Hyundai Merchant Marine Company Ltd v Trafigura Beheer B.v "The Gaz Energy"
| Jurisdiction | England & Wales |
| Judge | THE HON MR JUSTICE FLAUX,The Honourable Mr Justice Flaux |
| Judgment Date | 29 November 2011 |
| Neutral Citation | [2011] EWHC 3108 (Comm) |
| Docket Number | Case No: 2010 Folio 1209 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 29 November 2011 |
[2011] EWHC 3108 (Comm)
The Honourable Mr Justice Flaux
Case No: 2010 Folio 1209
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Stephen Kenny QC (instructed by MFB Solicitors) for the Claimant
David Semark (instructed by Reed Smith LLP) for the Defendant
Hearing date: 18 November 2011
Introduction and factual background
1. This is the judgment on a preliminary issue ordered by Gloster J at a Case Management Conference on 12 May 2011. The preliminary issue was as follows:
“Whether the head charterparty and the sub charterparty, on a proper construction of all the documents in which the contractual terms may be found, entered into between the respective parties on 21 November 2005 contained an all weather warranty or a weather warranty applying only in weather conditions up to a maximum of Force 4 on the Beaufort Scale.”
2. For the purposes of the preliminary issue, the following factual background applies (most of which constitutes agreed facts as set out in paragraph 11 (a) to (e) of the First Witness Statement of the claimant's solicitor, Mr Naqvi, as contemplated by the Order of Gloster J):
(1) By a time charter dated 21 November 2005 on an amended Shelltime 3 form with various additional clauses and with Gas Form C, Trafigura let the vessel “Gaz Energy” to Daelim Corporation (“Daelim”), for a period that was in effect 18 months, on the terms and conditions set out therein (“the head charter”).
(2) By a further time charter also dated 21 November 2005 again on an amended Shelltime 3 form with various additional clauses and with Gas Form C, on materially identical terms to the head charter save for hire, Daelim sub-let the vessel to Hyundai Merchant Marine (“HMM”) on the terms and conditions set out therein (“the sub-charter”).
(3) The terms of both charters are contained in (i) an amended Shelltime 3 form; (ii) additional clauses and (iii) Gas Form C.
(4) The vessel was delivered under both charters on 14 January 2006, at 10.45 local time (08.45 GMT) at Khor Fakkan. HMM then traded the vessel in accordance with the terms of the charters.
(5) Disputes subsequently arose between the parties under both charters as to whether the vessel had failed to perform in accordance with the speed and consumption provisions in the charters and as to how those provisions are to be construed. It is those disputes which are sought to be resolved in principle by the preliminary issue.
3. The Order of Gloster J provided that Trafigura, the Part 20 defendant, was to be substituted as defendant in place of Daelim and the action was to continue between HMM as claimant and Trafigura as defendant. Throughout this judgment, I will refer to HMM as “the charterers” and Trafigura as “the owners”, although Trafigura was in fact the disponent owner, having the vessel on time charter from her registered owners, Sure Gas Shipping SA of Panama, on terms which are not before the court.
4. Both parties filed witness statements pursuant to the Order of Gloster J, which also provided that there was to be no oral evidence at the trial of the preliminary issue. In the event, the evidence in the witness statements filed was either inadmissible or of marginal assistance to the court in what is an exercise of construction of the contract. I have had no regard to it in reaching my decision. The trial of the preliminary issue took place on one day, 18 November 2011. The charterers were represented by Mr Stephen Kenny QC and the owners by Mr David Semark.
The terms of the charterparty
5. The Court is principally concerned with three provisions in the charterparty, Clause 24 as amended, Additional Clause 42 and Gas Form C. These provided, so far as relevant, as follows:
Clause 24. Detailed Description and Performance
Owners warrant that at the date of delivery under this charter the vessel shall be of the description set out in Gas Form C attached hereto and signed by them and undertake to use their best endeavours so to maintain the vessel during the period of her service hereunder. Further but otherwise [without] prejudice to the generality of this clause Owners guarantee that the average speed of the vessel will be not less than knots in ballast and knots fully laden, with a maximum bunker consumption of tons diesel oil/ tons fuel oil per day for all purposes excluding cargo heating and tank cleaning. See Additional Clause 42 attached which also overrides any references to over performance herein. [lines 201–216]
The aforesaid average speeds shall be calculated in each yearly or other less period, as defined hereinafter by reference to the observed distance from pilot station to pilot station on all sea passages and over the whole of the time the vessel is on hire during such period [lines 217–219]…
…
In the event of any conflict between the particulars set out in the aforesaid Form and any other provision (including this clause) of this charter, such other provision shall prevail. [lines 241–242]
Clause 42: Speed/Consumption.
Speed about 15 knots average
Consumption about 40 mts IFO 380 CST at sea plus about 0.2 mts GO and about 10 mt IFO 380CST at port plus about 0.2 mt GO.
Otherwise as per Gas Form C.
Gas Form C
A.1 General Description
Owners Sure Gas Shipping SA, Panama
A.5 Speed
Guaranteed average speed on a year's period and max wind force 4 in Beaufort scale: Loaded about 14.5 knots, Ballast about 15.5 knots
A.6 Consumption in metric tons per day:
At sea
In port
Main engine/HFO
35 mt
-
Aux. engine/HFO/GO
6/0.2 mt
9/0.2 mt
Boiler/HFO
2.5 mt
Inert gas generator/gasoil
285 kg/h
6. Other provisions of the charterparty of some relevance to the issue I have to decide are as follows:
Clause 21 Off-hire
. In the event of loss of time (whether arising from interruption in the performance of the vessel's service or from reduction in the speed of the performance thereof or in any other manner)
(i) due to deficiency of personnel or stores, repairs, breakdown (whether partial or otherwise) of machinery or boilers, collision or stranding or accidental damage to the vessel or any other cause preventing the efficient working of the vessel; or
….
hire shall cease to be due or payable from the commencement of such loss of time until the vessel is again ready and in an efficient state to resume her service from a position not less favourable to Charterers than that at which such loss of time commenced.
Any such loss of time which arises wholly or partly from a reduction in the vessel's guaranteed average speed provided in clause 24 hereof shall be taken to be the difference between the time the vessel would require to perform the relevant service at the said speed and the time actually taken to perform the same and such loss of time shall be added to any loss of time arising from interruption in the performance of the vessel's service.
[Immediately after Clause 40] Additional Clauses Nos. 41–74, Gasform C and revised Paramount Clause, as attached, are deemed to be fully incorporated into this Charter Party.
Parties' submissions
7. I propose to set out in summary the rival submissions of the parties. To the extent that this summary does not deal with points of detail, so far as relevant, those are set out during the course of my analysis and conclusions later in the judgment.
8. The submissions of Mr Stephen Kenny QC on behalf of the charterers can be summarised as follows:
(1) Clause 24 creates an “all weather warranty”, a guarantee of performance as regards average speed and maximum daily bunker consumption, measured over the whole period that the vessel is on hire under the charter, regardless of weather conditions. Although the words “in all weather conditions” are not used expressly, the clear meaning of the words in lines 217–8: “on all sea passages and over the whole of the time the vessel is on hire during such period” is that the average speed and consumption under clause 24 is calculated in all weather conditions.
(2) The second paragraph of the Off-Hire Clause, clause 21, is predicated upon the speed warranty in clause 24 being an all weathers warranty.
(3) Additional Clause 42 makes no sense unless it is read into and as part of clause 24. Accordingly any suggestion that the speed and consumption warranty in clause 24 had been left blank is misconceived.
(4) The words “Otherwise as per Gas Form C” mean that only those matters set out in Gas Form C not expressly dealt with in Additional Clause 42, namely the consumption of the inert gas generator, “otherwise” apply. Accordingly, the speed warranty in Additional Clause 42 is an all weathers warranty not qualified by reference to Beaufort Force 4.
(5) If, contrary to those submissions, the owners are correct that, by virtue of Gas Form C, the speed warranty is qualified by reference to Beaufort Force 4, then there is a conflict between that provision and the all weathers performance calculation at lines 217 to 220 of clause 24. By reason of the final sentence of clause 24, that clause prevails over the conflicting provision in Gas Form C. In those circumstances, there is an all weathers warranty in the charter.
9. The submissions advanced on behalf of the owners by Mr David Semark can be summarised as follows:
(1) The words “Otherwise as per Gas Form C” mean that everything in Clauses A5 and A6 of that Form was incorporated into clause 42 and, thus clause 24, other than the actual...
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