Telfair Shipping Corporation v Inersea Carriers S.A. (Caroline P)

Weekly Law Reports Cited authorities (25) Cited in (52) Precedent Map Related
JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
Year1983
Date1983
[QUEEN'S BENCH DIVISION] TELFAIR SHIPPING CORPORATION v. INERSEA CARRIERS S.A. 1984 Feb 13, 14, 15; July 3 Neill J.

Limitation of Action - Contract - Indemnity - Charterparty making charterers responsible for stowage and requiring owners' agent to sign bills of lading as presented - Implied indemnity in favour of owners - Cargo damaged during stowage - Damage discovered on discharge - Damages awarded against owners - Owners claiming indemnity from charterers - Arbitrator appointed more than six years after stowage but within six years of discharge - Whether owners' claim statute-barred - Ships' Names - Caroline P.

The owners of the Caroline P chartered her under a New York Produce Exchange standard form time charterparty, clause 8 of which provided, inter alia, that the charterers were to load, stow, trim and discharge the cargo and that the captain, who was the owners' agent, was to sign bills of lading for cargo “as presented.” A cargo of bagged rice loaded in December 1974 and January 1975 under bills of lading signed on the captain's behalf was discharged at Basra between 31 March and 21 April 1975. Upon discharge it was discovered that many bags were badly damaged and shortages arose in respect of which the receivers of the cargo claimed damages from the owners' agents. In December 1978 an Iraqi court found that the damage was due to bad stowage and allowed the claim. The owners claimed an indemnity from the charterers in respect of the damages awarded, legal expenses, bank charges and all further sums and expenses reasonably paid in connection with the cargo claim, on the footing that the charterparty made the charterers responsible for loading, stowage and discharge and that it was to be implied from clause 8 that the charterers would indemnify the owners in respect of matters for which the charterers were responsible. The appointment of the arbitrator was perfected on 30 March 1981. The charterers contended that the implied indemnity was against liability and therefore that the claim was statute-barred because the arbitrator had been appointed more than six years after the cause of action had accrued, which had been when the owners' liability had been incurred when the bags had been damaged, and that in any event the indemnity did not extend to cover legal costs, bank charges and other expenses paid in connection with the claim. The arbitrator accepted the owners' contention that the indemnity was against the consequences of the captain signing bills of lading more onerous to the owners than the terms of the charterparty and allowed their claim in full, holding that their cause of action had arisen, at the earliest, on completion of the discharge of the cargo on 21 April 1975 and that their claim was therefore not statute-barred.

On the charterers' appeal: —

Held, dismissing the appeal, (1) that the indemnity to be implied as a result of the incorporation of clause 8 into the charterparty was a general indemnity against the consequences of the master signing the bills of lading and that general indemnity could not become enforceable by action until the liability of the owners to the receivers had been ascertained; that the earliest date that the liability could have been ascertained was when the Iraqi court of first instance gave judgment for the receivers in December 1978 and, therefore, the arbitrator had been appointed within the limitation period (post, pp. 566F–567A, H–568C, E–H); that, alternatively, if the period of limitation ran from the period when the owners first incurred a liability to the receivers, the earliest period that the action accrued was on the discharge of the cargo which commenced just within the limitation period (post, p. 569B–C).

Dictum of Fletcher Moulton L.J. in In re Richardson, Ex parte Governors of St Thomas's Hospital [1911] 2 K.B. 705, 712, C.A. and R & H Green & Silley Weir Ltd. v. British Railways Board [1985] 1 W.L.R. 570 applied.

Bosma v. Larsen [1966] 1 Lloyd's Rep. 22 distinguished.

Kruger & Co. Ltd. v. Moel Tryvan Ship Co. Ltd. [1907] A.C. 272, H.L.(E.); Elder Dempster & Co. v. C G Dunn & Co. Ltd. (1909) 15 Com. Cas. 49, H.L.(E.), Dawson Line Ltd. v. Aktiengesellschaft Adler fur Chemische Industrie of Berlin [1932] 1 K.B. 433, C.A., Strathlorne Steamship Co. Ltd. v. Andrew Weir & Co (1934) 50 Ll. L. Rep. 185, C.A. and County and District Properties Ltd v. C Jenner & Son Ltd. [1976] 2 Lloyd's Rep. 728 considered.

(2) That the indemnity to which the owners were entitled extended to cover all the expenses claimed in the arbitration, including legal costs and bank charges (post, p. 569F–H).

The following cases are referred to in the judgment.

Bosma v. Larsen [1966] 1 Lloyd's Rep. 22

County and District Properties Ltd. v. C Jenner & Son Ltd. [1976] 2 Lloyd's Rep. 728

Dawson Line Ltd. v. Aktiengesellschaft Adler fur Chemische Industrie of Berlin [1932] 1 K.B. 433, C.A.

Elder, Dempster & Co. v. C G Dunn & Co. Ltd. (1909) 15 Com. Cas. 49, H.L.(E.)

Forster v. Outred & Co [1982] 1 W.L.R. 86; [1982] 2 All E.R. 753, C.A.

Green (R & H) & Silley Weir Ltd. v. British Railways Board (Note) [1985] 1 W.L.R. 570; [1985] 1 All E.R. 237

Hadley v. Baxendale (1854) 9 Exch. 341

Kruger & Co. Ltd. v. Moel Tryvan Ship Co. Ltd. [1907] 1 K.B. 809, C.A.; [1907] A.C. 272, H.L.(E.)

Littlewood v. George Wimpey & Co. Ltd. and British Overseas Airways Corporation [1953] 2 Q.B. 501; [1953] 3 W.L.R. 553; [1953] 2 All E.R. 915, C.A.

M'Gillivray v. Hope [1935] A.C. 1, H.L.(Sc.)

Richardson, In re, Ex parte the Governors of St Thomas's Hospital [1911] 2 K.B. 705, C.A.

Robinson v. Harkin [1896] 2 Ch. 415

Strathlorne Steamship Co. Ltd. v. Andrew Weir & Co (1934) 50 LL Rep 185, C.A.

Toplis v. Grane (1839) 5 Bing. N Cas 636

Wolmershausen v. Gullick [1893] 2 Ch. 514

The following additional cases were cited in argument:

Castle Insurance Co. Ltd. v. Hong Kong Islands Shipping Co. Ltd. [1984] A.C. 226; [1983] 3 W.L.R. 524; [1983] 3 All E.R. 706; [1983] 2 Lloyd's Rep 376, P.C.

Coast Lines Ltd. v. Hudig & Veder Chartering NV [1972] 2 Q.B. 34; [1972] 2 W.L.R. 280; [1972] 1 All E.R. 451; [1972] 1 Lloyd's Rep. 53, C.A.

Collinge v. Heywood (1839) 9 A.& E. 633

Federal Commerce & Navigation Co. Ltd. v. Molena Alpha Inc [1979] A.C. 757; [1978] 3 W.L.R. 991; [1979] 1 All E.R. 307, H.L.(E.)

Huntley v. Sanderson (1833) 1 Cr. & M. 467

Ismail v. Polish Ocean Lines (No 2) [1977] 2 Lloyd's Rep. 134

ORIGINATING MOTION

By an originating motion dated 19 October 1983 the charterers, Telfair Shipping Corporation, applied under section 1(3)(b) of the Arbitration Act 1979 for leave to appeal against the award of John L Potter, the arbitrator in an arbitration between the charterers and the owners, Inersea Carriers S.A., dated 13 September 1983, on the ground that the rights of the parties could be substantially affected by the determination of the following question of law: (1) whether the implied indemnity arising out of the charterparty between the parties dated 5 November 1974 was an indemnity in respect of liabilities incurred by the owners to third parties which exceeded their liabilities to the charterers under the charterparty or was an indemnity in respect of other losses and expenses also; (2) whether on the facts found the owners' claim for an indemnity in respect of liability for bad loading and stowage arose when such loading and stowage took place; (3) whether on the facts found the owners' claim against the charterers for an indemnity and/or for damages in respect of such loading and stowage was barred by effluxion of time; (4) whether on the facts found the owners were liable to the cargo receivers in respect of cargo damage incurred in and/or by reason of discharging operations, notwithstanding the fact that the bill of lading was on “free out” terms; (5) whether on the facts found the charterers were bound to indemnify the owners and/or were liable to the owners in damages in respect of such discharging damage. On 26 November 1983 Parker J. granted the charterers leave to appeal.

On the appeal, the charterers sought orders that (1) the award of the arbitrator be varied pursuant to section 1(2)(a) of the Act of 1979 by declaring that the owners' claim for indemnity and/or for damages against the charterers in respect of damage caused to the cargo in or by reason of its loading and stowage was barred by effluxion of time; (2) the award be varied pursuant to section 1(2)(a) by declaring that the owners were not liable to the receivers for damage to cargo incurred in or by reason of discharging it and that the charterers were not therefore liable to indemnify the owners and/or in damages in respect thereof; and (3) the owners pay the charterers' costs of the appeal and of the arbitration.

The grounds of the appeal were that the arbitrator had erred in law and/or in principle in holding (1) that the indemnity to be implied into the charterparty was not restricted to liabilities incurred by the owners under bills of lading which were in excess of their liabilities under the charterparty; (2) that the owners' claim for indemnity and/or damages in respect of cargo damage caused in or by reason of its loading and stowage was not barred by effluxion of time as having arisen at the time of such loading and stowage; (3) that the owners were liable to the receivers for damage to cargo incurred in or by reason of its discharge; and (4) that the charterers were liable to indemnify the owners and/or for damages in respect of such discharging damage.

The facts are stated in the judgment.

Jeremy Cooke for the charterers.

Jonathan Hirst for the owners.

Cur. adv. vult.

3 July. NEIL J. The appellant charterers bring this appeal pursuant to the order giving leave to appeal made by Parker J. on 26 November 1983. The appeal is against the award of Mr John L Potter dated 13 September 1983. The appeal raises difficult questions as to the nature and extent of an implied indemnity.

By a charterparty dated and concluded in London on...

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43 cases
2 books & journal articles
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    • United Kingdom
    • Taylor and Francis Bills of Lading
    • Invalid date
    ...Corporation v Athos Shipping Co. S.A. (The Cleon) [1983] 1 Lloyd’s Rep. 126 13.73 Telfair Shipping Operation SA v Inersea Carriers SA (The Caroline P) [1985] 1 W.L.R. 553, [1984] 2 Lloyd’s Rep. 466 3.141, 3.148, 13.53 Temperley SS. Co. v Smythe [1905] 2 K.B. 791 7.25 Tempus Shipping Co. v L......
  • Table of Cases
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    • Taylor and Francis London Maritime Arbitration
    • Invalid date
    ...EWHC 405 (Comm) 21.13 Tedcom Finance Ltd v Vetabet Holdings Ltd [2011] EWCA Civ 191 24.19 Telfair Shipping Corporation v Inersea Carriers SA (The Caroline P) [1983] 2 Lloyd’s Rep 351 (Comm) 19.73, 19.76 Termarea SRL v Rederiaktibolaget Sally, The Dalny [1979] 2 Lloyd’s Rep 439 (Comm) 10.16 ......
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