Turks Shipyard Ltd v The Owners of the Vessel November
| Jurisdiction | England & Wales |
| Judge | Mr Justice Teare,Mr. Justice Teare |
| Judgment Date | 20 March 2020 |
| Neutral Citation | [2020] EWHC 661 (Admlty) |
| Date | 20 March 2020 |
| Docket Number | Case No: AD 2019 000022 |
| Court | Queen's Bench Division (Admiralty) |
[2020] EWHC 661 (Admlty)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMIRALTY COURT
On appeal from the Admiralty Registrar
Admiralty action in rem against the vessel November
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Teare
Case No: AD 2019 000022
Neil Henderson (instructed by BDM Law LLP) for the Claimant/Respondent
Stephen Du (instructed by Sach Solicitors) for one of the Owners, the Defendants/Appellants
Hearing date: 13 March 2020
Approved Judgment
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 an appeal from the decision of the Admiralty Registrar, Jervis Kay QC, dated 16 October 2019 in which he held that Clean Marine Limited had entered into an agreement with Turks Shipyard Limited, a family owned business operating at the Historic Dockyard at Chatham, for the drydocking, conversion and painting of the vessel NOVEMBER, and in so doing acting as agent for the Owners of the vessel NOVEMBER who were therefore liable to pay for the work as undisclosed principals of Clean Marine Limited. The Registrar concluded that the claim of Turks Shipyard Limited for the cost of the work could, in those circumstances and pursuant to section 21(4) of the Senior Courts Act 1981, be brought in rem against the vessel NOVEMBER.
One of the owners of the vessel NOVEMBER, Mr. Agamemnon Otero, brings this appeal, with the permission of this court. The other owner, a Mr. Fitzsimons, was not represented before me. I shall refer to them both as “the Owners”. Mr. Otero contends that the only party liable who would have been liable on the claim in personam was Clean Marine Limited (“CML”) and that accordingly Turks Shipyard Limited (“the Yard”) was not able to bring an action in rem against the vessel NOVEMBER pursuant to section 21(4) of the Senior Courts Act 1981 (because CML was not, when the cause of action arose, the owner, charterer of or in possession or control of the vessel NOVEMBER).
The claim was proved in a sum in excess of £103,000 but the vessel, when sold by the Admiralty Marshal, realised only £30,000. Since one of the Owners, Mr. Otero, acknowledged service, the claim can be enforced against him in personam, assuming that CML entered into the agreement on behalf of the Owners; see The Gemma [1899] P. 285 at pp.291–2, The August 8 th [1983] 1 Lloyd's Reports 351 at 355 and The Maciej Rataj [1992] 2 Lloyd's Reports 552 at 559.
The facts
Although several matters have been canvassed the principal dispute is whether the Registrar was correct to hold that CML entered into the agreement with the Claimant as agent for the Owners, as undisclosed principals of CML.
The circumstances in which this dispute arose were found by the Registrar.
NOVEMBER, a “swim end barge built during the 1940s”, was initially acquired and owned by Mr. Fitzsimons. Mr. Otero acquired a half share in 2017 (see paragraph 2 of the judgment). It appears that the intention of the Owners in October 2017 was to transfer ownership to CML. But in the event no such transfer took place (see paragraph 47). Mr. Otero and Mr. Fitzsimons were supporters of projects which support environmental awareness and sustainability. They planned to moor NOVEMBER on the Thames near to Westminster to be used as an educational conference centre to promote environmental awareness “amongst those at Westminster”. CML, of which Mr. Otero and Mr. Fitzsimons were directors and shareholders, was to be the vehicle through which funds would be channelled and which would manage the project. NOVEMBER required to be certified by the Classification Society, Bureau Veritas (see paragraph 4). A conversion specification was drawn up and the contract was given to the Yard in December 2017 (see paragraphs 5 and 6). The contract was contained in an exchange of emails and a booking form. I was shown the “booking form” which was unsigned but which identified “the client” as CML. The unsigned form bore the date 20 December 2017 and contemplated that Mr. Fitzsimons would sign it on behalf of CML. NOVEMBER was delivered to the Yard in February 2018 and work was done between February and July 2018 (see paragraphs 7–14).
The Registrar recorded (at paragraph 49) that it was common ground that the written element of the agreement only mentions CML. That must be a reference to the naming of “the client” as CML on the booking form. He also noted that Mr. Otero's evidence was that he and Mr. Fitzsimons only ever acted as directors of CML and not as owners of the vessel. But he had earlier expressed his opinion of Mr. Otero as a witness. He was “evasive, disingenuous and argumentative………a most unsatisfactory witness whose primary purpose was to deflect liability away from the owners of the vessel, particularly himself as a part owner of the vessel …his evidence ….was not to be relied upon as being reliable or true” (see paragraph 24). There was no evidence from Mr. Fitzsimons.
The judgment of the Registrar
On the essential issue of agency the basis of the Registrar's decision is to be found in paragraphs 50 and 51 of his judgment. The Registrar noted that there was no evidence of any agreement between CML and the Owners which provided that CML could enter into an agreement with a third party for the repair of NOVEMBER without the authority of the Owners. That was to be contrasted with a demise charter of a vessel which effectively provides that the charterer might enter into an agreement with a third party for the repair of the vessel without the authority of the owner. The Registrar, having noted the background to the case, found it “incredible” that the Owners and CML, if they had given the matter thought, could have considered that they could contract with the Yard without the authority of the owners. He noted that his conclusion was consistent with the evidence of Mr. Otero to the court that CML “entered into contract with yard on behalf of barge owners whoever the barge owners were”. The Registrar, in circumstances where he did not believe that anyone had considered this issue at the time, then considered what a reasonable person would have understood had he been asked. He concluded that a reasonable person would have responded that “of course such works could not be performed to the vessel without the authority of its owners”. The Registrar observed that it was interesting to note that in his witness statement Mr. Beck of Houlder, the company which provided the specification of the necessary work, stated that “the Owners of the barge, Jay Fitzsimons and Agamemnon Otero, instructed Turks Shipyard to undertake the works detailed in the conversion specification that Houlder Limited has repaired.” The Registrar further observed that “if that were not the case it would allow owners of vessels to escape the effects of s.21(4) of the Senior Courts Act which is clearly intended to give builders and repairers of vessels protection against the non-payment of invoices”. He concluded that Mr. Otero's statement in evidence was a “belated recognition by him of the true situation, namely, that both the agreement made with the yard and the instructions given to the yard with respect to the work to be performed were made on behalf of the owners of the vessel.”
The arguments on appeal
Counsel for Mr. Otero submitted that the Registrar's decision was wrong because there was no evidence of any communication, by words or conduct, between the Owners and CML which, objectively analysed, amounted to an intention to confer authority on CML to contract with the Yard on behalf of the Owners. Without such evidence there was nothing to displace the presumption that the person named in the contract as principal is contracting as principal. “Convincing proof” was needed to displace that presumption and that where conduct was relied upon it must be conduct which is only consistent with the conferring of such authority; see Magellan Spirit ApS v Vitol SA [2017] 1 AER Comm 241, [2016] EWHC 454 (Comm), at paragraphs 28 and 29 per Leggatt J. Counsel further submitted that there was no coherent explanation for the suggested “convoluted” transaction whereby CML, represented by Mr. Otero and Mr. Fitzsimons, entered into a contract in the name of CML but CML in fact acted on behalf of Mr. Otero and Mr. Fitzsimons as undisclosed principals. Had that been intended Mr. Otero and Mr. Fitzsimons could simply have been named in the...
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...however, in appropriate circumstances, encompass both senses of authority; see Turks Shipyard v The Owners of the Vessel NOVEMBER [2020] EWHC 661 (Admlty) at paragraphs 53 Actual authority may be expressed in words or inferred from conduct. In The Magellan Spirit Leggatt J. explained at pa......