SK Shipping Europe Plc v Capital VLCC 3 Corporation
| Jurisdiction | England & Wales |
| Judge | Mr Justice Foxton |
| Judgment Date | 16 December 2020 |
| Neutral Citation | [2020] EWHC 3448 (Comm) |
| Date | 16 December 2020 |
| Docket Number | Case No: CL-2018-000495 |
| Court | Queen's Bench Division (Commercial Court) |
[2020] EWHC 3448 (Comm)
Mr Justice Foxton
Case No: CL-2018-000495
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice
Strand, London, WC2A 2LL
Chris Smith QC (instructed by Preston Turnbull LLP) for the Claimant
Stephen Phillips QC and Marcus Mander (instructed by Reed Smith LLP) for the Defendants
Hearing dates: 19–22, 26–29 October and 2–3 November 2020.
Draft judgment to parties: 7 December 2020
Approved Judgment
This action arises out a long term charterparty (“the Charterparty”) entered into between the Claimant (“the Owner”) and the Third Defendant (“the Charterer”) in early December 2016 in respect of the Owner's very large crude carrier, the “C CHALLENGER” (“the Vessel”).
In summary:
i) The Charterer alleges that it was induced to enter into the Charterparty by fraudulent misrepresentations made by the Owner as to the Vessel's fuel consumption, and claims rescission and/or damages.
ii) If the Charterparty cannot be rescinded, the Charterer alleges that it was entitled to and did terminate the Charterparty by reason of the Owner's breaches of the Charterparty.
iii) The Owner seeks damages for what it contends was the Charterer's repudiatory breach of the Charterparty.
iv) The Owner also claims that the Fifth Defendant (“CMTC”) guaranteed the Charterer's obligations and liabilities under the Charterparty. CMTC (now) accepts that a guarantee was concluded (“the Guarantee”), but contends that it is not enforceable because s4 of the Statute of Frauds 1677 has not been complied with.
The Owner was represented by Chris Smith QC, and the Defendants by Stephen Phillips QC and Marcus Mander. I am grateful to all counsel, and their instructing solicitors, for the considerable work which went into ensuring an efficient hearing, for the high quality of their written and oral submissions and for the spirit in which the case was conducted.
The case was heard on a mixed hybrid/wholly remote basis, with 7 days of evidence and three days of opening and closing submissions. Unfortunately, the range of issues which the case raised meant that a number of points received little (if any) attention during the hearing, and have had to be resolved on the basis of the parties' written submissions and the documents.
THE WITNESSES
The Owner's witnesses
Mr Ray Jin Sung Kim (“Mr Ray Kim”) worked in SK Shipping Co Ltd (“SK Shipping”)'s Tanker Operations and Tanker Chartering Teams until July 2018, when he went to work for GS Caltex. He moved from the Tanker Operations to the Tanker Chartering Team on 7 November 2016, when he was 33 years old. Before his involvement in the fixtures which give rise to this litigation, he had never been responsible for fixing or chartering any vessel (whether on a spot or period basis). However, over the Friday and weekend before he began in the Tanker Chartering Team, he was responsible for preparing the speed and consumption data circulated by SK Shipping which is at the heart of this action.
Mr Ray Kim was subjected to demanding, but conspicuously fair, cross-examination by Mr Phillips QC over the course of two days, giving evidence by video link at the end of his working day in Korea from 6pm to midnight. He gave evidence in English, and his English was good but not fluent. For the most part, I found Mr Ray Kim an honest and forthcoming witness. He was frequently willing to accept propositions which were adverse to the Owner's case, and expressed disagreement with the evidence of other witnesses called by the Owner when it did not accord with his own views or experience. He was also willing to acknowledge deficiencies in the work he had performed when these were pointed out to him by Mr Phillips QC, and to accept that the verification exercise he undertook proved essentially beyond his capabilities.
However, he was somewhat less forthcoming in acknowledging the awareness within SK Shipping after the Charterparty had been concluded of the fact and extent of the over-consumption as compared with the warranted position; the Ship Management Team's disquiet when it learned of the warranties which had been offered; and the tensions which this generated within SK Shipping. On those matters, I have found the contemporaneous documents and inherent probabilities a better guide to Mr Ray Kim's perceptions at the time than his evidence at the trial.
Mr Sebin Im (“Mr Im”) was the head of the Tanker Chartering Team from January 2016 until he left SK Shipping in March 2020. I found him a more guarded witness than Mr Ray Kim, but someone who once again gave honest answers, a number of which were supportive of aspects of the Charterer's case. He too had had very limited experience of time chartering vessels before November 2016. His recollection of events in November 2016 was limited, and I formed the clear impression that, so far as the consumption analysis was concerned, he did not concern himself with the detail of the work Mr Ray Kim had done, but only with the outcome as reported to him. His command of English was much more limited than Mr Ray Kim's.
Once again he was markedly less forthcoming when giving evidence about the internal reactions and views within SK Shipping once consumption issues began to manifest themselves during the charters. In particular, I find that in his evidence, he sought to downplay the extent of the tensions which emerged within SK Shipping towards the end of December 2016 and in January and February 2017 about the level of consumption which had been warranted on the VLCCs.
The Owner's final witness was Mr Hae Yong Son (“Mr H Y Son”), who has worked within SK Shipping since joining it as a 3 rd Engineer in March 1994 and who was technical manager and head of the Ship Management Team from 1 January 2016. I formed the impression that Mr H Y Song was reluctant to make any criticisms of the company for whom he still works, even in relation to matters which are not susceptible to serious dispute (such as the fact that the VLCCs' performance under the various charters fell significantly short of the warranted consumption or the likelihood of the VLCCs' consumption performance having deteriorated between 2013 and 2016). This may have been, as Mr Phillips QC suggested, out of a sense of loyalty to the company within whom he has been all his life, or it may have been from a reluctance to criticise past or present colleagues with the “SK Shipping family”.
Whatever the reason, I have approached his evidence with caution and, as with all witnesses, sought to test it against the inherent probabilities and the contemporaneous documents. On technical issues, I have relied on the views of the expert witnesses rather than those put forward by Mr H Y Son, which on a number of issues (e.g. the influence of the cargo loaded on the Vessel's performance on the Southwold-Tanjung Pelepas voyage) the experts did not support.
The Defendants' witnesses
The Defendants' first witness was Mr Andreas Koniliadis. Mr Koniliadis is the managing director of Curzon Maritime Limited (“Curzon”), a firm of chartering brokers. However, his relationship with CMTC and the Capital Maritime group went far beyond that of a conventional chartering broker. Curzon was owned by the beneficial owner of CMTC until it was sold to its management in 2004. Thereafter, the overwhelming majority of business undertaken by Curzon– some 90% — was performed on behalf of the Capital Maritime group. Curzon was not paid in the conventional way by receiving commission on each transaction. The effect of the evidence was that Mr Marinakis (the ultimate shareholder of the Defendants) would decide whether Curzon would receive commission on a particular transaction, and how much. Mr Koniliadis explained that “we discuss kind of on an on-going basis about which commission, in which deals we take commission or not”. Mr Konialidis used a Capital Maritime email address as well as his Curzon email address in his communications. Mr Rexer of the brokers Poten & Partners (“Poten”), who clearly had a close personal and professional relationship with Mr Konialidis, described him in contemporary correspondence as Capital Maritime's “Chartering Manager” and Mr Ventouris gave evidence that Curzon “continue to manage some of the chartering activities of” Capital Maritime's fleet. While Mr Konialidis' relationship with Capital Maritime was sui generis, in my view these descriptions capture the extent to which Mr Konialidis was integrated into the Capital Maritime organisation.
Mr Konialidis was a careful witness, who was fully on top of the issues in the case and the evidence before the court. He was subjected to testing cross-examination in court for nearly three days. On certain topics, I formed the view that he was reluctant to give answers which might undermine the Charterer's case:
i) His reluctance to accept that many of the exchanges which Poten had with him would not have been appropriate if Poten had been acting as SK Shipping's exclusive broker.
ii) His evidence that he understood Poten to be SK Shipping's brokers, and that that was how he treated Poten during the negotiations. For reasons I explain below, I am satisfied that Poten operated as intermediate brokers, and that Mr Konialidis knew this to be the position.
iii) Aspects of his evidence on the Guarantee issue. For example both he and Mr Ventouris suggested that the reason why the Charterparty was never signed was...
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