St.Maximus Shipping Company Ltd v A.P. Moller-Maersk A/S
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 22 May 2014 |
| Neutral Citation | [2014] EWHC 1643 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2013-979 |
| Date | 22 May 2014 |
[2014] EWHC 1643 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mr Justice Hamblen
Case No: 2013-979
Stephen Kenny QC and Jessica Sutherland (instructed by Holman Fenwick Willam LLP) for the Claimant
Chris Smith QC and Neil Hart (instructed by Hill Dickinson LLP) for the Defendant
Hearing dates: 7 and 8 May 2014
This is the trial of preliminary issues concerning the claim of the Claimant ("Owners") to enforce the terms of a Letter of Undertaking, dated 6 September 2007 ("the LOU"), which was provided by the Defendant ("Maersk") to the Owners on 25 September 2007 by way of security for the potential liability of cargo interests in General Average.
The essential issue between the parties is whether, as the Owners contend, Maersk is liable to pay the sum ascertained to be due from cargo interests in a General Average Adjustment prepared by the Average Adjusters appointed by the Owners or whether, as Maersk contends, its only liability is to pay the sum which is properly and legally due from cargo interests.
Factual background
The Owners were at all material times the demise charterers of the vessel "Maersk Neuchatel" ("the vessel"), but can for all relevant purposes be treated as the vessel owner.
Maersk was the time charterer of the vessel from the Owners pursuant to a time charter dated 16 August 2004. In relation to General Average and General Average security the time charter provided as follows:
"14.(c) General Average: General average shall be adjusted at the place as indicated in Box 33 according to the York-Antwerp Rules 1994 or any amendment thereto by an adjuster appointed by the owners. In the event of general average or salvage, the Charterers shall provide an acceptable temporary security covering all goods and containers to avoid delay and secure their release so that transit/delivery may continue. The owners agree that the Charterers temporary guarantee may be exchanged in due course for a full set of securities from the appropriate interested parties covering all goods and containers. The Charterers agree to co-operate with the Owners and the Owners' appointed adjusters, to assist by supplying manifest and other information and, where required, to endeavour to secure the assistance of the Charterers' local agents in the collection of security, at the Owners' expense."
Pursuant to the time charter the vessel was operating in the liner trade, calling at various ports in South East Asia, South Africa and West Africa under the Maersk Lines banner. As is common on such services, the bills of lading for the containers and goods carried were issued by the liner operators – here Maersk and SCL – and identified those operators as the contractual carriers.
On 20 July 2007, whilst on a laden run from South East Asia to various ports in South and West Africa, the vessel grounded off the port of Tema, Ghana. There were 1,139 containers on board at the time, stuffed with goods owned by a variety of cargo interests and consigned to a variety of destinations. General Average was declared on 25 July 2007.
It is common ground that, as a result of the grounding, the vessel and her cargo were imperilled and that the grounding was, therefore, a General Average event. It is also common ground that the vessel suffered bottom damage as a result of the grounding, and that the cost of repairing this damage is not recoverable in General Average. There is a dispute as to the extent of this damage and also whether the rudder and propeller (as well as the hull) were damaged.
Between 20 July 2007 and 31 August 2007 eight attempts were made to refloat the vessel. On 31 August, following lightering operations, she was refloated by the salvors, Svitzer, who had been appointed on Lloyds' Open Form terms. It is common ground that during the refloating and/or the refloating attempts the vessel suffered further bottom damage, including damage to her rudder and propeller, and that the cost of repairing this sacrificial damage is recoverable in General Average. There is a dispute as to the extent of this damage.
Both parties were aware at the time that the vessel had suffered potentially serious bottom damage, and that there was at the very least a possibility that there would be a dispute as to the extent to which damage later found, when it was possible to survey the damage, was to be attributed to the refloating operation as distinct from damage caused by the initial grounding.
The Claimant appointed Messrs Stichling Hahn Hilbrich (Average Adjusters) Ltd. ("SHH") as Average Adjusters on or about 26 July 2007. SHH provided Maersk with a draft LOU on 27 July 2007. The initial draft was intended only to be temporary security, whilst security from the actual cargo interests was obtained, as envisaged by the terms of the time charter. However, in the event Maersk decided to provide permanent security in respect of cargo. A revised draft was therefore produced by SHH on 20 August 2007. Both drafts included the wording which is now in issue, but there was some correspondence between the parties as to other parts of the draft. By 18 September 2007 all of the wording had been agreed and on 25 September 2007 Maersk, through its solicitors (Messrs. Hill Dickinson ("HD") – Mr. Wallis acting), provided a scanned copy of the LOU (dated 6 September 2007) to SHH, acting on behalf of the Owners. The Owners' solicitors (Messrs. Holman Fenwick Willan ("HFW") – Mr. Chamberlain acting) were copied in on the relevant correspondence and had been asked by the Owners to consider and comment on the wording of the LOU before it was signed.
The LOU read as follows:-
"We, the undersigned, A.P. Moller-Maersk A/S are the Time Charterers of the m.v. MAERSK NEUCHATEL under a BIMCO, BOXTIME Charterparty dated 16 th August 2004. Various Cargo and Containers were shipped on the above vessel by various parties for delivery at Walvis Bay, Tema, Lome, Cotonou and Apapa and Bills of Lading have been issued by us and Safmarine Container Lines (SCL).
In consideration of the delivery to Cargo Interests or to their order on payment of the freight due of the cargo carried onboard the m.v. MAERSK NEUCHATEL at the time of the above mentioned casualty, we hereby undertake and agree as follows:-
1. To pay the proper proportion of any General Average and / or Special Charges which may hereafter be ascertained to be due from the Cargo or the Shippers or Owners thereof under an Adjustment prepared by the appointed Average Adjusters in accordance with the Charterparty, dated 16 th August 2004, and / or the Bills of Lading issued by us or SCL.
That in the event of the vessel's cargo or part thereof being forwarded to original destination by other vessel, vessels or conveyances,
(a) rights and liabilities in General Average shall not be affected by such forwarding, it being the intention to place the parties concerned as nearly as possible in the same position in this respect as they would have been in the absence of such forwarding and the adventure continuing by original vessel for as long as is justifiable under the law applicable or under the Contract of Affreightment. The basis of contributions to General Average of the property involved shall be the values on delivery at original destination unless sold or otherwise disposed of short of the destination; but where none of the cargo is carried forward in the vessel, she shall contribute on the basis of her actual value on the date she completes discharge of her cargo.
[…]
2. To furnish particulars of the value of the said Cargo as may have been provided by cargo or the shippers or owners thereof, supported by copy of detailed Cargo Manifest(s) covering the Cargo, Bills of Lading and by commercial invoices rendered or, where there is no such invoice, to accept the valuation of the Cargo as estimated by an independent Cargo Valuer as instructed by the Average Adjusters on the basis of the Cargo Manifest(s), and if insufficient information is available, a value of USD25,000 per TEU to apply.
3. To make one or more payment(s) on-account of such sum or sums as will be certified by the Average Adjusters to be due from Cargo and payable in respect thereof by the Shippers/Consignees/Cargo Owners."
The LOU was provided under cover of an e-mail dated 25 September 2007 which was addressed to SHH, copied to HFW, and read as follows:-
"I enclose herewith a scanned copy of the GA Letter of Guarantee provided by AP Moller-Maersk A/S dated 6/09/07 on behalf of all cargo interests.
This guarantee is provided on the basis that any liability on the part of cargo to contribute in GA arising out of this incident is agreed between owners and Charterers or determined by the English High Court of Justice in the event GA liability is disputed"
I will forward the original L/G to you when received."
Following the provision of the LOU the remaining containers were discharged from the vessel at Tema, and she sailed to Gdansk for repairs. The repairs were undertaken between 26 November 2007 and 21 February 2008. The vessel was surveyed by Mr Bowman on behalf of the Owners and by Mr Gordon on behalf of Maersk. She was also inspected by Mr Sandomeer, a German surveyor instructed by SHH.
It was subsequently agreed that SHH would provide a draft copy of their adjustment to Maersk for consideration before it was finalised. The draft was provided to HD on 9 December 2010. It concluded that 79.55% of the bottom damage and 100% of the propeller damage was sacrificial damage, and that the amount due from cargo interests was US$ 6,304,663.92 (US$ 6,039,827.26, plus US$ 264,836.66 under the non-separation agreement). The...
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