Huyton S.A. v Peter Cremer G.m.b.H. & Company
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Mance |
| Judgment Date | 21 October 1998 |
| Judgment citation (vLex) | [1998] EWHC J1021-2 |
| Docket Number | 1996 Folio No. 1842 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 21 October 1998 |
[1998] EWHC J1021-2
IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL COURT
First Avenue House
Mr Justice Mance
1996 Folio No. 1842
Stephen Males Q.C. was instructed by Richards Butler for the Plaintiffs.
Alistair Schaff was instructed by The Simkins Partnership for the Defendants.
WITH REFERENCE TO R.S.C. ORDER 68 RULE 1 AND THE PRACTICE DIRECTION OF THE MASTER OF THE ROLLS DATED 9TH JULY 1990 ( [1990] 1 W.L.R. 1126):
I certify that the attached text records my Judgment and direct that no further note or transcript need be made.
21st October 1998
COPIES OF THIS TEXT ARE ALSO AVAILABLE IN WP51 ON PROVISION OF A CLEAN 3.5" FLOPPY DISC: APPLY TO THE MECHANICAL RECORDING DEPARTMENT, ROYAL COURTS OF JUSTICE.
Introduction and facts
In this action the plaintiff, Huyton S.A. ("Huyton"), seeks declaratory and injunctive relief to prevent the defendant, Peter Cremer GmbH & Co. ("Cremer"), from pursuing a claim which Cremer has referred to London arbitration by GAFTA. The claim which Cremer wishes to arbitrate seeks to establish that demurrage under a sale contract entered into with Huyton should have been measured at a rate of $6,500 per day, rather than the $11,000 which Huyton insisted upon Cremer paying; to establish further that it was not liable for all or at any rate the larger part ($49,000) of the sum of $65,245.40 likewise paid at Huyton's insistence, on account of guarantee expenses; and to recover sums accordingly.
The factual background starts with the sale contract dated 13th September 1995 for the shipment and sale by Cremer as seller to Huyton as buyer of 30,000 mt Romanian milling wheat plus or minus 10% at buyer's option at $175 per mt FOB spout trimmed Constantza in September/October 1995. The contract provided for payment cash against listed documents. Shipped weight, quality, condition, description, sampling and analysis were to be final as certified on loading by SGS. Loading was to take place at 2000 mt per weather working day (Saturdays, Sundays and holidays excluded), with "demurrage max. 11.000. US$ as per C/P…". The charter was otherwise subject generally to GAFTA form 64, which by clause 29 includes provision for GAFTA arbitration in London of "any dispute arising out of or under this contract".
Cremer is based in Hamburg. It had previously contracted to buy equivalent wheat from Romanian suppliers. Huyton is a Swiss company, owned I was told by Sudanese interests, but represented for most purposes by a London company, Agrimpex Co. Ltd. Huyton also had a pre-existing commitment, made 31st August 1994, to sell to Sotisco Trading Company Limited ("Sotisco") of Khartoum "any origin milling wheat in sound good condition, crop 1993/ 1994 or 1994/1995 at sellers option at $225 per mt C+FFO Port Sudan". Payment under Huyton's contract with Sotisco was by irrevocable letter of credit, which was opened through the Omdurman National Bank. Quality, condition, description and sampling were to be final as certified on loading by an independent surveyor. Sotisco acts, it appears, simply as importer, onselling in this case to Sidco, a buying federation or cooperative established by Sudanese millers.
Agrimpex on behalf of Huyton instructed its regular brokers, J. Gran & Partners Ltd. ("JGP") of London, to charter a vessel to lift the wheat contracted to be shipped by Cremer. The principal of JGP is Mr Jens Gran, and his assistant at the time was Mr Frank Lund. In order to try to ensure that itobtained the most favourable conditions, Agrimpex's policy was, to JGP's knowledge, to charter vessels from their owners or time charterers, rather than on back to back terms from other voyage charterers. On 22nd September 1995 Mr Lund recapitulated to Agrimpex a voyage charter for the "Ithomi" said to have been made with Norwegian Bulk Transport Ltd ("NBT"), under which the freight was $550,000 (increased in a side letter to $650,000) while the demurrage rate was $11,000 per day. The charter included a term whereby owners undertook to release the cargo to receivers at the discharge port against an indemnity if original bills of lading were not available, and identified JGP as "shipbroker". On the same day, NBT chartered in the Ithomi from Olympic Chartering S.A. ("Olympic") under a voyage charter on like terms, providing for freight of $620,000 but demurrage of only $6,500 per day. A week later, the Ithomi was substituted in these arrangements by the Mike K, to which Olympic were also disponent owners. Olympic were it appears time charterers of the Mike K from her owners, Del Scando Shipping Co. Ltd. under time charter dated 22nd September 1995.
It transpires that NBT was owned by Jens ran until February 1995, when it was sold to Mr Gunnar Gran, a nephew of Mr Jens Gran, who until the end of 1995 worked for Messrs. Grieg, shipbrokers of Bergen. Jens Gran continued to retain limited authority to deal with NBT's business after February 1995. These facts regarding NBT were unknown at any relevant time to Huyton as well as Cremer. On the evidence of their own witness statements, neither Mr Lund nor Mr Gunnar Gran appears to have had an active conception of a broker's duties of good faith and integrity. Mr Lund allowed himself and JGP to become involved in acting as brokers for NBT on the head charter from Olympic. He seems to have regarded JGP as owing duties to NBT in relation to the charter to Huyton. He realised that the back to back charter being set up by Gunnar Gran was contrary to Huyton's policy, but he kept silent "to protect the interests of my employer" and, as he put it, to be "as neutral as possible" between two principles for whom he should, in reality, never have been acted at one and the same time in the first place. Mr Gunnar Gran positively instructed Mr Lund to mislead Agrimpex, e.g. by telling him not to mention to Agrimpex that NBT was taking the ship on voyage charter from Olympic (which he also knew to be contrary to Huyton's policy) and, so, not to mention anything about the head charter demurrage rate, as well as by telling him to say that the sub-charter demurrage rate of $11,000 could not be reduced. Accordingly, when Mr Amaslidis of Agrimpex on or about 20th September 1995 asked Mr Lund specifically to seek a lower demurrage rate, Mr Lund reverted to the effect that he was unable to persuade owners to come down. JGP and NBT thus co-operated to mislead Huyton and to act against Huyton's instructions and interests, so that NBT could profit at the expense of Huyton or whoever ultimately bore the demurrage. The upshot of their misconduct was that the charter arrangements were structured to that NBT would make a relatively modest profit of $30,000 out of the freight differential plus, much more significantly, a profit of $3,500 per day on the substantialdemurrage which, it was correctly envisaged, would be earned at the load port in Romania.
The Mike K arrived at Constantza on 29th September 1995, giving notice of readiness at 2300 hours. Loading commenced on 31st October and was completed on 14th December 1995. In respect of the shipment and carriage of the cargo, the master of the Mike K signed and issued to Cremer as shipper a bill of lading dated 14th December 1995, showing the consignee as being "to order" and Sotisco as notify party.
Already prior to completion of loading, a protest by Agrimpex at the delay had led at the end of November and beginning of December 1995 to both sides nominating an arbitrator to act in any eventual arbitration. At a demurrage rate of $11,000 a day, and allowing for holidays and other interruptions of time, Cremer's liability for load port demurrage amounted to $496,840.97, as set out in a calculation which was sent by Huyton to Cremer on about 18th December 1995 together with a copy of the charter between NBT and Huyton. However, before receiving this calculation, Cremer had on 15th December 1995 prepared its own preliminary calculation, which did not take full account of interruptions and arrived at demurrage of $533,507.64. It was this calculation which, somewhat curiously, was sent by Cremer to its Romanian seller on 8th January 1998 and it is the sum in it which was deducted by Cremer from the amount it paid at or about that time to its Romanian seller. Cremer has never refunded the extra $36,666.67 to its Romanian seller or informed it of the discrepancy or, indeed, about the present claim against Huyton-the explanation which Mr Birkholz gave me being to the effect that Cremer wants to deal with everything at once, after concluding its claim against Huyton. The odd result is that Cremer is pursuing, for the benefit of its Romanian seller, which knows nothing about it, a claim for about $207,000, on the resolution of which Cremer intends to remit an additional $36,666 which it has undoubtedly owed to its Romanian seller since the beginning of 1996, and that Cremer hopes to recover for its own account about $49,000, which seems to give it a net interest in this litigation of about $12,377, leaving aside interest.
The vessel arrived at Port Sudan on 22nd December 1995. Discharge took place and was completed by 2nd January 1996. The vessel's owners effected discharge, without production of the bill of lading, against, it seems, two indemnities, one dated 16th December 1995 issued in favour of the vessel's owners and Huyton by the Omdurman National Bank, requesting release of the cargo to Sotisco "c/o CIDICO" and a second indemnity issued to the vessel's owners by Huyton itself, likewise requesting delivery to Sotisco or their order. Each indemnity contained an undertaking to produce the bill of lading as soon as available. As to the first indemnity, Agrimpex had requested its local agent to arrange for receivers to issue such a bank indemnity...
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