Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (Cape Providence)

JurisdictionEngland & Wales
Judgment Date14 October 2002
Neutral Citation[2002] EWCA Civ 1407
Docket NumberCase No: 2001/2575
CourtCourt of Appeal (Civil Division)
Date14 October 2002
Between
Great Peace Shipping Limited
Respondent
and
Tsavliris (International) Limited
Appellant
"Great Peace"/"Cape Providence"

[2002] EWCA Civ 1407

Before

Lord Phillips, Master of the Rolls

Lord Justice May and

Lord Justice Laws

Case No: 2001/2575

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM QUEEN'S BENCH DIVISION

COMMERCIAL COURT

The Hon Mr Justice Toulson

John Reeder, QC and Rachel Toney (instructed by Shaw & Croft) for the Appellant

Huw Davies (instructed by Stephenson Harwood) for the Respondent

Lord Phillips MR

This is the judgment of the Court

Introduction

1

In 1932 in Bell v Lever Brothers Ltd [1932] AC 161 Lord Atkin made a speech which he must have anticipated would be treated as the definitive exposition of the rules of law governing the effect of mistake on contract. In 1950 in Solle v Butcher [1950] 1 KB 671 Denning LJ identified an equitable jurisdiction which permits the court to intervene where the parties have concluded an agreement that was binding in law under a common misapprehension of a fundamental nature as to the material facts or their respective rights. Over the last fifty years judges and jurists have wrestled with the problem of reconciling these two decisions and identifying with precision the principles that they lay down.

2

In the court below Toulson J. used this case as a vehicle to review this difficult area of jurisprudence. He reached the bold conclusion that the view of the jurisdiction of the court expressed by Denning LJ in Solle v Butcher was 'over-broad', by which he meant wrong. Equity neither gave a party a right to rescind a contract on grounds of common mistake nor conferred on the court a discretion to set aside a contract on such grounds.

3

Toulson J. gave permission to appeal, observing: 'the appeal raises a question of general importance and the Court of Appeal might take the view that my approach to Lord Denning's principle in Solle v Butcher was not open to me and/or wrong'.

The facts

4

We gratefully adopt, with a degree of adaptation, Toulson J's clear exposition of the relevant facts, as to which there is no dispute. All the times are stated by reference to British Summer Time.

5

The story concerns two vessels, the " Cape Providence" and the " Great Peace". In September 1999 the " Cape Providence" was on her way from Brazil to China with a cargo of iron ore when she suffered serious structural damage in the South Indian Ocean. The defendants learned that the vessel was in difficulties and offered their salvage services, which were accepted on the terms of Lloyd's Open Form of salvage agreement. To find a tug they approached a firm of London brokers, Marint. The individuals involved at Marint were Mr Graeme Little and Mr Andrew Holder. A tug was found, but it was going to take five or six days for the tug to reach the " Cape Providence" from Singapore. There was serious concern that in the meantime the vessel might go down with the loss of her crew. So Mr Little was asked by the appellants' representative, Captain Lambrides, to try to find a merchant vessel in the vicinity of the " Cape Providence" which would be willing to assist, if necessary, with the evacuation of the crew.

6

Mr Little contacted Ocean Routes, a respected organisation which provides weather forecasting services to the shipping industry and receives reports about vessels at sea. Ocean Routes gave Mr Little the names of four vessels reported to be in the area. He was told that the "Great Peace", a vessel owned by the respondents, was the nearest to the " Cape Providence" and should be close to a rendezvous position within about twelve hours. Mr Little noted the name of the four vessels and the estimated position of the " Great Peace". Unfortunately the position which he was given was wrong.

7

At 20.30 on Friday 24 September 1999 Mr Little telephoned a contact number for the " Great Peace's" managers, Worlder Shipping Limited of Hong Kong. The call was answered by Mr Pierre Lee. By Hong King time it was 03.30 on Saturday 25 September.

8

Mr Lee was a businessman with no seafaring experience. He had never personally negotiated the fixture of a vessel, because his company always used brokers. But it was the middle of the night and Mr Little explained that the situation was an emergency because of the potential danger to the crew. They did not discuss the exact position of either vessel. Mr Little simply advised Mr Lee that he believed from information received from Ocean Routes that the " Great Peace" was the closest vessel to the " Cape Providence". Mr Lee was not able to promise help there and then, because the " Great Peace" was under charter, carrying a cargo of soya beans from New Orleans to China, and the charterers would need to be consulted, but he asked Mr Little to send him details by fax.

9

Immediately after the conversation Mr Little faxed Mr Lee as follows:

"Further to our telcon at 22.22 hours BST 24 September, we are working on behalf of the owners of a cape size bulk carrier which has suffered serious structural damage in the southern Indian Ocean. Her position at 10.27 hours BST today was 29 40S/80 20E. She is proceeding at 5 knots on course 050 degrees direction Sunda Strait. Owners have mobilised a tug from Singapore which should reach the casualty in the next 5/6 days. We understand from Ocean Routes that your vessel " Great Peace" is in close proximity to the casualty and have been asked by hirers to check whether it would be possible to charter the " Great Peace" on a daily hire basis to escort the casualty until arrival of the tug.

We would appreciate greatly if you can check soonest with charterers whether they can agree to the request, bearing in mind that the casualty is in serious danger."

10

Shortly after midnight, Mr Lee phoned Mr Holder (who had taken over from Mr Little) and put forward an offer for the chartering of the " Great Peace". During the conversation all the terms necessary for a contract were discussed. The contract was to be on the basis of a Bimco Towhire form of agreement. (This was somewhat odd because the " Great Peace" was a bulk carrier and was not going to be towing the " Cape Providence", but the circumstances were unusual and the Bimco Towhire agreement was the form of contract with which Mr Holder was familiar). The hire was to be for a minimum of 5 days. The purpose of the charter was to be to escort and stand-by the " Cape Providence" for the purpose of saving life. Delivery was to be at the "Great Peace's" location at the time of the agreement and the hire would commence as soon as she was fixed and diverted (it being the mutual, and correct, assumption of Mr Lee and Mr Holder that there would be no practical difference between the vessel's position at the time of the agreement and at the time of deviation, since it was contemplated that there would have to be some alteration of course in order to effect a rendezvous and that the alteration of course would happen as soon as instructions could be given on the conclusion of the agreement). During the conversation Mr Holder asked Mr Lee for the position and speed of the " Great Peace", and Mr Lee replied that he would check these matters with the master when he knew if the appellants were interested in the terms of the offer.

11

Captain Lambrides decided not to accept the offer at once, but at 0640 he gave instructions to Mr Holder to fix the vessel at a gross rate of US$16,500 per day (which Mr Holder knew would be acceptable to Mr Lee from their earlier conversation).

12

Mr Holder thereupon called Mr Lee. They went through and confirmed the terms of the fixture.

13

Afterwards Mr Holder sent a fax to Mr Lee thanking him for his assistance with the fixture of the " Great Peace" for the services of escort/stand-by to the " Cape Providence"; saying that he would complete the recap of the main fixture terms shortly, giving details of the " Cape Providence's" latest position, course and speed in order to enable the vessels to rendezvous; and concluding:

"Please instruct your master to contact the master of " Cape Providence" and alter course to rendezvous with the vessel as soon as possible."

14

As requested, Mr Lee faxed instructions to the master of the " Great Peace" to alter course towards the " Cape Providence". He sent a copy of the fax to Mr Holder.

15

At 08.17 Mr Lee gave Mr Holder contact details of the " Great Peace", which Mr Holder passed on to Captain Lambrides. A few minutes later, at 08.29, the master of the " Great Peace" sent a message to Worlder that he had contacted the " Cape Providence" to find her latest position and was altering course "right now".

16

Meanwhile, at 08.25, Captain Lambrides called Mr Holder to say that the vessels were 410 miles away from each other. This was not something known to Mr Holder or Mr Lee, so the likely inference is that the master of the " Cape Providence" must have reported the positions of the vessels to the appellants after his conversation with the master of the " Great Peace".

17

If the information previously given to Marint by Ocean Routes had been accurate, the vessels should have been only about 35 miles apart when the contract was concluded.

18

Captain Lambrides told Mr Holder that he was looking to cancel the " Great Peace", but not yet, because he first wanted to know if there was a nearer available vessel which could provide assistance to the crew of the " Cape Providence".

19

Mr Holder made a number of unsuccessful enquiries, about which he reported to the appellants, at 0924, recommending that the " Great Peace" should...

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