QUEENS BENCH DIVISION
B e f o r e :
|PETER CREMER GMBH & Co||Defendants|
Alistair Schaff was instructed by The Simkins Partnership for the Defendants.
WITH REFERENCE TO R.S.C. ORDER 68 RULE 1 AND THE PRACTICE DIRECTION OF THE MASTER OF THE ROLLS
DATED 9TH JULY 1990 ( 1 W.L.R. 1126):
Crown Copyright ©
Introduction and facts
In this action the plaintiff, Huyton S.A. ("Huyton"), seeks declaratory and injunctive relief to prevent the defendant, Peter Cremer GmbH & Co. ("Cremer"), from pursuing a claim which Cremer has referred to London arbitration by GAFTA. The claim which Cremer wishes to arbitrate seeks to establish that demurrage under a sale contract entered into with Huyton should have been measured at a rate of $6,500 per day, rather than the $11,000 which Huyton insisted upon Cremer paying; to establish further that it was not liable for all or at any rate the larger part ($49,000) of the sum of $65,245.40 likewise paid at Huyton's insistence, on account of guarantee expenses; and to recover sums accordingly.
The factual background starts with the sale contract dated 13th September 1995 for the shipment and sale by Cremer as seller to Huyton as buyer of 30,000 mt Romanian milling wheat plus or minus 10% at buyer's option at $175 per mt FOB spout trimmed Constantza in September/October 1995. The contract provided for payment cash against listed documents. Shipped weight, quality, condition, description, sampling and analysis were to be final as certified on loading by SGS. Loading was to take place at 2000 mt per weather working day (Saturdays, Sundays and holidays excluded), with "demurrage max. 11.000. US$ as per C/P...". The charter was otherwise subject generally to GAFTA form 64, which by clause 29 includes provision for GAFTA arbitration in London of "any dispute arising out of or under this contract".
Cremer is based in Hamburg. It had previously contracted to buy equivalent wheat from Romanian suppliers. Huyton is a Swiss company, owned I was told by Sudanese interests, but represented for most purposes by a London company, Agrimpex Co. Ltd. Huyton also had a pre-existing commitment, made 31st August 1994, to sell to Sotisco Trading Company Limited ("Sotisco") of Khartoum "any origin milling wheat in sound good condition, crop 1993/1994 or 1994/1995 at sellers option at $225 per mt C+FFO Port Sudan". Payment under Huyton's contract with Sotisco was by irrevocable letter of credit, which was opened through the Omdurman National Bank. Quality, condition, description and sampling were to be final as certified on loading by an independent surveyor. Sotisco acts, it appears, simply as importer, onselling in this case to Sidco, a buying federation or cooperative established by Sudanese millers.
Agrimpex on behalf of Huyton instructed its regular brokers, J. Gran & Partners Ltd. ("JGP") of London, to charter a vessel to lift the wheat contracted to be shipped by Cremer. The principal of JGP is Mr Jens Gran, and his assistant at the time was Mr Frank Lund. In order to try to ensure that it obtained the most favourable conditions, Agrimpex's policy was, to JGP's knowledge, to charter vessels from their owners or time charterers, rather than on back to back terms from other voyage charterers. On 22nd September 1995 Mr Lund recapitulated to Agrimpex a voyage charter for the "Ithomi" said to have been made with Norwegian Bulk Transport Ltd ("NBT"), under which the freight was $550,000 (increased in a side letter to $650,000) while the demurrage rate was $11,000 per day. The charter included a term whereby owners undertook to release the cargo to receivers at the discharge port against an indemnity if original bills of lading were not available, and identified JGP as "shipbroker". On the same day, NBT chartered in the Ithomi from Olympic Chartering S.A. ("Olympic") under a voyage charter on like terms, providing for freight of $620,000 but demurrage of only $6,500 per day. A week later, the Ithomi was substituted in these arrangements by the Mike K, to which Olympic were also disponent owners. Olympic were it appears time charterers of the Mike K from her owners, Del Scando Shipping Co. Ltd. under time charter dated 22nd September 1995.
It transpires that NBT was owned by Jens ran until February 1995, when it was sold to Mr Gunnar Gran, a nephew of Mr Jens Gran, who until the end of 1995 worked for Messrs. Grieg, shipbrokers of Bergen. Jens Gran continued to retain limited authority to deal with NBT's business after February 1995. These facts regarding NBT were unknown at any relevant time to Huyton as well as Cremer. On the evidence of their own witness statements, neither Mr Lund nor Mr Gunnar Gran appears to have had an active conception of a broker's duties of good faith and integrity. Mr Lund allowed himself and JGP to become involved in acting as brokers for NBT on the head charter from Olympic. He seems to have regarded JGP as owing duties to NBT in relation to the charter to Huyton. He realised that the back to back charter being set up by Gunnar Gran was contrary to Huyton's policy, but he kept silent "to protect the interests of my employer" and, as he put it, to be "as neutral as possible" between two principles for whom he should, in reality, never have been acted at one and the same time in the first place. Mr Gunnar Gran positively instructed Mr Lund to mislead Agrimpex, e.g. by telling him not to mention to Agrimpex that NBT was taking the ship on voyage charter from Olympic (which he also knew to be contrary to Huyton's policy) and, so, not to mention anything about the head charter demurrage rate, as well as by telling him to say that the sub-charter demurrage rate of $11,000 could not be reduced. Accordingly, when Mr Amaslidis of Agrimpex on or about 20th September 1995 asked Mr Lund specifically to seek a lower demurrage rate, Mr Lund reverted to the effect that he was unable to persuade owners to come down. JGP and NBT thus co-operated to mislead Huyton and to act against Huyton's instructions and interests, so that NBT could profit at the expense of Huyton or whoever ultimately bore the demurrage. The upshot of their misconduct was that the charter arrangements were structured to that NBT would make a relatively modest profit of $30,000 out of the freight differential plus, much more significantly, a profit of $3,500 per day on the substantial demurrage which, it was correctly envisaged, would be earned at the load port in Romania.
The Mike K arrived at Constantza on 29th September 1995, giving notice of readiness at 2300 hours. Loading commenced on 31st October and was completed on 14th December 1995. In respect of the shipment and carriage of the cargo, the master of the Mike K signed and issued to Cremer as shipper a bill of lading dated 14th December 1995, showing the consignee as being "to order" and Sotisco as notify party.
Already prior to completion of loading, a protest by Agrimpex at the delay had led at the end of November and beginning of December 1995 to both sides nominating an arbitrator to act in any eventual arbitration. At a demurrage rate of $11,000 a day, and allowing for holidays and other interruptions of time, Cremer's liability for load port demurrage amounted to $496,840.97, as set out in a calculation which was sent by Huyton to Cremer on about 18th December 1995 together with a copy of the charter between NBT and Huyton. However, before receiving this calculation, Cremer had on 15th December 1995 prepared its own preliminary calculation, which did not take full account of interruptions and arrived at demurrage of $533,507.64. It was this calculation which, somewhat curiously, was sent by Cremer to its Romanian seller on 8th January 1998 and it is the sum in it which was deducted by Cremer from the amount it paid at or about that time to its Romanian seller. Cremer has never refunded the extra $36,666.67 to its Romanian seller or informed it of the discrepancy or, indeed, about the present claim against Huyton - the explanation which Mr Birkholz gave me being to the effect that Cremer wants to deal with everything at once, after concluding its claim against Huyton. The odd result is that Cremer is pursuing, for the benefit of its Romanian seller, which knows nothing about it, a claim for about $207,000, on the resolution of which Cremer intends to remit an additional $36,666 which it has undoubtedly owed to its Romanian seller since the beginning of 1996, and that Cremer hopes to recover for its own account about $49,000, which seems to give it a net interest in this litigation of about $12,377, leaving aside interest.
The vessel arrived at Port Sudan on 22nd December 1995. Discharge took place and was completed by 2nd January 1996. The vessel's owners effected discharge, without production of the bill of lading, against, it seems, two indemnities, one dated 16th December 1995 issued in favour of the vessel's owners and Huyton by the Omdurman National Bank, requesting release of the cargo to Sotisco "c/o CIDICO" and a second indemnity issued to the vessel's owners by Huyton itself, likewise requesting delivery to Sotisco or their order. Each indemnity contained an undertaking to produce the bill of lading as soon as available. As to the first indemnity, Agrimpex had requested its local agent to arrange for receivers to issue such a bank indemnity on 21st December, but receivers must, it appears, have anticipated this request, whether because it was standard practice or because of some earlier request.
At about the same time Cremer's shipping agent, Proline of Hamburg, sent a message to JGP, expressed to be "on behalf of our principal ... which is presently the owner of the wheat on board of your good vsl" and asking JGP to advise "how the consignee will rcv the cargo, against presentation of first class bank guarantee??". The request may have been made in the light of the charter, which by then Cremer had received. On or about 22nd December 1995, JGP appears to have replied that the vessel had arrived, that the consignees had surrendered a bank letter of indemnity in lieu of the original bill of lading and the master had on that basis instructed discharging to proceed. Cremer did not protest about or react to this news.
The evidence before me shows that the whole cargo was initially discharged into storage bins of a silo owned by Agricultural Bank at Port Sudan, where, save as to 7251 tons, it remained at all material times thereafter. Sidco was free to call for delivery of all or any part of the cargo in the silo at any time, and did in fact arrange for 7251 tons to be removed between 23rd and 30th December 1995 and transported inland by road or rail to three milling plants in as follows: (i) Khartoum Cereals Milling Plant: 2,576.986m/t; (ii) Ahlia Milling Plant: 1,998.756 m/t; and (iii) 2,675.397 m/t: El Bagair Milling Plant. These 7251 tons were then warehoused and were not available for use in milling pending written inspection certification from the Sudanese Standards and Metrology Organisation, which was only obtained on 15th February 1996. Even then, due to quality issues which persisted, the 7251 tons were not in fact withdrawn prior to 8th July 1996.
On 29th December 1995 Cremer and Huyton received from Olympic notice of a claim to a lien in respect of freight and "undisputed demurrage" at Constantza of $316,468.75 due under Olympic's charter with NBT. The limited amount of demurrage claimed was of concern to Cremer, and was a factor in a developing belief that Huyton could not be trusted. Accordingly, Cremer sought to obtain information from other sources about the actual charter position and rates, whilst telling Huyton no more than that it was checking figures or seeking documents. On 10th January 1996 Cremer received another claim, this time from the vessel's owners, claiming a lien over the demurrage from Cremer in order to cover charter hire said to be unpaid by Olympic. In a further message to Huyton on 11th January, excusing its non-payment of demurrage, Cremer referred to the notices received from both Olympic and the vessel's owners. At the same time it took legal advice from its legal department as to their efficacy.
On 4th January 1996, Sotisco complained to Huyton about the gluten content of the wheat, whilst acknowledging that the contract contained no express term regarding gluten, and ended:
"Finally, pls be notified tht above cargo will be kept in silo at Port Sudan for your account own risk and expense till this quality dispute is finalized."
Contrary to this message, by 4th January 1996, the 7251 tons had in fact been removed inland. Huyton did not at this stage pass on Sotisco's complaint to Cremer. On the contrary, it responded to Sotisco on 3rd and 4th January, rejecting the relevance of gluten content under the contract terms and further relying on the provisions making condition on shipment final, in which connection it said that it would supply the relevant certificate in due course. However, Huyton did on 6th January, without prejudice to its primary position, also send Sotisco a somewhat surprising message to the effect that, as it did not know "how our position with our sellers will be finalised" and as "sellers might ask to take away the goods" therefore "please be ready to put at sellers disposal the goods if so demanded by our sellers". This message did not result from any communication with Cremer about quality, there having been none. Nor was it pursued. Despite Mr Philippas' reluctance to agree to this, it seems to me that it was probably designed to put pressure on Sotisco, by making them ponder the question whether they really were so dissatisfied with the quality.
On 9th January 1996 Cremer presented shipping documents to Huyton's bank, notifying Huyton that it had done so. At 1529 hours on 12th January Huyton informed Cremer that Huyton's buyer was claiming the wheat to be very dry and of poor quality and said that it would have no alternative but to pass on any claim for damages which it might receiver. At 1705 hours on 12th January 1996 Huyton rejected the shipping documents for a number of alleged discrepancies. The extent to which these were actual discrepancies is in issue, but there were, in terms of the documentation stipulated by the sale contract, at least the following real discrepancies at this point in time - (i) no fumigation certificate had been presented as required, (ii) the certificate of origin did not state the bill of lading number or date, and (iii) the radiation certificate did not state that the goods were free from radioactive material. At 1722 hours Huyton also insisted once again that Cremer settle immediately the $496,840.97 claimed for loadport demurrage.
On 15th January 1996 Cremer's administration department responded to Huyton's message regarding demurrage:
"Our legal department has indicated to us that we are indeed in no way partner to the owners and therefore herewith confirm that we will arrange remittance without any further delay. Indeed regret this inconvenience."
The legal advice clearly related to the liens claimed by Olympic and the vessel's owners. The rest of the message, in so far as it seemed to acknowledge liability for the full sum claimed, appears now to have been incautiously expressed by Cremer's administration department, since others responsible for the making and handling of this contract within Cremer were still very exercised by the unproven likelihood, as they perceived it, of a second voyage charter involving much lower loadport demurrage than that which Huyton was claiming from Cremer and a strong, though unproven suspicion that Huyton was trying to defraud Cremer.
By a message also prepared on 15th, but not apparently transmitted until 17th January Cremer responded to Huyton's rejection of the shipping documents. Cremer asserted that the cargo had been "accepted upon completion of discharge" on 2nd January and that Huyton had thereby "waived any right to reject the documents as presented to you on 10th January as well as to refuse to pay for the cargo received". Cremer gave a time limit of 17th January for payment. As to the documents presented, Cremer said that Huyton had also waived any discrepancies by failure to raise them within 48 hours, but that Cremer would without prejudice address them and revert in due course. On 17th January 1995 Cremer extended its time limit to 19th January and otherwise repeated its position, ending that, should they not receive confirmation of payment
"... we will ask for the immediate return of the contractual documents the consequence of which should be evident to you."
In reply on 17th January, Huyton insisted on its position and on rectification of the discrepancies before payment, saying that the rights to reject the goods and the documents were separate rights, and welcoming the fact that Cremer was addressing the discrepancies. Also on 17th, Cremer sent a detailed message addressing the alleged discrepancies without prejudice. It rejected most of them. In relation to the certificate of origin, it indicated that this included all that the Romanian authorities would include. It did not address the limitation of the terms of the radiation certificate. As to the fumigation certificate, Cremer said that
"On you accepting and paying for the documents presented we hereby guarantee that we will send a fumigation certificate at our earliest convenience".
"Our comments/amendments to the documents are given without prejudice and will have no effect on your contractual obligation to pay for the goods after you took delivery".
Huyton in reply at 1631 on 18th January reiterated that Cremer was required to present conforming documents before payment was due, but said that it would nonetheless seek its buyers' agreement to most of them. As to the fumigation certificate, Huyton said:
"This is not good enough. We have to present a fumigation certificate to our buyers in order to get paid and this is not a contract where we are obliged to accept a guarantee...
Of course we will pay your documents when they conform to the contract (including our buyers being prepared to accept your non-conforming documents from us)..."
In a message which appears effectively to have crossed with Huyton's message at 1631, Cremer at about 1622/24 on 18th January informed Huyton that as its deadline had passed without payment
"... we therefore will instruct [the bank] to immediately return the contract documents to us.
Because you have taken delivery of the cargo there is also no longer a need to deal with the discrepancies in the documents as pointed out by you and any guarantee by us in this respect is null and void.
We consider you in breach of contract for refusing to pay for the cargo of which you took delivery."
Agrimpex in reply at 1716 asked Cremer to reconsider its message in the light of Huyton's message at 1631, but Cremer at 1130 on 19th January refused to do so, asserting that:
"The so-called faults in the documents are no longer relevant. You have accepted delivery of the cargo and you must pay for it. ...
Once we have the documents in our hands, we will then take all steps necessary to protect our position."
In reply on 19th, Huyton expressed its surprise and said:
"Your refusal to remedy the defects in the documents clearly amounts to a repudiation of the contract which we hereby accept subject to our pre-existing claims against you. These claims include the right to loadport demurrage ...
We find your argument that you do not have to present conforming documents to be quite incredible. We also regard your obvious threat to present the B/Ls to the ship as unworthy of a company with your good name. ..."
Cremer on 23rd January denied that it had repudiated, adding:
"We also have not declined to remedy the defects of the documents. We only clarified the contract situation by pointing out that we are no longer obliged to do so due to the fact that you took delivery of the goods.
Therefore your refusal to pay for the goods you have accepted constitutes a clear breach of the contract. It is you who have repudiated it, which we hereby accept. As a result we will claim arbitration against you ...."
Huyton on 25th January maintained the correctness of its stance, adding:
"The goods are accordingly at your disposal. However, as we have demonstrated more than once, we were driven to cancel the contract by your refusal to present conforming documents. Since it now appears that you want to present conforming documents, we are prepared, "without prejudice" to our rights to maintain that the contract was validly cancelled last Friday, to let you have a further opportunity to put the documents in order. If you do this before close of business on 31st January, we will pay your invoice less the loadport demurrage (the amount of which we think you have actually agreed) and the costs we have incurred in establishing a guarantee for delivery of the goods without having the documents ...."
Cremer on 25th January supplied Huyton with a revised radiation certificate conforming with the contract terms. Also on 25th it repeated that Huyton was obliged to pay for the goods, on the basis that it had accepted them and had indeed presented a quality claim on 12th January. Cremer went on:
"Therefore it is quite incorrect to say that contract goods are, or even have been, at our disposal at the discharge port. We know from our own sources of information that those goods were delivered to your sub-buyers and that a substantial quantity has been removed from the discharge port."
Cremer also said:
"We do not agree to accept payment less the port demurrage but request that the contract price be paid in full while we will execute the demurrage payment in accordance with the contract terms. For our part, if payment is made now we will nevertheless be claiming from you interest for late payment and our other related expenses."
In reply Huyton said that it was obvious that Cremer had taken legal advice, and set out the substance of legal advice which it said that it had taken supporting its position. It said in particular:
"4. You clearly repudiated the contract at the end of last week and that repudiation was promptly accepted by us. The goods have been returned to the port and they are at your disposal.
5. Without prejudice to our strict rights ..., we have given you an opportunity to present conforming documents but we emphasise that they must conform to the contract and be presented within the time limit before we will agree to pay them. If you fail to comply with these conditions, then the contract will remain cancelled and you will have all the problems of disposing of the goods for your own account.
6. .... We are perfectly entitled in a situation like this to insist that if you do present conforming documents within the that time limit, it is on terms that we can deduct the loadport demurrage and the bank guarantee expenses. Of course, we could not do this if you were making a contractual presentation of the documents before the contract was cancelled but we are entitled to include these terms when offering to lift the cancellation when we are not legally obliged to do so.
7. .... We have amply demonstrated our willingness to seek a commercial settlement of the case and we are surprised that you have not responded in the same way, as our legal position is sound, it is going to be an expensive mistake for you to fail to agree with our terms."
Huyton went on to confirm its appointment of its arbitrator for all disputes arising.
On 30th January Cremer repeated its prior position, adding only that it had, without prejudice to its position, no objection to the deduction of demurrage and bank guarantee expenses from the contract price, but that it would before giving final consent like to receive an explanation of the discrepancy between the demurrage being claimed by Huyton and that claimed by Olympic, and of the exact guarantee expenses claimed. On the same day, Cremer was informed by its Sudanese agent with reference to the balance of 20,000 tons remaining in the port silo that "understand receivers starting taking cargo from silos to up country". This information was factually incorrect.
In response to Cremer's message of 30th, Huyton on 31st said that it had no contract with Olympic. It pointed out also that Olympic had only referred to the "undisputed" demurrage owed by NBT and ended by saying that Cremer had on 15th January accepted and said that it would meet Huyton's demurrage claim.
By 31st January Cremer had supplied Huyton's bank with a revised certificate of origin meeting the contract terms as well as a fumigation certificate. Huyton still had some reservations about the documents being presented, but appears to have been prepared to waive any of its remaining objections even if valid, provided at least that Cremer agreed its other terms.
Cremer on 1st February denied that it had on 15th January agreed to meet Huyton's full demurrage claim. In this connection it asserted (contrary to the fact) that it had "subsequently" to 15th January received information indicating that the amount charged by Huyton was in excess of the amount that Huyton had actually to pay under its own charter.
Cremer went on to offer to accept deduction of the demurrage and guarantee expenses claimed, but under reserve "as we consider this amount .... in dispute".
This led to Huyton on 2nd February replying:
"We are not prepared to contemplate discussion or arbitration about demurrage or bank charges. ....
We would remind you that we properly cancelled the contract when you repudiated it and we are perfectly entitled to maintain that cancellation unless you agree our terms. If that does not happen, the goods will be at your disposal.
We will pay your invoice on the basis that it amounts to the first proper presentation of the documents less $496,840.97 for demurrage and $65,245.40 for guarantee charges, but before being obliged to do so, we require your categoric assurance that you irrevocably withdraw your demand to arbitrate on any of these points. If we do not have this assurance ...., then our cancellation of the contract will remain in effect."
On 6th February Cremer said that it found Huyton's attitude "completely unreasonable", and that the simple facts were that
"you have obtained delivery of the contract goods and you are refusing to pay the full contract price. Despite of what you say we know that you are not in a position to place the goods at our disposal at the port of discharge. Part of the goods have already been removed by your sub-buyers and we know that further quantities are being removed every day."
This last, erroneous statement was doubtless based on the erroneous information received by Cremer from its local agent on 30th January. Cremer went on:
"Due to your breach of contract we are left in an impossible position. We must accept that we have no real choice but to accept your terms for obtaining payment".
Huyton on 6th February re-presented the documents to the bank under the letter of credit opened by Sotisco, but on 7th February asked Cremer for confirmation that
"you regard presentation of the amended documents as the first proper presentation of documents and that you irrevocably withdraw your demand to arbitrate on demurrage and the guarantee charges".
Cremer replied that it agreed these points with, for the reasons previously stated, "the greatest possible reluctance". Huyton instructed its bank to pay and it paid the net sum of $4,502,813.94 on 9th February 1996.
On 14th February 1996, Cremer confirmed receipt of payment and said that it did not consider itself bound by the so called agreement to allow the deductions and give up the right to arbitrate about demurrage and guarantee expenses. It said that it had been forced to agree these terms by Huyton's breach of contract and threat to refuse to pay the price despite the fact that Huyton had delivered the goods to its sub-buyers who were removing them from the port of discharge. Cremer therefore confirmed its appointment of its arbitrator. Huyton rejected Cremer's stance and indicated that it would if necessary commence the present action to restrain pursuit of any such arbitration. The present action was thus begun on 19th September 1996. At one point, Huyton appeared to be trying to expand its scope to obtain a finding that the demurrage and guarantee charges were in fact due from Cremer to Huyton - a finding that if made would have effectively superseded the issue whether Cremer was entitled to pursue a claim in arbitration with regard to their deduction. In the event, however, Mr Males accepted that that too must be a matter for the arbitrators, if it was open to Cremer to pursue any arbitration with regard to it at all. All that I need say now is that it appears to me quite properly arguable that JGP's breaches of duty towards Huyton, known to and encouraged by NBT, would, assuming knowledge of all the facts now known, either have disentitled NBT from claiming demurrage at the rate of $11,000 from Huyton, or have made the Huyton/NBT charter voidable.
The purported agreement
It is common ground that Cremer agreed irrevocably to withdraw its demand to arbitrate on the demurrage and guarantee charges. Cremer submits that this purported agreement is either not binding or, if binding, not relevant. It is not binding because it lacked consideration or was induced by duress. It is irrelevant because, even if binding, it could not prevent Cremer pursuing in arbitration a claim to the balance of the price and/or interest for late payment or damages for breach of contract or repudiation.
I can take the latter point quite shortly. If the agreement binds, then the re-presentation of the documents to the bank on 6th February 1996 must be taken as the first proper presentation, and the price must be taken to have been paid against such presentation, less the amount of demurrage and guarantee charges, in respect of which Cremer irrevocably withdrew any demand to arbitrate. The true analysis is that Cremer must be regarded as having received payment of the price in full on first presentation of documents and as having accepted and satisfied in full a liability for the full amount of the demurrage and guarantee charges which Huyton claimed. Payment of the price in full was effected, as to part by the transfer of $4,502,813.94 on 9th February 1996 and as to the rest by setting off the demurrage and guarantee charges amounting to $562,086.37. On this basis, there remained thereafter no balance of the price outstanding in respect of which Cremer could claim. Nor could Cremer claim for late payment of the price. The unpleaded suggestion, made it seems for the first time in Mr Schaff's skeleton, that Cremer could claim damages for breach or repudiation by Huyton in failing or refusing to pay the price prior to and on 23rd January 1996 is also unsustainable in circumstances where Cremer agreed to treat the presentation on 6th February as the first proper presentation.
In Cremer's points of defence in this action, it is suggested that, whatever else the purported agreement provided, it dealt only with the parties' substantive rights and liabilities, and could not therefore affect the arbitrators' jurisdiction. But, before me, Mr Schaff did not suggest that the relief claimed by Huyton would be inappropriate or that the matter would still have to be left to the arbitrators, if I were to conclude that there was an agreement binding on and enforceable against Cremer, whereby Cremer agreed irrevocably to withdraw the demands which it presently wishes to pursue in arbitration against Huyton.
Was the agreement binding?
Mr Schaff submits, as I have indicated, that Cremer was not and is bound by the purported agreement for two reasons, the first absence of consideration and the second duress.
In Mr Males Q.C's submission, consideration exists in the parties' mutual agreement to resolve disputed issues. In particular, Huyton was denying that it had any obligation to pay the price or that the contract had any continuing existence. By agreeing to reinstate or recognise the contract, and to take up and pay against the amended and re-presented documents, Huyton was thus providing consideration.
Mr Schaff seeks to meet this contention, by arguing that Huyton was liable to pay the price and that its denial of liability was unjustified. If the price was due in law, then payment of a lesser sum than that due cannot, he submits, amount to valid consideration: re Selectmove Ltd.  1 WLR 474 (C.A.)
In that case, however, there was no dispute about the total indebtedness. In the present case, it is of the essence of Huyton's case that the agreement was reached to resolve a situation in which both sides were claiming that the contract was at an end and Huyton at least was claiming that it had no obligation with respect to the goods or their price at all. Mr Schaff accepts that Huyton's denial of liability for the price was in good faith. On the facts as I have outlined them, it seems to me clear also, as far as it is relevant, that Huyton's attitude in treating the contract as at an end was also in good faith. Further, whether it be right or wrong in law, Huyton's stance was in my view one which a reasonable business-man in Huyton's position could at the time take.
Mr Schaff raises a question mark over Huyton's good faith in statements made that the goods were at Cremer's disposal - particularly Huyton's statement on 26th January 1996 that the goods removed from Port Sudan had been returned there, and Huyton's reiteration on 2nd February 1996 that, if no agreement was reached, the goods "will be at your disposal". Mr Males submits that Mr Schaff did not suggest such a lack of good faith to the relevant witness, Mr Philippas. I consider, having examined the transcripts, that Mr Schaff's cross-examination did sufficiently do this, and that, even if it did not, no injustice would result, since there can be no doubt about Mr Philippas' response. But I am not satisfied that there was in fact any such lack of good faith. It is evident, from the inaccurate information provided both to Huyton by Sotisco on 4th January and to Cremer by its local contact on 30th January 1996, that reliable information may be difficult to come by from the Sudan, and Sotisco at least may have its own motives for not keeping Huyton accurately informed. Although it is true that Mr Philippas was vague about the precise sources of his information, and although the return of goods to Port Sudan from the interior would appear to have involved a substantial exercise, I am unable to conclude on the material before me that Mr Philippas was not repeating what he had been told and believed or that he was seeking deliberately to mislead Cremer, when he said on 26th January that the goods removed had been returned to Port Sudan and when he indicated on other occasions that the goods could and would, if necessary, be held at Cremer's disposal.
On the basis that Huyton was acting in good faith and (so far as this may also be material) that the stance which it took was reasonably arguable, the situation is one where, on the face, of it, it was open to the parties to reach a compromise, and where consideration for each party's agreement could be found in their mutual forbearance from maintaining or pursuing their original legal rights and remedies. Mr Schaff accepts this in principle, but submits on the particular facts that the present agreement reached cannot be viewed as a compromise. There was, he submits with particular reference to Cremer's message of 6th February 1996, never any intention on Cremer's part to compromise.
At this point the submissions relating to consideration and duress inter-relate. I accept that an agreement which appears on its face to involve a compromise may be shown to have been induced by and be voidable for duress. The duress may involve illegitimate pressure, consisting in the non-performance or threat of non-performance of an obligation the existence of which was apparently the subject of the compromise. The party asserting duress will have however also to show on the facts that the illegitimate pressure was at least a significant cause inducing it to enter the contract. Concurrent or contemporary protests that illegitimate pressure led to that party entering the agreement may be of considerable relevance in this latter respect - although neither sufficient nor essential. But absent duress, I see no basis on which an apparent compromise may be ignored on the ground that one party did not really intend to compromise. Contract is objective. If, objectively, an agreement was reached on terms involving a compromise of opposing contentions, the agreement should be upheld, despite any concurrent protest or manifestation of subjective dissatisfaction about the circumstances in which the agreement came to be made - unless the agreement is voidable for causative duress. This conclusion appears to me consistent also with the reasoning in Maskell v. Horner  3 K.B. 106 (see below) and with the treatment of the present problem in Goff and Jones on Restitution (Fourth Ed.) at pages 53-54, 258 and 264-4.
That economic pressure may amount to duress is now established law. Mr Schaff submitted, with reference to Lord Goff's speech in Dimskal Shipping Co. S.A. v. International Transport Workers Federation (The Evia Luck)  2 A.C. 152, 165G, that there were two basic ingredients of duress of this character: (i) illegitimate pressure by one party (ii) constituting a significant cause inducing the other party to act as he did (in the present case to enter into the agreement of 6th/7th February 1996). The submissions before me canvassed a number of moot points. These included questions whether these are the only ingredients of economic duress, what precisely each ingredient connotes and whether it is inflexible. For the moment, I shall focus on Mr Schaff's case regarding the first ingredient, illegitimate pressure.
One example of illegitimate pressure, in Mr Schaff's submission, is an actual or threatened breach of contract. That, in Mr Schaff's submission, is this case. Mr Schaff accepts that an actual or threatened breach of contract may lead to a valid compromise. But the hallmark of such a compromise is, he submits, identified by Lord Reading C.J. in Maskell v. Horner at p.118 as being a payment (or concession) made "voluntarily to close the transaction", rather than "under compulsion of urgent and compelling necessity". As to the latter situation, Lord Reading went on:
"Payment under such pressure establishes that the payment is not made voluntarily to close the transaction .... The payment is made for the purpose of averting a threatened evil and is made not with the intention of giving up a right but under immediate necessity and with the intention of preserving the right to dispute the demand ...."
Mr Schaff submits that it amounts to illegitimate pressure if a party threatens or commits a breach of contract, even if he acted in good faith, believing, and believing reasonably, that he was entitled to act as he did or threatened. From the viewpoint of the other party, Mr Schaff points out, the impact of the threat or breach is the same, as is the pressure exerted on him, whether or not the first party is in good or bad faith. Thus, he says, it is not critical or relevant to consider whether the party threatening or committing the breach was acting in bad faith. If, however, it is relevant at all, bad faith should not be regarded as essential, but as no more than a factor which could make the court more ready to treat a party's conduct as illegitimate.
Mr Schaff's primary contention is that Huyton broke or threatened to break the contract with Cremer by refusing to pay the price. Cremer's pleaded case is that Huyton accepted the goods and incurred liability for the price as a result of (i) the delivery of the goods ex-ship, (ii) Huyton's communication to Cremer of a quality and condition claim on 12th January based upon alleged liability to its sub-buyers and (iii) the removal of part of the goods to the interior. Mr Schaff submits in these circumstances that the property in the goods passed to Huyton, and that the price became due under s.49 of the Sale of Goods Act 1979. If that is wrong, he submits that Huyton was obliged to pay the price against presentation of the shipping documents and wrongfully failed to do so; it thus became liable to Cremer, not strictly for the price, but for damages measured by reference to the contractual price under s.50. Further alternatives which Mr Schaff sought to develop before me were that Huyton incurred, but refused to acknowledge, a liability, which was in economic terms the equivalent of the price, either in restitution or in damages on account of its retention and/or failure to return the goods to Cremer.
Taking first the contention that property passed, Mr Schaff accepts that the contract between Cremer and Huyton started lift as a contract providing for payment cash against documents. He acknowledges therefore that property did not pass upon shipment and that Cremer, when it took as shipper a bill of lading made out to its order, reserved the right of disposal over the goods shipped in accordance with s.19(2) of the Act. Mr Schaff submits however that the effect of what actually occurred was to pass property either on delivery of the wheat ex ship, or, alternatively, on or about 15th January 1996 when Cremer asserted that the cargo had been "accepted upon completion of discharge" on 2nd January and that Huyton had thereby "waived any right to reject the documents as presented to you on 10th January as well as to refuse to pay for the cargo received", and set a time limit for payment. Mr Schaff put before me two possibilities, one that there was some contractual variation, the other that Cremer was entitled simply to waive any right of disposal after discharge and delivery to Huyton's sub-buyers and on that basis to treat properly as having passed.
Mr Schaff did not press before me the submission that the delivery of the goods to Huyton's sub-buyers on discharge at Port Sudan involved a variation of the contract terms, whereby property passed immediately on such delivery. Mr Schaff acknowledged in this connection the force of the contrary view accepted by McNair J. in Ginzberg v. Barrow Haematite Steel Co. Ltd.  1 Ll.R. 343. There, under an ordinary c.i.f. contract providing for payment CAD, delivery was, with the agreement of both the sellers and the shipowners' agents, made at the discharge port to the buyers against a delivery order instead of the bill of lading. The seller's invoiced the buyers after arranging such delivery, but the buyers did not pay, and on the next day went into receivership, after which the sellers claimed the goods back as owners. McNair J. rejected the submission that property had passed on the delivery arranged, saying that the true inference was that the parties
"intended merely to expedite the delivery for the benefits of the [buyers] .... without in any way departing from the fundamental principles of their c.i.f. contract the implementation of which would safeguard them against losing the property in the goods until payment was made".
The decision was referred to without dissent and indeed with express approval of Mustill L.J., with whom Woolf L.J. agreed, in Enichem Anic S.p.A. v. Ampelos Shipping Ltd. (The Delfini)  1 Ll.R. 252, 264, 270 and 275-6. It is to be noted however that neither the factual situation nor the problem in issue was precisely the same as presented by the present case. McNair J. did not hold that the passing of property was postponed until production of the bill of lading. On the contrary he indicated that property would have passed on payment against the invoice which the sellers had presented in circumstances where the sellers themselves had been asked to arrange and were party to arranging delivery against a delivery order as opposed to the originally agreed bill of lading.
In The Delfini the facts were very different. The original contract, although described as c.i.f., contained from the outset an alternative mode of performance providing for payment against a letter of indemnity - although even then apparently contemplating that delivery might already have occurred. It also provided for a bank guarantee under which, as issued, the seller, Vanol, could claim the price without tendering any shipping documents. Vanol invoiced the buyer, Enichem, for the goods while they were still in the course of carriage on 5th August. Enichem then received the goods on discharge on 9th August and paid the seller's invoice on 12th August three days after discharge of the goods, in each case apparently against no shipping documents at all. Enichem only received the bills of lading some eight days after it had so paid. In these unusual circumstances, the Court of Appeal was unanimous in holding that property passed irrespective of the delivery of the shipping documents. Mustill L.J. was inclined to the view that it passed as early as 5th August. Purchas and Woolf L.JJ. considered that it passed upon discharge on 9th August or at latest upon payment on 12th August. This decision shows that the passing of property in each case requires a close analysis of the particular contract and circumstances. But as a decision on its particular facts, it does not to my mind greatly assist in the present case.
Here, the original contract was for payment CAD, with the inference that property was only to pass on such payment. The shipping documents included a number of documents with contractual and commercial significance for both parties, irrespective of delivery. This is particularly so, having regard to the provision in Cremer's contract with Huyton whereby shipped weight, quality, condition, description, sampling and analysis were to be final as certified on loading. Further, on the evidence before me, Cremer was not party to any request to permit or agreement to allow the delivery of the goods at the discharge port without production of the bill of lading. The most that can be said is that Cremer ascertained, through enquiry of JGP, that an arrangement for discharge and delivery was being made between the "receivers" and the vessel, that Cremer would or could have deduced from clause 45 of the charter (to which Cremer was not party) that Huyton would be providing (as it did) a letter of indemnity for this purpose, and that Cremer did not protest or react. A letter of indemnity would be required because the bills of lading could have continuing significance. Cremer was not, therefore, itself party to any arrangement made with the owners of the Mike K for discharge and delivery without production of the bill of lading at Port Sudan, still less to any variation of the provision for payment CAD in its contract with Huyton. In my judgment, the case falls on the same side of the line as Ginzberg and there was no variation. Cremer's apparent lack of concern about the whereabouts of the wheat is on its face a surprising feature, but one which cannot necessarily be attributed to any understanding that the wheat was no longer Cremer's. Cremer was not aware that any wheat would be removed from Port Sudan, and Mr Carroux's evidence, for what it may be worth on such a point, was that Cremer would have expected the wheat to be retained in Port Sudan for Cremer's account. Mr Philippas's evidence was that Huyton was not aware that any cargo had been removed from Port Sudan, until the latter half of January 1996 (as far as he could recall not until Cremer informed Huyton on 25th January 1996 of its information to this effect, whereupon Huyton then checked with its own sources and was informed, albeit erroneously, that the goods had in fact been returned to the port). I see no reason not to accept Mr Philippas's evidence on this. Mr Birkholz did not insist on payment immediately after discharge, because he knew that Cremer had still to tender shipping documents. When a dispute arose, Cremer's reaction on 17th/18th January was to call for the return to them by the bank of the shipping documents, in terms which indicated that Cremer would seek to use them to assert a continuing right to the goods. All these points go to confirm my view that neither the discharge nor the delivery of the goods to Huyton's sub-buyers nor the removal of part of the goods from Port Sudan had the effect of passing property.
Mr Schaff sought support for his submission that Cremer could and did waive its right of disposal in dicta of Roche J. in F.E. Napier v. Dexters Ltd. (1926) 26 Ll.L.R. 62; affirmed 184 (C.A.). The case concerned a shipment f.o.b. London cash against mate's receipt. Barrels of sweet fat were, on the buyer's instructions, delivered to the wharf alongside the buyer's vessel and were received there by the wharf company as agent for the buyers. Arbitrators held the buyer liable for the price on the basis that property had passed. Roche J. held that this was a finding of fact, which was not open to review by him, whatever he might have decided if the full evidence had been before him. He added some words to explain the possible bases on which the arbitrators might have acted. He said, inter alia, that
"Under a contract which at any rate gives the right to the seller to reserve the right of disposal of the goods until his conditions are fulfilled, in my judgment, where a stipulation is unilateral, that is to say, for the benefit of the vendor, it is possible and lawful for the vendor upon appropriation to waive or abandon a stipulation which is in his favour."
Distinguishing a previous authority, Roche J. pointed out that in it there had been a bill of lading, as distinct from "a mere mate's receipt" and that the bill of lading was in the hands of bankers. In the Court of Appeal Bankes L.J. held that buyers had failed to prove any reservation of property by the seller, but also saw no fault in law in Roche J's view. Scrutton L.J. stressed the distinction between a bill of lading and mate's receipt and the fact that most of the previous authorities about reserving a right of disposal were cases on bills of lading. He concluded that, since it was a question of fact whether there was a right of disposal, Roche J. had been right to say that he could not interfere with the decision of the arbitrators. Sargant L.J. simply agreed, and had nothing to add.
In the circumstances, I find Napier's case is of no real assistance on the issue which I have to decide. The present case concerns not only a bill of lading, but an elaborate set of contractually agreed documents with significance outside the mere field of carriage of the wheat from Constantza to Port Sudan. The provision of such documents was an element in a mutual scheme, with implications going beyond the passing of property, particularly so far as concerns finality in respect of weight, quality, condition, description, sampling and analysis. I would add, though not essential to my conclusion, that it was also, I think, foreseeable that Huyton would be on-selling on documentary terms, and that the presentation of shipping documents might continue to be of importance to Huyton for this reason, even though Cremer does not appear to have had particular knowledge that Huyton would require them under a letter of credit which Sotisco was in fact required to open. Quite apart from that last point, the provision of shipping documents cannot in the present case be regarded, even after delivery of the cargo, as a matter wholly for the benefit of Cremer. Huyton remained in my judgment entitled to expect that conforming documents would be presented to it before it paid and before property passed.
That, as it happens, corresponds with the way in which Cremer evidently saw the matter until Huyton began to point out deficiencies in the documents. It also corresponds with that aspect of Mr Schaff's submissions, which rightly acknowledged the existence of a continuing contractual obligation on the part of Cremer (despite the delivery of the goods and other circumstances upon which Mr Schaff relied as making Huyton liable to pay the price) to present conforming documents to Huyton at some later stage. Mr Schaff suggested that any breach of this continuing obligation had no effect on Huyton's obligation to pay the price, and would sound at worst in damages. But the recognition of such an obligation itself indicates that the contractually agreed documentation cannot be regarded as being for the unilateral benefit of Cremer, and the suggestion that Huyton had to pay for the goods without receiving the documents, leaving it with an unsecured claim for damages if the documents subsequently proved not to match the contractual requirements, does not strike me as probable.
Mr Males sought to turn this improbability to Huyton's advantage in a different way, by contending that the passing of property was irrelevant, and of no assistance to Cremer in any event, because it should be regarded as only passing contingently on proper contractual documentation being subsequently presented, so that, if and when Huyton later validly terminated the contract for failure or refusal to present such documentation, the rejection would revest property and remove any right to the price. This attempt to invert the reasoning in Kwei Tek Chao v. British Traders and Shippers Ltd.  2 K.B. 459, by making the passing of property in physically delivered goods conditional upon later examination of documents which, on this hypothesis, must have ceased to constitute documents of title whatever their other commercial or economic importance leaves me presently unconvinced, but I need not consider it further.
In the result, I reject Mr Schaff's primary case, that property passed either on delivery or on or about 15th January 1996 when Cremer sought payment without tendering conforming documents.
Mr Schaff's next submission rests on the proposition that conforming documents were at some stage presented, which Huyton wrongly failed and refused to pay. That case cannot be sustained in relation to the period up to 19th and 23rd January 1996, the dates on which first Huyton and then Cremer purported to treat the sale contract as at an end. At no time prior to 23rd January 1996 had Cremer ever presented shipping documents which complied with the contract. On the contrary, Cremer was insisting that it did not have to present conforming documents and that Huyton was obliged to pay the full price without conforming documents.
Mr Schaff contends that Cremer's attitude in the exchanges which led to Huyton's claim to treat Cremer as in repudiation was not repudiatory. In my judgment, it was repudiatory. Cremer was purporting to set Huyton a deadline, failing compliance with which Cremer indicated that it would obtain return of the documents from its bank. The terms in which Cremer said this indicated that Cremer intended to regard itself as free to recover the goods and to dispose of them elsewhere or at least to hold the ship responsible for them, if immediate payment was not made. The matter must be viewed objectively and Mr Philippas's answer in cross-examination that Huyton thought from Cremer's message of 18th January 1996 that Cremer wanted the documents back on 18th January 1996 in order to correct and represent them to Huyton seems to me both unlikely to reflect accurately what Huyton understood at the time, and in any event to be irrelevant on the question what Cremer indicated objectively. In the same message Cremer actually stated in clear terms that "because you have taken delivery of the cargo there is also no longer a need to deal with the discrepancies in the documents as pointed out by you and any guarantee by us in this respect is null and void". This is quite inconsistent with any intention to recover the documents in order to correct and represent them. I am also unable to regard Cremer's attitude on 18th January as in any way equivocal or as relating to minor matters. For reasons which I have already indicated, the presentation of conforming documents continued in my judgment to be a significant matter under the party's contract, despite the delivery of the goods. Cremer was categorically denying Huyton's entitlement to such documents, and was itself laying down deadlines for a quite different character of performance to any agreed between the parties. In my judgment, Huyton was entitled to treat Cremer's attitude as repudiatory.
Mr Schaff submits that, if that was so, Huyton was obliged to restore to Cremer the goods of which it had received delivery through its sub-buyers, and that, since Huyton did not do so, its purported acceptance of Cremer's repudiation was ineffective, and it was liable for the price of the goods received either as a matter of contract or on a quantum meruit. In my judgment, this submission also fails. Once Huyton had determined the contract, it was its duty to hold and, so far as necessary, make the goods available for Cremer. I accept that this would involve making them available at Port Sudan so far as they had been removed from Port Sudan by Huyton's sub-buyers. Mr Schaff points out that Huyton did not mention the goods in its message of termination on 19th January or until its further message of 25th January, sent after Cremer's response of 23rd January which referred yet again to the delivery of the goods to Huyton. He also relies on the principle that, for goods to be validly rejected, there must be "a clear notice that the goods are not accepted and at the risk of the vendor": see Benjamin's Sale of Goods (Fifth Ed.) para. 12-032, citing Grimoldby v. Wells (1875) L.R. 10 C.P. 391. That was a case on rejection of goods sold by sample which were found after delivery not to be equal to the sample. The issue in such a case is whether the buyer has validly rejected in a manner revesting property. In the present case, by contrast, the issue is whether Huyton validly and unequivocally treated as repudiated a contract under which possession had been given, although property had not yet passed. What Huyton had to make clear was that it was treating Cremer as in repudiation, and, if it did this, the automatic effect in law was to oblige Huyton to put the goods of which it had received delivery at Cremer's disposal at Port Sudan, whether or not Huyton expressly adverted to that effect in its termination notice. Further, once Cremer made a further reference to the delivery of the goods in its reply on 23rd January, Huyton did on 25th January confirm that the goods were at Cremer's disposal. In the meantime, Huyton had no duty to take any positive steps such as re-shipping them, and Cremer itself did not request Huyton for information or assistance with a view to their recovery, or take any steps in that direction, except for enquiries as the goods' whereabouts made through local agents and except in so far as recovery of the goods may have been part of the thinking behind Cremer's request to the bank to return the shipping documents. Recovery of the goods must in fact always have appeared to Cremer to be a most unattractive option, whether or not they were at Port Sudan. In these circumstances, I do not think that Huyton's claim to terminate the contract for repudiation can be disregarded as ineffective or internally inconsistent, simply because Huyton failed to address the natural consequences of such a step expressly.
Further, as a matter of fact, the evidence does not satisfy me that the goods could not and would not have been held at Cremer's disposal, and so far as necessary returned to Port Sudan for this purpose, had Cremer so insisted and had the parties not reached the arrangement which they did on 6th/7th February 1996. The probability is in my view that Mr Philippas of Huyton meant and believed what he said when he indicated on 25th January 1996 and subsequently that the goods were at Cremer's disposal, although Huyton's message of 25th January suggests that he also hoped that it would be possible to persuade Cremer to reach an accommodation. Huyton's sub-buyers in the Sudan were, whatever the limitations of their legal position, far from satisfied with the goods, and Mr Philippas was well aware that this was the case. He was in close touch with Sotisco and I accept his evidence that he was aware that the goods could not be used in the immediate future in the absence of Ministry approval. I also accept his evidence that he sought to ascertain from Sotisco the whereabouts of the goods and was told that the quantity removed had been returned to Port Sudan. The extent to which he positively instructed Sotisco not to use the goods is much less clear. In answers to interrogatories sworn unsatisfactorily by an employee of Huyton in Switzerland, who appears to have had no direct knowledge of affairs and who Mr Philippas said had not contacted him about the answers, it was stated categorically that Huyton had not given notice to Sotisco that the goods should not be used. Mr Philippas in fluctuating evidence sought at times to suggest that he must have given some such notice. I do not accept that he gave such a notice in so many terms. But I do accept that he enquired of Sotisco regarding the status and location of the goods and that the answers left him satisfied that the goods could be held at Cremer's disposal if required. If, as I accept, he was given misleading information to the effect that the goods removed from Port Sudan had been returned there, the context is in fact likely to have been some wish or willingness on Sotisco's part to show that the goods were not required and/or would be available for removal.
These conclusions make it strictly unnecessary to consider the implications of Cremer's own purported termination of the contract on 23rd January. This could only become relevant on an assumption that Huyton's termination on 19th January was ineffective. But, on that assumption, I do not think that Cremer's termination could simply be ignored, as Mr Schaff invited. If Huyton's stance in purporting to terminate for breach by Cremer was unjustified, then Cremer's termination was on its face valid, and, since the property had not passed, entitled Cremer to recover possession of the goods. The fact that Cremer did not claim or seek such possession would not in this situation affect the validity of its termination of the contract, or entitle Cremer to the price or an identical claim in restitution. Had Cremer shown that Huyton could not return the goods, Cremer could no doubt have acquired a restitutionary right or a right in damages; the measure of recovery might then have related to the value of the goods in the Sudan rather than the contract price, although there is in fact no evidence which would enable any positive conclusion as to what, if any, difference, might exist between these two. As it is, I am not satisfied that Cremer could not have recovered the goods, if it had wanted and sought them. It is not in these circumstances established that Cremer had any claim to the price, still less any claim to a sum in restitution or damages equating with the price.
The result is that Cremer had no continuing right after 19th or alternatively 23rd January 1996 either to present conforming documents and to claim payment of the price or, if it be material, to require payment of the price or any equivalent sum by Huyton on any other basis. Assuming that by the end of January Cremer had obtained amended documents which would have conformed with the contract requirements, this is irrelevant in circumstances where the contract had come to an end at least a week earlier.
It follows from these conclusions that Cremer is unable to establish, in any shape or form, the illegitimate pressure on which it relies in support of its claim that the agreement of 6th/7th February 1996 is voidable for duress. The illegitimate pressure pleaded is wrongful failure to pay the purchase price. If one looks at the matter more widely, as Mr Schaff did during the hearing, Cremer has not shown that there was any other illegitimate pressure in the form of failure to pay the equivalent value of the goods in restitution or damages.
One is left with an agreement made because Cremer found itself faced with a situation where it was unattractive to seek to recover the goods in the Sudan, and to dispose of them there or elsewhere. In the absence of any illegitimate pressure from Huyton to make that arrangement, there is no basis for avoiding the arrangement, and Huyton is entitled to relief preventing Cremer from pursuing an arbitration in breach of it.
Economic duress on a contrary assumption
Having regard to the evidence and submissions which I have heard, I shall also consider the position viewed on a contrary assumption. There are at least two possibilities, arising, as I have already indicated, from Cremer's case as to the effect of the discharge and delivery of the goods to Huyton's sub-buyers, the removal of goods from the port and/or Cremer's decision to treat the goods as belonging to Huyton and to treat the price as due prior to presentation of the shipping documents. One possibility is that property in the goods passed and the price became payable upon its passing. The other is that the price became due and that the property would have passed upon payment (as in Ginzberg), but did not because the price was not paid. On either basis, Huyton's purported acceptance on 19th January 1996 of a repudiation by Cremer was ineffectual, but Huyton was thereby itself in repudiation which Cremer accepted on 23rd January. On the former scenario, Cremer's acceptance of Huyton's repudiation cannot, I think, have revested property, or have discharged Huyton's liability for the price; it must simply have discharged Cremer from further performance, in particular from any obligation to present conforming shipping documents. On the latter scenario, since property never passed, Cremer's acceptance of Huyton's repudiation left Cremer with the property in the goods, but also with a claim against Huyton to make good any difference between the value of the goods realisable after their recovery in the Sudan and the contract price. The economic effect of the latter scenario would be likely to equate, in a more complex way, with that of the former scenario. Cremer's case that Huyton applied illegitimate pressure inducing Cremer to make the agreement of 6th/7th February is based expressly on the former scenario. But Mr Schaff's submissions also embraced the latter scenario, on the footing, in effect, that Huyton could, upon that scenario, be regarded as applying illegitimate pressure, by its assertion that it was Cremer who was in breach and by its disclaimer of any responsibility for the contract price at any stage, whether as such or, after Cremer's acceptance of Huyton's repudiation, as a measure of liability for wrongful refusal to accept and pay for the goods.
The two basic ingredients of duress have been identified earlier in this judgment. Leaving aside for the moment questions of onus, it must at least be the case that Huyton applied illegitimate pressure and that such pressure was a significant cause inducing Cremer to make the agreement of 6th/7th February 1996. The assumption, on which I am now approaching the matter, that Huyton's original contractual position was unjustified, does not alter the fact that Huyton both believed at the time in the correctness of its case, and was not, in my view, unreasonable to do so. The rights and wrongs of a complex situation were - and still are - difficult to analyse.
Mr Schaff submits that, if Huyton's position could now be seen to have been unjustified, it must follow that Huyton applied illegitimate pressure on Cremer (in which case, he submits, the only remaining issue would be causative inducement). Mr Males submits that other considerations are or may also be relevant, on one or other of various bases. He starts by suggesting a third ingredient of economic duress, that the illegitimate pressure must have left the innocent party with no reasonable alternative to the course he took. He distinguishes in this context between "commercial pressure", even in consisting of an actual or threatened breach of contract, and coercive pressure justifying legal protection. He further suggests that the bona fides and reasonableness of the position which Huyton adopted are relevant, either when determining whether illegitimate pressure was applied or in some other way. It is not, I think, difficult to see how the bona fides and/or arguability of Huyton's position could be relevant when assessing whether Huyton's actual or threatened breach was a significant cause of the agreement of 6th/7th February 1996 - at least so far as they were apparent to and impacted on Cremer's thinking. A party who perceives that the other party is acting in bad faith may be more likely to feel exposed and coerced. But Mr Males submits that the relevance of good or bad faith is not confined to situations where its existence or absence is apparent to the other party. In addition, Mr Males submits that the concept of a "significant cause" requires the court to consider not merely subjective causation, but, in effect, the causative potency of an actual or threatened breach of contract, viewed objectively; on this basis too the court must, he submits, assess whether a reasonable person would or could have acted as the actual innocent party before the court did, and whether he would have done so because he had no practical choice but to submit, or for other reasons.
I start with the requirement that the illegitimate pressure must, in cases of economic duress, constitute a "significant cause" (cf per Lord Goff in The Evia Luck, at p.165, cited above). This is contrasted in Goff and Jones on The Law of Restitution (4th ed.) p.251, footnote 59 with the lesser requirement that it should be "a" reason which applies in the context of duress to the person. The relevant authority in the latter context is Barton v. Armstrong  AC 104 (P.C.) (a case of threats to kill). The majority there discussed at p.118B "whether it was necessary for Barton in order to obtain relief to establish that he would not have executed the deed in question but for the threats", having pointed out that only in the most unusual cases could there by any doubt whether threats to kill unless a document was executed had operated to induce its execution. The majority referred at p.118H to the principle that "Once make out that there has been anything like deception, and no contract resting in any degree on that foundation can stand", and said at p.119A:
"Their Lordships think that the same rule should apply in cases of duress and that if Armstrong's threats were "a" reason for Barton's executing the deed he is entitled to relief even though he might well have entered into the contract if Armstrong had uttered no threats to induce him to do so."
After reviewing the facts, the majority then said at p.120:
"If Barton had to establish that he would not have made the agreement but for Armstrong's threats, then their Lordships would not dissent from the view that he had not made out his case. But no such onus lay on him. On the contrary it was for Armstrong to establish, if he could, that the threats which he was making and the unlawful pressure which he was exerting for the purpose of inducing Barton to sign the agreement and which Barton knew were being made and exerted for this purpose in fact contributed nothing to Barton's decision to sign.
The proper inference to be drawn from the facts found is .... that though it may be that Barton would have executed the documents even if Armstrong had made no threats and exerted no unlawful pressure to do so, the threats and unlawful pressure in fact contributed to his decision to sign the documents and to recommend their execution by Landmark and the other parties to them."
Whether this language does more than reverse the onus, so as to require the party responsible for the illegitimate pressure to establish that the agreement would anyway have been made, even had it not been present, is open to debate. The minority, Lords Wilberforce and Simon, appear to have thought that it did. After seeking to encapulate the test proposed by the majority as requiring the illegitimate means used to have been "a reason (not the reason, nor the predominant reason nor the clinching reason) why the complainant acted as he did", they went on:
"We are also prepared to accept that a decisive answer is not obtainable by asking the question whether the contract would have been made even if there had been no threats because, even if the answer to this question is affirmative, that does not prove that the contract was not made because of the threats."
The use of the phrase "a significant cause" by Lord Goff in The Evia Luck, supported by the weighty observation in the footnote in Goff & Jones, suggests that this relaxed view of causation in the special context of duress to the person cannot prevail in the less serious context of economic duress. The minimum basic test of subjective causation in economic duress ought, it appears to me, to be a "but for" test. The illegitimate pressure must have been such as actually caused the making of the agreement, in the sense that it would not otherwise have been made either at all or, at least, in the terms in which it was made. In that sense, the pressure must have been decisive or clinching. There may of course be cases where a common-sense relaxation, even of a but for requirement is necessary, for example in the event of an agreement induced by two concurrent causes, each otherwise sufficient to ground a claim of relief, in circumstances where each alone would have induced the agreement, so that it could not be said that, but for either, the agreement would not have been made. On the other hand, it also seems clear that the application of a simple "but for" test of subjective causation in conjunction with a requirement of actual or threatened breach of duty could lead too readily to relief being granted. It would not, for example, cater for the obvious possibility that, although the innocent party would never have acted as he did, but for the illegitimate pressure, he nevertheless had a real choice and could, if he had wished, equally well have resisted the pressure and, for example, pursued alternative legal redress.
I turn therefore to consider other ingredients of economic duress. One possibility, harking back for example to a word used by the minority in Barton, is that the pressure should represent the "pre-dominant" cause. Professor Birks in An Introduction to the Law of Restitution (1985), pp.182-3 has suggested that, in cases such as Pao On v. Lau Yiu  AC 614 where relief was refused on the ground that there had been "commercial pressure but no coercion" (p.635), the court was, in effect, insisting "on a more severe test of the degree of compulsion than is found in Barton v. Armstrong", securing what he describes as "a concealed discretion to distinguish between reasonable and unreasonable, legitimate and illegitimate applications of this species of independently unlawful pressure". His own preference, he indicated, was for "the simplest and more open course .... to restrict the right to restitution to cases in which one party sought, mala fide to exploit the weakness of the other". These comments highlight the extent to which any consideration of causation in economic duress inter-acts with consideration of the concept of legitimacy. Mr Males adopts the same approach as Professor Birks in relation to apparent contractual compromises for good consideration, suggesting that here at least bad faith ought to be a pre-condition to relief. The law will of course be cautious about re-opening an apparent compromise made in good faith on both sides. But it seems, on the one hand, questionable whether a "compromise" achieved by one party who does not believe that he had at least an arguable case is a compromise at all - though it may be upheld if there is other consideration (cf Occidental Worldwide Investment Corp. v. Skibs A/S Avanti (The Siboen and The Sibotre)  1 L.R. 293 at p.334 (right)); and, on the other hand, difficult to accept that illegitimate pressure applied by a party who believes bona fide in his case would never give grounds for relief against an apparent compromise. Another commentator, Professor Burrows, in The Law of Duress (1993) pp.181-2, has suggested that the concept of legitimacy is open to some flexibility or at least qualification, so that a threatened or actual breach of contract may not represent illegitimate pressure if there was a reasonable commercial basis for the threat or breach, e.g. because circumstances had radically changed. This suggestion too, is by no means uncontentious.
As to authority, in The Siboen and The Sibotre, one of the early cases on economic duress, Kerr J. indicated at p.335 (left) - in rejecting a contrary submission by Mr Robert Goff Q.C. as he was - that he did not think that bad faith had any relevance at all. On the other hand, in McHugh J.A's judgment in the Supreme Court of New South Wales in Crescendo Management Pty. Ltd. v. Westpac Banking Corp. (1988) 19 NSWLR 40 at p.46, referred to by Lord Goff in The Evia Luck, McHugh J.A. said that "Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct". It is also clear that illegitimate pressure may exist, although the threat is of action by itself lawful, if in conjunction with the nature of the demand, it involves potential blackmail: see Thorn v. Motor Trade Association  A.C. 797, esp. at pp.806-7, cited in Lord Scarman's dissenting judgment in Universe Tankships at p.401, and CTN Cash and Carry Ltd. v. Gallagher Ltd.  4 AER 713. And in this last case, Steyn L.J. as he was contemplated the possibility that unconscionable conduct might have a yet wider ambit. He said:
"Outside the field of protected relationships, and in a purely commercial context, it might be a relatively rare case in which "lawful act duress" can be established. And it might be particularly difficult to establish duress if the defendant bona fide considered that his demand was valid. In this complex and changing branch of the law I deliberately refrain from saying "never"."
That good or bad faith may be particularly relevant when considering whether a case might represent a rare example of "lawful act duress" is not difficult to accept. Even in cases where the pressure relied on is an actual or threatened breach of duty, it seems to me better not to exclude the possibility that the state of mind of the person applying such pressure may in some circumstances be significant, whether or not the other innocent party correctly appreciate such state of mind. "Never" in this context also seems too strong a word.
In The Evia Luck, Lord Goff did not speak in absolute terms. He said, with reference to the previous authorities, that
".... it is now accepted that economic pressure may be sufficient to amount to duress for this purpose, provided at least that the economic pressure may be characterised as illegitimate and has constituted a significant cause inducing the plaintiff to enter the relevant contract".
This description itself leaves room for flexibility in the characterisation of illegitimate pressure and of the relevant causal link. Lord Goff was identifying minimum ingredients, not ingredients which, if present, would inevitably lead to liability. The recognition of some degree of flexibility is not, I think, fairly open to the reproach that it introduces a judicial "discretion". The law has frequently to form judgments regarding inequitability or unconscionability, giving effect in doing so to the reasonable expectations of honest persons. It is the law's function to discriminate, where discrimination is appropriate, between different factual situations - as it does, to take one example, when deciding whether or not to recognise a duty of care. The present context is intervention in relation to bargains or payments in relatively extreme situations. Steyn L.J. in CTN Cash and Carry cited, albeit in the context of threats involving no unlawful act, an aphorism of Oliver Wendell Holmes "that general propositions do not solve concrete cases" and went on:
"It may only be a half-truth, but in my view the true part applies to this case. It is necessary to focus on the distinctive features of this case, and then to ask whether it amounts to a case of duress."
A similar approach appears to me to be appropriate in the present context.
In older authorities, relief against economic duress was said to require illegitimate pressure coercing the innocent party's will and vitiating consent (cf The Siboen and The Sibotre at p.336 and Pao On v. Lau Yiu Long at p.635). Lord Goff in The Evia Luck doubted whether it was helpful to speak in such terms, and referred to McHugh J.A's comments to that effect in the Crescendo case. The approach there adopted by McHugh J.A., at p.45, was based on statements by the House of Lords in DPP v. Lynch  AC 653, to the effect that, in cases of duress, "the will [is] deflected, not destroyed". Even on this more generous formulation, a simple enquiry whether the innocent party would have acted as he did "but for" an actual or threatened breach of contract cannot, I think, be the hallmark of deflection of will. Whether because the specific ingredients identified by Lord Goff should be interpreted widely or because it is implicit in the flexibility of Lord Goff's formulation and the underlying rationale of the law's intervention to prevent unconscionability, relief must, I think, depend on the court's assessment of the qualitative impact of the illegitimate pressure, objectively assessed. It is not necessary to go so far as to say that it is an inflexible third essential ingredient of economic duress that there should be no or no practical alternative course open to the innocent party. But it seems, as I have already indicated, self-evident that relief may not be appropriate, if an innocent party decides, as a matter of choice, not to pursue an alternative remedy which any and possibly some other reasonable persons in his circumstances would have pursued. Relief may perhaps also be refused, if he has made no protest and conducted himself in a way which showed that, for better or for worse, he was prepared to accept and live with the consequences, however unwelcome. Factors such as these are referred to as relevant to relief against duress in both The Siboen and The Sibotre and Pao On, although in some contexts it may also be possible to rationalise them by reference to other doctrines such as affirmation or estoppel. The emphasis, now to be discarded, in such cases on coercion of will does not, it seems to me, mean that such factors are no longer relevant. Taking, for example, Pao On, the complainant there was able, in the face of the illegitimate pressure, to consider its position, to take alternative steps if it wished, and to decide, as it apparently did (and however wrongly with hindsight), that the substitute arrangements proposed were of no real concern or risk to it and that it was preferable to agree to them, rather than become involved in litigation. Although there would have been no re-negotiation at all "but for" illegitimate pressure, the relationship between the illegitimate pressure applied and the substitute arrangements made was not of a nature or quality, or sufficiently significant in objective terms in deflecting the will, to justify relief. Examination of the same relationship may also involve taking into account the extent to which the party applying illegitimate pressure intended or could reasonably foresee that pressure which he applied would lead to the agreement or payment made, or at least the extent to which factors extraneous to that party played any important role.
The onus of proof in respect of economic duress is another relatively unexplored area. McHugh J.A. in Crescendo assumed that it would be reversed in accordance with the principle applied by the Privy Council in Barton v. Armstrong. That was a case of threats to kill, where the Privy Council took as an analogy dispositions induced by fraud. With such threats, as the Privy Council pointed out, it is only in the most unusual circumstances that there can be any doubt whether the threats operated to achieve their intended aim or known effect. The Privy Council's recognition of, not merely the prima facie factual inference, but of an apparent shifting of the legal onus, cannot, I think, be transposed automatically to the context of the more recently developed tort of economic duress. Threats to the person are, by definition, mala fide acts. Economic duress, as this case shows, embraces situations where the party applying what can, at least with hindsight, be shown to have been economic pressure held the view quite reasonably at the time that he was entitled to do so. There is, also, as indicated above, a major difference between the substantive test of causation in cases of threats to the person and in cases of economic duress. Leaving aside cases of fraud and fraudulent misrepresentation, mentioned in Barton v. Armstrong, the law normally treats the party seeking relief in respect of a breach of contract or seeking to set aside a bargain on grounds, such as innocent misrepresentation, as under a legal onus to prove his case on causation. The particular facts may give rise to an inference of loss or inducement, which may shift a factual onus to the other party, but the underlying legal onus remains at the end of the day on the party seeking relief (cf e.g. Marc Rich & Co. v. Portman  1 Ll.R. 430, 442, considering Pan Atlantic Insurance Co Ltd. v. Pine Top Insurance Co. Ltd.  2 Ll.R. 427 on misrepresentation and non-disclosure in relation to insurance contracts). It would seem to me, as presently advised, that this could represent the appropriate general approach in cases of economic duress. I am conscious that the question of onus of proof was only briefly touched on before me without citation of authority from outside the field of economic duress, but in view of my other conclusions I have not felt it necessary or appropriate to call for further submissions on it.
Turning now to the facts of the present case, the evidence called by Cremer, from Mr Birkholz in particular, was that Cremer felt under extreme and increasing pressure during the period leading up to the agreement of 6th/7th February. A number of contributing factors can be identified:
(a) Cremer was strongly suspicious about Huyton's demurrage claims. It suspected, according to Mr Birkholz's witness statement and evidence, that the Huyton/NBT document was not a genuine charter, that it had been brought into existence for the purpose of brining a demurrage claim against Cremer at a higher rate, and that Huyton was trying to defraud Cremer.
(b) Mr Birkholz was concerned at the quality claim which Huyton raised on 12th January, and his "distrust was confirmed" when three days later Huyton raised an issue of discrepancies of documents.
(c) Cremer (rightly) did not believe the information relayed to it (innocently) by Huyton on 25th January to the effect that the part of the cargo removed inland had been returned to Port Sudan. Further, it was itself (wrongly) informed on 30th January that further goods were being removed by the receivers, and showed this concern when it said on 6th February that "we know that further quantities are being removed every day". In these circumstances, Cremer did not believe that Huyton was holding or capable of holding the goods at its disposal, as Huyton said on and after 25th January that it was doing; and therefore distrusted Huyton on this basis too.
(d) After the dispute arose whether Huyton was bound to pay without Cremer presenting conforming documents, and both parties claimed to have terminated the contract, Cremer found itself in a situation where the goods were in the Sudan, and it had a choice between (i) continuing to pursue a claim to the price, if necessary by arbitration, or (ii) accepting Huyton's stance and reclaiming the goods or (iii) reaching some compromise.
(e) Mr Birkholz said that in this situation he became very scared; it was "alarming" to have Huyton as a buyer; his witness statement described Huyton as a "front" for Agrimpex, and suggested that, at the start of negotiations, Cremer had thought it would be dealing with Agrimpex, but was happy to proceed with Huyton because Huyton was related to Agrimpex.
Taking these factors in turn: as to (a), the suspicion that Huyton was party to putting forward a false charter and a false demurrage claim is not one which can, on the material before me, be pursued. Nor was it pursued before me by Mr Schaff, although he sought to reserve his position so far as possible before any arbitrators. The highest that Mr Schaff could put the matter was to suggest that Huyton ought, objectively, to have investigated further (and was in that sense responsible for both parties' ignorance of JGP's and NBT's misconduct), once Mr Amaslidis of Agrimpex discovered that NBT itself had taken the vessel on voyage charter, as he did in early December 1995. Mr Amaslidis learned this from Jens Gran of JGP, who indicated that he himself had not been informed of it by Mr Lund at the time when the charter was made. JGP were trusted brokers. What Mr Amaslidis learned from Mr Jens Gran revealed that one of JGP's employees, Mr Lund, had broken Agrimpex's policy regarding voyage charters. Mr Amaslidis rang Mr Lund to protest, and also requested him to obtain a copy of the head charter. Mr Schaff can point to a failure to follow up this request. But the request was made in the context of what appeared to be no more than a breach of a policy pursued by Agrimpex, which Mr Jens Gran himself had disclosed. Agrimpex and Huyton remained ignorant of the much more serious breaches of duty, which can now be seen to have taken placed between Mr Lund and Mr Gunnar Gran, directed against Huyton's interests, as well as ignorant of the family relationship between JGP and NBT (which itself would no doubt have raised questions). In parenthesis, it now also seems clear, from the facts recounted at the beginning of this judgment and from JGP's documents obtained under subpoena by Cremer, that Mr Lund and Mr Gunnar Gran (and I have to say that it seems from his signature of certain false addenda, although he did not give evidence before me, quite likely also Mr Jens Gran) would have gone to considerable lengths to put Huyton off the scent, had Huyton sought to investigate further, so that it is unclear that any further attempts to obtain the head voyage charter or to investigate further would at that stage have led anywhere. As it was, Huyton's request for the head charter, in order to see the profit which it was to be presumed that NBT was likely to be making, was not pursued after the holiday period at a time when attention was being directed to other developments. The limited demurrage for which Olympic claimed a lien on 29th December 1995 was also not a matter on which Mr Amaslidis focused, or indeed, a matter which Cremer - co-addressee of Olympic's notice - raised with Huyton for another month. Laytime conditions under back to back voyage charters could differ, part-payment of demurrage might have been made and some difference in demurrage to NBT's profit would not of itself be surprising - it would reflect the very reason why it was Huyton's policy not to voyage charter vessels from other voyage charters. On 30th January and 1st February 1996, Cremer did for the first time disclose concerns about the demurrage in the form of an assertion - not based on more than suspicion, and not in fact correct - that Huyton was party to a charter at lower rates than those claimed from Cremer. Huyton knew that this was not the case. Viewing the matter on the basis that Huyton knew that Mr Lund had breached Huyton's internal policy but were as much deceived as anyone about JGP's and NBT's wider misconduct and deception, I do not think that Mr Schaff's criticism of Huyton's conduct, as objectively unreasonable, can be sustained. It would not be right, in my view, to treat Huyton as in effect responsible for Cremer's suspicion either arising or persisting.
Cremer's final concerns, when Huyton passed on a quality claim and then raised the question of discrepancies, do not seem to me to have been objectively based on anything that Huyton actually did or said. Huyton's conduct was to my mind commercially understandable and reasonable, right or wrong, having regard to its sub-buyer's attitude and its need for proper shipping documents to present under the letter of credit opened by its sub-buyer.
As to (b), both parties were, as I find, victims of misinformation from the Sudan about the movements of goods. Cremer evidently viewed Huyton as misleading it about the location of the part of the goods originally moved. Huyton was, again, being misled, rather than being misleading. Cremer was then given misleading information by its own local agent, information which, if true - as Cremer clearly thought it to be - must have sounded very clear warning signals about Huyton's intentions. If Huyton was being dishonest about what was happening to the goods, the risk that Huyton intended that Cremer should get neither the price nor the goods must have seemed very large. In fact, however, Huyton was not being dishonest, and I am not satisfied that the goods could not and would not have been returned to Cremer's custody, at Port Sudan, had Cremer really ever wanted this.
As to (c), the views expressed in Mr Birkholz's witness statement about Huyton's position as a "front" were not justified in evidence, but they may again have represented the sort of thinking to which Cremer fell prey at the time, although it was, so far as appears, unjustified. Although Huyton's accounts have not been produced, and were not apparently requested on discovery, Huyton was able to pay the $4,502,813.94 on 9th February 1996 without difficulty and before recovering any sum from Sotisco.
Taking next (e), Cremer's fears about Huyton's status, financial and otherwise, appear to have developed ex post facto, after the dispute arose. This contract was in fact made against a background of previous contracts which Huyton (as distinct, it appears, in one case from Cremer) had performed entirely satisfactorily, even though none had been as large as this. Cremer was, I find, perfectly happy at the outset of the present contract to deal with Huyton.
I turn lastly to (d). The reality, in my judgment, is that Cremer would not have wished to have the goods back in the Sudan in any event, if it could avoid that. Its natural reaction would always have been to seek a solution whereby Huyton agreed to take or keep them, and paid their price. Mr Schaff said that this was a situation where illegitimate pressure by Huyton, in the form of a threat not to pay the price even though it or its equivalent was due, left Cremer with no option but to accept Huyton's terms. Mr Birkholz said that Cremer was confident in its position that the price was due. If that was certain to be the outcome of any dispute, then all that Cremer had to be concerned about was Huyton's ability to pay. It is not suggested that Cremer faced any overwhelming or unduly onerous financial burden having to carry the $5 million until it succeeded in arbitration, assuming that Huyton could and would then have paid any such sum which Cremer was awarded. Cremer's concern was about Huyton's ability and willingness to pay any such sum. But that concern was, it seems to me, substantially generated by matters for which Huyton had no responsibility, and which lay outside any refusal by Huyton to make such payment - such as Cremer's perception that Huyton was an untrustworthy front, based in turn on Cremer's belief that Huyton was deceiving it about demurrage and the whereabouts of the goods. In addition, however, I do not believe that Cremer can have been impervious to the thought that it might be wrong in its assertion that the price was due. If it was or might be wrong, then an adamant insistence on receiving payment or going to arbitration could have led to a situation, some time after the event, when Cremer had to attempt to dispose of the goods at whatever might then be their market value. Again, Cremer clearly thought that Huyton or its sub-buyers were making off with the goods, and would by then have irreversibly disposed of or used them. This thinking too is not borne out by the actual facts, as they are now known, and, once again, it was Cremer's mistaken perception of what Huyton was doing, rather than the actual or threatened breach by non-payment itself, which in this situation, in my judgment, played the most powerful role in Cremer's decision to accept the compromise.
Mr Males also relied on the smallness of the concession which Huyton extracted. But it seems to me that Mr Schaff is right, in principle, that the small size of an advantage extracted does not meant that it was not extracted by duress. Where the advantage being sought is small and easy to concede, the party under pressure may find it more difficult to refuse to concede it. Having said that, the smallness of the benefit required is also a factor which might make the party pressed to concede it more ready to do so in the interests of amicable compromise, even though other alternatives would have been open to him.
Although Huyton's claim to the demurrage and guarantee charges was made bona fide and on reasonable grounds, Mr Schaff relied on the fact that it was extraneous to the issue which had arisen about payment and conforming documents and whether the contract had determined. However, it represented a claim arising under the same contract. Further, it was a claim in relation to which Huyton had some reason to look askance at Cremer's attitude, particularly in the light of Cremer's apparent concession on 15th January that it would pay the demurrage in full; as I have indicated, that message was in fact probably an ill-phrased message prepared by Cremer's administration department with nothing more than the lien claims in mind, but Huyton had at the time no reason to know this. Only on 30th January did Cremer raise any explicit query about demurrage, and on 1st February Cremer sought to support this by asserting that it had, subsequently to 15th January, itself received information that Huyton was charging Cremer an amount more than Huyton had actually had to pay under its own charterparty. As far as Huyton was concerned this was simply untrue (and in fact, although Huyton did not actually know this, it was not even true that Cremer had received information to that effect). It seems to me that, against this background, it is understandable that Huyton should decide that it was not prepared to have anything more to do with the matter, if Cremer was going to pursue its points on demurrage and charges. Huyton was giving up an arguable case that the goods were now Cremer's responsibility, and it seems to me that it was entitled, before so doing, to look at this other contractual dispute, raised with it late in the day, and to insist on its final resolution as part of an overall arrangement.
I come back to the question whether, assuming that Huyton did commit an actual and threatened breach of contract in refusing to pay the price, the agreement which was reached on 6th/7th February 1996 was induced, or Cremer's will was deflected, in any significant way by such breach - as opposed, for example, to Cremer's own perception of the merits and demerits of alternative courses open to it, influenced to a major extent by Cremer's mistaken perceptions about Huyton's conduct and intentions. It seems to me, as I have said, that in so far as Cremer felt under pressure into entering into the agreement at all, a major element in the pressure which it perceived came from its own misconceptions about the position, for which Cremer itself and/or JGP and NBT were responsible. I note that in Barton, in addition to a number of incidents when Armstrong was undoubtedly responsible for threats to Barton's life and safety, there was an incident in which a man called Vojinovic informed Barton that he had been hired by Armstrong to kill Barton, with which the majority in the Privy Council dealt as follows:
"It is true that the judge was not satisfied that Vojinovic had been employed by Armstrong but if one man threatens another with unpleasant consequences if he does not act in a particular way, he must taken the risk that the impact of his threats may be accentuated by extraneous circumstances for which he is not in fact responsible."
That statement was however related to extraneous circumstances, for which Barton had no more responsibility than Armstrong. The misconceptions under which Cremer was labouring fall into a different category. They are not Huyton's responsibility and were outside the risk that Huyton may be said to have taken. I think that a court should take that into account, and in effect put such misconceptions aside, when considering the sufficiency and significance of any causal link between any illegitimate pressure applied by Huyton and Cremer's reaction. Even assuming that a conclusion that Huyton was in breach or threatened breach of contract imposes on Huyton an initial factual onus to show that Cremer was not thereby caused to enter into the agreement of 6th/7th February 1996, it seems to me that, once Cremer's misconceptions are taken into account, the onus shifts to Cremer to show that it would still have entered into that agreement, aside from such misconceptions, simply on the basis of Huyton's breach or threatened breach of contract. I do not think that this is established.
Taking the evidence which I have heard from Cremer's side at its face value, it is evident that Cremer felt very strongly about the demurrage and guarantee expenses. But an important reason for Cremer's strength of feeling and for its actual decision to accede to Huyton's demands was Cremer's (erroneous) perception that Huyton was acting in bad faith towards it. Once Cremer's misconceptions in this respect are put aside, it is far less clear that it would have acted as it did, or would have done so because of Huyton's breach or threatened breach rather than for reasons of choice. It seems to me that Cremer would in likelihood have acted in one or other of the following two ways: (i) Either Cremer would simply have stuck to its stated position, refusing to enter any such agreement as that of 6th/7th February 1996, and would have pursued Huyton in arbitration for the price or damages measured by reference to the price, unless Huyton took a less rigid line. On this basis, it was not any illegitimate pressure applied by Huyton, but Cremer's misconceptions, which led to the agreement now challenged. (ii) Alternatively, if one assumes that Cremer would still have made the agreement which it did, it would have done so not because the course identified in (i) would not have been practical if Cremer could have been assured of its success, but because (a) Cremer would have had well in mind, in relation to an unusual and complex dispute, that it could be wrong and that, if this proved to be so, its position in respect of the goods and the market might by then really be prejudiced, and/or because (b) at the end of the day Cremer was neither commercially nor financially greatly affected either way by the deduction on account of demurrage and guarantee expenses on which Huyton was insisting. Cremer had, as I have pointed out, very little exposure, having passed the amount of Huyton's demurrage claim, and more, to its own Romanian sellers, who were not aware - and remain to this day unaware - that it posed any problem. On this hypothesis, although Cremer would not have entered into the agreement but for Huyton's actual or threatened breach of contract, it could not, in my judgment, show that the pressure applied by Huyton deflected its will or constituted a sufficiently significant cause of the agreement for it to be unconscionable for Huyton to rely on the agreement.
In the result Cremer's defences to this action fail on the basis that (a) by the agreement dated 6th/7th February 1996 Cremer agreed irrevocably to withdraw the demands which it now seeks to pursue in arbitration against Huyton and (b) this agreement binds Cremer. It binds Cremer, because there was no illegitimate pressure, since Huyton never owed the price or its equivalent. But, for the reasons I have given, even if there had been illegitimate pressure, Cremer's case on economic duress should still, I believe, have failed, on the ground that there was no sufficient deflection of will or no sufficiently significant causal link - between such pressure and the agreement - to make it unconscionable for Huyton to insist on the agreement. Huyton is in these circumstances entitled to the relief sought.
October 21st 1998
reement binds Cremer. It binds Cremer, because there was no illegitimate pressure, since Huyton never owed the price or its equivalent. But, for the reasons I have given, even if there had been illegitimate pressure, Cremer's case on economic duress should still, I believe, have failed, on the ground that there was no sufficient deflection of will or no sufficiently significant causal link - between such pressure and the agreement - to make it unconscionable for Huyton to insist on the agreement. Huyton is in these circumstances entitled to the relief sought.
October 21st 1998