Trans-Tec International, Srl v The Owners and/or Demise Charterers of the Vessel ‘Columbus’
| Jurisdiction | England & Wales |
| Judge | Mr Admiralty Registrar Davison |
| Judgment Date | 17 December 2020 |
| Neutral Citation | [2020] EWHC 3443 (Admlty) |
| Court | Queen's Bench Division (Admiralty) |
| Date | 17 December 2020 |
| Docket Number | AD-2020-000108 |
[2020] EWHC 3443 (Admlty)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
ADMIRALTY COURT (QBD)
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL (Admlty)
Mr Admiralty Registrar Davison
AD-2020-000108
AD-2020-000097
Mr Paul Henton (instructed by Reed Smith LLP) for the Claimants
Mr John Kimbell QC and Ms Celine Honey (instructed by Watson Farley & Williams LLP) for Carnival Plc and P&O Princess Cruises International Ltd
Mr Bruce Hailey (of Salvus Law Ltd) for KPI Bridge Oil Inc and various other Claimants
Approved Judgment
Hearing date: 2 December 2020 (by Microsoft Teams)
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is my judgment on the application of the claimants for default judgment in these in rem proceedings against the vessels ‘Columbus’ and ‘Vasco Da Gama’. The vessels were sold on 22 October and 16 October 2020 respectively and the actions have continued against the proceeds of sale. Those proceeds will be insufficient to satisfy the many claims against the funds. Hence, each individual claimant has an interest in ensuring that only claims that are genuinely in rem claims are admitted and that those claims are properly scrutinised and quantified.
These claimants are bunker suppliers. They are subsidiaries of World Fuel Services Corporation, a company based in Florida, USA. I will refer to them in this judgment compendiously as ‘WFS’. The claims are for six stems of bunkers supplied in the first quarter of 2020. Two were supplied to ‘Columbus’ in Panama and Tahiti. Four were supplied to ‘Vasco Da Gama’ in Fremantle, Australia (two such), Singapore and Cape Town. The claims against ‘Columbus’ total US$1,420,320.43 (split across the two claimant companies). The claims against ‘Vasco Da Gama’ total US$2,282,061.02. These sums comprise the principal amounts for the supplies of bunker oil. Additionally, the claimants claim (i) contractual interest on overdue amounts at 2% per month (or 1 1/2% per month for invoices under US$500,000), (ii) an administrative fee of 5% of the principal amount on all amounts more than 15 days overdue, and (iii) a contractual indemnity in respect of the claimants' costs. These claims derive from WFS's standard terms and conditions which were in each case incorporated into the contract of sale by WFS's order confirmation and invoice. The relevant paragraphs were as follows:
7. PAYMENT
(c) Past due amounts shall accrue interest at a rate equal to the lesser of 2% per month, or the maximum rate permitted by the applicable law. All amounts more than fifteen (15) days past due shall incur an additional 5% administrative fee. All payments received from Buyer after an invoice is overdue shall first be applied to interest, legal collection costs and administrative fees incurred before they will be applied to the principal amounts on a subsequent delivery. Buyer may not designate application of funds to a newer invoice so long as they are unpaid.
(f) Buyer agrees to pay, in addition to other charges contained herein, internal and external attorneys fees on a full indemnity basis for Seller's collection of any nonpayment or underpayment, as well as any other charges incurred by or on behalf of Seller in such collection, including, but not limited to, the cost of bonds, fees, internal and external attorneys fees associated with enforcing a maritime lien, attachment or other available right, whether in law, equity or otherwise.
11. INDEMNITY:
Buyer shall defend, indemnify and hold Seller and any of Seller's agents or representatives harmless with respect to any and all liability, loss, claims, expenses, or damage suffered or incurred by reason of, or in any way connected with, the acts, omissions, fault or default of Buyer or its agents or representatives in the purchase, receipt, use, storage, handling or transportation of the Products in connection with each Transaction.”
By paragraph 18 of the terms and conditions, the contracts were subject to the law of the United States of America, specifically US General Maritime Law, applicable federal laws and, if the former were silent on any issue, then Florida State law.
It is not in dispute that the principal amounts are in rem claims. But two of the other in rem claimants, Carnival Plc and P&O Princess Cruises International Ltd (‘POPCIL’) have disputed that items (i) – (iii) can be so characterised. Their position is that these claims can only rank as in personam claims and should be re-directed against the operators of the vessels. If they were admitted as in rem claims, the effect, they say, would be improperly to deplete the funds available for distribution amongst the body of claimants whose claims are proved.
Legal provisions and submissions
The point turns on whether the claims fall within the wording of section 20 of the Senior Courts Act 1981 headed ‘Admiralty Jurisdiction of the High Court’, specifically section 20(2)(m). In relevant part, section 20 is in these terms:
(1) The Admiralty jurisdiction of the High Court shall be as follows, that is to say—
(a) jurisdiction to hear and determine any of the questions and claims mentioned in subsection (2) …
(2) The questions and claims referred to in subsection (1)(a) are—
…
(m) any claim in respect of goods or materials supplied to a ship for her operation or maintenance;
The bunkers themselves were obviously supplied to the vessels for their operation. But Mr Kimbell QC, for POPCIL and Carnival, submitted that the interest, the administrative fee and the costs indemnity were to be regarded separately and were not ‘in respect of’ the supply of the oil. Mr Henton, for the claimants, submitted that these items were part and parcel of the bargain and that it was not permissible to ‘unpick’ or ‘slice and dice’ the package of contractual terms upon which the bunkers were supplied. That was particularly so where they had been supplied on 90 days terms which others had not been prepared to extend and where the provisions for interest et cetera were elements of arm's length transactions reflecting hard commercial realities.
The leading modern case on section 20(2)(m) is The Edinburgh Castle [1999] 2 Lloyd's Rep 362, a decision of Peter Gross QC sitting as a Deputy High Court Judge. The claim was in respect of four categories of goods or materials supplied to a ship. These were (1) food, drink and other consumables supplied for the use of the officers and crew; (2) food, drink, stationery and other consumables supplied for the use or consumption by passengers on the vessel; (3) the provision of services, in particular the provision of officers and crew of suitable calibre for the operation and manning of the vessel; and (4) a wide range of equipment supplied to the vessel. The judge was taken to the authorities from which he derived the following four propositions:
1. The words “in respect of” are wide words which should not be unduly restricted: The Kommunar, [1997] 1 Lloyd's Rep. 1, at p. 5.
2. Section 20(2)(m), which is derived from the equivalent provision in the Administration of Justice Act, 1956, contains a jurisdiction which is no narrower than the predecessor jurisdiction in respect of claims for “necessaries”: The Fairport (No. 5), [1967] 2 Lloyd's Rep. 162; The Kommunar, sup.
3. No distinction is to be drawn: …between necessaries for the ship and necessaries for the voyage, and all things reasonably requisite for the particular adventure on which the ship is bound are comprised in this category. [Roscoe, The Admiralty Jurisdiction and Practice, 5th ed., at p. 203; The Riga (1872) L.R. 3 Ad. & Ecc. 516].
4. The jurisdiction extends to the provision of services: The Equator, (1921) 9 Ll.L.Rep. 1; The Fairport (No. 5), sup.
Mr Henton also referred to The Kommunar [1997] 1 Lloyd's Rep 1, a decision of Clarke J. In that case, pursuant to a written agreement, the claimant undertook ‘to organise and carry out all settlements with foreign firms regarding: the operation, servicing and repair of vessels in the countries of Latin...
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