HC Trading Malta Ltd v Savannah Cement Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henshaw |
| Judgment Date | 04 August 2020 |
| Neutral Citation | [2020] EWHC 2144 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2019-000801 |
| Date | 04 August 2020 |
[2020] EWHC 2144 (Comm)
THE HONOURABLE Mr Justice Henshaw
Case No: CL-2019-000801
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Kishore Sharma (instructed by Clyde & Co LLP) for the Claimant
The Defendant did not appear and was not represented
Hearing date: 5 June 2020
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.
| (A) INTRODUCTION | 2 |
| (B) PRINCIPAL FACTS | 4 |
| (C) APPLICABLE PRINCIPLES | 12 |
| (D) ANALYSIS | 15 |
| (1) The claim for the price of the Sale Contract shipments | 15 |
| (2) Demurrage claims | 19 |
| (a) Scope of the “Historic Demurrage Dispute” | 19 |
| (b) Dispute Resolution provisions for the Historic Demurrage Dispute | 21 |
| (E) CONCLUSIONS | 22 |
(A) INTRODUCTION
This judgment follows the hearing of the Claimant's application by notice dated 14 April 2020 for:
i) summary judgment pursuant to CPR 24, and/or that the Defendant's Defence be struck out pursuant to CPR 3.4 and/or the court's inherent jurisdiction, and/or that there be judgment upon admission pursuant to CPR 14, on the Claimant's claims for US$4,696,712.04 in respect of the price of certain shipments of bulk clinker cement sold by the Claimant to the Defendant;
ii) summary judgment, strike-out and/or judgment upon admission in respect of demurrage claims totalling US$674,679.93; and/or
iii) an order pursuant to CPR 25.7 that the Defendant make an interim payment of US$324,760.13 (or such other sum as the court may think fit) on account of the Claimant's demurrage claims.
The Defendant instructed solicitors and filed a Defence dated 19 March 2020. However, it did not respond to the Claimant's application, and did not appear at the hearing. In those circumstances it was necessary to decide whether or not to proceed with the hearing in the Defendant's absence. The circumstances leading up to the hearing were as follows:
i) On 16 April 2020 the Claimant's solicitors sent the application and supporting evidence, along with the Claimant's draft order, to the Defendant's solicitors by email, asking them to “please confirm that you accept service by email of this application and any further documents in this matter going forwards, which we presume is acceptable to you in light of the current situation regarding COVID-19”.
ii) There was no reply. On 30 April, 1 May and 19 May 2020 the Claimant's solicitors emailed the Defendant's solicitors in relation to the listing appointment for the present hearing and then to give details of the date fixed for the hearing. On 19 May 2020 the Defendant's solicitors replied by email “ With regard to your application for summary judgment now set for June 5 2020, we are still waiting for instruction.”
iii) After further emails from the Claimant's solicitors, the Defendant's solicitors on 2 June 2020 confirmed by email that they were “ instructed to receive your bundle for the summary judgment electronically”.
iv) However, on 4 June 2020 the Defendant's solicitors stated in an email to the Claimant's solicitors: “ We write to confirm that we have no instruction to take part in your application for summary judgement. Our client insists on negotiated settlement and will continue to do so in spite of the current economic situation worldwide.”
In these circumstances, I was satisfied, first, that there was good reason to treat the email service of the present application on 16 April 2020 as good service pursuant to CPR 6.27 (read with CPR 6.15(2)). There was good reason to authorise service by that means, including retrospectively, in circumstances where the documents were served on the Defendant's solicitors of record; the COVID-19 pandemic made service by email more reliable and safer than attempting to use postal or personal service; and the Defendant's solicitor's responses made clear that they had received and were fully aware of the contents and nature of the application and accompanying documents.
Secondly, I had to decide whether to proceed with the hearing in the Defendant's absence from the hearing, applying by analogy the factors identified by the Court of Appeal in R v Hayward, Jones and Purvis [2001] EWCA Crim 168, [2001] 2 Cr. App. R. 11 at § 22.5. I concluded that it was clearly appropriate to proceed because:
i) the proceedings had been duly served on the Defendant and the Defendant had appointed solicitors and served a Defence;
ii) the present application had been sent by email to the Defendant's solicitors of record, who had received it, referred to it, and accepted email service of the bundle;
iii) the Defendant had been given sufficient notice of the proceedings, the present applications and the hearing, and had ample opportunity to attend and/or be represented at the hearing;
iv) there was no reason to believe that an adjournment would have been likely to result in the Defendant attending the hearing at a later date;
v) there was no reason to believe that the Defendant wished to be represented at the hearing: its solicitors' email of 4 June 2020 made clear that the Defendant had voluntarily waived its right to appear or to be represented at the hearing, and was voluntarily absent;
vi) although the claims are for significant sums of money, there was a public interest in the matter proceeding without further delay; and
vii) though there would be some inevitable disadvantage for the Defendant of being absent, the Defendant had set out its position in its Defence and correspondence and court would take account of it. Court also had the benefit of the full and frank disclosure made by the Claimant in its application for permission to serve proceedings out of the jurisdiction, a copy of which was before me.
I therefore proceeded with the hearing, and asked counsel for the Claimant to ensure that the court was made aware, so far as possible, of such points as the Defendant might reasonably have been expected to take had it been present or represented at the hearing. I am satisfied that this was done, and at the hearing counsel for the Claimant took me carefully through the transaction documents and other relevant evidence.
(B) PRINCIPAL FACTS
Based on the evidence before me, including the parties' statements of case and the first witness statement of Eleanor Rose Coates (a partner in Clyde & Co LLP, the Claimant's solicitors) and the exhibited transaction and other documents, I find the key facts to be as set out below.
The Claimant is a company registered in Malta, carrying on business trading in, amongst other things, cement clinker in bulk. It is part of the HeidelbergCement group of companies. The Defendant is a company registered in Kenya, which carries on business there, amongst other things importing cement clinker which it processes into cement products for sale and distribution within Kenya.
The Claimant's claims arise under a Settlement Agreement dated 27 August 2019 (“ the Settlement Agreement”), which followed a Sale Contract dated 10 October 2018 (“ the Sale Contract”).
Prior to the Sale Contract, the parties entered into several contracts for the sale by the Claimant to the Defendant of cement clinker. It appears these were performed satisfactorily save that amounts of demurrage, totalling (on the Claimant's case) about US$336,466 remained due from the Defendant to the Claimant in respect of various shipments made by the Claimant during 2017 and 2018 (“ the Pre Sale Contract Demurrage”). As noted below, further sums by way of demurrage became due from the Defendant to the Claimant in respect of the four shipments which were the subject of the Sale Contract (“ the Sale Contract Shipments Demurrage”).
It is convenient at this stage to quote recitals (A) to (E)(a) of the Settlement Agreement, which set out the ensuing events (referring to the Sale Contract as ‘the Contract’):
“(A) Pursuant to a contract dated 10 October 2018 (“the Contract”) HC Trading as the seller agreed to sell and deliver to Savannah; and Savannah as the buyer agreed to accept and pay for: 4 x 45,000 – 50,000 mt (+/-10% in the seller's option) shipments of OPC cement clinker in bulk, to be shipped during November 2018 — February 2019 in consideration of the price of US$ 48.30 pmt CFR Mombasa.
(B) There were express terms of the Contract and / or the Contract on its true construction provided, inter alia:
a. [By Articles 3, 5 and 6] That Savannah would establish a workable confirmed and irrevocable letter of credit in favour of HC Trading, payable at 270 days from the bill of lading date, to be at HC Trading's counter 10 days prior to the loading lay-can for that shipment;
b. [By Article 7] That Savannah should pay HC Trading any demurrage accrued in respect of the discharge of the shipments in accordance with Exhibit II to the Contract;
c. [By Article 21] A failure by HC Trading to exercise or delay in exercising a right or remedy would not constitute a waiver of that or other rights or remedies.
(C) At the request of Savannah, and in reliance on various assurances and / undertakings and / or commitments of Savannah that letters of credit in accordance with the Contract would be established in respect of them, HC Trading made the four shipments (“the Shipments”) under the Contract despite no letters of credit having been...
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