P&O Nedlloyd BV v Arab Metals Co & Anor

This is an application for either summary judgment or a mandatory injunction pending trial. It arises in unusual circumstances. The Claimants are, as is well known, carriers of goods. They have carried two containers containing scrap metal from Alexandria, Egypt to Hamilton, Scotland, first by sea to Felixstowe and then by road. The object of their application is to require the Third Defendants Ireland Alloys Limited to take delivery of the containers, as has been tendered at their metal reprocessing plant at Hamilton. This plant is on a site extending to about 7.6 acres. Scrap metal is stored at the site, but the Third Defendants, or “IA” as I shall hereafter refer to them, refused to take delivery of these goods, notwithstanding that they had been carried to the Hamilton site at their express request. IA refused so to do because the first container, when it reached their weighbridge monitor, activated the Geiger counter, indicating the presence of radioactive material. P&O, as I shall hereafter call the Claimants, had no option but to take the container to their own nearby road haulage depot at Coatbridge. IA indicated in advance its refusal to take delivery of the second container and perhaps not surprisingly P&O did not go through the motions of tendering delivery of that container on the following day, as contractually required, but took it to their Coatbridge depot. There both containers have remained. What is perhaps unusual about the case is that the goods were carried, and delivery tendered, as long ago as 1998. Matters have now come to a head because P&O, under new ownership, wishes to sell its Coatbridge site. The presence of what is said to be “radioactive waste” will obviously have an inhibiting effect on their ability to market the site. As appears hereafter, it may well be that the harmful properties of the scrap have been somewhat overstated. However that may be, the presence of radioactivity is understandably an emotive matter.

In these circumstances it is not surprising that IA should seek to avoid responsibility for sorting out the problem. What I have found surprising is the length to which they have been prepared to go in order to deny that they ever had any contractual responsibility towards P&O in relation to delivery of the goods in Scotland. Equally disappointing has been the quality of some of the evidence deployed on their behalf in an effort to persuade the court that the balance of convenience militates against their being required to take delivery of the containers. By way of example I find it difficult to take seriously the suggestion made on their behalf that they have a real concern that their yard cannot take the weight of a loaded container. In the light of the view I have formed as to the contractual and other legal issues the greater part of the evidence deployed on this and allied topics is fortunately irrelevant to the issues which I have to decide.

Pursuant to a contract concluded between 27 April and 1 May 1998 IA purchased from Stena Non-Ferrous Metals A.B. (the Second Defendants, to whom I shall refer hereafter as “Stena”) 40 metric tonnes plus or minus 10 per cent cupronickel scrap on cif terms. The price was US$700 per tonne. It is not entirely clear to me whether the contract was for delivery at Felixstowe or for delivery at Hamilton and in the light of subsequent developments this does not matter. IA’s evidence is that in the usual course they purchase materials cif Hamilton or similar. It is said that, on this occasion, despite attempting to negotiate such terms, Stena were unwilling to agree to delivery to Scotland and the contract was therefore for delivery to Felixstowe. The bill of lading is certainly consistent with this. The documentary evidence of the negotiations of the sale contract produced by IA is somewhat equivocal. Their own formal Purchase Contract referred both to the Place of Delivery as Craighead Works, Whistleberry Road, Blantyre, which I understand to be Hamilton, and to the Terms of Delivery as being cif duty paid Felixstowe. Of note is that the goods were to be shipped in bulk bags strapped on pallets suitable for off-loading by a forklift truck into 20 foot containers. Although described in certain documents and in the Bill of Lading as “CU NI scrap,” it was in fact to comprise 75% Iron 15% Nickel and 6.5% Copper.

Arab Metals Co., the First Defendants, were the shippers of the cargo. They sold 35 tonnes to Stena on 7 May 1998. The price was US$680 per tonne cif Felixstowe.

The goods were shipped on board the “UB Tiger” at Alexandria on 7 May 1998, on which date P&O issued bill of lading no. ALYAA033 in respect thereof. This was a P&O standard form bill of lading for Combined Transport Shipment or Port to Port Shipment. Such a bill permits a choice to be made between Port to Port transport, i.e. a sea leg only, or combined carriage, i.e. sea carriage followed by on-carriage by road. Accordingly the boxes or spaces marked “Applicable only when this document is used as a Combined Transport Bill of Lading” were duly completed and the “Place of Delivery” was stated to be “Felixstowe CY” while the “Port of Discharge” was stated to be Felixstowe. The initials “CY” indicated that the containers were to be transported from the vessel and the quayside to at least P&O’s container yard at Felixstowe for on-carriage by P&O or for collection therefrom. It was provided on the face of the bill that terminal handling charges would be payable at destination for this service at Felixstowe – “THCD payable destination.”

The bill of lading names Arab Metals Co. as shipper and Stena as the consignee or person to whose order the goods are to be delivered.

The goods duly arrived at Felixstowe in May 1998. IA accepts that at some stage the bill of lading was endorsed to them by Stena. Stena asserts that this occurred on 18 May 1998 but the precise date does not matter. The bill of lading was presented to P&O by persons acting on behalf of IA in order to obtain discharge of the goods from the vessel and their removal to the P&O container yard at Felixstowe to await either collection therefrom or further on-carriage by P&O to a revised destination. It is IA’s pleaded case that, at Felixstowe “the containers were delivered to the order of [IA] but remained under the physical control of [P&O] subject to onward delivery to [IA’s] plant in Hamilton, Scotland.”

On 27 May 1998 William Martin & Co. (Marine) Limited to whom I shall refer hereafter as “Martins” sent a fax to P&O from their office at Cargo House, 10 Watt Road, Hillington, Glasgow. In view of its importance I set out its contents in full: -

“WEDNESDAY 27TH MAY 1998

FAX TO P & O NEDLLOYD

ATTENTION KAREN WALSH

CONFIRMING TELECONS WITH CAROL, CAN YOU PLEASE ARRANGE FOLLOWING REVISED DELIVERIES ON OUR BEHALF.

EX UB TIGER

2 X 20’ CONTAINERS KNLU 3213947 AND 3270119.

FOR DELIVERY ON TIPPER TRAILERS TO;

IRELAND ALLOYS LIMITED, CRAIGHEAD WORKS,

WHISTLEBERRY ROAD,

HAMILTON

ONE FOR 1000 HRS ON MONDAY 01/06/98

ONE FOR 1000 HRS ON TUESDAY 02/06/98

ORIGINAL B/L ALREADY SURRENDERED TO P&O,

CHARGES QUOTED TO IRELAND ALLOYS BY MR. CHRIS LANE AS FOLLOWS:

TERMINALS £97.00 EACH

HAULAGE £397.00 EACH

TIPPER HIRE £35.00 EACH

THESE CHARGES FOR OUR ACCOUNT – PLEASE QUOTE REF. YHE 334 ON INVOICE

IF YOU HAVE ANY PROBLEMS WHATSOEVER PLEASE ADVISE US IMMEDIATELY.

THANKS AND REGARDS,

JIM BORLAND.”

The stance adopted by IA as to the capacity in which Martins sent this fax has been and remains curious. Initially they admitted that the fax had been sent but did not admit that it was sent on their behalf. Then, in response to a request for further information, IA admitted that, in sending the fax, Martins were acting on their behalf. Following certain interlocutory proceedings before first Colman J and then the Court of Appeal the Defence was amended now to plead that Martins “had express specific authority to send the fax” but that Martins “were the Customs clearing agents and had no general authority to make any contract on behalf of [IA] nor to vary the bill of lading contract.” If Martins had “express specific authority” to send the fax it may be wondered why it matters what was the extent of their general authority. Finally, evidence adduced on IA’s behalf deposes to the fact that although Martins were retained generally by IA they had no general authority to contract on their behalf and that it would be unusual for them to do so. From this I infer that it is accepted that from time to time Martins did contract on behalf of IA. Since this fax was sent with express specific authority, it is in any event a matter of objective interpretation whether it had contractual effect.

In accordance with the request contained in the fax the containers were duly carried by road by P&O from their Felixstowe container yard to Scotland. It is the evidence of IA that “on 1 June 1998 the first of the two containers was delivered to [IA’s] premises at Hamilton.” As I have already indicated on reaching the weighbridge the container set off IA’s Geiger counter. Apparently no radiation was detected outside the container using a handheld monitor but radiation was detected close to a number of sacks of scrap in the container itself. One sack was opened and radiation was detected from at least one of the components in the sack – see the report of the National Radiological Protection Board, the “NRPB,” dated 12 June 1998. I infer that the container was at this stage still laden on board P&O’s delivery vehicle. According to the evidence of IA’s solicitor, Mr. Sacré, “on realising that the contents of the container were in some way radioactive, IA rejected the goods pursuant to clause 9 of their General Conditions of Purchase and refused to take delivery of the container.” P&O duly took the container to their Coatbridge depot as I have already recounted. Mr. Sacré gives it as his understanding that P&O did not raise an objection to the rejection by Ireland Alloys, and he further states his understanding that P&O simply redirected the second container to their Coatbridge site without first tendering it for delivery to Ireland Alloys. This action is, suggests Mr. Sacré, consistent only with P&O treating any contract of carriage [sc. with Ireland Alloys] as at an end as a result of Ireland Alloys’ refusal to accept the first container.

I have not had to consider whether IA’s General Conditions of Purchase were successfully incorporated into their contract with Stena nor whether IA was entitled, as against Stena, to reject the goods. It would not be surprising if they were so entitled and I shall assume that they were. The suggestion that P&O raised no objection to the rejection of the goods by IA is somewhat overstated. On the very day of the arrival of the first container Mr. Chris Lane of P&O was, as one might expect, in telephone contact with Mr. Borland of Martins who then sent a fax which stated: -

“…this container and also the second container you hold have both been rejected by Ireland Alloys Limited. Our principals have advised that all charges relating to this container (haulage/terminals etc) and also any additional charges incurred by your good selves should be referred back to the shipper, Stena Non-Ferrous Metals A.B. Sweden…”

I doubt if P&O had any practical option to its recognition that IA were simply not going to accept delivery, hence the pragmatic decision not to take the second container to IA’s Hamilton yard at the designated time on 2 June. It is also said by IA that on rejection of the goods by IA, Stena in turn rejected the goods as against their seller. IA apparently never paid the purchase price to Stena and, they say, Arab Metals provided a full refund to Stena.

On 3 June 1998 the containers were surveyed by the NRPB and found to contain radioactive material. The scrap metal in the containers consists of small components such as impellers, meter bodies etc such as are typically used in the oil and gas industry. The isotopes found are apparently typical of “Naturally Occurring Radioactive Material” usually known by the acronym “NORM.” I set out the Conclusions and Recommendations of the NRPB in its Report dated 12 June 1998: -

“Conclusions

1.

The general appearance of the scale and the isotopes found are typical of LSA (Low Specific Activity) scale associated with the oil and gas industry. It may also be known as NORM – Naturally Occurring Radioactive Material. It is caused by natural radioactive isotopes in the oil bearing strata being brought to the surface with the oil and then being deposited in the pipework and associated equipment. The process enhances the natural activity concentrations, often by several orders of magnitude. It is not a problem common to all oilfields but is well known to the oil and gas industry.

2.

The surveys carried out in the two containers indicate that a significant proportion of the sacks contain contaminated components.

3.

In Schedule 1 to the Radioactive Substances Act, 1993 (RSA93) the specified activity for both radium and actinium above which material must be considered as radioactive is 0.37 Bq g. Since the active scale on the component assessed will be only a small fraction of the weight of the component it will be seen that the specific activity is considerably greater than this level and the scale must be considered as radioactive material.

4.

Since the scale is radioactive material storage of the contaminated components may come under the provisions of RSA93. Further advice may be obtained from the Scottish Environment Protection Agency (SEPA) who are responsible for administering the Act in Scotland.

5.

Work with ionising radiation, which includes the handling and storage of radioactive material, comes under the provision of the Ionising Radiations Regulations, 1985 (IRR85). Schedule 3 of IRR85 lists work involving radioactive material having an activity concentration of less than 100 Bq g-¹ as not requiring notification to the Health and Safety Executive (HSE). The scale discovered almost certainly exceeds this figure. The work should be notified to HSE and conducted in accordance with IRR85. Further advice on the application of the regulations may be obtained from the Health and Safety Executive.

6.

At the end of the visit the containers were sealed closed to prevent access to the contaminated components by unauthorised persons. The dose rates around the containers are such that no warning notices or restrictions on access to the area are required.

7.

It had been thought that it may be possible to segregate the contaminated components for cleaning. This cleaning produces radioactive waste and in the UK this waste may only be disposed of in accordance with an authorisation under RSA93. Only two organisations are authorised to do this onshore and it transpires that they are only authorised to clean and dispose of waste from components originating from the North Sea and certain European countries. Therefore it would not be possible to have the contaminated components cleaned in the UK.

8.

Since the components cannot be cleaned in the UK the two alternative options are for the material to be returned to the place of origin or arrangements to be made for the material to be disposed of as radioactive waste.

9.

Disposal of the contaminated components as radioactive waste may only be done under an authorisation under Section 13 of RSA93 and in accordance with the conditions contained in that authorisation. Authorisations are issued by the Scottish Environment Protection Agency (SEPA), to whom application for an authorisation would have to be made.

10.

All transport, whether to a suitable disposal site or return to the place of origin, must be carried out in accordance with the requirements of the Radioactive Material (Road Transport) (Great Britain) Regulations, 1996, the International Maritime Organization Dangerous Goods Code (Volume IV) and other relevant national and international legislation and codes. (NB The basis for legislation and codes for the transport of radioactive material is the International Atomic Energy Agency (IAEA) document Regulations for the Safe Transport of Radioactive Material 1985 edition (as amended 1990).)

11.

LSA contaminated components must be transported in an Industrial Package Type 2 as defined in the IAEA document. In the case of a freight container this would be one which conforms to the requirements prescribed in the ISO freight containers document and which would, if subjected to the tests prescribed in that document, prevent loss or dispersal of the radioactive contents.

12.

The freight containers must be suitably marked and transport documents provided in accordance with the requirements of transport legislation and codes.

Recommendations

1.

The Scottish Environment Protection Agency should be contacted at the address below for advice concerning the application of the Radioactive Substances Act, 1993 to the storage and disposal of this material.

SEPA

Rivers House

Murray Road

East Kilbride

G75 0LA

01355 574200

(Contact Mr Ian Conroy)

2.

The Health and Safety Executive should be notified concerning the handling and storage of this material.”

P&O have at all times acted in accordance with the advice and official rulings made by the NRPB and the Scottish Environment Protection Agency to which I shall refer hereafter as the “SEPA.” Their joint and clear view was that the containers or their contents were to be classified as radioactive waste within the meaning of Section 2 and Schedule 1 of the Radioactive Substances Act 1993. SEPA accordingly issued to P&O pursuant to sections 13 and 14 of that Act an authorisation to hold the containers at P&O’s Coatbridge site. That authorisation remains the official stance of and the position taken by the UK regulatory authority which currently has responsibility for the storage of the containers and their contents.

Recently P&O and IA have, on a without prejudice basis, jointly instructed an expert to explore possible ways of disposing of the containers. That expert is Mr. Roger Cheshire. He too initially concluded that the material was radioactive waste. However, during the course of 2006 he has come to the view, which he has now set out in a report of 26 June 2006, that this is not the proper classification and that it should be classified (and therefore declassified and reclassified by SEPA) as an “undeliverable consignment” within paragraph 582 of the International Atomic Energy Authority Transport Regulations and, accordingly, not within SEPA’s jurisdiction at all but solely within that of the Department of Transport Radioactive Materials Transport Division, hereinafter referred to as the “RMTD.” RMTD has unofficially agreed and has written to the Egyptian authorities requesting them to take back the containers. However SEPA has not accepted the correctness of Mr. Cheshire’s view. The material remains classified as contaminated waste. For so long as it remains in Scotland SEPA retains responsibility for approving arrangements for the storage of the material.

On 3 June 1998 P&O formally asked Martins whether, in the light of information which evidently was available at that stage as a result of the NRPB survey which took place on that day although there was then no written report, their principals were prepared to accept the cargo. On the same day Martins responded to the effect that, having spoken to their principals IA, the situation remained the same. IA could not accept the goods “hence original instructions to return to shipper must comply.” (sic)

On 18 June 1998 P&O sent a fax message to IA in these terms: -

“You will by now have received a copy of the report issued by NRPB which explains the condition of the above consignment when examined by them.

According to our information, your organisation is the legal owner of these goods, by the endorsement on the reverse of the bill of lading, and so we must formally hold you responsible for all costs and expenses currently being incurred by us. You will also be responsible for the disposal of these goods and we will ask you to please let us know soonest what action you intend taking in this regard.

Your urgent response is awaited.”

Again the response of IA was immediate. On the same day they responded by fax to the following effect: -

“Further to your fax to my colleague, Mr Frank Bent, and our telephone conversation of today’s date, we would confirm with you the following.

1.

It is quite correct that we have signed the original Bill of Lading on the reverse side. This was done so that we could complete the UK Customs Clearance as we have bought this material on a C & F Felixstowe basis and, at that time, we had no idea that the material was contaminated with radioactive material.

2.

On arrival at our premises, when the Container came on to our Weighbridge, our Geiger counter automatically sounded off therefore we refused to accept the fist Container and we notified your office accordingly.

3.

All charges relating to the disposal etc. is for the account of the Supplier, Stena Non-Ferrous Metals AB in Sweden and I understand that you already have the contact name, address and telephone number and fax number.

4.

Therefore Ireland Alloys Ltd, are not responsible for any costs or expense being incurred by you and you should refer these to Stena Non-Ferrous Metals AB.

If we can be of any further assistance please, in this instance, address all correspondence to myself.

In the meantime, we remain,

best regards

Paul Williams

Shipping/Transport Manager.”

IA sent a further fax to P&O on 23 June 1998. So far as material it read: -

“Further to our telephone conversation, we would confirm no payment has been or will be made between Ireland Alloys Limited and Stena Non-Ferrous Metals AB for the radioactive material. Stena Non-Ferrous Metals were our contracted Supplier and, to the best of our knowledge, are the owners of this material. We were considering purchasing the material on a valuation basis, this was before it was known that the material was radioactive.

On these grounds Ireland Alloys Limited have no claim, ownership or responsibility to the goods in question in Container Numbers KNLU 321394-7 and KNLU 327011-9. Any charges incurred are the responsibility of the Supplier, Stena Non-Ferrous Metals AB, Sweden.

Once again, the total and sole responsibility for this shipment lies with Stena Non-Ferrous in Sweden and Ireland Alloys Limited have no responsibility under the circumstances outlined above.

I am always available to help, if I can, however, at the moment there is not much more I can do or say.”

Thereafter there was, as I understand it, no further contact between P&O and IA for almost six years and IA was wholly unaware of efforts being made by P&O to secure the return of the goods to Egypt. It is said on IA’s behalf that, not having heard anything about the two containers for six years, they were under the impression that the containers had been returned to Arab Metals in Egypt. That evidence is plausible and I accept it.

On 20 February 2004 P&O sent to IA a notice in the following form: -

“UB TIER Voy TIG8515 Arr Felixstowe 27 May 1998 Container KNLU32113947 abd KNLU3270119 Scrap Metal

As bailees of the above cargo we give you Notice pursuant to the Torts (Interference with Goods) Act 1997 that the cargo is available for delivery from Coatbridge Containerbase, Gartsherrie Road, Coatbridge ML5 2DY to Ireland Alloys Ltd.

Attached is a schedule listing details of the expenses incurred up to 9 February 2004 of GBP148,797.79 which needs to be settled.”

The expenses incurred were container demurrage charged at the rate indicated in the clause stamped on the face of the bill of lading and storage charges calculated by reference to the notional storage cost of the containers. Not long after the sending of that notice this Action was commenced by issue of the Claim Form on 8 March 2004.

It is unnecessary for me to rehearse in detail the efforts made by P&O to secure the return of the goods to Egypt. Detailed findings may in due course be required on this score in order to resolve between the parties the question whether P&O have failed to act reasonably in mitigation of their loss. In those circumstances it is also undesirable that I should stray too far into this territory. I would merely state that the situation again seems to me rather less clear cut than is suggested in the evidence presented on behalf of IA, which seeks to suggest, essentially, that return of the goods to the shippers could have been swiftly accomplished had not P&O’s local agency in Egypt dragged their feet. The matter is dealt with comprehensively in the Fifth Witness Statement of William Anthony Howard dated 2 August 2006 at paragraphs 30-56. IA place much reliance on Arab Metals having apparently obtained the consent of the Egyptian Atomic Energy Authority to the return of the containers to Egypt. The document relied upon as a consent is dated 23 August 1998. It appears not to have been officially translated into English until 14 April 2005 and it was not seen by P&O until 18 April 2005. Whatever the status of the document it does not purport to indicate any approval for the containers to leave the port at Alexandria and in the light of this one can understand the advice from P&O’s Egyptian agents that in the absence of written approvals from the Ministry of Health, the Port Authority and the Container Terminal he could not recommend that the containers be shipped by P&O to Alexandria. Furthermore, the documentation available to the court does not bear out the suggestion that Arab Metals have at all times been ready, able and willing to accept the return of the containers and their contents. At Paragraph 50 of his Fifth Witness Statement Mr. Howard, for P&O, says this: -

“If the radioactive containers could as a matter of practicality have been returned to Egypt at any time P&O would have jumped at the opportunity. However, they could not and the suggestion that it has, at any time, been open to P&O to ship the goods back to Egypt is illusory.”

These connected propositions seem intuitively likely to be correct.

IA’s principal defence on liability is that there is no contract upon which P&O can sue because the bill of lading was accomplished and became spent and because the Martins fax is insufficient of itself to give rise to or to evidence a separate contract which can only be proved, suggests IA, by reliance on the preceding telephone conversation, reliance upon which has been disclaimed by P&O when obtaining leave to amend from the Court of Appeal.

P&O suggests that the Martins fax took effect in one of three ways: -

(i)

either as a nomination of the delivery place contemplated in the Combined Transport Bill of Lading as the on-carriage delivery place;

(ii)

or as a variation of the Bill by the revision of the delivery place from “Felixstowe CY” to IA’s premises at Hamilton and with corresponding revision of the charges provided for in the Bill;

(iii)

or as a new contract for the on-carriage of the containers.

In my judgment the bill of lading was not accomplished by surrender of it to P&O at Felixstowe. A bill of lading becomes accomplished when the contract contained in or evidenced thereby is fully discharged on both sides with no obligation left outstanding. IA presented the bill of lading to P&O in order to obtain the discharge of the goods from the vessel and their removal to the P&O container yard. That however did not exhaust the parties’ obligations pursuant to their contract. P&O would in my judgment have been obliged to on-carry the goods to an inland destination if asked so to do. At the very least P&O was obliged properly and carefully to look after the goods and not to deliver them other than to IA’s order. IA for their part had an obligation to take delivery of the goods and to pay the terminal handling charges and container demurrage in accordance with the terms contained in the bill. IA themselves allege that the containers “remained under the physical control of [P&O] subject to onward delivery to [IA’s] plant in Hamilton.” Although I am not entirely sure what this is intended to mean, it does seem to envisage that at the very least P&O remained bailee of the goods, which bailment surely would have to be regarded as an ongoing obligation under the bill of lading contract.

I am not sure that it really matters which of Mr. Rainey’s three possible analyses of the effect of the Martins fax is correct. I am inclined to think that the preferable analysis is that it brought about, as it said on its face, a revised place of delivery, i.e., a variation of the contract substituting Hamilton for the Felixstowe container yard as the contractual place of delivery. In default of other instructions the bill of lading provided for delivery at the Felixstowe container yard. It is because of that default nomination that I am inclined to prefer this analysis to the suggestion that the fax was a nomination of the delivery place contemplated in the Combined Transport Bill of Lading as the on-carriage delivery place. So also I do not think that this was a new contract – the existing contract was not yet fully performed and the fax brought about, as it said, a revision. However, if there was a new contract it was plainly intended by necessary implication that it be on the same terms, where applicable, as the old.

It is to my mind wholly immaterial whether the revision was agreed in the telephone conversations which preceded the fax, and then evidenced and/or confirmed, as the fax again says, by the fax itself, or whether the revision was effected simply by the fax itself, or whether yet further the revision was effected by P&O’s conduct in performing as requested in the fax. What is to my mind indisputable is that there was a contract pursuant to which P&O agreed to carry the containers from Felixstowe to Hamilton and there to deliver them to IA at its premises at two very precise times. The contrary is in my view unarguable.

I have already mentioned that I do not understand the suggested relevance of the usual limitation upon the authority of Martins. Since the fax was sent with express specific authority the only question is as to its objective interpretation. It binds IA in accordance therewith whatever the general authority of Martins and indeed whatever the intention of IA.

I was not sure whether at the end of the day Mr. Davey, for IA, maintained their argument that whilst they may have had rights vested in them by virtue of becoming the lawful holder of the bill of lading they had not become subject to any liabilities under the contract. This argument, if maintained, seems to me misconceived. Firstly it is IA’s own case that they took delivery of the goods at Felixstowe. Whether or not that is so IA at the least demanded delivery at Felixstowe by requiring discharge from the vessel and carriage to the container yard. They presented the bill of lading in order to justify that demand. That alone is in my judgment sufficient to satisfy Section 3(1)(a) of the Carriage of Goods by Sea Act 1992 but of course the matter does not stop there. By the Martins fax IA demanded delivery of the goods at Hamilton.

For all these reasons I am in no doubt that IA was under a contractual obligation owed to P&O to take delivery of the containers at Hamilton. The fact that, pursuant to their contract of purchase with Stena, they may have had a right to reject the goods as non-conforming seems to me entirely beside the point. IA’s obligation to take delivery was in no way dependant upon their having and/or retaining title to the goods.

I also reject IA’s assertion that P&O’s conduct in not tendering delivery of the second container is consistent only with P&O accepting that IA’s refusal to take delivery meant that the contract of carriage was at an end, with the consequence that IA remained under no outstanding obligation to take delivery of the goods. On the contrary, P&O’s conduct seems to me equally if not more consistent with a recognition that there was no point in taking the second container to IA’s Hamilton plant, since it was inevitable that IA would refuse there to take delivery. It is true that P&O’s subsequent fax of 18 June 1998 was sent upon what I would assume is the false premise that IA remained the owner of the goods. However the fax nonetheless held IA responsible for all costs and expenses being incurred by P&O in connection with the goods and asserted IA’s continuing responsibility for the disposal of the goods. In that connection P&O asked what action IA intended to take. None of this amounts to my mind to that unequivocal overt act inconsistent with the subsistence of the contract which is required if a repudiation is to be regarded as accepted without an unequivocal communication to that effect – see generally Chitty on Contracts 29^th edition, paragraph 24-013. Of course, that conclusion is not of itself conclusive as to the availability of the remedy of specific performance.

I also accept that P&O have a very real interest in now transferring onto the shoulders of IA the problems surrounding these containers. As between P&O and IA, IA had a clear contractual obligation to take delivery of the containers and it was, as between these two parties, the responsibility of IA to sort out how precisely effect could be given to their rejection of the cargo as against their own sellers. It is not therefore a case in which P&O have no legitimate interest in seeking performance of the contract rather than simply damages for its breach – c.f. White & Carter (Councils) Ltd v McGregor [1962] AC 413. Again that conclusion is not of itself conclusive as to the availability of the remedy of specific performance.

Much of the hearing was devoted to a consideration of IA’s pleaded defence of laches. At paragraph 18 of their Amended Defence IA plead as follows: -

“Furthermore, it is denied that the Claimants are entitled to an order for specific performance or other equitable relief. Any such claim is barred by laches on the grounds that to make such an order now would be inequitable in all the circumstances. The third Defendants will rely on the following facts and matters:

(1)

The Third Defendants refused to accept delivery of the containers at their premises on or about 1^st June 1998.

(2)

On or about 18^th June 1998 the Claimants served a notice on the Third Defendants requiring it to remove the containers. The said notice was served on the Third Defendants on an incorrect basis, namely that the Third Defendants were the owner of the containers and/or their contents, which they were not.

(3)

Prior to the service by the Claimants of a further notice on 20^th February 2004, the Claimants had not communicated with the Third Defendants since the notice sent in June 1998. As a result of this lack of communication, the Third Defendants were under the impression that the containers had been returned to the First Defendants in Egypt.

(4)

In the premises, the Claimants slept on their alleged rights against the Third Defendants for nearly 6 years and it would be inequitable for an order for specific performance now to be made.”

Mr. Davey relied upon the decision of the Court of Appeal in Frawley v Neill “The Times” 5 April 1999, Court of Appeal (Civil Division) Transcript No. 360 of 1999 as authority for the proposition that the modern approach to laches is to take a broad view, directed to ascertaining whether it would in all the circumstances be unconscionable for a party to be permitted to assert his beneficial rights.

However Mr. Rainey for his part pointed to the fact that IA’s pleaded case appeared to be reliant principally if not simply upon the lapse of almost six years as of itself rendering it inequitable for an order for specific performance now to be made. Mr. Rainey submits that since it has been determined as between these parties that the six year period of limitation applies by analogy to P&O’s claim for specific performance of the contract, a defence of laches asserting delay of a period short of six years is simply unavailable. In support of that latter proposition Mr. Rainey cites a passage from Wilberforce J in Re Pauling’s Settlement Trusts [1962] 1 WLR 86 at 115, approved by the Court of Appeal (Willmer, Harman & Upjohn LJJ) at 1964 1 Ch. 303 at 353, to the following effect: -

“There being an express statutory provision, providing a period of limitation for the plaintiffs’ claims, there is no room for the equitable doctrine of laches.”

Sir George Jessel MR expressed the same principle in Redgrave v Hurd (1881) 20 Ch. D. 1 at page 13: -

“I take it to be a settled doctrine of equity, not only as regards specific performance but also as regards rescission, that [lack of due diligence] is not an answer unless there is such delay as constitutes a defence under the statute of limitations.”

In Halsbury’s Laws, (4^th Edition) volume 16(2) edited by Professor Pettit the following proposition is put forward at paragraph 910, citing, amongst other authorities, remarks of Lord Wensleydale in Archbold v Scully (1861) 9 HL Cas 360 at 383: -

“The defence of laches is, however, allowed only where there is no statutory bar. If there is a statutory bar operating either expressly or by way of analogy, the claimant is entitled to the full period before his claim becomes unenforceable; and an injunction in aid of a legal right is not barred until the legal right is barred, although laches may be a bar to an interim injunction.”

The parties are not agreed on the question whether they are bound by the determination of Colman J that the six year period of limitation applies by analogy to P&O’s claim for specific performance of the contract. The application which led to that decision arose in this way. Following the bringing of proceedings by P&O on 8 March 2004, very shortly before the expiry of the six year limitation period, IA and Stena took their stand, after the expiry of the limitation period, on the basis that the only contract was the bill of lading issued by P&O on shipment and that that bill had become accomplished on presentation at Felixstowe; therefore it was said that any contract pursuant to which the containers had been carried to Hamilton for delivery to IA was a different contract from that sued on and any claim on such a contract was time barred. P&O accordingly applied to amend to rely upon the Martins fax, which had already been pleaded, as a variation of the bill of lading contract or as a wholly new contract. Colman J, adopting the analogy approach expressly preserved by section 36(1) of the Limitation Act 1980, held that the six year limitation period prescribed in section 5 of the Act applied by analogy to P&O’s new claims for specific performance, rejecting P&O’s argument that such a claim was affected by no period of limitation. He held further that the new claims did not arise out of the same or substantially the same facts as the old, did not therefore satisfy the test prescribed by CPR 17.4(2) and he accordingly disallowed the amendment.

Colman J also had before him an application by both the Second and the Third Defendants to amend so as to introduce a defence of laches. This was potentially applicable both to the existing claims before reliance on the Martins fax and to the alternative claims sought to be introduced by amendment. Colman J gave leave to the Defendants to amend to plead laches. On this topic generally he said this: -

“48.

As to the submission that the claim for specific performance of the varied contract or the Alternative Contract should be disallowed because it is bound ultimately to fail on the grounds of laches, it would be undesirable for me to express any concluded view at this stage because to do so might well have the effect of pre-determining a substantive defence available to the defendants in respect of their original claim for specific performance. That will be for them to pursue at the main trial of these proceedings. This application having been determined on other grounds, that defence should be left unexplored prior to the trial.”

P&O appealed against Colman J’s decision to refuse leave to amend to rely upon the Martins fax, but did not appeal against his decision to allow the Defendants to amend to plead laches. Stena and IA put in a Respondents’ Notice. Paragraph 1 of that notice read: -

“The Second and Third Defendants will rely on the following additional grounds in support of the Judgment:

(1)

If the Judge had jurisdiction to allow the amendment in relation to the Claimant’s claim for specific performance, the fact that such a claim would be met by the defence of laches made it inappropriate to allow such an amendment and as a matter of discretion the Judge should have refused the application to that extent.”

The Court of Appeal took the view that Colman J had erred in the application of CPR 17.4(2). That court considered that the new claims arose out of the same or substantially the same facts as the old claims. The Court of Appeal accordingly reversed Colman J on this point and as to the exercise of his discretion but said nothing about his decision as to the applicability of the statutory period of limitation by way of analogy. The Defendants did not before the Court of Appeal pursue their point, preserved by the Respondents’ Notice, that the amendment should not in any event be allowed because the claims introduced thereby would inevitably be defeated by the defence of laches.

Mr. Rainey also submits that by not pursuing in the Court of Appeal the point that laches may be a defence to a claim for specific performance even when the delay falls short of the analogously applicable statutory limitation period, the Defendants are equally estopped from now seeking to deploy their defence of laches as an answer to P&O’s claim for specific performance. Mr. Rainey naturally relies upon the well-known decision of the Court of Appeal in Fidelitas Shipping Co. Ltd v V/O Exportchleb [1966] 1 QB 630.

By way of fall-back Mr. Rainey further submits that there is formidable authority for the proposition that the defence of laches is simply unavailable where the statutory limitation period is applicable and where the delay relied upon falls short of the permitted period. In addition to the material already referred to in paragraph 34 above, Mr. Rainey also relies upon Rochdale v King [1851] 2 Sim. (N.S.) 78 and The Law Commission Consultation Paper No. 151 “Limitation of Actions: A Consultation Paper” (1998) particularly at paragraph 13.161 to the following effect:-

“If there is no direct or by “analogy” statutory limitation period applicable to specific performance or an injunction or an account of profits for a breach of contract or tort, laches can be applied without contradicting Wilberforce J’s view in Re Pauling’s Settlement that laches cannot be invoked where there is a statutory limitation period.”

Finally, Mr. Rainey for his part relies upon a passage from Professor Beatson’s essay to the following effect: -

“First, as we have seen, where the statutory period applies to a claim for equitable relief, either directly or by analogy, a person is entitled to the entire six year period but to no more, but where it does not a person asking for such relief must be prompt and any delay may amount to laches or acquiescence and bar relief.” (Page 20.)

Mr. Davey for his part submitted that insofar as the decisions of Colman J and the Court of Appeal had given rise to any issue estoppel, it was P&O who by virtue of not appealing the grant of permission to amend to rely upon laches as a defence to all of the claims for specific performance was now precluded from denying the availability of such a defence. He pointed out that the subject matter of the Defendants’ Respondents’ Notice was not the question whether laches could be run as a substantive defence to the unamended claims but rather the question whether the amendment should be disallowed as a matter of discretion because it would be met by a defence of laches. Mr. Davey relied upon some observations of Professor Gordon in his article “Effect of Reversal of Judgment on Acts Done Between Pronouncement and Reversal” (1958) 74 LQR 517 as supporting the proposition that where an appellate tribunal reverses a judgment or order, the former decision is avoided ab initio and it is only the decision of the appellate court to which resort can be had for the purpose of setting up a defence of estoppel per rem judicatam. In those circumstances there was, submitted Mr. Davey, no binding determination to the effect that the statutory limitation period applies analogously to claims for specific performance. Mr. Davey wishes to espouse the argument that P&O’s claims for specific performance are in fact subject to no limitation period because, paradoxically as Professor Beatson has pointed out, where no statutory period applies either directly or by way of analogy, a person seeking relief by way of specific performance must apparently act promptly and any delay may amount to laches or acquiescence and bar relief – see the passage cited from page 20 of Professor Beatson’s essay.

However Mr. Davey also submitted that even if the limitation period did apply analogously to P&O’s claim for specific performance (or if he was precluded from controverting that proposition) still that was not inconsistent with the availability of the defence of laches founded on delay falling short of the limitation period. He relied particularly upon the saving in section 36(2) of the Limitation Act to the following effect: -

“(2)

Nothing in this Act shall affect any equitable jurisdiction to refuse relief on the ground of acquiescence or otherwise.”

Of that section the Law Commission Report No. 270 of 2001 (as opposed to the earlier Consultation Paper No. 151 of 1998) says, at paragraph 2-97: -

“Section 36(2) of the 1980 Act expressly preserves the equitable jurisdiction to refuse relief on the ground of acquiescence or laches.”

Next Mr. Davey submitted that in none of the cases relied upon by Mr. Rainey had it actually been decided as part of the ratio decidendi that delay short of an applicable period of limitation is incapable of disentitling a claimant from a grant of the remedy of specific performance. Professor Pettit’s formulation set out in Halsbury was he said simply wrong.

Finally, Mr. Davey submitted that since specific performance is an equitable remedy the court has a discretion whether or not to grant such relief and it is always open to the court to decline to make an order on the basis that it is inequitable to do so, whether as a result of delay or otherwise.

These interesting arguments were deployed on both sides with great skill. In my judgment however it is the last of Mr. Davey’s submissions which is the crucial one and the intrinsic interest of the other points should not be permitted to distract attention from the critical enquiry. I do not need to decide whether section 36(2) of the Limitation Act 1980 preserves the equitable jurisdiction to refuse specific performance on the ground alone of delay in making a claim therefor. There is I think a substantial difference between the assertion of a claim for specific performance as the preferred alternative remedy in respect of a claim for breach of a commercial contract which sounds also in damages at common law and the assertion of a claim which sounds only in equity such as the claim brought by Mr. Frawley in Frawley v Neill, who had no claim at common law because of the failure to comply with the requirements of section 40 of the Law of Property Act 1925. That case was concerned with the assertion of a beneficial right. In the present context P&O has no right to specific performance. The question is whether in all the circumstances it is just that P&O should be confined to its remedy in damages – see per Sachs LJ in Evans Marshall v Bertola [1973] 1 WLR 349 at 379. Delay is but one aspect of this enquiry. As Sir Robert Megarry VC pointed out in Lazard Bros & Co. v Fairfield Properties Co. [Mayfair] [1997] 121 SJ 793: -

“If between the Plaintiff and the Defendant it [is] just that the Plaintiff should obtain the remedy, the court ought not to withhold it merely because the Plaintiff had been guilty of delay.”

At the very least in my judgment section 36(2) of the Limitation Act is consistent with the ability of the court to refuse specific performance where the circumstances rendering it just so to do include as one element delay which falls short of an applicable period of limitation.

Moreover IA does not rely upon mere delay. The critical feature in P&O’s conduct upon which IA in my judgment relies is that spelled out in paragraph 18(3) of the Amended Defence, viz: -

“Prior to the service by the Claimants of a further notice on 20^th February 2004, the Claimants had not communicated with the Third Defendants since the notice sent in June 1998. As a result of this lack of communication, the Third Defendants were under the impression that the containers had been returned to the First Defendants in Egypt.”

IA follows this sub-paragraph with the allegation that P&O slept on its alleged rights. Professor Pettit, in the passage in Halsbury’s Laws immediately prior to that which I have already set out, says that “a court of equity refuses its aid to stale demands, where the claimant has slept upon his right and acquiesced for a great length of time. He is then said to be barred by his unconscionable delay (“laches”).” I am not sure that I would characterise the delay of which P&O has been guilty as “unconscionable,” at any rate if I were examining it in isolation, or by reference to the conscience of P&O. Of more importance for present purposes in my judgment is the overall effect of the conduct of all parties insofar as it contributes to what is now the justice of the case as between P&O and IA. The critical feature here is not I think delay simpliciter but rather P&O’s failure to keep IA informed of what it was doing and what progress, or lack of progress, it was achieving. Although it must be seriously open to question whether IA could or would have been any more successful than were P&O in finding a practical solution to the problem, whether assisted by an expert such as Mr. Cheshire or not, had it had the burden of dealing with it from an earlier stage, the fact is that IA have effectively been deprived of the opportunity even to attempt to deal with the situation by reason of having been induced to believe that the problem had long since been dealt with by P&O. If it had been brought unequivocally to the attention of IA that, notwithstanding their protestations of non-responsibility on 18 & 23 June 1998, they would not just be held responsible for the financial consequences of non-disposal of the material but also moreover that they were expected to take positive steps directed towards removal of the goods from the UK or their disposal by other means, they would at the very least have made or been forced to have made an informed decision whether at that early stage to make their own efforts towards removal or disposal. Although it was no doubt open to IA at all times it is, in the circumstances, in my view somewhat unrealistic to expect that IA would solicitously enquire as to P&O’s progress and offer their own assistance. The longer the silence continued the more implausible is it to contend that such a response could realistically have been expected. It must also I think be recognised that since P&O have, albeit unsuccessfully, been engaged with the various agencies in attempting to find a solution for over 8 years, any transfer now of the immediate de facto responsibility for taking the matter forward is likely to lead to yet further and possibly considerable delay in achieving a satisfactory removal or disposal of the material. For these reasons I have, after anxious consideration and, I confess, contrary to my first inclination, concluded that it is just that P&O should be confined to their remedy in damages.

I hope that IA will not be persuaded by this outcome to terminate the interest in the problem which undoubtedly they have taken over the last two years as manifested in their initiative which led to the appointment of Mr. Cheshire. I indicated at the hearing that I did not consider that P&O’s claims for damages in the shape of their claim for container demurrage and accrued storage charges were amenable to summary determination. The same is equally true of P&O’s broader claim for an indemnity in respect of the expense to which they have been and will be put by reason of IA’s wrongful refusal in breach of contract to accept delivery of the containers. IA is now squarely on notice that P&O could suffer further loss arising out of their inability to market and sell their Coatbridge depot. Plainly there will be issues to be resolved at trial in relation to all of these claims but I hope that IA will not lose sight of the fact that it may be as much in their own interests for the accumulating losses to be mitigated as it is in the interests of P&O who are in the first instance suffering them.

Finally it is I think worthwhile setting out here the last paragraph of Mr. Cheshire’s report to the parties of the situation as at 26 June 2006. He wrote: -

“As a last point I think it should be interesting to all parties (and in particular the relevant Authorities) that the 960 gm sample of the contaminated metal analysed by NRPB contained less radioactivity than a domestic smoke alarm. Domestic smoke alarms have an Americium 241 Radioactive Source in them which is about 37 KBq (1 microcurie) as against the NRPB figure of 30 KBq for the sample.”

In the event that it proves impossible for the material to be returned to Egypt, a matter which is I suspect beyond the control of either P&O or IA, I very much hope that this observation, if accepted as accurate, will be borne in mind by those whose task it is to consider the grant of any authorisation necessary to enable decontamination or disposal to take place within the UK. As I understand it such one-off authorisation is required because the relevant organisations are currently authorised only to decontaminate or to dispose of waste from components originating from the North Sea and certain European countries.

I will hear Counsel as to the form of order required in order to give effect to my judgment. I have found that Ireland Alloys Ltd were and are in breach of their contract with P&O in failing to take delivery of the containers and their contents. Having found that it is not unjust that P&O should be confined to their remedy in damages the application for a mandatory injunction pending trial obviously falls away.