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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Kyla Shipping Company Ltd v Bunge S.A.  EWCA Civ 734 (20 June 2013)
Cite as:  EWCA Civ 734
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ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE HONOURABLE MR JUSTICE FLAUX
Strand, London, WC2A 2LL
B e f o r e :
THE RIGHT HONOURABLE LADY JUSTICE GLOSTER
THE RIGHT HONOURABLE SIR ROBIN JACOB
| KYLA SHIPPING COMPANY LIMITED
|- and -
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Dominic Kendrick QC & Mr N G Casey (instructed by Reed Smith LLP) for the Respondent
Hearing dates: 5th June 2013
Crown Copyright ©
Lord Justice Longmore:
"What is the effect on the doctrine of frustration of a clause in a time charterparty which requires Owners maintain H & M insurance at a stipulated level? In particular, is the insured value res inter alios acta when considering the Owners' obligation to repair damage or does it create an assumption of risk and responsibility on the Owners to repair hull damage up to this figure?"
He dealt with the application (as is usual) on the papers and said that the question of law:-
"raises a question of general public importance. I do not accept that it will only arise on unusual facts. I am satisfied that the decision of the arbitrator on this question is open to serious doubt and that the statutory requirements are met."
The reference is to section 69(3) of the 1996 Act.
i) on a correct analysis of what was decided, the case turned on the correct construction of particular clauses in a particular charterparty;
ii) he was not convinced that there would be a real prospect of success if permission were given for an appeal to the Court of Appeal;
iii) the case was not a case of general importance. The judge said that the real reason why the dispute arose was because the Owners chose to walk away from the charterparty without repairing the ship in circumstances where underwriters were "quite prepared and amenable to repair the ship", and so there is a real sense of self-induced frustration; and
iv) the interests of justice favoured finality.
"I can envisage that if a judge had in truth never reached "a decision" at all on the grant or refusal of leave, but had reached his conclusion, not by any intellectual process, but through bias, chance, whimsy or personal interest, an appellate or other court might find a way to intervene."
"as seeking to express a distinction between a decision however flawed by error and an apparent decision which, because of something which has gone fundamentally wrong in the process, cannot properly be called a decision."
"If, as is accepted, there is a residual jurisdiction in this court to set aside a judge's decision for misconduct then there can be no reason in principle why the same relief should not be available in the case of unfairness. Each is directed at the integrity of the decision-making process or the decision-maker, which the courts must be vigilant to protect, and does not directly involve an attack on the decision itself."
As Rix LJ pointed out in CGU v AstraZeneca para 50:-
"What [is] in question [is] not the correctness of the reasons but their adequacy"
and at para 79:-
"What one is looking for is not merely an error of law, but such a substantial defect in the fairness of the process as to invalidate the decision."
As Rix LJ also pointed out at para 80:-
"perversity … is not enough."
"There may be a temptation, even an unconscious one, to present an unfavourable decision as one which is not wrong but arrived at unfairly. But in the nature of things it is likely to be an exceptionally rare case where the submission of unfairness is justifiably advanced. The courts will not permit the residual jurisdiction, which exists to ensure that injustice is avoided, to become itself an unfair instrument for subverting statute and undermining the process of arbitration."
i) that Flaux J did not in terms say that the question of law was not of general importance but merely that the case turned on "particular clause in the particular charterparty" and was "very much on its own facts". Those observations were, in any event, plainly correct as a reading of his main judgment reveals; and
ii) that the requirement that the question be a "question of general importance" does not presuppose an appeal. It is a jurisdictional requirement that leave to appeal cannot be given "unless the court considers that the question is one of general importance". Even if therefore the judge had committed some procedural unfairness in reaching a conclusion that the question was not of general importance, his second reason for refusing leave (namely that there was no real prospect of success) would provide an insuperable obstacle to this court exercising the narrow residual jurisdiction relied on.
Lady Justice Gloster:
Sir Robin Jacob: