ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION, COMMERCIAL COURT
Mr Justice Field
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE TOMLINSON
SIR MARK POTTER
| National Shipping Company of Saudi Arabia
|- and -
|BP Oil Supply Company
Mr Henry Byam-Cook (instructed by Hill Dickinson LLP) for the Respondent
Hearing dates : 20/21 July 2011
Crown Copyright ©
Lord Justice Tomlinson :
FREIGHT RATE: FOLL BASIS 1/1
LUMPSUM USD 3.5 MILLION
IF ADDITIONAL LOAD/DISPORT, VITOL
INTERIM PORT CLAUSE TO APPLY
DEMURRAGE RATE: USD 70,000 PDPR
LAYTIME: 96 HOURS
PORT CHARGES: ALL PORT CHARGES TO BE FOR
"Charterer shall pay for any interim load/discharge port(s) at cost. Time for additional steaming, which exceeds direct route from first loadport to furthest discharge port, shall be paid at the demurrage rate plus bunkers consumed, plus actual port costs, if any. The reasonable, estimated costs will be payable as an on account payment together with freight, followed by final invoice plus all supporting documents as soon as possible but not later than ninety (90) days after completion of this voyage."
"5.2 Charterers shall have the option of instruction owners to load the Vessel at more than one berth at each loading port and to discharge at more than one berth at each discharge port in which event Owners shall, in the first instance, pay expenses arising from any of the following movements of the Vessel:-
5.2.1 unmooring at, and pilotage and towage off, the first loading or discharge berth;
5.2.2 mooring and unmooring at, and pilotage and towage onto and off, any intermediate or discharge berth; and
5.2.3. mooring at, and pilotage and towage onto, the last loading or discharge berth.
Charterers shall reimburse Owners in respect of expenses properly incurred arising from any of the aforementioned movements, upon presentation by Owners of all supporting invoices evidencing prior payments by Owners.
5.3 Charterers shall reimburse Owners in respect of any djues and/or other charges incurred in excess of those which would have been incurred if all the cargo required to be loaded or discharged at the particular port had been loaded or discharged at the first berth only. Time used on account of shifting shall count as laytime or, if the Vessel is on demurrage, as demurrage, except as otherwise provided in Clauses 17 and 18.2.
. . .
6.3 Notwithstanding tender of a valid NOR by the Vessel such NOR shall not be effective or become effective for the purposes of calculating laytime, or if the Vessel is on demurrage, demurrage unless and until the following conditions have been met:-
. . .
6.3.2 In the case of the Vessel not berthing upon arrival and being instructed to anchor, she has completed anchoring at an anchorage where vessels of her type customarily anchor at the port or, if she has been instructed to wait, she has reached the area within the port where vessels of her type customarily wait;
. . .
7.3.2 Laytime or, if the Vessel is on demurrage, demurrage, shall commence, at each loading and each discharge port, upon the expiry of six (6) hours after a valid NOR has become effective as determined under Clause 6.3, berth or no berth, or when the Vessel commences loading, or discharging, whichever first occurs.
7.3.3 Laytime or, if the Vessel is on demurrage, demurrage shall run until the cargo hoses have been finally disconnected upon completion of loading or discharging, and the Master shall procure that hose disconnection is effected promptly…
7.4 Charterers shall pay demurrage at the rate stated in Section J of PART 1 per running day, and pro rata for part of a running day, for all time that loading and discharging and any other time counting as laytime exceeds laytime under this Clause 7. If, however, demurrage is incurred by reason of the causes specified in Clause 17, the rate of demurrage shall be reduced to one-half of the rate stated in Section J of PART 1 per running day, or pro rata for part of a running day, for demurrage so incurred.
. . .
20.1 Charterers shall be discharged and released from all liability in respect of any claim for demurrage, deviation or detention which Owners may have under this Charter unless a claim in writing has been presented to Charterers, together with all supporting documentation substantiating each and every constituent part of the claim, with ninety (90) days of the completion of discharge of the cargo carried hereunder.
20.2 Any other claim against Charterers for any and all other amounts which are alleged to be for Charterers' account under this Charter shall be extinguished, and Charterers shall be discharged from all liability whatsoever in respect thereof, unless such claim is presented to Charterers, together with full supporting documentation substantiating each and every constituent part of the claim, within one hundred and eighty (180) days of the completion of discharge of the cargo carried hereunder."
. . .
32. Charterers shall deduct 1.25% address commission from freight, (including fixed and variable freight differentials), and any dead freight and demurrage payable under this charter."
"5. I turn to the factual background. The vessel arrived at Freeport, the nominated loadport, and tendered notice of readiness at 0930 on 6 February 2008. She berthed at berth 10 at the BORCO terminal at 1712 on 7 February and started loading operations at 2236 the same day, loading cargo by ship-to-ship transfer, from the BRITISH WILLOW and the BARING SEA, and from shore tanks. At 0136 on 11 February 2008 the hoses were disconnected and at 0330 that morning the vessel left berth 10 to drift off Freeport awaiting the arrival of the GANGES SPIRIT, from which she was due to load a further parcel of cargo. Her place at berth 10 was taken by another vessel, the CAP GEORGE.
6. The GANGES SPIRIT arrived off Freeport the following day (12 February 2008) and gave notice of readiness to discharge her cargo at 0735. At 1025 that day, the BORCO terminal suspended operations at the jetties and at 1354 the same day closed operations at the jetties, due to deteriorating weather conditions.
7. The intention had been for the GANGES SPIRIT to berth at berth 9 and to discharge a parcel of cargo into the ABQAIQ at berth 10. However, the arrival draft of The GANGES SPIRIT was too great for berth 9, requiring her to berth at berth 10 to discharge part of her cargo into a shore tank, before shifting to berth 9. As it happened, however, when the GANGES SPIRIT arrived, the ABQAIQ and the GANGES SPIRIT had lost their turn for berths 9 and 10, which were now occupied by the CAP GEORGE and the SANKO BRIGHT. The ABQAIQ eventually re-berthed at berth 10 at 0300 on 17 February and between 0654 on 17 February and 0954 on 18 February she loaded cargo from the GANGES SPIRIT and a shore tank. At 1312 that day hoses were disconnected and an hour later she unmoored and headed for Singapore.
8.The ABQAIQ arrived at Singapore and tendered notice of readiness at 1200 local time on 22 March. At 1306 she anchored awaiting a berth and shifted to her discharging berth between 1324 and 1600 on 28 March. She completed discharge and hoses were disconnected at 1500 on 30 March."
"Per Joanne Radke's below, please advise who in your group is handling."
"I received your confirmation of receipt for demurrage claim.
I need confirmation of receipt of attached."
As far as I can see this joined the email string to which I referred in the last paragraph.
Please respond to Athena."
In point of form Mr Orona was I think being asked to acknowledge receipt of the Time and Bunkers Invoice. The documents before us do not indicate whether he in fact did so.
"Subject: RE: Abqaiq/BP 29/01/08: Supplementary Invoice For Port Charges + Demurrage
I have gone over the claim for the Abqaiq and see that time at Singapore should have started at 13:06 at anchorage as per BP Voy4 6.3.2.
I have a counter offer of gross demurrage of $317,625.00 with a 1.25% commission for a net of $313,654.69
Also, I have forwarded the other charges for this vessel to my operator Joanne. For settlement of those invoices. Please contact Joanne."
"Subject: RE: Abqaiq/BP 29/01/08: Supplementary Invoice For Port Charges + Demurrage
Good Day Athena,
Owners hereby in agreement with Charterer's comment.
For sake of good order, please find enclosed revised final agreed demurrage invoice.
Kindly advise us the remittance details/value date to track funds from our end."
Combine All ports: 4.5375@70,000 (Demurrage)
Addr Comm 317,625.00 x 1.25%
I will revert to this point in due course, merely observing for the moment that wording to which the judge attached particular importance "Combine All ports . . . demurrage" appeared in both versions of the invoice, including that sent on 2 April 2008.
"Per below, Owners are in agreement with your revised demurrage calcs. Attached please find Owners' revised demurrage invoice. Please advise remittance details."
"HERE'S THE 2ND ONE!
PLEASE CONFIRM ALL IN ORDER NOW."
It is unclear from the documents before us what prompted Ms Sarris to re-send the documents. However, I note that at the end of his email of 3 June 2008 Mr Orona had said:-
"Also, I have forwarded the other charges for this vessel to my operator, Joanne. For settlement of those invoices. Please contact Joanne."
Presumably therefore there had been some contact between Ms Sarris and Ms Radke, possibly by telephone, as a result of which Ms Radke had asked for the invoice and the supporting documents to be re-sent. It will be recalled that these had first been sent to Ms Radke on 2 April, and passed on by her to the Charterers' demurrage group.
"Attached invoice does not have full supporting documentation attached for the waiting time declared. Based on what little documentation was submitted for the claim, this time should be demurrage not waiting time and should be declared as such. Further bunkers for a vessel waiting on demurrage are not Charterers responsibility. Please send proper supporting documentation and revise invoice to show demurrage and delete the bunker costs."
I would simply comment at this stage that the sending of this request is inconsistent with any intention to meet a revised invoice with the contention either that all claims for demurrage arising out of the charter had been finally settled or that the claim which an invoice revised in compliance with Charterers' request would present would be time-barred.
Owners would like to advise Charterer's (sic) that the freight for the subject voyage was paid basis 1:1. Additional ports for loading/discharging will be charged basis Vitol Interim port clause & CP clause 5.3
Owners would like to thank Charterer's for settling the demurrage claim earlier, the additional time calculated is based on demurrage rate and the last bunker purchased invoice which has been passed to Charterer's earlier. For Charterer's guidance have attached cargo documents for kind perusal.
Hence owners stand by their claim and request Charterer's to review claim positively."
"It's been a week since our response to chrtrs comments, Owners now want Charterers to settle this claim asap."
"We, the National Shipping Company of Saudi Arabia, share an excellent relationship with your organisation. FYG, we have done six fixtures in the last 12 months.
We refer to NSCSA/BP CP dated 29 Jan 2008 (performing vessel Abqaiq)
On completion of the voyage, a supplementary invoice was raised on 31 March 2008.
After numerous reminders through the normal broker channel, we have only received a response saying the claim is under review.
We have had excellent record of closing out of claims with BP, do realize that this may be a "one off" case.
We request you to review the enormity of the amount involved, and would much appreciate your looking into this matter and expediting the close-out."
"Dear Captain Prasad:
According to my operator, this invoice was sent back to the broker advising that the supplemental invoice should be part of demurrage as time waiting to berth the vessel and that the Charterer should not be responsible for any bunkers consumed as this was part of a 2 port option originally agreed to by the parties.
Apologies for any confusion this may have caused your company."
"Dear Mr Guzik
Thank you for your prompt reply. We attach correspondence wherein we have replied to the counter on the 21 August 2008, and this was acknowledged by your operator on 29 August 2008.
We must add with regret that the delay in closing out this claim is frustrating.
We would much appreciate your further involvement in ensuring this claim is closed out soonest.
Thank you for your help this far."
In regards to your supplementary invoice about the Abqaiq. I have spoken with Joanne Radke about this and she finds that this invoice should have been part of the demurrage claim since it is in fact time the vessel waited for product.
However, a claim for the Abqaiq has already been settled in regards to this vessel back on June 9th in the amount of $313,654.69.
If you have any further questions, please feel free to contact me at your earliest convenience."
"Dear Mr Orona
Thank you for your response.
We did present a demurrage claim – the same was settled as mentioned by you.
The claim in discussion was presented based on the following that was agreed in the CP.
FREIGHT RATE: FOLL BASIS 1/1
LUMP SUM USD 3.5M
IF ADDITIONAL LOAD/DISPORT, VITOL INTERIM PORT CLAUSE TO APPLY.
Please do realize that it is extremely frustrating for us to have had numerous correspondences, with no improvement in the status of this substantial claim.
We do realize that there is an excellent relationship between the companies, and we would much appreciate an expedited solution."
I have spoken with my manager about reopening a demurrage claim and he is in agreement that this is not done.
Furthermore, since you consider this invoice an interim port clause invoice and not demurrage due to the bunkers that were used, I would recommend going through operations to settle this invoice. However, since the vessel never left the port, it is highly unlikely that an interim port clause in valid in this case.
I have brought this issue to the attention of my manager since there will need to be a commercial decision made on this invoice since I only handle demurrage."
"The Claim in this Action"
"The decision below"
1. Was the parties' agreement of 4 June 2008 in full and final settlement of any and all claims for demurrage under the charter?
2. If not, is the claim for the balance of demurrage time-barred under clause 20.1?
. . .
5. Is the Claimant entitled to the cost of bunkers consumed by the vessel between 0330 on 11 February and 1412 on 18 February under clause 5.2 or clause 5.3 on their true construction?
The parties were agreed that issue No.1 was purely a matter of construction of the documents in the agreed bundle. They were similarly agreed that issue No.2 was a matter of construction, and there was no obstacle to it being determined summarily. Presumably their agreement was to the effect that the issue raised issues of construction both as to the meaning and effect of clause 20 of the charterparty and of the documents presented in support of the various claims. Plainly issue No.5 is likewise to be resolved as a matter of the proper construction of clauses 5.2 and 5.3 of the Charter.
The appeal to this court
"Was the agreement reached by the exchange of emails from Mr Orona and Mr Sunder on 3 and 4 June a settlement of any and all claims for demurrage or just a settlement of the demurrage claim in respect of the periods 2224 on 25 March 2008 to 1324 on 28 March 2008 and [between 1600 on 28 March and] 1500 on 30 March 2008?"
"35. I decline to accept Mr Macey-Dare's submissions. In my view, the relevant background for interpretative purposes includes: (i) the presentation by the Claimant of two quite different claims, one for demurrage and one for additional freight, which were deliberately being advanced separately and in respect of different periods of time under the charter; (ii) the fact that demurrage is a well known entitlement under voyage charters which arises once the stipulated laytime has been exceeded; and (iii) the Amended Demurrage Invoice contained the details set out in paragraph 22 above, including, in particular: "Combine All ports: 4.5375@70,000 (Demurrage) USD 317,625.00".
36. Construed against this background, what was being settled was all and any claims for demurrage under the charter. The only other period in which demurrage was potentially claimable was the period prior to 25 March 2008 and a different claim for additional freight was being deliberately made in respect of this period. Accordingly, in my judgement, the parties were proceeding on the basis that the only claim for demurrage that was going to be made under the charter was the claim made in the Amended Demurrage Invoice and by settling that claim, they were settling all and any claims for demurrage under the charter. There is no question here of the Defendant unfairly taking advantage of a mistake it knew the Claimant had made. On the contrary, the Claimant was well aware of Ms Radke's suggestion that the additional freight claim be re-submitted as a demurrage claim but it persisted in maintaining two separate claims, one for demurrage and one for additional freight. In these circumstances, the Defendant was entitled to proceed on the basis that no demurrage claim was being made or was going to be made in respect of the period before 25 March 2008, and it was on that basis that the parties entered into the settlement that resulted from Mr Sunder's acceptance of Mr Orona's counter offer.
37. I would add for completeness that the words "Without Prejudice" in Mr Sunder's email are not to be construed as a reservation of a right to claim demurrage in respect of the period prior to 25 March 2008. Instead, those words are either to be ignored as mere surplusage, or, if they are to be given any meaning, they mean that the acceptance of Mr Orona's offer is without prejudice to the claim for Port Costs and the claim made in the Time and Bunkers Invoice, the latter claim being a claim for additional freight, not a claim for demurrage. I am also of the view that the reference to "other charges" in Mr Orona's email of 3 June 2008 is a reference to the port charges covered by the Port Costs Invoice and the words "those invoices" refer back to those charges and to the vouching invoices itemising the port costs claim."
Is the claim now made for demurrage time-barred?
"Charterers shall be discharged and released from all liability in respect of any claims Owners may have under this Charter Party (such as, but not limited to, claims for deadfreight, demurrage, shifting expenses or port expenses) unless a claim has been presented to Charterers in writing with all available supporting documents within 90 . . . days from completion of discharge of the cargo concerned under this Charter Party."
There is no material distinction between that clause and clause 20.1 of the BP VOY4 form.
"The commercial intention underlying this clause seems to me plainly to have been to ensure that claims were made by the owners within a short period of final discharge so that the claims could be investigated and if possible resolved while the facts were still fresh … This object could only be achieved if the charterers were put in possession of the factual material which they required in order to satisfy themselves whether the claims were well-founded or not. I cannot regard the expression "all available supporting documents" as in any way ambiguous: documents supporting the owners' claim on liability would of course be included, but so would a document relating to quantum only, just as a doctor's bill would be a document supporting a claim for personal injury. The owners would not, as a matter of common sense, be debarred from making factual corrections to claims presented in time … nor from putting a different legal label on a claim previously presented, but the owners are in my view shut out from enforcing a claim the substance of which and the supporting documents of which (subject always to de minimis exceptions) have not been presented in time."
"42. In my judgement, in the circumstances of the instant case, the claim made in the Time and Bunkers Invoice is not to be regarded as substantially the same claim as the demurrage claim now advanced. On the contrary, the Time and Bunkers Invoice deliberately advanced a claim not for demurrage, but for additional freight under the Vitol Interim Ports Clause. Thus: (i) the claim was in respect of the period of 7.445 days between 0330 on 11 February 2008 and 18 February 2008 at the loadport, with no reference being made to the running of laytime or to when laytime was alleged to have expired; (ii) the documents sent with the claim were not demurrage-type documents; (iii) the invoiced sum includes an element for bunkers, whereas there is no liability for bunkers under a demurrage claim; (iv) the trigger points for the start and the end of the claimed period (i.e.vessel line away) are the trigger points under the Interim Port Clause and not the trigger points for a demurrage claim (under clause 7.3.3 laytime and demurrage run until the disconnection of hoses).
43. I also accept Mr Byam-Cook's submission that, even if the claim made in the Time and Bunkers Invoice can be regarded as [a] demurrage claim, that invoice was not accompanied by "all supporting documentation substantiating each and every constituent part of the claim" as required by Clause 20.1. As Mr Byam-Cook contended, a demurrage claim should have been presented together with at least notices of readiness, a statement of facts, letters of protest and pumping logs, yet the Claimant presented none of these in support of the claim in the Time and Bunkers invoice. Mr Macey-Dare argued that the Claimant presented the necessary documents by presenting them with the Demurrage Invoice but I reject this submission. The Claimant was obliged to comply carefully and strictly with the requirement to present all supporting documentation substantiating each and every constituent part of the claim and it is not enough for the Claimant now to seek to rely on documents presented with an entirely separate claim from the claim for additional freight which was made through the Time and Bunkers Invoice."
"Certainty is a crucial foundation for commercial activity. Certainty is only achieved when the vendor is left in no reasonable doubt not only that a claim may be brought but of the particulars of the ground upon which the claim is to be based. The clause contemplates that the notice will be couched in terms which are sufficiently clear and unambiguous as to leave no such doubt and to leave no room for argument about the particulars of the complaint. Notice in writing is required in order to constitute the record which dispels the need for further argument and creates the certainty."
See at page 442
"In the present case it might well be fair to say that the substance of the Owners' claim was presented in time inasmuch as it was always clear that they were claiming a particular number of days and hours had be spent at Escravos when no berth had been accessible for the vessel. But an essential document in support of every demurrage claim is the notice of readiness and if the only notice of readiness submitted is a contractually invalid notice, the claim cannot be said to be "fully and correctly documented" within the wording of clause 15(3). That is not necessarily to say that alternative laytime statements and invoices would always have to be submitted to avoid the extinction of an alternative claim but merely to say that the documents to be submitted pursuant to the clause must include a valid notice of readiness. It is not unreasonable for Charterers to require such a notice nor is it unreasonable to expect Owners to supply it."
I find there support for my view that it is the substance of the presentation which is important.
Are the Charterers liable under Clause 5.2 or 5.3 for the cost of bunkers consumed by the vessel between 0330 on 11 February 2008 and 0300 on 17 February 2008?
Sir Mark Potter:
Lord Justice Ward :