Howard Marine and Dredging Company Ltd v A. Ogden & Sons (Excavations) Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE BRIDGE,LORD JUSTICE SHAW |
| Judgment Date | 13 December 1977 |
| Judgment citation (vLex) | [1977] EWCA Civ J1213-3 |
| Docket Number | No. 75. H. 4557 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 December 1977 |
[1977] EWCA Civ J1213-3
The Master of the Rolls (Lord Denning)
Lord Justice Bridge and
Lord Justice Shaw
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Queen's Bench Division
(Mr. Justice Bristow)
MR. M. THOMAS, Q.C. and MR. A.G.S, POLIOOK (instructed by R.A. Howard, Esq., Solicitor, Chatham) appeared on behalf of the Plaintiffs (Respondents).
MR. A. LLOYD, Q.C. and MR. J. PHILLIPS (instructed by Messrs. Ingleden Mark Pybus, Solicitors, Newcastle-upon-Tyne) appeared on behalf of the Defendants (Appellants).
This case took three weeks before the judge and two weeks before this court. It is very complicated, but I will try to state the main facts as simply as I can, missing out many details.
In 1974 the Northumbrian Water Authority were about to construct a big sewage works for Tyneside. There was much excavation to be done. Contractors were required to dig out vast quantities of earth, take it by conveyors to the river-side, tip it into seagoing barges, carry it out to sea for a few miles and dump it there. Tenders were invited. One of those invited was Ogdens, a firm of contractors in the North East. They were experienced in disposing of earth by land. But they had no experience of dumping it at sea.
In order to make their tender, Ogdens had to calculate the cost of the excavating and conveying - which they knew all about -but also the cost of the dumping at sea - which they knew nothing about. They had to hire barges suitable for the work. Two seagoing barges were to be employed. The operation was to be continuous. It was to be synchronised with the excavation. As soon as one barge was full, it would leave the quay, carry the material to the dumping ground, dump it and return. Meanwhile the other barge would be loading.
In order to prepare their tender, Ogdens got into touch with five firms who had barges, and invited them to quote a price for the hire. One of these firms were Howards of London. They had two German-built barges which might be available. They were self-propelled twin-screw hopper barges, 207 feet long. They were at the time lying idle in the Medvray. Howards had used them previously at work in the estuary at Felixstowe where silt was being dredged from the bottom. These two barges had been used to carry it out to sea and dump it. Howards had bought the barges from theGerman owners and had the file of German shipping documents in their London office.
THE LETTER OF THF 10TH APRIL.1974
Howards were keen to find work for these two barges. So when Ogdens invited quotations, Howards sent their marine manager, Mr. O'Loughlin, up to the site at Tyneside to see the nature of the material to be carried. He thought the two barges- could do the work. He then quoted for hire of them. He did it in an important letter of 10th April, 1974. He offered to let the barges to Ogdens at £1,800 per week "subject to availability and charterparty". In the letter he specified the volume of material that each barge could carry. He put it in marine terms: "Capacity (struck 940m3) usable c.s. 850m3".
That meant that its capacity filled level to the brim would be 940 cubic metres: but that, as the material would not be level but "in heaps", its usable capacity was about 850 cubic metres. Mr. O'Loughlin based that figure on their experience at Felixstowe. In that letter, Howards said nothing about the weight that each barge could carry. That is called in marine circles the" deadweight" There are certain deductions to be made for fuel, etc. to give the "pay-load", that is, the load for which payment is received.
THE TWO TELEPHONE CONVERSATIONS OF APRIL 1974
On receiving that letter Ogdens wanted to make sure that the barges could carry the material which was- to be excavated on Tyneside. So their Mr. Dent 'in the North-Fast telephoned to Mr. O'Loughlin in the South, on 11th April, 1974, and asked him to explain the letter. "Does your letter mean that each of these vessels can carry 850 cubic metres- of spoil". Mr. O'Loughlin said: "Yes, of course, each can carry 850 cubic metres, but you must remember that it depends on the weight of the material. A ton offeathers occupies much more space than a ton of lead. If the material is heavy, you must he careful not to fill the barge above the load-line".
Mr. Dent knew so little about barges that he missed the point about the load-line. As a result of the conversation he was under the firm impression that each barge could carry 850 cubic metres of the material they were going to excavate at Tyneside. A day or two later Mr. Hall (the area manager for Ogdens in the North-East) wanted to be sure that each barge could carry 850 cubic metres of the material. So he himself telephoned to Mr. O'loughlin and asked him: "Does it mean that each barge can carry 850 cubic metres solid measure?". Mr. C'loughlin said: "Yes, 850 cubic metres are available to be used".
The Judge found that those two telephone conversations were bedevilled by a classic misunderstanding. Both of Ogden's men, Mr. Dent and Mr. Hall, were thinking of the clay they had to excavate in Tyneside; whereas Mr. C'Loughlin was thinking of the silt they had carried at Felixstowe. In the estuary of Felixstowe, the silt (being a mixture of sand and water) only weighed 1.24 tons per cubic metre. Ho 850 cubic metres of it would weigh 1,054 tonnes. This was, near enough, equal to the pay-load of each barge. But at the sewage site in Tyneside, the earth was heavy clay. It. weighed "in the dig", in the ground before being excavated, two tons per cubic metre. So 850 cubic metres of it would weigh 1,700 tonnes. That was far more than either barge could safely carry. 1,7C0 tonnes would send the vessel down deep in the water, well below the load-line, and sink her.
At any rate, at the end of those two telephone conversations, both of Ogden's men, Mr. Dent and Mr. Hall, firmly believed that each barge could carry 850 cubic metres of "in-dig clay" weighing1,700 tonnes. The Judge found that this was because they failed to ask Mr. O'Loughlin the right question, and honestly misunderstood his simple answer to it. So there was no mispresentation and no liability can attach to Howards in respect of those two telephone conversations.
THE TENDER
Believing that each barge could carry 850 cubic metres of "in-dig clay", Ogdens made calculations as to the cost of hiring the barges from Howards. But, as a matter of prudence, they worked on a capacity of 600 cubic metres instead of 850 cubic metres. That was indeed prudent: because they had overlooked the "bulking factor", V/hen "in-dig clay" was excavated, it occupied more space in a heap than in solid. The "bulking factor" was 1. 25. So 600 cubic metres of "in-dig clay" would occupy 750 cubic metres of clay in a heap, Even on that figure of 750, it would go far to fill the volume of usable space in the barge (850 cubic metres). But unbeknown to Ogdens, it would be far too heavy. It would weigh 1,200 tonnes, whereas the pay-load was 1,050 tonnes. If filled with 1,200 tonnes the deck would be awash and the barges in peril.
Ogdens also made calculations as to the cost of hiring barges from the other four firms who quoted. Howards were the lowest. So Ogdens used their quotation in making their tender for the whole excavation to the Northumbria water Authority. It was one of the items in the over-all figure. Ogdens made their tender to the Authority on 29th April, 1974. It was to do the work for £1,847,647,31. Seven other contractors made tenders for the whole wxcavation. On the 18th June, 1974, the Authority accepted Ogdens' tender.
THE HEGOTIATIONS
Having got their tender accepted, Ogdens took up negotiations with Howards so as to acquire the barges. (They also kept in touch with the other barge firms in case their negotiations with Howards broke down). On 12th June, 1974, Mr. O'Loughlin of Howards went up to the North and saw Cgden's men, Mr. Dent and Mr. Hall. They discussed the barges (then lying in the Medway), but nothing was said about capacity, at any rate nothing which either side took seriously. At this meeting Mr. O'Loughlin handed Ogdens a draft charterparty. It contained many standard-form clauses. He said that the barges were still available. He reduced the price of hire to £1,724 a week. On 24th June, 1972, when he got back, he wrote to Ogdens confirming the conversation, and saying: "… We now look forward to receiving your formal. Letter of Intent booking our vessels, at which time we shall finalise charterparties for each vessel and will forward them to you for signature".
THE INTERVIEW OF 11th JULY. 1974
Nothing was, however, finalised at that time. Ogdens were negotiating with another firm of barge-owners as well as Howards. They asked both firms to send up representatives to the North-East. They prepared a questionnaire of 31 questions on all sorts of matters. The meeting took place on 11th July, 1974, at Ogden's office at Otley in Yorkshire. One of the questions was: "No. 8 -Capacity of Barges". They asked this question of the other firm, and also of Mr. O'Loughlin of Howards. The judge found what was said was this: (Q) Ogdens: "What is the capacity of each barge?" (A) Mr. O'Loughlin "350 cubic metres" (Q) Ogdens: "What is that in tonnes about?" (A) Mr. O'Loughlin "About 1600 tonnes subject to weather, fuel-load and time of year". Mr. C'Loughlin's answerwas noted down by Ogdens in writing, as follows: "1600 850 m3 usable".
The judge found that Mr. O'Loughlin was perfectly honest in saying 1600 tonnes. Early on when Howards acquired the barges, he had looked up Lloyd1s Register for these two barges. That Register gave the...
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