India Steamship Company v Louis Dreyfus Sugar Company Ltd ('Indian Reliance') [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Rix J. |
| Judgment Date | 11 June 1996 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 June 1996 |
Queen's Bench Division (Commercial Court)
Rix J.
Angus Glennie QC (instructed by Zaiwalla & Co) for the plaintiffs.
Mark Havelock-Allan QC (instructed by Richards Butler) for the defendants.
The following cases were referred to in the judgment:
Cosemar SA v Marimarna Shipping Co Ltd (The Matthew)UNK[1990] 2 Ll Rep 323.
Diederichsen v Farquharson BrothersELR[1898] 1 QB 150.
Federal Commerce & Navigation Co Ltd v Molena Alpha Inc (The Nanfri)ELR[1979] AC 757.
Fidelitas Shipping Co Ltd v VIO ExportchlebUNK[1963] 2 Ll Rep 113.
Fry v The Chartered Mercantile Bank of India(1866) 1 CP 689.
Manchester Trust v FurnessELR[1895] 2 QB 539.
Miramar Maritime Corporation v Holborn Oil Trading LtdELR[1984] AC 676.
Oriental Maritime Pte Ltd v Ministry of Food, Government of the Peoples Republic of Bangladesh (The Silva Plana)UNK[1989] 2 Ll Rep 37l.
Smith v SievekihgENRENR(1855) 4 E & B 945, 5 E & B 589.
Wehner v Dene Steam Shipping CoELR[1905] 2 KB 92.
Shipping Time charter with sub-charter sub-charter Providing that freight payable to time charterer's account Sub-charter providing that bills of lading to be marked freight payable as per charterparty Sub-charter providing that freight payable after issue of bills of lading Bills of lading marked freight payable as per charterparty Bills of lading marked freight pre-paid Sub-charterer paying freight to time charterer Time charterer going into liquidation without paying freight to owner Whether owner entitled to recover freight from sub-charterer.
This was an action by shipowners to recover freight from sub-charterers, the time charterer having received the bill of lading freight but not having paid the time charter before going into insolvent liquidation. The owners time chartered their vessel Indian Reliance to Cosemar Schiffahrts Transport GmbH, and Cosemar sub-chartered to the defendants under a voyage charter dated 30 March 1992. The sub-charter named Cosemar as disponent owners and provided, by cl. 9, for the payment of 95 per cent of freight within three banking days of sailing from loading port provided that signed clean bills of lading were released immediately on completion of loading, and the balance on delivery, to Cosemar's bank in Geneva. Clause 39 provided: Bills of lading to be marked freight payable as per charterparty.
Three bills of lading were issued and signed by the master with the owners authority. In the box headed Description of Packages and Goods the bills, after describing the cargo as loaded, went on to say freight prepaid, clean on board charterparty dated 30 March 1992. A box headed Freight Payable At, allowing for the insertion of alternative freight rates, was left blank, but underneath was typed Freight payable as per charterparty. At the time of issue of the bills of lading no freight had in fact been paid.
On 21 April 1992 the sub-charterers paid 95 per cent of the freight at the specified rate to Cosemar's account in Geneva. No freight was ever received by the owners. On 23 April Cosemar notified the owners of their intention, for financial reasons, to redeliver the vessel prematurely under the time charter. Cosemar subsequently went into insolvent liquidation. On 6 May 1992 the owners notified the sub-charterers of the termination of the time charter and demanded payment of freight from them as a condition of continuing the voyage and discharging the cargo, asserting that the bills provided for freight to be payable to owners at the rate stated in the governing charterparty. The sub-charterers declined to pay further freight.
The owners instituted proceedings which in this case were limited to an application under RSC, O. 14A for the determination of the following issues: (1) whether, on their true construction, the bills of lading as originally issued were freight prepaid bills of lading; and (2) whether, on a true construction of the bills of lading, freight payable under them was agreed to be paid as stipulated in the charterparty and not to the owners.
Held, ruling accordingly:
1. The bills of lading, although marked freight prepaid, did not preclude the owners from claiming freight from the sub-charterers. There was no necessary inconsistency between the expressions freight prepaid and freight payable as per charterparty since their conjuncture could mean that freight was payable as per charterparty and had been paid. If it had not in fact been paid, then the latter expression was left unqualified. Once the identified charterparty was consulted, it was clear that the bill of lading freight, or at any rate 95 per cent of it, was to be paid after the issue of the bills, and indeed that the bills ought at that time to have been left unendorsed by the freight prepaid expression.
2. The expression freight payable as per charterparty did incorporate cl. 9 of the sub-charter, so as to make freight payable to the nominated account, that payment being treated as due to the owners but payable to Cosemar. The owners could not thus seek thereafter to claim freight a second time, or seek to lien cargo on the basis of freight still going unpaid. The owners claim must therefore fail as to 95 per cent of freight, but all further questions were reserved as to the balance of five per cent.
Rix J: This case arises out of the, sadly, not infrequent occurrence of the insolvency of a time charterer who has received the bill of lading freight but has not paid his time charter hire to the owners of the vessel. Can the owners recover the freight from sub-charterers? Do the sub-charterers have to pay freight a second time, to the owners, having already paid the time-charterers as disponent owners? Who, under the relevant contractual arrangements, takes the risk of the time-charterers failure, the owners or the sub-charterers?
The plaintiffs, India Steamship Co Ltd, are the owners (owners), and the defendants, Louis Dreyfus Sugar Co Ltd, are the sub-charterers and bill of lading holders (sub-charterers). The time charterers are Cosemar Schiffahrts Transport GmbH (Cosemar). The contracts were as follows. The owners time-chartered their vessel Indian Reliance to Cosemar under a time-charter dated 27 November 1991 (the time-charter). Cosemar sub-chartered the vessel to the sub-charterers under a voyage charter dated 30 March 1992 (the sub-charter).
The time-charter was on an amended NYPE form and provided for payment of time-charter hire in the normal way (every 15 days) in advance, to a specified account in the owners name at a bank in London. Clause 8 was amended somewhat to provide that:
Master to authorise in writing Charterers and/or their agents to sign Bills of Lading on his behalf. Bills of Lading to be signed by agents only if in conformity with Mate's receipt. All bills of lading shall be without prejudice to this Charter and the Charterers shall indemnify the Owners against all consequences or liabilities which may arise from any inconsistency between this Charter and any bills of lading or waybills signed by the Charterers or their agents or by the Captain at their request.
Clause 10 provided in standard form that:
The Owners shall have a lien upon all cargoes and all sub-freights for any amounts due under this Charter
The sub-charter was on an amended revised sugar charterparty form and named Cosemar as disponent owners. It provided for a voyage from Acajutla to ports on either the CIS's Black Sea or Egypt's Mediterranean. A rider (part of the sub-charter form) provided for alternative freight rates, being US$41 for the CIS or $40 for Egypt (and...
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