Owneast Shipping Ltd v Qatar Navigation QSC

JurisdictionEngland & Wales
JudgeMR JUSTICE CHRISTOPHER CLARKE,Mr Justice Christopher Clarke
Judgment Date07 July 2010
Neutral Citation[2010] EWHC 1663 (Comm)
CourtQueen's Bench Division (Commercial Court)
Date07 July 2010
Docket NumberCase No: 2009 1470

[2010] EWHC 1663 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Before: Mr Justice Christopher Clarke

Case No: 2009 1470

Between
Owneast Shipping Limited
Claimant
and
Qatar Navigation QSC
Defendant

Michael Coburn QC (instructed by Hill Dickinson LLP) for the Claimant

Chirag Karia (instructed by Davies Johnson & Co) for the Defendant

Hearing date: 21 st June 2010

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

MR JUSTICE CHRISTOPHER CLARKE Mr Justice Christopher Clarke

Mr Justice Christopher Clarke:

1

This is an appeal from an award made by the majority of an arbitral tribunal (Sir Anthony Colman, Richard Siberry, QC, Mr Michael Baker-Harber dissenting) in favour of charterers. The majority held that the Owners of the vessel “Qatar Star”—Owneast Shipping Limited (“Owners”) – had wrongfully withdrawn her from the service of the charterers – Qatar Navigation Inc (“Charterers”) for non-payment of hire. Permission to appeal was granted by Teare, J on two points of law on the basis that the question at issue was one of general public importance and the decision at least open to serious doubt.

The facts as found by the tribunal

2

The vessel had been chartered to the charterers on an amended NYPE form of charter with additional clauses dated 7 th February 2005 for 48 months +/- 2 months at Charterers' option.

3

The Charter included the following clauses:

“5. Payment of said hire to be made to Owners designated bank account in cash in United States Currency, 15 days in advance … otherwise failing the punctual and regular payment of the hire, or bank guarantee or deposit, or on any fundamental breach of this Charter Party, the Owners shall be at liberty to withdraw the vessel from the service of the Charterers, without prejudice to any claim they may have against the Charterers….”

15. That in the event of the loss of time from deficiency and/or default and/or strike of men or deficiency of stores, fire, breakdown or damages to hull, machinery or equipment, grounding, detention by average accidents to ship or cargo, drydocking for the purposes of examination or painting bottom, or by any other cause preventing the full working of the vessel, the payment of hire shall cease for the time thereby lost and all extra directly related expenses may be deducted from hire;…

62. Punctual Payment

Referring to lines 60 and 61, where there is any failure to make “punctual and regular payment” due to errors or omission of Charterers' employees, bankers or Agents or otherwise for any reason where there is absence of intention to fail to make payment as set out, Charterers shall be given by owners 3 banking days notice to rectify the failure and where so rectified the payment shall stand as punctual and regular payment.”

4

The Charterers' record of payment was somewhat unsatisfactory. The 34 th semi-monthly payment was due on 24 th August 2006 and the vessel was withdrawn when it was not paid. Of the previous 30 semi-monthly payments, only 12 had been made on or before the due date and 17 had been paid late—on 4 occasions 5 or 6 days late. Only on the 33 rd payment date did the Owners resort to an anti-technicality notice under clause 62, whereupon the Charterers immediately paid.

5

In the course of discharging a cargo of logs at Kandla during the period 28 th July to 3 rd August 2006 the vessel suffered from the breakdown of 3 out of its 4 cranes. As a result on 1 st August it was ordered off the berth due to delayed working, and thereafter discharged its remaining cargo into barges at its anchorage, completing on 3 rd August. The Charterers sought to make deductions from hire (pursuant to clause 15 of the charterparty) on this account.

6

The Charterers are registered in Doha, Qatar, and their financial affairs are operated from their head office there. But their commercial operations are managed from their office in Dubai. Based there were Captain Roger Hatch, the Charterers' Port Captain, who was responsible for the operations of the vessel, and Mr Hamad Al Hitmi, the Charterers' General Manager. Mr Hamad Al Hitmi reported to Mr Khalifa Bin Ali Hitmi who was located at the Doha Office where he was Deputy Chief, Executive Operations. Mr Hamad Al Hitmi was subject to a financial authorisation limit of $ 13,400. For amounts above that he needed the authority of the Board of Management in Doha.

7

It is convenient to set out the events leading up to the non-payment by citing the tribunal's findings:

“7. On 6th August 2006 the Charterers' Operations Department in Dubai requested the local agents in India to send a statement of facts for the vessel's discharge at Kandla. On the following day the agents emailed a statement of facts, copied to Capt. Hatch, and the master of the vessel emailed (copied to Capt. Hatch) a summary of the periods of time during 28th July to 3rd August when there were crane breakdowns.

8. On 8th August 2006 the Charterers' Dubai Office sent to the Doha Office a hire payment request in respect of the 33rd period, which started on 9th August. Amongst the amounts deducted from the gross hire due was US $5371.57 in respect of off-hire at Kandla. This request for payment of hire was issued in accordance with the usual practice in the Charterers' organisation which was as follows. The request for payment would be prepared in the Dubai office by Mrs Louly Raju, who was known as “Miss Lovely”, and signed by Hamad Al Hitmi. It would the be sent to the Doha Office, where the payment would have to be authorised by two higher management officers out of the Vice Chairman and Chief Executive, another member of the Board of Directors and the Deputy Chief Executive Operations and the Deputy Chief Executive Finance & AdministrationAffairs. A transfer instruction would then be prepared, on the bank's prescribed form, and, taken to the Charterers' bank in Doha, Standard Chartered Bank, and the bank would then effect inter-bank transfer to the Owners' bank in Copenhagen.

9. The Charterers' Doha Office had not sent a transfer instruction to their bank by 14th August 2006. On that day the Owners served an anti-technicality clause notice under clause 62. Immediately on the same day the Charterers sent the transfer instruction to their bank. Owners' bank confirmed receipt of payment on 15 August.

10. On 16th August 2006, the Charterers having provided Owners with a breakdown of their off-hire deductions from the 33rd period statement, the Owners challenged the justification for that and requested the statement of facts.

11. On 20th August Ms Lovely drew up a draft transfer request in respect of the 34th period hire payment. It showed deductions only for address commission and standard expenses. She marked the copy “Due date in owners bank: 24th August 06”. That left 4 days for Hamad Al Hitmi to sign it, for it to be sent to the Doha Office, for it to be signed by three management officers and for a payment instruction to be prepared and to be couriered to Standard Chartered, and then for the inter-bank transfer to be operated. The minimum period of time which it had previously taken for the inter-bank transfer had been 2 days. Accordingly, if payment was to reach the owners by 24th, the last day on which a payment instruction could be provided to the bank was 22nd August.

12. On 21st August 2006 the Owners repeated their request for a statement of facts in support of the deduction from the 33rd hire period payment, but Capt Hatch replied to the Charterers' agents that Charterers were “having a meeting” about the vessel at that time and he would get back to them later that day. He did not do so. In the meantime nothing was done about forwarding the request for payment of hire to the Doha office. According to the evidence of Ms. Lovely, she was informed by the Chartering Department that further deductions would be necessary for off-hire, crane breakdown and additional expenses incurred as a result of the vessel having to leave the berth at Kandla and shift to the anchorage to complete discharge, and that the calculation of these further deductions, which would initially be made by Capt. Hatch and the Chartering Department, would be delayed until further information had been obtained from the vessel and/or Kandla.

13. It was, however, only on 22nd August 2006 that Capt. Hatch requested the agents at Kandla to provide a discharge statement of facts, showing the date and time each hold completed discharge. Although Capt. Hatch had received a discharge statement of facts on 7th August, that did not provide the time at which each hold had been completed.

14. The agents duly provided the requested statement of facts on 22nd August, but it arrived after the Dubai office had closed. Nobody was left on duty in the Dubai office to receive that information after hours in spite of the need to effect payment in Denmark on 24th August. When the Dubai office re-opened on 23rd August the Operations Section then made calculations of the required deductions from hire and passed them to Ms Lovely to draft a transfer request for Hamad al Hitmi to sign. The deduction for off-hire and bunkers was shown at US $34,643.44. Remarkably, although the office opened at 7.00, this exercise was not completed until the afternoon and it was only at 14.48 that the re-drafted and signed transfer request was faxed to the Doha office. In the meantime, on the morning of 23rd August Mr. Hamad Al Hitmi telephoned Mr. Khalifa Ali Al Hitmi in the Doha office “to remind him” that the 34th period hire payment was due on 24th and to inform him that the transfer request would be faxed to Doha that afternoon. In his witness statement Hamad al Hitmi made the following remarkable...

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