Toepfer (Alfred C.) v Cremer

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE ORR
Judgment Date17 March 1975
Judgment citation (vLex)[1975] EWCA Civ J0317-2
Date17 March 1975
CourtCourt of Appeal (Civil Division)

In the Matter of the Arbitration Act, 1950 and

In the Matter of an arbitration

between
Alfred C. Toepfer
Appellant Seller
and
Peter Cremer
Respondent Buyer

[1975] EWCA Civ J0317-2

Before:

The Master of the Rolls (Lord Denning),

Lord Justice Orr and

Lord Justie Scarman

In The Supreme Court of Judicature

Court of Appeal

Appeal of Alfred C. Toepfer from judgment of Mr. Justice Donaldson on 16th December, 1974.

Mr. ANTHONY LLOYD, Q. C., Mr. KENNETH ROKISON and Mr. MARTIN MOORE-BICK (instructed by Messrs. Richards, Butler & Co.) appeared on behalf of the Appellant.

Mr. CHRISTOPHER STAUGHTON, Q. C., Mr. DAVID JOHNSON and Mr. GLENNY (instructed by Messrs. Thomas Cooper and Stibbard) appeared on behalf of the Respondent.

THE MASTER OF THE ROLLS
1

In the middle West of the United States, the farmers grow large crops of soya beans. These are loaded into barges and taken by water down the rivers to the big inland ports on the lower Mississippi river. They are then loaded on to ocean going vessels and carried to Europe and elsewhere. They are the subject of many contracts of sale made before and during transit. Any one parcel may be sold by one seller to the next down a long string before reaching the ultimate receiver.

2

On 21st March 1973, two merchants in Hamburg made a contract of sale. The sellers were Alfred c. Toepfer. The buyers were Peter Cramer. The contract was for the sale of 5,000 tons of soya bean meal U. S. A. at a price of U. S.$216 per 1,000 kilogrammes, cif Rotterdam. It contains these terms (among others):

3

"Shipment: Shipment from country of origin April 1973.

4

Contract

5

and

6

Arbitration: G. A. F. T. A. No 100 with arbitration London".

7

The reference to G. A. F. T. A. No. 100 meant that the contract was on the terms contained in form No. 100 issued by The Grain and Feed Trade Association of the Baltic Exchange in London.

8

We are concerned with a parcel of 100 tons part of that contract. According to the contract, the shipment had to be made from the U. S. A. during the month of April 1973, and at latest by 30th April 1973. Those two merchants were only sellers and buyers in a long string. The sellers did not intend to ship the goods themselves. They had bought from a previous seller. If you went back along the string to the first sellers (the shippers) who were to ship the goods, you would find that they intended to ship the parcel from a port or ports on the Mississippi River.

9

But, after the contract was made, there were several floods on the Mississippi river and the rivers running into it. They were the worst for 20 years. The flooding started in March and got worse andworse. The upper rivers became unnavigable. Several locks were closed for nearly a month from about 21st April to 19th May. Barge traffic could not get down to St. Louis and points South. So there were great delays to the loading and discharging operations and to shipping generally in the ports on the lower Mississippi river. But the floods eventually subsided. The locks were reopened from about 19th May and the upper rivers again became navigable. Big efforts were made to clear the backlog. By 30th May it had been successful. By that date any delay in shipment due to flooding had ceased.

10

This flooding was "force majeure", and on account of it the sellers were entitled under Clause 22 of G. A. F. T. A. Form 100 to an extension of time for shipment. I will not read the clause in full, but I will state the general effect. In order to get an extension, the shippers (who were the first sellers) had to give two notices to the first buyer.

11

The first notice was a warning notice telling the first buyer that shipment of the goods had been delayed or was likely to be delayed; and giving the reasons for it.

12

The second notice was an extension notice telling the buyer that, owing to the delay, the shipper needed an extension of the contract period and stating the port or ports from which the goods were intended to be shipped. This gave the shipper an extension of one calendar month. If the shipper did not ship within that extra month, the buyer had the option of cancelling the contract: but, if he did not do so, the contract period was automatically extended for a further period of one month. In that way the shipper would get two months' extension. But no more. Within those two months the shipper was bound to ship the goods from the port or ports which he bad nominated in his extension notice, and get a bill of lading showing the date of shipment. He had then, within 10 days from thatdate, to give notice of appropriation to the buyer giving the name of the vessel and the approximate date shipped. If he did not do so, he was in breach and liable to damages based upon the value of the goods on date of default (clause 26).

13

So much for the position as between the shipper (the first seller) and the first buyer. Clause 22 contained time limits within which the shipper was to give the warning notice and the extension notice to the first buyer. But the subsequent sellers were entitled to the extension so long as they passed on the notice to the buyers Without delay (clause 23).

14

In the present case it may be assumed that the shipper (the first sellers) complied with the time limit for giving the notices and that the subsequent sellers did the same. At any rate, there is no evidence to the contrary. When we come to these two parties these were the notices given by the sellers to the buyers. Both were given on 16th May 1973, by telex. After specifying the parcel, they ran:

15

"(i) The warning notice

16

Due to flooding condition on the Mississippi river our loading is being curtailed and, therefore, we invoke the 'force Majeure' clause as per G. A. F. T. A. 100.

17

(ii) The extension notice

18

The following telex received from sellers we pass on to you as coming from us: We inform you that as per force majeure clause of G. A. F. T. A. 100 we intend to ship this parcel from Mississippi River port (s)".

19

At no time did the buyers object that notice had been given out of time. The sellers knew that the buyers were likely to pass on the sellers' message to the buyers' sub-purchasers, if any.

20

The effect of those notices was to give the sellers an extension of one month in the contract period. The date for shipment wasextended therefore from 30th April 1973, to 31st May 1973.

21

Those notices were given, as I have said, on 16th May 1973. At that time the Mississippi was still not navigable. But it became navigable three days later on 19th May, 1973. By 30th May 1973, things had improved so much that any delay in shipment had ceased. But the sellers did not tell the buyers that the delay had ceased.

22

On 31st May 1973, the first month's extension expired. Thereupon the buyers had the option of cancelling the contract. But they did not do so. The result was that (subject to an argument which I will mention hereafter) the contract period was extended automatically for a further period of one month, that is, until 30th June 1973. That was the latest date for shipment.

23

If goods of the contract description had been shipped by 30th June, the sellers could have fulfilled their contract by buying such goods whilst in transit and appropriating them to this contract. But they had only ten days in which to do it: see clause 10. Notice of appropriation had to be given within ten days, i.e., by 10th July 1973 If it were not given, the sellers would be in breach. The sellers did not do this. They did not give notice of appropriation within ten days, or at all. The buyers now claim damages for non-performance of the contract.

24

Here I must mention a fact of the first importance.

25

The market price was rising all this time. It reached the peak on 10th July 1973. At the various dates it was as follows:

26

21st March, 1973 Contract Price $216 per kilo

27

10th May, 1973 Market Price $338 per kilo

28

12th June, 1973 Market Price $485 per kilo

29

29th June, 1973 Market Price $590 per kilo

30

10th July, 1973 Market Price $635 per kilo

31

11th July, 1973 Market Price $585 per kilo

32

18th July, 1973 Market Price $475 per kilo

33

From the point of view of a buyer in the string, it is to his advantage to put the date of default at 10th July 1973, because his damages would be the difference between the contract price of $216 per kilo and the market price of $635 per kilo: whereas, from the point of view of a seller in the string, it is to Ms advantage to put the date of default back to 10th May 1973, ($ 338) or 10th June, 1973 ($485): or even on to 11th July ($585). The contest in the present case is between the buyers who want to put the date of default at 10th July 1973; and the sellers who want to put it at some other time.

34

At ail stages below the buyers have succeeded. The date of default has been determined as 10th July 1973. It was so determined by the Umpire and by the Board of Appeal and by the Commercial Judge. The sellers appeal to this Court. By agreement between the parties, they have raised certain points of law, to which I now turn.

35

1. "PORT OR PORTS"

36

The sellers in their own extension notice said: "We intend to ship this parcel from Mississippi River Port (s)". The sellers say that this (their own) notice was bad: because it did not state any certain ports. So they were not entitled to any extension at all. Accordingly the goods should have been shipped by 30th April 1973, and notice of appropriation by 10th May 1973: with the result that the damages are to be ascertained as at 10th May 1973.

37

The sellers base this argument on the words of clause 22 which say that the extension notice shall state "the port or ports of loading from which the goods were intended to be shipped". Those words require, they say, that the seller should have made up his mind as to the port at which he was going to load...

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