E D & F Man v Unicargo Transportgesellschaft GmbH The Ladytramp

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DMC/SandT/15/02

England

ED&F Man Sugar Ltd v Unicargo Transportgesellschaft GmbH (Polska Zegluga Morska PP, interested party), The “Ladytramp”

Court of Appeal; Pattern, Tomlinson, Christopher Clarke LJJ; [2013] EWCA Civ 1449, 19 November 2013

Timothy Young QC (instructed by Jackson Parton) for ED&F Man Sugar Ltd, Appellants/Charterers

Luke Parsons QC and Nevil Phillips (instructed by Waltons & Morse LLP) for Unicargo Transportgesellschaft GmbH, Respondents/Owners

Mark Jones (instructed by Holman Fenwick Willan LLP) for Polska Zegluga Morska PP, Interested Party

SUGAR CHARTERPARTY 1999: DESTRUCTION BY FIRE OF FACILITIES AT LOADING TERMINAL NOT WITHIN CLAUSE 28 EXCEPTION TO LAYTIME OF “MECHANICAL BREAKDOWNS”

Summary

The Vessel’s charter contained an exception to laytime for “mechanical breakdowns…”, which Charterers relied on when delay was caused by a fire that destroyed a conveyor-belt system at the load port. Charterers did not prove that “mechanical breakdown” was the cause of the destruction of the conveyor-belt system, and they were accordingly unable to deduct the delay from laytime and demurrage.

This note has been contributed by Justin Gan Boon Eng, LLB (Hons) (NUS), a Registered Foreign Lawyer (Singapore) in Hong Kong

Background

Unicargo chartered the “Ladytramp” (“Vessel”) to E D & F Man on the Sugar Charterparty 1999 form to load a cargo of sugar from “1-2 safe berths, 1 safe port” within a specified geographical range. Clause 28 listed exceptions to laytime, including “mechanical breakdowns at mechanical loading plants”.

A week before the Vessel arrived at the loadport of Parangua, a fire destroyed the conveyor-belt system at Charterers’ usual terminal. Congestion ensued and the Vessel’s berthing terminal was changed twice before the Vessel finally berthed at an alternative berth and loaded cargo, a month after tendering NOR. Owners claimed demurrage.

Charterers relied on Clause 28 before the Tribunal and failed, because the cause of the breakdown was fire (absent from Clause 28), and not “mechanical”. It appears that Charterers did not adduce any significant evidence on the cause of the fire before the Tribunal.

Charterers appealed on a point of law, and were unsuccessful both at first instance and on appeal. Polska Zegluga Morska PP, owners of another vessel chartered to the Charterers on similar terms, intervened and supported Owners’ position.

Judgment

Charterers relied on The Afrapearl, [2004] EWCA Civ 864, and argued that “mechanical breakdown” had occurred simply because the machinery no longer functioned as a conveyor-belt system. However (and unlike Clause 28 here), the clause in The Afrapearl was not restricted by the cause of the “breakdown”, the word “mechanical” not appearing there.

The Court of Appeal (Tomlinson LJ) consequently distinguished The Afrapearl and, as the Tribunal had found only that the conveyor-belt system was destroyed by fire, held that the Charterers had failed to bring themselves within “mechanical breakdown” in Clause 28.

Separately, when Polska Zegluga Morska PP intervened, Charterers adduced a report on the cause of the fire – “excessive friction between a sugar-encrusted rubberized belt and one or more seized metal cylinders” – and suggested that the matter be remitted to the Tribunal for further findings of fact. The report was not previously placed before the Tribunal.

The Court of Appeal refused to do so. Before the Tribunal, Charterers did not adduce any significant evidence on the cause of the fire, which they contended was irrelevant. Charterers were therefore not permitted to re-open the arbitration and adduce fresh evidence that could have been obtained previously.

Comment

The Ladytramp highlights the need for parties relying on contractual exceptions to ensure that each and every contractual pre-requisite for doing so is met, and that evidence is adduced for each. Here, however, the cost of detailed investigations in Paranagua may well have been disproportionate to the claim faced (about US$400,000), at least until equivalent claims from other Owners subsequently emerged.