PD Teesport Ltd v P&O North Sea Ferries Ltd
| Jurisdiction | England & Wales |
| Judge | Klein |
| Judgment Date | 26 April 2023 |
| Neutral Citation | [2023] EWHC 857 (Comm) |
| Docket Number | Claim No: CC-2022-LDS-000012 |
| Court | Queen's Bench Division (Commercial Court) |
[2023] EWHC 857 (Comm)
HH JUDGE Klein SITTING AS A HIGH COURT JUDGE
Claim No: CC-2022-LDS-000012
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN LEEDS
CIRCUIT COMMERCIAL COURT (KBD)
Leeds Combined Court Centre,
The Courthouse,
1 Oxford Row,
Leeds, LS1 3BG.
Kajetan Wandowicz (instructed by Womble Bond Dickinson (UK) LLP) for the Claimant
Celine Honey (instructed by Norton Rose Fulbright LLP) for the Defendant
Hearing date: 12 April 2023
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
HH JUDGE Klein
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:00 a.m. on 26 April 2023.
This is the judgment following the hearing of an application for summary judgment, made by notice dated 15 November 2022, by the claimant, PD Teesport Ltd., against the defendant, P&O North Sea Ferries Ltd., on the whole of the claim.
Kajetan Wandowicz of counsel represented the claimant on the application and Celine Honey of counsel represented the defendant. I am grateful to both of them for their very helpful skeleton arguments and for their clear and focused oral submissions.
The dispute
In this section of the judgment, I summarise the pleaded dispute between the parties. Although only a summary, for the purpose of considering whether the defendant has a real prospect of successfully defending the claim, what I set out is sufficiently accurate.
The claimant is the operator of Teesport, a sea port in Teesside. The defendant is a well-known sea ferry operator. The defendant has transported freight, vehicles and passengers for many years between Teesport and, principally, Zeebrugge in Belgium and Rotterdam in Holland.
The dispute relates to an agreement between the parties, dated 1 March 2021, but which operated retrospectively from 1 January 2021, by which, in return for permitting the defendant to use Teesport and for providing it with services, the claimant was to be paid a fee (“the Agreement”). The following were express terms of the Agreement:
“…9.5 [The defendant] shall make payment of each invoice no later than 30 days from the date of the invoice.
…9.8 If [the defendant] fails to pay by the due date any amount which is properly payable under this Agreement:
…9.8.2 …[it] shall pay [the claimant] interest on the overdue amount at a rate equal to four per cent. per annum above the base rate of Barclays Bank PLC as at the due date accruing on a daily basis from the due date for payment until payment is made, after as well as before judgment [(“clause 9.8.2”)].
9.9 In the event of a bona fide dispute regarding any invoice or other request for payment, [the defendant] shall immediately notify [the claimant] thereof in writing and the parties shall attempt promptly and in good faith to resolve any dispute regarding amounts owed. Disputed portions of payments shall be set aside until resolved, but undisputed amounts shall be paid on the due date. In the event that disputed portions are agreed by [the parties] or otherwise determined in accordance with this Agreement as being payable, [the defendant] shall pay [the claimant] interest on such amounts at a rate equal to two per cent. per annum above the base rate of Barclays Bank PLC as at the due date accruing on a daily basis from the due date for payment until payment is made, after as well as before judgment [(“clause 9.9”)].
… Minimum Volume Guarantee
11.1 Subject to clause 12.3, [the defendant] guarantees to import or export via a Vessel at the Terminal [(that is, Teesport)]:
11.1.1 during the first Contract Year [(2021)], a minimum of one hundred and twenty thousand (120,000) Units;…
(“the Minimum Volume Guarantee”).
11.2 …if in any Contract Year the number of Units imported or exported by [the defendant] via a Vessel at the Terminal is less than the Minimum Volume Guarantee, [the defendant] shall pay [the claimant] a shortfall payment of £44.54 (“the Shortfall Payment”) for each Unit by which [the defendant] is short of the Minimum Volume Guarantee…
11.3 If [the defendant] can demonstrate to [the claimant's] reasonable satisfaction that it is impossible for [the defendant] to achieve the Minimum Volume Guarantee in the first Contract Year solely due to economic factors resulting from the UK's exit from the European Union, the parties shall attend a meeting to discuss and propose strategies for [the defendant] to achieve the Minimum Volume Guarantee and reasonably consider any amendment to the Minimum Volume Guarantee for the first Contract Year [(“clause 11.3”)].
Force Majeure
12.1 If the performance of this Agreement or any obligations hereunder by or of either party to this Agreement is impeded, hindered or prevented by Force Majeure then the party affected shall not be deemed in breach of this Agreement, provided that:
12.1.1 the suspension of performance is of no greater scope than is required by the Force Majeure event;
12.1.2 the non-performing party gives the innocent party prompt notice describing the circumstances of the Force Majeure event including the nature of the occurrence and its expected duration and continues to furnish regular reports during the period of the Force Majeure event;
12.1.3 the non-performing party uses all reasonable endeavours to remedy as soon as possible its inability to perform and to mitigate the effects of the circumstance of Force Majeure.
12.2 If a Force Majeure event shall continue for 60 days the innocent party shall be entitled by 14 days' notice in writing served on the non-performing party to terminate this Agreement.
12.3 If a Force Majeure event affecting [the claimant] prevents [the defendant] from importing or exporting Units via a Vessel at [Teesport]:
12.3.1 the relevant number of affected Units shall be deducted from the Minimum Volume Guarantee for the Contract Year in which the Force Majeure event occurs (but such reduction to the Minimum Volume Guarantee shall not affect the calculation of the Minimum Volume Guarantee for subsequent Contract Years, which shall be calculated without reference to the Force Majeure deduction);… [(“clause 12.3”)]”
The defendant did not meet the Minimum Volume Guarantee in 2021. The claimant contends that the defendant only imported or exported (“transported”) 99,550 units, and the defendant accepts that it did not transport any more than that number, so that the defendant fell short of the Minimum Volume Guarantee by 20,450 units (“the shortfall units”). But for any defence to the claim, the defendant therefore became liable to make a Shortfall Payment in the principal sum of £910,843. The claimant invoiced the defendant the Shortfall Payment on 31 January 2022 and, the claimant contends, the invoice became due for payment on 2 March 2022. The defendant admits that the claimant invoiced it the Shortfall Payment on 31 January 2022 and apparently admits that, but for any defence to the claim, the invoice became due for payment on 2 March 2022. The defendant has not paid the invoice. So, the claimant began the claim, to recover the Shortfall Payment. The claimant also claims interest, under clause 9.8.2, at the rate of 4% pa above the Barclays Bank base rate from 2 March 2022.
There is a dispute between the parties about whether the rate of any contractual interest payable by the defendant in this case should be 4% pa, as the claimant contends, or 2% pa above the Barclays Bank base rate, as the defendant contends relying on clause 9.9. This was one of the disputes which the claimant sought to have resolved as part of the summary judgment application. On instructions, however, Mr Wandowicz accepted at the hearing that that dispute (the rate of interest payable) is one which should go forward to trial and is not suitable for summary determination.
By its Defence, the defendant contends that the Agreement is “a long-term relational contract to which good faith obligations apply”, which the claimant disputes.
More significantly, the defendant contends that that it is not liable to pay any Shortfall Payment for two reasons.
First, it contends that, in breach of clause 11.3, the claimant failed “(in good faith) to meet and reasonably consider amendments to” the Minimum Volume Guarantee (see paragraph 8(5) in particular of the Defence). In her oral submissions, Ms Honey explained that the good faith obligation the defendant contends the claimant breached was an express obligation found in clause 11.3 or clause 9.9 or an obligation implied because, the defendant contends, the Agreement is a relational contract. (She also argued, at one point in her oral submissions, that a good faith obligation was implied on conventional grounds; for example, to give business efficacy to the Agreement. As that is a case which is wholly unpleaded, and which is otherwise wholly unsupported by any evidence, Ms Honey was right not to pursue the argument). The defendant contends that, because of the claimant's breach of clause 11.3, the defendant is not liable to make any Shortfall Payment and, in particular, is not liable to pay the principal sum claimed.
Secondly, the defendant contends that:
i) its customers cancelled, changed, or reduced their orders because of the Covid-19 pandemic, which reduced the number of units it transported;
ii) social distancing measures in place because of the Covid-19 pandemic limited the number of self-drive vehicles which it could carry on any sailing, which reduced the number of units it transported;
iii) its customers were unable to adapt to post-Brexit transition arrangements in time to allow it...
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Force Majeure: General Assertions As To Impact Of Covid-19 And Brexit Not Sufficient To Defeat Summary Judgment Application
...could rely on a force majeure defence in light of Brexit and the Covid-19 pandemic: PD Teesport Ltd v P&O North Sea Ferries Ltd [2023] EWHC 857 (Comm). This decision is a useful reminder that, while the Covid-19 pandemic and/or Brexit may be categorised as force majeure events, whether a fo......