England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIISION
COMMERCIAL COURT

		Royal Courts of Justice The Strand, London WC2A 2LL
		29th March 2007

1. This is a claim for demurrage of $279,289 brought by the Claimant owners ("the Owners") arising out of the unloading of a cargo of iron ore in bulk to the port of Yantai in China in February 2005. There is a counterclaim for despatch by the Defendant charterers ("the Charterers") for $1,436. The dispute is about interruptions to laytime and demurrage and turns partly upon the construction and application of Clause 11 of the Charterparty. There are also issues of fact. The Owners claim that a Statement of Facts ("SoF") is wrong and that the real reason for delay in discharge was not bad weather but shortage of lighters or inadequate fenders. The parties have sensibly sought to save unnecessary expense, given the limited sum in issue so that while I have statements from four witnesses only one of these was available for cross examination. This has not made it easy to get at the facts.

Background

2. By a voyage Charterparty ("the Charterparty") dated 7 December 2004 the Charterers took the vessel Newforest for the carriage of the cargo from Brazil to ports in China at Charterers option which included Yantai. Although the parties take various points about the Charterparty it is common ground that it contained the following clauses which must of course be read in context and as part of the contract as a whole:-

"8.B.b. Upon completion of loading, the vessel shall proceed to one or two safe berth(s) of one safe port Qingdao or to one or two safe berth(s) each two safe port(s) Beilun + Baoshan, or to one safe anchorage and one to two safe berth(s) Yantai, China, always safely afloat. Charterers guarantee vessel is fully acceptable for discharging at Yantai basis full arrival draft of vessel at Yantai.

11. Demurrage and Dispatch Clause

Demurrage and dispatch shall be calculated on the basis of the statement of facts made by Agents at loading and discharging port(s) entrusted by Owners and mutually confirmed by Master and LOADING PORT AUTHORITIES or DISCHARGING PORT AUTHORITIES.

11.B.a. Demurrage and Dispatch rates at discharging port:

Demurrage rate USD100,000 per day or pro rata for part of a day.

Dispatch rate USD50,000 per day or pro rata for part of a day.

11.B.b. Discharging rates

Yantai 25,000 mts per weather working day of 24 consecutive hours Sunday and Holidays included.

11.B.e. The following time shall not count as laytime:

- Time used for sailing from anchorage to wharf till all fastened at the designated discharging berth

- Time used for draft survey

- The stoppage caused by adjusting ballast (or deballasting)

- The stoppage caused by bad weather

- Stoppage or partial stoppage caused by Owners and partial stoppage as pro rata

- Stoppage caused by Force Majeure

11.B.f Discharging shall complete upon the last grab of cargo leaving hatches.

11.B.g The cargo on vessel shall be in grabs' reach. essel shall be guaranteed suitable for grab discharge. If the cargo is not accessible by means of grabs (including in hatches), any time and/or dispatch money so lost and the extra expenses over and above the cost of normal grab discharge at discharging ports shall be for Owners' account.

11.B.h Once a vessel is on demurrage, always on demurrage to apply.

25. Strike and Force majeure Clause

25.B At discharging ports

The time lost as a result of all or any of the following causes shall not count as laytime and demurrage IZ: war, rebellions, tumults, civil commotions, strikes, insurrections, political disturbances, epidemics, quarantine, riots, lock-out, stoppage of workmen, railway employees, stevedores, seamen or any other workers essential to the working, carriage, delivery, shipment, interruptions of railway transport, whether partial or general, landslides, flood, intervention of sanitary, customs and/or other constituted authorities or other causes beyond Charterers' control preventing cargo preparation, discharging or berthing vessel.

Facts agreed or not greatly in dispute

3. The Charterers nominated a port and loading was completed on 9 January. Charterers nominated Yantai as the discharge port and the vessel arrived there and tendered Notice of Readiness at 15.00 on 21 February 2005. The vessel is of Cape-size and because of draft limitations at Yantai needed to lighten before berthing. Lightening at Yantai is by a combination of floating and mobile cranes, both of which discharge into lighters alongside the discharging vessel. At Yantai berthing, loading and discharging operations including the provision of cranes, lighters and operators, is the responsibility of a company known as Yantai Port United ("the Port"). Lightening procedures at Yantai are as follows. Mobile cranes are sent out by the Port to the vessel and installed on board. A floating crane of local construction is towed out to the vessel by a tug and moored alongside with rubber fenders. There are lighters alongside to receive cargo from the cranes. When operations are suspended for bad weather the floating crane and lighters return to berth and the mobile crane operators return to shore for safety reasons.
4. At 19.44 on 21 February the vessel anchored at the Lightening Anchorage and at 07.00 the following morning a floating crane berthed alongside. Four mobile cranes were carried out to the vessel on lighters and installed on the starboard side by the floating crane. It seems agreed that at 09.45 on 22 February lightening commenced and that at 13.10 it was suspended due to bad weather. There is then dispute about the resumption and suspension of lightening over the ensuing days which boils down to the following periods in dispute between the parties.

Period No	Between	Time in issue
(1)	22 Feb 13.10 – 24 Feb 10.20	1d 20h 15 mins
(2)	25 Feb 08.45 – 26 Feb 05.20	20h 35 mins
(3)	26 Feb 10.00 – 26 Feb 17.05	7h 5 mins
(4)	28 Feb 00.54 – 28 Feb 01.35	41 mins
(5)	5 Mar 14.00 – 4 Mar 15.50	1h 50 mins

It also seems agreed that by 01.35 on 28 February the vessel had berthed alongside a wharf and that discharging resumed until completed on 4 March.

5. On 3 March "China Marine Shipping Agency Shandong Yantai Company", as agents issued and signed a "Laytime Statement of Facts" as agent. This was confirmed by the Master on 4 March and endorsed with the port authority's "chop" but not until mid November 2006, a fact which gives rise to competing submissions about its effect on the requirement of Clause 11 that demurrage and dispatch shall be calculated on the basis of the statement of facts made by agents and "mutually" confirmed by master and discharging port authorities.
6. There was only one letter of protest from the Master in this period. This is headed "letter of protest for improper discharging of cargo" and refers to an incident "due to strong wind and swell the floating barges tied up alongside ship side for discharging were rolling and mobile cranes on deck were dropping cargo into the barges from considerable heights. A lot of cargo was falling as well as flying out". There was thus no suggestion that the weather was not bad enough to suspend operations or that there had been a shortage of lighters.
7. On 11 March 2005 the Owners submitted their demurrage claim accompanied by a copy of the SoF. The Charterers rejected the claim, there was dialogue about a provision now not relied upon. In July 2005 the Owners came back contending that very strong winds had caused rough sea conditions in which it was not safe for the vessel to continue to operate, this time not counting because it related to the safety of the vessel rather than to discharge operations. By February 2006 the Owners were contending that discharge could have continued during the bad weather periods identified in the SoF and that a lack of lighters was to blame.

The status of the SoF

8. Before turning to the facts and the evidence in more detail I first need to decide what the status of the SoF is as this will condition my approach to the evidence.
9. The Claimant says that Clause 11 does not provide that the SoF shall be final and binding on the parties or that any calculations made as a result are to be final either. Furthermore Clause 11 provides that the statement of facts is to be "mutually" confirmed. The Claimant submits that there was no "mutuality" because by the time that the port authority chopped the statement the owners had withdrawn their approval of the statement of facts.
10. The Defendant accepts that Clause 11 does not expressly say that the statement shall be final and binding but submits that the Claimant's case gives it no effect whatever. Clause 11 is the basis for calculating demurrage offering as it does protection to Owners because it has to be confirmed by the Master and to Charterers because of the requirement for port authority confirmation. Without conceding the point the Defendant accepts that the Claimant may be able to challenge the statement if it can show manifest error or if the Master was called to retract his confirmation.
11. The Owners contend that it is for the Charterers who claim that the weather was such as to prevent discharge to prove it. Mr King relies upon an observation by Lord Devlin in The ancouver Strike Cases [1963] 1 Lloyds Rep 12 at 38, supported by an acceptance by Charterers of such a burden in the Khian Captain [1985] 2 Lloyds Rep 212 at 214. He says that it is thus for the Charterers to show that laytime was interrupted by bad weather or some other exception and that this was the operative cause of the delay.
12. The Charterers concede that if their primary case on Clause 11 does not succeed the burden of proof would usually be upon them. Where however, as in this case, there is a statement of facts given the status accorded by Clause 11 it cannot be dismissed as being simply one piece of evidence among others. Mr Lewis points out that a statement of facts will always be good prima facie evidence relying also on the Khian Captain (at 214), all the more so where there is no protest by the Master.
13. As I see it the SoF is not final and binding because it does not say so and because the words "on the basis of" do not point clearly enough to finality. Similarly it may be too dogmatic to describe the effect of the SoF as reversing the burden of proof. The word "mutually" is perhaps an unhelpful choice by the draftsperson but I take it to mean , at the least, around the same time. But the evidential value of the SoF is unquestionably strong whether or not the requisite mutuality is achieved and almost regardless of its contractual status. We have a statement of facts prepared on the spot by the agent confirmed at the time by the Master and, albeit much later, by the Port Authority. Stepping back from the fact that this is a specialised area of law, that is powerful evidence in any civil case to set against potentially self serving recollection and reconstruction of unremarkable and detailed facts, albeit assisted by weather records and other contemporaneous documents two years later. In general this evidence is likely to discharge the Charterers' burden of proof unless the Owners show it to be wrong, an exercise which requires more than speculation and needs convincing live evidence and/or persuasive contemporaneous documents. Further, although this factor plays no part in my decision, the court should lean towards seeing finality when documents like the SoF are available as the unsatisfactory exercise which I must now conduct confirms.

Further argument by Charterers

14. Mr Lewis for the Defendant does not accept that his clients must show that the bad weather was the operative cause of the delay. The Charterparty provides for both weather "interruptions", in the description of laytime ("weather working days") and weather "exceptions" in the laytime exceptions ("stoppage caused by bad weather"). No causal element is necessary. He also says that what constitutes bad weather depends upon a wide range of factors including the nature of the vessel, the circumstances of the place of cargo operations and the nature of the cargo. Similarly if bad weather prevented discharge by the equipment customarily provided by the Yantai port authority it is irrelevant that better equipment would have allowed discharge in such weather. Mr King contests this position but as I understand the position it is unnecessary for me to determine it (and not possible without further argument) given the factual conclusions I reach. If Mr Lewis is right it would mean that Mr King's arguments about mobilisation time faced a further difficulty

Owners' Evidence

15. The Master and the Chief Officer, who would have overseen cargo operations, were not available. I have witness statements from Captain Xiu Shao Ping ( who, I emphasise, was not the Master of the vessel) , and from Professor Zhang Duo who is a part time shipping lawyer practising in Quing Dao familiar with Yantai port and who was asked to investigate in March 2006 the lightening restrictions and conditions as they operated at the relevant time. Captain Xiu gave evidence and was cross examined.
16. Captain Xiu has extensive experience at sea and from 1995 to 2003 captained no less than ten container vessels ( but without therefore gaining experience of lightening), before joining Zodiac, the Owners' managers in Shanghai . He was present at Yantai and sometimes on board at the time of the events in dispute. In broad terms he says that the weather was good enough for discharge in the first period but that the Port blamed the weather for what was its inability to provide the barges it should have made available. He cites the weather records available some of which he suggests overstated the seriousness of the conditions. He says that in the second and third periods the weather was suitable but operations were suspended to prevent the inadequate fendering of the lighter causing damage to the vessel. Apart from weather records there are no documents to support these claims. The witness kept no notes and understandably had only vague recollections of what must have been routine events. His evidence that the crew may have overstated the severity of the weather was not recorded at the time. It seems unlikely that his recollection that he advised the Master to protest is correct –the Master would have no incentive not to do so, quite the reverse. Assisted as he was from time to time by the interpreter he came across as a generally straightforward witness but one with very limited personal recollection of these events. Much of his evidence was more comment on the documents than recollections of what happened.
17. Professor Zhang made a variety of enquiries in and around Yantai which suggested that mobile cranes could operate in a wind speed of force 7 or so and that lighters could continue to work at anchorage up to force 6. Forecasts were generally in the bracket 5 to 7 but in the result the weather was in the range 2 to 5. The Port was in the habit of wrongly blaming "adverse weather" and of magnifying the seriousness of conditions.
18. For the Defendants I have three witness statements from Mr Xing Chengwen who was ice Director of the Duty Office of Yantai Port United at the relevant time . Mr Xing states that operations were suspended only because wind and sea conditions around the lightening anchorage were, without being a threat to the safety of the vessel, too bad for safe lightening or were forecast to be so. The Port's written requirements are that lightening can be carried out in wind speeds of up to 6 in winter. Their experience is that same day forecasts tend to be accurate and they therefore rely and act upon them. Monitoring of actual conditions was, as the regulations provide, mainly the task of the Masters of the tug, barges and floating crane who have the right to decide when to stop operations on weather grounds. He accepts that it takes 2 to 4 hours to mobilise the lighters and mobile crane operators once conditions are or are expected to become suitable for discharging cargo. He does not produce some of the records he permitted Professor Zhang to inspect but not copy. He is however not a representative of a party and there is some evidence that Charterers would not be in a position to apply any pressure on the Port to produce material. I cannot evaluate this witness beyond observing that what he writes seems straightforward and consistent with what one might expect and with common sense.
19. Charterers also rely on a statement from Ms Qin Ying Manager of the agents who deals with the apparently dominant role of Yantai Port Group and with how her company was involved in drawing up the SoF. As even Charterers who obtained this evidence accept it to be peripheral I do not address it further.
20. The other materials relied upon include the Deck Note Book and Deck Log Book, hindcast weather records of the port from the Qingdao Decision Weather Service, some records of port procedures, wind forecasts from Yantai Met Observatory and from State Oceanic and sea condition forecasts from the latter.
21. Mr Lewis for the Charterers produced a helpful written summary of his client's case on each period . I found this helpful after a very short trial where much of the detailed material had been deployed only briefly and asked for a similar document form Mr King . I am grateful for that and for Mr Lewis's reply. I turn next to the five periods;

Period 1 – 22 February 13.10 – 24 February 10.20

22. The SoF for this period records that throughout this period "lightening suspended due to bad weather".
23. The Owners challenge this and rely upon the evidence of Captain Xiu that weather conditions did not deteriorate but there were no replacement barges. The Captain said that it was common for port authorities to blame the weather when there were not enough barges for an uninterrupted service so that they would not have to account to Charterers. The vessels log books show that on 22 February from 13.10 the wind force was 5/6. It seems common ground that lightening operations are not normally safe in wind speeds above force 6. The swell dropped from 2.5m recorded at noon which is accepted to have been weather working time to 2m during the afternoon of 22 February. At 13.00, approximately the time when discharge was suspended the wind speed had dropped from 11.4m per second to 10.1m (ie BF5). The Owners also say that the maximum of the waves on the day 1.6m was low according to the records of Ocean Environment Monitoring which would be more reliable than any estimate from the crew on board. The Owners discount the value of the weather forecast, the test being the actual weather not what it was anticipated to be. Further although the forecast was for BF6-7 at sea this was not expected to prevent discharge as lighters were provided for the morning.
24. The Charterers point to the forecast of 6-7 with some rain and snow patches and other forecasts indicating up to 8 according to the records of the Yantai Oceanic Environment Monitor Centre Station (not to be confused with the records relied on particularly by the Owners from Ocean Environment Monitoring Station in Zhi Huan Island). They rightly place particular reliance on a message from the Master of the vessel to the agents, Zodiac-Shanghai which states "stopped discharging 13.10 22 February 2005 (due onset of bad weather) – at present bad weather continuing (21.00 L(oca)l T(ime)). Captain Xiu did not seriously challenge the views of the Master. The Owners point out, despite the views of the Master, the coincidence which they say is not credible, that the weather became too bad at 13.10 just when the first barge was full.
25. As to 23 February the Owners point out that the vessel's log shows 4-5 and swell at 2m all day which are acceptable conditions for discharge. The highest recorded wind speed of the day is at 5 and at times it was as low as 1.9m per second. The wave heights in both sets of records also indicate 1.2m, which is low. If the weather forecast be relevant it was better than the previous day and was for 5-6 and thus, according to Mr Xing acceptable. The Charterers point out that one forecast was severe at 6-7. A barge attended at 15.30 but cargo operations were not pursued. There was a gust to 7 in the evening. The next day the Master reported that the previous day there had been "no cargo work due persisting bad (weather)". As regards the period from midnight until 10.20 on 24 February the Owners point out that this was one of the calmest days of the discharge. The daily maximum wind speed for the day was at 4. The wind speeds during the period in issue were between 1 and 3. The swells at Zhi Huan Island were zero. The Owners maintain that the forecast is irrelevant but that this was for the wind to increase during the course of the day to 6-7 and thus in a period up to 10.20 to be lower. The Charterers accept that the weather was calm in the early hours but point out that from 5.00 am on 24 February there was a gale warning (but this was "gradually increasing to 6-7") or, looking at the other forecast, increasing to as high as 7-8.
26. The evidence from the various records is equivocal for 22 and 23 February but less so for 24 February but the contemporaneous messages from the Master either support the view that the weather was bad or are consistent with it being so . Captain Xiu's evidence in cross examination supported the views of the Master to a degree and was otherwise too vague to contradict it. The weather and sea records are a secondary source of information about what conditions were like in the general vicinity of the vessel and no evidential basis for undermining the Master's assessment and the absence of protest, let alone the terms of the SoF. The Defendant's case is made out for this period.

Period 2 – 25 February 08.45 – 26 February 05.20 (20 hours 35 minutes)

27. The SoF records that the lightening was suspended at 08.45 "due to bad weather" and did not resume until 05.20 on 26 February. The Owners claim that the initial weather problem stopped operations only because of inadequate fendering of the lighters and that after that conditions returned to normal. The vessel's Deck Notebook indicates a series of problems with discharge described, at 08.40 as "due prevailing sea condition". The Deck Log records, apparently at some point in the afternoon "no cargo operations due heavy swells". The Master reported to Zodiac- Shanghai "cargo discharge stopped today at 08.45 due onset of bad (weather)" and, elsewhere that this was "due to snowing and rough sea". Captain Xiu accepted largely what was said about the snow but thought that the swell would have led only to loss of a little cargo . There is no evidence that he expressed this view at the time. The Deck Logs show a swell of 2.5m. The Claimant suggests however that the position was different from around midnight by which time the swell had dropped to 2m and the Log Book shows by 4.00 am slight swell and wind force 3. The Deck Log Book indicates that by 5.15 a barge was alongside in uneventful conditions. Wind speeds appear to have been satisfactory throughout 25 February, particularly after midnight. The Yantai weather forecast was for gusts of winds to 7 decreasing to 5-6 at night. The State Oceanic Administration forecast is similar but with a gale warning.
28. The evidence of poor fendering is flimsy or non existent. The same considerations which lead me to find the Charterer,s case made out on the first period apply equally to this one.
29. The Owners best point is that the end of some of these periods may have been delayed because of the two to four hour mobilisation time. The Owners rely upon Mr Xing's overall conclusions "we made the decisions to suspend lightening in the above periods because, as I recall, both wind and sea conditions at the Lightening Anchorage were bad. The forecasted wind/sea conditions were also unfavourable. To my mind, even had wind conditions permitted lightening operations to continue in these periods, bad sea conditions (ie large waves and heavy swell) would nevertheless have made it unsafe to continue."
30. Mr King suggested this is in effect a concession that at times the sea conditions were moderate. Mr Xing ,he says, concedes that there is a mobilisation time of 2-4 hours and he submits that this explains why there was no discharge during acceptable working conditions after midnight during the second period and after 2.00 pm during the third. The weather was obviously good enough for discharge, the problem was simply that the lighters that should have been standing by were not available until the end of the mobilisation period. But this is too speculative and has no contemporaneous support from those who might have been expected to say something if this claim were correct.

Period 3 – 26 February 10.00 – 26 February 17.05 (7 hours 5 minutes)

31. The SoF attributes this period of stoppage to bad weather. The Master reported to Zodiac-Shanghai that discharge "stopped today at 10.00 due onset of bad (weather) again". There is no report of delayed resumption caused by other factors. By this time there was a swell of 3m and wind gusting up to 7. Captain Xiu does not contest the Master's view. The Owners focus however on the last 3 hours of the period from 2.00 pm when they say that the weather seems to have been fine. By 16.00 the swell is recorded as 1m with comments "slight/mod sea and swell". The recorded maximum wind is 9.2m per second BF5. At Zhi Huan Island the waves had dropped from a high of 1.6m to 1.2m at 2.00 pm and then 1m at 5.00 pm.
32. Extrapolation from weather records is too thin a basis to overcome the other available material which I have now mentioned repeatedly. For the same reasons as for the other periods I consider that the Defendant's claim is made out.

Period 4 - 28 February 00.54 – 28 February 01.35 (41 minutes)

33. This period is described in the SoF as "berthed alongside and prepared for discharging". The Charterers say that since this entry shows the vessel was in the process of berthing time should not count regardless of what other documents may say. They no doubt have in mind the vessel's log book for that day which states "00.54 all made fast forward and aft at berth 63/64 Yantai". It seems obvious from that entry which is not contradicted by any other evidence that berthing had been completed and that the ambiguity in the expression used in the statement of facts, the document not being sacrosanct, should be resolved in the Owners' favour.

Period 5 - 4 March 14.00 – 4 March 15.50 (1 hour 50 minutes)

34. Although this period is addressed in one skeleton argument I understood at trial that it is no longer in issue. If that is not correct I will deal with the point when handing down judgment.

Conclusion

35. It follows that there will be judgment for the Claimant for the fourth period but for the Defendant on the other three. I shall be grateful if counsel will let me have an agreed order and note of corrections of the usual kind and separate notes of any issues which they wish to raise when this judgment is handed down.

GH008192A/DC