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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Trafigura Beheer BV v Golden Stavraetos Maritime Inc [2002] EWHC 1154 (Comm) (12 June 2002) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2002/1154.html Cite as: [2002] EWHC 1154 (Comm), [2002] 2 All ER (Comm) 984

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand. London. WC2A 2LL
		12 June 2002

The Hon. Mr Justice Morison Morison J.

1. This is the determination of the Defendant's Part 24 application for judgment against the Claimant, on the basis that the latter has no real prospect of success on the Claim and there is no other reason why the Claim should be disposed of at trial. This application raises a nice question as to the proper interpretation of Article III Rule 6 of the Hague Visby Rules which provides:

"... the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered."

THE FACTS

2. The facts relevant to this application are largely uncontroversial. The claim arises out of a shipment of fuel oil on the Defendant's vessel, which had been chartered by the Claimant. The parties entered into a voyage charterparty dated 16 December 1999, to which the Hague Visby Rules applied, pursuant to which the vessel proceeded to a port in Saudi Arabia for loading. Between 8-10 January 2000 the vessel was loaded with Jet A1 fuel in apparent good order and condition, for delivery at Mombassa. Shortly after sailing, the parties varied the destination to Lagos, Nigeria. The vessel arrived off Lagos in the evening of 2 February 2000, when notice of readiness was tendered. The intended purchaser refused delivery because, after tests, it was allegedly discovered that the cargo was off specification.
3. Thereafter, the vessel was ordered by the Claimant to proceed to Abidjan where she arrived in the evening of 13 February, having sailed from Lagos on 11 February 2000. Nearly one month later, on 7 March 2000, the Charterers indicated that they would like to sell the cargo, without prejudice to any future claim "at best in an effort to mitigate damages. Please confirm Owners agreement that they are happy for us to proceed." On 9 March the Charterers were seeking confirmation from third parties for the discharge of the cargo at a port in the Mediterranean; the Owners were indicating that for that voyage the freight rate would be $320,000. The Owners' agents wrote, on 10 March 2000, stating that the basis upon which the ship was being used had yet to be formalised. It was pointed out that it was effectively being used as floating storage and that Owners were happy to agree compensation "for this activity at the demurrage rate." Further, "if the cargo has to be on-carried that is outside the scope of the presently agreed charter. Charterers discharge option has been exercised. For any new voyage an addenda to the present charter or a new agreement need to be arranged." Charterers gave instructions to the vessel to sail from Abidjan on 11 March 2000 and proceed towards Gibraltar for orders. Owners submitted an invoice for items due in respect of the voyage from Saudi Arabia to Lagos, and thence to Abidjan: the contractual freight rate of $470,000, the deviation cost of going from Lagos to Abidjan of $21,370 and demurrage of $426,257.64. All these items were calculated in accordance with the provisions of the original voyage charter. For the voyage from Abidjan to a port in Greece, a new freight rate was agreed; there was a new period of laytime and demurrage at the unloading port was calculated and paid on this basis.
4. In formal terms, the parties agreed an Addendum [No 2] to the original charterparty. In the correspondence thereafter, the parties predominantly referred to the charter dated 16 December, subject to the addendum, although there are some communications, such as the freight invoice for the voyage from Abidjan to Greece, which referred to a new charter having been agreed at 9 March 2000. For reasons which will become clear, I do not regard it as decisive of the issue I must determine whether the new arrangements amounted to a variation of the original charter or to a new voyage charter. On any view, there was an agreement for a new voyage at a new freight rate and with a new period of laytime. The obligation on the Charterer to pay freight rate and demurrage in relation to the voyage to Lagos and Abidjan was not superseded by the new arrangement. It is also clear that the new arrangement was not made by the Charterer purporting to exercise any right under clause 24 of the original voyage charter, as Mr Lord QC, on the Claimant's behalf, tentatively suggested in the course of argument. This is not a case where the Charterer has nominated a new alternative discharge port in place of the original one.

THE CLAIM

5. The Claim Form was issued on 27 March 2001. In their amended particulars of claim the Charterer alleges that the Defendant was in breach of contract in tendering a notice of readiness at Lagos when the cargo had been contaminated by residues within the vessel's tanks of soya bean oil. The Claimant claims by way of damages, the difference between the original contract price to the consignee in Lagos and the price received from the sale of the cargo in Greece to a Greek oil company. The Claimant says that it is also entitled to recover what are described as "the additional costs incurred on re-sale", including the demurrage and storage charges at Lagos and Abidjan and the freight from Lagos/Abidjan to Greece, as well as the deviation costs from Lagos to Abidjan, which the Defendant had required the Claimant to pay.
6. There is no claim in relation to the voyage from Abidjan to Greece and no suggestion that in relation to that voyage the Owners were at fault in any way.
7. If time started to run from the date of delivery in Greece, the Claim was presented within the one year time limit; if time starts to run from the date when the cargo ought to have been delivered in Lagos, the claim is barred.

THE PARTIES' ARGUMENTS

8. The Defendant, through Mr Boyd QC, says that the claim has been issued out of time because suit must be brought within one year of the date of delivery or the date when the cargo ought to have been delivered. The complaints relate to the events in Lagos when the cargo should have been delivered, but was not. The cargo should have been delivered by, at the latest, 6 February 2000. Although the amended pleading now alleged that the tender of the Notice of Readiness, as opposed to a tender of delivery, was the breach relied upon, the fact remained that the breach alleged is a breach at Lagos. From that moment the Charterer was aware that the claim could be made as at that date [February 2000]. There has been no allegation relating to the voyage from Abidjan to Greece, nor to the delivery which was effected there. Under the original charter, as amended, Owners' contractual delivery obligation was delivery at the nominated discharge port, namely Lagos. After the notice of readiness had been given the Charterer was under an obligation to take delivery of the cargo within the contractual laytime. By failing to take and effect delivery in Lagos, time started to run, as Lagos was the contractual place of delivery and delivery ought to have been effected there. The new voyage was a separate voyage undertaken in mitigation. The discharge of the cargo at the port in Greece attracted a new period of laytime and the Claimant approved the laytime statement calculated on this basis and paid the demurrage requested.
9. For the Claimant, Mr Lord QC submits that the cargo was delivered in Greece and that the proceedings were commenced within one year from that date. Accordingly, the second part of Article III Rule 6 does not come into play. He says that Rule 6 does not give a party the right to 'choose' which limb of the Rule applies. The words "should have been delivered" only come into play in those cases where there has been no delivery; for example, because a cargo has been lost at sea or never loaded. There is no basis for saying that "delivery" means delivery during the currency of the contract of carriage pursuant to which the cargo was loaded. In any event, on the facts, the original charterparty was extended to cover the voyage from Abidjan to Greece, and the result in this case cannot hinge upon whether there was a new contract or an addendum or variation to the original.

THE DECISION ON THE ARTICLE III RULE 6 POINT

10. I deal with this point first, and leave aside a further argument based upon an alleged agreement made shortly before proceedings were started. I start with such help as the Court was offered in terms of reported cases and text books.

(1) The purpose of the Rule, as stated by Lord Wilberforce, in an obiter remark, in Aries Tanker v Total Transport [1997] 1 WLR page 185, at 188:

"I would add, though this is unnecessary since the provision is clear in its terms, that to provide for the discharge of these claims after 12 months meets an obvious commercial need, namely, to allow shipowners, after that period, to clear their books."

(2) In The Ot Sonja [1993] 2 Lloyd's Reports page 435 at 444, the Court of Appeal considered whether the time limit applied where goods had not been loaded. It held that the limit did apply and time would start to run from the date when the goods ought to have been delivered.

(3) In Carver on Bills of Lading, first edition, written by two distinguished academics [Former professors Sir Guenter Treitel and F.M.B. Reynolds] appears this paragraph, 9-165:

"The term "delivery" in a bill of lading is ordinarily taken to refer to transfer of possession to the consignee ... or the consignee's agent ... It certainly does not mean the same thing as "discharge". It seems that the first date [i.e. delivery] provides the rule, with the second ['when they should have been delivered'] providing a variant, principally for the case where the goods are lost or in some other way not delivered (e.g. because they are so damaged as to have lost their commercial character as goods of the type shipped); or because they are delivered wrongfully, for example not against a bill of lading. The choice, where there is one, must however, be that of the claimant. Thus, if the goods are delivered late, even though there may be a date when they should have been delivered, it will be to the claimant's advantage to take the date of actual delivery for the purposes of the time bar."

(4) In the second edition of Cooke on Voyage Charters, paragraph 85.189 the authors, helpfully, make a number of points:

Delivery is distinct from the physical act of discharge; although delivery is not defined in the Rules.

Delivery of damaged goods is clearly 'delivery' within the meaning of the Rule unless the goods are so badly damaged that they are no longer to be regarded as the goods which were shipped.

"Where there is no delivery of any goods at all, the rule adopts the starting point "or of the date when they should have been delivered" and for those purposes one must assume that all parties had performed their obligations and then find when the goods ought to have been delivered."

Because there are situations where goods are delivered late, or are only partly delivered, or when delivery is tendered but not taken then, or when delivery is spread over a period of time:

"It is necessary to impose a gloss as a matter of construction of the rule to give effect to its business purpose and it is important that there should be a practical and easily identifiable starting time. It is therefore submitted that the purposive or pragmatic construction of the Rules consistent with the reasoning of the Court of Appeal in The Ot Sonja, should be that, where the goods in respect of which the claim is made (or what is left of the goods shipped) actually arrive at a legitimate place of delivery and absent any wrongful refusal by the receiver, time starts when that delivery (or the material part) is completed, and in all other cases, time starts from the time when delivery of the relevant goods ought to have been completed assuming the performance of all contractual obligations."

11. It seems to me, contrary to what is implied if not expressed in Carver on Bills of Lading, the Rule does not confer a choice on either the Claimant or the Defendant as to which limb applies. I agree with Mr Lord's submission on this point. Either the goods have been delivered, within the meaning of the Rule, or they ought to have been delivered. In so far as there is a 'choice' the choice is made not by the parties but by the application of legal principles, based upon the facts of a particular case. In essence the Court must adopt a process of construction appropriate to the interpretation of a set of Rules agreed internationally and enacted into UK law. That process is both purposive and practical, as Cooke's book states.
12. So, the question is whether time runs from the date when the goods should have been delivered at Lagos or when they were delivered in Greece. It seems to me that one can identify the complaint in this case, which led to the "suit" being brought, as the non-delivery of the cargo at Lagos, due, allegedly, to its condition. That is the substance of the claim in this case; there is no complaint about what happened during the voyage from Abidjan to Greece and no complaint relating to the delivery there. As the parties recognised, the voyage to Greece was an attempt by the Claimant to mitigate its damage arising from the non-delivery of the cargo in Lagos. Whether the voyage to Greece was a new venture or an amendment to the old one, the fact is that it did not impinge on the previous contractual obligations, otherwise there could have been no claim in relation to the events at Lagos and no claim for damages following on from the voyage to Abidjan and thence to Greece.
13. It seems to me, on the facts of this case, that the relevant suit (referred to in the Rule) is a claim which is essentially for damaging the cargo during the contractual voyage from the load port to Lagos. The commercial purpose and effect of the Rule would be distorted if, as Mr Lord suggests, the second limb does not apply because the goods were eventually delivered in Greece. The delivery in Greece is not the subject of the suit and it would be contrary to the underlying need for certainty and clarity to suggest that time started on delivery in Greece. The cargo might never have been delivered or the vessel lost. In either event, there was a completed cause of action when the vessel was in Lagos and no good reason could be advanced for suggesting that time did not run from that moment; the fact that the cargo was either lost or subsequently delivered does not, I think, alter the position. Lagos was the only legitimate place of delivery in relation to the voyage about which complaint is made; and there was a wrongful refusal by the Claimant at Lagos to take delivery there; the defendant had fulfilled the owners' obligations under the voyage charter, subject to any claims that might have been made in relation to the state of the cargo. It would be entirely artificial to extend the contractual time limit period as a result of the new arrangement for the voyage to Greece. Had there been a further problem during the second voyage then Article III Rule 6 would operate and time would start running from the date of delivery in Greece.
14. In short, I reject Mr Lord's submission that "[t]here is no basis for saying that "delivery" means delivery during the currency of the contract of carriage pursuant to which the cargo was loaded". What must be identified is the relevant suit; that is, what the Claimant is alleging. If the cause of action was complete then it makes good commercial sense in a case such as the present to hold that time starts to run from that date. The Owners say that the cargo should have been delivered at Lagos; the Claimant complains that it was not. At that time the parties were aware of their rights and an action could have been started there and then. If the cargo was destroyed, stolen or sold on and subsequently delivered to a third party [as here] that would affect the amount of any recovery but not delay the running of time. Had the vessel sunk en route to Greece time would not start running from that time, but rather from the time when delivery should have occurred in Greece, assuming the fulfilment of all contractual obligations; but it could not cause time to start running from the events in Lagos. The delivery in Greece and the non-delivery in Lagos are two separate and distinct events.

THE EXPRESS AGREEMENT POINT

15. 1 can deal with this separate point quite briefly. The argument centres on events which occurred in March 2000. Mr Bassett, an Associate Legal Executive employed by the Claimant's solicitors, Messrs Clyde & Co, in his witness statement of 15 March 2002, says that an extension of time of six months was sought through Clyde & Co on 22 March 2001, that on 27 March, "by voice mail message the Club stated that an extension would be granted, this being confirmed by the content of a fax from the Club later that day. This constituted an agreement to this effect ..." In his helpful skeleton argument, Mr Lord QC says that there was an extension of time granted.
16. It seems to me that the documents referred to by Mr Bassett reveal that no concluded agreement was reached as to an extension of time. It is clear that the time limit of concern was the period of one year from the date of delivery in Greece [1 April 2000]. According to an attendance note of 27 March 2002, a representative of the Club told Messrs Clyde & Co that before he could agree to an extension of time he would need to get the written authority of his Members, although he thought it was something of a formality. There was a message left on the solicitor's voice mail on 27 March to the effect that the Club's representative had been "verbally advised" from owners that they would give their consent "so you should be receiving from a fax from us later today". In a further phone call later that day, the solicitor pointed out that she would need something in writing from the Club "confirming the time extension to avoid proceedings being commenced". At about 17.40 the Club's representative telephoned Messrs Clyde & Co and asked whether "he could send the time extension to-morrow." The solicitor pointed out that they had needed the time extension to-day and that proceedings had been issued "because he did not get back to us". The representative referred to his voicemail message and the solicitor said that she had called him back "because he said we should get a time extension and he said he needed written authority from his members."
17. The following day, Messrs Clyde & Co explained precisely why they felt it necessary to issue proceedings, making the point that the voicemail referred only to "verbal authority" when the Club had informed them that "written authority from ... members" was needed. And the statement that Messrs Clyde & Co "should" receive the time extension during the course of the day was unclear.

"We waited until the last possible time to issue proceedings ... We had no alternative but to issue proceedings as we had received no confirmation of the time extension and no clarification of what you meant by "should" be receiving the time extension later that day."

18. It seems to me abundantly clear that the parties never concluded an agreement for an extension of time for precisely the reasons advanced by Messrs Clyde & Co at the time. A written authority was required as was a confirmatory written statement that authority had been given. Had Messrs Clyde & Co been of the view that an agreement had been reached then, no doubt, proceedings would not have been issued. I regard the contention that an extension was agreed as hopeless.

CONCLUSION

19. It follows, therefore, that the Defendant is entitled to judgment since the limitation defence is bound to succeed and there is no good reason why a trial of this action should take place.