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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Golden Ocean Group Ltd. v Salgaocar Mining Industries PVT Ltd & Anor [2011] EWHC 56 (Comm) (21 January 2011) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2011/56.html Cite as: [2011] 1 CLC 125, [2011] 2 All ER (Comm) 95, [2011] CILL 3022, [2011] EWHC 56 (Comm), [2011] 1 WLR 2575 |
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QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
GOLDEN OCEAN GROUP LIMITED |
Claimant |
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- and - |
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(1) SALGAOCAR MINING INDUSTRIES PVT LTD (2) MR ANIL V. SALGAOCAR |
Defendant |
____________________
Dominic Kendrick QC and Peter MacDonald-Eggers (instructed by MFB) for the 1st Defendant
Charles Kimmins QC and Luke Pearce (instructed by Bentleys, Stokes and Lowless) for the 2nd Defendant
Hearing dates: 4th and 5th November 2010
____________________
Crown Copyright ©
MR JUSTICE CHRISTOPHER CLARKE:
The dispute
The background
The history
21st February The alleged making of the contracts
"Throughout this Charter Charterers are to be given access to all Drydock, damage, Port State Control reports and Charterers authorised representatives are to be granted access to visit vessel whether in the yard, drydock or in port"
"Following back from Golden Ocean on the MOA
In the end I did not mention anything about pulling the tail shaft to them, as on reviewing the VLCC we did with them it was in there …anyway they agree to all Salgaocar's changes except deposit which I think quite right – do you know if it is already drawn up. If not suggest we put it in or otherwise do an addendum. Deposit seems very fair especially considering Salgaocar has the option on when to exercise.
Can I confirm this?"
That e-mail crossed the line between Mr Hall as broker for Golden Ocean and Mr Hindley as broker for SMI/Mr Salgaocar.
"YES. CONFIRM THE 5 DAYS THAT'S FINE.
CD U SEND ME RECAP – WITH TODAYS DATE?
SUGGEST TO GOLDEN OCEAN WE AGREE THE SAME DATE FOR C/P
CAN YOU GET ADDITIONAL CLAUSE PUT IN C/P AS DON'T THINK SAME HAS BEEN DRAWN UP YET THOUGH HAPPY FOR IT TO BE AN ADDENDUM
I'M RATHER HOPING WE CAN AGREE THAT VESSEL IS GOLDEN BEIJING AS SALGAOCAR LIKED THE NAME!
THANKS V. MUCH"
"Many thanks yours - we are all done!
Charterers confirm ok to change deposit to within 5 days. Also will put the inspection clause in the C/P (or as an addendum).
Can we make the C/P and MOA today's date? (Or have you already announced this deal?)
Also can we tell/confirm to Salgaocar that the Vessel will be the M.V. Golden Beijing?"
"Owners Charterers
For the Owners
GOLDEN OCEAN GROUP LIMITED, BERMUDA
By e-mail authority received from
GOLDEN OCEAN MANAGEMENT AS
Dated 17th July 2008
For and on behalf of
HOWE ROBINSON SHIPBROKERS, LONDON
Director
As Broker Only."
Subsequent events
"this charter was concluded on behalf of trustworth in accordance with authority we received from mr Salgaocar. Mr Salgaocar also confirmed that the charter was fully guaranteed by Salgaocar Mining Industries, GOA. This is the basis on which the vessel was fixed."
Legal Proceedings
i) The claims against both SMI and Mr Salgaocar were made in respect of contracts governed by English law (CPR PD6B, para 3.1(6) (c)).
ii) In relation to Mr Salgaocar, a claim has been made against SMI, and there was between Golden Ocean and SMI a real issue which it was reasonable for the court to try, and Mr Salgaocar was a necessary or proper party to that claim (CPR PD6B para 3.1(3)).
iii) The claims had a reasonable prospect of success and England was the proper place to bring the claims.
The defendants' submissions
SMI
Mr Salgaocar
i) Golden Ocean fails the requirement under CPR PD6B para 3.1(3) that there be a serious issue to be tried between Golden Ocean and SMI because the guarantee is unenforceable pursuant to the Statute of Frauds 1677;
ii) Golden Ocean does not have a good arguable case that its contractual claim against Mr Salgaocar for breach of warranty of authority is governed by English law and so cannot establish "gateway" jurisdiction pursuant to CPR PD6B para 3.1(6)(c);
iii) If the guarantee is unenforceable pursuant to the Statute of Frauds 1677, Golden Ocean also has no reasonable prospect of succeeding in its claim for breach of warranty of authority against Mr Salgaocar because even if Mr Salgaocar had had authority to give the guarantee it would have been unenforceable.
iv) Golden Ocean also has no reasonable prospect of succeeding in its claim for breach of warranty of authority against Mr Salgaocar because there is no reasonable prospect of establishing that Howe Robinson had authority to conclude (or sign) the Guarantee.
The Statute of Frauds
"No action shall be brought whereby to charge the Defendant upon any special promise to answer for the debt default or miscarriage of another person unless the Agreement upon which such Action shall be brought or some Memorandum or Note thereof shall be in Writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorised."
a) because the e-mail which reads "YES CONFIRM THE 5 DAYS THAT'S FINE. CD U SEND ME RECAP – WITH TODAYS DATE" contains no reference to the guarantee;
b) because that e-mail refers to the agreement being recorded in a future document;
c) because, both in relation to a memorandum or note in writing of an agreement and to an agreement in writing itself, case law establishes that you can look at a number of documents together but only if there is in one document an express or necessary reference to another; and that condition is not satisfied in the present case.
"it is still indispensably necessary, in order to justify the reading of documents together for this purpose, that there should be a document signed by the party to be charged, which, while not containing in itself all the necessary ingredients of the required memorandum, does contain some reference, express or implied, to some other document or transaction. Where any such reference can be spelt out of a document so signed, then parol evidence may be given to identify the other document referred to, or, as the case may be, to explain the other transaction, and to identify any document relating to it. If by this process a document is brought to light which contains in writing all the terms of the bargain so far as not contained in the document signed by the party to be charged, then the two documents can be read together…"
"The object of the Statute was to prevent fraud and perjury by taking away the right to sue on certain agreements if only established by verbal evidence ... The object of the statute being merely to exclude parol evidence, any writing embodying the terms of the agreement and signed by the person to be charged is sufficient..."[3]
"... the court is not in quest of the intention of the parties, but only of evidence under the hand of one of the parties to the contract that he has entered into it...."[4]
"The question is not what is the intention of the person signing the memorandum, but is one of fact, viz., is there a note or memorandum of the promise signed by the party to be charged?"[5]
The authorities
"ONdigital and its shareholders will guarantee all funding to the FL outlined in this document"
a) the requisite written document must actually record the agreement of guarantee or be a note of it and none of the three documents relied on (Initial Bid, Revised Bid and June contract) did so. The Initial Bid did not record any agreement because it was subject to contract as was the Revised Bid. The June contract referred to further negotiation.
b) The only written document (the Initial Bid) did not record all the material terms of the alleged agreement of guarantee because it referred only to the funding of the Initial Bid itself (£240m not £ 315m); and
c) None of the documents relied upon by the League were signed by a person authorised by Carlton and Grenada to do so. The Initial Bid was expressly subject to contract.
The defendants' submissions
Guarantees signed by the guarantor
a) the agreement itself is in writing; or
b) there is some memorandum or note of the guarantee; and
in each case the guarantor must sign. Any note or memorandum must postdate the main contract because the memorandum or note must be of "the Agreement upon which such Action shall be brought".
In what capacity must the note or memorandum be signed?
"Demurrage guaranteed and payable directly by charterers to owners. However Marti guarantees about outstanding demurrage, if any, and for balance freight"
a) Marti signed the page containing clause 24 as a contracting party, in which case the prior oral agreement of guarantee was subsumed in the written agreement signed by Marti on its own account so that there was a written agreement of guarantee signed by the person to be charged therewith and enforceable in the first of the two ways prescribed by the Statute;
b) Marti signed the charterparty, including clause 24, solely as agents of the charterers, in which case the signature, although affixed as agent for the charterers, was nevertheless a note or memorandum of the prior oral agreement. It was irrelevant with what intention or in what capacity Marti signed.
Accordingly, since there was no dispute that an agreement of guarantee had been made, it did not matter which analysis was correct. Lord Brandon's analysis illustrates the distinction between an agreement and a note or memorandum thereof.
Guarantees signed by the agent
"[D] has been with us today, and stated that he had arranged with your client [P] for sale to the latter of the Golden Lion for £ 950. We therefore send herewith draft contract for your perusal and approval."
This was held by the Court of Appeal to be insufficient as a note or memorandum. James LJ held that the only authority given to the solicitor was to prepare a formal document. Even if the letter had said that D had "told us that he has sold the property to you for £ 950" this would merely have been the communication of a fact. The signature would not make it a binding memorandum, not being affixed eo intuitu. The draft sent was not the same contract as had been agreed and a statement of the reason why it was being sent was not a memorandum signed by someone authorised by the person interested to sign it as binding. Bagallay LJ regarded the agreement reached as conditional upon a formal contract and said that the authority conferred on the solicitor by D was not authority to convert it into an absolute agreement. Lush LJ held that in order to satisfy the statute a note or memorandum must be one which the principal had authorised the agent to sign as a record of the transaction and that the authority actually given to the solicitors was merely to prepare a formal draft contract to be sent to the other side for perusal and approval.
"The unintentional by-product of satisfying the Statute may be produced as completely by a note or memorandum signed by an agent of the party as by a note or memorandum signed by the party himself, provided, of course, that the agent had authority to sign the particular note or memorandum".
"Received of [L] the sum of £ 50 on the purchase price £ 590 for the house and premises and land…The balance of the purchase price to be paid on or before March 25th 1918. Purchase price £ 590. Deposit £ 50. Balance £ 540."
N signed the receipt.
"I need not trouble you to send me another contract as the one which your client has signed is, I think quite sufficient".
The "one which your client has signed" was a reference to the signed receipt.
Signature
If the agreement was not in writing signed by a person lawfully authorised, was there a note or memorandum signed by a person so authorised?
"After having made the above corrections you are herewith authorised to sign the above on behalf of Owners".
Mr Hindley appears to have received a copy of this e-mail because he e-mailed it to "Lisa", a Howe Robinson employee, asking for a copy of the charterparty so as to check the comments.
"Trustworth/Salgaocar should have had ample time to review cp and comments below by now
Please push for a signature from both
If guarantor doesn't sign we need to have a guarantee letter drawn up as well
But sufficient for us if they co-sign the cp
Please forward a copy of the corrected cp signed on our behalf"
For the Owners
GOLDEN OCEAN GROUP LIMITED, BERMUDA
By e-mail authority received from
GOLDEN OCEAN MANAGEMENT AS
Dated 17th July 2008
For and on behalf of
HOWE ROBINSON SHIPBROKERS,LONDON
Director
As Broker Only."
I call this "the working charterparty".
Possible memoranda
The working charterparty
The Howe Robinson stamps
"I would like to make it clear that no other documents (i.e. other than the recap) in respect of either the charterparty or the guarantee have been signed by Howe Robinson on behalf of either Trustworth or SMI. So far as we are aware the charter party was never actually signed by Trustworth or SMI"
although that statement does not deal in terms with whether Howe Robinson drew up the working charterparty on behalf of SMI.
Micawber
Guarantee or promise to get one?
Howe Robinson's authority to bind SMI
Summary so far
a) that Golden Ocean has a well arguable claim (i) that the charter and guarantee were valid contracts; (ii) that Trustworth repudiated the charter; (iii) that the guarantee is an agreement in writing which does not fall foul of the Statute of Frauds; and (iv) that SMI is, therefore, liable to it in respect of Trustworth's repudiation of the charter;
b) that the claim against SMI is governed by English law so that it is open to the Court to exercise jurisdiction on that account.
The proper law of the claim against Mr Salgaocar for breach of warranty of authority
"(1) To the extent that the law applicable to the contract has not been chosen in accordance with Article 3, the contract shall be governed by the law of the country with which it is most closely connected. ...
(2) Subject to the provisions of paragraph 5 of this Article, it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence ....
(5) Paragraph 2 shall not apply if the characteristic performance cannot be determined, and the presumptions in paragraphs 2, 3 and 4 shall be disregarded if it appears from the circumstances as a whole that the contract is more closely connected with another country.
"I accept the defendants' submission that once it is seen that there is no choice of applicable law satisfying par. 2 (i) of the schedule, the question of choice and absence of choice becomes irrelevant to the question of ascertaining with what State the contract is most closely connected. Similarly to refer to the contemplation by one party or another that certain local laws may or may not be relevant is to be influenced by considerations of inferred choice and connection with legal systems and not with the question of performance and the location of performing parties."
This passage was quoted with approval in Samcrete Egypt Engineers and Contractors S.A.E. v Land Rover Exports Ltd [2001] EWCA Civ 2019.
Forum conveniens
"Article 3
Freedom of choice
1. A contract shall be governed by the law chosen by the parties. The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or a part only of the contract."
"Under the law of England and Wales a contract may be made–
(a) by a company, by writing under its common seal, or
(b) on behalf of a company, by any person who, in accordance with the laws of the territory in which the company is incorporated is acting under the authority (express or implied) of that company".
Non disclosure
Conclusion
Note 1 Mr Hindley’s e-mail to Mr Salgaocar of 8th January 2008 [C/1-2] refers to “account to be guaranteed by [SMI]”. Mr Hintz’s e-mail of 9th January to Golden Ocean [C/3-4] refers to his having “offered to chars – account to be guaranteed by [SMI]”. The e-mail to Mr Hindley does not appear to be in the papers. [Back] Note 2 “An Act for prevention of Frauds and Perjuries. For prevention of many fraudulent Practices which are commonly endeavoured to be upheld by Perjury and Subornation of Perjury”. [Back] Note 3 At 98 per Lindley LJ. [Back] Note 4 At 99 per Bowen LJ. [Back] Note 5 At 100 per AL Smith LJ. [Back] Note 6 When the matter comes to trial it will be necessary to assemble a bundle of the e-mail exchanges between the parties and Howe Robinson and between the brokers themselves in chronological order; and probably helpful to have in addition a separate bundle containing only the communications between the brokers. At present the correspondence is spread over a number of exhibits. What was said to be a chronological bundle was prepared during the course of the hearing at my request; but it omits a number of relevant documents. It is also apparent that there are further negotiating e-mails not currently exhibited anywhere. [Back] Note 7 As was Griffiths v Young [1970] Ch 675, unless, as Lord Denning thought, it could be supported on other grounds. [Back] Note 8 In that case the Court thought that a guarantee given “in consideration of your agreeing, at our request, from time to time to supply on credit to P such goods as he may require and you may think fit to supply” was not binding until the first supply: sed quaere. [Back] Note 9 The meaning is somewhat obscure. There was no “document which in fact contained the proposed terms”. The sense would appear to be that the solicitor was not authorised to sign any document recognising the agreed terms. [Back] Note 10 Para 48 states that documents sufficient to satisfy the Statute include the working charterparty and the e-mails of 8th January. [Back] Note 11 In Samcrete Egypt Engineers v Land Rover Exports Ltd (see para 135 ) the Court of Appeal held that there was no room for doubt that the obligation characteristic of the performance of a guarantee (which is somewhat analogous to a warranty of authority) was the payment of money by the guarantor (para 38). The Giuiliano and Lagarde Report is to the same effect (see para 36 of the judgment). The Court also held that in the absence of an express or inferred choice of law under Article 3, the Article 4 (2) presumption should only be disregarded in circumstances which clearly demonstrated the existence of connecting factors justifying the disregard of the presumptions in Article 4 (2). [Back] Note 12 “In my view it would be unjust to the plaintiff to prevent him from proceeding in Courts where the result of his bargain would be to produce success and to force him to proceed in Courts where the result would or might be that the defendants escaped from their bargain”: per Parker, LJ at 53. [Back] Note 13 Cf Samcrete where Article 3 was inapplicable in circumstances where the English choice of law/jurisdiction clause proferred by Land Rover had been deleted by Samcrete, the guarantor. [Back]