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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 >> A/S Dan Bunkering Ltd v F G Hawkes (Western) Ltd & Ors  EWHC 3141 (Comm) (30 November 2009)
Cite as:  EWHC 3141 (Comm)
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| A/S DAN BUNKERING LIMITED
|- and -
|(1) F G HAWKES (WESTERN) LIMITED
|(2) ALANI SHIPPING CO (UK) LIMITED
|(3) DAVID JOHN ORRELLS
Neil Hart Esq (instructed by Morgan Cole) for the Defendants
Hearing dates: 15th – 17th July 2009; 23rd July 2009;
Further written submissions 29th July 2009
Crown Copyright ©
Mrs Justice Gloster, DBE:
"M/V Hohefels and/or master and/or owners and/or charterers and/or managers and/or operators and/or Alani Shipping Co Ltd".
i) Dan contended that Alani Cyprus was a chartering vehicle for FGH, and that, although third party cargoes were carried on some of the vessels, that was simply as a means of reducing the net shipping cost to FGH.
ii) FGH contended that, in effect there was an arm's length relationship between FGH and Alani Cyprus/Alani UK/Mr. Orrells. Orrells and FGH booked space with Alani Cyprus, through Orrells/Alani UK in the same way that it would have done with any other shipping company.
"Please note that as from October, all F G Hawkes Biz will be dealt under the name of Alani Shipping Co Ltd in Cyprus. F G Hawkes will guarantee all orders and therefore, please let us know what kind of documents you will need (from FG hawkes) to cover such operations.
Note that although FG hawkes will guarantee the invoices, it should only be addressed to Alani Shipping Co Ltd."
"It would satisfy management here if FG Hawkes could sent [sic] short letter to us confirming they are liable for payments to Dan-Bunkering from Alani Shipping Co Ltd "
"In consideration that Alani Shipping Company Ltd, Limassol, Cyprus is our agents and representatives in what the maritime and transportation of our cargoes are concerned, we F G Hawkes (western) Ltd, guarantee their performance and we renouncing the benefit of the right to have the default of the principal debtor proved and all other privileges accordingly to the prevailing law, hereby unconditionally and irrevocably guarantee as co-debtor for the due performance of the bunkers orders by Alani Shipping Company Ltd.
In case Messrs. Alani Shipping Co Ltd will not perform and observe their obligation under their contract (s) with A/S Dan Bunkering, we, F G Hawkes (Western) Ltd, will effect the performance of the contract as guaranteed as if it would be in our name and any due payment will be made on your first written demand whilst all other claims will be settled after proof of default of the principal debtor on your first written demand.
This guarantee and all rights, obligations and liabilities arising hereunder shall be construed according to English law. Any dispute shall be referred to the Arbitration in London according to the arbitration clause of the governing contract.
This guarantee shall remain valid under our written confirmation otherwise.
For and on behalf of
F. G. Hawkes (Western) Limited
[in manuscript] F G Hawkes"
The manuscript signature, "F G Hawkes", was in a distinctive hand, with the "H" of "Hawkes", resembling an "A". It was common ground by the end of the trial that the signature was not in Mr. Hawkes' handwriting. As I have already stated, the typed wording and format were in similar terms to the guarantee given in respect of the Morgenstond.
The principal contentions of the parties
i) The Guarantee was given by someone with actual authority so to do:a) The signature on the Guarantee was probably made by someone employed or engaged by FGH in its Swansea office who had actual authority to, and regularly did, sign documents on behalf of Mr. Hawkes and his brother, Darren Hawkes, operations manager at FGH ("Mr. Darren Hawkes"). Such person had actual authority to sign the Guarantee.b) Alternatively, the Guarantee was signed byi) Mr. Orrells, orii) by someone employed or engaged by Mr. Orrells in Maidstone, and authorised by him to sign the Guarantee.Mr. Orrells had express actual, or implied actual, authority to sign the Guarantee (and, if the Guarantee was signed by an employee or agent, directed the employee or agent to do so on his behalf).
ii) Alternatively Mr. Orrells had ostensible authority to sign the Guarantee, even if he did not have actual authority to do so; (and, if the Guarantee was signed by an employee or agent, directed the employee or agent to do so on his behalf).
iii) Alternatively, in any event, even if Mr. Orrells did not have actual or ostensible authority to sign the Guarantee, Mr. Orrells had actual, implied or ostensible authority to represent to third parties such as Dan that a guarantee was valid, and, by forwarding the Guarantee as he did, he so represented. Dan relied on that representation. Accordingly FGH was now estopped from denying the validity of the Guarantee.
i) The Guarantee was not signed by anyone authorised on behalf of FGH.
ii) There was no evidence to support Dan's case that an unidentified worker at FGH signed the guarantee with actual authority.
iii) The evidence did not support the allegation that Mr. Orrells had either express actual authority from FGH to sign the Guarantee or implied actual authority from FGH to do so; it therefore followed that nobody authorised by him could have had actual authority to do so. In particular, the fact that Mr. Orrells specifically asked Mr. Hawkes to sign the three guarantees of the time charters relating to the Morgenstond, Baltic Straight and Manfred.
iv) There was no evidence to support Dan's case that Mr. Orrells, or anyone authorised by him, had ostensible authority to sign the Guarantee.
v) If Mr. Orrells lacked ostensible authority to sign the Guarantee, Dan would have to present very cogent evidence that Mr. Orrells, or one of the agency companies with whom he was associated, had nevertheless been clothed with an additional, specific, ostensible authority to represent that the disputed guarantee had been validly signed. There was no such evidence.
The relevant legal principles
"An 'actual' authority is a legal relationship between principal and agent created by a consensual agreement to which they alone are parties. Its scope is to be ascertained by applying ordinary principles of construction of contracts, including any proper implications from the express words used, the usages of the trade, or the course of business between the parties. To this agreement the contractor is a stranger; he may be totally ignorant of the existence of any authority on the part of the agent. Nevertheless, if the agent does enter into a contract pursuant to the 'actual' authority, it does create contractual rights and liabilities between the principal and the contractor."
"An 'apparent' or 'ostensible' authority [...] is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the 'apparent' authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract."
Summary of the position taken by the respective parties in evidence
i) He had had various conversations with Mr. Marcano in 2006 in which effectively Mr. Marcano stated that Alani Cyprus was being established as the new chartering arm of FGH and that all obligations of Alani Cyprus would be fully underwritten by FGH. He considered that Mr. Marcano was authorised to make comments to this effect on behalf of FGH. Mr. Marcano also told him that Mr. Orrells, as the chartering manager of FGH, was the appropriate person to provide a valid guarantee from FGH.
ii) In August 2006 Dan performed various credit checks on FGH. It obtained a Lloyd's MIU company report on FGH dated 24 August 2006. This stated inter-alia as follows:"Directors:Mr Frederick Geraint Hawkes – Managing Director.Ms Janis [sic] Hawkes – Director & Company Secretary.ManagersMr David Orrells – Chartering Manager (David Orrells & Co).…Operations…In the past, FGH has voyage chartered tonnage to meet its import requirements, with vessels being loaded from Brazil, China, Malaysia, Europe, and the USA. However, in early-2006 a decision was made to move over to time-charter-trip charters with the company expanding the role of David Orrells in Maidenhead, to include the booking of additional 3rd-party freight to supplement plywood cargo imports. FGH generally lifts one vessel per month from China/Malaysia into the UK with discharge being handled at Londonderry in Northern Ireland, Swansea in Wales, Glasgow in Scotland, and in Liverpool for England. Discharges may also be arranged into the Thames estuary although we are yet to confirm this. So far it has taken three vessels on time-charter-trip terms, the Luxury SW (built 1999, 23,519 dwt), Ivory Star (built 1990, 26793 dwt) and Clipper Frontier (built 1996, 29,458 dwt). All three are understood to have been bunkered at Singapore and topped off at Gibraltar, although supply is also sought at other ports. It is currently negotiating another charter at this time. We are told that the flexibility it obtains from time-charter-trip arrangements have been very much welcomed by the business community and it is expected to grow its 3rd-party break-bulk freight activity in the next year.Mr. David Orrells of David Orrells and Co, along with a Germany-based colleague is responsible for the chartering and freight booking functions. However, we are reliably informed that all fixtures and supplies are contracted in the name of FGH itself."(I comment, however, that there was no reference to Alani in the report and that as at its date no vessels had been chartered in Alani's name).
iii) As a result, Mr. Fulton believed that Alani Cyprus, working in association with Alani UK and Alani GmbH, was the chartering arm of FGH.
iv) The first time that Dan was in correspondence with Mr. Orrells was upon receipt of the Guarantee by the latter's e-mail dated 12 December 2006. Dan never received or asked for the original copy of the Guarantee. Mr. Fulton believed that the copy sent by e-mail was satisfactory and had no reason to believe that it was not genuine. Dan would not have continued to supply bunkers to Alani Cyprus on an ongoing basis without the Guarantee from FGH.
v) After Mr. Marcano left Alani Shipping in June 2007, Mr. Fulton dealt with Mr. Orrells in relation to bunkers supplied by Dan to Alani Cyprus.
vi) After non-payment of the sums claimed under the Guarantee, he and/or a colleague, Mr. Claus Klausen had had a number of conversations with Mr. Marcano. He produced transcripts of tapes of four such conversations, although more took place. In such transcripts, Mr. Marcano stated that he had forwarded the wording of the proposed guarantee to Mr. Orrells, and that Mr. Orrells had e-mailed Mr. Marcano with the signed version. In such transcripts, Mr. Marcano further stated that on several occasions Mr. Hawkes would just tell Mr. Orrells or himself, over the telephone, to go ahead and sign documents such as an "LOI" (in context, likely to have been a letter of indemnity).
vii) Subsequently, following on from 15 August 2008, Mr. Fulton stated that he had been "closely liaising" with Mr. Marcano in order to obtain a witness statement from the latter, since at that date Mr. Marcano had appeared prepared to provide such a statement. On 20 May 2009 Mr. Fulton sent Mr. Marcano a draft witness statement, prepared in conjunction with Clyde and Co (Dan's solicitors), which Mr. Fulton said was based on his conversations with Mr. Marcano and accurately reflected the content of such conversations. The draft statement included the following passages:"15. On 4th December 2006, whilst co-ordinating the bunker supplies for the 'Morgenstond', Mr. Fulton emailed me asking about the requested letter from Hawkes (Exhibit the December 06 email chain of emails that attached the guarantee of December 06).16. In response to this request, I contacted Mr. Orrells about obtaining a guarantee from Hawkes. [ANDRE PLEASE CONFIRM – WE CAN DELETE THIS PARAGRAPH]17. I exhibit at AM1 pp the email from Mr. Orrells to Mr. Fulton which attached the signed Dan-Bunkering guarantee.18. This was normal procedure. Hawkes asked Mr. Orrells and myself to carry out the chartering activities of Hawkes and we did so on his behalf. We had no standing in the market and since Hawkes was an established trader we advised Mr Hawkes that he would need to guarantee our charters and purchases of bunkers. Mr Orrells was the main contact with Mr Hawkes but I spoke to Mr Hawkes quite regularly. Mr Hawkes made it clear that we should provide Hawkes' guarantees for whatever contracts were necessary. We would regularly provide guarantees or letters of indemnity on behalf of Hawkes and with his authority. For example, [ANDRE – CAN YOU RECALL A GOOD EXAMPLE OF THIS? THE EXAMPLES WE HAVE ARE WHEN ANDRE SIGNED AS ALANI GMBH] Mr. Orrells would get various documents signed by Hawkes and there was an understanding at the time that Mr. Orrells or indeed myself could sign documents for and on behalf of Mr. Hawkes. I therefore did not think anything of the guarantee which had been sent by Mr. Orrells to Dan-Bunkering in December 2006.19 [EXHIBIT VARIOUS DOCUMENT SIGNED BY ORRELLS AS HAWKES, FOR AND ON BEHALF OF HAWKES, IN HIS OWN NAME]20. Regarding the guarantee provided to Dan-Bunkering by David Orrells in December 2006, it would seem that as the guarantee emanated from David Orrells' email account, that Mr. Orrells either got Mr. Hawkes to sign the guarantee or that he signed the guarantee himself. There was nothing unusual about this. Mr. Orrells would regularly sign guarantees, charters or indemnities on Hawkes' behalf. He confirmed to me that Mr. Hawkes had authorised him to do so."
viii) However, on the same date Mr. Fulton said that Mr. Marcano telephoned him and said that he would not be willing to sign the statement in its existing form. According to Mr. Fulton, Mr. Marcano said:"I am afraid to give my own opinion on this issue as I do not know what will happen to me if I did so ... I cannot give my own opinions."According to Mr. Fulton, Mr. Marcano conveyed to him the impression that he was frightened of Mr. Hawkes. Subsequently he refused a request from Clydes to sign the statement, although at no time did he deny that the facts contained with the draft witness statement were correct. He was merely unwilling to put himself forward as a witness.
ix) On 22 July 2008, Mr. Fulton wrote to Mr. Hawkes at FGH explaining that Alani Cyprus had failed to pay the invoice sum and that accordingly Dan was looking to FGH under the terms of the guarantee to pay the outstanding sums due. Mr. Fulton explained that:"… we have been unable to get in contact with Mr Orrell for the past week and not getting any reply to e-mails either. "
x) Mr. Fulton subsequently spoke to Mr. Hawkes on the telephone on 30 July 2008. He stated that Mr. Hawkes did not seek to suggest in the course of that short conversation that there were any doubts regarding the authenticity of the Guarantee. Mr. Hawkes said that he would need to receive a copy of it to refresh his memory but would be open to assist Dan in the matter.
xi) Mr. Fulton followed up this telephone conversation with an e-mail on the same date, which attached copies of the invoices. There was no suggestion in that e-mail that during the course of the telephone conversation Mr. Hawkes had denied the validity of the Guarantee. FGH did not reply to this e-mail.
"when I was interviewed at Stansted airport in June 2007 for the position at Alani UK, I asked Mr Orrells, who was interviewing me, about the financial security of Alani. Mr Orrells informed me that Alani was 100% backed financially by [FGH]".
The statement was subject to a hearsay notice because Mr. Pastoors was out of the jurisdiction.
i) It was not his signature on the Guarantee and he had never seen the document until a copy was provided to him on 30 July 2008 by Mr. Fulton. Dan did not contact FGH at the time that the Guarantee was purportedly provided to check that the Guarantee had been given with FGH's authority, nor did Dan ever contact Mr. Hawkes or his staff during the course of its trading relationship with Alani Cyprus.
ii) He gave no-one permission to sign the Guarantee because nobody signed guarantees on behalf of FGH without him knowing about it and authorising it. Indeed he would normally have signed a guarantee himself. He certainly did not know about or authorise the Guarantee.
iii) He did not give authority to Mr. Orrells, or any of the Alani companies, to sign the Guarantee. Mr. Orrells would certainly have known that, if FGH was being asked to underwrite Alani's liability, then Mr. Orrells would have had to raise the matter with Mr. Hawkes. Mr. Orrells was not an employee of FGH.
iv) The fact that Mr. Orrells expressly asked Mr. Hawkes to sign the guarantees for the Morgenstond, Baltic Strait and Manfred time charters showed that the former had no authority to sign guarantees on FGH's behalf and that he knew he specifically had to ask Mr. Hawkes to do so.
v) So far as Mr. Marcano was concerned, Mr. Orrells introduced him to Mr. Hawkes in May 2006. Mr. Marcano was never authorised to sign anything on behalf of FGH.
vi) FGH never represented to Dan that either Mr. Orrells or Mr. Marcano had authority to sign the Guarantee on its behalf, or to represent that the Guarantee had been validly signed.
vii) The Lloyd's MIU Report was prepared without reference to him and was full of errors, as was a subsequent one prepared in 2008. FGH did not have an in-house chartering arm or broker, or control, or have any interest in, Alani Cyprus.
viii) Once the vessels began to be chartered in the name of Alani Cyprus, no further bunker invoices were sent by Dan to FGH, although they had been previously when the vessels were chartered in the name of FGH.
ix) Originally Mr. Orrells acted as FGH's broker in booking cargo space on its behalf on various vessels. Mr. Hawkes described the various changes in the business relationship between FGH and Mr. Orrells as follows:"26. As far as I am aware, until they began trading as Alani UK/Cyprus/GmBH, Mr Orrells and his business partner Mr Marcano worked on behalf of David Orrells & Co, Goodfight or Aquila.27. On 5 May 2006, whilst I was attending a ship-brokers dinner …, Mr Orrells and Mr Marcano met me and over a drink before dinner they made me a business proposal. Prior to that meeting I had never met Mr Marcano.28. At that time FG Hawkes Ltd's turnover was steadily increasing and Mr Orrells was finding it increasingly difficult to book cargo space on our behalf. He told me that the problem was caused by our increasing preference for using container ships but with break-bulk cargoes, and that finding suitable vessels was becoming difficult. …29 Mr Orrells and Mr Marcano explained that they intended to set up a ship chartering business. The idea was that their new company would act as a disponent shipowner, chartering in ships and sub-letting space on board. They wanted to establish what the demand would be from potential key customers, and to sound me out to see if FG Hawkes Ltd would be one of them. They were looking for a close relationship with FG Hawkes Ltd, because to start up the venture they wanted to be sure they could count on us to send them business. For me, the hope was that the new venture would provide better flexibility and capacity (because they would be chartering in a whole ship in their own right, rather than just trying to find cargo space for us on another ship). I had no problem with being the new company's main customer. In some ways that suited me – we would get better service (in the sense that they would come to us first to offer us cargo space in their vessels, and be flexible about our requirements), and hopefully better rates from a company who saw us as one of their main customers, and who we had helped get on its feet by sending it business in the early days.30. Before trading as the new venture, Mr Orrells and Mr Marcano needed my company's help in two ways.31. First, during the period from June until September 2006, Goodfight, Aquila or David Orrells & Co chartered a number of vessels acting as brokers for FG Hawkes Ltd. In other words, I agreed to allow FG Hawkes Ltd to be the nominal time charterer and the disponent owner as far as the cargo interests on board the vessel were concerned (other cargoes were carried apart from FG Hawkes cargoes). Mr Orrells (through David Orrells & Co) and Mr Marcano (through Goodfight or Aquila) managed the vessels.32. I agreed to do this at the request of Mr Orrells because they wanted to gain experience and establish a track record in managing vessels, so that they could use that as a springboard for the new business in the autumn of 2006. After managing four vessels … Mr Orrells and Mr Marcano were able to 'go it alone' as Alani, which acted as a charterer in its own right.33. Although FG Hawkes Ltd was the nominal time charterer for these vessels, David Orrells & Co, Goodfight and Aquila (i.e. Mr Orrells and Mr Marcano managed the entire process, from identifying the right vessel, conducting the time charter negotiations through to the loading of the cargo, the ship's voyage and the purchase of bunkers.…35. The other way in which we helped Mr Orrells and Mr Marcano to manage these vessels in the run-up to going it alone as charterers was by paying our 'freight' in advance, rather than after the cargo had been shipped on to the vessel. In fact, I often paid freight in advance even after they started trading as Alani, at first to help them with their cash flow when starting out, and latterly out of necessity, because Alani was so badly run that if we didn't pay in advance our cargo would not be moved.36. I agreed to help in these ways, because I wanted Mr Orrell's venture to succeed as it seemed that his success would benefit my company and its transport requirements (for the reasons I have outlined above), and because at the time I got on well with Mr Orrells and quite liked the man (that has changed). I could also remember what it was like to set up a business and how the early customers can make or break it, especially as regards cash flow.37. At no point did I, or Mr Orrells or Mr Marcano contemplate that my company would have any financial interest in their new venture, such as receiving any profit, shareholding, dividends or the like. Nor did they ask us to invest or take any equity or debt in their business. …"
x) He did not know that on a number of occasions the charter party agreements entered into by Alani Cyprus purported to provide that the latter's obligations were "fully guaranteed by FGH". At one stage in his statement he said that he had only discovered that practice as a result of the current litigation; although in another part of the witness statement he said that "I told Mr. Orrells to stop it immediately when I found out."
xi) During the lifetime of Alani Cyprus, FGH did not place any of its freight needs with any other carrier. However Alani Cyprus, as a charterer, provided freight positions to a great number of parties in addition to FGH. Thus Alani Cyprus was not reliant upon FGH for its livelihood. For example, in relation to a number of vessels the volume of FGH's cargo ranged from as little as 22% to 43%. On two occasions no cargo at all was carried for FGH, and in relation to the Morgenstond (which was subject to FGH's guarantee), only 32% of the cargo was referable to FGH. Likewise in relation to the Hohefels itself, only 42% was referable.
xii) Mr. Hawkes was made aware of Alani Cyprus' increasing financial difficulties during the course of 2008. Although FGH helped by paying up front, due to Mr. Orrells' mismanagement of the various vessels, its cargo got into more and more trouble. Mr. Hawkes had to help sort out the financial problems which Mr. Orrells had created. When Alani Cyprus and Alani UK ceased trading, FGH had pre-paid freight for cargo on two vessels, with the result that FGH had to take over the charters in relation to those vessels.
The parties' submissions
i) the lack of credibility of Mr. Hawkes as a witness;
ii) the de facto or evidential presumption that the Guarantee is what it purports to be, namely a guarantee signed on behalf of FGH;
iii) the fact that, apparently, FGH had made no attempt to find out who had actually signed the Guarantee, despite the fact that other relevant documents, which had authorised acts on behalf of FGH, and which had not been disowned as forgeries, were clearly signed with similar signatures;
iv) the existence of such other documents, bearing the same signature, which clearly did authorise certain acts to be carried out on behalf of FGH;
v) the fact that Mr. Orrells was authorised to, and did, enter into binding contracts on behalf of FGH and signed contractual documents on its behalf.
i) There was no evidence that an unidentified office worker at FGH would have signed the Guarantee. There was no attempt to cross-examine Mr. Hawkes as to who the relevant office worker might be. The allegation is also inconsistent with Mr. Hawkes' evidence in cross-examination that no-one in his office would sign a guarantee without his being aware of it. It was not an allegation that Dan had ever sought to pursue before, despite having access to Mr. Orrells' Office files as a result of the search and seizure exercise it conducted at his home. Dan had not even raised a prima facie case that (for example) Mr. Hawkes' fellow director, his mother, signed the guarantee, let alone any other nominated employee.
ii) Dan's suggestion that it was telling that FGH had not made any attempts to find out who signed the Guarantee was misconceived, in circumstances where Dan had chosen not to admit that the Guarantee had been signed by Mr. Hawkes himself, and had not advanced any positive case that he (or anyone else) had signed it. If Dan had wanted to develop its unnamed office worker theory, it should have sought disclosure of a list of employees, and documents relating to their function, and at the very least named a shortlist of suspects. The evidential burden was not upon FGH to exculpate one by one all of its employees, in whichever unidentified locations (potentially Londonderry, Bristol, Glasgow, Leeds or Swansea), the unnamed employees are said to have worked in.
iii) Thus, although Dan contended that FGH's case that the Guarantee was signed without Mr. Hawkes' authority depended on the evidence of Mr. Hawkes, this was not so. Rather, FGH's defence depended upon a lack of any particularised case stated against it, and a lack of any evidence from which such a case could be inferred.
iv) In reality, Dan's only arguable case was that the guarantee was signed by Mr. Orrells. But this was unsustainable on the evidence. In particular:a) The alleged implied actual authority would be inconsistent with the course of dealings between Alani Cyprus and FGH on three occasions (one before and two after the date of the Guarantee, 12 December 2006), when Mr. Hawkes was specifically asked to provide and sign guarantees on behalf of FGH to secure the liabilities of Alani Cyprus under various time charters.b) It was unnecessary for Alani UK to have implied actual authority to provide a FGH guarantee for Alani Cyprus' bunker liabilities, because it was unnecessary for such a guarantee to be in place before Alani Cyprus could buy bunkers. Thus there was no need for the alleged actual authority to be implied into the relationship between FGH and any of Alani UK, Alani Cyprus or Mr. Orrells.c) The fact that Mr. Orrells may have signed, in FGH's name, rain letters and letters of indemnity relating to cargo operations for FGH cargoes, was not relevant and no comparison could be made, or basis put forward for implying authority simply because of the existence of such letters. The nature of such operational communications was entirely different from a guarantee. Although Mr. Hawkes may have, if not authorised, then, at least, tolerated, the signing of rain letters and letters of indemnity by Mr. Orrells, a guarantee was clearly not the same kind of document, since the latter type of document was liable to (and did) engage FGH in far greater liabilities than the type of risk involved in the signing of an operational document.d) The difference between what were essentially operational documents, such as a rain letter or letters of indemnity, and documents which were liable to (and did) engage FGH in far greater liabilities which ran beyond its control, such as guarantees, was illustrated by the way in which, as shown by the contemporaneous documents, Mr. Hawkes had reacted when he discovered what Alani UK had purported to do in FGH's name. Likewise, in his oral evidence, Mr. Hawkes made it clear that"he didn't like it, he didn't authorise it, he usually didn't even know about it, but even when he did find out about it, it was, by comparison with documents such as guarantees, unimportant."e) But when Mr. Orrells used FGH's name in other contexts, where the risk involved was not simply an operational risk, but of incurring liabilities at Alani Cyprus's discretion, Mr. Hawkes was less sanguine. This point, Mr. Hart submitted, was illustrated, for example, by an e-mail from Mr. Hawkes dated 20 February 2008 to Alani UK, concerning the damage to the goods on board m/v Katarina:"This cant happen again – don't ever use my companies name again Dave in any shipping dealings you have"which was re-sent at noon that day to David Orrells & Co in the following terms:"Don't use my companies name for any purpose whatsoever whilst booking freight ever again".Moreover, Dan had not sought to suggest that either of these emails were "staged".
v) There was no sound basis for the attack on the credibility of Mr. Hawkes.
vi) No weight should be attached to Mr. Marcano's "draft witness statement", since the document was produced in questionable circumstances. Moreover no notes were produced of unrecorded conversations, between Mr. Fulton and Mr. Marcano, and such notes as had been produced from Clydes which were said to have formed the basis of Mr. Marcano's draft statement, provided no basis for the suggestion that Mr. Marcano had reason to be physically afraid of Mr. Hawkes.
vii) No weight should be given to the statement of Mr. Pastoors. Likewise no weight could be attached to a video produced by Mr. Orrells' son, relied upon by Dan as to the nature of the relationship between FGH and Mr. Orrells and the nature of FGH's business.
The court's determination
i) The first letter, which is a letter dated 20 August 2007, authorised the Master of m/v "Port Pirie" to discharge in the rain. The letter is signed "D Hawkes", instead of "FG Hawkes", but the "Hawkes" part of the signature is clearly written in the same hand as the signatory of the Guarantee. This document was found at Mr. Orrells' premises in the course of the search and seizure order. I find on the balance of probabilities that either the document was signed by Mr. Orrells at his office, with Mr. Hawkes' authority, or was signed at FGH's Swansea office, again with Mr. Hawkes' authority, and was circulated to Mr. Orrells for his use.
ii) The second document is a fixture note, dated 3 September 2007, in respect of the M/V "Margarita" cargo, as between Alani Cyprus as disponent owners and FGH as charterers. The signature on behalf of Alani Cyprus was clearly that of Mr. Orrells. The signature on behalf of FGH, in the style "FG Hawkes", is very similar to that on the Guarantee. This document was disclosed by FGH (although it may have originated from Mr. Orrells) and the evidence suggests that it came into existence in connection with a claim by FGH under a goods in transit insurance policy for the cargo carried on board the vessel. Mr. Hawkes' evidence was that arrangements between FGH and Mr. Orrells were very informal and that, usually, no fixture notes in relation to cargo were signed. I find as a fact that the document was prepared by Mr. Orrells, and either signed by him at his offices, with Mr. Hawkes' authority, or sent to FGH's offices at Swansea, where it would likewise have been signed with Mr. Hawkes' authority, and then sent to the recovery agents dealing with the claim. There can be little doubt that the document would have been utilised as a document in the recovery claim.
iii) The third document is another "rain letter" dated 25 January 2007 to the Master of the M/V "Norderoog" signed on behalf of FGH, in the style "D Hawkes". The letter permitted discharge of cargo in the rain at Swansea. Again the signature is very similar to that on the Guarantee. This document was found at Mr. Orrells' premises in the course of the search and seizure order. I find as a fact that either the document was signed by Mr. Orrells at his office, with Mr. Hawkes' authority, or was signed at FGH's Swansea office, again with Mr. Hawkes' authority, and was circulated to Mr. Orrells for his use.
iv) The fourth document is another fixture note, dated 30 June 2008, in relation to the m/v Manfred, between Alani Cyprus (signed for by Mr. Orrells) and FGH. The evidence showed that this fixture note was needed because FGH was taking over Alani Cyprus' obligations in relation to the vessel because of the latter's deteriorating financial position. The signature on behalf of Alani Cyprus was clearly that of Mr. Orrells. The signature on behalf of FGH, in the style "FG Hawkes", is very similar to that on the Guarantee. This document was disclosed by FGH (although it may have originated from Mr. Orrells). Again the probability is that the document was prepared by Mr. Orrells, and either signed by him at his offices, with Mr. Hawkes' authority, or sent to FGH's offices at Swansea, where it would likewise have been signed with Mr. Hawkes' authority.
"I had just had a call from Dan bunkering who is after me for 460K . I am into Alani for 1.4 million usd and probably the same to [a Chinese party]. That is what I know of. So it seems that I will lose 1.9 million usd here. … What gives you the right to question what is Fair or not when I am faced with trying to clear up this fucking mess that Alani has created ... What you have done is used other people's money and credit which is being given on the basis of my company and lost it."
In cross-examination Mr. Hawkes had no adequate explanation of what he meant by the words underlined above.
i) Mr. Hawkes wrote to Mr. Orrells on 30 July 2008, forwarding the e-mail received from Mr. Fulton with a copy of the Guarantee:"This is not my signature is it Dave",and then"I think you and I need to have a chat face to face don't you think".
ii) Mr. Orrells then responded, the following morning:"its not mine either – I have never seen this before in my life. Andre Marcano arranged the bunkers for all of the first vessels and after meeting with Dan Bunkering some time in 2006 he told me one day that he had agreed 30 day credit terms. I think I only spoke to Dan Bunkering twice before Andre left last year and it was in no way about this."I comment this was either a lie on the part of Mr. Orrells, or, in his state of health, he had forgotten the correct position, since not only had he forwarded the Guarantee to Dan but he had also been in communication with Dan.
iii) Mr. Hawkes then emailed Mr Orrells:"Is f g hawkes [western] included in any charter party agreement or guaranteeing anything to do with Tette rickmars." [Another vessel]
iv) Mr. Orrells responded"Yes – they have all been this way since nobody will book a ship to Alani".
v) Mr. Hawkes then responded:"Send me the charter party. After the last time you had used my company name without authorization you were told under no circumstances to use my company name in any transactions you concluded. This was not only made clear verbally but also by e-mail. Why have you done this?"
vi) Mr. Orrells responded:"You know perfectly well that every vessel booked by Alani has been underwritten by FGH. We have discussed this on several occasions."
vii) Mr. Hawkes responded:"When it came to light that you falsely used my company name you were specifically told to stop. I am loosing hundreds of thousands of pounds every day I come into work and you want me to consider your feelings? You have personally cost me I don't know how much yet you expect me not to be upset – I can't believe your attitude. Well lets spell it out shall we Dave. The forged guarantee was done by an employee if Alani as you say although you have no proof although it is clear that the forgery was done by Alani shipping which means you. This is a criminal act and if Alani goes down you personally will not be able to hide behind the limited liability thing.Also you were specifically told not to use my companies name in any transactions – you have ignored this and caused hundreds of thousands of dollars losses. This is not something you can hide behind in your role as a director. Your actions are both fraudulent and criminal.All this and you are giving me grief over my attitude. I am receiving calls from your bunker broker so what do I tell him Dave as you won't talk to him will you?Shall we just direct them to Andre the Brazilian if they can find him?"
i) In his solicitor's declaration in the Rule B proceedings, it was alleged that Dan "knew or likely knew" that the Guarantee was a forgery "from the outset". Such an allegation can only have been made on instructions. There was no evidence to support such an allegation, and it was not made at this trial or put to Mr. Fulton.
ii) Morgan Cole's initial letter denying the claim alleged that:"We can point to other instances where bogus guarantees have been offered without our clients knowledge or consent."However, no such "bogus" guarantee was in fact identified.
iii) Serious, and apparently unfounded, allegations of dishonesty were made against the supervising solicitor on the execution of the search and seizure order.
iv) Serious allegations were made against Mr. Marcano and Mr. Orrells that they dishonestly represented that they were the "chartering arm of FGH". In fact the evidence showed that, notwithstanding that, as matter of law, Alani Cyprus, was operating as a separate corporate entity, and, as such, might not have been acting as agent for FGH, as principal, in relation to all chartering operations, the commercial reality was that FGH was funding to a substantial extent Alani Cyprus' operations, in its own interests, and was using Alani Cyprus as its chartering arm. On any basis there was a very close commercial relationship between the two entities.
Ostensible authority - estoppel
Note 1 In their submissions to the court, both parties agreed that the charterer of the “Hohefels” was Alani Cyprus, notwithstanding that the description of “Charterers” in the Time Charter was “Alani Shipping Charterers of the City of Kent/United Kingdom”. [Back] Note 2 I should say that it was never suggested that Mr. Hawkes, who was clearly the directing and controlling mind of FGH, and in charge of all its day-to-day decisions and operations, did not have the necessary corporate power to delegate the signing of the Guarantee to someone else. [Back]
Note 1 In their submissions to the court, both parties agreed that the charterer of the “Hohefels” was Alani Cyprus, notwithstanding that the description of “Charterers” in the Time Charter was “Alani Shipping Charterers of the City of Kent/United Kingdom”. [Back]
Note 2 I should say that it was never suggested that Mr. Hawkes, who was clearly the directing and controlling mind of FGH, and in charge of all its day-to-day decisions and operations, did not have the necessary corporate power to delegate the signing of the Guarantee to someone else. [Back]