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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Emeraldian Ltd Partnership v Wellmix Shipping Ltd & Anor [2010] EWHC 1411 (Comm) (17 June 2010) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2010/1411.html Cite as: [2010] 1 CLC 993, [2010] EWHC 1411 (Comm), [2011] 1 Lloyd's Rep 301 |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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Emeraldian Limited Partnership |
Claimant |
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- and - |
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(1) Wellmix Shipping Limited (2) Guangzhou Iron &Steel Corporation Limited |
Defendants |
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Lionel Persey QC and David Walsh (instructed by DLA Piper UK LLP) for the Defendants
Hearing dates: April 19-21 and 26-28 and May 4-5 2010
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Crown Copyright ©
Mr. Justice Teare:
The charterparty
"Notice of Readiness (NOR) may be tendered after arrival of the vessel at Loading Port, at any time, ……provided that the vessel is ……cleared by the Port Authorities……. "
"5.10 Time lost as a result of all or any of the causes hereunder shall not be computed as laytime, unless vessel is already on demurrage:
………
(iv) Accident at the mines, railway or ports;
………
(viii) Partial or Total interruptions on railways or port;
………
(ix) Any cause of whatsoever kind or nature, beyond the control of Seller, preventing cargo preparation, loading or berthing of the vessel."
The nominated berth
"The pier and the ore loading system were dimensioned to serve bulk carriers in the range of 40,000 DWT to 230,000 DWT……The berthing pier has a total length of 143 meters and three berthing dolphins equipped with Sumitomo Type fenders spaced 60 meters one from another plus four mooring dolphins..… "
The PACIFIC FORTUNE incident and the contingency plan
"Vessels must always berth on the starboard side; the damaged dolphin [D3] will be lit and must not be touched by the vessel during the berthing operation. Four tugs to be used for berthing operations – two of them at least 45 tons tbp. Wind conditions of 15 knots or more must be assessed during the operation by the pilot.
……
The vessel's portside anchor must always be used as an aid in the berthing operation in order to limit the distance from the dolphin and reduce the approach speed.
……
During berthing, the vessel must always contact Dolphin D1 first"
The NORDSTAR incident
The arrival of VINE and the delay in berthing her
7-13 January 2008 Underwater work to piles of D3
16-20 January 2008 Installation of piles of D3
24-30 January 2008 Further work on piles of D3
5-11 February 2008 Further work on piles and cap of D3
15-16 February 2008 Fitting of fender to D3
17 February 2008 D3 available for berthing vessels
The decision to repair and close the berth from 7 January 2008
i) Although D3 had been damaged in July 2007 CPBS had not repaired D3 but had permitted berthing to continue pursuant to the (first) contingency plan for a substantial period.
ii) Once D2 had been damaged by NORDSTAR the berth could no longer be used. Berthing stopped on 9 December 2007. A second contingency plan was put into operation which involved vessels being moored off the berth but repairs were now immediately required if berthing alongside was to continue.
The issues
The commencement of laytime
The repairs to D3 and laytime
"Partial or total interruptions on railway or port"
Must the interruption be fortuitous ?
Must the interruption be "beyond the control of the Seller" ?
"In case of strikes, lockouts, civil commotions, or any other causes or accidents beyond the control of the consignee which prevent or delay the discharging, such time is not to count unless the vessel is already on demurrage…"
"…by reason of the word "other", the words "beyond the control of the consignee" are capable of referring both to the specified events and to the unspecified causes."
"The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean."
Must the interruption be beyond the control of the Charterers ?
"In our view the clause refers to clauses which, by the contract, are under the control of the merchant; the effect of clause 3 is that, as between the owners and the merchant, the stevedores are under the control of the merchant. The situation then is that the cause of the delay may or may not have been caused by something which was not under the control of the merchant. We cannot tell which. The defence is therefore not made out and the claim for demurrage succeeds."
"However, for reasons which have not been made clear, but which would appear to relate to commercial rather than engineering issues, CPBS appear to have chosen not to repair/replace dolphin D3 immediately."
"Accident at the mines, railways or ports"
"Any cause of whatsoever kind or nature, beyond the control of Seller, preventing cargo preparation, loading or berthing of vessel."
Breach of the safe berth warranty
The berth
Stern-on berthing
"A master will endeavour to bring his ship to her berth parallel to the quay and moving very slowly. Nevertheless there are many occasions when a ship approaches a berth slightly angled to the quay and moving sideways under the force of high wind or as a result of tug pushing….."
The "set-up" at the berth
i) There was no means by which masters were informed that D3 was a potential hazard, that D2 was not adequate to receive the first contact from a Capesize bulk carrier and that the mooring plan was to contact D1 first.
ii) There was no means by which the pilots were aware that D2 was not adequate to receive the first contact from a Capesize bulk carrier and therefore that this was an additional reason for contacting D1 first.
iii) The pilots were not satisfied with the contingency plan and determined to implement it.
iv) There was no guidance to the berthing vessel from those on the terminal as to the position and alignment of the vessel as she approached the berth.
Informing the master
The pilots' knowledge of D2
The contingency plan and the pilots
Guidance from those on the terminal
The condition of the fender on D2
The cause of the damage to D2: Unsafety or negligence in berthing NORDSTAR ?
(a) The manner in which NORDSTAR was berthed
(b) Did NORDSTAR berth in a negligent manner ?
(c) Cause of damage to D2
Conclusion on the demurrage claim
The claim on the guarantee
"Subject: Vine c/p dated December 2007
Account: Wellmix Shipping Ltd.,……Hong Kong
We, [GIS] hereby guarantee the full and complete performance execution and fulfilment of charterers obligations under the said charterparty VINE cp dated December 2007 and the payments of all amounts due to you thereunder."
Actual authority
i) He appeared to wish to say as often as he could that GIS never issued the letter of guarantee even though that was not an answer to the question asked.
ii) It was surprising that in circumstances where he had determined to give evidence in support of GIS defence to the claim brought against it that he had never seen the contract between GIS and Vale SA for the purchase of iron ore which had been signed by Mr. Tao.
iii) His inability to identify the department responsible for finding a ship to carry cargo purchased by GIS on FOB terms was most surprising. Even assuming that Jun Jin made the arrangements that company had to be contacted by a department within GIS.
iv) His unwillingness to explain the contractual relationship between GIS and the Charterers, save to say that the Charterers were a third party, was also surprising.
v) It seemed to me, even allowing for possible differences in company administration and employer/employee relationships between the PRC and this country, very unlikely that in circumstances where, according to Mr. Zhang, there had been an internal investigation into the signing of the guarantee by Mr. Tao who had been demoted in consequence, there was no report of that investigation and no letter of reprimand to Mr. Tao explaining that that he was being demoted because of the issue of the guarantee.
vi) His explanation as to why there was no statement from Mr. Tao was surprising. In circumstances where his employer apparently knew why he had signed the guarantee and where Mr. Tao had been demoted as a result it is difficult to understand why he would be reluctant to give a statement. A statement saying that he had no authority to sign the letter of guarantee, as Mr. Zhang said was the truth, would support GIS' case and one would expect Mr. Tao to do what he could to assist GIS.
vii) Finally, Mr. Zhang signed GIS' List of Documents dated 23 July 2009. No correspondence or other documents concerning the charterparty or guarantee had been disclosed other than the guarantee itself. When asked about this he said that whatever should have been disclosed had been disclosed. It is improbable that GIS had no other documents, emails or notes concerning the charterparty and guarantee. Mr. Persey was constrained to see the force of that observation.
Ostensible authority
Illegality
"This Charter Party shall be governed by English Law and any dispute arising out of or in connection with Charter shall be submitted to the exclusive Jurisdiction of the High Court of Justice of England and Wales."
"The fact that the parties have chosen a foreign law, whether or not accompanied by the choice of a foreign tribunal, shall not, where all the other elements relevant to the situation at the time of the choice are connected with one country only, prejudice the application of rules of the law of that country which cannot be derogated from by contract, hereinafter called "mandatory rules".
i) GIS will have civil liability under the guarantee in Chinese law if it were at fault. It seems inevitable that it must have been at fault. No submission was made to the effect that it was not. Indeed Professor Gao accepted that GIS was at fault. He expressed the opinion that the Owners were also at fault on the basis that they "should have known of the laws and regulations of China." He referred to judgments in China where the guarantor and creditor had been held at fault for the invalidity of a letter of guarantee due to a failure to obtain the approval of SAFE. Mr. Sun, the Chinese law expert called by the Owners, accepted that both GIS and the Owners would be regarded as being at fault.
ii) There was a dispute between the experts as to whether GIS' liability could be ascertained before the Owners had attempted to enforce the charterparty against the Charterers and the Charterers had failed to discharge some or all of their liability. Mr. Sun said that that this was possible when a claim was brought against both the debtor (in this case the Charterers) and the guarantor (in this case GIS). In his reports Professor Gao disagreed.
iii) However, when cross-examined on this particular point Professor Gao agreed that it was possible for a Chinese court, if claims were made against both the Charterers and GIS at the same time, to decide the extent of liability to be borne by GIS. Thus there was in fact no disagreement between the experts on this point.
iv) I therefore conclude that under Chinese law GIS would bear civil liability for 50% of its liability otherwise arising under the guarantee, notwithstanding that the guarantee was "null and void" and that the issue of the guarantee in the absence of approval of SAFE was an offence.
Conclusion on both claims
Note 1 Although B&S Contracts was not a laytime case the case on which it was based, Bulman & Dickson v Fenwick & Co. [1894] 1 QB 179, was. No submissions were made to me with regard to the latter case. Notwithstanding the dicta of Lord Esher on which reliance may be placed the actual decision in the case, having regard to the findings of fact in the case (see p.181), may not be regarded as clearly supporting the proposition for which it was cited inB&S Contracts. The claim for demurrage failed notwithstanding that the strike could have been avoided by the charterers had they redirected the vessel as the jury found they could reasonably have done. [Back] Note 2 When I formally gave judgment for the Claimants Mr. Coburn said that this summary of his argument did not precisely reflect the legal analysis which he had advanced which was that where an event was caused by a breach of the safe port warranty such an event could not, as matter of construction, fall within an exception to laytime upon which the Charterers might otherwise rely.
[Back] Note 3 When I formally gave judgment for the Claimants Mr. Persey said that I had not dealt with his written submissions on this point. My summary of his submissions was short but I had them in mind. His written submissions were longer than this summary suggests. [Back] Note 4 If the correct analysis is, as submitted by Mr. Coburn, that where an event was caused by a breach of the safe port warranty such an event cannot, as matter of construction, fall within an exception to laytime then the same result follows. There is no difference in substance.
[Back] Note 5 When I formally handed down judgment Mr. Persey said this use of the safe berth warranty had been challenged and he referred me to paragraph 155 of his Closing Submissions. The objection in that paragraph was not, however, developed. [Back]