Miramar Maritime Corporation v Holborn Oil Trading Ltd

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Diplock,Lord Scarman,Lord Roskill,Lord Brandon of Oakbrook,Lord Brightman
Judgment Date01 Jan 1984
Judgment citation (vLex)[1984] UKHL J0101-1

[1984] UKHL J0101-1

House of Lords

Lord Diplock

Lord Scarman

Lord Roskill

Lord Brandon of Oakbrook

Lord Brightman

Miramar Maritime Corporation
(Appellants)
and
Holborn Oil Trading Limited
(Respondents)
Lord Diplock

My Lords,

1

The question before your Lordships' House in this appeal is a short and, in my view, very simple question of construction of a bill of lading issued pursuant to and in the form annexed to a tanker voyage charterparty in the standard form known as "Exxonvoy 1969" which is widely used in the tanker trade. More specifically the question is whether the provision in the bill of lading which purports to incorporate terms of the charterparty renders the respondents ("the Consignees") as holders of the bill of lading when the cargo was discharged, personally liable to the appellants ("the Owners") for demurrage payable under the terms of the charterparty to the Owners by S.E.A. Petrochem Pte. Ltd. Singapore ("the Charterers") who are in liquidation and insolvent.

2

At the trial of the action before Mustill J., there were other issues between the parties with which neither the Court of Appeal nor your Lordships have been concerned. Although the amount of the demurrage in issue is of the order of U.S.$250,000, the principal purpose of the parties in pursuing the appeal from that part of Mustill J.'s judgment that held that the Consignees were not liable to the Owners for demurrage, was to obtain an authoritative ruling on the question whether the holder of a bill of lading in the form ("the Exxonvoy bill of lading") annexed to a charterparty in the Exxonvoy 1969 standard form, if he were not himself the charterer, was nevertheless personally liable to the shipowner for the full amount of demurrage payable by the charterer under the terms of the charterparty. Neither party has contended either in the Court of Appeal or in this House that the answer to this question depended upon the particular fact that in the instant case there was only one bill of lading and this covered a complete cargo of petroleum products carried in the Miramar from Singapore to Trincomalee in 1980. Exxonvoy 1969 contemplates that, at charterer's option, there may be more than one loading port and more than one discharging port and that separate bills of lading may be issued, and must be issued if the charterer so requests, for shipments forming parts of the complete cargo loaded, it may be, at different loading ports for carriage to different discharging ports. The words in the Exxonvoy bill of lading upon which this appeal turns are the same irrespective of whether it is issued in respect of a complete or a part of the cargo, received on board at the first or any subsequent loading port for carriage to and discharge at the last or any previous discharging port. There must be ascribed to the words a meaning that would make good commercial sense if the Exxonvoy bill of lading were issued in any of these situations, and not some meaning that imposed upon a transferee to whom the bill of lading for goods afloat was negotiated, a financial liability of unknown extent that no business man in his senses would be willing to incur.

3

The Court of Appeal, in a judgment delivered by Sir John Donaldson M.R., upheld Mustill J.'s rejection of the personal liability of the Consignees to the Owners for demurrage although the reasons preferred by him for so doing differed somewhat, at any rate in emphasis, from those of Mustill J.

4

Both judgments, however, took as their starting point what had been said by Russell L.J. in The Merak [1965] P. 223, 260, and restated by Lord Denning M.R. in The Annefield [1971] P. 168, 184. Those two cases were concerned with whether or not the presence of a clause expressed to incorporate the terms of the charterparty in the bill of lading annexed, in The Merak to a charterparty in the Newbaltwood standard form, and in The Annefield in the Centrocon standard form, was effective to make the arbitration clause in the charterparty binding upon a holder of the bill of lading other than the charterer himself. Although the incorporation clauses in the bills of lading used with the Newbaltwood, the Centrocon and the Exxonvoy 1969 charterparties respectively are not in identical words, there is no distinction to be drawn between them that is relevant to the instant appeal.

5

In strictness, what was said by Russell L.J. and Lord Denning M.R. in The Merak [1965] P. 223 and The Annefield [1971] P. 168 was obiter as respects the correct approach to the extent to which incorporation clauses in bills of lading issued in standard forms annexed to charterparties, are effective to impose upon the bill of lading holder personal liability for non-performance of obligations undertaken by the charterer that are contained in clauses of the charterparty, other than an arbitration clause. Nevertheless, those dicta drew a clear distinction as respects incorporation in the bill of lading between an arbitration clause in the charterparty and a clause therein "which is directly germane to the shipment, carriage and delivery of goods." A clause that falls within this latter category, it was said, is to be treated as incorporated in the bill of lading even though it may involve a degree of "manipulation" of the words in order to fit exactly a bill of lading.

6

The manipulation in the instant case for which the Owners argued was of the words "charterer" in the demurrage clause (Clause 8) of Exxonvoy 1969, so as to substitute for it "consignee" or "bill of lading holder" when clause 8 was incorporated in the Exxonvoy bill of lading. Mustill J. and Sir John Donaldson M.R. were able to find reasons for holding such substitution impermissible notwithstanding that a demurrage clause is one which is germane to the shipment, carriage and delivery of goods.

7

The Owner's application for leave to appeal from the Court of Appeal's judgment was refused by that court, but was subsequently granted by an appeal committee of this House. As was explained to the petitioners at the hearing of the petition, leave was granted not because their Lordships had, at that stage, reached a state of prima facie doubt as to the correctness of the result reached by the Court of Appeal, but in order to give this House an opportunity of dealing with the extent, if any, to which it is permissible to indulge in what in the dicta to which I have referred was described as "verbal manipulation" of clauses in charterparties in order, by means of an incoporation clause in a bill of lading, to impose upon the holder of the bill of lading personal liability for non-performance of obligations which under the express terms of the charterparty are undertaken by "the charterer" under that designation alone and are not therein referred to as being obligations of any other persons interested in the shipment.

8

The incorporation clause in the Exxonvoy bill of lading reads:

"This shipment is carried under and pursuant to the terms of the charter dated … between … and … charterer, and all the terms whatsoever of the said charter except the rate and payment of freight specified therein apply to and govern the rights of the parties concerned in this shipment."

9

The effect of the clauses in Exxonvoy 1969, which deal with laytime, clause 5 "LAY DAYS," clause 6 "NOTICE OF READINESS" and clause 7 "HOURS FOR LOADING AND DISCHARGING," is to provide a combined total of 72 running hours of laytime for loading and discharge at loading and discharging port or ports, starting at each port six hours after receipt by the charterer or his agent of notice of readiness to load or to discharge, as the case may be. Clause 8, "DEMURRAGE," should be set out in full:

"8. DEMURRAGE. Charterer shall pay demurrage per running hour and pro rata for a part thereof at the rate specified in Part I for all time that loading and discharging and used laytime as elsewhere herein provided exceeds the allowed laytime elsewhere herein specified. If, however, demurrage shall be...

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