Panchaud Frères S.A. v R Pagnan & Fratelli (Kriss, Natale)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE MEGAW,SIR ERIC SACHS |
| Judgment Date | 22 November 1973 |
| Judgment citation (vLex) | [1973] EWCA Civ J1122-3 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 November 1973 |
[1973] EWCA Civ J1122-3
In The Supreme Court of Judicature
Court of Appeal
Revised.
Appeal of Panchaud Freres S. A. from order of Mr. Justice Kerr on 19th February 1973.
The Master of the Rolls (Lord Denning),
Lord Justice Megaw and
Sir Eric Sachs.
In the Matter of the Arbitration Act 1950 and
In the Matter of an Arbitration
Mr. JULIAN COOKE (instructed by Messrs. Constant and Constant) appeared on behalf of the Appellants.
Mr. ROBERT GOPP, Q. C., and Mr. BRIAN DAVENPORT (instructed by Messrs. Crawley and De Reya) appeared on behalf of the Respondents.
This case arises out of two commercial contracts which were made in July 1965 for the shipment of maize from Santos in Brazil through to Italy. The sellers were Panchaud Freres. The buyers were Pagnan and Fratelll. The first contract was dated 23rd July for 20,000 tons of Brazilian yellowmaize to be delivered at buyers: option during the period from 15th October to 15th November 1965. The shipping weight was to be final as per a certificate issued in Brazil. The second contract was dated 26th July 1965 for another 20,000 tons on substantially the same terms but with different shipping dates, 25th November to 25th December 1965.
In each contract there was incorporated the conditions of the London Corn Trade Association, one of which provided for all disputes being referred to arbitration In London in accordance with the rules of the London Corn Trade Association.
The buyers nominated two ships to fulfil those contracts. The first ship was the "Natale". It could take about 10,000 tons. The second ship was the "Kriss", which could take the other 10,000 tons. The first one, the "Natale", arrived at Santos on 8th November 1965 and began loading. It so happened that the Italian buyers had been disturbed about the condition of the maize which had been coming into Italy from Brazil. They sent a Mr. Luochi over to Santos to examine the shipments to see that they were up to contract. So he was in Santos when the "Natale" began loading on the morning of 8th November. 3,000 tons of maize were shipped on the "Natale". But Mr. Luochi was very dissatisfied with the condition of the maize. The evidence showed:
"that many of the lorries which brought the cargo alongside were old and in poor condition, that some of them had no tarpaulin coverings at all, and of those which did have tarpaulin coverings not one had a complete sheet covering the maize, that Supervise employed boys of about 14 or 15 years of age on the quay to check weights and take samples, that Supervise made no attempt to control the quality or condition of the maize being loaded on the quay, their only concern being to check the weights and to obtain samples, that no effective attempt was made to obtain fair and representative samples, and that the boys simply collected handfuls of maize from the top of the lorries and wagons as they came alongside,"
Mr. Luochi was very disturbed about this. On his advice the buyers suspended the loading. The suspension started on 11th November 1965. The buyers said that they were not going to allow the ship to be loaded with any more maize unless the consignments were up to contract. Many messages went to and fro. I will read the more important ones. On 13th November 1965 at 09,38 hours the buyers sent this telex to the sellers:-
"We insist with absolute firmness and intransigenoe that the sellers of Panchaud deliver goods which are absolutely in condition…. We repeat that if Panchaud do not remedy the situation promptly, loading will remain suspended and we shall not pay one kilo of the goods shipped."
At 12,24, on the same day, 13th November, they sent this next telex:-
"We have considered contents of your telex message and contemporarily we have received a cable from Mr. Lucchi advising that loading has been resumed."
Then they refer to their bad experience in the past, and they go on:-
"We Intend that such a situation has not to repeat itself with execution of your contracts and we are telling you, with full fairness, that we will not pay for the goods, should the bitter past experiences repeat."
The question is whether that conduct of the buyers was such as to justify the sellers in calling off the contract. This case can be divided into two parts: first, The conduct of the buyers in suspending the acceptance of the maize on the vessel. If that was a breach which went to the root of the contract, the sellers might claim to be discharged from any further obligation to deliver. But to my mind, it did not go to the root of the contract. The sellers suspended acceptance only temporarily so as to ensure proper performance by the sellers. Second, the conduct of the buyers in sending those two telexes. They did not amount to a repudiation by the buyers. In the telexes the buyers were insisting on adherence to the contracts. They were not evincing an intention no longer to be bound by them. The Appeal Committee of the London Corn Trade Association so found. They said that the buyers were not evincing an intention not to be bound by the contract, but were anxious that such contract should be properly carried out without delay.
But even assuming that the buyers did repudiate the contract on 13th November, nevertheless the sellers did not accept it. They elected to treat the contract as still subsisting. They insisted on it being performed. Their brokers sent a message saying "Panchaud has asked us to confirm to you that he rejects all your exceptions recalling you to the regular performance of the contract." That is clearly an insistence on the performanceof the contract, and election to keep it in continuance and not to treat it as discharged. The Appeal Committee so found. They said:
"Even if" the buyers "had evinced such an intention in their two telex messages relied upon by Panchaud as being a repudiation, Panchaud, by their telex of reply sent by their brokers at 1300 hours on 13th November 1965 had not accepted Pagnan's act as a repudiation but had pressed them to perform and had thereby waived their right to treat Pagnan's two said telex messages as being a repudiation."
I turn now to the next important date. On 17th November 1965 the sellers purported to call off the contract on the ground of the alleged repudiation. This was a telex on 17th November at 0045 hours. The sellers relied on the suspension and on those two telexes, and added: "We therefore declare you to be in default." In other words, they were saying "We are canceling the contract on that account."
Seeing that the buyers had not repudiated the contract or given any cause to warrant cancellation, the sellers were thereafter guilty of repudiation by refusing, in effect, to go on with the contract.
It is a significant fact that it turned out that the sellers had no maize available to fulfil these contracts at these times. The price of maize had gone up and they could not get them from their own suppliers.
So it comes to this: There was no repudiation by the buyers at all, but rather there was a repudiation by the sellers, and the sellers are liable in damages.
I may say that after 17th November there was a good deal of discussion between the parties. Eventually a compromise agreementwas entered into on 24th November 1965 whereby 20,000 tons of wheat was in fact shipped. That was treated by both sides to be in performance of the second contract. So that the second contract was out of the picture. The arbitration was in regard to the full amount of 20,000 tons under the first contract. Only 3,000 tons was delivered under it; but the sellers were in breach by their own repudiation of it. They are therefore liable in damages for that repudiation and non-delivery of the appropriate amount there under. Such was the decision of Mr. Lynn, the umpire, then of the Appeal Committee; and then Mr. Justice Kerr. All were of the same opinion.
There is one other matter, It concerns the payment of interest. The Appeal Committee said: has respects the payment of interest we have been unable to determine the reason why the disputes took so long to come before us for review, and we have therefore decided not to award interest to either party on any damages awarded." The buyers asked the Judge for the award to be remitted so that interest should be awarded. See page 74. The Judge did so. I think he was quite right. In a commercial transaction, if the plaintiff has been out of his money for a period, the usual order is that the defendant should pay interest for the time for which the sum has been outstanding. No exception should be made except for good reason. The delay in this case was not such as to deprive the buyers of interest. An affidavit has been put in explaining the delay. The buyers should be awarded interest.
In parting with the case, I would like to express my appreciation for the way in which Mr. Justice Kerr dealt with it. I find myself entirely in agreement with all he said. I would dismiss the appeal.
I agree.
I also should wish to pay tribute to the very clear and careful way in which the learned Judge has dealt with all the numerous and relevant arguments that arose and were presented to him for consideration and discussion. The principal indeed the "essential - question is whether the buyers were In repudiation of the contract PVZ4201, otherwise referred to as the first contract. The submission on behalf of the sellers is that on 17th November 1965, when, at 0045 hours in the morning the sellers sent their telex to the buyers, the buyers were properly to be treated as having evinced an unequivocal intention no longer to be bound by the terms of that...
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