – do you know if it is already drawn up. If not suggest we put it in or otherwise do an addendum. Deposit seems very fair especially...
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