England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(HIS HONOUR JUDGE CHAMBERS QC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		9th October 2008

Lord Justice Thomas:

1. On 23 July 2005 the vessel the Ocean Dirk became a CTL. As I have been told today, this vessel was a supply and tug vessel operating in the eastern Mediterranean and Red Sea. She was a vessel built in the 1980s and owned by a small group comprised of single ship-owning companies. The vessel was insured by the claimant which, as its name implies, is a subsidiary, though not wholly owned, of the well-known international group of insurance companies; the particular company in question is incorporated in Egypt. It insured this vessel and sought reinsurance from the defendants, a company incorporated in Greece.
2. The short point in the case, and the basis upon which the judge decided the question, was: was there a contract of reinsurance on a particular date? There was also an issue of much more general importance relating to the way in which section 53(1) of the Marine Insurance Act applied. But on the basis of the judge's decision in the case he decided that he need make no more than some observations about it, referring in particular to Dame Elizabeth Gloster's Donald O'May lecture on section 53, with the title "Who pays the piper, who calls the tune".
3. But the particular point upon which the judge decided it related to a very simple question as to whether there was a concluded contract of reinsurance before the vessel sank. It was the primary case of the claimant that there was a contract on 30 March 2005, alternatively on 2 April 2005. The judge rejected the case that there was an agreement on 30 March 2005, and concluded there was a contract on 2 April 2005.
4. What in essence happened was that in the prior negotiations, as one would have expected, the proposed re-insurance terms contained a class-maintained warranty. As I have observed, in my experience, given the age and type of market in which this vessel was operating, no prudent underwriter would have entered into a contract without such terms. That seems to be accepted by Mr Blackwood, who has appeared on this matter for the defendants even though it is a without notice application. Secondly, although that term was in the earlier exchanges, when an e-mail was sent by the claimants annexing terms, on 31 March 2005, that term was not included in those terms. The e-mail annexing the terms stated:

"Further to your e-mail dated 31.03.2005, kindly find attached the slip for the above account as requested."

The response from the defendants to that came on 2 April:

"Cover is bound with effect from 31.3.05 as we had quoted, ie, 1.33% H&M and 0.4% IV for our 30% line.

Our documents to follow."

5. The way the judge decided the case was that as at that date, the e-mail was unequivocal acceptance of the terms annexed to the e-mail, and that it was plain that the parties had agreed the terms of the policy should include the class maintained warranty to which he referred as the "IACS condition". He said at paragraph 34:

"Arguably Aigaion had agreed to provide cover that was limited to the terms of the slip. In reality, whatever the nature of the jurisprudential mechanism used to establish the fact, the parties had agreed that the terms of the policy should include the IACS condition."

6. What subsequently happened was that when the defendants sent the policy, it included the class maintained term but also terms which were unacceptable and which the claimants contended were not agreed relating to payment terms.
7. It is therefore the submission, that has been attractively made today by Mr Duncan Matthews QC who has appeared on behalf of the defendants, that what the defendant was accepting was not what had been offered. Then he says, looking at the commercial importance of the class-maintained warranty, and the judge's view, unexplained, that it would somehow be incorporated, how could that be achieved jurisprudentially? The judgment is silent. He therefore says the parties were not ad idem on an important term. That was not cured by what subsequently happened.
8. Unfortunately, the judgment contains no answer to the question. I have canvassed, when the parties were before me, whether I should attempt in an ex parte hearing to try and fill that void. I do not think I should turn this hearing into a hearing for which the prospective respondents were not fully prepared; and, secondly, it cannot possibly be right that a single judge of this court should in the circumstances effectively decide the issue on a matter that had not been dealt with in the judgment of the trial court.
9. However, I have indicated my own view of the matter. It seems to me that the right course is to permit the defendants, the appellants before me, to bring the appeal but to protect completely the prospective respondents; so that within a short period of time, which I shall indicate in a moment, the appellants can decide whether they wish to incur the cost and expense of coming to this court to have the matter dealt with.
10. It seems to me that therefore what I propose to do is grant permission to appeal, order that within seven days of today's date the appellants must state whether they with to pursue appeal and, if they do so -- and this is a time to which I will not` abridge -- that within a further seven days the whole of the sum that the judge ordered to be paid is secured, probably, given the current financial circumstances, by bringing the money into a bank account, suitably approved, or into court, so that there can be no doubt about the security of the sums that are held. I am not certain what the mechanism for that is at present, but there must be one. The currency concerned, I think we are dealing with here, is dollars.
11. I have made an enquiry with the Listing Office today and been told that there is a very real prospect that this case, if confined to the issue presently before me, can be heard on 14 November. Therefore I intend to order the additional sum of interest between the date of the judgment and 14 November be part of the security. I have asked those behind counsel to go outside and make the relevant calculations; I also will order security for costs be provided in a sum I will give counsel an opportunity of agreeing; if not, they can send me a short e-mail telling what their respective contentions are, but a two-hour appeal should not be too expensive. Those time limits I will not abridge at all. Therefore effectively I am the putting the appellant to his election as to whether he wants to incur all this cost with a result that I think may be quite clear.
12. There is an issue, as I have indicated, of great importance and of some interest in relation to section 53. It is a well-known chestnut on which views below and in this court differ. Whether the respondents in this appeal really wish to cross-appeal on that basis must be a matter for them; but if they do so, they do so on the basis that (1) the case may not be heard on the date indicated and (2) I do not believe it is fair, if they wish to run that point, to order the provision of additional security for interest beyond the date of 14 November. It is their election to do as they think fit in respect of that.

Order: Application granted.