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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Losinjska Plovidba Brodarstovo DD v Valfracht Maritime Co Ltd (The Lipa) [2001] EWHC 541 (Comm) (02 February 2001) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2001/541.html Cite as: [2001] EWHC 541 (Comm)

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IN THE SUPREME COURT OF JUDICATURE
QUEENS BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		2 February 2001

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.

1. Before I set out Mr Cooke's submission, I should mention that it seems to me that there is a third

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.

2. Mr Cooke's submission does not have clause 26 as its starting point. He starts with the "preamble"

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".

3. Box 12 refers to clause 26 and, as Mr Cooke argues, is to be taken to be referring to the speed

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."

4. Despite the care with which Mr Cooke presented his argument, 1 do not accede to it. The boxes that are referred to in the "preamble" fall into four categories. Firstly there are those (boxes 4 and 13) which are completed with details that are not found in clause 26. Secondly there are those (boxes 3 and 5) which repeat, at least partly, details that are given in clause 26. Thirdly there are six boxes, including box 26, which are completed by referring to clause 26 but not repeating the information. Finally, box 8 was not completed at all, although the corresponding information was in fact in clause 26. I draw attention to this for two reasons. Firstly, the fact that box 8 is left blank goes some way to undermine Mr Cooke's argument that anything which was mentioned in the preamble is to be taken to be regarded by the parties as important and more than a mere detail: the horsepower referred to in the preamble was not considered sufficiently important for the box to be completed. Secondly, and more significantly, where information required to complete the boxes was set out in clause 26 the parties did not in two cases incorporate it by reference. If the parties considered that the information warranted it, it was repeated in the appropriate box.
5. It seems to me that the more natural interpretation of the entry "see cl 26" in box 12 and other boxes is that the parties were referring the reader to the clause to find out what was said in the charterparty about the subject matter of the box. The contents of clause 26 are not being incorporated by reference into the box: that is not the meaning of the word "see". When the reader goes to clause 26 he finds not only the details about speed and consumption but also the parties' agreement about the status of provisions in clause 26.
6. The point can be looked at slightly differently. Even if box 12 is to be regarded as incorporating clause 26 as far as is relevant, that is no reason to read it as incorporating the relevant speed and consumption particulars without the qualifying words if as a matter of interpretation the qualification does apply to them. If the draftsman simply incorporated "Cl 26" he was not being selective about which parts of the clause he is incorporating.
7. It is therefore necessary to return to the question whether the last paragraph is to be interpreted as applying to the relevant speed and fuel provisions. I consider that it is. It seems to me that both the natural meaning of the words and authority require that it be given the effect that at least some, if not all, of the provisions of clause 26 are not contractual terms. I cannot accept that the parties intended there to be a distinction between some provisions of clause 26 which were to be treated as mere "details" and to which the qualification was to apply, and other provisions which were more than details to which the provision was not to apply. The distinction is too vague to make commercial sense and puts an emphasis upon the "details" which in my view would amount to an unnatural use of language.
8. Whichever is preferred of the other three interpretations of the last paragraph of the clause which have been suggested - the two which were Mr Smith's primary and secondary submissions and the third to which I have referred - the qualification applies to the words upon which the Charterers rely. That suffices for the Owners. If no acceptable interpretation can be found which limits the qualification to only some of the provisions of clause 26, it must be taken to apply to all, and the two more restrictive interpretations which in my view could possibly be entertained do not remove the relevant particulars from the scope of the qualification.
9. It is therefore not strictly necessary for me to express a view as to which of the three interpretations is to be preferred. However, it seems to me for the reasons that I have already indicated the last paragraph of clause 26 explains the effect to be given to particulars about the vessel in the paragraph which are qualified by the word "about". This interpretation gives effect to the last paragraph of the clause, and also gives it a narrow effect that meets the concerns expressed by Lord Roskill, and cannot, in my view, be said to be uncommercial. I am aware that I should be cautious of interpreting the last paragraph of the clause as providing that about has been given a meaning which is not the ordinary meaning. However it is no part of my preferred interpretation that the word about is stripped of its usual meaning of affording a margin to the stipulated figures. The qualification at the end of the paragraph is to be interpreted as adding a further stipulation, that the "about" estimations have the status only of bona fide representations.
10. I therefore conclude that answer to the point of law raised on this appeal is that the charterparty does not contain a warranty about the vessel's rate of fuel consumption.