Scottish Court of Session Decisions

This was an action brought in the Sheriff Court at Glasgow by Dawson Brothers, steamship owners and brokers, Glasgow, against James Fisher & Sons, steamship owners, Barrow-on-Furness, in which the pursuers craved decree for payment of £66, being the amount of commission or brokerage alleged by them to be due by the defenders in connection with the chartering of a steamer called the “Firth Fisher,” belonging to the defenders.

Proof was allowed and led.

The following narrative of the facts is in substance taken from the note to the interlocutor of the Sheriff-Substitute ( Strachan):—In the months of September and October 1898 the pursuers were in negotiations with the defenders and Messrs Harold Nickson & Company of Manchester with the view of arranging a charter between them of the “Firth Fisher.” These negotiations resulted in a charter-party being entered into between them, dated 8th Otcober 1898.

By this charter-party Messrs Harold Nickson & Company agreed to hire the said steamer for a period of six months to trade between ports in the United Kingdom and between Hamburg and Brest on the Continent, excluding the various ports and wharves therein specified, and to pay therefor the sum of £330 per calendar month half-monthly and in advance, commencing on the day of delivery of the vessel to the charterers.

It was provided by the said charter that the charterers were “to have the option of cancelling this charter on expiry of first month on giving ten days' notice,” and that they also were “to have the option of continuing

Page: 879↓

the charter for a further period of six months on giving owners ten days' notice previous to expiration.”

The charter-party further contained a stipulation in the following terms:—“ Commission of two-thirds of five per cent. on the estimated amount of freight is due on signment hereof to Dawson Brothers, Glasgow, ship lost or not lost.” The charter-party was signed by “Harold Nickson & Company,” and by Dawson Brothers as agents “by authority of and for James Fisher & Sons.”

The charterers obtained possession of the vessel in terms of the said charter, and proceeded to carry out the same.

In the month of March 1899, about six weeks before the expiry of the first six months after the delivery of the vessel under this charter to the charterers, they communicated with the owners by telephone with regard to the chartering of another vessel called the “Sound Fisher.” At the same time they intimated verbally by telephone to the owners that they would not keep on the “Firth Fisher” for a further period after the expiry of the six months at the same rate of hire. On 11th March 1899 the chief clerks of the defenders and Messrs Harold Nickson & Company met at Barrow-on-Furness, in the view of the latter chartering the “Sound Fisher.” At that meeting defenders' clerk inquired if Messrs Harold Nickson & Company intended to continue the charter of the “Firth Fisher” for another period of six months. Messrs Harold Nickson & Company's clerk replied that they would only do so in the event of the hire being reduced to £320 per month, and this was ultimately agreed to by the parties. Thereafter a new charter-party, dated 13th March 1899, was entered into between the defenders and Messrs Harold Nickson & Company, whereby the latter agreed to hire the “Firth Fisher” for six months commencing 27th April 1899. This second charter-party was substantially in the same terms as the first, with the following exceptions:—the rate of hire was £320 instead of £330; there was an option given to the charterers “of continuing the charter for a further period of six months at £325 per month on giving notice thereof to owners ten days previous to expiration of first-named term”; the charterers were not given any option of cancelling the charter at the expiry of the first month; and there was no brokerage clause. The charter was signed by “Harold Nickson & Company,” and by “James Fisher & Sons.”

The defenders regularly paid the pursuers the commission payable under the first charter down till six months from the date thereof, but they refused to make any payment in respect of the hire received by them under the second charter, and in consequence of this refusal the pursuers brought the present action.

On 9th March the Sheriff-Substitute issued the following interlocutor:—“ Finds that in the months of September and October 1898 the pursuers were in negotiations with the defenders and Harold Nickson & Company of Manchester for the chartering by the latter of the s.s. ‘Firth Fisher’ belonging to the defenders: Finds that these negotiations resulted in a charter being entered into between the defenders and Messrs Harold Nickson & Company, whereby the latter agreed to hire the said vessel for a period of six months, and to pay therefor at the rate of £330 per month: Finds it was provided by the said charter that the defenders had the option of renewing the same for a further period of six months on giving ten days' notice before the expiration thereof: Finds that under the said charter the pursuers were entitled to a commission of two-thirds of 5 per cent. on the estimated freight: Finds that on 13th March 1899 a charter-party was entered into between the defenders and Messrs Harold Nickson & Company whereby they both agreed to hire the same vessel for a further period of six months from the expiry of the first charter, and to pay therefor at the rate of £320 per month: Finds that with the exception of the abatement of the freight, the terms and conditions of the second charter are exactly the same as those of the first, and required no new negotiations between the parties: Finds that the second was a renewal or continuance of the first charter, and that both were equally the result of the pursuers' negotiations: Finds that the pursuers are entitled to a commission of £66 on the estimated freight under the second charter, and that the defenders are liable to them in payment thereof: Therefore decerns against the defenders for payment to the pursuers of the sum of £66 as concluded for with interest as craved,” &c.

Note.—[ After stating the facts]—“It is maintained by the pursuers that the second charter was a continuance of the first for a period of six months in terms of the stipulation to that effect contained therein, and that in any case it was the direct result of their negotiations, and that their commission consequently extended to the freight during the second period.

The defenders, on the other hand, contend that the second charter was a new one negotiated between them and Messrs Harold Nickson & Company without the intervention of the pursuers on the expiry of the first charter, and that the pursuers have no claim for commission therewith.

In my opinion the second charter was in reality a continuance of the first. It was entered into during the currency of the first, and its duration ran only for the same period as the charterers had the option of renewing it. It was not the result of any renewed negotiations between the parties. No such negotiations were required, and in point of fact none took place. The terms and conditions of the second charter, the ports to which the vessel was to trade and those she was to avoid, and the period of duration were all the same as in the first charter. The only difference was a reduction of freight from £330 per month to £320. That was settled in a few minutes' conversation between the clerks of the respective

Page: 880↓

parties. I am not aware of any principle or authority for holding that slight reduction of freight had in itself the effect of breaking the continuity of the charter. There does not appear to have been any necessity for a second charter being entered into. The slight alteration in the freight could very easily have been given effect to by an endorsement on the first charter. If this had been done I do not see how it could be maintained that there was no continuance of the charter, and there is just as little room for that contention when the alteration has been made on a separate document. It is said that the charter was only to be continued for a further period of six months on the charterers giving ten days' notice previous to the expiration, and that as no such notice was given the charter must be held to have expired. The parties having arranged for the renewal of the arrangement in March, the ten days' notice prior to the expiry of the first charter was thereby superseded and rendered unnecessary.

But even if the second should be held to be a new charter, that would not in my opinion have the effect of excluding the pursuers' claim for commission, as I think it clear from the circumstances that the second charter was equally with the first the direct result of the pursuers' negotiations.

It seems to be entirely a question of circumstances whether a broker who has negotiated a charter is entitled to a commission on a new charter-party being entered into on the expiry of the first.

A material consideration in such a case is whether or not the second transaction was in the contemplation of the parties when the first was entered into. It has been held that an agent can claim commission for the re-letting of a house if it was owing to an express term in the contract allowing the tenant to renew that this happened—Wright on Agency, 162. In the case of Tribe v. Taylor, 1 C. P. D. 505, when an agent had obtained a loan for a principal, and the lender in about a year afterwards became partner in the principal's business, and made a large additional advance, it was held that the agent was not entitled to commission on the second advance. It was admitted that this advance was not contemplated at the time of the original advance. Again, in the case of White v. Baxter & Co., 1883, 1 Cab. & Ellis, 199, the question was left to the jury whether the business was contemplated at the time of the introduction.

It cannot, I think, be disputed in this case that the continuance of the charter for a second period of six months was in the contemplation of the parties at the time it was entered into. The charter itself contains a special provision for its continuance for six months, and the endurance of the second charter is limited to that period. It does no more therefore than carry out what was in the contemplation of the parties when the first charter was entered into. There was no necessity for renewed negotiations, the terms and conditions of both charters with the exception of the slight abatement of the freight being the same. The connecting link between them is thus quite distinct. The option to renew led to the second charter being entered into, and it seems to me therefore that the second is as much the result of the pursuers' services as the first.

It would appear from the authorities that the mere fact of a principal changing his terms does not affect the broker's claim for commission— Mecham on Agency, s. 967. But in any case it would in my opinion be unreasonable to hold that a slight abatement of freight could have the effect of depriving the broker of the commission to which he would otherwise be entitled. By the first charter the charterers had the option of terminating it on the expiry of the first month on giving ten days' previous notice. If the charterers had given notice to the defenders in course of the first month that they would not continue the charter unless they got a deduction of £5 per month, and a new charter was in consequence entered into reducing the freight, could it be reasonably contended that in such a case the pursuers should thereby be deprived of their commission? And what is the difference between such a transaction at the end of the first month and the expiry of the sixth? There does not appear to be any, the principle being precisely the same in both cases. I have no difficulty therefore in holding in the circumstances that both charters are equally the result of the pursuers' negotiations, and that their claim for commission in the second is well founded.

It is averred by the pursuers that the substitution of the new charter was a fraudulent device to deprive the pursuers of their justly earned brokerage, and by that device both the defenders and the charterers were benefited. The result certainly is that in consequence of excluding the brokerage the defenders are actually receiving more freight under the second charter than they did under the first notwithstanding the reduction of £10 per month. I am not prepared to hold that the second charter was a fraudulent device on the defenders' part, but I am bound to say that in my opinion it was unnecessary, and that the exclusion of the brokerage clause was contrary to the good faith of the contract to which the parties were parties.”

The defenders appealed to the Court of Session.

The arguments sufficiently appear from the note of the Sheriff-Substitute and the judgment of Lord Trayner.

At advising—