Pace Shipping Company Ltd v Churchgate Nigeria Ltd
| Jurisdiction | England & Wales |
| Judge | MR.JUSTICE TEARE,MR JUSTICE BURTON |
| Judgment Date | 07 October 2010 |
| Neutral Citation | [2010] EWHC 2828 (Comm),[2009] EWHC 1975 (Comm) |
| Docket Number | Case No: 2009 FOLIO 184,Claim No. 2010 Folio 365 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 07 October 2010 |
[2009] EWHC 1975 (Comm)
Mr.justice Teare
Case No: 2009 FOLIO 184
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
David Bailey QC (instructed by Jackson Parton) for the Claimant
Simon Picken QC and Jessica Sutherland (instructed by Bentleys Stokes and Lowless) for the Defendant
Hearing dates: 24 and 25 June 2009
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 Teare:
There are before the Court applications pursuant to sections 68, 69 and 70 of the Arbitration Act 1996 arising out of an arbitration award dated 24 October 2008. This is not the first time this case has been before the Court. Following the determination by the arbitration tribunal (Mr. Bruce Harris, Mr. Roger Rookes and Mr. Ben Leach) on 6 September 2007 that Churchgate, the Respondent, did not have title to sue in respect of a cargo damage and short delivery claim (the first award), permission to appeal was granted to the Respondent and the appeal was heard on 12 June 2008. The appeal was upheld and the matter was remitted to the arbitration tribunal. By a further award dated 24 October 2008 (the second award) the arbitration tribunal decided by a majority (Mr. Bruce Harris dissenting) that the Respondent had title to sue. Pace, the Applicant, now seeks to challenge the second award pursuant to section 68 (by way of remission on account of a serious irregularity) or section 69 (by way of an appeal on a point of law) and if necessary seeks further reasons pursuant to section 70.
The cargo claim
The Applicant is the owner of MV PACE which, in June 2004, loaded a cargo of bagged rice in Thailand for carriage to Nigeria. Seven bills of lading were issued. The Respondent contends that the cargo suffered damage during the course of the voyage and that there was a small short delivery. The claim is for a sum of about $500,000. More than 5 years after shipment the parties are locked in combat on the question of the Respondent's title to sue. The hearing before me was the fifth occasion on which the parties have argued, either orally or in writing, title to sue; it has been argued three times before the tribunal (including, in addition to the two awards, an application to clarify the second award) and now twice before this court.
The first award
The facts found by the tribunal in the first award (or assumed to be true in the absence of complete documentary evidence) included the following:
i) The cargo was sold under two contracts, both dated May 2004, one between Ameritech and the Respondent and the other between Soon Hua Seng and the Respondent.
ii) The tribunal assumed that the Respondent requested its bankers (who, it was common ground, were Guaranty Trust Bank) to open letters of credit in favour of New Burlington International Corporation (“NBIC”) and NBIC then arranged for letters of credit to be issued in favour of the respective sellers.
iii) The bills of lading showed the Respondent as the notify party.
iv) The notify party under the letter of credit issued at NBIC's request in favour of Ameritech was to be the Respondents. It appeared to the tribunal that the provisions of the Soon Hua Seng letter of credit may have been the same or similar.
v) The sellers were in fact paid for the cargo under the letters of credit opened at the request of NBIC. Payment took place on 15 July. It appeared that NBIC acquired title to the goods rather than the Respondent.
vi) The Respondent became holders of the bills of lading in due course by virtue of the bills having been endorsed to it by its bankers (Guaranty Trust Bank) and then handed over to an employee of the Respondent. This appears to have happened on 30 August 2004, after completion of discharging at Lagos and roughly halfway through discharging at Port Harcourt.
The memoranda to the first award
The tribunal issued two memoranda. The first was dated 16 October 2007 and recorded that the cargo was delivered, in the absence of the bills of lading, to the charterers of the ship, Ocean Transport and Trading, pursuant to a letter of indemnity issued by that company.
The second was dated 25 November 2007 and confirmed that the tribunal had made no finding that the Respondent had paid for the cargo and “that there was insufficient evidence before them to make such a finding.”
The second award
The tribunal confirmed its finding that the Respondents “became holders of all the bills of lading by virtue of the bills having been endorsed by CN's [the Respondent's] bankers and then handed over to a CN employee, apparently around 30 August, after completion of the vessel's discharge in Lagos and about half way through discharge in Port Harcourt………There is nothing to suggest that CN became the holders other than lawfully. It is clear, and was in any event common ground, that at the time CN became holders of the bills they were “spent” bills; meaning that possession of them no longer, as against the owners of “PACE” gave any right to possession of the goods.”
Following the remission of the first award to the tribunal the tribunal was concerned with a claim to title to sue pursuant to section 2(2)(a) of the Carriage of Goods by Sea Act 1992. That provides as follows:
“Where, when a person becomes the lawful holder of a bill of lading, possession of the bill no longer gives a right (as against the carrier) to possession of the goods to which the bill relates, that person shall not have any rights transferred to him by virtue of subsection (1) above unless he becomes the holder of the bill—
(a) by virtue of a transaction effected in pursuance of any contractual or other arrangements made before the time when such a right to possession ceased to attach possession of the bill; ….
The tribunal set out the respective cases. The account of the Respondent's case was a little muddled but it was that the Respondent became the holders of the bills of lading by virtue of a transaction, namely, the endorsement and delivery of the bills pursuant to a contractual arrangement, namely the Respondent's contract to purchase the bagged rice. The tribunal said that the Applicant's case was that it was necessary for the Respondents to show that the “immediate and proximate cause” of the transfer of the bills was a contractual undertaking which pre-dated the discharge of the cargo and that in this regard the evidence adduced by the Respondent was inadequate.
The tribunal said that the Applicant made the following points:
(i) The mere fact that CN (or in the case of the Soon Hua Seng contract “or its nominee”) were named as buyers did not justify the inference that the bills were endorsed pursuant to those contracts.
(ii) Seeing that we had found in paragraph 16 of the Reasons that property in the goods (probably) passed from the shippers directly to NBIC on 15 July 2004 when payment for the goods was made, the inference to be drawn was that NBIC were CN's nominees under one or the other contract or under both.
(iii) It followed that CN had no entitlement to receive the bills of lading under the sale contracts; the more so in the light of our comments in the Reasons concerning NBIC's alleged role as “sole purchasing agent” for CN.
(iv) The upshot of this was that there was no inferential basis to support the necessary finding of fact that CN required to succeed on title to sue under section 2(2)(a); that the sale contracts were the reason or cause of the endorsements of the bills of lading.
The Respondent also relied upon the letters of credit as an alternative contractual arrangement pursuant to which the bills were endorsed and delivered but this was rejected by the tribunal. That rejection is not the subject of further challenge and therefore I shall say nothing further about it. I should however note that the reason this alternative argument failed was that the letters of credit issued at the request of the Respondent were not “effective payment instruments”.
The tribunal described the issue it had to decide as “one of fact” explaining that there was no difference between the parties as to the applicable legal principles. The tribunal said that the issue of fact was not easy having regard to the absence of comprehensive evidence and contemporary documentation.
The majority then decided the issue as follows:
“14. Making the best we can of what we have before us, it seems to us that it is more likely than not that payment for the goods, by whatever means, was under the sale contracts, rather than under some other (in the terminology of section 2(2)(a)) “contractual or other arrangements”. True, payment cannot have been made strictly in accordance with the terms of these contracts. This is so for the reasons relied on by the owners, as summarized above. But in our view this does not matter. Section 2(2)(a) requires the identification and proof of the “contractual or other arrangements” pursuant to which the bills were endorsed and, only so far as is relevant, exactly what those arrangements were. It is sufficient that CN were parties to the sale contracts, that payment was made and that as a result CN became the lawful holders of the bills.”
15. It follows from our findings in our immediately preceding paragraph that we are also satisfied that the immediate and proximate cause of the transfer of the bills was the sale contracts and the payments made thereunder to CN's respective sellers.
16. In coming to this decision we have fully considered the owners' submissions concerning NBIC's apparent, but never satisfactorily explained role. In contracts...
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