Trade Star Lines Corporation v Mitsui & Company Ltd
| Jurisdiction | England & Wales |
| Judge | Peter Gibson,Brooke L JJ,Evans |
| Judgment Date | 04 July 1996 |
| Judgment citation (vLex) | [1996] EWCA Civ J0704-17 |
| Docket Number | QBCMF 94/1632/B |
| Court | Court of Appeal (Civil Division) |
| Date | 04 July 1996 |
[1996] EWCA Civ J0704-17
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR JUSTICE TUCKEY)
Royal Courts of Justice
Strand
London WC2
Lord Justice Evans
Lord Justice Peter Gibson
Lord Justice Brooke
QBCMF 94/1632/B
QBCMF 94/1523/B
and
MR S BERRY (Instructed by Messrs Linklaters & Paines, London EC2V 7JA) appeared on behalf of the Mitsui & Co
MR D GOLDSTONE (Instructed by Messrs Clifford Chance, London EC1A 4JJ) appeared on behalf of the Trade Star Lines Corporation
MR N HAMBLEN (Instructed by Messrs Hill Dickinson Davis Campbell, Liverpool L2 9UB) appeared on behalf of Lauritzen
Thursday, 4 April 1996
This is the judgment of the Court.
The m.v. 'Arctic Trader' loaded a cargo of about 15000 m.t. of crude salt at Alexandria in April 1988. The arbitrator found that the salt was contaminated by substantial quantities of stone of various sizes, cement, pieces of tarpaulin, and perhaps pieces of metal" (paragraph 33) and that "the Master did see a level of contamination which ought to have induced him to clause the Mate's Receipts" (paragraph 37). The master did not do so. Instead, he issued 'clean' i.e. unclaused Mate's Receipts. Thereafter, clean bills of lading in accordance with the receipts were issued by agents. The agents were appointed by the shippers but they acted in this respect for the vessel's time charterers who were authorised themselves or by agents to sign the bills on behalf of the owners of the vessel.
The time charterers claimed damages in the arbitration on the grounds that (1) the Master acted in breach of an implied term in the time charterparty when he failed to clause the Mate's Receipts as he ought to have done, and (2) that the issue of clean bills of lading for a contaminated cargo led to difficulties and delays at the discharging port, which was Lagos, and thereafter at Douala, Cameroon, where the balance of the cargo was finally discharged; this disrupted the trading programme which the time charterers had planned for the vessel, and they suffered consequent loss.
The arbitrator, Michael Howard Q.C., upheld this as well as other claims to which reference will be made below, but the shipowners were given leave to appeal from his award (by Mr Justice Gatehouse on 10th June 1994) so that the following question of law could be argued before the Court:-
"…whether it is an implied term of the standard form NYPE time charterparty that the Master is under a duty to the Charterers to clause the Mate's Receipts for the cargo shipped if it is not in apparent good order and condition".
The appeal was heard by Mr Justice Tuckey. He held that no such term should be implied, and accordingly he allowed the appeal. The time charterers now appeal with his leave against his judgment, given on 29th July 1994.
We have heard wide-ranging submissions from Mr David Goldstone, counsel for the appellant time-charterers, and from Mr Nicholas Hamblen, counsel for the shipowners, and we should begin by expressing our indebtedness to them. Because the matters which they have canvassed are of some general importance, and because the detailed facts are rather more complicated than the above summary may suggest, although we hope that it is accurate as far as it goes, we will begin with a general statement of what may be called the legal and the commercial background.
Background
First, the difference between a time charterparty and a voyage charterparty. Both are contracts for the carriage of goods by sea, as distinct from some other arrangement such as the hire of a ship under which the shipowners surrender possession of the ship to charterers. Under a voyage charter, the shipowner agrees to load, carry and discharge a cargo at and between the agreed ports of loading and discharge and the charterer undertakes that he will provide the cargo and perform his part of the loading and discharging operation, or arrange for those things to be done by others. The shipowner receives freight for the agreed voyage in accordance with whatever terms as to payment are included in the charterparty.
Under a time charterparty, the shipowner, whilst retaining possession of the vessel and remaining the employer of the master and crew, places the vessel at the service of the time charterer for a specified period. He agrees that for that period the ship will load such cargoes and perform such voyages as the time charterer shall direct; but there is no obligation on the charterer to provide any cargoes or to send the vessel on any voyages. His undertaking is that he will pay the agreed rate of hire throughout the period of the charterparty and he may, if he so decides, direct the vessel to remain effectively in lay-up, as sometimes occurs when no cargoes are available to him or when market rates and prices so dictate.
The above takes no account of hybrid forms such as consecutive voyage charterparties, or time charterparties for the period of one of more "trips", which are much used in practice, because for present purposes it is unnecessary to do so.
Next, the relationship between a charterparty and bills of lading which may be issued in respect of goods shipped under it. The bill of lading contract is made between the shipper and the carrier, usually the shipowner but sometimes the charterer, if that intention is clear from the terms of the bill. It records the fact of shipment and it evidences the terms on which the goods are carried. As a contract, it may bind not only the shipowner (or, if a charterer's bill, the charterer or carrier) and the shipper, but the consignee and other third parties to whom it may be endorsed in accordance with commercial practice. It follows from this that when goods are shipped on a chartered vessel by a person who is not the charterer, and a bill of lading is issued to the shipper, then that is a separate contract from the charterparty itself. Subject to whatever terms may be agreed in the particular case, the charterparty is and remains the only contract between the shipowner and the charterer. When the charterer himself is the shipper, the bill of lading operates amongst other things as a negotiable receipt but not usually as a separate contract, although if the charterers indorse the bill to a third party then it duly takes effect as a contract between the shipowner and the indorsee.
Finally, the procedures which are followed when cargo is loaded on a chartered ship. In practice, of course, the actual loading operation will be carried out by stevedores or their equivalents in modern trades, and the goods will be received on board the ship, traditionally from a warehouse or other storage ashore. In some respects these persons will be acting as principals and for their own account, but for the purposes of the charterparty i.e. the contract between the shipowner and the charterer it becomes necessary to establish whether they are also acting as agents for one party or the other in the discharge of their respective obligations under it. When the loading is complete, the time comes for the issue of appropriate documentation. It is customary for the master or chief officer of the vessel to issue the mate's receipt on behalf of the shipowners, recording what cargo has been received on board, and for a bill of lading thereafter to be issued to the shipper, signed by the master on behalf of the shipowner or by an agent duly authorised to do so on behalf of the shipowner (or charterer). It is commonplace for the charterer to be given this authority to sign bills of lading on behalf of the shipowner, as was the case here under clause 46 of the time charterparty, but as a safeguard for the shipowner the authority is expressly limited to bills which are in accordance with the mate's receipts. So the shipowner cannot become liable to a third party under the bill of lading, unless some form of ostensible authority is established against him, except in relation to goods which the master or chief officer has receipted on his behalf.
This appeal is only concerned with the operation of these procedures when the cargo which is provided for shipment and duly received on board cannot be properly described as being in "apparent good order and condition". That is the invariable formula in bills of lading, subject to any express qualification ("clausing") which may appear thereon. Although there is no standard form of Mate's Receipt, an unqualified receipt would usually be regarded as "clean" in the same sense.
Inevitably, there may be room for debate as to whether the goods shipped are in "apparent good order and condition", or not. This will depend primarily upon the nature of the goods and the way in which they are described, and questions involving some degree of expertise may arise. It is common ground in the present case that the master or chief officer must exercise the judgment of a responsible and reasonable ship's officer, but beyond this no expertise is required of him; and we would accept this as correct. The arbitrator found as already noted that the master ought to have claused the Mate's Receipt; in other words, he failed to record what was the actual appearance of the goods, or that they could not properly be described as being in apparent good order and condition for goods of that description.
It is also accepted that the master or chief officer, when he is asked for signed Mate's Receipts, is under a duty to his employer, the shipowner, to record the apparent condition accurately, so...
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