QUEENS BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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LOSINJSKA PLOVIDBA BRODARS OVO DD | Applicants | |
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(1) VALFRACHT MARITIME COMPANY LIMITED | ||
(2) VALFRACHT RO-RO LINE LIMITED | Respondents |
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Julian Cooke- (Instructed by Davies Arnold Cooper, solicitors for the Respondents)
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Crown Copyright ©
Mr Justice Andrew Smith
1. This is an appeal under section 69 of the Arbitration Act 1996. It raises a point of construction of a charterparty on the Baltime form (box layout) with additional clauses.
2. The appellants are the Owners of the motor cargo vessel "Lipa". The respondents are the
Charterers. The charterparty is dated 8 September 1993. The vessel was delivered between 8 and 12 September 1993. Originally the charterparty was for a duration of between 3 and 6 months, but it was extended on several occasions and the vessel was redelivered on 29 December 1998.
3. A question has arisen whether the charterparty, properly interpreted, contains a warranty about the fuel consumption of the vessel, the Charterers complaining that in breach of warranty she consumed excessive quantities of fuel.
4. The charterparty provided for London arbitration and disputes between the parties were referred to Mr Timothy Rayment and Mr George Lugg. The question of nterpretation of the charterparty to which I have referred was determined as a preliminary issue, and the arbitrators issued their interim final award on the question dated 12 July 2000.
5. What has been referred to as the preamble of the charterparty reads as follows:
"It is agreed between the party mentioned in Box 3 as disponent Owners of the
Vessel named in Box 5 of the gross/net Register tonnage indicated in Box 6,
classed as stated in Box 7 and of indicated horsepower as stated in Box 8,
carrying about the number of tons dead weight indicate in Box 9 on Board of
Trade summer freeboard inclusive of bunkers, stores, provisions and boiler
water, having as per builder's plan a cubic-feet grain, bale capacity as stated in
Box 10, exclusive of permanent bunkers which contain about the number of tons
stated in Box 11, and fully loaded capable of steaming about the number of knots
indicated in Box 12 in good weather and smooth water on a consumption of
about the number of tons best oil-fuel stated in Box 12 now in position as stated
in Box 13 and the party mentioned as Charterers in Box 4 as follows...
There are then set out, with typed amendments and deletions, the usual printed and numbered clauses.
6. Box 12 of the form is completed after the printed words "Speed capability in knots (abt.) on a consumption in tons (abt.) of with the words "see C1.26". Other boxes referred to in the opening words of the charterparty are similarly completed: boxes 6,7,9,10 and 11. Box 8 is left blank. Boxes 3,4 & 5 are completed with the name of the Owners, the Charterers and the vessel (together with the Owners' and the Charterers' places of business). Box 13 is completed with the word "trading".
7. Clause 26 of the charterparty is a typed clause introduced with the words "Vessel's description". There follow two pages of typescript setting out particulars of the vessel including her name, her flag and her disponent Owners, as well as (by way of example) such provisions as "Telex equipped", "Bowthruster equipped", details of her engines, her cargo capacity and her cargo handling equipment, (e.g. that there should be a 20m.t. gantry crane on the weatherdeck). The words about consumption, upon which the Charterers rely, are these:
"speed/consumption in good weather/calm sea, wind not exceeding Beaufort scale 4, on even keel
-about 11 knots on about 14 mt IFO(180 cst) + about 1.5 mt Gasoil.
-about 12 knots on about 17.5 mt IFO (180 cst)) + about 1.5 m Gasoil
-about 14 knots on about 21 mt IFO (180 cst)) + about 1.5 mt Gasoil
-about 16 knots on about 33 mt IFO (180 cst)) + about 1.5 mt Gasoil
In case carrying reefer containers Gasoil consumption increases to about 2.1 mt.
Port consumption:
-working about 2.4 mt Gasoil
-idle about 1.5 mt Gasoil"
It is to be observed that of the many provisions found in clause 26, only those concerning speed and consumption contain within them the qualification "about".
8. At the end of clause 26 there is the important paragraph, "All details `about' - all details given in good faith but without guarantee". It is the Owners' contention that because of these words no warranty is given in respect of the matters set out in clause 26 or at least that no warranty is given in respect of the consumption of the vessel.
9. The Arbitrators did not accept this contention. They proceeded on the basis that a meaning had to be given to the closing words of clause 26 which applied not only to the consumption of fuel but to all other items in the clause as well. Accordingly they said we were not persuaded that these words removed all promises from clause 26, for example what would the position have been if the vessel had not been fitted with a bow thruster or if a gantry crane was only capable of lifting five tonnes?". They concluded that "although the words `without guarantee' prevented the Owners from being held to an absolute warranty, they did not remove all obligations from the Owners shoulders. To do so would have run counter to common sense and business efficacy". They then sought to give the words some meaning and concluded that "so far as concerned the consumption warranties, they should be taken to give an additional allowance over and above that imported by `about'." They therefore held that, whereas otherwise they would have allowed a five per cent margin on warranted consumption, because of the words " without guarantee" a ten per cent margin should be allowed.
10. Mr Mark Smith, who appears before me for the Owners, submits that this reasoning is inconsistent with authority and does not give proper effect to the last word of clause 26. He argues that the effect of the words "without guarantee" is that they stipulate that a provision to which they apply is not a warranty. Moreover, the effect of the words coupled with the words "all details given in good faith" is that no claim can be based upon them in the absence of mala fides, which is not alleged in this case.
11. I consider, despite the reasoning of the Arbitrators, that the first stage of Mr Smith's argument is undoubtedly correct. It is clear that if and in so far as a provision in the charterparty is qualified by the words "without guarantee" the provision is not a warranty. If authority be needed to support this, it is found in Japy Freres v Sutherland, (1921) 26 Com. Cas. 227, and in Continental Pacific Shipping Limited v Deemand Shipping Company Limited, [ 1997] 1 Lloyds Reports 404. The more difficult question in this case is whether the qualification at the end of clause 26 applies to the provisions in the charterparty about consumption (or more precisely about consumption when the vessel was not in port).
12. Mr Smith's primary submission is that the words qualify all the particulars of the vessel which are set out in clause 26. The objection that might be raised against this interpretation is that the words "all details `about"' are not to apt to qualify all the provisions of the clause, for example the provisions "telex equipped and "bowthruster equipped". Mr Julian Cooke, who appears for the Charterers, submits that it cannot be that the word "details" in the last paragraph refers to different provisions when used in the phrase "All details `about"' and then used in the phrase "all details given in good faith but without guarantee"; and that this shows that the words "without guarantee" do not refer to the whole of clause 26. Mr Smith replies that the last words of the clause apply to all the provisions in so far as they are apt: it does not follow because a "detail" is not apt to be qualified by the word "about", it is not apt to be subject to the rest of the qualification.
13. Mr Smith however, has a secondary submission about the intepretation of the last paragraph of the clause. If it be the case that, for the reason to which I have referred, the qualifying words do not apply to all the provisions of clause 26, nevertheless they do refer to all the provisions which can properly be qualified by the word "about", which he suggests are all the provisions which are matters of estimation and capable of greater or lesser accuracy of description. That would suffice for his purposes because the provision about fuel consumption is obviously appropriate to be qualified with "about" and so given a margin of allowance: see, for example, the Al Bida, [1987] 1 Lloyd's Rep 124. Indeed, as I have observed, the only provisions in clause 26 which are individually qualified by the word "about" are the fuel and consumption provisions.
possible interpretation of the last paragraph in clause 26. It is possible to interpret the words as
providing that where particulars are specified to be "about", that part of the description of the
vessel is given in good faith but without guarantee. This would of course mean that the
consumption provisions are given on this basis. This interpretation would explain why the word
"about" appears in inverted commas in the last paragraph of t e clause the only other explanation
suggested being that the draftsman of the contract was (uncharacteristically) conscious of an
ungrammatical usage. It is also an interpretation of the clause which, unlike the interpretations
for which Mr Smith contends, means that the recurrent use of the word "about" in the provisions
dealing with speed and fuel consumption is not surplusage.
and points out that statements in the preamble are, in the absence of effective qualification, to be
taken to be contractual terms. In support of this proposition he cites Lorentzen v White (1943) 74
Lloyd's LR 161 and The Apollonius, [1978] 1 Lloyd's Rep 53. The preamble provides for the
charter of a vessel capable of steaming fully loaded at about the number of knots indicated in Box
12 in the conditions described "on a consumption of tons best of fuel stated in Box 12".
provisions and the corresponding oil consumption provisions in clause 26. There is no reason, he
submits, to read box 12 as referring to more than these provisions in clause 26, and in particular
no reason to read clause 12 as incorporating the qualification in the closing paragraph. In support
of this argument, he draws attention to the use of the word "details", and submits that that would
not be an appropriate word to connote a part of the vessel's description which was of sufficient
importance to be introduced, via a box, into the description of the vessel in the "preamble".
17. Mr Cooke makes three other submissions in support of his argument that the last paragraph of
clause 26 should not be given so robust an interpretation as to penetrate the preamble via the Box.
First, he argues that, at least in so far as it is said to apply to provisions in clause 26 which are
invoked in the boxes, the last paragraph is relied upon by way of an exception clause or exemption
clause, and accordingly is to be interpreted firmly contra proferentem. Secondly, he urges that an
interpretation that gave so broad an effect to the last paragraph as Mr Smith advocates would so
emasculate the description of the vessel in the charterparty as to be uncommercial. Thirdly, he
submits, citing the speech of Lord Roskill in Tor Line AB v Alltrans Group of Canada Limited
[1984] 1 Lloyd's Reports 123, that I should not adopt an intepretation of the charterparty which
deprives the description of the vessel set out in clause 26 of contractual effect. The Tor Line case
concerned the effect of clause 13 in a Baltime charterparty which provided that Owners were
responsible for delay and loss and damage to goods only if caused by want of due diligence on the
part of the Owners or their managers or their personal act, omission or default; and in particular
concerned whether the effect of clause 13 was to qualify obligations in respect of a detailed
description of the vessel set out in clause 26 of that charter party, including a provision under the
heading "Free Heights" of "Main Deck 6.10m". Lord Roskill, with whose speech the other
members of the House of Lords agreed, said this (at p130):
"In truth if cl.13 were to be construed so as to allow a breach of the warranties as to description in cl.26 to be committed or a failure to deliver the vessel at all to take place without financial redress to the charterers, the charter virtually ceases to be a contract for the letting of the vessel and the performance of services by the owners, their master officers and crew in consideration of the payment of time charter hire and becomes no more than a statement of intent by the owners in return for which the charters are obliged to pay large sums by way of hire, though if the owners fail to carry out their promises as to description or delivery are entitled to nothing in lieu. I find it difficult to believe that this can accord with the true common intention of the parties and I do not think that this conclusion can accord with the true construction of the charter in which the parties in the present case are suppose to have expressed that true common intention in writing."