Tradigrain SA v King Diamond Shipping SA [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Colman J. |
| Judgment Date | 27 April 1999 |
| Date | 27 April 1999 |
| Court | Queen's Bench Division (Commercial Court) |
Queen's Bench Division (Commercial Court).
Colman J.
Michael Coburn (instructed by Richards Butler) for the plaintiffs.
Nigel Meeson (instructed by Hill Dickinson) for the defendants.
The following cases were referred to in the judgment:
Fowler v KnoopELR (1878) 4 QBD 299
Heidberg, TheUNK [1994] 2 Ll Rep 287
India Steamship Co v Louis Dreyfus Sugar Co Ltd (“Indian Reliance”) [1997] CLC 11
Miramar Maritime Corp v Holborn Oil Trading Ltd (“The Miramar”)ELR [1984] AC 676
Molthes Rederi Aktieselskabet v Ellerman's Wilson Line LtdELR [1927] 1 KB 710
Wehner v Dene Steam Shipping CoELR [1905] 2 KB 92
Shipping — Charterparty — Bill of lading — Freight — Time charterers defaulted on payment of hire — Whether shipowners entitled to intercept freight payable by shippers under bill of lading contract — Whether sub-charterer had discharged liability for freight — Payee designated under sub-charter not time charterer — Whether shippers liable under bill of lading contract for delay in discharging vessel.
This was an application by the plaintiff shippers for determination of a question of law and to strike out part of the defendant shipowner's counterclaim, and an application by the shipowners for summary judgment on their counterclaim for freight.
The defendant owners time chartered a vessel to “Mercator” and the vessel was subchartered to the third plaintiff, “Tradigrain Shipping”. The first plaintiff, “Tradigrain”, was the shipper of a cargo of wheat on the vessel. Mercator got into financial difficulties and defaulted on the payment of hire under the time charter. The owners then attempted to intercept the freight payable under the bill of lading contract by Tradigrain. Under the relevant bills of lading freight was payable “as per charter party” and the subcharter provided that freight was payable “less commissions, loading despatch, owners' contribution to extra insurance” to a named account holder, not Mercator, at a US bank. Tradigrain paid freight of US$5,962.04 to that account, which was the freight due under the voyage charter less deductions totalling US$42,869.15 in respect of brokerage, address commission, extra insurance and agreed deductions of US$25,931.59 paid by Tradigrain Shipping to Mercator's agents in respect of load port disbursements and a US$10,000 advance to the master.
On the owners' counterclaim for freight they accepted that Tradigrain had an arguable defence in respect of such part of the claim for freight as was equivalent to the amount of freight, brokerage and extra insurance premium deducted but argued that no deduction was permissible in respect of load port disbursements or cash advances to the master and that accordingly to that extent freight had not been paid before the owners gave notice of the exercise of a lien on the subfreights. Alternatively the freight paid was paid before it fell due and was therefore an advance on freight rather than an actual payment of freight. Tradigrain argued that its liability for freight had been discharged by set off of the sums paid for disbursements and advanced to the master, alternatively that because Mercator was not the person named in the charter as the person to whom freight was payable there was no debt due to Mercator on which the owners could sue.
The owners also counterclaimed for breach of the bill of lading contract in not discharging the vessel within the time permitted by the voyage charter or within a reasonable time.
Held, ruling accordingly:
1. The fact that the freight was to be paid under the subcharter to someone other than Mercator did not exclude the right of the shipowners to intercept that freight prior to payment. Until freight had been paid in accordance with the subcharter the shipper's obligation to the shipowner was to pay the freight to him upon notice to do so having been properly given in exercise of the owners' lien on subfreights. It made no difference whether the payee designated under the subcharter was the disponent owner or some other person. (India Steamship Co v Louis Dreyfus Sugar Co Ltd (“Indian Reliance”)[1997] CLC 11applied.)
2. The terms of the bill of lading contract defined what constituted payment for the purposes of the interception of unpaid freight by the shipowner. Any deductions from freight had to be expressly provided for in the bill of lading or incorporated from the charterparty. The agreement between Tradigrain and Mercator to make deductions from freight in respect of the disbursements and advance to the master was not binding on the shipowners as a variation of the bill of lading contract and to that extent the freight had not been paid in accordance with the terms of the bill of lading contract when the owners' notice was given. Tradigrain would have to pay that part of the freight again regardless of having already paid that amount. (The HeidbergUNK[1994] 2 Ll Rep 287applied.)
3. Although the subcharter provided that the freight was to be paid within three days from signing/releasing clean bills of lading, it did not prohibit payment prior to the three day period, provided such payment was specifically designated as freight in respect of the chartered voyage. Thus the freight was freight even though paid in advance. Accordingly the owners were entitled to judgment for US$35,931.59.
4. The discharge terms from the subcharter were not incorporated into the bill of lading contract. The demurrage provisions of the subcharter provided for demurrage to be paid by charterers and accordingly could not be incorporated into the bills of lading contract. It could not have been the intention to incorporate the discharge but not the demurrage provisions. However there was an implied term in the bill of lading contract that the shippers would effect discharge of the cargo at the agreed port within a reasonable time. Whether there had been a breach of that term would have to be decided by reference to the whole of the cargo shipped under each bill in the context of the whole discharging operation. The rate of discharge specified in the subcharter would be no more than an indicator of a reasonable rate. The owners were entitled to a declaration that each shipper was under an obligation to procure discharge of the cargo within a reasonable time and the discharge obligation was not subject to the discharge provision of the subcharter. (Miramar Maritime Corp v Holborn Oil Trading Ltd (“The Miramar”)ELR[1984] 1 AC 676andFowler v KnoopELR(1878) 4 QBD 299applied.)
Colman J:
The defendant shipowners apply by summons under O. 14 for summary judgment against the plaintiff shippers on their counterclaim. The counterclaim is for freight which is said to be due to the defendants as owners of the SPIROS C under a bill of lading contract (bill of lading No. 1) in respect of the carriage of a cargo of Hungarian milling wheat in bulk from Constanza to Morocco. The vessel had been time-chartered by the defendant owners to Mercator Marine and sub-chartered for the voyage in question to the third plaintiffs, Tradigrain Shipping. The bills of lading were owners' bills and were issued late due to their having initially been issued in a form which expressly referred to the time charter and not to the sub-charter. Substitution took place pursuant to an order by Moore-Bick J. The disponent owners (Mercator) then got into financial difficulties and, it is said, defaulted in the payment of hire. The owners then attempted to intercept the freight by giving notice to the plaintiff shippers. The issue that arises is therefore whether the owners were entitled to claim payment of freight from the shippers under the bill of lading contract.
The plaintiff shippers also apply by summons under O. 14A for determination of an issue as between them and the defendant owners as to whether under the bill of lading contract they are under any obligation, and if so what obligation, in respect of the time taken to discharge the vessel at the port of discharge. The issue arises by reason of a claim advanced by the owners as part of their counterclaim based on the delays encountered by the vessel at the discharging ports. The owners pleaded that the cargo was not discharged within the time permitted by the terms of the voyage charter which were said to be incorporated into the bill of lading contract or within a reasonable time, which the owners submit would have been equivalent to the voyage charter laytime. The owners claimed damages for breach of the bill of lading contract in not discharging the vessel within the proper time. The plaintiffs further apply under RSC, O. 18, r. 19(1)(a) and/or (b) for an order striking out those paragraphs in the owners' counterclaim which advance the claim for damages for breach of the bill of lading contract by reason of delay in discharge.
(1) Facts relating to the payment of freight
On 26 February 1998, the same day as the sub-charter was fixed, it was agreed between the sub-charterers, Tradigrain, and Mercator, the disponent owners, that the sub-charterers would pay by way of advance to Mercator the vessel's disbursements account at the loading port, Constanza, and that this amount could be deducted from the sub-charter freight which remained to be paid.
On 4 March 1998 Mercator telexed Tradigrain asking them for a cash advance to the master of US$10,000 and to deduct that payment from the freight.
On 6 March 1998 Tradigrain paid to Mercator's bank as identified in cl. 46 of the voyage charter US$5,962.04. This was calculated as the balance of 95 per cent of the total freight due under the voyage charter less deductions totalling US$42,869.15 in respect of brokerage, address commission, extra insurance, the Constanza disbursements account and the...
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