OT Africa Line Ltd v Vickers Plc [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Mance J. |
| Judgment Date | 16 January 1996 |
| Date | 16 January 1996 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court)
Mance J.
David Allen (instructed by Jackson Parton) for the plaintiffs.
Hilary Heilbron QC and Peter Hayward (instructed by Lovell White Durrant) for the defendants.
The following cases were referred to in the speeches:
Centrovincial Estates plc v Merchant Investors Assurance Co Ltd (unreported, 4 March 1983).
Food Corp of India v Antclizo Shipping Corp (The Antclizo)UNK[1987] 2 L1 Rep 130.
McCutcheon v David Macbrayne LtdUNK[1964] 1 L1 Rep 16.
Raffles v WichelhausENR(1864) 2 H & C 906; 159 ER 375.
Contract Breach Settlement offer Unilateral mistake Plaintiffs transported battle tanks for defendants Tanks contained guns without plaintiffs' knowledge Delay caused to plaintiffs as authorities investigated loss of guns en route Defendants offered to settle Plaintiffs refused offer New increased offer made by mistake faxed to plaintiffs following day Offer accepted by plaintiffs Whether agreement binding Whether plaintiffs ought reasonably to have realised mistake Whether defendant entitled to rescind agreement on grounds of unilateral mistake.
This was an application to determine whether an agreement made in order to settle an action was binding on the parties.
The plaintiffs were the owners of a vessel and undertook to carry four tanks from England to Nigeria for the defendants. The plaintiffs claimed that unbeknown to them the tanks contained sub-machine guns and other items which, on being found to be missing, caused delay to the vessel whilst the incident was investigated by the Nigerian Ministry of Defence. The plaintiffs issued proceedings for damages caused by the delay.
After correspondence the parties attended a meeting in an attempt to settle the dispute out of court. At the meeting the defendants made an offer to the plaintiffs of $155,000 which the plaintiffs refused because it was not clear whether the sum included costs. At the end of the meeting the defendants agreed to discuss further what offer could be made in respect of costs. The following day the defendants' solicitor sent a fax to the plaintiffs' solicitor offering the sum of 150,000. The plaintiffs' solicitor accepted the offer which had in fact been made in error. The defendants' solicitor had been instructed only to confirm the offer of $155,000 and had in error dictated the letter offering the sum of 150,000.
The defendants issued a summons claiming that the agreement was not binding. They contended that the plaintiffs' solicitor as a competent and reasonable solicitor ought to have realised that a mistake had been made and that therefore no agreement was in fact made. They contended in the alternative that if the agreement was made the defendants were entitled to rescind it on the grounds of the unilateral mistake contained in the defendants' offer.
Held, dismissing the application:
1. The test, in relation to whether a person ought to have realised that a mistake had been made, was not what the actual intentions of each party were but what each party was entitled to conclude from the attitude of the other.
2. There was nothing to indicate that the plaintiffs or their solicitors ought reasonably to have known that a mistake had been made. The offer made sense in the circumstances as the meeting had left the plaintiffs with the legitimate expectation that the defendants would reconsider and possibly increase their offer to cover costs.
3. Although rescission might be available where it was inequitable for one party to seek to hold the other to an agreement, the fact remained that neither the plaintiffs nor their solicitors were aware of or in any way responsible for the defendant's mistake. Therefore there was nothing in the plaintiffs' conduct which made it inequitable for them to hold the defendants to the agreement.
Mance J: The issue before me is whether this action has been settled by agreement binding on the parties. The action arises out of a bill of lading under which the plaintiffs (OTAL) as disponent owners of the m. v. Kukawa undertook to carry four battle tanks from England to Nigeria for the defendants (Vickers) in early 1994. The action was begun in May 1994. OTAL's claimed in effect that, unbeknown to them, the tanks contained sub-machine guns and other items and that these were reported missing at Lagos whereupon the vessel was unduly delayed while the Nigerian Ministry of Defence investigated the allegations. The claim was put forward totalling some $700,000 plus interest and costs. Pleadings were exchanged followed by witness statements and experts reports in September 1995, and a date for trial of 15 January 1996 was fixed.
OTAL now assert and Vickers deny that agreement was reached on 22 December 1995 to compromise OTAL's claim for a total of 150,000. Pursuant to a summons issued (and amended) by Vickers raising this issue, affidavit evidence has been exchanged and I have directed that the issue be tried in open court and have allowed Vickers to cross-examine Mr Weller, the assistant solicitor at Jackson Parton handling the matter for OTAL.
Both parties are English companies, and the litigation is in...
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